Bank of America (BAC) said Wednesday that it had net income of $340 million, or $0.00 per share, in the third quarter, compared to $6.2 billion, or $0.56 per share, in the year-ago quarter. Analysts had expected BofA to report a loss of $0.07 per share.
It blamed the flat earnings on $1.9 billion of debit valuation adjustments (DVA) and fair value option (FVO) adjustments related to the improvement in the company’s credit spreads, $1.6 billion for total litigation expense, including a charge for the previously announced settlement of the Merrill Lynch class action litigation, and a charge of $0.8 billion related to the repricing of certain deferred tax assets due to a reduction in the U.K. corporate tax rate. Together, these three items totaled a negative $0.28 per share.
The latest results benefited from improved credit quality across most major portfolios, increased sales and trading revenue (excluding the impact of DVA), higher mortgage banking income and increased investment banking income, the company says. However, average annual sales by financial advisors in the first nine months of 2012 are down 5.5% from the same period in 2011.
“We are doing more business with our customers and clients: Deposits are up; mortgage originations are up; we surpassed 11 million in mobile customers; small business lending is up 27% year over year; loans to our commercial clients rose for the seventh consecutive quarter; and our corporate clients made us the second-ranked global investment banking firm,” said CEO Brian Moynihan, in a press release. “Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues.”
The number of financial advisors stood at 17,533 as of Sept. 30, which is down one from the second quarter but up 439 reps from a year ago. These figures include financial advisors in the mass-affluent Merrill Edge platform and others in BofA’s Consumer & Business Banking segment, which totaled 1,457 in Q3’12; 1,383 in Q2’12; and 1,032 in Q3’11.
The average yearly production (or fees and commissions) of Merrill Lynch advisors—excluding those in Consumer & Business Banking—was $910,000 for Q3, down from $921,000 a year ago and from $915,000 in Q2. On a nine-month basis, current annual production of $910,000 is off of the first nine months of 2011, when production averaged $963,000 per advisor.