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Bank of America's Moynihan Delivers

Bank of America's first-quarter report stole more honey from the bears on Friday in a strong start to CEO Brian Moynihan's tenure at the top.



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Bank of America's

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first-quarter report stole more honey from the bears on Friday in a strong start to CEO Brian Moynihan's tenure at the top.

Showing marked improvement in credit quality and core earnings power, Bank of America earned $3.2 billion, or 28 cents a share, during the first quarter. Its profit was down 25% from the year-ago period, but did represent a swing back into positive territory after a fourth-quarter loss. The earnings were also far higher than the 9 cents per share in profit that analysts had expected, on average, according to

Thomson Reuters


In pre-market trading, Bank of America stock was up 1.4% at $19.76. As of Thursday's close, the stock has climbed 88% over the past 52 weeks and 29% so far this year, as the economic recovery has begun to take shape. The results followed

JPMorgan Chase's

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stellar report on Thursday, which showed a 55% jump in profit on much lower credit costs.

Bank of America's charge-offs continued to climb last quarter, but its provision for future credit losses declined sharply, indicating better times ahead. The Charlotte, N.C.-based firm discarded $10.8 billion worth of trashy loans in the first three months of the year, up from $8.4 billion the previous quarter, and $6.9 billion a year ago. The provision fell to $9.8 billion, down $305 million on a sequential basis, and $3.6 billion on an annual basis.

Bank of America's nonperforming loan ratio fell, to 3.69% from 3.98% the previous quarter, though the nominal value of bad loans rose, as did the broader allowance for loan and lease losses. The ratio was down largely because Bank of America extended much more credit: Its loan and lease book increased 8%, or $76 billion, during the quarter as the firm expanded its mortgage portfolio, commercial real estate book and other consumer credit items.

"With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy," Moynihan said in a statement.

In his first quarter at the helm of the nation's largest bank, Moynihan made good on several pledges. He has focused largely on two goals: Improving Bank of America's standing with retail depositors through several customer-friendly initiatives, and driving growth in its investment banking and wealth management divisions.

Though Bank of America hadn't been known for its capital markets prowess, the tide has turned over the past 15 months as a combined entity with Merrill Lynch. Last quarter, Bank of America posted record sales and trading revenue, and ranked No. 2 in global league tables, behind JPMorgan.

Overall revenue, net of interest expense, climbed 27% from the fourth quarter, to $32.3 billion. Revenue was down 11% from the year-ago period, when the mortgage-refinancing wave and favorable market adjustments to Merrill's structured notes boosted results. The sale of an equity investment also weighed down revenue last quarter, but Moynihan indicated that core results were strong.

"Our customers - individuals, companies, and institutional investors - increasingly see the value of our integrated capabilities," Moynihan said. "We also are seeing ample indications that those integrated capabilities hold promise for long-term shareholder value."

-- Written by Lauren Tara LaCapra in New York