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January 23, 2001
Headlines--- Advanta Closes Its Door to New Business February Association Meetings CapitalStream Names Walter Demaree New Senior Vice President CIT Commercial Backs Comfin.com/Enters Internet Fray Yodlee raises $52 million for online account venture Confirmation: Union Bank Severly Cuts Down Leasing Textron Up 14% even after Writing of Internet Losses The List: Now in Chronological Order
------------------------------------------------------------------------------------------------ Advanta Officially Ceases New Leasing Business "The quarter's results were impacted by an Advanta Leasing loss of $7.9 million for the quarter. After a thorough review of strategic alternatives available to its Leasing business, the Company has decided that it is in the best interests of its shareholders to cease originating leases. The Company will continue to service the existing portfolio rather than sell the business or the portfolio. In connection with this decision, the Company recorded a $4.3 million charge to write-down certain Leasing business assets, which are included in the quarter's results. Despite the loss, during the fourth quarter Advanta Leasing significantly improved the asset quality of its portfolio. Charge-offs for the quarter were 3.91% as compared to 6.28% during the third quarter of 2000. Over 30 day delinquencies declined to 6.85% from 7.87% at September 30, 2000, and are at the lowest level since June 30, 1998." ( full press release with financial report at end of report ) ---------------------------------------------------------------------------------------------- The List is now divided into Chronological order and Alpahabetical order (Please note there are still nine dates that we have not been able to determine for nine changes We are still working on this. Any other changes, please let us know. editor) Also on line at: http://www.leasingnews.org/list.htm The List Chronological Advanta Leasing (1/2001 Advanta ceases leasing business announcement 1/2001 Chris Ciarrocchi says "goodbye" 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.) Union Bank, San Francisco ( 1/2001 Leasing curtailment/cutback 1/2001 Union Bank, Los Angeles, no more lease purchasing, not confirmed about S.F. yet ). El Camino Leasing, Woodland Hills, California (1/2001) ( 1/2001 reportedly winding down, sold portfolio, selling partner relationships, selling off all assets (10/2000 No longer taking broker business 11/2000 struggling to stay in leasing business, according to insider reports ) Saddleback Financial ( 1/2001 Prez. Warren Emard in business, looking for new business from brokers. ) First Commercial Capital Corp ( 1/2001 to be acquired by TCF Leasing ) First International Bancorp ( 1/2001 ) to be acquired by UPS Capital First State Bancorp, Albuquerque, N.M ( 3/2000 sold leasing division-$64 million---) Union Bank, Los Angeles ( 1/2001 ) Out of broker-discounting leasing business. LeaseExchange.com ( 1/2001 Closes Irving office, cuts staff ) 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.) SierraCities (1/2001 VerticalNet Merger falls apart 1/16/01 Sells Off UK Assets, 7/2000 2nd quarter loss, see report ) Preferred Capital (01/2000 Mark Seif confirms 12/2000 On the block. David Murray left 11/7 "didn't like letting his friends go." ) Affinity Leasing, Washington ( 12/2000 to close and concentrate on Financial Pacific biz ) Banc One Leasing ( 12/2000 Lays Off 60, Closes 5 offices ) 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 ) Capital Associates, Denver, Colorado ( no longer doing business, filing bk? ) Conseco Finance Vendor Service ( 12/2000 purchased by Wells Fargo Leasing). DVI Capital (12/2000 out of broker ) Finova ( 1/2001 laid off 90 employees, or about 9 percent of its workforce, in an ongoing effort to cut costs. The company continues to employ about 300 people in Phoenix and 940 nationwide. (12/2000) out 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 11/2000 reports $274 million loss United Capital, Austin Texas ( 1/2001 ½ employees let go, portion of portfolio sold, discounters not paid, vendors not paid, it is alleged.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 trying to hold it together. Dallas says, " We will survive." 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. ) Metwest Leasing, Spokane Wa. (11/2000 is pulling the plug, confirmed by five sources. 9/2000 advising brokers that they have run out of funds so they are unable to fund a transaction we have there for funding.) 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 ) Orix 11/10 First Six Month Profits up 14% at Orix! ) 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. 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 Commits 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) Resource Leasing, Herndon, Virginia ( 11/2000 MicroFinancial/Leasecomm acquires major portion of the assets.) Signature Leasing, Dublin, California ( 11/2000 no longer in small ticket marketplace; appears to have closed down ). Transamerica ( 11/2000 for sale, but no buyers, so taken off marketplace, no longer for sale ) Varilease ( 11/2000 closed down ) Copelco (10/2000 ceases broker business, many complaints in manner turning off faucet 5/2000 sold to Citibank/10/2000 stock down rated/ ) Linc
Capital ( out of vendor and broker business, Nasdaq
halts stock sales, $13.4 loss last Matsco Financial (10/2000 purchased by Greater Bay Bank ) 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 Balboa Capital ( 9/2000 Founder Pat Byrne "...office available any time he wants to use it" Reported he is no longer "in control" or working "full time" at Balboa, the company he started). Liberty Leasing, Des Moines, Iowa ( 10/2000 closed, selling portfolio, owned by Commercial Federal Bank, Omaha, Nebraska ) Bay View Commercial Corporation (Bay View Bank) 9/2000 discontinuing all franchise loan and lease production Charter Financial ( purchased by Wells Fargo 9/5/2000 ) Manifest Group--( 9/1/2000 purchased by US Bancorp Leasing and Financial, "...a win for all the parties involved," Brian Bjella. Onset Capital ( 9/2000 Irwin buys 87% equity ) 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." SFC Capital ( 9/15/2000 purchased by Trinity Capital ) Dana ( 7/2000 sold off portfolio, active as captive lessor ) Lease Acceptance Corp---( ceases broker business 7/26/2000 ) eLease ( June/July/2000 senior management changes ) 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. Prime Capital, Chicago ( 6/2000 closed ) Scripp Financial ( 6/29/2000 ( purchased by US Bancorp ) 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.) Phoenix ( 5/2000 both divisions closed ) FMA Financial, 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 ) Comstock Leasing ( 3/2000 Unicapital then Linc and discontinued operation this date ). NIA National Leasing ( 3/2000 purchased by Lakeland Bancorp ) Franklin Leasing, Des Moines, Iowa--owned by Liberty Bank-- (2/2000)-no longer writing leases ( limited by regulations and leases are for sale ). Commerce Security ( 9/99 closed to leasing broker program )(11/99 last fundings/ 12/2000 Leasing News gives credit to Ron Wagner as the first to see the quality and margins of leasing changing, decides to avoid what was to happen in the year 2000 ). Franchise Mortgage Acceptance Corporation (FMAC) 11/1999 purchased Heller Financial's Commercial Services Unit ( 10/99 purchased by CIT ) Lyon Credit Corporation ( 9/99 purchased by Hudson United Bancorp ) Japan Leasing Credit claims ( JLC --6/99 purchased by Orix ) Liberty Leasing ( 6/1999 closed, California company ) Golden Gate Funding ( 2/99 purchased by Westover Financial ) 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." 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 ) American Business Leasing ( gone ) 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) . Imperial Credit Industries (ICII) ( sold portfolio ) Leasing Solutions , San Jose ( bankrupt ) Merit Leasing ( gone ) Prime Leasing, Minnesota ( no longer doing business ) Rockford ( sold to American Express ) USA Capital Leasing ( gone-bk )
***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 ---back in business U.S. Turbine Engine Corp. 7/98 The Myerson Companies dba BSB Leasing 9/98 --- back in business under original owner now: Don Meyerson
------------------------------------------------------------------------------------------- Mid-America Leasing Association of Equipment Lessors There are approximately 135 members and counting... :) Alison J. Huhn Executive Assistant Facility Capital 333 West Wacker Drive Suite 1750 Chicago, IL 60606 ajhuhn@facilitycapital.com www.facilitycapital.com 312.541.6000 phone 312.541.1275 fax ( we will up-date this membership information now on line at: http://www.leasingnews.org/links_section.htm
----------------------------------------------------------------------------------------------- United Association of Equiment Leasing January,26, 2001 Funding Retreat Hilton Hotel Costa Mesa (formerly Doubletree Hotel) 3050 Bristol St. Costa Mesa, CA. 90626 715.540.7000 _____________________________________________________________________________ Equipment Leaisng Association February 4-6, 2001 Equipment Management Conference and Exhibition Westin LaPaloma Tuscon, Arizona Program available at: http://www.elaonline.com/Events/2001/EquipMgmt/ for complete list of meeting: http://www.elaonline.com/Events/Year.htm ----------------------------------------------------------------------------------------- EAEL/NAELB February 5th Joint Meeting
One Day, all Business Broker/Funding Meeting, Atlanta Marriott Hotel February 5th ( actually there is a get acquainted evening available on February 4th ). To learn more: http://www.leasingnews.org/4th-annual-gathering.htm This is a joint meeting of the Eastern Association of Equipment Leasing and the National Association of Equipment Brokers. You can also get the registration form on line. http://www.leasingnews.org/Reg-form.htm ------------------------------------------------------------------------------------ United Association of Equipment Leasing 2/9, 2001 Funding Retreat Sheraton Dallas Brookhollow 1241 W. Mockingbird Lane Dallas, Tx. 75247 214.630.7000
for further information, go to: http://www.uael.org/events/retreats/
United Assoication of Equipment Leasing 2/23, 2001 Funding Retreat Washington Athletic Club 1325 Sixth Ave Seattle, Wa. 98111 206.464.3050 for further information, go to: http://www.uael.org/events/retreats/ -------------------------------------------------------------------------------------- If anyone can give us a "report" or "synopsis" or "reaction" to the UAEL Friday, January 19 Funding Retreat at the Sheradon Biscayne Bay Hotel, Miami, Florida, many of us may be interested in the attendance, mood, and any news from attendees. editor. ------------------------------------------------------------------------------------------------- CapitalStream Names Walter Demaree New Senior Vice President Demaree promotion brings additional experience to sales department. Seattle - January 23, 2001 - CapitalStream, a provider of hosted e-commerce solutions for the commercial finance industry, today announced the appointment of Walter Demaree to the position of senior vice president of sales. Demaree brings more than 20 years of expertise in the commercial finance industry, specializing in sales and marketing. Most recently, he served as the senior vice president and group manager of financial institutions for CapitalStream since joining the company last June. Demaree joined CapitalStream from Babcock & Brown, a leading investment bank specializing in asset-based financing, where he was Managing Director and Partner. His extensive career has included senior management positions for several companies prominent in the finance industry such as, MetLife Capital Corporations and BankAmeriLease. "CapitalStream's significant growth over the last six months, in the small and mid-ticket arena, has dictated a sales strategy that also includes Fortune 500 finance companies." Said Steve Campbell, President and CEO, "Walt is ideally suited to lead our current sales focus and forge our future path." Demaree holds a B.S. degree in Finance from the University of Santa Clara and an MBA from the University of California at Berkley. He and his family reside in Kirkland, Washington. About CapitalStream Seattle-based CapitalStream provides hosted e-commerce solutions for commercial financing, a $4 trillion global industry. The company provides infrastructure and tools that enable finance companies and manufacturers to create branded financing sites, tailor finance programs, build credit work flow, retrieve credit scores and content, and offer financing at the point of sale. CapitalStream, an established industry leader for more than five years with deep knowledge about the inner workings of the financing world, has helped several hundreds of financial organizations increase their competitiveness, customer service and profitability. ------------------------------------------------------------------------------------------- CIT Partners With Commfin CIT Commercial Services, a division of CIT, announced an agreement with Commfin, an internet portal that provides online trade finance solutions for business-to-business exchange participants. Internet exchange participants will receive access to accounts receivable discounting, factoring services and, in the near future, inventory financing via Commfin's Web site (www.commfin.com). The agreement reinforces CIT's commitment to embracing the Internet as an alternative distribution network and will further enhance the breadth of lending services available via the Commfin site. CIT Commercial Services is a unit of Commercial Finance, an operating group of CIT. "We are pleased to align with Commfin, one of the web's premier B2B financing portals," said John F. Daly, president of CIT Commercial Services. "By partnering with Commfin, we are able to reach the growing universe of borrowers who are using the power of the Web as a tool in their search for commercial financing." Commenting on the partnership, Commfin's acting CEO Alan Kestenbaum said, "We are delighted to have CIT Commercial Services join our prestigious list of lenders. CIT is an internationally-known and well-respected asset-based lender that brings to our partnership many years of experience and an excellent reputation within the industry." Commfin's Internet trade finance portal provides net market participants with access to a consortium of financial providers with specific product expertise, such as Brown Brothers Harriman & Co and Societe Generale. Commfin enables buyers and sellers to receive financing without ever leaving the B2B exchange. Commfin is also the provider of financial solutions to Aluminium.com, a B2B net marketplace for the non-ferrous metals industry. ------------------------------------------------------------------------------------------- Yodlee raises $52 mln for online account venture SAN FRANCISCO, (Reuters) - A group of corporate investors including AOL Time Warner Inc. and E-Trade Group Inc. Wednesday raised about $52 million for Yodlee, a company that provides services to financial institutions and Web portals that allow users to aggregate online accounts. Wednesday's financing round, joined by Merrill Lynch and Co. Inc. , Chase Manhattan Bank, Morgan Stanley Dean Witter & Co. , Internet software vendor Inktomi and the strategic private equity division of Intel Corp. , brings the total raised by Redwood Shores, Calif.-based Yodlee to almost $70 million. The funding also helps position privately-held Yodlee for an initial public offering in the second half of 2001 if the market turns around, Yodlee President and Chief Executive Anil Arora told Reuters. "We expect to be both cash-positive and profitable in this calendar year," said Arora. Yodlee also announced Wednesday that it will acquire VerticalOne Corp., a subsidiary of S1 Corp. . Under the deal, S1, which facilitates online financial services, will take a 32 percent stake in Yodlee. According to Arora, the S1 deal will help both companies better develop next-generation Internet applications. Meanwhile, Wednesday's $52 million cash infusion will also help Yodlee expand in Europe and Japan, he said. "We plan to be global into non-English-speaking countries," Arora said. The funding round also will be used to boost Yodlee's wireless applications, an increasingly important focus for financial institutions partnering with the 2-year-old company, Arora said. "We're obviously going to ramp up our wireless efforts," Arora said. "Our service, aggregation, is even more compelling on wireless because of information you need on the go." Yodlee counts Charles Schwab Corp. , the largest U.S. discount brokerage, and Fidelity Investments, the largest U.S. mutual fund family, among its 60 corporate partners. Advanta Reports Fourth Quarter Business Cards Income Up 64% Over Prior Year; Sale of Mortgage Business Proceeding ------------------------------------------------------------------------------------- ( BW)(CA-UNIONBANCAL)(UB) UnionBanCal Corporation Reports Net Income of $440 Million for 2000 Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Jan. 22, 2001--UnionBanCal Corporation (NYSE: UB) today reported fourth quarter 2000 net income of $8.4 million, or $0.05 per diluted common share, consistent with the Company's public guidance in December. Earnings were depressed by a provision for credit losses of $250 million. In the fourth quarter of 1999, the Company earned $136.9 million, or $0.83 per diluted common share, including a provision for credit losses of $30 million. For full year 2000, net income was $439.9 million, or $2.72 per diluted common share, compared to $441.7 million, or $2.64 per diluted common share, in 1999. For full year 2000, operating earnings were $411.1 million, or $2.54 per diluted common share, compared to $486.2 million, or $2.91 per diluted common share, in 1999. The provision for credit losses was $440 million in 2000 and $65 million in 1999. On an operating earnings basis, full year 2000 returns on average common equity and average assets were 13.09 percent and 1.22 percent, respectively, compared with 16.54 percent and 1.51 percent, respectively, for full year 1999. "While net income was depressed due to a large increase in credit costs, much progress was made during 2000 to reposition the Company for growth in 2001 and beyond," said Takahiro Moriguchi, President and Chief Executive Officer. "Our most important achievement was the successful implementation of Mission Excel, which has resulted in a much leaner organization, as reflected in an extraordinary improvement in our efficiency ratio during 2000. At 52 percent, the Company's efficiency ratio now ranks in the upper tier of the industry. In 2000, we generated revenue growth of 10.7 percent over the prior year, while simultaneously reducing non interest expense by 2.9 percent. "While we currently face a great deal of economic uncertainty, we are well-positioned for improved results in 2001. Our lending, depository and trust businesses are strong competitors in attractive markets - in California, regionally and nationally. Assuming satisfactory economic conditions in our key markets, we anticipate solid revenue growth, declining credit costs, and a healthy increase in operating earnings this year. "We also enter 2001 with strong capital levels and healthy core earnings power. We have the financial strength to pursue our growth and investment plans and we are dedicated to restoring investor confidence and creating significant shareholder value going forward." Total Revenue Total revenue (taxable-equivalent net interest income plus non interest income) in fourth quarter 2000 was $552.4 million, an increase of $28.6 million, or 5.5 percent, over fourth quarter 1999. Net interest income increased 8.0 percent, while non interest income decreased 0.7 percent, due primarily to higher auto lease residual write downs. Compared to third quarter 2000, total revenue decreased 3.7 percent. Net interest income decreased 1.3 percent, while non interest income decreased 9.3 percent, due primarily to higher auto lease residual writedowns and lower merchant banking fees. For full year 2000, total revenue was $2.2 billion, 11.4 percent higher than in the prior year. Net interest income increased 11.8 percent and non interest income increased 10.3 percent. Net Interest Income Net interest income was $399.3 million in fourth quarter 2000, an 8.0 percent increase from the same quarter a year ago. This increase was attributable to a 3.9 percent increase in average earning assets and a 22 basis point improvement in the net interest margin, to 5.18 percent. A higher rate environment and core deposit growth of 4.8 percent contributed to the strong improvement in the margin. On a sequential quarter basis, net interest income decreased $5.3 million, or 1.3 percent. The decrease in net interest income was primarily attributable to higher non accrual loan balances, which also contributed to a 12 basis point decline in the net interest margin. Net interest income was $1.6 billion for full year 2000, 11.8 percent higher than full year 1999. The increase in net interest income was primarily attributable to a 5.1 percent increase in average loan balances and a 33 basis point increase in the net interest margin. The higher rate environment and core deposit growth of 4.8 percent contributed to the strong margin performance. Noninterest Income In fourth quarter 2000, non interest income was $153.2 million, down 0.7 percent from the same quarter a year ago. Service charges on deposit accounts increased $11.6 million, or 25.8 percent, on higher volumes and prices. Other non interest income decreased $8.6 million, or 60.6 percent, primarily due to a $12.3 million increase in auto lease residual write downs. Excluding the impact of higher auto lease residual write downs, and a divestiture gain in fourth quarter 1999, total non interest income rose 11.3 percent. Noninterest income decreased $15.8 million, or 9.3 percent, in fourth quarter 2000, compared with the preceding quarter. Service charges on deposit accounts increased $2.5 million, or 4.6 percent, due to growth in deposit balances. Trust and investment management fees decreased $1.8 million, or 4.4 percent, due to declining equity markets and reduced trading volumes. Merchant banking fees were down $7.0 million, or 45.9 percent, due to fewer closed syndications. Other non interest income decreased $5.1 million, or 48.0 percent, primarily due to a $16.0 million increase in auto lease residual write downs. For full year 2000, non interest income was $647.2 million, up $60.4 million, or 10.3 percent, over full year 1999. Service charges on deposit accounts increased $37.6 million, or 21.7 percent, on higher volumes and prices. Trust and investment management fees increased $13.5 million, or 9.6 percent, primarily due to an increase in assets under management. Other non interest income decreased $17.0 million, or 27.8 percent, primarily due to a $23.5 million increase in auto lease residual write downs. Excluding the impact of higher auto lease residual write downs, total non interest income grew 13.9 percent. Noninterest Expense Noninterest expense for fourth quarter 2000 was $300.5 million, an increase of $9.2 million, or 3.1 percent, from fourth quarter 1999. Salaries and benefits expense declined 3.2 percent, primarily due to lower employee count and lower incentive expense. Other non interest expense increased $12.7 million, or 28.1 percent, primarily due to an increase in marketing and business development costs. On a sequential quarter basis, non interest expense increased 3.1 percent. Salaries and benefits expense increased 2.5 percent due to higher employee benefits expense. For full year 2000, non interest expense on an operating earnings basis decreased $34.7 million, or 2.9 percent, as compared to full year 1999. Salaries and other compensation expense declined $21.6 million, or 4.0 percent, primarily due to lower employee count and lower incentive expense. Employee benefits expense declined $26.1 million, or 21.4 percent, primarily due to lower retirement expense. Income Taxes Income tax benefit in fourth quarter 2000 was $7.1 million, primarily due to the impact of low income housing tax credits. For full year 2000, the effective income tax rate was 33.5 percent, compared with 32.6 percent for full year 1999. Credit Quality Nonperforming assets at December 31, 2000, were $408 million, compared with $300 million at September 30, 2000, and $170 million at December 31, 1999. The increase in non performing assets during fourth quarter 2000 was primarily due to additional deterioration in the syndicated loan portfolio. Nonperforming assets were 1.16 percent of total assets at December 31, 2000, up from 0.89 percent at September 30, 2000, and up from 0.50 percent at December 31, 1999. Net loans charged off in fourth quarter 2000 were $162 million. This compares with $55 million in third quarter 2000 and $17 million in fourth quarter 1999. The elevated level of charge-offs in the fourth quarter was the result of a detailed analysis of non performing loans, to reflect estimated loss content or secondary market pricing. The provision for credit losses in fourth quarter 2000 was $250 million, compared with $80 million in third quarter 2000 and $30 million in fourth quarter 1999. The provision for credit losses was determined based upon management's ongoing assessment of the adequacy of the allowance for credit losses, which considers the composition of and growth in the loan portfolio, the level of non performing loans and charged-off loans, and general and specific economic and business conditions. For full year 2000, net loans charged off were $296.1 million and the provision for credit losses was $440.0 million. "At $162 million, our fourth quarter net charge-offs were in line with the guidance provided in our December 14, 2000, press release," said Philip Flynn, Executive Vice President and Chief Credit Officer. "Year end non performing asset balances of $408 million were also in line with our guidance. These results principally reflect the continued credit deterioration in our portfolio as a result of weakening business conditions in the markets served by some of our customers, as well as the completion of a detailed and comprehensive review to identify and account for credit impairment currently existing in our commercial loan portfolio. "As previously reported," continued Mr. Flynn, "we have sharply scaled back lending in areas outside of our core competencies and have taken other actions to curb credit losses and improve the performance of our loan portfolio going forward. While it will take some additional time to work through the problems in the portfolio, we are confident that credit costs will be lower in 2001." Balance Sheet and Capital Ratios At December 31, 2000, the Company had total assets of $35.2 billion and total deposits of $27.3 billion. Total shareholders' equity was $3.2 billion and the tangible equity ratio was 9.01 percent. Book value per share was $20.17, up 11 percent from the prior year end. The Company's Tier I and total risk based capital ratios at December 31, 2000, were 10.24 percent and 12.07 percent, respectively. These capital ratios are well in excess of the "well-capitalized" thresholds of 6 percent and 10 percent, respectively, designated by bank regulatory authorities. Share Repurchase Program During fourth quarter 2000, a total of 891,600 shares of common stock were purchased at an average price of $21.76 per share. During full year 2000, 5.2 million shares were purchased at an average price of $25.17 per share. Common shares outstanding at December 31, 2000, were 159.2 million, a decrease of 5.0 million shares, or 3.1 percent, from the prior year end. 2001 Outlook For 2001, management currently expects operating earnings to increase more than 25 percent from the $2.54 per diluted common share earned in 2000. This incorporates management's expectation that the provision for credit losses will be $250 million to $300 million for the year, down from $440 million in 2000. The current forecast for 2001 assumes some additional weakening of the economy, particularly in the first half of the year, but satisfactory economic conditions overall. The current forecast assumes no material adverse effect on the Company's 2001 earnings as a result of the current energy crisis in California. Such impact, if any, cannot be quantified at this time. If actual business conditions differ appreciably from current assumptions, management's expectations for provision expense and earnings per share could be affected. For first quarter 2001, management currently expects earnings per diluted common share of approximately $0.60, which assumes a provision for credit losses of approximately $100 million. Community Banking and Investment Services Group - 2001 Outlook The Community Banking and Investment Services Group ("CBISG") offers a broad range of banking products, primarily to individuals and small businesses, delivered through a network of branches and ATMs. Products include commercial loans, mortgages, home equity lines of credit, consumer loans, deposit and cash management services, fiduciary services, private banking, investment services and asset management. During 2000, CBISG generated strong growth in profit contribution, through a combination of non interest income growth and expense reduction. "All market segments in the Community Banking and Investment Services Group contributed to our strong core earnings performance and I have every expectation of continued strong performance in 2001," said Richard Hartnack, Vice Chairman of CBISG. In 2001, CBISG will emphasize growth in the consumer asset portfolio, expanding wealth management services, extending the small business franchise and expanding the branch network. The strategy for growing the consumer asset portfolio will primarily focus on mortgage and home equity products, originated through the branch network, as well as indirectly. The wealth management division is focused on becoming the preferred provider of banking and investment products for affluent individuals in geographic areas already served by the Bank. This will be achieved through a combination of superior service, a broad product suite, an increased number of banking locations convenient to the targeted clientele and improved cross-selling programs. In January 2001, the Company expects to complete the acquisition of Copper Mountain Trust Company, which will enhance the growing custody and 401(kg) administration businesses. Core elements of the initiative to extend the Bank's small business franchise include enhancing the sales force, increasing marketing activities, introducing new insurance and trade finance products, adding new locations, and developing online capabilities to complement physical distribution. Expansion of the distribution network will be achieved through acquisitions and de novo branching. Expansion opportunities exist in both Southern California, where the Company has a particularly strong presence, and Northern California. "Our plans to increase presence and sales effectiveness in our core markets will contribute to strong operating earnings growth for the Bank in 2001," concluded Mr. Hartnack. Commercial Financial Services Group - 2001 Outlook The Commercial Financial Services Group ("CFSG") provides tailored credit and cash management services to large and mid-sized corporations. Products include commercial loans, asset based loans, commercial real estate loans, construction loans, leases, and a comprehensive array of deposit and cash management services. "We are particularly proud of our performance in the wholesale deposit markets in 2000, where a recent study by Ernst & Young shows Union Bank of California favorably ranked within our peer group in cash management revenues and in the top 10 in the industry in several cash management products," said Robert Walker, Vice Chairman of CFSG. CFSG initiatives for 2001 include expanding capital markets activities, increasing domestic trade financing and expanding the item processing business. Loan growth strategies for CFSG include originating, underwriting and syndicating loans in core competency markets, such as the California middle market, commercial real estate, communications, media, energy, equipment leasing and commercial finance. In expanding capital markets activities, CFSG aims to broaden the range of services offered to business customers seeking bundled financial services. Some services that CFSG intends to begin offering in this arena include debt underwriting and private placements. CFSG operates a strong processing business, including services such as check processing, front-end item processing, cash vault services and digital imaging. Opportunities for outpourings these capabilities to correspondent banks, e-banks and credit unions are significant. In the processing business, CFSG intends to build new capabilities, in addition to leveraging existing capabilities. Some new initiatives underway include cash management products with internet delivery, check truncation at point-of-sale, digital certificates and e-bill payment and presentment. "The combination of expanded products and an emphasis on core competencies will contribute to the strong growth in operating earnings expected for the Bank in 2001," concluded Mr. Walker. ----------------------------------------------------------------------------------
Textron Reports EPS Growth of 14% for the Fourth Quarter and 15% for Full-Year 2000 Before Special Charges -------------------------------------------------------------------------------------------- Providence, RI - January 23, 2001 Textron Inc. (NYSE: TXT) today reported fourth-quarter earnings per share from continuing operations before special charges of $1.28, up 14% from $1.12 in the prior year. Income from continuing operations before special charges was $185 million versus $170 million reported in 1999. For the year, earnings per share from continuing operations before special charges rose 15% to $4.65 per share from $4.05 in 1999. Income from continuing operations before special charges was $680 million versus $623 million reported in 1999. The special charges are composed of $366 million in charges related to a previously announced restructuring program and $117 million in write-downs of e-business investments. After the effect of these charges, the company reported a net loss of $218 million for the fourth quarter and net income of $218 million for the full year. Textron Chairman and Chief Executive Officer Lewis B. Campbell said, "During the quarter, we met our earnings objectives, overcoming the negative impact of a rapid decline in automotive production and general weakness in the economy. In addition to solid earnings growth in our Aircraft, Industrial Products and Finance segments, we were able to meet our target through cost reduction and other actions." Earnings during the quarter benefited from gains of $8 million on the sale of non-core assets in the Automotive and Industrial Products segments, and a lower tax rate. "We are pleased that we made progress in our top areas of strategic focus for the future. We improved return on invested capital, our priority metric for creating shareholder value, by 50 basis points. We have moved forward with a major restructuring program to support enterprise excellence. And we continued to invest in and build our leading brands," said Campbell. For the quarter, revenues were up 2% before the impact of foreign exchange and the reclassification of revenues following the adoption of EITF 99-19, for which a substantial portion of the reclassifications are related to the inclusion of used aircraft sales (see footnote (a) in press release tables). Reported revenues were $3.3 billion versus $3.4 billion in 1999. Segment income improved 8% to $369 million from $341 million the prior year. Segment margin was 11.1% versus 10.1% last year. For the year, revenues were up 13% before the impact of foreign exchange and the reclassification of revenues as a result of the adoption of EITF 99-19. Organic sales growth for the year was 4%, before a negative 2% impact from foreign exchange. Reported revenues increased to $13.1 billion, up 10% from $11.9 billion. Segment income improved 17% to $1.4 billion from $1.2 billion, resulting in a segment margin of 10.8%, up 70 basis points from 1999. 2000 Financial Highlights Strong free cash flow of $463 million EPS growth before special charges of 15% - the eleventh consecutive year of earnings improvement Return on invested capital improvement of 50 basis points to 13.1% Operating margin expansion of 70 basis points to 10.8% Revenue growth of 10% Repurchase of 6.6 million of Textron's common shares, including 1.8 million shares in the fourth quarter Maintained a strong balance sheet, ending the year with a debt to capital ratio of 32% |