UPDATE: Wells Fargo (WFC) Tops Q3 EPS by 1c

(Updated - October 14, 2015 8:17 AM EDT)

Wells Fargo (NYSE: WFC) reported Q3 EPS of $1.05, $0.01 better than the analyst estimate of $1.04. Revenue was $21.9 billion, with the consensus at $21.76 billion.

"Wells Fargo's strong third quarter results reflected the ability of our diversified business model to generate consistent financial performance in an uneven economic environment while continuing to meet our customers' financial needs," said Chairman and CEO John Stumpf. "Compared with a year ago, we grew loans, deposits and capital, and returned more capital to shareholders through dividends and share buybacks. Our balance sheet and credit results remained strong and our 265,000 team members continue to focus on helping our customers succeed financially."

Chief Financial Officer John Shrewsberry said, "Wells Fargo reported a solid $5.8 billion of net income for the third quarter. Revenue increased on both a linked quarter and year over year basis, on growth in both net interest income and noninterest income. We generated positive operating leverage in the quarter, as our expenses declined, and we remained within our targeted efficiency ratio range. Our return on equity and return on assets also remained within our targeted ranges, and we increased our net payout ratio5 to shareholders to 60 percent from 54 percent in second quarter."

Loans

Total loans were $903.2 billion at September 30, 2015, up $14.8 billion from June 30, 2015. Growth was broad-based and was driven by commercial and industrial, and 1-4 family first mortgage loans. Core loan growth was $17.1 billion, as non-strategic/liquidating portfolios declined $2.3 billion in the quarter. Total average loans were $895.1 billion in the third quarter, up $24.6 billion from the prior quarter, and included the benefit of the GE Capital loan purchase and related financing transaction that settled late in the second quarter.

		September 30, 2015										June 30, 2015
(in millions)		Core				Non-strategic and liquidating (a)			Total			Core			Non-strategic and liquidating			Total
Commercial		$	446,832			506			447,338			437,430			592			438,022
Consumer		402,363				53,532			455,895			394,670			55,767			450,437
Total loans		$	849,195			54,038			903,233			832,100			56,359			888,459
Change from prior quarter:		$	17,095			(2,321	)		14,774			29,423			(2,195	)		27,228
(a) See table on page 32 for additional information on non-strategic/liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios.

Net Loan Charge-offs

The quarterly loss rate (annualized) of 0.31 percent included commercial losses of 0.08 percent and consumer losses of 0.53 percent. Credit losses were $703 million in third quarter 2015, compared with $650 million in the second quarter, an 8 percent increase, primarily driven by a seasonal increase in the auto portfolio.

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

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