Bailed-out banks turn second-quarter profits

Two major banks that teetered during the recent financial meltdown on Friday reported unexpectedly strong second-quarter earnings.

Bank of America reported profit fell to $3.2 billion, or 33 cents a share, for the quarter, from $3.4 billion, or 72 cents a share, for the same quarter last year. Still, the results exceeded analysts’ expectations.

The bank said its second-quarter earnings were driven by trading results. Charlotte, N.C.-based Bank of America acquired Merrill Lynch & Co. earlier this year.

New York-based Citigroup reported earnings of $4.3 billion, or 49 cents a share, compared with $2.59 billion, or 55 cents a share, during the same quarter last year. Analysts expected the bank would lose 37 cents a share.

Citigroup attributed the results to the $6.7 billion sale of its Smith Barney unit to Morgan Stanley and the recovery of asset values since the depths of the market crisis.

The bank had more than $300 billion in risky assets on the books at quarter end and is negotiating to give the federal government a 34 percent stake as part of a debt-exchange program.

The banks were among those to receive the largest shares of the $549.4 billion federal Troubled Assets Relief Program.

Bank of America received $55 billion, while Citibank received $45 billion. Just two months ago, they failed the Treasury Department’s so-called “stress test” for the country’s 19 biggest financial institutions and were told to raise more capital to protect against future potential losses. Neither bank has repaid any of the money.

Earlier this week, Goldman Sachs and JP Morgan Chase reported second-quarter profits, also boosted by securities trading. Both companies also received billions in federal bailout money.

New York-based Goldman Sachs on Tuesday reported quarterly net income of $3.44 billion, or $4.93 a share, exceeding expectations of $3.65 a share. The bank said the profits were from trading and stock underwriting.

JPMorgan on Thursday reported second-quarter profits of $2.7 billion, 36 percent more than a year ago. The company said the gains were from record investment-banking fees and success in the fixed-income market.

Goldman Sachs received $10 billion in bailout money and JPMorgan received $25 billion. Both companies began to repay the money last month.