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May 21, 2001
Headlines-- New
Orleans Conference Report Sysix
and Mister Leasing Form Leasing Services Company
"
End of Easy Money…Flight to Quality." It
was a surprise to receive the "Walter Winchell Press Hat"* at the National
Association of Equipment Leasing Brokers ( NAELB )Lunch Conference at the Hilton Riverside Hotel on Friday
in New Orleans, Louisiana. President
Michael Meacher ( Bankdcorpt Financial Services, Irvine,Ca) made the presentation
with the promise I would wear it at the
lunches and dinners. There were 328 at
the luncheon. The conference was reported
to have around 350 signed up, including wives, funders and service provides; down
from 400 last year.
According
to a funding source who attended the Equipment Leasing Association meeting in
Chicago, Illinois, the attendance there was 686. The funder representation was down by 30 from
the previous year, he stated. It was a
very worthwhile conference. The other
two leasing association conferences had the
same response from those who attended. The
surprising difference at both the NAELB and UAEL was the number of "first
timers." The workshops at the NAELB
conference had 25% first timers. Some
of the first timers, although, were not new in the leasing industry. Bruce Kropschot ( Kropschot Financial Services,
Vero Beach, Fla), a "broker "of
leasing companies, and Roy Yohe ( Yohe and Associates, Stillwater, Ka ), a "broker"
of leasing portfolio's were wearing "first time attendee" ribbons.
While they consider themselves not to be actual "lease brokers," they appeared to feel at home,
knowing most of the funders and many of
the well-established brokers who attended, several in business for over 20 years. Clemmons
and Association coordinated the conference, being hired only 100 days ago. NAELB
President Michael Meacher explained the directors has sifted through 80 associations,
narrowing it down to five that they interviewed. Clemmons
handles 18 other associations of the same size. Buzz Thomas heads the professional management team. He announced the next annual conference will
be in Orlando, Florida, exhibitors at the conferences will be hosted on line free
and exclusively at the NAELB web site, other changes on the web site are to be
made, listserve would be divided into three sections in the near future, and they
hope to find a better way to handle the more than 40 telephones calls they receive
every day. Barry
Marks,esq. ( Berkowitz, Lefovits, Isom,
Birmingham, Il )told of a more active Code of Ethics. "Funders who violate
the code, we will go to bat for you, " he said. " We will also help
funders where brokers are not following the rules, too. We would recommend our members do business
with funding members, where we can be of help.
We will do our best for you with non-members, but we don't have the same
influence as we have with NAELB funding members." There
were many excellent workshops by veterans in the leasing business. Saturday morning Steve Geller ( Leasing Solutions,
Wesley Hills, NY) and Bob Teichman ( Teichman Financial Services, Syracuse, NY
) did a tag team on "The Current Marketpace." They should bring this show on the road, as
it not only had some great humor, bringing laughter many times from the audience,
but a very serious side
that often brought a strong contrasting silence to the room. Geller
had over 11 years with Orix Credit Alliance in charge of buying broker business.
He was at Tilden before that. Teichman
now trains and educates leasing companies, banks, captive vendors; he formerly
ran a leasing company, did sales work, and worked for a bank for a number of years. The
theme of the meeting was set by Teichman who said, "Leasing is going back
to the old days." He talked about a large vacuum that has been created by
the demise or mergers of many leasing companies and entities, with a lot of new
funders on the horizon. "This
is a risk business," he said. " You have to recognize and understand
this. How do you justify to a funder to
understand the risk. This means all that is addresses by the funder: credit, collateral,
terms…and how to help the funder understand the risk. "
The write-up is more important than ever." Rob
Yohe, who was in the audience, said , " Now is the time for face-to-face."
Geller explained funders want to know the broker, see him face to face,
and for the broker to see the lessee face to face, rather than getting a deal
from New York and bringing it to California, as an example. It will be more than
just collecting an application and "throwing it against the wall." "Leasing
companies are very, very busy, " he explained. " The good ones left
have a lot of business and can't process it fast enough. They don't have enough credit people. You need to understand their aversion to risk. "You
need to know your funder, maximize your approval, select the quality of the funding
source, know what they will approve, wat they want to see, make them glad you
called them, with write-ups that cover everything…You need to make yourself
valuable to the funder, valuable to the buyer of the credit. You should treat each deal like it was your
own money. Look at it as if you would
lose the money if the lease goes sour. And more than ever, you need to talk to
your colleagues, attend conferences, and read about where not to go, find out
about frauds, stay out of trouble." Geller
said it was "the end of easy money."
The bubble is burst. It is now
a "flight to quality." There is "…an irrational fear during
this entrenchment; an over-reaction." He
blamed Wall Street to being too eager, too easy with securitizations, venture
capital throwing money into an "idea" rather than a traditional well-planned
and profitable company. Both
predicted there would be new funding sources, such as community banks, industrial
companies such as Tyco and UPS. Geller
believes the economy is turning around and "..with the Fed being active,
the Dow up, unemployment and consumer
confidence being where it is, we should have a good quarter." He
was concerned about high overhead, noting that banks and other funding sources
are as concerned. Dwight
Galloway, Republic Leasing of South Carolina, and attorney Joseph Bonnano held
a workshop, "Practice Safe Leasing."
The basic theme was "how
to avoid hiring an attorney." The
workshop went into overtime as it
was very interactive. Basically many said
to expect more fraud, " the level of deals that are going bad is going to
increase," and buyers looking for the "weakest link" to pay them
off to increase." The
theme of Bob Bell, CLP ( Independent Leasing Associates, Cummings, Ga), "90% Approvals, 99% of
the Time" Workshop was "Know Your Lendor." As the real estate motto, is "Location,
Location, Location," Bell said, " Know Your Lender, " " Know
Your Lender, " " Know Your
Lender." "
All you need is a handful of loyal vendors, " Bell told the group."
Five vendors with two deals a month will make you a very comfortable living." In
his power point presentation, he went over a presentation of targeting vendors, learning
how to do "complete and thorough" write-ups and how not to waste a
lender's time; making yourself "valuable." Guest
speaker at the Saturday Luncheon was the reverent Jeff Wong, esq.,Cooper-White-Cooper,
San Francisco, who not only had everyone rolling in the aisle with his one line
jokes and excellent delivery, but accompanied by Bob Teichman on the piano, he
sang a song about attorneys. This man is a marvel. Not only does he sit
on many boards, have an active practice, but writes ( his Mathew Bender three
book tome was on sale at the conference for $365 ), and many may not know it,
but heis also a bon vivant (Insider's Guide to the Best Restaurants in the San
Francisco Bay Area: http://www.americanleasing.com/recommendations/site_restau/east_bay.htm Leo
Timmerman ( Timmerman Leasing, Minneapolis,
MN) won two drawings, fair and square, a NAELB T-shirt and trip to Europe, and
his wife Dawn, won the free registration fee for the next NAELB Conference.
You had to be in attendance to win at the lunch, and there were several
other tickets picked in between the ones that the Timmerman's one, eleven on the
last one for Dawn. It was "fair and square." In
something unique, there was an election from the floor for a seat available on
the NAELB board of directors. After a closed ballot, John Winchester was
re-elected, beating out both Leo Timmerman and Bob Baker., which was
quite a surprise to many members, who told me they had voted for either
Timmerman or Baker. That's the way NAELB
elects with a private ballot. Leo
Timmerman had special workshop "Brokers with 5 to 15 Employees." They
not only met for two hours, but planned
to get together during the
year and spend more time, letting their hair down, sharing many "secrets"
and solutions. The
"Changing of Funder Landscape" workshop had four top people: Charles
Hansen ( Commercial Money Center, Escondido, Ca) , " There is not gloom and
doom. The securitization created more bidding. lower rates, no margins, combining
with the defaults and changing economy, the margins even got smaller, and thus
fewer active in buying leases." The
ex-coach put it in five steps: 1.
Communication 2.
Trust 3.
Collective responsibility 4.
Care about each other 5.
Makes Success. Gary
Souverign ( Pawnee Leasing, Fort Collins, Co) " Poor credit, poor pricing,
outstripping back office capabilities, inexperienced lease people with the volume
focus not on the bottom line, but putting on more deals, led to today's market." June
Sciotto," The funders were not helping us, showing us, but strictly interested
in volume." She talked about the
lack of training and how things had
changed since she was in business. Chuck
Brazier ( Centerpoint Financial Services, Denver, Co), talked about the cost of
doing business as a funder, from cost of processing, approving, then the ratio
of approvals to signed leases and how that had effected the leasing industry. "The
pool of credit is shifting, " he said. " getting information is very
important to
the people making the credit decison. Everyone
is going to want more information
to make a decision." Several
from the audience spoke about how " super brokers" had "ruined" the
industry. Perhaps one of the first programs was Pegasus at Colonial Pacific
where brokers collected smaller brokers who did not have the volume or
knowledge to qualify and the "superbroker" was the coordinator between the
funder and the lessee. It was noted that
of the "exhibitors" present, less than
10% were "principals." Odds
and Ends: Cindy
Spurdle is no longer working for UAEL, but for the Eastern Association of Equipment
Leasing, plus the CLP Education Foundatin….Ray Williams, past UAEL
Executive Director, is now employed as director of Emergency Medical Association
out of Reno, Nevada….Randy Anderson, formerly of System 1, has completed
Wildwood Financial Training and is about to enter the broker business, as
soon as he sells his house in Edmonds, Washingon, and moves back to Modesto,
California---Jim Buckles, formerly of System 1, has started a software support
company, including training and custom programing ( Leasing News will
have a feature on this soon )…Tom Williams of LeasingExchange was the
only "internet leasing" company that I saw active at the conference,
quite a
contrast from when Allan Collier of Total Funding was in Nashville, Tennessee, last
year…The next NAELB Confernce will be
in Orlando, Florida, the beginning of
April ( we hope to have more about this )….In addition to Jeff Wong, Esq. Tome
on leasing, Barry S. Marks, Esq. book was quite a big hit, as was Bob
Baker's Six Volume Video Tape made especially for NAELB ( great price for
this excellent education tool.) Leasing
News---- We
had our first board meeting and there will be changes in our daily format,
plus new advisors were recommended to the board. More about soon. My laptop crashed the first day and I have
been without e-mail since since
I left Santa Clara, California. ). Without
my laptop, it has been difficult to communicate, let along write this
report. I have not had the resources I
have normally had. I
hope to be able to correspond by Wednesday. Kit
Menkin ############################################ Sysix
and Mister Leasing Form Leasing Services Company Under terms of the partnership, which was formalized April 4, 2001, Sysix Technologies and Mister Leasing each will maintain 50 percent ownership in Sysix Financial, LLC. The new company will be guided by it's own Board of Directors and will form a joint Credit Committee to review leasing deals and set pricing for financial alternatives on all Sysix Technologies transactions. Sysix Financial plans to originate $10 million in new leases for the year 2001. Sysix Financial leverages the "total solutions" model provided by Sysix Technologies, including front-end sales, marketing and end-of-term remarketing. In addition, it maintains the comprehensive suite of leasing services and risk management expertise offered by Mister Leasing. "We are extremely excited about the creation of Sysix Financial. This new corporation meets a critical need in soft economic times. Companies have a close eye on ROI from technology investments, the quest to balance technology solutions with budgetary constraints," said John Sheaffer, president and CEO of Sysix Technologies. "More than ever before, given the advances of technology, mid-market organizations have been 'locked-out' by traditional leasing organizations. This meant they were unable to advance as quickly as they should due to inflexible financing arrangements that were often cost-prohibitive. We recognize that the mid-market is looking to move quickly with solutions that are low-risk and provide a high yield on their returns." Sheaffer continued, "The bottom line is that leasing often makes good business sense for our customers. It minimizes upfront acquisition costs, conserves working capital, produces tax savings, helps overcome budget limitations and offers technology obsolescence protection. With Sysix Financial, our customers will have a single source for the end-to-end solution: from enterprise applications to system selection, implementation and training - supported by attractive financial options." According to Harvey Lambert, president of Mister Leasing, "Companies are under constant pressure to navigate a wide range of technology choices in addition to considering the financial implications accompanying their decisions. More than simply knowing their options, effective solutions require funding built around individual budget constraints. Sysix Financial combines the expertise of both of our companies into a single corporate entity with the flexibility, knowledge and creativity to offer winning financial solutions which deliver technology ROI quickly." The formation of Sysix Financial was initiated by Friedman, Goldberg, Mintz & Kallergis (FGMK), a Bannockburn-IL based provider of accounting and business consulting services. According to FGMK President Steve Kolber, "We identified a synergy between Sysix Technologies and Mister Leasing that would create a strong, customer-centric business poised for success in today's marketplace." Michael Donato, FGMK's partner in-charge of Sysix adds, "The creation of Sysix Financial is a plus for both companies, and ultimately the end customers as well who are able to achieve their technology/business goals while addressing critical financial issues." Mister Leasing, formed in 1969, offers open and closed-end leasing options for autos and computers and equipment. The Highland-Park, IL-based company, which was acquired by MLC Holdings, in 2000, has more than 1500 small to mid-range customers nationwide with a portfolio of roughly $60 million in assets currently under lease. Mister Leasing provides financial options to its clients via a strategic banking arrangement with LaSalle Bank. Sysix Technologies announced in January 2001, a management-led buyout and corporate restructuring of the $30 million technology company which is focused on providing technology solutions for eBusiness initiatives, along with Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Business Intelligence (BI) and Customer Relationship Management (CRM). The 13-year old technology company has a strong heritage of roviding infrastructure solutions to traditional brick-and-mortar organizations versus a focus on dot.com's. Over the past 18 months, the company successfully introduced a new business structure based on bundled solutions and a leveraged consulting model. Sysix
delivers its leveraged consulting solutions via the Solutions Consortium, a group
of four companies acting together as one "virtual" organization. The
Solutions Consortium allows the individual companies to pool their respective
technology skill sets, methodologies and market experience to bring customers
a single-point solution to lower risk and accelerate implementation time. ######################################## KeyCorp
Plans to Reduce Indirect Lending, Eliminate Credit-Only Deals KeyCorp, which has been undergoing a lengthy restructuring program in an effort to shore up leaking profits, plans to exit the auto leasing business and reduce indirect lending, resulting in a hefty $402 million in various charges for the second quarter. The charges will result in after-tax losses of between 34 cents and 38 cents per share, chief executive officer Henry L. Meyer 3d said. For the year, the company expects earnings between $1.43 and $1.53 per share. Speaking at the company's annual shareholder meeting, Meyer said he is taking several measures to improve the Cleveland banking company's financial performance. Meyer's plan includes exiting the auto leasing business, which has proven unprofitable for a number of banks, and slashing KeyCorp's total auto loan portfolio from $7 billion to $3 billion. The total after-tax charge includes some $27 million stemming from the cost of exiting the leasing business, $189 million in added loan loss reserves, and $150 million related to losses stemming from its AutoFinance Group, acquired in 1995. "I will tell you frankly, I was disappointed with our first-quarter results," Meyer told shareholders. By taking the charges, the company will be streamlined and more likely become profitable, he said. KeyCorp is not the only banking company having car trouble. In March, Charlotte, NC-based Bank of America announced plans to scale back its participation in the auto leasing business. KeyCorp's decision to exit the auto leasing business was a move in the making, according to Matt Snowling, an analyst at Friedman Billings Ramsey. Bank One and Wells Fargo have also taken charges on auto leasing, and First Union Corp. sold its unit. "They are somewhat behind the curve," he said of KeyCorp. "They are the last to come out and say this isn't making money." The charges are the latest pitfall for a company that has been in an almost constant state of restructuring for the last couple of years. "Earnings quality was somewhat suspect in the past," Snowling said. "It seems like they are cleaning house this quarter. They are trying to reposition themselves for better earnings" in 2002. The company also plans to reduce indirect lending and eliminate credit-only transactions. KeyCorp is establishing a $2.7 billion commercial run-off portfolio to help eliminate the indirect lending. Another $300 million will be added to the loan-loss reserve to help in resolving the credit transactions. The company does not plan on replenishing the $300 million reserve. Meyer said one priority is "to reemphasize our commitment to relationship-based activities, while avoiding high-risk, low-return businesses. We believe that focusing on service-centered relationships is the most profitable approach." Key also will incur a one-time $23 million charge because of an accounting change on retained interest in securitized assets. The company is also taking a $13 million miscellaneous charge. On Thursday (5/17/01), a generally uneventful day for bank stocks overall, the company's stock actually rose a touch, gaining 0.4% to close at $24.40. Meyer, who has just completed his first quarter as chief executive, said the company plans to improve revenue by offering third-party products to clients going forward. The company has been working to increase profits for the last two years. In late 1999, Key sold its $1.3 billion credit card portfolio to Associates First Capital Corp. The deal included 600,000 Visa and MasterCard accounts, resulting in a net gain of approximately $330 million. Last fall, the company announced plans to cut its work force by 10% or 2,300, after already slashing its work force by nearly 1,975. Last December KeyCorp consolidated its retail banking operation and specialty consumer business segments into a single unit to boost efficiency. Under the new organization, retail banking and home equity finance were combined with other consumer finance units, including Champion Mortgage. That consolidation was part of a plan to cut the number of its business units by nearly half, from 22 to 12. By bringing the units into more centralized divisions, the company said it would be easier to study each business line to find ways to maximize revenue. "Our decision last year to recognize 12, rather than 22, lines of businesses is helping enormously by allowing us to make decisions faster and more easily hold people accountable for achieving expected results," Meyer said. By cross-selling products, KeyCorp believes it can increase revenue growth substantially, he said. ######################################### ·
Walter
Winchell Press Hat---he was a very well known syndicated columnist, and the picture
above his column had him wearing a dark hat with brim, with the card press in
the band. In the old days, a newsman would
put his press credential in his hat band to access a news scene or event. |
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