Wells Fargo reported better-than-expected quarterly results before the opening bell Friday. We were also happy to see that as of the end of 2023, management has officially delivered on its $10 billion multiyear cost-saving program. However, the stock came under pressure on weaker-than-expected guidance. Total revenue for the three months ended Dec. 30 advanced a little over 2% year-on-year, to $20.48 billion, exceeding analysts’ expectations for $20.3 billion, according to LSEG. Adjusted earnings-per-share of $1.29 came in above Wall Street’s consensus estimate of $1.17 per share, LSEG data showed. However, several one-time items impacted EPS in the quarter. There was a 40-cent charge relating to a Federal Deposit Insurance Corporation (FDIC) special assessment in Q4 on big banks to pay for the rescue of regional banks after last year’s failure of Silicon Valley Bank; a 20-cent severance expense; and a 17-cent discrete tax benefit. The consensus did not account for these special items, which is why we don’t compare the after-item earnings of $0.86 to estimates. WFC 1Y mountain Wells Fargo 1 year Still, shares of Wells Fargo were down more than 3.5% as the bank warned net interest income (NII) for 2024 could come in lower year over year. Bottom line While the results were a bit noisy, they were largely better than expected once factoring out one-time costs. Revenue exceeded expectations on the back of beats for both net interest income and non-interest income in the fourth quarter. Core earnings performance — after adjusting for one-time factors — came in above expectations as did tangible book value at the end of 2023 and several key operating metrics that are crucial to the bank’s valuation multiple. The charges that impacted earnings also factored into the misses we see on efficiency ratio, non-interest expense, and return on tangible common equity (ROTCE) lines. Excluding all that, they were above estimates. ROTCE was better-than-expected at 13.4% in the…
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