Earlier this year, senior executives from Rockland Trust approached Chris O’Connor, then executive vice president at Webster Business Credit, regarding their plan to start an asset-based lending team and expand its strong commercial and industrial group by entering into the ABL marketplace. Rockland Trust, a full-service bank headquartered in Massachusetts with approximately $4.9 billion in assets, has enjoyed a rapid expansion of its commercial lending activity, with total commercial loans growing 150% over the past five years.
“Rockland saw an opportunity to start an ABL group that was complementary to its existing C&I middle-market lending group, and it wanted a professional team, people who know the local market and could hit the ground running,” O’Connor explains.
Joining O’Connor at Rockland are Cyndy Tonucci, vice president, underwriting and relationship manager; Eric Luukko, vice president, due diligence and collateral monitoring; and Mike Pandolfi, vice president and new business development officer. Holding his team in high regard, O’Connor says, “The people that came over with me have many years in the industry. We all have the same goal and the same work ethic and culture. They bring a lot to the table, and we work well as a team. We bounce ideas off of each other, and we work closely together. It’s a great, experienced team of lenders in all aspects of the business.
For Rockland Trust, this is the right time to expand into the ABL marketplace. In addition to its healthy C&I group, it also has engaged in ABL-light and non-conforming ABL transactions and sees asset-based lending as a product that will enhance the bank’s growth.
“What I am charged with is building a traditional asset-based lending shop. Our credit facilities will be fully conforming, with daily and/or weekly reporting , and full control of cash. Up until August when we joined, the bank did have ABL-light or non-conforming ABL, but it really wasn’t a fully followed structure,” says O’Connor.
Rockland Trust has 40 lenders throughout its C&I middle-market footprint, which can serve as a source of deal flow for the ABL unit. O’Connor notes that in the two and a half months he’s been at Rockland, he has received several solid internal referrals that have turned into deals. He adds, “I knew there would be a great opportunity to cross-sell and cross-refer ABL and C&I middle-market and real estate loans. Rockland Trust has traditionally been active in commercial real estate lending. They know the market and the product, and so we are able to add that commercial real estate and term loan product to the asset-based working capital line of credit. You’ll often talk to a prospective borrower that is looking for a bank to solve its entire lending solution. Rockland is comfortable with term debt, so we can offer it to our borrowers.”
After graduating from Stonehill College, O’Connor started his career in public accounting at Peat Marwick, now KPMG. After working there for several years, he realized public accounting wasn’t his calling, and his ABL career was born. He joined Shawmut Bank as a field examiner in its asset-based lending group. He then moved on to Foothill Capital, which is now part of Wells Fargo Capital, as a field examiner. In his ten years at Foothill, he learned every aspect of the ABL world by serving as relationship manager, underwriter and new business developer, and eventually running the underwriting group for Wells Fargo Retail Finance. He was approached by Webster Business Credit, which had a retail finance group in Massachusetts. Webster was looking for new leadership for its Retail Finance group and offered him the opportunity to run his own lending group. At Webster he led the retail finance and asset-based lending groups for both retail and non-retail in the New England region.
At Rockland, the ABL unit’s footprint covers all of New England and upstate New York. Prospective borrowers include manufactures, distributors, service companies and retailers. The ABL unit offers committed lines of credit from $3 million to $25 million and focuses on companies that are seasonal, going through a turnaround, emerging from bankruptcy or rapidly growing.
“Portfolios that I’ve managed have included both companies that are in some stage of a turnaround and companies that are either growing or going through an M&A transaction or a recapitalization,” he says.
O’Connor plans to build on Rockland’s success in strong customer service toward businesses and its strong community reputation. “The culture at Rockland is very customer focused. Decision-making is performed locally, and the bank’s structure is such that there aren’t levels upon levels of approval to go through in order to service your customer. It’s very streamlined and direct. The ability to service the customer is the most important thing in the market that we serve.”
Rockland Trust, a 104-year-old commercial bank, has grown over the last several years at a time when many banks had been internally focused on examining portfolios and experiencing slow growth. O’Connor attributes that success to Rockland’s culture within the bank that translates into how it treat its clients.
“When I began discussing the ABL opportunity with senior management at the bank, I reached out and talked to some people in the marketplace that I trusted and have respect for, and every single one had nothing but glowing things to say about Rockland Trust. It has a great reputation. We wanted to make sure that the four of us would fit in culturally — not only into the social culture, but the business culture and credit culture as well — I got the sense that we were on the same page as far as what we thought was important and how we represent ourselves in the market.”
So far, loan demand has been good, and O’Connor says his group has had some great opportunities, but he notes that because most banks are back in the marketplace looking to grow their businesses and portfolios, structure and pricing are very competitive, leaving a strong borrower with a number of options.
“What I like about Rockland is that we differentiate ourselves on the customer service level and the culture that we bring to the relationship. We’ve got several termsheets out right now, and demand is good, although competition is fierce,” O’Connor notes.
That high level of client service is part of what keeps O’Connor in the ABL game: “I like the relationship part of the business, getting to know the borrowers. In asset-based lending, 50%, plus or minus, of your relationships are going to be in some stage of turnaround. You can see how your ability to understand your customer’s business and to provide them with capital can help them grow or turn their business around. You truly feel like a partner. When you can help finance a company and help it grow and reach its potential, it’s a lot of fun.”
Lisa M. Goetz is an associate editor of the ABF Journal.