Wells Fargo (WFC) reported an unexpectedly strong Q2, recording revenue and EPS of $11.5 billion (vs. $10.65 billion estimate) and $0.53 (vs. $0.50 estimate). Just as important, the bank also announced that it would increase its dividend to 34 cents, up 10% from its last dividend of 31 cents. This is the 21'st consecutive year WFC has raised its dividend.
This news should provide some comfort that the entire financial system isn't going bankrupt. Digging into the numbers, however, will be important: What is Wells doing that others aren't?
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Key Stats:
- Provision for credit loss at $3 billion.
- Average loans rose 17% yoy.
- Tier 1 capital of 8.24 percent, up from 7.92 percent at March 31, 2008, and 7.59 percent at December 31, 2007.
- Net charge-offs as a percent of total loans fell to 1.55% from 1.60% last quarter. Up from 0.87% in the same period last year.
- Non-performing loans as a percent of total loans spiked to 1.02%, up from 0.84% last quarter and 0.51% last year.
