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Monthly Leasing and Finance Index January 2007

Jan 1, 2007, 18:55 PM

The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), reporting equipment leasing and finance activity for January, releases today showing overall new business volume for the period declining by 47 per cent since December. The month of January traditionally shows a decline following robust end-of-year volume, making this decline in line with historical industry behavior. However, when compared to the same month in 2006, new business volume for January 2007 has actually grown by 25 percent. Significantly, the decrease in equipment financing volume for the period mirrors the downward activity in durable goods orders for January, which was reported by the U.S. Department of Commerce. Specifically, January originations reported by the MLFI-25 totaled $5.5 billion for new commercial equipment leases and loans, compared to $10.4 billion in December. The January 2006 volume totaled $4.4 billion.

"January traditionally confirms the transactional nature of the equipment finance industry; each year brings a fresh start and a large drop in new originations typically gets the attention of company executives," according to Ed Dahlka, President, LaSalle National Leasing Corporation, whose company participates in the survey each month. "We have a renewed hope that 2007 will build upon the solid volume growth from last year, as this January is much stronger than 2006, with head count growth continuing and credit quality holding steady," said Dahlka.

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 indicated portfolio quality remained steady. Receivables over 90 days inched slightly upward to 0.8 percent, while average losses remained the same over the prior month at 0.5 percent. Credit approval ratios improved by 1.2 percent from the previous month. Total headcount increased over the previous month, continuing a growth trend indicated in 12 of the last 13 months. Headcount was 11,438 in January and 11,194 in December, for comparison. In January of 2006, headcount was slightly lower at 10,476.

"The data would appear to mirror the drop off in durable goods investment as reported by the Department of Commerce, however, with a seasonally adjusted increase, January's data does not yet indicate a general decline in equipment finance deal origination. Credit quality remains steady, albeit with a slight downtick in portfolio quality," said Kenneth E. Bentsen Jr., ELFA president. 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.

The MLFI-25 is available on the fifth business day of each month. 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)

0107-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        
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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