Archives--- March 18, 2009
Paul A. Larkins resigns from Key National Finance

Confirmed: Paul A. Larkins, CEO of Key National Finance and Key Equipment Finance, Superior, Colorado, and Leasing News Person of the Year for 2006, has resigned.

A call to his office this morning to get confirmation or denial was directed to Key Public Relations Officer Tricia Akins, who did not return the telephone call. The reaction by Mr. Larkins’ secretary, known to Leasing News, the fact that he was not available, email returned, and comments were referred to public relations indicates the group was not prepared.

Late afternoon email from Tricia Atkins:

“Peter Hancock, Vice Chairman of Key’s National Banking organization, announced today that Paul Larkins, President and CEO of Key National Finance, will be resigning at the end of the month to take a position at an asset management firm specializing in distressed debt.  Key remains committed to the leasing business, known as Key Equipment Finance (KEF). Business groups that previously reported to Larkins, including KEF, will now report to Hancock.  We are grateful to Paul for his leadership, and wish him the best in his new endeavors.”

Larkins had just won an award for his education program, plus was recently named top business newsmakers in Colorado for the third consecutive year by the Denver Business Journal.

November 11, 2008 he announced 180 positions were let go from the estimated 1,100 employees, including 30 positions of the company's 352 person Boulder, Colorado headquarters being let go or not replaced via attrition.

Previous quarterly reports from Key Bank SEC filings showed the leasing division was doing relatively well.

TODAY

President and CEO
SquareTwo Financial

"Since 1994, SquareTwo Financial has worked with more than two million individuals and small businesses in North America. We provide practical solutions to our Customers’ outstanding financial obligations so they can improve their financial position and become active participants in our economy. Each quarter, we give hundreds of thousands of Customers the chance to regain financial stability, secure a new job, or even take steps towards owning their first home. We do this by removing the burden of debt."
http://www.squaretwofinancial.com/

 

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Classified Ads---Sales

(These ads are “free” to those seeking employment or
looking to improve their position)

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Work Remotely Business Development - Are you looking to enter/increase your Healthcare lending? Let me identify and qualify healthcare (all verticals) vendors, distributors, and end users who utilize leasing/financing as a tool to sell equipment for you. Many years experience - contact Mitchell Utz at mitutz@msn.com or  (215) 460-4483.

Free Posting for those seeking employment in Leasing
http://www.leasingnews.org/Classified/Jwanted/Jwanted-post.htm

All “free” categories “job wanted” ads:
http://www.leasingnews.org/Classified/Jwanted/Jwanted.htm

Balboa Capital Loses Decisively
to Put Regents Capital Out of Business Right Now!
by Christopher Menkin

Balboa Loses TRO Because It Had No Facts to Support Allegations of Theft of Customer List. Papers Contain Revelation That Balboa Paid a 1% Bounty If Its Salesmen Stole Competitors Customer List.

Pat Byrne’s Balboa Capital, Irvine, California, is back in the news, trying to shut down Regents Capital with a restraining order. The actual lawsuit calls for a jury trial, which could easily be two years down the road. The attempt then is to close Regents Capital before it can get established. The lesson is obvious to not only punish those who left, but who might leave, or want to disclose inside information on the culture of Balboa Capital. The ex parte Temporary Restraining Order was denied, but a hearing for Preliminary Injunction is scheduled for April 24, 2014 at 2:00pm is scheduled before Judicial Officer Kirk Nakamura.

Balboa Capital on March 11 introduced 249 pages for an ex parte TRO. The pages basically state Regents Capital contacted a few customers. (1)

The Application for ex parte TRO and Preliminary Injunction contains no factual support for the conclusion regarding the assertion that Regents Capital took customer lists. One would think that if Balboa Capital’s CEO Patrick Byrne had actual proof, as opposed to conjecture, you could assume that there are no facts, and it didn’t happen.

That the Judicial Officer denied the motion, leads me to three conclusions: First, there is no factual basis for this suit and it simply filed out of spite. Second, the idea that a salesperson could download or physically take customer lists from 1998 is just silly. It would take a moving van and presumably Chief Operating Officer Robert Rasmussen and President Phil Silva would have been watching this all happen. Third, this is just a vendetta.

Knowing that he certainly would be sued by Byrne and company, as that is the practice of this company since inception, Don Hansen, president of Regents Capital appears to have taken serious steps to make sure he was taking no files or customer documentation, and obviously was following an attorney’s advice in the careful manner he resigned and left employment. As to contacting a few Balboa Capital customers, Hansen explains it well enough to get the TRO denied.

It’s no secret to Leasing News readers that Balboa Capital has a practice of obtaining information and customer lists from companies where the new hires come from; as noted in previous Leasing News articles regarding Direct Capital and TimePayment (2a).

In a rebuttal against a preliminary injunction, Hansen gives further insider testimony to Balboa Capital practices of obtaining customers lists from competitors:

“(10) During my employment and pursuant to my compensation agreement, if I brought in new employees who brought with them their "books of business", also known as their customer list from their prior employer, I would receive additional compensation in the form of 1% of gross margin generated by "Books of Business" salespeople for any such salespeople that I brought in. Thus, Balboa incentivized employees to get individuals to join Balboa and take their prior employer's customer list with them. This is one way the company has grown.”
(3a, Page 4)

There is no doubt that since this was the practice of obtaining customer lists and other information from a competitor, Balboa Capital suspected Hansen would be doing the same with his new company.

Here is an excerpt of Hansen’s ten page response, where he addresses contacting a few Balboa Capital customers:

“(2) I began working at Balboa Capital Corporation ("Balboa") in August 1994 as an Account Executive. In 1997, I took the position of Vice President of the Commercial Finance Division. I was in this position when I resigned.

“(3) Balboa is a lending company that specializes in equipment leasing, working capital loans and franchise financing. Balboa was created when Patrick Byrne and his co-worker Shawn Giffin together left one equipment financing corporation to start their own competing company. Balboa has grown to have over 150 employees.

“(4) As the Vice President of the Commercial Finance Division, I was responsible for management and oversight of the Commercial Finance Division. At the time of my resignation in December 2013, there were approximately 20 employees in the Commercial Finance Division including Dennis Odiorne, Kirsten Merza, Chelsea Haines, Javier Enriquez, Kevin Kutter and Travis Power. I worked closely with each of these individuals. Our division focused on middle market customers — namely, companies with annual revenues from $10 million to $250 million. In my experience, personal relationships are very important in this industry. During the last few years of my employment, the number of middle market transactions constituted approximately 20% of Balboa's deals while the remaining 80% were small ticket transactions (loans of $150,000 or less).

“(7) During my almost twenty years of employment with Balboa, I have reviewed thousands of applications from thousands of different companies for thousands of different equipment leasing loans and working capital loans. Some of these applications were converted to transactions and many others were not. I would not be able to remember the name of every company who submitted an application that I reviewed while working at Balboa.

“(8) At no time during my employment at Balboa did I have any formal written customer list or excel spreadsheet with information regarding all of the customers I worked with. There was a database on which information relating to leads/prospective customers and actual customers was kept but I was unable to run a list from that database due to Balboa's security measures.

“(9) During my time at Balboa, the company has publicly announced customer information in places such as video testimonials that are posted on Balboa's website, YouTube, Twitter, LinkedIn, and Facebook. These can be found at http://www.balboacapital.com/testimonials/. The company "likes" its customers on Facebook, therefore a list of all customers Balboa "likes" is shown to anyone who visits Balboa's Facebook page. Similar to Balboa's "likes" on Facebook, it also frequently tweets on Twitter different companies to connect with and to follow on follow Friday ("#FF"). Many of these companies Balboa publicly asks people to follow on its Twitter page are customers of Balboa. Similarly, on Balboa's LinkedIn page, it has 1,541 followers as of March 11, 2014, many of whom have been Balboa customers. Balboa also has a Google+ page on which it is connected to 1,707 people/companies in its circle as of March 11, 2014, many of whom have been Balboa customers. In addition, Balboa frequently releases press releases when it reaches financing deals with customers. Through all of these means, Balboa publicly advertises the identities of many of its customers.

“(11) I am not aware of Balboa using any specialized marketing techniques or strategies to target potential customers that are markedly different from those techniques and strategies used by other companies in the industry. Balboa is a member of the same trade groups and receives industry magazines, like many other companies in the equipment financing business. Through these groups and publications, we share ideas.” (3a)

Hansen’s ten page statement is below along with the statement of Tiffany Brosan as noted below (3a, 3b). There was no “hard facts” in the complaint for a Temporary Restraining Order by Balboa Capital. Certainly there is more to follow as both sides reveal what really goes on, including perhaps previous officers and employees. The statements from Balboa Capital are in footnote (1) as well as the original complaint (2, b).

Leasing News has sought a statement from both main parties but has not received one. All these records are from the Orange County Court Reports, Case Id: 30-2014-00705733-CU-BT-CJC

 

Case Title: BALBOA CAPITAL CORPORATION VS. REGENTS CAPITAL CORPORATION

(1) ex parte TRO

(a) EX PARTE APPLICATION - OTHER FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
http://www.leasingnews.org/PDF/EXPARTEAPPOTHERFILEDBALBOA.pdf

(b) DECLARATION IN SUPPORT (OF EX PARTE) FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
http://www.leasingnews.org/PDF/DECLARATIONREEX-PARTEFILEDBALBOA.pdf

(c) PROPOSED ORDER (TRO) RECEIVED ON 03/11/2014.

(d) PROPOSED ORDER (OSC RE PRELIMINARY INJUNCTION) RECEIVED ON 03/11/2014.

http://www.leasingnews.org/PDF/PROPOSEDORDER(TRO)RECEIVED.pdf

(e) MOTION FOR PRELIMINARY INJUNCTION RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/MOTIONFOR
PRELIMINARYINJUNCTIONRECEIVEDON.pdf

(f) DECLARATION IN SUPPORT (OF MOTION) RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/DECLARATIONINSUPPORTOFMOTION.pdf

(g) PROPOSED ORDER (ON MOTION) RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/PROPOSEDORDERMOTION.pdf

(h) DECLARATION RE: EX-PARTE NOTICE FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
http://www.leasingnews.org/PDF/DECLARATIONREEX-PARTEFILEDBALBOA.pdf

(2) Balboa Capital Sues Regents Capital
They Are After Salesmen Who Left
http://leasingnews.org/archives/Mar2014/3_12.htm#balboa

(b) Balboa Complaint
http://leasingnews.org/PDF/BalboaCapitalComplaint_3122014.pdf

2. (a)Declaration of Don Hansen
   http://www.leasingnews.org/PDF/DeclarationofDonHansen.pdf

   (b) Declaration of Tiffany Brosan
   http://www.leasingnews.org/PDF/DeclarationofTiffanyBrosan.pdf

3. (a) Opposition to Restraining Order
   http://www.leasingnews.org/PDF/OppositiontoTRO.pdf

   (b) Declaration of Don Hansen and Dennis Odiorne
   http://www.leasingnews.org/PDF/DeclarationDonHansen
   andDennisOdiorne.pdf

 

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“How to Career Search before an Interview”
Career Crossroad---By Emily Fitzpatrick/RII

Question: What questions should I be asking myself before a career search and/or interview?

Answer: There are a lot of questions to ask yourself while contemplating a career move. Answering these questions should enable you to define both short and long-term goals. Additionally, they will help you better assess the fit between you and the company’s culture, position, etc… they will help you evaluate future job offers and potential employers.

The following will help you asses who you are and what is important to you:

Sample aspects to be considered

1. What are your key values you will bring up?

2. Are you a risk-taker?

3. Do you rise to a challenge or back away?

4. Are you overly competitive?

5. What in your personal life causes you the most stress?

6. If you were to ask acquaintances to describe you, what adjectives would they use?

7. What kinds of people do you like working with?

8. What are your goals and aspirations?

Sample practical aspects to consider

1. Geographically, where do you want to work?

2. What kinds of products / services would you prefer to work with?

3. Do I mind traveling frequently – what percentage is reasonable?

4. Do you prefer a large or smaller type company?

5. Is it important to me that the company have an employee-training program?

For more samples, feel free to contact us.

Emily Fitzpatrick
Sr. Recruiter
Recruiters International, Inc.
Phone: 954-885-9241
Cell: 954-612-0567
emily@riirecruit.com
Invite me to Connect on LinkedIn
www.linkedin.com/pub/emily-fitzpatrick/4/671/76
Also follow us on Twitter #RIIINFO

Career Crossroads Previous Columns
http://www.leasingnews.org/Conscious-Top%20Stories/crossroad.html

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Leasing Industry Help Wanted

 

 

 

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Meet

Leasing News Advisor
Ginny Young

Ginny is one of the original founders of the Leasing News Advisory Board. She had been in the finance industry for 35 years, including being very active for over 20 years in equipment leasing. She retired from the commercial finance industry in 2005.

Since closing Brava Capital, Ginny has become CFO of the family’s construction business which specializes in playground and other site amenity construction for municipalities such as cities, counties, school districts, and HUD. She still keeps in touch with her friends in the leasing business and participates in Leasing News Advisory Board discussions and meetings.

Ginny Young
Ortco, Inc.
2163 N. Glassell Street
Orange, CA 92865-3307
714-998-3998
ginny@ortcoplays.com

Her prior company Brava Capital specialized in franchise financing. She was a very active member of the United Association of Equipment Leasing having chaired several committees, worked on regional committees and was a speaker/panelist at annual conferences. She wrote articles for "Newsline." She chaired the very successful 1999 Annual Conference and Exhibition and served on the Board of Directors for four years.

Ginny enjoys spending time in her mountain home in Lake Arrowhead, CA, which is only a little over an hour away. The weather is usually 10-15 degrees cooler in the summer than her home in Orange County.  

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Leasing 102
by Mr. Terry Winders, CLP

Stipulated Loss Values
Tax Indemnification Agreement (TIA)

A true lease is a non-cancelable transaction so the lessee has no right to terminate the lease early. However, if the equipment is destroyed or made inoperable, the lease language contains a provision that such events constitute defaults. Because of the non-cancelable clause, the loss must be stipulated as a loss and that is why it is a default. In the default language, the lessee should be required to pay the balance of the rent plus the purchase option, and if an operating lease, the stipulated loss value (SLV), or the current street value whichever is greater.

In a true lease, the lessor is considered the tax owner of the equipment and is using MACRS depreciation to reduce the lessor’s income tax. The amount to clear both the book balance and remove the asset from the tax books requires a complex calculation. The tax impact develops because book depreciation is straight line and MACRS depreciation for income tax is accelerated. Therefore, the balance for book is usually higher that the undepreciated balance for income tax.

The amount charged to the lessee to terminate the lease is considered a sale of a capital asset. If the book balance is higher than the undepreciated tax value a profit is created and a recovery tax is necessary. This additional tax will raise the amount required from the lessee to clear both book and tax.

In the thought process of the IRS, we have over depreciated the asset beyond its true value and need to recapture the tax savings. This tax must come from someone, so the lessor passes this on to the lessee by raising the payoff. The lessor must increase the early termination value (SLV) with the increased tax. The problem is that if you increase the SLV with the tax, you are increasing the difference that increases the tax. So there is a tax on a tax on a tax. The procedure to determine the correct SLV usually requires a computer-based pricing program that can do the calculations properly.

You must remember in an operating lease, the equipment is owned by the lessor, so if the loss comes near the end of the lease, the SLV may be too low. The current value of the asset may be higher. Outside appraisers may be necessary to determine the real value for loss consideration.

Most lessors compute the SLV at the time the transaction is booked and place the schedule in the folder. Some lessors provide this to the lessee, but it is not wise to do this because if the actual street value is the greatest value, do you want to sell “your asset” for less than its worth?

The major penalty from the tax effect comes in the first few years when the difference between the book value and the undepreciated tax value is the greatest. Knowing the SLV in advance helps with early termination values if the lessee needs some outs in case of changes in equipment needs.

To compensate the lessor for a tax differential, it is not uncommon to include a Tax Indemnification Agreement (TIA), which requires the lessee to pay the tax consequences for destruction of the equipment and a corresponding shortfall by the lessor.

Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at terrywinders11@yahoo.com or 502-649-0448

He invites your questions and queries.

Previous #102 Columns:

http://www.leasingnews.org/Conscious-Top%20Stories/Leasing_102/Index.htm

Mr. Terry Winders available as Expert Witness. 35 years as a professional instructor to the top equipment leasing and finance companies in the United States, author of several books, including DVD's, as well as weekly columnist to Leasing News. He also performs audits of leasing companies as an expert on documentation, and has acted as an expert witness on leasing for litigation in legal and tax disputes, including before the IRS. He also has taught the senior bank examiners, how to review a bank leasing department, for the Federal Reserve in Washington D.C. and has trained the examiners for the FDIC on how to prepare a lease portfolio for sale. Mr. Winders received his Master of Business Administration and his Bachelor of Science degrees from the College of Notre Dame. 502.649.0448/terrywinders11@yahoo.com

(This ad is a “trade” for the writing of this column. Opinions
contained in the column are those of Mr. Terry Winders, CLP)

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New York Court Holds SLV Damage Provisions
in Lease to be Unconscionable

By Tom McCurnin
Leasing News Legal News Editor

Lessor’s Lease Which Contained Both a Stipulated Loss Value and Acceleration Clause Was Unconscionable. Lessor Could Have Stipulated Loss Value or Expectancy Damages, But Not Both.

Lessee Failed to Make Critical Suretyship Argument,
Which Might Have Won the Day.

CIT Group/Equipment Financing, Inc. v. Shapiro 2013 WL 1285269 (S.D.N.Y. 2013)

Today’s case is a double edged sword, dealing with both an assignment of the lease by the lessee and a Stipulated Loss Value. The lessor made two minor errors in failing to document a transfer and assumption of the lease, and having both a stipulated loss value and contract damages in one clause. Sound a bit greedy? A New York Court agreed and cut the lessor’s damages in half. The facts follow.

The CIT Group leased a scanner to Shapiro and after two years, the Lessee transferred the equipment and assigned the lease to Capitol. It does not appear that The CIT Group was part of this assignment or consented to the terms. However, Shapiro remained liable on the lease. When Capitol breached the lease and filed bankruptcy, the Lessor merely sued Shapiro. The Lessor sought both the Stipulated Loss Value and contract damages. The Lessor sought $1,225,580.61 for unpaid rent and taxes, and $606,063.84, for the stipulated loss value schedule less the proceeds of a sale of the equipment.

Shapiro made two arguments, one dealing with the assignment and his lack of notice, and a second argument concerning the SLV.

First, Shapiro claimed that it was not notified of the breach by Capitol nor was it given an adequate opportunity to cure the lease before the repossession of the equipment. However, the court held that the Lessee could easily have contracted with Capitol, or developed some other informal arrangement, to monitor their obligations under the Assignment, rather than the file and forget assignment that was negotiated.

Second, Shapiro claimed the lessor’s proposed recovery of both the SLV and the contract expectancy damages was double-dipping and unconscionable. The Lessor argued that it was not and urged the court to give it both past due and future rent as well as the SLV.

A New York Federal Court shared Shapiro’s concern, and had a problem with the two types of remedies, especially when they were combined. CIT’s lease stated

15(e). Upon the occurrence of an Event of Default, Lessor may, at its option, do one or more of the following...declare immediately due and payable (i) all Rent Payments due under the Lease; (ii) as liquidated damages for loss of the bargain and not as a penalty, an amount (“Liquidated Damages Amount”) equal to the Stipulated Loss Value for the Equipment as of the Rent Payment Date immediately preceding the date Lessor declares or Lessee knows of an Event of Lessee…”

As can be seen by the above clause, in the event of default, CIT would recover both the Stipulated Loss Value and contract damages. The Lessor sought $1,225,580.61 for unpaid rent and taxes, and $606,063.84, for the stipulated loss value schedule less the proceeds of a sale of the equipment.

The court found this to be unfair, and held that in the ordinary course, the Lessor would only be entitled only to expected damages—the default remedy in contract law—the sum of the future lease payments and the residual, if any. Therefore, the court called the Stipulated Loss Value “troubling” and stated the Lessor unfairly sought to profit by selling the leased equipment and the proposed future rent payments on a machine that—by virtue of the contractually mandated sale—the Lessor no longer owned.

Therefore, the court struck down the SLV provision as unconscionable.

What are the lessons here?

First, SLV provisions are handy when the lease equipment is destroyed or there is a contractual breach. But a lessor may not have its cake and eat it too. Pick a specific remedy upon destruction or default and put that single remedy in the lease. Putting two combined remedies puts the court in a position of choosing the more reasonable remedy. The lessor wants to be the person making that choice, not the court.

Second, SLVs are generally drafted at the inception of the deal, and as Mr. Winders stated, there may be negative tax ramifications for the lessor. The common precaution is a Tax Indemnity Agreement (“TIA”) appended to the lease. In any event, the lessor is probably locked into the SLA numbers, so accuracy is important

Third, the Lessor clearly knew the lease had been assigned, but didn’t document it. The Lessor should have declared a default then and there, unless the parties signed a “Transfer and Assumption Agreement.” That type of agreement allows the assignment to go forward, but clearly keeps the original lessee and guarantor on the hook, and provides that it is up the original lessee to monitor the status of the account. The Lessor could have avoided the Lessee’s arguments with a T&A.

Fourth, the existence of the assignment with recourse probably creates a suretyship contract, e.g., a guaranty, and such guaranties provide defenses to the original obligor to force the creditor to pursue the new principal (the assignee) first, unless of course, that right is waived. The Lessor dodged a bullet here, but in any event, this would be covered by any good Transfer and Assumption Agreement.

The bottom line to the CIT decision is that lessors cannot have it both ways. The lessor may not use a SLV and recover contract damages. Pick one. In addition, when leased equipment is sold and the lease assigned to a new lessee, have all parties sign a Transfer and Assumption Agreement. The Lessor dodged a bullet on the suretyship issue.

CIT Group Case
http://www.leasingnews.org/PDF/CITGroupCase_32014.pdf

Tom McCurnin is a partner at Barton, Klugman & Oetting in Los Angeles, California.

Tom McCurnin
Barton, Klugman & Oetting
350 South Grand Ave.
Suite 2200
Los Angeles, CA 90071
Direct Phone: (213) 617-6129
Cell (213) 268-8291
Email: tmccurnin@bkolaw.com
Visit our web site at www.bkolaw.com

Previous Tom McCurnin Articles:
http://www.leasingnews.org/Conscious-Top%20Stories/leasing_cases.html

 

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Sick Banks No Longer an Epidemic

by Nathan Stovall and Robert Clark

A SNL Financial Exclusive

As market conditions continued to improve in 2013, undercapitalized banks fell to pre-crisis levels and the number of problem banks experienced a dramatic decline.

The number of undercapitalized banks dwindled throughout 2013 and not necessarily through failures, which was the case during 2011 and 2012. More banks found their ways out of trouble through positive means in 2013 even if true success stories are still not commonplace for most troubled banks. Raising capital today is still difficult for a weaker institution, but with the economy improving, banks looking to raise funds, particularly institutions with some scale, can often find an audience with investors.

As one investment banker recently said to SNL, "There's more opportunity today than there was last year and there was more opportunity last year than there was the year before."

The number of undercapitalized institutions looking to raise funds now is much smaller than it was in years past. The FDIC defines undercapitalized banks as those with a total risk-based capital ratio below 8.0%, a Tier 1 risk-based capital ratio below 4.0% or a Tier 1 leverage capital ratio below 4.0%, unless the bank is a CAMELS one-rated institution. In that case, a bank would be undercapitalized if its leverage ratio was less than 3.0%.

Twenty-four banks and thrifts were undercapitalized, based on the criteria of having Tier 1 ratios below 4%, at Dec. 31, compared to 23 institutions at the end of the third quarter and 44 institutions a year ago, according to SNL data. After witnessing several quarters of sizable declines in the number of undercapitalized institutions, the decreases have moderated as the sheer number of banks still reporting low capital ratios has fallen to pre-crisis levels.

The current number of undercapitalized institutions stands in stark contrast to the levels seen three years ago, when 93 banks were considered undercapitalized. Failures were the main contributor to the decrease in undercapitalized institutions in 2011 and 2012. The trend was consistent through those two years, when the number of undercapitalized banks decreased by 49 to 44 institutions. During that period, a number of banks joined the ranks of the undercapitalized and 143 banks failed, while 36 banks found their way out of trouble through recapitalizations, mergers or balance sheet shrinkage and de-risking, coupled with modest earnings in some cases.

The trend was more positive in 2013, when 16 banks, including five in the fourth quarter, found their way out of undercapitalized territory without failing or closing their doors. Just 24 banks failed in 2013 — only two banks failed in the fourth quarter.

In total, four banks previously deemed undercapitalized have failed since SNL last published the list of undercapitalized banks in the industry. When excluding banks that have failed or merged since the end of the fourth quarter, SNL data shows that, as of March 3, 17 banks were undercapitalized based on Dec. 31, 2013, data, compared to 20 banks at the last publication of the list of undercapitalized banks. The 17 undercapitalized banks reported a median Tier 1 ratio of 3.13% at the end of the fourth quarter and the group reported median linked-quarter declines in their capital ratio of 26 basis points.

As one investment banker recently said to SNL, "There's more opportunity today than there was last year and there was more opportunity last year than there was the year before."

The number of undercapitalized institutions looking to raise funds now is much smaller than it was in years past. The FDIC defines undercapitalized banks as those with a total risk-based capital ratio below 8.0%, a Tier 1 risk-based capital ratio below 4.0% or a Tier 1 leverage capital ratio below 4.0%, unless the bank is a CAMELS one-rated institution. In that case, a bank would be undercapitalized if its leverage ratio was less than 3.0%.

Twenty-four banks and thrifts were undercapitalized, based on the criteria of having Tier 1 ratios below 4%, at Dec. 31, compared to 23 institutions at the end of the third quarter and 44 institutions a year ago, according to SNL data. After witnessing several quarters of sizable declines in the number of undercapitalized institutions, the decreases have moderated as the sheer number of banks still reporting low capital ratios has fallen to pre-crisis levels.

The current number of undercapitalized institutions stands in stark contrast to the levels seen three years ago, when 93 banks were considered undercapitalized. Failures were the main contributor to the decrease in undercapitalized institutions in 2011 and 2012. The trend was consistent through those two years, when the number of undercapitalized banks decreased by 49 to 44 institutions. During that period, a number of banks joined the ranks of the undercapitalized and 143 banks failed, while 36 banks found their way out of trouble through recapitalizations, mergers or balance sheet shrinkage and de-risking, coupled with modest earnings in some cases.

The trend was more positive in 2013, when 16 banks, including five in the fourth quarter, found their way out of undercapitalized territory without failing or closing their doors. Just 24 banks failed in 2013 — only two banks failed in the fourth quarter.

In total, four banks previously deemed undercapitalized have failed since SNL last published the list of undercapitalized banks in the industry. When excluding banks that have failed or merged since the end of the fourth quarter, SNL data shows that, as of March 3, 17 banks were undercapitalized based on Dec. 31, 2013, data, compared to 20 banks at the last publication of the list of undercapitalized banks. The 17 undercapitalized banks reported a median Tier 1 ratio of 3.13% at the end of the fourth quarter and the group reported median linked-quarter declines in their capital ratio of 26 basis points.

A total of six banks escaped undercapitalized territory during the fourth quarter, in line with the number of institutions that escaped those ranks in the third quarter.

One of the institutions escaping undercapitalized territory in the fourth quarter, Hunt Valley, Md.-based Community First Bank, actually ceased its operations. The FDIC filed a termination of deposit insurance proceeding against Community First Bank dated Sept. 30, ordering that its status as an insured federal savings bank would be terminated Dec. 31. A FDIC spokesman told SNL that Community First Bank was not a traditional commercial bank and did not take in deposits and was in the trust business.

Three other banks previously deemed undercapitalized were involved in mergers, but two of those institutions entered into transactions that amounted to last-minute lifelines. In fact, former Capital Bancorp units Bank of Las Vegas and Sunrise Bank of Albuquerque, which were previously deemed undercapitalized, agreed to sell to Talmer Bancorp Inc. in a transaction conducted under Section 363 of the U.S. Bankruptcy Code.

While some banks found their way out of undercapitalized territory, others joined those ranks in the fourth quarter. Seven banks, all of which had less than $350 million in assets, gained undercapitalized status during the fourth quarter. The banking industry as a whole, though, finds itself on the mend, with credit quality having improved considerably from the depths of the crisis. Commercial banks' adjusted nonaccrual loans fell to 1.24% of total loans in the fourth quarter, from 1.38% in the prior quarter and 1.71% a year earlier, while net charge-offs declined to just 0.60% of average loans, from 0.61% in the linked quarter and 0.99% one year ago, according to SNL data.

With the improvements, the number of banks on the FDIC's "problem list" continues to decline and even dropped at a faster rate than the decrease in undercapitalized institutions during 2013. The number of institutions on the problem list fell to 467 at the end of the fourth quarter, compared to 515 institutions in the third quarter and 651 a year ago, a 9.3% drop from the linked quarter and down 28.3% from the year prior. The number of problem institutions stood at 813 two years ago.

Banks that continue to grapple with issues and remain on the problem bank list and in undercapitalized territory are largely in areas that suffered from stress during the cycle. The Southeast remains home to more undercapitalized banks than any other region.

Florida, where 70 banks have failed this cycle, had three operating banks falling below the 4% Tier 1 risk-based capital threshold at Dec. 31. Georgia also had three operating, undercapitalized institutions as of March 3, using Dec. 31 data. Eighty-eight banks have failed in Georgia this cycle.

Illinois, the state with the third most bank failures this credit cycle, also had three operating, undercapitalized institutions as of March 3, using Dec. 31 data.

 

 

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Impact of Retiring Baby Boomers on the Labor Force
Businessinsider.com

 

 

John Kenny Receivables Management • End of Lease Negotiations & Enforcement • Fraud Investigations • Credit Investigations • Asset Searches • Skip-tracing • Third-party Commercial Collections john@jkrmdirect.com | ph 315-866-1167| www.jkrmdirect.com

Top Stories March 10---March 14
(You May Have Missed One)

Here are the top stories opened by readers:

(1) Balboa Capital Sues Regents Capital
They Are After Salesmen Who Left
by Christopher Menkin
http://leasingnews.org/archives/Mar2014/3_12.htm#balboa

(2) Inside Balboa’s Patrick “Evergreen” Byrne’s Head
http://leasingnews.org/archives/Mar2014/3_14.htm#inside

(3) Jim McGrane Passes Away
http://leasingnews.org/archives/Mar2014/3_14.htm#mcgrane

(4) Clarification:
Renasant Bank Will Consider Third Party Originations
http://leasingnews.org/archives/Mar2014/3_12.htm#clarification

(5) Leasing 102 by Mr. Terry Winders, CLP
Internal Revenue Service vs. the Uniform Commercial Code
http://leasingnews.org/archives/Mar2014/3_10.htm#irs

(6) Former Marks & Associates Employee to Head
Renasant Bank Equipment Financing Division
http://leasingnews.org/archives/Mar2014/3_10.htm#renasant

(7) Archives---March 10, 2006
Summit National Chapter 11 BK Up-date
http://leasingnews.org/archives/Mar2014/3_10.htm#archives

(8) Archives---March 14, 2006
Marlborough names LaChance “Business Person of the Year”
http://leasingnews.org/archives/Mar2014/3_14.htm#archives

(9) New Hires---Promotions
http://leasingnews.org/archives/Mar2014/3_14.htm#hires

(Tie) (10) JPMorgan whistleblower gets $63.9 million in mortgage fraud deal
http://www.chicagotribune.com/business/sns-rt-us-jpmor

(Tie) (10) Lease Servicing Pitfalls
By Tom McCurnin, Leasing News Legal News Editor
http://leasingnews.org/archives/Mar2014/3_10.htm#servicing

Not Counted for Technical Reasons
More on the Passing of Jim McGrane from ELFA

(Leasing News provides this ad “gratis” as a means
to help support the growth of Lease Police)

Labrador Retriever Puppy
Denver, Colorado Adopt-a-Dog

Maria

Animal ID: 22222359
Breed: Retriever, Labrador/Mix
Age: 2 months 5 days
Sex: Female
Size: Small
Color: Brindle/Black
Spayed/Neutered
Declawed: No
Housetrained: Unknown
Site: MaxFund Dog Shelter
Location: Small Dog Room
Intake Date: 2/21/2014

"My name is Maria, and I am the sweetest and most adorable Lab mix baby! I think you need to meet me and take me home, OK?

"Because I am still a puppy, you'll need to be prepared for the things that come with puppyhood. Whether a puppy will grow up to be a first-rate canine citizen is directly dependent on the effort that the family puts in. It's my ambition to be the best canine citizen ever, so I'd like a family whose ambitions match mine!

"Do you have the time and patience to teach me the things I need to know? Will you be around most of the time, so I don't get lonely or bored? Will you watch me carefully, so I don't chew up your shoes, electrical cords, or furniture? Will you make sure that I'm never in a yard unattended? Will you forgive my occasional "accidents”? Will you take me through Puppy Kindergarten? Will you give me the best in nutritious foods, so that I'll grow up healthy and strong? Will you give me lots of walks and supervised play and exercise?

"Most importantly, will you love me, forever and ever and ever? I know this sounds like a tall order, but believe me, I will make it worth your while!

Application: http://www.maxfund.org/pdfs/MaxFundApplication.pdf

*Puppies under 6mos. : $200.00

MaxFund Animal Adoption Center
1025 Galapago Street
Denver, Colorado 80204-3942
Phone: 303-595-4917
Fax: 303-595-0192
email: catsanddogs@maxfund.org

Adopt a Pet
http://www.adoptapet.com/

 

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Leasing Attorneys

Birmingham, Alabama The lawyers of Marks & Associates, P.C. have over 30 years experience in dealing with virtually every type of equipment financing and are recognized throughout the industry for prompt, practical solutions and exemplary service. They offer cost-conscious, effective lease enforcement and good counsel.  Email: Barry@leaselawyer.com Website: www.leaselawyers.com	California, National: city: Riverside  Ellen Stern - get results, reasonable pricing; numerous industry contacts, nearly 30 yrs exp.in SoCal, 20 yrs equip.: CFL license specialist, documentation, work-outs, litigated collections, recoveries; deal-maker.  Email: leaselaw@msn.com
Kenneth C. Greene California & Nevada Leasing and Financial consultant, active in several leasing associations, as well as involved in music and film productioncin LA.  Mention "Leasing News" for a free consultation. 415-858-97111 Skype: 424.235.1658 or kenlaw100@gmail.	Connecticut, Southern New England:  EVANS, FELDMAN & BOYER, LLC Collections, litigation, documentation, portfolio sales and financing, bankruptcy. We represent many of the national and local leasing companies doing business in this state. Past chairman EAEL legal committee. Competitive rates.  email: rcfeldman@snet.net
Los Angeles, Southern CA  Seasoned attorney representing secured creditors in auto finance and truck/equipment lease industry.  Bankruptcy and State Court litigation.   Vincent V. Frounjian (818) 990-0605or email: vvf@pacbell.net.	Encino, California: Statewide “ELFA”  Hemar, Rousso & Heald, LLP 30 yr excellent reputation Lessor representation commercial litigation, debt collection, and bankruptcy. Call Stephen E. Jenkins Esq (818) 501-3800
Los Angeles, Statewide: CA.     "ELFA" Aggressive creditors rights law firm specializing in equipment leasing handling collection matters on a contingency, fixed fee or hourly cbasis. email:RGarwacki@prodigy.net	Los Angeles -statewide: CA      "ELFA" Practice limited to collections, bankruptcy and problem accounts resolution. Decades of experience. 10-lawyer firm dedicated to serving you. Call Ronald Cohn, Esq. (818)591-2121 or email. Email: rrcohn@aol.com
Los Angeles- Statewide, CA Lawyer specializing in banking and leasing issues statewide. Documents and litigation.  Tom McCurnin, Barton, Klugman & Oetting. Voice: (213) 617-6129  Cell:(213) 268-8291 Email:  tmccurnin@bkolaw.com
Long Beach, CA  Wagner & Zielinski,  successfully representing lessees/ lessors.  Not a member of any leasing organization, therefore not beholden to special interests.  Richard Wagner  (562) 216-2952  www.wzlawyers.com	California & National Paul Bent – More than 35 years experience in all forms of equipment leasing, secured lending, and asset based transactions. Financial analysis, deal structuring, contract negotiations, documentation, private dispute resolution, expert witness services. (562) 426-1000. www.paulbentlaw.com
Illinois Trabaris, P.C.: Finance attorney with 24 years’ experience with transactional, documentation, secured financing and workouts/restructurings.  Kevin Trabaris.  Phone:  847-205-4377 Email:kevin@trabaris.com Website: www.trabaris.com   Blog: http://www.trabaris.com/info/blog/	Law Firm - Service, Dallas, TX. "ELFA" Mayer regularly practices in leasing, secured financing, project development and finance and corporate finance.  email: dmayer@pattonboggs.com Website: www.pattonboggs.com
National:  The OMEGA Network Group-nationwide legal representation of small and mid ticket equipment lessors-flat fee bankruptcy & replevin, contingent collection,  billable litigation (704-969-3280) tong_92@yahoo.com	National: Coston & Rademacher: Business attorneys serving the lease-finance industry since 1980. Transactional, documentation, corporate/finance, workouts, litigation, bankruptcy, portfolio management. Chicago-based national practice. Jim Coston, CLP (Members: ELFA, NEFA).  email: Jcoston@costonlaw.com Website:www.costonlaw.com
St. Louis County , MO. - statewide:  Schultz & Associates LLP., collections, negotiation, and litigation. Also register and pursue recovery on foreign judgments. Contingency and reasonable hourly rates.  Ronald J. Eisenberg, Esq. (636) 537-4645 x108  reisenberg@sl-lawyers.com www.sl-lawyers.com	NJ,De,Pa: Specializing in leased equipment/secured transactions. Collections, replevins/workouts reasonable rates. Sergio Scuteri/Capehart & Scratchard, PAsscuteri@capehart.com / www.capehart.com
New York and New Jersey Peretore & Peretore, P.C. documentation, portfolio purchase & sale, replevin, workouts, litigation, collection, bankruptcy.  Aggressive. Over 25 years experience.www.peretore.com	Thousand Oaks, California:  Statewide coverage Spiwak & Iezza, LLP 20+ years experience,Representing Lessors banks in both State/ Federal Courts/ all aspects of commercial leasing litigation. Nick Iezza 805-777-1175 niezza@spiwakandiezza.com

 

News Briefs----

Tesla fights for a place to park
http://www.nytimes.com/2014/03/18/business/tesla-fights-for-a-place-to-park.html


Mortgage servicer to pay millions to Californians
http://www.latimes.com/business/la-fi-ocwen-foreclosures-20140318,0,1317760.story#axzz2wFWTYnCC

Caterpillar appeals contract loss for Illinois high-speed train
http://www.chicagotribune.com/business/breaking/chi-caterpillar-appeals-contract-loss-for-illinois-highspeed-train-20140317,0,5956452.story

Silicon Valley billionaire sets record with $201 million life insurance policy -- but who is it?
http://www.mercurynews.com/business/ci_25347898/silicon-valley-billionaire-sets-record-201-million-life

Working Capital Loans $10,000-$250,000
www.channelpartnersllc.com p: (763) 746-7760 f: (763) 592-8297 information@channelpartnersllc.com

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--You May Have Missed It

How a Presidential phone call gets made
http://news.yahoo.com/how-the-president-makes-a-phone-call-212133128.html

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SparkPeople--Live Healthier and Longer

7 Fun Ways to Burn BIG Calories this Spring
http://www.sparkpeople.com/resource/slideshow.asp?show=26

 

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Winter Poem

Mending Wall

by Robert Frost

SOMETHING there is that doesn’t love a wall,  That sends the frozen-ground-swell under it,  And spills the upper boulders in the sun;  And makes gaps even two can pass abreast.  The work of hunters is another thing:  I have come after them and made repair  Where they have left not one stone on a stone,  But they would have the rabbit out of hiding,  To please the yelping dogs. The gaps I mean,  No one has seen them made or heard them made,  But at spring mending-time we find them there.  I let my neighbour know beyond the hill;  And on a day we meet to walk the line  And set the wall between us once again.  We keep the wall between us as we go.  To each the boulders that have fallen to each.  And some are loaves and some so nearly balls  We have to use a spell to make them balance:  “Stay where you are until our backs are turned!”  We wear our fingers rough with handling them.  Oh, just another kind of out-door game,  One on a side. It comes to little more:  There where it is we do not need the wall:  He is all pine and I am apple orchard.  My apple trees will never get across  And eat the cones under his pines, I tell him.  He only says, “Good fences make good neighbors.”  Spring is the mischief in me, and I wonder  If I could put a notion in his head:  “Why do they make good neighbors? Isn’t it  Where there are cows? But here there are no cows.  Before I built a wall I’d ask to know  What I was walling in or walling out,  And to whom I was like to give offence.  Something there is that doesn’t love a wall,  That wants it down.” I could say “Elves” to him,  But it’s not elves exactly, and I’d rather  He said it for himself. I see him there  Bringing a stone grasped firmly by the top  In each hand, like an old-stone savage armed.  He moves in darkness as it seems to me,  Not of woods only and the shade of trees.  He will not go behind his father’s saying,  And he likes having thought of it so well  He says again, “Good fences make good neighbors.”

 

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Sports Briefs----

Barry Bonds returns to Giants, larger than life no longer
http://www.sfgate.com/giants/article/Barrry-Bonds-returns-to-Giants-larger-than-life-5305117.php

Barry Bonds on his week with the San Francisco Giants and a quick batting cage session
http://www.contracostatimes.com/giants/ci_25355921/barry-bonds-his-week-giants-and-quick-batting?source=most_viewed

49ers Coach Jim Harbaugh Had A Pushup Contest With A Walrus
http://www.huffingtonpost.com/2014/03/17/jim-harbaugh-walrus-push-up-video-49ers_n_4980182.html?ncid=txtlnkusaolp00000592

Video version:
http://blog.sfgate.com/49ers/2014/03/17/watch-jim-harbaugh-do-push-ups-with-a-giant-walrus/

How Dixon's loss impacts 49ers
http://www.csnbayarea.com/49ers/how-dixons-loss-impacts-49ers?p=ya5nbcs&ocid=yahoo

Redskins add more weapons for RG3
http://www.csnwashington.com/football-washington-redskins/talk/redskins-add-more-weapons-rg3?p=ya5nbcs&ocid=yahoo

There's been a trade: 49ers deal for QB Blaine Gabbert
http://blogs.sacbee.com/49ers/archives/2014/03/theres-been-a-trade-49ers-deal-for-qb-blaine-gabbert.html

Donte Whitner leaves 49ers for Browns
http://www.pressdemocrat.com/article/20140311/sports/140319919

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California Nuts Briefs---

More than $400 million Asian-focused retail in pipeline in South and East Bay SF
http://www.contracostatimes.com/business/ci_25347405/san-jose-and-fremont-more-than-400-million

Yosemite: Rim Fire zone leaves lasting impression (5-pic gallery)
http://blog.sfgate.com/stienstra/2014/03/17/rim-fire-zone-leaves-lasting-impression-5-pic-gallery/#21609101=0

It's official: Toni Atkins elected speaker of California Assembly
http://blogs.sacbee.com/capitolalertlatest/2014/03/its-official-toni-atkins-elected-speaker.html

Affordable housing in S.F.? Depends on whom you ask
http://www.sfgate.com/bayarea/article/Affordable-housing-in-S-F-Depends-on-whom-you-5321064.php

Are schools ready for the new online Common Core tests?
http://edsource.org/2014/are-schools-ready-for-the-new-online-common-core-tests/58849#.UyeHeKhdUuc

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“Gimme that Wine”

http://www.youtube.com/watch?v=EJnQoi8DSE8

The Mr. Miyagi of Wine Sommeliers
http://www.thedailybeast.com/articles/2014/03/08/the-mr-miyagi-of-wine-sommeliers.html

Sonoma Valley vintners show off wines from the barrel
http://pressdemocrat.com/article/20140315/articles/140319662

Taking a page from California's wine history
http://www.sfgate.com/wine/thirst/article/Taking-a-page-from-California-s-wine-history-5318779.php

Top 10 Wines in the US Press
http://www.thedrinksbusiness.com/2014/03/top-10-wines-in-the-us-press-63/

Will NY Times Readers Join Asimov's Virtual Wine School?
http://www.wine-searcher.com/m/2014/03/will-ny-times-readers-join-asimov-s-virtual-wine-school

Free Mobile Wine Program
http://leasingnews.org/archives/Feb2010/2_26.htm#mobile

Wine Prices by vintage
http://www.winezap.com
http://www.wine-searcher.com/

US/International Wine Events
http://www.localwineevents.com/

Winery Atlas
http://www.carterhouse.com/atlas/\

Leasing News Wine & Spirits Page
http://two.leasingnews.org/Recommendations/wnensprts.htm