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Equipment Leasing & Finance Index Up 27% YOY, 17% YTD

November 29, 2012

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $628 billion equipment finance sector, showed overall new business volume for October was $7.6 billion, up 27 percent from volume of $6.0 billion in the same period in 2011. Volume was down 7 percent from the previous month. Year-to-date cumulative new business volume increased 17 percent.

Receivables over 30 days decreased for the fifth consecutive month to 1.7 percent, down from 1.8 percent in September and down 23 percent when compared to the same period in 2011. Charge-offs were down from the previous month at 0.4 percent, and down by 43 percent compared to the same period last year.

Credit approvals were unchanged in October at 79.5 percent. Sixty-six percent of participating organizations reported submitting more transactions for approval during October, up from 54 percent the previous month.

Finally, total headcount for equipment finance companies was up 1 percent from the previous month, and declined 2 percent year over year.

Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for November is 49.9, a decrease from the October index of 53.3, reflecting industry participants’ post-election concerns over issues including the fiscal cliff, economic policy and taxes. A confidence level of 50.0 indicates a neither positive nor negative outlook overall.

ELFA president and CEO William G. Sutton, CAE, said, “Lease financings continue to show modest growth overall, despite soft patches evident in certain equipment and end-user sectors recently. With U.S. elections now behind us and recent indications by policy makers to find a solution to the ‘fiscal cliff,’ the cloud of uncertainty that has frozen the economy during the past 12 months may be lifting. We hope that the recent no-growth scenario gripping our nation’s economy will transition to a more normalized recovery that will cause businesses to feel more confident about their future and result in additional investment in capital equipment and job creation.”

“At RBS Citizens Asset Finance, our funded volume for 2012 is ahead of last year’s record pace and we are pleased to see continued strength in our credit quality, as delinquency rates and non-performing assets remain at all-time lows for our business,” said Marc Paulhus, president, RBS Citizens Asset Finance. “While the level of activity in the investment grade bond market has been a challenge, we are encouraged to see the increase in new business volume for 2012.”

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 8 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 at www.elfaonline.org/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.