How Merrill Lynch Became Bank of America Corp (BAC)’s Unlikely Savior

In the five years since, however, the tables have turned. Bank of America Corp (NYSE:BAC) has been weighed down by bad loans and litigation dating back to the financial crisis. Altogether, its consumer banking segments — encompassing deposits, credit cards, and home lending, among other things — have lost $29 billion since 2008. Its consumer real estate segment has alone lost $41.2 billion over that time period.

Meanwhile, its commercial and investment banking operations, as well as its wealth management unit — most of which came via Merrill — have flourished. Combined, they’ve accounted for $40.2 billion in income. Without Merrill’s contribution, in other words, Bank of America would have recorded a net operating loss over the last five years of somewhere in the range of $29 billion as opposed to the $11 billion in profit it notched instead.

The Foolish bottom line
Far from emerging from the financial crisis as a mere shell of its former self, as one might have expected given its acquisition of Countrywide Financial earlier in 2008, Bank of America Corp (NYSE:BAC) has indeed become the premier financial services franchise Ken Lewis envisioned. With more than $2 trillion in assets on its balance sheet and a comparable amount of assets under management, it’s hard to envision a future that isn’t ripe with opportunity for the megabank. Now, of course, whether it profitably exploits this remains to be seen.

The article How Merrill Lynch Became Bank of America’s Unlikely Savior originally appeared on Fool.com and is written by John Maxfield.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America.

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