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BofA posts stronger-than-expected earnings

Bank of America says it earned $2.83 billion during the first quarter as strong trading revenue helped the bank offset continuing losses on consumer loans.
/ Source: The Associated Press

Bank of America said Friday its first-quarter earnings rose 0.7 percent to $2.83 billion as strong trading revenue helped the bank offset continuing losses on consumer loans.

The bank reported a $2.1 billion loss in its home mortgage business, but said its other consumer loan businesses were showing signs of healing.

Bank of America's results after payment of preferred stock dividends are up slightly from $2.81 billion a year ago. They surpassed expectations and provided further evidence that the banking industry and the economy are recovering. JPMorgan Chase & Co. on Wednesday also reported improvements in its consumer loan business, and said continuing credit losses were offset by income from trading.

Bank of America set aside $9.8 billion to covered soured loans during the quarter, down 3 percent from $10.1 billion the previous quarter. A year earlier, it had set aside $13.4 billion. Many analysts predict loan losses should peak some time in the first half of 2010.

CEO Brian Moynihan said in a statement, "the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy." JPMorgan Chase also reported that it saw signs of improvement in the economy.

Still, home mortgages remain a trouble spot for Bank of America, the nation's largest mortgage servicer. Although its set aside less money for overall loan losses, it increased the amount set aside for home mortgage losses, to $3.6 billion, as its mortgage losses widened. Home loans were the only one of Bank of America's six major business units to show a loss for the quarter.

The bank said losses in other consumer loans portfolios, including credit cards, fell during the quarter.

Bank of America reported that income from its global banking and markets business, which includes the Merrill Lynch investment banking operations, rose $709 million to $3.2 billion.

Charlotte, N.C.-based Bank of America earned 28 cents per share after paying preferred dividends. A year ago, it earned $2.81 billion, or 44 cents per share. Analysts expected profit of 9 cents per share in the most recent quarter, according to Thomson Reuters. Revenue totaled nearly $32 billion in the quarter.

Bank of America's stock rose 1.5 percent to $19.78 in pre-opening trading, a level it hasn't reached since November 2008.

The bank was among the hardest hit during the credit crisis, and received $45 billion in bailout funds from the federal government. Bank of America said in December it had repaid the money. Like nearly all banks in the country, the company faced waves of loan defaults as more customers fell behind and investments soured.

Earlier in the week, JPMorgan Chase said it earned $3.3 billion in the first quarter even as consumers continued to struggle to repay loans. The bank said it set aside $7 billion to cover bad loans during the most recent quarter. Its investment banking division and other businesses enabled it to more than overcome the ongoing weakness in lending.

Citigroup Inc. reports earnings Monday.

While the bank is still facing big losses from failed consumer loans, but CEO Brian Moynihan said there have been clear improvements in the economy.

Bank of America's business relationships extend to about 59 million customers, including individual consumers and businesses. That breadth makes BofA particularly vulnerable to high unemployment, which currently sits at 9.7 percent