Market Overview

GM Financial Reports Third Quarter 2020 Operating Results

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  • Third quarter net income of $893 million
  • Retail loan and operating lease originations of $12.8 billion for the third quarter
  • Earning assets of $96.5 billion at September 30, 2020
  • Available liquidity of $29.1 billion at September 30, 2020

GENERAL MOTORS FINANCIAL COMPANY, INC. ("GM Financial" or the "Company") announced net income of $893 million for the quarter ended September 30, 2020, compared to $173 million for the quarter ended June 30, 2020, and $516 million for the quarter ended September 30, 2019. Net income was $1.2 billion for both the nine months ended September 30, 2020 and 2019.

Retail loan originations were $7.3 billion for the quarter ended September 30, 2020, compared to $8.7 billion for the quarter ended June 30, 2020, and $5.4 billion for the quarter ended September 30, 2019. Retail loan originations for the nine months ended September 30, 2020 were $22.5 billion, compared to $19.7 billion for the nine months ended September 30, 2019. The outstanding balance of retail finance receivables, net of fees was $48.7 billion at September 30, 2020, compared to $42.3 billion at December 31, 2019 and $42.0 billion at September 30, 2019.

Operating lease originations were $5.5 billion for the quarter ended September 30, 2020, compared to $3.2 billion for the quarter ended June 30, 2020, and $5.8 billion for the quarter ended September 30, 2019. Operating lease originations for the nine months ended September 30, 2020 were $13.7 billion, compared to $17.0 billion for the nine months ended September 30, 2019. Leased vehicles, net was $39.4 billion at September 30, 2020, compared to $42.1 billion at December 31, 2019 and $42.5 billion at September 30, 2019.

The outstanding balance of commercial finance receivables, net of fees was $8.5 billion at September 30, 2020, compared to $12.1 billion at December 31, 2019 and $13.3 billion at September 30, 2019.

Retail finance receivables 31-60 days delinquent were 2.1% of the portfolio at September 30, 2020 and 3.0% at September 30, 2019. Accounts more than 60 days delinquent were 0.8% of the portfolio at September 30, 2020 and 1.2% at September 30, 2019.

Annualized net charge-offs were 1.2% of average retail finance receivables for the quarter ended September 30, 2020 and 1.6% for the quarter ended September 30, 2019. Annualized net charge-offs were 1.5% for both the nine months ended September 30, 2020 and 2019.

The Company had total available liquidity of $29.1 billion at September 30, 2020, consisting of $4.7 billion of cash and cash equivalents, $20.9 billion of borrowing capacity on unpledged eligible assets, $0.5 billion of borrowing capacity on committed unsecured lines of credit, $1.0 billion of borrowing capacity on the Junior Subordinated Revolving Credit Facility from GM, and $2.0 billion of borrowing capacity on the GM Revolving 364-Day Credit Facility.

Earnings resulting from the Company's equity investment in joint ventures that conduct automotive finance operations in the Asia/Pacific region were $46 million for the quarter ended September 30, 2020, compared to $42 million for the quarter ended June 30, 2020, and $39 million for the quarter ended September 30, 2019. Earnings for the nine months ended September 30, 2020 were $113 million, compared to $126 million for the nine months ended September 30, 2019.

About GM Financial

General Motors Financial Company, Inc. is the wholly-owned captive finance subsidiary of General Motors Company and is headquartered in Fort Worth, Texas. In lieu of a conference call, management recorded remarks addressing the Company's results of operations for the quarter ended September 30, 2020. This recording, along with the presentation slides and this release, will be posted to the Company's website on November 5, 2020 by 11:00 a.m. central time. The recording and materials can be accessed via the Investor Relations section of the Company's website at https://investor.gmfinancial.com.

Forward-Looking Statements

This release contains several "forward-looking statements." Forward-looking statements are those that use words such as "believe," "expect," "intend," "plan," "may," "likely," "should," "estimate," "continue," "future" or "anticipate" and other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2019 and our subsequent quarterly reports on Form 10-Q. Such risks include - but are not limited to - the length and severity of the COVID-19 pandemic; GM's ability to sell new vehicles that we finance in the markets we serve; dealers' effectiveness in marketing our financial products to consumers; the viability of GM-franchised dealers that are commercial loan customers; the sufficiency, availability and cost of sources of financing, including credit facilities, securitization programs and secured and unsecured debt issuances; the adequacy of our underwriting criteria for loans and leases and the level of net charge-offs, delinquencies and prepayments on the loans and leases we purchase or originate; our ability to effectively manage capital or liquidity consistent with evolving business or operational needs, risk management standards and regulatory or supervisory requirements; the adequacy of our allowance for loan losses on our finance receivables; our ability to maintain and expand our market share due to competition in the automotive finance industry from a large number of banks, credit unions, independent finance companies and other captive automotive finance subsidiaries; changes in the automotive industry that result in a change in demand for vehicles and related vehicle financing; the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements; adverse determinations with respect to the application of existing laws, or the results of any audits from tax authorities, as well as changes in tax laws and regulations, supervision, enforcement and licensing across various jurisdictions; the prices at which used vehicles are sold in the wholesale auction markets; vehicle return rates, our ability to estimate residual value at the inception of a lease and the residual value performance on vehicles we lease; interest rate fluctuations and certain related derivatives exposure; our joint ventures in China, which we cannot operate solely for our benefit and over which we have limited control; changes in the determination of LIBOR and other benchmark rates; our ability to secure private customer and employee data or our proprietary information, manage risks related to security breaches and other disruptions to our networks and systems and comply with enterprise data regulations in all key market regions; foreign currency exchange rate fluctuations and other risks applicable to our operations outside of the U.S.; and changes in local, regional, national or international economic, social or political conditions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. It is advisable not to place undue reliance on any forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.

 

General Motors Financial Company, Inc.

Consolidated Statements of Income

(Unaudited, in millions)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

Finance charge income

$

999

 

 

$

1,043

 

 

$

2,971

 

 

$

3,038

 

Leased vehicle income

2,354

 

 

2,515

 

 

7,203

 

 

7,536

 

Other income

68

 

 

101

 

 

231

 

 

344

 

Total revenue

3,421

 

 

3,659

 

 

10,405

 

 

10,918

 

Costs and expenses

 

 

 

 

 

 

 

Operating expenses

394

 

 

384

 

 

1,097

 

 

1,131

 

Leased vehicle expenses

1,126

 

 

1,574

 

 

4,602

 

 

5,025

 

Provision for loan losses

31

 

 

150

 

 

824

 

 

504

 

Interest expense

709

 

 

879

 

 

2,332

 

 

2,778

 

Total costs and expenses

2,260

 

 

2,987

 

 

8,855

 

 

9,438

 

Equity income

46

 

 

39

 

 

113

 

 

126

 

Income before income taxes

1,207

 

 

711

 

 

1,663

 

 

1,606

 

Income tax provision

314

 

 

195

 

 

430

 

 

416

 

Net income

893

 

 

516

 

 

1,233

 

 

1,190

 

Less: cumulative dividends on preferred stock

24

 

 

23

 

 

69

 

 

68

 

Net income attributable to common shareholder

$

869

 

 

$

493

 

 

$

1,164

 

 

$

1,122

 

Consolidated Balance Sheets

(Unaudited, in millions)

 

September 30, 2020

 

December 31, 2019

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

4,705

 

 

$

3,311

 

Finance receivables, net

55,153

 

 

53,473

 

Leased vehicles, net

39,358

 

 

42,055

 

Goodwill

1,167

 

 

1,185

 

Equity in net assets of non-consolidated affiliates

1,485

 

 

1,455

 

Related party receivables

566

 

 

678

 

Other assets

6,777

 

 

7,060

 

Total assets

$

109,211

 

 

$

109,217

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

Liabilities

 

 

 

 

 

Secured debt

$

35,671

 

 

$

39,959

 

Unsecured debt

53,151

 

 

48,979

 

Deferred income

3,093

 

 

3,648

 

Related party payables

235

 

 

82

 

Other liabilities

4,514

 

 

3,823

 

Total liabilities

96,664

 

 

96,491

 

Total shareholders' equity

12,547

 

 

12,726

 

Total liabilities and shareholders' equity

$

109,211

 

 

$

109,217

 

Operational and Financial Data

(Unaudited, Dollars in millions)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Originations

2020

 

2019

 

2020

 

2019

Retail finance receivables originations

$

7,301

 

 

$

5,407

 

 

$

22,491

 

 

$

19,682

 

Lease originations

$

5,532

 

 

$

5,843

 

 

$

13,737

 

 

$

16,964

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Average Earning Assets

2020

 

2019

 

2020

 

2019

Average retail finance receivables

$

47,818

 

 

$

42,311

 

 

$

45,016

 

 

$

42,103

 

Average commercial finance receivables

8,046

 

 

13,118

 

 

9,897

 

 

12,614

 

Average finance receivables

55,864

 

 

55,429

 

 

54,913

 

 

54,717

 

Average leased vehicles, net

39,504

 

 

42,754

 

 

40,562

 

 

43,059

 

Average earning assets

$

95,368

 

 

$

98,183

 

 

$

95,475

 

 

$

97,776

 

Ending Earning Assets

September 30, 2020

 

December 31, 2019

Retail finance receivables, net of fees

$

48,695

 

 

$

42,268

 

Commercial finance receivables, net of fees

8,461

 

 

12,149

 

Leased vehicles, net

39,358

 

 

42,055

 

Ending earning assets

$

96,514

 

 

$

96,472

 

Finance Receivables

September 30, 2020

 

December 31, 2019

Retail

 

 

 

Retail finance receivables, net of fees

$

48,695

 

 

$

42,268

 

Less: allowance for loan losses

(1,936

)

 

(866

)

Total retail finance receivables, net

46,759

 

 

41,402

 

Commercial

 

 

 

Commercial finance receivables, net of fees

8,461

 

 

12,149

 

Less: allowance for loan losses

(67

)

 

(78

)

Total commercial finance receivables, net

8,394

 

 

12,071

 

Total finance receivables, net

$

55,153

 

 

$

53,473

 

Allowance for Loan Losses

September 30, 2020

 

December 31, 2019

Allowance for loan losses as a percentage of retail finance receivables, net of fees

4.0

%

 

2.0

%

Allowance for loan losses as a percentage of commercial finance receivables, net of fees

0.8

%

 

0.6

%

Delinquencies

September 30, 2020

 

September 30, 2019

Loan delinquency as a percentage of ending retail finance receivables:

 

 

 

31 - 60 days

2.1

%

 

3.0

%

Greater than 60 days

0.8

 

 

1.2

 

Total

2.9

%

 

4.2

%

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Charge-offs and Recoveries

2020

 

2019

 

2020

 

2019

Charge-offs

$

280

 

 

$

300

 

 

$

876

 

 

$

886

 

Less: recoveries

(133)

 

 

(133)

 

 

(378)

 

 

(410)

 

Net charge-offs

$

147

 

 

$

167

 

 

$

498

 

 

$

476

 

Net charge-offs as an annualized percentage of average retail finance receivables

1.2

%

 

1.6

%

 

1.5

%

 

1.5

%

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Operating Expenses

2020

 

2019

 

2020

 

2019

Operating expenses as an annualized percentage of average earning assets

1.6

%

 

1.6

%

 

1.5

%

 

1.5

%

 

 

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