NMBA - March 2012 Newsletter
IN THIS ISSUE...
- A Message from the President
- 2012 Conference - Save the Date
- NMBA Donation to BoatUS Foundation Helps Launch Program
- 2012 Annual Report - Questionnaires are ready
- Winter Shows Suggest Positive Turn for Boat Sales and Lending
- Legislative Updates
- AVDA Annual Meeting
- Quarterly Survey - Please participate
- Marine Lending Workshop a Success!
- Statistics Corner
MARCH 2012, PRESIDENT'S LETTER
Welcome Spring!! I am glad to see signs of warm weather – cherry blossoms popping out, robins looking for a good place to make their nests, and boatyards overwhelmed with requests for boats to be put back in the water. In addition, there seems to be a groundswell of optimism for the boating industry, while it may just be appearing in pockets around the country. Several dealers and manufacturers have said that one of the largest problems that they anticipate is their inability to get new product to sell. That is a problem we have not seen in quite some time.
In several states, such as mine here in Maryland, we are battling luxury tax proposals. We all know these types of taxes devastate the whole marine community with loss of jobs and ultimate loss of revenue to the state. Get involved with your state marine trade associations, dealers, and retail businesses to stop this tax implementation that mostly affects middle class Americans.
Here at the NMBA, the Board and Committee Chairs have been extremely busy. The annual survey is being sent to NMBA members as we go to press with this newsletter. The survey questionnaire has been revamped to make it clearer and easier to complete and we are expecting a high participation rate. Attendees at the NMBA annual conference in San Antonio last November saw the presentation that highlighted the statistics from this annual report. The data is quite informative and represents statistics that are not available except through the NMBA report. Member lenders: please support your association by completing this annual survey questionnaire for your business and you’ll receive a complimentary copy of this valuable report (value $249.00).
The NMBA Board of Directors is holding a very important strategic planning meeting next month. The day- long session is being facilitated by an association management consulting firm who will provide guidance and insight to the process. Our primary goal is to determine the importance and benefit of the NMBA to members, and identify changes necessary to increase value. Our minds are open, our ears will hear what you have said, and our eyes are focused on the future of our association. Thanks to all of you who participated in the pre-survey. Your comments will be invaluable to this session. We hope to gain two or three major ideas for change that can be implemented this year, with our sights on longer term goals as well. We will share the results of our meeting with you and plan a special session at this year's NMBA Marine Lending Conference, scheduled for September 9-11 in Newport, Rhode Island.
Mike Bryant and Jackie Forese, NMBA Conference committee co-chairs, are feverishly planning the September event. Agenda items include more focus on Dodd-Frank and how it may affect your business, best practices for collateral evaluation from the decision-makers, and much more. Please save the dates of September 9-11, 2012 and plan to join us in Newport.
Be on the look-out for NMBA's quarterly survey questionnaire asking for input on first quarter activity for 2012. This short survey gives all of us a snapshot look at on-time data of activity within the world of marine lending. The survey will be sent to key contacts of all lender members the first week of April. We appreciate your participation.
Several of the NMBA Board members are attending the American Boating Congress in Washington, DC April 24th and 25th. The NMBA is co-hosting the event and we welcome all interested parties to join us. The hill visits are exceptional in getting our voices heard on issues that affect the boating community. See more details and a link to registration and pre-conference briefing materials in the article below.
Bill Otto of Lake Effect Financial Services will represent the NMBA at the Recreational Boating Stakeholders Growth Summit being held in Chicago on April 3rd. This is the second gathering of all segments of the marine community to further their goal of expanding the growth of boating as a national pastime. Stay tuned for updates.
Have a great spring boating season and I hope to see all of you in Newport, RI in September. My phone is always on, my door is always open so please let me know how I can help make this association better for you!
Karen Trostle, President
ANNUAL CONFERENCE TO BE HELD IN NEWPORT, RHODE ISLAND IN SEPTEMBER 2012
The 33rd Annual NMBA Marine Lending Conference will be held September 9-11 at the exquisite Newport Marriott hotel situated in the heart of historic Newport, RI. The waterfront hotel offers first-class accommodations with a luxury spa, indoor swimming pool, fitness center, and on-site restaurant, Fathoms, which features fresh seafood cuisine.
Mike Bryant and Jackie Forese, NMBA Conference Committee Co-Chairs, are developing an agenda of timely and relevant topics for the marine lending industry and welcome your input. Mike may be reached at email@example.com or 949-475-0760; Jackie is available at firstname.lastname@example.org or 516-810-3796. The annual golf tournament will be held Tuesday, September 11th at New England’s number one rated Newport National Golf Club. A tour of the historic and elegant Newport area will be available for those who do not golf.
Conference registration materials and hotel rate and reservation information will be posted to the NMBA website http://www.marinebankers.org/ in the next few weeks. Sponsorship opportunities are available and interested parties can contact Jayme Yates at email@example.com or 615-341-8017.
Low Cost Teen Life Jackets Available for Camps, Schools, Non-Profit Programs
NMBA donation to BoatUS Foundation helps launch program
The BoatUS Foundation’s Teens Afloat Program helps keep teens safe on the water by offering discounted vest-style life jackets – at just $5 – to non-profit summer camps, schools, or any local non-profit organization providing on-the-water educational programming for teens. Made possible through a donation from the National Marine Bankers Association, the goal of the program is to provide an affordable way to keep teens safe while they participate in educational programs on local waters. Groups interested in getting life jackets may apply using an online application located at www.BoatUS.com/Foundation/TeensAfloat by a March 31 deadline. After applications are received, the Foundation will choose the applications that best match grant guidelines and post them on the Foundation’s website and Facebook page for a public vote in April.
“The NMBA supports BoatUS Foundation’s commitment to promote stewardship of American’s waterways and make boating safe and enjoyable,” commented Mike Smith representing the NMBA board of directors as he presented the $5,000 check to Foundation President Chris Edmonston at the association’s annual members’ conference in November 2011. “The company controls overhead, with 85% of the expenses being used for the programs.” Smith highlighted several initiatives that made Boat U.S. Foundation a clear choice for this donation, including the Child Life Jacket Loaner Program which is now established in all 50 states with over 500 active sites, the EPIRB rental program which has saved 63 lives to date, and the more than $1 million awarded through the Grassroots Grants programs since 1997. This was the 2nd time in as many years the NMBA recognized the BoatUS Foundation with a contribution in this amount.
The NMBA board encourages you to share this with any local non-profit organization that may fit the parameters of the program so they may have the opportunity to purchase the life jackets for their on-the-water educational programs. Don’t forget to check out the applicants on the Foundation’s website and Facebook page in April and vote for your favorite groups.
DATA COLLECTION TO BEGIN MID-MARCH FOR 2012 ANNUAL REPORT
One of the benefits provided to NMBA members is the Annual Report, a compilation of statistics on the activity and performance of marine loan portfolios originated and serviced by our members. The trends in this report are critical to not only every NMBA member, but to the boating industry at large, as they are used in forecasting, staffing, recruiting new lenders, and validating lenders' own productivity. The goal of the NMBA board is to gain as many participants as possible to provide the most accurate data on the state of the marine lending industry.
Statistical Surveys Inc. and The Avala Marketing Group will be independently preparing the survey and collecting the data again this year. With member feedback we have made some changes and updates to ease the process and the survey can be completed online or printed, completed and faxed back. The data is compiled by SSI and Avala in confidence and no one within the NMBA or board sees the raw data from any participating member.
Please take the time to complete your company’s annual survey to add integrity to the results and earn yourself a complimentary copy of the full report (value $249.00). The stronger the participation the more useful the Annual Report will be for your businesses. Please contact NMBA Annual Survey Committee Chairman Chris Renn with any questions at 770-888-7918 or firstname.lastname@example.org.
WINTER SHOWS SUGGEST POSITIVE TURN FOR BOAT SALES AND LENDING
NMBA members and others attending the Miami Boat Show in mid-February sensed a better business and lending climate than in the previous several years, and noted a change where activity is originating. Don Parkhurst of SunTrust Bank reports hearing of positive intentions of acquiring mid-range and some larger craft, but admits it will be some time before the deals are closed. “There was also a shift of prospective buyers coming from South America, notably Brazil ,” he adds, “with Europeans becoming scarce, reflecting the economic challenges in the Eurozone.”
Early readings from the winter show season also suggest continued resilience in the smaller family, fishing and pontoon markets, with some stirrings in the mid-range cruiser class. Sailboats and larger power craft continue to see action on the pre-owned and brokerage side, but new builds are weak with a few notable major brand exceptions.
At U.S. Bank's Recreation Finance division, Jeff Smith says boat sales are gaining and applications are substantially higher than a year ago with a focus on smaller family craft under 35-feet and apparent movement to downsizing and lower horsepower. He feels pent-up demand and perceived values in lending rates and terms are driving the market. Smith adds the outlook for continued improvement could be tempered by gas prices that may be heading to the $5 per gallon level, and regulatory restrictions, potentially reducing usage and increasing boating expenses for the consumer. Longer term he suggests the unemployment rate will need to recede substantially before sales and lending see sustained gains.
Gary Rademaker, Strategic Alliance Director at Priority One Financial Services (owned by Forest River and Berkshire Hathaway) said that the Miami show is not a big producer of loan volume for their company since they do business with very few dealers in the southern part of Florida . However, in its strong $20-30,000 size range business niche, volume for the first two months of 2012 has exceeded that over the first two months of 2011.
Tracker Marine Financial Services’ Director of Operations Nancy Young is receiving positive reports of sales from Tracker dealers from the boat shows and their showrooms. “To go along with that, our loan application volume is substantially higher than we've seen in recent years and our loan volume is at record levels. Our dealers sell boats in categories that represent the biggest part of the boat market. 94% of new boats registered last year were 28 feet and under; and almost 70% of those were under 20 feet. Most of our loans are under $20,000. So we see increasing loan approval rates as evidence that our lenders are gaining confidence in the creditworthiness of our customer base.”
Medallion Bank, which does non-prime retail financing for marine dealers nationwide has seen marine loan volume increase by 17% over 2011. Application volume from boat shows nationwide over the last two and a half months is as high as they have experienced since the first quarter of 2008. This increase in applications and loan fundings represents an on-going increase for the bank year over year since 2008. Medallion Bank also serves the recreational vehicle market, where application and loan activity is rebounding at an even quicker pace than that of the Marine industry.
Though new boat sales are at decades-long lows, a report from a major provider of the inventory financing is suggesting improvement this year. According to a survey shared by GE Capital's Commercial Distribution Finance in Soundings Trade Only Today, 39 percent of respondents said they expect sales to increase 0 to 5 percent this year and 38 percent expect increases of 5 to 10 percent; 54 percent said they are increasing their inventory levels to prepare for the upcoming selling season; 22 percent plan to wait until mid-2012 to increase inventory levels and 2 percent plan to wait until 2013 or later. The survey was conducted among boat retailers at the Miami Boat Show.
“We’re expecting slow and steady growth in 2012, similar to last year. Shipments are aligned with demand and dealer inventories are low, healthy and turning,” Commercial Distribution Finance Marine Group president Bruce Van Wagoner said in the report. “Although the industry’s outlook is tempered by the experiences of the past several years, the marine industry is healthy today and dealers have reason to be optimistic.”
The survey showed that access to credit does not seem to be a widespread worry. Only 4 percent were concerned about the availability or stability of wholesale financing options, and 5 percent were concerned about the availability or stability of retail financing options.
Producers of The Yacht & Brokerage Show along Collins Avenue in Miami Beach, which features larger craft both new and brokered, reported a stronger show overall than the past several years, with the number of exhibitors and boats on display both up 9 percent over 2011. Attendance, based on concession sales and number of people using show transportation at the free-to-the-public event, was up more than 7 percent.
PassageMaker Magazine produced a TrawlerPort event for the first time at the Yacht & Brokerage Show, in conjunction with Show Management, a sister company in the Active Interest Media marine group. Structured as a show-within-a-show, TrawlerPort featured speakers and activities in a location dedicated to trawlers and oceangoing powerboats appropriate for those who contemplate extended periods of cruising, both coastal and offshore. Said magazine Editor-in-Chief John Wooldridge, “It was interesting and advantageous for prospective cruising owners to have so many power cruising boats together in one place. From my perspective, the traffic on the docks and the quality of the attendees was good. Most of the exhibitors in this portion of the show, including Outer Reef, Nordhavn, Beneteau, Grand Banks, Kadey-Krogen, Hampton, Fleming and others, confirmed this appraisal, and several reported signed contracts.”
Agreement between CFPB and FTC Creates Concern for RVDA
Rate Markups Could Become a Problem for Marine Dealers and Loan Service Companies
The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) entered into a Memorandum of Understanding in January to cooperatively enforce regulations to protect consumers, prevent duplication of efforts, provide consistency and ensure a strong and fair marketplace for consumer financial products and services. The CFPB was created to implement and enforce Federal consumer financial law to ensure access to markets for consumer financial products and services that are fair, transparent, and competitive. The FTC was established to prevent business practices that are anti-competitive, deceptive, or unfair to consumers and regulates consumer financial products and services offered by non-banks entities such as thrifts, federal credit unions, and bona fide non-profit organizations.
RV dealers, like auto dealers, were given an exemption from oversight by the CFPB, however, now the FTC has received enhanced powers to regulate dealership financing. A major area of concern for RV Dealers Association (RVDA) members is the investigation by the FTC into how dealership F&I departments generate lending revenue. Consumer groups argue that dealers are not providing consumers with the lowest possible rates since the dealership has flexibility to markup the lender’s wholesale rate. RVDA members believe their financing rates, even with the markup, are competitive with loans consumers are offered at other lending institutions.
Marine dealers received this same exemption from the CFPB, so it is likely they too will be regulated by the FTC. Marine loan service companies were not granted exemption and have been concerned about the rules, restrictions, and reporting requirements that will be put in place to govern them. Going forward it appears boat dealerships and loan service companies acting as agents for the banks and finance companies will face new regulation. Rate markups are likely to be a priority for the newly created CFPB since mortgage broker participation in mortgage loans is claimed to be discriminatory and abusive. The hot button will be the disclosure of fees paid to the dealer or service company for the loan origination. Please contact Don Parkhurst, NMBA Legislative Committee Chairman, at 703-691-4411 or email@example.com with any questions.
RVDA Takes Stand on "Dwelling" Issue with CFPB
Marine Lending Could be impacted by Unrelated U.S. Supreme Court Case
The RVDA recently filed comments with the Consumer Financial Protection Bureau (CFPB), seeking guidance on the definition of a “dwelling” as it relates to RV full-timers. RVDA members provided a number of reasons for treating all RV sales as motor vehicle sales, indicating it is a reach to categorize a loan to a full-timer as a mortgage transaction. This issue has caused many marine banks and lenders to stop offering financing to liveaboards, as it requires the lender to have an active mortgage lenders license.
In another issue surrounding a liveaboard, the U.S. Supreme Court has agreed to hear a case that could decide if a houseboat without engines can be ruled a “vessel.” The owner lost his claim in U.S. District Court that his houseboat was not a vessel, but a floating home. He refused to sign a lease with the marina that required it be registered, insured, and equipped to evacuate in emergency under its own power. The marina had the boat towed away by U.S. Marshals (see complete story from Soundings Trade Only Today Supreme Court takes case of Florida houseboat owner). If the boat qualified as a “dwelling” it would have been protected under state and federal laws as per the provisions of the S.A.F. E. Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.This case could create concerns for marine lenders if the definition of “dwelling” should be redefined to not include boats. On the one hand, it could release lenders from the real estate disclosures and regulations that have caused many to stop offering financing for liveaboard boaters. On the other hand, this could be a reason for the government to discontinue the interest expense deduction for boats, saying they do not quality as a primary or second home. Losing the interest expense deduction could hurt the already soft demand for marine loans, but at this point there is nothing to do but wait for the outcome of the Supreme Court hearing. Please contact Don Parkhurst, NMBA Legislative Committee Chairman, at 703-691-4411 or firstname.lastname@example.org with any questions.
Maryland Marine Industry Gears up for Luxury Tax Fight
A luxury tax bill has been introduced in Maryland that would put a luxury tax on boats with a price greater than $35,000. The bill includes the sale of motor vehicles, motorcycles, boats, and planes in that state. Maryland marine industry members are concerned boaters will travel to adjoining states, like Virginia or Delaware, to purchase their boats if the bill passes. Additionally the Marine Trades Association of Maryland estimates about one-third of the dwindling marine industry jobs could be lost if this bill is passed.
States have shown mixed messages of late when it comes to marine industry revenue generators. Last year Connecticut imposed a luxury tax on any boat sold for more than $100,000. Florida recently touted the success of its $18,000 cap on sales tax, indicating sales tax revenue in the first year of the new program was nearly 10 times what it had been in the prior year (see complete story from Soundings Trade Only Today Study touts success of Florida boat tax cap)
Don Parkhurst, Chairman of the NMBA Legislative Committee, has indicated your association is working with NMMA and BoatUS to help fight this bill. Don may be reached at 703-691-4411 or email@example.com with questions.
American Boating Congress to be Held April 24-25 in Washington DC
Marine Industry Members Encouraged to Attend American Boating Congress
The marine industry’s premier political and legislative event, the American Boating Congress, will be held at The Liaison Capitol Hill in Washington, DC on April 24-25. This event is a comprehensive legislative conference that brings together recreational boating industry leaders to formulate public policy and present a unified front on issues that impact marine businesses. Events include meetings arranged by NMMA with your representatives and senior staff and educational seminars designed to update you on issues vital to your business. Here’s a short list of other benefits of participation in ABC:
- Learn ways to grow your business in the current economy
- Discover how current state and federal regulatory issues affect your operations
- Learn the status of key federal legislation concerning the marine industry
- Hear updates from experts about how pending legislation and regulation can impact your bottom line
- Get first-hand knowledge from state and federal regulators, key congressional staff and industry experts as to trends that impact the marine industry
- Network with fellow industry leaders
You'll never have a better opportunity to personally influence legislation and protect your business interests. In preparation for visits with your legislator and their staff, download the pre-conference issues briefing and policy briefs on our industry's most pressing issues at American Boating Congress. Here you’ll also find registration and hotel details, schedule of events, and other useful information.
Many NMBA members and board members are expected to attend. Please contact NMBA Legislative Committee Chairman Don Parkhurst at 703-691-4411 or firstname.lastname@example.org with questions.
USCG Policy to Allow Notice of Claim of Lien against Vessels with Expired CODs
The USCG National Vessel Documentation Center has announced a recent change in its policy that did not accept Notice of Claims of Liens (NCLs) on vessels with expired Certificates of Documentation. Director Tim Skuby has announced a review of the Maritime Transportation Security Act (MTSA) 2002 and applicable sections in 46 USC 12136 concluded the intent of MTSA 2002 was to expand the situations in which NCLs could be filed to include all documented vessels without limitation to those subject to Preferred Mortgage.
The new USCG policy, according to Skuby, “will be when a vessel is deemed to continue to be documented (at least for some purpose – e.g. a preferred mortgage), and where it would not be released from documentation to be registered elsewhere, by issuance of a deletion letter, absent resolution of that PM, it makes the best sense, in terms of transparency and providing full information to the public, to allow NCLs to continue to be filed during that period. “
Skuby went on to say “Although that vessel should not operate under those circumstances it probably would in any event and, in the process, it would incur costs for necessaries. Those purveyors ought to have a basis to compel payment. In addition, potential buyers of the vessel ought to have a fuller record of potential maritime liens against it.”
AVDA ANNUAL MEETING TO BE HELD MAY 4-6 IN PORTLAND, OREGON
The American Vessel Documentation Association (AVDA) will hold its annual meeting at the River Place Hotel in River, overlooking the Willamette River, in Portland’s city center. It’s removed from the noise of the city, yet is just a short walk or streetcar into the heart of downtown where you’ll find lots of shopping, cultural sites, and exciting exploring. The Hotel also is extending attendees a special rate of $145 per night plus tax, and includes complimentary access to the River Place Athletic Club. The deadline for reservations is April 10, 2012.
A cocktail reception, followed by dinner, will be held at the hotel Friday evening, May 4th, and the members’ meeting will be held Saturday. Dinner and a river cruise will be aboard the Willamette Star Saturday evening and Sunday brunch will be at Multnomah Falls Lodge. For complete details and itinerary please visit the AVDA website (http://www.americanvessel.com/favicon.ico).
NMBA MEMBERS ENCOURAGED TO PARTICIPATE IN QUARTERLY SURVEY
The NMBA is continuing its brief quarterly members’ survey, introduced in 2011, to gauge changes in the lending environment and identify trends that could be used for business planning. The 1Q2011 survey will be sent to lender members in early April and will only take a few minutes to complete. No tallying or calculating is required – just click on a response. The survey is delivered through Zoomerang and respondents’ identities are not tracked. Results are provided to all members, along with any relevant comments and feedback. We had increased participation in the 4Q-2011 survey, which lends credibility to the results, so please take a few minutes to respond to this next request. Thank you for your interest and support. Please contact NMBA Marketing Chairman Peggy Bodenreider at 714-473-8523 or email@example.com with any questions.
MARINE LENDING WORKSHOP REPORTED TO BE A SUCCESS
The 2011-12 Workshop again received outstanding reviews from the student participants reflecting on best practices, operational tips, real-time scenarios and valuable instructor experiences. From its origin over 25 years ago, the Workshop continues to deliver the most comprehensive recreational marine finance course in the United States. The hands-on course modules featured nine exclusive topics by industry leading lending and legal experts:
- U.S. marine industry and marine finance historical overview
- Market planning and start-up development for a successful marine lending division
- Marine insurance with tips on portfolio and collateral protections
- Best practices and operations for accessing reliable collateral values
- Perfecting lender liens at local, state and federal levels
- Credit analysis for risk-adverse decisioning through hands-on training for novices and skilled lenders
- Organizing and managing a high-performing collection department
- Legal and timely steps for appropriate, cost-effective repossession strategies
- Remarketing procedures for minimization of repossession losses
All student participants received the latest 200-page workbook containing comprehensive and valuable module presentation information and other key data relevant to U.S. marine lending. During breaks and evening free-time hours the participants were able to spend valuable time with workshop instructors and sponsors, providing a forum for additional learning experiences and networking.
A very special thank you goes to all of the workshop sponsors National Liquidators, BSC America, SunTrust Bank, U.S. Bank, M&T Bank, LAB Marine Inc./Grande Yachts, Caterpillar Financial Services, Northeast Marine Liquidation, Inc., McIntosh Schwartz PL, and International Recovery Group. Plans are already underway for the next Worksop to be held in the 2012-13 winter season. Watch your email, the NMBA Group on LinkedIn, and this newsletter for more information as it becomes available.
Regional growth, as reported by Statistical Surveys, Inc. (SSI) shows the East North Central region led the country in new boat registrations in 2011, with 6.1% 12-month rolling growth over 2010, followed by New England at 4.7%, West North Central with 4%, South Atlantic at 3.6%, Middle Atlantic with 2.9%, and West South Central with 1%. The Mountain states new boat registrations decreased 9.1% during the past 12 months, followed by the Pacific region at 8.9% and the East South Central region at 5.5%.
SSI reports new boat registration data as of December 2011 shows a small decrease of 1.7% in the 12-month rolling numbers from the prior year. This report includes 28 states which represents approximately 63% of the US market. Registration increases were reported in the outboard segments, with aluminum up 3.7% and fiberglass up 2.1%. Personal watercraft, fiberglass sterndrive, and inboard cruiser registrations were all down over 9%, while inboard ski boat and jet boat registrations were off about 5% each.
Reproduced with kind permission from Statistical Surveys Inc.