Wells Fargo: Another Glossy Lip Job
Wells Fargo #5 bank;#2 mortgage lender; "Stumpfed" its investors again. (CEO, John Stumpf)
Much like last quarter, by smearing lipstick on the pig...
the book cookers tried to hide alot of ugly performance details in a large preliminary report.
The effort included $12 billion in segregated loans that produced suspiciously little loss.
Don't be surprised if like last quarter, Wells actual 10Q differs to the downside. Our preliminary findings follow...
Revenue +12%; EPS -9%; Net income -11%; $2 billion vs $2.24 billion; community banking -5%; wholesale banking -25%; Wells Fargo financial -13%
set aside $2 billion for bad loans; net charge offs $1.5 billion vs Q4 $1.2 billion vs Q107 $715 million (+184%); charge offs for consumer loans +26% $1.21 billion.
Allowance for loan losses $5.8 billion, up 9% from $5.3 billion at year-end 2007 and up +57% Yoy from $3.7 billion.
Community banking provision for credit loss (+329%) $1.3 billion vs $306 million.
Backing out the one time $334 million gain on the Visa IPO; community banking net income fell 27% to $1.1 billion.
Total nonperforming foreclosed assets +16% to $4.5 billion vs $3.87 billion at year end.
Total nonaccrual loans +88% at $3.2 billion vs $1.7 billion. Adding the two classes yields 2% of total loans.
Wells suffered a $1.8 billion reduction in the value of mortgage servicing rights (MSRs) due to a decline in mortgage rates during the quarter,
offset by a $1.9 billion gain on the financial instruments hedging the MSRs. The MSR's are down -16% or $2.8 billion Yoy.
Unrealized net losses on securities available for sale $598 million vs unrealized net gains of $680 million at year end. A $1.3 billion unrealized swing.
Wells segregated approximately $12 billion of home equity loans into a liquidating portfolio.
The liquidating portfolio miraculously produced ONLY $163 million in net charge-offs in Q108,
for an annualized quarterly loss rate of 5.58%, 78 basis points higher than the December 2007 annualized loss rate.
90 days or more delinquent Yoy: Unguaranteed loans +50% $1.6 billion vs $1.1 billion.
Guaranteed loans +44% $6.92 billion vs $4.81 billion. Yoy Private collateralized mortgage obligations +525% $21 billion vs $4 billion
Advances from GNMA & FHA on those delinquent loans: $5.29 billion vs $3.68 billion.
Yoy: Securities available for sale +80% $82 billion vs $45 billion. Short term borrowings +410% $54 billion vs $13 billion.
Mike Loughlin, chief credit officer:
"Residential real estate values continued to decline in the quarter and the number of markets adversely impacted continued to increase."
Wells News Release
Much like last quarter, by smearing lipstick on the pig...
the book cookers tried to hide alot of ugly performance details in a large preliminary report.
The effort included $12 billion in segregated loans that produced suspiciously little loss.
Don't be surprised if like last quarter, Wells actual 10Q differs to the downside. Our preliminary findings follow...
Revenue +12%; EPS -9%; Net income -11%; $2 billion vs $2.24 billion; community banking -5%; wholesale banking -25%; Wells Fargo financial -13%
set aside $2 billion for bad loans; net charge offs $1.5 billion vs Q4 $1.2 billion vs Q107 $715 million (+184%); charge offs for consumer loans +26% $1.21 billion.
Allowance for loan losses $5.8 billion, up 9% from $5.3 billion at year-end 2007 and up +57% Yoy from $3.7 billion.
Community banking provision for credit loss (+329%) $1.3 billion vs $306 million.
Backing out the one time $334 million gain on the Visa IPO; community banking net income fell 27% to $1.1 billion.
Total nonperforming foreclosed assets +16% to $4.5 billion vs $3.87 billion at year end.
Total nonaccrual loans +88% at $3.2 billion vs $1.7 billion. Adding the two classes yields 2% of total loans.
Wells suffered a $1.8 billion reduction in the value of mortgage servicing rights (MSRs) due to a decline in mortgage rates during the quarter,
offset by a $1.9 billion gain on the financial instruments hedging the MSRs. The MSR's are down -16% or $2.8 billion Yoy.
Unrealized net losses on securities available for sale $598 million vs unrealized net gains of $680 million at year end. A $1.3 billion unrealized swing.
Wells segregated approximately $12 billion of home equity loans into a liquidating portfolio.
The liquidating portfolio miraculously produced ONLY $163 million in net charge-offs in Q108,
for an annualized quarterly loss rate of 5.58%, 78 basis points higher than the December 2007 annualized loss rate.
90 days or more delinquent Yoy: Unguaranteed loans +50% $1.6 billion vs $1.1 billion.
Guaranteed loans +44% $6.92 billion vs $4.81 billion. Yoy Private collateralized mortgage obligations +525% $21 billion vs $4 billion
Advances from GNMA & FHA on those delinquent loans: $5.29 billion vs $3.68 billion.
Yoy: Securities available for sale +80% $82 billion vs $45 billion. Short term borrowings +410% $54 billion vs $13 billion.
Mike Loughlin, chief credit officer:
"Residential real estate values continued to decline in the quarter and the number of markets adversely impacted continued to increase."
Wells News Release
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