Wells Fargo posts profits, again.

What the brains are reporting
BR Capital Markets analysts on Thursday upgraded Wells Fargo & Co.(WFC 27.88, -0.13, -0.45%) to market perform from underperform and raised its target price to $26 from $21, saying earnings continue to surprise on the upside. “The big takeaways from the quarter are flat revenues and stabilizing total credit losses,” FBR said in a note. Wells Fargo on Wednesday said it swung to a fourth-quarter profit that beat analyst expectations. The stock was up about 1% in early trading Thursday.
Fourth-quarter earnings at the four major commercial banks show a divide between those that achieved profitability (JPMorgan Chase(NYSE: JPM) and Wells Fargo (NYSE: WFC)) and those that didn’t (Bank of America (NYSE: BAC) and Citigroup (NYSE: C)). Nevertheless, even in the “lead pack,” loan loss rates continued to rise across virtually every loan category. Should Wells Fargo shareholders be concerned?
Shares look cheap
The risk of further credit losses at quality banking institutions is offset by share valuations, which look pretty cheap … on the basis of “normalized” earnings that are probably a couple of years down the road (see table). Last week, for example, value guru Bill Miller of Legg Mason (NYSE: LM)spoke approvingly of the shares of JPMorgan Chase and Bank of America. As far as Wells Fargo is concerned, I continue to believe the acquisition of Wachovia will add enormous value to the franchise over the long term.
What the mouth is saying

(Video) Wells Fargo on repaying TARP funds.
What the hand is doing
Wells Fargo Postit Note

Believe me, once that “normalization” process starts. Meaning that Wells Fargo actually has to value its crap-tastic assets at market value, we should see some pretty painful news again.