Wells Fargo Is Pulling Into GR
The San Francisco-based bank has chosen downtown Grand Rapids as the location for its first commercial banking office in Michigan's Lower Peninsula.
Wells Fargo's intention is to round up middle-market companies across Michigan that have annual revenues of $10 million to $750 million.
Newly appointed Regional Vice President John VanDine and Assistant Vice President Kyle Baldwin are heading up the effort from an office on the 12th floor of McKay Towers on Monroe Center and are the only two involved in the operation at this time.
"You only need to have two people in commercial banking to be able to provide all the services to a market," said Executive Vice President Perry Pelos of Wells Fargo's Minneapolis office.
"When you think about the cost effectiveness of doing that vs. going out and purchasing a consumer bank, we can make more money on the commercial banking side than the consumer banking side and with a lot less cost."
Part of the reason the company chose to locate a commercial banking office in Grand Rapids was because of the availability of banking professionals in this market, Pelos said.
As he put it: "John VanDine was available."
VanDine is firmly entrenched in the West Michigan market, having served the banking community for 21 years.
He worked for Comerica for seven years, Old Kent Bank for three years, and formerly served as president of Michigan National Bank in Grand Rapids.
Wells Fargo has operated community bank offices in Michigan's Upper Peninsula since 1999, and is now the largest bank in the U.P. in terms of its consumer and commercial banking presence, Pelos said.
Between Grand Rapids, Battle Creek and Kalamazoo, Wells Fargo has five established mortgage offices and a consumer finance office in the 3000 block of 28th Street in Grand Rapids that offers all banking services except deposits.
"I think what we're doing is just a natural expansion of the existing infrastructure that's in place in this state," VanDine said.
"We've got six departments on the ground in West Michigan already that are more consumer oriented. The commercial banking is another offering from Wells Fargo.
"It's not just a satellite office. We have 700 people in this state."
Those 700 people, of whom 52 are employed in West Michigan, cover 60 offices statewide, including Wells Fargo Home Mortgage, Acordia Insurance, Wells Fargo Financial, Wells Fargo Financial Leasing and Wells Fargo Financial Acceptance offices.
Wells Fargo & Co. has $388 billion in assets and provides banking, insurance, investments, mortgages and consumer finance through more than 5,900 offices in North America.
Nationwide, Wells Fargo ranks second largest among banks in terms of market capital and fourth in terms of assets, he noted.
With offices in Wisconsin, Illinois, Indiana, Iowa, Nebraska, Missouri and Michigan's Upper Peninsula, Wells Fargo feels like it knows and understands the Midwest fairly well, Pelos said.
"We think those markets and this market share a lot of characteristics. Business style and ethics are similar to what we're used to."
He said one of the things that distinguishes Wells Fargo is that it's a big bank that acts like a small bank.
"John VanDine is the decision maker in this marketplace. Decisions are not made in Chicago, Minneapolis or San Francisco for what happens in this market.
"That is a big differentiator. We spend a lot of time on the front end hiring the right people because we expect them to have the responsibility and the authority to make decisions in their markets."
Wells Fargo employees are "real differentiators" for the company, too, VanDine said, adding that he's been impressed with the "consistency and professionalism" of everybody he has met at Wells Fargo.
"They're very professional, very knowledgeable, incredibly responsive and really driven to get results for clients," he said.
"We've got a real advantage in terms of our credit capacity vs. some of the other players, given the size of our institution."
According to VanDine, Wells Fargo is both tailored and optimized to cater to the larger commercial customers in West Michigan, providing them with basically any financial service they might need, with the exception of local depository.
"Our technological platform is a real differentiator for us. We can deliver everything we do via the Web. There are a lot of products that already are running and operating on our system that other people are in the development stages on. We found that to be a real advantage."
He noted that last August, Global Finance magazine ranked Wells Fargo & Co. as the "Best Commercial Internet Bank" in the country.
Typically, other lines of business follow a commercial banking group into new markets, such as treasury management services, foreign exchange, commercial real estate, private client services, trust, investments and insurance.
"We have indications that other departments will follow us here," VanDine said, "but we don't have anything absolutely concrete to report at this time."
He further pointed out that Wells Fargo is the only "Triple-A" rated bank in the United States, and the only U.S. bank in the past 25 years to be upgraded to Moody's highest rating, a rating only nine banks have received.
VanDine said stability is one of the big ways Wells Fargo will establish itself in this market.
Seven of the top eight banks in this market don't have the same name they did six years ago, he observed.
One of the interesting things about Wells Fargo, he said, is that in its entire 152-year history, whenever the bank has made a decision to enter a market, it has never left that market.
"As we're pursuing clients in the marketplace, that's a good comfort for them. You are doing business with people primarily, but you're also doing business with an institution. We are a business with tremendous resources and staying power.
"This is a relationship business. We want to establish as many relationships as we possibly can with the right people and the right companies in our market."
Wells Fargo has made more acquisitions over the last five years than any other banking institution in the country, and those have typically been what Pelos calls "fill-in acquisitions" in markets where Wells Fargo has a presence.
But that won't necessarily be the growth strategy in this market.
"We still think acquisition is a viable strategy, but we don't need to pursue that strategy in order to grow," he said.
He noted that the company's revenue growth has been in the double digits for the past six to eight quarters and the same is expected over the next six to eight quarters, regardless of whether or not the bank makes any acquisitions.
"That's a unique position in the banking industry. We just don't necessarily need to make acquisitions."