Expense Controls Help Boost 1st-Quarter Earnings at B of A

BankAmerica Corp., the nation’s third-largest bank, reported strong first-quarter earnings on Wednesday, helped by revenue growth and expense controls.

Meanwhile, Great Western Financial Corp. said its net earnings were hurt by merger-related costs.

BankAmerica, California’s No. 1 bank, reported earnings of $780 million, or $2.05 a share, for the first quarter, compared with $720 million, or $1.79 a share, a year ago.

“We continue to focus on the fundamentals, including effective operating leverage, prudent risk management and disciplined capital management,” said BankAmerica Chairman David Coulter.

The earnings topped Wall Street expectations, but BankAmerica’s stock fell $2.25 to close at $103.875 on the New York Stock Exchange.

Brown Bros. Harriman analyst Raphael Soifer said that while the earnings were good, they were helped in part by the sale of $3 billion worth of residential first mortgages.

“BankAmerica was better than expected, but the main reason was due to a gain on the sale of a mortgage portfolio,” Soifer said.

On a conference call, BankAmerica Chief Financial Officer Mike O’Neill said there was some interest in its consumer financial unit, Security Pacific Financial Services, which is up for sale.

Last month, BankAmerica said it planned to sell the unit, with loan assets of $1.4 billion, excluding its executive and professional business unit, which will not be sold.

O’Neill cited improvements in many sectors, but said increases in net credit losses and delinquencies were troubling.

“We saw both our net credit losses and delinquencies on cards go up,” he said. “Our increase is less than the industry’s, but still somewhat troubling.” Separately, Chatsworth-based Great Western said its net earnings for the first quarter were reduced by merger-related costs totaling $33.7 million.

Great Western has agreed to merge with Washington Mutual Inc. and has rejected a takeover bid by rival H.F. Ahmanson & Co.

Great Western posted first-quarter net income of $65.7 million, or 44 cents per share, compared with $71.3 million, or 47 cents per share, a year earlier. Great Western stock fell 50 cents to close at at $40.125 on the NYSE.