There has been so much focus on the risks banks face from the U.S. energy market that it has been easy to forget the global economy is as dicey as ever.

Bank of America got a tough reminder in the first quarter.

Its earnings report Thursday showed how much B of A is wrestling with weakness on the international front.

If not for a heavy hand with expense cuts and the benefit of broad domestic loan growth, the year-over-year decline in profit at B of A really could have been a lot worse.

Net income in B of A's global banking segment fell 22% in the first quarter, to about $1.1 billion, compared with the year-earlier period. The global segment's credit-loss provision ballooned to $553 million from $96 million, primarily because of nonperforming energy loans.

B of A's global banking segment, which operates out of New York, London and Hong Kong, includes commercial lending and leasing for large-cap and midsize companies, treasury management and other services, and investment banking services. The segment generated about $17 billion of revenue last year.

The global banking segment's performance, combined with a massive downturn in trading revenue, resulted in Bank of America's overall first-quarter net income falling 18% to about $2.2 billion.

Thankfully for B of A, it posted growth in virtually all categories of domestic lending, including commercial and industrial loans, auto loans, credit cards and commercial real estate.

"The U.S. economy is OK, but not great," said Ryan Kelley, a portfolio manager for the Hennessy Large Cap Financial Fund, which owns about 220,000 Bank of America shares. "The fact they can be growing loans in this environment is pretty good."

New auto loan originations rose 35% to $7.7 billion. New credit card accounts created rose 4% to 1.2 million. New originations of home equity lines of credit rose 19% to $3.8 billion.

The big exception, of course, was the energy sector. B of A raised its reserves for energy loans by $525 million to $1 billion, representing about 4.6% of its exposure to the sector. Net chargeoffs for energy loans rose by $17 million to $102 million.

Even with potential ongoing weakness in the energy sector, Chief Financial Officer Paul Donofrio said he thinks B of A has set the correct level of reserves for its energy exposure.

"We think the reserves we have right now are the right reserves for our portfolio," Donofrio said during a Thursday morning conference call.

The long-running effort by Chairman and Chief Executive Brian Moynihan to contain expenses also appeared to pay off. Noninterest expense in the first quarter fell 6% to $14.8 billion. Expenses were $150 million lower in the quarter than the estimate of Jeffery Harte, an analyst at Sandler O'Neill.

"It's just good, solid expense discipline," Donofrio said. "Expenses came down in nearly every category."

Bank of America has been selling expensive branches and cutting employees in an effort to lower its expense base. While its efficiency ratio remains high compared to peers, standing at 75.11% in the first quarter, it was little changed from a year ago.

Part of the reason for the cost savings is that B of A is making progress in moving people out of branches and into using mobile banking, Moynihan said during the call.

"We went from 6,100 branches down to 4,600 or whatever today," Moynihan said. "The customer base has increased by 10% and the volume of deposits is up by I think 30% to 40%, and checking deposits are up dramatically."

B of A's shares had fallen about 13% over the 12-month period through Wednesday. But the stock price could rally on the first-quarter earnings report, Kelley said. Indeed, B of A shares had risen about 2% in Thursday afternoon trading, to $14.09.

If Bank of America officials "can continue to reduce their expenses and get through relatively well their issues in the energy sector, they could start to appear attractive for the long term," Kelley said.

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