Wells Fargo Reports Record Revenue and Earnings

Wells Fargo reported today second quarter net income of $2.28 billion on revenues of $9.89 billion, both record-setting for the San Francisco-based bank. Wells Fargo reported net income of $2.09 billion on revenues of $8.8 billion in last year’s second quarter.

Net credit losses in the quarter were $720 million, or 0.87 percent of average loans annualized. The losses jumped more than 66 percent from $432 million in the second quarter of 2006 when losses were at historically low levels following the changes in bankruptcy law enacted in October 2005.

Total loans 90 days or more past due was $4.99 billion in the second quarter, up nearly 50 percent from $3.34 billion in the same period a year ago. Credit card loans 90 days or more past due came in at $253 million in the quarter, up nearly 40 percent from $181 million a year ago.

The Financial division, which includes credit cards, auto financing, and commercial service to consumers and businesses, recorded revenues of $1.4 billion, up 10 percent from nearly $1.3 billion a year ago. The loan growth rate was 14 percent, offset by an 18 percent increase in expenses, “largely due to the additional collection capacity we added last last year in auto [finance],” Tom Shippee, president and CEO said in a statement.   

Residential real estate originations at $ 80 billion “were essentially flat from” second quarter 2006, according to a statement from Mark Oman, senior executive vice president, home and consumer finance group. Prime originations were up $2.4 billion though nonprime originations were down $1.4 billion, reflecting changes in underwriting standards for the loans to consumers with spotty credit histories.

Oman said that Wells Fargo does not originate negative amortizing mortgages, or option adjustable rate mortgages, and doesn’t have in its portfolio nonprime, no-documentation, or low documentation mortgages.