Wells Fargo Earnings Meet Expectations

Banking, finance, and taxes

Published: October 14, 2014 9:10 am

Last Updated: October 14, 2014 9:39 am

Wells Fargo & Co. (NYSE: WFC) reported its results before the markets opened on Tuesday. The bank’s earnings came in at $1.02 per share on $21.2 billion in revenue, compared to Thomson Reuters consensus estimates of $1.02 in earnings per share and $21.10 billion in revenue. In the same quarter in the previous year, it reported earnings of $0.99 per share and $20.48 billion in revenue.

In this quarter, Wells Fargo posted a 4% growth in total average loans to $833.2 billion from the third quarter in 2013. Total average deposits were up 10% to $1.1 trillion.

Wells Fargo ranked third among all banks in deposits, according to the FDIC. The second-quarter earnings report was lackluster and the bank had some difficulty putting its deposits to work earning returns.

John Stumpf, chairman and CEO of Wells Fargo, said, “Loan and deposit growth was strong and diversified across both commercial and consumer businesses. Capital levels increased even as we returned more capital to shareholders through higher dividends and share repurchases from a year ago.”

Wells Fargo noted having a reserve release of $300 million due to improved credit quality in the third quarter, which represents the amount that net charge-offs exceed the provision for credit losses. Net charge-offs for the quarter were $668 million, down $307 million from the third quarter in 2013. The company posted a return on equity of 13.1% along with a return on assets of 1.4%. Wells Fargo has a Common Equity Tier 1 ratio under Basel III of 11.16% as of the end of September.

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The book value per share was up roughly 8.9% to $31.55, compared to the previous year at $28.98. The gain from the second quarter was only marginal at just over 1%.

On Monday shares of Wells Fargo dropped less than 1% to $50.20 from the previous close of $50.64. On the day, shares were as high as $50.98. Early morning trading indications Tuesday had Wells Fargo shares down about 0.8% at $49.80 on profit taking.

Wells Fargo’s stock has a consensus analyst price target of $55.13 and a 52-week trading range of $41.10 to $53.80. It has a market cap of $262 billion.

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