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Investors, Peapack bullish on equipment financing

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Ken Walters, group head of equipment financing, Investors Bank.
Ken Walters, group head of equipment financing, Investors Bank. - ()

New Jersey's nearly 10,000 manufacturers may get some relief when buying or leasing the equipment needed to run their businesses.

Investors Bank and Peapack-Gladstone Bank’s Peapack Capital see big opportunities in equipment financing, thanks to tax reform, a surge in construction and increased focus on infrastructure.  

Ken Walters, group head of Investors Bank’s equipment financing group, recently brought his team and $350 million portfolio to the bank in a spinoff from EverBank after it was acquired by TIAA Financial Services.

Peapack Capital was launched in April when Robert Cobleigh, now president of the division, was hired from Santander Bank. The division has since grown its portfolio to $152 million and staff to nine banking professionals.

Walters said in an interview his group is seeking to add “a couple hundred million” to its portfolio this year and grow it to over $1 billion in the next three to five years. He stressed the range of businesses in the state that need equipment financing is growing.

“We view the economy as growing and healthy in New Jersey and in the nation,” Walters said. “In our group, we’re trying to take advantage of the brand name that Investors Bank has built, because there are a good amount of industrial companies in New Jersey, whether it be construction, transportation or trucking. We’re really looking to take advantage of that growing sector to add to our portfolio.”

Loans have covered purchases for such things as rail cars for client CSX and ferry boats for Port Imperial, which owns New York Waterway. Deals are mostly in the $5 million to $15 million range.

"We're trying to take advantage of the brand name that Investors Bank has built, because there are a good amount of industrial companies in New Jersey to add to our portfolio."

Ken Walters, group head of equipment financing, Investors Bank

“We really look at the collateral as a very important part of our transactions,” Walters said. “That’s what distinguishes us form traditional commercial and industrial lenders – we really do have expertise in the equipment. We also do leasing where we are taking truer residual positions, so we have additional risk and upside in terms of the equipment on the back end. …We’ve been doing this for the better part of 30 years, and over that time we’ve had very few credit losses and have made money on the residuals at the back end of our leases.”

Leasing forms another big area of activity by the equipment financing unit.

“Leasing also has an advantage because in a bankruptcy, a lessee has a decision to make within 60 days on whether to affirm or reject the lease,” Walters said. “So if a company is leasing critical assets and it is restructuring, the lessor will continue to get paid while the company is in bankruptcy, so we believe that is a big advantage.”

Walters said the bank hasn’t been active in municipal financing but may explore opportunities as transportation initiations by Gov. Phil Murphy’s team move ahead.

Peapack’s Cobleigh said recent federal tax changes could spur manufacturers to finance equipment with tax savings. The Bedminster-based bank deals in investment grade loans for tractor-trailers, construction and transportation equipment for middle-market companies.

Unlike Investors Bank, Peapack monetizes its loans in the secondary market.

“Our team is dedicated and experienced, and we look forward to building on our early success and contributing to realizing the bank’s goals,” Cobleigh said.

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Vince Calio

Vince Calio

Vince Calio covers health care and manufacturing for NJBIZ. You can contact him at vcalio@njbiz.com.

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