Bank of America (BAC) beat expectations when it reported quarterly earnings on Friday morning.

BofA said it earned $3.2 billion, or 33 cents a share, in the quarter, down from $3.4 billion, or 72 cents a share, in the same period the prior year. Earnings per share were expected to be 28 cents.

The company issued 1.25 billion, or $13.5 billion, in common shares in the quarter.

Revenue was $32.77 billion, slightly below analyst predictions of $33.1 billion but up from around $20 billion in the same period the prior year.

"Our goals during this difficult time have been to enhance the strength of our balance sheet and capital position and to continue to improve our earning power while dealing with the credit issues facing our industry due to the recession,” BofA CEO and President Ken Lewis said in a statement.

The bank doesn’t see a quick economic recovery, but feels it’s in good position moving forward.

"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," Lewis said in the release. "However, we are convinced that Bank of America will weather the storm and emerge as an acknowledged leader in financial services in the United States and around the world."

The bank’s Tier 1 capital ratio was 11.93%, up from 10.09% in the previous quarter. The tangible common equity ratio was 4.67, up from 3.13 in the prior quarter.

BofA said its acquisitions of Countrywide Financial and Merrill Lynch are on track.

Credit quality was a somber spot in the report: “Credit quality deteriorated further as the economic environment weakened,” BofA’s press release said. “Consumers remained under significant stress as unemployment and underemployment increased and individuals spent longer periods without work. These conditions led to higher losses in almost all consumer portfolios compared with the prior quarter.”