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Big bank targets market

Rochester Business Journal
November 30, 2012

Wells Fargo & Co. has introduced commercial banking in the Rochester market this month as part of its growth plan, with retail banking a possibility ahead, preferably through acquisitions, officials said.
 
The San Francisco-based company now offers commercial services at its Wells Fargo Advisors LLC office on Pittsford-Victor Road.
 
The Perinton site is one of two loan production offices in the state outside the New York City metropolitan area. The other, in the Buffalo suburbs, opened in 2005.
 
"We're looking to do loans," said Rich-ard Ferrari, senior vice president of commercial banking for the local office.
 
Wells Fargo is targeting commercial customers with annual sales of $10 million to $1 billion, with a core of $20 million to $500 million, Ferrari said.
 
"This is not a branch," he said. "We will take deposits electronically, not over the teller counter. We sell treasury management services, international services, foreign exchange, basically every commercial banking product except taking transactions over the teller window."
 
The commercial banking services will mirror those of the Buffalo-area office, whose portfolio is nearly $1 billion, said Michael Kubala, senior vice president of commercial banking there.
 
"Several Rochester companies were being handled out of Buffalo, and some prospecting," Kubala said.
 
The Rochester interest began some two years ago, Ferrari said.
 
"Rochester is the type of market Wells Fargo likes," he said. "Wells is a $1 trillion operation, and one of the Big Four banks. We're not necessarily a Wall Street bank. We're a Main Street bank. We want to be in every Rochester in the U.S."
 
Wells Fargo Advisors employs 50 advisers and a support staff of 25 in Perinton and at the Meridian Centre in Brighton, Ferrari said. Wells Fargo Home Mortgage, a division of Wells Fargo Bank N.A., employs 125 at offices on Sully's Trail in Perinton and Red Creek Drive in Pittsford.
 
Wells Fargo wants to double its business, Ferrari said. It plans to hire as many as 10 people for its commercial loan business in Perinton.
 
"We're probably two years into a five-year plan," Ferrari said. "Unlike other places that might bring more customers and then hire to take care of them, we believe in hiring the best talent out there and letting them build a business."

Banking veteran
He joined Wells Fargo in October after serving as vice president of finance and administration for the DiMarco Group LLC development company for more than four years.
 
A Perinton resident, Ferrari moved from his downstate roots in 1998 to manage middle-market and business banking teams here for KeyBank N.A. until 2004, then managed corporate banking for First Niagara Bank N.A. from 2005 to 2008 before joining DiMarco.
 
He spent 17 years at the Bank of New York, leading 10 middle-market bankers in the New York City area with total loans of more than $200 million, before taking a job with KeyBank.

Big lender
Wells Fargo is the leading U.S. Small Business Administration lender in the country, Ferrari said.
 
"We have a balance sheet that's extremely strong," he said. "We have more deposits than we have loans, so we're looking to push money out.
 
"Credit is usually a part of the relationship, but not always. There are probably another 80 or 90 products and services that we deliver through our Internet portal to the customer."
 
Wells Fargo is the largest commercial bank in the United States and has the biggest middle-market book of business, Kubala said.
 
"But we look at the business on a regionalized basis," he said. "We think it's important to have local folks who have local connections. When we go into a market, we look for local talent to take all that Wells has to offer-not only loans but a vast array of products and services for the middle market to be able to grow a business.
 
"We look at these markets as growth markets. We've populated a number of cities in the East with offices like ours. The longer-term goal will be for Rochester to be on an even scale with Buffalo."
 
The territory for the two offices extends nearly to Albany and includes most of the Southern Tier, Ferrari said.
 
"As we develop a customer base where the opportunities are, that will determine where we put people on the ground, be it in the Southern Tier or Syracuse, or just do it out of these two offices," he said.
 
Syracuse is the most likely third location for upstate commercial banking, Kubala said.
 
"The natural extension would be Syracuse, but I would think we would first start to fill out the team in Rochester," he said.
 
"We could have eight to 10 people in Rochester running a very solid commercial office within a two- or three-year window. It could be shorter if things are more successful. We're looking to bank the best companies in the market."
 
Although Wells Fargo is based on the West Coast, its founders were New Yorkers. William Fargo was a Syracuse native and mayor of Buffalo from 1862 to 1866. Henry Wells, born in Vermont, moved to Central New York as a child.
 
"They ran a transportation operation first, from Buffalo to Albany," Ferrari said. "Ultimately, with the gold fields in the 1850s, they decided to go out there, to go west and make a big fortune."
 
The two formed Wells Fargo & Co. in 1852 to provide banking services in California.

More expansion?
Branch banking is a possibility in Western New York, including the Rochester market, Ferrari said.
 
"It's probably more likely through acquisitions," Ferrari said. "I'm sure we're looking and talking, because Wells is in a growth mode. De novo is a long, painful process, and we would bleed here out of contiguous markets. But I'm sure the area charged with that is looking."
 
Wells Fargo has been involved in two major transactions in the last 14 years. It was acquired by Minneapolis-based Norwest Corp. in 1998, with the Wells Fargo name surviving because of its national recognition. Wells Fargo acquired Wachovia in a government-forced sale because of a looming fiscal meltdown, paying $14.8 billion in October 2008. Wachovia was the fourth-largest bank holding company in the nation at the time, based on total assets.
 
"We'll all be interested to see how government regulations that are in place or will be in place play out," Kubala said. "There's going to be a lot of pressure on banks, particularly on some of the smaller banks, to keep reserve levels up. We feel we're in the best position because of our performance and our credit rating."
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010 in the wake of the fiscal distress, might instead work against Wells Fargo, said Anton Schutz, president of Mendon Capital Advisors Corp. in Brighton and manager of two finance-related mutual funds.
 
"It's not easy for the largest banks in this country to do acquisitions," he said. "The regulators have just put the screws on the biggest, not wanting them to get much bigger. Acquisitions are going to be a tough strategy for the biggest of the big, and Wells is in that camp.
 
"It doesn't mean they can't do it. It would just be harder."
 
Nonetheless, Wells Fargo might be attracted to Western New York banking because of its stable economy, Schutz said.
 
"There haven't been a lot of booms and busts over the last decade," he said. "They see room to capture some market share.
 
"Some of the bigger banks in the market may not have their eye on the ball right now because they may still be looking inwardly rather than outward. So they see an opportunity to step in."

11/30/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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