Shares of Wells Fargo were down 3% to close at $34.25, after the company reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating the consensus estimate by a penny, on continued strong mortgage loan revenue. Total revenue for the third quarter was $21.2 billion, also slightly ahead of the consensus estimate. Investors may have been disappointed that Wells Fargo's net interest margin narrowed even further than they may have expected after CFO Tim Sloan said at a conference last month that the margin for the third quarter "could be similar to what we experienced in the third quarter of last year when our net interest margin was down 17 basis points." Wells Fargo's third-quarter net interest margin was 3.66%, narrowing by 25 basis points from 3.91% the previous quarter, and 3.84%, a year earlier. During the company's conference call with analysts, Sloan said that the company's "operating losses were down $243 million on lower litigation accruals," and that "our litigation reserves consider all litigation matters we are aware of including the recently announced FHA lawsuit. Expense reduction is a continuing theme for Wells Fargo, and the company's efficiency ratio -- essentially, the number of pennies of overhead expenses for each dollar of revenue -- improved to 57.1 during the third quarter, from 58.2 in the second quarter, and 59.5, during the third quarter of 2011. The company's second-quarter return on average assets was a strong 1.45% and its return on equity was 13.38%, both increasing slightly from the previous quarter. Jefferies analyst Ken Usdin said that Wells Fargo's "expenses looked fine, declining $285mm Q-Q," with the efficiency ratio "right in the middle of the company's longer-term target of 55%-59%." Usdin said that "greater-than-expected
Shares of Regions Financial have now returned 70% year-to-date, following a following a 38% decline during 2011. The shares trade for 1.1 times their reported June 30 tangible book value of $6.69, and for nine times the consensus 2013 EPS estimate of 81 cents. The consensus 2012 EPS estimate is 72 cents. The Birmingham, Ala., lender will announce its third-quarter results on Oct. 23, with a consensus EPS estimate of 21 cents, increasing from 20 cents the previous quarter, and eight cents a year earlier. Analysts will be looking for a relatively "clean quarter" for the company, after a major transition during the first half of 2012. During the second quarter, Regions redeemed all $3.5 billion in preferred stock held by the government for bailout assistance through the Troubled Assets Relief Program, or TARP, after selling its Morgan Keegan subsidiary and raising $900 million in common equity during the first quarter. Usdin rates Regions Financial a "Hold," with an $8.00 price target, and said on Oct. 2 that he expects the company's "pre-provision
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