EverBank Commercial Finance
As a co-founder of US Express Leasing, leader of Tygris Vendor Finance and now president of EverBank Commercial Finance, Jim McGrane has been with the company since its creation and through its various identities. In addition, he is quick to note that each step in the evolution has made the business stronger and its value proposition increasingly compelling.
In the fall of 2009, EverBank Financial Corp. was looking to diversify its originations and Tygris Vendor Finance was seeking access to depository cost of funds. McGrane describes the union as a “marriage made in heaven,” thanks to a shared entrepreneurial, performance-oriented culture. The ensuing acquisition in February 2010 enabled Tygris to provide EverBank with growth capital and the ability to diversify the bank’s new asset generation into the commercial sector and for EverBank to provide the unit with access to low-cost depository funding.
Integration Spawns Opportunities and Growth
Officially branded EverBank Commercial Finance in July 2010, McGrane and his group have enjoyed healthy growth, due in part to that access to cost of funds and being a component of a well-respected and growing national franchise.
“When you look at our performance since we’ve been part of EverBank, we’ve exceeded our earnings objectives in the last two years and our originations from 2010 to 2011 went up 239%. We went from $145 million to $492 million, which I suspect puts us in the top tier of vendor leasing companies nationally,” he notes.
On May 3, 2012, EverBank Financial Corp., with approximately $14 billion in assets and $11 billion in deposits, became a publicly traded company, further validating the institution in terms of its track record of sustainable growth and strong earnings performance since its formation in 1994. McGrane explains. “Now that our parent company is public, it is another arrow in our credibility quiver, if you will. The company raised $200 million in capital to support continued growth. Being public allows the institution as a whole to be transparent in terms of what we do and our financial performance, which ultimately is a good thing,” he adds.
McGrane is pleased, but not surprised, by the ease of integration and assimilation into EverBank. “The more we learned about the institution, the more we believed there was going to be a very good fit. We are culturally like-minded — very collaborative and customer focused. In terms of the specific values that both institutions espouse, I don’t think they could have been better aligned. It almost feels like we’ve always been part of the bank. We didn’t miss a beat, and if you talk to leadership at EverBank I believe they’d say the same thing, that the compatibility is terrific.”
Building the Commercial Finance Business
McGrane says that his group is “thrilled to be back on the Monitor 100” now that they can disclose performance data having exited their pre-IPO quiet period. In 2011, the company reported solid growth in all markets, including healthcare, technology and office products. EverBank Commercial Finance also added an industrial segment, focused on plastics, packaging, food processing, construction and specialty vehicles, which is showing strong organic growth in its target markets.
“A lot of that growth has to do with executing on our core value proposition. Being a part of an institution like EverBank brings fiscal stability and credibility in its own right. We also were able to continue to evolve our offering, including our specialized and unit-based billing capabilities, partner portal and proactive delivery of actionable insights through our business intelligence competency,” he notes.
In addition, EverBank Commercial Finance launched its lender finance business in 2011, led by David D’Antonio, the unit’s managing director. “We began from a standing start, and now have over a dozen relationships ranging in commitment size from $15 million to $40 million. We believed there was and still is significant demand due to how the asset-based market has shifted and how middle-market companies are borrowing. And we continue to see that. As a result, we have the ability to be very selective while generating really good risk-adjusted returns along with the growth. The group has done an outstanding job,” McGrane relates.
The commercial finance group’s 239% increase in 2011 new business volume was driven by the market’s recovery along with a mandate for growth from EverBank, dedication to a loyal base of customers throughout the assimilation process, and access to more liquidity. “There’s really no ‘secret sauce’ here. It was delivering in a way that was predictable and consistent and honoring the commitments we made to our customers. In healthcare and technology, we added a number of large new vendor partners. And in office products, we continue to build on what we had been doing all along.”
He adds, “When we came out of the downturn, it really was a matter of picking up where we left off. It’s deeper penetration with our existing customers, new partners and new segments. For example, in industrial, we added new verticals on the vendor side along with entering the direct space. All of this has helped us get back to a level of asset and originations growth that’s exciting. The good work and foundation we laid reestablishing ourselves in 2010 has carried us through, and we’re optimistic about what 2012 holds for us in terms of continued growth.”
Looking ahead, the team at EverBank Commercial Finance is closely watching the global and domestic economy and continuing to focus on market penetration and expansion in its existing verticals. Moreover, thanks to the low rate environment in which McGrane is seeing some compressing margins industry-wide, the group is focusing on operating efficiency, utilizing technology and smart process design, and in some cases process redesign.
“We have always been and continue to be focused like a laser beam on underwriting discipline and portfolio vigilance. I don’t think we’re much different from many of the players in the industry. Much of our focus will be on the basics, on the fundamentals and continuing to do what we did in 2011. In terms of new growth, we are looking at other verticals in our vendor finance group. We’re continuing to build out our lender finance business with an intense focus around portfolio diversification, and we may expand some of the verticals there. And we are looking at other areas of commercial finance where we may be able to grow, other areas in asset-based lending that are potentially very appealing to us,” he offers.
The senior management team at EverBank Commercial Finance has significant experience, with some, including McGrane, clocking in more than 30 years in the industry. With that history, he explains that his group has a tremendous affinity for the business and its evolution. Therefore, they are mindful of possible changes coming down the path, including a tightening regulatory environment, especially now that they are bank affiliated, and the impact of the impending IASB/FASB accounting modifications.
“This is an industry that thrives on change and always rises to the occasion, so there’s little doubt that even though these changes may not initially be looked at positively, they will continue to drive more innovation and opportunity,” McGrane remarks.
He concludes, “Our story is one of focusing on the basics and core execution, providing solutions that make sense to customers, and making sure we deliver a compelling experience through best in class operations and high quality customer service. We really don’t compete on price but on the overall customer experience, and that’s completely congruent with how EverBank goes to market in its banking, investment services and lending businesses.”