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Santander Consumer USA Holdings Inc. Reports Second Quarter 2019 Results and Key Leadership Appointments

07/24/19
Net Income of $368 million and Total Auto Originations of $8.4 billion
SC Appoints Fahmi Karam as CFO and Shawn Allgood as Head of Chrysler Capital and Auto Relationships
Juan Carlos Alvarez Appointed CFO of Santander US

DALLAS, July 24, 2019 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced the Boards of Directors of Santander Holdings USA, Inc. and SC have approved several senior management appointments to further strengthen Santander's US leadership teams.

  • Fahmi Karam, SC's Head of Pricing and Analytics, will succeed Juan Carlos "JC" Alvarez as CFO, effective September 16, 2019. He will continue to lead the Pricing and Analytics group in addition to his new role.
  • Shawn Allgood, currently EVP at Chrysler Capital, succeeds Richard Morrin as Head of Chrysler Capital and Auto Relationships, effective immediately. Morrin has resigned to assume a CEO role with a privately-held company outside of the auto finance industry.
  • Juan Carlos "JC" Alvarez, will become CFO of Santander US and Santander Bank, N.A. ("SBNA"), effective September 16, 2019. Alvarez currently serves as the CFO at SC, a role he has held since 2017. Alvarez succeeds Duke Dayal in his capacity as Santander US CFO.

Management Quotes

"We are pleased with our second quarter results. We reached a mutually beneficial agreement with Fiat Chrysler, we saw strong originations driven by our FCA relationship and Santander Bank program - where we originated almost two billion dollars in loans through SBNA in the quarter, demonstrating the strength in the collaboration between our US platforms," said Scott Powell, SC President and CEO, also CEO of Santander US. "We also made important leadership appointments to further strengthen the SC and US management teams to help take the company into the future. I want to congratulate JC, Fahmi and Shawn and I want to thank Rich Morrin for his many years of service at Santander and Chrysler Capital. We wish him well."

Juan Carlos Alvarez, SC Chief Financial Officer, added, "We delivered another strong quarter with steady credit performance and disciplined expense management. We were also pleased to have announced our plan to repurchase up to $1.1 billion in common stock and the dividend increase to $0.22 from $0.20. This announcement demonstrates our progress toward a more efficient capital base, a longstanding corporate objective."

Fahmi Karam has been appointed CFO of SC in addition to his current leadership position as Head of SC's Pricing and Analytics. He joined SC in September 2015 as Executive Vice President of Strategy and Corporate Development, where he was responsible for overseeing financial planning and analysis, asset acquisitions and sales, and other strategic initiatives. Previously, Karam spent 12 years with J.P. Morgan's investment banking unit. He also held positions at Deloitte in its audit and assurance services.

Shawn Allgood assumes the role of Head of Chrysler Capital and Auto Relationships from his current position as Executive Vice President, where he led consumer underwriting. In his new role, Shawn will be focused on, and responsible for, Chrysler Capital and SC's sales and marketing activities, and its dealer and customer relationships. He joined Santander in April 2017 from Ally Financial Inc., where he held a series of leadership roles with increasing responsibility for nearly three decades, serving most recently as Executive Director for Collections.

Juan Carlos "JC" Alvarez joins Santander US from SC, where he has served as CFO since October 2017. A highly experienced finance professional, Alvarez joined Santander in 1996 and has held roles with increasing responsibility, including Corporate Treasurer for Santander US. In that role, Alvarez oversaw Santander US's liquidity risk management, asset liability management, fixed-income investor relations and treasury functions.

Q2 2019 Highlights (variances compared to the second quarter of 2018 ("Q2 2018"), unless otherwise noted):

  • SC announced net income for the second quarter ended June 30, 2019 ("Q2 2019") of $368 million, or $1.05 per diluted common share.
  • The Company has declared a cash dividend of $0.22 per share, to be paid on August 15, 2019, to shareholders of record as of the close of business on August 5, 2019.
  • Total auto originations of $8.4 billion, up 5%
  • Core retail auto loan originations of $2.4 billion, down 7%
  • Chrysler Capital loan originations of $3.5 billion, up 25%
  • Chrysler Capital lease originations of $2.5 billion, down 4%
  • Chrysler average quarterly penetration rate of 36%, up from 32%
  • Santander Bank, N.A. program originations of $1.9 billion
  • Net finance and other interest income of $1.2 billion, up 5%
  • 30-59 delinquency ratio of 9.4%, down 20 basis points
  • 59-plus delinquency ratio of 4.7%, up 20 basis points
  • Retail Installment Contract ("RIC") gross charge-off ratio of 16.1%, up 90 basis points
  • Recovery rate of 60.3%, stable
  • RIC net charge-off ratio of 6.4%, up 30 basis points
  • Troubled Debt Restructuring ("TDR") balance of $4.5 billion, down $397 million vs. March 31, 2019
  • Return on average assets of 3.2%, down from 3.3%
  • $3.4 billion in loan asset-backed securities "ABS"
  • Expense ratio of 2.0%, down from 2.2%
  • Common equity tier 1 ("CET1") ratio of 15.7% , down from 16.9% as of June 30, 2018

Net finance and other interest income1 increased 5 percent to $1.17 billion in Q2 2019 from $1.12 billion in Q2 2018, driven by increased loan and lease balances.

SC's serviced for others portfolio decreased 3 percent to $9.3 billion as of Q2 2019 versus the prior year quarter. Servicing fee income decreased 9 percent to $25 million in Q2 2019, from $28 million in Q2 2018, driven by the change in the composition of those balances. Fees, commissions and other increased to $90 million in Q2 2019, from $77 million in Q2 2018, driven by origination fees from the SBNA program.

RIC delinquency ratio2 of 4.7 percent in Q2 2019 increased 20 basis points compared to 4.5 percent in Q2 2018.

RIC net charge-off ratio3 increased to 6.4 percent in Q2 2019, from 6.1 percent in Q2 2018. Provision for credit losses of $431 million in Q2 2019 were up from $407 million the prior year quarter.

Allowance ratio4 decreased 20 basis points, to 10.8 percent at the end of Q2 2019, from 11.0 percent at the end of Q1 2019.

Recorded net investment losses of $85 million in Q2 2019, compared to net investment losses of $83 million in Q2 2018. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio.5

During Q2 2019 SC incurred $281 million of operating expenses, up 1 percent from $277 million in Q2 2018. SC's expense ratio decreased to 2.0 percent during the quarter, compared to 2.2 percent during the same period last year.

1Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.
2Delinquency 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 finance leases.
3Net charge-off ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.
4Ratio for allowance for credit losses excludes end of period balances on purchased receivables portfolio of $26 million and finance receivables and personal loans held for sale of $1.2 billion.
5The current period losses were primarily driven by $85 million of lower of cost or market adjustments related to the held for sale personal lending portfolio, comprised of $97 million in customer default activity, partially offset by a $12 million decrease in market discount, consistent with typical seasonal patterns.

Conference Call Information
SC will host a conference call and webcast to discuss its Q2 2019 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 24, 2019. The conference call will be accessible by dialing 800-263-0877 (U.S. domestic), or 646-828-8143 (international), conference ID 8209516. Please join 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 Q2 2019 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 prior to the call.

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 8209516, approximately two hours 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 FCA US LLC may not result in currently anticipated levels of growth and is subject to certain 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 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, had an average managed asset portfolio of approximately $56 billion (as of June 30, 2019), 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

MediaRelations@santander.us

 

Santander Consumer USA Holdings Inc.

Financial Supplement

Second Quarter 2019


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






June 30,
2019


December 31,
2018

Assets

(Unaudited, Dollars in thousands)

Cash and cash equivalents

$

99,756



$

148,436


Finance receivables held for sale, net

1,249,101



1,068,757


Finance receivables held for investment, net

25,838,749



25,117,454


Restricted cash

2,272,621



2,102,048


Accrued interest receivable

277,813



303,686


Leased vehicles, net

15,313,369



13,978,855


Furniture and equipment, net

59,176



61,280


Federal, state and other income taxes receivable

83,427



97,087


Related party taxes receivable

4,581



734


Goodwill

74,056



74,056


Intangible assets

34,117



35,195


Due from affiliates

19,581



8,920


Other assets

1,089,746



963,347


Total assets

$

46,416,093



$

43,959,855


Liabilities and Equity




Liabilities:




Notes payable — credit facilities

$

6,514,163



$

4,478,214


Notes payable — secured structured financings

26,248,528



26,901,530


Notes payable — related party

4,002,814



3,503,293


Accrued interest payable

46,817



49,370


Accounts payable and accrued expenses

431,004



422,951


Deferred tax liabilities, net

1,327,342



1,155,883


Due to affiliates

91,320



63,219


Other liabilities

416,844



367,037


Total liabilities

$

39,078,832



$

36,941,497






Equity:




Common stock, $0.01 par value

3,481



3,523


Additional paid-in capital

1,413,461



1,515,572


Accumulated other comprehensive income, net

(20,567)



33,515


Retained earnings

5,940,886



5,465,748


Total stockholders' equity

$

7,337,261



$

7,018,358


Total liabilities and equity

$

46,416,093



$

43,959,855


 

Table 2: Condensed Consolidated Statements of Income






Three Months Ended
June 30,


Six Months Ended
June 30,


2019


2018


2019


2018


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

Interest on finance receivables and loans

$

1,261,098



$

1,211,006



$

2,514,678



$

2,379,546


Leased vehicle income

676,236



537,897



1,325,796



1,042,175


Other finance and interest income

11,437



8,494



21,684



15,631


Total finance and other interest income

1,948,771



1,757,397



3,862,158



3,437,352


Interest expense

330,039



273,953



664,421



514,981


Leased vehicle expense

444,442



360,335



888,461



719,018


Net finance and other interest income

1,174,290



1,123,109



2,309,276



2,203,353


Provision for credit losses

430,676



406,544



981,555



916,885


Net finance and other interest income after provision for credit losses

743,614



716,565



1,327,721



1,286,468


Profit sharing

13,345



12,853



20,313



17,230


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

730,269



703,712



1,307,408



1,269,238


Investment losses, net

(84,787)



(82,634)



(151,884)



(169,154)


Servicing fee income

25,002



27,538



48,808



53,720


Fees, commissions, and other

90,196



77,480



184,572



162,871


Total other income

30,411



22,384



81,496



47,437


Compensation expense

122,678



118,598



250,572



240,603


Repossession expense

69,699



63,660



140,559



135,741


Other operating costs

88,272



94,692



180,475



188,518


Total operating expenses

280,649



276,950



571,606



564,862


Income before income taxes

480,031



449,146



817,298



751,813


Income tax expense

111,764



114,120



201,528



172,172


Net income

$

368,267



$

335,026



$

615,770



$

579,640










Net income per common share (basic)

$

1.05



$

0.93



$

1.75



$

1.61


Net income per common share (diluted)

$

1.05



$

0.93



$

1.75



$

1.60


Weighted average common shares (basic)

351,106,197



361,268,112



351,309,700



360,987,233


Weighted average common shares (diluted)

351,556,349



362,057,614



351,825,554



361,829,283


 

Table 3: Other Financial Information






Three Months Ended
June 30,


Six Months Ended
June 30,

Ratios (Unaudited, Dollars in thousands)

2019


2018


2019


2018

Yield on individually acquired retail installment contracts

16.1

%


16.2

%


16.1

%


16.1

%

Yield on purchased receivables portfolios

14.0

%


24.1

%


16.8

%


25.9

%

Yield on receivables from dealers

1.6

%


3.4

%


2.6

%


3.2

%

Yield on personal loans, held for sale (1)

26.3

%


24.6

%


26.2

%


24.5

%

Yield on earning assets (2)

12.9

%


13.5

%


12.9

%


13.4

%

Cost of debt (3)

3.7

%


3.4

%


3.7

%


3.3

%

Net interest margin (4)

10.1

%


10.9

%


10.0

%


10.8

%

Expense ratio (5)

2.0

%


2.2

%


2.1

%


2.3

%

Return on average assets (6)

3.2

%


3.3

%


2.7

%


2.9

%

Return on average equity (7)

20.3

%


19.5

%


17.2

%


17.2

%

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

6.4

%


6.1

%


7.5

%


7.2

%

Net charge-off ratio (8)

6.4

%


6.0

%


7.5

%


7.2

%

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

4.7

%


4.5

%


4.7

%


4.5

%

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

4.7

%


4.5

%


4.7

%


4.5

%

Allowance ratio (10)

10.8

%


12.1

%


10.8

%


12.1

%

Common stock dividend payout ratio (11)

19.1

%


5.4

%


22.8

%


6.2


Common Equity Tier 1 capital ratio (12)

15.7

%


16.9

%


15.7

%


16.9

%

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

$

462,427



$

405,651



$

1,077,631



$

946,934


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



(565)





(993)


Charge-offs, net of recoveries, on personal loans

1,675



515



1,914



1,264


Charge-offs, net of recoveries, on finance leases

175



406



347



712


Total charge-offs, net of recoveries

$

464,277



$

406,007



$

1,079,892



$

947,917


End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment

1,368,427



1,232,521



1,368,427



1,232,521


End of period delinquent principal over 59 days, personal loans

167,033



164,458



167,033



183,919


End of period delinquent principal over 59 days, loans held for investment

1,368,427



1,234,502



1,368,427



1,234,502


End of period assets covered by allowance for credit losses

29,007,585



27,551,134



29,007,585



27,551,134


End of period gross individually acquired retail installment contracts held for investment

28,971,311



27,511,718



28,971,311



27,511,718


End of period gross personal loans held for sale

1,364,956



1,370,888



1,364,956



1,370,888


End of period gross finance receivables and loans held for investment

29,009,846



27,566,517



29,009,846



27,566,517


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

45,557,709



40,422,435



45,557,709



40,422,435


Average gross individually acquired retail installment contracts held for investment

29,017,122



26,772,369



28,816,732



26,402,688


Average gross personal loans held for investment

1,337



4,562



1,809



5,304


Average gross individually acquired retail installment contracts held for investment and held for sale

$

29,070,738



$

27,673,016



$

28,834,640



$

27,305,408


Average gross purchased receivables portfolios

26,759



37,284



28,020



39,257


Average gross receivables from dealers

13,088



15,361



13,368



15,507


Average gross personal loans held for sale

1,375,306



1,375,877



1,424,717



1,421,861


Average gross finance leases

21,889



20,937



20,994



21,699


Average gross finance receivables and loans

$

30,507,780



$

29,122,475



$

30,321,739



$

28,803,732


Average gross operating leases

16,043,654



12,219,612



15,752,705



11,856,109


Average gross finance receivables, loans, and leases

46,551,434



41,342,087



46,074,444



40,659,841


Average managed assets

55,545,503



50,445,203



55,043,583



49,632,691


Average total assets

45,700,887



40,885,720



45,101,873



40,316,990


Average debt

36,152,602



31,898,900



35,715,392



31,589,063


Average total equity

7,273,470



6,879,749



7,163,738



6,724,157




(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 finance 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 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)

"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

The activity in the credit loss allowance for individually acquired retail installment contracts for the three and six months ended June 30, 2019 and 2018 was as follows (Unaudited, Dollar amounts in thousands):


Three Months Ended June 30, 2019


Three Months Ended June 30, 2018



Retail Installment Contracts Acquired
Individually


Retail Installment Contracts Acquired
Individually


Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR




Balance — beginning of period

$

1,891,351



$

1,280,649



$

1,597,057



$

1,716,132



Provision for credit losses

365,604



63,414



263,648



144,750



Charge-offs

(795,901)



(369,523)



(605,658)



(412,710)



Recoveries

517,626



185,371



396,667



216,050



Transfers to held-for-sale

(16,787)



(3,608)







Balance — end of period

$

1,961,893



$

1,156,303



$

1,651,714



$

1,664,222



 


Six Months Ended June 30, 2019


Six Months Ended June 30, 2018



Retail Installment Contracts Acquired
Individually


Retail Installment Contracts Acquired
Individually


Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR




Balance — beginning of period

$

1,819,360



$

1,416,743



$

1,540,315



$

1,804,132



Provision for credit losses

$

812,092



$

168,027



550,099



368,324



Charge-offs

$

(1,723,358)



$

(836,160)



(1,260,827)



(960,053)



Recoveries

$

1,070,586



$

411,301



822,127



451,819



Transfers to held-for-sale

$

(16,787)



$

(3,608)







Balance — end of period

$

1,961,893



$

1,156,303



$

1,651,714



$

1,664,222



A summary of delinquencies of our individually acquired retail installment contracts as of June 30, 2019 and December 31, 2018 is as follows (Unaudited, Dollar amounts in thousands):

Delinquent Principal

June 30, 2019


December 31, 2018

Principal 30-59 days past due

$

2,723,639



9.4

%


$

3,118,869



11.0

%

Delinquent principal over 59 days2

1,367,310



4.7

%


1,712,243



6.0

%

Total delinquent contracts

$

4,090,949



14.1

%


$

4,831,112



17.0

%

Within the total delinquent principal above, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of June 30, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):

Nonaccrual Principal

June 30, 2019


December 31, 2018

Non-TDR

$

864,619



3.0

%


$

834,921



2.9

%

TDR

546,495



1.9

%


733,218



2.6

%

Total nonaccrual principal

$

1,411,114



4.9

%


$

1,568,139



5.5

%

The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of June 30, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):

Allowance Ratios

June 30,
 2019


December 31,
 2018

TDR - Unpaid principal balance

$

4,519,334



$

5,378,603


TDR - Impairment

1,156,303



1,416,743


TDR - Allowance ratio

25.6

%


26.3

%





Non-TDR - Unpaid principal balance

$

24,451,977



$

23,054,157


Non-TDR - Allowance

1,961,893



1,819,360


Non-TDR Allowance ratio

8.0

%


7.9

%





Total - Unpaid principal balance

$

28,971,311



$

28,432,760


Total - Allowance

3,118,196



3,236,103


Total - Allowance ratio

10.8

%


11.4

%


1Percent of unpaid principal balance.

2Interest is accrued until 60 days past due in accordance with the Company's account policy for retail installment contracts.


Table 5: Originations

The Company's originations of individually acquired loans and leases, including revolving loans, average APR, and discount were as follows:


Three Months Ended


Six Months Ended


Three Months Ended


June 30, 2019


June 30, 2018


June 30, 2019


June 30, 2018


March 31, 2019

Retained Originations

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

3,949,648



$

4,630,704



$

7,975,975



$

8,014,110



$

4,026,327


Average APR

16.2

%


16.8

%


16.7

%


17.0

%


17.2

%

Average FICO® (a)

601



602



597



599



593


Discount

(0.5)

%


0.004

%


(0.3)

%


0.2

%


(0.1)

%











Personal loans

343,214



340,088



631,770



613,416



$

288,557


Average APR

29.7

%


27.1

%


29.8

%


28.3

%


29.7

%











Leased vehicles

2,520,130



2,632,052



4,483,710



4,725,657



$

1,963,580












Finance lease

4,822



2,058



8,129



$

4,456



$

3,308


Total originations retained

$

6,817,814



$

7,604,902



$

13,099,584



$

13,357,639



$

6,281,772












Sold Originations (b)










Retail installment contracts

$



$

683,935



$



$

1,553,979



$


Average APR

%


7.6

%


%


7.3

%


%

Average FICO® (b)



726





726




Total originations sold

$



$

683,935



$



$

1,553,979



$












Total originations (excluding SBNA Originations Program)

$

6,817,814



$

8,288,837



$

13,099,584



$

14,911,618



$

6,281,772




(a)

Unpaid principal balance excluded from the weighted average FICO score is $448 million, $594 million, $941 million, $1 billion and $493 million for the three months ended June 30, 2019 and 2018, the six months ended June 30, 2019 and 2018, and for the three months ended March 31, 2019 respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $141 million, $44 million, $247 million, $77 million and $106 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. Unpaid principal balance excluded from the weighted average FICO score is zero, $54 million, zero, $121 million and zero for the three months ended June 30, 2019 and 2018,the six months ended June 30, 2019 and 2018, and the three months ended March 31, 2019, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, zero, $26 million, zero, $67 million and zero, respectively, were commercial loans.

SBNA Originations Program
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. The Company facilitated the purchase of $1.9 billion and $2.95 billion of retail installment contacts during the three and six months ended June 30, 2019, respectively.

Table 6: Asset Sales






Three Months Ended


Six Months Ended


June 30, 2019


June 30, 2018


June 30, 2019


June 30, 2018


(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$



$

1,156,060



$



$

2,631,313


Average APR

%


7.5

%


%


7.0

%

Average FICO®



724





726










Total asset sales

$



$

1,156,060



$



$

2,631,313


There were no asset sales during 2019, since it has been replaced with SBNA originations program.

Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted dealer discount of our held for investment portfolio as of June 30, 2019, and December 31, 2018, are as follows:


June 30, 2019


December 31, 2018


(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

28,996,835



$

28,463,236


Average APR

16.8

%


16.7

%

Discount

0.5

%


0.8

%





Personal loans (a)

$



$

2,637


Average APR

%


31.7

%





Receivables from dealers

$

13,010



$

14,710


Average APR

4.0

%


4.1

%





Leased vehicles

$

16,524,600



$

15,219,313






Finance leases

$

23,263



$

19,344




(a)

The remaining balance of personal loans, held for investment, was charged off during the quarter ended June 30, 2019.

 

Table 8: Reconciliation of Non-GAAP Measures






June 30,

2019


June 30,

2018


(Unaudited, Dollar amounts in thousands)

Total equity

$

7,337,261



$

7,033,636


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

152,264



166,241


  Deduct: Accumulated other comprehensive income (loss), net

(21,568)



62,449


Tier 1 common capital

$

7,206,565



$

6,804,946


Risk weighted assets (a)

$

45,849,574



$

40,251,526


Common Equity Tier 1 capital ratio (b)

15.7

%


16.9

%



(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.

 

Cision View original content:http://www.prnewswire.com/news-releases/santander-consumer-usa-holdings-inc-reports-second-quarter-2019-results-and-key-leadership-appointments-300890019.html

SOURCE Santander Consumer USA Holdings Inc.

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