First Republic Hires $4.7 Mln Wells Team in San Diego, Reports 18% Wealth Asset Rise
First Republic Bank last week recruited a seven-person team from Wells Fargo Advisors in San Diego who were generating $4.7 million of fees and commissions, signaling that its aggressive hiring of experienced brokers is continuing in 2019.
The San Francisco-based bank, which on Tuesday said it attracted 11 teams of wealth management advisers, primarily from wirehouse, in 2018, on Friday hired a four-broker team led by Peter Morimoto, an almost 21-year Wells Fargo, the company said. The bank lists about 170 “wealth managers” in 72 offices on its private wealth management team website, a number that excludes financial planners and what it calls “wealth advisors.”
Morimoto did not return a call for comment, but well-placed sources said his group had been overseeing about $1.5 billion of client assets from Wells’ Rancho Santa Fe branch. Wells Fargo & Co. on Tuesday reported that it lost a net total of 106 advisers in last year’s fourth quarter and a net 576 in all of 2018.
First Republic, a business bank that was added to the S&P 500 index late last year and was once owned by Merrill Lynch, said in its quarterly earnings report on Tuesday that wealth management fueled 14.8% of its revenue in 2018, up from 13.6% in 2017.
Total wealth management assets rose 18% as of year-end to $126.2 billion from 12 months earlier, First Republic said.
The total—which included $55.4 billion in brokerage and money-market fund accounts, $60.6 billion in its investment management unit and trust and custody assets of $10.2 billion—pales, to be sure, next to the $1.7 trillion that Wells Fargo Advisors reported in its wealth management accounts at yearend.
Wells, the first of the large bank-owned retail brokerage firms to report fourth-quarter results, said, that client assets were down 10% as of yearend as a result of withdrawals and market declines. (It prices its asset fees in advance, meaning they reflected September 30 prices that preceded the end-of-year market collapse.) First Republic said market declines contributed to a 3.6% fall in its clients’ assets in the last three months of the year.
First Republic, which began 2018 by lifting from Merrill Lynch a bicoastal team in San Francisco and Greenwich producing $11 million and a $22-million megateam in Boston, on Tuesday attributed its healthy 18% growth in noninterest income last year largely to wealth management revenue.
“Wealth management fees grew very nicely,” Chief Financial Officer Michael Roffler said on an earnings call with analysts, citing a 22% rise that he said reflected a high level of client satisfaction and customer referrals.
Wealth management revenue in First Republic’s fourth quarter totaled $119.6 million, up 15.4% compared to last year’s fourth quarter. For all of 2018, wealth management revenues were $433.7 million, an increase of 21.7% compared to the prior year.
The wealth revenue represented 14.2% of the bank’s total revenue for 2018, up from 13.6% for 2017.