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Leasing Veteran Rex Wiggins Passes Away
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Leasing Veteran Rex Wiggins Passes Away
Rex Wiggins, principal with Jean M. Hamilton in Crosspoint Leasing & Financial Services, Fair Oaks, California, recently passed away; he had Alzheimer’s the last few years of his life.
"He was active in the Leasing Industry for many years from the IFG days in Great Falls, Montana; United Thrift & Loan in Sunnyvale and then with Crosspoint Leasing & Financial Services Inc. in Fair Oaks, California. Prior to entering the leasing industry Rex spent many years with Bank of America throughout the Valley as well.
"We met in the late eighties & married in 1993.
"Rex is definitely in a better place!"
Rex was born in Oklahoma on April 15, 1936; he grew up in Bakersfield and worked throughout the Central Valley of California, Great Falls, Montana and Northern California. Rex passed away on January 20, 2013 with his wife by his side in Fair Oaks. Rex is survived by his wife Jean; sister Polly and husband Elmer Scritchfield; daughter Kathy Wiggins; son Lloyd Wiggins and wife Susanne and grandchildren Anya and Alex; Jean's son Ron Hamilton and grandchildren Megan and Ryan; mother-in-law Margaret Anway; granddaughter Samantha Doan and husband Chuong; grandson Jason Garner and wife Olympia and great-grandson Logan; nephew Jim Scritchfield and wife Myrna and children Kelsey, Kyle, Jake & Josh and many other family members. Rex will be remembered for his love of life, family and friends, fishing and golfing. He will rest in peace with his mother and father, Eva and Frank Wiggins, at the Hillcrest Mortuary and Cemetery.
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African-American Religious Bank Fails in Chicago
Covenant Bank, Chicago, Illinois, was closed with Liberty Bank and Trust Company, New Orleans, Louisiana, to assume all of the deposits. Founded June 20, 1977 the bank had 25 full time employees as of September 30, 2012. Tier 1 risk-based capital ratio 2.19%.
The main problem was Non-Current Loans for this small bank,
"The bank, previously known as Community Bank of Lawndale, was bought in 2008 by a group that included Rev. Bill Winston and members of his congregation at Living World Christian Center of Forest Park, according to a June 2012 profile of the bank by Crain's Chicago Business." (1) "...much of the cash supplied by members of his 20,000-member congregation, Living Word Christian Center." (2)
The bank had not been showing a profit for several years,
(in millions, unless otherwise noted)
Primarily from non-current loans (not charge offs).
(in millions, unless otherwise noted)
2006 $32,000 ($42,000 commercial/industrial, -$10,000 consumer loans)
(Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.)
According to the American Banker, "The bank significantly grew its real estate loan portfolio after the acquisition, but many of those loans have since soured, Crain's said. Covenant has been operating under a cease-and-desist order with state and federal regulators since June of last year and has been trying to raise additional capital since.
"The $61 million-asset Covenant Bank is undercapitalized and nearly 14% of its loans were at least 90 days past due as of March 31, according to Federal Deposit Insurance Corp. data. In its annual report filed with the Securities and Exchange Commission in late May, the bank said that given "precipitous decline in the value of the collateral securing its loan portfolio and a sharp decrease" in its capital...no assurances can be made about [its] ability to continue as a going concern." (3)
"The bank rapidly increased lending after Rev. Winston's March 2008 acquisition, nearly quadrupling loans to $54 million at the end of 2010 from $14 million. Most of that lending was to owners of two- and three-flats throughout the Chicago area, Ms. Whitfield says. Of Covenant's $22 million in loans to owners of one- to four-unit buildings, $4 million, or 18 percent, are delinquent to the point they're no longer accruing interest...Covenant's tangible equity of $2.7 million is now half of the $5.4 million it had just after Rev. Winston's purchase, thanks to steady losses. The bank has lost $6.2 million since his purchase. Over the last three years, he, along with his shopping mall venture, has pumped about $1.1 million in debt and preferred equity into Covenant to prop up its capital, according to Covenant's securities filing. That investment would be at risk, too, if the bank falls into receivership." (4)
"The African-American owned bank was seeking $3 million of capital. In early November, regulators gave the bank 45 days to get recapitalized or face seizure." (1)
The description on the bank's web site, now taken down, originally stated:
"Covenant Bank is a Christian bank founded on Judeo-Christian principles and culture from where we draw our ethical compass."
“The way the capital was raised is something that's totally out of the box,” says James Hannon, a banking attorney at Gozdecki Del Giudice Americus & Farkas LLP in Chicago. “If this bank does go down, what kind of impact is that going to have on the average shareholder? People may have put their life savings in.” (4)
Sadly there were 770,000 private shares of the bank issued, now worthless.
(in millions, unless otherwise)
September 31, 2012 Non-Current Loans: $6.4 million
As of December 31, 2012, Covenant Bank had approximately $58.4 million in total assets and $54.2 million in total deposits. In addition to assuming all of the deposits of the failed bank, Liberty Bank and Trust Company agreed to purchase essentially all of the assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $21.8 million
Bank Failure Map:
List of Bank Failures:
Bank Problem Real Estate Owned Remains Stubbornly High
Real estate owned, or OREO, on bank balance sheets has fallen 9.7% from a year earlier and is nearly back to the levels witnessed in 2009
(Note: edited due to length)
SNL data shows that OREO held at commercial banks and savings banks totaled $38.51 billion at the end of the fourth quarter 2012, down from $42.62 billion a year earlier and $47.96 billion at the end of the fourth quarter of 2010.
Regulators are encouraging banks to work through their problem assets and move them off their books, but few banks simply have enough capital to withstand the hit they will take when selling foreclosed real estate in bulk, said Bryan Cave LLP Partner Walt Moeling. The Atlanta-based attorney said that five years ago some banks might have thought that the value of problem credits would increase if they held onto the assets long enough but that institutions are now more realistic about their actual worth.
"I don't know of anyone that has capital capacity to do so that is not trying to offload foreclosed assets and bad loans," Moeling told SNL. "I don't see anyone really wanting to hold them. Everybody would love to get rid of them. It's just an anchor."
Despite that desire, the pace of distressed asset sales remained relatively slow through the first nine months of 2012, tracking virtually in line with the pace of sales activity in 2011, when sales fell to $19.37 billion from $29.61 billion in 2010, according to SNL
As Moeling noted, sales activity has not picked up because many banks lack the capital necessary to absorb the hit they would take when selling properties on their balance sheets. Market participants have long said that banks are forced to take the deepest haircuts when selling construction and land-development-related assets. And not surprisingly, construction and land development assets represent the largest portion of OREO on bank balance sheets at $12.04 billion, or 31.26% of all OREO, according to SNL data.
The second-biggest portion of OREO falls into in the commercial real estate category — domestic office loans secured by nonfarm, nonresidential real estate — which totaled $8.90 billion, or 23.1% of all OREO at the end of the fourth quarter of 2012, according to SNL data. The next biggest portion of OREO comes from one- to four-family properties, totaling $8.33 billion, or 21.64% of all OREO on bank balance sheets.
A far greater number of one- to four-family loans are locked up in the foreclosure process. The amount of one- to four-family loans in foreclosure — one- to four-family loans in default but not yet seized by banks — dwarfs the size of one- to four-family properties held in OREO on bank balance sheets, totaling $91.51 billion at the end of the fourth quarter of 2012. Even the aggregate amount of the top 20 banks reporting the largest number of mortgages headed for foreclosure stands out against the level of one- to four-family properties held in OREO. SNL data shows that those institutions in aggregate reported $80.92 billion in mortgages in the process of foreclosure, or nearly 10x the amount of one- to four-family properties in OREO for the entire banking industry.
Two of the top five banks in terms of OREO concentrations on their balance sheets — NBH Bank NA and Capital Bank NA — have acquired numerous failed banks and distressed institutions. And Beal Bank USA, which reported the third-largest concentration of OREO to assets, at 2.08% at the end of the fourth quarter of 2012, works to acquire distressed credits as part of its regular business strategy.
Some of the other largest relative holders of OREO operate in markets that were badly hit by the credit crisis. For instance, Troy, Mich.-based Flagstar Bancorp Inc. tops the list with OREO accounting for 4.96% of its asset base, and five Puerto Rico-based banks also made the list of the top 20 banks by OREO to assets.
Photocopier Leases: Washington Court
By Tom McCurnin
This Leasing Staple is Fraught With Manufacturers Playing Games
TBF Financial, v Boris Petrenko 2012 WL 5292826 (Wash.2012)
Photocopiers have been ideal leasing targets since they were first made in the 1970’s. For many leasing companies, they are the bread and butter of their portfolio. My experience, both as in house counsel, and as outside counsel, is they are a double-edged sword. If copier leases form the backbone of a company’s portfolio, then one can’t with them and can’t live without them.
Since the financial meltdown of 2006, my experience is that copier manufacturers know exactly where they stand and take advantages over leasing companies, who, if they want the business, have to bend over and take it.
This case from the Washington Court of Appeal
Lawyer Boris Petrenko leased two photocopiers with Konica which was assigned to TBF Financial. Five years later, the lessee defaulted and TBF sued. The lessee then made a novel claim that the lease term was not supposed to be 60 months, but only 36 for one copier and 48 months for the other. The lessee submitted declarations which supported the claim that Konica orally modified the deal, prior to assignment to TBF. So of course, the lessee didn’t make the payments during the last year—the lease had expired, so he claimed.
By the way, given my experience with copier deals, I have no reason to doubt the lessee’s story, but more on that later.
The lessor lawyer filed a summary judgment motion which of course claimed that the lease had “no oral modification” clause. The Court gave lip service to the claim, but ultimately set aside the granting of the summary judgment based on the declarations of the lessee, which went uncontroverted at trial.
I understand why no controverting evidence may have been offered. First, the allegation might be true and a Konica representative may have actually modified the leases. Second, even if false, TBF might have had a hard time finding a witness at Konica to controvert the statements. Finally, TBF may have not wanted to voluntarily create a “he said she said” issue at the hearing, a guaranty that the motion for summary judgment might be denied.
In any event, the Washington Court of Appeals reversed the granting of the motion and sent the case back to the trial court. Details are sketchy here, but I offer the following lessons.
First, if the paper came directly from the manufacturer, most program agreements have indemnity language that the assignor has not orally modified the lease and upon any such allegation will pick up the defense of the assignee. I’m not sure these were direct assignments, as the Court mentions there were a series of assignments, so this could be third hand paper.
Second, most copier manufacturers will not sign anything that obligates them to anything since 2006. Indeed, their position is that the lessor should drop down on its knees and praise God that the manufacturer is condescending to throw the lessor some crumbs of business.
Third, I couldn’t tell from the decision how much was involved, but if these are one-off assignments from strangers, the lessor might have considered getting an estoppel agreement from the lessee as to the lease terms and the balance owed. We do this all the time for bigger dollar leases, and it’s a one page form, and it’s a pre-condition, so usually the manufacturer’s sales rep gets us the estoppel certificate.
Fourth, as inviting and as vanilla as copier leases are, they are fraught with collection issues 48 months downstream. Our firm has 4 copiers now, and I haven’t seen a single copier yet that performed worth a darn much after 48 months. The thing starts jamming and service calls become more frequent. If the lessor is taking a 60 month piece of paper on a photocopier, that is asking for trouble.
Fifth, many clients have been reporting to me that copier manufacturers now give their dealers advance notice that a particular model is going to be phased out, and clear their inventory to those dealers at a huge discount. The dealers, in turn, place the copiers in offices at full face value knowing full well that the model is obsolete. Of course, the dealer does not inform the lessor that the equipment is obsolete and worth half its price when delivered. The customer finds out, and naturally wants concessions from the lessor.
The bottom line to copier leasing is that it is a specialized, manufacturer based program, in which large concessions are given for the business, and some deals will not end well. Don’t expect to treat these leases the same as typical equipment, because the manufacturer has the upper hand.
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Leasing News Alexa Rating Improves Since Feb. 3
Alexa ranks web sites in the order of most read, meaning number one is the most read, which is Google, and the rest follow. In the finance and leasing trade, a relatively small niche on the world wide web, ratings are in "most read" in the United States and the most read "World 'Wide." There are, of course, more web sites in the world than just one country, thus the numbers.
All news editions are actually part of the web site and when a headline is clicked, it goes to the web site. This is also true of those members of an association going to a web site not just for news, but a forum, or multiple forums such as at ELFA and NAELB.
In addition, many do not have daily news editions, but perhaps monthly as CLP Foundation, National Equipment Finance Association, or the National Association of Equipment Leasing Brokers.
Lessors, Monitordaily, ELFAonline, EquipmentFinance Advisors have five news editions a week; Leasing News has generally has three (holidays for both daily and three times a week will change the schedule).
Companies also can employ Google Analytics or a Google relationship, such as Lessors.org.
Sites linking in refer to other sites who connect readers to the web site, as Alexa notes “can serve as a measure of a site’s reputation.”
Asset Description and Use
A commercial lease is a contract for the use of equipment not its ownership. Therefore the description of the equipment needs to be very complete and descriptive. However, you cannot describe the equipment properly unless you know how it is going to be used. It is the use as well as the physical description on the lease schedule that needs to be complete.
I have written often on the need to completely describe the equipment on the lease agreement and have tried to explain that usually the description on the vendors invoice is only a brief presentation and is rarely complete. You usually need to request a better description that includes all attachments or accessories. In addition you should request what represents a proper use and how long is a normal life span for the equipment.
If you are creating a number leases for a vendor then the description and knowledge of the average types of use can be determined in advance reducing operations time. When you have a request from the lessee and do not know the vendor this process sounds like overkill unless the price of the equipment is above your cost threshold. Below that at least get a complete description.
There is a lot of equipment like medical, data processing, and food processing that would not need much description but they all have accessories and occasionally the environment that they are used in can have an impact on the condition of the equipment. Therefore use on any equipment includes the location and environment for that use.
Sometimes the description is so tied to the type of equipment that it does not make sense to the average person. It is advisable to get a picture to add to the schedule. Also you may ask the vendor to define as much as possible the equipment in simple terms to both purpose and structure.
If the equipment is hard to identify like pipes, or anything that has large amounts of pieces, than in addition to the description it is wise to send labels and have them placed on each piece. This becomes critically important if there are multiple lessors with like equipment.
The last point is to have language in the lease requiring notice of location change. Sometimes location change indicates a change of use and may require a change in lease payments if the lease is tied to actual use.
A lease is not a loan and the protection of the asset should be of primary interest to the lessor. Too many leases look like loans regardless of the purchase option. Also the amount of losses is directly tied to the way you investigate the equipment’s use, as you do the credit. The better you know the equipment the better you leases.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at email@example.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
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Changing Career to Sales
Question: I am strongly considering changing my profession and beginning a career in sales. What are the pros and cons?
Answer: That is a very broad question, as sales has many aspects, and the larger the company, the more diverse the responsibilities.
Sales professionals are responsible for creating and organizing effective sales programs, devising marketing strategies, identifying customers, maintaining relationships and trying to gain / keep the largest possible market share. It takes a certain type of person to be able to create and maintain a successful Sales Career – Sales Professionals are hunters NOT gatherers.
A sales person who meets with customers MUST be self-motivated and possess a “fire-in-the-belly” to succeed. These professionals must be able to work under stress, retain information and calculate quickly (and accurately) sound judgments, which are often based on intuition and historical data.
Additionally, these Sales Pros have to possess a “sense of urgency” which is the innate ability to drive the sales process from lead generation to closing the deal. Competition is fierce so you must be able to maintain (and possess the desire) to be one of the best – mediocrity will NOT lead to success in this profession!
The sales process begins by contacting and cultivating leads (warm or cold) which is an arduous process that requires focus, dedication and, often times, phone work / cold-calling. Few people “enjoy” this responsibility – if you are one of them, then a career in sales is not for you! Additionally, long-hours and travel are typically required, and it is difficult for some in this profession to tell where business ends, and private life begins. If you are not eager and willing to make this your lifestyle, then again, this career path is probably not for you!
Compensation for this type of career can be lucrative with base offerings that run the gamut (large spectrum based upon many factors, including geography, experience, etc…) HOWEVER; the REAL money is in commissions; earned commissions will be a reflection of your success as a Sales Professional. Obviously, the larger the company, the larger the base salaries offered – HOWEVER, the commission structure is typically not as hefty as it would be with a smaller organization.
One major perk is that all companies in one way shape or form need employees who will generate income; if an industry implodes, “Tony” can still sell widgets. Again, your production (regardless of industry or product) will be a direct reflection of your success and marketability for your future career path. Aim to be the most successful Sales Pro and skies the limit!
“Aim at perfection in everything, though in most things it is unattainable; however, they who aim at it, and persevere, will come much nearer to it than those whose laziness and despondency make them give it up as unattainable”
- Lord Chesterfield
Career Crossroads Previous Columns
Top Stories February 11-February 15
Here are the top ten stories opened by readers:
(1) Bank of West Leasing Indirect Leaves NAELB
(2) Why Bank of West Leasing Indirect Has Left
(3) Stan Nathanson Passes Away
(4) TFC Equipment Finance Up-Dates "Funder A" List
(5) Leasing Companies Out of Business
(6) Dodd Frank Wall Street Reform Act
(Tie) (7) Direct Capital Ranked Among Top Ten Best Places to
(Tie) (7) Ex-Dixon comptroller gets 19 1/2 years for
(Tie) (7) Funders Looking for New Broker Business (updated)
(8) New Hires---Promotions
(9) Update ---New Credit Reporting Agency
(10) Raymond Wesley (Skip) Florea II Passes Away
Fitch Rating European Senior Fixed-Income Investor Survey
85 respondents: senior fixed income executives, fixed-income portfolio and investment managers, heads of fixed-income research teams, portfolio specialists and senior credit analysts, together representing USD7.6 trillion of fixed-income assets.
51% of investors say fundamental credit conditions for sovereigns will improve – the first time in three years optimists have outnumbered pessimists. A bullish mood pervaded all sectors except high yield and, to a lesser extent, investment grade non-financial corporates.
51% expect the Eurozone to muddle through, with 28% anticipating fiscal union. Responses signal more confidence than in the July survey, when only 31% believed in the muddling-through path and more participants feared exits, defaults and break-up.
53% think 2013 Eurozone funding conditions will be better than in H212 while another 39% expect them to be about the same; only 8% expect deterioration.
42% say banks will prepay up to half the total EUR1trillion LTROs this year, doing their utmost to wean themselves off the ECB. Another 44% expect the amount to be between 10% and 33%.
57% of investors expect a 2013 bond yield correction to be gradual, driven by incremental normalization of interest rates. Only 8% think it will happen more abruptly and 35% expect stable or even continued declines in yields this year. This relatively relaxed view is supported by participants’ lack of concern about inflation: 77% ranked this risk as low.
29% voted HY their most favored investment choice, more than double the 13% in the last survey and the highest reading since Q111 (36%) – braving their concerns about deteriorating sector fundamentals in favor of yield hunting, and comforted by a belief in continued moderate defaults:
53% expect the European HY default rate will end 2013 at 2-4%, with 31% somewhat more negatively estimating 4-6%.
Full European Survey Report:
##### Press Release##############################
Henry Schein Acquires The Maddox Practice Group
Strengthens Dental Practice Transition Presence in California
MELVILLE, N.Y., -- Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of health care products and services to office-based dental, medical and animal health practitioners, today announced the acquisition of the Maddox Practice Group (MPG), a leading practice transition group that serves the California dental market. Financial and other terms of the transaction were not disclosed.
MPG was founded by A. Lee Maddox, DDS, ESQ and is based in Newport Beach, California. Dr. Maddox, a retired endodontist, is a prominent figure in the California dental community. He is a former instructor of endodontics at University of Southern California and is a frequent lecturer at national, regional and local dental society meetings.
MPG will become part of Henry Schein Professional Practice Transitions (HS PPT), the division of Henry Schein Financial Services that provides a full range of dental practice brokerage, practice valuations and practice transition planning services. In addition to HS PPT, Henry Schein Financial Services offers an array of business solutions for health care practitioners, including equipment leasing and financing, and patient and practice credit card services.
"We are proud to expand our Practice Transitions business in California, one of the largest dental markets in the U.S., with approximately 32,000 licensed dentists," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "In acquiring MPG, we are expanding our team of experts that partner the right buyers and sellers based on fit, specialization and value. We are delighted to welcome Dr. Maddox, his colleague Kerri McCullough and their staff to Henry Schein. The professionals at MPG bring an entrepreneurial spirit that is the hallmark of Team Schein."
About Henry Schein, Inc.
The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a selection of more than 96,000 branded products and Henry Schein private-brand products in stock, as well as more than 110,000 additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.
Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 25 countries. The Company's sales reached a record $8.9 billion in 2012, and have grown at a compound annual rate of 17 percent since Henry Schein became a public company in 1995. For more information, visit the Henry Schein Web site at www.henryschein.com
#### Press release###############################
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