Bank Of America Earnings 1Q 2012: Debt Accounting Charges Take Toll

* Q1 EPS 3 cents vs 17 cents a year earlier

* Accounting charges hurt results

* Shares up 1.8 pct in early trading

By Rick Rothacker

April 19 (Reuters) - Bank of America Corp posted a better-than-expected first-quarter profit on Thursday, as the second-largest U.S. bank saw credit quality improve and capital markets activity rebound after slowing at the end of 2011.

The bank joined rivals such as JPMorgan Chase & Co and Citigroup Inc that have all benefited from signs of strength in the U.S. economy and more activity in the capital markets as fears about the European debt crisis eased.

Bank of America said its provision for credit losses declined to the lowest level since the third quarter of 2007 and sales and trading revenue, excluding an accounting charge, was the highest since the 2008 acquisition of Merrill Lynch.

"In general it shows nice improvement across the board," said Joe Terril, president of Terril & Co. "I think the thing I am most pleased with just at first glance is continued improvement in the loan portfolio."

Bank of America's shares rose 1.8 percent to $9.10 in early trading on the New York Stock Exchange.

The shares are up 60 percent this year after falling 58 percent in 2011. The bank passed the Federal Reserve's latest stress test in March, shifting investor concerns from its capital needs to its ability to increase earnings in a time of low interest rates and increased regulation.

Separately on Thursday, Morgan Stanley also reported better-than-expected results helped by strong trading revenue.


ACCOUNTING CHARGE

Bank of America's first-quarter net income was $653 million, or 3 cents a share, down from $2.05 billion, or 17 cents per share, a year earlier.

Revenue declined to $22.3 billion from $26.9 billion.

The bank reported charges of $4.8 billion related to changes in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.

Excluding debt valuation adjustments, it earned 31 cents a share.

Analysts' average earnings estimate was 12 cents per share, according to Thomson Reuters I/B/E/S. Bank of America said analysts typically do not include debt valuation adjustments in their estimates.

The Charlotte, North Carolina-based bank took a loan-loss provision of $2.4 billion, compared with $3.8 billion a year ago.

In its capital markets operations, Bank of America reported sales and trading revenue of $3.8 billion, up from $1.5 billion in the fourth quarter, but down from $4.6 billion a year ago.

The bank's Tier 1 common equity ratio -- comparing its core equity capital to its risk-weighted assets -- rose to 10.78 percent from 9.68 percent in the 2011 fourth quarter as it issued shares to employees, shed assets and accumulated earnings.

Comments

[hk usp 45]

11:41 PM on 04/19/2012

Big deal....Most minorities, in the US, do not have photo id.

[B Bleue]

02:39 PM on 04/19/2012

BANK of AMERICA, CHASE, LEHMAN BROS and GOLDMAN SACHS are some of the most diabolical financial institutions ran ... they, along with a few other [some fallen] lenders, were the driving forced behind the popcorn-billionaire-mortgage-paper aka sub-prime mortgages that would eventually lead to the second largest financial disaster - in American history. Hell, Goldman even took their criminally-psychotic programs abroad (just ask Greece).

How banks of this caliber [with a Board of pure psychopaths who have no conscience about destroying entire economies] are still able to exist go beyond my comprehension.

My new fav thing to see, as a mortgage UW & LO, are the people who were told to skip their mortgage payments [by THEIR mortgagor] to qualify for loan modifications ... that take months to complete ... only to be denied. THEN to have their homes foreclosed upon OR require bankruptcy because they are too far behind - to catch up - on their mortgage payments. All served with an extra side of screwed because their new crappy credit score prevents then from most refinancing options.

[websailor]

02:06 PM on 04/19/2012

Bank of America is one of the worst banks I have ever delt with.

[Rad666]

01:31 PM on 04/19/2012

"The strong operating results seemed to justify the company's huge rise in its stock price this year, which is up 60%. B of A has been one of the best performing stocks in the market this year." ---------- B of A must be using two sets of accounting books.

[MrStat1]

01:32 PM on 04/19/2012

If you own stock in BofA you would be happy!

[Jon E Parmer]

01:20 PM on 04/19/2012

goog, crooks deserve to lose a few billion!!!!

[margoA]

01:16 PM on 04/19/2012

i used to work for this company I pray every day they go down the toilet! they are crooks!!!!!!!!!!!

[AviaCGT]

01:10 PM on 04/19/2012

Creative Accounting 101
New expense items:
Bribes, kickbacks, errors and omissions, oops
Life is too short to be an accountant, audit THAT and fudge it
The balance sheet is out of balance, on MANY levels.....

[Rad666]

01:04 PM on 04/19/2012

Hurry and get bailout money to them. Americans need to protect Buffett's insider trade investment.

[xcitemint]

01:14 PM on 04/19/2012

Fanned and Faved - sad to see the "Oracle" kiss the emperor's ring but everyone has their price. Goldman - BOA and the windfall he will get with the pipeline failing to pass will satisfy him for now. He should be happy to pay the IRS what he owes them now.

[Freedland]

12:07 PM on 04/19/2012

It is ironic that Warren Buffett is a major shareholder in Bank of America with his holding of preferred shares paying a very nice return to him. He has a sweet deal with them that pays a high dividend that is paid before the common shareholders are paid and gives him some upside if the stock goes higher.

[xcitemint]

01:17 PM on 04/19/2012

Don't you wish you could come up with such brilliant ideas when you take your baths?

[Kenz300]

12:05 PM on 04/19/2012

Move your money.

Credit Unions treat you better.

Find a local credit union in your area. Try it you'll like it.

[ResearchtheFacts]

12:03 PM on 04/19/2012

Seems real smart now the DNC having their convention and presidential candidate renomination in the corporate home of bank of America. At least, OWS will get the last laugh.

Hey, boys at B of A haven't you heard there is a new casino open in Cupertino and Goldman Sachs and the rest of the bankers are already in on the game. Didn't they send you your invite? On top of it they are handing out Apples only someone bite into mine. Oh well, it is shiny and has this full "retina display" thing on some of the party favors. The casino is hot, with iPhone, iPad and iPod chips stacked up waiting to cash in. Don't tell anyone but the 99 percent loves these devices and are funding the new casino operations. You don't have to worry about co-mingling with them they are-own only less than one percent of the game.

[wakohnen]

11:46 AM on 04/19/2012

Poor Bank of America....lets put them on hold for the next available representative....

[ahnree]

11:44 AM on 04/19/2012

BEST DAMN NEWS OF THE WEEK!!!!! BOA stands for dirty rotten scoundrels

[MRstoner2udude]

11:34 AM on 04/19/2012

Please move your money from B of A to a local trustworthy bank that strengthens your community. If you do business with this criminal organization, you are part of the problem. BofA only stays in business because it's sucking out tax dollars into it's veins, then it forecloeses on taxpayers. PLEASE MOVE YOUR MONEY NOW.

[janmB]

11:33 AM on 04/19/2012

What a system we have going here. The same people make and hoard all the cash.... then they have to think about how to give half their money away before they die because they have so much ......they donate to the charities going towards the poverty stricken the hoarding creates....they manipulate the stock markets because they have billions in there....the American economy has been growing, but almost all the gains from that growth have been going to the very top..... quite a system.