Nov. 14, 2014, 7:34 AM
- Ocwen Financial's (NYSE:OCN) agreement to buy the MSRs on $39B UPB of mortgages from Wells Fargo (NYSE:WFC) was originally announced in January to the great excitement of Ocwen investors. Shortly after, however, Ben Lawsky held up the deal as his office examined the servicing practices at Ocwen, and its relationships with the Altisource companies.
- The two today announce a mutual decision to cancel the deal. For Wells, the cancellation won't be material to its financial results.
- Source: Press release
- Ocwen is down 6.7% premarket.
Nov. 13, 2014, 9:18 AM
- Aiming to limit focus to its private student loan clients, Wells Fargo (NYSE:WFC) agrees to the sale of its Federal Family Education Loan Program (FFELP) loans ($8.5B principal balance) to Navient (NASDAQ:NAVI). The paper was held in the bank's held-for-sale portfolio, and Wells has not made any federal student loans for more than four years.
- Terms were not disclosed and the deal is expected to close this year. The sale isn't material to the bank's results.
- Wells Fargo's currently has $11.9B in private student loans, making it the nation's largest among the banks.
- Source: Press Release
Nov. 5, 2014, 3:43 PM
- At issue is a two-year old U.S. lawsuit accusing Wells Fargo (WFC +0.5%) of submitting more than 6K home loans for FHA insurance without reporting they did not meet the requirements for the program. The FHA subsequently had to pay out hundreds of millions of claims on loans it should have never insured, says the government.
- JPMorgan, Bank of America, Citigroup, and Deutsche Bank have all reached settlements over the same issue over the past few years.
- In other quarterly disclosures, the bank cut its projected litigation-related losses to $950M above the sum already set aside vs. $1.2B at the end of June.
Oct. 28, 2014, 3:48 PM
Oct. 23, 2014, 4:49 PM
- Not having had the pleasure of being subject to the stress test and CCAR previously, Deutsche Bank's (NYSE:DB) U.S. unit will be a participant next year
- As in prior years, those BHCs with large trading operations - BAC, C, GS, JPM, MS, WFC - will be required to factor in a global market shock as part of their scenarios.
- Those six, plus STT and BK - thanks to their custodial operations - will be required to incorporate a counterparty default scenario.
- Among the items in the severely adverse scenario is the unemployment rate jumping to 10%, a 60% dive in the stock market, and oil jumping to $110 per barrel (how about oil falling to $10 per barrel?).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KCE, KRU, KBWR, RWW, RYF, KBWC, FINZ, KRS
Oct. 22, 2014, 10:32 AM
- The MBA index rose 11.6% for the week ended October 17, the largest gain since January as mortgage rates continued to decline - the average 30-year fixed mortgage coming in at 4.1%, the lowest since May 2013.
- Leading the way were refinancings, with that gauge jumping 23.3%, the biggest move since January 2012 (purchase applications fell 4.6%).
- Should the trend continue, the now-lean mortgage operations at places like Wells Fargo (WFC +0.2%), JPMorgan (JPM +0.2%), and Bank of America (BAC +0.2%), among others, should provide a nice boost to Q4 results.
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, KBWR, RWW, RYF, FINZ, KRS
Oct. 20, 2014, 12:27 PM
- Beginning today Wells Fargo (WFC +0.6%) debit and credit card holders and small business debit card holders can add those cards to their iPhone 6 and iPhone 6 Plus to make payments without need to swipe a card at spots where merchants are set up to accept it.
- Soon adding the service will be First Horizon's (FHN +0.8%) FIrst Tennessee Bank. which notes the actual and credit and debit card numbers are not shared with merchants when payment is made.
Oct. 17, 2014, 12:20 PM
- One of the key issues serving as a road block to mortgage lending is banker fear over having any loans put back to them by the GSEs at any time - even years down the road - for any number of reasons.
- This concern was voiced most pointedly in the late summer by Wells Fargo (WFC +1.2%) CEO John Stumpf in the kind of call-out of regulators you don't often hear from corporate leaders.
- The WSJ is now reporting that Fannie (OTCQB:FNMA +5.9%), Freddie (OTCQB:FMCC +7.3%), their regulators, and banks are near a deal in which the lenders could feel protected enough to begin granting mortgages to those without perfect credit and employment histories.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
Oct. 15, 2014, 10:49 AM
- Bank earnings models will no doubt need to be tweaked as the sure thing of higher rates becomes somewhat less sure, with the 10-year U.S. Treasury yield plunging all the way down to 2%, and 30-day Fed Funds futures - just weeks ago pricing in 100% chance of a rate hike by June 2015 - now sees no move until December 2015.
- The XLF is lower by 1.9% and the Regional Banking ETF (NYSEARCA:KRE) is down 2.1% (the S&P 500 is off a mere 1.1%). Among individual names, KeyCorp (KEY -6.4%), First Bancorp (FBP -6.4%), Regions Financial (RF -4%), U.S. Bancorp (USB -2.2%), Fifth Third (FITB -2.6%), Bank of America (BAC -4%), Citigroup (C -3.3%), JPMorgan (JPM -2.8%), Wells Fargo (WFC -1.9%).
- Financial ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, FINZ, KRS
- Life insurers were also waiting on higher rates and they're slipping more than the averages as well. MetLife (MET -3.7%), Prudential (PRU -2.9%), Manulife (MFC -3.5%) Sun Life (SLF -3.4%), Lincoln Financial (LNC -3.9%).
- Insurance ETFs: KIE, IAK, KBWP, KBWI
- Previously: BofA call: Assumption about higher rates not so sure anymore
Oct. 14, 2014, 10:36 AM
- Credit quality is the best he's seen in his more than 32 years at the bank, says Wells Fargo (WFC -1.7%) chief John Stumpf, leading off the earnings call.
- Webcast and presentation slides
- The housing market, he says, has not fully recovered as tight inventory, slower household formation, high student loan debt, and tough lending standards hold things back.
- Taking over the call, CFO John Shrewsberry says 48.7M shares were repurchased during the Q (net share reduction during quarter of 34.9M), and the bank entered into a $1B forward repurchase deal expected to settle in Q4 that should retire another 19.8M shares. Between the dividend and buybacks, $3.6B was returned to owners during Q3.
- As for reserve releases, which fell to $300M during Q3 from $500M a quarter ago, Shrewsberry expects them to keep slipping as there's little room left for credit improvement.
- Previously: Wells Fargo slips after inline results
Oct. 14, 2014, 8:30 AM
- Q3 net income of $5.7B or $1.02 per share up 3% from a year ago.
- Net interest income of $10.9B up $150M from Q2, as strong asset growth was offset by a nine basis point drop in net interest margin to 3.06% - consumer deposits are rushing in, but bank is having trouble finding someplace to invest the cash.
- Noninterest income of $10.3B is flat from Q2, with mortgage banking income of $1.6B off $90M. Residential mortgage originations of $48B were $1B higher on the quarter.
- Noninterest expense of $12.2B increased $54M from Q2. The efficiency ratio improves to 57.7% from 57.9%.
- Total loans of $838.9B up $9.9B from Q2.
- Conference call at 10 ET
- WFC -0.9% premarket
- Previously: Wells Fargo EPS in-line, beats on revenue
Oct. 14, 2014, 8:04 AM
Oct. 13, 2014, 5:30 PM
Oct. 13, 2014, 10:55 AM
- Credit-cards have historically been more of an "accommodation" for branches rather than a serious business at Wells Fargo (WFC +0.2%), says Beverly Anderson, head of the bank's consumer financial services.
- Things, though, are quickly changing at what is just the country's 7th largest issuer, in part thanks to the purchase of Wachovia in 2008 which greatly expanded Wells' branch network east of the Mississippi. "We can sell a card to a customer at a fraction of the cost of someone else from the outside," said CEO John Stumpf a few months back.
- Competitors are noticing: "We have increasingly started tracking Wells Fargo," says Discover chief David Nelms.
- Wells Fargo has picked up 2M new customers in the past year, credit-card purchase volume was up 16% Y/Y through June 30, and credit-card household penetration grew to 39% from 35%.
Oct. 13, 2014, 8:00 AM
- When you're a hammer, everything looks like a nail. In what smells like another foray by the Consumer Financial Protection Bureau, with other agencies possibly joining in, banks are reportedly under investigation for lending ... this time for automobiles.
- Amid an otherwise sluggish loan market - especially for mortgages - auto lending has experienced rapid growth over the past few years, particularly subprime lending, and those in that business - Santander Consumer being one - are already under examination by the CFPB.
- At issue for banks is not just the direct auto loans they're making, but the financing they're providing to shops like Santander Consumer.
- Wells Fargo (NYSE:WFC) is the largest U.S. auto lender, with $50.8B in loans outstanding at the end of last year, roughly $15B of which was subprime. In addition, the bank has extended since 2011 more than $1.5B of credit lines to the country's largest subprime lenders. Other sizable players include Capital One (NYSE:COF) and JPMorgan (NYSE:JPM).
- "Banks are making a lot of money off these (auto) loans in many different ways," says the head of a consumer advocate group. Isn't that what they're supposed to do?
- "The subprime auto sector appears too small to present a systemic risk," says BAML's Michael Hanson.
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, KBWR, RWW, RYF, KRS, FINZ
Oct. 1, 2014, 3:58 PM
- The suit - which is seeking class action status - claims Wells Fargo (NYSE:WFC) and Citigroup's (NYSE:C) CitiMortgage violated federal law by falsely notifying credit reporting agencies that thousands of homeowners went through bankruptcies or foreclosures (Experian is also a defendant).
- The lawsuit claims the mistakes were made after mortgage customers of the two banks sold their homes in a short sale, which is very much not a bankruptcy or foreclosure. The banks, says the plaintiffs, nevertheless reported bankruptcies and foreclosures to credit bureaus and correct their mistake when notified.
- In other Citi news, a Delaware court has ordered the bank to turn over records related to its Banamex unit to a Oklahoma pension fund which wants to know what Citi executives knew and when they knew it.
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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