Bank of America Reports Q1 Net Income of $3.4 Billion, In Part Due to Rise in Originations

In its Q1 2015 earnings report released Wednesday, Bank of America reported a net income of $3.4 billion, or 27 cents per diluted share, in part due to an increase in mortgage originations and a decline in the number of 60-plus day delinquent mortgages.

The megabank, headquartered in Charlotte, North Carolina, originated $17 billion worth of first-lien residential mortgage loans and home equity loans in Q1. The number of first mortgage loans serviced by the bank's Legacy Assets unit that were 60 or more days delinquent declined year-over-year by 45 percent in Q1, down to 153,000 loans.

"Continuing the trend from last quarter, we saw core loan and deposit growth, higher mortgage originations, and increased wealth management client balances," Bank of America CEO Brian Moynihan said. "We retained a top position in investment banking as our team generated the highest advisory fees since the Merrill Lynch merger. We see continued encouraging signs in customer and client activity, with consumer spending increasing and utilization of credit by our commercial customers rising. This should bode well for the near-term economic outlook. At a time of continued low interest rates, we had good expense control as we focus on responsible growth with a balanced platform to create long-term value for customers and shareholders."

The bank's net revenue for Q1 was reported at $21.4 billion, which was a decline of $1.3 billion from Q1 2014. The decline can be attributed to a reduction of $757 in equity investment income and $211 million related to additional market-related adjustments on the bank's debt securities portfolio, due to long-term lower interest rates' impact. Without those two items and net debt valuation adjustments, the bank's revenue declined by just 1 percent in Q1, down to $21.9 billion (from $22.1 billion in the same quarter a year earlier).

Credit quality improved in Q1 for the bank with adjusted net charge-offs down 28 percent year-over-year, from the record capital and liquidity levels established in Q1 2014.

"We continued to strengthen an already strong and liquid balance sheet this quarter," CFO Bruce Thompson said. "We improved our liquidity, accreted capital, and tightly managed expenses in a challenging interest rate environment. Meanwhile, credit quality remained strong, reflecting both the economic environment and our risk underwriting."