Santander Consumer USA Holdings Inc. Announces Filing of Form 10-K

News provided by

Santander Consumer USA Holdings Inc.

Mar 31, 2016, 06:15 ET

DALLAS, March 31, 2016 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company"), a full-service, technology-driven consumer finance company focused on vehicle finance and third-party servicing, filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the "2015 10-K").

As the Company previously disclosed in its Form 8-K filed with the Securities and Exchange Commission (the "SEC") on March 15, 2016, the Company revised its methodology for estimating credit loss allowance on individually acquired retail installment contracts and has restated prior periods, which are not materially different than its reported results on an annual basis. These changes are included in the Company's 2015 10-K in Item 8, Financial Statements, and Item 9B, Other Information, and are summarized in the Financial Supplement attached to this press release. SC has determined it is not required to refile any of its previously filed financial statements.

"After completing this process and revising our methodology, we remain confident in SC's ability to execute on its business plan," said Jason Kulas, President and Chief Executive Officer. "We continue to focus on upholding disciplined underwriting standards to deliver strong returns, robust profitability and value to our shareholders."

Highlights of the impacts to previously reported figures are as follows (additional details can be found in the Financial Supplement to this press release and in Item 9B of the Form 10-K):

For the year ended December 31, 2015 (variances compared to unaudited figures from January 27, 2016, Current Report on Form 8-K):

  • Net income decreased approximately 5 percent to $827 million, or $2.31 per diluted common share, from $866 million, or $2.41 per diluted common share, driven by the correction of an overstatement of the allowance at the beginning of the year
  • Year-end credit loss allowance increased $7 million, or less than 1 percent
    • The allowance ratio1 increased 10 basis points to 12.3 percent
  • Year-end stockholders' equity decreased $17 million, or less than 1 percent
  • Net charge-off ratio remains unchanged

For the quarter ended December 31, 2015 (variances compared to unaudited figures from January 27, 2016, Current Report on Form 8-K):

  • Net income decreased to $12 million, or $0.03 per diluted common share, from $68 million, or $0.19 per diluted common share, driven by the correction of an overstatement in the allowance as of the beginning of the quarter
  • Quarter-end credit loss allowance increased $7 million, or less than 1 percent
    • The allowance ratio1 increased 10 basis points to 12.3 percent
  • Quarter-end stockholders' equity decreased $17 million, or less than 1 percent
  • Net charge-off ratio remains unchanged

For the year ended December 31, 2014:

  • Net income decreased approximately 5 percent to restated $724 million, or $2.04 per diluted common share, from reported $766 million, or $2.15 per diluted common share
  • Year-end credit loss allowance decreased by $57 million, or 2 percent
    • The allowance ratio1 decreased 20 basis points to 11.3 percent
  • Year-end stockholders' equity increased by $35 million, or 1 percent
  • Net charge-off ratio remains unchanged

For the year ended December 31, 2013:

  • Net income increased approximately 2 percent to restated $709 million, or $2.05 per diluted common share, from reported $696 million, or $2.01 per diluted common share
  • Year-end credit loss allowance decreased by $122 million, or 6 percent
    • The allowance ratio1 decreased 60 basis points to 9.7 percent
  • Year-end stockholders' equity increased by $77 million, or 3 percent
  • Net charge-off ratio remains unchanged

SC's revised methodology assesses lifetime impairment on loans classified as a troubled debt restructuring ("TDR"), inherent and probable loss coverage on individually acquired loans held for investment not classified as TDR ("non-TDR") and qualitative adjustments related to non-modeled factors, which results in an overall portfolio reserve level (a bottom-up approach). The Company's previous methodology assessed inherent and probable loss coverage on the overall portfolio and qualitative adjustments related to non-modeled factors, and deducted lifetime impairment on TDRs to arrive at an estimate of adequate loss coverage related to non-TDRs (a top-down approach).

"We are now current with our SEC filings. Our control environment is of the utmost importance to us and we will remain focused on the remediation efforts," said Izzy Dawood, Chief Financial Officer.

In connection with this change in methodology and the resulting immaterial restatements, the Company has identified and disclosed several material weaknesses in internal controls over financial reporting primarily related to the estimate for credit loss allowance. Management is currently working on plans to remediate these material weaknesses. Further details can be found in Item 9A of the 2015 10-K.

1Excludes purchased receivables portfolio and finance receivables held for sale.

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) our ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner; (c) adverse economic conditions in the United States and worldwide may negatively impact our results; (d) our business could suffer if our access to funding is reduced; (e) we face significant risks implementing our growth strategy, some of which are outside our control; (f) we may incur unexpected costs and delays in connection with exiting our personal lending business; (g) 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; (h) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (i) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (j) loss of our key management or other personnel, or an inability to attract such management and personnel, could negatively impact our business; (k) 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 (l) 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

[email protected]


Media Relations

Laurie Kight

214.801.6455

[email protected]

Table 1:




Selected Financial Information
(Dollar amounts in thousands, except per share data)






The following table summarizes the impacts of the corrections for the years ended December 31, 2015, December 31, 2014, and December 31, 2013. Impacts for the year ended December 31, 2015, are being compared to unaudited figures published in the January 27, 2016, 8-K filing. Other periods are corrections to previously filed financial statements.

As of and For the Year Ended December 31,

2015

2014

2013

Provision for credit losses

As Published/Previously Reported

$         2,888,834

$         2,616,943

$         1,852,967

As Revised/Restated

$         2,965,198

$         2,682,809

$         1,832,494

Variance ($)

76,364

65,866

(20,473)

Variance (%)

2.6 %

2.5 %

(1.1)%






Allowance for credit losses

As Published/Previously Reported

$         3,309,962

$         3,085,261

$         2,313,074

As Revised/Restated

$         3,316,817

$         3,028,753

$         2,190,700

Variance ($)

6,855

(56,508)

(122,374)

Variance (%)

0.2 %

(1.8)%

(5.3)%






Allowance ratio

As Published/Previously Reported

12.2 %

11.5 %

10.3 %

As Revised/Restated

12.3 %

11.3 %

9.7 %

Variance (bps)

10

(20)

(60)






Net income

As Published/Previously Reported

$            866,357

$            766,349

$            695,670

As Revised/Restated

$            827,293

$            724,237

$            708,790

Variance ($)

(39,064)

(42,112)

13,120

Variance (%)

(4.5)%

(5.5)%

1.9 %






Diluted earnings per share

As Published/Previously Reported

$                  2.41

$                  2.15

$                  2.01

As Revised/Restated

$                  2.31

$                  2.04

$                  2.05

Variance ($)

(0.10)

(0.11)

0.04

Variance (%)

(4.1)%

(5.1)%

2.0 %






TDR unpaid principal balance

As Published/Previously Reported

n/a

$         4,191,208

$         2,604,351

As Revised/Restated

$         4,579,931

$         4,020,299

$         2,478,544

Variance ($)

n/a

(170,909)

(125,807)

Variance (%)

n/a

(4.1)%

(4.8)%






TDR impairment

As Published/Previously Reported

 n/a 

$            797,240

$            475,128

As Revised/Restated

$         1,356,092

$         1,159,827

$            729,272

Variance ($)

n/a

362,587

254,144

Variance (%)

n/a

45.5 %

53.5 %






Auto net charge-off ratio1

Unchanged - 7.0%

Unchanged - 6.9%

Unchanged - 5.9%






TCE/TA ratio2

As Published/Previously Reported

n/a

10.6 %

9.7 %

As Revised/Restated

11.8 %

10.7 %

10.0 %

Variance (bps)

n/a

10

30






Common equity tier 1 capital ratio ("CET1")

As Published/Previously Reported

11.2 %

n/a

n/a

As Revised/Restated

11.1 %

n/a

n/a

Variance (bps)

(10)

n/a

n/a






12015 net charge-off ratio of 7.3%; after adjusting for LOCM impairments net charge-off ratio of 7.0%. Non- GAAP measure; see reconciliation in Table 4.

2Non- GAAP measure; see reconciliation in Table 4.

The following table summarizes the impacts of the corrections for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015. Impacts for the three months ended December 31, 2015, are being compared to unaudited figures published in the January 27, 2016, 8-K filing.


As of and For the Three Months Ended

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

Provision for credit losses






As Published/Previously Reported

$              799,978

$               744,140

$            738,735

$            605,981

As Revised/Restated

$              902,526

$               771,910

$            616,075

$            674,687

Variance ($)

102,548

27,770

(122,660)

68,706

Variance (%)

12.8 %

3.7 %

(16.6)%

11.3 %








Allowance for credit losses

As Published/Previously Reported

$           3,309,962

$            3,173,327

$         3,530,919

$         3,191,902

As Revised/Restated

$           3,316,817

$            3,090,635

$         3,420,457

$         3,205,100

Variance ($)

6,855

(82,692)

(110,462)

12,198

Variance (%)

0.2 %

(2.6)%

(3.1)%

0.4%








Allowance ratio

As Published/Previously Reported

12.2 %

11.8 %

12.4 %

11.5 %

As Revised/Restated

12.3 %

11.5 %

12.0 %

11.5 %

Variance (bps)

10

(30)

(40)

—








Net income

As Published/Previously Reported

$                67,743

$               223,900

$            285,464

$            289,250

As Revised/Restated

$                12,138

$               206,626

$            362,247

$            246,282

Variance ($)

(55,605)

(17,274)

76,783

(42,968)

Variance (%)

(82.1)%

(7.7)%

26.9 %

(14.9)%








Diluted earnings per share

As Published/Previously Reported

$                    0.19

$                     0.62

$                  0.79

$                  0.81

As Revised/Restated

$                    0.03

$                     0.57

$                  1.01

$                  0.69

Variance ($)

(0.16)

(0.05)

0.22

(0.12)

Variance (%)

(84.2)%

(8.1)%

27.8 %

(14.8)%








TDR unpaid principal balance

As Published/Previously Reported

n/a

n/a

n/a

n/a

As Revised/Restated

$           4,579,931

$            4,306,116

$         4,422,723

$         4,389,071

Variance ($)

n/a

n/a

n/a

n/a

Variance (%)

n/a

n/a

n/a

n/a








TDR impairment

As Published/Previously Reported

 n/a 

$            1,402,215

$            967,994

$            878,278

As Revised/Restated

$           1,356,092

$            1,323,416

$         1,384,649

$         1,273,051

Variance ($)

n/a

(78,799)

416,655

394,773

Variance (%)

n/a

(5.6)%

43.0 %

44.9 %








Auto net charge-off ratio1

Unchanged - 9.6%

Unchanged - 7.9%

Unchanged - 4.5%

Unchanged - 6.1%








TCE/TA ratio2

As Published/Previously Reported

 n/a 

11.8 %

11.5 %

10.8 %

As Revised/Restated

11.8 %

11.9 %

11.6 %

10.8 %

Variance (bps)

 n/a 

10

10

—








Common equity tier 1 capital ratio ("CET1")

As Published/Previously Reported

11.2 %

11.2%

10.8%

n/a

As Revised/Restated

11.1 %

11.4%

11.0%

10.1%

Variance (bps)

(10)

20

20

n/a








1Q3'15 net charge-off ratio of 8.8%; after adjusting for LOCM impairments net charge-off ratio of 7.9%. Non- GAAP measure; see reconciliation in Table 4.

2Non- GAAP measure; see reconciliation in Table 4.

The following table summarizes the impacts of the corrections for the three months ended December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014.


As of and For the Three Months Ended

December 31, 2014

September 30, 2014

June 30, 2014

March 31, 2014

Provision for credit losses






As Published/Previously Reported

$               559,524

$               769,689

$               589,136

$               698,594

As Revised/Restated

$               726,794

$               802,267

$               549,028

$               604,720

Variance ($)

167,270

32,578

(40,108)

(93,874)

Variance (%)

29.9%

4.2%

(6.8)%

(13.4)%








Allowance for credit losses

As Published/Previously Reported

$            3,085,261

$            3,100,378

$            2,882,464

$            2,648,777

As Revised/Restated

$            3,028,753

$            2,876,600

$            2,626,108

$            2,432,529

Variance ($)

(56,508)

(223,778)

(256,356)

(216,248)

Variance (%)

(1.8)%

(7.2)%

(8.9)%

(8.2)%








Allowance ratio

As Published/Previously Reported

11.5%

12.1%

11.4%

11.0%

As Revised/Restated

11.3%

11.2%

10.4%

10.1%

Variance (bps)

(20)

(90)

(100)

(90)








Net income

As Published/Previously Reported

$               247,033

$               191,369

$               246,481

$                 81,466

As Revised/Restated

$               141,667

$               169,888

$               271,853

$               140,829

Variance ($)

(105,366)

(21,481)

25,372

59,363

Variance (%)

(42.7)%

(11.2)%

10.3%

72.9%








Diluted earnings per share

As Published/Previously Reported

$                     0.69

$                     0.54

$                     0.69

$                     0.23

As Revised/Restated

$                     0.40

$                     0.48

$                     0.76

$                     0.40

Variance ($)

(0.29)

(0.06)

0.07

0.17

Variance (%)

(42.0)%

(11.1)%

10.1%

73.9%








TDR unpaid principal balance

As Published/Previously Reported

$            4,191,208

$            3,666,676

$            3,151,614

$            2,812,852

As Revised/Restated

$            4,020,299

$            3,499,144

$            2,998,950

$            2,672,132

Variance ($)

(170,909)

(167,532)

(152,664)

(140,720)

Variance (%)

(4.1)%

(4.6)%

(4.8)%

(5.0)%








TDR impairment

As Published/Previously Reported

$               797,240

$               605,643

$               551,767

$               498,811

As Revised/Restated

$            1,159,827

$            1,016,114

$               875,879

$               769,327

Variance ($)

362,587

410,471

324,112

270,516

Variance (%)

45.5%

67.8%

58.7%

54.2%








Auto net charge-off ratio

Unchanged - 8.1%

Unchanged - 7.9%

Unchanged - 5.2%

Unchanged - 6.2%








TCE/TA ratio1

As Published/Previously Reported

10.6%

10.4%

10.0%

9.7%

As Revised/Restated

10.7%

10.8%

10.5%

10.1%

Variance (bps)

10

40

50

40








1Non- GAAP measure; see reconciliation in Table 4.

Table 2:
















Condensed Consolidated Balance Sheets
(Dollar amounts in thousands)

The following table summarizes the impacts of the corrections on our condensed consolidated balance sheets as of December 31, 2015, December 31, 2014, and December 31, 2013. Impacts as of December 31, 2015, are being compared to unaudited figures published in the January 27, 2016, 8-K filing. Other periods are corrections to previously filed financial statements



















For the Year Ended December 31,



2015




2014




2013


As Published

Adjustments

As Revised

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Assets
















Finance receivables held for investment, net

$ 23,464,147

$      15,533

$ 23,479,680

$ 23,915,551

$      56,508

$ 23,972,059

$21,268,543

$   122,374

$21,390,917

Deferred tax asset

—

—

—

21,244

(2,164)

19,080

197,041

(44,839)

152,202

Total assets

$ 36,561,392

$        8,981

$ 36,570,373

$ 32,342,176

$      54,344

$ 32,396,520

$26,401,896

$     77,435

$26,479,331

Liabilities and Equity
















Liabilities:
















Deferred tax liabilities, net

$      882,110

$      26,142

$      908,252

$      492,303

$      19,021

$      511,324

$               —

$            —

$              —

Total liabilities

32,119,281

26,129

32,145,410

28,783,827

19,021

28,802,848

23,715,064

—

23,715,064


















Equity:
















Retained earnings

2,857,144

(3,741)

2,853,403

1,990,787

35,323

2,026,110

1,276,754

77,435

1,354,189

Total stockholders' equity

4,442,111

(17,148)

4,424,963

3,558,349

35,323

3,593,672

2,686,832

77,435

2,764,267

Total liabilities and equity

$ 36,561,392

$        8,981

$ 36,570,373

$ 32,342,176

$      54,344

$ 32,396,520

$26,401,896

$     77,435

$26,479,331




































The following table summarizes the impacts of the corrections on our condensed consolidated balance sheets as of September 30, 2015, June 30, 2015, and March 31, 2015.



















September 30, 2015

June 30, 2015

March 30, 2015

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Assets
















Finance receivables held for investment, net

$ 23,464,030

$      82,692

$ 23,546,722

$ 24,778,311

$    110,462

$ 24,888,773

$24,650,372

$   (12,198)

$24,638,174

Deferred tax asset

14,488

(2,895)

11,593

5,152

(4,087)

1,065

19,367

436

19,803

Total assets

$ 35,991,228

$      79,797

$ 36,071,025

$ 36,039,919

$    106,375

$ 36,146,294

$34,665,571

$   (11,762)

$34,653,809

Liabilities and Equity
















Liabilities:
















Deferred tax liabilities, net

$      698,509

$      27,933

$      726,442

$      556,013

$      37,237

$      593,250

$     509,428

$     (4,117)

$     505,311

Total liabilities

31,630,387

27,933

31,658,320

31,794,469

37,237

31,831,706

30,815,090

$     (4,117)

30,810,973


















Equity:
















Retained earnings

2,789,401

51,864

2,841,265

2,565,501

69,138

2,634,639

2,280,037

(7,645)

2,272,392

Total stockholders' equity

4,360,841

51,864

4,412,705

4,245,450

69,138

4,314,588

3,850,481

(7,645)

3,842,836

Total liabilities and equity

$ 35,991,228

$      79,797

$ 36,071,025

$ 36,039,919

$    106,375

$ 36,146,294

$34,665,571

$   (11,762)

$34,653,809




































The following table summarizes the impacts of the corrections on our condensed consolidated balance sheets as of September 30, 2014, June 30, 2014, and March 31, 2014:



















September 30, 2014

June 30, 2014

March 30, 2014

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Assets
















Finance receivables held for investment, net

$ 22,802,129

$    223,778

$ 23,025,907

$ 22,763,432

$    256,356

$ 23,019,788

$22,195,918

$   216,248

$22,412,166

Deferred tax asset

143,524

(83,089)

60,435

220,338

(94,186)

126,152

232,185

(79,450)

152,735

Total assets

$ 30,641,292

$    140,689

$ 30,781,981

$ 29,732,396

$    162,170

$ 29,894,566

$28,796,233

$   136,798

$28,933,031

Liabilities and Equity
















Total liabilities

27,338,079

—

27,338,079

26,630,138

—

26,630,138

25,888,215

—

25,888,215


















Equity:
















Retained earnings

1,743,754

140,689

1,884,443

1,552,385

162,170

1,714,555

1,358,220

136,798

1,495,018

Total stockholders' equity

3,303,213

140,689

3,443,902

3,102,258

162,170

3,264,428

2,908,018

136,798

3,044,816

Total liabilities and equity

$ 30,641,292

$    140,689

$ 30,781,981

$ 29,732,396

$    162,170

$ 29,894,566

$28,796,233

$   136,798

$28,933,031

Table 3:
















Condensed Consolidated Statements of Income and Comprehensive Income
(Dollar amounts in thousands, except per share data)

The following table summarizes the impacts of the corrections on our condensed consolidated statements of income for the years ended December 31, 2015, December 31, 2014, and December 31, 2013. Impacts for the year ended December 31, 2015, are being compared to unaudited figures published in the January 27, 2016, 8-K filing. Other periods are corrections to previously filed financial statements.



















For the Year Ended December 31,

2015

2014

2013

As Published

Adjustments

As Revised

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Interest on finance receivables and loans

$   5,205,261

$       45,903

$ 5,251,164

$ 4,631,847

$                 —

$ 4,631,847

$ 3,773,072

$               —

$ 3,773,072

Leased vehicle income

1,502,886

(465,093)

1,037,793

929,745

(269,252)

660,493

154,939

(41,048)

113,891

Other finance and interest income

28,677

(10,515)

18,162

8,068

—

8,068

6,010

—

6,010

Total finance and other interest income

6,736,824

(429,705)

6,307,119

5,569,660

(269,252)

5,300,408

3,934,021

(41,048)

3,892,973

Interest expense

628,791

—

628,791

523,203

—

523,203

408,787

—

408,787

Leased vehicle expense

1,186,983

(465,093)

721,890

740,236

(269,252)

470,984

121,541

(41,048)

80,493

Net finance and other interest income

4,921,050

35,388

4,956,438

4,306,221

—

4,306,221

3,403,693

—

3,403,693

Provision for credit losses

2,888,834

76,364

2,965,198

2,616,943

65,866

2,682,809

1,852,967

(20,473)

1,832,494

Net finance and other interest income after provision for credit losses

2,032,216

(40,976)

1,991,240

1,689,278

(65,866)

1,623,412

1,550,726

20,473

1,571,199

Profit sharing

57,484

—

57,484

74,925

—

74,925

78,246

—

78,246

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

1,974,732

(40,976)

1,933,756

1,614,353

(65,866)

1,548,487

1,472,480

20,473

1,492,953

Investment gains (losses), net

(116,127)

—

(116,127)

116,765

—

116,765

40,689

—

40,689

Servicing fee income

131,113

—

131,113

72,627

—

72,627

25,464

—

25,464

Fees, commissions, and other

375,079

—

375,079

368,279

—

368,279

245,413

—

245,413

Total other income (loss)

390,065

—

390,065

557,671

—

557,671

311,566

—

311,566

Compensation expense

443,212

13,050

456,262

482,637

—

482,637

305,056

—

305,056

Repossession expense

241,522

—

241,522

201,017

—

201,017

147,543

—

147,543

Other operating costs

340,712

—

340,712

278,382

—

278,382

246,359

—

246,359

Total operating expenses

1,025,446

13,050

1,038,496

962,036

—

962,036

698,958

—

698,958

Income before income taxes

1,339,351

(54,026)

1,285,325

1,209,988

(65,866)

1,144,122

1,085,088

20,473

1,105,561

Income tax expense

472,994

(14,962)

458,032

443,639

(23,754)

419,885

389,418

7,353

396,771

Net income

866,357

(39,064)

827,293

766,349

(42,112)

724,237

695,670

13,120

708,790

Noncontrolling interests

—

—

—

—

—

—

1,821

—

1,821

Net income attributable to Santander Consumer USA Holdings Inc. shareholders

$      866,357

$      (39,064)

$    827,293

$    766,349

$         (42,112)

$    724,237

$    697,491

$         13,120

$    710,611


















Net income

$      866,357

$      (39,064)

$    827,293

$    766,349

$         (42,112)

$    724,237

$    695,670

$         13,120

$    708,790

Other comprehensive income: 

Change in unrealized gains (losses) on cash flow hedges, net of tax

(1,428)

—

(1,428)

6,406

—

6,406

9,563

—

9,563

Change in unrealized gains (losses) on investments available for sale, net of tax

—

—

—

—

—

—

(3,252)

—

(3,252)

Other comprehensive income, net

(1,428)

—

(1,428)

6,406

—

6,406

6,311

—

6,311

Comprehensive income 

864,929

(39,064)

825,865

772,755

(42,112)

730,643

701,981

13,120

715,101

Comprehensive (income) loss attributable to noncontrolling interests

—

—

—

—

—

—

953

—

953

Comprehensive income attributable to Santander Consumer USA Holdings Inc. shareholders

$      864,929

$      (39,064)

$    825,865

$    772,755

$         (42,112)

$    730,643

$    702,934

$         13,120

$    716,054

Net income per common share (basic)

$            2.44

$          (0.11)

$          2.33

$          2.20

$             (0.12)

$          2.08

$          2.01

$             0.04

$          2.05

Net income per common share (diluted)

$            2.41

$          (0.10)

$          2.31

$          2.15

$             (0.11)

$          2.04

$          2.01

$             0.04

$          2.05

Weighted average common shares (basic)

355,102,742

—

355,102,742

348,723,472

—

348,723,472

346,177,515

—

346,177,515

Weighted average common shares (diluted)

358,883,643

3,508

358,887,151

355,722,363

—

355,722,363

346,177,515

—

346,177,515

Condensed Consolidated Statements of Income and Comprehensive Income
(Dollar amounts in thousands, except per share data)

The following table summarizes the impacts of the corrections on our condensed consolidated statements of income for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015. Impacts for the three months ended December 31, 2015, are being compared to unaudited figures published in the January 27, 2016, 8-K filing. Other periods are corrections to previously filed financial statements.

























For the Three Months Ended December 31, 2015

For the Three Months Ended September 30, 2015

As Published

Adjustments

As Revised

As Reported

Corrections

As Restated

Interest on finance receivables and loans

$   1,319,359

$           45,903

$ 1,365,262

$ 1,334,655

$                 —

$ 1,334,655

Leased vehicle income

425,266

(130,157)

295,109

389,537

(122,326)

267,211

Other finance and interest income

5,264

(10,515)

(5,251)

9,334

—

9,334

Total finance and other interest income

1,749,889

(94,769)

1,655,120

1,733,526

(122,326)

1,611,200

Interest expense

157,893

—

157,893

171,420

—

171,420

Leased vehicle expense

336,449

(130,157)

206,292

296,352

(122,326)

174,026

Net finance and other interest income

1,255,547

35,388

1,290,935

1,265,754

—

1,265,754

Provision for credit losses

799,978

102,548

902,526

744,140

27,770

771,910

Net finance and other interest income after provision for credit losses

455,569

(67,160)

388,409

521,614

(27,770)

493,844

Profit sharing

10,649

—

10,649

11,818

—

11,818

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

444,920

(67,160)

377,760

509,796

(27,770)

482,026

Investment gains (losses), net

(225,608)

—

(225,608)

1,567

—

1,567

Servicing fee income

42,357

—

42,357

35,910

—

35,910

Fees, commissions, and other

86,602

—

86,602

93,076

—

93,076

Total other income (loss)

(96,649)

—

(96,649)

130,553

—

130,553

Compensation expense

95,408

13,050

108,458

136,291

—

136,291

Repossession expense

66,456

—

66,456

60,770

—

60,770

Other operating costs

77,432

—

77,432

90,282

—

90,282

Total operating expenses

239,296

13,050

252,346

287,343

—

287,343

Income before income taxes

108,975

(80,210)

28,765

353,006

(27,770)

325,236

Income tax expense

41,232

(24,605)

16,627

129,106

(10,496)

118,610

Net income

$        67,743

$         (55,605)

$      12,138

$    223,900

$         (17,274)

$    206,626












Net income

$        67,743

$         (55,605)

$      12,138

$    223,900

$         (17,274)

$    206,626

Other comprehensive income:    










     Change in unrealized gains (losses) on cash flow hedges, net of tax

26,364

—

26,364

(18,513)

—

(18,513)

Comprehensive income

$        94,107

$         (55,605)

$      38,502

$    205,387

$         (17,274)

$    188,113

Net income per common share (basic)

$            0.19

$             (0.16)

$          0.03

$          0.63

$             (0.05)

$          0.58

Net income per common share (diluted)

$            0.19

$             (0.16)

$          0.03

$          0.62

$             (0.05)

$          0.57

Weighted average common shares (basic)

357,927,012

—

357,927,012

354,150,973

—

354,150,973

Weighted average common shares (diluted)

361,956,163

13,919

361,970,082

357,837,426

—

357,837,426













For the Three Months Ended June 30, 2015

For the Three Months Ended March 31, 2015

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Interest on finance receivables and loans

$   1,321,245

$                 —

$ 1,321,245

$ 1,230,002

$                 —

$ 1,230,002

Leased vehicle income

355,137

(111,280)

243,857

332,946

(101,330)

231,616

Other finance and interest income

6,738

—

6,738

7,341

—

7,341

Total finance and other interest income

1,683,120

(111,280)

1,571,840

1,570,289

(101,330)

1,468,959

Interest expense

150,622

—

150,622

148,856

—

148,856

Leased vehicle expense

281,118

(111,280)

169,838

273,064

(101,330)

171,734

Net finance and other interest income

1,251,380

—

1,251,380

1,148,369

—

1,148,369

Provision for credit losses

738,735

(122,660)

616,075

605,981

68,706

674,687

Net finance and other interest income after provision for credit losses

512,645

122,660

635,305

542,388

(68,706)

473,682

Profit sharing

21,501

—

21,501

13,516

—

13,516

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

491,144

122,660

613,804

528,872

(68,706)

460,166

Investment gains (losses), net

86,667

—

86,667

21,247

—

21,247

Servicing fee income

28,043

—

28,043

24,803

—

24,803

Fees, commissions, and other

94,268

—

94,268

101,133

—

101,133

Total other income (loss)

208,978

—

208,978

147,183

—

147,183

Compensation expense

110,973

—

110,973

100,540

—

100,540

Repossession expense

55,470

—

55,470

58,826

—

58,826

Other operating costs

86,985

—

86,985

86,013

—

86,013

Total operating expenses

253,428

—

253,428

245,379

—

245,379

Income before income taxes

446,694

122,660

569,354

430,676

(68,706)

361,970

Income tax expense

161,230

45,877

207,107

141,426

(25,738)

115,688

Net income

$      285,464

$           76,783

$    362,247

$    289,250

$         (42,968)

$    246,282












Net income

$      285,464

$           76,783

$    362,247

$    289,250

$         (42,968)

$    246,282

Other comprehensive income:    










     Change in unrealized gains (losses) on cash flow hedges, net of tax

3,564

—

3,564

(12,843)

—

(12,843)

Comprehensive income

$      289,028

$           76,783

$    365,811

$    276,407

$         (42,968)

$    233,439

Net income per common share (basic)

$            0.80

$               0.22

$          1.02

$          0.83

$             (0.13)

$          0.70

Net income per common share (diluted)

$            0.79

$               0.22

$          1.01

$          0.81

$             (0.12)

$          0.69

Weighted average common shares (basic)

355,091,818

—

355,091,818

349,421,960

—

349,421,960

Weighted average common shares (diluted)

359,193,738

—

359,193,738

356,654,466

—

356,654,466

Condensed Consolidated Statements of Income and Comprehensive Income
(Dollar amounts in thousands, except per share data)

The following table summarizes the impacts of the corrections on our condensed consolidated statements of income for the three months ended December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014.

























For the Three Months Ended December 31, 2014

For the Three Months Ended September 30, 2014

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Interest on finance receivables and loans

$ 1,150,242

$                 —

$ 1,150,242

$ 1,177,828

$                 —

$ 1,177,828

Leased vehicle income

300,536

(88,276)

212,260

263,148

(81,435)

181,713

Other finance and interest income

4,432

—

4,432

2,512

—

2,512

Total finance and other interest income

1,455,210

(88,276)

1,366,934

1,443,488

(81,435)

1,362,053

Interest expense

141,308

—

141,308

129,135

—

129,135

Leased vehicle expense

240,635

(88,276)

152,359

200,397

(81,435)

118,962

Net finance and other interest income

1,073,267

—

1,073,267

1,113,956

—

1,113,956

Provision for credit losses

559,524

167,270

726,794

769,689

32,578

802,267

Net finance and other interest income after provision for credit losses

513,743

(167,270)

346,473

344,267

(32,578)

311,689

Profit sharing

8,152

—

8,152

10,556

—

10,556

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

505,591

(167,270)

338,321

333,711

(32,578)

301,133

Investment gains (losses), net

21,334

—

21,334

38,015

—

38,015

Servicing fee income

19,576

—

19,576

20,547

—

20,547

Fees, commissions, and other

92,546

—

92,546

91,399

—

91,399

Total other income (loss)

133,456

—

133,456

149,961

—

149,961

Compensation expense

98,093

—

98,093

88,940

—

88,940

Repossession expense

56,200

—

56,200

50,738

—

50,738

Other operating costs

76,163

—

76,163

62,228

—

62,228

Total operating expenses

230,456

—

230,456

201,906

—

201,906

Income before income taxes

408,591

(167,270)

241,321

281,766

(32,578)

249,188

Income tax expense

161,558

(61,904)

99,654

90,397

(11,097)

79,300

Net income

$    247,033

$       (105,366)

$    141,667

$    191,369

$         (21,481)

$    169,888












Net income

$    247,033

$       (105,366)

$    141,667

$    191,369

$         (21,481)

$    169,888

Other comprehensive income:    










Change in unrealized gains (losses) on cash flow hedges, net of tax

(1,003)

—

(1,003)

8,685

—

8,685

Comprehensive income

$    246,030

$       (105,366)

$    140,664

$    200,054

$         (21,481)

$    178,573

Net income per common share (basic)

$          0.71

$             (0.30)

$          0.41

$          0.55

$             (0.06)

$          0.49

Net income per common share (diluted)

$          0.69

$             (0.29)

$          0.40

$          0.54

$             (0.06)

$          0.48

Weighted average common shares (basic)

348,998,644

—

348,998,644

348,955,505

—

348,955,505

Weighted average common shares (diluted)

355,856,631

—

355,856,631

355,921,570

—

355,921,570

























For the Three Months Ended June 30, 2014

For the Three Months Ended March 31, 2014

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Interest on finance receivables and loans

$ 1,163,448

$                 —

$ 1,163,448

$ 1,140,329

$                 —

$ 1,140,329

Leased vehicle income

218,938

(58,626)

160,312

147,123

(40,915)

106,208

Other finance and interest income

874

—

874

250

—

250

Total finance and other interest income

1,383,260

(58,626)

1,324,634

1,287,702

(40,915)

1,246,787

Interest expense

128,314


128,314

124,446

—

124,446

Leased vehicle expense

179,135

(58,626)

120,509

120,069

(40,915)

79,154

Net finance and other interest income

1,075,811

—

1,075,811

1,043,187

—

1,043,187

Provision for credit losses

589,136

(40,108)

549,028

698,594

(93,874)

604,720

Net finance and other interest income after provision for credit losses

486,675

40,108

526,783

344,593

93,874

438,467

Profit sharing

24,056

—

24,056

32,161

—

32,161

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

462,619

40,108

502,727

312,432

93,874

406,306

Investment gains (losses), net

21,602

—

21,602

35,814

—

35,814

Servicing fee income

22,099

—

22,099

10,405

—

10,405

Fees, commissions, and other

95,030

—

95,030

89,304

—

89,304

Total other income (loss)

138,731

—

138,731

135,523

—

135,523

Compensation expense

93,689

—

93,689

201,915

—

201,915

Repossession expense

45,648

—

45,648

48,431

—

48,431

Other operating costs

71,889

—

71,889

68,102

—

68,102

Total operating expenses

211,226

—

211,226

318,448

—

318,448

Income before income taxes

390,124

40,108

430,232

129,507

93,874

223,381

Income tax expense

143,643

14,736

158,379

48,041

34,511

82,552

Net income

$    246,481

$           25,372

$    271,853

$      81,466

$           59,363

$    140,829












Net income

$    246,481

$           25,372

$    271,853

$      81,466

$           59,363

$    140,829

Other comprehensive income:    










Change in unrealized gains (losses) on cash flow hedges, net of tax

(3,364)

—

(3,364)

2,088

—

2,088

Comprehensive income

$    243,117

$           25,372

$    268,489

$      83,554

$           59,363

$    142,917

Net income per common share (basic)

$          0.71

$               0.07

$          0.78

$          0.23

$               0.17

$          0.40

Net income per common share (diluted)

$          0.69

$               0.07

$          0.76

$          0.23

$               0.17

$          0.40

Weighted average common shares (basic)

348,826,897

—

348,826,897

348,101,891

—

348,101,891

Weighted average common shares (diluted)

356,381,921

—

356,381,921

356,325,036

—

356,325,036

Table 4:

Reconciliatioin of Non-GAAP Measures
(Dollar amounts in thousands)


For the Year Ended December 31,

2015

2014

2013

As Published

Adjustments

As Revised

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Total equity

$   4,442,111

$      (17,148)

$    4,424,963

$   3,558,349

$      35,323

$    3,593,672

$    2,686,832

$      77,435

$     2,764,267

Deduct: Goodwill and intangibles

127,372

—

127,372

127,738

—

127,738

128,720

—

128,720

Tangible common equity

$   4,314,739

$      (17,148)

$    4,297,591

$   3,430,611

$      35,323

$    3,465,934

$    2,558,112

$      77,435

$     2,635,547


















Total Assets

$ 36,561,392

$         8,981

$   36,570,373

$  32,342,176

$      54,344

$   32,396,520

$   26,401,896

$      77,435

$    26,479,331

Deduct: Goodwill and intangibles

127,372

—

127,372

127,378

—

127,378

128,720

—

128,720

Tangible assets

$ 36,434,020

$         8,981

$   36,443,001

$ 32,214,438

$      54,344

$   32,268,782

$  26,273,176

$      77,435

$    26,350,611
















Equity to assets ratio

12.1%

—

12.1%

11.0%

0.1%

11.1%

10.2%

0.2%

10.4%

Tangible common equity to tangible assets

11.8%

—

11.8%

10.6%

0.1%

10.7%

9.7%

0.3%

10.0%



















September 30, 2015

June 30, 2015

March 31, 2015

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Total equity

$   4,360,841

$       51,864

$     4,412,705

$    4,245,450

$      69,138

$     4,314,588

$     3,850,481

$      (7,645)

$      3,842,836

Deduct: Goodwill and intangibles

127,766

—

127,766

127,698

—

127,698

127,646

—

127,646

Tangible common equity

$   4,233,075

$       51,864

$     4,284,939

$    4,117,752

$      69,138

$     4,186,890

$     3,722,835

$      (7,645)

$      3,715,190


















Total Assets

$ 35,991,228

$       79,797

$   36,071,025

$  36,039,919

$    106,375

$   36,146,294

$   34,665,571

$    (11,762)

$    34,653,809

Deduct: Goodwill and intangibles

127,766

—

127,766

127,698

—

127,698

127,646

—

127,646

Tangible assets

$ 35,863,462

$       79,797

$   35,943,259

$  35,912,221

$    106,375

$   36,018,596

$   34,537,925

$    (11,762)

$    34,526,163


















Equity to assets ratio

12.1%

0.1%

12.2%

11.8%

0.1%

11.9%

11.1%

—

11.1%

Tangible common equity to tangible assets

11.8%

0.1%

11.9%

11.5%

0.1%

11.6%

10.8%

—

10.8%



















September 30, 2014

June 30, 2014

March 31, 2014

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

As Reported

Corrections

As Restated

Total equity

$   3,303,213

$     140,689

$     3,443,902

$    3,102,258

$    162,170

$     3,264,428

$     2,908,018

$    136,798

$      3,044,816

Deduct: Goodwill and intangibles

127,991

—

127,991

127,693

—

127,693

128,447

—

128,447

Tangible common equity

$   3,175,222

$     140,689

$     3,315,911

$    2,974,565

$    162,170

$     3,136,735

$     2,779,571

$    136,798

$      2,916,369


















Total Assets

$ 30,641,292

$     140,689

$   30,781,981

$  29,732,396

$    162,170

$   29,894,566

$   28,796,233

$    136,798

$    28,933,031

Deduct: Goodwill and intangibles

127,991

—

127,991

127,693

—

127,693

128,447

—

128,447

Tangible assets

$ 30,513,301

$     140,689

$   30,653,990

$  29,604,703

$    162,170

$   29,766,873

$   28,667,786

$    136,798

$    28,804,584


















Equity to assets ratio

10.8%

0.4%

11.2%

10.4%

0.5%

10.9%

10.1%

0.4%

10.5%

Tangible common equity to tangible assets

10.4%

0.4%

10.8%

10.0%

0.5%

10.5%

9.7%

0.4%

10.1%

































For the Year Ended
December 31, 2015

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





$                                1,959,634

Deduct: LOCM adjustment on retail installment contracts acquired individually





(73,388)

Adjusted Net charge-offs on retail installment contracts acquired individually





$                                1,886,246
















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%

































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%

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SOURCE Santander Consumer USA Holdings Inc.

Related Links

http://www.santanderconsumerusa.com

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