Boston, MA 10/14/2013 (wallstreetpr) – Wells Fargo &Co (NYSE:WFC) is a bank in transition. With banking services under severe strain on earnings and revenue growth, they have to redefine their businesses. Banks who have managed to do so are faring much better. Wells Fargo, it seems, has managed to do so as their third quarter results show. They reported an earnings growth for fifteen straight quarters, despite a drop in their traditional business line of mortgage. The company has reported earnings of $0.99 per share in the third quarter, totaling $5.58 billion, a rise of 13%.
Fees accounted for 33% of the rise in profits at its brokerage and wealth management businesses in the third quarter as compared to the same period last year.
Following a decline in its mortgage business, it released $10 million from its reserves for bad loans.
The company’s “Wealth, Brokerage, and Retirement” sector contributed $450 million to its net revenue.
Cost reduction measures initiated by the bank are showing results. The company has laid off 5500 people since July, 2013 out of its total strength of 274,000 nationwide employees.
Mortgage revenues have been declining due to a rise in long term interest rates, lower refinance volumes, and reduced sale margins. The unclosed pipeline of first mortgages stood at just $35 billion, and the revenues are expected to fall further.
Walls Fargo was also able to reach an agreement with Freddie Mac to resolve all repurchase liabilities related to loans sold to Freddie Mac prior to January 1, 2009 with a onetime payment of $780 million. This will be done through its existing reserves and will not impact the earnings. The reserve balance of $1.42 billion will cover 109% of unresolved repurchase demands. Exceeding the company’s target of 9%, Tier 1 common under Basel III stood at 9.54%, an improvement of 100 bps.
The proactive steps by the company to tackle the turmoil in the banking industry are showing results, and Wells Fargo will continue to give good results ahead.