Wells Fargo is the market share leader in many states across the country, but when it comes to Connecticut, the San Francisco banking giant is still the new kid on the block.
After acquiring Wachovia at the height of the financial crisis in 2008, Wells Fargo has slowly been making its presence known in Connecticut. It was just last year when the $1.3 trillion bank flipped the switch on its brand conversion in the state, exchanging the Wachovia flag for Wells Fargo’s red and yellow moniker.
Now bank officials say they are eager to grow their market share in Connecticut, particularly in small business lending, and compete with some of the dominant players here.
“Connecticut is one of the markets where we don’t have a big market share,” said John P. Cole, Wells Fargo’s northeast business banking division manager. “We see it as a growth center.”
To become a market share leader, Wells Fargo will have a lot of work to do. The banking company ranked as the fourth largest Connecticut bank in 2011 with 75 branches and about $8 billion in deposits. That was good enough for owning 7.89 percent of the market.
But Wells Fargo is well behind Connecticut market share leader Bank of America, which has $24.3 billion in deposits and controls about 24 percent of the market. Webster Bank and People’s United Bank are also ahead of Wells Fargo with $11.6 billion and $10.1 billion in deposits respectively.
Cole said one of the key concentrations right now for the bank is growing its small business lending in Connecticut. While lending standards remain conservative, Cole said Wells Fargo has capital to lend and is eagerly looking for new business clients. And the main goal is to not just underwrite a loan, but attract a company’s full set of business including deposit, cash management, insurance and other services.
“We want a relationship, not a transaction,” Cole said.
Ronald Coccaro, Wells Fargo’s business banking area manager for Connecticut, said competition for new loans remains competitive in the state, with many banks competing on rates. The fight for creditworthy borrowers is especially intense in Connecticut where the economy still remains stagnant.
Coccaro said while some banks are willing to lower lending standards to win a deal, Wells Fargo has stayed disciplined.
Wells Fargo now has 74 branches in Connecticut, which the company refers to as stores. The lender has about 1,380 employees the state, which is up 20 percent since the company took over Wachovia.
Cole said Wells Fargo experienced some modest attrition in its workforce as a result of the Wachovia conversion, but the sales staff has largely held intact.
In terms of its business banking division, Wells Fargo employs about 20 people including 10 relationship managers, who serve as the frontline risk managers with small business customers. The risk managers help business customers with cash flow issues and also advocate for their clients within the company.
In Connecticut, Coccaro said Wells Fargo extended more than $145 million in small business loans of less than $100,000 last year and provided more than $205 million in small business loans less than $1 million.
The company’s small business sweet spot is loans between $2 million and $20 million.
Wells Fargo also ranked No. 10 in the state in Small Business Administration loans and has approved $5.8 million in SBA 7(a) loans through the first 10 months of fiscal 2012.
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Credit thaw
While Connecticut businesses saw their profitability improve in 2011, they still expressed many concerns about the state’s business climate in a survey recently released by the Connecticut Business & Industry Association and Blum Shapiro.
But access to credit wasn’t a big issue.
In fact, according to the 580 businesses surveyed by the CBIA, only 2 percent ranked credit availability as their top concern through the end of 2013.
Of more pressing concern are the national and state economy and the impact of tax increases, the survey said.
At the same time, more than half of the respondents plan to introduce a new product or service in the next 12 months, a feat that usually requires some sort of financing in order to bring a product from the conceptual stage to the market.
The improved lending conditions are a positive economic indicator since access to credit serves as the lifeblood for small businesses.
Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.
