Banking stock to watch: Wells Fargo & Co(NYSE: WFC)

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Wells Fargo & Co(NYSE: WFC) stock is trading weak today post its fourth quarter of 2017 and full year update. The stock lost over 0.3% this morning (as of  12:33PM EST on Jan 12th, 2018; Source: Google finance). The group reported an overall revenue rise to $88.4 billion, as compared to $88.3 billion in pcp which is lower than the street growth estimates.

For the Full year of 2017, Net income rose to $22.2 billion, against $21.9 billion in the prior corresponding period while diluted earnings per share (EPS) fell to $4.10, from $3.99 in pcp.  Net interest income rose 4% yoy to $49.6 billion, but Noninterest income fell 4% yoy to $38.8 billion. Average deposits rose $54.1 billion to $1.3 trillion, while Average loans rose $6.2 billion to $956.1 billion. The bank reported an  Return on assets (ROA) of 1.15 percent and return on equity (ROE) of 11.35%. Their Nonaccrual loans fell $2.3 billion to $8.0 billion.

Investment securities rose $11.8 billion to $416.4 billion as at December 31, 2017, against third quarter, with over $20.9 billion of purchases, mostly federal agency mortgage-backed securities (MBS) in the available for-sale portfolio, partially offsetting by run-off and sales.

Net unrealized gains on available-for-sale securities fell to $1.5 billion at December 31, 2017, from $1.8 billion at September 30, 2017, on the back of the gains realized in the fourth quarter. Rising Treasury yields were largely offset by tighter credit and agency MBS spreads during the quarter.

Total average deposits for fourth quarter 2017 rose $2.3 billion to $1.3 trillion. The average deposit cost enhanced 28 basis points during the quarter against pcp and 16 basis points from pcp boosted by an rise in commercial and Wealth and Investment Management deposit rates.

Nonperforming Assets Nonperforming assets lost $647 million, or 7 percent, from third quarter 2017 to $8.7 billion. Nonaccrual loans fell $583 million from third quarter 2017 to $8.0 billion on the back of falling commercial and industrial nonaccruals reflecting continued improvement in the oil and gas portfolio, as well as continued declines in consumer real estate nonaccruals.

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