Chesswood Reports Slight Q3 Earnings Dip Due to Windset Capital Wind Down

Chesswood Group reported Q3/17 operating earnings of $6.7 million compared to $7.2 million during the same quarter a year ago. Chesswood also generated operating earnings of $24.1 million during the first nine months of the year, which was down slightly from $24.3 million during the same period in 2016.

The results for the third quarter and nine-months of the prior year included greater operating earnings of $346,000 and $1.2 million, respectively, from Windset Capital, which was wound down in 2017.

“Our originations generated another quarter of excellent growth for Chesswood’s finance receivables which have grown to almost $650 million,” said Barry Shafran, Chesswood’s president and CEO. “The seasonal rise in delinquencies and charge-offs that we experienced in the back half of the past few years was mirrored again in this quarter. We added $2.4 million to our non-cash portfolio reserve and provision for credit losses this quarter, compared to $1.7 million in the third quarter of 2016, while our portfolio is approximately $140 million larger than one year ago.

”The increase in the reserve was driven primarily by a rise in delinquency in our highest-risk product, which is returning to normal performance levels following the immediate post crisis years in which we enjoyed unprecedented credit quality due to the contraction of credit. While we continue to generate strong risk-adjusted yields and returns from this segment of our business, we have tightened our underwriting and do not expect any near-term growth from this portion of our portfolio,” Shafran said. “This is the same approach we took in past cycles and is an appropriate risk-management step in the face of what we consider to be overly aggressive competitive behavior in this market segment. This normal effect from a change in the cycle underscores our strategic considerations in moving to further diversify our product offerings’ risk profiles by significantly growing our prime and near-prime portfolios.”

Chesswood Group is a North American commercial equipment finance provider for small and medium-sized businesses and parent company of Pawnee Leasing and Blue Chip Leasing.

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