Credit performance continued to weigh on Santander Consumer USA during the fourth quarter, as the auto lender’s profits fell short of analysts’ expectations.

Santander Consumer reported net income of $61 million for the quarter, an improvement from a $19.5 million loss in the year-earlier period. Earnings per share were 17 cents, well below the consensus estimate from analysts of 30 cents.

The Dallas-based company’s stock price was down 5.7% to $13.01 in midday trading Wednesday.

Santander Consumer is one of the nation’s largest subprime auto lenders, and its financial performance has been hurt by rising defaults among car buyers with low credit scores.

Santander Consumer CEO Jason Kulas said the firm should be able to better compete for car loans once an agreement to flow assets to affiliate Banco Santander is finalized. "In 2017 we are very enthusiastic about our ability both to maintain credit discipline and to increase volume," he said.

The firm’s net chargeoff ratio was 8.9% during the fourth quarter, up from 8.3% a year earlier. During a conference call with analysts, top executives sought to reassure investors by noting that loans originated in 2016 are performing better than those from the previous year.

But weaker credit quality is not the company’s only cause for concern.

Santander Consumer also recorded a 24% drop in quarterly auto originations to $4.5 billion. The company attributed the decline in large part to sharp competition in the U.S. auto lending market, particularly with respect to borrowers with prime credit scores.

Santander Consumer is 58.8% owned by Banco Santander’s U.S. holding company. The $38.5 billion-asset auto lending specialist said Wednesday that it expects by the end of March to finalize an agreement to flow assets to the Spanish banking giant.

Jason Kulas, Santander Consumer’s CEO, said that he expects the agreement, when it is finalized, to allow the company to better compete for auto loans. Today, Santander Consumer relies more heavily on higher-priced wholesale funding than many of its competitors for prime auto loans.

“In 2017 we are very enthusiastic about our ability both to maintain credit discipline and to increase volume,” Kulas said.

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