Is Wells Fargo (NYSE:WFC) living up to its Reputation?

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By Lisa Bradley on October 15, 2014 Company

Wells Fargo (NYSE:WFC) is an American multinational banking and financial services company. Its headquarters are based in California. It holds the position of fourth largest bank in the US in terms of assets, and is known to be the largest bank on the basis of market capitalization. The bank is the second largest in terms of deposits, home mortgage servicing and debit cards. It was listed as the 23^rd largest company in the United States. The bank is among one of the big fours in the US, along with Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM) and Citigroup (NYSE:C).

In February this year, Wells Fargo (NYSE:WFC) was named as the world’s most desired, most valued bank brand for two consecutive years. But this quarter’s financial statement portrayed a very different picture, even though Wall Street expectations have been met; the shares fell dramatically.

The U.S equity markets trading started once again on Tuesday, after been down for three consecutive days. The reporting didn’t do so well for Well Fargo (NYSE:WFC), as its shares slid lower then what was predicted by Wall Street analysts. According to the bank reports, $21.2 billion were reported in revenues, which were up by 4% from last year’s similar time frame. The net income rose by 2.7% to $5.7 billion and earnings per share rose by 3 cents to $1.02. All these figures aligned with the Wall Street expectations.

But the shares fell by 1.5% initially, at $49.46. These figures fell even more, as the days progressed. The bank witnessed an increase in net interest income from $150 million to $10.9 billion, even though the interest margin was down by 9 points as compared to the previous quarter, but it rounded up to 3.06%. However, at $10.3 billion the noninterest income remained stable in the second quarter.

According to the, CEO John Stumpf, the third quarter results seem promising in terms of long term growths obtained by fundamental drivers. He emphasized that there was visible deposit growth and solid loan through commercial and consumer banking.

By the end of the third quarter, Well Fargo (NYSE:WFC)’s total loans summed up to an exhilarating $838.9 billion with further expected growth. These loans came into existence through commercial and industrial, real estate, family mortgage, credit card, automobile and revolving credit as well as installment loans. The introduction of residential mortgage also contributed to $48 billion, with $1 billion on linked quarter. On the other hand mortgage application reduced from a staggering $72 billion to $64 billion in comparison to previous quarter.

With regards to future anticipation, Stumpf boasted that the bank’s capital levels increased and signs of continued stable growth in economy are evident. In light of these revelations, several good opportunities are expected for Wells Fargo (NYSE:WFC).

The other big banks also faced similar situations as Wells Fargo (NYSE:WFC). JPMorgan Chase (NYSE: JPM)’s shares went down by 2% to $57.60. Citigroup (NYSE: C) on the contrary, showed better results of 3% increase to $51.46 per share.