The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $650 billion equipment finance sector, showed overall new business volume for October decreased 9.1 percent when compared to the same period in 2007. Cumulative year-to-date new business volumes show an increase of 0.9 percent compared to 2007.
The MLFI-25 is the only index that reflects the volume of commercial equipment financed in the U.S. 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. Together with the MLFI-25 these reports provide a complete picture of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
According to the October data as reported by the twenty-five banks, finance companies and manufacturers that comprise the MLFI-25, month-to-month new business volume decreased by 7.7 percent, from $6.5 billion to $6.0 billion. Receivables in the less-than-30-days category, a measure of non-delinquent accounts, were 96.6 percent, as accounts more than 30 days delinquent increased to 3.4 percent, the highest level since August 2007. Charge-offs increased to 1.01 percent as compared to .86 percent in September.
Credit approvals of new transactions declined to the lowest level in two years (72.5 percent), with nearly half of participant companies reporting that fewer transactions were being submitted for approval and underwriting standards tightening. Total headcount for equipment finance companies remained relatively flat in the September-October period.
"Members are reporting that a combination of enhanced underwriting standards, declining demand and increased cost of funds are resulting in fewer transactions being funded," said ELFA president Kenneth E. Bentsen, Jr. "The continued recession in the financial markets is starting to have its affect on the commercial finance sector," said Bentsen.
About the ELFA's MLFI-25
The index is released globally at 9:00 a.m. Eastern time from Washington, D.C. each month, on the day before the U.S. Department of Commerce releases the durable goods report. More information on the Monthly Leasing and Finance Index, including methodology and participants is available below and at http://www.elfaonline.org/ind/research/
The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 measures 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 and current business conditions nationally.
Results of each MLFI-25 are posted on the ELFA website and in ELT, the Magazine of Equipment Leasing and Finance. To access ELFA's comprehensive industry information, please visit http://www.elfaonline.org/ind/research/
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
- Fifth Third Bank
- First American Equipment Finance
- Hitachi Credit America
- HP Financial Services
- Irwin Financial
- John Deere Credit Corporation
- Key Equipment Finance
- 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