Adam D. Warner President, Key Equipment Finance

When Paul Larkins assumed the responsibilities of leading Key National Finance, the company named Adam Warner as Larkins’ successor. Warner’s proven track record and willingness to expand his responsibilities made him the natural choice to lead Key Equipment Finance’s global powerhouse.

From the Ground Up…
Warner’s equipment leasing career began at McDonnell Douglas Finance and spans some 22-plus years. When asked about his career advancement, Warner attributes his professional successes to his willingness to take on different roles, “I began as an accountant,” Warner recalls. “That’s how I learned the business — from the ground up. From there, I ran operations and credit and collections, and I did that for the first 10-12 years of my career.”

In 1995, while at Mellon Leasing, Warner moved away from his operational responsibilities and accepted a job involving sales with select accounts. By 1997, he was responsible for Mellon’s entire sales and marketing effort — a position he held until he joined the Key organization several years later.

In 2001, Warner was recruited by Key to run a small-ticket unit selling the leasing product to the bank’s customers. “It was my first full P&L responsibility, even though it was a small business at the time,” Warner notes. “It was what I would call a boutique, but my charge was to take it out of the bank footprint and into the vendor world.” Over time, the unit grew from a “boutique,” generating around $50 million in sales, to a significant piece of Key’s equipment finance business generating several hundred million in sales.

Warner was then asked to manage an important acquisition for Key — an event that proved to be equally as important for Warner’s career. “We acquired American Express’ finance company and brought it into the business. It was a very successful acquisition from a financial perspective. After that was completed, I took on other responsibilities like our direct sales group, mid- and large-ticket, as well as our corporate aircraft group. Most recently, I took on responsibility for the rest of our company, which is really our global vendor organization. That’s the Adam Warner story.” he explains.

The Key Equipment Finance story began in 1973 when Key went to market as KeyCorp Leasing comprised of a direct sales group for the middle market. “There wasn’t a vendor shop at the time — the company grew the vendor business organically under Paul Larkins. But the company was started by Rick Wolfert, and Paul joined as national sales manager,” Warner says. Eventually, Larkins took over the entire organization and, in 1997, orchestrated the acquisition of Leasetec, an event that marked Key’s first foray into the vendor finance business.

With the Leasetec acquisition, the company became a direct sales organization and a vendor organization but still lacked a small-ticket business. The acquisition of the American Express Business Finance organization rounded out Key’s offerings in equipment leasing. “What you now have with Key Equipment Finance is the full breadth of service — we can finance a single piece of office equipment, say a work station for $20,000, and we finance a complete furniture installation of several million dollars. There isn’t an area of the market that Key isn’t covering,” Warner says proudly.

Larkins Lays the Path to the Future, Warner to ‘See it Through’
As Warner assumes responsibility for the whole of Key Equipment Finance, it is almost impossible not to ask him about Larkins, his predecessor. “When it comes to Paul’s leadership, it’s not over the top to say that he’s really an icon in the industry … as former chairman of the ELFA’s board of directors, Paul wields a lot of credibility,” says Warner.

“Paul left some big shoes to fill! But what he has done for me and the company — in a sense — is laid out a path for success by removing barriers in the organization and repositioning all of our products under one banner, the Key Equipment Finance brand.

“Although we’ve grown organically, we’ve also grown through some acquisitions and when you grow that way, you can end up creating silos or barriers within the organization. In some areas, you create great products and in other areas, you develop some great capabilities. But those products and capabilities are being offered to customers of those particular units and that can be problematic. So my focus is bringing down the barriers and doing that under a very efficient cost structure,” he says.

“Ideally, I’d like to get our organization so that we have a 1:1 sales to back office ratio. I see us growing our shop significantly in an originations capacity, while at the same time, becoming even more efficient through process and technology. We’re out to accomplish it with a stable cost structure. That’s my focus in 2008 … bringing the organization together under one banner.”

Attaining Success at Key — A Solid Bet
What does it take to discover the path to success in the Key organization? In Warner’s case, he says his own success stems from a fundamental approach concerning professional development. “Probably one of the first things is the ability to look outside of your current environment and ask yourself, ‘What’s my next assignment?’ If you think you’re tied to a specific location or a specific job or function, then you narrow your world,” Warner explains.

“But when you say, I’ve been doing credit for awhile now — I’d really like to explore the operations side of the business, we like that kind of stuff. We’re ready to invest in someone who may not have all of the credentials, but is a really good leader or developer of talent. We’re interested in moving them into a world that expands their universe — a world that prepares them for a more senior role in the company.” Warner pauses then adds, “I guess what I’m saying is if you’re willing to bet on the company, the company is willing to bet on you.”

And clearly, with Warner as its leader, Key Equipment Finance treats employee development as a top priority. “We have a unified message in our company about the need to attract and retain the right talent, and I think we’re a leading edge company when it comes to developing a strong employee base,” says Warner.

“We’ve got good numbers when it comes to diversity and employee turnover and it’s because we make investments in employee development programs, which help us attract and retain talent.And this can be tough because you can’t put a tangible revenue number on things like creating a training center such as our Learning University,” Warner adds.

“But we’ve done it and it has worked really well for us … and when you look around Key Equipment Finance at say mid-level and senior managers, about 80% plus are internally developed candidates,” he explains.

Recently, there’s been a great deal said about the so-called “graying of the leasing industry.” From Warner’s perspective, Key is at the forefront at figuring out how to manage a cross-generational workforce. Warner poses the following challenge: “Today, our workforce is primarily comprised of baby boomers, but that won’t be the case by 2012 when Gen-Y comes into the picture to replace those retiring from the workforce. How can you attract those candidates without alienating your current workforce?”

He adds, “We’re looking at what kinds of work spaces and schedules work best to have those employees collaborate better. Who can work virtually rather than in the office… those things weren’t on our radar screen five years ago and now they are a part of how we grow our organization. I haven’t been at a management or leadership meeting at Key where we’re not talking about attracting and retaining employee talent. It’s a high, high priority.”

Pointing to his own experience at Key as a native Chicagoan, Warner has worked his way “back home” to run the business. “That’s something unique about Key and ten years ago, that may not have been the best model. We’re headquartered in Superior, CO, and I’m working out of Chicago — it’s a big origination platform for us — but it’s not our headquarters.”

Warner explains, “In today’s environment of being virtual and traveling all the time, it works. I’m in Superior about every other week, but I’m on the road virtually every week. When, I’m not in Superior, I’m heading out to meet with our clients in various locations around the world.” He admits, “That’s my favorite thing to do. Our people really know how to manage their relationships, but I think customers really appreciate it when someone who runs the business takes the time to tell them how valuable their business is to our organization.”

With hometown pride he adds, “From a travel perspective, it’s hard to find a better spot than Chicago. If I need to go to Sydney or Hong Kong, it’s a direct flight … the same holds true for London or Denver.” It all works well for Warner and Tammy, his wife of 27 years, as well as their family — his daughter, Violet, who is a recent law school graduate and his 21 year-old son, Jake, who is working and going to college.

In terms of life away from the office, Warner sees himself pursuing involvement with charitable organizations as well as his alma mater, Elmhurst College in Illinois. “When I was in New York, I was involved with several organizations and that’s something I’ve missed since being back in the area. That’s a real focus for me right now,” Warner says.

KEF’s Direct Sales Group — Transcending the Vertical
On Key Equipment Finance’s Direct Sales Group, Warner notes, “It’s a big piece of our organization that fits in its own vertical. Our direct sales group is one of the largest origination engines in the company. Whether we’re in the bank footprint or out of it, going to end-users directly and soliciting them for their business brings a value to the organization that could get missed if you only align in verticals organized around industries.

“If you’re only vertically aligned around vendors, sometimes a salesperson will move on after they’ve done say, the trucking deal … they may not exploit all the opportunities that exist based on the fact they’ve just established a relationship with that customer. We view our direct sales group as a critical component of our growth and intend grow this group significantly in 2008.”

Beyond Key: Thoughts on the Industry
After ten years of what Warner calls “active participation” at the ELFA, recently Warner has been appointed to the association’s board as well as to its finance committee. “These appointments give me the ability to understand what other companies are dealing with,” he notes. I think association involvement helps position our industry in the right way in today’s market, and under Ken Bentsen’s leadership we’re focusing on the right areas — the legislative community. The challenges for the industry are around the legislative and tax environment, and there’s been a much more dedicated focus on those particular items.

“From my perspective, I think it’s critical that companies not only join the ELFA, but that they actively participate … and, that they enroll their people into specific committees and business councils. Things like the Young Executive Forum are important and bring us full circle to issues like developing future talent in the industry. Besides, younger people in the industry — and by younger, I mean people who are new to the industry — bring fresh perspectives to what we do.”

And Warner has little to no time for those in the industry who perceive a threat in sending their employees to association conventions and other networking events. “If you’re afraid of that, you need to confront whether or not you’re doing the things necessary to create the right environment for your own company. If you’re not investing in your own talent, and your people hear that other companies are, they’ll gravitate toward those companies anyway,” he warns.

As for what lies ahead in 2008, Warner senses the industry will continue to feel the ripple effect of the subprime debacle well into the first quarter. Warner says “We’re going to continue to see some shakeout, particularly from parent companies that have some bad decisions to explain. Their finance companies might be doing a great job and have little exposure — but in situations like these, it’s all up for grabs.”

For the bank-affiliated equipment leasing companies, Warner explains the importance of taking the good with the bad. “Let’s face it, the banks come under more scrutiny — the OCC doesn’t look at the manufacturers’ finance companies. There’s a good side and a bad side to that. The bad side is that there’s a cost to managing the regulatory and compliance aspects of being a bank-affiliated business. At the same time, if you’re looking for a warm and fuzzy feeling about who your finance company is, you can feel pretty good about the fact that a bank-affiliated company has gone through a lot more scrutiny.”

When it comes to being associated with the industry, Warner sees it as a one-sided proposition with the good overwhelmingly outweighing the bad. “What still excites me? We’ve got thinkers in this industry and at Key, we’ve got people actively involved in the industry. There are folks who have worked their way through different economic cycles and have built some very strong companies out of it. There are a lot of survivors in this industry,” he notes.

“While some markets may be troubled right now, this industry has been pretty resistant to the economic cycles. I think we may be in one of those economic troughs and we probably haven’t yet hit bottom … but those who can create the right strength within their organizations are likely to survive these ups and downs.”

As for Warner, he anticipates an exciting future for Key Equipment Finance. “We’re extremely well positioned for 2008 … and for the years ahead.”