October 18, 2011 / 8:34 PM / 6 years ago

UPDATE 1-Merrill adds year-on-year revenues, more brokers

(Rewrites to lead with year-over-year performance; Adds recruiter comment, details)

* Merrill Q3 revenue up 7.9 pct to $3.43 bln

* Financial adviser ranks rose by 475 to 16,722 vs Q2

* Credit-loss provision doubles to $162 mln vs Q2

Oct 18 (Reuters) - Third-quarter revenue at Bank of America Corp’s BAC.N Merrill Lynch rose 7.9 percent on higher brokerage services and investment income, even as client assets and deposits fell from a year earlier.

Merrill has dramatically expanded its sales force through recruiting and new trainees, even as parent Bank of America prepares to slash 30,000 jobs as it seeks savings to offset credit losses and financial crisis-related litigation.

Overall, Merrill’s “Thundering Herd” of financial advisers grew by 1,236 during the past year to 16,722, second only to the roughly 17,600 advisers Morgan Stanley Smith Barney had at the end of June.

Merrill added 475 during the third quarter, a combination of trainees and recruits from rivals.

“They have a fantastic franchise, though they’ve been stuck in the mud for several years,” said Daniel Arbeeny, a broker recruiter at CMF Partners LLC in New York. “They’re hiring a lot of people. People realize the bank is not going away.”

Merrill’s adviser count includes trainees who must learn the ropes and build a business from scratch. It also includes more than 660 associates at Merrill Edge, a year-old program that targets the “mass affluent” with less than $250,000 to invest and those who want to manage their investments online.

Bank of America intends to end this year with more than 1,000 Merrill Edge advisers.

Revenue generated per adviser rose to $854,000 from $846,000 a year earlier.

Merrill advisers historically were the most productive on Wall Street, but Morgan Stanley brokers edged out Merrill’s in the second quarter by averaging $894,000 each. Morgan Stanley reports its third quarter results on Wednesday.

Bank of America’s broader wealth management division -- which includes Merrill Lynch global wealth management, private banking unit U.S. Trust and a corporate retirement services business -- earned $347 million, up 29 percent from a year earlier. Net revenue rose 9 percent to $4.23 billion on higher asset-management fees, net interest income and commissions.

BofA said customers added $4.5 billion into stocks, bonds and other investments during the three months ended Sept 30, offset by the withdrawal of $2.6 billion of “liquidity assets,” such as money market funds.

These in-flows helped propel asset-management fees to a record $1.56 billion during the quarter, the bank said.

Earlier Tuesday, Bank of America reported a third-quarter profit, though investors remained anxious as the bank’s core lending and investment banking businesses remain weak.

(To read about Bank of America’s company-wide results, click on [ID:nN1E79G1K9])

The third quarter presented some of the most challenging markets since the financial crisis, with U.S. stocks hammered by Europe’s debt crisis, a downgrade of the United States’ credit rating and a sluggish economy. The S&P 500 Index .SPX fell by more than 14 percent in the September quarter.

Accordingly, BofA wealth management earnings fell by 31 percent from the second quarter. The big hit came from weakness in the division’s mortgage portfolio, which prompted BofA to more than double its credit provision to $162 million.

Merrill revenue slipped 1.9 percent from the second quarter, while total client balances fell by 5.7 percent. Client balances at Bank of America’s wealth management division fell 6.3 percent to $2.06 trillion.

Shares of Charlotte, North Carolina-based BofA have lost more than half their value this year amid economic weakness and worries that legal liabilities stemming from the financial crisis could severely weaken the bank. (Reporting by Joe Giannone in New York; Editing Richard Satran)

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