Bank of America posts 1Q profit, surpasses view

IEVA M. AUGSTUMS
AP Business Writer

CHARLOTTE, N.C. (AP) — Bank of America Corp. posted strong
first quarter results Monday, as higher revenue from the purchase of
Merrill Lynch & Co. help offset a surge in credit costs.

The results surpassed analysts’ expectations, and provide further evidence the banking sector might be improving.

But
the bank also took a hefty $13.4 billion provision for credit losses
and its shares fell 80 cents, or 7.5 percent, to $9.80 in premarket
trading.

The Charlotte, N.C.-based company earned $2.81 billion
after paying preferred dividends, or 44 cents per share, compared with
a profit of $1.02 billion, 23 cents per share, in the year ago period.
Analysts surveyed by Thomson Reuters expected profit of 4 cents per
share.

The higher-than-expected earnings could take some heat off
Chief Executive Ken Lewis who has faced calls from shareholders to
either give up his job as chairman or be ousted.

Lewis has been
up against intense pressure this year over the Merrill purchase, which
closed Jan. 1. Shareholders approved the deal before learning of big
losses at the New York-based investment and reports surfaced that
Merrill Chief Executive John Thain rushed out billions of dollars in
bonuses to Merrill employees in his final days as CEO even as Bank of
America was begging the government for aid to complete the deal.

The
first quarter results include revenue from the company’s acquisitions
of Merrill and Countrywide Financial Corp., which Bank of America did
not own last year.

During the quarter, revenue more than doubled
to $35.76 billion, mainly from the addition of Merrill. Analysts
expected revenue of $27.13 billion.

However, Bank of America
recorded a $13.4 billion provision for credit losses in the first
quarter, showing that it is not immune from deteriorating credit
quality and growing unemployment. The bank set aside $6.4 billion as
additional reserves to cover future losses.

“We understand that we continue to face extremely difficult challenges,” Lewis said in a statement.

Bank
of America’s better-than-expected profit is the latest in a string of
bank earnings that have beat expectations, including JPMorgan Chase
& Co. and Citigroup Inc.

Bank of America has received $45
billion in government funds as part of the Treasury Department’s $700
billion financial rescue package.

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