Wells Fargo income declines

SAN FRANCISCO — Wells Fargo, which operates the largest banking network in Colorado, reported a decline in net income for 2007.

Despite reporting a record revenue of $39.4 billion, the San Francisco-based bank’s net income declined 4 percent from 2006 to $8.06 billion. In 2007, the company saw increases in net charge-offs and nonperforming loans as a percentage of all loans. Net charge-offs increased to 1.03 percent of all loans from .73 percent in 2006, and nonperforming loans increased to .7 percent from .5 percent in 2006.

Wells’ Chief Credit Officer Mike Loughlin said in a prepared statement, “2007 was a challenging year for credit. We largely avoided many higher-risk wholesale and consumer loan products and practices that are problematic to the industry.

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“However, we did not fully appreciate the severity of the residential real estate downturn and its impact on our home equity portfolio, particularly our third party-originated, higher loan-to-value second mortgages.”

The largest percentage decline in net income came from Wells Fargo Financial, the division that handles consumer loans. While revenues increased 2 percent year-over-year, net income declined 44 percent to $481 million. Wells Fargo Financial is the smallest of the company’s three segments. Comparatively, the community banking division reported a net income of $5.3 billion and wholesale banking reported $2.3 billion.

Wells Fargo operates about 250 branches in Colorado and holds the highest deposit market share in the state at more than 17 percent. It operates 12 branches in Northern Colorado and claims about 10 percent of the deposit market share.