Bank Offers Capital Alternative

August 15, 2003
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GRAND RAPIDS — Huntington Equipment Finance works with businesses to secure financing and leases on capital equipment ranging from CNC machines to airplanes to office furniture.

A division of Huntington National Bank, Huntington Equipment Finance provides both tax and non-tax financing deals on basically any kind of industrial core asset in the manufacturing, health care, construction and transportation sectors.

The health care industry is a big area for the company in West Michigan, said Vice President Gregory Leymon.

Leymon is responsible for business development and client services in the Grand Rapids-Holland-Muskegon triangle and the Kalamazoo and Traverse City areas.

A separate entity within the company, called LeaseNet, is devoted solely to leasing technology assets, which is a big area as well, he said.

About one-third of all capital assets are leased every year, he pointed out, and there are different tax and accounting advantages in leasing equipment rather than purchasing it.

“What our group primarily does is leasing, not so much financing,” Leymon explained. “We do financing, but our forte is doing tax and true leasing, so we differentiate ourselves from the bank in that we actually own equipment and lease it to our customers.”

A company, for instance, might use the equipment finance division when it needs a $500,000 CNC machine but prefers to lease it.

“We don’t go out and find the equipment, but we take care of all the financial leasing details.”

The division’s primary focus is Huntington Bank customers, but Leymon noted it also works with companies that are not bank customers.

Most of the large national and regional banks have equipment-leasing companies, but he said Huntington kind of stands out because of the types of assets it is willing to work with.

“We’re really a generalist and that’s kind of different in today’s lease environment,” Leymon said.

“You’ll find a lot of bank leasing companies won’t touch an airplane, won’t touch a tractor or trailer, whereas we are pretty much open to all types of assets.”

A no-tax finance or lease solution — called a capital lease — is a situation in which the customer still owns the equipment, claims the depreciation and reports it as an asset on their balance sheet. There’s no tax implication, Leymon explained. The company makes its payments and owns the machine at the end of the lease.

A “tax deal,” on the other hand, is similar to leasing a car. Companies have an option to buy the equipment at the end of the lease.

“In that scenario” Leymon said, “the bank leasing company owns that asset. We’re depreciating it, and we pass on the benefits of depreciation in the form of the payment and the rate. It’s a cheaper way for them to pay for that asset. It’s a smaller payment every month.”

Huntington Equipment Finance began operation in October 2001.

The equipment finance group now has about $160 million in assets under management and its technology arm, LeaseNet, has about $65 million in assets under management.

In the economic environment of the last two and a half years, the bank leasing company has naturally seen a huge downturn in capital expenditures, which equates to lower lease deals, Leymon said.

“I think we’re seeing the light at the end of the tunnel,” he said.

“We do business with some companies that are leading indicators that the economy is starting to come back. We’re starting to see some of that economic spur in those industries. We’re optimistic at this point.”

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