First Quarter Best Quarter Ever for Wells Fargo

No wonder the market is up huge today. Before the bell, Wells Fargo (WFC) announced that it would earn a profit of $3 billion in the first quarter, making it the best quarter in the company’s history. Even more impressive, that result includes $372 million in TARP preferred dividends paid back to the government.

Some numbers from their press release:

Revenue $20 billion (+16%)

Pre-tax, pre-provision profit: $9.2 billion

Provision expense: $4.6 billion

Pre-tax profit: $4.6 billion

Net earnings: $3 billion

Allowance for future loan losses: $23 billion

Why isn’t the Wachovia deal killing them? As I have pointed out before, purchase accounting lets you write-off loans when deals close, so Wells was able to take most of the Wachovia losses up front, which boosts earnings in the future quarters. As we can see, this is the first quarter for the combined company and they are really executing well.

Full Disclosure: No position in WFC at the time of writing, but positions may change at any time

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2 Thoughts on “First Quarter Best Quarter Ever for Wells Fargo

  1. shepherd on April 10, 2009 at 5:54 PM said:


    I wondered how much, if any, of the numbers can be attributed to revising mark-to-market writedowns. Is that a possibility?


  2. Chad Brand on April 11, 2009 at 3:01 PM said:

    We’ll have to see when they release full numbers. It might have a small effect, but since most of the asset side of their balance sheet is loans, not securities, you should see much less of a mark-to-market impact for them versus a JPM, BAC, or C. Their capital markets business is not that big given how large of a bank they are. Wachovia did increase it some for them, though.

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