B of A announces 10 percent jump in second quarter earnings

Paul Nowell

Monday, July 15, 2002 | 11:13 a.m.

CHARLOTTE, N.C. -- Barely beating Wall Street's expectations, Bank of America Corp. today reported a 10 percent increase in its second-quarter earnings as tightened cost controls overcame decreases in revenue from trading and stock market investments.

The bank, the second-largest in Nevada behind Wells Fargo, earned $2.22 billion, or $1.40 per share. That compared with $2.02 billion, or $1.24 per share, in the same three months in 2001.

Analysts surveyed by Thomson Financial/First Call had expected Bank of America to earn $1.39 share in the quarter.

"Given market conditions, we were especially pleased to see solid growth in our investment banking fees," said Ken Lewis, chairman and chief executive officer. "Diligent expense management has complemented our efforts to grow revenue across the company and has enabled us to continue to deliver attractive results to our shareholders."

Shares of Bank of America's stock closed at $68.61 a share Friday on the New York Stock Exchange.

Expenses were down 7 percent, or $4.49 billion from the same quarter last year. The efficiency ratio improved to 51.34 percent.

However, credit quality continued to be affected by the economic slowdown and uncertain market conditions. That led Bank of America to increase its provision for credit losses to $888 million, up $88 million from a year ago.

Net charge-offs were $888 million, or 1.06 percent of loans and leases, up from $787 million, or 0.82 percent, a year ago. The increase in charge-offs was primarily concentrated in the consumer bank card portfolio and the impact of the rise in unemployment and personal bankruptcy filings, the bank said.

Commercial net charge-offs increased $33 million, or 7 percent, from a year ago.

Non-performing assets were $4.9 billion, or 1.45 percent of loans. That was down 20 percent from $6.2 billion, or 1.63 percent, a year earlier. The decrease was primarily due to the exit of the subprime lending business and the company's risk management program.