Equipment Leasing and Finance Association - Equiping Business for Success

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Monthly Leasing and Finance Index April 2008

Apr 1, 2008, 14:50 PM

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 April increased 16 percent when compared to the same period 2007.

The MLFI-25 reflects levels of equipment financed and 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 these reports provide a complete picture that describes the use of productive assets in the U.S. economy: equipment produced, acquired and financed.

According to the April data, originations month-to-month also improved, climbing to $7.2 billion in April from $7.0 billion in March. Respondents' portfolio performance improved: receivables in the less-than-30 days category were 96.9 percent in April, up slightly from the prior month. This trend held for charge-offs as well, declining to .77 percent in April from .83 percent in March. However, when comparing April 2008 data to the same period one year earlier, overall portfolio quality shows some deterioration.

Credit approval ratios (73.9 percent) increased when compared to the prior month (73.6 percent). Total headcount remains virtually flat for the last three months.

"At De Lage Landen we experienced a very good month volume-wise in April and we are seeing strong demand globally," said Denis McCafferty, CFO of Global Operations, De Lage Landen. "This is particularly pleasing against a backdrop of the current financial market challenges. April results suggest that companies view the global economy as robust and that a return to positive economic growth is a "when and not if"—and perhaps sooner that some might think," McCafferty said.

"While we are very pleased with what we see, we remain focused on credit," said McCafferty. "Financing based on solid credit is one of the keys to success for both lessors and lessees alike," McCafferty said. De Lage Landen is a participant in ELFA's MLFI-25.

"The April data shows that businesses invested in capital goods at a faster pace," said ELFA President Kenneth E. Bentsen, Jr. "This is an improvement in financing activity for capital goods as compared to the first quarter and may indicate that businesses are predicting positive growth in economic demand," 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 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.

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

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
  • 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

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.


MLFI-25 New Business Volume
(Year Over Year Comparison)
0408-NewBusVol

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Aging of Receivables:

AgingofRcv.png

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

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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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