Santander 2014 Q3 10-Q



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2014
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 001-36270
SANTANDER CONSUMER USA HOLDINGS INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
32-0414408
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
1601 Elm Street, Suite 800, Dallas, Texas
 
75201
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (214) 634-1110
Not Applicable
(Former name, former address, and formal fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
¨
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
ý
  
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes  ¨ No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at October 31, 2014
Common Stock ($0.01 par value)
  
348,982,438 shares





INDEX
 

 
 
 
Item 1. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2. 
Item 3. 
Item 4. 
Item 1. 
Item 1A. 
Item 2. 
Item 3.  
Item 4.  
Item 5.  
Item 6. 
 


2



Unless otherwise specified or the context otherwise requires, the use herein of the terms “ we,” “our,” “us,” “SCUSA,” and the “Company” refer to Santander Consumer USA Holdings Inc. and its consolidated subsidiaries.
Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends,” and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors, some of which are beyond our control. For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to the Risk Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2013, as supplemented by the risks discussed below in this report in Part II, Item 1A, “Risk Factors,” as well as factors more fully described in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, including the exhibits hereto, and subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. Among the factors that could cause our financial performance to differ materially from that suggested by the forward-looking statements are:

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

If one or more of the factors affecting our forward-looking information and statements proves incorrect, its actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution not to place undue reliance on any forward-looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

3



PART I: FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements
SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
 
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Cash and cash equivalents
$
43,889

 
$
10,531

Receivables held for sale
91,153

 
82,503

Retail installment contracts held for investment, net
21,319,080

 
20,219,609

Unsecured consumer loans, net
1,340,283

 
954,189

Restricted cash
1,989,434

 
1,563,613

Receivables from dealers, held for investment, net
97,178

 
94,745

Accrued interest receivable
352,473

 
319,157

Leased vehicles, net
4,414,008

 
2,023,433

Furniture and equipment, net of accumulated depreciation of $54,772 and $58,117, respectively
29,274

 
25,712

Federal, state and other income taxes receivable
119,397

 
372,338

Deferred tax asset
143,524

 
197,041

Goodwill
74,056

 
74,056

Intangible assets
53,935

 
54,664

Capital lease receivables, net
45,588

 

Other assets — $20,573 and $817 due from affiliates, respectively
528,020

 
410,305

Total assets
$
30,641,292

 
$
26,401,896

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
     Notes payable — credit facilities, $3,350,000 and $3,650,000 to affiliates, respectively
$
8,390,080

 
$
8,099,773

Notes payable — secured structured financings
18,444,397

 
15,195,887

     Accrued interest payable — $7,425 and $11,563 to affiliates, respectively
25,777

 
26,512

Accounts payable and accrued expenses — $39,529 and $39,772 to affiliates, respectively
304,578

 
283,106

Federal, state and other income taxes payable
91,460

 
7,623

Other liabilities — zero and $3,163 to affiliates, respectively
81,787

 
102,163

Total liabilities
27,338,079

 
23,715,064

Commitments and contingencies (Notes 5 and 10)

 

Equity:
 
 
 
Common stock, $0.01 par value — 1,100,000,000 shares authorized;
 
 
 
348,984,592 and 346,763,261 shares issued and 348,981,438 and 346,760,107 shares outstanding, respectively
3,490

 
3,468

Additional paid-in capital
1,551,413

 
1,409,463

Accumulated other comprehensive income (loss)
4,556

 
(2,853
)
Retained earnings
1,743,754

 
1,276,754

Total stockholders’ equity
3,303,213

 
2,686,832

Total liabilities and equity
$
30,641,292

 
$
26,401,896

See notes to unaudited condensed consolidated financial statements.

4



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) (Dollars in thousands, except per share amounts)
 
For the Three Months Ended 
 September 30,
 
For the Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Interest on finance receivables and loans
$
1,177,828

 
$
1,011,492

 
$
3,481,605

 
$
2,723,774

Leased vehicle income
263,148

 
50,099

 
629,209

 
60,129

Other finance and interest income
2,512

 
1,029

 
3,636

 
5,870

Total finance and other interest income
1,443,488

 
1,062,620

 
4,114,450

 
2,789,773

Interest expense — Including $30,877, $38,935, $101,956, and $64,479 to affiliates, respectively
129,135

 
120,589

 
381,895

 
291,062

Leased vehicle expense
200,397

 
41,485

 
499,601

 
48,513

Net finance and other interest income
1,113,956

 
900,546

 
3,232,954

 
2,450,198

Provision for credit losses
769,689

 
598,201

 
2,057,419

 
1,223,805

Net finance and other interest income after provision for credit losses
344,267

 
302,345

 
1,175,535

 
1,226,393

Profit sharing
10,556

 
27,238

 
66,773

 
34,802

Net finance and other interest income after provision for credit losses and profit sharing
333,711

 
275,107

 
1,108,762

 
1,191,591

Investment gains, net
38,015

 
7,678

 
95,431

 
8,950

Servicing fee income
20,547

 
7,384

 
53,051

 
21,010

Fees, commissions, and other
91,399

 
63,278

 
275,733

 
178,918

Total other income
149,961

 
78,340

 
424,215

 
208,878

Salary and benefits expense
88,940

 
79,293

 
384,544

 
217,172

Repossession expense
50,738

 
36,091

 
144,817

 
103,231

Other operating costs
62,228

 
60,756

 
202,219

 
175,909

Total operating expenses
201,906

 
176,140

 
731,580

 
496,312

Income before income taxes
281,766

 
177,307

 
801,397

 
904,157

Income tax expense
90,397

 
65,486

 
282,081

 
322,413

Net income
191,369

 
111,821

 
519,316

 
581,744

Noncontrolling interests

 
(576
)
 

 
1,821

Net income attributable to Santander Consumer USA Holdings Inc. shareholders
$
191,369

 
$
111,245

 
$
519,316

 
$
583,565

Net income
$
191,369

 
$
111,821

 
$
519,316

 
$
581,744

Other comprehensive income (loss):
 
 
 
 
 
 
 
Change in unrealized gains (losses) on cash flow hedges, net of tax of $5,044, $779, $4,324 and $3,723
8,685

 
986

 
7,409

 
5,821

Change in unrealized gains on investments available for sale, net of tax of zero, $368, zero and $1,993

 
(629
)
 

 
(3,252
)
Other comprehensive income, net
8,685

 
357

 
7,409

 
2,569

Comprehensive income
$
200,054

 
$
112,178

 
$
526,725

 
$
584,313

Comprehensive (income) loss attributable to noncontrolling interests

 
(624
)
 

 
953

Comprehensive income attributable to Santander Consumer USA Holdings Inc. shareholders
$
200,054

 
$
111,554

 
$
526,725

 
$
585,266

Net income per common share (basic)
$
0.55

 
$
0.32

 
$
1.49

 
$
1.69

Net income per common share (diluted)
$
0.54

 
$
0.32

 
$
1.46

 
$
1.69

Dividends declared per common share
$

 
$

 
$
0.15

 
$
0.84

Weighted average common shares (basic)
348,955,505

 
346,172,443

 
348,630,740

 
346,169,595

Weighted average common shares (diluted)
355,921,570

 
346,172,443

 
355,809,576

 
346,169,595


See notes to unaudited condensed consolidated financial statements.

5



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

 
$
3,462

 
$
1,335,572

 
$
(9,164
)
 
$
869,664

 
$
39,932

 
$
2,239,466

Repayment of employee loans

 

 
1,563

 

 

 

 
1,563

Stock issued in connection with employee incentive compensation plans
4

 

 
23

 

 

 

 
23

Purchase of treasury stock
(4
)
 

 
(23
)
 

 

 

 
(23
)
Capital contribution received from shareholder

 

 
48,275

 

 

 

 
48,275

Net income

 

 

 

 
583,565

 
(1,821
)
 
581,744

     Other comprehensive income, net of taxes

 

 

 
2,569

 

 

 
2,569

Abandonment of noncontrolling interest

 

 
24,053

 

 

 
(38,111
)
 
(14,058
)
Dividends

 

 

 

 
(290,401
)
 

 
(290,401
)
Balance — September 30, 2013
346,165

 
$
3,462

 
$
1,409,463

 
$
(6,595
)
 
$
1,162,828

 
$

 
$
2,569,158

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance — January 1, 2014
346,760

 
$
3,468

 
$
1,409,463

 
$
(2,853
)
 
$
1,276,754

 
$

 
$
2,686,832

Stock issued in connection with employee incentive compensation plans
2,221

 
22

 
18,674

 

 

 

 
18,696

Stock-based compensation expense

 

 
123,276

 

 

 

 
123,276

Net income

 

 

 

 
519,316

 

 
519,316

Other comprehensive income, net of taxes

 

 

 
7,409

 

 

 
7,409

Dividends

 

 

 

 
(52,316
)
 

 
(52,316
)
Balance — September 30, 2014
348,981

 
$
3,490

 
$
1,551,413

 
$
4,556

 
$
1,743,754

 
$

 
$
3,303,213

 
See notes to unaudited condensed consolidated financial statements.

6



SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands)
 
For the Nine Months Ended 
 September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
519,316

 
$
581,744

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Derivative mark to market
(15,868
)
 
(16,235
)
Provision for credit losses
2,057,419

 
1,223,805

Depreciation and amortization
561,432

 
89,743

Accretion of discount, net of amortization of capitalized origination costs
(636,604
)
 
(321,187
)
Originations and purchases of receivables held for sale
(3,248,055
)
 
(1,179,109
)
Proceeds from sales of and repayments on receivables held for sale
3,264,855

 
1,114,634

Investment gains, net
(95,431
)
 
(8,950
)
Stock-based compensation
123,276

 
187

Deferred tax expense
49,358

 
43,481

Changes in assets and liabilities:
 
 
 
Accrued interest receivable
(83,597
)
 
(74,277
)
Accounts receivable
(30,297
)
 
(4,504
)
Federal income tax and other taxes
336,778

 
(181,754
)
Other assets
(68,156
)
 
(1,114
)
Accrued interest payable
(735
)
 
6,304

Other liabilities
41,273

 
109,031

Net cash provided by operating activities
2,774,964

 
1,381,799

Cash flows from investing activities:
 
 
 
Retail installment contracts originated or purchased from dealers
(11,927,733
)
 
(12,256,669
)
Collections on retail installment contracts
6,920,653

 
7,027,406

Proceeds from sale of loans held for investment
2,392,773

 

Leased vehicles purchased
(3,706,763
)
 
(1,421,078
)
Manufacturer incentives received
744,089

 
194,403

Proceeds from sale of leased vehicles
412,167

 
7,199

Change in revolving unsecured consumer loans
(177,478
)
 
(524,578
)
Unsecured consumer term loans purchased
(542,196
)
 
(108,669
)
Collections on unsecured consumer term loans
92,047

 
5,850

Disbursements for receivables from lenders held for investment
(34,673
)
 
(228,938
)
Collections on receivables from lenders held for investment
29,599

 
112,313

Collections on investments available for sale

 
91,563

Purchases of furniture and equipment
(13,862
)
 
(17,789
)
Sales of furniture and equipment
662

 
991

Upfront fee paid in accordance with private label financing agreement

 
(150,000
)
Change in restricted cash
(425,821
)
 
(322,482
)
Other investing activities
(4,526
)
 
(5,090
)
Net cash used in investing activities
(6,241,062
)
 
(7,595,568
)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable related to secured structured financings — net
      of debt issuance costs
10,310,701

 
8,150,330

Payments on notes payable related to secured structured financings
(7,071,464
)
 
(5,740,669
)
Proceeds from unsecured notes payable
3,348,334

 
2,936,130

Payments on unsecured notes payable
(3,681,399
)
 
(2,520,063
)
Proceeds from notes payable
20,028,887

 
18,074,725

Payments on notes payable
(19,405,515
)
 
(14,457,932
)
Proceeds from stock option exercises, gross
24,529

 

Repurchase of stock - employee tax withholding
(5,999
)
 

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

 
1,562

Capital contribution from shareholder

 
48,275

Cash collateral posted on cash flow hedges
3,698

 
(31,724
)
Net cash provided by financing activities
3,499,456

 
6,170,233

Net increase (decrease) in cash and cash equivalents
33,358

 
(43,536
)
Cash — Beginning of period
10,531

 
70,887

Cash — End of period
$
43,889

 
$
27,351

See notes to unaudited condensed consolidated financial statements.

7



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

1.
Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices
Santander Consumer USA Holdings Inc., a Delaware Corporation (“SCUSA Delaware” or, together with its subsidiaries, “SCUSA” or “the Company”), is the holding company for Santander Consumer USA Inc., an Illinois corporation (“SCUSA Illinois”), and subsidiaries, a specialized consumer finance company focused on vehicle finance and unsecured consumer lending products. The Company’s primary business is the indirect origination of retail installment contracts principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers.
In conjunction with a ten-year private label financing agreement with Chrysler Group (the “Chrysler Agreement”) that became effective May 1, 2013, the Company offers a full spectrum of auto financing products and services to Chrysler customers and dealers under the Chrysler Capital brand. These products and services include consumer retail installment contracts and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit.
The Company also originates vehicle loans through a web-based direct lending program, purchases vehicle retail installment contracts from other lenders, and services automobile and recreational and marine vehicle portfolios for other lenders. Additionally, the Company has several relationships through which it provides unsecured consumer loans, private label credit cards and other consumer finance products.
The Company is owned approximately 60.5% by Santander Holdings USA, Inc. (“SHUSA”), a subsidiary of Banco Santander, S.A. (“Santander”), approximately 28.2% by public shareholders, approximately 10.0% by DDFS LLC, an entity affiliated with Thomas G. Dundon, the Company’s Chairman and Chief Executive Officer (“CEO”), approximately 1.2% by Sponsor Auto Finance Holdings Series LP (“Auto Finance Holdings”) and approximately 0.1% by other holders, primarily members of senior management.

On August 14, 2014, the Company filed a shelf registration statement on Form S-1 with the Securities and Exchange Commission ("the Commission") to register up to 14,178,779 shares of its common stock owned by Auto Finance Holdings. On August 22, 2014, the Commission declared the registration statement effective. On September 8, 2014, J.P. Morgan, acting as sole bookrunner for the offering, purchased 10,047,954 shares, or 2.88% of the Company's outstanding common stock, from Auto Finance Holdings for $18.65 per share.  As a result of the sale, Auto Finance Holdings' ownership in the Company declined from approximately 4.1% to approximately 1.2% of the Company's outstanding common stock. Auto Finance Holdings received all of the net proceeds from the sale of such shares.
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including certain special purpose financing trusts utilized in financing transactions (“Trusts”), which are considered variable interest entities (“VIEs”). The Company consolidates other VIEs for which it was deemed the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying condensed consolidated financial statements as of September 30, 2014 and December 31, 2013, and for the three and nine months ended September 30, 2014 and 2013, have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Results of operations for the periods presented herein are not necessarily indicative of results of operations for the entire year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed on March 6, 2014. Certain prior year amounts have been reclassified to conform to current year presentation; specifically, capital leases are now reportedly separately from other assets in the condensed consolidated balance sheets and disclosed in corresponding footnotes (see Notes 3 and 4), manufacturer incentives received are now reported separately from retail installment contract originations in the condensed

8



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

9



is effective for fiscal years ending after December 15, 2016 with early adoption permitted. The Company does not expect the adoption to have a material impact to the consolidated financial statements as there are not any conditions or events that raise substantial doubt about the Company's ability to continue as a going concern.

2.
Finance Receivables
Finance receivables held for investment at September 30, 2014 and December 31, 2013, were comprised as follows:
 
September 30, 2014
 
Retail Installment Contracts Held for Investment
 
 
 
 
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Receivables from
Dealers Held
for Investment
 
Unsecured
Consumer
Loans
Unpaid principal balance
$
23,890,480

 
$
1,032,828

 
$
24,923,308

 
$
97,826

 
$
1,640,276

Loan loss allowance (Note 4)
(2,793,199
)
 
(192,960
)
 
(2,986,159
)
 
(648
)
 
(300,425
)
(Discount) / premium
(660,652
)
 
5,797

 
(654,855
)
 

 
(297
)
Capitalized origination costs and fees
36,786

 

 
36,786

 

 
729

Net carrying balance
$
20,473,415

 
$
845,665

 
$
21,319,080

 
$
97,178

 
$
1,340,283

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

 
$
1,961,060

 
$
23,199,341

 
$
95,835

 
$
1,165,778

Loan loss allowance (Note 4)
(2,132,634
)
 
(226,356
)
 
(2,358,990
)
 
(1,090
)
 
(179,350
)
Discount
(573,462
)
 
(81,216
)
 
(654,678
)
 

 
(32,831
)
Capitalized origination costs
33,936

 

 
33,936

 

 
592

Net carrying balance
$
18,566,121

 
$
1,653,488

 
$
20,219,609

 
$
94,745

 
$
954,189

 
As of September 30, 2014, retail installment contracts and receivables from dealers held for sale totaled $89,918 and $1,235, respectively. As of December 31, 2013, retail installment contracts and receivables from dealers held for sale totaled $56,066 and $26,437, respectively. Sales of retail installment contracts for the three and nine months ended September 30, 2014 included principal balance amounts of approximately $2,413,251 and $5,483,149. The Company retains servicing of sold retail installment contracts and was servicing $6,928,679 and $2,847,656 as of September 30, 2014 and December 31, 2013, respectively, of contracts owned by unrelated third parties, including contracts sold by the Company.
Retail installment contracts are collateralized by vehicle titles, and the Company has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. Most of the Company’s retail installment contracts held for investment are pledged against warehouse facilities or securitization bonds (Note 5). Most of the creditors on the Company’s retail installment contracts are retail consumers; however, approximately $677,007 and $345,177 of the unpaid principal balance represented fleet contracts with commercial borrowers as of September 30, 2014 and December 31, 2013, respectively.
Borrowers on the Company’s retail installment contracts held for investment are located in Texas (18%), Florida (11%), California (9%), and other states each individually representing less than 5% of the Company’s total.
Receivables from dealers held for investment includes a term loan, which was previously a residual warehouse credit facility, with a third-party vehicle dealer and lender that operates in multiple states. The loan allowed committed borrowings of $50,000 at September 30, 2014 and December 31, 2013, and the unpaid principal balance of the facility was $50,000 at each of those dates. The term loan will mature on December 1, 2019. On September 16, 2014, the Company sold $18,227 of receivables from dealers to Santander Bank, N.A., formerly Sovereign Bank ("SBNA"), an affiliate (Note 11), resulting in a gain of $347. The Company is entitled to additional proceeds on this sale totaling

10



$694 if certain conditions, including continued existence and performance of the sold loans, are met at the first and second anniversaries of the sale.
Borrowers on the Company’s remaining receivables from dealers held for investment, all of which are Chrysler-affiliated, are located in Virginia (23%), Ohio (21%), California (17%), New York (15%), Tennessee (9%), Louisiana (6%), and other states each individually representing less than 5% of the Company’s total.
Borrowers on the Company’s unsecured consumer loans are located in California (10%), New York (8%), Texas (8%), Florida (6%), and other states each individually representing less than 5% of the Company’s total.
Changes in accretable yield on the Company’s purchased receivables portfolios for the periods indicated were as follows:
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30, 2014
 
September 30, 2013
 
September 30, 2014
 
September 30, 2013
Balance — beginning of period
$
305,254

 
$
535,656

 
$
403,400

 
$
816,854

Accretion of accretable yield
(43,231
)
 
(174,201
)
 
(164,651
)
 
(421,913
)
Reclassifications from nonaccretable difference
36,394

 
73,560

 
59,668

 
40,074

Balance — end of period
$
298,417

 
$
435,015

 
$
298,417

 
$
435,015

The Company also has capital leases classified as finance receivables (Note 3).

3.
Leases
The Company has both operating and capital leases which are separately accounted for and recorded on the Company's consolidated balance sheets as leased vehicles, net and capital lease receivables, net.
Operating Leases
Leased vehicles, net, which is comprised of leases originated under the Chrysler Agreement, consisted of the following as of September 30, 2014 and December 31, 2013:
 
September 30,
2014
 
December 31,
2013
Leased vehicles
$
5,645,755

 
$
2,402,052

Origination fees and other costs
2,707

 
2,716

Manufacturer subvention payments
(614,255
)
 
(259,152
)
 
5,034,207

 
2,145,616

Less: accumulated depreciation
(620,199
)
 
(122,183
)
 
$
4,414,008

 
$
2,023,433


The following summarizes the future minimum rental payments due to the Company as lessor under operating leases as of September 30, 2014:
 
 
Remainder of 2014
$
196,776

2015
766,408

2016
619,909

2017
183,882

2018
313

Thereafter

Total
$
1,767,288




11




Capital Leases
In early 2014, the Company began originating leases that are accounted for as capital leases as the contractual residual values are nominal amounts. Capital lease receivables, net consisted of the following as of September 30, 2014:
 
September 30,
2014
Gross investment in capital leases
$
78,779

Origination fees and other
19

Less unearned income
(27,104
)
   Net investment in capital leases before allowance
51,694

Less: allowance for lease losses
(6,106
)
   Net investment in capital leases
$
45,588


The following summarizes the future minimum lease payments due to the Company as lessor under capital leases as of September 30, 2014:
 
 
 
 
Remainder of 2014
$
4,639

2015
18,559

2016
18,559

2017
18,486

2018
17,112

Thereafter
1,424

Total
$
78,779


4.
Loan and Lease Loss Allowance and Credit Quality
Loan and Lease Loss Allowance
The Company estimates loan losses on individually acquired retail installment contracts and unsecured consumer loans held for investment based on delinquency status, historical loss experience, estimated values of underlying collateral, when applicable, and various economic factors. The Company maintains a general loan loss allowance for receivables from dealers based on risk ratings, and individually evaluates the loans for specific impairment as necessary. The loan loss allowance for receivables from dealers is comprised entirely of general allowances as none of these receivables have been determined to be individually impaired.
The activity in the loan loss allowance for individually acquired loans for the three and nine months ended September 30, 2014 and 2013 was as follows: 
 
Three Months Ended September 30, 2014
 
Three Months Ended September 30, 2013
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
Balance — beginning of period
$
2,668,587

 
$
923

 
$
212,954

 
$
1,864,313

 
$
1,490

 
$
39,250

Provision for loan losses
601,414

 
(275
)
 
167,409

 
447,565

 
103

 
56,815

Charge-offs
(932,145
)
 

 
(86,512
)
 
(584,815
)
 

 
(815
)
Recoveries
455,343

 

 
6,574

 
260,887

 

 

Balance — end of period
$
2,793,199

 
$
648

 
$
300,425

 
$
1,987,950

 
$
1,593

 
$
95,250

 

12



 
Nine Months Ended September 30, 2014
 
Nine Months Ended September 30, 2013
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
 
Retail Installment
Contracts
Acquired
Individually
 
Receivables
from Dealers Held
for Investment
 
Unsecured
Consumer Loans
Balance — beginning of period
$
2,132,634

 
$
1,090

 
$
179,350

 
$
1,555,362

 
$

 
$

Provision for loan losses
1,785,482

 
(442
)
 
299,750

 
1,074,487

 
1,593

 
96,071

Charge-offs
(2,385,675
)
 

 
(194,426
)
 
(1,338,936
)
 

 
(821
)
Recoveries
1,260,758

 

 
15,751

 
697,037

 

 

Balance — end of period
$2,793,199
 
$
648

 
$
300,425

 
$
1,987,950

 
$
1,593

 
$
95,250


The activity in the impairment reserves related to purchased receivables portfolios for the three and nine months ended September 30, 2014 and 2013 was as follows:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Balance — beginning of period
$
197,844

 
$
176,576

 
$
226,356

 
$
218,640

Incremental provisions for purchased receivable portfolios
1,606

 
245,987

 
3,281

 
285,963

Incremental reversal of provisions for purchased receivables portfolios
(6,490
)
 
(152,269
)
 
(36,677
)
 
(234,309
)
Balance — end of period
$
192,960

 
$
270,294

 
$
192,960

 
$
270,294


The Company estimates lease losses on the capital lease receivable portfolio based on delinquency status, loss experience to date, and consideration of similarity between this portfolio and individually acquired retail installment contracts as well as various economic factors. The activity in the lease loss allowance for capital lease receivables for the three and nine months ended September 30, 2014 was as follows: 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2014
Balance — beginning of period
$

 
$

Provision for lease losses
6,106

 
6,106

Balance — end of period
$
6,106

 
$
6,106


Delinquencies

Retail installment contracts and unsecured consumer amortizing term loans are classified as non-performing when they are greater than 60 days past due as to contractual principal or interest payments. 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 status, previously accrued and uncollected interest is reversed against interest income. If an account is returned to a performing status, the Company returns to accruing interest on the contract. The accrual of interest on revolving unsecured consumer loans continues until the loan is charged off. A summary of delinquencies as of September 30, 2014 and December 31, 2013 is as follows: 

13



 
September 30, 2014
 
Retail Installment Contracts Held for Investment
 
Unsecured
Consumer
Loans
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Principal, 31-60 days past due
$
2,077,190

 
$
163,047

 
$
2,240,237

 
$
51,274

Delinquent principal over 60 days
888,940

 
81,048

 
969,988

 
131,537

Total delinquent principal
$
2,966,130

 
$
244,095

 
$
3,210,225

 
$
182,811

 
 
December 31, 2013
 
Retail Installment Contracts Held for Investment
 
Unsecured
Consumer
Loans
 
Loans
Acquired
Individually
 
Purchased
Receivables
Portfolios
 
Total
 
Principal, 31-60 days past due
$
1,729,139

 
$
321,549

 
$
2,050,688

 
$
28,102

Delinquent principal over 60 days
855,315

 
181,698

 
1,037,013

 
65,360

Total delinquent principal
$
2,584,454

 
$
503,247

 
$
3,087,701

 
$
93,462


The balances in the above tables reflect total principal rather than net investment; the difference is considered immaterial.

As of September 30, 2014 and December 31, 2013, there were no receivables from dealers or receivables held for sale that were non-performing. Delinquencies on the capital lease receivables portfolio, which began in 2014, were immaterial as of September 30, 2014.
FICO® Distribution — A summary of the credit risk profile of the Company’s consumer loans by FICO® distribution, determined at origination, as of September 30, 2014 and December 31, 2013 was as follows:
 
September 30, 2014
 
 
Retail Installment
 
Unsecured
 
 
Contracts Held
 
Consumer
FICO Band
 
for Investment (a)
 
Loans (b)
<540
 
26.9%
 
3.2%
540-599
 
33.2%
 
20.7%
600-659
 
26.5%
 
35.6%
>660
 
13.4%
 
40.5%
December 31, 2013
 
 
Retail Installment
 
Unsecured
 
 
Contracts Held
 
Consumer
FICO Band
 
for Investment (a)
 
Loans (b)
<540
 
26.8%
 
6.3%
540-599
 
31.8%
 
24.2%
600-659
 
26.3%
 
39.4%
>660
 
15.1%
 
30.1%
(a)
Excluded from the FICO distribution is $2,771,937 and $1,944,204 as of September 30, 2014 and December 31, 2013, respectively, as the borrowers on these loans did not have FICO scores at origination.
(b)
Excluded from the FICO distribution is an insignificant amount of loans to borrowers that did not have FICO scores at origination.

Commercial Lending Credit Quality Indicators — The credit quality of receivables from dealers, which are considered commercial loans, is summarized according to standard regulatory classifications as follows:
Pass — Asset is well protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value less costs to acquire and sell any underlying collateral in a timely manner.

14



Special Mention — Asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for an asset at some future date. Special Mention assets are not adversely classified.
Substandard — Asset is inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. A well-defined weakness or weaknesses exist that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected.
Doubtful — Exhibits the inherent weaknesses of a substandard credit. Additional characteristics exist that make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. Possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the credit, an estimated loss cannot yet be determined.
Loss — Credit is considered uncollectible and of such little value that it does not warrant consideration as an active asset. There may be some recovery or salvage value, but there is doubt as to whether, how much or when the recovery would occur.
As discussed in Note 2, the Company has $677,007 of fleet contracts with commercial consumers. Although these loans are recorded in Retail installment contracts held for investment, net, on the consolidated balance sheets, the Company's risk department performs a commercial analysis and classifies certain loans over an internal threshold accordingly based on the classifications above. As of September 30, 2014, the fleet portfolio all was classified as Pass.
Commercial loan credit quality indicators for receivables from dealers held for investment as of September 30, 2014 and December 31, 2013 were as follows:
 
 
September 30,
2014
 
December 31,
2013
Pass
$
95,692

 
$
95,835

Special Mention
2,134

 

Substandard

 

Doubtful

 

Loss

 

 
$
97,826

 
$
95,835

 
Troubled Debt Restructurings
In certain circumstances, the Company modifies the terms of its finance receivables to troubled borrowers. Modifications may include a reduction in interest rate, an extension of the maturity date, rescheduling of future cash flows, or a combination thereof. A modification of finance receivable terms is considered a troubled debt restructuring (“TDR”) if the Company grants a concession to a borrower for economic or legal reasons related to the debtor’s financial difficulties 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 and operating and capital leases are excluded from the scope of the applicable guidance. As of September 30, 2014 and December 31, 2013, there were no receivables from dealers classified as a TDR.

15



The table below presents the Company’s loans modified in TDRs as of September 30, 2014 and December 31, 2013
 
September 30, 2014
 
December 31, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Total TDR principal
$
3,666,676

 
$
15,428

 
$
2,604,351

 
$
8,391

Accrued interest
100,592

 

 
70,965

 

Discount
(101,396
)
 
(4
)
 
(70,321
)
 
(274
)
Origination costs
5,646

 
14

 
4,161

 
5

Outstanding recorded investment
3,671,518

 
15,438

 
2,609,156

 
8,122

Allowance for loan losses
(605,643
)
 
(6,884
)
 
(475,128
)
 
(2,345
)
Outstanding recorded investment, net of allowance
$
3,065,875

 
$
8,554

 
$
2,134,028

 
$
5,777

 
A summary of the Company’s delinquent TDRs at September 30, 2014 and December 31, 2013, is as follows:
 
September 30, 2014
 
December 31, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Principal, 31-60 days past due
806,819

 
1,101

 
556,489

 
875

Delinquent principal over 60 days
422,776

 
8,017

 
356,969

 
1,396

Total delinquent TDR principal
$
1,229,595

 
$
9,118

 
$
913,458

 
$
2,271

 
A loan that has been classified as a TDR remains so until the loan is liquidated through payoff or charge-off. Consistent with other of the Company’s retail installment contracts, TDRs are placed on nonaccrual status when the account becomes past due more than 60 days, and return to accrual status when the account is 60 days or less past due. Average recorded investment and income recognized on TDR loans are as follows:
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2014
 
September 30, 2013
 
September 30, 2014
 
September 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Average outstanding recorded investment in TDRs
$
3,412,644

 
$
17,484

 
$
2,076,345

 
$
2,323

 
$
3,060,141

 
$
13,240

 
$
1,816,378

 
$
1,549

Interest income recognized
$
130,716

 
$
449

 
$
88,034

 
$
24

 
$
363,305

 
$
1,169

 
$
218,435

 
$
25

 
TDR Impact on Allowance for Loan Losses
For loans not classified as TDRs, the Company generally estimates an appropriate allowance for loan loss based on delinquency status, the Company’s historical loss experience, estimated values of underlying collateral, and various economic factors. Once a loan has been classified as a TDR, impairment is measured based on the present value of expected future cash flows considering all available evidence, including collateral values.
The following table summarizes the financial effects of loan modifications accounted for as TDRs that occurred during the three and nine months ended September 30, 2014 and 2013:
     

16



 
Three Months Ended
 
September 30, 2014
 
September 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled Debt Restructurings:
 
 
 
 
 
 
 
Outstanding recorded investment before TDR
$
951,012

 
$
6,284

 
$
615,097

 
$
4,034

Outstanding recorded investment after TDR
$
948,164

 
$
6,311

 
$
585,830

 
$
4,020

 
 
 
 
 
 
 
 
Number of contracts
57,829

 
5,653

 
39,598

 
5,950


 
Nine Months Ended
 
September 30, 2014
 
September 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled Debt Restructurings:
 
 
 
 
 
 
 
Outstanding recorded investment before TDR
$
2,318,685

 
$
13,032

 
$
1,379,733

 
$
4,184

Outstanding recorded investment after TDR
$
2,228,375

 
$
12,978

 
$
1,319,642

 
$
4,169

 
 
 
 
 
 
 
 
Number of contracts
141,582

 
11,788

 
89,869

 
6,093


A TDR is considered to have subsequently defaulted upon charge off, which for retail installment contracts is at the earlier of the date of repossession or 120 days past due and for revolving unsecured consumer loans is generally the month in which the receivable becomes 180 days past due. Loan modifications accounted for as TDRs within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2014 and 2013 are summarized in the following table:
 
Three Months Ended
 
September 30, 2014
 
September 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled debt restructurings that subsequently defaulted
$
110,528

 
$1,054
 
$
341,718

 
(a)
Number of contracts
10,736

 
1,015
 
24,952

 
(a)

 
Nine Months Ended
 
September 30, 2014
 
September 30, 2013
 
Retail Installment Contracts
 
Unsecured Consumer Loans
 
Retail Installment Contracts
 
Unsecured Consumer Loans
Troubled debt restructurings that subsequently defaulted
$
230,803

 
$1,801
 
$
371,048

 
(a)
Number of contracts
23,859

 
1,766
 
27,105

 
(a)

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


17



5.
Debt
Revolving Credit Facilities
The following table presents information regarding credit facilities as of September 30, 2014 and December 31, 2013:
 
September 30, 2014
 
Maturity Date(s)
 
Utilized Balance
 
Committed Amount
 
Effective Rate
 
Assets Pledged
 
Restricted Cash Pledged
Warehouse line
June 2015
 
$
214,186

 
$
500,000

 
1.22%
 
$
306,303

 
$

Warehouse line
Various (a)
 
149,602

 
1,240,393

 
1.03%
 
234,040

 
15,384

Warehouse line (b)
June 2016
 
2,276,688

 
4,300,000

 
0.92%
 
3,327,514

 
62,647

Warehouse line
June 2016
 
598,127

 
2,500,000

 
2.04%
 
821,395

 
18,408

Warehouse line
July 2015
 

 
500,000

 
 

 

Warehouse line (c)
September 2015
 
175,080

 
200,000

 
2.02%
 

 
12,195

Repurchase facility (d)
Various
 
868,838

 
875,993

 
1.59%
 

 
31,533

Warehouse line
December 2015
 
331,965

 
750,000

 
1.06%
 
446,467

 
7,329

Warehouse line (e)
November 2016
 
175,000

 
175,000

 
1.71%
 

 
134

Warehouse line (f)
March 2015
 
250,594

 
250,594

 
0.98%
 

 

Total facilities with third parties
 
 
5,040,080

 
11,291,980

 
 
 
5,135,719

 
147,630

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

Line of credit
December 2016
 
500,000

 
500,000

 
2.45%
 
1,447

 

Line of credit
December 2018
 

 
500,000

 
 

 

Line of credit
December 2016
 
1,750,000

 
1,750,000

 
2.30%
 

 

Line of credit
December 2018
 
800,000

 
1,750,000

 
2.75%
 
12,588

 

Line of credit (h)
March 2017
 
300,000

 
300,000

 
1.70%
 

 

Total facilities with Santander and related subsidiaries
 
 
3,350,000

 
4,800,000

 
 
 
14,035

 

Total revolving credit facilities
 
 
$
8,390,080

 
$
16,091,980

 
 
 
$
5,149,754

 
$
147,630


18



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

 
$
500,000

 
0.82%
 
$
757,352

 
$

Warehouse line
Various
 
159,300

 
1,219,474

 
3.62%
 
232,015

 
3,667

Warehouse line
April 2014
 
613,600

 
4,550,000

 
2.12%
 
745,759

 
15,184

Warehouse line
June 2015
 
1,360,070

 
2,000,000

 
0.96%
 
1,672,082

 
42,510

Warehouse line
July 2015
 
495,786

 
500,000

 
0.85%
 
598,754

 
25,056

Warehouse line
September 2015
 
73,080

 
200,000

 
2.84%
 
76,807

 
2,701

Repurchase facility
Various
 
879,199

 
879,199

 
1.59%
 

 

Warehouse line
December 2015
 
210,000

 
750,000

 
1.84%
 
302,632

 

Warehouse line
November 2016
 
175,000

 
175,000

 
1.72%
 

 

Total facilities with third parties
 
 
4,449,773

 
10,773,673

 
 
 
4,385,401

 
89,118

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

 
500,000

 
2.48%
 
10,674

 

Line of credit
December 2018
 

 
500,000

 
3.10%
 

 

Line of credit
December 2016
 
1,750,000

 
1,750,000

 
2.09%
 

 

Line of credit
December 2018
 
1,400,000

 
1,750,000

 
2.58%
 
93,969

 

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

 
4,500,000

 
 
 
104,643

 

Total revolving credit facilities
 
 
$
8,099,773

 
$
15,273,673

 
 
 
$
4,490,044

 
$
89,118


(a)
Half of the outstanding balance on this facility matures in March 2015 and half in March 2016.
(b)
This line is held exclusively for Chrysler Capital retail loan and lease financing, with lease financing comprising no more than 50% of the outstanding balance upon advance.
(c)
This line is held exclusively for unsecured consumer term loans.
(d)
The repurchase facility is also collateralized by securitization notes payable retained by the Company. No portion of this facility is unsecured. This facility has rolling 30-day and 90-day maturities.
(e)
This line is collateralized by residuals retained by the Company.
(f)
This line is collateralized by notes payable retained by the Company.
(g)
These lines are also collateralized by securitization notes payable and residuals retained by the Company. As of September 30, 2014 and December 31, 2013, $1,702,720 and $1,123,354, respectively, of the aggregate outstanding balances on these facilities were unsecured.
(h)
On October 15, 2014, the Company made a $28,596 principal payment to increase the overcollateralization on this warehouse by 10% to cure a level I triggering event. The Company subsequently amended the warehouse agreement to revise the trigger levels.

Facilities with Third Parties
The warehouse lines and repurchase facility are fully collateralized by a designated portion of the Company’s retail installment contracts (Note 2), leased vehicles (Note 3), securitization notes payables and residuals retained by the Company.
Lines of Credit with Santander and Related Subsidiaries
Through its New York branch, Banco Santander provides the Company with $4,500,000 of long-term committed revolving credit facilities. Through SHUSA, under an agreement entered into on March 6, 2014, Santander provides the Company with an additional $300,000 of committed revolving credit, collateralized by residuals retained on its own securitizations. The fundings through the New York branch and through SHUSA are collectively known as the “Santander Credit Facilities.”
The facilities offered through the New York branch are structured as three- and five-year floating rate facilities, with current maturity dates of December 31, 2016 and December 31, 2018, respectively. Santander has the option to continue to renew the term of these facilities annually going forward, thereby maintaining the three and five year maturities. These facilities currently permit unsecured borrowing but generally are collateralized by retail installment

19



contracts and retained residuals. Any secured balances outstanding under the facilities at the time of their maturity will amortize to match the maturities and expected cash flows of the corresponding collateral.
Secured Structured Financings
 
The following table presents information regarding secured structured financings as of September 30, 2014 and December 31, 2013
 
September 30, 2014
 
Original Estimated Maturity Date(s)
 
Balance
 
Initial Note Amounts Issued
 
Initial Weighted Average Interest Rate
 
Collateral
 
Restricted Cash
2010 Securitizations (a)
October 2016 - November 2017
 
$
185,348

 
$
2,634,349

 
1.04%-1.44%
 
$
403,129

 
$
95,597

2011 Securitizations
October 2015 - September 2017
 
511,348

 
3,536,550

 
1.21%-2.80%
 
811,610

 
121,647

2012 Securitizations
November 2017 - December 2018
 
2,667,792

 
8,023,840

 
0.92%-1.68%
 
3,416,857

 
341,653

2013 Securitizations
January 2019 - January 2021
 
3,863,220

 
6,689,700

 
0.89%-1.59%
 
4,727,996

 
343,478

2014 Securitizations
August 2018 - November 2020
 
4,871,772

 
5,859,400

 
1.42%-1.72%
 
5,535,175

 
328,313

Public securitizations (b)
 
 
12,099,480

 
26,743,839

 
 
 
14,894,767

 
1,230,688

2010 Private issuances
June 2011
 
190,183

 
516,000

 
1.29%
 
320,151

 
9,058

2011 Private issuances
December 2018
 
1,026,730

 
1,700,000

 
1.46%-1.80%
 
1,476,856

 
58,240

2012 Private issuances
May 2016
 
9,607

 
70,308

 
1.07%
 
15,198

 
1,450

2013 Private issuances
September 2018 - September 2020
 
2,166,424

 
2,693,754

 
1.13%-1.38%
 
2,960,515

 
91,402

2014 Private issuances
November 2015 - December 2021
 
2,951,973

 
3,519,049

 
1.05%-1.85%
 
4,165,753

 
140,007

Privately issued amortizing notes
 
 
6,344,917

 
8,499,111

 
 
 
8,938,473

 
300,157

Total secured structured financings
 
 
$
18,444,397

 
$
35,242,950

 
 
 
$
23,833,240

 
$
1,530,845

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

 
$
4,671,749

 
1.04%-1.44%
 
$
1,143,435

 
$
205,190

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

 
5,605,609

 
1.21%-2.80%
 
1,634,220

 
195,854

2012 Securitizations
November 2017 - December 2018