The equipment financing market is experiencing upheaval as some banks look to make acquisitions while others sell off their lending operations.
Since the beginning of the year, at least three lenders have exited the equipment financing industry altogether or paused their operations, opting to remain conservative in a difficult funding environment that includes an increased cost of funds and low-performing loans.
But a challenge for one bank is an opportunity for another, and this year has also seen a handful of acquisitions as lenders look to pick up slack and buy out floundering financing operations.
The uncertainty in the market is widely felt, FSG Capital President Bruce Winter told Equipment Finance News.
“I get face time with leaders of large financial institutions and equipment finance subsidiaries,” Winter said. “In the banking world, I really believe that the folks running these multibillion-dollar equipment finance divisions within a bank, they’re as blind as you and I are to what’s coming down the pike.
“Nobody really has good insight into what’s going on, [and] the regulators have proven continually that they’re worthless, they’re not able to differentiate a good lender from bad,” Winter said.
Recent closures, sales
Quaint Oak Capital sells Oakmont
Southampton, Pa.-based Quaint Oak Bank sold its stake in Oakmont Capital Holdings to JA Mitsui Leasing on March 29.
Quaint Oak bought a 51% share of Oakmont in January 2022, for an undisclosed sum. Oakmont operates in all 50 states and is based in West Chester, Pa.
Quaint Oak was established in 1926 and had $754.2 million assets under management at the end of 2023, down 4.8% year over year from $794.2 million.
Oakmont Chief Executive Joe Leonard declined to comment on the deal but said in a release: “We’re honored to join the JA Mitsui Leasing family of companies to take our offerings to the next level and better serve our customers, partners and employees.”
A source familiar with the deal said, “Those guys were owned by a small bank that completely ran out of money,” alleging that the buyout had been in the works for at least 18 months.
Quality Equipment Finance pauses funding
Carmel, Ind.-based Quality Equipment Finance reportedly ceased funding equipment finance transactions in late March as it faced challenges managing capital, Monitor Daily first reported March 28.The lender did not return requests for comment about the state of its operations or outlook.
Quality finances purchases up to $3 million for both new and used equipment. The bank ranked No. 108 by assets on the 2023 Monitor 100+ Index and had $220 million in assets under management in 2023, up 39% year over year.
Recent acquisitions
CBC Bancorp buys Community Bank of the Bay
CBC Bancorp, the holding company for the Commercial Bank of California, bought Community Bank of the Bay from its holding company, Bay Community Bancorp, in an estimated $3.5 billion deal, the companies said in a May 21 release.
The transaction was announced Tuesday and is expected to close by early 2025 at the latest, the banks said in the announcement.
The merging of the large, West Coast lenders will see the formerly publicly traded Community Bank of the Bay transition to a private entity, becoming a division of Community Bank of California. But Community Bank of the Bay will retain its name and branding in the San Francisco Bay Area.
Community Bank of the Bay reported $975 million in assets under management in its 2023 annual report. The lender offers term loans and lines of credit for equipment finance and specific loan agreements for construction or land development.
Commercial Bank of California said in a recent quarterly report that it maintained $325.4 million assets under management.
UMB Financial buys Heartland
Kansas City, Mo.-based regional lender UMB Financial bought Denver-based bank Heartland Financial USA for nearly $2 billion in late April.
The parties announced April 29 that the deal will add new locations to UMB’s portfolio in California, Iowa, Minnesota, New Mexico and Wisconsin. UMB was founded in 1913 and maintains $64.5 billion in assets following the Heartland merger.
Heartland Financial manages $19.4 billion in assets, $16.2 billion in total deposits and $12.1 billion in total loans, the company reported March 31.
The deal was the largest U.S. bank merger or acquisition since the beginning of 2023, according to S&P Global Market Intelligence data.
Wintrust Specialty Finance buys Macatawa Bank
Rosemont, Ill.-based lender Wintrust Specialty Finance bought Michigan-based Macatawa Bank in the first quarter of 2024.
The deal added Macatawa’s 26, full-service, branch locations to Wintrust’s portfolio.
Neither bank would disclose the value of the buyout, but Macatawa said in a release on April 15 that it had roughly $2.7 billion in assets, $2.4 billion in deposits and $1.3 million in loans under management.
Wintrust was ranked No. 36 on the 2023 Monitor 100 list of largest equipment financiers, with $3.1 billion in assets, up 21% in 2022 from the prior year.
DLL buys elf Leasing
Buyouts are also occurring on an international level. In the Netherlands, finance firm DLL agreed to purchase elf Leasing, an equipment leasing firm based in Hannover, Germany.
Elf Leasing services the agricultural, construction, industrial and transportation equipment sectors. The value of the deal was not disclosed but it is expected to close by the end of this year, DLL said in a May 22 statement.
“We are delighted with this intended acquisition, which marks our growth ambitions in the German market, and is part of our larger strategic plans to grow both organically and through mergers and acquisitions,” DLL European regional manager Rob van den Heuvel said in a statement this week.
DLL’s USA division maintained $16.2 billion in assets under management in 2022, per the 2023 Monitor 100 index.
