Optimism continues in the commercial equipment leasing and finance industry. I traveled extensively in the month of October facilitating on-site visits with my clients. My on-site visits confirmed that both banks and independent finance/leasing companies are actively positioning themselves for controlled growth and sustainability. I want to share the following general observations:

• Our industry is changing. Automation, efficiencies, and internal processes are adapting to the changing needs and wants of our commercial clients.
• Competition is fierce, especially for the highest quality assets. Margins continue to be squeezed, especially for the commodity players (specifically banks).
• With only a few exceptions, portfolios continue to perform exceptionally well based upon historical data. There are a few cracks, but overall portfolio performance remains historically strong. I am constantly reminding professionals to maintain their credit underwriting discipline to avoid the next bump in the road. Although we cannot predict when the bump in the road will occur, it will come, and the most prudent professionals are preparing for it.
• Independents are becoming more equipment centric. They are providing real expertise to the market. They are realizing up-side potentials because of their ability to generate significantly more business and because of their ability to re-market equipment when needed. I am encouraged by the trend, but warn professionals to not be overconfident, until their expertise has been fully tested in a down market.
• Yields are increasing across the board and, to date, these increases have not hindered activity. Business owners are buying equipment now before equipment cost or yields increase even further. There is a built-in sense of urgency. 
• Cost of funds are significantly increasing; and many participants continue to fund their transactions with floating lines while their products are fixed for the term of the financing or leasing agreement. Match funding is appropriate to protect future earnings.
• Some industry participants are reducing terms and, when offering longer-term transactions, they are including rate reset provisions to offset prolonged increases in cost of funds.
• The potential in the market continues to grow for those professionals and organizations that understand their position in the market, know their clients, and strive to offer superior products and services.