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Wells Fargo: Doing What It Takes to Succeed

I'll just finally agree with a previous comment, that WFC is highly levered to California, and with their Wachovia acquisition, they are highly levered to Option-Arms. Based on recent recasts of ARMS in general, the time-bomb is set to go off between now and 2012.

Also, TCE isn't the end all be all of metrics when analyzing a bank, I realize that. I am just throwing it out there that WFC has next to nothing for common equity holders. The possibility that WFC will have to further dilute common shareholders is high with the kind of common equity they have. God forbid we enter into a period worse than the "stress tests" provided for, which based on current unemployment stats is worse than the regulators had planned for in 2010.... Good luck getting that to rise. Also, you've got to understand that California is screwed royally. There economy is going to lock up in a major way, should the state employees not agree to some major concessions, and/or state programs are cut...

We aren't out of the woods yet with regards to banks. That is all I am saying.

Wells Fargo: Doing What It Takes to Succeed

Also, your assertion that WFC is interested in attracting customers and "making their lives better," is hilarious. Sounds like you got that out of some marketing brochure. At $1.3T in assets, they are not some small community bank that knows your name when you walk in the door. The level of corporate bloat is likely tremendous. Since I have no direct knowledge of this, I won't make exclamatory statements stating such, but neither should you. Oh yeah, have you ever been a Wells Fargo customer? Ever talked with someone who is? My experience has been egregiously high fees, no matter what you are doing and extremely average customer service. When I went to close my account with them, they said they would have to charge me a fee to close my account. Turns out my experience was not dissimilar from many others.

The more I read articles from Bullish Bankers, the more I wonder if you guys just sit around and congratulate each other about your titles as opposed to doing some real thinking outside of the educations you are all STILL getting. You've got to question any advice from a bunch of guys who have no real world experience outside of preparing copies for some Hedge Funds.... But I suppose you would lead everyone to believe that you were instrumental in upper-level management decisions.

Wells Fargo: Doing What It Takes to Succeed

The funniest part about any analysis of any of these banks is people's willingness to disregard the fact that Wells Fargo, to name one, is leveraged to their eyeballs when compared to their tangible common equity. A quick back of the envelope calculation from their 4Q08 report shows approx. $29B in TCE, with total assets weighing in at over $1.3T. So you're telling me that you or anyone should be comfortable with a bank that can only withstand around 2.2% losses on its portfolio?? Are you insane? Do we not understand that employment is not going up anytime soon, and commercial RE is going to implode, not to mention credit cards? Seriously explain to me how defaults on Wells' loan portfolio is going to keep that equity in tact. IT WON'T HAPPEN. Disputing this is arguing from a stance that doesn't understand the true extent of how screwed our banks are. It should come as no surprise that a bloated bank like WFC needs to raise capital. They all do.