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Monday, April
14, 2003
Headlines---
Pictures
from the Past---“Our First One”
Paul
Menzel---- ELA Funding Frontline Report
ELA
Claims "Pent-up Demand" for Leasing
Union
Safe Deposit Bank Expands Portfolio of Leases
Streamlined Sales Tax Project Seeks
Volunteers
This Border #####
Denotes Press Release (Not Written By Leasing News)
--------------------------------------------------------------------------------------------
Economic Events The Week
April 14
MONDAY
Inventory-Sales Ratio:
February
ELA Captives &
Vendor Leasing Conference
World Golf Village
Renaissance Resort, St. Augustine, FL.
ELA Principles of
Leasing Workshop
Courtyard Marriott,
Philadelphia, PA.
April 15
TUESDAY
Industrial Production:
March
Capacity Utilization:
March
Tax Filing Date/estimated
taxes due
ELA Captives & Vendor Leasing Conference
World Golf Village Renaissance Resort, St. Augustine, FL.
ELA Principles of Leasing
Workshop
Courtyard Marriott, Philadelphia, PA.
April 16
WEDNESDAY
Consumer Price Index:
March
Housing Construction:
March
ELA Principles of
Leasing Workshop
Courtyard Marriott,
Philadelphia, PA.
April 17
THURSDAY
Weekly Jobless Claims
April 18
FRIDAY
Federal Budget: March
---------------------------------------------------------------------------------
Pictures from the Past---“Our First One”
August 26,2002 we started this feature in each edition, using
a picture
from the “past.” We
have been asking readers to send in photographs,
that we will return. Some
have sent us pictures by e-mail, such as from
Duane Russell, Barry Reitman, Charlie Lester, and Steve Geller,
to
mention a few.
Recently we started ask people who in the pictures what they
have been doing
since the date of the photography. Some comments have been very interesting,
some entertaining, and others have used the opportunity to
talk about their
company today.
We encourage all readers to contribute a picture that we
can publish.
Here is the first one that started the series:
http://www.leasingnews.org:80/pictures_past/past_8-26-02.htm
--------------------------------------------------------------------------------------------
IMBEDDED JOURNALIST REPORTS FROM
ELA FRONTLINE WITH EXCLUSIVE COVERAGE
OF INDUSTRY BATTLES
Bylines: Capturing “Hearts & Minds” is Critical to
Success
Search is
on for WMDs (Weapons of Mass Demand)
Supply Lines
are Open despite coming under Heavy Attack
By PAUL MENZEL, CLP
LEASING NEWS
CHICAGO,
IL - Despite assurances from the
Iraqi Minister of Information that “Business has never been better and
companies are experiencing triple digit growth with virtually no delinquency
or losses”, three different and distinct themes emerged from a gathering
of around 500 loyalists at ELA’s National Funding Exhibition.
The Fairmont Hotel
at Grant Park served as the theater of engagement as 42 funding sources
met with the elite forces of the leasing industry. Under chilly but crystal clear skies, a frenzy
of meetings occurred over a Wednesday afternoon and full day on Thursday.
The meeting room was efficiently laid out and well appointed for
the series of 20 minute meetings between funders and originators.
The schedules were set up in advance through the ELA website or
on-site booth. Serious discussion sought targets of opportunity to set
up coalitions for success. New
relationships were pursued and celebrated at well-attended receptions
at the end of each day.
Although total attendance
(500+) was down 10% from the prior year and well below the annual exhibition’s
highpoint of 738 in the spring of 2000, the number of Funding Source Exhibitors
(42) increased by 20% over 2002. CentCom (ELA Staff) theorized that the increase
in Exhibitors, along with a higher than usual ratio of Funder to Originator
attendees, suggests a turning point in the economic war being fought in
cities all around the country.
“Business is tough,”
said Mike Fleming, President of ELA. “The showing at this conference reflects the exact same reaction
our industry had to the last Gulf War and economic downturn ten years
ago.” This is the second economic
cycle the Funding Exhibition has experienced since it was established
in the late 80’s. The Exhibit remains
one of the most successful gatherings of industry professionals that the
ELA sponsors. “The difference this
time around is that low interest rates are having a positive impact on
the cost of debt which is so critical to the survival of leasing companies
holding portfolios”, added Fleming.
Edward Dahlka, Chairman
of the ELA and President of LaSalle
National Leasing Corp., reminded everyone that “Our industry always does
better in a rising interest rate environment and it doesn’t look like
we will start seeing that until the end of the war.”
For the first time
in several years, the Funding Exhibition Committee scheduled two 90 minute
breakout sessions on Thursday morning.
The attendance at both sessions was so good that a few exhibitors
complained that there was a noticeable drop in activity in the exhibit
hall during that period. A high-energy
atmosphere quickly returned for the remainder of the day.
The speaker’s panel
for the first breakout session, titled “The Bank Market: What are they
doing and what do they expect?” was moderated by Scott Gates of Diversity
Capital and included Michael Evans, SVP of Sterling Bank Leasing, Dennis
Roesslein, VP of MB Financial Bank, and yours truly. The follow-up session presented the lessor’s
perspective on how the Best in Class
of independent leasing companies present
themselves and manage their funding relationships. The second session was moderated by William Verhelle, CEO of First
American Equipment Finance, and included Chris Czaja, VP of Relational
Funding Corp., and Tom Howard, EVP of Eplus Group, Inc.
An impressive cadre
of leasing special forces went out of their way to capture the “Hearts
and Minds” of the captains of capital. There was unanimous agreement
on both sides that the key to success today and in the future was for
leasing companies to take the time to get to know and understand their
bankers and funding sources. Lessors described the extent to which they
communicated with their bankers and the type and depth of information
they provided to maintain the trust in the relationship.
The Bank sources emphasized
how important the depth and quality of applications, term sheets, and
credit packages has become in today’s business environment. The concern over asset quality and the increased
regulatory burden were the primary reasons cited for this enhanced scrutiny.
The spirit of the U.S. Patriot Act will require all financial firms
to “know your customer”. Banks that provide non-recourse funds emphasized
how important “attitude” toward the relationship and asset quality was
in deciding with whom they will deploy their capital in the future. The times of “transaction risk transference”
are being replaced by funding relationships in which the originator provides
ongoing service as the intermediary.
A clear and present
challenge facing the industry was finding “WMDs”. Weapons of Mass Demand
are the only missing ingredients in the success equation for leasing companies
and capital sources.
The absence of “cap ex’ was on everyone’s mind
and the subject of every conversation. “When are businesses going to start spending
to replace their equipment?” was the question of the day. Much speculation focused on when the economy
might pick up or if we were facing a second dip into recession. The optimists were predicting a much better
second half of 2003. Everyone agreed
that the length of the war would be an important factor.
The first signs of
spring in the Midwest interestingly coincided with a report that the Consumer
Sentiment Index increased to over 83 in April from a ten year low of just
above 77 in March. This possible
sign of an emerging economy was followed over the weekend with a report
of the first increase in retail sales in seventeen months.
The lessons of the
first Gulf War may give us insight into economic prospects today. The one parallel in the war comparison that
is hoped for is that the same prosperity emerges that persisted through
the 90s.
Intelligence sources
active at the Exhibition reported that substantial “chatter” was being
detected between Funding Sources. Every
Funding Source interviewed by this reporter revealed in private that they
are anxious to lend and are struggling to meet growth goals. Even though it was acknowledged that portfolios
were shell shocked, those Funders in attendance had clearly survived heavy
attacks on credit quality over the last couple of years.
The present assessment is that
“Supply Lines are Open”. A major difference from the first Gulf War recession
is that we are not in a credit or liquidity crunch this time around. The
supply side of the equation is not the greater challenge.
Thursday’s luncheon was highlighted by the leadership
insights and secrets of Michael Abrashoff, former Commander of U.S.S.
Benfold and former military assistant to the Secretary of Defense under
the Honorable Dr. William J. Perry. Mr.
Abrashoff was involved in critical missions during the Gulf War.
There are many lessons
Mr. Abrashoff took from his military leadership experiences that are vital
to success in business as well. He
reminded the audience that, “We are all playing to win”. When he was first assigned to take over the
U.S.S. Benfold, which won the prestigious Spokane Trophy for having the
highest degree of combat readiness, morale was low and turnover was high. He discovered that they “…were spending more
time fighting amongst ourselves than preparing to fight the enemy.”
Mr. Abrashoff advised
our industry to attract and retain the best and the brightest; get employees
to take ownership by empowering them to make decisions; find the rust
in your organization; and allow your employees to have fun. His leadership
anecdotes are the subject of his recently published book, It’s Your Ship.
While some prominent
members of the leasing industry chose to stay home and not participate
in the rebuilding of the funding landscape, the committed loyalists were
busy in establishing coalitions for success in the future. Those in attendance were certainly counting
on the adage that “to the victors go the spoils”, as they went home content
that their attendance at the 2003 ELA Funding Exhibition was an important
step in winning the battles for future prosperity.
Paul J. Menzel, CLP
Senior Vice President / General Manager
Leasing Division
SANTA BARBARA BANK & TRUST
P.O. Box 60607
Santa Barbara, CA 93160-0607
1 South Los Carneros Road
Goleta, CA 93117
Dir Ph# (805)560-1650
Email PaulM@sbbt.com
__________________________________________________________________
### Press Release ##############################################
ELA Claims “Pent-up Demand” Reaching Critical Point, Leasing
to Benefit
Chicago, Illinois-The Equipment Leasing Association's
(ELA) president, Michael Fleming asserted that there is pent-up
demand for new equipment that will require companies to seek
out more
flexible financing to meet the demand. Since the U.S. economic
climate
has forced many companies to forgo refreshing their equipment,
such as
computers, food processing and handling equipment, trucks
and trailers,
and construction equipment to name just a few, the consensus
among
equipment leasing industry members at today's annual ELA
National
Funding Exhibition is that aging assets and pent-up demand
are reaching
a critical point.
"We already
see a need for equipment, and the pent-up demand
continues to grow," said Fleming. "As companies
begin planning for the
upturn predicted for later this year, we expect them to discover
that
the decision it isn't whether or not they can afford to acquire
equipment needed to run their businesses, but rather how
they are going
to finance it."
To underscore the
pent-up demand theory, the ELA reported in its
March 2003 online quick poll that, out of 118 respondents,
61% say that
once the uncertainties of the Iraqi war are over, their customers
will
begin ordering equipment. Just under 39% answered "no"
to whether
customers would begin ordering equipment. Respondents of
the poll are
considered primarily equipment lessors.
At the Funding Exhibition
today, attendees agreed that while expense
management remains a theme among companies scrambling to
continue to
show profitability, equipment needs cannot go unmet much
longer.
"The need for
equipment forces businesses to find creative ways to
finance equipment they need to stay alive," said Fleming.
Said Darrell Harmon,
President, Alliance Capital Resources, Inc.,
at the Exhibition, "Businesses cannot wait much longer
to refresh their
IT systems, their transportation fleets, and other critical
equipment.
With the themes of expense management and pressure to produce
profits,
companies will look to flexible financing methods, such as
leasing, to
allow them to move quickly and efficiently to acquire new
equipment."
Currently, eight
out of 10 U.S. companies lease some or all of
their equipment, taking advantage of leasing's 100 percent
financing,
quick credit approval, and convenient structure.
Said Deborah J. Monosson,
President, Boston Financial & Equity
Corporation, "Firms across all industries will need
to respond quickly
to the economic rebound. Our shop is gearing up for high
demand for
leasing."
Of the $697 billion
spent by American business on productive assets
in 2001, $216 billion, or 31 percent, was acquired through
leasing. In
2002, that figure is estimated at $204 billion. The projected
2003
volume is $208 billion.
"The time for
finance planning is now," said Fleming. "Preparation
will be key to taking advantage of growth opportunities once
the
economic upturn comes."
Financial decision
makers needing more information on leasing
should visit www.LeaseAssistant.org, which provides information
on how
to choose a leasing company, the top 10 questions to ask
before signing
a lease, a glossary of terms, and more.
###
About ELA
Organized in 1961, the Equipment Leasing Association (ELA)
is a
non-profit association representing companies involved in
the dynamic
equipment leasing and finance industry. ELA's mission is
to promote the
leasing industry as a major source of funds for capital investment
in
the United States and abroad. Headquartered in Arlington,
Va., ELA has
more than 800 member companies and a staff of 27 professionals.
Equipment leasing is estimated to be a $204 billion industry
in 2002.
Visit ELA online at http://www.elaonline.com.
#### Press Release #############################################
Union Safe Deposit Bank Expands Portfolio of Leases
Serviced by Orion First Financial, LLC
(Gig Harbor, WA)
-- Orion First Financial, LLC (Orion) announced that Union Safe
Deposit Bank of Stockton, CA (Union Safe) has further expanded its servicing
relationship with the addition of approximately 800 lease contracts recently
acquired by the Bank from Leverage Leasing Company of Omaha, NE in the
amount of $15,200,000. Kropschot Financial Services represented the seller
in the transaction.
"We are pleased to be working with a progressive bank
like Union Safe. This is the third
portfolio we have arranged for the Bank to purchase and we are pleased
to be part of the Bank's ongoing commitment to the commercial equipment
leasing market. Our goal has been to help Union Safe successfully acquire
select portfolios and provide the highest level of service to maximize
portfolio performance. We look at the Bank's expansion with Orion as a
validation of our lease servicing and portfolio management capabilities,"
said David T. Schaefer, President and Managing Member of Orion First Financial,
LLC.
Orion provides consulting and advisory services to Union
Safe Deposit Bank by assisting in the location of portfolios for acquisition,
portfolio analysis and in negotiation of the purchase. The services provided
by Orion allow banks and other lending institutions the ability to invest
in small-ticket, high-margin leases without additional overhead or the
hiring of specialized management. Orion's services include billing, tax
administration, customer service and all phases of collection activity.
Karl Miller, Executive Vice President of Union Safe Deposit
Bank, stated, "Our relationship with Orion First Financial has enabled
us to significantly increase our equipment leasing portfolio, improve
our margins and maintain losses within a reasonable level. We are very
pleased with Orion's performance and look forward to a long-term relationship."
Michelle Parker, Vice President and Team Leader of the Bank's
Commercial Leasing Group, noted that "The staff at Orion provides
superior service and has extensive knowledge in its respective areas of
expertise. The advisory capacity of Orion has been invaluable throughout
the transactions. Orion is a fully capable source for efficient lease
servicing."
About Orion First Financial, LLC
Orion First Financial provides a complete and comprehensive
suite of services to assist lending institutions and lessors successfully
compete in the commercial equipment leasing industry. With a concentration in small-ticket leasing,
Orion provides consulting and advisory services, lease servicing and complete
portfolio management. The company
has developed a funding mechanism by creating joint ventures with lease
originators and arranging warehouse and permanent financing. Orion First Financial, located in Gig Harbor,
WA, employs state-of-the-art technology combined with years of management
experience to insure that lease portfolios are managed in a sound and
cost-effective manner.
About Union Safe Deposit Bank
Union Safe Deposit Bank, based in Stockton, CA, was founded
in 1897 and is one of the oldest independent, community banks in California.
The Bank's Commercial Banking Group provides traditional commercial lending
services to business and agri-business customers, cash management solutions
and commercial real estate financing. Additionally, the Bank's Financial Management Group provides investment
management, retirement planning and traditional trust services.
Contact: David T.
Schaefer at (253) 851 8778 ext. 210 or dtschaefer@orionfirst.com
### Press Release ##########################################
Cartoon
http://two.leasingnews.org:80/cartoons/HP-Financial.jpg
__________________________________________________________
---announcement--------------------------------------------------------------
Streamlined Sales Tax Project Seeks Volunteers
The Council On State Taxation (COST) seeks private sector
volunteers to review state compliance with the Streamlined Sales and Use
Tax Agreement. Each
volunteer will use a compliance checklist being developed
by COST. To assist in this effort please respond to Stephen Kranz of COST
at skranz@statetax.org
Conformity to elements of the Agreement as depicted in these
compliance spreadsheets will become important to states, as they may not
join the new sales tax
system unless they are in substantial compliance with
each section. I hope you will consider
participating in this process.
Dennis Brown
Equipment Leasing Association
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www.leasingnews.org
Leasing News, Inc. 346 Mathew Street, Santa Clara, California 95050 E-Fax: (781)459-4789 kitmenkin@leasingnews.org 
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