"Wells Fargo stock was down last year. [But] I don't think the intrinsic business value shrunk. In fact ... I thought it probably increased a touch."
Those were the words of Berkshire Hathaway
Sure enough, San Francisco-based Wells Fargo
Wells Fargo, the nation's second-largest mortgage lender, is reaping the benefits of its conservative lending practices, providing a shield from the perils of the housing market. CEO John Stumpf called the quarter "one of the best we've ever had for our mortgage business." During the quarter, mortgage applications totaling some $132 billion made their way to Wells Fargo, the largest surge since 2003, when the housing boom was still booming. All things considered, that's quite an amazing statistic.
Even though it has exposure to some of the same markets pummeling competitors like Washington Mutual
Despite the respectable performance, Wells Fargo wrote off $1.5 billion in bad loans, and set aside an additional $500 million to cover expected future losses. Its total allowance for credit-related losses now stands at $2 billion.
With a solid 4.5% dividend yield, conservative balance sheet, proven business model, and Warren Buffett's backing, Wells Fargo will likely be one of the few shining stars to come out of the credit fiasco with its head held high.
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