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Santander Consumer USA Holdings Inc. Reports Second Quarter 2020 Results

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DALLAS, July 29, 2020 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE:SC) ("SC" or the "Company") today announced net income for the second quarter ended June 30, 2020 ("Q2 2020") of $(97) million, or $(0.30) per diluted common share. The quarter included $400 million of incremental allowance for credit loss primarily driven by macroeconomic factors and COVID-19.

As previously announced, based on the interim Federal Reserve Board ("FRB") policy and SHUSA's expected average trailing four quarters of net income, SC is prohibited from paying a dividend in the third quarter of 2020. Although SC's standalone expected income is sufficient to declare and a pay a dividend in the third quarter, SC is consolidated into SHUSA's capital plan and therefore is subject to the FRB's interim policy that utilizes SHUSA's average trailing income to determine the cap on common stock dividends. SHUSA has requested certain exceptions to the interim policy, however the timing and outcome of the request is uncertain. SC does not currently expect to declare or pay a dividend in the third quarter of 2020 pending approval of SHUSA's exception request.

Management Quotes

"The duration of the pandemic has created significant macroeconomic uncertainty, and the speed of the economic recovery will dictate our performance over the next several months. While certain indicators are trending positive, we anticipate a delayed reversion to normal. Our results this quarter demonstrate the resiliency of our portfolio, the effectiveness of the hardship programs we instituted and the strength of our business model. Our employees, dealers and customers continue to be our priority as we endeavor to provide them the highest levels of service in these trying times. In the past weeks, we have also responded to the calls for an end to systemic racism by starting a conversation with our employees and committing to take action to make our company a place where all employees are valued, feel safe and have an opportunity to succeed. In the process, we will make sustained and material differences in the way we view race and interact with each other," said Mahesh Aditya, SC President and CEO.  

Fahmi Karam, SC Chief Financial Officer, added, "This quarter's strong credit performance reflects the impact of the pandemic relief we provided to our customers and the improvement in auction recovery rates, particularly towards the end of the quarter. We continued to build reserves this quarter due to the COVID-19 uncertainty and we remain well capitalized with a 13.4% CET1 ratio, combining for an industry leading loss absorbing capacity to manage through the pandemic and position us for long-term success."

Second Quarter of 2020 Highlights (variances compared to second quarter of 2019 ("Q2 2019"), unless otherwise noted)

  • Total auto originations of $7.8 billion, down 7%
    • Core retail auto loan originations of $2.1 billion, down 12%
    • Chrysler Capital loan originations of $4.7 billion, up 36%
    • Chrysler Capital lease originations of $989 million, down 61%
    • Chrysler average quarterly penetration rate of 37%, from 36%
    • Santander Bank, N.A. program originations of $1.7 billion
  • Net finance and other interest income1 of $1.1 billion, down 7%
  • 30-59 delinquency ratio of 4.3%, down 510 basis points
  • 59-plus delinquency ratio2 of 2.4%, down 230 basis points
  • Retail Installment Contract ("RIC") gross charge-off ratio of 11.1%, down 500 basis points
  • Recovery rate of 46%, down from 60%
  • RIC net charge-off ratio3 of 6.0%, down 40 basis points
  • Troubled Debt Restructuring ("TDR") balance of $3.9 billion, down from $4.5 billion
  • Return on average assets of (0.8)%, down from 3.2%
  • $1.9 billion in asset-backed securities "ABS" issued
  • Expense ratio of 1.7%, down from 2.0%
  • Common equity tier 1 ("CET1") ratio of 13.4%, down from 15.7% as of June 30, 2019

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.

Conference Call Information
SC will host a conference call and webcast to discuss its Q2 2020 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 29, 2020. The conference call will be accessible by dialing 888-394-8218 (U.S. domestic), or 323-701-0225 (international), conference ID 2177889. 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 2020 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 2177889, 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 for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (collectively, our "SEC filings"). 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 adverse impact of COVID-19 on our business, financial condition, liquidity and results of operations; (b) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (c) adverse economic conditions in the United States and worldwide may negatively impact our results; (d) a reduction in our access to funding a reduction in ; (e) significant risks we face implementing our growth strategy, some of which are outside our control; (f) unexpected costs and delays in connection with exiting our personal lending business; (g) 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; (h) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (i) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (j) loss of our key management or other personnel, or an inability to attract such management and personnel; (k) 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 (l) 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 3.1 million customers across the full credit spectrum. SC, which began originating retail installment contracts in 1997, had an average managed asset portfolio of approximately $61 billion (for the second quarter ended June 30, 2020), and is headquartered in Dallas. (www.santanderconsumerusa.com)

 

CONTACTS:

Investor Relations
Evan Black
800.493.8219
InvestorRelations@santanderconsumerusa.com

Media Relations
Annette Rogers
469.563.4157
Media@santanderconsumerusa.com

 

 

Santander Consumer USA Holdings Inc.

Financial Supplement

Second Quarter 2020



Table of Contents




Table 1: Condensed Consolidated Balance Sheets

7

Table 2: Condensed Consolidated Statements of Income

8

Table 3: Other Financial Information

9

Table 4: Credit Quality

11

Table 5: Originations

13

Table 6: Asset sales

14

Table 7: Ending Portfolio

15

Table 8: Reconciliation of Non-GAAP Measures

16

 

Table 1: Condensed Consolidated Balance Sheets


June 30, 2020


December 31, 2019

Assets

(Unaudited, Dollars in thousands)

Cash and cash equivalents

$

175,936



$

81,848


Finance receivables held for sale, net

2,445,599



1,007,105


       Finance receivables held for investment, at amortized cost

30,606,438



30,810,487


       Allowance for credit loss

(5,859,954)



(3,043,468)


Finance receivables held for investment, at amortized cost, net

24,746,484



27,767,019


Restricted cash

2,057,315



2,079,239


Accrued interest receivable

447,232



288,615


Leased vehicles, net

16,239,622



16,461,982


Furniture and equipment, net

61,653



59,873


Goodwill

74,056



74,056


Intangible assets

53,159



42,772


Other assets

967,639



1,071,020


Total assets

$

47,268,695



$

48,933,529


Liabilities and Equity




Liabilities:




Borrowings and other debt obligations

$

40,636,769



$

39,194,141


Deferred tax liabilities, net

910,448



1,468,222


Accounts payable and accrued expenses

508,290



563,277


Other liabilities

317,723



389,269


Total liabilities

$

42,373,230



$

41,614,909






Equity:




Common stock, $0.01 par value

3,162



3,392


Additional paid-in capital

624,554



1,173,262


Accumulated other comprehensive income, net

(63,705)



(26,693)


Retained earnings

4,331,454



6,168,659


Total stockholders' equity

$

4,895,465



$

7,318,620


Total liabilities and equity

$

47,268,695



$

48,933,529


 

Table 2: Condensed Consolidated Statements of Income


Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019


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

Interest on finance receivables and loans

$

1,236,600



$

1,261,098



$

2,510,419



$

2,514,678


Leased vehicle income

737,549



676,236



1,485,528



1,325,796


Other finance and interest income

2,657



11,437



10,208



21,684


Total finance and other interest income

1,976,806



1,948,771



4,006,155



3,862,158


Interest expense

308,982



330,039



637,816



664,421


Leased vehicle expense

610,861



444,442



1,163,773



888,461


Net finance and other interest income

1,056,963



1,174,290



2,204,566



2,309,276


Credit loss expense

861,896



430,676



1,769,783



981,555


Net finance and other interest income after credit loss expense

195,067



743,614



434,783



1,327,721


Profit sharing

11,530



13,345



25,825



20,313


Net finance and other interest income after credit loss expense and profit sharing

183,537



730,269



408,958



1,307,408


Investment losses, net

(147,582)



(84,787)



(211,008)



(151,884)


Servicing fee income

19,120



25,002



38,223



48,808


Fees, commissions, and other

82,069



90,196



177,199



184,572


Total other income

(46,393)



30,411



4,414



81,496


Compensation and benefits

127,643



122,678



260,969



250,572


Repossession expense

22,289



69,699



79,951



140,559


Other expenses

116,747



88,272



208,432



180,475


Total other expenses

266,679



280,649



549,352



571,606


Income (loss) before income taxes

(129,535)



480,031



(135,980)



817,298


Income tax expense

(32,857)



111,764



(35,315)



201,528


Net income (loss)

$

(96,678)



$

368,267



$

(100,665)



$

615,770










Net income per common share (basic)

$

(0.30)



$

1.05



$

(0.31)



$

1.75


Net income per common share (diluted)

$

(0.30)



$

1.05



$

(0.31)



$

1.75


Weighted average common shares (basic)

319,773,636



351,106,197



326,899,844



351,309,700


Weighted average common shares (diluted)

$

319,878,145



$

351,556,349



$

327,137,104



$

351,825,554


Number of shares outstanding

316,235,387



348,130,140



316,235,387



348,130,140


 

Table 3: Other Financial Information


Three Months Ended June 30,


Six Months Ended June 30,

Ratios (Unaudited, Dollars in thousands)

2020


2019


2020


2019

Yield on retail installment contracts

14.8

%


16.1

%


15.0

%


16.1

%

Yield on leased vehicles

2.9

%


5.8

%


3.7

%


5.6

%

Yield on personal loans, held for sale (1)

25.6

%


26.3

%


26.0

%


26.2

%

Yield on earning assets (2)

10.9

%


12.9

%


11.4

%


12.9

%

Cost of debt (3)

3.1

%


3.7

%


3.2

%


3.7

%

Net interest margin (4)

8.4

%


10.1

%


8.8

%


10.0

%

Expense ratio (5)

1.7

%


2.0

%


1.8

%


2.1

%

Return on average assets (6)

(0.8)

%


3.2

%


(0.4)

%


2.7

%

Return on average equity (7)

(7.7)

%


20.3

%


(3.6)

%


17.2

%

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

6.0

%


6.4

%


6.9

%


7.5

%

Net charge-off ratio (8)

6.0

%


6.4

%


6.9

%


7.5

%

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

2.4

%


4.7

%


2.4

%


4.7

%

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

2.4

%


4.7

%


2.4

%


4.7

%

Allowance ratio (10)

19.2

%


10.8

%


19.2

%


10.8

%

Common stock dividend payout ratio (11)

*


19.1

%


*


22.8

%

Common Equity Tier 1 capital ratio (12)

13.4

%


15.7

%


13.4

%


15.7

%

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

$

461,014



$

462,427



$

1,054,060



$

1,077,631


Total charge-offs, net of recoveries

461,925



464,277



$

1,055,524



$

1,079,892


End of period delinquent amortized cost over 59 days, retail installment contracts held for investment

743,693



1,367,310



743,693



1,367,310


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

127,504



167,033



127,504



167,033


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

744,170



1,368,427



744,170



1,368,427


End of period assets covered by allowance for credit losses

30,522,963



29,007,585



30,522,963



29,007,585


End of period gross retail installment contracts held for investment

30,492,634



28,971,311



30,492,634



28,971,311


End of period gross retail installment contracts held for sale

1,718,244



321,503



1,718,244



321,503


End of period gross personal loans held for sale

1,283,183



1,364,956



1,283,183



1,364,956


End of period gross finance receivables and loans held for investment

30,496,308



29,009,846



30,496,308



29,009,846


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

47,729,637



45,557,709



47,729,637



45,557,709


Average gross retail installment contracts held for investment

30,493,604



29,017,122



30,586,535



28,816,732


Average gross retail installment contracts held for sale

1,363,876



321,503



1,363,876



321,503


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

31,193,215



29,070,738



31,017,842



28,834,640


Average gross personal loans held for sale

1,307,609



1,375,306



1,363,023



1,424,717


Average gross finance receivables and loans

32,554,978



30,507,780



32,438,109



30,321,739


Average gross operating leases

17,492,255



16,043,654



17,584,849



15,752,705


Average gross finance receivables, loans, and leases

50,047,233



46,551,434



50,022,958



46,074,444


Average managed assets

61,001,767



55,545,503



60,652,091



55,043,583


Average total assets

46,876,726



45,700,887



47,308,997



45,101,873


Average debt

40,113,885



36,152,602



39,858,355



35,715,392


Average total equity

5,033,773



7,273,470



5,573,544



7,163,738




















(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 amortized cost 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. The Common stock dividend payout ratio for the three and six months ended June 30, 2020 has not been disclosed since the earnings per share for the three and six months ended June 30, 2020 was a negative number

(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 retail installment contracts for the three and six months ended June 30, 2020 and 2019 was as follows (Unaudited, Dollar amounts in thousands):


Three Months Ended June 30, 2020


Three Months Ended June 30, 2019


Retail Installment Contracts


Retail Installment Contracts

Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR


Balance — beginning of period

$

4,482,663



$

973,236



$

1,891,351



$

1,280,649


Credit loss expense (a)

744,511



116,419



348,817



59,806


Charge-offs (b)

(721,218)



(127,617)



(795,901)



(369,523)


Recoveries

312,231



75,590



517,626



185,371


Balance — end of period

$

4,818,187



$

1,037,628



$

1,961,893



$

1,156,303











Six Months Ended June 30, 2020


Six Months Ended June 30, 2019


Retail Installment Contracts


Retail Installment Contracts

Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR


Balance — beginning of period

$

2,123,878



$

914,718



$

1,819,360



$

1,416,743


Day 1 - Adjustment to allowance for adoption of CECL standard

2,030,473



71,833






Credit loss expense (a)

1,501,704



267,268



795,305



164,419


Charge-offs (b)

(1,620,768)



(417,184)



(1,723,358)



(836,160)


Recoveries

782,900



200,993



1,070,586



411,301


Balance — end of period

$

4,818,187



$

1,037,628



$

1,961,893



$

1,156,303




(a)

Excluded from the credit loss expense is $39 million related to retail installment contracts sold in an off balance sheet securitization during the three and six months ended June 30, 2020. In addition, credit loss expense excludes $12 million related to retail installment contracts transferred to held for sale during the three and six months ended June 30, 2020. Furthermore, credit loss expense includes $20 million related to retail installment contracts transferred to held for sale during the three and six months ended June 30, 2019.

(b)

Charge-offs for retail installment contracts includes partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional ACL on these loans.

 

A summary of delinquencies of our retail installment contracts as of June 30, 2020 and December 31, 2019 is as follows (Unaudited, Dollar amounts in thousands):

Delinquent Balance


June 30, 2020



Amount


Percent

Amortized cost, 30-59 days past due


1,308,305



4.3

%

Delinquent amortized cost over 59 days


743,693



2.4

%

Total delinquent balance at amortized cost


$

2,051,998



6.7

%






Delinquent Balance


December 31, 2019



Amount


Percent

Principal 30-59 days past due


$

2,972,495



9.7

%

Delinquent principal over 59 days


1,578,452



5.1

%

Total delinquent principal (a)


$

4,550,947



14.8

%



(a)

The table includes balances based on UPB. Difference between amortized cost and UPB was not material.

 

The retail installment contracts held for investment that were placed on nonaccrual status, as of June 30, 2020 and December 31, 2019 (Unaudited, Dollar amounts in thousands):

Nonaccrual Balance

June 30, 2020


Amount


Percent

Non-TDR

622,126



2.0

%

TDR

242,037



0.8

%

Total non-accrual loans (a)

$

864,163



2.8

%



(a)

The table includes balances based on amortized cost.



Nonaccrual Balance


December 31, 2019



Amount


Percent

Non-TDR


$

1,099,462



3.6

%

TDR


516,119



1.7

%

Total nonaccrual principal (a)


$

1,615,581



5.3

%



(a)

The table includes balances based on UPB. Difference between amortized cost and UPB was not material.

 

The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of June 30, 2020 and December 31, 2019 (Unaudited, Dollar amounts in thousands):

Allowance Ratios

June 30, 2020


December 31, 2019

TDR - Unpaid principal balance

$

3,946,808



$

3,859,040


TDR - Impairment

1,037,628



914,718


TDR - Allowance ratio

26.3

%


23.7

%





Non-TDR - Unpaid principal balance

$

26,527,943



$

26,895,551


Non-TDR - Allowance

4,818,187



2,123,878


Non-TDR Allowance ratio

18.2

%


7.9

%





Total - Unpaid principal balance

$

30,474,751



$

30,754,591


Total - Allowance

5,855,815



3,038,596


Total - Allowance ratio

19.2

%


9.9

%

The Company's allowance for credit losses increased $0.4 billion and $2.8 billion for the three and six months ended June 30, 2020. For the three months ended June 30, 2020, the increase was primarily due to a reserve build associated with a weaker economic outlook related to COVID-19, partially offset by declines in balances. For the six months ended June 30, 2020, the primary drivers were $2.1 billion increase at CECL adoption on January 1, 2020, driven mainly by the addition of lifetime expected credit losses for non-TDR loans, and additional reserves specific to COVID-19 risk, partially offset by decline in balances.

 

Table 5: Originations

The Company's originations of loans and leases, including revolving loans, average APR, and dealer discount (net of dealer participation) were as follows:


Three Months Ended


Six Months Ended


Three Months Ended


June 30, 2020


June 30, 2019


June 30, 2020


June 30, 2019


March 31, 2020

Retained Originations

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

5,098,496



$

3,949,648



$

8,832,741



$

7,975,975



$

3,846,226


Average APR

11.7

%


16.2

%


13.3 %


16.7

%


15.3

%

Average FICO® (a)

657



601



635



597



607


Discount

(0.9)

%


(0.5)

%


(0.8)

%


(0.3)

%


(0.8)

%











Personal loans (b)

347,238



343,214



618,073



631,770



$

270,835


Average APR

29.6

%


29.7

%


29.5

%


29.8

%


29.8

%











Leased vehicles

986,617



2,520,130



3,007,338



4,483,710



$

2,020,721












Finance lease

1,927



4,822



4,929



$

8,129



$

3,002


Total originations retained

$

6,434,278



$

6,817,814



$

12,463,081



$

13,099,584



$

6,140,784












Sold Originations










Retail installment contracts

$



$



$

111,981



$



$


Average APR

%


%


4.4 %


%


%

Average FICO® (c)





722






Total originations sold

$



$



$

111,981



$



$












Total originations (excluding SBNA Originations Program)

$

6,434,278



$

6,817,814



$

12,575,062



$

13,099,584



$

6,140,784




(a)

Unpaid principal balance excluded from the weighted average FICO score is $586 million, $448 million, $1.0 billion, $941 million and $432 million for the three months ended June 30, 2020 and 2019, the six months ended June 30, 2020 and 2019, and for the three months ended March 31, 2020,  as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $102 million, $141 million, $241 million, $247 million and $139 million, respectively, were commercial loans.

(b) 

Included in the total origination volume is $58 million, $51 million, $79 million, $76 million and $21 million for the three months ended June 30, 2020 and 2019, the six months ended June 30, 2020 and 2019, and for the three months ended March 31, 2020, respectively, related to newly opened accounts.

(c)

Unpaid principal balance excluded from the weighted average FICO score is $9 million for the six months ended June 30, 2020, as the borrowers on these loans did not have FICO scores at origination.

 

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 $1.7 billion and $2.8 billion of retail installment contacts during the three and six months ended June 30, 2020, respectively.

Table 6: Asset Sales


Three Months Ended


Six Months Ended


Three Months Ended


June 30, 2020


June 30, 2019


June 30, 2020


June 30, 2019


March 31, 2020

Assets Sold

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

512,286



$



$

512,286



$



$


Average APR

6.4

%


%


6.4

%


%


%

Average FICO®

$

691





691






 

Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted net discount of our held for investment portfolio as of June 30, 2020 and December 31, 2019, are as follows:


June 30, 2020


December 31, 2019


(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

30,492,634



$

30,776,038


Average APR

15.4

%


16.1

%

Discount

0.03

%


0.3

%





Receivables from dealers

$

3,675



$

12,668


Average APR

3.9

%


4.0

%





Leased vehicles

$

17,206,674



$

17,562,782






Finance leases

$

26,655



$

27,584


 

Table 8: Reconciliation of Non-GAAP Measures


June 30, 2020


June 30, 2019


(Unaudited, Dollar amounts in thousands)

Total equity

$

4,895,465



$

7,337,261


Add: Adjustment due to CECL capital relief (c)

1,769,430




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

154,943



152,264


Deduct: Accumulated other comprehensive income (loss), net

(63,705)



(21,568)


Tier 1 common capital

$

6,573,657



$

7,206,565


Risk weighted assets (a)(c)

48,997,902



45,849,574


Common Equity Tier 1 capital ratio (b)(c)

13.4

%


15.7

%



(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.

(c)

As described in our 2019 annual report on Form 10-K, on January 1, 2020, we adopted ASU 2016-13, Financial Instruments -Credit Losses ("CECL"), which upon adoption resulted in a reduction to our opening retained earnings balance, net of income tax, and increase to the allowance for credit losses of approximately $2 billion. As also described in our 2019 10-K, the U.S. banking agencies in December 2018 had approved a final rule to address the impact of CECL on regulatory capital by allowing banking organizations, including the Company, the option to phase in the day-one impact of CECL until the first quarter of 2023. In March 2020, the U.S. banking agencies issued an interim final rule that provides banking organizations with an alternative option to delay for two years an estimate of CECL's effect on regulatory capital, relative to the incurred loss methodology's effect on regulatory capital, followed by a three-year transition period. The Company is electing this alternative option instead of the one described in the December 2018 rule.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/santander-consumer-usa-holdings-inc-reports-second-quarter-2020-results-301101849.html

SOURCE Santander Consumer USA Holdings Inc.

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