Victor Cook

Stress Test Results: AQ Chances vs. SCAP Buffers

Sanitychecker,

Yes, of course I remember your comment. Unfortunately, I did not follow up on ways to combine Wachovia’s pre-merger numbers with Wells Fargo’s. I wish I had done as you suggested.

It would have been a simple thing to combine the two if WB were included in my 32 quarter analysis of the 92 public US bank and thrift holding companies with the most deposits. But it wasn’t. That’s because WB was not on the list I got from American Banker. Apparently their data supplier (SNL) removed WB since the merger had gone through when they compiled the list on March 11, 2009. So, rather than redo the analysis I let it ride.

I just checked WB’s 9/30/08 financials. At that time its price had dropped to around $3.50 destroying its market cap, while the merger would have doubled WFC revenues. The combination would have pushed Wells Fargo’s AQ score back far below zero. Then I wouldn’t have been nailed by Connell in my interview! Sigh…

~V

Which Banks Are Holding Those 'Hard-to-Value' Assets?

Sorry, the SA commenting software seems to misinterpret the equal sign as I entered it above. The sum is $12.772b.

Which Banks Are Holding Those 'Hard-to-Value' Assets?

No, I did not include Wachovia in the analysis. Since you plan to run an analysis on that bank combined with the eight included in my article you should know I’m using S&P Compustat data standardized for direct comparability among companies.

Also, I cross-checked the S&P numbers with EdgarOnline I*Metrix data -- As Reported. In the case of banks both services define Total Revenue as Net Interest Income + Total Interest Expense + Total Non-interest Income. For example, WFC’s reported Total Revenue on 9/30/08 was $6.381+$2.393+$3.998=$... Note that Yahoo Finance reports revenue net of interest expense for some banks. In effect, Yahoo removes what amounts to a bank’s "cost of goods sold" from reported revenue. I’ll be interested to see what you come up with. If you have any questions please feel free to contact me by email any time. Thanks for your interest.

Which Banks Are Holding Those 'Hard-to-Value' Assets?

The data in this analysis cover the 36 quarters ending 12/31/08. The Wells Fargo-Wachovia deal closed on Jan 1, 2009, so the impact won't show up in their financials till 3/31/09.