Long-term commercial and equipment financing success depends on rigorous cost control, outstanding client service, organic growth, and strong capital reserves, as the industry continues to evolve.
Success requires maintaining rigorous cost control alongside outstanding client service, 1st Source Corp. Chairman and Chief Executive Christopher Murphy III tells Equipment Finance News in the second of a two-part episode of “The Dig” podcast. 1st Source Corp. is the parent company of 1st Source Bank.
“Rigorous cost control and outstanding client service are very important elements of making it work over the longer term,” he says. Other essential elements include giving second chances, ensuring employees develop and master necessary skills, and resisting flashy distractions, he adds.
Murphy is stepping down as CEO of 1st Source after nearly 50 years, becoming executive chairman while Andrea Short becomes president and CEO of both the corporation and the bank on Oct. 1. Additionally, Kevin Murphy, Chris Murphy III’s son and current executive vice president and chief digital officer, will become president of the bank.
Managing growth, prioritizing relationships
Meanwhile, 1st Source has focused on organic growth rather than acquisitions, prioritizing shareholder value through disciplined cash flow analysis and long-term relationships, often passing on overpriced deals in favor of growing one customer at a time, Murphy says.
“The key is to be patient, just keep growing and be patient, and when it's time to take your foot off the gas pedal, get it off the gas pedal, and apply the brake” he says. “There's nothing wrong with that.”
Over the years, 1st Source also exited verticals that didn’t fit, including environmental equipment and aircraft financing, but preserved long-term customer relationships, often working through setbacks until clients repaid in full, Murphy says.
“We were strong enough in working through that period without the regulators coming down and telling us how to do it, so having strong capital reserves is really critical,” he says. “When I look forward, making sure that we are in this where both Andrea and Kevin come in, as well as Brett Bowers, our chief financial officer, making sure we have the right strength in our balance sheet to withstand hard hits in the economy, whether they're black swan events or otherwise, because they will come.”
Tune in to the newest episode of “The Dig” to hear Murphy discuss his leadership philosophy, relationship building, changes in equipment finance, and opportunities and challenges facing the industry in the next decade.