Wells Fargo, which has come under fire in recent weeks for fraudulently creating more than 2 million fake accounts, remains the Washington area’s largest bank, according to new data from the Federal Deposit Insurance Corp.
The San Francisco-based financial institution holds $31.87 billion in local deposits, accounting for 17 percent of the region’s money, according to the FDIC.
This is the fourth consecutive year Wells Fargo has led the list of the region’s largest banks, but banking analysts say its reign at the top could soon end, as lawmakers across the country call for severing ties with the bank.
Wells Fargo employees opened 1.5 million phony deposit accounts — including an estimated 15,000 in Maryland — and 565,000 unauthorized credit card accounts in recent years in a race to meet company quotas, according to an investigation by federal regulators. The Consumer Financial Protection Bureau fined the bank $185 million as a result.
“This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals,” the Consumer Financial Protection Bureau said in a statement. “Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.”
As a result, California and Illinois have said they would stop doing business with Wells Fargo for at least a year. A number of other states and municipalities, including the District, are looking into similar measures.
Maryland recently reviewed its dealings with the bank before determining it did not have any major underwriting, investment or dealer-broker contracts with the bank, according to Susanne Brogan, the state’s deputy treasurer for public policy. She added that some state agencies keep bank accounts at Wells Fargo.
“Those contracts will be allowed to continue until their terms run out,” Brogan said. “We didn’t want to put those agencies in the predicament of not having access to banking services by canceling the contract.”
Wells Fargo recently said as many as 15,391 bank accounts in Maryland could have been created fraudulently. A spokesman for the bank said it was not clear how much money was held in those accounts but said new checking and savings accounts require an opening amount of at least $25.
Maryland state Sen. C. Anthony Muse, a Democrat from Prince George’s County, has been among the bank’s most vocal critics.
“Maryland cannot do business with an institution that robs our citizens and targets people based on race,” he wrote on his Facebook page. “We should not allow them to do business here.”
In Virginia, state agencies and local governments keep about $1.9 billion in deposits in 1,500 Wells Fargo accounts, according to Treasurer Manju Ganeriwala. But, she added, the state was not looking to cut ties with the bank, which recently bought $385 million in municipal bonds.
“We’re monitoring the situation, but we are not planning to take any action right now,” she said, adding that breaking the state’s contracts with Wells Fargo would take at least four to six months and would probably result in fines and penalties. “We do business with Wells Fargo on a number of different fronts and don’t want to make any rash decisions.”
But that doesn’t mean local families aren’t moving their money. Executives at other area banks say they have noticed a pickup in deposits but that it is too soon to tell what the impact will be.
“There’s going to be some migration of deposits, but it’s really hard to measure,” said Bert Ely, a financial industry consultant in Alexandria. “The last time we saw this level of shifting because of deposit concerns was back during the financial crisis.”
At EagleBank in Bethesda, the area’s eighth-largest bank, chief executive Ronald D. Paul says he is seeing an uptick in larger clients, including municipalities, nonprofits, law firms and escrow companies.
“I will tell you, we hear it anecdotally all the time — whether it’s Wells Fargo or something else, people say they’re coming to us because they’re tired of the big banks,” Paul said. “Candidly, I think that’s going to be the case more and more.”
Deposits at EagleBank rose 9 percent to $5.4 billion in the year ended June 30, according to the FDIC. (Local deposits at Wells Fargo, by comparison, grew 2.7 percent in the same period.)
Among the area’s largest banks were Bank of America (with $30.28 billion in local deposits), Capital One ($25.65 billion) and SunTrust Bank ($18.6 billion), according to the FDIC. Overall, 82 banks had a presence in the Washington region, accounting for 1,671 bank branches.
The FDIC considers metropolitan Washington to include the District, its Maryland and Virginia suburbs and Jefferson County in West Virginia. Deposits from the Arlington-based online financial firm E-Trade Financial were excluded in these calculations.
|bank||Local deposits||Market share|
|Wells Fargo||$31.87 billion||16.89%|
|Bank of America||$30.28 billion||16.04%|
|Capital One||$25.65 billion||13.59%|
|United Bank||$5.39 billion||2.85%|
As of June 30, 2016. Source: Federal Deposit Insurance Corp.