Bank of America Bad-Loan Provisions at 2007 Level
NEW YORK (AP) - Bank of America said Thursday that it set aside less money to cover bad loans in the first three months of the year than it has since before the 2008 financial crisis.
The bank said it earned $653 million in the first quarter, or 3 cents per share. That included an accounting charge of 28 cents per share because the value of Bank of America's debt rose.
Without the accounting charge, Bank of America beat the estimate of 9 cents by Wall Street analysts polled by FactSet, a provider of financial data. The stock climbed in premarket trading.
Banks have to record an accounting charge when the value of their debt rises on the open market because it would cost the banks more in theory to buy back that debt.
The bank said it put aside $2.4 billion for bad loans, down from $3.8 billion in the same quarter a year ago and the lowest since the third quarter of 2007, a year before the financial crisis.
The bank serves about half of American households and is a good barometer of the economy. It was a clear sign that the Americans were getting their household finances in order and paying down debt.
Bank of America's real estate business narrowed its losses in the quarter to $1.1 billion from $2.4 billion a year ago. Revenue from real estate increased slightly, to $2.7 billion, and the bank said it issued more mortgages and refinanced more loans.
The bank is also saving money by retiring expensive debt.
"Our strategy is paying off," CEO Brian Moynihan said.
Revenue fell 17 percent to $22.5 billion. Analysts expected $22.8 billion.
Mortgages were a big driver of earnings at Bank of America's rivals Wells Fargo and JPMorgan Chase in the first quarter as the housing market starts to recover.
Mortgage rates hit a historic low in February, and job growth has mostly improved in recent months. The government also expanded a program that helps Americans with troubled home loans to refinance.
Bank of America's income from its bank customers fell $587 million to $1.5 billion. It collected less in fees from stores processing debit card transactions because of new regulations that limit those fees.
The bank's income from investment banking was flat at $1.6 billion. Revenue fell 20 percent due to lower fees, as stock trading volume fell.