In his public introduction as Wells Fargo & Co.'s new president and CEO, Charles Scharf extolled the strength of the bank's businesses and gave no hints that he is aiming for a major strategic overhaul.
"The franchises that exist today are no different than the franchises that existed before some of the issues came out," Scharf said on a conference call, referring to a string of consumer scandals that erupted in 2016 and led to the exit of two of his predecessors and a series of consent orders with regulators. He appeared energized by the new role.
"The franchises are extraordinary, and the performance of the company over a long period of time was exceptional," he said. "It's just a damn good base to build from."
Wells Fargo entered an acute phase of uncertainty when Timothy Sloan stepped down as CEO six months ago and the bank named its general counsel, C. Allen Parker, as the interim boss. In investor presentations, the company said setting its strategic and financial targets for 2020 and beyond would have to wait on a permanent replacement. Investors focused on delays in the company's efforts to rein in expenses.
Scharf declined to provide a timeline for when he would be able to deliver new financial targets, saying his focus until now has been on "learning everything I can about the company."
"I don't have a point of view yet," he said, noting that his official start date is Oct. 21. "I don't come in with any preconceived notions one way or another."
Still, by naming a permanent CEO, Wells Fargo has answered one major question about its future and cleared the way toward completing its efforts to strengthen its risk and compliance systems, mend its relationship with regulators and regain revenue momentum.
"The first priority is to make sure we get the regulatory issues behind us [and] upgrade the foundation that we need to continue to build the company," Scharf said.
Board Chair Elizabeth Duke reinforced the message of continuity and rebuilding.
"Our overall strategy is pretty well laid out. I think Charlie is exactly right when he talks about the work we need to do for our regulators," she said. "I don't think it's going to be a huge difference in the company."
Investors welcomed the news, sending Wells Fargo shares up more than 4% by early afternoon Friday compared with a roughly flat performance for the KBW Nasdaq Bank Index.
"This has been just such a tremendous overhang. To resolve it is just unequivocally a plus," Sandler O'Neill analyst R. Scott Siefers said in an interview.
Siefers called Scharf a "very, very strong pick" based on his lengthy resume, which includes tenures as the former CEO of Visa Inc. and, until accepting the job with Wells Fargo, CEO of Bank of New York Mellon Corp. Scharf was also formerly a top executive at JPMorgan Chase & Co.
"He was the presumed heir to [JPMorgan Chase CEO] Jamie Dimon" at the time, Siefers said. "He was in that ilk of 'can do no wrong.'"
Siefers also said it was important that Wells Fargo fulfilled its stated goal of recruiting an outsider, meeting pressure from lawmakers who have demanded that the bank change its culture.
Duke said Wells Fargo has received a "supervisory non-objection" for the hire from the Office of the Comptroller of the Currency.
As to when the bank might be released from a cap imposed by the Federal Reserve that limits its size to the level of assets it held at year-end 2017, Siefers said he was reluctant to predict a decision that is up to the discretion of regulators.
"The odds of it being lifted this year seem pretty low," he said. He added that 2020 is "probably about as much as I care to venture."
