Bank of America (BAC) earned $2 billion in the first quarter, or 17 cents a share, as it settled more mortgage buyback claims and shook up its executive management team. BofA earnings for the quarter dropped 37% from one year ago but increased from a $1.2 billion loss in the fourth quarter. The bank settled representation and warranty claims on troubled residential mortgage-backed securities with monoline insurer Assured Guaranty for $1.6 billion. The remaining principal balance on these severely delinquent loans totaled $10.9 billion. The settlement covered 21 first-lien RMBS trusts and eight second-lien trusts. In January, the bank settled RMBS buyback claims from Fannie Mae and Freddie Mac for roughly $3 billion. BofA set aside an additional $1 billion in reps and warranties provisions during the first quarter, down from $4.1 billion at the end of 2010. “This agreement is an important step towards resolving non-government sponsored enterprise legacy issues on terms beneficial to our company,” said Terry Laughlin, Legacy Asset Servicing executive. Not all was settled in mortgage servicing however. The government-sponsored enterprises charged BofA $548 million in fees in the first quarter for recent foreclosure delays. As part of a series of announcements Friday, BofA Chief Financial Officer Chuck Noski will become the bank’s vice chairman. Bruce Thompson will replace him as the CFO, and Gary Lynch moved into a new position as the bank’s global chief of legal, compliance and regulatory relations. The transitions are expected to take place over the next several months as the bank attempts to evolve from a U.S.-based commercial bank into a global financial services company. Total revenue at the bank dropped 19% to $27 billion in the first quarter from $32 billion one year ago. Reps and warranties claims, lower mortgage production and the GSE servicing fees drove the downturn, the bank said. Personnel costs increased $1 billion during the quarter, as it took on more staff for its mortgage servicing business, a requirement of its recent consent order with regulators. However, because of a downturn in homeownership demand, 1,500 employees were laid off from its forward mortgage unit, Moynihan said in a conference call with investors Friday. Litigation expenses overall at the bank increased to $940 million in the first quarter, mostly related to its mortgage department. As BofA continues to work through its mortgage issues, CEO Brian Moynihan maintained that the business and the overall economy is on the mend. “While still soft, the economy is healing; we see retail spending up versus the year-ago period and continued declines in bankruptcy filings and delinquency rates,” Moynihan said. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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