This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Banks Report Muted Quarter

The fourth-quarter earnings season kicked off Tuesday with many U.S. banks reporting profits that either matched or fell short of Wall Street expectations.

Topping the list of big lenders to report modest earnings was Wells Fargo (WFC - Get Report). The California-based lender said its fourth-quarter profits rose a modest 8% from a year ago to $1.9 billion, up from $1.8 billion. In the quarter, Wells Fargo earned $1.14 a share, compared with $1.04 a share a year ago. Revenue rose 4% to $8.5 billion.

Earnings came in a penny shy of the Thomson First Call consensus forecast of $1.15 a share, a figure that already had been reduced by a penny in recent days. Revenue came in slightly ahead of the consensus estimate of $8.45 billion.

Fourth-quarter earnings were weighed down at Wells Fargo by a surge in consumer bankruptcy filings, as individuals raced to beat the filing deadline for escaping a new and tougher federal bankruptcy law. The new bankruptcy law is expected to be one of the many drags on bank earnings in the fourth quarter.

In the quarter, Wells Fargo reported a $203 million increase in net charge-offs for bad loans. Of that total, the bank attributed $171 million to the impact of the new bankruptcy law.

But Wells Fargo did a better job of managing the other big expected problem for banks in the quarter, which was the narrowing spread between short- and long-term interest rates.

In the quarter, the bank said net interest income rose 9% in the face of a so-called flattening yield curve that has made it difficult for many banks to generate fat profits off their deposit and lending operations.

By comparison, Fifth Third (FITB - Get Report), the big Midwestern regional lender, reported a 2% year-over-year decline in net interest income. Net interest income is the difference between what a bank makes on its investments and loans and the money it pays out to depositors.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
FITB $18.81 -0.21%
WFC $53.95 -0.83%
USB $43.35 -0.73%
AAPL $123.91 -0.42%
FB $81.49 -0.88%


DOW 17,686.71 -89.41 -0.50%
S&P 500 2,059.01 -8.88 -0.43%
NASDAQ 4,866.4050 -34.48 -0.70%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs