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Post Earnings Coverage as Wells Fargo Q1 Diluted EPS Beat Estimates

Upcoming AWS Coverage on Comerica Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 20, 2017 / Active Wall St. announces its post-earnings coverage on Wells Fargo & Co. (NYSE: WFC). The Company announced its financial results for the first quarter fiscal 2017 (Q1 FY17) on April 13, 2017. The San Francisco, California-based bank’s net income per diluted share improved on a year-over-year basis, outperforming market consensus forecasts. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Wells Fargo’s competitors within the Money Center Banks space, Comerica Inc. (NYSE: CMA), reported its first quarter 2017 financial results on Tuesday, April 18, 2017. AWS will be initiating a research report on Comerica in the coming days.

Today, AWS is promoting its earnings coverage on WFC; touching on CMA. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

In the three months ended on March 31, 2017, Wells Fargo’s total revenues came in at $22.00 billion, marginally below $22.20 billion in the year ago same quarter. Total revenue numbers for the reported quarter lagged behind market expectations of $22.10 billion. During Q1 FY17, Wells Fargo’s net interest income was $12.30 billion, rising 5% from $11.67 billion in Q1 FY16. However, total noninterest income fell to $9.70 billion in Q1 FY17 from $10.53 billion in the prior year’s comparable quarter.

The diversified financial services Company reported net income of $5.46 billion, or $1.00 per diluted share, in Q1 FY17 compared to $5.46 billion, or $0.99 per diluted share, in Q1 FY16. Quarterly net income per diluted share topped analyst’s expectations of $0.97 per diluted share.

Performance Metrics

During Q1 FY17, Wells Fargo reported total average loans of $963.65 billion, up 4% from $927.22 billion in Q1 FY16. Total average deposits also grew 7% y-o-y to $1.30 trillion in Q1 FY 17 from $1.22 trillion in Q1 FY16.

In Q1 FY17, Wells Fargo’s return on assets stood at 1.15% compared to 1.21% in the previous year’s corresponding period. The Company’s return on equity was down to 11.54% in Q1 FY17 from 11.75% reported in the year ago same quarter. The bank’s efficiency ratio was 62.7% in Q1 FY17 compared to 58.7% in Q1 FY16. Moreover, Wells Fargo’s net interest margin for the reported quarter was down by three basis points to 2.87% from 2.90% in Q1 FY16.

During Q1 FY17, total earning assets grew to $1.77 trillion from $1.65 trillion in the last year’s quarter. Furthermore, yield on these assets rose to 3.31% in Q1 FY17 from 3.22% in Q1 FY16. The Company reported non-interest expense of $13.79 billion in Q1 FY17, which came in 6% above the $13.03 billion reported in the year ago comparable period.

As on March 31, 2017, the bank’s common BASEL III equity tier 1 ratio was 11.2%, compared with 10.6% as on March 31, 2016. During Q1 FY17, non-performing assets fell to $10.66 billion, or $1.11% of total loans, from $13.51 billion, or 1.43% of total loans, in Q1 FY16. During the quarter net loan charge-offs were $805 million, or 0.34% of average loans, versus the prior year’s same quarter net charge-offs of $886 million, or 0.38% of average loans.

Segment Performance

For the reported period, Community Banking’s revenues fell to $12.09 billion from $12.61 billion in the prior year’s same quarter. The Company attributed this decline to lower other income (hedge ineffectiveness), mortgage banking revenue, and gains on sale of debt securities, partially offset by equity investments, net interest income, and deferred compensation plan investments. Additionally, the segment’s net income had declined by $287 million, or 9%, y-o-y to $3.01 billion.

Wholesale Banking’s revenue grew $80 million, or 1%, to $7.04 billion in Q1 FY17, on increased net interest income driven by strong loan growth, including the GE Capital portfolio acquisitions. Furthermore, the segment’s net income also improved $194 million, or 10% y-o-y to $2.12 billion in Q1 FY17.

Due to higher net interest income, asset-based fees, deferred compensation plan investments, and other fee income, the Wealth and Investment Management segment reported total revenue of $4.19 billion, up $339 million, or 9%, on a y-o-y basis. Meanwhile, the segment’s net income rose by $111 million, or 22%, y-o-y to $623 million in Q1 FY17.

Share Repurchase

In Q1 FY17, the Company repurchased 53.1 million shares of its common stock, thereby reducing the quarter ended common shares outstanding by 19.4 million after considering seasonally higher common stock issuances to employee benefit plans. Furthermore, the Company has returned $0.38 per share to its shareholders in Q1 FY17 through common stock dividends up from $0.375 per share a year ago.

Stock Performance

At the closing bell, on Wednesday, April 19, 2017, Wells Fargo’s stock slightly fell 0.57%, ending the trading session at $52.15. A total volume of 17.41 million shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have surged 18.97% and 7.81%, respectively. The Company’s shares are trading at a PE ratio of 13.05 and have a dividend yield of 2.91%. At Wednesday’s closing price, the stock’s net capitalization stands at $260.95 billion.

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SOURCE: Active Wall Street