The Community Banking segment offers a complete line of diversified financial products and services to consumers and small businesses. It also offers investment management and other services to retail customers and securities brokerage through affiliates. Its Loan products include lines of credit, auto floor plan lines, equity lines and loans, equipment and transportation loans, education loans, origination and purchase of residential mortgage loans and servicing of mortgage loans and credit cards.
The Wholesale Banking segment provides financial solutions to businesses across the United States. It also provides a complete line of commercial, corporate, capital markets, cash management and real estate banking products and services. These include traditional commercial loans and lines of credit, letters 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, interest rate, commodity and equity risk management, online or electronic products such as the Commercial Electronic Office portal, insurance, corporate trust fiduciary and agency services, and investment banking services.
It also provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and trust. The company was founded by Henry Wells and William G. After the acquisition, the parent company kept its headquarters in San Francisco.
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.
However the deal with Wells Fargo overwhelmingly won shareholder approval since it valued Wachovia at about 7 times what Citigroup offered. To further ensure shareholder approval, Wachovia issued Wells Fargo with preferred stock holding On October 4, , 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, , 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. Wells Fargo operates under Charter 1, the first national bank charter issued in the United States. 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 acquisition of Wachovia, which in turn had inherited it through one of its many acquisitions.
Banco acquired stock in the affiliated banks and served as a mutual protection association for the beleaguered banks. Another 90 banks joined Banco in its first year of operation and by there were affiliates. During the Great Depression, numerous additional banks failed, another in the Upper Midwest by None of the Banco members went under--and no depositor lost any savings--because the group was able to move liquidity around the system and in some cases, inject new capital into troubled banks.
The number of members did decline, however, as some units in the group merged while others were sold off. Membership fell to 83 by , then to 70 by One of Banco's strategic advantages in the long run was its ability to operate in multiple states. The McFadden Act of had prohibited banks from operating branches across state lines.
Banco was one of three major banks the others being First Bank System and First Interstate Bancorp that was allowed to conduct interstate banking under a grandfather clause in the act. This advantage was tempered somewhat by the emergence of bank holding companies in the late s, but under the holding company arrangement, a subsidiary bank in one state was a separate entity from a subsidiary bank in another state.
Prior to the s, the affiliated members of Banco were largely autonomous. But during that decade, Banco began adopting a more unified structure in terms of systemwide planning, marketing, data processing, funds management, and loan syndication. Banco was also active on the international banking scene through its lead bank, Northwestern National, which controlled Canadian American Bank, a merchant bank with offices in Winnipeg, London, Nassau, and Luxembourg.
Banco was beset by a series of major setbacks in the early s. The troubles actually began in late when Richard H. Vaughan, the president and CEO, died by electrocution when he touched an electrical wire that had fallen during a storm. This set off a management crisis. Chester Lind stepped in as a caretaker leader until a more permanent successor could be found.
In October John W. Morrison was named chairman and CEO. The new leader began centralizing the still loosely knit confederation. In the odd affiliates began to be grouped into eight regions reporting to a corporate vice-chairman. Plans were also laid to unify all the affiliates and Banco itself under a new name. The change occurred in , when Northwest Bancorporation became Norwest Corporation.
Tellingly, the new name did not include 'bank' or some variant thereof because Morrison aimed to create a diversified financial services company. Based in Des Moines, Iowa, Dial had more than offices in 38 states offering consumer loans for everything from cars to sailboats. Dial was renamed Norwest Financial Services Inc.
While these restructuring initiatives were being carried out, the bank suffered another blow during the Thanksgiving weekend when the downtown Minneapolis headquarters burned to the ground. It would be six years before Norwest would be able to move into its new quarters at the Norwest Center, during which time the corporate staff was scattered around 26 different sites in the city, leading to numerous logistical difficulties.
Further trouble came from the bank's mortgage unit, Norwest Mortgage Inc. In August the head of Norwest Mortgage was fired because of the hedging losses. By early substantial portions of Norwest Mortgage were divested, including operations involved in servicing mortgages and buying mortgages from other lenders for resale. The unit now focused strictly on originating mortgages. In the wake of Norwest's poor performance in , Morrison resigned and was replaced by Lloyd P.
Johnson, former vice-chairman of Security Pacific Corp. Johnson soon brought on board Richard M. Kovacevich, who was hired away from Citicorp to become vice-chairman and CEO of Norwest's banking group in early he was named to the additional posts of president and COO of Norwest Corp. The new managers began slashing away at Norwest's bloated bureaucracy. To help prevent future calamities, Norwest instituted tighter lending criteria.
On the banking side, Kovacevich continued the process of standardizing the operating methods of the various Norwest banks, increased marketing efforts, and expanded the services offered. At the same time came the pruning of some rural operations, including eight banks in southern Minnesota and seven branches in South Dakota.
Later in the decade, opportunities to expand outside the group's traditional seven-state banking region began to arise as the barriers to interstate banking began to be dismantled. In Norwest entered rapidly growing Arizona for the first time through the purchase of a small bank near Phoenix. Acquisitions continued in the early s. By early Norwest had bank branches in 11 states, having moved into Indiana, Illinois, and Wyoming. Norwest Financial grew through acquisition as well, with the purchase of Trans Canada Credit, the second largest consumer finance firm in Canada.
Between January and June , Norwest made an additional 25 acquisitions, including several in Texas, making it the most active acquirer among bank holding companies. In Norwest Mortgage became the nation's leading originator of home mortgages following the acquisition of Directors Mortgage Loan Corp. About one-quarter of Norwest Corp. One of the keys to Norwest's success in the retail banking sector following the arrival of Kovacevich was the emphasis on relationship banking.
His focus was on smaller customers, checking account depositors and small businesses, and he aimed to build relationships with them that would lead to cross-selling of other financial services--an auto loan, a mortgage, insurance, a mutual fund, and so on. To do so required the maintenance of an extensive network of bank branches staffed by well-trained tellers and bankers.
This ran counter to the mids trend in the industry away from expensive branch banking and toward impersonal ATMs and Internet banking--the latter of course making cross-selling difficult. It was also in this cross-selling that the main units of Norwest--the retail bank, the finance company, and the mortgage company--fit and worked together. Another key to Norwest's success was its focus on these three key areas; although it did have other operations, such as a successful venture capital unit, the bank was not moving into such areas as investment banking, unlike numerous other banks, and it was not attempting to compete with large New York securities firms.
With bank branches in 16 states, Norwest had the largest contiguous bank franchise in the nation. Its strongest markets were in Minnesota, Texas, Colorado, and Iowa. Norwest Mortgage was national in scope, while Norwest Financial covered all 50 states, along with additional operations in Canada, the Caribbean, and Central America. Soon after gold was discovered in early at Sutter's Mill near Comona, California, financiers and entrepreneurs from all over North America and the world flocked to California, drawn by the promise of huge profits.
Fargo watched the California boom economy with keen interest. Before either Wells or Fargo could pursue opportunities offered in the West, however, they had business to attend to in the East. Wells, founder of Wells and Company, and Fargo, a partner in Livingston, Fargo and Company, were major figures in the young and fiercely competitive express industry. Butterfield, Wells, and Fargo soon realized that their competition was destructive and wasteful, and in they decided to join forces to form the American Express Company.
Soon after the new company was formed, Wells, the first president of American Express, and Fargo, its vice-president, proposed expanding their business to California. Fearing that American Express's most powerful rival, Adams and Company later renamed Adams Express Company , would acquire a monopoly in the West, the majority of the American Express Company's directors balked.
Undaunted, Wells and Fargo decided to start their own business while continuing to fulfill their responsibilities as officers and directors of American Express. Financier Edwin B. Morgan was appointed Wells Fargo's first president. The company opened its first office, in San Francisco, in July The immediate challenge facing Morgan and Danforth N.
Barney, who became president in , was to establish the company in two highly competitive fields under conditions of rapid growth and unpredictable change. At the time, California regulated neither the banking nor the express industry, so both fields were wide open. Anyone with a wagon and team of horses could open an express company and all it took to open a bank was a safe and a room to keep it in.
Because of its late entry into the California market, Wells Fargo faced well established competition in both fields. From the beginning, the fledgling company offered diverse and mutually supportive services: general forwarding and commissions; buying and selling of gold dust, bullion, and specie or coin ; and freight service between New York and California.
Under Morgan's and Barney's direction, express and banking offices were quickly established in key communities bordering the gold fields and a network of freight and messenger routes was soon in place throughout California.
Barney's policy of subcontracting express services to established companies, rather than duplicating existing services, was a key factor in Wells Fargo's early success. In , Wells Fargo faced its first crisis when the California banking system collapsed as a result of overspeculation.
Louis, Missouri, parent was made public. The run soon spread to other major financial institutions, all of which, including Wells Fargo, were forced to close their doors. The following Tuesday Wells Fargo reopened in sound condition, despite a loss of one-third of its net worth. Wells Fargo was one of the few financial and express companies to survive the panic, partly because it kept sufficient assets on hand to meet customers' demands rather than transferring all its assets to New York.
Surviving the Panic of gave Wells Fargo two advantages. First, it faced virtually no competition in the banking and express business in California after the crisis; second, Wells Fargo attained a reputation for dependability and soundness. From through , Wells Fargo expanded rapidly, becoming the West's all-purpose business, communications, and transportation agent. Under Barney's direction, the company developed its own stagecoach business, helped start and then took over the Overland Mail Company, and participated in the Pony Express.
This period culminated with the 'grand consolidation' of when Wells Fargo consolidated under its own name the ownership and operation of the entire overland mail route from the Missouri River to the Pacific Ocean and many stagecoach lines in the western states. In its early days, Wells Fargo participated in the staging business to support its banking and express businesses. But the character of Wells Fargo's participation changed when it helped start the Overland Mail Company.
In , Overland Mail was awarded a government contract to carry the U. Louis to California. From the beginning, Wells Fargo was Overland Mail's banker and primary lender. In there was a crisis when Congress failed to pass the annual post office appropriation bill and left the post office with no way to pay for the Overland Mail Company's services. As Overland Mail's indebtedness to Wells Fargo climbed, Wells Fargo became increasingly disenchanted with Butterfield's management strategy.
In March Wells Fargo threatened to foreclose. As a compromise. Butterfield resigned as president of Overland Mail and control of the company passed to Wells Fargo. Wells Fargo, however, did not acquire ownership of the company until the consolidation of Wells Fargo's involvement in Overland Mail led to its participation in the Pony Express in the last six of the express's 18 months of existence.
By the end of , the Pony Express was in deep financial trouble; its fees did not cover its costs and, without government subsidies and lucrative mail contracts, it could not make up the difference. Joseph, Missouri, under subcontract. The Pony Express ended when transcontinental telegraph lines were completed in late Overland mail and express services were continued, however, by the coordinated efforts of several companies.
By , Holladay had built a staging empire with lines in eight western states and was challenging Wells Fargo's supremacy in the West. A showdown between the two transportation giants in late resulted in Wells Fargo's purchase of Holladay's operations. The 'grand consolidation' spawned a new enterprise that operated under the Wells Fargo name and combined the Wells Fargo, Holladay, and Overland Mail lines and became the undisputed stagecoach leader. The Wells Fargo stagecoach empire was short lived.
McLane had reached an agreement with a railroad group that failed. Although the Central Pacific Railroad, already operating over the Sierra Mountains to Reno, Nevada, carried Wells Fargo's express, the company did not have an exclusive contract. Moreover, the Union Pacific Railroad was encroaching on the territory served by Wells Fargo stagelines. Ashbel H. The transcontinental railroad was completed in the following year, causing the stage business to dwindle and Wells Fargo's stock to fall.
The Tevis group also started buying up Wells Fargo stock at its sharply reduced price. There Wells Fargo agreed to buy the Pacific Express Company at a much-inflated price and received exclusive express rights for ten years on the Central Pacific Railroad and a much needed infusion of capital. All of this, however, came at a price: control of Wells Fargo shifted to Tevis.
Ashbel Barney resigned in and was replaced as president by William Fargo. In William Fargo also resigned to devote full time to his duties as president of American Express. Lloyd Tevis replaced Fargo as president of Wells Fargo, and the company expanded rapidly under his management. The number of banking and express offices grew from in to 3, at the turn of the century.
During this period, Wells Fargo also established the first transcontinental express line, using more than a dozen railroads. The company first gained access to the lucrative East Coast markets beginning in ; successfully promoted the use of refrigerated freight cars in California; had opened branch banks in Virginia City, Carson City, and Salt Lake City by ; and expanded its express services to Japan, Australia, Hong Kong, South America, Mexico, and Europe.
In Wells Fargo also began selling money orders. In Wells Fargo separated its banking and express operations. Edward H. Harriman, a prominent financier and dominant figure in the Southern Pacific and Union Pacific railroads, had gained control of Wells Fargo. Harriman reached an agreement with Isaias W. In the government forced Wells Fargo Express to consolidate its domestic operations with those of the other major express companies. Wells Fargo continued some overseas express operations until the s.
The two years following the merger tested the newly reorganized bank's, and Hellman's, capacities. In April the San Francisco earthquake and fire destroyed most of the city's business district, including the Wells Fargo Nevada National Bank building. The bank's vaults and credit were left intact, however, and the bank committed its resources to restoring San Francisco. Money flowed into San Francisco from around the country to support rapid reconstruction of the city. The Panic of , begun in New York in October, followed on the heels of this frenetic reconstruction period.
The stock market had crashed in March. Several New York banks, deeply involved in efforts to manipulate the market after the crash, experienced a run when speculators were unable to pay for stock they had purchased. The run quickly spread to other New York banks, which were forced to suspend payment, and then to Chicago and the rest of the country. The years following the panic were committed to a slow and painstaking recovery.
In , Hellman was very briefly succeeded as president by his son, I. Hellman II, who was followed by Frederick L. Lipman's management strategy included both expansion and the conservative banking practices of his predecessors. The bank prospered during the s and Lipman's careful reinvestment of the bank's earnings placed the bank in a good position to survive the Great Depression. Following the collapse of the banking system in , the company was able to extend immediate and substantial help to its troubled correspondents.
The war years were prosperous and uneventful for Wells Fargo. In the s, Wells Fargo President I. In the name of the bank was shortened to Wells Fargo Bank, to capitalize on frontier imagery and in preparation for further expansion.
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