Wells Fargo Profits Rise in 3Q

A woman puts away her money after visiting a Wells Fargo automated teller machine in a San Francisco file photo from July 17, 2006. Wells Fargo & Co., the nation's fifth-largest bank, said third-quarter profit rose 11 percent, led by particular strength in regional banking and wholesale/commercial banking. (AP Photo/Eric Risberg, File) (Eric Risberg - AP)

SAN FRANCISCO -- Wells Fargo & Co. registered its third consecutive quarter of record profits in the July-September period as strength in deposit gathering and cross-selling of products offset sluggishness in mortgage operations.

The nation's fifth largest bank said Tuesday that it earned $2.19 billion, or 64 cents per share, in the third quarter, an 11 percent increase from net income of $1.98 billion, or 58 cents per share, a year earlier.

Revenue for the period totaled $8.93 billion, a 5 percent increase from last year's $8.50 billion.

The earnings for the San Francisco-based bank were a penny above the projection of analysts surveyed by Thomson Financial.

Wells Fargo fared better than many of the other major banks reporting earnings this week. A number have seen a slowdown in revenue growth because of the flat yield curve, which has reduced the spread between what banks pay to borrow money and what they can earn when they lend it.

On Monday, Wachovia Corp., the nation's fourth largest bank based in Charlotte, N.C., reported a decline in revenue in the third quarter from the second, and investors sent its share price tumbling.

The nation's largest banks _ Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. _ were to report earnings on Wednesday and Thursday.

Gary Townsend, an analyst with Friedman, Billings, Ramsey & Co. Inc., said he expected the third quarter "to be a disappointing one" because banks had to pay more to attract deposits at the same time long-term lending rates were disappointing.

"The yield curve environment was difficult all through the quarter," Townsend said. He added that the interest rate situation appears to be improving in the current quarter.

Wells Fargo has reported three consecutive quarters of strong profits, and its share price has risen about 15 percent so far this year.

Virtually all of its major banking divisions generated strong revenue growth except the bank's mortgage operations, which have been slowing down as interest rates have climbed and home sales have grown more sluggish.

Well Fargo originated mortgage loans totaling $104 billion in the third quarter, slightly above the $103 billion made last year. But the bank's mortgage applications fell to $95 billion, an 18 percent drop from $116 billion last year.