WFC-PY

Wells Fargo Series Y preferred offers solid yield from the fourth-largest U.S. bank. Wells Fargo's journey through the fake accounts scandal and subsequent regulatory consent orders has been painful for shareholders, but the bank has emerged with stronger compliance systems, a new management team under CEO Charlie Scharf, and a business that generates consistent earnings.

The asset cap imposed by the Federal Reserve after the scandal still constrains Wells Fargo's growth, but it has not impaired the bank's ability to pay preferred dividends. If anything, the cap has forced the bank to improve efficiency rather than grow through asset accumulation. When the cap is eventually lifted, it will be a positive catalyst for all Wells Fargo securities.

WFC preferreds trade at a slight yield premium to JPM and BAC, reflecting the residual reputational and regulatory risk. For investors who believe the worst is behind Wells Fargo, this premium represents an opportunity rather than a warning.