Wells Fargo Earnings Review
Wells Fargo posted its earnings report yesterday morning and I took the opportunity to put it under a SWOT-light.
It was a good report, although about a quarter of the earnings were from releasing loan loss reserves. If that's backed out, there was still a nice cushion to cover April's dividend raise.
Loan quality and capital ratios continued to improve. One new item I hadn't seen before was a cost reduction program - Wells is targeting about $1 billion of cuts to quarterly operating expenses by the end of 2012. That's more than enough to move the needle if the program is successful.
It's still a bank with all the economic and balance sheet uncertainty that goes along with banks.
It trades at a premium to its peers, but I believe the premium is deserved. It doesn't rely on trading to the extent JPM does and operations are stronger than Citi or BAC.
As a nice little bonus, the stock price jumped enough since the earnings release to edge my CAPS pick into the green.
Long WFC and C.