In late March, Hudson Valley Bank (HVB) announced the formation of HVB Equipment Capital LLC – a new equipment finance unit offering financing in numerous industry sectors nationwide. This announcement comes on the heels of the launch of a de novo asset-based lending unit in November 2013 – HVB Capital Credit LLC. The new equipment leasing unit is based in New York City and headed by Steven Orenstein, an industry veteran with over 35 years of experience in equipment finance sales and management.

Equipment Finance Advisor sat with Steve Brown, President and CEO of Hudson Valley Bank, and Steven Orenstein, HVB Equipment Capital’s newly named leader to learn more about this latest entrance into the equipment finance industry by a bank.

Equipment Finance Advisor: Steve, please tell our readers a bit about the timing behind this decision to enter the equipment finance sector nationally by Hudson Valley Bank – this announcement was made within six months of the announcement that HVB launched an ABL unit in November 2013. Is this latest expansion part of an overall strategy “shift” for Hudson Valley Bank to move beyond a regional presence?

Steve Brown:The board and executive team of HVB worked on a transition plan in 2013 that was largely focused on how we would best position the bank in the post-recession economy to take advantage of new opportunities in the marketplace. One of the results of this planning was the recognition of the need to diversify our loan portfolio, which was historically largely focused on commercial real estate. As we went through this strategic plan in late 2013, we identified areas in our market that we viewed as synergistic with our customer base, as well as opportunities outside of our footprint – which includes the New York metro area including Westchester and Rockland counties, Fairfield County in Connecticut, and portions of Northern New Jersey and Long Island. We talked about this expansion relative to asset-based lending initially, and determined that equipment financing fits in very nicely for us. So this was a planned progression of diversification as well as a geographic expansion. The front-work was done by the end of 2013, and we are ready to launch.

Equipment Finance Advisor: How does the equipment finance product compliment the other financial services HVB offers its commercial customers? Will the equipment finance group operate jointly with the banking side to establish a “turnkey” solution for customers while also pursuing business with non-bank customers?

Brown: We are a very customer-focused organization and we had been getting requests for equipment financing from our customers. Couple this need with the value our customers place on the service we provide, we saw that equipment financing was a real opportunity that we could address with a new product offering. This product focus will put us in a position to provide turnkey solutions. We are very committed to putting an efficient process in place, which is what Steven Orenstein has been doing since his onboarding – focusing on how we can effectively cross pollinate the business units to benefit the market. So it will be a close alignment between the units to find opportunities to provide turnkey solutions to our current customer base.

Steven Orenstein: To expand a bit on Steve's comments, we are going to have a retail sales force that will be joint-calling with bank business development officers to offer this new equipment finance product. And our equipment finance sales force will be calling on customers in the bank footprint to refer commercial banking opportunities to the bank’s lenders.

Equipment Finance Advisor: What talents and skills does Steven Orenstein bring to the table making him the right person for this very important position?

Brown:  Steven hit all the right buttons for us. He has been in the business long enough to have experienced a number of cycles – competitive and economic – and the dynamics that have occurred over the past 20 years in our industry. He possesses great depth of knowledge and experience. Also, his experience is right in the zone of our plan in terms of deal sizes, industry emphases, etc. Then it goes into the intangibles – many times small businesses are treated exactly as that – small businesses. We treat all our customers as relationships, as we are not interested in merely executing a transaction. Rather, we work to build long-term relationships, and this has been Steven’s approach to the market throughout his career.

Equipment Finance Advisor: The economic environment has created significant margin compression for equipment finance companies. How will Hudson Valley Bank effectively compete against the larger established bank and non-bank equipment finance shops?

Brown: Let’s talk about the people side first. First and foremost, we were looking for a leader with a strong reputation and industry experience – a leader that  can find ways to compete against banks and equipment finance companies. Secondly, we can provide a level of service other equipment finance sources are not engineered to provide, systemically or genetically. That will be a big differentiator as we penetrate this space. On the economic side, as an industry, we live in an extraordinarily competitive environment. Margins have been compressed by the intensity of competition as well as a protracted near zero interest rate environment. The real advantage we have is  our extraordinarily stable and low-cost funding base from our depositors, providing HVB one of the lowest costs of funds in the industry. Leveraging this low cost funding puts us in a position to compete on pricing – but we are not prepared to compete on ridiculous terms nor structuring.

Orenstein: It’s really about differentiating HVB in the market as Steve mentioned. Part of this differentiation will be a function of how we price our products. While we are certainly not going to be the cheapest or most expensive – we will be competitive. But what will set us apart is our service capability. We will be able to take opportunities through the process quickly and respond to financing opportunities in a timely manner. Many profess to do this, but do not deliver.

Equipment Finance Advisor: Steven Orenstein, please share a bit about your background with our readers and how your prior experiences at Sterling National Bank’s Leasing Division have prepared you for this latest challenge?

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