Along with acknowledging the reception of additional investigative subpoenas, General Motors Financial posted across the board growth in North American loan originations during the third quarter, thanks in part to a prime financing program that rolls out fully to the parent automaker’s network of franchised dealers on Nov. 1.

Altogether, GM Financial’s North American loan originations came in at $1.957 billion during the quarter that closed on Sept. 30. The amount broke down to be a $905 million figure for the company’s AmeriCredit channel, contracts originated on vehicles sold by non-GM dealerships. The figure marked the fourth quarter in row of growth, and up from $673 million the division posted after the close of the fourth quarter of last year when the streak began.

GM Financial’s North American Q3 loan originations on new vehicles climbed to $680 million, up from $392 million in the year-ago quarter. Financing for used vehicles at GM stores also posted a healthy year-over-year, increasing from $156 million to $372 million.

“The GM channels, both new and used, increased significantly primarily because of the rollout of our prime program, which not only added incremental prime volume, but also enabled us to be more relevant to GM dealers,” GM Financial president and chief executive officer Dan Berce said.

“We now have a one-stop shopping opportunity with a full suite of products. That has increased our volumes across products, loan lease and commercial,” Berce continued.

And speaking of leasing, GM Financial’s North American lease portfolio stood at $5.8 billion at the close of the third quarter. That’s up sequentially by $1 billion. Canadian lease volume softened by $176 million quarter-over-year, but Berce said, “I want to point out that the Canadian volume, again, is going to fluctuate depending on lease offers from GM Canada. Nevertheless, year-over-year, our volume is more than double in Canada.”

In the U.S., GM Financial generated $1.417 billion in new-vehicle leases in Q3, the second quarter in a row the finance company produced more than $1 billion. Berce indicated GM Financial now handles about a third of the leasing volume for the parent automaker in the U.S.

Furthermore, more GM dealers are using the finance company’s commercial offerings. GM Financial’s total outstanding balance of commercial finance receivables stood at $7.2 billion at Sept. 30, with $2.5 billion of that amount connected with 406 North American dealers. Floorplan financing represented the largest share of the North American portfolio at 88 percent.

“As we’ve said before, now that we've got a full suite of products and as we continue to roll out prime in the U.S., we do expect to see growth here, even increase a bit, from the steady pace it’s been on,” Berce said.

Top-Line and Consumer-Credit Performance

As an entire company, GM Financial posted earnings of $158 million for the third quarter, down slightly from the $161 million the company generated a year earlier.

The company’s earnings for the nine-month span that ended Sept. 30 totaled $478 million, up from $445 million during the same stretch last year. The 2014 earnings include $7 million and $29 million in pre-tax acquisition and integration expenses for the quarter and nine-month period, respectively.

GM Financial reported that consumer finance receivables 31-to-60 days delinquent constituted 3.9 percent of the portfolio at the close of the third quarter, marginally higher than the 3.8 percent reading recorded a year earlier.

Company accounts more than 60 days delinquent made 1.7 percent of the portfolio as of the end of Q3, compared to 1.5 percent a year ago.

Annualized net credit losses were 2.0 percent of average consumer finance receivables for the quarter compared to 1.9 percent a year ago. For the nine-month span, annualized consumer net credit losses were 1.8 percent, compared to 1.9 percent through the first nine months of 2013.

“Credit performance in North America remains historically strong, albeit normalizing off of those levels,” Berce said. “You can see the seasonality here where the March quarter is typically our best in terms of delinquencies and then it weakens throughout the year. The June quarter is our best in terms of losses and it also weakens from there on, seasonally.

“Nevertheless, we realized strong metrics, 3.2 percent loss rate in the September quarter. And fairly steady delinquency rates, both year-over-year and sequentially,” he continued.

“Our recovery rates also are seasonal. They are typically weakest in the September and December quarters. We did see, year-over-year, about a 200 basis point decrease in recovery rates. That reflects the softening that we've seen in the used-car market throughout 2014,” Berce went on to say.

Investigation Update

In its filings with the Securities and Exchange Commission, GM Financial reiterated that it was served with a subpoena by the U.S. Department of Justice directing the company to produce certain documents relating to our and our subsidiaries’ and affiliates’ origination and securitization of subprime loans since 2007. That demand came in July in connection with an investigation by the Department of Justice in contemplation of a civil proceeding for potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

“Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loans and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loans,” company officials said.

Then in September, GM Financial said it was served with additional investigative subpoenas to produce documents from state attorneys general and other governmental offices relating to its subprime auto finance business and securitization of subprime auto loans. 

“We are investigating these matters internally and believe we are cooperating with all requests,” GM Financial officials said. “Such investigations could in the future result in the imposition of damages, fines or civil or criminal claims and/or penalties.

“No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect us or any of our subsidiaries and affiliates,” they added.