FORT WORTH, Texas -

General Motors Financial president and chief executive officer Dan Berce took multiple opportunities after the finance company reported its third-quarter performance to state that despite being elevated to be the captive for the parent OEM, the company remains a significant institution in the subprime space.

Berce first referenced subprime when GM Financial discussed its Q3 North American origination mix, which included $1.769 billion in leases and vehicle installment contracts to customers with FICO scores below 620. Berce elaborated about the figure since it constituted only 19 percent of GM Financial’s origination total in the quarter, a level less than half of what it was a year earlier when the company’s subprime penetration stood at 44.1 percent.

“I will point out that subprime lending has not decreased,” Berce said. “In fact in absolute dollars, it is higher year-over-year but as a percent of our total originations, it is down because of the growth in prime and near prime.”

All told, GM Financial’s North American Q3 origination figure spiked to $9.316 billion, more than double the year-ago figure of $3.669 billion.

But GM Financial not only generated more paper in absolute dollars in the subprime space, the company posted more in the near-prime space, too, booking deals with customers who have a FICO score between 620 and 670. That origination segment climbed from $533 million to $1.235 billion in the most recent quarter.

With still a significant amount of subprime and near-prime paper in its portfolio, GM Financial also touched on the impact that mix had on delinquencies and losses.

The company indicated consumer finance receivables 31-to-60 days delinquent stood at 4.0 percent of the portfolio as of Sept. 30 compared to 3.9 percent a year earlier. Accounts more than 60 days delinquent constituted 1.6 percent of the portfolio when Q3 closed, down from 1.7 percent a year ago.

GM Financial also reported annualized net credit losses were 1.9 percent of average consumer finance receivables for the quarter compared to 2.0 percent for the year-ago quarter. For the first nine months of 2015, the company’s annualized consumer net credit losses stood at 1.7 percent, compared to 1.8 percent at the same juncture last year.

“I want to point out though that finance receivables with FICO scores less than 620 or so called subprime do still comprise 65 percent of our North American portfolio, which is the reason losses are higher at 2.6 percent than what you would see in a prime portfolio. But our loss trends should be favorably impacted by the increasing mix of prime lending over time,” Berce said.

“Recovery rates at 56 percent for the quarter were fairly flat with the 57 percent number a year ago; still very strong from a historical perspective,” he continued.

“Our outlook continues to be moderation in that rate as we go through 2016. And I will point out that recovery rates are seasonal so that December of 2015 just like December of 2014 should be lower sequentially than the September quarter,” Berce went on to say.

As Berce referenced, GM Financial’s subprime and near-prime originations are being dwarfed by its prime paper additions. That trend is likely to continue since the company is enhancing its relationship with the parent automaker as GM winds down its relationship with Ally Financial.

“We have also taken further steps in our evolution as a captive,” Berce said. “Effective Nov. 3, we will expand our role in GM's loan subvention programs with the removal of Ally from this channel. GM and GM Financial remarketing organizations are now realigned under the GM Financial brand. GM Financial is responsible for asset remarketing, for GM Financial off-lease vehicles as well as GM company cars and rental vehicles.”

Other Q3 financial metrics

GM Financial reported that it third net income climbed from$158 million to $179 million on a year-over-year basis. Earnings through nine months came in at $515 million, compared to $478 million through the same span a year earlier.

The company indicated its outstanding balance of commercial finance receivables was $7.8 billion as of Sept. 30, up from $7.2 billion. Berce noted 607 dealers currently use company’s offerings in this space.

“Floor planning continues to represent 86 percent of the portfolio with the balance of the portfolio being dealer loans such as real estate and lines of credit,” he said. “We do believe our expanded product suite and increasing penetration in GM’s retail channels enhances our ability to continue to grow this business at the steady rate that we have been on.”

GM Financial also shared that it possessed total available liquidity of $11.6 billion as of the close of the third quarter. That figure consisted of $1.6 billion of cash and cash equivalents, $8.0 billion of borrowing capacity on unpledged eligible assets, $1.0 billion of borrowing capacity on unsecured lines of credit and $1.0 billion of borrowing capacity on a junior subordinated revolving credit facility from GM.

“That liquidity increased primarily due to increased borrowing capacity on unpledged eligible assets and again, we do expect our leverage to continue increasing as our earning assets expand in the higher credit tiers in advance of the earnings generated by those assets and as we continue to build our liquidity through unsecured debt issuances,” GM Financial chief financial officer Chris Choate said.