Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Santander Consumer USA Holdings Inc. | scusa8-k9x30x16earningsfin.htm |
| EX-99.1 - EXHIBIT 99.1 - Santander Consumer USA Holdings Inc. | exhibit991september302016.htm |
11.09.2016
SANTANDER CONSUMER USA HOLDINGS INC.
Third Quarter 2016
2IMPORTANT INFORMATION
Forward-Looking Statements
This presentation 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).
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 inherent limitations in internal controls over financial reporting; (b) our ability to remediate any material weaknesses
in internal controls over financial reporting completely and in a timely manner; (c) continually changing federal, state, and local laws and regulations could
materially adversely affect our business; (d) adverse economic conditions in the United States and worldwide may negatively impact our results; (e) our business
could suffer if our access to funding is reduced; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (g)
unexpected costs and delays in connection with exiting our personal lending business; (h) 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; (i) our business could
suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (j) our financial condition, liquidity, and results of operations
depend on the credit performance of our loans; (k) loss of our key management or other personnel, or an inability to attract such management and personnel; (l)
certain regulations, including but not limited to 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 (m) 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.
33Q16 HIGHLIGHTS
» Net income of $214 million, or $0.59 per diluted common share
» One-time tax benefit of $0.03 per diluted common share
» Net interest income of $1.2 billion
» ROA of 2.2% and ROE of 17.1%
» Total auto originations of $5.2 billion, down 31% vs. prior year third quarter
» Underwriting standards remain disciplined in a competitive environment impacting short term market share
» Lease originations of $1.3 billion, down 17% vs. prior year third quarter
» QoQ nonprime originations up 13%
» Expense ratio of 2.2%, as SC continues to leverage scale to manage expenses
» Continued strength of ABS platforms evidenced by the upgrade of 90 ABS tranches by Moody’s, S&P and Fitch across multiple
platforms during the quarter, positively impacting more than $7 billion in securities
» Retail installment contract (RIC) net charge-off ratio of 8.7%; up 50 bps year-over-year driven by slower portfolio growth, fewer
bankruptcy sales and lower recovery rates
» CET1 ratio of 13.1%, demonstrating SC’s ability to generate earnings and capital
» During 2Q16 SC executed a subservicing agreement with its Puerto Rico entity, Santander Consumer International (“SCI”), to
service the performing portion of SC’s loan and lease portfolio
» Call center operations to begin by the end of 2016, adding geographic and time-zone diversification as well as proximity
to existing SC servicing vendors facilitating improved oversight
SC continues to be a leader in the auto finance industry, and consistently demonstrates strength in its operational capabilities.
4ECONOMIC INDICATORS
U.S. Auto Sales1
Units in Millions
1 St. Louis Fed Research
2 University of Michigan
3 Bloomberg
4 Bureau of Labor Statistics
Consumer Confidence2
Index Q1 1966=100
U.S. GDP3
YOY%
U.S. Unemployment Rate4
%
OR
IGIN
A
TI
O
N
S
CRE
D
IT
16.5
Max 18.1
Min 9.0
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
93.5
Max 98.1
Min 55.3
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-1 Sep-12 S - 3 Sep-14 Sep-15 Sep-16
2.9%
Max 3.2%
Min -4.1%
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
4.9%
Max 10.0%
Min 4.4%
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
5
4.9%
Max 5.4%
Min 1.6%
Aug-06 Aug-08 Aug-10 Aug-12 Aug-14 Aug-16
AUTO INDUSTRY ANALYSIS
Used Vehicle Indices1
Manheim: Seasonally Adjusted NADA: Not Seasonally Adjusted
1 Manheim, Inc.; Indexed to a basis of 100 at 1995 levels; National Automotive Dealers Association
2 Auction Only - includes all auto-related recoveries including inorganic/purchased receivables from auction lanes only
2 Auction Plus - GAAP Recoveries which also includes insurance proceeds, bankruptcy/deficiency sales, and timing impacts
3 Standard & Poor’s Rating Services (ABS Auto Trust Data – two-month lag on data, as of August 31, 2016)
SC Recovery Rates2
Industry Net Loss Rates3
Nonprime
Industry 60+ Day Delinquency Rates3
Nonprime
SE
V
ER
IT
Y
CRE
D
IT
8.4%
Max 13.3%
Min 2.8%
Aug-06 Aug-08 Aug-10 Aug-12 Aug-14 Aug-16
90
95
100
105
110
110
115
120
125
130
Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
Manheim (Left Axis) NADA (Right Axis)
6
VEHICLE FINANCE
LEVERAGING TECHNOLOGY IS INTEGRAL TO THE FOUR PILLARS OF OUR FOCUSED BUSINESS MODEL
FOCUSED BUSINESS MODEL
DISCIPLINED APPROACH TO MARKET
SIMPLE, PERSONAL, FAIR APPROACH WITH
CUSTOMERS, EMPLOYEES AND ALL CONSTITUENCIES
SERVICED FOR OTHERS
FUNDING AND LIQUIDITY CULTURE OF COMPLIANCE
7DISCIPLINED LOAN UNDERWRITING CONTINUES IN 3Q16
1 Approximate FICO score
2 Includes some capital lease originations.
Average managed assets remain stable. Total auto origination decrease was driven by disciplined underwriting in a competitive market.
Q3 2016 Q2 2016 Q3 2015 QoQ YoY
Total Core Retail Auto 1,972 1,654 2,788 19% (29%)
Chrysler Capital Loans (<640)1 855 857 1,374 0% (38%)
Chrysler Capital Loans (≥640)1 1,034 1,212 1,732 (15%) (40%)
Total Chrysler Capital Retail 1,889 2,069 3,106 (9%) (39%)
Total Leases2 1,303 1,697 1,569 (23%) (17%)
Total Auto Originations 5,164 5,420 7,463 (5%) (31%)
Total Personal Lending - 9 158 N/A N/A
Total Originations 5,164 5,429 7,621 (5%) (32%)
Asset Sales 794 659 3,058 20% (74%)
Serviced for Others Portfolio 12,157 13,034 14,788 (7%) (18%)
Average Managed Assets 52,675 53,237 50,961 (1%) 3%
Three Months Ended Originations % Variance
8
3% 4% 4% 3% 2%
15% 12% 14% 13% 12%
14%
12%
15%
12% 13%
22%
20%
22%
20% 23%
12%
12%
13%
13%
14%
33%
39%
32%
40%
35%
3Q15 4Q15 1Q16 2Q16 3Q16
Originations by Credit (RIC only)
($ in millions)
>640
600-639
540-599
<540
No FICO
Commercial
$4,929 $5,162$5,894 $3,723 $3,861
RECENT ORIGINATIONS EXHIBIT HIGHER CREDIT QUALITY
1 Loans to commercial borrowers; no FICO score obtained
1
% of RIC originations <600 FICO have declined YoY
Consistent with disciplined pricing strategy and track
record of leveraging performance and data into new
originations
YoY increase in loans >600 FICO driven by Fiat Chrysler
(“FCA”) relationship
Stable mix of new and used vehicle originations YoY
Average loan balances for new/used originations down YoY
Average loan balance
in dollars
$22,165 $23,721 $21,745 $21,929 $21,482
55% 61% 51% 57% 56%
45% 39% 49% 43% 44%
3Q15 4Q15 1Q16 2Q16 3Q16
New/Used Originations
($ in millions)
Used
New
$5,894 $3,861$5,162$4,929 $3,723
49%45%
9
Significant opportunity in prime originations
Finalizing a strategic agreement with Banco Santander
Beneficial to FCA relationship and Chrysler Capital volume
FCA had prior year sales of more than 2 million units
YTD 2016 sales of more than 1.7 million units
Consistent annual sales growth since 2011
September 2016 penetration rate of 19%
Accomplishments and Improvements
SC remained the largest provider for FCA
FCA and SC’s relationship provides a unique offering for nonprime consumers in comparison to other original equipment
manufacturers (“OEMs”)
Continued to refine dealer VIP program; increasing participating dealerships since Q1 2016
The VIP program is leading to an increase in application views without impacting underwriting standards
Continued to refine off-lease processes as SC anticipates incremental off-lease volume in upcoming quarters
Through Santander Bank N.A. (“SBNA”), SC has increased dealer receivable originations (“floorplan”) 50% compared to 2015 YTD
CHRYSLER CAPITAL
1 FCA filings; sales as reported on 10/03/2016
SC continues to work strategically and collaboratively with FCA to continue to strengthen the relationship and create value within
the Chrysler Capital program.
1.6 1.7
1.8
2.1
2.3
1.7
2011 2012 2013 2014 2015 YTD 2016
FCA Sales1
(units in millions)
10
$14,788 $15,047
$14,235
$13,034
$12,157
3Q15 4Q15 1Q16 2Q16 3Q16
$ in Millions
Flow Programs 1,348 1,081 860 659 794
CCART 788
Residual Sales 1,710
Recent decrease in total balance
related to lower prime originations
Growth in SFO remains dependent
upon Chrysler Capital Penetration
Finalizing a strategic agreement with
Banco Santander
Beneficial to SFO platform
SERVICED FOR OTHERS PLATFORM
Composition at
9/30/2016
RIC 75%
Leases 19%
RV/Marine 7%
Total 100%
Serviced for Others Balances
Flow programs continue to drive asset
sales
*Sales with retained servicing during period
11Q3 2016 FINANCIAL RESULTS
September 30, 2016 June 30, 2016 September 30, 2015 QoQ YoY
Interest on finance receivables and loans 1,246,386$ 1,271,741$ 1,285,085$ (2%) (3%)
Net leased vehicle income 135,771 125,218 92,666 8% 47%
Other finance and interest income 3,638 3,890 9,334 (6%) (61%)
Interest expense 207,175 198,594 171,420 4% 21%
Net finance and other interest income 1,178,620 1,202,255 1,215,665 (2%) (3%)
Provision for credit losses 610,398 511,921 723,922 19% (16%)
Profit sharing 6,400 17,846 11,818 (64%) (46%)
Total other income 26,682 37,302 154,336 (28%) (83%)
Total operating expenses 284,484 272,227 261,287 5% 9%
Income before tax 304,020 437,563 372,974 (31%) (18%)
Income tax expense 90,473 154,218 136,539 (41%) (34%)
Net income 213,547 283,345 236,435 (25%) (10%)
Diluted EPS ($) 0.59$ 0.79$ 0.66$ (25%) (11%)
Total assets 38,771,636 38,490,611 36,035,625 1% 8%
Average managed assets 52,675,379 53,237,279 50,961,182 (1%) 3%
Three Months Ended
(Unaudited, Dollars in Thousands, except per share) % Variance
12
September 30,
2016
June 30,
2016
September 30,
2015
QoQ YoY
Interest on finance receivables and loans 1,167,675$ 1,190,500$ 1,170,824$ (2%) 0%
Net leased vehicle income 135,771 125,218 92,666 8% 47%
Other finance and interest income 3,638 3,890 9,334 (6%) (61%)
Interest expense 196,984 188,546 156,062 4% 26%
Net finance and other interest income 1,110,100 1,131,062 1,116,762 (2%) (1%)
Provision for credit losses 610,398 511,921 618,109 19% (1%)
Profit sharing 10,957 13,944 10,594 (21%) 3%
Investment gains (losses), net (10,404) (6,543) 28,684 59% (136%)
Servicing fee income 36,447 42,988 35,910 (15%) 1%
Fees, commissions and other 46,426 45,347 48,975 2% (5%)
Total other income 72,469$ 81,792$ 113,569$ (11%) (36%)
Assets 37,839,733$ 37,518,961$ 34,140,016$ 1% 11%
Retail installment contracts held for investment, net 23,578,757$ 23,377,022$ 23,303,693$ 1% 1%
Leased vehicles 8,467,129$ 8,065,227$ 6,062,106$ 5% 40%
Three Months Ended
(Unaudited, Dollars in Thousands, except per share) % Variance
Q3 2016 EXCLUDING PERSONAL LENDING
1 Additional details can be found in Appendix
13
30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16 30-Sep-16
Reported Total Other Income (Loss) 154,336 (97,587) 77,558 37,302 26,682
Reported Investment Gains (Losses), Net 22,684 (229,212) (69,056) (101,309) (106,050)
Add back:
Personal Lending LOCM Adjustments - 236,396 64,213 94,767 95,646
Other 6,000 14,226 6,451 7,330 6,639
Normalized Investment Gains (Losses), Net 28,684 21,410 1,608 788 (3,765)
Servicing Fee Income 35,910 42,357 44,494 42,988 36,447
Fees, Commissions, and Other1 95,742 89,268 102,120 95,623 96,285
Normalized Total Other Income 160,336 153,035 148,222 139,399 128,967
Customer Default Activity 123,254 101,347 97,169 114,477
Fair Value Discount 113,142 (37,134) (2,402) (18,831)
Denotes quarters with CCART sales
Three Months Ended
(Unaudited, Dollars in Thousands)
TOTAL OTHER INCOME
SC’s strategy is to price loans sold under flow agreements close to par, with minimal investment gains (losses), to generate further growth
in the serviced for others platform and drive increased fee income
In Q3 2015, SC designated the personal lending portfolio as held for sale and released any allowance associated with the portfolio; any
lower of cost or market (“LOCM”) impact related to personal lending in Q3 2015 was recognized through provision for credit losses
Beginning in Q4 2015, net investment gains (losses) include the impact of personal lending assets
Customer defaults, as part of LOCM adjustments on the personal lending portfolio designated as held for sale, are recognized through
net investment gains (losses)
Seasonal balances will impact magnitude of LOCM adjustments; this quarter included lower LOCM adjustments driven by seasonal
declines in the personal lending portfolio
1 Fees, commissions and other includes fee income from the personal lending and auto portfolios
14
3,436
177
144 34 (125)
(253)
3,413
3000
3100
3200
3300
3400
3500
3600
3700
3800
3900
Q2 2016 New
Volume
TDR
Migration
Performance
Adjustment
Qualitative
Reserve
Liquidations
& Other
Q3 2016
Q2 2016 to Q3 2016 ALLL Reserve Walk
($ in millions)
724
851
660
512
610
11.1%
11.9%
12.0%
12.6%
12.4%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
0
100
200
300
400
500
600
700
800
900
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Provision Expense and Allowance Ratio
($ in mill ions)
Provision for credit losses Allowance Ratio
PROVISION AND RESERVES
Allowance to loans ratio decreased to 12.4% QoQ
Provision for credit losses decreased YoY primarily driven by
the recording of provision for credit losses on the personal
loan portfolio in prior year
Excluding the impact of personal loans, provision for
credit losses decreased $8 million YoY
QoQ allowance decreased $23 million
Liquidations and removal of qualitative adjustment partly
offset by new volume and TDR migration
1 TDR Migration – additional allowance coverage required for loans now classified as a TDR or “troubled debt restructuring”
15
15.4%
16.6% 16.3%
14.2%
17.2%
8.2%
8.9%
7.6%
5.7%
8.7%
47%
47%
53% 60%
49%
0%
10%
20%
30%
40%
50%
60%
70%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Credit: Individually Acquired Retail Installment Contracts,
Held for Investment
Gross Charge-
off Ratio
Net Charge-off
Ratio
Recovery Rate
(as % of
recorded
investment)
LOSS AND DELINQUENCY
YoY delinquency increased for each delinquency bucket
Primary drivers:
2015 originations more nonprime in nature
Slower portfolio growth
YoY gross loss increased 180 basis points
Primary drivers:
2015 originations more nonprime in nature
Slower portfolio growth
Recovery rates and net losses in Q2 2016 benefited by
proceeds from bankruptcy sales1
1 Excluding bankruptcy sales, recovery rates would have been 59%
8.1%
9.1%
6.9%
9.0% 9.2%
3.8%
4.4%
3.1%
4.2%
4.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Delinquency: Individually Acquired Retail Installment Contracts,
Held for Investment
31-60
61+
16CREDIT QUALITY: LOSS DETAIL
Overall increase is primarily due to a combination of portfolio growth, portfolio aging and mix shift
2015 vintage represents largest portion of losses
* Individually acquired retail installment contracts
565
631
99 2 (34)
Q3 2015 Portfolio Growth, Aging
and Mix Shift
Bankruptcy Sales Recoveries Q3 2016
Q3 2015 to Q3 2016 Net Charge-Off Walk
($ in millions)
17
$50,961
$52,239 $52,962
$53,237 $52,675
$261 $257
$291
$272
$284
2.1% 2.0%
2.2% 2.0% 2.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
$2
$10,002
$20,002
$30,002
$40,002
$50,002
$60,002
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Average Managed Assets
($ millions)
Total Expenses
($ millions)
Expense Ratio
EXPENSE MANAGEMENT
Operating expenses totaled $284 million, an increase of 9% versus the same quarter last year, driven by higher repossession and
compensation expenses
18
7.0 8.3
3.8 2.5
Q2 2016 Q3 2016
Unused Used
FUNDING AND LIQUIDITY
Total committed liquidity of $36.8 billion at end of Q3 2016, down 4% from $38.1 billion at the end of Q2 2016
Asset-Backed Securities
($ Billions)
Private Financings
($ Billions)
Banco Santander & Subsidiaries
($ Billions)
Asset Sales
($ Billions)
Leveraged alternative liquidity sources during Q3
$4.8 billion in total commitment
51% unused capacity at Q3 2016
Flow program sales continued to drive total asset sales
Amortizing Revolving
10.8
$19.6 billion in commitments from 13 lenders
23% unused capacity on revolving lines at Q3 2016
10.8
14.2
12.4
Q2 2016 Q3 2016
8.3 8.8
Q2 2016 Q3 2016
0.7
0.8
Q2 2016 Q3 2016
2.35 2.35
2.45 2.45
Q2 2016 Q3 2016
Unused
Used
4.8 4.8
19CONSISTENT CAPITAL GENERATION
1 Common Equity Tier 1 (CET1) Capital Ratio begins with stockholders’ equity and then adjusts for AOCI, goodwill/intangibles, DTAs, cash flow hedges and other regulatory exclusions over risk-
weighted assets; Non-GAAP measure
2Tangible common equity to tangible assets is defined “as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets; Non-GAAP
measure, reconciliation in Appendix
1 2
SC has exhibited a strong ability to generate earnings and capital, while growing assets.
Tangible Assets ($ millions) 35,925 36,342 37,661 38,383 38,665
11.5% 11.2%
12.1%
12.6%
13.1%
12.1% 11.9% 11.9%
12.4%
13.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
CET1 TCE/TA
APPENDIX
21SANTANDER CONSUMER USA HOLDINGS INC.
1 As of September 30, 2016
2 DDFS LLC is an entity owned by former Chairman and Chief Executive Officer, Tom Dundon. This purchase would result in SHUSA owning approximately 68.8% of SC.
3 Chrysler Capital is a dba of Santander Consumer USA
• Santander Consumer USA Holdings Inc. (NYSE:SC) (“SC”) is approximately 58.9%1 owned by Santander Holdings USA, Inc.
(“SHUSA”), a wholly-owned subsidiary of Banco Santander, S.A. (NYSE:SAN)
• On July 3, 2015, SHUSA elected to exercise its right to purchase all of the shares of SC common stock owned by DDFS LLC,
subject to regulatory approval and applicable law2
▪ SC is a full-service, technology-driven consumer finance company focused on vehicle finance, third-party servicing and providing
superior customer service
• Historically focused on nonprime markets; established presence in prime and lease
▪ Approximately 5,100 full-time, 90 part-time and 1,500 vendor-based employees across multiple locations in the U.S. and the
Caribbean
▪ Our strategy is to leverage our efficient, scalable technology and risk infrastructure and data to underwrite, originate and service
profitable assets while treating employees, customers and all stakeholders in a simple, personal and fair manner
▪ Unparalleled compliance and responsible practices focus
▪ Continuously optimizing the mix of assets retained vs. assets sold and serviced for others
▪ Presence in prime markets through Chrysler Capital3
▪ Efficient funding through key third-party relationships, secondary markets and Santander
Overview
Strategy
22COMPANY ORGANIZATION
Other Subsidiaries
100% Ownership
Santander Holdings USA, Inc.
(“SHUSA’)
58.9% Ownership
Santander Consumer USA Holdings Inc.
(“SC”)
Santander Bank, N.A.
Other Subsidiaries
9.8% Ownership
(11.5% Beneficial Ownership)1
DDFS LLC2
and Tom Dundon
0.1% Ownership
(0.4% Beneficial Ownership)1
31.3% Ownership
Other
Management
Public
Shareholders
Banco Santander, S.A. Spain
**Ownership percentages are approximates as of September 30, 2016
1 Beneficial ownership includes options currently exercisable or exercisable within 60 days of September 30, 2016
2 On July 3, 2015, SHUSA elected to exercise the right to purchase shares of SC common stock owned by DDFS LLC, an entity owned by former Chairman and Chief Executive Officer, Thomas
Dundon, subject to regulatory approval and applicable law. This purchase would result in SHUSA owning approximately 68.8% of SC.
23HELD FOR INVESTMENT CREDIT TRENDS
Retail Installment Contracts1
1Held for investment; excludes assets held for sale
3.9
% 12.
2%
23.
8%
30.
4%
17.
1%
12.
6%
4.0
% 12.
2%
23.
4%
30.
9%
17.
3%
12.
2%
4.2
% 12
.6%
23.
2%
31.
0%
17.
1%
11.
9%
2.6
% 1
2.6
%
22.
9%
31.
2%
17.
4%
13.
3%
3.3
% 12
.4%
22.
2%
31.
1%
17.
2%
13.
8%
Commercial Unknown <540 540-599 600-639 >=640
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
24Q3 2016 EXCLUDING PERSONAL LENDING DETAIL
As Reported
Personal
Lending
Excluding
Personal
Lending
As Reported
Personal
Lending
Excluding
Personal
Lending
As Reported
Personal
Lending
Excluding
Personal
Lending
Interest on finance receivables and loans $ 1,246,386 $ 78,711 $ 1,167,675 $ 1,271,741 $ 81,241 $ 1,190,500 $ 1,285,085 $ 114,261 $ 1,170,824
Net leased vehicle income 135,771 135,771 125,218 125,218 92,666 92,666
Other finance and interest income 3,638 3,638 3,890 3,890 9,334 9,334
Interest expense 207,175 10,191 196,984 198,594 10,048 188,546 171,420 15,358 156,062
Net finance and other interest income 1,178,620 68,520 1,110,100 1,202,255 71,193 1,131,062 1,215,665 98,903 1,116,762
Provision for credit losses 610,398 610,398 511,921 511,921 723,922 105,813 618,109
Profit sharing 6,400 (4,557) 10,957 17,846 3,902 13,944 11,818 1,224 10,594
Investment gains (losses), net (106,050) (95,646) (10,404) (101,309) (94,766) (6,543) 22,684 (6,000) 28,684
Servicing fee income 36,447 36,447 42,988 42,988 35,910 35,910
Fees, commissions and other 96,285 49,859 46,426 95,623 50,276 45,347 95,742 46,767 48,975
Total other income $ 26,682 $ (45,787) $ 72,469 $ 37,302 $ (44,490) $ 81,792 $ 154,336 $ 40,767 $ 113,569
Assets $ 38,771,636 $ 931,903 $ 37,839,733 $ 38,490,611 $ 971,650 $ 37,518,961 $ 36,035,625 $ 1,895,609 $ 34,140,016
Retail installment contracts held for investment,
net $ 23,578,757 $ 23,578,757 $ 23,377,022 $ 23,377,022 $ 23,303,693 $ 23,303,693
Leased vehicles $ 8,467,129 $ 8,467,129 $ 8,065,227 $ 8,065,227 $ 6,062,106 $ 6,062,106
As of and for the Three Months Ended
($ in Thousands)
September 30, 2016 June 30, 2016 September 30, 2015
25CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts) September 30, 2016 December 31, 2015
(Unaudited)
Assets
Cash and cash equivalents $ 75,873 $ 18,893
Finance receivables held for sale, net 2,572,429 2,859,575
Finance receivables held for investment, net 23,686,391 23,367,788
Restricted cash 2,696,500 2,236,329
Accrued interest receivable 369,543 395,387
Leased vehicles, net 8,467,129 6,497,310
Furniture and equipment, net 62,378 58,007
Federal, state and other income taxes receivable 101,284 267,636
Related party taxes receivable 85 71
Goodwill 74,056 74,056
Intangible assets, net 33,028 33,016
Due from affil iates 46,333 58,599
Other assets 586,607 582,291
Total assets $ 38,771,636 $ 36,448,958
Liabilities and Equity
Liabilities:
Notes payable — credit facil ities $ 8,299,229 $ 6,902,779
Notes payable — secured structured financings 21,150,666 20,872,900
Notes payable — related party 2,350,000 2,600,000
Accrued interest payable 28,796 22,544
Accounts payable and accrued expenses 354,864 413,269
Federal, state and other income taxes payable 14,038 2,462
Deferred tax liabilities, net 1,227,179 881,225
Due to affil iates 54,848 58,148
Other l iabilities 174,359 263,082
Total l iabilities $ 33,653,979 $ 32,016,409
Equity:
Common stock, $0.01 par value 3,584 3,579
Additional paid-in capital 1,652,786 1,644,151
Accumulated other comprehensive income (loss), net (26,598) 2,125
Retained earnings 3,487,885 2,782,694
Total stockholders’ equity 5,117,657 4,432,549
Total l iabilities and equity $ 38,771,636 $ 36,448,958
26CONSOLIDATED INCOME STATEMENTS
September 30, September 30,
2016 2015
Interest on finance receivables and loans $ 1,246,386 $ 1,285,085
Leased vehicle income 388,501 267,211
Other finance and interest income 3,638 9,334
Total finance and other interest income 1,638,525 1,561,630
Interest expense 207,175 171,420
Leased vehicle expense 252,730 174,545
Net finance and other interest income 1,178,620 1,215,665
Provision for credit losses 610,398 723,922
Net finance and other interest income after provision for credit losses 568,222 491,743
Profit sharing 6,400 11,818
Net finance and other interest income after provision for credit losses and profit sharing 561,822 479,925
Investment gains (losses), net (106,050) 22,684
Servicing fee income 36,447 35,910
Fees, commissions, and other 96,285 95,742
Total other income 26,682 154,336
Compensation expense 128,056 114,070
Repossession expense 75,920 60,770
Other operating costs 80,508 86,447
Total operating expenses 284,484 261,287
Income before income taxes 304,020 372,974
Income tax expense 90,473 136,539
Net income $ 213,547 $ 236,435
Net income per common share (basic) $ 0.60 $0.66
Net income per common share (diluted) $ 0.59 $0.66
Weighted average common shares (basic) 358,343,781 357,846,564
Weighted average common shares (diluted) 360,087,749 359,108,197
For the Three Months Ended
(Unaudited, dollars in thousands, except per share amounts)
27RECONCILIATION OF NON-GAAP MEASURES
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Total equity $ 5,117,657 $ 4,876,712 $ 4,604,739 $ 4,432,549 $ 4,451,984
Deduct: Goodwill and intangibles 107,084 107,737 107,971 107,072 110,966
Tangible common equity $ 5,010,573 $ 4,768,975 $ 4,496,768 $ 4,325,477 $ 4,341,018
Total assets $ 38,771,636 $ 38,490,611 $ 37,768,959 $ 36,448,958 $ 36,035,625
Deduct: Goodwill and intangibles 107,084 107,737 107,971 107,072 110,966
Tangible assets $ 38,664,552 $ 38,382,874 $ 37,660,988 $ 36,341,886 $ 35,924,659
Equity to assets ratio 13.2% 12.7% 12.2% 12.2% 12.4%
Tangible common equity to tangible assets 13.0% 12.4% 11.9% 11.9% 12.1%
(Unaudited, dollars in thousands)
