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Wells Fargo (WFC) Shares Off Despite Higher 4Q Earnings, Revenue

 January 11, 2013 08:20 AM

(By Balachander) Wells Fargo & Co (NYSE: WFC) reported an increase in quarterly earnings and revenue, yet the company's shares dropped 1.10 percent in premarket trading on Friday.

Earnings per share (EPS) increased 25 percent to 91 cents, versus market expectations of 89 cents. Net income grew 24 percent to $5.09 billion for the fourth quarter. On a sequential basis, earnings rose 3 percent.

Revenue was $21.9 billion, up 6.0 percent from the same period of last year and 3.3 percent from the prior quarter. Wall Street analysts, on average, expected a revenue increase of 3.30 percent.

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Net interest income fell 2 percent from last year.

Provision for credit losses declined 10 percent to $1.83 billion.

"We saw the continued benefits of our diversified business model and reported record full year and fourth quarter earnings, robust deposit and solid loan growth, and strong performance across our business units," commented Chairman and CEO John Stumpf. "While our fourth quarter included some noteworthy items, we achieved strong returns on average assets and equity of 1.46 percent and 13.35 percent, respectively."

Net interest margin (NIM) was 3.56 percent, down from 3.89 percent in the year-ago period. In the third quarter, NIM was 3.66 percent.

The decline in NIM reflected strong deposit growth of $30 billion in the quarter as well as the ongoing low rate environment and pressure on asset yields, the company said.

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As at Dec. 31, total loans were $799.6 billion, up $16.9 billion from Sept. 30, 2012.

Wells Fargo shares, which have been trading between $28.77 and $36.60 over the past year, closed Thursday's regular trading at $35.40.

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