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| 8-K - 8-K - Santander Holdings USA, Inc. | q316shusair.htm |
12.30.2016
SANTANDER HOLDINGS USA, INC.
Fixed Income Investor Presentation
Third Quarter 2016
2 Disclaimer
This presentation of Santander Holdings USA, Inc. (“SHUSA”) contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of SHUSA. Words such
as “may,” “could,” “should,” “looking forward,” “will,” “would,” “believe,” “expect,” “hope,” “anticipate,” “estimate,” “intend,” “plan,” “assume” or similar
expressions are intended to indicate forward-looking statements.
Although SHUSA believes that the expectations reflected in these forward-looking statements are reasonable as of the date on which the statements
are made, these statements are not guarantees of future performance and involve risks and uncertainties based on various factors and
assumptions, many of which are beyond SHUSA’s control. Among the factors that could cause SHUSA’s financial performance to differ materially
from that suggested by the forward-looking statements are: (1) the effects of regulation and policies of the Board of Governors of the Federal
Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the
Consumer Financial Protection Bureau, including changes in trade, monetary and fiscal policies and laws, including interest rate policies of the
Federal Reserve, the failure to adhere to which could subject SHUSA to formal or informal regulatory compliance and enforcement actions; banking,
capital and liquidity, regulations and policies and the application and interpretations thereof by regulatory bodies, and the impact of changes in and
interpretations of generally accepted accounting principles in the United States of America; (2) the strength of the United States economy in general
and regional and local economies in which SHUSA conducts operations in particular, which may affect, among other things, the level of non-
performing assets, charge-offs, and provisions for credit losses; (3) the ability of certain European member countries to continue to service their debt
and the risk that a weakened European economy could negatively affect U.S.-based financial institutions, counterparties with which SHUSA does
business, as well as the stability of global financial markets; (4) inflation, interest rate, market and monetary fluctuations, which may, among other
things, reduce net interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and
secondary markets; (5) adverse movements and volatility in debt and equity capital markets and adverse changes in the securities markets,
including those related to the financial condition of significant issuers in SHUSA’s investment portfolio; (6) SHUSA’s ability to manage changes in the
value and quality of its assets, changing market conditions that may force management to alter the implementation or continuation of cost savings or
revenue enhancement strategies and the possibility that revenue enhancement initiatives may not be successful in the marketplace or may result in
unintended costs; (7) SHUSA's ability to grow revenue, manage expenses, attract and retain highly-skilled people and raise capital necessary to
achieve its business goals and comply with regulatory requirements and expectations; (8) SHUSA’s ability to timely develop competitive new
products and services in a changing environment that are responsive to the needs of SHUSA's customers and are profitable to SHUSA, the
acceptance of such products and services by customers, and the potential for new products and services to impose additional costs on SHUSA and
expose SHUSA to increased operational risk; (9) changes or potential changes to the competitive environment, including changes due to regulatory
and technological changes, the effects of industry consolidation and perceptions of SHUSA as a suitable service provider or counterparty; (10) the
ability of SHUSA and its third-party vendors to convert and maintain SHUSA’s data processing and related systems on a timely and acceptable
basis and within projected cost estimates; (11) SHUSA's ability to control operational risks, data security breach risks and outsourcing risks, and the
possibility of errors in quantitative models SHUSA uses to manage its business and the possibility that SHUSA's controls will prove insufficient, fail
or be circumvented; (12) the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, which is a significant
development for the industry, the full impact of which will not be known until the rule-making processes mandated by the legislation are complete,
although the impact has involved and will involve higher compliance costs that have affected and will affect SHUSA’s revenue and earnings
negatively; (13) SHUSA's ability to promote a strong culture of risk management, operating controls, compliance oversight and governance that
meets regulatory expectations; (14) competitors of SHUSA that may have greater financial resources or lower costs, may innovate more effectively,
or may develop products and technology that enable those competitors to compete more successfully than SHUSA;
3 Disclaimer (cont.)
(15) acts of terrorism or domestic or foreign military conflicts; and acts of God, including natural disasters; (16) the outcome of ongoing tax audits by
federal, state and local income tax authorities that may require SHUSA to pay additional taxes or recover fewer overpayments compared to what
has been accrued or paid as of period-end; (17) adverse publicity, whether specific to SHUSA or regarding other industry participants or industry-
wide factors, or other reputational harm; and (18) SHUSA’s success in managing the risks involved in the foregoing.
Because this information is intended only to assist investors, it does not constitute investment advice or an offer to invest, and in making this
presentation available, SHUSA gives no advice and makes no recommendation to buy, sell, or otherwise deal in shares or other securities of Banco
Santander, S.A. (“Santander”), SHUSA, Santander Bank, N.A. (“Santander Bank” or “SBNA”), or Santander Consumer Holdings USA, Inc. (“SC”) in
any other securities or investments. It is not our intention to state, indicate, or imply in any manner that current or past results are indicative of future
results or expectations. As with all investments, there are associated risks, and you could lose money investing. Prior to making any investment, a
prospective investor should consult with its own investment, accounting, legal, and tax advisers to evaluate independently the risks, consequences,
and suitability of that investment. No offering of securities shall be made in the United States except pursuant to registration under the U.S.
Securities Act of 1933, as amended, or an exemption therefrom.
In this presentation, we may sometimes refer to certain non-GAAP figures or financial ratios to help illustrate certain concepts. These ratios, each of
which is defined in this document, if utilized, may include Pre-Tax Pre-Provision Income, the Tangible Common Equity to Tangible Assets Ratio, and
the Texas Ratio. This information supplements our results as reported in accordance with GAAP and should not be viewed in isolation from, or as a
substitute for, our GAAP results, among others. We believe that this additional information and the reconciliations we provide may be useful to
investors, analysts, regulators and others as they evaluate the impact of these items on our results for the periods presented due to the extent to
which the items are indicative of our ongoing operations. Where applicable, we provide GAAP reconciliations for such additional information.
On February 18, 2014, the Federal Reserve issued the final rule implementing certain of the enhanced prudential standards mandated by Section
165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Final Rule") to strengthen regulatory oversight of foreign banking
organizations ("FBOs"). Under the Final Rule, FBOs with over $50 billion of U.S. non-branch assets, including Santander, were required to
consolidate U.S. subsidiary activities under an intermediate holding company ("IHC"). Due to its U.S. non-branch total consolidated asset size,
Santander was subject to the Final Rule. As a result of this rule, Santander transferred substantially all of its equity interests in U.S. bank and non-
bank subsidiaries previously outside SHUSA to SHUSA, which became an IHC effective July 1, 2016. These subsidiaries included Santander
BanCorp, Banco Santander International (“BSI”), Santander Investment Services, Inc. (“SIS”), Santander Securities LLC (“SSLLC”), as well as
several other subsidiaries.
As these entities were and are solely owned and controlled by Santander prior to and after July 1, 2016, in accordance with Accounting Standards
Codification 805, the transaction has been accounted for under the common control guidance which requires SHUSA to recognize the assets and
liabilities transferred at their historical cost of the transferring entity at the date of the transfer. Additionally, as this transaction represents a change in
reporting entity, the guidance requires retrospective combination of the entities for all periods presented in the financial statements as if the
combination had been in effect since inception of common control. The entities transferred approximately $14.1 billion of assets and approximately
$11.8 billion of liabilities to SHUSA on July 1, 2016. The transfer added approximately $69.9 million and $68.8 million of net income to SHUSA for
the nine-month periods ended September 30, 2016 and 2015 after the financial statements have been recast to reflect the operations of the
commonly controlled entities for all periods presented as a change in reporting entity. Historical financial information in this presentation has
not been consistently recasted to reflect the above financial reporting requirements.
4
Santander
Bank
Santander
Consumer
USA
Santander
Puerto Rico
Banco
Santander
International
Santander
Investment
Securities
SHUSA is a bank holding company (“BHC”) headquartered in Boston, MA and is
wholly owned by Santander (NYSE: SAN)
Introduction
• SHUSA consists of:
• Well established banking franchises in
the Northeast and Puerto Rico
• A nationwide auto finance business
• A wholesale broker-dealer in New York
• International Private banking business
• Regulated by the Federal Reserve
• SEC registered1
12SHUSA’s SEC filings are accessible on the SEC website at www.sec.gov. Filings are also accessible through
SHUSA’s website at www.santanderus.com
5
Corporate Structure1
Santander Holdings USA, Inc.
$139.2BN Assets
Santander Bank,
N.A.
$85.5BN Assets
Santander
Consumer USA
Holdings Inc.
$38.7BN Assets
On July 1, 2016, SHUSA became the IHC for Santander’s U.S. operations
1Balances as of September 30, 2016
2Puerto Rico = includes Banco Santander Puerto Rico and SSLLC
“Approximately
58.9% ownership
Banco Santander, S.A.
Puerto Rico2
$5.3BN Assets
BSI
$7.2BN Assets
SIS
$1.4BN Assets
100% ownership
100% ownership
Added to SHUSA effective July 1, 2016
6
3Q16 Executive Summary1
Liquidity and
Funding
Capital
Balance Sheet
1Data as of 9/30/16 unless otherwise noted 4Liquidity Coverage Ratio
2Includes non controlling interest
3YTD 2016 includes $69.9MM in net income from the IHC entities consolidated on July 1, 2016
Earnings
Credit Quality
SHUSA 3Q16 net income $226MM2, YTD 2016 net income $611MM2,3
SHUSA 3Q16 net interest margin of 5.87%
In July 2016 SHUSA added $14.1BN in assets and $11.8BN in liabilities through
the consolidation of U.S. entities for the formation of the IHC
YTD 2016 SHUSA’s balance sheet has increased by $11BN as the IHC assets
were partially offset by lower assets at SBNA due to balance sheet optimization
SHUSA as a holding company has $4.0BN cash on hand
SHUSA’s LCR4 at end of 3Q16 is in excess of regulatory requirement
SC has $36.8BN in committed funding, of which $31.9BN was in use at 3Q16
Common Equity Tier 1 (CET1) 14.1%; 13.4% under U.S. Basel III fully phased-in
CET1 increased by 1.7% from 2Q16, primarily due to the IHC consolidation
SBNA’s non-performing loans (“NPLs”) and criticized balances have steadily
decreased since 1Q16, when they increased due to the energy finance portfolio
90 SC asset-backed securities (“ABS”) tranches totaling $7.1BN were upgraded
by Moody’s, S&P, and Fitch during 3Q16
SC delinquencies increased YoY primarily due to 2015 vintage loans
7 Significant Developments
IHC: On July 1, 2016, SHUSA completed the formation of the IHC by assuming ownership
of most U.S. entities formerly owned by Santander. The impact on SHUSA was:
SBNA Net Interest Margin (“NIM”) Improved from 2.19% at 4Q15 to 2.33% at 3Q16
Deposit repricing initiatives conducted in 2016 have reduced SBNA’s deposit cost by 8bps from
0.47% in 4Q15 to 0.39% in 3Q16
Through 3Q16 SBNA has terminated $3.1BN of legacy Federal Home Loan Bank (“FHLB”)
borrowings which had a weighted average rate of 3.93%
Moody’s downgrade: On October 18, 2016, Moody’s downgraded SHUSA’s long-term
debt rating from Baa2 to Baa3 and changed SHUSA’s outlook from negative to stable.
SBNA’s ratings were not affected.
Delayed Financial Statement Filings: See next slide for more information on the
delayed financial filings by SHUSA and SC
IHC Entity Impact BSI Puerto Rico SIS Other1 Total
Total Assets $7.2BN $5.3BN $1.4BN $0.2BN $14.1BN
Cash $3.6BN $1.0BN $1.0BN $5.6BN
Loans $3.4BN $4.0BN $7.4BN
Deposits $5.5BN $4.2BN $9.7BN
Equity $1.0BN $1.0BN $0.2BN $0.1BN $2.3BN
1Includes other small entities that were consolidated such as Santander Securities LLC
8 Delayed Financial Filings
In August 2016, SHUSA and SC disclosed1 that their 2Q16 Forms 10-Q would be delayed
as SC was working with its current and former independent registered public accountants
as well as the SEC to address certain accounting matters
The accounting matters primarily related to SC’s discount accretion and credit loss allowance
methodologies, and the related control considerations
On September 23, 2016, SC and SHUSA disclosed2 that they would be restating financial
disclosures for the full years 2013, 2014 and 2015, and 1Q16
Restatements would address the accounting matters cited in the August 2016 notices
SC provided preliminary restated results which showed no material impact from the restatements.
SC also provided preliminary 2Q16 results
On October 27, 2016, SC published final restated results and 2Q16 Form 10-Q3
Both the restated results and the 2Q16 Form 10-Q had immaterial changes to the preliminary
results provided on 9/23/16
On November 9, 2016 SC filed its 3Q16 Form 10-Q in a timely fashion
On December 7, 2016 SHUSA filed its restated results and the Form 10-Q for 2Q16.
On December 12, 2016 SHUSA filed the Form 10-Q for 3Q16
1SC Form 8-K filed 8/16/16 and SHUSA Form 8-K filed 8/23/16
2SC Form 8-K and SHUSA Form 8-K filed 9/23/16
3SC Form 8-K filed 10/27/16
9 Quarterly Profitability1
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
2 Net Income includes noncontrolling interest
3Q16 results reflect addition of IHC entities
4Q15 results reflect $4.5BN (pre-tax) goodwill impairment charge
Pre-Tax Pre-Provision Income/(Loss) ($MM)
Net Income/(Loss) ($MM)2
Net Interest Income ($MM)
Pre-Tax Income/(Loss) ($MM)
*3Q15 - excludes $96MM tax provision
1,264
(3,647)
1,032 985 1,022
-3,500
-2,500
-1,500
-500
500
1,500
3Q15 4Q15 1Q16 2Q16 3Q16
1,633 1,605 1,616 1,586 1,621
6.33%
6.12% 6.16%
6.06%
5.87%
0
500
1,000
1,500
2,000
3Q15 4Q15 1Q16 2Q16 3Q16
NII Net Interest Margin
327
(4,704)
150
388 334
(500)
(350)
(200)
(50)
100
250
400
3Q15 4Q15 1Q16 2Q16 3Q16
126
(3,665)
85
253 226 222*
(500)
(375)
(250)
(125)
-
125
250
3Q15 4Q15 1Q16 2Q16 3Q16
10
2
18%
11%
4%
7%
8%
8% 15%
5%
5%
3%
16%
Balance Sheet Overview (September 30, 2016)
9%
6%
4%
5%
4% 7%
6%
19%
13% 7%
18%
Investments
Auto Loans
2%
Cash
Non Interest-
Bearing
Demand
Deposits
Other Assets
C&I
CRE Residential
Mortgage
Other
Loans
Operating
Lease Assets
Goodwill
Home
Equity
Multi-Family
$139.2BN Assets
$116.8BN Liabilities
$22.4BN Equity
Interest-
Bearing
Demand
Deposits
Secured
Structured
Financings
Equity
Other
Liabilities
FHLB
Money
Market
Certificates
of Deposit
Savings
Revolving
Credit
Facilities
Other
Borrowings
Cash and Non-interest bearing DDA increases reflect IHC consolidation
Reduction in investments and FHLB due to SBNA balance sheet optimization
11
2
Balance Sheet Trends: Overview1
$131 $128 $131 $126
$139
ASSETS LIABILITIES & EQUITY
$ in Billions
Q316 balance sheet increase reflects the IHC consolidation in July 2016
$131 $128 $131
$126
$139
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
12
2
2
Balance Sheet Trends: Loans and Leases1
$90 $91
$93 $93
$100
$ in Billions
3Q16 growth of $7BN due to IHC consolidation
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
13
2
2
Balance Sheet Trends: Deposits1
$56 $56 $57 $56
$68
$ in Billions
3Q16 increase reflects $10BN from IHC consolidation as well as continued growth
in deposits at SBNA
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
14
2
2
$696
$619
$590
$515 $497 $513
$710
$687
$615
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Non-Performing Loans1 Criticized Balances2
Texas Ratio4 Annualized Net Charge off Ratio3
0.25%0.23% 0.26%
0.31%
0.20%
0.43%
0.15%0.12%
0.92%
0.43%0.41%0.36%
0.49%
0.36% 0.35% 0.36%
0.38%
0.39%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Large Banks**
SBNA: Asset Quality
$ MM
-12%
NPLs and Criticized Balances continued to contract after the increase in 1Q16
$ MM
Annualized NCO = Quarterly NCO*4
**Source: SNL Bank level data; Large Bank = BAC, COF, C, KEY, BMO, HSBA, PNC, RBS, JPM, UNB, TD, USB, and WFC
14.3% 13.7% 13.1%
9.6%10.1% 9.3% 8.5% 7.9% 8.6%
10.3%10.7%10.8%
14.0%
17.3% 16.2% 15.1% 14.5% 13.9%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Large Banks**
1NPLs = Nonaccruing loans plus accruing loans 90+ DPD;
2Criticized = loans that are categorized as special mention, substandard, doubtful, or loss
33Q14 reflects charge offs relating to troubled debt restructuring (“TDR”)/NPL sale; excluding sale 3Q14 would have been 0.47%
4See Appendix for definition and non-GAAP measurement reconciliation of Texas Ratio
$2,054
$1,980 $1,972
$2,073
$2,171
$2,333
$2,626
$2,376 $2,337
4.08% 3.92% 3.78% 3.95%
4.09%
4.35%
4.81%
4.36% 4.42%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Criticized Balances Criticized Ratio
15
2
2
84.0%
90.6% 93.2%
111.3%114.6%
119.4%
106.5%
98.6% 100.2%
106.0%
120.0%118.6%120.6%115.3%113.2%110.6% 109.0% 110.4%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Large Banks**
Reserve Coverage (ALLL/NPL2)
1.16% 1.18% 1.17%
1.07%1.07%
1.17%1.21%1.21% 1.16%
1.29%1.26%1.28%1.31%1.34%
1.36%1.39% 1.27% 1.26%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Large Banks**
ALLL to Total Loans
NPL Ratio Delinquency1
1.16%1.22% 1.13% 0.98%0.94% 0.96%
1.26%
1.30%1.38% 1.22%1.26%
1.36%
1.29% 1.25% 1.18% 1.17% 1.14%
1.28%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Large Banks**
0.54%
0.43% 0.37%0.40%
0.47%0.42%0.46%
0.56%
0.39%
0.76%
0.86%0.83%0.79%0.86%
0.95%0.96%
0.75% 0.76%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q 6
Santander Bank Large Banks**
SBNA: Asset Quality (cont.)
**Source: SNL Bank level data; Large Bank = BAC, COF, C, KEY, BMO, HSBA, PNC, RBS, JPM, UNB, TD, USB, and WFC
1Delinquency = accruing loans 30-89 DPD plus accruing loans 90+ DPD
2NPLs= Nonaccruing loans plus accruing loans 90+ DPD
SBNA’s credit metrics continue to compare favorably to peers
16
2
2
SC: Asset Quality – Provisions and Reserves
3,436
177
144 34 (125)
(253)
3,413
3000
3100
3200
3300
3400
3500
3600
3700
3800
3900
Q2 2016 New
Volume
TDR
Migration
Performance
Adjustment
Qualitative
Reserve
Liquidations
& Other
Q3 2016
Q2 2016 to Q3 2016 ALLL Reserve Walk
($ in millions)
724
851
660
512
610
11.1%
11.9%
12.0%
12.6%
12.4%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
0
100
200
300
400
500
600
700
800
900
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Provision Expense and Allowance Ratio
($ in mill ions)
Provision for credit losses Allowance Ratio
Allowance to loans ratio decreased to 12.4% QoQ
Provision for credit losses decreased YoY primarily
driven by the recording of the provision for credit
losses on the personal loan portfolio in prior year
Excluding the impact of personal loans,
provision for credit losses decreased $8 million
YoY
QoQ allowance decreased $23 million
Liquidations and removal of qualitative adjustment
partly offset by new volume and TDR migration
1 TDR Migration – additional allowance coverage required for loans now classified as TDRs
17
8.1%
9.1%
6.9%
9.0% 9.2%
3.8%
4.4%
3.1%
4.2%
4.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Delinquency: Individually Acquired Retail Installment Contracts,
Held for Investment
31-60
61+
2
SC: Credit Quality – Loss and Delinquency
15.4%
16.6% 16.3%
14.2%
17.2%
8.2%
8.9%
7.6%
5.7%
8.7%
47%
47%
53% 60%
49%
0%
10%
20%
30%
40%
50%
60%
70%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Credit: Individually Acquired Retail Installment Contracts,
Held for Investment
Gross Charge-
off Ratio
Net Charge-off
Ratio
Recovery Rate
(as % of
recorded
investment)
YoY delinquency increased for each
delinquency bucket
Primary drivers:
2015 originations more nonprime in
nature
Slower portfolio growth
YoY gross loss increased 180 basis points
Primary drivers:
2015 originations more nonprime in nature
Slower portfolio growth
Recovery rates and net losses in Q2 2016
benefited by proceeds from bankruptcy sales1
1 Excluding bankruptcy sales, recovery rates would have been 59%
18
2
2017 2018 2019 2020 … 2025 … … 2036 Perp
Wholesale Funding Profile1
Trust
Pref
$150
Sr
Debt
4.625%
Sr
Debt
3.0%
Sr
Debt
3.45%
20 6 2017 2018 2019 Perp
4.8 2.4
10.8
8.3
8.8
8.8
12.4
12.4
Utilized
$31.9
SC ($BN)
Public Sec
Committed
FHLB
Bank Debt
HoldCo Debt
3rd Party Rev
Santander2
Trust
Pref
Pref
Stock
Sr
Debt
4.6%
Sr
Debt
3M+
145
REIT
Pref
12.2%
FHLB
0.6%
FHLB
0.7%
FHLB
0.8% $0.18
$2.7
$0.2
$4.2
Public Sec
$36.8
$0.6
$0.5
$0.22 $0.2
1As of September 30, 2016
2$0.3BN difference in Santander balance between SHUSA and SC charts reflects
$0.3BN facility between SHUSA and SC that is eliminated at the consolidated level
$46.8
$44.4
$1.0
Sr
Debt
2.65%
FHLB
1.7%
Private Amort.
SBNA ($BN, % yield)
SHUSA HOLDCO ($BN, % yield) SHUSA ($BN)
$1.1
Sr
Debt
4.5%
Debt
4.2%
$0.6
Private Amort.
3rd Party Rev
Santander2
Holding company funding will be driven by total loss-absorbing capacity (“TLAC”) and
liquidity risk management
$1.0
Sr
Debt
2.7%
FHLB
19
2
2
FRB Final TLAC Rule
The Federal Reserve Board (“FRB”) published its final rule for TLAC on December 15, 20161
The FRB TLAC rule will require SHUSA to meet the following:
TLAC requirement of 20.5% of risk-weighted assets (“RWA”) by January 1, 2019
Long term debt (“LTD”) requirement of 6.0%2 of RWA by January 1, 2019
• SHUSA, as an IHC under a multiple point of entry (“MPOE”) resolution strategy, can meet the LTD
requirement by issuing debt both externally and internally3
The final rule grandfathers debt issued prior to 12/31/2016 to qualify for LTD and TLAC
1The original FRB TLAC proposal was published on October 30, 2015
2The original FRB TLAC proposal required 7% of RWA for LTD
3TLAC proposal required that IHCs such as SHUSA could only issue debt internally to meet TLAC
Illustration
20
2
2
1Capital ratios calculated under the U.S. Basel III framework on a transitional basis
2Periods prior to 3Q16 have not been re-casted for the IHC consolidation
3Fully phased-in under the standardized approach - see SHUSA 3Q16 Form 10-Q
Increase in capital ratios from 2Q16 to 3Q16 primarily due to IHC consolidation
Under fully phased-in US Basel III rule,3 CET1 ratio as of 3Q16 was 13.4%
Capital Ratios1,2
Tier 1 Leverage
Tier 1 risk based
Common Equity Tier 1
Total Risk Based
12.1% 12.0% 11.9%
12.4%
14.1%
3Q15 4Q15 1Q16 2Q16 3Q16
11.9%
11.6% 11.5% 11.6%
12.5%
3Q15 4Q15 1Q16 2Q16 3Q16
13.4% 13.5% 13.4%
14.0%
15.7%
3Q15 4Q15 1Q16 2Q16 3Q16
15.3% 15.3% 15.3%
15.8%
17.6%
3Q15 4Q15 1Q16 2Q16 3Q16
21
2
2
SHUSA’s capital ratios remain at the top of peers
Capital Ratios Peer Comparison (as of 9/30/16)
CET1 Tier 1 Risk-Based Capital (“RBC”)
Total RBC Tier 1 Leverage
- - - - Peer Median
22
2
2
Rating Agencies
Santander Bank
Te S&P Moody’s
Short Term
Deposits
A-2 P-1
Senior Debt BBB+ Baa2
Outlook Stable Stable
SHUSA
S&P Moody’s
N/A N/A
BBB+ Baa3
Stable Stable
On August 5, 2016, S&P affirmed SHUSA’s and SBNA’s ratings of
A-2/BBB+/stable
On October 18, 2016, Moody’s downgraded SHUSA’s senior debt rating by 1
notch from Baa2 to Baa3 and moved SHUSA’s outlook from negative to stable
On October 18, 2016, Moody’s affirmed SBNA’s ratings at P-1/Baa2 and the
outlook at stable
October 30, 2016
Banco Santander
S&P Moody’s
A-2 P-2
A- A3
Stable Stable
Appendix
24
2
2
Santander U.S. Web site
SantanderUS.com
At-a-Glance
• Up-to-date key Santander US
information in one institutional
website
• 6 sections:
• About Us
• Structure and
governance
• Board of Directors
• Management
• Financial Services
• Investor and Shareholder
Relations (includes link to SEC
filings and fixed-income investor
presentations)
• Media Relations
• Communities
• Careers
• Links to U.S. business units
WWW.SANTANDERUS.COM
25
2
2
Consolidating Balance Sheet
(US $ millions) Bank SC Other
(1)
IHC Entities
(2)
SHUSA
Assets
Cash and cash equivalents 6,934$ 76$ (28) 4,848 11,830$
Investments 16,599 - 1 792 17,392
Loans 52,934 29,841 (488) 7,617 89,904
Less allowance for loan losses (616) (3,582) 476 (92) (3,814)
Total loans, net 52,318 26,259 (12) 7,525 86,090
Goodwill 3,403 74 967 11 4,455
Other assets 5,603 12,363 641 857 19,464
Total assets 84,857$ 38,772$ 1,569$ 14,033$ 139,231$
Liabilities and Stockholders' Equity
Deposits 61,724$ - (4,071) 10,051 67,704$
Borrowings and other debt obligations 8,404 31,800 4,126 274 44,604
Other liabilities 1,119 1,854 65 1,422 4,460
Total liabilities 71,247 33,654 120 11,747 116,768
Stock olders' equity including
noncontrolling interest 13,610 5,118 1,449 2,286 22,463
Total liabilities and stockholders' equity 84,857$ 38,772$ 1,569$ 14,033$ 139,231$
September 30, 2016
(1) Includes holding company, eliminations, IHC eliminations and purchase accounting marks related to SC consolidation
(2)The IHC entities are presented within "other" in the company's financial statement segment presentation due to immateriality
26 Consolidating Income Statement
(US $ Millions) Bank SC Other
(1)
IHC Entities
(3)
Interest income 541$ 1,302$ 40$ 88 1,971$
Interest expense (108) (207) (27) (8) (350)
Net interest income 433 1,095 13 80 1,621
Fees & other income/(expense) 248 389 (27) 118 728
Other non interest income - - - - -
Net revenue 681 1,484 (14) 198 2,349
G & A expense (539) (566) (39) (137) (1,281)
Other expenses (28) (4) (9) (5) (46)
Provision for credit losses 12 (610) (74) (16) (688)
Income/(loss) before taxes 126 304 (136) 40 334
Income tax (expense)/benefit (31) (90) 30 (17) (108)
Net income/(loss)
2
95$ 214$ (106)$ 23$ 226$
For the three-month period ended September 30, 2016
SHUSA
(1)Includes holding company activities, IHC eliminations, eliminations and purchase accounting marks related to SC consolidation.
(2) SHUSA net income includes non-controlling interest.
(3)The IHC entities are presented within "other" in the company's financial statement segment presentation due to immateriality
27
2
2
Quarterly Trended Statement of Operations1
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
2Represents net income/(loss) including noncontrolling interest
(US $ Millions) 3Q15
1 4Q151 1Q161 2Q161 3Q16
Interest income 1,933$ 1,933$ 1,970$ 1,942$ 1,971$
Interest expense (300) (328) (354) (356) (350)
Net interest income 1,633 1,605 1,616 1,586 1,621
Fees & other income 719 518 575 585 728
Equity investment income/(expense) 2 (3) (4) (1) -
Other non interest income/(loss) (2) - 26 31 -
Net revenue 2,352 2,120 2,213 2,201 2,349
G&A expense (1,058) (1,227) (1,109) (1,144) (1,281)
Other expenses (30) (4,540) (72) (72) (46)
Provision for credit losses (937) (1,057) (882) (597) (688)
Income/(loss) before taxes 327 (4,704) 150 388 334
Income tax (expense)/benefit (201) 1,039 (65) (135) (108)
Net income/(loss)(1) 126$ (3,665)$ 85$ 253$ 226$
3Q151 4Q151 1Q161 2Q161 3Q16
Net interest margin 6.33% 6.12% 6.16% 6.06% 5.87%
28
(US $ millions)
Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate
Deposits and investments 23,417$ 1.39% (1,202)$ -0.26% 24,619$ 1.65%
Loans 90,200 8.33% 494 -0.15% 89,706 8.48%
Allowance for loan losses (3,784) --- (764) --- (3,020) ---
Intercompany Investment 15 6.14% - --- 15 6.02%
Earning assets 109,848 7.14% (1,472) -0.06% 111,320 7.20%
Other assets 29,935 --- (2,760) --- 32,695 ---
TOTAL ASSETS 139,783$ 5.61% (4,232)$ 0.04% 144,015$ 5.57%
Interest-bearing demand deposits 10,978 0.23% (2,066) -0.24% 13,044 0.47%
Noninterest-bearing demand deposits 15,107 --- 2,236 --- 12,871 ---
Savings 6,002 0.22% (430) 0.04% 6,432 0.18%
Money market 25,199 0.50% 1,681 -0.05% 23,518 0.55%
Certificates of deposit 9,515 0.97% 97 0.06% 9,418 0.91%
Borrowed funds 45,948 2.47% (2,544) 0.55% 48,492 1.92%
Other liabilities 4,615 --- (23) --- 4,638 ---
Equity 22,419 --- (3,183) --- 25,602 ---
TOTAL LIABILITIES & SE 139,783$ 1.00% (4,232)$ 0.15% 144,015$ 0.85%
NET INTEREST MARGIN 5.87% -0.23% 6.10%
3Q16 Change 3Q15
2
2
Average Balance Sheet
Quarterly Averages
29
2
2
2016 CCAR Results
Capital
4Q15
Starting
Ratio
SHUSA1
Federal
Reserve2
Regulatory
Minimum
Severely Adverse Scenario
Stressed Capital Ratios
Minimum
CET1 ratio (%) 12.0% 10.6% 11.8% 4.5%
Tier 1 RBC ratio (%) 13.5% 11.8% 12.7% 6.0%
Total RBC ratio (%) 15.3% 13.3% 14.3% 8.0%
Tier 1 leverage ratio (%) 11.6% 9.2% 10.0% 4.0%
1Results calculated by SHUSA. SHUSA published its DFAST results via Form 8-K on 6/27/16
2DFAST Results calculated by the Federal Reserve and published on 6/24/16
SHUSA’s projected capital ratios, as calculated by both the Federal Reserve
and SHUSA, remain very strong and well above regulatory requirements
The Federal Reserve, while noting progress has been made by SHUSA since
the 2015 CCAR exercise, objected to SHUSA’s 2016 CCAR capital plan on
qualitative criteria
DFAST = Dodd Frank Act Stress Testing
CCAR = Comprehensive Capital Analysis and Review
30
2
2
2016 DFAST/CCAR Results – Projected Loan Losses
Loan Category
SHUSA1
Federal Reserve2
Total Losses – Severely Adverse 12.4% 8.2%
First Lien Mortgage 5.7% 3.8%
Junior Liens & HELOCs 3.4% 3.8%
Commercial and Industrial 2.9% 3.9%
Commercial Real Estate 2.3% 5.2%
Credit Cards 19.9% 15.6%
Other Consumer 34.0% 16.5%
Other Loans 1.1% 4.2%
SHUSA’s projected loss rates for the DFAST/CCAR exercise were more
conservative than the Federal Reserve’s calculations
1Results calculated by SHUSA. SHUSA published its DFAST results via Form 8-K on 6/27/16
2Results calculated by the Federal Reserve and published on 6/24/16
DFAST = Dodd Frank Act Stress Testing
CCAR = Comprehensive Capital Analysis and Review
31
2
2
SBNA: Quarterly Profitability
US $ Millions
1See non-GAAP to GAAP reconciliation of Pre-Tax Pre-Provision Income
NIM improvement due to balance sheet management actions and deposit rate
reductions
*3Q15 - excludes $96MM tax provision
Net Interest Income ($MM) Pre-Tax Pre-Provision Income1 ($MM)
Pre-Tax Income/(Loss) ($MM) Net Income/(Loss) ($MM)
117
81
100 104
114
0
20
40
60
80
100
120
140
3Q15 4Q15 1Q16 2Q16 3Q16
419 424 434 438 433
2.22% 2.19% 2.22%
2.24%
2.33%
0
100
200
300
400
500
3Q15 4Q15 1Q16 2Q16 3Q16
NII Net Interest Margin
136
11
(20)
104
126
-25
0
25
50
75
100
125
150
3Q15 4Q15 1Q16 2Q16 3Q16
109*
12
(17)
93 91
13
-20
5
30
55
80
105
3Q15 4Q15 1Q16 2Q16 3Q16
32
2
2
SBNA: Quarterly Trended Statement of Operations
(US$ in Millions) 3Q15 4Q15 1Q16 2Q16 3Q16
Interest income 554$ 564$ 576$ 565$ 541$
Interest expense (135) (140) (142) (127) (108)
Net interest income 419 424 434 438 433
Fees & other income 261 276 227 240 248
Other non-interest (loss)/income (1) - 26 31 -
Net revenue 679 700 687 709 681
General & administrative expenses (544) (603) (537) (540) (539)
Other expenses (18) (16) (50) (65) (28)
Release of/(Provision for) credit losses 19 (70) (120) - 12
Income/(loss) before taxes 136 11 (20) 104 126
Income tax (expense)/benefit (123) 1 3 (11) (35)
Net income/(loss) 13$ 12$ (17)$ 93$ 91$
3Q15 4Q15 1Q16 2Q16 3Q16
Net interest margin 2.22% 2.19% 2.22% 2.24% 2.33%
33
2
2
SBNA: Quarterly Average Balance Sheet
Quarterly Averages
(In millions)
Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate Balance Rate
Deposits and investments 22,018$ 1.32% 25,301$ 1.51% (3,283)$ -0.19% 24,058$ 1.68%
Loans 53,530 3.51% 54,560 3.49% (1,030) 0.02% 52,859 3.46%
Allowance for loan losses (633) --- (645) --- 12 --- (615) ---
Other assets 10,597 --- 10,873 --- (276) --- 11,287 ---
TOTAL ASSETS 85,512$ 2.54% 90,089$ 2.54% (4,577)$ 0.00% 87,589$ 2.55%
Interest-bearing demand deposits 9,780 0.24% 10,972 0.52% (1,192) -0.28% 11,523 0.49%
Noninterest-bearing demand deposits 11,439 --- 11,481 --- (42) --- 11,408 ---
Savings 4,099 0.12% 4,137 0.08% (38) 0.04% 3,969 0.12%
Money market 26,977 0.48% 26,493 0.49% 484 -0.01% 24,147 0.55%
Certificates of deposit 8,357 0.91% 8,777 0.93% (420) -0.02% 7,905 0.87%
Borrowed funds 9,438 2.06% 12,757 1.85% (3,319) 0.21% 13,520 2.05%
Other liabilities 1,791 --- 1,933 --- (142) --- 1,643 ---
Equity 13,631 --- 13,539 --- 92 --- 13,474 ---
TOTAL LIABILITIES & SE 85,512$ 0.50% 90,089$ 0.56% (4,577)$ -0.06% 87,589$ 0.62%
NET INTEREST MARGIN 2.33% 2.24% 0.09% 2.22%
3Q16 3Q152Q16 Change
34
2
2
SBNA: Funding – Deposits*
1Represents average quarterly balances
*SBNA total deposits less the SHUSA cash deposit held at SBNA
Average Non Maturity Deposit Balances
1
($Mn)
$47,168 $47,604 $47,624 $48,282
$48,757
0.40% 0.40% 0.41%
0.39%
0.31%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
3Q15 4Q15 1Q16 2Q16 3Q16
Non Maturity Deposit Balances
Avg. Interest Cost
Average Total Deposit Balances
1
($Mn)
$55,073 $55,756
$56,638 $57,059 $57,114
0.48%
0.46%
0.48%
0.47%
0.39%
0.30%
0.35%
0.39%
0.44%
0.48%
0.53%
3Q15 4Q15 1Q16 2Q16 3Q16
Total Deposits Avg. Interest Cost
35
2
2
Global Corporate Banking2
1Commercial Banking = Non-CRE total for Business Banking, Middle Market, Equipment Finance & Leasing and Commercial Banking NCE
2Global Corporate Banking = Non-CRE total for MRG and Large Corporate
3Other Commercial = Non –CRE total for all other Commercial Business segments
4Other Consumer = Direct Consumer, Indirect Consumer, RV/Marine, Credit Cards, SFC, & RDM Run-off
Commercial Banking1
Other Consumer4 Other Commercial3
Outstandings NPL* to Total Loans Net Charge-Offs**
SBNA: Asset Quality
*NPL = Nonaccruing loans plus accruing loans 90+ DPD
**NCO = Rolling 12-month average for that quarter and the prior 3 quarters US $ Billions
$5.4 $5.4 $5.5 $5.5 $5.7
$6.0 $6.2
$6.5 $6.5
1.3% 1.4%
1.6%
1.4%
1.1% 1.1%
1.5% 1.6% 1.4%
0.4% 0.3% 0.5% 0.4% 0.4% 0.5% 0.2% 0.1%
0.4%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
$8.2 $8.3
$9.5
$10.1 $9.7 $10.0 $10.1 $9.4
$8.4
0.0% 0.0% 0.0% 0.0% 0.1%
0.2%
0.6% 0.7% 0.8%
0.0% 0.0% 0.0% 0.0% 0.0%
0.3%
0.3% 0.3% 0.3%
3Q 4 4Q14 1Q15 2Q15 3Q 5 4Q15 1Q16 2Q16 3Q16
$5.5
$6.4
$ .8 $6.7 $6.8
$7.1 $7.4
$7.6 $7.6
0.7%
0.3%
0.3% 0.3% 0.3% 0.4%
1.9% 1.6
1.2%
0.4%
0.4%
0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
$1.9 $1.9 $1.8 $1.7 $1.7 $1.7 $1.6 $1.6 $1.6
2.1% 2.2% 2.2% 2.0% 2.0% 1.8% 1.7% 1.7% 1.8%
2 7 2 6 2 6 2 5 2 6 2.7 2.5% 2.6% 2.7%
3Q14 4Q14 Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
36
2
2
Santander Real Estate Capital Commercial Real Estate1
Home Equity Mortgages
Outstandings NPL* to Total Loans Net Charge-Offs**
SBNA: Asset Quality
*NPL = Nonaccruing loans plus accruing loans 90+ DPD
**NCO = Rolling 12-month average for that quarter and the prior 3 quarters
1Commercial Real Estate is comprised of the commercial real estate, continuing care retirement community and non-owner
occupied real estate secured commercial loans (SREC segment included in separate graph)
US $ Billions
$7.5
$7.0 $7.0 $6.8 $6.7 $6.5 $6.4 $6.6 $6.7
3.3% 3.3% 3.0% 2.9% 2.8% 2.7% 2.6% 2.4% 2.2%
1.2% 1.2% 1.3% 1.3%
0.3% 0.2% 0.2% 0.2% 0.1%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
$6.0 $6.0 $6.0 $6.0 $6.0 $6.0 $5.9 $5.9 $5.9
1.9% 1.9% 1.9% 1.8% 1.7% 1.8% 1.8% 1.7% 1.7%
0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2%
3Q 4 4Q14 Q15 2Q15 3Q 5 4Q15 Q16 2Q16 3Q16
$5.4 $5.6 $5.8
$5.9 $5.8 $6.0
$6.6 $6.6 $6.5
3.2%
2.2% 1.9%
1.3% 1.3% 1.3% 1.7% 1.6% 1.2%
0.7% 0.5% 0.2% 0.4% 0.1% 0.2% 0.2% 0.0% -0.1%
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
$10.3 $10.0 $9.7 $9.7
$10.7 $10.5 $10.3 $10.1 $9.8
0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
3Q 4 4Q14 1Q15 2Q15 3Q 5 4Q15 1Q16 2Q16 3Q16
37
2
2
SBNA: Capital Ratios
1Fully phased-in under the standardized approach - see SHUSA 3016 Form 10-Q
13.9% 13.8% 13.9%
14.9%
15.7%
3Q15 4Q15 1Q16 2Q16 3Q16
13.9% 13.8% 13.9%
14.9%
15.7%
3Q15 4Q15 1Q16 2Q16 3Q16
11.7% 11.5% 11.3% 11.4%
12.3%
3Q15 4Q15 1Q16 2Q16 3Q16
15.1% 15.1% 15.4%
16.2%
17.0%
3Q15 4Q15 1Q16 2Q16 3Q16
CET1 Tier 1 Leverage Ratio
Tier 1 RBC Ratio Total RBC Ratio
Beginning in 1Q15, capital ratios have been calculated under the U.S. Basel III
framework on a transition basis
Under fully phased-in US Basel III rule1, CET1 ratio as of 3Q16 was 15.3%
38
2
2
SC: Serviced For Others (“SFO”) Platform
$14,788 $15,047
$14,235
$13,034
$12,157
3Q15 4Q15 1Q16 2Q16 3Q16
$ in Millions
Flow Programs 1,348 1,081 860 659 794
CCART 788
Residual Sales 1,710
Recent decrease in total balance
related to lower prime
originations
Growth in SFO remains
dependent upon Chrysler Capital
Penetration
Finalizing a strategic agreement
with Santander1
Beneficial to SFO platform
Composition at 9/30/2016
RIC 75 %
Leases 19 %
RV/Marine 7 %
Total 100 %
SFO Balances
Flow programs continue to drive
asset sales
*Sales with retained servicing during period
1SC is finalizing a strategic agreement with Banco Santander to originate and flow prime and near-prime retail loan assets
39
2
2
SC: Credit Trends
RICs1,2
1RIC = Retail installment contract
2Held for investment; excludes assets held for sale
3.9
% 12.
2%
23.
8%
30.
4%
17.
1%
12.
6%
4.0
% 12.
2%
23.
4%
30.
9%
17.
3%
12.
2%
4.2
% 12
.6%
23.
2%
31.
0%
17.
1%
11.
9%
2.6
% 1
2.6
%
22.
9%
31.
2%
17.
4%
13.
3%
3.3
% 12
.4%
22.
2%
31.
1%
17.
2%
13.
8%
Commercial Unknown <540 540-599 600-639 >=640
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
40
2
2
Non-GAAP to GAAP Reconciliations1 $ Million 3Q15 4Q15 1Q16 2Q16 3Q16
SHUSA Pre-Tax Pre-Provision Income/(Loss)
Pre-tax income/(loss), as reported 327$ (4,704)$ 150$ 388$ 334$
Add back:
Provision for credit losses 937 1,057 882 597 688
Pre-Tax Pre-Provision Income/(Loss) 1,264$ (3,647)$ 1,032$ 985$ 1,022$
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
41
2
2
1
1Periods prior to 3Q16 have not been re-casted for the IHC consolidation
2Basel III ratios on a transition basis under the standardized approach starting in 2Q15
Non-GAAP to GAAP Reconciliations1,2
$ Millions 3Q15 4Q15 1Q16 2Q16 3Q16
CET1
Tier 1 Common 13,199$ 12,973$ 12,644$ 12,750$ 15,153$
Risk-Weighted Assets 109,173 108,455 106,446 106,446 107,310
Ratio 12.1% 12.0% 11.9% 12.4% 14.1%
Tier 1 Leverage
Tier 1 Capital 14,678$ 14,657$ 14,281$ 14,401$ 16,866$
123,129 126,636 123,964 124,498 135,155$
Ratio 11.9% 11.6% 11.5% 11.6% 12.5%
Tier 1 Risk-Based
Tier 1 Capital 14,678$ 14,657$ 14,281$ 14,401$ 16,866$
Risk-Weighted Assets 109,173 108,455 106,446 102,967 107,310$
Ratio 13.4% 13.5% 13.4% 14.0% 15.7%
Total Risk-Based
Risk-Based Capital 16,711$ 16,637$ 16,288$ 16,270$ 18,834$
Risk-Weighted Assets 109,173 108,455 106,446 102,967 107,310$
Ratio 15.3% 15.4% 15.3% 15.8% 17.6%
Average total assets for leverage capital
42
2
2
1
SBNA: Non-GAAP to GAAP Reconciliations1
$ Millions 3Q15 4Q15 1Q16 2Q16 3Q16
CET1
Tier 1 Common Capital 9,828$ 9,858$ 9,813$ 9,876$ 10,025$
Risk Weighted Assets 70,894 71,395 70,512 66,357 64,015
Ratio 13.9% 13.8% 13.9% 14.9% 15.7%
Tier 1 Leverage
Tier 1 Capital 9,828$ 9,858$ 9,813$ 9,876$ 10,025$
84,040 86,028 87,066 86,358 81,815
Ratio 11.7% 11.5% 11.3% 11.4% 12.3%
Tier 1 Risk Based
Tier 1 Capital 9,828$ 9,858$ 9,813$ 9,876$ 10,025$
Risk Weighted Assets 70,894 71,395 70,512 66,357 64,015
Ratio 13.9% 13.8% 13.9% 14.9% 15.7%
Total Risk Based
Risk Based Capital 10,734$ 10,776$ 10,827$ 10,771$ 10,874$
Risk Weighted Assets 70,894 71,395 70,512 66,357 64,015
Ratio 15.1% 15.1% 15.4% 16.2% 17.0%
Average total assets for leverage capital purposes
1Basel III ratios on a transition basis under the standardized approach starting in 2Q15
43 SBNA: Non-GAAP to GAAP Reconciliations
$ Millions 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Texas Ratio
Total Equity 13,416$ 13,326$ 13,456$ 13,576$ 13,610$
Less:
Goodwill and Other Intangibles (excluding MSRs) (3,717) (3,732) (3,723) (3,716) (3,681)
Preferred Stock - - - - -
Add: Allowance for loan losses 570 572 643 640 616
Total Equity and Loss Allowances for Texas Ratio 10,269$ 10,166$ 10,376$ 10,500$ 10,545$
Nonperforming Assets 536$ 550$ 747$ 748$ 648$
90+ DPD accruing 3 2 2 2 3
Accruing TDRs 268 323 364 364 356
Total Nonperforming Assets 807$ 875$ 1,113$ 1,114$ 1,007$
Texas Ratio 7.9% 8.6% 10.7% 10.6% 9.5%
44
2
2
SBNA: Non-GAAP to GAAP Reconciliations
$ Millions 3Q15 4Q15 1Q16 2Q16 3Q16
Santander Bank Pre-Tax Pre-Provision Income
Pre-tax income, as reported 136$ 11$ (20)$ 104$ 126$
Add back:
Provision for credit losses (19) 70 120 - (12)
Pre-Tax Pre-Provision Income 117$ 81$ 100$ 104$ 114$
