Bear Stearns Profit Plunged 79 Pct Ahead of JPMorgan Takeover

"The continuation of the global liquidity crisis coupled with a further repricing of credit risk created a difficult operating environment" in the quarter, Bear said.

The New York-based bank revealed that despite a raging credit crisis, it still managed to generate a profit. In a regulatory filing for the quarter which ended on February 29, it said that it earned $110 million, or 86 cents per share, down from $548 million, or $3.82 cents a share a year ago. Revenue dropped to $1.48 billion from $2.48 billion in the same quarter last year.

Bear Stearns was just short of expectations according to a Thomson Financial poll of analysts, who anticipated a profit of 87 cents per share on $1.35 billion of revenue.

Last Month, Bear Stearns CEO Alan Schwartz issued a statement just prior to the bank's collapse on March 12 indicating that the bank's books were in order despite outside concerns.

The bank also said the Securities and Exchange Commission was considering a civil injunction or an administrative hearing about the company's municipal securities bidding process. The bank said it would reply to the notice it received after discussing with its staff.

Meanwhile, Bear said the Federal Trade Commission was investigating its EMC Mortgage Corp. regarding its business practices.

Shares of bear Stearns dipped 11 cents, or $1.08 to $10.11 before the firm released its latest earnings.

The bank wrote down $600 million of investments linked to mortgages and leveraged finance, according to the report.

In a securities filing made late Friday, the bank said that its main business -- which includes stock and fixed income trading -- since the end of November fell to "well less than the 50% of activity levels in 2007 and in the first quarter of 2008."