GM Financial Reports June Quarter 2014 Operating Results

  • Earnings of $175 million
  • Consumer loan and lease originations of $5.2 billion
  • Annualized net credit losses of 1.4% on average consumer finance receivables
  • End of period earning assets of $37.0 billion

FORT WORTH, Texas--()--GENERAL MOTORS FINANCIAL COMPANY, INC. (“GM Financial” or the “Company”) announced earnings of $175 million for the quarter ended June 30, 2014, compared to $178 million for the quarter ended June 30, 2013. Earnings for the six months ended June 30, 2014 were $320 million, compared to $284 million for the six months ended June 30, 2013. Earnings include $16 million and $22 million in pre-tax acquisition and integration expenses for the quarter and six month periods ended June 30, 2013, respectively.

Consumer loan originations were $3.6 billion for the quarter ended June 30, 2014, compared to $3.4 billion for the quarter ended March 31, 2014, and $2.5 billion for the quarter ended June 30, 2013. Consumer loan originations for the six months ended June 30, 2014 were $7.0 billion, compared to $3.8 billion for the six months ended June 30, 2013. The outstanding balance of consumer finance receivables totaled $25.1 billion at June 30, 2014.

Operating lease originations of General Motors Company (“GM”) vehicles were $1.5 billion for the quarter ended June 30, 2014, compared to $773 million for the quarter ended March 31, 2014 and $834 million for the quarter ended June 30, 2013. Operating lease originations for the six months ended June 30, 2014 were $2.3 billion, compared to $1.5 billion for the six months ended June 30, 2013. Leased vehicles, net, totaled $4.7 billion at June 30, 2014.

The outstanding balance of commercial finance receivables was $7.1 billion at June 30, 2014 compared to $7.1 billion at March 31, 2014 and $6.7 billion at December 31, 2013.

Consumer finance receivables 31-to-60 days delinquent were 3.5% of the portfolio at June 30, 2014, compared to 3.4% at June 30, 2013. Accounts more than 60 days delinquent were 1.6% of the portfolio at June 30, 2014, compared to 1.4% a year ago.

Annualized net credit losses were 1.4% of average consumer finance receivables for the quarters ended June 30, 2014 and 2013. For the six months ended June 30, 2014, annualized consumer net credit losses were 1.6%, compared to 1.8% for the six months ended June 30, 2013.

The Company had total available liquidity of $4.8 billion at June 30, 2014, consisting of $1.4 billion of unrestricted cash, $1.8 billion of borrowing capacity on unpledged eligible assets, $990 million of borrowing capacity on unsecured lines of credit and $600 million of borrowing capacity on a line of credit from GM.

The Company acquired Ally Financial’s auto finance and financial services operations in Germany, the United Kingdom, Italy, Sweden, Switzerland, Austria, Belgium, the Netherlands, Greece, Spain, Chile, Colombia and Mexico on April 1, 2013 and acquired Ally Financial’s auto finance and financial services operations in France and Portugal on June 1, 2013. The Company also acquired Ally Financial’s auto finance and financial services operations in Brazil on October 1, 2013. The results of operations of the acquired entities are included since their respective acquisition dates.

About GM Financial

General Motors Financial Company, Inc. is the captive finance company for and a wholly-owned subsidiary of General Motors Company and is headquartered in Fort Worth, Texas. For more information, visit www.gmfinancial.com.

Forward-Looking Statements

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements which are the Company’s 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 those anticipated by the Company. The most significant of these risks are detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company's annual report on Form 10-K for the year ended December 31, 2013. Such risks include – but are not limited to – our ability to close the acquisition of Ally Financial’s equity interest in its auto finance and financial services operations in China and operate that business successfully, changes in general economic and business conditions, GM’s ability to sell new vehicles that we finance in the markets we serve in North America, Europe and Latin America, interest rate and currency fluctuations, our financial condition and liquidity, as well as future cash flows and earnings, competition, the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements, the availability of sources of financing, the level of net credit losses, delinquencies and prepayments on the loans and leases we originate, the viability of GM-franchised dealers that are commercial loan customers, the prices at which used cars are sold in the wholesale auction markets, and changes in business strategy, including acquisitions and expansion of product lines and credit risk appetite. If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual events or results may differ materially. It is advisable not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to, and does 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, Dollars in Millions)
 
Three Months Ended Six Months Ended
June 30, June 30,
2014   2013 2014   2013
Revenue
Finance charge income $ 882 $ 647 $ 1,712 $ 1,062
Leased vehicle income 238 136 438 243
Other income   71   53   138   71
  1,191   836   2,288   1,376
Costs and expenses
Operating expenses 280 191 549 299
Leased vehicle expenses 179 101 335 181
Provision for loan losses 113 100 248 194
Interest expense 354 164 669 246
Acquisition and integration expenses     16     22
  926   572   1,801   942
Income before income taxes 265 264 487 434
Income tax provision   90   86   167   150
Net income $ 175 $ 178 $ 320 $ 284
 
 
Consolidated Balance Sheets
(Unaudited, Dollars in Millions)
     
June 30, 2014 December 31, 2013
Assets
Cash and cash equivalents $ 1,412 $ 1,074
Finance receivables, net 31,545 29,282
Restricted cash 2,205 1,958
Property and equipment, net 150 132
Leased vehicles, net 4,748 3,383
Deferred income taxes 433 359
Goodwill 1,245 1,240
Related party receivables 185 129
Other assets   436   433
Total assets $ 42,359 $ 37,990
Liabilities and Shareholder's Equity
Liabilities
Secured debt $ 25,006 $ 22,073
Unsecured debt 7,596 6,973
Accounts payable and accrued expenses 984 946
Deferred income 249 168
Deferred income taxes 12 87
Taxes payable 293 287
Related party taxes payables 891 643
Related party payable 432 368
Other liabilities   229   160
Total liabilities   35,692   31,705
Shareholder's equity   6,667   6,285
Total liabilities and shareholder's equity $ 42,359 $ 37,990
   
 
Operational and Financial Data
(Unaudited, Dollars in Millions)
 
Three Months Ended
June 30,
2014   2013

North
America

  International   Total

North
America

  International   Total
Consumer finance receivables originations $ 1,553 $ 2,080 $ 3,633 $ 1,351 $ 1,117 $ 2,468
GM lease originations $ 1,549 $ 1,549 $ 834 $ 834
GM new vehicle loans and leases as a percent of
total loan and lease originations 66.3 % 87.1 % 74.6 % 58.8 % 86.0 % 68.0 %
   
 
Six Months Ended
June 30,
2014   2013

North
America

  International   Total

North
America

  International   Total
Consumer finance receivables originations $ 2,917 $ 4,128 $ 7,045 $ 2,710 $ 1,117 $ 3,827
GM lease originations $ 2,322 $ 2,322 $ 1,454 $ 1,454
GM new vehicle loans and leases as a percent of
total loan and lease originations 60.8 % 87.6 % 72.6 % 55.2 % 86.0 % 61.7 %
   
 
Three Months Ended
June 30,
2014   2013

North
America

  International   Total

North
America

  International   Total
Average consumer finance receivables $ 11,847 $ 12,827 $ 24,674 $ 11,323 $ 6,957 $ 18,280
Average commercial finance receivables   2,287   4,755   7,042   1,059   3,515   4,574
Average finance receivables 14,134 17,582 31,716 12,382 10,472 22,854
Average leased vehicles, net   4,169   1   4,170   2,410   7   2,417
Average earning assets $ 18,303 $ 17,583 $ 35,886 $ 14,792 $ 10,479 $ 25,271
   
 
Six Months Ended
June 30,
2014   2013

North
America

  International   Total

North
America

  International   Total
Average consumer finance receivables $ 11,691 $ 12,406 $ 24,097 $ 11,200 $ 3,615 $ 14,815
Average commercial finance receivables   2,158   4,715   6,873   882   1,725   2,607
Average finance receivables 13,849 17,121 30,970 12,082 5,340 17,422
Average leased vehicles, net   3,867   2   3,869   2,150   4   2,154
Average earning assets $ 17,716 $ 17,123 $ 34,839 $ 14,232 $ 5,344 $ 19,576
     
 
June 30, 2014 December 31, 2013

North
America

  International   Total

North
America

  International   Total
Consumer finance receivables $ 11,978 $ 13,152 $ 25,130 $ 11,493 $ 11,757 $ 23,250
Commercial finance receivables 2,373 4,741 7,114 1,975 4,725 6,700
Leased vehicles, net   4,747   1   4,748   3,381   2   3,383
Ending Earning Assets $ 19,098 $ 17,894 $ 36,992 $ 16,849 $ 16,484 $ 33,333
     
 
June 30, 2014 December 31, 2013

North
America

  International   Total

North
America

  International   Total
Consumer
Pre-acquisition consumer finance
receivables - outstanding balance $ 584   $ 255   $ 839   $ 931   $ 363   $ 1,294  
Pre-acquisition consumer finance
receivables - carrying value $ 510 $ 245 $ 755 $ 826 $ 348 $ 1,174
Post-acquisition consumer finance            
receivables, net of fees   11,394     12,897     24,291     10,562     11,394     21,956  
  11,904     13,142     25,046     11,388     11,742     23,130  
Less: allowance for loan losses (515 ) (60 ) (575 ) (468 ) (29 ) (497 )
Total consumer finance receivables, net   11,389     13,082     24,471     10,920     11,713     22,633  
Commercial
Commercial finance receivables, net of fees   2,373     4,741     7,114     1,975     4,725     6,700  
Less: allowance for loan losses   (17 )   (23 )   (40 )   (17 )   (34 )   (51 )
Total commercial finance receivables, net   2,356     4,718     7,074     1,958     4,691     6,649  
Total finance receivables, net $ 13,745   $ 17,800   $ 31,545   $ 12,878   $ 16,404   $ 29,282  
     
 
June 30, 2014 December 31, 2013

North
America

  International   Total

North
America

  International   Total
Allowance for loan losses as a percentage of
post-acquisition consumer finance
receivables 4.5 % 0.5 % 2.4 % 4.4 % 0.3 % 2.3 %
Allowance for loan losses as a percentage of
commercial finance receivables 0.7 % 0.5 % 0.6 % 0.9 % 0.7 % 0.8 %
 
 
June 30, 2014 June 30, 2013

North
America

International Total

North
America

International Total

Loan delinquency as a percent of ending
consumer finance receivables:

31 - 60 days 6.3 % 1.0 % 3.5 % 5.3 % 0.6 % 3.4 %
Greater than 60 days 2.1   1.0   1.6   1.8   0.6   1.4  
Total 8.4 % 2.0 % 5.1 % 7.1 % 1.2 % 4.8 %
 

The Company analyzes portfolio performance of both the pre-acquisition and post-acquisition consumer finance receivable portfolios on a combined basis. This information allows for the ability to analyze credit loss trends of the combined post-acquisition portfolio to credit losses on the combined portfolio:

   
 
Three Months Ended
June 30,
2014   2013

North
America(a)

  International   Total  

North
America(a)

  International   Total
Charge-offs $ 157 $ 34 $ 191 $ 116 $

116

Adjustments to reflect write-offs of the
contractual amounts on the
pre-acquisition portfolio   15   2   17   36 $ 5   41
Total credit losses $ 172 $ 36 $ 208 $ 152 $ 5 $ 157
 
 
Six Months Ended
June 30,
2014   2013

North
America(a)

International Total

North
America(a)

International Total
Charge-offs $ 349 $ 66 $ 415 $ 248 $ 248
Adjustments to reflect write-offs of the
contractual amounts on the
pre-acquisition portfolio   39   5   44   89 $ 5   94
Total credit losses $ 388 $ 71 $ 459 $ 337 $ 5 $ 342
 

(a) Total credit loans on the portfolio in the North American Segment is composed of repossession credit losses and mandatory credit losses.

The following table presents credit loss data (which includes charge-offs on the post-acquisition portfolio and write-offs of contractual amounts on the pre-acquisition portfolios) with respect to our consumer finance receivables portfolio (dollars in millions):

   
 
Three Months Ended
June 30,
2014   2013

North
America

  International(a)   Total

North
America

  International(a)   Total
Repossession credit losses $ 172 $ 36 $ 208 $ 152 $ 5 $ 157
Less: recoveries   (105 )   (16 )   (121 )   (94 )     (94 )
Net credit losses $ 67   $ 20   $ 87   $ 58   $ 5 $ 63  
Net annualized credit losses as a percentage of
average consumer finance receivables(b) 2.3 % 0.6 % 1.4 % 2.1 % 0.3 % 1.4 %
Recoveries as a percentage of gross
repossession credit losses: 61.5 % 62.2 %
 
 
Six Months Ended
June 30,
2014 2013

North
America

International(a) Total

North
America

International(a) Total
Repossession credit losses $ 388 $ 71 $ 459 $ 337 $ 5 $ 342
Less: recoveries   (233 )   (33 )   (266 )   (208 )     (208 )
Net credit losses $ 155   $ 38   $ 193   $ 129   $ 5 $ 134  
Net annualized credit losses as a percentage of
average consumer finance receivables(b) 2.7 % 0.6 % 1.6 % 2.3 % 0.3 % 1.8 %
Recoveries as a percentage of gross
repossession credit losses: 60.1 % 61.2 %

_______________

(a) Repossession credit losses for International Segment includes the write-down of receivables to net realizable value.

(b) Average consumer finance receivables are defined as the average daily receivable balance excluding the carrying value adjustment.

   
 
Three Months Ended
June 30,
2014   2013

North
America

  International   Total

North
America

  International   Total
Annualized operating expenses as a percent of
average earning assets(a) 2.9% 3.4% 3.1% 3.0% 3.1% 3.1%
 
 
Six Months Ended
June 30,
2014 2013

North
America

International Total

North
America

International Total
Annualized operating expenses as a percent of
average earning assets(a) 2.9% 3.5% 3.2% 3.1% 3.1% 3.1%
 

(a) Excluding lease and acquisition and integration expenses.

Contacts

General Motors Financial Company, Inc.
Investor Relations contacts:
Susan Sheffield, 817-302-7355
or
Stephen Jones, 817-302-7119

Contacts

General Motors Financial Company, Inc.
Investor Relations contacts:
Susan Sheffield, 817-302-7355
or
Stephen Jones, 817-302-7119