The Banking and Strategy Initiative

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Bank Results Season: West Coast Economy snowed under/tanned brown by Wells Fargo mortgages

While one can’t say the leader JP Morgan has not tried, with $130 B in consumer loans including less than half a million new mortgages, the Wells Fargo-Wachovia combine, which still thinks expenses from its merger with Wachovia on the East Coast are too high with 20,000 operations employees from the $16.9 B acquisition in Philly.

Wells Fargo did $195 B in new mortgages alone in the first half of the year. at the end of the first quarter it had a 34% share of mortgages followed by JP Morgan at 11%. Wells Fargo has cut 10% of its orkforce in high cost geographies, adding 2,200 to the pile this summer

Earnings of $0.82 for the quarter compare with $1.21 for JP Morgan and are sequentially 38% higher even as it reported $4.4 B in profits including just $800 M from Investment Banking income which puts it in the top dozen investment banks a huge improvement from its non existent play last year. (Debt Origination, Loans)

John Stumpf’s Bank worked to $101.7 B in Capital (Tier1, Basel3) in the June quarter and its revenues for the half year are $43 B with a loan book of $766B and Deposits of $850 B concentrated in the West Coast despite its takeover of a $16.9 B Wachovia mortgage portfolio. Net Interest Income is just half the revenue at $21.9B while card fees have trended down 30% after charges were capped, the Bank having since refashioned its charges heavy practice where it exceled with BofA in pushing Overdraft charges don the chute of unsuspecting customers.

 

 

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