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Wells Fargo profit edges up 3 percent in quarter

By WTOP Staff

MATTHEW CRAFT
AP Business Writer

NEW YORK (AP) — A stable housing market and fewer bad loans helped lift Wells Fargo’s quarterly profit 3 percent.

The country’s largest mortgage lender said Friday that net income rose to $5.42 billion for the three months ending in June, up from $5.27 billion a year earlier. That’s after taking out dividends for preferred stock.

On a per-share basis, quarterly earnings were $1.01, exactly what analysts had forecast.

Still, revenue and a key measure of profitability slipped.

As the first major bank to post results this earnings season, San Francisco-based Wells Fargo & Co. sets the tone for the rest of the industry. The third-largest U.S. bank by assets has turned a profit in every quarter since 2009.

Analysts expect banks to report weak revenue for the second quarter as interest rates remain at historic lows.

Wells Fargo’s revenue declined 1 percent to $21.1 billion. That was slightly better than the $20.8 billion analysts had expected, according to the data provider FactSet.

At the same time, Wells Fargo slashed its losses on loans in the second quarter by 52 percent to $717 million. That’s down from $1.2 billion the year before. The bank said this increase in the credit quality of its loans, along with rising home prices, allowed it to free up $500 million that had been set aside to protect against losses.

The country’s biggest mortgage lender is often seen as a bellwether for the overall housing market. To judge by the bank’s results, sales of new houses and refinancing activity have cooled off. Wells Fargo funded $47 billion worth of mortgages in the second quarter, a steep drop from the $112 billion in home loans made a year earlier.

Wells Fargo has countered the decline in home loans by turning to car loans, investment services and other businesses. As a result, total loans increased 4 percent to $829 billion.

Meanwhile, customers put more money into the bank, pushing total average deposits up 9 percent to $1.1 trillion in the second quarter. This wound up pinching Wells Fargo’s profits, because the difference between what it paid to depositors and what it received in interest payments shrank. Net interest margin, a measure of this profit, sank to 3.15 percent from 3.47 percent the year before.

The bank’s stock fell 51 cents, or 1 percent, to $51.30. Wells Fargo has traded as high as $53.08 and as low as $40.07 over the past year.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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