Content analysis
?Positive | ||
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Uncertain | ||
Constraining | ||
Legalese | ||
Litigous | ||
Readability |
H.S. sophomore Bad
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New words:
allegedly, assertion, Brasil, Brazilian, Caldwell, Craig, dividing, donation, enjoin, hosting, incomplete, onboarding, PDLA, permission, Southern, step, timeframe
Financial report summary
?Risks
- The current outbreak of COVID-19 has materially impacted our business, and the continuance of this pandemic or any future outbreak of this or any other highly contagious disease or other public health emergency, could materially and adversely impact our business, financial condition, liquidity and results of operations.
- Our relationship with FCA is a significant source of our loan and lease originations. Loss of our relationship with FCA, including as a result of termination of our agreement with FCA, could materially and adversely affect our business, financial condition and results of operations. Our agreement with FCA may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement. In addition, FCA has the option to acquire an equity participation in the CCAP portion of our business.
- We rely on third parties to deliver services for many aspects of our business operations. Our failure to effectively monitor or manage those third parties or the failure by those third parties to provide these services or meet contractual requirements could materially and adversely affect our business, financial condition and results of operations.
- Loss of our key management or other personnel, or an inability to attract such management and other personnel, could materially and adversely affect our business, financial condition and results of operations.
- Our risk management processes and procedures may not be effective in mitigating our risks.
- We face significant risks in implementing our strategy, some of which are outside our control.
- Changes in our relationship with Santander may adversely affect our business, financial condition and results of operations.
- Our business, financial condition and results of operations could be materially and adversely affected if used-vehicle values decline, resulting in lower residual values of our vehicle leases and lower recoveries in sales of repossessed vehicles.
- Our business, financial condition and results of operations could be materially and adversely affected if we fail to manage and complete divestitures.
- Our business, financial condition and results of operations could be materially and adversely affected if we are unsuccessful in developing and maintaining relationships with vehicle dealerships.
- Our business, financial condition and results of operations could be materially and adversely affected if we are unsuccessful in developing and maintaining our "serviced for others" portfolio.
- We depend on the accuracy and completeness of information about borrowers and counterparties and any misrepresented information could materially and adversely affect our business, financial condition and results of operations.
- Negative changes in the business of the OEMs with which we have strategic relationships, including FCA, could materially and adversely affect our business, financial condition and results of operations.
- Future significant loan, lease or personal loan repurchase requirements could materially and adversely affect our business, financial condition and results of operations.
- Competition with other lenders could materially and adversely affect our business, financial condition and results of operations.
- Goodwill and intangible asset impairments may be required in relation to acquired businesses.
- We are a consumer finance company with operations in all 50 states and the District of Columbia. Our industry is highly regulated, and continually changing federal, state and local laws and regulations could materially and adversely affect our business, financial condition and results of operations.
- We are involved in investigations, examinations and proceedings by government and self-regulatory bodies, which may materially and adversely affect our business, financial condition and results of operations.
- We are subject to enhanced legal and regulatory scrutiny regarding credit bureau reporting, origination and debt collection practices from regulators, courts and legislators.
- We are subject to certain banking regulations that limit our business activities and may restrict our ability to take other capital actions and enter into certain business transactions.
- We are subject to enhanced prudential standards as a subsidiary of SHUSA, which could materially and adversely affect our business, financial condition and results of operations.
- Our business, financial condition and results of operations may be materially and adversely affected upon our implementation of the capital requirements under the U.S. Basel III final rules.
- The Dodd-Frank Act, and its associated rules and guidance, and CFPB supervisory audits will likely continue to increase our regulatory compliance burden and associated costs.
- Unlike competitors that are banks, we are subject to the licensing and operational requirements of states and other jurisdictions, and our business would be adversely affected if we lost our licenses.
- We are subject to potential intervention by any of our regulators or supervisors.
- Cybersecurity and data privacy issues have become the subject of increasing legislative and regulatory focus, which will likely increase our regulatory compliance burden and associated costs.
- Adverse outcomes to current and future litigation against us may materially and adversely affect our business, financial condition and results of operations.
- Negative publicity associated with litigation, governmental investigations, regulatory actions and other public statements could damage our reputation.
- Changes in taxes and other assessments may adversely affect us.
- Liquidity and Funding Risks
- Our business, financial condition and results of operations could be materially and adversely affected if our access to funding is reduced.
- Poor portfolio performance may trigger credit enhancement provisions in our revolving credit facilities or secured structured financings.
- We apply financial leverage to our operations, which may materially adversely affect our business, financial condition and results of operations.
- Our indebtedness and other obligations are significant, impose restrictions on our business and could materially and adversely affect our business and ability to react to changes in the economy or our industry.
- Our business, financial condition, liquidity and results of operations depend on the credit performance of our loans.
- Our allowance for credit losses and impairments may prove to be insufficient to absorb losses inherent in our loan portfolio.
- Adverse macroeconomic conditions in the United States and worldwide may materially and adversely affect our business, financial condition and results of operations.
- Changes in interest rates may adversely impact our profitability and risk profile.
- We are subject to market, operational and other related risks associated with our derivative transactions that could materially and adversely affect our business, financial condition and results of operations.
- A successful security breach or a cyber-attack could materially and adversely affect our business, financial condition and results of operations.
- An outage or a high-severity disruption of our information technology platforms could materially and adversely affect our business operations.
- Our technology platforms may not be adequate for our business or provide a competitive advantage.
- Financial Reporting and Control Risks
- We are required to make significant estimates and assumptions in the preparation of our financial statements, and our estimates and assumptions may not be accurate. We also rely on pricing, accounting, risk management and other models which may fail to accurately predict outcomes.
- Lapses in internal controls, including internal control over financial reporting, could materially and adversely affect our business, financial condition and results of operations, including our liquidity and reputation.
- Internal control over financial reporting may not prevent or detect all errors or acts of fraud.
- Failure to timely satisfy obligations associated with being a public company may have adverse regulatory, economic and reputational consequences.
- Risks and Other Considerations Related to Our Common Stock
- So long as SHUSA controls us, our other stockholders will have limited ability to influence matters requiring stockholder approval, and Santander’s interest may conflict with the interests of our other stockholders.
- Certain provisions of our amended and restated certificate of incorporation, and amended and restated bylaws, have anti-takeover effects, which could limit the price investors might be willing to pay in the future for our common stock. In addition, Delaware law may inhibit takeovers of us and could limit our ability to engage in certain strategic transactions our Board believes would be in the best interests of stockholders.
- We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of companies that are subject to such requirements.
Management Discussion
- Income from retail installment contracts increased $102 million or 2% from 2019 to 2020 primarily due to increase in average outstanding balance of company's portfolio and new originations.
- Income from personal loans decreased $24 million or 7%, from 2019 to 2020 primarily due to 6% decrease in average outstanding balance of the Company's portfolio, respectively.
- Leased vehicle income, net decreased $29 million or 3% in 2020 compared to 2019 due to an increase in depreciation on a larger lease portfolio and a decrease in liquidated units. Through the MPLFA, the Company receives manufacturer incentives on new leases originated under the program in the form of lease subvention payments, which are amortized over the term of the lease and reduce depreciation expense within leased vehicle expense.