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Press Release Details

Santander Consumer USA Holdings Inc. Reports Third Quarter 2017 Net Income of $199 million

October 27, 2017

Quarter Marked By Strong Financial and Operational Performance, New Leadership Team and Significant Regulatory Progress, Leading To First Dividend Declaration Since 2014

DALLAS, Oct. 27, 2017 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") today announced net income for the third quarter ended September 30, 2017 ("Q3 2017") of $199 million, or $0.55 per diluted common share. This includes a pretax gain of $36 million, or $0.07 per diluted common share from the sale of the majority of the Company's legacy RV/Marine portfolio.

Santander Consumer USA Holdings Inc. logo

These results build on numerous Q3 2017 milestones:

  • SC announced a new President and CEO, Scott Powell
  • The Federal Reserve Bank of Boston announced the termination of the 2014 Written Agreement with SC's majority owner, Santander Holdings USA, Inc. ("SHUSA"), enabling SHUSA and SC to operate within a normal capital cycle
    • The Company has declared a cash dividend of $0.03 per share, to be paid November 17, 2017 to shareholders of record as of the close of business on November 7, 2017
  • SC's retail installment contract ("RIC") gross and net loss ratios improved, with YoY decreases of 40 and 20 basis points, respectively

"Our results this quarter demonstrate the continued strength of our business," said Scott Powell, SC President and CEO, also SHUSA CEO. "We have been focused on strengthening our financial and operational performance, delivering returns for all our shareholders and improving risk management. Our credit performance in the third quarter was strong and positively impacted our financial results. The Federal Reserve's termination of its 2014 Written Agreement with SHUSA gives SC the ability to make distributions within a normal capital cycle. We still have work to do to resolve our outstanding regulatory issues, but it is a major turning point for our business."

Other recently announced key leadership changes include:

  • Juan Carlos ("JC") Alvarez was appointed CFO. JC joined SC from SHUSA, where he served as Corporate Treasurer
  • Sandra ("Sandy") Broderick was appointed EVP, Head of Operations. Sandy joined SC from US Bank, which she joined in 2017 from JPMorgan Chase & Co., where she served as Managing Director, Operations Executive from 2002 to March 2017, and as Head of Operations for the automotive finance business from 2012
  • Rich Morrin, former SC COO, was appointed President, Chrysler Capital and Auto Relationships

Mr. Powell continued, "I'm pleased to have a strong leadership team in place including JC, Sandy and Rich.  JC was instrumental in the work that led to the termination of SHUSA's 2014 Written Agreement with the Federal Reserve, Sandy has significant operations expertise in auto finance, and Rich's new role will allow SC to devote more attention to building our relationship with Fiat Chrysler."

Juan Carlos Alvarez, Chief Financial Officer, added, "We are pleased to report solid financial performance this quarter. We are providing temporary financial relief to our customers affected by the recent hurricanes, primarily in the form of loan extensions. While we expect additional delinquencies and losses associated with this relief effort in subsequent quarters, both gross and net loss ratios decreased versus the prior year quarter, demonstrating improved credit performance in our portfolio."

Q3 2017 Highlights (variances compared to Q3 2016, unless otherwise noted):

  • Retail Installment Contract ("RIC") gross and net loss ratios decreased 40 and 20 basis points, respectively
  • Auction-plus recovery rate of 49.3% remained relatively flat
  • Asset sales of $1.3 billion executed through the Banco Santander flow agreement
  • $1.8 billion in asset-backed securities (ABS) offered and sold
  • Total auto originations of $5.0 billion, down 3%
    • Core retail auto loan originations of $1.5 billion, down 21%
    • Chrysler Capital nonprime loan originations of $850 million, down 1%
    • Chrysler Capital prime loan originations of $928 million, down 10%
  • Net finance and other interest income of $1.1 billion, down 10%
    • Net leased vehicle income of $118 million, down 13%
  • Return on average assets of 2.0%, down from 2.2%
  • Common equity tier 1 ("CET1") ratio of 15.0%, up 190 bps

Finance receivables, loans and leases, net1 of $34.4 billion as of September 30, 2017 increased 1 percent versus December 31, 2016. Net finance and other interest income decreased 10 percent to $1.1 billion in Q3 2017 from $1.2 billion in Q3 2016, driven by lower average RIC balances and an increase in benchmark rates.

Net leased vehicle income decreased 13 percent to $118 million in Q3 2017, from $136 million in Q3 2016, due to an increase in leased vehicle depreciation, primarily driven by revised Automotive Leasing Guide ("ALG") residual value forecasts as of Q2 2017. SC depreciates its lease portfolio to forecasted residual values.

Servicing fee income decreased 21 percent to $29 million in Q3 2017, from $36 million in Q3 2016. SC's serviced for others portfolio of $10.0 billion as of Q3 2017, is down 18 percent from $12.2 billion in Q3 2016. The serviced for others portfolio increased versus the prior quarter driven by asset sales of $1.5 billion during Q3 2017, $1.3 billion of which was generated through SC's flow agreement with Banco Santander.

SC's RIC delinquency ratio2 increased to 5.1 percent in Q3 2017 from 4.6 percent in Q3 2016, primarily due to a lower portfolio balance.

SC's RIC net charge-off ratio3 and provision for credit losses decreased to 9.1 percent and $536 million in Q3 2017, respectively, from 9.3 percent and $610 million in Q3 2016, respectively, attributable to a combination of improving credit performance and stabilizing recovery rates. The decrease in provision for credit losses was partially offset by additional reserves for customers affected by Hurricanes Harvey and Irma.

SC's allowance ratio4 increased 20 basis points, to 12.8 percent at the end of Q3 2017, from 12.6 percent at the end of Q2 2017.

SC recorded net investment losses of $53 million in Q3 2017, compared to net investment losses of $106 million in Q3 2016. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio5. Excluding the impact of personal lending, net investment gains totaled $30 million, which includes the $36 million pretax RV/Marine portfolio gain on sale.

During Q3 2017 SC incurred $298 million of operating expenses, up 5 percent from $284 million in Q3 2016, primarily driven by losses recorded for certain contingencies and severance expenses related to management changes. SC's expense ratio for the quarter increased to 2.4 percent, up from 2.2 percent during the same period last year.

1 Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.

2 Delinquency ratio is defined as the ratio of end of period delinquent principal over 60 days to end of period gross balance of the respective portfolio, excludes capital leases.

3 Net charge-off ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.

4 Ratio for allowance for credit losses excludes end of period balances on purchased receivables portfolio of $49 million and finance receivables held for sale of $1.8 billion.

5 The current period losses were primarily driven by $84 million of lower of cost or market adjustments related to the held for sale personal lending portfolio, comprised of $108 million in customer default activity, offset by a $24 million decrease in market discount, consistent with typical seasonal patterns.

Conference Call Information

SC management will host a conference call and webcast to discuss its Q3 2017 results and other general matters at 9:00 a.m. Eastern Time on Friday, October 27, 2017. The conference call will be accessible by dialing 877-419-6593 (U.S. domestic), or 719-325-4933 (international), conference ID 7075755. Please dial in 10 minutes prior to the start of the call. The conference call will also be accessible via live audio webcast through the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com. Choose "Events" and select the information pertaining to the Q3 2017 SC Earnings Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software.

For those unable to listen to the live broadcast, a replay of the call will be available on the Company's website or by dialing 844-512-2921 (U.S. domestic), or 412-317-6671 (international), conference ID 7075755, approximately two hours after the event. The dial-in replay will be available for two weeks after the conference call. An audio webcast of the call and investor presentation will also be archived on the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com, under "Events".

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as anticipates, believes, can, could, may, predicts, potential, should, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond our control. For additional discussion of these risks, refer to the section entitled Risk Factors and elsewhere in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed by us with the U.S. Securities and Exchange Commission (SEC). Among the factors that could cause the forward-looking statements in this press release and/or our financial performance to differ materially from that suggested by the forward-looking statements are (a) the inherent limitations in internal control over financial reporting; (b) our ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner; (c) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (d) adverse economic conditions in the United States and worldwide may negatively impact our results; (e) our business could suffer if our access to funding is reduced; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (g) unexpected costs and delays in connection with exiting our personal lending business; (h) our agreement with Fiat Chrysler Automobiles US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (i) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (j) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (k) loss of our key management or other personnel, or an inability to attract such management and personnel; (l) certain regulations, including but not limited to oversight by the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the European Central Bank, and the Federal Reserve, whose oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (m) future changes in our relationship with SHUSA and Banco Santander that could adversely affect our operations. If one or more of the factors affecting our forward-looking information and statements proves incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution the reader 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 as new factors emerge from time to time. 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.

About Santander Consumer USA Holdings Inc.

Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") is a full-service, technology-driven consumer finance company focused on vehicle finance, third-party servicing and delivering superior service to our more than 2.7 million customers across the full credit spectrum. The company, which began originating retail installment contracts in 1997, has an average managed asset portfolio of approximately $50 billion (as of September 30, 2017), and is headquartered in Dallas. (www.santanderconsumerusa.com)

Contacts:

Investor Relations

Evan Black

800.493.8219

InvestorRelations@santanderconsumerusa.com


Media Relations

Laurie Kight

214.801.6455

SCMedia@santanderconsumerusa.com



Santander Consumer USA Holdings Inc.

Financial Supplement

Third Quarter 2017


Table of Contents




Table 1: Condensed Consolidated Balance Sheets

5

Table 2: Condensed Consolidated Statements of Income

6

Table 3: Other Financial Information

7

Table 4: Credit Quality

9

Table 5: Originations

10

Table 6: Asset Sales

11

Table 7: Ending Portfolio

12

Table 8: Reconciliation of Non-GAAP Measures

13



Table 1: Condensed Consolidated Balance Sheets



September 30,
2017


December 31,
2016

Assets

(Unaudited, Dollars in thousands)

Cash and cash equivalents

$

397,311



$

160,180

Finance receivables held for sale, net

1,775,459



2,123,415

Finance receivables held for investment, net

22,667,203



23,481,001

Restricted cash

2,559,246



2,757,299

Accrued interest receivable

330,554



373,274

Leased vehicles, net

9,931,283



8,564,628

Furniture and equipment, net

72,519



67,509

Federal, state and other income taxes receivable

112,794



87,352

Related party taxes receivable

467



1,087

Goodwill

74,056



74,056

Intangible assets

31,534



32,623

Due from affiliates

26,871



31,270

Other assets

786,260



785,410

Total assets

$

38,765,557



$

38,539,104

Liabilities and Equity




Liabilities:




Notes payable — credit facilities

$

4,965,888



$

6,739,817

Notes payable — secured structured financings

23,258,363



21,608,889

Notes payable —  related party

2,369,850



2,975,000

Accrued interest payable

38,012



33,346

Accounts payable and accrued expenses

336,390



379,021

Deferred tax liabilities, net

1,515,932



1,278,064

Due to affiliates

67,059



50,620

Other liabilities

328,829



235,728

Total liabilities

32,880,323



33,300,485





Equity:




Common stock, $0.01 par value

3,598



3,589

Additional paid-in capital

1,672,392



1,657,611

Accumulated other comprehensive income, net

27,481



28,259

Retained earnings

4,181,763



3,549,160

Total stockholders' equity

5,885,234



5,238,619

Total liabilities and equity

$

38,765,557



$

38,539,104




Table 2: Condensed Consolidated Statements of Income



Three Months Ended
September 30,


Nine Months Ended
September 30,


2017


2016


2017


2016


(Unaudited, Dollars in thousands, except per share amounts)

Interest on finance receivables and loans

$

1,185,059



$

1,246,386



$

3,626,497



$

3,804,322

Leased vehicle income

457,932



388,501



1,305,429



1,086,651

Other finance and interest income

6,385



3,638



15,415



11,440

Total finance and other interest income

1,649,376



1,638,525



4,947,341



4,902,413

Interest expense

250,674



207,175



711,134



590,504

Leased vehicle expense

339,581



252,730



927,976



717,230

Net finance and other interest income

1,059,121



1,178,620



3,308,231



3,594,679

Provision for credit losses

536,447



610,398



1,692,015



1,782,489

Net finance and other interest income after provision for credit losses

522,674



568,222



1,616,216



1,812,190

Profit sharing

5,945



6,400



22,333



35,640

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

516,729



561,822



1,593,883



1,776,550

Investment losses, net

(52,592)



(106,050)



(228,513)



(276,415)

Servicing fee income

28,673



36,447



92,310



123,929

Fees, commissions, and other

82,866



96,285



275,025



294,028

Total other income

58,947



26,682



138,822



141,542

Compensation expense

134,169



128,056



398,325



371,242

Repossession expense

66,877



75,920



205,445



217,816

Other operating costs

96,857



80,508



281,626



258,509

Total operating expenses

297,903



284,484



885,396



847,567

Income before income taxes

277,773



304,020



847,309



1,070,525

Income tax expense

78,385



90,473



239,819



365,334

Net income

$

199,388



$

213,547



$

607,490



$

705,191









Net income per common share (basic)

$

0.55



$

0.60



$

1.69



$

1.97

Net income per common share (diluted)

$

0.55



$

0.59



$

1.69



$

1.96

Weighted average common shares (basic)

359,619,083



358,343,781



359,397,063



358,179,618

Weighted average common shares (diluted)

360,460,353



360,087,749



360,069,449



359,635,034




Table 3: Other Financial Information




Three Months Ended

 September 30,


Nine Months Ended

 September 30,



2017


2016


2017


2016

Ratios

(Unaudited, Dollars in thousands)


Yield on individually acquired retail installment contracts

15.6

%


15.9

%


15.8

%


16.2

%


Yield on purchased receivables portfolios

17.4

%


26.7

%


20.1

%


26.0

%


Yield on receivables from dealers

6.0

%


6.7

%


5.7

%


5.2

%


Yield on personal loans (1)

24.4

%


23.4

%


24.9

%


21.8

%


Yield on earning assets (2)

13.0

%


13.8

%


13.4

%


14.2

%


Cost of debt (3)

3.2

%


2.6

%


3.0

%


2.5

%


Net interest margin (4)

10.5

%


11.8

%


11.0

%


12.2

%


Expense ratio (5)

2.4

%


2.2

%


2.3

%


2.1

%


Return on average assets (6)

2.0

%


2.2

%


2.1

%


2.5

%


Return on average equity (7)

13.8

%


17.1

%


14.6

%


19.8

%


Net charge-off ratio on individually acquired retail installment contracts (8)

9.1

%


9.3

%


8.5

%


7.7

%


Net charge-off ratio on purchased receivables portfolios (8)

2.6

%


0.4

%


1.2

%


(0.4)

%


Net charge-off ratio on receivables from dealers (8)







0.2

%


Net charge-off ratio on personal loans (8)

67.2

%




62.7

%




Net charge-off ratio (8)

9.1

%


9.2

%


8.5

%


7.7

%


Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9)

5.1

%


4.6

%


5.1

%


4.6

%


Delinquency ratio on personal loans, end of period (9)

13.8

%


13.4

%


13.8

%


13.4

%


Delinquency ratio on loans held for investment, end of period (9)

5.1

%


4.6

%


5.1

%


4.6

%


Allowance ratio (10)

12.8

%


12.4

%


12.8

%


12.4

%


Common Equity Tier 1 capital ratio (11)

15.0

%


13.1

%


15.0

%


13.1

%

Other Financial Information









Charge-offs, net of recoveries, on individually acquired retail installment contracts

$

611,130



$

630,847



$

1,722,684



$

1,583,406



Charge-offs, net of recoveries, on purchased receivables portfolios

769



254



1,541



(807)



Charge-offs, net of recoveries, on receivables from dealers







135



Charge-offs, net of recoveries, on personal loans

1,771





6,550





Charge-offs, net of recoveries, on capital leases

1,193



2,095



3,785



7,165



Total charge-offs, net of recoveries

$

614,863



$

633,196



$

1,734,560



$

1,589,899



End of period Delinquent principal over 60 days, individually acquired retail installment contracts held for investment

$

1,338,635



$

1,260,255



$

1,338,635



$

1,260,255



End of period Delinquent principal over 60 days, personal loans

$

183,919



$

179,443



$

183,919



$

179,443



End of period Delinquent principal over 60 days, loans held for investment

$

1,342,335



$

1,267,950



$

1,342,335



$

1,267,950



End of period assets covered by allowance for credit losses

$

26,367,894



$

27,490,290



$

26,367,894



$

27,490,290



End of period Gross finance receivables and loans held for investment

$

26,395,085



$

27,706,307



$

26,395,085



$

27,706,307



End of period Gross personal loans

$

1,337,114



$

1,337,692



$

1,337,114



$

1,337,692



End of period Gross finance receivables, loans, and leases held for investment

$

37,418,133



$

37,295,993



$

37,418,133



$

37,295,993



Average Gross individually acquired retail installment contracts held for investment

$

26,762,472



$

27,075,151



$

26,976,810



$

27,276,903



Average Gross personal loans held for investment

$

10,549



$

6,937



$

13,935



$

6,869



Average Gross individually acquired retail installment contracts

$

28,144,133



$

28,970,039



$

28,182,386



$

28,710,402



Average Gross purchased receivables portfolios

120,245



266,749



176,792



301,026



Average Gross receivables from dealers

53,715



70,392



63,401



72,735



Average Gross personal loans

1,367,445



1,343,099



1,419,223



1,572,297



Average Gross capital leases

22,544



39,974



26,415



49,625



Average Gross finance receivables, loans and capital leases

$

29,708,082



$

30,690,253



$

29,868,217



$

30,706,085



Average Gross finance receivables, loans, and leases

$

40,419,023



$

40,037,873



$

40,125,969



$

39,299,213



Average Managed assets

$

49,998,111



$

52,675,379



$

50,555,068



$

52,983,740



Average Total assets

$

39,496,278



$

38,473,832



$

39,192,434



$

37,844,330



Average Debt

$

31,554,026



$

31,671,237



$

31,538,355



$

31,343,204



Average Total equity

$

5,764,119



$

4,994,511



$

5,542,255



$

4,736,826




(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. Effective as of September 30, 2016, the Company records the charge-off activity for certain personal loans within the provision for credit losses due to the reclassification of these loans from held for sale to held for investment.

(9)

"Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 60 days to End of period gross balance of the respective portfolio, excludes capital leases

(10)

"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

(11)

"Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)




Table 4: Credit Quality


Amounts related to our individually acquired retail installment contracts as of and for the three and nine months ended September 30, 2017 and 2016, are as follows:


(Unaudited, Dollars in thousands)



Three Months Ended September 30,


Nine Months Ended September 30,


2017


2016


2017


2016

Credit loss allowance — beginning of period

$

3,446,968



$

3,422,736



$

3,411,055



$

3,197,414


Provision for credit losses

535,427



609,396



1,682,894



1,787,277


Charge-offs

(1,206,059)



(1,246,760)



(3,542,471)



(3,429,905)


Recoveries

594,929



615,913



1,819,787



1,846,499


Credit loss allowance — end of period

$

3,371,265



$

3,401,285



$

3,371,265



$

3,401,285










Net charge-offs

$

611,130



$

630,847



$

1,722,684



$

1,583,406


Average unpaid principal balance (UPB)

26,762,472



27,075,151



26,976,810



27,276,903


Charge-off ratio1

9.1

%


9.3

%


8.5

%


7.7

%






September 30, 20172


December 31, 20162

Principal 30-59 days past due

$

2,574,165



9.8

%


$

2,911,800



10.7

%

Delinquent principal over 59 days3

1,460,793



5.5

%


1,520,105



5.6

%

Total delinquent contracts

$

4,034,958



15.3

%


$

4,431,905



16.3

%






September 30,

 2017


December 31,

 2016

TDR - Unpaid principal balance

$

6,276,659



$

5,599,567


TDR - Impairment

1,782,114



1,611,295


TDR allowance ratio

28.4

%


28.8

%





Non-TDR - Unpaid principal balance

$

20,044,330



$

21,528,406


Non-TDR - Allowance

1,589,151



1,799,760


Non-TDR allowance ratio

7.9

%


8.4

%





Total - Unpaid principal balance

$

26,320,989



$

27,127,973


Total - Allowance

3,371,265



3,411,055


Total allowance ratio

12.8

%


12.6

%



1

"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

2

Percent of unpaid principal balance.

3

Interest is accrued until 60 days past due in accordance with the Company's account policy for retail installment contracts.




Table 5: Originations



Three Months Ended


Nine Months Ended


Three Months
Ended


September 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016


June 30,

2017

Retained Originations

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

2,570,228



$

3,281,112



$

8,619,961



$

10,545,592



$

3,750,752


Average APR

16.1

%


14.7

%


17.2

%


15.1

%


15.6

%

Average FICO® (a)

605



612



591



606



612


Discount

1.2

%


0.1

%


0.8

%


0.4

%


0.3

%











Personal loans

$



$



$

5,660



$

9,281



$

5,660


Average APR





25.7

%


25.0

%


25.7

%











Leased vehicles

$

1,665,776



$

1,300,375



$

4,693,392



$

4,612,284



$

1,426,957












Capital lease

$

2,477



$

2,319



$

4,655



$

5,977



$

1,001


Total originations retained

$

4,238,481



$

4,583,806



$

13,323,668



$

15,173,134



$

5,184,370












Sold Originations (b)










Retail installment contracts

$

757,720



$

580,242



$

2,550,065



$

2,201,659



$

304,748


Average APR

6.0

%


3.2

%


6.2

%


3.0

%


6.6

%

Average FICO® (c)

729



760



727



759



725


Total originations sold

$

757,720



$

580,242



$

2,550,065



$

2,201,659



$

304,748












Total originations

$

4,996,201



$

5,164,048



$

15,873,733



$

17,374,793



$

5,489,118




(a)

Unpaid principal balance excluded from the weighted average FICO score is $311 million, $492 million, $1.2 billion, $1.8 billion, and $503 million for the three months ended September 30, 2017 and 2016, the nine months ended September 30, 2017 and 2016, and the three months ended June 30, 2017, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $37 million, $74 million, $95 million, $370 million, and $49 million, respectively, were commercial loans.



(b)

Only includes assets both originated and sold in the period. Total asset sales for the period are shown in Table 6.



(c)

Unpaid principal balance excluded from the weighted average FICO score is $93 million, $59 million, $319 million, $263 million, and $39 million for the three months ended September 30, 2017 and 2016, the nine months ended September 30, 2017 and 2016, and the three months ended June 30, 2017, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $26 million, zero, $102 million, zero, and $14 million, respectively, were commercial loans.




Table 6: Asset Sales


Asset sales may include assets originated in prior periods.



Three Months Ended


Nine Months Ended


Three Months
Ended


September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016


June 30, 2017


(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

1,482,134



$

793,804



$

2,979,033



$

2,312,983



$

566,309


Average APR

6.2

%


3.0

%


6.2

%


2.9

%


6.6

%

Average FICO®

716



762



721



762



725












Personal loans

$



$



$



$

869,349



$


Average APR







17.9

%



Total asset sales

$

1,482,134



$

793,804



$

2,979,033



$

3,182,332



$

566,309








Table 7: Ending Portfolio



Ending outstanding balance, average APR and remaining unaccreted dealer discount of our held for investment portfolio as of September 30, 2017, and December 31, 2016, are as follows:





September 30, 2017


December 31, 2016



(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

26,369,828


$

27,358,147


Average APR

16.7

%

16.4

%

Discount

1.6

%

2.3

%





Personal loans

$

9,188


$

19,361


Average APR

31.9

%

31.5

%





Receivables from dealers

$

16,069


$

69,431


Average APR

4.2

%

4.9

%





Leased vehicles

$

11,001,400


$

9,612,953






Capital leases

$

21,648


$

31,872





Table 8: Reconciliation of Non-GAAP Measures



September 30, 2017


September 30, 2016


(Unaudited, Dollar amounts in thousands)

Total equity

$

5,885,234



$

5,117,657


  Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities

172,502



191,850


  Deduct: Accumulated other comprehensive income (loss), net

27,481



(26,598)


Tier 1 common capital

$

5,685,251



$

4,952,405


Risk weighted assets (a)

$

37,828,130



$

37,828,982


Common Equity Tier 1 capital ratio (b)

15.0

%


13.1

%



(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 as of January 1, 2015. The fully phased-in capital ratios are non-GAAP financial measures.

 

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SOURCE Santander Consumer USA Holdings Inc.