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Wells Fargo reported better than expected Q2 earnings before the bell Tuesday. $WFC reported along with JPMorgan $JPM and Goldman Sachs  . Mortgage, credit card and auto loans increased

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Wells Fargo & Co NYSE: WFC Reported Earnings Before Open Tuesday

$1.30 Beat $1.16 EPS And $21.58 Bil Beat $20.94 Billion Forecast in Revenue 

Earnings

Wells Fargo announced an EPS of $1.30 on revenue of $21.58 billion. Mortgage, credit card and auto loans increased. Total average deposits were up $6.9 billion from the prior quarter, led by retail banking gain. Preview

  • The Fed took action in February to prohibit the bank from growing until it "sufficiently improves its governance and controls." 
  • 2Q EPS estimate $1.16 (range $1.08 to $1.27)
  • 2Q net interest margin estimate 2.86% (range 2.81% to 2.9%) 
  • 2Q Preview Call 10am 866-872-5161

In the conference call expect questions about the scandal-ridden company's search for a new CEO to replace Tim Sloan. Investors are hoping for signs that earnings will improve later this year. Revenue is expected to be  down at Wells Fargo. There are concerns about how low interest rates will impact their businesses witht he Fed's U turn to save the stockmarket.

Wells Fargo & Co NYSE: WFC

Market Reaction Pre-market $46.39 USD −0.32 (0.69%)

Highlights

  • Interest income decreased $446 million to $12.1 billion in the second quarter.
  • Net interest income got impacted by higher deposit costs and the lower interest rate environment.

“During the second quarter, we formed a new Strategic Execution and Operations Office that will focus on achieving operational excellence across our businesses to enable us to execute more effectively on our regulatory priorities and further drive our transformation,” said Interim CEO Allen Parker. In June 2019,

Wells Fargo received a non-objection to its 2019 capital plan from the Federal Reserve. As part of this plan, the San Francisco-based bank is expected to increase its third quarter 2019 common stock dividend to $0.51 per share, subject to approval by its Board of Directors. This capital plan also includes up to $23.1 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from the third quarter of 2019 through second quarter 2020.

 

Wells Fargo & Co Q1 Earnings Recap

$1.10 EPS on $21.00 billion forecast in revenue 

Earnings

Wells Fargo & Co. reported $1.20 per share vs $1.10 per share expected on revenue of $21.609 billion vs $21.012 billion forecast. Shares of Wells Fargo closed last Friday at $48.78. The 52-week trading range is $43.02 to $59.53.

In the conference call expect questions about the scandal-ridden company's search for a new CEO to replace Tim Sloan. Investors are hoping for signs that earnings will improve later this year. Revenue is expected to be  down at Wells Fargo. There are concerns about how low interest rates will impact their businesses witht he Fed's U turn to save the stockmarket.

Wells Fargo & Co NYSE: WFC

Market Reaction Pre-market $47.78 +0.01 (+0.21%)

Highlights

“Our financial results included continued strong credit performance and high levels of liquidity,” CFO John Shrewsberry said in a statement. “In addition, our continued de-risking of the balance sheet and consistent level of profitability have resulted in capital levels well above our regulatory minimum.”

  • Wells Fargo  credit-card transactions totaled $18.3 billion in the quarter, up 5% from a year earlier
  • Debit-card purchases increased by 6% to $86.6 billion.
  • Auto loans surged 24% to $5.4 billion. 
  • WFC it returned $6 billion to shareholders in the quarter through dividend payments and buybacks.
  • It increased its quarterly dividend to 45 cents per share, up from 43 cents in the fourth quarter of 2018.
  • Wells’ deposits fell less than expected, totaling $1.3 trillion.
  • Loans came in at $950.1 billion, roughly in line with expectations.
  • Wells Fargo’s nonperforming assets totaled $7.3 billion, well above a $6.67 billion estimate from StreetAccount.
  • The bank’s efficiency ratio was also higher than forecast, coming in at 64.4% for the quarter. A higher efficiency ratio indicates a bank is spending more money than it is making.

The company’s report follows the departure of CEO Tim Sloan on March 28. Sloan worked at Wells for 31 years. Allen Parker, Wells Fargo’s general counsel, took over as the company’s interim CEO.

Wells Fargo is still trying to recover from the fake account scandal surrounding its sales practices, in which employees in its consumer banking division created fake accounts amid a high-pressure sales environment. More issues surrounding the bank's practices continue to surface. The Fed in February last year barred the bank from growing until it "sufficiently improves its governance and controls."

Source: WFC, AlphaStreet

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