Equipment Leasing and Finance Association - Equiping Business for Success

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Monthly Leasing and Finance Index February 2009

Feb 1, 2009, 13:11 PM

The Equipment Leasing and Finance AssociationÕs (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $650 billion equipment finance sector, showed overall new business volume for February declined by 37.7 percent when compared to the same period in 2008. Month-to-month new business volume decreased 26.7 percent from January to February, from $4.5 billion to $3.3 billion. This follows a 24 percent decline in January (YOY) volume.

The MLFI-25 is the only index that reflects the volume of commercial equipment financed in the U.S. 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. Together with the MLFI-25 these reports provide a complete picture of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.

The MLFI-25 reported receivables over 30 days increased to 4.5 percent as compared to 3.9 percent in January. Charge-offs increased to 1.74 percent from 1.41 percent in the prior month. Credit approvals dropped to 64.7 percent from 65.2 percent, surpassing JanuaryÕs record low. Forty-seven percent of participant companies reported that fewer transactions were submitted for approval during the month, due to tightening underwriting standards and lower demand. Total headcount for equipment finance companies showed a slight decline in February (one percent).

ÒIn the near term, we see continued deterioration of customer credit quality and delays in capital spending as companies re-evaluate the current economic situation. These factors have been driving the overall decline in new business volume in the equipment finance sector,Ó said Anthony Cracchiolo, President, U.S. Bank Equipment Finance, Portland, Oregon. US Bank Equipment Finance is an ELFA member and a participant in the MLFI-25. ÒSome markets have been less hard hit and we do expect delays in spending to result in pent up demand for equipment in a variety of industries late in the year and into early 2010,Ó said Cracchiolo.

ÒAfter finishing the fourth quarter of 2008 down, the first quarter of 2009 continues on a downward trend as businesses pull back from making new investments in plant and equipment,Ó said ELFA President Kenneth E. Bentsen, Jr. ÒWe also witnessed continued deterioration in portfolio quality, albeit better than many other asset classes,Ó Bentsen said.

About the ELFAÕs MLFI-25
The index 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. More information on the Monthly Leasing and Finance Index, including methodology and participants is available below and at http://www.elfaonline.org/ind/research/

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.

The results of each MLFI-25 are posted on the ELFA website. ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit http://www.elfaonline.org/ind/research/ for additional information.

Participants in the ELFA MLFI-25:

  • 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

MLFI-25 New Business Volume
(Year Over Year Comparison)
0209-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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