Bank of America said wealth management profits were up 13% year-over-year and reported an increase in its advisor ranks.

The company reported that profits for its Global Wealth & Investment Management division, or GWIM, which includes Merrill Lynch and U.S. Trust, increased to $813 million for the third quarter from $720 million a year ago.

Total revenue hit a record high of $4.7 billion, up from $4.4 billion for the same period a year earlier, a 4.5% increase. Expenses grew slightly faster at 6.2%, reaching $3.4 billion for the quarter from $3.2 billion.

Total AUM flows rose to $17 billion for the quarter, up from $12 billion for the previous quarter and $13 billion a year ago.

Advisor headcount rose for the unit as a whole to 15,868 from 15,620 for the previous quarter. Merrill Lynch grew its advisor ranks by 155 to reach 14,000 for the quarter. The firm also said its training program graduated 103 new financial advisors for the quarter, and 320 year-to-date.

"The retention of our more experienced advisors remains at record levels," said CFO Bruce Thompson during a conference call with analysts.


Merrill Lynch's client balances fell by $13 million to $2 trillion for the third quarter, but was still up from $1.85 trillion a year earlier. Revenue rose 1.3% to reach $3.8 billion from $3.6 billion.

Financial advisor productivity at Merrill reached $1.07 million per advisor, up from $1 million for the year-ago period.

"We're seeing a movement in a positive direction for several quarters now, and at the same time you're seeing average production go up as well," says Alois Pirker, research analyst at Aite Group. "Ultimately, the problem is that if you add headcount, you see production go down. But they've been able to grow headcount while growing production. So they must be adding some solid [producing] advisors."

Asset management fees grew 16.6% to reach $1.5 billion, a post-merger record. The firm said that nearly half of all advisors had 50% or more of their client assets under a fee-based relationship as of September.

The firm's Merrill Lynch One platform, which is replacing several older platforms, continued to accumulate assets. As of the end of September, $120 billion in assets had transitioned to the new platform. Merrill Lynch One is now available to all of the firm's advisors.

U.S. Trust, Bank of America's wealth management business for high-net-worth clients, reported profits increased 6%, reaching $775 million for the quarter from $730 million a year ago. Client balances at U.S. Trust grew 5%, climbing to $381 billion from $362 billion.

The firm's asset management fees reached $415 million, up from $369 million, a 12% increase.


Bank of America also said that its wealth management division is contributing a larger share of the overall company's total revenues. GWIM's share of total revenue rose from 13.5% in the third quarter of 2009 to 22% of total revenue for the most recent quarter.

"When we look at firms that have such a diverse business model like BofA has, such as UBS, you see that wealth management might give you less spectacular earnings, but if you take care of it, you get a consistent revenue steam. There's a much greater reliability on that business. I think that's really what the market is looking for, something that is much more stable," notes Pirker.

Overall, the Charlotte, N.C.-based company said net income fell to $168 million from $2.5 billion, a 93% drop. The decrease was due in part to a pretax charge of $5.3 billion for litigation related expenses.

Total revenue at Bank of America for the quarter fell to $21.2 billion from $21.5 billion a year ago, a 1.4% decrease. Total noninterest expenses climbed to $19.7 billion from $16.3 billion, a 21% increase. Earnings-per-share fell to -$0.01 from $0.20.

Despite the drop in profits, executives remained positive about the direction of the bank.

"We feel we made very good progress during the quarter. We saw good business activity across our customer segments," said CEO Brian Moynihan during the conference call.


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