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Wells Fargo Reports Record Quarterly Net Income

Wells Fargo & Company (NYSE:WFC):
  • Continued strong financial results:
    • Net income of $5.9 billion, up 14 percent from first quarter 2013
    • Diluted earnings per share (EPS) of $1.05, up 14 percent
    • Revenue of $20.6 billion, compared with $21.3 billion
    • Noninterest expense of $11.9 billion, down $452 million
    • Efficiency ratio of 57.9 percent, improved by 40 basis points
    • Return on assets (ROA) of 1.57 percent, up 8 basis points 1
    • Return on equity (ROE) of 14.35 percent, up 76 basis points
  • Strong loan and deposit growth:
    • Total average loans of $823.8 billion, up $27.1 billion, or 3 percent from first quarter 2013 1
      • Quarter-end loans of $826.4 billion, up $28.1 billion, or 4 percent 1
      • Quarter-end core loans of $748.4 billion, up $41.0 billion, or 6 percent 1,2
    • Total average core deposits of $973.8 billion, up $47.9 billion, or 5 percent
      • Quarter-end core deposits of $994.2 billion, up $54.3 billion, or 6 percent
  • Continued improvement in credit quality:
    • Net charge-offs of $825 million, down $594 million from first quarter 2013
      • Net charge-off rate of 0.41 percent (annualized), down from 0.72 percent
    • Nonperforming assets down $4.1 billion, or 18 percent
    • $500 million reserve release 3 due to continued strong credit performance and improved economic conditions
  • Strengthened capital levels 4:
    • Common Equity Tier 1 ratio under Basel III (General Approach) of 11.36 percent at March 31, 2014
    • Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.04 percent
    • Received a non-objection to 2014 Capital Plan under the Comprehensive Capital Analysis and Review (CCAR), which included a proposed dividend rate of $0.35 per share for second quarter 2014, subject to Board approval, up from $0.30 per share in the first quarter. The 2014 Capital Plan also included an increase in common stock repurchase activity compared with actual repurchases in 2013.
    • In the first quarter, the Board approved an additional 350 million shares in the Company’s authority to repurchase its common stock.
1

Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the SUMMARY FINANCIAL DATA table for more information.
2

See Loans Breakdown table for more information on core and non-strategic/liquidating loan portfolios.
3 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
4

See FIVE QUARTER RISK-BASED CAPITAL COMPONENTS and COMMON EQUITY TIER 1 UNDER BASEL III tables for more information on Common Equity Tier 1. Common Equity Tier 1 (Advanced Approach, fully phased-in) is estimated based on final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act.

Selected Financial Information
             
  Quarter ended
Mar. 31,   Dec. 31,   Mar. 31,
    2014     2013   2013
Earnings
Diluted earnings per common share $ 1.05 1.00 0.92
Wells Fargo net income (in billions) 5.89 5.61 5.17
Return on assets (ROA) (1) 1.57 % 1.48 1.49
Return on equity (ROE) 14.35 13.81 13.59
 
Asset Quality
Net charge-offs (annualized) as a % of avg. total loans 0.41 0.47 0.72
Allowance for credit losses as a % of total loans (1) 1.74 1.82 2.15
Allowance for credit losses as a % of annualized net charge-offs 431 392 299
 
Other
Revenue (in billions) $ 20.6 20.7 21.3
Efficiency ratio 57.9 % 58.5 58.3
Average loans (in billions) (1) $ 823.8 813.3 796.7
Average core deposits (in billions) 973.8 965.8 925.9
Net interest margin (1) 3.20 % 3.27 3.49
               

 

(1) Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the SUMMARY FINANCIAL DATA table for more information.

Wells Fargo & Company (NYSE:WFC) reported record net income of $5.9 billion, or $1.05 per diluted common share, for first quarter 2014, up from $5.2 billion, or $0.92 per share, for first quarter 2013, and up from $5.6 billion, or $1.00 per share, for fourth quarter 2013.

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