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Listen in as Equipment Finance News editors interview the leaders in the industry, on both the lender and dealer sides of the table, to discuss new developments, trends, opportunities and more.
EFN_The DIG with 1st Source's Christopher
Murphy III_0829
Thu, Aug 28, 2025 23:00:51
SUMMARY KEYWORDS
Equipment finance, Christopher Murphy III, 1stSource Bank, retirement, succession,
heavy duty trucking, financing business, community bank, solar financing, family legacy, Andrea Short,
Kevin Murphy, digitalization, AI, mentorship.
SPEAKERS
Christopher Murphy III, Johnnie Martinez
J
Johnnie Martinez 23:01:09
Hello and welcome to the dig joint equipment finance news editors as they connect with
leaders in the equipment finance industry on both the lender and dealer sides of the table to
discuss new developments, market analysis, trends, tips and more. I am Johnny Martinez, the
second deputy editor of equipment finance news, the one news source for both dealers and
lenders. Find us at equipment finance news.com
J
Johnnie Martinez 23:01:44
On today's episode of The Dig. I am joined by Christopher Murphy, the third the chairman and
CEO of first source bank as he prepares for his the succession of a new CEO and president, and
we will discuss all of that and more on today's episode of the dig to begin reflecting on your
tenure. What are you the most proud of? What have you seen the most in your time?
C
Christopher Murphy III 23:02:08
I came here 49 years ago. I was on the board of the bank in 1971 when we bought it back from
the associates finance company at Galton Western, which was a publicly held conglomerate.
We've had a relationship with the associates since 1931 and the founder of the associates
became the president of the bank in 31 so the family has been involved in the financing
business, financing equipment, financing, individuals, financing businesses since the 20s,
involved in the banking business. That's 31 and so we've got into the bank then, and grew both
the bank and the finance company side by side, until I got here, it was sold off when Gulf and
Western acquired the associates back in 1968 and then in 1971 we bought it back as the family
got together with people from across the country and returned the bank to local ownership. At
that point, all of the equipment financing was done inside of associates, and we provided the
financing for associates in many ways, and access to capital markets. As we began to build the
bank, we realized that sooner or later, we were going to have to have an ability to grow outside
of the local markets we were in in those days, there were very big restrictions in Indiana and
even across the country and how you could branch or open branches or grow the bank,
because it was the rust belt and so quite a lot of growth going on here. In 1976 the board and
the CEO at the time made the decision that we would start financing heavy duty trucking under
factory guaranteed programs with GM, because we had a history of it, people going back and
forth between the associates and the bank. Was a natural thing for us to start. Unfortunately,
the CEO at the time, the chairman died, it was my father in law, a heart attack at age 56 and I,
having been in banking since 71 and working for Citibank, came to help. We wanted to make
sure that the bank stayed in local hands public, but it stayed family focused. I joined my mother
in law hire other people to buy the bank back, and then came here. Eventually, in 77 became
president, Chairman, a little later, CEO, and have been in that role now for almost 50 years. We
started the financing business for equipment. In 76 the trucking business got deregulated in 78
which made it obvious to me that we needed to have multiple verticals in the equipment
financing business, so we were not relying on any one area. And so we added automobiles and
lighter trucks in 1980 81 aircraft, 1985 and 86 we had a construction machinery at 1990 and
we continue to add verticals as time went on and out, we do a full range of transportation
equipment. We also do solar across the country. One of the things I'm proud of is that we've
been able to build those businesses. Often. When we started the construction machinery
business, I said, I only want to start it between the mountain ranges so we get it back, it rolls
towards the center of the country, and I can get it eventually. We went across the country with
it. Half of the bank is focused on these specialty businesses, while half is a traditional
community bank, sub regional community bank in northern Indiana and southwestern
Michigan. We derived deposits from customers across the country and from our local markets.
When we bought the bank back, it was in the 200 million $300 billion size. Most of our growth
has been organic. We're $9 billion we've had really good results over time with the way we built
the balance sheet, the income statement. We're all about the very long term of these
businesses, building balance in the company so that we're not. Over exposed to any one
industry, I've been fortunate to have really great colleagues in each of these businesses. I'm
approaching 80 I've had 50 years. It seems to turn the leadership over. We're a public
company. To make sure there is a good legacy here, and that legacy has to be both internally
built, legacy, that focus management legacy, and hopefully family legacy, because we do want
the family feel the family focus, the long term focus to still be driving what we do. It is really
building the book value of the company, quality earnings from the company, and doing that
consistently over time and that we have been able to achieve. The woman who's becoming
CEO in October is Andrea short. She's been with us for 20 years. I've been working with her in
the last 11 years to prepare her for this. She's been president for now probably five or six
years. The person becoming president of the bank happens to be my son, who's been here for
20 years and grew up in a variety of businesses here. He has more digital and it experience.
She has more finance and accounting and control experience, so they meld together very well
with a phenomenal team of people under them. I just couldn't be more proud people come here
and we stay for 20, 30, 35, 40 years. For me, the most exciting thing is to watch people grow
here, to watch them get involved in the community, people who are significant. They build a
life of significance because of the people they help. The thing that's most important is that
people here buy and believe in our mission, and it is nothing more than to help our clients
achieve security, build wealth and realize their dreams. We do that by understanding our
customers unique differences, asking questions, listening, discerning the differences and giving
them straight talent advice, keeping their best interests in mind for the long term. And we're
pretty consistent. I mean, you go back and read everything we've written for many of those
years, you'll see we haven't changed much. I mean, at the core level, your values are still the
same. We start with integrity, it's teamwork, it's high quality service. It's being leadership in
communities we serve. Those are important. And building the culture and having the right
people make the right decisions.
J
Johnnie Martinez 23:07:56
Gotcha, that makes it a ton of sense. And, you know, I think especially one of the things you
bring it up there with the, you know, having this very family oriented bank, and then finding the
way this balance that you went into with the two promotions with Andrea, shorts, rule, sons
role, and having sort of both represented in kind of the future of the bank and of the
corporation behind it. And I
C
Christopher Murphy III 23:08:24
will tell you that could only have to happen because of Andrea. She had to be strong enough,
and I could trust her with it. She has to be strong enough and bring Kevin along. Andrea is so
substantive and stood that it was, for me, a no brainer. She's just perfect for this. She will do a
great job. She's been here a long time. She leads to Erica, as it were, and really believes in the
culture of the place and our values.
J
Johnnie Martinez 23:08:51
So going back to your end of this, what made now the best time for you to make that step from
CEO to executive chairman?
C
Christopher Murphy III 23:08:57
Well, now has been a number of times before, but every time there's a crisis, oh, great, I'll
make the chase down and boom, oh 809, whatever. More recently, I went on the Federal
Reserve Board in Chicago, the Reserve Bank of Chicago, Ford, and that was a six year term. So
that term just ended. I've decided there's always crisis. So not gonna let a crisis keep me from
doing what I should do. It's important for me to do it now so I can be here to mentor them, help
them. I want to be sharpened up. I can answer questions and help them develop. I think we
gotta continue to develop our people. We gotta give them broader portfolios so they have a
broader extent of experiences. And today, you're dealing with younger people that don't
necessarily get the culture right away. You've got to enculturate them over time.
J
Johnnie Martinez 23:09:43
Yes, you know, because I know, especially on the equipment financing side of things, just being
in the industry and interacting with people, there's a lot of people on the spectrum, a lot of
people, you know, mid to late 20s, early 30s. And there's a giant gap in the middle. When
you're talking about the culture side of it, there's an element of, how do we connect these two,
and how do we have the people to connect these two? It's like, that's from the very important
for
C
Christopher Murphy III 23:10:07
you guys. You do not want these younger people to commit the same mistakes we all made
before you come along, you start reading the press, you read how great things are, and it's
going to be different this time. It's never. Sooner or later, hits the wall, sooner or later, there's a
problem, and you better understand how to handle those problems and help your client get
through those problems. Clients tend to be optimistic. They're sales people. They believe that
they've got control of the future. None of us have control of the future, and so our job is to help
them look down the road and around the corner and prepare for that around the corner, so that
we get them through whatever crisis is there. Our strength and the reason we have large,
strong capital and reserves is so we can help our customers through the problem times. If.
Don't listen to us, we'll have a problem. But listen to us and we work through things. We can
help them weather the downturns and the cyclicality
J
Johnnie Martinez 23:10:59
of the markets. Right now, you have the fourth generation of the family in charge a lot of these
businesses, especially on the local side, where you guys are at they're also family businesses.
C
Christopher Murphy III 23:11:09
If you think about most of the companies that we're financing rental car companies, crate
companies, construction machinery companies, people using aircraft for their business. They're
often failing companies. They've got the same sense of family that we do. They have the same
concern about the future. They've got all of their shekels tied up in the business. They've been
washing cars, doing the hard work they're not hired him. They're people who are deeply
embedded in their businesses, and we want to help we understand their psyche, and so that's
important in terms of making sure we're doing the right thing for their long term, as well as
ours.
J
Johnnie Martinez 23:11:44
No that tracks. And you know, as you're doing that and you're all this transition is going on. And
even in the industry, the financing side is having its own transition different markets, and
you're seeing the changes in technology and the changes in how equipment it's used, right with
you being now in more of a mentorship role. How do you help advise Andrea and Kevin to
navigate this time of change in the industry as new technology emerges, both on the financing
side and with all of the equipment that you guys are financing.
C
Christopher Murphy III 23:12:12
I've been around long enough because it was financing equipment. I was at Citibank. We were
competing with GE to warn them to be careful of easy money, because the client gets easy
money, things are going to work out, and then there's a problem, and they're way over
leveraged, and they have no way out. And what happens is the third party financiers shut them
down, or they're not close to them. It was easy to get the money, but they're working with
people have no idea how to help them survive in the business. It is working with Kevin, Aaron,
Chris Craft, all of the people who run the especially advanced divisions, and even our local
divisions, look, don't overreact and make sure you're close to the customer, counsel them
through it, and be careful when the customer is borrowing somewhere else and you've got
other lenders who don't know what they're doing or are going to react in a wrong way. It's
important you know who you're financing with, not only what you're financing, so that you've
got people who are Experienced on the other side, experienced at working through problems.
Now digitalization, AI, all of that's making that stuff faster. So what it does, it makes mistakes
bigger and faster. How do you get in front of that and calm down the client going through that?
How do you begin to look and say, Where are values going to go? What's the use value of this
equipment. What's the depreciation curve on that equipment? What's going to drive in one way
or the other? One of the signals in the economy that tell you something is likely to be
happening? What's the canary in the coal mine, as it were? And so it's really counseling with
them, and taking my view, just being here so long and some others around here been for a long
time, and be more intentional about talking about it, thinking about it, looking at it, and then
moving forward.
J
Johnnie Martinez 23:14:00
Now, the fascinating bit you got into there as well, the digitalization side of all of this, making
things faster, but if there's risk of making those bigger mistakes, even with all the technology in
the world, you're never going to get away from that personal element.
C
Christopher Murphy III 23:14:15
Well, you can get there, but it's going to hurt you. You need to feel and understand that
equipment. You need to know where to move. You need to know who to move it to. You need to
know when it's being overused or underused. So it's understanding the collateral,
understanding the cash flows and the ebbs and flows, the cash flows, as well as the seasonality
of business. So it's a multi varied equation that you've got to be running with, but you got to
have the human element there. You can't just let an AI tool do that, because it's not going to go
out and collect it
J
Johnnie Martinez 23:14:45
fascinating. Well, thank you so much for joining me on today's episode of the day. You John,
thank you for joining us for the dig where we aim to take the industry and you to better results.
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