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Monthly Leasing and Finance Index September 2007

Sep 1, 2007, 18:37 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 September increased over August originations by 4 percent but decreased by 6.8 percent when compared to September 2006. According to year-to-date cumulative totals, new business volume for January to September 2007 was 7.2 percent higher when compared with the same period in 2006.

The MLFI-25 reported new business volume for September totaling $7.2 billion for new commercial equipment leases and loans, compared to $6.9 billion in August. New business volume for September 2006 totaled $7.7 billion.

Portfolio quality remained relatively unchanged in September. Delinquencies improved across the board, with aging of receivables in the over 90-day category declining significantly when compared to the prior month. In addition, receivables under 30 days in age increased dramatically over August. Losses were flat over the prior month and year earlier period. Credit approval ratios showed a decline compared to September 2006 data and declined slightly over the prior month as well.

Total headcount was slightly higher in the August-September period, but compared to the year over year data, showed a 9.7 percent drop.

"The softening in September bears watching to determine if it is the start of a trend or an anomaly," said Ralph M. Martinez, Senior Vice President/COO, National City Commercial Capital Company, LLC, in Cincinnati, OH. "It should be viewed in concert with the trend in approval ratios. If approval ratios remain down, it is likely that volume will follow," said Martinez.

"The slowing of new originations may indicate that businesses are showing some hesitation to make capital investments in light of the uncertainty in the credit markets. Yet even with the fall out in the subprime mortgage market, new origination of financings of plant and equipment are growing indicating continued demand and good liquidity and credit quality in the equipment finance market," said ELFA president Kenneth E. Bentsen, Jr.

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)
0907-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        
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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