Monthly Confidence Index - Equipment Finance Industry (MCI-EFI)
June 2009
|
|
June 2009 Survey Results:
The overall Monthly Confidence Index of the Equipment Finance Industry (MCI-EFI) is 52, up 2.6 points from May 2009, using a 100 point scale. For the purposes of this index, a score of 50 is considered as being "no change" in confidence from the prior month. Respondents indicate:
- For June 2009, 68.4% of the executives responding believe their business conditions will remain the same over then next four months vs. 44.7% for May, and 26.3% believe business conditions will get better over the same time period, vs. 36.2% for May 2009.
- The majority of survey respondents (76.3%) believe demand for leases and loans to fund Capital Expenditures (Cap Ex) will remain the same over the next four months.
- Almost three-quarters (73.7%) of the equipment finance leadership believe they will have the same access to capital to fund equipment acquisitions in the next four months, while 18.4% believe their access to capital will increase over the same time period.
- When asked, 57.9% (down slightly from 59.6% in May 2009) of executives reported they expect no change in their workforce headcount over the next few months, however, 26.3% still expect to have employee layoffs over the same time period, slightly down from 27.7% in May 2009.
- The leadership's view of the current economy generated the most significant month over month change. June 2009 survey results indicate 60.5% of the respondents rated the current U.S. economy as "poor" compared to 85% who rated the U.S. economy as "poor" in May 2009. The remaining 39.5% rate the current economy as "fair," compared to 15% in May 2009.
- A full 50% of survey respondents believe the U.S. economy will get better over the next six months, compared to 44.7% from May 2009.
- The majority of executives (78.9%) believe they will have no change in their spending on business development activities over the next six months compared to 66% in May 2009.
June 2009 Survey Comments from Industry Executive Leadership:
From the Large-ticket segment:
"Demand for capital and equipment financing should strengthen as we move into the 4th Quarter. Evidence that the economy has stabilized/posting modest gains will enhance consumer and commercial confidence, and redirect focus on capitalizing on the recovery and identification of business opportunities in 2010. As an industry, we should be well positioned to finance the new and replacement assets required by existing and new customers." Russ Nelson, President, Farm Credit Leasing,
From the Micro-ticket segment:
"Lenders in general as well as the leasing industry as a whole are going thru a major transformational phase. This phase will be multi-year and will require company's to alter their approach to risk management and pricing practices given the "new" norm outlook for the economy and the need to generate satisfactory returns on capital. For some, funding strategies will also need to adapt as a result of the sea change within the capital markets." Dan Dyer, Chairman & CEO, Marlin Leasing Corp.
From the Small-ticket segment:
"I feel positive about the long-term but we must focus on getting through the here and now. Portfolio performance is still stressed, demand for equipment financing is off 50-75% and access to capital is restricted." Dave Schaefer, President, Orion First Financial, LLC
From the Middle Market segment:
"I am confident that the industry will continue to play a vital role in the economy. The industry will continue to have difficulty with existing workout loans but overall the industry will thrive and provide much needed services to our clients." Elaine Temple, President, BancorpSouth Equipment Finance
Survey Respondent Demographics:
Market Segment:
- Bank 42.10%
- Captives 23.70%
- Financial Services 13.20%
- Independent 21.10%
Market Segments Based on Transaction Size of New Business Volume
- Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million) 31.60%
- Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 - $5 Million) 71.10%
- Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 - $249,999) 50.00%
- Micro-Ticket (New Business Volume Avg. Transaction Less Than $25,000) 10.50%
Organization Size (Based on Annual New Business Volume for Fiscal Year 2008):
- Under $50 Million 13.20%
- $50 Million - $250 Million 13.20%
- $250 Million - $1 Billion 36.80%
- Over $1 Billion 36.80%