Saturday, January 15, 2011

Wells Fargo & Co. (NYSE: WFC): Q4 Earnings Preview 2010

Wells Fargo Company (NYSE: WFC) is scheduled to release its fourth-quarter earnings before the opening bell on Wednesday, January 19, 2011. Analysts, on average, expect the company to report earnings of 61 cents per share on revenue of $20.97 billion. In the year ago quarter, the company reported earnings of 8 cents per share on revenue of $22.70 billion.

Wells Fargo Company, through its subsidiaries, provides retail, commercial, and corporate banking services principally in the United States. The Company provides retail, commercial and corporate banking services through banking stores located in 39 states and the District of Columbia.

In the preceding third-quarter, the San Francisco, California-based company's net income was  $3.34 billion, or 60 cents a share, compared to $3.24 billion, or 56 cents a share, in the year-earlier quarter. Revenue slipped to $20.87 billion from $22.47 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 55 cents per share on revenue of $20.95 billion. 

The Wachovia merger integration remains on track and is expected to realize $5 billion of annual merger-related savings upon completion of the integration process in 2011. The acquisition of Wachovia has helped company to expand its customer base and geographic reach. 

As far as financial regulation is concerned, the company expects that the overall impact on Wells Fargo will be lower than the impact of its large-bank peers; particularly in areas such as proprietary trading, derivatives, and private equity. The company expects after-tax impact of about $275 million in the fourth quarter, not including any offsets.

Meanwhhile, billionaire investor Warren Buffett raised his holding in Wells Fargo & Co. to 336.4 million shares  at the end of September 2010 quarter, from 320.08 million shares held at the end of June quarter.

During the quarter in review, Wells Fargo & Co. agreed to pay Citigroup (NYSE: C) $100 million to settle litigation regarding Wells Fargo's acquisition of Wachovia in late 2008. Wells Fargo and Citi have been in a legal tussle over the last two years over the San Francisco-based bank's takeover of Wachovia.

Among other developments, Wells Fargo Insurance Services USA Inc., an insurance unit of  Wells Fargo & Co. announced the acquisition of Prestige Professional Plans on Wednesday. Based in Dayton, Ohio, the acquired entity is an employee benefits insurance brokerage firm. Wells Fargo closed the acquisition on December 1, 2010, but the requisites of the transaction were not disclosed.

In terms of stock performance, Wells Fargo shares have lost nearly 10 percent over the past year.

Full Disclosure: None.
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