XML 19 R12.htm IDEA: XBRL DOCUMENT v3.24.0.1
Finance and Other Receivables
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Finance and Other Receivables

NOTE B – FINANCE AND OTHER RECEIVABLES

The Company’s finance and other receivables include the following:

 

 

 

December 31

 

 

December 31

 

 

 

 

2023

 

 

 

2022

 

Retail loans

 

$

5,028.2

 

 

$

4,627.0

 

Retail financing leases

 

 

1,710.4

 

 

 

1,433.5

 

Dealer wholesale financing

 

 

1,953.3

 

 

 

1,093.2

 

Dealer master notes

 

 

509.2

 

 

 

377.0

 

Operating lease receivables and other

 

 

65.3

 

 

 

49.4

 

 

 

9,266.4

 

 

 

7,580.1

 

Less allowance for credit losses:

 

 

 

 

 

 

Loans and leases

 

 

(58.6

)

 

 

(59.7

)

Dealer wholesale financing

 

 

(1.0

)

 

 

(1.0

)

Operating lease receivables and other

 

 

(1.4

)

 

 

(1.0

)

 

 

$

9,205.4

 

 

$

7,518.4

 

 

Annual minimum payments due on loans and finance leases and a reconciliation of the undiscounted cash flows to the amortized cost basis of finance leases are as follows:

 

 

 

Loans

 

 

Finance Leases

 

2024

 

$

1,795.9

 

 

$

519.7

 

2025

 

 

1,318.6

 

 

 

446.1

 

2026

 

 

1,063.1

 

 

 

350.7

 

2027

 

 

798.3

 

 

 

291.0

 

2028

 

 

434.4

 

 

 

170.2

 

Thereafter

 

 

127.1

 

 

 

97.3

 

 

$

5,537.4

 

 

 

1,875.0

 

Unguaranteed residual values

 

 

 

 

 

57.6

 

Unearned interest on finance leases

 

 

 

 

 

(222.2

)

Amortized cost basis of finance leases

 

 

 

 

$

1,710.4

 

 

Included in Finance and other receivables, net of allowance for credit losses, on the Balance Sheets is accrued interest receivable, net of allowance for credit losses, of $31.6 and $19.3 as of December 31, 2023 and 2022, respectively.

Interest income recognized on finance leases was $77.8 and $59.3 for the years ended December 31, 2023 and 2022, respectively. Estimated residual values included with finance leases amounted to $57.6 in 2023 and $60.5 in 2022. Experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, collection experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while other may be extended or modified.

For the following credit quality disclosures, finance receivables are classified into two portfolio segments, wholesale and retail. The retail portfolio is further segmented into dealer retail and customer retail. The dealer wholesale segment consists of truck inventory financing to PACCAR dealers. The dealer retail segment consists of loans and leases to participating dealers and franchises that use the proceeds to fund customers’ acquisition of commercial vehicles and related equipment. The customer retail segment consists of loans and leases directly to customers for the acquisition of commercial vehicles and related equipment. Customer retail receivables are further segregated between fleet and owner/operator classes. The fleet class consists of retail accounts of customers operating five or more trucks. All other customer retail accounts are considered owner/operator. These two classes have similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk.

Allowance for Credit Losses

The allowance for credit losses is summarized as follows:

 

 

2023

 

 

 

Dealer

 

 

Customer

 

 

 

 

 

 

 

 

 

Wholesale

 

 

Retail

 

 

Retail

 

 

Other*

 

 

Total

 

Balance at January 1

 

$

1.0

 

 

$

1.8

 

 

$

57.9

 

 

$

1.0

 

 

$

61.7

 

Provision for losses

 

 

 

 

 

(.1

)

 

 

8.0

 

 

 

.2

 

 

 

8.1

 

Charge-offs

 

 

 

 

 

 

 

 

(9.8

)

 

 

 

 

 

(9.8

)

Recoveries

 

 

 

 

 

 

 

 

.8

 

 

 

.2

 

 

 

1.0

 

Balance at December 31

 

$

1.0

 

 

$

1.7

 

 

$

56.9

 

 

$

1.4

 

 

$

61.0

 

 

 

 

2022

 

 

 

Dealer

 

 

Customer

 

 

 

 

 

 

 

 

 

Wholesale

 

 

Retail

 

 

Retail

 

 

Other*

 

 

Total

 

Balance at January 1

 

$

1.0

 

 

$

6.5

 

 

$

57.1

 

 

$

1.1

 

 

$

65.7

 

Provision for losses

 

 

 

 

 

(4.7

)

 

 

 

 

 

 

 

 

(4.7

)

Charge-offs

 

 

 

 

 

 

 

 

(1.6

)

 

 

(.1

)

 

 

(1.7

)

Recoveries

 

 

 

 

 

 

 

 

2.4

 

 

 

 

 

 

2.4

 

Balance at December 31

 

$

1.0

 

 

$

1.8

 

 

$

57.9

 

 

$

1.0

 

 

$

61.7

 

 

 

 

2021

 

 

 

Dealer

 

 

Customer

 

 

 

 

 

 

 

 

 

Wholesale

 

 

Retail

 

 

Retail

 

 

Other*

 

 

Total

 

Balance at January 1

 

$

1.3

 

 

$

7.5

 

 

$

57.7

 

 

$

1.7

 

 

$

68.2

 

Provision for losses

 

 

(.3

)

 

 

(1.0

)

 

 

 

 

(.9

)

 

 

(2.2

)

Charge-offs

 

 

 

 

 

 

 

 

(2.5

)

 

 

 

 

(2.5

)

Recoveries

 

 

 

 

 

 

 

 

1.9

 

 

 

.3

 

 

 

2.2

 

Balance at December 31

 

$

1.0

 

 

$

6.5

 

 

$

57.1

 

 

$

1.1

 

 

$

65.7

 

 

* Operating lease and other trade receivables.

Credit Quality

The Company’s customers are principally concentrated in the transportation industry in the United States. The Company’s portfolio assets are diversified over a large number of customers and dealers with no single customer or dealer balances representing over 10% of the total portfolio assets as of December 31, 2023 and 2022. The Company retains as collateral a security interest in the related equipment. There is no single customer or dealer representing over 10% of Interest and other revenues for the years ended December 31, 2023, 2022 and 2021.

At the inception of each contract, the Company considers the credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios and other internal metrics. On

an ongoing basis, the Company monitors credit quality based on past due status and collection experience as there is a meaningful correlation between the past due status of customers and the risk of loss.

The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high-risk. Watch accounts are not collateral dependent. At-risk accounts are collateral dependent, including accounts over 90 days past due and other accounts on non-accrual status.

The tables below summarize the amortized cost basis of the Company’s finance receivables within each credit quality indicator by year of origination and portfolio class and current period gross charge-offs of the Company’s finance receivables by year of origination and portfolio class.

 

At December 31, 2023

 

Revolving Loans

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Total

 

Amortized Cost Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

1,951.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,951.4

 

Watch

 

 

1.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.9

 

 

 

$

1,953.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,953.3

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

280.7

 

 

$

677.3

 

 

$

467.2

 

 

$

267.6

 

 

$

135.2

 

 

$

146.3

 

 

$

106.6

 

 

$

2,080.9

 

 

 

$

280.7

 

 

$

677.3

 

 

$

467.2

 

 

$

267.6

 

 

$

135.2

 

 

$

146.3

 

 

$

106.6

 

 

$

2,080.9

 

Total Dealer

 

$

2,234.0

 

 

$

677.3

 

 

$

467.2

 

 

$

267.6

 

 

$

135.2

 

 

$

146.3

 

 

$

106.6

 

 

$

4,034.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

 

 

$

1,967.2

 

 

$

1,244.9

 

 

$

725.3

 

 

$

453.3

 

 

$

151.5

 

 

$

38.9

 

 

$

4,581.1

 

Watch

 

 

 

 

 

24.2

 

 

 

16.6

 

 

 

3.3

 

 

 

2.0

 

 

 

.5

 

 

 

.9

 

 

 

47.5

 

At-risk

 

 

 

 

 

2.4

 

 

 

4.0

 

 

 

4.5

 

 

 

2.0

 

 

 

.6

 

 

 

.1

 

 

 

13.6

 

 

 

 

 

$

1,993.8

 

 

$

1,265.5

 

 

$

733.1

 

 

$

457.3

 

 

$

152.6

 

 

$

39.9

 

 

$

4,642.2

 

Owner/Operator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

 

 

$

151.8

 

 

$

140.5

 

 

$

130.5

 

 

$

66.3

 

 

$

24.5

 

 

$

4.0

 

 

$

517.6

 

Watch

 

 

 

 

 

.9

 

 

 

1.9

 

 

 

1.1

 

 

 

.5

 

 

 

.2

 

 

 

 

 

 

4.6

 

At-risk

 

 

 

 

 

.6

 

 

 

.8

 

 

 

.8

 

 

 

.2

 

 

 

.1

 

 

 

 

 

 

2.5

 

 

 

 

 

 

$

153.3

 

 

$

143.2

 

 

$

132.4

 

 

$

67.0

 

 

$

24.8

 

 

$

4.0

 

 

$

524.7

 

Total Customer Retail

 

 

 

 

$

2,147.1

 

 

$

1,408.7

 

 

$

865.5

 

 

$

524.3

 

 

$

177.4

 

 

$

43.9

 

 

$

5,166.9

 

Total

 

$

2,234.0

 

 

$

2,824.4

 

 

$

1,875.9

 

 

$

1,133.1

 

 

$

659.5

 

 

$

323.7

 

 

$

150.5

 

 

$

9,201.1

 

 

At December 31, 2023

 

Revolving Loans

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Total

 

Gross Charge-Offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet

 

 

 

$

.5

 

 

$

2.4

 

 

$

.8

 

 

$

.2

 

 

$

3.8

 

 

 

 

 

$

7.7

 

Owner/Operator

 

 

 

 

.2

 

 

 

.7

 

 

 

.8

 

 

 

.2

 

 

 

 

 

$

.2

 

 

 

2.1

 

Total

 

 

 

$

.7

 

 

$

3.1

 

 

$

1.6

 

 

$

.4

 

 

$

3.8

 

 

$

.2

 

 

$

9.8

 

 

 

At December 31, 2022

 

Revolving Loans

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

Prior

 

 

Total

 

Amortized Cost Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

1,087.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,087.0

 

Watch

 

 

6.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.2

 

 

 

$

1,093.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,093.2

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

206.2

 

 

$

546.2

 

 

$

315.5

 

 

$

182.7

 

 

$

214.9

 

 

$

97.5

 

 

$

105.0

 

 

$

1,668.0

 

 

 

$

206.2

 

 

$

546.2

 

 

$

315.5

 

 

$

182.7

 

 

$

214.9

 

 

$

97.5

 

 

$

105.0

 

 

$

1,668.0

 

Total Dealer

 

$

1,299.4

 

 

$

546.2

 

 

$

315.5

 

 

$

182.7

 

 

$

214.9

 

 

$

97.5

 

 

$

105.0

 

 

$

2,761.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

 

 

$

1,698.2

 

 

$

1,130.2

 

 

$

751.7

 

 

$

382.6

 

 

$

113.7

 

 

$

38.6

 

 

$

4,115.0

 

Watch

 

 

 

 

 

2.9

 

 

 

1.7

 

 

 

.3

 

 

 

2.9

 

 

 

2.0

 

 

 

.6

 

 

 

10.4

 

At-risk

 

 

 

 

 

1.6

 

 

 

6.0

 

 

 

1.7

 

 

 

10.4

 

 

 

4.1

 

 

 

.4

 

 

 

24.2

 

 

 

 

 

$

1,702.7

 

 

$

1,137.9

 

 

$

753.7

 

 

$

395.9

 

 

$

119.8

 

 

$

39.6

 

 

$

4,149.6

 

Owner/Operator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

 

 

$

199.2

 

 

$

216.8

 

 

$

124.7

 

 

$

56.5

 

 

$

17.9

 

 

$

2.7

 

 

$

617.8

 

Watch

 

 

 

 

 

.5

 

 

 

.4

 

 

 

.1

 

 

 

 

 

 

 

 

 

 

 

 

1.0

 

At-risk

 

 

 

 

 

.4

 

 

 

.3

 

 

 

.1

 

 

 

.2

 

 

 

.1

 

 

 

 

 

 

1.1

 

 

 

 

 

 

$

200.1

 

 

$

217.5

 

 

$

124.9

 

 

$

56.7

 

 

$

18.0

 

 

$

2.7

 

 

$

619.9

 

Total Customer Retail

 

 

 

 

$

1,902.8

 

 

$

1,355.4

 

 

$

878.6

 

 

$

452.6

 

 

$

137.8

 

 

$

42.3

 

 

$

4,769.5

 

Total

 

$

1,299.4

 

 

$

2,449.0

 

 

$

1,670.9

 

 

$

1,061.3

 

 

$

667.5

 

 

$

235.3

 

 

$

147.3

 

 

$

7,530.7

 

 

The tables below summarize the amortized cost basis of the Company’s finance receivables by aging category. In determining past due status, the Company considers the entire contractual account balance past due when any installment is over 30 days past due. Substantially all customer accounts that were greater than 30 days past due prior to credit modification became current upon modification for aging purposes.

 

 

 

Dealer

 

 

Customer Retail

 

 

 

 

 

 

 

 

 

 

 

 

Owner/

 

 

 

 

At December 31, 2023

 

Wholesale

 

 

Retail

 

 

Fleet

 

 

Operator

 

 

Total

 

Current and up to 30 days past-due

 

$

1,953.3

 

 

$

2,080.9

 

 

$

4,589.2

 

 

$

518.2

 

 

$

9,141.6

 

31 – 60 days past-due

 

 

 

 

 

 

 

 

45.3

 

 

 

4.8

 

 

 

50.1

 

Greater than 60 days past-due

 

 

 

 

 

 

 

 

7.7

 

 

 

1.7

 

 

 

9.4

 

 

$

1,953.3

 

 

$

2,080.9

 

 

$

4,642.2

 

 

$

524.7

 

 

$

9,201.1

 

 

 

 

Dealer

 

 

Customer Retail

 

 

 

 

 

 

 

 

 

 

 

 

Owner/

 

 

 

 

At December 31, 2022

 

Wholesale

 

 

Retail

 

 

Fleet

 

 

Operator

 

 

Total

 

Current and up to 30 days past-due

 

$

1,093.2

 

 

$

1,668.0

 

 

$

4,143.7

 

 

$

618.3

 

 

$

7,523.2

 

31 – 60 days past-due

 

 

 

 

 

 

 

 

1.1

 

 

 

1.4

 

 

 

2.5

 

Greater than 60 days past-due

 

 

 

 

 

 

 

 

4.8

 

 

 

.2

 

 

 

5.0

 

 

$

1,093.2

 

 

$

1,668.0

 

 

$

4,149.6

 

 

$

619.9

 

 

$

7,530.7

 

The amortized cost basis for finance receivables that are on non-accrual status is as follows:

 

 

Dealer

 

Customer Retail

 

 

 

 

 

 

 

 

 

 

 

 

Owner/

 

 

 

 

At December 31, 2023

Wholesale

 

Retail

 

Fleet

 

 

Operator

 

 

Total

 

Amortized cost basis with a specific reserve

 

 

 

 

$

8.2

 

 

$

1.8

 

 

$

10.0

 

Amortized cost basis with no specific reserve

 

 

 

 

 

5.3

 

 

 

.8

 

 

 

6.1

 

Total

 

 

 

 

$

13.5

 

 

$

2.6

 

 

$

16.1

 

 

 

 

Dealer

 

Customer Retail

 

 

 

 

 

 

 

 

 

 

 

 

Owner/

 

 

 

 

At December 31, 2022

Wholesale

 

Retail

 

Fleet

 

 

Operator

 

 

Total

 

Amortized cost basis with a specific reserve

 

 

 

 

$

2.0

 

 

$

1.1

 

 

$

3.1

 

Amortized cost basis with no specific reserve

 

 

 

 

 

6.1

 

 

 

 

 

 

6.1

 

Total

 

 

 

 

$

8.1

 

 

$

1.1

 

 

$

9.2

 

 

Interest income recognized on a cash basis for finance receivables that are on non-accrual status is as follows:

 

 

 

2023

 

 

2022

 

 

2021

 

Fleet

 

$

.5

 

 

$

.6

 

 

$

1.2

 

Owner/Operator

 

 

.2

 

 

 

.1

 

 

 

.1

 

 

$

.7

 

 

$

.7

 

 

$

1.3

 

 

Customers Experiencing Financial Difficulty

The Company adopted ASU 2022-02 on January 1, 2023. The amortized cost basis of finance receivables that were modified with customers experiencing financial difficulty was $3.1 and represented less than .1% of the total retail portfolio for the year ended December 31, 2023. These modifications provided only insignificant term extensions. The effect on the allowance for credit losses from such modifications was not significant for the year ended December 31, 2023.

All of the finance receivables modified with customers experiencing financial difficulty are current. There were no finance receivables modified with customers experiencing financial difficulty on or after January 1, 2023 that had a payment default in the year ended December 31, 2023.

 

Troubled Debt Restructurings

Prior to the adoption of ASU 2022-02, when considering whether to modify customer accounts for credit reasons, the Company evaluated the creditworthiness of the customers and modified those accounts that the Company considered likely to perform under the modified terms. When the Company modified a loan or finance lease for credit reasons and granted a concession, the modification was classified as a troubled debt restructuring (TDR). The Company did not typically grant credit modifications for customers that did not meet minimum underwriting standards since the Company normally repossesses the financed equipment in those circumstances. When such modifications did occur, they were considered TDRs.

The balance of TDRs was $13.3 at December 31, 2022. There were no finance receivables modified as TDRs during 2022.

Repossessions

When the Company determines that a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for loans, finance leases and equipment under operating leases. The Company records the vehicles as used truck inventory included in Other assets on the Balance Sheets. The balance of repossessed units at December 31, 2023 and 2022 was $18.3 and $2.3, respectively.

Proceeds from the sales of repossessed assets were $11.5, $6.9 and $16.5 for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write-downs of repossessed equipment under operating leases are recorded as impairments and included in Depreciation and other rental expenses on the Statements of Income.