WASHINGTON, Sept. 24, 2008 (GLOBE NEWSWIRE) -- The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $650 billion equipment finance sector, showed overall new business volume for August decreased 14.5 percent when compared to the same period in 2007. However, cumulative year-to-date new business volumes show an increase of 2.5 percent compared to 2007.
The MLFI-25 is the only index that reflects the volume of equipment financed in the U.S. The MLFI-25 complements other relevant economic indices, including the monthly durable goods report produced by the U.S. Department of Commerce, which reflects new orders for manufactured durable goods, and the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25, these reports provide a complete picture of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
According to the August data, month-over-month new business volume declined by 22.1 percent from $6.8 billion to $5.3 billion. Receivables in the less-than-30-days category, a measure of non-delinquent accounts, were 96.9 percent, unchanged from the prior month and actually, an improvement over the same period last year. However, charge-offs increased slightly to 0.88 percent, still high when compared to year-over-year data.
Credit standards appear to have remained relatively stable compared to the previous month, with credit approval ratios increasing 0.1 percent to 74.1 percent. Total headcount for equipment finance companies showed a very slight decline in the July-August period.
"The big news here is the 14.5 percent drop in August new business originations," said William (Bill) Verhelle, ELFA Chairman and CEO of First American Equipment Finance in Fairport, NY, and a participant in the monthly survey.
"For nearly a year now, everyone has been watching for signs that the global credit crisis is spreading into the general economy," said Verhelle. Specific equipment finance segments such as transportation, construction and some areas of the small-ticket market have experienced problems during the past several months. Until August, however, the broader equipment finance industry had yet to see a slowdown. This 14.5 percent August decline in equipment lease and loan originations (compared to the same month in 2007) may be the first objective data reflecting a broad capital equipment slowdown in the U.S.," said Verhelle.
"The decline in new business volume is likely a combination of capital constraints among lessors and lenders, enhanced underwriting standards and risk based pricing, and some diminishment of demand," said ELFA President Kenneth E. Bentsen, Jr. "Beyond the effects of market disruption, portfolio credit quality remained strong in August," said Bentsen.
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.
The results of each MLFI-25 are posted on the ELFA website. ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit http://www.elfaonline.org/ind/research/ for additional information.
ELFA MLFI-25 Participants
ADP Credit Corporation
Bank of America
Bank of the West
Canon Financial Services
Caterpillar Financial Services Corporation
CIT
Citicapital
De Lage Landen Financial Services
Fifth Third Bank
First American Equipment Finance
GreatAmerica
Hitachi Credit America
HP Financial Services
Irwin Financial
John Deere Credit Corporation
Key Equipment Finance
Marlin Leasing Corporation
National City Commercial Corp.
RBS Asset Finance
Regions Equipment Finance
Siemens Financial Services
US Bancorp
US Express Leasing
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 $650 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 700 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
The Equipment Leasing and Finance Association logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5375