Seidman Investment Portfolio Organization


Company: Wells Fargo & Company
Sector: Financial (NYSE:WFC)

      Wells Fargo is a diversified financial services and bank holding company, founded in 1852. WFC is the second largest U.S. Bank by market cap and by total deposits, and is headquartered in San Francisco, California. In 2007, a collaboration of Fitch, Standard & Poor's, and Moody's named WFC The World's Safest U.S. Bank. 

      On October 3, 2008, Wells Fargo acquired Wachovia for $14.8 billion. On October 28, the federal government gave WFC a $25 billion bailout as part of the Emergency Economic Stabilization Act. Additionally, it raised another $8.6 billion with an equity offering in May of 2009. As a result of the financial crisis of 2008, Wells Fargo has had to increase its allowance for loan losses from 1.85% to 2.80%, which will definitely hinder results in the near term. Wells has also lost its coveted AAA rating, dropping to AA-.   However, management is taking swift corrective action, liquidating many high risk portfolios acquired along with Wachovia. In addition, quarterly dividends have been cut from 34 to 5 cents per share in the second quarter of 2009. 

      While the near term losses may be troubling, the corrective action being taken by management along with WFC's sheer size should ensure that Warren Buffett's favorite bank will be a solid holding for IPO's future.

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Page last modified March 14, 2014