Wells Fargo profit jumps 24 percent to record high

SAN FRANCISCO, Fri Jan 11, 2013 — Wells Fargo & Co. on Friday said fourth-quarter profit rose 24 percent to a record high as the bank set aside less money to cover bad loans and made more fees from mortgages.

But the bank’s net interest margin declined and it made fewer mortgage loans than in the third quarter, and its shares fell 1.4 percent to $34.92 in premarket trading.

Wells Fargo, the fourth-biggest U.S. bank and the largest U.S. home lender, said fees from mortgages climbed nearly 30 percent from a year ago to $3.1 billion as homeowners continued to refinance their homes at low rates. The bank issued $125 billion in mortgages during the quarter, down from $139 billion in the third quarter.

In a sign that the mortgage refinancing boom could be slowing, the bank’s pipeline of unclosed home loans was $81 billion at the end of the fourth quarter, down from $97 billion at the end of the third quarter.

The bank’s net interest margin — a closely watched measure of how much money banks make from their loans — fell to 3.56 percent from 3.66 percent a year ago, but the decline was less severe than in the third quarter. Banks are seeing their margins shrink as older loans with higher interest rates are paid down.

Wells Fargo’s provision for loan losses fell to $1.8 billion from about $2 billion a year ago as borrowers continued to do a better job of making their payments.

Wells Fargo expands commercial banking in Canada

SAN FRANCISCO, Tue Nov 6, 2012 – Wells Fargo & Co. on Tuesday said it was expanding lending, treasury management and other services for corporate customers in Canada as the No. 4 U.S. bank by assets adds to its international reach.

The bank said it received regulatory approval for the expansion in September. The bank previously had select businesses in the country, but under its new license will now have commercial banking, global banking, commercial real estate and energy banking businesses in Canada.

The bank said it will aim to serve existing U.S. customers with subsidiaries in Canada, Canadian companies with business in the United States and local Canadian companies. Wells has about 75 employees in offices in Toronto, Vancouver, Calgary and Montreal.

“Canada is a key trading partner to the U.S. and a market where we see more of our commercial and corporate customers doing business,” Wells CEO John Stumpf said in a statement.

As of June 30, foreign loans equaled about 5 percent of Wells Fargo’s total loans and 3 percent of total assets, the bank said in its most recent quarterly securities filing.

Wells Fargo third-quarter net up on strong mortgage lending

SAN FRANCISCO, Fri Oct 12, 2012 – Wells Fargo & Co. on Friday reported a 22 percent increase in third-quarter profit on a surge in mortgage lending.

The fourth biggest U.S. bank said net income totaled $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. The bank’s latest EPS topped the analysts’ consensus estimate of 87 cents, according to Thomson Reuters I/B/E/S.

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 expects net interest decline in third quarter: CFO

SAN FRANCISCO, Tue Sep 11, 2012 – Wells Fargo & Co. expects a decline in its net interest margin in the third quarter as low interest rates continue to squeeze the money it makes from loans, Chief Financial Officer Tim Sloan said.

The decline could be similar to that of a year ago, when the bank’s net interest margin fell from the previous quarter by 17 basis points, Sloan said at an investor conference on Tuesday. A basis point is 1/100th of a percentage point.

In the second quarter, Wells reported a net interest margin of 3.91 percent, flat with the previous quarter. Sloan attributed the estimated decline to lower variable income than in the previous quarter, the running off of higher yielding loans and securities and strong deposit inflows.

Wells Fargo to pay more than $6.5 million to settle SEC charges

WASHINGTON, Tue Aug 14, 2012 – Wells Fargo & Co. will pay a penalty of more than $6.5 million to settle civil charges alleging it sold complex mortgage-backed instruments to municipalities and non-profits during the financial crisis without fully disclosing the risks.

The Securities and Exchange Commission said on Tuesday that the bank has agreed to settle without admitting or denying the charges, and the money will be placed into a fund to help harmed investors.

The SEC also charged a former Wells Fargo vice president, Shawn McMurtry, for his role in selling the products. He settled the charges without admitting or denying them. He will pay a $25,000 penalty and will also be suspended from the industry for six months.

Wells Fargo profit up 17 percent, mortgage banking strong

SAN FRANCISCO, Fri Jul 13, 2012 – Wells Fargo & Co. reported a 17 percent increase in second-quarter profit on strong mortgage banking income and improved credit quality.
The nation’s fourth-biggest bank on Friday said net income was $4.6 billion, or 82 cents a share, compared with $3.9 billion, or 70 cents a share, a year earlier.
Analysts’ average estimate was 81 cents a share, according to Thomson Reuters I/B/E/S.
Wells Fargo, the U.S. leader in home loans, posted mortgage banking income of $2.9 billion, up from $1.6 billion a year ago and up slightly from the first quarter.
The bank also benefited by releasing $400 million in reserves previously booked for loan losses.
“Wells Fargo’s strong financial results this quarter again reflect the benefit of our diversified business model,” CEO John Stumpf said in a statement.
Revenue was $21.3 billion, up from $20.4 billion a year ago. Expenses totaled $12.4 billion, down slightly from a year earlier.
The bank previously said it expected expenses to fall to $11.25 billion by the fourth quarter as part of an efficiency push. But on Friday it said it would miss that target.
The bank’s shares were down 5 cents at $32.80 in premarket trading.
Wells Fargo and JPMorgan Chase & Co. kicked off bank earnings season on Friday.
JPMorgan, the largest U.S. bank, reported net income of $4.96 billion, or $1.21 a share, including a $4.4 billion trading loss. That compared with $5.43 billion or $1.27 a share, a year earlier.

Wells Fargo to pay $125 million in race discrimination probe

WASHINGTON, Thu Jul 12, 2012 – Wells Fargo & Co. has agreed to pay $125 million to settle an investigation by the U.S. Justice Department into whether it discriminated on the basis of race and national origin in its mortgage lending, according to court documents filed on Thursday.
The settlement, which needs approval from a judge, would end the investigation into whether the fourth largest U.S. bank between 2004 and 2009 knowingly targeted minorities for risky mortgages that came with higher costs, according to documents filed in the U.S. District Court for the District of Columbia.
Wells Fargo in May said it could face civil charges under laws that prohibit discrimination against minority homebuyers. At the time, the lender said in a securities filing it believed the charges should not be brought and said it was seeking to show the department that it is in compliance with fair lending laws.
The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees, and costs based only on race and not correlated to the borrowers’ creditworthiness, according to the court document.
The bank had no immediate comment on Thursday.

Analysts have questions about Wells Fargo’s risks

SAN FRANCISCO, Mon May 21, 2012 – Analysts are likely to pepper Wells Fargo & Co. with questions about its investment portfolio at the bank’s investor day on Tuesday, after JPMorgan Chase & Co. disclosed a surprise investment loss this month.

Wells Fargo faces the same pressure as JPMorgan and every other U.S. bank right now: boosting income is tough when loan demand is weak and lending margins are tight.

Deposits have been flooding into the bank, and it has struggled to find good places to invest them. JPMorgan’s excess deposits were invested by the bank’s Chief Investment Office, which made trades that have generated at least $2 billon of paper losses.

Wells has been one of the more successful U.S. banks in recent years. It expanded to the East Coast after its 2008 purchase of Wachovia, and now eclipses JPMorgan as the largest bank by market value.

Wells Fargo may face fair lending claims involving minority homebuyers

SAN FRANCISCO, Tue May 8, 2012 – Wells Fargo & Co. could face civil charges from the U.S. Department of Justice under laws that prohibit discrimination against minority homebuyers, the bank disclosed on Tuesday.

The fourth-largest U.S. bank said in a securities filing it believes the charges should not be brought and said it is seeking to show the department that it is in compliance with fair lending laws.

A bank spokeswoman declined to comment beyond the filing.

The disclosure comes several months after Bank of America Corp.’s Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.

The Justice Department accused Countrywide of charging blacks and Hispanics higher interest rates and fees than whites, and steering minorities to more expensive subprime loans even though they were qualified for traditional mortgage rates. Countrywide denied the department’s allegations.

A DOJ spokeswoman did not immediately respond to a request for comment.

Wells Fargo’s play for prime brokerage prompts skepticism

As Wells Fargo becomes a bigger player in the investment banking game, not everyone is a fan.

Moody’s Investors Service, the rating agency, raised concerns on Monday about the bank’s recent move outside its comfort zone of consumer lending. Moody’s directed criticism at the bank for stepping into prime brokerage, calling the bank’s recent acquisition of the midsize company Merlin Securities “credit negative.”

Wells Fargo agreed to buy Merlin last month for an undisclosed sum, making it the last of the nation’s biggest banks to enter prime brokerage, the lucrative business that caters to hedge funds and other big investors. Prime brokers provide a broad array of services, including cash management, execution of leveraged trades and securities lending.

Moody’s expressed concern the Merlin takeover “signals that Wells Fargo intends to expand its” investment banking business. “Though Merlin is small and has a limited balance sheet, we expect that Wells Fargo will build this business and seek to expand its products and services,” Moody’s said in the report.

Fitch, one of Moody’s top competitors, offered a softer interpretation of the deal. While Wells Fargo “may use Merlin as a platform for further expansion, the transaction is still viewed as relatively small in nature,” Fitch said last week.

In a statement, Wells Fargo defended the deal and challenged the Moody’s assessment.