Wednesday, January 26, 2011
Today's Equipment Leasing Headlines
IRS: Small Business Jobs Act of 2010 Tax Provisions (Official)
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Key Leasing Charge Offs Improve
Key Corp (Key Bank) (NYSE: KEY ), Cleveland, Ohio reported net income for the fourth quarter totaled $279 million, compared to fourth quarter, 2009 of a loss of loss of $265 million.
It should be noted that the Tier 1 Risk based capital ratio rose from 12.75% to 15.10%, which is a change from the FDIC Tier 1 reporting in September 30, 2010 of 11.6% (although anything over 10% is considered healthy.)
It should be pointed out that over the last two years, Key has opened 77 new branches and renovated approximately 145 others, expanding Key's 14-state branch network to 1,033 branches. The Company plans to build an additional 40 new branches in 2011. Considering its growth mode, the bank has improved its loss ratio's while maintaining a controlled growth, showing management in very good stead. The question of better income will be coming from its community involvement and expansion of branches investments.
November 18, 2010 when it was announced Beth Mooney would be the new chair, replacing Chairman and CEO Henry Meyer, retiring, she said that among her goals was to make sure that Key remains focused on being a "relationship-based, community bank." She specifically said Key wants to grow and potentially have more branches and do business in more cities.
It does appear Key Bank is changing its direction and appealing to more community markets as well as thrust toward smaller business company opportunities.
Charge offs have improved in Key Bank FDIC filings.
The FDIC December 31, 2008 shows a charge off of $62.4 million in lease finance receivables and $106.5 million year-end 2009. Total charge off for 2009 was $2.4 billion in the FDIC filing with $1.17 billion in real estate, $646.36 million in commercial and industrial loans, $234.78 million in loans to individuals, and $139.49 million in other loans.
December 31, 2010 FDIC records not available, but September 30, 2010 shows charge off of $1.4 billion with $745.32 million in real estate, $347.092 million in commercial and industrial loans, $208.18 million in loans to individuals and $50.6 million in lease financing receivables.
Looking at the last three leasing write-offs $62.45 million, $106.55 million and $50.6 million (although a three quarter, doesn’t include fourth quarter.)
Noncurrent loans and leases are $1.84 billion compared to third quarter of 2009 of $1.75 billion.
Tier 1 risk-based capital ratio: 11.60%. It is a definite improvement since year-end 2008 of 7.38% as record in FDIC filings.
From the consolidated average balance sheet, page 19, SEC filing, comparing the 2009 quarter with 2010 saw an asset decrease from $95.97 billion to $93.3 billion with a yield drop from 4.47% to 4.22%, with one of the largest drops in commercial lease financing from $7.59 billion to $6.48 billion. Commercial loans themselves fell from $43.5 billion to $35 billion.
Consolidate Average Balance Sheet, page 19
Loan Composition Chart, page 23
Net Loan Charge-offs from continuing operations. Please note lease charge offs from the previous quarter came down from $39 million to $12 million. The total commercial loans charge off, less commercial leasing, dropped from $564 million to $160 million, less leasing.
Net Loan Charge-offs from continuing operations, page 6
Nonperforming Assets from Continuing Operations page 6
It will be interesting to compare the last three FDIC filings when the year-end 2010 is available.
Full 65 page SEC Fourth Quarter filing:
U.S. Bancorp and Leasing Still Going in Opposite Directions
Two More Comments: Evergreen---ELFA Small Ticket Council
Leasing News is aware in the past that the Equipment Leasing and Finance Small Ticket Steering Council has discussed the subject, but has never made a recommendation. To learn if the current council, Leasing News asked each of the members of the ELFA Small Ticket Council for the position of their company regarding Evergreen clauses, specifically notifying lessee regarding the termination of their initial lease term and the residual, especially when nominal.
The current ELFA policy is to oppose the notification, although being heavily abused in the small ticket marketplace.
Here are two more comments from council members, that are also added to those already received:
Terey Jennings, CLP, Financial Pacific Leasing:
Nancy Pistorio, Madison Capital:
Chairman: Chris Enbom, CEO, Allegiant Partners
Enbom also states his company notifies lessees on FMV residuals and if they don’t pay the residual, it goes month-to-month until paid.”
He also commented, “I am also on a church board and the church just had the same negative experience. I can understand the frustrations of many lessees and we will shoot ourselves in the foot if we are not careful!”
Robert Boyer, Past Chairman, Susquehanna Commercial Finance, Inc.
James Elwood, Bank of the West
Terey Jennings, CLP, Financial Pacific Leasing
Kevin Clune, CLP, CLUNE:
Nancy Pistorio, Madison Capital
Raymond Shilling, Marlin Leasing:
Evan Iilkoff, Hembstead Capital:
Carl Zwilling, Summit Funding Group
(a) Marlin Leasing
Leasing Industry Help Wanted
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John Roscoe Pleads Guilty in "Cigarettes Cheaper" fraud
John Roscoe pleads guilty in the indictment regarding "Cigarettes Cheaper" that cost American Express Equipment Finance, LEAF Funding, and GE Capital a lot of money, as well as a receivable line of credit at Comerica bank. It leaves his son Ned Roscoe on trial to prove his innocence as CFO Robert Mazur, marketing director David Ballot and Steve Grazzini have been granted immunity.
According to the court document the company with stores in the San Francisco Bay Area got into financial difficulties and with their revolving line of credit with Co-America, San Jose, California allegedly first began using retail prices for whole invoices that it presented to the bank, and then started presenting invoices from the line of credit for cigarettes supposedly delivered but not yet, and then as it got worse, allegedly presented invoices for cigarettes that were never to be delivered, as well as leasing equipment twice or three times and then equipment that did not exist in a means to make payments.
“a. In 2003, the Company entered into an agreement with another tobacco company, hereinafter referred to as B.T., in which Ned Roscoe, through the Company, requested B.T. to invoice purchases of Revenge Brand cigarettes at $27.64 per carton. In truth and in fact, the Company paid B.T. $6.80 per carton of Revenge Brand cigarettes. The cost the Company later reported to Comerica on borrowing base certificates was not the actual cost of $6.80 per carton, but rather the inflated invoice cost of $27.64 per carton. These fraudulent misrepresentations accounted for more than $1 million in overstatements in the weekly borrowing base inventory reports the Company made to Comerica Bank.”
“12. In late November 2003, Ned Roscoe instructed accountants to provide an analysis comparing figures the Company had reported to the bank in weekly reports and a strict interpretation of the loan agreement's borrowing base provisions. An accountant reported that, as of November 11, 2003, the discrepancy between the inventory figures the Company had provided to the bank and the correct figures was approximately $16.5 million dollars. After reviewing the report and discussing it with R.M., Ned and John Roscoe agreed on a fraudulent strategy that they would tell Comerica Bank officials that differences in their weekly inventory reports were the result of ‘clerical or accounting errors’."
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Sales makes it Happen---by Steve Chriest
Time and Management
A major sales consulting firm estimates that most salespeople spend no more than six percent (6%) of their available working hours talking to prospects and customers in person or on the phone about whether the customer or prospect wants to grow their business or fix a problem in the business. Excluding telemarketers, where then do most salespeople spend their time?
Not surprisingly, effective time management is a challenge for many salespeople and sales managers. What is surprising is how much time and money is spent by sales organizations desperate to teach their sales teams how to spend their work time wisely and efficiently. Even a cursory look at the essential activities of salespeople reveals all you need to know about time management for the sales team.
For most salespeople, there are only six essential tasks for which they are responsible - prospecting, qualifying, facilitating orders, closing business, maintaining customer relationships, and reporting activities to management. With the exception of continuing education, a salesperson can plan his or her days, weeks, months and years around these essential activities. The trick is to exclude as many activities as possible that do not impact at least one of these essential tasks.
Because all companies need revenue, and salespeople are paid to close business, closing business is the number one priority for most salespeople. It seems obvious, then, that salespeople would not let anything stand in the way of closing current business with customers.
Whether a salesperson prospects as a "hunter," or is continually on the lookout for additional opportunities to do more business with existing customers, prospecting for business is the second most important activity for all salespeople.
Why? Without a constant flow of new prospects or new prospective business from existing customers, a sales pipeline or funnel quickly runs dry.
Once prospects are identified, salespeople must qualify the prospects as a fit for the products or services offered. There are few things in a salesperson's working life that are worse than spending gobs of time with prospects who cannot or will not do profitable business with the salesperson's company.
As business from a number of prospects and customers begins to move through the salesperson's pipeline, time must be spent facilitating activities that cause that business to move toward closing. It's here that salespeople waste most of their time. Whether the salesperson is at fault, or whether operational inefficiencies make it necessary for salespeople to baby-sit order processing, this activity robs many salespeople of precious selling time.
Salespeople must spend some time cultivating and growing their relationships with customers. This essential activity can take many forms, from regular visits to the customer's place of business, researching solutions to customer challenges, to arranging entertainment events like business lunches and dinners, sporting events and so on.
Finally, as bitter a pill as it is for salespeople to swallow, some time must be spent reporting activities and the results of activities to sales management. After all, if sales managers did not receive reports from their team, what on earth would they do with their time? But seriously, management should always require reports from the sales team, not for the purposes of micromanagement, but for the value of the intelligence to be gained from feedback reported by the sales team.
Keeping the main activities of sales in mind - prospecting, qualifying, facilitating orders, closing business, maintaining customer relationships, and reporting activities to management - should help salespeople and managers prioritize and allocate selling time. Does anyone really need a time management class to tell them to do essential selling activities and stop doing everything else during selling hours?
About the author: Steve Chriest is the founder of Selling UpTM (www.selling-up.com), a sales consulting firm specializing in sales improvement for organizations of all types and sizes in a variety of industries. He is also the author of Selling The E-Suite, The Proven System For Reaching and Selling Senior Executives and Five Minute Financial Analyst, Basic CREDIT & Analysis Tools for Non-Accountants. He was the CEO of a very successful leasing company and executive at a major company. You can reach Steve at firstname.lastname@example.org.
Sales Makes it Happen articles:
January 27 Free Webinar by IDS on Lease Accounting
How to prepare for the new rules
Alan Leesmith, Chair; Director of IAA – Advisory
Katie Emmel, Director of Product Management and Support, International Decisions Systems
Rodney (Rod) W. Hurd, Chief Financial Officer, Bridgeway Capital Advisors, Inc.; Chair, ELFA Financial Accounting Committee
Mark Venus, Projects Director, BNP Paribas; Chair, Leaseurope’s Accounting and Taxation Committee
Jacqueline Mills, Senior Advisor, Economic and Financial Affairs, Leaseurope
Andy Thompson, Legal and Regulatory Editor, Asset Finance International
"Meet the News Media” Friday, March 18th
This is to let readers know I will be participating in the "Meet the News Media" workshop at the National Equipment Finance Association Spring Conference in Scottsdale, Arizona.
Other participants to be named with a presentation plus question and answer format, too.
Kit Menkin, editor
All Leasing Association 2011 Conferences
Saluting Leasing News Advisor Ken Greene, Attorney
The Leasing News Advisory Board does not participate in editorial decisions, meaning reviewing or choosing stories or subjects. Their role is to participate with policy and business advice as well as contribute in discussions on matters brought up by the publisher in a private internal blog.
Ken has been representing Leasing News pro bono in several suits in our early days, including depositions and court time. He was involved in the formation of Leasing News. Ken has closed his Northern California office and moved to Southern California, although continues to represent clients throughout the state plus Nevada.
Kenneth C. Greene, Partner
He began his leasing career with BankAmerilease, practiced with several firms, and served as corporate counsel to a leasing company before joining Hamrick & Evans, LLC, a full service law firm specializing in construction defect litigation, insurance coverage litigation, equipment finance law, and entertainment law, throughout California and Nevada. He has been associated with the American Bankruptcy Institute ("ABI"), California Bankruptcy Forum ("CBF"), Eastern Association of Equipment Lessors ("EAEL"),Equipment Leasing and Finance Association ("ELFA"--formerly the Equipment Leasing Association), and United Association of Equipment Leasing ("UAEL"), California Bankruptcy Forum ("CBF"), and he has served twice on the board of directors of UAEL, and has also been its Legal Committee Chairman, Legal Line Editor, and Regional Committee Chair.
He received his B. A, at Brandeis University, located in Waltham, Massachusetts, graduating cum laude. He received his J.D. at Santa Clara University in 1980, also graduating cum laude.
Mr. Greene is a frequent writer and lecturer on matters of leasing law and other related legal issues. He is an acknowledged contributor on bankruptcy issues to Miller & Starr, California Real Estate 2d (Bancroft Whitney). He lectures on leasing law and documentation, litigation and collection matters, and has produced and presented seminars to leasing companies on enhancing the attorney-client relationship. He has taught nationally for Euromoney Lease Training.
He lives in Westlake Village with his wife and son who attends Cal Lutheran and daughter who attends UC Irvine.
### Press Release ############################
Sequent Asset Management Launches “Repo Garage”
Sequent Asset Management has launched “Repo Garage”, a dynamic new website for the listing and sale of repossessed, off-lease and surplus equipment and vehicles. Additionally the site will provide financing for qualified purchasers.
Ross Reida, Sequent President, commented “Sequent is very excited about the launch of www.repogarage.com and the positive feedback that we have received from our customers. The detailed information and pictures of the equipment will help potential purchasers to find and select the right vehicles and equipment for their needs”.
According to Gary McLeskey, Sequent Executive Vice President, “This new website enables Sequent to more effectively remarket equipment and vehicles in the national marketplace and Repo Garage will very quickly become the #1 listing site in the industry”.
Sequent Asset Management, “The Lenders Advocate”, is based in Vancouver, WA and provides collections support, collateral recovery and remarketing services to banks, credit unions, leasing companies and captive finance companies nationwide. Sequent also performs a wide range of portfolio management functions, equipment appraisals, asset liquidation services, collateral inspection services and appraisals.
#### Press Release #############################
Breed: Golden Retriever Mix
Rescue Group: GRIN - Golden Retrievers In Need Rescue Service, Inc.
Adopt-a-Pet by Leasing Co. State/City
Adopt a Pet
Dog Walks Kit on a Beautiful Day in California
It was 74 degrees here in Saratoga yesterday with very little wind. In the sun, it even felt much warmer. I even opened the swimming pool cover and thought about jumping in…Walked the dog wearing a short sleeve shirt (The dog seems to always be in front, pulling me, and people who I pass often ask: “Who’s walking who?”)
While the East Coast had cold fronts, it was very different here, as this is what happens:
Air Temperature Calibrations:
60 degrees - Californians put their sweaters on.
50 degrees - Miami residents turn on the heat.
45 degrees - Oregon residents go to outdoor concert.
40 degrees - You can see your breath, Californians shiver uncontrollably, Minnesotans go swimming.
35 degrees - Italian cars don't start.
32 degrees - Water freezes.
30 degrees - You plan your vacation to Hawaii.
25 degrees – Water in Iowa freezes, Californians panic to cover their fruit trees, Minnesotans eat ice cream, Canadians go swimming.
20 degrees - Politicians begin to talk about the homeless, New York City water freezes, Miami residents plan to fly to Hawaii.
15 degrees - French cars don't start, cat insists on sleeping in your bed with you.
10 degrees - You need jumper cables to get the car going.
5 degrees - American cars don't start.
0 degrees - Alaskans put on T-shirts.
-10 degrees - German cars don't start, eyes freeze shut when you step outside.
-15 degrees - You can cut your breath and use it to build an igloo, Arkansans stick tongue to metal objects, Miami residents cease to exist.
-20 degrees - Cat insists on sleeping in pajamas with you, politicians actually do something about the homeless, Minnesotans shovel snow off roof, Japanese cars don't start.
-25 degrees - Too cold to think, you need jumper cables to get the driver going.
-30 degrees - You plan a two week hot bath, Swedish cars don't start.
-40 degrees - Californians disappear, Minnesotans button top button, Canadians put on sweater, your car helps you plan your trip to Hawaii.
-50 degrees - Congressional hot air freezes, Alaskans close the bathroom window.
-80 degrees - Polar bears move South, Green Bay Packers order hot cocoa at the game.
-90 degrees - Lawyers put their hands in their own pockets.
-100 degrees - Hell freezes over, Obama resigns.
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IRS: Small Business Jobs Act of 2010 Tax Provisions (Official)
SF Gavin Newsom to find lieutenant governor's role limited
Cisco buying land in Fremont
Off-Premise Wine Sales Increase Through December
A Rosé Can Bloom in Winter, Too--by Eric Asimov
Dan Berger: Want rare wine? Buy the winery
Alcohol industry grapples with nutrition labeling
Wine Prices by vintage
US/International Wine Events
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This Day in American History
1654-Jews flee to the New World: approximately 150 Jewish families of Portuguese background fled the city of Recife, in Pernambuco, Brazil. By September a number of these refugees had established the first community of Jews in the future United States.
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