Equipment Leasing and Finance Association - Equiping Business for Success

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Monthly Leasing and Finance Index May 2007

May 1, 2007, 18:46 PM

The Equipment Leasing and Finance Association's 1/ (ELFA) Monthly Leasing and Finance Index (MLFI-25), reporting equipment finance activity for May, releases today showing overall new business volume for the period increased by 1.6 percent compared to May 2006. Reviewing year-to-date cumulative totals, new business volume for 2007 was 9.1 percent higher when comparing the same period in 2006 (Jan-May).

May originations reported by the MLFI-25 totaled $6.9 billion for new commercial equipment leases and loans, compared to $6.2 billion in April. New business volume for May 2006 totaled $6.8 billion.

"Year over year, we are projecting nearly 11% new business growth as the overall market for equipment acquisitions remains strong," according to ELFA member Laird Boulden, President and Chief Executive Officer, RBS Asset Finance, Inc. located in Chicago, IL. "Our portfolio / credit quality remains strong which mirrors the current state of the economy in general. We continue to hire new employees as we focus on growing our business," he said.

The MLFI-25 indicated portfolio quality remained steady throughout the period. The trend for receivables over 90 days had been edging slightly higher in the January to April period, before retreating in May. Charge-offs remained virtually unchanged (.48 percent of net receivables) compared to the prior month, but showed a dramatic up-tick when compared to the year-earlier period (.38 percent of net receivables). Credit approval ratios declined by 1.1 percent from the previous month (third consecutive monthly decline). Total headcount increased over the previous month. Headcount was 11,734 in May and 11,694 in April, for comparison. In May 2006, headcount was higher at 12,723 or a 7.8 percent decrease year over year.

"Although we've seen an increase year over year with charge-offs, overall these latest numbers would seem to indicate continued resilience in capital expenditures by businesses," said Kenneth E. Bentsen Jr., ELFA president. "With expectations for increasing economic growth we believe this trend should continue," 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; please contact Diane Zyats of ELFA at dzyats@elfaonline.org or 703.516.8391.

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

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

0507-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 97.4% 1.0% 0.4% 1.2%
May 2006 98.0% 1.0% 0.3% 0.7%
  2007 97.5% 1.1% 0.4% 1.0%
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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Percentage of your net investment at risk
for receivables over 90 days

Net Investment at Risk

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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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