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http://www.latimes.com/business/la-fi-wells-fargo-sale-pressure-20131222,0,2502059,full.story#axzz2on9Y5d37

 

Wells Fargo's pressure-cooker sales culture comes at a cost

 

 

Employees say intense sales demands at Wells Fargo branches create a dilemma for many: cheat or risk being fired. Bank officials say they make ethical conduct a priority.

 

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  • 2 weeks later...

4Q

 

https://www08.wellsfargomedia.com/downloads/pdf/press/4q13pr.pdf

 

Fourth quarter 2013:

 Net income of $5.6 billion, up 10 percent from fourth quarter 2012

 Diluted earnings per share of $1.00, up 10 percent

 Revenue of $20.7 billion, compared with $21.9 billion

 Noninterest expense of $12.1 billion, down $811 million

 Efficiency ratio of 58.5 percent, improved by 30 basis points

 ROA of 1.47 percent, up 1 basis point

 ROE of 13.81 percent, up 46 basis points

 

• Fourth quarter 2013 results included:

o Strong loan and deposit growth:

 Total loans of $825.8 billion, up $26.2 billion from fourth quarter 2012

 Core loan portfolio up $39.9 billion1

 Total average core checking and savings deposits up $50.7 billion

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http://blogs.wsj.com/moneybeat/2014/01/14/as-wells-fargo-hits-profit-milestone-ceo-gives-credit-to-wachovia/

 

"“I don’t see the connectivity between being number one in something and having more regulatory or litigation scrutiny,” he said. “Companies are unique, what they bought and what the behaviors are of those companies they bought matters.” - Stumpf

 

 

Read: the people leading Wells Fargo have superior capital allocation skills.

 

Indeed.

 

 

 

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Something I don't get about WFC.

 

At Q1 2011, they had net charge-offs of 3.5 Billion for the quarter. Their allowance for credit losses stood at $22.4B. If you annualize the charge offs, you get 22.4 / 14 = 1.74X.

 

Currently, the allowance stands at $14.5B. Charge-offs were under a billion last quarter.So the ratio is now 14.5 / 3.85 = 3.76X.

 

Why on earth is it higher now, when the existing loan book is so much better?

 

Are they monkeying with the numbers to smooth earnings, or is this driven by regulators?

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Wells Fargo chief’s rise to the top

 

 

 

http://www.ft.com/intl/cms/s/2/74c30a12-7c81-11e3-b514-00144feabdc0.html#axzz2rcQ5KXps

 

 

 

This, for instance, is Stumpf’s explanation of why he arrives at his desk by 5.30am: “I get up at 4.30, because that’s what you do on the farm.” He adds: “I don’t think you need to get up early in life, but most people I know who are successful get up early.”

 

The farm in question is the 125 acres in Minnesota where he grew up as the second of 11 children. The girls slept in one bedroom, the boys in another. “We were very, very poor,” he says, and bankruptcy was often a threat.

 

 

 

 

With his silver hair and easy patrician style, Stumpf, who became chief executive six years ago, seems born to the corner office. But his rise to the top of the banking industry was far from ordained. After leaving school at 17 with poor grades and few prospects, he worked for a year in a bakery. He later joined the Minneapolis-based Norwest, which rode a wave of acquisitions – including those of Wells Fargo (whose name it took) in 1998 and Wachovia at the depths of the financial crisis a decade later – to reach the top of the US banking industry.

Wells_Fargo_chief’s_rise_to_the_top.pdf

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Hi, I am wondering if anyone has recently looked at WFC warrant.... seems like the premium is a lot less in comparison to BAC.  Does anyone know why?

 

thanks

Gary

 

Mostly because WFC is already operating at normal capacity, so the future potential EPS/price growth is already normal.  People expect BAC to go up more, so the warrant prices in more growth.

 

That being said, WFC warrants are much cheaper than they have been.  Seems like a good time to buy them, absent anything terrible happening to banks/economy/etc.

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Hi, I am wondering if anyone has recently looked at WFC warrant.... seems like the premium is a lot less in comparison to BAC.  Does anyone know why?

 

thanks

Gary

 

Mostly because WFC is already operating at normal capacity, so the future potential EPS/price growth is already normal.  People expect BAC to go up more, so the warrant prices in more growth.

 

That being said, WFC warrants are much cheaper than they have been.  Seems like a good time to buy them, absent anything terrible happening to banks/economy/etc.

 

How can you tell looks expansive VS cost of leverage for options ?

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Totally agree...  Lets hope BAC is maximizing their $4B repurchase authorization this quarter, especially since the stock is under $17! The problem is, i doubt they are and I bet they will evenly repurchase stock - $1B /quarter which is a bit disapointing but these damn regulators!!!

 

It is interesting how wfc has little volatility in comparison to BAC!

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  • 1 month later...

Thank you, great article. They even mention valuation at the end...

 

But if there is a negative for Wells Fargo, it is clearly its valuation. The stock trades at a premium to all of its peers on a price-to-earnings and book value basis. In other words, the market already knows that Wells Fargo is the best of the bunch. So if you want to own quality, you have to pay up for it.

 

:)

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John Stumpf said government-backed agencies that buy mortgages, such as Fannie Mae, Freddie

Mac and the Federal Housing Administration, were too quick to accuse banks of faulty

underwriting on mortgages that default and force them to repurchase the soured loans, known as

“put-back” risk.

 

“If you guys want to stick with this program of ‘putting back’ any time, any way, whatever, that’s fine, we’re just not going to make

those loans and there’s going to be a whole bunch of Americans that are under-served in the mortgage market,” Mr Stumpf told the

Financial Times.

Wells_chief_warns_on_mortgage_lending_-_FT.pdf

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