As a 25-year asset-based lending (ABL) industry veteran, Greg has spent the majority of his career navigating through the evolving ABL landscape. Below, he discusses the transition of Marquette Business Credit to UMB Capital Finance, his role with the bank, and the bank’s strategy for growing its asset-based lending (ABL) business. You can read Greg’s full interview with ABL Advisor‡ from January 2020 for more insight.
Q: Where does ABL fit into UMB Bank’s overall strategy?
A: While UMB Bank has continually grown its business and footprint, it was missing a national ABL and factoring business to round out the borrowing lifecycle for clients. That’s why the acquisition of Marquette in 2015 was a perfect fit.
Like most banking institutions that are looking to maintain loan yields, the ABL group is an important contributor to achieving those long-term yield goals. UMB Bank has provided the ABL group all the necessary tools to grow the portfolio, so it is incumbent upon us to grow our portfolio in the right way.
Q: How has the ABL business changed the past decade?
A: Over the last decade, ABL businesses have had to move away from exclusively lending against traditional collateral to having a much broader lens that includes cash flow lending and non-traditional asset classes. With this change, we have needed to educate our portfolio management teams as well as our internal credit committees.
The results are that ABL lending continues to consume more of the total capital structure of our clients, which has impacted the second lien lenders in a meaningful way.
Q: You have a strong career as a portfolio manager. How has that shaped your views in terms of managing an ABL business?
A: Although my business development officers would almost certainly rather have a pure salesperson running the business, lending in this current low-yield environment has made it more important to minimize loan losses through strong portfolio management in order to achieve budgeted results. Margins have continued to erode, and the only way to offset some of that is to minimize loan losses. Taking a large charge off in the portfolio requires a considerable amount of new funds employed to offset the P&L impact given the lower yield environment.
We have built a very versatile portfolio management team with strong workout skills and the ability to do it with a customer-centric approach in mind. This approach is more art than science and something I have instilled in all of our client managers.
If you are interested in learning more about how UMB can help your business as a financial partner, visit our website.
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Original publish date: January 2020. Updated: September 2020.