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January 12, 2001 Headlines--- " Union Bank of California has discontinued providing credit lines to leasing companies and that the employees in their lease lending group in Los Angeles (I am not sure if this also impacts their S.F. group) are being reassigned or terminated. The story I heard is that they have not had significant credit problems, but they want to avoid the losses a number of other banks have incurred on loans to leasing companies." Name With Held GE Capital Hawaii cutting 100 jobs here and on Guam It is restructuring to focus solely on commercial real estate By Tim Ruel Star-Bulletin GE Capital Hawaii Inc., one of the state's largest financial institutions, said today it is slashing a total of 100 jobs here and in Guam as part of a restructuring. The company said it is ending its financing operations for business equipment and residential real estate in Hawaii and Guam. The job cuts will likely begin immediately and occur over a two-year period, said corporate spokesman Hal Platzkere. He did not know if terminated employees would have a chance to find other jobs at the company, or its larger mainland parent. GE Capital Hawaii has 130 employees, and it was not immediately clear how many would be laid off. "The change is a reflection of the company's global focus on the commercial real estate sector," Platzkere said. "It just so happens Hawaii is being hit at this particular time." GE Capital Hawaii is a wholly owned subsidiary of Stamford, Conn.-based GE Capital, which is owned by diversified giant General Electric Co. GE Capital has more than $345 billion in assets and provides equipment management, financing, insurance, car leasing and other services to a global market. GE Capital Hawaii plans to focus solely on lending to commercial real estate activities, Platzkere said. Half of the company's asset base is in commercial loans, while nearly 40 percent is residential loans, according to Pacific Business News' "Book of Lists 2000." Assets at the company slipped 13 percent to $1.06 billion as of January 2000 from $1.22 billion in 1997, according to the Book of Lists. GE Capital Hawaii has already trimmed 45 positions since 1997. It started in Hawaii as Amfac Financial, then became GECC Financial in 1979 when GECC Financial Corp. bought Amfac Financial. It later joined GE Capital. More Bad News about United Capital, Austin, Texas "I think all of us in the leasing industry appreciate all the hard work and the valuable insight that you provide. I'd like to add our experience with United Capital and our brief encounter with Old Kent Leasing. We currently have five incidents where all the vendors involved have not been paid. I finally got a hold of someone at United and informed them that all five lessees have received letters from Old Kent stating that their leases have been assigned to Old Kent. The United rep informed me that since we have been paid on all five transactions, technically, the leases are booked, even though the vendors were not paid. I then called Old Kent Leasing and spoke with an accounts manager and she informed me that Old Kent Leasing purchased a large portfolio from United and regardless of whether or not the vendors have been paid, the lessee's must make payments to Old Kent since they paid United. United has had miserable portfolios with three brokers, no company names need to be mentioned but those of us who have been in the industry a while, should know who the three are. It's unfortunate what has happened to United but it looks like they are going to run with the money from Old Kent and file BK to compensate or minimalize their massive loses from the three brokers who have caused this unfortunate situation." name with held ( In California, and perhaps elsewhere, title to equipment can pass without the vendor receiving payment. Whether the new creditor has the right to collect payments, and whether the lessee is obligated, well, that's one of the many reasons we have a court of law to make such decision. editor ). Evidently there were several who thought this was included in about Sierra Cities, so I will repeat it in today's issue: This is what we hear from insiders: " No changes since December 15. We have six "funded" transactions. At this point, we still have 3 NSFs and 3 other assigned leases for which we have not rec'd our proceeds. We have paid all our vendors, of course." name with held No,changes. "We were lucky in that our sales rep sent back to us all of the transactions we had open in for funding and we portfolioed as I would not put our customers\vendors in a position I would not want to be in. We have made a few mistakes and United was one of them, so I cut my losses as quick as possible and move on, so I have not followed up with them either. If I get a mass email or something I will forward on." name with held ( We have several telephone calls and e-mails to Steve Dallas for a report on Damage Control, but he evidently has both his hands pretty busy. editor ) Sierra Cities We put"on line" a cartoon with Sierra Cities President Tom Depping telling his staff about the falling stock market and what the chart meant. Perhaps it was too close to the truth to be funny. http://www.leasingnews.org/archives/December/12-22-00.htm There are many rumors floating around Houston, and I have heard several versions, but the one that echoes the most is Depping is telling everyone, "The end of BTOB as it now exists. We will never be the same.( Sierra Cities) will be operating differently and leaner next week." oh-Oh, spaghetti-Oh's. Any comments about what is happening from insiders will be kept in strict confidence. If you know someone who might help us, send them this newsletter. Also please send to your friends as we are trying to build our readership. editor "Leasing Logic" National Association of Equipment Leasing Brokers ( We have been getting ten requests daily to subscribe, but the other day there was over fifty. Some mentioned "Leasing Logic" and then today in the mail came the reason why we are recently getting so many more subscriptions. editor ) The leasing business had its share of eyebrow raisers this year. The list of leasing companies and fundders who have gone out of business or had major changes has grown every month. For those of you not receiving Kit Menkin's electronic newsletter. Leasing News, go to www.leasingnews.org and subscribe. .At that site you can view the current update of this list of companies purchased, consolidated, or just out of business. Ever' member of NAELB needs to keep current on the industry. Kit does a commendable job of sorting through the rumor and innuendo to bring this information to our fragmented industry. The NAELB Listserve has been growing every month. For those of you still unfamiliar with this benefit of membership, think of this as "broadcast e-mail'". When you subscribe to listserve you can post a brief inquiry or response to an inquiry on any industry related topic. We request that they be concise and "rant-free'. You can get almost immediate feedback from hundreds of your peers on subjects like 'who will hind this deal', or 'does anyone know about this broker or funder'. Everyone one the listserve views your inquiry and the responses. If you are a member of NAELB you can subscribe by sending e-mail to info@naelb.org and requesting how get listserve. Listserve is one of the growing group of tools that you will need to use to keep connected to the broker community. Since education is one of the mainstays of NAELB, we have commissioned a videotape series from Bob Baker Wild-wood Financial. As you know bob is a frequent speaker at our meetings and on of the most respected lease educators in the business. This eight tape series covers the A to Z of the leasing business. The tape series has information on history of the industry, marketing, documentation, ethics and much more. You will all find this tapes series valuable as either a refresher course on topics or as a stand-alone teaching vehicle for your staff or outside sales reps. If you are coming to the national convention in New Orleans, this tape series will cost you as little as $198. Ask yourself, how else can you train a document or marketing person for less than two hundred dollars? I have recently previewed this tape series and Bob has done an excellent job of synopsizing the leasing business. This tape series will be available to members in mid .January 2001. You can order them by e-mail. Contact info@NAELB.org and place order. **** Membership continues to grow in NAELB and the organization is financially very sound. In order to maximize our responsiveness to members, we need a broader base of participants helping to run NAELB. We will be forming standing committees for various ongoing functions such as membership, meeting planning, education, etc. If you are interested in spending some time helping your organization grow and prosper, we want to hear from you. Send me an email with a brief background and what your interests would be. My address meacher@bankgrouponline.com. Help us keep NAELB on track as the only national leasing organization run by and for brokers. **** I just wanted to drop you a note primarily for your readers clarification. I have received several calls the last couple of days regarding the Video Tape Series I recently completed for the NAELB. I was very proud to have been asked by the board to create these educational tapes. I have already been compensated by NAELB and I will not receive any additional monies or royalties for them. I did this 8 tape series as much to give back something to an industry and Association that has been very good to me. I hope that all that view them find them educational and helpful. The tape series is only available to NAELB members. To get them they should not contact me but NAELB. Anyone viewing them with questions may feel to call me at 800 373 3581 or E-Mail at Baker@wildwoodfinancial.com Thanks, Bob Baker CLP Broker Membership is $295 at NAELB. The Video Tape Series is available only to members. It is a "bargain," indeed, particularly compared to other video tapes available, such as from ELA. The NAELB "listserve" alone is worth the price of membership, plus members get a discount in many things, including the 2001 Annual Conference to be held in New Orleans, Louisiana, May 17-20th, New Orleans Hilton Riverside Hotel 504-561-0500. Make your reservation now for Emile Lagresse Restaturant. Plus there will be Education Workshops, Hospitality Suites, and One-on-One Meetings with New Funding Sources. ( This is also available on line in html: http://www.leasingnews.org/list.htm Thank you new readers for your help with companies and dates. editor 66 Leasing Companies Major Changes ( For specific stories, use search on our site, or go to archives: http://www.leasingnews.org/archives.htm ) Advanta Leasing (1/2001 Mortgage Division sold, re-affirms Leasing Division still for sale 9/2000 for sale, former prez now at eOriginals,others let go like Kaye Lee.) Affinity Leasing, Washington ( 12/2000 to close and concentrate on Financial Pacific biz ) American Business Leasing ( gone ) Balboa Capital ( 9/2000 Founder Pat Byrne "...office available any time he wants to use it" ). Banc One Leasing ( 12/2000 Lays Off 60, Closes 5 offices ) The Bancorp Group, Inc. (Southfield, MI) (Not accepting news business. The BOD of the parent bank is assessing what to do with the leasing subsidiary.....currently servicing portfolio but not originating. no longer in business ) Bankvest (bankrupt) Bayview Capital ( 12/2000 announces $17 million loss/later does not issue dividend ) Bombadier ( 12/2000 reported having leasing problems, not confirmed, company strong in other divisions, but appears backing out of leasing division ) BSB Leasing ( 1/2001 Don Meyerson bought back the company and they are back in business at 303-329-09227. Official announcement to be made soon. They are notifying brokers to start sending them business again. 12/2000 Don Meyerson says to be "re-born"11/2000 closed to accepting new business.) Capital Associates, Denver, Colorado ( no longer doing business, filing bk? ) Charter Financial ( purchased by Wells Fargo 9/5/2000 ) Colonial Pacific (11/98) purchased by GE Capital 5/2000 no more re-brokered applications, except from one or two sources, such as Steve Dunham's Leasing Associates ) Commerce Security ( 9/99 closed to leasing broker program )(11/99 last fundings) Comstock Leasing ( 3/2000 Unicapital then Linc and discontinued operation this date ) Conseco Finance Vendor Service ( 12/2000 purchased by Wells Fargo Leasing. Copelco ( 4/2000 sold to Citibank/10/2000 stock down rated/10/2000 ceases broker business, many complaints in manner turning off faucet ) Dana ( 7/2000 sold off portfolio, active as captive lessor ) DVI Capital (12/2000 out of broker ) El Camino Leasing, Woodland Hills, Caifornia (10/2000 No longer taking broker business 11/2000 struggling to stay in leasing business, according to insider reports ) eLease ( June/July/2000 senior management changes ) Finantra (11/2000 will eliminate its commercial finance operations in order to focus on its two core finance platforms, consumer finance and services and consumer mortgage lending. ) FMA Financm California ( 4/2000 reportedly closed to brokers ) Fidelity ( 4/2000 acquired by EAB, a wholly owned subsidiary of ABN AMRO Bank N.V., headquartered in the Netherlands, raising funds ) Finova ( 12/2000out of market place, many problems, raises $250 MM, but not enough ) ( 10/2000 Dow Jones headlines "Finova Stock Falls As Buyout Hopes Wane 10/2000 Dow Jones notes stock falling and problems at Finova 11/2000 Announces they will discontinue business, sell units 11/2000 Suspends Dividend 11/2000 Leucadia National to Invest $350 Million in Finova 11/2000 reports $274 million loss )) First State Bancorp, Albuquerque, N.M ( 3/2000 sold leasing division-$64 million---) Franklin Leasing, Des Moines, Iowa--owned by Liberty Bank-- (2/2000)-no longer writing leases ( limited by regulations and leases are for sale ). Franchise Mortagage Acceptance Corporation (FMAC) 11/1999 purchased by Bay View Commercial Corporation (Bay View Bank) 9/2000 discontinuing all franchise loan and lease production. Golden Gate Funding ( 2/99 purchased by Westover Financial ) Heller Financial's Commercial Services Unit ( 10/99 purchased by CIT ) Imperial Credit Industries (ICII) ( sold portfolio ) Japan Leasing Credit claims ( JLC --6/99 purchased by Orix ) Lease Acceptance Corp---( ceases broker business 7/26/2000 ) LeaseExchange.com ( 1/2001 Closes Irving office, cuts staff ) Leasing Solutions ( bankrupt ) Liberty Leasing ( 6/1999 closed, California company ) Liberty Leasing, Des Moines, Iowa ( 10/2000 closed, selling portfolio, owned byCommercial Federal Bank, Omaha, Nebraska ) Linc Capital ( out of vendor and broker business, Nasdaq halts stock sales, $13.4 loss last quarter,10/2000 assets for sale ) Lyon Credit Corporaton ( 9/99 purchased by Hudson United Bancorp ) Manifest Group--( 9/1/2000 purchased by US Bancorp Leasing and Financial, "...a win for all the parties involved," Brian Bjella. Matsco Financial (12/2000 purchased by Greater Bay Bank ) Merit Leasing ( gone ) Metwest Leasing, Spokane Wa. ( 9/2000 advising brokers that they have run out of funds so they are unable to fund a transaction we have there for funding. 11/2000 Metwest Leasing Spokane, WA. is pulling the plug, confirmed by five sources. ) Metrolease--( 5/2000 reports closing operation,John Blazek at Evergreen Leasing, Hathcock losing assets, will not confirm nor deny; many serious rumors of serious fraud floating around the marketplace, including debt to Textron Financial, reported to file bk.) NationsCredit, Business Leasing Group (1/29/99 sold to Textron** 1/2001 complaints from brokers regarding getting information for NationsCredit and GrayRock Capital on FMV, payoffs, residuals from Textron who is servicing the portfolio ) *** Textron does "broker business." NIA National Leasing ( 3/2000 purchased by Lakeland Bancorp ) New England Capital ( 6/2000 sold to Network Capital Alliance a division of Sovereign Bank. Sovereign did hire two people who will run a sales office in CT, doing basically the same deals with the same people as before. Little will change in that aspect. Newcourt ( 8/2000 sold off ) Old Kent Financial ,GrandRapids, Michigan ( 11/2000 Fifth Third Bank,Cincinnati, Ohio announces acquirement, to close second quarter 2001-Gateway Leasing sold to Old Kent in 1997, small ticket leasing specialists ) Onset Capital ( 9/2000 Irwin buys 87% equity ) Orix 11/10 First Six Month Profits up 14% at Orix! ) 10/2000 "long-term Outlook has been revised from Stable to Negative" Credit Allianchat it has changed its name to ORIX Financial Services, 9/2000 Japanese Bank President Committs Suicide (Orix is a 14.7% shareholder in bank having problems ), ( 8/2000 closes small ticket vendor division in Portland, Oregon, "Business as usual (in New Jersey and with brokers)," says Steve Geller 11/8 New President at Orix appointed 11/10 First Six Month Profits up 14% at Orix! No negative reports, company appears to be doing very well. ) Phoenix ( 5/2000 both divisions closed ) Prime Leasing, Minnesota ( no longer doing business ) Preferred Capital ( 12/2000 On the block. David Murray left 11/7 "didn't like letting his friends go." 01/2000 Mark Seif confirms ) Prime Capital, Chicago ( 6/2000 closed ) Republic Leasing, South Carolina 9/27/2000 ( "The expected result will be a sale of Republic Leasing"---Dwight Galloway. He adds,"We have always been for sale for the right price, but in thirteen years we have not sold off any leases or gone direct after broker's business,ever." ) Resource Leasing, Herndon, Virginia ( 11/2000 MicroFinancial/Leasecomm acquires major portion of the assets.) Rockford ( sold to American Express ) Scripp Financial ( 6/29/2000 ( purchased by US Bancorp ) Signature Leasing, Dublin, California ( 11/2000 no longer in small ticket marketplace ) SDI ( 5/2000 closed to broker programs ) SFC Capital ( 9/15/2000 purchased by Trinity Capital ) SierraCities (1/2001 VerticalNet Merger falls apart 1/16/01 Sells Off UK Assets, 7/2000 2nd quarter loss, see report ) T&W, Washington (10/2000 filed Chapter 11. Creditors meeting on 12-4-00 Seattle. Case # 00- 10868 US Bankruptcy Court Western District of Wash. 206-553-7545. Debtor Attorney-Marc Barreca 206-623-7580) Transamerica ( 11/2000 for sale, but no buyers, so taken off marketplace, no longer for sale ) Unicapital ( 12/2000 files bk ) *** series of company that may be affected, end of report ) United Capital, Austin Texas ( 1/2001, selling off portfolio, problems ahead with vendors not paid, brokers not paid, sinking in quicksand 12/2000 no new deals until after the 1st of year, Steve Dallas says, " We will survive." Varilease ( 11/2000 closed down ) USA Capital Leasing ( gone-bk ) Union Bank, Los Angeles ( 1/2001 ) Out of broker-discounting leasing buisness. any corrections, additions, comments will be appreciated. We are presently working on dividing the list into last twelve months and prior. We have decided to make this an internal form, so this may take longer to do for us, but we are working on it. ***Original Purchases by Date by Unicapital American Capital Resources 2/98 Boulder Capital Group 2/98 Cauff, Lippman Aviation 2/98 Jacom Computer Services 2/98 Matrix Funding 2/98 Merrimac Financial Associates 2/98 MunicipalCapital Markets Group 2/98 The NSJ Group 2/98 PortfolioFinancial Servicing 2/98 --acquires assets of Unicapital Vanlease 2/98 The Walden Group 2/98 K.L.C., Inc. dba Keystone Leasing 5/98 Jumbo Jet 7/98 HLC Financial 7/98 Saddleback Financial Corporation 7/98 U.S. Turbine Engine Corp. 7/98 The Myerson Companies dba BSB Leasing 9/98 --- back in business under original owner now: Don Meyerson We give you permission, and in fact, encourage you to pass on information to your colleagues. If you would like to join our leasing news network, we are free, with no advertising or banners, too--- all you need to do is e-mail us. View Us on Line, too: www.leasingnews.org In Support of the United Association of Equipment Leasing Recent Changes Kit, Claude Lanselle has a point…Big is not always better. As a Broker and a WAEL/UAEL Member for 24 (and soon to be 25) years, I don't feel the UAEL has a lot to offer our company these days. However, I have appreciated those members and organizations with divergent interests and bigger operations who have allowed their personnel to participate and to financially support UAEL's activities and I applaud the CLP program which other organizations have adopted. Through the years I have benefited through the exchange of ideas, formation of Funding Source relationships and inter-action with other Western States members --- but I don't remember a particular benefit from being a member of a national organization. It seems S.E.L.'s opportunities and problems concern how our company does business in the Western States. Jim Reed President Securities Equipment Leasing P.S. We heartily approve the addition of Bill Grohe to the UAEL Staff. He is an experienced Lessor/Broker and is acquainted with many of our members and is experienced with the problems and opportunities in the Western States. Securities Equipment Leasing 1200 East Alosta Avenue, Suite 109 P.O. Box 877 Glendora, CA 91740 (626) 914-3434 FAX (626) 914-7534 sellsng@aol.com Dear Kit, I am seeing alot of negative comments regarding recent developments at UAEL. I would simply say this. In my opinion the new President Chuck Brazier is one of the finest as well as most respected pro's in the industry. With Chuck at the helm I will assure everyone that positive results will be forthcoming. There have been major changes in personnel at UAEL and you can't solve problems overnight. Already he has engaged the help of Bill Grohe, another undisputed pro , as well as a Past UAEL President. In many peoples eyes Joanie Dalton is a untried leader but is taking her responsibilities seriously and is an unquestionable hard worker. I predict she may surprise us all. The value of our membership will depend on the success of these folks. Let us all give them our full support. Respectfully, Bob Baker CLP Baker@wildwoodfinancial.com Know all details before leasing expensive equipment The Orange County Register A photography store owner has found a way to expand the business with digital equipment without buying the $25,000 camera, printer and software. He leased them, instead. Eighty-five percent of U.S. businesses now lease at least some equipment, from phones to locomotives to medical-diagnostic equipment to vending machines to popcornmakers. American companies spend $233 billion on equipment leases annually, almost double the amount of 10 years ago. Equipment leasing has its benefits, but small-business owners must be careful because the industry is not licensed or regulated. Complaints range from delays in approvals to last-minute contract changes. Matt Breneman -- owner of the store All Season Photography in Placentia, Calif. -- has, perhaps, the most common reason for leasing equipment. In business for only two years, he didn't have the cash to buy the digital equipment outright. By leasing, he avoided a down payment or the up-front collateral he would have had to provide with a loan. The equipment seller referred Breneman to a leasing company, but he also called John Sexton, president of Sexton Companies of Newport Beach, Calif. ``My advice is to shop around,'' the photographer said. ``Some people, like Matt, find us in the phone book, but half our business comes from vendor referrals or repeat business,'' said Sexton, who usually provides leases of $5,000 to $250,000 for small to midsize companies. In addition to helping with cash-flow management, a lease isn't listed as debt on a financial statement, which can make a company more attractive to its bankers and investors. Payments on an operating lease are tax-deductible, whereas purchased equipment must be depreciated over several years. And leasing is a good hedge against obsolescence. Gateway touts this advantage when it promotes leases for its computers. Sexton estimates that 90 percent of his clients choose to pay the residual value and keep the equipment at the end of the lease. Leasing costs more than an outright purchase. The interest depends on the lessor, type of equipment, lessee's credit rating, length of the lease and cost of money. ``On a $10,000 piece of equipment leased for 36 months at the average rate, the total price will be $12,500, so your cost is $2,500,'' Sexton said. Most small leases are standard, according to Laurie Kusek of the Equipment Leasing Association in Virginia. But variations are appearing, such as copier leases that charge per copy made. Some have options for early termination and may extend for 120 months to lower the payment. Some business owners are too trusting when they lease, Sexton said. Telemarketers or an advertising mailing will tell the owner he's ``preapproved'' for a lease, but when he tries to use it, he must provide extensive information to qualify. ``When was the last time a customer asked me how long I have been in business, or for references? Never,'' Sexton said. One man told Sexton he was getting a lease from a company that Sexton hadn't heard of; neither did it have a Dun & Bradstreet report. ``I finally said, `Call directory assistance and see if the (lessor) is listed.' It wasn't.'' Sexton suggests asking if the lessor has earned certification from the United Association of Equipment Lessors in Oakland, Calif. Sexton is certified. Small-business owners should make sure they understand the lease before they sign, Sexton said. Some salesmen promise terms that aren't in the final documents or raise the interest rate at the last minute. Some small businesses or their equipment won't qualify for a lease, Sexton said. ``Equipment under $5,000 isn't cost-effective for us,'' he said. ``Although we will lease $3,000 software.'' In addition, most lessors won't lease to companies that have been in business less than two years, he said. And a firm with bad credit will not qualify with most lessors. ``Also, the lease has to make sense,'' he added. ``There's fraud in this industry, so if an accountant is leasing a restaurant broiler, he's probably not getting it for his office. Maybe he's getting it for a brother-in-law with bad credit.'' For information: Equipment Leasing Association, 4301 N. Fairfax Drive, Suite 550, Arlington, VA 22203-1627, 703-527-8655, www.elaonline.com United Association of Equipment Lessors, 520 3rd St., Oakland, CA 94607, 510-444-9235, www.uael.org www.leasingnews.org
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