Wells Fargo Posts 10th Quarter of Consecutive Growth

California bank, Wells Fargo, posted its 10^th consecutive quarter of positive earnings growth. Earnings reported were $0.82 per share up 17%, and up 9% from last quarter.

In their earnings conference call, executives cited solid growth in deposits and mortgage purchases. They also pointed out to an increase in re-financing volume with 6.2 million customers originating mortgages or re-financing at record low rates.

There’s a real sign of confidence by the executives; with a strong balance sheet, they will be looking to continue gainful acquisitions. In 2011 Wells Fargo was able to buy a book of loans from Bank of Ireland and Allied Irish Bank. In the beginning of this year they were also able to acquire a book of loans from BNP Paribas North America in the energy lending business.

Most of the conference call was looking back with forward-looking prospects not looking bad. However, the mortgage industry is a cruel mistress.

A major class-action lawsuit found Wells Fargo complicit in discriminatory practices against ethnic minorities, charging minorities higher rates based on race alone. In addition to the $175 million settlement they had to pay, the bank will also be closing its relationship with mortgage brokers who were aggressively originating loans for Wells Fargo.

For those people who are in the process of refinancing through Wells, Reuters reports the following, “If you've already filed your application with a mortgage broker, your loan should go through as planned. Wells said it would stop taking new broker applications on Friday, July 13. Mortgages already in the pipeline are expected to go through.” Their severing from mortgage brokers will ensure that non-kosher practices will not occur, yet it will slow down their growth as well.

Their core businesses performed well in the quarter, which are well understood by their executive team. Non-interest bearing portfolio; such as, trading and equity portfolio gains were down, while their net interest income was performing well.

Markets reacted favorably to the news with Wells Fargo’s stock going up more than 3% in the day’s trading session. Coupled with earnings from J.P. Morgan Chase, the Dow Jones 30 Index climbed up 1.62%.