BofA profit drops

Bank of America Corp posted an unexpectedly sharp drop in first-quarter profit as higher expenses from delayed home foreclosures weighed on its mortgage business. The largest US bank lost more than $2.39 billion in its home loan business as revenue fell and expenses rose.
The foreclosure mess that began in the fourth quarter of 2010, with borrowers accusing major banks of repossessing homes without having the right paperwork in place, was a key source of higher costs in the quarter. BofA also named Chief Risk Officer Bruce Thompson as its new chief financial officer, becoming the sixth new CFO in seven years. The current CFO, Charles "Chuck" Noski, is stepping aside after less than a year in the post due to a serious family illness.
The first-quarter results give some inkling of why the Federal Reserve told the bank in March to rein in its plans to boost dividends, even as competitors got approval to do so.
"Bank of America is further behind. And the reason they're further behind is because of what's going on with the mortgage business," said Ben Wallace, analyst at Grimes & Co, with $1 billion under management.request for a higher dividend - it now pays 1 cent per share quarterly - and warned that a dividend increase could slip into 2012, depending on when it receives Fed approval. The bank's shares were down 1.5 percent to $12.93 in afternoon trading Friday. The shares fell 1.5 percent Wednesday after J.P. Morgan Chase & Co's quarterly results showed the pressure facing consumer lending businesses.
Bank of America said in March it did not expect its mortgage business to return to normal earnings until 2014 or later, while most of its other businesses could recover by 2013. Home loan difficulties appear to be widespread among major lenders. J.P. Morgan Chase & Co, the second-largest US bank, suffered extraordinarily high losses on mortgage-related issues in the first quarter. "Unfortunately, these losses will continue for awhile," said J.P. Morgan Chief Executive Jamie Dimon.
Bank of America did manage to earn $2 billion in the latest quarter, its first profit since the second quarter of 2010. But profit fell more than 35 percent from a year earlier, and earnings per share were just 17 cents, compared with analysts' average forecast of 27 cents, according to Thomson Reuters I/B/E/S. Total revenues, net of interest expenses, declined 15.9 percent to $26.9 billion from $32 billion a year prior.
A big portion of the bank's profit was driven by a $2.2 billion release of loan loss reserves, as loan delinquencies and defaults continued declining. The bank's loan book fell 8.5 percent during the first quarter, to $932.43 billion, due mainly to a decline in consumer loans. Moynihan has put new people in charge of many areas of the bank, but more changes are underway in the executive suite. In the latest change, Thompson will become CFO by the end of the second quarter. A search is underway for a new risk chief.