April 17, 2013

BofA Earnings Fall Short Despite Boost in Merrill Results

Client asset flows jump nicely for advisors, though their headcount declines

Bank of America headquarters, Charlotte, N.C. (Photo: AP) Bank of America headquarters, Charlotte, N.C. (Photo: AP)

Bank of America (BAC) reported net income on Wednesday of $2.6 billion, or $0.20 per share, for the first quarter of 2013, compared with $653 million, or $0.03 per diluted share, in the first quarter of 2012. Revenue, net of interest expense, rose 5% to $23.7 billion from $22.5 billion a year ago.

Analysts, however, had expected earnings of $0.23 per share.

"Our strategy of connecting our customers to all we can do for them is working," said CEO Brian Moynihan, in a press release. "Solid increases in loan growth to small businesses and middle-market companies, four straight quarters of steady growth in mortgage originations, record earnings in wealth management, and another quarter near the top in investment banking fees show we are balanced, focused and moving forward."

Wealth Management

Merrill Lynch’s thundering herd improved its yearly fees and commissions, or production level, in the quarter. The number of advisors across the company, though, declined both year over year and for the quarter.

Yearly advisor productivity, as measured by fees and commissions, stood at $971,000 vs. $891,000 a year ago and $927,000 in the prior quarter. (These figures do not include the results of advisors in consumer and business-banking operations.)

The firm’s number of financial advisors was 16,084 versus 16,692 a year ago and 16,411 in the prior quarter. There were 17,312 wealth advisors, down from 18,004 a year ago and 17,640 in the final quarter of 2012. The full tally of client-facing professionals was 20,037 versus 20,982 in the year-ago period and 20,386 in the previous quarter.

Global Wealth and Investment Management net income rose 31% from the first quarter of 2012 and 25% from the prior period to $720 million. Revenue for the unit was $4.42 billion, up from $4.15 billion a year ago and $4.19 billion in the earlier quarter.

“Revenue increased 7% from the year-ago quarter to $4.4 billion, driven by higher asset management fees related to higher market levels and long-term AUM flows, higher transactional revenue and higher net interest income,” the company said in a statement. “The pretax margin was a record 26% for the first quarter of 2013, up from 21% in the year-ago quarter.”

Total assets under management were $2.25 trillion, with about $1.83 billion held in Merrill Lynch client accounts.

Flows of long-term assets in the quarter were $18 billion vs. $11.7 billion in the prior quarter and $7.8 billion a year ago. Long-term asset flows were $20.4 billion, up from $9.1 billion in the earlier period and $7.7 billion a year before.

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