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Earnings season underway for banks Wells Fargo taking things often beating estimates -- shares down as the bank's net interest margin Nim fumbled again in the fourth quarter.
Joining me now Paul Miller analyst at FiOS capital markets -- thanks for joining us you've looked at the report comes through the numbers what you take overall.
You know I was basically in line quarter I think the name was down a little bit more than we expected but it was mainly driven by.
They attracted a lot of deposits over the quarter over fifty billion -- unable to put those deposits to work towards the end of the quarter and that's what drove that -- down.
But women looking for new contraction across the industry.
And that's it's it's also -- it's it's coming from just low yields in general.
Flowing through the system until we -- real economic growth -- we get rates moving up because a -- economic growth.
You gonna see continued pressure across the industry not just wells with that net interest margin leverage -- question I have been pretty aggressive on the lending side but.
Is it just about volume because of those paltry yields.
Well -- you know what we what they said they saw was very strong.
Growth in the commercial lending arm.
I'm towards the end of that and ended the quarter so that's a positive -- does that continue through the first quarter and second quarter I don't now.
Yeah 08 it just goes back to economic growth we need to get the economy back starting to get we need to have real growth above 5% we need -- sector that unemployment rate down.
For real to for these banks to really -- -- these levels but I find -- staying Paula you know wells has expanded its securities business while other banks have basically scaled back as we'll just dumped out of it -- together is that a good rouble not do you think.
You know it's it it's a good way to park is you know that acquitted an extra liquidity that they're getting rather than getting you know 5060 basis points with the -- with the Fed.
Every bank has as -- -- securities portfolio -- a lot of banks that are growing that securities portfolio.
But you are correct the problem with that it's that you're taking on some duration risks when you're growing that portfolio.
Arm and it unites for the just a low yielding asset and so therefore a lot of guys have not done it I'm not too concerned about it it's not that big of a -- I think for Wells Fargo.
Well -- Poll you know the other thing that's at 2012 Oracle also specially to a bank like Wells Fargo is that boom.
-- refinancing but can't go on forever and can account -- -- so much this year right.
Yeah I think that's what -- the other concerns is that the pipeline of applications is down 20%.
A lot of people pointing at that saying that that they're the refi boom is is on -- -- arm is starting to decline.
No word on the opposite side of that trade we believe the -- -- is gonna remain very robust throughout 2014.
In the profitability is also to remain.
An elevated level levels just because there's so many people have an economic instead of the refi.
And capacity is unable to grow because of all the regulation out there that's brand new relative we were a couple years ago.
That's what -- the -- we really like mortgage banking but you're right that's that's causing some of the new wasted people trade that off also today.
Activists which is -- a -- poll of five year anniversary of the Bank of America.
Teaming up taking over countrywide.
Graphic up -- happy fifth -- -- -- Is this going to be considered probably one of V worst.
You know contracts or.
Acquisitions in corporate history certainly in banking history.
Yeah I'm not so -- that's torn up to judge corporate history but it's that we going to be probably up there and if AME I think the last count -- they've lost over forty billion dollars -- -- transaction.
Com yes it was a very poorly time the transaction countrywide should have been left to fail yeah everybody would have been better off of that company -- DNA would have none of these issues yeah all of the today's problems have come from that country what acquisition -- Ken Lewis thinks about that every -- all right pulled -- thank you so much for joining us appreciate it.
Yes thank you.
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