Net income for Wells Fargo dropped to $1.64 billion, or 49 cents per share, from $2.17 billion, or 64 cents, a year earlier, the fourth straight quarterly decline. Revenue rose 5 percent to $10.38 billion, while expenses fell 3 percent.
Wells Fargo's purchase of Wachovia Corp will create the largest U.S. retail branch banking network. It was able to wrest Wachovia from the arms of Citigroup Inc with a $15.1 billion all-stock takeover, largely because it never dove deeply into the risky mortgages and exotic debt that strangled Wachovia and rivals such as Washington Mutual Inc, Countrywide Financial Corp and IndyMac Bancorp Inc.
The merger has won federal regulatory approval and is expected to close this quarter. It would create the nation's fourth-largest bank, with more than $1.4 trillion of assets, close to $800 billion of deposits, about 6,600 branches, 48 million customers and 280,000 employees.
In related news, in a complaint filed on Tuesday with the U.S. district court in Manhattan Wells Fargo asked a federal court to void Citigroup Inc's earlier agreement to buy parts of Wachovia. The complaint says that the earlier agreement is unenforceable under the government's $700 billion banking industry bailout because it is "contrary to public policy."
Wells Fargo asked for a ruling that the Citigroup agreement is unenforceable to the extent it may have prohibited Wachovia from considering another merger offer, and to bar damages premised on the idea that the agreement could be enforced.
Citigroup has said it will seek up to $60 billion of compensatory and punitive damages from Wells Fargo and Wachovia, alleging breach of contract and tortious interference with contract.