ELFA - Equipment Leasing and Finance Association - Equipping Business for Success

Monthly Leasing and Finance Index June 2007

Jun 1, 2007, 18:44 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 June increased by 13.6 percent when compared to the same month in 2006. According to year-to-date cumulative totals, new business volume for January to June 2007 was 10 percent higher when comparing the same period in 2006.

The MLFI-25 reported new business volume for June totaled $9.1 billion for new commercial equipment leases and loans, compared to $6.9 billion in the prior month. New business volume for June 2006 totaled $8.1 billion. The MLFI-25 indicated portfolio quality remained unchanged throughout the period. The trend for receivables over 90 days has been edging slightly higher in the January Ð April 2007 period, before leveling off in May and June. Charge-offs were slightly higher compared to the prior month, but showed a dramatic decline when compared to the year-earlier period. Credit approval ratios increased by 2.0 percent from May to break the declining trend in the previous months.

William H. Verhelle, CEO of First American Equipment Finance in Fairport, New York said, "The ten percent increase in new business volume in the first-half of 2007 is noteworthy. The commercial equipment finance segment continues to expand rapidly during this period of relatively low credit losses. As an aside, the 2.0 percent increase over the prior month in June's credit approval ratios is a bit of a surprise, given recent industry talk about a need for possible tightening of credit approval standards in anticipation of increasing future credit losses," said Verhelle, who is ELFA's Vice Chairman and whose company is an MLFI-25 survey participant.

"The increase in borrowing to finance capital equipment investment in June as shown by MLFI-25 mirrors other data we've seen such as the recent Federal Reserve Board Monetary Policy Report that noted business spending on equipment and software firmed in the spring. This data would seem to indicate that after some softening in the winter, business investment in capital goods continues on an upward swing," said Kenneth E. Bentsen Jr., ELFA president.

Total headcount reported in the June MLFI-25 decreased over the previous month. Headcount was 11,515 in June and 11,734 in May. In June 2006, headcount was higher at 12,858 or a 10.4 percent decrease year over year.

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 receivables (non-performing assets); charge-offs; credit approval (approved vs. booked); and headcount for leasing and finance business (indicator of stability).

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. Because the same companies participate in the survey each month, the MLFI-25 provides a consistent trend analysis of current activity. 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 the full economic picture for the equipment finance sector: 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 Zyats at ELFA.

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)

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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%
August 2006 97.8% 1.0% 0.4% 1.1%
September 2006 97.6% 0.9% 0.5% 0.9%
October 2006 97.7% 0.9% 0.3% 1.1%
November 2006 97.6% 1.0% 0.3% 1.1%
December 2006 98.1% 0.8% 0.3% 0.7%

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Percentage of your net investment at risk
for receivables over 90 days
Net Investment at Risk

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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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