If the madness of bank stocks made you want to duck and cover earlier this week, Wednesday might have given you an equally disturbing bout of vertigo.
Second-quarter net income came in at $1.8 billion, or $0.53 per diluted share, down about 21% from the $0.67 per diluted share earned in the same period last year. Revenue was a record $11.5 billion for the quarter, up 16% from last year. Provisions for credit losses hurt net income by $3 billion, but, let's be honest, that's a pretty respectable number, all things considered. The huge news of the day, and probably what caused shares to surge, came from a 10% increase in its dividend.
What to make of all this madness
Financial shares as a group made an unbelievable comeback on Wednesday after the obliteration had endured earlier in the week. Wells Fargo's vigor undoubtedly provided fuel for that rally, but should you interpret its earnings as meaning the worst is behind us?
Wells Fargo's earnings have trounced the stigma attached to the banking sector, but its performance isn't exactly a reflection of what the industry as a whole should expect down the road.
Wells Fargo operated like a bashful school girl compared with some of its rivals in the past several years -- and that's paying huge rewards today. Unlike competitors Washington Mutual
The bottom line
If you've been bullish on Wells Fargo, you've been reassured. If you've been bearish, you're looking at the wrong bank. Once the smoke clears and the bulk of the credit crunch is behind us, we're likely to be left with two dominating banks that make it out stronger than before: Goldman Sachs
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