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Wells Fargo's earnings rise 14 percent

Published April 11, 2014 8:18 am

This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

First-quarter profit for Wells Fargo & Co., the biggest U.S. mortgage lender, surged 14 percent in the latest quarter as the bank continued to trim its losses on soured loans.

EARNINGS: Net income after dividends on preferred stock rose to $5.6 billion in the January-March period from $4.9 billion a year earlier, the bank reported early Friday. On a per-share basis, earnings were $1.05, well above the 97 cents forecast by Wall Street analysts. Revenue in the first quarter fell to $20.6 billion from $21.3 billion a year earlier, in line with analysts' estimates.

HOW IT HAPPENED: The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo's mortgage business.

The San Francisco-based bank, which is the fourth-largest U.S. bank by assets, controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was dampened by the spike in interest rates.

Wells Fargo funded $36 billion worth of mortgages in the first quarter, down sharply from $109 billion a year earlier.

At the same time, Wells Fargo slashed its losses on loans in the first quarter by 41 percent, to $825 million from $1.4 billion.

The bank trimmed expenses by $137 million compared with the fourth quarter to $11.9 billion, with lower costs for outside professional services and equipment offsetting higher employee pay and benefits.

STOCK ACTION: Wells Fargo stock rose 11 cents, or 0.2 percent, to $47.82 in pre-market trading.