What does everyone make of Wells Fargo's impressive profits?

[CoffeeCat]

I am wondering if anyone has some insight into Wells Fargo's announcement today that
it had posted record profits of $3 billion for Q1 09.

http://www.thestreet.com/story/10484482/1/financial-winners-and-losers-wells-fargo.html

I remember back in Jan, when Bank of America and City announced that they were "profitable"
during Jan and Feb. Everyone was puzzled, because these banks were in the thick of bailout
negotiations, but the banks insisted that they were profitable. It was later unearthed
that much of their good news was due to money from AIG. In effect, it was all smoke
and mirrors.

I was wondering if anyone had any thoughts or opinion about why Wells made such
hefty profits---record profits? Is this legitimate? If there some funny accounting
happening?

I thought that Wells was, by definition, insolvent. Is that accurate? What about all
of the toxic assets that still remain on their books?

Will we find out in a few weeks--that the numbers really aren't that great, or that the
situation at Wells isn't as rosy?

I think the Wells news is pretty significant. Analysts are suggesting that the market
moved nearly 250 points today, due in large part to the good news from Wells Fargo. So,
if this news really is a load of hot air--the market will likely revolt the other way, once
the truth is revealed.

Anyone have any thoughts or insight into today's good news from Wells Fargo?

[monmouth]

1. I am quite pleased since they took over my bank, Wachovia. Services

are still the same, excellent, and the transition has been flawless. If they had not sent me an e-mail and other communications I would have never known..

[FrenchieCat]

2. I don't recall Wells Fargo having the problem as the one you describe.

That was Bank of America and Citigroup.

Wells Fargo was always better performing than the others. Something about not getting into subprimes much.

That is who I bank with....and strangely, my Mortgage is with Wachovia, which Wells recently acquired.

This was written in September of last year....


Wells Fargo beats Citi as 3rd most valuable bank
10 Sep 2008
SAN FRANCISCO: Wells Fargo, the California lender that skirted the subprime collapse, topped Citigroup by market value to become the third-most
valuable US bank.
snip
The worst housing crisis since the Great Depression has resulted in more than $500 billion in losses and credit writedowns at financial institutions worldwide, led by $55 bn at Citigroup. Wells Fargo, in avoiding the riskiest types of loans, has maintained a profit, orchestrated acquisitions and raised its dividend.

“Wells Fargo has bucked the trend of other large banks and has actually used bank M&A in a disciplined manner that has created value for shareholders,” Sanford C Bernstein analyst John McDonald, who rates the shares “market perform”, wrote in a September 5 report. The bank has “so far managed through the crisis better than its peers”.

snip

While Wells Fargo has reported more than $5 bn in profit over the past three quarters, Citigroup has racked up $17.4 bn in losses because of writedowns for subprime-related assets, leveraged loans and bond insurance contracts.

snip
Wells Fargo, the second-biggest US home lender, avoided most subprime loans that have burned Washington Mutual and Wachovia. Located in California, the centre of the mortgage collapse, Wells Fargo has set aside $7.52 bn because of expected higher credit losses, including late payments on home equity loans.
http://economictimes.indiatimes.com/News/International_Business/Wells_Fargo_beats_Citi_as_3rd_most_valuable_bank/articleshow/3464628.cms

[Mike 03]

3. This was a surprise, but I tend to believe this is true.

They did make a risky acquisition, but it was far wiser than most of the takeovers we've seen in banking.

Secondly, Wells has a tremendous reputation--much better than BAC or C or even IMO Goldman or any investment banks.

Wells Fargo is really a cut above every other financial institution I can think of.

This was true of WF in the late 80s, 90s, and now.

It is a first class operation. They are cautious with their real estate portfolios, and they don't make careless acquisitions (I can testify to this personally).

[BootinUp]

4. They got a huge tax break for slurping up Wachovia for one

second, I think they are a well run bank relatively speaking.

[Mike 03]

5. Wells has always used good jugment when it comes to extending credit, particularly

when it comes to real estate.

It saved them when Security Pacific fell, and it has saved them again now.

But having said that, I would not be buying stock in WFC now.