2010 Q4 Earnings: Wells Fargo Reports Strong Jump in Profits

The number of financial advisors in the fourth quarter is up 100 from Q3 to nearly 15,200

Wells Fargo said Wednesday that it had net income of $3.4 billion, or $0.61 per share, in the fourth quarter of 2010 vs. $2.8 billion, or $0.08 per share, a year ago.

(Earnings per share for the fourth quarter of 2009 were reduced by $0.47 for the combined dividends and deemed dividend upon redemption and full repayment of TARP preferred stock, according to the company.)

Wells’ quarterly earnings performance met analysts’ expectations, as did its revenue: Sales were $21.5 billion, down from $22.7 billion in the same period of 2009 but up from $20.9 billion in the third quarter of 2010.

“In 2010, Wells Fargo saw solid growth in a variety of businesses, with record net income for the full year as well as the fourth quarter,” said Chairman and CEO John Stumpf, in a press release.

Its shares were trading down, along with the broader markets, about 2% to $31.75 mid-day Wednesday.

Financial Advisors, Retail

In terms of its advisor headcount, released separately from its earnings report, Wells Fargo says it has 15,188 financial advisors – an increase of 100 from the previous quarter and an addition of 227 from the same year-ago quarter. This keeps it in the No. 3 slot, behind Morgan Stanley with about 18,100 FAs and Merrill Lynch with roughly 15,300.

Its FAs have$1.2 trillion in assets under management, up from $1.1 trillion in the third quarter of 2010.

The unit also has 4,386 licensed bankers, down nearly 200 from the third quarter.

Wells Fargo’s wealth, brokerage and retirement unit reported net income of $197 million in the fourth quarter, up $213 million from the same period of 2009, when results were affected by an auction rate securities settlement.

Revenue for the unit was $3.0 billion, up 15% from the fourth quarter of 2009.

During the period, “higher asset-based revenues, brokerage transactional revenue and net interest income were partially offset by lower securities gains and other fees in the brokerage business,” the company said in a press release. Also, the total provision for credit losses increased $20 million from fourth quarter 2009.

Non-interest expense was up 2% from fourth-quarter 2009 due to growth in broker commissions and primarily driven by higher production levels, Wells Fargo says.

Client assets of $1.2 trillion were up 6% from the fourth quarter 2009, and managed-account assets increased $38 billion, or 20%, from the fourth-quarter 2009 “driven by strong market gains and solid net flows,” according to the company.

Investment management and trust asset-based revenue rose 6% year over year.

Also, the bank said it converted the brokerage platform for its integration of Wachovia during the weekend of Jan. 15.

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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