The History, Development, and Growth of the Company Overtime

NINA MARINO MANAGEMENT 210

Well Fargo: The future of a Community Bank

Case Study # 4

Alan N. Hoffman

7/19/2013

The history, development, and growth of the company overtime

Everything we do is built on trust. It doesn't happen with one transaction, in one day on the job or in one quarter, it's earned relationship by relationship

John G. Stumpf; Chairman and CEO

These are the word of a dedicated officer who wants to make an effort to support what he believes will be prosperous for the community, customers and the financial growth of all persons involved, from the stockholders to the employee who keeps the bank clean.

It's as relevant today as it was back in 1852 when Wells Fargo was founded by two former express messengers, Henry Wells and William Fargo the two of these young men along with other colleagues came together and established a company called American Express Company. Since the gold rush to the early 20th century Wells Fargo earned a reputation of trust by dealing rapidly and responsibly with people money and their goods, offering both banking and express delivery. Transporting increased for Wells Fargo with cargo as well as geographically. Wells Fargo was beginning to grow rapidly during WWI and the government saw an advantage to nationalize the network. The company used stagecoaches to move the gold, and other important business items quickly. The stages could carry about nine passengers, who were able to pay for the ride, and the seats were full maybe about one or two could ride on the top of the stagecoach. It wasn't quite like our luxury we travel with today, there was dust, the weather may have been cold or hot with no heating or air-condition, and every now and then you had Indians attack. They even operated several small pony express routes around California, and these were particularly valuable to the business. Even though that may have been the case the Wells Fargo stage coach still could depend on a customer to ensure a paying fare for a ride. Here's a little known history fact, over 100 years ago today July 22, 1859 to an infantryman, Fort Yuma, California, was hell, and it was considered the worse. One poor soldier had the misfortune to stay in the Devil's Domain, unfortunately it was so cold that he sent back to Yuma for his blankets, troops found that the only thing worse than the heat was the lack of a paymaster to dole out their thirteen dollars a month plus a extra two dollars for California duty. Well Fargo had no control over the weather, but they had control and forward their pay. One of the mean reasons that the founders of Well Fargo wake up in the morning till this day is to help customers succeed financially and to satisfy all their financial needs. The result is we make money because of our focus on serving customer, not the other way around. This time vision will forever be what matters to Wells Fargo. "We'll never put the stagecoach ahead of the horses.

The Identification of the Company strengths and weaknesses:

Earnings increased compared to last quarter and the same quarter last year. Wells Fargo announced this past week that the second quarter profit of $5 billion and increase of 20% from the same period last year, as the company puts aside less money for a bad loan. This means revenue will inch its way up by $90 million to a whopping $21 billion from a year ago. Share increased by 98 cents, higher than analyst expected. Wells had to decrease its pool to cover bad loans by 64% to almost $650 million, much better than last quarter, this shows that borrowers are doing better with repaying their loans. JP Morgan Chase announced that the second quarter results have reduced its provisions for loan losses in consumer and community banking by $1.5 billion. Wells Fargo is the most popular private mortgage lender in the United States, the feeling of effects of rising mortgages rates are coinciding with strength toward the housing market. The more homes are being sold it bodes will for the company mortgage department. But as interest rate rise borrowers are not likely to refinance, cutting into the center piece of Wells Fargo business Weaknesses: One of Wells Fargo major weaknesses is their limited international presence, although this can be looked at as a strong suit, European financial crisis could prove to be a major downfall in the long run. The acquisition of Wachovia did enhance their global position but it no competition for Citigroup and JP Morgan Chase. The housing market is in distress and is expected to stay that way for the 3 to 4 years maybe even longer; this will cause quarterly losses for Wells Fargo, in the estimated amount of $250 million per quarter. This will probably have a negative impact on common stock, dividends, and the ability to grow the business.

The Nature of the external environment surrounding the company:

Wells Fargo environmental forum pushes to integrate environmental stewardship into everything they do. Well Fargo is making a conscious effort not only to conserve resources in their operations, but they also look for ways to help customers and communities. Well Fargo has created a forum for their customers and clients so that they can share their thoughts, stories, and knowledge with each other and Wells Fargo looks forward to learning from the customers as well. Wells Fargo environmental affairs run by competent employees that help to connect banking needs and environmental initiatives with customers, communities and non profit organization as well as universities. Well Fargo has a team of managers that are responsible for socially investing with careful responsibility. They manage social and responsible sustainability focused investment portfolios for upper net worth individuals. The environmental finance group helps individual customers advance in lending and investment commitment to environmental finance opportunities, like energy efficiency green real estate, carbon markets, and renewable energy. There's a team for renewing appraisals as well as directors of environmental affairs with sustainability and oversees the injection of environmental consciousness into our DNA. Wells Fargo has the first known study for online banking and online bill payment. Wells Fargo has become involved in bringing tools of education and music to remote communities such as Borne, South America, and Africa. Well Fargo

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