CHAIRMAN’S UPDATE // June 2012
Fully Customized and Flexible Financing from TAB Bank Allows Company to Continue Growth and Expansion
TAB Bank was started in 1998 we were known as Transportation Alliance
Bank. The name described exactly what we did for the first decade of our
existence — we served the needs of the trucking industry. Through the
years we built one of the largest portfolios of trucking relationships
in the industry. This was accomplished primarily through our Accounts
Receivable Financing, Equipment Funding, and Deposit Accounts for our
trucking company customers and their drivers. We always intended to be a
leader in financing transportation. However, as we grew and matured as a
bank, we were also able to take our expertise to other commercial
industries, and we have since built a significant portfolio of
relationships outside of trucking. We currently provide working capital
funding through our Accounts Receivable Financing and Asset-Based
Lending programs for many commercial entities from a variety of
industries. One such company that recently became a beneficiary of our
working capital funding programs is PureTek Corporation of San Fernando,
Since its founding in 1991, PureTek Corporation
has grown to be the premier producer of pharmaceutical, nutritional,
and personal care products in Southern California. The company
manufactures quality branded and private label items for some of the
largest retail chains and drug companies in the United States. At their
state-of-the-art facilities, PureTek utilizes industry-leading
manufacturing and packaging technology, allowing them to produce and
distribute a wide array of liquid, tablet, and capsule products.
In order to meet the demand for their products and take
advantage of new business opportunities, PureTek relies on their
banking, lending, and financial partners to provide financing solutions
and services to ensure they can meet and exceed these goals and
objectives. Due to the nature of the pharmaceutical, nutritional, and
personal care product industries, as well as the relationships PureTek
has with its customers, it is vital for them to have flexibility and
customization in any lending relationship they enter into.
Unfortunately, the finance company that PureTek had been using for its
source of working capital financing was failing to provide the needed
flexibility. Jole Deal, Chief Financial Officer for PureTek, shared with
us the issues they were having at this time, "The finance company we
had been with was increasingly becoming less flexible than we needed. At
times, our concentration level with certain high-quality customers
exceeded their limit. It was difficult, and sometimes costly, to get
them to temporarily increase their concentration limit."
So PureTek set out to establish a lending relationship with a
financial institution that could customize a solution for their
specific financing needs. Their search eventually led them to TAB Bank.
Our business development and underwriting teams at TAB took the time to
become intimately acquainted with PureTek and the unique aspects of
their business. Our team of commercial lending professionals recognized
opportunities to create a new financing program for PureTek that would
allow them to focus on further establishing and expanding their
business. TAB set up a working capital line of credit, based on accounts
receivable and inventory, with customization and flexibility being key
elements. For PureTek, it was the flexibility that clinched the decision
to go with TAB Bank as their new lending partner. Commented Jole, "We
liked TAB's flexibility. The people are great as well. The process has
been the easiest I had ever experienced. The team at TAB was incredibly
professional and helpful."
Let our team of professionals customize a financing line
that will help your business succeed and grow. Let us display our
lasting commitment in tailoring a solution for you. To get started
contact us today at 800-440-4541 or visit us at www.tabbank.com.
CAPITAL EXPENDITURES AND IMPROVEMENTS —
When is a Good Time and What Should be Considered?
companies consider and prepare budgets for a specific time frame there
are many considerations that come into play. Typically budgets are
prepared to set expectations for operating results and, correspondingly,
earnings. However, many companies fail to consider their cash-flow and
capital expenditures. These can cause significant heartache to an
organization that would otherwise be on a smooth course.
With the economy still crawling along, many companies have
foregone investments in capital improvements for several years and
projects are starting to move from "nice to have" to "critical." The
good news is that banks are flush with cash and interest rates are at
all-time lows. The bad news is that many banks are not lending. This
leaves finance departments struggling to find ways to take advantage of
cheap funds to move ahead with needed capital projects. In addition to
stress caused by lenders, other concerns such as regulatory
requirements, tax rules, and accounting changes are making the horizon
more difficult to discern.
The following factors should be considered when evaluating
options for capital expenditures. This list is not intended to be
comprehensive, but food for thought.
Interest rates have been consistently low for over
three years and are forecast to stay at historically low levels for at
least the next year. As the economy improves, however, these rates,
particularly the long-term rates, will creep up. This will lead to
increased overall cost of capital investments in the future and drives
value to companies to invest today.
In an effort to stimulate the economy the
government will, at times, allow for capital investments to be fully
depreciated for tax purposes, which can result in significant savings.
For example, there is a 50% bonus depreciation in place through 2012.
Discuss the pros and cons of such rules with your tax accountant to see
whether they will benefit your organization.
One of the biggest hurdles to capital improvements is the
cash outlay. Leasing is an option that can significantly reduce
up-front cash requirements and allow for smaller monthly payments.
Depending on whether the lease can qualify, this option can also reduce
the balance sheet impact of asset additions by classifying them as
operating leases. This option may help companies meet leverage ratios
or other balance sheet covenants imposed by lenders. However, it also
impacts an organization's ability to realize any tax benefits and should
be evaluated accordingly. Also, proposed accounting changes may impact
the value of leases in the future as a means of managing the balance
sheet. Check with your accountants to determine whether these changes
will impact your company's financial statements.
Other Regulatory Impact
Environmental or other regulatory requirements impact
certain industries and can have a significant role in the timing of
capital investments. For instance, in the transportation industry
changes to emissions requirements for heavy trucks may accelerate new
equipment acquisitions because of the cost they add to both the purchase
price, as well as ongoing operations. Since these can be very
industry-specific it is important to stay abreast of proposed changes
and evaluate how these might impact your company.
|RECENT FUNDING ACTIVITY
re-discount line of credit for 1st Merchant Funding of Bay Harbor Islands, FL
accounts receivable line of credit for VSS Carriers of Carrollton, TX
accounts receivable line of credit for Precision Quincy Corp. of Woodstock, IL
accounts receivable line of credit for ISYNC Solutions of Tampa, FL
accounts receivable line of credit for Virgo Inc. of Tampa, FL
accounts receivable line of credit for Whitestone Transportation of Moselle, MS
TAB BANK IS INVOLVED IN THE COMMUNITY
TAB Bank Partnership with Applied Technology Colleges Provides Scholarships to Low to Moderate Income Students
has long partnered with non-profit organizations locally in Utah for
the purpose of providing financial assistance and other resources. Two
such organizations that TAB has partnered with for this purpose are the Davis Applied Technology College in Kaysville, UT and the Ogden-Weber Applied Technology College in Ogden, UT.
Each of these institutions offers technical education in many
high-demand fields. They rely on generous donors such as TAB Bank to
fund scholarship and other programs so that students can complete their
education and training programs. TAB has been a partner of both schools
since 2002 in providing funding for scholarship programs for low to
moderate income students.
"TAB Bank has been extremely generous in donating scholarship monies to
be used by students who want to attend Davis Applied Technology College.
This is critically important, as 71% of the students at the DATC have
resources in the very low to moderate income range. Receiving a
scholarship can make all the difference in a student's ability to stay
in school and learn up-to-date technical skills required by industry.
The partnership between TAB Bank and the DATC strengthens services to
deserving students. Currently, five students are completing programs in
Pharmacy Technician, Medical Office, Firefighting, American Sign
Language, and Welding Technology — all funded by TAB Bank," stated JoAnn
Matern, Director of Special Projects and Contracts at the Davis Applied
Karen Thurber, Development Director at the Ogden-Weber Applied
Technology College, stated the following: "Scholarship assistance fills
an essential need for low to moderate income students who otherwise
would continue to work, often while raising families. The OWATC
Foundation strongly believes that job training is the most efficient
long-term solution to poverty. Providing even one low-income student
the opportunity to earn a training credential can raise a family out of
poverty for generations."
continues, "To date, the generosity of TAB Bank has assisted 48 tech
college students. According to the Census, a Weber County resident who
earns a training credential will increase his or her income by an
average of $1,000 a month. Therefore, the economic impact of TAB's
contributions for scholarships has resulted in a return-on-investment of
just under $2 million for the state of Utah. But even more important
is the lives TAB has touched through its generosity. As one student
stated, 'This scholarship will give me new opportunities to grow,
including advancement and new challenges where I now work. I will be
using my education to better myself and those around me.'"
To learn more about the DATC visit www.datc.edu. To learn more about the OWATC visit www.owatc.edu.
Milestone Advisors, LLC
Milestone Advisors, LLC
(Milestone) is the financial advisory division of Milestone Merchant
Partners, LLC. Milestone is a registered broker/dealer, member of
FINRA, and is headquartered in Washington, DC with additional offices in
Newport Beach, CA, New York, NY, and Miami, FL.
Founded in 2001, Milestone's core focus is providing
investment banking services to institutions and companies within the
financial services sector. Milestone's partners and professionals have
particular expertise in working with:
• Banks and Thrifts
• Commercial, Consumer, and Mortgage Finance Companies
• Accounts Receivable Management and Business Process Outsourcing Firms
• Insurance and Re-Insurance Companies
• Asset Managers
They advise their clients on:
• Mergers and Acquisitions
• Corporate Finance Solutions
• Restructuring Services
• Other Strategic Initiatives
Since its inception, Milestone has advised on over 150 M&A
and capital raise transactions across the financial service sector and
has advised on more M&A transactions involving finance companies
than any other advisor since 2005 (Source: SNL Financial, LC). In
addition, Milestone has raised over $3 billion of capital for financial
services companies since 2008.
To learn more about Milestone Advisors, visit www.milestonecap.com, or contact Tim Stute at 202-367-3014 or firstname.lastname@example.org.
Milestone is affiliated with Milestone Merchant Partners, LLC.
Securities offered through Milestone Advisors, LLC, member FINRA/SIPC.