If you want to see how far you’ve come, taking a look back over the past 25 years provides a great opportunity. As I perused issues we’ve published over the last quarter century, I watched Monitor’s reporting on the growth and vitality of the industry improve with every year. When we published the first Monitor 100, we were only experimenting with the publishing business. It was a big deal to undertake the monumental challenge of quantifying the equipment leasing industry by mimicking something as grand as the Fortune 500 rankings. Unlike the Fortune magazine approach of using published data, we had to depend — and trust — those who had access to the information we required.

We began by meeting with members of the leasing community to get feedback on our premise of measuring the industry’s yearly growth. The more people we talked to, the more we were encouraged to continue on our quest to produce a unique report that members of the leasing community would anticipate. To complicate matters, we didn’t have a resident art director, and we were hesitant about farming out the project. We did have access to the latest Macintosh computer, though, and we were blessed with two people who had a sense of how to produce such a publication. Of course, when I look back at the issue now, I can’t help but smile at the old layout and graphics — we’ve come a long way since our meager beginnings!

The First Survey
One of the many components of the project was determining our target outcome. From there, we could work backward to make it a reality. Did we need to divide the market into segments to recognize the difference, say, between a bank affiliate and a captive? Was size the way to go as a basis for ranking? How should we describe what’s eligible for inclusion and what isn’t? How should we pose questions to get the answers we needed?

A purist at heart, I decided to engage with someone in the industry who had a reputation for being a “bean counter.” I went to U.S. Leasing International, which was owned by Ford Motor Company at the time. (Some of you may remember Ford’s rationale for getting into the equipment finance business. As I recall, it was essentially part of a strategy to “diversify.”) The person who ran U.S. Leasing International was from Ford’s treasury group. He was flattered that I called and was quick to provide me with the basics of how an enterprise should account for an equipment lease and/or a loan on a balance sheet. He told me what to include, which was essentially finance leases, operating leases and leveraged leases.

After defining each type of those three leases, we added a securitization component to ensure managed assets were also included. We used segments to refine the outcome further, which turned out to be a good way to discern trends over time. Then all we needed was enough participation to achieve our desired outcome of 100 companies.

The First Monitor 100 (1991-1990)

After creating our very first survey, we sent it to about 150 equipment finance and leasing companies across the U.S. Having both the Monitor subscription database and our Molloy Associates files ensured we could target CEOs and related support staff. Then we engaged in phone follow-ups to sustain interest and answer any questions. Looking back, it’s still hard to believe there were enough people in the industry who wanted to participate and who were drawn by the notion that there was a way to keep score, which was just as important! We were definitely encouraged by the initial outcome and pleased with the level of interest and feedback. We were successful in creating an iconic publication at a time when the industry was just beginning its journey to become a mainstream financial solution for acquiring equipment.

A Look Back

It turns out that 373 equipment leasing and finance companies have appeared in the pages of the Monitor 100 during the past 25 years. Of the original group, only 13 have appeared in every issue since its launch in 1992. The first Monitor 100 showed a year-over-year comparison for 1990 and 1991, the former was used as a basis for the compound annual growth (CAGR) calculations.

Exhibit 1 takes a closer look at the growth characteristics of the original 13 to get a sense of what has transpired over the last quarter century. Some immediate changes were obvious. Most notable are the initial six banks, which had a combined total of $1,747 million in net assets at year-end 1990 and grew to $46,339.3 million 25 years later. On a combined basis, the CAGR for the period turned out to be just slightly better than 14%. Though CIT is a bank affiliate today, it has changed segments over the years. When it originally entered the Monitor 100 as a foreign affiliate, it was not included in this calculation.

During the same period, 16 industrial affiliates ceased to exist. At year-end 1990, the industrial affiliates accounted for $57.4 billion, or 45.5%, of the initial $126.2 billion total for all the Monitor 100 companies that appeared in the very first edition of the rankings. Considering that GE Capital1 is now a shadow of its previous size, at year-end 2015 the industrial affiliates, as a group, have all but disappeared (see related article on page 34). Just as interesting in hindsight is the fact that, as a group, the banks were just entering the equipment finance space when the Monitor 100 began. I personally had direct experience working for a bank as a leasing guy who got beat up every time I took a deal to the loan committee. Given the growth that has occurred during the last 25 years, it’s safe to say equipment finance and leasing has matured to the point where it is no longer considered a stepchild to a more traditional form of term financing.

If you look closely at the data, a common theme of meager beginnings emerges. Notice, for example, that Key Equipment Finance (formerly known as Keycorp Leasing) was initially ranked No. 78, with $60.6 million in net assets at year-end 1990. Fast-forward 25 years to year-end 2015, and Key is now ranked No. 18 with $9,738 million in net assets. Key takes the top spot for the highest compound annual growth rate for the 12 charter members of the Monitor 100.

GE Capital

We first need to acknowledge that, over the course of all but one year during the 25-year period covered by the Monitor 100, GE Capital has been the perennial leader, with higher net asset totals than any other participant ever featured in this publication. This is the first year that GE Capital has not been No. 1. Also noteworthy is its pace of growth between 1990 and 2008. As of year-end 1990, GE reported $22.9 billion in net assets, and at year-end 2008 it peaked at $183.9 billion. Over this 18-year period, GE Capital’s CAGR was 12.27%.

As shown in Exhibit 2, GE Capital’s growth over this period was attributed in large measure to an insatiable appetite to acquire assets. During the 1992 to 2008 timeframe, GE Capital acquired 51 equipment finance and leasing companies (44 of these appear in Exhibit 2). Many were storied names, such as ITT Capital Finance, MetLife Capital, Phoenixcor, Mellon USL, Safeco Credit, Associates Fleet, Heller Financial, Wells Fargo Fleet, Transamerica Commercial Finance, Boeing Capital, CitiCapital Transportation and CitiCapital EF Assets.

To put the $183.9 billion in perspective, at year-end 2008, GE Capital Finance, which encompassed five financial service segments, including Commercial Loans and Leases ($232.5 billion) and GECAS ($49.5 billion), reported total assets of $573 billion. As the global economic downturn worsened, it accelerated the notion that it no longer made sense for GE to depend so heavily on its finance business to achieve its performance targets. Investor sentiment soured as GE’s financial services arm became the subject of discontent. CLL’s earnings dropped $2 billion, or 53%, year-over-year as the unit took higher provision charges and mark-to-market losses and impairments. GE’s share price plummeted to close at $6.66, down more than 80% from its close of $33.67 on the same day a year earlier. S&P lowered the company and finance arm’s coveted Triple-A rating, and Moody’s followed suit with a downgrade to Aa2.

As a result, GE committed to reducing the size of GE Capital to realize the strategic goal of expecting no more than 30% of its earnings to come from financial services. It’s no wonder that the last acquisition GE Capital completed was in 2008 when it acquired CitiCapital’s EF assets ($13.2 billion). It wasn’t until seven years later (2015) that GECAS acquired Milestone Aviation, a move that mirrored GE’s new strategy of supporting only its industrial business verticals.