When banking insiders talk about the corporate culture of Wells Fargo, they use the same adjectives that cropped up in descriptions of Wachovia two decades ago.
They call it a cautious, conservative company that doesn't chase financial fads and won't lend money without close scrutiny of borrowers. That non-nonsense approach to doing business helped it avoid the worst of the subprime mortgage mess that has hobbled Wachovia and other large institutions.
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And observers say that culture should make Wachovia's employees feel right at home, if the $15.1 billion merger with the San Francisco-based banking giant goes through.
“The great thing about Wells is that it's a retail bank and it looks a lot like Wachovia looked two years ago before it bought Golden West,” said John Connaughton, an economics professor at UNC Charlotte.
James Early, a senior analyst at the Motley Fool investment guide, said Wells Fargo maintained its strict lending standards while other banks loosened theirs to add exotic loans. He has had other banks brag to him that their mortgage-backed securities are sound because they'd been vetted by Wells Fargo.
“It's definitely a conservative bank,” Early said. “Wells won't just give mortgages to anybody. They are very methodical, very in-depth.”
Many observers trace that cautious, no-nonsense corporate culture to its top executives, especially Chairman Dick Kovacevich.
He worked for Citibank in the 1970s, trying to get people to use the latest technological advance – ATMs – rather than tellers. By the 1980s, he'd moved to Norwest, a smaller Minneapolis-based bank that eventually merged with Wells Fargo.
The 64-year-old Stanford MBA has won praise from no less a financial authority than billionaire investor Warren Buffett, whose Berkshire Hathaway firm owns Wells Fargo stock. USA Today last year described Kovacevich as possibly “the best banker you've never heard of.”
If Kovacevich defines the bank's past, President and CEO John Stumpf, 55, represents its future. A Minnesota native, Stumpf is a 26-year veteran of the bank. He worked his way up through the ranks, serving in the 1990s as the point man for Norwest's acquisition of 30 Texas banks with total assets of more than $13 billion.
He has said Wells Fargo took a pass on exotic financial and mortgage instruments, preferring instead to focus on doing more with the customers it already had. The bank has focused so tightly on “cross-selling” its customer base that its clients use about twice as many Wells Fargo financial products as other banks' customers typically use.
During a conference call with analysts Friday, Kovacevich said Wachovia and Wells Fargo share a common culture of high ethical values, customer-focused business practices and a deep commitment to the communities they serve.
Wells Fargo studied the Wachovia merger thoroughly before moving ahead, he added, and will take its time integrating the two companies.
“We will not change our policy about doing it right, because the cost of doing it wrong has been so (readily) observed in the marketplace,” he said.
An executive who has worked both for Wells Fargo in San Francisco and Bank of America in Charlotte said Wells Fargo's corporate culture blends the laid-back, accepting psyche of its West Coast location with the straight-shooting sensibilities of its Midwestern roots. It is aggressive about growth and expansion, but in more of a “Minnesota nice” way, without throwing sharp elbows at the competition.
Wells Fargo has been a good corporate citizen in California, said Alan Fisher, executive director of a nonprofit group that urges banks to give fair and equal access to poor people seeking loans. The bank has dabbled in high-interest payday lending, he said, but has also helped non-profits buy foreclosed properties.
“We do have concerns,” said Fisher, head of the California Reinvestment Coalition. “But I think they are a well-run bank.”
During Friday's call, Kovacevich, who is nearing retirement age, and Stumpf were so loose that they joked about one piece of unfinished business related to the merger.
“I've asked Dick to stay on and help,” Stumpf said. “What I have not figured out is how to talk to (his) wife Mary Jo” about that.
Staff Writer Elizabeth Leland and researcher Maria David contributed.