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BofA Wealth Results Weaken; Wells Fargo Mulls Robo Move

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Bank of America reported second quarter earnings of $5.3 billion, $0.45 per share, vs. $2.3 billion, or $0.19 per share, in the year-ago period. Revenue, net of interest expense, increased 2% to $22.3 billion.

Its wealth management operations had net income of $690 million, down from $726 million in the second quarter of 2014. Revenue was $4.57 billion, down slightly from a year ago, while the pre-tax margin was 24%.

The unit had a jump in its total client balances of $53.5 billion from the year-ago quarter to more than $2.5 trillion. In the second quarter, flows of long-term assets under management were $8.6 billion. Asset management fees grew 9% to $2.1 billion, and average loan balances increased 10% to $130.3 billion.

The number of financial advisors is about 16,419, up from 15,560 last year and 16,175 in the prior quarter. These reps had yearly fees and commissions of $1.04 million on average as of June 30, unchanged for the earlier period but down slightly from a year ago.

Wealth management chief David Darnell recently announced plans to retire by the fourth quarter, after more than 35 years with the company. Upon Darnell’s retirement, Terry Laughlin will take over as head of the wealth group.

“Terry will be returning to businesses he knows well,” BofA said in an employee memo shared with the media. “Terry’s impressive background includes various senior leadership positions with Bank of America and predecessor entities including Merrill Lynch, where he was chairman and chief executive officer of Merrill Lynch Bank & Trust. In his new role, Terry will retain his current responsibility for our U.K. card business.”

Wells Fargo said it had second-quarter net income of $5.72 billion, or $1.03 a share vs. $5.73 billion, or $1.01 a share last year. Revenue was up 1% to $21.3 billion.

Its wealth, brokerage and retirement unit had income of $602 million in the period, an 11% jump from last year and 7% improvement from the prior quarter. Revenue expanded 5% year over year to $3.74 billion.

The unit’s brokerage advisory assets grew 6% from last year to $434 billion, while wealth-management assets increased 2% to $224 million. The group had a pre-tax margin of 26%, topping its 25% goal.

In addition, the firm says it brought on 17 net new financial advisors during the quarter, bringing its total headcount to 15,151. Average loans among its wealth and brokerage clients were $59.3 billion, up 16% from last year. Managed account assets grew 6% to $434 billion.

Total assets for the wealth unit were $1.4 trillion, and assets in individual retirement account assets were $365 billion.

Wells Fargo CFO John Shrewsberry said during a conference call with equity analysts after it released earnings that, “There are a number of initiatives underway” in wealth management. “At some point, it could even include a service or capability that competes with some of the robo-advisory people out there today who rely primarily on technology to construct portfolios and make offerings to customers,” he explained.