...Strong Earnings Performance: Wells Fargo & Company's (WFC) superior earnings performance is a core strength for the company, and a positive rating attribute that differentiates it from its peers. WFC continues to post record net income each quarter, with ROAs well in excess of the large regional average. WFC, along with U.S. Bancorp (USB), remain the most consistent and most profitable large regional banks. This is particularly noteworthy given the dramatic slowdown in refinancings beginning in the second half of last year. NIM Compression Persists: Although WFC continues to report very strong levels of net income, top-line revenue growth for the industry, inclusive of WFC, has been somewhat weak. Spread income and the net interest margin (NIM) have been on a generally declining trend, owing to the low interest rate environment and muted loan growth. The NIM fell to 3.20% in 1Q14, well below the prior 10-year average of around 4.3%. Capital Ratios Appropriate: Fitch believes that WFC is...
