Wells Fargo & Co.NYSE
Yesterday, 12:32 PM
- "Losses are going to go higher - there's no question about that," says Hylton Heard, senior director at Fitch. Prices of used cars up to eight years old are down 3.6% in the year's first nine months, according to J.D. Power. It's the first "material" decline in prices since 2008, says the company's Larry Dixon.
- The country's 2nd-largest auto-lender by volume, Ally Financial (NYSE:ALLY) this week said it started seeing used-car values fall in Q3. The company wrote off an annualized 1.37% of its loans in Q3, up from 1.01% a year earlier and the highest charge-off rate since at least the end of 2012.
- Also this week, Capital One (NYSE:COF) lifted provisions, citing stronger originations and expectations of rising charge-offs as used-car values decline.
- The country's largest auto-lender, Wells Fargo (NYSE:WFC) has responded to signs of weakness by tapping the brakes, writes Annamaria Andriotis in the WSJ, noting a 2% Y/Y fall in Q3 auto-loan originations.
Yesterday, 10:51 AM
- Rates are up across the globe again today, with the 10-year U.S. Treasury yield looking like it's ready for another assault on 2% - up 7 basis points on the session to 1.865%.
- Alongside a sharp move lower in REITs, the utility sector (XLU -0.9%) is facing a rough go of it.
- In the green though is the banking sector - (KBE +0.2%), (KRE +0.4%) - which has been awaiting a real move higher in rates for years. A big move on the long end while short rates hold (for now) is an added boost as it widens the yield curve.
- Bank of America (BAC +0.4%), Citigroup (C +0.4%), JPMorgan (JPM +0.4%), Wells Fargo (WFC +0.5%), PNC Financial (PNC +0.5%), Fifth Third (FITB +0.9%), U.S. Bancorp (USB +1.2%), BB& T(BBT +0.7%)
- Other high-yield beneficiaries include: MetLife (MET +0.9%), Lincoln Financial (LNC +1.3%), Schwab (SCHW +0.4%), Voya Financial (VOYA +0.9%).
- ETFs: XLF, FAS, FAZ, XLU, UTG, IDU, VPU, UYG, VFH, GUT, BUI, IYF, BTO, FUTY, IYG, FNCL, SEF, RYU, FXO, UPW, RYF, FXU, FINU, RWW, SDP, XLFS, FINZ, FUGAX, JHMF, FAZZ, FNCF, JHMU, UTLF
Tue, Oct. 25, 5:07 PM
Wed, Oct. 19, 4:38 PM
- California's attorney general is investigating Wells Fargo (NYSE:WFC) on criminal charges of identity theft in connection with its bogus-account scandal, the Los Angeles Times reports.
- Shares of WFC are off 0.7% after hours.
- A search warrant that the paper obtained shows that the state's Justice Department is demanding information including the names of California customers who had unauthorized accounts opened up, info about fees tied to those accounts, and the name of employees who opened them as well as their managers, along with e-mail and communications.
- It's also requesting info about customers in other states, if accounts were opened by Wells Fargo workers in California.
- The agency says there's probable cause to believe the bank violated two sections of the state penal code, both felonies. But it's not yet clear whether Attorney General Kamala Harris and her office will pursue charges against individuals or even the bank yet.
- Wells Fargo says it's "cooperating in providing the requested information."
Tue, Oct. 18, 4:55 PM
- The agency holds Wells Fargo's (NYSE:WFC) credit rating at "A" for now, but cuts its outlook to Negative from Stable, suggesting a downgrade could come relatively soon.
- Fitch did the same two weeks ago.
- In other news, now-former CEO John Stumpf has resigned from the boards of Chevron and Target.
- Shares down 0.3% after hours
Mon, Oct. 17, 3:36 PM
- It's a valuation call by the BMO Capital team of James Fotheringham and Joseph Recendez after the sizable divergence in the two stocks' paths. JPMorgan (NYSE:JPM) is flat since Sept. 1, while Wells Fargo (NYSE:WFC) has dropped 12.5%. Going back to the Feb. 11 bottom, JPMorgan's 20.7% advance beats Wells by a full 2,400 basis points.
- They're not yet bulls on Wells Fargo (the upgrade is to Market Perform from Underperform), but do believe the stock has priced-in the cross-selling scandal.
- "JPMorgan shares are running out of upside," they say, downgrading to Market Perform from Outperform.
Mon, Oct. 17, 9:52 AM
- Customers of offerings like JPMorgan's (NYSE:JPM) Sapphire Reserve card can't believe their good fortune, but bank shareholders can't be faulted for wondering whether there's going to be any profits from the growing rewards war.
- "You have five or six big national players and they are going around killing one another," says Oppenheimer's Chris Kotowski.
- It's the banking version of a loss leader. The upfront rewards are well above the annual fee, but if customers hold onto the card after the first year, and better yet hold a balance, they could become profitable.
- "It has been a huge success," says the bank's card boss, Kevin Watters. Speaking on Friday's earnings call, CFO Marianne Lake declined to say how much card debt customers need to take on before a profit can be turned.
- Citigroup's (NYSE:C) spending on cards has also been aggressive, but personal finance gurus say its Prestige premium card needs to up its rewards game to compete with JPMorgan's offering.
- Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) also naturally want to boost card business, but until now have mostly refrained from joining the war, and earlier this month, American Express (NYSE:AXP) boosted rewards on its Platinum card, though saying publicly the move wasn't in response to JPMorgan and Citi.
Mon, Oct. 17, 8:22 AM
- KBW throws in the towel on Wells Fargo (NYSE:WFC), downgrading the stock to Market Perform. Details aren't yet available, but we'll check the scorecards.
- Since the account-opening scandal made the front pages on Sept. 8, Wells Fargo is lower by 10% vs. modest gains for JPMorgan, BofA, and Citi. It's down 3% since KBW said the selling pressure was near an end on Sept. 16, again vs. modest gains for peers.
- Looking back further, Wells was underperforming most peers this year before the scandal news hit. Since the Feb. 11 market bottom, Bank of America is higher by 33%, Citi by 30%, and JPMorgan by 22%. Wells Fargo is lower by 3%.
- It's largest investor might or might not be a buyer here, but The Oracle awaits Fed approval to boost his stake in the bank above 10%.
Sat, Oct. 15, 5:57 PM
- New Wells Fargo (NYSE:WFC) CEO Tim Sloan had a rocky Wall Street debut on Friday, Bloomberg says, collecting comments from analysts on WFC's Q3 earnings call.
- On the call Sloan deflected questions about how the scandal may shape his approach to the role. He deferred most queries about sales abuses, saying that he wanted “to be very respectful” of the board’s continuing investigation, and saying he wasn’t sure if the findings would be made public.
- “We can’t really ask about the internal investigation, there’s no time frame, we can’t ask who knew what and when,” Mike Mayo, an analyst at CLSA Ltd., complained to Sloan about an hour into the call. “We can’t ask why it took so long to stop the problems. This is the first time we’ve had to ask questions.” Mayo said it was “a little frustrating” that the bank didn’t know whether affected customers are sticking with the lender.
- “Investors wanted to know a couple of things primarily,” Brennan Hawken, a UBS Group AG analyst, said . “How much is this going to cost us in expenses? And what is this going to mean for revenue? And they gave very little on either.”
Fri, Oct. 14, 10:28 AM
- Unsurprisingly, the early part of Wells' (NYSE:WFC) earnings call presentation deals with the account opening scandal, and actions being taken to make it all better.
- While customer branch traffic in September was at typical levels, new checking-account openings were down 25% Y/Y, and customer visits with branch bankers were down 10%. Credit card applications slid 20%.
- Other impacts: Mortgage referrals from Retail Banking were down 24% in September from August (referrals have accounted for about 10% of mortgage originations this year); while certain governments have suspended business activity, ending deposit balances were up 4% M/M, and 1% Y/Y.
- The bank will address the impact on customer FICO scores from the fake account openings. It's also investigating claims of retaliation against employees who reported ethics issues.
- Shares are up 1%, but still lagging gains from the other big banks.
- Previously: Wells Fargo cautiously higher after topping estimates (Oct. 14)
- Previously: Banks lead early gains after beats from JPM, C, and WFC (Oct. 14)
Fri, Oct. 14, 8:20 AM
- New CEO Tim Sloan: “I am deeply committed to restoring the trust of all of our stakeholders ... We know that it will take time and a lot of hard work to earn back our reputation."
- Q3 net income of $5.6B or $1.03 per share vs. $5.8B and $1.05 in Q2, $5.6B and $1.01 a year ago.
- ROA of 1.17% down 3 bps Q/Q, down 15 bps Y/Y. ROTCE of 13.96% down 19 bps, and 123 bps.
- Net charge-offs as a percent of total loans of 0.33% down 6 bps Q/Q, up 2 bps Y/Y. Allowance for credit losses as a percent of total loans of 1.32% down one basis point Q/Q, down 7 bps Y/Y.
- Efficiency ratio of 59.4% up (worse) from 58.1% in Q2 and 56.7% a year ago.
- Net interest margin of 2.82% down four basis points from Q2, down 16 bps Y/Y.
- The cross-sale ratio (the focus on which helped get the bank into this mess) fell to 6.25 products per customer from 6.33 a year ago.
- CC at 10 ET
- Previously: Wells Fargo beats by $0.02, beats on revenue (Oct. 14)
- WFC +0.2% premarket
Fri, Oct. 14, 8:01 AM
Fri, Oct. 14, 6:38 AM
- It will take more than the retirement of Wells Fargo (NYSE:WFC) CEO John Stumpf to make California State Treasurer John Chiang change his mind about doing business with the bank again.
- "We are beyond the point of tweaking. We want to see fundamental reform of Wells Fargo before we make a decision," he said.
- In September, the state suspended its relationship with the lender after it was accused of defrauding customers.
Thu, Oct. 13, 5:30 PM
Thu, Oct. 13, 5:01 PM
- Along with some other sell-siders, Mike Mayo is supportive of John Stumpf's exit from the bank and the elevation of Tim Sloan to CEO, but says further changes need to be made.
- Speaking to CNBC, Sloan says a number of significant changes are already in motion, among them management and the incentive compensation system.
- "Everyone wanted to have someone's head on a plate and now they do," says KBW's Brian Kleinhanzl. "Now that he's gone, you go on to the next discussion."
- Wells Fargo (NYSE:WFC) reports its Q3 tomorrow before the bell. Analysts are looking for EPS of $1.01 on $22.22B in revenue vs. $1.05 and $21.88B a year ago.
- The stock was unable to hold onto gains and closed lower today by 1.3%.
Wed, Oct. 12, 5:14 PM
- Tim Sloan, chief operating officer and president at Wells Fargo (NYSE:WFC), is the new CEO at the bank in the wake of the immediate retirement of John Stumpf.
- Sloan will join the board as well, and retain the role of president.
- Lead director Stephen Sanger will take over Stumpf's chairman role, and independent director Elizabeth Duke will act as vice chair.
- Stumpf has been besieged with calls to resign in the wake of a bogus-account scandal that has plagued the bank and resulted in lengthy congressional hearings and thousands of job cuts at Wells Fargo. He had joined the bank in 1982 as part of the former Norwest Bank, and became Wells' CEO in June 2007.
- "While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside," Stumpf said in a statement. "I know no better individual to lead this company forward than Tim Sloan.”
- A month ago, Stumpf had determined that he wouldn't resign and told CNBC he was set to "lead this company forward."
- Shares are now up 1.4% in postmarket action.
- Wells Fargo statement