10-QPeriod: Q3 FY2013

WELLS FARGO & COMPANY/MN Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 6, 2013For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company (WFC) reported strong financial results for the third quarter of 2013, with net income applicable to common stock of $5.3 billion, a 13% increase year-over-year, and diluted earnings per common share of $0.99, also up 13%. This marks the company's 15th consecutive quarter of EPS growth and 10th consecutive quarter of record EPS, demonstrating the benefits of its diversified business model. Key performance drivers included robust loan and deposit growth, with core loans up 6% year-over-year, and average core deposits up 5%. Credit quality continued to improve, with net charge-offs declining to 48 basis points and provision for credit losses significantly lower than the prior year. Capital levels also strengthened, with the Common Equity Tier 1 ratio under Basel III reaching 9.56%, surpassing the company's target. While total revenue saw a slight decline year-over-year, primarily due to lower mortgage banking revenue, noninterest income from other business lines, such as trust and investment fees, and card fees, showed solid growth. The company remains focused on its cross-sell strategy to deepen customer relationships and drive future earnings growth.

Financial Highlights

36 data points
Beta

Net Income

$5.58B

EPS (Diluted)

$0.99

Total Assets

$1.49T

Free Cash Flow

$21.10B

Financial Statements
Beta
Interest Expense$1.03B
Net Income$5.58B
EPS (Basic)$1.00
EPS (Diluted)$0.99
Shares Outstanding (Basic)5.30B
Shares Outstanding (Diluted)5.38B

Key Highlights

  • 1Net income applicable to common stock increased by 13% year-over-year to $5.3 billion.
  • 2Diluted earnings per common share rose by 13% to $0.99.
  • 3Core loans grew 6% year-over-year, and average core deposits increased by 5%.
  • 4Credit quality improved, with net charge-offs falling to 0.48% and a significant reduction in the provision for credit losses.
  • 5Common Equity Tier 1 ratio under Basel III reached 9.56%, exceeding the company's 9% target.
  • 6Total revenue decreased 3% year-over-year to $20.5 billion, impacted by lower mortgage banking income.
  • 7Noninterest income, excluding mortgage banking, increased, driven by growth in trust and investment fees, card fees, and brokerage advisory services.

Frequently Asked Questions

Wells Fargo reported a net income applicable to common stock of $5.3 billion, or $0.99 per diluted common share, for the third quarter of 2013.

Core loans grew by $44.2 billion, or 6%, year-over-year. Average core deposits increased by $79.1 billion, up 5% year-over-year, while deposit costs declined.

Wells Fargo's capital levels continued to strengthen. The Common Equity Tier 1 ratio under Basel III increased to 9.56% at September 30, 2013, surpassing its stated 9% target. Tier 1 capital and total capital ratios also remained strong.

Total revenue decreased by 3% year-over-year to $20.5 billion, primarily due to a decline in noninterest income from mortgage banking activities. However, growth was seen in other areas like trust and investment fees, card fees, and brokerage advisory services.

Wells Fargo uses its available-for-sale securities portfolio and various interest rate derivatives (swaps, swaptions, futures, forwards, and options) to hedge its interest rate exposures. The company generally views itself as positioned to benefit from higher interest rates, although mortgage banking activities tend to decline in a higher rate environment.