1Q25 Financial Results April 11, 2025 © 2025 Wells Fargo Bank, N.A. All rights reserved. 1Q25 results | | • Net income of $4.9 billion, or $1.39 per diluted common share, included: | | | | --- | --- | --- | --- | | | ($ in millions, except EPS) | Pre-tax Income | EPS | | | Discrete tax benefits related to the resolution of prior period matters | $313 | $0.09 | | | Gain on the previously announced sale of the non-agency third party servicing segment of our commercial mortgage servicing business | 263 | 0.06 ...

Core Viewpoint - Wells Fargo & Company reported first-quarter 2025 adjusted earnings per share of $1.27, exceeding the Zacks Consensus Estimate by 3.3% and showing a slight increase from $1.26 in the prior-year quarter [1] Financial Performance - The company's total revenues for the quarter were $20.15 billion, missing the Zacks Consensus Estimate of $20.79 billion and reflecting a 3.4% decrease from the year-ago quarter [4] - Net interest income (NII) was reported at $11.49 billion, down 6% year over year, influenced by lower interest rates, deposit mix changes, and lower loan balances [4] - Non-interest income grew marginally to $8.65 billion, driven by gains from the sale of the commercial non-agency third-party servicing business and higher investment banking fees, but offset by lower venture capital results and trading gains [6] - Non-interest expenses decreased by 3.1% year over year to $13.89 billion, attributed to reduced operating losses and efficiency initiatives [7] Credit Quality and Capital Ratios - The provision for credit losses was $932 million, down 1% from the prior-year quarter, with net loan charge-offs at $1.09 billion, a decrease of 12.2% year over year [9] - The Tier 1 common equity ratio was 11.1%, down from 11.2% in the first quarter of 2024 [10] Profitability Metrics - Return on assets improved to 1.03% from 0.97% in the prior-year quarter, while return on equity increased to 11.5% from 10.5% [12] Shareholder Actions - In the reported quarter, Wells Fargo repurchased 44.5 million shares, amounting to $3.5 billion [13] Future Outlook - The growth in fee income and decline in expenses are expected to support the company's top line in the upcoming periods, although the decrease in NII remains a concern [14]

Group 1 - Wells Fargo & Co reported first-quarter earnings of $1.27 per share, exceeding analyst estimates of $1.23 per share, but revenue of $20.15 billion fell short of expectations [1] - CEO Charlie Scharf noted that consumers "have remained resilient" during the conference call [1] - Following the earnings report, Wells Fargo's stock was down 4.4% at $60.32, reversing premarket gains, with a year-to-date decline of approximately 14% [1] Group 2 - In the options market, 35,000 calls and 37,000 puts have been traded, which is double the typical overall options volume [2] - The most popular option is the weekly 4/11 60-strike put, with positions being bought to open [2] - Wells Fargo's Schaeffer's Volatility Scorecard (SVS) is 88 out of 100, indicating that the stock has outperformed options traders' volatility expectations over the past 12 months [2]

Core Viewpoint - Wells Fargo & Co reported earnings of $1.39, exceeding estimates by five cents, yet its shares are trading lower, indicating potential for a price rally from a support level [1] Group 1: Stock Performance - The stock found support around $60.40 after a period of panic selling, which is significant as this level was previously a resistance point in July [2] - Many investors who sold at $60.40 are now looking to repurchase shares at the same price, contributing to the formation of support [3][4] Group 2: Market Dynamics - The presence of numerous buyers at the support level may lead to a bidding war, potentially resulting in an upward trend for the stock [4] - If Wells Fargo's stock reaches $66.30, it may encounter resistance again, as this level was previously a support point that many investors regret selling at [5] Group 3: Price Movement Patterns - Stocks often sell off after hitting resistance due to competitive selling among investors, which can create a downward price trend [6]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company focuses on medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - Proactive's news team delivers insights across various sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] Group 2 - Proactive is committed to adopting technology to enhance workflows and improve content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Group 1: Earnings Performance - Wells Fargo reported quarterly earnings of $1.27 per share, exceeding the Zacks Consensus Estimate of $1.23 per share, and showing a slight increase from $1.26 per share a year ago, representing an earnings surprise of 3.25% [1] - The company posted revenues of $20.15 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.12%, and down from $20.86 billion year-over-year [2] - Over the last four quarters, Wells Fargo has surpassed consensus EPS estimates four times but has topped consensus revenue estimates only once [2] Group 2: Stock Performance and Outlook - Wells Fargo shares have declined approximately 10.2% since the beginning of the year, slightly outperforming the S&P 500's decline of 10.4% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.46 on revenues of $21.06 billion, and for the current fiscal year, it is $5.83 on revenues of $84.52 billion [7] Group 3: Industry Context - The Financial - Investment Bank industry, to which Wells Fargo belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The current estimate revisions trend for Wells Fargo is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Core Insights - Wells Fargo reported an increase in quarterly earnings driven by stable income from investment banking and wealth management, leading to a nearly 2% rise in shares during pre-market trading [1] Financial Performance - Net interest income decreased by 6% year over year to $11.50 billion [2] - Non-interest income, which includes investment banking fees, brokerage commissions, and advisory fees, rose by 1% to $8.65 billion from $8.54 billion last year [2] - Adjusted earnings per share were $1.39, a 16% increase year over year, but slightly below the estimate of $1.24 due to special items during the quarter [5] - Total revenue was reported at $20.15 billion, compared to the expected $20.75 billion [5] Share Buyback and Provisions - The company repurchased 44.5 million shares worth $3.5 billion in the first quarter [3] - Wells Fargo set aside $932 million as a provision for credit losses, which included a decrease in the allowance for credit losses [4] Economic Outlook - CEO Charlie Scharf emphasized the uncertainty in the economy due to the Trump administration's trade policies and called for a timely resolution [2][3] - The company anticipates continued volatility and a slower economic environment in 2025, with outcomes dependent on policy changes [3]

Financial Performance - Total revenue for Q1 2025 was $20,149 million, a decrease of 1% from Q4 2024 and 3% from Q1 2024[4] - Wells Fargo net income for Q1 2025 was $4,894 million, down 4% from Q4 2024 but up 6% from Q1 2024[4] - Diluted earnings per common share for Q1 2025 were $1.39, a decrease of 3% from Q4 2024 and an increase of 16% from Q1 2024[4] - Net income applicable to common stock for Q1 2025 was $4,616 million, a decrease of 4% from Q4 2024 but an increase of 7% from Q1 2024[10] - Earnings per common share for Q1 2025 was $1.41, down 3% from Q4 2024 but up 17% from Q1 2024[10] Asset and Equity - Total equity increased to $182,906 million, a 1% rise from Q4 2024[8] - Total assets as of March 31, 2025, were $1,950,311 million, a 1% increase from Q4 2024[8] - Total assets as of March 31, 2025, were $1,919,661 million, slightly up from $1,918,536 million in the previous quarter[15] - Total equity as of Mar 31, 2025, is $182.9 billion, reflecting a 1% increase from $181.1 billion on Dec 31, 2024[56] Loans and Deposits - Average loans for Q1 2025 were $908,182 million, remaining stable compared to Q4 2024 but down 2% from Q1 2024[8] - Total deposits decreased to $1,361,728 million, down 1% from Q4 2024 and 2% from Q1 2024[13] - Total loans amounted to $315,973 million, a decrease of 2% from the previous quarter and 4% year-over-year[21] - Total loans outstanding as of March 31, 2025, were $913,842 million, reflecting a $1,097 million increase from the previous quarter[35] Income and Expenses - Interest income for Q1 2025 was $20,973 million, a decrease of 5% from Q4 2024 and 8% from Q1 2024[10] - Net interest income decreased to $11,495 million, down 3% from Q4 2024 and 6% from Q1 2024[10] - Noninterest expense for the quarter was $13,891 million, compared to $13,900 million in the previous quarter, indicating a marginal decrease[16] Credit Losses and Allowances - Provision for credit losses decreased to $932 million, a 15% decline from Q4 2024 and a 1% decrease from Q1 2024[4] - The allowance for loan losses was $14,029 million, a slight decrease of 1% from Q4 2024[13] - The provision for credit losses for loans was $925 million for the quarter, a decrease of $191 million from the previous quarter[38] - Total allowance for credit losses for loans is $14,552 million, representing 1.59% of loans as of March 31, 2025[40] Nonperforming Assets - Nonaccrual loans increased to $7,978 million, accounting for 0.87% of total loans as of March 31, 2025, up from $7,730 million (0.85%) in the previous quarter[42] - Total nonperforming assets reached $8,225 million, or 0.90% of total loans, an increase of $289 million from $7,936 million (0.87%) in the previous quarter[42] Segment Performance - Total revenue for the Commercial Banking Segment was $2,925 million, down 8% from the previous quarter and 7% year-over-year[25] - Net income for the Corporate and Investment Banking Segment rose to $1,941 million, a 23% increase from the previous quarter but down 2% year-over-year[29] - Net interest income for the Wealth and Investment Management segment decreased to $826 million, down 4% from the previous quarter and 5% year-over-year[32] Customer Metrics - Digital active customers reached 36.7 million, a 2% increase from the previous quarter and a 3% increase year-over-year[21] - Mortgage loan originations totaled $4.4 billion, a decrease of 25% from the previous quarter but an increase of 26% year-over-year[21] Capital Ratios - Common Equity Tier 1 (CET1) ratio was 11.1% for Q1 2025, unchanged from Q4 2024[8] - Return on average common stockholders' equity (ROE) for Q1 2025 is 11.5%, compared to 11.7% in Q4 2024[54] - Tangible common equity as of Mar 31, 2025, is $137.776 billion, up 2% from $135.628 billion in Q4 2024[54]

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I ventured into investing in high school in 2011, mainly in REITs, preferred stocks, and high-yield bonds, starting a fascination with markets and the economy that has not faded despite the years. More recently I have been combining long stock positions with covered calls and cash secured puts. I approach investing purely from a fundamental long-term point of view. On Seeking Alpha I mostly cover REITs and financials, with occasional articles on ETFs and other stocks driven by a macro trade idea.Analyst’s D ...