Bank of America Posts $4.2 Billion 1st Quarter Profit

CHARLOTTE, N.C. (AP) - Bank of America managed to avoid a loss in the first quarter, surpassing analysts' expectations and providing further evidence the banking sector might be improving.

The Charlotte, N.C.-based company says it earned $2.81 billion after paying preferred dividends, or 44 cents per share. Analysts expected profit of 4 cents per share.

However, Bank of America recorded a $13.4 billion loan-loss provision, proving that it is not immune from deteriorating credit quality and growing unemployment.

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

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

(Copyright 2009 by The Associated Press. All Rights Reserved.)

Bank of America News Release

CHARLOTTE, N.C., April 20 /PRNewswire-FirstCall/ -- Bank of America Corporation today reported first-quarter 2009 net income of $4.2 billion. After preferred dividends, including $402 million paid to the U.S. government, diluted earnings per share were $0.44.

Those results compared with net income of $1.2 billion, or diluted earnings per share of $0.23 after preferred dividends, during the same period last year.

Results for the quarter include Merrill Lynch & Co., which Bank of America purchased on January 1, 2009, and Countrywide Financial, which was acquired on July 1, 2008. Merrill Lynch contributed $3.7 billion to net income, excluding certain merger costs, on strong capital markets revenue. Countrywide also added to net income as mortgage lending and refinancing volume increased. The year-ago period does not include Merrill Lynch and Countrywide results.

The company also took several actions in the quarter to enhance its capital and liquidity position, including strengthening its loan loss reserves and building its cash position.

"The fact that we were able to post strong, positive net income for the quarter is extremely welcome news in this environment," said Kenneth D. Lewis, chairman and chief executive officer. "It shows the power of our diversified business model as well as the ability of our associates to execute. We are especially gratified that our new teammates at Countrywide and Merrill Lynch had outstanding performance that contributed significantly to our success."

However, we understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment," Lewis said. "Our company continues to be a solid contributor to the effort to revitalize the U.S. economy through our industry-leading efforts to reform mortgage lending, restructure home loans where appropriate and mitigate foreclosures wherever possible. We look forward to continuing that role."

First Quarter 2009 Business Highlights

Bank of America Merrill Lynch was No. 2 in global and U.S. investment banking fees during the quarter and based on volume was No. 1 in U.S. equity capital markets, No. 1 in U.S. high yield debt, leveraged and syndicated loans, and was a top-five advisor on mergers and acquisitions globally and in the U.S., according to first-quarter league tables.

Bank of America funded $85 billion in first mortgages, helping more than 382,000 people either purchase a home or refinance their existing mortgage. Approximately 25 percent were for purchases.

Credit extended during the quarter, including commercial renewals of $44.3 billion, was $183.1 billion compared with $180.8 billion in the fourth quarter. New credit included $85.2 billion in mortgages, $70.9 billion in commercial non-real estate, $11.2 billion in commercial real estate, $5.5 billion in domestic and small business card, $4.0 billion in home equity products and $6.3 billion in other consumer credit. Excluding commercial renewals, new credit extended during the period was $138.8 billion compared with more than $115 billion in the fourth quarter.

During the first quarter, Small Business Banking extended more than $720 million in new credit comprised of credit cards, loans and lines of credit to more than 45,000 new customers.

The company originated $16 billion in mortgages made to 102,000 low- and moderate-income borrowers.

To meet rising refinancing and first mortgage application volume, the company is in the process of adding approximately 5,000 positions in fulfillment. In addition, the company has more than 6,400 associates in place to address increasing needs from consumers for assistance with loan modifications.

To help homeowners avoid foreclosure, Bank of America modified nearly 119,000 home loans during the quarter. Last year, the company embarked on a loan modification program projected to modify over $100 billion in loans to help keep up to 630,000 borrowers in their homes. The centerpiece of the program is a proactive loan modification process to provide relief to eligible borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as rate resets or payment recasts. In some instances, innovative new approaches will be employed to include automatic streamlined loan modifications across certain classes of borrowers. Also during the first quarter, the company began a new program that utilizes affordability measures to qualify borrowers for loan modifications.

Average retail deposits in the quarter increased $140.0 billion, or 27 percent, from a year earlier, including $107.3 billion in balances from Countrywide and Merrill Lynch. Excluding Countrywide and Merrill Lynch, Bank of America grew retail deposits $32.7 billion, or 6 percent, from the year-ago quarter.

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