Profits at Wells Fargo’s Wealth, Brokerage and Retirement division surged in the first quarter, as the firm reported a 41% increase year-over-year, contributing to record overall profits for the quarter, the company said.

The Wealth, Brokerage and Retirement division’s profits rose to $475 million for the first quarter from $337 million for the same period a year ago, Wells Fargo reported Thursday.

Overall, the San Francisco-based bank posted record quarterly profits of $5.9 billion, up 14% from $5.1 billion for the same period a year earlier.


Wells Fargo, which has about $19 billion in cash on its balance sheet, may consider acquisitions, particularly with an eye toward enhancing wealth, brokerage and retirement, said CEO John Stumpf in a conference call with analysts. “That would be interesting to us,” Stumpf said.

He added that Wells Fargo’s continuing strong performance also means that they can stay the course. The bank recently proposed raising its dividend 17% to $0.35 per share. “We don’t need to do anything, which is the beauty here,” Stump said.

Wells Fargo CFO Tim Sloan, who also participated in the call, cautioned that no moves would be coming in the near future.

“Clearly we have adequate capital to run our business and return capital to our shareholders.

We don’t need to do an acquisition to grow,” Sloan said. “I wouldn’t anticipate us doing any big splash in the immediate future.”

Analysts, however, say that an acquisition could make sense, particularly if it boosts their managed accounts business.

“They have the private bank on the higher end, and the brokerage firm for the mass affluent level. In between, there could be an opportunity,” says Alois Pirker, research director for Aite Group.


Revenues for the Wealth, Brokerage and Retirement division increasedto $3.4 billion from $3.1 billion.  Expenses rose slightlyto $2.7 billion from $2.6 billion.

Client assets for the division roseto $1.6 trillion from $1.5 trillion. Meanwhile, the number of financial advisors at Wells Fargo fell to 15,146 from 15,280 for the previous quarter.

“Overall, wealth management has good performance.  And it has set the mark for the other firms,” says Aite Group's Pirker.


Wells Fargo’s overall revenues fell to $20.6 billion from $21.3, a roughly 3% drop. Despite the fall in revenue, profits were up. Reductions in the use of third-party professional services, equipment costs and lower salary expenses due to the slightly shorter quarter contributed to the rise in profits.

“Our solid first quarter results again demonstrated the ability of our diversified business model to perform for shareholders,” said Chairman and CEO John Stumpf in a statement. “As we move forward in 2014, I am optimistic about the opportunities ahead and believe that we are well positioned for growth.”

Earnings-per-diluted share for the quarter increased to $1.05 per share from $0.92. Return on equity also rose to 14.35 from 13.59.

Wells Fargo is one of the first banks to report earnings, and is often watched as a bellwether by analysts.

Despite the bank’s strong performance in 2013, a year in which net income was up 16%, Wells Fargo recently kept CEO Stumpf’s pay unchanged at $19.3 million for 2013, according to SEC documents.

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