CHARLOTTE, N.C. -- Bank of America Corp. said Monday its profit fell 77 percent in the first quarter, hurt by trading losses and a $3.3 billion increase in reserves for problem loans.
The Charlotte-based bank, which recently bought struggling mortgage lender Countrywide Financial, reported earnings of $1.21 billion, or 23 cents per share, on $17 billion in revenue.
Analysts on average expected a profit of 41 cents per share on revenue of $16.5 billion, according to Thomson Financial.
The bank's shares fell 67 cents to $37.89 in premarket trading.
"These results clearly did not meet our expectations," Chief Executive Ken Lewis said in a statement. "The weakness in the economy and prolonged disruptions in the capital markets took their toll."
Results included $1.31 billion of trading losses compared with income of $1.66 billion a year earlier. This was driven primarily by $1.47 billion in write-downs of collateralized debt obligations, a security often backed by subprime mortgage loans, and $439 million for loans to fund leveraged buyouts. Trading losses were $5.15 billion in the fourth quarter of 2007.
Bank of America said the $3.3 billion increase in reserves was part of a $4.78 billion increase in provisions, to $6.01 billion, "due to rising credit costs - particularly in the home equity, small business and homebuilder portfolios."
The company said it "remains concerned" about the health of the consumer.
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