newsline A Publication of the National Equipment Finance Association

JANUARY/FEBRUARY 2013 Vol. 5, No. 1

National Equipment Finance Association

leasing services

inside this issue: Innovation: Sustaining Success Averting the Fiscal Cliff Nostradamus on Finance The Art & Science of Asset Management

contents

JANUARY/FEBRUARY 2013 • Vol. 5, No. 1

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Innovation: Sustaining Success By Michael J. Fleming

Averting the fiscal cliff 11 By Nancy Geary nostradamus on finance 16 By David Taylor the art and science of asset management 18 By Lynne Wicker

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DEPARTMENTS BROKER line 10 originator/funder relationships

By Scott A. Wheeler, CLP

LEGAL line 14 The Commercial Reasonableness Requirement for the Sale of Collateral

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By Frank Peretore, Esq. and Scott D. Chait, Esq.

20 NEFA TIDBITS MEMBER line 23 Lovern Augustine, Boston Financial & Equity Corp

newsline NEFA Headquarters P.O. Box 69 Northbrook, IL 60065-0069 847-380-5050 main 847-380-5055 fax www.NEFAssociation.org [email protected]

Executive Director Gerry Egan 847-380-5052 [email protected] Senior Association Coordinator Kim King 847-380-5053 [email protected]

Newsline Editor Lisa Rafter [email protected] Advertising Sales Lisa Rafter 215-765-2646 www.rw-assoc.com [email protected]

Design & Production R&W Publishing Associates 315 Poplar Ave, Suite P564 Devon, PA 19333 215-765-2646 www.rw-assoc.com [email protected]

NEFA Newsline ©2013 is published by the National Equipment Finance Association. All rights reserved. All opinions expressed in the articles, analysis, interpretations, etc. within this publication are solely those of the individual. For editorial information, please contact Lisa Rafter at 215-765-2646.

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Letter

From NEFA’s President National Equipment Finance Association

OMG—It’s 2013 already! Are you ready?

NEFA 2013 Board of Directors

On behalf of the, Executive Committee, Board of Directors and Executive Director and staff, we wish all of you a very happy and prosperous 2013!

Executive Committee

I also want to thank the 2012 Board and Executive Committee for their fine work as well as our Executive Director Gerry Egan and his staff for keeping things running smoothly. 2012 saw an influx of 32 new member companies and a positive industry outlook at our very successfully conferences, held In San Diego and Washington DC. We also honored a very good friend and colleague in Chris Walker by establishing a special education fund in his honor.

President John Rosenlund Portfolio Financial Servicing Company Vice President Kyle Gilliam Arvest Equipment Finance Treasurer John Donohue Direct Capital Corporation Secretary Tara Aasand Great American Insurance Immediate Past-President Hugh Swandel The Alta Group

Board of directors Mike Coon TAB Bank William Ford Ford Financial Services, Inc. Brad Harmon First Star Capital Terey Jennings Financial Pacific Leasing, LLC Jesse Johnson LeaseTeam, Inc. Jim Merrilees, CLP Great American Insurance Group David Normandin Normandin Consulting Bruce Smith Diversified Capital Credit Corporation Gary Souverein Pawnee Leasing Corporation Diane Williams Bankers Leasing Company

John G. Rosenlund, CLP Director Risk Management Portfolio Financial Servicing Company

Looking ahead to 2013, we have two excellent conference venues. Our Spring Summit will be in Albuquerque, which is a great location. Great sessions and activities are being planned and registration is already on-line so mark the dates—March 14 -16! The Fall Funding Symposium will be held in Nashville, TN, October 10-12, 2013. In addition to great sessions, networking and sharing of ideas, the conferences themes in 2013 will focus on ways to create value in your company, identify and secure new business and profitably operate it. There is no doubt 2012 saw a rebound in most funding sectors. How much of a rebound depends on your specific niche as guarded optimism by many small and medium businesses curtailed or postponed needed equipment acquisitions waiting for signs of “economic expansion.” The political environment also curtailed expansion as election uncertainty and the unknown status of the tax legislation fueled speculation of a recession “relapse.” 2012 was expected to be a year of increased expansion and optimism and though for some sectors it was, for many it was not. Many are speculating that 2013 will be that year and with political stability and low interest rates, the possibility looks favorable. Some are forecasting 2013 to react like 3rd & 4th Quarter 2012. The question is: Are you ready for either scenario and have you established your goals and strategies? Those that have will be in a position to make the most of the upcoming opportunities. Over the last 4 years, many companies have looked at different methods of increasing efficiency while reducing overhead and focusing on core competencies. Rather than do extensive hiring and training, some are examining/implemented outsourcing of certain/ all operational functions. One segment of the NEFA membership are the Service Providers who offer a wide variety of solutions to enhance your business and allow you to focus on the core competencies of marketing and customer service. In fact all of our service providers are tops in their field and can offer solutions and guidance in most any situation. In my next Newsline message in March, I will discuss the upcoming Spring Summit and what the Board is working on in 2013 to enhance your membership and make it more valuable. If you have any comments, questions or suggestions, please feel free to contact myself or any Board member. We are always looking for volunteers for the committees to help plan the conferences, develop and enhance education modules and organize regional events! We look forward to sharing a year of resurgence and growth with you in 2013.

John G. Rosenlund, CLP Director—Risk Management Portfolio Financial Servicing Company

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Letter

From NEFA’S Executive Director As I sit here on New Year’s Eve, in our RV parked behind my motherin-law’s home in rural South Carolina, linked to my PC at home via a WiFi connection to the internet, I’m once again blown away by the many advantages that technology has brought to the day-to-day conduct of business.

Gerry Egan Executive Director

I’m old enough to remember being on the road making sales calls when my only link to my office —or to my next customer— was a road side pay-phone! Now I manage our association, with members all around North America, which does its banking and receives its mail in suburban Chicago, from my home in Raleigh, NC, (or wherever I happen to be on the road) and I’m ably assisted by Kim King, working from her home in California! It’s wonderful, powerful and convenient but it all comes with risks, too.

We all benefit from technology and should strive to leverage it in every way we can. NEFA’s currently looking at ways we can make better use of it in our mission of serving our members. But whatever our individual missions are, it’s important to keep emerging technologies in service to those missions and not the other way around. Even more important is focusing on using technologies to enhance the personal relationships we depend on and not letting them become a layer between those relationships. Rapid technology allows for quick responses but it can be way too easy, in our quest for speed, to make responses that are not as well thought out, or presented as carefully as we might have responded had we had to drive somewhere and respond face to face. In other words, it’s easy to respond in ways that don’t really reflect the most pleasant parts of our personalities. Email is, of course, the biggest culprit here. How many times have you received or seen an email that says something, in either content or tone, that you know the sender would not normally say, or says it in a way that doesn’t reflect the way you know them? I can think of one recent heated email exchange that most certainly did not reflect how some of the participants act or speak in person at all. But email’s so seductively fast and easy that it gets used in ready-fire-aim mode way more than it should. Online quotes and proposals, automated presentations, Facebook and Twitter posts and any other non-human contacts are subject to this, too, though. It’s very important to take the time to insert your humanity prominently into your use of technology. It’s not just polite, it’s also good business. Why did I write about this? Here’s why. NEFA conferences are a great —and cost effective— way of keeping and re-enforcing the personal, human aspects of our business relationships. Information can be transmitted quickly and efficiently electronically, of course, but nothing helps establish trust and confidence like a good firm handshake and eye-to-eye contact. Oh, and a good laugh with friends at the bar goes a long way, too! To that point, registration for the 2013 National Equipment Finance Summit is open and off to an excellent start. This year’s Summit is a week or two earlier than in prior years so it’s good to see folks making their plans early…and there’s lots to plan! Albuquerque is loaded with things to do. I was interested to see how many people are already signing up for hot-air balloon rides. I never thought I’d do it but I did when I went out to visit our conference hotel. It’s a ‘bucket-list’ kind of thing and well worth it. Keep an eye on our online event calendar for other NEFA events throughout the year. The revised date for the Funding Symposium in Nashville, Tennessee is there. I recently watched a documentary about ancient Greece and, of course, the Parthenon figured prominently in it. Well… not everyone may know this, but Nashville has its own full-sized replica of the Parthenon, built for the 1897 Worlds Fair, and it’s directly across the street from our conference hotel! Maybe some kind of oracle there can give you a secret key to success! See you soon, I hope!

Gerry Egan Executive Director Direct Phone: 847-380-5052 Email: [email protected]

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National Equipment Finance Association

Members on the move Personnel

National Equipment Finance Association

Constellation Financing Systems Names Susan Foster as VP/Sales & Marketing Constellation Financing Systems, a subsidiary of Constellation Software, and a provider of software and services to the leasing and finance and commercial lending industries, announced the appointment of Susan Foster as vice president of Sales and Marketing. “We welcome Susan to the Constellation team and look forward to her fresh perspective for the company and our marketing and business development efforts in the ongoing growth of our business” said David Taylor, Constellation’s managing director.

On Deck Names Andrea Gellert SVP of Marketing On Deck said that Andrea Gellert has been named to the company’s newly created position of senior vice president of Marketing. She joins On Deck from Group Commerce, where she was VP of Client Services and Operations. Gellert brings more than fifteen years of marketing and client services experience geared towards the small to medium business market. She will oversee all of the company’s marketing activities, including strategy for customer campaigns, advertising, direct marketing, social media and public relations.

TAB Bank Names Michael Palmer as VP of Compliance TAB Bank said it appointed Michael Palmer as vice president of Compliance. In his new role, Palmer will provide direction to the bank’s compliance team as well as oversight of the bank’s compliance objectives and responsibilities. “He has an impressive professional and educational background that make him a great fit for this position as we continue to take every step necessary to comply with the regulatory environment in which we operate and serve our clients,” stated Steve Sala, president of TAB Bank.

Industry News Alta Creates New Diversified Industries Unit to be Headed by Frechette The Alta Group announced the development of a new vertical industry focus, Diversified Industries, to be headed by Paul W. Frechette, a senior managing director. Alta also appointed Valerie L. Gerard to head its Management Consulting Practice. “We have seen significant growth in client engagements within Diversified Industries, including healthcare, construction, alternative energy, manufacturing and transportation,” said John C. Deane, CEO of The Alta Group. “Paul has more than three decades of experience in equipment leasing and finance and exposure to the manufacturers using financing to improve sales.

Douglas Guardian Announces Agreement with Northpoint Commercial for Inspection Services Northpoint Commercial Finance announced an inventory inspection agreement with Douglas Guardian Services as its inventory inspection provider. Continued on page 22

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Leasing Services

Innovation: Sustaining Success Innovation is change and, for the most part, the changes we experience through innovation have been beneficial. This article examines the principals of innovation and its impact on success. By Michael J. Fleming

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nnovation is change and, for the most part, the changes we experience through innovation have been beneficial.

We associate innovation with creativity, technological progress and business success. In most businesses, technology enables innovation. Creativity implies something new/improved. Assume an innovation is a change that solves a problem and/or increases value to someone or an enterprise.

Value for Stakeholders An equipment leasing company has a minimum of four stakeholders to whom value can be added by innovation: • The most obvious stakeholder is the customer, including end users of equipment and channel partners. We usually think about the customer first, because we tend to equate innovation with volume/penetration/profit growth. Companies do much of their creative thinking when considering customers and product value. • The next stakeholder is the parent/investor, those who are looking for returns or other value. • Employees are stakeholders. Their enthusiasm and productivity can be enhanced through innovation.

The Traditional Business/ Organization Culture • Centralization has characterized organizations for decades. It was accepted as a way to minimize risk through control.

• An organization that neither encourages nor rewards innovative thinking. Mistakes are not tolerated. Consequently, personnel are most comfortable “doing things the way they have always been done” without question or examination. The environment on the edges of the organization is usually more open, the company may not utilize the perspectives of those on the value delivery line: • Focused on the past and present, not the future • Failing to boost its core competencies • Lacking in self-examination • Who are we? What words do stakeholders use to describe us and how do they compare to words we use? • Who do we want, and need, to be? • What are we committed to? • Which stakeholders are we most focused on? • Confusing developing new products with innovation, whether the product delivers value or not Successful innovators create customer need to sustain themselves. This is far different than being driven by customer need.

Moving to a Culture of Innovation A leading authority on innovation, Clayton M. Christensen, and his colleagues, summarize five discovery skills that distinguish innovators from other executives. Discovery Skills: • Associating means people are able to make connections between seemingly unrelated problems and ideas and create

new ideas. • Questioning allows innovators to understand the status quo, breakout and consider new possibilities. • Through observation, innovators detect small behavioral details in the activities of customers, employees and channel partners that suggest new ways of doing things. • Experimentation: innovators relentlessly try new experiences. • Networking with individuals from diverse backgrounds, they gain radically different perspectives. In its global consultancy work, Alta advisors are often gratified to see the knowledge and enthusiasm released through the right kinds of open dialogue that leads to creating real solutions. Technology is a great enabler of innovation in equipment leasing companies but it is not the technology per se that is the innovation of value. The value is a new process, higher productivity and greater knowledge. Innovators have to consider whether the innovation should be/could be breakout or incremental. Sudden breakout/change can catch a competitor unprepared. However, the innovator must pay close attention to the breakout to determine if the results of innovation are as planned and that the stakeholder accepts it and that there are no unintended results. Incremental change is more suited to an equipment leasing company. Incremental change allows measurements and adjustments to make the innovation work well. newsLine | JANUARY/FEBRUARY 2013

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Attention should be given to needed renovations in an organization before launching the innovation. Another popular term is Disruptive Innovation, meaning the innovation disrupts an existing product or process while providing accompanying value to the disrupter. Frequently, the disruption is aimed at a competitor; however, innovators have to be very careful not to disrupt their own value offering. When considering innovation as it relates to customers, begin the analysis with existing customers. Factual knowledge and analysis is critical to innovation.

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5 Business Model Components: • The market in which the company will operate including customers, asset type, competitors and issues of growth, operations, required resources and scale. • Value Proposition: Who does the organization say it is and what does it offer? What do the stakeholders expect from us? Over the years, equipment financing companies have presented their value to the client in financial terms: • Cash flow management • Financial accounting • Tax liability management • Lower cost of capital available to the

equipment finance company Sometimes the value has been presented in terms of asset management: • Upgrades • Maintenance/substitution • Utilization volume monitoring • Knowledge-based replacement planning What words do others use? What will innovation do to this value proposition? Is it something we want? • Resources: All companies have resources that should be maximized, but keep in mind resources can be copied. Breakout innovations are limited. Innovation in this component can also include how the equipment leasing and finance company funds itself. • Organization and process of doing things: This business model component defines the company culture – open, closed, innovative, collaborative, etc. • Formula/measures of success, profit measures and standards: How does the company make money and measure success? Do we get revenue from financing activity or from activities related to managing the financed assets or providing asset-related? • Sometimes innovation is focused on changing the entire business model. Most often, however, equipment leasing companies do not completely change their entire business model. • The market/sectors and channel partners to be served. The company is selling to end-user companies through a selected channel or channels to benefit a group of stakeholders. If your organization does not see an advantage to provide value for stakeholders in this market, it is not for your company. • The Value Proposition: Customers value consistency, reliability, knowledge, speed of response, transparency, flexibility, options and service. While equipment leasing and finance products are regarded as financings, customers have expressed need and acceptance of features that resemble rent like offerings such as flexible terms, options, maintenance and other asset management services • Service: Everyone expects quality service today as a require norm. Technology has become the enabler of quality service whether it is through social media, webbased, or internally installed systems. Service translates into speed, accuracy and comprehensiveness. What are the longstanding assumptions, practices and value offerings that are not as relevant today as they once were? • Process: Equipment leasing companies are continuously improving how they do things. Efficient costs are essential. • Management: Executives are paying far more attention to their business strategies,

their systems and the organization of the company to increase knowledge, productivity and growth. • The concept of Value Added: By focusing on value for any stakeholders from any of the components of the business model, personnel can collaborate to identify opportunities, solve problems and intensify the effort at creating sustainable success. Innovation should lead to growth, profits or some other objective. The key is that innovation in the areas immediately above can lead to desired objectives: • Volume growth • Greater penetration of existing customer bases • More customers from new channels • Higher profits • Higher deal flow from channel partners • Better portfolio quality Have a goal and focus on it. A key to minimize replication is to make your innovation strategic. Make your innovation strategic by having it integrated through all aspects of your company. What types of companies will have the easiest time innovating? The hardest time innovating? In general, companies where

creativity and change is part of the culture and important to stakeholders will have an easier time innovating. Innovation is change, which threatens the status quo. A challenge to leadership is bringing key stakeholders along or making them part of the innovation designThey must understand innovation’s rewards and consequences of remaining in the status quo. Breakout innovations have become routine improvements. For example, there was great excitement when certain companies pioneered sophisticated document imaging capabilities in the 1980s. Companies now are making important innovations/ changes in the areas above, but most are incremental. Incremental innovation is easier and safer. In the early to mid 1980s, equipment leasing companies faced a major problem related to funding: inflation and high interest rates. However, by the hundreds, leasing executives poured into ballrooms in all of the major U.S. cities to learn about the use of interest rate swaps in their funding strategies. These instruments not only saved many companies, but they gave leases a big advantage over other means of finance for SMEs that could not access affordable funding to acquire assets.

Innovation is change. It is not change for change’s sake, it is change designed to focus on a goal – solve a problem, deliver more value. A final principle of innovation: change requires unlearning. The leader must be prepared to say and enforce, “We won’t/ cannot do that/offer that anymore and be effective.” Be prepared to leave behind selected things that no longer demonstrate they deliver value in today’s market. These include processes, standards and beliefs. Business units can be rebuilt into value delivering entities for the total enterprise and often should be. This allows the total company to sustain success. 

ABOUT THE AUTHOR Michael J. Fleming is a senior managing director with The Alta Group, a global consultancy exclusively focused on the business of equipment leasing and finance. He is the leader of Alta’s Service Provider Vertical. Before Alta, he was the president of the Equipment Leasing and Finance Association for 27 years until 2006. He can be reached at [email protected].

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BROKER

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Originator/Funder Relationships By Scott A. Wheeler, CLP

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s I am writing this article, the relationships between experienced originating companies and funders are stronger than they have been since the 2008 recession. One of the greatest concerns for brokers is how to generate enough new business to meet the needs of their funders and to strengthen their relationships. There is no lack of funding for strong transactions and even a desire by many funders to drive portfolio growth with transactions which are a step below their traditional criteria. In order to participate in the market, most funders have expanded their credit windows in the past twelve to fifteen months and have been forced to reduce pricing – significantly reducing margins for the funders. The reduced margins have been rightfully passed on to the originators in capped points and shared downward pressure on profits for both the funder and broker. Funders have been willing to make both credit and pricing concessions, because their portfolios are currently performing exceptionally well. Delinquency ratios have been at historically low levels for most funders and have continued to fall for nearly twenty-four months. The emphasis for funders has changed from risk management to portfolio growth beginning in 2011 and continuing throughout 2012. The recent growth in portfolios has created excellent ratios for portfolio managers with the majority of the growth occurring in the last twelve months. It is anticipated by many portfolio managers that, in the next twelve to fifteen months, performance will settle in at a higher, yet more traditional, delinquency level. The low delinquency rates are not sustainable over the long run, especially as portfolio growth levels off and recent fundings begin to age. The hope is that delinquencies do not accelerate too quickly or go beyond traditional levels which have been routinely accepted in the industry. Therefore, the desire of every funder is to increase their portfolios with the strongest transactions and to have broker relationships which are truly partners who seek the highest quality transactions. Funders are committed to their indirect partners and value the ability of third party originators to establish new transactions. However, as in 2008, these relationships will be ultimately judged on

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the ability of the brokers to generate well performing assets for the entire term of the transactions. For those funders who are able to provide consistency to origination partners, and who are able to successfully manage future risk, there will be tremendous opportunities in the market. The unanswered question for many brokers is: which of their current funders will be able to sustain consistencies through the next economic cycle? The most valued originating companies have been able to significantly enhance their offerings to funding partners. It is no longer enough to just originate a transaction. The valued brokers must be willing and capable of performing in-depth underwriting tasks and to assume the responsibility, the cost and to a certain degree, the risk of properly funding a transaction. The most valued originating companies of today and for the foreseeable future will be multidimensional, providing real marketing and operational expertise. Many funders have had significant reduction in staff over the last few years and are depending upon their indirect partners to fill a portion of the gap. The ability to originate new business is still the main contribution of a lease broker, but it is not the sole attribute necessary to build long lasting relationships with solid funding partners. The most successful originating firms have a full operatiomal staff which performs underwriting, documentation and funding tasks. It is becoming commonplace for established origination firms to hold a small portion of their own paper and to share customers with their primary funders. Many origination firms have found their expertise and knowledge exponentially increase with additional assets held on their own books. Funders recognize the value in partnering with origination firms which have “skin in the game”. The process of building a balance sheet is more important today than at any time in the past; and the process can be implemented in small, yet steady steps. The added capabilities and financial strength of a full service origination firm help to improve its position in the market with its clients and funding sources. Successful owners and management teams of origination firms have increased their value by being more diverse, offering greater services and being a more active

participant in all aspects of the leasing process. After the last economic downturn, some suggested broker firms would become obsolete as institutional funders studied the viability of expanding their internal origination staffs to replace indirect channels. However, the greatest challenge for funders and originating firms today is the ability and cost to hire, train and retain competent originators in the market. Therefore, most funders have concluded the indirect channel of origination, with the right partners, to be a necessary and viable mechanism to grow assets. The future for sophisticated and multi-dimensional originating firms is bright. The market is in need of marketing driven companies which can easily engage with both vendors and end-users. Successful origination firms provide the flexibility and niche expertise which is so often needed to deliver the industry’s most appealing products. With shrinking margins and more responsibilities, the most successful originating companies will need to significantly grow through efficiencies and expertise. Relationships will matter more as the industry progresses through the next growth cycle. The value added by the originating firms will be measured by their ability to expand relationships with strong vendors, strong end-users and most importantly, strong funders. The market will continue to change, dominant participants will evolve over time and successful originator/funder relationships will continue to thrive. 

ABOUT THE AUTHOR Scott A. Wheeler, CLP has been in the commercial equipment leasing/financing industry since 1982. With over 30 years of leasing experience and an Executive Masters in Business Administration, Scott is an accomplished senior leasing executive with leadership qualities in marketing and operations. He is currently the President of Wheeler Business Consulting LLC; providing consultative services to brokers, lessors, funding sources, banks and investors in the commercial equipment leasing/ financing industry. Scott was active with EAEL from 1989-2008 and a board member of NEFA from 2009-2011.

Leasing Services

Averting the Fiscal Cliff After much ado, the “Fiscal Cliff” has been averted, and the American Taxpayer Relief Act of 2012 has become a reality. This legislation makes permanent many expiring Bush-era benefits for taxpayers. While The Act addresses tax related issues relevant to 2012 and 2013, the spending cut issues are far from settled. By Nancy Geary

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fter much ado, the “Fiscal Cliff” has been averted, and the American Taxpayer Relief Act of 2012 (“ATRA” or “The Act”) has become a reality. Approved by both the Senate and House on January 1, 2013, and signed by the President on January 2, 2013, this legislation makes permanent many expiring Bush-era benefits for taxpayers. While The Act addresses tax related issues relevant to 2012 and 2013, the spending cut issues are far from settled.

For Businesses Many in the leasing industry will be pleased with the provisions The Act has extended for both 2012 and 2013. Tax tools such as expanded section 179 limits and bonus depreciation have been very beneficial for the industry in terms of tax deferral, and their reduction and/or expiration are likely to bring unwelcome tax liabilities to those who have used these deferral methods over the last several years. As tax rates increase for some in 2013, strategic use of these tools may help to manage tax liabilities, which may include accelerating income into 2012. Business Tax Extenders provided in The Act include: Section 179: ATRA extends the $500,000 limit for fixed asset purchases (including offthe-shelf computer software) through the end of 2013. The deduction begins to phase out dollar for dollar once total fixed assets placed in service exceed the $2,000,000 investment limit. This extension allows businesses to take advantage of higher limits for both 2012 and 2013, as the dollar limit for 2012 was previously set at $125,000 with a $500,000 investment limit. Section 179 applies to both new and used equipment purchases.

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Bonus Depreciation: Set to expire at the end of 2012, ATRA extends 50% bonus depreciation for assets placed in service through 2013, with some transportation and longer period production property eligible through 2014. Used equipment does not qualify for bonus depreciation. Research Tax Credit: ATRA extends the research tax credit, which previously expired at the end of 2011, through 2013. This credit applies to the excess of qualified research expenditures for the current year over the average annual qualified research expenditures for the four preceding years.

Work Opportunity Tax Credit: ATRA extends the Work Opportunity Tax Credit (WOTC), which provides a credit for employers that hire individuals from targeted groups, through 2013. The Act also extends a number of business tax credits including the employer wage credit for activated military reservists, 100 percent exclusion for gain on sale of qualified small business stock, reduced recognition period for S corporation built-in gains tax, and tax incentives for empowerment zones, among others.

For Individuals While individuals with incomes above $400k single or $450k for joint filers will pay more in taxes in 2013 due to the higher marginal rates, all wage earners, including self-employed individuals, will see less net earnings due to the lost social security holiday, as well as the .9% medicare tax imposed on wage earners over $200k single and $250k for joint filers. Extenders for Individual Taxpayers provided in The Act include: Social Security: Employers should already be aware that the 2% social security “holiday” their employees enjoyed over the past two years was not extended. Therefore, the employee social security rate for 2013 has reverted back to its previous rate of 6.2%. (The social security tax limit for 2013 is $113,700.) Individual Tax Rates: Marginal rates for taxpayers earning less than $400k single or $450k for joint filers will not change for 2013 (other than the brackets being indexed for inflation). The marginal tax rate for earnings in excess of these thresholds will rise from 35% to 39.6%. Capital Gains and Qualified Dividends: For taxpayers below the $400k/$450k thresholds, long-term capital gains and dividends will remain taxable at 15%. For taxpayers above the thresholds, tax rates will increase from 15% to 20%. Combined with the 3.8% net investment income tax that some taxpayer’s will be subject to this year, the top rate for capital gains and qualified dividends will be 23.8%. Alternative Minimum Tax (AMT): The bill retroactively adjusts the AMT patch for 2012 to $50,600 for individuals and $78,750 for joint filers, which should help many middle-income taxpayers avoid being subject to AMT. ATRA provides for indexing of the patch going forward. Personal Exemption and Itemized Deduction Phase Outs: The personal exemption phase-out is back, but only for taxpayers earning more than $250k single and $300k joint. Likewise, the phase out of itemized deductions will return for individuals earning over these same amounts. These provisions allow additional tax revenue for the over $250k wage earners, without increasing the tax rate, by reducing allowable deductions. Education: With regard to education-related provisions, ATRA permanently extended the expanded Coverdell Account contribution limits, retained the student loan interest deduction and extended the American Opportunity Tax Credit for five years.

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Emergency Unemployment Compensation (EUC): ATRA extends, for one year, the federally funded program that provides unemployment benefits to individuals who have exhausted regular state benefits. New Roth Possibilities: ATRA provides an important retirement planning opportunity for taxpayers. Until now, 401(k), 403(b) and 457(b) plan participants could convert funds from these retirement accounts to Roth, but subject to certain qualifying events or age restrictions. ATRA has lifted most restrictions, thereby allowing participants to roll funds to designated Roth accounts in the same plan at any time. This change was enacted as a revenue generator, as converting retirement funds to a Roth constitutes a taxable event. The Act also extends or makes permanent a number of tax credits/deductions for individuals including the adoption credit, child and dependent care credit, IRA distributions to charity and the teachers’ classroom expense deduction, among others.

For Estates The Act provides for a maximum federal estate tax rate of 40 percent with a $5

million exclusion (to be indexed annually for inflation) for decedents dying after December 31, 2012. This reduces the federal estate tax rate which was scheduled to revert to 55 percent (with a $1 million exclusion) effective January 1, 2013. The Act also makes portability of any unused exclusion between spouses permanent. This benefit was set to expire January 1, 2013.

On The Spending Side The American Taxpayer Relief Act provides a two month delay for sequestration, the across-the-board spending cuts imposed as a part of the Budget Control Act of 2011, which were to be effective after 2012. Left alone, the automatic spending reductions will become effective March 1, 2013. However, there’s no doubt that these across-the-board spending cuts will continue to be a major topic of discussion and debate during January and February, along with related discussions regarding control of the national debt ceiling. The fun continues...• This material is for your general information, is not a complete summary of the provisions included in The American Taxpayer Relief Act of 2012, and does not constitute

tax advice. It has been prepared based on information that the author believes to be reliable, but the author makes no representation or warranty with respect to the accuracy and completeness of the information. Please consult your own tax advisor for assistance in interpreting and / or applying the provisions of The American Taxpayer Relief Act of 2012, or to find out about specific provisions not mentioned in this article. 

ABOUT THE AUTHOR Nancy Geary, CPA, CLP is a partner at ECS Financial Services, a Certified Public Accounting firm specializing in lease accounting and portfolio management services. Ms. Geary has over twenty-five years of public accounting experience. Ms. Geary has been a speaker/panelist/instructor at lease association functions and classes, has authored articles for various industry publications, and was a contributing author for the CLP Handbook. Ms. Geary has served on various association boards and committees within the leasing industry, including UAEL, NEFA, ELFA and the CLP Foundation, most recently as a member of NEFA’s Executive Committee, and joins the CLP Foundation Board of Directors in 2013.

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The Commercial Reasonableness Requirement for the Sale of Collateral By Frank Peretore, Esq. and Scott D. Chait, Esq.

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ne of the most heavily litigated issues today in the asset-based lending arena is whether the disposition of collateral was “commercially reasonable.” Section 9-610(b) of the Uniform Commercial Code (UCC) requires that every aspect (method, manner, time, place, and other terms) of the disposition of collateral must be commercially reasonable. If any aspect is not commercially reasonable, a rebuttable presumption exists that the disposition of the collateral satisfied the debt in full. While the UCC requires the disposition to be commercially reasonable, it does not expressly define what constitutes commercial reasonableness. Therefore, various courts have applied different tests to determine commercial reasonableness, all of which are likely to be fact intensive endeavors (read: they will likely involve expensive litigation). This, of course, can be very problematic for a lender with a deficiency balance because not only could the litigation itself be time consuming and expensive, but if any aspect of the disposition is found to be commercially unreasonable and the lender cannot rebut the presumption that the disposition of the collateral satisfied the debt in full, the lender could be barred from pursuing collection of its deficiency balance. That is precisely what happened in a recent case out of Kansas. In United Cent. Bank v. Siddiqui, 276 P.3d 838 (Kan. Ct. App. 2012), a bank financed the purchase of a blanking machine for a steel processing firm. The borrower defaulted and the bank hired a law firm to dispose of the collateral. The firm did so, conducting a public sale of the collateral which netted significantly less than the balance owed. The guarantor challenged the disposition, claiming that various factors rendered the disposition commercially unreasonable, including the low sale price ($300,000 vs. an original invoiced price of over a million dollars) and the inadequacy of the advertising. The trial court, on both summary judgment and then at a bench trial (a trial before a judge without a jury) found in

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favor of the guarantor and on appeal, the appellate division upheld these findings. Specifically, the court found that while (a low) price alone is insufficient to render a disposition commercially unreasonable, when combined with other factors, the disposition was fatal to the lender’s deficiency balance. The law firm hired to dispose of the collateral advertised the sale in the Chicago Tribune (both print and online versions) and Craigslist.com. They also emailed about a dozen potential bidders. They did not advertise in a trade journal and both the advertisements and emails were published less than 10 days before the sale. Moreover, no pre-sale appraisal of the collateral was conducted and the advertisements contained various factual errors and omissions (for example, some of the ads had the wrong date and address for the auction sale, others failed to indentify the date for a pre-sale public viewing of the collateral). The court also noted that because the lender used an attorney (as opposed to a dealer in the type of collateral at issue) and there was no recognizable market for the collateral, it could not avail itself of the “safe harbor” provisions of the UCC which, if utilized, render a disposition presumptively commercially reasonable. To hopefully avoid the unfortunate result of the Siddiqui case, there are several lessons to be gleaned from the case which could assist lenders in establishing that a disposition of collateral was commercially reasonable: While it’s dubious that parties can contract to waive commercial reasonableness, parties to a commercial transaction can contractually define what constitutes a commercial reasonableness disposition of collateral. For example, the loan documents should spell out exactly where and how often a sale must be advertised. Notably in Siddiqui, the court found it problematic that the sale wasn’t advertised in a trade journal and was advertised less than 10 days before the sale. A contractual provision stating that the sale need only

be advertised in a single “general circulation” newspaper (even if the collateral is specialized) on two separate occasions, no more than 2 weeks apart, the last of which shall be no later than the day before the sale, might have obviated this issue. Other useful provisions defining the parameters of “commercial reasonableness” address the specific contents of advertisements; provide that the lender need not incur expense or effort to prepare the collateral for sale and may sell the collateral in the same condition as when it took possession; and provide that the lender may credit bid (however, even with a contractual provision, if the lender credit bids, it should only do so if the disposition is at a public sale). This is a just a sampling of what can be included in the equipment lease or security agreement, and is anything but exhaustive. The point is that an effort to define the parameters of what constitutes commercial reasonableness may be useful down the road in defending a challenge to the adequacy of the disposition. If the loan documents do not contain a definition of what constitutes commercial reasonableness, at the very least a lender should advertise in a general circulation newspaper on several occasions and in a trade journal if possible (or on an industry website). Also, potential bidders should be contacted through multiple emails, telephone calls or direct mailings. In Siddiqui, about a dozen were contacted. There is law in some jurisdictions approving sales where only 25 potential bidders were contacted. As such, we recommend contacting at least that number of potential bidders (and of course, contacting even more would be all the better). If possible, a lender should avail itself of the UCC’s “safe harbor” provisions. Section 9-627(b) provides that a disposition is deemed commercially reasonable “if the disposition is made: (1) in the usual manner on any recognized market, (2) at the price current in any recognized market, or (3) otherwise in conformity with

reasonable commercial practices among dealers in that type of property.” Sections (b)(1) and (2) are really quite limited and apply only in situations where there are standardized price quotes, such as stock exchanges. However, (b)(3) is a provision that many lenders successfully avail themselves of and should be considered whenever an agent is being hired to dispose of the collateral: hire a “dealer” of the type of equipment at issue and you substantially enhance the chance you may withstand an attack on the sale. While it’s questionable that there is an actual requirement to appraise the collateral pre-sale, some jurisdictions do factor it into the analysis. If it’s cost-effective, having a pre-sale appraisal report in the loan file could be very helpful in establishing commercial reasonableness. If a full-blown appraisal is simply cost prohibitive, at the very least a simple desk-top appraisal should be considered. This goes to price. While many jurisdictions do not look at the sale price alone in determining commercial reasonableness, it’s usually a key factor and especially, as was the case in Siddiqui, if you cannot establish other basic factors such as adequate publicity, a court may very well find the disposition was commercially unreasonable. As the Siddiqui noted, where the collateral is equipment, some courts require that it be made available for a pre-sale inspection. While this is not necessarily the status of the law in every jurisdiction and can be cost prohibitive or logistically impossible, conducting a public viewing (and including the details in the advertisements for the sale) should be considered, if at all possible. The bottom line for lenders is that care should be taken, both in the contract formation and in the actual disposition of collateral, to mitigate against the possibility of a successful challenge to the disposition of collateral. As they say, an ounce of prevention is worth a pound of cure. 

ABOUT THE AUTHORs Frank Peretore is a founding partner of Peretore & Peretore, P.C. and Scott Chait is an associate with the firm. They can be reached at frank. [email protected] and [email protected], or (973) 729-8991. Visit www. peretore.com.

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Leasing Services

Nostradamus on Finance Here is a Nostradamus-like assertion in its vagueness: if we can know enough about what we have done in the past, and look for relationships between policy and results, we should be able to predict some likely future results. By David Taylor

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n 1555, Nostradamus set the standard for all subsequent prognosticators, extending his vision forward several hundred years. His best known book Les Propheties (The Prophecies) is credited by his followers with predicting many major world events. He was either smart or lucky enough to have buried these prophecies in sufficiently vague and ambiguous language that it’s impossible to say for sure exactly what the match is between prophecy and actual world events. As popular astrologers have found ever since, though, there’s a healthy living to be made making one size fits all predictions that are hard to confirm or refute. Political and financial commentary seems to me to be much of the same ilk. At the start of a New Year, articles may fall into one of two classes or both – a review of the year just past, or a prediction for the year ahead. The exception being photographic assemblages, which for obvious reasons, are always of the former kind. The past year’s financial writings have all been well digested by now, and we pretty much know what we thought about 2012. With 2013 starting out with all focus on

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the nicely named Fiscal Cliff, there were relatively few takers to speculate beyond that significant, and Nostradamus scaled, impending disaster. Well, depending on your point of view, disaster having been averted, what does 2013 look like for the leasing industry? I’m reminded of one of Hugh Grant’s lines from the movie Notting Hill. Pretending to be a journalist from “Horse and Hound” and conducting an interview with Julia Roberts’ character he asks “Are there many horses in your new film? Or hounds for that matter?” Looking at all the complex moving parts of world events, and asking the question “Yes, but what does this mean for Leasing?” has an element of the absurd about it. But that, of course, is what we try to do. In the best spirit of plagiarism, I read an article by Bob Rinaldi the other day, in which he looked for significant correlations between key data trends and the likely movements in fortune for the leasing industry. As always, he made some excellent points. Quoting the advice of a truly talented economist of my acquaintance “If

you can’t forecast accurately, forecast frequently.” And that seems to have been the tactic employed by most financial commentators during the past 36 months. Weekly calendars of announcements of statistical data have driven the range of predictions within very short timeframes. Employment statistics, housing starts, GDP numbers, Fed pronouncements, Central Bank prognostications have become the staple for that week’s speculation. The backdrop of sovereign debt, bailouts, political shifts, and acts of God or nature, are all so much scenery to the rune casting of data analysis. Indices of business and consumer confidence seem, to follow Bob’s point, to have, at best, a tentative relationship with the health of the markets and of economies. At times they seem to be perversely working against the facts, although, with so many complex issues, that may just be a problem with timing or sample size. So, absent even a mini-Nostradamus prepared to look 12 months ahead, what can we do to keep our business aligned with a sensible strategy for success during any

12 month period? As anyone who has ever been present at an event subsequently reported in the national press will tell you - first hand knowledge is a whole lot more reliable than third hand reportage. The use of common sense, applied to data gathered at first hand by our organisations, can tell us a lot more than predictions based on aggregated data from dramatically dissimilar organisations. That’s not to say that external data sources should be ignored – just that sanity checking what we hear and read against our own experience should be a fundamental good practice for all our businesses. If the trend is up and we are down, then investigate. But if the trend is up and we are up, still investigate. The underlying trend drivers may not be in line with what’s happening in our particular business. Strengths and weaknesses within an organisation and its portfolios can be masked by broader trending data.

some pretty sophisticated analytical tools. Having extracted raw data from a portfolio, the tool automated the process of running sequential sets of statistical analyses against the data. What was particularly nice was the use of plain English commands and querying capability. You could ask the tool, for example, “What is the single biggest influence on yield?” Of course, its first triumphant response was “Rate!” You then selectively removed the obvious factors until you came up with some genuine insights into portfolio performance that were quite invisible to the naked eye. Salesman X, selling finance on

asset class Y has a high correlation with great results. Same salesperson selling asset class Z sucks. These relationships were often impossible to detect on a case by case basis and yet would allow fine tuning of the business to produce markedly improved results. Of course, sophisticated analysis is only productive if data is both complete and accurate. In many cases, we choose to not gather additional data which would yield good organisational results because we don’t have time, or there is organisational Continued on page 22

It’s a rare financial organisation in this century that does not have many years of computer produced data available to it. We are a mature industry in terms of the tools we use, the financial products we offer, and the markets in which we operate. Where we continue with some immaturity is in the area of analysing the data we have on hand. Surprisingly large numbers of significant financial institutions make little use of time sequenced data in looking at trends and forecasts for their business. Credit policies may be fine tuned, but how often are delinquency statistics tied back to prior policy changes to give statistically significant correlations? You will not have failed to notice the Nostradamus like vagueness of these assertions, but I believe the point is valid. If we can know enough about what we have done in the past, and look for relationships between policy and results, we should be able to predict some likely future results. Some years ago, a software vendor, well known for the excellence of its reporting products, extended its offerings to

ABOUT THE AUTHOR David Taylor is Vice President of Constellation Financing Systems. Taylor began his career with the Prudential Assurance Company in the City of London in 1966. Since then he has held posts with European Leasing Companies, been a deputy Chief Executive in Regional Government and lead international consultancy teams in Eastern and Western Europe, Africa, and North America. newsLine | JANUARY/FEBRUARY 2013

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Leasing Services

The Art and Science of Asset Management Your asset management company should bring more to the table than just a source to recover and/or liquidate your assets. They should consistently demonstrate a commitment to your organization’s wellbeing and view themselves, not as your service provider, but as a business partner. By Lynne Wicker

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oes your asset management company bring more to the table than just a source to recover and/or liquidate your assets? If they don’t, they should! Asset management, broadly defined, refers to any system that monitors and maintains things of value to an entity or group. In leasing, it is the strategic art and science of optimizing this process and making the right decisions for physical assets during their life within the organization. This is why it is important to utilize an asset management company that not only offers a full range of services but also has a proven reputation in the financial industry of providing results. In this article, I will address several critical services that should be part of your service provider’s resume.

ReMarketing Knowledge One benefit of using a full service asset management company should include the ability to tap into their expertise in market values and trends of a wide variety of equipment transactions. Whether it is desktop fair market values, appraisals or the commercially reasonable sales process, market knowledge is a key component in making educated decisions for the disposition of any asset. How confident are you that your current remarketer is prepared to defend the commercially reasonable sale of your assets? Market knowledge

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does not come from a quick search of the internet or in speaking with a couple of vendors. It comes from years of knowledge that is gained and refined from experience in a multitude of equipment genres. It’s not only knowing what it is worth, but also where the market is and what remarketing methods to utilize to obtain the best sale price. Remember, the values are only as solid as the company providing them.

Compliance This has become the focus of many government regulations and audits over the last couple of years and should be one of your focuses in your service provider relationships going forward. Your service provider should be able to demonstrate that they are in compliance with and have in place the policy and procedures to meet current and future regulatory requirements that will protect your business. A few of the compliance areas you should review would be: Anti Money Laundering laws and guidelines, OFAC/Patriot Act, Federal Food And Drug, Import/ export laws, Federal Food Drug and Cosmetic Act, Cash handling procedures, Repossession laws, HIPPA, Data storage and encryption regulations, SarbanesOxley, Sales Tax/Accounting, Insurance, Commercially reasonable sales transactions, etc. You should include at least an annual audit of sale transactions and to ensure

compliance. Better to partner with a company that is compliant and knowledgeable in these areas, then to find out they are not when it is too late.

Equipment Inspections A physical equipment inspection is another service that should be part of your asset management service provider’s arsenal. In addition to validating business locations, equipment serial number verifications or pre-funding delivery confirmations, using a service that also has specialized equipment knowledge of what they are inspecting and can provide you with information that will be useful in ensuring that the borrower, among other things, is complying with any aspect of your lease terms.

Collection and Recoveries Many asset management companies state that they can handle your collection and recovery needs. It is important that these companies understand not only the laws regarding debt collections but repossession laws as they pertain to each state. It is equally important that the agent recovering the assets have knowledge of the equipment to ensure that the correct tools and methods are used to de-install or remove the equipment as well as to ensure that all components are recovered. Protecting the integrity of the equipment and its value during the recovery and transport should be paramount.

Here’s an example of how equipment knowledge can save you in the long run. The lender utilized a local company to recover their assets. The repossession agent was not a remarketer so another company was engaged to take possession of the items and remarket on their behalf. However, when the agent was notified that the equipment was being picked up, they admitted that they had not recovered all of the assets as reported nor did they have some of the key components that were required to operate the equipment. Fortunately, the additional items were recovered but it created additional expense for the client that could have been avoided if the first agent had been more knowledgeable regarding the equipment.

Custody and Control Last but certainly not least, your asset management partner should have the ability to store your assets in an environment that is secure and protected. You should be confident of the measures that are in place to keep your equipment safe from loss or damage. Unfortunately, there have been several occasions when our clients have requested that we intervene when they discover that their assets are being stored in someone’s garage instead of a secure commercial facility. Many leasing companies and banks have implemented periodic warehouse audits of their remarketers as part of their portfolio management program. Could some of these services cost a little more? Depending on how you look at it. If you are reviewing the recovery cost only that may be the case. We all know that keeping losses and expenses at a minimum is always a key element to asset management. However the right company will ensure the removal is done correctly, all assets are recovered/well documented and the ultimate disposition of the collateral is sold in a commercially reasonable manner. At the same time, a full service asset management company should offer you many value added services at little to no cost. This would include such services as desktop FMV’s, storage of assets during remarketing and immediate access to solid industry knowledge/consulting. So when one considers the full picture of asset management often times the net return of a full service asset management company is greater than a cheaper, up front option. These companies therefore are able to offer some of their services such as desktop fair market values, at little to no cost to their clients as well as free or reduced storage as long as the provider is remarketing the assets. In conclusion, your asset management service provider should consistently demonstrate a commitment to your organization’s wellbeing and view themselves, not as your service provider but as a business partner. A partner that provides valuable knowledge throughout the leasing process by treating each transaction as their own and ensuring that you are optimizing your asset management process. 

ABOUT THE AUTHOR Lynne Wicker has worked in the commercial equipment industry for over 25 years. She has been in leasing industry since 2000. Since 2006 she has been the National Remarketing Manager for RTR Services Inc. She oversees the company’s resale of their clients lease returned and repossessed assets along with remarketing compliance. Lynne has also served on the NEFA conference committee and was named Conference Chair for the NEFA Spring Summit in 2012 held in San Diego. She can be reached at 800-238-3294 or [email protected].

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National Equipment Finance Association

tidbits

The 2013 National Equipment Finance Summit March 14-16 National Equipment Finance Association

The Hyatt Regency • Albuquerque, New Mexico Summit adds another layer of interest, benefit and value to this already compelling destination. For adventure lovers there are hot-air balloon rides, the Sandia Peak Tramway, or miles of hiking. For wine lovers, the New Mexico Wine Growers Association publishes a map of wineries with tours and tastings. They say that New Mexico is the oldest wine growing region in the United States, with the first grapevines planted way back in 1629! There are tours of ancient Indian Pueblos and a fascinating Pueblo Cultural Center. For more modern history buffs, well, the Mother Road, Route 66 goes right through it; need we say more? Great food, great shopping, golf, nearby casinos, truly, Albuquerque has something for everyone. The 2013 National Equipment Finance Summit will be held at the Hyatt Regency in downtown Albuquerque, New Mexico, March 14th through March 16th. Last year’s Summit drew a record number of equipment finance professionals from across the US and Canada for fun and effective business industry networking; first class, focused educational sessions; and an opportunity to meet with eager funding sources and leading edge services exhibitors. This year’s conference, chaired by Jesse Johnson, of Lease Team promises to be even better.

Albuquerque was listed this year by Fodor’s, the world’s largest publisher of English language travel and tourism information, in their world-wide GOLIST 25 Places to Go in 2013. Now the NEFA

ADVERTISER INDEX Allegiant Partners.............................................................................15 Asset Management Associates...................................................19 Boston Financial & Equity.............................................................. 5 ECS Financial Services..................................................................... 8 EquipmentEngine.............................................................Back Page Financial Pacific Leasing..............................................................19 Great American Insurance Group.............................................. 9

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LEAN.......................................................................................................12 Lease Team............................................................................................ 6 Leasing Solutions................................................................................ 5 LFC Capital...........................................................................................15 NEFA.......................................................................................................13 RTR Services.......................................................................................22 TAB Bank..............................................................................................17

In Memoriam

Steve LeBarron Constellation Financing Services

By David Taylor Vice President, Constellation Financing Systems

Volunteer Spotlight jesse johnson

New System Sales, Lease Team, Inc. Jesse Johnson graduated from West Virginia University in 2003 with a bachelor’s degree in Business AdministrationMarketing. Jesse has worked in the equipment leasing business since 2005, starting his career with OSG Billing Services. Jesse left OSG Billing Services in 2011 and joined LeaseTeam, Inc., where he is responsible for new system sales in North America. Jesse Johnson served on the ELFA Operations and Technology Committee from 2009-2011 and currently serves on the NEFA Board of Directors since 2010. Jesse also serves on the NEFA Membership and Marketing Committee where his efforts contribute to the rising number of NEFA new members and member renewals.

It is with immense sadness that I write to record the passing of Steve LeBarron in October 2012. For many years, Steve and I would run together at every major Leasing Conference around the world. Over the years, we had run together, (always at 6.00a.m., before conference breakfasts) in numerous cities and conference venues. On several of these runs, notably at the ELFA operations and technology conferences, we were joined by many colleagues from the industry, all wearing our Cap Gemini sponsored shirts. I’m not sure, though, that any of us knew that Steve was such a consummate athlete. In the week before his death, he completed his 61st marathon – the Twin Cities Marathon. He had competed in triathlons, ultra marathons and over the years overcame all the usual associated injuries to keep on running. It was with considerable pleasure that we eventually managed to begin working together in Constellation Financing Systems during 2012. Steve’s background in leasing and his work at IDS, as a consultant with Northern Consulting, Blackwell Consulting, and CHP as well as his significant contributions to the industry associations brought to us an extremely valuable and knowledgeable colleague. His no-nonsense judgements, wicked sense of humour, and commitment to excellence in all things, made him an instantly loved and valued colleague to us all. Steve’s accidental death will have shocked all who knew him, and appreciated his vitality, sense of fun, and comradeship. He will be sorely missed not only by family and friends, but by all he had worked with over the past decades.

Jesse is married to his wife Jasmin and they have a four year old son. Jesse enjoys being Assistant Coach for his son’s soccer and baseball teams.

CALENDAR OF EVENTS January 10, 2013 PNW Holiday Party Tap House Grill   March 14-16, 2013 National Equipment Finance Association Hyatt Regency Albuquerque Albuquerque, NM   October 10-12, 2013 NEFA Funding Symposium Nashville Marriott at Vanderbilt University Nashville, TN

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Nostradamus on Finance Continued from page 17 resistance to the effort. By using text instead of data, we often bury that information in unsearchable files. Data on our operational efficiency seems to be often just as neglected as data concerning portfolio performance. The currently unfashionable time and motion study techniques pioneered in the early 20th century by Frederick Winslow Taylor, and the later work of William Edwards Deming, encapsulated in the PDCA (plan–do–check–act) cycle, despite having been widely validated in industrial production environments, is significantly absent in financial organizations. Implicit in these approaches is the check and revisit process. When a new tool or process is introduced, its effect on other tools and processes and on the organization as a whole must be re-evaluated. Often we see the implementation of a new process or software tool, with little or no thoughtful integration with other systems and processes. Equally often, the projected return on investment in such a process or product change goes unvalidated against actual results. In the management of our portfolios, customer service, and staff relationships, if we are not continuously reviewing results, using accurate and complete data to bring about Deming’s vision of continuous improvement, we haven’t moved that far from Nostradamus level prediction. Without good data and good analytics, we can persuade ourselves that just about any business result has a correlation with just about any organizational activity or policy. In this regard, many of us would seem to be disobeying life and business rule #1 “Thou shall’t not kid thyself.” 

Members on the Move Continued from page 5 Dan Radley, Northpoint’s chief executive officer stated, “Our formula for success is based on leveraging our expertise with the expertise of our partners. Our management team has personal experience going back over 15 years working directly with Douglas Guardian,”

Alta Group’s Bent to Receive ‘Lawyer of the Year’ Award The Alta Group said that Paul Bent, a senior managing director of the firm and the head of Alta’s Legal Support Services Practice, has been named the Long Beach, CA “Lawyer of the Year” for 2012. The award will be presented by the Long Beach Bar Association during its 96th annual Installation of Officers on January 25, 2013. “The Alta Group is proud to extend our congratulations to Paul Bent upon his receipt of this prestigious and exceptional award,” said Alta CEO John C. Deane.

Balboa Expands Funding Capacity With Wells Fargo Facility Balboa Capital announced the acquisition

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of a revolving credit facility with Wells Fargo Capital Finance. Balboa said it will use this additional capacity to fund the company’s complete portfolio of financing products that are used by small businesses and equipment dealers throughout the U.S. “We are very pleased to extend a credit facility to Balboa Capital Corporation,” said Andrea Petro, division manager of the Lender Finance Division of Wells Fargo Capital Finance.

Dynamic Funding Closes Equipment Lease Dynamic Funding, a Colorado-based equipment leasing company, said that it has completed a sizable equipment lease with a Denver-based office furniture company. The financing will allow the company to furnish a new office space for Mitomics USA Incorporated, an Ontariobased molecular biomedical company that recently founded its U.S. headquarters in Aurora, CO.

Dakota Financial Launches DakotaCalc App for Equipment Leasing Brokers Dakota Financial said it has released DakotaCalc, the company’s new app

for equipment leasing brokers. The first application of its kind in the industry, DakotaCalc provides instant collateral structure calculations along with payment calculations. Michael Green, Dakota Financial’s managing partner stated, “We are continuously working to keep our program simple and accessible for our brokers. This new app meets both those goals and we are eager to introduce it to the market.”

The Alta Group & IEC Merge to be Led by Carl Chrappa The Alta Group announced an equipment leasing industry merger that will create The Alta Group Asset Management Practice, within The Alta Group’s global operations. Alta CEO John Deane and Carl Chrappa, CEO of Independent Equipment Company (IEC), said the new practice, to be headed by Chrappa, will meet comprehensive equipment management needs of clients worldwide. “The greatest challenge facing leasing industry executives is making profitable decisions amidst increased competition and regulatory compliance issues,” Chrappa. 

Member

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Lovern Augustine Boston Financial & Equity Corp

A Voice To Make A Difference and Caicos in the Caribbean, filled with great tasting food, clear water beaches, powdery sand, water sports and friendly locals, settling back into life as a pair is exciting but is not without difficulty. “It was hard to come back to reality after coming off of such great experiences but it’s been 4 months now since our nuptials and wouldn’t trade reality for anything else. Sure, living together as newlyweds brings its challenges some days but our differences and the way we to do things as individuals, makes life interesting and it has me excited to go home every day,” Augustine said.

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overn Augustine has kept herself quite busy over the last decade. In 1999, Augustine started as a temp for Boston Financial in their sales department, simply filling in for an employee out on maternity leave. She quickly fell in love with sales and garnered herself a permanent position with the company while attending college in the evenings. After two years, Augustine left to become a full-time mother with her first daughter, with the intention of returning to the work force. “Growing up, I knew I always wanted to use my mouth--I’m really good at talking to people and understanding and negotiating. I always knew I wanted to end up in that arena whether it be news or business,” Augustine said. Augustine went back to work, this time in TV broadcasting, and was the Boston Fox affiliate traffic anchor. When the economy derailed, she decided to rejoin the Boston Financial team about three years ago. She was drawn back to the leasing industry because she felt she could truly help business development in the sales department once again. “I love talking to CFOs and learning what their plans are so I really want to develop that and learn about other aspects of leasing and grow in the position,” Augustine said. “I love closing deals and helping companies learn how to

conserve cash. Marketing, sales—the skills I have in that area really pulled me back.” While her professional success has brought joy, Augustine recently found happiness elsewhere—as a newlywed. “Leading up to our wedding on August 11th, 2012… there was all the usual excitement centered around making sure everything was ‘just right’ for the big day. All the planning in the world could not have prepared me for the moment I walked down aisle to meet the man I was anxious to start the rest of my life with,” Augustine said. “With over 100 people in attendance, it would seem at that moment and many times that evening…that no one else was in the room except for us. The love and support we had of family and friends culminated into a night more than we could ask for.” Like anything else, married life takes work to grow and create success and even with an impressive professional background, Augustine sees the challenges and faces them head on. “I’m already learning that getting married isn’t a guarantee that you and your partner will stay together; it’s the effort you put into the relationship when things aren’t that great that warrants merit and will get you through the years which we are looking forward to.” After a dream-like honeymoon in Turks

Aside from her work as a professional, wife and mother, Augustine has built a huge awareness of domestic abuse over the last three years. In 2010, Augustine participated in her first two beauty pageants, winning both titles, Mrs. Ethnic New England 2010 and Mrs. Ethnic World International 2011. After winning both titles, she put a great amount of energy into promoting Awareness Against Domestic Violence. “I try to keep that part of my life and my professional life separate but I do try to get my coworkers involved,” Augustine said. “For White Ribbon Day held in March, I tried to get the men in the office to participate and wear the ribbons and just let the people around me become more informed.” According to Humberto Carlo, the director of programs for the White Ribbon Campaign in Massachusetts, the White Ribbon Campaign’s pledge “never commit, condone, or remain silent about violence against women” is a call to action for every man and boy to think about and challenge their attitudes, beliefs, and behaviours and to work together towards a more peaceful, equitable world for women and girls, men and boys. If it seems like Augustine’s life is jam packed already with her career, family and advocacy, it will only get more hectic this year but it is a joyful task that she is ecstatic to take on. “We look forward to the next chapter in our lives…especially since we found out we are expecting in 2013!”  newsLine | JANUARY/FEBRUARY 2013

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