Santander Consumer USA Holdings Inc. Reports Third Quarter 2015 Results
DALLAS, Oct. 29, 2015 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") today announced net income for third quarter 2015 of $223.9 million, or $0.62 per diluted common share, up 17 percent from third quarter 2014 net income of $191.4 million, or $0.54 per diluted common share, and down 22 percent from second quarter 2015 net income of $285.5 million, or $0.79 per diluted common share.
Third Quarter 2015 Key Highlights:
- Total originations of $7.6 billion, in line with $7.6 billion originated in prior quarter and up from $7.4 billion originated in prior year third quarter
- Asset sales of $3.1 billion, up from $2.8 billion in prior quarter and $2.4 billion in prior year third quarter
- Serviced for others portfolio of $14.8 billion, up from $13.1 billion in prior quarter and $10.2 billion in prior year third quarter
- Managed assets of $52.1 billion, up from $49.6 billion in the prior quarter and $42.1 billion in prior year third quarter
- Net charge-off ratio of 14.4%; adjusted net charge-off ratio1 of 8.7% excluding non-recurring lower of cost or market adjustments on loans sold and held for sale, up from 5.3% in prior quarter and 8.4% in prior year third quarter
- Return on average equity of 21.1%, down from 28.2% in prior quarter and 23.9% in prior year third quarter
- Return on average assets of 2.5%, down from 3.2% in prior quarter and in line with 2.5% in prior year third quarter
- Provision for credit losses of $744 million, up from $739 million in the prior quarter and down from $770 million in prior year third quarter
- Expense ratio of 2.3%; adjusted expense ratio1 of 2.1% excluding non-recurring expense related to former CEO departure, in line with 2.1% in prior quarter and up from 2.0% in prior year third quarter
"We are pleased to report another strong quarter, as we continue to execute against our stated strategy of optimizing the mix of retained assets versus assets sold and serviced for others. During the quarter, we originated more than $7.6 billion and sold more than $3.1 billion in assets, further strengthening our balance sheet while growing our consumer finance marketplace. We will continue to focus on optimizing this mix, and will maintain our commitment to generating value for our shareholders," said Jason Kulas, Chief Executive Officer.
In the third quarter, total originations were more than $7.6 billion, including $3.1 billion in Chrysler Capital retail loans and $1.6 billion in Chrysler Capital leases originated. Other originations, including other auto and personal loans, totaled $2.9 billion for the third quarter 2015. Incentives on certain vehicle models drove strong prime auto originations in the third quarter.
Finance receivables, loans and leases, net2, increased 12 percent to $32.3 billion at September 30, 2015, from $28.8 billion at December 31, 2014, and increased 18 percent from $27.3 billion at September 30, 2014. Net finance and other interest income increased 14 percent to $1.3 billion in the third quarter 2015 from $1.1 billion in the third quarter 2014, driven by 17 percent growth in the average portfolio. SC's average APR as of the end of the third quarter 2015 for retail installment contracts held for investment was 16.9 percent, unchanged from 16.9 percent as of the end of the second quarter 2015 and up from 16.3 percent as of the end of the third quarter 2014.
1 For a reconciliation from GAAP to this non-GAAP measure, see Reconciliation of Non-GAAP Measures in Table 8 of this release.
2 Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.
"During the quarter, we undertook a strategic evaluation of all of our lines of business, and have determined to focus our attention on our core auto business as we want to make sure we are realizing the full value of our auto platform. Although the personal lending portfolio is performing well, we no longer intend to hold these assets for investment. As a result of moving these assets into held for sale, we recognized a slight reduction in provision for credit losses. All future personal loans will be classified as held for sale. Despite this change, we will remain party to various agreements, under which we will continue to purchase specified volumes of personal loans originated by third parties," said Mr. Kulas.
The provision for credit losses increased to $744 million in the third quarter 2015, from $739 million in the second quarter 2015, and decreased from $770 million in the third quarter 2014. The allowance ratio3 decreased to 11.8 percent as of September 30, 2015, from 12.4 percent as of June 30, 2015, and 12.1 percent as of September 30, 2014. During the third quarter 2015, SC removed the volatility associated with seasonality from its loss provisioning model for individually acquired auto retail installment contracts. The impact of removing seasonality from the loss provisioning model was a $134 million decrease in the provision for credit losses and the credit loss allowance.
"Following extensive analysis on the methodology of our provisioning models, we have refined the model to remove volatility associated with seasonal assumptions, leading to a one-time reduction to provision expense. It is important to note that under the prior methodology, this quarter's provision expense would have been higher, and we likely would have seen a reduction in the provision line in the upcoming fourth quarter. However, due to the change we made this quarter, the seasonal benefit historically seen in the fourth quarter provision is not expected to occur. Similarly, all future quarters should not be impacted by seasonality assumptions in the provisioning process," said Jennifer Davis, Interim Chief Financial Officer.
Portfolio trends are reflective of the mix of assets retained at the end of each quarter, which are affected by the credit quality and timing of asset sales, as well as normal seasonality of the business. SC's net charge-off ratio increased to 14.4 percent for the third quarter 2015 from 5.3 percent for the second quarter 2015, and 8.4 percent for the third quarter 2014. Net charge-off performance was negatively impacted by a non-recurring lower of cost or market adjustment on loans sold and held for sale. Excluding the adjustment, credit performance remains in line with management expectations and is reflective of current asset mix. SC's loan delinquency ratio4 increased seasonally to 3.8 percent as of the end of the third quarter 2015 from 3.6 percent at the end of the second quarter 2015, and is down from the 4.1 percent loan delinquency ratio as of the end of the third quarter 2014.
During the quarter, SC incurred $287 million of operating expenses, up 42 percent from $202 million in the third quarter 2014. The increase was primarily attributable to higher headcount which was a result of SC's strong managed asset growth, and also due to a $22 million non-recurring expense related to former CEO departure. SC produced a 2.3 percent expense ratio for the quarter, or 2.1 percent adjusted for the non-recurring expense5, up from a 2.0 percent expense ratio in the same period last year. SC expects expenses to continue to increase throughout the rest of the year as credit trends worsen, in line with normal seasonality of the business.
During the quarter, SC continued to demonstrate consistent access to liquidity executing three securitizations, totaling $3.0 billion.6 Additionally, SC advanced $987 million on new and existing private term amortizing facilities.
In line with SC's strategy to leverage its scalable servicing platform and increase servicing fee income, SC executed asset sales of $3.1 billion during the quarter. Loan sales included $1.3 billion of assets through existing monthly loan sale programs and $1.7 billion in seasoned nonprime residual sales.
Servicing fee income totaled $35.9 million in the third quarter 2015, up from $20.5 million in the third quarter 2014, primarily due to the increase in the portfolio of loans and leases serviced for others to $14.8 billion as of September 30, 2015, up from $10.2 billion as of September 30, 2014.
3 Excludes purchased receivables portfolio and finance receivables held for sale.
4 Ratio excludes receivables held for sale. As of September 30, 2015, held for sale assets included the entire personal lending portfolio, which had an aggregate delinquency ratio of 8.8% as of that date.
5 For a reconciliation from GAAP to this non-GAAP measure, see Reconciliation of Non-GAAP Measures in Table 8 of this release.
6 Net bonds sold of $2.9 billion.
Conference Call Information
SC management will host a conference call and webcast to discuss the third quarter results and other general matters at 8 a.m. Eastern Time on Thursday, October 29, 2015. The conference call will be accessible by dialing 844-856-2691 (U.S. domestic), or 815-926-1990 (international), conference ID 52113301. 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 Q3 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 855-859-2056 (U.S. domestic), or 404-537-3406 (international), conference ID 52113301, 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 October 29, 2016. 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 more than $52 billion (as of September 30, 2015), and is headquartered in Dallas. (www.santanderconsumerusa.com)
| Contacts: Investor Relations Evan Black & Kristina Carbonneau 800.493.8219 |
Media Relations Laurie Kight 214.801.6455 |
| Table 1: Condensed Consolidated Balance Sheets |
|||
| September 30, |
December 31, |
||
| Assets |
(Unaudited, Dollars in thousands, except per share amounts) |
||
| Cash and cash equivalents |
$ 104,552 |
$ 33,157 |
|
| Finance receivables held for sale, net |
2,709,944 |
46,585 |
|
| Finance receivables held for investment, net |
23,464,030 |
23,915,551 |
|
| Restricted cash |
2,217,879 |
1,920,857 |
|
| Accrued interest receivable |
394,692 |
364,676 |
|
| Leased vehicles, net |
6,078,865 |
4,862,783 |
|
| Furniture and equipment, net |
50,642 |
41,218 |
|
| Federal, state and other income taxes receivable |
256,956 |
502,035 |
|
| Related party taxes receivable |
— |
459 |
|
| Deferred tax asset |
14,488 |
21,244 |
|
| Goodwill |
74,056 |
74,056 |
|
| Intangible assets |
53,710 |
53,682 |
|
| Due from affiliates |
63,924 |
102,457 |
|
| Other assets |
507,490 |
403,416 |
|
| Total assets |
$ 35,991,228 |
$ 32,342,176 |
|
| Liabilities and Equity |
|||
| Liabilities: |
|||
| Notes payable — credit facilities |
$ 6,654,184 |
$ 6,402,327 |
|
| Notes payable — secured structured financings |
20,027,111 |
17,718,974 |
|
| Notes payable — related party |
3,525,000 |
3,690,000 |
|
| Accrued interest payable |
19,855 |
17,432 |
|
| Accounts payable and accrued expenses |
378,552 |
315,130 |
|
| Federal, state and other income taxes payable |
417 |
319 |
|
| Deferred tax liabilities, net |
698,509 |
492,303 |
|
| Related party taxes payable |
396 |
— |
|
| Due to affiliates |
148,250 |
48,688 |
|
| Other liabilities |
178,113 |
98,654 |
|
| Total liabilities |
31,630,387 |
28,783,827 |
|
| Equity: |
|||
| Common stock, $0.01 par value |
3,579 |
3,490 |
|
| Additional paid-in capital |
1,592,100 |
1,560,519 |
|
| Accumulated other comprehensive income (loss), net |
(24,239) |
3,553 |
|
| Retained earnings |
2,789,401 |
1,990,787 |
|
| Total stockholders' equity |
4,360,841 |
3,558,349 |
|
| Total liabilities and equity |
$ 35,991,228 |
$ 32,342,176 |
|
| Table 2: Condensed Consolidated Statements of Income |
|||||||
| For the Three Months Ended |
For the Nine Months Ended September 30, 2015 |
||||||
| 2015 |
2014 |
2015 |
2014 |
||||
| (Unaudited, Dollars in thousands, except per share amounts) |
|||||||
| Interest on finance receivables and loans |
$ 1,334,655 |
$ 1,177,828 |
$ 3,885,902 |
$ 3,481,605 |
|||
| Leased vehicle income |
389,537 |
263,148 |
1,077,620 |
629,209 |
|||
| Other finance and interest income |
9,334 |
2,512 |
23,413 |
3,636 |
|||
| Total finance and other interest income |
1,733,526 |
1,443,488 |
4,986,935 |
4,114,450 |
|||
| Interest expense |
171,420 |
129,135 |
470,898 |
381,895 |
|||
| Leased vehicle expense |
296,352 |
200,397 |
850,534 |
499,601 |
|||
| Net finance and other interest income |
1,265,754 |
1,113,956 |
3,665,503 |
3,232,954 |
|||
| Provision for credit losses |
744,140 |
769,689 |
2,088,856 |
2,057,419 |
|||
| Net finance and other interest income after provision for credit losses |
521,614 |
344,267 |
1,576,647 |
1,175,535 |
|||
| Profit sharing |
11,818 |
10,556 |
46,835 |
66,773 |
|||
| Net finance and other interest income after provision for credit losses and profit sharing |
509,796 |
333,711 |
1,529,812 |
1,108,762 |
|||
| Investment gains, net |
1,567 |
38,015 |
109,481 |
95,431 |
|||
| Servicing fee income |
35,910 |
20,547 |
88,756 |
53,051 |
|||
| Fees, commissions, and other |
93,076 |
91,399 |
288,477 |
275,733 |
|||
| Total other income |
130,553 |
149,961 |
486,714 |
424,215 |
|||
| Salary and benefits expense |
136,291 |
88,940 |
347,804 |
384,544 |
|||
| Repossession expense |
60,770 |
50,738 |
175,066 |
144,817 |
|||
| Other operating costs |
90,282 |
62,228 |
263,280 |
202,219 |
|||
| Total operating expenses |
287,343 |
201,906 |
786,150 |
731,580 |
|||
| Income before income taxes |
353,006 |
281,766 |
1,230,376 |
801,397 |
|||
| Income tax expense |
129,106 |
90,397 |
431,762 |
282,081 |
|||
| Net income |
$ 223,900 |
$ 191,369 |
$ 798,614 |
$ 519,316 |
|||
| Net income per common share (basic) |
$ 0.63 |
$ 0.55 |
$ 2.26 |
$ 1.49 |
|||
| Net income per common share (diluted) |
$ 0.62 |
$ 0.54 |
$ 2.23 |
$ 1.46 |
|||
| Dividends declared per common share |
$ — |
$ — |
$ — |
$ 0.15 |
|||
| Weighted average common shares (basic) |
357,846,564 |
348,955,505 |
354,150,973 |
348,630,740 |
|||
| Weighted average common shares (diluted) |
362,221,918 |
355,921,570 |
357,837,426 |
355,809,576 |
|||
| Table 3: Other Financial Information |
||||||||
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| Ratios |
(Unaudited, Dollars in thousands) |
|||||||
| Yield on individually acquired retail installment contracts |
17.4 % |
17.4 % |
17.4 % |
17.5 % |
||||
| Yield on purchased receivables portfolios |
14.1 % |
15.0 % |
13.9 % |
15.2 % |
||||
| Yield on receivables from dealers |
5.2 % |
3.2 % |
5.0 % |
3.8 % |
||||
| Yield on personal loans (1) |
20.0 % |
21.9 % |
20.5 % |
24.5 % |
||||
| Yield on earning assets (2) |
15.5 % |
15.7 % |
15.4 % |
16.1 % |
||||
| Cost of debt (3) |
2.3 % |
1.9 % |
2.1 % |
2.0 % |
||||
| Net interest margin (4) |
13.7 % |
14.1 % |
13.7 % |
14.4 % |
||||
| Expense ratio (5) |
2.3 % |
2.0 % |
2.2 % |
2.6 % |
||||
| Return on average assets (6) |
2.5 % |
2.5 % |
3.1 % |
2.4 % |
||||
| Return on average equity (7) |
21.1 % |
23.9 % |
26.7 % |
23.1 % |
||||
| Net charge-off ratio on individually acquired retail installment contracts (8) |
8.8 % |
7.9 % |
6.5 % |
6.4 % |
||||
| Net charge-off ratio on purchased receivables portfolios (8) |
1.3 % |
3.0 % |
(1.3)% |
4.4 % |
||||
| Net charge-off ratio on personal loans (8) |
85.9 % |
20.4 % |
40.8 % |
17.4 % |
||||
| Net charge-off ratio (8) |
14.4 % |
8.4 % |
8.9 % |
6.9 % |
||||
| Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) |
3.8 % |
3.7 % |
3.8 % |
3.7 % |
||||
| Delinquency ratio on personal loans, end of period (9) |
7.3 % |
8.0 % |
7.3 % |
8.0 % |
||||
| Delinquency ratio on loans held for investment, end of period (9) |
3.8 % |
4.1 % |
3.8 % |
4.1 % |
||||
| Tangible common equity to tangible assets (10) |
11.8 % |
10.4 % |
11.8 % |
10.4 % |
||||
| Common stock dividend payout ratio (11) |
— |
— |
— |
10.1 % |
||||
| Allowance ratio (12) |
11.8 % |
12.1 % |
11.8 % |
12.1 % |
||||
| Other Financial Information |
||||||||
| Charge-offs, net of recoveries, on individually acquired retail installment contracts |
$ 610,657 |
$ 476,802 |
$ 1,301,203 |
$ 1,124,917 |
||||
| Charge-offs, net of recoveries, on purchased receivables portfolios |
1,563 |
8,728 |
(6,103) |
47,571 |
||||
| Charge-offs, net of recoveries, on unsecured consumer loans |
490,548 |
79,938 |
673,294 |
178,675 |
||||
| Charge-offs, net of recoveries, on capital leases |
3,027 |
— |
11,048 |
— |
||||
| Total charge-offs, net of recoveries |
$ 1,105,795 |
$ 565,468 |
$ 1,979,442 |
$ 1,351,163 |
||||
| End of period Delinquent principal over 60 days, Individually acquired retail installment contracts held for investment |
$ 1,012,042 |
$ 888,940 |
$ 1,012,042 |
$ 888,940 |
||||
| End of period Delinquent principal over 60 days, Personal loans |
$ 165,759 |
$ 131,537 |
$ 165,759 |
$ 131,537 |
||||
| End of period Delinquent principal over 60 days, loans held for investment |
$ 1,200,230 |
$ 1,101,525 |
$ 1,200,230 |
$ 1,101,525 |
||||
| End of period assets covered by allowance for credit losses |
$ 26,907,346 |
$ 25,680,258 |
$ 26,907,346 |
$ 25,680,258 |
||||
| End of period Gross finance receivables and loans held for investment |
$ 27,319,991 |
$ 26,806,074 |
$ 27,319,991 |
$ 26,806,074 |
||||
| End of period Gross finance receivables, loans, and leases held for investment |
$ 34,205,593 |
$ 31,831,631 |
$ 34,205,593 |
$ 31,831,631 |
||||
| Average Gross individually acquired retail installment contracts |
$ 27,687,564 |
$ 24,150,655 |
$ 26,596,429 |
$ 23,261,250 |
||||
| Average Gross purchased receivables portfolios |
467,643 |
1,149,344 |
618,362 |
1,446,655 |
||||
| Average Gross receivables from dealers |
81,490 |
113,372 |
93,817 |
124,026 |
||||
| Average Gross personal loans |
2,284,951 |
1,567,511 |
2,201,551 |
1,369,631 |
||||
| Average Gross capital leases |
120,334 |
35,741 |
122,366 |
16,388 |
||||
| Average Gross finance receivables, loans and capital leases |
$ 30,641,982 |
$ 27,016,623 |
$ 29,632,525 |
$ 26,217,950 |
||||
| Average Gross finance receivables, loans, and leases |
$ 37,045,713 |
$ 31,616,751 |
$ 35,706,140 |
$ 29,958,707 |
||||
| Average Managed assets |
$ 50,961,182 |
$ 40,396,797 |
$ 47,812,496 |
$ 36,923,075 |
||||
| Average Total assets |
$ 36,014,598 |
$ 30,446,488 |
$ 34,750,871 |
$ 29,173,189 |
||||
| Average Debt |
$ 30,416,494 |
$ 26,750,117 |
$ 29,575,308 |
$ 25,718,012 |
||||
| Average Total equity |
$ 4,245,991 |
$ 3,198,603 |
$ 3,993,032 |
$ 2,997,634 |
||||
| (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) |
"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 |
|||||||
| (10) |
"Tangible common equity to tangible assets" is defined as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release) |
|||||||
| (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 |
|||||||
| Table 4: Credit Quality |
|||||||
| Amounts as of and for the three and nine months ended September 30, 2015 are as follows: |
|||||||
| (Dollars in thousands) |
|||||||
| Three Months Ended September 30, 2015 |
|||||||
| Retail Installment |
Personal Loans2 |
||||||
| Credit loss allowance — beginning of period |
$ 3,129,646 |
$ 384,735 |
|||||
| Provision for credit losses |
640,113 |
105,813 |
|||||
| Charge-offs |
(1,108,435) |
(499,010) |
|||||
| Recoveries |
497,778 |
8,462 |
|||||
| Credit loss allowance — end of period |
$ 3,159,102 |
$ — |
|||||
| Net charge-offs |
$ 610,657 |
$ 490,548 |
|||||
| Average unpaid principal balance (UPB) |
27,687,564 |
2,284,951 |
|||||
| Charge-off ratio3 |
8.8 % |
85.9 % |
|||||
| Nine Months Ended September 30, 2015 |
|||||||
| Retail Installment |
Personal Loans2 |
||||||
| Credit loss allowance — beginning of period |
$ 2,726,338 |
$ 348,660 |
|||||
| Provision for credit losses |
1,761,084 |
324,634 |
|||||
| Charge-offs |
(2,870,711) |
(695,918) |
|||||
| Recoveries |
1,569,508 |
22,624 |
|||||
| Transfers to held for sale |
(27,117) |
— |
|||||
| Credit loss allowance — end of period |
$ 3,159,102 |
$ — |
|||||
| Net charge-offs |
$ 1,301,203 |
$ 673,294 |
|||||
| Average unpaid principal balance (UPB) |
26,596,429 |
2,201,551 |
|||||
| Charge-off ratio3 |
6.5% |
40.8% |
|||||
| Nine Months Ended September 30, 2015 |
|||||||
| Retail Installment Contracts |
Personal |
||||||
| Principal, 31-60 days past due |
$ 2,176,539 |
8.1% |
$ 63,422 |
2.8% |
|||
| Delinquent principal over 60 days |
1,012,042 |
3.8% |
165,759 |
7.3% |
|||
| Total delinquent contracts |
$ 3,188,581 |
11.9% |
$ 229,181 |
10.1% |
|||
| 1 Excludes retail installment contracts held for sale. |
|||||||
| 2 As of September 30, 2015 all of the Company's personal loans were classified as held for sale. |
|||||||
| 3Net charge-off performance was negatively impacted by a non-recurring lower of cost or market adjustment on loans sold and designated as held for sale. |
|||||||
| 4Percent of unpaid principal balance. |
|||||||
| Table 5: Originations |
|||||||||
| Three Months Ended |
Nine Months Ended |
Three Months Ended |
|||||||
| September 30, |
September 30, |
September 30, |
September 30, |
June 30, |
|||||
| Retained Originations |
(Dollars in thousands) |
||||||||
| Retail installment contracts |
$ 4,650,381 |
$ 3,497,949 |
$ 13,602,409 |
$ 10,439,003 |
$ 4,765,800 |
||||
| Average APR |
16.1% |
15.0% |
17.2% |
15.9% |
17.2% |
||||
| Discount |
1.7% |
3.7% |
2.6% |
4.1% |
2.5% |
||||
| Personal loans |
$ 158,328 |
$ 249,474 |
$ 582,735 |
$ 619,993 |
$ 257,915 |
||||
| Average APR |
21.0% |
21.6% |
19.4% |
22.7% |
19.4% |
||||
| Discount |
— |
— |
— |
— |
— |
||||
| Receivables from dealers |
$ — |
$ 1,609 |
$ — |
$ 25,515 |
$ — |
||||
| Average APR |
— |
3.5% |
— |
4.1% |
— |
||||
| Discount |
— |
— |
— |
— |
— |
||||
| Leased vehicles |
$ 1,568,104 |
$ 1,267,291 |
$ 4,122,527 |
$ 3,389,214 |
$ 1,424,308 |
||||
| Capital leases |
1,103 |
$ 31,503 |
$ 64,906 |
$ 51,076 |
$ 8,073 |
||||
| Total originations retained |
$ 6,377,916 |
$ 5,047,826 |
$ 18,372,577 |
$ 14,524,801 |
$ 6,456,096 |
||||
| Sold Originations1 |
|||||||||
| Retail installment contracts |
$ 1,243,456 |
$ 1,707,984 |
$ 3,580,539 |
$ 4,906,267 |
$ 927,586 |
||||
| Average APR |
2.4% |
4.8% |
4.1% |
5.0% |
4.3% |
||||
| Receivables from dealers |
$ — |
$ — |
— |
8,724 |
— |
||||
| Average APR |
— |
— |
— |
5.3% |
— |
||||
| Leased vehicles |
$ — |
$ — |
$ — |
$ 369,114 |
$ — |
||||
| Total originations sold |
$ 1,243,456 |
$ 1,707,984 |
$ 3,580,539 |
$ 5,284,105 |
$ 927,586 |
||||
| Total SC originations |
$ 7,621,372 |
$ 6,755,810 |
$ 21,953,116 |
$ 19,808,906 |
$ 7,383,682 |
||||
| Facilitated Originations |
|||||||||
| Receivables from dealers |
$ — |
$ 139,408 |
$ — |
$ 392,920 |
$ — |
||||
| Leased vehicles |
— |
464,523 |
632,471 |
1,196,637 |
228,572 |
||||
| Total originations facilitated for affiliates |
$ — |
$ 603,931 |
$ 632,471 |
$ 1,589,557 |
$ 228,572 |
||||
| Total Originations |
$ 7,621,372 |
$ 7,359,741 |
$ 22,585,587 |
$ 21,398,463 |
$ 7,612,254 |
||||
| 1Only 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 |
Nine Months Ended |
Three Months Ended |
|||||||
| September 30, |
September 30, |
September 30, 2015 |
September 30, 2014 |
June 30, |
|||||
| (Dollars in thousands) |
|||||||||
| Asset Sales |
|||||||||
| Retail installment contracts |
$ 3,057,654 |
$ 2,413,251 |
$ 5,993,407 |
$ 5,483,149 |
$ 2,016,675 |
||||
| Average APR |
10.7% |
4.8% |
8.0% |
5.0% |
5.6% |
||||
| Receivables from dealers |
$ — |
$ 18,227 |
$ — |
$ 18,227 |
$ — |
||||
| Average APR |
— |
4.7% |
— |
4.7% |
— |
||||
| Leased vehicles |
$ — |
$ — |
$ 1,316,958 |
$ 369,114 |
$ 755,624 |
||||
| Total asset sales |
$ 3,057,654 |
$ 2,431,478 |
$ 7,310,365 |
$ 5,870,490 |
$ 2,772,299 |
||||
| Table 7: Ending Portfolio |
|||
| Ending outstanding balance, average APR and remaining unaccreted discount as of September 30, 2015, and December 31, 2014, are as follows: |
|||
| September 30, 2015 |
December 31, 2014 |
||
| (Dollars in thousands) |
|||
| Retail installment contracts |
$ 27,131,221 |
$ 25,401,461 |
|
| Average APR |
16.9% |
16.0% |
|
| Discount |
2.2% |
2.1% |
|
| Personal loans |
$ — |
$ 2,128,769 |
|
| Average APR |
— |
23.1% |
|
| Discount |
— |
0.1% |
|
| Receivables from dealers |
$ 76,293 |
$ 100,164 |
|
| Average APR |
4.6% |
4.3% |
|
| Discount |
— |
— |
|
| Leased vehicles |
$ 6,885,602 |
$ 5,504,467 |
|
| Capital leases |
$ 112,477 |
$ 91,350 |
|
| Table 8: Reconciliation of Non-GAAP Measures |
||||
| September 30, 2015 |
September 30, 2014 |
|||
| (Dollars in thousands, except per share data) |
||||
| Total equity |
$ 4,360,841 |
$ 3,303,213 |
||
| Deduct: Goodwill and intangibles |
127,766 |
127,991 |
||
| Tangible common equity |
$ 4,233,075 |
$ 3,175,222 |
||
| Total assets |
$ 35,991,228 |
$ 30,641,292 |
||
| Deduct: Goodwill and intangibles |
127,766 |
127,991 |
||
| Tangible assets |
$ 35,863,462 |
$ 30,513,301 |
||
| Equity to assets ratio |
12.1% |
10.8% |
||
| Tangible common equity to tangible assets |
11.8% |
10.4% |
||
| For the Three Months Ended |
||||
| September 30, 2015 |
||||
| Total charge-offs, net of recoveries |
$ 1,105,795 |
|||
| Deduct: Lower of cost or market impairment on held for sale receivables |
441,738 |
|||
| Adjusted Net charge-offs |
$ 664,057 |
|||
| Average Gross finance receivables and loans |
$ 30,641,982 |
|||
| Net charge-off ratio |
14.4% |
|||
| Adjusted Net charge-off ratio |
8.7% |
|||
| Operating expenses |
$ 287,343 |
|||
| Deduct: compensation expense1 |
22,221 |
|||
| Adjusted operating expenses |
$ 265,122 |
|||
| Average managed assets |
$ 50,961,182 |
|||
| Expense ratio |
2.3% |
|||
| Adjusted Expense ratio |
2.1% |
|||
| 1Expense related to former CEO departure |
||||
SOURCE Santander Consumer USA Holdings Inc.
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