Wells, U.S. Bancorp post higher earnings

Wells Fargo & Co. fattened its profit margins and pocketed more customer service fees to boost its fourth-quarter earnings 13%, while U.S. Bancorp lowered its problem loans and expenses to eke out a modest improvement.

The results released Tuesday provided investors with their first look at how the nation’s biggest banks fared during the final three months of 2006 -- a period in which the U.S. economy continued to expand despite jitters over crumbling home sales and weakening property values in many parts of the country.

Still, credit losses increased at both banks in the fourth quarter, suggesting that more borrowers were struggling to pay their bills.

At San Francisco-based Wells Fargo, the deepening real estate slump pinched mortgage revenue, but the nation’s fifth-largest bank overcame the slowdown by plumbing other financial pipelines to post a fourth-quarter profit of $2.18 billion, or 64 cents a share. That compared with net income of $1.93 billion, or 57 cents a share, a year earlier.

The earnings matched the average estimate of analysts surveyed by Thomson Financial.

Revenue for the period totaled $9.41 billion to easily surpass the average analyst estimate of $8.96 billion, according to Thomson Financial. The fourth-quarter revenue represented an 11% increase from the previous year.

Wells Fargo shares climbed 72 cents to $36.23.

Profit for the year was $8.48 billion, an 11% increase from $7.67 billion in 2005. Revenue for the year increased 8% to $35.7 billion.

Analyst Jim Bradshaw of D.A. Davidson doesn’t envision Wells Fargo’s growth tapering off any time soon. In a note issued Tuesday, he predicted the bank’s earnings would rise 11% this year and 12% next year.

U.S. Bancorp, the nation’s seventh-largest financial institution, earned $1.19 billion, or 66 cents a share, in the fourth quarter. That represented a 4% increase from net income of $1.14 billion, or 62 cents a share, a year earlier.

Revenue was $3.42 billion, a 3% increase from $3.33 billion in the previous year.

Although the earnings fell a penny below analyst projections, U.S. Bancorp shares gained 20 cents to $35.75.

U.S. Bancorp benefited from a decline in delinquent debt as the Minneapolis-based bank wrote off $169 million in bad loans during the fourth quarter, down from $213 million in the previous year.

The bank cited tougher bankruptcy laws that have made it harder for consumers to go to court and be excused from debt.