BofA Earnings Tank, Retail Brokerage Steady

Bank of America posted a whopping 77-percent drop in first quarter net income today, down to $1.21 billion, or 23 cents a share. The sharp drop in earnings was the result of $1.9 billion in write-downs for the quarter—$1.47 billion on collateralized-debt obligations (CDOs) and $439 million on leveraged loans—as well as an increase in capital provisions to cover future potential credit losses, which rose to $6.01 billion from a $1.23 billion a year ago, according to the firm’s earnings release.

Bank of America posted a whopping 77-percent drop in first quarter net income today, down to $1.21 billion, or 23 cents a share. The sharp drop in earnings was the result of $1.9 billion in write-downs for the quarter—$1.47 billion on collateralized-debt obligations (CDOs) and $439 million on leveraged loans—as well as an increase in capital provisions to cover future potential credit losses, which rose to $6.01 billion from a $1.23 billion a year ago, according to the firm’s earnings release.

But the bank’s retail brokerage unit, Banc of America Investment Services Inc., which is part of its Premiere Banking Investment division, did all right, posting a 10-percent increase in revenue to $170 million from $154 million in the same period last year. The firm does not break out its profit numbers for the retail brokerage unit, but the entire Premier Banking and Investment division generated after-tax profits of $104 million on net revenue of $841 million.

The Premier Banking and Investments division manages $21 billion in client assets, up just barely from the year ago period’s $20 billion. Meanwhile, the 1,952 financial advisors in the full-service brokerage unit generated average annualized production of $472,000 per advisor.

Bank of America may be doing better, overall, than some of the other banks with brokerages, in any case. Punk Ziegel analyst Dick Bove says he doesn’t see Bank of America as a sell yet. “If you were to tell me that that deposits were falling dramatically, that the company's cash flow had turned negative, then I would say you'd better get out of this stock and get away from the company, but that's not happening,” Bove told Wall Street blog, Dealbreaker.

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