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US Bank Equipment Finance Continues Downsizing

Leasing News recently reported U.S. Bank Equipment Finance--Technology Finance Group, previously known as the Oliver-Allen Group, located in Larkspur, California, had basically moved its operation up to Portland, Oregon after audit problems, lawsuit problems, management difficulties, and just plain cronyism, too.

There are other events that have come to light: the CEO of US Bank Equipment Finance Portfolio Services Joe Andries, officially Senior Vice-President and 20 year employee, was let go (confirmed by four reliable sources,) with other major changes and complaints here, as well as the Small Ticket Division, under Adrian Hebig and/or Tom Landmark, or who knows now, which has reportedly become a shell of what it had been just a few years ago. Sal Maglietta, out of Portland, Oregon is head of the full division.

A highly reliable source reports that Joe Andries has joined Great America Leasing to start a portfolio service working out of Marshall, Minnesota. US Bank Portfolio Service is to exit altogether. Brian Bjella was originally in charge in 1995, and it is reported Andries will be working out of his offices for the time being, perhaps on a private label vendor portfolio program: designing and implementation. An official Great America announcement is expected soon.

Exactly what is happening at US Bank Equipment Finance is not known to outsiders, and insiders are very tight lipped, afraid of losing their jobs, as is the City of Marshall's major employers. Many are employed by US Bank from the original start of the company by Schwan ((the Largest employer in Marshall (population was 12,735 at the 2000 census) is The Schwan Food Company, original owners of Lyon Financial dba Manifest. Schwan remains one of the largest frozen-food companies in the United States and located here:

What started this news story off this time was an unsigned US Mail letter to Leasing News from a banker unhappy with the alleged non-performance by US Bank Equipment Finance Portfolio Service, also stating that its CEO Joe Andries was "let go:"

"There is a leasing company in the Chicago area that was financed by 3 or 4 large well known banks. US Bank was the backup servicing agent for the past several years & was paid monthly for being positioned to take over servicing if the leasing company failed.

"US Bank's new internal plan seems to be to continue to do back up business and take the monthly fees from the investor banks for not doing much of anything (and let the investor banks think they have US Bank to do full servicing if necessary) and then find another service company to do the work if the portfolio gets in trouble & full servicing is needed."

No one at US Bank Equipment Finance returned telephone calls to respond to Leasing News.

Two insiders confirmed the information that was sent (note: names, dates, other information is not included as sources do not want to be named or confirm any of this information. The servicing company named would not confirm nor deny with the policy they do not talk about who or who are not their clients, so Leasing News is unable to disclose at this time.)

According to one of the banks involved, the concept of having a back-up receiver has always been one of those theories that looked great but almost never worked. In theory, the back-up company was supposed to be like the verifier in the beginning of computers. In that concept you ran data through two sources and if there was a discrepancy between the two you looked to correct the mistake. The truth of the matter is that the back-up receiver never did the work and when the first receiver (lessor) failed the back-up could move in right away with no hitches. All theory….Evidently No controls."

The Portfolio Services Web Site says there are 75 PC's available to take information, and the listing in "Back Offices" says 135 employees, but evidently neither is correct, as well as several telephone numbers on the web site or even on its front page:

"Commitment to the Industry
Portfolio Services is an active member in the United Association of Equipment Leasing, the Eastern Association of Equipment Leasing, the National Association of Equipment Lessors and Brokers, the Equipment Leasing Association, and the National Vehicle Leasing Association."

The first two leasing associations merged almost two years ago and the Equipment Leasing Association in 2006 elected to change their name to the Equipment Leasing and Finance Association.

The Portfolio Services group actually started out as the servicing arm for the small ticket leasing operation, which was the major factor in what appears to be happening today. Again, it was reported by a highly reliable source that the group would be closing down.

A major announcement regarding the Equipment Finance Unit is expected on October 15, meaning more layoffs, Leasing News was told. It is no secret that the lease financing market has been off for two years, perhaps going of for three years, from the days when the copier group was doing $70 million a month and the vendor group doing $100 million a month, according to a highly reliable source. The next SEC report from the main bank may give more of the numbers, as Leasing News has been reporting the write-offs and business numbers (although combined with the middle-market Portland operation.)

These changes began to surface when Executive Vice-President Mike Rizzo wrote his own job description out of the loop and resulted in several management shifts, as written about in Leasing News, which resulted in a major move that eventually became public of laying off service employees and sales representatives at the small ticket division; cutting off all brokers who did not send in a specific dollar amount, which was allegedly a million dollars a year in business.

This division has not been performing, Leasing News was told, and the October 15th news may be aimed more here than elsewhere, as the broker group is less than 50 brokers sending business.

Leasing News heard from many long time independent brokers who were quite upset as they had been with "Manifest" for quite some time they reported. What happened next was a rise in credit criteria, due to the economy, bank management outside of Marshall, and evidently a change in the original model. The relatively small community of Marshall was not used to this change which in a time factor can be considered "sudden," although was happening over a longer period of time.

What then happened was brokers "revolting" to the credit criteria and fear they would not meet the minimum requirements, and while there are less major funders, there are more smaller funders and other sources arising from the marketplace and they went here. All this combination hit the leaders who had two, maybe more, very serious meetings, Leasing News is told. This is all relatively new to those who live in Marshall.

In the meantime, with less staff, less servicing, things start to happen in operations that affect the bottom line, and the cutting of staff that has happened in the leasing market at GE Capital, Key Equipment Finance, LEAF Financial, as well as many banks actually exiting leasing altogether has not gone unnoticed by the parent US Bank.

Commitment to the Industry web page:

Disclosure: no position