Wells Fargo (WFC) fell short on both the top and bottom lines but investors likely focused on the industry's outlook just a week away from President-elect Trump's inauguration. WFC is the biggest U.S. mortgage lender.Earnings Results:
EPS of 96 cents on revenue of $21.6 billion from $5.2Bil or $1.00 per share last year, revenue remained flat. WFC reported a 6% decline in 4Q16 earnings due lower non-interest income and the inclusion of hedge ineffectiveness accounting impact of $592MM, as well as higher non-interest expenses.
- Trading operations lost $109 million. Estimates were:
EPS down 3% to $1.00, with revenue up 4% to $22.451 billion
Non-interest income for 4Q16 declined to $9.2Bil from $10.4Bil in 3Q16. The linked-quarter results included a $592MM loss due to the impact of higher interest rates and currency movements on hedging results reflected in other income. The linked-quarter declines also reflected decreases in trading income and mortgage banking fees.
Net interest income for 4Q16 rose by $450MM from last quarter, on growth in loans and investment securities, higher interest income on trading assets, higher variable income including periodic dividends and fees and a modest benefit from higher interest rates. Net interest margin rose 5 basis points to 2.87% from 3Q16.Loans and Deposits
WFC's total loans were $967.6Bil at Dec. 31, 2016, up $6.3Bil from Sept. 30, 2016. Loan growth was affected by the deconsolidation of certain previously sold reverse mortgage loans, which resulted from the sale of the related servicing, and reduced real estate 1-4 family first mortgages.
WFC's total asset under management for 4Q16 declined by 2% to $482Bil from the previous year. This decline was primarily due to equity and money market net outflows. This is partially offset by higher market valuations, fixed income inflows and assets acquired during the quarter.
WFC's total average deposits for 4Q16 were $1.3 trillion, up 2% from last quarter, driven by both commercial and consumer growth. Investment securities were $407.9Bil at Dec. 31, 2016, up $17.1Bil from 3Q, as about $44Bil of purchases, predominantly federal agency MBS in the available-for-sale portfolio, were partially offset by run-off.
Charts via https://alphastreet.com/app#/company/WFCReaction:
Wells Fargo & Co NYSE: WFC - Jan 13, 11:17 AM EST $55.79 +1.29 +2.37%Live From the Pit