Author Topic: WFC - Wells Fargo  (Read 332223 times)



rolling

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Re: WFC - Wells Fargo
« Reply #901 on: April 09, 2019, 09:45:31 AM »
Hi rolling,

1.  The market cap is $222.5 Billion using $48.9 share price and 4.5494 Billion shares outstanding

2.  Look at the line called Net Income Applicable to Common Stock (instead of Net Income) because there was $1.7 B preferred stock dividend in 2018.  NIACS was $20.7 B in 2018

For me, I try to get to core operating earnings by reversing one time charges or gains.  Just like BAC prior to 2017, WFC's 2018 income statement is full of one time gains and charges.  This core operating earnings is subjective but below is how I did mine for 2018
all numbers are post tax, negative means I subtract that number from reported NIACS, positive means I add that number to reported NIACS

Reported NIACS $20.7 B
Provision minus Net Charge-Offs Negative $0.8 B
Gain on Security Sale Negative $1.32 B
Gain on Loan sale Negative $2.06 B
Amortization of Intangibles $0.87 B
Litigation Accrual $1.47 B
Tax Effects $0.19 B
LOCOM Puerto Rico Sale $0.14 B
Redemption of Preferred Charges $0.15 B

Core Operating Earnings $19.34 B or roughly $4 per share.  That's my personal core eps, everybody should have their own. 


What Wells Fargo is going through is not only adding a lot of operating expenses but also is very business disruptive.  So they're being hit both on the revenue side and the expense side.  One of the lesson I learned from my investments in BAC is that my estimate tended to be a little high during their tough periods and my estimates were way low during their normalized period. 

Wells' revenue has been buffetted by accretable yield from the Wachovia loans bought in 2018.  You can see how much of these were added to WFC's revenue on Note 6 Table 6.20 of the 2018 10K.  They were $1.1 B of interest income and $2.4 B of non interest income (part of gains on loan sale).  This balance is running off and will be gone in the next few years.
Thank you. I could invest in WFC just because of this post. you did all the work here, and seems a great one.
My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.

Viking

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Re: WFC - Wells Fargo
« Reply #902 on: April 12, 2019, 07:22:55 PM »
Well i am only part way through the conference call and i must say i am surprised. WFC is in deep shit. And it might be getting worse, if that is possible. They sound simply beat on the call; very robotic with answers; no solutions just acceptance on where they are at. Perhaps we are getting closer to the capitulation point with their large and loyal investor base. Today WFC is down 3% when the other big US banks are up 3-5%. Here are my initial key take aways:
1.) They are no where near being done complying with the consent order; in some respects it sounds like they are still in the early stages???
2.) no time line for CEO search; some scepticism about hiring a non-Wall Street person given how unique the banking business is
3.) until CEO is in place, overall strategy will be put on hold (no plans to get more aggressive with cost cutting... business as usual for now)
4.) appears they are losing ground to competitors and are unable to do anything about it.
5.) appears long term shareholders are getting frustrated; to the point they are selling and moving on.

meiroy

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Re: WFC - Wells Fargo
« Reply #903 on: April 12, 2019, 08:55:24 PM »


It's time for Buffett to get involved actively considering all his "passive" involvement by supporting the previous CEOs and the bank in interviews. He owes this to his shareholders. Otherwise, one would seriously just be better off owning an index.






undervalued

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Re: WFC - Wells Fargo
« Reply #904 on: April 12, 2019, 10:04:59 PM »
Did "Everything is awesome" song just stop all of a sudden?

https://www.cnn.com/2019/04/12/investing/wells-fargo-bank-earnings/index.html

I think it's better this way. If regulators think everything is great and not painful for the wrongdoers, they'll throw more shit to the fan.

I felt bad for Sloan.. Can you imagine working hard 32 years in company going from no one to CEO and BAM.. shits hit the fan and you're only on the top job for about 2 years? Such is life.
« Last Edit: April 12, 2019, 10:10:23 PM by undervalued »
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

sleepydragon

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Re: WFC - Wells Fargo
« Reply #905 on: April 13, 2019, 10:08:32 AM »
The CEO and the CFO Ďs boss just got fired and they are not sure how long they will keep  their job.
 Of course they wonít be that enthusiastic in the ER call.
The chairman of the board is disappointing to me. She should have done more to keep the transition smoother. At least keep Sloan longer till a new CEO is found. She should be the one to be fired!

Spekulatius

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Re: WFC - Wells Fargo
« Reply #906 on: April 13, 2019, 10:29:53 AM »
The interim CEO has to be defensive, he can’t make commitments on behalf of the new CEO. I ams Ort of Ok with the asset cap. It certainly prevents them from doing something stupid late in the cycle and thy can buy back shares quite cheaply. Organic reinvestment is preferable, but I am not sure it’s a great idea to put the foot on the gas now. if they can continue to pay an almost 4% dividend and buy back 6% of their outstanding shares this year as well and remain overcapitalized, I am quite happy.

(Edited for typo)
« Last Edit: April 13, 2019, 11:18:04 AM by Spekulatius »
To be a realist, one has to believe in miracles.

gfp

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Re: WFC - Wells Fargo
« Reply #907 on: April 13, 2019, 10:35:01 AM »
The interim CEO has to be defensive, he canít make commitments on behalf of the new CEO. I ams Ort of Ok with the asset cap. It certainly prevents them from doing something stupid late in the cycle and thy can buy back shares quite cheaply. Organic reinvestment is preferable, but I am not sure itís a great idea to put the foot on the gas now. if they can continue to pay an almost 6% dividend and buy back 6% of their outstanding shares this year as well and remain overcapitalized, I am quite happy.

6% dividend?  What am I missing?

shalab

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Re: WFC - Wells Fargo
« Reply #908 on: April 13, 2019, 10:38:25 AM »
They bought back 7% of outstanding diluted shares in one year. If they retire 7.5% of shares this year (at the same rate) and pay 3.75% dividend yield, we are at 11.25 % return. Not shabby.

The interim CEO has to be defensive, he canít make commitments on behalf of the new CEO. I ams Ort of Ok with the asset cap. It certainly prevents them from doing something stupid late in the cycle and thy can buy back shares quite cheaply. Organic reinvestment is preferable, but I am not sure itís a great idea to put the foot on the gas now. if they can continue to pay an almost 6% dividend and buy back 6% of their outstanding shares this year as well and remain overcapitalized, I am quite happy.
« Last Edit: April 13, 2019, 10:47:23 AM by shalab »

Spekulatius

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Re: WFC - Wells Fargo
« Reply #909 on: April 13, 2019, 11:17:29 AM »
The interim CEO has to be defensive, he can’t make commitments on behalf of the new CEO. I ams Ort of Ok with the asset cap. It certainly prevents them from doing something stupid late in the cycle and thy can buy back shares quite cheaply. Organic reinvestment is preferable, but I am not sure it’s a great idea to put the foot on the gas now. if they can continue to pay an almost 6% dividend and buy back 6% of their outstanding shares this year as well and remain overcapitalized, I am quite happy.

6% dividend?  What am I missing?

Sorry, typo, the dividend yield is 3.9%.
To be a realist, one has to believe in miracles.