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ELFA’s survey of economic activity: March 2017 leasing and finance index

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, showed their overall new business volume for March was $8.9 billion, up 10 percent year-over-year from new business volume in March 2016. Volume was up 51 percent month-to-month from $5.9 billion in February. Year to date, cumulative new business volume was up 4 percent compared to 2016.

Receivables over 30 days were 1.40 percent, down from 1.50 percent the previous month and up from 1.20 percent in the same period in 2016. Charge-offs were 0.68 percent, up from 0.38 percent the previous month, and up from 0.51 percent in the year-earlier period.

Credit approvals totaled 74.5 percent in March, down slightly from 74.8 percent in February. Total headcount for equipment finance companies was up 19.9 percent year over year, a spike largely attributable to continued acquisition activity at an MLFI reporting company.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for April is 65.8, easing from the March index of 71.1.

ELFA President and CEO Ralph Petta said, “Responding companies report surprisingly strong end-of-quarter volume, despite a sluggish first quarter economic growth projection by the Atlanta Federal Reserve Bank. The central bank’s recent rate hike may, in part, be responsible for the spike in equipment demand as businesses seek to lock in fixed rate financing ahead of steadily increasing interest costs. Hopefully, this growth trend takes hold and continues into the spring and summer months.”

Daryn Lecy, Vice President of Operations, Stearns Bank NA – Equipment Finance Division, said, “Year-to-date, respondents are signaling some signs of a slightly tougher credit environment with higher year-over-year delinquencies and charge-offs combined with lower credit approval percentages. This more than likely demonstrates a return to historic norms relative to the record lows we experienced in recent years rather than a deterioration of credits as a whole. The increased overall funding volume and contagious optimism surrounding the construction industry presents some real excitement throughout 2017 for us at Stearns Bank. In addition, future infrastructure spending, paired with a possibility of less regulation, presents more reasons for industry enthusiasm throughout the year ahead.”
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