About $4.4 billion if you are Wells Fargo.
The net unrealized loss on securities available for sale declined to $4.7 billion at March 31, 2009, from $9.9 billion at December 31, 2008. Approximately $850 million of the improvement was due to declining interest rates and narrower credit spreads. The remainder was due to the early adoption of FAS FSP 157-4, which clarified the use of trading prices in determining fair value for distressed securities in illiquid markets, thus moderating the need to use excessively distressed prices in valuing these securities in illiquid markets as we had done in prior periods.
Wells Fargo [Trading Markets]
I am mark to market accounting, what is reality?
i am jim cramer, where can i buy some FAZ?
I am mark to model accounting, what is reality?
how the f-word did FAS FSP 157-4 ever get passed?
Wow – that’s quite a difference. All this messing with accounting rules has really made it impossible to determine exactly what’s going on inside banks. Not that it was ever easy, but now it seems like management can just make up whatever they want.
Means I don’t know whether to remove my shorts or not!
Mark, to model: “So, come here often?”
@4 – yes, you should. Then bend over.
Wonder why Warren Buffet keeps invested in these c(r)ooks.
Before we get our panties all twisted (EP), that $4bn didn’t add to their net income; it (merely?) increased capital. You could – and they did – argue that their capital is artificially low because they recognized all of wb’s losses at 12/31 instead of over the life of the assets as other banks do. Fair points.
obfuscation can best describe this company…case in point:
(1) how many public traded trillion dollar (assets) companies do not hold conference calls?
(2) why don’t they report 30 day delinquencies like their peers? 90 days delinquent is a bit late to correct a problem, no?
(3) why does the carrying value of their beloved pick-a-pay portfolio increase while the ltv of said loans have increased? (for the uninitiated, there is typically a negative correlation)
next let’s compare that TCE ratio they are touting to their brethren:
JPM – 4.3%
WFC – 3.3%
BofA – 3.1%
WFC (sans FAS 157) – 2.9%
C – 2.3%
if, as reported on everyone’s favorite station (cnbc), the gov’t says the banks need a 3% TCE under the worst case scenario, I believe there are three banks (above) that will go back to the capital well…oh, wait. I forgot, the stress test had unemployment going to 9% – not so stressful.
finally, take a look at the allowance as a percent of all loans/leases compared to the others:
JPM – 4.53%
BofA – 3.00%
WFC – 2.71%
C – 2.31%
fortress-like…oops, that was citi.
Fair points. Except that I never made any of their opposites, so your pantie twisting comment is off base.
Cluzo agree to many of your points, esp relating to the cc. But keep in mind that they took a huge hit to capital by recognizing all of wb’s losses upfront. Going fwd their losses should be substantially lower than peers and their capital should grow that much faster.
@13 – you sound like whitney tilson. he said he bought into wfc because he believed their earnings could outrun their charge-offs. re: the write-down at the time of the acquisition, true – but pick-a-pay portfolio doesn’t seem to be doing as well as previously advertised. I’m still waiting for someone to tell me why they should trade at 2.26x tang book (1.22x bvps) while jpm is at 1.43x (0.90x).