Bank of America socked by credit crunch

Weakening credit conditions hammered Bank of America (BAC) in the first quarter. The Charlotte, N.C., bank made $1.21 billion, or 23 cents a share, for the quarter ended March 31, down from the year-ago $5.26 billion, or $1.16 a share. The latest quarterwas hit by a $6 billion provision for future loan losses, which is five times the year-ago level, reflecting rising loss expectations in the bank’s home equity, small business  and homebuilder portfolios. Analysts were looking for a 41-cent profit, according to Bloomberg.

“Despite revenue growth in most of our businesses, these results clearly did not meet our expectations,” said CEO Kenneth D. Lewis. “The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance.”

Bank of America said it took trading-related losses of $1.3 billion in the first quarter, reversing the year-ago trading profit of $1.7 billion. The latest-quarter number was hit by $1.47 billion in writedowns of collateralized debt obligations and $439 million in writedowns of leveraged loans. The writedowns were fairly modest, given that Wall Street had forecast a number in the $4 billion to $5 billion range. But the rising loan losses sent shares down $1 in premarket trading to $37.56.