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Capital One: On the Move, In All Directions

Date: May 22, 2013 @ 07:00 AM

In the fall of 2011, the commercial finance industry learned that Dean C. Graham had been appointed to lead the newly created Commercial and Specialty Finance business for Capital One Bank. Some 18 months into his tenure, ABL Advisor had the opportunity to sit down with Graham to find out about this division’s vast and varied accomplishments and to gain his perspective on the commercial finance industry at large.

ABL Advisor: We have a sense of your background, which includes experience gathered at various commercial finance companies such as Heller Financial and Capital Source. We also noticed that both your bachelors and masters degrees were earned in the humanities – in history and philosophy – prior to your attending law school at the University of Virginia. Can you tell our readers what it was that drew you to a career in commercial finance?

Photo of Dean Graham - President - Capital One Commercial and Specialty FinanceDean Graham: My background includes degrees in the humanities and law. But for my entire career, I’ve had an interest in economics and commercial transactions. After college and before law school, I worked on Wall Street for a couple of years doing mergers and acquisitions. When I graduated from law school, I came to Washington and worked in the legal profession where I was focused on commercial transactions, initial public offerings, mergers and acquisitions and corporate securities.

So, in my professional endeavors, I have always been focused on commercial activities in my professional life in one way or another. Those experiences are what really drew me into the commercial finance business.

ABL Advisor: What was it about the opportunity at Capital One that attracted you?

Graham: In short, I think the opportunity to come to Capital One was compelling for several reasons for me and my entire management team. First, Capital One has a nationally recognized brand name. Second, Capital One has a tremendous balance sheet -- one of the best in the banking business. And third, the opportunity to grow a national, large-scale commercial lending business with top-tier talent in the industry was tremendously compelling. This opportunity was just too good to pass up.

Over the last 18 months, we’ve been able to put together a best-in-class commercial finance management team focusing on specialty sectors. Our team is filled with seasoned industry leaders who have been recognized in their particular specialties for a long period of time. And I think that’s a testament of the opportunity here at Capital One; the fact that so many great leaders in their respective industries decided to come to Capital One and participate in growing the commercial business.

ABL Advisor: Please share the business lines that make up Capital One’s Commercial and Specialty Lending business as well as its target markets and coverage from a geographic standpoint.

Graham: The Commercial and Specialty Lending business is a very broad-based nationwide business that covers a variety of specialty sectors. At its core, our activities across the entire business focus on providing middle-market companies with access to capital to grow their businesses. Our specialties are quite diverse and they include healthcare lending, security/government defense, equipment finance, consumer and commercial rediscount, specialty cash flow and several other specialty niches. We also have a nationally known municipal finance and asset-based lending team.

We also recently expanded our offerings to provide senior secured warehouse facilities to other commercial finance companies throughout the United States through our commercial lender finance group. The commercial and specialty finance business is broad based and services entrepreneurs and middle-market companies across many sectors of the U.S. economy. Capital One also derives tremendous leverage across our middle-market business where we have branch offices in different geographic regions throughout the country.

ABL Advisor: Could you tell us more about your recent announcement about your commercial lender finance team? Is this a new offering or an expansion in an already existing business?

Graham: Capital One had been in the commercial rediscount business in the past. We recently expanded our team by bringing on a number of senior executives and the reception has been very positive. These are professionals who are nationally known and with whom we have worked with for more than a decade and I think that this is emblematic of what I mentioned earlier … Capital One’s ability to attract top talent and its ability to find specialty lending areas where it can deploy its balance sheet to middle-market customers in the U.S.

ABL Advisor: Now that the first quarter is well behind us, could you give us your sense of how the first three months of 2013 played out in terms of both asset-based lending and equipment finance?

Graham: When I look across all of our lending activities in Commercial and Specialty Lending here at Capital One, I see the first quarter as a reflection of what happened in 2012. We had very attractive growth and I see that consistent and prudent growth continuing for the balance of the year. When I look at a number of the specialty lending businesses, the message is the same: there are very attractive opportunities for growth in those sectors as well.

In equipment finance, we are in the middle of a nationwide build out. Over the next two quarters, you are going to see us expand this business in Chicago and west of the Mississippi and our goal is to be one of the top five equipment lenders in the United States.

With respect to asset-based lending, we’re seeing a very hot market. There’s lots of capital chasing asset-based lending deals at the moment. And I think it’s fair to say that this dynamic is producing more lenient, borrower-friendly structures. Leverage is increasing but pricing is generally tightening. And for banks and other finance companies, they are going to have to rely on their direct lending activities to find opportunities that aren’t so commoditized.

ABL Advisor: As you reflect over the past 18 months, what would you say are your team’s chief accomplishments since the formation of Capital One Commercial and Specialty Finance?

Graham: I’m really pleased with how quickly our team has been able to create and establish a leading market position nationwide across so many of our specialty businesses. When one considers the municipal finance market, healthcare market, the security market and the consumer and commercial rediscount market, Capital One in very short order has become a leading go-to lender in those sectors. I think the market in general is also very excited to have a lender the size and scope of Capital One participating across so many different areas of the economy.

The Commercial and Specialty Finance business is growing and we are on the move … and our entire management team is excited about our growth prospects.

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