Wells Fargo (WFC) Edges Out Q2 EPS Views; Sees Higher Expenses in Q4

July 13, 2012 10:11 AM EDT
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One of the most important earnings report from the banking sector -- that of Wells Fargo (NYSE: WFC) -- was out this morning and after initial hesitation investors are bidding shares higher.

Revenue in the second quarter rose 4.4 percent from $20.39 billion up to $21.29 billion, but missed consensus views calling for $21.32 billion.

Net income saw a 17 percent jump to $4.62 billion, or 82 cents per share, from $3.95 billion in the same period last year. The Street was looking for EPS of 81 cents.

Return on assets improved 14 basis points to 1.41 percent while return on equity popped 94 basis points to 12.86 percent.

Wells noted that loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $1.4 billion, from $1.6 billion in the prior quarter.

Tier 1 common equity ratio was 10.08 percent and estimated Tier 1 common equity ratio was 7.78 percent under Basel III.

Net charge-offs fell $195 million from the first quarter.

"While the economic recovery remains uneven, we continued to meet our customers’ financial needs and benefited from signs of stabilization in the housing market," commented CEO John Stumpf. "[w]e had record quarterly mortgage applications, increases in lending to consumers and businesses, and continued growth in deposits and cross-sell."

The increase in mortgage apps is leading Wells to expect fourth quarter 2012 expenses to be higher than its previous target of $11.25 billion.

Shares are 1.9 percent higher in early trading Friday.

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