Wells Fargo & Company reported net income of $5.6 billion, or $1.01 per diluted common share, for second quarter 2016.
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This compared with $5.7 billion, or $1.03 per share, for second quarter 2015, and $5.5 billion, or $0.99 per share, for first quarter 2016.
Net interest income increased $66 million from first quarter 2016 to $11.7 billion, primarily driven by loan growth, including the full quarter benefit of the assets acquired from GE Capital that closed late in the first quarter.
The benefit to net interest income from loan growth was partially offset by reduced income in the investment securities portfolio reflecting accelerated prepayments, primarily on our mortgage-backed securities (MBS), increased interest expense from higher debt balances, and lower interest income from trading assets.
Net interest margin was 2.86 percent, down 4 basis points from first quarter 2016. The decline was primarily driven by the impact of growth in long-term debt, growth in deposits and reduced income on investment securities.
The impact of all other balance sheet growth, mix changes and repricing was beneficial to the net interest margin. Noninterest Income Noninterest income in the second quarter was $10.4 billion, down from $10.5 billion in first quarter 2016.
Second quarter noninterest income reflected higher net gains on debt securities, trust and investment fees, net gains from trading activities, lease income, card fees and service charges on deposit accounts.
These increases were partially offset by a linked-quarter reduction in other income, driven by a decline in hedge ineffectiveness income from $379 million in first quarter 2016 to $56 million in second quarter.
Other income also included a $290 million gain on the sale of our health benefit services business in second quarter 2016, while first quarter results included a $381 million gain from the sale of our crop insurance business.
Insurance revenue declined $141 million linked quarter, due to the sale of our crop insurance business.
Trust and investment fees were $3.5 billion, up $162 million from the prior quarter, primarily due to higher investment banking fees, as well as higher retail brokerage asset-based fees and transaction activity, and trust and investment management fees.
Mortgage banking noninterest income was $1.4 billion, down $184 million from first quarter 2016, as a $306 million increase in origination gains was more than offset by a decline in servicing revenue due in part to lower mortgage servicing rights (MSR) hedging results.
Residential mortgage loan originations were $63 billion in the second quarter, up $19 billion linked quarter.
The production margin on residential held-for-sale mortgage loan originations5 was 1.66 percent, compared with 1.68 percent in first quarter.
Total loans were $957.2 billion at June 30, 2016, up $9.9 billion, or 1 percent, from March 31, 2016, driven by growth in commercial loans, including commercial and industrial and real estate mortgage loans, as well as growth in consumer loans, including real estate 1-4 family first mortgage loans, credit card and automobile.
Total average loans were $950.8 billion in the second quarter, up $23.5 billion from the prior quarter, and included the full quarter impact of the March 1, 2016 acquisition of GE Capital's Commercial Distribution Finance and Vendor Finance businesses, as well as a portion of its Corporate Finance business. ■