Wells Fargo Investors Dismayed Over Mixed Results

Wells Fargo & Co. (NYSE: WFC) reported its fourth-quarter financial results before the markets opened on Friday. The megabank had $1.03 in earnings per share (EPS) on $21.60 billion in revenue. That compares to consensus estimates from Thomson Reuters of $1.02 in EPS on $21.80 billion in revenue. The same period from the previous year had $1.02 in EPS on $21.44 billion in revenue.

During this quarter, Wells Fargo had total average loans of $912.3 billion, up $62.9 billion or 7%. At the same time, total average deposits totaled $1.2 trillion, up $67.0 billion or 6%.

The bank has a Common Equity Tier 1 ratio (fully phased-in) of 10.7%. Return on assets was 1.27% and return on equity was 12.23% in the fourth quarter.

In terms of its business segments Wells Fargo reported:

• Community Banking had total revenue of $12.33 billion, with a net income of $3.3 billion.
• Whole Sale Banking had total revenue of $6.56 billion, with a net income of $2.1 billion.
• Wealth and Investment Management had revenues totaling $3.95 billion, with a net income of $595 million.

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John Stumpf, chairman and CEO of Wells Fargo, commented on earnings:

Full year and fourth quarter 2015 results demonstrated the benefit of our diversified business model as we again generated strong financial results, maintained our risk discipline and continued to invest across the company for future growth. We remained focused on the building blocks of long-term shareholder value, with continued growth in loans, deposits and capital. For the 5th consecutive year, we returned more capital to shareholders than the prior year. I am proud of the dedication of our team members and their focus on helping our customers succeed financially.

Chief Financial Officer John Shrewsberry added:

Our performance in the fourth quarter reflected a continuation of the solid results we generated all year and the ability of our diversified business model to perform consistently across cycles. Compared with the prior quarter, we increased deposits and grew both commercial and consumer loans, while maintaining our credit and pricing discipline. Net interest income increased as we benefited from broad-based earning asset growth, and fee income remained diversified. We continued to have strong liquidity and capital levels, and our net payout ratio4 was stable at 59 percent.

Shares of Wells Fargo down 3.2% to $49.00 early Friday, with a consensus analyst price target of $58.59 and a 52-week trading range of $47.75 to $58.77.