TD Equipment Finance

by Stuart P. Papavassiliou January/February 2010

Anthony Sasso is upbeat about the future. And these days, that’s saying a lot. As the leader of TD Equipment Finance, he shares his outlook for the equipment leasing industry as a whole and where his operation fits inside of the TD Bank franchise. Armed with a customer-centric culture, committed leadership and a strong team of professionals, Sasso finds it somewhat difficult to contain his enthusiasm.

When the Monitor last spoke with Anthony Sasso in 2006, the then leader of Commerce Commercial Leasing was spending the bulk of his professional life on the road and working with his sales force to uncover new opportunities. While many things have changed since those days — Commerce’s joining with TD Banknorth under the brand name TD Bank and the integration of the two leasing operations — some of the particulars have remained the same. For instance, Sasso is still at the helm of the equipment finance shop and still finds himself on the road much of the time.

“I would say my travel is just about the same as it was in 2006,” Sasso notes. “But you have to remember one thing … with the joining of Commerce Commercial and TD Banknorth, our footprint is now from Maine to Florida. And that means the distribution channel for product is far greater and getting out there is important.” And with today’s different economic landscape, Sasso also finds himself concentrating on TD Equipment Finance’s strategy. “Planning where we can build and add to the business is more of a focus than it was in 2006.”

And while TD Equipment Finance continues to ascend in the annual Monitor rankings, Sasso is not shy about giving credit where credit is due. The credit, he says, is largely attributable to Walter Owens, head of TD Bank’s commercial bank in the U.S. “Walter is a brilliant strategist… He’s a great leader and quite frankly, he knows equipment finance very well. He knows the business is a strategic fit to the overall commercial bank.”

Owens, who joined the TD Bank organization in 2008, fortified the commercial bank’s leadership with the appointment of asset-based lending veteran, Barry Kastner. As Monitor readers may remember, Kastner, the former chief operating officer of Wachovia Capital Finance, was brought on board in the fall of 2009 to head the bank’s ABL unit as well as to oversee TD Equipment Finance. In a recent interview with ABF Journal, the Monitor’s sister publication, Kastner told readers of his excitement to be involved with the equipment finance team. But, Kastner emphasized, TD Equipment Finance would remain Sasso’s dominion.

And while it’s clearly still his game, Sasso is charged with having the equipment finance shop in full alignment with TD Bank’s “America’s Most Convenient Bank” culture. Sasso approaches that directive seriously and from two fronts. He says, “I’m always thinking about how TD Equipment Finance fits into the bank’s overall strategy. If you look at our business model, we’ve never been a silo business within the commercial bank… We have a strong connectivity between our sales team and our commercial banking partners. About 70% of our business provides leasing solutions to existing commercial clients at TD Bank.

“Of course, the other part of our model is direct origination and, in 2009, given the dislocation in the markets and liquidity issues experienced with some of the other banks, we were out there rather aggressively seeking new equipment financing opportunities … but with a total bank solution. On those calls, we brought along a commercial lender and we discovered some opportunities — sometimes it was a commercial credit line or a commercial mortgage and sometimes we closed a leasing deal as well. In the end, we had very positive results.”

By approaching the market through existing banking relationships in concert with direct origination efforts, Sasso is confident he’s adding franchise value and therefore fulfilling on the TD Bank strategy. And TDEF’s value doesn’t end there. “We’ve also been increasing our role as equipment finance experts for the commercial bank. Our asset managers are consistently engaged with lenders providing expertise in terms of evaluating equipment,” he adds.

And it’s all happening in TD Bank’s footprint. “That’s right,” Sasso affirms. “We’ve always been a footprint player. The same was true of our legacy banks and that approach just makes sense for us. And these days, it has really helped us on the credit quality side because we are doing business with companies that are known within our footprint in industries we know and understand.”

Looking beyond the footprint and his institution to the equipment financing industry as a whole, Sasso says, “I’m thinking we’ll start to see an increase in the demand for capital equipment in the later part of this year. Of course there are a lot of macroeconomic issues, which will factor heavily for that to become a reality. But I think you have to peel back the onion and look at the sectors to find the opportunities as well. From where we sit, we’ve seen an uptick in spending in healthcare equipment and we’re seeing the same from the energy sector … particularly with solar equipment. We’re seeing some good signs from the municipal leasing market as well.”

But for Sasso, the greater issue is how the leasing industry deals with current economic realities and he sees success lying in the return to what he calls normalcy. He notes, “What I’m seeing lately are transactions that are now priced to the risk in the deal. And, I’m seeing them structured properly. Back in 2006 when we spoke, pricing wasn’t driven by the credit risk … it was driven by a very competitive market. At TD, we didn’t price that way and we didn’t compromise on structure. But today, as I look back over the last 12 months, I really do see a return to this normalcy I mentioned. And when it comes down to it, my chief concern is that things will move away from this positive direction.”

In addition to adherence to sound pricing and structuring practices, Sasso’s other hope for the equipment finance industry is a rebound in capital equipment spending in key equipment sectors like trucking, manufacturing and printing. “That,” he says, “will be a function of when those industries return in terms of their own economics.”

However harsh the economic lessons have been of late, TDEF has weathered the last several quarters relatively well. “Well, it comes from sticking to our knitting,” Sasso explains. “Our bank has some great resident expertise in a number of disciplines and industries, so when we underwrite a deal, we will engage with those different areas to provide us with that expertise. That way we can just stick to what we know best.”

Still, Sasso says, there is room for expansion. “We have a number of new initiatives in the strategic planning phase and it’s a bit early to talk about those right now. I will say that the work we’re doing in the energy space will be one initiative we’ll look at more in 2010. And more and more, we’re engaging with the commercial bank bringing expertise on equipment and proper equipment financing structures. Of course, there are a lot of opportunities to expand our sales presence as the bank expands in certain geographies.”

As for the future of TD Equipment Finance, Sasso remains upbeat. “I’m very optimistic about 2010. Our ultimate parent, TD Bank Financial Group, has a strong balance sheet and is one of the few Moody’s triple-A rated institutions in the world, and that means we have the capacity to do larger transactions. We have very strong leadership that understands and values our business. And, I’m privileged to have a team of world-class professionals … it’s a team that can execute.

“With all these things in place,” Sasso concludes, “I’m more than excited about 2010 as well as the years beyond.”

Stuart P. Papavassiliou is senior editor of the Monitor.

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