Aided in part by its acquisition of Merrill Lynch & Co., Bank of America used an increase in investment banking revenue and improved market conditions to post stronger than expected first-quarter earnings.

The Charlotte-based banking company reported Friday that quarterly earnings declined 25% to $3.18 billion, or 28 cents per share, from a year earlier.

Yet due to record sales and trading results, Bank of America’s [BAC] global banking and markets business, which includes Merrill Lynch, increased its quarterly profits 28% to $3.2 billion from a year earlier. The strong quarter from the investment and wealth units more than offset the performance at the rest of the bank, which collectively lost $36 million in the first quarter.

Analysts said that they expect the acquisition of Merrill Lynch, which closed more than a year ago, to continue to help the bank get through the financial crisis.

Bank of America said Merrill had strong organic growth during the quarter “as momentum in the affluent customer base continued.”

“Consumer referrals and sales to Merrill Lynch Global Wealth Management clients accelerated in the first quarter,” the company said in a press release. “Approximately 60,000 lending and deposit products were sold to Merrill Lynch clients. Referrals  between Global Wealth and Investment Management and the company's commercial and corporate businesses increased 56% compared with the fourth quarter.”

U.S. Trust, Bank of America Private Wealth Management, the banking company’s unit for ultra-wealthy individuals, net revenue was flat at $688 million “as higher valuations in the equity markets and increased deposit spreads were offset by net outflows and lower residual net interest income.”

Due primarily to stronger market conditions, Columbia Asset Management increased its revenue 84.5% to $277 million. Rumors persist that BofA is shopping Columbia. Minneapolis-based financial services firm Ameriprise agreed to acquire Columbia Management from Bank of America last September for approximately $1 billion in cash. That deal is expected to close later this year. BofA expects to generate between $130 million and $150 million in annual net synergies, with about half of those savings to be realized in the first year and substantially all in the second year.

To continue to develop its wealth management business, BofA announced in February that it planned to add 2,000 advisors. Most of the additions will be in the United States, with some small additions also in Europe and Asia. And many of them will be young trainees instead of more experienced advisors lured from other companies.

The banking company’s overall quarterly results included $521 million and $765 million in restructuring and merger charges, respectively. The company’s revenue declined 11% to $31.97 billion. Analysts expected earnings of 9 cents per share on revenue of $27.97 billion, according to Thomson Reuters.

"With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy," said Brian Moynihan, BofA’s president and chief executive officer.