2010 Q4 Earnings: BofA Misses Estimates; Merrill Adds Advisors

Wealth-management sales rise; Merrill Lynch's FA headcount increases to nearly 15,500

On Friday, Bank of America reported a net loss of $1.2 billion, or $0.16 per share, for the fourth quarter of 2010, vs. a net loss of $194 million, or $0.60 per share, a year ago. The loss included a goodwill-impairment charge of $2 billion in its home loans and insurance unit.

Excluding the charge, the company earned $756 million, or $ 0.04 per share, analysts had expected earnings of $0.21 a share for the quarter.

For 2010, BofA had goodwill-impairment charges of $12.4 billion and a net loss of $2.2 billion, or $0.37 per share, vs. a net loss of $0.29 per share in 2009. Excluding the charges, the company earned $10.2 billion, or $0.86 per share.

"Last year was a necessary repair and rebuilding year," said President and CEO Brian Moynihan (left) in a press release.

Merrill, Wealth Management

Net income for BofA’s global wealth and investment management unit, which includes Merrill Lynch, fell $197 million to $332 million compared with the same period last year, “reflecting higher provision for credit losses,” the company says.

Revenue, though, increased to $4.28 billion, compared to $4.05 billion in the year-ago quarter, due in part to increased deposits, according to BofA. Asset management fees rose to $1.4 billion in the fourth quarter, reflecting positive market and long-term client flows.

For the full year, net income dropped $369 million in 2010 to about $1.35 billion, “driven by higher non-interest expense and the tax-related effect from the sale of the Columbia long-term business,” the company said in a statement.

Revenue, though, improved $534 million from a year earlier to $16.7 billion on “higher asset management fees and transactional revenue.”

Merrill Lynch, which accounts for nearly 80% of the wealth-management unit’s sales, boosted its year-over-year revenue by close to $400 million – or 13% -- in the fourth quarter of 2010 to $3.55 billion. Fourth-quarter sales also improved about $285 million, or 9%, over third-quarter results.

In terms of advisor headcount, Merrill Lynch had 15,498 registered reps. This shift represents an increase of 327 advisors over the fourth quarter of 2009 and 22 more than in the third quarter of 2010.

Assets under management at Merrill stand at $1.58 trillion, up from $1.48 trillion last year and $1.52 in the third quarter of 2010. Assets for the full wealth-management unit total $2.24 trillion.

Per advisor, average AUM for Merrill is thus nearly $102 million.

Gross sales, or production, per FA was $854,000 for the full-year 2010 vs. $819,000 in 2009, an increase of 4%. In the fourth quarter, annualized sales per rep were $916,000 vs. $830,000 a year earlier and $843,000 for the third quarter.

Overall asset flows for the wealth-management unit dropped $2 billion in the fourth quarter. Long-term asset flows, however, were up close to $7 billion.

On Thursday, Morgan Stanley said its Morgan Stanley Smith Barney joint venture now includes 18,043 financial advisors, down 1%, from 18, 135 a year ago and off slightly from 18,119 in the third quarter of 2010.

Average annualized revenue per advisor at MSSB as of the fourth quarter was $742,000, an increase of 7% from $692,000 last year and 6% from $686,000 in the third quarter. AUM per advisor stands at $92.5 million based on fourth-quarter results.

Also, Morgan Stanley said its global wealth-management unit had net inflows – or net new client assets – in the fourth quarter of 2010 of $14.1 billion vs. outflows of $6.8 billion in the same year-ago period. Inflows in the third quarter of 2010 were $5 billion.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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