Bank of America Beats Estimates in Noisy Quarter (Update 2)

• Bank of America reports first-quarter earnings per share of $0.03, valuation adjusted $0.28
• Revenue decreased 10.3% from the previous quarter, to $22.5 billion
• Analysts were expecting EPS of $0.12 on revenues of $22.51 billion

NEW YORK (TheStreet) -- Bank of America (BAC) reported first quarter earnings that beat analyst estimates, though mortgage issues continued to be of concern to at least one analyst.

First quarter earnings of $0.03 per share, or $0.28 on a valuation-adjusted basis, beat analyst estimates of $0.12. However, stripping out one time gains produces a number closer to $0.17 or $0.18, FBR Capital Market analyst Paul Miller told Bloomberg Television on Thursday morning.

Particularly concerning to Miller were ongoing mortgage-related legal disputes from Government Sponsored Entities Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). The GSEs have been pushing the bank to repurchase mortgage securities that contain loans that were fraudulent or did not meet the criteria originally promised to investors.

Bank of America has worked through just $1 billion out of $5 billion in claims from the GSEs, according to Miller, a pace he argues is troublingly slow.

The bank is "not giving us a lot of faith on what those future liabilities are," Miller said.

Bank of America has by far the greatest exposure to mortgage-related problems resulting from the U.S. housing crisis. Such issues are expected to cost the bank some $20-30 billion.

Overall, Bank of America's revenues of $22.5 billion were in line with analyst expectations and lower than $25.1 billion in the previous quarter and $27.1 billion a year ago. Taking away debt valuation adjustments, however, revenues were $27.3 billion, compared to $26.4 billion last quarter and $28 billion a year ago.

"With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year," said CEO Brian Moynihan.

-- Written by Dan Freed in New York.

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