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Monthly Leasing and Finance Index March 2007

Mar 1, 2007, 18:50 PM

The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), reporting equipment leasing and finance activity for March releases today showing overall new business volume for the period increased by 53.7 percent compared to the previous month. When compared to the same month in 2006, new business volume for March 2007 has grown by 18.2 percent.

March originations reported by the MLFI-25 totaled $7.1 billion for new commercial equipment leases and loans, compared to $4.6 billion in February. The March 2006 volume totaled $6.3 billion. The durable goods orders for new shipments released by the government today showed an increase of 3.4 percent (18.84 percent, not seasonally adjusted).

"The increase in March originations of nearly 54% (as compared to February), are indicative of both the continued strength of our members' financing activities and the month-to-month choppiness we have seen in procurement activity through the first quarter," said Paul A. Larkins, President and CEO, Key National Finance, located in Superior, CO. "Our new business volume numbers rose measurably in March and represent an 18.2% increase over the prior year's numbers. These increases parallel today's reported 3.4% increase in durable goods orders and efforts by business to invest in capital equipment while hiring fewer people, thus boosting productivity. We will need to continue monitoring the soft labor market and its impact on demand models. That said, the robust March numbers and only modest portfolio metrics degradation are encouraging," said Larkins, whose company participates in the MLFI-25.

The MLFI-25 indicates portfolio quality showing some deterioration in the first three months of 2007. Receivables over 90 days inched slightly upward to 1.0 percent, and average losses increased by 0.08 percent compared to the prior month. Credit approval ratios declined by 1.9 percent from the previous month indicating a tightening of credit standards. Total headcount decreased over the previous month primarily due to one company restructuring. Headcount was 9,789 in March and 11,416 in February, for comparison. In March 2006, headcount was higher at 10,536 or a 7.1 percent decrease year over year.

"The increase in new originations is in line with historical trends, and in fact up slightly year over year, said Kenneth E. Bentsen Jr., ELFA president. "The MLFI-25 participants report a normal ramp up in business investment in plant and equipment. While others have pointed to a potential softening in business investment, these lenders have yet to witness a downturn in financing activity for such investment," 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 receivables (non-performing assets); charge-offs; credit approval (approved vs. booked); and headcount for leasing and finance business (indicator of stability).

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 upon 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
  • Citicapital
  • 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)

0307-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 97.5% 1.0% 0.5% 1.0%
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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