The Equipment Leasing and Finance Association’s (ELFA), which reports economic activity for the $521 billion equipment finance sector, showed overall new business volume for January was $4.2 billion, up 24 percent compared to the same period in 2010.
Credit quality is mixed. Receivables over 30 days increased slightly to 2.8 percent in January from 2.7 percent in December, but declined by 35 percent compared to the same period in 2010. Charge-offs declined significantly, falling to 1.0 percent from 1.4 percent in December, and also showed improvement over the same period in 2010.
Compared to the year-earlier period, credit standards relaxed as approvals increased to 74 percent in January. And, 56 percent of participating organizations reported submitting more transactions for approval during the month, down from two-thirds of responding organizations in December.
Finally, total headcount for equipment finance companies remained flat for the last three months, and reflected a year-over-year decrease of four percent for January. Supplemental data shows that the construction and trucking sectors once again led the underperforming sectors in January.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for February is 71.6, a new high since the MCI was launched in May 2009, and an increase from the previous high of 69.7 in January. Click HERE for more detailed information on the MCI-EFI.
ELFA President and CEO William G. Sutton, CAE, said, “After a typical end-of-quarter, end-of-year spike in new business activity, the equipment finance sector seems to be resuming a steady pace of increasing volume. This trend, coupled with a strong outlook by leasing and finance executives about the future of the industry, bodes well for a continued recovery of the sector.”
“At Summit Funding Group, we have seen a dramatic increase in customer interest in acquiring new assets,” said Richard Ross, President, Summit Funding Group Inc. located in Cincinnati, Ohio. “The fourth quarter of 2010 finished the year stronger than recent history. These strong results, coupled with the awarded backlog and continued interest in new financing, leads us to believe the last three quarters of the year should produce a sizable increase in lease financing for 2011.”
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.
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
- Hitachi Credit America
- HP Financial Services
- John Deere Financial
- Key Equipment Finance
- M&I Equipment Finance
- Marlin Leasing Corporation
- Merchants Capital
- 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 ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $521 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 over 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. In 2011, ELFA is celebrating 50 years of equipping business for success.
ELFA is the premier source for statistics and analyses concerning the equipment finance sector.
For more information, please visit www.elfaonline.org.
About The Equipment Leasing & Finance Foundation
The Equipment Leasing & Finance Foundation is the non-profit affiliate to the Equipment Leasing and Finance Association, providing future-focused research to the equipment finance industry.
For more information, visit www.leasefoundation.org.
