In October, Atlantic Union Bank announced the launch of a new division – Atlantic Union Equipment Finance. This newest entrant into the bank-owned equipment finance space will provide a variety of equipment finance solutions across Atlantic Union Bank’s Mid-Atlantic footprint, and expand into new geographic regions – leveraging its lending expertise beyond traditional banking.
Leading Atlantic Union Equipment Finance is Jule Kreyling, the division’s President. Kreyling possesses over 25 years of experience in equipment finance and leasing, along with extensive experience building successful equipment finance companies for financial institutions.
In the following interview, Kreyling explains why Atlantic Union Bank has entered the equipment finance space and describes its go-to-market strategy for offering equipment finance products within and beyond the bank’s footprint.
Equipment Finance Advisor: Thank you for your time today Jule. Please tell our readers what is driving Atlantic Union Bank to launch a new equipment finance division at this time?
Jule Kreyling:Over the past few years, Atlantic Union Bank recognized they have numerous customers with extensive capital equipment needs, but they couldn’t fully address these needs. Most of the senior executives at Atlantic Union Bank have worked for banks that offered equipment financing as part of their product mix and viewed equipment finance as a sector the bank would eventually enter, but they wanted to enter the business by bringing a team onboard with deep equipment finance experience. We are doing this to meet our customers’ needs and to expand and diversify their commercial loan portfolio.
Equipment Finance Advisor: Tell us about the equipment finance products the equipment finance group will be providing. Also, what is your targeted transaction range?
Kreyling: We will be providing a full slate of equipment finance products including true tax leases, operating leases, TRAC leases, Split TRAC leases and conditional sales contracts as well as loans. As it relates to our targeted transaction range, our sweet spot on the direct origination channel will be $1 million to $20 million, but our focus will primarily be in the middle market. We will be underwriting smaller transactions as well that will help the bank meet its existing customers’ needs. In the bank’s footprint, the bank would like to see our group doing small-mid-ticket deals as well as larger transactions. For example, we see quite a few marine and trucking company opportunities in the bank’s footprint where larger exposures will be targeted.
Equipment Finance Advisor: How will the equipment finance group work with the bank's relationship managers? Will there be a “partnership” of efforts to originate business from existing bank customers?
Kreyling: Yes. As a matter of fact, one of the first hires we will make is an originator in the middle of the bank’s footprint – the Richmond, VA area – to work with the bank’s relationship managers. Our goal is to be a strong partner with the bank and to work closely with the bank’s relationship managers regularly to offer equipment finance products to their customers – rather than risk losing them to a competitor due to not offering a robust suite of equipment finance products. It also presents an opportunity for the equipment finance group to introduce new customers to the bank. Sometimes an equipment finance transaction can be the low hanging fruit to bring a customer in the door. We hope to bring the bank in on some of our group’s existing relationships that are not currently on the bank’s radar. It should be a very close working relationship with the bank and its relationship managers.
Equipment Finance Advisor: According to the press release, the bank's footprint is Mid-Atlantic region. Will the Mid-Atlantic region be your primary area of focus, or will the equipment finance group begin originating deals immediately in other parts of the country?
Kreyling: Our main focus is to support our franchise. Our footprint reaches across Virginia, North Carolina and Maryland, but we have originators positioned to take advantage of transactions where we don’t have a commercial relationship manager available.
Equipment Finance Advisor: Will you be including a buy and sell desk as part of your overall business strategy?
Kreyling: We will begin our capital markets efforts with a buy desk, which is being led by Kurt Henning. We will use this buy desk initially to diversify the portfolio and most likely a few years from now we will also be selling transactions in order to manage credit exposure when required. Prior to joining Atlantic Union Bank, our team had been an active seller of transactions to manage exposure levels and I envision at some point we will be selling between 20 to 25 percent of our originations as we mature and grow our exposure with customers.
Equipment Finance Advisor: Please tell us a little about your team – originations, credit underwriting and operations. Are these teams in place and operating now?
Kreyling: Our team is currently comprised of nine people, including myself; Mark White, the equipment finance Chief Credit Officer; two credit underwriters; Andy Gerot our Chief Operating Officer; one documentation officer; Kurt Henning, our capital markets person; and two direct originators. From our Alpharetta, GA office, where our team is based, we will credit underwrite transactions, and we have been provided a certain amount of credit authority within this office. When transactions exceed our local credit authority, they will be reviewed by the bank’s Chief Credit Officer. From an operations perspective, we will take transactions from documentation until the booking process. The bank’s Operations team will then take over to book, fund and service the portfolio.
Equipment Finance Advisor: Which equipment sectors will the equipment finance group be focusing upon?
Kreyling: Numerous sectors, but our focus will be mainly on income producing, hard assets such as marine, tractors, trailers, buses, specialty vehicles, construction, manufacturing and medical equipment. In the Mid-Atlantic region, there are many transportation companies – both surface and marine transportation – that will be prospective new customers for both traditional bank products and equipment finance products.
Equipment Finance Advisor: In closing, how do you see the future for your group and its cultural fit within the bank?
Kreyling: We are all very excited to join Atlantic Union Bank. I believe we are a strong cultural fit for the bank and we are looking forward to helping the bank diversify the portfolio and achieve strong returns. We believe this will be a win-win for everyone.