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Jason Lindt
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Jason is a resident of New York where he currently works for a private equity fund. He graduated from Yale College with a degree in Economics.
My blog:
Leveraged Bailouts
  • Wells Fargo Results - As Good as They Look? 0 comments
    Apr 9, 2009 10:50 AM | about stocks: WFC


    Wells Fargo (NYSE:WFC) reported 0.55 EPS for Q1. On the one hand results are very strong, illustrating the earnings power of the franchise. Company's net charge-offs are up to 3.3B from 2.8B in last quarter, while they also added 1.3B to reserve, but the pre-provision earnings at 9B allow them to easily absorb these losses. Hoorah, all bank shares rallying. Two points of caution on the results though: a) NCOs are lowered as Wachovia's impaired 'Pick-a-Pay' loans are not in the charge-off number - they were written down on acquisition, and until losses on them exceed the initial written-off amount, there're no new charge-offs on them; b) WFC CEO Kovacevich has recently repeatedly ranted against the stress tests calling them 'asinine'. That makes you question whether WFC needs to raise new capital (their Tier 1 at 7.9% is the lowest among all major banks after all), in which case pre-announcing the earnings will give you a nice share price bump, that would allow to tap existing shareholders for capital with less dilution. We'll wait a couple of weeks to see whether this prediction will pan out...

    'Disclosure: No positions'

    Stocks: WFC
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