Profits plunge at Bank of America

Bank of America Corp. reported a 77 percent drop in its first-quarter net income to $1.21 billion, or 23 cents per diluted share.

The Charlotte, N.C.-based bank earned $5.26 billion, or $1.16 per diluted share, in the same period last year.

On avergage, analysts had forecast that BofA would earn 41 cents per share in the latest quarter.

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Bank of America -- Greater Baltimore's largest bank -- cited $6.01 billion in provision expenses in the latest quarter to cover rising credit costs in its home-equity, small-business and home-builder portfolios. Those expenses were up from $4.8 billion a year earlier, and the $6.01 billion total included a $3.3 billion increase in reserves to cover problem loans.

BofA also incurred trading-related losses of $1.31 billion in the latest quarter that were driven by writedowns of collateralized debt obligations and leveraged loans. In the first quarter of last year, BofA had trading-related gains of $1.66 billion.

Net interest income in the latest quarter rose 20 percent to $10.29 billion from $8.6 billion in the first quarter of last year. Noninterest income declined 29 percent to $7.01 billion from $9.89 billion a year earlier.

"Despite revenue growth in most of our businesses, these results clearly did not meet our expectations," said Kenneth Lewis, BofA chief executive, in a statement. "The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance. That said, we are continuing to invest in growth initiatives across the company, and believe our core strengths -- including our diverse income stream, liquidity and capital -- put us in a strong position to withstand the jolts to the system and emerge even stronger when conditions improve."

BofA (NYSE: BAC) has more than 59 million consumer and small-business customers in the United States, where it has more than 6,100 retail banking offices and 18,500 ATMs.