With more than 28 years on the institutional side of the equipment finance and leasing business, industry veteran Bill Fite has switched gears. In June, he was hired by MagnetBank, a de novo Utah-chartered commercial bank focused exclusively on commercial lending, to establish a national equipment finance group.
Bill FiteEVP & Managing Principal, MagnetBank Equipment Finance
So why the sudden switch after so many years in the institutional arena? Fite’s background and experience, combined with the ever-changing competitive landscape, explain it all.
He graduated as a business major from the State University of West Georgia. Throughout the late 1970s, he honed his sales and management skills while working with the likes of Westinghouse Credit, Citicorp Industrial Credit and the Citizens and Southern National Bank. By 1986, Fite was recruited by LeasePlan USA, a wholly owned subsidiary of ABN Amro, to develop an equipment finance and leasing unit for the company. His career responsibilities increased to include executive level and full profit and loss management.
Fourteen years and nearly $1 billion in assets later, Fite was recruited away by a former mentor to ORIX Financial Services. As executive vice president and director of sales and marketing for the equipment finance group, he was responsible for assisting in the re-engineering of its legacy business as well as developing and executing new lines of business for the organization. Within two years he was named president of the equipment finance group, and given direct responsibility for managing the $750 million unit. In 2005, Fite joined Key Equipment Finance as senior vice president and national sales manager of its $5 billion commercial leasing services unit.
In early 2007, Fite decided to return to his native Atlanta and began to consider his options for the next leg of his career. “Upon returning to Atlanta, I discovered that the equipment finance and leasing landscape had materially changed over the years,” Fite notes. “Although it had been home to a wide variety of equipment finance and bank leasing businesses, Atlanta was no longer the financial hub it once was.”
A simple moment of pondering his next move led Fite into a totally different realm of the industry. Unsure if his heart was into working for some of the same companies he had already encountered throughout his tenure in the industry, he decided to return to what he loved best: building businesses, preferably within a banking environment. Fite turned to a group of trusted advisors, who had significant experience in, and knowledge of, de novo banking in the region. Fite learned that the Southeast, notably Atlanta, had been a hotbed for de novo bank development in recent years. However, the notion of working for a bank, particularly a new one, was somewhat far-reaching for Fite, as his nearly three-decade career had focused on large institutional businesses in the equipment financing industry, primarily in the bank lessor space.
With warm referrals in hand from his group of advisors, Fite began his due diligence. He soon learned that these banks had seen significant asset growth and expansion over the past several years, largely fueled by the real estate industry and related assets, and that many of these banks were experiencing pressure from regulators and directors to diversify.
“I discovered that there was a consistent need to generate higher levels of commercial and industrial loans,” Fite says. As his search expanded, the problem became more defined and a solution crystallized in his mind. “With necessity being the mother of invention, I saw a unique opportunity for a turnkey, focused equipment finance initiative to be ideally suited to satisfy this diversification need. It soon became evident that it was not a matter of finding a bank that bought into the strategy, as I found numerous interested parties, but a matter of finding an ideal suitor to capitalize on this opportunity in a mutually benefiting and powerful way.”
Fite’s objective: to create a broad-based, fully functional, national equipment finance organization for a bank that not only offered “core value alignment and a balance sheet that could support the initiative, but one that had an absolute strategic need, a strategic mandate for my team’s mission to exist in order for the bank to realize its goal potential,” Fite says. Enter MagnetBank.
As progress was being realized with a variety of possible suitors, none seemed to be ideally suited to Fite. Then he met MagnetBank chairman and CEO, Darrell Pittard. “It was immediately evident that MagnetBank would offer an outstanding environment to create this new equipment financing initiative,” Fite explains.
Pittard, who had a reputation for starting successful banking organizations in the past, began to develop MagnetBank’s unique business plan in 2004. With his past success, Pittard knew which strategies would best serve clients and shareholders alike, and was acutely aware of the trends developing in the banking industry.
With regard to the bank’s exclusive focus on lending, Fite notes, “we do one thing only, and we aim to do it best. Our strategy is one of high operating efficiency and laser focus execution. We narrowly focus on businesses with which we believe we can create the most mutually benefiting relationships and we work hard each and every day to earn the right to continue doing business with them.”
From a liability management perspective, the bank’s strategy is equally unique: it funds its growth by tapping into the deep wholesale brokered CD market. Fite says that traditional commercial banks’ model of raising deposits primarily through a retail branch network comes with significant operating costs and management drain. In the past, funding growth principally through wholesale brokered deposits was not permitted by the regulators, as it was presumed to be a high-cost source of funding. However, Fite notes that with changing client behaviors, largely driven by effective usage of the Web, brokered CDs now offer an efficient source of funding.
Pittard and his COO, Chris Worel, anticipated these emerging trends and developed the MagnetBank high efficiency/high product focus model that soon earned the confidence of regulators and investors alike. In less than three years, the bank has achieved what Fite calls “impressive results” and “unparalleled success.” Within two years of inception, the bank’s asset growth was nearly two times that of de novo banks formed over the past five years, and nearly three times that of its peer group.
Furthermore, the bank became cash-flow positive in its seventh month, achieved profitability on a GAAP basis in its ninth month and became cumulatively profitable by its 22nd month.
MagnetBank’s equipment finance team is dedicated to providing equipment financing solutions for middle-market businesses as well as providing funding alternatives to other banks and financial institutions. Currently a new line of business for the bank, Fite’s goal is for it to become, a broad-based, national equipment finance organization with $1 billion in assets over the next five years. And, they’re officially on the way. As we spoke, the bank was in the process of closing its first deal: a $2.3 million financing for a construction-related company.
Fite says that it’s an incredibly exciting time for his team and himself personally. “This has become a unique opportunity to take an idea to fruition in such a way that benefits both the bank and my people. To have the ability to make a significant contribution towards MagnetBank’s long-term success and to be part of its world-class management team has proven to be incredibly rewarding for me personally,” he states.
Since joining the management team in June 2007 as executive vice president and managing principal for equipment finance, Fite has assembled what he calls “an all-star team of commonly focused, highly professional, experienced and talented teammates.
Fite believes that prospective clients choose to do business with a financial services firm for one or a combination of four primary reasons: people, price, product and service. He states the industry has become commoditized when it comes to price and product, thus he aims to differentiate MagnetBank Equipment Finance through the technical competencies of its people and the laser sharpness of its service and “can-do” attitude that will create extraordinary value to its clients. He asserts that his team will not be an all-things-to-all-people lender.
“We will work hard to understand our client’s exacting financial reporting, tax and budgetary requirements with respect to their financing needs, and fashion a mutually benefiting solution that meets those needs… MagnetBank Equipment Finance will be a resourceful partner with focused solutions to make it happen,” says Fite.
According to Fite, the equipment finance and leasing industry is a resourceful and creative body of financial service providers that will continue to provide creative financing solutions for Corporate America. Although he believes the industry will face challenges in the future from increased regulatory pressures, client sophistication and economic dilution, he notes that the void between the vast and dynamic capital needs of Corporate America and the lack of willingness or inability of traditional banks to meet those needs will continue to present great opportunity in the future for the equipment finance and leasing industry.
As he feels there to be uncertainty as to future outlook with all the pressures forcing its way into the economy, Fite says that, “at a minimum, sufficient visibility exists to support the belief that we’re going to continue to have a moderately active equipment finance marketplace over the next few years.”
His positive view reflects his passion for the industry. “I know of no industry that better affords the wide range of professional opportunities and challenges for someone with my skills and abilities. I have always been wowed by the power of our economy and wide array of businesses within it. And to have been witness to it through my service to this industry has been a deeply enriching personal experience,” Fite concludes.
Amanda Gutshall is the assistant editor of the Monitor.