Whether it was moving in or out of a dorm room or into our first house or apartment, most of us have rented a U-Haul truck or space in a U-Haul storage unit at some point in our lives. So when news hit in early December 2013 that AMERCO, U-Haul’s parent, had closed on $100 million in funded corporate debt, it caught the eye of many. At first glance and as far as corporate financings go, the deal appeared to be a normal event for a borrower like U-Haul. Upon closer examination however, it would be the financial institutions that comprised the lending group that had the industry stop and take notice. Here was a deal funded not by the mega institutions or even the super regionals, but by 23 community banks and credit unions in no fewer than 17 states across the U.S. Serving as administrative agent is Oklahoma City-based MidFirst Bank, which ranks as one of the largest privately owned banks in the United States.
Also of interest was the fact than an Austin, TX-based advisory firm by the name of BancAssets served as advisor on the transaction. ABL Advisor caught up with BancAssets' Chairman Don Shafer and David Hill, its Chief Executive Officer to find out among other things how the U-Haul transaction with this unique set of players came to be. And while the “Main Street to Wall Street” concept has been expressed in many ways, in speaking with both Shafer and Hill, it is evident the two take the matter to heart. In short, the two state BancAssets’ raison d’être is to insure that community financial institutions have a fair shot when it comes to participating in loans to quality credits.
To understand the genesis of BancAssets and its mission, it’s important to understand its partnership with BancVue, the wholesale financial services company Shafer co-founded in 2004. He also serves as BancVue’s current chairman. Shafer explains, “We launched BancVue to help the community institutions better compete against the mega banks. We showed them a couple of things. One lesson was that without learning to compete differently, these institutions were headed toward extinction. The other thing we showed them was they could actually make money by rewarding customers for using technology.”
Today BancVue has approximately 700 community banks and credit unions offering the reward checking products it developed with the aim of attracting younger, more tech savvy depositors. “Our mission is to help the community institutions compete in a different way … to compete for those younger people so these institutions can continue to be vibrant.”
As Shafer and his BancVue colleagues continued to fulfill on their mission, a new issue arose. Shafer recalls, “Three and a half years ago, a banker from Oklahoma said, ‘everything you do is great and it’s helped us acquire new account holders, but what we really need right now are loans.’”
Shafer notes that in the period that followed, assistance with booking loans became a recurring request from BancVue’s clients. He explains, “After 24 months of people asking us to help them, we decided to do something about it. I contacted David who had done some consulting work with us in the past and asked him, ‘If Coca Cola wants to borrow $1 billion, what do they do?’”
With that simple question, the idea of launching BancAssets came about. The rest, as they say, is history. Shafer and Hill set about to pursue Fortune 1000 companies with the idea of allowing community banks and credit unions to participate in their debt financings.
With an extensive background in corporate finance, Hill was intrigued by the idea. Hill explains, “In essence with BancVue’s clients, there existed this correspondent network with $240 billion that was hungry to lend. I saw this as both a challenge and as an opportunity. The next thing I did was to contact Josh Green who now sits on BancAssets’ board and who was a Managing Director in Merrill Lynch & Co. Inc.'s Global Structured Finance & Investments Group where he founded and ran the Alternative Assets Group.”
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