Wells Fargo & Co., with banking and investment advisory operations in Connecticut, on Wednesday took a more optimistic view than other banks about consumer resilience, after it reported a surprise profit for the fourth quarter.
In Connecticut, the bank operates as Wachovia Bank and Wells Fargo Advisors, formerly Wachovia Securities.
San Francisco-based Wells Fargo did say problems remain in lending portfolios and another downturn in the economy would hurt profitability. But unlike the extremely cautious tone other banks such as JPMorgan Chase & Co. and Citigroup Inc. have taken in recent days on the health of the consumer, Wells Fargo provided a rosier picture for 2010.
Mike Loughlin, Wells Fargo’s chief credit and risk officer, said, “While losses remained elevated during the quarter as expected, a more favorable economic outlook and improved credit statistics in several portfolios further increase our confidence that our credit cycle is turning.”
Investors have been disappointed recently about big banks’ uncertainty over when consumers would find their footing. With Wall Street having already recovered, the focus is now firmly on when that rebound will spread to Main Street. Declining loan defaults, for example, would show investors that the economy is turning around.
The bank earned $394 million after paying preferred dividends, or 8 cents per share, when analysts polled by Thomson Reuters were expecting a loss of 1 cent per share. Earnings were reduced by 47 cents per share because of costs tied to repaying $25 billion in government bailout money.
Wells Fargo lost $3.02 billion, or 84 cents per share, during the final quarter of 2008 when the credit crisis peaked.
Quarterly revenue exceeded expectations. Wells Fargo generated $22.7 billion in revenue during the quarter. Analysts had been expecting revenue of $21.97 billion.
Shares rose 32 cents to $28.60 even as the broader market declined in morning trading. (AP)
