The Equipment Leasing and Finance Association has released its 2015 Survey of Equipment Finance Activity (SEFA) reporting new business volume grew 6.7% in the equipment finance industry in 2014.
Of industry new business volume in 2014:
* Construction equipment represented 11% of equipment financing new business volume reported by ELFA member companies, up from 9.6% in 2013.
* As an end-user of equipment finance, the construction industry represented 8.1% of new business volume reported by ELFA member companies, up from 7.2% in 2013.
*Aerial work platforms represented 28% of the construction industry financing, and high-reach telehandlers represented 20%.
New business volume grew 6.7% in the equipment finance industry in 2014, according to the 2015 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA).
The rise in new business volume marked the fifth consecutive year that businesses increased their spending on capital equipment. The SEFA report, now celebrating its 40th year, covers key statistical, financial and operations information for the $903-billion equipment finance industry, based on a comprehensive survey of 100 ELFA member companies. The report includes an expanded executive summary and is available at www.elfaonline.org/SEFA.
ELFA also released a companion report to the 2015 SEFA called the 2015 Small-Ticket Survey of Equipment Finance Activity. The report, which focuses on small-ticket and micro-ticket equipment transactions among the SEFA respondents, found that new business volume in the small-ticket space grew by 7.1% in 2014.
“We are pleased to present the 2015 Survey of Equipment Finance Activity. This year marks the 40th anniversary of the report, which has grown over the years into the most important source of statistical information available on the $903-billion equipment finance industry,” said William G. Sutton, ELFA president and CEO. “The data show that the equipment finance industry is healthy and growing, continuing an upward trend since the end of the Great Recession."
Sutton added, "More recent data collected in 2015 indicate that positive momentum is continuing, with member companies reporting solid new business growth and portfolio performance. We remain cautiously optimistic that demand for capital equipment will continue to drive positive growth for the equipment finance industry.”
Survey highlights:
Key findings for 2014 as reported in the 2015 SEFA include:
* Overall new business volume grew 6.7%.
* Positive trend: In 2014, the 6.7% growth rate was lower than the previous three years, but it still surpassed the 2.4% rate of growth for the U.S. economy. New business volume increased for the fifth year in a row, following increases of 9.3% in 2013, 16.4% in 2012, 16.5% in 2011 and 3.9% in 2010, and a decline of 30.3% in 2009.
* By organization type: Independent equipment finance organizations led the industry in new business volume growth for a third straight year. Independents saw a 17.6% increase in new business volume, while banks saw their volume grow by 7.4% and captives saw a 1.3% increase.
* By market segment: New business volume varied by market segment, growing 9% in the small-ticket segment and 7.9% in the middle-ticket segment, and falling 2.4% in the large-ticket segment.
* From an asset perspective, the top-five most-financed equipment types were transportation, IT and related technology services, agricultural, construction and industrial/manufacturing equipment. The top five end-user industries representing the largest share of new business volume were services, agriculture, industrial/manufacturing, transportation and wholesale/retail.
* Overall, cost of funds increased slightly. Competitive pressure continued to drive pre-tax spreads down in 2014 to 2.8%, its lowest level in five years.
* Assets under management grew 8.6%. Return on assets remained steady at a healthy 1.7%, unchanged since 2012.
* Net income increased 15.2%. Return on average equity decreased slightly, but remained strong at 16.6%.
* Overall, delinquencies remained steady. Full-year losses or charge-offs fell close to 0.0% overall.
* Credit approvals decreased slightly while the percentage of approved applications being booked and funded remained steady.
* Employment levels grew moderately by 1.7%, with headcount in sales and marketing increasing and servicing declining slightly. There was a significant increase in headcount associated with compliance.
* Electronic documents: For the first time, the SEFA asked respondents about their use of electronic documents for funding new business volume. A total of 70% reported some use of electronic documents.
Videos
An animated infographic summarizing key findings from the 2015 SEFA is available at https://youtu.be/8Kc6OE5yIWM.
A brief video interview about the report with ELFA President and CEO William G. Sutton, CAE, is available at https://www.youtube.com/watch?v=IHSPA8dKKcU.
The SEFA is the broadest compendium of data on the equipment finance industry, comprising a representative cross-section of equipment lease and loan origination by product, structure and origination.
PricewaterhouseCoopers LLP administered the 2015 SEFA. The results were compiled from surveys sent to 351 eligible ELFA member companies in the first quarter of 2015. A total of 100 companies submitted 2014 U.S. domestic lease and loan data.
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $903 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods.
For more information, please visit www.elfaonline.org.
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