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TMFAleph1 (95.22)

Where Does Wells Fargo Stand Now?

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January 21, 2010 – Comments (1) | RELATED TICKERS: BRK-A , WFC , JPM

My thoughts on Wells Fargo in the context of the big four banks' earnings reports.

On another note, for those who are interested in following/ commenting on my analysis on a different platform, I can now be found on Twitter.

Alex Dumortier, CFA

1 Comments – Post Your Own

#1) On January 21, 2010 at 11:53 PM, Option1307 (29.84) wrote:

Here's one statistic I saw this morning that suggests the banking industry still faces some headwinds: According to data from research firm Foresight Analytics, more than a third (36%) of the $270 billion in commercial real estate loans maturing this year are underwater. The percentages for loans maturing in 2011 and 2012 are even higher: 49% and 63%, respectively. For bank shareholders, the wild ride might not be over yet.

I know we have been hearing about the 2nd leg down in terms of RE for a while now, but holy geez those are some large numbers you posted there!

 It'll be interesting to see how all of this plays out this year and possibly next. IMO the massive amount of underwater commercial loans will have to be delt with soon enough and written down significantly before we are out of this mess. However, many people are aware and expecting this to occur, at least more people than expect the residential RE crash, so the quetion is, will it actually occur? The residential crash was so bad b/c everyone was overally optomistic, there seems to be a small dose of reality regarding commercial, so will it be as bad, who knows...

In terms of WFC, I'm a wuss when it comes to banks so I'm staying far away. There are far too many unknowns and too many "black box" items. How much will they have to write down the coming loans, are their profits real, etc. I would rather speculate in other areas were I feel like I halfway have a far shot at correctly valuing companies.

Good write up, thanks!

 

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