UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 000-20202

CREDIT ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter)

Michigan		38-1999511
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
25505 W. Twelve Mile Road
Southfield,	Michigan	48034-8339
(Address of principal executive offices)		(Zip Code)

(248) 353-2700

(Registrant’s telephone number, including area code)

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	CACC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of Common Stock, $.01 par value, outstanding on October 25, 2021 was 14,539,621.

TABLE OF CONTENTS

PART I. — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets - As of September 30, 2021 and December 31, 2020	1
Consolidated Statements of Income - Three and nine months ended September 30, 2021 and 2020	2
Consolidated Statements of Comprehensive Income - Three and nine months ended September 30, 2021 and 2020	3
Consolidated Statements of Shareholders' Equity - Three and nine months ended September 30, 2021 and 2020	4
Consolidated Statements of Cash Flows - Nine months ended September 30, 2021 and 2020	5
Notes to Consolidated Financial Statements	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	45
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	63
ITEM 4. CONTROLS AND PROCEDURES	63
PART II. — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	64
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	64
ITEM 6. EXHIBITS	65
SIGNATURES	66

PART I. - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CREDIT ACCEPTANCE CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Dollars in millions, except per share data)	As of
	September 30, 2021		December 31, 2020
ASSETS:
Cash and cash equivalents	$	13.3	$	16.0
Restricted cash and cash equivalents	429.0		380.2
Restricted securities available for sale	67.1		66.1
Loans receivable	9,685.8		10,124.8
Allowance for credit losses	(3,103.2)		(3,336.9)
Loans receivable, net	6,582.6		6,787.9
Property and equipment, net	58.3		59.4
Income taxes receivable	25.0		147.0
Other assets	23.7		32.4
Total Assets	$	7,199.0	$	7,489.0
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued liabilities	$	251.3	$	186.7
Revolving secured line of credit	72.2		95.9
Secured financing	3,733.0		3,711.6
Senior notes	792.0		790.6
Mortgage note	9.9		10.5
Deferred income taxes, net	386.6		391.0
Income taxes payable	0.2		0.2
Total Liabilities	5,245.2		5,186.5
Commitments and Contingencies - See Note 15
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued	—		—
Common stock, $.01 par value, 80,000,000 shares authorized, 14,716,977 and 17,092,432 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	0.1		0.2
Paid-in capital	166.0		161.9
Retained earnings	1,787.0		2,138.8
Accumulated other comprehensive income	0.7		1.6
Total Shareholders' Equity	1,953.8		2,302.5
Total Liabilities and Shareholders' Equity	$	7,199.0	$	7,489.0

See accompanying notes to consolidated financial statements.

1

CREDIT ACCEPTANCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollars in millions, except per share data)	For the Three Months Ended  September 30,				For the Nine Months Ended  September 30,
	2021		2020		2021		2020
Revenue:
Finance charges	$	442.1	$	404.4	$	1,312.4	$	1,144.5
Premiums earned	15.4		15.1		45.6		42.2
Other income	12.6		7.0		34.8		35.2
Total revenue	470.1		426.5		1,392.8		1,221.9
Costs and expenses:
Salaries and wages	63.2		46.6		150.9		140.4
General and administrative	16.9		17.2		79.9		46.8
Sales and marketing	16.3		16.6		48.4		53.9
Provision for credit losses	(8.3)		(29.8)		(17.5)		464.3
Interest	39.8		46.8		125.6		146.9
Provision for claims	10.0		10.7		29.3		28.8
Loss on extinguishment of debt	—		—		—		7.4
Total costs and expenses	137.9		108.1		416.6		888.5
Income before provision for income taxes	332.2		318.4		976.2		333.4
Provision for income taxes	82.2		76.3		235.5		78.7
Net income	$	250.0	$	242.1	$	740.7	$	254.7
Net income per share:
Basic	$	15.83	$	13.57	$	44.77	$	14.18
Diluted	$	15.79	$	13.56	$	44.73	$	14.17
Weighted average shares outstanding:
Basic	15,795,963		17,844,785		16,543,326		17,957,931
Diluted	15,829,166		17,849,765		16,559,639		17,973,091

See accompanying notes to consolidated financial statements.

2

CREDIT ACCEPTANCE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)	For the Three Months Ended  September 30,				For the Nine Months Ended  September 30,
	2021		2020		2021		2020
Net income	$	250.0	$	242.1	$	740.7	$	254.7
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities, net of tax	(0.2)		(0.2)		(0.9)		0.9
Other comprehensive gain (loss)	(0.2)		(0.2)		(0.9)		0.9
Comprehensive income	$	249.8	$	241.9	$