In mid-April, Wintrust Financial Corporation announced the expansion of its lease and equipment finance operations with the launch of Wintrust Commercial Finance (WCF), an equipment-focused financing group located in Texas. This newest entrant to the equipment finance industry will assemble some of the most experienced equipment finance professionals in the industry to provide highly sophisticated loan and lease products to companies in a variety of industries throughout the United States and Canada and complement Wintrust's other leasing groups – Wintrust Equipment Finance and Wintrust Capital, based in the Chicago metropolitan area.
Wintrust Commercial Finance is headed by industry veteran Kirk S. Phillips, President and Chief Executive Officer. Phillips, a former executive from companies including ITT, Transamerica and AIG, and his team are excited about the entrepreneurial spirit exemplified by the Wintrust senior management team and are ready to take a significant role in the equipment finance market nationally.
In the following Q&A, Phillips describes his team’s role within the Wintrust organization, the caliber of his team and long-term vision for the group, and how he and Wintrust Commercial Finance will approach the market in this highly-competitive environment.
Equipment Finance Advisor: According to the April announcement, Wintrust has launched this new group to provide “highly sophisticated loan and lease products in the U.S. and Canada.” How will this new group, based in Texas, differentiate itself from the other lending operations under the Wintrust umbrella – the current Equipment Finance, ABL, C&I lending groups?
Kirk Phillips: Wintrust Commercial Finance (“WCF”) was formed to build upon and expand the success that Wintrust has experienced in its Equipment Finance, ABL, and C&I groups. Through the C&I and ABL groups, Wintrust Financial Corporation currently holds a significant share of the Chicago regional commercial banking market. These groups have done an excellent job of lending into that market.
As far as the current equipment finance groups, WCF is the next logical step. One of the current groups Wintrust Equipment Finance operates an indirect origination shop, functioning under a fixed rate debt discounting model. The other, Wintrust Capital offers direct origination to current Wintrust C&I customers and among other things, focuses on vendor finance nationally. At WCF we differentiate ourselves from the current operations by leveraging an average of 25 years of equipment finance experience in a wide range of heavier equipment classes to provide even more geographic and asset class diversification to the bank. We will do this on an indirect basis initially while we build out a direct origination team that we expect to drive better pricing, documentation and control over a growth portfolio. We will accomplish this while simultaneously providing a superior customer experience.
Equipment Finance Advisor: How would you classify your credit underwriting culture as a bank-owned equipment finance company, and how will the business you will be booking fit into the bank’s overall credit underwriting philosophy?
Phillips: Having a disciplined credit culture is important and will be the key to our overall success and we will be working closely with the bank to ensure we meet established credit underwriting criteria.
The bank has hired us for our asset management experience and our ability to go out and find transactions to finance essential use collateral while balancing credit risk. That is the expertise we possess – finding transactions where we can balance cash flow and collateral against each other, understand the dynamics of a business and the industry in which it operates, and then constructing a structure that makes sense. We are in a regulated environment and need to do all this with an eye toward maintaining a very strong credit discipline.
Equipment Finance Advisor: Please explain your target market in terms of company revenues (or some other measure), transaction size range, and financing structures to be offered. What will likely be the new group’s top five targeted industry sectors?
Phillips: WCF is targeting the “B” to “BB” credit equivalent space where we can find the right combination of credit, essential use collateral, and pricing return. We will offer a full product suite of both fixed and floating rate loans as well as capital and true leases. Our typical transaction size will be $5 to $30 million with the sweet spot in the $10 to $20 million range and tenors in the 24 to 72 month range.
As for our industry focus, we will serve a wide variety of industries including transportation (trucks, trailers, rail, marine, buses, aircraft), construction, manufacturing, energy, medical and technology to name a few.
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Equipment Finance Advisor: How will Wintrust compete in the current hyper-competitive market? Do you see any competitive advantages for your group as a bank-owned equipment finance company?
Phillips: Our team has an average of 25 years of experience in the equipment finance and leasing business and we have been successful throughout several economic and business cycles. I can’t remember many times when this industry hasn’t been competitive. We have succeeded in the past, and will do so again at Wintrust by providing superior customer service at a competitive price point. This fits well with Wintrust Financial Corporation’s theme of “Have It All” -- where you have the resources of a large bank with the personal attention of a relationship lender. Clients, both direct and indirect, are looking for a lender that is predictable, consistent and efficient in reviewing and processing their transactions, and doing so in a professional and courteous manner is critical. A lot of this comes down to establishing and maintaining relationships; one-on-one and face-to-face. We are strong believers in understanding the customer’s business and objectives. Once you understand the customer’s needs, you can begin to put together a financing structure that aligns with their objectives and provides a prudent risk adjusted return for WFC.
Equipment Finance Advisor: Kirk, from a personal perspective, what attracted you to this particular opportunity and what are you finding is attracting the team you are building?
Phillips: Over the last 25 years, I have worked with some very talented individuals and mentors at three top performing commercial finance companies including ITT, Transamerica and AIG. When we connected with Wintrust, I felt the same dedication to building a best in class bank-owned equipment finance company we felt when we started with those institutions. The Wintrust culture is very entrepreneurial and one that is genuinely interested in helping the customer, investing into the lives of its employees and providing a superior return to its stakeholders. It is also a chance for this team to make a meaningful impact on the growth and direction of the bank. Combined, it was an easy decision for me and those that have joined us.
Equipment Finance Advisor: Tell us a bit about the team you have hired to date and the team you will be building. When will you begin your go-to-market strategy?
Phillips: Joe Thompson, Jeff Darlington and Paul Hallauer – the Chief Operating Officer, Chief Financial Officer and Chief Credit Officer, respectively – have been key in putting this new group together and building it out. We have also recently hired a General Counsel and Operations Manager and we will be building our credit and marketing teams in very short order.
We were fortunate that our launch occurred the week prior to the Equipment Leasing and Finance Association (ELFA) Funding Conference in Chicago. We got a lot of tailwind off our meetings at the Funding Conference and have had more than enough deals to review. As a matter of fact, we recently received a credit approval on our first transaction with Wintrust and have several more deals in the pipeline that look like solid investments. We just need to add resources to help process all of the opportunities that are coming our way.
It’s funny, when we first launched I had a few sleepless night wondering where the deals would come from. That hasn’t been a problem. I think our track record, the relationships we have built over the past 25 years, and our reputation for doing the right thing have made it easy for customers to trust us with their funding needs.
We are very excited to have the opportunity to work with Wintrust and the senior management team. We feel the market is strong for our product offerings and we have a very bright and positive future ahead of us.