Tuesday, December 19, 2011
Retiring CEO of Costco takes a look back on his legacy
######## surrounding the article denotes it is a “press release”
and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer. It is considered “bias” as it is the writer’s viewpoint.
Jules and Associates Attorney "Cease & Desist Demand"
Charles L. Kreindler, Attorney
A letter was sent by email and Federal Express by Attorney Charles L. Kreindler in behalf of Jules and Associates, Inc., Los Angeles, California, regarding a Bulletin Board Complaint and use of the Evergreen clause. The email included his "bio" in the signature, so the receiver would know who he was:
"Mr. Kreindler was a Federal Prosecutor in Los Angeles from 1989-1997. In that role, Mr. Kreindler investigated and prosecuted a variety of criminal offenses including health care fraud, defense procurement fraud, tax evasion, bank fraud, money laundering, international theft, murder, and counterfeiting."
The "Cease and Desist Demand" stems
Jules and Associates, Los Angeles, California
This concerns a $230,879.34 lease for:
for Jensen's Complete Shopping, Inc. 102 S. Sunrise Way
The lessee has had three leases with Jules and Associates, and in the beginning stated in writing they want to exercise the 1% purchase option, and on April 11, 2011 Adam Zack, Vice-President wrote a letter of notice to purchase for 1%. It is also obvious from the nature
In this lease, the letter was not certified, and was considered late:
The Evergreen Clause in the contract states "...PROVIDED LESSEE NOTIFIES LESSOR (BY CERTIFIED MAIL) AT LEAST ONE HUNDRED AND EIGHTY (180) DAYS PRIOR TO THE FINAL REGULAR RENTAL PAYMENT (SPECIFIC TO THE RESPECTIVE SCHEDULE) OF LESSEE'S INTENT OF OPTION CHOICE, LESSEE MAY EXERCISE ONE OF THE FOLLOWING OPTIONS: 1) PURCHASE ALL OF THE EQUIPMENT FOR ONE (1%) PERCENT OF THE ORIGINAL EQUIPMENT COST; 2) RETURN ALL OF THE EQUIPMENT; 3) EXTEND THE LEASE FOR AN ADDITIONAL SIX MONTH PERIOD AT THE RATE DELINEATED ON THE RESPECTIVE SCHEDULE, SHOULD LESSEE NOT GIVE PROPER NOTICE AS INDICATED ABOVE, THE LEASE SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL THREE MONTH PERIOD AT THE RATE DELINEATED ON THE RESPECTIVE SCHEDULE"
1% is $$2,308.79. The monthly payments are $6,743.99 plus California sales/use tax for 36 months (.02921). The additional six months are $40,463.94 and if the 1% notice is not made or purchase not concluded, the contract calls for an additional three months.
Leasing News made several telephone calls, with one call answered with the promise to be returned, but was not. There were many emails since August 18, 2011, for a comment or a statement. None was received.
This appears to be what Leasing News has written editorials and been campaigning regarding the abuse of Evergreen Clauses. As in all Bulletin Board Complaint, we leave it up to readers to make their own opinion, but to Leasing News the complaint appears legitimate.
Copies of the contract, letters:
In this complaint, not only were there several emails to officers of the corporation regarding obtaining a statement, a comment, their viewpoint to the complaint, as well as emails and telephone conversations with Leticia Moreno of Jules and Associates as the complaint appeared to be a legitimate complaint and a request for a response. None was ever received.
As stated in our Complaint Bulletin Board Procedures, Leasing News acts as an ombudsman; "Leasing News role was to determine if the complaint was "legitimate," meaning valid, and if not resolved, which might means "negotiated," "compromised," or "settled," it would appear in Leasing News as well as the Complaint Bulletin Board. It was never the role to say who is right or who is wrong, although some are quite obvious, such as an Evergreen Clauses on $1.00 purchase options..."(2)
Leasing News has been consistent in its position regarding the apparent abuse of the Evergreen Clause:
There are many more articles as Leasing News has not been silent about this issue.
(1) Charles L. Kreindler biography, link on his email signature:
(2) Bulletin Board Complaint Procedure:
(3) Five States Evergreen Illegal:
Classified Ads---Senior Management
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Free Posting for those seeking employment in Leasing:
In testing the Dwolla transfer from a bank to another bank account or merchant for a 25 cent fee, it appears this only applies to money that is kept in your Dwolla account and also sent to another Dwolla account.
Transferring money to your Dwolla account from your bank account can be three to five days, as learned from trying the system. Transferring money from your bank account to another Dwolla account can also take three to five days. It means the money must be in your Dwolla account to transfer to another Dwolla account.
It appears the main benefit would be to merchants who do not pay the credit card fee, and for users: to purchases where the merchant does not take a credit card for under a specific dollar amount. The merchant has to have a Dwolla account.
Transferring from your bank account to another bank account can take three to five days, depending on the bank, they note, and it appears the system is set up for Dwolla to basically be the bank. Their profit then comes from the “float” of daily balances.
They are not insured by the FDIC or appear regulated as the banking industry.
“Not the End of the Leasing World”
The current rumor is that the accounting changes will take effect starting in January of 2013, but it appears that that date could change if modifications from the current request for comments are disregarded. Many financial people think the new requirements to capitalize all existing leases, including Real Estate leases, will have a major negative effect on the economy as many major companies will be outside their loan covenants. There may be a lot of “sale-lease backs” and early terminations as lessees brace for the new rules.
Transparency also may change the dimensions and definitions to improve business decisions as business adjusts to new accounting standards. Certainly accountants, attorneys and software companies will do well struggling with communicating the changes.
The small ticket market place and perhaps a good part of the middle market will not feel the change as most transactions are “capital leases” or discounted and there is little tax advantage for the lessor.
Many of the leasing companies who really write “true leases” will work within the new standards. It is not the end of the leasing world.
No matter what, the trend is apparent, and it certainly appears that equipment leasing will become equipment financing because a large portion of our leasing companies have been selling Article 9, non-true leasing and have not been educating the business public on the benefits of true leasing. The accounting requirements have held center stage for the past few years. Equipment finance will put us in competition with manufacture programs, banks and other lenders where rate becomes the deciding factor. This will put a lot of strain on margins and commissions.
Part of the business plan for 2012 needs to include how much compensation is going to be needed to meet the marketing objectives and the back office performance, keeping in mind the pending accounting changes. The most difficult leasing company to work for is one that changes the requirements each year. If you plan to make adjustments, you had better have a solid reason to do so. However, there are a lot of reasons to adjust your compensation plans with the turmoil in the market place today.
The main emphasis for compensation needs to be on margin. Margin is a function of term and the larger the transaction size the longer the term. Small transactions need to have higher rates to compensate for the smaller term. Higher rates are harder to sell so you need to have additional advantages to offer such as a faster turnaround time, or a lot of payment flexibility. A computer based pricing program is a must and training on how to sell with answers to questions on how the accounting changes will affect the transaction in the future.
The old management style will need to change not only due to accounting, but the changes in internet and software development in developing and finding both vendor and direct business. Do you need to refocus your product selection? If so how will the compensation plan support that effort? Do you have the ability to offer a broad range of leasing or finance alternatives? How long can you survive if the market place changes and begins to look for different type of financial product? Next year will be a transition year which will require a lot of flexibility in both your business plan and your compensation plans.
Clearly the success of any leasing company will be tied to funding. Part of any compensation plan is how and when the funding happens and what if any part does the recourse or non recourse play into the margin. For independent lessor’s they should take note that the bank regulators are coming down hard on banks that finance leases and are requiring a lot of new controls to prevent the losses sustained the last year or two. Therefore funding will require more effort and better quality credits. This will place a lot of extra work on your back office so they will require a compensation plan that will point them in the right direction.
Correct and complete documentation will become the norm instead of sloppy and incomplete forms. I would tie the compensation plan in the back office to the problems that they should handle or draw attention to prior to funding. Do not ignore the back office when setting marketing compensation.
Perhaps there should be compensation for good performance and for company margin at year end so everyone is pulling in the same direction. Once I created a program for the credit department based on only credit quality that centered on lack of charge offs. You know what happened …very few credits were acceptable. Therefore everyone needs to be tied to company performance as well as individual performance.
I think business will get better, especially for those who are competitive and not afraid of the future.
My last suggestion is how important it is that you match the training to your abilities and the markets you serve. It is becoming a market that requires a “complete” understanding of the rules and regulations that control commercial equipment leasing like; tax laws, the new accounting requirements, and both Article 9 and Article 2A of the UCC. If you need any tests on these subjects to use in your training—please don’t hesitate to contact me at anytime.
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:
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Steve Hudson Element Financial Stock (EFN)
“The 41,700,000 subscription receipts issued by Element at $4.20 per subscription receipt on October 28, 2011 have been exchanged, on a one-for-one basis, for common shares of the amalgamated company. The $162.5 million of net proceeds from the private placement have been released from escrow and are now available to Element to fund future growth. Following the completion of the exchange of the Subscription Receipts and the amalgamation with Mira, Element will have 66,373,421 common shares issued and outstanding, on an undiluted basis.”
At Last! Positive News for Equipment Leasing & Finance 2012
"Overall, investment continues to be a bright spot in the U.S. economy. In particular, investment in equipment and software has grown steadily for eight straight quarters. Expectations for 2012 are that growth will moderate slightly, but remain positive overall."
"Credit market conditions are improving slowly as demand for financing grows and supply constraints gradually ease. However, the growth rate of investment in equipment and software is likely to remain moderate until demand puts more pressure on capacity. Based on an outlook for moderate economic growth in 2012, and the overhang of excess industrial capacity, investment in equipment and software is expected to increase by 8-10 percent in 2012, compared to about 10.5 percent in 2011.
"The macro outlook for 2012 is for a slow improvement, as impediments to growth are expected to gradually dissipate, with more positive cyclical trends kicking in later in the year. Compared to the consensus forecast of 2.0 percent growth for 2012, a slightly faster growth rate of 2.4 percent is predicted. This implies that the unemployment rate will remain at 8 percent or higher by the end of 2012."
"Trends in equipment investment include:
Full 2012 forecast:
"The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research. Primarily funded through donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. Visit the Foundation online at http://www.LeaseFoundation.org. “
I have in a sales role for years within the equipment leasing industry … having a hard time securing a new Sales Role – any suggestions?
It is VERY tough out there for Sales Candidates (in all industries, not just equipment leasing / finance) … companies won’t accept just any applicant. True Sales Executives have to work extremely hard (and smart) to be able to hit the types of production numbers they used to. They have to have not only the proven knowledge, skills, but a following to prove it.
Companies are looking for Reps that hit a certain yearly production and have deals / relationships to bring to the table; as they cannot afford to make hiring mistakes. They prefer someone who can hit the street running and produce results. It is a good idea to have past customers, and better yet, vendor references on a sheet of your resume.
I may suggest being open to working on a commission-only basis or draw basis until you “prove” yourself. If you are good business development rep, you can reinvent yourself and hit numbers similar to the ones you used to hit before the economy took a nose dive. If you need more advice, please contact me!
Previous Career Crossroad columns:
Salvation Army Kettle Donations to Date
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OCC Definition Small and Intermediate Bank
The Office of the Comptroller of the Current has completed their annual adjust to the asset-size thresholds to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.
In either case, if assets are less than $1.60 billion, you are a small bank.
Rise of the Monster Banks:
Bank Beat—Florida again, and Arizona
Two branches of Premier Community Bank of the Emerald Coast, Crestview, Florida were closed with Summit Bank, National Association, Panama City, Florida, to assume all of the deposits.
Founded in September 5, 2006, there were 21 full time employees at the two offices, one in Crestview and one in Fort Walton. September 30, 2011 Tier 1 risk-based capital ratio -1.34%.
Located in Okaloosa County, the area is known as the Emerald Coast due to its "natural, sugar-white beaches are the most beautiful in the world. Blue-green waters lap the white sands of the Gulf of Mexico, thus the name Emerald Coast. Bayous, lazy rivers, and green forests complement the shoreline, making this region truly a place of peacefulness and beauty."
The problems basically were nonfarm nonresidential properties where the primary source of repayment is the cash flow from the ongoing operations activities of the owners of the property. Mortgages are held or liens are placed on business property such as hotels, motels, churches, clubs, lodges, association buildings, golf courses, recreational and similar property."
January 21, 2011 a serious consent order was issued, which followed a $5.2 million charge off, $14.3 million loss, and dropped in equity from 2009 $17.4 million to $3.1 million in 2010. September 31, 2011 the charge off was $9.9 million, of that $7.2 in nonfarm nonresidential.
The map of bank failures at the end of this column show the South hit hardest by residential and business property loan losses. In reality, the bank since forming in 2006 had only two years of profitability, and not over $200,000 combined.
(in millions, unless otherwise)
Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.
As of September 30, 2011, Premier Community Bank of the Emerald Coast had approximately $126.0 million in total assets and $112.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, Summit Bank, National Association agreed to purchase essentially all of the assets.
The FDIC and Summit Bank, National Association entered into a loss-share transaction on $98.0 million of Premier Community Bank of the Emerald Coast's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.2 million. http://www.fdic.gov/news/news/press/2011/pr11194.html
The three branches of Western National Bank, Phoenix, Arizona were closed with Washington Federal, Seattle, Washington, to assume all of the deposits. Founded February 2, 2005, there were 21 full time employees at their two offices in Scottsdale and one in Phoenix, from a high of 54 employees as of December 31, 2007. September 30, 2011 Tier 1 risk-based capital ratio 1.19%.
Nonfarm nonresidential loans here saw equity drop from $19 million in 2009 to $7.6 million in 2010 and $1.7 million September 30, 2011 after the tremendous loss of $11.7 million year-end 2010 and September 30, 2011 $6.2 million. The charge offs in 2010 were $5.3 million in nonfarm/nonresidential, followed by $3.1 in 1-4 family homes (mortgages) and this year the trend was continuing.
It may not be as serious as the real estate troubles in the 1980's...
Charles Keating, accompanied by his wife Mary Elaine,
But in case your forgot:
(in millions, unless otherwise)
Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.
As of September 30, 2011, Western National Bank had approximately $162.9 million in total assets and $144.5 million in total deposits. In addition to assuming all of the deposits of the failed bank, Washington Federal agreed to purchase essentially all of the assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $37.6 million.
List of Bank Failures:
Tracking Bank Failure Map
Top Stories December 12--December 16
Here are the top ten sorties opened by readers:
(1) Ascentium Capital Copying First Sierra?
(2) New Classified Ad Section
(3) Equipment Lessor Gets Stung in Assignment Trap
(4) Global Leasing Toolkit Now Available
(5) Resource America "deconsolidates" LEAF Financial
(6) Leasing 102 by Mr. Terry Winders, CLP
(7) Operation Lease Fleece Sentencing Donnybrook
(8) Operation Lease Fleece Kirk A. McMahan Sentencing
(9) HP Introduces "Step Payment" FMV Lease Program
(10) New Hires---Promotions
#### Press Release #############################
David Cohen and Helen Mooney celebrate 25 years
NEWTON, MA – – David Cohen, President and CEO and Helen Mooney, Senior Inside Sales Representative both celebrated their 25th anniversary with Firestone. “People who achieve this type of accomplishment must be adaptable, willing to change and able to learn. David and Helen both have these qualities. They are highly regarded and respected by ever major manufacturer, distributor, and operator in the industry” said Scott Cooper, Firestone’s CFO.
The awards were presented during Firestone’s annual employee Holiday party on December 14th. David Cohen contributed his personal success and that of the organization to the past and present employees. “So many things were so different 25 years ago but one thing remains true, we have the most talented, hard working people. We invest in our relationships with our customers and each other and that is why I am so proud to be celebrating 25 years at Firestone.”
In receiving her award Helen Mooney praised the company and her coworkers, “I have had the opportunity over the years to work with great teams, but I don’t think anything compares to who we have at Firestone today.”
Pete Aldrich from the Inside Sales team also celebrated his 10 year anniversary. In receiving his award Pete acknowledged the closeness of the Firestone team, “When I came here 10 years ago I was told I was joining a family and sure enough 10 years later nothing could be truer.”
The company also acknowledged employees with five years of service. Recipients include Adam Bronkella, Credit Manager, Kurt Engelhardt, Inside Sales, Chuck Lambert, Sr. Credit Analyst, Liz McNeil, Accounting Manager and Frank Moreschi, Asset Management.
About Firestone Financial
##### Press Release ############################
San Juan Capistrano, California-- Adopt-a-Dog
“Pierre is a 4 yr. old neutered PooChon (Poodle-Bichon) who came to The Ark severely underweight from malnutrition. He is doing well in his foster home where he has been getting all the love and nutrition he could possibly want. Pierre is a sweet lovable boy and is most happy in a lap.”
“Rexy is a one year old female Labrador mix. She is a very sweet girl who loves people and other dogs. She would be a great addition to any family.”
The Ark of San Juan
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
Insider Bank Loans at Crescent Bank and Others
$7 Billion Ponzi Scheme: Investors await justice
Bank of America Shares Hit $4.99, one-year low
AT&T drops $39 billion bid for T-Mobile USA
Indian Billionaire Kotak’s Bank Reaps Margins Goldman Can Envy
Saab files to unwind its assets
Madoff’s ex-controller pleads guilty in NYC
Americans average $4,155 on gas in 2011
Associated Bank to close 21 branches, including 2 in Madison
Golf Industry: Consolidating/Myrtle Beach example
The New York Times Co. tentatively agrees to sell The Press Democrat
Bon Jovi not dead: Rumor was Twitter fiction
Retiring CEO of Costco takes a look back on his legacy
SparkPeople--Live Healthier and Longer
What Does 300 Calories Really Look Like?
San Francisco 49ers earn a meaningful victory
Blackout(s) at Candlestick
Raiders' robust start veers toward ugly end
Oakland Raiders Déjà Vu
As I look upon Our Oakland’s side
Our team has stood the test of time
I fear the worst, as we fall
I read words of anger, disappointment, and hate
A nation divided will never prevail
Have we lost all hope and respect
This silver lining has faded to grey
I say this team will stay Silver and Black
California first dog Sutter Brown lands his own page on Jerry Brown's website
“Gimme that Wine”
2011 California Vintage: Light and Late to Lead to Elegant Wines
A fine season to break out sweet wines
Wineries abound in Alabama: Your guide to 13 of them (with video, photo gallery)
Long Island Robust Despit the Rains
Free Mobile Wine Program
Wine Prices by vintage
US/International Wine Events
Leasing News Wine & Spirits Page
This Day in History
1606-Three small ships, departed London, England, bound for America,( "Susan Constant", "Godspeed" and "Discovery", destined for America. Captain Christopher Newport commanded the three tiny ships, which are now on display at Jamestown village in Virginia) where the royally chartered Virginia Company's approximately 120 persons established the first permanent English settlement Jamestown, Virginia. They arrived May 14,1607. When the next ship arrived a year later with additional provisions, there were no survivors. What happened is still a mystery today. It is believed that the survivors joined Indian tribes, and were not murdered or died from disease as there
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