rb1253

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    • Fri Oct 3rd 10:53 AM | Rating: 0 0
      Commented on:
      Talk Me Down From the Wells Fargo Ledge
      Unemployment remains flat -- and the deal announced this morning should convince the pessimists that Wells is not hiding a bunch of bad loans -- you can not do this deal the way Wells is structuring it if you are about to implode. However - this should at least force to make a decision -- you can no longer sit on the ledge -- either you believe the mangement at Wells and get off the ledge or this deal should make you jump.
      Side note--Here is small but positive sign of a bottoming -- foreclosures, which were going to anyone who wanted to buy at the low price and rarely had any competitive bids, are beginning to see multiple bidders on properties -- that is the first sign that investors are seeing a bottom and need to get into the market to make some money on these properties. Small but overlooked sign that the tide may be turning -- I know we still have a long way to go but maybe this is an indication that the next light we see at the end of the tunnel will truly be a light at the end of the tunnel and not another train coming at us.
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    • Thu Oct 2nd 15:06 PM | Rating: 0 0
      Commented on:
      Talk Me Down From the Wells Fargo Ledge
      A lot of you are talking about the drop in housing prices impacting HELOCs that Wells has made -- housing prices have no impact on the HELOC unless the customer runs into financial trouble -- if you invest in a bond that you intend to hold for 5 years at 6% -- and you hold it until maturity you are going to get your 6% --does it really matter to you if bond prices drop while you are holding it? Of course not. It only matters if you need the money before maturity or the entity that owes you the money for the bond goes under -same with HE loans -- not sure where the guy gets 125% of LTV but I know that wasn't done - with the drop in prices their cushion is significantly reduced and in some cases they now have over 100% LTV on the home --but let's remember that 95% of Americans are NOT behind on their mortgage and have no problem repaying it and their HE -- they are not going to stop paying their mortgage just because values have dropped -- they know there will be a rebound down the road -- have you stopped paying your mortgage or home equity loan? I haven't --and if values drop significantly I am still going to pay my mortgage or HE-- that still leaves a comparatively high 5% that are behind on their mortgage -- but a number of those will be worked out -- further reducing the exposure --and most people are not going to try and sell their homes and move in the current environment --so in terms of collecting the debt the only risk left is if the person can not afford to pay -- and that is because of job loss.
      I would be looking at the unemployment numbers in Wells' footprint to see how significant the impact will be -not housing values. It is only after the fact that housing values will impact the amount of the loss --
      That is not to say housing values are not important -- losses will be higher tha in normal economic cycles if unemployment continues to go up because of the housing values dropping -- can't get anything out of the collateral to offset part of the loss ---- having both high unemployment and dropping housing prices at the same time makes it a worst-case scenario -- but it will be unemployment that drives this -not the drop in housing prices.
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    • Wed Oct 1st 19:08 PM | Rating: 0 0
      Commented on:
      Talk Me Down From the Wells Fargo Ledge
      Paul -- Wells didn't pull the trigger on WAMU and WACHOVIA because of two things -- they won't dilute their earnings so much hurting their shareholders and their culture -- not because they feared any problems within their own portfolio-- it has always been this way with them -- just look at their acquisition history . Also forget the issue of increasing the write-off period from 120 days to 180 days -- the amount of loans impacted by this is significantly less than the excess reserves they put back in the 2nd quarter --and that WAS excess reserves. When they remove the mark to market this bank is going to be very strongly capitalized compared to its peers --they are not the ones out there selling the securities at basement bargain prices to get cash -- so this has hurt them probably more than others and eliminating it will then help them more than others. It is buying quality loans from cash strapped financial institutions furthering strengthening its portfolio. Look at its revenue growth over the past year in spite of the economy, financial crisis, liquidity crisis etc. --double digit .Look at its margin. They will be least hurt by the current environment because of credit quality, strong capital position and significant liquidity (deposit base --not Warren) -- they are also still able to grow while others must shrink due to low capital --deposits are flowing into this organization daily further fueling their abiliy to grow while others are retrenching -- that is why so many are so high on this company. Something that is difficult to determine just by looking at the financials is the culture -- conservative in terms of risk, aggressive sales, and customer focused (which is why they did not issue those ARMs --couldn't see how it would help the customer) --they are not focused on short term quarterly results -- and they are not a company that believes big makes you better --they believe being better will make them big. Quite a different culture than the greedy market share driven organizations that are now falling by the wayside. Along with what P4321 states above about differences in loan portfolios --it is also a difference in the decision-making process by the management team at that bank --may be hard for people to believe in this day and age but they have integrity. They do the right thing for their shareholders, their employees, and their customers. It has added some protection to the their balance sheet. They are reeping the benefits now, and will be positioned to outperform their peers significantly well after this crisis is over.
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    • Tue Sep 30th 11:01 AM | Rating: 0 0
      Commented on:
      Wells Fargo: A Growth Stock During the Great Depression?
      watch what happens to WF if they eliminate the mark to market accounting rule as is being widely discussed--this more than anything has held back WF -- when they established this rule they never envisoned this type of environment and the impact it would have -- removing this rule significantly increases bank capital overnight for Wells and others --
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    • Sun Sep 28th 23:29 PM | Rating: 0 0
      Commented on:
      Wells Fargo: A Growth Stock During the Great Depression?
      "Realist" states an issue with WFC is that they changed the default timeline on loans -- if he/she looked at the numbers -- the loans this impacted --which was an attempt to work with customers --is far less than the EXCESS reserves WF added in the 2nd quarter. Look at the accounting on banks -- they write off loans and have to add to reserves in bad years in effect taking a double hit-- they are not allowed to add to reserves above a certain amount in good years --this is what causes the up and down in earnings during cycles -- problems like today's could be significantly reduced if this one accounting rule were changed. --conservative banks like Wells --who make decisions based on the long-term health of the compnay and not the quarterly expectations of analysts would add extra reserves during good years if they were allowed. When we get through this cycle --and we will get through it --you will see what happens with Wells -- their revenue continues to grow at double digit rates even today. Their assets have grown during this period at record pace -- how? They are buying quality loans from institutions that need capital or need to shrink their loan portfolios for capital ratios (thus the increasing spread at Wells) --they are still lending money (although still very conservatively) because they do have an abundance of low cost deposits. They also continue to make purchases and expand. They are easily a P/E of 15 company --so think what happens to earnings when they drop the reserves they need-- and then stock price.
      The pessimists worry about dropping home values. There are really only three reasons home values matter -- if you want to sell your home or you want to borrow against it or you have an ARM and want to refinance to a fixed. Wells did not do a lot of ARMs -- the average length of a mortgage is about 12 years --most people have no reason to sell their homes right away and will just ride out this cycle. Wells also has a presence in markets where values are not dropping like they are in California --so they still have the ability to do Home Equity lending in other areas of the country (check out Texas).
      Will they have more write-offs --of course --but they are no where near as bad off as some of the pessimists on this board indicate. If you think they are fooling people by hiding bad loans -- then they have a lot of people fooled -- they were just listed by an independent organization as one of the 10 safest banks in the world --the only American bank on the list -- Congress and the Fed have looked to Wells to determine how they avoided the mess other institutions are in -- they still have their Triple A rating --the only American Bank to have this rating. Even the few analysts who have rated them a "sell" or "underperform&quo... are beginning to get on the stagecoach. Are all these people less knowledgeable than you? Is Buffet less knowledgeable than you?
      When the stock price gets to $50 you will be saying I should have gotten on the stagecoach when it was in the 30's.
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    • Fri Jul 18th 12:14 PM | Rating: 0 0
      Commented on:
      Wells Fargo Lays Bear Trap on Wall Street
      If $265Mil equals .08 /sh, then I guess the reserve BUILD of an additional 1.5 BILLION could have improved their reported results by .45 /share!! No mention of that here though --you can cherry pick anyone's numbers and come up with the story you want -- but go through all of the numbers on WF and you find they are well positioned to separate themselves from the rest of the pack.
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