Wells Fargo & Company (NYSE:WFC) Q4 2014 Earnings Conference Call - Final Transcript

Jan 14, 2015 • 10:00 am ET

Previous

Wells Fargo & Company (NYSE:WFC) Q4 2014 Earnings Conference Call - Final Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
John Stumpf

changes in GSE lending guidelines should provide some benefit to the housing market where affordability remains attractive.

While lower oil prices have created volatility in the financial markets, America as a whole is a net consumer of energy and American households will benefit from the decline in energy prices, which is positive for the US economy. I believe the improvement in the economy, the strength of our balance sheet, the diversity of our businesses and the continued commitment of our team members to meet our customers' financial needs. We'll provide Wells Fargo with many opportunities in the year ahead. John Shrewsberry, our Chief Financial Officer, will now provide more details on our fourth quarter results, John.

Executive
John Shrewsberry

Thanks, John and good morning everyone. My comments will follow the presentation included in the quarterly supplement starting on page 2. John and I will then answer your questions. Wells Fargo had another strong quarter earning $5.7 billion and the $2 in EPS in the fourth quarter. Our results included continued strong loan and deposit growth that was diversified across our businesses and credit quality continued to reflect the benefit of our ongoing risk discipline. Our capital levels remain strong even as we return $3.9 billion to shareholders in the fourth quarter through common stock dividends and net share repurchases.

Slide 3 highlights our strong full year results that John discussed at the beginning of the call including increased revenue and pre-tax, pre-provision profit strong loan and deposit growth, higher earnings and increasing our net payout ratio to 57%. Page 4 highlights our revenue diversification and the balance between spread and fee income in the fourth quarter. The benefit of our diversified business model is that we have over 90 businesses that performed differently based on interest rates of the economic environment. While the balance between spread and fee income has remained consistent over time. The drivers of fee income have varied.

For example, over the past five years, mortgage banking has a share of total fee income has been as high as 28% but because of the decline in mortgage refinancing activity, mortgage banking

Executive
John Shrewsberry

use of declined as expected and represented 15% of fee income in the fourth quarter, however other businesses have benefited from current market conditions. Our trust and investment fees has steadily increased over the past five years and were 36% to fee income in the fourth quarter. These examples demonstrate the benefit of our diversification and how our business mix enabled us to focus on meeting our customers' financial needs, while retaining our risk discipline.

Let me highlight some key drivers of our fourth quarter results from a balance sheet and income statement perspective starting on page 5. I will discuss the drivers of our strong loan and deposit growth later in the call. Short-term investments in fed funds so declined $3.5 billion from third quarter due to the deployment of liquidity in the loans and investment securities. This was the first time since the fourth quarter of 2011