New business volume in September increased 12% month-to-month from August, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index, which covers economic activity from 25 companies who represent a portion of the $1 trillion equipment finance sector. Overall new business volume clocked in at $8.7 billion, a 7% decrease year-over-year from that in September 2016. Cumulative new business volume was up by 4% compared to 2016, year to date.
Credit approvals decreased more than a point for the month, totaling 74%. Head count for equipment finance companies rose 16.5% year-over-year, mostly due to acquisition activity at one surveyed company. The separate Equipment Leasing & Finance Foundation’s Monthly Confidence Index for October is 63.7, unchanged from September, ELFA said.
Receivables over 30 days were 1.4%, a decrease from the 1.5% in August. Charge offs in September were 0.4%, down from 0.44% the previous month.
“Third quarter new business volume was steady, if not exceptional, despite the string of devastating weather events that plagued parts of the U.S. during the month of September,” said ELFA president and CEO Ralph Petta. “Positive cumulative year-to-date volume is indicative of healthy capex, which shows that business owners continue to choose financing as a means to acquire the equipment they need to run their operations. In addition, credit quality remains at historic lows. These metrics bode well for a solid end-of-year performance.”
“Overall, September 2017 was a satisfactory month for commercial originations,” said William J. Clark, executive vice president of Univest Capital Inc. “Our municipal originations were above average for the month. We continue to see aggressive pricing in the market and loosening of credit standards, especially as it relates to ‘corp only’ approvals. It is becoming increasingly challenging; however, we are maintaining a superior net interest margin compared to our select peer group. It is part of a strategic plan to increase our average ticket and we are experiencing some success with that, especially in the municipal and golf/turf vertical markets. Additionally, we are seeing larger financing opportunities referred by our parent bank and affiliates.”
– Adam Fusco, associate editor