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55-476: This article outlines the history of Wells Fargo & Company from its merger with Norwest Corporation and beyond. The new company chose to retain the name of " Wells Fargo " and so this article is about the history after the merger. Continuing the Norwest tradition of making numerous smaller acquisitions each year, Wells Fargo acquired 13 companies during 1999 with total assets of $ 2.4 billion. The largest of these

110-652: A Seattle -based regional brokerage firm, Ragen MacKenzie Group Incorporated. In October 2000, Wells Fargo made its largest deal since the Norwest-Wells Fargo merger when it paid nearly $ 3 billion in stock for First Security Corporation , a $ 23 billion bank holding company based in Salt Lake City, Utah , and operating in seven western states. Wells Fargo thereby became the largest banking franchise in terms of deposits in New Mexico , Nevada , Idaho , and Utah; as well as

165-417: A $ 1.5 billion transaction. In June 2007, Wells Fargo acquired CIT 's construction unit. In January 2008, Wells Fargo acquired United Bancorporation of Wyoming. In August 2008, Wells Fargo acquired Century Bancshares of Texas. In June 2007, John Stumpf was named chief executive officer of the company, and Richard Kovacevich remained as chairman. During the financial panic of September 2008, Wells Fargo made

220-472: A $ 2 billion concern. Also acquired was a troubled "savings and loan" in Norwest's home state, First Minnesota Savings Bank . The largest purchase yet came in 1992 when Norwest paid about $ 420 million in stock for United Banks of Colorado Inc. , a bank based in Denver with total assets of $ 6.3 billion. Norwest Financial grew through acquisition as well, with the 1992 purchase of Trans Canada Credit ,

275-479: A bid to purchase the troubled Wachovia Corporation. Although at first inclined to accept a September 29 agreement brokered by the Federal Deposit Insurance Corporation to sell its banking operations to Citigroup for $ 2.2 billion, on October 3, Wachovia accepted Wells Fargo's offer to buy all of the financial institutions for $ 15.1 billion. On October 4, 2008, a New York state judge issued

330-567: A coast-to-coast super-bank with $ 1.4 trillion in assets and 48 million customers and expanded Wells Fargo's operations into nine Eastern and Southern states. There would be big overlaps in operations only in California and Texas, much less so in Nevada, Arizona, and Colorado. In contrast, the Citigroup deal would have resulted in a substantial overlap, since both banks' operations were heavily concentrated in

385-432: A corporate vice-chairman. Plans were also laid to unify all the affiliates and Banco itself under a new name. The change occurred in 1983, when Northwest Bancorporation became Norwest Corporation. Tellingly, the new name did not include 'bank' or some variant thereof because Morrison aimed to reposition Norwest as a diversified financial services company. He'd taken steps in this direction a year earlier, when he engineered

440-483: 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 City securities firms. By the end of 1994, Norwest had become the 11th largest bank in the United States with total assets of $ 88.54 billion. With a branch network covering 16 states, Norwest had the largest contiguous bank franchise in

495-412: 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, 2008, by New York state appeals court. Citigroup and Wells Fargo then entered into negotiations brokered by

550-529: Is in sight. When the Weatherball is wearing green, no weather changes are foreseen. Colors blinking by night and day, say precipitation's on the way." Wachovia Securities Wachovia Securities grew through the mergers of multiple companies. Its oldest predecessor company, Leopold Cahn & Co. was founded in 1879. One of main Wachovia Securities' predecessor companies was founded in 1934 as

605-630: The Pony Express , telegraph equipment, and historic bank artifacts. The museum also has a gift shop . In January 2015, armed robbers in an SUV smashed through the museum's glass doors and stole gold nuggets. The company previously operated other museums but those have since closed. Norwest Corporation Norwest Corporation was a banking and financial services company based in Minneapolis , Minnesota, United States. In 1998, it merged with Wells Fargo & Co. and since that time has operated under

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660-598: The U.S. Treasury under the Troubled Asset Relief Program's Capital Purchase Program. As part of the redemption of the preferred stock, Wells Fargo also paid accrued dividends of $ 131.9 million, bringing the total dividends paid to the U.S. Treasury and U.S. taxpayers to $ 1.441 billion since the preferred stock was issued in October 2008. Wells Fargo Securities was established in 2009 to house Wells Fargo's new capital markets group, which it obtained during

715-684: The Wells Fargo name. The earliest roots of the company are with the Northwestern National Bank established in Minneapolis in 1872. Early Minneapolis business and political leaders Dorilus Morrison and Henry T. Welles were the bank's first two presidents. Initially the bank was heavily supported by the Northern Pacific Railroad , but as the city and region grew the bank's deposits and assets grew in kind. Between 1872 and 1892

770-459: The 1970s, Banco's affiliated members 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. By the end of the decade, Banco consisted of 85 affiliates in seven states: Minnesota , Wisconsin , Iowa , Nebraska , South Dakota , North Dakota , and Montana . Total assets had reached $ 11 billion , ranking Banco as

825-484: The 1982 Minneapolis Thanksgiving Day Fire and before the building was demolished, the bank's weatherball was dismantled and stored at the Minnesota State Fairgrounds. The weatherball was never restored and, in 2000, it was scrapped. The Northwestern National Bank Weatherball jingle: "When the Weatherball is glowing red, warmer weather's just ahead. When the Weatherball is shining white, colder weather

880-464: The 20th largest banking company in the United States. 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 1980s. The troubles actually began in late 1979 when Richard H. Vaughan,

935-421: The 30th largest bank overall, with assets in excess of $ 25 billion. Net income stood at $ 237 million for 1989. Acquisitions continued in the early 1990s. By early 1991 Norwest had 291 bank branches in 11 states, having moved into Indiana , Illinois , and Wyoming . In April 1990 Norwest paid $ 173 million for Sheboygan -based First Interstate of Wisconsin (formerly Citizen's Bank of Sheboygan ),

990-515: The 4th-largest bank in Arizona by acquiring the Arizona operations of Citicorp (formerly United Bank of Arizona and Great Western Bank & Trust). Between January 1994 and June 1995, Norwest made an additional 25 acquisitions, including several in Texas, making it the most active acquirer among bank holding companies. In 1995 Norwest Mortgage became the nation's leading originator of home mortgages following

1045-523: The Charlotte, North Carolina–based First Union bank. The brokerage firm changed its name to Wheat First Union, reflecting its newly acquired status. In April 1999, First Union acquired Chicago -based investment bank and brokerage Everen Capital Corp. for $ 1.1 billion. Separately, Wachovia Corporation acquired the brokerage firm Interstate Johnson Lane in April 1999, and changed the name to IJL Wachovia. In 2001,

1100-757: The East and Southeast. The proposed merger was approved by the Federal Reserve as a $ 12.2 billion all-stock transaction on October 12 in an unusual Sunday order. The acquisition was completed on January 1, 2009. On October 28, 2008, Wells Fargo was the recipient of $ 25B of the Emergency Economic Stabilization Act Federal bail-out in the form of a preferred stock purchase. Tests by the Federal government revealed that Wells Fargo needed an additional $ 13.7 billion in order to remain well-capitalized if

1155-518: The FDIC to reach an amicable solution to the impasse. Those negotiations failed. Sources say that Citigroup was unwilling to take on more risk than the $ 42 billion that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $ 42 billion). Citigroup did not block the merger, but indicated they would seek damages of $ 60 billion for breach of an alleged exclusivity agreement with Wachovia. The merger created

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1210-993: The Wachovia acquisition. Prior to that point, Wells Fargo had little to no participation in investment banking activities, though Wachovia had a well-established investment banking practice which operated under the Wachovia Securities banner. Wachovia's institutional capital markets and investment banking business arose from the merger of Wachovia and First Union. First Union had bought Bowles Hollowell Connor & Co. on April 30, 1998 adding to its merger and acquisition , high yield , leveraged finance , equity underwriting, private placement , loan syndication , risk management , and public finance capabilities. Legacy components of Wells Fargo Securities include Wachovia Securities , Bowles Hollowell Connor & Co. , Barrington Associates, Halsey, Stuart & Co. , Leopold Cahn & Co. , Bache & Co. and Prudential Securities , and

1265-520: The acquisition of Directors Mortgage Loan Corp. , a Riverside, California-based lender with a residential mortgage portfolio of $ 13.1 billion. The following year Norwest Mortgage became the biggest home-mortgage servicer as well through the $ 600 million purchase of the bulk of the mortgage unit of the Prudential Insurance Co. of America, otherwise known as Prudential Home Mortgage. Prudential's high-quality loan portfolio and technology

1320-519: The acquisition of Dial Corporation (not to be confused with the consumer products company of the same name ) in September 1982 for $ 252 million. Based in Des Moines, Iowa , Dial had more than 460 offices in 38 states offering consumer loans for everything from cars to sailboats. It was considered one of the top consumer finance firms in the country and had a $ 1 billion consumer loan operation. Dial

1375-514: The affiliated banks and served as a mutual protection association. Another 90 banks joined Banco in its first year of operation, and by 1932 there were 139 affiliates. During the Great Depression , numerous additional banks failed. In 1932, 700 Upper Midwestern banks failed. None of the Banco members went under – and no depositor lost any savings – because the group was able to move liquidity around

1430-409: The bank's agricultural and international loan portfolios, the former being reduced to $ 400 million by early 1989, the latter to $ 10 million. By December 1988, the nonperforming loan total stood at just $ 150 million. To help prevent future calamities, Norwest instituted tighter lending criteria. On the banking side, Kovacevich continued the process of standardizing the operating methods of

1485-473: The bank's deposits increased from $ 50,000 to $ 3 million. Between 1892 and 1902 deposits more than tripled to more than $ 10 million. During the generally prosperous 1920s, the nation's agricultural sector did not share in the good times. Many smaller banks that had overextended credit to farmers ran into serious trouble. In the Upper Midwest alone, 1,500 banks became insolvent from 1920 to 1929. It

1540-565: The blockbuster mergers that shook up the banking industry in the 1990s, but in June 1998 the bank announced the pending merger with San Francisco -based Wells Fargo & Company in a stock swap worth $ 34 billion. Although Norwest was the surviving entity, retaining the Northwestern Bank charter, the merged company took the better-known Wells Fargo name and moved its headquarters to San Francisco. Norwest Bank, NA merged into Wells Fargo Bank, NA as

1595-446: 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 1988 Norwest entered rapidly growing Arizona for the first time through the purchase of a small bank near Phoenix . Norwest ended the 1980s fully recovered from its early-decade travails and ranking as one of the nation's most profitable regional banking companies and

1650-566: The early 1980s as Norwest, like most U.S. banks, had made many bad loans overseas. As a result, Norwest saw its non-performing loans increase 500 percent from 1983 to 1984, to more than $ 500 million. Further trouble came from the bank's mortgage unit, Norwest Mortgage Inc., which had been quickly built into the second largest holder of mortgages in the United States. In the summer of 1984, Norwest Mortgage lost nearly $ 100 million from an unsuccessful effort to hedge its mounting interest-rate risk on adjustable-rate mortgages. The loan losses and

1705-399: The economy were to deteriorate further under stress test scenarios. On May 11, 2009, Wells Fargo announced an additional stock offering, which was completed on May 13, 2009, raising $ 8.6 billion in capital. The remaining $ 4.9 billion in capital is planned to be raised through earnings. On December 23, 2009, Wells Fargo redeemed the $ 25 billion of series D preferred stock issued to

History of Wells Fargo - Misplaced Pages Continue

1760-506: The firm became known as Wachovia Securities when parent companies of Wheat First Union and IJL Wachovia, First Union and Wachovia Corporation, merged. The newly formed Wachovia then merged the brokerage operations to form Wachovia Securities. Wachovia Securities and the Prudential Securities Division of Prudential Financial combined on July 1, 2003. Wachovia owned 62% of this entity, while Prudential Financial owned 38%. At

1815-429: 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

1870-558: The investment banking arm of Citadel LLC . In 2016, the Wells Fargo cross-selling scandal led to the resignation of CEO John Stumpf and resulted in fines of $ 185 million by the Consumer Financial Protection Bureau . The company operates the Wells Fargo History Museum at 420 Montgomery Street, San Francisco. Displays include original stagecoaches , photographs, gold nuggets and mining artifacts,

1925-461: The investment firm of J.C. Wheat & Co. Wheat fostered growth through mergers, including the 1971 merger with First Securities that created Wheat First Securities, Inc. and the 1988 merger with Butcher & Singer, a successful Philadelphia-based securities firm established in 1910; the firm then became known as Wheat First Butcher Singer. In August 1997, the privately held Wheat First Butcher Singer agreed to be acquired for just under $ 500 million by

1980-555: The largest banking franchise in the West overall. Following completion of the First Security acquisition, Wells Fargo had total assets of $ 263 billion with some 140,000 employees. In 2001, Wells Fargo acquired H.D. Vest Financial Services for $ 128 million, but sold it in 2015 for $ 580 million. In January 2007, Wells Fargo acquired Placer Sierra Bank. In May 2007, Wells Fargo acquired Greater Bay Bancorp, which had $ 7.4 billion in assets, in

2035-525: The merged bank's legal banking entity. The merged company claims legacy Wells Fargo’s history (dating to 1852) as its own, and also adopted legacy Wells Fargo's ticker symbol, WFC. However, it retains Norwest's pre-1998 stock price history and corporate structure, and all pre-1998 SEC filings are under Norwest, not Wells Fargo. Former Wells Fargo stockholders held 52.5 percent of the newly combined company and former Norwest stockholders held 47.5 percent. Paul Hazen, chairman and CEO of Wells Fargo, become chairman of

2090-460: The merged bank, while Richard M. Kovacevich, chairman and CEO of Norwest, become president and CEO of the new organization. The merger was completed in November 1998. In 1949, Northwestern National Bank constructed a 157-foot high weatherball , designed by Douglas Leigh , atop its headquarters building in downtown Minneapolis. The bank incorporated it into its advertising and logo for a time. After

2145-433: The mortgage debacle led to a drop in net income from $ 125.2 million in 1983 to $ 69.5 million in 1984. In August 1984 the head of Norwest Mortgage was fired because of the hedging losses. By early 1985 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

2200-646: The nation. Its strongest markets were in Minnesota, Texas, Colorado , and Iowa. Having only entered Texas in 1993, Norwest had built up a $ 10 billion presence there by buying 33 banks. Norwest Mortgage was national in scope, while Norwest Financial covered 49 states, along with additional operations in Guam, Saipan, Canada, the Caribbean , and Central America. Net income had reached $ 1.35 billion by 1994. Norwest had grown into this position of strength without completing any of

2255-472: The president and CEO, was electrocuted by a 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 1981 John W. Morrison was named chairman and CEO. The new leader began centralizing the still loosely knit confederation into a more traditional bank holding company. In 1982 the 80-odd affiliates began to be grouped into eight regions reporting to

History of Wells Fargo - Misplaced Pages Continue

2310-510: The second largest brokerage firm in the United States with $ 1.17 trillion retail client assets under management. In 2008 Wachovia was bought out by Wells Fargo for $ 15.1 billion. This was approximately $ 7 a share, which is nearly an 80 percent premium closing price of $ 3.91. On May 1, 2009, the retail brokerage legally changed its name to Wells Fargo Advisors. Wachovia's institutional capital markets and investment banking business arose from

2365-542: The second largest consumer finance firm in Canada. By the end of 1992 Norwest had total assets of $ 44.56 billion, more than double the figure of 1988. At the beginning of 1993, Johnson handed over his CEO position to Kovacevich. Expansion of the banking operation into New Mexico and Texas came in 1993 through the acquisition of First United Bank Group Inc. of Albuquerque for about $ 490 million. First United had assets of $ 3.8 billion. Also in 1993, Norwest became

2420-425: 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 1940, then to 70 by 1952. One of Banco's strategic advantages in the long run was its ability to operate in multiple states. The McFadden Act of 1927 had prohibited banks from operating branches across state lines. Banco

2475-428: The time, the new firm had client assets of $ 532.1 billion, making it the nation's third largest full service retail brokerage firm based on assets. Much of the retail brokerage came from Prudential's previous acquisition of Bache & Co. In May 2007, Wachovia Securities announced the purchase of A. G. Edwards of St. Louis, Missouri . Following the acquisition, as of October 1, 2007, the Wachovia Securities became

2530-435: The total. By year-end 1995, Norwest had total assets of $ 72.13 billion, making it the 13th largest bank holding company in the nation. Net income, which was nearing the $ 1 billion mark, had grown at a compounded annual rate of 25 percent over the previous eight years. 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

2585-514: The various Norwest banks, increased marketing efforts, and expanded the services offered. He also began seeking acquisitions, particularly aiming to bolster Norwest's presence in key cities; in 1986, for example, Norwest acquired Toy National Bank of Sioux City, Iowa , which had assets of $ 145 million. 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

2640-555: The wake of Norwest's poor performance in 1984, 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 1986 (he was named to the additional posts of president and COO of Norwest Corp. in January 1989). The new managers began slashing away at Norwest's bloated bureaucracy. They drastically curtailed

2695-571: Was key to this acquisition. Meanwhile, in May 1996, Norwest Financial completed the purchase of $ 1 billion-asset ITT Island Finance , a consumer finance company based in San Juan , Puerto Rico. About one-quarter of Norwest Corp.'s earnings were generated by Norwest Financial in the mid-1990s, with another 12 percent coming from Norwest Mortgage. The traditional community banking operations—which extended to 16 states by 1995—counted for only about 37 percent of

2750-414: 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 mid-1990s trend in

2805-434: 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 1927 act. This advantage was tempered somewhat by the emergence of bank holding companies in the late 1960s, 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

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2860-559: Was renamed Norwest Financial Services Inc. in 1983. While these restructuring initiatives were being carried out, the bank suffered another blow during the 1982 Thanksgiving weekend when a Thanksgiving Day fire destroyed the downtown Minneapolis headquarters. Norwest immediately announced plans to build a modern 774-foot tower, the Norwest Center , as its replacement. However, until the Norwest Center opened in 1988, corporate staff

2915-410: Was scattered around 26 different sites in the city, leading to numerous logistical difficulties. Meanwhile, with the farm economy going into a tailspin starting in 1981, Norwest began feeling the effects of its heavy farm loan portfolio--$ 1.2 billion, or seven percent of its overall loan portfolio. Norwest had another $ 1.2 billion in loans in foreign markets, which caused additional problems in

2970-593: Was the February purchase of Brownsville, Texas -based Mercantile Financial Enterprises, Inc., which had $ 779 million in assets. The acquisition pace picked up in 2000, with Wells Fargo expanding its retail banking into two more states: Michigan , through the buyout of Michigan Financial Corporation ($ 975 million in assets), and Alaska , through the purchase of National Bank of Alaska , with $ 3 billion of assets. Wells Fargo also acquired First Commerce Bancshares , Inc. of Lincoln, Nebraska , which had $ 2.9 billion in assets, and

3025-558: Was with this backdrop that in early 1929, just months before the stock market crash, two banking associations were formed in the Twin Cities of Minnesota : Northwest Bancorporation and the First Bank Stock Corporation (later known as First Bank System and then U.S. Bancorp ). Northwest, known more simply as "Banco", was a banking cooperative anchored by Northwestern National Bank in Minneapolis. Banco acquired stock in

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