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Mortgages boost Bank of America's profits
By TIMES WIRE Boosted by high mortgage income and increasing consumer deposits, Bank of America Corp. on Monday said its earnings increased nearly 17 percent in the first quarter. The nation's third-largest bank by assets said net income earnings were $2.18-billion, or $1.38 per share, compared with $1.87-billion, or $1.15 per share, a year ago. The earnings exceeded the $1.34 a share anticipated by a poll of analysts at Thomson Financial/First Call. Jim Hance, BofA's chief financial officer, told analysts during a conference call the bank was hopeful an economic rebound would continue and improve the bank's future performance. "First-quarter earnings releases are going to be key to overall earnings health, if you will, for corporate America," Hance said. "We're waiting to see that." The bank's expectations for an improved economy were bolstered by its growth in new checking accounts, which increased by more than 120,000 in the first quarter. It also saw a jump in debit card use, where purchase volume rose 14 percent over a year ago due to increased consumer activity. Analysts were watching the bank's credit quality closely because bad loans and problem credit lines tend to hit the bottom line during tough economic times. Bad loans and credit card losses hurt the bank, as it reported a 9 percent increase in net chargeoffs. Hance said the hit came from an increase in individuals filing personal bankruptcy and a rise in unemployment, affecting customers' ability to pay back loans. At the same time, the company's nonperforming assets decreased 15 percent, in part, because it shed a problem subprime lending business. "The credit quality numbers were a pleasant surprise," said Denis Laplante, analyst with Fox-Pitt, Kelton. "I still expect deterioration of credit over the next couple of quarters, but they seemed to be weathering the storm." The bank's shares fell 85 cents to $69.20. Also reporting earnings Monday was Citigroup, whose first-quarter income came in below analysts' expectations because of large write-offs of the bank's Argentine holdings. Citigroup, the nation's largest bank, said net income totaled $4.84-billion, or 93 cents a share, in the January-March period, up from $3.54-billion, or 69 cents a share, a year earlier. Excluding a number of special items -- including a gain from the initial public offering of Travelers Property Casualty Corp. stock and losses from the bank's Argentine holdings -- the company earned $3.86-billion, or 74 cents a share. That compared with year-earlier earnings of $3.66-billion, or 71 cents a share. Analysts surveyed by Thomson Financial/First Call had expected Citigroup to report earnings of 78 cents a share, excluding special items. Citigroup chairman and chief executive Sanford Weill said the results represented "exceptional results in the face of difficult economic conditions." Weill told a conference call with analysts he thought delinquencies and write-offs in both consumer and corporate loans were peaking and that "we're hopeful we'll sees these indices declining by the end of the year." He concluded: "We look for double-digit earnings increases in the year 2002." Merrill Lynch analyst Judah Kraushaar said in a special note to investors that "the key to Citigroup's success remains solid revenue growth and operating leverage." He maintained his "strong buy" rating, noting that after adjusting for the Argentina write-downs and an accounting change, earnings per share grew 15 percent in the first quarter compared with the year-earlier period. Citigroup said the write-offs and write-downs of Argentine holdings cost the bank $519-million, or 10 cents a share, in the first quarter. Loan loss reserves were raised $475-million, the bank said. Citigroup shares fell $1.18 at $45.92 on the New York Stock Exchange. -- Information from Knight Ridder Newspapers and the Associated Press was used in this report.
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From the Times Business report
From the AP
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