Wells Fargo’s second-quarter profit rises by 12 percent

Tuesday, July 18, 2000 | 10:32 a.m.

SUN STAFF AND WIRE REPORTS

Wells Fargo & Co., the second-largest bank in Nevada, today reported a 12 percent increase in its second-quarter profit as the bank's push to sell more products to its customers continued to pay off.

The San Francisco-based company earned $1.04 billion, or 63 cents per share, in the three months ended June 30, up from $931 million, or 55 cents per share, in the same 1999 period. The earnings per share matched the consensus of analysts polled by First Call/Thomson Financial.

Wall Street wasn't impressed. After the first hour of trading today, Wells' stock was down $1.375 at $42.

Investors may have been reacting to a warning that the bank's diluted earnings per share will be reduced by 6 cents per share because of accounting changes related to 20 acquisitions made during the last two years. Wells completed its latest acquisition, National Bancorp of Alaska, last week and expects to complete its acquisition of Utah-based First Security Corp. by the end of the year.

Wells said the bank's revenues rose 11 percent in the second quarter, realizing a goal of double-digit growth set by a new management team in 1998 after the bank was purchased by Norwest Corp.

In the months leading up to the takeover, Wells had been struggling to build its business after a customer backlash to its 1995 merger with First Interstate Bank.

Through the first six months of the year, Wells profit totaled $2.05 billion, a 13 percent increase from 1999. The bank's revenue through the first half of the year were up by 10 percent.

Wells attributed the revenue gains to successful efforts to sell more products to existing customers as well as healthy growth in its loan portfolio. The bank also continued to sign up more customers to its fast-growing online division. As of June 30, about 2 million Wells customers had signed up for the bank's Internet service, double the total at the same point in 1999.

Another Nevada bank operator, Colonial BancGroup of Montgomery, Ala., also reported quarterly earnings today. The owner of Colonial Bank said it earned $30.1 million or 27 cents per share, up from $28.9 million or 26 cents per share in the year-ago quarter.

The Colonial earnings were reported on a continuing operations basis to reflect the disposal of Colonial's mortgage servicing business. Colonial is selling the operation to Homeside Lending Inc. of Jacksonville, Fla.

Including the $4 million cost of disposing the mortgage servicing business, Colonial earned $26 million or 23 cents per share, down from $30.2 million or 27 cents in the 1999 quarter.