Wednesday, February 25, 2015

Investor website: Wells Fargo CEO is 'one of the best'

John Stumpf, CEO of San Francisco-based Wells Fargo, is “one of the best CEOs of our time," according to the headline of a column posted Tuesday to popular investor website Seeking Alpha.

Stumpf (Photo by Daniel Acker/Bloomberg)
The site features columns that offer financial analyses of public companies.

In the case of the Wells Fargo column, the writer points out that, among other things, the bank's stock price has risen more than 38 percent since May 2013, better than the S&P 500 Index’s rise of about 29 percent over the same period.

The column also notes that the nation’s fourth-largest lender has been increasing its dividend for the past four years.

Since the financial crisis, big U.S. banks must receive approval from the Federal Reserve to raise their dividends or buy back shares. Banks are expected to announce next month whether they have asked the Fed to let them to boost their dividends or buy back shares as part of their 2015 capital plans. In the past, the Fed has rejected some banks’ capital plans.

Wells Fargo’s quarterly common stock dividend is now 35 cents per share. The columnist expects the bank to get Fed approval to raise it.

Also, under Stumpf's watch Wells Fargo late last year became the most valuable U.S. bank ever, surpassing Citigroup 2001 record.

But Wells Fargo also has its share of challenges.

Like other lenders, it continues to cope with overall lower mortgage originations following lower demand to refinance home loans.

In addition, Wells Fargo's net interest margin, a key measure of lending profitability, has been hurt by sluggish loan growth and low interest rates. Net interest margin can shrink when deposits grow faster than loans. The margin has been squeezed at other banks, too.

Wells Fargo maintains an East Coast hub in Charlotte since its 2008 purchase of Charlotte-based Wachovia. Wells Fargo grew its Charlotte-area employment by about 1,400 positions last year, bringing the figure to 22,100.


Anonymous said...

Best among big banks is like saying the most honorable among those on death row. Most big banks like Wells Fargo are in fact linked to the government otherwise they are insolvent. This is the reason Wells Fargo does not mark their bad loans to the market. Stock price is up only because the big banks get money from the government to buy each others shares; it is just a game that is all it is.