Wells Fargo’s bankers and branches in the Charlotte region could be on the rise, as the lender prepares to take a close look at its presence in fast-growing markets across the Carolinas.
In Charlotte, Raleigh and Charleston, household formation is outpacing the U.S. rate, says Rick Redden, Wells Fargo’s new lead regional president for the Carolinas. In those areas, Wells Fargo wants to be sure it has the capacity to add bankers over the next three to five years, he said.
Although no final decisions have been made, Redden said Wells Fargo expects to expand beyond its 91 branches – or “stores,” as the lender calls them – in the nine-county Charlotte area. Wells Fargo regional presidents will meet in Charlotte in a few weeks for a quarterly meeting to discuss strategies for the Carolinas, he said.
In addition to adding branches in Charlotte, it’s also possible that Wells Fargo will relocate some of its branches to adjust to growth patterns in the market, Redden said. He said it is too early to say which branches might be relocated.
Wells Fargo’s review of its Carolinas branch network follows the lender’s addition of hundreds of bankers across both states in the past 12 months.
Over that period, Wells Fargo has added about 40 bankers in its branches across the Charlotte region, Redden said. Small-business bankers are among the added positions, while growth in teller positions has been flat, he said.
“We’ve added so many bankers, we’re at a point right now where we’re really having to look at our physical capacity to make sure that in the markets that we see still growing … we’re able to continue adding bankers – and, in some cases, we may need to add stores,” he said.
“Over the next few years, we might at the margin add a store or two in the Charlotte area.”
San Francisco-based Wells Fargo announced Redden’s promotion last month, naming him one of the lender’s top-ranking executives in Charlotte. In his new role, he oversees 460 branches and consumer and small-business banking activities in both states.
Redden, 44, replaces Stan Kelly, who retired after leading community banking in the Carolinas since Wells Fargo’s purchase of Charlotte’s Wachovia six years ago. Prior to his new appointment, Redden was Wells Fargo’s regional president for South Carolina.
Wednesday marked Redden’s first interview with the Observer since being named to the new post. He also spoke with the Observer about small businesses’ appetite for loans, the growing competition in the banking industry for customers and recent criticism about Wells Fargo’s sales culture.
Wells Fargo’s focus on branch placement highlights the banking industry’s growing interest in how best to use branches as an increasing number of banking activities can be done by customers online.
That has led banks to take a hard look at their networks of branches, which are costly to operate at a time when banks are eager to cut expenses. New branches are sometimes smaller than branches of the past and feature fewer tellers.
Wells Fargo has experimented with ways to lower its branch-related costs. In Washington, D.C., last year, the lender began piloting a branch that is about one-third the size of a typical Wells Fargo branch.
Bank spokesman Josh Dunn said the lender’s branch count in the Charlotte metropolitan area has held steady in recent years. While Wells Fargo has closed branches in the region – in some cases to relocate them – it has also opened new ones, he said.
Redden said Wells Fargo continues to see a need for its branches, which nearly three-quarters of the lender’s customers visit at least once a quarter. Branches, among other things, allow bankers to give face-to-face advice to customers, he said.
Wells Fargo’s review of its Charlotte branches also comes as the city’s population has risen.
According to census estimates released in May, Charlotte bypassed Fort Worth, Texas, to become the nation’s 16th most populous city. Charlotte, with an estimated population of 792,862, gained more residents than all but seven other cities between 2012 and 2013.
As a result of that growth, Charlotte is a market Wells Fargo has identified for “selective expansion,” Redden said.
“As the community continues to grow in areas, we’ll look at where we might add stores,” he said.
Here’s how Redden weighed in on other banking topics.
Small-business lending down
Small-business lending, which has been a large focus for Wells Fargo, remains below prerecession levels, Redden said.
While demand for such loans is picking up in the Charlotte region, the appetite could be better, he said.
“We saw early in the (economic) recovery pretty good resurgence of demand, and then it slowed somewhat last year. We’re seeing evidence that it’s coming back to a degree now,” he said.
Redden said some businesses are still uncertain about whether they want to borrow. Demand for loans, he said, is “not anything like the levels that it was years ago. We’re working to make every credit-worthy loan that we can. It’s one of our top priorities, if not our very top priority.”
Criticism over sales pressure
A big focus for Wells Fargo CEO John Stumpf is increasing the number of Wells Fargo products purchased by its existing customers – a strategy known as cross-selling. The bank’s goal is eight products per household.
The practice has led to allegations that the bank has opened accounts or credit lines for customers without their permission as employees sought to meet quotas.
Redden said Wells Fargo has made it a priority that its customers have a good experience with the bank. Wells Fargo has a “cultural focus” on meeting customers’ financial needs “and not providing anything that goes beyond what their needs are,” he said.
“The bank is constantly looking at the team member experience and the customer experience,” he said. “I see those as our top priorities.
“It’s a people business. … We’re constantly looking at aspects of the customer experience through a team member lens … and it’s really something that leadership in the markets is responsible for and that we need to work on all the time.”
Competition for customers
Just as getting small businesses to borrow remains challenging since before the recession, so is getting consumers to take on more debt.
Nationwide, consumer debt is 8.2 percent below its peak of $12.68 trillion in the third quarter of 2008, according to a report last month from the Federal Reserve Bank of New York.
Redden said banks in Charlotte are “hungry for business.”
“It’s a very competitive environment,” he said.
“Coming out of the recession, you had many banks that were working to put themselves back in a position where they could lend. Now, most banks are interested in lending and are competing for every customer opportunity that’s out there.”