Wells Fargo Beats but Margin Pressure Continues

  • Wells Fargo reports fourth-quarter profit of 91 cents a share, beating the consensus estimate of 89 cents, according to data compiled by Bloomberg
  • Excluding items, net income was $5.1 billion, beating an estimate of $4.82 billion.
  • Net revenue came in at $21.9 billion, beating an estimate of $21.3 billion.
  • Annual profits of $18.9 billion were a record for the bank.
  • Net interest margin fell 10 basis points, missing some estimates.
  • Core loans grew $47.7 billion versus the third quarter.

NEW YORK ( TheStreet) -- Wells Fargo ( WFC) reported better than expected earnings of $5.1 billion, on revenue of $21.9 billion, beating adjusted estimates of $4.82 billion and $21.3 billion respectively.

Adjusted earnings per share of 91 cents, beat an estimate of 89 cents, according to analyst forecasts compiled by Bloomberg. Earnings of the nation's top mortgage lender were harmed by the impact of interest rates, but reflected continued loan growth and mortgage refinancing activity.

Net interest margin, the differential between what Wells Fargo earns on mortgages and loans and what it pays out in deposits and funding, fell 10 basis points.

Meanwhile, the bank grew its total loans by $29.9 billion from the third quarter, when total loans stood at $782.6 billion. Wells Fargo's core loan portfolio grew $47.7 billion, after rising $11.9 billion in the third quarter, mostly from capitalizing assets normally sold off to investors.

Prior to earnings, Guggenheim Partners analyst Marty Mosby said any sequential loan growth and a net interest margin decline of less than 5 basis points would signal a strong quarter for Wells Fargo.

In the fourth quarter, Wells Fargo recorded a $644 million charge for a Monday foreclosure settlement agreed with the Federal Reserve and Office of Comptroller of Currency (OCC), which has the bank committing a total cash payment of $766 million and a further $1.2 billion for already provisioned for foreclosure prevention.

For more on the foreclosure settlement, see why lenders were slow to detail the cost to investors.

Here's a look at why any of Wells Fargo's earnings troubles were hidden in plain sight ahead of the Friday earnings report.

-- Written by Antoine Gara in New York