Wells Fargo and U.S. Bancorp

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Wells Fargo and U.S. Bancorp

By Credit Federal | Published 01/17/2006

Wells Fargo, U.S. Bancorp post higher profits

Three large U.S. banks, led by Wells Fargo & Co., posted higher fourth-quarter profit on Tuesday as increased borrowing by businesses helped offset slowing consumer loan demand and bankruptcy-related losses.

Wells Fargo (WFC.N: Quote, Profile, Research) and U.S. Bancorp (USB.N: Quote, Profile, Research) each said profit rose 8 percent. Profit jumped 89 percent at Fifth Third Bancorp Inc. (FITB.O: Quote, Profile, Research), though a balance sheet restructuring affected year-earlier results.

A fourth big bank, National City Corp. (NCC.N: Quote, Profile, Research), posted a profit decline of 59 percent.

Earnings at Wells Fargo and Fifth Third fell short of analysts' estimates.

"You're going to see commercial and industrial lending be a point of strength, though we may see a slowdown on the consumer side" as interest rates rise, said Mark Batty, an analyst at PNC Advisors in Philadelphia. "The bankruptcies are a one-time event. Credit quality overall appears benign."

In morning trading, Wells Fargo shares fell 0.6 percent, U.S. Bancorp fell 2 percent, National City rose 1.9 percent, and Fifth Third fell 1.8 percent.

WELLS FARGO, U.S. BANCORP

San Francisco-based Wells Fargo, the No. 5 U.S. bank, said net income rose to $1.93 billion, or $1.14 per share, from $1.79 billion, or $1.04 a share, a year earlier.

Revenue rose 4 percent to $8.49 billion. Analysts polled by Reuters Estimates on average had forecast profit of $1.15 per share on revenue of $8.46 billion.

Business lending rose 13 percent from a year earlier and increased 10 percent from the third quarter, the fifth straight double-digit, quarter-over-quarter gain.

This helped offset $171 million, or 7 cents per share, of losses from the surge in bankruptcy filings ahead of an Oct. 17 law change that made it tougher and more costly for consumers to rid themselves of debt.

Profit rose 13 percent to $1.39 billion from retail banking, increased 9 percent to $439 million from wholesale banking for businesses, and fell 35 percent to $98 million from Wells Fargo Financial.

Minneapolis-based U.S. Bancorp, the nation's No. 6 bank, said net income rose to $1.14 billion, or 62 cents per share, from $1.06 billion, or 56 cents.

Net revenue rose 3 percent to $3.33 billion. Analysts on average expected profit of 62 cents per share on revenue of $3.38 billion.

The bank set aside $205 million in the quarter for credit losses, triple the year-earlier level, including $56 million related to bankruptcies.

Fees rose 8 percent to $1.55 billion, including double-digit gains from deposit charges, corporate payment products, mortgage banking and automated teller machine processing. Lending income fell 1 percent to $1.79 billion. Expenses fell 7 percent to $1.46 billion.

NATIONAL CITY, FIFTH THIRD

Cleveland-based National City, the No. 8 bank, said net income fell to $398 million, or 64 cents per share, from $960 million, or $1.46 per share. Year-earlier results included a one-time $477 million gain from an asset sale.

Excluding items, such as costs for a multiyear plan to boost efficiency, fourth-quarter profit totaled 76 cents per share, according to Reuters Estimates. Analysts expected 68 cents. Some analysts, though, said operating earnings were closer to the consensus forecast.

"Consumers are being affected by higher rates and energy prices," National City Chief Executive David Daberko said in an interview. "On the corporate side, we see a fair amount of conservatism on the part of middle-market borrowers. Commercial real estate is good, and commercial leasing is very good."

Cincinnati-based Fifth Third, the No. 11 bank, said net income rose to $332 million, or 60 cents per share, from $176 million, or 31 cents a share, a year earlier, when it took a big charge to restructure its balance sheet.

Profit fell 16 percent from the third quarter, hurt by consumer and airline bankruptcies. Expenses rose 4 percent, while revenue was little changed.

In a statement, Chief Executive George Schaefer said the bank intends in 2006 "to improve expense efficiency in light of current revenue trends."

Copyright Reuters 2006. All Rights Reserved.

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Wells Fargo and U.S. Bancorp - by <a href=http://creditfederal.com>CreditFederal.com</a> Wells Fargo, U.S. Bancorp post higher profits Three large U.S. banks, led by Wells Fargo & Co., posted higher fourth-quarter profit on Tuesday as increased borrowing by businesses helped offset slowing consumer loan demand and bankruptcy-related losses. Wells Fargo (WFC.N: Quote, Profile, Research) and U.S. Bancorp (USB.N: Quote, Profile, Research) each said profit rose 8 percent. Profit jumped 89 percent at Fifth Third Bancorp Inc. (FITB.O: Quote, Profile, Research), though a balance sheet restructuring affected year-earlier results. A fourth big bank, National City Corp. (NCC.N: Quote, Profile, Research), posted a profit decline of 59 percent. Earnings at Wells Fargo and Fifth Third fell short of analysts' estimates. "You're going to see commercial and industrial lending be a point of strength, though we may see a slowdown on the consumer side" as interest rates rise, said Mark Batty, an analyst at PNC Advisors in Philadelphia. "The bankruptcies are a one-time event. Credit quality overall appears benign." In morning trading, Wells Fargo shares fell 0.6 percent, U.S. Bancorp fell 2 percent, National City rose 1.9 percent, and Fifth Third fell 1.8 percent. WELLS FARGO, U.S. BANCORP San Francisco-based Wells Fargo, the No. 5 U.S. bank, said net income rose to $1.93 billion, or $1.14 per share, from $1.79 billion, or $1.04 a share, a year earlier. Revenue rose 4 percent to $8.49 billion. Analysts polled by Reuters Estimates on average had forecast profit of $1.15 per share on revenue of $8.46 billion. Business lending rose 13 percent from a year earlier and increased 10 percent from the third quarter, the fifth straight double-digit, quarter-over-quarter gain. This helped offset $171 million, or 7 cents per share, of losses from the surge in bankruptcy filings ahead of an Oct. 17 law change that made it tougher and more costly for consumers to rid themselves of debt. Profit rose 13 percent to $1.39 billion from retail banking, increased 9 percent to $439 million from wholesale banking for businesses, and fell 35 percent to $98 million from Wells Fargo Financial. Minneapolis-based U.S. Bancorp, the nation's No. 6 bank, said net income rose to $1.14 billion, or 62 cents per share, from $1.06 billion, or 56 cents. Net revenue rose 3 percent to $3.33 billion. Analysts on average expected profit of 62 cents per share on revenue of $3.38 billion. The bank set aside $205 million in the quarter for credit losses, triple the year-earlier level, including $56 million related to bankruptcies. Fees rose 8 percent to $1.55 billion, including double-digit gains from deposit charges, corporate payment products, mortgage banking and automated teller machine processing. Lending income fell 1 percent to $1.79 billion. Expenses fell 7 percent to $1.46 billion. NATIONAL CITY, FIFTH THIRD Cleveland-based National City, the No. 8 bank, said net income fell to $398 million, or 64 cents per share, from $960 million, or $1.46 per share. Year-earlier results included a one-time $477 million gain from an asset sale. Excluding items, such as costs for a multiyear plan to boost efficiency, fourth-quarter profit totaled 76 cents per share, according to Reuters Estimates. Analysts expected 68 cents. Some analysts, though, said operating earnings were closer to the consensus forecast. "Consumers are being affected by higher rates and energy prices," National City Chief Executive David Daberko said in an interview. "On the corporate side, we see a fair amount of conservatism on the part of middle-market borrowers. Commercial real estate is good, and commercial leasing is very good." Cincinnati-based Fifth Third, the No. 11 bank, said net income rose to $332 million, or 60 cents per share, from $176 million, or 31 cents a share, a year earlier, when it took a big charge to restructure its balance sheet. Profit fell 16 percent from the third quarter, hurt by consumer and airline bankruptcies. Expenses rose 4 percent, while revenue was little changed. In a statement, Chief Executive George Schaefer said the bank intends in 2006 "to improve expense efficiency in light of current revenue trends." Copyright Reuters 2006. All Rights Reserved. Free Personal Finance Software - Create your household <a href="http://creditfederal.com/personal-budget.html">personal budget</a> to easily itemize and <a href="http://creditfederal.com/track-expenses.html">track expenses</a> so you know where you spend your money most. Desktop software makes it easy to <a href="http://creditfederal.com/balance-checkbook.html">balance checkbook</a> entries, or use the software as an electronic <a href="http://creditfederal.com/checkbook-register.html">checkbook register</a>. This article provided courtesy of <a href=http://creditfederal.com target=_new>www.CreditFederal.com</a>, a personal credit resource of good or bad credit credit cards and loans.

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