Santander Consumer USA Holdings Inc. Reports Fourth Quarter and Full Year 2015 Results

Jan 27, 2016, 06:15 ET from Santander Consumer USA Holdings Inc.

DALLAS, Jan. 27, 2016 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") today announced net income for fourth quarter 2015 of $68 million, or $0.19 per diluted common share, compared to third quarter 2015 net income of $224 million, or $0.62 per diluted common share, and fourth quarter 2014 of $247 million, or $0.69 per diluted common share. Fourth quarter 2015 earnings were negatively impacted by lower of cost or market ("LOCM") adjustments on the held for sale personal lending portfolio, driven by seasonal balance increases. Fourth quarter 2014 earnings were positively impacted by provision model adjustments.

Full year 2015 net income was $866 million, or $2.41 per diluted common share, up 13 percent from $766 million, or $2.15 per diluted common share in 2014, and up 3 percent from 2014 core net income1 of $842 million, or $2.37 per diluted common share.

Fourth Quarter 2015 Highlights (All comparisons are 4Q15 versus 4Q14):

  • Net finance and other interest income of $1.3 billion, up 17%
  • Total originations of $6.2 billion, up 2%
  • Serviced for others portfolio of $15.0 billion, up 47%
  • Average managed assets of $52.5 billion, up 23%

Full Year 2015 Highlights (All comparisons are full year 2015 versus full year 2014):

  • Net finance and other interest income of $4.9 billion, up 14%
  • Total auto originations of $27.9 billion, up 6%
  • Retail installment contract ("RIC") net charge-off ratio of 7.3%; after adjusting for LOCM impairments1 RIC net charge-off ratio of 7.0%, up 10 basis points
  • Total asset sales of $9.2 billion, up 31%
  • Servicing fee income of $131 million, up 81%
  • Expense ratio of 2.1%, down 10 basis points from core full year 2014 expense ratio1

"Full year results remain strong with net income of $866 million, an increase of 3 percent over the prior year core net income. We continue to be strategic in our originations approach, maintaining disciplined underwriting practices and selectivity while growing auto originations six percent over the prior year. Recognizing our reported results for the quarter are challenging, there are several factors that are not a true reflection of the earnings power of our franchise. I would like to thank our employees, customers and dealers for being a large part of another successful year. SC's fundamentals remain robust and we remain committed to generating shareholder value," said Jason Kulas, Chief Executive Officer.

In the fourth quarter, total originations were more than $6.2 billion, including $2.9 billion in Chrysler Capital retail loans and $1.0 billion in Chrysler Capital leases. Other originations, including other auto and personal loans, totaled $2.3 billion for the fourth quarter 2015. New incentive programs in Chrysler Capital drove an increase in retail loan originations. Full year auto originations were $27.9 billion, up 6 percent compared to 2014.

Finance receivables, loans and leases held for investment, net, increased 4 percent to $30.0 billion at December 31, 2015, from $28.8 billion at December 31, 2014. Net finance and other interest income increased 17 percent to $1.3 billion in the fourth quarter 2015 from $1.1 billion in the fourth quarter 2014, driven by 15 percent growth in the average portfolio. SC's average APR as of the end of the fourth quarter 2015 for retail installment contracts held for investment was 16.8 percent, in line with 16.9 percent as of the end of the third quarter 2015 and up from 16.0 percent as of the end of the fourth quarter 2014. The year-over-year APR increase is driven by the opportunity to increase originations in a disciplined manner within lower FICO buckets at appropriate returns.

The provision for credit losses increased to $800 million in the fourth quarter 2015 from $560 million in the fourth quarter 2014. Fourth quarter 2014 was benefited by $149 million in model impacts, including seasonality and a reduction in months' coverage, neither of which impacted provision in fourth quarter 2015. Fourth quarter 2014 also was benefited by $58 million due to outperformance in net charge-offs. Additionally, effective in the fourth quarter 2015, SC recognized changes in value of the personal lending portfolio, including customer defaults, as LOCM adjustments in net investment gains (losses), rather than recognizing provisions and charge-offs on this portfolio.

After adjusting for these impacts and net growth and mix of the portfolio, fourth quarter 2015 provision was impacted by $41 million related to deterioration of forward-looking loss expectations, consistent with the trends in net charge-off ratio and delinquencies. SC's net charge-off ratio and delinquency ratio on the individually acquired retail installment contract portfolio increased to 9.6 percent and 4.4 percent, respectively, for the fourth quarter 2015 from 8.1 percent and 4.2 percent, respectively, for the fourth quarter 2014. Full year 2015 net charge-off ratio on the individually acquired retail installment contract portfolio was 7.3 percent. After adjusting for LOCM impairments, the net charge-off ratio of 7.0 percent was up 10 basis points compared to 2014.

The fourth quarter 2015 provision of $800 million is up from $744 million in the third quarter 2015, despite the reclassification of personal lending impacts out of this line item, primarily due to the removal of modeled seasonality as of September 30, 2015. The increase is also attributable to normal seasonal trends, as the net charge-off ratio and delinquency ratio on individually acquired retail installment contracts increased from the third quarter 2015 ratios of 8.8 percent (7.9 percent adjusted1) and 3.8 percent, respectively.

Net investment gains (losses) were negative for the fourth quarter of 2015, due to the classification of $232 million in LOCM adjustments on the personal lending portfolio in this line. These adjustments are attributable to customer default activity, which no longer is recorded in provision for credit losses, as well as market discounts on seasonally higher balances.

"This quarter, seasonal balance increases and seasonally high customer default activity drove net investment losses on our personal lending portfolio, which was classified as held-for-sale as of the beginning of the quarter. Balances on this portfolio and customer defaults both generally decline throughout the first half of the year, so we expect smaller LOCM adjustments over the next couple of quarters," said Jennifer Davis, Deputy Chief Financial Officer.

During the quarter, SC incurred $239 million of operating expenses, up 4 percent from $230 million in the fourth quarter 2014. The increase was primarily attributable to SC's strong average managed asset growth of 23 percent. SC produced a 1.8 percent expense ratio for the quarter, down from a 2.2 percent expense ratio in the same period last year. Full year 2015 expense ratio of 2.1 percent, down from the 2014 expense ratio of 2.5 percent (2.2 percent adjusted1).

Although the ABS markets saw some volatility in the fourth quarter, SC continued to demonstrate access to liquidity, executing two securitizations totaling $1.9 billion, inclusive of $788 million sold through a CCART transaction. Additionally, SC advanced $1.8 billion on new and existing private term amortizing facilities.

In addition to the CCART transaction and in line with SC's strategy to leverage its scalable servicing platform and increase servicing fee income, SC executed asset sales of $1.1 billion through existing loan sale programs.

Servicing fee income totaled $42 million in the fourth quarter 2015, up from $20 million in the fourth quarter 2014, primarily due to the increase in the portfolio of loans and leases serviced for others to $15.0 billion as of December 31, 2015, up from $10.3 billion as of December 31, 2014.

1 For a reconciliation from GAAP to this non-GAAP measure, see Reconciliation of Non-GAAP Measures in Table 8 of this release.

Conference Call Information

SC management will host a conference call and webcast to discuss the fourth quarter results and other general matters at 9 a.m. Eastern Time on Wednesday, January 27, 2016. The conference call will be accessible by dialing 877-397-0286 (U.S. domestic), or 719-325-4752 (international), conference ID 868223. Please dial in 10 minutes prior to the start of the call. The conference call will also be accessible via live audio webcast through the Investor Relations section of the corporate website at http://investors.santanderconsumerusa.com. Choose "Events" and select the information pertaining to the Q4 2015 Earnings Call. Additionally there will be several slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software.

For those unable to listen to the live broadcast, a replay will be available on the company's website or by dialing 877-870-5176 (U.S. domestic), or 858-384-5517 (international), conference ID 868223, approximately two hours after the event. The dial-in replay will be available for two weeks after the conference call, and the webcast replay will be available through January 27, 2017. An investor presentation will also be available by visiting the Investor Relations page of SC's website at http://investors.santanderconsumerusa.com.

Non-GAAP Disclosure

This press release includes certain non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). SC believes that this non-GAAP financial measure provides both management and investors a more complete understanding of the underlying operational results and trends and SC's marketplace performance. This additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other financial institutions.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipates," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimates," "plans," "projects," "continuing," "ongoing," "expects," "intends," and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond our control. For additional discussion of these risks, refer to the section entitled "Risk Factors" and elsewhere in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed by us with the SEC. Among the factors that could cause our financial performance to differ materially from that suggested by the forward-looking statements are: (a) we operate in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect our business; (b) adverse economic conditions in the United States and worldwide may negatively impact our results; (c) our business could suffer if our access to funding is reduced; (d) we face significant risks implementing our growth strategy, some of which are outside our control; (e) we may incur unexpected costs and delays in connection with exiting our personal lending business; (f) our agreement with FCA US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (g) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (h) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (i) loss of our key management or other personnel, or an inability to attract such management and personnel, could negatively impact our business; (j) we are subject to certain regulations, including oversight by the Office of the Comptroller of the Currency, the CFPB, the European Central Bank, and the Federal Reserve, whose oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (k) future changes in our relationship with Santander could adversely affect our operations.  If one or more of the factors affecting our forward-looking information and statements proves incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution not to place undue reliance on any forward-looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

About Santander Consumer USA Holdings Inc.

Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") is a full-service, technology-driven consumer finance company focused on vehicle finance, third-party servicing and delivering superior service to our more than 2.5 million customers across the full credit spectrum. The company, which began originating retail installment contracts in 1997, has a managed assets portfolio of $53 billion (as of December 31, 2015), and is headquartered in Dallas. (www.santanderconsumerusa.com)



Contacts:

 

Investor Relations

Evan Black & Kristina Carbonneau

800.493.8219

InvestorRelations@santanderconsumerusa.com


Media Relations

Laurie Kight

214.801.6455

LKight@santanderconsumerusa.com



Santander Consumer USA Holdings Inc.

Financial Supplement

Fourth Quarter 2015


Table of Contents


Table 1: Condensed Consolidated Balance Sheets

6

Table 2: Condensed Consolidated Statements of Income

7

Table 3: Other Financial Information

8

Table 4: Credit Quality

10

Table 5: Originations

11

Table 6: Asset Sales

12

Table 7: Ending Portfolio

13

Table 8: Reconciliation of Non-GAAP Measures

14



Table 1: Condensed Consolidated Balance Sheets



December 31,
 2015


December 31,
 2014

Assets

(Unaudited, Dollars in thousands)

Cash and cash equivalents

$

18,893


$

33,157

Finance receivables held for sale, net

2,868,603


46,585

Finance receivables held for investment, net

23,464,147


23,915,551

Restricted cash

2,236,329


1,920,857

Accrued interest receivable

405,464


364,676

Leased vehicles, net

6,516,030


4,862,783

Furniture and equipment, net

58,007


41,218

Federal, state and other income taxes receivable

274,238


502,035

Related party taxes receivable


459

Deferred tax asset


21,244

Goodwill

74,056


74,056

Intangible assets, net

53,316


53,682

Due from affiliates

42,665


102,457

Other assets

549,644


403,416

Total assets

$

36,561,392


$

32,342,176

Liabilities and Equity




Liabilities:




Notes payable — credit facilities

$

6,902,779


$

6,402,327

Notes payable — secured structured financings

20,872,900


17,718,974

Notes payable — related party

2,600,000


3,690,000

Accrued interest payable

22,544


17,432

Accounts payable and accrued expenses

413,269


315,130

Federal, state and other income taxes payable

2,462


319

Deferred tax liabilities, net

882,110


492,303

Related party taxes payable

342


Due to affiliates

145,013


48,688

Other liabilities

277,862


98,654

Total liabilities

32,119,281


28,783,827





Equity:




Common stock, $0.01 par value

3,579


3,490

Additional paid-in capital

1,579,263


1,560,519

Accumulated other comprehensive income, net

2,125


3,553

Retained earnings

2,857,144


1,990,787

Total stockholders' equity

4,442,111


3,558,349

Total liabilities and equity

$

36,561,392


$

32,342,176



Table 2: Condensed Consolidated Statements of Income



For the Three Months Ended
December 31,


For the Year Ended
December 31,


2015


2014


2015


2014


 (Unaudited, Dollars in thousands, except per share amounts)

Interest on finance receivables and loans

$

1,319,359


$

1,150,242


$

5,205,261


$

4,631,847

Leased vehicle income

425,266


300,536


1,502,886


929,745

Other finance and interest income

5,264


4,432


28,677


8,068

Total finance and other interest income

1,749,889


1,455,210


6,736,824


5,569,660

Interest expense

157,893


141,308


628,791


523,203

Leased vehicle expense

336,449


240,635


1,186,983


740,236

Net finance and other interest income

1,255,547


1,073,267


4,921,050


4,306,221

Provision for credit losses

799,978


559,524


2,888,834


2,616,943

Net finance and other interest income after provision for credit losses

455,569


513,743


2,032,216


1,689,278

Profit sharing

10,649


8,152


57,484


74,925

Net finance and other interest income after provision for credit losses and profit sharing

444,920


505,591


1,974,732


1,614,353

Investment gains (losses), net

(225,608)


21,334


(116,127)


116,765

Servicing fee income

42,357


19,576


131,113


72,627

Fees, commissions, and other

86,602


92,546


375,079


368,279

Total other income (loss)

(96,649)


133,456


390,065


557,671

Compensation expense

95,408


98,093


443,212


482,637

Repossession expense

66,456


56,200


241,522


201,017

Other operating costs

77,432


76,163


340,712


278,382

Total operating expenses

239,296


230,456


1,025,446


962,036

Income before income taxes

108,975


408,591


1,339,351


1,209,988

Income tax expense

41,232


161,558


472,994


443,639

Net income

$

67,743


$

247,033


$

866,357


$

766,349








Net income per common share (basic)

$

0.19


$

0.71


$

2.44


$

2.20

Net income per common share (diluted)

$

0.19


$

0.69


$

2.41


$

2.15

Dividends declared per common share

$


$


$


$

0.15

Weighted average common shares (basic)

357,927,012


348,998,644


355,102,742


348,723,472

Weighted average common shares (diluted)

361,956,163


355,856,631


358,883,643


355,722,363



Table 3: Other Financial Information




For the Three Months Ended
December 31,


For the Year Ended
December 31,



2015


2014


2015


2014

Ratios

(Unaudited, Dollars in thousands)


Yield on individually acquired retail installment contracts

17.1%


16.7%


17.4%


17.3%


Yield on purchased receivables portfolios

25.7%


14.7%


15.8%


15.1%


Yield on receivables from dealers

5.3%


5.3%


5.0%


4.1%


Yield on personal loans (1)

20.0%


20.5%


20.3%


23.1%


Yield on earning assets (2)

15.1%


14.9%


15.4%


15.7%


Cost of debt (3)

2.1%


2.1%


2.1%


2.0%


Net interest margin (4)

13.4%


13.1%


13.6%


14.1%


Expense ratio (5)

1.8%


2.2%


2.1%


2.5%


Adjusted expense ratio (5)a

1.8%


2.2%


2.1%


2.2%


Return on average assets (6)

0.8%


3.1%


2.5%


2.6%


Adjusted return on average assets (6)a

0.8%


3.1%


2.5%


2.8%


Return on average equity (7)

6.1%


29.1%


21.1%


24.7%


Adjusted return on average equity (7)a

6.1%


29.1%


21.1%


27.2%


Net charge-off ratio on individually acquired retail installment contracts (8)

9.6%


8.1%


7.3%


6.9%


Adjusted net charge-off ratio on individually acquired retail installment contracts (8)a

9.6%


8.1%


7.0%


6.9%


Net charge-off ratio on purchased receivables portfolios (8)

3.5%


5.2%


(0.5)%


4.5%


Net charge-off ratio on personal loans (8) (9)


18.3%


40.8%


17.6%


Adjusted net charge-off ratio on personal loans (8) (9)a


18.3%


17.9%


17.6%


Net charge-off ratio (8) (9)

9.5%


8.6%


9.0%


7.3%


Adjusted net charge-off ratio (8) (9)a

9.5%


8.6%


7.5%


7.3%


Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (10)

4.4%


4.2%


4.4%


4.2%


Delinquency ratio on personal loans, end of period (10)

6.9%


6.5%


6.9%


6.5%


Delinquency ratio, end of period (10)

4.6%


4.5%


4.6%


4.5%


Common stock dividend payout ratio (11)




6.8%


Allowance ratio (12)

12.2%


11.5%


12.2%


11.5%


Common Equity Tier 1 capital ratio (13)

11.2%


n/a


11.2%


n/a









Other Financial Information


Charge-offs, net of recoveries, on individually acquired retail installment contracts

$

658,432


$

492,434


$

1,959,635


$

1,617,351


Charge-offs, net of recoveries, on purchased receivables portfolios

3,383


12,086


(2,720)


59,657


Charge-offs, net of recoveries, on personal loans


86,045


673,294


264,720


Charge-offs, net of recoveries, on capital leases

6,857


402


17,905


402


Total charge-offs, net of recoveries

$

668,672


$

590,967


$

2,648,114


$

1,942,130


End of period Individually acquired retail installment contracts Delinquent principal over 60 days

$

1,191,567


$

1,030,580


$

1,191,567


$

1,030,580


End of period Personal loans Delinquent principal over 60 days

168,906


138,400


168,906


138,400


End of period Delinquent principal over 60 days

$

1,377,770


$

1,241,453


$

1,377,770


$

1,241,453


End of period assets covered by allowance for credit losses

$

27,031,332


$

26,875,389


$

27,031,332


$

26,875,389


End of period Gross finance receivables and loans held for investment

$

27,392,095


$

27,721,744


$

27,392,095


$

27,721,744


End of period Gross finance receivables, loans, and leases held for investment

34,737,111


33,226,211


34,737,111


33,226,211


Average Gross individually acquired retail installment contracts

$

27,560,674


$

24,399,879


$

26,818,625


$

23,556,137


Average Gross purchased receivables portfolios

385,420


935,734


562,512


1,321,281


Average Gross receivables from dealers

76,598


99,363


89,867


118,358


Average Gross personal loans

2,309,474


1,878,501


2,229,080


1,505,387


Average Gross capital leases

100,549


71,555


116,414


30,648


Average Gross finance receivables, loans and capital leases

$

30,432,715


$

27,385,032


$

29,816,498


$

26,531,811


Average Gross finance receivables, loans, and leases

$

37,546,370


$

32,650,643


$

36,148,709


$

30,642,923


Average Managed assets

$

52,485,567


$

42,676,247


$

48,919,418


$

38,296,610


Average Total assets

$

36,056,323


$

31,491,655


$

35,066,836


$

29,780,754


Average Debt

$

30,137,927


$

27,429,389


$

29,699,885


$

26,158,708


Average Total equity

$

4,427,061


$

3,399,942


$

4,098,287


$

3,097,915














a Non-GAAP measure; see reconciliation in Table 8



(1)

Includes Finance and other interest income; excludes fees



(2)

"Yield on earning assets" is defined as the ratio of annualized Total finance and other interest income, net of Leased vehicle expense, to Average gross finance receivables, loans and leases



(3)

"Cost of debt" is defined as the ratio of annualized Interest expense to Average debt



(4)

"Net interest margin" is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and leases



(5)

"Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets



(6)

"Return on average assets" is defined as the ratio of annualized Net income to Average total assets



(7)

"Return on average equity" is defined as the ratio of annualized Net income to Average total equity



(8)

"Net charge-off ratio" is defined as the ratio of annualized Charge-offs, net of recoveries, to average balance of the respective portfolio.



(9)

Effective as of September 30, 2015, changes in the value of the personal lending portfolio driven by customer default activity are classified in net investment gains (losses) due to the classification of the portfolio as held for sale. As there was accordingly no charge-off activity on personal loans for the three months ended December 31, 2015, the annualized charge-off rate on personal loans reported as of September 30, 2015 has been used as the full year charge-off rate. The average gross balance of personal loans used in the full year charge-off rate was $2,201,551. Additionally, the denominators of the aggregate Net charge-off ratios for the three and twelve months ended December 31, 2015 have been adjusted to $28,123,241 and $29,279,874, respectively, to exclude Personal Lending balances for the three months ended December 31, 2015.



(10)

"Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 60 days to End of period gross balance of the respective portfolio



(11)

"Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share



(12)

"Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses



(13)

"Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets. The ratio was not reported in 2014 as it was implemented with the Basel III regulatory framework in 2015.



Table 4: Credit Quality


Amounts as of and for the three and twelve months ended December 31, 2015 and 2014 are as follows:

(Unaudited, Dollars in thousands)



Three Months Ended December 31,

Retail Installment Contracts Acquired Individually

2015


2014

Credit loss allowance — beginning of period

$

3,159,102


$

2,793,199

Provision for credit losses

781,514


425,573

Charge-offs

(1,190,632)


(955,372)

Recoveries

532,200


462,938

Credit loss allowance — end of period

$

3,282,184


$

2,726,338





Net charge-offs

$

658,432


$

492,434

Average unpaid principal balance (UPB)

27,560,674


24,399,879

Charge-off ratio

9.6%


8.1%




Year Ended December 31,

Retail Installment Contracts Acquired Individually

2015


2014

Credit loss allowance — beginning of year

$

2,726,338


$

2,132,634

Provision for credit losses

2,542,598


2,211,055

Charge-offs

(4,061,343)


(3,341,047)

Recoveries

2,101,708


1,723,696

Impact of loans transferred to held for sale

(27,117)


Credit loss allowance — end of year

$

3,282,184


$

2,726,338





Net charge-offs

$

1,959,635


$

1,617,351

Average unpaid principal balance (UPB)

26,818,625


23,556,137

Charge-off ratio1

7.3%


6.9%


December 31,

Retail Installment Contracts Acquired Individually

20152


20142

Principal, 31-60 days past due

$

2,454,986


9.1%


$

2,319,203


9.4%

Delinquent principal over 60 days

1,191,567


4.4%


1,030,580


4.2%

Total delinquent principal

$

3,646,553


13.6%


$

3,349,783


13.6%



1

Net charge-off performance was impacted by lower of cost or market adjustments on loans sold and designated as held for sale.



2

Percent of unpaid principal balance.



Table 5: Originations



Three Months Ended


Year Ended


December 31,
2015


September 30,
2015


December 31,
2014


December 31,
2015


December 31,
2014

Retained Originations

(Unaudited, Dollars in thousands)

Retail installment contracts

$

3,830,337


$

4,650,381


$

3,220,019


$

16,692,229


$

13,531,801

Average APR

13.9%


16.1%


14.2%


16.9%


15.6%

Discount

1.5%


1.7%


1.0%


2.5%


3.4%










Personal loans

$

304,748


$

158,328


$

562,178


$

887,483


$

1,182,171

Average APR

24.4%


21.0%


20.5%


21.2%


20.1%

Discount














Receivables from dealers

$


$


$


$


$

25,515

Average APR





4.1%

Discount














Leased vehicles

$

1,009,526


$

1,568,104


$

721,932


$

5,132,053


$

4,111,146










Capital leases

$

2,338


$

1,103


$

42,368


$

67,244


$

93,444

Total originations retained

$

5,146,949


$

6,377,916


$

4,546,497


$

22,779,009


$

18,944,077










Sold Originations1









Retail installment contracts

$

1,098,674


$

1,243,456


$

1,016,165


$

5,419,730


$

6,049,653

Average APR

2.6%


2.4%


4.1%


4.2%


4.8%










Receivables from dealers

$


$


$


$


$

8,724

Average APR





5.3%










Leased vehicles

$


$


$


$


$

369,114

Total originations sold

$

1,098,674


$

1,243,456


$

1,016,165


$

5,419,730


$

6,427,491










Total SC originations

$

6,245,623


$

7,621,372


$

5,562,662


$

28,198,739


$

25,371,568










Facilitated Originations









Receivables from dealers

$


$


$


$


$

392,920

Leased vehicles



564,875


632,471


1,761,512

Total originations facilitated for affiliates

$


$


$

564,875


$

632,471


$

2,154,432










Total Originations

$

6,245,623


$

7,621,372


$

6,127,537


$

28,831,210


$

27,526,000



1

Only includes assets both originated and sold in the period. Total asset sales for the period are shown in Table 6.



Table 6: Asset Sales


Asset sales may include assets originated in prior periods.



Three Months Ended


Year Ended


December 31,
2015


September 30,
2015


December 31,
2014


December 31,
2015


December 31,
2014

Asset Sales

(Unaudited, Dollars in thousands)

Retail installment contracts

$

1,869,113


$

3,057,654


$

1,137,471


$

7,862,520


$

6,620,620

Average APR

4.5%


10.7%


4.1%


7.2%


4.8%










Receivables from dealers

$


$


$


$


$

18,227

Average APR





4.7%










Leased vehicles

$


$


$


$

1,316,958


$

369,114

Total asset sales

$

1,869,113


$

3,057,654


$

1,137,471


$

9,179,478


$

7,007,961



Table 7: Ending Portfolio


Ending outstanding balance, average APR and remaining unaccreted discount as of December 31, 2015 and 2014 are as follows:



December 31, 2015


December 31, 2014


(Unaudited, Dollars in thousands)

Retail installment contracts

$

27,223,768


$

25,401,461

Average APR

16.8%


16.0%

Discount

2.0%


2.1%





Personal loans

$

941


$

2,128,769

Average APR

20.9%


23.1%

Discount


0.1%





Receivables from dealers

$

76,941


$

100,164

Average APR

4.6%


4.3%

Discount






Leased vehicles

$

7,345,016


$

5,504,467





Capital leases

$

90,445


$

91,350



Table 8: Reconciliation of Non-GAAP Measures


(Dollars in thousands, except per share data)



For the Year Ended
December 31, 2015

Charge-offs, net of recoveries on personal loans

$

673,294

  Deduct: LOCM adjustment on personal loans

(377,598)

Adjusted Net charge-offs on personal loans

$

295,696



Average gross personal loans1

$

2,201,551

Net charge-off ratio on personal loans

40.8%

Adjusted net charge-off ratio on personal loans

17.9%



Charge-offs, net of recoveries on retail installment contracts acquired individually

$

1,959,635

  Deduct: LOCM adjustment on retail installment contracts acquired individually

(73,388)

Adjusted Net charge-offs on retail installment contracts acquired individually

$

1,886,247



Average Gross retail installment contracts acquired individually

$

26,818,625

Net charge-off ratio on retail installment contracts acquired individually

7.3%

Adjusted Net charge-off ratio on retail installment contracts acquired individually

7.0%



Total charge-offs, net of recoveries

$

2,648,114

  Deduct: LOCM adjustment on personal loans

(377,598)

  Deduct: LOCM adjustment on retail installment contracts acquired individually

(73,388)

Adjusted Net charge-offs total

$

2,197,128



Average Gross finance receivables and loans1

$

29,279,874

Net charge-off ratio

9.0%

Adjusted Net charge-off ratio total

7.5%




Three Months Ended
September 30, 2015

Charge-offs, net of recoveries on retail installment contracts acquired individually

$

610,657

  Deduct: LOCM adjustment on retail installment contracts acquired individually

(64,140)

Adjusted Net charge-offs on retail installment contracts acquired individually

$

546,517



Average Gross retail installment contracts acquired individually

$

27,687,564

Net charge-off ratio on retail installment contracts acquired individually

8.8%

Adjusted Net charge-off ratio on retail installment contracts acquired individually

7.9%



1 The denominators of the Personal Lending Net charge-off ratios and the aggregate Net charge-off ratios for the three and twelve months ended December 31, 2015 have been adjusted to exclude Personal Lending balances for the three months ended December 31, 2015.




For the Year Ended
December 31, 2014

Net income

$

766,349

Add back:


Stock compensation recognized upon initial public offering ("IPO"), net of tax

74,428

Other IPO-related expenses, net of tax

1,409

Core net income

$

842,186



Weighted average common shares (diluted)

355,722,363

Net income per common share (diluted)

$

2.15

Core net income per common share (diluted)

$

2.37





Average total assets

$

29,780,754

Return on average assets

2.6%

Core return on average assets

2.8%



Average total equity

$

3,097,915

Return on average equity

24.7%

Core return on average equity

27.2%



Operating expenses

$

962,036

Deduct:


Stock compensation recognized upon IPO, net of tax

(117,654)

Other IPO-related expenses, net of tax

(2,175)

Core operating expenses

$

842,207



Average managed assets

38,296,610

Expense ratio

2.5%

Core expense ratio

2.2%

 

SOURCE Santander Consumer USA Holdings Inc.



RELATED LINKS

http://www.santanderconsumerusa.com