Updated from 7:32 a.m. EDT with new stock price
Bank of America
beat second-quarter estimates, becoming the latest big bank to shrug off worries about losses tied to the slumping housing market.
The Charlotte, N.C., bank made $5.76 billion, or $1.28 a share, for the quarter ended June 30, up from the year-ago $5.48 billion, or $1.19 a share. Revenue rose to $19.56 billion from $18.22 billion a year earlier.
Analysts surveyed by Thomson Financial were looking for a profit of $1.20 a share on revenue of $18.58 billion.
The bank's stock was recently trading at $49.15, down 21 cents, or .41%, on the day.
"Bank of America, with its diverse business model, was able to continue attractive earnings growth despite challenging headwinds," said CEO Ken Lewis. "Our businesses are doing a good job of attracting new customers and expanding our relationships with existing clients. Our investments in a number of businesses such as capital markets, mortgage and services for the affluent, in addition to the equity investment gains produced in the current environment, are generating results that more than offset spread compression impacting virtually all of our businesses and the trend toward more normalized credit costs."
Investment banking revenue rose 26% from a year ago and retail product sales added 8%.
Overall credit quality remained sound, but continues to move toward more normalized levels. Compared with the second quarter of 2006, net charge-offs increased primarily reflecting seasoning and a trend toward more normalized loss levels in the consumer and small business portfolios as well as lower commercial recoveries. Provision expense in the second quarter rose from a year ago due to higher net charge-offs as well as increased reserves for portfolio seasoning and higher loss expectations in the small business and home equity portfolios reflecting the growth of these businesses.
Provision for credit losses was $1.81 billion, up from $1.24 billion in the first quarter and $1.01 billion in the second quarter of 2006.
Total managed net losses were $2.77 billion, or 1.30 percent of total average managed loans and leases, compared with $2.57 billion, or 1.26 percent, in the first quarter and $1.81 billion, or 0.98 percent, in the second quarter of 2006.
The news comes as big banks such as
report varying levels of stress tied to rising defaults and deliquencies by homebuyers with poor credit histories. JPMorgan shares fell Wednesday after credit losses jumped by $100 million, while WaMu rose after its mortgage business showed signs of recovering from last quarter's near collapse.