ELFA: Equipment Finance Industry March New Business Volume Up 10% Y/Y

According to the Equipment Leasing and Finance Association’s monthly leasing and finance index, overall new business volume for March was $8.9 billion, up 10% year-over-year from new business volume in March 2016.

Volume was up 51% month-to-month from $5.9 billion in February. Year to date, cumulative new business volume was up 4% compared to 2016.

“Responding companies report surprisingly strong end-of-quarter volume, despite a sluggish first quarter economic growth projection by the Atlanta Federal Reserve Bank,” said Ralph Petta, ELFA president and CEO. “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.”

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

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

Separately, the Equipment Leasing & Finance Foundation’s monthly confidence index for April is 65.8, easing from the March index of 71.1.

“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,” said Daryn Lecy, vice president of operations for Stearns Bank’s equipment finance division. 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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