WELLS FARGO EARNS $1.8 BILLION ON RECORD REVENUE; INCREASES DIVIDEND 10%
>Net income of $1.8 billion compared with $2.3 billion a year ago
>Diluted earnings per share of $0.53 compared with $0.67 a year ago
>Record revenue of $11.5 billion, up 16 percent from prior year and 34 percent (annualized) from prior quarter
>Record cross-sell for both retail and commercial customers
>Provision for credit losses of $3.0 billion (including reserve build of $1.5 billion)
>Positive operating leverage (revenue growth of 16 percent; expense growth of 2 percent from prior year)
>Average loans up 18 percent from prior year and 8 percent (annualized) from prior quarter
>Average earning assets up 20 percent from prior year and 15 percent (annualized) from prior quarter
>Net interest margin of 4.92 percent, up 23 basis points from prior quarter
>Tier 1 capital of 8.24 percent, up from 7.92 percent at March 31, 2008, and 7.59 percent at December 31, 2007
SAN FRANCISCO — Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $0.53 for second quarter 2008 compared with $0.60 in first quarter 2008 and $0.67 in second quarter 2007. Net income was $1.75 billion compared with $2.00 billion in first quarter 2008 and $2.28 billion in second quarter 2007. The Company also announced a quarterly common stock dividend of 34 cents per share, up 10 percent from the previous dividend of 31 cents per share. "Wells Fargo continued to strengthen its franchise during the second quarter," said President and CEO John Stumpf. "Earnings per share were 14 cents below that of last year due to $2.3 billion of higher provision expense, including a credit reserve build of $1.5 billion (30 cents per share). We were able to lend more to current customers where we believed it was prudent and properly priced. We grew core deposits while reducing funding costs. We achieved record cross-sell results with our retail and commercial customers — a testament to our relationship-based strategy and our 160,000 team members who serve our customers. We are open for business and getting lots of it. We also continued to benefit from opportunities in this environment to gain new business and customers through selective acquisitions. We maintained a strong balance sheet and, for the 21st consecutive year, increased our dividend. We're still affected by the weak economy, but we believe we're one of the best positioned in financial services to grow through this adversity and to build an even stronger company for our team members, customers, communities and shareholders."
Financial Performance
“Wells Fargo continued to profitably build its franchise this quarter, at a time when many in our industry are primarily focused on fixing rather than growing their companies,” said Chief Financial Officer Howard Atkins. “Despite a $3 billion provision for loan losses in the quarter — including a $1.5 billion credit reserve build — the Company earned a $1.8 billion quarterly profit, generated a return on equity of 14.6 percent, increased Tier 1 capital in the quarter by 32 basis points to 8.24 percent, and increased the combination of capital and loan loss allowance to 9.7 percent of average earning assets from 9.1 percent linked quarter. The continued profitable growth in our franchise is reflected in the growth of our pre-tax pre-provision income to $5.6 billion, up $1.4 billion, or 34 percent, from a year ago, driven by a 20 percent increase in earning assets, a 16 percent increase in revenue, a 10 percent increase in noninterest income, record cross-sell of 5.64 products in our retail business and 6.3 products in our commercial business, an increase in the net interest margin to 4.92 percent, up 23 basis points linked quarter, and an increase in operating leverage, with expenses up only 2 percent versus 16 percent revenue growth. “In broad terms, the credit crisis has created incremental earnings opportunities for Wells Fargo largely offsetting our incremental charge-offs from the crisis. Year-to-date total net interest income, for example, was up $1.8 billion from the first half of 2007, roughly equal to the increase in net charge-offs for the same period, even after adjusting charge-offs for the impact of our National Home Equity Group’s new charge-off policy. Few other large financial institutions have had the capacity to realize the opportunities generated by the credit crisis, and if opportunities to add attractive assets, add new customers and gain market share and wallet share continue, the long-term benefits could very well last beyond the peak in credit costs.”As a result of the Company’s performance and confidence in long-term growth, the Board of Directors increased the Company’s third quarter common stock dividend to $0.34 per share, an increase of 10 percent from the second quarter dividend of $0.31 per share.
The current earnings from companies reporting so far are great. The Wells Fargo news is especially upbeat news. Maybe a market bottom has been reached. Afterall, earnings should be the driving force behind whether the market moves up or down (Tim).
>Net income of $1.8 billion compared with $2.3 billion a year ago
>Diluted earnings per share of $0.53 compared with $0.67 a year ago
>Record revenue of $11.5 billion, up 16 percent from prior year and 34 percent (annualized) from prior quarter
>Record cross-sell for both retail and commercial customers
>Provision for credit losses of $3.0 billion (including reserve build of $1.5 billion)
>Positive operating leverage (revenue growth of 16 percent; expense growth of 2 percent from prior year)
>Average loans up 18 percent from prior year and 8 percent (annualized) from prior quarter
>Average earning assets up 20 percent from prior year and 15 percent (annualized) from prior quarter
>Net interest margin of 4.92 percent, up 23 basis points from prior quarter
>Tier 1 capital of 8.24 percent, up from 7.92 percent at March 31, 2008, and 7.59 percent at December 31, 2007
SAN FRANCISCO — Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $0.53 for second quarter 2008 compared with $0.60 in first quarter 2008 and $0.67 in second quarter 2007. Net income was $1.75 billion compared with $2.00 billion in first quarter 2008 and $2.28 billion in second quarter 2007. The Company also announced a quarterly common stock dividend of 34 cents per share, up 10 percent from the previous dividend of 31 cents per share. "Wells Fargo continued to strengthen its franchise during the second quarter," said President and CEO John Stumpf. "Earnings per share were 14 cents below that of last year due to $2.3 billion of higher provision expense, including a credit reserve build of $1.5 billion (30 cents per share). We were able to lend more to current customers where we believed it was prudent and properly priced. We grew core deposits while reducing funding costs. We achieved record cross-sell results with our retail and commercial customers — a testament to our relationship-based strategy and our 160,000 team members who serve our customers. We are open for business and getting lots of it. We also continued to benefit from opportunities in this environment to gain new business and customers through selective acquisitions. We maintained a strong balance sheet and, for the 21st consecutive year, increased our dividend. We're still affected by the weak economy, but we believe we're one of the best positioned in financial services to grow through this adversity and to build an even stronger company for our team members, customers, communities and shareholders."
Financial Performance
“Wells Fargo continued to profitably build its franchise this quarter, at a time when many in our industry are primarily focused on fixing rather than growing their companies,” said Chief Financial Officer Howard Atkins. “Despite a $3 billion provision for loan losses in the quarter — including a $1.5 billion credit reserve build — the Company earned a $1.8 billion quarterly profit, generated a return on equity of 14.6 percent, increased Tier 1 capital in the quarter by 32 basis points to 8.24 percent, and increased the combination of capital and loan loss allowance to 9.7 percent of average earning assets from 9.1 percent linked quarter. The continued profitable growth in our franchise is reflected in the growth of our pre-tax pre-provision income to $5.6 billion, up $1.4 billion, or 34 percent, from a year ago, driven by a 20 percent increase in earning assets, a 16 percent increase in revenue, a 10 percent increase in noninterest income, record cross-sell of 5.64 products in our retail business and 6.3 products in our commercial business, an increase in the net interest margin to 4.92 percent, up 23 basis points linked quarter, and an increase in operating leverage, with expenses up only 2 percent versus 16 percent revenue growth. “In broad terms, the credit crisis has created incremental earnings opportunities for Wells Fargo largely offsetting our incremental charge-offs from the crisis. Year-to-date total net interest income, for example, was up $1.8 billion from the first half of 2007, roughly equal to the increase in net charge-offs for the same period, even after adjusting charge-offs for the impact of our National Home Equity Group’s new charge-off policy. Few other large financial institutions have had the capacity to realize the opportunities generated by the credit crisis, and if opportunities to add attractive assets, add new customers and gain market share and wallet share continue, the long-term benefits could very well last beyond the peak in credit costs.”As a result of the Company’s performance and confidence in long-term growth, the Board of Directors increased the Company’s third quarter common stock dividend to $0.34 per share, an increase of 10 percent from the second quarter dividend of $0.31 per share.
The current earnings from companies reporting so far are great. The Wells Fargo news is especially upbeat news. Maybe a market bottom has been reached. Afterall, earnings should be the driving force behind whether the market moves up or down (Tim).
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