Wells Fargo (
has been the
most reliable of the six big banks
in recent years. And the company again came in ahead of quarterly
earnings forecasts this morning.
But weaknesses in other areas are causing the stock to
Revenue declined 1.7% as the bank's usually stalwart mortgage
business slipped. Mortgage banking noninterest income was down
2.6% from a year earlier. Home lending originations declined 13%
from the fourth quarter, while loan application income fell 8%.
Total loans showed no improvement from the previous quarter.
Those numbers are driving WFC shares down 2% in early trading.
Of course, part of that could be a pullback given that the stock
was up 7% year-to-date entering the day. Only a spotless earnings
report would likely have sparked the shares to rally higher.
Still, the slowdown in the bank's mortgage business is a
legitimate concern. Well Fargo has been the dominant player in
the mortgage industry, where it commands close to a 30% share.
That's what the company hangs its hat on, and is a major reason
it has remained profitable for 13 straight quarters.
The housing industry is supposed to be in full
, with housing starts on the rise and home prices accelerating
faster than at any time since 2006. So a slippage in America's
largest mortgage lending bank is a red flag.
For now, that concern is overshadowing yet another very
profitable quarter at Wells Fargo.