NEW YORK (CNNMoney.com) -- Bank of America revealed its fortunes may finally be turning around Friday, as the nation's top bank reported first-quarter profits of $3.2 billion, easily surpassing Wall Street's estimates.
Record trading revenues that exceeded $7 billion as well as moderating credit costs across a number of the company's consumer-related businesses powered the bank's results during the period.
"With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy," Bank of America CEO Brian Moynihan said in a statement.
Heading into this year, Bank of America had been hoping to make a fresh start. Enduring a seemingly never-ending amount of scrutiny over its purchase of Merrill Lynch and zapped by loan troubles, the company reported a loss of $2.2 billion in 2009.
The latest results from the Charlotte,N.C.-based lender, however, mark a swift departure from that difficult period.
Profits after the payment of preferred dividends were $2.8 billion, or 28 cents a share, beating Wall Street estimates for a profit of 9 cents a share according to Thomson Reuters.
Even once-troubled divisions of the company appeared to be turning around. The bank's credit card and commercial banking businesses, for example, each swung to a profit after losing money throughout all of 2009.
Earnings in BofA's investment banking business more than doubled from the fourth quarter of last year, driven largely by stock and bond trading.
"The company was helped tremendously by trading volumes," said Jaime Peters, banking analyst at Morningstar. "Is that sustainable? Well probably not."
Bank of America enjoyed a similar surge in its trading business last year's first quarter, helping the company report overall profits that were nearly identical to Friday's numbers.
One area that continued to struggle though was the bank's mortgage business, as it issued fewer new loans and charged off more than $2.4 billion in home equity loans. The unit was the only one of Bank of America's six different divisions to record a loss for the quarter.
"We are addressing those issues and hopefully can correct that over the next few quarters," Moynihan told investors during a conference call Friday.
Bank of America's overall strong results, which represent the first full quarter with Moynihan in control, may distract investors who have been anxious for the firm to get its affairs in order.
Moynihan inherited the job at the end of 2009 from outgoing Bank of America CEO Ken Lewis and with it a whole host of troubles, including a series of legal headaches associated with the Merrill merger and a pool of still-festering mortgages it absorbed as a result of its purchase of mortgage giant Countrywide in 2008.
Even as Moynihan warned Friday about sluggish loan growth in the coming quarters and the fragile state of the U.S. economy, he seemed most encouraged that loan troubles were starting to moderate.
"I think it was a solid quarter," he said. "We expect the recovery to continue."
The latest numbers from the Charlotte, N.C.-based lender are also likely to offer some encouragement about the recovery of the U.S. banking sector as whole.
On Tuesday JPMorgan Chase (JPM, Fortune 500) said it earned $3.3 billion during the first quarter. Both Citigroup (C, Fortune 500) and West Coast banking giant Wells Fargo (WFC, Fortune 500) are both expected to record profits when they deliver their results next week.
Bank of America (BAC, Fortune 500) shares, which are up 29% so far this year, fell 4% in early afternoon trading Friday. Bank stocks took a dive Friday after the SEC announced it was charging Wall Street king Goldman Sachs (GS, Fortune 500) with fraud over a sale of securities tied to subprime mortgages.
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