Interview: Wells Fargo
>> wells fargo turned in a record profit thanks to growth in consumer lending. earnings up 5%, coming in at $1.08 a share. chief financial officer, howard atkins, joins us from san francisco to go over the numbers. thank you very much for joining us. when i saw your numbers and it was better consumer lending, i thought, well, you know, mortgage business but the mortgage business has to start tailing off because interest rates are rising and then i looked at the latest interest rates from freddie mac last week, 5.9%, lower than in the same week a year ago, it was over 6%. so your business has to look good going forward?
>> on average, interest rates were higher in the first quarter than they were a year ago but despite that, our mortgage volumes were as strong in the first quarter this year as they were the first quarter last year. there has been a shift from refinancings from a year ago to more of a purchase mortgage market and that plays to our strength.
>> how much do you think that that is going to continue? a lot of people saying at some point the business has to tail off and we saw a big drop in housing starts today.
>> again, a lot of people predicted a year ago that volumes are going to drop and in fact they haven’t. what’s happening is, as the economy expands, more people are buying homes and financing those home purchases with mortgages and that trend could very well continue.
>> we’ve seen interest rates very low. a lot of companies refinanced over the past year or two. they can issue stock, they can issue debt. how’s your corporate loan business going? do they need to go to you and are they doing it?
>> we’ve been very fortunate, six quarters in a row, now, seeing increases in commercial loan volume at wells fargo. the last two quarters, we saw double-digit increases. the last quarter, first quarter of this year, i should say, our commercial loan and commercial real estate loan volume combined was up 12% to 15%. so we are seeing and have seen for a couple of quarters now, good increases in commercial loan volume.
>> is this short term commercial paper kind of loan volume or long-term expansion, business is getting better, we’ll keep coming back to you for more money kind of volume.
>> i wouldn’t characterize it as short-term commercial paper. we’re seeing loan demand from small business borrowers, middle market customers. those are the markets we are in as opposed to the large corporate market and we see pretty much across our geography and the states and sectors that we deal with at this point.
>> you mentioned the states that you do business in, any thought of expansion at this point by acquisition outside of your footprint right now?
>> no. we’ve been really articulate in the past about that. we like our markets . they’re very high-growth markets , high population growth, high income levels. we have strong positions in our markets . we know these markets very well and if we do any acquisitions, we like doing fill-in acquisitions in these markets . i should also say our growth is not dependent on acquisitions. we’ve been getting double-digit growth without having done major acquisitions in the last couple of years.
>> you’re not a small bank. you cover quite a bit of the united states. what you do see for the economy and for your bank going forward? continued strength in a lot of questions in the stock market recently about how strong the economy really is.
>> the economy, i think, has been on an upward trend for a period of time. obviously, it may not go up in a straight line fashion. it usually doesn’t. it does have ebbs and flows in it but certainly through the fourth quarter of last year, early part of the first quarter of this year, we’ve been seeing reasonably good strength, both consumer and commercial.
>> you’re not hit as hard by energy costs perhaps as some, but what are you doing to control costs as prices start to rise? we’ve been talking in our show today about inflation picking up a bit.
>> i think energy has clearly picked up. inflation in general hasn’t picked up significantly. so our costs are well controlled. what we’re aiming for is double-digit top-line revenue growth and expense growth to make that happen but expense growth at a lower rate than our revenue growth and that’s where we’ve been in the past couple of years.
>> are you raising prices for services at this point?
>> prices go up periodically in line with market demand. but basically in line with inflation.
>> one last question. as your company goes forward, the economy in reasonably good shape, what about hiring at wells fargo?
>> great question. we’ve actually been hiring all along, particularly sales people across virtually all of our businesses. we really believe that increasing our distribution capability, both sales people as well as branches, is the way to grow the company and we’ve been doing that consistently and successfully for a while now.
>> thank you very much. howard atkins, chief financial officer, wells fargo and company.
>> thank you.
>> speaking of banks, sovereign bancorp coming out with stronger-than-expected quarterly earnings.% we’ll go over those numbers with their chief executive when we return.
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Listen Market briefing --- Mike (fast)
Intel --- Deidre (slow)
Nasdaq --- Robert (slow)
NYSE --- Julie (fast)
deirdre bolton has been crunching the intel numbers and joins us with the latest. deirdre?
>> the semiconductor maker reported better-than-expected first-quarter earnings lifted by sales of chips that power laptop computers. intel saying while second-quarter sales will meet analysts’ forecasts, there have been concerns about a tech spending slowdown. let’s give you the numbers. earnings came in at 34 cents a share, three cents above analysts’ forecasts. revenue also coming in higher-than-expected, at $9.43 affect tech trade for the entire semiconductor group. the s.g. cowen analyst says the rally may not last long, since chip sales tail off in the summer.
>> a lot of concern about the summer months. july and august are a big concern to us. we see strength in the early part of the second quarter, strength from september through december. there’s a rough patch in between and i think investors are pricing that in.
>> for the moment, intel likely to help tech sentiment.
>> deirdre bolton. yahoo shares also rising in extended hours after their earnings beat the average estimate. they’re up about 5% right now. for more, we turn to robert gray standing by at the nasdaq marketsite with the latest.
>> deirdre mentioned helping sentiment, absolutely. pat becker jr. at becker management telling me today prior to the release that he saw the market responding well to the earnings and expected more of the same through today and throughout the busy week of earnings and he is getting it here in the after hours. nasdaq futures rising after the yahoo-intel, one-two combination. you see the futures rising there and the nasdaq 100 after-hours indicator rising, as well. as soon as intel came out, it started rising. yahoo came in, the one-two combination and sending that higher, as well. now to the numbers. yahoo seeing second-quarter sales of $855 million to $905 million dollars, above the range. so, helping to boost the stock as we were getting an idea that yahoo is bullish on this quarter and beyond. for the full year, they see revenue, excluding items, $3.57 billion, up to $3.75 billion, higher than the average analyst estimates, the entire range. the estimate there, $3.52 billion. as for the first quarter they reported, profit more than doubled. they sold more banner ads, more paid search results, coming in at 13 cents per share, higher than the average estimate of 11 cents per share and matched the whisper.com number, many traders use which can be higher than the average analysts’ estimates. these estimates do include the stock-based compensation and american technology research mark mahaney was looking for that beat and raised quarter on both of those factors, as well as jerry byrne. google shares up $7, ebay rising and amazon.com rising, as well. during today’s session, amazon was near a two-year low. ebay’s stock was also falling, down more than 1% in the session. ebay reporting tomorrow after the close and we have amazon reporting next tuesday after the close. again, mike, it looks like we’re pointing towards a higher open as far as the earnings go this afternoon.
>> futures prices up about 11 points right now for the nasdaq. robert gray. let’s get you to today’s closing numbers. stocks ended higher thanks to stronger-than-expected earnings at coca-cola and general motors, which was a little bit less of a loss than people had forecast. the dow jones industrials finished the day up 56 points at 10,127. the s&p 500 up six points, call it almost seven, 1,153 for the close there and nasdaq finishing higher by 19 points, 1,932. the benchmark 10-year u.s. treasury note surged today. march wholesale prices climbed less than expected after you factored out food and energy and the 10-year note up .5, the five-year note up, in the belly of the curve, up 3/8. bank of st. louis president william poole saying this afternoon that inflation is well contained. intel’s news today, adding to a day when a number of technology companies’ earnings beat estimates. we’ll go to julie hyman at the new york stock exchange for% -another look at today’s trading session.
>> stocks indeed continuing their rally today. there are a number of reasons behind the rally. we did see semiconductors and energy lead and a couple of reasons for that. energy shares doing well with the price of oil gaining. no earnings out from energy-related companies, nonetheless, their earnings are expected to outperform the rest of the market when they report later this month. earnings and forecasts that were released today generally did beat analysts’ estimates in a wide variety of industries, helping matters. and the producer price index report this morning reassuring folks about the pace of inflation in a potentially slowing economic environment. if you look at the breadth of the market , a positive sign, more than two-to-one margin of advancers beating decliners in the session and volume not as heavy as it was at the end of last week but nonetheless, above the average for the year. to give a few more details on what we saw in today’s session, texas instruments, beating analysts’ estimates, mostly with its forecast. because of that, those shares up 5%. the company saying chip demand is recovering and chip sales should recover. we saw other semiconductor makers and semiconductor equipment makers also recover in the session on t.i.’s news. also in technology today, we heard from e.m.c. that company doing very well, a gain of 13% in today’s session. that company saying their net income in the first quarter almost doubled. sales up 20% as they sold more profitable software and lucent, another company in the technology group that did very well today, second-quarter profit quadrupling as demand for wireless gear boosted sales. as for particular energy movers, valero, whot, a couple of gains there. also natural gas stocks on expectations their earnings as a group will rise 40% in the first quarter. that gain second only to that of basic materials. i’m julie hyman, bloomberg news, at the new york stock exchange.
>> we have headlines, now, crossing from the u.s. capital. a senate panel, foreign relations committee, has delayed a vote on john bolton’s nomination to be ambassador to the united nations. it said it will explore further allegations against mr. bush’s pick to be u.n. ambassador. mark crumpton was discussing that a short time ago and will bring you the latest in 20 minutes. crude oil had its biggest gain in eight weeks as speculation grew that gasoline demand will strain supplies. general motors, falling u.s. sales and market share produced a loss for the latest quarter, a penny better than expected by analysts after their mid quarter update. we’ll have a detailed look at g.m. later in the hour. merrill lynch says profit fell for a second straight quarter. costs rising and revenue growth slowing. first-quarter net income $1.21 a share. revenue rose 3% to $6.2 billion. the company plans to buy back as much as $4 billion in stock and is boosting its dividend. pfizer said today first-quarter earnings fell 87%, because of costs to return overseas profits to the u.s. the decline on the heels of expenses related to the bextra painkiller suspension. excluding special items, earnings for pfizer per share 54 cents. we will, as we mentioned, take a closer look at general motors later in the hour. we’ll also look at wells fargo. it turned in record earnings just shy of what analysts predicted. we’ll look at the numbers with the company’s chief financial officer, howard atkins, coming up.
