The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $518 billion equipment finance sector, showed overall new business volume for August increased 16 percent when compared to the same period in 2009. When compared to the prior month, however, the MLFI-25 reported new business volume declined from $5.6 billion to $4.3 billion. This drop follows two consecutive months of growth.
Credit quality is mixed as well. Receivables over 30 days increased to 4.3 percent, up from 3.5 percent in the prior month, but improved when compared to the year-earlier period (5.0 percent). Charge-offs fell for the second consecutive month, from 1.5 percent in July to 1.3 percent in August. And, there was considerable improvement when compared to the same period in 2009.
The percentage of credit approvals increased to 73 percent in August, matching the highest approval ratio since September 2008. Sixty-eight percent of participating organizations reported submitting more transactions for approval during the month. Finally, total headcount for equipment finance companies increased during the July-August period. Supplemental data shows that trucking and construction assets lead the underperforming sectors.
The Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for September is 56.9, down from 58.2 in August. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org.
“While some equipment financing metrics are improving and moving in the right direction, other data reflect continued uncertainty about the economy and a less-than-robust economic recovery,” said ELFA president William G. Sutton. “According to the data provided by ELFA members, a majority of organizations are experiencing a gradual, but uneven, improvement in business activity compared to 2009.”
“While CSI would concur that there are some modest improvements in most of the demonstrable year-over-year metrics tracked by the MLFI -25, not enough evidence exists to lead us to believe that we are firmly on the ‘yellow brick road’ to recovery,” said Robert Rinaldi, senior vice president, CSI Leasing Inc. “We have more than anecdotal evidence to suggest that possible corporate tax impacts resulting from fiscal imbalances at the federal, state and local levels, along with dissatisfaction with recently enacted regulatory policies, are still causing businesses to hold back on many of their strategic growth initiatives. Additionally, we think many businesses are just now becoming aware of the looming effects of yet another regulatory initiative that will complicate how they will acquire equipment, i.e., FASB / IASB lease accounting changes. The result of all of this basically is preventing consistently elevated levels in capital equipment acquisitions, in which our industry plays a vital role.”
About the ELFA’s MLFI-25
The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at 9 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. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at http://www.elfaonline.org/ind/research/MLFI/.
MLFI-25 Methodology
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.
ELFA MLFI-25 Participants
- ADP Credit Corporation
- Bancorp South Equipment Finance
- Bank of America
- Bank of the West
- BB&T
- Canon Financial Services
- Caterpillar Financial Services Corporation
- CIT
- De Lage Landen Financial Services
- Dell Financial Services
- EverBank Commercial Finance
- Fifth Third Bank
- First American Equipment Finance
- GreatAmerica
- HitachiCredit America
- HP Financial Services
- John Deere Credit Corporation
- Key Equipment Finance
- M&I Equipment Finance
- Marlin Leasing Corporation
- National City Commercial Corp.
- RBS Asset Finance
- Regions Equipment Finance
- Siemens Financial Services
- Stearns Bank
- Susquehanna Commercial Finance Inc.
- US Bancorp
- Verizon Capital Corp
- Volvo Financial Services
- Wells Fargo Equipment Finance
About the ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $518 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its more than 600 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, please visit www.elfaonline.org.
