Friday, April 15, 2011

Bank of America's (BAC) Profits Plunge on Foreclosure Delays

Foreclosure delays in the first quarter resulted in Bank of America's (NYSE:BAC) profits plunging, as the mortgage business weighed the company down.

The home loan business ended up losing over $2.39 billion as expenses climbed and revenue dropped.

This is apparently the major reason why Bank of America wasn't allowed to increase its dividends when it make the request.

The giant bank did earn $2 billion in the quarter, the first profit the company made since the second quarter of 2010. Much of that was the results generated from the Merrill Lynch brokerage unit.

Bank of America posted first-quarter net income of $2.0 billion, or 17 cents a share, falling from $3.2 billion, or 28 cents a share, in the same quarter a year ago.

Analysts on average had estimated earnings of 27 cents a share.

The loss in its residential mortgage unit of more than $2.39 billion compared with a loss of $2.07 billion last year in the same quarter.

Overall expenses jumped in the mortgage business, but write-offs of bad loans actually fell: Net charge-offs of residential mortgages were $905 million, compared with $1.07 billion in the same quarter in 2010.

Bank of America was trading at $13.02, dropping $0.11, or 0.88 percent, as of 12:12 PM EDT.

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