Wells Fargo (WFC) reported earnings on Fri 13 Oct 2017 (b/o)

• Wells Fargo missed both top and bottom line estimates

** charts after earnings **

  

Wells Fargo misses by $0.19 (including $0.20 in litigation), misses on revs; mortgage originations rose to $59 bln vs $56 bln in Q2; efficiency ratio above target range

• Reports Q3 (Sep) earnings of $0.84 per share, $0.19 worse than the Capital IQ Consensus of $1.03; revenues fell 1.8% year/year to $21.93 bln vs the $22.3 bln Capital IQ Consensus. GAAP EPS includes $0.20 of discrete litigation accrual.
• Total average loans of $952.3 billion, down $5.1 billion, or 1 percent. Total average loans of $952.3 billion, down $5.1 billion, or 1 percent.
• Net interest margin was 2.87 percent, down 3 basis points from second quarter 2017.
• Net interest income in third quarter 2017 was $12.5 billion, in line with second quarter 2017, as the impacts of lower investment portfolio yields driven by accelerated prepayments and lower average loan balances were offset by the impact of one additional day and a modest benefit from all other growth and repricing.
• Residential mortgage loan originations were $59 billion in the third quarter, up from $56 billion in the second quarter. The production margin on residential held-for-sale mortgage loan originations was 1.24 percent, consistent with the second quarter.
• Mortgage servicing income was $309 million in the third quarter, down from $400 million in the second quarter, primarily due to higher unreimbursed servicing costs.
• The efficiency ratio was 65.5 percent in third quarter 2017 (co's target range of 55-59%), which included a 456 basis point impact from the $1 billion litigation accrual.