BofA’s 2nd-Quarter Profit Rises 41%, but Shares Drop
Bank of America Corp., the third-biggest U.S. bank, said Wednesday that second-quarter profit rose 41%, boosted by consumer lending and the purchase of FleetBoston Financial Corp.
Net income climbed to $3.85 billion, or $1.86 a share, from $2.74 billion, or $1.80, a year earlier, the Charlotte, N.C.-based company said.
Chief Executive Kenneth Lewis, 58, said the bank was “ahead of schedule” in integrating FleetBoston, which it bought for $48 billion in April. Fleet helped it add more credit-card and checking customers and increase loans to consumers. Sales of debt securities bolstered profit by $800 million, more than double the year-earlier level.
“Revenues were pretty good, and the outlook for commercial loans was optimistic,” said Thane Bublitz, who helps manage about $62 billion, including 1.7 million Bank of America shares, at Thrivent Financial for Lutherans in Appleton, Wis. “The biggest challenge for them is getting more revenue growth as they’re cutting costs and restructuring.”
Results from a year earlier do not include FleetBoston. Profit would have increased 18% had the companies been combined in last year’s second quarter, according to a company filing with the Securities and Exchange Commission.
BB&T; Corp. and SunTrust Banks Inc., two of Bank of America’s competitors in the Southeast, reported higher second-quarter profits this week because of increases in consumer lending and fees.
Bank of America was expected to earn $1.74 a share, according to the average estimate of 20 analysts surveyed by Thomson First Call.
Its shares fell 83 cents Wednesday, to $84.30, on the New York Stock Exchange.
Pretax merger costs of $125 million cut profit by 4 cents a share, the company said. The company also set aside $300 million for litigation related to the settlement of an Enron Corp. lawsuit and other unspecified matters.
Bank of America’s revenue increased 35% to $13.2 billion. Lending income rose 40% to $7.75 billion, and fee income rose 28% to $5.44 billion.
