Leasing News is a web site that posts information, news, and entertainment for the commercial leasing and finance industry. The News Edition is updated Monday, Wednesday and Friday.
Monday, July 25, 2011
Great Dane, largest in world, afraid of Chihuahuas
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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.
Five Point Capital joins Evergreen Notification List
Greg Wells, President & CEO Five Point Capital, San Diego, California, in a follow-up communication, told Leasing News, "As I mentioned to you several weeks ago, we would be reviewing our end of term process. One of the outcomes of this review is that we are now sending written notice of the impending maturity to all true leases in all states.
"In full disclosure – notices that are being sent out now will have first impact on deals maturing in December. The current FPC contract calls for notice 120 days prior to maturity and we’re going to aim to get notices to them 30 days prior to the contract date. We’ll still have a few months ahead of us where deals have matured or have passed the contractual 120 days that a lessee won’t have notice."
In the communication on the last complaints, Greg Wells did say from the beginning he was working on a review of the procedure. It is also true that both he and Michael Losey, Director of Portfolio Management at Five Point Capital, have been very responsive, including both active in resolving the complaints; which were all resolved to the customer's satisification.
It was the non-notification issue that kept the complaints on the web site, but they now will all be removed, plus in LinkedIn group, Twitter, and Facebook sites.
Leasing News salutes Mr. Greg Wells for his leadership.
Companies who notify lessee in advance of lease expiration
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Leasing hiring index falls in Q2 after six straight quarters of growth
After 18 months of steady and consistent growth, the ZRG Equipment Leasing and Finance hiring index retreated, ending the quarter at 410. Despite the drop in career opportunities from Q1 to Q2 of this year, the overall job opening numbers are still higher than they have been in the past 3 years, showing healthy levels of hiring occurring in the space.
Will this gradual decline in new jobs continue in the upcoming quarter or will summer and fall bring continued hiring and further job opportunities to close out year? This is certainly a big question for the industry looking forward.
From a sector standpoint, growth for this year has come out of the technology and healthcare sectors. Functionally, we see a continued emphasis on business development and sales related hiring in the quarter. At current hiring index levels, 2011 is still on pace to exceed last year’s hiring pace by 85%.
ZRG is launching a new global leasing and finance hiring index this coming quarter, so global hiring trends in leasing will bring new insights to the quarterly releases.
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More on Brendan Messenheimer Sentencing
Leasing News has printed four “Alerts” on Brendan Messenheimer of AMC Funding, Charlotte, North Carolina, from both vendors and brokers. He owned another company that had sources through leasing companies as a vendor and was putting deals through here, reportedly more liberal as coming from a supposed vendor. When he was caught doing this, he was cut off and what happened were over a dozen brokers getting bounced checks or no checks, as well as vendors not being paid. Kendal Nuclear Medicine was one of them who nine months ago took the matter to court for a worthless check.
It was the vendor who was informing Leasing News about the trial, and confirmed that he had received reimbursement on his check for $10,587.88.
The vendor had said because it was a first time offense, the sentencing was "light." Leasing News has learned the sentencing was not just the return of the money, but he was ordered to pay $21,425.76, dissolve AMC Funding Group, take his website down and not own or operate a "similarly situated business."
“The total amount owed was $21,425.76. I was given (2) bad checks. One was for the amount discussed previously and the second was for the difference. The first check bounced for "NSF" and that was the one he was charged with Felony Worthless Check and the second was a "Stop Payment". As part of the plea deal, he was required to pay both in addition to removing his web site and one year supervised probation. In North Carolina, this will remain on his record forever.”
(name with held)
Fourth Alert (includes first three alerts)
Annual Operational Audits
I function as another set of eyes for the leasing industry doing reviews of lease portfolios to determine the soundness of lease operations. It is always a surprise to me that I find sloppy back offices and untrained personnel in companies that have been around for many years. The organization of a lease back office is a complicated affair and it does not take much to make mistakes that slip through the cracks. After a lease transaction is called complete, and before it is filed away, there should always be a review by someone trained to look at documentation and paperwork. I would also recommend this not be someone involved in day to day operations. Exceptions should be noted and repairs completed before time makes them impossible to correct.
The most common mistakes I find are unsigned documents (lacking signatures), blanks not filed in and documents misfiled. I could go on, but perhaps the most startling of all is the comments I receive prior to starting the audit when I am assured by management that their back office is the “best” there is and everything is reviewed and double checked and I should find no problems except a “few” human errors! So you can imagine their surprise when I show them a large verity of mistakes. It simply is because someone with knowledge out of the immediate department reviewed all the material and then the file is considered “reviewed.” “Complete” is next noted on the file when the items discovered are corrected.
In this current economy with downsizing and consolidation and longer work hours, I note more mistakes than normal are creeping in. In fact, I have found many more mistakes than senior management expected, and they were aware there would be errors, but not so many of them.
The fact that it is not expected is what is surprising. There are a million reasons for the mistakes, but apathy is usually the biggest problem. With personnel changes, policy changes, every day pressures and a lack of accepting that back office problems are usual, not unusual.
I believe very strongly in having a procedures manual for each position not just an overall policy and procedures manual. To create one you should have each employee create what they think is a list of their duties and responsibilities. Then the employee’s manager should first review it to determine how it corresponds to what they believe it should be and then review it every six months to make sure it has not changed or see it needs modifications.
Senior management needs to compare the correct duties and responsibilities for all employees to make sure all tasks have been assigned. Sounds like a lot of work, but once completed a more efficient work environment with less mistakes is the result. In Addition the duties and responsibilities list is an excellent outline for performance reviews.
Many of the mistakes occur due to a requirement for speed and excess work load. The more that is expected of the staff, the more mistakes are going to occur ---so more review is a real necessity.
A lease back office does not manage itself. Many of the mistakes occur due to the lack of supervision. Just because someone is a hard worker does not mean they will not make mistakes. We are all prone to make mistakes on occasion, but if the system is there to have someone with a fresh set of eyes review the work load ---perhaps they can be found and corrected prior to any consequences.
An annual review by someone trained to look at documents and who questions each action may help adjust your procedure manual so it supports the work flow instead of interfering with it.
I also suggest that the back office be organized according to the paper flow. Occasionally I find that over time and sometimes for political reasons personnel are stationed far apart requiring many additional hours for a transaction to make its way through the organization. It would be wise to establish a work flow chart and then compare it to your office set up to see how it moves and where it moves on its path to completion.
If you draw a line from task to task, it may surprise you how inefficient your work flow really is. That is why I said the back office of a leasing operation is a complicated affair.
If you are well organized and you need none of this pat yourself on the back and understand that you are in the minority.
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.
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Microfinancial (TimePayment) Almost Double Earnings
Microfinancial earned $2.3 million in the quarter ending June 30, 2011 compared to $1.3 million in the same period in 2010.The company that specializes in the mini-ticket marketplace, $500 minimum, opened an office Westlake, California increasing employees from 113 to 129.
“Although we continue to see a sluggish economy in the microticket market, especially with new business creation, we are very pleased with the continued improvement in our financial performance in the second quarter of 2011, " said Richard Latour, President and Chief Executive Officer.
"...the Company significantly improved its service offerings with the opening of our full service west coast operations center in Westlake Village, California. In addition, we realized continued improvement in our portfolio quality through reductions in delinquency levels and net charge-offs.”
Receivables increased from year-end $191 million to $193.3 million as well as retained earnings from $22.9 million to $25.7 million and equity from 143.6 million to $147.3 million.
Microfinancial 8-K report:
Bank Beat---Directors lose three banks: two Florida, Colorado
In covering the failure of banks in detail for almost three years, most were over extended in construction and land development loans, followed up by commercial loans, and 1-4 family home loans. The banks that failed started their decline either in 2006 or 2007, with obvious growing charge offs, and the time consuming and burden of growth in non-conforming loans, coupled with the result of not being able to raise additional capital, meaning the inability to bring in new investors. The numbers being posted are basically a minimum of 90 days behind, and more than likely close to a year. So what happened in 2008 was really the reporting reaching the point in 2009. All those who failed needed new capital, but their friends and relatives had already been approached in the formation of the bank. To raise capital for an entity losing money, charge offs, non-conforming loans, and god forbid, a cease and desist order from the FDIC, made it quite difficult, and in these cases, impossible. And they all started too late, six months to a year after the numbers were reported to the FDIC.
The larger banks have access to a more “public marketplace,” as well as many products to produce additional revenue, such as leasing, where the write offs were not happening with these banks. The smaller banks are trapped in their community and reflect it in the local down economy without the ability to reach further into communities in other states with the products available to larger banks with more staff and abilities.
Couple this with mismanagement by a board of directors who really had no business directing a bank, thinking they knew what they were doing, who in reality were usually a bunch of well-to-do friends and community leaders who raised enough money so they could have the local prestige of being on the board of a bank. I don’t know if that is as true today as it was five years ago when a bank director was looked upon as not only a celebrity in the community, but a financial successful person. If the bank is successful, it most likely is true today…but if not…
To top it off, the construction and business loans were mainly to their friends and relatives. In the end, the bank directors lost their initial investment as well as the respect of those they talked into investing in their bank.
These directors should have seen it coming. Leasing News Contributor Steve Chriest, a former leasing company president, and active then in training sales personnel for large corporations, saw it, and wrote about it in the February 3, 2006 edition (1)
The 17 branches of Bank of Choice, Greeley, Colorado were closed with Bank Midwest, National Association, Kansas City, Missouri, to assume all of the deposits. This is a long time bank that made it through the depression, founded January 1, 1896 and had 284 full time employees in 2008, the last years they opened a new office to 214 full time employees March 31, 2011 at two offices each in Arvada, Fort Collins, Greely, and Parker, one each in Auora, Denver, Elizabeth, Englewood, Evans, Kiowa, Platteville, Windsor. 12 of these offices opened from 2000 to 2008.
Charge offs of Construction and Land Development loans did them in with $7.8 million in 2009 and $$20.2 in 2010, along with nonfarm loans in the same years $2.3 and $7.5, farmland $2 million and $3.2 million. In fact, the first quarter of 2011 found $2.5 million in farmland charge offs as non-current loans had also climbed to $106 million, compared to $3.3 million in 2006 and $8.8 million in 2007.
Bank of Choice had lost $51 million in 2009 and $59.9 million in 2010.
A blog on the failure of this bank brought comments from a person who posted what he had learned in a four year Bank Strategies LLC as to "...why some of the banks got into the troubled condition they found themselves in regardless of what the economy or real estate values did. Below are a handful of actual examples of the dozens of practices that we have found in our studies that are inappropriate and significantly contributed to the risk profile of the bank. We are putting this forward now because Board members in all banks are nervous and we think will provide some perspective for you to share with your Board.
*-- "The bank distributes loan packages at loan committee, not before, and makes on decisions on each loan usually within 10 minutes,
*-- A lender tells us the approach of the bank is to book the loan and worry about the details later. When asked what the details are, the lender responds financial statements, tax returns, and written appraisals,
*-- Officers turned down in loan committee go directly to the President/CEO who possesses the full lending authority of the bank and the President overrides the loan committee decision,
*-- A rural bank enters a metropolitan market and starts making CRE loans and the only person approving the credit is the President who has no CRE experience and who had not updated the loan policy to deal with CRE loans.
"The examples above are some of the more blatant situations we have seen during our management study engagements. While each study has been unique, we have also observed many common flaws in various fundamental aspects of risk management and general oversight amongst the banks we have worked with.
"One common flaw is that banks' board of directors often knew what was going on but deferred to the judgment of the President/Executive team, whom they believed knew more about banking and therefore, concluded the practices must be okay. Clearly, Boards need to be better informed, better trained, and, in some cases, have the benefit of an independent management study before their primary regulator dictates it. This will help protect them from liability by insuring the practices and approaches of the bank are appropriate."
The numbers of Bank of Choice:
(in millions, unless otherwise)
Land and Construction, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.
As of March 31, 2011, Bank of Choice had approximately $1.07 billion in total assets and $924.9 million in total deposits. In addition to assuming all of the deposits, Bank Midwest, N.A. agreed to purchase approximately $853.0 million of the failed bank's assets.
Tier 1 risk-based capital ratio 3.47%
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $213.6 million.
(1) Bad Moon on the Rise
Ninth Bank to fail in Florida this year
Tier 1 risk-based capital ratio 0.32%
Note the drop in equity, profit, charge offs, and non-current loans. Most had very low Tier 1 Risk Capital, and as alarming, a trend you giving you little confidence to invest in, but as well as even extend credit. Note the following bank had a Tier 1 risk-based capital ratio 0.32%.
The six branches of LandMark Bank of Florida, Sarasota were closed with American Momentum Bank, Tampa Florida, acquiring the banking operations, including all the deposits. Founded February 4, 2000 the bank had gone from 66 full time employees in 2006 to 53 full time employers March 31, 2011 at the six offices located in Sarasota.
(in millions, unless otherwise)
Land and Construction, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non Residential loans.
As of March 31, 2011, LandMark Bank of Florida had total assets of $275.0 million and total deposits of $246.7 million.
Reportedly American Momentum was opened in 2006 with $100 million in capital, $90 million of it allegedly from Don Adams, the lead investor. He is considered “a Texas tycoon with business interest in Florida, including an agriculture and livestock operation near Ocala. Adams ran privately held First American Bank of Texas that he sold to Citigroup for $750 million in 2005, getting out at the right time. American Momentum has a strong board of directors: http://www.americanmomentumbankfl.com/a_directors.htm
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) LandMark Bank of Florida, $34.4 million
The two branches of Southshore Community Bank, Apollo Beach, Florida were closed with American Momentum Bank, Tampa Florida, acquiring the banking operations, including all the deposits. This is another young, small bank, founded September 12, 2005, with 10 full time employees as of March 31, 2011 with offices in Apollo Beach and Sun City Center.
The collapse of real estate was the culprit to this bank, where Wikipedia describes the area with "...a beautiful waterfront community. It is a year-round haven for boating and fishing enthusiasts, with its many miles of canals and inlets.
"Perhaps the fifty-five miles of navigable canals are the best known characteristic of Apollo Beach. The canals average a depth of seven feet in the center and all are connected, eventually merging into Tampa Bay. The canals themselves are lined with magnificent homes, with lush tropical foliage. The majority of home sites have docking facilities with sail boats and motor boats lining both sides of each canal."
Sun City Center is more of a retirement community, age restricted: "2000 Census...The median age was 75 years. For every 100 females there were 74.4 males...It is legal to drive golf cars on the wide palm lined streets during daylight hours and most shopping has special parking slots for same. There are several golf courses, about 20 various hobby shops, an outdoor and two indoor pools in the main clubhouse area. There are clubs for almost any interest or hobby including ham radio, computers, sewing, cards, investments, and dancing."
(in millions, unless otherwise)
Land and Construction, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.
As of March 31, 2011, Southshore Community Bank had approximately $46.3 million in total assets and $45.3 million in total deposits.
Tier 1 risk-based capital ratio 2.61%
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for Southshore Community Bank will be $8.3 million.
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San Diego, California-- Adopt-a-Dog
Why I'd make a great companion: I'm a lovable companion seeking a special home where I'll be a cherished member of the family. With bright eyes and a precious face, I have a beautiful personality to match. I can be a bit shy at first, but I warm up as I become more familiar with my environment and get to know you better. I appreciate a close, trusting relationships. During the adoption process a San Diego Humane Society trainer will be present to answer any questions and share how to best care for me and tips for continued training in the future.
Type of home I'm looking for: I will do best in a home with calm adults. I get along well with other small friendly dogs.
Other things you should know about me: My adoption fee is $105 and includes my spay, current vaccinations, permanent microchip identification, a certificate for a free veterinary exam, and a license if residing in Oceanside or Vista!
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Subway boss pares sales force; IPO possible
Caterpillar profit misses, hit by costs; stock off
Antigua opposition scolds gov't in bank takeover
Price of dinner foods up almost 5% in one year
U2 gave an 'out of this world' performance at the TCF Bank Stadium
Great Dane, largest in world, afraid of Chihuahuas
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California lowers taxes, raises fees
The largest high-tech heist in Bay Area history was an inside job
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This Day in American History
1651- African slaves in America arrived for the first time at the Spanish colony of St. Augustine, FL. They belonged to King Phillip II of Spain. The first slaves in the English colonies in America were introduced in Jamestown, VA, in August, 1619 by a Dutch man-of-war that sold 20 kidnapped Africans to the planter colonists. They were treated as indentured servants, since slavery was not legalized in Virginia for several decades. Forms of slavery were also practiced among Native American peoples from ancient times.
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