NEW YORK (Reuters) - Bank of America Corpon Monday posted a first-quarter profit, as a rebound in mortgage banking activity and higher revenue from the acquisition of Merrill Lynch & Co offset rising credit losses.
The results, however, are unlikely to stem calls for Chief Executive Kenneth Lewis to be ousted, or at least give up his job as chairman, in the furor over defections of top talent at Merrill, the awarding of big bonuses to Merrill workers, and a share price that has fallen by 73 percent over the past year.
Net income applicable to common shareholders of Bank of America rose to $2.8 billion, or 44 cents per share, from $1.02 billion, or 23 cents, a year earlier. Net revenue more than doubled to $35.76 billion.
The following is reaction from industry analysts and investors:
TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT
“The stock’s not acting well here, but the backdrop is that the futures are down overall...I think the revenues and the results from Merrill certainly are positive and favorable...It’s a big provision for credit losses and that’s good that they’re taking a large provision for that. There were charge offs as well.”
“It seems like BofA is cleaning itself up and it does continue to function well and do business but the initial market reaction is negative I think because it was a big provision and with all the moving parts its hard to say how it’s going to be. It’s not the obvious positive surprise you seem to have seen from the other banks but BofA is in one of the weaker situations especially with the Merrill deal — but Merrill was a big positive contribution here.”
“The initial reaction is a bit negative here but I think it really takes time to go through all the results and the call as always will be key. The tone that management sets — not so much for last quarter but the current quarter, and how business has been over the last several months — that’s very key.”
MICHAEL HOLLAND, FOUNDER, HOLLAND & CO, NEW YORK:
“There are plenty of one-time items here. Let’s start with $45 billion of low-cost government money. There are trading desk profits that may not be repeatable. But the headline number here is still a really really healthy number given where expectations were just a few months ago. Both Countrywide and Merrill provided surprises to the upside, and their integration being on schedule is great for the franchise.”
Reporting by Dan Wilchins and Elinor Comlay