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Last Update: 17-Jan-12 10:09 ET
Wells Fargo Trades Modestly Higher Following This Morning's Earnings Results
Wells Fargo (WFC $30.11 +0.50) reported fourth quarter earnings of $0.73 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.73. Revenues fell 4.1% year/year to $20.61 bln vs the $20.07 bln consensus. "We are pleased with revenue performance in the quarter. Both net interest income, which benefited from the growth in earning assets and an increase in the net interest margin, and noninterest income, which was bolstered by strong mortgage banking and capital markets results, were up this quarter." Businesses generating linked-quarter revenue growth included asset-backed finance, capital markets, commercial banking, commercial real estate, corporate banking, corporate trust, credit card, equipment finance, government and institutional banking, insurance, international, merchant services, mortgage, real estate capital markets and retail sales finance. Net interest income was $10.9 bln, up from $10.5 bln in third quarter 2011. Noninterest income was $9.7 bln, compared with $9.1 bln in third quarter 2011. The $627 mln increase was driven by increases of $531 mln in mortgage banking and $337 mln in trading, debt and equity gains. Card fees declined $333 mln from third quarter due to a $365 mln decline in debit interchange fees partially offset by improved credit card fee revenue. Total loans were $769.6 bln at December 31, 2011, up $9.5 bln from $760.1 bln at Sept 30, 2011.
Capital increased in the fourth quarter, with Tier 1 common equity reaching $95.1 bln under Basel I, or 9.46 percent of risk-weighted assets. Under current Basel III proposals, the Tier 1 common equity ratio was an estimated 7.49 percent. The co redeemed $5.8 bln of trust preferred securities in the quarter, repurchased 27 mln shares of its common stock, plus an additional estimated 6 mln shares through a forward repurchase transaction that will settle in first quarter 2012, and paid a quarterly common stock dividend of $0.12 per share.
"Credit remained strong and within expectations in the fourth quarter. Consumer losses were essentially flat from third quarter while commercial losses increased slightly as we experienced normal period-to-period fluctuation. Based on our current forecasts, we expect continued improvement in credit in 2012."
Capital increased in the fourth quarter, with Tier 1 common equity reaching $95.1 bln under Basel I, or 9.46 percent of risk-weighted assets. Under current Basel III proposals, the Tier 1 common equity ratio was an estimated 7.49 percent. The co redeemed $5.8 bln of trust preferred securities in the quarter, repurchased 27 mln shares of its common stock, plus an additional estimated 6 mln shares through a forward repurchase transaction that will settle in first quarter 2012, and paid a quarterly common stock dividend of $0.12 per share.
"Credit remained strong and within expectations in the fourth quarter. Consumer losses were essentially flat from third quarter while commercial losses increased slightly as we experienced normal period-to-period fluctuation. Based on our current forecasts, we expect continued improvement in credit in 2012."
