Personal Cloud to replace PC by 2014
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Investors' Conference a Major Success
The 11th annual Investors’ Conference on Equipment Finance was held in New York City on March 15, 2012. As has been the case in recent years, the conference was organized by Information Management Network (IMN) in partnership with the Equipment Leasing and Finance Association. About 300 attendees enjoyed a busy day of informative programs and valuable networking opportunities.
I found the conference to personally be of great value as I was able to talk (briefly in some cases) with about 50 people that I wanted to connect with.
ELFA Chairman Crit DeMent
The opening session was an update on the state of the leasing industry presented by ELFA President & CEO Woody Sutton and ELFA Chairman Crit DeMent.
The ELFA is projecting that overall capital equipment expenditures and equipment leasing and finance volume will continue to grow in 2012. This session was followed by the keynote address in which Pimm Fox of Bloomberg TV and radio discussed some of his experiences as a member of the media.
Other sessions on the day’s agenda included Overview of the Equipment Finance Sector in 2012, Capital Markets Update and Funding Strategies Today, Assessing Investment Opportunities on the Equipment Finance Sector, Risk Mitigation Developments in the Equipment Finance Sector, Locking in Equity & Debt Funding, and Solar Energy as a Growth Sector. The presenters were senior executives from the equipment leasing industry, investors in equipment leasing companies and service providers, and their remarks were informative and well-received by the audience.
The greatest value for many of the attendees was the opportunity to network. Many of the leasing company executives in attendance had pre-arranged meetings with potential investors in equity or debt. For parties interested in investing in the leasing sector, the conference was an opportunity to interact with executives of many of the leading independent leasing companies in one location. In fact, during some of the conference sessions there were more people networking in the refreshment area outside the conference auditorium that were attending the session. There were also a few service providers that had exhibit tables to promote their services, but most of the attendees appeared to be more interested in networking with their peers and with investment sources and advisors than in talking with the service provider exhibitors.
The conference concluded with a cocktail reception for which many of the attendees stayed in order to continue their networking. For many of us in the capital markets sector, the Investors’ Conference is a “must go” event, and this year’s conference did not disappoint.
Bruce Kropschot, Senior Managing Director and Merger & Acquisition Advisory Practice Leader
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Bank Beat-- 100 Top Community Banks $500M to $5B Assets
Despite coming from Georgia, a state with 77 failures since 2008, Atlanta-based State Bank Financial was found to be the "Best Performing Community Bank between $500 million and $5 billion in assets for 2011 by SNL Financial.
Texas had the highest number of ranked banks in 2011 with 12 companies in the top 100. California came in second with 9 banks, followed by Virginia and Pennsylvania with 8 banks each.
Methodology: To compile the rankings, SNL defined community banks as institutions with less than $5 billion in assets, 60 or fewer offices, with at least one-third of their balance sheet composed of loans, and cannot have more than half of their loans in credit cards. Additionally, banks with a majority of revenue derived from nontraditional banking activities or not well capitalized were excluded. SNL ranked companies at the bank holding company level if consolidated data was reported. Otherwise, commercial bank subsidiary data was used. Thrifts were excluded. Based on the described criteria, 723 companies with assets between $500 million and $5 billion, and 4,316 companies with assets under $500 million were eligible for the rankings.
Recognition: SNL will recognize the top performers in person at the 2012 SNL Community Bankers Conference, May 3-4 in Tampa, FL. The conference features community bankers and advisors from across the country sharing operational and financial strategies they've found useful in driving profitability. Details and registration can be found at www.snlcenter.com/CBC.
The Independent Community Bankers of America at their 2012 national Convention and Techworld, held in Nashville, Tennessee, attracting more than 3,000 attendees, announced their "Community Banking Policy Priorities."
“Our nation’s more than 7,000 community banks continue to be prolific small businesses lenders and job creators, boosting economic growth in local communities nationwide,” said Jeff Gerhart, incoming ICBA chairman and chairman of Bank of Newman Grove, Neb.
“ICBA’s 2012 policy priorities address the needs of Main Street community banks and their customers by supporting key policies that promote much-needed regulatory relief for community banks, address the suffocating examination environment, extend FDIC coverage of transaction accounts and stop the tax-exempt credit unions’ unfair push to expand into prohibited commercial lending—at the expense of taxpaying community banks.”
ICBA’s top priorities for 2012 include:
REGULATORY RELIEF LEGISLATION
• Pursuing enactment of the Communities First Act (H.R. 1697 and S. 1600), which provides much-needed regulatory and tax relief for community banks, their customers and their communities. The Communities First Act would allow community banks to continue to lend locally and help boost the economy by providing appropriate tiering of regulation and providing relief for smaller, low-risk institutions. The legislation contains 26 tax- and regulatory-reform provisions that would benefit local economies and have a positive impact for community banks and their customers.
STOP UNFAIR TAX-EXEMPT CREDIT UNION POWER GRAB
• Urging Congress to address the unfair tax and regulatory disparity between taxpaying community banks and tax-exempt credit unions, while opposing further credit union “mission creep.” Bank-like credit unions should be subject to the same laws and regulations as banks, including taxation and compliance with the Community Reinvestment Act. Large, multi-bond and geographic-based credit unions have exceeded their statutory tax-exempt mission and unfairly use their large taxpayer subsidy to compete with taxpaying community banks. At a time of record federal budget deficits, every dollar of revenue counts. ICBA also vigorously opposes legislation to expand commercial lending powers of credit unions. Of the nation’s 7,300 credit unions, only 162 are at or near the current cap. Furthermore, Small Business Administration loans, as well as any small business loans of $50,000 or less, are exempt from the cap. There is ample capacity for the 98 percent of credit unions below the federally mandated cap to expand their lending with no change to current law if they choose to do so.
FDIC “TAG” INSURANCE EXTENSION
• Urging Congress to extend full insurance on noninterest-bearing transaction accounts once the temporary coverage expires on Dec. 31. This important coverage was established to support bank liquidity and stability and prevent any sudden withdrawal of deposits, which potentially could destabilize the entire banking system. It also ensures that small business, municipal and other transaction accounts are adequately protected. Congress must act soon to continue full FDIC coverage for noninterest-bearing transaction accounts for an additional five years. Leaving this important insurance issue unaddressed would harm Main Street communities and small businesses and create disruptive uncertainty in an already fragile banking system. More than $1.4 trillion in deposits are now insured by this bank-funded insurance. Congress must act this year to extend it.
MORTGAGE LENDING POLICIES
• Encouraging the Consumer Financial Protection Bureau (CFPB) to provide community banks a safe harbor for “qualified mortgages” for the “ability to repay” requirements mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. ICBA also encourages the regulatory agencies not to define “qualified residential mortgage” under the credit risk retention rules of Dodd-Frank so stringently that community banks would no longer have the ability to structure loan terms that fit a qualified borrower’s unique financial situation. Too narrow a definition will severely limit credit availability to many creditworthy borrowers who do not have significant down payments, have seasonal incomes or face other unique situations that fall outside of secondary market guidelines. Community banks need to retain the flexibility to serve these borrowers.
IMPROVING THE BANK EXAM ENVIRONMENT
• Continuing to warn regulators that excessively tough exams that result in potentially unnecessary loss of earnings and capital can have a dramatic and adverse impact on the ability of community banks to lend and therefore impair their ability to support economic growth. To prevent unnecessary bank failures, the examiners must exercise some restraint. ICBA resists efforts by the regulators to impose hard concentration limits on any type of lending. Examiners should take a longer-term view of real estate held by banks as collateral for loans and should not demand aggressive write-downs and reclassifications of loans based on forced sale values of real estate during illiquid or dysfunctional markets. ICBA supports legislation that would reform the appellate process for agency decisions or actions and that would allow bankers to appeal to an independent council or ombudsman office an adverse determination made by an examiner in an exam report.
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) REFORMS
• Ensuring that any new rules promulgated by the CFPB provide community banks the flexibility to meet the unique needs of their customers and do not burden community banks with additional and unnecessary regulatory requirements that could prevent them from serving their communities. ICBA also supports legislation that would replace single-director governance of the CFPB with a five-member commission. Prudential banking regulators should actively participate in the consumer protection rule-writing process. The Financial Stability Oversight Council should have the power to veto CFPB rules under a more practical and realistic standard than currently exists. ICBA firmly believes that the focus of any enhanced regulation of consumer financial products should be on the unregulated “shadow” financial industry. The CFPB must use its authority to exempt any class of providers or any products or services from the rules it writes to grant broad relief to community banks and their products where appropriate.
TAX RELIEF AND REFORMS
• Promoting tax laws that spur robust economic activity and a vibrant community banking sector while fostering saving and investment. ICBA opposes new bank-specific fees or punitive new tax levies and transaction taxes specifically targeting the financial services sector. ICBA also advocates for the net operating loss five-year carryback to be extended or made permanent for all community banks. Public policy should support community banks’ ability to raise capital, including allowing Subchapter S Corporation banks to issue preferred stock, increasing their shareholder limits, and allowing new IRA shareholder investments. Tax policy should also foster greater savings and bank liquidity, including tax-advantaged savings accounts and CDs.
For more information, visit www.icba.org.
Story Credit Lessors---Update
To qualify for this list, the company must be a funder (as qualified by Leasing News and on the “Funder List, meaning we have verified with their banker, investor, or they are a public company, that 50% of
their transactions are "full recourse.") They also have to have a good reputation as evidenced by an acceptable Better Business Bureau Rating and no history of complaints at Leasing News, as well as notifying lessees in advance when the lease will end and what the residual will be, specifically not automating extra lease payments, or insisting their discounter follow the same policy. We reserve the right to not list a company who does not meet these qualifications.
These companies may accept and compete in "A" and "B" marketplaces, but also specialize in "C" and "D" credits, often new businesses, or businesses where the principal(s) have Beacon score around 600 or previous difficulties or the equipment may be considered poor collateral or attracting problems; meaning to become comfortable with the credit and financial situation you need to learn the "story" to make a positive decision, often requiring further security, shorter term, or additional guarantors. Their specialty is not being a “cookie cutter” and often require full financial statements and tax returns as well as a “story about the company, its history, goals, circumstances” to fully understand the full financial picture.
Leasing News encourages companies who are listed to contact us for any change or addition they would like to make. Adding further information as an "attachment" or clarification of what they have to offer would be helpful to readers is very much encouraged.
Vendor programs are as varied as the different types and kinds of equipment. Here are some of the most popular programs at the moment realizing that some of them will fade away, if and when the FASB decides to implement their new rules for lease accounting.
Discounted rate structure:
The vendor allows the Lessor to purchase the equipment at a discount so that it appears that the lease rates are below market encouraging the Lessee to lease the equipment. Even a 5% reduction in the equipment cost will reduce the appearance of the interest rate to the lessee and your competition. Occasionally it helps the vendor sell equipment because sometimes the lessee’s look at the lease rate as a deciding factor.
The vendor may wish to encourage the leasing company to take weaker credits by giving a recourse agreement, which allows them to repurchase the lease agreement when the lessee falters. They are in a better position to come out of the deal whole because of the mark up on the equipment is greater than the Lessor’s mark up and they have remarketing capabilities which the Lessor probably does not have. On occasion the Lessor may have to gain the right to repossess the equipment through a replevin action prior to requiring the Vendor to repurchase the transaction.
Rent to Lease:
A startup company or a week credit may require that the first six months look like a rental with the vendor accepting the credit risk but if the Lessee makes it through the first six months at a payment that is much higher than the remaining term; then the vendors recourse goes away but the Lessee has reduced the outstanding risk to where the equipment is now supporting the deal. This works good if the equipment has a small mark up and retains its value. It does not work if the vendors mark up is high or the value of the asset falls shortly after it leaves the vendors business.
Programs tailored to use:
Certain types of equipment are seasonal use and programs that understand this are offered so lease payments can be made when the revenues are received by the Lessee.
If a vendor agrees to remarket the equipment for a reduced fee on “off lease equipment”; or guarantees residuals; or repurchase the repossessed equipment, then the Lessor can assume higher residuals allowing for reduced terms that help both the vendor and the leasing company do increased business.
National Manufacturer Programs
Most manufacturers of equipment have established a captive financial company to serve the needs of its customers and support the sale of their equipment. On occasion they may engage a leasing company to provide a private label-leasing program where the customer is unaware that an outside firm is doing the lease financing. It will function much the same as a captive where equipment residual values and credit guarantees support the leasing company so better terms can be offered. The manufacturers equipment mark up tends to be a grater margin than the markup for financing and the manufacturers have found that financial incentives are easier to provide so as to not have to vary the price of the equipment. The public is use to changing interest rates but react negatively to changing equipment values.
Manufacturers can use their dealer base to remarket off lease equipment and therefore take higher residuals and lower lease payments below what a financial or independent Lessor can offer. In some cases the rates may be higher but the rent payments are lower and if the residuals can be realized the manufacturer can hold on to his customer. Manufacturers are often using lower lease payments to increase market share knowing they may have a small loss on the residual but in the long run increasing the customer base will pay off in the end.
Captive Leasing Programs
Captive leasing companies are rarely direct subsidiaries or part of the manufacturer because they need to separate the equipment performance responsibility from the financial responsibility. If the equipment stops the lessee would stop the rent payments until the repairs were made. By separating the financial arrangements into a separate company it also allows the manufacturer to book a sale instead to taking the income over the term of the lease if they never passed title/ownership.
Captive leasing companies are a growing segment of the lease market generally because they have a better understanding of the equipment and how to remarket it. They are more prominent in large companies but a large number of smaller manufactures that unable to establish the capital to create a separate financial entity are looking for support except they usually need a leasing company with national capabilities.
(part III next week)
Vendor/Manufacturer/Distributor Lease Sales --
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:
Career Crossroad—“Negotiating a Salary”
Question: I am a candidate expecting an offer next week---Do you have any tips on negotiating a salary?
Answer: First, congratulations!
If you are currently employed and in an operations-type role and are expecting an offer from a new employer:
If it is a sales position, the game has changed, do not expect companies to be offering base salaries of the good ‘ol days, salaries offered have become more conservative – especially in the world of finance.
Right now Captive Lessors and Manufacturing companies are hiring back sales personnel, while others want a proven sales record.
Typically a company will want to view your W-2 for the past few years to see what your base salary has been. This is quite common.
If you are in a sales/business development role, your W-2 ALSO indicates your success (commission) as such it is almost always a requirement to supply this information.
There is a bright side, if you are in a sales role, there are ways to make up the difference (call me for the inside scoop).
Previous Career Crossroad columns:
Classified Ads---Help Wanted
Leasing News Help Wanted Ad Pricing
""I want to thank you for listing our Business Risk employment position in Leasing News. Through our various postings, we received resumes from over 50 very qualified candidates.
""I am very happy to report that the position has been filled..."
Laurie Bakke, President
"The ad worked great. We hired a Documentation Coordinator that has been out of the industry for almost 3 years as a friend of hers saw our ad on Leasing News. She is now in her 2nd full week.
"We are actually looking to fill 4 sales positions this year so we’ll likely be back again. It feels nice to be managing growth, albeit measured, again.
Andrew Nere, President
"We are definitely satisfied customers after placing our employment ad in Kit's Leasing News. Although the person we hired hadn't seen the ad, a friend of her's in the leasing industry saw the ad and told her that Dakota was hiring...
(The position was filled and time was left on the ad, so it was changed to a marketing person, which they also were successful in finding. editor.)
"It turned out we not only filled our open position, but were able to find an experienced leasing veteran who just wanted a location change. It worked out well for everyone!"
Mae G. Philpott
1. What do you call a lawyer with an I. Q. of 50?
2. What do you call a lawyer gone bad?
3. What’s the difference between a lawyer and a trampoline?
4. How can you tell when a lawyer is lying?
5. What’s the difference between a dead dog in the road and a dead lawyer in the road?
6. Why won't sharks attack lawyers?
7. What do have when a lawyer is buried up to his neck in sand?
8. If a lawyer and an IRS agent were both drowning, and you could only save one of them, would you go to lunch or read the paper?
9. If you see a lawyer on a bicycle, why don't you swerve to hit him?
10. Santa Claus, the tooth fairy, an honest lawyer and an old drunk are walking down the street together when they simultaneously spot a hundred dollar bill. Who gets it?
Top Stories March 13--March 16
Here are the top ten sorties opened by readers:
(1) Alert---Another One/ from Lease Police
(2) Blue Bridge Financial joins
(Tie) (3) Dick's Drive-In named "Most Life-Changing Burger in America"
(Tie) (3) Westover Capital and Joe Woodley, CLP by Christopher Menkin
(4) New Hires---Promotions
(5) Financial Pacific Leasing joins
(6) Not Over Yet for Mr. Donner!
(Tie) (7) Direct Capital Expands $100 MM Securitization Facility
(Tie) (7) Leasing 102 by Mr. Terry Winders, CLP
(8) Central Leasing Executive Gets Two Years
(9) Five Leadership Lessons from James T. Kirk
(10) National Equipment Finance Summit Page
Not counted due to technicalities:
#### Press Release #############################
Convicted $736 Million Tax Fraud Involving 1,000 people
Ronald L. Brekke, 55, was convicted of tax fraud in a conspiracy that resulted in more than $14 million tax loss, involving over 1000 people with claims over $736 million.
The Orange County, California man was indicted and arrested in late 2010, after two of his Canadian co-conspirators were arrested in Bellingham after attempting to cash two refund checks exceeding $350,000 each. The two Canadians, Donald Mason and John Chung, were convicted in U.S. District Court in Seattle, and the investigation revealed that Brekke had been promoting the tax fraud scheme. Brekke faces up to 20 years in prison when sentenced by U.S. District Judge John C. Coughenour, on June 15, 2012. The jury also found that $291,064 seized from Brekke’s PayPal account at the time of his arrest was subject to forfeiture as the proceeds of his crime.
Brekke promoted a tax fraud scheme known as “1099 OID” fraud. Promoters of this scheme claim that the U.S. Treasury will pay out tax refunds equal to the value of a person’s personal debt. Brekke helped nearly 1,000 people claim over $763 million in fraudulent tax refunds by preparing phony tax forms on their behalf. The IRS flagged the vast majority of the filings as frivolous, but refund claims totaling approximately $14 million were paid before the IRS detected the fraudulent nature of the returns. Brekke had been repeatedly warned and fined by the IRS about the frivolous filings. He also had received information from the FBI that the scheme was illegal. In a recording played for the jury, Brekke told people at a seminar that some of the filings would slip through resulting in a big payout for some of the filers. In closing argument, prosecutors said that Brekke “knew the tax system’s vulnerabilities and exploited them... and the result was people getting free money who never paid a dime into the U.S. Treasury.”
The IRS has more information on this fraud scheme here: http://www.irs.gov/newsroom/article/0,,id=254383,00.html.
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and the United States Secret Service. The case was prosecuted by Assistant United States Attorneys Thomas Woods, Mary K. Dimke, and Tessa Gorman.
##### Press Release ############################
Pet ID: A454758
“Brownie is a 5-month-old Labrador Retriever/Shepherd mix. Batten down the hatches when Brownie comes through because she's a whirlwind of energy. She is playful, vocal, and ready to go. She wants to play, she wants to investigate, she wants to make new friends. Brownie would probably be comfortable doing 8 things at once. She'll be a delight in an active household and has a sweet nature to go with all that puppy energy. If you would like to contact Metro to ask about this dog, it is very helpful if you have the ID number (A454758) handy. Thanks!! “
Metro Animal Services' Animal House Adoption Center
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
(Leasing News provides this ad as a trade for investigations
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The Sound of the Trees
by Robert Frost
I wonder about the trees
For California's disgraced politicians, the fall hurts -- but just look where they landed
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This Day in History
1589 - William Bradford, Pilgrim father, governor of Plymouth Colony, one of the early presidents of the United States. Born at Yorkshire, England, baptized Mar 19, 1589. Sailed from Southampton, England, on the Mayflower in 1620. His wife Dorothy fell off the Mayflower and drowned on 7 December 1620, when it was anchored in Provincetown Harbor. Died at Plymouth, MA, May 9, 1657 (OS).
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