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| October 12, 2000 Orix
"long-term Outlook has been revised from Stable to Negative" by Fitch Up-dates: "Unicapital says that they will be announcing information next week sometime. They are still in the process of negotiateing with the Bank of America." "SierraCities negotiations may be mirrors" ( please don't ask me what that means, but a high source in the know, gave me that comment as if I understood the meaning---editor) Broker's Lament---Redux I've been reading Leasing News.Org and I like it because it gives a public forum for everyone to see what's going on in the industry. Thats why I'm sure it is so popular. I get a couple of them e-mailed to me. I'm the president of a 17 year old leasing company. We hold our own portfolio. But the reason I'm calling is I liked the most recent comments made by a broker because there is a lot of truth to what's going on in the industry But most people don't want to discuss it in a public forum. I support and recommend that you have more comments that can be made anonymously. As long as you screen them and your comfortable and you mention the person wanted to remain anonymous. But obviously you spoke to the person. I think that if there were a lot more input, I certainly would give it to you, because we all know its a small industry, and what comes around goes around. No Name Left on This Message
I just read the 'anonymous' email and I UNDERSTAND, sadly, too well. This person
has been privy to "both sides of the desk". He, or she, knows, as I do, that it
is often a tough road to travel when one is doing what one interprets to be the
'right thing', and what one knows in ones integrity heart to be the right thing,
when it comes to earning money. Shame on that no doubt financially comfortable
lawyer who said that unkind and most unfair remark. Sure there are lots of people
that 'made a fortune', but in my humble opinion suggest may have made their fortune
not always doing the right thing, perhaps then left the industry, filed bk, changed
the name of their company, and/or aligned themselves over cocktails at a leasing
industry convention or gala, with someone else who had an evil way of thinking,
but more access to the money funds. Over the years, since 1978 when I first entered
the then little known industry called LEASING, I have met and done business with
people that I would not accept a drink of water from on my deathbed, but because
of the intricacies and politics of the funding world, was forced to do business
with - either that or lose my transaction, my customer and my vendor. Sincerely,
LJR Equipment Leasing Service Mike Meacher, NAELB President Kit, In response to your segment titled 'Broker's Lament', all brokers need to understand there are two factors that will keep them in this business long-term and improve their profitability. These are education and ethics. The author of the lament recognizes this. Most long-term, gray-haired brokers (like this author) will agree. The National Association of Equipment Leasing Brokers emphasizes these two issues as our primary focus. Our marketing slogan this year is, "This is no time to go it alone". NAELB has implemented a code of ethics with teeth. We assist in mediating the disputes that arise from our member funders and member brokers. The NAELB provides educational events throughout the year to help our member brokers and introduce them to funders who have agreed to abide by our mutual Code of Ethics. In fact, we are having one such event next week on October 20 at the Orange County Hilton in Irvine. If your readers would like to know more they can log on to www.naelb.org and select "guest" from the title page, click "upcoming events" and read all about it. The NAELB, and other leasing organizations, are the right approach to self-regulation of this industry. If we don't, the alternative of greater government regulation looms large. We would extend an invitation to the author of Broker's Lament and other professionals in this industry to get involved in an association like NAELB. This is no time to go it alone. Mike
Meacher Bob Rodi, UAEL President Dear Kit, I would like to weigh in on the "Broker's Lament" comments. I hope this isn't too long. While I am no longer a pure broker LeaseNOW still does a fair amount of "one off" transactions, primarily based on the size of the transaction. While I have a fairly significant warehouse facility it has not grown as rapidly as our volume has grown so LeaseNOW is a true hybrid. I believe that many companies our size have gone, or are considering going, this route.
Let me say that I am in complete agreement with the comments made in "Brokers
Lament" from the standpoint that "funding sources" will pretty much react to changing
market conditions in the manner stated. Over the past 20 or so years I have seen
several of these cycles. How well I remember the late 80's and early 90's that
are referred to in the "Lament". A couple of years ago I participated on a panel (joint UAEL/EAEL) at the Las Vegas Spring Conference. The members of the panel were asked to give their predictions about the direction that the industry would take over the next five years. I commented that this would be a difficult time for brokers/third party companies due to the fact that conditions were rapidly changing for the funding sources. I said that we would see eroding margins, new competitors attracted by the traditionally higher yields in leasing, and an acceleration of the consolidation that began in the late 80's. The funding sources that dealt with 3rd parties would react adversely to the market changes beginning with limiting commissions, tightening credit criteria, introducing "stealth" fee income programs, and eventually "cutting off" brokers. The conventional wisdom would hold that this occurred because there was no loyalty in the 3rd party channel and the "cost" of doing 3rd party business was too high. The funding sources would reason that the nature of the broker/funder relationship (or lack thereof) was simply an inefficient business model that could produce volume but not profits. In short they would blame brokers for problems that brokers, while somewhat complicit, couldn't have possibly caused. Brokers just make good "whipping boys". The funding sources failed to realize that they created this "monster" by instituting bonus programs that put too much emphasis on origination efforts and little or no emphasis on portfolio quality. Funding sources further encouraged this "bad behavior" by agreeing to pay commission levels that were unsustainable and that caused resentment for the brokers earning them, especially when a deal went "bad" and the 25% commission on a $50K transaction was totally unrecoverable. In addition the funding sources came up with a great solution to the problems they were having attaining efficiencies in their operations. They created the "SuperBroker", which, I believe, may go down as one of the worst ideas in leasing history. When all other industries were eliminating layers from their distribution channels, we in the leasing industry thought it would be prudent to add a few layers. Fast forward to our current market. What brokers are now feeling is the shift in attitude by funding source management away from a "volume mentality" to an "operational mentality". Many of the larger funding sources are driven by ROE (return on equity) pricing models. They have to deal with "corporate allocations" from their parent companies which is basically a charge that some accountant dreams up to compensate the parent for the "use of HQ resources". Most institutional lenders and funding sources in this business are no more efficient than they were five years ago. The biggest failure by members of this industry is the fact that they fail to realize who their competitors really are. They still think their competitors are members of the leasing industry when, in fact, they are competing against credit cards, banks, brokerage firms, and insurance companies, all of whom are selling the identical small ticket product we sell. It's the equivalent of owning a restaurant and reasoning that McDonald's or Burger King aren't your competitors. This is predatory competition and it is eating away at our market share and the people that feel this first are the 3rd parties. Brokers are not totally innocent in this. They have been slow to accept the fact that the days of the 20% commission are gone. Yes there are funding sources who publicly say they will pay it. Privately, however they will admit that they are losing transactions left and right because the broker is holding out for too much commission. This makes the funded to approved ratios look bad--which makes the ROE on the broker segment of the portfolio look bad. The conclusion that the funding source comes to is that broker business just isn't profitable. As a result brokers have fewer programs to sell and therefore fewer "closing opportunities". In order to keep their incomes constant they have to make more money on fewer deals and getting every deal, regardless of credit quality, approved becomes more important. When market conditions dictate that you should be doing higher volume at a lower price, most brokers are doing less volume and trying to get a higher price. It's a true "Catch 22". What is the answer to this. When the Internet cards are all played and the venture capitalists realize that the auction and deal matching sites aren't going to give them the ROI they require, the "money" will begin to look for a more comfortable home. There will be companies that emerge, possibly from other areas of the financial services industry, who understand that the 3rd party community of the leasing industry is a highly trained "de facto" sales force that is better than any sales force that could be trained and fielded by a single company. I think there will be an effort to leverage this de facto force to manage customer relationships using a method I call "HT3" (high tech, high touch, high trust). While they will still originate transactions their primary purpose will be fulfillment and customer service. I believe that the model for this would be similar to State Farm Insurance. Former brokers, in an agency relationship, will function as "human browsers", empowered by technology to deliver instant answers and decisions. The "value added" will be HT3. The customer will absolutely respond to this. If anyone doubts this please research what happens when Charles Schwab, a web based brokerage firm, opens a local office staffed by human beings. In the final analysis I would tell "Broker's Lament" to understand that he may not feel as important as he once was to his traditional sources but please remember that his traditional sources are reacting that way because their place in the market has also been diminished. I would also encourage him to work hard at elevating the relationship with 2 or 3 sources that are true "portfolio" lenders. The relationship between broker and funder has always been adversarial and ambivalent. Some of this is good but too much of it creates bad feelings that foster the current broker/funder climate. Funding sources are wrong in accusing brokers of greed and avarice. They created that situation and instead of working with brokers to correct it they want to justify their on mistakes by placing blame on a group of people who did exactly what they were asked to do. Those of us in the leasing community should be circling the wagons to defend our collective turf from invaders. By the way, there really shouldn't be any arrows or gunshots coming from inside the circle. There is still a lot of opportunity in this industry and brokers are still a viable channel of distribution. They have to be managed properly and there has to be mutual trust. Funding sources should be making an effort to be open about how they make money. Brokers should be aware of what they can impact most to make sure the funding source makes money on the broker business. It is a symbiotic relationship. At the UAEL conferences we have done sessions on this called "Shared Risk/Shared Reward". That's what true partners do, isn't it?
Bob Rodi
ORIX Credit Alliance Inc.'s Ratings "affirmed"; Outlook Revised To Negative NEW YORK--(BUSINESS WIRE)--Oct. 12, 2000--ORIX Credit Alliance,Inc.'s (Credit Alliance) long- and short-term debt ratings are affirmed at 'BBB+' and 'F2', respectively, by Fitch. The long-term Outlook has been revised from Stable to Negative. Credit Alliance's ratings reflect the company's good risk-adjusted capitalization, appropriate funding strategy, and long operating history with consistent performance. Additionally, the ratings consider the covenant protection provided by the company's bank facilities and private placement loan agreements. Rating concerns center on Credit Alliance's weakening asset quality and profitability measures, its size relative to key competitors, the heightened competitive environment in the commercial finance industry, and exposure to economically cyclical industries. Approximately $2.1 billion of securities are affected by this rating action. Credit Alliance announced today that it has changed its name to ORIX Financial Services, Inc. (OFS). OFS will serve as holding company to its three business groups: Equipment Finance, Business Credit, and the newly formed Structured Finance group. Historical underpinnings of the Credit Alliance ratings have been the company's conservative management, steady operating performance, and well-defined business model. However, in recent years, these strengths have been challenged by the increasingly competitive landscape within the commercial finance industry, resulting in weakening asset quality and reduced profitability. In an effort to regain operating momentum and improve its competitive position within the industry, Credit Alliance has made several significant changes over the past 18 months. During this period, the company consolidated its distribution network, re-assessed its commitment to several industries and businesses, and appointed a new chief executive officer. Credit Alliance will focus on diversifying the business as well as improving the company's market position in its core market over the near-term. As part of this strategy, the company will strive to diversify its receivable base by investing in additional equipment types/industries; develop a structured finance business that will focus on larger transactions; establish a syndication capability; extend its asset management expertise; and emphasize higher margin direct originations. Nevertheless, continued weakness in asset quality and profitability measures coupled with execution risk related to the company's aforementioned near-term strategic objectives has caused Credit Alliance's Rating Outlook to be revised from Stable to Negative. In recent years, Credit Alliance's asset quality measures have steadily weakened due to recessions in several of the cyclical industries it finances as well as a problem small-ticket leasing portfolio purchased from Bankvest Capital Corp. Credit quality was also negatively impacted by the company's 1999 branch consolidation, which required significant management attention. Annualized net charge offs remain manageable and represented 0.59% of average owned net receivables for the quarter ended June 30, 2000. However, non-performing receivables, defined as non-accruing receivables plus repossessed assets, as a percentage of owned net receivables stood at 4.19% at June 30, 2000, its highest level in five years. While management is focused on reducing non-performing assets, and has intensified its efforts with respect to managing repossessed inventory, Fitch believes it will take some time for problem receivables to work their way through the portfolio and likely result in somewhat higher charge offs over the near-term. Additionally, given Credit Alliance's middle-market customer orientation and historical experience, Fitch believes the company's asset quality measures would likely decline further under a more stressful economic environment. From an operating perspective, Credit Alliance continues to report modest results, particularly relative to many of its competitors. Net income totaled $34.1 million for the fiscal year ended March 31, 2000, an 11.9% decline compared to fiscal 1999's results. Profitability, measured as return on average managed assets, declined for the fourth consecutive year and totaled 1.06% in fiscal 2000. Driving the company's operating results were continued margin compression driven by heightened competitive pressures and rising funding costs; increased credit costs; and additional restructuring charges associated with the fiscal 1999 branch network consolidation. While the company maintains a solid long-term operating record, Fitch believes Credit Alliance will be challenged to reverse profitability trends in a meaningful manner over the near-term as heightened industry competition continues to constrict both receivable growth and margins in its core business. Credit Alliance remains well capitalized on a risk-adjusted basis. Nevertheless, in recent years, the company's receivable growth has outpaced internal capital formation, causing leverage to steadily rise. At June 30, 2000, leverage, defined as total debt divided by equity, stood at approximately 5.94 times (x), a level Fitch views as acceptable for the assigned rating category. Established in 1963 and headquartered in Secaucus, New Jersey, Credit Alliance is a commercial finance company focused on providing equipment financing and leasing, asset-based lending, structured financing and insurance for middle market companies in the U.S. and Canada. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide. CONTACT:
Fitch, New York or Philip
S. Walker KEYWORD: NEW YORK CyberLoan R/E Loan Application Volume Tops $1 Billion in September DENVER--(BUSINESS WIRE)--Oct. 12, 2000--CyberLoan.com, a Denver-based developer of business-to-business e-finance enabling technologies and online lending exchanges, today announced that commercial real estate loan applications submitted electronically through CyberLoan R/E totaled a record $1.4 billion in September. CyberLoan R/E is the company's online lending exchange for the commercial real estate industry. Lenders that receive loans through CyberLoan R/E eliminate their marketing costs while reducing underwriting and processing costs by as much as 70 percent. This is the second time in the history of CyberLoan R/E, which debuted in February 1999, that monthly loan application volume exceeded $1 billion. No other online commercial real estate lending exchange has topped the $1 billion mark in a single month. CyberLoan R/E is an online multi-lender loan application system currently used by many of the United States' 400 largest lending institutions. Borrowers seeking to acquire or build commercial properties access the system and complete a detailed loan application, which is then matched with the underwriting criteria of lenders nationwide and electronically transmitted to those most likely to finance the property. While many companies have developed similar systems for the residential mortgage market, CyberLoan R/E focuses exclusively on financing for commercial properties. CyberLoan R/E was the first of its kind and is the only system to electronically transmit loan applications directly to lenders, routing those applications through the lending institution's internal maze to the right department, office and individual loan officer. CyberLoan R/E is also the only system to incorporate proprietary knowledge bases and expert advice technologies that guide the borrower through the completion of a loan application, ensure the accuracy of information in that application, and raise the qualifications of the borrower. The company also reports strong sales of CyberLoan Virtual Lending System (VLS), the sister product of CyberLoan R/E. A total of 25 VLS systems have been sold and are in production, up from 15 in September. VLS lets individual lending institutions or mortgage brokers adapt technology from CyberLoan R/E for use on their own web sites. It is available in two versions: VLS for Brokers, which gives brokers customized, instant access through their own web site to CyberLoan.com's database of 400 lenders; and VLS for Lenders, which allows lending institutions to quickly establish a customized online lending presence, without incurring the tremendous development and maintenance costs of such a web-enabled system. VLS adapts CyberLoan R/E technology to run on the licensee's web site, incorporating graphics, interface elements, and some internal underwriting and analysis systems to create a customized, proprietary online loan application, submission and processing system. VLS also contains a built-in client management and Internet marketing system that lenders and brokers can use for advanced database marketing to borrowers. For example, VLS users can electronically distribute announcements and updates to borrowers and site visitors in a highly graphical HTML format. CyberLoan.com (formerly DataMerge, Inc.) develops web-based, fully automated loan application, processing, underwriting, and closing systems for a number of lending sub markets, including commercial real estate, manufactured housing, multi-family housing, and small-ticket equipment leasing. Additional information about CyberLoan.com is available at the company's web site, www.cyberloan.com, or by calling (303) 757-6298. CONTACT: Masi PR, Denver Peter Masi, 303/399-6031 masipr@earthlink.net KEYWORD: COLORADO Lakeland Bancorp Reports a 25% Increase in Earnings Per Share and Increases Dividend OAK RIDGE, N.J., Oct. 12 /PRNewswire/ -- Lakeland Bancorp (Nasdaq: LBAI) reported third quarter 2000 Net Income of $2.5 million or $0.20 per share on a diluted basis compared with operating earnings of $2.0 million or $0.16 per share for the same period in 1999. This represents a 25% increase in diluted earnings per share. Including merger related expenses, third quarter 1999 Net Income was $375 thousand or $0.03 per diluted share. Return on Average Assets was 1.17% and Return on Average Equity was 13.47% for the third quarter 2000. Lakeland Bancorp also announced an increase in its regular quarterly cash dividend from $0.075 to $0.08 per common share and a stock dividend of 5%. Both the cash dividend and the stock dividend will be payable on November 15, 2000 to holders of record as of the close of business on October 31, 2000. The cash dividend will be paid before the stock dividend. Therefore, no cash dividend will accompany the new shares arising from the stock dividend. "We are quite pleased to report another quarter of record earnings," said Roger Bosma, President and CEO of Lakeland Bancorp. "These results have enabled us to reward our shareholders with today's 6.7% cash dividend increase along with a 5% stock dividend." Net interest income for the third quarter of 2000 was $9.1 million compared to $8.8 million for the third quarter of 1999. The net interest margin was 4.71% and 4.67% for the third quarter of 2000 and 1999, respectively. Despite rising funding costs due to the higher interest rate environment, the net interest margin increased as a result of loan growth and improved returns on the investment portfolio. Non-interest income increased 55% to $2.3 million reflecting higher deposit related fees and the impact of the leasing division which was acquired in second quarter 2000. Noninterest expenses for the third quarter of 2000 were $7.2 million or 8.8% higher than the $6.6 million in the third quarter of 1999 reflecting the additional costs of the leasing division including commissions. For the nine months ended September 30, 2000, Net Income was $7.4 million or $0.58 per share on a diluted basis compared with operating earnings of $6.2 million or $0.49 per diluted share for the same period in 1999. This represents an 18% increase in diluted earnings per share. Including merger related expenses, nine month 1999 Net Income was $4.5 million or $0.35 per diluted share. Return on Average Assets was 1.16% and Return on Average Equity was 13.32% for the first nine months of 2000. At September 30, 2000, non-performing assets totaled $5.4 million (0.6% of total assets) compared to $6.0 million at December 31, 1999. The Allowance for Possible Loan Losses totaled $8.6 million at quarter-end and represented 177% of non-performing loans and 1.7% of total loans. Lakeland Bancorp's total assets at September 30, 2000 were $874.3 million compared to $830.2 million at year-end 1999. Total loans at September quarter-end were $506.3 million, an increase of $29.8 million from December 31, 1999. At September 30, 2000, total deposits were $776.3 million, stockholders' equity was $76.2 million and book value per common share was $6.06. All regulatory capital ratios exceed those necessary to be considered a well-capitalized institution. Lakeland Bancorp is the bank holding company for Lakeland Bank and The National Bank of Sussex County having 28 banking offices in northern New Jersey. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "believes," "expects," and similar words or variations. Such statements are not historical facts and involve certain risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that may cause a difference include, but are not limited to, changes in interest rates, economic conditions, deposit and loan growth, loan loss provisions, customer retention, or failure to realize expected cost savings or revenue enhancements from acquisitions. Lakeland Bancorp assumes no obligation for updating any such forward-looking statements at any time.
49 Leasing Companies Major Changes American
Business Leasing ( gone ) any corrections, additions, comments will be appreciated. We are presently working on dividing the list into last twelve months and prior. To clear up any misunderstand, we have quoted Bruce Kropschot in the past about the purpose of the list, but it appears some readers thought it was his list. It is not. It was started by Sierra Cities in an internal memo to salesmen to go after the vendors and accounts of companies no longer around. It has been up-dated by your editor and readers over the last six months--editor
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