Posted on 20 Apr 2009
Bank of America Corp.'s posted first-quarter net income that more than tripled as a result of its Merrill Lynch acquisition, which contributed more than $3 billion to net income.
Chairman and Chief Executive Ken Lewis said that the company welcomed the profit amid the harsh economic environment, adding that "we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment."
Bank of America is considered particularly vulnerable to unemployment, which economists expect to continue to climb through this year. The condition of the company's large portfolio of credit-card loans could be a bellwether for the rest of the industry. Credit-card losses soared again during the quarter.
The company posted net income of $4.25 billion, or 44 cents a share, compared to $1.21 billion, or 23 cents a share, a year earlier. The latest results included $765 million in restructuring and merger charges compared with $170 million in charges a year earlier.
Revenue more than doubled to $35.76 billion, mainly from the addition of Merrill Lynch. Possible write-downs tied to Merrill Lynch's securities and the integration of the firm with the bank have been closely watched by analysts. Excluding merger costs, Bank of America said Merrill earned $3.7 billion.
Credit-loss provisions more than doubled to $13.38 billion and climbed from the prior quarter's $8.54 billion, while the net charge-off rate rose to 2.85% from 1.25% a year earlier and 2.36% in the fourth quarter. Credit-card losses increased to 8.62% from 5.19% and total nonperforming assets jumped to 2.65% from 0.9% in the prior year and 1.96% in the fourth quarter.
The company said it extended $183.1 billion in new credit during the quarter, with $70.9 billion to commercial non-real-estate intents and another $85 billion for mortgages. Bank of America has said it is beefing up its mortgage operations to meet demand that has occurred in recent months as rates fell to historic lows. But most mortgage activity industrywide is for refinancings, not home purchases.