Does size have its privileges? Oh yes indeed. But by the time you take your banking up to the level of Tony Pirretti, you’ve probably earned it. As Wachovia’s commercial bank director for south Jersey, Pirretti and his staff handle clients with a $20 million revenue minimum, up to multibillions. “Our real sweet spot runs between $75 and 500 million,” he says. “You’d be surprised how many of those there are in our region of Mercer, Middlesex, Monmouth, and Ocean.”
Wachovia itself, is no small player. The fourth largest bank in the U.S., it boasts assets of $808.9 billion and operates 3,400 branches worldwide. With 315 offices spread around the Garden State, nearly one out of every 10 bank buildings you see in New Jersey bears the Wachovia sign. Like many commercial lenders, Wachovia segments businesses into a) startups to $3 million in gross revenue; b) $3 million to $20 million; and the elite c) over $20 million.
Be it a garage-based startup or Fortune 100, the need for speedy, hassle-free lending is just as vital. And, of course, old customers at any level typically can claim more attention. But as one enters more Olympian amounts, the whole funding process changes.
* Large v. Not-so-Large. Firms entering Pirretti’s office will probably never hear the term “bank products.” Complexity grows with size. Like the large business seeking it, large loans for even seemingly basic expansions, hold countless facets. Establishing a 200,000 square-foot, functioning warehouse just involves more fiscal nuance than purchasing small retail shop. Lenders, in yielding to this complexity, offer the same amount of service, but with a shifted focus.
For major firms, bankers diminish their financial counseling roles, e.g. teaksing out how much of a loan needs be set back as a line of credit, vs the necessary upfront capital. Instead, Wachovia supplies larger clients with a trade specialist and an individual relationship manager. A sort of big league version of the home town banker whom you could call any time of day, the relationship manager works with a client beyond the life of a single loan.
With the help of a trade specialist, the client’s needs undergo an initial research. The specialist defines the client into one of 250 monitored industry categories. He generates a 10 - 15 page report depicting the field’s risk, marketing trends, profit margins, state of competition, etc. Then, the well armed relationship manager meets with the client for a strategic planning session. Like the smaller loans for smaller businesses, decisions may still be made in the field. But the larger lending package will be much more individualized.
* How Personal? “To grow a company to $200 million takes some very intelligent people,” says Pirretti. “Owners and senior officers are managing large payrolls, a diversification of products, and tangible assets, all in addition to their financial responsibilities. And if the owner doesn’t know finances himself, you can bet he has an expert staff.”
All this gets down to what this large banker wants. Often as not, Pirretti’s staff deals with CFO’s, treasurers, vice presidents of finance, or cash managers. “I do not mind working with these officers for the more technical part of the transaction,” says Pirretti, “but I always seek access to the top.” Experience has taught him that owners and CEO’s tend to embrace more of the corporation’s long-range vision. It helps the banker not only assess risk, but understand the avenues and pace of growth - and the funding his bank will need to supply.
Yet whatever the officer’s position who picks up the phone, every client wants different amounts of contact. Each of Pirretti’s relationship managers has a Blackberry glued to his side. Some large commercial customers call in literally every day. “Recently, one of my managers was at home relaxing late at night when his customer put through a frantic call requiring an immediate and lengthy fix,” says Pirretti. While it my be convenient to give advice in one’s underwear, many clients just want each loan as quickly as possible with anything else viewed as excessive hand holding.
* Tailoring to the XL. Though standardized bank products may not be parts of major firm lending packages, Wachovia extends these accounts a whole slew of custom services. At least one third of all Wachovia clients at Pirretti’s level deal internationally. For one such local electronics supply corporation, owned by French parent company, Pirretti’s far-reaching staff provides a one-stop shop. At home the New Jersey bank handles all the treasury services, while Wachovia’s London house provides the credit for the parent firm.
“With larger loans, there is more elbow room to employ different techniques,” says Pirretti. “With a straight acquisition, we are able to break down long and short term financing.” The relationship manager can often increase the amount by scrutinizing lendable assets from e.g. a percentage of receivables or inventory. For favored, long-term clients, mezzanine financing has become a popular tool. This hybrid debt and equity loan provides very quick funds with less than standard due diligence, at rates often within the 20 - 30 percent range. The lender receives partial ownership rights or equity in case of default, and, of course, the higher rate. Not a traditional banking tool, this allows certain businesses to jump in with the necessary funding and take timely advantage.
However, the real competitive arena in which Wachovia and all major banks are vying for large corporate clients is the treasury services business. In essence, this is a no-holds-barred list of perks designed to give the bank allure - and the prizes are a lot better than a toaster. For the right clients, Wachovia will handle and even collect receivables. They will print invoices out. “The company has the cash coming into our bank anyway,” says Pirretti. “Why not just give us the data files and let us take care of it?” The savings can be enormous. Sweeps investment handling has also become a very enticing service. For large accounts, having excess monies at day’s end invested overnight, then brought home can reap great profits, even after the fees. Pirretti notes that Wachovia was the first bank to tie sweeps investing to borrower accounts, creating an almost free money use position for the client.
Definitely, growing companies have a lot to look forward to when they reach Mr. Pirretti’s level. There certainly are advantages to gaining entrance, of which speed and customized service are only a part. But this larger league is scarcely a good old boy’s network of insiders, versus the forever excluded. If anything, it is a club whose doors swing wide for the knowledgeable and proficient.
While no less due diligence goes forth, Pirretti is playing with people who thoroughly know the game. Lending becomes more a matter of mutual strategy, than investigation. We asked Pirretti if his managers often unearth totally new ways of funding of which his customers were totally unaware. “Major ways? Oh, I won’t say never, but almost always these people come to us having studied it out. They know exactly what they want.” B4
Tony Pirretti has been watching over other people’s money for 37 years. A New York native, Pirretti attended Long Island’s Hofstra University, amid the high hippie days of the late 1960’s. “With the SDS and Kent State, we had some pretty scary times,” he recalls. He graduated in the spring of l971 with a bachelor’s in business administration and three days later went to work for Manufacturer Hanover Trust. In l991, Pirretti joined Citibank, which, after several shifts and buyouts, placed him with Wachovia where he currently directs commercial lending for Mercer, Middlesex, Monmouth, and Ocean counties.
