ells Fargo beats by $0.02, reports revs in-line (55.60)
- Reports Q2 (Jun) earnings of $1.03 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $1.01; revenues rose 0.2% year/year to $22.2 bln vs the $22.23 bln Capital IQ Consensus.
- Second quarter 2017 also excluded discrete tax benefits totaling $186 million, or approximately $0.04 per share.
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Net interest income in second quarter 2017 increased $183 million from first quarter 2017 to $12.5 billion, as the benefit of repricing earning assets in response to higher short-term interest rates exceeded the cost of repricing liabilities, due in part to continued deposit pricing discipline. Second quarter results also benefited from one additional business day. These benefits more than offset the impact of lower average loan and investment securities balances.
- Net interest margin was 2.90 percent, up 3 basis points from first quarter 2017. The benefit of higher short-term interest rates, disciplined deposit pricing, and a reduction in long-term debt was partially offset by the impacts from lower loan and investment securities balances.
- Total average loans of $956.9 billion, up $6.1 billion, or 1 percent.
- Return on assets (ROA) of 1.21 percent and return on equity (ROE) of 11.95 percent.
- Provision expense of $555 million, down $519 million, or 48 percent, from second quarter 2016; Net charge-offs of $655 million, down $269 million Net charge-offs were 0.27 percent of average loans (annualized), down from 0.39 percent Reserve release of $100 million
- Auto originations of $4.5 billion in second quarter, down 17 percent from prior quarter and down 45 percent from prior year, as proactive steps to tighten underwriting standards resulted in lower origination volume.
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Home Lending Originations of $56 billion, up from $44 billion in prior quarter;
- Applications of $83 billion, up from $59 billion in prior quarter;
- Application pipeline of $34 billion at quarter end, up from $28 billion at March 31, 2017
- Expect efficiency initiatives will reduce expenses by $2 billion annually by year-end 2018 and that those savings will support our investment in the business; expect an additional $2 billion in annual expense reductions by the end of 2019; these savings are projected to go to the "bottom line"