Good news out of the failing financial sector, finally. Wells Fargo Bank reports it will pay back the federal government $371.5 million in its first quarterly bailout installment.

Wells Fargo is believed to be the first major bank receiving TARP (Troubled Assets Relief Program) to do so.

In an internal memo obtained by The Remmers Report, Wells Fargo said the quarterly dividend of $14,861.11 per share is payable Feb. 15. The feds purchased 25,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock last September and is the only holder of record of the Series D preferred stock.

“Since credit began contracting 18 months ago, Wells Fargo has made almost half a trillion dollars in new loan commitments and mortgage originations,” said Chief Financial Officer Howard Atkins. “Last quarter alone, we made $22 billion in loan commitments and $50 billion in mortgage originations. That’s more than $70 billion or almost three times the amount of the U.S. Treasury’s investment in Wells Fargo. We believe we’re leading our industry in lending to creditworthy customers during this difficult economy.”

It is ironic that initially Wells Fargo signalled Treasury it did not want TARP funds and, when it did, negotiated the takeover of financial giant competitor Wachovia.

Among the lending highlights listed in the internal memo:

Average earning assets, primarily loans and securities, up $119 billion, or 28 percent, since the start of the credit crisis in mid-2007.

New loan commitments to consumer and commercial customers of $187 billion since mid-2007.

Residential real estate originations of $354 billion since mid-2007.

New loan commitments of $22 billion in fourth quarter.

Average loans in fourth quarter up $9.7 billion, or 10 percent.

Residential real estate originations of $50 billion in fourth quarter.

Wells Fargo Home Mortgage is the nation’s second largest mortgage servicer, a leader in developing programs to protect homeowners, helping them modify their mortgages and avoid foreclosure. Through repayment plans and other modifications, Wells Fargo provided 498,000 solutions to customers in 2008, including 143,000 last quarter.

Wells Fargo is aggressively using streamlined approaches and customized solutions to avoid preventable foreclosures for Wachovia mortgage customers, primarily those whose loans are delinquent or are likely to become delinquent — 478,000 Wachovia customers.

While the internal memo sounds self-serving, Wells Fargo’s financial success is a welcome relief to the stigma banks receiving TARP funds are hoarding the money to improve their assets.

Cross posted onThe Remmers Report

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Copyright 2009 The Moderate Voice
  • DLS

    Jerry, this is good news to report. More than once it’s been stated now that Wells Fargo management is good, unlike at so many other banks. Also, an effect of the bailout and a likely result desired by some in the industry and in the Bush administration was the related consolidation of the industry. This may be a case where consolidation is a good, rather than a questionable or known-to-be bad thing.

  • StockBoySF

    “It is ironic that initially Wells Fargo signalled Treasury it did not want TARP funds and when it did, negotiated the takeover of financial giant competitor Wachovia.”

    Actually I think Wells first announced the Wachovia merger at teh beginning of Oct and the TARP money was announced around Oct. 20 or so…. And you are correct Wells didn’t want the money but the government forced it upon Wells. The reason Wells decided to take a second loko at Wachovia was because of the tax ruling the government announced at the end of Sept. (The tax ruling in favor of companies taking on bad debt of other companies, which was controversial.)

    Though I will point out that Wells is expecting to write of tens of billions of dollars in the next year or so as a result of its merger with Wachovia… so while Wells may report these write-offs and results in future quarters may look bad, this is something planned and not unexpected.

    But, as DLS says, this is good news. Though I’m not too sure that extending have a trillion dollars of loan commitments in this recession is really a good idea. 🙂

    • mikkel

      Yeah like we’ve talked about before…Wells took a big risk. Did they accurately gauge the number of writeoffs? The wave has started coming ashore…and there are questions about the balance sheet.

      I just can’t feel good about them, and I felt very strongly that they were going to be in a fantastic position before the Wachovia purchase. I told my parents to think about investing in them when things were at their worst (which I think will be another year or so), but couldn’t understand that move at all.

  • KevinHayden

    Of all the majors, Wells Fargo alone has demonstrated good sense and not excessive greed. I’ve never utilized their services but all I’ve learned in the past year tells me they’re the only major that demonstrated sound judgment… the type of judgment that would have avoided the current panic had other majors demonstrated similar responsibility and ethics.

    So I’m not surprised they’re the first to pay the government back. It doesn’t restore my faith in anything but simply confirms they earned their good reputation.

  • Silhouette

    Pull your accounts out of the others and show Wells Fargo some love people! (And maybe the other sheister-banks will get the message about Wells Fargo’s good business sense in this type of make-nice-nice advertising..)

  • balthar

    Gee, Wells Fargo takes 1.5% of the money they received from the government and pays it back to Uncle Sugar. That’s what passes for good news from the financial sector!

    The blizzard of self-congratulatory numbers ignores and obfuscates the severe contraction in credit that WFC extended during 2008 (note the greasy use of a “mid-2007” baseline, avoiding genuine year-on-year comparisons and packing its origination and asset figures with the last remnants of the credit binge). And, yes, I’ve seen their claims of 3Q year-on-year growth in loans, numbers that conveniently ignore the role a dozen (pre-Wachovia) acquisitions played.

    Read last week’s 4Q results for evidence of management’s genius: $5.6 billion in bad-loss reserve build-up, nearly one-third of a billion lost to the Madoff Ponzi, a 37% increase in bad-loan charge-offs as a proportion of total loan portfolio, and they still deign to pay a common stock dividend… like the preferred D, with taxpayer money. Better than Citi? Yes, they cleared that low bar, but I think we’ve all grown past the era of “relative performance”.

    A quick “G” search will reveal the truth behind their “streamlined approaches”: bungled paperwork and unresponsive staff have made life miserable for people who made good faith attempts to deal with the fallout of the real estate deflation. Make no mistake: WFC, in spite of its constant claims of conservative lending standards, originated many billions in no-doc, no-down, no-equity mortgages. They manged to sell much of this dodgy paper to into the MBS market, where it contributed every bit as much to the current crisis as any other bank’s misbegotten assets.

    Do I have a dog in this hunt? Perhaps. Question for Mr. Remmers and others is: do you? Or do you always take press rele… er, internal memos… at face value?

    For more… shall we say… reality based links about Wells Fargo:
    (I have no relationship with the site, but the post is an excellent compendium of claims about WFC’s practices).

  • StockBoySF

    balthar, ‘Gee, Wells Fargo takes 1.5% of the money they received from the government and pays it back to Uncle Sugar. That’s what passes for good news from the financial sector!”

    That’s a quarterly payment, annually (if Wells keeps up the payments) that’s 6%, which is good news from the financial sector. Before the recession most companies paid less than 6% dividends.

  • Burdick

    I never heard about like this before. Thank for this.