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Bank of America Q1 profits plunge 77%

Bank of America Corp. said Monday its profit fell 77% in the Q1, hurt by trading losses and a $3.3 billion increase in reserves for problem loans.

The Charlotte-based bank, which recently bought struggling mortgage lender Countrywide Financial, reported earnings of $1.21 billion, or 23 cents per share, on $17 billion in revenue. Analysts on average expected a profit of 41 cents per share on revenue of $16.5 billion, according to Thomson Financial. “These results clearly did not meet our expectations,” CEO Ken Lewis said in a statement. “The weakness in the economy and prolonged disruptions in the capital markets took their toll.” Results included $1.31 billion of trading losses compared with income of $1.66 billion a year earlier. This was driven primarily by $1.47 billion in write-downs of collateralized debt obligations, a security often backed by subprime mortgage loans, and $439 million for loans to fund leveraged buyouts. Trading losses were $5.15 billion in the Q4 of 2007.

Bank of America said the $3.3 billion increase in reserves was part of a $4.78 billion increase in provisions, to $6.01 billion, “+due to rising credit costs — particularly in the home equity, small business and homebuilder portfolios.” The company said it “remains concerned” about the health of the (