Total Assets: $549 billion (retail bank is $239 billion)
3Q ROE: 19.12%
3Q ROA: 1.67%
3Q Stock-Price Performance: $37.99 to $32.66; end of quarter: $35.72
3Q Earnings Per Share: $0.68
3Q Net Income: $2.28 billion
Wells Fargo doesn’t just talk the talk, it also walks the walk. The San Francisco giant’s impressive third-quarter figures showed a record net income of $2.28 billion, up four percent from last year, and revenue of $9.95 billion, up 10 percent. The retail bank tops $239 billion in assets, about one-third of the bank’s total assets.
“It was no one thing, but many things,” explains Carrie Tolstedt, senior evp of community banking. “One of our enduring advantages and key focuses for our entire team is our vision and values. Our vision is to help our customers succeed—and we focus on that. The second factor is all the strong work our people do. It really does start with our people, the starting point of all the decisions I make every day. When they are in the right jobs, are spending time on the right things, when they are fully using their skills and having fun, then they’ll d do right for the customer. We do believe our people are our competitive advantage, though we also have a broad product line and great distribution.”
The bank has picked up many fans along the way. “Wells Fargo has demonstrated for the last decade that they handle the retail-bank sector better than their peers,” says Richard Z. Bove, a financial-services analyst at New York investment bank Punk, Ziegel & Co. “They understand they have to incent the employee first to get the customer to do business with them. And, number two, they understand that selling the existing customer is more profitable than selling new customers. Number three, they under they have to keep adding products to the system.”
The bank holds the industry cross-sell record of 5.5 products per consumer household and says it is No. 1 in small-business lending, agricultural lending, insurance-brokerage sales and retail home-mortgage lending.
Bove applauds Wells’s strategic move away from mortgages and into small-business lending in the last several years, which paid off when the subprime market crisis hit in late summer. “They were proactive and moved away from mortgages sooner than other banks,” according to Bove. “Most of the more mortgage-oriented institutions didn’t do that.” Wells Fargo has said it would take a $1.4 billion charge related to home-equity loans, but that figure is not part of Tolstedt’s unit.
Other third-quarter highlights: average total loans grew 15 percent from the prior year; average commercial and commercial real-estate loans rose 16 percent from the prior year; and average consumer loans climbed 15 percent from the prior year. Moreover, average core deposits rose 11 percent from the prior year.
