In the lending business, you don’t often get to start something from scratch. So when Blue Hills Bank invited Keith Broyles and Yvonne Kizner to build an ABL division from the ground up, the pair jumped at the opportunity.
At the time, Kizner and Broyles, now senior vice presidents of Asset-Based Banking at Blue Hills, had been working together for about three years at First Niagara.
They came to ABL from different directions. Broyles was interested in banking from the start of his career. In 1990, he got a job as a field examiner for Boston-based Shawmut Bank. “Since that time I have held every position there is to hold within an ABL group with the exception of holding a credit pen,” he says.
Kizner was an accountant, beginning her career at PricewaterhouseCoopers on what she dubs, “The typical CPA route.” Then a client starting a valuation business — Gordon Brothers — lured her away.
“This was back in the 90s,” says Kizner, “when retail finance was in its infancy. Ultimately I spent a good bulk of my career at Gordon Brothers, learning the liquidation business and serving asset-based lenders in structuring inventory advance rates.”
In 2002, Gordon Brothers began expanding the business into all asset classes. Kizner moved to the banking side and began working with New Alliance Commercial Finance, which First Niagara acquired in 2011.
At First Niagara, she and Broyles formed a well-oiled ABL team.
“Yvonne was there for about five years. I was there for about three years under a couple different roles. We had established pretty early on a very solid working relationship,” says Broyles, adding that he and Kizner look at things a bit differently when it comes to assessing opportunities but often come to the same conclusions.
An Approach From a Colleague
Then two unconnected events occurred. First Niagara began the process of merging with KeyBank. Meanwhile, Blue Hills offered Broyles and Kizner the opportunity to begin a new ABL division. According to Broyles, these two transformative events happening simultaneously was pure coincidence.
“The opportunity first came up in conversation in 2015, when we met with the senior management team of Blue Hills. We had worked together in our previous lives, and I knew their vision of an ABL was similar to mine,” Broyles says.
“They have appreciated the benefit of having an asset-based lending group and what that could mean for a bank. Blue Hills senior management has ties that go back to Bank of Boston and Citizens Bank, so they’ve been around asset-based lending for the past 20 to 25 years. It is fairly unique for a bank like Blue Hills to have an ABL group, but that’s one of the pluses that we see here.”
Broyles describes the move to Blue Hills as a once-in-a-lifetime opportunity, adding, “Yvonne and I would have made this move whether First Niagara was going through a merger or not.”
Blue Hills was founded 140 years ago as Hyde Park Savings Bank in what is Boston’s southern-most neighborhood today. Its holding company, Blue Hills Bancorp, has 11 branches in the Boston area and $2.2 billion in assets.
A desire for lending portfolio diversification is the reason why Blue Hills invested in Broyles and Kizner. “They understand that you absolutely need the right people to properly structure and monitor the deals.”
Kizner says close monitoring is particularly important on the collateral-dependent side to help companies grow through certain transitions. “You need to understand when a situation may be turning on you so that you have the proper stops in place.”
Start Spreading the News
Blue Hill’s go-to-market strategy targets companies in the lower end of the middle market — primarily located in New England, New York State, New York City and Long Island — with borrowing needs between $3 million and $25 million.
Broyles knows this market well after serving it for the better part of his 25-year career. “This is a market the ‘too-big-to-fail’ banks aren’t really interested in,” he says.
“We also have the opportunity and the full support of the bank to go outside of that geographical region in support of centers of influence, referral sources that we have standing relationships with.”
Blue Hills’ goal is to support manufacturers, distributors, wholesalers, service providers and retailers. “We provide working capital lines of credit. We also have the ability, in conjunction with the working capital lines of credit, to provide term financing support for assets including real estate,” Broyles says.
Kizner and Broyles emphasize that one advantage of working at a small bank is the personalized service and the executive structure.
“The bank has a flat organizational chart when it comes to making decisions. We literally sit within 60 feet of the CEO, the CRO and the head of commercial banking. We’re all in one building here. That will provide us with a great ability to make decisions quickly, to vet opportunities, to issue term sheets with full confidence that we can deliver on those term sheets, assuming due diligence comes out as we expect it to. In today’s market that’s going to be a big advantage,” Broyles says.
“When we meet with prospective borrowers, we have the ability to present ourselves not only as the front end of the group that is trying to win the deal, but also as the same individuals that will manage any relationship after the deal closes.”
Kizner adds, “We can be very nimble in making decisions due to our size, which is a huge advantage. Properly structured, we also can be competitive in collateral dependent deals that some banks may not be able to close, due to our deep experience both within our ABL team as well as in the Blue Hills executive team.”
The Blue Hills ABL department — which at this point consists of Kizner and Broyles — closed its first deal in May, just weeks after the duo moved to the bank. The deal was a participation with Bank of America, facilitated by the team’s existing relationships.
“It was a good test for us because we underwrote the deal and took it through our approval process,” Broyles says. “It certainly feels good to have some income coming into our group and not just be a cost center. It’s a step in the right direction. But we have a lot more work to do.”
Neither Broyles nor Kizner express any doubts about the strength of the ABL world. Their main challenge is opening up the image of a community bank to this new area of lending.
“We’re still in our infancy here. I think the majority of our opportunities are going to fall below $20 million. Some of our friends in the larger banks are just less and less interested in that sub-$20 million world, no matter what they tell you,” Broyles says.
“We just launched this business a couple of months ago, so it’s still a work in progress. From an infrastructure standpoint, we certainly are open for business. We’re really trying to get the word out so we can get a steady and consistent line of quality opportunities, reconnecting with the referral sources that we’ve worked with over the last 20 years, making sure they know they can rely on Blue Hills Bank ABL when they’re working their clients.”
Smaller Can Be Better
That last one, Broyles admits, is what keeps him up at night.
“Honestly, when I lay awake at night, it’s trying to figure out how we get out to our clients. We have the full support of the bank here. We have a full understanding of what we can and can’t do. So it’s really getting excited about opportunities and determining ways to earn the right to service some of the great companies we have in our region.”
Kizner adds, “I think that [many] would be very surprised to know that we absolutely go all the way up to $25 million. They may perceive Blue Hills as a small Massachusetts-only bank, but our team can go outside of Massachusetts and go up to $25 million on a direct basis. So, of course, we are mindful of that and structuring our group around the regulatory requirements that are out there. But, even so, I think properly structured collateral-dependent deals are something that the bank will be able to do.”
The bank is promoting the new ABL through its marketing department, and Kizner and Broyles believe that the small, community-like environment at Blue Hills will work to their advantage.
“We hope that the owner or operator of a company that used to borrow $6 million to $12 million will look at Blue Hills. Do they really want to be banked by a bank that has a trillion dollars in assets? How important is that borrower to that large bank? How much customer service are they going to get? Are they going to be supportive when they need support?” Broyles asks.
The word “excitement” occurs repeatedly in conversation with Broyles and Kizner. As entrepreneurs, they are enjoying an unusual situation that gives them the freedom to create something new combined with the support and respect that comes from being part of a 142-year old institution.
“We’re both very happy to be here,” Broyles says. “I said to my 21-year old daughter last week, I couldn’t wait to go to work. I love my job. So there is a level of excitement here that I don’t think either one of us has had for a number of years and that goes back to the opportunity that we both believe we have in front of us here. It’s pretty exciting. At times it feels a little daunting, because we do have a lot of expectations on us from the rest of the bank, but we’re pretty confident that we can execute our plan.”