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Chesswood Announces Q2 Results, Provides COVID Impact Update

August 10, 2020, 07:25 AM
Filed Under: Corporate Earnings

Chesswood Group Limited, a North American commercial equipment finance provider for small and medium-sized businesses, reported its results for the second quarter and six months ended June 30, 2020 and provided a COVID-19 update.

The company reported second-quarter adjusted operating income of $2,109,457, down from $5,363,433 in the second quarter in 2019. The company posted net income of $1,051,366 down from $2,909,619 a year ago.

"Our U.S. and Canadian teams worked diligently throughout the quarter to ensure customers successfully returned to making their regular monthly payments after the expiration of payment accommodation" said Ryan Marr, Chesswood's President and CEO.  "As a result of this successful effort, we were able to reverse a meaningful amount of our allowance for credit losses recognized in Q1.  Excluding one-time items associated with the management transition, free cash flow remained strong for the quarter resulting from our strong collections effort and expense control."

"Although charge-offs are likely to remain above 2019 levels for the remainder of the year, we are encouraged by the incremental improvement we have seen throughout Q2.  Our portfolio today has a higher proportion of prime credits than at any time in the company's history, currently at 66 percent of total.  We believe this positioning will support profitability as we move through COVID throughout the remainder of the year" added Marr.

At the end of June, COVID-19 related deferrals at its Pawnee Leasing subsidiary declined to 12 percent of portfolio accounts representing 15 percent of portfolio value of our customer base, with approximately 50 percent of COVID deferred accounts resuming their regular monthly payments in June and less than one-third of the deferred accounts left at the end of July.  Blue Chip Leasing deferrals ended the quarter at 12 percent of the portfolio accounts representing 21 percent of portfolio value.

For Pawnee customers that have required further assistance, the company has introduced phase 2 accommodation programs. These customers have agreed to some level of monthly payment, albeit at a lower level.  Approximately 5 percent of its portfolio accounts have subscribed to these programs.

As outlined in the first quarter, discussions with customers take place on a one-on-one basis. Its long history in collections provides us with the necessary tools to successfully work with our customers in the current environment.

Chesswood Group Limited is North America's only publicly traded commercial equipment finance company focused on small and medium-sized businesses. 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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