Wells Fargo's (NYSE:WFC) Lagging Loan Growth Weighs on Performance

While there was a strong improvement in growing deposits for Wells Fargo (NYSE:WFC) in their latest quarter, that didn't result in their loan portfolio growing, causing FBR to believe they'll be range bound until that improves.

FBR says, "Excluding a number of one-time items, we estimate operating EPS of $0.66. Credit continued to improve this quarter, which enabled the company to release $850 million of reserves, and revenues remained essentially flat despite drags from Reg E and the CARD Act. That said, NIM continues to come under pressure with 9 basis points of contraction, mainly due to strong deposit growth without coinciding loan growth. We believe shares will likely remain range bound until the company experiences solid loan growth, which is dependent on a recovering economy and not Wells Fargo's internal operations. Due to lower provision expenses and stable revenues, we are adjusting our FY11 operating EPS estimate to $2.80 and introducing our FY12E operating EPS estimate of $3.55."

FBR Capital maintains a "Market Perform" on Wells Fargo (WFC), which trading at $31.79, down $0.02, or 0.06 percent, as of 12:27 PM EST. FBR has a price target of $31 on Wells Fargo.