experian quarterly business credit review q2 2013

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Quarterly Business Credit Review

Presented by Joel Pruis


Small Business Credit Index

Increase of 2.8 points and highest reading since inception!


National PerspectiveExperian Metro Business Pulse

Q1 2013 Q2 2013 Change

Delinquency 15.26% 13.43% 1.83%

Days Beyond Terms 7.69 5.71 1.98

Bankruptcy Rate 1.03% 0.99% 0.04%

Fewer businesses paying late + Faster payments = More Money faster for Creditors!

Source: Experian Metro Business Pulse


Performance by Industry

Industry Delinquency Days Beyond Terms Bankruptcy Rate

Top

Health Services 8.36% 3.98 0.68%

Hospitality 9.08% 5.31 1.55%

Forestry 11.16% 3.79 1.03%

Mining 11.37% 5.00 1.92%

Education Services 11.68% 4.47 0.69%

Bottom

Manufacturing 16.04% 6.59 1.93%

Transportation 19.59% 8.24 2.09%

Communications 19.71% 8.17 1.65%

Finance 20.13% 10.01 1.29%

Construction 22.90% 11.94 2.41%



Small Business Credit Quality



BankruptcyRate

DaysBeyondTerms

Delinquency

Top & Worst by Geography

Top0.92% - 5.05%

Worst20.11% - 44.72%

Top3.79 – 12.18

Worst7.78 – 10.58

Worst0.43% - 0.71%

Top0.77% - 1.57%



Top/Bottom 10 - Delinquency



Top/Bottom 10 – Days Beyond Terms



Top/Bottom 10 – Bankruptcy Rate



Small businesses are improving their credit profile

Performance differs:

► By Industry

● Health Services vs. Construction

► By Geography

● Delinquencies vs. Bankruptcy Rates

What Does This Mean To You?


Decision strategies must adjust to:

► Attract new customers

► Retain existing customers

Credit Performance must be monitored by:

► Geography

► Industry

► Other?

Key Take-Away’s:



Macro Outlook: The Right Pieces Are Falling Into Place

Cristian deRitisMoody’s Analytics


05 06 07 08 09 10 11 12 13F 14F 15F-6-5-4-3-2-1012345

GDP Growth Remains Lackluster…

Source: Moody’s Analytics

Real GDP growth, %


8080:02:0080:03:0080:04:0081:01:0081:02:0081:03:0081:04:0082:01:0082:02:0082:03:0082:04:0083:01:0083:02:0083:03:0083:04:0084:01:0084:02:0084:03:0084:04:008585:02:0085:03:0085:04:0086:01:0086:02:0086:03:0086:04:0087:01:0087:02:0087:03:0087:04:0088:01:0088:02:0088:03:0088:04:0089:01:0089:02:0089:03:0089:04:009090:02:0090:03:0090:04:0091:01:0091:02:0091:03:0091:04:0092:01:0092:02:0092:03:0092:04:0093:01:0093:02:0093:03:0093:04:0094:01:0094:02:0094:03:0094:04:009595:02:0095:03:0095:04:0096:01:0096:02:0096:03:0096:04:0097:01:0097:02:0097:03:0097:04:0098:01:0098:02:0098:03:0098:04:0099:01:0099:02:0099:03:0099:04:000001020304050607080910'11'120

10

20

30

40

50

60

Interest coverage ratio

Quick ratio

Corporate Balance Sheets Are Strong

Nonfinancial corporate businesses

Sources: Federal Reserve, Moody’s Analytics


'90

90:02:00

90:03:00

90:04:00

91:01:00

91:02:00

91:03:00

91:04:00

'92

92:02:00

92:03:00

92:04:00

93:01:00

93:02:00

93:03:00

93:04:00

'94

94:02:00

94:03:00

94:04:00

95:01:00

95:02:00

95:03:00

95:04:00

'96

96:02:00

96:03:00

96:04:00

97:01:00

97:02:00

97:03:00

97:04:00

'98

98:02:00

98:03:00

98:04:00

99:01:00

99:02:00

99:03:00

99:04:00

'00

0:02

0:03

0:04

1:01

1:02

1:03

1:04

'02

2:02

2:03

2:04

3:01

3:02

3:03

3:04

'04

4:02

4:03

4:04

5:01

5:02

5:03

5:04

'06

6:02

6:03

6:04

7:01

7:02

7:03

7:04

'08

8:02

8:03

8:04

9:01

9:02

9:03

9:04

'10

'11

'12

'13

6.25

6.75

7.25

7.75

8.25

8.75

9.25

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Core Capital Ratio (L)

Return on Assets (R )

Banks are Well Capitalized and More Willing to Lend

Commercial banks

Source: FDIC


Household Debt Service Ratios Near Record Lows

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 1210.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0Debt service (L)Financial obligations (R)

% of disposable income

Sources: Federal Reserve, BEA, Moody’s Analytics


Home Equity Is Being Restored And…

Case-Shiller Index, average annual growth, %, 2013-2016

Sources: CoreLogic, Moody’s Analytics

U.S. = 5.9

≥7.1

5.1 to 7

3.1 to 5

≤3.0


0202020203030303040404040505050506060606070707070808080809090909101010101111111112121212131313131414141415151515

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

Trend

Housing Construction Is Steadily Improving…

Sources: Census, Moody’s Analytics

Single-family and multifamily starts, mil


'05

5-Feb

5-Mar

5-Apr

5-May

5-Jun

5-Jul

5-Aug

5-Sep

5-Oct

5-Nov

5-Dec

'06

6-Feb

6-Mar

6-Apr

6-May

6-Jun

6-Jul

6-Aug

6-Sep

6-Oct

6-Nov

6-Dec

'07

7-Feb

7-Mar

7-Apr

7-May

7-Jun

7-Jul

7-Aug

7-Sep

7-Oct

7-Nov

7-Dec

'08

8-Feb

8-Mar

8-Apr

8-May

8-Jun

8-Jul

8-Aug

8-Sep

8-Oct

8-Nov

8-Dec

'09

9-Feb

9-Mar

9-Apr

9-May

9-Jun

9-Jul

9-Aug

9-Sep

9-Oct

9-Nov

9-Dec

'10

10-Feb

10-Mar

10-Apr

10-May

10-Jun

10-Jul

10-Aug

10-Sep

10-Oct

10-Nov

10-Dec

'11

11-Feb

11-Mar

11-Apr

11-May

11-Jun

11-Jul

11-Aug

11-Sep

11-Oct

11-Nov

11-Dec

'12

12-Feb

12-Mar

12-Apr

12-May

12-Jun

12-Jul

12-Aug

12-Sep

12-Oct

12-Nov

12-Dec

'13

13-Feb

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500

122,000

124,000

126,000

128,000

130,000Housing-Related (L)

Non Housing-Related (R )

…Supporting More Jobs and Small Businesses

Source: Wall Street Journal, Moody’s Analytics

Thousands of jobs



HOT TOPIC:

The Regional Divide


The Regional Divide

Source: Experian/Moody’s Small Business Credit Index Q2 2013


Leaders vs. LaggardsDelinquency



Leaders vs. LaggardsDays Beyond Terms



Leaders vs. LaggardsBankruptcy Rate




Is the Sun Rising in the West and Setting in the East?

Why the regional divide may be a long-term phenomenon.

Nathan KelleyMoody’s Analytics


Regional Jobs Recoveries Diverge Noticeably

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3NortheastMidwestSouthWest

Sources: BLS, Moody’s Analytics

Payroll employment, % change yr ago, 3-mo moving avg


Wages are growing.

► This is leading shoppers out to spend.

► The support to revenues is helping small companies stay current on debt.

The mix of jobs in major Mountain West cities has been concentrated in higher paying professions.

Housing-related industries are in better financial shape, making them a safer bet for lenders.

What Does This Mean To You?


Residents Heading to Where the Jobs Are

% change in population, 2012

0.54% to 1.38%

-0.09% to 0.54%

1.38% to 2.17%

Sources: Census Bureau, Moody’s Analytics

U.S.=0.96%


West is the Clear Winner for Price Gains

0.0% to 4.0%

Prices falling

4.0% to 14.3%

Sources: FHFA, Moody’s Analytics

FHFA home price index, % change yr ago

U.S.=4.0%


Business Creation Concentrated in the West

Establishment births, % change yr ago, 4-qtr MA, 2012Q4

-5.5% to 2.6%

-16.8% to -5.5%

2.6% to 24.1%

Sources: BLS: Business Employment Dynamics Survey, Moody’s Analytics


Foreclosures a Big Problem for FL, IL, and NV

Sources: RealtyTrac, Moody’s Analytics

-6.72 to 6.726.72 to 29.95

-10.60 to -6.72

Foreclosed properties per 1,000 households, diff from U.S., Aug 2013


Migration to the South and West Will Continue

0.54% to 1.19%-0.13% to 0.54%

1.19% to 2.90%

Source: Moody’s Analytics forecast

Annualized % change in population, avg from 2013 to 2018

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experian quarterly business credit review q2 2013

Economy & Finance

experian public

terms source

delinquency source

bankruptcy rate source

lackluster source

terms bankruptcy rate

bankruptcy rate days

terms delinquency