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Solid growth at Bank of America

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CHARLOTTE, N.C. — Solid growth in consumer lending as well as in investment and brokerage services boosted first-quarter profits at Bank of America Corp. above Wall Street analysts' expectations.

The bank, based in Charlotte, N.C., said Wednesday its net income totaled $2.68 billion, or $1.83 per share, in the January-March quarter, up 11 percent from $2.42 billion, or $1.59 per share, a year earlier. Revenue rose 7 percent to $9.69 billion.

Analysts surveyed by Thomson First Call had forecast earnings of $1.80 per share.

Bank of America shares dropped 41 cents to $80.09 in Wednesday trading on the New York Stock Exchange.

The figures did not include results from FleetBoston Financial Corp., the Boston-based bank with which Bank of America merged on April 1.

In the first quarter, FleetBoston had earnings of $773 million, or 71 cents a share, compared with earnings of 54 cents a share a year ago, Bank of America said. FleetBoston's revenue climbed to $3.2 billion, 15 percent more than a year earlier.

The bank said it would begin reporting combined earnings with FleetBoston next quarter.

"The quarter is a transitional one without much in core revenues but with better expense control as the firm focuses on integrating Fleet," Michael L. Mayo, an analyst with the Prudential Equity Group, said in a note to investors. He rates the stock at "neutral."

"Bank of America started the year with good momentum in its businesses," said Ken Lewis, chief executive officer of Bank of America. "We are encouraged by the economic growth we see in the U.S."

He added that he expected the merged bank to perform well.

"The integration is ahead of schedule, and we remain optimistic about the business," Lewis said.

Last week, Bank of America said it would cut 12,500 jobs — nearly 7 percent of its 180,000-employee work force — over the next two years.

The cuts were a direct result of the merger, which will create a bank with nearly $1 trillion in assets and operations stretching from North Carolina to New England and California.

The combined bank, which will retain the Bank of America name, will be the third largest in the nation after the J.P. Morgan Chase & Co. merger with Bank One is completed. The combined J.P. Morgan-Bank One will be second in size to Citigroup.

Bank of America's first-quarter results included a $285 million pretax charge, or 16 cents per share, for the bank's agreement to pay $375 million to settle accusations that it allowed favored clients to improperly trade mutual funds.

The bank also wrote off $106 million in loans and wrote down about $29 million of derivative exposure related to Parmalat, the Italian dairy conglomerate enmeshed in a fraud scandal.

On a conference call with analysts, vice chairman James Hance said the bank ended March with about $120 million of remaining exposure to Parmalat. The exposure was from loans and derivatives, he said. About $105 million of the total was insured.