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BofA Misses Q1 Estimates; Wealth Profits Fall 11%

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Bank of America (BAC) reported first-quarter net income on Wednesday of $3.4 billion, or $0.27 per share, compared with a loss of $276 million, or $0.05 per share, in the year-ago period – missing analysts’ EPS estimates by $0.02.

Revenue, net of interest expense, was $21.4 billion vs. about $22.7 billion a year ago, mainly due to onetime items. Excluding these items, revenue was $21.9 billion in the first quarter.

“Continuing the trend from last quarter, we saw core loan and deposit growth, higher mortgage originations and increased wealth management client balances,” said CEO Brian Moynihan, in a statement. “We retained a top position in investment banking as our team generated the highest advisory fees since the Merrill Lynch merger.”

Wealth Management

Global Wealth and Investment Management had Q1 net income of $651 million, down 11% from a year ago. Revenue dropped slightly to $4.5 billion from $4.6 billion in Q1’14.

Non-interest expenses grew 3% to $3.5 billion, as the unit spent more money on “revenue-related incentive compensation and investment in client-facing professionals,” BofA says. This pushed the unit’s return on average allocated capital to 22% in the first quarter of 2015 vs. 25% in the year-ago quarter.

Total client balances increased 5% from last year to about $2.5 trillion, “driven by higher market levels and net inflows,” according to the company. Assets under management stand at $917 billion.

First-quarter 2015 net flows of assets under management were $13.2 billion vs. $9.1 billion in Q4’14 and $15.0 billion in Q1’14.

BofA Merrill has 16,175 financial advisors. Excluding reps in Consumer Banking, its FA force numbers 14,183 – a jump of 103 from the prior quarter and an increase of 458 from last year.

The average yearly level of fees and commissions for its core FAs is $1.04 million as of Q1’15, down slightly from $1.07 million in Q4’14 and $1.06 million in Q1’14. It notes that veteran FA productivity is roughly $1.4 million.

The firm says asset management fees were nearly $1.7 billion in the most recent period, an 11% jump from a year ago. In addition, the thundering herd has 50% or more of its client assets in a fee-based relationship. 

— Check out Wells Fargo Sees Q1 Profit Drop on Weaker Bank Results on ThinkAdvisor.