Wells Fargo Slides By With Q3 Earnings

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Wells Fargo & Co. (NYSE: WFC) reported its third-quarter financial results before the markets opened on Friday. The bank said that it had $1.13 in earnings per share (EPS) and $21.94 billion in revenue. That compares with consensus estimates of $1.17 in EPS and revenue of $21.9 billion, as well as the $0.84 per share and $21.93 billion posted in the same period of last year.

During the most recent quarter, average deposits decreased 3% year over year, or $40.0 billion, to $1.3 trillion. At the same time, average loans decreased 1%, or $12.9 billion, to $939.5 billion.

Return on assets was 1.27%, while return on equity was 12.04%. Common Equity Tier 1 ratio (fully phased-in) was 11.9%, down from 12.0% in the prior quarter.

The quarterly loss rate in the third quarter was 0.29% (annualized), compared with 0.26% in the prior quarter and 0.30% a year ago. Commercial and consumer losses were 0.12% and 0.47%, respectively.

At the end of the quarter, book value per common share was $37.55 and tangible book value per common share was $31.49.

CFO John Shrewsberry commented:

Wells Fargo reported $6.0 billion of net income in the third quarter. Revenue increased and noninterest expense declined both linked quarter and year-over-year. Our positive operating leverage reflected the benefit of the transformational changes we are making at Wells Fargo, including our focus on reducing expenses. In addition, we saw positive business trends in the third quarter, including growth in primary consumer checking customers, increased debit and credit card usage, and higher year-over-year loan originations in auto, small business, home equity and personal loans and lines. Credit performance and capital levels remained strong. Our commitment to returning more capital to shareholders was demonstrated by an increase in net common share repurchases, which more than tripled from a year ago, and a higher common stock dividend.

Shares of Wells Fargo closed Thursday at $51.44, with a consensus analyst price target of $62.20 and a 52-week range of $50.26 to $66.31. Following the announcement, the stock was up 1.5% at $52.20 in early trading indications Friday.