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Wells Fargo & Co. (WFC)

  • Sep. 10, 2014, 8:03 AM
    • It's my favorite slide, says Wells Fargo (NYSE:WFC) CFO John Shrewsberry, presenting at the Barclays Financial Services Conference. He's referring to page 23 of his presentation which shows Wells' performance across certain key metrics vs. its peers.
    • Whether its ROA, ROE, efficiency ratio, or payout ratio, Wells Fargo ranks near the top, whether compared against the TBTFs or against regional players (though USB consistently ranks higher ... kudos).
    • As for the proposed tough capital rule which made news yesterday, Shrewsberry says regulators have been talking about it for some time, he believes they're serious, the tougher ratios will come to pass, and his bank is prepared.
    • Echoing his CEO John Stumpf from a couple of weeks ago, Shrewsberry says the current mortgage regime - where GSEs threaten to put back to lenders any mortgages which don't perform, no matter how many years have gone by - is not a viable business model for the bank.
  • Sep. 9, 2014, 12:24 PM
    • The Fed intends to impose a capital surcharge on banks tougher than the international standard, according to Fed Governor Daniel Tarullo's prepared remarks for the Senate Banking Committee. Those banks with heavier reliance on short-term funding like overnight loans - i.e. Goldman Sachs (GS -1%) and Morgan Stanley (MS -1.8%) - will likely face even more rigorous requirements.
    • Officials haven't yet decided on a number, but reportedly are considering as much as 200 basis points more than the top range of 2.5% of risk-weighted assets agreed to by international regulators.
    • What's not yet clear is who would need to raise capital to meet the new, tougher standard.
    • Citigroup (C -1%), Bank of America (BAC -0.6%), JPMorgan (JPM -1.3%), Wells Fargo (WFC -0.4%), State Street (STT -1.1%), Bank of New York Mellon (BK -0.9%)
  • Sep. 4, 2014, 3:18 AM
    • U.S. regulators have approved of the proposed liquidity rules to safeguard banks in case of a financial crunch.
    • The rules are requiring large U.S. banks to load up on ultra-safe assets to ensure enough cash and securities to fund their operations for 30 days. Separate liquidity rules for foreign banks will be drawn up at a later date.
    • Big banks will need to hold a total of about $2.5T in easy-to-sell assets by 2017, which would result in a $100B shortfall if the threshold applied today.
    • Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
    • Previously: Bank regulators to vote on new liquidity rules
  • Sep. 3, 2014, 2:39 AM
    • Bank regulators are expected to finalize rules today that would require banks to hold capital against every asset on their books, and approve of a "liquidity-coverage ratio", which would require large banks to load up on ultra-safe assets to fund their operations for 30 days.
    • The new rules have Wall Street concerned due to the likely harm to earnings and lending restrictions, although regulators say the policies will create a safer financial system.
    • Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
  • Aug. 28, 2014, 8:04 AM
    • Maybe not wanting competition for federal government debt, U.S. regulators are set to approve a final liquidity rule next week reportedly excluding municipal bonds from being among banks' high-quality, highly liquid assets. Treasurys and balances held at the Fed, of course, would be allowed.
    • Wells Fargo (NYSE:WFC) - with $47.3B - is the largest holder of municipals among the four largest U.S. banks. It hasn't said how much of that amount is included in its liquidity tally, but did say it was compliant with the international rule and awaiting the final U.S. version.
    • Both banks and local governments had naturally argued to include munis in the final rule. "[This] will almost certainly decrease liquidity in asset markets disfavored by the rule," says ABA President Frank Keating.
    • Financial sector ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
  • Aug. 26, 2014, 1:25 PM
    • "We're just not going to make those loans and there's going to be a whole bunch of Americans that are underserved in the mortgage market," says Wells Fargo (WFC +0.2%) chief John Stumpf, warning (in an FT interview) the GSEs to stop being so quick to accuse banks of faulty underwriting and then forcing them to repurchase soured loans.
    • Fighting the last war, regulators are demanding more rigorous underwriting and tighter lending criteria, but evidence is beginning to grow (especially if you ask banks!) that the pendulum has swung too far.
    • Stumpf: "If somebody makes a payment for - let’s say - three years, the risk ought to transfer then to the insurance company ... If you’re going to pick through each one looking for a technical fault not to pay your insurance policy we’re not going to be in that business.”
    • Jamie Dimon (JPM +0.8%) last month: "We want to help consumers there, but we can’t do it at great risk to JPMorgan ... We’re going to be very very cautious in that line of business.”
  • Aug. 21, 2014, 9:26 AM
    • "It's definitely politics," Dick Kovacevich says of Bank of America's $16.65B mortgage settlement. "It has nothing to with justice or restitution to the innocent victims. In fact, more of the money is going to the coffers of the states and various departments than the victims."
    • Wells Fargo (NYSE:WFC) shareholders who remember the legal onslaught brought upon JPMorgan when Jamie Dimon dared to question U.S. regulators, can be thankful Kovacevich is a former chairman and CEO of their bank.
    • Kovacevich: "[Neither] JPMorgan or its employees [nor] Bank of America or its employees did anything wrong here. They just bought companies that did wrong ... Why are we charging the stock holders instead of going after the people who did wrong? Corporations don't engage in criminal behavior. They don't take advantage of innocent people. People do."
  • Aug. 20, 2014, 9:14 AM
    • The Wells Fargo Startup Accelerator will be a semiannual "boot camp" for tech startups in the areas of payments, deposits, fraud, operations, and other financial services areas. Wells Fargo (NYSE:WFC) will make a direct equity investment of $50K to $500K in each selected startup.
    • Applications are being accepted through October 1. "We need to expand our access to new ideas at the edges of our industry," says Steve Ellis, head of Wholesale Services at the bank. Three companies have already been selected and funded.
    • Press release
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  • Aug. 19, 2014, 3:09 PM
    • Known internally as the "Big Hairy Audacious Goal," Wells Fargo (WFC +0.2%) aims to double the size of its asset-management operation to more than $1T of AUM over the next decade through (small) acquisitions and aggressive selling to big-fish investors, reports the WSJ.
    • The move comes as other parts of Wells' business - notably mortgages - stagnate (bank revenue fell 1.5% Y/Y in Q2), and major acquisitions are pretty much verboten in today's regulatory environment.
    • Investors may be steering away from mutual funds and toward passive products like ETFs and index funds, but it hasn't stopped JPMorgan from racking up $17B of inflows in 2013, and another $17.5B so far this year. Wells, on the other hand, saw $1.6B of outflows in 2013 and another $1B YTD. Goldman Sachs - the only other of U.S. banks ranking among the top 50 asset managers - like JPMorgan, also saw sizable inflows during this period.
  • Aug. 14, 2014, 11:34 AM
    • Loan officers' top commission rate rose to 70 basis points from 63, according to Bloomberg, and the new policy - which took effect on July 1 - also merges two lower tiers into one that pays 65 bps instead of 48 or 58.
    • “By adjusting those tiers we created a lot of desire for the loan officers to go out and get that extra production,” says Franklin Codel, who oversees mortgage origination for Wells (WFC +0.7%). “This creates that little extra incentive.”
    • With the refinancing boom finished, lenders are trying to find business by funding new home purchases, but those deals usually require more effort than a refi, and the big players are losing talent to smaller firms with better pay packages and shorter turnaround times for closing deals.
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  • Aug. 13, 2014, 3:14 AM
    • Bank officials, trade groups and lawmakers are quietly pressing the Federal Reserve for a delay of up to seven years regarding the rule that limits their investments in private-equity and venture-capital funds
    • The "Volcker rule," part of the Dodd-Frank legislation, restricts banks' ownership stake in hedge funds and private equity funds, and prohibits banks from making speculative bets with their own money.
    • Regulators finalized the rule in December but agreed not to enforce it until 2015.
    • Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
  • Aug. 8, 2014, 3:15 PM
    • Notably missing from the list of major banks whose "living wills" were stingingly rebuked by the FDIC and the Fed earlier this week is Wells Fargo (WFC +0.4%), writes the WSJ's David Reilly.
    • "Size alone doesn't make a firm a [systemic] threat," says Reilly, noting Wells' $1.6T in assets is nearly double that of Goldman Sachs and Morgan Stanley. Wells, however, was not included int he so-called first-wave banks initially having to submit resolution plans because its non-bank assets aren't greater than $250B.
    • "In banking today," writes Reilly, "simplicity is a virtue, no matter your size."
    • Previously: Feds reject "living wills" of 11 major lenders
  • Aug. 6, 2014, 3:40 PM
    • Legal costs could exceed litigation reserves by $1.2B, says Wells Fargo (WFC -0.7%) in its 10-Q. That estimate is up from $911M three months earlier.
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  • Jul. 22, 2014, 4:51 PM
    • Wells Fargo & Co. (NYSE:WFC) declares $0.35/share quarterly dividend, in line with previous.
    • Forward yield 2.73%
    • Payable Sept. 1; for shareholders of record Aug. 8; ex-div Aug. 6.
  • Jul. 18, 2014, 6:48 PM
    • The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.
    • The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.
    • Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.
    • Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.
  • Jul. 16, 2014, 3:28 PM
    • It's another shakeup in Wells Fargo's (WFC -0.3%) management team following the naming of John Shrewsberry to replace Tim Sloan as CFO, with Tom Wolfe - who oversees two of the bank's fastest-growing consumer businesses, credit cards and auto lending - set to leave later this year.
    • Wolfe came over as part of 2008's purchase of Wachovia, and led Wells Fargo's effort to overtake Ally Financial as the country's largest auto lender. He was also behind a big move to expand credit card lending, and so-called credit-card penetration rose to 39% in Q2 from 34.9% a year prior. Outstanding balances rose 9.7% to $27.2B.
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Company Description
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.
Sector: Financial
Country: United States