Finance and Other Receivables

12 Months Ended

Dec. 31, 2024

NOTE B – FINANCE AND OTHER RECEIVABLES

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


	December 31			December 31
		2024			2023
Retail loans	$	5,675.3		$	5,028.2
Retail financing leases		1,846.3			1,710.4
Dealer wholesale financing		3,070.1			1,953.3
Dealer master notes		518.1			509.2
Operating lease receivables and other		55.9			65.3
		11,165.7			9,266.4
Less allowance for credit losses:
Loans and leases		(71.8	)		(58.6	)
Dealer wholesale financing		(1.1	)		(1.0	)
Operating lease receivables and other		(1.5	)		(1.4	)
	$	11,091.3		$	9,205.4

Annual minimum payments due on loans and finance leases and a reconciliation of the undiscounted cash flows to the net investment in finance leases at December 31, 2024 are as follows:


	Loans		Finance Leases
2025	$	1,954.9	$	573.9
2026		1,440.8		458.8
2027		1,253.6		412.4
2028		886.0		310.0
2029		490.2		195.1
Thereafter		167.9		97.9
	$	6,193.4		2,048.1
Unguaranteed residual values				56.0
Unearned interest on finance leases				(257.8	)
Net investment in finance leases			$	1,846.3

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 $32.8 and $31.6 as of December 31, 2024 and 2023, respectively.

Interest income recognized on finance leases was $98.7 and $77.8 for the years ended December 31, 2024 and 2023, respectively. Estimated residual values included with finance leases amounted to $56.0 in 2024 and $57.6 in 2023. Experience indicates substantially all of dealer wholesale financing will be repaid within one year. In addition, repayment experience indicates that some loans, leases and other finance receivables will be paid prior to contract maturity, while others 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 customer retail accounts 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:


	2024
	Dealer					Customer
	Wholesale		Retail			Retail			Other*		Total
Balance at January 1	$	1.0	$	1.7		$	56.9		$	1.4	$	61.0
Provision for losses		.1		(.6	)		37.9			.1		37.5
Charge-offs							(24.4	)				(24.4	)
Recoveries							.3					.3
Balance at December 31	$	1.1	$	1.1		$	70.7		$	1.5	$	74.4


	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

* 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, 2024 and 2023. 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, 2024, 2023 and 2022.

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, 2024	Revolving Loans		2024		2023		2022		2021		2020		Prior		Total
Amortized Cost Basis:
Dealer:
Wholesale:
Performing	$	3,064.1													$	3,064.1
Watch		6.0														6.0
	$	3,070.1													$	3,070.1
Retail:
Performing	$	229.8	$	599.6	$	562.3	$	371.1	$	181.6	$	83.5	$	128.1	$	2,156.0
Watch				1.1		21.5		5.6		1.6		4.4		.4		34.6
	$	229.8	$	600.7	$	583.8	$	376.7	$	183.2	$	87.9	$	128.5	$	2,190.6
Total Dealer	$	3,299.9	$	600.7	$	583.8	$	376.7	$	183.2	$	87.9	$	128.5	$	5,260.7

Customer Retail:
Fleet:
Performing			$	2,140.6	$	1,418.7	$	830.5	$	398.9	$	185.7	$	39.8	$	5,014.2
Watch				2.5		5.6		5.4		1.8		.5		.9		16.7
At-risk				19.3		148.5		61.2		29.3		3.1		.7		262.1
			$	2,162.4	$	1,572.8	$	897.1	$	430.0	$	189.3	$	41.4	$	5,293.0
Owner/Operator:
Performing			$	249.2	$	109.0	$	90.6	$	67.0	$	25.9	$	5.4	$	547.1
Watch				.5		2.5		1.6		.9		.4				5.9
At-risk				.5		.8		1.1		.3		.4				3.1
			$	250.2	$	112.3	$	93.3	$	68.2	$	26.7	$	5.4	$	556.1
Total Customer Retail			$	2,412.6	$	1,685.1	$	990.4	$	498.2	$	216.0	$	46.8	$	5,849.1
Total	$	3,299.9	$	3,013.3	$	2,268.9	$	1,367.1	$	681.4	$	303.9	$	175.3	$	11,109.8


At December 31, 2024	Revolving Loans	2024		2023		2022		2021		2020		Prior		Total
Gross Charge-Offs:
Customer Retail:
Fleet		$	.2	$	4.5	$	6.1	$	1.2	$	1.6	$	5.8	$	19.4
Owner/Operator					1.5		1.8		.5		.7		.5		5.0
Total		$	.2	$	6.0	$	7.9	$	1.7	$	2.3	$	6.3	$	24.4


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

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, 2024	Wholesale		Retail		Fleet		Operator		Total
Current and up to 30 days past-due	$	3,070.1	$	2,190.6	$	5,203.5	$	547.4	$	11,011.6
31 – 60 days past-due						42.3		5.1		47.4
Greater than 60 days past-due						47.2		3.6		50.8
	$	3,070.1	$	2,190.6	$	5,293.0	$	556.1	$	11,109.8


	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

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


	Dealer		Customer Retail
					Owner/
At December 31, 2024	Wholesale	Retail	Fleet		Operator		Total
Amortized cost basis with a specific reserve			$	237.1	$	2.2	$	239.3
Amortized cost basis with no specific reserve				24.0		1.1		25.1
Total			$	261.1	$	3.3	$	264.4

The increase in amortized cost basis with a specific reserve was primarily due to two large fleet customers.


	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

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


	2024		2023		2022
Fleet	$	1.2	$	.5	$	.6
Owner/Operator		.1		.2		.1
	$	1.3	$	.7	$	.7

Customers Experiencing Financial Difficulty

The Company modified $199.8 and $3.1 of finance receivables for customers experiencing financial difficulty during the years ended December 31, 2024 and 2023, respectively. Generally, other than insignificant term extensions and payment delays are modifications extending terms and payment delays for more than three months. The amortized cost basis of finance receivables for other than insignificant term extensions and payment delays for customers in financial difficulty was as follows:


	At December 31, 2024
	Amortized Cost Basis		% of Total Retail Portfolio
Customer Retail:
Fleet	$	145.4		1.9	%

The higher other than insignificant modifications to customers experiencing financial difficulties was primarily driven by two large fleet customers. These customers were not past due at the time of modification and at December 31, 2024. The modifications granted customers additional time to pay and added a weighted-average of five months to the life of the modified contracts. The Company provided only insignificant term extensions for the same periods in 2023.

The effect of modifications is included in the Company’s historical loss information used to determine the allowance for credit losses. For certain modifications to customers experiencing financial difficulties that are at-risk at December 31, 2024 and December 31, 2023, the allowance for credit losses is based on the value of underlying collateral or a discounted cash flow analysis.

There were $.8 and nil finance receivables modified with customers experiencing financial difficulty during the previous twelve months that had a payment default in the year ended December 31, 2024 and 2023, respectively.

Repossessions

When the Company determines 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 on 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, 2024 and 2023 was $34.5 and $18.3, respectively.

Proceeds from the sales of repossessed assets were $30.5, $11.5 and $6.9 for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts are included in Proceeds from disposal of equipment on the Statements of Cash Flows. Write-downs of repossessed equipment on operating leases are recorded as impairments and included in Depreciation and other rental expenses on the Statements of Income.

PACCAR FINANCIAL CORP 10-K