QUOTE AND NEWS
Motley Fool  Oct 3  Comment 
How Wells Fargo ascended to the top of the five largest mortgage originators in America.
Reuters  Oct 1  Comment 
Wells Fargo Bank and Citigroup's mortgage unit must face claims that they violated federal law by falsely notifying credit reporting agencies that thousands of homeowners went through bankruptcies or foreclosures, a federal judge has ruled.
Benzinga  Oct 1  Comment 
C.H. Robinson Worldwide, Inc. (NASDAQ: CHRW) coverage was resumed on Wednesday by Wells Fargo Securities with a Market Perform rating and a valuation range of $69 to $71. The Wells Fargo report observed that pressures from growing competition...
Forbes  Sep 30  Comment 
Perhaps marking a new focus on what has been described as the "netherworld" of Wall Street, the Securities and Exchange Commission has charged two former Wells Fargo employees with violating federal securities laws by using knowledge of nonpublic...
Benzinga  Sep 29  Comment 
Shares of Lumos Networks Corp (NASDAQ: LMOS) experienced a sharp rise in share price Monday afternoon following takeover comments from Dealreporter stating, “Lumos said to begin sale process.” Beginning around 1:00 p.m. EDT, shares of...
Mondo Visione  Sep 29  Comment 
The Securities and Exchange Commission today announced insider trading charges against two former Wells Fargo employees involved in an alleged scheme to profit by buying or short selling a stock before research analyst reports were published...
Forbes  Sep 29  Comment 
Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Wells Fargo & Co. (NYSE: WFC). So this week we highlight one interesting put contract, and one interesting call contract, from...
Market Intelligence Center  Sep 29  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center  are highlighting two trades on Wells Fargo & Co (WFC) today after it closed at $51.87 on Friday. For more conservative...
Motley Fool  Sep 28  Comment 
The key to a successful bank boils down to culture, and that's something that doesn't just change overnight.
Jutia Group  Sep 26  Comment 
[Business Wire] - The Wells Fargo Advantage Income Opportunities Fund , the Wells Fargo Advantage Multi-Sector Income Fund , and the Wells Fargo Advantage Utilities and Read more on this. Wells Fargo & Company (WFC), valued at $270.78B, opened at...




 

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
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