Fri, Apr. 10, 6:46 AM
- GE decides the time is right to get out the banking business and plans to sell nearly all GE Capital assets over the next 24 months, excepting the financing verticals relating to the company's industrial businesses - GE Capital Aviation Services, Energy Financial Services, and Healthcare Equipment Finance.
- As part of the plan and as leaked yesterday, GE agrees to the sale of nearly all of the assets of GE Capital Real Estate to Blackstone (NYSE:BX) and Wells Fargo (NYSE:WFC). GE also has LOIs from other buyers for another $4B in property. The total amount of the sales comes to about $26.5B.
- Under the restructuring, GE expects more than 90% of its earnings will be generated by industrial businesses by 2018 - that's up from 58% last year.
- For 2015, the company's industrial businesses remain on track to generate operating EPS of $1.10-$1.20.
- GE has identified the potential to return $90B to shareholders in dividends, buybacks, and the Synchrony Financial (NYSE:SYF) separation through 2018, and has authorized a new buyback program of up to $50B. The company expects to reduce share count to 8B-8.5B by 2018 (it's currently 10B).
- Shares +1.8% premarket.
- Source: Press release
Wed, Apr. 8, 11:47 AM
- Picking winners in banking names is tough right now, says Nomura, as correlation between names has risen to 90% this year from 60% in 2014. When the headwind from ZIRP turns into a tailwind from rising rates is anybody's guess, but Nomura figures the market will still reward those who deliver strong performance in areas they can control, like fee income and efficiency.
- In credit cards, the team sees relative value in Discover (DFS +0.7%), noting it trades at a lower premium to Capital One (COF +1.2%) than has been typical in the past. "Discover’s excess capital (9% of its market cap) and the optionality associated with having its own network lead us to believe that it is likely to regain its premium."
- For banks, Nomura is cautious as recent data suggests loan growth has not been enough to offset margin compression. If you've got to own them, PNC Financial (PNC), U.S. Bancorp (USB +0.3%), and Wells Fargo (WFC +0.1%) are favorites.
Wed, Apr. 1, 4:33 PM
- Looking for some kind of growth wherever they can find it, banks are about to get their wish as Fair Isaac is set to launch a new credit scoring metric which should expand by tens of millions the field of those eligible to get credit.
- The new score will pull payment histories for things like utilities to calculate credit scores for consumers who might otherwise not have one. Other things - like how often someone changes address - will be used to help calculate a score.
- FICO and 10 unnamed credit card issuers have been testing the new score since November, and Fair Isaac intends to roll things out nationwide by year-end. Right now, about 15M of the 53M previously unscorable Americans can be scored using the new system.
- Source: WSJ
- Among those of interest: WFC, C, BAC, JPM, COF, DFS, AXP
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KRU, RWW, KBWR, RYF, FINZ, KRS
Tue, Mar. 31, 2:58 PM
Wed, Mar. 25, 2:49 PM
- Mike Johnson has been with Wells Fargo (WFC -1%) for 32 years and will step down as corporate-banking chief at the end of Q2. No successor has yet been named.
- In other news, the bank is cutting 1K jobs at its mortgage servicing office in Milwaukee as sharp reductions in delinquencies/problem mortgages means less servicing work. The bank has about 265K employees.
Mon, Mar. 23, 3:24 PM
- The Barron's 400 has regularly beaten the S&P 500 (NYSEARCA:SPY) since its 2007 launch, writes Chris Dieterich, and also powers the Barron's 400 ETF (NYSEARCA:BFOR), which has topped the S&P 500 by nearly 500 basis points since starting in June 2013. BFOR is up 6% YTD, more than double that of the S&P 500.
- Among those added to the index during last week's twice-yearly rebalancing were Celgene (NASDAQ:CELG), American Airlines (NASDAQ:AAL), Starbucks (NASDAQ:SBUX), and Ameriprise Financial (NYSE:AMP).
- Among those dropped were McDonald's (NYSE:MCD), Wells Fargo (NYSE:WFC), Verizon (NYSE:VZ), and IBM.
- A "ruthless" quantitative security-selection method screens for growth, value, and cash flow, and filters further with other factors such as diversification.
Wed, Mar. 11, 4:47 PM
- Receiving no objection to its capital plan from the Fed, Wells Fargo (NYSE:WFC) intends to boost its quarterly dividend by 7% to $0.375 per share, and "continue our strong share repurchase activity."
- Source: Press Release
- Shares +0.35% after hours
- CCAR results
- Previously: More CCAR: Goldman, Morgan Stanley, and JPMorgan pass after resubmissions (March 11)
- Previously: BofA must resubmit capital plan; Deutsche and Santander rejected (March 11)
Tue, Mar. 10, 10:39 AM
- "Slowing earnings growth, deterioration in the quality of earnings, loan growth largely limited to low-yielding assets, continuing NIM pressure, loss absorbing capital issuance, and rising loan loss provision costs are some of the headwinds," says SocGen's Murali Gopal, downgrading Wells Fargo (WFC -1.9%) to Sell from Neutral.
- The stock owes much of its recent move higher to expanding multiples, but Gopal sees little hope for further advance on that front.
- "With the stock’s performance likely to be a function of earnings growth, and consensus forecasting 3% EPS growth in FY15, we recommend investors Sell the stock at current levels," says Gopal, who remains positive on the TBTFs in general, and suggests investors instead buy Bank of America (BAC -1.8%) and JPMorgan (JPM -1.7%).
Thu, Mar. 5, 8:28 PM
- The minimum Tier 1 common capital ratio for banks is 5%, according to the Fed, and here's how the 31 lenders stacked up under the central bank's severely adverse scenario vs. a year ago (h/t: WSJ):
- Deutshce Bank (NYSE:DB): 34.7%, not tested a year ago
- DIscover (NYSE:DFS): 13.9% vs. 13.2% a year ago
- Bank of New York Mellon (NYSE:BK): 12.6% vs. 13.1%
- American Express (NYSE:AXP): 12.5% vs. 12.1%
- Northern Trust (NASDAQ:NTRS): 12.3% vs. 11.7%
- State Street (NYSE:STT): 11.8% vs. 13.3%
- Citizens Financial (NYSE:CFG): 10.7% vs. 10.7%
- KeyCorp (NYSE:KEY): 9.9% vs. 9.2%
- Capital One (NYSE:COF): 9.5% vs. 7.8%
- PNC Financial (NYSE:PNC): 9.5% vs. 9%
- Santander Holdings USA (SAN's U.S. unit): 9.4% vs. 7.3%; shares +0.8% after hours
- BMO Financial (BMO's U.S. unit): 9% vs. 7.6%
- Comerica (NYSE:CMA): 9% vs. 8.6%
- Huntington Bancshares (NASDAQ:HBAN): 9% vs. 7.4%
- HSBC North America (NYSE:HSBC): 8.9% vs. 6.6%
- U.S. Bancorp (NYSE:USB): 8.5% vs. 8.2%
- Regions Financial (NYSE:RF): 8.3% vs. 8.9%
- Citigroup (NYSE:C): 8.2% vs. 7.2%
- SunTrust (NYSE:STI): 8.2% vs. 8.8%
- BB&T (NYSE:BBT): 8.1% vs. 8.4%
- MUFG Americas Holdings (NYSE:MTU): 8% vs. 8.1%
- Ally Financial (NYSE:ALLY): 7.9% vs. 6.3%
- Fifth Third Bancorp (NASDAQ:FITB): 7.9% vs. 8.4%
- Wells Fargo (NYSE:WFC): 7.5% vs. 8.2%
- M&T Bank (NYSE:MTB): 7.3% vs. 6.2%
- Bank of America (NYSE:BAC): 7.1% vs. 5.9%; shares +2.1% after hours
- JPMorgan (NYSE:JPM): 6.5% vs. 6.3%
- BBVA Compass (NYSE:BBVA): 6.3% vs. 8.5%
- Goldman Sachs (NYSE:GS): 6.3% vs. 6.9%
- Morgan Stanley (NYSE:MS): 6.2% vs. 6.1%
- Zions Bancorp (NASDAQ:ZION): 5.1% vs. 3.6%; shares -1.7% after hours
- The lenders were also informed today whether their capital return plans would put them below the Fed's 5% threshold, giving them a 6-day window with which to change those requests, if need be. Last year, both BofA and Goldman scaled back their dividend/buyback requests, allowing them to pass the CCAR. This year's CCAR results will be announced on Wednesday.
- 2015 Stress Test Methodology and Results
Mon, Mar. 2, 8:30 AM
- One of this country's largest participants in the bubbly subprime auto lending market, Wells Fargo (NYSE:WFC), reports the NYT, for the first time is imposing a cap on the amount of subprime loans it will offer - no more than 10% of overall auto loan originations, which last year was about $30B.
- The move could have big effect as Wells Fargo - having sidestepped the worst of the mortgage mess - has earned a reputation for knowing something about managing risk.
- The cap is already being felt across the auto market, and dealers are noting the bank increasingly rejecting loans which previously might have been accepted.
- Capital One (NYSE:COF), Santander Consumer (NYSE:SC), Ally Financial (NYSE:ALLY) ... ball's in your court now.
- Previously: Ally mulling return to mortgages, credit cards (Feb. 20)
Wed, Feb. 18, 2:49 PM
- The financial sector had begun to turn around a dismal start to the year as February brought forth a string of hawkish Fed heads suggesting a June rate hike, but the XLF is lower by 0.8% after just-released FOMC minutes suggest markets and the hawks are getting ahead of themselves. KBE -1.7%, KRE -2%
- The TBTFs: BofA (BAC -2.2%), JPMorgan (JPM -1.4%), Wells Fargo (WFC -1.6%), Ciitgroup (C -0.8%)
- The regionals: Regions Financial (RF -1.6%), KeyCorp (KEY -1.6%), PNC Financial (PNC -1.3%), BB&T (BBT -1.5%), Fifth Third (FITB -1.6%), SunTrust (STI -1.7%), First Niagara (FNFG -2.1%), M&T (MTB -1.9%), U.S. Bancorp (USB -1.3%), First Horizon (FHN -2.7%).
- Online brokerage: Schwab (SCHW -2.3%), E*Trade (ETFC -1.7%), Ameritrade (AMTD -1.1%), Interactive Brokers (IBKR -0.9%).
- Previously: FOMC minutes: June rate hike not a slam dunk yet (Feb. 18)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KCE, KRU, RWW, KBWR, RYF, KBWC, FINZ, KRS
Fri, Feb. 13, 1:05 PM
- Banks are getting the worse end of the deal in co-branding partnerships with major retailers, say banking officials.
- Margins have shrunk on co-branded programs for major card issuers and processors such as Capital One (NYSE:COF), Wells Fargo (NYSE:WFC), American Express (NYSE:AXP), Visa (NYSE:V), and MasterCard (NYSE:MA) with retailers playing banks off against one another in order to score better terms.
- Earlier this week, American Express announced it would end its co-branded card with Costco.
Tue, Jan. 27, 5:15 PM
Thu, Jan. 15, 11:18 AM
- Wells Fargo (WFC -0.9%) opens a new commercial banking office in New York City to get a bigger piece of the city's near-$100B apparel business. The middle-market lending initiative is spearheaded by Joe Pollicino, the bank's commercial banking chief in New York, a 33-year industry veteran.
- “Over the past five years, more apparel companies are turning to factoring and asset-based lending to leverage extra cash flow during their cyclical business cycles,” says Wells Fargo Capital Finance EVP Kevin Gillespie.
- Source: Press Release
Wed, Jan. 14, 10:38 AM
- "Virtually all of [the bank's 70M customers] know how to fill a gas tank," says Wells Fargo (WFC -1.1%) CEO John Stumpf on the bank's earnings call, and he thus believes the dive in prices is a great opportunity for the economy and the bank. The WSJ's Emily Glazer notes Stumpf avoids the question on how the stumble in energy might impact the Wells' investment banking operation.
- Webcast and Q4 supplement
- Like Jamie Dimon earlier, Wells Fargo management reminds nervous investors that prices fluctuate. Going back just six years, they note, we've had oil at $30, oil at $140, and oil now at $45. Natural gas has both soared and crashed during that time frame as well. The bank abides.
- Previously: Wells Fargo slips after Q4 earnings meet estimates (Jan. 14)
- Previously: Wells Fargo EPS in-line, beats on revenue (Jan. 14)
Wed, Jan. 14, 8:17 AM
- Q4 net income of $5.7B or $1.02 per share vs. $5.6B and $1.00 one year ago.
- Net interest income of $11.2B up $239M from Q3, with net interest margin of 3.04% down two basis points as deposits continue to roll in.
- Community Banking net income of $3.435B vs. $3.222B one year ago on revenue of $12.835B vs. $12.254B. Mortgage originations of $44B vs. $48B in Q3. 14.1M active mobile customers up 19% Y/Y.
- Wholesale Banking net income of $1.97B vs. $2.111B a year ago on revenue of $6.054B vs. $5.972B.
- Wealth, Brokerage and Retirement net income of $514M vs. $491M a year ago on revenue of $3.647B vs. $3.438B. Retail brokerage client assets of $1.4T up 4% Y/Y. Wealth management client assets of $225B up 5%.
- Conference call at 10 ET
- Previously: Wells Fargo EPS in-line, beats on revenue (Jan. 14)
- WFC -1.1% premarket
WFC vs. ETF Alternatives
Wells Fargo & Co is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions.
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