Is Wells Fargo "about to blow?"
Some Wells Fargo-watchers say they're still nervous about home loans and derivatives the bank bought when it purchased Wachovia last year
New York financial freelancer Teri Buhl, writing yesterday at BankImplode.com (Home of the Bank Implode-O-Meter), claims that Wells Fargo & Co. (the dominant bank in Philadelphia and dozens of other metro markets) and quoting both hedge fund managers and unnamed bank officials, says Wells still has a lot of expensive heavy lifting to do to resolve losses in big COMMERCIAL MORTGAGE and derivatives portfolios acquired when it bought Wachovia Corp. last year. Financial Times' Alphaville picked up on the theme here.
Rochdale Securities bank analyst Richard X. Bove asked, in a note to clients this morning, if Wells Fargo is "about to blow" due to "questionable loans and securities" and "understating its loan problems in the home equity, commercial real estate, and credit card arenas" as well as its derivative-securities and mortgage-servicing portfolios.
Wells Fargo has reported healthy deposit growth, an active loan portfolio, adequate capital replenishment and fee growth. But, Bove says, "the bank has never been happy answering analysts' queries and this is now also becoming an irritant." The year-end audit should "put to rest" these worries - or oblige Wells Fargo to raise more capital, Bove concludes.
