Rich Doherty President, PNC Equipment Finance

The company ranked fourth in both net assets and new business volume among the bank-affiliated equipment finance companies listed in this year’s Monitor 100 — an impressive accomplishment given that just five years ago, it was thirteenth. We asked Rich Doherty, president of PNC Equipment Finance, to tell us more about the organization, what makes it tick and offer some clues to their secret of consistent growth.

Doherty has worked in the leasing industry for more than 30 years, and his enthusiasm for the business is apparent when you talk to him. He joined Pittsburgh National Bank’s commercial bank division as part of its training program in the mid-70s and later entered the leasing division, because he was attracted to the variety of financing expertise necessary to do the job. “Leasing involved accounting, legal and tax, and that appealed to me,” he recalls. “The banking industry was changing at that time, and banks were becoming more of a sales organization. I liked that aspect, too.”

Money center banks were expanding, and in 1980 Doherty joined Manufacturers Hanover, the number one bank leasing company in the world. That decade brought an environment of constant change with frequent acquisitions and mergers, and Doherty’s career was not immune.

“I’ve always taken pride in the fact that I have not changed jobs a lot, but then I look at my resume,” laughs Doherty. “I only changed employers twice over three decades, but there are a lot of companies listed there!” Just as the economic downturn was picking up speed, in 2009 Doherty arrived at PNC Equipment Finance as executive vice president. He helped with the integration of a handful of bank leasing company mergers during the economic downturn and was named president this past year.

“I am very pleased with the way PNC has withstood the tests of the economy,” says Doherty. “We didn’t skip a beat. We took advantage of the slowdown to assess what we had — a great platform and good technology — and saw it as an opportunity to upgrade certain aspects of our business.”

In October 2008, PNC announced its intention to acquire National City, making PNC the fifth largest U.S. banking deposit franchise in the country and increasing its core deposit base to $180 billion. It was this strong capital base, which allowed the company to thrive during the down years of 2009 and 2010. “We concentrated on our platform, technology and people while staying focused on our customers,” states Doherty, “and that allowed us to continue growing and lending during that time. We went from about $2 billion in volume in 2008-2009, up to $2.5 billion in 2010, and this year we’ll be above $3 billion. I expect this growth trend to continue as we go into the next year, strictly because we tend to stick to our knitting. We adhere to our fundamentals and don’t take risks by going outside our box: You know what you know, and you don’t know what you don’t know.

“Our top priority is to create an outstanding client experience,” continues Doherty. “This focus has driven the company’s growth and guided the successful integration of the two platforms resulting from our merger with National City. Another strength was realized from the diversity of that merged platform. Our lines of business range from vendor finance to specialty finance (such as corporate aircraft) in addition to our fundamental business of serving the customer footprint of our parent, PNC Bank. That diversity and product line enabled us to continue growing at a time when some businesses were a little soft. We created a discipline that matches where the bank is going. Our mantra right now is “go to market as one” — to have a consistent customer experience and approach, so the customer knows what he is going to get. Bringing these three things together has really helped us grow. Since 2009 our production is up 20% a year, and that’s pretty good considering where the rest of the industry has been.”

Diversity Leads to Growth
Expansion into new markets, such as vendor finance and sports/entertainment, has also been a driving factor in the company’s ongoing success. A good vendor platform with solid technology allows vendor clients to access their information and know where it is as it moves through the system. “To strengthen our vendor business, we realized we didn’t have the marketing capacity in-house, so we brought in a few strong people who had specialized in business development on the vendor side for other organizations. This really gave us a leg up,” remarks Doherty.

In the process of pursuing golf financing, PNC management realized that the golf industry was part of a bigger picture and formed its Sports and Entertainment Finance Group. While financing golf carts and turf equipment, the company saw it was financing a lot of the same products for sports franchises and universities. “We’ve done a couple of major scoreboards, such as the Washington Redskins’ scoreboard, and saw how the customer experience has changed at stadiums,” conveys Doherty. “Franchises want to provide a lot more information to the fans while they are in their seats, and a lot of those items are financed through vendors, so our experience in sports and entertainment is enhanced by our vendor financing capability. We can help universities, which earmark much of their major capital for stadiums and buildings, by providing a third-party source of financing.”

Doherty attributes the parent company’s strength to its leadership team, headed by James Rohr, chairman and chief executive. “For the past ten years, they have remained focused on the customer, the community and building a great employee culture,” affirms Doherty. “We have a strong balance sheet and capital to lend. We are well-regarded and competitive. This is a by-product of Jim’s leadership, and it enables us to capture market share. His plan is to encourage growth by bringing new customers into the bank and letting them see how good their experience is. When you put all that together, it’s hard not to be successful.”

The leasing company works in partnership with PNC’s bankers. “With 90% of Corporate America using equipment finance or leasing, we know we can create value and enhance revenue for our bankers,” insists Doherty. “A new client may not be eager to move over his entire banking business, but he’ll give us a one-off opportunity and see how well we handle it. We’ve been able to team with the bankers to develop goals and marketing plans, and we go to market as one.”

Communication, Culture and Coaching
Good old-fashioned communication is the key to PNC Equipment Finance’s customer experience. “When we hand off transactions from sales to credit to documentation to funding, our people take a few minutes to call the customer to reinforce expectations and make sure we have the details right,” says Doherty. “We think it’s fundamental, but a lot of companies have lost sight of that.”

The work culture is also important, and PNC prides itself on providing a workplace where employees are encouraged to balance work, home and community. “When you work for a good organization, it’s easy to get excited about the future,” stresses Doherty. “Leasing is an industry where people like to give back, so it doesn’t surprise me to see our employees getting involved in our communities. Our employees give back without any push from executive management at the bank, and it’s a privilege to work with people like that. But that’s leasing — a great group of people!”

PNC offers corporate-wide training for new employees and ongoing educational programs within the leasing division. “You have to step back and ask yourself if you are teaching your employees where you want business to go and what it takes to be successful in this economy. We are opportunistic about hiring — if we see established performers are available, we try to bring them into the company, whether their expertise is in sales, credit, documentation or whatever. We spend time coaching our sales force by partnering average players with above-average players. We just created a new career development position to help employees identify career paths and make plans to progress through the company. If an employee shows the initiative to move forward, we’ll provide the training to help him or her get there.”

What the Future Holds
In August, PNC surveyed small- and mid-sized business owners to get a sense of their outlook on the economy. The key findings indicated that respondents were less optimistic about their own company’s prospects during the next six months with eight out of ten saying they were unlikely to take out a new loan or line of credit. However, capital spending plans held steady with technology equipment leading the list of investment priorities.

Over the next 12 months, PNC Equipment Finance will focus on two key objectives: to continue improving the customer experience and to make technology an increasingly bigger part of the business. “This economic environment provides great opportunities for making customers happy, and technology can make a big difference in terms of customer service,” expresses Doherty. “Customers want to downsize their corporate finance and operations departments, so the more information they can get online from us, the easier it is for them. When we get these two aspects really lined up, I expect our business to take off faster than it already has.”

PNC will continue to follow its marching orders: Go to market as one, bring in new customers and remember the core values. “I’m bullish on the outlook for PNC Equipment Finance, because each day we become more focused as our teams work together,” declares Doherty. “Our efficiency has improved dramatically quarter over quarter. We just had our best month ever in September, which is unusual since in this business, the best month is normally December. We are ahead of plan in every metric we have, so the future is bright. It’s just a matter of executing. I don’t expect any help from the economy at all. If we continue to execute, stay focused on the client, communicate internally and upgrade people when we have the opportunity, I expect PNC Equipment Finance to grow through 2012 and 2013.”