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 As Bank of America Corp.'s (NYSE:BAC) CEO Ken Lewis girds for the battle to save his job at the company's annual shareholder meeting on April 29, a great deal of his critic's momentum (see video here) may have been slowed by the bank's better-than-expected first-quarter results. Lewis has been under fire for months as the acquisition of Merrill Lynch & Co. went from bad to worse thanks to controversy over early bonuses and $16 billion in losses at the investment bank just prior to the shareholder vote. But on the earnings conference call, Lewis was able to boast of Merrill's contribution to the bank's bottom line, which came in to the tune of $3.7 billion in the first quarter. Without that boost from Merrill, BofA may have finished the first quarter in the red. While declining to comment on how the the first-quarter results will affect Ken Lewis' job prospects, Bart Narter, SVP of the Banking Group at Celent, said: "It seems to be Wall Street -- not Main Street -- that pulled these numbers up. ... On the commercial side, their investment banking activities and market making were profitable. [The Wall Street side] made money in global banking ($175 million), global markets ($2,365 million), and wealth management (earning $510 million). Let's call it a $3 billion profit." And while Merrill's businesses were doing the heavy lifting to pull the bank's earnings higher, the Main Street side was struggling, according to Narter: "The stock didn't go up because people looked at Main Street business and said 'Ewww.'... The MBNA and Countrywide acquisitions makes Bank of America a giant in the credit card and mortgage sectors, which are both suffering badly. They are more exposed than their competitors in these areas, and it hurts them on the consumer side of the business." So on April 29 when Lewis must defend the Merrill acquisition, he now has some hard numbers to justify the purchase. However, in an interesting twist, Lewis' opponents will have new ammunition against him from the MBNA and Countrywide purchases. - George White See Dealscape posts on BofA earnings
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Get your facts straight before you go reporting them. BOA reported a profit of 4.2 billion for the first quarter, not 3.7 billion as you state. The profits for 2008 were 4 billion, so the first quarter alone was more profitable than all four quarters last year. I'd say the company is on the right track.