10-Q 1 santander2014q210-q.htm 10-Q Santander 2014 Q2 10-Q



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2014
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 001-36270
SANTANDER CONSUMER USA HOLDINGS INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
32-0414408
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
1601 Elm Street, Suite 800, Dallas, Texas
 
75201
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (214) 634-1110
Not Applicable
(Former name, former address, and formal fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
¨
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
ý
  
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes  ¨ No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at August 4, 2014
Common Stock ($0.01 par value)
  
348,939,599 shares





INDEX
 


2



Unless otherwise specified or the context otherwise requires, the use herein of the terms “ we,” “our,” “us,” “SCUSA,” and the “Company” refer to Santander Consumer USA Holdings Inc. and its consolidated subsidiaries.
Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q 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,” “estimate,” “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 which are subject to change based on various important factors, some of which are beyond our control. For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to the Risk Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2013, as supplemented by the risks discussed below in this report in Part II, Item 1A, “Risk Factors,” as well as factors more fully described in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, including the exhibits hereto, and subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. Among the factors that could cause our financial performance to differ materially from that suggested by the forward-looking statements are:

we operate in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect our business;
adverse economic conditions in the United States and worldwide may negatively impact our results;
our business could suffer if our access to funding is reduced;
we face significant risks implementing our growth strategy, some of which are outside our control;
our agreement with Chrysler Group LLC (“Chrysler”) may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement;
our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships;
our financial condition, liquidity, and results of operations depend on the credit performance of our loans;
loss of our key management or other personnel, or an inability to attract such management and personnel, could negatively impact our business; and
future changes in our relationship with Banco Santander, S.A. (“Santander”) could adversely affect our operations.

If one or more of the factors affecting our forward-looking information and statements proves incorrect, its 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.

3



PART I: FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements
SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited at June 30, 2014)
 
 
June 30,
2014
 
December 31,
2013
Assets
 
 
 
Cash and cash equivalents
$
45,913

 
$
10,531

Receivables held for sale
123,791

 
82,503

Retail installment contracts held for investment, net
21,444,601

 
20,219,609

Unsecured consumer loans, net
1,233,637

 
954,189

Restricted cash
2,007,946

 
1,563,613

Receivables from dealers, held for investment, net
85,194

 
94,745

Accrued interest receivable
344,658

 
319,157

Leased vehicles, net
3,567,546

 
2,023,433

Furniture and equipment, net of accumulated depreciation of $58,587
   and $58,117, respectively
30,405

 
25,712

Federal, state and other income taxes receivable
7,487

 
372,338

Deferred tax asset
220,338

 
197,041

Goodwill
74,056

 
74,056

Intangible assets
53,637

 
54,664

Other assets
493,187

 
410,305

Total assets
$
29,732,396

 
$
26,401,896

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Notes payable — credit facilities, $3,300,000 and $3,650,000 to affiliates, respectively
$
7,762,950

 
$
8,099,773

Notes payable — secured structured financings
18,391,660

 
15,195,887

Accrued interest payable — $6,485 and $11,563 to affiliates, respectively
24,452

 
26,512

Accounts payable and accrued expenses — $43,930 and $39,772 to affiliates, respectively
281,250

 
283,106

Federal, state and other income taxes payable
81,145

 
7,623

Other liabilities
88,681

 
102,163

Total liabilities
26,630,138

 
23,715,064

Commitments and contingencies (Notes 5 and 10)

 

Equity:
 
 
 
Common stock, $0.01 par value — 1,100,000,000 shares authorized;
 
 
 
348,931,490 and 346,763,261 shares issued and 348,928,336 and 346,760,107 shares outstanding, respectively
3,489

 
3,468

Additional paid-in capital
1,550,513

 
1,409,463

Accumulated other comprehensive loss
(4,129
)
 
(2,853
)
Retained earnings
1,552,385

 
1,276,754

Total stockholders’ equity
3,102,258

 
2,686,832

Total liabilities and equity
$
29,732,396

 
$
26,401,896

See notes to unaudited condensed consolidated financial statements.

4



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (Dollars in thousands, except per share amounts)
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2014
 
2013
 
2014
 
2013
Interest on finance receivables and loans
$
1,163,448

 
$
900,375

 
$
2,303,777

 
$
1,712,282

Leased vehicle income
218,938

 
10,030

 
366,061

 
10,030

Other finance and interest income
874

 
2,156

 
1,124

 
4,841

Total finance and other interest income
1,383,260

 
912,561

 
2,670,962

 
1,727,153

Interest expense — Including $36,836, $15,390, $71,079, and $26,884 to affiliates, respectively
128,314

 
87,476

 
252,760

 
170,473

Leased vehicle expense
179,135

 
7,028

 
299,204

 
7,028

  Net finance and other interest income
1,075,811

 
818,057

 
2,118,998

 
1,549,652

Provision for loan losses
589,136

 
408,411

 
1,287,730

 
625,604

  Net finance and other interest income after provision for loan losses
486,675

 
409,646

 
831,268

 
924,048

Profit sharing
24,056

 
7,564

 
56,217

 
7,564

  Net finance and other interest income after provision for loan losses and profit sharing
462,619

 
402,082

 
775,051

 
916,484

Gain on sale of finance receivables and leases
21,602

 
1,272

 
57,416

 
1,272

Servicing fee income
22,099

 
6,355

 
32,504

 
13,626

Fees, commissions, and other
95,030

 
46,782

 
184,334

 
115,640

Total other income
138,731

 
54,409

 
274,254

 
130,538

Salary and benefits expense
93,689

 
75,332

 
295,604

 
137,879

Repossession expense
45,648

 
30,982

 
94,079

 
67,140

Other operating costs
71,889

 
64,984

 
139,991

 
115,153

Total operating expenses
211,226

 
171,298

 
529,674

 
320,172

Income before income taxes
390,124

 
285,193

 
519,631

 
726,850

Income tax expense
143,643

 
104,129

 
191,684

 
256,927

Net income
246,481

 
181,064

 
327,947

 
469,923

Noncontrolling interests

 
854

 

 
2,397

Net income attributable to Santander Consumer USA Holdings Inc. shareholders
$
246,481

 
$
181,918

 
$
327,947

 
$
472,320

Net income
$
246,481

 
$
181,064

 
$
327,947

 
$
469,923

Other comprehensive income (loss):
 
 
 
 
 
 
 
Change in unrealized gains (losses) on cash flow hedges, net of tax of $1,950, ($1,238), $720 and ($2,944)

(3,364
)
 
2,001

 
(1,276
)
 
4,835

Change in unrealized gains on investments available for sale, net of tax of zero, $682, zero and $1,625


 
(1,167
)
 

 
(2,623
)
Other comprehensive income (loss), net
(3,364
)
 
834

 
(1,276
)
 
2,212

Comprehensive income
$
243,117

 
$
181,898

 
$
326,671

 
$
472,135

Comprehensive loss attributable to noncontrolling interests

 
586

 

 
1,577

Comprehensive income attributable to Santander Consumer USA Holdings Inc. shareholders
$
243,117

 
$
182,484

 
$
326,671

 
$
473,712

Net income per common share (basic)
$
0.71

 
$
0.53

 
$
0.94

 
$
1.36

Net income per common share (diluted)
$
0.69

 
$
0.53

 
$
0.92

 
$
1.36

Dividends declared per common share
$
0.15

 
$
0.84

 
$
0.15

 
$
0.84

Weighted average common shares (basic)
348,826,897

 
346,171,491

 
348,465,666

 
346,168,144

Weighted average common shares (diluted)
356,381,921

 
346,171,491

 
356,008,288

 
346,168,144


See notes to unaudited condensed consolidated financial statements.

5



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited) (In thousands)
 
 
Common Stock
 
Additional
Paid-In
 
Accumulated
Other
Comprehensive
 
Retained
 
Noncontrolling
 
Total
Stockholders’
 
Shares
 
Amount
 
Capital
 
Loss
 
Earnings
 
Interests
 
Equity
Balance — January 1, 2013
346,165

 
$
3,462

 
$
1,335,572

 
$
(9,164
)
 
$
869,664

 
$
39,932

 
$
2,239,466

Repayment of employee loans

 

 
519

 

 

 

 
519

Stock issued in connection with employee incentive compensation plans
4

 

 
69

 

 

 

 
69

Capital contribution received from shareholder

 

 
48,275

 

 

 

 
48,275

Net income

 

 

 

 
472,320

 
(2,397
)
 
469,923

Other comprehensive income, net of taxes

 

 

 
2,212

 

 

 
2,212

Dividends

 

 

 

 
(290,401
)
 

 
(290,401
)
Balance — June 30, 2013
346,169

 
$
3,462

 
$
1,384,435

 
$
(6,952
)
 
$
1,051,583

 
$
37,535

 
$
2,470,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance — January 1, 2014
346,760

 
$
3,468

 
$
1,409,463

 
$
(2,853
)
 
$
1,276,754

 
$

 
$
2,686,832

Stock issued in connection with employee incentive compensation plans
2,168

 
21

 
18,239

 

 

 

 
18,260

Stock-based compensation expense

 

 
122,811

 

 

 

 
122,811

Net income

 

 

 

 
327,947

 

 
327,947

Other comprehensive loss, net of taxes

 

 

 
(1,276
)
 

 

 
(1,276
)
Dividends

 

 

 

 
(52,316
)
 

 
(52,316
)
Balance — June 30, 2014
348,928

 
$
3,489

 
$
1,550,513

 
$
(4,129
)
 
$
1,552,385

 
$

 
$
3,102,258

 
See notes to unaudited condensed consolidated financial statements.

6



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands)
 
For the Six Months Ended 
 June 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
327,947

 
$
469,923

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Derivative mark to market
(8,112
)
 
(17,329
)
Provision for credit losses
1,287,730

 
625,604

Depreciation and amortization
335,902

 
36,269

Accretion of discount and capitalized origination costs, net
(403,654
)
 
(193,359
)
Originations and purchases of receivables held for sale
(2,385,913
)
 
(253,141
)
Proceeds from sales of and repayments on receivables held for sale
2,376,818

 
162,232

Gain on sale of finance receivables and leases
(57,416
)
 
(1,272
)
Stock-based compensation
122,811

 
324

Deferred tax benefit
(13,027
)
 
(107,707
)
Changes in assets and liabilities:
 
 
 
Accrued interest receivable
(59,825
)
 
(38,872
)
Accounts receivable
(19,740
)
 
(2,999
)
Federal income tax and other taxes
438,373

 
(72,306
)
Other assets
(21,774
)
 
(12,561
)
Accrued interest payable
(2,061
)
 
4,283

Other liabilities
(9,242
)
 
140,174

Net cash provided by operating activities
1,908,817

 
739,263

Cash flows from investing activities:
 
 
 
Retail installment contracts originated or purchased from dealers
(7,573,492
)
 
(7,254,246
)
Collections on retail installment contracts
4,561,823

 
4,241,026

Proceeds from sale of loans held for investment
776,746

 

Leased vehicles purchased
(2,491,092
)
 
(492,569
)
Manufacturer incentives received
499,500

 
105,393

Proceeds from sale of leased vehicles
366,471

 

Change in revolving unsecured consumer loans
(87,217
)
 
(283,406
)
Unsecured consumer term loans purchased
(300,832
)
 
(47,350
)
Collections on unsecured consumer term loans
46,633

 
1,022

Disbursements for receivables from lenders held for investment
(21,766
)
 
(190,554
)
Collections on receivables from lenders held for investment
23,573

 
4,040

Collections on investments available for sale

 
34,748

Purchases of furniture and equipment
(11,543
)
 
(11,036
)
Sales of furniture and equipment
885

 
827

Upfront fee paid in accordance with private label financing agreement

 
(150,000
)
Change in restricted cash
(444,333
)
 
(193,155
)
Other investing activities
(22,979
)
 
(3,398
)
Net cash used in investing activities
(4,677,623
)
 
(4,238,658
)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable related to secured structured financings — net
      of debt issuance costs
7,717,856

 
4,318,966

Payments on notes payable related to secured structured financings
(4,526,678
)
 
(3,811,491
)
Proceeds from unsecured notes payable
2,407,533

 
1,286,119

Payments on unsecured notes payable
(2,807,016
)
 
(839,958
)
Proceeds from notes payable
12,684,871

 
10,937,485

Payments on notes payable
(12,622,210
)
 
(8,219,888
)
Proceeds from stock option exercises, gross
14,625

 

Repurchase of stock - employee tax withholding
(5,908
)
 

Dividends paid
(52,316
)
 
(290,401
)
Repayment of employee notes

 
519

Capital contribution from shareholder

 
48,275

Cash collateral posted on cash flow hedges
(6,569
)
 

Net cash provided by financing activities
2,804,188

 
3,429,626

Net increase (decrease) in cash and cash equivalents
35,382

 
(69,769
)
Cash — Beginning of period
10,531

 
70,887

Cash — End of period
$
45,913

 
$
1,118

See notes to unaudited condensed consolidated financial statements.

7



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

1.
Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies and Practices
Santander Consumer USA Holdings Inc., a Delaware Corporation (“SCUSA Delaware” or, together with its subsidiaries, “SCUSA” or “the Company”), is the holding company for Santander Consumer USA Inc., an Illinois corporation (“SCUSA Illinois”), and subsidiaries, a specialized consumer finance company focused on vehicle finance and unsecured consumer lending products.
The Company is owned approximately 60.5% by Santander Holdings USA, Inc. (“SHUSA”), a subsidiary of Banco Santander, S.A. (“Santander”), approximately 4.1% by Sponsor Auto Finance Holdings Series LP (“Auto Finance Holdings”), approximately 10.0% by DDFS LLC, an entity affiliated with Thomas G. Dundon, the Company’s Chairman and Chief Executive Officer (“CEO”), approximately 25.3% by public shareholders and approximately 0.1% by other holders, primarily members of senior management.
The Company’s primary business is the indirect origination of retail installment contracts principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers.
In conjunction with a ten-year private label financing agreement with Chrysler Group (the “Chrysler Agreement”) that became effective May 1, 2013, the Company offers a full spectrum of auto financing products and services to Chrysler customers and dealers under the Chrysler Capital brand. These products and services include consumer retail installment contracts and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit.
The Company also originates vehicle loans through a Web-based direct lending program, purchases vehicle retail installment contracts from other lenders, and services automobile and recreational and marine vehicle portfolios for other lenders. Additionally, the Company has several relationships through which it provides unsecured consumer loans, private label credit cards and other consumer finance products.
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including certain special purpose financing trusts utilized in financing transactions (“Trusts”), which are considered variable interest entities (“VIEs”). The Company consolidates other VIEs for which it was deemed the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying condensed consolidated financial statements as of June 30, 2014 and December 31, 2013, and for the three and six months ended June 30, 2014 and 2013, have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Results of operations for the periods presented herein are not necessarily indicative of results of operations for the entire year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the amount of revenue and expenses during the reporting periods. Actual results could differ from those estimates and those differences may be material. These estimates include the determination of loan loss allowance, discount accretion, impairment, expected end-of-term lease residual values, values of repossessed assets, and income taxes. These estimates, although based on actual historical trends and modeling, may potentially show significant variances over time.

8



Business Segment Information
The Company has one reportable segment: Consumer Finance, which includes the Company’s vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to motorcycles, RVs, and watercraft. It also includes the Company’s unsecured personal loan and point-of-sale financing operations.
Accounting Policies
The Company has identified the following significant accounting policies and estimates used by management in the preparation of the Company’s financial statements: retail installment contracts, unsecured consumer loans, receivables from dealers, provision for loan losses, leased vehicles, income taxes, and earnings per share. As of June 30, 2014, there have been no significant changes to the Company's accounting policies as disclosed in the Company’s consolidated financial statements for the year ended December 31, 2013.
Recently Adopted Accounting Standards
In July 2013, the FASB issued ASU 2013-11, Income Taxes: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU provides guidance on the presentation of unrecognized tax benefits, particularly the manner in which an entity would settle, at the reporting date, any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This guidance became effective for the Company January 1, 2014 and implementation did not have a significant impact on the Company’s financial position, results of operations, or cash flows.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance on a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This guidance is effective beginning after December 15, 2016. The Company does not expect the adoption to have a material impact to the consolidated financial statements as loan and lease contracts are excluded.
In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The standard requires entities to account for repurchase-to-maturity transactions as secured borrowings, eliminates accounting guidance on linked repurchase financing transactions, and expands disclosure requirements related to certain transfers of financial assets that are accounted for as secured borrowings. This guidance is effective for the Company beginning January 1, 2015 and early adoption is not permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award That a Performance Target Could be Achieved after the Requisite Service Period. This standard affects entities that issue share-based payments when the terms of an award stipulate that a performance target could be achieved after an employee completes the requisite service period. This guidance is effective for fiscal years beginning after December 15, 2015 and early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.



9



2.
Finance Receivables
Finance receivables held for investment at June 30, 2014 and December 31, 2013, were comprised as follows:
 
June 30, 2014
 
Retail Installment Contracts Held for Investment
 
 
 
 
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Receivables from
Dealers Held
for Investment
 
Unsecured
Consumer
Loans
Unpaid principal balance
$
23,675,889

 
$
1,272,807

 
$
24,948,696

 
$
85,885

 
$
1,448,709

Loan loss allowance (Note 3)
(2,668,587
)
 
(197,844
)
 
(2,866,431
)
 
(923
)
 
(212,954
)
Discount
(659,154
)
 
(13,679
)
 
(672,833
)
 

 
(3,067
)
Capitalized origination costs and fees
35,169

 

 
35,169

 
232

 
949

Net carrying balance
$
20,383,317

 
$
1,061,284

 
$
21,444,601

 
$
85,194

 
$
1,233,637

 
 
December 31, 2013
 
Retail Installment Contracts Held for Investment
 
 
 
 
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Receivables from
Dealers Held
for Investment
 
Unsecured
Consumer
Loans
Unpaid principal balance
$
21,238,281

 
$
1,961,060

 
$
23,199,341

 
$
95,835

 
$
1,165,778

Loan loss allowance (Note 3)
(2,132,634
)
 
(226,356
)
 
(2,358,990
)
 
(1,090
)
 
(179,350
)
Discount
(573,462
)
 
(81,216
)
 
(654,678
)
 

 
(32,831
)
Capitalized origination costs and fees
33,936

 

 
33,936

 

 
592

Net carrying balance
$
18,566,121

 
$
1,653,488

 
$
20,219,609

 
$
94,745

 
$
954,189

 
As of June 30, 2014, retail installment contracts and receivables from dealers held for sale totaled $89,404 and $34,387, respectively. As of December 31, 2013, retail installment contracts and receivables from dealers held for sale totaled $56,066 and $26,437, respectively. Sales of retail installment contracts for the three and six months ended June 30, 2014 included principal balance amounts of approximately $1,384,174 and $3,069,898. The Company retains servicing of sold retail installment contracts and was servicing $4,589,650 and $2,847,656 as of June 30, 2014 and December 31, 2013, respectively, of contracts owned by unrelated third parties, including contracts sold by the Company. No receivables from dealers were sold during the six months ended June 30, 2014.
Retail installment contracts are collateralized by vehicle titles, and the Company has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. Most of the Company’s retail installment contracts held for investment are pledged against warehouse facilities or securitization bonds (Note 6). Most of the creditors on the Company’s retail installment contracts are retail consumers; however, approximately $605,261 and $345,177 of the unpaid principal balance represented fleet contracts with commercial consumers as of June 30, 2014 and December 31, 2013, respectively.
Borrowers on the Company’s retail installment contracts held for investment are located in Texas (18%), Florida (11%), California (9%), Georgia (5%), and other states each individually representing less than 5% of the Company’s total.
Receivables from dealers held for investment includes a term loan, which was previously a residual warehouse credit facility, with a third-party vehicle dealer and lender that operates in multiple states. The loan allowed committed borrowings of $50,000 at June 30, 2014 and December 31, 2013, and the facility balance was $50,000 at each of those dates. The term loan will mature on December 1, 2019.
Borrowers on the Company’s remaining receivables from dealers held for investment, all of which are Chrysler-affiliated, are located in Ohio (31%), New York (19%), California (14%), Tennessee (12%), Louisiana (9%), Mississippi (5%), and other states each individually representing less than 5% of the Company’s total.

10



Borrowers on the Company’s unsecured consumer loans are located in California (10%), New York (8%), Texas (8%), Florida (6%), Pennsylvania (5%), and other states each individually representing less than 5% of the Company’s total.
Changes in accretable yield on the Company’s purchased receivables portfolios for the periods indicated were as follows:
 
For the Three Months Ended
 
For the Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Balance — beginning of period
$
362,823

 
$
743,348

 
$
403,400

 
$
816,854

Accretion of accretable yield
(52,519
)
 
(112,513
)
 
(117,565
)
 
(247,712
)
Reclassifications from (to) nonaccretable difference
(5,050
)
 
(95,179
)
 
19,419

 
(33,486
)
Balance — end of period
$
305,254

 
$
535,656

 
$
305,254

 
$
535,656

The Company did not acquire any vehicle loan portfolios for which it was probable at acquisition that not all contractually required payments would be collected during the six months ended June 30, 2014 and 2013. Interest receivable on purchased receivables portfolios totaled $10,516 and $16,950 at June 30, 2014 and December 31, 2013, respectively.

3.
Loan Loss Allowance and Credit Quality
Loan Loss Allowance
The Company estimates loan losses on individually acquired retail installment contracts and unsecured consumer loans held for investment based on delinquency status, historical loss experience, estimated values of underlying collateral, when applicable, and various economic factors. The Company maintains a general loan loss allowance for receivables from dealers based on risk ratings, and individually evaluates the loans for specific impairment as necessary. The activity in the loan loss allowance for individually acquired loans for the three and six months ended June 30, 2014 and 2013 was as follows: 
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
Balance — beginning of period
$
2,444,552

 
$
1,035

 
$
203,190

 
$
1,660,612

 
$

 
$

Provision for loan losses
527,362

 
(112
)
 
70,212

 
375,281

 
1,490

 
39,256

Charge-offs
(700,965
)
 

 
(66,966
)
 
(369,395
)
 

 
(6
)
Recoveries
397,638

 

 
6,518

 
197,815

 

 

Balance — end of period
$
2,668,587

 
$
923

 
$
212,954

 
$
1,864,313

 
$
1,490

 
$
39,250

 
The loan loss allowance for receivables from dealers is comprised entirely of general allowances as none of these receivables have been determined to be individually impaired.
 
 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
Balance — beginning of period
$
2,132,634

 
$
1,090

 
$
179,350

 
$
1,555,362

 
$

 
$

Provision for loan losses
1,184,068

 
(167
)
 
132,341

 
626,922

 
1,490

 
39,256

Charge-offs
(1,453,530
)
 

 
(107,914
)
 
(754,121
)
 


 
(6
)
Recoveries
805,415

 

 
9,177

 
436,150

 

 

Balance — end of period
$2,668,587
 
$
923

 
$
212,954

 
$
1,864,313

 
$
1,490

 
$
39,250



11



The activity in the impairment reserves related to purchased receivables portfolios for the three and six months ended June 30, 2014 and 2013 was as follows:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2014
 
2013
 
2014
 
2013
Balance — beginning of period
$
206,170

 
$
184,192

 
$
226,356

 
$
218,640

Incremental provisions for purchased receivable portfolios
350

 
18,314

 
1,675

 
39,976

Incremental reversal of provisions for purchased receivable portfolios
(8,676
)
 
(25,930
)
 
(30,187
)
 
(82,040
)
Balance — end of period
$
197,844

 
$
176,576

 
$
197,844

 
$
176,576


Delinquencies

Retail installment contracts and unsecured consumer amortizing term loans are classified as non-performing when they are greater than 60 days past due as to contractual principal or interest payments. At the time a loan is placed on non-accrual status, previously accrued and uncollected interest is reversed against interest income. If an account is returned to a performing status of 60 days or less past due, the Company returns to accruing interest on the contract. The accrual of interest on revolving unsecured consumer loans continues until the loan is charged off. A summary of delinquencies as of June 30, 2014 and December 31, 2013 is as follows: 
 
June 30, 2014
 
Retail Installment Contracts Held for Investment
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer
Loans
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Principal, current
$
21,047,173

 
$
981,616

 
$
22,028,789

 
$
85,885

 
$
1,283,884

Principal, 31-60 days past due
1,829,261

 
194,069

 
2,023,330

 

 
45,382

Delinquent principal over 60 days
799,455

 
97,122

 
896,577

 

 
119,443

Total principal
$
23,675,889

 
$
1,272,807

 
$
24,948,696

 
$
85,885

 
$
1,448,709

 
 
December 31, 2013
 
Retail Installment Contracts Held for Investment
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer
Loans
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Principal, current
$
18,653,827

 
$
1,457,813

 
$
20,111,640

 
$
95,835

 
$
1,072,316

Principal, 31-60 days past due
1,729,139

 
321,549

 
2,050,688

 

 
28,102

Delinquent principal over 60 days
855,315

 
181,698

 
1,037,013

 

 
65,360

Total principal
$
21,238,281

 
$
1,961,060

 
$
23,199,341

 
$
95,835

 
$
1,165,778


As of June 30, 2014 and December 31, 2013, there were no receivables held for sale that were non-performing.
FICO® Distribution — A summary of the credit risk profile of the Company’s consumer loans by FICO® distribution, determined at origination, as of June 30, 2014 and December 31, 2013 was as follows:
 

12



June 30, 2014
 
 
Retail Installment
 
Unsecured
 
 
Contracts Held
 
Consumer
FICO Band
 
for Investment
 
Loans
<540
 
26.7%
 
10.0%
540-599
 
32.3%
 
21.3%
600-659
 
26.5%
 
40.9%
>660
 
14.5%
 
27.8%
December 31, 2013
 
 
Retail Installment
 
Unsecured
 
 
Contracts Held
 
Consumer
FICO Band
 
for Investment
 
Loans
<540
 
26.8%
 
6.3%
540-599
 
31.8%
 
24.2%
600-659
 
26.3%
 
39.4%
>660
 
15.1%
 
30.1%
 
Commercial Lending Credit Quality Indicators — The credit quality of receivables from dealers, which are considered commercial loans, is summarized according to standard regulatory classifications as follows:
Pass — Asset is well protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value less costs to acquire and sell any underlying collateral in a timely manner.
Special Mention — Asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for an asset at some future date. Special Mention assets are not adversely classified.
Substandard — Asset is inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. A well-defined weakness or weaknesses exist that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected.
Doubtful — Exhibits the inherent weaknesses of a substandard credit. Additional characteristics exist that make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. Possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the credit, an estimated loss cannot yet be determined.
Loss — Credit is considered uncollectible and of such little value that it does not warrant consideration as an active asset. There may be some recovery or salvage value, but there is doubt as to whether, how much or when the recovery would occur.
Commercial loan credit quality indicators for receivables from dealers held for investment as of June 30, 2014 and December 31, 2013 were as follows:
 
 
June 30,
2014
 
December 31,
2013
Pass
$
83,754

 
$
95,835

Special Mention
2,131

 

Substandard

 

Doubtful

 

Loss

 

 
$
85,885

 
$
95,835

 

13



Troubled Debt Restructurings
In certain circumstances, the Company modifies the terms of its finance receivables to troubled borrowers. Modifications may include a reduction in interest rate, an extension of the maturity date, rescheduling future cash flows, or a combination thereof. A modification of finance receivable terms is considered a troubled debt restructuring (“TDR”) if the Company grants a concession to a borrower for economic or legal reasons related to the debtor’s financial difficulties which would not otherwise have been considered. Management considers TDRs to include all individually acquired retail installment contracts that have been modified at least once, deferred for a period of 90 days or more, or deferred at least twice during the period. Additionally, modifications set forth through bankruptcy proceeding are deemed to be TDRs by the Company. The purchased receivables portfolio is excluded from the scope of the applicable guidance. As of June 30, 2014 and December 31, 2013, there were no receivables from dealers classified as a TDR.
The table below presents the Company’s loans modified in TDRs as of June 30, 2014 and December 31, 2013
 
June 30, 2014
 
December 31, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Total TDR principal
$
3,151,614

 
$
19,540

 
$
2,604,351

 
$
8,391

Accrued interest
85,218

 

 
70,965

 

Discount
(87,743
)
 
(58
)
 
(70,321
)
 
(274
)
Origination costs
4,682

 
18

 
4,161

 
5

Outstanding recorded investment
3,153,771

 
19,500

 
2,609,156

 
8,122

Allowance for loan losses
(551,767
)
 
(6,040
)
 
(475,128
)
 
(2,345
)
Outstanding recorded investment, net of allowance
$
2,602,004

 
$
13,460

 
$
2,134,028

 
$
5,777

 
A summary of the Company’s performing and non-performing TDRs at June 30, 2014 and December 31, 2013, is as follows:
 
 
June 30, 2014
 
December 31, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Current
$
2,171,354

 
$
13,008

 
$
1,690,893

 
$
6,120

31-60 days past due
635,787

 
972

 
556,489

 
875

Greater than 60 days past due (non-performing)
344,473

 
5,560

 
356,969

 
1,396

Total TDRs
$
3,151,614

 
$
19,540

 
$
2,604,351

 
$
8,391

 
A loan that has been classified as a TDR remains so until the loan is liquidated through payoff or charge-off. Consistent with other of the Company’s retail installment contracts, TDRs are placed on nonaccrual status when the account becomes past due more than 60 days, and return to accrual status when the account is 60 days or less past due. Average recorded investment and income recognized on TDR loans are as follows:
 
 
Three Months Ended
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Average outstanding recorded investment in TDRs
$
2,979,944

 
$
14,570

 
$
1,683,372

 
$
62

 
$
2,856,348

 
$
12,510

 
$
1,628,540

 
$
41

Interest income recognized
$
112,138

 
$
391

 
$
38,260

 
$
1

 
$
232,589

 
$
720

 
$
130,401

 
$
1

 

14



TDR Impact on Allowance for Loan Losses
Prior to a loan being classified as a TDR, the Company generally estimates an appropriate allowance for loan loss based on delinquency status, the Company’s historical loss experience, estimated values of underlying collateral, and various economic factors. Once a loan has been classified as a TDR, impairment is measured based on present value of expected future cash flows considering all available evidence, including collateral values.

The following table summarizes the financial effects of loan modifications accounted for as TDRs that occurred during the three and six months ended June 30, 2014 and 2013:
     
 
Three Months Ended
 
June 30, 2014
 
June 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled Debt Restructurings:
 
 
 
 
 
 
 
Outstanding recorded investment before TDR
$
743,664

 
$
4,637

 
$
473,775

 
$
150

Outstanding recorded investment after TDR
$
699,158

 
$
4,573

 
$
444,971

 
$
149

 
 
 
 
 
 
 
 
Number of contracts
44,524

 
4,116

 
29,797

 
143


 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled Debt Restructurings:
 
 
 
 
 
 
 
Outstanding recorded investment before TDR
$
1,367,673

 
$
6,748

 
$
764,636

 
$
150

Outstanding recorded investment after TDR
$
1,280,211

 
$
6,667

 
$
733,812

 
$
149

 
 
 
 
 
 
 
 
Number of contracts
83,753

 
6,135

 
50,271

 
143


For retail installment contracts, a TDR is considered to have subsequently defaulted at the earlier of the date of repossession or 120 days past due after becoming a TDR. For unsecured consumer loans, a TDR is considered to have subsequently defaulted upon charge off, which for revolving unsecured loans is generally at 180 days past due. Loan modifications accounted for as TDRs within the previous 12 months that subsequently defaulted during the three and six months ended June 30, 2014 and 2013 are summarized in the following table:
 
Three Months Ended
 
June 30, 2014
 
June 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled debt restructurings that subsequently defaulted
$
70,811

 
(a)
 
$
24,471

 
$

Number of contracts
7,234

 
(a)
 
2,609

 



15



 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled debt restructurings that subsequently defaulted
$
120,275

 
(a)
 
$
38,491

 
$
Number of contracts
13,123

 
(a)
 
4,234

 

(a) Subsequent defaults on unsecured consumer loan TDRs were immaterial for the periods presented.

4.
Leased Vehicles, net
Leased vehicles consisted of the following as of June 30, 2014 and December 31, 2013:
 
 
June 30,
2014
 
December 31,
2013
Leased vehicles
$
4,481,384

 
$
2,402,052

Origination fees and other costs
1,157

 
2,716

Manufacturer subvention payments
(495,597
)
 
(259,152
)
 
3,986,944

 
2,145,616

Less: accumulated depreciation
(419,398
)
 
(122,183
)
 
$
3,567,546

 
$
2,023,433


The following summarizes the future minimum rental payments due to the Company as lessor under operating leases as of June 30, 2014:

 
 
 
 
Remainder of 2014
$
318,976

2015
616,414

2016
472,417

2017
90,436

2018
96

Thereafter

Total
$
1,498,339




16



5.
Debt
Revolving Credit Facilities
The following table presents information regarding credit facilities as of June 30, 2014 and December 31, 2013:
 
June 30, 2014
 
Maturity Date(s)
 
Utilized Balance
 
Committed Amount
 
Effective Rate
 
Assets Pledged
 
Restricted Cash Pledged
Warehouse line (a)
July 2014
 
$
109,461

 
$
500,000

 
2.05%
 
$
158,591

 
$
172

Warehouse line
Various (b)
 
552,268

 
1,235,038

 
1.14%
 
816,330

 
25,768

Warehouse line (c)
January 2016
 
1,318,088

 
4,550,000

 
1.15%
 
1,756,086

 
35,685

Warehouse line
December 2015
 
464,037

 
2,000,000

 
2.18%
 
570,306

 
11,993

Warehouse line
July 2015
 
153,515

 
500,000

 
1.64%
 
191,391

 
7,532

Warehouse line (d)
September 2015
 
196,880

 
200,000

 
1.97%
 
290,043

 
12,054

Repurchase facility (e)
Various
 
747,342

 
747,342

 
1.52%
 
844,305

 

Warehouse line
December 2015
 
495,765

 
750,000

 
0.91%
 
675,143

 
10,083

Warehouse line (f)
November 2016
 
175,000

 
175,000

 
1.71%
 

 

Warehouse line (g)
March 2015
 
250,594

 
250,594

 
0.99%
 
296,929

 

Total facilities with third parties
 
 
4,462,950

 
10,907,974

 
 
 
5,599,124

 
103,287

Lines of credit with Santander and related subsidiaries (h):
 
 
 
 
 
 
 
 
 
 

Line of credit
December 2016
 
500,000

 
500,000

 
2.45%
 
1,623

 

Line of credit
December 2018
 

 
500,000

 
0.25%
 

 

Line of credit
December 2016
 
1,750,000

 
1,750,000

 
2.26%
 

 

Line of credit
December 2018
 
750,000

 
1,750,000

 
2.59%
 
187,555

 

Line of credit
March 2017
 
300,000

 
300,000

 
1.70%
 

 

Total facilities with Santander and related subsidiaries
 
 
3,300,000

 
4,800,000

 
 
 
189,178

 

Total revolving credit facilities
 
 
$
7,762,950

 
$
15,707,974

 
 
 
$
5,788,302

 
$
103,287


17



 
December 31, 2013
 
Maturity Date(s)
 
Utilized Balance
 
Committed Amount
 
Effective Rate
 
Assets Pledged
 
Restricted Cash Pledged
Warehouse line
June 2014
 
$
483,738

 
$
500,000

 
0.82%
 
$
757,352

 
$

Warehouse line
Various
 
159,300

 
1,219,474

 
3.62%
 
232,015

 
3,667

Warehouse line
April 2014
 
613,600

 
4,550,000

 
2.12%
 
745,759

 
15,184

Warehouse line
June 2015
 
1,360,070

 
2,000,000

 
0.96%
 
1,672,082

 
42,510

Warehouse line
July 2015
 
495,786

 
500,000

 
0.85%
 
598,754

 
25,056

Warehouse line
September 2015
 
73,080

 
200,000

 
2.84%
 
76,807

 
2,701

Repurchase facility
Various
 
879,199

 
879,199

 
1.59%
 

 

Warehouse line
December 2015
 
210,000

 
750,000

 
1.84%
 
302,632

 

Warehouse line
November 2016
 
175,000

 
175,000

 
1.72%
 

 

Total facilities with third parties
 
 
4,449,773

 
10,773,673

 
 
 
4,385,401

 
89,118

Lines of credit with Santander and related subsidiaries:
 
 
 
 
 
 
 
 
 
 
 
Line of credit
December 2016
 
500,000

 
500,000

 
2.48%
 
10,674

 

Line of credit
December 2018
 

 
500,000

 
3.10%
 

 

Line of credit
December 2016
 
1,750,000

 
1,750,000

 
2.09%
 

 

Line of credit
December 2018
 
1,400,000

 
1,750,000

 
2.58%
 
93,969

 

Total facilities with Santander and related subsidiaries
 
 
3,650,000

 
4,500,000

 
 
 
104,643

 

Total revolving credit facilities
 
 
$
8,099,773

 
$
15,273,673

 
 
 
$
4,490,044

 
$
89,118


(a)
In July 2014, the maturity date of this facility was extended to June 2015.
(b)
Half of the outstanding balance on this facility matures in March 2015 and half in March 2016.
(c)
This line is held exclusively for Chrysler Capital retail loan and lease financing, with lease financing comprising no more than 50% of the outstanding balance upon advance. In July 2014, the committed amount was reduced to $4.3 billion and the maturity date was extended to June 2016.
(d)
This line is held exclusively for unsecured consumer term loans.
(e)
The repurchase facility is also collateralized by securitization notes payable retained by the Company. No portion of this facility is unsecured. This facility has rolling 30-day and 90-day maturities.
(f)
This line is collateralized by residuals retained by the Company.
(g)
This line is collateralized by securitization notes payable retained by the Company.
(h)
These lines are also collateralized by securitization notes payable and residuals retained by the Company. As of June 30, 2014 and December 31, 2013, $1,569,930 and $1,123,354, respectively, of the aggregate outstanding balances on these facilities were unsecured.

Facilities with Third Parties
The warehouse lines and repurchase facility are fully collateralized by a designated portion of the Company’s retail installment contracts (Note 2), leased vehicles (Note 4), securitization notes payables and residuals retained by the Company. The Company was in compliance with all covenants related to these financing arrangements at June 30, 2014.
Lines of Credit with Santander and Related Subsidiaries
Through its New York branch, Banco Santander provides the Company with $4,500,000 of long-term committed revolving credit facilities. Through SHUSA, under an agreement entered into on March 6, 2014, Santander provides the Company with an additional $300,000 of committed revolving credit, collateralized by residuals retained on its own securitizations. The fundings through the New York branch and through SHUSA are collectively known as the “Santander Credit Facilities.”
The facilities offered through the New York branch are structured as three- and five- year floating rate facilities, with current maturity dates of December 31, 2016 and December 31, 2018. Santander has the option to continue to renew the term of these facilities annually going forward, thereby maintaining the three and five year maturities. These

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facilities currently permit unsecured borrowing but generally are collateralized by retail installment contracts and retained residuals. Any secured balances outstanding under the facilities at the time of their maturity will amortize to match the maturities and expected cash flows of the corresponding collateral.
Secured Structured Financings
 
The following table presents information regarding secured structured financings as of June 30, 2014 and December 31, 2013
 
June 30, 2014
 
Original Estimated Maturity Date(s)
 
Balance
 
Initial Note Amounts Issued
 
Initial Weighted Average Interest Rate
 
Collateral
 
Restricted Cash
2010 Securitizations
October 2016 - November 2017
 
$
333,148

 
$
3,671,749

 
1.04%-1.44%
 
$
641,669

 
$
142,992

2011 Securitizations
October 2015 - September 2017
 
653,968

 
4,693,289

 
1.21%-2.80%
 
1,038,660

 
157,307

2012 Securitizations
November 2017 - December 2018
 
3,088,855

 
8,023,840

 
0.92%-1.68%
 
3,899,764

 
355,658

2013 Securitizations
January 2019 - January 2021
 
4,338,610

 
6,689,700

 
0.89%-1.59%
 
5,295,330

 
348,040

2014 Securitizations
April 2020 - August 2020
 
3,706,441

 
4,100,000

 
1.63%-1.72%
 
4,385,840

 
236,269

Public securitizations
 
 
12,121,022

 
27,178,578

 
 
 
15,261,263

 
1,240,266

2010 Private issuances
June 2011
 
209,128

 
516,000

 
1.29%
 
338,513

 
9,538

2011 Private issuances
December 2018
 
1,222,065

 
4,856,525

 
1.46%-1.80%
 
1,652,724

 
56,942

2012 Private issuances
May 2016
 
14,962

 
70,308

 
1.07%
 
20,177

 
1,874

2013 Private issuances
September 2018 - September 2020
 
2,411,661

 
2,693,754

 
1.13%-1.38%
 
3,249,917

 
89,031

2014 Private issuances
March 2018 - August 2021
 
2,412,822

 
2,680,379

 
1.09%-1.85%
 
2,965,196

 
112,116

Privately issued amortizing notes
 
 
6,270,638

 
10,816,966

 
 
 
8,226,527

 
269,501

Total secured structured financings
 
 
$
18,391,660

 
$
37,995,544

 
 
 
$
23,487,790

 
$
1,509,767

 
December 31, 2013
 
Original Estimated Maturity Date(s)
 
Balance
 
Initial Note Amounts Issued
 
Initial Weighted Average Interest Rate
 
Collateral
 
Restricted Cash
2010 Securitizations
October 2016 - November 2017
 
$
632,251

 
$
4,671,749

 
1.04%-1.44%
 
$
1,143,435

 
$
205,190

2011 Securitizations
October 2015 - September 2017
 
1,218,208

 
5,605,609

 
1.21%-2.80%
 
1,634,220

 
195,854

2012 Securitizations
November 2017 - December 2018
 
4,061,127

 
8,023,840

 
0.92%-1.68%
 
5,013,135

 
383,677

2013 Securitizations
January 2019 - January 2021
 
5,503,580

 
6,689,700

 
0.89%-1.59%
 
6,465,840

 
351,160

Public securitizations
 
 
11,415,166

 
24,990,898

 
 
 
14,256,630

 
1,135,881

2010 Private issuances
June 2011
 
219,704

 
516,000

 
1.29%
 
378,434

 
8,435

2011 Private issuances
December 2018
 
662,138

 
4,856,525

 
1.46%-1.80%
 
908,304

 
36,449

2012 Private issuances
May 2016
 
30,526

 
70,308

 
1.07%
 
35,378

 
3,016

2013 Private issuances
September 2018 - September 2020
 
2,868,353

 
2,693,754

 
1.13%-1.38%
 
3,554,569

 
97,100

Privately issued amortizing notes
 
 
3,780,721

 
8,136,587

 
 
 
4,876,685

 
145,000

Total secured structured financings
 
 
$
15,195,887

 
$
33,127,485

 
 
 
$
19,133,315

 
$
1,280,881

 

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Notes Payable — Secured Structured Financings
The principal and interest on secured structured financings are paid using the cash flows from the underlying retail installment contracts, loans and leases, which serve as collateral for the notes. Accordingly, the timing of the principal payments on these notes is dependent on the payments received on the underlying collateral.  
 
 
Most of the Company’s secured structured financings are in the form of public, SEC-registered securitizations. The Company also executes private securitizations under Rule 144A of the Securities Act and periodically issues private term amortizing notes, which are structured similarly to securitizations but are acquired by banks and conduits. Historically, all of the Company’s securitizations and private issuances have been collateralized by vehicle retail installment contracts and loans; however, in 2013, the Company issued its first amortizing notes backed by vehicle leases. As of June 30, 2014, the Company had private issuances of notes backed by vehicle leases totaling approximately $1,433,658.
Unamortized debt issuance costs are amortized as interest expense over the terms of the related notes payable using a method that approximates the effective interest method. Amortization of premium or accretion of discount on acquired notes payable is also included in interest expense using a method that approximates the effective interest method, over the estimated remaining life of the acquired notes. Total interest expense on secured structured financings for the three months ended June 30, 2014 and 2013 was $57,217 and $56,626, respectively. Total interest expense on secured structured financings for the six months ended June 30, 2014 and 2013 was $117,079 and $114,336, respectively.