Expanding a Footprint to ‘Cover a Lot More Ground’ Industry Veterans Launch Triumph Commercial Finance
Finding the right market or niche is important when launching a new venture. In Triumph Commercial Finance’s case, the most crucial part was how to provide financing to those borrowers that are sometimes lost in the shuffle, those on the lower end of the market. ABF Journal speaks with EVP Dan Karas about what is driving Triumph Commercial Finance.
By Amanda L. Gutshall, Editor, ABF Journal
To serve what Dan Karas calls a sector that’s not aggressively served, Triumph Commercial Finance was founded as a commercial finance unit focused specifically on asset-based lending and non-transportation factoring as well as equipment financing aiming to complete deals at $5 million and under.
Triumph Commercial Finance was formed in November 2011 by Triumph Savings Bank, which itself was started by a predecessor at the same time as the company it would acquire in 2012. What would become Triumph began in June 2004 when Equity Bank was chartered and transportation factoring company Advance Business Capital (ABC) was launched. Two years later, in March, Triumph Land and Capital Management was established. Three and a half years later, it altered its focus to wholesale banking, changing its name to TLCM Holdings.
In November 2010, TLCM became Triumph Consolidated, which acquired the stock of Equity Bank’s parent company. The buyer then reworked its name to Triumph Bancorp, and Equity Bank became Triumph Savings Bank. In 2011, Triumph formed Triumph Commercial Finance and, two months later, the company bought ABC, which continue to pursue transportation factoring as a subsidiary of the bank.
Steve Hausman, the founder, CEO and president of ABC, has been named president and CEO of Triumph Commercial Finance. With a broad background in all aspects of commercial finance, Hausman was formally VP, national sales manager at CitiCapital Commercial Corp., and held similar roles at Associates Commercial Corp., focusing on asset-based lending and factoring. Before that, he as chief operating and credit officer for boutique leasing and asset management company Fleet Management after serving 14 years at Volvo, with his most recent role as vice president of operations at Volvo Truck Finance.
In a press release announcing the merger of ABC and Triumph, Hausman said, “The partnership is a win/win. Triumph and ABC are an excellent culture fit and have a similar philosophy based on transparency, innovation and adherence to core business values. Now our footprint is expanding to cover a lot more ground.”
Adds Karas, EVP of Asset-Based Lending, “We’re working to put together a business where we can provide non-transportation factoring, asset-based lending and equipment finance across all industries…” The thought, he said, was to take the one business and add “complimentary businesses to it, so we’ll have much broader coverage and be able to serve a broader market overall.”
Karas joined the company this summer and immediately set about cementing not only the team, but the processes and policies for Triumph Commercial. “I use the analogy of laying the foundation, but we were truly building the asset-based lending and non-transportation factoring from the ground up with the systems, policies, procedures and a go-to-market strategy. We’ve opened our doors for business in September to let people know we’re delivering a traditional asset-based lending and non-transportation factoring product. And we’re doing it for a sector that’s not as aggressively served as the large corporate ABL market.”
It is the middle-market and large ABL market that Karas is quite familiar with. With almost 30 years of experience in commercial finance, he joined Triumph from Marquette Business Credit where he was executive vice president and managing director. While there, he led the company’s general factoring business as well as marketing for asset-based lending. Before Marquette, he was with GE Commercial Finance/Heller Financial as managing director of the Corporate Lending Group, then the Enterprise Client Group and finally Energy Financial Services. He was also at Bank of America as a senior vice president where he established the New York asset-based origination effort and then led the Dallas asset-based origination.
For Karas, joining Triumph was a continuation of what he has done throughout his career, establishing and growing commercial finance providers. In the early 1980s, Karas says he had his first experience being a part of a growing and expanding operation. “I got a taste for what it was like to be in an early-stage effort where folks didn’t exactly know the market … and you had to try to convince them that there was a reason for being — there’s value creation that you have the ability to generate for your clients.” He adds, “Since that point, every effort that I’ve been a part of has been like that: come into an opportunity and help build it. That’s really what excited me here. It is an early-stage opportunity to build a commercial finance practice with broad capabilities with an awfully strong experienced management team.”
Triumph Commercial Finance is based in Dallas, while ABC is located in a suburb. At first, from a staffing perspective, Karas says, the company’s efforts will be based in Dallas, the rest of Texas and in continuous states and then grow outward. Both ABC and Triumph will cover a national footprint, and will be broadly focused targeting manufacturing, distribution and the service industries.
The company reaches out to its customers, Karas says, with a philosophy of respect, fairness and being candid. “We feel we add value to client relationships by listening to the clients’ needs, delivering our ideas and capabilities thoughtfully and timely and doing so with a level of professionalism that clients tend to appreciate… Whether it is that we have a solution that fits their needs based on our capabilities or we don’t, doing it in a thoughtful manner tends to help us build long-term relationships.”
The company’s immediate goals are to continue to establish itself and get the word out. “This year, from my perspective,” Karas says, “was to get the foundation right — get the team in place that could help us grow, make sure we’ve got the policies and procedures and those things in place that if we do it right in the beginning, then we’ll lessen the risk to the organization, our shareholders and our team.”
For 2013, Karas says Triumph will be leveraging what it did in 2012. “That’s getting our profile raised to let people know that we’re in business, specifically what we’re capable of doing, demonstrating that we can deliver.”
So far, he’s been pleased. The company officially opened its doors after Labor Day and has been accepting business with the result of closing its first new client relationship. “I feel pretty good that we delivered that quickly. It’s evidence to me that we did something right over the summer. Now that we’re in business, the need is to let people know that we are out there, we are open and we’re capable of delivering.”
In acting to reach its goals, Triumph Commercial Finance has hired a dedicated team. Along with Karas, Dirk Copple will serve as EVP, Equipment Finance. Rounding out the ABL unit is Kim Grant Anderson, vice president, business development; Anthony Acosta, vice president, underwriting and field examination manager; and Chris Benson, vice president, portfolio manager, all with significant experience in commercial finance and especially asset-based lending and factoring from such institutions as Gulf Coast Business Credit, Marquette and GE Capital. The team also includes personnel on the operations and support side that also worked with Karas at Marquette.
As for what he sees for the ABL industry, Karas notes that it’s “interesting how active the market has gotten.” In 2008, when the economy went south, he adds, “it didn’t take long, once institutions began to stabilize, for groups to begin to develop or expand and from what I’ve seen of the market, there are still opportunities for companies, for clients that are not quite right for a traditional bank C&I solution, to look for an asset-based lending solution.”
While he doesn’t want to comment on the larger side of the ABL market, he explains that on the smaller side, “it has been very active and we still find opportunities where banks just feel that those clients, from a performance standpoint, something isn’t quite right to put them in a bank C&I portfolio. So, I’m optimistic about 2013. What I hear anecdotally from clients and perspective clients is the level of uncertainty has been so high, that once we’re through the November election cycles, regardless of how things turn out, that people feel they’ll be able to plan, to be more forward looking, more forward thinking, and I think that certainty will add to how clients perform in the market and will need our ABL products and capabilities.”
With regard to potential challenges for the industry, Karas notes that sticking true to the basics of asset-based lending will allow for more opportunity. “It seems that whenever we have expansion of either capacity or a new group like ours, one of the things that you risk in trying to grow the portfolio is the fundamental disciplines of what we all need to follow whether it’s credit or legal or structure or monitoring. But, if we or the market begin to abandon the fundamentals of what makes asset-based lending work, that’s when we set ourselves up for the kind of situation we ran into in the last downturn.”
He adds, “I think as long as we as an industry stick to our knitting, we’ll be in terrific shape no matter what happens. I will say that there will inevitably be in another downturn. That’s always going to be a reason to be concerned. Are people abandoning what makes this product the right product for companies that aren’t quite right for banks?”
On the flip side, Karas sees some indications of expansion. “It’s not robust, not overly aggressive,” he says, but one of the benefits of being aligned with a transportation factor and an equipment finance unit that does a fair amount of transportation-related financing is to see what is occurring in the transportation industry. “As the level of transportation activity picks up, we get that as an early indicator that there will be some positive movement in overall business direction.”
He adds, “I think what we’re going to see as an opportunity next year is just simply some growth. Potentially tempering that [growth] are the tax issues, the fiscal issues and the geopolitical issues that we all get to read about and get concerned about, but from my clients’ perspective and prospective clients’ perspective, what I’m seeing is that people are anxious to build their businesses and grow and are looking for opportunities to do that. So I think we’ll get a chance to ride their coattails a bit and be a resource for them.”