Consumers Confident Wells Fargo Will Survive

Deposits grew at Wells Fargo bank as people decided the Wachovia/Wells merger will succeed and Wells Fargo (WFC) will survive. From Wells' Q408 conference call:

Core deposits increased 31% annualized linked quarter. Net new consumer checking accounts once again exceeded 6% annual growth, as has been the case every quarter since third quarter 2005.

Private Banking, serving our highest net worth customers, grew revenue by over 50% from the fourth quarter of 2007. In the fourth quarter, Private Banking grew average core deposits by 38% and average loans by 27% compared to the fourth quarter of 2007.

Wachovia’s core deposits resumed growth in the fourth quarter following the merger announcement with Wells Fargo, increasing 10% un-annualized from the trough early in the quarter.

Each major business segment at Wachovia experienced positive deposit growth including retail/commercial, wealth clients, brokerage and cash management during the quarter.

So far, deposit retention rates at Wachovia have exceeded our expectations.

We are now the number one in the U.S. in community banking presence, small business lending, middle market commercial banking, agricultural lending, commercial real estate lending, commercial real estate brokerage and bank owned insurance brokerage. We are number two in banking deposits in the United States, home mortgage originations and servicing, retail brokerage and debit card.

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Comments

[User 283977:]

What proportion of that increase in core deposits came from people moving their money out of Washington Mutual in the fourth quarter? If they are in such great shape why has their stock dropped by 25% since the beginning of the year? Its recent upward movement was spurred by the prospects of the creation of a bad bank" which will allow them to off load all of their bad investments onto the tax payers.

Jan 31 08:29 PM

[Obama is Bu...:]

Wells Fargo's assets are concentrated in California -- but supposedly Wells Fargo was infinitely more conservative than any of its competitors. At the same time, Wells supposedly made similar returns to its more risky competitors. I for one do not believe there is such a thing as a free lunch

Now Wells has merged with Wachovia, paying whatever positive nominal sum for a bank with a negative net worth. Wachovia comes with the disaster that finished it off -- Great Western Savings ... whose underwater assets are based in California.

Even if Well's asset mix was markedly better than the market average before (which is hard to swallow) -- they now must add in all the garbage they got from Great Western via Wachovia. There is no way asset quality could possibly be anything but worse following the merger

And as Bank America has learned, if you pay a positive amount for an asset worth less than zero -- you will have future losses

Jan 31 09:28 PM