The Commercial Finance Association Q3/16 ABL Index shows growth and increased activity on multiple fronts. For larger lenders, commitments and asset-based loans outstanding were up. Utilization improved. Gross new commitments were higher than in the same quarter of 2015. Regarding portfolio performance, non-accruals improved while gross write-offs stabilized in the third quarter.

“The new credit commitments and higher total credit commitments reflect an economy that’s growing nicely,” said Robert Trojan, CEO of the CFA. “This is good for our industry. Companies are building up inventories and adding working capital. It looks promising.”

The CFA ABL Index showed that loan outstandings increased by 4% from the prior quarter, with a 7.8% gain over Q3/15. The increase is primarily due to new commitments. Loan utilization at 41.5% is almost at the same level as Q3/15. Gross new commitments for Q3/16 were 17.6% higher than the prior month, but these were balanced by a similar increase in loan runoff, indicating that much of the market activity is movement of borrowers from one lender to another. Gross new commitments for the quarter represent about 4% of the overall committed credit lines.

Non-accruals have been rising since Q1/15, but the Q3/16 results show stabilization with a slight drop in non-accruals down to 0.57%. No lender surveyed reported an increase in gross write-offs, which remained steady, while net write-offs showed a slight decline.

CFA’s Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm. CFA has tracked asset-based lending activity and published the Quarterly Asset-Based Lending Index since March 2008 to provide insight on national commercial lending activity.

The complete report is available on the CFA website.