In early December 2021, First Financial Bank, headquartered in Cincinnati, Ohio, announced the acquisition of Cincinnati-based Summit Funding Group, Inc. (Summit), the fourth largest independent equipment financing platform in the United States.
Summit’s founder and CEO, Rick Ross, is remaining in his leadership position and as a subsidiary of First Financial Bank, Summit is continuing to operate under the name Summit Funding Group, allowing them to take full advantage of the company's brand recognition within the equipment finance industry.
Upon announcement of the acquisition, Rick Ross stated, "With First Financial, we are joining a like-minded partner who is well-positioned to assist Summit in unlocking significant growth, while enhancing profitability through immediate funding synergies and sharing a commitment to credit performance excellence.”
Equipment Finance Advisor met with Archie Brown, President & CEO, First Financial Bank, and Rick Ross, President & CEO, Summit Funding Group, to learn more about this strategic acquisition and the enhanced offerings Summit is now bringing to the market as part of First Financial Bank.
Equipment Finance Advisor: Why did First Financial Bank and Summit Funding reach this agreement to come together?
Archie Brown: For number of years, we have been looking to add an asset generating type company, such as equipment leasing, to First Financial Bank. We were familiar with Rick and the team prior to the acquisition, and then later we became a creditor providing financial solutions for Summit. This enabled us to get to know them even more deeply. Our desire to acquire an equipment leasing company aligned with Rick's desire to sell at some point, so we began having conversations. We think it's a great opportunity for us to diversify our product and service offering to help meet a wider range of our clients’ needs. As I mentioned, we were already familiar with Summit, the location of the group near our Cincinnati headquarters makes sense, the quality of the people, and the fact that they are one of the most widely respected companies in the equipment finance sector all made sense for us to come together. Now that they are part of First Financial Bank, we can provide our clients with a much wider range of products.
Rick Ross: I agree with Archie. Summit has always been in Cincinnati – after all, I'm a southwestern Ohio boy. Keeping the partnership here in Cincinnati was a big point. We began the process of looking for a potential bank in the $15 billion to $40 billion range and we wanted to go somewhere we knew we could make a difference. Believe it or not, First Financial was not the highest bidder, but the culture seemed to be the best fit. The people are tremendous, and I believe everything is about people. The people that visited us and spoke with us during the process were outstanding, but more than that, they wanted us to keep the Summit name as we have a footprint that is nationwide and well known. They also allowed us to keep all our people. This allows us to continue to do what we do best. The combination of all those things was just perfect for us.
EFA: What will be Summit's strategy under the First Financial Bank’s ownership?
Ross: For the most part, things will remain the same, but this acquisition will increase the opportunities, the product offerings, and the customer base we can pursue. With a bigger balance sheet and lower cost of funds, we can expand those offerings and do more with our current customers. We can also continue to serve our current customers with better pricing and the ability to do more transactions. We were a syndication shop prior to the acquisition where approximately 90 percent of our transactions were taken off our balance sheet. With the acquisition by First Financial, we can now hold more transactions and continue to keep the profitable deals that we've always housed on our own balance sheet and grow the company. The other change that Archie alluded to is we will continue to support the bank’s regional managers and commercial bankers in the bank’s footprint. We'll bring TRAC leasing, tax leasing, fair market value transactions, and some other structured transactions to the table.
Brown: What Rick said about the bank side is interesting because we didn't have the breadth of products nor the expertise that Summit brings. We think there's a significant avenue to pursue by being able to offer our clients the additional breadth of services available from Summit. On the Summit side, as Rick mentioned, Summit now has a bigger balance sheet, lower cost funding, the ability to continue doing what has made them successful in the past.
We have some experience with buying specialty companies, and we are using a similar blueprint. We bought a company in 2015 called Oak Street Funding. It's a company lending into the insurance agency space and the RIA space. We also bought a foreign exchange company about two and a half years ago by the name of Bannockburn Global Forex, which provides foreign exchange services to commercial clients all around the country.
In both cases, great entrepreneurs founded the companies and grew them to a certain level. By partnering with us, they have been able to take these businesses to a next level of growth and a higher growth trajectory. We think we have the same model here – get a great leader with a great company and culture, and then give them tools to grow further and faster than they have in the past. Then we need to get out of their way.
EFA: First Financial is in a regulated industry. Will this affect Summit’s operational approach? Will Summit be doing business as it always has, and serve the same type of customers?
Ross: Because we sold or discounted over 90% of our leases to regular banks, we were already adhering to some regulations, as the banks themselves are regulated. Most of the difference is in the reporting. We are both committed to growth and success, and thus are ensuring compliance issues are upheld. We will continue to go to market in the same manner because we are keeping our syndications relationships. We can continue to place transactions in the secondary market and our customer base will expand with the ability to fund ourselves with a more reasonable cost of funds.
Brown: First Financial had knowledge of Summit Funding Group, since we engaged in providing loans through our previous business relationship. This gave us an opportunity to gain valuable insights into their leadership, culture, business practices, and clients. We feel confident that Summit’s business practices will help them continue to be successful.
EFA: Rick, are you finding that it's an open door and the lenders are working with the equipment leasing team?
Ross: People are eager to have new arrows in their quiver. They're excited for the new products to bring to market, to learn more about how they can do more business and meet more of their customers’ needs. It’s already working better than I anticipated.
Brown: I think what Summit brings is an incredible expertise. They possess knowledge of equipment and bring a much larger breadth of product than what we've ever provided to our clients. Many of our client companies were doing leasing transactions elsewhere as we didn't have the product capabilities. Now they can do them with us. This provides our lenders another way to bring value to their clients and opens doors with new prospects. For all those reasons, the bankers are excited. They are now in the process of building their leasing knowledge to the level where they know how to introduce and talk about this financing product.
EFA: Will Summit be able to operate more effectively? How will Summit work better with First Financial in Summit’s traditional footprint? Will bigger mean being more complex, or will it mean there’s a bigger box to operate from?
Brown: We think it’s the latter, because as Rick said, we're leaving the company intact – all team members and the processes they had remain in place, but we can also offer some services for Summit. There are certain operational elements not related to the leasing side of the business, such as technology solutions or HR administration that we can provide Summit. If they need us to take on some of those elements of the business so they can focus more on origination and taking care of clients, we can step in to assist. There’s a menu of choices for Rick and the team related to how we can meet their needs. The bottom line is if we can do anything to take away distractions and let them focus more on clients and growth, we will do so.
Ross: This goes to the very point of why the two companies joined together. First Financial recognized upfront that Summit had a national footprint, and our name was very well known in the marketplace. Keeping our name, I believe, is key to the growth because we already had a national footprint and people know us. Our reputation, as Archie stated, is very good in the industry. Because the bank has allowed us to keep our credit people and operations staff in place, we will continue to do what we've been doing; only better. We get support if we need it, and the First Financial team has already been very helpful. Keeping all operations in-house allows us to keep the speed we need to go to market with appropriate and quick responses for our customers. Since 1993, people have been comfortable and expected a lot out of us, because we try to put the customer first. First Financial, does not just provide more money, a bigger balance sheet and lower rates. We are already enjoying tremendous support from their IT and marketing departments. It’s very clear, they are very committed to owning and enhancing this synergy between the two companies.
EFA: What is First Financial’s footprint and will bringing on Summit allow you to expand your lending footprint across the country?
Brown: Good question. The core bank footprint – where we take deposits and lend money – is primarily Ohio, Indiana, Kentucky, and a bit of Northeastern Illinois. We have established several businesses, some through acquisitions like Summit, which have taken us more into a national reach. As I mentioned earlier, our Oak Street Funding business that lends to insurance agents and RIAs is on a national scale, and we have a quick serve restaurant franchise lending business that's also a national business. Our foreign exchange business also has a national reach. Our commercial real estate teams go a bit beyond our region, maybe not quite nationally, but certainly further than our region. We are seeing more of these opportunities, and it provides us the ability to grow faster. If you think about what's happening in banking today, there's many new financial technology players and competitors that continue to chip away at core banking. We think the right recipe for us to be competitive long term is for us to be able to provide a mix of core banking in our footprint and then national scale businesses.
EFA: Any parting thoughts?
Brown: We are very excited about having Summit be part of the company, the growth that's going to come and our ability to enable them to grow even faster. We are very pleased already.
Ross: I fully concur, and we are excited to be a part of First Financial Bank.