Wells Fargo Stays On Growth Track

February 8, 2008
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GRAND RAPIDS — Iris Chan, group head of Wells Fargo’s Commercial Banking group, likes what she sees in Grand Rapids, particularly her company’s growing presence in this market. 

In February 2004, Wells Fargo opened a regional commercial banking office here to provide financial services to middle-market businesses. It was the company’s first commercial banking operation in Michigan’s Lower Peninsula. The office started with two people — Regional Vice President Don VanDine and then-Assistant Vice President Kyle Baldwin  — and 1,500 square feet of space in McKay Tower. The commercial banking operation now occupies the entire 10th floor of the building  — or 9,000 square feet — and has a lease option on another floor to accommodate future growth. Staff has grown to include 22 people across Wells Fargo’s local commercial banking, real estate and wealth management divisions.

Wells Fargo has expanded its offices in McKay Tower twice in the past three years and expects to expand again soon, VanDine said.

Wells Fargo actually employs 274 people on the ground in Grand Rapids across Wells Fargo Commercial Banking, Wells Fargo Home Mortgage, Wells Fargo Financial (consumer lending), Wells Fargo Financial Leasing, Wells Fargo Financial Acceptance and Wells Fargo Insurance Services.

Wells Fargo Insurance Services came to town last summer when Wells Fargo purchased Universal Insurance Services Inc., a closely held and independent regional insurance agency founded in Grand Rapids in 1982. The purchase expanded Wells Fargo’s local presence by 115 people. Statewide, Wells Fargo employs more than 1,000, VanDine estimated. 

“Under Don’s leadership over the last four years, this office has actually continued to grow, so that speaks to the fact that there are still good opportunities for us,” said Chan, who oversees more than 85 commercial banking offices nationwide.

“We really like to localize the service model, meaning that the people in this office stay very close to the market so that we know and work and play with the people we do business with.”

The bank’s commercial arm in Grand Rapids is in partnership with all of Wells Fargo’s 84 business lines, Chan pointed out, so in addition to serving customers’ capital needs, it serves their other financial services needs, such as helping them run their businesses more efficiently, deploying their assets more effectively, mitigating their risk and helping them invest in the higher yield liquidity management.

Wells Fargo looks at the Grand Rapids office and every regional office as a distributor of all of Wells Fargo financial services, Chan observed. The company continues to acquire new relationships and continues to add new channels, or market locations, she said. 

“Our purchase of Universal Insurance is a classic example of how the bank is expanding channels,” VanDine said. “For anybody who’s wondering whether we’re willing to commit the resources to expand in this market, that’s Exhibit A.”

Chan actually sees “tremendous” opportunities here for continued expansion. People may wonder why Wells Fargo would want to do that, given the challenges in the auto market and now in the housing market, Chan said. 

“We don’t necessarily just look at one industry; we look at the whole market,” she explained. “There are some downturns, but we continue to stay committed to customers in the markets we do business in,” Chan explained. “The way we are successful is by avoiding the crowd. You will find more opportunities when you have competition pull out of certain markets, and we love those opportunities.” 

The significance of western Michigan is that Wells Fargo does exceptionally well in the rural markets, she noted. The company doesn’t do much on the investment banking side. More than 90 percent of its earnings come from the annuities stream — “meaning that, day in and day out, we do the same thing — service our customers,” Chan said.

Some of the other major banks rely more on trading income so they’re susceptible to the market’s ups and downs, Chan said. Wells Fargo wants to remain “very steady,” and the only way it can do that, she said, is by keeping customers happy and growing with them.

“That’s why we have a sustainable double-digit growth curve, and that’s how we designed our model,” Chan said. “We feel we are better equipped to compete, simply because we have more capabilities.”  

VanDine believes there’s a misconception that a bank based on the West Coast — Wells Fargo is headquartered in San Francisco — can’t possibly relate to middle America, yet Wells Fargo has been successful in cities such as Chicago, San Antonio, Milwaukee, Fort Wayne, Ind., and Des Moines, Iowa. 

“Sometimes it’s not the sexy thing that makes someone like Warren Buffet really attracted to your corporation; it’s the day to day blocking-and-tackling type of activities,” VanDine added. “Do you want your checking account to go right? Do you want your payroll to go through? If you want the financial activities that you do everyday to go right, that’s where we excel.” 

Last year local and regional bank stocks were down an average of 60 percent because of the difficult banking environment, VanDine pointed out. In spite of that, Wells Fargo’s commercial office here more than doubled in terms of the amount of capital it has committed to the market, its outstanding loans and its monthly contribution to the corporation, he said.

“I’m very proud of that considering the economic circumstances we’ve done that in,” VanDine remarked. “It really speaks to the power of the Wells Fargo brand and to a real commitment by management to back our efforts on the local level and give us local decision-making authority.”

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