Wells Fargo & Co. (NYSE: WFC) has just reported record net income of $3.8 billion on 49% year over year earnings growth to $0.67 EPS despite a near-5% sequential decline in revenues to $20.3 billion.  Thomson Reuters had estimates of $0.66 EPS and $21.24 billion in revenues.

The bank said its capital ratios rose: Tier 1 common equity ratio of 8.9%, and an estimated Tier 1 common equity ratio of 7.2%, and its Tier 1 capital ratio was 11.5%. The bank’s net loan charge-offs fell to $3.2 billion, down $629 million from the prior quarter; non-performing assets fell $1.8 billion from the prior quarter to $30.6 billion and non-performing loans fell $1.3 billion.

The main feature we have been looking at during earnings season is the book value per share.  Wells Fargo said its book value per share was $23.18 at March 31, up from $22.49 at the end of 2010 and up from $20.76 a year ago.

We already knew this from earlier after the Federal Reserve approved the return of capital plan, but it raised its dividend to $0.12 per quarter and approved a 200 million share buyback plan.

Wells Fargo closed at $30.07 and its 52-week trading range is $23.02 to $34.25.  In pre-market trading, shares are indicated down 0.5% at $29.90. 

Based upon what we are seeing elsewhere on book values, Wells Fargo looks to be fully valued or at least close to it.  For whatever it is worth, Thomson Reuters has a consensus analyst target of just over $38.00.

JON C. OGG

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