Equipment Leasing and Finance Association - Equiping Business for Success

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Monthly Leasing and Finance Index October 2006

Oct 1, 2006, 19:01 PM

The Equipment Leasing and Finance Association (ELFA) Monthly Leasing and Finance Index (MLFI-25) of equipment leasing and finance activity for October releases today showing overall volume for the period decreasing when compared to September originations. The MLFI-25 provides metrics reflecting monthly commercial equipment lease and loan activity as reported by the 25 participating ELFA member equipment finance companies.

October originations reported by the MLFI-25 totaled $6.0 billion for new commercial equipment leases and loans, compared to $7.1 billion in the prior month. This drop-off in new leasing and finance volume mirrors the trend reported by the U.S. Census Bureau for October: the largest decline in manufactured durable goods orders in six years.

Portfolio quality shows some deterioration as well, with receivables over 90 days increasing to 1.1 percent from 0.9 percent in September, matching its highest level of the year. However, average losses as a percentage of net receivables dropped seven basis points from the previous month, to .43 percent from .50 percent. Credit policies are tightening, with credit approval ratios at their lowest for the year: 78 percent of all submitted deals. Total headcount continues to increase with employment in MLFI-25 companies growing nine out the last 10 months in 2006.

"The softening economy is having its impact on the equipment finance and leasing arena, however the drop in credit approval ratios indicates the industry is reacting appropriately," said Laird Boulden, President and CEO of RBS Asset Finance, Inc. "Despite the October decline, a look at industry performance over the last three months indicates that our sector is holding its own and should finish the year strong overall."

The participant companies in the MLFI-25 represent a broad 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 industry activity. Results of each MLFI-25 are posted on the ELFA website and Equipment Leasing Today magazine. Charts and graphs are available for reprint to the media.

The ELFA provides a variety of studies, reports, and market analyses covering the $234 billion equipment finance sector. To access this and other industry information, visit the ELFA website at http://www.elfaonline.org/Ind/Research/ or contact Bill Choi, bchoi@elfaonline.org.

Participants in the ELFA MLFI-25:

  • ADP Credit Corporation
  • Amsouth Leasing 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
  • Siemens Financial Services
  • US Bancorp Leasing & Financial
  • US Express Leasing
  • Verizon Capital Corp/Verizon Credit
  • Volvo Financial Services
  • Wells Fargo Equipment Finance

Total New Business Volume (Leases and Loans)

1006-NewBusVol

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Aging of Receivables:

  2006
  Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct.
Less than 30 days 98.1% 97.8% 98.0% 98.0% 98.0% 98.0% 97.8% 97.6% 97.7% 97.7%
31-60 days 0.9% 1.0% 1.0% 0.9% 1.0% 0.8% 0.9% 1.0% 0.9% 0.9%
61-90 days 0.3% 0.4% 0.3% 0.3% 0.3% 0.4% 0.3% 0.4% 0.5% 0.3%
Over 90 days 0.7% 0.8% 0.7% 0.8% 0.7% 1.0% 0.9% 1.1% 0.9% 1.1%

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Annualized Average Loss (Charge-Offs as a % of Net Receivables)

Annualized Average Loss

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Credit Approval Ratios (As % of All Decisions Submitted)

Credit Approval Ratios

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Total Number of Employees

Total Number of Employees

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