ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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) |
Large accelerated filer | ý | Accelerated filer | ¨ | Emerging growth company | ¨ | |||||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Class | Outstanding at April 29, 2019 | |
Common Stock ($0.01 par value) | 351,781,864 shares |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | the Company operates in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect its business; |
• | the Company’s ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner; |
• | adverse economic conditions in the United States and worldwide may negatively impact the Company’s results; |
• | the business could suffer if access to funding is reduced or if there is a change in the Company’s funding costs or ability to execute securitizations; |
• | the Company faces significant risks implementing its growth strategy, some of which are outside of its control; |
• | the Company may not realize the anticipated benefits from, and may incur unexpected costs and delays in connection with, exiting its personal lending business; |
• | the Company’s agreement with FCA may not result in currently anticipated levels of growth and is subject to performance conditions that could result in termination of the agreement, and is subject to an option giving FCA the right to acquire an equity participation in the Chrysler Capital portion of the Company’s business; |
• | the business could suffer if the Company is unsuccessful in developing and maintaining relationships with automobile dealerships; |
• | the Company’s financial condition, liquidity, and results of operations depend on the credit performance of its loans; |
• | loss of the Company’s key management or other personnel, or an inability to attract such management and personnel, could negatively impact its business; |
• | the Company is directly and indirectly, through its relationship with SHUSA, subject to certain banking and financial services regulations, including oversight by the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), the European Central Bank, and the Federal Reserve Bank of Boston (FRBB); such oversight and regulation may limit certain of the Company’s activities, including the timing and amount of dividends and other limitations on the Company’s business; and |
• | future changes in the Company’s ownership by, or relationship with, SHUSA or Santander could adversely affect its operations. |
2018 Annual Report on Form 10-K | Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 26, 2019. |
ABS | Asset-backed securities |
Advance Rate | The maximum percentage of collateral that a lender is willing to lend. |
Affiliates | A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity. |
ALG | Automotive Lease Guide |
APR | Annual Percentage Rate |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
Bluestem | Bluestem Brands, Inc., an online retailer for whose customers SC provides financing |
Board | SC’s Board of Directors |
CBP | Citizens Bank of Pennsylvania |
CCART | Chrysler Capital Auto Receivables Trust, a securitization platform |
CEO | Chief Executive Officer |
CFPB | Consumer Financial Protection Bureau |
CFO | Chief Financial Officer |
Chrysler Agreement | Ten-year master private-label financing agreement with FCA |
Clean-up Call | The early redemption of a debt instrument by the issuer, generally when the underlying portfolio has amortized to 5% or 10% of its original balance |
Commission | U.S. Securities and Exchange Commission |
Credit Enhancement | A method such as overcollateralization, insurance, or a third-party guarantee, whereby a borrower reduces default risk |
DCF | Discounted Cash Flow Analysis |
Dealer Loan | A Floorplan Loan, real estate loan, working capital loan, or other credit extended to an automobile dealer |
Dodd-Frank Act | Comprehensive financial regulatory reform legislation enacted by the U.S. Congress on July 21, 2010 |
DOJ | U.S. Department of Justice |
DRIVE | Drive Auto Receivables Trust, a securitization platform |
Exchange Act | Securities Exchange Act of 1934, as amended |
FASB | Financial Accounting Standards Board |
FCA | FCA US LLC, formerly Chrysler Group LLC |
FICO® | A common credit score created by Fair Isaac Corporation that is used on the credit reports that lenders use to assess an applicant’s credit risk. FICO® is computed using mathematical models that take into account five factors: payment history, current level of indebtedness, types of credit used, length of credit history, and new credit |
FIRREA | Financial Institutions Reform, Recovery and Enforcement Act of 1989 |
Floorplan Loan | A revolving line of credit that finances dealer inventory until sold |
Federal Reserve Board | Board of Governors of the Federal Reserve System |
FRBB | Federal Reserve Bank of Boston |
FTC | Federal Trade Commission |
GAP | Guaranteed Auto Protection |
GAAP | U.S. Generally Accepted Accounting Principles |
IPO | SC’s Initial Public Offering |
ISDA | International Swaps and Derivative Association |
Managed Assets | Managed assets included assets (a) owned and serviced by the Company; (b) owned by the Company and serviced by others; and (c) serviced for others |
Nonaccretable Difference | The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows of a portfolio acquired with deteriorated credit quality |
OCC | Office of the Comptroller of the Currency |
Overcollateralization | A credit enhancement method whereby more collateral is posted than is required to obtain financing |
OEM | Original equipment manufacturer |
Private-label | Financing branded in the name of the product manufacturer rather than in the name of the finance provider |
RC | The Risk Committee of the Board |
Remarketing | The controlled disposal of vehicles at the end of the lease term or upon early termination or of financed vehicles obtained through repossession and their subsequent sale |
Residual Value | The future value of a leased asset at the end of its lease term |
Retail installment contracts acquired individually | Includes purchased non-credit impaired finance receivables |
RSU | Restricted stock unit |
Santander | Banco Santander, S.A. |
SBNA | Santander Bank, N.A., a wholly-owned subsidiary of SHUSA. Formerly Sovereign Bank, N.A. |
SC | Santander Consumer USA Holdings Inc., a Delaware corporation, and its consolidated subsidiaries |
SCI | Santander Consumer International Puerto Rico, LLC , a wholly-owned subsidiary of SC Illinois |
SC Illinois | Santander Consumer USA Inc., an Illinois corporation and wholly-owned subsidiary of SC |
SCRA | Servicemembers Civil Relief Act |
SDART | Santander Drive Auto Receivables Trust, a securitization platform |
SEC | U.S. Securities and Exchange Commission |
SHUSA | Santander Holdings USA, Inc., a wholly-owned subsidiary of Santander and the majority stockholder of SC |
SPAIN | Santander Prime Auto Issuing Note Trust, a securitization platform |
SRT | Santander Retail Auto Lease Trust, a lease securitization platform |
Subvention | Reimbursement of the finance provider by a manufacturer for the difference between a market loan or lease rate and the below-market rate given to a customer |
TDR | Troubled Debt Restructuring |
Trusts | Special purpose financing trusts utilized in SC’s financing transactions |
VIE | Variable Interest Entity |
Warehouse Line | A revolving line of credit generally used to fund finance receivable originations |
Item 1. | Condensed Consolidated Financial Statements (Unaudited) |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Cash and cash equivalents - $38,200 and $101,334 held at affiliates, respectively | $ | 76,272 | $ | 148,436 | |||
Finance receivables held for sale, net | 974,017 | 1,068,757 | |||||
Finance receivables held for investment, net | 25,598,716 | 25,117,454 | |||||
Restricted cash and cash equivalents - $0 and $341 held at affiliates, respectively | 2,414,653 | 2,102,048 | |||||
Accrued interest receivable | 272,014 | 303,686 | |||||
Leased vehicles, net | 14,388,657 | 13,978,855 | |||||
Furniture and equipment, net of accumulated depreciation of $77,036 and $72,345, respectively | 61,856 | 61,280 | |||||
Federal, state and other income taxes receivable | 80,567 | 97,087 | |||||
Related party taxes receivable | 2,594 | 734 | |||||
Goodwill | 74,056 | 74,056 | |||||
Intangible assets, net of amortization of $47,438 and $45,324, respectively | 41,200 | 35,195 | |||||
Due from affiliates | 6,685 | 8,920 | |||||
Other assets | 1,054,619 | 963,347 | |||||
Total assets | $ | 45,045,906 | $ | 43,959,855 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Notes payable — credit facilities | $ | 5,063,786 | $ | 4,478,214 | |||
Notes payable — secured structured financings | 27,080,312 | 26,901,530 | |||||
Notes payable — related party | 3,503,055 | 3,503,293 | |||||
Accrued interest payable | 54,655 | 49,370 | |||||
Accounts payable and accrued expenses | 399,792 | 422,951 | |||||
Deferred tax liabilities, net | 1,230,531 | 1,155,883 | |||||
Due to affiliates | 70,526 | 63,219 | |||||
Other liabilities | 484,719 | 367,037 | |||||
Total liabilities | 37,887,376 | 36,941,497 | |||||
Commitments and contingencies (Notes 5 and 10) | |||||||
Equity: | |||||||
Common stock, $0.01 par value — 1,100,000,000 shares authorized; | |||||||
362,419,860 and 362,028,916 shares issued and 351,728,473 and 352,302,759 shares outstanding, respectively | 3,517 | 3,523 | |||||
Additional paid-in capital | 1,499,092 | 1,515,572 | |||||
Accumulated other comprehensive income, net | 12,938 | 33,515 | |||||
Retained earnings | 5,642,983 | 5,465,748 | |||||
Total stockholders’ equity | 7,158,530 | 7,018,358 | |||||
Total liabilities and equity | $ | 45,045,906 | $ | 43,959,855 |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Restricted cash and cash equivalents | $ | 1,830,617 | $ | 1,582,158 | |||
Finance receivables held for investment, net | 24,889,257 | 24,151,971 | |||||
Leased vehicles, net | 14,388,657 | 13,978,855 | |||||
Various other assets | 667,368 | 685,383 | |||||
Total assets | $ | 41,775,899 | $ | 40,398,367 | |||
Liabilities | |||||||
Notes payable | $ | 32,810,785 | $ | 31,949,839 | |||
Various other liabilities | 109,388 | 122,010 | |||||
Total liabilities | $ | 32,920,173 | $ | 32,071,849 |
For the Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Interest on finance receivables and loans | $ | 1,253,580 | $ | 1,168,540 | ||||
Leased vehicle income | 649,560 | 504,278 | ||||||
Other finance and interest income | 10,247 | 7,137 | ||||||
Total finance and other interest income | 1,913,387 | 1,679,955 | ||||||
Interest expense — Including $44,873 and $42,033 to affiliates, respectively | 334,382 | 241,028 | ||||||
Leased vehicle expense | 444,019 | 358,683 | ||||||
Net finance and other interest income | 1,134,986 | 1,080,244 | ||||||
Provision for credit losses | 550,879 | 510,341 | ||||||
Net finance and other interest income after provision for credit losses | 584,107 | 569,903 | ||||||
Profit sharing | 6,968 | 4,377 | ||||||
Net finance and other interest income after provision for credit losses and profit sharing | 577,139 | 565,526 | ||||||
Investment losses, net — Including $0 and $(16,903) from affiliates, respectively | (67,097 | ) | (86,520 | ) | ||||
Servicing fee income — Including $12,995 and $7,811 from affiliates, respectively | 23,806 | 26,182 | ||||||
Fees, commissions, and other — Including $6,781 and $225 from affiliates, respectively | 94,376 | 85,391 | ||||||
Total other income | 51,085 | 25,053 | ||||||
Compensation expense | 127,894 | 122,005 | ||||||
Repossession expense | 70,860 | 72,081 | ||||||
Other operating costs — Including $933 and $1,161 to affiliates, respectively | 92,203 | 93,826 | ||||||
Total operating expenses | 290,957 | 287,912 | ||||||
Income before income taxes | 337,267 | 302,667 | ||||||
Income tax expense | 89,764 | 58,052 | ||||||
Net income | $ | 247,503 | $ | 244,615 | ||||
Net income | $ | 247,503 | $ | 244,615 | ||||
Other comprehensive income (loss): | ||||||||
Change in unrealized gains (losses) on cash flow hedges, net of tax of $6,794 and $2,903, respectively | (21,039 | ) | 12,800 | |||||
Unrealized gains (losses) on available-for-sale debt securities net of tax of ($149), and zero, respectively | 462 | — | ||||||
Comprehensive income | $ | 226,926 | $ | 257,415 | ||||
Net income per common share (basic) | $ | 0.70 | $ | 0.68 | ||||
Net income per common share (diluted) | $ | 0.70 | $ | 0.68 | ||||
Weighted average common shares (basic) | 351,515,464 | 360,703,234 | ||||||
Weighted average common shares (diluted) | 352,051,887 | 361,616,732 |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance — January 1, 2018 | 360,527 | $ | 3,605 | $ | 1,681,558 | $ | 44,262 | $ | 4,736,277 | $ | 6,465,702 | |||||||||||
Cumulative-effect adjustment upon adoption of ASU 2018-02 | — | — | — | 6,149 | (6,149 | ) | — | |||||||||||||||
Stock issued in connection with employee incentive compensation plans | 481 | 5 | 464 | — | — | 469 | ||||||||||||||||
Stock-based compensation expense | — | — | 4,208 | — | — | 4,208 | ||||||||||||||||
Dividends ($0.05 per share) | — | — | — | — | (18,028 | ) | (18,028 | ) | ||||||||||||||
Tax sharing with affiliate | — | — | 3,766 | — | — | 3,766 | ||||||||||||||||
Net income | — | — | — | — | 244,615 | 244,615 | ||||||||||||||||
Other comprehensive income (loss), net of taxes | — | — | — | 12,800 | — | 12,800 | ||||||||||||||||
Balance — March 31, 2018 | 361,008 | $ | 3,610 | $ | 1,689,996 | $ | 63,211 | $ | 4,956,715 | $ | 6,713,532 | |||||||||||
Balance — January 1, 2019 | 352,303 | $ | 3,523 | $ | 1,515,572 | $ | 33,515 | $ | 5,465,748 | $ | 7,018,358 | |||||||||||
Stock issued in connection with employee incentive compensation plans | 391 | 4 | (1,715 | ) | — | — | (1,711 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 5,987 | — | — | 5,987 | ||||||||||||||||
Stock repurchase/Treasury stock | (965 | ) | (10 | ) | (17,770 | ) | — | — | (17,780 | ) | ||||||||||||
Dividends paid ($0.20 per share) | — | — | — | — | (70,268 | ) | (70,268 | ) | ||||||||||||||
Tax sharing with affiliate | — | — | (2,982 | ) | — | — | (2,982 | ) | ||||||||||||||
Available-for-sale securities, net of taxes | — | — | — | 462 | — | 462 | ||||||||||||||||
Net income | — | — | — | — | 247,503 | 247,503 | ||||||||||||||||
Other comprehensive income (loss), net of taxes | — | — | — | (21,039 | ) | — | (21,039 | ) | ||||||||||||||
Balance — March 31, 2019 | 351,729 | $ | 3,517 | $ | 1,499,092 | $ | 12,938 | $ | 5,642,983 | $ | 7,158,530 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 247,503 | $ | 244,615 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Derivative mark to market | 5,162 | (7,164 | ) | ||||
Provision for credit losses | 550,879 | 510,341 | |||||
Depreciation and amortization | 472,886 | 392,847 | |||||
Accretion of discount | (26,708 | ) | (48,075 | ) | |||
Originations and purchases of receivables held for sale | — | (1,019,425 | ) | ||||
Proceeds from sales of and collections on receivables held for sale | 36,710 | 1,551,109 | |||||
Change in revolving personal loans, net | 6,523 | 5,722 | |||||
Investment losses, net | 67,097 | 86,520 | |||||
Stock-based compensation | 5,987 | 4,208 | |||||
Deferred tax expense | 81,062 | 64,789 | |||||
Changes in assets and liabilities: | |||||||
Accrued interest receivable | 16,019 | 31,832 | |||||
Accounts receivable | (6,926 | ) | 11,760 | ||||
Federal income tax and other taxes | 11,911 | (4,215 | ) | ||||
Other assets | (75,445 | ) | (46,923 | ) | |||
Accrued interest payable | 4,051 | (2,529 | ) | ||||
Other liabilities | 69,756 | 113,090 | |||||
Due to/from affiliates | 9,816 | (4,150 | ) | ||||
Net cash provided by operating activities | 1,476,283 | 1,884,352 | |||||
Cash flows from investing activities: | |||||||
Originations of and disbursements on finance receivables held for investment | (4,041,377 | ) | (3,253,263 | ) | |||
Purchases of portfolios of finance receivables held for investment | — | (43,177 | ) | ||||
Collections on finance receivables held for investment | 3,008,780 | 2,624,311 | |||||
Leased vehicles purchased | (1,975,326 | ) | (2,118,545 | ) | |||
Manufacturer incentives received | 227,757 | 215,113 | |||||
Proceeds from sale of leased vehicles | 875,002 | 957,863 | |||||
Change in revolving personal loans, net | 36,520 | 45,184 | |||||
Purchases of available-for-sale securities | (31,410 | ) | — | ||||
Purchases of furniture and equipment | (5,634 | ) | (1,012 | ) | |||
Sales of furniture and equipment | 58 | 57 | |||||
Other investing activities | (1,335 | ) | (3,705 | ) | |||
Net cash used in investing activities | (1,906,965 | ) | (1,577,174 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from notes payable related to secured structured financings — net of debt issuance costs | 3,979,924 | 3,687,932 | |||||
Payments on notes payable related to secured structured financings | (3,807,357 | ) | (3,386,999 | ) | |||
Proceeds from unsecured notes payable | 1,195,000 | — | |||||
Payments on unsecured notes payable | (1,195,000 | ) | — | ||||
Proceeds from notes payable | 4,572,550 | 7,795,002 | |||||
Payments on notes payable | (3,986,978 | ) | (7,954,759 | ) | |||
Proceeds from stock option exercises, gross | 1,032 | 2,391 | |||||
Dividends paid | (70,268 | ) | (18,028 | ) | |||
Shares repurchased | (17,780 | ) | — | ||||
Net cash provided by financing activities | 671,123 | 125,539 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net increase in cash and cash equivalents and restricted cash and cash equivalents | 240,441 | 432,717 | |||||
Cash and cash equivalent and restricted cash and cash equivalents— Beginning of period | 2,250,484 | 3,081,707 | |||||
Cash and cash equivalents and restricted cash and cash equivalents — End of period | $ | 2,490,925 | $ | 3,514,424 | |||
Supplemental cash flow information: | |||||||
Cash and cash equivalents | 76,272 | 618,809 | |||||
Restricted cash and cash equivalents | 2,414,653 | 2,895,615 | |||||
Total cash and cash equivalents and restricted cash and cash equivalents | $ | 2,490,925 | $ | 3,514,424 |
Three months ended March 31, 2018 | ||||||||||||
Reported | Corrections | Revised | ||||||||||
Interest on finance receivable and loans | $ | 1,114,137 | $ | 54,403 | $ | 1,168,540 | ||||||
Provision for credit losses | 458,995 | 51,346 | 510,341 | |||||||||
Income (loss) before income taxes | 299,610 | 3,057 | 302,667 | |||||||||
Income tax expense | 57,311 | 741 | 58,052 | |||||||||
Net income (loss) | 242,299 | 2,316 | 244,615 | |||||||||
Net income (loss) per common share (basic) | $ | 0.67 | $ | 0.01 | $ | 0.68 | ||||||
Net income (loss) per common share (diluted) | $ | 0.67 | $ | 0.01 | $ | 0.68 |
Three months ended March 31, 2018 | ||||||||||||
Reported | Corrections | Revised | ||||||||||
Net cash provided by operating activities | $ | 1,835,235 | $ | 49,117 | $ | 1,884,352 | ||||||
Net cash used in investing activities | (1,528,057 | ) | (49,117 | ) | (1,577,174 | ) |
March 31, 2018 | ||||||||||||
Reported | Corrections | Revised | ||||||||||
TDR - Unpaid principal balance | $ | 5,998,768 | $ | 97,110 | $ | 6,095,878 | ||||||
TDR - Impairment | 1,595,465 | 120,667 | 1,716,132 | |||||||||
TDR allowance ratio | 26.6 | % | 1.6 | % | 28.2 | % | ||||||
Nonaccrual loans TDRs | 1,346,148 | (781,215 | ) | 564,933 | ||||||||
Delinquencies for our retail installment contracts held for investment: | ||||||||||||
Principal, 30-59 days past due | 2,238,425 | 95,020 | 2,333,445 | |||||||||
Delinquent principal over 59 days | 1,089,648 | 72,663 | 1,162,311 | |||||||||
Total delinquent principal | 3,328,073 | 167,683 | 3,495,756 |
• | In February 2016, the FASB issued ASU 2016-02, Leases. The primary effect of the ASU is to replace the existing accounting requirements for operating leases for lessees. Lessee accounting requirements for finance leases and lessor accounting requirements for operating leases and sales type and direct financing leases (sales-type and direct financing leases were both previously referred to as capital leases) are largely unchanged. The Company adopted this standard using the modified retrospective method and utilized the optional transition method under which we continue to apply the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative period presented. |
• | In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard effective January 1, 2019 and it did not have a material impact on the Company’s business, financial position or results of operations. |
• | In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815), Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits use of the OIS rate based on SOFR as an eligible benchmark interest rate for purposes of applying hedge accounting under Topic 815. The adoption of this standard did not have any impact on the Company’s business, financial position or results of operations. |
• | ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities |
• | ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception |
• | ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting |
• | ASU 2018-09, Codification Improvements |
• | ASU 2018-17, Consolidation (Topic 10): Targeted Improvements to Related Party Guidance for Variable Interest Entities |
2. | Finance Receivables |
March 31, 2019 | December 31, 2018 | ||||||
Retail installment contracts acquired individually (a) | $ | 25,548,985 | $ | 25,065,511 | |||
Purchased receivables-Credit Impaired | 17,903 | 19,235 | |||||
Receivables from dealers | 13,032 | 14,557 | |||||
Personal loans | 1,485 | 2,014 | |||||
Finance lease receivables (Note 3) | 17,311 | 16,137 | |||||
Finance receivables held for investment, net | $ | 25,598,716 | $ | 25,117,454 |
March 31, 2019 | |||||||||||||||
Retail Installment Contracts Acquired Individually | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Unpaid principal balance | $ | 23,905,478 | $ | 4,916,251 | $ | 13,169 | $ | 1,952 | |||||||
Credit loss allowance - specific | — | (1,280,649 | ) | — | — | ||||||||||
Credit loss allowance - collective | (1,891,351 | ) | — | (137 | ) | (605 | ) | ||||||||
Discount | (151,909 | ) | (32,519 | ) | — | — | |||||||||
Capitalized origination costs and fees | 79,841 | 3,843 | — | 138 | |||||||||||
Net carrying balance | $ | 21,942,059 | $ | 3,606,926 | $ | 13,032 | $ | 1,485 |
December 31, 2018 | |||||||||||||||
Retail Installment Contracts Acquired Individually | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Unpaid principal balance | $ | 23,054,157 | $ | 5,378,603 | $ | 14,710 | $ | 2,637 | |||||||
Credit loss allowance - specific | — | (1,416,743 | ) | — | — | ||||||||||
Credit loss allowance - collective | (1,819,360 | ) | — | (153 | ) | (761 | ) | ||||||||
Discount | (172,659 | ) | (40,333 | ) | — | — | |||||||||
Capitalized origination costs and fees | 77,398 | 4,448 | — | 138 | |||||||||||
Net carrying balance | $ | 21,139,536 | $ | 3,925,975 | $ | 14,557 | $ | 2,014 |
March 31, 2019 | December 31, 2018 | ||||||
Outstanding balance | $ | 28,153 | $ | 30,631 | |||
Outstanding recorded investment, net of impairment | 18,030 | 19,390 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Balance — beginning of period | $ | 18,145 | $ | 19,464 | |||
Accretion of accretable yield | (1,413 | ) | (2,840 | ) | |||
Reclassifications from (to) nonaccretable difference (a) | 1,160 | 1,822 | |||||
Balance — end of period | $ | 17,892 | $ | 18,446 |
March 31, 2019 | December 31, 2018 | ||||||
Personal loans | $ | 974,017 | $ | 1,068,757 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Sale of retail installment contracts to affiliates | $ | — | $ | 1,475,253 | |||
Proceeds from sales of charged-off assets to third parties | 20,225 | 18,237 |
3. | Leases (SC as Lessor) |
March 31, 2019 | December 31, 2018 | ||||||
Leased vehicles | $ | 19,136,180 | $ | 18,737,338 | |||
Less: accumulated depreciation | (3,529,738 | ) | (3,518,025 | ) | |||
Depreciated net capitalized cost | 15,606,442 | 15,219,313 | |||||
Manufacturer subvention payments, net of accretion | (1,287,017 | ) | (1,307,424 | ) | |||
Origination fees and other costs | 69,232 | 66,966 | |||||
Net book value | $ | 14,388,657 | $ | 13,978,855 |
Remainder of 2019 | $ | 1,848,447 | |
2020 | 1,894,782 | ||
2021 | 838,398 | ||
2022 | 68,060 | ||
2023 | 535 | ||
Thereafter | — | ||
Total | $ | 4,650,222 |
March 31, 2019 | December 31, 2018 | ||||||
Gross investment in finance leases | $ | 25,524 | $ | 23,809 | |||
Origination fees and other | 150 | 152 | |||||
Less: unearned income | (4,855 | ) | (4,465 | ) | |||
Net investment in finance leases before allowance | 20,819 | 19,496 | |||||
Less: allowance for lease losses | (3,508 | ) | (3,359 | ) | |||
Net investment in finance leases | $ | 17,311 | $ | 16,137 |
Remainder of 2019 | $ | 5,734 | |
2020 | 7,087 | ||
2021 | 5,954 | ||
2022 | 4,354 | ||
2023 | 2,282 | ||
Thereafter | 113 | ||
Total | $ | 25,524 |
4. | Credit Loss Allowance and Credit Quality |
Three Months Ended March 31, 2019 | |||||||||||||||
Retail Installment Contracts Acquired Individually | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Balance — beginning of period | $ | 1,819,360 | $ | 1,416,743 | $ | 153 | $ | 761 | |||||||
Provision for credit losses | 446,488 | 104,613 | (16 | ) | 83 | ||||||||||
Charge-offs (a) | (927,457 | ) | (466,637 | ) | — | (346 | ) | ||||||||
Recoveries | 552,960 | 225,930 | — | 107 | |||||||||||
Balance — end of period | $ | 1,891,351 | $ | 1,280,649 | $ | 137 | $ | 605 |
Three Months Ended March 31, 2018 | |||||||||||||||
Retail Installment Contracts Acquired Individually | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Balance — beginning of period | $ | 1,540,315 | $ | 1,804,132 | $ | 164 | $ | 2,565 | |||||||
Provision for credit losses | 286,451 | 223,574 | (3 | ) | (102 | ) | |||||||||
Charge-offs (a) | (655,169 | ) | (547,343 | ) | (1,068 | ) | |||||||||
Recoveries | 425,460 | 235,769 | 319 | ||||||||||||
Balance — end of period | $ | 1,597,057 | $ | 1,716,132 | $ | 161 | $ | 1,714 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Balance — beginning of period | $ | 3,359 | $ | 5,642 | |||
Provision for lease losses | 321 | 421 | |||||
Charge-offs | (659 | ) | (1,381 | ) | |||
Recoveries | 487 | 1,075 | |||||
Balance — end of period | $ | 3,508 | $ | 5,757 |
March 31, 2019 | |||||||||||
Retail Installment Contracts Held for Investment | |||||||||||
Loans Acquired Individually | Purchased Receivables Portfolios | Total | |||||||||
Principal, 30-59 days past due | $ | 2,417,300 | $ | 2,341 | $ | 2,419,641 | |||||
Delinquent principal over 59 days (a) | 1,224,289 | 1,518 | 1,225,807 | ||||||||
Total delinquent principal | $ | 3,641,589 | $ | 3,859 | $ | 3,645,448 |
December 31, 2018 | |||||||||||
Retail Installment Contracts Held for Investment | |||||||||||
Loans Acquired Individually | Purchased Receivables Portfolios | Total | |||||||||
Principal, 30-59 days past due | $ | 3,118,869 | $ | 2,926 | $ | 3,121,795 | |||||
Delinquent principal over 59 days (a) | 1,712,243 | 1,532 | 1,713,775 | ||||||||
Total delinquent principal | $ | 4,831,112 | $ | 4,458 | $ | 4,835,570 |
March 31, 2019 | December 31, 2018 | ||||||||||||
Amount | Percent (a) | Amount | Percent (a) | ||||||||||
Non-TDR | $ | 724,025 | 2.5 | % | $ | 834,921 | 2.9 | % | |||||
TDR | 537,259 | 1.9 | % | 733,218 | 2.6 | % | |||||||
Total nonaccrual principal | $ | 1,261,284 | 4.4 | % | $ | 1,568,139 | 5.5 | % |
FICO® Band | March 31, 2019 (b) | December 31, 2018 (b) | ||
Commercial (a) | 1.9% | 1.9% | ||
No-FICOs | 10.9% | 11.0% | ||
<540 | 19.4% | 19.8% | ||
540-599 | 33.0% | 32.9% | ||
600-639 | 18.4% | 18.2% | ||
>640 | 16.4% | 16.2% |
March 31, 2019 | December 31, 2018 | ||||||
Retail Installment Contracts | |||||||
Outstanding recorded investment (a) | $ | 4,891,375 | $ | 5,365,477 | |||
Impairment | (1,280,649 | ) | (1,416,743 | ) | |||
Outstanding recorded investment, net of impairment | $ | 3,610,726 | $ | 3,948,734 |
March 31, 2019 | December 31, 2018 | ||||||
Retail Installment Contracts (a) | |||||||
Principal, 30-59 days past due | $ | 978,359 | $ | 1,265,946 | |||
Delinquent principal over 59 days | 549,692 | 810,589 | |||||
Total delinquent TDR principal | $ | 1,528,051 | $ | 2,076,535 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Retail Installment Contracts | |||||||
Average outstanding recorded investment in TDRs | $ | 5,181,657 | $ | 6,194,844 | |||
Interest income recognized | $ | 235,688 | $ | 293,787 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Retail Installment Contracts | |||||||
Outstanding recorded investment before TDR | $ | 332,010 | $ | 584,448 | |||
Outstanding recorded investment after TDR | $ | 332,630 | $ | 582,664 | |||
Number of contracts (not in thousands) | 19,873 | 34,374 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Retail Installment Contracts | |||||||
Recorded investment in TDRs that subsequently defaulted (a) | $ | 126,238 | $ | 195,265 | |||
Number of contracts (not in thousands) | 7,572 | 11,540 |
March 31, 2019 | |||||||||||||||||||
Maturity Date(s) | Utilized Balance | Committed Amount | Effective Rate | Assets Pledged | Restricted Cash Pledged | ||||||||||||||
Facilities with third parties: | |||||||||||||||||||
Warehouse line | August 2019 | $ | 37,484 | $ | 500,000 | 8.60% | $ | 54,475 | $ | — | |||||||||
Warehouse line | Various (a) | 355,345 | 1,250,000 | 5.16% | 511,875 | — | |||||||||||||
Warehouse line (b) | August 2020 | 2,515,243 | 4,400,000 | 4.09% | 3,311,763 | 4,274 | |||||||||||||
Warehouse line | October 2020 | 775,177 | 2,050,000 | 5.16% | 1,158,396 | 37 | |||||||||||||
Repurchase facility (c) | May 2019 | 167,748 | 167,748 | 3.80% | 235,540 | — | |||||||||||||
Repurchase facility (c) | May 2019 | 119,169 | 119,169 | 3.04% | 151,932 | — | |||||||||||||
Warehouse line | November 2020 | 751,400 | 1,000,000 | 3.68% | 1,088,648 | — | |||||||||||||
Warehouse line | November 2020 | 261,620 | 500,000 | 3.57% | 289,933 | 505 | |||||||||||||
Warehouse line | October 2019 | 80,600 | 350,000 | 5.74% | 89,781 | 581 | |||||||||||||
Total facilities with third parties | 5,063,786 | 10,336,917 | 6,892,343 | 5,397 | |||||||||||||||
Facilities with Santander and related subsidiaries: | |||||||||||||||||||
Promissory Note | December 2022 | 250,000 | 250,000 | 3.95% | — | — | |||||||||||||
Promissory Note | December 2021 | 250,000 | 250,000 | 3.70% | — | — | |||||||||||||
Promissory Note | December 2023 | 250,000 | 250,000 | 5.25% | — | — | |||||||||||||
Promissory Note | December 2022 | 250,000 | 250,000 | 5.00% | — | — | |||||||||||||
Promissory Note | March 2021 | 300,000 | 300,000 | 3.95% | |||||||||||||||
Promissory Note | October 2020 | 400,000 | 400,000 | 3.10% | — | — | |||||||||||||
Promissory Note | May 2020 | 500,000 | 500,000 | 3.49% | — | — | |||||||||||||
Promissory Note (d) | March 2022 | 650,000 | 650,000 | 4.20% | — | — | |||||||||||||
Promissory Note | August 2021 | 650,000 | 650,000 | 3.44% | — | — | |||||||||||||
Line of credit | July 2021 | — | 500,000 | 5.85% | — | — | |||||||||||||
Line of credit | March 2022 | — | 3,000,000 | 5.69% | — | — | |||||||||||||
Total facilities with Santander and related subsidiaries | 3,500,000 | 7,000,000 | — | — | |||||||||||||||
Total revolving credit facilities | $ | 8,563,786 | $ | 17,336,917 | $ | 6,892,343 | $ | 5,397 |
(d) | In 2017, the Company entered into an interest rate swap to hedge the interest rate risk on this fixed rate debt. This derivative was designated as fair value hedge at inception. This derivative was later terminated and the unamortized fair value hedge adjustment as of March 31, 2019 and December 31, 2018 was $3.1 million and $3.2 million, respectively, the amortization of which will reduce interest expense over the remaining life of the fixed rate debt. |
December 31, 2018 | |||||||||||||||||||
Maturity Date(s) | Utilized Balance | Committed Amount | Effective Rate | Assets Pledged | Restricted Cash Pledged | ||||||||||||||
Facilities with third parties: | |||||||||||||||||||
Warehouse line | August 2019 | $ | 53,584 | $ | 500,000 | 8.34% | $ | 78,790 | $ | — | |||||||||
Warehouse line | Various | 314,845 | 1,250,000 | 4.83% | 458,390 | — | |||||||||||||
Warehouse line | August 2020 | 2,154,243 | 4,400,000 | 3.79% | 2,859,113 | 4,831 | |||||||||||||
Warehouse line | October 2020 | 242,377 | 2,050,000 | 5.94% | 345,599 | 120 | |||||||||||||
Repurchase facility | April 2019 | 167,118 | 167,118 | 3.84% | 235,540 | — | |||||||||||||
Repurchase facility | March 2019 | 131,827 | 131,827 | 3.54% | 166,308 | — | |||||||||||||
Warehouse line | November 2020 | 1,000,000 | 1,000,000 | 3.32% | 1,430,524 | 6 | |||||||||||||
Warehouse line | November 2020 | 317,020 | 500,000 | 3.53% | 359,214 | 525 | |||||||||||||
Warehouse line | October 2019 | 97,200 | 350,000 | 4.35% | 108,418 | 328 | |||||||||||||
Total facilities with third parties | 4,478,214 | 10,348,945 | 6,041,896 | 5,810 | |||||||||||||||
Facilities with Santander and related subsidiaries: | |||||||||||||||||||
Promissory Note | December 2022 | 250,000 | 250,000 | 3.95% | — | — | |||||||||||||
Promissory Note | December 2021 | 250,000 | 250,000 | 3.70% | — | — | |||||||||||||
Promissory Note | December 2023 | 250,000 | 250,000 | 5.25% | — | — | |||||||||||||
Promissory Note | December 2022 | 250,000 | 250,000 | 5.00% | — | — | |||||||||||||
Promissory Note | March 2019 | 300,000 | 300,000 | 4.09% | — | — | |||||||||||||
Promissory Note | October 2020 | 400,000 | 400,000 | 3.10% | — | — | |||||||||||||
Promissory Note | May 2020 | 500,000 | 500,000 | 3.49% | — | — | |||||||||||||
Promissory Note | March 2022 | 650,000 | 650,000 | 4.20% | — | — | |||||||||||||
Promissory Note | August 2021 | 650,000 | 650,000 | 3.38% | — | — | |||||||||||||
Line of credit | July 2021 | — | 500,000 | 4.34% | — | — | |||||||||||||
Line of credit | March 2019 | — | 3,000,000 | 4.97% | — | — | |||||||||||||
Total facilities with Santander and related subsidiaries | 3,500,000 | 7,000,000 | — | — | |||||||||||||||
Total revolving credit facilities | $ | 7,978,214 | $ | 17,348,945 | $ | 6,041,896 | $ | 5,810 |
March 31, 2019 | |||||||||||||||||||
Estimated Maturity Date(s) | Balance | Initial Note Amounts Issued (d) | Initial Weighted Average Interest Rate | Collateral (b) | Restricted Cash | ||||||||||||||
2014 Securitizations | January 2022 - April 2022 | $ | 210,870 | $ | 2,291,020 | 1.16%-1.27% | $ | 276,026 | $ | 65,769 | |||||||||
2015 Securitizations | April 2021 - January 2023 | 1,400,803 | 9,054,732 | 1.33%-2.29% | 1,673,187 | 296,972 | |||||||||||||
2016 Securitizations | April 2022- March 2024 | 1,913,327 | 7,462,790 | 1.63%-2.8% | 2,482,363 | 295,114 | |||||||||||||
2017 Securitizations | July 2022 - September 2024 | 3,787,585 | 9,296,570 | 1.35%-2.52% | 5,321,553 | 385,897 | |||||||||||||
2018 Securitizations | May 2022 - April 2026 | 8,292,523 | 12,039,840 | 2.41%-3.42% | 10,749,495 | 602,036 | |||||||||||||
2019 Securitizations | June 2025-June 2026 | 2,884,535 | 2,990,260 | 3.1%-3.34% | 3,555,396 | 144,790 | |||||||||||||
Public Securitizations (a) | 18,489,643 | 43,135,212 | 24,058,020 | 1,790,578 | |||||||||||||||
2013 Private issuances | November 2020 - September 2024 | 1,172,833 | 2,044,054 | 1.28%-1.38% | 2,426,570 | 1,835 | |||||||||||||
2015 Private issuances | June 2019-September 2021 | 827,842 | 1,811,312 | 0.88%-2.8% | 275,512 | 1,784 | |||||||||||||
2016 Private issuances | August 2020 - Sept 2024 | 346,660 | 2,550,000 | 1.93%-2.86% | 679,865 | 797 | |||||||||||||
2017 Private issuances | April 2021 - Sept 2021 | 489,845 | 1,600,000 | 1.85%-2.44% | 806,525 | 4,604 | |||||||||||||
2018 Private issuance | June 2022-April 2024 | 4,767,573 | 4,536,002 | 2.42%-3.53% | 6,395,457 | 23,716 | |||||||||||||
2019 Private issuance | September 2022 | 985,916 | 1,000,000 | 3.34% | 1,252,200 | 1,906 | |||||||||||||
Privately issued amortizing notes (c) | 8,590,669 | 13,541,368 | 11,836,129 | 34,642 | |||||||||||||||
Total secured structured financings | $ | 27,080,312 | $ | 56,676,580 | $ | 35,894,149 | $ | 1,825,220 |
December 31, 2018 | |||||||||||||||||||
Estimated Maturity Date(s) | Balance | Initial Note Amounts Issued | Initial Weighted Average Interest Rate | Collateral | Restricted Cash | ||||||||||||||
2014 Securitizations | January 2022 - April 2022 | $ | 246,989 | $ | 2,291,020 | 1.16% - 1.27% | $ | 334,888 | $ | 65,028 | |||||||||
2015 Securitizations | April 2021 - January 2023 | 1,651,411 | 9,054,732 | 1.33% - 2.29% | 1,979,942 | 288,654 | |||||||||||||
2016 Securitizations | April 2022 - March 2024 | 2,233,720 | 7,462,790 | 1.63% - 2.80% | 2,876,141 | 285,300 | |||||||||||||
2017 Securitizations | July 2022 - September 2024 | 4,385,029 | 9,296,570 | 1.35% - 2.52% | 6,090,150 | 352,833 | |||||||||||||
2018 Securitizations | May 2022 -April 2026 | 10,708,030 | 13,275,840 | 2.41% - 3.53% | 13,631,783 | 549,899 | |||||||||||||
Public Securitizations | 19,225,179 | 41,380,952 | 24,912,904 | 1,541,714 | |||||||||||||||
2013 Private issuance | November 2020 - September 2024 | 1,507,241 | 2,044,054 | 1.28% - 1.38% | 2,896,344 | 3,021 | |||||||||||||
2015 Private issuances | June 2019 -September 2021 | 1,043,723 | 1,811,312 | 0.88% - 2.80% | 350,212 | 2,215 | |||||||||||||
2016 Private issuances | August 2020 - September 2024 | 454,280 | 2,550,000 | 1.93% - 2.86% | 901,641 | 1,661 | |||||||||||||
2017 Private issuances | April 2021 -September 2021 | 689,152 | 1,600,000 | 1.85% - 2.44% | 1,037,263 | 5,716 | |||||||||||||
2018 Private issuances | June 2022 - April 2024 | 3,981,955 | 3,300,002 | 2.42% - 3.17% | 5,197,806 | 22,588 | |||||||||||||
Privately issued amortizing notes | 7,676,351 | 11,305,368 | 10,383,266 | 35,201 | |||||||||||||||
Total secured structured financings | $ | 26,901,530 | $ | 52,686,320 | $ | 35,296,170 | $ | 1,576,915 |
6. | Variable Interest Entities |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Assets securitized | $ | 4,928,462 | $ | 7,240,944 | |||
Net proceeds from new securitizations (a) | $ | 3,962,618 | $ | 3,476,322 | |||
Net proceeds from retained bonds | 17,306 | 211,610 | |||||
Cash received for servicing fees (b) | 208,325 | 215,790 | |||||
Net distributions from Trusts (b) | 592,769 | 545,152 | |||||
Total cash received from Trusts | $ | 4,781,018 | $ | 4,448,874 |
(a) | Includes additional advances on existing securitizations. |
(b) | These amounts are not reflected in the accompanying condensed consolidated statements of cash flows because these cash flows are intra-company and eliminated in consolidation. |
March 31, 2019 | December 31, 2018 | ||||||
SPAIN | $ | 3,110,475 | $ | 3,461,793 | |||
Total serviced for related parties | 3,110,475 | 3,461,793 | |||||
Chrysler Capital securitizations | 520,842 | 611,050 | |||||
Total serviced for third parties | 520,842 | 611,050 | |||||
Total serviced for others portfolio | $ | 3,631,317 | $ | 4,072,843 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Receivables securitized (a) | $ | — | $ | 1,475,253 | |||
Net proceeds from new securitizations | $ | — | $ | 1,474,820 | |||
Cash received for servicing fees | 10,251 | 8,078 | |||||
Total cash received from securitization trusts | $ | 10,251 | $ | 1,482,898 |
7. | Derivative Financial Instruments |
March 31, 2019 | |||||||||||||||
Notional | Fair Value | Asset | Liability | ||||||||||||
Interest rate swap agreements designated as cash flow hedges | $ | 4,150,000 | $ | 11,323 | $ | 28,601 | $ | (17,278 | ) | ||||||
Interest rate swap agreements not designated as hedges | 2,110,000 | 1,329 | 6,409 | (5,080 | ) | ||||||||||
Interest rate cap agreements | 9,679,846 | 136,470 | 136,470 | — | |||||||||||
Options for interest rate cap agreements | 9,679,846 | (136,470 | ) | — | (136,470 | ) |
December 31, 2018 | |||||||||||||||
Notional | Fair Value | Asset | Liability | ||||||||||||
Interest rate swap agreements designated as cash flow hedges | $ | 3,933,500 | $ | 36,489 | $ | 43,967 | $ | (7,478 | ) | ||||||
Interest rate swap agreements not designated as hedges | 2,270,200 | 9,423 | 11,553 | (2,130 | ) | ||||||||||
Interest rate cap agreements | 7,741,765 | 128,377 | 128,377 | — | |||||||||||
Options for interest rate cap agreements | 7,741,765 | (128,377 | ) | — | (128,377 | ) |
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||
Assets Presented in the Condensed Consolidated Balance Sheet | Cash Collateral Received (a) | Financial Instruments received (c) | Net Amount | ||||||||||||
March 31, 2019 | |||||||||||||||
Interest rate swaps - third party (b) | $ | 35,010 | $ | (852 | ) | $ | (3,878 | ) | $ | 30,280 | |||||
Interest rate caps - third party | 136,470 | (48,289 | ) | (71,771 | ) | 16,410 | |||||||||
Total derivatives subject to a master netting arrangement or similar arrangement | 171,480 | (49,141 | ) | (75,649 | ) | 46,690 | |||||||||
Total derivatives not subject to a master netting arrangement or similar arrangement | — | — | — | ||||||||||||
Total derivative assets | $ | 171,480 | $ | (49,141 | ) | $ | (75,649 | ) | $ | 46,690 | |||||
Total financial assets | $ | 171,480 | $ | (49,141 | ) | $ | (75,649 | ) | $ | 46,690 | |||||
December 31, 2018 | |||||||||||||||
Interest rate swaps - third party | 55,520 | (23,929 | ) | — | 31,591 | ||||||||||
Interest rate caps - third party | 128,377 | (72,830 | ) | — | 55,547 | ||||||||||
Total derivatives subject to a master netting arrangement or similar arrangement | 183,897 | (96,759 | ) | — | 87,138 | ||||||||||
Total derivatives not subject to a master netting arrangement or similar arrangement | — | — | — | — | |||||||||||
Total derivative assets | $ | 183,897 | $ | (96,759 | ) | $ | — | $ | 87,138 | ||||||
Total financial assets | $ | 183,897 | $ | (96,759 | ) | $ | — | $ | 87,138 |
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||
Liabilities Presented in the Condensed Consolidated Balance Sheet | Cash Collateral Pledged (a) | Financial Instruments pledged (a) | Net Amount | ||||||||||||
March 31, 2019 | |||||||||||||||
Interest rate swaps - third party | 22,358 | (16,374 | ) | (5,984 | ) | — | |||||||||
Back to back - third party | 136,470 | (105,997 | ) | (30,473 | ) | — | |||||||||
Total derivatives subject to a master netting arrangement or similar arrangement | 158,828 | (122,371 | ) | (36,457 | ) | — | |||||||||
Total derivatives not subject to a master netting arrangement or similar arrangement | — | — | — | ||||||||||||
Total derivative liabilities | $ | 158,828 | $ | (122,371 | ) | $ | (36,457 | ) | $ | — | |||||
Total financial liabilities | $ | 158,828 | $ | (122,371 | ) | $ | (36,457 | ) | $ | — | |||||
December 31, 2018 | |||||||||||||||
Back to back - Santander & affiliates | 9,608 | (9,608 | ) | — | — | ||||||||||
Back to back - third party | 128,377 | (128,377 | ) | — | — | ||||||||||
Total derivatives subject to a master netting arrangement or similar arrangement | 137,985 | (137,985 | ) | — | — | ||||||||||
Total derivatives not subject to a master netting arrangement or similar arrangement | — | — | — | — | |||||||||||
Total derivative liabilities | $ | 137,985 | $ | (137,985 | ) | $ | — | $ | — | ||||||
Total financial liabilities | $ | 137,985 | $ | (137,985 | ) | $ | — | $ | — |
Three Months Ended March 31, 2019 | |||||||||||
Recognized in Earnings | Gross Gains Recognized in Accumulated Other Comprehensive Income (Loss) | Gross amount Reclassified From Accumulated Other Comprehensive Income to Interest Expense | |||||||||
Interest rate swap agreements designated as cash flow hedges | $ | — | $ | (14,793 | ) | $ | 13,040 | ||||
Derivative instruments not designated as hedges | |||||||||||
Losses (Gains) recognized in interest expenses | 5,401 |
Three Months Ended March 31, 2018 | |||||||||||
Recognized in Earnings | Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss) | Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive Income to Interest Expense | |||||||||
Interest rate swap agreements designated as cash flow hedges | $ | — | $ | 26,429 | $ | 4,578 | |||||
Derivative instruments not designated as hedges | |||||||||||
Losses (Gains) recognized in interest expenses | (9,717 | ) |
March 31, 2019 | December 31, 2018 | ||||||
Vehicles (a) | $ | 353,123 | $ | 342,097 | |||
Manufacturer subvention payments receivable (b) | 100,099 | 106,313 | |||||
Upfront fee (b) | 61,250 | 65,000 | |||||
Derivative assets at fair value (c) | 171,480 | 183,897 | |||||
Derivative-third party collateral | 177,152 | 150,783 | |||||
Operating leases (Right-of-use-assets) | 64,822 | — | |||||
Available-for-sale debt securities | 42,733 | — | |||||
Prepaids | 26,696 | 29,080 | |||||
Accounts receivable | 34,217 | 28,511 | |||||
Other | 23,047 | 57,666 | |||||
Other assets | $ | 1,054,619 | $ | 963,347 |
(a) | Includes vehicles recovered through repossession as well as vehicles recovered due to lease terminations. |
(b) | These amounts relate to the Chrysler Agreement. The Company paid a $150,000 upfront fee upon the May 2013 inception of the Chrysler Agreement. The fee is being amortized into finance and other interest income over a ten-year term. As the preferred financing provider for FCA, the Company is entitled to subvention payments on loans and leases with below-market customer payments. Exercise of the equity option in the Chrysler Agreement by FCA would require the Company to evaluate whether the remaining unamortized balance of the upfront fee should be impaired. To date, FCA has not exercised its equity option. |
(c) | Derivative assets at fair value represent the gross amount of derivatives presented in the condensed consolidated financial statements. Refer to Note 7 to these Condensed Consolidated Financial Statements for the detail of these amounts. |
March 31, 2019 | |||
Operating leases-right of use assets | $ | 64,822 | |
Other liabilities | 88,206 | ||
Weighted average lease term | 6.8 years | ||
Weighted average discount rate | 3.40 | % |
2019 | $ | 12,470 | |
2020 | 16,465 | ||
2021 | 12,940 | ||
2022 | 12,283 | ||
2023 | 12,393 | ||
Thereafter | 32,270 | ||
Total | $ | 98,821 | |
Less: Interest | (10,615 | ) | |
Present value of lease liabilities | $ | 88,206 |
March 31, 2019 | |||||||||||||||
Amortized cost | Gross Unrealized gain | Gross Unrealized loss | Fair value | ||||||||||||
Available-for-sale debt securities (US Treasury securities) | $ | 42,122 | $ | 611 | $ | — | $ | 42,733 |
Amortized cost | Fair value | ||||||
Due within one year | $ | 5,812 | $ | 5,997 | |||
Due after one year but within 5 years | 36,310 | 36,736 | |||||
Total | $ | 42,122 | $ | 42,733 |
9. | Income Taxes |
10. | Commitments and Contingencies |
Agreement or Legal Matter | Commitment or Contingency | March 31, 2019 | December 31, 2018 | |||||||||
Chrysler Agreement | Revenue-sharing and gain-sharing payments | $ | 13,254 | $ | 7,001 | |||||||
Agreement with Bank of America | Servicer performance fee | 5,980 | 6,353 | |||||||||
Agreement with CBP | Loss-sharing payments | 3,340 | 3,708 | |||||||||
Other Contingencies | Consumer arrangements | 2,999 | 2,138 | |||||||||
Legal and regulatory proceedings | Aggregate legal and regulatory liabilities | 106,900 | 97,700 |
• | The Company received a civil subpoena from the DOJ, under FIRREA, requesting the production of documents and communications that, among other things, relate to the underwriting and securitization of nonprime vehicle loans. The Company has responded to these requests within the deadlines specified in the subpoena and has otherwise cooperated with the DOJ with respect to this matter. |
• | In October 2014, the Company received a subpoena from the SEC commencing an investigation into the Company’s securitization practices. In June 2016, the SEC served an additional subpoena on the Company requesting documents related to the Company’s securitizations practices as well as the Company’s financial restatements. The Company produced documents responsive to these subpoenas, and the SEC took testimony from certain of the Company’s employees. In December 2018, the SEC and the Company reached a voluntary agreement to settle the SEC’s investigation under which the SEC entered a cease-and-desist order against the Company in an administrative matter captioned In the Matter of Santander Consumer USA Holdings Inc., File No. 3-18932. The Company paid a civil penalty of $1,500 in January 2019 and agreed to cease and desist from any future violations of the Exchange Act and the rules thereunder. |
• | In October 2014, May 2015, July 2015 and February 2017, the Company received subpoenas and/or Civil Investigative Demands (CIDs) from the Attorneys General of California, Illinois, Oregon, New Jersey, Maryland and Washington under the authority of each state’s consumer protection statutes. The Company has been informed that these states serve as an executive committee on behalf of a group of 32 state Attorneys General (and the District of Columbia). The subpoenas and/or CIDs from the executive committee states contain broad requests for information and the production of documents related to the Company’s underwriting, securitization, servicing and collection of nonprime vehicle loans. The Company has responded to these requests within the deadlines specified in the CIDs and has otherwise cooperated with the Attorneys General with respect to this matter. |
• | In August 2017, the Company received a CID from the CFPB. The stated purpose of the CID is to determine whether the Company has complied with the Fair Credit Reporting Act and related regulations. The Company has responded to these requests within the deadlines specified in the CIDs and has otherwise cooperated with the CFPB with respect to this matter. |
11. | Related-Party Transactions |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Line of credit agreement with Santander - New York Branch (a) | $ | — | $ | 4,367 | |||
Debt facilities with SHUSA (Note 5) | 44,881 | 35,846 |
March 31, 2019 | December 31, 2018 | ||||||
Line of credit agreement with Santander - New York Branch (Note 5) | $ | — | $ | — | |||
Debt facilities with SHUSA (Note 5) | 20,399 | 19,928 |
March 31, 2019 | December 31, 2018 | ||||||
Total serviced portfolio | $ | 355,280 | $ | 383,246 | |||
Cash collections due to owner | 20,411 | 14,920 | |||||
Servicing fees receivable | 628 | 601 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Origination and renewal fee income from SBNA (a) | $ | 1,223 | $ | 840 | |||
Servicing fees expenses charged by SBNA (b) | 13 | 20 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Servicing fee income | $ | 8,431 | $ | 4,792 | |||
Loss (Gain) on sale, excluding lower of cost or market adjustments (if any) | — | 16,903 |
12. | Computation of Basic and Diluted Earnings per Common Share |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Earnings per common share | |||||||
Net income | $ | 247,503 | $ | 244,615 | |||
Weighted average number of common shares outstanding before restricted participating shares (in thousands) | 351,515 | 360,703 | |||||
Weighted average number of participating restricted common shares outstanding (in thousands) | — | — | |||||
Weighted average number of common shares outstanding (in thousands) | 351,515 | 360,703 | |||||
Earnings per common share | $ | 0.70 | $ | 0.68 | |||
Earnings per common share - assuming dilution | |||||||
Net income | $ | 247,503 | $ | 244,615 | |||
Weighted average number of common shares outstanding (in thousands) | 351,515 | 360,703 | |||||
Effect of employee stock-based awards (in thousands) | 537 | 914 | |||||
Weighted average number of common shares outstanding - assuming dilution (in thousands) | 352,052 | 361,617 | |||||
Earnings per common share - assuming dilution | $ | 0.70 | $ | 0.68 |
13. | Fair Value of Financial Instruments |
March 31, 2019 | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents (a) | $ | 76,272 | $ | 76,272 | $ | 76,272 | $ | — | $ | — | |||||||||
Finance receivables held for investment, net (b) | 25,417,594 | 26,413,532 | — | — | 26,413,532 | ||||||||||||||
Restricted cash and cash equivalents (a) | 2,414,653 | 2,414,653 | 2,414,653 | — | — | ||||||||||||||
Total | $ | 27,908,519 | $ | 28,904,457 | $ | 2,490,925 | $ | — | $ | 26,413,532 | |||||||||
Liabilities: | |||||||||||||||||||
Notes payable — credit facilities (c) | $ | 5,063,786 | $ | 5,063,786 | $ | — | $ | — | $ | 5,063,786 | |||||||||
Notes payable — secured structured financings (d) | 27,080,312 | 27,245,983 | — | 18,332,662 | 8,913,321 | ||||||||||||||
Notes payable — related party (e) | 3,503,055 | 3,511,805 | — | — | 3,511,805 | ||||||||||||||
Total | $ | 35,647,153 | $ | 35,821,574 | $ | — | $ | 18,332,662 | $ | 17,488,912 |
December 31, 2018 | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents (a) | $ | 148,436 | $ | 148,436 | $ | 148,436 | $ | — | $ | — | |||||||||
Finance receivables held for investment, net (b) | 24,914,833 | 26,037,559 | — | — | 26,037,559 | ||||||||||||||
Restricted cash and cash equivalents (a) | 2,102,048 | 2,102,048 | 2,102,048 | — | — | ||||||||||||||
Total | $ | 27,165,317 | $ | 28,288,043 | $ | 2,250,484 | $ | — | $ | 26,037,559 | |||||||||
Liabilities: | |||||||||||||||||||
Notes payable — credit facilities (c) | $ | 4,478,214 | $ | 4,478,214 | $ | — | $ | — | $ | 4,478,214 | |||||||||
Notes payable — secured structured financings (d) | 26,901,530 | 26,994,912 | — | 17,924,867 | 9,070,045 | ||||||||||||||
Notes payable — related party (e) | 3,503,293 | 3,438,543 | — | — | 3,438,543 | ||||||||||||||
Total | $ | 34,883,037 | $ | 34,911,669 | $ | — | $ | 17,924,867 | $ | 16,986,802 |
(a) | Cash and cash equivalents and restricted cash and cash equivalents — The carrying amount of cash and cash equivalents, including restricted cash and cash equivalents, is at an approximated fair value as the instruments mature within 90 days or less and bear interest at market rates. |
(b) | Finance receivables held for investment, net — Finance receivables held for investment, net are carried at amortized cost, net of an allowance. These receivables exclude retail installment contracts that are measured at fair value on a recurring and nonrecurring basis. The estimated fair value for the underlying financial instruments are determined as follows: |
• | Retail installment contracts held for investment and purchased receivables — The estimated fair value is calculated based on a DCF in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates, expected recovery rates, discount rates reflective of the cost of funding, and credit loss expectations. |
• | Finance lease receivables — Finance lease receivables are carried at gross investments, net of unearned income and allowance for lease losses. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements. |
• | Receivables from dealers and personal loans held for investment — Receivables from dealers and personal loans held for investment are carried at amortized cost, net of credit loss allowance. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements. |
(c) | Notes payable — credit facilities — The carrying amount of notes payable related to revolving credit facilities is estimated to approximate fair value. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements as the facilities are subject to short-term floating interest rates that approximate rates available to the Company. |
(d) | Notes payable — secured structured financings — The estimated fair value of notes payable related to secured structured financings is calculated based on market observable prices and spreads for the Company’s publicly traded debt and market observed prices of similar notes issued by the Company, or recent market transactions involving similar debt with similar credit risks, which are considered level 2 inputs. The estimated fair value of notes payable related to privately issued amortizing notes is calculated based on a combination of credit enhancement review, discounted cash flow analysis and review of market observable spreads for similar liabilities. In conducting this analysis, the Company uses significant unobservable inputs on key assumptions, including historical default rates, prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations, which are considered level 3 inputs. |
(e) | Notes payable — related party — The carrying amount of floating rate notes payable to a related party is estimated to approximate fair value as the facilities are subject to short-term floating interest rates that approximate rates available to the Company. The fair value premium/discount of the fixed rate promissory notes are derived from changes in the Company’s unsecured cost of funds since the time of issuance and weighted average life of these notes. |
Fair Value Measurements at March 31, 2019 | |||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Other assets — trading interest rate caps (a) | $ | 136,470 | $ | — | $ | 136,470 | $ | — | |||||||
Other assets — cash flow hedging interest rate swaps (a) | 28,601 | — | 28,601 | — | |||||||||||
Other assets — trading interest rate swaps (a) | 6,409 | — | 6,409 | — | |||||||||||
Other assets — available-for-sale-debt securities (b) | 42,733 | — | 42,733 | — | |||||||||||
Other liabilities — trading options for interest rate caps (a) | 136,470 | — | 136,470 | — | |||||||||||
Other liabilities — cash flow hedging interest rate swaps (a) | 17,278 | — | 17,278 | — | |||||||||||
Other liabilities — trading interest rate swaps (a) | 5,080 | — | 5,080 | — | |||||||||||
Retail installment contracts acquired individually (c) | 11,195 | — | — | 11,195 |
Fair Value Measurements at December 31, 2018 | |||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Other assets — trading interest rate caps (a) | $ | 128,377 | $ | — | $ | 128,377 | $ | — | |||||||
Other assets — cash flow hedging interest rate swaps (a) | 43,967 | — | 43,967 | — | |||||||||||
Other assets — trading interest rate swaps (a) | 11,553 | — | 11,553 | — | |||||||||||
Other liabilities — trading options for interest rate caps (a) | 128,377 | — | 128,377 | — | |||||||||||
Other liabilities — cash flow hedging interest rate swaps (a) | 7,478 | — | 7,478 | — | |||||||||||
Other liabilities — trading interest rate swaps (a) | 2,130 | — | 2,130 | — | |||||||||||
Retail installment contracts acquired individually (c) | 13,509 | — | — | 13,509 |
(a) | The valuation is determined using widely accepted valuation techniques including a DCF on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurement of its derivatives. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings and guarantees. The Company utilizes the exception in ASC 820-10-35-18D (commonly referred to as the “portfolio exception”) with respect to measuring counterparty credit risk for instruments (Note 7). |
(b) | The Company's available-for-sale debt securities includes U.S. Treasury securities that are valued utilizing observable market quotes. The Company obtains vendor trading platform data (actual prices) from a number of live data sources, including active market makers and interdealer brokers and therefore, classified as Level 2. |
(c) | For certain retail installment contracts reported in finance receivables held for investment, net, the Company has elected the fair value option. The fair values of the retail installment contracts are estimated using a DCF model. When estimating the fair value using this model, the Company uses significant unobservable inputs on key assumptions, which includes historical default rates and adjustments to reflect prepayment rates based on available data from a comparable market securitization of similar assets, discount rates reflective of the cost of funding of debt issuance and recent historical equity yields, and recovery rates based on the average severity utilizing reported severity rates and loss severity utilizing available market data from a comparable securitized pool. Accordingly, retail installment contracts held for investment are classified as Level 3. Changes in the fair value are recorded in investment gains (losses), net in the condensed consolidated statement of income. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Balance — beginning of period | $ | 13,509 | $ | 22,124 | |||
Additions / issuances | — | 1,349 | |||||
Net collection activities | (2,654 | ) | (5,594 | ) | |||
Gains recognized in earnings | 340 | 971 | |||||
Balance — end of period | $ | 11,195 | $ | 18,850 |
Fair Value Measurements at March 31, 2019 | ||||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Lower of cost or fair value expense for the three months ended March 31, 2019 | ||||||||||||||
Other assets — vehicles (a) | 353,123 | $ | — | $ | 353,123 | $ | — | $ | — | |||||||||
Personal loans held for sale (b) | 974,017 | — | — | 974,017 | 67,691 | |||||||||||||
Auto loans impaired due to bankruptcy (c) | 169,928 | — | 169,928 | — | 4,410 |
Fair Value Measurements at December 31, 2018 | |||||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Lower of cost or fair value expense for the year ended December 31, 2018 | |||||||||||||||
Other assets — vehicles (a) | $ | 342,097 | $ | — | $ | 342,097 | $ | — | $ | — | |||||||||
Personal loans held for sale (b) | 1,068,757 | — | — | 1,068,757 | 367,219 | ||||||||||||||
Retail installment contracts held for sale | — | — | — | — | 15,098 | ||||||||||||||
Auto loans impaired due to bankruptcy (c) | 189,114 | — | 189,114 | — | 18,083 |
Financial Instruments | Fair Value at March 31, 2019 | Valuation Technique | Unobservable Inputs | Range | |||||||
Financial Assets: | |||||||||||
Retail installment contracts held for investment | $ | 11,195 | Discounted Cash Flow | Discount Rate | 8%-10% | ||||||
Default Rate | 15%-20% | ||||||||||
Prepayment Rate | 6%-8% | ||||||||||
Loss Severity Rate | 50%-60% | ||||||||||
Personal loans held for sale | $ | 974,017 | Lower of Market or Income Approach | Market Approach | |||||||
Market Participant View | 70%-80% | ||||||||||
Income Approach | |||||||||||
Discount Rate | 15%-25% | ||||||||||
Default Rate | 30%-40% | ||||||||||
Net Principal & Interest Payment Rate | 70%-85% | ||||||||||
Loss Severity Rate | 90%-95% |
Financial Instruments | Fair Value at December 31, 2018 | Valuation Technique | Unobservable Inputs | Range | |||||||
Financial Assets: | |||||||||||
Retail installment contracts held for investment | $ | 13,509 | Discounted Cash Flow | Discount Rate | 8%-10% | ||||||
Default Rate | 15%-20% | ||||||||||
Prepayment Rate | 6%-8% | ||||||||||
Loss Severity Rate | 50%-60% | ||||||||||
Personal loans held for sale | $ | 1,068,757 | Lower of Market or Income Approach | Market Approach | |||||||
Market Participant View | 70%-80% | ||||||||||
Income Approach | |||||||||||
Discount Rate | 15%-25% | ||||||||||
Default Rate | 30%-40% | ||||||||||
Net Principal & Interest Payment Rate | 70%-85% | ||||||||||
Loss Severity Rate | 90%-95% |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||
Options outstanding at January 1, 2019 | 645,376 | $ | 13.15 | 4.0 | $ | 3,682 | ||||||||
Granted | — | — | — | — | ||||||||||
Exercised | (83,312 | ) | 9.49 | — | 924 | |||||||||
Expired | — | — | — | — | ||||||||||
Forfeited | — | — | — | — | ||||||||||
Other (a) | 1,480 | 9.21 | — | — | ||||||||||
Options outstanding at March 31, 2019 | 563,544 | 13.68 | 3.8 | 4,493 | ||||||||||
Options exercisable at March 31, 2019 | $ | 497,569 | 12.82 | 3.6 | $ | 4,337 |
Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||
Outstanding as of January 1, 2019 | 698,799 | $ | 14.53 | 1.1 | $ | 12,292 | |||||||
Granted | 462,680 | 20.77 | — | — | |||||||||
Vested | (438,285 | ) | 17.57 | — | 9,098 | ||||||||
Forfeited/canceled | (89 | ) | 16.12 | — | — | ||||||||
Unvested as of March 31, 2019 | 723,105 | 16.76 | 1.5 | $ | 15,279 |
15. | Shareholders’ Equity |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Beginning balance, unrealized gains (losses) | $ | 33,515 | $ | 44,262 | |||
Other comprehensive income (loss) before reclassifications (gross) | (10,680 | ) | 22,919 | ||||
Amounts (gross) reclassified out of accumulated other comprehensive income (loss) | (9,897 | ) | (3,970 | ) | |||
Ending balance, unrealized gains (losses) | $ | 12,938 | $ | 63,211 |
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | ||||||||||
Reclassification | Amount reclassified | Income statement line item | Amount reclassified | Income statement line item | |||||||
Cash flow hedges | $ | (13,040 | ) | Interest expense | $ | (4,578 | ) | Interest expense | |||
Available for sale-debt securities | — | Investment gain/loss | — | Investment gain/loss | |||||||
Tax expense (benefit) | 3,143 | 608 | |||||||||
Net of tax | $ | (9,897 | ) | $ | (3,970 | ) |
16. | Investment Losses, Net |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Gain (loss) on sale of loans and leases | $ | — | $ | (16,696 | ) | ||
Lower of cost or market adjustments | (67,691 | ) | (70,499 | ) | |||
Other gains, (losses and impairments), net | 594 | 675 | |||||
$ | (67,097 | ) | $ | (86,520 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
March 31, 2019 | December 31, 2018 | ||
Retail Installment Contracts Held for Investment | |||
Texas | 17% | 17% | |
Florida | 11% | 11% | |
California | 9% | 9% | |
Georgia | 6% | 6% | |
Illinois | 4% | 4% | |
North Carolina | 4% | 4% | |
New York | 4% | 4% | |
Pennsylvania | 3% | 3% | |
Louisiana | 2% | 2% | |
Ohio | 2% | 2% | |
South Carolina | 2% | 2% | |
Other States | 36% | 36% | |
100% | 100% |
• | Net financing income — The Company tracks the spread between the interest and finance charge income earned on assets and the interest expense incurred on liabilities, and continually monitors the components of its yield and cost of funds. The Company’s effective interest rate on borrowing is driven by various items including, but not limited to, credit quality of the collateral assigned, used/unused portion of facilities, and reference rate for the credit spread. These drivers, as well as external rate trends, including the swap curve, spot and forward rates are monitored. |
• | Net credit losses — The Company performs net credit loss analysis at the vintage level for individually acquired retail installment contracts, loans and leases, and at the pool level for purchased portfolios, enabling it to pinpoint drivers of any unusual or unexpected trends. The Company also monitors its recovery rates as well as industry-wide rates. Additionally, because delinquencies are an early indicator of future net credit losses, the Company analyzes delinquency trends, adjusting for seasonality, to determine if the Company’s loans are performing in line with original estimations. The net credit loss analysis does not include considerations of the Company’s estimated allowance for credit losses. |
• | Other income — The Company’s flow agreements have resulted in a large portfolio of assets serviced for others. These assets provide a steady stream of servicing income and may provide a gain or loss on sale. The Company monitors the size of the portfolio and average servicing fee rate and gain. Additionally, due to the classification of the Company’s personal lending portfolio as held for sale upon the decision to exit the personal lending line of business, adjustments to record this portfolio at the lower of cost or market are included in investment gains (losses), net, which is a component of other income (losses). |
• | Operating expenses — The Company assesses its operational efficiency using the cost-to-managed assets ratio. The Company performs extensive analysis to determine whether observed fluctuations in operating expense levels indicate a trend or are the nonrecurring impact of large projects. The operating expense analysis also includes a loan- and portfolio-level review of origination and servicing costs to assist the Company in assessing profitability by pool and vintage. |
• | Delinquency ratios |
As of March 31, 2018 | |||||||||
Reported | Corrections | Revised | |||||||
Delinquent principal, 30-59 days past due | 8.6 | % | 0.3 | % | 8.9 | % | |||
Delinquent principal over 59 days | 4.2 | % | 0.2 | % | 4.4 | % |
• | Other ratios |
Three months ended March 31, 2018 | |||||||||
Reported | Corrections | Revised | |||||||
Net Charge-off ratio | 8.3 | % | — | % | 8.3 | % | |||
Yield on individually acquired retail installment contracts | 15.2 | % | 0.8 | % | 16.0 | % |
• | Total auto originations of $6.0 billion, down 5.6% from $6.3 billion originated in the same quarter in 2018; |
• | Net finance and other interest income of $1.1 billion, up 5.1% compared to the same quarter in 2018; |
• | Return on average assets of 2.2%, down from 2.5% compared to the same quarter in 2018; |
• | Common equity tier 1 (CET1) ratio of 15.8%, down 119 bps compared to the same quarter in 2018; and |
• | Net leased vehicle income of $206 million, up 41.2% compared to the same quarter in 2018. |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Retained Originations | |||||||
Retail installment contracts | $ | 4,026,327 | $ | 3,866,494 | |||
Average APR | 17.2 | % | 16.1 | % | |||
Average FICO® (a) | 593 | 611 | |||||
Discount | (0.1 | )% | 0.3 | % | |||
Personal loans (b) | $ | 288,557 | $ | 273,328 | |||
Average APR | 29.7 | % | 26.0 | % | |||
Leased vehicles | $ | 1,963,580 | $ | 2,093,604 | |||
Finance lease | $ | 3,308 | $ | 2,398 | |||
Total originations retained | $ | 6,281,772 | $ | 6,235,824 | |||
Sold Originations | |||||||
Retail installment contracts | $ | — | $ | 386,956 | |||
Average APR | — | % | 6.8 | % | |||
Average FICO® (c) | — | 732 | |||||
Total originations | $ | 6,281,772 | $ | 6,622,780 |
(a) | Unpaid principal balance excluded from the weighted average FICO score is $493 million and $461 million for the three months ended March 31, 2019 and 2018, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $106 million and $54 million, respectively, were commercial loans. |
(b) | Included in the total origination volume is $24 million and $17 million for the three months ended March 31, 2019 and 2018, respectively, related to newly opened accounts. |
(c) | Unpaid principal balance excluded from the weighted average FICO score is zero and $32 million for the three months ended March 31, 2019 and 2018, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, zero and $20 million, respectively, were commercial loans. |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | ||||||||||
(Dollar amounts in thousands) | |||||||||||
Retail installment contracts | |||||||||||
Car | $ | 1,555,114 | 38.6 | % | $ | 1,544,947 | 36.3 | % | |||
Truck and utility | 2,322,091 | 57.7 | % | 2,213,400 | 52.0 | % | |||||
Van and other (a) | 149,122 | 3.7 | % | 495,103 | 11.7 | % | |||||
$ | 4,026,327 | 100.0 | % | $ | 4,253,450 | 100.0 | % | ||||
Leased vehicles | |||||||||||
Car | $ | 106,502 | 5.4 | % | $ | 158,869 | 7.6 | % | |||
Truck and utility | 1,802,755 | 91.8 | % | 1,658,957 | 79.2 | % | |||||
Van and other (a) | 54,323 | 2.8 | % | 275,778 | 13.2 | % | |||||
$ | 1,963,580 | 100.0 | % | $ | 2,093,604 | 100.0 | % | ||||
Total originations by vehicle type | |||||||||||
Car | $ | 1,661,616 | 27.7 | % | $ | 1,703,816 | 26.8 | % | |||
Truck and utility | 4,124,846 | 68.9 | % | 3,872,357 | 61.0 | % | |||||
Van and other (a) | 203,445 | 3.4 | % | 770,881 | 12.2 | % | |||||
$ | 5,989,907 | 100.0 | % | $ | 6,347,054 | 100.0 | % |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Retail installment contracts | $ | — | $ | 1,475,253 | |||
Average APR | — | % | 6.5 | % | |||
Average FICO® | — | 727 | |||||
Total asset sales | $ | — | $ | 1,475,253 |
March 31, 2019 | December 31, 2018 | ||||||||||
(Dollar amounts in thousands) | |||||||||||
Retail installment contracts | |||||||||||
Car | $ | 12,826,449 | 44.5 | % | $ | 13,011,925 | 45.7 | % | |||
Truck and utility | 14,835,476 | 51.4 | % | 14,266,757 | 50.1 | % | |||||
Van and other (a) | 1,187,830 | 4.1 | % | 1,184,554 | 4.2 | % | |||||
$ | 28,849,755 | 100.0 | % | $ | 28,463,236 | 100.0 | % | ||||
Leased vehicles | |||||||||||
Car | $ | 1,494,104 | 9.6 | % | $ | 1,590,621 | 10.5 | % | |||
Truck and utility | 13,434,910 | 86.1 | % | 12,899,955 | 84.8 | % | |||||
Van and other (a) | 677,428 | 4.3 | % | 728,737 | 4.7 | % | |||||
$ | 15,606,442 | 100.0 | % | $ | 15,219,313 | 100.0 | % | ||||
Total by vehicle type | |||||||||||
Car | $ | 14,320,553 | 32.2 | % | $ | 14,602,546 | 33.4 | % | |||
Truck and utility | 28,270,386 | 63.6 | % | 27,166,712 | 62.2 | % | |||||
Van and other (a) | 1,865,258 | 4.2 | % | 1,913,291 | 4.4 | % | |||||
$ | 44,456,197 | 100.0 | % | $ | 43,682,549 | 100.0 | % |
March 31, 2019 | December 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Retail installment contracts (a) | $ | 28,849,755 | $ | 28,463,236 | |||
Average APR | 16.8 | % | 16.7 | % | |||
Discount | 0.7 | % | 0.8 | % | |||
Personal loans | $ | 1,952 | $ | 2,637 | |||
Average APR | 31.7 | % | 31.7 | % | |||
Receivables from dealers | $ | 13,169 | $ | 14,710 | |||
Average APR | 4.0 | % | 4.1 | % | |||
Leased vehicles | $ | 15,606,442 | $ | 15,219,313 | |||
Finance leases | $ | 20,669 | $ | 19,344 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Income Statement Data | (Dollar amounts in thousands, except per share data) | ||||||
Interest on individually acquired retail installment contracts | 1,156,023 | $ | 1,076,319 | ||||
Interest on purchased receivables portfolios | 1,413 | 2,841 | |||||
Interest on receivables from dealers | 122 | 120 | |||||
Interest on personal loans | 96,022 | 89,260 | |||||
Interest on finance receivables and loans | 1,253,580 | 1,168,540 | |||||
Net leased vehicle income | 205,541 | 145,595 | |||||
Other finance and interest income | 10,247 | 7,137 | |||||
Interest expense | 334,382 | 241,028 | |||||
Net finance and other interest income | 1,134,986 | 1,080,244 | |||||
Provision for credit losses | 550,879 | 510,341 | |||||
Profit sharing | 6,968 | 4,377 | |||||
Other income | 51,085 | 25,053 | |||||
Operating expenses | 290,957 | 287,912 | |||||
Income before tax expense | 337,267 | 302,667 | |||||
Income tax expense | 89,764 | 58,052 | |||||
Net income | $ | 247,503 | $ | 244,615 | |||
Share Data | |||||||
Weighted-average common shares outstanding | |||||||
Basic | 351,515,464 | 360,703,234 | |||||
Diluted | 352,051,887 | 361,616,732 | |||||
Earnings per share | |||||||
Basic | $ | 0.70 | $ | 0.68 | |||
Diluted | $ | 0.70 | $ | 0.68 | |||
Dividend paid per common share | $ | 0.20 | $ | 0.05 | |||
Balance Sheet Data | |||||||
Finance receivables held for investment, net | 25,598,716 | $ | 22,551,646 | ||||
Finance receivables held for sale, net | 974,017 | 1,611,535 | |||||
Goodwill and intangible assets | 115,256 | 105,144 | |||||
Total assets | 45,045,906 | 40,028,740 | |||||
Total borrowings | 35,647,153 | 31,305,159 | |||||
Total liabilities | 37,887,376 | 33,315,209 | |||||
Total equity | 7,158,530 | 6,713,532 | |||||
Allowance for credit losses | 3,176,250 | 3,320,821 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Other Information | (Dollar amounts in thousands) | ||||||
Charge-offs, net of recoveries, on individually acquired retail installment contracts | $ | 615,204 | $ | 541,283 | |||
Charge-offs, net of recoveries, on purchased receivables portfolios | — | (428 | ) | ||||
Charge-offs, net of recoveries, on personal loans | 239 | 749 | |||||
Charge-offs, net of recoveries, on finance leases | 172 | 306 | |||||
Total charge-offs, net of recoveries | 615,615 | 541,910 | |||||
End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment | 1,224,289 | 1,160,154 | |||||
End of period personal loans delinquent principal over 59 days | 165,220 | 162,061 | |||||
End of period delinquent principal over 59 days, loans held for investment | 1,225,807 | 1,162,311 | |||||
End of period assets covered by allowance for credit losses | 28,857,519 | 26,124,390 | |||||
End of period gross individually acquired retail installment contracts held for investment | 28,821,729 | 26,081,986 | |||||
End of period gross personal loans | 1,393,403 | 1,387,713 | |||||
End of period gross finance receivables and loans held for investment | 28,864,876 | 26,141,811 | |||||
End of period gross finance receivables, loans, and leases held for investment | 44,491,987 | 37,816,402 | |||||
Average gross individually acquired retail installment contracts held for investment | 28,595,315 | 26,006,518 | |||||
Average gross personal loans held for investment | 2,317 | 6,010 | |||||
Average gross individually acquired retail installment contracts held for investment and held for sale | 28,595,315 | 26,915,621 | |||||
Average gross purchased receivables portfolios | 29,283 | 41,209 | |||||
Average gross receivables from dealers | 13,598 | 15,651 | |||||
Average gross personal loans | 1,466,300 | 1,459,308 | |||||
Average gross finance leases | 20,018 | 22,474 | |||||
Average gross finance receivables and loans | 30,124,514 | 28,454,263 | |||||
Average gross operating leases | 15,425,190 | 11,441,789 | |||||
Average gross finance receivables, loans, and leases | 45,549,704 | 39,896,052 | |||||
Average managed assets | 54,433,129 | 48,516,758 | |||||
Average total assets | 44,488,868 | 39,677,593 | |||||
Average debt | 35,261,121 | 31,208,250 | |||||
Average total equity | 7,052,703 | 6,566,933 | |||||
Ratios | |||||||
Yield on individually acquired retail installment contracts | 16.2 | % | 16.0 | % | |||
Yield on purchased receivables portfolios | 19.3 | % | 27.6 | % | |||
Yield on receivables from dealers | 3.6 | % | 3.1 | % | |||
Yield on personal loans (1) | 26.2 | % | 24.5 | % | |||
Yield on earning assets (2) | 12.9 | % | 13.2 | % | |||
Cost of debt (3) | 3.8 | % | 3.1 | % | |||
Net interest margin (4) | 10.0 | % | 10.8 | % | |||
Expense ratio (5) | 2.1 | % | 2.4 | % | |||
Return on average assets (6) | 2.2 | % | 2.5 | % | |||
Return on average equity (7) | 14.0 | % | 14.9 | % | |||
Net charge-off ratio on individually acquired retail installment contracts (8) | 8.6 | % | 8.3 | % | |||
Net charge-off ratio on purchased receivables portfolios (8) | — | % | (4.2 | )% | |||
Net charge-off ratio on personal loans (8) | 41.3 | % | 49.9 | % | |||
Net charge-off ratio (8) | 8.6 | % | 8.3 | % | |||
Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) | 4.2 | % | 4.4 | % | |||
Delinquency ratio on personal loans, end of period (9) | 11.9 | % | 11.7 | % | |||
Delinquency ratio on loans held for investment, end of period (9) | 4.2 | % | 4.4 | % | |||
Equity to assets ratio (10) | 15.9 | % | 16.8 | % | |||
Tangible common equity to tangible assets (10) | 15.7 | % | 16.6 | % | |||
Common stock dividend payout ratio (11) | 28.4 | % | 7.4 | % | |||
Allowance ratio (12) | 11.0 | % | 12.7 | % | |||
Common Equity Tier 1 capital ratio (13) | 15.8 | % | 17.0 | % |
(1) | Includes finance and other interest income; excludes fees. |
(2) | “Yield on earning assets” is defined as the ratio of annualized Total finance and other interest income, net of Leased vehicle expense, to Average gross finance receivables, loans and leases. |
(3) | “Cost of debt” is defined as the ratio of annualized Interest expense to Average debt. |
(4) | “Net interest margin” is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and leases. |
(5) | “Expense ratio” is defined as the ratio of annualized Operating expenses to Average managed assets. |
(6) | “Return on average assets” is defined as the ratio of annualized Net income to Average total assets. |
(7) | “Return on average equity” is defined as the ratio of annualized Net income to Average total equity. |
(8) | “Net charge-off ratio” is defined as the ratio of annualized Charge-offs on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. |
(9) | “Delinquency ratio” is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes capital leases. |
(10) | “Tangible common equity to tangible assets” is defined as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets. Management believes this non-GAAP financial measure is useful to assess and monitor the adequacy of the Company’s capitalization. This additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures used by other financial institutions. A reconciliation from GAAP to this non-GAAP measure for the periods ended March 31, 2019 and 2018 is as follows: |
March 31, 2019 | March 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Total equity | $ | 7,158,530 | $ | 6,713,532 | |||
Deduct: Goodwill and intangibles | 115,256 | 105,144 | |||||
Tangible common equity | $ | 7,043,274 | $ | 6,608,388 | |||
Total assets | $ | 45,045,906 | $ | 40,028,740 | |||
Deduct: Goodwill and intangibles | 115,256 | 105,144 | |||||
Tangible assets | $ | 44,930,650 | $ | 39,923,596 | |||
Equity to assets ratio | 15.9 | % | 16.8 | % | |||
Tangible common equity to tangible assets | 15.7 | % | 16.6 | % |
(11) | “Common stock dividend payout ratio” is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company’s shareholders. |
(12) | “Allowance ratio” is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses. |
(13) | “Common Equity Tier 1 Capital ratio” is defined as the ratio of Total Common Equity Tier 1 Capital (CET1) to Total risk-weighted assets. |
March 31, 2019 | March 31, 2018 | ||||||
Total equity | $ | 7,158,530 | $ | 6,713,532 | |||
Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities | 163,444 | 169,870 | |||||
Deduct: Accumulated other comprehensive income (loss), net | 12,938 | 63,211 | |||||
Tier 1 common capital | $ | 6,982,148 | $ | 6,480,451 | |||
Risk weighted assets (a) | $ | 44,260,896 | $ | 38,191,687 | |||
Common Equity Tier 1 capital ratio (b) | 15.8 | % | 17.0 | % |
(a) | Under the banking agencies’ risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together with the measure for market risk, resulting in the Company’s total Risk weighted assets. |
(b) | CET1 is calculated under Basel III regulations required since January 1, 2015. The fully phased-in capital ratios are non-GAAP financial measures. |
Three Months Ended March 31, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||||||||
Average Balances | Interest Income/Interest Expense | Yield/Rate | Average Balances | Interest Income/Interest Expense | Yield/Rate | ||||||||||||||||
Assets | |||||||||||||||||||||
Retail installment contracts acquired individually | $ | 28,595,315 | $ | 1,156,023 | 16.2 | % | $ | 26,915,621 | $ | 1,076,319 | 16.0 | % | |||||||||
Purchased receivables | 29,283 | 1,413 | 19.3 | % | 41,209 | 2,841 | 27.6 | % | |||||||||||||
Receivables from dealers | 13,598 | 122 | 3.6 | % | 15,651 | 120 | 3.1 | % | |||||||||||||
Personal loans | 1,466,300 | 96,022 | 26.2 | % | 1,459,308 | 89,260 | 24.5 | % | |||||||||||||
Finance lease receivables | 20,018 | 365 | 7.3 | % | 22,474 | 558 | 9.9 | % | |||||||||||||
Finance receivables | 30,124,514 | 1,253,945 | 16.8 | % | 28,454,263 | 1,169,098 | 16.4 | % | |||||||||||||
Leased vehicles, net | 15,425,190 | 205,541 | 5.3 | % | 11,441,789 | 145,595 | 5.1 | % | |||||||||||||
Other assets | 2,156,750 | 9,882 | 1.8 | % | 3,152,001 | 6,579 | 0.8 | % | |||||||||||||
Allowance for credit losses | (3,217,586 | ) | — | — | (3,370,460 | ) | — | — | |||||||||||||
Total assets | $ | 44,488,868 | $ | 1,469,368 | $ | 39,677,593 | $ | 1,321,272 | |||||||||||||
Liabilities and equity | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Notes payable | $ | 35,261,121 | $ | 334,382 | 3.8 | % | $ | 31,208,250 | $ | 241,028 | 3.1 | % | |||||||||
Other liabilities | 2,175,044 | — | — | 1,902,410 | — | — | |||||||||||||||
Total liabilities | 37,436,165 | 334,382 | 33,110,660 | 241,028 | |||||||||||||||||
Total stockholders' equity | 7,052,703 | — | — | 6,566,933 | — | ||||||||||||||||
Total liabilities and equity | $ | 44,488,868 | $ | 334,382 | $ | 39,677,593 | $ | 241,028 |
For the Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Interest on finance receivables and loans | $ | 1,253,580 | $ | 1,168,540 | ||||
Leased vehicle income | 649,560 | 504,278 | ||||||
Other finance and interest income | 10,247 | 7,137 | ||||||
Total finance and other interest income | 1,913,387 | 1,679,955 | ||||||
Interest expense | 334,382 | 241,028 | ||||||
Leased vehicle expense | 444,019 | 358,683 | ||||||
Net finance and other interest income | 1,134,986 | 1,080,244 | ||||||
Provision for credit losses | 550,879 | 510,341 | ||||||
Net finance and other interest income after provision for credit losses | 584,107 | 569,903 | ||||||
Profit sharing | 6,968 | 4,377 | ||||||
Net finance and other interest income after provision for credit losses and profit sharing | 577,139 | 565,526 | ||||||
Total other income | 51,085 | 25,053 | ||||||
Total operating expenses | 290,957 | 287,912 | ||||||
Income before income taxes | 337,267 | 302,667 | ||||||
Income tax expense | 89,764 | 58,052 | ||||||
Net income | $ | 247,503 | $ | 244,615 | ||||
Net income | $ | 247,503 | $ | 244,615 | ||||
Change in unrealized gains (losses) on cash flow hedges, net of tax | (21,039 | ) | 12,800 | |||||
Unrealized gains (losses) on available-for-sale debt securities, net of tax | $ | 462 | $ | — | ||||
Comprehensive income | $ | 226,926 | $ | 257,415 |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Income from individually acquired retail installment contracts | $ | 1,156,023 | $ | 1,076,319 | $ | 79,704 | 7 | % | ||||||
Income from purchased receivables portfolios | 1,413 | 2,841 | (1,428 | ) | (50 | )% | ||||||||
Income from receivables from dealers | 122 | 120 | 2 | 2 | % | |||||||||
Income from personal loans | 96,022 | 89,260 | 6,762 | 8 | % | |||||||||
Total interest on finance receivables and loans | $ | 1,253,580 | $ | 1,168,540 | $ | 85,040 | 7 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Leased vehicle income | $ | 649,560 | $ | 504,278 | $ | 145,282 | 29 | % | ||||||
Leased vehicle expense | 444,019 | 358,683 | 85,336 | 24 | % | |||||||||
Leased vehicle income, net | $ | 205,541 | $ | 145,595 | $ | 59,946 | 41 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Interest expense on notes payable | $ | 343,312 | $ | 253,372 | $ | 89,940 | 35 | % | ||||||
Interest expense on derivatives | (8,930 | ) | (12,344 | ) | 3,414 | (28 | )% | |||||||
Total interest expense | $ | 334,382 | $ | 241,028 | $ | 93,354 | 39 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Provision for credit losses | $ | 550,879 | $ | 510,341 | $ | 40,538 | 8 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Profit sharing | $ | 6,968 | $ | 4,377 | $ | 2,591 | 59 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Investment losses, net | $ | (67,097 | ) | $ | (86,520 | ) | $ | 19,423 | 22 | % | ||||
Servicing fee income | 23,806 | 26,182 | (2,376 | ) | (9 | )% | ||||||||
Fees, commissions, and other | 94,376 | 85,391 | 8,985 | 11 | % | |||||||||
Total other income | $ | 51,085 | $ | 25,053 | $ | 26,032 | 104 | % | ||||||
Average serviced for others portfolio | $ | 8,887,964 | $ | 8,697,711 | $ | 190,253 | 2 | % |
• | Investment losses, net for the three months ended March 31, 2019 and 2018, decreased $19 million, or 22%, primarily because of no asset sales in 2019. The Company recorded a loss of $17 million during first quarter of 2018 related to asset sales. |
• | The Company records servicing fee income on loans that it services but does not own and does not report on its balance sheet. Servicing fee income decreased $2 million, or 9%, from the first quarter of 2018 to the first quarter of 2019, due to the lower average balances for serviced portfolio that had higher servicing fee rates. The serviced for others portfolio as of March 31, 2019 and 2018 was as follows: |
March 31, | |||||||
2019 | 2018 | ||||||
(Dollar amounts in thousands) | |||||||
SBNA and Santander retail installment contracts | $ | 5,735,648 | $ | 3,660,760 | |||
SBNA leases | 202 | 97,274 | |||||
Total serviced for related parties | 5,735,850 | 3,758,034 | |||||
Chrysler Capital securitizations | 520,842 | 1,182,457 | |||||
Other third parties | 2,487,473 | 3,782,602 | |||||
Total serviced for third parties | 3,008,315 | 4,965,059 | |||||
Total serviced for others portfolio | $ | 8,744,165 | $ | 8,723,093 |
• | The Company’s fees, commissions, and other, primarily includes late fees, miscellaneous, and other income. This income increased 11% from the three months ended March 31, 2018 to the three months ended March 31, 2019, primarily due to the increase in referral fee income from SBNA related to origination support services. |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Compensation expense | $ | 127,894 | $ | 122,005 | $ | 5,889 | 5 | % | ||||||
Repossession expense | 70,860 | 72,081 | (1,221 | ) | (2 | )% | ||||||||
Other operating costs | 92,203 | 93,826 | (1,623 | ) | (2 | )% | ||||||||
Total operating expenses | $ | 290,957 | $ | 287,912 | $ | 3,045 | 1 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Income tax expense | $ | 89,764 | $ | 58,052 | $ | 31,712 | 55 | % | ||||||
Income before income taxes | 337,267 | 302,667 | 34,600 | 11 | % | |||||||||
Effective tax rate | 26.6 | % | 19.2 | % |
Three Months Ended | ||||||||||||||
March 31, | Increase (Decrease) | |||||||||||||
2019 | 2018 | Amount | Percent | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Change in unrealized gains (losses) on cash flow hedges and available-for-sale securities, net of tax | $ | (20,577 | ) | $ | 12,800 | $ | (33,377 | ) | (261 | )% |
March 31, 2019 | |||||||||||||||
Retail Installment Contracts Acquired Individually (a) | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Unpaid principal balance | $ | 23,905,478 | $ | 4,916,251 | $ | 13,169 | $ | 1,952 | |||||||
Credit loss allowance - specific | — | (1,280,649 | ) | — | — | ||||||||||
Credit loss allowance - collective | (1,891,351 | ) | — | (137 | ) | (605 | ) | ||||||||
Discount | (151,909 | ) | (32,519 | ) | — | — | |||||||||
Capitalized origination costs and fees | 79,841 | 3,843 | — | 138 | |||||||||||
Net carrying balance | $ | 21,942,059 | $ | 3,606,926 | $ | 13,032 | $ | 1,485 | |||||||
Allowance as a percentage of unpaid principal balance | 7.9 | % | 26.0 | % | 1.0 | % | 31.0 | % | |||||||
Allowance and discount as a percentage of unpaid principal balance | 8.5 | % | 26.7 | % | 1.0 | % | 31.0 | % |
December 31, 2018 | |||||||||||||||
Retail Installment Contracts Acquired Individually (a) | Receivables from Dealers | Personal Loans | |||||||||||||
Non-TDR | TDR | ||||||||||||||
Unpaid principal balance | $ | 23,054,157 | $ | 5,378,603 | $ | 14,710 | $ | 2,637 | |||||||
Credit loss allowance - specific | — | (1,416,743 | ) | — | — | ||||||||||
Credit loss allowance - collective | (1,819,360 | ) | — | (153 | ) | (761 | ) | ||||||||
Discount | (172,659 | ) | (40,333 | ) | — | — | |||||||||
Capitalized origination costs and fees | 77,398 | 4,448 | — | 138 | |||||||||||
Net carrying balance | $ | 21,139,536 | $ | 3,925,975 | $ | 14,557 | $ | 2,014 | |||||||
Allowance as a percentage of unpaid principal balance | 7.9 | % | 26.3 | % | 1.0 | % | 28.9 | % | |||||||
Allowance and discount as a percentage of unpaid principal balance | 8.6 | % | 27.1 | % | 1.0 | % | 28.9 | % |
March 31, 2019 | December 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Outstanding balance | $ | 28,153 | $ | 30,631 | |||
Outstanding recorded investment, net of impairment | $ | 18,030 | $ | 19,390 |
March 31, 2019 | |||||||||||||||||||||||||||||||
Trade Lines | 1 | 2 | 3 | 4+ | Total | ||||||||||||||||||||||||||
FICO | Months History | $ | % | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||
No-FICO | <36 | $ | 2.6 | 96 | % | $ | 0.1 | 4 | % | $ | — | — | $ | — | — | $ | 2.7 | 9 | % | ||||||||||||
36+ | 0.4 | 40 | % | 0.2 | 20 | % | 0.1 | 10 | % | 0.3 | 30 | % | 1.0 | 4 | % | ||||||||||||||||
<540 | <36 | 0.1 | 25 | % | 0.1 | 25 | % | 0.1 | 25 | % | 0.1 | 25 | % | 0.4 | 1 | % | |||||||||||||||
36+ | 0.2 | 4 | % | 0.3 | 6 | % | 0.3 | 6 | % | 4.5 | 84 | % | 5.3 | 18 | % | ||||||||||||||||
540-599 | <36 | 0.3 | 38 | % | 0.2 | 25 | % | 0.1 | 12 | % | 0.2 | 25 | % | 0.8 | 3 | % | |||||||||||||||
36+ | 0.2 | 2 | % | 0.2 | 2 | % | 0.3 | 3 | % | 8.0 | 93 | % | 8.7 | 30 | % | ||||||||||||||||
600-639 | <36 | 0.3 | 38 | % | 0.2 | 25 | % | 0.1 | 12 | % | 0.2 | 25 | % | 0.8 | 3 | % | |||||||||||||||
36+ | 0.1 | 2 | % | 0.1 | 2 | % | 0.1 | 2 | % | 4.3 | 94 | % | 4.6 | 16 | % | ||||||||||||||||
>640 | <36 | 0.3 | 49 | % | 0.1 | 17 | % | 0.1 | 17 | % | 0.1 | 17 | % | 0.6 | 2 | % | |||||||||||||||
36+ | 0.1 | 3 | % | 0.2 | 5 | % | 0.1 | 3 | % | 3.6 | 89 | % | 4.0 | 14 | % | ||||||||||||||||
Total | $ | 4.6 | 16 | % | $ | 1.7 | 6 | % | $ | 1.3 | 4 | % | $ | 21.3 | 74 | % | $ | 28.9 | 100 | % |
December 31, 2018 | |||||||||||||||||||||||||||||||
Trade Lines | 1 | 2 | 3 | 4+ | Total | ||||||||||||||||||||||||||
FICO | Months History | $ | % | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||
No-FICO | <36 | $ | 2.5 | 96 | % | $ | 0.1 | 4 | % | $ | — | — | $ | — | — | $ | 2.6 | 9 | % | ||||||||||||
36+ | 0.4 | 40 | % | 0.2 | 20 | % | 0.1 | 10 | % | 0.3 | 30 | % | 1.0 | 4 | % | ||||||||||||||||
<540 | <36 | 0.1 | 25 | % | 0.1 | 25 | % | 0.1 | 25 | % | 0.1 | 25 | % | 0.4 | 1 | % | |||||||||||||||
36+ | 0.2 | 4 | % | 0.3 | 5 | % | 0.3 | 5 | % | 4.7 | 86 | % | 5.5 | 19 | % | ||||||||||||||||
540-599 | <36 | 0.3 | 37 | % | 0.2 | 25 | % | 0.1 | 13 | % | 0.2 | 25 | % | 0.8 | 3 | % | |||||||||||||||
36+ | 0.2 | 2 | % | 0.2 | 2 | % | 0.3 | 4 | % | 7.7 | 92 | % | 8.4 | 30 | % | ||||||||||||||||
600-639 | <36 | 0.2 | 33 | % | 0.1 | 17 | % | 0.1 | 17 | % | 0.2 | 33 | % | 0.6 | 2 | % | |||||||||||||||
36+ | 0.1 | 2 | % | 0.1 | 2 | % | 0.1 | 2 | % | 4.2 | 94 | % | 4.5 | 16 | % | ||||||||||||||||
>640 | <36 | 0.3 | 43 | % | 0.2 | 29 | % | 0.1 | 14 | % | 0.1 | 14 | % | 0.7 | 2 | % | |||||||||||||||
36+ | 0.1 | 2 | % | 0.1 | 2 | % | 0.1 | 2 | % | 3.7 | 94 | % | 4.0 | 14 | % | ||||||||||||||||
Total | $ | 4.4 | 15 | % | $ | 1.6 | 6 | % | $ | 1.3 | 5 | % | $ | 21.2 | 74 | % | $ | 28.5 | 100 | % |
March 31, 2019 | December 31, 2018 | ||||||||||||
Dollars (in thousands) | Percent (a) | Dollars (in thousands) | Percent (a) | ||||||||||
Principal 30-59 days past due | $ | 2,419,641 | 8.4 | % | $ | 3,121,795 | 11.0 | % | |||||
Delinquent principal over 59 days (b) | 1,225,807 | 4.2 | % | 1,713,775 | 6.0 | % | |||||||
Total delinquent principal | $ | 3,645,448 | 12.6 | % | $ | 4,835,570 | 17.0 | % |
March 31, 2019 | December 31, 2018 | ||||||||||||
Amount | Percent (a) | Amount | Percent (a) | ||||||||||
Non-TDR | $ | 724,025 | 2.5 | % | $ | 834,921 | 2.9 | % | |||||
TDR | 537,259 | 1.9 | % | 733,218 | 2.6 | % | |||||||
Total nonaccrual principal | $ | 1,261,284 | 4.4 | % | $ | 1,568,139 | 5.5 | % |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Retail Installment Contracts | |||||||
(Dollar amounts in thousands) | |||||||
Principal outstanding at period end | $ | 28,849,755 | $ | 26,121,158 | |||
Average principal outstanding during the period | $ | 28,624,598 | $ | 26,047,727 | |||
Number of receivables outstanding at period end | 1,813,284 | 1,717,403 | |||||
Average number of receivables outstanding during the period | 1,805,099 | 1,704,781 | |||||
Number of repossessions (a) | 76,963 | 77,763 | |||||
Number of repossessions as a percent of average number of receivables outstanding | 17.1 | % | 18.2 | % | |||
Net losses | $ | 615,204 | $ | 540,855 | |||
Net losses as a percent of average principal amount outstanding | 8.6 | % | 8.3 | % |
March 31, 2019 | December 31, 2018 | ||||||||||||
(Dollar amounts in thousands) | |||||||||||||
Never deferred | $ | 21,006,521 | 72.8 | % | $ | 20,212,452 | 71.0 | % | |||||
Deferred once | 3,615,890 | 12.5 | % | 3,690,522 | 13.0 | % | |||||||
Deferred twice | 1,777,579 | 6.2 | % | 1,952,894 | 6.9 | % | |||||||
Deferred 3 - 4 times | 2,355,275 | 8.2 | % | 2,516,451 | 8.8 | % | |||||||
Deferred greater than 4 times | 94,491 | 0.3 | % | 90,917 | 0.3 | % | |||||||
Total | $ | 28,849,756 | $ | 28,463,236 |
March 31, 2019 | December 31, 2018 | ||||||
Retail Installment Contracts | |||||||
(Dollar amounts in thousands) | |||||||
Temporary reduction of monthly payment (a) | $ | 1,856,055 | $ | 2,137,334 | |||
Bankruptcy-related accounts | 49,956 | 54,373 | |||||
Extension of maturity date | 28,340 | 25,644 | |||||
Interest rate reduction | 56,617 | 54,906 | |||||
Max buy rate and fair lending (b) | 5,120,118 | 4,685,522 | |||||
Other | 133,509 | 137,958 | |||||
Total modified loans | $ | 7,244,595 | $ | 7,095,737 |
March 31, 2019 | December 31, 2018 | ||||||
Retail Installment Contracts | |||||||
(Dollar amounts in thousands) | |||||||
Outstanding recorded investment (a) | $ | 4,891,375 | $ | 5,365,477 | |||
Impairment | (1,280,649 | ) | (1,416,743 | ) | |||
Outstanding recorded investment, net of impairment | $ | 3,610,726 | $ | 3,948,734 |
March 31, 2019 | December 31, 2018 | ||||||
Retail Installment Contracts (a) | |||||||
(Dollar amounts in thousands) | |||||||
Principal 30-59 days past due | $ | 978,359 | $ | 1,265,946 | |||
Delinquent principal over 59 days | 549,692 | 810,589 | |||||
Total delinquent TDRs | $ | 1,528,051 | $ | 2,076,535 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Balance — beginning of period | $ | 5,365,477 | $ | 6,328,159 | |||
New TDRs | 331,792 | 582,664 | |||||
Charge-offs | (464,758 | ) | (549,584 | ) | |||
Paydowns (a) | (341,606 | ) | (267,304 | ) | |||
Others | 470 | 888 | |||||
Balance — end of period | $ | 4,891,375 | $ | 6,094,823 |
March 31, 2019 | December 31, 2018 | ||||||
(Dollar amounts in thousands) | |||||||
TDR - Unpaid principal balance | $ | 4,916,251 | $ | 5,378,603 | |||
TDR - Impairment | 1,280,649 | 1,416,743 | |||||
TDR - Allowance ratio | 26.0 | % | 26.3 | % | |||
Non-TDR - Unpaid principal balance | $ | 23,905,478 | $ | 23,054,157 | |||
Non-TDR - Allowance | 1,891,351 | 1,819,360 | |||||
Non-TDR Allowance ratio | 7.9 | % | 7.9 | % | |||
Total - Unpaid principal balance | $ | 28,821,729 | $ | 28,432,760 | |||
Total - Allowance | 3,172,000 | 3,236,103 | |||||
Total - Allowance ratio | 11.0 | % | 11.4 | % |
• | One securitizations on the Company’s SDART platform for approximately $0.9 billion; |
• | Two securitizations on the Company’s DRIVE, deeper subprime platform, for approximately $2.0 billion; and |
• | One private amortizing lease facility for approximately $1.0 billion. |
March 31, 2019 | December 31, 2018 | ||||||
Third - party revolving credit facilities | $ | 5,063,786 | $ | 4,478,214 | |||
Related - party revolving credit facilities | 3,503,055 | 3,503,293 | |||||
Total revolving credit facilities | 8,566,841 | 7,981,507 | |||||
Public securitizations | 18,489,643 | 19,225,179 | |||||
Privately issued amortizing notes | 8,590,669 | 7,676,351 | |||||
Total secured structured financings | 27,080,312 | 26,901,530 | |||||
Total debt | $ | 35,647,153 | $ | 34,883,037 |
As of March 31, 2019 (amounts in thousands) | |||||||||||||||
Counterparty | Utilized Balance | Committed Amount | Average Outstanding Balance | Maximum Outstanding Balance | |||||||||||
Promissory Note | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||
Promissory Note | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||
Promissory Note | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||
Promissory Note | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||
Promissory Note | SHUSA | 300,000 | 300,000 | 300,000 | 300,000 | ||||||||||
Promissory Note | SHUSA | 400,000 | 400,000 | 400,000 | 400,000 | ||||||||||
Promissory Note | SHUSA | 500,000 | 500,000 | 500,000 | 500,000 | ||||||||||
Promissory Note | SHUSA | 650,000 | 650,000 | 650,000 | 650,000 | ||||||||||
Promissory Note | SHUSA | 650,000 | 650,000 | 650,000 | 650,000 | ||||||||||
Line of Credit | SHUSA | — | 500,000 | 100,833 | 375,000 | ||||||||||
Line of Credit | SHUSA | — | 3,000,000 | — | — | ||||||||||
$ | 3,500,000 | $ | 7,000,000 |
As of March 31, 2018 (amounts in thousands) | |||||||||||||||||
Counterparty | Utilized Balance | Committed Amount | Average Outstanding Balance | Maximum Outstanding Balance | |||||||||||||
Line of credit | Santander-NY | $ | 30,000 | $ | 1,000,000 | $ | 166,444 | $ | 610,000 | ||||||||
Line of credit | Santander-NY | 114,200 | 750,000 | 498,973 | 750,000 | ||||||||||||
Line of credit | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||||
Promissory Note | SHUSA | 250,000 | 250,000 | 250,000 | 250,000 | ||||||||||||
Promissory Note | SHUSA | 300,000 | 300,000 | 300,000 | 300,000 | ||||||||||||
Promissory Note | SHUSA | 400,000 | 400,000 | 400,000 | 400,000 | ||||||||||||
Promissory Note | SHUSA | 500,000 | 500,000 | 500,000 | 500,000 | ||||||||||||
Promissory Note | SHUSA | 650,000 | 650,000 | 650,000 | 650,000 | ||||||||||||
Promissory Note | SHUSA | 650,000 | 650,000 | 650,000 | 650,000 | ||||||||||||
Line of Credit | SHUSA | — | 3,000,000 | — | — | ||||||||||||
$ | 3,144,200 | $ | 7,750,000 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(Dollar amounts in thousands) | |||||||
Net cash provided by operating activities | $ | 1,476,283 | $ | 1,884,352 | |||
Net cash used in investing activities | (1,906,965 | ) | (1,577,174 | ) | |||
Net cash provided by financing activities | 671,123 | 125,539 |
Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Operating lease obligations | $ | 12,612 | $ | 29,917 | $ | 25,233 | $ | 32,391 | $ | 100,153 | |||||||||
Notes payable - credit facilities and related party | 760,346 | 7,053,440 | 750,000 | — | 8,563,786 | ||||||||||||||
Notes payable - secured structured financings (a) | 1,125,084 | 6,933,245 | 12,989,593 | 6,095,328 | 27,143,250 | ||||||||||||||
Contractual interest on debt | 1,107,286 | 1,087,883 | 231,971 | 35,480 | 2,462,620 | ||||||||||||||
Total | $ | 3,005,328 | $ | 15,104,485 | $ | 13,996,797 | $ | 6,163,199 | $ | 38,269,809 |
• | that the Company maintain at least eight external credit providers (as of March 31, 2019, it had twelve); |
• | that the Company relies on Santander and affiliates for no more than 30% of its funding (as of March 31, 2019, Santander and affiliates provided 10% of its funding); |
• | that no single lender’s commitment should comprise more than 33% of the overall committed external lines (as of March 31, 2019, the highest single lender’s commitment was 21% (not including repo)); |
• | that no more than 35% of the Company’s debt mature in the next six months and no more than 65% of the Company’s debt mature in the next twelve months (as of March 31, 2019, 11.19% and 20.90% of the Company’s debt is scheduled to mature in the next six and twelve months, respectively); and |
• | that the Company maintain unused capacity of at least $6.0 billion, including flow agreements, in excess of the Company’s expected peak usage over the following twelve months (as of March 31, 2019, the Company had twelve-month rolling unused capacity of $11.2 billion). |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
• | Management did not effectively execute a strategy to hire and retain a sufficient complement of personnel with an appropriate level of knowledge, experience, and training in certain areas important to financial reporting. |
• | The tone at the top was insufficient to ensure there were adequate mechanisms and oversight to ensure accountability for the performance of internal control over financial reporting responsibilities and to ensure corrective actions were appropriately prioritized and implemented in a timely manner. |
• | There was not adequate management oversight of accounting and financial reporting activities in implementing certain accounting practices to conform to the Company’s policies and GAAP. |
• | There was not an adequate assessment of changes in risks by management that could significantly impact internal control over financial reporting or an adequate determination and prioritization of how those risks should be managed. |
• | There was not adequate management oversight and identification of models, spreadsheets and completeness and accuracy of data material to financial reporting. |
• | There were insufficiently documented Company accounting policies and insufficiently detailed Company procedures to put policies into effective action. |
• | There was a lack of appropriate tone at the top in establishing an effective control owner risk and controls self-assessment process which contributed to a lack of clarity about ownership of risk assessments and control design and effectiveness. There was insufficient governance, oversight and monitoring of the credit loss allowance and accretion processes and a lack of defined roles and responsibilities in monitoring functions. |
• | Appointed an additional independent director to the Audit Committee of the Board with extensive experience as a financial expert in our industry to provide further experience on the committee. |
• | Established regular working group meetings, with appropriate oversight by management of both the Company and its parent to strengthen accountability for performance of internal control over financial reporting responsibilities and prioritization of corrective actions. |
• | Hired a Chief Accounting Officer and other key personnel with significant public-company financial reporting experience and the requisite skillsets in areas important to financial reporting. |
• | Developed and implemented a plan to enhance its risk assessment processes, control procedures and documentation. |
• | Reallocated additional Company resources to improve the oversight for certain financial models. |
• | Increased accounting resources with qualified permanent resources to ensure sufficient staffing to conduct enhanced financial reporting procedures and to continue the remediation efforts. Improved management documentation, review |
• | Increased accounting participation in critical governance activities to ensure an adequate assessment of risk activities which may impact financial reporting or the related internal controls. |
• | Completed a comprehensive review and update of all accounting policies, process descriptions and control activities. |
• | Developed and implemented additional documentation, controls and governance for the credit loss allowance and accretion processes. |
• | Conducted internal training courses over Sarbanes-Oxley regulations and the Company’s internal control over financial reporting program for Company personnel that take part and assist in the execution of the program. |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
• | Santander UK holds two savings accounts and one current account for two customers resident in the U.K. who are currently designated by the U.S. under the Specially Designated Global Terrorist (SDGT) sanctions program. Revenues and profits generated by Santander U.K. on these accounts in the three months ended March 31, 2019 were negligible relative to the overall profits of Santander. |
• | Santander UK held one savings account and one current account for another customer resident in the UK who is currently designated by the US under the SDGT sanctions program. The United Nations and European Union removed this customer from their equivalent sanctions lists in 2008. The customer relationship predated the designations of the customer under these sanctions. Santander UK determined to put a block on the accounts and the accounts were closed on January 14, 2019. Revenues and profits generated by Santander UK on these accounts in the three months ended March 31, 2019 were negligible relative to the overall profits of Santander. |
• | Santander UK holds two frozen current accounts for two U.K. nationals who are designated by the U.S. under the SDGT sanctions program. The accounts held by each customer have been frozen since their designation and have remained frozen through the three months ended March 31, 2019. The accounts are in arrears (£1,844.73 in debit combined) and are currently being managed by Santander UK Collections & Recoveries department. No revenues or profits were generated by Santander UK on these accounts during the three months ended March 31, 2019. |
Item 6. | Exhibits |
Exhibit Number | Description | |
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
* | Filed herewith. |
# | Indicates management contract or compensatory plan or arrangement |
Santander Consumer USA Holdings Inc. (Registrant) | ||
By: | /s/ Scott Powell | |
Name: Scott Powell | ||
Title: President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Scott Powell | President and Chief Executive Officer | May 1, 2019 | ||
Scott Powell | (Principal Executive Officer) | |||
/s/ Juan Carlos Alvarez de Soto | Chief Financial Officer | May 1, 2019 | ||
Juan Carlos Alvarez de Soto | (Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Santander Consumer USA Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Scott Powell | |
Name: | Scott Powell |
Title: | President and Chief Executive Officer (Principal Executive Officer) |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Juan Carlos Alvarez de Soto | |
Name: | Juan Carlos Alvarez de Soto |
Title: | Chief Financial Officer (Principal Financial Officer) |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Scott Powell | |
Name: | Scott Powell |
Title: | President and Chief Executive Officer (Principal Executive Officer) |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Juan Carlos Alvarez de Soto | |
Name: | Juan Carlos Alvarez de Soto |
Title: | Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 29, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Santander Consumer USA Holdings Inc. | |
Entity Central Index Key | 0001580608 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 351,781,864 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents held for affiliates | $ 38,200 | $ 101,334 |
Restricted cash held for affiliates | 0 | 341 |
Accumulated depreciation | 77,036 | 72,345 |
Accumulated amortization | $ 47,438 | $ 45,324 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 362,419,860 | 362,028,916 |
Common stock, shares outstanding | 351,728,473 | 352,302,759 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement [Abstract] | ||
Interest expense to affiliates | $ 44,873 | $ 42,033 |
Investment losses, net from affiliates | 0 | (16,903) |
Servicing fee income from affiliates | 12,995 | 7,811 |
Fees, commissions and other from affiliates | 6,781 | 225 |
Other operating costs to affiliates | 933 | 1,161 |
Change in unrealized gains (losses) on cash flow hedges, tax | 6,794 | 2,903 |
Unrealized gain/losses on available-for-sale debt securities, tax | $ (149) | $ 0 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Parenthetical) - $ / shares |
1 Months Ended | 3 Months Ended | |
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Feb. 28, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Stockholders' Equity [Abstract] | |||
Dividends paid per share (in usd per share) | $ 0.20 | $ 0.20 | $ 0.05 |
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices | Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices SC, or the Company, is the holding company for SC Illinois, and its subsidiaries, a specialized consumer finance company focused on vehicle finance and third-party servicing. The Company’s primary business is the indirect origination and securitization of retail installment contracts, principally, through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. Since May 2013, under the Chrysler Agreement with FCA, the Company has been FCA’s preferred provider for consumer loans and leases and Dealer Loans. Under the Chrysler Agreement, the Company offers a full spectrum of auto financing products and services to FCA 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. Retail installment contracts and vehicle leases entered into with FCA customers, as part of the Chrysler Agreement, represent a significant concentration of those portfolios and there is a risk that the Chrysler Agreement could be terminated prior to its expiration date. Termination of the Chrysler Agreement could result in a decrease in the amount of new retail installment contracts and vehicle leases entered into with FCA customers as well as Dealer Loans. In June 2018, the Company announced that it was in exploratory discussions with FCA regarding the future of FCA’s U.S. finance operations. FCA announced its intention to establish a captive U.S. auto finance unit and indicated that acquiring Chrysler Capital is one option it would consider. Under the Chrysler Agreement, FCA has the option to acquire, for fair market value, an equity participation in the business offering and providing the financial services contemplated by the Chrysler Agreement. The likelihood, timing and structure of any such transaction, and the likelihood that the Chrysler Agreement will terminate, cannot be reasonably determined. In July 2018, FCA and the Company entered into a tolling agreement pursuant to which the parties agreed to preserve their respective rights, claims and defenses under the Chrysler Agreement as they existed on April 30, 2018. 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 other relationships through which it provides personal loans, private-label revolving lines of credit and other consumer finance products. As of March 31, 2019, the Company was owned approximately 69.8% by SHUSA, a subsidiary of Santander, and approximately 30.2% by other shareholders. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including certain Trusts, which are considered VIEs. The Company also consolidates other VIEs for which it was deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements as of March 31, 2019 and December 31, 2018, and for the three months ended March 31, 2019 and 2018, have been prepared in accordance with 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 U.S. GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of 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 2018 Annual Report on Form 10-K. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that 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 credit loss allowance, discount accretion, impairment, fair value, 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. Corrections to Previously Reported Amounts As mentioned in Note 1- “ Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices” in 2018 Annual Report on Form 10-K, the Company identified and corrected two immaterial errors. The Company has revised its comparative condensed consolidated financial statements as of March 31, 2018 included within. The following tables summarize the impacts of the corrections on the condensed consolidated financial statements of income and comprehensive income:
The following tables summarize the impacts of the corrections on the condensed consolidated statement of cash flows:
In addition to the revision of the Company’s condensed consolidated financial statements, information within the footnotes to the condensed consolidated financial statements has been revised to reflect the correction of the errors discussed above. The following table summarizes the impacts of the corrections of those items, including table disclosures in Note 4-“Credit Loss Allowance and Credit Quality”:
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 recreational vehicles, and marine vehicles. It also includes the Company’s personal loan and point-of-sale financing operations. Accounting Policies There have been no material changes in the Company’s accounting policies from those disclosed in Part II, Item 8 - Financial Statements and Supplementary Data in the 2018 Annual Report on Form 10-K. Recently Adopted Accounting Standards Since January 1, 2019, the Company adopted the following FASB ASUs:
For all our operating leases (primarily our office space/facility leases), where the Company is a lessee, adoption of the new standard resulted in recognizing on our balance sheet, a right-of-use (“ROU”) asset of $67,300, a reduction of accounts payable and accrued expenses of $24,100 relating to straight-line rent accruals and unamortized tenant improvement allowances, and a lease liability of $91,400. The right-of-use-asset and lease liability will be derecognized in a manner that effectively yields a straight-line lease expense over the lease term. In addition, the Company will no longer capitalize certain initial direct costs in connection with lease originations where it is the lessor. Further, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We elected not to (a) use the hindsight practical expedient to determine the lease term for existing leases; and (b) recognize a lease liability and associated ROU asset for short term leases if such lease meet the definition under ASC 842. We chose not to elect the practical expedient to not separate non-lease components from lease components. The standard did not have a material impact on our condensed consolidated statement of income or condensed consolidated statement of cash flows.
The adoption of the following ASUs did not have a material impact on the Company’s business, financial position or results of operations.
Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses, which changes the criteria under which credit losses are measured. The amendment introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to establish credit loss estimates. The guidance will be effective for the fiscal year beginning after December 15, 2019, including interim periods within that year. The Company does not intend to adopt the new standard early and is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows; however, it is expected that the new CECL model will alter the assumptions used in calculating the Company’s credit losses, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material increase in the Company’s credit and capital reserves and related decrease in capital ratios. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. In addition to those described in detail above, the Company is also in the process of evaluating the following ASUs and does not expect them to have a material impact on the Company’s business, financial position, results of operations or disclosures:
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Finance Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables | Finance Receivables Held For Investment Finance receivables held for investment, net is comprised of the following at March 31, 2019 and December 31, 2018:
(a) The Company has elected the fair value option for certain retail installment contracts reported in finance receivables held for investment, net. As of March 31, 2019 and December 31, 2018, $11,195 and $13,509 of loans were recorded at fair value (Note 13). The Company’s held for investment portfolio of retail installment contracts acquired individually, receivables from dealers, and personal loans is comprised of the following at March 31, 2019 and December 31, 2018:
Retail installment contracts 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 lines or securitization bonds (Note 5). Most of the borrowers on the Company’s retail installment contracts held for investment are retail consumers; however, $553,495 and $537,922 of the unpaid principal balance represented fleet contracts with commercial borrowers as of March 31, 2019 and December 31, 2018, respectively. During the three months ended March 31, 2019 and 2018, the Company originated $2,442,582 and $1,962,180, respectively, in Chrysler Capital loans which represented 61% and 46%, respectively, of the total retail installment contract originations (unpaid principal balance). As of March 31, 2019 and December 31, 2018, the Company’s carrying value of auto retail installment contract portfolio consisted of $9,192,748 and $8,977,284, respectively, of Chrysler Capital loans which represents 36% and 36%, respectively, of the Company’s carrying value of auto retail installment contract portfolio. As of March 31, 2019, borrowers on the Company’s retail installment contracts held for investment are located in Texas (17%), Florida (11%), California (9%), Georgia (6%) and other states each individually representing less than 5% of the Company’s total portfolio. Purchased receivables - Credit impaired Purchased receivables portfolios, which were acquired with deteriorated credit quality, is comprised of the following at March 31, 2019 and December 31, 2018:
Changes in accretable yield on the Company’s purchased receivables portfolios-credit impaired for the periods indicated were as follows:
(a) Reclassifications from (to) nonaccretable difference represents the increases (decreases) in accretable yield resulting from higher (lower) estimated undiscounted cash flows. During the three months ended March 31, 2019 and 2018, 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. However, during the three months ended March 31, 2019 and 2018, the Company recognized certain retail installment contracts with an unpaid principal balance of zero and $42,996, respectively, held by non-consolidated securitization Trusts, under optional clean-up calls (Note 6). Following the initial recognition of these loans at fair value, the performing loans in the portfolio are carried at amortized cost, net of allowance for credit losses. The Company elected the fair value option for all non-performing loans acquired (more than 60 days delinquent as of the re-recognition date), for which it was probable that not all contractually required payments would be collected (Note 13). Receivable from Dealers The receivables from dealers held for investment are all Chrysler Agreement-related. As of March 31, 2019, borrowers on these dealer receivables are located in Virginia (70%) and New York (30%). Held For Sale The carrying value of the Company’s finance receivables held for sale, net is comprised of the following at March 31, 2019 and December 31, 2018:
Sales of retail installment contracts and proceeds from sales of charged-off assets for the three months ended March 31, 2019 and 2018 were as follows:
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Leases (SC as Lessor) |
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Leases (SC as Lessor) | Leases (SC as Lessor) The Company originates operating and finance leases, which are separately accounted for and recorded on the Company’s condensed consolidated balance sheets. Operating leases are reported as leased vehicles, net, while finance leases are included in finance receivables held for investment, net. Operating Leases Leased vehicles, net, which is comprised of leases originated under the Chrysler Agreement, consisted of the following as of March 31, 2019 and December 31, 2018:
The following summarizes the maturity analysis of lease payments due to the Company as lessor under operating leases as of March 31, 2019:
Finance Leases Certain leases originated by the Company are accounted for as direct financing leases, as the contractual residual values are nominal amounts. Finance lease receivables, net consisted of the following as of March 31, 2019 and December 31, 2018:
The following summarizes the maturity analysis of lease payments due to the Company as lessor under finance leases as of March 31, 2019:
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Credit Loss Allowance and Credit Quality |
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Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Loss Allowance and Credit Quality | Credit Loss Allowance and Credit Quality Credit Loss Allowance The Company estimates the allowance for credit losses on individually acquired retail installment contracts (including loans acquired from third party lenders that are considered to have no credit deterioration at acquisition) and personal loans held for investment, not classified as TDRs, based on delinquency status, historical loss experience, estimated values of underlying collateral, when applicable, and various economic factors. In developing the allowance, the Company utilizes a loss emergence period assumption, a loss given default assumption applied to recorded investment, and a probability of default assumption. The loss emergence period assumption represents the average length of time between when a loss event is first estimated to have occurred and when the account is charged-off. The recorded investment represents unpaid principal balance adjusted for unaccreted net discounts, subvention from manufacturers, and origination costs. Under this approach, the resulting allowance represents the expected net losses of recorded investment inherent in the portfolio. The Company uses a transition based Markov model for estimating the allowance for credit losses on individually acquired retail installment contracts. This model utilizes the recently observed loan transition rates from various loan statuses, including delinquency and accounting statuses from performing to charge off, to forecast future losses. For loans classified as TDRs, impairment is generally measured based on the present value of expected future cash flows discounted at the original effective interest rate. For loans that are considered collateral-dependent, such as certain bankruptcy modifications, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. The amount of the allowance is equal to the difference between the loan’s impaired value and the recorded investment. The Company maintains a general credit loss allowance for receivables from dealers based on risk ratings and individually evaluates loans for specific impairment as necessary. As of March 31, 2019 and 2018, the credit loss allowance for receivables from dealers is comprised entirely of general allowance as none of these receivables have been determined to be individually impaired. The activity in the credit loss allowance for individually acquired retail installment contracts and Dealer Loans for the three months ended March 31, 2019 and 2018 was as follows:
(a) For the three months ended March 31, 2019, charge-offs for retail installment contracts acquired individually includes approximately $4 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional credit loss allowance on these loans.
(a) For the three months ended March 31, 2018, charge-offs for retail installment contracts acquired individually includes approximately $7 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional credit loss allowance on these loans. The Company estimates lease losses on the finance lease receivable portfolio based on delinquency status and loss experience to date, as well as various economic factors. The activity in the lease loss allowance for finance leases for the three months ended March 31, 2019 and 2018 was as follows:
There was no impairment activity noted for purchased receivable-credit impaired portfolio for the three months ended March 31, 2019 and March 31, 2018. Delinquencies Retail installment contracts and personal amortizing term loans are classified as non-performing (or nonaccrual) when they are greater than 60 days past due as to contractual principal or interest payments. Dealer receivables are classified as non-performing when they are greater than 90 days past due. At the time a loan is placed in non-performing (nonaccrual) status, previously accrued and uncollected interest is reversed against interest income. If an account is returned to a performing (accrual) status, the Company returns to accruing interest on the loan. The Company considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date. In each case, the period of delinquency is based on the number of days payments are contractually past due. The accrual of interest on revolving personal loans continues until the loan is charged off. The unpaid principal balance on revolving personal loans 90 days past due and still accruing totaled $112,317 and $129,227 as of March 31, 2019 and December 31, 2018, respectively. A summary of delinquencies as of March 31, 2019 and December 31, 2018 is as follows:
(a) Interest is generally accrued until 60 days past due in accordance with the Company’s accounting policy for retail installment contracts. The retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of March 31, 2019 and December 31, 2018:
(a) Percent of unpaid principal balance of total retail installment contracts individually held for investment. The balances in the above tables reflect total unpaid principal balance rather than recorded investment before allowance. As of March 31, 2019 and December 31, 2018, there were no receivables from dealers that were 30 days or more delinquent. Credit Quality Indicators FICO® Distribution — A summary of the credit risk profile of the Company’s retail installment contracts held for investment by FICO® distribution, determined at origination, as of March 31, 2019 and December 31, 2018 was as follows:
(a)No FICO score is obtained on loans to commercial borrowers. (b)Percentages are based on unpaid principal balance. Commercial Lending — The Company’s risk department performs a credit analysis and classifies certain loans over an internal threshold based on the commercial lending classifications described in Part II, Item 8 - Financial Statements and Supplementary Data (Note 4) in the 2018 Annual Report on Form 10-K. All the receivables from dealers, as of March 31, 2019 and December 31, 2018 were classified as “Pass.” Troubled Debt Restructurings In certain circumstances, the Company modifies the terms of its finance receivables to troubled borrowers. Modifications may include a temporary reduction in monthly payment, reduction in interest rate, an extension of the maturity date, rescheduling of future cash flows, or a combination thereof. A modification of finance receivable terms is considered a TDR if the Company grants a concession to a borrower for economic or legal reasons related to the debtor’s financial difficulties that 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. Additionally, restructurings through bankruptcy proceedings are deemed to be TDRs. The purchased receivables portfolio-credit impaired, operating and finance leases, and loans held for sale, including personal loans, are excluded from the scope of the applicable guidance. The Company’s TDR balance as of March 31, 2019 and December 31, 2018 primarily consisted of loans that had been deferred or modified to receive a temporary reduction in monthly payment. As of March 31, 2019 and December 31, 2018, there were no receivables from dealers classified as a TDR. A loan that has been classified as a TDR remains so until the loan is liquidated through payoff or charge-off. For loans on nonaccrual status, interest income is recognized on a cash basis, and the accrual of interest is resumed and reinstated if a delinquent account subsequently becomes 60 days or less past due. The recognition of interest income on TDR loans reflects management’s best estimate of the amount that is reasonably assured of collection and is consistent with the estimate of future cash flows used in the impairment measurement. Any accrued but unpaid interest is fully reserved for through the recognition of additional impairment on the recorded investment, if not expected to be collected. The table below presents the Company’s TDRs as of March 31, 2019 and December 31, 2018:
(a) As of March 31, 2019, the outstanding recorded investment excludes $91.0 million of collateral-dependent bankruptcy TDRs that have been written down by $38.3 million to fair value less cost to sell. As of December 31, 2018, the outstanding recorded investment excludes $90.1 million of collateral-dependent bankruptcy TDRs that have been written down by $36.4 million to fair value less cost to sell. A summary of the Company’s delinquent TDRs at March 31, 2019 and December 31, 2018, is as follows:
(a) The balances in the above table reflects total unpaid principal balance rather than net recorded investment before allowance. Average recorded investment and interest income recognized on TDR loans are as follows:
The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs (including collateral-dependent bankruptcy TDRs) that occurred for the three months ended March 31, 2019 and 2018:
Loan restructurings accounted for as TDRs within the previous twelve months that subsequently defaulted during the three months ended March 31, 2019 and 2018 are summarized in the following table:
(a) For TDR modifications and TDR modifications that subsequently defaults, the allowance methodology remains unchanged; however, the transition rates of the TDR loans are adjusted to reflect the respective risks. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Revolving Credit Facilities The following table presents information regarding credit facilities as of March 31, 2019 and December 31, 2018:
(a) One-half of the outstanding balance on this facility matures in May 2019 and remaining balance matures in March 2020. (b) This line is held exclusively for financing of Chrysler Capital leases. (c) The repurchase facilities are collateralized by securitization notes payable retained by the Company. As the borrower, we are exposed to liquidity risk due to changes in the market value of the retained securities pledged. In some instances, we place or receive cash collateral with counterparties under collateral arrangements associated with our repurchase agreements.
Facilities with Third Parties The warehouse lines and repurchase facilities are fully collateralized by a designated portion of the Company’s retail installment contracts (Note 2), leased vehicles (Note 3), securitization notes payables and residuals retained by the Company. Facilities with Santander and Related Subsidiaries Lines of Credit SHUSA provides the Company with $3,500,000 of committed revolving credit that can be drawn on an unsecured basis. Promissory Notes SHUSA provides the Company with $3,500,000 of unsecured promissory notes. Secured Structured Financings The following table presents information regarding secured structured financings as of March 31, 2019 and December 31, 2018:
(a)Securitizations executed under Rule 144A of the Securities Act are included within this balance. (b)Secured structured financings may be collateralized by the Company’s collateral overages of other issuances. (c)All privately issued amortizing notes issued in 2014 were paid in full. (d)Excludes securitizations which no longer has outstanding debt and excludes any incremental borrowings.
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. The Company’s securitizations and private issuances are collateralized by vehicle retail installment contracts and loans or leases. As of March 31, 2019 and December 31, 2018, the Company had private issuances of notes backed by vehicle leases totaling $8,035,481 and $7,847,071, respectively. Unamortized debt issuance costs are amortized as interest expense over the terms of the related notes payable using the effective interest method and are classified as a discount to the related recorded debt balance. Amortized debt issuance costs were $8,461 and $7,920 for the three months ended March 31, 2019 and 2018, respectively. For securitizations, the term takes into consideration the expected execution of the contractual call option, if applicable. Amortization of premium or accretion of discount on notes payable is also included in interest expense using the effective interest method over the estimated remaining life of the notes. Total interest expense on secured structured financings for the three months ended March 31, 2019 and 2018 was $231,291 and $150,675, respectively. |
Variable Interest Entities |
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Variable Interest Entity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities The Company transfers retail installment contracts and vehicle leases into newly formed Trusts that then issue one or more classes of notes payable backed by the collateral. The Company’s continuing involvement with these Trusts is in the form of servicing the assets and, generally, through holding residual interests in the Trusts. The Trusts are considered VIEs under U.S. GAAP and the Company may or may not consolidate these VIEs on the condensed consolidated balance sheets. For further description of the Company’s securitization activities, involvement with VIEs and accounting policies regarding consolidation of VIEs, see Part II, Item 8 - Financial Statements and Supplementary Data (Note 7) in the 2018 Annual Report on Form 10-K. On-balance sheet variable interest entities The Company retains servicing rights for receivables transferred to the Trusts and receives a monthly servicing fee on the outstanding principal balance. Supplemental fees, such as late charges, for servicing the receivables are reflected in fees, commissions and other income. As of March 31, 2019 and December 31, 2018, the Company was servicing $28,058,972 and $27,193,924, respectively, of gross retail installment contracts that have been transferred to consolidated Trusts. The remainder of the Company’s retail installment contracts remain unpledged. A summary of the cash flows received from consolidated securitization trusts during the three months ended March 31, 2019 and 2018, is as follows:
Off-balance sheet variable interest entities During the three months ended March 31, 2018 the Company sold $1,475,253, of gross retail installment contracts to Santander in off-balance sheet securitizations for a loss (excluding lower of cost or market adjustments, if any) of $16,903, recorded in investment losses, net, in the accompanying consolidated statements of income. There were no sales during the three months ended March 31, 2019. As of March 31, 2019 and December 31, 2018, the Company was servicing $3,631,317 and $4,072,843, respectively, of gross retail installment contracts that have been sold in off-balance sheet securitizations and were subject to an optional clean-up call. The portfolio was comprised as follows:
Other than repurchases of sold assets due to standard representations and warranties, the Company has no exposure to loss as a result of its involvement with these VIEs. A summary of the cash flows received from off-balance sheet securitization trusts for the three months ended March 31, 2019 and 2018 is as follows:
(a) Represents the unpaid principal balance at the time of original securitization. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivatives financial instruments such as interest rate swaps, interest rate caps and the corresponding options written in order to offset the interest rate caps to manage the Company’s exposure to changing interest rates. The Company uses both derivatives that qualify for hedge accounting treatment and economic hedges. In addition, the Company is the holder of a warrant that gives it the right, if certain vesting conditions are satisfied, to purchase additional shares in a company in which it has a cost method investment. This warrant was issued in 2012 and is carried at its estimated fair value of zero at March 31, 2019 and December 31, 2018. The underlying notional amounts and aggregate fair values of these derivatives financial instruments at March 31, 2019 and December 31, 2018, are as follows:
See Note 13 for disclosure of fair value and balance sheet location of the Company’s derivative financial instruments. The Company enters into legally enforceable master netting agreements that reduce risk by permitting netting of transactions, such as derivatives and collateral posting, with the same counterparty on the occurrence of certain events. A master netting agreement allows two counterparties the ability to net-settle amounts under all contracts, including any related collateral posted, through a single payment. The right to offset and certain terms regarding the collateral process, such as valuation, credit events and settlement, are contained in ISDA master agreements. The Company has elected to present derivative balances on a gross basis even if the derivative is subject to a legally enforceable master netting (ISDA) agreement. Collateral that is received or pledged for these transactions is disclosed within the “Gross amounts not offset in the Condensed Consolidated Balance Sheet” section of the tables below. Information on the offsetting of derivative assets and derivative liabilities due to the right of offset was as follows, as of March 31, 2019 and December 31, 2018:
(a) Cash collateral received is reported in Other liabilities or Due to affiliate, as applicable, in the consolidated balance sheet. (b) Includes derivative instruments originally transacted with Santander and affiliates and subsequently amended to reflect clearing with central clearing counterparties. (c) These amounts represent financial instruments that are pledged to the Company for interest rate swaps, caps and back to back instruments. These amounts are not reflected in the accompanying consolidated balance sheet since the Company does not control or have the ability of rehypothecation of these instruments.
(a) Cash collateral pledged and financial instruments pledged is reported in Other assets, Restricted cash and cash equivalents, or Due from affiliate, as applicable, in the consolidated balance sheet. In certain instances, the Company is over-collateralized since the actual amount of cash pledged as collateral exceeds the associated financial liability. As a result, the actual amount of cash collateral pledged that is reported in Other assets, Restricted cash and cash equivalents, or Due from affiliates may be greater than the amount shown in the table above. The gross gains (losses) reclassified from accumulated other comprehensive income (loss) to net income, are included as components of interest expense. The impacts on the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2019 and 2018 were as follows:
The Company estimates that approximately $23,659 of unrealized gains included in accumulated other comprehensive income (loss) will be reclassified to interest expense within the next twelve months. |
Other Assets |
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Other Assets, Leases And Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Other assets were comprised as follows:
Operating Leases (SC as Lessee) The Company has entered into various operating leases, primarily for office space. Operating leases are included within other assets as operating lease ROU assets and other liabilities within our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Most of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Supplemental information relating to these operating leases is as follows:
Lease expense incurred totaled $3,466 and $2,559 for the three months ended March 31, 2019 and 2018, respectively, and is included within “other operating costs” in the income statement. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Cash paid for amounts included in the measurement of operating lease liabilities was $4,176 during the three months ended March 31, 2019. The maturity of lease liabilities at March 31, 2019 are as follows:
Operating lease payments exclude $1.3 million of legally binding minimum lease payments for leases signed but not yet commenced. Available-for-sale debt securities Debt securities expected to be held for an indefinite period of time are classified as available-for-sale (“AFS”) and are carried at fair value, with temporary unrealized gains and losses reported as a component of accumulated other comprehensive income within stockholder's equity, net of estimated income taxes. Realized gains and losses on sales of investment securities are recognized on the trade date and are determined using specific identification method and is included in earnings within Investment gain (losses) on sale of securities. Unamortized premiums and discounts are recognized in interest income over the estimated life of the security using the interest method. The following tables present the amortized cost, gross unrealized gains and losses and approximate fair values of debt securities AFS as of March 31, 2019:
Contractual Maturities The contractual maturities of available-for-sale debt instruments are summarized in the following table.
The Company did not record any other-than-temporary impairment related to its AFS securities for the three months ended March 31, 2019. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax expense of $89,764 (26.6% effective tax rate) and $58,052 (19.2% effective tax rate) during the three months ended March 31, 2019 and 2018, respectively. The Company is a party to a tax sharing agreement requiring that the unitary state tax liability among affiliates included in unitary state tax returns be allocated using the hypothetical separate company tax calculation method. The Company had a net receivable from affiliates under the tax sharing agreement of $2,594 and $734 at March 31, 2019 and December 31, 2018, respectively, which was included in related party taxes receivable in the condensed consolidated balance sheet. The Company provides U.S. income taxes on earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside of the United States. As of December 31, 2018 and March 31, 2019, the Company has no earnings that are considered indefinitely reinvested. The Company applies an aggregate portfolio approach whereby disproportionate income tax effects from accumulated other comprehensive income are released only when an entire portfolio (i.e., all related units of account) of a particular type is liquidated, sold or extinguished. Significant judgment is required in evaluating and reserving for uncertain tax positions. Although management believes adequate reserves have been established for all uncertain tax positions, the final outcomes of these matters may differ. Management does not believe the outcome of any uncertain tax position, individually or combined, will have a material effect on the Company’s business, financial position or results of operations. The reserve for uncertain tax positions, as well as associated penalties and interest, is a component of the income tax provision. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies The following table summarizes liabilities recorded for commitments and contingencies as of March 31, 2019 and December 31, 2018, all of which are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets:
Following is a description of the agreements and legal matters pursuant to which the liabilities in the preceding table were recorded. Chrysler Agreement Under terms of the Chrysler Agreement, the Company must make revenue sharing payments to FCA and also must make gain-sharing payments to FCA when residual gains on leased vehicles exceed a specified threshold. The Company had accrued $13,254 and $7,001 at March 31, 2019 and December 31, 2018, respectively, related to these obligations. The Chrysler Agreement requires, among other things, that the Company bear the risk of loss on loans originated pursuant to the agreement, but also that FCA shares in any residual gains and losses from consumer leases. The Chrysler Agreement also requires that Santander maintain at least $5.0 billion in funding available for Floorplan Loans and $4.5 billion of financing dedicated to FCA retail financing. In turn, FCA must provide designated minimum threshold percentages of its subvention business to the Company. The Chrysler Agreement is subject to early termination in certain circumstances, including the failure by either party to comply with certain of their ongoing obligations under the Chrysler Agreement. These obligations include the Company’s meeting specified escalating penetration rates for the first five years of the agreement. The Company did not meet these penetration rates. Also, FCA has the option to acquire, for fair market value, an equity participation in the business offering and providing the financial services contemplated by the Chrysler Agreement. If FCA exercises its equity option, the Chrysler Agreement were to terminate, or the Company otherwise is unable to realize the expected benefits of its relationship with FCA, there could be a materially adverse impact to the Company’s business, financial condition, results of operations, profitability, loan and lease volume, the credit quality of its portfolio, liquidity, funding and growth, and the Company’s ability to implement its business strategy could be materially adversely affected. Agreement with Bank of America Until January 2017, the Company had a flow agreement with Bank of America whereby the Company was committed to selling up to $300,000 of eligible loans to the bank each month. The Company retains servicing on all sold loans and may receive or pay a servicer performance payment based on an agreed-upon formula if performance on the sold loans is better or worse, respectively, than expected performance at time of sale. Servicer performance payments are due six years from the cut-off date of each loan sale. The Company had accrued $5,980 and $6,353 at March 31, 2019 and December 31, 2018, respectively, related to this obligation. Agreement with CBP Until May 1, 2017, the Company sold loans to CBP under terms of a flow agreement and predecessor sale agreements. The Company retained servicing on the sold loans and will owe CBP a loss-sharing payment capped at 0.5% of the original pool balance if losses exceed a specified threshold, established on a pool-by-pool basis. Loss-sharing payments are due the month in which net losses exceed the established threshold of each loan sale. The Company had accrued $3,340 and $3,708 at March 31, 2019 and December 31, 2018, respectively, related to the loss-sharing obligation. Other Contingencies The Company is or may be subject to potential liability under various other contingent exposures. The Company had accrued $2,999 and $2,138 at March 31, 2019 and December 31, 2018, respectively, for other miscellaneous contingencies. Legal and regulatory proceedings Periodically, the Company is party to, or otherwise involved in, various lawsuits and other legal proceedings that arise in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of any such lawsuit, regulatory matter and legal proceeding, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of the matters, or the eventual loss, fines or penalties related to the matter. Further, it is reasonably possible that actual outcomes or losses may differ materially from the Company’s current assessments and estimates and any adverse resolution of any of these matters against it could materially and adversely affect the Company’s business, financial condition and results of operation. In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation, regulatory matters and other legal proceedings when those matters present material loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation, regulatory matter or other legal proceeding develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether the matter presents a material loss contingency that is probable and estimable. If a determination is made during a given quarter that a material loss contingency is probable and estimable, an accrued liability is established during such quarter with respect to such loss contingency. The Company continues to monitor the matter for further developments that could affect the amount of the accrued liability previously established. As of March 31, 2019, the Company has accrued aggregate legal and regulatory liabilities of $106,900. Further, the Company believes that the estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for legal and regulatory proceedings is up to $71,000 as of March 31, 2019. Set forth below are descriptions of the material lawsuits, regulatory matters and other legal proceedings to which the Company is subject. Securities Class Action and Shareholder Derivative Lawsuits •Deka Lawsuit: The Company is a defendant in a purported securities class action lawsuit (the Deka Lawsuit) in the United States District Court, Northern District of Texas, captioned Deka Investment GmbH et al. v. Santander Consumer USA Holdings Inc. et al., No. 3:15-cv-2129-K. The Deka Lawsuit, which was filed in August 26, 2014, was brought against the Company, certain of its current and former directors and executive officers and certain institutions that served as underwriters in the Company’s IPO on behalf of a class consisting of those who purchased or otherwise acquired our securities between January 23, 2014 and June 12, 2014. The complaint alleges, among other things, that our IPO registration statement and prospectus and certain subsequent public disclosures violated federal securities laws by containing misleading statements concerning the Company’s ability to pay dividends and the adequacy of the Company’s compliance systems and oversight. In December 2015, the Company and the individual defendants moved to dismiss the lawsuit, which was denied. In December 2016, the plaintiffs moved to certify the proposed classes. In July 2017, the court entered an order staying the Deka Lawsuit pending the resolution of the appeal of a class certification order in In re Cobalt Int’l Energy, Inc. Sec. Litig., No. H-14-3428, 2017 U.S. Dist. LEXIS 91938 (S.D. Tex. June 15, 2017). In October 2018, the court vacated the order staying the Deka Lawsuit and ordered that merits discovery in the Deka Lawsuit be stayed until the court ruled on the issue of class certification. •Feldman Lawsuit: In October 2015, a shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, captioned Feldman v. Jason A. Kulas, et al., C.A. No. 11614 (the Feldman Lawsuit). The Feldman Lawsuit names as defendants, certain of its current and former members of the Board, and names the Company as a nominal defendant. The complaint alleges, among other things, that the current and former director defendants breached their fiduciary duties in connection with overseeing the Company’s nonprime vehicle lending practices, resulting in harm to the Company. The complaint seeks unspecified damages and equitable relief. In December 2015, the Feldman Lawsuit was stayed pending the resolution of the Deka Lawsuit. •Parmelee Lawsuit: The Company is a defendant in two purported securities class actions lawsuits that were filed in March and April 2016 in the United States District Court, Northern District of Texas. The lawsuits were consolidated and are now captioned Parmelee v. Santander Consumer USA Holdings Inc. et al., No. 3:16-cv-783. The lawsuits were filed against the Company and certain of its current and former directors and executive officers on behalf of a class consisting of all those who purchased or otherwise acquired our securities between February 3, 2015 and March 15, 2016. The complaint alleges that the Company violated federal securities laws by making false or misleading statements, as well as failing to disclose material adverse facts, in its periodic reports filed under the Exchange Act and certain other public disclosures, in connection with, among other things, the Company’s change in its methodology for estimating its allowance for credit losses and correction of such allowance for prior periods. In March 2017, the Company filed a motion to dismiss the lawsuit. In January 2018, the court granted the Company’s motion as to defendant Ismail Dawood (the Company’s former Chief Financial Officer) and denied the motion as to all other defendants. In July 2018, the lead plaintiff filed an unopposed motion for preliminary approval of a class action settlement of the lawsuit for a cash payment of $9,500. In September 2018, the court entered an order granting the motion for preliminary approval of the settlement of the lawsuit. A final settlement approval hearing is scheduled for May 2019. •Jackie888 Lawsuit: In September 2016, a shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, captioned Jackie888, Inc. v. Jason Kulas, et al., C.A. # 12775 (the Jackie888 Lawsuit). The Jackie888 Lawsuit names as defendants current and former members of the Board, and names the Company as a nominal defendant. The complaint alleges, among other things, that the defendants breached their fiduciary duties in connection with the Company’s accounting practices and controls. The complaint seeks unspecified damages and equitable relief. In April 2017, the Jackie888 Lawsuit was stayed pending the resolution of the Deka Lawsuit. Consumer Lending Cases The Company is also party to various lawsuits pending in federal and state courts alleging violations of state and federal consumer lending laws, including, without limitation, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, Fair Credit Reporting Act, Section 5 of the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Truth in Lending Act, wrongful repossession laws, usury laws and laws related to unfair and deceptive acts or practices. In general, these cases seek damages and equitable and/or other relief. Regulatory Investigations and Proceedings The Company is party to, or is periodically otherwise involved in, reviews, investigations, examinations and proceedings (both formal and informal), and information-gathering requests, by government and self-regulatory agencies, including the FRBB, the CFPB, the DOJ, the SEC, the FTC and various state regulatory and enforcement agencies. Currently, such matters include, but are not limited to, the following:
These matters are ongoing and could in the future result in the imposition of damages, fines or other penalties. No assurance can be given that the ultimate outcome of these matters or any resulting proceedings would not materially and adversely affect the Company’s business, financial condition and results of operations. •2017 Written Agreement with the Federal Reserve In March 2017, the Company and SHUSA entered into a written agreement with the FRBB. Under the terms of the agreement, the Company is required to enhance its compliance risk management program, Board oversight of risk management and senior management oversight of risk management, and SHUSA is required to enhance its oversight of the Company’s management and operations. •Mississippi Attorney General Lawsuit In January 2017, the Attorney General of Mississippi filed a lawsuit against the Company in the Chancery Court of the First Judicial District of Hinds County, Mississippi, captioned State of Mississippi ex rel. Jim Hood, Attorney General of the State of Mississippi v. Santander Consumer USA Inc., C.A. # G-2017-28. The complaint alleges that the Company engaged in unfair and deceptive business practices to induce Mississippi consumers to apply for loans that they could not afford. The complaint asserts claims under the Mississippi Consumer Protection Act (the MCPA) and seeks unspecified civil penalties, equitable relief and other relief. In March 2017, the Company filed motions to dismiss the lawsuit and the parties are proceeding with discovery. •SCRA Consent Order In February 2015, the Company entered into a consent order with the DOJ, approved by the United States District Court for the Northern District of Texas, that resolves the DOJ’s claims against the Company that certain of its repossession and collection activities during the period of time between January 2008 and February 2013 violated the Servicemembers Civil Relief Act (SCRA). The consent order requires the Company to pay a civil fine in the amount of $55, as well as at least $9,360 to affected servicemembers consisting of $10 per servicemember plus compensation for any lost equity (with interest) for each repossession by the Company, and $5 per servicemember for each instance where the Company sought to collect repossession-related fees on accounts where a repossession was conducted by a prior account holder. The consent order also provides for monitoring by the DOJ for the Company’s SCRA compliance for a period of five years and requires the Company to undertake certain additional remedial measures. Agreements •Bluestem The Company is party to agreements with Bluestem whereby the Company is committed to purchase certain new advances on personal revolving financings receivables, along with existing balances on accounts with new advances, originated by Bluestem for an initial term ending in April 2020 and renewable through April 2022 at Bluestem’s option. As of March 31, 2019 and December 31, 2018, the total unused credit available to customers was $2.8 billion and $3.1 billion respectively. In 2019, the Company purchased $0.3 billion of receivables, out of the $3.1 billion unused credit available to customers as of December 31, 2018. In 2018, the Company purchased $1.2 billion of receivables, out of the $3.9 billion unused credit available to customers as of December 31, 2017. In addition, the Company purchased $24,239 of receivables related to newly opened customer accounts during the three months ended March 31, 2019. Each customer account generated under the agreements generally is approved with a credit limit higher than the amount of the initial purchase, with each subsequent purchase automatically approved as long as it does not cause the account to exceed its limit and the customer is in good standing. As of March 31, 2019 and December 31, 2018, the Company was obligated to purchase $9,233 and $15,356, respectively, in receivables that had been originated by Bluestem but not yet purchased by the Company. The Company also is required to make a profit-sharing payment to Bluestem each month if performance exceeds a specified return threshold. The agreement, among other provisions, gives Bluestem the right to repurchase up to 9.99% of the existing portfolio at any time during the term of the agreement, and, provides that if the repurchase right is exercised, Bluestem has the right to retain up to 20% of new accounts subsequently originated. •SBNA The Company also has agreements with SBNA to service recreational and marine vehicle portfolios. These agreements call for a periodic retroactive adjustment, based on cumulative return performance, of the servicing fee rate to inception of the contract. There were no adjustments for the three months ended March 31, 2019 and March 31, 2018. The Company provided SBNA with the first right to review and approve consumer vehicle lease applications, subject to volume constraints, under terms of a flow agreement that was terminated in 2015. In 2015, the Company additionally agreed to indemnify SBNA for residual losses, up to a cap, on certain leases originated under the flow agreement for which SBNA and the Company had differing residual value expectations at lease inception. As of March 31, 2019 and December 31, 2018, the Company had a recorded liability of zero and $39, respectively, related to the residual losses covered under the agreement. •Others Under terms of an application transfer agreement with Nissan, the Company has the first opportunity to review for its own portfolio any credit applications turned down by the Nissan’s captive finance company. The agreement does not require the Company to originate any loans, but for each loan originated the Company will pay Nissan a referral fee. In connection with the sale of retail installment contracts through securitizations and other sales, the Company has made standard representations and warranties customary to the consumer finance industry. Violations of these representations and warranties may require the Company to repurchase loans previously sold to on- or off-balance sheet Trusts or other third parties. As of March 31, 2019, there were no loans that were the subject of a demand to repurchase or replace for breach of representations and warranties for the Company’s asset-backed securities or other sales. In the opinion of management, the potential exposure of other recourse obligations related to the Company’s retail installment contract sales agreements is not expected to have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows. Santander has provided guarantees on the covenants, agreements, and obligations of the Company under the governing documents of its warehouse lines and privately issued amortizing notes. These guarantees are limited to the obligations of the Company as servicer. In November 2015, the Company executed a forward flow asset sale agreement with a third party under terms of which the Company committed to sell $350,000 in charged off loan receivables in bankruptcy status on a quarterly basis . However, any sale more than $275,000 is subject to a market price check. The remaining aggregate commitment as of March 31, 2019 and December 31, 2018, not subject to market price check was $52,231 and $63,975, respectively. |
Related-Party Transactions |
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Related-Party Transactions | Related-Party Transactions Related-party transactions not otherwise disclosed in these footnotes to the condensed consolidated financial statements include the following: Credit Facilities Interest expense, including unused fees, for affiliate lines/letters of credit for the three months ended March 31, 2019 and 2018, was as follows:
(a) Through its New York branch, Santander provided the Company with revolving credit facilities. During the year ended December 31, 2018 these facilities were terminated. Accrued interest for affiliate lines/letters of credit at March 31, 2019 and December 31, 2018, was as follows:
In 2015, under an agreement with Santander, the Company agreed to begin incurring a fee of 12.5 basis points (per annum) on certain warehouse lines, as they renew, for which Santander provides a guarantee of the Company’s servicing obligations. The Company recognized guarantee fee expense of zero and $2,048 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and December 31, 2018, the Company had $1,922 of related fees payable to Santander. Derivatives There were no derivative financial instruments with Santander and affiliates outstanding as of March 31, 2019 and December 31, 2018. Interest and mark-to-market adjustments on previously outstanding derivative financial instruments with Santander and its affiliates totaled $238 and $229 for the three months ended March 31, 2019 and 2018, respectively. Lease origination and servicing agreement Servicing fee income recognized on leases serviced for SBNA totaled $4 and $781 for the three months ended March 31, 2019 and 2018, respectively. Retail Installment Contracts and RV Marine The Company also has agreements with SBNA to service auto retail installment contracts and recreational and marine vehicle portfolios. Servicing fee income recognized under these agreements totaled $407 and $1,039 for the three months ended March 31, 2019 and 2018, respectively. Other information on the serviced auto loan and retail installment contract portfolios for SBNA as of March 31, 2019 and December 31, 2018 is as follows:
Dealer Lending Under the Company’s agreement with SBNA, the Company is required to permit SBNA a first right to review and assess Chrysler Capital dealer lending opportunities, and SBNA is required to pay the Company origination fee and annual renewal fee for each loan originated under the agreement. The agreement also transferred the servicing of all Chrysler Capital receivables from dealers, including receivables held by SBNA and by the Company, from the Company to SBNA. The Company may provide advance funding for dealer loans originated by SBNA, which is reimbursed to the Company by SBNA. The Company had no outstanding receivable from SBNA as of March 31, 2019 and December 31, 2018 for such advances. Other information related to the above transactions with SBNA as of March 31, 2019 and December 31, 2018 is as follows:
(a) As of March 31, 2019 and December 31, 2018, the Company had origination and renewal fees receivable from SBNA of $416 and $385, respectively. (b) As of March 31, 2019 and December 31, 2018, the Company had $6 and $19, respectively, of servicing fees payable to SBNA, respectively. Under the agreement with SBNA, the Company may originate retail consumer loans in connection with sales of vehicles that are collateral held against floorplan loans by SBNA. Upon origination, the Company remits payment to SBNA, who settles the transaction with the dealer. The Company owed SBNA $4,667 and $5,908 related to such originations as of March 31, 2019 and December 31, 2018, respectively. The Company received a $9,000 referral fee in connection with sourcing and servicing arrangement and is amortizing the fee into income over the ten-year term of the agreement through July 1, 2022, the termination date of the agreement. As of March 31, 2019 and December 31, 2018, the unamortized fee balance was $3,825 and $4,050, respectively. The Company recognized $225 and $225 of income related to the referral fee for the three months ended March 31, 2019 and 2018, respectively. Origination Support Services Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. During the three months ended March 31, 2019, the Company facilitated the purchase of $1 billion of retail installment contacts, respectively. The Company recognized origination/referral fee and servicing fee income of $6,556 and $2,881, respectively, for the three months ended March 31, 2019 of which $3,226 is receivable as of March 31, 2019. Beginning in 2016, the Company agreed to pay SBNA a market rate-based fee expense for payments made at SBNA retail branch locations for accounts originated or serviced by the Company and the costs associated with modifying the Advanced Teller platform to the payments. The Company incurred expenses of $49 and $187 for these services during the three months ended March 31, 2019 and 2018, respectively. Securitizations The Company had a Master Securities Purchase Agreement (MSPA) with Santander, whereby the Company had the option to sell a contractually determined amount of eligible prime loans to Santander, through the SPAIN securitization platform, for a term that ended in December 2018. The Company provides servicing on all loans originated under this arrangement. Other information relating to SPAIN securitization platform for the three months ended March 31, 2019 and March 31, 2018 is as follows:
Servicing fee receivable as of March 31, 2019 and December 31, 2018 was $2,690 and $2,983 respectively. The Company had $15,769 and $15,968 of collections due to Santander as of March 31, 2019 and December 31, 2018, respectively. Santander Investment Securities Inc. (SIS), an affiliated entity, serves as joint bookrunner and co-manager on certain of the Company’s securitizations. Amounts paid to SIS as co-manager for the three months ended March 31, 2019 and 2018, totaled $814 and $710, respectively, and are included in debt issuance costs in the accompanying condensed consolidated financial statements. CEO and other employee compensation In 2017, the Board of the Company announced the appointment of Scott Powell as President and CEO. During the three months ended March 31, 2019, the Company accrued $1,072 as its share of compensation expense based on time allocation between his services to the Company and SHUSA. In addition, certain employees of the Company and SHUSA, provide services to each other. For the three months ended March 31, 2019, the Company owed SHUSA approximately $2,000 and SHUSA owed the Company approximately $575 for such services. Other related-party transactions The Company subleases approximately 13,000 square feet of its corporate office space to SBNA. For the three months ended March 31, 2019 and 2018, the Company recorded $44 and $41 respectively, in sublease revenue on this property. The Company’s wholly-owned subsidiary, Santander Consumer International Puerto Rico, LLC (SCI), opened deposit accounts with Banco Santander Puerto Rico, an affiliated entity. As of March 31, 2019 and December 31, 2018, SCI had cash of $6,655 and $8,862, respectively, on deposit with Banco Santander Puerto Rico. The Company has certain deposit and checking accounts with SBNA, an affiliated entity. As of March 31, 2019 and December 31, 2018, the Company had a balance of $31,545 and $92,774, respectively, in these accounts. Beginning in 2017, the Company and SBNA entered into a Credit Card Agreement (Card Agreement) whereby SBNA will provide credit card services for travel and related business expenses and for vendor payments. This service is at zero cost but generates rebates based on purchases made. As of March 31, 2019, the activities associated with the program were insignificant. Effective 2017, the Company contracted Aquanima, a Santander affiliate, to provide procurement services. Expenses incurred and paid for totaled $379 and $379 for the three months ended March 31, 2019 and 2018. Santander Global Tech, (formerly known as Produban Servicios Informaticos Generales S.L.), a Santander affiliate, is under contract with the Company to provide professional services, telecommunications, and internal and/or external applications. Expenses incurred, which are included as a component of other operating costs in the accompanying consolidated statements of income, totaled $195 and zero for the three months ended March 31, 2019 and 2018, respectively. The Company partners with SHUSA to place Cyber Liability Insurance in which participating national entities share $150 million aggregate limits. The Company repays SHUSA for the Company’s equitably allocated portion of insurance premiums and fees. Expenses incurred totaled $108 and $92 for the three months ended March 31, 2019 and 2018, respectively. In addition the Company partners with SHUSA for various other insurance products. Expenses incurred totaled $195 and $163 for the three months ended March 31, 2019 and 2018. |
Computation of Basic and Diluted Earnings per Common Share |
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Computation of Basic and Diluted Earnings per Common Share | Computation of Basic and Diluted Earnings per Common Share Earnings per common share (EPS) is computed using the two-class method required for participating securities. Restricted stock awards are considered to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of a declaration of a dividend on the Company’s common shares. The calculation of diluted EPS excludes 168,728 and 284,951 employee stock options and zero RSUs for the three months ended March 31, 2019 and 2018, respectively, as the effect of exercise or settlement of those securities would be anti-dilutive. The following table represents EPS numbers for the three months ended March 31, 2019 and 2018:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value measurement requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs and also establishes a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities that can be accessed as of the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 inputs are those that are unobservable for the asset or liability and are used to measure fair value to the extent relevant observable inputs are not available. Financial Instruments Disclosed, But Not Carried, At Fair Value The following tables present the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at March 31, 2019 and December 31, 2018, and the level within the fair value hierarchy:
Financial Instruments Measured At Fair Value On A Recurring Basis The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018, and the level within the fair value hierarchy:
The following table presents the changes in retail installment contracts held for investment balances classified as Level 3 balances for the three months ended March 31, 2019 and 2018:
The Company did not have any transfers between Levels 1 and 2 during the three months ended March 31, 2019 and 2018. There were no amounts transferred into or out of Level 3 during the three months ended March 31, 2019 and 2018. Financial Instruments Measured At Fair Value On A Nonrecurring Basis The following table presents the Company’s assets and liabilities that are measured at fair value on a nonrecurring basis at March 31, 2019 and December 31, 2018, and are categorized using the fair value hierarchy:
(a) The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market levels of used car prices. (b) The estimated fair value for personal loans held for sale is calculated based on the lower of market participant view and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates (principal and interest), discount rates reflective of the cost of funding, and credit loss expectations. The lower of cost or fair value adjustment for personal loans held for sale includes customer default activity and adjustments related to the net change in the portfolio balance during the reporting period. (c) For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of used car prices. Quantitative Information about Level 3 Fair Value Measurements The following table presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2019 and December 31, 2018:
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Employee Benefit Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The Company has granted stock options to certain executives, other employees, and independent directors under the Company’s 2011 Management Equity Plan (the MEP), which enabled the Company to make stock option awards up to a total of approximately 29 million common shares (net of shares canceled and forfeited). The MEP expired in January 2015 and the Company will not grant any further awards under the MEP. The Company has granted stock options, restricted stock awards and restricted stock units (RSUs) under the Omnibus Incentive Plan (the Plan), which was established in 2013 and enables the Company to grant awards of cash and of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, RSUs, and other awards that may be settled in or based upon the value of the Company’s common stock up to a total of 5,192,641 common shares. The Plan was amended and restated as of June 16, 2016. Stock options granted under the MEP and the Plan have an exercise price based on the estimated fair market value of the Company’s common stock on the grant date. The stock options expire ten years after grant date and include both time vesting options and performance vesting options. The fair value of the stock options is amortized into expense over the vesting period as time and performance vesting conditions are met. Compensation expense related to the 583,890 shares of restricted stock that the Company has issued to certain executives is recognized over a five-year vesting period, with zero and zero recorded for the three months ended March 31, 2019 and 2018, respectively. The Company recognized $5,987 and $4,208 related to stock options and restricted stock units within compensation expense for the three months ended March 31, 2019 and 2018, respectively. In addition, the Company recognizes forfeitures of awards as they occur. A summary of the Company’s stock options and related activity as of and for the three months ended March 31, 2019 is as follows:
(a) Represents stock options that were reinstated. In connection with compensation restrictions imposed on certain executive officers and other employees by the European Central Bank under the Capital Requirements Directive IV prudential rules, which require a portion of such officers’ and employees’ variable compensation to be paid in the form of equity, the Company periodically grants RSUs. Under the Plan, a portion of these RSUs vest immediately upon grant, and a portion vest annually over the following three or five years and subject to the achievement of certain performance conditions as applicable. After the shares subject to the RSUs vest and are settled, they are subject to transfer and sale restrictions for one year. In addition, the Company grants RSUs to certain officers and employees as part of variable compensation and these RSUs vest over three years. The Company also has granted certain directors RSUs that vest either upon the earlier of the first anniversary of grant date or the first stockholder meeting following the grant date. RSUs are valued based upon the fair market value on the date of the grant. A summary of the Company’s Restricted Stock Units and performance stock units and related activity as of and for the three months ended March 31, 2019 is as follows:
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Share Repurchases and Treasury Stock In July 2018, the Board approved purchases by the Company of up to $200 million, excluding commissions, of its outstanding common stock through June 2019. During the year ended December 31, 2018, the Company purchased 9,473,955 shares of its common stock under its share repurchase program at a cost of approximately $182 million, excluding commissions. In January 2019, the Company purchased the remaining $18 million in share purchases by purchasing 965,430 shares at an average price of $18.40 per share. The Company had 10,691,387 and 9,725,957 shares of treasury stock outstanding, with a cost of $205,710 and $187,930 as of March 31, 2019, and December 31, 2018, respectively. Prior to the IPO, the Company repurchased 3,154 shares as a result of an employee leaving the Company. No shares were withheld to cover income taxes related to stock issued in connection with employee incentive compensation plans for the three months ended March 31, 2019. The value of the treasury stock is included within the additional paid-in-capital. Accumulated Other Comprehensive Income (Loss) A summary of changes in accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2019 and 2018 is as follows:
Amounts (gross) reclassified out of accumulated other comprehensive income (loss) during the three months ended March 31, 2019 and 2018 consist of the following:
Dividends The Company paid a cash dividend of $0.20 per share in February 2019 and has declared a cash dividend of $0.20 per share, to be paid on May 20, 2019, to shareholders of record as of the close of business on May 10, 2019. |
Investment Losses, Net |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Losses, Net | Investment Losses, Net When the Company sells retail installment contracts acquired individually, personal loans or leases to unrelated third parties or to VIEs and determines that such sale meets the applicable criteria for sale accounting, the Company recognizes a gain or loss for the difference between the cash proceeds and carrying value of the assets sold. The gain or loss is recorded in investment gains (losses), net. Lower of cost or market adjustments on the recorded investment of finance receivables held for sale are also recorded in investment gains (losses), net. Investment gains (losses), net was comprised of the following for the three months ended March 31, 2019 and 2018:
The lower of cost or market adjustments for the three months ended March 31, 2019 and 2018 included $109,154 and $105,774 in customer default activity, respectively, and net favorable adjustments of $41,463 and $35,275, respectively, primarily related to net changes in the unpaid principal balance on the personal lending portfolio, most of which has been classified as held for sale. |
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including certain Trusts, which are considered VIEs. The Company also consolidates other VIEs for which it was deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements as of March 31, 2019 and December 31, 2018, and for the three months ended March 31, 2019 and 2018, have been prepared in accordance with 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 U.S. GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of 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 2018 Annual Report on Form 10-K. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that 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 credit loss allowance, discount accretion, impairment, fair value, 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. |
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Business Segment Information | 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 recreational vehicles, and marine vehicles. It also includes the Company’s personal loan and point-of-sale financing operations. |
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Recently Adopted Accounting Standards and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Standards Since January 1, 2019, the Company adopted the following FASB ASUs:
For all our operating leases (primarily our office space/facility leases), where the Company is a lessee, adoption of the new standard resulted in recognizing on our balance sheet, a right-of-use (“ROU”) asset of $67,300, a reduction of accounts payable and accrued expenses of $24,100 relating to straight-line rent accruals and unamortized tenant improvement allowances, and a lease liability of $91,400. The right-of-use-asset and lease liability will be derecognized in a manner that effectively yields a straight-line lease expense over the lease term. In addition, the Company will no longer capitalize certain initial direct costs in connection with lease originations where it is the lessor. Further, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We elected not to (a) use the hindsight practical expedient to determine the lease term for existing leases; and (b) recognize a lease liability and associated ROU asset for short term leases if such lease meet the definition under ASC 842. We chose not to elect the practical expedient to not separate non-lease components from lease components. The standard did not have a material impact on our condensed consolidated statement of income or condensed consolidated statement of cash flows.
The adoption of the following ASUs did not have a material impact on the Company’s business, financial position or results of operations.
Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses, which changes the criteria under which credit losses are measured. The amendment introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to establish credit loss estimates. The guidance will be effective for the fiscal year beginning after December 15, 2019, including interim periods within that year. The Company does not intend to adopt the new standard early and is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows; however, it is expected that the new CECL model will alter the assumptions used in calculating the Company’s credit losses, given the change to estimated losses for the estimated life of the financial asset, and will likely result in a material increase in the Company’s credit and capital reserves and related decrease in capital ratios. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. In addition to those described in detail above, the Company is also in the process of evaluating the following ASUs and does not expect them to have a material impact on the Company’s business, financial position, results of operations or disclosures:
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Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Corrections to Previously Reported Amounts | The following tables summarize the impacts of the corrections on the condensed consolidated financial statements of income and comprehensive income:
The following tables summarize the impacts of the corrections on the condensed consolidated statement of cash flows:
In addition to the revision of the Company’s condensed consolidated financial statements, information within the footnotes to the condensed consolidated financial statements has been revised to reflect the correction of the errors discussed above. The following table summarizes the impacts of the corrections of those items, including table disclosures in Note 4-“Credit Loss Allowance and Credit Quality”:
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Finance Receivables (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financing Receivables Held for Investment | Purchased receivables portfolios, which were acquired with deteriorated credit quality, is comprised of the following at March 31, 2019 and December 31, 2018:
Finance receivables held for investment, net is comprised of the following at March 31, 2019 and December 31, 2018:
(a) The Company has elected the fair value option for certain retail installment contracts reported in finance receivables held for investment, net. As of March 31, 2019 and December 31, 2018, $11,195 and $13,509 of loans were recorded at fair value (Note 13). The Company’s held for investment portfolio of retail installment contracts acquired individually, receivables from dealers, and personal loans is comprised of the following at March 31, 2019 and December 31, 2018:
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Changes in Accretable Yield on Purchased Receivables Portfolios | Changes in accretable yield on the Company’s purchased receivables portfolios-credit impaired for the periods indicated were as follows:
(a) Reclassifications from (to) nonaccretable difference represents the increases (decreases) in accretable yield resulting from higher (lower) estimated undiscounted cash flows. |
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Schedule of Carrying Values of Finance Receivables Held for Sale | The carrying value of the Company’s finance receivables held for sale, net is comprised of the following at March 31, 2019 and December 31, 2018:
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Schedule of Sales of Retail Installment Contracts and Charged-off Assets | Sales of retail installment contracts and proceeds from sales of charged-off assets for the three months ended March 31, 2019 and 2018 were as follows:
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Leases (SC as Lessor) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Leased Vehicles, Net | Leased vehicles, net, which is comprised of leases originated under the Chrysler Agreement, consisted of the following as of March 31, 2019 and December 31, 2018:
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Summary of Maturity of Operating Lease Payments to be Received | The following summarizes the maturity analysis of lease payments due to the Company as lessor under operating leases as of March 31, 2019:
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Schedule of Finance Lease Receivables, Net | Finance lease receivables, net consisted of the following as of March 31, 2019 and December 31, 2018:
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Summary of Maturity of Finance Lease Payments to be Received | The following summarizes the maturity analysis of lease payments due to the Company as lessor under finance leases as of March 31, 2019:
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Credit Loss Allowance and Credit Quality (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Loan Loss Allowance | The activity in the credit loss allowance for individually acquired retail installment contracts and Dealer Loans for the three months ended March 31, 2019 and 2018 was as follows:
(a) For the three months ended March 31, 2019, charge-offs for retail installment contracts acquired individually includes approximately $4 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional credit loss allowance on these loans.
(a) For the three months ended March 31, 2018, charge-offs for retail installment contracts acquired individually includes approximately $7 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional credit loss allowance on these loans. The activity in the lease loss allowance for finance leases for the three months ended March 31, 2019 and 2018 was as follows:
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Summary of Delinquencies | A summary of delinquencies as of March 31, 2019 and December 31, 2018 is as follows:
(a) Interest is generally accrued until 60 days past due in accordance with the Company’s accounting policy for retail installment contracts. |
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Summary of Financing Receivables on Nonaccrual Status | The retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of March 31, 2019 and December 31, 2018:
(a) Percent of unpaid principal balance of total retail installment contracts individually held for investment. |
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Summary of Credit Risk Profile | A summary of the credit risk profile of the Company’s retail installment contracts held for investment by FICO® distribution, determined at origination, as of March 31, 2019 and December 31, 2018 was as follows:
(a)No FICO score is obtained on loans to commercial borrowers. (b)Percentages are based on unpaid principal balance. |
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Summary of TDRs | The table below presents the Company’s TDRs as of March 31, 2019 and December 31, 2018:
(a) As of March 31, 2019, the outstanding recorded investment excludes $91.0 million of collateral-dependent bankruptcy TDRs that have been written down by $38.3 million to fair value less cost to sell. As of December 31, 2018, the outstanding recorded investment excludes $90.1 million of collateral-dependent bankruptcy TDRs that have been written down by $36.4 million to fair value less cost to sell. |
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Summary of Delinquent TDRs | A summary of the Company’s delinquent TDRs at March 31, 2019 and December 31, 2018, is as follows:
(a) The balances in the above table reflects total unpaid principal balance rather than net recorded investment before allowance. |
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Average Recorded Investment and Income Recognized on TDR Loans | Average recorded investment and interest income recognized on TDR loans are as follows:
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Summary of Financial Effects of TDRs | The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs (including collateral-dependent bankruptcy TDRs) that occurred for the three months ended March 31, 2019 and 2018:
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Summary of Loan Restructuring Accounted for as TDRs | Loan restructurings accounted for as TDRs within the previous twelve months that subsequently defaulted during the three months ended March 31, 2019 and 2018 are summarized in the following table:
(a) For TDR modifications and TDR modifications that subsequently defaults, the allowance methodology remains unchanged; however, the transition rates of the TDR loans are adjusted to reflect the respective risks. |
Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Credit Facilities | The following table presents information regarding credit facilities as of March 31, 2019 and December 31, 2018:
(a) One-half of the outstanding balance on this facility matures in May 2019 and remaining balance matures in March 2020. (b) This line is held exclusively for financing of Chrysler Capital leases. (c) The repurchase facilities are collateralized by securitization notes payable retained by the Company. As the borrower, we are exposed to liquidity risk due to changes in the market value of the retained securities pledged. In some instances, we place or receive cash collateral with counterparties under collateral arrangements associated with our repurchase agreements.
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Summary of Secured Structured Financings | The following table presents information regarding secured structured financings as of March 31, 2019 and December 31, 2018:
(a)Securitizations executed under Rule 144A of the Securities Act are included within this balance. (b)Secured structured financings may be collateralized by the Company’s collateral overages of other issuances. (c)All privately issued amortizing notes issued in 2014 were paid in full. (d)Excludes securitizations which no longer has outstanding debt and excludes any incremental borrowings.
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Variable Interest Entities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Flows Received from Consolidated Securitization Trusts | A summary of the cash flows received from consolidated securitization trusts during the three months ended March 31, 2019 and 2018, is as follows:
A summary of the cash flows received from off-balance sheet securitization trusts for the three months ended March 31, 2019 and 2018 is as follows:
(a) Represents the unpaid principal balance at the time of original securitization. |
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Off-balance Sheet Variable Interest Entities Portfolio | As of March 31, 2019 and December 31, 2018, the Company was servicing $3,631,317 and $4,072,843, respectively, of gross retail installment contracts that have been sold in off-balance sheet securitizations and were subject to an optional clean-up call. The portfolio was comprised as follows:
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Derivative Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Underlying Notional Amounts and Aggregate Fair Values | The underlying notional amounts and aggregate fair values of these derivatives financial instruments at March 31, 2019 and December 31, 2018, are as follows:
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Schedule of Offsetting Financial Assets |
(a) Cash collateral received is reported in Other liabilities or Due to affiliate, as applicable, in the consolidated balance sheet. (b) Includes derivative instruments originally transacted with Santander and affiliates and subsequently amended to reflect clearing with central clearing counterparties. (c) These amounts represent financial instruments that are pledged to the Company for interest rate swaps, caps and back to back instruments. These amounts are not reflected in the accompanying consolidated balance sheet since the Company does not control or have the ability of rehypothecation of these instruments.
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Schedule of Offsetting Financial Liabilities |
(a) Cash collateral pledged and financial instruments pledged is reported in Other assets, Restricted cash and cash equivalents, or Due from affiliate, as applicable, in the consolidated balance sheet. In certain instances, the Company is over-collateralized since the actual amount of cash pledged as collateral exceeds the associated financial liability. As a result, the actual amount of cash collateral pledged that is reported in Other assets, Restricted cash and cash equivalents, or Due from affiliates may be greater than the amount shown in the table above. |
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Gross Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) | The impacts on the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2019 and 2018 were as follows:
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Gross Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) | The impacts on the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2019 and 2018 were as follows:
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Other Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets, Leases And Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets were comprised as follows:
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Supplemental Information Related to Operating Leases | Supplemental information relating to these operating leases is as follows:
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Schedule of Maturity of Lease Liabilities | The maturity of lease liabilities at March 31, 2019 are as follows:
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Schedule of Debt Securities, AFS | The following tables present the amortized cost, gross unrealized gains and losses and approximate fair values of debt securities AFS as of March 31, 2019:
Contractual Maturities The contractual maturities of available-for-sale debt instruments are summarized in the following table.
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Liabilities for Commitments and Contingencies | The following table summarizes liabilities recorded for commitments and contingencies as of March 31, 2019 and December 31, 2018, all of which are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets:
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Related-Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Other information related to the above transactions with SBNA as of March 31, 2019 and December 31, 2018 is as follows:
(a) As of March 31, 2019 and December 31, 2018, the Company had origination and renewal fees receivable from SBNA of $416 and $385, respectively. (b) As of March 31, 2019 and December 31, 2018, the Company had $6 and $19, respectively, of servicing fees payable to SBNA, respectively. Other information on the serviced auto loan and retail installment contract portfolios for SBNA as of March 31, 2019 and December 31, 2018 is as follows:
Other information relating to SPAIN securitization platform for the three months ended March 31, 2019 and March 31, 2018 is as follows:
Interest expense, including unused fees, for affiliate lines/letters of credit for the three months ended March 31, 2019 and 2018, was as follows:
(a) Through its New York branch, Santander provided the Company with revolving credit facilities. During the year ended December 31, 2018 these facilities were terminated. Accrued interest for affiliate lines/letters of credit at March 31, 2019 and December 31, 2018, was as follows:
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Computation of Basic and Diluted Earnings per Common Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Computation of Basic and Diluted Earnings per Common Share | The following table represents EPS numbers for the three months ended March 31, 2019 and 2018:
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value Estimates, Methods and Assumptions | The following tables present the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at March 31, 2019 and December 31, 2018, and the level within the fair value hierarchy:
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Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018, and the level within the fair value hierarchy:
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Changes in Level 3 Balances, Assets | The following table presents the changes in retail installment contracts held for investment balances classified as Level 3 balances for the three months ended March 31, 2019 and 2018:
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Assets and Liabilities Measured at Fair Value on Nonrecurring Basis | The following table presents the Company’s assets and liabilities that are measured at fair value on a nonrecurring basis at March 31, 2019 and December 31, 2018, and are categorized using the fair value hierarchy:
(a) The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market levels of used car prices. (b) The estimated fair value for personal loans held for sale is calculated based on the lower of market participant view and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates (principal and interest), discount rates reflective of the cost of funding, and credit loss expectations. The lower of cost or fair value adjustment for personal loans held for sale includes customer default activity and adjustments related to the net change in the portfolio balance during the reporting period. (c) For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of used car prices. |
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Quantitative Information About Significant Unobservable Inputs for Liabilities Measured at Fair Value | The following table presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2019 and December 31, 2018:
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Employee Benefit Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Options and Related Activity | A summary of the Company’s stock options and related activity as of and for the three months ended March 31, 2019 is as follows:
(a) Represents stock options that were reinstated. |
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Schedule of Nonvested Restricted Stock Units and Performance Stock Units Activity | A summary of the Company’s Restricted Stock Units and performance stock units and related activity as of and for the three months ended March 31, 2019 is as follows:
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Shareholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax | A summary of changes in accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2019 and 2018 is as follows:
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Reclassification of Amounts Out of Accumulated Other Comprehensive Income (Loss) | Amounts (gross) reclassified out of accumulated other comprehensive income (loss) during the three months ended March 31, 2019 and 2018 consist of the following:
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Investment Losses, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment Gains (Losses), Net | Investment gains (losses), net was comprised of the following for the three months ended March 31, 2019 and 2018:
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Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices - Additional Information (Details) |
3 Months Ended |
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Mar. 31, 2019
segment
| |
Basis Of Presentation And Significant Accounting Policies [Line Items] | |
Number of reportable segments | 1 |
SHUSA | |
Basis Of Presentation And Significant Accounting Policies [Line Items] | |
Ownership percentage held in the Company | 69.80% |
Public Shareholders | |
Basis Of Presentation And Significant Accounting Policies [Line Items] | |
Ownership percentage held in the Company | 30.20% |
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices - Impact of Error Correction on Cash Flows Statement (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net cash provided by operating activities | $ 1,476,283 | $ 1,884,352 |
Net cash used in investing activities | $ (1,906,965) | (1,577,174) |
Reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net cash provided by operating activities | 1,835,235 | |
Net cash used in investing activities | (1,528,057) | |
Correction on Reporting of Required Minimum Payment Threshold and Treatment in Nonaccrual Designation and Cost Recovery Basis of Loans | Corrections | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net cash provided by operating activities | 49,117 | |
Net cash used in investing activities | $ (49,117) |
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices - Recently Adopted Accounting Standards (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | $ 64,822 | $ 0 |
Accounts payable and accrued expenses | (399,792) | $ (422,951) |
Lease liability | 88,206 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | 67,300 | |
Accounts payable and accrued expenses | 24,100 | |
Lease liability | $ 91,400 |
Finance Receivables - Held for Investment (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Purchased receivables-Credit Impaired | $ 17,903 | $ 19,235 |
Finance lease receivables (Note 3) | 17,311 | 16,137 |
Finance receivables held for investment, net | 25,598,716 | 25,117,454 |
Recurring | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Retail installment contracts acquired individually | 11,195 | 13,509 |
Retail Installment Contracts Acquired Individually | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Retail installment contracts acquired individually | 25,548,985 | 25,065,511 |
Receivables from Dealers | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables from dealers and personal loans | 13,032 | 14,557 |
Personal Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables from dealers and personal loans | $ 1,485 | $ 2,014 |
Finance Receivables - Purchased Receivables - Credit Impaired (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Receivables [Abstract] | ||
Outstanding balance | $ 28,153 | $ 30,631 |
Outstanding recorded investment, net of impairment | $ 18,030 | $ 19,390 |
Finance Receivables - Changes in Accretable Yield on Purchased Receivables Portfolios Credit Impaired (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
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Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Balance — beginning of period | $ 18,145 | $ 19,464 |
Accretion of accretable yield | (1,413) | (2,840) |
Reclassifications from (to) nonaccretable difference | 1,160 | 1,822 |
Balance — end of period | $ 17,892 | $ 18,446 |
Finance Receivables - Schedule of Carrying Values of Finance Receivables Held for Sale (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Personal loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Finance receivables held for sale, net | $ 974,017 | $ 1,068,757 |
Finance Receivables - Schedule of Sales of Retail Installment Contracts and Charged-off Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Receivables [Abstract] | ||
Sale of retail installment contracts to affiliates | $ 0 | $ 1,475,253 |
Proceeds from sales of charged-off assets to third parties | $ 20,225 | $ 18,237 |
Leases (SC as Lessor) - Summary of Leased Vehicles (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Leases [Abstract] | ||
Leased vehicles | $ 19,136,180 | $ 18,737,338 |
Less: accumulated depreciation | (3,529,738) | (3,518,025) |
Depreciated net capitalized cost | 15,606,442 | 15,219,313 |
Manufacturer subvention payments, net of accretion | (1,287,017) | (1,307,424) |
Origination fees and other costs | 69,232 | 66,966 |
Net book value | $ 14,388,657 | $ 13,978,855 |
Leases (SC as Lessor) - Future Minimum Rental Payments Due to Lessor under Operating Leases (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of 2019 | $ 1,848,447 |
2020 | 1,894,782 |
2021 | 838,398 |
2022 | 68,060 |
2023 | 535 |
Thereafter | 0 |
Total | $ 4,650,222 |
Leases (SC as Lessor) - Summary of Finance Lease Receivables (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Leases [Abstract] | ||
Gross investment in capital leases | $ 25,524 | $ 23,809 |
Origination fees and other | 150 | 152 |
Less: unearned income | (4,855) | (4,465) |
Net investment in finance leases before allowance | 20,819 | 19,496 |
Less: allowance for lease losses | (3,508) | (3,359) |
Net investment in finance leases | $ 17,311 | $ 16,137 |
Leases (SC as Lessor) - Future Minimum Rental Receivable under Finance Leases (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of 2019 | $ 5,734 |
2020 | 7,087 |
2021 | 5,954 |
2022 | 4,354 |
2023 | 2,282 |
Thereafter | 113 |
Total | $ 25,524 |
Credit Loss Allowance and Credit Quality - Delinquencies, Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
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Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivable, nonperforming loans, period for classification | 60 days | |
Loan origination, required minimum payment, percentage of scheduled payment | 90.00% | |
Receivables from dealers | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivable, nonperforming loans, period for classification | 90 days | |
Financing receivable, recorded investment, past due | $ 0 | $ 0 |
Personal loans | Consumer Portfolio Segment | Unfunded Loan Commitment | Unpaid Principal Balance | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Financing receivable, recorded investment, 90 days past due and still accruing | $ 112,317,000 | $ 129,227,000 |
Credit Loss Allowance and Credit Quality - Retail Installment Contracts Held for Investment on Nonaccrual Status (Details) - Retail Installment Contracts Acquired Individually, Held for Investment - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Financing Receivable, Modifications [Line Items] | ||
Total nonaccrual principal | $ 1,261,284 | $ 1,568,139 |
Percent | 4.40% | 5.50% |
Non-TDR | ||
Financing Receivable, Modifications [Line Items] | ||
Total nonaccrual principal | $ 724,025 | $ 834,921 |
Percent | 2.50% | 2.90% |
TDR | ||
Financing Receivable, Modifications [Line Items] | ||
Total nonaccrual principal | $ 537,259 | $ 733,218 |
Percent | 1.90% | 2.60% |
Credit Loss Allowance and Credit Quality - Troubled Debt Restructurings, Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Retail Installment Contracts Acquired Individually | ||
Financing Receivable, Modifications [Line Items] | ||
TDRs, deferral period (or more) | 90 days | |
Receivables From Dealers | ||
Financing Receivable, Modifications [Line Items] | ||
Total TDR principal | $ 0 | $ 0 |
Credit Loss Allowance and Credit Quality - Summary of TDRs (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
|
Financing Receivable, Modifications [Line Items] | |||
Impairment | $ (1,716,132) | ||
Retail Installment Contracts | |||
Financing Receivable, Modifications [Line Items] | |||
Outstanding recorded investment | $ 4,891,375 | $ 5,365,477 | |
Impairment | (1,280,649) | (1,416,743) | |
Outstanding recorded investment, net of impairment | 3,610,726 | 3,948,734 | |
Retail Installment Contracts | Collateral Dependent | |||
Financing Receivable, Modifications [Line Items] | |||
Outstanding recorded investment | 91,000 | 90,100 | |
TDR write down | $ 38,300 | $ 36,400 |
Credit Loss Allowance and Credit Quality - Delinquent TDRs (Details) - Retail Installment Contracts - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Troubled Debt Restructuring Debtor Current Period [Line Items] | ||
Principal, 30-59 days past due | $ 978,359 | $ 1,265,946 |
Delinquent principal over 59 days | 549,692 | 810,589 |
Total delinquent TDR principal | $ 1,528,051 | $ 2,076,535 |
Credit Loss Allowance and Credit Quality - Average Recorded Investment and Income Recognized on TDR Loans (Details) - Retail Installment Contracts - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Financing Receivable, Modifications [Line Items] | ||
Average outstanding recorded investment in TDRs | $ 5,181,657 | $ 6,194,844 |
Interest income recognized | $ 235,688 | $ 293,787 |
Credit Loss Allowance and Credit Quality - Financial Effects of TDRs (Details) - Retail Installment Contracts $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
contract
|
Mar. 31, 2018
USD ($)
contract
|
|
Financing Receivable, Modifications [Line Items] | ||
Outstanding recorded investment before TDR | $ 332,010 | $ 584,448 |
Outstanding recorded investment after TDR | $ 332,630 | $ 582,664 |
Number of contracts | contract | 19,873 | 34,374 |
Credit Loss Allowance and Credit Quality - Defaults in Loan Modifications Accounted for as TDRs (Details) - Retail Installment Contracts $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
contract
|
Mar. 31, 2018
USD ($)
contract
|
|
Financing Receivable, Modifications [Line Items] | ||
Recorded investment in TDRs that subsequently defaulted | $ | $ 126,238 | $ 195,265 |
Number of contracts | contract | 7,572 | 11,540 |
Debt - Facilities with Santander and Related Subsidiaries (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Line of credit | $ 5,063,786,000 | $ 4,478,214,000 |
Revolving credit facilities | ||
Line of Credit Facility [Line Items] | ||
Line of credit | 8,563,786,000 | 7,978,214,000 |
Committed amount | 17,336,917,000 | $ 17,348,945,000 |
Unsecured debt | Total facilities with Santander and related subsidiaries | ||
Line of Credit Facility [Line Items] | ||
Line of credit | 3,500,000,000 | |
Secured debt | Revolving credit facilities | Total facilities with Santander and related subsidiaries | ||
Line of Credit Facility [Line Items] | ||
Committed amount | $ 3,500,000,000 |
Debt - Secured Structured Financings, Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Debt Disclosure [Abstract] | |||
Private issuance notes secured with vehicle lease | $ 8,035,481 | $ 7,847,071 | |
Amortized debt issuance costs | 8,461 | $ 7,920 | |
Interest expense on secured structured financing | $ 231,291 | $ 150,675 |
Variable Interest Entities - Additional Information (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items] | |||
Sale of receivables securitized | $ 0 | ||
Gross retail installment contracts transferred and serviced | 28,058,972,000 | $ 27,193,924,000 | |
VIE, Not Primary Beneficiary | |||
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items] | |||
Gross retail installment contracts transferred and serviced | 3,631,317,000 | $ 4,072,843,000 | |
Maximum exposure to loss, involvement with the VIE | $ 0 | ||
Affiliates | Santander | |||
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items] | |||
Sale of receivables securitized | $ 1,475,253,000 | ||
Loss on retail installment contracts | $ 16,903,000 |
Variable Interest Entities - Summary of Cash Flows Received from Securitization Trusts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Variable Interest Entity [Line Items] | ||
Assets securitized | $ 4,928,462 | $ 7,240,944 |
Net proceeds from new securitizations | 3,962,618 | 3,476,322 |
Net proceeds from retained bonds | 17,306 | 211,610 |
Cash received for servicing fees | 208,325 | 215,790 |
Net distributions from Trusts | 592,769 | 545,152 |
Total cash received from Trusts | 4,781,018 | 4,448,874 |
VIE, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Assets securitized | 0 | 1,475,253 |
Net proceeds from new securitizations | 0 | 1,474,820 |
Cash received for servicing fees | 10,251 | 8,078 |
Total cash received from Trusts | $ 10,251 | $ 1,482,898 |
Variable Interest Entities - Off-balance Sheet Variable Interest Entities Portfolio (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Total serviced | $ 28,058,972 | $ 27,193,924 |
VIE, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Total serviced | 3,631,317 | 4,072,843 |
VIE, Not Primary Beneficiary | Chrysler Capital securitizations | ||
Variable Interest Entity [Line Items] | ||
Total serviced | 520,842 | 611,050 |
VIE, Not Primary Beneficiary | Third parties | ||
Variable Interest Entity [Line Items] | ||
Total serviced | 520,842 | 611,050 |
VIE, Not Primary Beneficiary | Santander | ||
Variable Interest Entity [Line Items] | ||
Total serviced | $ 3,110,475 | $ 3,461,793 |
Derivative Financial Instruments - Additional Information (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Estimated unrealized gains to be reclassified from AOCI to interest expense in next 12 months | $ 23,659,000 | |
Warrant | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Estimated fair value of warrant | $ 0 | $ 0 |
Derivative Financial Instruments - Summary of Underlying Notional Amounts and Aggregate Fair Values (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Asset | $ 171,480 | $ 183,897 |
Liability | (158,828) | (137,985) |
Interest rate swaps | Not Designated As Hedges | ||
Derivative [Line Items] | ||
Notional | 2,110,000 | 2,270,200 |
Fair Value | 1,329 | 9,423 |
Asset | 6,409 | 11,553 |
Liability | (5,080) | (2,130) |
Interest rate swaps | Cash Flow Hedging | Designated as Hedges | ||
Derivative [Line Items] | ||
Notional | 4,150,000 | 3,933,500 |
Fair Value | 11,323 | 36,489 |
Asset | 28,601 | 43,967 |
Liability | (17,278) | (7,478) |
Interest rate cap agreements | ||
Derivative [Line Items] | ||
Notional | 9,679,846 | 7,741,765 |
Fair Value | 136,470 | 128,377 |
Asset | 136,470 | 128,377 |
Liability | 0 | 0 |
Options for interest rate cap agreements | ||
Derivative [Line Items] | ||
Notional | 9,679,846 | 7,741,765 |
Fair Value | (136,470) | (128,377) |
Asset | 0 | 0 |
Liability | $ (136,470) | $ (128,377) |
Derivative Financial Instruments - Gross Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Designated as Hedges | Interest Rate Swaps | Cash Flow Hedging | ||
Derivative Instruments Gain Loss [Line Items] | ||
Recognized in Earnings | $ 0 | $ 0 |
Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss) | (14,793) | 26,429 |
Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive Income to Interest Expense | 13,040 | 4,578 |
Not Designated As Hedges | Interest Expense | ||
Derivative Instruments Gain Loss [Line Items] | ||
Recognized in Earnings | $ 5,401 | $ (9,717) |
Other Assets - Summary (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
May 31, 2013 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Other Assets, Leases And Investments [Abstract] | |||
Vehicles | $ 353,123 | $ 342,097 | |
Manufacturer subvention payments receivable | 100,099 | 106,313 | |
Upfront fee | 61,250 | 65,000 | |
Derivative assets at fair value | 171,480 | 183,897 | |
Derivative-third party collateral | 177,152 | 150,783 | |
Operating leases (Right-of-use-assets) | 64,822 | 0 | |
Available-for-sale debt securities | 42,733 | 0 | |
Prepaids | 26,696 | 29,080 | |
Accounts receivable | 34,217 | 28,511 | |
Other | 23,047 | 57,666 | |
Other assets | $ 1,054,619 | $ 963,347 | |
Upfront fee | $ 150,000 | ||
Finance and other interest income amortization period | 10 years |
Other Assets - Operating Leases, Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Lessee, Lease, Description [Line Items] | ||
Lease expense | $ 3,466 | $ 2,559 |
Minimum lease payments on leases signed but not yet commenced | 1,300 | |
Operating cash flows from operating leases | $ 4,176 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease renewal term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease renewal term | 15 years |
Other Assets - Supplemental Information Related to Operating Leases (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Assets, Leases And Investments [Abstract] | ||
Operating leases-right of use assets | $ 64,822 | $ 0 |
Other liabilities | $ 88,206 | |
Weighted average lease term | 6 years 9 months 18 days | |
Weighted average discount rate | 3.40% |
Other Assets - Maturity of Operating Lease Liabilities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Other Assets, Leases And Investments [Abstract] | |
2019 | $ 12,470 |
2020 | 16,465 |
2021 | 12,940 |
2022 | 12,283 |
2023 | 12,393 |
Thereafter | 32,270 |
Total | 98,821 |
Less: Interest | (10,615) |
Present value of lease liabilities | $ 88,206 |
Other Assets - Amortized Cost, Gross Unrealized Gains and Losses and Fair Values of AFS Debt Securities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Assets, Leases And Investments [Abstract] | ||
Amortized cost | $ 42,122 | |
Gross Unrealized gain | 611 | |
Gross Unrealized loss | 0 | |
Fair value | $ 42,733 | $ 0 |
Other Assets - Contractual Maturities of AFS Debt Securities (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Amortized cost | |
Due within one year | $ 5,812 |
Due after one year but within 5 years | 36,310 |
Total | 42,122 |
Fair value | |
Due within one year | 5,997 |
Due after one year but within 5 years | 36,736 |
Total | 42,733 |
Other-than-temporary Impairment | $ 0 |
Income Taxes (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense | $ 89,764,000 | $ 58,052,000 | |
Effective tax rate | 26.60% | 19.20% | |
Earnings that are considered indefinitely reinvested | $ 0 | $ 0 | |
Operating Loss Carryforwards [Line Items] | |||
Related party taxes receivable | 2,594,000 | 734,000 | |
Tax Sharing Agreement | |||
Operating Loss Carryforwards [Line Items] | |||
Related party taxes receivable | $ 2,594,000 | $ 734,000 |
Commitments and Contingencies - Liabilities for Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Consumer arrangements | ||
Loss Contingencies [Line Items] | ||
Contingencies | $ 2,999 | $ 2,138 |
Legal and regulatory proceedings | ||
Loss Contingencies [Line Items] | ||
Contingencies | 106,900 | 97,700 |
Revenue-sharing and gain-sharing payments | Chrysler | ||
Loss Contingencies [Line Items] | ||
Commitments | 13,254 | 7,001 |
Servicer performance fee | Bank of America | ||
Loss Contingencies [Line Items] | ||
Commitments | 5,980 | 6,353 |
Loss-sharing payments | CBP | ||
Loss Contingencies [Line Items] | ||
Commitments | $ 3,340 | $ 3,708 |
Commitments and Contingencies - Chrysler Agreement (Details) - Chrysler - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Other Commitments [Line Items] | ||
Funding available for FCA retail financing | $ 4,500,000,000 | |
Meeting specified escalating penetration rates, period | 5 years | |
Minimum | ||
Other Commitments [Line Items] | ||
Funding available for dealer inventory financing | $ 5,000,000,000.0 | |
Revenue-sharing and gain-sharing payments | ||
Other Commitments [Line Items] | ||
Amount accrued for the payments | $ 13,254,000 | $ 7,001,000 |
Commitments and Contingencies - Agreement with Bank of America (Details) - Bank of America - USD ($) |
Jan. 31, 2017 |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Other Commitments [Line Items] | |||
Commitment to sell loans | $ 300,000,000 | ||
Servicer performance payments due, period | 6 years | ||
Servicer performance fee | |||
Other Commitments [Line Items] | |||
Commitments | $ 5,980,000 | $ 6,353,000 |
Commitments and Contingencies - Agreement with CBP (Details) - CBP - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Other Commitments [Line Items] | ||
Loans servicing, loss-sharing payment percentage | 0.50% | |
Loss-sharing payments | ||
Other Commitments [Line Items] | ||
Commitments | $ 3,340 | $ 3,708 |
Commitments and Contingencies - Other Contingencies (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Consumer arrangements | ||
Other Commitments [Line Items] | ||
Accrual for miscellaneous contingencies | $ 2,999 | $ 2,138 |
Related-Party Transactions - Interest Expense and Accrued Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Santander | |||
Related Party Transaction [Line Items] | |||
Interest expense for affiliate lines/letters of credit | $ 0 | $ 4,367 | |
Accrued interest for affiliate lines/letters of credit | 0 | $ 0 | |
SHUSA | |||
Related Party Transaction [Line Items] | |||
Interest expense for affiliate lines/letters of credit | 44,881 | $ 35,846 | |
Accrued interest for affiliate lines/letters of credit | $ 20,399 | $ 19,928 |
Related-Party Transactions - Credit Facilities (Details) - Santander - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2015 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | ||||
Guarantee fee, basis spread (as a percent) | 0.125% | |||
Guarantee fee expense | $ 0 | $ 2,048,000 | ||
Guarantee fee payable | $ 1,922,000 | $ 1,922,000 |
Related-Party Transactions - Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Santander and Affiliates | ||
Related Party Transaction [Line Items] | ||
Interest and mark-to-market adjustments | $ 238 | $ 229 |
Related-Party Transactions - Lease Origination and Servicing Agreement (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Related Party Transaction [Line Items] | ||
Servicing fee income | $ 23,806 | $ 26,182 |
SBNA | ||
Related Party Transaction [Line Items] | ||
Servicing fee income | $ 4 | $ 781 |
Related-Party Transactions - Retail Installment Contracts and RV Marine (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Related Party Transaction [Line Items] | ||
Servicing fee income | $ 23,806 | $ 26,182 |
SBNA | ||
Related Party Transaction [Line Items] | ||
Servicing fee income | 4 | 781 |
SBNA | Serviced Auto Loan and Retail Installment | ||
Related Party Transaction [Line Items] | ||
Servicing fee income | $ 407 | $ 1,039 |
Related-Party Transactions - Information on Serviced Auto Loan and Retail Installment Contract Portfolio (Details) - SBNA - Serviced Auto Loan and Retail Installment - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Related Party Transaction [Line Items] | ||
Total serviced portfolio | $ 355,280 | $ 383,246 |
Cash collections due to owner | 20,411 | 14,920 |
Servicing fees receivable | $ 628 | $ 601 |
Related-Party Transactions - Dealer Lending (Details) - SBNA - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | |||
Referral fee | $ 9,000,000 | ||
Referral fee, amortization period | 10 years | ||
Unamortized fee balance | $ 3,825,000 | $ 4,050,000 | |
Income related to referral fee | 225,000 | $ 225,000 | |
Dealer Loan Portfolio | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 0 | 0 | |
Loan Origination on Sales of Floorplan Inventory | |||
Related Party Transaction [Line Items] | |||
Due to related parties | $ 4,667,000 | $ 5,908,000 |
Related-Party Transactions - Information on Transactions with SBNA (Details) - SBNA - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | |||
Servicing fees payable | $ 6 | $ 19 | |
Origination and Renewal Fees | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 1,223 | $ 840 | |
Due from related parties | 416 | $ 385 | |
Servicing Fees Expenses | |||
Related Party Transaction [Line Items] | |||
Expenses from transaction with related party | $ 13 | $ 20 |
Related-Party Transactions - Origination Support Services (Details) - Affiliates - SBNA - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Purchase of Retail Installment Contracts | ||
Related Party Transaction [Line Items] | ||
Additions to servicing asset | $ 1,000,000 | |
Origination/Referral Fee | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | 6,556 | |
Servicing Fee | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | 2,881 | |
Referral and Servicing Fee | ||
Related Party Transaction [Line Items] | ||
Due from related parties | 3,226 | |
Fee for Payments Made at Retail Branch Locations | ||
Related Party Transaction [Line Items] | ||
Expenses from transaction with related party | $ 49 | $ 187 |
Related-Party Transactions - Securitizations (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Santander | |||
Related Party Transaction [Line Items] | |||
Due from related parties | $ 2,690 | $ 2,983 | |
Due to related parties | 15,769 | $ 15,968 | |
Affiliates | SIS | Fees Paid for Co-Management of Certain Securitizations | |||
Related Party Transaction [Line Items] | |||
Expenses from transaction with related party | $ 814 | $ 710 |
Related-Party Transactions - Other Information on SPAIN Securitization (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Related Party Transaction [Line Items] | ||
Servicing fee income | $ 12,995 | $ 7,811 |
Santander | ||
Related Party Transaction [Line Items] | ||
Servicing fee income | 8,431 | 4,792 |
Loss (Gain) on sale, excluding lower of cost or market adjustments (if any) | $ 0 | $ 16,903 |
Related-Party Transactions - CEO and Other Employee Compensation (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
SHUSA | Administrative Services | Affiliates | |
Related Party Transaction [Line Items] | |
Due to related parties | $ 2,000 |
Due from related parties | 575 |
Chairman and CEO | |
Related Party Transaction [Line Items] | |
Compensation expense paid | $ 1,072 |
Computation of Basic and Diluted Earnings per Common Share - Additional Information (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Awards excluded from computation of earnings per share (in shares) | 168,728 | 284,951 |
Restricted Stock Units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Awards excluded from computation of earnings per share (in shares) | 0 | 0 |
Fair Value of Financial Instruments - Change in Level 3 Balances (Details) - Retail Installment Contracts - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance — beginning of period | $ 13,509 | $ 22,124 |
Additions / issuances | 0 | 1,349 |
Net collection activities | (2,654) | (5,594) |
Gains recognized in earnings | 340 | 971 |
Balance — end of period | $ 11,195 | $ 18,850 |
Employee Benefit Plans - Schedule of Restricted Stock and Performance Stock Units (Details) - Restricted Stock and Performance Stock Units - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Shares | ||
Outstanding as of beginning of period (in shares) | 698,799 | |
Granted (in shares) | 462,680 | |
Vested (in shares) | (438,285) | |
Forfeited/canceled (in shares) | (89) | |
Unvested as of end of period (in shares) | 723,105 | 698,799 |
Weighted Average Grant Date Fair Value | ||
Outstanding as of beginning of period (in usd per share) | $ 14.53 | |
Granted (in usd per share) | 20.77 | |
Vested (in usd per share) | 17.57 | |
Forfeited/canceled (in usd per share) | 16.12 | |
Unvested as of end of period (in usd per share) | $ 16.76 | $ 14.53 |
Weighted Average Remaining Contractual Term (Years) | 1 year 6 months | 1 year 1 month 6 days |
Aggregate Intrinsic Value | ||
Outstanding as of beginning of period | $ 12,292 | |
Vested | $ 9,098 | |
Unvested as of end of period | $ 15,279 |
Shareholders' Equity - Share Repurchases and Treasury Stock (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2013 |
Jul. 31, 2018 |
|
Equity [Abstract] | |||||
Authorized repurchase amount | $ 200,000,000 | ||||
Stock repurchased (in shares) | 965,430 | 9,473,955 | |||
Value of shares repurchased | $ 18,000,000 | $ 182,000,000 | |||
Average price per share (in usd per share) | $ 18.40 | ||||
Number of shares withheld to cover income taxes related to vesting of RSUs (in shares) | 10,691,387 | 9,725,957 | |||
Treasury stock value | $ 205,710,000 | $ 187,930,000 | |||
Number of shares repurchased (in shares) | 3,154 | ||||
Number of shares withheld for income tax (in shares) | 0 |
Shareholders' Equity - Summary of Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward] | ||
Beginning balance | $ 7,018,358 | $ 6,465,702 |
Ending balance | 7,158,530 | 6,713,532 |
Accumulated Other Comprehensive Income (Loss) | ||
Increase (Decrease) in Accumulated Other Comprehensive Loss [Roll Forward] | ||
Beginning balance | 33,515 | 44,262 |
Other comprehensive income (loss) before reclassifications (gross) | (10,680) | 22,919 |
Amounts (gross) reclassified out of accumulated other comprehensive income (loss) | (9,897) | (3,970) |
Ending balance | $ 12,938 | $ 63,211 |
Shareholders' Equity - Reclassification of Amounts Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income On Derivatives [Line Items] | ||
Interest expense | $ 334,382 | $ 241,028 |
Investment gain/loss | (67,097) | (86,520) |
Tax expense (benefit) | 89,764 | 58,052 |
Net of tax | 247,503 | 244,615 |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains (Losses) on Cash Flow Hedges | ||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income On Derivatives [Line Items] | ||
Interest expense | (13,040) | (4,578) |
Investment gain/loss | 0 | 0 |
Tax expense (benefit) | 3,143 | 608 |
Net of tax | $ (9,897) | $ (3,970) |
Shareholders' Equity - Dividends (Details) - $ / shares |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
May 20, 2019 |
Feb. 28, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Dividends Payable [Line Items] | ||||
Dividend paid per common share (in usd per share) | $ 0.20 | $ 0.20 | $ 0.05 | |
Dividends declared, per share (in usd per share) | $ 0.20 | |||
Scenario, Forecast | ||||
Dividends Payable [Line Items] | ||||
Dividend paid per common share (in usd per share) | $ 0.20 |
Investment Losses, Net - Schedule of Investment Gains (Losses), Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Gain (loss) on sale of loans and leases | $ 0 | $ (16,696) |
Lower of cost or market adjustments | (67,691) | (70,499) |
Other gains, (losses and impairments), net | 594 | 675 |
Investment losses, net | $ (67,097) | $ (86,520) |
Investment Losses, Net - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Lower of cost or market adjustment, customer default activity | $ 109,154 | $ 105,774 |
Lower of cost or market adjustment | $ 41,463 | $ 35,275 |
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