Wells Fargo has become the nation's most profitable bank, topping the full-year profits of rival JPMorgan Chase and posting record earnings for the fourth quarter and the year, the company reported Tuesday.
During the fourth quarter that ended Dec. 31, Wells Fargo earned $5.61 billion, up 10.2 percent from the year-ago quarter. Revenue in the October-December period totaled $20.7 billion, down 5.5 percent from the year before.
"Wells is a huge earnings powerhouse," said Michael Yoshikami, ¿CEO and founder of Walnut Creek-based Destination Wealth Management. "They have stuck to very basic and sound banking and lending principles."
San Francisco-based Wells Fargo earned $21.88 billion in 2013, up 15.8 percent from 2012. For the full year, JPMorgan Chase earned $17.9 billion.
"Wells Fargo had another outstanding year in 2013, including strong growth in loans and deposits," CEO John Stumpf said in a news release.
Wells Fargo managed a gain in profits despite a slump in its mortgage business caused by higher interest rates that cooled refinancing activity. The bank reined in costs and improved the quality of its loan portfolio to bolster profits. Wells is the biggest U.S. mortgage lender.
Loan originations in the fourth quarter totaled $50 billion, down 38 percent from the third quarter.
Despite the loan slump, the outlook for housing looks favorable, Stumpf told the analysts."While we don't expect the same rate of home price appreciation we had last year, we do expect the housing market to continue to recover," he said.
The bank's per-share profits of $1.00 topped Wall Street's predictions of 99 cents. Wells' shares rose 0.04 percent, or 2 cents, to close at $45.58.
"Sure, Wells Fargo has made mistakes -- by not expanding to the East Coast quickly enough, and they still have legacy problem loans to deal with -- but they keep going forward," said Ken Thomas, a Miami-based independent bank analyst and operator of BranchLocation.com. "Wells is like (49ers quarterback) Colin Kaepernick. They get knocked down, but they get back up and stay on offense. Wells is in a league of its own."
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.