In reviewing the Monitor 100 survey data submitted by Capital One Equipment Finance, one comment in particular was an attention-grabber: “2012 was a year of change as we prepare to implement a new strategy in 2013.” Leading the charge is industry veteran Dan McKew, who explains that the company’s new approach to the equipment finance business includes robustly building out into a wider coverage area.
“We are basically reestablishing the company. As of April 1 we feel like we have re-launched the company into a space with larger transactions and upper middle-market and investment grade credits across a nationwide footprint,” he explains.
Toward that end, the company changed its name from All Points Capital to Capital One Equipment Finance to capitalize on the well-known brand name of parent Capital One Bank, the sixth-ranked bank in the U.S. based on deposits. Moreover, in the past the company focused on small-ticket transactions below $300,000. Aspiring to make a major impact on the industry, McKew’s team today targets equipment leasing and finance transactions ranging from $500,000 to $50 million.
“A great brand name like Capital One is an amazing benefit. People want to do business with us and with the brand. We are bringing in a lot of solid, experienced people to help us expand our brand presence in the equipment finance space,” McKew adds.
In that regard, McKew says his group is in the process of achieving its short-term goal of identifying quality people who are interested in working with the Capital One brand and in helping the company to gain a foothold in the equipment leasing and finance industry. He said that his group hired 20 people over the last 45 days and noted, “We are well on our way to getting the right people in the right places to do what we need to do.”
McKew reveals that his ambitious, yet simply stated, long-term objective is for Capital One to emerge as an impact player in the equipment leasing and finance industry. “We have strong growth goals over the next several years,” he notes.
By The Numbers
Data from 2012 shows that Capital One Equipment Finance had owned/managed assets of $5.48 billion, compared to $4.472 billion in 2011, placing it 23rd on the Monitor 100 both years. The company’s new business volume in equipment related loans and leases was $2.87 billion, up from $2.09 billion the prior year. Top three asset classes by volume in 2012 were municipal finance, led by Jonathan Lewis; taxi/medallion finance led by Paul Dell’Aquilo; and general equipment led by McKew.
“We have one of the leading tax-exempt finance companies in the country. Under Jonathan Lewis’ leadership, the group has done a great job of expanding its business and becoming a major partner in the tax-exempt space. If we can mirror the quality portfolio that he has built, we will start to get to where we want to be with equipment finance as well,” McKew explains.
Regarding originations, direct/end user sources in 2012 generated $2.73 billion, compared to $893 million in 2011. Indirect (buy desk) originations in 2012 were $151 million in 2012 compared to $1.2 billion the year before.
“We are excited to re-launch the business and to build out our nationwide network of calling officers. We will also have an indirect buy/sell desk to be able to trade with all of the partners we’ve known in the past. We are going to support the bank footprint and bank customers, but we are going to expand beyond that,” he says.
McKew notes that his group is going to focus on air, rail and marine equipment types. In addition, his team will work closely with the bank’s vibrant healthcare and energy specialty finance groups. “Capital One Equipment Finance will support the bank in both of those areas and increase the penetration in that space,” he adds.
The Equipment Finance Team
Prior to joining Capital One in June 2012, McKew was president of CFG Community Bank in Baltimore. He previously served as president of 1st Mariner Bank and spent more than a decade as the president and CEO of SunTrust Equipment Finance and Leasing. At SunTrust he established the bank’s regional equipment leasing team, expanded the business nationally and tripled the size of the originations team. Before joining SunTrust, he headed up leasing units at Signet and Crestar.
A well-known and regarded player in the equipment finance space, McKew got the call — a text message to be exact — regarding the position at Capital One from a former colleague who now works at the bank. “It’s all about relationship building and who you meet as you go throughout your career. When Signet Bank was purchased by First Union, 20 of us left and established an equipment finance company at Crestar Bank. The number-two credit officer was very helpful and influential in getting us set up. He had been at SunTrust as well. We’d stayed in touch for many years. It just so happens that he is at Capital One, and when there was a need last year, he asked me if I was interested in talking, and off we went,” McKew explains.
In building his team, McKew tapped his deep network of industry professionals. This May he added eight new equipment finance officers as vice presidents: Joe Houston, Jim Class, Greg Kealey, David Zgrabik, Jerry Herrmann, Tom Auchincloss, Mark Trollinger and Jim Pontier. They join team members Edward Stack, Dale Craig, William Dridge, Francis Meche and Robert Vandervalk.
“There’s good and bad in being in this industry such a long time. The bad part means that I’m getting a little bit older, but the good part is that you get to meet great people along your travels. Almost everyone that we’ve hired has worked with me in one form or another. I know what they’ve done, and what they are capable of doing,” McKew notes.
“I’m most happy about how excited they were to come here. It’s great to take something in its infancy and get the chance to make it grow. They see we’ve grown a couple of companies before. We know how to do it, and Capital One is a great partner and parent, and we are excited about where we can take this,” he adds.
The Bank and the Brand
According to McKew, the Capital One brand not only serves well in generating new business, but it has also helped him in attracting talent. “The people who have chosen to make a change to come to Capital One have opened the eyes of those the industry and of the customers. If these people with this amount of experience and this strongly embedded in their former institutions are willing to take a risk to go somewhere, it must be something special,” he notes.
With regard to building the business, he says, “You just can’t get away from the brand. That is such an advantage when we want to speak to a customer. Now, we may hear ‘What’s in your wallet?’ a few hundred times a day,” he jokes, referring the bank’s well-known advertising tag line, “but clients really respond when we, as members of Capital One, call on them.”
Providing his outlook for the equipment finance industry as a whole going into the second half of 2013, McKew sees stagnant interest rates and a crowded competitive playing field as ongoing challenges. “If interest rates can start to move a little bit, businesses waiting to buy will begin to make acquisitions before interest rates go up and it will cost them more. The real business boom will start to happen when interest rates move. This is a perfect time for Capital One to re-launch an equipment finance business. There’s a need for a bank of our size and with the acumen we bring to the table. There is going to be a big industrial growth in the next three to five years, and we are well poised to be able to help the customer and to do well ourselves,” he explains.
When asked if there was anything else about Capital One Equipment Finance that he’d like to add, McKew was quick to say, “We are amassing the people and putting our systems together to be able to go at this business 100%. I’m excited for the industry to know we’re here. The great thing is, the industry seems excited, too. Even our competitors and partners have embraced us and the change. I’ve received so many calls and notes cheering us on. It’s good fun.”
Lisa M. Goetz is the editor of the Monitor.
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