Wells Fargo’s wealth, brokerage and retirement unit saw its first-quarter profits slide $47 million, or 14%, to $296 million from the year-ago quarter and down $15 million, or 5%, from the fourth quarter.

The unit recorded sales of $3.1 billion, down $92 million, or 2.9%, from the first quarter last year. Company officials said the revenue decline was the result of shrinking brokerage transaction revenue and sliding securities gains in its brokerage business. However, the decline was partially offset by higher gains on deferred compensation investments and growth in fee revenue from managed accounts.

Total revenue did climb 1% from the fourth quarter, driven by asset-based fees, higher brokerage transaction revenue and gains from investments in deferred compensation plans. All of this was partially offset by the $153 million gain on the sale of the company’s HD Vest business in the fourth quarter. Excluding that gain, revenue was up 6%.

Company officials said its retail brokerage unit saw strong deposit growth with average balances up $13 billion, or 16%, from first quarter 2011. It reported client assets of $1.2 trillion, flat with the prior year. Managed account assets grew $27 billion, or 11%, from the year-ago period thanks to rising markets and robust inflows.

Meanwhile, the wealth management group saw client assets dip to $202 billion, down $2 billion, or 1%, from the prior year.

The Retirement group saw assets climb to $257 billion, an increase of $13 billion, or 5%, in its Institutional Plans from the year-ago period. IRA assets reached $287 billion, up $3 million, or 1%, from the prior year.

The wealth, brokerage and retirement unit’s non-interest expense climbed 1% from the fourth quarter, which the company chalked up to seasonal personnel costs, higher compensation to brokers, including increased commissions on higher production levels, and more deferred compensation expense. The company noted this was partially offset by lower non-personnel costs. Yet compared to the year-ago quarter, the unit’s expenses were flat.

The wealth, brokerage and retirement unit also boosted its provision for credit losses by $23 million in the quarter. The total provision for credit losses has climbed $3 million from a year ago. The unit’s average core deposits increased $400 million from the fourth quarter 2011 and $10.2 billion from first quarter 2011.

Overall, the entire bank saw profits climb 13% in the first quarter, thanks to strong performance from mortgage banking.

“This was a great quarter for Wells Fargo, as we increased revenue, PTPP, and net income; saw improvement in operating leverage and credit quality; and continued to grow capital,” said Chief Financial Officer Tim Sloan in the company’s earnings release.

“Our return on assets of 1.31% was the highest since first quarter 2008, while our return on equity of 12.14% was the highest since second quarter 2009.”

Elizabeth Wine writes for On Wall Street.