The Secured Lender - March 2010

our marketing activities in this segment and with Sandi heading up the underwriting and portfolio management functions for these larger syndicated transactions.

With the strength of this team, we have expanded our capabilities look to play more of a leadership role in the syndicated loan market. Initially, we are partnering with established top-tier players by committing early to their transactions and taking larger positions. Our enhanced capabilities and strong balance sheet have been key to us playing a more meaningful role in this market. In the near term our goal is to build upon this success and expand our activity as a lead of syndicated deals at the smaller end of this market.

As we look ahead, we will not only invest resources in the syndicated sector of the market, but we will also continue to invest in our middle-market asset-based business, which we view as the foundation of our business platform. This includes adding resources within our franchise, especially on the West Coast, as well as looking to expand outside of our bank’s geographic footprint. At present, we have marketing resources in Houston and Boston and we are optimistic that at some point in 2010 we will have additional locations.

Since you were in an expansion mode,
with the economy being what it was,
did you find it easier to find quality
candidates?
Our decision to expand into a new
market is always driven by our
success in finding the right quality
candidate in that market to join our
team. Certainly over the past year,
we have had access to very, very tal-
ented asset-based professionals.
We found that the positioning of U.S.
Bank as a strong company and our
interest in expanding our asset-based
business has created a great environ-
ment for us to attract top talent to
support our growth.

In 2009, ABL capital markets activity seemed to be dominated by amendments to existing syndicated loan agreements. Do you expect there to be significant growth in new syndicated commitments in 2010?

I certainly expect that amendment activity will continue to dominate the ABL activity in 2010. This amendment activity will include the continued migration of cash flow deals to ABL structures as well as the redo of maturing ABL deals to bring to them today’s market pricing and structure.

I think the key unknown is the timing of a pickup in M&A activity. That should be a real engine of growth in the asset-based business. But I think it’s anyone’s guess when that really gets going.

I know that everyone wants to be optimistic that the economy will start to show some growth in 2010, but I think we’re all taking a wait-and-see attitude, given the volatility we experienced over the past year.

In this difficult economy and credit environment, what would you say has been the biggest challenge for U.S. Bank Asset Based Finance?

Fortunately, we’ve been blessed with very strong credit quality as measured by both our level of nonperforming loans and charge-offs. We’re feeling very fortunate and we’re hopeful that it continues into 2010. Strong credit quality has certainly been one of our key focuses as a company and this will continue to be part of our strategy going forward.

From a financial performance
standpoint, I think the biggest chal-
lenge that we’ve experienced is credit
facility usage. When you look at our
existing customers in our portfolio,
we had a great year in terms of retain-
ing customers. But, on average, our
existing customers are borrowing 30%
less than they did a year ago. And I
know that it is a challenge that has
been faced by everyone in our indus-
try. I’m optimistic that, as the level
of economic activity improves in the
market and businesses invest again in
inventories, that usage will improve in
the coming year.