Item 1.02 Termination of a Material Definitive Agreement.
On August 11, 2021, GreenSky, LLC and GreenSky Servicing, LLC, subsidiaries of
GreenSky, Inc. (together with GreenSky, LLC and GreenSky Servicing, LLC, the
"Company"), received notice from Truist Bank ("Truist"), a bank partner in the
GreenSky program, that Truist was terminating the Loan Origination Agreement
between the Company and Truist, dated as of December 31, 2016, as amended (the
"Truist Loan Origination Agreement"), which governs Truist's origination of
loans through the GreenSky program. The termination of the Truist Loan
Origination Agreement will be effective November 9, 2021 and will not affect
Truist's obligation to fund any loans originated prior to the termination date.
The Company does not expect that the termination of the Truist Loan Origination
Agreement will have a material impact on its profitability, and the Company
maintains significant unused funding commitments for future loan originations.
Beginning in 2020, the Company diversified its funding model to include a
combination of commitments from bank partners and alternative funding sources,
including the asset-backed securitization market. Since that time, the Company
entered into $1.5 billion of forward flow purchase commitments with a leading
global insurance company and completed over $2 billion in whole loan and loan
participation sales. In addition, during that time period the Company increased
its other bank partner funding commitments by an aggregate of over $2.5 billion,
through the expansion of existing bank partner commitments and the addition of a
new bank partner. In 2021, year-to-date Truist originations under the GreenSky
program have comprised approximately 8% of total transaction volume, and the
Company's previously disclosed unused bank partner commitments as of June 30,
2021 remain at $2.5 billion when excluding Truist. The Company anticipates that
its required levels of restricted cash, on average, will be lower for future
GreenSky program originations following the termination of the Truist Loan
Origination Agreement. Demand for GreenSky program consumer loans from multiple
funding sources remains high, cost of funds across funding sources remain low,
and GreenSky continues to be poised for strong profitability as reflected in the
margins reported in the Company's recent second quarter financial results.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that reflect the
Company's current views with respect to, among other things, the following: the
Company's operations; the Company's financial performance, including
profitability and margins; the Company's restricted cash; growth prospects; the
Company's ability to retain existing, and attract new, merchants and bank
partners or other funding sources, including the risk that one or more bank
partners do not renew or reduce their funding commitments; the Company's
continued sales of whole loans and loan participations or future sales of
asset-backed securities; cost of funds associated with whole loan and loan
participation sales; the Company's funding capacity; the percentage of financing
provided under the Company's warehouse facility; cash payments required under
the financial guarantee arrangements; the launch and performance of new
products; the adaptability of the Company's platform to additional industry
verticals and origination channels; the extent and duration of the COVID-19
pandemic and its impact on the Company, its bank partners and merchants,
GreenSky program borrowers, loan demand (including, in particular, for elective
healthcare procedures), legal and regulatory matters, consumers' ability or
willingness to pay, information security and consumer privacy, the capital
markets, the economy in general and changes in the U.S. economy that could
materially impact consumer spending behavior, unemployment and demand for the
Company's products; and the Company's ability to mitigate or manage disruptions
to its business posed by the pandemic; and the impact of the Company's warehouse
facility on the GreenSky program. You generally can identify these statements by
the use of words such as "outlook," "potential," "continue," "may," "seek,"
"approximately," "predict," "believe," "expect," "plan," "intend," "poised,"
"estimate" or "anticipate" and similar expressions or the negative versions of
these words or comparable words, as well as future or conditional verbs such as
"will," "should," "would," "likely" and "could." These statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those included in the forward-looking statements. These risks
and uncertainties include those risks described in the Company's filings with
the Securities and Exchange Commission and include, but are not limited to,
risks related to the extent and duration of the COVID-19 pandemic and its impact
on the Company, its bank partners and merchants, GreenSky program borrowers,
loan demand (including, in particular, for elective healthcare procedures), the
capital markets (including the Company's ability to obtain additional funding or
close new institutional financings) and the economy in general; the Company's
ability to retain existing, and attract new, merchants and bank partners or
other funding partners, including the risk that one or more bank partners do not
renew their funding commitments or reduce existing commitments; its future
financial performance, including trends in revenue, cost of revenue, gross
profit or gross margin, operating expenses, and free cash flow; changes in
market interest rates; increases in loan
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delinquencies; its ability to operate successfully in a highly regulated
industry; the effect of management changes; cyberattacks and security
vulnerabilities in its products and services; and the Company's ability to
compete successfully in highly competitive markets. The forward-looking
statements speak only as of the date on which they are made, and, except to the
extent required by laws, the Company disclaims any obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events. In light of these risks and uncertainties, there is no assurance that
the events or results suggested by the forward-looking statements will in fact
occur, and you should not place undue reliance on these forward-looking
statements.
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