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Wells Fargo Advisors Stumbles Slightly In First Quarter

Wells Fargo Advisors Stumbles Slightly In First Quarter

The St. Louis-based bank beat analysts’ expectations Friday with a 14 percent annual rise in first-quarter net profit. But its Wealth, Brokerage and Retirement unit net income was down slighly and its advisor force fell by over 130 from last quarter.

Wells Fargo reported overall profits of $5.9 billion, up from 5.17 billion in the first quarter of 2013. The bank’s revenue for the quarter dipped to $20.6 billion from $21.3 billion in the same period a year ago.

While the bank exceeded profit expectations, some analysts are watching for the wealth management business to possibly offset diminishing mortgage revenue - Wells Fargo, the country's largest mortgage lender, saw mortgage originations fall to $36 billion, compared with the $109 billion during the same period last year.

In the first quarter following the official departure of long-term leader Danny Ludaman, Wells Fargo’s Wealth, Brokerage and Retirement division reported a $475 million profit; while that was down three percent from last quarter, it is a 41 percent increase from the $337 million reported in March 2013. The lower profits were partially attributed to the 2 percent increase in expenses, including higher personnel costs.

Brokerage advisory fees, commissions and other wealth management fees continue to make up 22 percent of Wells Fargo’s overall noninterest income.

Revenue for the unit increased 8 percent from a year ago, to $3.5 billion in the first quarter. Client assets within the retail brokerage business also increased, to $1.4 trillion, up 8 percent from the same period a year ago. Assets increased by one percent increase from last quarter.

The Wealth, Brokerage and Retirement unit reported managed account assets of $388 billion in the first quarter, up 4 percent from last quarter and 19 percent year-over-year. The increase was largely driven by net flows and market performance, the company says.

The retail brokerage side of the business also saw a dip in its advisor force, reporting it had 15,146 advisors in the first quarter—a drop of 134 advisors from last quarter (15,280).

Chairman and CEO John Stumpf said in a statement Friday he was optimistic about the company’s future, noting that  the bank’s first quarter 2014 earnings were another record for Wells Fargo and capital levels continued to strengthen.

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