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BofA Posts Small Q3 Loss; Merrill Reps Near $1.1M in Average Production

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Bank of America (BAC) said early Tuesday that it had a third-quarter net loss attributable to shareholders of $70 million, or $0.01 per share, vs. a profit of $2.22 billion, or $0.20 per share, a year ago.

Its net income, including preferred stock dividends, declined sharply to $168 million in the period ending Sept. 30 from $2.5 billion a year earlier, mainly because of its latest mortgage settlement — which involved a pretax charge of $5.3 billion and took $0.43 per share off earnings, according to the bank.

Analysts had expected BofA to post a loss of $0.09 per share, according to Thomson Reuters. However, adjusted earnings per share (excluding an accounting gain) were $0.40, beating estimates compiled by Bloomberg.

Total revenue in Q3’14, net of interest expense, was $21.43 billion, down from $21.73 billion last year. Analysts had anticipated sales of $21.36 billion in the period ending Sept. 30. 

BofA said four of its five business lines, including wealth management, had higher net income in Q3’14 vs. last year’s results.

“We saw solid customer and client activity and improved profitability in most of our businesses relative to the year-ago quarter,” explained CEO Brian Moynihan, in a statement. “We remain focused on streamlining and simplifying our company and connecting customers and clients with the real economy, an approach that is paying dividends for them and for our shareholders.”

Wealth Management

Global Wealth and Investment Management, which includes the results of Merrill Lynch and U.S. Trust, reported net income of $813 million, compared to $720 million in the third quarter of 2013 and $726 million in the prior quarter.

Revenue increased about 1% from the year-ago quarter and 7% from Q2’14 to nearly $4.7 billion, driven by “higher non-interest income related to improved market valuation and long-term AUM flows,” BofA says.

The group’s pre-tax margin was 27.4%, up from the year-ago margin of 25.5%, marking the seventh straight quarter over 25%.

Client balances increased 8% from the year-ago quarter to $2.46 trillion, thanks to “higher market levels and net inflows,” the bank notes; client balances as of June 30 were $2.47 trillion.

Third-quarter 2014 long-term assets under management (AUM) flows were $11.2 billion, the 21st consecutive quarter of positive flows. AUM was $888 billion, up from $780 billion a year ago and $879 billion in the prior quarter.

GWIM says it “successfully completed the national rollout of Merrill Lynch One, an investment-management platform with a single view of clients’ holdings across their accounts. As of Sept. 30, 2014, the platform included over $157 billion of AUM and 400,000 accounts.

Asset management fees hit $2 billion in the third quarter, up 19% from a year ago, and average loan balances grew 7% from the year-ago quarter to $121 billion; Merrill Lynch asset management fees were $1.5 billion in the quarter, up almost 17% from last year.

As for its advisor headcount, BofA says it has some 15,868 advisors — up from 15,560 in the prior quarter and 15,624 a year earlier. Excluding advisors in the consumer and business-banking segments, the group includes 14,000 registered reps, an increase of 155 from last quarter.

In addition, Merrill Lynch says it had 102 graduates from its advisor training program in the third quarter and 320 year to date.

Merrill Lynch advisors had average yearly fees and commissions of $1.08 million as of Sept. 30, 2014, up from $1.06 million as of June 30, 2014, and $1.0 million as of Sept. 30, 2013. Veteran advisors have annual production of about $1.4 million.

As of Sept. 30, 47.3% of Merrill Lynch advisors “had 50% or more of their client assets under a fee-based relationship,” the group reports.

(Wirehouse rival Morgan Stanley reports its third-quarter earnings on Friday.)

Check out the Q3 earnings of JPMorgan, Wells Fargo and Citigroup on ThinkAdvisor.

Check out ThinkAdvisor’s 2014 Q3 Earnings Calendar for the Finance Sector.


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