This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Big Bank Stocks: Financial Losers

Stocks in this article: BAC JPM WFC I:BKX

Wells Fargo

Shares of Wells Fargo were down 3% to close at $34.25, after the company reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating the consensus estimate by a penny, on continued strong mortgage loan revenue.

Total revenue for the third quarter was $21.2 billion, also slightly ahead of the consensus estimate.

Investors may have been disappointed that Wells Fargo's net interest margin narrowed even further than they may have expected after CFO Tim Sloan said at a conference last month that the margin for the third quarter "could be similar to what we experienced in the third quarter of last year when our net interest margin was down 17 basis points."

Wells Fargo's third-quarter net interest margin was 3.66%, narrowing by 25 basis points from 3.91% the previous quarter, and 3.84%, a year earlier.

During the company's conference call with analysts, Sloan said that the company's "operating losses were down $243 million on lower litigation accruals," and that "our litigation reserves consider all litigation matters we are aware of including the recently announced FHA lawsuit.

Expense reduction is a continuing theme for Wells Fargo, and the company's efficiency ratio -- essentially, the number of pennies of overhead expenses for each dollar of revenue -- improved to 57.1 during the third quarter, from 58.2 in the second quarter, and 59.5, during the third quarter of 2011.

The company's second-quarter return on average assets was a strong 1.45% and its return on equity was 13.38%, both increasing slightly from the previous quarter.

Jefferies analyst Ken Usdin said that Wells Fargo's "expenses looked fine, declining $285mm Q-Q," with the efficiency ratio "right in the middle of the company's longer-term target of 55%-59%."

Usdin said that "greater-than-expected net interest margin decline is a result of strong deposit growth and a relatively conservative reinvestment strategy (average short-term investments up about $20B)," and that "given the magnitude of NIM compression, net interest income declined just under $400mm ($10,820mm vs. $11,213mm in 2Q)."

Usdin rates Wells Fargo a "Buy," with a price target of $39.00.

3 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs