As part of the expanded Monitor 100 this year, Monitor profiled five executives representing a vast range of companies on the list, each offering their own unique perspective on the industry and the growth of the business.
Nadine Bonner, Senior Editor, Monitor
Jule Kreyling (East West Bank): Building Businesses from the Ground Up
In 2014, East West Bank launched its Equipment Finance division and hired industry veteran Jule Kreyling to take the helm. Now, only five years later, East West has made it onto the Monitor 100 at a respectable 76. Monitor’s senior editor, Nadine Bonner, sat down with Jule and asked him, “how did they do it?”
Jule Kreyling might appear to be a lawyer who has transformed into an equipment finance executive, but he is really a builder. For the past 20 years, Kreyling has helped companies from Citigroup to TD Bank make successful moves into the equipment finance business by starting from scratch.
“I like to build things from the ground up,” says Kreyling. So, when East West approached him about setting up a new Equipment Finance program, he was on board from the start, with the blessing of his TD colleagues.
It was a good match, although it took a while for East West to understand that equipment finance was unlike other business verticals. Kreyling said at first the bank thought it could hire a relationship manager to come in and do equipment deals, but it learned that equipment finance is a business separate from the bank’s traditional businesses.
East West was established in 1973 as the first federally charted bank to serve the financial needs of Chinese Americans in the Los Angeles area. Today, East West has more than 130 locations in key cities in the U.S. and Greater China. East West Bancorp is a publicly owned company with total assets over $41.0 billion and is traded on the Nasdaq Global Select Market.
The bank also has its own way of doing business, which fit nicely with Kreyling’s own sales background.
“A lot of people start with a buy desk, and they build a portfolio quickly. After that, they build a dedicated sales force. We did the opposite. Although East West was okay with indirect sales, the bank liked having direct contact with the customer. That was what they were comfortable with, so we started that way.”
The approach has been successful, despite Kreyling’s admission that East West does not win deals because of low pricing. Instead, the team focuses on customer service, turning the deals around quickly and getting the funds in place.
Kreyling may seem like an unlikely sales executive. He began his career with a large Atlanta law firm and later moved to Textron Financials as in-house counsel. He wanted to move to a leadership position, but was told, to his surprise, if he wanted to become a leader at Textron, he needed to understand sales. Management pointed out that without actual sales experience, he would not understand it the way a leader of an organization driven by growth needed to understand sales.
After taking on that traditional sales role at Textron, he became the top sales person in the company before flipping to management. So, he was comfortable with East West’s direction. He started off by hiring Andy Gerot as operations manager, and they hammered out the credit function, policies and procedures. Within six months, they were open for business.
Now, the team is focusing on getting to the next level and looking to recruit younger bankers into the equipment finance sphere.
Meanwhile, they are delighted to have gained entry to the Monitor 100.
“I think everybody in the group is proud of all of the work we’ve done. They’ve worked hard to get here, and they deserve it,” he said.
Chris Chiappetta (First Midwest): Expanding the Market
Five years from launch and more than $280 million funded assets later, Chris Chiappetta and the First Midwest Bank Equipment Finance team continue to develop on the strong foundation of National Machine Tool Financial Corporation, a business he founded more than 20 years earlier. To learn more about their strategy and growth, Monitor editorial board member and managing director, Santander CEF, Vince Belcastro interviewed Chiappetta.
First Midwest Bank started as a community bank and now has $17 billion in assets. The bank has a strong focus in core C&I, middle market lending, business banking and real estate. In addition to its core offerings, First Midwest provides specialty financing as it relates to equipment finance, ABL, healthcare, and structured finance. In 2014, First Midwest made the strategic decision to bolster its specialty lending capabilities by acquiring National Machine Tool Corporation. With $40 million in annual volume and $4 million of exposure outstanding, the company primarily operated in brokerage services at the time of acquisition. First Midwest’s Equipment Finance story is one underscored by explosive growth as it currently has $325 million in funded assets with 57% year-over-year growth.
Historically, First Midwest Equipment Finance was a vertical player focused on machine tools and environmental finance, construction, trucks and trailers. In recent years, under Chiappetta’s leadership, the Equipment Finance team has expanded this platform to broaden its touchpoints to the market. There is an emphasis on developing deeper and more accretive relationships by calling on direct clients. Dealers and manufacturers continue to be targets of its marketing efforts and subsequently serve as centers of influence, proving to be good sources of referrals.
The key to successfully supporting this growth was ensuring that First Midwest Equipment Finance was equipped with a first-rate coverage team to meet its clients’ needs. Over the past two years, the team has swelled to 10 originators that have a nationwide presence. The team has proven to have had a quick return on investment as it has originated more than $180 million of funded volume in 2017 and 2018. The direct team is complemented by a buy side centric syndication desk. The direct and indirect mix is a healthy balance, of 70% direct and 30% indirect. The buy side capabilities offer a funding source that is less risky; a counter balance to the direct business which has higher delinquencies.
The bank’s lender finance sector was also a boon to growth. Lender finance has contributed $80 million of volume since July 2018. The ticket sizes are also more substantial, with an average deal size of $5 million. The average deal size of the remainder of the portfolio is $250,000. To support growth in the healthcare sector on the front end, the Midwest team is investing in back-office capabilities, such as rolling out DocuSign, which should reduce man-hours required to close deals.
Chiappetta attributes the success of this division to maintaining a customer centric attitude, and his continued growth strategy is to remain focused on client needs. He uses his vast network of industry relationships to source well situated and strong senior new business officers that know where the clients and the business volume are buried. His motto is to hire the best customer service professionals and evolve with client needs. This strategy has been supported by First Midwest, which remains a strong partner and owner, providing efficient cost of capital to provide funding for the business.
Fred Van Etten (Midland Equipment Finance): A Proven Leader
New name, same game, as a highly experienced leadership team of equipment finance veterans with a proven track record looks to set new tracks towards success. To learn more about their strategy and growth, Monitor editorial board member and managing director, Santander CEF, Vince Belcastro interviewed Fred Van Etten, president.
Although the business cards may be new, the business is the same for the team at Midland Equipment Finance (MEF). When Midland States Bank decided to diversify its portfolio of offerings, it turned to a well-known industry veteran, Fred Van Etten. In 2017, Midland States Bank tapped Van Etten, then president of Scotttrade Bank Equipment Finance, to establish MEF. MEF began by absorbing a medical portfolio and a team of leasing professionals previously acquired from Heartland Business Credit (HBC). Since then, Van Etten has shifted MEF’s focus to more traditional markets.
With more than $376 million of assets in the portfolio, MEF has grown more than 80% based on top of the legacy HBC healthcare portfolio. To achieve this growth, Van Etten created the MEF core management team from professionals he has worked with since 2006 at institutions such as Popular Equipment Finance and Scottrade Bank. Having this team, with its proven track record, has been key to enabling growth, as this provides consistency of execution to their clients’ financing needs. To support this team, MEF built a cohesive business unit of experienced professional credit, operations, and direct originators to build a seamless end-to-end process for its clients. MEF serves direct clients that are accretive to the bank as well as dealers and vendors through the equipment finance industry.
The entire MEF team provides consistent, best in class products and service to the EF markets that it serves. The MEF team’s deep industry experience enables them to offer a wide breadth of financing options. Equipment Finance agreements offer financing in a simple one-application for transactions up to $500,000; MEF’s clients have been very receptive to this streamlined process which can lead to credit decisions in effectively the same day. Extensive industry experience enables MEF to guide clients through the ins and outs of the tax code by offering the most advantageous tax leases. Vendor financing programs help dealers’ sales teams close more deals in an expeditious manner, and drive repeat sales by increasing customer satisfaction and loyalty. And the HBC acquisition gives MEF a competitive advantage in serving healthcare clients.
MEF is accessible to clients in all 50 states, and touches all the traditional equipment finance verticals. As the MEF team continues to gain traction, look for it to continue to expand into transportation, construction, environmental, manufacturing machinery, and specialty vehicles.
Van Etten has proven to be an experienced leader with a repeatable model for success. He attributes his strong team to consistent growth and enforces repeatability and flexibility and being innovative to continue to win business. He believes this attention to detail and knowing what to expect from this team will continue to drive his pillars to growing what is an already successful platform. • (Part Two)
Business leaders have largely embraced the rapid introduction of home working and digital processes as an inevitable necessity. Though the global lockdown has rapidly accelerated trends in digitalisation, seeing many asset finance businesses moving their operations entirely online in a contracted timescale, the direction of these developments is not a new concept for the industry.
Many companies’ priorities have shifted due to the pandemic, creating cash flow concerns for some organizations. Jennifer Booth explains how companies may benefit from a detailed understanding of their lease agreements, which can provide clear visibility into their entire lease portfolio, allowing for better decision making and the potential to generate liquidity during this critical time.