FORTH WORTH, Texas — Back when General Motors was shopping for a new lender relationship, one of its key goals appeared to be ramping up sales through non-prime approvals. And its relatively new symbiotic partnership with AmeriCredit — now known as GM Financial — appears to be paying off.

In revealing its quarterly results Thursday, GM Financial announced the domestic OEM's subprime penetration has grown. And as the manufacturer's sales slowly bounce back to historical markers after dropping since the economic recession hit in 2008, GM Financial will benefit as well.

During its conference call Thursday, the lender announced that GM's current subprime loan penetration is now 6.8 percent, up from 4.8 percent a year ago. Management also stressed this is above the industry average of 4.9 percent subprime penetration.

"Average APRs for loans originated remained unchanged at 14.4 percent for the December quarter, compared to last quarter," explained Dan Berce, president and chief executive officer. "Similarly, key loan structure metrics such as loan-to-value and the weighted average custom score of the loans we originated also remained unchanged from last quarter. The stability in our loan metrics is indicative that our cyclical expansion of credit risk appetite has largely concluded. We expect continued growth in our portfolio to be achieved through market share gains and market expansion as GM vehicle sales volumes track back to historical levels over time."

"Originations from non-GM dealers have continued at a stable rate, comprising more than 50 percent of our total loan originations in the December quarter, and remain an important part of our operating strategy and profitability. Overall, competition in our core subprime lending market remains rational and focused on the traditional factors of pricing, loan structure and service levels, and we expect these dynamics to remain consistent," he went on to say.

In more news coming from GM Financial, the company revealed it has divided its sales force and credit teams into two segments, one that services General Motors dealers and one that services non-GM dealers.

"This division will allow us to continue our efficient service for non-GM dealers under the ‘AmeriCredit' brand, while providing GM dealers the broader product offerings including loan, lease and commercial lending under the ‘GM Financial' brand," Berce explained Thursday.

For the quarter, GM Financial announced net income of $104 million. For the year, the company put this figure at $386 million.

Loan originations for the quarter were $1.2 billion, compared to $1.4 billion in the prior quarter and $935 million in the quarter ending Dec. 31, 2010.

For the year, loan originations came in at $5.1 billion, compared to $3.4 billion in the previous year. The outstanding balance of finance receivables was $9.7 billion at the end of 2011.

Meanwhile, lease originations on GM vehicles for the quarter were $314 million, compared to $189 million in the prior quarter and $11 million in the December 2010 quarter.

For the full year, lease originations on GM vehicles came in at $987 million. As a net, lease vehicles totaled $809 million at the end of year.

"With regard to our leasing, our U.S. lease origination volume increased to $183 million from $32 million last quarter. During the December quarter, we successfully increased our lease presence in GM dealerships by targeting specific vehicles for competitive program offerings. We are pleased with the progress we have made and will continue to develop attractive lease offerings to build more scale in our platform," Berce said Thursday.

The Canadian lease originations were a bit of a different story.

He explained, "Our Canadian lease originations declined sequentially to $131 million in the December quarter, from $157 million last quarter. This decrease resulted from the motor company's allocation of more marketing resources and support to loan instead of lease financing during the quarter. GM's Canadian lease penetration was 8.5 percent for the quarter, down from 9.4 percent last quarter. With industry-wide lease penetration rates in the high teens, we see tremendous opportunity to grow our Canadian lease portfolio over time."

Continuing on, the company announced finance receivables 31

Jordan Takeyama
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–60 days delinquent were 5.3 percent of the portfolio, compared to 6.2 percent a year ago. Furthermore, accounts more than 60 days past due were 1.9 percent of the portfolio, compared to 2.4 percent in the previous year.

As for net charge-offs, these came in at 3.3 percent of average finance receivables for the quarter, compared to 5.5 percent a year earlier. For 2011, net charge-offs were 3.2 percent.

The company said total liquidity was at $1.6 billion, including $572 million of unrestricted cash, about $681 million of borrowing capacity on unpledged eligible assets and $300 million on a line of credit from GM.

Furthermore, the company is in preparations to roll out commercial lending services for dealers.

Discussing this, Berce indicated, "On the commercial lending front, we are just a couple of months away from launching our suite of commercial lending products for GM dealers. We are working diligently with our vendor partners to lay the foundation for our commercial lending platform and we are building out our core team and infrastructure. Our commercial lending products will be designed to provide GM dealers with a viable financing alternative and we are not seeking to be and do no not need to be the dominate provider for GM dealers to achieve this goal."

Another key metric that helps the company's bottom line is its recovery rate at auction, or the average amount the company gains on a repossessed unit. According to Berce, this figure was 54 percent for the quarter.

"While we are experiencing exceptional credit trends, we do not expect them to continue indefinitely. We began a cyclical expansion of credit risk appetite in 2010 that, as I noted earlier, largely stabilized by mid 2011," Berce said.

"Our recent favorable credit metrics are due in large part to a notable improvement in how consumers manage their credit. We have no assurance that this improvement will last or that we will continue to benefit from the change. At some point, shifting consumer behavior or moderation of used-car values will temper the strong credit performance we saw in 2011," he pointed out during the conference call.

And looking ahead, after launching its commercial services in April for U.S. GM dealers, as Berce said, the company "will then turn our attention to rounding out our Canadian product offerings with the rollout of a non-prime loan program in Canada for GM dealers later in 2012."