Wells Fargo & Co. posted another record profit in the second quarter, continuing to ride the wave of mortgage refinancings while benefiting from a shrinking and shifting workforce.
The bank reported Friday that it earned $4.4 billion for shareholders between April and June, or 82 cents per share. That edged out analysts expectations and increased 17 percent over the same period last year.
Among the strongest results for the San Francisco bank were in mortgage banking, which earned it $2.9 billion in the second quarter on a record-setting number of applications. About 70 percent were refinancings.
Mortgage banking revenue is up 79 percent over the same time last year.
Mortgage volumes are stronger than anybody expected a year ago, or three months ago, for that matter, Chief Financial Officer Tim Sloan said on a conference call with analysts Friday.
The banks earnings also benefited from a 5 percent cut in expenses from the quarter before, primarily from lower employee benefit and incentive pay.
In the past year and a half, Wells has cut 10 percent of its workforce in more expensive locations like New York and renegotiated deals with third-party contractors.
The banks full-time headcount is down by 2,000, or 1 percent, from last year. That includes boosting employment in its mortgage sector by 19 percent, with 2,000 new employees in the second quarter to help process loans.
Wells Fargo employs about 20,500 people in the Charlotte area, and the bank has said that number wont change significantly.
The bank also has cut 7 percent of its real estate costs, shedding 3 million square feet.
Cost cutting will remain a focus, CEO John Stumpf said on the analyst call, but he did not offer specifics.
Expenses are still too high around here, Stumpf said. Weve lost none of our enthusiasm, our passion, to do that. This is not a destination; this is a journey. It will continue next quarter, the quarter after and into next year.
Investors generally deemed the results to be positive. Wells Fargos stock closed 3 percent higher Friday.
But some analysts raised concerns about how large a role mortgage banking is playing in the banks streak of record-setting quarters, which has now reached 10.
Stumpf and Sloan dismissed those fears, saying they will work quickly to ramp down expenses in the area when refinancings subside and lean on other areas of the bank.
Theres a lot of different horses pulling this coach. One pulls harder when the other doesnt pull as hard, Stumpf said. If we happen to have something that goes down in one quarter, thats life.