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VGM Group, Inc. CEO and Founder Van G. Miller
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VGM Group, Inc. CEO and Founder Van G. Miller
A reader sent this, adding, "He meant the world to us."
WATERLOO, Iowa – VGM Group, Inc. CEO and Founder Van G. Miller died Sunday, Oct. 18, at his home, of an apparent heart attack.
Miller, 67, was an icon in the home care industry, and the recipient of numerous awards for business achievement. He was also a generous philanthropist who focused his giving on local agencies and projects.
The father of three sons, his youngest, Christopher, was married Saturday. He also leaves behind Vance, Dax and five grandchildren, and Christine Livingston, his significant other of 24 years.
In recent years, Miller had set in place accommodations for his succession. In 2008, Miller and minority shareholders James E. Walsh Jr., and John Deery Jr., sold 100 percent of the stock of the company to its employees through an Employee Stock Ownership Plan, or ESOP.
Jim Walsh, has been named chairman of the board. Walsh will also serve as interim CEO until the full board of directors has the chance to meet in person next month. Jim has been a long-time business partner of Van and most recently was both president and general counsel of VGM Group, Inc.
Miller founded VGM and Associates on Sept. 3, 1986, with the belief that quality home health care is best delivered by community-based, independent providers. The original buying group for independent home medical equipment providers grew to be a diverse company of business units. VGM is still best known for its leadership in the home medical equipment industry, where it provides services that include group purchasing, insurance, education, marketing, insurance contracting, advocacy and analysis.
VGM also has a significant business presence in management of post-acute health care, golf, restaurants, orthotics and prosthetics and physical therapy. VGM employs 850 people, the majority of whom work at its headquarters in Waterloo, Iowa, but with significant offices in Dade City, Florida, Atlanta, Kansas City, Phoenix and Toronto.
He’s twice headed companies that made Inc. Magazine’s list of the 500 fastest growing U.S. companies, was named one of the HME industry’s Ten Most Influential Individuals by HME News, and received HomeCare Magazine’s HomeCaring Award. The American Association for Home Care recognized him as a Champion of Home Care.
In 2009, he was inducted into the Junior Achievement of Eastern Iowa Hall of Fame. In 2014, he was named one of the Upper Midwest EY (Ernst and Young) Entrepreneurs of the Year. This year, the Des Moines Register named VGM the Top Workplace in Iowa among large companies.
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Top Stories October 19 -- October 23
(1) Why Was Daniel Dyer Forced to Resign
(2) In a Surprise Move, Marlin Business Co-Founder/CEO
(3) Court Finds Casino Not Responsible for
(4) Federal Bureau of Prisons
(5) Leasing 102 by Mr. Terry Winders, CLFP
(6) Women in Leasing LinkedIn Group
(7) State Bank & Trust Acquires Patriot Capital
(8) New Hires---Promotions in the Leasing Business
(9) OnDeck Expands Product Set To Meet
(10) Northern Leasing Settles $3 Million Accused in
Marlin Business Services Stock Hits 17.24
Marlin Business Service stock dropped to 16.36 on the news of Daniel Dyer resigning as CEO and Director, leaving as of October 25. He is staying on one year as a consultant but not spending more than 35 hours a month. It didn't seem to bother stockholders; however, as by Friday the stock rose to 17.24 on a volume of 40,200 (3 month volume average 51,921).
The stock hit a low of 11.17 for the 52 week period on August 24, 2015, but basically has been climbing ever since.
Zacks, among other stocky analyst companies, report the company a "strong" buy.
FinTech Legend Dave Murray is Back, This Time
One of the first to use what is now called Financial Technology, Murray developed an analytic program for the small ticket market place. He is one of the first to use Dun & Bradstreet to do mailers on businesses with better ratings, claiming they were approved. He hired had a group of people out of high school and college who responded to the callers from the mailers and he developed a sales calling room to those who got the mailers and didn’t respond.
He adopted the software from what Jim Merrilees, CLFP, developed at Colonial Pacific Leasing, labeled the “Bliss System,” an automated broker program, then credit scoring in 1987 with fair-Isaacs, and when president, was the first to go on line in 1989 with a processing system. The company was the first to use a “wide area network,” before the days of the internet. BLISS was the first available for brokers and lessors. It was a telephone direct “dial-up” to the CPL main frame computer. Rich Viola, Chief Financial Officer, named the program: Broker-Lessor Information System Support. It revolutionized the processing of applications and fundings of transactions. (1)
Another successful program was a proprietary lease adjudication system developed by Newcourt for Dell Financial Services as part of its operational responsibilities to the JV. The primary source was the Credit Bureau reports for the principals of the business, or for the consumer directly. In addition, there were benchmarks for time in business, D&B rating, absence of BK, litigation, extreme DQ...and amount of transaction. Decisions were rendered within 5 minutes, so quickly that people on the phone were incredulous that a decision was made so quickly.
Dave Murray and his brother Mike started Direct Capital in New Hampshire, where he liked to ski, then started Preferred Leasing in 1989 in Tahoe, where he liked to ski, further developed analytic software, then left in the downturn, continued to develop software, co-developing Turbo Tax as well as software for Five Point Capital and others. At last report, he had moved back to Lake Tahoe where he liked to ski. (2) Now he is back in finance and leasing business, in Chicago. This is from his website:
"Copperline Capital, LLC is in the business of providing commercial loans, commercial lines of credit and commercial equipment and/or vehicle leases. We are partners and have continuing business relationships with Dun & Bradstreet, Experian, Wells Fargo, Lending Club, Financial Pacific Leasing, Chase Manhattan Bank and other sources of capital and credit analytics companies."
"Ask your Account Manager about Instant Cash. We will wire $10,000 to your account in an hour. Seriously."
He again is using a credit card mailer, but this time going after working capital loans.
Tennenbaum Capital Partners Invests in 36th Street Capital
36th Street Capital states it will focus on funding equipment leasing and financing transactions originated in partnership with bank, independent and captive financing firms.
The company was co-founded in January, 2015, by Kiran Kapur, formerly Past President of GSG Financial, member of the Advisory Board, CIT Vendor Finance, along with Mark Horan, formerly with Durham Capital Advisers, UBS, and Merrill Lynch Private Wealth Management Advisors. They state the company was formed to” increase industry approval rates on equipment loans and leases by investing in transactions that require alternative capital solutions.”
Tennebaum Capital Partners is an alternative investment management firm headquartered in Los Angeles with more than $6 billion in committed capital under management.
“We have been evaluating opportunities to participate in this market for some time given its size and the attractive risk return attributes it offers. We believe 36th Street Capital’s team has extensive experience in the sector, a strong network of relationships and a unique origination strategy.”
“We are very pleased to be joining forces with TCP”, Kapur said. “We believe demand for alternative capital solutions in the equipment leasing sector is increasing and TCP’s investment will help us capitalize on our growing pipeline of opportunities, while also helping our clients better serve their customers.”
FinTech #102 by Charles Anderson
Charles Anderson observes:
“Let’s see where the music stops after the next recession.”
“Here is a three-part Series on Instant Credit Decisioning – What is it? Who is doing it? – Or just claiming that they are, and, is it an impossible goal?”
Flawed Data Leads to Flawed Decisions
The prescreen process relies on math and analytics in its decision-making logic. Whether using personal or business credit reports, business bank deposits, or vendor and equipment information – data drives the instant decision. Many alternative lending sources today, such as OnDeck, Funding Circle, and National Funding, to name a few, provide loans up to $500,000 with only an application and 3 months of bank statements to deliver their prescreen decision. Many say they also check social media, such as Facebook, LinkedIn, and even Instagram, in the final decision making process.
William Phelan, president of PayNet, Inc. , notes “With the right mix of data, software and algorithms, lenders can create instant credit decisions to deliver money to small businesses within hours of their application.”
PayNet is recognized as one of the leading providers of accurate analytics to business lenders. When PayNet debuted in 2001, they came with the promise of “better credit data, better credit decisions.” However, this begs us to question the alternative. What happens when our data points are incorrect or incomplete? And even more unsettling, what if lenders are looking to the wrong data points altogether for the basis of their credit decisioning? This poses our first credit pitfall: flawed data leads to flawed decisions.
Despite the incessant claim that quality underwriting is “more than a personal credit rating,” most underwriting models used in finance and leasing in the small ticket marketplace rely primarily on the personal credit of a guarantor to determine an applicant’s quality and risk criteria. After all, personal credit reports and scores provide the most proven reporting to date on an applicant’s payment history.
Terey Jennings, CLFP, Senior Vice President Business Development, Financial Pacific Leasing states the company starts its models primarily on the credit quality of the applicant “to provide a real time (at the point of application submission) conditional decision and risk based price.”
Before jumping to a conclusion, note Jennings’ remark has an important caveat – any risk-based pricing based on payment history only applies at the point of submission.
No economic risk model – even with the most robust and accurate data points – can account for changes to the playing field. Economic downturn, increased competition in the market, even personal economic or emotional events or fraud – these are just a few examples of variables that we cannot account for in our risk-based instant credit decision. This poses our next credit pitfall: instant decisioning is limited to the past, and thus inherently fails to forecast likelihood to default in the future.
The biggest limitation to the alluring promise of an instant credit decision: you just can’t quantify human common sense. As David Gilbert, Five Point Capital fame, now CEO of National Funding observes, “We don’t advocate for a 100% automated approval, because we value the insight we can bring to the decision using the human element.”
What is that human element? Take, for instance, Ben Carlile’s breakdown of the ideal credit analyst: An underwriter brings curiosity, common sense, creativity and drive – qualities you can’t account for in any algorithm or equation. (1)
“There are positives to this process, such as efficiency, cost savings, consistency of output,” notes Jay Shaw, Director of Account Management at Quick Bridge Funding, “but there are also negatives such as a lack of human interaction, intuition, and real world experience.”
We have to weigh in and face the biggest challenges to instant credit processes: flawed data, limited frameworks, and the lack of basic human common sense. So ultimately, the development of the instant credit decision comes down to its long-term accuracy and the Return on Investment for your operations team.
Part I-Instant Credit Decisions-Introduction
Previous Financial Technology Articles
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“Will Ten Years at Same Company Go Against Me?”
Q:I am coming up on my 10th year of employment with the same organization. Recently, I heard that Candidates with some job movement are more desirable. Will this affect my future career goals?
A: Loyalty to an employer is not what is used to be … remember; companies do what they must to stay afloat (e.g. the Financial Crisis) and/or show profit/growth; if that means shutting down a division or two – so be it regardless of the employees’ tenure. However, moving too many times within a short period could also affect your career goals. The sweet spot is a balancing act!
With all the merges, cutbacks, sales, and changes in the equipment finance and leasing industries, it is not uncommon to see two year, three year, two year, off and on again, changes, almost like musical chairs, especially in the lease origination sector.
The key is that many employers seek some tenure AND career progression. Some employers will even list the following as a part of their job description, e.g.:“ … good tenure with no more than two jobs in five years unless progressive growth in the same company … must have five-year tenure at prior companies …”
In general, 3-5 years in a job without a promotion is the optimal tenure to establish a record of accomplishment. Average tenure will be dependent on the job, the level you are at, and the organization you work for. True outside Business Development Professionals, not program or relationship managers, have a bit more flexibility due to many factors. If you have spent more than five years in one job, you will need to counteract potential negative perceptions during job interviews. Be prepared to explain why you stayed as long as you did.
The other side: if you work at the same job for too long without progression, potential employers may assume you are not motivated or driven, and others might think that you are overly comfortable and would have difficulty adapting to a new job or corporate culture (I have come across this scenario many times). In addition, employers may think you have fewer diverse skills; employees gain additional skills as they move from job to job/employer to employer.
Sample Interview Questions you may Encounter:
Career Crossroads Previous Columns
ELFA Reports Finance, Leasing, Loan Business Up 22%
June July August Sept.
The Equipment Leasing and Finance Foundational Monthly Leasing and
(Terry retired January 1, 2015. To honor him and his many years of writing for readers of Leasing News, is repeating several of his columns that are still meaningful today. Here is October 10, 2013 updated.)
Why Lease 4th Quarter, 2015
The proposed change in the accounting rules may appear to lower the lessee’s interest in leasing, but with Congress dysfunctional (that is being kind), what is happening is many businesses are continuing to conserve cash. This is usually positive for leasing.
The small ticket market is getting much faster with approvals as software programs have become quite sophisticated, they claim. Some like TimePayment can do it is in three minutes and Financial Pacific is as also fast on leases up to $100,000.
The middle market and above, composed primarily of larger corporations, is becoming more cautious. They continue to conserve cash. Leasing may become more attractive to this marketplace, not less.
We should remember the old days when leasing was of interest because we offered no down payment financing, except the first payment. Often it could be 30 to 60 days delayed, too. In addition we tried to match the lease payments to the lessee’s cash flow or tax needs. To do this we needed to offer a true lease.
Today more transactions are Equipment Finance Agreements or “Business Loans,” often of short duration and with daily payments, really a very high interest rate. Perhaps “true leases” have become too difficult for a new generation to understand.
One of the requirements of a legal or tax lease is a purchase option that is not considered a bargain or was equal to, or greater than, the reasonably predictable fair market value (FMV) of the equipment at lease termination.
One of the challenges was how to sell a FMV lease to a lessee that was afraid you would hold them up with the sale price at termination. This caused more than one leasing company to offer side letters with a fixed price and then told the lessee to hide the side letter if a tax audit was coming. You should understand that this is tax fraud and there are serious consequences if discovered.
Most of the problems developed because many lessors refused to consider proper residuals. Under changes in lease accounting, moving back to true leasing, residuals will be required. Residuals will require a few procedures to support the lessor’s position. The first has always been a “complete” description of the leased equipment. The second is to determine the lessees “use” of the equipment and now a new attachment to the acceptance agreement is a document called a “use and maintenance” agreement where the use is described and addition rent is required, if the use exceeds the agreed upon maximum use or is returned in poor condition.
The lessee cannot be expected to have to return the equipment in like new condition because it is expected to be used. However the tax and legal requirements require the term of the lease not to exceed 80% of the equipment’s useful life so the use and maintenance agreement reinforces the leases determination to have the equipment returned in good condition and have at least 20% useful life remaining. Its main purpose is to protect the lessor’s residual position. This should limit the real residual risk to the change in the future value of the equipment.
One of the reasons to lease in the future is the ability to offer short terms on equipment that usually leased over longer terms. An example is equipment that has a MACRS depreciation term of five years that is leased over three years to increase the tax write off by expensing the rent instead of taking MACRS depreciation and interest. This requires a FMV purchase option, or no purchase option, and the assumption of a proper residual protected by a use and maintenance agreement.
There will be additional changes in leasing as we determine how to meet the lessees needs in the future but at the same time we will need stay positive and adapt to those changes. Companies with cash are in the position to offer true leases to their customers, as well as companies who want to conserve their cash, will also look toward leasing. The positive implications also stand a good chance as influencing small ticket leasing, even when it is treated as a capital lease. It’s the sizzle, and it hasn’t left the great marketing sales pitch of why lease. Especially in the 4th quarter of the year!!!
Previous #102 Columns:
Banks Closed More Branches Than They Have Opened
By Nicole De Dios and Tahir Ali
Branch pruning has been one of the more visible manifestations of expense cuts at U.S. banks, and an SNL study of the trend shows that from the start of 2006 (before the crisis) to Oct. 8, 2015, (five years after Dodd-Frank), banks have closed more branches than they have opened by a difference of 1,443.
The numbers far from spell the death of branch banking. The figures for Internet and mobile banking still add up to less than half of the respondents. As ABA deputy chief counsel for consumer protection and payments Nessa Feddis points out, the newer methods "complement, but do not replace, branches."
Also of note, the smallest banks opened more branches than they closed throughout the covered period, while bigger banks started closing more than they opened as early as 2009 and — by and large — have yet to stop. But both IBAT's Williston and ICBA's Cole are quick to point out that community banks are picking up the slack. Big banks withdraw from certain communities, and small banks buy the vacated branches. While a difference might be felt in the case of, say, a large manufacturer needing a loan that exceeds a smaller bank's limits, community banks can share credits as needed. Still, the loss is not fully offset. Even as community banks are the last to close, they have to "cherry-pick" locations before they expand, Cole explains. "You're going to see an overall decline in branches in the years to come, because the smaller banks are not going to buy all the ones that big banks are closing. But they will take up some of the business."
Broken down by region, the Southwest saw the most net openings from 2006 to 2015, with most of expansion occurring in Texas. Chris Williston, president and CEO of the Independent Bankers Association of Texas, noted that aside from the state's growth in population, the numbers take into account the "explosion of loan production offices" — largely of smaller institutions from rural areas looking to diversify their loan portfolios. Coming in second place to Texas is California, which has enjoyed a lot of interest from banks with at least $100 billion in assets. A July 2015 paper on GDP by state released by the Bureau of Economic Analysis shows that in 2014 Texas and California were among the states with the largest real GDP, having grown by 5.2% and 2.8% respectively. The two also grew faster than the national average in 2012 and 2013. In Texas, finance and insurance contributed 0.11 percentage points to the GDP percent change. The corresponding figure for California was 0.07 percentage point. For comparison, New York saw 2.5% in 2014 real GDP growth, with finance and insurance contributing 0.87 percentage point.
Chris Cole, executive vice president and senior regulatory counsel of the Independent Community Bankers of America, notes that branch success isn't only a reflection of a state's economic health but of demographics too. The brick-and-mortar decline is often attributed to the preference among millennials for online and mobile banking. For 2014, the Census Bureau's annual population estimates for selected age groups show that those born roughly between 1980 and 2000 (a.k.a. millennials) comprise roughly 33% of Texas' population and 32% of California's. It may explain why the growth in Texas is focused on loan production offices, as opposed to full service branches, and why the activity in California stands out for being big bank-driven. There's also an American Bankers Association survey to consider: Out of 1,000 U.S. adults, 32% prefer Internet banking over other methods. Branches are now the second-most preferred method — at 17%, down from the 21% it was a year ago. ATM banking also saw a decline in popularity, albeit a slight one (to 13% in 2015 from 14% in 2014), and mobile banking looks ready to overtake it (at 12% compared to 10% a year ago).
Meanwhile, the decline in branch presence was most noticeable in the Midwest, and largely in Michigan. Yet Michigan is still surpassed by Pennsylvania, which experienced the highest number of net closings in the country. A February 2015 Crowe Horwath study commissioned by the Pennsylvania Bankers Association compared the bank tax regime of Pennsylvania with those of Delaware, Maryland, New Jersey, Ohio, New York, Michigan and North Carolina and found "that, under the various scenarios considered, substantially similar banks generally would pay more — often significantly more — state tax if headquartered in Pennsylvania than if headquartered in one of the other states." Michigan grew only 1.9% in real GDP (0.01 percentage points contributed by finance and insurance); Pennsylvania grew 1.8% (0.17 percentage points).
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This Day in American History
1682 - William Penn accepted the area around Delaware River from Duke of York. In 1681, King Charles II handed over a large piece of his American land holdings to William Penn to satisfy a debt the king owed to Penn’s father. This land included present-day Pennsylvania and Delaware. Penn immediately sailed to America and his first step on American soil took place on this day in New Castle. On this occasion, the colonists pledged allegiance to Penn as their new proprietor, and the first general assembly was held in the colony. Penn then journeyed up river and founded Philadelphia. However, Penn's Quaker government was not viewed favorably by the Dutch, Swedish, and English settlers in what is now Delaware so they almost immediately began petitioning for their own assembly. In 1704, they achieved their goal when the three southernmost counties of Pennsylvania were permitted to split off and become the new semi-autonomous colony of Lower Delaware. As one of the earlier supporters of colonial unification, Penn wrote and urged for a union of all the English colonies in what was to become the United States of America. The democratic principles that he set forth in the Pennsylvania Frame of Government served as an inspiration for the US Constitution.
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