Wells Fargo Woos Small Businesses, Finds Them Elusive : Banking: The giant company is trying to hold on to and attract smaller accounts, but a number of customers are leaving for smaller operations.

Wells Fargo Bank has great hopes for its latest effort to woo small companies as customers. But the giant bank is finding that it’s tough to hold onto the business accounts at two small Orange County banks that it bought earlier this year.

The San Francisco bank, with $56.2 billion in assets, kicked off Small Business Week on Monday with an 11-week campaign to attract small companies with bonus coupons, new benefits, seminars and promises of great service.

But a number of business customers at the institutions it bought--Citizens Bank of Costa Mesa and El Camino Bank in Anaheim--are leaving the big bank for a smaller operation.

Worse, the former heads of Citizens and El Camino have gone to work for other community banks--and they’re taking some of their old business customers with them.

Wells’ primary reason for buying the banks from their parent company, Citizens Holdings, was to gain access to their six branch locations and consumer accounts. The business clients were an added bonus, but the defections are taking the luster off the approximately $50-million acquisition.

The transaction also could provide a lesson in the dynamics of independent banking, which makes up most of the nation’s 12,000 banks and serves hundreds of thousands of small business operators nationwide.

“Our customers were uncomfortable with a big bank,” said Paige V. Simpson, former chairman of Citizens Bank. He is now vice chairman of Bank of Newport, which is remodeling a restaurant for a branch several hundred feet from Citizens’ old headquarters on Newport Boulevard at Baker Street.

“The people at Wells think they made a terrible mistake,” Simpson said. “They didn’t do a good job at analyzing the loyalty of our customers and the importance of keeping our key people.”

But Wells executives don’t see it that way. They feel confident that they can keep at least 80% of the consumers--the “bread and butter” accounts--and most of the small companies, said Larry Crabtree, senior vice president and manager of Wells’ Orange County division. But he acknowledged that Wells is used to retaining “much more.”

And the battle for the small companies is heating up.

Usually, small businesses favor community banks for their personal service and willingness to make small business loans that big banks generally don’t want to be bothered with.

“When you’re self-employed, big bankers don’t know how to read your tax returns to tell if you qualify for a loan,” said William J. Gallagher Jr., a Costa Mesa landscape contractor and small investor. “When I was with a big bank, I didn’t qualify for a car loan, even though I had the cash in my bank account to cover the loan.”

For Gallagher, who banked at Citizens for the last eight years, community banking means easy access to the branches, short lines at the teller windows, better service and bankers who remember your name.

“At Citizens, they didn’t put a hold on the check if they knew who it was from or if the checks were in the regular course of business or if I gave them my word the checks were good,” he said. “They’d even call out-of-state to see if a check is good.”

That is service, he said, that he can’t get at a big bank.

At Wells Fargo, he now deals with a new part-time employee and has to show some identification every time he goes in. He said he expects to move his account soon.

Though Wells took over the banks and their combined $233.7 million in assets on Jan. 1, it did not change the signs or convert them to the Wells banking and computer systems until the first week in March. Since then, Wells has begun to reap a cost-savings.

Two Wells Fargo branches were folded into Citizens-El Camino branches and closed.

Of 204 employees at the small banks, 119 have either been laid off or have left voluntarily, and Wells will put most of the remaining 85 employees on part-time status. Wells operates its branches mostly with part-time help, and many of the tellers are senior citizens, Crabtree said.

Simpson, who at 72 is the dean of Orange County bankers, introduced Crabtree and other Wells Fargo officials to his best business customers during a transition period that ended March 31. The next day, he went to work for Bank of Newport, which sought regulatory approval for the branch as soon as word leaked out about the sale of Citizens.

Stanley Pawlowski, former chairman at El Camino, also took Crabtree on the rounds to meet business customers. He then joined the group buying Corporate Bank in Santa Ana from its sole shareholder, James A. Carter.

Corporate now plans to open an office two blocks away from El Camino’s old headquarters. Pawlowski already is bringing in $1 million a day in business to Corporate Bank, Gary Wrigley, its president, said.

Simpson feels no qualms about stealing customers from Wells.

“The customers we take aren’t going to stay at Wells anyway,” he said.

Crabtree agreed, reluctantly.

“The kind of customers they’re going to take from us would be going to some other small, independent bank anyway,” he said. “Still, I would have loved it if Stan (Pawlowski)and Paige (Simpson) had gone to Northern California instead.”

Nevertheless, Wells Fargo is making a big push to attract the small business customer.

During its 11-week campaign, Wells is offering $2,500 in bonus coupons for loans, lines of credit and other small business services. It already is making business loans as small as $10,000, including loans for business equipment and vehicles, Crabtree said.

On Friday, it is co-hosting an economic forum on small business trends at the Center Club in Costa Mesa for 100 or so of its customers.

“We want to play a key role in the success of our small business customers that goes beyond providing financial services,” said Douglas Freeman, executive vice president of Wells Fargo’s business banking group.

Some banking experts doubt that the campaign will sway the minds of most small-business people.

“Wells will get some business customers from the freebies and other promotions,” said Gerry Findley, a Brea banking consultant.

“But the trouble is, big banks don’t sustain the quality of their services,” he continued. “Consequently, that disgusts the small businessman. Imagine a borrower who has to come in and re-educate his lender about his business every year.”