Stock Quote
Recent Posts
YHOO+MSFT sitting in a tree
August 7, 2008 01:58 PM
AIG: Another Example Why Anything Related To Financials Must Be Sold
August 7, 2008 01:18 PM
The Tyrannical Rule of King Market
August 7, 2008 06:45 AM
Bear Market Trading Rules
August 6, 2008 11:27 PM
Heat Seeking Using the Sizzle Index
August 6, 2008 05:08 PM
A Stroll Through the Oil Fields
August 6, 2008 04:20 PM
They Don't Know (What They Don't Know)
August 6, 2008 11:27 AM
To add an specific blogger's feed, simply go to their blog and click on their individual RSS link.
Wells fargo Earnings Report
Wells Fargo reported earning this morning and as expected the bank was profitable and had much smaller credit and real estate related losses than it competitors. The bank reported net income of $2 billion, or $.60 a share. Although this is down form the year ago periods 42.24 billion, or $.66 a share it was slightly ahead of analyst's expectations. Well Fargo had total write offs in the quarter of 41.5 billion, primarily related to residential real estate loans. In addition, the bank added $500 to loan loss reserves to protect against further losses in the mortgage portfolio. Revenues for the bank grew by 12% in the quarter reaching $10.6 billion. Analysts had forecast earnings of $.57 on revenues of $10.4 billion.
The bank continues to do a much better job than most large financial institutions in the current difficult economic environment. In the quarter, total core deposits grew by 9%. Average earning assets were up 21%, while average loans were up 19%. CEO John Stumpf commented on the quarter saying, ""Despite a weakening economy, the continued downturn in housing and expected higher charge-offs, this was a remarkably strong quarter." He added that the loan growth was comprised at loans with higher interest spreads than last year and that the bank continued to strengthen its balance sheet and liquidity position.
Wells Fargo also reported a gain of $334 million form the Visa (v) IPO. The bank received the shares when Visa reorganized from a member bank owned organization to a corporation earlier this year. This helped partially offset weakening credit conditions in the loan portfolio. Net charge offs rose form 1.28% of average loans outstanding to 1.6% as the real estate market continued to experience difficult conditions. There were some signs of improving condition in that market however. Total mortgage applications rose 17% in the quarter. Reflecting the new, tighter loan underwriting standards originations rose just 7%. The total mortgage service portfolio rose 10% to $1.53 trillion, leading to a $94 million increase in service revenues.
Wealth Management also showed solid gains in the first quarter. Total wealth management revenues rose 12% while net earnings for the division rose 21%. Total brokerage assets rose above $100 billion for the first time in the quarter. The online brokerage WellsTrade reported a 48% increase in earnings for the quarter. Treasury management income rose 175 while foreign exchange trading profits gained 36%.
While the conditions remain difficult, particularly in the residential mortgage market, Wells Fargo continues to avoid most of the pitfalls that have caused enormous losses for many banks. Slid management, a diversified base of financial products and services combined with the new stricter lending standards are continuing to keep the bank at the forefront of major money center banks. As competitors struggle to raise capital and shore up their balance sheet ,Well Fargo will be in a strong position to gain market share and grow through opportunistic acquisition. It is clearly the class of the large bank sector in the first quarter.
Tags:
Post a comment
