Wells Fargo Earnings In Line With Expectations.

Wells Fargo kicked off second-quarter earnings for the banks.

The bank reported Q2 earnings per share of $1.01. That's right in line with consensus analyst estimates.

The fourth largest U.S. bank was expected to report adjusted earnings per share of $1.01, up 3% year-over-year, according to analysts polled by Bloomberg.

Revenue for the quarter came in at $21.1 billion, which was better than analyst estimates.

Revenue for Q2 was expected to come in at $20.836 billion, down 3.4% year-over-year, according to Bloomberg.

Shares of Wells Fargo are up slightly in the pre-market.

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Here's the release:

WELLS FARGO REPORTS $5.7 BILLION IN NET INCOME
Diluted EPS of $1.01, Up 3 Percent From Prior Year

Continued strong financial results:

• Net income of $5.7 billion, up 4 percent from second quarter 2013
• Diluted earnings per share (EPS) of $1.01, up 3 percent
• Revenue of $21.1 billion, compared with $21.4 billion
• Linked-quarter revenue up $441 million
• Noninterest expense of $12.2 billion, down $61 million
• Return on assets (ROA) of 1.47 percent and return on equity (ROE) of 13.40 percent

Strong loan and deposit growth:

• Total average loans of $831.0 billion, up $32.7 billion, or 4 percent, from second quarter 20131
• Quarter-end loans of $828.9 billion, up $29.1 billion, or 4 percent
• Quarter-end core loans of $763.6 billion, up $51.3 billion, or 7 percent
• Total average deposits of $1.1 trillion, up $91.7 billion, or 9 percent

Continued improvement in credit quality:

• Net charge-offs of $717 million, down $435 million from second quarter 2013
• Net charge-off rate of 0.35 percent (annualized), down from 0.58 percent
• Nonperforming assets down $3.0 billion, or 14 percent
• $500 million reserve release due to improvements in credit performance

Higher return to shareholders while maintaining strong capital levels

• Increased quarterly common stock dividend to $0.35 per share from $0.30, or 17 percent, in the second quarter
• Period-end common shares outstanding down 15.8 million in second quarter on 39.4 million of purchases
• Also entered into a forward repurchase transaction for an additional estimated 19.4 million shares expected to settle in third quarter 2014
• Common Equity Tier 1 ratio under Basel III (General Approach) of 11.31 percent at June 30, 2014
• Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.09 percent

SAN FRANCISCO - Wells Fargo & Company (NYSE:WFC) reported net income of $5.7 billion, or
$1.01 per diluted common share, for second quarter 2014, up from $5.5 billion, or $0.98 per share, for
second quarter 2013. For the first six months of 2014, net income was $11.6 billion, or $2.06 per share, up
from $10.7 billion, or $1.90 per share, for the same period in 2013.

"Our strong results in the second quarter reflected the benefit of our diversified business model and our
long-term focus on meeting the financial needs of our customers," said Chairman and CEO John Stumpf.
"By continuing to serve customers we grew loans, increased deposits and deepened our relationships. Our
results also reflected strong credit quality driven by an improved economy, especially the housing market,
and our continued risk discipline. We are committed to both maintaining strong capital levels and returning
more capital to our shareholders. In the second quarter we increased our common stock dividend 17 percent
and repurchased 39.4 million shares. We remain dedicated to building long-term shareholder value, and I
am optimistic about the future as we continue to focus on meeting the needs of our consumer, small
business and commercial customers."

Chief Financial Officer John Shrewsberry said, "The primary drivers of Wells Fargo's business remained
strong in the second quarter, with broad-based loan growth, increased deposit balances, and improved
credit quality. Revenue increased linked quarter as the Company grew both net interest income and
noninterest income, a reflection of Wells Fargo's diversified business model. These solid fundamental
business results led to an increase in pre-tax income linked quarter. Net income was down as the Company's
effective tax rate was lower in the first quarter due to a $423 million discrete tax benefit.

Revenue

Revenue was $21.1 billion, up from $20.6 billion in first quarter 2014, reflecting increases in both net
interest income and noninterest income. Several businesses generated linked-quarter growth, including
capital markets, corporate banking, commercial real estate, corporate trust, debit card, personal lines and
loans, merchant services, and retail brokerage.

Net Interest Income

Net interest income in second quarter 2014 increased $176 million on a linked-quarter basis to $10.8 billion
driven by organic growth in commercial and consumer loans and higher mortgages held for sale and trading
assets. Approximately one-third of the increase resulted from the benefit of one additional business day in
the quarter. Interest income from variable sources, including purchased credit-impaired (PCI) loan
resolutions and periodic dividends, also improved slightly linked quarter.

Net interest margin was 3.15 percent, down 5 basis points from first quarter 2014 as strong customer driven
deposit growth contributed to higher cash and short-term investment balances. This deposit growth was
essentially neutral to net interest income, but had the effect of diluting net interest margin approximately
5 basis points. Liquidity funding actions taken to meet regulatory expectations also diluted the margin by
1 basis point, but with minimal impact to net income. Higher interest income from variable sources
contributed 1 basis point to the change in net interest margin linked quarter. The net impact of all other
balance sheet growth and repricing was essentially flat from first quarter.
Noninterest Income

Noninterest income in the second quarter was $10.3 billion, up from $10.0 billion in the prior quarter.
Growth was broad-based and was driven by increases in mortgage banking, trust and investment fees,
deposit service charges, and card fees. These increases were partially offset by a decline in market sensitive
revenue, mainly equity gains.

Trust and investment fees were $3.6 billion, up $197 million from first quarter on higher investment
banking and brokerage advisory, commissions and other fees. Investment banking fees increased
$164 million linked quarter on broad-based growth. Brokerage advisory, commissions and other fees were
up $39 million from the prior quarter as asset-based fees increased due to higher market valuations and net
customer flows.

Mortgage banking noninterest income was $1.7 billion, up $213 million from first quarter. During the
second quarter, residential mortgage originations were $47 billion, up $11 billion linked quarter, while the
gain on sale margin was 1.41 percent, compared with 1.61 percent in first quarter. Net mortgage servicing
rights (MSRs) results were $475 million, compared with $407 million in first quarter 2014

Noninterest Expense

Noninterest expense increased $246 million from the prior quarter to $12.2 billion, as a decline in
seasonally-elevated compensation and benefits costs from first quarter 2014 was offset by higher revenuebased incentive compensation, increased salary expense due to annual merit increases and the impact of one additional day in the quarter, an $84 million linked-quarter increase in deferred compensation benefit costs (offset in revenue) and a $205 million linked-quarter increase in operating losses largely due to litigation accruals. Expenses in the quarter also included higher outside professional services and advertising expenses, which are typically lower in the first quarter. The efficiency ratio was 57.9 percent in second quarter 2014, in line with first quarter 2014. The Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent in third quarter 2014.

Income Taxes

The Company's effective income tax rate was 33.4 percent for second quarter 2014, compared with
27.9 percent in the prior quarter. The tax rate for the first quarter included a net $423 million discrete tax
benefit primarily from a reduction in the reserve for uncertain tax positions due to the resolution of prior
period matters.

Loans

Total loans were $828.9 billion at June 30, 2014, up $2.5 billion from March 31, 2014, driven by broadbased growth in commercial and industrial, automobile, credit card, 1-4 family first mortgage and
commercial real estate loans. This growth was reduced by the transfer to loans held for sale at the end of the
quarter of $9.7 billion of government guaranteed student loans, which were previously included in the
Company's non-strategic/liquidating loan portfolio. Excluding this transfer, total loans would have been up
$12.2 billion, or 6 percent (annualized), from first quarter. Core loan growth was $15.1 billion, as nonstrategic/liquidating portfolios declined $12.7 billion in the quarter, including the $9.7 billion transfer.
Average total loans were $831.0 billion, up $7.3 billion from the prior quarter, mainly reflecting growth in
commercial and industrial, automobile and commercial real estate.