August 21, 2011 2:05 PM CDT
Credit quality is mixed. Receivables over 30 days decreased 14 percent to 2.5 percent in June from 2.9 percent in May, and declined by 24 percent compared to the same period in 2010. Charge-offs increased 38 percent in June from the previous month, and decreased by 35 percent from the same period in 2010.
Credit standards eased in June as the credit approvals ratio increased to 79 percent from 76 percent the previous month. Sixth-three percent of participating organizations reported submitting more transactions for approval during the month, a decrease from 68 percent in May.
Finally, total headcount for equipment finance companies in June showed no significant change month to month and year over year. Supplemental data shows that the construction and trucking sectors and small and medium-sized enterprises continued to lead the underperforming sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for July is 56.2, up 6.8 percent from the June index of 52.6. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org
ELFA President and CEO William G. Sutton, CAE, said: “Overall new business activity in the equipment finance sector continues to show steady improvement in 2011. We hope this positive trend will continue as we head into the second half of the year amid an economic recovery restrained by uncertainty.”
Crit DeMent, Chief Executive Officer, LEAF Commercial Capital, Inc, located in Philadelphia, PA, said, “LEAF is experiencing similar results that are in line with the statistics detailed in the June MLFI index. We are receiving positive feedback from our equipment vendors that sales are beginning to trend upwards.” He added, “The majority of these sales are still replacement volume, which is driven by companies now obtaining new equipment they have been holding back on acquiring during the recession. The fulfillment of this pent-up demand is a positive indication that the economy is continuing to recover.”
The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants is available below and also at www.elfaonline.org/ind/research/MLFI.
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.
Monthly leasing and finance index
June new business volume up 33 percent year-over-year
By Amy Vogt
The ELFA Monthly Leasing and Finance Index showed overall new business volume for June was $7.3 billion.
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 June was $7.3 billion, up 33 percent from volume of $5.5 billion in the same period in 2010. Compared with May volume, June volume increased by 30 percent. Year to date, new business volume is up 28.5 percent over last year.Credit quality is mixed. Receivables over 30 days decreased 14 percent to 2.5 percent in June from 2.9 percent in May, and declined by 24 percent compared to the same period in 2010. Charge-offs increased 38 percent in June from the previous month, and decreased by 35 percent from the same period in 2010.
Credit standards eased in June as the credit approvals ratio increased to 79 percent from 76 percent the previous month. Sixth-three percent of participating organizations reported submitting more transactions for approval during the month, a decrease from 68 percent in May.
Finally, total headcount for equipment finance companies in June showed no significant change month to month and year over year. Supplemental data shows that the construction and trucking sectors and small and medium-sized enterprises continued to lead the underperforming sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for July is 56.2, up 6.8 percent from the June index of 52.6. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org
ELFA President and CEO William G. Sutton, CAE, said: “Overall new business activity in the equipment finance sector continues to show steady improvement in 2011. We hope this positive trend will continue as we head into the second half of the year amid an economic recovery restrained by uncertainty.”
Crit DeMent, Chief Executive Officer, LEAF Commercial Capital, Inc, located in Philadelphia, PA, said, “LEAF is experiencing similar results that are in line with the statistics detailed in the June MLFI index. We are receiving positive feedback from our equipment vendors that sales are beginning to trend upwards.” He added, “The majority of these sales are still replacement volume, which is driven by companies now obtaining new equipment they have been holding back on acquiring during the recession. The fulfillment of this pent-up demand is a positive indication that the economy is continuing to recover.”
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 MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants is available below and also at 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.
About the Author
Amy Vogt is the Vice President of Communications and Marketing for the Equipment Leasing and Finance Association (ELFA).
