Financial Pacific Prospectus Available

   by Christopher “Kit” Menkin

Leasing News reported that the well-known “C” and “D” funding source has filed an IPO to raise $80.5 million dollars. The actual prospectus is now available.

  Here is the full filing of the prospectus:

http://www.hoovers.com/financial-pacific/--ID__132645,ipage__
2724977--/free-co-secoutline.xhtml

Banc of America Securities LLC and Piper Jaffray will serve as joint book-running managers for the offering, with SunTrust Robinson Humphrey acting as co-manager.

Copies of the preliminary prospectus for the offering, when available, may be obtained from Banc of America Securities LLC, Prospectus Department, 100 West 33rd Street, New York, New York 10001, or by telephone at 646-733-4166, or Piper Jaffray, 800 Nicollet Mall, Minneapolis, Minnesota 55402, or by telephone at 800-333-6000.

For specific questions, please call: Dale A. Winter, 253-568-6120

Financial Pacific has applied for a Nasdaq listing under the ticker symbol    
"FNPC" ----    http://finance.yahoo.com/q?s=fnpc     . 

Known in the trade as  “Fin Pac,” the company innovated not only “liberal” credit policies in the small ticket marketplace, particularly under $50,000

transactions, going down as low as $5,000,  but also considered equipment types not considered by others, which are still not highly accepted in the industry, such as sales from private parties, “I mean old” equipment, restaurants, new franchise,  “owner and operator” trucks and rigs, tanning booths, and personal property requiring landlord waivers for the recycling trade, oil and gasoline, ATM machines at one time, leases to people working out of their homes or those who had no trades and paid most business bills with cash, young businesses, among other so called “non-standard” transactions.

Their experience with “A” and “B” credits for this “non-standard” equipment lead them to a sister company called  ‘Affinity Leasing” to reach this market place with a lower rate than an 18% base “buy rate. ” When they forecast the tough times for the financial market, they closed this operation down in the year 2000. Now that the leasing industry is starting to turn around, they are getting ready to dominate the small ticket marketplace.

Specializing in “story credits” and “unusual” equipment, along with general small equipment, including “A” and “B” credits, the company has led the industry primarily via the brokerage business market with a reported 450 lease broker network.  They are well-known for their quick decisions,

spelling out requirements with every approval.

They are similar to Republic Leasing of South Carolina, who is more in the “A” and “B” marketplace, relying on independent sales men and women rather than an “in house” sales team.  Marlin Leasing, along with Republic Leasing of South Carolina, is in a similar marketplace, but Marlin differs as they have a minimum of $1,000, plus state 80% of their business is either vendor or “in house” direct sales driven.  That leaves Republic Leasing of Southern California and US Bancorp Manifest who rely primarily on

the independent sales process.

Republic Leasing of South Carolina relatively recently let go 100 independent brokers.  It should be noted it was a planned decision to accept brokers who had a high percentage of getting approved leases signed, plus welcoming larger discounters such as LeaseNow, which specializes in new franchise equipment leases and LPI Financial, who specialize in medical and dental unsecured loans.  April 1 Republic Leasing of South Carolina was made a division of Netbank with the rules and regulations of “bankers.”  Everyone
denies there will be changes, but those in the leasing industry have heard that before; time will tell. 

US Bancorp last year spun off its “C” and “D” credits to “Navigator,” run by veteran Ron Wagner, CLP, for Pentech Financial.  The program is now 100%

in place, reportedly running very smoothly but only available to brokers who first go through US Bancorp Manifest. It should be noted the company's president Brian Bjella left last month  to form a partnership with Ken Noyes called Grandview Financial with sales guru Brad Peterson taking over the reigns.

In its field, Fin Pac has no real competition, except for perhaps some local lessors who make their own credit decision and visit their clients in person.  On a volume basis, with loyal, ethical brokers, they have no peer in their marketplace. With more capital, they will be very tough competition to beat.

The Financial Pacific employees  for many years has been very active in their local community, raising funds for charities and schools, especially active in C.A.P. ( Community Action Program) which assists the 24-Hour Run Against Cancer, Christmas for Familes in Need, March of Dimes.  The perhaps comes from former president Douglas G. Erwin, now retired, who was a great leader in motivation; well-known for ringing the bell to cheering own his employees.

 
Doug Erwin 

The picture above is from a 1995 brochure, and under the picture, he states: “ I look forward to spending time with all of our brokers.  I consider it one of the most important and pleasant things that I do. As our company has grown, our broker “partners” have become more and more important to financial Pacific Company.  The knowledge, experience and ability of our brokers has greatly enhanced the quality of our portfolio.  We value the relationships we have developed over the years and look forward to providing the service necessary to keep our relationships thriving.”

In the 29 years  in business, they have established an excellent reputation in the leasing community.  Originally a local company, they expanded to the NorthWest, then opened up the Los Angeles market place, and after making it a success, expanded nationwide. 

Terey Jennings, one of Doug Erwin protégées, travels quite  bit these days, but comes home to smell the roses his wife Cherie grows. He is also very active in several leasing trade associations.

 

 
Jennings Riding the Waves

The company has a reputation in the industry for their quick response, liberal credit (“putting deals together,”) and great customer service. Perhaps their claim to fame is their super collection department that creates repeat customers, they are that good.  They get the margins, and repeat business.

In the industry where leases are sold back and forth, Fin Pac has held on to all, with superb service, especially compared to others who treat customers as if they can't be bothered to answer questions or research an account.

 
Dave Schafer, SVP 

The above picture is from the 1995 brochure, where he states, “ Providing a consistent source of available bunds on a long-term basis is an important inegredient ot developing successful broker relationships.  Portfolio management, finance, operations and account are the key components in developing adequate sources of funds for a wide range of transaction types. As always, I am committed to continue our tradition of always having adequate resources to fund our brokers. “ 

According to papers filed with the Securities and Exchange Commission, the company has been profitable for four of the past five years. Its 2003 profit of $5.3 million was almost two-and-a-half times higher than the 2002 figure. Revenue last year was nearly $43 million, a 5.9 percent increase from 2002.

And the spreads are attractive, too, at least for the lender: Interest income, measured as a percent of average net investment in leases, was 20.16 percent last year, while interest expense as a percent of average revolving and term debt was just 4.93 percent. 

The company operates nationwide, largely through independent brokers. At the end of 2003, it had 15,592 active leases in its portfolio and lessees in 48 states.               

(  Disclaimer: Kit Menkin as American Leasing was one of the first “discounters” with the company and has done business with
them for ten years plus. Editor )