Wells Fargo Doing Quite Well With Record Earnings in 4Q

Wells Fargo (NYSE:WFC) reported fourth quarter earnings, which beat analysts’ estimates and were up almost 20 percent over the previous year.

Riding on the back of better credit quality, robust loan growth and significant write-backs of earlier loan-loss provisions, the bank’s results justified Chief Executive Jon Stumpf’s statement that “I’m extremely pleased with Wells Fargo’s performance in 2011 – including strong deposit and loan growth, record cross-sell and record earnings.”

“Wells Fargo has a better business model for the environment we’re in now because commercial lending is their biggest sector,” said Jeffrey Sica, president of SICA Wealth Management in Morristown, N.J. “They’re not overly involved in the trading activities that the other banks are involved in.”

Net income was $3.89 billion (73 cents a share) compared to $3.23 billion (61 cents a share) a year before. Analysts had expected the bank to post earnings per share of 72 cents in this quarter. Total revenues were $20.6 billion, marginally down from $21.5 billion last year. Loan loss provision was $2 billion down from $3 billion last year. Significantly, this is the seventh quarter on the trot that the bank has reversed loan provisioning, and more could be expected through 2012, as per Chief Credit Officer, Mike Loughlin. A $442 million loss from trading activities in the immediately preceding quarter was nullified by a gain of $430 million in the fourth quarter.

The results were in sharp contrast to competitor Citigroup (NYSE:C) which reported earnings that were off analyst estimates and down significantly over the previous year.