As we begin to wrap up the year, Equipment Finance Advisor catches up with four industry leaders who weigh in on, among other things, how the year 2014 played out in terms of new business volume. The four participants – Anthony Cracchiolo, President and CEO of U.S. Bank Equipment Finance; Anthony Sasso, President of TD Equipment Finance; Chris Bucher, National Sales Manager at Regions Equipment Finance; and James Jenkins, National Sales Manager at SunTrust Equipment Finance & Leasing – also share their expectations for the coming year.

While the responses vary from these four executives, it appears that 2015 will look very much like 2014 with regard to growth.

As always, we thank Tony, Anthony, Chris and Jim for taking the time to share their insights with Equipment Finance Advisor’s readers.

Equipment Finance Advisor:  From a new business origination standpoint, please share your thoughts on 2014. Did 2014 meet, exceed or fall short of your expectations and why?

Anthony Cracchiolo: In the equipment finance markets, 2014 was weaker than expected. However, the last quarter of the year is showing considerable promise and is meeting our expectations. We believe that the uncertainty in the economy is continuing to weigh on equipment decisions and was the primary reason for weak expansion in equipment financing transactions in the middle of the year.

Anthony Sasso:  The year 2014 exceeded all of our expectations. New business booked volume was up year-over- year by more than 30 percent.  We experienced new business growth across all of our major business segments including Commercial, Healthcare and Government Finance. Overall, it was a great year for TD.

Chris Bucher:  2014 is tracking volume expectation, however spreads continue to migrate downward in the face of observed increase in number competitors per transactions. Industry segments supporting energy continue to be strong and supported 2014 volume. Competitively however, we see new entrants into this space, driving terms and rates.

James Jenkins:  We saw a lot of opportunity this year. However, there was also a tremendous amount of liquidity and competition was strong. From an opportunity standpoint, 2014 met our expectations.

Equipment Finance Advisor:  What are the expectations from a new business perspective for the upcoming year?

Cracchiolo:  All signs are pointing to moderate growth in most equipment finance business segments. Although concerns with the strength of the global economy continue to adversely affect some business's expansion plans, we believe that equipment finance business growth in the coming year will accelerate.

Sasso:  Our expectations are for continued growth. Although U.S. investment in capital equipment and software is projected to grow roughly 6 plus percent over the next year, certain sectors have performed at growth rates in in excess of that such as over the road transportation and construction. Another sector which has experienced growth is corporate aviation. Lastly we also expect to see continued opportunities in the government finance space – both federal and municipal -- particularly in the area of energy upgrade financing.

Bucher:  We see no change in market dynamics and anticipate consistent new business results. Based on current win/loss/spread trends, we see competitive pressures to continue.

Jenkins:  Our new business expectations are positive for 2015. That being said, yield pressures will continue to drive decisions.

Equipment Finance Advisor:  What concerns or circumstances, if any, exist that might be holding back business investment in new equipment?

Cracchiolo:  Client uncertainty in the overall economic environment has been and is continuing to suppress expansion and its associated new equipment growth. We are hopeful that in the coming year these uncertainties will begin to diminish.

Sasso:  I would say concerns about the global economy and its effects on the U.S. economy along with geopolitical concerns could be drivers undermining business investment in new equipment. In the small business sector, concerns regarding tight credit conditions have been a factor effecting levels of investment in equipment. 

Bucher: Sectors supporting energy have enjoyed new build programs for the past three years, which we see continuing but leveling in the rate of growth. The effect of oil prices will be a wild card relative to continued cap ex expansion in certain segments.

Jenkins:  From an equipment acquisition perspective, the recent election results are positive. Clients have a lot of pent up acquisition demand, with a significant amount of capital sitting on the sidelines, and we believe companies will now be more willing to part with some of that capital.

Equipment Finance Advisor:  Are there any emerging -- or less traditional from the equipment finance standpoint -- equipment sectors that look promising going forward?

Cracchiolo: I see no new emerging markets; however, the existing market segments are showing signs of continued improvement and expansion. The industry is well positioned for expansion and growth in 2015 and beyond.

Sasso:  I would say financing opportunities in the shale gas industry as well as the energy and transmission distribution sectors could be growth areas for equipment finance entities which are not currently engaged in energy verticals.

Jenkins:  We are very optimistic around the energy and industrial sectors.

Equipment Finance Advisor:  How would you characterize the prevailing sentiment among your peers at this year’s Equipment Leasing and Finance Assocation’s Annual Conference in San Diego?

Cracchiolo:  All are optimistic about the industry, the industry’s health and its future. However, the moderate growth and expansion that we’re seeing needs to be sustainable before a more positive outlook settles in.

Sasso:  Although the topic of margin/spread compression came up in most of my conversations at the ELFA Conference, the overall sentiment was very positive. Most of the executives I met with had similar experiences to what we had at TD Equipment Finance in terms of new business growth. There was also strong sense of optimism about the prospects for continued growth in 2015.  

Jenkins:  I was pleased to see the largest attendance in the last five years — more than 1,000 member companies and member participants attended. The prevailing sentiment from the conference was a focus around return pressures. When there is a lot of liquidity, people are focused on asset growth. Now, I think we’ll see a focus on return growth.