Wells Fargo earnings rise 11 percent

The Associated Press
FILE - In this Jan. 17, 2012, file photo, a customer uses an ATM outside a Wells Fargo branch in Charlotte, N.C. Wella Fargo & Co. reports quarterly results before the market opens on Tuesday, Jan. 14, 2014. (AP Photo/Chuck Burton, File)

Fourth-quarter profit for Wells Fargo & Co., the biggest U.S. mortgage lender, jumped 11 percent as a steep drop in mortgage lending was offset by increased interest income.

EARNINGS: Net income after dividend payments on preferred stock rose to $5.4 billion in the October-December period from $4.9 billion a year earlier. On a per-share basis, earnings were $1, slightly above the 99 cents forecast by Wall Street analysts.

Fourth-quarter revenue fell to $20.7 billion from $21.9 billion.

HOW IT HAPPENED: The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo's mortgage business.

The San Francisco-based bank, which is the fourth-largest U.S. bank by assets, controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was reduced by the spike in interest rates.

Wells Fargo funded $50 billion worth of mortgages in the fourth quarter, down from $125 billion a year earlier. The bank has cut about 5,700 jobs, most of them related to its mortgage business, since the end of September.

At the same time, net interest income increased $55 million to $10.8 billion as the bank earned more on the securities it held and from trading.

Wells Fargo's stock fell 49 cents, or 1.1 percent, to $45.07 in early trading.

WHAT'S NEXT?

Wells Fargo CEO John Stumpf says the improving prospects for the U.S. economy will help the bank perform strongly this year.