Wells Fargo Shares Drop as Revenue Comes in Light
Wells Fargo reported quarterly earnings on Friday that were a penny betterthan Wall Street had been expecting, but revenue was lighter than forecast.
Following the earnings announcement, shares of the nation's fourth-biggest bank fell. \(Click here to get the latest quote for Wells Fargo.\)
The fourth biggest U.S. bank said net income was $4.9 billion, or 88 cents a share, in the quarter, up from $4.1 billion, or 72 cents a share, in the same period a year earlier.
Revenuerose to $21.2 billion from $19.63 billion a year ago.
Analysts had expected the bank to post earnings excluding items of 87 cents a share on $21.47 billion in revenue, according to a Thomson Reuters consensus estimate.
Wells Fargo, the largest U.S. home lender, posted mortgage banking revenue of $2.8 billion, up more than 50 percent from a year ago. The bank made $139 billion in mortgages versus $89 billion a year ago, but up only slightly from the second quarter.
Wells Fargo and other banks are experiencing a jump in home lending as borrowers refinance their homes at low interest rates.
The bank's net interest margin — the spread it makes on what it pays on deposits and makes on loans — fell to 3.66 percent from 3.91 percent in the second quarter, a bigger drop than it had warned of last month.
Banks are seeing the margin shrink as older loans with higher interest rates are paid down.
Wells Fargo and JPMorgan Chase are the first two major banks to report earnings in what is forecast to be one of the worst quarterly seasons for companies since late 2009.
JPMorgan reported quarterly earnings and revenue that beat analysts' expectations, as the company began to put the "London Whale" trading losses in the past and looked ahead to an improving housing market.
—Reuters contributed to this report.