Wells Fargo CEO John Stumpf: Goal Is NOT To Make Money | Mad Money | CNBC — Transcript

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1. 0:05[Music]
2. 0:20the market initially loved it when fed
3. 0:22Chief Janet yell decided to do the same
4. 0:24thing and keep interest rates low for
5. 0:26the moment at least at first even as
6. 0:28that decision didn't come as all that
7. 0:29much of a surprise
8. 0:30but there's one group that could have
9. 0:31really benefited from a rate hike and
10. 0:33that's the banks because they make more
11. 0:35money off your deposits when the FED
12. 0:37raises short-term rates sooner or later
13. 0:39though the FED will start tightening and
14. 0:40when that happens you'll want to own the
15. 0:43best bank in the country the San
16. 0:44Francisco base Wells Fargo in fact I
17. 0:47think this one's worth the wait even if
18. 0:48Janet Yellen puts off any rid hikes
19. 0:50until next year because Wells has a
20. 0:52tremendous deposit base gigantic
21. 0:53exposure of the mortgage Market a
22. 0:55fabulously streamlined business and most
23. 0:57important the top-notch management
24. 0:59that's why we own for my Trel trust one
25. 1:00of the biggest positions you can follow
26. 1:02along at actionalertsplus.com and of
27. 1:04course it's 2.8 87% yield doesn't hurt
28. 1:06either so let's take a closer look with
29. 1:08John stump I'm very excited about this
30. 1:10the Este steam chairman and CEO of Wells
31. 1:12Fargo hear more about the state of his
32. 1:14bank and the US economy Mr stum welcome
33. 1:17to me buddy good to see you it's nice to
34. 1:19be here you know I I you shouldn't get
35. 1:21excited about seeing a banker but I I
36. 1:24what you build is amazing well and your
37. 1:26predecessor too and and and people
38. 1:28actually we're in our 164th year this
39. 1:30this year and this is our hometown San
40. 1:32Francisco so we started in 1852 so
41. 1:34there's been a lot of people you know
42. 1:37along the way you know if there wouldn't
43. 1:38have been Innovation we would have stage
44. 1:40coaches on the freeway here let's start
45. 1:42with Innovation you probably have the
46. 1:43most you're probably the most
47. 1:44technologically advanced Bank in the
48. 1:45country even though you're the largest
49. 1:47well you know we actually have an
50. 1:48innovation Center and we actually follow
51. 1:50our customers and some of the people
52. 1:52influencing our industry today are here
53. 1:55in the Bay area but not in our industry
54. 1:57Googles apples and those kind of folks
55. 1:59have a big influence on how customers
56. 2:01think about retailing and how and how to
57. 2:03get Services I know those are the
58. 2:04companies you actually say you admire I
59. 2:06do admire them they take complexity and
60. 2:09they make it simple that is real
61. 2:12Innovation anybody can take Simplicity
62. 2:14and make it complex the other way around
63. 2:16is tough all let's talk about today
64. 2:18because I know that you're a bank that
65. 2:20has said listen we're not going to wait
66. 2:21for the FED to move we're going to start
67. 2:24doing money with doing things with our
68. 2:25money that no that not many banks are
69. 2:27doing yet your stock fell 3% today isn't
70. 2:29that an anomaly given the fact that
71. 2:31you're the one Bank of the big banks
72. 2:32that said listen we're going to find
73. 2:33ways to make money with that money and
74. 2:35everyone else is kind of just petrified
75. 2:36and keeping it all in cash Yeah we
76. 2:38actually went out last quarter and said
77. 2:40we think rates could be lower for longer
78. 2:43you know and well you know and we don't
79. 2:46try to spec we don't speculate on rates
80. 2:48but we do have you know views on things
81. 2:50if you look at the rest of the world Jim
82. 2:52in fact I think today's comments and and
83. 2:54the activity by the fed or lack of
84. 2:56activity was a statement about the rest
85. 2:58of the world almost more so than the US
86. 2:59us so when you look at negative rates in
87. 3:02some places slowing in China you know
88. 3:05the U uh uh the EU doing only okay has a
89. 3:09big influence on the global economy so I
90. 3:12so if you took United States in its just
91. 3:14isolation it's actually doing quite well
92. 3:18but in a global economy surely you know
93. 3:21lack of exports today probably takes a
94. 3:23point off of our our GDP growth now I
95. 3:25also felt that to some degree you're
96. 3:27largely do domestic
97. 3:30so that 1% that you just talked about
98. 3:32knocked off won't really hurt you but
99. 3:34your C your CFO the other day came out
100. 3:37and I was quite surprised you said
101. 3:38commercial real estate has seen
102. 3:40significant slowdown how's that possible
103. 3:43well you know Ashley a lot of in our
104. 3:46that's from a lending side if you look
105. 3:47at Ash construction there's cranes up
106. 3:50everywhere but a lot of fixed income
107. 3:53investors
108. 3:55uh or insurance companies are buying a
109. 3:57lot of those end loans that we would
110. 3:59have had traditionally so it puts
111. 4:01pressure on what's going on in the
112. 4:04portfolio although we've seen some
113. 4:05growth it's it's uh it's just a lot of
114. 4:08competition for only a certain number of
115. 4:11assets but at the same time you did that
116. 4:12very uh opportunistic acquisition with
117. 4:14GE we love that deal talk a little bit
118. 4:16about it because I think people don't
119. 4:17understand the other side of what GE is
120. 4:19doing well GE actually I don't know that
121. 4:22company as well as I should but gecc the
122. 4:25finance side was half or more than half
123. 4:28of the company and
124. 4:30through I think Jeff and and the board
125. 4:32and the management team want them to
126. 4:34become more of an industrial company and
127. 4:36they're reducing their Reliance on the
128. 4:39financial part of the business so we
129. 4:41bought a number of loans there and with
130. 4:43Blackstone we financed some and we think
131. 4:45that's a great add to our organic
132. 4:47business now I I want to mention that
133. 4:49your bank was the most opportunistic
134. 4:51during the big decline how did it all
135. 4:53work out because you you took on a lot
136. 4:55of assets I know you couldn't have been
137. 4:56that crazy about you had a lot of real
138. 4:57estate actual corporate real estate
139. 4:59Where Are You Now versus where you were
140. 5:015 years from now and where will you be
141. 5:03because you're a buyer back of stock
142. 5:04you're increasing the dividend what's it
143. 5:06look like 5 years ago what's it look
144. 5:07like now what's it going to look like 5
145. 5:08years from now let me go to the runup of
146. 5:11to 2008 or n how you behave and how you
147. 5:16think about credit and serving customers
148. 5:18in the boom times will all allow you to
149. 5:21have the capital and capacity when the
150. 5:24real operates come in the bad times so
151. 5:26there was times between 2000 2008 where
152. 5:29other mortgage lenders as an example
153. 5:31were making loans with nothing down no
154. 5:34verification the so-called lawyer loans
155. 5:37they were doing negative am mortgages
156. 5:39and we didn't participate in most of
157. 5:42that so we gave up billions of
158. 5:43originations hundreds of millions of
159. 5:45profit but then when everything came
160. 5:48apart we were able to use our Capital to
161. 5:50buy a wacovia and that turned out to be
162. 5:53give you the regional and National
163. 5:54exactly it gives you you know the
164. 5:56ability to do that right and now that
165. 5:59has that'll be the go down as the best
166. 6:01large acquisition ever in our industry
167. 6:04me I don't think ever can happen what
168. 6:06percent of the country did you have
169. 6:08versus now yeah in fact it was about we
170. 6:10were almost the mere image west of the
171. 6:13Mississippi that wov is on the on the
172. 6:15east side so we are both about $600
173. 6:18billion do companies we put together for
174. 6:191.2 trillion today we're almost 1.7 or
175. 6:221.8 uh deposits have grown core deposits
176. 6:26from like 650 billion to a trillion 2
177. 6:29loan are up uh substantially so we're
178. 6:33essentially a Main Street Bank we do
179. 6:36traditional banking some of it's quite
180. 6:37sophisticated but we're not a you know
181. 6:40we're not a money center Bank we're not
182. 6:42a you know we don't Corner aluminum
183. 6:44markets that's not who we are and that's
184. 6:46why when I read about the justice
185. 6:48department investigating Banks I I I
186. 6:49never see the largest bank in the
187. 6:51country mentioned well you know we
188. 6:53didn't do everything right okay and and
189. 6:56and we've we've had issues but everybody
190. 6:58in our company we think as a risk
191. 6:59manager you know how we behave how we
192. 7:02think about going to Market cuz I you
193. 7:05know people surprised when I say this
194. 7:07our number one goal when we get up in
195. 7:08the morning is not about making money
196. 7:10it's about serving customers that's the
197. 7:12reason for business the result is you
198. 7:14make money so and we think about risk
199. 7:17adjusted rates of returns we want we
200. 7:19think about you know will this loan P
201. 7:22every loan's a good one the day you make
202. 7:23it the key is you have to get up return
203. 7:25sometime and in The Lending business the
204. 7:27margins are sufficiently thin you have
205. 7:29to get it right most of the time but
206. 7:31that's not the only risk we manage today
207. 7:32so that's how we think about that well
208. 7:33you speak about return Warren Buffett
209. 7:35obviously huge huge shareholder and
210. 7:37that's a pretty amazing Marquee in
211. 7:39itself but you've been returning Capital
212. 7:41can you get aggressive when you see your
213. 7:43stock down say 2.3 just say look this is
214. 7:45really nuts 2 to 3% we're going to be
215. 7:47buying back stock or is the government
216. 7:49still saying wait a second we don't want
217. 7:51you doing that yeah every year there are
218. 7:53something called the C car the
219. 7:55comprehensive Capital uh uh uh analysis
220. 7:58that we do and as part of that process
221. 8:01we set our dividend policy for the year
222. 8:04and our and our Capital BuyBacks or our
223. 8:06stock BuyBacks as part of a whole
224. 8:08Capital return now we can make decisions
225. 8:11within quarters of how we do that and we
226. 8:14always want to buy it of course when the
227. 8:16intrinsic value is more than than the
228. 8:18actual value or the stated value and
229. 8:21that could be right here you know uh it
230. 8:24could you know you're not going to get
231. 8:25me to commit to that Jim but but but we
232. 8:27think returning capital is really
233. 8:28important well terrific that's John
234. 8:30stump chairman president and CEO of
235. 8:32Wells Fargo which you know I think is
236. 8:34the best bank in the country St right
237. 8:39Booyah Jim Kramer here from M money
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