Wells Fargo (NYSE:WFC) boasts over $2 trillion in assets. It is one of the largest financial institutions in the United States. Shares of Wells Fargo have climbed 3.2% in 2019 so far. This is a disappointing return when we compare Wells Fargo to other top US bank stocks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).
The bank released its first-quarter results for fiscal 2019 on April 12. Net income increased to $5.9 billion compared to $5.1 billion in the prior year. It also reported diluted earnings per share of $1.20 over $0.96 in the first quarter of 2018. Like other U.S. banks, Wells Fargo benefited from higher margins which emerged as a result of rate tightening.
There were signs of a broader slowdown in Wells Fargo’s earnings. The bank posted average deposits of $1.3 trillion, a $35.1 billion or 3% decline from the prior year. Average loans came in at $950.1 billion, which was down $876 million from Q1 2018.
Still, Wells Fargo is in a strong capital position and the benefits of tax reform have enabled it and its peers to pursue aggressive share repurchase programs. This continued in Q1 2019, as net share repurchases ballooned to $3.9 billion which was up 86% from the $2.1 billion posted in Q1 2018.
Wells Fargo increased its quarterly dividend to $0.45 per share. This represents a solid 3.8% yield. The stock last had an RSI, which puts it in neutral territory as of early afternoon trading on April 22. Wells Fargo is a suitable target for value investors seeking income and exposure to U.S. banks. However, economic headwinds represent a significant risk going forward.
