When banking insiders discuss the 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 strategy helped it avoid the worst of the mortgage mess that hobbled Wachovia and other large institutions.
And observers say that culture should make Wachovia's workers feel right at home, if the $15.1 billion merger with the San Francisco 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.
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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.
“Wells won't just give mortgages to anybody,” Early said. “They are very methodical, very in-depth.”
Many observers trace that approach 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 has won praise from no less a financial authority than billionaire investor Warren Buffett, whose Berkshire Hathaway firm owns 9 percent of Wells Fargo's 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 bank veteran who 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 passed on exotic financial and mortgage instruments, preferring to focus on doing more with existing customers. The bank has focused so tightly on “cross-selling” its customer base that its clients use about twice as many Wells Fargo products as other banks' customers typically use.
During a conference call with analysts Friday, Kovacevich said Wachovia and Wells Fargo share a culture of high ethics, customer-focused business practices and a deep commitment to their communities.
Wells Fargo studied the Wachovia merger thoroughly before moving ahead, he added, and will take its time integrating the two. “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.”
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.
During Friday's call, Kovacevich, nearing retirement age, and Stumpf were 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.