Wells Fargo today reported record net income of $1.91 billion for the second quarter of 2005, or $1.12 per share, up 11 percent from the prior year’s $1.71 billion, or $1 per share.
A group of analysts polled by Thomson First Call had predicted profit of $1.13 per share.
Revenue rose 6 percent to $7.87 billion, the company said. Wells Fargo also reported a return on equity of 19.8 percent. Average loans were up 11 percent from the prior year, at $295.6 billion, and average core deposits were up 6 percent, at $238.3 billion.
“Thanks to the outstanding efforts of our more than 150,000 talented team members, this was another exceptional quarter of broad-based growth across our more than 80 businesses with continued double-digit growth in profit and earnings per share,” said Chairman and CEO Dick Kovacevich in a statement.
Kovacevich noted that during the first half of this year, the company opened 28 banking stores and added 22 mortgage stores, seven consumer finance stores and four regional commercial banking offices.
The company reported mortgage originations of $85 billion, up $20 billion from the prior quarter. Mortgage applications for the quarter came to $117 billion, up $26 billion from the prior quarter. The mortgage application pipeline was $73 billion, up $14 billion from the prior quarter. The owned mortgage-servicing portfolio was $874 billion, up 17 percent from June 30, 2004. The home equity loan portfolio was $56 billion, up 26 percent from June 30, 2004.
“We were very pleased with the underlying performance of our residential real estate lending business,” said Mark Oman, Group EVP, Home and Consumer Finance, in a statement.
“With lower interest rates and a strong housing market, we saw significant growth in home mortgage applications in the quarter. Applications of $117 billion were up 17 percent from last year and we ended the quarter with a pipeline of $73 billion, up $14 billion, or 24 percent, from March 31, 2005,” Oman said.
“Reflecting the lower mortgage interest rates at quarter end, $304 million of provision for impairment of mortgage servicing rights was recorded in the quarter compared with a $271 million release in first quarter 2005,” Oman said.
“At quarter end, the mortgage servicing rights asset was valued at $8.5 billion, or 1.12 percent of loans serviced for others, compared with $8.5 billion, or 1.37 percent at June 30, 2004, and $9 billion, or 1.24 percent, at March 31, 2005,” Oman said.
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