The chairman and chief executive of Santander Consumer USA Holdings has resigned, as the subprime auto lender remains under scrutiny for its lending and securitization practices.
Thomas Dundon is leaving to "pursue new opportunities," Santander Consumer said in a news release, without providing additional details. Dundon will remain on Santander Consumer's board.
Santander Consumer named Chief Financial Officer Jason Kulas the new CEO and named Stephen Ferriss, lead outside director, the interim chairman until the Dallas company's annual meeting on July 15. Kulas' appointment as CEO is "in line with [Santander Consumer's] Board-approved succession plan," the company said in the release.
The changes to Dundon's role "have been amicably agreed and are unrelated to the company's performance or regulatory standing," Kulas said in the release.
Santander Consumer will also buy out Dundon's stake in the company at a cost of more than $928 million. It will pay him $26.83 a share for the nearly 10% stake he holds, according to a filing with the Securities and Exchange Commission.
Dundon helped found the company, formerly Drive Financial Services, in 1994 and he retained an ownership stake after the Spanish banking giant Banco Santander bought a majority stake in 2006. Santander paid $651 million for about 61% of the company.
"This is a great company and with Jason Kulas at the helm, supported by our talented management team, I am confident [it] will become an even stronger player in the consumer finance industry," Dundon said in the release.
Like many subprime auto lenders, Santander Consumer has come under regulatory scrutiny recently. It was subpoenaed by the Justice Department last year over its underwriting and securitization of subprime loans, and the attorney general of Massachusetts is also reportedly looking into its lending practices. It also entered a written agreement with the Fed last year over its capital distributions.
However, the company's financial performance has been strong in the last year. Its stock initially fell after its January 2014 IPO, but it has rebounded strongly this year, and its stock price is up nearly 34% over the past 12 months. It has also lowered its expectations for loan losses, despite concerns from regulators and industry observers that auto lending is becoming overheated.
Kulas has been CFO of Santander Consumer since 2007. Earlier, he had covered the company as an investment banker at JPMorgan.
Additionally, Jason Grubb, Santander Consumer's chief operating officer of originations, will become president, and chief accounting officer Jennifer Popp has been named interim CFO.
Santander Consumer managed about $46 billion in assets as of March 31. Along with subprime auto loans, it also makes prime auto loans and personal loans.