The overall educational process has been very easy because we are an international bank with Basel regulatory standards. Our MUFG parent is a lot further along than we are here in the U.S. They have the loss-given default and the Basel III scenario figured out. Lastly as a culture, the Japanese are very detail oriented and that fits right in with the ABL product. It’s been an easy process in terms of assimilation. I work closely with a credit liaison who speaks very good English and we meet monthly. We give credit updates to Tokyo so their credit professionals understand our product and market conditions in the United States.

ABL Advisor:  What are the challenges the ABL industry faces these days?

Murphy:  I’d say the challenges are associated with ongoing regulatory and compliance issues that we face as an industry. Basel III creates a host of issues with regard to data integrity, keeping current with new rules and regulations in this area, as well as monitoring other changes including the Interagency Guidance on Leveraged Lending with the OCC, Federal Reserve Board of Governors, and FDIC.

Every regulated ABL Lender has to contend with these challenges and it is critical to ensure that risk management systems and technology are balanced with the growth of the business.

ABL Advisor:  How do you manage it all given your complexity of the business and the diversity of your responsibilities? What do you keep your eye on?

Murphy:  I think we all learned some lessons after 2008. Maintaining a discipline with credit structure is critical when the market is competitive and cost of capital is cheap. One needs to know when to draw the line for establishing minimum hurdles for springing covenants and liquidity covenants; identifying proper baskets for acquisitions and permitted indebtedness, justifying proper EBITDA add-backs for projection models, and reviewing frequency of audits and collateral appraisals as interest rates begin to increase.

ABL Advisor:  Is there anything that keeps you up at night in terms of the current environment?

Murphy: When you are in an expansionary mode as we are, it’s important to attract the right people … and also younger people as future leaders in the ABL industry. Many younger ABL lenders have not experienced several credit cycles. At the same time, asset-based lending is becoming a career where professionals can enjoy a rewarding and challenging career. Hopefully we can continue to attract the right people to keep the business moving forward.

We are one of the few banks that maintains a credit training program. It is very well-defined and we’ve had several people join our group from the credit training program over the years who have made ABL their career choice.

ABL Advisor:  What has kept you in the industry for these 37-plus years?

Murphy:  For me, it’s the everyday challenge of growing the business. There’s always a different opportunity … from solving an issue in order to get a deal done to visiting an existing client relationship or a potential new customer, hiring new people, or preparing projections for the business. There are many things that hit my desk on a day-to-day basis. I’m in early and stay busy through the day managing all aspects of the business. It keeps my mind active and that’s what I most appreciate about it.