Equipment leasing business volume improves but confidence falls

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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 May was $5.6 billion, up 30% from volume of $4.3 billion in the same period in 2010.

Compared with April volume, May volume increased by 10%. Year to date, new business volume is up 27% over last year.

The MLFI-25 measures monthly commercial equipment lease and loan activity as reported by 25 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. The MLFI-25 reflects capex, or the volume of commercial equipment financed in the US and is released globally from Washington, DC, each month, on the day before the US Department of Commerce releases the durable goods report.

"Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector and current business conditions nationally," says ELFA.

Credit quality continues to improve, according to the index. Receivables over 30 days decreased 12% to 2.9% in May from 3.3% in April, and declined by 28% compared to the same period in 2010. Charge-offs remained unchanged at 0.8% in May from the previous month, and decreased by 51% from the same period in 2010.

Credit standards remained unchanged in May from the previous month at 76%. Approximatley 68% of participating organisations reported submitting more transactions for approval during the month, an increase from 45% in April..

Separately, ELFA's monthly confidence index (MCI-EFI) for June is 52.6, down from the May index of 63.2, indicating industry concerns over the sputtering economic recovery and uncertainties regarding lease accounting changes.

ELFA president and CEO William G. Sutton, CAE, says: "Directionally, there is good news both in the amount of new business generated during the period and the rebound in credit quality. However, some industry sectors continue to lag, and an atmosphere of uncertainty prevails."

Harry Kaplun, president, Frost Leasing, located in San Antonio, Texas says:"This lack of a uniform trend suggests some weakness in the overall recovery. If the recovery can be more universal, the current availability of capital and improving portfolio performance have the equipment finance industry well positioned to serve the future needs of US industry."

ELFA MLFI-25 Participants:

ADP Credit Corporation

Bank of America

Bank of the West


Canon Financial Services

Caterpillar Financial Services Corporation


De Lage Landen Financial Services

Dell Financial Services

EverBank Commercial Finance

Fifth Third Bank

First American Equipment Finance


Hitachi Credit America

HP Financial Services

John Deere Financial

Key Equipment Finance

M&I Equipment Finance

Marlin Leasing Corporation

Merchants Capital

PNC Equipment Finance

RBS Asset Finance

Siemens Financial Services

Stearns Bank

Susquehanna Commercial Finance

US Bancorp

Verizon Capital Corp

Volvo Financial Services

Wells Fargo Equipment Finance