Wells Fargo (WFC) Can't Overcome Low Mortgage Demand, Revenue Drops

Revenue for Wells Fargo & Co. (NYSE:WFC) in the latest quarter dropped as fees generated from mortgages fell and loan demand faltered. Revenue was down to $20.3 billion, a 5.2 percent decline.

The bank was able to generate a profit though, as its quarterly profit rose to $3.76 billion, or 67 cents a share, up from $2.55 billion, or 45 cents a share, last year in the same quarter.

On average, analysts surveyed by FactSet Research looked for the company to earn 66 cents a share on $21.2 billion of revenue.

Overall loans fell 4 percent to $751.2 billion from last year.

Wells was able to grow deposits for the quarter. On average, Wells Fargo said checking and savings deposit accounts grew 9 percent from 2010’s first quarter.

Chairman and Chief Executive John Stumpf in a statement, “As the economy continued an uneven recovery, our business customers increased borrowing and utilization of credit lines — a hopeful sign that businesses are once again investing for growth.”

Net charge-offs for bad loans in the quarter were $3.21 billion, or 1.73 percent of all loans, compared with $3.84 billion, or 2 percent of loans, at the end of the fourth quarter. Nonperforming real estate and commercial assets were down 5 percent to $30.6 billion from the end of 2010.

Wells Fargo was trading at $28.71, falling $1.36, or 4.52 percents, as of 12:04 PM EDT.

Wells Fargo (WFC) CEO Concerned Over Home Equity Losses

Wells Fargo (NYSE:WFC) Chief Executive Officer John Stumpf said on the top of his concerns is the effects unemployment may have on home-equity, which could result in huge losses.

Citing Stumpf, Sanford C. Bernstein & Co. said, “Stumpf noted that home-equity losses remain his number one concern, which makes sense to us given Wells has the largest portion of its loan book allocated to mortgages and home-equity loans among large banks.”

“Management was clear that it views the outlook for home-equity and mortgage losses to be more tied to employment conditions than home prices,” Bernstein analyst John McDonald wrote.

"Wells Fargo held $117.5 billion of home-equity loans at the end of December, with $42.8 billion of those made in California and Florida, according to the bank’s year-end filing. Almost $110.6 billion of the loans was held in a so-called core portfolio. The unemployment rate in the bank’s mortgage footprint is a percentage point higher than the national average of 8.9 percent," added McDonald.

He maintains an "Outperform" rating on the bank, which closed Thursday at $31.54, gaining $0.16, or 0.51 percent.

Wells (WFC) CEO Stumpf Gets $19 Million Pay Package for 2010

The total compensation package for Wells Fargo (NYSE:WFC) CEO John Stumpf came to a total of just under $19 million for 2010. That's under the $21 million plus Stumpf received for 2009.

Wells Fargo's board human-resources committee said in a proxy, “Mr. Stumpf’s leadership has been essential to the company’s success in navigating the financial crisis, being in a position of strength to acquire Wachovia, integrating Wachovia’s operations smoothly, and earning over $24.7 billion since the Wachovia merger. In 2010, Mr. Stumpf’s leadership was critical to achieving success in strategic imperatives related to merger integration and cultural assimilation, enhanced relationships with government agencies, communities and investors, and financial success without jeopardizing our risk-management principles.”

Stumpf received a base salary of $2.8 million; long-term stock awards of $11 million and an annual bonus of $3.3 million. He also received more than $1.5 million in pension, health-care and other fringe benefits.

Wells Fargo closed Monday at $31.88, up $0.05, or 0.16 percent.

Wells Fargo (WFC) Looking to Expand Wealth Management Unit

Wells Fargo (NYSE:WFC) CEO John Stumpf said in an interview that the wealth and retirement business of the company is "suboptimized" is has targeted the segment to fast growth.

The implication is he's looking for an acquisition to jump-start the division, although if he had to he would hire more and push out the existing business if he has to; although that would take a little longer.

"If we could jump a curve with the right deal, that's great," Stumpf said in an interview with the Wall Street Journal.

At this time Wells is the number three brokerage among those targeting what is identified as the "mass affluent" segment, behind Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC).

Goldman Sachs (NYSE:GS) and JPMorgan Chase (NYSE:JPM) on the other hand, target a more high net worth clientele.

If Stumpf is interested in a specific brokerage at this time, he's not letting anyone know which one it is.

Wells Fargo's (WFC) CFO Departure Still Generating Questions

Wells Fargo (NYSE:WFC) is caught up in drama no company would want, as the sudden and relatively unexplained departure of CFO Howard Atkins is generating more concerns and questions than answers.

From the beginning of Atkins leaving the company, Wells has asserted it was for personal reasons, and nothing else.

Chris Whelan, of Institutional Risk Analytics, has said there were executives within Wells Fargo that are concerned over the methods the giant bank is using in accounting and disclosure, and that they have in fact contacted regulators concerning the situation.

TheStreet also reported there had been confrontations between Atkins and CEO John Stumpf which possibly left to his leaving, although there has been no confirmation it was connected to accounting issues.

Wells will be filing its 10-K annual report by the end of February, and Atkins hasn't signed off on it, although his replacement, Tim Sloan, will.

Possibly the worst case scenario in this case, even if there are no legs to the story, is the SEC may feel compelled to investigate, which could weigh on Wells Fargo for an extended period of time, and cast a shadow on its integrity.

Wells Fargo was trading at $32.44, down $0.51, or 1.55 percent, as of 1:39 PM EST.