BofA Reports $3.2bn Q2 Profit
Bank of America (BAC) reported a $3.2bn profit in Q209, or about $0.33 per share. BofA’s profits Q209 revenue was bolstered by the sale of its merchant processing business and shares in the China Construction Bank, but high credit costs, and increasing its loan loss reserve kept overall profit below the $3.4bn profit level earned in Q208. The bank extended $211bn in credit, up from $183bn in Q109, with $111 billion of that going toward mortgage originations. “Our goals during this difficult time have been to enhance the strength of our balance sheet and capital position and to continue to improve our earning power while dealing with the credit issues facing our industry due to the recession,” president and CEO Kenneth Lewis said in a release. “Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010.” BofA said it funded $110.6bn in first lien mortgages for nearly 500,000 new home purchases or refinance loans. The bank said that included $24.3bn in mortgages for 154,000 low- and moderate-income borrowers. About 29% of all mortgages were for home purchases. Nonperforming assets were $31bn in Q209, up from $25.6bn in Q109, and BofA added $4.7bn to its credit loss reserve. The bank’s Tier 1 capital ratio was 11.93%, an increase by nearly $40bn from Q109. BofA said it performed 150,000 mortgage modifications in the first six months of 2009, and an additional 80,000 customers are in the three-month trial period for modification sponsored by the federal government’s Making Home Affordable modification program, which provides incentives to servicers who modify distressed homeowners’ loans. Write to Austin Kilgore.