Wells Fargo’s revenue dropped 2 percent—to $21.9 billion—compared to third quarter 2016. The bank noted that Q3 2017 included a discrete litigation cost of $1 billion for “previously disclosed mortgage-related regulatory investigations.”
Noninterest income was $9.5 billion, compared with $9.7 billion in Q2 2017, which reflected lower mortgage banking and other income, partially offset by "higher market-sensitive revenue."
Additionally, mortgage banking noninterest income declined to $1 billion, compared with $1.1 billion in Q2 2017. Residential mortgage loan originations were $59 billion, representing an increase from Q2 2017. The bank noted, "the production margin on residential held-for-sale mortgage loan originations was 1.24 percent, consistent with the second quarter." While mortgage servicing income was $309 million in Q3, down from $400 million in Q2, primarily due to "higher unreimbursed servicing costs."
Overall net income results are down as well, with the bank’s net income for Q3 2017 at $4.6 billion, or $0.84 per diluted common share, compared with $5.6 billion, or $1.03 per share, for Q3 2016, and $5.8 billion, or $1.07 per share, for Q2 2017.
According to John Shrewsberry, Chief Financial Officer of Wells Fargo, despite the decline in net income, the bank continued to see good credit performance and its liquidity and capital remained strong.
“During the quarter, first under our 2017 Capital Plan, we returned $4 billion to shareholders through common stock dividends and net share repurchases, up from $3.4 billion in the second quarter,” Shrewsberry said. “We remain committed to our target of $2 billion of expense reductions by the end of 2018 which will be reinvested in the business and an additional $2 billion by the end of 2019 intended to go to the bottom line.”
Chief Executive Officer Tim Sloan commented, saying that over the past year Wells Fargo has made fundamental changes to transform as part of the bank's efforts to rebuild trust and build a better bank.
“While our financial performance in the third quarter included the impact of a litigation accrual for previously disclosed, pre-crisis mortgage-related regulatory investigations, I am proud of the commitment of our 268,000 team members who put our customers first,” Sloan said.
Bank of America also reported Q3 earnings on Friday. According to the results, net income increased 13 percent to $5.6 billion, and diluted earnings per share (EPS) increased 17 percent to $0.48, while year-to-date net income increased 19 percent to 15.7 billion.
However, noninterest income decreased $756 million, or 7 percent, to $10.7 billion, driven primarily by lower mortgage banking income and lower sales and trading revenue, partially offset by higher asset management fees, which the bank noted is "partially offset by higher card income and service charges."
Additionally, the results found that average loans and leases grew $11.1 billion, or 8 percent, driven by mortgage and structured lending.
"Our focus on responsible growth and improving the way we serve customers and clients produced another quarter of strong results," said Bank of America CEO Brian Moynihan. “Revenue across our four lines of business grew 4 percent, even with a challenging comparable quarter for trading."
Moynihan continued to explain that the bank delivered positive operating leverage year-over-year for the eleventh consecutive quarter while continuing to invest in improved capabilities.
According to Paul M. Donofrio, Chief Financial Officer at BofA, year-over-year the bank grew average deposits by $45 billion, or 4 percent, and increased average loan balances in business segments by $46 billion, or 6 percent.
“It's worth noting that we grew loans while remaining within our customer and risk frameworks, as evidenced by our low loss rates," Donofrio said. “Our balance sheet remained strong, which enabled us to repurchase nearly $3 billion in common stock and pay $1.3 billion in common stock dividends in the quarter."
To view Wells Fargo's full Q3 2017 results, click here.
To view Bank of America's full Q3 2017 results, click here.