Maybe Wells Fargo & Co. will not be one of the banks in need of more money from the federal government.
The San Francisco-based bank announced that it expects to post net income of $3 billion during the fist quarter, up from $2 billion a year ago.
Better-than-expected results from the recently acquired Wachovia Corp. and strong mortgage originations helped fuel the improved earnings, the bank said in a statement.
Investors swooned at the news, sending the bank’s stock price up more than 30% in early morning trading.
Interestingly, Weiss research included WF on a list of large banks with a strong likelihood of failing in 2009. Granted, Dr. Weiss is seen as sort of a Don Quixote type in the field of ratings, but it was interesting nonetheless. As my cynical side raises it head, I have to ask what part relaxed Mark-to-Market rules have helped WF “fabricate” the earnings. Also, WF seems to be an aggressive refinance company here in the Cleveland area, and for the amount that is going on, purchase money finance company here in Cleveland area. They are also well represented in the Foreclosure sales too.
I would love to think that it is all good news and I would love to see a bank the size of WF throw the TARP money back in the Fed’s face, having been one of the early recipients when for about a day and half receiving TARP money was considered a major vote of confidence. In the interest of full disclosure, I may be letting this thought in my mind because I know a lot of good people over there.
Tim