Estimated read time: 1-2 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
(AP) - Fourth-quarter profit for Wells Fargo & Co., the biggest U.S. mortgage lender, jumped 11 percent as a steep drop in mortgage lending was offset by increased interest income.
EARNINGS: Net income after dividend payments on preferred stock rose to $5.4 billion in the October-December period from $4.9 billion a year earlier. On a per-share basis, earnings were $1, slightly above the 99 cents forecast by Wall Street analysts.
Fourth-quarter revenue fell to $20.7 billion from $21.9 billion.
HOW IT HAPPENED: The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo's mortgage business.
The San Francisco-based bank, which is the fourth-largest U.S. bank by assets, controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was reduced by the spike in interest rates.
Wells Fargo funded $50 billion worth of mortgages in the fourth quarter, down from $125 billion a year earlier. The bank has cut about 5,700 jobs, most of them related to its mortgage business, since the end of September.
At the same time, net interest income increased $55 million to $10.8 billion as the bank earned more on the securities it held and from trading.
Wells Fargo's stock fell 49 cents, or 1.1 percent, to $45.07 in early trading.
WHAT'S NEXT?
Wells Fargo CEO John Stumpf says the improving prospects for the U.S. economy will help the bank perform strongly this year.
(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
