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Monthly Leasing and Finance Index October 2007

Oct 1, 2007, 18:35 PM

The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports equipment finance activity showed that overall new business volume for October was virtually flat (0.10%) when compared to October 2006. However, according to year-to-date cumulative totals, new business volume for January to October 2007 was 6.5 percent higher when compared with the same period in 2006.

The MLFI-25 reported new business volume for October totaling $6.8 billion for new commercial equipment leases and loans, compared to $7.2 billion in September. New business volume for October 2006 totaled $6.8 billion. Portfolio quality was stable in October. Delinquencies remained at historically low levels, with aging of receivables in the over 90-day category flat when compared to the prior month (0.8%). When compared to the prior year period, October delinquencies were much improved (1.1% versus .08%). However, losses were up over both the prior month and year earlier periods. Credit approval ratios showed another slight decline when compared to both October 2006 data and the prior month.

Total headcount was slightly higher in the September-October period, but compared to the year over year data, showed an 8.7 percent drop.

Bill Verhelle, ELFA Chairman and also CEO of First American Equipment Finance, an MLFI-25 company participant located in Fairport, NY, said, "The U.S. housing slump and mortgage crisis have so far had little or no effect on the commercial equipment leasing and finance sector. October commercial lease and loan volume was relatively robust. October delinquencies remained at historically low levels." Despite growing fears of recession, Verhelle observed that "business credit remains widely available on favorable terms to small and medium size commercial borrowers meeting traditional qualification criteria."

ELFA president, Kenneth E. Bentsen, Jr. said, "While new origination, year over year, for October tapered off from its earlier growth plane, borrower demand and credit quality remain positive for the commercial equipment finance sector amidst the subprime meltdown."

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 of receivables; charge-offs; credit approval ratios (approved vs. submitted); and headcount for the leasing and finance business. The MLFI-25 provides metrics reflecting 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, 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 a complete picture that describes the use of productive assets in the U.S. economy: equipment produced, acquired and financed.

Results of each MLFI-25 are posted on the ELFA website and in ELT, the Magazine of Equipment Leasing and Finance. Charts and graphs are available for the media upon request; please contact Diane Helyne Zyats at ELFA at dzyats@elfaonline.org.

Participants in the ELFA MLFI-25:

  • ADP Credit Corporation
  • Bank of America
  • Bank of the West
  • Canon Financial Services
  • Caterpillar Financial Services Corporation
  • CIT
  • Citicapital
  • De Lage Landen Financial Services
  • First American Equipment Finance
  • GreatAmerica
  • 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
  • US Express Leasing
  • Verizon Capital Corp
  • Volvo Financial Services
  • Wells Fargo Equipment Finance

MLFI-25 New Business Volume
(Year Over Year Comparison)
1007-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 97.6% 1.0% 0.4% 1.0%
July 2006 97.8% 0.9% 0.3% 0.9%
  2007 96.8% 1.8% 0.4% 1.0%
August 2006 97.8% 1.0% 0.4% 1.1%
  2007 96.7% 0.9% 1.0% 1.4%
September 2006 97.6% 0.9% 0.5% 0.9%
  2007 97.8% 1.0% 0.4% 0.8%
October 2006 97.7% 0.9% 0.3% 1.1%
  2007 97.7% 1.1% 0.4% 0.8%
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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