Bank of America (BAC) on Friday reported first-quarter 2011 net income of $2.0 billion, or $0.17 in earnings per diluted share, disappointing analysts' expectations for EPS of $0.28, as the bank continued to work out the bad mortgage loans it took on after acquiring Countrywide Financial.
Profits were off 36% versus Q1 2010, when BAC earned net income of $3.2 billion. The bank's quarterly performance a year ago came in at EPS of $0.28 on net income of $3.2 billion. This quarter showed improvement over Q4 2010, however, when net income showed a net loss of $1.2 billion, or $0.16 per diluted share.
But higher asset management fees from the Merrill Lynch unit and investment banking fees as well as lower credit costs and gains from equity investments positively affected results for the most recent quarter. But along with higher legacy mortgage-related costs, these positive earnings results were offset by higher litigation expenses and lower sales and trading revenue. Late Thursday, the company said it would cut 1,500 jobs in its mortgage-origination business.
"Str
ong growth in deposit balances and positive contributions from five of our six businesses reflect the steady improvement in the broader economy," said CEO Brian Moynihan in a statement. "Our customer-focused strategy is working well, and we also benefited from improved credit quality. "
Global Wealth and Investment Management (GWIM) reported one of its strongest quarters since the acquisition of Merrill Lynch, setting records for revenue, asset management fees and brokerage income, Bank of America reported in its Q1 2011 earnings release. In addition, the business more than doubled long-term asset management flows and added 184 financial advisors since the end of 2010 through a combination of new hires and high advisor retention rates.
Merrill Lynch profits stood at $531 million, up 68.6% quarter-over-quarter and up 22.4% year-over-year. Revenues totaled $3.54 billion compared with $2.99 billion a year ago, for a gain of 18.5%. Merrill Lynch client balances stood at $1.55 trillion versus $1.45 trillion in Q1 2010, 6.9% higher. Quarter-over-quarter revenues were 3.3% higher from Q4 2010's $3.43 billion.
The number of financial advisors at Merrill Lynch keeps growing and now stands at 15,695 compared with 15,511 in Q4 2010 and 15,178 a year ago at this time. Financial-advisor yearly production, or fees and commissions, rose to $931,000 per advisor in the first quarter from $913,000 in the previous period.
"The bull market and the improving economy put the winds at the back of Wall Street brokerages," Elzweig (left) added. "Once we see the other wirehouses' first-quarter results , we'll be able to put these [Merrill] numbers in their proper context."
