Wallwork Financial Finds Growth Well Beyond the Bakken Shale

by By Lisa A. Miller January 2015
Wallwork Financial president Bill Wallwork shares his vision for his grandfather's company, which is quickly approaching its 100 year anniversary.

Fargo, North Dakota-based Wallwork Financial has deep roots in the Midwest. With a family business history that goes back more than 90 years, the Wallwork name has long been associated with quality service and products. Operating in 39 states, with a $230 million portfolio, Wallwork Financial offers lease and finance options for a full array of truck, trailer and heavy equipment, including semi-tractors, trailers, straight trucks, construction, logging and agricultural equipment.

“My grandfather started the company as a car and tractor dealership in 1921, but the focus quickly turned away from tractors,” relates Bill Wallwork, president, Wallwork Financial Corporation. “In the early 1950s my father attended a seminar and learned about lease financing. He came home and immediately hired someone to start our lease financing company. Established in 1952, Wallwork Lease and Rental grew to be one of the largest independent lease companies for cars and trucks in the country. We had a number of large clients, including U.S. Steel.”

In 1986 as he contemplated retirement, Wallwork’s father sold the leasing company and signed a five-year non-compete clause. Over the ensuing years, the family focused on its network of dealerships. In 1994 the company re-entered the world of financing as Wallwork Financial Corporation. The organization is still in the business of selling trucks and heavy equipment through its Wallwork Truck Center dealerships, which are authorized dealers for new and used, medium- and heavy-duty Kenworth and Ford trucks. It also operates two trailer repair facilities.

“We are fortunate that Wallwork Truck Centers are franchised to sell the truck and equipment brands that are dominant products in North Dakota and in the oil fields,” credits Steve Lausch, general manager, Wallwork Financial. “We have a large presence in this part of the country, and we get a lot of opportunities.” With more than 2,000 active leases and loans, Wallwork Financial’s main products are TRAC leases and loans in addition to operating leases and modified TRACs.

Competing against OEMs and big banks, Wallwork Financial originated about 68% of its new business in 2013 from outside the captive finance box. “We have ten people in our marketing department, and they cover a lot of territory,” explains Lausch. “We added two new marketing representatives in New Mexico and Utah, and our portfolio has grown outside the Midwest. Much of our growth has to do with a change in focus on the types of credits we are going after. We are chasing larger transactions and better credits, and that has allowed us to compete more successfully against the loan business that’s out there.”

Wallwork’s transaction sizes have increased, especially outside the Midwest. “Some of this has to do with the oil boom in the Bakken Shale in North Dakota,” explains Wallwork. “Our dealership sales were extremely strong in 2011 and 2012 when companies were buying 50-100 pieces of equipment at a time. That demand has leveled off in 2013, and now they are buying more replacement equipment than additional units. There are only so many companies that can service the Bakken.”

About 35% of Wallwork’s business is related to the oil and gas industry, though the equipment is not necessarily specific to that industry. Oil field-specific equipment is closer to 12% of the portfolio. “Our portfolio is up about 25% from a year ago, and we will continue to grow, but the demand will be across the U.S. and outside our dealership area,” adds Lausch.

Strong Customer Focus

“As we grow, our cost of funds become more competitive, and our name is out there more and more,” says Lausch. “We’ve had a lot of conquests with customers who understand the value of doing business with a smaller independent lender. They get frustrated by the large bureaucracies where no one seems able to make a decision.”

“We provide a service that a lot of the large banks cannot,” comments Wallwork. “Even though we are a multi-million-dollar company, we operate with just 23 employees, so our staff can provide a lot of personal service. Our customers have direct access to people who can provide them instant information, whether it is balances, payoffs or details needed for an insurance loss. Our employees have been with us a long time and are empowered to make decisions, and that leads to quick response times.”

“The fact that we are an independent has a lot of resonance with the dealerships we call on,” remarks Lausch. “We let them know that Wallwork Financial can compete, that we are easy to work with and deliver fast turnaround times. They welcome that.”

Wallwork Financial’s customers range from owner-operators to businesses with more than $300 million in annual revenues. Their customers are Tier I and Tier II credits, with two to three years of industry credit, and personal credit scores in the 740+ range. Delinquencies are running about 0.5%.

“Customers who come over to us tend to stick with us,” says Bill proudly. “We have customers that we’ve done more than 200 deals with, and some of our customers go back to the 1950s.”

Lisa A. Miller is a regular Monitor contributor who has worked in the equipment financing industry for more than 15 years.

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