Wells Fargo Keeps Streak, Earning $1.77B
By MICHAEL LIEDTKE
SAN FRANCISCO (AP) - Wells Fargo & Co. continued its recent earnings roll in the first quarter, propelled by a hard-driving sales culture that fed the banking giant's loan-hungry customers.
The San Francisco-based company said Tuesday that it earned $1.77 billion, or $1.03 per share, for the three months ending in March, an 18 percent increase from $1.49 billion, or 88 cents per share, a year ago.
Revenue totaled $7.15 billion, a 7 percent improvement from $6.68 billion last year.
The earnings per share exceeded the mean estimate of 98 cents among analysts polled by Thomson First Call.
The performance marked the 11th consecutive quarter of double-digit earnings growth for Wells, the largest bank based west of the Mississippi.
Wells' shares fell 55 cents to close at $55.36 on the New York Stock Exchange.
Chairman Dick Kovacevich is confident the bank will be able to sustain its recent earnings momentum as the economy gathers more steam. ``We're well positioned for even more growth,'' he said Tuesday.
The bank has been fattening its profits by catering to consumers eager to sample a smorgasbord of financial products.
That trend continued in the first quarter, despite a home mortgage lending slowdown that stemmed from a rise in interest rates.
Wells ended March with consumer loans totaling $165.5 billion, a 52 percent increase from $108.6 billion year ago. The gains included $19 billion in new consumer loans during the first three months of this year.
The steady rise reflects the bank's aggressive sales culture. Kovacevich, a former retailer, refers to Wells' 5,900 branches as ``stores'' to help foster a culture devoted to finding new ways to sell customers a mix of deposit accounts, loans and investment products.
The approach has been paying off. Wells said it sold 3.24 million products in the first quarter, a 23 percent increase from last year. The bank sells an average of five products to its customer households today, up from about three products in the late 1990s, said Howard Atkins, Wells' chief financial officer. Wells wants to average eight products per household.
Wells may be about to expand its product selection. The bank reportedly is among the bidders interested in buying mutual fund company Strong Financial Corp., which put itself on the auction block in December. Atkins declined to comment on Wells' interest in Strong Financial, but said in a telephone interview Tuesday that the bank remains interested in deals that would make it more profitable.
Home mortgages accounted for $125 billion, or 75 percent of Wells' consumer loans through the first quarter.
When interest rates began to climb last year, Wells' mortgage lending volume tapered off. The bank said its first-quarter revenue from home mortgages totaled $800 million, down 33 percent from $1.2 billion at the same time last year.
But demand for home mortgages surged in March when mortgage rates dipped again. The bank said it received $119 billion in mortgage applications during the first quarter, a 68 percent increase from the final three months of 2003. Wells entered the second quarter with about $72 billion in its mortgage pipeline.
Wells so far has been able to avoid major loan problems as its portfolio has swelled. The bank suffered first-quarter loan losses of $404 million, 3 percent less than the $415 million in loan losses registered a year ago.
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