Wells Fargo 2Q Profit Up 17% On Strong Mortgage Income

Date : 07/13/2012 @ 8:46AM
Source : Dow Jones News
Stock : Wells Fargo & Company (WFC)
Quote : 55.06  0.79 (1.46%) @ 4:37PM

Wells Fargo 2Q Profit Up 17% On Strong Mortgage Income

Wells Fargo (NYSE:WFC)
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   By Saabira Chaudhuri 
 

Wells Fargo & Co.'s (WFC) second-quarter profit rose 17% as the nation's fourth-largest bank by assets saw mortgage banking income climb and its provision for credit losses fall.

With a smaller capital markets business than its big bank peers, the West Coast-based bank is more closely watched in the investment community for its mortgage banking results. In May, Wells Fargo--the nation's largest mortgage originator--turned over hundreds of emails and other documents related to its mortgage-backed securities business to the Securities and Exchange Commission after being taken to court.

The SEC wanted data on the pools of loans underlying nearly $60 billion of securities sold by Wells Fargo to investors from September 2006 through early 2008. The agency said the subpoenas asked for information on the guidelines on loan quality used by the underwriters to vet the loan pools before they were bundled into securities, the outcomes of those due-diligence checks and the prospectuses used to sell the investments.

Wells Fargo originated $131 billion of mortgages in the second quarter, compared with $129 billion in the first quarter and $64 billion a year earlier. Mortgage banking non-interest income was up 79% to $2.89 billion from a year earlier.

The bank reported a profit of $4.62 billion, up from a year-earlier profit of $3.95 billion. Per-share earnings, reflecting the payment of preferred dividends, rose to 82 cents from 70 cents a year earlier. Analysts polled by Thomson Reuters expected 81 cents.

Revenue increased 4.4% to $21.29 billion. Analysts were looking for $21.36 billion.

Credit-loss provisions totaled $1.8 billion, down slightly from $1.84 billion a year earlier and $2 billion in the first quarter.

Net charge-offs, or loans lenders don't think are collectible, fell to 1.15% of average loans, compared with 1.52% a year earlier and 1.25% in the first quarter.

Shares were down 1.07% to $32.50 premarket. Through Thursday's close, the stock is up 19% so far this year.

Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com

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