Wells Fargo (WFC) Tops Q2 EPS by 5c

Wells Fargo (NYSE: WFC) reported Q2 EPS of $1.07, $0.05 better than the analyst estimate of $1.02. Revenue for the quarter came in at $22.2 billion versus the consensus estimate of $22.51 billion.

Chief Executive Officer Tim Sloan said, "Second quarter 2017 results demonstrated the benefit of our diversified business model as we continued to generate strong financial results, invest for the future, and adhere to our prudent risk discipline. We remain committed to reducing expenses and improving the efficiency of our company, and we are very focused on our recently announced goals. As we work to improve our efficiency, we will also continue to innovate for the future. We recently advanced a number of important customer-focused initiatives, such as the launch of the ZelleSM person-to-person payment platform to our 28 million digital customers. As always, our success starts with our customers, and I appreciate the effort of our 271,000 team members in helping our customers succeed financially. We continued to make progress this quarter in our efforts to rebuild trust and build a better Wells Fargo and, while there is still more work ahead of us, we are on the right track and I am confident about our future."

Chief Financial Officer John Shrewsberry said, “Wells Fargo reported $5.8 billion of net income in the second quarter, up on a linked-quarter and year-over-year basis. Overall results were solid in a period with continued modest economic growth and included growth in net interest income and continued improvement in credit results. Second quarter 2017 also included discrete tax benefits totaling $186 million, or approximately $0.04 per share, primarily as a result of our agreement to sell Wells Fargo Insurance Services.

Our liquidity and capital positions remained strong, and we returned $3.4 billion to shareholders through common stock dividends and net share repurchases for a net payout ratio3 of 63 percent in the quarter. In addition, during the quarter we received a non-objection from the Federal Reserve to our 2017 Capital Plan, which included an increase, subject to board approval, in our quarterly common stock dividend rate in third quarter 2017, to $0.39 per share from $0.38 per share, as well as increased share repurchases."

• Strong financial results:
  • Net income of $5.8 billion, up 5 percent from second quarter 2016
  • Diluted earnings per share (EPS) of $1.07, up 6 percent
  • Revenue of $22.2 billion
    • Net interest income of $12.5 billion, up $750 million, or 6 percent
  • Total average deposits of $1.3 trillion, up $64.5 billion, or 5 percent
  • Total average loans of $956.9 billion, up $6.1 billion, or 1 percent
  • Return on assets (ROA) of 1.21 percent and return on equity (ROE) of 11.95 percent
• Continued improvement in credit quality:
  • Provision expense of $555 million, down $519 million, or 48 percent, from second quarter 2016
    • Net charge-offs of $655 million, down $269 million
    • Net charge-offs were 0.27 percent of average loans (annualized), down from 0.39 percent
  • Reserve release1 of $100 million
  • Nonaccrual loans of $9.1 billion, down $2.9 billion, or 24 percent
• Strong capital position while returning more capital to shareholders:
  • Common Equity Tier 1 ratio (fully phased-in) of 11.6 percent2
  • Period-end common shares outstanding down 81.7 million from second quarter 2016
  • Returned $3.4 billion to shareholders in the second quarter through common stock dividends and net share repurchases
• Received a non-objection to the Company's 2017 Capital Plan submission from the Federal Reserve
  • As part of this plan, the Company expects to increase its third quarter 2017 common stock dividend to $0.39 per share from $0.38 per share, subject to approval by the Company's Board of Directors. The plan also includes up to $11.5 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from third quarter 2017 through second quarter 2018.

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

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