Santander Consumer USA (SC) 30 Oct 192019 Q3 Earnings call transcript

Good morning, and welcome to the Santander Consumer USA Holdings Third Quarter 2019 Earnings Conference Call. Today's conference is being recorded. At this time, all parties have been placed in the listen-only mode.

Following today's presentation, the floor will be opened for your questions. [Operator Instructions]. pleasure Investor your Relations. my Vice Evan now of President is to host, introduce Black, It Evan, floor the is yours.

Powell, room Thank thanks you, Chief have Financial the Fahmi everyone and Chief Scott we for joining Officer. Officer; Audra. today’s call. Karam, Good and President and morning Executive In

believe forward-looking. measures We’ll and GAAP be As with Risk those will you’re maybe respect aware, that also our and to to of XX, the made statements refer certain statements. XXXX. reference is X-K Factors financial non-GAAP public we are these investors reconciliation for today Please SEC in useful October included filings today, a to measures

with And Powell. it Scott to I'll that, turn over

results. am Good how Thanks Thanks, morning, I at be call to for want everybody. to Consumer. to CFO here our pleased new our Karam, say with third Santander Fahmi I Evan. joining do sitting quarter discuss our

and is to you U.S. him do know you Santander I know job CFO Carlos recent a here know Head role. I roles strategy, now us. working will great continues a most has development been number years. Alvarez and Analytics. including all but with many in his and has Fahmi current As Juan already, all of He Pricing miss work Fahmi different of for corporate had our

all It’s knows getting So like job. him inside to great absolutely think will the and Fahmi. the for have you business and right he out. He to person is here know I

here, great Fahmi. to So have you

and of highlights. a overview turn So our I'll the X give to let's you presentation, Slide in quick

Originations process. dealer total in [funding] X%. had quarter totaled especially XX% which on quarter focusing earnings experience, million, after-tax a So the very on billion $X.XX for ROA at in strong the net improving our year-over-year. income $XXX We in $X.X came share came on per We share, up origination the our remain and was really per originations. focused operations at is in volume

really the in did with were Bank, came up we up by driven is XX%. third during prime at $X.X billion that's they business billion where Chrysler volume of non-FCA $X.X quarter. volume loans have billion, program -- $X.X And at Our core the prime which our Santander XX%.

is were XX%. leases can in year-over-year, Q&A were our year-over-year. down And third more down sure. XX% up originations quarter, year-to-date which about And XX% talk though reflect and X% billion, $X.X for penetration we Total we're help all the Chrysler during Chrysler and were continues the Chrysler of from FCA in them to a at with successful. again is relationship with rate doing work ago, the XX%, be to came which which up strength year our that

were to mover we results, also pleased report second the And released, nearly is which Chrysler percentage a points group. which compared were year Capital on ago. versus JD peer to the Power increased survey, previous We're recently largest X the

So dealers. that satisfaction very on this important to area to demonstrates service dealer continued our progress, improving improving focus our because and continue of we

our securitization environment our a interesting consumer. active the I to billion performance a what's in $X.X On of from side, from supported and remains benign market. strong, portfolio’s very credit of three the We one platforms. successfully really we funding execute continue by healthy ABS credit very is each transactions, did And think

comparison interesting XXX the looked XX you've decreased at So year-over-year, quarter-on-quarter ratio I'm points delinquency of but too. basis is sure this kind to XX what's already, day our and

basis seasonally. points, quarter. what the just at up delinquency year, day if the we're basis XX were you flat. quarter-on-quarter, second you year basis XX points, we a expect of would to basically points. year-over-year, we're look points. plus So, we're up and in we quarter-on-quarter ago, XXXX, -- year, down pretty XXX basis XX This XX We're again were ratio, And This flat because up

reflects inherent that our credit think portfolio. the kind I have quality So we in of

Our gross that are as Net driven X.X% the XX%. another very ratio very XX.X%, our positive quarter charge-off rate recovery which down recoveries TDR is sign in to very is strong also XX at obviously points basis XX% charge-off by points, strong and basis is up ratio year-over-year. down XX balances

remain do on series by our here. is expenses This up is We year disciplined one-timers. X.X% increase really But all driven expense to X.X%. very a ratio that of

out, So those would if back expense flat. ratio you be our

the environment, prices at the on to car we exceed on continue the people's of track keeping remain all macroeconomic [end] the super then And focused trends. that, of expectations Used year.

at obviously compared it’s the connection still a New bit Everybody to very very industry. particular last are And car year and little looking defaults between level. understands unemployment in strong. consumer down healthy but just at this sales a itself, economy the

all So strong, very consumer remains confidence strong. that remains

feeling macroeconomic we're about environment. pretty So good the

I'll So it with over that, turn Fahmi. to

Thanks everyone. Scott. And morning, good

environment is confidence influenced lending remains rates business. Turning improve that and our said, to supportive The indicators of environment resilient what market continues to to performance. for Slide on Consumer X a originations balance the still labor key is environment. our strong saving Scott just as economic some increase. household and macroeconomic continue Building consumer the high, sheets credit support

to the are to stable remains used historically robust. for we've high at regards be sales, moderate new vehicle and industry quarter, demand continues levels. experts out In consumers a car seen we third some forecasting that The in as of are play still decrease market but

factors On influenced Slide are our severity X a there and performance. loss credit few that key

the lanes, the which rate, auto related recovery all year recoveries during XX% from quarter. prior represents XX.X%, auction auction up from was Our

versus quarter quarter, Our recovery non-metal and up XX.X% bankruptcy which deficiency the rate includes same proceeds, year. last sales was the in also

the are we lanes some auction did auction September. in overall to begin softening positive, in observe While trends

any on seasonal watching very we'll months. typical patterns, but be of Some trends expected in is coming for closely the this based

non-prime a trends stable compared consistent Additionally, overall and our industry with portfolio. points delinquency last securitization relatively net to data year, loss

driven XX%. in our $X Chrysler auto last XX% trends. the than Core the driven quarter loan Turning and to compared offers year Prime exclusive originations Chrysler prior the business. from origination board another increased flow is greater originations Similar Overall, loan That's by we is year Capital quarter billion in Slide coming total an of X for with had last our from loan the across by volume. more healthy XXX XX%. increase program. Chrysler which quarter Capital than SBNA to originations to segments, quarter. the increased growth

progress profile XX% is of originations lease last volume competitive volume while our the disciplined year Our third to strong to our with risk remain position. Capital origination a Chrysler our originations and growth maintaining indicative our quarter and FCA, the processes. strength decreased The versus quarter dealers to year. competition are and in with of last execute. our due non-prime continued our our ability We to with the return FCA volumes partnership of respect due

FCA support our to our with while We strong prime expect loans maintain SBNA market share in to continuing to program lease. continue

Page And to XX%, penetration our quarter FCA that with the average from which up at in point, rate you on quarterly XX% X, can shows year. the see results third last

We mutually find increase drive continue and to ways volume to sales FCA. beneficial together work for our to

to serviced Slide million the others this in X, income Turning for servicing quarter. platform $XX fee generated

fees, and our addition fees $XX SBNA line commissions other those origination million In item. are fees, in to servicing

SFO via we $X.X billion previous the programs our to our quarter balance flow continue the in added increase which platform drove the agreement SFO as to run with SBNA, During origination off.

Net versus $XXX increase financial driven prior XX% expense due increased Net and year loan prior relatively contribution a growth our X for in due lease our Slide to in on balances. X% lease Interest XX% leased lower vehicle for with Interest review and derivatives continued finance portfolio. of versus increased the balances. receivables debt, receivables from year outstanding flat the million, income the line our performance loan to income loans higher levels higher quarter average increased quarter. quarter to Moving the of quarter. the by to and in

for other lending discounts. in by in market the $XX $XXX in credit personal for the losses Provision quarter related driven portfolio, comprised sale and of income million million included $XX offset decrease million which $XX balances. $XX million is million of charge-offs lower the by adjustments down, to was customer $XXX Total million held to TDR decreased quarter in

Slide prior early basis delinquency Continuing late XXX decreased stage year delinquencies stage XX, versus points while XX points. to the quarter decreased basis

lower in as have lower improved modification inflows past, and time TDRs. As delinquencies normalized, remains. loan cleaner a delinquencies, have we Over impact levels charge-offs an into have and referenced on modifications have the portfolio

of third recovery rates. XX points Regarding increased last gross basis ratio ratio charge-off charge-off year XX.X% by points X.X% the third from driven quarter losses, year. decreased XX of the strong quarter last RIC from The net basis the

and provided the at Our of are guidance charge-off credit XXXX. mid have we been stable net consistent X% the metrics beginning with

in These average million is quarter Turning by another were charge-off loan contributed XX change, more million charge-offs up Net figures billion million. versus Breaking the balances, $XX which last down loss Slide other to dollars. higher higher rate, million review for to were gross $XX and year. due than decreased $XX RICs better $X.X were combined year items recoveries which $XX the million. offset in $XXX to to attributable from prior to a losses

million an XX. the decrease regards the last higher $X.X which inflows $X to due increase end million reserve attention the Turning payoffs million end reserves of new totalled walk, the unfavourable than this which XX.X% on the XXXX credit adjustments. allowance quarter. a from increases charge-offs. due At $X $X quarter, increased of million to migration represents $XXX These to allowance the decreasing allowance In our to were due billion, and originations $XXX quarter, provisions Slide and QX by in increased offset the TDR more reserve at to and ratio for by losses performance million into

Now Slide TDR TDR levels. versus decreased consumer lower year to downward in million of the quarter, given due balances strength prior the XX lower trend more their and modification TDRs continuing let's to detail. turn inflows $XXX the to discuss

reserve As generation the the of the lower the trend balances we rest in of could year. to allow mentioned past, TDRs throughout slower

reserve, the for the Turning quarter expense prior prior up quarter. in been totalled expense expense, our X.X%, by expense ratio to this would XX, have one-time legal the X.X%, a in driven from our quarter ratio year with excluding line Slide

remains XX, position committed continues nearly liquidity access with deep consistent capital strong, SC markets. of Turning and total demonstrate our to $XX to billion. to funding Slide the

treasury active Our shelf a in ABS one each to be transaction markets capital quarter the issuing combined billion. $X.X of continue and active for teams

commitments diversification is lease quarter transaction private which to fourth late our of through continue $X.X Subsequent transaction and since important SRT. $XX.X we this We funding lender and XXXX, to new is leases. also funding end the our totalled ABS in for billion financings inception lease also platform billion. the closed diversify This which

year. turning Finally ratio down versus quarter XX, the prior XX.X%, XX.X% for from to CETX was Slide Our

purchasing to plan share million $XXX our million the We during repurchase approximately or quarter. continue execute X.X X.X previously billion announced shares

CECL. on our QX into I'll provide going a update Before guidance, XXXX brief

portfolio losses. to our TDR credit our reminder already loss is the a portfolio lifetime increase to for a lifetime XX% will non-TDR also allowance reserved XX% the CECL, with we XXXX on adoption As of CECL basis. reserved at implementation. for In expect be Accordingly,

We basis. ratios line also years to phase-in respect regulatory to the impacts with over on capital four amounts straight and a expect

capital not strong base, our to announced previously our do Given we distributions. capital CECL expect impact

to quarter is our accordingly. portfolio third fourth were seasonally personal turning also is and The performing the quarter, from weakest lending impacted for heavily the quarter the the guidance the Now to portfolio. the increased of required the mark the sale quarter is personal most seasonally fourth held we remember for fourth lending quarter and by to that balances portfolio quarter

benefited some resolved mind the keep we legacy to legal XXXX QX period this that quarter. which comparing all in we matters during when should Additionally,

be my comments noted unless QX of the will relative and lending. personal So will impact otherwise to include

the with other be fourth income million We and line to trend. seasonal X% increase $XX million expect in quarter-on-quarter $XXX quarter is with line Provision last interest pattern. in X% expense down in to finance net to year's to expected

million $XX in $XX than were be some this sale the We the seasonality of higher by one-time normal portfolio. driven total held to income Operating quarter expenses period. expenses anticipated Bluestem expect other for million to to due

quarter million fourth million $XX to expect the to in $XX We expenses be better.

are to earnings all call our full exception provided QX tax metrics guided XXXX of year with ranges guidance, our with on rate. our we in line the Regarding our relatively effective the previously we've

let's those go So points again. through once

to in to year, the ratio growth due X.X%. tax stable XXXX, For And other rate, the the interest income single-digit full state around XX% regarding expect net be mid X% electric the versus finance full mid and lower charge-off and we rate year XXXX vehicle we expense a tax currently for in expect taxes higher ratio the a tax credits. net range

Scott? Scott. over Before the would we to begin Q&A, to I turn call like back

points work as on those our really key pricing continue better I making back our how that on operations, this Thanks, to Number make smoothly. on and I'd experience, we've significant changes Fahmi. operations done, creating to risk a to side our we better good management and we as funding calls. well sustainable dealer progress the by fine in Well, I do seeking one, we shows credit a come like progress four then tuning made improve prior sure we're side servicing impact made and feel had and because constantly what quarter about risk our not pricing operations. have We're do results. think and But to

Having example here and great that. operating lot Number did we I my Fahmi time with the and on as of we is team. expenses remain a of very two, Fahmi our spend positive mentioned a remarks, Number today it, building disciplined management opening deepening leverage. three,

that broader we’ve our standards, built to improved run we Our results to and at financial speak as management continue out our this the business institution point depth. team large

of good of also goes U.S. the operations. has is depth team Broderick, Another a Head she has It built management running She broader the recently been in that taken in that, Consumer. we role example the Sandy announced Operations has Santander which at Santander operations. who here to of

four number is with And then our Chrysler. relationship

continue really to our to partner. hard We support work

we create performance to partnership. mutual ways continue that Our And reflects with to them. work day of originations every value find strength the to new

with Operator, it questions. we'll up open for So to over you. that,

Thank you.

questions. Suisse. [Operator Moshe first We'll open the go to Credit We will at now Orenbuch for call Instructions].

James is morning. for actually Ulan Good Moshe. taking question. my on Thanks for This

And congrats, there. First, wanted to I see capital. to Fahmi. ask you Good about

XXXX billion You market buyback do $X is that think $XXX the the in get to repurchases? And reasonable in allow to repurchase had share as and outstanding about what repurchase. far float, you with do just million you you XX% given as what

Yes, thanks for the question.

million did $XXX we million purchase stated, or around during you quarter. As X.X the shares

And As $X.X And as approach conditions. accretive all through we is our be strategies billion announced the we thoughtful look as up-to-amount. an did to to monitor to opportunities highlight available us, previously we in to other shareholders. our market that's continue we last quarter, continue very the to are of deploy continue well investment as execution buyback to the capital

So I'm comment to to do XXXX. we're going on in going what not

our our We approach are and going to thoughtful very deploying continue capital to to in be shareholders.

related. quick up a follow just And that's

fourth of ability or how first do couple on -- think months. return? approvals got Any -- You've or quarter capital would CECL phasing you impact to thoughts in that in a returns a on your just capital

we do said Yes, our buybacks. prepared share think impact that CECL and remarks any of announced the previously I the during expect we to impact

macro CECL on on in the portfolio environment. the we're and and We our capital impact function on view strategic and a accretive have our our we including seeing a ultimate impact forward confident will priorities, shareholders. that of trends of the to we're strong capital can opportunities absorb execute growth still that base, deploying very the be at credit time that portfolio looking CECL, mix The

bit The think a it on implementation you will that get we price is one day to underwrite underlying of not day little change that as guidance. also we fundamentally are not lifetime give as have economics our we CECL the bit give we deals. loans worth closer and work we to do do do or details little mentioning to not we the more implementation a before -- have will XXXX of be way believe we changed. CECL risk also So I and able

thing timing So it's more a anything. than of

to We SIG. Micenko Jack next at will go

probably down historically you're obviously but somewhat rates quality. you about portfolio some Looking the also the higher liability are a little guys come at inputs thinking the have there, remixing -- sensitive, of NIM and

were where may gone rates change in to and drivers thinking of maybe to this Just begin or something does through we have that? are it of were sort historically that XXXX -- versus get week, what the not inflect NIM some today the if

NIM you the the of mix the Part mentioned portfolio. is of story as

is a they’re QX. we than throughout cost than therefore it and a to XX about are as a -- I assets. balance our ticked believe year, grow, yield were is a product lower in better points relatively of part As continuing basis typical sheet, has non-prime debt lease our we bigger prime The prime down lease is of the

We as some be that will further impact we see of and able to do our credit new facilities reprice securitization. continue to we

of So improve I the and through do end the we XXXX. the get trend think to will continue as year

interest may rates generally take origination share On front as hold we and Obviously segments, we are the to yield. some reduce able in fall choose new price. to

competition be have come mindful But priced. the we're higher rates and generate as is we course down to speaking able margins. competitively where to of generally Of be

That’s would same. on that how of doing you're is recovery assume you’ve you're to How could points, just in how is car really TDRs I because when people is modification and time And basis it Curious which the and the so you compressed how than year-to-year. changed street give you of much the directionally much better is still recovery of taking think pretty of way increase changed at methodology? back. as if better then parse the I moved the TDRs, that XXX the impressive much prices pricing used out holding auction you’ve much less rate, think rate frame, the much

you. above sales of It's little deficiency the part be impact our The honest increase a big on a recovery has of overall bit with in quarter-over-quarter. to of all rate timing

the pretty point with growth you that's what is to only So I consistent seeing. would auction and just industry the

bit goes, mix But you I the portfolio specific of portfolio far seeing. a the have do far vehicles is industry our do see newer because reflective very us think to we what to rate. As little is a benefit as as of as recovery the in

move next We at Mark to will Barclays. DeVries

I press decline maybe profitability get why hoping serviced that what declining others in thanks. little the more of color it’s release and a Yes, fee having for a that us portfolio, Could the that kind as is on more sense impact on grow income you driving mixed. give in of business? you kind of the overall what's was is you little the to the indicated think fee servicing of I

the others partners. a platform Yes, I several is different serviced think mix for of

origination remind along commissions I to As with further portfolio million of grow get a on our volume the haven't fee. see fee. based and grows. part nature the our you agreement fees with benefit flow But which we we definitely have is $XX an want that the origination of fee, other line items, the there do will the we programs, just as of due origination SBNA, as charged flow to you the SBNA,

as to then And willing we useful expect on to you're to we some charge-offs -- really thoughts would the your it on look to be which into color what get extent on XXXX? can

mean line gross higher I Yes, our are expectations. in year-over-year, little bit but charge-offs with a

past quarters performance more recent seen the if five across quite of our most on across or we've some would As channels in have all we've time modifications in some are early four of that does indicators of years. of vintages we’ve some the over say and last communicated our best month-to-month XXXX in the some and over impact at performing the more of segments, charge-offs. vintages, look an our several talked vintages, lower recent monthly that about you really I our

we're on positive or we us for today, So assets risk red in be less we very we’ll the on the market, our But the balance focused pause optimistic be we any flags that on have we're as pricing would booking. sit opportunities give sheet. not on put we're that the that here seeing any

just that good pretty credit year we quality year that delinquency And add Fahmi what profitability said looks this I on Yes. feel next which has perspective about we of what a early originationss Fahmi -- from just really vintage. good of to what positive been said reads. I about like given also Fahmi saying would was think from And Mark, feel based is

to of yet terms what rate. But year. happens equal we including any there and broader next Obviously, So, isn't to that's year credit pretty pretty to people we gross in feel loss are all we trends yes, there subject in overall that all that reason environment. positive next and positive being as about believe look things the there, the and things

next Hecht go We’ll to John with Jefferies.

that the one-time rate quantify expense run you know in quarter? can legal of kind core what earnings so is, question just we First were

legacy coming We're I and with point XX-Q. not legal I’d is matter, going to you the comment it a point ratio take and that we not that also the our the will reserve, off, but I new you consistent is our on as quarter. up John disclosure will is to we it one-time prior guidance a in our to say, -- matter is What extent

Okay. your you return there on year-over-year -- factors, driving that's and end can best Maybe down the the margins going partnership. very talk but then what's particularly change based in trends And focus wasn't more on on in other the on in lie? strong leases it’s origination capital markets or where at looking is that Chrysler about that

think of we I are we last our quarter coming no, we had where that indication FCA amendment off that quarter. Yes, announced the last with an it's partnership

originations along. strong seen all year You’ve really

partnership quarters. us it helps a helps very FCA part pleased SBNA helps full SBNA also executing over big more bank, of touched across our us, with support flow It several it obviously but we’ve competitive it also So -- on the the FCA that. spectrum. and -- flow is with we're our be us a the really last of helps relationship it it's program it to function helps which credit The program

core as channel. it’s good of Chrysler at I So our growth look really a story originations and

last then Okay, question. and

Just constant this we where coming that volumes, the Where commented year? relative on in you think Scott, next this growth growth you there's think do you we in do do past year this modest are sustaining year. cycle? in -- into persistence Where in used car value. a

I think that consumer we of it's which cars. strong think especially it's changing much given theme. just the think I and Yes, new same a and what is demand you value see there, relative strong said, don't to continuation I

people admit to despite pretty out got downturn. well calling significant the there a You we're all hanging there in

New as are for -- you and cars you in little but healthy used a car see and see bit, can cars. value used for the demand used very rate the still level sales down a cars recovery

So I in it think will will some macroeconomic think see barring reason a change continue. Again, the don't is big there I continue. change there. to any it situation,

move Securities. David We'll to Scharf with JMP next

market good Thanks of I a Hi, recovery Whether sustainability a wanted rate want going more out you to -- otherwise auction the there questions. of to total, there get for is sort paper and for sold? my morning. non-auction to gross just may of and of are an increasingly taking how trends the quarter's and gap pure to your to wondering obviously just an recoveries? efficiency yourself get are to And much return sense sell given between or I'm and sort whether maybe recoveries. market terms forward, sort the purchases sense charge-off to increasing because deficiency paper going the represented for in bit there? you better finding the you expectations have this a sort trying of Just of other recovery of anomaly

items doing that drive those it's with I strategy deficiency -- I of think number. mean we're if the in any or balanced that no. change consistently is other respect sales things kind answer to

should will will it point in -- expect to to think, and rates, gross it's the continue the car you'd periodically is gross there. hang that So our hang recovery and of to I too. see and rate there -- delinquency in those happen delinquency was there. the underlying again And overall -- rates eventually I continue to think as prices I rates The in this Fahmi that hang loss about will think so things through connection fall, flow charge-off used making

So…

the SBNA we've broader That's for helpful. in about volume? platform there then And portfolio, I about should coming whether for impressive kind as much onto that we has lenders other program of regarding a follow-up, viewing your Scott, growing mix other In a just volumes proxy of plans serviced for for the it's or developed sense, pipeline and there while heard of be Got that notwithstanding a been how is since the it. be -- serviced performed. as understood. much SBNA or a portfolio. It's that interesting, longer-term others this comments may a pretty kind that being

a the It's program. The timely, you the building out be area David, be staff team for SBNA are in for the think will of and of in a space Fahmi -- more success we outside reasons a the very future in it. adding relationship. can it's important a looking be for others we'll other and the we're because of great We're and us it more really as program, on there said for Chrysler our because question, looking efficient, the whole opportunities that. process for has process are for where do Bank, at But of serviced that yes, is focused and to in for will an we good we opportunities be Santander of we business that as said, SBNA success been huge bunch

We'll next to at go Cyganovich Citi. Arren

non-GAAP thought On consider the potential might some forward? and CECL measures, each the and side, have some about highlighted to going to companies you going finance potential report provision in consumer you for some have whether how might changes they the how change volatility quarter that's

well determined post-day portfolio, in really or by the or as how as shifts be our one impacts really the will how any will view. kind Yes. kind volatility of On grow fast basis macro ongoing implementation, determined be the by of an slowly we

going as volatility dictate grow the we're if an and we forward. will stable have that -- market of big the you won't is as stable, the So If market impact.

consider, haven't any as really to be that new far gotten process in able the that to comment. As we will metrics far

Okay.

mentioned there point? in softening stable that into were through it some that trends You flowed of Is October? of kind at that auction September. Is

October. in into seen that know recent I trend Yes. the September of and part we've first

of board. across kind your the the fourth really -- seasonal is have it reminder, a which heading some -- pressures we quarter, is the As into we're

it's a trend. continue one yet, data this not it's call point to really of trend time, at we'll a So to just it and mindful but It's data not that point very watch. something we're enough in it's

just then long like in sell seems any potential very that time to been And the terms held there has lastly, a of now. portfolio. for in It for Okay. sale that? update Is Bluestem

meantime, though, on for will point Yes, to of for exploring still and it profitable exit alternatives quarter, there is no the very the clean a with $XX kind real a us, the on pre-tax our portfolio update. the I portfolio. We're personal find million In in third business. lending

forward, give As you update, make move an we we sure that we'll will feedback. have if we

to We'll JP of go Shane Morgan. next Rick

we strategically the move associated am starts in a environment, narrow. that curious distortion actually accounting dissipate? into if usage TDR TDRs increase to as I see you distortion As with CECL starts to will an

quick get and way deserve answer no, track. consumers’ the payment Yes, of because back I consumers important that that is just helping are they're challenges mean, on modifications help having particular an the to those it's specific to

will. activity And of optimization so we wouldn't you in context view if that kind the of accounting

determine it's to you so question to perspective and put optimizing your the greater historically were going into what it of forward. accounts restructuring the one obviously reasons, reason if trying flexibility gives we punitive historically No, I'm is from ask is, you that,

And want -- your and to about close the prior sure to look, it to what is I we're we've we're make still in calls and for sure every we're also make and right the and doing it -- to make loan opportunity and we better company. how doing how the answer consumer their and restructure we we answer more is the the talked get with for doing mean we're the thing precise. now question give have that I consumer Yea, changed happy

And so but right, it, we're think wouldn't in is can there because always that change we the way. opportunity about it tweaking of -- that's but we a -- potential CECL you're

Barker of Jaffray. to Piper We'll Kevin go next

growth I to implies give understand understanding that that at you bit growth going lot expenses XX% what's recovery the could So the normal your guidance after beyond for the us you're on a -- just more little fourth legal year, portfolio last for growing are OpEx operating of a but your year-over-year quarter driving of grow in company? normalizing buying a growth, over basis.

background question. on specific to for operating before get comment as expenses will I XXXX Yes, your QX I well

remember If as we quarter have actually quarter, some a to had to our more reserve benefit fourth you're quarter, did than legal for. out last beneficial we fourth fourth closed that were comparing reserved matters we

So up that you are and the our line normalize we year-over-year, balance for in in our if seen with we've portfolio. really asset that, growth

management we -- As are Scott vigilant control. expense on expense our mentioned, very

is looked on is If basis, up. cost to our our year-over-year, just unit up it $X originate you and down of asset balance unit service at because is a a

around you're some calls follow in some adjusting rates, to that you the up some of servicing mix And comments underwriting of when well. those on you're and match changes the that previous of rates how of then recovery your have then consider Okay. you're up the as that mentioned Could you recovery detail your practices you business some implemented you against of today? peers, may

Yes, practices, lower just so modifications. about servicing over time level the talked on we've around of it the

a to continue to the decision to pay trend whether car demand to that think customer I loan, prices used wouldn't and not. necessarily we're of have necessarily whether the seeing connection with ability recovery As really that and the loan we're a modify determine or the because for rates cars. consumers we draw an I has that's kind used making off the industry willingness

is disconnected. to the and mix practices. car driven rate used by but the little tied is it is new charge-off recovery how have bit in do heavier than think there loans, our new we So -- whether market more I used versus is what servicing seeing you're fast some There our mix we

We'll to go next Morgan Betsy Graseck Stanley. at

you good Hey, and questions. bit underwriting the There still, a just the changing as some it has but you're morning. get going defaults on mean early of They're us Couple for is bit and SDART a how securitization loans to increasing. sense chatter your or that? some color about small a there of still recently little can own different is the I up portfolio, and what's on to wanted some give if underwriting from been

the for Betsy question. Thanks Yes.

and some for our time. not we're practices we changing no, So, quite haven't underwriting

and from because with ABS It I transaction So repurchase what repurchases We with on read, practices. about losses say modifications expect an talked all modifications. would over time our goes to based our have platforms. documents. loans those you we consistent do what despite do have servicing The back lower consistent we've been lower recognition the of earlier of

portfolio. our two one There experience of with some repurchases. our XXXX expectation. performance transactions are elevated in securitizations consistent line did that They our So was or overall with very in are

historical our the and SDART recent with would I deeper more when really our keep add, are have at mind securitizations also DRIVE DRIVE. platform. securitization look in that averages you platforms, and to our retail we you in being However, have more a back our rates. that repurchase credit line two securitizations

XXXX of you're make to on DRIVE can't when XXXX SDART or really a some our the underlying portfolio comparing repurchase So, of compare the conclusion rates, you a of those performance consumer. and XXXX or state the

just securitizations said, I as average we look at at some are as in when we as we mentioned and performance And five there are compared like XXXX to So flashing those indicators, the performing early earlier on of call, vintages expect the averages. XXXX year historical monthly I I best. the look said,

really the through we're And we're on so what in currently. bringing door positive

seeing the So we're of not some ... overall

number because things asking add said already Yes, the asked few people a I have what these will and Fahmi you Betsy thank for to question. questions. a of

quality talked changing, look recoveries. these well. We car period of a a which the as peak auto are delinquency on changing. I talked if are performing trends you near all industry at car we lot loans, year-over-year. if data the about nowhere We're who the They kind at on to whole talked a You time. of we're delinquent, data. at recession. nowhere point, is last lot we quarter-on-quarter. percentage this originations like is over the that is do look at we improvement sales, published We this that finance metrics earlier long significant didn't vintage, performance call asset credit of we showed about a expected. the the improved suggest be increase rates, our mentioned look versus seasonal a broadly when for you new because our guys, XXXX. look year, And fed used get Fahmi's near that We metrics The own they about to vintage those prices. where lot seeing will We we industry We're and it's were follows delinquency industry, of at understand, the environment important delinquency

job yes, at to So -- we that we and addition of doing which have years better and of looking previous in point are and we're always period. feel than the mean we I pretty do for job a haven't in originations, a then that, fraud identifying to previous about, talked better ways we time

of with you think to yes, that the So trends kind securitizations But securitizations, the look are of industry. focus positive, a at metrics a what's last year got the do, you of And we kind in again, all just performance. right all if different conclusion. to direction, and come we might there you happening all were those stable couple the on

It's for answers hopefully good question, So thank asking. that question. the you a but

verification a first if maybe I today buyout just is that Because non-payment as last underwriting that of is on just wondering maybe I things Maybe early us client how wondering about you your seeing you're and fraud year, thing? you is couple and wasn't comment in there the there. thinking or well you're kind the was some you're to that a could buyback you great second, of last and Does year great, if in there -- was versus I point year think, give in can is that you anything tightened -- maybe guess that on And color a up? securitizations you if touch fraud. there could that last if anything not driving that's there if year how just like income

Yes, on modification previously. part we've it I was discussed levels of just going call that the is say, to the

that Some The earlier of of those of vintage is changes. XXXX is losses. reflective recognition

far last rates tightened are years over up things So in The changes there’s I nothing as securitizations. consistent. point from to If the They've the that to been probably underwriting of couple a repurchase material we've compared anything, of our as would we practices. pretty loans definitely would handful that repurchase XXXX.

think most you on version. impactful touched the I probably

If to I SDART, X.X% and X% around been somewhere point to material really X% X%. at or anything we've can't you that's look DRIVE consistently in the changed.

Caintic of Vincent go Stephens. We'll to next

back question going to credit. on part Two

good this very So trends delinquency quarter.

you maybe maybe the if strong? improvements seeing the is question seeing to you describe practices think weakness. is to is back delinquency on rate good can Thanks. it collections about been recoveries. getting? run a you've recovery the driving to forward -- what that's Sort the components it And of or could Are lot you break you there? a being if there you consumer mentioned, another -- When wondering this rates when vehicle we down share September be able you're that think I recent then also really your and XX% of -- going you was Would then

rate I'll want take to and one maybe one -- do... recovery you Fahmi, recovery

sure. Yes,

deficiency we one when quarter, kind do lumpy So little you quarter-to-quarter, a of We in kind to when I do market those. of rate it factor and depends of sales, think depends sale. conditions the it amount of on kind try has just the recovery but get the on on deficiencies does

I wouldn't rate. good So a as the stick to XX% run

point. as a even at I is it of September, As as high in trend year-over-year want historical also level. make is is the up it month overall and it far September, that data over we And one to the I sure mentioned, say

fourth have just quarter, it entering softness. It again it's one So little we did a trend the is into data some But yet. which of point do a on. wouldn't call see seasonal and pressures we bit I just

about say of in more always whole series a is our make there. see that working improvements what good to the sure initiatives and feel pricing of seeing so a But the results more make shout we're a don't year we're in over got the more on that I reflection and delinquency first improvement making part But out, ways we're the point to the has the that for are first impact always credit better out you're That's I want collections quality for you're about at answer that, they've with to on a last progress team. I and and the give they question ways them would driving looking And doing and or question or to too. effective made in -- the always origination. of collections your leave efficient. our place what's progress make of credit significant We've are I your will looking to that significant doing because we seeing.

And of relatedly or helpful. usage, whether remarks, on so great, very about buybacks you're prepared also how kind you think mentioned capital at you Okay, your actually investments. looking

there might maybe And some of sort that about about, of million here or of you thinking of investments? Is investments us and interested help else you're are or couple whether you're sort hear what if something just bit it's a that thinking larger? be technology interesting could kind collections size to little about a things it or what are

that it's had year, it's infrastructure capital our Yes, mentioned to or we capital, last shareholders. whether we some of for deploy deploying SFO whether to -- it's upgrading the I opportunities whether looking our conversion always think we're

thoughtful and So we nothing as opportunistic or our approach evaluate how to to are we deploy kind of guidance be capital. very give in announce you on to which our going

serviced and business, have add, Yes. impact because in And of in results. terms we mean our that, others do the I earlier opportunities there I continue in for on meaningful we're we're investing doing are in there. investing that. today doing the would call, I a the that will we'll just mentioned to business, That think And

it infrastructure dealers. make more we're to or it better dealing make said, consumers Fahmi to run with and effective investing As support when

to So customers a as how we investments, lot kind and as of those make talk in originations made well really important We is serve investments about we process. which have investing consumer too. we funding our continue and dealers

kind And just I'll the of you ability our add have capital we because if of to give above, the of that, and to will. one that base of all on

market, can execute. talked we've the any come acquisitions and we'll seen return, come to definitely about haven't if we So make right those to as up, as a portfolio being we'll take look But opportunistic announce.

to next Sandler And at we'll move O'Neill. Donat Chris

at Scott, on mentioned the the wanted leases of and side the beginning and I call to origination and that did quarter-on-quarter ask you year-on-year that the to on wanted question. decrease you

So are. here we

for Leasing is you Leasing Yes. with thank the Well, Chrysler year-over-year. down question. year-over-year. down is

with Chrysler originations total are actually up. third quarter in the Our

So quarter there -- really we a had is leasing. strong third in year last

more for -- high So always means in to periods. Chrysler at prior is and quarter yes, that looking I and Chrysler third a of But base. mean competitors we're comparing leasing what We're adjusting ourselves. what to in there went we're our the and for doing

it with tend I how Penetration between is down in total originations good. up And again, again, was almost the overall yes, leases quarter, to rate which XX% So FCA. and our is loans the we good. with relationship up year-over-year but was look at are which were doing

measured up is with by dealers satisfaction JD good. was which Power as Our

we're think good progress making there. I So

if didn't on. add And I

think I our very in compared lease limited know competition people to is most retail. that

country players, two number. aggressive, did see quarterly become national share the impacts lease we regions greatly. it in but bit party also not the that So also volume a we the quarter, if unions actually saw, one of aggressive and more high some the In our just credit certain from becomes little pretty impacted more

of taking then And Okay, got it, view Chrysler that. on relationship. the thanks a bigger-picture

with able some So you in expect be no change Capital for Chrysler would Peugeot. sort I answer. there this think for the might of in your mean Fiat and that in that to expiration? agreement Chrysler the in Is I control with change talks are what amended or Fiat anticipate guess, anything FCA agreement XXXX confirmed morning we Chrysler should through they

look a I relationship I I we with that's from in comment has no been mean think -- have often like think them Yes, a and But that's great and periods prior we us. this partnership with worry helping we've them that's a cars. them more about about control, to and all job sell respect can and talking the we with our and better improving doing been things what

just world changes, with can focused. of we're of we deal we'll where take the care and take that's We that. what So care then

Rob to Research. Autonomous We'll next at move Wildhack

CECL little, you about Touch CECL I way upfront growth more the What impact. ask reserving? think conceptually wanted the of and higher you're level about to do given thinking on impact ongoing but on going the have a to is

accounting the mentioned of we're drive Yes, call plans. loans treatment the underlying the not going change from origination doesn't that -- booking. it earlier as to far strategy I that our risk the is think in as our I

about sheet. on right adjusted with we'll continue we how balance to our the thoughtful risk So be for loans returns go very booking

impact or our I going is or growth. So think don't underwrite price loans we CECL how impact to our

over the And turn question-and-answer I to for call ends now final Powell Scott comments. that session. will the

that. for all call. joining good Thanks your today. you appreciate the really We thank Great, for questions

always, everybody. follow-up Thanks, probably is Investor team our look to after questions, if the fourth Relations we'll forward here again you quarter have finalized. soon, and you speaking As to is

And does that thank Again, conference. today's conclude you your participation. for