Cover Feature

CIT Commercial Services Merges with First Citizens Bank — and Looks Toward the Future

Photo Courtesy - Jill Lotenberg

Deirdre Quinn, CEO of noted fashion house Lafayette 148, knew she had a great opportunity to relocate her business. Still, it made her nervous.

After all, Lafayette 148 had been founded in Manhattan and flourished there for more than two decades. Moving across the East River to the Brooklyn Navy Yard would mean more space, lower expenses and greater flexibility. But making the move would be costly.

So, Quinn reached out to the folks who’d helped her successfully navigate other financial challenges: her bankers at CIT Commercial Services. After discussing the merits and running the numbers, it was clear Quinn would have the financial backing she needed to make the move work. It turned out to be a great investment at just the right time.

“I’ve been with CIT forever. I’m a huge fan,” Quinn says. “It’s all about your relationship. I feel I can pick up the phone any time and get an answer or a callback. It’s a real partnership, and who doesn’t want that?”

CIT Commercial Services has long ranked among the largest and most successful factoring companies in the United States. And its financial strength and breadth of complementary banking services have only grown since January 2022 when CIT Group merged with Raleigh, North Carolina-based First Citizens Bank. With the merger, CIT Commercial Services became a First Citizens Bank subsidiary.

But in many ways, the success of CIT Commercial Services is attributable as much to intangibles — such as strong relationships, deep industry knowledge and unmatched insights — as it is to the dollars and cents of lending.

“We’ve spent many years building relationships with clients who have been with us for decades,” said Marc Heller, who is the long-time president of CIT Commercial Services. “Relationships and trust are the foundation of how we do business. As our clients have grown, we have grown with them.”

Factoring Leadership

CIT Commercial Services was already a major factor in 2004 when its business got a huge boost through the acquisition of HSBC Bank USA’s factoring unit with its $8 billion in annual factoring volume. Along with that acquisition came another key asset: Heller, who was working at HSBC and had already built a reputation throughout the industry for savvy business dealings and strong relationships.

After serving as northeast regional and international manager, Heller was named as president of CIT Commercial Services in 2016. More recently, he has been joined in a leadership role by Michael Hudgens, another long-term regional manager who was promoted to group head in March.

Despite their decades of combined experience, Heller and Hudgens don’t spend much time discussing CIT Commercial Services’ storied history. Instead, they are laser-focused on leading the business into the future with an eye on significant growth.

The recent merger with First Citizens Bank is a major catalyst of that advancement. First Citizens Bank brings many complementary banking services, such as wealth management, that can benefit CIT Commercial Services clients. In addition, First Citizens Bank has its own client relationships that can leverage CIT Commercial Services financing.

Factoring is a Range of Services

The core of CIT Commercial Services, now and in the future, will be factoring, a financial service that remains a mystery in many corners of the business world.

In its simplest form, factoring involves buying invoices or accounts receivable at a discount, typically from a manufacturer, importer or wholesaler — that way, the client gets paid immediately and avoids extending credit and worrying about collecting. But factoring also describes a bundle of services that can be unbundled to meet client needs. Some CIT Commercial Services clients, for example, finance their receivables. Some finance receivables and inventory. Others only use expert cash application, collection, credit protection and/or credit analysis services.

In essence, these clients are outsourcing some or all of their financing, credit and collection needs at a fraction of the cost of handling the job themselves.

“At first, many of our clients don’t believe the value we’re providing,” Heller said. “Then they get used to it, and then they don’t want to live without it.”

Growing in New Verticals

Factoring is closely associated with fashion, footwear, furniture, housewares, cosmetics, electronics and other consumer products. But it is available to businesses in any market vertical. Increasingly, clients outside traditional factoring markets are discovering the value and convenience of factoring services.

“We’re always going to be big in fashion and furniture, but our business is truly industry agnostic,” Hudgens shared. “Ours is a really compelling product.”

Hudgens continued, “We can support clients that are involved in any business-to-business financing. And we are determined to grow across all these opportunities.”

For many clients, factoring is a secret weapon that helps them move more quickly and focus more intensely on core skills than the competition. Over time, that speed and focus provide a substantial and decisive competitive edge.

What Sets CIT Apart

CIT Commercial Services isn’t the only company offering factoring services — but no others likely can match its depth of industry knowledge, breadth of market insight, stretch of relationships and willingness to stretch when the circumstances are right.

Consider the experience of Jim Ziozis, owner of Linon Home Décor Products, which provides furniture and home furnishings for a large variety of e-commerce companies, lifestyle furniture firms and core retailers.

“Early in our business, we had a credit line with a traditional middle-market bank and they said we were growing too fast,” Ziozis said. “So we connected with CIT and found them to be very solutions-oriented. They had a commonsense approach. They understood the difficulties that companies like ours face.

“By solutions-oriented, I mean that when a challenge or problem arose, they didn’t focus on the problem; they focused on how the problem could be solved. They had more ideas on how to structure the credit than other lenders,” Ziozis continued. “There’s always ups and downs with the economy and with retailers. I’ve never had to explain to CIT about that. They get it.”

Being deeply embedded throughout retailing enables CIT Commercial Services to share insights and leverage relationships that others can’t. Let’s say, for example, that a client is struggling. Or, conversely, that it is doing well and looking to grow through acquisition. The right introductions at the right time to the right players can lead to results that benefit everyone involved. Just ask Haresh Tharani, chairman and CEO of Tharanco Group, a leading manufacturer of men’s and women’s apparel.

“The type of relationships that CIT and Marc have built are engaging and proactive,”Tharani said. “That’s a special thing in a time where everything is so transactional. We know how to run our business. Working with CIT allows us to focus on what we do best.”

Hudgens agrees. “Because we know everyone, we’re pretty good at match-making for those market participants that want to buy another business or sell their own,” he said. “We know people and we know your business. We’re not just your factor, but also your advisor.”

Advanced Industry Knowledge Paired with Strong Relationships

That kind of fundamental business understanding can be particularly helpful in coping with the cyclical nature of retail, fashion, furniture and so much more. The recent COVID-19 pandemic is just the latest in a long line of

challenges that CIT Commercial Services has helped its clients overcome.

“CIT has been a great partner for us through thick and thin,” said Eddie Betesh, president and CEO of SaraMax Apparel Group, which is a global leader in the intimate apparel industry. “We’ve had some tremendous bumps over the years — the pandemic just being the latest one to come to mind. But they understood our business: more than just the numbers, but also the relationships behind the numbers. Their support has allowed us to prosper in good times and bad.”

Again and again, discussions with CIT Commercial Services clients come back to the value of both relationships and industry knowledge in the fast-moving and ever-changing retail environment of today.

Quinn, who is now directing Lafayette 148 into more of a direct-to-consumer model, shared that entrepreneurs get great returns from an informed third-party perspective.

“They’re part of our company. They’re almost like the doctor. They’re on the outside looking in and they see things that we might not see because we’re on the inside,” Quinn said. “They know the factoring industry. The highs and lows. They understand that. And they stuck with us.”

So, if a friend were looking for a factor, what company would Quinn recommend?

“I would tell them 100% that I would recommend CIT,” she said. “It’s not just one reason. It’s sleeping at night. I know that if something comes up, I have a banker I can count on. That means so much more than just a rate.”