4Q Net Income Rises 24%
Its quarterly profit increased 24 percent to see a record high, while setting aside less money for bad loans and making greater fees from mortgages, reported Reuters.
Mortgage fees jumped almost 30 percent from the previous year to $3.1 billion, an increase as homeowners refinanced their homes at lower rates. In the quarter, Wells Fargo & Company (NYSE:WFC) issued $125 billion in mortgages, down from the third quarter’s $139 billion.
Chairman and CEO, John Stumpf said in the company’s earnings release, “2012 was an outstanding year for Wells Fargo. We saw the continued benefits of our diversified business model and reported record full year and fourth quarter earnings, robust deposit and solid loan growth, and strong performance across our business units.”
But the good news was overshadowed by a fall in the bank’s net interest margin and mortgage loans during the third quarter. Wells Fargo & Company (NYSE:WFC) reported net interest margin was 3.56 percent for the quarter, down from 3.89 percent in the previous year.
The market didn’t take the news well and shares fell 1.4 percent in pre-market trading to $34.92.
The bank’s net income was $5.1 billion (91 cents a share), as compared to $4.1 billion (73 cents a share) from the same period in 2011.
Analysts had estimated earnings at 88 cents per share.
For the year, net income was $18.9 billion, as compared to 2011′s $15.9 billion.
The quarterly results also included a previously announced $644 million pre-tax charge for Wells Fargo’s portion of an $8.5 billion settlement that will conclude with a U.S. government review of financial crisis foreclosures.
In the company’s earnings release, Wells Fargo Chief Financial Officer, Tim Sloan said, “The Company’s underlying results were driven by solid loan growth, improved credit quality, and continued success in improving efficiency. While our fourth quarter included some noteworthy items, we achieved strong returns on average assets and equity of 1.46 percent and 13.35 percent, respectively. We are very pleased with the Company’s outstanding performance despite the challenges our industry faced during this past year, including continued low interest rates and elevated unemployment.”
The Wells Fargo & Company (NYSE:WFC) report follows Monday’s news from Bank of America Corp (NYSE:BAC). It announced approximately $11.6 billion in settlements with the mortgage finance company Federal National Mortgage Association (OTC:FNMA), and its $1.8 billion sale from home loan collections as it moves beyond its 2008 acquisition of Countrywide Financial, reported CNBC.
Next week, Bank of America Corp (NYSE:BAC) will announces its earnings along with JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc. (NYSE:C). In the last month, financial shares have been on the rise, anticipating good earnings. Since early December, Wells has jumped 6 percent, but on Friday, in its young trading session, it’s down 1.72 percent to $34.79.