Bank of America reported a better-than-expected first-quarter profit, reversing from a year-earlier loss, as legal costs fell steeply and the bank earned more from mortgage lending.

Still, the bank’s cost-cutting efforts fell short of market expectations, and the bank’s shares fell about 1.2 percent to $15.63 yesterday.

Litigation expenses fell to $370 million in the latest quarter from $6 billion a year earlier, suggesting again that the worst of the bank’s legal troubles may be over.

The bank has paid at least $70 billion so far to settle legal issues related to the financial crisis, undermining cost-cutting initiatives introduced by chief executive Brian Moynihan since he took the bank’s top job in 2010.

Through job cuts, the bank is approaching employment levels of early 2008, with a headcount at the end of the quarter under 220,000, down 8 percent from a year earlier.

However, persistent low interest rates have overshadowed cost cuts and hurt the bank’s net interest income, which fell 6.3 per cent in the quarter.The bank’s non-interest expenses fell 29.4 percent to $15.7 billion. But analysts said more needs to be done.

Analysts at Oppenheimer Equity Research calculated non-interest expenses – excluding legal costs and the cost of servicing delinquent loans – at $14.3 billion, compared with their forecast of $14.2 billion.

Bank of America reported net income of $2.98 billion, or 27 cents per share, attributable to common shareholders compared with a loss of $514 million, or 5 cents per share, a year earlier.

Revenue from the bank’s bond trading unit fell 6.8 percent to $2.75 billion. Currency trading revenue doubled, however, helped by the Swiss central bank’s shock move in January to remove the franc’s cap against the euro, which set off frenzied trading.

Overall revenue, excluding adjustments, fell 5.9 percent to $21.42 billion.