It's all about the "diversified business model" early in the Wells Fargo (WFC -0.8%) earnings call as the bank's bread and butter mortgage banking business continues a steep decline. Originations were off 60% from a year ago - refis down 80% and purchases down 22%.
Looking at other revenue drivers, core loans grew $39.8B, or 6% Y/Y. Core deposits of $965.8B grew 4%; funding costs declined to 11 bps from 16 bps a year prior.
Along with an improved credit picture, cost cuts were key in Q4 - $12.1B in noninterest expense was down $811M from the previous year as the bank slashed about 1.1K jobs in mortgage banking (quarterly net income was $5.6B). The efficiency ratio drops (improves) 62 bps from Q3 to 58.5% - a range of 55-59% is targeted for Q1, and CFO Tim Sloan expects continued improvement throughout the year.
Capital returns? Management expects a boosted dividend and repurchase program, but awaits approval from the Fed.