quarterly business credit review (q3 2013)
DESCRIPTION
In this presentation Joel Pruis of Experian's Global Consulting Practice and Nate Kelley of Moody's Analytics take us through key findings from the Experian/Moody's Analytics Q3 Small Business Credit Index, and macro outlook of small business credit.TRANSCRIPT
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©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks ofExperian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Quarterly Business Credit Review for Q3 2013
December 10th, 2013
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Welcome
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Our Speakers
Joel PruisSr. Business ConsultantExperian Global Consulting Practice
• Senior Business Consultant dedicated to delivering programs to his clients that increase productivity and profitability, provide financial services organizations with tools to gain a competitive edge.
• More than 22 years of experience in origination and portfolio management for small business and commercial credit
• Bachelors in Accounting, MBA from Indiana Wesleyan University
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Our Speakers
Nate KelleyAssociate Economist
Moody’s Analytics• Covers regional economies • Researches and writes extensively on macro topics, including labor, consumer, and small-
business economics. • Former municipal bond trader at The Reserve Management Corporation in New York City.• Bachelor’s degree from Baruch College of the City University of New York
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©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks ofExperian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Quarterly Business Credit Review
Presented by Joel Pruis
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Small Business Credit Index
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Delinquency Rate Hits New Low
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
-10
-5
0
5
10
15
11 12 13
Outstanding credit, % change yr ago (L)
Delinquency rate, % (R)
Sources: Experian, Moody’s Analytics
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National PerspectiveExperian Metro Business Pulse
Q2 2013 Q3 2013 ChangeDelinquency 13.43% 12.89% -0.53%Days Beyond Terms 5.71 5.62 -0.09 daysBankruptcy Rate 0.99% 0.95% -0.04%
Fewer and Faster – Just the way we like it!
Source: Experian Metro Business Pulse – Average Metropolitan Data
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Performance by IndustryRanked by Delinquency %
Industry Delinquency Days Beyond Terms Bankruptcy Rate
TopHealth Services 8.05% 3.93 0.68%Hospitality 9.52% 5.28 1.51%Education Services 11.40% 4.33 0.64%Agriculture 11.56% 7.12 1.42%Legal Services 12.54% 6.06 0.44%
BottomManufacturing 15.56% 6.45 1.86%Transportation 18.83% 8.14 1.93%Finance 19.08% 9.88 1.34%Communications 19.79% 7.81 1.50%Construction 22.64% 12.18 2.35%
Source: Experian Metro Business Pulse
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4.5% to 15.6%15.7% to 25.1%
1.1% to 4.4%
U.S.=10%
Delinquency Rate, $ volume
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0 10 20 30
Wholesale trade
Real estate
Health services
Business services
Agriculture
UtahIdahoFlorida
High Delinquency Across Industries in Florida
Sources: Experian, Moody’s Analytics
Delinquency rate, $ volume
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Top/Bottom 10 - Delinquency
Source: Experian Metro Business Pulse
Salt Lake City, UTHouston, TXBoise City, IDTucson, AZSan Diego, CAPhoenix, AZBaton Rouge, LASan Francisco, CALas Vegas, NVFresno, CA
0.95% - 5.02%
West Palm Beach, FL Baltimore, MD
Philadelphia, PAJacksonville, FL
Atlanta, GAMemphis, TN
Fort Lauderdale, FLOrlando, FL
Cincinnati, OHMiami, FL
20.19% - 30.77%
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Source: Experian Metro Business Pulse
San Francisco, CAOmaha, NENew York, NYSeattle, WAMilwaukee, WIMinneapolis, MNSalt Lake City, UTRochester, NYOklahoma City, OKPortland, OR
3.19 - 3.99
West Palm Beach, FL Sarasota, FL
Chicago, ILAtlanta, GA
Jacksonville, FLTampa, FL
Fort Lauderdale, FLMiami, FL
Las Vegas, NVOrlando, FL
14.08 - 7.83
Top/Bottom 10 – Days Beyond Terms
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Source: Experian Metro Business Pulse
New York, NYNassau-Suffolk, NYBaton Rouge, LAHonolulu, HIMiami, FLNew Orleans, LANorfolk-Virginia Beach, VAFort Lauderdale, FLRichmond-Petersburg, VAWashington, DC
0.27% - 0.56%
Portland, OR Albuquerque, NM
Rochester, NYTacoma, WA
Santa Rosa, CADenver, CO
Colorado Springs, COSan Bernardino, CA
Bakersfield, CASacramento, CA
1.49% - 2.34%
Top/Bottom 10 – Bankruptcy Rate
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Still low in the East
Still higher in the West
Overall Bankruptcy Rate continues to slightly decline across the country
Overall Delinquency is improving in the East
What about that Bankruptcy Rate?
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Most Improved Award by Category
Industry
Delinquency Real Estate 12.69% -1.48%Days Beyond Terms Communications 7.81 -0.38
Bankruptcy Rate TransportationBusiness Services
1.93%1.33% -0.16%
Geography
Delinquency Miami, FL 30.77% -13.95%Days Beyond Terms Chicago, IL 8.19 -0.11Bankruptcy Rate San Antonio, TX 1.39% -0.16%
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“Greatest Opportunity for Improvement” by Category
Industry
Delinquency Hospitality 9.52% 0.44%Days Beyond Terms Construction 12.18 0.24Bankruptcy Rate Finance 1.34% 0.05%
Geography
Delinquency Cincinnati, OH 29.43% 3.85%Days Beyond Terms Jacksonville, FL 8.34 0.60Bankruptcy Rate Baltimore, MD 0.58% 0.03%
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Key take away
► Keep watching the Bankruptcy rate
► Retail performance?
► Growth is available
► Watch for seasoning of the new credit balances
Key Take-Away’s:
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©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks ofExperian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Macro Outlook: The Right Pieces Are Falling Into Place
Nathan KelleyMoody’s Analytics
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-6-5-4-3-2-1012345
05 06 07 08 09 10 11 12 13F 14F 15F
Private economyFiscal policyTotal
Fiscal Headwinds Are Set to Fade…
Source: Moody’s Analytics
Contribution to real GDP growth, %
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5,500
6,500
7,500
8,500
9,500
10,500
11,500
90 92 94 96 98 00 02 04 06 08 10 12
Trend Vacancy
Sources: Census, Moody’s Analytics
Vacant homes for sale, for rent and held off market, ths
Housing Will Provide the Catalyst…
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0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Trend
…Pushing Housing Starts Upward…
Sources: Census, Moody’s Analytics
Single-family and multifamily starts, mil
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122,000
124,000
126,000
128,000
130,000
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,500
05 06 07 08 09 10 11 12 13
Housing-Related (L)Non Housing-Related (R )
…Meaning More Homebuilding and Jobs
Source: Wall Street Journal, Moody’s Analytics
Millions of jobs
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Home Prices Will Appreciate Fastest in the West…
Case-Shiller Index, average annual growth, %, 2013-2016
Sources: CoreLogic, Moody’s Analytics
U.S. = 5.9
≥7.15.1 to 73.1 to 5≤3.0
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-4-3-2-1012345678
20
30
40
50
60
70
80
90
100
08 09 10 11 12 13
Confidence, 3 mo MA (L)Real spending, % chg yr ago (R)
Debt Ceiling Debate
S&P Downgrade
A Bumbling Congress Hurts Confidence
Sources: BEA, Conference Board and Moody’s Analytics
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The Shutdown’s Impact
Nathan KelleyMoody’s Analytics
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0
20
40
60
80
100
120
140
160
08 09 10 11 12 13
Shutdown/debt ceiling standoff
Federal Impasse Severely Rattles Psyches
Moody’s Analytics policy uncertainty index, 4-wk MA, 2004-2005=0
Source: Moody’s Analytics
Lehman collapse
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U.S. Small Firms Shaken by the Shutdown
Sources: NFIB, Moody’s Analytics
NFIB small business optimism index, 1986=100
87
88
89
90
91
92
93
94
95
-40-35-30-25-20-15-10
-505
12 13
Net % expectingeconomy to improve (L)Composite index (R)
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Gap Closing for Small-Business Loan Volumes
Approved SBA 7(a) and 504 loans, ytd $ vol, % change yr ago
Sources: U.S. Small Business Administration: Weekly lending report, Moody’s Analytics
-60-55-50-45-40-35-30-25-20-15-10
Oct 18 Oct 25 Oct 31 Nov 8 Nov 15 Nov 22
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51
52
53
54
55
56
57
58
27
29
31
33
35
37
39
41
43
05 06 07 08 09 10 11 12 13
Borrowing at least once per qtr (L)
Credit is “hard to get” (R)
But Credit Supply Doesn’t Seem to Be the Issue
% of small firms who say…
Sources: NFIB Small Business Optimism Survey, Moody’s Analytics
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©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks ofExperian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
HOT TOPIC:
SHUT DOWN CONSEQUENCES
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Impact on Retail?
Employment outlook?
ACA impact?
What may we see in the 4th quarter?
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©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks ofExperian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
QUESTIONS
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