Bank Earnings Lack Gusto (GS, STT, USB, WFC)

Banking, finance, and taxes

Published: January 19, 2011 8:54 am

Last Updated: April 27, 2020 5:17 pm

There was a slew of bank and broker earnings out this morning and we broke out the top four for investors. The results are broadly mixed and a quick snapshot leaves a scenario where the bulls might have wanted more. Today’s top bank and broker earnings reviews were in Goldman Sachs Group Inc. (NYSE: GS), State Street Corporation (NYSE: STT), U.S. Bancorp (NYSE: USB), and Wells Fargo & Co. (NYSE: WFC).

Goldman Sachs Group Inc. (NYSE: GS) was not as easy to compare earnings due to the change in reporting by the top investment bank. Earnings fell 52% on the surface as trading and investment banking revenue declined. Net income fell to $2.39 billion in the quarter to generate $3.79 EPS versus $8.20 EPS a year ago. The last Thomson Reuters estimate we had was $3.76 EPS. Revenue fell almost $1 billion to $8.64 billion versus estimates of $9 billion. At issue with Goldman Sachs is charges. One time charges were there and investors will have to get used to a new reporting method. The old days required the big investment banks to beat earnings and then still see a slide in shares. After the news, it is not a shock that shares are down 3.1% at $169.27 in pre-market trading.

State Street Corporation (NYSE: STT) saw a drop on earnings due to portfolio reposition charges. Net income was $83 million, or $0.16 EPS against $498 million or $1.00 EPS a year ago; that figure is actually $0.87 EPS on operating earnings that analysts use and that compared to $0.85 EPS from Thomson Reuters. Revenue was up almost 10% to $2.28 billion against Thomson Reuters estimates of $2.14 billion. Shares of State Street are effectively flat, although shares are indicated around $49.85 versus a $50.06 close.

U.S. Bancorp (NYSE: USB) beat its earnings expectations on lower loan losses, and there was actually a gain to its loan portfolio. Net income rose to $974 million, or $0.49 EPS versus the $0.46 EPS figure expected by Thomson Reuters; Revenue was up almost 8% to $4.7 billion against consensus estimates of $4.53 billion. Shares are indicated up only 0.2% at $27.35 in the pre-market.

Wells Fargo & Co. (NYSE: WFC) saw an earnings gain as it lowered loan loss reserves. The quarter brought $3.2 billion in profit or $0.61 EPS cents per share, hitting the consensus target of $0.61 from Thomson Reuters. Revenue rose by 12% to $21.5 billion versus estimates of $21 billion. Wells Fargo shares are down 0.6% at $32.29 in pre-market trading.

JON C. OGG

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