April 13, 2012 08:00 AM Eastern Daylight Time
Wells Fargo Reports Record Quarterly Net Income
Q1 Net Income of $4.2 billion; Q1 Revenue of $21.6 billion
SAN FRANCISCO--()--Wells Fargo & Company (NYSE:WFC):
“Absent significant deterioration in the economy, we continue to expect future reserve releases in 2012.”
- Continued strong financial results:
- Record diluted earnings per common share of $0.75, up 11 percent (annualized) from prior quarter
- Wells Fargo net income of $4.2 billion, up 14 percent (annualized) from prior quarter
- Revenue of $21.6 billion, up 20 percent (annualized) from prior quarter
- Pre-tax pre-provision profit (PTPP)1 of $8.6 billion, up 27 percent (annualized) from prior quarter
- Positive operating leverage
- Return on average assets of 1.31 percent, up 6 basis points from prior quarter
- Return on equity of 12.14 percent, up 17 basis points from prior quarter
- Solid deposit growth and higher core loans:
- Total average core checking and savings deposits up $7.8 billion from prior quarter
- Core loan portfolios up $984 million from December 31, 20112
- Total loans of $766.5 billion at March 31, 2012, compared with $769.6 billion at December 31, 2011
- Announced the acquisition of BNP Paribas’s North American energy lending business, which is expected to close in April 2012 and includes approximately $3.9 billion of loans outstanding
- Improved capital position:
- Tier 1 common equity3 under Basel I increased $4.4 billion to $99.5 billion, with Tier 1 common equity ratio of 9.95 percent under Basel I at March 31, 2012. Under current Basel III capital proposals, Tier 1 common equity ratio estimated at 7.81 percent, an increase of 31 basis points from prior quarter
- Increased quarterly common stock dividend rate to $0.22 per share, starting in first quarter 2012
- Improved credit quality:
- Net charge-offs were $2.4 billion, a decline of $245 million from prior quarter
- 1.25 percent (annualized) charge-off rate, the lowest level since 2007
- Reserve release4 of $400 million (pre-tax) reflected improved portfolio performance
1 See footnote (2) on SUMMARY FINANCIAL DATA table for more information on pre-tax pre-provision profit.
2 See table in Loans section for more information on core and non-strategic/liquidating loan portfolios.
3 See FIVE QUARTER TIER 1 COMMON EQUITY tables for more information on Tier 1 common equity.
4 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
| Selected Financial Information | ||||||||||||
| Quarter ended | ||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||
| 2012 | 2011 | 2011 | ||||||||||
| Earnings | ||||||||||||
| Diluted earnings per common share | $ | 0.75 | 0.73 | 0.67 | ||||||||
| Wells Fargo net income (in billions) | 4.25 | 4.11 | 3.76 | |||||||||
| Asset Quality | ||||||||||||
| Net charge-offs as a % of avg. total loans | 1.25 | % | 1.36 | 1.73 | ||||||||
| Allowance as a % of total loans | 2.50 | 2.56 | 2.98 | |||||||||
| Allowance as a % of annualized net charge-offs | 199 | 188 | 172 | |||||||||
| Other | ||||||||||||
| Revenue (in billions) | $ | 21.64 | 20.61 | 20.33 | ||||||||
| Average loans (in billions) | 768.6 | 768.6 | 754.1 | |||||||||
| Average core deposits (in billions) | 870.5 | 864.9 | 796.8 | |||||||||
| Net interest margin | 3.91 | % | 3.89 | 4.05 | ||||||||
Wells Fargo & Company (NYSE:WFC) reported record net income of $4.2 billion, or $0.75 per diluted common share, for first quarter 2012, compared with $3.8 billion, or $0.67 per share, for first quarter 2011, and $4.1 billion, or $0.73 per share, for fourth quarter 2011.
“Wells Fargo delivered outstanding first quarter results driven by strong revenue growth. Quarterly revenue was the highest in nine quarters, and we achieved our ninth consecutive quarter of earnings per share growth,” said Chairman and CEO John Stumpf. “Our continued performance for shareholders through a variety of economic environments is a testament to our diversified business model. The performance of our franchise also allowed us to provide our shareholders with an increased common stock dividend for the second consecutive year. As Wells Fargo celebrates its 160th anniversary and successful completion of the Wachovia merger integration, I want to again thank all our team members for helping our customers succeed financially and satisfying all their financial needs—quarter after quarter, year after year.”
“This was a great quarter for Wells Fargo, as we increased revenue, PTPP, and net income; saw improvement in operating leverage and credit quality; and continued to grow capital,” said Chief Financial Officer Tim Sloan. “Revenue was up 20 percent (annualized) from the fourth quarter, led by continued strong mortgage banking results. Expenses increased in the quarter, but we currently expect a $500-$700 million overall reduction in noninterest expense during the second quarter. Our return on assets of 1.31 percent was the highest since first quarter 2008, while our return on equity of 12.14 percent was the highest since second quarter 2009.
“We increased our quarterly common stock dividend rate 83 percent to $0.22 per share and have the ability to repurchase more common shares as a result of the Federal Reserve’s non-objection to our 2012 Comprehensive Capital Analysis and Review capital plan. Our shareholders have been very patient, and we are pleased to reward them with an additional return on their investment.”
Revenue
Revenue increased $1 billion from fourth quarter 2011, to $21.6 billion. Total revenue increased due to growth in noninterest income, including strong mortgage banking and market sensitive revenues1, while net interest income remained stable. Businesses generating linked-quarter revenue growth included asset-backed finance, brokerage services, capital finance, capital markets, commercial banking, corporate banking, corporate trust, dealer services, equity funds, global remittance, insurance, international, mortgage banking, personal credit management, real estate capital markets, retail sales finance, private student lending, and wealth management.
1 Includes net gains (losses) from trading activities, net gains (losses) on debt securities available for sale and net gains from equity investments.
