BofA profit doubles after it releases reserves for bad loans

Bank of America Corp. said its profit doubled in the first three months of the year after it released money that it had set aside for bad loans.

The Charlotte, N.C.-based lender posted earnings of $8.05 billion for the first quarter. That compared with $4.01 billion a year earlier, when banks took big hits to their earnings to begin stockpiling rainy-day reserves at the beginning of the pandemic.

Bank of America made 86 cents a share, beating the 66 cents forecast in a FactSet poll of analysts.

Earnings from the largest banks have reflected heightened optimism about an economic rebound. JPMorgan

Chase & Co. and Wells Fargo & Co. said they both released money they had socked away last year to cover widespread loan defaults.

Bank of America posted strong first-quarter results, but the stock was tumbling as investors focused on the bank's Covid-19-related expenses and weaker-than-expected net interest income and loan growth.

Earnings at Bank of America (ticker: BAC) more than doubled from a year ago, coming in at $8.1 billion, up from $4 billion in last year's first quarter. The bank posted earnings of 86 cents a share on sales of $22.8 billiontopping analyst expectations for earnings of 66 cents a share on $21.9 billion in revenue.

Shares were sliding 4% in recent trading, at $38.28, after advancing as much as 1.2% premarket. The S&P 500 was up 0.7%.

Like JPMorgan Chase (JPM) and Wells Fargo (WFC), which reported earlier in the week, Bank of America's results were helped by an improving economic backdrop and the release of reserves built up last year to cover potential loan losses. The bank released $2.7 billion from its reserves, compared with adding $3.6 billion at this time last year.

But while the economic backdrop is much better than feared, customers still aren't taking out loans. Bank of America saw revenue in its consumer bank fall by $1.1 billion to $8.1 billion due to the impact of lower rates and loan balances.