Cole Taylor Equipment Finance

by Lisa M. Goetz September/October 2012

In 2008, after Bank of America acquired LaSalle Bank and its subsidiary, LaSalle National Leasing Corporation, industry veteran Edward Dahlka set out to launch a new national equipment finance business. After four years of working with various banks on possible deals, Dahlka found the fit he was looking for at Cole Taylor Bank.

Edward A. Dahlka, Jr.,
President,
Cole Taylor Equipment Finance

When Bank of America acquired LaSalle Bank, Edward Dahlka, founder and president of the bank’s subsidiary, LaSalle National Leasing Corporation, was told that his departure would be announced as a “retirement.” As Dahlka tells it, he might have been “close to early retirement age,” but he was in no way ready to stop doing what he loves — running an equipment leasing and finance operation.

Seeking the Right Fit
After his non-compete period expired, Dahlka went to work to find a new home for himself and his team. He set his sights on the national marketplace. Noting that most regional banks keep to their respective geographic space, Dahlka began talking with a group of regional banks to see if they could “attack the national market” by forming a joint venture. He found interest from banks in Chicago, the West Coast and the eastern side of the mid-American marketplace. However, the project never quite gelled.

“For various reasons, it was difficult to get these all together at the same place at the same time. We had a passage of time of about two years where we were very close to doing something with the joint venture, which would have given us the ability to participate on a national basis, where we thought the larger-ticket segment needed to be.” Dahlka explains. “We didn’t want to be confined to a geographic area that would typically come with a smaller bank.”

After that, Dahlka and his former LaSalle team worked with a consulting firm to focus on two major banks that weren’t in the leasing business. According to Dahlka, “It took a long time to get those folks over the hurdle to start a new business from scratch given the economic conditions that were going on in the United States.”

During the months-long interaction one of the major bank candidates, Cole Taylor Bank, made the decision to enter the equipment leasing business. Mark Hoppe, president and CEO of Cole Taylor, who was also a LaSalle banker for many years, called Dahlka with the invitation to create and lead the new endeavor. At first, Dahlka felt obligated to forge ahead in negotiations with the previously mentioned bank. However, it became apparent that, in dealing with this bank and the process it would have to go through, Dahlka and his team would likely not enter the marketplace in 2012. Cole Taylor, a much smaller bank, would give them the opportunity to get back in the game this year. Even more appealing, Cole Taylor would give Dahlka what he was working so hard to attain —an opportunity to enter the national equipment finance marketplace.

“What appealed to us was obviously we knew the people well, Mark was my boss twice during the 11 years I was at LaSalle, and he brought a lot of LaSalle bankers to Cole Taylor. What really attracted us to Cole Taylor was the bank’s desire to expand and grow on a national basis. Cole Taylor’s desire was to continue that pattern of being an important player in the middle market in Chicago and the Midwest. But, in contrast to most other banks I talked to, Cole Taylor had a desire to play in the national market and had lines of business that had a national perspective. That just fit in so well with us. We could get up and running and book business in 2012, so we made the choice of going with Cole Taylor, and we’ve been very, very pleased since we’ve been here.”

Cole Taylor Bank is based in Chicago and is a subsidiary of Taylor Capital Group, a publicly traded company with $4.8 billion in assets. In addition to equipment financing, Cole Taylor’s other national lines of business are Cole Taylor Mortgage and Cole Taylor Business Capital. Cole Taylor Mortgage, headquartered in Ann Arbor, MI, provides residential mortgage loan products, and Cole Taylor Business Capital, led by Michael Sharkey, former president and CEO of LaSalle Business Credit, provides asset-based lending services. It has regional offices in Atlanta, Baltimore, Chicago, Dallas, Los Angeles, Kansas City, Memphis, Milwaukee, Minneapolis, Seattle and Stamford.

As for the back office home of the equipment finance group, Dahlka was granted yet another of his wishes. “Our main back office, the core of our operation, remains in Baltimore. With GE, Bank of America, BB&T, SunTrust, M&T and, with Capital One coming to the area, there are many leasing companies in the Baltimore area, and we buy and sell business with most of them. There’s a real logical reason for us to be there,” he explains.

Starting Fresh Based on Past Success

Starting from scratch this year, Dahlka and his team are following the successful patterns that they developed in their “previous lives.” First, they are making progress in building the back office. Joining Dahlka are former LaSalle colleagues Steven Williams, Peter J. Steger, Joseph A. Maddox and John A. Hurt.

Williams is senior vice president of syndications and will handle the buy desk function. He will work with the packaging/syndication group when the marketing force is in place in 2013. Steger is senior vice president in charge of operations and the equipment asset group. Maddox is senior vice president, responsible for overseeing the division’s accounting, tax and finance functions, and “knows this business inside and out and is an excellent advisor to our folks in structuring deals from a tax and accounting perspective. He’s been with me since 1978,” Dahlka adds.

Hurt is senior vice president of technology and an integral part of the marketing plan, targeting and monitoring the sales effort and leading the installation of new lease origination systems. In August Jennifer Rosenberg, another former LaSalle alumni, joined as senior vice president to head the credit group completing the startup team.

In 2013, the group will start building its direct marketing team, recreating the unique calling effort used at LaSalle. Dahlka says the company asks its marketers to prospect, propose and close, with the back office providing ample support to free the marketers to concentrate on bringing in new transactions.

“In our prior life, we spent a lot of time with clients to try to solve problems for them. In a transaction business, people frequently talk about price and not much else. We really try to be problem solvers, get to know the client a little better and try to structure something that is unique and beneficial. We tend to do more transactions that don’t involve just a handful of assets. We tend to do more lease lines of credit, where there would be multiple takedowns, multiple vendors, multiple locations, so there’s a true service element that goes into it,” Dahlka reveals.

He points out that his group’s approach is consistent with that of Cole Taylor, which includes providing personalized customer service, understanding the clients’ needs and competing on the basis of prompt feedback. Dahlka also believes in having experts in place to handle specific aspects of each deal. “We invest in our personnel and want them to feel good about the value they are contributing to this process. The system we use involves a lot of hand-offs. I refer to it as a relay — when you get a fresh person, you can perform at a better level as a team. The person you hand off to has specific expertise on that particular component of the transaction,” he relates.

Growing the Business and the Bank
As president of the new group, Dahlka has double duty — to develop the equipment finance business and to help grow the bank. He explains, “Our focus for Cole Taylor is to customize our product so we can help the bank. The bank is looking to us, and its other national businesses, for precisely the same thing — to help grow the bank with good solid earning assets on a national level.”

Although the group is still in a building phase, it has found opportunities this year, purchasing business from entities it has known for many years. He notes, “We’ve been pleasantly surprised at the level of business that ‘s available to us, virtually all purchased in 2012. The advantage of starting off is that we are a fresh source of money in the national market in the leasing product.”

Dahlka says, “Our goal is to do transactions in the national market in the $3 million to $20 million range, and that includes buying of business that we’re doing today. In the bank’s local market, we’ll probably do slightly smaller deals, say in the $2 million to $15 million range. We’re here to help the bank’s clients who would like to consider leasing as a strategic financing solution,” he adds.

Cole Taylor Equipment Finance is a general equipment lessor, without specialty niches, instead focusing on transactions that have a bigger service component. The group will consider a range of industries including manufacturing, transportation, construction and some IT. To accomplish his goals, Dahlka is turning toward technology, seeing a competitive advantage in utilizing state-of-the art systems. He explains, “Some of the new systems that are available in the marketplace are fantastic. It is a massive project to convert a $30-billion-plus portfolio into a new system. It’s not unusual to cost millions of dollars to go through these conversions and months to get it done. Using new systems with a clean slate, we’re going to be very efficient. At one time, we had 100 people in the U.S. working on our volume that was about $1.5 billion. With these new systems, you can do a tremendous amount of volume with fewer people.”

As for the state of the industry as a whole, Dahlka says he is a perpetual optimist, noting, “Equipment isn’t like a lot of other assets; it wears out pretty quickly in the overall scheme of things. And, to compete on a worldwide basis, you have to be more efficient, and one way to be more efficient is to have better equipment. Strategic equipment financing can provide companies with that competitive edge.”

Staying in the Game
In addition to leading the new equipment finance group at Cole Taylor and his leadership at LaSalle, Dahlka’s storied 40-plus-year career includes having served as executive vice president of Sanwa Business Credit Corporation and as president of Sanwa General Equipment Leasing Incorporated, as well as president of MNC Leasing (formally known as Maryland National Leasing Corporation). When asked what keeps him in the game and still sincerely excited about the business, he notes with a chuckle, “Retirement is overrated! If you really like what you’re doing, why stop doing it if you still have the desire and the energy?”

More specifically, Dahlka enjoys the diversity of challenges that equipment finance brings. “What I have always found so appealing is working with different industries, geographies and customers. In equipment finance, we are constantly meeting new people, solving new problems. Early in my career I worked as an accountant, and every month I had the same set of reports to put out, and that didn’t create a level of enthusiasm for me,” he reveals.

Giving Back
Dahlka is a well-known a champion for the industry and has volunteered significant time, talent and effort to the Equipment Leasing Finance Association (ELFA), serving as its chairman from 2002 to 2003, treasurer from 1997 to 1999 and chairing several committees. He was also a member of the ELFA’s board of directors, on the finance, nominating and executive committees. He was appointed chairman of the Equipment Leasing and Finance Foundation in 2009 and currently serves as the foundation’s immediate past chairman.

Dahlka explains, “I’ve been a tremendous supporter of the Equipment Leasing and Finance Association. The association does a terrific job representing our interests in Washington and state-by-state. I’ve been honored to be involved in the foundation. I was chairman for three years, and we did a lot of good things. The main roles of the foundation are raising money and issuing the research studies. We are publishing quality reports and studies and haven’t lost a beat in raising money.” He adds, “I am a great supporter of what we do at the association and foundation, and they have been very beneficial to everything that I’ve done in my career. I’m excited for the association’s future and for the future of the leasing industry.”

Lisa M. Goetz is the editor of the Monitor.

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