www.atel.com

Equipment leasing may not be the first thing that pops into your head when thinking about Web-based financial services.

That’s fortunate, because if you concentrate on it now, you can beat the competition to the potentially lucrative $180 billion market.

The Company: Privately held ATEL Capital Group was founded 21 years ago by A.J. Batt, a physicist and mathematician who authored a software program still used by major leasing companies to run internal analyses of leasing opportunities. The company, headquartered in San Francisco, is the seventh largest privately owned leasing company in the U.S, originating $225 million worth of equipment leases per year. Its lease portfolio exceeds $1 billion.

Atel is a full-service leasing company providing equipment leasing for companies of all sizes. The company also packages leases and sells them to the investment community through its ATEL Securities Corporation subsidiary.

ATEL Business Credit is the small-ticket financing division ($5,000 to $5 million). The division has recently begun targeting community banks with assets less than $1 billion who typically do not offer equipment leasing.

Market Potential: The Equipment Leasing Association www.elaonline.com estimates there were $180 billion in equipment leases originated last year in the United States. According to Atel, approximately, $50 billion of that is in deals valued $250,000 or less. Furthermore, 87% of businesses with equipment needs finance their purchases outside the bank. Nearly three quarters of these companies never even consult the bank for a quote on a lease.

The market is ripe for preapproved leasing as evidenced by American Express’s experience last year. According to ATEL, American Express originated $245 million in leases using aggressive direct mail (OBR alone received at least a half dozen solicitations last year from American Express).

ATEL believes that banks using its preapproved system can generate leases from 1 out of every 6 existing bank clients that use equipment financing. In dollar terms, they predict $1.5 million in leases the first year per 1,000 clients. With 60% to 70% of leasees typically ð becoming repeat customers, this would grow over time. With banks earning 1.5% to 2% fee revenue for non-recourse financing, fee income would average $22,500 to $30,000 per 1,000 clients in the first year.

Product and Services: ATEL provides a full range of leasing products and services. They can provide non-recourse financing where the bank receives pure fee income for deals handled by ATEL on a private-branded basis, or the bank has the option of holding the paper to build assets.

ATEL’s Cyberlease can be added to a bank’s Web-based small business services to handle customers looking to their bank for lease financing. But given that 74% of bank customers never approach their bank for financing, ATEL prefers to proactively target the bank’s client base with preapproved lease offers. Typically, the bank would share in the out-of-pocket expenses associated with the mailing and database work.

Here’s how the private label turnkey program works:

•  ATEL mines the bank’s existing commercial customer database by:
  - screening and sorting customers by industry type
  - pre-qualifying/preapproving credit
•  mails a customer solicitation
•  conducts follow-up telemarketing
•  clients can apply by phone, by fax or via the Web

Bank Partners: ATEL recently began actively soliciting bank partners to offer its leasing programs on a private-branded basis. The company reports it’s working with three banks in various pre-launch activities. However, no bank is currently live with
its system.

Bank Pros:

•  Adds a widely used financial service to your small business product line.
•  Keeps your clients from going to American Express or other competitors.
•  Cyberlease can be used to differentiate your Web-based services.
•  Develop new business relationships from customers attracted to your leasing service.
•  Save your clients time and/or money with preapproved lease financing at competitive rates.
•  Earn fee income and/or increase assets with no upfront licensing fee.

Bank Cons:

•  Lack of control over the leasing process and pricing.
•  Lower margin than doing leases in-house.

How Cyberlease Works:

1. Bank adds Cyberlease to its Web (cost = $0).

2. Customer fills out private-branded Cyberlease application which is available round the clock.

3. Customers receive approval within 15 minutes.

4. If not immediately approved, ATEL asks for more information and will discuss the client with the bank to see what they can do together. Outright declines are rare.

5. Customers can access application status, historical activity reports, and an early payoff quote via the Web (monthly hardcopy lease statements are optional and would be private-branded for the bank).

6. Banks can also access the application and status info via the Web.

7. Final lease documents are printed.

8. Customer comes to the bank to sign.

9. Customers can also apply via the Web for additional funding when necessary.

Future Plans: ATEL is committed to Web-based delivery. They have secured numerous domain names and are in discussions with major portal players to develop leasing centers across the Web. The company is also entertaining the idea of a future IPO.

Contacts: A.J. Batt is CEO/Founder, ajbatt@atel.com ; Richard DiNottia heads its banking initiative, rdinottia@atel.com , (800) 446-2835.

If you are not in the leasing business today, or are not leveraging the Web, this could be your answer. Here’s an established company that can help you:

a.) increase revenues

b.) add value to your Web site

c.) differentiate your bank from the competition

d.) put your brand on the product

e.) handle the back-office functions

If you are concerned about losing assets, Atel will work with you to put the leases on your books. One area we cannot assess is lease pricing. Will Atel’s prices be competitive in your market? Only you can determine that. Call Atel and find out.