CHRIS CHIAPPETTA (FIRST MIDWEST)
Expanding the Market
Five years from launch and more than $280 million funded assets later, Chris Chiappetta and the First Midwest Bank Equipment Finance team continue to develop on the strong foundation of National Machine Tool Financial Corporation, a business he founded more than 20 years earlier. To learn more about their strategy and growth, Monitor editorial board member and managing director, Santander CEF, Vince Belcastro interviewed Chiappetta.
First Midwest Bank started as a community bank and now has $17 billion in assets. The bank has a strong focus in core C&I, middle market lending, business banking and real estate. In addition to its core offerings, First Midwest provides specialty financing as it relates to equipment finance, ABL, healthcare, and structured finance. In 2014, First Midwest made the strategic decision to bolster its specialty lending capabilities by acquiring National Machine Tool Corporation. With $40 million in annual volume and $4 million of exposure outstanding, the company primarily operated in brokerage services at the time of acquisition. First Midwest’s Equipment Finance story is one underscored by explosive growth as it currently has $325 million in funded assets with 57% year-over-year growth.
Historically, First Midwest Equipment Finance was a vertical player focused on machine tools and environmental finance, construction, trucks and trailers. In recent years, under Chiappetta’s leadership, the Equipment Finance team has expanded this platform to broaden its touchpoints to the market. There is an emphasis on developing deeper and more accretive relationships by calling on direct clients. Dealers and manufacturers continue to be targets of its marketing efforts and subsequently serve as centers of influence, proving to be good sources of referrals.
The key to successfully supporting this growth was ensuring that First Midwest Equipment Finance was equipped with a first-rate coverage team to meet its clients’ needs. Over the past two years, the team has swelled to 10 originators that have a nationwide presence. The team has proven to have had a quick return on investment as it has originated more than $180 million of funded volume in 2017 and 2018. The direct team is complemented by a buy side centric syndication desk. The direct and indirect mix is a healthy balance, of 70% direct and 30% indirect. The buy side capabilities offer a funding source that is less risky; a counter balance to the direct business which has higher delinquencies.
The bank’s lender finance sector was also a boon to growth. Lender finance has contributed $80 million of volume since July 2018. The ticket sizes are also more substantial, with an average deal size of $5 million. The average deal size of the remainder of the portfolio is $250,000. To support growth in the healthcare sector on the front end, the Midwest team is investing in back-office capabilities, such as rolling out DocuSign, which should reduce man-hours required to close deals.
Chiappetta attributes the success of this division to maintaining a customer centric attitude, and his continued growth strategy is to remain focused on client needs. He uses his vast network of industry relationships to source well situated and strong senior new business officers that know where the clients and the business volume are buried. His motto is to hire the best customer service professionals and evolve with client needs. This strategy has been supported by First Midwest, which remains a strong partner and owner, providing efficient cost of capital to provide funding for the business. •