Equipment Finance Companies report new business growth.
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Press Release Summary:
According to ELFA's Monthly Leasing and Finance Index, overall new business volume for April grew 15% when compared to same period in 2009. When compared to prior month, MLFI-25 reported new business volume increased by 9%, from $4.3 billion to $4.7 billion. April originations showed year-over-year growth for first time since July 2008. Delinquencies improved as well, with receivables over 30 days declining to 3.7%, from 4.2% in prior month and 4.0% in year-earlier period.
Original Press Release:
Equipment Leasing and Finance Association's Survey of Economic Activity: Monthly Leasing and Finance Index
Equipment Finance Companies Report New Business Growth
Washington, DC, - The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $518 billion equipment finance sector, showed overall new business volume for April grew 15 percent when compared to the same period in 2009. When compared to the prior month, the MLFI-25 reported new business volume increased by nine percent, from $4.3 billion to $4.7 billion. April originations showed year-over-year growth for the first time since July 2008.
Delinquencies improved as well. Receivables over 30 days declined to 3.7 percent, from 4.2 percent in the prior month and 4.0 percent in the year-earlier period. Charge-offs increased slightly to 1.6 percent, up from 1.5 percent in the prior month, but improved over the year-earlier period.
Credit approvals remained flat when compared to March data, but, at 68 percent, increased from same period the prior year. Of participating organizations, 46 percent reported submitting more transactions for approval during the month. Finally, total headcount for equipment finance companies decreased by one percent in the March-April period.
The construction, trucking transportation, and small business categories led the underperforming sectors. While the National Federation of Independent Business's Small Business Optimism Index showed a significant improvement in May, small businesses planning on making capital expenditures remained at an all time low (three points above the 35-year record low).
A related index, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI), for May was at 67.38, the highest to date, up from the April 2010 index of 65.4.
"April's new business volume data is encouraging even though demand is still soft," said David Merrill, President, Fifth Third Leasing Company, located in Cincinnati, OH. "Companies are still searching for signs of a sustained economic recovery before they invest heavily in capital equipment. When viewed in conjunction with the continued improvement in charge-off and delinquency metrics, April's data provides reason for optimism that additional growth will occur in the second half of 2010."
"April's new business volume is indeed a positive sign that businesses are starting to invest in capital assets," said ELFA President William G. Sutton. "The April data support anecdotal evidence from ELFA members that a growth trajectory is beginning to take shape, as pent-up demand gives way to equipment acquisition by business, both large and small."
About the ELFA's MLFI-25
The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at 9:00 a.m. Eastern time from Washington, D.C. each month, on the day before the U.S. Department of Commerce releases the durable goods report. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at www.elfaonline.org/ind/research/MLFI/
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.
ELFA MLFI-25 Participants
ADP Credit Corporation
Bank of America
Bank of the West
Canon Financial Services
Caterpillar Financial Services Corporation
CIT
De Lage Landen Financial Services
Dell Financial Services
Fifth Third Bank
First American Equipment Finance
GreatAmerica
Hitachi Credit America
HP Financial Services
John Deere Credit Corporation
Key Equipment Finance
Marlin Leasing Corporation
National City Commercial Corp.
RBS Asset Finance
Regions Equipment Finance
Siemens Financial Services
Susquehanna Commercial Finance, Inc.
US Bancorp
Tygris Vendor Finance
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 $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 www.elfaonline.org/ind/research/ for additional information.
The Equipment Leasing & Finance Foundation is the non-profit affiliate to the Equipment Leasing and Finance Association, providing future-focused research to the equipment finance industry. For more information please visit the website at www.leasefoundation.org
Media/Press Contact: Diane Johnson, 703-391-2056, diane@fourleafpr.com
