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Wells Fargo & Co.

Type	Public (NYSE: WFC)
Founded	New York City, New York, U.S. (March 18, 1852) (1929 by Merger with Norwest)
Headquarters	San Francisco, California, U.S.
Key people	John G. Stumpf (Chairman, President and CEO)
Industry	Banking Financial Services
Products	Retail banking Investment banking Commercial banking Mortgages Consumer finance Insurance Payday advance
Revenue	▲US$52.38 billion (2008)
Net income	▼US$8.49 billion (2008)
Total assets	▲ US$1.284 trillion (July '09)[1]
Total equity	▲ US$99.08 billion (2008)[2]
Employees	276,000 (2009)
Website	WellsFargo.com

An older Wells Fargo branch, located in Berkeley, CA

Wells Fargo's corporate headquarters in San Francisco, CA

Wells Fargo & Co. is a diversified financial services company with operations around the world. Wells Fargo is the fourth largest bank in the US by assets and the third largest bank by market cap.^[3] Wells Fargo is the second largest bank in deposits, home mortgage servicing, and debit card. In 2007 it was the only bank in the United States to be rated AAA by S&P ^[4], though its rating has since been lowered to AA-^[5] in light of the 2008 Financial Crisis.

Headquartered in San Francisco, California (its bank, Wells Fargo Bank, N.A., is legally chartered in Sioux Falls, South Dakota), Wells Fargo is a result of an acquisition of California-based Wells Fargo & Co. by Minneapolis-based Norwest Corporation in 1998. The new company chose to keep the name Wells Fargo, to capitalize on the 150-year history of the nationally-recognized Wells Fargo name and its trademark stagecoach. After the merger, the company maintained its headquarters in San Francisco and charter in Sioux Falls.

As of 2009, Wells Fargo has 6,650 retail branches (called stores by Wells Fargo), 12,260 automated teller machines, 276,000 employees and over 48 million customers.^[6] Wells Fargo currently operates stores and ATMs under the Wells Fargo and Wachovia names.

Wells Fargo is one of the Big Four banks of the United States with Bank of America, Citigroup and JP Morgan Chase.^{[7][8][9][10][11][12][13]}

Lines of business

Wells Fargo offers a range of financial services in over 80 different business lines.^[14] Wells Fargo delineates three different business segments when reporting results: Retail Banking, Wholesale Banking, and Consumer Finance.

Community banking

The Community Banking segment includes Regional Banking, Wealth Management Group, Diversified Products and the Consumer Deposits groups.

Wells Fargo also has around 9,400 stand alone mortgage branches throughout the country. It also does mortgage wholesale lending through independent mortgage brokers.

Wells Fargo in Laredo, Texas, is located near Mall Del Norte.

Brokerage

Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC and Wells Fargo Advisors (previously known as Wachovia Securities). It also offers mutual funds under the Wells Fargo Advantage brand name and Evergreen Funds.

Calibre

Calibre is a subsidiary that Wells Fargo currently uses for its wealth management services to ultra-high net worth families with net worth exceeding $25 million. Calibre was acquired as part of the purchase of Wachovia.^[15]

Internet services

Wells Fargo launched its personal computer banking service in 1989 and was the first bank to introduce access to banking accounts on the web in May 1995.

Wells Fargo's Business Online Banking gives small business owners all the services available to consumers, plus services designed specifically for businesses.

The new Wells Fargo vSafe service offers online storage of documents.

Wholesale

The Wholesale Banking segment contains products sold to large and middle market commercial companies, as well as to consumers on a wholesale basis. This includes lending, treasury management, mutual funds, asset-based lending, commercial real estate,corporate and institutional trust services, and investment banking through Wells Fargo Securities. The company also owns Barington Associates, a middle market investment bank. Wells Fargo historically has avoided large corporate loans as stand-alone products, instead requiring that borrowers purchase other products along with loans—which the bank sees as a loss leader. One area that is very profitable to Wells, however, is asset-based lending: lending to large companies using assets as collateral that are not normally used in other loans. This can be compared to subprime lending, but on a corporate level. The main business unit associated with this activity is Wells Fargo Capital Finance. Wells Fargo also owns Eastdil Secured, which is described as a "real estate investment bank" but is essentially one of the largest commercial real estate brokers for very large transactions (such as the purchase and sale of large Class-A office buildings in central business districts throughout the United States).

Consumer finance

Wells Fargo Financial is the consumer finance segment. It engages in lending through over 1,000 branches throughout the U.S. and in certain other countries. This division also engages in "indirect lending" for such organizations as furniture retailers. This business is based out of Des Moines, Iowa. Norwest purchased DIAL Finance before its acquisition with Wells Fargo. The Home Mortgage group is based out of West Des Moines, Iowa.

Business model

A map of states where Wells Fargo operates retail banks under the Wells Fargo and Wachovia names

The present business model of Wells Fargo is summed up in its vision statement: "We want to satisfy all of our customers' financial needs, help them succeed financially, be the premier provider of financial services in every one of our markets, and be known as one of America's great companies."^[16]

Wells Fargo's goal is to encourage its customers to buy all their financial products through Wells Fargo: "We want to earn 100 percent of our customers' business. The more products customers have with Wells Fargo the better deal they get, the more loyal they are, and the longer they stay with the company, improving retention. Eighty percent of our revenue growth comes from selling more products to existing customers. Our goal: sell at least eight products to every customer."^[17]

This is a concept known as "cross-selling," or as Wells Fargo refers to it, "needs-based selling," which is popular in the financial services industry. While earlier companies, such as Prudential, pioneered the concept of selling a variety of products, they acted merely as holding companies and each product was sold through its own distribution channel. However, predecessor Norwest pioneered selling all its products through all its channels, with discounts given to those who purchase a larger variety.

The average "cross-sell ratio" for a financial institution is two (based on an average American consumer owning sixteen different financial products from eight different institutions). Wells Fargo purports to have a cross-sell ratio of 5.5 (2007 data) products per Community Banking household (almost one in five have more than eight), 6.1 (2007 data) for Wholesale Banking customers, and the average middle-market commercial banking customer has more than seven products, which is among the highest in the country.^[18] (Washington Mutual was beating them at the end of 2003 with a 5.59 ratio.^[19])

Global Presence

Wells Fargo has a presence in India as well. Wells Fargo India Solutions (WFIS) is a wholly owned subsidiary of Wells Fargo. WFIS is an extended arm of the organization created to support the needs for expansion in technology and business processes. Set up in September 2006 in Hyderabad, India, it is already operating out of two facilities in the city and has people strength of over 950. Its two Offices are located at Raheja MindSpace, Hitech City, and Maytas Hill County SEZ, Bachupally respectively.

History

The current Wells Fargo is a result of a 1998 merger between Minneapolis-based Norwest Corporation and the original Wells Fargo.^[20] Although Norwest was the nominal survivor, the new company kept the Wells Fargo name to capitalize on the long history of the nationally-recognized Wells Fargo name and its trademark stagecoach (the company's slogan, "The Next Stage," is a nod to the company's wagons-west motif). After the acquisition, the parent company moved its headquarters to San Francisco.

Wachovia acquisition superseding plans by Citigroup

On October 3, 2008, Wachovia agreed to be bought by Wells Fargo for about $14.8B in an all stock transaction. This news came four days after the FDIC made moves to have Citigroup buy Wachovia for $2.1B. Citigroup protested Wachovia's agreement to sell itself to Wells Fargo and threatened legal action over the matter. However, the deal with Wells Fargo is expected to overwhelmingly win shareholder approval as it values Wachovia at about 7 times what the Citigroup deal valued Wachovia. To further ensure shareholder approval, Wachovia issued Wells Fargo with preferred stock that holds 39.9% of the voting power in the company.^[21] On October 4, 2008, a New York state judge issued a temporary injunction blocking the transaction from going forward while the situation was sorted out.^[22] Citigroup alleges that they had an exclusivity agreement with Wachovia that barred Wachovia from negotiating with other potential buyers. The injunction was overturned late in the evening on October 5, 2008, by New York state appeals court.^[23]

Citigroup and Wells Fargo had entered into negotiations brokered by the FDIC to reach an amicable solution to the impasse. Those negotiations failed, however. Sources say that Citigroup was unwilling to take on more risk than the $42B that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42B). While Citigroup was no longer attempting to block the merger, they indicated they will seek damages of $60B for breach of an alleged exclusivity agreement with Wachovia.^[24]

Corporate predecessors

The holding company was previously known as Norwest Corporation and before that as Northwestern National Bank (BANCO). Norwest was "one of the most acquisitive banks of the 1990s...."^[25] Most of the management and the business model of the present day Wells Fargo come from Norwest Bank, and the stock history of Wells Fargo is that of Norwest.

Selected predecessor companies

• Crocker National Bank
• First Interstate Bancorp
• First Security Corporation
• Norwest Corporation
• Wachovia Corporation

2008 Financial crisis

On October 28, 2008, Wells Fargo and Company was the recipient of $25B of the Emergency Economic Stabilization Act Federal bail-out in the form of a preferred stock purchase.^[26][27] Recent tests by the Federal government revealed that Wells Fargo needs an additional 13.7 billion dollars in order to remain well capitalized if the economy were to deteriorate further under stress test scenarios. On May 11, 2009 Wells Fargo announced an additional stock offering which was completed on May 13, 2009 raising $8.6 billion in capital. The remaining $4.9 billion in capital is planned to be raised through earnings.

Key dates

• 1852: Henry Wells and William G. Fargo (Mayor of Buffalo, NY from 1862-63 and again from 1864-65), the two founders of American Express, form Wells Fargo & Company to provide express and banking services to California.
• 1860: Wells Fargo gains control of Butterfield Overland Mail Company, leading to operation of the western portion of the Pony Express.
• 1866: 'Grand consolidation' unites Wells Fargo, Holladay, and Overland Mail stage lines under the Wells Fargo name.
• 1904: A.P. Giannini creates the Bank of Italy in San Francisco.
• 1905: Wells Fargo separates its banking and express operations; Wells Fargo's bank is merged with the Nevada National Bank to form the Wells Fargo Nevada National Bank.
• 1918: As a wartime measure, the U.S. government nationalizes Wells Fargo's express franchise into a government agency known as the American Railway Express Agency. The government takes control of the express company. The bank begins rebuilding but with a focus on commercial markets.
• 1923: Wells Fargo Nevada merges with the Union Trust Company to form the Wells Fargo Bank & Union Trust Company.
• 1928: Giannini forms Transamerica Corporation as a holding company for his banking and other interests.
• 1929: Northwest Bancorporation, or Banco, is formed as a banking association.
• 1954: Wells shortens its name to Wells Fargo Bank.
• 1957: Transamerica spins off its banking operations, including 23 banks in 11 western states, as Firstamerica Corporation.
• 1960: Wells Fargo merges with American Trust Company to form the Wells Fargo Bank American Trust Company.
• 1961: Firstamerica changes its name to Western Bancorporation.
• 1962: Wells again shortens its name to Wells Fargo Bank.
• 1968: Wells converts to a federal banking charter, becoming Wells Fargo Bank, N.A.
• 1969: Wells Fargo & Company holding company is formed, with Wells Fargo Bank as its main subsidiary.
• 1981: Western Bancorporation changes its name to First Interstate Bancorp.
• 1982: Banco acquires consumer finance firm Dial Finance which is renamed Norwest Financial Service the following year.
• 1983: Banco is renamed Norwest Corporation.
• 1983: Largest U.S. bank heist to date takes place at a Wells Fargo depot in West Hartford, Connecticut.
• 1986: Wells Fargo acquires Crocker National Corporation from Midland Bank.
• 1987: Wells Fargo acquires the personal trust business of Bank of America.
• 1988: Wells Fargo acquires Barclays Bank of California from Barclays plc.
• 1995: Wells Fargo becomes the first major financial services firm to offer Internet banking.
• 1996: Wells Fargo acquires First Interstate for $17.3 billion.
• 1998: Wells Fargo Bank merges with Norwest Corp. of Minneapolis. Norwest changes its name to Wells Fargo and moves to San Francisco.
• 2000: Wells Fargo acquires First Security Corporation.
• 2001: Wells Fargo acquires H.D. Vest Financial Services.
• 2007: Wells Fargo acquires CIT Construction.
• 2007: Wells Fargo acquires Placer Sierra Bank.
• 2007: Wells Fargo acquires Greater Bay Bancorp.
• 2008: Wells Fargo acquires Century Bank.
• 2008: Wells Fargo acquires Wachovia Corporation.
• 2009: Wells Fargo acquires North Coast Surety Insurance Services

Historical data

Asset & Liability

Asset/Liability Ratio

Net Income

^[28]

Wells Fargo Bank was the fifth largest bank at the end of 2008 as an individual bank. (Not including subsidiaries)

Environmental record

Wells Fargo has received awards for environment in Green Power Leadership Club, Partner of the Year 2007 and is in the top 25 of Green Power Partnership. In line with its commitment to the environment, Wells Fargo purchases renewable energy certificates (RECs) to support the generation of 550 million kilowatt-hours of clean, renewable wind energy per year. “This commitment reflects the desire of our team members to do what’s right for our customers, our communities, and our company. By purchasing RECs we are advancing our efforts to reduce our greenhouse gas emissions while doing our part to encourage the development of new renewable energy sources,” said Mary Wenzel, Vice President of Environmental Affairs. Through its green power purchase, Wells Fargo is helping to address important business and societal issues such as rising energy costs, poor air quality and climate change and taking steps toward achieving its goal of integrating environmental responsibility throughout the Company’s business practices and operations.^[29] Wells Fargo has also announced a ten-point environmental commitment to more effectively integrate environmental responsibility into its business practices and procedures.^[30]

Recent controversies

A Wells Fargo branch in Logan, Utah

Wells Fargo has attracted many vocal detractors who protest their business practices, customer service, fee levels, and other aspects of the company. There is even a project^[31] dedicated to tracking all alleged instances of corporate malfeasance, especially ongoing investigations into alleged predatory lending practices^[32] in Wells' mortgage division.

Wells Fargo has been the target of activist actions because they are one of the largest investors into the GEO Group.^[33][34] The GEO Group operates private prisons and immigrant detention facilities which have been criticized for serious abuses of detainees.^{[35] [36]}

In September 2003, New York State Attorney General Eliot Spitzer sought information about the lending practices of Wells Fargo and other national banks. Two suits seeking injunctive relief were filed against Spitzer, one by the Office of the Comptroller of Currency and one by the Clearinghouse association of banks, asserting that Spitzer had no authority to regulate the activities of national banks. The suits both resulted in the granting of injunctive relief preventing the continuation of Spitzer's efforts to obtain bank information, including Wells Fargo information.

In December 2005, the parachurch group Focus on the Family ended its banking relationship^[37] with Wells Fargo. This was due to Wells Fargo's support of the gay rights movement when the company announced that it was matching contributions to GLAAD. Wells Fargo continued the program and received widespread support in the face of the boycott, which had no other high-profile participants.

The relationship between the bank's Board of Directors and certain activist shareholders has at times been contentious. The Board of Directors has recommended voting against every single shareholder proposal since 2002.^{[citation needed]} Many of these proposals were warnings to the company, heeding them to stop predatory lending and other controversial practices.

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African-Americans and Hispanics into high-cost subprime loans. A Wells Fargo spokesman responded that “The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor…” ^[38]

Wells Fargo corporate buildings

• Wells Fargo Center in Los Angeles, California
• Wells Fargo Place in Saint Paul, MN
• Wells Fargo Center in Minneapolis, MN
• Wells Fargo Center in Denver, CO
• Wells Fargo Center in West Des Moines, IA
• Wells Fargo Center in Austin, TX
• Wells Fargo Plaza in Houston, TX
• Wells Fargo Plaza in Phoenix, Arizona
• Wells Fargo Center in Portland, OR
• Wells Fargo Center in Salt Lake City, UT
• Wells Fargo Center in Sacramento, CA
• Wells Fargo Headquarters in San Francisco, CA
• Wells Fargo Plaza in El Paso, TX
• Wells Fargo Plaza in Tacoma, WA
• Wells Fargo Center in Albuquerque, NM
• Wells Fargo Tower in Colorado Springs, CO
• Wells Fargo Center in Seattle, WA
• Wells Fargo Center in Boise, ID
• Wells Fargo Center in Spokane, WA
• One Wachovia Center in Charlotte, North Carolina
• Duke Energy Center (Formerly; Wachovia Corporate Center) in Charlotte - Wells Fargo owns and occupies space in the building^[39]

Wachovia headquarters - North Carolina, will succeed as Headquarters for East Coast Operations of Wells Fargo[39][40]

Wells Fargo Center in Los Angeles

Wells Fargo Center in Minneapolis

Wells Fargo Center in Denver

See also

San Francisco Bay Area portal

Companies portal

• Stagecoach
• Butterfield Stage
• Pony Express
• Wells Fargo Center
• Wells Fargo Arena
• History of Wells Fargo
• List of Wells Fargo Directors
• List of Wells Fargo Presidents
• GEO Group Controversy

Notes

References

• "Frequently Asked Questions." Wells Fargo History. URL accessed 26 October 2005.
• "Is there a way to look up relatives who may have worked as stagecoach drivers for Wells Fargo?" Wells Fargo History. URL accessed 26 October 2005.
• Mehta, Julie. "Merger means a bigger bank but uncertainty for employees." Cupertino Courier. 31 January 1996. URL accessed 26 October 2005.
• Segal, Dave. "Both CB Bancshares' Ronald Migita and Central Pacific's Clint Arnoldus have been through bruising bank battles before." Honolulu Star-Bulletin. 13 July 2003. URL accessed 26 October 2005.
• Svaldi, Aldo. "Wells Fargo learned hard way about deals." Denver Business Journal. 12 June 1998. URL accessed 26 October 2005.
• Vault.com. "Wells Fargo Company Profile." Excite Careers. 2000. URL accessed 26 October 2005.
• Baker, David R. "When hostile takeovers backfire." San Francisco Chronicle. 19 December 2004. p. C1. URL accessed 26 October 2005.
• In July 2007 Wells Fargo Insurance Services Inc.. was ranked fifth in Business Insurance's world's largest brokers list.
• Wells Fargo Buying Placer Sierra Banks [3]
• Wells Fargo buys bank: Greater Bay has 41 branches in the Bay Area [4]

External links

• Media related to Wells Fargo at Wikimedia Commons
• Wells Fargo Home Page