Wells Fargo

Overview: Wells Fargo is large diversified financial services company headquartered in San Francisco whose major lines of business include:

  • Banking
  • Insurance
  • Investments
  • Mortgages

Job Openings: See this current list of job openings.

Recent History: At the end of 2010, Wells Fargo had the most bank branches in the U.S., with 6,314. Bank of America was second with 5,856 while also planning to close about 10% of them. Meanwhile, JPMorgan Chase (5,286 retail bank branches) plans to add up to 2,000 new branches over five years, looking to surpass Wells Fargo as number one in California, Florida and probably also Texas, while maintaining its dominant position in New York. Source: Bloomberg Businessweek, 6/27/2011.

In July 2010, Wells Fargo announced the closure of its consumer finance unit, Wells Fargo Financial, headquartered in Des Moines, Iowa. Wells Fargo Financial catered primarily to “non-prime” (subprime) business and retail customers, offering auto finance, secured real estate lending, consumer and private-label credit cards, and commercial services. Approximately 3,800 employees of this unit will be laid off, with the remaining 10,000 or so redeployed elsewhere within the company. Loan products formerly offered through the Wells Fargo Financial unit will instead be sold through Wells Fargo bank branches and home mortgage stores. Wells Fargo Financial already had shrunk from 19,500 employees and 1,025 employees as of June 2008 to 14,000 employees and 638 locations as of June 2010.

Wachovia Merger: In 2008, Wells Fargo agreed to acquire Wachovia on October 3, 2008 for $15.1 billion in stock. By October 12, 2008, when the Federal Reserve gave the final regulatory approval, the value of this offer had declined to $11.7 billion, after a week of major declines in stock prices. The merger more than doubled Wells Fargo in size and extended its geographic reach to 39 states, as far as bank branches are concerned. It also makes Wells Fargo a major national player in securities brokerage.

In 2011, Wells Fargo began rebranding all Wachovia banking and brokerage locations with new signage reading Wells Fargo. By May 2011, this was accomplished in New York, New Jersey, Connecticut, Delaware and Pennsylvania. Florida locations are scheduled to be rebranded in June and July.

Wachovia’s Charlotte, NC headquarters became the new headquarters for Wells Fargo banking operations in the East. Wells Fargo Advisors, formerly Wachovia Securities, remained headquartered in St. Louis, MO.

In December 2009, Wells Fargo paid $4.5 billion to Prudential Financial for the latter’s 38% minority stake in what is now called Wells Fargo Advisors.

Citigroup threatened a $60 billion breach of contract suit, based on its earlier (September 29, 2008) offer to acquire just the banking operations of Wachovia. This suit effectively has been dropped under pressure from federal regulators.

Size: Wells Fargo reports these pre-merger figures as of June 30, 2008:

  • Employees = 160,000
  • Assets = $609 billion
  • Deposits = $339 billion
  • Assets Under Management (Mutual Funds) = $151 billion
  • Customers = 28 million
  • Stores (Locations) = 5,941
  • ATMs = 6,950

The combined Wells Fargo and Wachovia would have these metrics as of June 30, 2008:

  • Employees = 280,000 (actually about 271,000 as of June 30, 2010)
  • Assets = $1.42 trillion
  • Deposits = $787 billion
  • Assets Under Management (Mutual Funds) = $258 billion
  • Customers = 48 million (contains overlap)
  • Stores (Locations) = 10,761
  • ATMs = 12,227

All the following figures are from pre-merger Wells Fargo:

Regional Banking:

  • Stores (locations) = 3,327
  • Customers = 11.2 million households
  • Presence in 23 states

Home Mortgage:

  • Stores (locations) = 2,400
  • Customers = 7.9 million
  • Originations = $272 billion in 2007
  • Portfolio = $1.53 trillion in 2007
  • Presence in 50 states, including via the Internet

Card Services:

  • Accounts = 7.8 million credit, 20.4 million debit
  • Outstandings = $12.5 billion

Personal Credit Management (personal loans):

  • Accounts = 1.5 million
  • Balances = $7.7 billion

Home Equity:

  • Customers = 1.5 million households
  • Portfolio = 84 billion
  • Second-largest prime home lender in the U.S., with distribution in 50 states

Wealth Management Group:

  • Brokerage
  • Investment Management
  • Trust and Estate Services
  • Private Banking
  • Insurance
  • Clients = 923,000
  • Assets = $256 billion

Fortune magazine ranks pre-merger Wells Fargo among U.S. companies as:

  • Number 17 in profits
  • Number 41 in revenues
  • Number 33 in employees

Positives: Wells Fargo has remained strongly profitable through the credit crisis. This points to sound business practices and management. The company also has received numerous accolades:

  • The highest credit ratings granted by Standard & Poor’s and Moody’s
  • The 18th most valuable brand in the world, per the Financial Times
  • The 16th most admired company in the world, per Barron’s
  • One of the top 50 places to launch a career, per Business Week
  • Various awards for diversity, including opportunities for executive women

Analysts appear to agree that the Wells Fargo offer for Wachovia would be a strategic win. Meanwhile, shares of Citigroup fell sharply when its offer apparently lost.

Wells Fargo will receive a $25 billion equity infusion from the Treasury Department pursuant to the $700 billion financial rescue package. This will solidify its already strong financial position even further.

Negatives: Wells Fargo has been building loan loss reserves and extending payment terms on delinquent loans. This may point to some hidden problems. On the other hand, the company reports that its efforts to work with customers who are in arrears has resulted in some recoveries.

The Wachovia deal required about $10 billion of merger and integration costs, a large exposure. Additionally, unlike an earlier offer from Citigroup, Wachovia was absorbed by Wells Fargo with no assistance from the FDIC in covering bad loans. Lastly, the former Wachovia Securities has been under federal probe for possible illegal business practices.

Headcount on June 30, 2012 was 265,000, down 3.6% from the prior year.

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