The bank reported record full-year net income of $7.79 billion, up 17% from 2005. Full-year earnings per share were $4.63, up from $4.11 for 2005. Because of the challenging yield curve environment in 2006, net interest margin declined to 3.12% from 3.24% in 2005, but fourth-quarter numbers seem to show that the downward trend in margin is reversing itself. Credit quality remained strong. Wachovia is the nation's fourth-largest bank, with total assets of nearly $700 billion.
Wachovia completed two major acquisitions of consumer lenders in 2006, including Golden West and Westcorp. As a result, the bank's fourth quarter average loans increased by 74%, including $123.9 billion from Golden West and $15.5 billion from Westcorp. On a day when competitors Bank of America
CEO Ken Thompson also cited record fees in Wachovia's investment banking, wealth management, and capital management divisions during the quarter, contributing to a 33% gain in fee and other income. However, both return on equity and return on assets decreased in the quarter, to 13.09% and 1.31%, respectively, lagging many of its competitors.
As of today, the market gives Wachovia a P/E multiple between that of the larger banks like Bank of America and the smaller banks like SunTrust
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Fool contributor Michael Mancini does not own any shares of the companies mentioned in this article.