NEW YORK Buried within the mixed quarterly earnings report from Bank of America Corp (BAC.N) Thursday was strong news about its global wealth and investment management division, comprised primarily of its Merrill Lynch retail operations.
Profit at the unit, which includes the bank's US Trust and other private banking businesses, more than doubled from the fourth quarter of 2011 to $578 million while revenue climbed 6.3 percent to $4.2 billion.
Merrill contributed $3.5 billion, or 84 percent, of the unit's revenue, despite an exodus of 371 advisers during the quarter. Its revenue rose 9 percent from the fourth quarter of 2011 and 2.7 percent from the end of the third quarter of 2012. Bank of America does not break out Merrill's net income numbers.
Merrill ended 2012 with 14,917 brokers, down 9 percent from 16,413 a year earlier. The total excludes about 1,500 salespeople at Bank of America's Merrill Edge unit for less-affluent clients, which is part of its consumer banking division.
Overall fourth-quarter profit at the second-biggest U.S. bank company fell $1.6 billion from a year ago on mortgage-related charges that eroded growing investment banking and wealth management income.
The decline in Merrill brokers came largely from forcing out advisers who were not thriving in the firm's training program, said Susan McCabe, a company spokeswoman. She would not comment on whether they represented a majority of the almost 400 advisers who left.
Per-broker revenue on an annualized basis grew 3.5 percent since the third quarter and 7.6 percent from a year earlier to $935,000. Excluding brokers in Merrill's three-to-four-year training program, productivity would have risen to $1.3 million of revenue per adviser, one of the highest averages in the industry, McCabe said.
The biggest brokerage firms have for years been competing fiercely for top advisers, offering six-figure recruiting packages. Morgan Stanley (MS.N), the biggest brokerage firm by number of advisers, will report its fourth-quarter brokerage data on Friday.
Wells Fargo & Co. (WFC.N), the third-largest U.S. broker, said earlier this month that it ended 2012 with 15,414 advisers, up 151 from a year earlier.
Bank of America said wealth management earnings and revenue were driven by "strong" client activity. Loan balances in the unit grew $7.3 billion, or 7 percent, to end the year at a record $105.9 billion. The biggest U.S. brokers have been striving to make mortgage and other loans to their wealthy clients to offset client disenchantment with stock trading.
Private bank and brokerage clients also added $9.1 billion of "long-term" assets for bankers and brokers to manage during the quarter. Assets under management ended 2012 at $698.1 billion, up 9.8 percent from a year earlier, while total client balances were up 6.7 percent to $2.2 billion.
Brokerage balances fell in the fourth quarter, however, ending the year at $975.4 billion from $984.7 billion three months earlier.
That reflects a trend of U.S. investors eager to put their money to work but cautious about short-term investing in stocks and bonds. Charles Schwab Corp. (SCHW.N), often viewed as a proxy for retail investors' engagement in the stock market, reported Wednesday that it collected a record number of assets from clients in the fourth quarter but continued to see a drop in daily trades.
The decline in Merrill's brokerage balances at the end of 2012 was "largely due to a shift into assets under management and deposits," the Merrill spokeswoman wrote in an e-mail.
The wealth management results exclude operations outside the United States that Merrill is winding down.
Bank of America reported a $400 million gain during the quarter from selling its brokerage joint venture in Japan to its partner, Mitsubishi UFJ Financial Group. (8306.T) It also is selling its European and some other Asian brokerage operations, which lost $30.4 million in the first half of 2012, to Switzerland-based Julius Baer Group BAER.VX.
(Reporting by Jed Horowitz; Editing by Dan Grebler)