Q4 Quarterly Business Credit Review
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Q4 Quarterly Business Credit Review

on

  • 205 views

You can view the recording of our most recent Quarterly Business Credit Review at http://ex.pn/1iuJcr9

You can view the recording of our most recent Quarterly Business Credit Review at http://ex.pn/1iuJcr9

Statistics

Views

Total Views
205
Views on SlideShare
205
Embed Views
0

Actions

Likes
0
Downloads
2
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Q4 Quarterly Business Credit Review Presentation Transcript

  • 1. 1©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian 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. Q4 Quarterly Business Credit Review Webinar March 18, 2014 Audio & Visual for today’s webinar will be delivered through your computer. No dial-in number for this event.
  • 2. 3©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Our Speakers Joel Pruis Sr. Business Consultant Experian 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 25 years of experience in origination and portfolio management for small business and commercial credit • Bachelors in Accounting, MBA from Indiana Wesleyan University
  • 3. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Our Speakers Cristian deRitis, PhD Sr. Director Moody’s Analytics • Manages a team of economists focused on consumer credit modeling and analysis. • Provides regular commentary to clients and the media on the state of consumer credit markets and small businesses. • has an interest in housing markets and housing policy and has written extensively on the future of the US housing finance system. • He received a Ph.D. and M.A. in Economics from Johns Hopkins University
  • 4. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian 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
  • 5. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Small Business Credit Index
  • 6. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. More Credit – Slight Increase in Delinquency 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) Sources: Experian, Moody’s Analytics
  • 7. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Region Map South West Midwest Northeast South West Midwest Northeast
  • 8. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Delinquency Trends 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00% 19.00% 21.00% Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total Source: Experian Metro Business Pulse
  • 9. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Days Beyond Terms Trend Source: Experian Metro Business Pulse 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total
  • 10. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Bankruptcy Rate Trend Source: Experian Metro Business Pulse 0.50% 0.70% 0.90% 1.10% 1.30% 1.50% 1.70% Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total
  • 11. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top 5 Industries – Delinquency Rate Source: Experian Metro Business Pulse
  • 12. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Bottom 5 Industries – Delinquency Trend Source: Experian Metro Business Pulse
  • 13. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Construction Industry – By Region Source: Experian Metro Business Pulse 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total
  • 14. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  105 Financial Institutions using Experian’s Bank2Business platform to origination small business credit.  Asset Size of the Financial Institutions is $50 Billion or less.  Only new loan requests (excludes renewals of existing credit) Small Business Application Data
  • 15. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. App Volume Index (# of Apps) All Credit Types 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 IndextoQ42012 West South Midwest Northeast Total Source: Experian Bank2Business Origination Platform
  • 16. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. App Volume Index ($ of Apps) All Credit Types 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 IndexedtoQ42012$ West South Midwest Northeast Total Source: Experian Bank2Business Origination Platform
  • 17. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Approval % All Credit Types 40.00% 50.00% 60.00% 70.00% 80.00% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total Source: Experian Bank2Business Origination Platform
  • 18. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average Request Size All Credit Types 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total Source: Experian Bank2Business Origination Platform
  • 19. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Approval vs. Delinquency 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00% 19.00% 21.00% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Delinquency Trend West South Midwest Northeast Total 40.00% 50.00% 60.00% 70.00% 80.00% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Approval % All Credit Types West South Midwest Northeast Total Source: Experian Bank2Business Origination Platform
  • 20. 24©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Pockets of opportunity ► Insurance in the Northeast ► Communications in the Midwest  Determine when to “call it”  Watch the early delinquency ► 30/60 days Key Take-Away’s:
  • 21. 25©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian 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: Will The Economy Spring Forward in 2014 Cristian deRitis Moody’s Analytics
  • 22. 26©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. -250 -200 -150 -100 -50 0 50 100 150 03 04 05 6 07 08 09 10 11 12 13 14 Winter Weather Weighing on Economy Heating degree days, deviation from prior 5-year average Sources: NOAA, Moody’s Analytics Colder Warmer
  • 23. 27©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 0 1 2 3 4 5 10 11 12 13 14F 15F 16F Spending GDP Outlook Still for Faster Growth… Real GDP and spending, annualized % change Sources: BEA, Moody’s Analytics
  • 24. 28©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. -2 -1 0 1 2 3 '08 '09 '10 '11 '12 '13 14 Sequester Obamacare Bush taxes over $400k Payroll tax & UI Recovery Act Other Spending Cash for Clunkers Tax rebate checks Total Fiscal Policy …As Effects From Fiscal Austerity Recede Source: Moody’s Analytics Federal discretionary fiscal policy contribution to real GDP growth, % Stimulus Austerity
  • 25. 29©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. -30 -20 -10 0 10 20 30 40 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Businesses Get Their Groove Back Business confidence diffusion index Source: Moody’s Analytics The difference between the % of responses to the survey that are positive and the % that are negative.
  • 26. 30©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. …Households Have De-Levered and Locked-In… 15 20 25 30 35 10.0 10.5 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 % Sources: Federal Reserve, BEA, Moody’s Analytics Debt service burden (L) Adjustable share of Liabilities (R)
  • 27. 31©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. …And Wealth Is Rising -4 -3 -2 -1 0 1 2 3 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Annual change in housing equity, $ tril Sources: Federal Reserve, Moody’s Analytics
  • 28. 32©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Household Pent-Up Demand Remains Large… Sources: BEA, Moody’s Analytics Real spending, $ tril 9.0 9.5 10.0 10.5 11.0 11.5 12.0 05 06 07 08 09 10 11 12 13 Actual Prerecession trend: 2.5% annually 2% growth
  • 29. 33©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 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 Soon Be Undersupplied…
  • 30. 34©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 2013Q4 Sources: CoreLogic, BEA, PPR, Moody’s Analytics Undervalued Correctly valued Overvalued Significantly overvalued … And Appropriately Valued Most Everywhere
  • 31. 35©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Downside Risk: Wages Remain a Restraint 3-mo MA, % change yr ago -6 -4 -2 0 2 4 6 8 10 -5 -4 -3 -2 -1 0 1 2 3 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Employment (L) Wage income (R) Sources: BEA, BLS, Moody’s Analytics
  • 32. 36©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 0 2 4 6 8 10 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Federal Funds Rate 10-Year T-yield Unemployment Rate Downside Risk: Graceful Exit By the Fed Sources: Treasury, BLS, Moody’s Analytics %
  • 33. 37©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Upside Risk: U.S.’s Energy Advantage 0 50 100 150 200 250 300 0 5 10 15 20 Sources: Country sources, Moody’s Analytics Natural gas price, $ mmbtu Industrial electricity prices, $ Mwh U.S. China Italy Korea Japan India Germany U.K. France
  • 34. 38©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  The weather impacted the economy in the first quarter but the effect is temporary.  Households and businesses are well positioned for growth this year.  The drag from fiscal austerity is fading.  Housing construction will be an engine for broader economic growth in 2014 and 2015  Downside risks could slow growth but are unlikely to trigger a recession Key Takeaways
  • 35. 39©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian 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: Did Main Street Sit Out Q4?
  • 36. 40©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Retail Delinquency Trend 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00% 19.00% 21.00% 23.00% Q1 2013 Q2 2013 Q3 2013 Q4 2013 West South Midwest Northeast Total Source: Experian Moody’s Small Business Credit Index
  • 37. 41©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Delinquency is Middle of the Road 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Construction Health Services Retail Trade Source: Experian Moody’s Small Business Credit Index
  • 38. 42©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. But Overall Risk Score is Weak… 46.00 48.00 50.00 52.00 54.00 56.00 58.00 60.00 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Retail Trade Construction Health Services Source: Experian Moody’s Small Business Credit Index
  • 39. 43©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Winter Weather Hits Retail Hard 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 % change (L) % change yr ago (R) Retail sales and food services Sources: Census Bureau, Moody’s Analytics
  • 40. 44©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Broad Deceleration in Sales Across Segments -3 -2 -1 0 1 2 Autos/parts Furn./home Elec./appl. Hobby Bars/rest. Clothing Gen. merch. Online Bldg. materials Food/bev. Gas stations Diff in Dec and Jan from Jan to Nov 2013 avg, ppt Sources: Census Bureau, Moody’s Analytics % change in retail sales and food services by segment
  • 41. 45©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Retail Still Has Some Catching Up to Do 90 92 94 96 98 100 102 07 08 09 10 11 12 13 14 Total ex retail Retail Payroll employment, prerecession peak=100 Sources: BLS, Moody’s Analytics
  • 42. 46©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Retail Toward the Smaller End of the Spectrum 0 10 20 30 40 50 Real estate Agriculture Construction Prof./scien./tech. Arts/ent. Wholesale Retail Accom./food Trans./warehousing Finance Healthcare Administrative Mining Education Manufacturing Information Avg number of workers per firm by industry in 2011 Sources: Census Bureau: Statistics of U.S. Businesses, Moody’s Analytics
  • 43. 47©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Revenues Tell a Similar Story 90 95 100 105 110 115 120 07 08 09 10 11 12 13 14 Total Retail Intuit Small Business Revenue Index, rebased to Jan 2007=100 Measures firms with <20 workers Sources: BLS, Moody’s Analytics
  • 44. 48©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Overall risk is supporting higher level of “bads” over the next 12 months (3rd lowest for last 3 quarters)  Caution with existing 30/60 day delinquencies (may be the next 90 day delinquency)  Trade creditors – Monitor new orders (or lack of new orders)  Financial Institutions – Monitor deposits/line utilization  Winter weather hit the retail sector especially hard  Small retailers are still working to recover the ground they lost during the recession  A recovery in home construction will pull up retailers of all sizes Key take away Joel Pruis Cris deRitis
  • 45. 50©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian 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
  • 46. 52©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 52©2012 Experian Information Solutions, Inc. All rights reserved. Experian Public. Essential insight serving global financial markets www.moodysanalytics.com
  • 47. 53©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. 53©2012 Experian Information Solutions, Inc. All rights reserved. Experian Public. www.experian.com/b2b www.experian.com/b2b