Wells Fargo 2014 Annual Report Download - page 36

Earnings Performance
Wells Fargo net income for 2014 was $23.1 billion ($4.10 diluted
earnings per common share), compared with $21.9 billion
($3.89 diluted per share) for 2013 and $18.9 billion
($3.36 diluted per share) for 2012. Our 2014 earnings reflected
strong execution of our business strategy as well as growth in
many of our businesses. Our financial performance in 2014
benefited from a $914 million reduction in our provision for
credit losses, reflecting strong underlying credit performance.
We also generated diversified sources of fee income across many
of our businesses and grew loans and deposits.
Revenue, the sum of net interest income and noninterest
income, was $84.3 billion in 2014, compared with $83.8 billion
in 2013 and $86.1 billion in 2012. The increase in revenue for
2014 compared with 2013 was predominantly due to an increase
in net interest income, reflecting increases in income from
trading assets and investment securities. Our diversified sources
of revenue generated by our businesses continued to be balanced
between net interest income and noninterest income. In 2014,
net interest income of $43.5 billion represented 52% of revenue,
compared with $42.8 billion (51%) in 2013 and $43.2 billion
(50%) in 2012.
Noninterest income was $40.8 billion in 2014, representing
48% of revenue, compared with $41.0 billion (49%) in 2013 and
$42.9 billion (50%) in 2012. The decrease in 2014 was driven
predominantly by a 27% decline in mortgage banking income
due to decreased net gains on mortgage loan origination/sales
activities, partially offset by higher trust and investment fee
income. Mortgage loan originations were $175 billion in 2014,
down from $351 billion a year ago.
Noninterest expense was $49.0 billion in 2014, compared
with $48.8 billion in 2013 and $50.4 billion in 2012. The
increase in noninterest expense in 2014, compared with 2013,
reflected higher salaries expense and other expenses, including
operating losses and outside professional services. Noninterest
expense as a percentage of revenue (efficiency ratio) was 58.1%
in 2014, 58.3% in 2013 and 58.5% in 2012, reflecting our
expense management efforts.
Table 3 presents the components of revenue and noninterest
expense as a percentage of revenue for year-over-year results.
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