Wells Fargo & Co. bought Flatiron Credit Co. Inc. on Thursday, a move the San Francisco banking company said will bolster its growing insurance division and let it enter the premium-finance business.
The $595 billion-asset Wells bought the Denver company from Toronto-Dominion Bank's TD Banknorth Inc. of Portland, Maine. Flatiron has about 60 employees and a $300 million loan portfolio. The deal's terms were not disclosed.
David Zuercher, the head of international and insurance services at Wells, said in an interview that the deal was part of the company's continuing effort to expand its insurance business. He said Wells views insurance as an important way to attract customers and boost cross-selling, which has long been a hallmark of the company's growth strategy.
He said insurance premium financing is a steady business that should grow along with its insurance division. Wells spent much of 2007 expanding its insurance line through acquisitions. The company owns the fifth-largest insurance brokerage in the United States.
"We see demand for" insurance premium financing "growing, mainly because we see our insurance business growing," Mr. Zuercher said.
Flatiron, which will keep its name and main office in Denver, lends primarily to small and midsize businesses that essentially need short-term loans to buy insurance. Its loans are typically for less than $500,000. The interest generated on such loans has proved profitable, Mr. Zuercher said.
But insurance premium financing comes with some risk — namely that clients might be low on reserves and struggle to keep up their payments.
"There's inherent risk in any type of lending business, but this is a risk consistent with what we deal with every day," Mr. Zuercher said.
Founded in 1995 by its two principals, chief executive Robert Pinkerton and president Bruce Lundy, Flatiron is the seventh-largest premium-finance company in the United States. It has insurance agents in Denver, San Antonio, Philadelphia, Boston, Chicago, San Francisco, and Boca Raton, Fla. All of its employees have joined Wells.
"We're excited about this new opportunity, which will enable us to provide our clients with more services to better accommodate their financial needs," Mr. Pinkerton said in a press release Thursday.
The $437 billion-asset Toronto-Dominion acquired Flatiron when it bought Hudson United Bancorp of Mahwah, N.J., in 2006. Hudson had bought Flatiron in 2003.
Neil Parmenter, a TD Banknorth spokesman, said the company made the sale as part of an effort to sharpen its focus on retail banking.
"That's really our core strength and our focus," Mr. Parmenter said.
He said the company has no plan to sell other business units.
Toronto-Dominion bought the $49 billion-asset Commerce Bancorp Inc. of Cherry Hill, N.J., in March for $8.5 billion, a deal that will enable TD Banknorth to ramp up retail banking on the East Coast, particularly in the New York area.
