Thread: Wells Fargo Exceeds Expectations With $3.9 Billion Profit

July 19, 2011, 8:19 am

Wells Fargo Exceeds Expectations With $3.9 Billion Profit, Up 29%

By ERIC DASH

Wells Fargo, the nation’s biggest consumer bank, said profit rose 29 percent in the second quarter from the period a year earlier as loan losses eased significantly.

The bank reported record second-quarter earnings of $3.9 billion, or 70 cents a share, beating the 69-cents-a-share consensus estimate of analysts. That compared with a profit of $3.1 billion, or 55 cents a share, in the period a year earlier.

Wells Fargo’s earnings benefited from the reversal of about $1 billion that the bank had previously set aside to cover loan losses. That helped offset a 5 percent drop in revenue, which fell to $20.4 billion, as new regulations curbed overdraft charges and its big home lending business slowed. New mortgage originations dropped nearly a quarter to $64 billion from $84 billion in the first quarter.

Wells Fargo’s investment bank is far smaller than most of its big rivals, which meant that the difficult market conditions that affected competitors like Citigroup and Bank of America did not hurt as much.

Still, meager loan growth, the rising cost of servicing troubled mortgages and the effect of new financial rules have weighed on its results.

Richard Patterson for The New York TimesJohn Stumpf, chief of Wells Fargo.

“While the economic recovery continues to be slower than expected, there are signs that businesses are investing for growth,â€

Nice to see that the Stimulus took care of the big banks.