Buffett's Favorite Bank Gets It Done (WFC, BRK-A, C, BAC, JPM)

Wells Fargo & Co. (NYSE: WFC) managed to beat earnings this morning.  Warren Buffett’s favorite bank posted a gain of 19% in net income of $3.15 billion, translating to $0.60 EPS on revenues of $20.9 billion.  Thomson Reuters had estimates of $0.55 EPS and revenues of $20.95 billion. As a reminder, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) owns roughly 325 million shares of Wells Fargo.  The bank is joining Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C) and J.P. Morgan Chase & Co. (NYSE: JPM) in beating earnings estimates.  The question is whether Wells Fargo can shake the trend.

The following figures were provided:

• Checking and savings deposits up 9% from year ago and up 9% annualized on a sequential basis;
• Net loan charge-offs of $4.1 billion, down $394 million, or 9% from prior quarter, down $1.3 billion, or 24%, from fourth quarter 2009 peak;
• tier 1 capital 10.9% vs 10.5% sequentially and vs. 10.6% year ago;
• total capital 14.9% vs. 14.5% sequentially and vs. 14.7% year ago;
• Tier 1 leverage 9.0% vs. 8.7% sequentially and vs. 9.0% year ago;
• Tier 1 common equity 8.0% vs 7.6% sequentially and vs. 5.2% year ago.

Total loans were $753.7 billion at September 30, 2010 compared with $766.3 billion at June 30, 2010 and $800.0 billion at September 30, 2009.

Book value per common share was listed as $22.04 and shares closed on Tuesday at $24.55. Shares are indicated up 1.4% at $24.90 in pre-market trading.

JON C. OGG