Banking giant Wells Fargo turns 150

Michael Liedtke

Monday, March 18, 2002 | 10:57 a.m.

SAN FRANCISCO -- Celebrating its 150th birthday today, Wells Fargo & Co. appears to be getting stronger with age -- an enviable position that the banking giant owes to its frail condition of just a few years ago.

Enfeebled by a botched takeover of a bitter rival that alienated customers and demoralized employees, Wells limped into the arms of a smaller Minneapolis bank in 1998 and has been improving ever since.

The Minneapolis bank, Norwest Corp., adopted Wells Fargo's storied name, moved its headquarters to San Francisco and brought along a management team that invigorated an atrophying franchise. The decay began shortly after Wells' $11.3 billion acquisition of First Interstate Bank in 1996.

Wells is now the largest bank in Nevada. "The First Interstate deal was not a good one, but the bank we created after the Norwest merger is much better off than Wells ever would have been had the First Interstate been successful," said Wells Chief Executive Dick Kovacevich.

Since Kovacevich took over in 1998 and infused Wells with a retailer's mindset, the bank's revenues have been rising at one of the fastest clips in the industry. While much of the economy suffered, Wells' revenue during the final three months of 2001 climbed by 16 percent from the previous year.

"This has gone far better than most big bank mergers," said analyst Joseph Morford of RBC Capital Markets. "They have restored the Wells name as one of the top-performing banks in the industry."

The biggest blemish during the Kovacevich era occurred last year when Wells got burned in the dot-com meltdown. The plunging values of tech startups forced Wells to recognize a $1 billion loss in its venture capital portfolio.

Despite that setback, Wells still posted a 2001 profit of $3.42 billion, nearly three times more than the bank earned during the year before joining forces with Norwest.

Mergers, both good and bad, have been a constant at Wells since the partners Henry Wells and William Fargo teamed up to form the bank in New York on March 18, 1852. It took them four months to make it across the country to establish a San Francisco hub -- the home of Wells Fargo ever since.

The bank, cobbled together through more than 2,000 deals, now has roughly 5,400 branches in 23 states. With $308 billion in assets, Wells is the largest bank headquartered west of the Mississippi.

The powerhouse nearly became a pauper on several occasions during its history.

In the 19th century, the rise of the railroad threatened a bank that made its name delivering luggage, mail and money on stagecoaches that covered an average of five miles per hour. Wells adapted to the times, although the stagecoach remains the centerpiece of the bank's marketing, even in the Internet age.

"Sometimes you don't really know how good you are until you get off the mat to fight calamity," Kovacevich said.