Wells Fargo taps expansion markets to grow commercial lending

Laura Oberst, a native of Rugby, N.D., took a management-trainee job after graduating college in business and accounting with a Minneapolis-based predecessor institution to what became nation-spanning Wells Fargo & Co. Today, Oberst is an executive vice president and manages the 10 states and 280 employees of the Minneapolis-based north region of commercial banking for Wells Fargo, one of the nation's largest bank holding companies. The several-region commercial bank within Wells Fargo provides loans and related services to mostly midsize companies. The loan portfolio, about 90 percent of which is credit to privately held companies, is finishing a strong year.

Q: Who are your customers?

A: We serve family-owned, owner-operated businesses with revenues greater than $20 million and up to about $1 billion. We provide a full-suite of financial products and services to midsize companies that are investing in their businesses, hiring employees and expanding their markets. Ninety two percent of our companies are privately held.

Q: How was business in 2015, and how long has the commercial book been growing?

A: Business was very good in 2015. For the past five years, my teams have achieved more than 10 percent loan growth [annualized] by providing our customers with the capital they need to reach their financial goals.

Q: Any particular states or business segments that stand out?

A: We've had tremendous growth in our expansion markets, including Illinois, Michigan, Ohio and Indiana. Fifteen years ago, we didn't have regional commercial banking offices in those states. Today, we have thriving offices serving hundreds of middle-market companies across industries. We are generalists, but this is a big manufacturing section of the United States. Most of our growth has come through manufacturing and agribusiness. Many cities in Ohio are resurgent. Cleveland has been a great market. Detroit is coming back. We've had success in Grand Rapids [Michigan] with manufacturing, trucking and technology companies.

A: We have significantly grown our commercial banking customer base, while maintaining a strong customer retention rate. Our strength, financial discipline and commitment to doing what's right for the customer contribute to solid portfolio performance.

Our loan-loss provisions are way down [from postrecession years]. We're in a good cycle. Companies in this region are pretty conservative. It took some of them longer to bounce back from the 2008-09 recession, into 2010 for some of them, but we're in a good cycle.

Q: What kind of a year do you expect in 2016?

A: In 2016, we don't expect to see the same growth rates we've seen in the recent past because a lot companies [already] have taken advantage of low interest rates for capital and facility expansion. We expect continued revenue growth. Even though loan growth may moderate, we offer a multitude of financial services … to help middle-market customers optimize their cash, insurance, international business services, employee benefits and investment banking capabilities.

In my 30-plus years serving the middle market, I've learned that owners and executives want innovative solutions … to help solve problems. The emerging opportunity and growth as we see it, is in touch, voice and image technologies. We're talking about making things more accessible and safer. We are currently exploring how companies can integrate these tools into their operations.

A: I worry about potential fraudulent activity impacting the banking industry. Cyberattacks and impostor fraud is an industrywide concern. Wells Fargo is helping to build awareness and understanding about the threat through a customer communications campaign. We collaborate with other financial institutions, as this is an industrywide problem.