- The Washington Times - Saturday, July 18, 2009

Two major banks that teetered during last fall’s financial meltdown reported surprisingly strong earnings Friday.

Bank of America reported its second-quarter 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 its 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 financial crisis.

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

The banks were among those to receive the largest cash infusions from the 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 ordered to raise more capital to protect against future potential losses. Neither bank has repaid any of the TARP money.

Earlier this week, Goldman Sachs and JPMorgan Chase reported healthy 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 a 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 attributed the gains to record investment-banking fees and profitable trades in the fixed-income market.

Goldman Sachs received $10 billion in bailout money and JPMorgan received $25 billion. Both companies have paid back the money to Treasury.

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