Author Topic: WFC - Wells Fargo  (Read 397159 times)

skanjete

  • Sr. Member
  • ****
  • Posts: 252
Re: WFC - Wells Fargo
« Reply #1140 on: January 14, 2020, 07:04:46 AM »
https://www.wsj.com/articles/we-need-to-be-a-technology-company-wells-fargo-struggles-with-aging-systems-11578738600

WFC would've had a pass from investors if they had depressed earnings to invest in better controls 2 years ago. Equity:Assets ratio fell below 10% for the first time since 2009. I think investors are underestimating how devastating the asset cap is to a bank. Thankfully inflation isn't higher, but it seems like WFC is making a lots of little bad decisions to pretend they are a normal bank at the moment.

If you consider the data per share, things don't look that bad.
If they ever succeed in normalising the cost base, the culture and eventually the perception, the revaluation will be very considerable.

At that time, this episode will seem a huge buying opportunity in retrospect. In this scenario, the buyback programme will appear to have been enormously beneficial.


sleepydragon

  • Hero Member
  • *****
  • Posts: 724
Re: WFC - Wells Fargo
« Reply #1141 on: January 14, 2020, 07:20:57 AM »
https://www.wsj.com/articles/we-need-to-be-a-technology-company-wells-fargo-struggles-with-aging-systems-11578738600

WFC would've had a pass from investors if they had depressed earnings to invest in better controls 2 years ago. Equity:Assets ratio fell below 10% for the first time since 2009. I think investors are underestimating how devastating the asset cap is to a bank. Thankfully inflation isn't higher, but it seems like WFC is making a lots of little bad decisions to pretend they are a normal bank at the moment.

What matters is the deposits are still growing.
Charles is the best person for improving their tech systems.
I can see on LinkedIn, WFC is trying hire more quants and IT people.
It's pretty clear what need to be done.

mwtorock

  • Full Member
  • ***
  • Posts: 179
Re: WFC - Wells Fargo
« Reply #1142 on: January 14, 2020, 07:55:52 AM »
https://www.wsj.com/articles/we-need-to-be-a-technology-company-wells-fargo-struggles-with-aging-systems-11578738600

WFC would've had a pass from investors if they had depressed earnings to invest in better controls 2 years ago. Equity:Assets ratio fell below 10% for the first time since 2009. I think investors are underestimating how devastating the asset cap is to a bank. Thankfully inflation isn't higher, but it seems like WFC is making a lots of little bad decisions to pretend they are a normal bank at the moment.

What matters is the deposits are still growing.
Charles is the best person for improving their tech systems.
I can see on LinkedIn, WFC is trying hire more quants and IT people.
It's pretty clear what need to be done.

Maybe it is just me, but the more i look at that 1.5b accrual, the more it looks like a kitchen sink quarter?

LC

  • Hero Member
  • *****
  • Posts: 3896
Re: WFC - Wells Fargo
« Reply #1143 on: January 14, 2020, 12:21:59 PM »
I agree with the previous two posters. They are revamping their internal systems and controls. Poaching folks from other (better) banks to institute industry standard best practices throughout the org. Can be lucrative if you are in the right place at the right time.
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
ads | brk.b | irm | mmm | mo | nlsn | pm | pypl | v | wm

Spekulatius

  • Hero Member
  • *****
  • Posts: 3759
Re: WFC - Wells Fargo
« Reply #1144 on: January 14, 2020, 04:02:25 PM »
https://www.wsj.com/articles/we-need-to-be-a-technology-company-wells-fargo-struggles-with-aging-systems-11578738600

WFC would've had a pass from investors if they had depressed earnings to invest in better controls 2 years ago. Equity:Assets ratio fell below 10% for the first time since 2009. I think investors are underestimating how devastating the asset cap is to a bank. Thankfully inflation isn't higher, but it seems like WFC is making a lots of little bad decisions to pretend they are a normal bank at the moment.

If you consider the data per share, things don't look that bad.
If they ever succeed in normalising the cost base, the culture and eventually the perception, the revaluation will be very considerable.

At that time, this episode will seem a huge buying opportunity in retrospect. In this scenario, the buyback programme will appear to have been enormously beneficial.

They also missed on revenues, not just expenses and litigation reserves. They have got years of work ahead of them, before things normalize while the competition steps on the gas. The stock is not  as cheap as it looks, Imo.
« Last Edit: January 14, 2020, 04:09:28 PM by Spekulatius »
Life is too short for cheap beer and wine.

CorpRaider

  • Hero Member
  • *****
  • Posts: 2253
    • The Corpraider
Re: WFC - Wells Fargo
« Reply #1145 on: January 14, 2020, 05:35:23 PM »
With $1.3 trillion+ in deposits (up like 2% or $30 bills last q...with no CEO...while the sound and fury rages) on which they are paying/spending .62% (with costs that can probably come out of that over time), there's a decent chance it works out. 

The $1.5 bil litigation accrual is run rate from the prior Q...I think...they also released some reserves, so i don't know about the kitchen sink quarter, but there's not a lot of incentive to be overly positive in CEOs first year. 
« Last Edit: January 14, 2020, 05:54:38 PM by CorpRaider »

bluejoseph

  • Newbie
  • *
  • Posts: 6
Re: WFC - Wells Fargo
« Reply #1146 on: January 14, 2020, 07:39:03 PM »
The $1.5 bil litigation accrual is run rate from the prior Q...I think...

During the quarter, Wells Fargo set aside $1.5 billion for litigation expenses, which came on top of another $1.6 billion litigation accrual in the previous three-month span. The company said that the fourth-quarter accrual was partly related to its retail sales practices, as was the entire third-quarter accrual. - American Banker

Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1583
Re: WFC - Wells Fargo
« Reply #1147 on: January 15, 2020, 05:29:26 PM »
After listening to the CEO (with his prepared remarks) on the conference call it sounds like WFC is still in the early innings of its turn around. He is still in the process of bringing in new blood. He is not yet finished his evaluation of what needs to be done, what it will cost and how long it will take. And WFC appears to still have lots of work to be done to get the regulators off their back.

I wonder how long this state can go on... it has to be impacting their total business. More importantly, WFCs 2 main competitors (JPM and BAC) are aggressively moving on to the next round of tech investments (the benefits we will only see in 2 or 3 years). WFC must be falling further and further behind on their strategy and investment spend.

As much as i want to take advantage of the idea of the turn around in WFC my brain tells me the turn around might be another year away. But that is what i thought a year ago, and the year before that. And after listening to the CEO it sounds like they might have to do a complete reset and start over. Crazy.

WFCs continuing problems has to be good news for BAC and JPM (in addition to the continuing issues with the big European banks.)

The silver lining of having such a poorly performing stock is WFC has excess capital and has been able to buy up an enormous number of shares and this will likely continue in 2020.
« Last Edit: January 15, 2020, 05:42:32 PM by Viking »

Spekulatius

  • Hero Member
  • *****
  • Posts: 3759
Re: WFC - Wells Fargo
« Reply #1148 on: January 15, 2020, 07:39:29 PM »
After listening to the CEO (with his prepared remarks) on the conference call it sounds like WFC is still in the early innings of its turn around. He is still in the process of bringing in new blood. He is not yet finished his evaluation of what needs to be done, what it will cost and how long it will take. And WFC appears to still have lots of work to be done to get the regulators off their back.

I wonder how long this state can go on... it has to be impacting their total business. More importantly, WFCs 2 main competitors (JPM and BAC) are aggressively moving on to the next round of tech investments (the benefits we will only see in 2 or 3 years). WFC must be falling further and further behind on their strategy and investment spend.

As much as i want to take advantage of the idea of the turn around in WFC my brain tells me the turn around might be another year away. But that is what i thought a year ago, and the year before that. And after listening to the CEO it sounds like they might have to do a complete reset and start over. Crazy.

WFCs continuing problems has to be good news for BAC and JPM (in addition to the continuing issues with the big European banks.)

The silver lining of having such a poorly performing stock is WFC has excess capital and has been able to buy up an enormous number of shares and this will likely continue in 2020.

My guess is that they will need 2 years to work this out. FWIW, a new CEO is not incentivized to downplay the problem, quite the opposite. I also dont think that they can reduce their capital levels much more, they will probably keep a buffer to their target capital rate, so the pace of buybacks will slow down.
Life is too short for cheap beer and wine.

DooDiligence

  • Hero Member
  • *****
  • Posts: 2024
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: WFC - Wells Fargo
« Reply #1149 on: January 19, 2020, 07:48:43 AM »
The $1.5 bil litigation accrual is run rate from the prior Q...I think...

During the quarter, Wells Fargo set aside $1.5 billion for litigation expenses, which came on top of another $1.6 billion litigation accrual in the previous three-month span. The company said that the fourth-quarter accrual was partly related to its retail sales practices, as was the entire third-quarter accrual. - American Banker

Would part of the litigation expense occur as a result of these judgements?

www.americanbanker.com/news/wells-fargo-loses-another-patent-lawsuit-to-usaa

www.digitaltransactions.net/after-beating-wells-fargo-twice-in-court-usaa-seeks-dismissal-of-miteks-mobile-deposit-lawsuit/

---

Why would USAA be taking WFC to court for using technology provided by Mitek?

www.sec.gov/ix?doc=/Archives/edgar/data/807863/000080786319000045/mitk-20191101.htm

www.nafcu.org/compliance-blog/update-usaa-rdc-litigation

---

Is this even anything?
Healthcare 21.7% - EW NVO // BRK.B - 24.2% // Auto's & Oil 14.9% - CLB GPC VDE

Banking 9.4% - WFC // Entertainment 4.7% - DIS // Drinkers & Smokers 7.6% - MO

Retail 1.8% - ULTA

---

%'s held @ MV 1/16/2020 minus 15.8% investable cash

i trumpet my ignorance

https://twitter.com/tunawish