Bank of America posts 1Q profit, surpasses view

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.