Santander Consumer USA Holdings Inc. Reports Second Quarter 2018 Net Income of $335 million
DALLAS, July 25, 2018 /PRNewswire/ -- 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, 2018(1). In addition, the Company received authorization to repurchase $200 million of outstanding common stock through June 30, 2019(1).
"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, net(2) 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 ratio(3) of 4.2 percent in Q2 2018 decreased compared to 5.2 percent in Q2 2017.
RIC net charge-off ratio(4) 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 ratio(5) 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 portfolio(6). 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.
(1)The 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.
(2)Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.
(3)Delinquency ratio is defined as the ratio of end of period delinquent principal over 60 days to end of period gross balance of the respective portfolio, excludes capital leases.
(4)Net charge-off ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.
(5)Ratio 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.
(6)The 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, December 31,
2018 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 Six Months Ended
June 30, 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 Six Months Ended
June 30, 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 Retail Installment Contracts Acquired
Individually Individually
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 Retail Installment Contracts Acquired
Individually Individually
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, 2018(1) December 31, 2017(1)
----------
Principal 30-59
days past due $2,532,058 9.3% $2,822,686 10.9%
Delinquent
principal over
59 days(2) 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, 2018(1) December 31, 2017(2)
----------
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, December 31,
2018 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(R) (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(R) (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(R) 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.
Contacts:
Investor Relations Media Relations
Evan Black Laurie Kight
800.493.8219 214.801.6455
InvestorRelations@santanderconsumerusa.com Media@santanderconsumerusa.com
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SOURCE Santander Consumer USA Holdings Inc.
