Wells Fargo (WFC -0.2%) and U.S. Bancorp (USB -0.2%) are both downgraded to Sell by Atlantic Equities' Richard Staite, who says valuations and earnings expectations are already high, leaving little room for upside surprises. Wells is likely "overearning" relative to normal capacity thanks to previously high (now, not so much) refinance volumes. His top pick is Bank of America (BAC -0.4%), currently "underearning" by as much as 50% thanks to high legal and asset servicing costs. [View news story]
uhhmm, no. Hard to respect reasoning references that point to events already passed - last sell guidance was at $35, a seemingly high number at the time, and a nice gain to buyers of ~$32. My guess is that they are not happy with that guidance, now. Re-fi has Been dead, it was simply an opportunity to be mined - At the Time. and our amazing experts looked at it and said, "OHH, That's why, move on," then 1st quarter, saw Re-fi dropping, (as already expressed by eoy business plan as a near certainty) and said, "OHH, Wells is gonna Tank now." oopps.
As stated by Stumpf, Too much deposit and no where to invest it hurting NIM is the problem. A few companies envy That problem.
Meanwhile, .90/sh and up-ticking divs keep rolling in like precision clockwork. Yep, better dump it.
More on Mortgage applications: The refinance index dove 15% to its lowest level since November 2011 as the average 30-year fixed-rate mortgage jumped 17 bps to 4.07%, the highest in more than a year. The index is now off about 40% in a month. Mortgage REITs (MORT,, REM) certainly face a few issues at the moment, but prepayment risk is no longer one of them. Struggling enough finding growth, the refinancing cash cow benefitting the big banks (WFC, BAC, JPM, C isn't producing at the moment. [View news story]
refi = 75% of appraised value, hard number. appraisals are hideously low, with tight requirement of comparable houses sold in last six months (generally 25% Below tax assessment valuation). fees for appraisal & 'inspections' reach $1k to "find out" if a refi will actually produce 'cash-out' to do home repairs. smart street wisdom is don't even try if your house is in less than stellar condition AND paid to under 50% of assumed hideously low appraisal. long and short, the banks have cherry-picked nearly all of those customers and the remainder aren't willing to even try at an outlay of $1k (which also leaves the hideous appraisal on record). MHO, refi is already dead, has been for approaching 12 months, and investors running from the refi drop when profits continue to grow are misreading the financials, or something.
You wrote: "The bank took out 25 billion from TARP, and as a result had to slash its dividend and acquire Wachovia."
I believe you mean to say that: The bank, like all others, was Forced to take TARP and remain quiet about their initial refusal to do so, then were forced to eliminate dividends due to their debt to the taxpayers until they were allowed to pay back TARP. The Wachovia merger was in motion prior to the melt-down, and the guvm't stating that they were accepting Citi's bid of ~ half of what WFC had already offered could be construed as the strong-arm that the guvm't did to force the TARP acceptance. or not. ymmv. long WFC
Has Wells Fargo Taken A Step Backward? [View article]
nawp, read it twice, hours apart. record earnings across diversity vs. headline of 'step backward'. all my apps blue-screened @ reconcile. recommend you consider putting energy drinks aside for a bit. look forward to your follow-up to this article @ 2nd qtr and @ eoy.
This latest run-up is a very pleasant surprise, post buyback and div, I had only divined a solid >$36 by eoy. Paints a pretty picture for div increase as well, ~$1.25, ~3%. fed is quieting and still hope for NYC's 'budget balancers' to suffer their long overdue strokes and infarctions this year, then financial sector can return to Profitable biz-as-usual. ot, long wfc /cranky
JPMorgan And Wells Fargo Post Solid First Quarters [View article]
WSJ et al.. it seems that perfection across the board will still not eek out a 'hey, good job' in the current environment. When the numbers are kill across the board, then the WSJ et al reach for the 'yeah, but..' and drone about market indicators.
I can only conclude that there is some underlying benefit in continuing to beat up the banking sector.. their performance over the last 3 years has been exemplary in any book that I have read leading to this day, and they did not reference 'disaster environments'.
My hope is that they'll categorically ignore the WSJ et al hype and not change a thing. and I'll keep buying depressed shares.
agreed, good article, thanks for the comparison and detail..
Wells Fargo: Compounding At Double Digits [View article]
Again, I understand the misgivings, and I went on at too much length about my personal disappointment in Jamie in my previous comment, but felt I had already beat up enough on JPM via Vivec above, so deleted it. Their detrimental effect on investor confidence in the industry is hard to over-state - numbers look good, but in your heart you Know they aren't playing straight.
I'm just Way crabby about how long-termers/div-centric investors are justifiably afraid of this segment (and specifically WFC) due to attention-grabbing headlines. We have the considerable advantage of looking deeper into the details for our investments, but how many doom&gloom headlines and summaries can any investor be expected to wade through.
Not many, and I know Many KO PG investors that wouldn't touch WFC, Buffet or no. pity.
Wells Fargo: Compounding At Double Digits [View article]
boston - they used WFC as a 'conservative model' to highlight how 'bad' the situation is throughout the segment, yet failed to address that WFC's percentage of business there is basically no different than it was during the crash. All that horrendous 'exposure' surely should have destroyed them in the "worse than anyone can imagine" scenario of the crash, isn't that a fair and correct assessment, based upon their (endless) doom examples? They had Hard numbers to back up their preach, yet failed to show the Actual results. They had the data to back up their claims of imminent catastrophic danger, why not use it instead of relying on innuendo and pitiful analogies? Because the numbers in the case that they chose could Not back up their claim. Sorry, Atlantic lost all points they had with me.. the article was not a proof of conclusion, just another headline in search of proof.
I have not found a confidence-despairing fault with Wells yet, but I certainly understand so many investors expecting that it is only a matter of time, given the current sentiments and sensationalist headlines.
Wells Fargo Offers Investors An Annualized Gross Return Of Between 12% And 19% Over The Next 5 Years [View article]
Use 2000 thru 2006 and apply those constant-creep values at any point (going forward, of course) and you'll be very accurate.. 2000 thru 2006 is the normalized Wells in action, representing the last Huge merger of Wells and Norwest, after full integration. 2000 thru 2006 represent the conservative model that allowed them to have already begun due diligence on Wachovia and have the funding to act upon it, and they have now reached full integration and benefit of that merger. Only the guv'mnt can screw up your forwards using that basis.
Wells Fargo: Compounding At Double Digits [View article]
Thank you for an excellent summary, well done.
The list of "ahhh, but" analysts is certainly long, as is the list of worrisome headlines over the last three years - No One in the financial industry media has any memory whatever, so these analyses just hang in the history, smearing the market segment, rather than being properly addressed for their obvious misstatement and bias. Dear Vivec, your decision to pine at Wells' substantial drop in mortgage originations, leading to a $300M drop in income (which they had already addressed in the previous two quarters), however accurate, being delivered at a time when JPM has FINALLY managed to make any mortgages whatsoever reeks of market manipulation and bias. You are nowhere near the top moron in that regard, however, as we all recognize that that is business as usual, now, regardless of its general harm to the segment. Sincerely, the world /podium I continue to appreciate Wells' choice to participate as little as possible in the manipu-lines.. their quiet regard for the industry as a whole is appreciated (particularly in regard to the things they Could have said when they were fine and the remainder of the big five -including whale-bound Jamie- were tanking). my biased long WFC opinion
The Brown/Vitter bill being rolled out in Congress is essentially Armageddon to the TBTF banks, says Goldman, seeing it as mandating another $1.1T in equity for the banking system. Banks would need 12 years of earnings to build this amount organically, though the bill would give just 5 - say goodbye to lending. Break up the banks? BAC, C, JPM, and WFC all have multiple divisions with more than $400M in assets - the level at which the bill gets tough on lenders. [View news story]
Just more congressional schmucks desperate for headlines in a headline desperate media - please ignore the trolls.
In Concealing Whale Losses Did JPMorgan Breach Sarbanes? [View article]
Disagree, that level of loss woulda' placed them into the sell-at-all-costs column, tanking them like BoA.. so they wouldna' been able to buy BS-though that might have been a blessing if the 'derivsperts' that they drew from BS are behind them jumping into derivatives more deeply, given their power to manipulate the markets.
2 Near-Term Reasons To Avoid JPMorgan Chase At Present Levels [View article]
Where once, he was the better, safer alternative, he squandered that role in allowing (if not guiding) the derivatives fiasco, and then, and most importantly, downplaying (misleading) shareholders about the impact.
In short, there are better, safer alternatives in the financial sector. Ignoring or forgiving his willingness to mislead shareholders is not an acceptable proposition for us. general hinkiness inspires no trust, regardless of quarterly results.
In Concealing Whale Losses Did JPMorgan Breach Sarbanes? [View article]
and interesting to see if der Jamie has enough political capital remaining to avoid being a congressional scapegoat.
Bringing the horror-show that was 2008 back into klieg-lights when it was finally fading due to admirable recovery of the financial sector, he has hurt many with this gaff, in and out of D.C.
U.S. Banking Review: Outstanding Credit Card Loan Comparisons [View article]
good luck with that, but april can be a wonky month. depending on what you feel is a drop, you might be right. If you mean a drop to ~$36 I'm afraid not. As for overpriced, I disagree, but it hardly matters with a street of ~$40 and a buck-n-a-quarter div.
Wells Fargo (WFC -0.2%) and U.S. Bancorp (USB -0.2%) are both downgraded to Sell by Atlantic Equities' Richard Staite, who says valuations and earnings expectations are already high, leaving little room for upside surprises. Wells is likely "overearning" relative to normal capacity thanks to previously high (now, not so much) refinance volumes. His top pick is Bank of America (BAC -0.4%), currently "underearning" by as much as 50% thanks to high legal and asset servicing costs. [View news story]
Hard to respect reasoning references that point to events already passed - last sell guidance was at $35, a seemingly high number at the time, and a nice gain to buyers of ~$32. My guess is that they are not happy with that guidance, now.
Re-fi has Been dead, it was simply an opportunity to be mined - At the Time. and our amazing experts looked at it and said, "OHH, That's why, move on," then 1st quarter, saw Re-fi dropping, (as already expressed by eoy business plan as a near certainty) and said, "OHH, Wells is gonna Tank now." oopps.
As stated by Stumpf, Too much deposit and no where to invest it hurting NIM is the problem. A few companies envy That problem.
Meanwhile, .90/sh and up-ticking divs keep rolling in like precision clockwork. Yep, better dump it.
More on Mortgage applications: The refinance index dove 15% to its lowest level since November 2011 as the average 30-year fixed-rate mortgage jumped 17 bps to 4.07%, the highest in more than a year. The index is now off about 40% in a month. Mortgage REITs (MORT,, REM) certainly face a few issues at the moment, but prepayment risk is no longer one of them. Struggling enough finding growth, the refinancing cash cow benefitting the big banks (WFC, BAC, JPM, C isn't producing at the moment. [View news story]
appraisals are hideously low, with tight requirement of comparable houses sold in last six months (generally 25% Below tax assessment valuation).
fees for appraisal & 'inspections' reach $1k to "find out" if a refi will actually produce 'cash-out' to do home repairs.
smart street wisdom is don't even try if your house is in less than stellar condition AND paid to under 50% of assumed hideously low appraisal.
long and short, the banks have cherry-picked nearly all of those customers and the remainder aren't willing to even try at an outlay of $1k (which also leaves the hideous appraisal on record).
MHO, refi is already dead, has been for approaching 12 months, and investors running from the refi drop when profits continue to grow are misreading the financials, or something.
Should You Invest In Wells Fargo? [View article]
"The bank took out 25 billion from TARP, and as a result had to slash its dividend and acquire Wachovia."
I believe you mean to say that:
The bank, like all others, was Forced to take TARP and remain quiet about their initial refusal to do so, then were forced to eliminate dividends due to their debt to the taxpayers until they were allowed to pay back TARP.
The Wachovia merger was in motion prior to the melt-down, and the guvm't stating that they were accepting Citi's bid of ~ half of what WFC had already offered could be construed as the strong-arm that the guvm't did to force the TARP acceptance.
or not. ymmv.
long WFC
Has Wells Fargo Taken A Step Backward? [View article]
recommend you consider putting energy drinks aside for a bit. look forward to your follow-up to this article @ 2nd qtr and @ eoy.
This latest run-up is a very pleasant surprise, post buyback and div, I had only divined a solid >$36 by eoy. Paints a pretty picture for div increase as well, ~$1.25, ~3%. fed is quieting and still hope for NYC's 'budget balancers' to suffer their long overdue strokes and infarctions this year, then financial sector can return to Profitable biz-as-usual.
ot, long wfc
/cranky
Has Wells Fargo Taken A Step Backward? [View article]
JPMorgan And Wells Fargo Post Solid First Quarters [View article]
it seems that perfection across the board will still not eek out a 'hey, good job' in the current environment. When the numbers are kill across the board, then the WSJ et al reach for the 'yeah, but..' and drone about market indicators.
I can only conclude that there is some underlying benefit in continuing to beat up the banking sector.. their performance over the last 3 years has been exemplary in any book that I have read leading to this day, and they did not reference 'disaster environments'.
My hope is that they'll categorically ignore the WSJ et al hype and not change a thing. and I'll keep buying depressed shares.
agreed, good article, thanks for the comparison and detail..
Wells Fargo: Compounding At Double Digits [View article]
I'm just Way crabby about how long-termers/div-centric investors are justifiably afraid of this segment (and specifically WFC) due to attention-grabbing headlines. We have the considerable advantage of looking deeper into the details for our investments, but how many doom&gloom headlines and summaries can any investor be expected to wade through.
Not many, and I know Many KO PG investors that wouldn't touch WFC, Buffet or no. pity.
Wells Fargo: Compounding At Double Digits [View article]
They had Hard numbers to back up their preach, yet failed to show the Actual results. They had the data to back up their claims of imminent catastrophic danger, why not use it instead of relying on innuendo and pitiful analogies?
Because the numbers in the case that they chose could Not back up their claim.
Sorry, Atlantic lost all points they had with me.. the article was not a proof of conclusion, just another headline in search of proof.
I have not found a confidence-despairing fault with Wells yet, but I certainly understand so many investors expecting that it is only a matter of time, given the current sentiments and sensationalist headlines.
Wells Fargo Offers Investors An Annualized Gross Return Of Between 12% And 19% Over The Next 5 Years [View article]
Only the guv'mnt can screw up your forwards using that basis.
Wells Fargo: Compounding At Double Digits [View article]
The list of "ahhh, but" analysts is certainly long, as is the list of worrisome headlines over the last three years - No One in the financial industry media has any memory whatever, so these analyses just hang in the history, smearing the market segment, rather than being properly addressed for their obvious misstatement and bias.
Dear Vivec,
your decision to pine at Wells' substantial drop in mortgage originations, leading to a $300M drop in income (which they had already addressed in the previous two quarters), however accurate, being delivered at a time when JPM has FINALLY managed to make any mortgages whatsoever reeks of market manipulation and bias.
You are nowhere near the top moron in that regard, however, as we all recognize that that is business as usual, now, regardless of its general harm to the segment.
Sincerely,
the world
/podium
I continue to appreciate Wells' choice to participate as little as possible in the manipu-lines.. their quiet regard for the industry as a whole is appreciated (particularly in regard to the things they Could have said when they were fine and the remainder of the big five -including whale-bound Jamie- were tanking).
my biased long WFC opinion
The Brown/Vitter bill being rolled out in Congress is essentially Armageddon to the TBTF banks, says Goldman, seeing it as mandating another $1.1T in equity for the banking system. Banks would need 12 years of earnings to build this amount organically, though the bill would give just 5 - say goodbye to lending. Break up the banks? BAC, C, JPM, and WFC all have multiple divisions with more than $400M in assets - the level at which the bill gets tough on lenders. [View news story]
never happen.
In Concealing Whale Losses Did JPMorgan Breach Sarbanes? [View article]
2 Near-Term Reasons To Avoid JPMorgan Chase At Present Levels [View article]
In short, there are better, safer alternatives in the financial sector.
Ignoring or forgiving his willingness to mislead shareholders is not an acceptable proposition for us. general hinkiness inspires no trust, regardless of quarterly results.
In Concealing Whale Losses Did JPMorgan Breach Sarbanes? [View article]
Bringing the horror-show that was 2008 back into klieg-lights when it was finally fading due to admirable recovery of the financial sector, he has hurt many with this gaff, in and out of D.C.
U.S. Banking Review: Outstanding Credit Card Loan Comparisons [View article]