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July 19, 2011 at 09:03 AM
Bank of America said Tuesday that it had a net loss of $8.8 billion, or $0.90 per share, for the second quarter, compared with net income of $3.1 billion, or $0.27 per share, in the year-ago period. Revenue fell to $13.23 billion from $29.15 billion a year ago as the company settled mortgage-related issues.
The loss met analysts’ expectations and was in the upper range of BofA’s estimated results. Last month, the bank said its loss could be as much as $9.1 billion.
BofA says results were hurt by charges related to a recently announced agreement to resolve “nearly all of the legacy Countrywide-issued first-lien non-GSE residential mortgage-backed securitization (RMBS) repurchase exposures, as well as the impact of other mortgage-related costs,” according to a press release.
Still, the charges were partially offset by lower credit costs, gains from the sale of non-core assets and debt securities, improved sales and trading revenues and higher asset management fees and investment banking fees, the company explains.
“Obviously, the solid performance in our underlying businesses continues to be clouded by the costs we are absorbing from our legacy mortgage issues,” said Bank of America CEO Brian Moynihan (left) in a statement. “But it is clear that – from deposits to wealth management to investment banking – our customers and clients are choosing to do more with us every day. We intend to continue our efforts to put the mortgage uncertainty behind us, build capital through the strength of the franchise, and deliver the returns for shareholders that we owe them.”
Wealth Management
Total sales for the unit, which is led by Sallie Krawcheck, were nearly $4.5 billion in the second quarter vs. $4.2 billion a year ago and $4.5 billion in the first quarter of 2011. Total-client balances were $2.20 trillion, up from $2.05 trillion a year ago and down slightly from $2.23 trillion in the first quarter of 2011.
Net Income for GWIM was $506 million, up from $329 million in the year-ago quarter but down from $533 million in the previous quarter. Return on equity for the group rose to 11.54% in the most-recent period vs. 7.27% last year and 12.06% in earlier quarter.
BofA says referrals from Global Wealth and Investment Management to Global Commercial Banking rose 75% from the prior quarter, and referrals from GBC to the wealth-management group grew 23%.
The number of wealth-management associates increased for the eighth consecutive quarter, with the company adding 546 financial advisors in the quarter and 942 since the second quarter of 2010. The total number of client-facing professionals is 20,876 vs. 19,744 last year and 20,273 in Q1.
Merrill Lynch
“We have made a very strong commitment to building out solutions and adding experts for our preferred customer base of about 8 million individuals,” said Cary Grace (left), a Preferred Sales executive for Bank of America’s Consumer & Small Business Bank, in an interview with 