Wells Fargo once again posted record profits in the third quarter, the bank said Friday, despite the long-expected slow-down in its mortgage division.
Wells posted a profit for shareholders of $5.32 billion in the quarter, or 99 cents per share. That beat analysts’ expectations and was up 1 percent from a profit of $5.27 billion, or 98 cents per share, in the second quarter. It marked the 10th straight quarter of record profits at the San Francisco bank.
Mortgage banking income, however, fell more than 40 percent from the quarter before — to $1.6 billion. The bank’s mortgage originations fell nearly 30 percent.
Wells was able to increase its profits primarily by setting aside less money for bad loans and releasing about $900 million it had set aside before.
As the largest U.S. mortgage originator, Wells Fargo’s earnings were greatly affected by the dramatic slowdown in the home loan market. As mortgage rates began to rise, the flood of refinancings that had propelled Wells Fargo’s mortgage business dropped off significantly.
Wells Fargo’s chief financial officer, Tim Sloan, had told investors last month that mortgage originations would likely fall more than 30 percent to a two-year low.
In response, the bank had laid off more than 5,300 loan processors to try to bring costs down as well, the bank said Friday.
Wells Fargo joined JPMorgan Chase as the first of the big banks to report third quarter earnings. JPMorgan swung to a loss under the weight of more than $9 billion in legal costs.
Bank of America will report its earnings Wednesday.