All for One and One for All: Wintrust’s Unique Makeup Builds Quick Success
by Phil Neuffer Monitor 100 2016
As a new entrant to the Monitor 100, Wintrust Asset Finance is now in the company of the heavy-hitters in the equipment finance industry, even if it’s not organized the same way as its new peers. President and CEO Mike Knowles explains how Wintrust’s unique structure and entrepreneurial culture have powered its ascent.
Not all equipment finance companies are the same, but many are similar. You have your small-ticket focused shops, the captives and vendor-focused entities, among others. However, no company is exactly the same. That is especially true when it comes to Wintrust Asset Finance, the holding company for the equipment finance branch of Wintrust Financial.
Before diving into the makeup of Wintrust Asset Finance, it’s helpful to have an understanding of how, exactly, the overall Wintrust brand is set up. Wintrust Asset Finance is a subsidiary of one of the Wintrust banks, and Wintrust Financial is a group of community banks, with about 15 that complete the corporate entity. Being tied to communities is an important aspect of Wintrust’s philosophy, whether it’s dealing in commercial banking or equipment leasing, but having an overarching financial brand to lean on is key as well.
“Really, part of our strategy is being a community bank so all our banks are very connected to the communities they serve,” says Mikes Knowles, president and CEO of Wintrust Asset Finance. “But we also market Wintrust as a whole in a couple different areas, [such as] commercial banking and commercial real estate. There we do leverage the Wintrust Financial name and not necessarily the individual bank name.”
Where does the equipment finance part of the company fit in? The answer is a bit complicated but not to the detriment of Wintrust. In fact, Wintrust Asset Finance reported $383.5 million in new business volume in 2015, which was a jump of nearly $300 million compared to 2014. In addition, there was growth of just over $300 million in net investment in equipment related loans in 2015 ($453.9 million) compared to 2014 ($149.6 million).
Three Become One
Wintrust Asset Finance owes its strong showing in 2015 to the three different entities for which it is a holding company. First, there’s Wintrust Equipment Finance, which was Wintrust’s first endeavor in the equipment finance business, according to Knowles. The unit is headed by Dick Dunbar, a 30-year industry veteran who focuses on the debt discounting and capital markets side of the business.
Then there’s Wintrust Capital, which is based near Chicago and run by Jeff Wolinski. This part of the company covers the deeds of commercial banking customers who have equipment leasing needs and focuses on vendor finance.
Finally, there’s Wintrust Commercial Finance, the newest member of the group, which is based out of Frisco, TX and run by Kirk Phillips, who formerly worked for Transamerica and AIG. The WCF team, which was added in April of 2015, is the heavy industrial equipment finance division for Wintrust. It deals with railcar, manufacturing equipment, oil tankers and many other big-ticket items.
Knowles readily admits that having such separation might not look right from the outside, but for Wintrust, it’s the perfect fit.
“Logically, if we were at a big bank, a big bank would say, ‘You know what, let’s just put all these groups together,’ and have them run together and really report to one person in the equipment finance business. But because we had essentially three different leaders who knew how to run a business and wanted to run their own business, we let them be sort of independent. They all report to me but they really operate independently of each other,” Knowles says. “Having said that, they do a very good job communicating and collaborating. As crazy as it sounds, it actually works very, very well.”
The separation into three businesses does a lot more than add moving parts underneath the Wintrust umbrella. Specifically, it adds geographic diversification.
“It adds another asset class that we didn’t have before in a big way. It also adds geographic diversification because a lot of our businesses are really focused just here in Illinois,” Knowles says, who is based out of Chicago. “Really, based on the talent, we were able to either grow organically internally or, in the case of the commercial finance folks, hire externally; we thought we really had the talent pool to make a big splash in the business.”
When starting what is now Wintrust Asset Finance, Knowles says leadership was extremely focused on credit.
“A key to what we were doing when we first started talking about growing this group was a real focus on credit because we couldn’t really have a bad outcome early. So we hired a decent number of very talented credit folks, and we’re still hiring more,” Knowles says. “Prior to having the sales force engine in place, we wanted to make sure we had the infrastructure in place in credit and operations, that’s gone really well.”
Credit is not the only area in which Wintrust is hiring. In 2016 alone, Wintrust Commercial Finance added Brian de la Houssaye as senior vice president of Business Development, Stephen C. Cusick as senior vice president of Capital Markets and John Benoit as vice president of Business Development. Knowles says that hiring more direct sales people is still a priority, with the WCF unit planning to hire three to five more before the end of the year, and Wintrust Capital on the lookout to strengthen its stable as well.
“We’ve hired some really good people. Competition for talent is really fierce but I think we’ve done a good job hiring good people and getting them up and running,” Knowles says.
Wintrust’s focus on expanding originations is evident in its 2015 performance. During the year, it recorded $83.6 million of direct/end user origination sources and $194.6 million of indirect origination sources. It also reported $101 million in portfolio purchases.
While new staff additions will clearly help improve the direct numbers in the years to come, Knowles knows it’s the current staff and the culture they have built together that has led Wintrust to where it is today.
“First and foremost, it’s the people we have. I think we have the right talent across the organization,” Knowles says. “We have a very friendly and collaborative culture, but at the same time it’s very competitive and entrepreneurial. It’s really that entrepreneurial side that I think has led to a lot of the growth. When we as a management team saw the opportunity to grow the EF business, we put a lot of resources behind it and came up with a strategy, and I think we are executing pretty well on that strategy. But it starts with having the right people.”
The culture that Knowles references is built on encouraging ideas and creativity.
“Wintrust as a whole is an organization that if you have a good idea and it’s something you want to pursue, you are free to do that,” says Knowles, noting that it was that freedom and support from the parent company that led to the acquisition of the Frisco team, which has helped the equipment finance business become one of the more prominent growth engines for Wintrust.
Building the sales staff and increasing originations are priorities in the here and now, but business is not built on short-term goals alone. Since the beginning of 2016, Knowles says, the company has grown somewhere between $125 million and $150 million and total assets are right around $600 million. By the end of the year, he would like to see that number creep near $800 million. That kind of ambition matches Knowles’ goals for the next half decade, as he would like to be reporting a couple billion in assets in five years. Reaching those heights begins with the bedrock of Wintrust Asset Finance: credit.
“One of the key things for us is a laser-focus on credit. As a bank, if you are going to run into problems it’s going to be there,” Knowles says. “I think it’s a combination of managing the growth focusing on credit and making sure that everything we do performs the way we think it’s going to perform.”
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