QUOTE AND NEWS
Motley Fool  8 hrs ago  Comment 
How has Wells Fargo been able to survive and thrive over the past decade? Here are seven factors that contributed to its success.
Motley Fool  9 hrs ago  Comment 
This dividend-paying bank stock had a great year in 2014. Could it produce another great year?
Jutia Group  Dec 19  Comment 
[Reuters] - U.S. homeowners suing mortgage companies once owned by a bank Wells Fargo & Co later acquired won a $54.8 million verdict on Friday in a class action over excessive fees. The verdict, by a federal jury ... Read more on this. Wells...
Mondo Visione  Dec 18  Comment 
The Financial Industry Regulatory Authority (FINRA) today announced that it has ordered two St. Louis-based broker-dealers under common control, Wells Fargo Advisors (WFA) and Wells Fargo Advisors Financial Network (WFAFN), to pay a joint fine of...
MarketWatch  Dec 18  Comment 
Wells Fargo is fined by the Financial Industry Regulatory Authority, or “Finra,” for its anti-money-laundering failures.
Forbes  Dec 18  Comment 
Comparing units outstanding versus one week ago at the coverage universe of ETFs at ETF Channel, the biggest inflow was seen in the Financial Select Sector SPDR Fund (XLF), which added 44,500,000 units, or a 5.5% increase week over week.  Among...
Jutia Group  Dec 18  Comment 
[Reuters] - Two brokerage units of Wells Fargo & Co must pay a joint $1.5 million fine for failing to comply with anti-money laundering regulations by not verifying 220,000 new accounts during a nine-year period, ... Read more on this. Wells...
Benzinga  Dec 18  Comment 
Shares of LinkedIn Corp (NYSE: LNKD) spiked up over 3 percent at Thursday’s open. The price action came amid Wells Fargo initiating coverage on the stock with an Outperform rating and valuation range of $260 to $270. Wells Fargo analysts...
Canada.com  Dec 18  Comment 
A new report forecasts the anticipated drop in investment banking fees from the energy sector will impact Wells Fargo and Citigroup the most




 

Wells Fargo & Company (NYSE:WFC), is the fourth largest bank holding company in the United States.[1] Wells Fargo & Company is best classified as a diversified financial services company, and with over 80 distinct businesses, Wells Fargo offers a full range of financial products and services and targets all types of clients, from individuals to large corporations in all 50 states as well as the District of Columbia. In 2010, Wells Fargo earned a total of $85 billion in total revenues and a net income of $12.4 billion.[2]

Wells Fargo became the nation's largest mortgage lender and the second-largest diversified financial services firm in the United States in term of deposits Stock:WFC after acquiring Wachovia (WB).[3][4] There was a legal dispute with the deal however, as Citigroup had sought to acquire Wachovia as well. Wells Fargo and Citigroup reached a settlement, with Wells Fargo paying Citigroup $100 million to settle the lawsuits.[5] Wells Fargo's sold $12.6 billion in common stock and $25 billion in preferred stock to the US Government through former U.S. Treasury Secretary Paulson's $700B Troubled Assets Relief Program (TARP) as part of the deal to raise enough cash for the acquisition.[6][7][8]

Company Overview

Dividend Earnings per Share

WFC COMMON SHARES DIVIDEND during the fiscal year of 2012 as seen below.

Record Date Payment Date Dividend Rate (USD)
23 FEB 2012 15 MAR 2012 $0.22
24 MAY 2012 15 JUN 2012 $0.22
23 AUG 2012 17 SEP 2012 $0.22
21 NOV 2012 17 DEC 2012 $0.22



Note: Paid March 31 / June 30 / Sept. 30 / Dec. 31

Trends and Forces

Wells Fargo has teamed up with Visa (V) to pilot test mobile payments system

Wells Fargo announced that it has teamed up with Visa to pilot test a mobile payments system using smartphones such as the iPhone and Blackberry. The pilot will be conducted by 200 employees of Wells Fargo in San Francisco, where both Visa and Wells Fargo are headquartered.[9] This announcement came shortly after three of the largest telecom carriers (AT&T (T), Verizon Communications (VZ), and T-Mobile announced a joint venture for mobile payments. The upcoming struggle for mobile payments dominance between credit card companies and telecom companies may have huge implications for future earnings as this market begins to develop.

Effects of housing market slowdown

Wells Fargo's mortgage lending business was hit by slow growth and falling residential real estate prices. The economy as a whole experienced the "home equity effect", where homeowners perceive their house values to be lower than they anticipated, and therefore perceive themselves to be relatively less wealthy. As a result, consumers spend and consume less. The number of total housing starts has fallen 63% since peak levels during the end of the housing boom.[10] Wells Fargo Home Mortgages have taken a setback, with higher provisions for credit losses offsetting revenue growth. However, Wells Fargo has been dealing with the mortgage setbacks relatively well due to its wide diversification in product offerings, which allows the company to compensate for poor performance in the home mortgage business.

Subprime bust avoidance

The housing slowdown is often attributed to the collapse of the subprime lending market. Subprime lending, or lending money to customers with poor credit scores (riskier borrowers), can lead to higher loan losses in harsh economic climates or during periods of stagnant or falling housing prices. As customers find themselves unable to make their debt payments, which are higher than average to begin with, defaults rise.

Wells Fargo has fared better than most competitors in the mortgage business, mainly because its mortgages are predominately prime and near-prime. As a result, Wells Fargo has not experienced high rates of default seen in the subprime market. Wells Fargo has avoided much of these losses by deciding not to extend or purchase option adjustable rate mortgages (option ARMs). However, Wachovia Bank, which was acquired by Wells Fargo, took part in Option ARMs and subprime lending.

Potential implementation of "Financial Crisis Responsibility Fee"

Obama announced a plan to tax the largest banks and financial institutions to recover TARP funds that the government used to bailout many of the banks. The proposed plan calls for a 0.15% tax on each firm's liabilities, excluding Tier 1 capital and those already insured by the FDIC, with the goal of raising $90 billion over ten years.[11] However, the financial institutions subject to this fee are limited to only those with over $50 billion in assets. If this plan gets passed into law, it could represent a substantial cost to Wells Fargo for up to ten years.

Competition

With 6,795 branches and $760 billion in total domestic deposits, Wells Fargo has the most offices and the second most deposits in the United States.[12] Since Wells Fargo focuses its business operations on the domestic U.S. market, its major nationwide competitors include Bank of America (BAC), JP Morgan Chase (JPM), and Citigroup (C). Wells Fargo's lack of international exposure contrasts with these top competitors. Although Wells Fargo holds assets overseas, its remains strongly focused on the United States domestic market. While this does allow Wells Fargo to focus its resources on gaining greater market share within the U.S., Wells Fargo is thereby more vulnerable to the U.S. economic cycles, as it does not have foreign markets to buffer domestic performance.

  • Bank of America (BAC) is the world's leading bank and financial holding company with over $907 billion in deposits and 6,238 offices within the United States.[12]
  • JP Morgan Chase (JPM) is one of the world's largest financial services companies, offering both investment banking as well as commercial banking. It has the third most deposits in the United States with $640 billion.[12]
  • Citigroup (C), another of the commercial banking giants, ranks fourth in the United States in terms of deposits with $321 billion.[12]



References

  1. WFC 10-K 2009 Item 1 Pg. 1
  2. Trading Markets "Wells Fargo and Wachovia Merger Completed" 1 January 2009
  3. Forbes "Bank of America drops Countrywide name" 27 April 2009
  4. Wells Fargo to pay Citi $100 million over Wachovia. Maria Aspan and Jonathan Stempel. Reuters.
  5. Wachovia Chooses Wells Fargo, Spurns Citi - WSJ.com
  6. Board of Governors of the Federal Reserve System "Press Release" 12 Oct 2008
  7. Forbes: Business Finance "UPDATE 3-Wells Fargo to raise $10 bln to fund Wachovia deal" 5 Nov 2008
  8. Wells Fargo, Visa Test Mobile Payments. Aparajita Saha-Bubna. The Wall Street Journal.
  9. Housing Economics "Housing Starts State & Metro Forecasts for 2008-2009"
  10. Obama proposes special fee on financial companies. Rex Nutting & Robert Schroeder. MarketWatch.
  11. 12.0 12.1 12.2 12.3 FDIC Summary of Deposits: June 30, 2009
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki