Tuesday, January 18, 2011
Today's Equipment Leasing Headlines
Classified Ads---Senior Management
California Nuts Briefs---
"Gimme that Wine"
This Day in American History
Weather, USA or specific area
######## 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.
Classified Ads---Senior Management
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Free Posting for those seeking employment in Leasing:
Active in Leasing---Bank Beat
Bank of Ozarks (NASDAQ-OZRK), Little Rock, Arkansas is very active in the leasing industry. Scott Hastings has served as president of the leasing division since 2003 and is part of the executives lead by George Gleason who has served as chairman, CEO and/or president since 1979.
The two branches of Oglethorpe Bank, Brunswick, Georgia were closed Friday with Bank of the Ozarks to assume all of the deposits. It brings the Bank of Ozarks to 12 offices in Georgia. According to the FDIC, as of September 30, 2010, the bank had 95 offices with one office in Alabama, 67 in Arkansas, 3 in Florida, 11 in Georgia, one in Louisiana, two in North Carolina, two in South Carolina, 8 in Texas.
Bank Director magazine recognized Bank of the Ozarks as the second best bank in the US (1)
Oglethorpe Bank was formed August 26, 2003. The bank had 37 full time employees with an office in Brunswick and Saint Simons Island. It is the 52nd bank to fail in Georgia since the middle of 2008. Again real estate loans, including construction and land development loans were the culprits.
City of Brunswick
Brunswick, the county seat of Glynn County, was incorporated December 3, 1812. Brunswick was founded in 1771 and received its name from the King of England, George III of the House of Brunswick. Many of the street and square names reflect English heritage - Gloucester, Halifax, London, Newcastle and Prince.
In addition, the over development and drop in tourism at Saint Simons Island was a factor, too.
Homes for sale Saint Simons Island:
As of September 30, 2010, Oglethorpe Bank had approximately $230.6 million in total assets and $212.7 million in total deposits. The bank equity had dropped from $19.7 million year-end 2008 to $17.5 million year-end 2009 and $2.3 million September 30, 2010; $3.8 million loss 2008, $14.2 million loss 2009 with $4.4 million charge off in 1-4 family residential properties, $1.2 million construction and land development, $902,000 in nonfarm nonresidential properties, $919,000 commercial and industrial loans, $705,000 to individuals.
September 30, 2010 the bank had lost $7.1 million after charge offs of $5.3 million in 1-4 family residential property, $3.9 million construction and land development, $982,000 nonfarm nonresidential property, $1.6 million in commercial and industrial loans and $415,000 in loans to individuals.
Non-current loans had also leaped to $28.3 million from $6.1 million the previous September. Tier 1 risk-based capital ratio 1.40%.
The FDIC and Bank of the Ozarks entered into a loss-share transaction on $173.9 million of Oglethorpe Bank's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $80.4 million.
Tracking Bank Failures Map:
List of Bank Failures:
Leasing 102 by Mr. Terry Winders, CLP
Reasons to Lease – Cash flow
The proposed new accounting rules may eliminate irregular rents for accounting purposes, however, “Cash Flow is still King” and the more questions you ask about the revenue flow of your customer may create opportunities to create structured rents.
Leasing creates a new line of credit than a bank or accounts receivable line of credit. It also doesn’t have the restrictions and allows the lessee more “cash freedom.” It also may be less expensive when compared to a fixed price lease rather than an adjustable line, especially with a residual lease.
While it is true, the small ticket market place is more “convenience” and “Cash Flow is King,” the comparison advantage exists.
It is especially apparent when applied to the middle market and it is why the larger corporation lease instead of purchase or use their bank lines of credit.
One cost no one seems to want to bring up is the cost for a bank line of credit. The purpose for a line of credit is that all companies have periods of low cash and need to use the line of credit to handle payments that were structured on a level basis. So if a loan is arranged with an interest rate of 4%, which does not include points up front and most often is higher, the company will use the line when it finds itself in a cash shortage position.
If the equipment warrants a residual then the payments would be lower than a full payout loan and if the lessee understands the time value of money a lease will always have the upper hand.
In addition to the lower payments from a lease with a 10% put or 10% purchase option the earnings are greater for the lessor while being lower for the lessee. Example: a loan at 10 % for $100,000 over 60 months is $2,124.70 for a total of $127,482.27. A lease with a 10% put over the same terms is a payment of $1,995.57 saving the lessee $129.13 for 60 months for a 60 month savings of $7,747.96. Now you may say that the $7,747.96 does not equal the put at $10,000 which is true but if you put a present value to the monthly savings equal to the lessee’s current return on investment (ROI) say 15% pretax the actual value of the savings is $11,437.63.
The lessor with payments of $1,995.57 for a total of $119,734.20 plus the put of $10,000 gets a return of $29,734.20 while the bank only gets $27,482.27. Because of this difference the actual risk to the lessor for the $10,000 put is reduced by the $2,225.93 extra income so the actual risk is only 7.75%. The larger the put, or the residual, the greater the savings.
A lease that is arranged with irregular payments that match the firm’s revenue flow can prevent the need to use a line of credit and therefore would be cheaper that a level payment bank loan with a comparable interest rate. This is true regardless of the type of lease.
We must also remember that a large percentage of American business prefer to use cash accounting so they will expense irregular rents as they are paid. So always request the type of accounting used by small business and request information about revenue flow so you can create a lease that helps the lessee arrange their cash requirement.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at firstname.lastname@example.org or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
(This ad is a “trade” for the writing of this column. Opinions
Evergreen and the ELFA MFLI-25
David A. Merrill, President, Fifth Third Leasing Company
This is a follow-up to the story on the Equipment Leasing and Finance Association (ELFA) position on the Louisiana legislation regarding Evergreen Leasing clauses. While Ralph Petta, COO, and Dennis Brown, CAE, Vice-President, State Government Relations, have told Leasing News they are for "transparency," the issue is the notification by the lessor to the lessee about the end of the initial term of the lease (a). It has been common in the small ticket market specifically for those finally holding the lease to not notify the lessee and continue the monthly payments, even on $1.00 purchase options.
This practice of extending payments has been going on for years by smaller companies ((such as in the past Puget Sound Leasing as documented in the court records of the practice (b)) as well as Marlin Leasing ((documented in their SEC filings as well as many complaints.(c))
Leasing News printed the ELFA MFI-25 participants and stated they "appear" to support this non-notification. Several have contacted Leasing News, and others are invited to state their policy and position.
1- ADP Credit Corporation
(a) Favors transparency, but not notification
(b) Puget Sound Leasing
(c) Marlin Leasing
(Leasing News provides this ad “gratis” as a means
Leasing Industry Help Wanted
Please see our Job Wanted section for possible new employees.
Top Stories --January 10---January 14
Here are the top ten stories opened by readers:
(1) Bulletin Board Complaint--ACC Capital Corporation
(2) Archives January 14, 2001
(3) New Company: LEAF Commercial Capital?
(5) Sales Makes It Happen---by Steve Chriest
(6) From the Desk of Michael J. Witt, Esq.
(7) (Tie) Clarification: ZRG and ELFA MFLI-25 Employment Charts
(7) (Tie) Road Conditions Closing Some Leasing Companies
(8) Bank Beat---Florida, Florida, Florida
(9) 21st Century Leasing added to “Broker/Lessor” “A” List
(10) “Story Credit” List---Up-dated
Saluting Leasing News Advisor Bruce Kropschot
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.
Bruce Kropschot is one of the first asked to join the advisory board and he has been active since September 6, 2000.
Kropschot Financial Services
Bruce Kropschot is President of Kropschot Financial Services, a firm he founded in 1986. The firm has been for many years the leading provider of merger and acquisition advisory services for equipment leasing companies, having initiated the sale of more than 160 businesses. In 2008, Kropschot Financial Services became part of The Alta Group, a leading worldwide consulting firm for the leasing industry. Mr. Kropschot is Senior Managing Director of Alta and serves as the firm’s M&A Advisory Practice Leader. He has been active in the equipment leasing industry since 1972 and has been a senior executive of three large leasing companies.
Mr. Kropschot has served on the Board of Directors of the Equipment Leasing and Finance Association, the Equipment Leasing and Finance Foundation, Eastern Association of Equipment Lessors and United Association of Equipment Leasing. He is also a founding director of the International Network of Merger & Acquisition Partners. Mr. Kropschot is a CPA and graduated with BBA and MBA degrees (with honors) in Accounting and Finance from the University of Michigan.
Leasing News has asked each one the same four questions to give readers more insight into their personality and experience in the industry.
1. What is the biggest issue you face in your business?
“As a merger and acquisition advisor to leasing companies, my most important issue usually is to be able to convince potential acquirers that the acquisition of my equipment leasing company client can provide an excellent return on investment.”
2. What advice would you give to a young person entering the leasing business today?
“Become a well-rounded leasing person by trying to get experience in sales, credit, collections, accounting and finance. Continue the learning process throughout your career by participating in leasing industry association conventions and conferences.”
3. To what do you attribute your success?
“Throughout my career, I believe that hard work, doing more than is expected and maintaining a high level of integrity have played important roles in my success. I try to live by the words of my high school class motto: "Give to the world the best you have, and the best will come back to you."
4. What is one big thing that you hope to do before you die?
“After I semi-retire, I would like to take an active management role in a charitable organization.”
Kit receives CLP Handbook for his birthday
Theresa Kabot, CLP, K2 Funding, Kabot Commercial Leasing LLC, a past president of the Certified Leasing Professional Foundation, former Leasing News Advisory Board member, and a long time personal friend, sent me the new Certified Lease Professionals Handbook for my January 1st birthday. I had not seen an edition since the original, which was also a gift, but from Bob Teichman, CLP, who was tutoring me to pass the test (I never could get the math part correct and Bob spent a lot of time in my office with two private lessons.)
I read chapters, browsed others since receiving the 4th edition, and plan to go back to it. This is not just for entry level people interested in leasing, but is a reference book, and even for persons in business a long time, a refresher course, a handbook.
If I may be so bold, and with respect, to say: "The CLP Professionals Handbook is the bible of the leasing industry."
Kit Menkin, editor
Site Inspection Services
(A) "Douglas Guardian has probably been doing site inspections longer than any other company in the market today. This is our 75th year in business. We even do inspections for some of the people on your editorial board. Please include Douglas Guardian in your survey. We do not subcontract our inspections to independent contractors like many of our competitors. We utilize a network of over 300 company trained and certified employees. We operate throughout the US and Canada performing pre-funding inspections, post-funding inspections, collection inspections and vendor verifications."
Bruce Lurie, President
- SecureTrac, Inc is a nationwide provider of collateral inspections for banks, leasing companies, equipment brokers and equipment vendors.
Benefits of choosing SecureTrac:
SecureTrac is proud to offer Same Day Service Requests.
Associations are abbreviated. See our Associations page full name and information.
### Press Release ############################
First U.S. Finance Partners With SEC to Offer 100% Financing for Entire Equipment Line
LOS ANGELES, CA--- First U.S. Finance (FUSF), a California-based equipment leasing and financing firm, announced today a partnership with Semiconductor Equipment Corp. (SEC) to provide a wide variety of equipment leasing and financing programs on a national scale. Now SEC customers and affiliates can look to First U.S. Finance for assistance in financing new assembly and production equipment. Financing programs are flexible from 3 to 5 year terms with packages starting at $15,000.00 up to multi-million dollar projects. FUSF can combine a variety of equipment in one contract so an entire assembly area can be easily equipped.
Through the FUSF leasing and financing programs, SEC (www.Semicorp.com) customers nationwide can receive 100% financing for all their production equipment including add-on costs like installation, training and warranties. Customers typically only pay documentation fees and one month advance payment. This is a great benefit to the semiconductor and technology markets which are now poised for rapid growth in 2011 and beyond.
About First U.S. Finance
First U.S. Finance is a national independent equipment leasing and financing business dedicated to providing customized programs to meet the growth objectives of small to mid-size companies in a wide variety of markets. FUSF can finance any capital asset or expansion from $15,000 to multi-million dollar projects with terms from 3 to 5 years. Typical equipment financed includes technology assembly equipment, computer networks, medical technology, communication systems, LED lighting retrofit projects, solar projects, electronic systems and furniture. They have lenders for every major commercial market in the U.S.A.
They work with a variety of credit profiles and base approval decisions on both the credit and the collateral structure of the applicant. FUSF has 14 years experience in the finance market and can structure very competitive financing even when traditional lenders cannot. For more information, please visit http://www.FirstUSFinance.com or contact Lester Salvatierra at: Lester@FirstUSFinance.com or call 805-217-9896.
### Press Release ##############################
(Leasing News provides this ad as a trade for investigations
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
10 Simple Google Search Tricks
Raiders promote Hue Jackson to be head coach
Blue Shield of California defies state insurance commissioner over rate hikes
Winemakers to watch in 2011
The Case for More Sweet Wine
Wine Prices by vintage
US/International Wine Events
Leasing News Wine & Spirits Page
This Day in American History
1770- the Sons of Liberty in New York City attacked British soldiers. They were called this because the group of American civilians attached 40 to 50 armed soldiers because they had cut down the liberty poles that the Americans had erected. The soldiers used their bayonets and dispersed them. No one was killed, but several persons on both sides were seriously injured. What was really a mob fight was termed the Battle of Golden Hill.
Super Bowl Champions This Date
1976 Pittsburgh Steelers
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