Wells Fargo & Co. (NYSE: WFC) reported its fourth-quarter results Wednesday before the market opened as $1.02 in earnings per share on $21.4 billion in revenue. The Thomson Reuters consensus estimates were $1.02 in earnings per share and $21.23 billion in revenue. In the fourth quarter of the previous year, Wells Fargo posted $1.00 in earnings per share and $20.66 billion in revenue.
The company reported net income of $5.7 billion, which was an increase of 2% from the same period in the previous year. There was strong loan and deposit growth for the fourth quarter as total average loans were $849.4 billion, up 4%, and total average deposits grew 8% to $1.1 trillion.
Wells Fargo has a Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.44%, as capital levels continued to be strong in the fourth quarter. In this quarter, the company purchased 61.6 million shares of its common stock and entered into a $750 million forward repurchase transaction for an additional estimated 14.3 million shares in the first quarter of 2015.
Net interest income increased $239 million in the fourth quarter to $11.2 billion. This was primarily due to loan growth, in increase in investment securities, higher trading assets and slightly higher income from variable sources.
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Across its business segments, Wells Fargo reported net income of:
- Community Banking, $3.44 billion
- Wholesale Banking, $1.97 billion
- Wealth, Brokerage and Retirement, $514 million
Wells Fargo CFO John Shrewsberry said:
Compared with the prior quarter, we increased deposits and grew commercial and consumer loans while maintaining our risk and pricing discipline. Revenue increased as net interest income benefited from loan growth and the prudent deployment of our liquidity. Fee income remained strong and diversified. Credit quality continued to improve. We also maintained strong capital and liquidity, and returned more capital to shareholders in the quarter.
Book value per common share was recorded as $32.19 for the fourth quarter. Wells Fargo trades at the highest premium among the major banks of book value to share at 1.6. With bank stocks coming under investor scrutiny over puzzling growth questions, investors just want to see better numbers to keep buying these higher.
Credit Suisse initiated coverage on Wells Fargo with an Overweight rating and a $65 price target on January 7. The firm is looking for an upside of roughly 25%, compared to Tuesday’s close.
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Shares of Wells Fargo closed Tuesday down 0.4% at $51.85. After the earnings report was released, shares were down approximately 1% at $51.39 in premarket trading Wednesday.
The stock has a consensus analyst price target of $55.83 and a 52-week trading range of $44.17 to $55.95. The market cap is near $269 billion.
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