ELFA November Report shows decline in new business volume.

Press Release Summary:



ELFA's Monthly Leasing and Finance Index (MLFI-25), reporting equipment finance economic activity, showed new business volume for November declined by 7.0% compared to 2008. Alternatively, receivables and charge-offs increased for month and year. For 2009 monthly activity, decreases were also reported for total headcount for equipment finance companies. Supplemental data indicated tightening underwriting standards and lower demand were to blame for fewer transactions submitted for approval.



Original Press Release:



Nov. Monthly Leasing and Finance Index Shows New Biz Volume Decline Easing



Equipment Leasing and Finance Association's Survey of Economic Activity: Monthly Leasing and Finance Index

Year-Over-Year New Business Volume Declines 7.0 Percent

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 November declined by 7.0 percent when compared to the same period in 2008. For 2009, the MLFI-25 reported month-to-month new business volume down 7.0 percent from October to November, from $4.3 billion to $4.0 billion.

The MLFI-25 reported receivables over 30 days increased to 4.5 percent as compared to 4.2 percent in October. On a year-over-year basis, receivables over 30 days increased by 15 percent. Charge-offs increased to 2.4 percent from 1.7 percent in the prior month and rose by 66.9 percent compared to November 2008. Sixty-two percent of participant companies reported that fewer transactions were submitted for approval during the month, due to tightening underwriting standards and lower demand, according to supplemental data. Credit approvals increased slightly to 67.2 percent when compared to the previous month; compared to the same period in the previous year, credit approvals ratios have dropped slightly from 69.2 percent in November 2008. Total headcount for equipment finance companies decreased slightly at 0.6 percent in the October-November period.

"Whether or not the worst of this recession is really behind us remains to be seen," said Frederick S. Summers, Chairman and Chief Executive Officer, Vision Financial Group, Inc., located in Pittsburgh, PA. "When the economy does make the turn for the better and the credit markets really start to open and fire on all eight cylinders, whoever can increase accessibility to capital will reap big rewards. Independents need to continue to weather the storm and stay true to the business principles that got them where they are. Their time is coming."

"November's origination number is a dramatic improvement over the prior month," said Ralph Petta, ELFA Interim President. "While by no means robust, demand for capital equipment seems to picking up. We are hopeful that this trend continues as the overall economy rebounds."

A related index, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI), for December showed an increase to 58.8 compared to 57.2 compared in November. December MCI-EFI is the highest since the index was inaugurated in May this year.

MCI-EFI survey respondent Russell Nelson, President, Farm Credit Leasing Services Corporation, located in Minneapolis, MN, said, "Many customers indicate there is pent-up demand for asset replacement and additions for the coming year. I believe the industry will benefit and enjoy a much stronger year of financing opportunities in 2010, provided key economic measurements reflect progress, which will stimulate new business growth and spending."

The MCI-EFI is a monthly survey of equipment finance industry executive leadership that provides a qualitative assessment of both the prevailing business conditions and expectations for the future. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence. For more information, visit www.leasefoundation.org/IndRsrcs/MCI/

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

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