Annual Survey shows decline in new business volume in 2009.

Press Release Summary:



According to ELFA's 2010 Survey of Equipment Finance Activity, new business volume among sample of ELFA member companies declined 30.3% in 2009, in contrast to 2.2% decline in 2008. Pre-tax income and net income, in dollar terms, declined by 55.7% and 54.4%, respectively, while decreases in revenues and total headcount were only 13.8% and 5.8%, respectively. For first time in past 10 years of SEFA, weighted average return on equity was in single digits at 5.2%, a decline from 11% in 2008.



Original Press Release:



Annual Survey of Equipment Finance Activity Shows Unprecedented Decline of 30.3% in New Business Volume in 2009



Revenue, Headcount Declines Not As Severe

Washington, DC, - The Equipment Leasing and Finance Association (ELFA) today released its 2010 Survey of Equipment Finance Activity (SEFA), which shows that new business volume among a sample of the ELFA member companies declined 30.3 percent in 2009, in contrast to a 2.2 percent decline in 2008. Pre-tax income and net income, in dollar terms, declined by 55.7 percent and 54.4 percent, respectively. Decreases in revenues and total headcount were only 13.8 percent and 5.8 percent, respectively.

For the first time in the past 10 years of the SEFA, weighted average return on equity (ROE) was in the single digits at 5.2 percent, a decline from 11 percent in 2008. Return on assets (ROA) declined by half, falling to 0.6 percent from 1.2 percent during the year-earlier period.

"Not surprisingly, industry performance data for 2009 mirrored the difficult conditions prevalent in the broader U.S. economy," commented ELFA President Woody Sutton. "Fortunately, it appears the worst is behind us: More recent data collected during the past two quarters suggests a gradually improving U.S. economy extends to the equipment leasing and finance sector."

The SEFA is the broadest compendium of industry data, comprising a representative cross-section of equipment lease and loan origination by product, structure and origination. It provides a baseline and benchmark for companies operating in the equipment finance space through a voluntary survey of ELFA member companies. In the 2010 SEFA project, 100 reporting entities participated in the survey as compared to 122 the prior year.

Independent equipment finance organizations had the largest decline in new business volume with a rate of 46.3 percent, while new business volume for Banks and Captives declined by 26.1 percent and 20.9 percent, respectively. From an asset perspective, new business volume by equipment type declined for all categories with transportation and construction equipment hardest hit and computer equipment investment close behind. Similar trends were seen in equipment investment by end-user industry with construction, utilities and services showing the sharpest declines.

Other key findings:

Portfolio Performance. Equipment finance organizations report average charge-offs of 1.6 percent of the average net lease receivables balance, up from 0.7 percent in 2008. Receivables over 90 days rose to 1.4 percent from 1.0 percent the prior year.
Margins. Average pre-tax yield decreased to 7.15 percent from 7.29 percent in 2008. Average cost of funds were lower at 3.30 percent, down from 4.21 percent in 2008. Pre-tax spreads increased to an average of 3.85 percent from 3.08 percent in 2008.
Lease Applications Processed. Total number of applications submitted (1.87 million) is down from 2008 (1.96 million), with the number of applications approved (66.9 percent) also declining when compared to the previous year (72.5 percent).
Workforce. Total number of full-time equivalent (FTE) employees declined in all types of equipment finance organizations. Headcount of Independents fell 9.7 percent, while Bank and Captive FTEs declined 5.3 percent and 3.8 percent respectively.

Once again, PricewaterhouseCoopers LLP managed the survey for the ELFA, ensuring confidentiality, integrity and quality of the submitted data and results.

The 2010 SEFA is available for purchase at www.elfaonline.org/cvweb_elfa/cgi-bin/msascartlist.dll/ProductInfo?productcd=RSEFA2010. SEFA survey participants may receive the report at no charge.

Members of the media who would like to obtain a copy may contact Diane Johnson, diane@fourleafpr.com or 703-391-2056.

For more information about this survey or ELFA Industry Research, please call Bill Choi at 202-238-3413 or please go to www.elfaonline.org/ind/Research/

About the 2010 Survey of Equipment Finance Activity

ELFA's 2010 SEFA results were compiled from surveys sent to 341 eligible ELFA members, of which 100 companies representing 106 entities submitted 2009 U.S. domestic lease and loan data. Of the 2010 respondents, 91.5 percent also submitted data to the 2009 survey, including nine ELFA members in the 2009 Monitor Top 10 and 37 ELFA members in the 2009 Monitor Top 50 of the largest U.S. equipment finance organizations.

  • Equipment types financed, as explored in the survey, include: Agriculture, aircraft, construction, computers, telecommunications, rolling stock, printing, medical, industrial, trucks and trailers and other equipment types.

  • Types of financing offered by the equipment finance companies include: Tax-oriented finance leasing, short-term operating leases, leveraged leases, conditional sales agreements, off-balance sheet loans and tax-exempt leasing.

    About the ELFA

    The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $518 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its over 600 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, please visit www.elfaonline.org

    ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit elfaonline.org/ind/r46esearch/ for additional information.

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