Ameriprise Financial (AMP) reported second-quarter 2012 net income from continuing operations of $224 million, or $0.99 per diluted share, compared to $319 million, or $1.27 per diluted share, a year ago — a decline of about 30%.
The company also said second-quarter operating earnings were $254 million, or $1.13 per share, compared with $333 million, or $1.33 per share, a year ago. Results in the quarter included a charge of $57 million, or 26 cents per share, for unfavorable items, including a $40 million, or 18-cent-per-share, impact from a tax-related issue.
Analysts had expected the company to earn $1.32 before charges.
Operating net revenues were $2.5 billion, a 3% decline from a year ago, primarily due to lower net investment income from continued low interest rates and volatile equity markets, the company says. These market-driven impacts, though, were partially offset by growth in fee-based revenues driven by Ameriprise advisor client net inflows.
“Our business results were solid considering the difficult markets during the quarter,” said Chairman and CEO Jim Cracchiolo (right), in a press release. “We experienced good advisor client and asset growth with strong net inflows in our fee-based products.”
Advice & Wealth Management
Ameriprise client assets grew 4% from a year ago to $331 billion driven by strong net inflows, and wrap assets grew 7% to $113 billion, including $2.6 billion of wrap net inflows in the quarter, a 12% increase from a year ago. This represents about $34 million in average AUM per advisor and $265,000 in average new inflows of wrap-account assets per advisor.
The company says it has had five consecutive quarters of increased advisor counts. It recruited 91 advisors in the quarter ended June 30 and has brought on more than 400 over the last year.
The number of financial advisors is 9,803 vs. 9,744 in the previous quarter and 9,663 a year ago. About 7,500 of its advisors are franchisee reps and 2,300 are employees. Retention rates for these two advisor groups were 94% and 92% in the most recent quarter, respectively.
Advisors had average fees and commissions of $97,000 in the second quarter vs. $98,000 a year ago. Through June 30, the average production of Ameriprise advisors was $195,000, compared with $194,000 last year.
“Earlier this month, we announced our plan to transition our federal savings bank subsidiary to a non-depository national trust bank by year end,” Cracchiolo said. “Our advisors will continue to meet clients’ deposit and borrowing needs through leading third-party banks, and our shareholders will benefit from the additional capital flexibility.”
In addition, during the second quarter, the company says it concluded that incomplete data received from a third-party service provider for securities-lending activities resulted in the miscalculation of the company’s tax position and reported earnings in prior periods. Ameriprise has since “resolved the data issue and stopped the securities lending that negatively impacted its tax position.”