Wells Fargo & Co. (WFC), the largest U.S. home lender and the nation’s most valuable bank, closed at a record high yesterday as strength in the economy and housing markets spurred buyers.
The shares rose 1.6 percent to $39.88 in New York, surpassing the previous closing record of $39.80 set on Sept. 19, 2008. The bank touched an intraday high of $44.68 that day, less than a week after Lehman Brothers Holdings Inc. collapsed and before Wells Fargo announced plans to buy Wachovia Corp.
Chief Executive Officer John Stumpf has reported three straight years of record profit including $18.9 billion in 2012, aided by a rebound in home sales and prices. Results were also helped by the 2008 purchase of Wachovia, which added East Coast branches, an investment-banking unit and a retail brokerage.
The bank dominates the U.S. mortgage business, where it originated almost 3 in 10 home loans last year. The median resale home price in 150 U.S. cities jumped 11.3 percent in the first quarter to $176,600, the biggest rise in seven years, the National Association of Realtors reported May 9.
Wells Fargo’s market value has been No. 1 among U.S. banks for most of the past 18 months and now stands at about $211 billion. The shares have gained 17 percent this year, trailing the 19 percent rise in the 24-company KBW Bank Index. (BKX)
Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) is the largest shareholder with more than 8 percent, according to data compiled by Bloomberg. This year’s performance added about $2.6 billion to the value of Berkshire’s existing stake of about 456.2 million shares that he held at the end of December. Berkshire also boosted its holdings by 4.2 percent to about 458.2 million shares during the first quarter.
“I feel very good about our investment in Wells Fargo,” Buffett said May 4 at Berkshire’s annual meeting. “I consider the banking system in the United States to be stronger certainly more than at any time in the past 25 years.”
Stumpf has vowed to return more capital to shareholders by raising the quarterly dividend to 30 cents from 25 cents and promising more stock buybacks.
Wells Fargo said first quarter profit rose 22 percent to a record $5.17 billion on lower expenses even as revenue dropped and lending margins narrowed. Net income at U.S. banks including Wells Fargo has been helped by fewer costs tied to faulty mortgages and foreclosures and lower litigation expenses.
The bank said yesterday it imposed a new halt on some foreclosure sales until it can understand new federal guidelines on seizures sent to the nation’s large and mid-sized banks. The pause is expected to be brief, said Vickee Adams, a spokeswoman, who declined to say which states are affected.
Mortgage firms have previously imposed moratoriums amid reports of borrowers incorrectly being thrown out of homes. Complaints pushed the five largest firms to sign a $25 billion settlement last year that ended a probe of their practices.
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