September/October 2018

Out of Retirement, Into a New Challenge: Fagnani Leads New Bank Leumi ABL Division

With roots in Tel Aviv and branches the world over, Bank Leumi lacked only one thing — an ABL division. The bank corrected the situation this spring and hired Mark Fagnani, a veteran of many outstanding ABL institutions, to lead it. Fagnani shares his vision for Leumi and his mantra for success with ABF Journal editor Nadine Bonner.



Mark Fagnani, First Vice President/Group Head, Leumi Business Credit

Mark Fagnani,
First Vice President/Group Head,
Leumi Business Credit

When the Anglo-Palestine Bank opened its doors in the port city of Jaffa in 1902, Palestine was a sleepy backwater of the Turkish Empire. Most of the bank’s transactions involved imports, land purchases and long-term loans to farmers. As a subsidiary of the Jewish Colonial Trust, the bank was created to support the efforts of its parent agency, but the daughter gradually subsumed the parent.

A loan to the Ahuzat Bayit (Homestead) association proved to be one of its most crucial transactions, helping the white city of Tel Aviv — the first modern city in Palestine — arise amid the sand dunes along the Mediterranean in 1909.

By the eve of World War I, the bank had branches throughout the region, including Beirut, Jerusalem and Gaza. Because the bank was registered in England, the Turkish government declared it an enemy institution once war broke out and tried to confiscate its holdings. The bank survived, the Turks were defeated and Palestine became a less sleepy backwater of the British Empire. During World War II, the bank financed companies that manufactured war supplies for the British Army.

In 1950, now part of the new State of Israel, the bank changed its name to Bank Leumi L’Israel — the National Bank of Israel — and took on a larger role. Today, Leumi has emerged as a global financial power with outposts in the U.S., China and throughout Europe, providing a wide selection of products to businesses and consumers. This summer, Bank Leumi USA added a new arrow to its quiver — an ABL group led by veteran Mark Fagnani.

Fagnani seems like a perfect choice to build the group. He has a long-standing relationship with Shawn McGowan, the executive vice president and head of Commercial Banking at Bank Leumi USA, and he has spent his entire career in ABL.

“I just fell into ABL,” Fagnani admits. “It was my first real job as an adult, and I started with a company called Congress Financial. I didn’t actually know what Congress did at the time. I just wanted a job. And ultimately, I loved the business.”

Looking back fondly at Congress, he adds, “It really was one of the leaders in asset-based lending, and it was run by people who I would consider giants in the industry. I certainly admired the people I worked for in the extreme.”

The Urge to Merge

The compulsion to merge is not unique to contemporary institutions. Congress was majority owned by Philadelphia National Bank (PNB) — another legacy lender, founded in 1809. After merging with Hamilton Bank, PNB changed its names to CoreStates and continued to acquire rival banks, including First Pennsylvania. In 1998, CoresStates was itself acquired by First Union, in what was then the largest U.S. bank merger. Three years later, First Union took over Wachovia and changed its name.

“When Wachovia bank failed, Wells Fargo, which was then Foothills, bought the entire Wachovia Capital Finance portfolio and most of the people — I would say almost 100% of the people — and became what is today known as Wells Fargo Capital Finance,” Fagnani says.

He stayed on through the shifting owners, finally retiring from Wells Fargo in 2010 for a variety of personal reasons, not the least of which was the 2009 death of his wife. Like many early retirees, he was eventually ready for a second act, so he founded MSF Associates, a consulting firm which primarily served lenders and distressed borrowers.
In 2013, he was recruited by Hudson Valley Bank to do what he does best — start an ABL division. But the mergers kept coming. “HVB Capital ultimately got bought by EverBank and became EverBank Business Credit. And that really wasn’t a very happy marriage,” Fagnani says. “EverBank didn’t particularly like the ABL business and didn’t particularly support the ABL business, so I left in April of 2016.”

A Good Fit for Leumi

Back at MSF Associates, he was contacted by McGowan, another Wachovia veteran, who was trying to decide if ABL was a good fit for Leumi. In the end, not only did he determine ABL was a good match for the bank, he realized Fagnani was the right person to run the division and get it off the ground.

“Shawn, very astutely, at least in my opinion, understood that ABL is sort of a natural extension of C&I,” Fagnani says. “ABL lenders will lend into situations, or are more well suited for certain situations, where the banks would normally not want to make a loan or would shy away from making a loan, whether it’s because the company is highly leveraged or the company has a history of losses or erratic financial performance.

“Or it may just be a business that is seasonal in nature and needs a working capital line that can grow and fluctuate with its seasonal needs. That’s what ABL does, and I think it is a natural extension of their product line and their desire to grow the C&I business.”
Thanks to the magic of 21st century communications, the news of a new ABL player in town rocketed across the industry as soon as Leumi announced it.
“Given how many phone calls, emails and texts I have received in just the last few days, I would say the word is out, but it’s out in the lending community. Now we’ve got to get it out to the borrower community,” Fagnani says.

Reaching Out to Borrowers

“Shawn and I will be busy meeting both internally with all the bankers again across the country and helping them understand what we will do and what we won’t do. So when they meet with potential borrowers or customers, they will know when it might be appropriate for them to refer us in,” Fagnani says. “I’ve been around a long time. I have a slew of contacts and intermediaries that can help us generate business. I’ll be busy talking to all of them, and that’s everyone from the turnaround firms to accounting firms to lawyers, appraisers.”

In the beginning, he will concentrate efforts on the bank’s current footprint area — New York, Chicago, Los Angeles and Florida — before expanding nationally. The first task will be setting up a software system and slowly staffing up as a portfolio is built.

When asked who he thinks are his chief competitors, Fagnani laughs and says, “Everyone is my competition.” He rattles off a number of New York banks who play in the ABL sandbox — Webster, Israel Discount Bank and People’s United. “Wells is a force to be reckoned with, always. Bank United is playing in ABL a little bit, and there are community banks, and then there are all the non-bank lenders like Siena and North Mill. I think we’ll bump into all of them,” he says.

He quotes the mantra he learned as a novice at Congress — “Don’t say ‘no’, say ‘how’.”

Solutions for Borrowers

“Borrowers need solutions,” he says. “Borrowers like to have the lowest interest rate they can get, but my experience has taught me that what borrowers want more than anything else is to get closure. They want to know that the person they’re talking to can deliver a deal and get it done as quickly as possible. I have stressed that to the senior management at Leumi from the first day we met, and I find them to be responsive and nimble and creative. I think we will win our share of deals just by being able to bring borrowers a solution they’re looking for — get it approved, get it documented and get it closed in a very timely fashion.”

Leumi’s sweet spot will be deals between $5 million and $25 million. “We’re really looking at middle market deals and almost any industry. I would say we’re industry agnostic,” he says.

Perched on the precipice of an exciting new venture, Fagnani is calm and admits nothing about it keeps him up at night.

“I’m at an age now where I’ve learned to just relax and breathe. Right now, my motivation is to get the computer system up and running and build out the team and make the market aware that we exist. Clearly my No. 1 concern always is finding new loan prospects. I wouldn’t like to say it keeps me up at night.”

He points out when he founded HVB Capital in 2013, the team found deals every day. “If we booked 20, we probably looked at 50. So, I am relatively confident today there are plenty of deals out there. We’ll get our [fair] share of looks, and it’s up to us to win.”

The winning way is one he’s cultivated over a successful career, and he doesn’t mind sharing the secret sauce.

“You win by assuring people you can help them, that you will be a financial partner to them, that you will close and that you will deliver what you’ve said.”