When BBVA Compass decided to establish a new equipment finance unit, it turned to 30-year industry veteran Mark Marinik and his Cleveland-based team to strategically fill the gap in the bank’s product offerings.
After serious consideration, working with a well-known industry consultant, BBVA Compass made the decision to launch an equipment leasing and finance unit. Part of that strategy included securing Mark Marinik to lead the new effort. Now serving as the executive vice president and director of commercial equipment finance at BBVA Compass, Marinik brings nearly 30 years of experience and a team well-versed in the leasing business. His industry pedigree includes co-founding ICX Corporation as an independent in the late 1980s, then leading the group after it was acquired by Charter One Bank of Cleveland. By the time Charter One was acquired by RBS Citizens in 2004, the equipment finance portfolio was approximately $2.5 billion.
“BBVA Compass was very deliberate in this project. It carefully researched the industry until the bank made the decision to proceed with launching an equipment finance business. I knew of the consulting company, and it knew of my team and me. The consultant advised the bank, and we were invited to the dance and ultimately chosen to lead the effort,” Marinik explains. “Our equipment finance group strategically filled a gap in the bank’s product offerings. We were the largest U.S. bank that did not have equipment leasing and finance capabilities. And, the bank relationship managers had been clamoring for equipment finance for some time.”
Furthermore, he points out that banks fund about 40%-50% of all equipment financing activity. “We can effectively service the larger corporate clients of the bank, and leasing can be a very good penetration point to enter a new account, as well. There is a significant cross-sell opportunity,” he explains.
Marinik adds that from an industry standpoint, and based on research from the Equipment Leasing and Finance Association, he estimates moderate growth in equipment acquisitions, noting that he has seen an increased need for newer replacement assets for his customers. In addition, he doesn’t see the potential lease accounting changes as a major threat. “I am confident leasing will continue to be a significant source of capital for our client base. There will continue to be some balance sheet management available based upon my last review of the most recent version of the exposure draft. For convenience, flexibility, obsolescence factors and most importantly tax reasons there is still going to be a robust equipment leasing industry.”
Entering Production Mode
Regarding types of assets that Marinik’s group will finance, he notes, “We are generalists.” His team will focus on energy, transportation (including over-the-road, rail, corporate aircraft and marine), medical and industrial manufacturing equipment. About half of the portfolio will likely consist of transportation assets, he adds.
“We just entered production mode in July, and we have successfully booked some attractive assets already. We have completed transactions for marine, general manufacturing and rail assets and have gotten off to a good kick-start,” Marinik says.
The group will serve both bank clients, through BBVA Compass’ corresponding relationship managers, and its own established national customer base. “We will be an active indirect buyer and syndicator as well. However, our bread and butter is really direct marketing,” Marinik explains.
Targeting stronger credits, generally BB and higher, transaction sizes generally will start at $1 million, with a sweet spot of $10 million-plus. Marinik adds that they will engage in smaller deals to service existing customers or as an entrée into a new account.
Working with Marinik are several former senior managers from ICX, including long-time colleague J.T. Lovins, who, as senior vice president, leads the sales force and operations. Joan Hinkle runs portfolio management and pricing, while Wayne Ownby manages accounting and taxes. John O’Donnell heads the capital markets group, buying indirect business from other leasing companies and banks and syndicating some of the group’s transactions on the sell side as well. Industry veteran Jim Noyes heads equipment management, responsible for residual and collateral evaluations. Joining the group from BBVA Compass is Brick Moore, the dedicated chief credit officer for the equipment finance business.
Driving the direct marketing effort is a team of four sales officers — one in Dallas, one in Chicago and two in Cleveland. “We expect to add a number of direct marketing personnel throughout the country, probably three or four per year for the next few years. We will target them in key locations within the bank footprint, which generally consists of the Sunbelt states,” Marinik explains. BBVA Compass ranks among the top 25 largest U.S. commercial banks based on deposit market share and operates 688 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas. “We want to make sure that each major in-footprint region has one of our direct reps within the next year,” he adds.
Marinik and Lovins spent the last year working with BBVA Compass putting policies, procedures and IT solutions into place, with the goal of making the business nimble and client focused. “The bank is deeply committed to the success of this group and has invested heavily into the infrastructure to provide us with the best customer service capabilities. We have implemented a state-of-the-art lease accounting and asset tracking system,” Marinik says.
Another advantage of working under BBVA Compass’ umbrella includes the opportunity to join the bank’s relationship managers and other product specialists in serving the customer base. Marinik and his team have been training the RMs on the equipment leasing products and the services his group can provide to their clients. “We have been embraced by the banking RMs across the footprint. We are leveraging the hundreds of RMs across the institution and getting them very excited to pitch our products and refer us at a high level.”
Strategy for Moving Forward
In the short-term, Marinik will build out the group’s marketing force, particularly in key markets across the bank’s footprint. “We have always tried to get the strongest group of personnel with us. We look for the best and the brightest because that eventually leads to success,” he says. Moreover, his team will continue to educate and collaborate with the bank’s relationship managers on the various equipment leasing offerings and capabilities. Long-term, Marinik wants to develop nothing less than a “world-class equipment finance operation” that is recognized for its outstanding customer service.
“We have always relied very heavily on repeat business with our clients, and the way you do that is to provide exceptional customer service. A leasing agreement can be very dynamic. It’s not something that you put in a vault and get out five years from now. There will be a multitude of changes along the way. As long you service your customers and make it easy for them to do business with you, you will have a very high rate of repeat business,” Marinik explains.
Providing such notable client service is vital to Marinik’s plan in growing the group’s direct origination efforts. “The customer is crucial for our operation and the bank’s as well. BBVA Compass has made a huge commitment to technology across the entire organization in order to best serve the customers,” he says.
Another client-focused strategy is serving as advisors to clients by evaluating their needs to determine the most effective products and services. “We don’t just offer a quote and move on. We work as consultants to our client base, and the bank does that as well,” Marinik notes.
The Accidental Equipment Leasing Career
Marinik started his career as a certified public accountant with what is now known as Deloitte. From there, he moved to an accounting position with one of the firm’s leasing company clients, where he shifted quickly into the marketing and structuring of tax leases. After many years of working for that independent lessor, he co-founded ICX. “Candidly, I had never heard of the equipment leasing industry when I got out of college,” he laughs.
Based on his knowledge of the tax side of the business and his success in facing the challenges of the marketing side, he continues to find working in equipment leasing and finance rewarding. “I’ve always enjoyed building strong, lifelong relationships that have come my way through the industry. And, J.T. and I still get involved in marketing because after 30 years in the business it’s still in our DNA,” he says.
Lisa M. Goetz is editor of the Monitor.
Tom Toton from Corcentric explores some of the many reasons why leasing conforms to the matching principles of accounting and business better than other asset management approaches.
With wild swings in financial markets, the political landscape changing worldwide, oil production through the roof and the U.S. Federal Reserve increasing interest rates, how should a company adjust its asset financing structures to contend with the uncertainty? Corcentric’s Pat Gaskins suggests using a dynamic financing model that can account for unexpected change over the asset life cycle.