In April 2015, Wintrust Financial Corporation (Wintrust) expanded its lease and equipment finance operations with the launch of Wintrust Commercial Finance (WCF), a division of Wintrust Asset Finance Inc., headed by Kirk Phillips, the group’s President and Chief Executive Officer. The objective at that time was to build an organization comprised of highly experienced equipment finance professionals focused on providing mid- to large-ticket lease and loan products in a variety of industries nationwide. Today WCF serves multiple industries including transportation, construction, manufacturing, energy services, aviation and turnkey property, plant and equipment, among others.

The group has experienced tremendous success, recently announcing that in only six years, WCF has generated more than $3 billion in funded and managed volume, leading to a Compound Annual Growth Rate of 30.5 percent.

In the following Q&A, Kirk Phillips sits with Michael Toglia, publisher of Equipment Finance Advisor as a follow up to their original interview in June 2015, and describes his team’s success, challenges and pleasant surprises over the past six years, the extraordinary culture of the group, and what lies ahead for this highly successful team.

Michael Toglia: Thanks for joining me again Kirk and congratulations on your team’s tremendous success. To begin, please remind us of who the founding members of the team were when you launched Wintrust Commercial Finance in 2015 and how large is the team today?

Kirk Phillips: Thanks again for inviting me for this interview Mike. In April 2015, we launched with four people: Paul Hallauer, our Chief Credit Officer, Jeff Darlington, our Chief Financial Officer, Joe Thompson, our Chief Operations Officer and me. We ended 2015 with eleven on the team and we quickly added a few other people that were key hires including Tom Forbes in capital markets, Ron Horner, General Council, Lisa McNeme, who ran our operations team as well as a few other folks. On a national basis, Wintrust Commercial Finance is currently at 50 people.

Toglia: How is the team structured regionally?

Phillips: On the direct sell side, we have three regions – East, Central and West and are currently hiring in each region to increase our direct reach to our end-user clients.

Toglia: When you launched the group in April 2015, you started with the capital markets group, but that expanded to a model of direct and capital markets, is that correct?

Phillips: That's correct. Eventually our plan is and has been to try to achieve a blend of business of 60 to 70 percent direct originations with capital markets comprising the balance of our business. COVID set us back a bit on our timeframe of hitting that 60 to 70 percent target, but we're starting to regain some traction in this area. That is why we're looking for additional direct sales headcount – to help us keep pushing towards that goal.

Toglia: You’ve also formed some specialty groups over the past six years. Can you tell us about some of the specialty groups?

Phillips: We've been fortunate. When we launched six years ago, there were already two groups within Wintrust that were providing equipment finance and leasing. The first was Wintrust Capital, a division of Wintrust Asset Finance Inc., led by Jeff Wolinski, which is the internal leasing product specialist for the bank footprint. Wintrust’s footprint, as you may recall, encompasses locations in and around Chicago, northern Indiana, and southern Wisconsin. They focus primarily with our banking team in that geographic area. The second was Wintrust Equipment Finance, a division of Wintrust Asset Finance Inc., which was led by Dick Dunbar, and focused primarily on debt discounting and more of the smaller, mid -ticket space working with other leasing companies.

We then launched Wintrust Commercial Finance, which as I mentioned is national in scope, and covers mid- large ticket direct end-user as well as capital markets business. After launching WCF, we recognized that we were not serving the small-ticket vendor business in the market. We were fortunate a few years ago to connect with David Normandin and convince him to join the Wintrust family. Under his direction we launched Wintrust Specialty Finance, a division of Beverly Bank & Trust Company, N.A., a Wintrust Community Bank, about two and a half years ago. They're growing very nicely and filling in that niche for the small-ticket app-only and vendor platform business. Together these groups now make up what we call Wintrust Asset Finance.

Toglia: Today, are you doing larger deals than you anticipated when you launched, or are you within the realm of your original plan?

Phillips: We're still within the realm of what we originally planned. We were targeting $5 to $50 million deal sizes, with the sweet spot being around $12 to $15 million. For the most part, that's still the case. We've widened our box up a bit, especially on the lower end. Today we’ll do some smaller transactions where we're really trying to get our foot in the door with a customer or trying to leverage a relationship with an eye towards moving them towards that $10 to $15 million dollar facility.

Toglia: Back in 2015 when I interviewed you, you had mentioned that you would be building upon and expanding on the success that Wintrust has had in its C&I and ABL groups. How would you describe your relationships with those groups and are you interfacing with those teams regularly?

Phillips: The relationships are great. We've had the opportunity to work with several of the C&I bankers on some sophisticated transactions with existing bank clients where we had expertise in either a particular industry or collateral type. They had a few transactions in the rail and over-the-road transportation industries as well as in the maritime space. Those are three industries that we obviously know well, and we've been able to partner with them and had a lot of success by meeting the client's needs and demonstrating the depth of the services Wintrust can provide. Our ABL group continues to grow, and we continually look for opportunities where can support them and their clients.

Toglia: When you look back over the past six years, what do you think have been your biggest challenges?

Phillips: Well, the easy answer is that the last 18 months with COVID has impacted every business across the face of the globe including us. But as I really think back and COVID aside, one of the biggest challenges is people, and that probably will always be an ongoing challenge no matter what part of the industry cycle we’re in. It's always challenging to just find the right people. We had a great mentoring and training ground at GE Capital earlier in my career – where they would put employees through their training program for a few years. For that reason, we like to hire people who have worked for GE Capital and undergone their training program. But GE Capital is obviously no longer in the business and therefore that pipeline of people is gone. So, finding the right people, with the right skills to come in and either step in as direct salespeople, or on the credit side or documentation and funding is challenging.

The good news is we have been successful finding a lot of the right people that have the right aptitudes and training. This has resulted in our turnover being relatively minimal over the few years that we've been in business. Finding, retaining, and training people is always the biggest challenge for us and others I believe.

Toglia: Besides the biggest challenge, have there been any pleasant surprises on your end?

Phillips: I'm very pleased with how well the market has accepted us – because we're a bit unique. I always tell people we're not a bank leasing company. Rather, we're a bank-owned leasing company. We act like an independent finance company, but we have the back-office support and funding of a bank. We’ve always tried to do the right things and deliver on what we say we can do. You know, you always hope and think it’s going to happen, but to actually see the results is very satisfying.

Toglia: Going back again to our 2015 interview, you mentioned that the culture at Wintrust is focused on building personal relationships. Can you tell us a bit more about this culture now that you have 6 years under your belt as part of Wintrust?

Phillips: Our culture is something we take a lot of pride in because to us, culture is everything. I am very happy that we had four years to build that culture before COVID hit, as that becomes a challenge when you're trying to hire people. We've hired people that we've never met in person as they've never been able to come together and experience our face-to-face culture. I'm happy that we were able to set that in motion before the pandemic hit. It’s important to develop personal relationships internally, with each other, as no department can exist in isolation; it takes a team. Knowing who your team members are and their strengths and weaknesses is important and knowing how to work within a team and leverage the strengths of the individual members is key.

We also have a strong relationship with our sponsor, Wintrust. We've worked very hard to establish our credibility, our thought processes and how we do things with them so that they're comfortable with us. To me, it just really boils down to doing the right things every day, in every situation by our customers, by each other and by our sponsor.

It was very gratifying at this most recent ELFA annual convention where we were all finally back together and hearing people say, “All I hear is good things about you. I want to come to work for you guys. When will there be a position open for me?" I think the market recognizes the value of our culture and that we work very hard on it. One of the hardest things for me to tackle over the past 18 months has been to retain our culture when we can't get together. I give kudos to the team. Last year we had our best year in five years and we're going to have a good year this year as well. This year was a little harder than last year, but we've survived and thrived in the pandemic.

Toglia: Since launching in 2015, Wintrust Commercial Finance has generated more than $3 billion in funded and managed volume, which lead to a compound annual growth rate of 30.5 percent. What’s ahead for your team?

Phillips: Well, number one, we're just looking to continue building on our successes that we've achieved over the last six years and continue to grow the business. There are areas that we need to work on and we're going to address those. We're always looking for new opportunities in new segments, and we have a few areas that we're exploring. We recently launched a business aviation platform. We found the right personnel to bring in for this segment focus and we will continue to explore other segments. As I mentioned earlier, doing the right things every day is very important. If we can do those things, we will achieve the success that we are seeking.

One of the hardest things to do during past few years has been maintaining discipline. I believe our team has done this very well. Obviously, there's a lot of liquidity in the marketplace and over the last two years, there haven’t been as many transactions with some of the unique disruptions that we've seen. That makes it difficult sometimes to maintain those disciplines when others are not. Again, our philosophy is that if we just do the right things and maintain those disciplines, then good things over the long term will occur. It's really not any more complicated than that. Just do what you know is right and good things will happen.

Toglia: Is there anything else that you wanted to say before we part?

Phillips: I can't say it enough about Wintrust – from senior management to the founding members of the bank and throughout the organization. We could not have been more blessed. When we did that interview six years ago, I believe I told you that we talked to over thirty different institutions to find the right home and we were very blessed to partner with Wintrust. They've been a phenomenal supporter and a believer in us. I tell people all the time that when we met with Ed Wehmer, the Founder and Chief Executive Officer of Wintrust, he said and I’m paraphrasing, “You guys know how to run the business. We expect you to run the business and if you don't see us coming, then that's a good thing." I translate that to the team as, Ed's giving us enough rope to climb the mountain or hang ourselves! They've truly been a phenomenal supporter so I guess we will just keep on climbing.