ELFA releases July survey of economic activity.
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Press Release Summary:
The ELFA Monthly Leasing and Finance Index, MLFI-25, which reports economic activity for the $650 billion equipment finance sector, shows overall new business volume increased 17.2% compared to the same period the year before and cumulative year-to-date new business volumes increased 4.8%. While new business volume month-to-month declined by 15%, portfolio performance showed that receivables in the less than 30-day category were down to 96.9% in July, but charge-offs were up 0.87%.
Original Press Release:
Equipment Leasing and Finance Association's Survey of Economic Activity: Monthly Leasing and Finance Index
MLFI-25 Data Show Year-Over-Year Equipment Finance Originations Increased in July 2008
Washington, DC, August 26, 2008- The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $650 billion equipment finance sector, showed overall new business volume for July increased 17.2 percent when compared to the same period 2007. Cumulative year-to date new business volumes show an increase of 4.8 percent compared to 2007.
The MLFI-25 is the only index that reflects levels of equipment financed in the U.S. economy. The MLFI-25 complements other relevant economic indices, including the monthly durable goods report produced by the U.S. Department of Commerce, which reflects new orders for manufactured durable goods and the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Along with the MLFI-25 these reports provide a complete picture that describes the use of productive assets in the U.S. economy: equipment produced, acquired and financed.
According to the July data, new business volume month-to-month declined by 15 percent to $6.8 billion. Respondents' portfolio performance was positive: receivables, a measure of non-delinquent accounts, in the less-than-30 day category were 96.9 percent in July, down from the prior month by 0.2 percent. However, charge-offs showed improvement, at 0.87 percent, a slight decline from the prior month, but still high compared to year-over-year data.
Credit standards appear to have tightened; with credit approval ratios (74.1 percent) decreased 2.3 percent when compared to the prior month (76.4 percent). Total headcount for equipment finance companies has been relatively stable since February 2008 showing slight increase of 0.1 percent compared to the previous month.
"The findings of this study are in line with our experience with respect to receivables and charge-offs. We are seeing continued program opportunities as vendor partners focus on their core manufacturing competencies. Our customer loyalty remains high as financing continues to represent significant value add to manufacturers' end-user relationships," said Kris Snow, President and Co-Head, Global Vendor Finance, CIT, whose company participates in the monthly survey.
"Business investment in capital goods continues even in light of the credit crunch and weakness in the overall economy. It is a testament to business confidence and export demand," said Kenneth E. Bentsen, Jr., ELFA President.
MLFI-25 Methodology
ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information which supports strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment; five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 provides metrics reflecting monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector including small ticket, middle market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector, which contributes to the representation of current business conditions nationally.
Results of each MLFI-25 are posted on the ELFA website. ELFA is the premier source for statistics and analyses covering the entire equipment finance sector. Please visit www.elfaonline.org/ind/research/
ELFA MLFI-25 Participants
ADP Credit Corporation
Bank of America
Bank of the West
Canon Financial Services
Caterpillar Financial Services Corporation
CIT
Citicapital
De Lage Landen Financial Services
Fifth Third Bank
First American Equipment Finance
GreatAmerica
Hitachi Credit America
HP Financial Services
Irwin Financial
John Deere Credit Corporation
Key Equipment Finance
Marlin Leasing Corporation
National City Commercial Corp.
RBS Asset Finance
Regions Equipment Finance
Siemens Financial Services
US Bancorp
US Express Leasing
Verizon Capital Corp
Volvo Financial Services
Wells Fargo Equipment Finance
About the ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $650 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing the utilization and investment of and in 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 700 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
