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Monthly Leasing and Finance Index April 2007

Apr 1, 2007, 18:47 PM

The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), reporting equipment finance activity for April releases today showing overall new business volume for the period declined by 19.5 percent compared to the previous month. When compared to the same month in 2006, new business volume for April 2007 declined by 1.5 percent. Reviewing year-to-date cumulative totals, new business volume for 2007 was 10.3 percent higher when comparing the same period in 2006 (January-April).

April originations reported by the MLFI-25 totaled $6.0 billion for new commercial equipment leases and loans, compared to $7.4 billion in March. The April 2006 volume totaled $6.1 billion.

"April originations confirms our observation that the equipment finance business builds each quarter similar to the growth we see over the calendar year," according to Ed Dahlka, President, LaSalle National Leasing Corporation, located in Chicago, IL. "LaSalle originations were flat in April, but the pipeline is much stronger for May and excellent for June. We still see 2007 volume exceeding a good 2006, with credit quality showing some weakness. We also see many lessors adding headcount which indicates others see a good volume year developing," said Dahlka, whose company participates in the MLFI-25.

The MLFI-25 indicates portfolio quality declined slightly. Receivables over 90 days inched slightly upward to 1.2 percent, and average losses declined by 0.11 percent compared to the prior month. Credit approval ratios declined by 1.2 percent from the previous month (second consecutive monthly decline). Total headcount decreased over the previous month. Headcount was 11,544 in April and 11,599 in March, for comparison. In April 2006, headcount was higher at 12,444 or a 7.2 percent decrease year over year.

"While April's demand for new capital goods expenditures softened slightly, our members indicate a continued positive outlook over the near term," said Kenneth E. Bentsen Jr., ELFA president. "Credit quality continues to maintain and we see no indication of companies pulling back from capital investment at this time," Bentsen said.

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 receivables (non-performing assets); charge-offs; credit approval (approved vs. booked); and headcount for leasing and finance business (indicator of stability).

The MLFI-25 provides metrics reflecting monthly commercial equipment lease and loan activity as reported by 25 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. Because the same companies participate in the survey each month, the MLFI-25 provides a consistent trend analysis of current activity. 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 the full economic picture for the equipment finance sector: equipment produced, acquired, and financed.

Results of each MLFI-25 are posted on the ELFA website and ELT, the Magazine of Equipment Leasing and Finance. Charts and graphs are available for the media upon request; please contact Diane Zyats of ELFA at dzyats@elfaonline.org or 703.516.8391.

Participants in the ELFA MLFI-25:

  • ADP Credit Corporation
  • Bank of America Leasing
  • Bank of the West
  • Canon Financial Services
  • Caterpillar Financial Services Corporation
  • CIT
  • Citicapital
  • De Lage Landen Financial Services
  • First American Equipment Finance
  • GreatAmerica Leasing Corporation
  • Hitachi Credit America
  • HP Financial Services
  • Irwin Financial
  • John Deere Credit Corporation
  • Key Equipment Finance
  • LaSalle National Leasing Corporation
  • Marlin Leasing Corporation
  • National City Commercial Corp.
  • RBS Asset Finance
  • Regions Equipment Finance
  • Siemens Financial Services
  • US Bank Equipment Finance
  • US Express Leasing
  • Verizon Capital Corp/Verizon Credit
  • Volvo Financial Services
  • Wells Fargo Equipment Finance

MLFI-25 New Business Volume
(Year Over Year Comparison)

0407-NewBusVol

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Aging of Receivables:

Month Year Less than 30 days 31-60 days 61-90 days Over 90 days
January 2006 98.1% 0.9% 0.3% 0.7%
  2007 97.8% 1.0% 0.3% 0.8%
February 2006 97.8% 1.0% 0.4% 0.8%
  2007 97.5% 1.3% 0.3% 0.9%
March 2006 97.8% 1.0% 0.3% 0.7%
  2007 97.5% 1.0% 0.5% 1.0%
April 2006 98.0% 0.9% 0.3% 0.8%
  2007 97.4% 1.0% 0.4% 1.2%
May 2006 98.0% 1.0% 0.3% 0.7%
  2007        
June 2006 98.0% 0.8% 0.4% 1.0%
  2007        
July 2006 97.8% 0.9% 0.3% 0.9%
  2007        
August 2006 97.8% 1.0% 0.4% 1.1%
  2007        
September 2006 97.6% 0.9% 0.5% 0.9%
  2007        
October 2006 97.7% 0.9% 0.3% 1.1%
  2007        
November 2006 97.6% 1.0% 0.3% 1.1%
  2007        
December 2006 98.1% 0.8% 0.3% 0.7%
  2007        

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Average Losses (Charge-offs) as a % of net receivables
(Year Over Year Comparison)

Annualized Average Loss

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Credit Approval Ratios As % of all Decisions Submitted
(Year Over Year Comparison)

Credit Approval Ratios

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Total Number of Employees
(Year Over Year Comparison)

Total Number of Employees

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