NEW YORK — Bank of America, which has a sprawling business in personal and commercial loans, reported a 77 percent decline in profit Monday, the latest indication of how financial troubles that started with subprime mortgages have spread across the credit markets.

NEW YORK — Bank of America, which has a sprawling business in personal and commercial loans, reported a 77 percent decline in profit Monday, the latest indication of how financial troubles that started with subprime mortgages have spread across the credit markets.

In reporting its first-quarter results, the Charlotte bank said it wrote down $1.9 billion of assets on its books, including securities linked to subprime mortgages and leveraged loans used to finance corporate buyouts.

The bank's earnings were also hurt by the $3.3 billion set aside to cover expected losses, particularly on home-equity, small-business and home-builder loans.

"These results clearly did not meet our expectations," said Kenneth D. Lewis, chairman and chief executive, who told investors in a conference call that "the current environment is the most challenging I have dealt with." He added, "We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices."

Bank of America said its first-quarter profit was $1.21 billion, or 23 cents per share, on revenue of $17 billion. That compares with profit of $5.26 billion, or $1.16 a share, in the first quarter a year ago on revenue of $18.16 billion. While the write-down was substantially smaller than analysts' worst expectations, the bank's profit came in under Wall Street estimates. Analysts polled by Thomson Financial expected earnings of 41 cents a share on $16.46 billion in revenue.

Bank of America shares fell about 2.5 percent Monday, to $37.61.

Kris Niswander, associate director of financial institutions at SNL Financial, said investors appear to be taking the recent string of poor bank results, including Bank of America's, in stride. He said this was partly because the first-quarter losses, such as those on home-equity loans, were "easier to wrap your head around" than those that occurred last year as the result of complex mortgage-backed securities.

"In some sense, bank performance is being redefined," Niswander said. "So bad news is good news as long as the bad news is better than anticipated."

But analysts warned that there were plenty of troubling signs. Bank of America executives sounded cautious notes, with Lewis suggesting that the bank may cut its dividend "if the economy worsens dramatically from our outlook over the next few quarters, resulting in a prolonged recessionary environment." Lewis said he expected gross domestic product to grow minimally at best in the second quarter and to pick up slightly in the second half of the year.

Revenue rose in many of the firm's businesses, including its global consumer and small-business banking unit. But profit declined substantially as credit costs increased.

Bank of America also said that its nonperforming assets, or loans in default or close to being in default, rose to $7.8 billion, or 0.9 percent of its total loans, leases and foreclosed properties during the first quarter. That was up from $2.1 billion, or 0.29 percent, a year ago.

Stephanie Hall, senior analyst with Gradient Analytics, called the increase in the bank's nonperforming loans "scary." Given the increase, she said, the bank's allowance for future losses is inadequate.

The bank also reported $2.72 billion in net charge-offs, or loans that it believes it can no longer collect on. That is a 90 percent jump from a year ago. It also quintupled its set-aside for credit losses, to $6.01 billion from $1.24 billion.

"We expect higher levels of defaults, higher levels of write-downs given the current state of the economy," Hall said. "All signs point to higher charge-offs, higher provisions."

Bank of America is also set to take on more troubled subprime mortgages. Its acquisition of Countrywide Financial, the largest U.S. mortgage lender, is scheduled to close in the third quarter.