Wells Fargo Tops Q4 Estimates, Boosts Advisor Headcount

Net income in the fourth quarter rose to $0.91 a share, as sales hit nearly $22 billion and the number of advisors rose

Wells Fargo headquarters in San Francisco. (Photo: AP) Wells Fargo headquarters in San Francisco. (Photo: AP)

Wells Fargo (WFC) posted fourth-quarter 2012 earnings and sales that beat expectations Friday. Its shares, though, are being hit by negative reaction to its net interest margin—how much it profits on loans—which fell to 3.56% from 3.89% a year ago.

In the fourth quarter, net income was $5.1 billion, or $0.91 per share, compared with $4.1 billion, or $0.73 per share, in the same period of 2011. This represents a jump of 24% in net income and a 25% improvement in EPS. Sales for the period grew 7% to $21.9 billion.

The bank’s full-year diluted EPS ticked up 19% to $3.36 in 2012, up 19% from $2.82 in 2011, and net income was $18.9 billion compared with $15.9 billion. Sales were $86.1 billion, up 6% from 2011.

Earnings per share for the fourth quarter, excluding certain one-time items and other adjustments, were $0.89 a share, topping analysts’ estimates of $0.88 for EPS (and $21.3 billion for sales).

“From growing revenue, making strategic acquisitions and achieving efficiency improvements, I am extremely pleased with our 2012 performance,” said Chairman and CEO John Stumpf.

WFA Results

The Wealth, Brokerage and Retirement unit reported net income of $351 million, up 13% from the fourth quarter of 2011. Revenue was $3.1 billion, up 2%.

Excluding a gain on the sale of H.D. Vest and $46 million in lower gains on deferred-compensation plan investments (offset in compensation expense), revenue was up 9%, mainly due to higher asset-based fees and brokerage transaction revenue, according to the wirehouse.

Client assets for the retail brokerage were $1.2 trillion, up 8% from the prior year. Managed-account assets increased $50 billion, or 20%, from a year ago due to strong net flows and market performance, and deposit improved 9%.  

Wells Fargo said it launched an iPad app in December so clients of Wells Fargo Advisors could monitor accounts, get real-time quotes and execute trades. Also, trading capability was added for mobile brokerage clients via a mobile app and online.

In the Wealth Management segment, client assets were $204 billion, up 3% from the prior year. Institutional retirement plan assets grew 13% to $266 billion, with IRA assets improving 11% to $297 billion.

Wells Fargo Advisors, led by Danny Ludeman, said its headcount was 18,662 as of Dec. 31, up from 18,277 in the previous quarter. The number of traditional, nonbank employee advisors as of Dec. 31 was 10,945 vs. 10,857 on Sept. 30.

In mid-November, Wells Fargo said it recruited 24 advisors with $2.2 billion in assets in recent months for its traditional Private Client Group channel. Its independent-advisor channel, FiNet, noted that it added seven advisors with about $1.3 billion in assets in November. WFA should report its December advisor data late on Friday.

We are very pleased with the company’s outstanding performance despite the challenges our industry faced during this past year, including continued low interest rates and elevated unemployment,” said Chief Financial Officer Tim Sloan, in a statement. “Our balanced business model helped us deliver strong results throughout these challenging times and should provide us the opportunity to continue to deliver value to our shareholders in the coming year.”

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