Fri, Jul. 22, 3:27 AM
- Stepping into the student loan marketplace, Amazon (NASDAQ:AMZN) has entered into a partnership with Wells Fargo (NYSE:WFC), in which the bank will offer interest rate discounts to select "Prime Students."
- The offer, which will shave a half percentage point off WFC's student interest rates, will be accessible to Amazon shoppers who want loans to attend college and those who want to refinance existing loans.
Tue, Jul. 19, 2:48 PM
- Mary Mack came to Wells Fargo (NYSE:WFC) in 2008 as part of its purchase of Wachovia. She currently is in charge of Wells Fargo Advisors, the retail brokerage unit of the bank.
- Mack will become head of community banking, effective July 31, making her the 2nd former Wachovia executive to serve in top management at Wells Fargo (she's succeeding Carrie Tolstedt, who is retiring).
- Wells Fargo's community bank has 6K branches and 13K ATMs in 39 states and D.C. The unit last year generated $49.3B in revenue - roughly 60% of the company total. It has 94K employees, more than one-third of the total workforce.
Tue, Jul. 19, 11:59 AM
- With interest rates continuing to pressure revenues, banks - after years of slashing costs - are coming under renewed pressure to trim even more expenses. But what's left?
- Source: Dan Freed and Olivia Oran at Reuters
- The digital revolution has raised hopes for leaner operations, but Bank of America (BAC +0.7%) still spends $1B per year shuffling papers and transporting money in armored trucks. Other costs like mailing paper account statements, replacing lost credit cards, and repairing ATMs haven't gone anywhere either.
- JPMorgan (NYSE:JPM) - which for years has bragged about technology allowing customers to bank with their smartphones - had to start hiring tellers again due to customer complaints (it's also hiking pay).
- Count Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) to the above two names as those reporting year-over-year profit declines thanks to the top-line challenges posed by low rates. On the conference call, management faced continued grilling about operating expenses. For its part, Bank of America promised another $3.3B in annual expense cuts.
Tue, Jul. 19, 5:27 AM| Tue, Jul. 19, 5:27 AM | 12 Comments
Tue, Jul. 19, 3:45 AM
- The Republican convention has left Wall Street banks on edge by embracing a proposal to reinstate Glass-Steagall, the banking separation rule which was dropped during the Clinton administration after a bipartisan effort to overturn it.
- The repeal is often cited as a cause of the financial crisis in 2008, even though two of the institutions at the core of the crisis, Lehman and Bear Stearns, were unaffected by the act's prohibition of combining investment and commercial banks.
- Related tickers: C, JPM, BAC, WFC, GS
Fri, Jul. 15, 2:55 PM
- There aren't a whole lot of catalysts for bank stocks unless there's a sustained rise in the 10-year Treasury yield, says FBR's Paul Miller. "I'm going to be buying these things all day long," will be investors' attitude once yields do move higher.
- Until then, one might have a look at those with high exposure to mortgages - Wells Fargo (NYSE:WFC), U.S. Bancorp (NYSE:USB), and PNC Financial (NYSE:PNC) - as they stand to benefit from the refinancing boom. This has risks as well as refi booms inevitably burn themselves out.
- ETFs: XLF, KBE, KRE
Fri, Jul. 15, 11:45 AM
- Speaking on the earnings call, CEO John Stumpf says Brexit should have a much lower impact on Wells Fargo (WFC -2.8%) compared to its more internationally-exposed peers. On the other hand, all lenders have to swim in the same lower-for-longer interest rates pool.
- WSJ blog
- To that end, Wells, says Stumpf, in Q2 was a big buyer of MBS and other securities in order to churn out a slightly better return on excess deposits.
- Low rates did help the mortgage business in Q2, says Stumpf, and a full pipeline likely means a good Q3.
- One of the largest lenders to the energy sector, the bank didn't build oil and gas reserves for the first time in the past six quarters in Q2.
- Buy the dip, says Citi's Keith Horowitz, who pegs core earnings at a disappointing $0.96 per share vs. the $1.01 reported. Part of his buy thesis is an expectation Wells will close the gap between core and reported EPS. "We see good value here and would look to establish or add to positions on any weakness."
Fri, Jul. 15, 8:54 AM
- Q2 net income of $5.6B or $1.01 per share vs. $5.7B and $1.03 a year ago.
- Net charge-offs of $924M vs. $274M a year ago. Net charge-offs as a percent of total loans of 0.39% vs. 0.30%. Reserve build of $150M (mostly from loan growth) vs. a release of $350M.
- ROA of 1.2% down 13 bps Y/Y. ROE of 11.7% down 101 bps. ROTCE of 14.15% down 117 bps.
- NIM of 2.86% down four basis points from Q1. Mortgage banking noninterest income of $1.4B down $184M from Q1.
- CET 1 ratio of 10.6% flat from Q1. 44.8M shares bought back during quarter.
- CC at 10 ET
- Previously: Wells Fargo EPS and revenue in-line (July 15)
- WFC -1% premarket
Fri, Jul. 15, 8:01 AM
Thu, Jul. 14, 5:30 PM
Thu, Jul. 14, 8:19 AM
- Among the items boosting the quarter was a big rebound in markets revenue (which includes FICC) - up 23% Y/Y to $5.56B. The bank had previously unofficially guided to more than a 10% gain in trading revenue.
- Jamie Dimon has previously said that the myriad legal and regulatory issues pressuring the bank were beginning to dissipate, and this quarter JPMorgan reported a legal benefit of $430M vs. $291M of expenses a year ago.
- Energy? JPMorgan's Corporate & Investment bank booked a $235M credit loss vs. $50M a year ago, though $185M of that loss came from one customer. The commercial bank had a reserve release of $25M vs. needing to add $304M in Q1.
- Citigroup (NYSE:C) +2.6%, Bank of America (NYSE:BAC) +2.1%, Goldman Sachs (NYSE:GS) +2.25%, Morgan Stanley (NYSE:MS) +1.8%, Wells Fargo (NYSE:WFC) +1.4% premarket
Wed, Jul. 13, 12:01 AM
- In a letter to shareholders, Sequoia Fund -- the second-biggest shareholder in Valeant (NYSE:VRX) -- says it exited that position completely by mid-June.
- The Fund notes that after longtime CEO and co-manager Robert Goldfarb retired in March, "new leadership elected to sell our position." Valeant once made up 30% of Sequoia's portfolio; the company "was our largest position to start the year and its 80% decline through June 30 badly penalized our results."
- The Fund also said it exited its position in Idexx Laboratories (NASDAQ:IDXX), "a wonderful stock for us over the past 13 years"; and got out of smaller positions, in Allergan (NYSE:AGN) and Cabela's (NYSE:CAB).
- Meanwhile, it bought Carmax (NYSE:KMX), Chipotle Mexican Grill (NYSE:CMG), Charles Schwab (NYSE:SCHW), and Wells Fargo (NYSE:WFC).
Mon, Jul. 11, 3:40 PM
- While nearly all major U.S. banks cruised through the stress tests last month, writes David Schawel, those exams are about determining if lenders have enough capital to get through a crisis, not whether they can earn the sort of risk-adjusted returns of the past.
- On this front (for insurers as well as banks), there's plenty more for investors to worry about, he says, thanks to the vanishing spread between short rates (what the companies pay on their liabilities), and long rates (what they earn on their assets).
- A new Fed study finds the adverse effect of weaker net interest margins is materially larger when rates are low. The reason: The lower bound of funding costs is zero as institutions are reticent to charge negative rates.
- Investors interested in buying banks or insurers because of seemingly cheap valuations might want to look again. Bank multiples, says Schawel, typically move alongside ROE, and serious improvement in ROE is unlikely with rates remaining low.
- Interested parties include: BAC, C, JPM, WFC, MET, PRU, LNC, PNC, USB, RF, KEY, KRE, KBE
Fri, Jul. 1, 4:08 PM
- Berkshire Hathaway (BRK.A -0.3%, BRK.B -0.5%) has applied to the Fed to allow it to raise its holdings in Wells Fargo (WFC -0.6%) above 10%.
- The company doesn't intend to take on more shares of the bank at the moment, it says, or to merge it with others, and “Berkshire does not have any specific transaction or dollar value in mind with respect to any such potential purchases," the company said in its application.
- No other top bank has a single investor with a holding this size. Warren Buffett disclosed in March that Berkshire's stake hit 10% due to bank buybacks.
- The Berkshire investment in Wells Fargo stands at $23B based on yesterday's closing price, and it was attained at average price of $25.46 vs. today's $47.03.
Thu, Jun. 30, 10:51 AM
- Dividend increases and boosted buybacks must already have been priced into the shares of the big banks, as share prices are showing little reaction to last night's capital plans.
- Citigroup (C -0.6%) is notably lower despite announcing more than a tripling in the dividend. Bank of America (BAC -0.8%) was more cautious with its payout boost, but is faring about the same. JPMorgan (JPM unch) chose not to lift its dividend, but did raise the buyback. Morgan Stanley (MS +0.6%) lifted both. Wells Fargo (WFC -0.5%) didn't give details other than saying its capital plan was approved; same for Goldman Sachs (GS +0.1%).
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF, KBE
Wed, Jun. 29, 5:01 PM
- Without giving any details on the numbers involved, Wells Fargo (NYSE:WFC) says it received no objection from the Fed on its capital return plan. The bank continues to expect to target a net payout ratio of 55-75%. The current quarterly payout is $0.38 per share for a 3.2% annual yield.
- Shares +0.5% after hours
Wells Fargo & Co. is a nationwide, diversified, community-based financial services and bank holding company. It provides banking, insurance, investments, mortgage, and consumer and commercial finance through its stores, ATMs, the Internet, and other distribution channels across North America and... More
Industry: Money Center Banks
Country: United States
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