Wells Fargo, Bank One Post Profits on Consumer Lending

Wells Fargo & Co. and Bank One Corp. said second-quarter profit grew on credit card fees and increased demand for consumer loans, including mortgages.

San Francisco-based Wells Fargo, the biggest U.S. mortgage lender, had net income of $1.42 billion, or 82 cents a share, after a loss in the same period last year.

Bank One, the sixth-biggest U.S. bank, said profit climbed 27% to $843 million, or 71 cents a share, from $664 million, or 56 cents, a year ago.

Short-term interest rates at 40-year lows have helped bolster consumer demand for loans and pared the cost of funds for banks, helping consumer-oriented institutions such as Wells Fargo and Bank One. Some of their rivals have been hurt by foreign loans and by declines in corporate investment banking business.

Shares of Wells Fargo gained 5 cents to $47.20 on the New York Stock Exchange. Bank One shares rose $1.60 to $37.41.

Wells Fargo’s lending income rose 21% to $3.67 billion as the net interest margin, or the difference between what a bank pays for funds and gets for loans, widened to 5.66 percentage points from 5.31 points in the year-earlier quarter.

The fifth-biggest U.S. bank generated $60 billion in new mortgages in the quarter, a rise of 33% from the year-earlier quarter, as more people sought to finance homes at low interest rates. Chief Executive Richard Kovacevich has focused on 20 million household clients to help boost earnings.

“We had more mortgage applications in the pipeline at the end of the quarter than ever before,” Wells Fargo Chief Financial Officer Howard Atkins said.

Bank One Chief Executive Jamie Dimon has benefited from a growing credit card business, First USA Inc.

First USA, bolstered by the purchase in 2001 of Wachovia Corp.’s credit card portfolio, had fewer loan losses and added card customers. The unit’s revenue increased 12% to $2.01 billion from a year earlier.

The Chicago-based bank’s revenue from service charges, including fees from credit cards and deposits, rose 25% to $2.23 billion.

In other earnings Tuesday:

* Washington Mutual Inc., the largest U.S. savings and loan, said second-quarter earnings rose 23%, helped by strong loan volume and retail checking-account growth. Net income rose to $984 million, or $1.01 a share, from $798 million, or 91 cents, a year earlier, the Seattle-based company said.

* Minneapolis-based U.S. Bancorp, the eighth-largest U.S. bank, said second-quarter profit rose 46% as fees from processing credit card and automated teller machine transactions climbed. Net income totaled $823 million, or 43 cents a share, up from $562.3 million, or 29 cents, in the same quarter a year ago, when merger costs lowered earnings.

* Pittsburgh-based Mellon Financial Corp. said operating earnings fell to $106 million, or 24 cents a share, from $118 million, or 25 cents, in the same quarter last year. The bank said it set aside $101 million to write off loans to WorldCom Inc., which is under investigation after revealing that it improperly accounted for expenses and misstated profit.

* City National Corp., parent of City National Bank in Beverly Hills, had second-quarter earnings of $45.8 million, or 88 cents a share, up 16% from $39.6 million, or 80 cents, in the same quarter last year. A strong increase in deposits helped offset a higher provision for loan losses as City National continues to reduce its loans to media and telecommunications companies, Chief Executive Russell Goldsmith said.