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The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $521 billion equipment finance sector, showed overall new business volume for November was $4.5 billion, up 13 percent compared to the same period in 2009, but down 8.0 percent from October’s volume of $4.9 billion. Year-to-date new business volume is $50.6 billion, up 6.5 percent compared to the cumulative year-to-date total from 2009.
Credit quality is mixed. Receivables over 30 days increased to 3.2 percent in November from 3.0 percent in October, which was the lowest level in two years. Receivables over 30 days decreased by 29 percent in November 2010 compared to the same period in 2009. Losses increased to 1.4 percent in November, up from 1.2 percent in the prior month. But, these losses declined dramatically when compared to the year-earlier period.
Credit approvals decreased a percentage point to 72 percent in November, but remained fairly consistent when compared to the prior several months. Seventy-three percent of participating organizations reported submitting more transactions for approval during the month, also one percentage point off from the high mark of the last two years. Finally, total headcount for equipment finance companies was virtually flat from October to November. Supplemental data shows that construction and small and medium-sized businesses again led the underperforming sectors from October to November.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for December is 64.8, a decrease from 65.5 in November. For more detailed information on the MCI-EFI, visit www.LeaseFoundation.org
ELFA president William G. Sutton said, “The data continue to show an uneven recovery for the equipment finance business. While total volume is up, portfolio quality still is a concern for some ELFA members.”
“We are beginning to see signs of growing pipelines and a strengthening in fourth quarter bookings that combine to foster increased optimism heading into 2011,” said Kenneth A. Turner, president and CEO, SunTrust Equipment Finance & Leasing Corporation, located in Towson, Md. “New business volume appears to be most robust in the areas of trucking, technology and healthcare. Competition is evident, creating nominal downward pressure on margin, and there is still a bias toward stronger credits. Economic, political, regulatory, and accounting standard uncertainty are causing corporations to maintain cash reserves at record levels and combining to slow the pace of growth.”
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/
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
About the 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 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.