Wells Fargo Reports 3Q Results

[PBS Poll-435]

Wells Fargo Reports 3Q Results
Morningstar
by Jaime Peters, CFA, CPA | 10-20-10 | 12:06PM | E-mail Note


Wells Fargo WFC reported third-quarter earnings of $3.15 billion, or $0.60 per share, up from $0.55 in the second quarter. Using market share gains and cost efficiencies from its Wachovia merger to reward shareholders, Wells Fargo's performance has steadily improved. Loan losses continue to decline, dropping $400 million during the quarter to $4.1 billion, or an annualized 2.14% of average loans. We expect loan losses will continue to improve, allowing the bank to release additional reserves. During the third quarter, Wells Fargo released $650 million of reserves, adding $0.12 to pretax income. Overall, results were in line with our expectations, and we are maintaining our fair value estimate.

On the mortgage repurchase side of the foreclosure problems, we believe Wells Fargo has a good handle on the situation. The bank actually saw a decline in the number of repurchase demands during the quarter, to $3.8 billion from $4.3 billion in the second quarter. The bank has been able to satisfy half of the requests without repurchasing the loans and been able to modify the loans of an additional 20%-25% of the requests. Wells Fargo currently holds a $1.3 billion reserve for additional repurchases, a figure we believe is adequate, given its exposure.

Finally, we want to note Wells Fargo's capital position. The company estimates that its Tier 1 common ratio--including all of the Basel III adjustments--stands around 6.9%, just shy of the 7% minimum it needs to obtain by 2019. The bank added about 40 basis points to its Tier 1 common ratio during the quarter. We believe the company will easily be able to meet its Tier 1 common ratio goals while still raising the dividend sometime in the first half of 2011.

[tridim]

1. Propaganda at its finest!

[louis-t]

2. It takes them forever to do a short sale.

I've got one in the works that's going on 4 months. They used to take 6. They are infamous for losing documents. Can't be coincidence.

[NewEngland4Obama]

3. I bought a foreclosed home and finance through Wells Fargo

it went very quickly. Had a great experience using them and also got a rehab loan too. I would highly recommend them.

[louis-t]

4. My point exactly. It's like they don't want to do

short sales. Totally different departments, of course. New mortgages vs. asset management. If they were so competant in doing your new mortgage, it seems odd they would be so incompetant on short sales,

[hamsterjill]

5. They screwed my mortgage up disastrously!

I bought a house this past summer and was referred to Wells Fargo for my mortgage. I locked in a good rate and things started smoothly.

But by the end of the process, I had a whole different opinion of Wells Fargo. They lost documents sometimes two and three times, they did not estimate good faith charges correctly, and they asked for things that they didn't need. I didn't know if I was going to be able to close until 2 hours before the scheduled closing.

I would NEVER recommend them to anyone. The personnel that I dealt with did not know the business, had no idea WHY they were asking for documents or what the loan requirements were. When I asked questions, I got answers. The problem was that the answers I got were not answers to the questions that I asked.

Total idiots.

P.S. I am a real estate paralegal.

[tridim]

6. All of the TBTF banks are like that. It's the new normal.