Stumpf says Wells Fargo unlikely to pursue naming rights

In an interview, John Stumpf said the bank is seeing more lending demand but is also looking at other areas for growth.

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John Stumpf, Wells Fargo CEO, was in Minneapolis for the Tuesday groundbreaking for the new office project near the Vikings stadium.

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When the “Sunday Night Football” blimp floats over the new Vikings stadium, viewers will catch the big Wells Fargo name.

It just probably won’t be on the stadium.

John Stumpf, head of the San Francisco-based bank, said in an interview Tuesday that Wells Fargo likes to hang signs on its own buildings, and has skipped naming rights other than one arena it inherited with its purchase of Wachovia in 2008.

“We traditionally don’t name stadiums,” Stumpf said. “It’s not traditionally what we do.”

Stumpf has led Wells Fargo & Co. for nearly seven years now, out of a near depression and into a new era of challenge marked by an onslaught of financial regulations and a restrained appetite for loans.

In Minneapolis for the groundbreaking Tuesday on the two Wells Fargo office towers that will rise next to the stadium, Stumpf sat down before hitting the road to visit his 85-year-old mother and 91-year-old father in his hometown of Pierz, Minn., north of St. Cloud.

Q: Nationally, Wells Fargo has been trimming its real estate. Last year the bank said it shrank its real estate by about 18 million square feet in the previous four years, to about 98 million square feet. How much will it shrink?

A: I think we could do more. We’ve not said how much more. As we redo or refresh a store, we’re able to use new ways of designing the footprint such that we can have the same number of people in a smaller place and we can sell the excess off or lease it.

Q: Going into the second quarter, have you seen any uptick in mortgage purchase originations?

A: It’s too early probably to tell where we are. At the end of the second quarter, we’ll announce it then.

Q: What about overall lending? Are you seeing a trend up?

A: All lending, yes, we’re seeing more demand. People are feeling a little bit better about the economy and they’re starting to borrow. If you take the last year, we grew loans by about $40 billion, which is a 7-8 percent net number. It’s pretty broad, but it’s not as robust as it needs to be.

Q: The competitive environment in mortgages has gotten a lot tougher, with smaller players getting more aggressive as the overall pie is shrinking. What does the bank do to grow mortgages?

A: We had probably an oversized share of the market for the last few years because a lot of others left the market. Today we are holding to our credit standards, but we are also making sure that we have enough people … so that we can serve our customers. We’re not going to put our shareholders at risk to get some kind of share that we think we have to have.

Q: Do you get more aggressive going down the credit score spectrum? Last February the bank said it would originate loans backed by the FHA with scores as low as 600. Would you go lower?

A: I don’t know if we would or not. But if we would, it would be with the understanding internally that there would be other things that we’re going to be more restrictive on. … There are probably people who could get a mortgage, should get a mortgage, could afford a mortgage, who are not getting a mortgage. It’s probably too restrictive today.

Q: The big issue facing all banks is revenue growth. Absent mortgage, where does that come from for Wells Fargo? If you were to list in rough order of importance where you see the most opportunity …

A: Wealth, brokerage and retirement is the biggest. We have 10-11 percent of the deposits in the country. We have about 1-2 percent of the wealth. We have all these warm leads. We could double our size of business if we just got those customers who call us theirs to bring their wealth to us. That is by far the biggest. Others that are really important: credit cards, insurance, international. We help U.S.-based customers do business internationally. And we do correspondence business with about 3,000 banks across the globe.

Q: Senator Elizabeth Warren has talked about legislation to end Too Big To Fail. How concerned you are about that?

A: No company in America should be too big to fail. Failure is an important part of the free enterprise system. I believe we are not too big to fail. And I believe that [with] Dodd-Frank … I think Too Big to Fail has been solved.

Q: Then why have the giant banks gotten bigger?

A: Our banks are tiny compared to the size of our economy. Our bank in asset size is less than 10 percent of the U.S. economy. If you take banks around the globe … most countries have five or six banks. We came from a place where we had 14,000 banks. It’s very unconcentrated here. In fact the top four banks in the U.S. make up about 50-60 percent of the banking in the U.S. You take the top 5-6 banks in Australia, in England, in Germany, in Canada … it’s usually 100 percent. Furthermore, those banks are a multiple of their economy. Swiss banks are two times the national economy.

Q: The bank has been subject to repeated litigation related to mortgages since the crisis. Last October, New York Attorney General Eric Schneiderman sued the bank and accused it of “Kafkaesque delays” in loan modifications and violating the National Mortgage Settlement. What’s your take on that? Is the bank doing everything it should in terms of streamlining loan modifications?

A: We don’t agree with his finding at all. For mortgages that we own, some of those we actually own on our balance sheet, we have forgiven $8 billion of principal on those, more than any bank by some distance. We’ve also modified over 900,000 loans. We’ve also held hundreds of modification weekends where we help people. … We’ve done more than what was asked of us in that. We have one state out here who said “Wells Fargo, you didn’t do this right.”

Q: You took home $66 million in compensation last year, must of it from vesting shares of stock. Your shareholders have the say on pay, and they gave the bank’s executive pay a 97 percent approval rating. How does that $66 million square with your Midwestern values and your upbringing?

A: Most of my compensation is market-based. So, in other words, it’s at risk. It’s performance-based. I’m willing to put myself at the same risk our shareholders are. There is no question that’s a lot of money. I get it. I understand that. But the principles that we set for compensation are the principles that have guided us for a long time. Obviously the shareholders are very pleased. I don’t know of any other bank that gets a 97 percent support from their shareholders on compensation not only for me but all of our named executive officers. I think our pay practices, that are set by the board, are appropriate for our company at this time.

Jennifer Bjorhus • 612-673-4683

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