Bank of America 1Q net income plummets

In its April 21 earnings release, the Charlotte, N.C.-based bank reported net income of $1.21 billion for the year’s first quarter, down from $5.26 billion in first-quarter 2007. Diluted earnings per share sank 80 percent to 23 cents, a fifth of $1.16 earned a year ago.

“The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance,” CEO and Chairman Kenneth D. Lewis said in a news release. “That said, we are continuing to invest in growth initiatives across the company, and believe our core strengths – including our diverse income stream, liquidity and capital – put us in a strong position to withstand the jolts to the system and emerge even stronger when conditions improve.”

Primary factors in the bank’s earnings decline were a $4.78 billion increase in provision expense because of rising credit costs in the home equity, small business and homebuilder portfolios, and $1.31 billion in trading-related losses driven by writedowns of collateralized debt obligations and leveraged loans, according to the release.

Net interest income rose 20 percent to $10.29 billion, though that was partially offset by higher funding costs. Noninterest income was down 29 percent to $7.01 billion.

Noninterest expense was relatively flat, increasing less than a percent to $9.03 billion.

Shares (NYSE: BAC) closed April 30 at $37.54, compared to a 52-week range of $33.12 to $52.96.