Donald W. Hance used to view Union Bank of California as a small, sleepy competitor.
That was more than two years ago, when the banker worked for Well Fargo & Co. But now Mr. Hance is at Union, a unit of Bank of Tokyo-Mitsubishi Ltd. And for the past 16 months he's been trying to shape his new employer into a force in small-business lending even Wells will have to reckon with.
In the maelstrom of California small-business banking, he's out to prove that a second-tier bank can achieve big-bank results.
"Union wasn't thought of as being particularly aggressive in sales," said Mr. Hance, 43, manager of Union's small-business program since November 1994. "That's something I'm trying to change."
For example, Union has launched a media blitz to advertise big discounts on business lines of credit, checks, and PC banking software - conveniently timed to coincide with marketplace uncertainty created by Wells' hostile acquisition of First Interstate Bank.
So far it seems to be working. Since the promotion's kickoff at the beginning of the quarter, loan applications have picked up by 40%, Mr. Hance said.
Behind the scenes, Mr. Hance is overhauling the way it works with small businesses. And Wells - with its aggressive sales culture and high-tech prowess - clearly is the model.
For now, Wells' and BankAmerica Corp.'s small-business loan portfolios each dwarf that of Union. As of June 1995, the $604 million Union portfolio was a third the size of Wells' and a little more than half of Bank of America's, according to Sheshunoff Information Services.
Indeed, BankAmerica small-business chief Jerry L. Bowman cited Wells as his main competition, saying he didn't see much of Union. A Wells spokeswoman declined to comment.
Mr. Hance isn't trying merely to ape BankAmerica or even Wells, where he worked for 20 years. Instead, he wants to meld aspects of those banks' approaches to Union's traditional high-touch style and create an alternative to the California giants.
"We want to differentiate ourselves from the monolithic Wells and Bank of America," Mr. Hance said. "We want to be a large bank that still can give good service."
Mr. Hance takes heart from a recent Union-commissioned study by the consulting firm J.D. Power and Associates. In it, Union ranked higher than Wells and Bank of America when it came to small-business customer satisfaction.
Mr. Hance said he knew why.
"Wells will call on you very aggressively, and you can literally apply for a loan in the morning and get an answer in the afternoon," he said. - "But that salesman then goes onto the next sale and the customer is left to deal with the bank and fend for themselves.
"We can't give you an answer right away," Mr. Hance said. "But with us, six months later when you have a question or want a loan you can come back and deal with a person you know."
He added, "We've picked up a lot of business from Wells at renewal time. Their customers get lost."
Wells declined comment.
Mr. Hance gives the big boys their due, acknowledging them as tough competitors and innovators. In fact, Union is following their lead and adopting credit scoring for small-business loans, Mr. Hance said. The goal is to speed up turnaround time and become more efficient.
"We were a little slow out of the gate on credit scoring, and that's probably been an obstacle in the marketplace for the past six months," Mr. Hance said. "But I think we can catch up quickly without losing much ground - or any."
The bank is testing a system right now, he said.
"We'll know at the end of the year where we are with credit scoring," he said.
But unlike Wells, Union isn't planning to close down its network of traditional branches.
"Wells' plan is to close a lot of traditional branches and move a lot of those customers to grocery stores," he said. "If I were a business owner would I want to go to the frozen food section of a Lucky store to get a $50,000 loan?"
Mr. Hance conceded that the Union approach won't realize the same cost savings as Wells. But he maintained that Wells' approach could cost it customers - particularly former First Interstate Bank clients - who aren't comfortable with joining Wells on the leading edge of technology.
"We recognize that we are not going to be the most efficient bank, but that's the cost of differentiating ourselves in the market," Mr. Hance said.
Mr. Hance himself appreciates the difference between his current and former employer.
He went to work for Wells right after graduating from college in 1975, just as the bank was making inroads in Los Angeles. Within three years he was a branch manager, then regional manager, a position where he had to play many roles.
But by 1994 Wells had reorganized so that responsibility for different functions - for instance, small business - was farmed out to different divisions. His focus became more operational.
"I wasn't doing as much banking anymore," he said. "I wasn't doing small business, I wasn't doing upper-end consumer accounts."
Unhappy in his diminished role, Mr. Hance began sniffing around for new work and in February 1994 landed a job as manager of Union's Beverly Hills region. In November he was promoted to his current position.
"I like being able to contribute to the success of a line of business," he said.
As manager of the small-business program he coordinates the efforts of different departments. He said this consensus approach differs sharply from that of Wells.
"Wells is more dictatorial," Mr. Hance said. At Union "it takes longer to do things and you can get a watered-down version of what you want, but everyone buys into it. There aren't hard feelings."
Union was about to kick off a standardized loan product for small businesses when Mr. Hance took the reins.
"The purpose of the product is to enable the entire branch to submit business loan requests," Mr. Hance said. "Before that, all small-business stuff had to go to a business relationship officer."
As Mr. Hance unrolled this product, he also refocused the bank's small- business sales force. Branch officers were given training and assigned to handle businesses with credit needs of as much as $150,000; business relationship officers were assigned to handle higher-end entrepreneurs.
"We brought in a much larger group of people who could sell to small businesses," Mr. Hance said.
The bank also started to closely track sales activity and new-business solicitation, Mr. Hance said.
The revamped sales strategy has paid off, he said, claiming that the bank's customer base grew by 4% in six months.
Union has increased its focus on cross-selling products to small businesses as well, Mr. Hance said.
"Finding ways to deepen our share of the business wallet is something I'm spending some time developing," Mr. Hance said.
Mr. Hance wants to make better use of the bank's customer information to find more sales opportunities. He is currently looking for a vendor that can analyze Union's data base and consolidate a range of business customer information. Currently that information is scattered throughout the bank.
"The information is with different product groups and we need to be able to pull it all together," Mr. Hance said. "Right now we can't do that very well. We want to find someone to clean it up and hand it back to us with information of how many customers do we really have and what services do they have."
This year he's focusing on credit scoring and integrating Union's small- business operation with that of Bank of California, which Union acquired last year.
