Don Melendez, who has served as the Idaho regional president for Wells Fargo Bank since 2012, still gets a thrill when he sees a young couple qualify for a mortgage and move into their first home, or when a new doctor buys that first office.
A native Texan, Melendez, 63, began his career as a commercial lender. He joined Wells Fargo 25 years ago.
Wells Fargo is the No. 1 bank in the Treasure Valley, with 24 branches and deposits of $2.9 billion — a commanding 27 percent of the market. This giant has been getting bigger, too. It controlled $1.4 billion in deposits 10 years ago and 18 percent of the market. In those days, Wells trailed U.S. Bank.
Q: How did you get into banking?
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When I went into banking, banking was considered really dull and static and stodgy. Today it’s anything but that.
I wanted to be a lender. I thought that was really cool, lending people money. I was a real estate lender in Houston and I loved my customers. We lent money and you could see something come out of the ground. In Houston, we were doing a lot of offices and warehouses and I had a couple of subdivisions and I took a lot of pride in my work, that we were providing something people needed.
I was the chief operating officer for about a billion-and-a-half-dollar bank in El Paso and that was another insight into people. And then I gravitated to the retail side of the bank.
I didn’t set out to become a manager. At first it was something to do, but I didn’t really like it, because I had to deal with people. But today, it’s almost intoxicating every day to see how people are special and how they grow and they figure things out, they struggle, they try, they fail and then they try again.
Q: What kind of loans don’t you do?
We don’t do reverse mortgages. We used to, but the regulatory piece got too big.
Q: How is making a loan today different than in past decades?
I think we do a lot better job today in going back and saying what were we thinking, what was our assumption, how did we structure this loan, even on consumer loans.
Of course, that’s done on more from a statistical perspective, using megadata. We use that to help us understand what’s going on.
It’s a much more data-rich environment today. I’m doing more research than I’ve ever done before.
Q: How does regulation affect the bank?
We’ve always been regulated. Dodd-Frank [a 2010 law that imposed new restrictions on bank practices] was necessary. Some of that regulation was good, but some of it added costs, and I saw how it impacted smaller banks. That probably wasn’t good.
We were one of the stronger banks coming out of the recession. We embraced regulation and we changed. We added a lot of backroom support for that.
I think it’s a good process that they’re going through now to re-evaluate whether all those regulations are still necessary. I think that’s a debate we should have.
Q: What do you think of alternative funding sources?
You can go on Craigslist and you’re having a wedding and there’s someone who will finance your wedding dress. It could be someone with a laptop sitting in their kitchen doing business.
I think people need to know the risks they’re taking. I think there are some nonbank financing tools that are OK.
This is a huge, unregulated kind of growth out there. Some of it is good and some of it is really, really risky. And that’s our challenge, to help consumers understand that.
We’re rolling out a “Get Smart About Credit” program to teach people. We’re also going to have something called “Hands-on Banking” that teaches people how to use a bank. For a person to do well, they have to understand building credit is a good thing. You don’t need to borrow a lot of money, but you need to understand how to build your credit.
I drive past places that offer title loans [at high interest rates and at risk of customers losing their cars if they fall behind on payments] and I see that as a failure on our part on educating the consumer. It’s a vital part of that economy at that level. I respect it. I recognize it. It’s something we’re trying to overcome by education.
If you’re in that segment where you’re living paycheck to paycheck, you can’t afford one thing to go wrong. And that’s such a bad thing. And that’s why using your hard-earned money to pay fees probably isn’t good.
Q: How has online banking affected branches?
We see it in different ways. People aren’t coming into branches as often. They’re using digital channels. They’re using their phone, their desktop computer, their iPhone — they’re taking advantage of that.
Will people always want branches? Yes. Millennials are very tech-savvy folks. But when they have an issue, they want to come in and talk with somebody. They don’t want to do it over the phone. They don’t want to do it online. They want to sit across a desk from someone and say, “I’m having this issue.”
So I think there will always be branches. Do we need branches everywhere? Probably not. In rural communities that’s something we look at really hard. But the data I’m seeing says that the dropoff in branch visits is significant. In some smaller communities, I think you’ll see some branches close, because it makes sense.
Edited for length and clarity. This story is part of special coverage of banking in the Oct. 18-Nov. 14, 2017, edition of the Statesman’s Business Insider magazine. John Sowell: 208-377-6423, @JohnWSowell
About Wells Fargo
It was founded in San Francisco in 1852 during the California Gold Rush. It became known for its fleet of stage coaches that transported people and goods across the American West. Today, Wells Fargo is the third largest bank in the country with $1.9 trillion in assets, 8,500 locations globally, and 84 branches in Idaho. It became the state’s largest bank following a 2000 merger with First Security Bank, then Idaho’s largest.