Wells Fargo Latest Earnings Report

Wells Fargo & Co (NYSE:WFC) which is one of the biggest banks in the World reported net income of $5.7 billion, up 4% from second quarter of last year, while diluted earnings per share (EPS) were $1.01, up 3% from second quarter 2013, but down from $1.05 from the previous quarter. This ended Wells Fargo’s 17 quarters long streak of increasing earnings per share. The result was achieved despite – or thanks to – lower revenue of $20.1 billion, compared with $20.4 billion.

Largest Financial Services Companies

Wells Fargo & Co (NYSE:WFC) posted return on assets (ROA) of 1.47%, which Fitch analysts called “very strong”, and return on equity (ROE) of 13.4%. Total mortgage originations were $47 billion, up 30.6% from the previous quarter’s $36 billion, but down from $112 billion from the last year. Wells Fargo & Co (NYSE:WFC)’s Chief Financial Officer John Shrewsberry reflected this on a conference call when he told investors that this spring was also a weak home buying season compared with last year’s.

The slump is typical for the overall U.S. mortgage lending, which is falling for the past 15 months, according to Reuters, as rates have risen, cutting into demand to refinance home loans. According to the video, the Wells Fargo & Co (NYSE:WFC)’s Chairman and Chief Executive John Stumpf said that the results reflect “strong credit quality driven by an improved economy, especially in the housing market”, citing also “the bank’s continued risk discipline”.

Total average loans and total average deposits grew, the later by 9% over the year to $1.1 trillion. Jim Cramer and other analysts from CNBC were impressed with the number, adding: “That took my breath away when I read it.[...] you see that number, and the first thing you think is, OK, did they put the number of zeroes correctly?”

They expressed their opinion that the large deposits are behind what they called “not up to snuff” interest margin, saying that “they can’t invest this, they have too much money”. Wells Fargo & Co (NYSE:WFC)’s net interest margin (NIM) is down five basis points from last quarter, as banks are squeezed by lower rates, which may be an important short-term concern, as mortgage business is for years one of the largest sources of revenues for Wells Fargo & Co (NYSE:WFC). Cramer’s opinion was not influenced by this, as he called Wells Fargo & Co (NYSE:WFC) “a juggernaut”.

The video report also suggests that this is the first time in at least six quarters that actual earnings per share beat the analysts’ predictions.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!