Monday, October 25, 2010
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Financial Pacific Sold!
Leasing News has confirmed from three highly reliable sources that Financial Pacific, Federal Way, Washington, a major third party originator in the leasing business, perhaps the largest small ticket generator in this field, has been sold.
While Balboa Capital, Direct Capital, LEAF, Marlin and others exited the third party origination field, Financial Pacific, known in the trade as "Fin Pac" has become more robust.
Details most likely will be made public after this article appears in Leasing News, but what is known is reportedly the negotiations may have been going on for a year and the buyer is a "private equity investor."
The good news is that Paul Menzel, CLP, will remain as president and CEO, and long time senior vice-president, in charge of the broker program and business development, Terey Jennings, CLP, will also remain. Key positions and operation will remain the same, Leasing News was told. Reportedly the move will strengthen Financial Pacific ability and may again, as they have recently done, lowered rates into new market places, especially with programs for broker's vendors.
Neither Paul Menzel, CLP, nor Terey Jennings, CLP, was available at press time for a comment, and all inquiries to others at Fin Pac were directed to them.
June 30, 2004, Allied Capital announced "... that it has agreed to purchase Financial Pacific Company (FinPac), a specialized commercial finance company focused on providing leases for business-essential equipment to small businesses nationwide. The total transaction amount is expected to be approximately $94 million, which includes closing costs and is subject to adjustments. Allied Capital intends to provide both subordinated debt and equity financing for the transaction. The purchase is scheduled to close in the third quarter and is subject to certain closing conditions and regulatory approvals."
The company's majority owner at the time was Windward Capital Partners, L.P.
Allied Capital was described in the press release as “… the nation's largest business development company and provides long-term debt and equity investment capital to companies in a variety of industries. The company also participates in the real estate capital markets as an investor in non-investment grade commercial mortgage-backed securities and collateralized debt obligation bonds and preferred shares.”
It may be the Allied Capital is trying to raise capital as March 7, 2007, the company committed $75 million to acquire a majority interest in Direct Capital, Portsmouth, New Hampshire. Leasing News is working on an unconfirmed report that the relationship no longer exists and perhaps Direct Capital the parent has completed the transaction. Again, this is unconfirmed.
In January of this year Financial Pacific Leasing announced it had completed the renewal of its $100 Million Term Credit Facility with WestLB AG. The lending relationship between the two financial institutions was originally established in 2001.
October 10, 2008 Financial Pacific announced: "... the appointment of Paul J. Menzel, CLP, as the Company's new President, effective November 1, 2008. Dale Winter, Fin Pac’s current President and CEO, will remain as CEO during a transition period. After the transition Mr. Winter will remain with the Company as Chairman of the Board of Directors.
"Mr. Menzel brings with him over 30 years of experience in the equipment leasing and finance industry, having served in senior management positions at Puritan Leasing Company, Cal Fed Credit and Pacific Capital Bancorp. Most recently, Mr. Menzel served as President of LEAF Third Party Funding, a subsidiary of LEAF Financial Corporation."
Paul Menzel, CLP, was named as one of the 25 most influential in the leasing business:
“…. Highest of ethics, good clean portfolios, quality leader. He has been active in two leasing associations himself, also supporting others, giving his time to the industry for many years. Paul is a leader who believes in "do as I do, not as I say". He has set a great example for all his years in the industry.
(He also is the First Leasing News Person of the Year: http://www.leasingnews.org/archives/January%202006/01-03-06.htm#person editor)
The parent of Fin Pac, Allied Capital, had some "Mark to Market" issues in February, 2009, and Menzel sent out a memo to clients, basically saying: "...the facts are Financial Pacific has its own bank lines, its own sources of funds, and is independent. 2008 was a record year for them with Terey Jennings, CLP, still in charge of sales, and a new President who has much banking and overall operating experience, 2009 should be a banner year." (1)
Terey Jennings, CLP, is a long time employee, working under Doug Erwin.
Doug Erwin was appointed president and CEO in 1986. He previously was the President of State Mutual Savings Bank in Tacoma for 10 years.
(Current photo not available).
November 18, 2004, Terey Jennings, CLP, was appointed Senior Vice President in charge of Business Development.
"Jennings is now responsible for all Sales and Marketing activities of the company. Mr. Jennings graduated from Pacific Lutheran University with a B.A. degree in business administration. He is very active in several equipment leasing associations, Eastern Association of Equipment Lessors, Equipment Leasing Association, National Association of Equipment Lease Brokers, including recently being elected 2005 president of the United Association of Equipment Leasing.
"He is married to Cherie and they have two daughters. Jennings says his number one hobby is spending time with his family. His second hobby is golf, whom Credit Administrator Alan Kissinger says, he plays extremely well."
(1) Paul Menzel, CLP Memo to "FinPac" Clients:
Leasing Companies on the Stock Exchanges
From close of Friday, October 22, 2010
CIT Group (NYSE:CIT)
G A T X CP (NYSE: GMT)
GEN ELECTRIC CO(NYSE: GE)
Marlin Business Services Corp.( NasdaqGS: MRLN)
MicroFinancial Incorporated (NasdaqGM: MFI)
Chesswood Income Fund (Pawnee Corp.) (CHW.UN)
Resource America, Inc.(NasdaqGS: Rexi)
Key Bank and Leasing Appear Timid
KeyCorp (NYSE: KEY) third quarter net income was $163 million, compared to a net loss of $422 million for the 2009 third quarter. Tier 1 risk-based capital ratio was 14.26% up from 13.62% one quarter ago.
Chief Executive Officer Henry L. Meyer III noted that Key opened 34 new branches during the first nine months of 2010 and expects to open an additional five new branches during the fourth quarter of 2010, increasing its market presence in selected markets of its 14-state branch network.
While the move appears to be more consumer oriented, the loan composition from the third quarter 8-K indicates otherwise, except for a rise in real estate residential loans. All the commercial loan compositions and community equity loans are down (in millions):
There did not appear to be an indication of the leasing numbers by divisions, but overall the "Nonperforming Assets from Continuing Operations" also show a decline:
It appears the bank is more in a strengthening holding position than one of growth. This does not mean that they appear to not to be looking for a profit, but are more interested in improving their assets and decreasing their losses. At the same time, they are continuing to "build" branches rather than delete them.
Key Bank 8-K Filing:
Hillcrest Bank Leasing to Close
Hillcrest Bank, Overland Park, Kansas, with 41 branches and 184 full time employees was closed with a newly-chartered bank subsidiary of NBH Holdings Corp., Boston, Massachusetts, to assume all of the deposits of Hillcrest Bank. It had one of the lowest Tier 1 Bank Beat has recorded: 0.82%
Hillcrest Bank Leasing, Overland Park, Kansas, under the direction of Chuck Cannata, SVP, Commercial Leasing, in putting their company on the funder list reported 125 employees involved primarily in the Southeast marketplace is doing well promising good rates, no "Evergreen" lease options or splitting "Evergreen" lease payments with vendors.
The company did not take broker business. They were heavy into copier leasing. Year-end 2009 the bank wrote off $7.7 million in "Lease financing receivables" and $4.4 million June 30, 2010..
Originally there was a relationship with SunBridge Capital, and on June 27, 2007 there was an announcement that Hillcrest would buy majority interest in SunBridge, primarily in the truck and trailer leasing business, but it fell apart.
Leasing News had several alerts about SunBridge, which eventually forced into involuntary Chapter 11 bankruptcy by three creditors on March 4, 2009. SunBridge closed on March 20, 2009 and filed Chapter 7 on May 21, 2009.
Ironically Commercial Equipment Lease, Eugene, Oregon, was also into truck and trailer leasing as well as the small ticket market place, when their parent bank, LibertyBank was closed by the FDIC on July 30th, 2010 and most assets sold to Home Federal Bank, Nampa, Idaho.
In an interview with Len E. Williams, President/CEO, Home Federal Bank, when asked what was going to happen to Commercial Leasing, he was very complimentary about the management of the leasing company by Jim Johnson, which had been in business for 35 years. In retrospect, he didn't answer the question as in September Commercial stopped taking business and all employees were let get except for caretakers of the portfolio.
As of June 30, 2010, Hillcrest Bank had approximately $1.65 billion in total assets and $1.54 billion in total deposits. Twenty-eight branches in Kansas (eight in Overland), seven of the branches were Denver, five in Denver, two in Larimer County, Colorado, eight in Texas (one in Austin and two in Dallas), one in Gladstone, Missouri.
Bank equity had dramatically dropped from $133,144 million June 30, 2009 to $72.5 million year-end 2009 to $10.2 million June 30, 2010 where non-current loans exceeded $163.9 million. The bank had lost $25.6 million June 30, 2009, year-end 2009 $83.4 million and $69.9 million June 30, 2010 after $53.9 million in construction and land development, $4.4 million in lease receivables, and $3.1 million in property secured by nonfarm nonresidential property.
Real estate construction and land development was the prime downfall of the bank, with such loans for the development of $31.1 million to Quintero Golf & Country Club LLC and Quintero Entrado LLC in Arizona.
The Kansas City Star reports:
"Hillcrest had become a national real estate lender and was undone by the damage that falling property values did to the value of those loans.
"'We’re a real estate-oriented bank. It’s our core competency,' Hillcrest CEO Jeff Wheeler had said in early 2008 when he was president.
"At the time, Hillcrest had a greater exposure to construction and land development loans than any bank in the Kansas City area. But its managers believed the exposure was manageable, in part because the loans weren’t focused here.
"Hillcrest’s portfolio was spread across 42 states, and it financed projects for developers who operated in several states. Loans in California, Florida and Arizona — three real estate trouble spots — were part of the bank’s portfolio but limited to 18 percent of loans, Wheeler had said."
The FDIC and Hillcrest Bank, N.A. entered into a loss-share transaction on $1.15 billion of Hillcrest Bank's assets.
Hillcrest Bank, N.A. will share in the losses on the asset pools covered under the loss-share agreement.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $329.7 million
The 139th FDIC-insured institution to fail this year was First Arizona Savings, Scottsdale, Arizona.
The FDIC was unable to find another financial institution to take over the banking operations of First Arizona Savings, A FSB. As a result, checks to depositors for their insured funds will be mailed on Monday, October 25. Customers who have questions about their deposits should contact the FDIC at the toll-free phone number below.
As of June 30, 2010, First Arizona Savings, A FSB had approximately $272.2 million in total assets and $198.8 million in total deposits. At the time of closing, the bank had an estimated $5.8 million in uninsured funds. This amount is an estimate that is likely to change once the FDIC obtains additional information from the bank's customers.
Formed May 18, 1988 to service the Phoenix-Mesa-Glendale area the bank had gone from 55 full time employees June 30, 2009 to 90 full time employees, decreasing the noncurrent loans in the same period from $17.3 million to $8.87 million as net equity dropped from $29 million to $9.3 million, loss June 30, 2009 was $6.4 million and the loss June 30, 2010 was $15.6 million after charge off of $6 million in 1-4 family residential properties and $354,000 construction and land development. Tier 1 risk-based capital ratio: 3.32%.
The Mohave Daily News writes: "That comes as little solace to many account holders, who now must wait until their receive their checks before they can access any of their funds: Checking accounts, savings accounts, certificates of deposit, money market accounts and other forms of deposits left with the bank. And it’s even less assuring to individual customers whose accounts exceeded the $250,000 threshold for the FDIC guarantee. The FDIC estimated that roughly $1.8 million of the bank’s deposits were uninsured.
"And it does little for customers who have written checks that have yet to clear. With closure of the bank, those checks likely will come back. Customers may receive a copy of a letter from the FDIC to send to merchants and creditors urging the waiving of returned-check charges, late fees and penalties associated with checks written on frozen accounts.
“Creditor compliance, however, is not mandatory.
“'It’s a hassle, Brennan said, suggesting he understood the plight of many customers. “It’s like the electricity just got turned off at the house: Nothing works any more. Your checking account doesn’t work; your bank card doesn’t work...
“We’re all trying to make this work again as quickly as possible, but it won’t work the same way it used to.”
"Bank customers will have until Nov. 22 to remove contents of safe deposit boxes on bank property. Customers should contact the FDIC at 1-800-830-4698 to schedule an appointment to close the safe deposit box."
Beginning today, Monday, October 25th, customers of First Arizona Savings, A FSB with deposits exceeding $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at https://www2.fdic.gov/drrip/afi/index.asp.
The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $32.8 million.
The 16th bank to fail this year in Georgia was The First National Bank of Barnesville, Barnesville, with United Bank, Zebulon, Georgia, to take over the deposits. There were two branches, one in Barnesville and the other in Zebulon, 41 full time employees. It is a rural bank.
First National was found in 1902 and made it through many recession and the great depression of 1932, but construction and real estate loans hit it hard, as it did many other Georgia banks caught in an expansion that they believed could not end.
As of June 30, 2010, The First National Bank of Barnesville had approximately $131.4 million in total assets and $127.1 million in total deposits. Bank equity had dropped from $10.3 million June 30, 2009 to $7.3 million June 30, 2010 with $13 million non-current loans the previous period and $13.55 million the latest period. The bank had lost $1.98 million June 30, 2009 and $2.47 million June 30, 2010, following $1.19 million in real estate loans ($503,000 construction and land development, $406,000 secured by farmland, $284,000 in 1-4 multifamily residences. Tier 1 risk-based capital ratio. 6.76%.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $33.9 million.
The Gordon Bank, Gordon, Georgia, was closed with Morris Bank, Dublin, Georgia, to assume all of the deposits.
As of June 30, 2010, The Gordon Bank had approximately $29.4 million in total assets and $26.7 million in total deposits. Morris Bank paid the FDIC a premium of 0.05 percent for the deposits of The Gordon Bank. In addition, Morris Bank will purchase approximately $11.5 million of The Gordon Bank's assets.
Gordon County was created in 1850 from parts of Floyd and Bartow counties. The 93rd county formed in the state was named after William Washington Gordon, who was president of what was then the Central Railroad and Banking Company and later became the Central of Georgia Railroad.
The small bank had 12 full time employees and was founded April 29, 1994. Bank equity had dropped from $2.7 million June 30, 2009 to $670,000 June 30,2010 with noncurrent loans at $4.5 million, a loss of $439,000 June 30, 2009 and a loss of $1.3 million June 30, 2010 with charge offs $362,000 1-4 multifamily residences, $101,000 construction and land development. Tier 1 risk-based capital ratio: 2.05%.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.0 million
The 27th bank to fail in Florida this year was Progress Bank of Florida, Tampa, Florida with Bay Cities Bank, Tampa, Florida, to assume all of the deposits. Formed October 25, 1984. There were three branches in Tampa with 20 full time employees.
"Tampa has a number of sports teams, such as the Tampa Bay Buccaneers in the NFL, the Tampa Bay Lightning in the National Hockey League, the Tampa Bay Rays in Major League Baseball, and the FC Tampa Bay Rowdies in North American Soccer League...Tampa is part of the Tampa-St. Petersburg-Clearwater, Florida MSA. The four-county area is composed of roughly 2.7 million residents, making it the second largest metropolitan statistical area (MSA) in the state, and the fourth largest in the Southeastern United States, behind Miami, Washington, D.C., and Atlanta.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $25.0 million.
The two branches of First Bank of Jacksonville, Jacksonville, Florida were closed with Ameris Bank, Moultrie, Georgia, to assume all of the deposits. There were 22 full time employees working for the bank formed August 28, 1989.
As of June 30, 2010, First Bank of Jacksonville had approximately $81.0 million in total assets and $77.3 million in total deposits. The FDIC and Ameris Bank entered into a loss-share transaction on $60.0 million of First Bank of Jacksonville's assets. The bank reportedly had several years of management problems including ousting its president and CEO and subsequent lawsuits, as well as a former vice-president accused of mishandling money.
Bank equity had gone from $8.2 million to $674,000 as non-current loans had increased from $4.6 million to $7 million June 30, 2009 to June 30, 2010. The bank had lost $860,000 the previous period and June 30, 2010 it had lost $1.9 million following charges off of $1.1 million secured by nonfarm nonresidential land, $563,000 1-4 multifamily homes, $124,000 construction and land development, and $46,000 in commercial and industrial loans. Tier 1 risk-based capital ratio: 1.20%.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $16.2 million.
The four branches of First Suburban National Bank, Maywood, Illinois were closed with Seaway Bank and Trust Company, Chicago, Illinois, to assume all of the deposits. This was the 16th bank to fail in Illinois this year. Formed September 7, 1943 to service Chicago-Joliet-Naperville (branch in Broadview, Chicago, Crestwood, Maywood), there were 41 full time employees.
As of June 30, 2010, First Suburban National Bank had approximately $148.7 million in total assets and $140.0 million in total deposits. Bank equity had dropped from $8.4 million June 30, 2009 to $4.7 million June 30, 2010 with $19.6 million in non-conforming loans. The bank had lost $1.1 million the previous period and $872,000 June 10, 2010. Tier 1 risk-based capital ratio: 4.21%.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.4 million.
List of Bank Failures:
Tracking Bank Failures Map
Bank Beat Columns:
Leasing Industry Help Wanted
Please see our Job Wanted section for possible new employees.
Leasing Veteran Steve Dunham joins BSB Leasing
Steve Dunham, former President of Leasing Associates, Mountain View, California, has joined BSB Leasing, Inc. as a Special Projects Coordinator and to continue to develop BSB’s Middle and Large Ticket product offerings.
(Archives: Steve Dunham, WAEL's founder and first president)
(WAEL: Western Association of Equipment Lessors which became the United Association of Equipment Leasing and then merged with the Eastern Association of Lessors to become the National Equipment Finance Association.
Dunham, started Leasing Associates in 1976 and was one of the first brokers to develop a Super Broker model specializing in working with brokers nationwide, utilizing the Pegasus program at Colonial Pacific Leasing.
“We are extremely pleased to welcome Steve to BSB Leasing," said Don Myerson, President of BSB Leasing, Inc." We’ve been competitors for over 25 years so it’s good to finally be on the same team. Steve’s vast wealth of knowledge and experience is a welcome addition to our management team.
Dunham will be working out of a regional office in Booth Bay, Maine. He can be reached at 888-465-0303
Part II—30 year History of WAEL:
Marketing Equipment Leasing in 2011
I have been asked to write about how to sell leasing in 2011 in light of the new accounting rules (if they are adopted 95%). It appears that it will be important to offer both equipment finance and equipment leasing to cover whatever needs the vendor or customer request. But a full range of products in leasing will be necessary from tax motivated to non-profits. TRAC leasing is still with us and municipal leasing, while changing, continues to grow. What will be gone are those transactions utilizing the off balance sheet advantage of operating leases.
Vendor programs will be important, but you need to understand your territory restrictions and only solicit business in the states where you have funding sources qualified to do business. The States are tax happy because they are hurting for funds and anyone not qualified to do business or not collecting and remitting taxes, are going to get a lot of heat and penalties.
I believe that a lot of training will be necessary to keep sales personnel qualified to present a complete array of lease products. You should create a test of rules and regulations to administer to your staff to determine their level of knowledge and where they need help to improve product knowledge, It would also be of help to gather them together and do some role playing to see how each of them approach a potential vendor or lessee. Prepare a list of questions that your customer or vendor might ask and see how your sales staff responds. You may want to repeat this role playing until all are comfortable and also well rehearsed in the best responses.
You should also have weekly discussions on current rates and let each person relate what they are observing in the market so everyone knows what to expect and more important: what your company can do to support the sale.
Residuals are going to become more important next year so teach your sales personnel how to ask equipment questions. Develop an equipment questionnaire for the industries you want to cover. If you need a start, let me know and I will email you an “equipment use and description form”.
Remember our name is “equipment” leasing. The more you know about the use of the equipment use with a “complete” description the better your lease transaction will be. Most equipment descriptions in the lease industry suck big time and are very hard to collect on if a default occurs. This year has been a record year for incomplete, “piss poor,” horrible, “shitty” descriptions ---and a lot of loss has occurred because of it!!!
It also appears shorter terms are making a headway instead of longer terms. Companies want to eliminate debt, not increase it, so look to the “any number of months” terms instead of 36, 48, or 60. If you can provide terms that match the payment request of the lessee, you stand a better chance of being successful next year. If you need a sample rate sheet let me know.
Trade-ins will be popular next year, so a problem exists if the customer wants a lease, so be ready to understand how your company will handle this in a lease. Also because of the amount of cash in business hands, you may expect the same problem with buy-downs. Remember you must pay the fair value of the equipment cost or you will get into income tax problems. The IRS does not audit your invoice cost. They look to see if you paid the fair market value. Always use cash as prepaid rent.
Next year will be different so prepare yourself and get trained and learn all the ins and outs of this business or you may be outside looking in, instead of making a good living.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at firstname.lastname@example.org or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
(This ad is a “trade” for the writing of this column. Opinions
Top Stories---October 18 - October 22
Here are the top ten stories opened by readers:
(1) Archive--October 20, 2000
(2) Adrian Hebig resigns from US Bank Manifest
(3) GE Keeps on Trimming
(4) Lease Police Identifies "Repo Machines"
(5) Placard--Rule #1 Boss is Right
(6) Leasing 102 by Mr. Terry Winders, CLP
(7) Chris Enbom, CLP, 2011 President NEFA
(8) Bank of the West Begins Servicing for Microsoft Financing
(9) Messenheimer of AMC Funding Group filed BK 4/19/10
(10) New Hires---Promotions
Classified ads—Back Office
Leasing Industry Outsourcing (Providing Services and Products)
All "Outsourcing" Classified ads (advertisers are both requested and responsible to keep their free ads up to date:
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Santa Barbara, California---Adopt a Dog
"Leona is a unique looking young lady. With her lighter eyes and somewhat muted coloring, you almost wonder if you really see her among the shadows.
"This girl is a nice dog - she has a good start on her manners, since she already knows sit and down, and walks pretty well on a leash, too. Like all youngsters, she'll need basic obedience training and regular exercise to keep her mind and body fit and trim.
“Leona recently has had the opportunity to get some 'staycation' time at a volunteers home. She visits during the day to get some quality house and green grass yard time, and returns in the evening to her kennel at the shelter. Her volunteer shared some great video of Leona being a happy silly goof, playing ball in the backyard. What a lucky girl! She is all tuned up to stay with you, now - good house companion and fun outside.
“Leona (which means Lioness in many languages)can be high energy, but seems to calm down easily when you want her to.
”She likes other dogs and passed her cat test."
“Come to the shelter and see Leona for yourself - the pictures don't do her justice.”
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
Bank of America Finds Foreclosure Mistakes: Report
KTB leasing raises net profit target by BT600M
Falcons withstand furious rally, defeat Bengals 39-32
Patriots 23, Chargers 20
Cutler's mistakes cost Bears win
Raiders set franchise record in 59-14 rout of Broncos
Singletary: playoffs still possible
Seahawks alone on top of the NFC West after 22-10 win over Cardinals
Rams wilt in loss to Bucs
Jerry Brown's lead doubles in a month; little change in Senate race
No. Calif. Storm wallops Wine Country
Lake County wineries - going where Napa won’t
Austrian Vineyards Are All in the Family
Botella’s Effective Wine Decanter
Wine Prices by vintage
US/International Wine Events
Leasing News Wine & Spirits Page
This Day in American History
1741-Georg Wilhelm Steller discovers the Kiska Island in the Aleutian Island chain of present day Alaska. http://memory.loc.gov/ammem/today/oct25.html
Three Run Homers, or, Rupert Brooke Celebrates Baseball
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