“We’re seeing more people interested in taking a peek inside the stagecoach,” Wells Fargo CEO John Stumpf told the San Francisco Business Times last week, but in reality, it’s his company that’s kicking tires and peeking under hoods.
Wells Fargo, which traces its roots to the Pony Express days and still utilizes a stagecoach logo, is the fifth-largest bank in the country by assets. While many of its counterparts along the East Coast have made blockbuster acquisitions in recent years — JPMorgan Chase scooped up Bank One and Bear Stearns; Bank of America bought FleetBoston and credit card company MBNA, and is assimilating mortgage lender Countrywide, while Wachovia has cozied up with Golden West Financial and A.G. Edwards — Wells has been content to buy smaller banks in states like California, Texas, and Wyoming to fill in its market area in the West.
And while some of those same peers founder in the wake of the mortgage mess, Wells Fargo has remained relatively unscathed. Indeed, it is the only US bank with a “AAA” credit rating from Moody’s and Standard & Poor’s.
Based in San Francisco, Wells’ wagon train stretches only as far east as Indiana, and conditions are ripe for the company to make a large acquisition to help it spread toward the Atlantic. Perhaps the most obvious target is National City, which operates in slow-growth Rust Belt states such as Ohio, Illinois, Michigan, Pennsylvania, and Indiana and has seen its stock lose some two-thirds of its value due to loan losses. Wells is well-capitalized enough to take on the Cleveland-based bank’s problems, and could expand its footprint and gain market share on the cheap. But National City’s bargain-basement price has also attracted other possible suitors, PNC and KeyCorp among them.
Of course, Wells has also been rumored to be looking for an acquisition in the more-attractive Southeast market for several years. Possible targets there include SunTrust and BB&T, which have struggled to integrate acquisitions of their own.
What’s certain is that Stumpf and Wells are hot to get a deal (or deals) done, whether it be a blockbuster or more small fill-in acquisitions, and are even willing to sacrifice the sterling credit rating that the company has been so prudent to attain.
Comments
Kevin Says:
March 28th, 2008 at 8:41 am
Of course Wells is doing well, they pay less interest than every other bank to deposit holders, numbers approximate to zero. Real interest rates of negative 2 or 3 percent. At any given time do a sort at bankrate.com on MM/Savings Accounts and if there’s a Well Fargo in your town, it’s at the bottom of the list. Literally. Who wouldn’t do well when your cost of capital is zero?
Why customers jump at that privilege and place any money in Wells Fargo is an entirely different question, and one of the great unsolved mysteries of our time.
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