Wells Fargo - Wells Fargo Personal Banking Services

Wells Fargo & Company is an American multinational banking and financial services holding company which is headquartered in San Francisco, California, with "hubquarters" throughout the country. It is the fourth largest bank in the U.S. by assets and the second largest bank by market capitalization. Wells Fargo is the second largest bank in deposits, home mortgage servicing, and debit cards. In 2011, Wells Fargo was the 23rd largest company in the United States.

In 2007 it was the only bank in the United States to be rated AAA by S&P, though its rating has since been lowered to AA- in light of the financial crisis of 2007-08. The firm's primary U.S. operating subsidiary is national bank Wells Fargo Bank, N.A., which designates its main office as Sioux Falls, South Dakota.

Wells Fargo in its present form is a result of a merger between San Francisco-based Wells Fargo & Company and Minneapolis-based Norwest Corporation in 1998 and the subsequent 2008 acquisition of Charlotte-based Wachovia. Following the mergers, the company transferred its headquarters to Wells Fargo's headquarters in San Francisco and merged its operating subsidiary with Wells Fargo's operating subsidiary in Sioux Falls.

Wells Fargo is one of the "Big Four Banks" of the United States, along with JPMorgan Chase, Bank of America, and Citigroup--its main competitors. The company operates across 35 countries and has over 70 million customers globally. In 2012, it had more than 9,000 retail branches and over 12,000 automated teller machines in 39 states and the District of Columbia. As of April 14, 2015, Wells Fargo became the world's second biggest bank by market capitalization, worth $281 billion, first being ICBC.

In February 2014 Wells Fargo was named the world's most valuable bank brand for the second year running in The Banker and Brand Finance study of the top 500 banking brands.

History

The current Wells Fargo is a result of a 1998 merger between Minneapolis-based Norwest Corporation and the original Wells Fargo. 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 previous slogan, "The Next Stage," is likely a nod to the company's trademark). After the acquisition, the parent company kept its headquarters in San Francisco. The company's current tagline, "Together we'll go far" also references the stagecoach motif, its customers, and represents the company name itself in a transposed way (Wells Far-go = we'll[s] go-Far).

In-store branches

There are many mini-branches located inside of other buildings, which are almost exclusively grocery stores, that usually contain ATMs, basic teller services, and, space permitting, an office for private meetings with customers.

Wachovia acquisition

On October 3, 2008, Wachovia agreed to be bought by Wells Fargo for about $14.8 billion in an all-stock transaction. This news came four days after the Federal Deposit Insurance Corporation (FDIC) made moves to have Citigroup buy Wachovia for $2.1 billion. Citigroup protested Wachovia's agreement to sell itself to Wells Fargo and threatened legal action over the matter. However, the deal with Wells Fargo overwhelmingly won shareholder approval since it valued Wachovia at about seven times what Citigroup offered. To further ensure shareholder approval, Wachovia issued Wells Fargo with preferred stock holding 39.9% of the voting power in the company.

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. Citigroup alleged 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. Citigroup and Wells Fargo then entered into negotiations brokered by the FDIC to reach an amicable solution to the impasse. Those negotiations failed. Sources say that Citigroup was unwilling to take on more risk than the $42 billion that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42 billion). Citigroup did not block the merger, but indicated they would seek damages of $60 billion for breach of an alleged exclusivity agreement with Wachovia.

Predecessors

Wells Fargo operates under Charter #1, the first national bank charter issued in the United States. This charter was issued to First National Bank of Philadelphia on June 20, 1863, by the Office of the Comptroller of the Currency. Traditionally, acquiring banks assume the earliest issued charter number. Thus, the first charter passed from First National Bank of Philadelphia to Wells Fargo through its 2008 acquisition of Wachovia, which in turn had inherited it through one of its many acquisitions.

Selected predecessor companies

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

2008 financial crisis

On October 28, 2008, Wells Fargo was the recipient of $25B of the Emergency Economic Stabilization Act Federal bail-out in the form of a preferred stock purchase. Tests by the Federal government revealed that Wells Fargo needs an additional $13.7 billion 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. On Dec. 23, 2009, Wells Fargo redeemed the $25 billion of series D preferred stock issued to the U.S. Treasury under the Troubled Asset Relief Program's Capital Purchase Program. As part of the redemption of the preferred stock, Wells Fargo also paid accrued dividends of $131.9 million, bringing the total dividends paid to the U.S. Treasury and U.S. taxpayers to $1.441 billion since the preferred stock was issued in October 2008.

Environmental record

Wells Fargo ranked No.1 among banks and insurance companies - and No.13 overall - in Newsweek magazine's inaugural "Green Rankings" of the country's 500-largest companies.

So far, Wells Fargo has provided more than $6 billion in financing for environmentally beneficial business opportunities, including supporting 185 commercial-scale solar photovoltaic projects and 27 utility-scale wind projects nationwide.

As a member of the U.S. Environmental Protection Agency's Climate Leaders program, Wells Fargo aims to reduce its absolute greenhouse gas emissions from its U.S. operations by 20% below 2008 levels by 2018.

Wells Fargo has launched what it believes to be the first blog among its industry peers to report on its environmental stewardship and to solicit feedback and ideas from its stakeholders.

"We want to be as open and clear as possible about our environmental efforts - both our accomplishments and challenges - and share our experiences, ideas and thoughts as we work to integrate environmental responsibility into everything we do," said Mary Wenzel, director of Environmental Affairs. "We also want to hear and learn from our customers. By working together, we can do even more to protect and preserve natural resources for future generations."

Key dates

• 1852: Henry Wells and William G. Fargo (Mayor of Buffalo, NY from 1862 to 1863 and again from 1864 to 1865), 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.
• 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 federal agency known as the U.S. Railway Express Agency (REA). The government takes control of the express company. The bank begins rebuilding but with a focus on commercial markets. After the war, REA is privatized and continues service.
• 1923: Wells Fargo Nevada merges with the Union Trust Company to form the Wells Fargo Bank & Union Trust Company.
• 1929: Northwest Bancorporation is formed as a banking association.
• 1954: Wells Fargo & Union Trust shortens its name to Wells Fargo Bank.
• 1960: Wells Fargo merges with American Trust Company to form the Wells Fargo Bank American Trust Company.
• 1962: Wells Fargo American Trust again shortens its name to Wells Fargo Bank.
• 1968: Wells Fargo 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.
• 1982: Northwest Bancorporation acquires consumer finance firm Dial Finance which is renamed Norwest Financial Service the following year.
• 1983: Northwest Bancorporation 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 Bancorp.
• 1998: Wells Fargo Bank merges with Norwest Corp. of Minneapolis.
• 2000: Wells Fargo Bank acquires National Bank of Alaska.
• 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 United Bancorporation of Wyoming
• 2008: Wells Fargo acquires Century Bancshares of Texas.
• 2008: Wells Fargo acquires Wachovia Corporation.
• 2009: Wells Fargo acquires North Coast Surety Insurance Services
• 2012: Wells Fargo acquires Merlin Securities
• 2012: Wells Fargo acquires stake in The Rock Creek Group LP

Operations

Wells Fargo offers a range of financial services in over 80 different business lines. Wells Fargo delineates three different business segments when reporting results: Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement.

Community banking

The Community Banking segment includes Regional Banking, Diversified Products and the Consumer Deposits groups, as well as Wells Fargo Customer Connection (formerly Wells Fargo Phone Bank, Wachovia Direct Access, the National Business Banking Center and Credit Card Customer Service).

Wells Fargo also has around 2,000 stand alone mortgage branches throughout the country.

Wells Fargo Home Mortgage

Wells Fargo Home Mortgage is the largest retail mortgage lender in the United States, as of Q3 2011, originating one out of every four home loans. Wells Fargo services $1.8 trillion in home mortgages, the 2nd largest servicing portfolio in the U.S. It was reported in 2012 Wells Fargo reached 30% market share for US mortgages, however, CEO John Stumpf has said the numbers are misleading because about half of that share represented the aggregation of smaller loans that were then sold on in the secondary market. Now, in 2013 its share is closer to 22%; of which eight percentage points is aggregation.

Wealth, brokerage, and retirement

Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC and Wells Fargo Advisors, LLC, as well as through national broker/dealer firms. Mutual funds are offered under the Wells Fargo Advantage Funds brand name. The company also serves high-net-worth individuals through its private bank and family wealth group.

Wells Fargo Advisors is the brokerage subsidiary of Wells Fargo, located in St. Louis, Missouri. It is the third largest brokerage firm in the United States as of the third quarter of 2010 with $1.1 trillion retail client assets under management.

Wells Fargo Advisors was known as Wachovia Securities until May 1, 2009, when it legally changed names following the Wells Fargo's acquisition of Wachovia Corporation.

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.

Wholesale banking

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 capital markets and investment banking services through Wells Fargo Securities. One area that is very profitable to Wells Fargo, however, is asset-based lending: lending to large companies using accounts receivable and inventory as collateral, though less traditional assets are often included in the collateral package. Historically, this type of lending has been done when normal routes of raising funds, such as the Capital Markets or unsecured bank loans, have been exhausted. 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).

Wells Fargo Securities

Wells Fargo Securities ("WFS") is the investment banking division of Wells Fargo & Co. It is the 9th largest in the U.S. (2011 fee estimates from Thomson SDC) and exists today as an amalgamation of several legacy enterprises, most notably Wachovia Securities. The size and financial performance of the group is not disclosed publicly, but analysts believe the investment banking group houses approximately 4,500 employees and generates between $3 and $4 billion per year in investment banking revenue. By comparison, two of Wells Fargo's largest competitors, Bank of America and J.P. Morgan Chase generate approximately $5.5 billion and $6 billion respectively (not including sales and trading revenue). WFS headquarters is based in Charlotte, North Carolina with other U.S. offices in New York, Minneapolis, Boston, Houston, San Francisco, and Los Angeles, and international offices in London and Hong Kong.

WFS History

Wells Fargo Securities was established in 2009 to house Wells Fargo's new capital markets group which it obtained during the Wachovia acquisition. Prior to that point, Wells Fargo had little to no participation in investment banking activities, though Wachovia had a well established investment banking practice which it operated under the Wachovia Securities banner.

Wachovia's institutional capital markets and investment banking business arose from the merger of Wachovia and First Union. First Union had bought Bowles Hollowell Connor & Co. on April 30, 1998 adding to its merger and acquisition, high yield, leveraged finance, equity underwriting, private placement, loan syndication, risk management, and public finance capabilities.

Legacy components of Wells Fargo Securities include Wachovia Securities, Bowles Hollowell Connor & Co., Barrington Associates, Halsey, Stuart & Co., Leopold Cahn & Co., Bache & Co. and Prudential Securities. WFS most recently acquired the investment banking arm of Citadel LLC.

WFS Growth plans

In 2009, then-Wells Fargo Chairman Dick Kovacevich stated that he believed Wells Fargo Securities would be among the top five investment banks in the 'next few years'. Regarding Wells Fargo's traditional aversion to complex institutional capital markets business lines, current CEO John Stumpf said that investment banking had "changed a lot", that Wells Fargo now had fewer competitors and was a bigger company with more clients who need capital market access. According to Jonathan Weiss and Robert Engel, co-heads of investment banking and capital markets, the group intends to grow by 10% to 20% per year for the foreseeable future. Wells Fargo disclosed that investment banking revenue from underwriting and M&A advisory increased 44% in 2010 over the prior year. As of April 14, 2015, Wells Fargo became the world's second biggest bank by market capitalization, worth $281 billion, trailing ICBC which regained its tag as the World's Biggest Bank.

Cross-selling

A key part of Wells Fargo's business strategy is cross-selling, the practice of encouraging existing customers to buy additional banking products. Customers inquiring about their checking account balance may be pitched mortgage deals and mortgage holders may be pitched credit card offers in an attempt to increase the customer's profitability to the bank, and to make it more difficult for the customer to switch to a different bank. Other banks have attempted to emulate Wells Fargo's cross-selling practices (described by The Wall Street Journal as a hard sell technique); Forbes magazine describes Wells Fargo as "better than anyone" at the practice.

International operations

Wells Fargo provides banking services throughout the world, with main offices in Hong Kong and London. Also, as announced in 2011, Wells Fargo Securities has planned an expansion of its investment banking practice internationally, adding positions to its existing offices in Asia, Europe, and Latin America.

Wells Fargo has an office in the Middle East, in Dubai at Dubai Financial Centre. Wells Fargo has a presence in India as well. Wells Fargo India Solutions (WFIS) is a wholly owned subsidiary of Wells Fargo.

Small business loans

Wells Fargo gave over 1,900 Small Business Administration (SBA) loans from late 2012 to early 2013.

Wells Fargo private student loans

Wells Fargo private student loans help students pay for eligible college expenses, such as; tuition, books, computers, or housing. Loans are available for undergraduate, career and community colleges, graduate school, law school and medical school. Wells Fargo also provides private student loan consolidation and student loans for parents.

Corporate affairs

Historical data

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

Major shareholders

As of 2012, Berkshire Hathaway was the single largest shareholder, having a stake of 411 million shares. Contains 5,266,300,000 in outstanding stock

Controversies

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Latinos 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..." According to Beth Jacobson, a loan officer at Wells Fargo interviewed for a report in The New York Times, "We just went right after them. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans." The report goes on to present data from the city of Baltimore, where "more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods."

In a March 2010 agreement with federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report suspected money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.

In August 2010, Wells Fargo was fined by U.S. District Judge William Alsup for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees.

On April 5, 2012, a federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over a single loan, one of the largest fines for a bank ever for mortgaging service misconduct. Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, cited the bank's behavior as "highly reprehensible", stating that Wells Fargo has taken advantage of borrowers who rely on the bank's accurate calculations. She went on to add, "perhaps more disturbing is Wells Fargo's refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods."

The fine has come at a time that the Department of Housing and Urban Development (HUD) has launched an investigation of Wells Fargo into racial discrimination practices, the second federal probe in 2012 of alleged violations of misconduct with regard to race. The other, began in 2011 by the National Fair Housing Alliance has found "overwhelming" and "troubling" evidence that six of the nation's major banks handle foreclosures in neighborhoods populated primarily by minorities differently from in white communities.

On July 13, 2012, Wells Fargo entered a settlement agreement with the U.S. Department of Justice for allegedly discriminating against African-American and Hispanic borrowers from 2004 to 2009. Wells Fargo agreed to pay $125 million to subprime borrowers and $50 million in direct down payment assistance in certain areas, for a total of $175 million. Wells Fargo spokespersons denied all claims and are settling only to avoid contested litigation.

On August 14, 2012, Wells Fargo agreed to pay around $6.5 million to settle SEC charges that in 2007 it sold risky mortgage-backed securities without fully realizing their dangers.

On October 9, 2012, the U.S. federal government sued the bank under the False Claims Act at the federal court in Manhattan, New York. The suit alleges that Wells Fargo defrauded the Federal Housing Administration (FHA) over the past ten years, underwriting over 100,000 FHA backed loans when over half did not qualify for the program. This suit is the third allegation levied against Wells Fargo in 2012.

In October 2012, Wells Fargo was sued by U.S. federal attorney Preet Bharara over questionable mortgage deals.

In April 2013, Wells Fargo settled a suit with 24,000 Florida homeowners alongside insurer QBE, in which they were accused of inflating premiums on forced-place insurance. In May 2013, Wells Fargo paid $203 million to settle class-action litigation accusing the bank of imposing excessive overdraft fees on checking-account customers. Also in May, the New York attorney-general, Eric Scheidermann, announced a lawsuit against Wells Fargo over alleged violations of the national mortgage settlement, a $25 billion deal struck between 49 state attorneys and the five-largest mortgage servicers in the US. Schneidermann claimed Wells Fargo had violated rules over giving fair and timely serving.

In February 2015, Wells Fargo agreed to pay $4 million for violations where an affiliate took interest in the homes of borrowers. There was a $2 million penalty with the other $2 million going towards restitution to customers.

Income inequality

With CEO John Stumpf being paid 473 times more than the median financial employee, Wells Fargo ranks #33 among the worst S&P 500 companies for CEO-employee pay inequality. In October 2014, a Wells Fargo banker, earning $15/hour, emailed the CEO asking that all employees be given a $10,000/year raise taken from a portion of large annual corporate profits to address wage stagnation and income inequality. Wells Fargo replied that all employees are paid above federally mandated minimums. The email was also sent to approximately 200,000 co-workers despite Wells Fargo not allowing its workers to unionize.

Tax avoidance and lobbying

In December 2011, the non-partisan organization Public Campaign criticized Wells Fargo for spending $11 million on lobbying and not paying any taxes during 2008-10, instead getting $681 million in tax rebates, despite making a profit of $49 billion, laying off 6,385 workers since 2008, and increasing executive pay by 180% to $49.8 million in 2010 for its top five executives. As of 2014 however, at an effective tax rate of 31.2% of its income, Wells Fargo is the fourth-largest payer of corporation tax in the US.

Prison industry investment

The GEO Group, Inc., a multi-national provider of for-profit private prisons, received investments made by Wells Fargo mutual funds on behalf of clients, not investments made by Wells Fargo and Company, according to company statements. By March 2012, its stake had grown to more than 4.4 million shares worth $86.7 million. As of November, 2012, the latest SEC filings reveal that Wells Fargo has divested 33% of its dispositive holdings of GEO's stock, which reduces Wells Fargo's holdings to 4.98% of Geo Group's common stock. By reducing its holdings to less than 5%, Wells Fargo will no longer be required to disclose some financial dealings with GEO.

Notable buildings

• One Wells Fargo Center in Charlotte, North Carolina
• Wells Fargo Building in Davenport, Iowa
• Wells Fargo Center in Denver, Colorado
• Wells Fargo Center in Jacksonville, Florida
• Wells Fargo Center in Los Angeles, California
• Wells Fargo Center in Minneapolis, Minnesota
• Wells Fargo Center in Portland, Oregon
• Wells Fargo Center in Sacramento, California
• Wells Fargo Center in Salt Lake City, Utah
• Wells Fargo Plaza in San Diego, California
• Wells Fargo Center in Seattle, Washington
• Wells Fargo Place in Saint Paul, Minnesota
• Wells Fargo Plaza in San Diego, California
• Wells Fargo Plaza in El Paso, Texas
• Wells Fargo Plaza in Houston, Texas
• Wells Fargo Plaza in Phoenix, Arizona
• Wells Fargo Tower in Birmingham, Alabama
• Wells Fargo Tower in Colorado Springs, Colorado
• Duke Energy Center (Formerly; Wachovia Corporate Center) in Charlotte, North Carolina - Wells Fargo owns and occupies space in the building

See also

• Comparison of online brokerages
• List of Wells Fargo directors
• List of Wells Fargo presidents
• Wells Fargo Arena
• Wells Fargo Center

Array

Notes

References

• "Frequently Asked Questions". Wells Fargo History. Retrieved October 26, 2005. 
• "Is there a way to look up relatives who may have worked as stagecoach drivers for Wells Fargo?". Wells Fargo History. Retrieved October 26, 2005. 
• Mehta, Julie (January 31, 1996). "Merger means a bigger bank but uncertainty for employees". Cupertino Courier. Retrieved October 26, 2005. 
• Segal, Dave (July 13, 2003). "Both CB Bancshares' Ronald Migita and Central Pacific's Clint Arnoldus have been through bruising bank battles before". Honolulu Star-Bulletin. Retrieved October 26, 2005. 
• Svaldi, Aldo (June 12, 1998). "Wells Fargo learned hard way about deals". Denver Business Journal. Retrieved October 26, 2005. 
• Baker, David R. (December 19, 2004). "When hostile takeovers backfire". San Francisco Chronicle. Retrieved October 26, 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". Sacramento, CA: KOVR. January 11, 2007. Retrieved June 12, 2010. 
• Said, Carolyn (May 5, 2007). "Wells Fargo buys bank / Greater Bay has 41 branches in the Bay Area". San Francisco Chronicle. Retrieved June 12, 2010. 

External links

• Official website

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