Finance Globe

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Bank of America Profits Nicely First Quarter - Shares Slide

Bank of America, which has received $45 billion of the Treasury's $700 billion financial rescue package, surprised investors today by announcing first-quarter 2009 net income of $4.2 billion. Investors may have been surprised, but they weren't reassured - BAC shares slid from $9.75 at market open and are down over 18% this afternoon.

The company's diluted earnings per share were $.44 after preferred share dividends, including $402 million paid to the U.S. government. Analysts had expected a profit of $.04 per share. This compares with a net income of $1.2 billion for the same period last year, or diluted earnings per share of $.23 after preferred dividends.

The bank's first quarter earnings has already exceeded the earnings of all of 2008. Merril Lynch & Co. contributed $3.7 billion to net income, excluding certain merger costs, and a small portion of income came from Countrywide Financial as mortgage lending and refinancing volume increased. Bank of America purchased Merril Lynch on January 1, 2009, and acquired Countrywide on July 1, 2008.

BofA expects that more borrowers will fall behind as the economy struggles and job losses continue. The company took actions in the quarter to enhance its capital and liquidity position, including strengthening its loan loss reserves by $6 billion 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."

The company said that in the first quarter they have funded $85 billion in first mortgages, helping more than 382,000 people either purchase a home or refinance their existing mortgage. They originated $16 billion in mortgages to 102,000 low and moderate-income borrowers.

BofA has also extended $138.8 billion in new consumer credit during the period, compared with $115 billion in the fourth quarter 2008.

To help homeowners avoid foreclosure, BofA 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.

Later this month, the company will introduce the Bank of America Home Loans and Insurance brand to consumers.





Sources:
Bank of America
Newswire
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Thursday, 28 March 2024

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