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Navigating Asset Verticals: A Nuanced Approach to Wholesale Financing

As community banks venture into the realm of wholesale financing, a crucial aspect to consider is the diversity of asset verticals within the sphere of manufactured goods. Each vertical – be it auto, marine, RV, powersports, manufactured homes, musical instruments, or agricultural equipment – presents a unique set of opportunities, challenges, and nuances.

Auto Industry

The auto industry typically witnesses a high volume of origination activities due to the large market demand. However, many auto Original Equipment Manufacturers (OEMs) have captive financing programs, which can prove competitive. To succeed here, community banks may need to offer competitive terms, efficient services, and cultivate strong relationships with dealers.

Marine, Powersports, and Musical Instruments

Contrary to the auto industry, smaller asset verticals such as marine, powersports, and musical instruments often lack OEM-backed financing programs. This presents an opportunity for community banks to fill the gap, providing crucial financial services to these underserved segments. However, these industries might see lower ticket value and volume than some of the larger verticals.

Agricultural Equipment

On the other end of the spectrum, agricultural equipment financing deals with high-ticket items, due to the high cost of farming machinery. The volume of origination activities in this sector might be lower than in the auto industry, but each transaction can significantly impact a bank’s portfolio. The bank’s relationship with the dealer and end customer becomes paramount in this context. It’s also essential to understand the seasonal nature of the agricultural business, which can lead to cyclical borrowing needs.


When sponsoring programs across these various asset verticals, it’s crucial for community banks to tailor their approach to the unique characteristics and needs of each vertical. Factors to consider include:
  1. Volume and Ticket Value: High-volume verticals like auto might require robust infrastructure to handle the sheer volume of transactions. In contrast, high-ticket verticals such as agricultural equipment might require a more personalized and relationship-driven approach.
  1. Competition from OEM Financing Programs: In verticals where OEM financing is prevalent, banks may need to differentiate themselves through superior customer service, flexible terms, or other unique selling propositions.
  1. Needs of the Dealers and Customers: Different asset verticals cater to different customer bases with unique needs and challenges. Banks need to understand these nuances to offer services that effectively meet these needs.
In conclusion, sponsoring wholesale financing programs across different asset verticals can provide community banks with an opportunity to diversify their portfolios, serve a broader range of customers, and deepen their relationships with dealers. However, success in this endeavor requires a nuanced understanding of each asset vertical and a tailored approach to serving each one’s unique needs.

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