Most of the big four banks disappoint in 4Q14

Fourth quarter results have generally been disappointing for the banking sector. Most of the big banks failed to meet analysts’ expectations. Among the big four banks, JPMorgan (JPM), Bank of America (BAC), and Citibank (C) failed to meet analysts’ estimates. Notably, these three banks also happen to be full-service banks.

Wells Fargo’s 4Q14 results meet expectations … again

These three banks reported lower revenues, primarily due to a fall in revenues from trading operations. In some cases, legal expenses also led to lower net income. These poor banking results can be attributed to income from investment banking. Full-service banks with large exposures to investment banking streams had disappointing results for 4Q14.

Wells Fargo consistently meets analysts’ expectations

Wells Fargo (WFC) is an exception among the big four banks. It has consistently met analysts’ expectations. It exceeded analysts’ expectations throughout 2013, and 2014 was no different. It exceeded analysts’ expectations in 1Q14 and met expectations in 2Q13 and 3Q14.

Wells Fargo’s 4Q14 results meet analysts’ expectations

Wells Fargo’s 4Q14 results continued the strong trend. The consensus analysts’ estimate for earnings per share was $1.02. Wells Fargo reported earnings per share of $1.02 and matched analysts’ expectation. Much of this performance can be attributed to strong performance in retail and commercial loans.

The continued strong performance of Wells Fargo is a big positive for some very popular exchange traded funds. Wells Fargo is the second largest holding in the Financial Select Sector SPDR (XLF) portfolio, representing 8.66% of the ETF. Wells Fargo is the largest holding in the Vanguard Financials Index Fund (VFH) portfolio, representing 6.86% of the fund.

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