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Wells Fargo Realizes Record Earnings in Q3

The bank was active in the third quarter, increasing its core loan portfolio by $11.9 billion. Officials attributed the bank's record performance to improving credit quality.

by Staff
October 16, 2012
2 min to read


SAN FRANCISCO —Wells Fargo realized record earnings in the third quarter behind an $11.9 billion increase in its core loan portfolio — which includes mortgage, auto, credit card, as well as commercial and student lending — from the previous quarter. Officials said they expect to expand that even more in coming quarters.

The bank reported total revenue of $21.2 billion, up 8 percent, while net income was up 27 percent from the prior quarter to a record $4.9 billion. For the first nine months, net income was up from $11.8 billion a year ago to $13.8 billion

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Wells also reported total loans of $782.6 billion, up $7.4 billion from the prior quarter. Officials said the increase was fueled mainly by improved credit quality, which allowed Wells Fargo to reduce its allowances for credit losses from $18.8 billion in the previous quarter to $17.8 billion.

“Underlying credit quality continued to show improvement in the third quarter, as the overall financial condition of businesses and consumers strengthen, the housing market in many areas of the nation improved, and we continue to work to reduce problem assets and make new, high quality loans,” said Chief Risk Office Mike Louglin.

The bank’s mortgage business lead the way, with new mortgage loan originations rising from $89 billion a year ago to $139 billion. Auto originations totaled $6.3 billion in the quarter, which was down 3 percent from the prior quarter but up 20 percent from the year-ago period.

Net loan charge-offs during the quarter were $2.4 billion, which included $567 million in net charge-offs due to the implementation of newly rules issued by the Office of the Comptroller of the Currency (OCC). The bank also reported that loans 90 days or more past due totaled $1.5 billion, up from $1.4 billion in the prior quarter.

“Excluding the impact of the OCC guidance, we saw improvement in charge-offs, recoveries and nonperforming assets,” said Louglin, noting that the bank released $200 million it had set aside earlier to cover possible loan losses. “Early stage delinquencies remained relatively stable from the prior quarter. Absent significant deterioration in the economy, we continue to expect future reserve releases.”

 

 

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