Bright prospects for midsize firms, Wells Fargo exec says

By Brett Johnson
New Jersey | Jan 25, 2018 at 12:20 pm

Even with the Garden State’s recent inundation of rain and snow, one of the country’s largest banks is expecting clear skies for the rest of the year — at least as far as financials go.

The economic forecast for middle-market companies in particular is a good one, according to a local Wells Fargo leader.

And Pete Dontas, the institution’s middle-market banking leader for New Jersey, said that may make for a deluge of investment for companies in the revenue range of around $20 million and up — the businesses his branch of Wells Fargo primarily works with.

“Across the board, we’re hearing really positive sentiment and companies heading into 2018 with a big growth plan in mind,” Dontas said. “It’s something that has been the case for several years. … But, especially going into this year, we don’t see a whole lot of weakness anywhere.”

Dontas said his perspective comes from his team’s involvement with nearly all the state’s industries. While some are faring better than others — he specifically mentioned logistics companies riding the e-commerce trend and burgeoning food service businesses — he struggled to name an industry that was lagging behind.

“Actually, even companies with niche client bases, such as printing companies, are doing really well,” he said. “If anything, companies relying on federal spending for projects that had a backlog of work may be encountering some challenges.”

Most middle-market companies, those entities that fit in the ill-defined space between small businesses and larger corporations, are doing well enough that they’re eager to invest in growth, Dontas said.

“That means new equipment, expanding into new locations or even expanding at already-existing locations to better service customers and suppliers,” he said.

New Jersey companies went into the new year with strong credit quality, he added, which helps with a bank’s lending for these business expenditures.

It’s also anticipated that many middle-market companies will be opportunistic with acquiring complementary businesses — this year more so than in years past.

“And, if you think about where middle-market companies are in terms of their sales, they are very attractive for private equity or larger corporate companies that are being strategic and moving into this space or geography,” Dontas said.

A lot of different trends are guiding the opinions Dontas and his team are hearing from commercial clients, but there’s no doubt the tax reform has its place in balance sheet predictions.

“It’s something that comes up in every conversation we have,” he said. “And companies seem to be generally optimistic about the impact it will have on their business. The feedback is positive, but it is still too early on to talk about the reform’s impact.”

Dontas has heard the rumblings of another tax reform-related issue from the bank’s larger clients — that there’s a lot of deliberation about bringing overseas-held financial assets back into the domestic sphere. Although Dontas said it’s also too early to tell if that will come to pass.

For now, what Dontas is sure about is that a positive outlook exists among middle-market companies — and that the post-recession business attitudes have been helping the bank reach its own loan growth goals.

The national bank, which had branches across North, Central and South Jersey historically and added offices in Paramus and Summit recently, could see it as validation.

“We realized that New Jersey had a very strong business climate,” Dontas said, adding that it was clear today that the climate is bulking up even more.