REUTERS/ Shannon Stapleton
Wells Fargo kicked off second-quarter earnings for the banks.
The bank reported Q2 earnings per share of $1.01. That's right in line with consensus analyst estimates.
The fourth largest U.S. bank was expected to report adjusted earnings per share of $1.01, up 3% year-over-year, according to analysts polled by Bloomberg.
Revenue for the quarter came in at $21.1 billion, which was better than analyst estimates.
Revenue for Q2 was expected to come in at $20.836 billion, down 3.4% year-over-year, according to Bloomberg.
"By continuing to serve customers we grew loans, increased deposits and deepened our relationships. Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline," Wells Fargo CEO John Stumpf said in the earnings release.
Shares of Wells Fargo are up slightly in the pre-market.
Here's an excerpt from the release:
WELLS FARGO REPORTS $5.7 BILLION IN NET INCOME
Diluted EPS of $1.01, Up 3 Percent From Prior Year
Continued strong financial results:
- Net income of $5.7 billion, up 4 percent from second quarter 2013
- Diluted earnings per share (EPS) of $1.01, up 3 percent
- Revenue of $21.1 billion, compared with $21.4 billion
- Linked-quarter revenue up $441 million
- Noninterest expense of $12.2 billion, down $61 million
- Return on assets (ROA) of 1.47 percent and return on equity (ROE) of 13.40 percent
Strong loan and deposit growth:
- Total average loans of $831.0 billion, up $32.7 billion, or 4 percent, from second quarter 20131
- Quarter-end loans of $828.9 billion, up $29.1 billion, or 4 percent
- Quarter-end core loans of $763.6 billion, up $51.3 billion, or 7 percent
- Total average deposits of $1.1 trillion, up $91.7 billion, or 9 percent
Continued improvement in credit quality:
- Net charge-offs of $717 million, down $435 million from second quarter 2013
- Net charge-off rate of 0.35 percent (annualized), down from 0.58 percent
- Nonperforming assets down $3.0 billion, or 14 percent
- $500 million reserve release due to improvements in credit performance
Higher return to shareholders while maintaining strong capital levels
- Increased quarterly common stock dividend to $0.35 per share from $0.30, or 17 percent, in the second quarter
- Period-end common shares outstanding down 15.8 million in second quarter on 39.4 million of purchases
- Also entered into a forward repurchase transaction for an additional estimated 19.4 million shares expected to settle in third quarter 2014
- Common Equity Tier 1 ratio under Basel III (General Approach) of 11.31 percent at June 30, 2014
- Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.09 percent
SAN FRANCISCO – Wells Fargo & Company (WFC) reported net income of $5.7 billion, or $1.01 per diluted common share, for second quarter 2014, up from $5.5 billion, or $0.98 per share, for second quarter 2013. For the first six months of 2014, net income was $11.6 billion, or $2.06 per share, up from $10.7 billion, or $1.90 per share, for the same period in 2013.
“Our strong results in the second quarter reflected the benefit of our diversified business model and our long-term focus on meeting the financial needs of our customers,” said Chairman and CEO John Stumpf.
“By continuing to serve customers we grew loans, increased deposits and deepened our relationships. Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline. We are committed to both maintaining strong capital levels and returning more capital to our shareholders. In the second quarter we increased our common stock dividend 17 percent and repurchased 39.4 million shares. We remain dedicated to building long-term shareholder value, and I am optimistic about the future as we continue to focus on meeting the needs of our consumer, small business and commercial customers.”
Chief Financial Officer John Shrewsberry said, “The primary drivers of Wells Fargo’s business remained strong in the second quarter, with broad-based loan growth, increased deposit balances, and improved credit quality. Revenue increased linked quarter as the Company grew both net interest income and noninterest income, a reflection of Wells Fargo’s diversified business model. These solid fundamental business results led to an increase in pre-tax income linked quarter. Net income was down as the Company’s effective tax rate was lower in the first quarter due to a $423 million discrete tax benefit.
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