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Bank of America earnings dipped in its first quarter

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Bank of America posted a 12% decline in first-quarter profits from a year earlier, a drop that was much smaller than the ones its rivals had reported the previous week. 

The Charlotte, North Carolina-based bank said it earned $7.1 billion in profit compared to $8 billion during the same period a year earlier. Other big Wall Street bank reported fallen profits this quarter, but BofA's results were helped by the fact that it holds only a modest amount of Russian assets. 

"This is not a bad result for Bank of America, particularly the continued solid loan growth," said David Wagner, portfolio manager at Aptus Capital Advisors, who owns BofA shares, in an email.

BofA's consumer banking division — the bank's largest business by revenue and profits — also helped boost results. Net income in the division was up 11% from a year earlier, helped by higher revenue from loans and interest rates. Deposits grew 14% to $1 trillion.

The bank didn't have to set aside much funds this quarter to cover potential losses as well, in contrast to JPMorgan Chase and Citigroup, who had to set aside money to cover the risk of a recession as well as for their exposure to Russia. BofA had to set aside $700 million to cover its exposure to Russia, compared with the $1.9 billion Citigroup set aside.

Banks only reserve funds for losses when they think that default rates, which are currently low, will start to rise. And JPMorgan admitted to such during the call, saying it was a "preemptive move" if the economy slowed.

Bank of America plans to cut the overdraft fees it charges customers to $10 from $35 starting in May. It will also stop charging fees for non-sufficient funds, which are levied when it rejects a transaction — better known to consumers as bouncing a check. While checks are no longer widely used, NSF fees can come from automated payments like utility bills. 

Bank of America has said roughly 25% of its overdraft/NSF fee revenue every year comes from NSF fees. Altogether, Bank of America estimates the step will cut its overdraft-fee revenues by 97% from where they were in 2009 — the year before it started taking incremental steps toward reining in overdraft-fee revenues. 

"This is the final step in the journey we've been on," said Holly O'Neill, president of retail banking at BofA, said in January. "We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed."

Like other banks, BofA saw a drop in investment banking revenues and fees in the quarter as businesses refrained from deal-making. 

BofA's stock price rose 3% during Monday morning trading to nearly $39 a share. 

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