Wells Fargo & Co (NYSE:WFC) released its second quarter results this morning, posting earnings of $1.01 per share, a 3% increase, on revenue of $21.1 billion. Analysts had been expecting earnings of $1.01 per share on $20.81 billion in revenue. In the same quarter a year ago, the bank reported $21.4 billion in revenue.

Wells Fargo

Breaking down Wells Fargo’s earnings

Wells Fargo & Co (NYSE:WFC) reported a 4% increase in net income, which rose to $5.7 billion. Linked quarter revenue rose $41 million. Non-interest expenses fell $61 million to $12.2 million. The bank posted 1.47% return on assets and 13.4% return on equity.

The bank reported that second quarter loans rose 4% to $831 billion, an increase of $32.7 billion year over year. At the quarter’s end, Wells Fargo had $828.9 billion in loans and $763.6 billion in core-loans, a 7% increase or $51.3 billion. Total average deposits increased 9% or $91.7 billion to $1.1 trillion.

“Our strong results in the second quarter reflected the benefit of our diversified business model and our long-term focus on meeting the financial needs of our customers,” said Chairman and CEO John Stumpf in a statement. “By continuing to serve customers we grew loans, increased deposits and deepened our relationships. Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline. We are committed to both maintaining strong capital levels and returning more capital to our shareholders.”

Wells Fargo improves credit quality, returns capital

The bank reported $717 million in net charge-offs, a $435 million decline year over year. The net charge-off rate was .35% annualized, a decline from .58%. Non-performing assets fell 14% or $3 billion, and the bank reported a release of $500 million because of credit performance improvements.

Wells Fargo & Co (NYSE:WFC) reported higher capital return to shareholders in spite of maintaining strong capital levels. The bank increased its quarterly dividend to by 5 cents or 17% from 30 cents to 35 cents per share. It reduced outstanding common shares by 15.8 million.

The bank had a Basel III general approach Common Equity Tier 1 ratio of 11.31% as of the end of June. Under the advanced approach, fully phased-in, the ratio was 10.09%.