ELFA releases survey of economic activity.
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Press Release Summary:
Reporting economic activity for $650 billion equipment finance sector, Monthly Leasing and Finance Index showed overall new business volume for September decreased 2.4% when compared to same period in 2007. When comparing 3Q 2007 to 3Q 2008, new business volume was down 0.1%. However, cumulative year-to-date new business volumes show increase of 1.9% compared to 2007. Also, according to September data, month-to-month new business volume increased by 22.3%, from $5.3 billion to $6.5 billion.
Original Press Release:
Equipment Leasing and Finance Association's Survey of Economic Activity
Monthly Leasing and Finance Index
MLFI-25 Data Show Equipment Finance New Business Volume Increased in September
Washington, DC, October 28, 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 September decreased 2.4 percent when compared to the same period in 2007. When comparing 3Q 2007 to 3Q 2008, new business volume was down 0.1 percent. However, cumulative year-to-date new business volumes show an increase of 1.9 percent compared to 2007.
The MLFI-25 is the only index that reflects the volume of equipment financed in the U.S. 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. Together with the MLFI-25 these reports provide a complete picture of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
According to the September data as reported by the twenty-five banks, finance companies and manufacturers that comprise the MLFI-25, month-to-month new business volume increased by 22.3 percent, from $5.3 billion to $6.5 billion. Receivables in the less-than-30-days category, a measure of non-delinquent accounts, were 96.8 percent, down slightly from the prior month, but showing a steep decline from the prior year period. Delinquent accounts (31-60 days) increased 48 percent since June of this year. Charge-offs were relatively flat, but still high when compared to year-over-year data.
Credit standards appear to have remained relatively stable compared to the previous month, with credit approval ratios increasing 0.1 percent to 73.8 percent. Total headcount for equipment finance companies remained relatively flat in the August-September period.
"September's nominal monthly volume increase followed historical trends as lessors were motivated to book tax lease volume due to requirements of the "60/40" rule for accelerated depreciation deductions," said Thomas M. Jaschik, President, BB&T Equipment Finance, Towson, MD. "The year-to-date volume increase can be attributed somewhat to greater utilization of lease financing by borrowers in light of the tight credit markets. Lessors continue to cope with increased delinquencies and charge-offs and most expect this to continue into 2009," Jaschik said. Jaschik is also a member of the ELFA Board, recently elected as 2008-9 Treasurer.
"It should be no surprise that the turmoil in the financial markets has spilled over into the commercial finance sector and general economy," said ELFA President Kenneth E. Bentsen, Jr. "Even so, amidst all the bad news, the commercial equipment finance market seemed to hold up in September," said Bentsen.
About the ELFA's MLFI-25
The index is released globally at 9:30 a.m. Eastern time from Washington, DC each month on the day before the U.S. Department of Commerce releases the durable goods report. More information on the Monthly Leasing and Finance Index, including methodology, participants and a calendar of release dates is available below and at www.elfaonline.org/ind/research/
MLFI-25 Methodology
The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support 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 measures 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 and current business conditions nationally.
The results of each MLFI-25 are posted on the ELFA website. ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit www.elfaonline.org/ind/research/ for additional information.
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 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
