via flickr” url=”http://www.flickr.com/photos/clintw/241152422/sizes/m/in/photostream/”]Tomorrow morning, Wells Fargo will report first quarter results, kicking off the financial sector’s earnings season with J.P. Morgan Chase.Analysts polled by Bloomberg are looking for the San Francisco, Calif., based bank to report earnings per share of $0.73 on revenue of $20.4 billion.
Erika Penala at Bank of America is relatively optimistic about Wells, beyond some pressure on asset yields.
Penala says that expenses continued to decline during the quarter as impacts from Project Compass, the company’s cost saving program, take effect, and that the company’s mortgage operations should provide momentum.
“We expect banks will have their best mortgage banking quarter since 3Q10, given strong industry volume from lower rates and [Home Affordable Refinance Program] refinancing, and wider gain on sale margins as industry capacity remains stretched, “Penala says.
Unlike peers on the Street, Wells Fargo is less exposed to more volatile areas like trading and investment banking — instead it is deeply entranched in consumer and commercial lending.