Equipment Finance Volume Grew 16.4% in 2012

New business volume grew 16.4 percent in the equipment finance industry in 2012, according to the 2013 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA).

New business volume grew 16.4 percent in the equipment finance industry in 2012, according to the 2013 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA). This growth in volume was on par with the 16.5-percent increase reported for 2011, and well above the 3.9-percent increase reported for 2010 and the 30.3-percent decline in 2009.

The SEFA, which is based on responses from 112 ELFA member companies, covers key statistical, financial and operations information for the $725 billion equipment finance industry.

The industrial and manufacturing industry represented 11.5 percent of new business volume reported by ELFA member companies, down from 12.4 percent in 2011; metal and machinery represented 5.8 percent, up from 5.4 percent; wood, paper, chemical and plastic represented 3.2 percent, relatively unchanged from 3.3 percent in 2011; and other industrial/manufacturing industries represented 2.5 percent, down from 3.7 percent.

Within the overall, 16.4-percent growth in new business volume, all market segments except for the smallest showed growth. Volume fell 4.7 percent for the micro-ticket segment, but grew 13.1 percent for the small-ticket segment, 15.8 percent for the middle-ticket segment and 31.1 percent for the large-ticket segment.

Broken down by organization type, banks saw the strongest increase in new business volume at 22.2 percent, while captives saw their volume grow by 10.8 percent and independent equipment finance organizations saw a 7.-percent increase. Equipment types that saw the largest year-over-year increases included transportation (34.4 percent); mining, oil and gas extraction (31.4 percent); and industrial/manufacturing (22.3 percent).

Delinquencies remained steady between 2011 and 2012, and full-year losses or charge-offs also fell well below 1.0 percent overall. Employment levels remained stable, though headcount by function reflected a decline in collections and services, juxtaposed with an increase in sales and marketing, credit approvals and booking. Given the current financial markets, cost of funds continued to decline. Competitive pressure drove pre-tax spreads lower in 2012 to just above 3 percent, on par with the lowest levels in five years. Credit approvals increased, and the percentage of approved applications that were booked and funded remained steady. Net income also remained steady between 2011 and 2012 in dollar terms. Return on average equity also remained healthy at 14.45 percent.

Participation in the SEFA is a benefit of membership in ELFA. Member-respondents receive a complimentary copy of the survey report, as well as confidential individual company data sheets, which show the individual company’s statistics ranked against a peer group. Non-respondents may purchase the SEFA at elfaonline.org/SEFA.