Equipment Leasing and Finance Association - Equiping Business for Success

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Monthly Leasing and Finance Index June 2009

Jun 1, 2009, 17:09 PM

The Equipment Leasing and Finance Association's (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 June declined by 37 percent when compared to the same period in 2008. Month-to-month new business volume actually increased 24 percent from May to June, from $4.2 billion to $5.2 billion. For Q2 2009, new business volume declined by 40.1 percent when compared to Q2 2008.

The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is a financial indicator that complements other relevant economic indices, including the monthly durable goods report prepared 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 decreased to 4.1 percent as compared to 4.7 percent in May. However, June delinquencies increased 100 basis points from the year-earlier reporting period. Charge-offs increased to 2.44 percent from 1.74 percent in the prior month, and more than doubled from June 2008. Credit approvals decreased to 65.4 percent from 66.3 percent in May, and from 74.0 percent in June 2008. Fifty-five 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 was virtually flat in the May-June period.

"While year-over-year declines improved in June as compared to April and May, the second quarter showed greater weakness as compared to Q1 2009 and Q4 2008 indicating that businesses continued to pull back from new investments while underwriting standards continued to tighten," said ELFA President Kenneth E. Bentsen, Jr.

At the same time, confidence in the equipment finance market is down slightly with a score of 49.2 for July 2009 compared to 51.8 for June 2009, according to a monthly confidence index released by the Equipment Leasing & Finance Foundation. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $650 billion equipment finance sector. Survey results are posted on the Foundation website, http://www.leasefoundation.org/IndRsrcs/MCI/

About the ELFA's MLFI-25
The MLFI 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. The latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at http://www.elfaonline.org/ind/research/MLFI/

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)
0609-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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