Bank of America beats forecast despite crunch
CHUCK BURTON / Associated Press
CHARLOTTE, N.C. - Bank of America Corp. yesterday became the latest in a string of big banks whose second-quarter earnings, while hurting from the impact of the credit crisis, still managed to beat Wall Street expectations. The nation's second-largest bank by assets said its profit fell 41 percent as losses in its struggling mortgage operations were offset by business in other parts of the company. But it easily beat Wall Street estimates, and its stock rose $1.07 or about 4 percent, to close at $28.56. Bank of America employs 8,000 in the Philadelphia area, where it held 6 percent of local deposits as of June 2007, the latest period for which figures are available. Four of the nation's five biggest banks have now reported better-than-estimated results. JPMorgan Chase & Co. and Wells Fargo & Co. reported smaller-than-expected profit declines, while Citigroup Inc. had a milder-than-expected $2.5 billion loss.Wachovia Corp., the nation's fourth-largest bank, is expected to report earnings today. The Charlotte-based bank has said it may post a $2.6 billion to $2.8 billion loss for the quarter. It said last night it was leaving the wholesale-mortgage-lending business. Starting Friday, it will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector. "Most of our businesses are performing well even with the current state of the economy and the problems with housing," Bank of America chief executive officer Ken Lewis said during a call with analysts. "However, as I said, we are not in denial. Credit losses are still going up, but given what we see today, they are manageable." Bank of America, also based in Charlotte, reported net income of $3.41 billion, or 72 cents per share, on $20.32 billion in revenue, in the April-June period. That compared with net income of $5.76 billion, or $1.28 per share, on $19.63 billion in revenue a year earlier. Analysts on average expected a profit of 53 cents per share on $18.37 billion in revenue. Bank of America said credit quality continued to weaken during the quarter, particularly in markets that experienced the most significant home-price declines. The company more than tripled the amount set aside for bad loans to $5.83 billion, up from $1.81 billion a year ago. The figure had surged to $6.01 billion in the first quarter.