Evan Wilkoff From Hembstead Capital Talks About The Structured Finance Industry And Why Charlotte Is A Great Place To Live And Work

Evan Wilkoff is a Strategic Consultant for Hembstead Capital, LLC, an advisory firm based in Charlotte, North Carolina, specializing in strategic consulting, including capital raising, securitization advisory, portfolio analysis and reporting, hedging strategies, and operations.

Prior to relaunching Hembstead Capital, Wilkoff worked for Ascentium Capital LLC where he designed and implemented a diversified funding strategy that included a robust asset-backed security issuance program, multiple credit facilities from money-center banks, and various syndication sources.

We recently spoke to Evan Wilkoff, and he was able to share some insights about his experience in the specialty finance industry.

How do you manage relationships with key stakeholders, such as investors, rating agencies, and investment bankers, throughout the lifecycle of a structured finance transaction?

This question is probably the most impactful question with a simple three-word answer: “Communicate, communicate, communicate.”

It is important to remember that ABS Investors look at countless deals from many issuers across various asset classes each month and often don’t have the time to dig into the nuances of each transaction every time an issuer comes to market. In order to maintain some sort of familiarity between investor and issuer, it never hurts to provide as much reporting and transparency as possible with respect to collateral characteristics, credit enhancement, and other transaction trends over time. Not only will investors find that helpful, but it might elevate their perception of the issuer, which may lead to increased levels of participation in future transactions.

The same concept applies to rating agencies and investment bankers, albeit on a different level. Although the rating agencies routinely monitor and review various aspects of transaction performance, it is imperative to keep them apprised of any significant shifts in the business and/or performance so they are not caught off guard during the final phases of an issuance. Nobody likes surprises….

What do you believe are the most significant challenges and opportunities currently facing the asset-backed and structured finance industry?

It’s very clear that the non-bank sector of the financial services industry has grown immensely over the past few decades, by some accounts now representing over half of all domestic lending. Although one can argue ad-nauseam about the pros and cons of the differing levels of regulations and compliance that apply to banks versus non-banks and the systemic risks each of those sectors might introduce to the economy, I spend more time keeping up to speed with respect to the shift from a traditional bank and 144a financing to (non-bank) private lending. Not that there is anything inherently better or worse with this route. It is different and introduces different risks and concerns to the issuer that would normally rely on one of those segments for ongoing financing.

Describe your experience in managing the due diligence process for asset-backed transactions and how you select the assets included in the securitized pools?

One of the key tenets of credibility in the specialty finance field is never select assets beyond the knowledge of the investor. What this means and how I put this into practice is to generally craft a securitized pool such that it is of similar composition to the book of business that is represented. Sometimes, this is easier said than done, as accomplishing this objective is relatively easy for large, homogeneous originators - less so for smaller, diversified originators. As for due diligence, aside from the regulatory due diligence requirements, which are fairly straightforward and routine in the industry, the more standardized a company’s originations are and actuarial the pool is, the simpler the internal due diligence process becomes as the pool characteristics generally “speak for themselves.”

Why is Charlotte, North Carolina, a great place to live and work?

It’s funny you ask that question, as I remember receiving some pretty strongly worded caution about moving to Charlotte 17 years ago. At the time, I was living in Philadelphia and was considering a job change and a move to Charlotte. As I was weighing the pros and cons of that major change, I was told by many that Charlotte was “neither here nor there” and I should be very cautious about such a move as my future job opportunities would be extremely limited. Although smaller than today, even back then, Charlotte was still growing rapidly. Having previously lived and worked in New York City and Washington DC, I sometimes even thought that Philly seemed like a small city.

So, after the move, once my family got settled, we quickly realized how great a place Charlotte was, and still is, to live. Given my personal experiences, I still view Charlotte in comparison to the Northeast megalopolis, where I still have lots of friends, family, and work colleagues. Charlotte traffic is still tolerable - even rush hour doesn’t last very long compared to Northeast standards. The cost of living is reasonable - despite the recent steep increases in housing costs. There are countless cultural outlets to enjoy, and most near and dear to me are the amazing food and restaurant options representing foods from all around the world - mostly reasonably priced as well!

Although continued growth might eventually and permanently alter the small-town feel that Charlotte still has, I think it will retain its outsized appeal for many years to come.

Many thanks to Evan Wilkoff for sharing his thoughts and insights with our readers.