It’s rare when a newly appointed executive of a bank’s asset-based lending team shares so openly about his first interview with the company’s top executive. But TD Bank’s Barry Kastner does so without qualm. We asked Kastner if his new employer’s reputation as being the “America’s Most Convenient Bank” with a strong focus on the customer experience extends to TD Bank’s commercial borrowers as well. “I can tell you, it absolutely does,” he says. He remembers first meeting with Bharat Masrani, the bank’s president and CEO. “It’s an easy question for me to answer because in our first meeting, Bharat asked me, ‘How can you make asset-based lending fit in the strategy of America’s most convenient bank?’ I’ve always been very customer centric, so right then, I knew it was the right fit.” But Kastner’s is a story that begins more than 33 years ago.
A Summer Job Launches a Career
Like many in the asset-based lending sector, Kastner explains his career came along by accident. Upon graduating from Hofstra University, the native New Yorker took a summer job at a small, growth-oriented asset-based lender and factor — Congress Financial. Kastner remembers, “My boss told me at the time, ‘Let’s talk sometime after the summer and we’ll see how you like the job and how the job likes you.’” As Kastner puts it, “That summer lasted 33 years and I was fortunate to wind up with a bunch of great people in a great lending environment. We grew to be a strong contender in many ways, and I think Congress really set the tone for today’s asset-based lending business. I’m very proud to have been a part of that.”
As for his decision to pursue asset-based lending, Kastner recalls two significant mentors at Congress Financial. “One was Bob Miller who was very customer-focused and very new-business focused and the other was Bill Davis. Bill was very credit disciplined, very organizational in his approach and he honed my leadership skills. I worked closely with both and through the years, in my own decision-making process, I ask myself, ‘How would they have handled this situation?’”
Kastner’s ability to assimilate both approaches served him well. In time, the college grad turned collateral analyst worked his way through the field examination side of the business into portfolio management and eventually to business development where, as Kastner puts it, he “found his stride.” From there, he was promoted to COO of Congress Financial until its merger with Wachovia where he once again concentrated on business development management. And while he’s drawn to that side of the business, Kastner re-emphasizes the importance of a balanced approach. “It’s always held my interest, but I have a strong credit discipline and I still think that my credit training and my years as a portfolio manager and COO gave me the ability to strike the right balance between the two — that’s what makes for a healthy lender and a healthy career.”
Taking ABL to the Next Level
Since its acquisition of Commerce Bank in 2008, TD Bank’s presence in the market is something of an anomaly with regard to the traditional image that many banks seek to convey. So what was it that made TD Bank the “right fit” at this point in Kastner’s career? He explains, “The bank was looking for an experienced asset-based lender that could take the shop to the next level and I found myself on the same page as far as the bank’s culture, lending philosophy and appetite for growth. The bank has plenty of capital to lend, and I’m impressed with the vision that it has. Beyond that, it just felt right and I’ve learned to trust my gut along the way.”
Kastner notes that Walter Owens’ leadership also factored heavily into his decision to join the bank. “As TD Bank’s head of commercial banking, I have a tremendous respect for Walter. In my view, he’s one of the few visionaries in this business. When we started talking, I found we were on the same page with regard to where we would take this business if you started with a clean sheet of paper. And, I give him a lot of credit for having the foresight to actually expand an ABL business at a time when others were retrenching. For Walter, ABL is a core business for a growing commercial bank. And that’s what TD has today … a growing commercial bank.”
And, Kastner notes, as an ABL, he finds it easy to adapt the bank’s retail culture, recognized for its legendary customer service to its commercial borrowers. “We are intent on delivering on what we propose and in giving our potential borrowers an early decision. We value our customers’ time and give them complete visibility to senior management, and we want our customers to feel as though they are our only customer. I’ve used this approach in the past and it’s consistent to the way TD treats its customers at all levels, both retail and commercial.”
A Strong Eye on Growth
As Kastner looks to 2010, he explains it’s all about growth. And true to form, he says, “I’m talking about smart growth with a strong eye on credit quality. And these days, we’re continuing to close several middle-market deals that we’ve sourced both externally and through our commercial banking partnerships.
“We’ve also bought into several syndications and I think we’re proving ourselves to be good, reliable partners, and we expect that this will put us in a position to lead some larger deals in 2010. But certainly we have that strong eye — just as the rest of the bank does — on growth going forward.”
In the meantime, Kastner has managed to leverage the resources of the bank’s regional commercial banking group to cover its footprint that extends from Maine to Florida as well as alter the ABL group’s model with regard to its personnel. “I’ve changed the model from where lenders cover all of the functions from origination through portfolio management to a more typical model used today in ABL. I’ve separated the groups into business development, underwriting and portfolio management. We’re looking at the capabilities of our people and we’re supplementing our already strong team with new hires both regionally and with the executive team in New York.”
Currently, TD Bank’s team consists of Kastner, who also oversees the bank’s equipment finance group, as well as Rich Scala who heads portfolio management and Tom McGrath as the group’s managing senior credit officer. John DePledge and Jim Carr serve as regional team leaders for business development in Philadelphia and portfolio management in Burlington, MA respectively. As Kastner notes and recent industry headlines confirm, the group is still in growth mode, just having opened an office in south Florida in mid-December.
ABL: Beyond the Bank
As for the asset-based lending industry as a whole, Kastner sees the upward trend toward growth in new commitments and the downward trend in non-accruing loans to continue. But again, it’s a question of striking the right balance. “The challenge will be for us as asset-based lenders to remain disciplined and balanced, and I see a return to a more rational, collateral-driven approach to ABL, avoiding the more aggressive products of recent years.”
Just how strong will the industry’s collective memory be as it relates to the snares of these products? Kastner says, “Well, we’ve already seen some tendency to provide over-advances and things like FILOs and that’s just not a good thing for our industry … these are the things we are going to try to resist.”
Beyond loan structures, Kastner comments on the current realities of the industry as he sees them. “When you think about it, there are very few Tier I asset-based lenders operating today and I can almost name them on one hand. Everyone recognizes that there is room for more players and I think companies are starting to evaluate where they want to be. Those of us with capital can work toward elevating ourselves into becoming a Tier I lender.”
While others might be struggling with securing and deploying capital, Kastner sees TD Bank’s asset-based lending group in an enviable position. For an industry veteran like Kastner, what could be more convenient?
Stuart P. Papavassiliou is the senior editor of ABF Journal.