Wells Fargo WFC Rohan Verma
What do they do? • Bank holdings and diversified financial services • 3 segments: • Community Banking- Financial products/services to consumers/small businesses. Traditional banking operations include, loans (credit line, auto, equipment, education, residential mortgage), equipment leases, real estate financing, cash management, payroll services, credit cards, payment processing, deposit accounts products (checking, savings, IRA). Investment management through affiliates. • Wholesale Banking- Financial solutions to global businesses/financial institutions. These include traditional commercial loans and lines of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection services, foreign exchange services, treasury management, investment management, institutional fixed-income sales, online/electronic products, insurance, corporate trust fiduciary and agency services, and investment banking services. • Wealth, Brokerage, and Retirement- Financial advisory services to high net-worth individuals. Typical services such as financial planning, private banking, investment management, trust, etc.
Numbers/Recent Performance • Least affected by financial crisis among national banks b/c of conservative lending approach. Difficult came after acquiring Wachovia and inheriting troubled assets. Paid off $25 billion bailout. • Least exposure to Europe among big banks (5% of loans, 3% of assets) • Country’s largest home mortgage lender (1 of every 3 US residential mortgages in 1H) • Interest rates low till 2014 and possibly further • Expanding in auto loan business- new deal with GM as main issuer in Western US. Big potential for expansion here. • Currently Buffett’s second biggest holding as a value play ($13 billion) • Solid dividend
Risks • Real estate market- Supposedly bottomed out. Yet new mortgage applications down 4.5% in week of 8/6. Refinanced mortgages down 5% that week and make up 81% of mortgage applications. • Stagnant economy- macro signs pointing to sluggish growth • Higher risk appetite in security portfolio- yielded more than 17 of US’s largest banks portfolios Financials: http://www.google.com/finance?q=NYSE%3AWFC&fstype=ii&ei=zk5SUIiOMqWQlgObRg