Tuesday, February 22, 2011
Today's Equipment Leasing Headlines
Fourth Alert----AMC Funding Still at It
New mortgage law could cause big changes
######## surrounding the article denotes it is a “press release” and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer. It is considered “bias” as it is the writer’s viewpoint.
Fourth Alert----AMC Funding Still at It
The first alert was issued on August 18, 2010 regarding AMC Funding Group, Charlotte, North Carolina. There were two other alerts issued, as well as other stories, so it is surprising to receive the following:
"I would like to know what if anything more you have heard about Brendan Messenheimer owner of AMC Funding Group. Brendan no longer communicates his lies as he has changed his cell phone number and the number on the website goes to Citi Mortgage. This guy is a **** who took over $20k in rental deposits from our clients and hung our venders and our company out to dry with no intent to ever pay back any of us. Between the NSF checks and so called wires never making it I believe he should be sent to prison for intent to commit fraud and for writing bad checks. We have filed reports with the Charlotte Police Dept and have sent legal letters but as we thought we have received nothing.
"We lost two venders and three customers over this guy. We just recently found out while he was taking in the advance rents from our clients he filed for personal bankruptcy which we believe caused his so called lenders to freeze his lines. But time after time he was telling us that he was just renegotiating his line which was causing the delay. Not knowing it or giving us any notice or indication this was going on he kept accepting the clients advance payments. There is no doubt this needs to be exposed. Nor do I want this guy to go elsewhere and start the whole thing over again. Shame on us for not doing more research early on but I just want to make sure that he doesn’t ever do this to anybody again.
"Please let our message be heard to the leasing community!"
(Name with held)
Classified Ads---Senior Management
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Free Posting for those seeking employment in Leasing:
All “free” categories “job wanted” ads:
Data Sales Joins "Funder List"/"Looking for Broker Business"
Provide lease lines for IT equipment to start-up, emerging growth
A -Accepts Broker Business | B -Requires Broker be Licensed |
Funder List “A”
(Leasing News provides this ad “gratis” as a means
AZELA Meeting & Digital Copy Machines
The Arizona Equipment Leasing Association (AZELA) had its first meeting in 2011 at the Starfire Country Club on February 17. There were 18 in attendance, representing members, brokers and funders, and visitors and potential members.
During the meeting the attendees were made aware of proposed data security legislation, Arizona House Bill 2244 which would require owners of digital copy machines, including finance sources, to destroy every record that is stored on the equipment. It could potentially cause a liability to the lessor, broker and manufacturer for any misuse of the information stored on the digital systems. The bill also covers computers, printers and multifunction equipment.
Our members and other interested parties were invited by Dennis Brown, VP State Government Relation of the Equipment Leasing & Finance Association (ELFA) who has been monitoring the bill, to attend a meeting on February 24 to present amendments to the proposed bill.
Following, there was a lively discussion of the usage and advantages of cloud computing and off sight data storage.
Our guest speaker, sales trainer and coach, Mike Leeds of Pro Sales Coaching gave an enlightening and humorous presentation on what not to do on marketing calls.
Salvex Introduces Global Online Auction “Off lease” Items
This is an international “on line” auction similar to eBay located in Houston, Texas, but primarily aimed at “salvage items.”
The site has 455 listings with the majority in the United States, 262 and majority in commercial equipment, as well as a "theft recovery" feature and a site dedicated to equipment with the proceeds going to a specific charity.
The site is aimed at asset companies who take back equipment, bankruptcy proceedings, insurance claims, as well as donations for the benefit to specific charities. Some of the equipment is aimed for the end user, and much of it is aimed at re-sellers, who buy in bulk for re-sale elsewhere.
In this situation, Salvex collects the funds from the buyer who is the winning bidder, paying for the equipment or merchandise, as well as a fee to Salvex. The only auction contains assets for leasing companies, bankruptcies, insurance claims as well as obsolete assets.
SALVEX was founded by the Wilson family with 45 years of salvage experience. The founder and CEO, Charlie Wilson, was also founder of SeaRail International Inc., a traditional salvage services company; founder and CEO of SalvageSale, another online commercial salvage company.
While the number of bids is noted, the actual dollar amounts are not noted in the sites visited. Also the "fee" involved was not disclosed, although the procedure states "A Salvex Agent will contact you within 24 hours of receiving your information to help build your listing and prepare your item for sale." Assuming before the item is placed for auction, the fee is agreed upon by both parties.
There is a "Dashboard" that gives the listing of your current bids, items watching, and invoices as well as a selling list.
Alexa gives the site a 38,156 rating in the US and 175,266 world wide with 12 sites linking in. This means out of the million or so web sites, Salvex needs to reach a larger audience; promote it site to promote more bids (eBay is number 22). The good news: “a typical visit to the site is about 44 minutes, with 57 seconds." Those that visit appear to serious buyers.
The only review on line comes from the founder: "Charlie Wilson says: This site is very user friendly and it has everything. If you want to buy in bulk and sell on eBay or your store, this is a great way to do that. This is an alternative to having to drive to live auctions."
(Leasing News provides this ad as a trade for investigations
Leasing Industry Help Wanted
Please see our Job Wanted section for possible new employees.
2011 World Leasing Yearbook Released
The World Leasing Yearbook directory includes full contact information including name, address, telephone and fax numbers, email and website details, plus a summary of their activities in the market.
The book is priced at USD $539.00 including shipping and handling.
For more information please click on: http://www.researchandmarkets.com/product/f738cf/world_leasing_yearbook
Article 2A Vs Article 9 Consequences
If I borrowed your car this afternoon for a trip across town it would be clear that you owned the car and I was just a user. So if I brought the car back with a lot of damage, you would expect me to repair it. However, what caused the damage and who is responsible for the damage I inflicted on the people or property involved? Perhaps I am injured and it can be proven that a defect in the car was at fault. You provided the car and may be responsible for all the damage. Perhaps it was a new car and the defect was a problem from the start and the vendor or manufacturer is at fault. Well let’s all go to court and present our case, with our lawyers, and let the judge sort it out. Hope you have a deep pocket!
Article 2A or its equivalent has been adopted by all of the States and was created to place into law controls and responsibilities for commercial equipment leasing. Article 9 is the law for lending and transactions that take on the mantel or appearance of a security arrangement. The largest difference is that Article 2A recognizes the Lessor as the “owner” of the equipment whereas article 9 recognizes the customer as the “owner”. Leases with bargain purchase options or where the lease of the equipment is 80% or greater of the equipments useful life as designated by the IRS fail the requirements of Article 2A and become Article 9 leases intended as a security.
The main point to remember is
Except article 2A recognizes two types of leases; two party and three party transactions. A three party lease is called a finance lease where the participants are the Vendor, the Lessor, and the Lessee. In this arrangement, if the Lessor passed on the “supply contract” (vendors warrantee’s and performance guarantees), the Lessor is declaring they are not responsible for equipment performance. In other words, the Lessor is claiming they are free from responsibility if the equipment fails to function or has a defect. Most of the small ticket, and many of the middle-market leases fall into this category. It is also the "Vendors" participation in this that has caused many current legal predicaments and losses to leasing companies as to the Lessors' responsibilities.
A two party lease is a transaction where the equipment supplier and the Lessor are one and the same. Clearly the Lessor in this arrangement is the reasonable party for equipment performance. Many Lessors start off as third party lessor’s, but fail to realize that at termination if they do not release to the original lessee and negotiate a new lease to someone on off lease equipment, they become the equipment supplier and have then arranged a two party lease. This can be done, but it requires a different lease agreement, one that has a lot of equipment performance language such as “no equipment performance guarantees." It does not stop lawsuits, but does attempt to support the lessor’s position. This is why many Lessors’ sell, especially on equipment that may have liabilities, instead of re-leasing their equipment that has come back to them either in a repossession, default judgment, or fair market value transaction.
The one problem not well understood by lessors is how to pass the supply contract. These warrantees and guarantees are provided by the vendor and made available to the purchaser which is the Lessor. To add the lessee on to the chain you must place a requirement in your purchase order as a condition of the purchase as such:
"Title to the equipment shall pass from you directly to us and shall be free of all liens and encumbrances. You warrant that the equipment will comply with all warranties, agreements and representations made by you to lessee, and you agree that all warranties agreements and representations made by you (supply contract) to lessee or to us shall be fully enforceable by us and/or by lessee in its own name."
Without a purchase order, with this language, you may find the vendor expects you to get involved each time there is a warrantee problem. Not a wise move--- so use purchase orders but do not have lessee purchase orders assigned to you without a lot of additional protective language added.
In Article 2A, the Lessor has a lot of rights and protections as an equipment owner.
In Article 9 the Lessee has a lot of rights as the equipment owner. In Article 9 the Lessor has passed possession and use and is holding title in “trust” until the (lease) contract is complete or terminated.
You need to understand the risks and rights available to lessor are based on the type of leasing you are engaged in so you can make informed decisions.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at email@example.com or 502-649-0448
He invites your questions and queries.
Leasing 102 by Mr. Terry Winders, CLP
Previous #102 Columns:
(This ad is a “trade” for the writing of this column.
Bank Beat- Two more in Georgia, Napa Wine Country, San Luis Obispo
The eight branches of Habersham Bank, Clarkesville, Georgia were closed with SCBT National Association, Orangeburg, South Carolina, to assume all of the deposits. The previous year they had over 147 full time employees, but by year-end 2010 it was less than 90 full time employees.
Habersham Bank Chairman Thomas Arrendale III and his family own more than a third of the company. His father was the former chairman before he died of a head injury, one of the founders of Fieldale Farms, reportedly the largest employer in both Habersham and Hall counties.
According to Forbes, Fieldale Farms is one of the largest poultry companies in the world.
As well as being Chairman of the bank, Thomas Arrendale III also serves as Chairman of the Board and Chief Executive Officer of Fieldale Farms.
The daughter of one of the original founders of Fieldale Farms, a director who owned 18%, wanted to look at the books, so the directors dismissed her from the board. She sued saying it was her right to see financial records, but the Fieldale Farms attorneys said she was no longer a director and did not have the legal right to see the books of a private corporation.
"Fieldale takes pride in providing more chicken under private labels than anyone else in the United States. Supplying many major grocery chains with a wide variety of high quality, tasty and nutritious chicken."
Bank equity had dropped from $37.9 million year-end 2008 to $14.5 million year-end 2009 and dropped to $2.9 million, 2010. In the same time periods, the bank lost $13.8 million, $26.2 million, and $12.3 million.
2009 year-end charge offs were $10.6 million in construction and land development, $1.1 million in commercial and industrial loans, $582,000 in los to individuals as well as $628,000 million in loans secured by 1-4 family residential properties. Non-current loans were $71.8 million.
2010 year-end charges offs were $1.3 million in construction and land development, $1.1 million in nonfarm nonresidential properties, $2 million in 1-4 family residential properties, $1 million in nonfarm nonresidential properties, and $491,000 in loans to individuals. Tier 1 risk-based capital ratio was 1.24%.
As of December 31, 2010, Habersham Bank had approximately $387.6 million in total assets and $339.9 million in total deposits. In addition to assuming all of the deposits of the failed bank, SCBT National Association agreed to purchase essentially all of the assets.
The FDIC and SCBT National Association entered into a loss-share transaction on $270.7 million of Habersham Bank's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $90.3 million.
Errata: The city should not to be confused as the town the The Monkees refer to in their song: "Last Train to Clarksville."
Georgia last year had 21 bank failures. The trend continues as this is sixth in the state this year, Habersham Bank above was number five.
The main cause of these Georgia banks has been primarily due to over building in construction, coupled with land development loans for projects that either never got off the ground, finding no “take outs” or if built, not finding buyers or tenants.
The four branches of Citizens Bank of Effingham, Springfield, Georgia were closed with Heritage Bank of the South, Albany, Georgia, to assume all of the deposits. Founded September 8, 1998 the bank had 42 full time employees with offices in Guyton, Port Wentworth, Rincon, and Springfield.
Michael Lee, president and CEO of Citizens Bank of Effingham, told savannahnow.com July, 2009, that the state of the nation's economy, particularly the real-estate market, is the primary reason the bank finds itself in difficult financial straits.
"We do have issues in our loan portfolio - just like any other bank in the area - all related to the real-estate market," Lee said.
Equity had dropped from $198.8 million year-end 2008 to $12.3 million, 2009, to $2.2 million year-end 2010.
Non-current loans were $12.3 million year-end 2009 and $10.1 million year-end 2010. The bank had positive incomes in 2009 of $657,000, but a loss of $7.2 million year-end 2009 following charge offs of $5.8 million in construction and land development, $520,000 1-4 family residential property, $559,000 in multi-family property, and $394,000 in commercial and industrial loans, $99,000 in loans to individuals.
The charges offs year-end 2010 were $7.2 million in construction and land development, $1.4 million in 1-4 family residential properties, $271,000 commercial and industrials loans and $579,000 in loans to individuals for household, family, and other personal expenditures.
As of December 31, 2010, Citizens Bank of Effingham had approximately $214.3 million in total assets and $206.5 million in total deposits. Heritage Bank of the South will pay the FDIC a premium of 1.0 percent to assume all of the deposits of Citizens Bank of Effingham. In addition to assuming all of the deposits of the failed bank, Heritage Bank of the South agreed to purchase essentially all of the assets.
The FDIC and Heritage Bank of the South entered into a loss-share transaction on $158.1 million of Citizens Bank of Effingham's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $59.4 million.
The two branches of Charter Oak Bank, Napa, California were closed with Bank of Marin, Novato, California, to assume all of the deposits. The bank opened December 17, 2004 and had 27 full time employees at a branch in Napa and Saint Helena.
The over expansion into the wine country and development of residential vacation properties, as well as large expensive homes first hit Sonoma Valley Bank, which failed, and now Charter Oak Bank, which reportedly shared $5 million in loan losses with Sonoma Valley Bank. There was interest in other smaller banks purchasing this bank, but only Bank of Marin, a growing, successful bank was qualified by the FDIC.
The Bank of Marin was opened in 1990 and has since expanded to 13 branch offices that focus on small to medium sized businesses, professionals and not-for-profit organizations. Bank of Marin is well capitalized, has over $1.2 billion in assets, pays a cash dividend and has seen the price of its stock double from the lows of 2009.
Tier 1 risk-based capital was .5%. It is considered anything under 4% is troublesome, as the standard is 10%.
Bank equity year-end 2008 was $17.2 million, $13.7 million year-end 2009, and $587,000 year-end 2010. In 2008, the bank made $1.17 million, but 2009 lost $3.6 million following charge offs of $2.1 million in multifamily residential properties, $538,000 in loans secured by nonfarm nonresidential properties, and $1.4 million in commercial and industrial loans.
The bank lost $13.2 million year-end 2010, most of it is $5.7 million charge off of commercial and industrial loans, $1.1 million in multifamily residential properties, $1.3 million in 1-4 family residential properties, $1.2 million in nonfarm nonresidential properties, and 4686,000 in loans to individuals for household, family, and other personal expenditures.
As of December 31, 2010, Charter Oak Bank had approximately $120.8 million in total assets and $105.3 million in total deposits. The FDIC will retain $28.5 million of the assets for later disposition.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $21.8 million.
San Luis Trust Bank, FSB, San Luis Obispo, California, was closed with First California Bank, Westlake Village, California, to assume all of the deposits. Established June 30, 2008 the bank had 28 employees.
The bank was issued a Cease and Desist Order November, 2009 and ordered to raise additional capital due to the problems with land development and construction loans. It seems things went from bad to worse in 2010 for a bank that did not know how to say “no” to real estate development loans.
Equity had dropped from $31.1 million year-end 2008 to $25.9 Million year-end 2009 to minus $1.8 million 2010. The bank had earned a $1.76 million profit year-end 2008 but saw a $5.5 million loss in 2009 after charge offs of $2.9 million in construction and land development, $2.2 million in multifamily residential properties, $1.7 million in nonfarm nonresidential properties, $1.2 million in commercial and industrial loans, $$567,000 in loans to individuals. 2010 loss was $13 million.
The only FDIC charge off numbers available were September 30, 2010 which showed $2.8 million in construction and land development, $1.3 million in 1-4 family residential, $885, 000 in nonfarm nonresidential property, and $1.8 million in commercial and industrial loans, a total of $7 million.
Tier 1 Risk-Based Capital ratio .85%.
As of December 31, 2010, San Luis Trust Bank, FSB had approximately $332.6 million in total assets and $272.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, First California Bank agreed to purchase essentially all of the assets.
The FDIC and First California Bank entered into a loss-share transaction on $241.7 million of San Luis Trust Bank, FSB's assets.
According to sanluisobispo.com, "A dozen FDIC agents in suits gathered across the street from the bank just after 6 p.m. Friday, holding suitcases and sipping coffee under umbrellas before entering the bank together.
"About 60 Irvine-based FDIC agents will work 12-hour days this weekend at the bank and a remote location to facilitate the transition.
"First California CEO C.G. Kum told The Tribune that he views the acquisition as a ‘tremendous asset’ and an initial foray into banking on the Central Coast. “This is not where we are going to stop,” he said.
"Kum plans to hire a local person to fill a newly created position of regional president for the branch. He added that the bank will keep as many San Luis Trust employees as possible but noted that some will lose their jobs."
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $96.1 million.
Tracking Bank Failures Map:
List of Bank Failures:
Top Stories February 14---February 18
Here are the top ten stories opened by readers:
(1) Patterson joins Marquette--Now Aggressive in Leasing
(2) Funders Looking for New Broker Business
(3) Balboa Forms East Coast Team for Vendor Service
(4) Leasing 102 by Mr. Terry Winders, CLP
(Tie)(5) Bulletin Board Complaint
(5)(Tie) Store/Restaurant Credit Card Devices Now Obsolete?
(6) How is it? Don’t Ask!
(7) US-Capital Joins “Broker/Lessor List ‘A’ “
(8) Pictures from the Past 1977
(9) Palm Spring Bank closed by Country Club,
(10) New Hires---Promotions
Saluting Leasing News Advisory Member Armon Mills
The Leasing News Advisory Board does not participate in editorial decisions, meaning reviewing or choosing stories or subjects. Their role is to participate with policy and business advice as well as contribute in discussions on matters brought up by the publisher in a private internal blog.
Armon Mills joined the Leasing News Advisory Board on February 5, 2004. In reality, he was quite instrumental and was the first to give Kit Menkin advice to incorporate, trade mark, and develop what were originally e-mails about what was happening in the equipment leasing industry sent to friends. Kit served on all Armon’s advisory boards; is a personal friend of he and his family. He and Armon often had lunch together often when Armon was located in San Jose, California. They also both served on community non-profit organizations as officers, including chairmen and presidents, working on projects together. Armon has been a mentor to several publishers, many of them across the nation, running the various Business Journals and other media.
Armon Mills, Director
Armon recently left his position as President and Publisher of the San Diego Business Journal that he had joined April, 2004, and has returned to his original career as director for the Southern California Region for the national CPA firm of J.H. Cohn, LLP.
He began his career in public accounting, earning his CPA certificate in 1967. He went on to work in public accounting at Fox & Company for 20 years. Armon knows the world of business publishing well, changing his career path and signing on as President and COO of American City Business Journals, Inc. He served as Publisher of the Business Journal in Phoenix, Arizona, the San Jose Silicon Valley Business Journal and Silicon Valley Biz Ink.
Armon has been active in many community organzations, including the Board of Directors of the San Jose/Silicon Valley Chamber of Commerce, San Jose Convention and Visitors Bureau, Boy Scouts of America, YMCA, Salvation Army and the Silicon Valley Chapter of the Commonwealth Club of California. He was also an active member of the San Jose Rotary Club.
Armon is continuing his strong commitment to the community here in San Diego. He is a member of the Rotary Club #33, and has accepted positions on the Board of Directors of Junior Achievement, the Salvation Army, the YMCA and is currently a member of the Finance Committee of the San Diego Convention and Visitors Bureau, the Pacific Life Holiday Bowl Committee, and is active in the board of the United Way of San Diego.
Demorest, Georgia -- Adopt-a-Dog
“This gentle 2 year old boy was found along with what we believe to be his mom, Luna. They were apparently abandoned and were taken in by one of our volunteers. Duke is super sweet and friendly, and gets along very well with other dogs and especially with people! He loves to play, and will need opportunities to exercise."
Can't adopt? Duke would love to find a good foster home while waiting for his forever home. Ask us about this opportunity! .If you need more info, please contact Becky at 770-497-9138.
Regarding adoption events, we hold such events almost every weekend in either Buford (PETSMART near Mall of Georgia) or the Roswell/Alpharetta area (PETCO on State Bridge Road in Alpharetta/Johns Creek). We will be sure to bring this pet to the next event if you are interested in seeing him/her.
Please note that we charge a $150 adoption fee for each dog to help partially offset vet care expenses. We generally conduct home visits prior to finalization of each adoption. Many of our dogs require a fenced-in yard
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
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This Day in American History
1616-A smallpox epidemic among Indians relieved future New England colonies of the threat of major hostilities with the Indians. The tribes from the Penobscot River in Maine to Narragansett Bay in Rhode Island were virtually destroyed. It was not the white man that defeated the American natives but the diseases they brought with them from the old world.
by Carl Sandburg
When Abraham Lincoln was shoveled into the tombs, he forgot the copperheads and the assassin . . . in the dust, in the cool tombs.
And Ulysses Grant lost all thought of con men and Wall Street, cash and collateral turned ashes . . . in the dust, in the cool tombs.
Pocahontas' body, lovely as a poplar, sweet as a red haw in November or a pawpaw in May, did she wonder? Does she remember?. . . in the dust, in the cool tombs?
Take any streetful of people buying clothes and groceries, cheering a hero or throwing confetti and blowing tin horns . . . tell me if the lovers are losers . . . tell me if any get more than the lovers . . . in the dust . . . in the cool tombs.
The object is to insert the numbers in the boxes to satisfy only one condition: each row, column and 3x3 box must contain the digits 1 through 9 exactly once. What could be simpler?
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