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The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $600 billion equipment finance sector, showed overall new business volume for February increased 3.9 percent when compared to February 2007.
The MLFI-25 also showed originations decreased slightly from January ($5.9 billion) to $5.4 billion in February. However, the decline was anticipated due to the cyclical nature of the equipment finance business overall.
Portfolio quality deteriorated in February. Receivables in the past due category (over 30 days) decreased compared to the previous month (0.4 percent). February charge-offs increased over the previous month (from .57 percent to .75 percent); it is noteworthy that charge-offs are at the highest levels since January 2006. Credit approval ratios increased slightly (76.2 percent) when compared to January 2008 (75.4 percent). Total headcount decreased in February by 2.8 percent compared to the previous month.
"While business demand on 'Main Street' continues in light of the meltdown on 'Wall Street,' the effects of the housing decline would appear to be affecting portfolio quality to some extent," said ELFA President, Kenneth E. Bentsen, Jr.
MLFI-25 Methodology
ELFA produces the MLFI-25 report to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information which supports strategic business decision making. The report is also a barometer of the trends in U.S. capital equipment investment.
Five components are included in the MLFI-25 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.
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, which reflects levels of equipment financed, these reports provide a complete picture that describes the use of productive assets in the U.S. economy: equipment produced, acquired and financed.
Results of each MLFI-25 are posted on the ELFA website and in ELT, the Magazine of Equipment Leasing and Finance. To access ELFA's comprehensive industry information, please visit http://www.elfaonline.org/ind/research/
Media Only: Charts and graphs are available for the media upon request; please contact Diane Zyats at dzyats@elfaonline.org
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Participants in the ELFA MLFI-25:
- ADP Credit Corporation
- Bank of America
- Bank of the West
- Canon Financial Services
- Caterpillar Financial Services Corporation
- CIT
- Citicapital
- De Lage Landen Financial Services
- 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
Index Change as of January 2008: LaSalle National Leasing Corporation has been acquired and thus has been replaced in the MLFI and all historical numbers have been adjusted to account for this change to the index.
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