Wells Fargo (WFC) filed its 10-Q and there were some very favorable items in it for shareholders.
Results: the credit crisis itself has created incremental earnings opportunities for Wells Fargo, largely offsetting our incremental charge-offs from the crisis.
Net interest income on a taxable-equivalent basis increased 21% to $6.33 billion in second quarter 2008 from $5.23 billion in second quarter 2007. The increase was driven by 20% earning asset growth combined with an increase in the net interest margin to 4.92%, up 3 basis points from a year ago and up 23 basis points linked quarter. Card fees increased 14% to $588 million in second quarter 2008 from $517 million in second quarter 2007, due to continued growth in new accounts and higher credit and debit card transaction volume. Purchase volume on these cards was up 13% from a year ago and average card balances were up 30%. Although credit quality in Wells Fargo Financial’s real estate-secured lending business has deteriorated, we have not experienced the level of credit degradation that many nonprime lenders have because of our disciplined underwriting practices.
Long story short? Wells Fargo is in fantastic shape. Does that mean there will not be bumps in the road? Clearly if the economy continues to deteriorate, things will fall. When you look around the financial sector, I can't find anyone making the kinds or statements (results based ones, not "anticipated results" promises) like Wells Fargo. Citi (C), Wachovia (WB), Washington Mutual (WM) are all repairing rather than growing. Even JP Morgan (JPM) and Bank of America (BAC) while not suffering can't claim the same quality of assets as Wells.