From the September 2007 issue of Research Magazine • Subscribe!

September 1, 2007

Merrill Posts 2Q Results; Bank Deal Moves Ahead

In the second quarter, Merrill Lynch's global wealth management unit had net sales of $3.6 billion, a jump of 18 percent over the year-ago period. Private-client revenues grew 13 percent to $3.3 billion. According to the company, these results were driven by record fee-based revenues, higher asset values, net flows into annuitized-revenue products, and strong transaction and origination revenues.

Second-quarter pretax earnings were $1.0 billion, a jump of nearly 40 percent. The pretax profit margin was close to 28 percent vs. roughly 24 percent in the prior-year period, "driven by the impact of the investment in BlackRock and continued discipline in managing expenses," the company explains.

According to Merrill, the FA headcount reached 16,200, an increase of 270 FAs for the quarter. Total client assets were $1.7 trillion, and total net new money was $9 billion.

In other developments, First Republic Bank of San Francisco says its stockholders have approved its merger with Merrill Lynch. The shareholders will receive $55 for each First Republic common stock in the form of cash or shares of Merrill Lynch common stock (or a combination), subject to proration. The merger, which was announced in late January, should close in the third quarter.

"We're very pleased with the overwhelming approval of the transaction by our stockholders," said Jim Herbert, president and CEO of First Republic. The bank has some $35 billion in assets and specializes in private banking, private business banking, investment management, trust, brokerage and real estate lending. Its offices are located in San Francisco, Los Angeles, Santa Barbara, Newport Beach, San Diego, Las Vegas, Portland, Seattle, Boston and New York.

And recently, a NASD arbitration panel was reportedly ordered to pay a former broker $1.6 million. The panel, which issued an eight-page decision, says a branch complex director in the greater Miami area, Briane Sepe, essentially positioned Fariborz Todd Zojaji to be fired after learning of his Iranian ethnicity and defamed him on his U5 (industry) form.

A Merrill Lynch spokesperson, Mark Herr, told Dow Jones. "We regret the panel didn't view the evidence in the same light we did."

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Janet Levaux is the managing editor of Research; reach her at jlevaux@researchmag.com.

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