Investing in bank stocks has not been for the fainthearted over the past several years.
Many financial institutions are still dealing with the lingering effects of the 2008 financial crisis that left their reputations soiled and have kept scores of market participants at arm's length.
Now, day after day, these banks are still saddled with troubles as they struggle with Eurozone exposure, uncertain global markets, mounting regulatory measures , and the newest scandal -- the Libor manipulation probe.
But there is one big bank that appears to be a bright spot in this otherwise dreary sector: Wells Fargo (NYSE: WFC).
"I like Wells Fargo better than anything by far. We have been buying Wells Fargo month after month for a lot of years. Among the big banks, I think it is the best," financial wizard and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) CEO Warren Buffett told Bloomberg TV in a recent interview.
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Why Wells Fargo Stock is a Buffett Favorite
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Wells Fargo Stock Gets Lift From Earnings
Wells Fargo stock (NYSE: WFC) rose in early trading behind a strong earnings report.
The company reported earnings of $4.6 billion or $0.82 per share. This slightly beat analysts' expectations for earnings of $0.81 per share.
Wells Fargo posted a 17% rise in its profits from $0.70 a year ago, marking the fourth consecutive quarter in which the company has posted rising profits.
Unfortunately for Wells, the earnings report comes at a bad time.
A discriminatory lending scandal was reported yesterday and that is keeping Wells Fargo stock from experiencing better gains than rival JPMorgan Chase (NYSE: JPM) today. The scandal involved Wells discriminating against African-American and Hispanic families who were forced into costlier subprime loans than comparable white families.
"If you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan, even though you were qualified and deserved better treatment," Assistant Attorney General Thomas Perez said in prepared remarks Thursday.
Wells Fargo denied the matter and will settle the issue to avoid contested litigation. The San Francisco-based company will pay a total of $175 million: $125 million in compensation to victims of discrimination and $50 million in down-payment assistance to borrowers in affected communities.
The company reported earnings of $4.6 billion or $0.82 per share. This slightly beat analysts' expectations for earnings of $0.81 per share.
Wells Fargo posted a 17% rise in its profits from $0.70 a year ago, marking the fourth consecutive quarter in which the company has posted rising profits.
Unfortunately for Wells, the earnings report comes at a bad time.
A discriminatory lending scandal was reported yesterday and that is keeping Wells Fargo stock from experiencing better gains than rival JPMorgan Chase (NYSE: JPM) today. The scandal involved Wells discriminating against African-American and Hispanic families who were forced into costlier subprime loans than comparable white families.
"If you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan, even though you were qualified and deserved better treatment," Assistant Attorney General Thomas Perez said in prepared remarks Thursday.
Wells Fargo denied the matter and will settle the issue to avoid contested litigation. The San Francisco-based company will pay a total of $175 million: $125 million in compensation to victims of discrimination and $50 million in down-payment assistance to borrowers in affected communities.
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