The resignation of the CIT Group's (CIT) chief executive Jeffrey M. Peek is very bad news for the finance and leasing industry. It will make credit tougher to obtain, and definitely more expensive, lengthening the recovery for small business in the United States, culling out the market place in a faster pace than Leasing News writers have been predicting. This is terrible news.

U.S. Bancorp (USB) reported net income of $471 million for the second quarter of 2009, which include the redemption of TARP, with a record net revenue of $4.2 billion. In addition, the bank was aggressive in purchasing bank branches from FDIC bank failings, such as the 213 branches of Downey Savings and Loan Association, F.A., Newport Beach, CA, and PFF Bank & Trust, Pomona in late November, 2008, but costs coming in 2009. The FDIC and U.S. Bank entered into a loss share transaction. U.S. Bank will assume the first $1.6 billion of losses on the asset pools covered under the loss share agreement, equal to the net asset position at close.

U.S. Bank is considered more of a consumer bank, but its wholesale side is growing.

Shoulda, Woulda, Coulda? When the economy comes back, the high tide will raise all boats. That have not sunk. Or been flushed down the toilet.

Despite all the positive reinforcement from industry trade publications from the garment industry, small businesses, and even Leasing News, the government turned down the CIT Group (CIT) for a "loan extension." It must have felt quite different to be on the other side of the desk being told "no."

Every day we read about the federal government bailouts, and how commercial and investment banks will be changed forever due to regulation, compensation caps, and a new view of systemic risk. A “what can go wrong” mentality has replaced Alfred E. Newman’s “what, me worry?” approach to the capital markets.

But only here at Leasing News can you read that in fact leasing has changed forever too, like banking going back to its roots where lessors had capital and lessees needed equipment, and they were willing to pay a premium for fleet flexibility, or off balance sheet treatment, or tax efficiency, or because conventional loans weren’t quite enough. There is a new world order coming for leasing and in fact it is the old world order... If you can access capital you are king of the leasing hill. But, there is unlikely to be any more securitizing because toilet paper apparently is not AAA. To the extent that institutional markets play the leasing game they will be hard to distinguish from the terms you always got from your banks.

Marlin Business Services's (MRLN) net income for the fourth quarter of 2008 was a loss of $7.3 million, year ending loss of $5.2 million compared to a year-end profit of 2007 of $18.2 million (SEC 8-K filing Fourth Quarter/Year-end). The stock has seen a decline. The natural reaction is it is happening to everyone in the leasing and finance industry, even GE and CIT. There is more to the story than this easy excuse.

First, by net worth and programs available, Marlin Business Service is neither GE nor CIT, and should not be compared as the stock brokerage firms do. Marlin did not have any subprime mortgages or student loans or credit cards. More to the point, year-end personnel is 286, nowhere near to the thousands at CIT, GE, and even LEAF or Key Finance. Today it has less employees. Its niche was to operate as a boutique leasing company making personal relationships and friends through a broker network and select vendors as the company the founders came from Advanta, who ironically stayed in the credit card business.

Many emails on Wednesday and Thursday that Marlin Business Services, Mount Laurel, NJ (MRLN) closed two offices, let 28 people go. “28 laid off today...2 branch offices closed...funding capped at 10MM this month,” and another wrote “Word on the street is that they just didn’t have the cash anymore to pay all the employees and they had to cut costs prior to their earnings announcement.”

A well-known “insider” to Leasing News stated: “Not funding at all, but being VERY selective with funding. App volume is down considerably as credit tightens. It's probably the same everywhere. We have to be careful to cover our own hides.”

As the ZRG Partners index shows: Opportunities for new jobs in the leasing and finance industry in America is at an all time low.

The emails started late morning on Thursday that Marlin had closed down their broker division and would only keep the direct division working. Leasing News had reports the company was down to two broker representatives, not getting the quality business it was seeking, and the once performing division has never been the same since Mike Bennie was fired by Executive Vice President, General Counsel & Secretary Corporate Secretary George D. Pelose.*

There were others let go, other changes, exiting factoring, doing loans, vehicles, cutting staff, then a bank, which has enable Marlin to go after TARP, plus the economy changed. As many companies appear to be doing now, they are cutting back to work their portfolio, in hopes of getting through the tough times with minimum overhead.

If any company needed TARP funds, it is Resource America (REXI), who perhaps should have become a commercial bank, too.

Resource America continues on its downward trend, despite cutting expenses, overhead, re-adjusting, but it hasn't been enough as the company still reported a net loss of $9.3 million for their fourth quarter resulting in a year-end net loss of $26.2 million, compared with almost a $11 million net loss the fourth quarter of 2007 and year end profit for 2007 of $3.7 million.

General Electric Co. (GE) Chief Executive Jeff Immelt said on March 10, 2008 that revenues should rise by at least 10 percent to $195 billion this year for the industrial, financial and entertainment conglomerate.

"In 2008, we should hit all of our financial goals and outperform the S&P 500," he said in a message to investors in GE's annual report.

On Friday, October 3, 2008, CIT Group Inc. (CIT) announced that Walter Owens resigned as President of Corporate Finance, effective immediately. The company will issue its financial results for the quarter ending September 30, 2008 before the market opens on Thursday, October 16, 2008. No comment on Owens' resignation was made except for the SEC filing. The shake up, which began with Rick Wolfert resigning and Thomas Hallman retiring, continues.

In January, 2007, Owens then 46, was named President of CIT Corporate Finance.

Lease originations month-to-month decline 15%

The majority of leasing companies saw a decline of business in the second quarter of 2008, according to the Equipment Leasing and Finance Association most recent survey.

It is not known at this time the employment status of 25 plus employees from the announcement by LEAF Corporation of the closing of LEAF Third Party Funding in Southern California (formerly Pacific Capital Bank Leasing, Santa Barbara Leasing,) headed by Paul Menzel, CLP, 2006 Leasing News Person of the Year, including his long time loyal staff.

No one is talking right now to Leasing News, referring everything to a press release that was aimed at announcing the office expansion in Columbia, South Carolina to in a 20,000 square foot facility to house 150 employees “in a consolidation for all third party originations.”

Irwin Financial Corporation (NYSE:IFC), a bank holding company, announced Thursday a loss of $107 million, including the commercial finance line of business loss of $23.4 million in the second quarter of 2008, down from earnings of $4.4 million in the first quarter. The loss reflected the required mark-to-market taken on the small-ticket lease portfolio sold in late July. The franchise finance channel, which is unaffected by the strategic restructuring, earned $1.7 million.

In its telephone conference call Tuesday, Marlin (MRLN) CEO Dan Dyer, Exec. VP George Perose and CFO Lynne Wilson all attributed the two-third down second quarter 2007 compared to 2008 as a result of “the economy.” It was $1.7 million compared to $5.178 million.

In fact, their net income has been on a down curve as their stock has been, too (net income in millions):

Leasing News will have an exclusive interview with the deposed ex-president of Marlin Business Services, Gary Shivers on Wednesday. The small ticket leasing business is about to change.

"Under the Separation Agreement, Mr. Shivers' employment with the Company will terminate on January 31, 2007 (the "Separation Date"). Mr. Shivers is subject to confidentiality provisions, an 18 month non-competition period, and a 24 month non-solicitation and no-hire period under the Separation Agreement. " (source: PDF file)

On Wednesday July 30, State Bancorp (STBC), parent of State Bank of Long Island, filed its second quarter earnings showing gains of $961,000 versus $930,000 a year ago.

The performance highlights noted,

As originally reported in Leasing News' April 9^th, 2008 story on CIT (NYSE:CIT), there were problems expressed in their financial statement regarding student loans delinquencies in general, as well as a major problem with student loans concerning a flight school in Nevada:

As noted by Leasing News in the over 60 day column, CIT has delinquencies in its $11.6 billion in student loans (as do most of the other student loan lenders.) Leasing News observed in their SEC filing before they made the announcement why they should exit the government student loans program.

Leasing News issued the press release from the CIT Group (CIT) announcing the $3 billion underwriting from Goldman Sachs as an “Extra” last Monday. Generally, we prefer to look at the “spin” first. It looked like very good news to this editor, and it still may be, but Leasing News didn’t know. Several attempts to reach the CFO or a “spokesman” went unheeded. Leasing News is not the New York Times and often our news comes from insiders, so that is the approach that we took.

The first set of questions that were asked were to confirm what the agreement provides:

The first quarter results for Marlin Business Services (MRLN) were issued late Thursday, after the stock market closed. Early in the morning, investors reacted with the stock falling to an all time low of $5.85. Later it closed at $6.12, lower than Thursday’s $6.17. There appeared no rush to buy this stock on the hopes that the company would become more profitable.