B of A profit improves on loans

Wednesday, April 14, 2004 | 11:09 a.m.

BLOOMBERG NEWS

CHARLOTTE, N.C. -- Bank of America Corp., the second- biggest U.S. bank and the largest in Nevada, today said first-quarter profit rose 11 percent as consumer lending increased and fees from money management and investment banking rose.

Net income increased to $2.68 billion, or $1.83 a share, from $2.42 billion, or $1.59 a share, according to a company statement. The Charlotte-based bank said revenue rose 6.9 percent to $9.5 billion.

In the Las Vegas area, Bank of America operates 47 branches and has 1,864 employees. Two of those branches were added in the first quarter as part of an effort announced last summer to build 19 new branches in two years.

Bank of America Chief Executive Officer Kenneth Lewis, 57, has emphasized consumer lending, which increase 20 percent in the quarter. The bank opened almost twice as many checking accounts as a year earlier and more than quadrupled new savings accounts.

Quarterly activity in Las Vegas mirrored that of the companywide results.

"Generally we have had lots of loan and deposit business," said George Smith, president of Bank of America's Nevada operations. "That's kind of a reflection of the bank as a whole."

He added that the bank is coping with the new state banking taxes handed down by the 2003 Legislature.

"It may be impacting earnings a bit, but we are in such a robust market we are OK with it," Smith said.

Industry analysts also credited consumers nationwide with driving the strength of the banking sector.

"The consumer remains strong and the demand for home-equity loans and credit cards continues," said Hilary Hayes, who helps manage $3.75 billion, including Bank of America shares, at SBSF Capital Management in New York. "It's been a consumer-driven recovery, not just in this industry but everywhere."

Investment banking profit rose 6.9 percent.

Bank of America shares fell 41 cents to $80.09 as of 9:45 a.m. in New York Stock Exchange composite trading today. The stock had gained 13 percent in the past year.

The bank, second in size by assets after Citigroup, was expected to earn $1.80 a share, excluding costs of 16 cents to settle a mutual-fund trading probe, according to the average estimate of 17 analysts polled by Thomson Financial. Citigroup reports earnings tomorrow.

Profit in the quarter didn't include results from the bank's $47 billion takeover of FleetBoston Financial Corp. this month.

With FleetBoston, Bank of America has 5,700 consumer offices in 29 states, more than any U.S. bank. Its consumer business has about 33 million customers and the bank runs the nation's fifth-biggest credit-card issuer.

The bank plans to increase mortgage lending in the U.S. Northeast and sell more credit cards through Fleet's 1,460 branches as it trims costs as part of the FleetBoston purchase. Some of the cost savings will come from the elimination of 12,500 jobs. Expense reductions may reach $1.38 billion, more than an earlier projection of $1.1 billion, Chief Financial Officer James Hance, 59, said in an interview.

Bank of America agreed to settle allegations of improper mutual-fund trading last month with the Securities and Exchange Commission and New York Attorney General Eliot Spitzer's office. Pretax costs related to the settlement in the quarter were $275 million.

The company still faces probes into allegations of biased stock research and for its role in financing Parmalat Finanziaria SpA, the bankrupt Italian food company. FleetBoston separately paid $140 million to settle a mutual-fund trading investigation.

Bank of America wrote off $720 million in bad loans, a 14 percent decline from a year earlier. Its losses included $106 million in loans related to Parmalat. The bank also said it wrote down $29 million in derivatives linked to the food company.

The company's global corporate and investment bank earned $463 million, 1 percent more than a year earlier. Investment banking fees rose to $404 million as it boosted mergers advice and stock offerings in the quarter.

The Las Vegas Sun

contributed to this story.