NEW YORK (
was among the winners during a busy day for the financial sector Wednesday following a report that testimony from a hedge-fund official contradicts fraud charges the government has brought against the bank.
rose 0.9% to $161.36 after
Paulson & Co.
official Paolo Pellegrini told the government that he informed
that the hedge fund intended to bet against a portfolio of mortgages ACA was assembling.
notes that the testimony by Pellegrini, if true, would go directly against the
Securities and Exchange Commission's
claims that ACA did not know that Paulson was hoping the collateralized debt obligations, or CDOs, would fail.
On Friday, the SEC charged
with defrauding investors by misstating and omitting key facts about subprime mortgage securities. Goldman later said that the charges are "completely unfounded."
Goldman shares are down nearly 13% since the SEC's announcement. Even a better-than-expected
report did little to quell investor fears sparked by the government's charges against the bank.
Several other banks were out with their own earnings releases Wednesday. Goldman rival
swung to a first-quarter adjusted profit of $1.03 a share, compared with a year-ago loss of 41 cents a share.
Including discontinued operations, Morgan Stanley earned 99 cents a share in the recent quarter. The Thomson Reuters average estimate called for a profit of 57 cents a share. Revenue totaled $9.1 billion, well ahead of the consensus target of $7.94 billion. Sales and trading revenue totaled $4.1 billion, almost tripling year-ago results.
Morgan Stanley shares were up 5.7% to $32.17.
reported a first-quarter profit of 45 cents a share, above the Thomson Reuters average estimate of 42 cents a share. Revenue climbed 2% to $21.4 billion, slightly below the consensus target of $21.7 billion.
Wells Fargo said credit has "turned the corner," noting that net charge-offs fell $83 million quarter-over-quarter to $5.3 billion. However, nonperforming assets rose on a year-over-year and sequential basis to $31.5 billion, although the bank noted the rate of growth in nonperforming assets continued to decline.
Wells Fargo was sliding 1.8% to $33.07.
Among other major U.S. bank stocks,
Bank of America
added 0.1% to $18.63,
rose 0.4% to $4.99, and
gained 0.3% to $46.
jumped after the bank swung to a first-quarter profit of $10.4 million, or a penny a share, compared with a year-ago loss of $2.49 billion, or $6.79 a share. Shares were rallying 13.7% to $6.63.
said late Tuesday that it swung to a first-quarter profit of 15 cents a share from a year-ago loss of 81 cents a share. The provision for loan losses dropped to $100,000 from $10.72 million in the year-ago quarter. The allowance for loan losses now stands at $30.3 million, or 3.72% of loans, the company said. Dearborn shares rocketed higher, climbing 91.3% to $2.87.
On the other hand,
The South Financial Group
dropped by 20% to 73 cents after the company posted a first-quarter loss of 40 cents a share and said it expects further losses in 2010. "Given our expectation of additional losses during 2010, we will need to raise additional capital during the year," CEO H. Lynn Harton said in a statement.
sank by 9.4% to $3.46 after the company said its first-quarter loss widened to 47 cents a share from 46 cents a share in the year-ago quarter. Synovus said its provision for loan losses increased by 17% to $340.9 million, while net charge-offs rose 28% and nonperforming assets increased 7% from a year earlier.
FBR Capital Markets analyst Paul Miller reiterated his underperform rating on Synovus, saying that credit remains his primary concern "as credit losses continue to erode book value and drive the company's need for more capital."
Away from earnings,
said it is buying online securities provider
for $26 a share, or a total of about $2 billion, representing a 34% premium to the stock's closing price Tuesday.
Visa expects the transaction to be about 4 to 5 cents dilutive to its fiscal fourth-quarter per-share earnings on a reported basis and slightly dilutive to its fiscal full-year 2011 earnings per share. Shares of Visa dipped 0.2% to $93.84, while CyberSource shares rallied 31.9% to $25.64.
In other bank-related news, the International Monetary Fund has proposed two new taxes on banks as a "fair and substantial" contribution by the financial sector, according to a report issued ahead of the next G20 meeting. "These are important proposals and we welcome them," said UK Chancellor Alistair Darling said, according to
The Financial Times
The first would be a Financial Stability Contribution, or FSC, which would initially be a flat rate levied against banks but refined over time to reflect institutions' riskiness and contributions to systemic risk, the IMF said. The FSC would target a bank's balance sheet, specifically on the liabilities of each bank. The second proposed tax would be a Financial Activities Tax, or FAT, levied on the sum of the profits of financial institutions that were above normal levels, the IMF said.
-- Written by Robert Holmes in Boston
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