Wells Fargo

Wells Fargo & Co.

Type	Public (NYSE: WFC)
Founded	New York, New York, USA (March 18, 1852)
Headquarters	San Francisco, California
Key people	Dick Kovacevich, Chairman John Stumpf, President and CEO
Products	Retail Banking Insurance Payday advance Mortgages Consumer Finance Corporate and Investment Banking
Revenue	▲US $39.390 billion (2007)
Net income	▲$8.057 billion USD (2007) [1]
Total assets	US$ 1.42 trillion (2008)[2]
Employees	167,500 (2008)[3]
Website	www.wellsfargo.com

Wells Fargo & Co. (NYSE: WFC) is a diversified financial services company headquartered in San Francisco, California, United States with operations around the world. Wells Fargo is the 4th largest bank in the US by assets and the largest bank by market cap.^[4] It is the only bank in the United States to be rated AAA by S&P.^[5]

Wells Fargo was named as "The World's Safest US Bank" based on long-term foreign currency ratings from Fitch Ratings and Standard & Poor's and the long-term bank deposit ratings from Moody’s Investors Service for the year 2007.^[6]

The current Wells Fargo is a result of a 1998 merger between Minneapolis-based Norwest Corporation and the original Wells Fargo.^[7] 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.

As of 2008, Wells Fargo has 5,983 retail branches,^[3] 3,327 banking branches,^[3] 160,900 employees^[3] and over 23 million customers.

On October 3, 2008, Wells Fargo announced it had agreed to acquire Wachovia for $15.1 billion in stock. Previously, Wachovia had announced talks with Citigroup on September 29 to sell off its core banking business for $2.2 billion, retaining Wachovia Securities and other brokerage services, in a deal brokered by the Federal Deposit Insurance Corporation. Wachovia preferred the Wells Fargo deal as it keeps the banking and brokerage businesses together, it provides shareholders with a better deal, and the deal does not require assistance from the Federal government as the Citigroup deal would have. Citigroup had demanded that Wachovia and Wells Fargo cease discussions, citing an exclusivity agreement between Citigroup and Wachovia.^[8] However, on Oct 9, 2008, Citigroup announced that they would no longer try to block the merger and Wells Fargo bought all of Wachovia.^[9] Citigroup is still exploring their options and has indicated that they will seek damages from the exclusivity violation.

Contents 1 Lines of business 1.1 Community banking 1.1.1 Internet services 1.2 Wholesale 1.3 Consumer finance 2 Environmental Record 3 Business model 4 Wells Fargo corporate buildings 5 History 5.1 Key dates 6 Wachovia Merger 6.1 Corporate predecessors 7 Recent controversies 8 See also 9 Notes 10 References 11 External links

Lines of business

Wells Fargo offers a range of financial services in over 80 different business lines. ^[10] In addition, the company claims to be one of the most "integrated" of financial services companies. For example, Wells Fargo investment employees sit in retail locations.

Wells Fargo delineates three different business segments when reporting results: Retail Banking, Wholesale Banking, and Consumer Finance. This is unlike many other financial services companies which provide more detail about particular businesses or product lines.

Community banking

The Community Banking segment includes Regional Banking, Wealth Management Group, Diversified Products and the Consumer Deposits groups. Wells Fargo consumer clients are encouraged to purchase multiple-product packages offering preferred client discounts. Examples of such packages are:

• "Wells Fargo Premium Membership Account" tied to payroll direct deposit from a participating employer;
• "Wells Fargo Complete Advantage Account" tied to balances in multiple deposit accounts, loans, or a home mortgage;
• "Wells Fargo Portfolio Management Account" tied to balances in brokerage accounts, IRAs, deposits, and loans.

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

Internet services

Wells Fargo launched its PC banking service in 1989 and was the first bank to introduce access to banking accounts on the web in May 1995. Using Wells Fargo's Online Banking, consumers can pay bills to anyone in the U.S., trade securities, view their account information, and transfer money between their Wells Fargo accounts or to other Wells Fargo account holders. In addition to banking and trading online, the online service lets customers apply for new accounts and products, find the nearest ATM or store/branch, change their address, view canceled checks, deposits and statements, enroll in account alerts, track their spending habits through Wells Fargo's "My Spending Report" and set and track savings goals with "My Savings Plan". To protect customers from fraud, Wells Fargo introduced e-mail sent to your online banking or personal e-mail and send wireless alerts if high-risk transactions are detected.

Wells Fargo's Business Online Banking gives small business owners all the services available to consumers, plus access to reporting tools and services to help them manage their business finances. New offerings, such as account-based alerts, check images, spending reports, delegation, and payment suite functionality have been designed specifically for businesses.

Wells Fargo has also released a virtual community called "Stagecoach Island" This online community appears to be very similar to the wildly popular "Second Life" produced by Linden Lab; however no mention of Second Life is made on the Stagecoach island website.

Wells also offers mobile access to your checking account, credit card, home equity line, and more.

The new Wells Fargo vSafe service offers secure online storage for you to safeguard, organize, and access electronic copies of important documents—from birth certificates and immunization records to wills and treasured photos.

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. 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 brand name for this activity is "Wells Fargo Foothill," and is regularly marketed in tombstone ads in the Wall Street Journal. 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. Wells Fargo Financial's core product is sub-prime mortgage lending. Other products include auto secured lending, personal lines of credit and unsecured credit cards. Team members generate sales by telephone solicitaion of current Wells Fargo Financial customers using the company developed program "ELeads".

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. ^[11]Wells Fargo has also announced a ten-point environmental commitment to more effectively integrate environmental responsibility into its business practices and procedures. ^[12]

Business model

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."^[13]

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."^[14]

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.^[15] (Washington Mutual was beating them at the end of 2003 with a 5.59 ratio.^[16]) Achieving such a high cross-sell ratio would result in a financial services version of the "agglomerator" business model, most popular among the big-box retailers, such as Home Depot, Office Depot, and Wal-Mart. In order to facilitate achievement of this goal, Wells Fargo lobbied hard for deregulation of the banking industry, and for repeal of many of the laws that were passed during the Great Depression like the Glass-Steagall Act.

Wells Fargo corporate buildings

• Wells Fargo Center (Los Angeles) 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 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 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

History

Main article: History of Wells Fargo

Key dates

• 1852: Henry Wells and William G. Fargo, 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
• 2008: Wells Fargo agrees to acquire Century Bank thereby making Arkansas its 24th community banking state.
• 2008: Wells Fargo agrees to buy Wachovia Corp for $15.4 Billion.

Wachovia Merger

On October 3, 2008 Wachovia agreed to be bought by Wells Fargo for about $14.8bn in an all stock transaction. This news comes four days after the FDIC made moves to have Citigroup buy Wachovia for $2.1bn. Citigroup has protested Wachovia's agreement to sell itself to Wells Fargo and has 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 has issued Wells Fargo with preferred stock that holds 39.9% of the voting power in the company.^[17] On October 4, 2008 a New York judge issued a temporary injunction blocking the transaction from going forward while the situation is sorted out.^[18] Citigroup alleges that they had an exclusivity agreement with Wachovia which 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.^[19]

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 is no longer attempting to block the merger, they have indicated they will seek damages of $60B for breach of an alleged exclusivity agreement with Wachovia.^[20]

Corporate predecessors

Wells Fargo & Company is an agglomeration of more than 2,000 mergers. 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...."^[21] 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
• Norwest Corporation

Recent controversies

Like many large-scale companies, 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^[22] dedicated to tracking all alleged instances of corporate malfeasance, especially ongoing investigations into alleged predatory lending practices^[23] 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.^[24][25] The GEO Group operates private prisons and immigrant detention facilities which have been criticized for serious abuses of detainees. ^{[26] [27]} Also see GEO Group Controversy

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^[28] 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 its shareholders has at times been contentious. The Board of Directors has recommended voting against every single shareholder proposal since 2002. ^[29] Many of these proposals were warnings to the company, heeding them to stop predatory lending and other controversial practices.

See also

• 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

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.

External links

• Wells Fargo corporate About page
• Wells Fargo Location Finder
• Wells Fargo Stagecoach Island Community
• Wells Fargo Advantage Funds
• An independent Wells Fargo Location Finder
• Wells Fargo history FAQ
• WFC: Profile for WELLS FARGO & CO (Yahoo! Finance)
• Wells Fargo Blogs An index of blogs by Wells Fargo.
• wellsfargoproblems.org Claims of predatory lending by WF, from the ACORN organization
• Landlord-Success.com Examples of Wells Fargo's abusive treatment of its customers.
• Wells Fargo Corporate Social Responsibility
• Wells Fargo’s Corporate Citizenship Report
• Wells Fargo Historical Services

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