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For well-nigh 20 years now, the Motley Fool has been here to help you invest better and smarter, using spot-on analysis and razor-sharp wit. To celebrate Worldwide Invest Better Day on September 25, we're taking some time to get back to the basics -- of investing, that is. In that spirit, I have rounded up some sweet financial sector stocks that have been showing some real investing mojo lately.
Without further ado, let me introduce you to the focus of this particular article: longtime banking icon, Wells Fargo(NYSE: WFC) .
A bank with historical perspective and a drive to succeed
Founded in 1852 in New York by Henry Wells and William Fargo, Wells Fargo & Co. provided express mail and banking services to frontier California. Originally employees of the American Express Company, the two men saw gold in their futures, and formed their own business to cater to gold miners. The first office out west was housed in San Francisco, and soon spread to other boom towns. When Wells was purchased in the late 1990s, the new owners obviously felt the tug of history, keeping the name of the company the same, and re-situated their main offices to San Francisco.
Although the big banks have enjoyed somewhat of a rally in recent weeks, the four years since the financial crisis has definitely cramped their style. Where some have pulled back from some lucrative aspects of banking, Wells has jumped right in. As big boys Bank of America (NYSE: BAC) , JP Morgan Chase (NYSE: JPM) , and Citigroup (NYSE: C) have retreated from writing mortgages in the years since the meltdown, Wells has corralled a full one-third of this market for itself. Although the bank has attracted criticism for its heavy involvement in the mortgage business from both regulators and lawmakers, Wells recently defended its position, noting that they have worked hard for their piece of the pie. Managers have even used the Old West motif at sales meetings to push for more loan business -- by dressing up as cowboys.
Wells is pushing its way into other loan markets, too. Noting the increase in housing activity, it has opened new loan offices in Bank of America’s hometown of Charlotte, North Carolina. The bank is not only ready and willing to loan to home builders, but is actively seeking out new business in the area.
Likewise, Wells has been tapped by General Motors (NYSE: GM) to service the financing needs of GMC, Chevy, Cadillac, and Buick dealers in the western United States, causing troubled Ally Financial, which already has a relationship with GM, to shake in its boots. Spurred by this recent success, Wells is pushing GM for an even larger share of its loan business.
The bank’s Q2 report showed only a slight increase in revenues year over year, but deposits were up, and loan activity strong. In addition, Wells recently paid out a nice $0.22 per sharedividend, which shows signs of trending upwards again, after a slowdown last year.
A bank that sticks to its roots
The Wild West spirit is still part and parcel of the Wells Fargo mystique, and the drive to prosper helps explain why this bank has weathered so many storms throughout its long history, and has become a favorite of well-regarded investors, like Warren Buffett. When it comes to staying power, it’s hard to beat this company -- something that long-term investors can tip their hats to.
Business Description: Wells Fargo & Company operates in the National commercial banksonline bookonline book sector. Company with three other companies in this sector in the United States: JPMorgan Chase & Co. (2011 sales of $110.91 billion of which 24% was Retail Financial Services), Bank of America Corporation ($107.24 billion of which 22% was Global Banking & Markets), and Citigroup Inc. ($103.31 billion of which 32% was Consumer Banking).
Sales Analysis. Wells Fargo & Company reported sales of $88.31 billion for the year ending December of 2011. This represents a decrease of 6.2% versus 2010, when the company's sales were $94.19 billion. Contributing to the drop in overall sales was the 7.3% decline in Community Banking, from $54.70 billion to $50.70 billion. There were also decreases in sales in Wholesale Banking (down 2.5% to $21.67 billion) . However, these declines were partially offset by the increase in sales of Wealth, Brokerage and Retirement (up 3.9% to $12.19 billion) .