Santander Consumer USA Holdings Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - Santander Consumer USA Holdings Inc.	a2018q2scusa8-kearningsfin.htm
EX-99.2 - EXHIBIT 99.2 - Santander Consumer USA Holdings Inc.	a2q18earningspresentatio.htm

Exhibit 99.1



Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com		Media Relations Laurie Kight 214.801.6455 Media@santanderconsumerusa.com

Santander Consumer USA Holdings Inc. Reports Second Quarter 2018 Net Income of $335 million

Total Auto Originations of $7.9 Billion Increased 45% YoY; Company Declares $0.20 Per Share Cash Dividend and Announces Inaugural $200 Million Share Repurchase Program; Begins Originations Program With Santander Bank

Dallas, TX (July 25, 2018) – Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC”) today announced net income for the second quarter ended June 30, 2018 (“Q2 2018”) of $335 million, or $0.92 per diluted common share.

The Company has declared a cash dividend of $0.20 per share, to be paid on August 8, 2018, to shareholders of record as of the close of business on August 6, 2018¹. In addition, the Company received authorization to repurchase $200 million of outstanding common stock through June 30, 2019¹.

“We had a strong second quarter, with clear momentum in our business performance and continued regulatory progress,” said Scott Powell, SC President and CEO. “Earnings were up 26 percent from 2Q 2017, driven by strong originations across all channels, including Chrysler, and by strong credit performance. SHUSA also received a non-objection from the Federal Reserve to our capital plan, which allows SC to pay a meaningful dividend and launch an inaugural share repurchase program.”

Juan Carlos Alvarez, SC Chief Financial Officer, added, “Our ongoing efforts to optimize pricing and dealer experience led to another strong quarter, with robust originations. Our credit performance, with continued stabilization in both gross and net charge-off ratios, resulted in solid financial performance during the second quarter.”

Scott Powell, who is also CEO of Santander US, added, “We are proud of our work since the beginning of the year to prepare for the launch of our program to originate SC auto loans at Santander Bank, which began on July 2, 2018. The originations program is another step forward as we continue to bring the Santander US businesses closer together, leveraging their individual strengths.”

Q2 2018 Highlights (variances compared to the second quarter of 2017 (“Q2 2017”), unless otherwise noted):


•	Total auto originations of $7.9 billion, up 45%


◦	Core retail auto loan originations of $2.6 billion, up 15%


◦	Chrysler Capital loan originations of $2.7 billion, up 51%


◦	Chrysler Capital lease originations of $2.6 billion, up 84%


◦	Chrysler average quarterly penetration rate of 32%, up from 20% during the same quarter last year


•	Net finance and other interest income of $1.1 billion, decreased 6%


◦	Net leased vehicle income of $178 million, increased 36%


•	Retail Installment Contract “RIC” gross charge-off ratio of 15.2% down 130 basis points


◦	RIC net charge-off ratio of 6.0%, down 150 basis points


◦	Auction-plus recovery rate of 60.6%, up 670 basis points


•	Troubled Debt Restructuring (“TDR”) balance of $6.0 billion, down $40 million vs. March 31, 2018


•	Return on average assets of 3.3%, up from 2.7%


•	Issued $3.5 billion in asset-backed securities “ABS”


•	Asset sales of $1.2 billion executed through the Santander flow agreement


◦	Full roll-out of SBNA originations program in July


•	Common equity tier 1 (“CET1”) ratio of 16.7%, up from 14.3%


•	Expense ratio of 2.2%, flat

Finance receivables, loans and leases, net² of $37.1 billion, increased compared to $34.8 billion at December 31, 2017.

Net finance and other interest income decreased 6 percent to $1.07 billion in Q2 2018 from $1.14 billion in Q2 2017, primarily driven by lower average RIC balances and an increase in benchmark rates.

Servicing fee income decreased 14 percent to $28 million in Q2 2018, from $32 million in Q2 2017, driven by lower serviced for others balances. SC's serviced for others portfolio of $9.5 billion as of Q2 2018 decreased 4 percent from $9.9 billion the prior year quarter and increased 9 percent from $8.7 billion versus Q1 2018.

RIC delinquency ratio³ of 4.2 percent in Q2 2018 decreased compared to 5.2 percent in Q2 2017.

RIC net charge-off ratio⁴ decreased to 6.0 percent in Q2 2018 from 7.5 percent in Q2 2017. Provision for credit losses decreased to $353 million in Q2 2018 from $521 million the prior year quarter.

Allowance ratio⁵ decreased 80 basis points, to 11.5 percent at the end of Q2 2018, from 12.3 percent at the end of Q1 2018.

Recorded net investment losses of $83 million in Q2 2018, compared to net investment losses of $100 million in Q2 2017. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio⁶. Excluding the impact of personal lending, net investment losses totaled $7 million.

During Q2 2018 SC incurred $277 million of operating expenses, down 2 percent from $282 million in Q2 2017. SC's expense ratio of 2.2 percent for the quarter, was flat compared to 2.2 percent during the same period last year.

¹The timing and amount of any capital actions will depend on various factors, including the business plans and financial performance of both SC and SHUSA, as well as market conditions, and any SC capital distribution is subject to approval of the Company's and SHUSA's respective boards of directors.

²Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.

³Delinquency ratio is defined as the ratio of end of period delinquent principal over 60 days to end of period gross balance of the respective portfolio, excludes capital leases.

⁴Net charge-off ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.

⁵Ratio for allowance for credit losses excludes end of period balances on purchased receivables portfolio of $36 million and finance receivables and personal loans held for sale of $1.2 billion.

⁶The current period losses were primarily driven by $76 million of lower of cost or market adjustments related to the held for sale personal lending portfolio, comprised of $90 million in customer default activity, partially offset by a $14 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 2018 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 25, 2018. The conference call will be accessible by dialing 888-394-8218 (U.S. domestic), or 323-701-0225 (international), conference ID 5415846. 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 2018 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 5415846, 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, has an average managed asset portfolio of approximately $50 billion (as of June 30, 2018), and is headquartered in Dallas. (www.santanderconsumerusa.com)

Santander Consumer USA Holdings Inc.

Financial Supplement

Second Quarter 2018




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	11
Table 6: Asset Sales	12
Table 7: Ending Portfolio	13
Table 8: Reconciliation of Non-GAAP Measures	14

Table 1: Condensed Consolidated Balance Sheets



	June 30, 2018		December 31, 2017
Assets	(Unaudited, Dollars in thousands)
Cash and cash equivalents	$	319,688	$	527,805
Finance receivables held for sale, net	1,246,732		2,210,421
Finance receivables held for investment, net	24,096,770		22,427,769
Restricted cash	2,125,410		2,553,902
Accrued interest receivable	286,164		326,640
Leased vehicles, net	11,729,482		10,160,327
Furniture and equipment, net	64,599		69,609
Federal, state and other income taxes receivable	100,517		95,060
Related party taxes receivable	467		467
Goodwill	74,056		74,056
Intangible assets	31,613		29,734
Due from affiliates	35,398		33,270
Other assets	1,062,240		913,244
Total assets	$	41,173,136	$	39,422,304
Liabilities and Equity
Liabilities:
Notes payable — credit facilities	$	4,502,823	$	4,848,316
Notes payable — secured structured financings	24,300,820		22,557,895
Notes payable — related party	3,125,963		3,754,223
Accrued interest payable	43,882		38,529
Accounts payable and accrued expenses	470,439		429,531
Deferred tax liabilities, net	1,079,557		897,121
Due to affiliates	154,192		82,382
Other liabilities	449,726		333,806
Total liabilities	$	34,127,402	$	32,941,803

Equity:
Common stock, $0.01 par value	3,614		3,605
Additional paid-in capital	1,693,896		1,681,558
Accumulated other comprehensive income, net	62,449		44,262
Retained earnings	5,285,775		4,751,076
Total stockholders’ equity	$	7,045,734	$	6,480,501
Total liabilities and equity	$	41,173,136	$	39,422,304

Table 2: Condensed Consolidated Statements of Income



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
	(Unaudited, Dollars in thousands, except per share amounts)
Interest on finance receivables and loans	$	1,156,536		$	1,232,252		$	2,270,673		$	2,441,438
Leased vehicle income	537,897			429,264			1,042,175			847,497
Other finance and interest income	8,494			5,205			15,631			9,030
Total finance and other interest income	1,702,927			1,666,721			3,328,479			3,297,965
Interest expense	273,953			233,371			514,981			460,460
Leased vehicle expense	360,335			298,224			719,018			588,395
Net finance and other interest income	1,068,639			1,135,126			2,094,480			2,249,110
Provision for credit losses	352,575			520,555			811,570			1,155,568
Net finance and other interest income after provision for credit losses	716,064			614,571			1,282,910			1,093,542
Profit sharing	12,853			8,443			17,230			16,388
Net finance and other interest income after provision for credit losses and profit sharing	703,211			606,128			1,265,680			1,077,154
Investment losses, net	(82,634		)	(99,522		)	(169,154		)	(175,921		)
Servicing fee income	27,538			31,953			53,720			63,637
Fees, commissions, and other	77,480			91,964			162,871			192,159
Total other income	22,384			24,395			47,437			79,875
Compensation expense	118,598			127,894			240,603			264,156
Repossession expense	63,660			67,269			135,741			138,568
Other operating costs	94,692			87,252			188,518			184,769
Total operating expenses	276,950			282,415			564,862			587,493
Income before income taxes	448,645			348,108			748,255			569,536
Income tax expense	114,004			83,433			171,315			161,434
Net income	$	334,641		$	264,675		$	576,940		$	408,102

Net income per common share (basic)	$	0.93		$	0.74		$	1.60		$	1.14
Net income per common share (diluted)	$	0.92		$	0.74		$	1.59		$	1.13
Dividend paid per common share	$	0.05		$	—		$	0.10		$	—
Weighted average common shares (basic)	361,268,112			359,461,407			360,987,233			359,284,213
Weighted average common shares (diluted)	362,057,614			359,828,690			361,829,283			359,928,003

Table 3: Other Financial Information



		Three Months Ended June 30,						Six Months Ended June 30,
		2018			2017			2018			2017
Ratios		(Unaudited, Dollars in thousands)
	Yield on individually acquired retail installment contracts	15.5		%	16.1		%	15.4		%	15.8		%
	Yield on purchased receivables portfolios	24.1		%	20.4		%	25.9		%	20.3		%
	Yield on receivables from dealers	3.4		%	5.6		%	3.2		%	5.4		%
	Yield on personal loans (1)	24.6		%	25.3		%	24.5		%	25.0		%
	Yield on earning assets (2)	13.0		%	13.7		%	12.9		%	13.5		%
	Cost of debt (3)	3.4		%	3.0		%	3.3		%	2.9		%
	Net interest margin (4)	10.4		%	11.3		%	10.3		%	11.2		%
	Expense ratio (5)	2.2		%	2.2		%	2.3		%	2.3		%
	Return on average assets (6)	3.3		%	2.7		%	2.9		%	2.1		%
	Return on average equity (7)	19.4		%	19.1		%	17.1		%	15.0		%
	Net charge-off ratio on individually acquired retail installment contracts (8)	6.0		%	7.5		%	7.1		%	8.2		%
	Net charge-off ratio on purchased receivables portfolios (8)	(6.1		)%	0.8		%	(5.1		)%	0.7		%
	Net charge-off ratio on personal loans (8)	45.2		%	39.0		%	47.7		%	61.3		%
	Net charge-off ratio (8)	6.0		%	7.5		%	7.1		%	8.2		%
	Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9)	4.2		%	5.2		%	4.2		%	5.2		%
	Delinquency ratio on personal loans, end of period (9)	12.0		%	12.7		%	12.0		%	12.7		%
	Delinquency ratio on loans held for investment, end of period (9)	4.2		%	5.2		%	4.2		%	5.2		%
	Allowance ratio (10)	11.5		%	12.6		%	11.5		%	12.6		%
	Common stock dividend payout ratio (11)	5.4		%	—			6.3		%	—
	Common Equity Tier 1 capital ratio (12)	16.7		%	14.3		%	16.7		%	14.3		%
Other Financial Information
	Charge-offs, net of recoveries, on individually acquired retail installment contracts	$	398,658		$	512,621		$	936,450		$	1,111,554
	Charge-offs, net of recoveries, on purchased receivables portfolios	(565		)	419			(993		)	772
	Charge-offs, net of recoveries, on personal loans	515			1,321			1,264			4,779
	Charge-offs, net of recoveries, on capital leases	406			1,278			712			2,592
	Total charge-offs, net of recoveries	$	399,014		$	515,639		$	937,433		$	1,119,697
	End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment	1,149,429			1,412,377			1,149,429			1,412,377
	End of period delinquent principal over 59 days, personal loans	164,458			177,615			164,458			177,615
	End of period delinquent principal over 59 days, loans held for investment	1,151,410			1,417,461			1,151,410			1,417,461
	End of period assets covered by allowance for credit losses	27,412,597			27,342,511			27,412,597			27,342,511
	End of period gross individually acquired retail installment contracts held for investment	27,373,181			27,240,542			27,373,181			27,240,542
	End of period gross personal loans	1,370,888			1,400,369			1,370,888			1,400,369
	End of period gross finance receivables and loans held for investment	27,427,980			27,512,362			27,427,980			27,512,362
	End of period gross finance receivables, loans, and leases held for investment	40,283,898			37,916,523			40,283,898			37,916,523
	Average gross individually acquired retail installment contracts held for investment	26,633,832			27,168,965			26,280,006			27,136,965
	Average gross personal loans held for investment	4,562			13,566			5,304			15,587
	Average gross individually acquired retail installment contracts held for investment and held for sale	$	27,534,479		$	28,202,716		$	27,221,983		$	28,235,651
	Average gross purchased receivables portfolios	37,284			202,097			39,257			211,494
	Average gross receivables from dealers	15,361			68,810			15,507			69,361
	Average gross personal loans	1,375,877			1,402,416			1,421,861			1,450,002
	Average gross capital leases	20,937			25,752			21,699			28,235
	Average gross finance receivables and loans	$	28,983,938		$	29,901,791		$	28,720,307		$	29,994,743
	Average gross operating leases	12,219,612			10,191,380			11,856,109			10,016,322
	Average gross finance receivables, loans, and leases	41,203,550			40,093,171			40,576,416			40,011,065
	Average managed assets	50,306,666			50,435,958			49,494,154			50,844,426
	Average total assets	40,901,810			39,216,971			40,334,031			39,063,816
	Average debt	31,898,900			31,519,486			31,589,063			31,545,144
	Average total equity	6,891,934			5,540,371			6,737,055			5,434,973


(1)	Includes Finance and other interest income; excludes fees


(2)	“Yield on earning assets” is defined as the ratio of annualized Total finance and other interest income, net of Leased vehicle expense, to Average gross finance receivables, loans and leases


(3)	“Cost of debt” is defined as the ratio of annualized Interest expense to Average debt


(4)	“Net interest margin” is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and leases


(5)	“Expense ratio” is defined as the ratio of annualized Operating expenses to Average managed assets


(6)	“Return on average assets” is defined as the ratio of annualized Net income to Average total assets


(7)	“Return on average equity” is defined as the ratio of annualized Net income to Average total equity

(8)

“Net charge-off ratio” is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Effective as of September 30, 2016, the Company records the charge-off activity for certain personal loans within the provision for credit losses due to the reclassification of these loans from held for sale to held for investment.


(9)	“Delinquency ratio” is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes capital leases


(10)	“Allowance ratio” is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses


(11)	“Common 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, 2018 and 2017 was as follows (Unaudited, Dollar amounts in thousands):



	Three Months Ended June 30, 2018						Three Months Ended June 30, 2017
	Retail Installment Contracts Acquired Individually						Retail Installment Contracts Acquired Individually
Allowance for Credit Loss	Non-TDR			TDR			Non-TDR			TDR
Allowance for Credit Loss	Non-TDR			TDR			Non-TDR			TDR
Balance — beginning of period	$	1,586,557		$	1,595,465		$	1,836,730		$	1,604,489
Provision for credit losses	242,286			112,144			172,990			345,380
Charge-offs	(584,296		)	(427,079		)	(654,613		)	(457,102		)
Recoveries	396,667			216,050			405,702			193,392
Balance — end of period	$	1,641,214		$	1,496,580		$	1,760,809		$	1,686,159



	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	Retail Installment Contracts Acquired Individually						Retail Installment Contracts Acquired Individually
Allowance for Credit Loss	Non-TDR			TDR			Non-TDR			TDR
Allowance for Credit Loss	Non-TDR			TDR			Non-TDR			TDR
Balance — beginning of period	$	1,529,815		$	1,731,320		$	1,799,760		$	1,611,295
Provision for credit losses	553,007			260,102			515,082			632,385
Charge-offs	(1,263,735		)	(946,661		)	(1,388,767		)	(947,645		)
Recoveries	822,127			451,819			834,734			390,124
Balance — end of period	$	1,641,214		$	1,496,580		$	1,760,809		$	1,686,159

A summary of delinquencies of our individually acquired retail installment contracts as of June 30, 2018 and December 31, 2017 is as follows (Unaudited, Dollar amounts in thousands):



Delinquent Principal	June 30, 2018¹				December 31, 2017¹
Principal 30-59 days past due	$	2,532,058	9.3	%	$	2,822,686	10.9	%
Delinquent principal over 59 days²	1,149,429		4.2	%	1,541,728		5.9	%
Total delinquent contracts	$	3,681,487	13.5	%	$	4,364,414	16.9	%

Within the total delinquent principal above, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of June 30, 2018 and December 31, 2017 (Unaudited, Dollar amounts in thousands):



Nonaccrual Principal	June 30, 2018¹				December 31, 2017²
Non-TDR	$	505,399	1.8	%	$	666,926	2.6	%
TDR	1,554,860		5.7	%	1,390,373		5.4	%
Total nonaccrual principal	$	2,060,259	7.5	%	$	2,057,299	7.9	%

The table below presents the Company’s allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of June 30, 2018 and December 31, 2017 (Unaudited, Dollar amounts in thousands):



Allowance Ratios	June 30, 2018			December 31, 2017
TDR - Unpaid principal balance	$	5,958,564		$	6,261,894
TDR - Impairment	1,496,580			1,731,320
TDR - Allowance ratio	25.1		%	27.6		%

Non-TDR - Unpaid principal balance	$	21,414,617		$	19,681,394
Non-TDR - Allowance	1,641,214			1,529,815
Non-TDR Allowance ratio	7.7		%	7.8		%

Total - Unpaid principal balance	$	27,373,181		$	25,943,288
Total - Allowance	3,137,794			3,261,135
Total - Allowance ratio	11.5		%	12.6		%

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, 2018			June 30, 2017			June 30, 2018			June 30, 2017			March 31, 2018
Retained Originations	(Unaudited, Dollar amounts in thousands)
Retail installment contracts	$	4,630,704		$	3,750,752		$	8,014,110		$	6,669,307		$	3,866,494
Average APR	16.8		%	15.6		%	17.0		%	16.7		%	16.1		%
Average FICO® (a)	602			612			599			598			611
Discount	0.004		%	0.3		%	0.2		%	0.4		%	0.3		%

Personal loans (b)	340,088			351,068			613,416			638,764			273,328
Average APR	27.1		%	25.7		%	28.3		%	25.7		%	26.0		%

Leased vehicles	2,632,052			1,426,957			4,725,657			3,027,616			2,093,604

Capital lease	2,058			1,001			4,456			$	2,178		$	2,398
Total originations retained	$	7,604,902		$	5,529,778		$	13,357,639		$	10,337,865		$	6,235,824

Sold Originations (c)
Retail installment contracts	$	683,935		$	304,748		$	1,553,979		$	1,172,771		$	386,956
Average APR	7.6		%	6.6		%	7.3		%	6.2		%	6.8		%
Average FICO® (d)	726			725			726			727			732
Total originations sold	$	683,935		$	304,748		$	1,553,979		$	1,172,771		$	386,956

Total originations	$	8,288,837		$	5,834,526		$	14,911,618		$	11,510,636		$	6,622,780

(a)

Unpaid principal balance excluded from the weighted average FICO score is $594 million, $503 million, $1 billion, $1.0 billion, and $461 million for the three months ended June 30, 2018 and 2017, the six months ended June 30, 2018 and 2017, and the three months ended March 31, 2018, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $44 million, $49 million, $77 million, $77 million, and $54 million, respectively, were commercial loans.

(b)

Effective as of three months ended December 31, 2017, the Company revised its approach to define origination volumes for Personal Loans to include new originations, gross of paydowns and charge-offs, related to customers who took additional advances on existing accounts (including capitalized late fees, interest and other charges), and newly opened accounts. In the prior periods, the Company reported net balance increases on personal loans as origination volume. Included in the total origination volume is $58 million , $48 million, $84 million, $71 million, and $17 million for the three months ended June 30, 2018 and 2017, the six months ended June 30, 2018 and 2017, and the three months ended March 31, 2018, respectively, related to newly opened accounts.


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

(d)

Unpaid principal balance excluded from the weighted average FICO score is $54 million, $39 million, $121 million, $156 million, and $32 million for the three months ended June 30, 2018 and 2017, the six months ended June 30, 2018 and 2017, and the three months ended March 31, 2018, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $26 million, $14 million, $67 million, $58 million, and $20 million, 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. During the three and six months ended June 30, 2018, the Company facilitated the purchase of $29 million and $53 million of retail installment contacts, respectively.

Table 6: Asset Sales

Asset sales may include assets originated in prior periods.



	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
	(Unaudited, Dollar amounts in thousands)
Retail installment contracts	$	1,156,060		$	566,309		$	2,631,313		$	1,496,899
Average APR	7.5		%	6.6		%	7.0		%	6.2		%
Average FICO®	724			725			726			726

Total asset sales	$	1,156,060		$	566,309		$	2,631,313		$	1,496,899

Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted dealer discount of our held for investment portfolio as of June 30, 2018, and December 31, 2017, are as follows:



	June 30, 2018			December 31, 2017
	(Unaudited, Dollar amounts in thousands)
Retail installment contracts	$	27,408,764		$	25,986,532
Average APR	16.6		%	16.5		%
Discount	1.0		%	1.5		%

Personal loans	$	4,016		$	6,887
Average APR	31.8		%	31.8		%

Receivables from dealers	$	15,200		$	15,787
Average APR	4.2		%	4.2		%

Leased vehicles	$	12,835,718		$	11,175,602

Capital leases	$	20,200		$	22,857

Table 8: Reconciliation of Non-GAAP Measures



	June 30, 2018			June 30, 2017
	(Unaudited, Dollar amounts in thousands)
Total equity	$	7,045,734		$	5,678,733
Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities	166,241			177,619
Deduct: Accumulated other comprehensive income (loss), net	62,449			27,860
Tier 1 common capital	$	6,817,044		$	5,473,254
Risk weighted assets (a)	$	40,744,526		$	38,368,928
Common Equity Tier 1 capital ratio (b)	16.7		%	14.3		%

(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.

Santander Consumer USA Holdings Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 24, 2018

Attached files

Santander Consumer USA Holdings Inc. Reports