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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