Santander Consumer USA Holdings Inc. Reports Third Quarter 2020 Results
DALLAS, Oct. 28, 2020 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced net income for the third quarter ended September 30, 2020 ("Q3 2020") of $490 million, or $1.58 per diluted common share. The quarter included $46 million of net charge-offs and $293 million of incremental allowance for credit loss primarily driven by balance growth.
On September 30, 2020, the Federal Reserve Board ("FRB") extended to the fourth quarter its interim policy applicable to all CCAR banks prohibiting share repurchases and limiting dividends to average trailing net income. Although SC's standalone income is sufficient to support a dividend, it is consolidated into Santander Holdings USA, Inc.'s ("SHUSA") capital plan and therefore is subject to the FRB's interim policy that utilizes SHUSA's average trailing income to determine the cap on common stock dividends. SC does not currently expect to declare or pay a dividend in the fourth quarter of 2020.
Management Quotes
"As the pandemic continues to affect our country and our industry, our top priority remains serving our dealers, customers and employees. During the quarter we originated more than $8 billion in loans and leases, continued to grow balances and remained disciplined in our underwriting. Our portfolio continues to be resilient as demand for customer deferrals declined significantly and delinquency is at a historic low. These factors, in addition to robust used vehicle prices, led to a solid quarter across the board and positions us to finish the year strong," said Mahesh Aditya, SC President and CEO.
Fahmi Karam, SC Chief Financial Officer, added, "This quarter's results highlight the unique environment we are currently operating in with low losses driven by relief programs and historically high used car prices driving strong net income. We grew reserves in the quarter to over $6 billion, or an 18.4% allowance ratio, driven by increased balances and continued uncertainty in the macro outlook. We are well capitalized with a 13.7% CET1 ratio, and combined with our reserve, we have an industry leading loss absorbing capacity to manage through the pandemic and position us for long-term success."
Third Quarter of 2020 Highlights (variances compared to third quarter of 2019 ("Q3 2019"), unless otherwise noted)
-- Total auto originations of $8.4 billion, flat
-- Core retail auto loan originations of $2.7 billion, up 5%
-- Chrysler Capital loan originations of $3.8 billion, up 6%
-- Chrysler Capital lease originations of $1.9 billion, down 17%
-- Chrysler average quarterly penetration rate of 33%, from 36%
-- Santander Bank, N.A. program originations of $1.1 billion
-- Net finance and other interest income(1) of $1.3 billion, up 6%
-- 30-59 delinquency ratio of 5.0%, down 450 basis points
-- 59-plus delinquency ratio(2) of 2.4%, down 230 basis points
-- Retail Installment Contract ("RIC") gross charge-off ratio of 6.8%, down
11.5 percentage points
-- Recovery rate of 91.4%, up from 55.9%
-- RIC net charge-off ratio(3) of 0.6%, down 750 basis points
-- Troubled Debt Restructuring ("TDR") balance of $3.8 billion, down from
$4.2 billion
-- Return on average assets of 4.1%, up from 2.0%
-- $3.3 billion in asset-backed securities "ABS" issued
-- Expense ratio of 1.7%, down from 2.3%
-- Common equity tier 1 ("CET1") ratio of 13.7%, down from 15.4% as of
September 30, 2019
(1 )Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.
(2 )Delinquency Ratio is defined as the ratio of end of period delinquent principal, over 59 days, to end of period gross balance of the respective portfolio, excludes finance leases.
(3 )Net Charge-Off Ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.
Conference Call Information
SC will host a conference call and webcast to discuss its Q3 2020 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, October 28, 2020. The conference call will be accessible by dialing 1-800-289-0438 (U.S. domestic), or 1-323-794-2423 (international), conference ID 2222613. 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 Q3 2020 SC Earnings Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software prior to the call.
For those unable to listen to the live broadcast, a replay of the call will be available on the Company's website or by dialing 844-512-2921 (U.S. domestic), or 412-317-6671 (international), conference ID 2222613, approximately two hours after the conference call. An audio webcast of the call and investor presentation will also be archived on the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com, under "Events".
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as anticipates, believes, can, could, may, predicts, potential, should, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond our control. For additional discussion of these risks, refer to the section entitled Risk Factors and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (collectively, our "SEC filings"). Among the factors that could cause the forward-looking statements in this press release and/or our financial performance to differ materially from that suggested by the forward-looking statements are (a) the adverse impact of COVID-19 on our business, financial condition, liquidity and results of operations; (b) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (c) adverse economic conditions in the United States and worldwide may negatively impact our results; (d) a reduction in our access to funding a reduction in ; (e) significant risks we face implementing our growth strategy, some of which are outside our control; (f) unexpected costs and delays in connection with exiting our personal lending business; (g) our agreement with FCA US LLC may not result in currently anticipated levels of growth and is subject to certain conditions that could result in termination of the agreement; (h) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (i) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (j) loss of our key management or other personnel, or an inability to attract such management and personnel; (k) certain regulations, including but not limited to oversight by the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the European Central Bank, and the Federal Reserve, whose oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (l) future changes in our relationship with SHUSA and Banco Santander that could adversely affect our operations. If one or more of the factors affecting our forward-looking information and statements proves incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution the reader not to place undue reliance on any forward-looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties as new factors emerge from time to time. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
About Santander Consumer USA Holdings Inc.
Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") is a full-service consumer finance company focused on vehicle finance, third-party servicing and delivering superior service to our more than 3.1 million customers across the full credit spectrum. SC, which began originating retail installment contracts in 1997, had an average managed asset portfolio of approximately $63 billion (for the third quarter ended September 30, 2020), and is headquartered in Dallas, Texas. (www.santanderconsumerusa.com)
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.
Financial Supplement
Third Quarter 2020
Table of Contents
Table 1: Condensed Consolidated
Balance Sheets 6
Table 2: Condensed Consolidated
Statements of Income 7
Table 3: Other Financial Information 8
Table 4: Credit Quality 10
Table 5: Originations 12
Table 6: Asset sales 13
Table 7: Ending Portfolio 14
Table 8: Reconciliation of Non-GAAP
Measures 15
Table 1: Condensed Consolidated Balance Sheets
September 30, 2020 December 31, 2019
---
Assets (Unaudited, Dollars in thousands)
Cash and cash equivalents $
105,616 $
81,848
Finance receivables held for
sale, net 763,292 1,007,105
Finance receivables held for
investment, at amortized cost 33,602,108 30,810,487
Allowance for credit loss (6,152,378) (3,043,468)
Finance receivables held for
investment, at amortized cost,
net 27,449,730 27,767,019
Restricted cash 2,267,154 2,079,239
Accrued interest receivable 428,586 288,615
Leased vehicles, net 16,195,376 16,461,982
Furniture and equipment, net 60,105 59,873
Goodwill 74,056 74,056
Intangible assets 62,341 42,772
Other assets 1,042,665 1,071,020
Total assets $
48,448,921 $
48,933,529
Liabilities and Equity
Liabilities:
Borrowings and other debt
obligations $
41,369,347 $
39,194,141
Deferred tax liabilities, net 1,095,238 1,468,222
Accounts payable and accrued
expenses 524,816 563,277
Other liabilities 364,708 389,269
Total liabilities $
43,354,109 $
41,614,909
Equity:
Common stock, $0.01 par value 3,061 3,392
Additional paid-in capital 394,428 1,173,262
Accumulated other comprehensive
income, net (56,882) (26,693)
Retained earnings 4,754,205 6,168,659
Total stockholders' equity $
5,094,812 $
7,318,620
Total liabilities and equity $
48,448,921 $
48,933,529
Table 2: Condensed Consolidated Statements of Income
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
---
(Unaudited, Dollars in thousands, except per share amounts)
Interest on finance
receivables and loans $
1,300,694 $
1,273,022 $
3,811,113 $
3,787,700
Leased vehicle income 725,156 706,302 2,210,684 2,032,098
Other finance and
interest income 2,146 9,926 12,354 31,610
Total finance and other
interest income 2,027,996 1,989,250 6,034,151 5,851,408
Interest expense 292,118 335,212 929,934 999,633
Leased vehicle expense 467,172 456,193 1,630,945 1,344,654
Net finance and other
interest income 1,268,706 1,197,845 3,473,272 3,507,121
Credit loss expense 340,548 566,849 2,110,331 1,548,404
Net finance and other
interest income after
credit loss expense 928,158 630,996 1,362,941 1,958,717
Profit sharing 30,414 18,125 56,239 38,438
Net finance and other
interest income after
credit loss expense and
profit sharing 897,744 612,871 1,306,702 1,920,279
Investment losses, net (68,989) (86,397) (279,997) (238,281)
Servicing fee income 18,574 21,447 56,797 70,255
Fees, commissions, and
other 78,924 96,243 256,123 280,815
Total other income 28,509 31,293 32,923 112,789
Compensation and benefits 127,991 132,271 388,960 382,843
Repossession expense 35,910 62,937 115,861 203,496
Other expenses 99,761 134,262 308,193 314,737
Total other expenses 263,662 329,470 813,014 901,076
Income (loss) before
income taxes 662,591 314,694 526,611 1,131,992
Income tax expense 172,476 82,156 137,161 283,684
Net income (loss) $
490,115 $
232,538 $
389,450 $
848,308
Net income per common
share (basic) $
1.58 $
0.67 $
1.21 $
2.43
Net income per common
share (diluted) $
1.58 $
0.67 $
1.21 $
2.42
Weighted average common
shares (basic) 310,150,293 345,469,657 321,275,907 349,341,627
Weighted average common
shares (diluted) $
310,307,265 $
345,956,043 $
321,492,331 $
349,855,822
Number of shares
outstanding 306,070,972 342,864,213 306,070,972 342,864,213
Table 3: Other Financial Information
Three Months Ended September 30, Nine Months Ended September 30,
---
Ratios (Unaudited,
Dollars in
thousands) 2020 2019 2020 2019
Yield on retail
installment % %
contracts 14.9 16.1 15.0
% 16.1
%
Yield on leased 6.0
vehicles % 5.9
% 4.4
% 5.7
%
Yield on personal
loans, held for % %
sale (1) 25.6 26.3 25.9
% 26.2
%
Yield on earning 12.2 12.8
assets (2) % % 11.6
% 12.9
%
Cost of debt (3) 2.8
% 3.6
% 3.1
% 3.7
%
Net interest margin 9.9 10.0
(4) % % 9.2
% 10.0
%
Expense ratio (5) 1.7
% 2.3
% 1.8
% 2.2
%
Return on average 4.1
assets (6) % 2.0
% 1.1
% 2.5
%
Return on average 38.9 12.7
equity (7) % % 9.6
% 15.7
%
Net charge-off
ratio on %
individually
acquired retail
installment
contracts (8) 0.6 8.1
% 4.7
% 7.7
%
Net charge-off 0.6
ratio (8) % 8.1
% 4.7
% 7.7
%
Delinquency ratio on
individually %
acquired retail
installment
contracts held for
investment, end of
period (9) 2.4 4.7
% 2.4
% 4.7
%
Delinquency ratio on
loans held for %
investment, end of
period (9) 2.4 4.7
% 2.4
% 4.7
%
Allowance ratio (10) 18.4 10.5
% % 18.4
% 10.5
%
Common stock
dividend payout % %
ratio (11) 13.9 32.7 54.4
% 25.5
%
Common Equity Tier 1 13.7 15.4
capital ratio (12) % % 13.7
% 15.4
%
Charge-offs, net of
recoveries, on
individually
acquired retail
installment
contracts $
46,078 $
592,912 $
1,100,138 $
1,670,543
Total charge-offs,
net of recoveries 48,125 592,893 $
1,103,649 $
1,672,785
End of period
delinquent
amortized cost over
59 days, retail
installment
contracts held for
investment 817,577 1,394,074 817,577 1,394,074
End of period
personal loans
delinquent
principal over 59
days, held for sale 93,296 176,500 93,296 176,500
End of period
delinquent
amortized cost over
59 days, loans held
for investment 817,911 1,394,074 817,911 1,394,074
End of period assets
covered by
allowance for
credit losses 33,515,634 29,636,174 33,515,634 29,636,174
End of period gross
retail installment
contracts held for
investment 33,485,342 29,597,897 33,485,342 29,597,897
End of period gross
personal loans held
for sale 1,211,575 1,322,301 1,211,575 1,322,301
End of period gross
finance receivables
and loans held for
investment 33,489,017 29,633,950 33,489,017 29,633,950
End of period gross
finance
receivables, loans,
and leases 50,617,356 46,874,858 50,617,356 46,874,858
Average gross retail
installment
contracts held for
investment 31,462,524 29,316,997 30,946,321 28,998,827
Average gross retail
installment
contracts held for
investment and held
for sale 32,847,716 29,450,778 31,632,276 29,035,278
Average gross
personal loans held
for sale 1,240,639 1,343,098 1,322,053 1,398,045
Average gross
finance
receivables, loans
and finance leases 34,135,256 30,855,074 33,008,338 30,495,290
Average gross
operating leases 17,146,166 16,902,932 17,447,194 16,135,606
Average gross
finance
receivables, loans,
and leases 51,281,422 47,758,006 50,455,532 46,630,896
Average managed
assets 62,662,686 57,379,308 61,325,546 55,830,429
Average total assets 47,979,008 46,915,965 47,581,031 45,696,088
Average debt 41,064,441 37,276,505 40,262,948 36,234,826
Average total equity 5,044,976 7,335,898 5,429,924 7,215,250
(1) Includes Finance and other interest
income; excludes fees
(2) "Yield on earning assets" is defined
as the ratio of annualized Total
finance and other interest income,
net of Leased vehicle expense, to
Average gross finance receivables,
loans and leases
(3) "Cost of debt" is defined as the
ratio of annualized Interest
expense to Average debt
(4) "Net interest margin" is defined as
the ratio of annualized Net finance
and other interest income to
Average gross finance receivables,
loans and leases
(5) "Expense ratio" is defined as the
ratio of annualized Operating
expenses to Average managed assets
(6) "Return on average assets" is
defined as the ratio of annualized
Net income to Average total assets
(7) "Return on average equity" is
defined as the ratio of annualized
Net income to Average total equity
(8) "Net charge-off ratio" is defined
as the ratio of annualized Charge-
offs, on a amortized cost basis,
net of recoveries, to average
unpaid principal balance of the
respective held-for-investment
portfolio.
(9) "Delinquency ratio" is defined as
the ratio of End of period
Delinquent principal over 59 days
to End of period gross balance of
the respective portfolio, excludes
finance leases
(10) "Allowance ratio" is defined as the
ratio of Allowance for credit
losses, which excludes impairment
on purchased receivables
portfolios, to End of period assets
covered by allowance for credit
losses
(11) "Common stock dividend payout ratio"
is defined as the ratio of
Dividends declared per share of
common stock to Earnings per share
attributable to the Company's
shareholders.
(12) "Common Equity Tier 1 Capital ratio"
is a non-GAAP ratio defined as the
ratio of Total common equity tier 1
capital to Total risk-weighted
assets (for a reconciliation from
GAAP to this non-GAAP measure, see
"Reconciliation of Non-GAAP
Measures" in Table 8 of this
release)
Table 4: Credit Quality
The activity in the credit loss allowance for retail installment contracts for the three and nine months ended September 30, 2020 and 2019 was as follows (Unaudited, Dollar amounts in thousands):
Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
---
Retail Installment Contracts Retail Installment Contracts
Allowance for
Credit Loss Non-TDR TDR Non-TDR TDR
--- ---
Balance -
beginning of
period $
4,818,187 $
1,037,628 $
1,961,893 $
1,156,303
Credit loss
expense (a) 24,841 314,075 484,626 102,494
Charge-offs
(b) (334,938) (200,352) (962,573) (381,490)
Recoveries 392,042 97,171 567,846 183,305
Balance -end
of period $
4,900,132 $
1,248,522 $
2,051,792 $
1,060,612
Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Retail Installment Contracts Retail Installment Contracts
Allowance for
Credit Loss Non-TDR TDR Non-TDR TDR
---
Balance -
beginning of
period $
2,123,878 $
914,718 $
1,819,360 $
1,416,743
Day 1 -
Adjustment to
allowance for
adoption of
CECL standard 2,030,473 71,833
Credit loss
expense (a) 1,526,545 581,344 1,279,931 266,913
Charge-offs
(b) (1,955,706) (617,536) (2,685,931) (1,217,650)
Recoveries 1,174,942 298,163 1,638,432 594,606
Balance -end
of period $
4,900,132 $
1,248,522 $
2,051,792 $
1,060,612
(a) Excluded from the credit loss
expense is $13 million and $52
million related to retail
installment contracts sold in an
off-balance sheet
securitization during the three
and nine months ended September
30, 2020, respectively. In
addition, credit loss expense
includes a net of $72 million
and $60 million in the credit
loss expense related to retail
installment contracts
transferred to held for sale and
returned to held for investment
during the three and nine months
ended September 30, 2020,
respectively. Furthermore,
credit loss expense includes $0
million and $20 million related
to retail installment contracts
transferred to held for sale
during the three and nine months
ended September 30, 2019,
respectively.
(b) Charge-offs for retail
installment contracts includes
partial write-down of loans to
the collateral value less
estimated costs to sell, for
which a bankruptcy notice was
received. There is no additional
ACL on these loans.
A summary of delinquencies of our retail installment contracts as of September 30, 2020 and
December 31, 2019 is as follows (Unaudited, Dollar amounts in thousands):
Delinquent
Balance September 30, 2020
--- ---
Amount Percent
---
Amortized cost, 1,673,713 5.0
30-59 days past
due %
Delinquent 817,577 2.4
amortized cost
over 59 days %
---
Total delinquent $
2,491,290 7.4
balance at
amortized cost %
===
Delinquent
Balance December 31, 2019
--- ---
Amount Percent
---
Principal 30-59 $
2,972,495 9.7
days past due
%
Delinquent 1,578,452 5.1
principal over
59 days %
Total delinquent $
4,550,947 14.8
principal (a)
%
===
(a) The table includes
balances based on UPB.
Difference between
amortized cost and UPB was
not material.
The retail installment contracts held for investment that were placed on nonaccrual
status, as of September 30, 2020 and December 31, 2019 (Unaudited, Dollar amounts in
thousands):
Nonaccrual
Balance September 30, 2020
--- ---
Amount Percent
---
Non-TDR 623,428 1.9
%
TDR 301,647 0.9
%
---
Total non- $
925,075 2.8
accrual loans
(a) %
===
(a) The table includes balances based on amortized cost.
Nonaccrual
Balance December 31, 2019
--- ---
Amount Percent
---
Non-TDR $
1,099,462 3.6
%
TDR 516,119 1.7
%
---
Total nonaccrual $
1,615,581 5.3
principal (a)
%
===
(a) The table includes
balances based on UPB.
Difference between
amortized cost and UPB was
not material.
The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as
of September 30, 2020 and December 31, 2019 (Unaudited, Dollar amounts in thousands):
Allowance
Ratios September 30, 2020 December 31, 2019
---
TDR -Unpaid
principal
balance $
3,801,948 $
3,859,040
TDR -
Impairment 1,248,522 914,718
TDR -
Allowance
ratio 32.8
% 23.7
%
Non-TDR -
Unpaid
principal
balance $
29,667,444 $
26,895,551
Non-TDR -
Allowance 4,900,132 2,123,878
Non-TDR
Allowance
ratio 16.5
% 7.9
%
Total -Unpaid
principal
balance $
33,469,392 $
30,754,591
Total -
Allowance 6,148,654 3,038,596
Total -
Allowance
ratio 18.4
% 9.9
%
The Company's allowance for credit losses increased $0.3 billion and $3.1 billion for the three and nine months ended September 30, 2020. For the three months ended September 30, 2020, the increase was primarily due to a portfolio growth. For the nine months ended September 30, 2020, the primary drivers were $2.1 billion increase at CECL adoption on January 1, 2020, driven mainly by the addition of lifetime expected credit losses for non-TDR loans, and additional reserves specific to COVID-19 risk.
Table 5: Originations
The Company's originations of loans and leases, including revolving loans, average APR, and dealer discount (net of dealer participation) were as follows:
Three Months Ended
Nine Months Ended Three Months Ended
September 30, September 30, September 30, September 30, June 30, 2020
2020 2019 2020 2019
---
Retained Originations
(Unaudited, Dollar amounts in thousands)
---
Retail installment
contracts $
5,344,755 $
4,080,028 $
13,608,298 $
12,056,003 $
5,098,496
Average APR 13.7
% 16.0
% 13.8
% 16.5
% 11.7
%
Average FICO(R) (a) 637 599 631 598 657
Discount (1.3)
% (0.7)
% (1)
% (0.4)
% (0.9)
%
Personal loans (b) 305,039 322,335 923,112 954,105 $
347,238
Average APR 29.4
% 29.7
% 29.4
% 29.8
% 29.6
%
Leased vehicles 1,856,166 2,225,117 4,863,504 6,708,827 $
986,617
Finance lease 4,087 4,859 9,016 $
12,989 $
1,927
Total originations
retained $
7,510,047 $
6,632,339 $
19,403,930 $
19,731,924 $
6,434,278
Sold Originations
---
Retail installment
contracts $
80,144
$ $
761,323
$
$
Average APR 5.2
% % 4.8
% % %
Average FICO(R) (c) 738 734
Total originations
sold $
80,144
$ $
761,323
$
$
Total originations
(excluding SBNA
Originations
Program) $
7,590,191 $
6,632,339 $
20,165,253 $
19,731,924 $
6,434,278
(a) Unpaid principal balance
excluded from the weighted
average FICO score is $571
million, $440 million, $1.5
billion, $1.4 billion and $586
million for the three months
ended September 30, 2020 and
2019, the nine months ended
September 30, 2020 and 2019,
and for the three months ended
June 30, 2020, respectively, as
the borrowers on these loans
did not have FICO scores at
origination. Of these amounts,
$145 million, $154 million,
$386 million, $401 million and
$102 million, respectively,
were commercial loans.
(b) Included in the total
origination volume is $72
million, $62 million, $151
million, $138 million and $58
million for the three months
ended September 30, 2020 and
2019, the nine months ended
September 30, 2020 and 2019,
and for the three months ended
June 30, 2020, respectively,
related to newly opened
accounts.
(c) Unpaid principal balance
excluded from the weighted
average FICO score is $11
million and $80 million for the
three and nine months ended
September 30, 2020,
respectively, as the borrowers
on these loans did not have
FICO scores at origination.
SBNA Originations Program
Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA's behalf. The Company facilitated the purchase of $1.1 billion and $3.9 billion of retail installment contacts during the three and nine months ended September 30, 2020, respectively.
Table 6: Asset Sales
Three Months Ended Nine Months Ended Three Months Ended
September 30, September 30, September 30, September 30, June 30, 2020
2020 2019 2020 2019
---
Assets Sold
(Unaudited, Dollar amounts in thousands)
---
Retail
installment
contracts $
636,301
$ $
1,148,587
$ $
512,286
Average APR 4.9
%
% 5.6
%
% 6.4
%
Average
FICO(R) $
735 715 691
Table 7: Ending Portfolio
Ending outstanding balance, average APR and remaining unaccreted net discount of our held for investment portfolio as of
September 30, 2020 and December 31, 2019, are as follows:
September 30, 2020 December 31, 2019
---
(Unaudited, Dollar amounts in thousands)
Retail
installment
contracts $
33,485,342 $
30,776,038
Average APR 15.2
% 16.1
%
Discount 0.05
% 0.3
%
Receivables from
dealers $
3,675 $
12,668
Average APR 3.9
% 4.0
%
Leased vehicles $
17,101,722 $
17,562,782
Finance leases $
26,617 $
27,584
Table 8: Reconciliation of Non-GAAP Measures
September 30, 2020 September 30, 2019
---
(Unaudited, Dollar amounts in thousands)
Total equity $
5,094,812 $
7,345,202
Add: Adjustment due to
CECL capital relief
(c) 1,842,536
Deduct: Goodwill,
intangibles, and
other assets, net of
deferred tax
liabilities 159,907 150,644
Deduct: Accumulated
other comprehensive
income (loss), net (56,882) (31,836)
Tier 1 common capital $
6,834,323 $
7,226,394
Risk weighted assets
(a)(c) 49,882,540 46,870,019
Common Equity Tier 1
capital ratio (b)(c) 13.7
% 15.4
%
(a) Under the banking agencies' risk-
based capital guidelines, assets
and credit equivalent amounts of
derivatives and off-balance sheet
exposures are assigned to broad
risk categories. The aggregate
dollar amount in each risk category
is multiplied by the associated
risk weight of the category. The
resulting weighted values are added
together with the measure for
market risk, resulting in the
Company's total Risk weighted
assets.
(b) CET1 is calculated under Basel III
regulations required as of January
1, 2015. The fully phased-in
capital ratios are non-GAAP
financial measures.
(c) As described in our 2019 annual
report on Form 10-K, on January 1,
2020, we adopted ASU 2016-13,
Financial Instruments -Credit
Losses ("CECL"), which upon
adoption resulted in a reduction to
our opening retained earnings
balance, net of income tax, and
increase to the allowance for
credit losses of approximately $2
billion. As also described in our
2019 10-K, the U.S. banking
agencies in December 2018 had
approved a final rule to address
the impact of CECL on regulatory
capital by allowing banking
organizations, including the
Company, the option to phase in the
day-one impact of CECL until the
first quarter of 2023. In March
2020, the U.S. banking agencies
issued an interim final rule that
provides banking organizations with
an alternative option to delay for
two years an estimate of CECL's
effect on regulatory capital,
relative to the incurred loss
methodology's effect on regulatory
capital, followed by a three-year
transition period. The Company is
electing this alternative option
instead of the one described in the
December 2018 rule.
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SOURCE Santander Consumer USA Holdings Inc.
