Wells Fargo Reports 117 BP Drop in Q1 Lease Financing Yield



Wells Fargo reported Q1/15 net income of $5.8 billion, down from $5.9 billion for the same quarter in 2014. Revenue was $21.3 billion in Q1/15 compared with $21.4 billion in fourth quarter 2014, as higher noninterest income was more than offset by the decline in net interest income primarily due to two fewer days in the quarter.

The bank said its net interest margin was 2.95%, down 25 basis points from first quarter 2014. Approximately 5 basis points of the decrease was from customer driven deposit growth, which had minimal impact to net interest income but was dilutive to net interest margin, and 3 basis points of the decline was due to lower income from variable sources.

Lease financing average balances in Q1/15 were $12.3 billion with a reported yield of 4.95% compared to $12.3 billion in Q1/14 at a yield of 6.12%. Interest income of $152 million in Q1/15 compared to $188 million for the same quarter in 2014.

“Credit losses were $708 million in first quarter 2015, compared with $735 million in fourth quarter 2014, a 4% improvement,” said chief risk officer Mike Loughlin. “The quarterly loss rate (annualized) was 0.33% with commercial losses of 0.04% and consumer losses of 0.60%. Nonperforming assets declined by $618 million, or 16% (annualized), from the prior quarter, and early stage delinquencies dropped. We released $100 million from the allowance for credit losses in the first quarter, reflecting continued credit quality improvement. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions.”

To view the full Wells Fargo earning report, click here.


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