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It's certainly true that book value is not enough information--in general.
In this case we're just using it as a roundabout way of calculating ROE,
which is certainly the most important single number for spotting a good business.
(I'm including in that the returns on both old and newly invested capital)

In the cast of Wells, the book and its trajectory still give quite a good insight
because it makes visible their very high return on equity, which in
turn is a result of their high earning power.
Current value is a function of current earning power, and future value
is a function of return on newly invested capital (and average capital base).
Wells does very well on both of those, it seems.

Unusually high return on assets for the industry, plus leverage at unusually low cost of funding.
So long as they don't blow up (they did survive the crunch at least), they're a money spinner.
Plus, very cheap at barely over 10x current on-trend EPS of that earning power.
Very slowly I begin to appreciate Mr Buffett's fondness for them.
To paraphrase, if you simply manage mostly to avoid doing really dumb things, banking is a great business.

Jim
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