Drip Portfolio Report
Thursday, May 14, 1998
by Dale Wettlaufer ([email protected])

Alexandria, VA (May 14, 1998) -- And now for number seven, Wells Fargo (NYSE: WFC). This has been one of the success stories of the 1990s. Left nearly for dead after the post-Cold War stand-down and the blowoff in the California real estate market, the company has come back with a vengeance along with the California economy. Since the Pacific Rim economies will be extremely vibrant in the coming century, California will be an ideal region for banking. Topline growth will be there -- we want to find the company that will translate that revenue growth into earnings growth. Wells Fargo is a prime candidate in that search. Here are the numbers on the company -- pay special attention to the huge amortization expenses the company incurs as a result of its 1996 purchase of First Interstate. This expense colors much of the rest of the numbers and should be backed out of financial results.

(Financials in millions except for per share numbers.)

Price/Valuation

Share Price.....$382 7/16
Market Cap.....$33,119.09
Price/Book.....2.59
Price/Tangible Book.....5.65
BVPS.....$147.84
Price/Assets.....34.93%
Price/Net Loans.....52.84%
Price/Deposits.....45.80%
Price/Tangible Assets.....37.69%
Price/Revenues.....4.53

P/E.....29.78
Amortization-Adjusted P/E.....23.06
Discount/Premium to Group.....29.9%
EPS.....$12.84
Cash EPS.....$16.58
Diluted Sharecount.....86.60
1998 EPS Estimate.....$15.08
1999 EPS Estimate.....$18.12
Multiple on 1998 Est......25.36
Multiple on 1999 Est......21.11
Amort-Adjusted Multiple on 1999.....17.49
Discount/Premium to Group.....26.0%

Capital Productivity/Efficiency

Asset Turnover2.....8.02%
Asset Turnover.....7.44%
ROE2.....10.88%
ROE.....8.42%
Amortization Adjusted ROE.....23.65%
ROA.....1.46%
ROA2.....1.574%
Net margin2.....19.62%
Net Margin.....15.19%
Efficiency Ratio.....57.38%
Interest Income/AEA.....7.47%
Interest Expense/AEA.....2.51%
Net Interest Margin.....4.97%
Net Share Buybacks (Including preferred).....$1,544.0
Dividends on Common.....$456.5
Retention Rate.....68.21%
Payout Ratio on AAEarnings.....31.79%
Internal Capital Generation Rate.....16.13%
Owners' Yield.....6.04%

Balance Sheet

Cash & Nonearning Assets.....$18,976.0
Cash & Nonearning Last Year.....$20,053.0
Long Term Debt.....$5,559.0
Shareholder's Equity.....$12,803.0
Last Year Equity.....$13,595.0
Total Assets.....$94,820.0
Last Year Assets.....$101,863.0
Total Liabilities.....$82,017.0
Goodwill.....$6,943.0
Last Year's Goodwill.....$7,312.0
Gross Loans.....$64,504.0
Loan Loss Reserves.....$1,830.00
Loan Loss Reserves %.....2.84%

Leverage

Equity/Tangible Assets.....14.57%
Average Equity/Average Assets.....13.42%
Average Equity/Average Assets (Tangible).....6.66%
Assets/Equity.....7.45
Avg. Assets/Avg. Equity (Tangible).....15.02
Loans to Deposits.....89.20%
LT Debt/Equity.....43.42%
Leveraged Capital Ratio.....7.04%
Tier 1 Capital Ratio.....7.76%
Total Risk Based Capital Ratio.....11.58%

Income Statement

Revenues.....$7,319.00
Interest Income (TTM).....$6,815.0
Interest Expense (TTM).....$2,286.0
Net Interest Income.....$4,529.0
Provision for Loan Losses.....$690.00
Noninterest Income (TTM).....$2,790.0
Noninterest Expense (TTM).....$4,524.00
Net Income for Common (TTM).....$1,112.00
Amortization Adjusted Earnings.....$1,436.00
Noninterest income/interest income.....40.9%
Noninterest income/revenues.....38.12%
Noninterest income/NII.....61.60%
Amort. Adjusted Net/Revs......19.62%
Amortization of Goodwill.....$324.00

Credit Quality

Nonperforming Loans.....$503.00
Nonperforming Assets.....$671.0
Charge Offs.....$1,049.00
Net Charge Offs.....$782.00
Nonperforming Assets Ratio.....1.04%
Reserves/Nonperforming Loans.....272.73%
Months Charge-Offs in Reserves.....20.9
Loan Loss Provision/Net Charge Offs.....88.24%

Deposits

Deposits.....$72,316.0
Noninterest bearing deposits.....$24,421.0
Noninterest deposits/deposits.....33.77%
Deposits/Liabilities.....88.17%
Core Deposit Percentage.....99.62%

Risk-Based Capital Productivity

ROE2*Tier1.....8.44
Leverage*Turns*Net Margin2.....1.35

FoolWatch -- It's what's going on at the Fool today.

TODAY'S NUMBERS 

 
 Stock    Close     Change 
 CPB    $54 7/8     +1 1/8 
 INTC   $84 9/16    -  1/4 
 JNJ    $72 3/16    -  1/4 
 
 
 
 
              Day     Month    Year    History 
 Drip       (0.16%)   2.61%   11.28%   (5.23%) 
 S&P 500    (0.13%)   0.51%   15.14%   17.45%  
 Nasdaq     (0.04%)  (0.16%)  18.79%   17.04%  
  
  
 Last Rec'd Total # Security In At   Current 
  04/13/98   1.000    CPB   $53.690  $54.875 
  04/01/98   9.015    INTC  $80.417  $84.563 
  04/07/98   4.099    JNJ   $68.952  $72.125 
  
  
 Last Rec'd Total# Security In At    Value   Change 
  04/13/98  1.000    CPB    $53.69   $54.88   $1.19  
  04/01/98  9.015    INTC  $724.94  $762.31  $37.37  
  04/07/98  4.099    JNJ   $282.64  $295.64  $13.01  
  
  
 Base:  $1500.00 
 Cash:   $386.10** 
 Total: $1498.92 
 
 
     
 
     The Drip Portfolio has been divided into 63.266 shares with an average purchase price of $23.710 per share. 
     
 
     The portfolio began with $500 on July 28, 1997, adds $100 on the 1st of every 
     month, and the goal is to have $150,000 in stock by August of the year 2017. 
     
 
     **Transactions in progress: 
     
 
  
     04/22/98: Sent $30 to buy more INTC.
 
     04/22/98: Sent $70 to buy more JNJ.