Wells Fargo Expects Record First Quarter Profits
NEW YORK - Wells Fargo & Co. said Thursday it expects record first-quarter earnings of $3 billion, easily surpassing analysts' estimates and providing an encouraging sign for the banking industry (see chart above). Wells Fargo's stock surged $4.72, or 31.7%, to close at $19.61. Broader markets also rose on the Wells Fargo report, with the Dow Jones industrial average gaining more than 246 points to 8,083.38.
Revenue at Wells Fargo, which has been one of the strongest banks during the ongoing credit crisis and recession, was bolstered by strong mortgage banking and capital markets business, Wells Fargo's CFO Howard Atkins told The Associated Press. During the first quarter, Wells Fargo received about $190 billion in mortgage applications, a 64% jump from the previous quarter. More than 40% of that volume came in March.
Most of that business was refinance applications, but about 25% came from customers looking to purchase homes, Atkins said, noting the recent quarter's mortgage activity has been among the strongest quarters since the housing market began to collapse in 2007.
Signs of improvement from one of the nation's largest banks gave investors reason to rally around the banking sector amid hopes that the worst of the credit crisis is ending. The KBW Bank Index, which tracks 24 of the nation's largest banks, surged 20.1% to 33.81. Some of the nation's hardest hit banks have also rallied, with Citigroup Inc. gaining 34 cents, or 12.6%, to $3.04. Shares of Bank of America Corp. rose $2.49, or 35.3%, to $9.55.