Let’s Review the Wells Fargo Earnings
Posted by Larry Doyle on April 9, 2009 12:02 PM |
A quick review of Wells Fargo’s earnings numbers this morning leaves us with as many questions as answers.
Wells posted record earnings of $3 billion largely driven by a significant increase in refinancing activity in their mortgage origination business. Their acquisition of Wachovia in the 4th quarter supported the origination business.
Analysts on the street are questioning the depth of detail provided along with the level of reserves taken against future losses. Highly regarded bank analyst Chris Whalen offerered that bank executives and regulators will present a rosy picture while not providing the support material to back it up.
In regard to the FASB relaxation of the mark-to-market and its impact on bank earnings, Whalen said, “accounting is a wonderful thing.”
Even after a Wells executive commented that the FASB relaxation had no impact on the banks’ earnings, Bloomberg reporters raised questions about that assertion. Bloomberg asked, “do we believe that?”
I don’t know…do we? Without total transparency it gets very difficult to read the charts and plot the appropriate course of action.