Leading Key Equipment Finance with a Focus on the Longview
BY RITA GARWOOD
The last time Monitor profiled Adam Warner, he had just taken the reins of Key Equipment Finance, and the industry had yet to be rocked by the Great Recession. Today, as Monitor’s inaugural Veteran Icon Award winner, Warner shares the vital lessons he has learned over the last decade.
The equipment finance industry has experienced many changes since Adam Warner, president of Key Equipment Finance, joined it in the late 1980s: banks have become more active in the space, tax reform strategies and accounting changes have occurred and the collateral financed has expanded to include service- and usage-based models.
Shortly after Warner was appointed to his current role, the industry faced the Great Recession. “The industry is a lot like a fighter who gets knocked out with punches all the time and keeps getting back up,” Warner says. Despite this rocky start, Warner managed to weather the storm and lead Key Equipment Finance to generate the highest returns in its history.
When our editorial board selected Monitor’s inaugural Veteran Icon Award winner, reserved for leaders who have seen it all and exhibited the tenacity to not only survive but thrive under pressure, they knew Warner was the perfect recipient.
“It was fascinating to witness Adam in action when he became president of Key Equipment Finance in 2008,” says Peter Bullen, EVP of Key Equipment Finance. “Banks were looking to conserve capital and only invest in businesses where sustainable returns could be earned and employees were wondering if they were going to have a job. I can’t imagine a more challenging time for a new leader to take charge, but Adam was certainly up to the challenge. He spent considerable time in Cleveland articulating Key Equipment Finance’s value proposition to not only our clients, but to KeyBank as well. He created a new strategy which was in-line with Key’s relationship focus while consistently maintaining visibility with employees and providing a reassuring voice that we would thrive. And thrive we have over the last 11 years!”
Amy Gross, EVP of Key Equipment Finance was also impressed by Warner’s ability to lead the company through that rocky period: “A lot of what defines a leader is how he or she responds to and recovers from challenges. When I joined Key in 2009, the industry was obviously going through a lot of turmoil … I observed how Adam handled the challenges at the time, maintained the company’s connection with KeyBank partners and refocused the business for growth and success over time.”
Warner often looks back on the early days of his presidency as they taught him valuable lessons that forever transformed the way he led the company. “There’s an old saying: don’t waste a good crisis,” he says. For Warner, this means framing business decisions around how they will affect his successors. “I think about that a lot. Decisions that I’m making today for our business may seem great short term, but what is my successor going to say about me and that decision when they inherit it someday?”
Since the recession, Warner has shifted the business to focus on return levels. “It’s not important to be the biggest, it’s important to be sustainable. It’s not all about chasing volume or revenue, it’s chasing profitability,” Warner says. “Frankly, we had to shrink our organization to grow it. We had to exit some areas to generate better returns for our organizations, so we shot some revenue, but our return levels skyrocketed because of it.”
During the process, Warner learned that “tenor isn’t our friend,” when it came to long-term decisions. “Making an investment in something that has a 10-to-15-year horizon for a good return is difficult because all the best forecasting tools in the world aren’t going to tell us what’s going to cause the next big economic downturn, and everything that seems great for the short term will have longer-term applications.“
Prior to 2008, I’m not sure that was a normal discipline — it wasn’t for me,” Warner adds. “I was very focused on the here and now and achieving our three-year objective, not what an investment will look like 10 years from now.”
This method has become even more important now as recession warning flags begin to unfurl. “Today, we’re generating the best returns in the history of our business,” Warner says. “However, we have to consider what our current business would look like if it were stressed to the level of an economic recession. We spend a lot of time doing that to make sure we remain profitable and able to manage our credit portfolio and the size of the organization. It’s a discipline we do every six months — we stress our entire portfolio and ask, ‘What will it look like?’”
Downturns have taught Warner that corollary risk is as important, but unfortunately less understood, than direct risk. “We think a lot about the oil and gas space — it’s always under stress, and it’s highly cyclical. But what about all the industries that are in that supply chain? Not only the trucks that use oil and gas, but the rail cars that deliver oil and gas and sand for fracking, and the jets that use oil and gas,” Warner explains. “When one industry gets hurt, there’s this ripple effect that’s like a bomb fallout. It may not be the center of the explosion, but it’s out there and it gets hit. If you’re thinking, ‘We boxed our oil and gas concentration,’ but you’re only looking at oil producers and field services, then you’re not looking at a whole picture.”
Another vital aspect of big picture that Warner used to strengthen the business during the Great Recession was building a solid team. “Adam was very deliberate in adding leadership talent to Key Equipment Finance to refocus the business and create a framework for profitable growth in existing and new areas, like clean energy,” Gross says. “Talent development was also a focus for Adam to develop bench strength in his organization.”
To Warner, building a strong team is the most important aspect of his job. “When I think about what I do for Key Equipment Finance, it’s akin to a general manager on a baseball team,” he explains. “In baseball, you get all the right coaches and players in the right spots, and they do the work for you and rack up a lot of wins if you did it right.”
Warner attributes his ability as a general manager to the variety of roles he has held during his career, including accounting, operations, credit collections, sales and marketing and other leadership positions. “I think that background has helped me understand how to hire the right people to manage those disciplines. I’m a little biased when I say this, but I am a reflection of my team, and my team is the best in the industry. I’m proud of my team — I’ve got phenomenal performers across the board.”
Warner also wants his leadership team to learn from varied experience. “Adam is very adept at steering Key Equipment Finance in a manner which positions the company for success and keeping his leadership team engaged in the process,” Bullen says. “One technique he has used is to provide leaders and employees at large with new opportunities. Pretty much every person on his leadership team has taken on new responsibilities or businesses over the years, which has resulted in a very well-rounded group of leaders. He is not overly concerned if you do not have the technical knowledge to manage a new business but is more focused on your leadership capabilities and ability to learn. As a result, we have all grown and become well-rounded executives under Adam’s guidance.”
“As a woman, I feel very supported by Adam. He has a very diversified executive team and openly promotes diversity and inclusion in our marketplace,” Gross says. “Adam leads his organization with positive inspiration, a drive for results, honest values and open communication. He hosts his executive team quarterly to review business results, business priorities and to discuss strategic initiatives. These sessions provide a forum to synchronize the team and drive cross functional collaboration. He is thoughtful in his approach and always acts with the highest level of integrity and values. Additionally, Adam strives to maintain connections both internally within our parent bank and externally with our most valued clients. I truly enjoy working for him and have learned a lot from observing his leadership style and approach.”
Hiring for culture is a large part of Warner’s leadership style and the most important aspect of his job. “We use a term here at Key about being a culture carrier,” Warner explains. “What kind of shadow are you casting in the organization, and does it align with the culture that we want? Our culture is focused on shareholder value and doing the right things for the client, but it’s also about teamwork, respecting everybody, making sure that everybody understands their value in the organization. Our receptionist is as important as me, and we make sure everybody understands the value of their contributions to the organization and that they’re appreciated.”
With the right roster playing on a sustainable model, Warner’s team is ready to take on the digital future. “Millennials are now financial decision makers at their companies and for them, the personal banking experience has been mostly digital: they deposit money or pay bills electronically, and they certainly do not wait for a courier to deliver paperwork necessary to complete a transaction. The equipment finance industry has been slow to pivot into a digital client experience. We’re very focused on building digital solutions and bring a more consumer-like experience to Key Equipment Finance customers.”
Warner is working with his team and his bank support partners to enable the next generation of commercial transactions in equipment finance. •