Wells Fargo & Co (WFC) Q4 Earnings Up 11%

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Wells Fargo & Co (NYSE:WFC) has reported fourth quarter earnings slighter higher than expectations, with EPS hitting $1.00 for the quarter, above the consensus $0.98 EPS, and an increase both sequentially (from $0.99 EPS in 3Q2013) and year on year (from $0.91 in 4Q2012). Even though revenues were down to $20.7 billion from $21.9 billion last year they were still up from $20.5 billion over last quarter, and Wells Fargo & Co (NYSE:WFC) paid a quarterly dividend of $0.30 per share, up from $0.22 in 4Q2012.

WFC’s balance sheet improves

Wells Fargo & Co (NYSE:WFC)’s balance sheet also ended stronger, with both average loans and average core deposits increasing sequentially and year on year. Average retail loan balances grew 24% over 4Q2012, and average deposits grew 9% over the time period. Managed account assets grew 23% year on year with both strong net inflows and market performance.  Wells Fargo & Co (NYSE:WFC) also improved its capital position, and purchased 30 million shares of its common stock plus an estimated 11.3 million shares through a forward repurchase program that will settle in 1Q2014.

WFC risk weighted assets 4q13

NIM falls while net interest income increases

The bank’s net interest margin fell to 3.26% (from 3.38% last quarter and 3.39% in 4Q2012), but according to Wells Fargo & Co (NYSE:WFC)’s earning statement NIM dropped partially because of the bank preparing for ‘increased regulatory liquidity expectations’ and partially because deposit growth was strong – driving net interest income while diluting NIM. Net interest income was up $55 million over last quarter to $10.8 billion.

Non-interest income fell to $9.9 billion from $11.3 billion in 4Q2102 because of reduced mortgage banking revenue, but it was $132 million over last quarter with the gains being driven by trust and investment fees as well as market sensitive revenues. Non-interest expenses were down 6% from last quarter. “Seasonally-higher costs for equipment (including software licenses) and outside professional services (including project spend on business investments and compliance and regulatory-related initiatives) were more than offset by lower salaries and mortgage-related incentive compensation,” the company said in its earning statement.

“Wells Fargo & Co (NYSE:WFC) had another outstanding year in 2013, including strong growth in loans and deposits, and double-digit growth in earnings,” said Chairman and CEO John Stumpf. “Strong earnings power and capital levels, and an improving economic outlook are major reasons why we look ahead to 2014 with optimism.”

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