Leasing News Special

Equipment Leasing Industry's Annual Survey Shows Industry Optimism Grows, Industry-Wide Profitability Up, Delinquencies Down

July 29, 2004 Arlington, Virginia. The Equipment Leasing Association's (ELA) 2004 Survey of Industry Activity (SIA) report results, released today, reveal marked improvement for the industry. Respondents reported that, in 2003, profitability was up, delinquencies were down, though new business volume also was down, from the previous year. New business volume, a key

growth measure, reached more than $110.5 billion, compared to $117.2 percent in 2002. This is a decline of 3.9 percent. However, the survey shows Return on Assets (ROA) improved to 1.7 percent (versus 1.2 percent in 2002) and Return on Equity (ROE) improved to 14.3 percent

(from 11.2 percent in 2002).

-ELA members are clearly optimistic about the future, said ELA President Michael Fleming.
-Our members report profitability is up, charge-offs and delinquencies are down, and portfolio quality is better. We are not experiencing 1990s levels, but demand appears to be strengthening, and the industry has reason to feel confident about the future.

Other 2003 key SIA findings include:
- Lessors report that their average charge-off were 1.3 percent in 2003, a decrease over last year's when charge-offs were 1.4 percent.

- Pre-tax yield decreased to 6.7 percent in 2003. At the same time, the cost of funds dropped by 2.8 percent.

- 96.4 percent of average receivables were current (less than 30 days past due); of the total receivables, 1.6 percent were more than 90 days past due, a decrease over comparable 2002 statistics.

- The total number of full-time equivalent employees (FTEs) was reported as 21,036 by respondents; this is a slight decrease of 0.8 percent from last year's employee total being 21,198. Large-ticket lessors contracted their workforce by 11 percent whereas micro-ticket lessors increased their workforce by 8.1 percent.

- Bank lessors' originations grew 4.3 percent; captive lessors remained flat with 0.1 percent growth; while independent/financial service firms declined by 16.6 percent.

"Lessors also reported in the survey a strong uptick in truck and trailer transportation, agricultural, computer, and construction equipment," said Fleming. Yesterday, the ELA in collaboration with R.S. Carmichael & Co. also released a survey on the state of the construction and agricultural equipment leasing marketplace, which corroborates the SIA data that these equipment types are a strong market for lessors. The ELA-Carmichael report is titled Construction and Agricultural Equipment Leasing, 2004: U.S. Market Dynamics and Outlook.

ELA Survey of Industry Activity results were compiled from responses from 135 entities in one of four market segments that were determined based on the typical transaction size of a majority of their lease volume. The 2004 survey participation rate was on par with the 2003 Survey; 76.5 percent of the 2004 respondents also submitted a response to the 2003 survey.
For the first time in the history of the project, all of the top 50 U.S. leasing and finance organizations that are members of ELA participated in the Survey.

The SIA provides aggregate data for all respondents to the survey. The four market segments include: micro-ticket (transactions less than $25,000), small ticket (transactions between $25,000 and $250,000), middle market (transactions between $250,000 and $5 million) and large ticket (transactions greater than $5 million). In addition, the data is analyzed and presented by the category of respondent organization (lessor type): bank, independent or captive, and specific industry sector such as: transportation, agriculture, computers, construction, medical, and telecommunications. A significant change to this year's survey included the addition of a new category used throughout the report lessor size as determined by annual new business volume, which supplements the existing categories of lessor type.

Members of the accredited media may obtain a full copy of the ELA Survey of Industry Activity, the ELA-Carmichael study, Construction and Agricultural Equipment Leasing, 2004:
U.S. Market Dynamics and Outlook, and other surveys by contacting Suzanne Jackson at 434-972-7278 or sj@FourLeafPR.com.

For more information on ELA visit http://www.ELAOnline.com. For more information on leasing, check out ELA's informational portal for financial decision-makers at http://www.ChooseLeasing.org, which hosts a directory of leasing companies, a list of 10 questions to ask before signing a lease, a glossary of terms and more.

About ELA
Organized in 1961, the Equipment Leasing Association (ELA) is the premier non-profit association representing companies involved in the dynamic equipment leasing and finance industry to the business community, government and media. As the voice of the leasing industry, ELA promotes the estimated $218 billion industry as a major source of funds for capital investment in the United States and abroad. Headquartered in Arlington, Va., ELA has more than 800 member companies and a staff of 25 professionals. For more information on ELA, please visit www.ELAOnline.com.