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Chesswood Reports Record Originations of $442MM in 2019

March 19, 2020, 07:10 AM
Filed Under: Corporate Earnings

Chesswood Group Limited reported its results for the fourth quarter and year ended Dec. 31, 2019.

“We had a record year of originations once again while our free cash flow, reduced by the $2.2 million of net expenses from our new startup Tandem Finance, remained strong at $22.4 million, well above our dividend level of $14.9 million,” said Barry Shafran, Chesswood’s President and Chief Executive Officer. “This was a very exciting and especially busy year for us, as we launched Tandem, renewed our two largest credit facilities, successfully completed our first marketed ABS transaction in the U.S. for US$254 million and achieved $1.0 billion in total gross portfolio receivables.”

For the full results, see the release here. Results are in Canadian dollars except where noted.

“Our fourth quarter and year-end results were also significantly affected by the IFRS 9 rules for the non-cash allowance for credit losses” added Shafran. These new rules, adopted in 2018, continue to produce volatility in results. The rules penalize a company’s earnings when new business grows over the prior year, by requiring the immediate recording of an estimate of the next twelve months’ expected losses on all performing receivables, which includes all new originations in the period.

As of today, Canada and the U.S. are only weeks into the new Coronavirus pandemic. Financial markets and businesses across many industries are beginning to experience challenges. While it will be some time before the economic impact of the Coronavirus will be known, today Chesswood has a strong balance sheet with more than $150 million of equity, modest leverage with our banks, significant liquidity and availability in each of our funding facilities.

Its Colorado-based Pawnee Leasing Corporation, founded in 1982, finances a highly diversified portfolio of commercial equipment leases and loans through relationships with over 600 independent brokers in the U.S. In Canada, Blue Chip Leasing Corporation has been originating and servicing commercial equipment leases and loans since 1996, and today operates through a nationwide network of more than 50 independent brokers. Located in Houston, TX, Tandem Finance Inc. provides equipment financing to small and medium-sized businesses in the U.S.

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