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Wells Fargo Reveals $25 Billion More Energy Exposure

It's easy in a situation like this for investors to get bogged down in the details. But the reality is that, as with any bank, there's simply no way for an outside observer to get a handle on the magnitude of credit losses that may or may not ultimately materialize at Wells Fargo as a result of low energy prices.

Data source: Wells Fargo.

This is why the experience and past performance of Wells Fargo in challenging credit environments are relevant. With respect to its energy team, in particular, its managers have "an average tenure of 13 years with Wells Fargo and an average 23 years of experience in the industry." And its credit and risk team have "an average tenure of 17 years with Wells Fargo and an average 22 years of experience in the industry."

On top of this, it's worth pointing out that Wells Fargo has survived and thrived through countless episodes like this in the past. This dates all the way back to its founding in 1852. Two years later, it survived the first financial panic to strike California while its two largest competitors didn't. And, of course, the same story repeated itself in the financial crisis of 2008-09, when Wells Fargo's prudent credit culture allowed it to more than double in size by exploiting the mistakes of its competitors.

If there is such a thing as a tried-and-true bank, then, Wells Fargo is at the top of the list. Given this, I encourage shareholders in the nation's third biggest bank by assets to ignore the noise around its energy portfolio. Yes, it may take additional losses, but Wells Fargo makes more than enough money and excess capital to absorb any that do materialize.

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The article Wells Fargo Reveals $25 Billion More Energy Exposure originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Wells Fargo. The Motley Fool has the following options: short March 2016 $52 puts on Wells Fargo. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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