Wells Fargo & Co. (WFC) Reports In-Line Q2 EPS of $1.01

(Updated - July 11, 2014 8:04 AM EDT)

Wells Fargo & Co. (NYSE: WFC) reported Q2 EPS of $1.01, in-line with the analyst estimate of $1.01. Revenue for the quarter was $21.1 billion, versus the consensus of $20.8 billion.

Quarterly highlights:

• 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 percent1
    • 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 release3 due to improvements in credit performance
• Higher return to shareholders while maintaining strong capital levels4:
  • 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

“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.”

The Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent in third quarter 2014.

For earnings history and earnings-related data on Wells Fargo & Co. (WFC) click here.

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