Cal-Fed, Wells Fargo post higher profits

Tuesday, Jan. 15, 2002 | 10:46 a.m.

SUN STAFF AND WIRE REPORTS

Two big Nevada bank and thrift operators reported higher earnings today.

Wells Fargo & Co., the largest bank in Nevada, said its fourth-quarter profit rose 5 percent as home lending surged with mortgage rates near the lowest in 30 years.

Net income at the fifth-largest U.S. bank rose to $1.18 billion, or 69 cents a share, from $1.13 billion, or 65 cents, in the year-earlier quarter. Revenue increased 9 percent to $5.8 billion from $5.4 billion.

In Nevada, Wells Fargo held loans and other assets of $7.2 billion when the Federal Deposit Insurance Corp. issued its most recent statewide report Sept. 30. The bank currently operates 111 branches in the state, including 66 in Southern Nevada.

"It's done a very strong job of staying with its bread-and-butter businesses," said James Ellman, who manages $250 million in a financial services company portfolio at Merrill Lynch Investment Management.

San Francisco-based Wells Fargo, which serves 20 million households, and other U.S. banks last year benefited from a surge in mortgage and consumer borrowing after the Federal Reserve cut interest rates 11 times. The company reduced earnings by a total of $28 million because of the bankruptcy of energy trader Enron Corp. and the financial collapse in Argentina.

Wells Fargo lent $38 billion for home mortgages in the quarter, up 243 percent from the year-ago period. Net interest income, or what the bank makes from lending, rose 23 percent to $3.45 billion from the year earlier quarter.

Loans flagged as unlikely to be paid rose to $1.64 billion, up 37 percent from the year ago quarter. The result was almost unchanged from $1.62 billion in the third quarter.

Non-interest income, or what the bank makes from fees, fell 6 percent from the $2.61 billion from the year-earlier period.

Wells said it wrote off $7 million in exposure to Enron and had no loans with the company. The San Francisco-based bank closed a consumer lending office in Argentina in mid-2001. It reduced earnings in the fourth quarter by $21 million because of the effect of the peso's devaluation last week on $50 million in assets remaining in the country.

Separately, Golden State Bancorp Inc. of San Francisco, the second-largest U.S. savings and loan company, said its fourth-quarter profit rose 22 percent as customers increased deposits and paid for more transactions.

Net income for the three months ended Dec. 31 rose to $109.2 million, or 76 cents a share, from $89.3 million, or 63 cents, a year earlier, the company said in a statement on Business Wire. Retail checking deposits rose 10 percent to $4.1 billion.

Golden State, the parent company of California Federal Bank, has 356 branches in California and Nevada, including nine in Las Vegas and Henderson. Company spokeswoman Janis Tarter said the bank does not break down its asset totals by state.

The company benefited last year from higher demand for banking services as interest rates declined. Known in the United States as a thrift, Golden State earned $60.8 million from customer service fees and banking charges, a 22 percent increase from $49.7 million a year before, according to the statement. The company has about $56.5 billion in assets.

Non-performing assets, or loans the bank doesn't expect to be repaid, fell to $124.1 million from $140.9 million a year earlier. Golden State said it wrote off $13.6 million in loans for the quarter, more than the $3.8 million it wrote off a year earlier.