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Monthly Leasing and Finance Index February 2007

Feb 1, 2007, 18:52 PM

The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), reporting equipment leasing and finance activity for February releases today showing overall new business volume for the period declining by 16 percent since January. However, when compared to the same month in 2006, new business volume for February 2007 has actually grown by 17 percent. February originations reported by the MLFI-25 totaled $4.6 billion for new commercial equipment leases and loans, compared to $5.5 billion in January. The February 2006 volume totaled $3.9 billion. The durable goods orders for new shipments (not seasonally adjusted) released by the government March 28 showed an increase of 4.5 percent. Other leading economic indicators, including one for equipment spending orders for nondefense capital goods, suggest a slowdown.

"The decline in new business volume in February doesn't really come as a surprise given historical trends," says Jim McGrane, President, US Express Leasing, whose company participates in the survey. "The numbers are pointing downward, and this may well portend the slowdown indicated in the durable goods numbers released yesterday. What's encouraging, however, is the year over year growth in new volume is up, indicating business investment in equipment in light of a potentially softening economy. We would like to think this growth along with continued steady credit quality bodes well for our industry for the remainder of 2007," said McGrane.

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 the leasing and finance business (indicator of stability).

The MLFI-25 indicated portfolio quality remained steady. Receivables over 90 days inched slightly upward by 0.1 percent, while average losses remained the same over the prior month at 0.5 percent. Credit approval ratios improved by 0.5 percent from the previous month. Total headcount decreased over the previous month. Headcount was 11,416 in February and 11,434 in January, for comparison. In February 2006, headcount was lower at 10,497 or an 8.8% increase year over year.

"February's drop in new business volume tracks a well-established seasonal trend showing lower activity during the winter months," said Kenneth E. Bentsen, Jr., president of the Equipment Leasing and Finance Association. "All other data provided by participating MLFI-25 companies for the month point to a steady equipment finance sector, which is impressive in the face of an uneven economic outlook," said Bentsen.

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 by request.

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
  • 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 Bancorp Leasing & Financial
  • US Express Leasing
  • Verizon Capital Corp/Verizon Credit
  • Volvo Financial Services
  • Wells Fargo Equipment Finance

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

0207-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        
April 2006 98.0% 0.9% 0.3% 0.8%
  2007        
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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