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Wells Fargo & Co. (WFC)

From The Blue Chip Investor: “Wells Fargo & Co. (WFC) is the fourth-largest bank in the United States, with over...

Wells Fargo & Co. (WFC) is the fourth-largest bank in the United States, with over 11,000 branches and $1.2 trillion in assets. WFC now has a deposit base of $795 billion, important since deposits are the lowest-cost money available to banks. The integration of Wachovia Bank is on track, and management expects to achieve $5 billion per year in savings from the purchase.

“Since the acquisition, Wells Fargo has trimmed its asset base, eliminating poor- quality loans as it instills higher underwriting standards. This has caused assets and revenues to decline modestly even as earnings have increased. Wells Fargo is known for a strong management team and industry-beating financial metrics. In Q1, the bank posted a return-on- assets of 1.23% as EPS grew 49% to 67 cents. Much of this growth arose from improving credit quality. Net charge-offs fell $630 million from the prior quarter, and non-performing loans totaled $30.6 billion, down 5.5%. WFC reduced its allowance for losses by $1.0 billion from December 31, 2010, and by $3.1 billion from the prior year. The company’s capital ratios continued to improve. Regulators gave Wells Fargo approval to raise its dividend (to 12 cents per quarter) and the bank has also begun repurchasing stock for the first time since 2008.”

Steven Check, The Blue Chip Investor, 5/8/11

Steven Check founded Check Capital Management (CCM) in 1987. As CCM’s Chief Investment Officer, Mr. Check remains responsible for overall investment policy and portfolio management. He also serves as editor of the nationally respected newsletter, The Blue Chip Investor, which, like CCM, focuses on underpriced stocks of blue chip growth companies. Mr. Check holds a BS degree in Electrical Engineering from Iowa State and a Masters in Engineering from the University of California, Irvine. He is a past President—and remains active in—the CFA Society of Orange County and is a member of the CFA Institute.