Wells Fargo Chairman Richard Kovacevich was openly skeptical that the major banks needed Paulson's cash. And this helps explains why: The bank reported earnings solidly ahead of expectations ($.49 vs. $41 est.) and it's benefitting from the woes of its rivals. Here's a key quote from CFO Howard Atkins:
“We saw a tremendous inflow of deposits in the latter part of the quarter, especially at the end of September reflecting what we believe is a significant flight to quality.”
No silent run on the bank going on at Wells Fargo. More from Atkins:
“Many of our businesses continued to generate double-digit, year-over-year revenue growth including asset-based lending, commercial banking, credit cards, mortgage banking, insurance, international and wealth management, and the significant growth this quarter in net new checking accounts positions us well with new accounts and new customers to continue our strong, double-digit revenue growth.”
Of course, Wells Fargo is dealing with the same loan loss issues as everyone else in the industry. Net charge-offs totalled $1.9 billion compared to $1.5 billion last quarter and $890 million in the year-ago quarter. On the other hand, Wells saw improvements in business direct loan quality, as well as student loans.
Look, this isn't the prettiest pictures we've seen (how could it be?), but it looks like a functioning, profitable financial institution during a time overall duress -- not to mention that they're benefitting from their competitors' weakness. No wonder they didn't want to leve the playing field and dilute current shareholders. Meanwhile the market is please: The stock is up over 3 percent pre-market.
