Profit Up at Wells; Citigroup Slides

Surging mortgage and home equity lending helped lift fourth-quarter earnings 24% at Wells Fargo & Co., the largest California-based bank, and 15% at Washington Mutual Inc., the firms said Tuesday.

But profit slid 37% at Citigroup Inc., which took a $1.3-billion after-tax charge to cover liability for claims it published misleading stock research.

Wells Fargo earned $1.46 billion, or 86 cents a share, up from $1.18 billion, or 69 cents, in the last quarter of 2001. If recent changes in accounting for goodwill had been in effect last year, profit would have risen 12%, the San Francisco bank said.

Wells shares fell 15 cents to $47.12 on the New York Stock Exchange.

Wells, the top U.S. supplier of mortgages, said fourth-quarter home-loan originations hit a record $112 billion, driving mortgage banking income 31% higher than in the third quarter.

Commercial lending rose slightly, but “it’s still too early to tell whether there’s a cyclical upturn” in demand for business loans, Wells Chief Financial Officer Howard Atkins said.

For 2002, Wells’ earnings rose from $3.4 billion, or $1.97 a share, to $5.7 billion, or $3.32.

Citigroup’s fourth-quarter profit was $2.43 billion, or 47 cents a share, down from $3.88 billion, or 74 cents, a year earlier. The New York firm’s securities unit, Salomon Smith Barney, lost money. About 98% of profit came from consumer banking, a business Citigroup beefed up last year by acquiring California Federal Bank.

For 2002, Citigroup’s earnings rose from $14.1 billion, or $2.72 a share, to $15.3 billion, or $2.94.

Citigroup said Tuesday that it would raise its dividend from 18 cents to 20 cents a share, effective Feb. 3. It also said it has become the first U.S. financial company to report earnings strictly according to generally accepted accounting principles rather than pro forma earnings that strip out merger, restructuring and other charges. Regulators have clamped down on the latter practice as potentially misleading after a string of corporate accounting scandals.

Hoefer & Arnett analyst Richard Bove called the move “very positive,” saying Citigroup is “one of the companies that has spent most of the time over the last few years playing with its numbers.”

Citigroup shares fell 66 cents to $36.14 on the NYSE.

Washington Mutual, the big Seattle savings and loan, said fourth-quarter net income was $969 million, or $1.03 a share, up from $842 million, or 97 cents, a year earlier. Loan volume hit $107 billion, nearly double the fourth quarter of 2001. Nonperforming assets, including loans unlikely to be repaid, rose 15% to $2.59 billion from a year earlier.

For the full year, Washington Mutual’s profit rose from $3.1 billion, or $3.59 a share, to $3.9 billion, or $4.05.

Announcing results after the close of trading Tuesday, Washington Mutual also said it will raise its quarterly stock dividend from 28 cents to 29 cents to shareholders of record Jan. 31. Its shares fell 60 cents to $35.30 on the NYSE. *

Bloomberg News and Reuters were used in compiling this report.