April 20, 2011

2011 Q1 Earnings: Wells Fargo’s Wealth Unit Boosts Results, FA Headcount

Wells Fargo Advisors adds about 50 financial advisors, as company’s overall results miss estimates

Wells Fargo said Wednesday that it had net income of $3.8 billion, or $0.67 per share, in the first quarter, up 52% from $2.5 billion, or $0.45 per share, in the year-ago period, but $0.01 shy of analysts’ estimates.

Revenue was $20.3 billion, down 5% from $21.4 billion in first quarter 2010 and missing analysts’ estimates of $21.2 billion. In the most-recent period, Wells Fargo said it had lower mortgage banking revenue and lower net interest income.

“Our strong first-quarter results reflected positive trends in our business fundamentals as credit quality improved, capital ratios increased and cross-selling reached new highs,” said Chairman and CEO John Stumpf in a press release. “Our Pennsylvania banking stores were converted successfully this past weekend and we expect to convert all remaining Wachovia stores by the end of this year.”

“Our focus on expanding customer relationships was evident in this quarter’s growth in core deposits, net checking accounts and many commercial loan portfolios,” said CFO Tim Sloan in a statement. “While revenue declined from the prior quarter, our expense and risk management discipline helped produce record results … We believe our franchise has never been better positioned to capture future growth opportunities.”

Wealth Management

Wells Fargo’s wealth, brokerage and retirement unit said it had net income of $339 million, up $142 million – or 72% -- from fourth quarter 2010 and up $57 million – or 20% -- from first quarter 2010.

Revenue was roughly $3.2 billion, up 4% from fourth quarter, due to asset-based revenues and brokerage-securities gains, and up 8% from the year-ago quarter, driven by higher asset-based revenues and net interest income, according to the company.

The retail brokerage business saw client assets expand 6% year over year to $1.2 trillion. Managed account assets expanded 21% year over year, by about $45 billion, thanks to net flows and solid market gains.

Wells said it “successfully completed the brokerage conversion in January, converting legacy Wells Fargo brokerage customers to the Wells Fargo Advisors common platform [with Wachovia], providing greater access to more products and services.”

The company also said its investment management and trust asset-based revenue expanded 8% from the prior year, and that average balances were up $1.9 billion, or 4%.

Institutional retirement plan assets were $244 billion, an increase 9% from the prior year, institutional retirement sales grew 40%, and IRA assets of $284 billion, increased 10%.

Advisor Headcount

Wells Fargo Advisors now includes 19,194 advisors, the company says, 15,236 of whom are traditional FAs and 3,958 of whom are licensed bankers. In the previous quarter, WFA had 19,574 advisors – with 15,188 in non-bank channels and 4,386 in banks.

Thus, over the most-recent period, Wells added 48 non-bank FAs and lost 428 bank-based advisors.

The company says it has the third-largest advisor group, based on the FA count, putting it behind Merrill and Morgan Stanley.

In terms of average assets per FA, its 19,194 advisors each have an average of $62.5 million in AUM. Excluding bank advisors, this average rises to $79 million.

Average sales or production per FA is about $669,000 on an annualized basis. Excluding bank reps, this figure is roughly  $840,000.

For more information on earnings in the financial sector read AdvisorOne’s 2011 Q1 Earnings Calendar.

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