Wells Fargo CEO John Stumpf's Eventful 2013
November 20, 2013 11:00 PM
There were dividend increases, record profits and promising growth initiatives in businesses such as credit cards. But with the pressure on the company's mighty mortgage business intensifying, it wasn't all smooth sailing for American Banker's Banker of the Year.
JANUARY
After its capital distribution plan is approved by the Fed, Wells announces it will bump up its dividend by 3 cents a share to 25 cents, starting with the first-quarter's dividend payout. The increase reflects "the confidence we have in our company's performance," Stumpf says. In March the Fed approved an additional 5-cent dividend increase for Wells shareholders.
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MARCH
Having rallied at Wells Fargo branches and outside Stumpf's home during the height of the Occupy Wall Street movement, protestors and housing activists (pictured here outside the bank's 2012 shareholder meeting in San Francisco) continue to follow Stumpf in 2013 at conferences (including one of American Banker's) and at the bank's annual meeting.
(Image: Bloomberg News)
APRIL
Wells reports first-quarter net income of $5.2 billion or 92 cents a share, handily beating the 88-cent average estimate of Wall Street analysts. Executives say they're still bullish on the U.S. mortgage business even as refinancing activity slows, and the bank, which originated one out of every four U.S. residential mortgages in 2012, continues to add staffing to its mortgage unit in the first quarter of 2013 despite a 13 percent drop in origination from the fourth quarter. But soon after, the mortgage business begins announcing mass layoffs .
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MAY
Stumpf's lack of a golf game becomes more widely known when his retired predecessor, Dick Kovacevich, represents the company in the Wells Fargo Championship pro-am in Charlotte, N.C. "John doesn't play golf," Kovacevich says, explaining his presence at the annual tournament. "They couldn't find anyone else this year, so they went to the bottom of the barrel and selected me," he joked. Kovacevich's trio finished five shots behind the winners.
MAY
Stumpf, speaking at an investor conference in London, says that government-sponsored enterprises Fannie Mae and Freddie Mac need to be retained in some form to make the housing finance system work. "Our balance sheets aren't big enough to put all these mortgages on our books," he says.
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JULY
Wells announces second-quarter net income of $5.5 billion, up 19 percent from a year earlier. Earnings per share beat Wall Street's estimates by a nickel. Analysts caution that the earnings momentum will be tough to sustain-but with the help of expense cuts and a large reserve release, Wells goes on to post another record quarter three months later , despite a sharp falloff in third-quarter mortgage revenue.
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AUGUST
Wells Fargo announces a plan to expand its credit card business through a partnership with American Express. Wells regularly touts its ability to "cross-sell" customers on additional products, but executives say that only one-third of its 70 million customers currently have a credit card from the bank-making cards an important diversification opportunity for the home mortgage heavyweight.
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AUGUST
In a BankThink op-ed in American Banker, Stumpf writes that amidst all the controversy over big banks, there should be more focus on "what needs to be done to ensure smaller community banks will continue to have a vital role in supporting the U.S. economy and our way of life." Noting his upbringing in a Minnesota farming community (and his eventual marriage to the local banker's daughter), Stumpf says he "learned early in life how essential community banks are to the people they serve." Many provisions in new regulations, he argues, "are burdensome even for large banks like Wells Fargo that have scope and scale-but are particularly punitive for small community banks."
OCTOBER
New York Attorney General Eric Schneiderman sues Wells Fargo for violating the 2012 National Mortgage Settlement, claiming the bank has failed to satisfactorily reform its loan modification and foreclosure practices. A Wells spokeswoman says the bank is committed to the settlement and has "voluntarily taken steps to put into place all of the customer service changes that would have been part of an agreement with the New York attorney general."
(Image: Bloomberg News)
NOVEMBER
Wells keeps its status as one of only two banks with the minimum capital buffer required of institutions identified by regulators as systemically important banks globally. Wells' and State Street's 1% buffer requirement compares with requirements of 1.5% for Bank of America, 2% for Citigroup and 2.5% for JPMorgan Chase.
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