NEW YORK (Reuters) -Wells Fargo CEO Charlie Scharf knows he has a reputation for sternness, but he said that when the bank was finally freed of a $1.95 trillion asset cap by regulators on Tuesday, he became emotional.

"Everyone thinks that I'm this tough, tough person ... but it's been so long in the making, it's impacted so many people so negatively," Scharf said. "All of a sudden, it's like it's all been worth it and everyone's feeling it."

Scharf, 60, took the helm at Wells Fargo in 2019, vowing to repair its deeply entrenched problems from a fake-accounts scandal that erupted in 2016. The bank faced a public outcry, was blasted by lawmakers and slapped with billions of dollars in fines. 

The Federal Reserve's decision to lift one of Wells Fargo's last major punishments this week has largely closed that chapter in its history. It also cements Scharf's legacy after a grueling turnaround in which he overhauled management, slashed headcount and shed businesses.

"I feel great," Scharf told Reuters in a wide-ranging interview on Wednesday after being inundated by congratulatory messages from employees and counterparts at other banks.

He is turning his focus to growth after serving almost six years as Wells Fargo's fixer-in-chief. He plans to expand further in credit cards and investment banking, while also investing in wealth and commercial banking.

It will not expand in mortgages, he said. The bank exited many of those operations after they were beset by scandal.

As Wells Fargo aims to increase earnings, it plans to raise its dividend to keep payouts consistent for investors, Scharf said. Share buybacks will continue, but their pace will probably slow as the bank invests in growth, he said.

Scharf, who previously ran BNY and Visa, took over scandal-plagued Wells Fargo after his two predecessors were ousted. He installed new leadership, slashed more than 55,000 jobs, exited unprofitable businesses and reworked the bank's risk management and controls. In an effort to transform its culture, he also reworked the company's performance review process to boost accountability.

Wells Fargo shares were up 0.5% on Wednesday afternoon, having climbed more than 8% so far this year as investors became more optimistic about the bank shedding its regulatory baggage.  

"The pressure, by the way, for me - it doesn't go away, it just changes" from focusing on historical problems to future growth, Scharf said. "I'm not going to work any less hard, I'm not going to feel any less pressure, I'll probably have more fun."

Below is a transcript of Reuters' interview with Scharf, which has been edited for length and clarity.

REACTIONS  

I feel great. I felt a little emotional yesterday. Everyone thinks I'm this tough, tough person, and I'm not actually. It's been so long in the making, it's impacted so many people so negatively. And I started getting notes immediately from everyone, but especially people who work here. I would say 80% of them, 75% of them were about their experience here over a period of time and how proud they are now, and thankful. Twenty percent were about the $2,000 (stock award) we were giving them.

All of a sudden, it's like it's all been worth it and everyone's feeling it. It's everyone, and I really do believe that everyone who is here has been impacted by the work. Some directly, because they had to do it, but even just people having to talk to their family and friends on weekends about Wells Fargo news, and why do they still work here? You put people through a lot.

GROWTH AREAS

I would expect that across all the remaining businesses that we have, with the slight exception of our mortgage business, all have opportunities to grow and produce higher returns. 

So it's true of the wealth business through commercial still true of CIB (corporate and investment banking), because even though we're seeing results and significant upside there, it's true in our business, and super importantly, it's true in our consumer and small business banking business, where they were most impacted by the sales practice scandal. We're just introducing disciplines back to be able to serve customers more broadly and grow in ways that we haven't been able to. 

People always ask me, "What are the top three priority areas for growth?" And I try not to answer the question, because I really believe every line of business has an opportunity.

ACQUISITIONS

Not on the short list right now. At some time, capabilities around payments, around rewards, around the movement of securities, would we be willing to look at something like that? Sure. But we haven't even begun to think about what that is. And we still have more work to do. We don't want to get ahead of ourselves.

CHANGES AT WELLS FARGO

In some ways, it's a totally different company. The culture is different here, it's not a "me" culture. People want to be treated fairly, they want to be paid fairly, but they come here because they want to work together. That is incredibly important.

Carried to an extreme, it hurt us because we didn't make difficult decisions about people, we didn't confront things. But I do think a culture like that, in a balanced way, is incredible to have. It takes a long time to build. 

We have real accountability in the organization, and that's those that's positive, that's negative, but it also brings with it a strong desire to help people get better. 

It's much more of a meritocracy. Nothing's perfect. We've still got a ways to go, but it drives performance. Every senior leader is expected to be involved in a detailed way in both the strategy and the execution of their business plan.     

HEADCOUNT

We're adding bankers, sales people, relationship managers in the commercial bank, technology resources. We're just funding it through efficiencies that we're getting elsewhere. There's significant opportunities to become more efficient.

BUYBACKS AND DIVIDENDS

We've been buying a lot of stock back, and I anticipate that we'll continue to buy stock back. So on the dividend, what we want to be able to do is increase the earnings capacity of the company (and) increase the dividend to keep a relatively consistent payout ratio. We hope to be able to consistently increase the dividend at a reasonable level. 

Hopefully we'll have more opportunities to invest inside the business so we'll likely buy less stock back than we had.

FUTURE PLANS

(Scharf's hobbies include woodworking, playing guitar and tennis.)

As hard as I've been working, we find time to do the things that allow us to regenerate.  

I'm not going to work any less hard, I'm not going to feel any less pressure. I'll probably have more fun. 

INDUSTRY REACTION

I've heard from just about all the big banks' CEOs congratulating us. When you're on the inside of these things, you know how hard they really are and what it takes. Folks have said it's good for the industry. A strong Wells Fargo, without those constraints, allows Wells to be able to support growth. And even though we're all very competitive, a strong U.S. is a good thing.