Just before the Fourth of July holiday began, Santander Consumer USA Holdings made a series of leadership changes, including the appointment of Jason Kulas as chief executive officer to succeed Thomas Dundon, the finance company’s founder who will continue to serve as a member of the SCUSA board of directors and as a senior advisor.

During a conference call late Thursday to discuss the moves in more detail, Kulas refuted any notion of SCUSA’s moves being related to some kind of negative situation. An investment analyst phrased his question by saying it was “odd” Dundon no longer is CEO but has still has a seat on the company’s board.

“There’s no issue underlying any of this,” said Kulas, who joined the company in 2007 as chief financial officer after covering SCUSA since its founding as an investment banker at JP Morgan.

“I think to a certain extent this is part of natural progression of things, where you have an entrepreneur who founds a company and grows that company and at some point decides to monetize his interest in the company,” Kulas continued. “Tom has been a driving force and we can’t say enough how much the debt of gratitude this company owes Tom for what he's done for us over the years. But he’s decided that he's going to move on and do other things but among those other things, still be involved with this company that he founded and still cares a lot about.

“Tom is one of the great minds in consumer finance. And he’s been in the industry a long time and we intend to fill our board with people who can add that kind of value,” Kulas went on to say.

After successfully growing the SCUSA business during the last 20 years, including nine years as CEO, Dundon has decided to pursue “new opportunities,” according to the company.

“I am proud to have been part of the company’s success and fortunate to have worked with so many outstanding, driven colleagues over the years,” Dundon said. “This is a great company, and with Jason Kulas at the helm, supported by our talented management team, I am confident SCUSA will become an even stronger player in the consumer finance industry.”

With Dundon in charge, SCUSA grew into one of the market leaders in auto finance as well as forging a relationship with Fiat-Chrysler to create a new captive, Chrysler Capital. SCUSA reported first-quarter net income of $289.2 million, or $0.81 per diluted common share, up from $81.5 million, or $0.23 per diluted common share, a year earlier.

The Chrysler Capital penetration rate rose to 30 percent in Q1 as SCUSA indicated the company’s first-quarter total originations and asset sales came in at $7.4 billion and $1.5 billion, respectively.

Not surprisingly, investment analysts also wanted to know how SCUSA will maintain the kind of performance with Kulas now in charge, inquiring if the finance company will shift away from subprime originations and focus more on prime business because of its relationship with Chrysler Capital.

“I think we do have a big focus on prime because we feel like a lot of our growth opportunity is in growing prime to the Chrysler relationship,” Kulas said during the call. “So, I'd answer that question two different ways. If you’re talking about our balance sheet, absolutely not, we will continue to look at retaining the highest margin assets on our balance sheet, which tend to be the more non-prime assets.

“If you look at our service book, our managed book, we do think that book will continue to trend up in the credit spectrum because that’s where the growth is as we originate to sell assets to third parties. That has been the strategy and will continue to be,” he continued.

Earlier during SCUSA’s call, Kulas described the company’s strategy as being “set,” in light of the organization demonstrating what it contends are strong expense management and ability to scale despite increases in regulatory and compliance costs.

“That’s not to say that we're not going to continue to look for ways to make things better because that's cultural here,” Kulas said.

“But the strategy has always been really simple and straightforward for us,” he continued. “We’re focused on originating assets, leveraging data, and making good risk decisions when we originate those assets. Once we have an asset on the book, efficiently collecting those assets in a way that’s compliant with laws and regulations and then, looking at ways to optimize the mix of assets that are on our balance sheets versus those we sell to third parties and retain servicing on.

“We’re going to continue to do that,” Kulas went on to say. “We feel like we got a lot of running room with what we've already built. And as opportunities present themselves going forward, I think we’ve got a team that is well-positioned to take advantage of them.”

Regulatory discussion

Earlier this year, federal officials said SCUSA agreed to pay at least $9.35 million to resolve a lawsuit by the Department of Justice alleging that the finance company violated the Servicemembers Civil Relief Act (SCRA) in connection with vehicle repossessions.

Officials explained the settlement covers the improper repossessions of 1,112 vehicles between January 2008 and February 2013.  They pointed out the proposed consent order represents the largest settlement for illegal vehicle repossessions ever obtained by the United States under the SCRA.

SCUSA remains in discussion with the Department of Justice over a subpoena the company received last year elated to origination and securitization practices; a situation that also prompted investment analysts to ask Kulas for an update.

“We don’t think (the management change) has any impact on the reviews in discussions with regulators,” Kulas said. “We do, obviously, have an ongoing regular discussion with the Federal Reserve and have had discussions with them as we were able to today about the transaction.

“Our regulatory standing has everything to do with the process and controls and oversight we have from SCUSA and those kinds of factors,” he continued. “And, we think very little to do with this only because we think this is a fairly straightforward story with the succession plan being enacted that has been in place for a long time.”

Other leadership changes

The elevation of Kulas to CEO prompted SCUSA to announce a handful of other management shifts.

The board appointed lead outside director Stephen Ferriss as interim chairman, effective until the July 15 SCUSA annual meeting.

Jason Grubb, chief operating officer of originations of SCUSA, will succeed Kulas as president. Grubb joined SCUSA in 2004 as senior vice president of servicing. He was chief operating officer from January 2007 until last October when he took on his most recent post.

Prior to joining SCUSA, Grubb held positions at WFS Financial, Nissan Motor Acceptance Corp, and Commercial Financial Services.

In another move, Jennifer Popp has been appointed interim chief financial officer of SCUSA while a search is underway for a permanent replacement. Popp has served in the finance industry since 2001 and joined SCUSA in July 2012. She most recently served as chief accounting officer and deputy chief financial officer.

In connection with Dundon’s departure as SCUSA’s chief executive officer, Santander Holdings USA will, subject to the applicable regulatory approvals, exercise a call option to acquire all of the approximately 9.68 percent of SCUSA common stock held by DDFS LLC, an entity solely owned by Dundon.

According to filings with the Securities and Exchange Commission, Dundon received approximately $928 million.

Scott Powell, chief executive officer of Santander Holdings USA and head of Santander’s operations in the United States, said: “We thank Tom for his vision and leadership as a founder of SCUSA, and a driver of its growth and success.

“Jason Kulas has the experience and strategic vision to lead SCUSA. Jason has been with SCUSA for eight years and has a deep understanding of its business, operations and people. I am confident in his ability to lead this business into the future,” Powell went on to say.

As CFO, Kulas oversaw the company’s treasury, accounting, financial planning, capital markets and corporate strategy divisions. Kulas became president in 2013 and, since SCUSA’s initial public offering last year, has overseen the company's corporate development, asset management, investor relations and various regulatory functions including the comprehensive capital analysis and review.

Kulas will join the board of directors of SCUSA and, subject to regulatory approvals, Santander Holdings USA.

“I am honored by the board’s decision to name me as Tom’s successor,” Kulas said. “Tom was pivotal in growing the company from a local start-up to a leading, national technology-driven consumer finance business.

“The changes in Tom’s role at SCUSA have been amicably agreed and are unrelated to the company’s performance or regulatory standing,” Kulas continued. “On behalf of the company’s management team, I thank him for his valuable contributions and wish him well in his future endeavors.

“This is an exciting time for the business and I look forward to working with my colleagues as we seek to grow the business in the months and years ahead,” he concluded.