B of A earnings up more than 30 percent

Tuesday, Oct. 14, 2003 | 11:02 a.m.

SUN STAFF AND WIRE REPORTS

CHARLOTTE, N.C. -- Bank of America Corp. said today that its profit rose more than 30 percent in the third quarter, driven by across-the-board gains in the bank's major businesses.

Net income totaled $2.92 billion, or $1.92 per share, in the July-September period, up from $2.24 billion, or $1.45 per share, in the third quarter of 2002.

The gains exceeded Wall Street's expectations. Analysts surveyed by Thomson First Call projected the bank's profit at $1.69 a share.

George Smith, president of Bank of America's Nevada operations, said the corporate results mirrored the state's performance.

"Nevada is very strong in a lot of areas," Smith said. "They really matched the performance of the bank with good loan and deposit growth."

Bank of America reported loans of $373 billion, up 9 percent from the same 2002 quarter. Deposits grew 8 percent to $409 billion and total assets were up 12 percent to $747 billion.

Still, Smith indicated that business could be better with improved performance in the commercial lending market, which has struggled to shake off the effects of a weak economy.

"In general the commercial banking market nationally is seeing more demand, but we are seeing some fence sitting," he said. "There are maybe some capital improvements on hold. It got better in the third quarter but there is still room for some improvement."

While the home mortgage market continues at a feverish pace, Smith added that banks also are getting less boost from the prolonged low interest rate environment.

"In the commercial market, it's been so low for so long, we're probably not seeing as much benefit as we were," Smith said, explaining that the majority of commercial borrowers have already taken advantage of the low rates.

Still, Bank of America reported a 19 percent increase in commercial banking earnings from a year ago.

Bank of America has 42 Las Vegas-area branches and 1,750 employees in the Las Vegas area. In July the bank announced plans to build 19 new free-standing branches in the Las Vegas Valley over the next three years.

The recent move by the Nevada Legislature to hit banks with a 2 percent payroll tax and $7,000 per branch in annual fees will not stifle the growth plans, Smith said.

"The way that came out is not going to impact (our plans)," he said. "We're going to be OK."

In midmorning trading, shares changed hands at $82.29, up 55 cents, on the New York Stock Exchange.

"Deeper customer relationships and better retention are fueling our strong revenue growth and record profits this quarter," Ken Lewis, chairman and chief executive, said in a statement accompanying the report.

During the quarter, the Charlotte, N.C.-based bank put $100 million in reserve to fund the ongoing investigation of its Nations Funds mutual fund business. The bank said it also increased its litigation reserve by $75 million to cover other cases.

Last week, Bank of America said it will establish a restitution fund for shareholders of its Nations Funds who may have lost millions of dollars because of alleged improper trading that gave a hedge fund advantage over other investors.

The hedge fund, Canary Capital Management LLC, and its managers agreed to pay $30 million in restitution for profits generated from improper trading, plus a $10 million penalty to settle allegations lodged by New York Attorney General Eliot Spitzer.