“We had a good second quarter on the mortgage side,” Howard Atkins, chief financial officer at Wells Fargo, told CNBC Tuesday. “Mortgage applications were up 6% year-over-year--the volume is still there. When you look at the organization more broadly, we had double-digit top-line growth, double-digit earnings per share growth, double-digit growth in commercial loans, total deposits and very strong growth in all our fee-based businesses – asset management, insurance, real estate brokerage, trust and investment fees and credit card fees. This was very solid quarter across the board.”
Analysts on average forecast profit of 67 cents per share on revenue of $9.63 billion, according to Reuters Estimates.
"It was a typical Wells Fargo quarter," said Mark Batty, an analyst at PNC Wealth Management in Philadelphia, which invests $75 billion and owns the bank's shares. "Credit quality was relatively benign, given issues surrounding subprime lending."
A 23% increase in fee income to $4.7 billion bolstered results, as gains from trust and investment fees and card fees offset a 6% drop from mortgage banking.
Wells Fargo is the largest U.S. bank so far to report results for the second quarter, when stagnating housing prices and rising borrowing costs caused more borrowers to default on home loans.
The bank, which is the nation's second-largest mortgage provider, said it is better able to withstand the turmoil afflicting "subprime" and other lenders because it doesn't make the exotic loans that caused dozens of rivals to retrench or collapse.
Wells Fargo said quarterly home loan applications rose 6% to $114 billion, while originations fell just 1% to $80 billion. "Given the turmoil in the market, business is somewhat being directed our way," Chief Financial Officer Howard Atkins said in an interview.
Credit Losses Rise
Credit losses rose 67% from a year earlier to $720 million, but just 1% from the first quarter. These losses were "very much in line with our expectations," Atkins said.
Wells Fargo's net interest margin, the highest of any large bank, rose to 4.89% from 4.76 percent a year earlier.