Sept. 17--Wells Fargo & Co., which has more than 800 workers in downtown Chicago, plans to add 50 employees to its local workforce over the next year.
The boost in local payroll will come in such areas as insurance, commercial banking and wealth management -- but not in retail branch banking. The San Francisco-based megabank has more than 6,000 branches in the U.S., more than any other bank, but only about 10 are in the Chicago area.
And that's unlikely to change in the foreseeable future, Wells Fargo Chief Executive John Stumpf says.
"We can't buy anyone anymore because of our size," he said in an interview. Banking regulators typically frown on an institution holding more than 10 percent of deposits nationwide, and Wells Fargo is in that ballpark.
So if $1.4 trillion-asset Wells Fargo wanted branches in the Chicago area, the bank would have to open them from scratch. And when it typically opens branches, it does so "where we already have existing operations," Stumpf said. "I wouldn't say 'never' in Chicago, but it's not on our planning board right now."
"We do have online and mobile banking, and people can bank with us that way," he said.
Of Wells Fargo's 90 business lines, more than 40 have a presence in the Chicago market. They include an agriculture industries group, commercial real estate and corporate trust services.
"Everyone always wants to know their plans in Chicago," said Wintrust Financial Corp. CEO Edward Wehmer, who calls Wells Fargo a "well-run institution."
"They have arms and legs here but no torso," Wehmer said of Wells Fargo's dearth of retail branches.
Stumpf was among 500 of the bank's U.S. executives who were in Chicago for a three-day leadership meeting that ends Tuesday. This week Wells Fargo also officially opened its 300,000-square-foot regional headquarters in the CME complex on Wacker Drive, where most of its Chicago operations are being consolidated.
Five years after the collapse of Lehman Brothers, which marked the start of the financial crisis, Wells Fargo has emerged as one of the world's strongest financial institutions. It acquired Wachovia, another large institution, during the crisis. Today, Warren Buffett's Berkshire Hathaway is a major Wells Fargo investor.
"We should never, ever put taxpayers in the position again to have to support any failing institution of any kind," Stumpf said. "No bank, no insurance company, no anything should be too big to fail, because failure is an important part of the free enterprise system."
The housing market has "clearly improved," but "we're still not anywhere near where it was at the top," he said. Wells Fargo recently announced about 3,000 layoffs, mostly in its mortgage business.
Stumpf frequently gets asked about how the rise in 30-year, fixed-rate mortgages to more then 4.5 percent will affect the housing market. But financing costs alone don't hurt housing purchases, he said.
"There are three important factors in buying a house: What you make, what you pay for the house and what you pay for financing," Stumpf said. "I don't know of anyone who says, 'That darn 4.5 percent rate is keeping me from buying a house.'"
Stumpf was 23 when he bought his first house in 1976. He said his first interest rate was 8.5 percent. His second was 11.5 percent.
"We're just conditioned to these historically low rates," he said. "If we had jobs and income, that will have a bigger influence on the future of housing than 100 basis points," or 1 percentage point.
Stumpf also said "savers have paid a real price in this recovery" as the Federal Reserve has been determined to keep interest rates low, which has also affected the interest that banks pay on their certificates of deposit.
"Five years after the downturn, four years after the recovery started, I'm more in the camp of letting rates normalize," Stumpf said. "That would allow for more interest to be paid to savers."
About 10,000 Americans are turning 65 each day.
"I don't think they ever thought they'd retire with these kinds of yields on their savings," he said.
Making loans is also a challenging business these days, he said.
Historically, Wells Fargo has had a loan-to-deposit ratio of 100 percent, meaning for every $1 in deposits it also has $1 in loans on its balance sheet.
Today, that has fallen to about 80 cents in loans for every $1 in deposits.
"We'd love to make more loans to qualified people, but consumers continue to pay down debts, and many of our corporate borrowers are flush with cash and not borrowing," Stumpf said.
Lending to midsize businesses has grown at Wells Fargo for 12 straight quarters, the company recently told analysts, but "it's very competitive," he said.
Lisa Johnson, who heads commercial banking for Wells Fargo in Wisconsin and Illinois, said loans are up 13 percent year to date in the Chicago area. Wells Fargo has about 40 Chicago-area commercial bankers, who make loans to businesses with revenues ranging from $20 million to $1 billion.
She said that they have little need for "stores," which is what Wells Fargo calls its branches.
"It's not a barrier to not have a store network," she said. "They could care less."
Paylocity, an online payroll service based in Arlington Heights, said Wells Fargo is one of several banks whose services it uses.
Specifically, Paylocity uses Wells Fargo's treasury services, which help it to pay clients' employees. Because Paylocity has customers nationwide, it seeks banks that have big U.S. branch networks.
"A retail presence allows customers who aren't getting paid electronically to go into a branch to cash their checks," said Paylocity CEO Steve Beauchamp. Privately held Paylocity has about 700 U.S. employees, half of which are in the Chicago area.
Asked about Wells' lack of Chicago-area branches, Beauchamp said, "that's one reason we maintain multiple banking relationships."
Title: Chairman, CEO and president of Wells Fargo & Co. Became chairman in 2010. Was named CEO in June 2007 and was elected to Wells Fargo's board of directors in 2006. He has been president since 2005.
Born and raised: Minnesota, the second of 11 children
Age: Just turned 60 on Sunday
Enjoys: Playing online bridge
Education: Earned bachelor's degree in finance from St. Cloud State University in St. Cloud, Minn., and his MBA from the University of Minnesota
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Original headline: Wells Fargo to add workers in Chicago, but not retail branches
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