Wells Fargo Income Sets Record in 2012; Q4 Originations Income Down 10%


reported today that its fourth quarter and full 2012 net income set new
record highs
.  Fiscal Year 2012 earnings
were $18.9 billion; an increase of 19 percent from 2011 and fourth quarter
earnings were up 24 percent compared to the fourth quarter of 2011 at $5.1

for the year was $86.1 billion, up 6 percent from $80.9 billion in 2011.  Fourth quarter income increased by 7 percent
year-over-year to 21.9 billion.  Net Interest
Income decreased $249 million or 2 percent from 2011 and was down slightly on a
linked quarter basis to $10.6 billion. 
Income from Wells Fargo’s loan portfolio rose slightly from the third
quarter both because of growth in consumer and commercial loans and the
retention of $9.7 billion in high-quality, conforming first mortgages.  The available for sale (AFS) securities
portfolio balance was essentially flat linked-quarter; income continued to be
impacted by runoff in federal agency mortgage-backed securities (MBS) and a
decision to replace the run-off with shorter term securities.  Interest income from the AFS securities
portfolio declined by $69 million and interest income from the mortgage
warehouse was down $63 million as the warehouse size declined with lower
origination volume.

company will take a $644 million or $0.09 per share operating loss from an
incremental accrual to fully reserve for the costs associated with the
Independent Foreclosure Review (IFR) settlement announced the first week in
January and other remediation costs.

Mortgage banking
noninterest income
was $3.1 billion, up $261 million from the third quarter on
$125 million in originations compared with $139 million of originations in the
third quarter.  During the fourth quarter
the company retained on its balance sheets approximately $340 million in 1-4
family conforming first mortgage loans, forgoing that amount that might have
been generated had they been originated for sale during the quarter. 

Company provided $379 million for mortgage loan repurchase losses, compared
with $462 million in the third quarter (included in net gains from mortgage
loan origination/sales activities). Net mortgage servicing rights (MSRs)
results were $220 million, up from $142 million in third quarter of 2012, due
primarily to MSRs valuation adjustments made in the third quarter for increased
servicing and foreclosure costs. The ratio of MSRs to related loans serviced
for others was 67 basis points and the average note rate on the servicing portfolio
was 4.77 percent. The unclosed pipeline at December 31, 2012 was $81 billion,
compared with $97 billion at September 30, 2012.

the end of the fourth quarter the company had $11.5 in non-accruing or
foreclosed 1 to 4 family residential loans, a rate of 4.58 percent, up slightly
from 11.2 billion or 4.65 percent at the end of Quarter 2.  There were 2.92 billion in non-accruing or
foreclosed junior residential liens (3.87 percent) compared to $3.14 billion or
4.02 percent the previous quarter. 

charge offs of real estate loans
have steadily decreased over the last
year.  Net charge-offs of 1 to 4 family
mortgages totaled $649 million in the fourth quarter or 1.05 percent of average
loans compared to $673 million in the third quarter (1.15 percent) and $743
million or 1.30 percent in the second quarter. 
Junior liens charge offs totaled $690 million in Q4, $1.04 billion in
Q3, and Q2.

As noted above,
originations declined from $139 billion in the third quarter to $125 billion in
the fourth; application volume was also down, from $188 billion in the prior
quarter to $152 billion and the application pipeline stood at $81 billion at
the end of the fourth quarter compared to $97 billion at the end of the
third.  The residential servicing
portfolio at year end was valued at $1.9 trillion.

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