The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $518 billion equipment finance sector, showed overall new business volume for November declined by 7.0 percent when compared to the same period in 2008. For 2009, the MLFI-25 reported month-to-month new business volume down 7.0 percent from October to November, from $4.3 billion to $4.0 billion.
The MLFI-25 reported receivables over 30 days increased to 4.5 percent as compared to 4.2 percent in October. On a year-over-year basis, receivables over 30 days increased by 15 percent. Charge-offs increased to 2.4 percent from 1.7 percent in the prior month and rose by 66.9 percent compared to November 2008. Sixty-two percent of participant companies reported that fewer transactions were submitted for approval during the month, due to tightening underwriting standards and lower demand, according to supplemental data. Credit approvals increased slightly to 67.2 percent when compared to the previous month; compared to the same period in the previous year, credit approvals ratios have dropped slightly from 69.2 percent in November 2008. Total headcount for equipment finance companies decreased slightly at 0.6 percent in the October-November period.
"Whether or not the worst of this recession is really behind us remains to be seen," said Frederick S. Summers, Chairman and Chief Executive Officer, Vision Financial Group, Inc., located in Pittsburgh, PA. "When the economy does make the turn for the better and the credit markets really start to open and fire on all eight cylinders, whoever can increase accessibility to capital will reap big rewards. Independents need to continue to weather the storm and stay true to the business principles that got them where they are. Their time is coming."
"November's origination number is a dramatic improvement over the prior month," said Ralph Petta, ELFA Interim President. "While by no means robust, demand for capital equipment seems to picking up. We are hopeful that this trend continues as the overall economy rebounds."
A related index, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI), for December showed an increase to 58.8 compared to 57.2 compared in November. December MCI-EFI is the highest since the index was inaugurated in May this year.
MCI-EFI survey respondent Russell Nelson, President, Farm Credit Leasing Services Corporation, located in Minneapolis, MN, said, "Many customers indicate there is pent-up demand for asset replacement and additions for the coming year. I believe the industry will benefit and enjoy a much stronger year of financing opportunities in 2010, provided key economic measurements reflect progress, which will stimulate new business growth and spending."
The MCI-EFI is a monthly survey of equipment finance industry executive leadership that provides a qualitative assessment of both the prevailing business conditions and expectations for the future. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence. For more information, visit http://www.leasefoundation.org/IndRsrcs/MCI/
Participants in the ELFA MLFI-25:
- ADP Credit Corporation
- Bank of America
- Bank of the West
- Canon Financial Services
- Caterpillar Financial Services Corporation
- De Lage Landen Financial Services
- Dell Financial Services
- Fifth Third Bank
- First American Equipment Finance
- 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