Wells Fargo & Co Stock Slides After Revenue Miss


Wells Fargo released the earnings results from its second quarter before opening bell this morning, posting earnings of $1.03 per share on revenue of $21.3 billion. Analysts had been looking for earnings of $1.03 per share and revenue of $21.7 billion. In the same quarter last year, the firm posted $21.1 billion in revenue and $1.01 per share in earnings.

Key metrics from Wells Fargo’s earnings report

Wells Fargo reported a return on assets of 1.33% and return on equity of 12.71%. The firm saw total average loans climb 5% to $870.4 billion and recorded $888.5 billion in quarter-end loans, a 7% increase from last year. Total average deposits rose 8% to $1.2 trillion. Net charge-offs fell $67 million to $650 million. The net charge-off rate fell from 0.35% last year to 0.3% this year. Wells Fargo released $350 million in reserves.

The Common Equity Tier 1 Basel III ratio was 10.5%.

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Wells Fargo’s earnings by division

Wells Fargo reported total revenue of $12.66 billion in its Community banking division. Net income for the division was $3.36 billion in the second quarter, an 8% decline from last year’s second quarter. The firm’s Regional Banking reported a 5.6% increase in primary consumer checking customers and a cross-sell ratio of 6.13 product per household for its Retail Bank segment. Business Banking, the firm saw a 5.3% increase in primary business checking customers.

The bank’s Wholesale Banking division recorded $6.08 billion in revenue, a 3% increase, and $2 billion in net income, a 12% year over year increase. Average loans rose 12% year over year, while total assets under management declined $2 billion because equity and stable value outflows more than offset higher inflows from fixed income net clients.

Wells Fargo’s Wealth Brokerage and Retirement division saw a 7% increase in net income to $602 million, while revenue increased to $3.7 billion. In Retail Brokerage, client assets increased 1% to $1.4 trillion, while managed account assets rose 6% to $434 billion. In Wealth Management, client assets increased 2% year over year to $224 billion, and IRA assets also increased 2% in the quarter, climbing to $365 billion.

As of this writing, shares of Wells Fargo were down 1.55% at $55.86 per share.