Monitor’s Top 30 Private Independents continued their growth spurt in 2022, reporting a year-over-year gain of 30.8% in new business volume — the second highest percentage gain recorded in the history of the ranking. After achieving great gains in 2021, the group doubled down to originate $13,471.8 million in new business volume, up $3,172.3 million from the $10,299.5 million recorded in 2021. Of the group, 24 companies posted increases, with these gainers combining to add $3,382.4 million, while four companies reported declines that combined to $210.1 million.
TOP FIVE
The top five posted collective new business volume of $5,844.2 million, representing 43.4% of the top 30’s total volume. With each member of the top five posting a year-over- year gain in originations, the top five contributed $1,957.4 million (61.7%) of the collective percentage gain for the group.
Stonebriar Commercial Finance easily retained the No. 1 position with $2,281.8 million in new business volume, a 51.2% year- over-year increase from the $1,509.6 million the company recorded in 2021 and more than $1 billion more than this year’s second place finisher, GreatAmerica Financial Services. With 85% of its total volume originated via the direct channel and 15% coming from indirect sources, Stonebriar mostly played in the large-ticket arena.
As noted, GreatAmerica Financial Services held on to its No. 2 ranking with $1,281.4 million in originations, an increase of $249.8 million (24.2%) from $1,031.6 million in 2021. GreatAmerica originated the bulk of its volume ($1,279.7 million) from vendor/dealer activity, while $1.7 million came from a portfolio purchase. Of its total volume, GreatAmerica originated $607.8 million (47.4%) in small-ticket, $409.5 million (32%) in micro-ticket, $256.6 million (20%) in medium-ticket and $7.5 million (less than 1%) in large-ticket.
Auxilior Capital Partners achieved a tremendous gain in the ranking, moving up10 positions from No. 13 to No. 3 with $901million in originations reported, an increase of $596 million (195.4%) from the $305 million it originated in 2021. Auxilior focused exclusively on the vendor/dealer channel for its origination activity, while its volume was made up entirely of medium-ticket transactions.
The rise of Auxilior caused Amur Equipment Finance to drop to No. 4 in the ranking despite a strong performance that included a reported $810.5 million in new business volume, which was up $161.7 million (24.9%) from the $648.7 million it closed in 2021. Amur relied heavily on the vendor/dealer channel, accounting for 92% of its origination activity, but it also gained 8% of its originations from the direct channel. Amur mostly booked small-ticket deals in 2022, reporting $676 million in volume in that category, making up 83% of its total.
North Mill Equipment Finance joined the top five with $569.5 million in originations, up $177.7 million (45.4%) from the $391.8 million in new business volume it reported in 2021. As usual, North Mill was very active in the in- direct space, which accounted for $542.4 mil- lion (95.2%) of its volume, while $27.1 million (4.8%) came from a portfolio purchase. The majority of North Mill’s originations ($450.9 million) were sourced from small-ticket trans- actions, with $111.3 million in medium-ticket and $7.3 million in micro-ticket.
TOP PERCENTAGE GAINERS
Auxilior achieved the highest percentage gain of the group, increasing its new business volume by 195.4% in its second year in the ranking. No. 23-ranked Honour Capital, new to the ranking this year, charted a year-over- year increase of 148.7%, reporting $194 million in new business volume, which was up from $78 million in 2021. Another newcomer, No. 25-ranked Reliant Capital, posted a gain of 101.3% with $156.8 million in originations.
Several other companies posted noteworthy increases, including No. 26-ranked CHG Meridian USA with 74.5%, No. 17-ranked Dext Capital with 57%, No. 1-ranked Stonebriar with 51.2%, No. 13-ranked Alliance Funding Group with 46.8%, No. 5-ranked North Mill with 45.4%, No. 26-ranked Regents Capital (which tied with CHG Meridian USA) with 43.7%, No. 19-ranked MMP Capital with 43.5% and No. 6-ranked Verdant Commercial Capital with 41.2%.
NEW ARRIVALS
Monitor welcomed three new companies to the ranking this year, while three previous contenders rejoined the group. As mentioned, Honour Capital made its grand entrance at No. 23 with $194 million in new business volume. Reliant Capital came in a couple spots below to make its debut, joining the club at No. 25 with $156.8 million in originations. CHG-Meridian fit in a slot below Reliant Capital, earning its first appearance on the list with $140.5 million in originations, tying it with Regents Capital for the No. 26 spot. SLR Equipment Finance rounded out the group at No. 30 with $125.1 million in originations, making its first appearance since rebranding from Nations Equipment Finance in 2021. United Leasing and Finance (No. 22, $209 million) and Jules and Associates (No. 28, $131 million) also returned to the mix. As a note, Wingspire Equipment Finance is new to the ranking in name only, as Liberty Commercial Finance rebranded following its acquisition by Wingspire Capital.
2022 RETROSPECTIVES
Unsurprisingly, the many economic hurdles of 2022 played an outsized role in coloring the perspective of this year’s independents. Whether due to the effects of the war in Ukraine, rising inflation, the Federal Reserve’s efforts to combat said inflation or continued supply chain disruption, the biggest take- aways from most companies stemmed from overall economic tumult. “Supply chain issues dramatically reduced the volume of business closed during the year.
Rising interest rates adversely affected mar- gins for the year,” one survey respondent said. “2022 was a year of challenge surrounding diminished spreads caused by the unprecedented spike in benchmark interest rates,” an- other respondent said. “There is an inherent lag in the ability to increase customer rates lock step with the spike in benchmarks.” In addition to other external factors, such as competition, spread compression, high asset prices, lack of inventory and a “more conservative approach” from partners, several companies found obstacles within their own walls. “Our challenges are, for the most part, internal,” one respondent said. “We are looking to update and modernize our digital offerings. We feel the economic climate presents more tailwinds for leasing than it has in decades.” Despite less-than-ideal circumstances, many companies noted that 2022 was a year of strong growth, a sentiment supported by the performance of the overall group in this year’s rankings.
FOCUS IN 2023
The Top Private Independents will have to overcome many of the same challenges they faced in 2022 this year, especially as a recession continues to loom. According to this year’s survey, 57% of respondents said the economy and capital spending were their greatest concerns for 2023, while 25% cited margin compression and 11% pointed to the credit quality of their customers. “The one challenge that is most prominent in our plans to improve during 2023 is our cost of funds,” one respondent said. “With interest rates rising for the first time in more than a decade, customers are resistant to increased lease pricing, yet our cost of funds has increased fairly dramatically in a short period of time.”
Despite some expected decreases in access to liquidity and an increase in the costs of funds, the Top Private Independents are focused on growth in 2023. Several companies cited their continued drive to improve efficiency and to become more technologically adept as goals for the year, while others mentioned growing into new markets, adding sales representatives in new territories and improving brand recognition in the market- place. In addition, hiring and staff management were popular focuses as well.
“More in-office presence by team members,” one respondent said. “The lingering effects from COVID and working remotely are making it much more difficult to build and maintain a corporate culture as the organization grows.”
2023 FORECAST
Despite the impressive growth of the last few years, the 2023 Top Private Independents are prepared for the proverbial other shoe to drop, especially with a recession in sight, combining to forecast just 0.53% overall growth in 2023.
SUMMARY
Last year was a difficult one for many businesses, but the top players in the independent equipment finance sector largely succeeded in the face of mounting economic pressures, building on 2021’s record-setting 35.6% increase in new business volume to log a 30.8% boost in 2022. The Top Private Independents secured most of their volume from either the direct channel (45.3%) or the vendor/dealer pipeline (40.2%) in 2022, just like in 2021. Interestingly, despite this relatively even split, among the top six companies, only Stonebriar accrued more than 8% of its activity from the direct channel, relying on it for 85% of its volume. The vendor/dealer channel was much more popular among most of the other companies in the top six, with GreatAmerica, Auxilior, Amur and Verdant, which missed out on the top five by just $19.4 million, all leaning on this part of the market for more than 90% of their originations.
In terms of other origination sources, the indirect channel accounted for 12.3% of the group’s overall output, while portfolio purchases and other means made up the remaining 2.2%. North Mill stood out in the top six with 95% of its originations from the indirect channel, while Quality Equipment Finance, which rebranded from Quality Leasing last year, was the only other company in this year’s group to derive the majority of its volume from the indirect channel.
Staff sizes for this year’s Top Private Independents mostly grew, with only one company reporting a decrease in its employee count and two others retaining the same number as last year. Based on their results, the Top Private Independents reported an average of $5.55 million per employee in volume, up from $4.55 million last year.
The last few years have been peppered with difficult challenges, but the Top Private Independents have continued to stand strong and prosper. With a recession on the horizon, the degree of difficulty will remain high in 2023, meaning these companies will need to rely on their ability to stay nimble in any environment.
Monitor’s staff is grateful to the companies that participate in our annual survey and make this report possible. •
