Wells Fargo Bank & Company is noted to be among the more stable highly diversified financial services company not only in the United States, but worldwide. Originally established in 1852, the bank is into a highly diversified financial services business which includes banking, insurance, investments, mortgage and consumer finance, among others. As of the year 2008, the bank registered a resource base of USD$1. 42 trillion, $39. 4 billion in revenues and $8. 0 billion net income.
Wells Fargo Bank, N. A. is reportedly the only bank in the United States and among the two banks worldwide with highly regarded credit rating from both Moody’s Investors Service and Standard & Poor’s Ratings Services. (Annual Report, 2007) Wells Fargo is one big company, it being the largest financial institution based in the western United States, with a service area spanning all of North America. With an estimated stock market value of $100 billion, Forbes (2008) ranks the bank among the world’s top 50 companies; in fact number 41 overall based on a composite of sales, assets, profits and market value.
In the United States, Wells Fargo is among the top 20 companies in terms of income and market value. Employing more than 168,000 with about 6,000 service branches and units, it is now one of America’s 30 largest private employers. In 2007, it reported $8. 0 billion net income out of $39. 4 billion of revenues. As of October 2008, Wells Fargo reported a Net Income of $1. 64 Billion, or $0. 49 Per Share. During the year, it merged with the Wachovia acquiring all of the latter’s banking operations for $15.
1 billion. Earlier in it corporate life, it merged with First Interstate Bank and in 1998 the Minneapolis-based Norwest Corporation. Liquidity Analysis Liquidity enhanced through acquisition of $370bn of core deposits. This was further reinforced by a series of retail lending operations and strategic acquisitions that enabled it to generate a total of $772 billion in liquid deposits making it number 2 in the funds market for deposits.
With 51 per cent of its lending operations devoted to the cash-rich retail sector such as the Community Banking and Home Mortgage and Equity Financing, its strong liquidity position enabled it to position itself rationally in terms of resources and market positioning, either through mergers and acquisitions and opening of mortgage service units to strengthen its cash generating activities. Table 1 Liquidity Ratios SHORT-TERM SOLVENCY RATIOS (LIQUIDITY) Free Cash Flow Margin 6. 57
Free Cash Flow Margin 5YEAR AVG 53. 36 Cash-Flow pS 2. 71 Free Cash-Flow pS 0. 70 Source:http://www. advfn. com/quote_Wells-Fargo—C_NYSE_WFC. html Table 1 indicates a healthy cash position for Wells Fargo Company with its free cash flow margin over payments and expenditures a surging to a high 53. 36 per cent during the last five years despite a modest edge during the current term. Its core retail business in good market areas are the stabilizing factors for its steady free cash flow during the five year period.
With its wholesale banking group limited to just less than 10 percent of its credit markets, it insulated itself from wild market fluctuations haunted by huge corporate bankruptcies. Earlier in 2006, it further generated $12. 6 billion funds from its commons stock offering. This composite set of balanced strategies further enabled Wells Fargo to identify and acquire potential liquid sources of funds for further strategic positioning. Its more than 150 years in the industry has enabled it to adopt a more visualized direction aimed at growth as well as risk management.