Sign Indiana Banking Lease Template Computer

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we need to move on to the second paper second paper is economic lease financing the role of community banks we have a couple of presenters Mohammed Khayyam from the University of Southern Indiana is going to start off and then turn it over to Charles Kelley as I understand so let's hear about equipment lease financing the role of community banks thank you Scott I think this paper is a good illustration of a case study about partnering I received word about this conference from the CEO of first federal savings banks in bank in Evansville a few months several months ago and his question to me was would you be interested in working on this we don't have any specialty in banking within our college and we don't have a center we don't have specific programs that are geared towards banking but we do have a community that is very much a financial services center in the Evansville Indiana so when Mike who's the CEO here sort of made this opportunity possible by sending a flyer out we had to make some determination about interest and I'd like to acknowledge another faculty member Curtis Price who is here who was instrumental in getting this project going and more importantly another individual who has had three decades of practical experience in an era of activity i have i have no knowledge about which is equipment leasing products and so Charles Kelley is here because he knew about something that none of us in the academic world at least in our College knew about but he at the time when this flyer came out was going to class and we had a dinner with a group of our my board of advisors in the college and I said to Charles could you after class attendance meet because when you Mike would be there and he'd sort of make mention of this thing Charles was excited and I think it's a good reminder to us academics by the importance of enthusiasm he was very excited and he took the ball and ran with it and so much of the work in this paper in terms of the networking with the fdic with new vigils in the Federal Reserve System raleys result of Charles's effort in his way of exciting us in the academic world on something that we had no knowledge of so I wanted to give you that background because I'll do a couple of slides which really turn it over the Charles to take it true towards the end but it is a case study about how not so easy it is to do collaboration bridging the gap between the academic world and the practitioner and real life in the banking sector we had some struggles get into the point of actually producing a product and the struggles had to do with differences in perspectives and methodologies about how you approach a task and so once we would want to encourage more of this I just wanted to be upfront about some of the difficulties that do exist when we try to bring the different parties together the good news is that we were able to meet the deadlines with some leeway with the folks from who were planning this conference they give us some extra days and that was very very helpful and we're very thankful to that but we had some challenges a long way and and we were able to overcome them which is what I take away is a very important piece of information from this particular exercise so I'll start now with given some context as to how we arrive to this particular topic overall context is that we know over at least the last several years there's some indication that structurally in the United States economy some things are not working where your custom viewing them is working there's some and I view it more as structural and cyclical so that's a personal perspective I think there's some structural changes occurring it in the economy that's causing the relatively slow response to certain things that we've done which we've done in the past have had slightly different impacts and those structural changes our current economy wide but they're also current within the commercial banking sector and I think we've heard already about the consolidation impact within the banking sector and what it's doing for the community banking sector within that commercial banking sector the motivation for our project is linked in some fashion to the idea that when there is a crisis there are sir natural ways of responding and a lot of times those responses are too much geared to what we know well we believe that there needs to be a more strategic way in which response occurs within the community banking sector and we're not saying that new markets are suddenly out there for community banks but we do believe that there may be new applications of existing strengths and lease equipment lease financing we think is one of those not based on a hypothetical on my part or literature review so much but from the three decades of experience of somebody who has done this not only with the banking sector but or companies that do equipment lease financing so the motivation is one to identify a way in which a strategic arena might be discovered or uncovered by a community bank or community banks that utilizes their strengths and it's adjacent to what they currently do and as Charles will describe many of the things that are done within equipment leasing other products in that segment have characteristics that are quite familiar to individuals in the community banking sector prudent underwriting control standards strong relationships three things that a recent study about driving banks identified as reasons why banks that drive during the last recession did those things are part and parcel of the equipment leasing segment we use data they were provided by the FDIC from 1990 22 2012 the results of this project at this point are still preliminary but their foundational we think to some of the more rigorous techniques and methods that we can use to test some hypotheses so we started with some very basic questions with the information that we had a tan and these are are there some things about the banks that and we're talking about community banks and we use for this project the 2012 FDIC definition of a community back which is not purely based on asset size but on a range of characteristics that did involve asset size but scope of banking geographic footprint or some of those characteristics so there is a layered process that led to a definition that now says the data that we have the designation of community bank is not just based on asset size but several other characteristics and that's the definition we're using in this project but the first question would be if banks are engaged in lease lansing community banks are there some systematic differences between those banks and other community banks secondly are there any district this differentiating attributes between the banks with leasing activity and other community banks again that the sample is about community banks as a whole not the non community banks basic question how many of these banks are engaged in leasing equipment least in particular and is there any relationship with asset size which is something that might be an expectation and is there any difference in performance using some standard indicators like return on assets return on equity net interest margin one suggested idea of a dimension of structural change might be evident in this graph from the mid-90s and it's proceeded beyond a recession investment fixed investment in equipment and software has become the most critical component in terms of relative importance within the fixed investment category and so if you look at the red line you see that sharp trajectory change in equipment and software as a component of fixed investment you continue beyond the recession so recent study done at Federal Reserve Bank of Cleveland and the pattern and a trajectory is maintained with regard to equipment and software if you look at the components of the equipment and software segment and I'll come back to the slide elements such as computers and peripheral equipment medical etc etc and you ask the question take transportation equipment and take medical equipment and instruments and think about the linkages within the economy if we were to have the same dollar increase in demand or expenditure in those two categories and there is a difference you go down the line and we will find is that inter-sectoral linkages multipliers that occur across those categories do vary the more traditional ones transportation agrasen reconstruction machinery they are higher in impact in terms of linkages across the economy medical equipment communication equipment information processing in general it's lower the one good thing is computing peripheral it says hi there as it is in transmission equipment the relevance is the this is that if you look at the equipment and software expenditure investment among the highest category today is the information processing component now transportation equipment not act in fact agriculture machinery construction machinery are smaller components within that two little figure but they have to hire supplier impacts but they're smaller the larger components would be in the communication computers etc and here's where the variation in impacts across the economy tend to be less than it used to be twenty eight twenty years ago 30 years ago because of the shift in composition of economic activity I believe that's an example of a structural change because it's long last into the degree that the nature the composition of fixed investment has changed as altered at least since the mid nineties so continuing back on the project what we were curious about was well how important is Lee sin as a source of acquisition for equipment when we found true information provided that is available from the equipment leasing and finance foundation is that as you track that data that's provided by that particular organization prior to two thousand six but even continuing at least fifty percent an average of the acquisition of business investment equipment equipment is acquired true leasing activity and so that gave us reason to pay more attention to what's happening in the equipment leasing segment and why might it be something to look at as a growth opportunity or as an opportunity for the future for community banks part of that story is linked to the idea of replacement of equipment so in 2004 if you go down the line this was the average age of the stock of equipment in those categories by 2011 that average age had incrementally gone up with the rapid pace of Technology in some of these areas and obsolescence that can occur it is appealing to look at lease in versus buying and holding on to something that wouldn't last maybe beyond the time that you expected because of the rapid way in which some of the changes or occurred in technology so again we feel that there is some reason to believe that this segment has some potential to be examined and explore in greater depth within the community back in Sector and I'll now turn it over to Charles to continue from here