Chesswood Group Limited announced it has completed the merger of its subsidiary Blue Chip Leasing with Vault Credit Corporation. Both organizations received the necessary approvals from their funding partners and are excited to serve the market under one group umbrella. Chesswood will provide the merged entity access to its funding facilities to facilitate growth in its Canadian equipment finance portfolio.
"We're pleased to complete this merger and welcome Vault's talented staff to the Chesswood family" said Ryan Marr, Chesswood's President and CEO. "We are also excited with the opportunity to work with Daniel Wittlin and his senior leadership team to continue growing Chesswood's presence in Canada's alternative lending market."
Equipment Finance Advisor reported the planned merger on April 8.
First-quarter Results
Chesswood also announced its first-quarter results.
"The first quarter benefited from strong portfolio performance on the back of strong recoveries and low loan delinquencies. The impact of COVID has largely made its way through our loan portfolio and we expect this strong performance to continue throughout the year," said Marr. "In addition, first quarter originations rose throughout the period, reaching their peak in March. We expect to see continued strength in Q2 and expect strong overall growth for the year.
"Subsequent to quarter end, we announced and completed the merger of Vault Credit Corporation (VCC) with our Canadian business entity, Blue Chip Leasing. The merged entity has approximately $246 million of receivables, positioning the business as one of the largest independent equipment finance companies in Canada. We are excited by the combination, which leverages Chesswood's strong balance sheet with VCC's strong originations pipeline in Canada."
Summary of First Quarter Results
The company reported consolidated net income of $5.17 million in the quarter ended March 31, 2021 compared to a net loss of $16.25 million in the first quarter of 2020, an increase of $21.42 million year-over-year. Charges incurred in 2020 related to COVID-19 induced non-cash goodwill, restructuring and other transaction costs primarily account for the difference. On a constant currency basis, net income would have been $328,320 higher for the quarter.
The U.S. Equipment Finance segment (Pawnee Leasing and Tandem Finance) reported interest revenue on leases and loans of $16.9 million and ancillary and other income of $2.13 million, a total decrease of $4.92 million year on year. The decrease is a result of a smaller average portfolio, lower transaction volume as well as an increasing weighting of prime receivables.
Outlook
The company continues to see strong pent-up demand in 2021, and expect its originations to continue to grow in the first month of Q2. Its teams at Pawnee and Tandem continue to expect record lease and loan volumes for the year. As a result, its goal continues to be to originate $650 million in new leases and loans.
The integration of Blue Chip and Vault Credit Corporation is expected to be completed in the second quarter of 2021. The offices have already been consolidated and both teams are working off the same operating system.
See the full earnings press release here.