I'll hand it to the members of Wachovia
Wachovia's latest results looked all right, thanks in part to a boost from acquisition activity. Total revenue rose slightly less than 14%, while earnings grew 12% if you exclude merger and acquisition costs in the current and year-ago quarters. Unlike many banks, Wachovia actually managed to boost its return on assets and equity, though there's still certainly room for improvement there.
Wachovia suffered only relatively minor erosion in net interest margin (five basis points), and net interest income was up 8%. Non-interest income was even stronger, growing at a 20% clip this quarter. Balance-sheet growth continues, with a 23% jump in average loan balances, a 10% rise in deposit balances, and a 6% rise in core deposits, while credit quality remains strong.
Like practically every other bank with an investment banking business, Wachovia saw good growth in its investment banking fee income, which contributed significantly to its overall earnings growth. (The same held true, to varying degrees, for Citigroup
Wachovia's management looks cocky now, but investors have taken a "show me" attitude in response. In the meantime, I'm curious to see what the next avenue of expansion will be for this large bank -- will it look to bulk up credit cards? Expand into the Midwest? Set their sights overseas? We'll just have to stay tuned and find out.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).