Market Overview

Wells Fargo Reports Record Earnings, Stock Still Drops

Wells Fargo (NYSE: WFC) reported record fourth quarter earnings on Friday morning.

America's largest bank (by market cap) posted a record $5.1 billion in profit, up 24 percent year-over-year.

Wells Fargo also reports a record earnings per share of $0.91, up 24 percent from the fourth quarter of 2011. This EPS tops analysts' expectations by $0.02.

The company's return on assets (ROA) was up nearly 17 percent and its return on equity (ROE) was up around 11.5 percent, further boosting its overall success during the quarter.

Revenue also finished nicely and was up 7 percent to $21.9 billion. This was largely due to a $29.9 billion surge in total loans as well as a $47.7 billion rise in the company's core loan portfolio.

Despite the positive earnings report, Wells Fargo's stock was down nearly 2 percent in trading on Friday. This is perhaps due to several bruises the company has received in the media in recent weeks.

Bloomberg reported on Tuesday that Wells Fargo and other top US mortgage providers must pay a combined $8.5 billion in a settlement involving claims of foreclosure abuse. In a statement on January 7, the company announced it would pay $766 million of the settlement and commit an additional $1.2 billion to foreclosure prevention actions.

Also, as reported yesterday by Reuters via PhillyBurbs.com, the banking giant must pay $1.3 million to a California couple after being held liable by FINRA in a case involving civil fraud, misrepresentation, breach of contract and other activities. While this represents a minor scratch financially, it is a black eye in a public relations sense.

Additionally, Well Fargo's earnings report, while otherwise good, was hampered by a $644 million hit in operating losses to compensate for the aforementioned settlement. This amounted to a loss of $0.09 per share.

The news has been mixed for Wells Fargo this week. From a regulatory standpoint, the company has taken a few lumps. However, its earnings report is a welcome boost.

After dropping around 2 percent as the market opened, the stock is trading down around 1.3 percent as of this writing and appears to be inching in a positive direction.

Posted-In: Earnings News Guidance Intraday Update Movers Trading Ideas Best of Benzinga

 

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