******Leasing News Flash******
Norvergence faces judgment, not leasing companies
A federal judge said he had ordered a $181.7 million default judgment against bankrupt telecommunications firm Norvergence in a case brought by the Federal Trade Commission.
But the ruling by U.S. District Judge Dickinson Debevoise means little. Creditors filed $549.3 million in claims against Norvergence as of April, but an attorney for the bankruptcy trustee noted the company has only about $617,500 in assets and nearly $1 million in unpaid administrative expenses. Norvergence was accused by the FTC of defrauding customers by claiming its equipment could provide them with dramatic phone and Internet service savings. -- Greg Saitz
For other current news, please go here: www.leasingnews.org
Wednesday, July 20, 2005
Classified Ads----- Asset Management
Classified Ads----- Asset Management
Austin, TX .
20+ years exper. lease/finance. P & L responsibility, strong credit & collection management, re-marketing& accounting. Computers, construction, auto & transportation. Both commercial/ consumer portfolios.
Bloomfield Township, MI.
For a full listing of all “job wanted” ads, please go to:
To place a free “job wanted” ad, please go to:
Story Credit Lessors
These companies specialize in "C" and "D" credits, often news businesses, or businesses where the principal(s) have Beacon score around 600 or previous difficulties; meaning to become comfortable with the credit and financial situation you need to learn the "story" to make a positive decision, often requiring further security, shorter term, or additional guarantors. Many of these companies may also be a "B," but appear otherwise without the "story" to understand the full financial picture.
(To qualify for this list, the company must be a lessor and not a broker or superbroker, along with an acceptable Better Business Bureau Rating and no history of complaints at Leasing News. We reserve the right to not list a company who does not meet these qualifications.)
(A) Pawnee Leasing Corporation; Some times we go higher than $30,000, but our marketplace is from $1,000 to $30,000.
(D) ABCO Leasing, Inc. in Seattle area has been operating since 1974 serving the broker community. We required full financial disclosure on every transaction. We do story transaction, but do not like to refer to them as "C" of "D" credits. We think of therm as "A" type credits that have not been discovered yet. In actuallity, we do not really like to look at what most describes as "D" credits.
(E) Black Rock Capital comment: We book anywhere between $15 to 20 million per year. We do no "app only" business and require a full financial package for each transaction. Our average size transaction is approximately $250k and, although, we concentrate in printing, packaging (steel rule die industry) and road construction equipment we do not rule out anything that makes sense. More information can be found at www.blackrockcapital.com.
(F) Black Rock Capital (Ireland) Limited and Black Rock Capital (UK) Limited provide the same services for small to middle market corporations in the European Economic Community and the United Kingdom.
(G) Cobra Capital, LLC. Comments: Our registered trademark "Making impossible possible" is our central marketing tagline for both strong and weak credits. I have developed a 10 year history, (from Cobra and my prior company GALCO), with specialty, non-conforming transactions (story credits) and have a solid reputation for candidly responding to our originators and lessees and working diligently to mitigate deal risk rather than making excuses to turn deals down. Our originators prefer our underwriting approach to non-conforming transactions since unlike most non-conforming funders, we prefer to mitigate risk versus jacking our return. Both Originators and Lessee's prefer our candid approach as we are also frequently asked to advise lessee's and lessors on the best way to structure their bank loans and raise capital due to our 25+ year banking and accounting backgrounds as my partner and I are both former bankers and CPA's.
(H) Pentech is the lessor partner with Manifest Funding Services for their Navigator, Navigator Plus & Navigator Direct. This is through our sister company Pentech Funding Services, located in San Diego and headed up by Ron Wagner.
(I) Sunrise International Leasing Corporation Comment: The broker program is "...an informal program as our primary business is still vendor leasing."
(J) Boston Financial & Equity Corporation, most of our leases are venture capital backed startups and turnarounds. We require full financial disclosures, CPA and internal statements, no tax returns. We do not required additional collateral, no PG's or RE needed. Do not send deals with large tax liens, especially if they are payroll taxes.
(L) IFC Credit Corporation also services on a regular basis "A" and "B" credits, but it also considers "story credits." "As you say, we need to become comfortable with the credit and financial situation and learn the "story" to make a positive decision, often requiring further security, shorter term, or additional guarantors. I would describe the B and C type credits we fund as companies having 'checkered earnings'."
(M) Creative Capital Leasing Group: "We are able to fund tough deals, bad credits, BK's, past tax liens, start ups, used equipment, etc., because we look outside the transaction for real estate, and marketable securities to take as additional collateral."
(N) Blackstone Capital Partners, L.P. lends up to 50% of verified auction value for working capital and/or equipment financing requests (we of course include equipment to be acquired in our valuation). Using this formula, allows Blackstone to approve deals on the assets rather than the credit or cash flow that other lenders desire. Also being an asset lender, we are looking for hard assets i.e. yellow iron, machine tool, manufacturing lines, textile etc... We do not care for soft assets such as computers, furniture, restaurant, or "white elephants" (equipment that is too specific to the clients needs and was specially built for them - there would be no resell available and our liquidity if repossessed would be in jeopardy). If you have any questions, please feel free to call, we will do our best to help or seek the answer for you.
(O) Bankers Capital " We will do ANY Type of Equipment, in ANY industry, in ANY state. We especially like 6-figure transactions with full financial packages no matter how good or bad they look. We look to structure the story C&D credits with any kind of additional collateral that makes sense. It could be with 2nd or 3rd mortgages on residential or commercial Real Estate, additional equipment, cash value life insurance, security deposits, vendor agreements. We look for any way to make the deal work instead of looking for any way to decline the deal."
(P) Financial Pacific Leasing supports a nationwide network of Brokers and Lessors. We specialize in "B" and "C" credits for established companies as well as companies under two years in business.
These companies basically function as a "broker," meaning most of their transactions are sent to other leasing companies or funders.They are not “lessors” or “funders.” An additional description: the majority of their business comes from others, who are acting as a broker. These “deals” may come from an independent, a “company,” or even a “lessor” or “funder.”
Brokers come to them because they may not have the "volume" for the source the "super broker" may have; they may be "too new" in business to qualify for many sources: they may be looking for a better rate than their regular sources, or the transaction was originated by another broker and they need to acknowledge that the transaction comes from another broker, called "sub broker," in the trade (most funders will not accept business from that has been “re-brokered.” .” As important, the sender may not have a regular source for the specific transaction they want to place, such as a young privately held company wanted the lease as “corporate only.”
The transactions may come from a lessor that wants to satisfy their client, and they have a "minimum" that the transaction does not meet; or perhaps their client is to the maximum amount of exposure for them.
For whatever reason, they come to a "super broker" to place the deal on their behalf.
In the question of sub-broker business, we take for granted that the “super broker” not only has a written agreement with the sub-broker but informs the lessor when submitting an application it has come from a sub-broker. A violation of this will have the company removed from the list.
This list is not does not include leasing companies who "fund" the majority of the transactions they receive.
In addition to the above qualifications, the "Super Broker" must have a "clean" Better Business Bureau rating, no Leasing News Bulletin Board complaints or a poor record, and must belong to a national leasing association, as we view this that they are professional and abide by their association standards and code of ethics.
We also will be verifying warehouse lines or "lessor" lines with their bankers (as done with those on the Story Credit List.)
Leasing News reserves the right not to list any company it believes does not meet the qualifications as stated above.
A -Requires Broker be Licensed | B -Sub-Broker Program | C -Warehouse Line | D -Also a Lessor
(A) BSB Leasing, Inc has been providing syndication services for brokers nationwide since 1982 and have been funding business directly since 2002 through BSB Direct Finance, LLC. We offer Brokers a complete internet solution for credit submission and tracking and document preparation.
Lessors Network Annual Showcase
August 24-25 | The Ritz-Carlton, Buckhead | Atlanta, GA Agenda & Speakers
The Power of Unconventional Thinking
Leasing Association Conferences—Fall, 2005
September 14-16 Vancouver, BC
The Canadian Finance and Leasing Association 2005 Conference "Working smarter for tomorrow ~ Mieux travailler pour demain" & 32nd Annual General Meeting ~ September 14 -16, Westin Bayshore Resort & Marina, Vancouver, BC - Join us in Vancouver for the 2005 Conference and discover how businesses are Working smarter for tomorrow within the asset-based financing/leasing industry.
Registration, plus agenda, please go here.
Participants by Company.
Eastern Association of Equipment Lessors
Information on the key speakers:
For Agenda and Registration, please go here:
For Exhibitor Registration
National Assocation of Equiment Leasing Brokers
United Association of Equipment Leasing
The event will also feature the exclusive buyout of the M.S. Dixie for the Saturday Sunset Dinner/Dance Cruise.
The complete brochure has been mailed and is also available at www.uael.org
Make your room reservation as soon as possible at Caesars Tahoe (1-866-89-Tahoe for the UAEL block) as the hotel expects to be sold out.
for more information, please go here:
Equipment Leasing Association
A non-member who has not attended the conference before is invited
Registration and all information about the Annual Convention are now available on-line at http://www.elaonline.com/events/2005/annconv/
(does not include those specifically employed in training or education, but who have a similar program as the following entities:)
Corporate Capital Leasing Group Grows to 24 Offices
“...we advertised this opportunity on Ebay and offered a protected territory of their home state. They would pay $500 for a security deposit on the training materials and when they booked $50,000 in business, they would get a refund of their security deposit plus a bonus of $200. They get a 60 page manual, four CDs and samples of marketing pieces. They would sign a 10 page Agency Agreement which clearly spelled out what they could or could not do and how their commissions would be paid including splitting commissions between territories in case of an overlap.
“ The first month we had 4000 hits on the Ebay listing and over 90 people who were interested enough to ask for more information.”
Phil Dushay, Global Leasing, who is a “super broker,” offers a sales program for $14,995**
“In 2003, he created a new division to train independent salesmen in all the aspects of finance, including leasing ,accounts receivable financing, business acquisitions, debt restructuring, working and venture capital. His students have found great success and he spends most of his time now developing entrepreneurs, who also utilize his knowledge and sources of funds.“
Mr. Dushay is also on the Leasing News Advisory Board
Lease One, Lynnfield, Massachusetts
“Our program has been operating for 14 years, we charge $19,900 for a three day training, & offerlifetime support , ongoing marketingasst. plus complete underwriting which allows the associate more time to market there company& we provide everything from materials, airfare, hotel , food, equipment etc...”
Leasing Institute of America
“With the faculty of Sudhir Amembal, Loni L. Lowder, Charles E. Brazier, CLP, Jason Smith, General Manger, and Joe Bonanno, Esq., with $30,000 you can take part in the “Five Day Leasing School” to participate in “Stage One...” Recently formed with a unique format. They stay active, helping find funding sources and giving continued help in the growth of your leasing business. http://www.leasingnews.org/Conscious-Top%20Stories/LIA_enters_fray.htm
Parker Leasing and Financial Services
Fort Lauderdale, Florida Formed December 1, 1969, this is a sole proprietorship, according to the Better Business Bureau, who many consider quite controversial. Mr. Parker has advertised in USA Today perhaps since the paper started in 1982, offering to train those in his office for $5,000. Former students have said today it is a one person office with an answering service and the manual was a mimeograph. Today most of his business appears to be of international nature where he also raises investor money, it is claimed. There are no claims against his company in the Better Business Bureau. He is not a member of any equipment leasing association.
Leasing News has oneBulletin Board Complaint and has notbeen able to reach him regarding a situation in Indonesia. http://www.leasingnews.org/Complaints-Bulletin_Board/Year2001.htm#parker
Wildwood Financial---$34,950 To Get Into Leasing
The oldest, most experienced school-program run byleasing veteran Bob Baker, CLP; perhaps the most successfulto date. He, and his staff, continue to help all students after they graduate, making recommendations and helping their business grow. Mr. Baker is on the Leasing News Advisory Board http://www.leasingnews.org/Conscious-Top%20Stories/wildwood.htm (If we have left out your company and its “franchise” or “like” program, please contact us: email@example.com )
Equipment Leasing License
Most banks in California require those who send leases to them have a license, and if they are discounters, also have a State Board of Equalization license.
* The above is from our archives, and needs to be up-dated. If any one can help us up-date it, please send to : firstname.lastname@example.org
U.S. Housing Starts – June 2005-Strong
by Al Schuler, USDA Forest Service
Housing starts remained strong, but unchanged in June, holding at 2.004 million (SAAR). The single family sector was down 2.5%, but multi family was up almost 15%. Regionally, the South was the only region with strength, up 11.4%, while the NE, MW, and West were down 0.5%, 12.1%, and 10.4% respectively. Permits, an indicator of future activity, were up 2.4%.
Analysis and outlook: The housing market remains strong thanks in large part to attractive mortgages (30 year rate still below 6%); improving job market; – same story as last month. The market is slowing, albeit slowly, and coming down from very lofty levels. As noted by C. Chan (Dismal Scientist, www.economy.com), starts in the 2nd quarter are off 13% on an annualized basis from the very strong 1st quarter, however, they are still averaging 2 million units, annually. Short term, housing is expected to remain healthy as long as interest rates remain below 6% and inventories remain low. Most analysts believe that rates would need to approach 7% in order to slow housing appreciably – 7% rates aren't expected until late 2006 or early 2007. Inventories of new homes for sale and existing homes for sale remain historically low at 4.2 months and 4.3 months supply respectively. This will insure that if the economy does slow, housing prices should not be as vulnerable.
The housing market is expected to remain strong through the rest of this year, improving slightly on last years 1.956 million units, reaching almost 2 million starts. But modest inflation and dollar problems will push mortgage rates upward through 2006 and this means the housing market will pull back in 2006. Single family will slow the most due to affordability problems with entry level buyers. Higher mortgage rates will shift some prospective single family buyers to the rental market.
Concerns remain the same – the dollar, and housing prices.
The dollar has been performing well lately ( against the Euro and Yen), and that has encouraged Japanese and Chinese central banks to continue buying dollar denominated assets – that isn't expected to change in the near future although there is more talk about a revaluation of the Yuan. As long as foreigners continue buying U.S. paper assets, the dollar will benefit and that will continue supporting attractive interest rates in the U.S. Inflation isn't expected to become a serious problem either thanks to excess manufacturing capacity in cheap labor countries. The other issue, housing prices, is getting more and more ink in the WSJ, BW, and even the talk shows.
The concern is that prices are increasing at an unsustainable rate, and what happens next.
The consensus is that the “bubble” will deflate rather than pop. A recent example is Australia where the market peaked in 2004 after two years or more of 15% or greater annual growth ( WSJ July 14, A1,A8). Their central bank raised rates more aggressively than the FED has done – their overnight lending rate is now 5.5% ( the U.S. FED funds rate is 3.25%), among the highest in the developed world. And the result has been flat housing prices in Sydney and Melbourne (60% of the population) for the past 12 months – no bursting of the bubble and the Australian economy did not plunge into recession with the higher rates.
Summary: The housing market is expected to remain strong through the rest of this year, improving slightly on last years 1.956 million units, reaching almost 2 million starts. But modest inflation and dollar problems will push mortgage rates upward through 2006 and this means the housing market will pull back in 2006. Single family will slow the most due to affordability problems with entry level buyers. Higher mortgage rates will shift some prospective single family buyers to the rental market.
CIT Announces Quarterly Dividend for Second Quarter 2005
NEW YORK, -- CIT Group Inc. (NYSE: CIT)
today announced that its Board of Directors has declared a regular quarterly cash dividend of $.16 per share. The dividend is payable on August 30, 2005 to shareholders of record on August 15, 2005.
CIT to Acquire Healthcare Business Credit Corporation
Acquisition of Established Asset-Backed Lending Leader Accelerates Growth of
NEW YORK, -- CIT Group Inc. (NYSE: CIT), a leading provider of commercial and consumer finance solutions, today announced it has reached a definitive agreement to acquire Healthcare Business Credit Corporation ("HBCC"), a full service healthcare financing company that specializes in asset-based and cash-flow financing to U.S. healthcare providers. The transaction is expected to close by the end of the third quarter of 2005. Terms of the deal were not disclosed.
With approximately $500 million in assets and $1 billion in loan commitments, HBCC has over 120 customers operating in 40 states, ranging from family-owned businesses to publicly traded companies. Headquartered in Mt. Laurel, New Jersey, HBCC has 64 employees and four business development offices located in Atlanta, Dallas, Chicago and Los Angeles. HBCC provides a variety of lending products including lines of credit, term loans, DIP financing, mortgage loans, acquisition financing and bridge loans.
"This is a very strategic acquisition for CIT as it allows us to quickly build critical mass in the healthcare industry, one of our most dynamic and important franchises," said Rick Wolfert, Vice Chairman, Commercial Finance. "Furthermore, it's a great example of CIT's portfolio optimization strategy at work evidenced by the investment of capital into higher return opportunities for our investors."
Flint Besecker, President, CIT Healthcare noted, "With a strong industry brand, including well-regarded expertise in the home healthcare and skilled nursing segment and a diverse middle-market client base, the addition of HBCC will accelerate the growth of CIT Healthcare and provide a more robust suite of products and advisory services for our clients."
Bernard Lajeunesse, HBCC's President said: "This is an exciting opportunity for HBCC to become part of a strong and well-respected
organization. CIT offers a renowned reservoir of financing expertise and longstanding client relationships, and we are tremendously excited about working together. We share in CIT's desire to create the industry leader in healthcare finance."
CIT Group Inc. (NYSE: CIT), a leading commercial and consumer finance company, provides clients with financing and leasing products and advisory services. Founded in 1908, CIT has nearly $60 billion in assets under management and possesses the financial resources, industry expertise and product knowledge to serve the needs of clients across approximately 30 industries. CIT, a Fortune 500 company and a component of the S&P 500 Index, holds leading positions in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. CIT, headquartered in New York, has approximately 6,000 employees in
locations throughout North America, Europe, Latin and South America, and the Pacific Rim. For more information, visit http://www.cit.com.
About Healthcare Business Credit Corporation:
Healthcare Business Credit Corporation (HBCC) provides asset-based and cash flow financing exclusively to healthcare providers throughout the United States. HBCC's breadth of financing programs, coupled with our knowledge of the healthcare services industry, third-party reimbursements and loan structuring, combine to deliver clients value-added financing solutions. HBCC strives to build strong and long lasting relationships with our clients by developing superior financing solutions to meet today's changing needs and fulfill the long-term goals of tomorrow.
SOURCE CIT Group Inc.
Capital Crossing Bank (Dolphin Leasing) Second Quarter Results
BOSTON------Capital Crossing Bank (NASDAQ:CAPX) (the "Bank") reported consolidated net income of $4.3 million, or $0.62 per diluted share, for the second quarter of 2005, compared to consolidated net income of $4.3 million, or $0.54 per diluted share, for the same period in 2004.
The Bank also reported consolidated net income of $8.9 million, or $1.26 per diluted share, for the six months ended June 30, 2005, compared to consolidated net income of $9.5 million, or $1.20 per diluted share, for the same period in 2004.
During the second quarter of 2005, the Bank's leasing subsidiary, Dolphin Capital Corp., originated leases with an aggregate investment balance of $15.5 million, compared to the same period in 2004 when it originated or acquired leases with an aggregate investment balance of $12.3 million. During the six months ended June 30, 2005, Dolphin Capital originated leases with an aggregate investment balance of $30.1 million compared to the same period in 2004 when it originated or acquired leases with an aggregate investment balance of $23.5 million. The increase is partially attributable to the initiation of a more aggressive marketing campaign. Dolphin Capital Corp.'s net income was $1.3 million for the six months ended June 30, 2005, compared to $1.2 million for the same period in 2004 and $425,000 for the second quarter in 2005, compared to $484,000 for the same period in 2004.
Nicholas W. Lazares, the Bank's Chairman and Co-Chief Executive Officer, stated, "We are pleased to report another strong quarter at Capital Crossing Bank." Mr. Lazares further stated, "A significant portion of the Bank's revenue arises from the recognition of "transactional" income. In the second quarter of 2005, the Bank recognized $10.1 million of transactional income, including $5.8 million of accelerated interest income associated with loan and lease payoffs and $4.3 million in net gains on sales of other real estate owned and property in possession. By contrast, in the second quarter of 2004, the Bank recognized approximately $8.7 million of transactional income, including $6.9 million of accelerated interest income associated with loan and lease payoffs, $960,000 in gains on sales of loans and $845,000 in net gains on sales of other real estate owned and property in possession. Total transactional income for the six months ended June 30, 2005 and 2004 amounted to $19.8 million and $17.0 million, respectively. Since the level of transactional income is unpredictable from quarter to quarter, the Bank's earnings may fluctuate significantly in the future."
Richard Wayne, the Bank's President and Co-Chief Executive Officer, explained that, "The volume of our loan acquisitions varies from quarter-to-quarter depending upon market conditions. For example, in the second quarter of 2005, we purchased loans with outstanding principal balances of $48.7 million for a purchase price of $41.5 million, compared to the same period in 2004, when we purchased loans with outstanding principal balances of $164.5 million for a purchase price of $148.6 million. In the six months ended June 30, 2005, we purchased loans with outstanding principal balances of $99.6 million for a purchase price of $85.9 million, compared to the same period in 2004, when we purchased loans with outstanding principal balances of $183.4 million for a purchase price of $167.6 million." Included in our loan acquisitions for the second quarter of 2004, were $89.8 million of high quality residential loans that were acquired for a purchase price of $88.1 million. Although residential loan portfolios were available for purchase in the second quarter of 2005, management elected not to bid on or purchase such loans at the offered pricing levels. Mr. Wayne continued, "During the course of our review of available loan portfolios, we will, in some cases, decline to bid on a portfolio after analyzing the results of our due diligence review, or, in other instances, be outbid by other purchasers. We simply cannot predict how often we will successfully bid on a loan portfolio."
Mr. Wayne further stated, "Our total non-performing assets decreased $10.2 million from $39.7 million at December 31, 2004 to $29.5 million at June 30, 2005. While a substantial majority of the loan and leases we have acquired in recent years have been performing, we have also acquired appropriately priced non-performing loans and leases. At June 30, 2005, we held loans and leases with net investment balances of $9.9 million which were acquired as non-performing. In the past, our pricing strategy and the level of discount we obtain on such loans and leases has enabled us to, over time, realize significant levels of transactional income from these assets."
Capital Crossing Bank is a Massachusetts-chartered, FDIC-insured trust company with $1.0 billion in assets as of June 30, 2005. The Bank operates as a commercial bank, providing financial products and services to customers through its executive and main offices in Boston, its website at www.capitalcrossing.com, and through its leasing subsidiary Dolphin Capital Corp. located in Moberly, Missouri. The Bank is a value oriented investor in whole loans and loan portfolios generally secured by commercial, multi-family and one-to-four family residential real estate and other business assets.
Capital Crossing Capital Crossing Bank Nicholas W. Lazares, 617-880-1000 or Richard Wayne, 617-880-1000
First BanCorp Reports Earnings for Second Quarter 2005
SAN JUAN, Puerto Rico, -- First BanCorp (NYSE:FBP), the second largest Puerto Rico financial holding company, with diversified banking operations in Puerto Rico, the U.S. and British Virgin Islands, and in the state of Florida (USA), reported today earnings for the quarter ended June 30, 2005.
Net income was $57,085,530, or $0.58 per share basic and $0.57 per share diluted, for the second quarter of 2005, as compared to earnings of $39,934,596, or $0.37 per share basic and $0.36 per share diluted for the second quarter of 2004. These results represent an earnings increase of 42.95% for this quarter, as compared to the same quarter in 2004. Return on Assets (ROA) and Return on Common Equity (ROCE) were 1.27% and 26.28%, respectively, for the quarter, as compared to 1.19% and 20.98%, respectively, for the same quarter of 2004. Basic and diluted weighted average common shares were 80,851,947 and 82,871,531, respectively, for the quarter ended June 30, 2005. All per share numbers are adjusted to reflect a 2 for 1 stock split distributed on June 30, 2005.
For the six month period ended June 30, 2005, earnings were $110,517,332, or $1.12 per share (basic) and $1.09 per share (diluted), as compared to $80,139,629, or $0.75 per share (basic) and $0.73 per share (diluted), for the six months ended June 30, 2004. Basic and diluted weighted average shares for the 2005 year-to-date period were 80,817,734 and 83,140,753, respectively.
Commenting on these second quarter 2005 results, Angel Alvarez-Perez, Chairman, President and CEO of First BanCorp, said, "This has been an excellent quarter. Our loan origination has been outstanding, increasing our loan portfolio by $659 million, and our non-performing assets and charge offs levels continue very stable. Net interest income increased substantially as a result of the increased volume of loans and investments. In addition, for the first time this quarter, the results of operations of Ponce General Corporation, the holding company of UniBank, a Florida thrift acquired on March 31, 2005, were included."
The main reasons for the increase in net earnings for the second quarter of 2005, when compared to the second quarter of 2004, were an increase of $33.7 million in net interest income, net of an increase of $10.0 million in other operating expenses and an increase of $7.7 million in the provision for income taxes.
Net interest income, the Corporation's main source of income, increased by $33.7 million from $96.5 million for the second quarter of 2004 to $130.2 million for the second quarter of 2005. This increase is mostly attributable to an increase in average earning assets of $4.5 billion, since June of 2004. On a linked quarter basis, net interest income increased $20.6 million.
The Corporation's average loan portfolio increased $1.4 billion during this quarter and its average investment portfolio increased by $1.3 billion. Net interest income includes, for the first time, $5.6 million net interest income of Ponce General, which was acquired on March 31, 2005. Net interest margin on a taxable equivalent basis was 3.36% for the second quarter of 2005, as compared to 3.50% for the second quarter of 2004 and 3.33% for the first quarter of 2005. To conform to the 2005 presentation, the 2004 net interest income, other income and net interest margin numbers have been adjusted to reflect late charges, prepayment fees and dividends on equity securities under interest income.
Total assets were $18.8 billion as of June 30, 2005, as compared to $14.5 billion as of June 30, 2004, and $15.6 billion as of December 31, 2004. Loans receivable increased by 47% to $11.6 billion, as compared to $7.9 billion as of June 30, 2004, and by 23% as compared to $9.5 billion as of December 31, 2004. The largest loan volume increases this quarter were achieved in the commercial portfolio. In addition, loans receivable include $476 million of loans acquired on March 31, 2005, on the acquisition of Ponce General. On a linked quarter basis, when compared to March 2005, loans increased by $659 million, mostly through internal loan generation, which did not include, for this quarter, bulk purchases of loans. During the second quarter, commercial loans increased by $587 million, consumer loans and finance leases increased by $129 million, and residential real estate loans decreased by $56 million, mostly as a result of mortgage loan sales in the amount of $90 million, and normal repayment of the existing portfolio.
Non-performing loans as of June 30, 2005, were $92.8 million (0.80% of total loans), as compared to $91.0 million (1.15% of total loans) and $88.9 million (0.81% of total loans) as of June 30, 2004 and March 31, 2005, respectively. Non-performing loans, when compared to the June 2004 and March 2005 quarters, decreased as a percentage of the portfolio.
The allowance for loan losses to non-performing loans (reserve coverage) was 157.47% as of June 30, 2005, compared to 146.9% as of June 30, 2004, and 153.9% as of December 31, 2004. The improvement is due to the stability experienced in our non-performing loans, resulting in a reduction in the charge offs. The allowance increase is related to the $659 million increase in the Corporation's loan portfolio during this quarter.
Net charge offs were $9.1 million (0.32% of average loans), as compared to $9.9 million (0.52% of average loans) during the second quarter of 2004, and $9.1 million (0.37% of average loans) during the first quarter of 2005. Charge offs have remained stable due to the Corporation's prudent underwriting policies implemented since 1998 and to the gradual shifting of the loan portfolio toward secured loans.
On March 31, 2005, the Corporation closed the acquisition of Ponce General Corporation, the parent company of UniBank, a $540.6 million asset size federal savings and loan association, which operates in the state of Florida, and of Ponce Realty Corporation, a $5.0 million realty estate company, which also operates in the state of Florida. Results of operations of Ponce General, Ponce Realty, and UniBank for the quarter ended June 30, 2005, are included in the results of First BanCorp. Total assets for Ponce General were $573 million as of June 30, 2005, and total net income for the quarter was $1.7 million.
The Legislature of Puerto Rico approved a temporary, two-year additional tax of 2.5% for corporations, which will increase the marginal tax rate from 39% to 41.5%. The new proposal is pending for the signature of the Governor of Puerto Rico. The implementation of the new proposal, if signed, should not have a significant impact on the Corporation's results of operations for the year.
With $18.8 billion in assets, First BanCorp is the second largest financial holding company in Puerto Rico. It is the parent company of FirstBank Puerto Rico, a state-chartered commercial bank in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and UniBank all operate within U.S. banking laws and regulations. The Corporation operates a total of 137 financial service facilities throughout Puerto Rico, the U.S. and British Virgin Islands and Florida. On October 1, 2004, the Bank opened a loan office in Coral Gables, Florida. Among the subsidiaries of FirstBank Puerto Rico is Money Express, a finance company; First Leasing and Car Rental, a car and truck rental leasing company; and FirstMortgage, a mortgage banking company. In the U.S. and British Virgin Islands, the Bank operates FirstBank Insurance VI, an insurance agency; First Trade, Inc., a foreign corporation management company; and First Express, a small loan company.
Fitch Ratings Publishes Latin America Quarterly for Q2 2005
NEW YORK------Fitch Ratings has published the latest installment of the 'Latin America Quarterly' for Q2 2005.
Highlighted in this edition is the ongoing turnaround of the Argentinean banking industry, following the final resolution of the country's foreign debt exchange. The industry has been aided by increases in private sector loans, deposit expansion, and improving earnings and asset quality. A separate article on the criticalness of an Argentine agreement with the International Monetary Fund (IMF) and relations with agreement holdouts is also included in this edition.
Other topics in this edition include
-- Changes in the Venezuelan private oil sector;
The Fitch Ratings 'Latin America Quarterly' provides discussion and analysis of trends affecting the credit ratings of Latin American corporate, public finance, and financial entities, as well as the structured finance market. A full copy of the newsletter is available at www.fitchratings.com under the Public Finance Sector -- Sovereigns -- Newsletters headings.
Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.
Fitch Ratings Sheila Robinson, 212-908-0632, New York Media Relations: Brian Bertsch, 212-908-0549, New York
U.S. Bancorp Reports Record Net Income for the Second Quarter of 2005
U.S. Bancorp (NYSE:USB)y reported net income of $1,121 million for the second quarter of 2005, compared with $1,037 million for the second quarter of 2004. Net income of $.60 per diluted share in the second quarter of 2005 was higher than the same period of 2004 by $.06 (11.1 percent). Return on average assets and return on average equity were 2.23 percent and 22.7 percent, respectively, for the second quarter of 2005, compared with returns of 2.19 percent and 21.9 percent, respectively, for the second quarter of 2004.
U.S. Bancorp Chairman and Chief Executive Officer Jerry A. Grundhofer said, "I am very proud to announce that our Company has achieved another quarter of record earnings and industry leading returns on equity and assets. The results included strong year-over-year and seasonal growth in our fee-based businesses, as well as exceptional credit quality. Loan growth in the second quarter of 2005 was excellent, increasing 8.3 percent over the same quarter of 2004 and at an annualized rate of 11.2 percent over the prior quarter. Once again, we exceeded our stated target and returned 92 percent of earnings to our shareholders during the quarter in the form of dividends and share repurchases.
"Fee revenue, excluding the impact of securities gains (losses), continued to drive revenue growth this quarter, increasing 8.9 percent over the second quarter of 2004. Investments and core growth in our Payments Services and Consumer Banking business units were the primary drivers of the growth in fees, increasing 17.1 percent and 6.1 percent, respectively.
"The growth in commercial loans was particularly encouraging this quarter, as average outstandings grew 9.0 percent over the second quarter of 2004 and, more importantly, at an annualized rate of 16.8 percent over the first quarter of 2005. Although credit spreads continued to tighten, accounting for 4 of the 9 basis point drop in the net margin on a linked quarter basis, we have remained competitive and disciplined in our approach to the market, capitalizing on our ability to compete on price while offering a wide array of non-credit products to fulfill our customers' needs.
"I am especially pleased with the exceptional improvement we have seen in the Company's credit quality over the past year. Our loss and coverage ratios are better than our Company has experienced in many years and are the direct result of the actions we have taken to reduce the risk profile of the Company. We expect to continue to grow our credit-related businesses, both commercial and retail, while maintaining the discipline that has helped us reach these quality metrics today.
"We are well on our way to meeting our financial goals for 2005 and beyond. We will continue to invest in our franchise, as we have been, to create and enhance our set of products and services, increase our market penetration and provide outstanding service to our customers."
The Company's results for the second quarter of 2005 improved over the same period of 2004, as net income rose by $84 million (8.1 percent), primarily due to growth in fee-based products and services, reduced credit costs and lower tax expense. During the second quarter of 2005, the Company recognized a $53 million impairment of its mortgage servicing rights ("MSR") asset, reflecting lower longer-term interest rates in the second quarter of 2005, compared with the recognition of $171 million reparation of its MSR asset in the second quarter of 2004. Also included in the second quarter of 2005 results was a $54 million charge related to a completed tender offer for debt securities and a $94 million reduction in income tax expense related to the resolution of federal tax examinations covering all of the Company's legal entities for all years through 2002.
Total net revenue on a taxable-equivalent basis for the second quarter of 2005 was $281 million (9.3 percent) higher than the second quarter of 2004, primarily reflecting 8.9 percent growth in fee-based revenue across the majority of fee categories, expansion in payments processing businesses and a $173 million favorable variance in securities gains (losses), partially offset by a 1.0 percent reduction in net interest income.
Provision for credit losses for the second quarter of 2005 was $144 million, a decrease of $60 million (29.4 percent) from the second quarter of 2004. The decrease in the provision for credit losses year-over-year reflected a decrease in total net charge-offs. Net charge-offs in the second quarter of 2005 were $144 million, compared with the first quarter of 2005 net charge-offs of $172 million and the second quarter of 2004 net charge-offs of $204 million. Total nonperforming assets declined to $610 million at June 30, 2005, from $665 million at March 31, 2005 (8.3 percent), and $911 million at June 30, 2004 (33.0 percent). The ratio of the allowance for credit losses to nonperforming loans was 441 percent at June 30, 2005, compared with 404 percent at March 31, 2005, and 299 percent at June 30, 2004.
Net Interest Income
Second quarter net interest income on a taxable-equivalent basis was $1,761 million, compared with $1,779 million recorded in the second quarter of 2004. Average earning assets for the period increased over the second quarter of 2004 by $9.7 billion (5.8 percent), primarily driven by a $3.3 billion (8.2 percent) increase in retail loans, a $3.2 billion (8.1 percent) increase in total commercial loans and a $3.1 billion (22.4 percent) increase in residential mortgages. The positive impact to net interest income from the growth in earning assets was more than offset by a lower net interest margin. The net interest margin in the second quarter of 2005 was 3.99 percent, compared with 4.28 percent in the second quarter of 2004. The decline in the net interest margin reflected the current lending environment, asset/liability management decisions and the impact of changes in the yield curve from a year ago. Since the second quarter of 2004, credit spreads have tightened by approximately 18 basis points across most lending products due to competitive pricing and a change in mix due to growth in lower spread credit products. The net interest margin also declined due to funding incremental growth with higher cost wholesale funding and asset/liability decisions designed to maintain a relatively neutral rate risk position, including reducing the duration of the securities portfolio, funding asset growth with more fixed rate long term debt and a 56 percent reduction in the net receive fixed swap position between June 30, 2004, and June 30, 2005. Increases in the margin benefit of deposits and net free funds helped to partially offset these factors.
Net interest income in the second quarter of 2005 was higher than the first quarter of 2005 by $10 million (.6 percent). Average earning assets grew quarter-over-quarter by $3.4 billion (2.0 percent). Growth in most loan categories, including a 3.7 percent increase in total commercial loans, drove the increase in average earning assets over the prior quarter. The positive impact to net interest income from the growth in earning assets and day basis was partially offset by a lower net interest margin. The net interest margin in the second quarter of 2005 was 9 basis points lower than the net interest margin of 4.08 percent recorded in the first quarter of 2005. The decline in the net interest margin from the first quarter of 2005 reflected tighter credit spreads (4 basis points) due to increased competition, in addition to changes in loan mix. Higher short-term rates, funding a higher percentage of earning asset growth with wholesale funding and asset/liability actions designed to maintain a relatively neutral rate risk position, including a 31 percent reduction in the net receive fixed swap position between March 31, 2005, and June 30, 2005, also contributed to the margin reduction. This was partially offset by the higher margin benefit of deposits and net free funds and loan fees.
Average loans for the second quarter of 2005 were $10.1 billion (8.3 percent) higher than the second quarter of 2004, driven by growth in average retail loans of $3.3 billion (8.2 percent), total commercial loans of $3.2 billion (8.1 percent) and residential mortgages of $3.1 billion (22.4 percent). Total commercial real estate loans also increased slightly year-over-year by $466 million (1.7 percent). Average loans for the second quarter of 2005 were higher than the first quarter of 2005 by $3.6 billion (2.8 percent), reflecting growth in substantially all loan categories.
Average investment securities in the second quarter of 2005 were $148 million (.3 percent) lower than in the second quarter of 2004. Investment securities at June 30, 2005, were $2.0 billion higher than at June 30, 2004, but $804 million lower than the balance at March 31, 2005. The changes in the balance of the investment securities portfolio from a year ago principally reflected the net impact of repositioning the investment portfolio during 2004 as part of asset/liability risk management decisions to acquire variable rate and shorter-term fixed securities to reduce the effective duration of the portfolio and to maintain a relatively neutral interest rate risk position. The decline from first quarter of 2005 primarily represented maturities or prepayments with the proceeds being utilized to fund loan growth. During the second quarter of 2005, the Company retained its mix of approximately 39 percent variable rate securities.
The allowance for credit losses was $2,269 million at June 30, 2005, equal to the allowance for credit losses at March 31, 2005, and slightly lower than the allowance for credit losses of $2,370 million at June 30, 2004. The ratio of the allowance for credit losses to period-end loans was 1.70 percent at June 30, 2005, compared with 1.76 percent at March 31, 2005, and 1.93 percent at June 30, 2004. The ratio of the allowance for credit losses to nonperforming loans was 441 percent at June 30, 2005, compared with 404 percent at March 31, 2005, and 299 percent at June 30, 2004. Total net charge-offs in the second quarter of 2005 were $144 million, compared with the first quarter of 2005 net charge-offs of $172 million and the second quarter of 2004 net charge-offs of $204 million.
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Today's Top Event in History
1944 --President Franklin D. Roosevelt nominated for an unprecedented 4th term at the Democratic convention. Harry S. Truman of Missouri was nominated for vice-president. In June the allied landed in Normandy and the Russian front was in full battle, but in mid-June the Germans introduced a new weapon, the V-1 pilot less bombs; they launched it against London and other British cities. In September they followed it with the V-2, a supersonic rocket causing great destruction. The end of June the Republican National Convention nominated Thomas E. Dewey, governor of New York for the presidency, and Gov. John W. Bricker of Ohio for the vice-presidency
This Day in American History
1591- Anne Marbury was baptized in Alford, England. America's first female religious leader, Anne Marbury Hutchinson was the daughter of an outspoken clergyman silenced for criticizing the Church of England. Better educated than most men of the day, she spent her youth immersed in her father's library. At twenty-one, Anne Marbury married Will Hutchinson and began bearing the first of their fifteen children. She became an adherent of the preaching and teachings of John Cotton, a Puritan minister who left England for America.
(Suggested by post-game broadcasts)
Fanaticism? No. Writing is exciting
It's a pitcher's battle all the way--a duel--
When three players on a side play three positions
Assign Yogi Berra to Cape Canaveral;
Those two magnificent saves from the knee-throws
They crowd him and curve him and aim for the knees. Trying
sped by Luis Arroyo, Hector Lopez--
From The Complete Poems of Marianne Moore . Copyright © 1961 Marianne Moore, © renewed 1989 by Lawrence E. Brinn and Louise Crane, executors of the Estate of Marianne Moore.
Another Poem by Marinne Moore
I, too, dislike it: there are things that are important beyond
high-sounding interpretation can be put upon them but because
eat, elephants pushing, a wild horse taking a roll, a tireless
school-books"; all these phenomena are important. One must make
for inspection, "imaginary gardens with real toads in them,"
From The Complete Poems of Marianne Moore . Copyright © 1961 Marianne Moore, © renewed 1989 by Lawrence E. Brinn and Louise Crane, executors of the Estate of Marianne Moore.