In what might be the last publication of a revealing look at the credit conditions in the trucking industry, the quarterly earnings of bank BMO released Tuesday showed the stronger freight market impacting its numbers.
BMO, the former Bank of Montreal and one of the largest lenders to the trucking industry, has announced its plans to sell its transportation unit to private equity firm Stonepeak in May. The deal is expected to close before the end of the year; the next earnings release for BMO is scheduled for December 2.
While net writeoffs in the third quarter ended July 31 were barely changed from the prior quarter, declining to Ca $24 million (US $17.32 million) from $25 million, that number is more of a backward-looking figure.
Provisions and allowances, as well as the size of the company’s gross loans considered impaired, which are a bank’s expectations of future troubled loans and estimates of the size of its issued credit that is under pressure, showed significant declines in the third quarter.
Provisions for credit losses fell to $15 million from $41 million in the second quarter. A year ago that figure was $50 million. The $15 million figure is the lowest since the first quarter of 2023.
Allowances for credit losses slid to $73 million from $86 million. That figure was less than that just three quarters ago, in the fourth quarter of 2025 when it was $71 million.
Allowances are a hit on a company’s balance sheet, while a provision impacts its income reporting. But both are reflections of distressed loans.
Gross impaired loans fell hard, to $440 million from $576 million one quarter earlier and $585 million in the fourth quarter of last year. That is another sign of a strengthening freight market boosting BMO’s transportation business which is believed to be about 90% lending to trucking.
While the size of BMO’s transportation book has been pared back in recent quarters, possibly in anticipation of a sale, the latest report shows relative stability.
Gross loans and acceptances for the transportation sector were $12.78 billion, up from $12.65 billion in the second quarter. That figure peaked at $15.6 billion in the third quarter of 2023.
But one place where the banks’ preparation for sale is apparent is in the size of transportation group loan originations. In the second quarter, it was $114 million. In the just-concluded third quarter, it was $11 million.
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