IMGCAP(1)]
Bank of America Corp.'s first-quarter net income more than tripled as the company said its Merrill Lynch acquisition contributed more than $3 billion to net income.
Analysts have had all eyes on Merrill, looking for everything from possible write-downs on its securities to how the integration is going.
Shares, though, were down 4.9% to $10.08 in active premarket trading. Through Friday's close, the stock has more than doubled in the last three months but has still lost about three-quarters of its value since a year ago.
Bank of America is considered particularly vulnerable to unemployment, and the condition of its mammoth portfolio of credit-card loans could be a bellwether for the rest of the industry. Credit-card losses soared again during the quarter.
Chairman and Chief Executive Ken Lewis on Monday said the company welcomed the news of a profit amid the economic environment, adding "we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment."
The company posted net income of $4.25 billion, or 44 cents a share, compared with net income of $1.21 billion, or 23 cents a share, a year earlier. The latest results included $765 million in restructuring and merger charges, compared with $170 million in charges a year earlier.
Revenue more than doubled to $35.76 billion, mainly from the addition of Merrill Lynch.
Analysts surveyed by Thomson Reuters expected earnings of 4 cents on revenue of $27.13 billion.
Excluding merger costs, Bank of America said Merrill earned $3.7 billion.
Credit-loss provisions more than doubled to $13.38 billion and climbed from the prior quarter's $8.54 billion, while the net charge-off rate rose to 2.85% from 1.25% a year earlier and 2.36% in the fourth quarter. Credit-card losses increased to 8.62% from 5.19% and total nonperforming assets jumped to 2.65% from 0.9% in the prior year and 1.96% in the fourth quarter.
The company said it extended $183.1 billion in new credit during the quarter, with $70.9 billion to commercial non-real-estate intents and another $85 billion for mortgages. Bank of America has said it is beefing up its mortgage operations to meet demand that has occurred in recent months as rates fell to historic lows. But most mortgage activity industrywide is for refinancings, not home purchases.
