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Wells Fargo’s ‘Record’ Q3 Earnings Fall Short of Analysts’ Expectations

""Wells Fargo"":http://www.wellsfargo.com reported net income of $4.1 billion over the July-to-September period.


The company called it a ""record"" quarter, but even with profits up 21 percent from the prior year and up 3 percent from the previous quarter, the numbers were overshadowed by the fact that the bank's Q3 results missed market expectations.

Analysts polled by Thomson Reuters were expecting revenue of $20.24 billion, but the bank's third quarter produced revenue of $19.6 billion, a 6 percent decline from a year earlier. At the same time, net income of 72 cents per share just missed forecasts of 73 cents per share.


According to the _Wall Street Journal_, it's the first time in more than two years that Wells Fargo didn't live up to analysts' expectations.

Improvement associated with credit quality helped to bolster the San Francisco-based bank's net income despite declining revenue.

Net loan charge-offs declined to $2.6 billion in Q3, down $227 million from the previous quarter and down $1.5 billion from the same period last year.

Nonperforming assets totaled $26.8 billion, a decline of $1.1 billion from the second quarter of this year and down $7.6 billion from the third quarter of 2010.

The company also released $800 million from its loan loss reserves â€" a move Wells Fargo says reflects ""improved portfolio performance.""

While the bank is seeing evidence of improving credit quality, pre-existing mortgage troubles continue to weigh heavy on its balance sheet.

Wells Fargo’s ""latest earnings report"":https://www.wellsfargo.com/downloads/pdf/press/3q11pr.pdf reflects a 61 percent increase in its provisions for expected mortgage buybacks. The company earmarked $390 million for mortgage loan repurchase losses, compared with $242 million at the end of the second quarter.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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