Daily News: January 17, 2012

Wells Fargo Beats Expectations, Reports Record Q4 Earnings

Wells Fargo reported record net income of $4.1 billion, or $0.73 per diluted common share, for fourth-quarter 2011, compared with $3.4 billion for fourth quarter 2010. Analysts polled by Thomson Reuters had expected earnings per share of $0.72. Full-year 2011 Wells Fargo net income was a record $15.9 billion, up 28% from 2010.

The bank said that many loan portfolios had linked quarter growth in average balances, including asset-backed finance, capital finance, commercial banking, commercial real estate, corporate banking, credit card, government and institutional banking, international, mortgage, real estate capital markets and retail sales finance.

Commenting on credit quality, chief risk officer Mike Loughlin said that fourth-quarter net charge-offs were $2.6 billion, or 1.36% (annualized) of average loans, essentially flat from third-quarter net charge-offs of $2.6 billion. The provision for credit losses was $600 million less than net charge-offs, compared with $800 million less than net charge-offs in the prior quarter, reflecting expected continued improvement. “We have seen significant improvement in credit performance over the past eight quarters, and expect continued but slower improvement in 2012 as portfolio quality approaches a stable, more normal level,” said Loughlin. “Absent significant deterioration in the economy, we continue to expect future reserve releases in 2012.”

“I’m extremely pleased with Wells Fargo’s performance in 2011 – including strong deposit and loan growth, record cross-sell and record earnings,” said chairman and CEO John Stumpf. “We achieved these results while completing the conversion of Wachovia’s retail banking stores – the largest such conversion in banking history – and now all of our 6,239 retail banking stores are on a single platform serving customers coast to coast. At the time of the merger, we said the integration of Wachovia would take three years and we are right on track. I couldn’t be prouder of how our two companies have come together as one, thanks to the important and tireless work of our more than 260,000 team members.”

To read the full text of the Wells Fargo news release, click here.