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Wells Fargo Looks to Stay Ahead of the Curve

What's more, Wells Fargo managed to grow its market share to close to 6%. In becoming the third-largest retail banking franchise in the country, customers continue to respond to the talent and resources Wells Fargo has put together in its commitment to customers.

Plus, I haven't even mentioned how strong of an auto lending business the Wachovia merger has created due to Wells Fargo's enhanced capabilities. And this is while expanding and diversifying not only the bank's geographic market position, perhaps more impressively, it widens the bank's revenue stream.

[Read: Down With the Connected Car!]

Clearly, I'm a huge fan of Wells Fargo's management team. I do believe, however, for the bank to truly stay ahead of the curve, there are several areas of improvement that needs attention. Not the least of which is Well Fargo's performance in net interest margin (NIM), which is the metric that denotes how well management utilized its capital and/or whether certain investment decision paid off when compared to the bank's overall debt situation.

To that end, net interest margin has seen some recent declines - and was down again by 28 basis points in the October quarter, which had an adverse impact on net interest income. Next, I would also like to see Wells Fargo get more aggressive and use its strength in mortgage lending to fight off Citigroup and JPMorgan. And I believe more of an effort to gain share in branch network and deposits against Bank of America would help get revenue going back in the right direction.

Having said all of that, the qualities that have made Wells Fargo so impressive still remain. Unlike JPMorgan or Citigroup, Wells Fargo continues to benefit from businesses like investment banking that is known to present unfavorable risk. Not to mention, unlike Citigroup, Wells Fargo is not so overly exposed to the European market, which is known for fiscal volatility.

Finally, it really comes down to value. And Wells Fargo still offers pretty appealing long-term potential - even should the bank's absolute performance on Tuesday underwhelms. While most banks tend to fall in within the same category and thus appraised on similar standards and metrics, it's become clear that Wells Fargo wants to remain a cut above. Accordingly, the stock remains a solid buy.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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