DALLAS, Sept. 23, 2016 /PRNewswire/ -- Santander
Consumer USA Holdings Inc. (NYSE:
SC) ("SC" or the "Company") today announced that it will be
restating financial statements and associated disclosures for the
full years 2013, 2014 and 2015, and the quarters within 2014 and
2015, as well as the first quarter of 2016, due to errors
identified in the financial statements for each of those periods.
The Audit Committee of the Company's Board of Directors has
concluded these financial statements and disclosures should no
longer be relied upon. The Audit Committee acted on the
recommendation of SC's management and in consultation with the
Company's current and former independent registered public
accounting firms, respectively PricewaterhouseCoopers LLP ("PwC")
and Deloitte & Touche LLP ("Deloitte").
The errors leading to this restatement were identified after the
Company's previously disclosed transition of audit firms. The
transition occurred in response to new corporate governance
recommendations related to external auditor rotation.
Management has determined that the errors should be corrected
through the issuance of restated financial statements, which will
be included in amendments to prior filings. The conclusion to
restate financial statements is based on an assessment of both
quantitative and qualitative considerations, including aggregation
of all known errors with those previously corrected in the
restatement effected through the filing of the 2015 Form 10-K on
March 31, 2016.
The restatements announced today are primarily being made to
correct errors associated with the following:
- The Company's methodology for accreting dealer discounts,
subvention payments from manufacturers and capitalized origination
costs
- The Company's lack of consideration of net discounts when
estimating the allowance for credit losses
- The discount rate used in determining the impairment for loans
accounted for as troubled debt restructurings ("TDRs")
Based on management's preliminary assessment, the expected
cumulative impact of the errors is an increase to total equity of
approximately 1%, as of March 31,
2016. The Company also believes these restatements will
increase previously reported net income for the fiscal quarter
ended March 31, 2016, by
approximately $9 million, or
$0.02 per share. The impact on total
equity and net income varies in each of the prior quarters.
Similarly, the impact of the errors varies by financial statement
line item. Further details, as well as reconciliations of
previously reported to preliminarily restated figures for certain
historical quarterly and annual filings, are available in Tables
1-4 located in the financial supplement of this press release.
"Since the identification of errors in our financial reporting,
we have been completely focused on ensuring we correct everything
as quickly and transparently as possible – engaging with our
regulators, completing a rigorous review of our financial
statements, and updating shareholders regularly," said Jason Kulas, President and Chief Executive
Officer. "We are entirely committed to achieving the highest
standards of integrity within our financial reporting and control
environment and believe that the actions we are announcing today
are a further important step toward achieving that goal. We would
like to assure our customers and partners that the issues uncovered
relate to non-cash items only, meaning they have no impact on our
ability to continue delivering the high levels of service our
customers rightly expect."
In addition, the Company expects to report the existence of
additional, previously unreported material weaknesses in internal
control over financial reporting. Management continues to assess
the nature and extent of these additional material weaknesses and
their impact on the Company's reports on the effectiveness of
internal control over financial reporting, and its disclosure
controls and procedures, and is working to implement remedial
measures.
The Company is working through the appropriate governance
process and will file amended annual and quarterly reports, as well
as its Form 10-Q for the quarter ended June
30, 2016, as soon as possible, and expects to complete the
amended filings prior to the deadline for filing its Form 10-Q for
the quarter ended September 30, 2016.
The Company has received waivers for certain debt facilities that
require timely filings. The Company also will likely delay the
previously announced third quarter 2016 earnings call date,
currently scheduled for October 26,
2016, at 9 a.m. Eastern Time.
Management will provide updates on the timing of the filings and
earnings call as appropriate.
Santander has taken the following steps to address legacy issues
and improve its oversight and internal controls:
- December 2014: Timothy Ryan named Chairman of SC's parent
company Santander Holdings USA,
Inc. ("SHUSA"), and affiliate Santander
Bank, NA boards
- March 2015: Scott Powell named CEO of SHUSA
- July 2015: Jason Kulas named CEO of SC, and Blythe Masters named Chair of SC
- September 2015 - February 2016: New SC Senior Leadership team
named, including new General Counsel, Chief Financial Officer,
Chief Operating Officer, Chief Compliance Officer, Chief Risk
Officer, Chief Information Officer and Chief Human Resources
Officer
- July 2016: William Rainer named Chairman of SC, succeeding
Blythe Masters who has taken on new
responsibilities within the Santander Group
- September 2016: Scott
Powell joins SC board
Preliminary and Unaudited Q2 2016 Results
The Company separately announced selected preliminary and
unaudited financial results for the three months ending
June 30, 2016. During the second
quarter 2016, SC earned net income of $283
million, or 78 cents per
diluted common share, delivered average managed asset growth that
outpaced expense growth, and continued to demonstrate strong access
to liquidity.
Auto originations totaled $5.4
billion in the second quarter, down from the prior year
second quarter due to lower nonprime originations as SC remained
disciplined in its underwriting standards in a competitive market.
The decline in nonprime originations was partially offset by an
increase in Chrysler Capital prime loans and leases.
Preliminary and Unaudited Second Quarter 2016 Results:
- Net finance and other interest income of $1.2 billion
- Provision for credit losses of $511
million
- Finance receivables, loans and leases held for investment, net
of $31.6 billion
- Total equity of $4.9 billion
- Total originations of $5.4
billion
- Chrysler Capital lease originations of $1.7 billion
- Retail originations of $3.8
billion
- Total committed liquidity of $38.1
billion
- Issued and sold total of $3.4
billion of asset-backed securities across all three
securitization platforms
- Average managed assets of $53.2
billion
- Expense ratio of 2.0%
- Retail installment contract net charge-offs and net charge-off
ratio of $412 million and 5.7%,
respectively1
- Recovery rate, adjusted for bankruptcy sales, of 59%
- Retail installment contract 31-60 and 61+ delinquency rates of
9.0% and 4.2%, respectively
Further origination, asset sale and ending portfolio details can
be found in Tables 5-7 located in the financial supplement of this
press release.
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 2.7
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 $53
billion (as of June 30, 2016),
and is headquartered in Dallas.
(www.santanderconsumerusa.com)
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 U.S. Securities and Exchange Commission ("SEC"). The
statements above and in the tables contained in this press release
regarding the expected impact of the errors and their corrections,
the expected controls disclosures, preliminary results for the
second quarter of 2016 and the expected timing of the Company's
filings constitute forward-looking statements that are based on the
Company's current expectations. The final amounts and controls
conclusions will be included in the amended filings after the
Company has completed its work on the restatement and the Audit
Committee has completed its final review of the amended filings.
There can be no assurance that the preliminary financial
information contained herein will not change, possibly materially,
prior to the filing of the amended Forms 10-Q and 10-K. Among the
factors that could cause the forward-looking statements in this
press release and/or our financial performance to differ materially
from that suggested by the forward-looking statements are: (a) the
ongoing internal review of accounting errors and other matters
described above and the preliminary stage of the analysis thereof;
(b) the final outcome of the Company's accounting review and
actions that may be taken or required as a result of the expected
restatements and the conclusions reached by the Company's
management, Audit Committee, Board of Directors or its independent
registered public accounting firms based on the results of the
review and based on additional information that may arise in the
future prior to the filing with the SEC of the expected
restatements; (c) the inherent limitations in internal controls
over financial reporting; (d) increased costs and/or reputational
harm associated with restating the Company's financial statements;
(e) we operate in a highly regulated industry and continually
changing federal, state, and local laws and regulations could
materially adversely affect our business; (f) our ability to
remediate any material weaknesses in internal controls over
financial reporting completely and in a timely manner; (g) adverse
economic conditions in the United States and worldwide may
negatively impact our results; (h) our business could suffer if our
access to funding is reduced; (i) we face significant risks
implementing our growth strategy, some of which are outside our
control; (j) we may incur unexpected costs and delays in connection
with exiting our personal lending business; (k) our agreement with
Fiat Chrysler Automobiles 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; (l)
our business could suffer if we are unsuccessful in developing and
maintaining relationships with automobile dealerships; (m) our
financial condition, liquidity, and results of operations depend on
the credit performance of our loans; (n) loss of our key management
or other personnel, or an inability to attract such management and
personnel, could negatively impact our business; (o) we are subject
to certain regulations, including oversight by the Office of the
Comptroller of the Currency, the Consumer Financial Protection
Bureau, 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 p) future changes in our relationship with
Banco Santander that 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.
1 Net charge-offs are measured on a recorded
investment basis, net of recoveries; the net charge-off ratio is
the ratio of these charge offs, on an annualized basis, to average
unpaid principal balance.
Contacts:
Investor
Relations
Evan Black &
Kristina Carbonneau
800.493.8219
InvestorRelations@santanderconsumerusa.com
|
|
Media
Relations
Laurie
Kight
214.801.6455
SCMedia@santanderconsumerusa.com
|
Santander Consumer
USA Holdings Inc.
|
Financial
Supplement
|
|
Table of
Contents
|
|
Table 1:
Preliminarily Restated Key Income Statement Figures for the Years
Ended December 31, 2015, 2014, and 2013
|
Table 2:
Preliminarily Restated Q1 2016 Key Income Statement Figures and
Select Q2 2016 Results
|
Table 3:
Preliminarily Restated Key Balance Sheet Figures and Related
Disclosures as of December 31, 2015 and 2014
|
Table 4:
Preliminarily Restated Q1 2016 Key Balance Sheet Figures and
Related Disclosures and Select Q2 2016 Results
|
Table 5: Q2 2016
Originations
|
Table 6: Q2 2016
Asset Sales
|
Table 7: Q2 2016
Ending Portfolio
|
Tables 1-4 in this financial supplement present a reconciliation
of the following figures for each period and line item
presented:
- As Originally Reported – for periods ending on or before
September 30, 2015, this caption
refers to audited or unaudited figures presented in a filing prior
to SC's 2015 Form 10-K. For the year ended December 31, 2015, this caption refers to audited
figures presented in SC's 2015 Form 10-K. For the quarter ended
March 31, 2016, this caption refers
to unaudited figures presented in the Form 10-Q for that
quarter.
- As Previously Restated – for periods ending on or before
September 30, 2015, this caption
refers to the figures presented in Footnote 1 to the financial
statements included in Part II, Item 8, or presented in Part II,
Item 9B, as applicable, of SC's 2015 Form 10-K. This caption is not
applicable for later periods. Errors corrected related to:
- The Company did not build its credit loss allowance for
individually acquired retail installment contracts by estimating a
general credit loss allowance on loans not classified as TDRs
separately from the impairment estimated on TDRs – instead, the
Company used a top-down approach, estimating a general credit loss
allowance for the total portfolio and then separating out TDR
impairment from that total. We now build our allowance using the
correct, bottom-up approach;
- The Company incorrectly applied a loss emergence period ("LEP")
to the entire portfolio rather than only the loans not classified
as TDRs. We now apply a LEP only to loans not classified as
TDRs;
- The Company incorrectly identified the population of loans that
should be classified as TDRs and, separately, had incorrectly
estimated the impairment on these loans. We continue to review the
population classified as TDRs using a reasonable interpretation of
the accounting guidance, and now correctly identify TDRs to
accurately reflect the estimated TDR impairment;
- The subvention payments related to the leased vehicles were
incorrectly classified as additions to Leased vehicle income rather
than reductions to Leased vehicle expense. The payments have been
reclassified.
- As Preliminarily Corrected – preliminary and unaudited restated
figures the Company expects to include in its amended filings,
which reflect separately the impact of:
- Errors previously corrected in the restatement effected through
the filing of the 2015 Form 10-K, filed on March 31, 2016.
- Newly corrected errors, which primarily relate to:
- Error #1: The Company's methodology for accreting dealer
discounts, subvention payments from manufacturers, and capitalized
origination costs. When applying the effective interest method, we
accreted discount, subvention, and other origination costs over the
average life of the loan. We now accrete these items over the
aggregate life of the loan pool;
- Error #2: The Company's lack of consideration of net discounts
when estimating the allowance for credit losses. We previously
omitted the consideration of net discounts when estimating
allowance for the non-TDR retail installment contract portfolio. We
now take discount into consideration for both allowance and
charge-offs, decreasing both the allowance ratio and net charge-off
ratio2; and
- Error #3: The discount rate used in determining the impairment
for loans accounted for as TDRs. We previously used contractual APR
to determine the original discount rate applied to expected cash
flows to determine TDR impairment. We now use the original
effective rate.
2 The appropriate method for correcting this error in
the allowance methodology was the sole subject of a pre-filing
submission process with the SEC, which did not object to the
Company's proposed accounting treatment.
Table 1:
Preliminarily Restated Key Income Statement Figures for the Years
Ended December 31, 2015, 2014, and 2013
|
|
Income
Statements
|
(Unaudited, Dollar
amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31,
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
|
|
|
Interest on
finance receivables and loans, as originally
reported
|
|
$
3,773,072
|
|
|
$
4,631,847
|
|
|
$
5,251,164
|
|
|
Previously corrected
errors
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Interest on
finance receivables and loans, as previously
restated
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Error #1
|
|
(76,700)
|
(2.1%)
|
|
(171,393)
|
(3.8%)
|
|
(249,405)
|
(5.0%)
|
|
Error #2
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Error #3
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Other identified and
resolved errors
|
|
(4,228)
|
(0.1%)
|
|
21,060
|
0.5%
|
|
24,787
|
0.5%
|
|
Newly corrected
errors
|
|
(80,928)
|
(2.2%)
|
|
(150,333)
|
(3.4%)
|
|
(224,619)
|
(4.5%)
|
|
Interest on finance
receivables and loans - preliminary
|
|
$
3,692,144
|
|
|
$
4,481,514
|
|
|
$
5,026,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment gains
(losses), as originally reported
|
|
$
40,689
|
|
|
$
116,765
|
|
|
$
(116,127)
|
|
|
Previously corrected
errors
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Investment gains
(losses), as previously restated
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Error #1
|
|
1,012
|
2.4%
|
|
(3,618)
|
(3.2%)
|
|
25,038
|
(26.3%)
|
|
Error #2
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Error #3
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Other identified and
resolved errors
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
(4,125)
|
4.3%
|
|
Newly corrected
errors
|
|
1,012
|
2.4%
|
|
(3,618)
|
(3.2%)
|
|
20,913
|
(22.0%)
|
|
Investment gains
(losses) - preliminary
|
|
$
41,701
|
|
|
$
113,147
|
|
|
$
(95,214)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance and
other interest income (before provision for credit losses), as
originally reported
|
|
$
3,403,693
|
|
|
$
4,306,221
|
|
|
$
4,956,438
|
|
|
Previously corrected
errors
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Net finance and
other interest income (before provision for credit losses), as
previously restated
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Error #1
|
|
(76,700)
|
(2.3%)
|
|
(171,393)
|
(4.1%)
|
|
(249,405)
|
(5.3%)
|
|
Error #2
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Error #3
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
-
|
0.0%
|
|
Other identified and
resolved errors
|
|
(4,228)
|
(0.1%)
|
|
20,025
|
0.5%
|
|
22,044
|
0.5%
|
|
Newly corrected
errors
|
|
(80,928)
|
(2.4%)
|
|
(151,368)
|
(3.6%)
|
|
(227,362)
|
(4.8%)
|
|
Net finance and other
interest income (before provision for credit losses) -
preliminary
|
|
$
3,322,765
|
|
|
$
4,154,853
|
|
|
$
4,729,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
credit losses, as originally reported
|
|
$
1,852,967
|
|
|
$
2,616,943
|
|
|
$
2,965,198
|
|
|
Previously corrected
errors
|
|
(20,473)
|
(1.2%)
|
|
65,866
|
2.6%
|
|
n/a
|
|
|
Provision for
credit losses, as previously restated
|
|
$
1,832,494
|
|
|
$
2,682,809
|
|
|
n/a
|
|
|
Error #1
|
|
(93,486)
|
(5.5%)
|
|
(176,657)
|
(7.0%)
|
|
(173,421)
|
(6.2%)
|
|
Error #2
|
|
(35,751)
|
(2.1%)
|
|
(16,055)
|
(0.6%)
|
|
(10,073)
|
(0.4%)
|
|
Error #3
|
|
4,015
|
0.2%
|
|
17,251
|
0.7%
|
|
4,167
|
0.1%
|
|
Other identified and
resolved errors
|
|
(5,154)
|
(0.3%)
|
|
1,736
|
0.1%
|
|
(5,285)
|
(0.2%)
|
|
Newly corrected
errors
|
|
(130,376)
|
(7.7%)
|
|
(173,723)
|
(6.9%)
|
|
(184,611)
|
(6.6%)
|
|
Provision for credit
losses - preliminary
|
|
$
1,702,118
|
|
|
$
2,509,086
|
|
|
$
2,780,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income, as
originally reported
|
|
$
1,085,088
|
|
|
$
1,209,988
|
|
|
$
1,285,325
|
|
|
Previously corrected
errors
|
|
20,473
|
1.8%
|
|
(65,866)
|
(5.8%)
|
|
n/a
|
|
|
Pre-tax income, as
previously restated
|
|
$
1,105,561
|
|
|
$
1,144,122
|
|
|
n/a
|
|
|
Error #1
|
|
17,798
|
1.5%
|
|
1,646
|
0.1%
|
|
(50,947)
|
(3.9%)
|
|
Error #2
|
|
35,751
|
3.1%
|
|
16,055
|
1.4%
|
|
10,073
|
0.8%
|
|
Error #3
|
|
(4,015)
|
(0.3%)
|
|
(17,251)
|
(1.5%)
|
|
(4,167)
|
(0.3%)
|
|
Other identified and
resolved errors
|
|
(5,832)
|
(0.5%)
|
|
(10,067)
|
(0.9%)
|
|
51,151
|
4.0%
|
|
Newly corrected
errors
|
|
43,702
|
3.8%
|
|
(9,618)
|
(0.8%)
|
|
6,110
|
0.5%
|
|
Pre-tax income -
preliminary
|
|
$
1,149,263
|
|
|
$
1,134,504
|
|
|
$
1,291,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as
originally reported
|
|
$
695,670
|
|
|
$
766,349
|
|
|
$
827,293
|
|
|
Previously corrected
errors
|
|
13,120
|
1.8%
|
|
(42,112)
|
(5.7%)
|
|
n/a
|
|
|
Net income, as
previously restated
|
|
$
708,790
|
|
|
$
724,237
|
|
|
n/a
|
|
|
Error #1
|
|
11,168
|
1.5%
|
|
905
|
0.1%
|
|
(30,298)
|
(3.7%)
|
|
Error #2
|
|
22,433
|
3.1%
|
|
8,828
|
1.2%
|
|
5,990
|
0.7%
|
|
Error #3
|
|
(2,520)
|
(0.3%)
|
|
(9,486)
|
(1.3%)
|
|
(2,478)
|
(0.3%)
|
|
Other identified and
resolved errors
|
|
(18,435)
|
(2.6%)
|
|
9,196
|
1.3%
|
|
24,682
|
3.0%
|
|
Newly corrected
errors
|
|
12,647
|
1.8%
|
|
9,443
|
1.3%
|
|
(2,103)
|
(0.3%)
|
|
Net income -
preliminary
|
|
$
721,437
|
|
|
$
733,680
|
|
|
$
825,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS, as originally
reported
|
|
$
2.01
|
|
|
$
2.15
|
|
|
$
2.31
|
|
|
Previously corrected
errors
|
|
0.04
|
1.9%
|
|
(0.11)
|
(5.3%)
|
|
n/a
|
|
|
EPS, as previously
restated
|
|
$
2.05
|
|
|
$
2.04
|
|
|
n/a
|
|
|
Error #1
|
|
0.03
|
1.4%
|
|
-
|
0.0%
|
|
(0.08)
|
(3.5%)
|
|
Error #2
|
|
0.06
|
2.9%
|
|
0.02
|
1.0%
|
|
0.02
|
0.9%
|
|
Error #3
|
|
(0.01)
|
(0.5%)
|
|
(0.03)
|
(1.5%)
|
|
(0.01)
|
(0.4%)
|
|
Other identified and
resolved errors
|
|
(0.05)
|
(2.4%)
|
|
0.02
|
1.0%
|
|
0.06
|
2.6%
|
|
Newly corrected
errors
|
|
0.03
|
1.4%
|
|
0.02
|
1.0%
|
|
(0.01)
|
(0.4%)
|
|
EPS -
preliminary
|
|
$
2.08
|
|
|
$
2.06
|
|
|
$
2.30
|
|
|
|
* Errors are
presented as a percentage of corrected amount.
|
Table 2:
Preliminarily Restated Q1 2016 Key Income Statement Figures and
Select Q2 2016 Results
|
|
Income
Statements
|
(Unaudited, Dollar
amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
March 31,
2016
|
|
June 30,
2016
|
Interest on
finance receivables and loans, as originally
reported
|
|
$
1,341,763
|
|
|
n/a
|
Error #1
|
|
(57,571)
|
(4.5%)
|
|
n/a
|
Error #2
|
|
-
|
0.0%
|
|
n/a
|
Error #3
|
|
-
|
0.0%
|
|
n/a
|
Other identified and
resolved errors
|
|
1,236
|
0.1%
|
|
n/a
|
Newly corrected
errors
|
|
(56,335)
|
(4.4%)
|
|
n/a
|
Interest on finance
receivables and loans - preliminary
|
|
$
1,285,428
|
|
|
$
1,271,112
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment gains
(losses), as originally reported
|
|
$
(73,151)
|
|
|
n/a
|
Error #1
|
|
(30)
|
0.0%
|
|
n/a
|
Error #2
|
|
-
|
0.0%
|
|
n/a
|
Error #3
|
|
-
|
0.0%
|
|
n/a
|
Other identified and
resolved errors
|
|
4,125
|
(6.0%)
|
|
n/a
|
Newly corrected
errors
|
|
4,095
|
(5.9%)
|
|
n/a
|
Investment gains
(losses) - preliminary
|
|
$
(69,056)
|
|
|
$
(101,309)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance and
other interest income (before provision for credit losses), as
originally reported
|
|
$
1,271,953
|
|
|
n/a
|
Error #1
|
|
(57,571)
|
(4.7%)
|
|
n/a
|
Error #2
|
|
-
|
0.0%
|
|
n/a
|
Error #3
|
|
-
|
0.0%
|
|
n/a
|
Other identified and
resolved errors
|
|
194
|
0.0%
|
|
n/a
|
Newly corrected
errors
|
|
(57,377)
|
(4.7%)
|
|
n/a
|
Net finance and other
interest income (before provision for credit losses) -
preliminary
|
|
$
1,214,576
|
|
|
$
1,201,208
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
credit losses, as originally reported
|
|
$
706,574
|
|
|
n/a
|
Error #1
|
|
(46,236)
|
(7.0%)
|
|
n/a
|
Error #2
|
|
(688)
|
(0.1%)
|
|
n/a
|
Error #3
|
|
434
|
0.1%
|
|
n/a
|
Other identified and
resolved errors
|
|
(767)
|
(0.1%)
|
|
n/a
|
Newly corrected
errors
|
|
(47,257)
|
(7.2%)
|
|
n/a
|
Provision for credit
losses - preliminary
|
|
$
659,317
|
|
|
$
511,292
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income, as
originally reported
|
|
$
316,822
|
|
|
n/a
|
Error #1
|
|
(11,366)
|
(3.4%)
|
|
n/a
|
Error #2
|
|
688
|
0.2%
|
|
n/a
|
Error #3
|
|
(434)
|
(0.1%)
|
|
n/a
|
Other identified and
resolved errors
|
|
24,856
|
7.5%
|
|
n/a
|
Newly corrected
errors
|
|
13,745
|
4.2%
|
|
n/a
|
Pre-tax income -
preliminary
|
|
$
330,567
|
|
|
$
437,161
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as
originally reported
|
|
$
200,693
|
|
|
n/a
|
Error #1
|
|
(7,135)
|
(3.4%)
|
|
n/a
|
Error #2
|
|
432
|
0.2%
|
|
n/a
|
Error #3
|
|
(272)
|
(0.1%)
|
|
n/a
|
Other identified and
resolved errors
|
|
15,600
|
7.5%
|
|
n/a
|
Newly corrected
errors
|
|
8,625
|
4.1%
|
|
n/a
|
Net income -
preliminary
|
|
$
209,318
|
|
|
$
283,074
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS, as originally
reported
|
|
$
0.56
|
|
|
n/a
|
Error #1
|
|
(0.02)
|
(3.4%)
|
|
n/a
|
Error #2
|
|
-
|
0.0%
|
|
n/a
|
Error #3
|
|
-
|
0.0%
|
|
n/a
|
Other identified and
resolved errors
|
|
0.04
|
6.9%
|
|
n/a
|
Newly corrected
errors
|
|
0.02
|
3.4%
|
|
n/a
|
EPS -
preliminary
|
|
$
0.58
|
|
|
$
0.78
|
|
* Errors are
presented as a percentage of corrected amount.
|
Table 3:
Preliminarily Restated Key Balance Sheet Figures and Related
Disclosures as of December 31, 2015 and 2014
|
|
Balance Sheets and
Related Disclosures
|
(Unaudited, Dollar
amounts in thousands)
|
|
|
|
|
|
|
|
|
As of December
31,
|
|
|
2014
|
|
2015
|
|
|
|
Allowance (retail
installment contracts), as originally reported
|
|
$
2,726,338
|
|
|
$
3,296,023
|
|
Previously corrected
errors
|
|
(56,508)
|
(2.2%)
|
|
n/a
|
|
Allowance (retail
installment contracts), as previously restated
|
|
$
2,669,830
|
|
|
n/a
|
|
Error #1
|
|
(56,320)
|
(2.2%)
|
|
(65,878)
|
(2.1%)
|
Error #2
|
|
(95,465)
|
(3.7%)
|
|
(105,538)
|
(3.3%)
|
Error #3
|
|
68,642
|
2.7%
|
|
72,809
|
2.3%
|
Other identified and
resolved errors
|
|
-
|
0.0%
|
|
-
|
0.0%
|
Newly corrected
errors
|
|
(83,143)
|
(3.2%)
|
|
(98,607)
|
(3.1%)
|
Allowance (retail
installment contracts) - preliminary
|
|
$
2,586,687
|
|
|
$
3,197,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables held for investment, as originally
reported
|
|
$
23,915,551
|
|
|
$
23,479,680
|
|
Previously corrected
errors
|
|
56,508
|
0.2%
|
|
n/a
|
|
Finance
receivables held for investment, as previously
restated
|
|
$
23,972,059
|
|
|
n/a
|
|
Error #1
|
|
(83,897)
|
(0.4%)
|
|
(134,294)
|
(0.6%)
|
Error #2
|
|
95,465
|
0.4%
|
|
105,538
|
0.5%
|
Error #3
|
|
(68,642)
|
(0.3%)
|
|
(72,809)
|
(0.3%)
|
Other identified and
resolved errors
|
|
(3,333)
|
(0.0%)
|
|
(10,326)
|
(0.0%)
|
Newly corrected
errors
|
|
(60,406)
|
(0.3%)
|
|
(111,891)
|
(0.5%)
|
Finance receivables
held for investment - preliminary
|
|
$
23,911,653
|
|
|
$
23,367,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets, as
originally reported
|
|
$
32,342,176
|
|
|
$
36,570,373
|
|
Previously corrected
errors
|
|
54,344
|
0.2%
|
|
n/a
|
|
Total assets, as
previously restated
|
|
$
32,396,520
|
|
|
n/a
|
|
Error #1,
tax-effected for 2013
|
|
(83,896)
|
(0.3%)
|
|
(134,841)
|
(0.4%)
|
Error #2,
tax-effected for 2013
|
|
95,465
|
0.3%
|
|
105,538
|
0.3%
|
Error #3,
tax-effected for 2013
|
|
(68,642)
|
(0.2%)
|
|
(72,809)
|
(0.2%)
|
Other identified and
resolved errors
|
|
34,873
|
0.1%
|
|
517
|
0.0%
|
Newly corrected
errors
|
|
(22,200)
|
(0.1%)
|
|
(101,596)
|
(0.3%)
|
Total assets -
preliminary
|
|
$
32,374,320
|
|
|
$
36,468,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity, as
originally reported
|
|
$
3,558,349
|
|
|
$
4,424,963
|
|
Previously corrected
errors
|
|
35,323
|
1.0%
|
|
n/a
|
|
Total equity, as
previously restated
|
|
$
3,593,672
|
|
|
n/a
|
|
Error #1,
tax-effected for 2013
|
|
(52,443)
|
(1.5%)
|
|
(84,546)
|
(1.9%)
|
Error #2,
tax-effected for 2013
|
|
59,675
|
1.7%
|
|
66,172
|
1.5%
|
Error #3,
tax-effected for 2013
|
|
(42,908)
|
(1.2%)
|
|
(45,651)
|
(1.0%)
|
Other identified and
resolved errors
|
|
(23,529)
|
(0.7%)
|
|
95,635
|
2.1%
|
Newly corrected
errors
|
|
(59,205)
|
(1.7%)
|
|
31,610
|
0.7%
|
Total equity -
preliminary
|
|
$
3,534,467
|
|
|
$
4,456,573
|
|
|
* Errors are
presented as a percentage of corrected amount.
|
Table 4:
Preliminarily Restated Q1 2016 Key Balance Sheet Figures and
Related Disclosures and Select Q2 2016 Results
|
|
Balance Sheets and
Related Disclosures
|
(Unaudited, Dollar
amounts in thousands)
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
March 31,
2016
|
|
June 30,
2016
|
Allowance (retail
installment contracts), as originally reported
|
|
$
3,423,258
|
|
|
n/a
|
Error #1
|
|
(70,133)
|
(2.1%)
|
|
n/a
|
Error #2
|
|
(106,226)
|
(3.2%)
|
|
n/a
|
Error #3
|
|
73,243
|
2.2%
|
|
n/a
|
Other identified and
resolved errors
|
|
-
|
0.0%
|
|
n/a
|
Newly corrected
errors
|
|
(103,116)
|
(3.1%)
|
|
n/a
|
Allowance (retail
installment contracts) - preliminary
|
|
$
3,320,142
|
|
|
$
3,422,736
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables held for investment, as originally
reported
|
|
$
24,082,180
|
|
|
n/a
|
Error #1
|
|
(144,678)
|
(0.6%)
|
|
n/a
|
Error #2
|
|
106,226
|
0.4%
|
|
n/a
|
Error #3
|
|
(73,243)
|
(0.3%)
|
|
n/a
|
Other identified and
resolved errors
|
|
(8,496)
|
(0.0%)
|
|
n/a
|
Newly corrected
errors
|
|
(120,191)
|
(0.5%)
|
|
n/a
|
Finance receivables
held for investment - preliminary
|
|
$
23,961,989
|
|
|
$
23,477,426
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets, as
originally reported
|
|
$
37,904,607
|
|
|
n/a
|
Error #1,
tax-effected for 2013
|
|
(146,207)
|
(0.4%)
|
|
n/a
|
Error #2,
tax-effected for 2013
|
|
106,226
|
0.3%
|
|
n/a
|
Error #3,
tax-effected for 2013
|
|
(73,243)
|
(0.2%)
|
|
n/a
|
Other identified and
resolved errors
|
|
(13,316)
|
(0.0%)
|
|
n/a
|
Newly corrected
errors
|
|
(126,540)
|
(0.3%)
|
|
n/a
|
Total assets -
preliminary
|
|
$
37,778,067
|
|
|
$
38,506,689
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity, as
originally reported
|
|
$
4,589,547
|
|
|
n/a
|
Error #1,
tax-effected for 2013
|
|
(91,657)
|
(2.0%)
|
|
n/a
|
Error #2,
tax-effected for 2013
|
|
66,593
|
1.4%
|
|
n/a
|
Error #3,
tax-effected for 2013
|
|
(45,916)
|
(1.0%)
|
|
n/a
|
Other identified and
resolved errors
|
|
111,216
|
2.4%
|
|
n/a
|
Newly corrected
errors
|
|
40,237
|
0.9%
|
|
n/a
|
Total equity -
preliminary
|
|
$
4,629,784
|
|
|
$
4,901,633
|
|
* Errors are
presented as a percentage of corrected amount.
|
Table 5: Q2 2016
Originations
|
|
|
|
|
|
|
|
|
|
|
|
|
Originations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
|
June 30,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
Retained
Originations
|
(Dollar amounts in
thousands)
|
Retail installment
contracts
|
$
3,176,087
|
|
$
4,765,800
|
|
$
7,482,180
|
|
$
9,054,701
|
|
$
4,418,930
|
Average
APR
|
14.0%
|
|
17.2%
|
|
14.9%
|
|
17.6%
|
|
15.3%
|
Average FICO®
(a)
|
624
|
|
586
|
|
609
|
|
579
|
|
601
|
Discount
|
0.2%
|
|
1.8%
|
|
0.5%
|
|
2.5%
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
Personal loans
(b)
|
$
9,272
|
|
$
257,915
|
|
$
9,281
|
|
$
424,407
|
|
$
9
|
Average
APR
|
25.0%
|
|
19.4%
|
|
25.0%
|
|
18.9%
|
|
24.9%
|
Discount
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Leased
vehicles
|
$
1,694,829
|
|
$
1,424,308
|
|
$
3,311,909
|
|
$
2,554,423
|
|
$
1,617,080
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease
receivables
|
$
1,805
|
|
$
8,073
|
|
$
3,658
|
|
$
63,803
|
|
$
1,853
|
Total originations
retained
|
$
4,881,993
|
|
$
6,456,096
|
|
$
10,807,028
|
|
$
12,097,334
|
|
$
6,037,872
|
|
|
|
|
|
|
|
|
|
|
|
Sold Originations
(c)
|
|
|
|
|
|
|
|
|
|
Retail installment
contracts
|
$
547,007
|
|
$
927,586
|
|
$
1,403,717
|
|
$
2,234,410
|
|
$
743,873
|
Average
APR
|
3.6%
|
|
4.3%
|
|
3.0%
|
|
5.1%
|
|
2.5%
|
Average FICO®
(d)
|
754
|
|
745
|
|
758
|
|
736
|
|
761
|
Total originations
sold
|
$
547,007
|
|
$
927,586
|
|
$
1,403,717
|
|
$
2,234,410
|
|
$
743,873
|
|
|
|
|
|
|
|
|
|
|
|
Total SC
originations
|
$
5,429,000
|
|
$
7,383,682
|
|
$
12,210,745
|
|
$
14,331,744
|
|
$
6,781,745
|
|
|
|
|
|
|
|
|
|
|
|
Facilitated
Originations
|
|
|
|
|
|
|
|
|
|
Leased
vehicles
|
-
|
|
$
228,572
|
|
-
|
|
$
632,471
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total
originations
|
$
5,429,000
|
|
$
7,612,254
|
|
$
12,210,745
|
|
$
14,964,215
|
|
$
6,781,745
|
|
|
(a)
|
Unpaid principal
balance excluded from the weighted average FICO score is $509
million, $933 million, $1.3 billion, $1.8 billion and $813 million
for the three months ended June 30, 2016 and 2015, the six
months ended June 30, 2016 and 2015 and the three months ended
March 31, 2016, respectively, as the borrowers on these loans
did not have FICO scores at origination.
|
(b)
|
The Company
originated $9,000 of LendingClub loans prior to the expiration of
the notice period in January 2016. Because volume on revolving
personal loans is reported based on the net balance increase, and
the net balance of revolving loans declined during the three months
ended March 31, 2016, no other net originations are shown for
Personal loans for this period.
|
(c)
|
Only includes assets
both originated and sold in the period. Total asset sales for the
period are shown in Asset Sales Table.
|
(d)
|
Unpaid principal
balance excluded from the weighted average FICO score is $64
million, $94 million, $175 million, $218 million and $97 million
for the three months ended June 30, 2016 and 2015, the six
months ended June 30, 2016 and 2015, and the three months ended
March 31, 2016, respectively, as the borrowers on these loans
did not have FICO scores at origination.
|
Table 6: Q2 2016
Asset Sales
|
|
Asset sales may
include assets originated in prior periods
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
|
June 30,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
|
|
(Dollar amounts in
thousands)
|
Retail installment
contracts
|
$
659,224
|
|
$
2,016,675
|
|
$
1,519,179
|
|
$
2,935,753
|
|
$
859,955
|
Average
APR
|
3.5%
|
|
5.6%
|
|
2.9%
|
|
5.3%
|
|
2.4%
|
Average
FICO®
|
758
|
|
722
|
|
762
|
|
729
|
|
765
|
|
|
|
|
|
|
|
|
|
|
|
Personal
loans
|
$
-
|
|
$
-
|
|
$
869,349
|
|
$
-
|
|
$
869,349
|
Average
APR
|
-
|
|
-
|
|
17.9%
|
|
-
|
|
17.9%
|
|
|
|
|
|
|
|
|
|
|
|
Leased
vehicles
|
$
-
|
|
$
755,624
|
|
$
-
|
|
$
1,316,958
|
|
$
-
|
Total asset
sales
|
$
659,224
|
|
$
2,772,299
|
|
$
2,388,528
|
|
$
4,252,711
|
|
$
1,729,304
|
Table 7: Q2 2016
Ending Portfolio
|
|
Ending outstanding
balance, average APR and remaining unaccreted discount
of our held for investment portfolio as of June 30, 2016, is as
follows:
|
|
(Dollar amounts in
thousands)
|
|
|
|
|
|
June 30,
2016
|
Retail installment
contracts
|
|
|
|
|
|
$
27,506,189
|
Average
APR
|
|
|
|
|
|
16.7%
|
Discount
|
|
|
|
|
|
2.5%
|
|
|
|
|
|
|
|
|
Personal
loans
|
|
|
|
|
|
$
909
|
Average
APR
|
|
|
|
|
|
24.1%
|
|
|
|
|
|
|
|
|
Receivables from
dealers
|
|
|
|
|
|
$
70,030
|
Average
APR
|
|
|
|
|
|
4.7%
|
|
|
|
|
|
|
|
|
Leased
vehicles
|
|
|
|
|
|
$
9,125,008
|
|
|
|
|
|
|
|
|
Capital
leases
|
|
|
|
|
|
$
42,897
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/santander-consumer-usa-holdings-inc-provides-update-on-filings-300333063.html
SOURCE Santander Consumer USA
Holdings Inc.