Bank of America posts profit, surprises investors


By IEVA M. AUGSTUMS
AP Business Writer
Monday, April 20, 2009


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

But the bank also took a hefty $13.4 billion provision for loan losses and its shares fell 55 cents, or 5.2 percent, to $10.05 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 pressure off Chief Executive Ken Lewis who has faced calls from some shareholders to either give up his job as chairman or be ousted.

Lewis has faced 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 bank that prompted a government bailout.

The results include higher revenue from the company's acquisitions of Merrill Lynch & Co. and Countrywide Financial Corp., which Bank of America did not own last year.

However, Bank of America recorded a $13.4 billion loan-loss provision 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 and Citigroup.

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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