Wells Fargo Q4 Profit Rises, Meets View

(RTTNews) - Wells Fargo & Co. (WFC), the fourth-largest bank in the U.S. by assets, on Wednesday reported a slight increase in profit for the fourth quarter from last year, boosted by higher net interest income reflecting loan growth.

Earnings per share for the quarter matched expectations, while revenues beat their estimates.

John Shrewsberry, chief financial officer said, "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."

Wells Fargo's net income attributable to common stock for the fourth quarter was $5.38 billion or $1.02 per share, up from $5.37 billion or $1.00 per share in the prior-year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $1.02 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter edged up 1 percent to $21.44 billion from $20.67 billion in the year-ago period. Analysts were expecting revenue of $21.23 billion for the quarter.

Net interest income for the quarter rose 3 percent from the year-ago period to $11.18 billion. Meanwhile, provision for credit losses increased 6 percent from the prior-year quarter to $518 million.

Total non-interest income rose 4 percent from the prior-year period to $10.26 billion. Total average loans grew 4 percent from last year to $849.4 billion, while total average deposits climbed 8 percent to $1.1 trillion.

In Community Banking, revenue for the quarter advanced 5 percent to $12.84 billion. The growth in revenues were primarily due to higher net interest income, trust and investment fees, revenue from card volumes and gains on sale of debt securities as well as government guaranteed student loans. These were partially offset by lower gains on equity investments.

Wholesale Banking revenues edged up 1 percent from the prior-year quarter to $6.05 billion. The increase reflects strong loan and deposit growth as well as higher investment banking, treasury management, commercial real estate brokerage and foreign exchange fees, in addition to increased gains on equity investments.

Wealth, Brokerage and Retirement revenues increased 6 percent to $3.65 billion, as strong growth in asset-based fees and higher net interest income was partially offset by lower gains on deferred compensation plan investments and lower brokerage transaction revenue.

During the fourth quarter, residential mortgage originations were $44 billion, down $6 billion from the year-ago period. The gain on sale margin was 1.80 percent, compared with 1.82 percent in the preceding third quarter.

Mortgage banking non interest income for the quarter declined 4 percent from the year-ago period to $1.52 billion.

For fiscal 2014, Wells Fargo's net income applicable to common stock increased to $21.82 billion or $4.10 per share from $20.89 billion or $3.89 per share in the prior year. Revenue for the year grew 1 percent to $84.35 billion from $83.78 billion last year.

Analysts expected the company to report earnings of $4.10 per share for the year on revenues of $84.25 billion.

WFC closed Tuesday's trading at $51.85. In Wednesday's pre-market activity, the stock is down $0.60 or 1.16 percent to $51.25.