Bank of America earnings surge

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Bank of America earnings surge

No. 3 bank sees improved results due to consumer banking growth, Fleet acquisition; stock rallies.

April 18, 2005: 8:27 AM EDT

NEW YORK (Reuters) - Bank of America Corp. , the No. 3 U.S. bank, Monday said first-quarter profit surged 75 percent, benefiting from consumer banking growth, securities gains and the acquisition of FleetBoston Financial Corp.

Bank of America (Research) shares rose over 2 percent in before-hours trading from Friday's close of $44.28 on the New York Stock Exchange. The stock has fallen 6 percent this year, compared with a 9 percent drop in the Philadelphia KBW Bank Index.

Net income for the Charlotte, North Carolina-based company rose to $4.7 billion, or $1.14 per share, from $2.68 billion, or 91 cents per share, a year earlier. Per-share figures reflect a 2-for-1 stock split.


Excluding $112 million of merger and restructuring charges, profit was $1.16 per share. On that basis, analysts on average were expecting 97 cents, according to First Call.

Results included $659 million of one-time gains on the sale of debt securities, roughly equal to 16 cents per share. Trading profit at the investment bank more than doubled.

"I am very pleased with the continued momentum of our businesses," Chief Executive Kenneth Lewis said in a statement. "We saw the strongest commercial loan growth in many quarters across our company and deposit growth continues to be robust."

Revenue increased 47 percent to $14.22 billion, topping analyst forecasts for $13.79 billion. Lending income increased 35 percent to $8.07 billion, while fee income jumped 65 percent to $6.15 billion. Noninterest expense rose 30 percent to $7.06 billion.

Results from Bank of America and other companies helped soothe some worries about a possible weak quarterly earnings season.

"There are no shockers in earnings today," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. "Because the market is oversold, these results will help to improve confidence."

Bank of America added a net 759,000 savings and 610,000 checking accounts, both records, and 1.34 million credit card accounts.

The first quarter was the last when year-earlier comparisons won't include results from Fleet, which Bank of America bought in April 2004 for $48 billion. Merger-related savings totaled $437 million, and Bank of America eliminated about 1,000 jobs in the quarter.

Profit surges
Consumer and small-business banking earned $1.9 billion, up 77 percent, on revenue of $6.96 billion.

Business and financial services banking nearly doubled to $1.12 billion on revenue of $2.73 billion. Profit from wealth and investment management, including mutual funds, more than doubled to $576 million on revenue of $1.79 billion.

The investment bank last quarter took in $721 million, up 59 percent, on revenue of $2.63 billion. Trading account profit more than doubled to $704 million from $267 million.

Loans and leases rose 41 percent to $529.5 billion, deposits rose 45 percent to $630 billion and assets increased 52 percent to $1.21 trillion.