Wells Fargo & Co., the nation’s fifth largest bank, said Tuesday its third-quarter profit rose 13 percent on strength in home mortgages and other consumer loans — a recipe that has generated double-digit earnings growth through most of the past four years.
U.S. Bancorp, meanwhile, said that higher fee income and a reduction in bad loans helped push its profit up 8 percent in the July-September period. But a falloff in mortgage income led to a drop in profit at Cleveland-based National City Corp. and sent its shares tumbling.
Among regional banks, SunTrust Banks Inc. and KeyCorp each posted double-digit percentage profit gains for the third quarter while earnings fell by double-digit percentages at National City Corp. and Fifth Third Bancorp.
Many of the nation’s banks have reported strong third-quarter earnings, reflecting in large part solid performance in retail banking.
Wells Fargo, which is based in San Francisco, said its net income totaled $1.98 billion, or $1.16 per share, for the three months ended in September, compared with a profit of $1.75 billion, or $1.02 per share, a year earlier. Revenue totaled $8.5 billion, a 16 percent increase from a year earlier.
The earnings were a penny above the consensus estimate of analysts polled by Thomson Financial.
Wells’ shares dropped 12 cents to $59.02 in afternoon trading on the New York Stock Exchange.
It marked the 16th time in the last 17 quarters that Wells’ quarterly earnings have increased by at least 10 percent from the prior year.
Howard Atkins, Wells’ chief financial officer, said in a Tuesday interview that “All our consumer products are up, pretty much across the board.”
Wells took a $100 million charge in the third quarter to cover its expected losses from loans made to consumers in the Gulf Coast, which was hit by Hurricane Katrina on Aug. 29. The bank said it will make adjustments as it learns more about the fallout.
Home mortgages remained a bright spot for Wells. The bank funded $103 billion in mortgages during the third quarter, a 51 percent increase from last year, and ended September with an additional $66 billion in its pipeline.
U.S. Bancorp, which is headquartered in Minneapolis, said its profit rose to $1.15 billion, or 62 cents per share, in the third quarter from $1.07 billion, or 56 cents per share, a year earlier.
The results were a penny higher than projections by analysts surveyed by Thomson Financial.
U.S. Bancorp shares rose 29 cents, or 1 percent, to $27.96 on the New York Stock Exchange.
Revenue increased 2 percent to $3.37 billion from $3.31 billion last year. U.S. Bancorp’s lending business pushed net interest income to $1.79 billion from $1.78 billion.
Also Tuesday, National City Corp., which is based in Cleveland, reported a 19 percent drop in earnings during the third quarter as rising interest rates hurt its mortgage business.
National City earned $478 million, or 74 cents per share, in the July-September period compared with $591 million, or 86 cents per share, a year earlier. Analysts surveyed by Thomson Financial expected 77 cents per share.
Its shares were down $1.59, or nearly 5 percent, at $31.41 on the New York Stock Exchange.
Mortgage banking revenue fell to $183 million for the quarter compared with $370 million a year ago. Overall, fees and other income totaled $716 million for the quarter, down from $1 billion a year ago.
Atlanta-based SunTrust Banks Inc., the Southeastern regional banking giant, said strong deposit growth and the recent acquisition of National Commerce Financial Corp. helped lift third-quarter profit by 39 percent.
Net income totaled $510.8 million, or $1.40 per share, compared with $368.8 million, or $1.30 per share, a year earlier.
Excluding $7.5 million of after-tax charges incurred from the National Commerce deal, earnings were $1.42 per share for the latest quarter. That was 3 cents above projections by analysts surveyed by Thomson Financial.
SunTrust shares advanced 60 cents, or nearly 1 percent, to $67.87 on the Big Board.
Cleveland-based KeyCorp reported a 10 percent increase in third-quarter profit, due mainly to growth in net interest income and a stronger performance from fee-based businesses.
KeyCorp earned $278 million, or 67 cents per share, in the July-September period, compared with $252 million, 61 cents per share, for the third quarter of 2004.
Analysts surveyed by Thomson Financial expected earnings of 66 cents per share.
Its shares dropped 30 cents, or nearly 1 percent, to $31.05 on the Big Board.
The company expects earnings of 65 cents to 69 cents per share for the fourth quarter.
Cincinnati-based Fifth Third Bancorp’s third-quarter earnings fell 16 percent as net interest income decreased from the year-ago period.
Net income for the July-September quarter slid to $395 million, or 71 cents per share, from $471 million, or 83 cents per share, a year earlier. The company’s earnings matched the average estimate from analysts polled by Thomson Financial.
Revenue totaled $1.37 billion, a 1 percent decline from $1.38 billion a year earlier and missing analysts’ consensus target of $1.38 billion.
Still, its shares were up $2.12, or more than 5 percent, at $39.23 in afternoon trading on the Nasdaq stock market.