Santander Consumer USA Holdings Inc. Reports Second Quarter 2021 Results

Net Income of $1.1 Billion and $10.5 Billion in Originations in the Second Quarter 2021

News provided by

Santander Consumer USA Holdings Inc.

Jul 28, 2021, 06:15 ET

DALLAS, July 28, 2021 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced net income for the second quarter ended June 30, 2021 ("Q2 2021") of $1.1 billion, or $3.45 per diluted common share. 

The Company has declared a cash dividend of $0.22 per share, to be paid on August 19, 2021, to shareholders of record as of the close of business on August 9, 2021.  

Management Quotes

"The second quarter was another exceptional quarter for us thanks to our team's execution in a highly competitive market. We have positioned SC to benefit from the ongoing tailwinds with consumers and the overall auto industry. Demand for vehicles remains strong, as evidenced by our record originations in the quarter of $10.5 billion, despite the pressure of new vehicle sales due to the chip shortage. For the first time in our Company's history, we experienced a net recovery for the quarter of $79 million supported by record used car prices. Yesterday we announced an important strategic expansion of our partnership with AutoFi to launch a new digital experience for our dealers and consumers. The economic recovery is underway and we are encouraged by the strength of consumers and our portfolio's performance. However, the uncertainty with COVID persists and we are mindful of the potential impact going forward as we continue to remain disciplined in our approach. I am very optimistic about our Company's position in the market, our portfolio and our employee's ability to execute," said Mahesh Aditya, SC President and CEO.

Fahmi Karam, SC Chief Financial Officer, added, "Our strong performance, which included record net revenues and income, reflects the strength of our disciplined underwriting, dealer and OEM relationships and our team. More than $1 billion in net income represents the most profitable quarter in the Company's history and $1.8 billion in net income in the first half of the year is greater than any single full year. We have significant available liquidity and capital to continue to grow origination volumes and reinvest in the business. We remain focused on generating assets with strong risk-adjusted returns and managing operating expenses, while remaining attentive to the lingering effects of the pandemic on our customers and employees."

Second Quarter of 2021 Highlights (variances compared to second quarter of 2020 ("Q2 2020"), unless otherwise noted)

  • Net Income of $1.1 billion; $3.45 EPS
  • Total auto originations of $10.5 billion, up 34%
    • Core retail auto loan originations of $3.8 billion, up 79%
    • Chrysler Capital loan originations of $4.6 billion, down 2%
    • Chrysler Capital lease originations of $2.1 billion, up 109%
    • Chrysler average quarterly penetration rate of 34%, down from 37%
    • Santander Bank, N.A. program originations of $2.6 billion
  • Announced launch of new dealer and consumer digital experience through partnership with AutoFi
  • Net finance and other interest income1 of $1.4 billion, up 33%
  • 30-59 delinquency ratio of 5.5%, up 120 basis points
  • 59-plus delinquency ratio2 of 2.4%, flat
  • Retail Installment Contract ("RIC") gross charge-off ratio of 6.6%, down 450 basis points
  • Recovery rate of 114.9%, up from 45.7%
  • RIC net charge-off ratio3 of (1.0)%, down 700 basis points
  • Allowance ratio of 17.8%, down from 18.9% as of March 31, 2021
  • Troubled Debt Restructuring ("TDR") balance of $4.2 billion, down from $4.4 billion as of March 31, 2021
  • Executed ~$300 million in off-balance sheet prime loan sales
  • Return on average assets ("ROA") of 8.9%
  • Expense ratio of 1.9%, up 20 basis points
  • Common equity tier 1 ("CET1") ratio of 18.1%


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 Q2 2021 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 28, 2021. The conference call will be accessible by dialing 1-866-548-4713 (U.S. domestic), or 1-323-794-2093 (international), conference ID 1398753. 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 2021 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 1-844-512-2921 (U.S. domestic), or 1-412-317-6671 (international), conference ID 1398753, 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 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; (e) significant risks we face implementing our growth strategy, some of which are outside our control; (f) 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; (g) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (h) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (i) loss of our key management or other personnel, or an inability to attract such management and personnel; (j) 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; (k) there can be no assurance that the proposed acquisition of all of our outstanding common stock by SHUSA will be agreed upon, approved and ultimately consummated, and the terms of any such transaction may differ materially from those originally proposed by SHUSA; and (l) other 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 $64 billion (for the second quarter ended June 30, 2021), and is headquartered in Dallas, Texas. (www.santanderconsumerusa.com)

Santander Consumer USA Holdings Inc.

Financial Supplement

Second Quarter 2021



Table of Contents




Table 1: Condensed Consolidated Balance Sheets


Table 2: Condensed Consolidated Statements of Income


Table 3: Other Financial Information


Table 4: Credit Quality


Table 5: Originations


Table 6: Asset sales


Table 7: Ending Portfolio


Table 8: Reconciliation of Non-GAAP Measures


Table 1: Condensed Consolidated Balance Sheets


June 30, 2021


December 31, 2020

Assets

(Unaudited, Dollars in thousands)

Cash and cash equivalents

$

321,976



$

109,053


Finance receivables held for sale, net

391,209



1,567,527


       Finance receivables held for investment, at amortized cost

33,120,008



33,114,638


       Allowance for credit loss

(5,818,382)



(6,110,633)


Finance receivables held for investment, at amortized cost, net

27,301,626



27,004,005


Restricted cash

2,660,662



2,221,094


Accrued interest receivable

347,722



415,765


Leased vehicles, net

16,120,051



16,391,107


Furniture and equipment, net

57,419



62,032


Goodwill

74,056



74,056


Intangible assets

79,183



70,128


Other assets

892,030



972,726


Total assets

$

48,245,934



$

48,887,493


Liabilities and Equity




Liabilities:




Borrowings and other debt obligations

$

38,202,642



$

41,138,674


Deferred tax liabilities, net

1,718,538



1,263,796


Accounts payable and accrued expenses

682,450



531,369


Other liabilities

412,674



331,693


Total liabilities

$

41,016,304



$

43,265,532






Equity:




Common stock, $0.01 par value

3,060



3,061


Additional paid-in capital

389,890



393,800


Accumulated other comprehensive income, net

(36,855)



(50,566)


Retained earnings

6,873,535



5,275,666


Total stockholders' equity

$

7,229,630



$

5,621,961


Total liabilities and equity

$

48,245,934



$

48,887,493


Table 2: Condensed Consolidated Statements of Income


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020


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

Interest on finance receivables and loans

$

1,229,492



$

1,236,600



$

2,534,143



$

2,510,419


Leased vehicle income

703,916



737,549



1,444,800



1,485,528


Other finance and interest income

3,068



2,657



4,494



10,208


Total finance and other interest income

1,936,476



1,976,806



3,983,437



4,006,155


Interest expense

237,195



308,982



490,732



637,816


Leased vehicle expense

294,720



610,861



718,515



1,163,773


Net finance and other interest income

1,404,561



1,056,963



2,774,190



2,204,566


Credit loss expense (benefit)

(263,751)



861,896



(127,542)



1,769,783


Net finance and other interest income after credit loss expense

1,668,312



195,067



2,901,732



434,783


Profit sharing

50,553



11,530



117,879



25,825


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

1,617,759



183,537



2,783,853



408,958


Investment gains (losses), net

2,414



(147,582)



(12,298)



(211,008)


Servicing fee income

22,812



19,120



41,506



38,223


Fees, commissions, and other

50,847



82,069



151,375



177,199


Total other income

76,073



(46,393)



180,583



4,414


Compensation and benefits

156,450



127,643



310,345



260,969


Repossession expense

38,845



22,289



84,191



79,951


Other expenses

107,915



116,747



203,166



208,432


Total operating expenses

303,210



266,679



597,702



549,352


Income (loss) before income taxes

1,390,622



(129,535)



2,366,734



(135,980)


Income tax expense

332,420



(32,857)



566,877



(35,315)


Net income (loss)

$

1,058,202



$

(96,678)



$

1,799,857



$

(100,665)










Net income per common share (basic)

$

3.46



$

(0.30)



$

5.88



$

(0.31)


Net income per common share (diluted)

$

3.45



$

(0.30)



$

5.88



$

(0.31)


Weighted average common shares (basic)

306,057,004



319,773,636



306,082,852



326,899,844


Weighted average common shares (diluted)

306,289,395



319,878,145



306,327,116



327,137,104


Number of shares outstanding

306,081,081



316,235,387



306,081,081



316,235,387


Table 3: Other Financial Information


Three Months Ended June 30,


Six Months Ended June 30,

Ratios (Unaudited, Dollars in thousands)

2021


2020


2021


2020

Yield on retail installment contracts

15.1

%


14.8

%


14.9

%


15.0

%

Yield on leased vehicles

9.6

%


2.9

%


8.5

%


3.7

%

Yield on personal loans, held for sale (1)

—

%


25.6

%


30.4

%


26.0

%

Yield on earning assets (2)

13.2

%


10.9

%


12.9

%


11.4

%

Cost of debt (3)

2.5

%


3.1

%


2.5

%


3.2

%

Net interest margin (4)

11.3

%


8.4

%


11.0

%


8.8

%

Expense ratio (5)

1.9

%


1.7

%


1.9

%


1.8

%

Return on average assets (6)

8.9

%


(0.8)

%


7.5

%


(0.4)

%

Return on average equity (7)

63.2

%


(7.7)

%


57.0

%


(3.6)

%

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

(1.0)

%


6.0

%


1.0

%


6.9

%

Net charge-off ratio (8)

(1.0)

%


6.0

%


1.0

%


6.9

%

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

2.4

%


2.4

%


2.4

%


2.4

%

Allowance ratio (10)

17.8

%


19.2

%


17.8

%


19.2

%

Common stock dividend payout ratio (11)

6.4

%


*



11.2

%


*


Common Equity Tier 1 capital ratio (12)

18.1

%


13.4

%


18.1

%


13.4

%

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

$

(79,223)



$

461,014



$

164,852



$

1,054,060


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

791,144



743,693



791,144



743,693


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

—



127,504



—



127,504


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

791,565



744,170



791,565



744,170


End of period assets covered by allowance for credit losses

32,774,721



30,522,963



32,774,721



30,522,963


End of period gross retail installment contracts held for investment

32,750,571



30,492,634



32,750,571



30,492,634


End of period gross personal loans held for sale

—



1,283,183



—



1,283,183


End of period gross finance receivables and loans held for investment

32,750,571



30,496,308



32,750,571



30,496,308


End of period gross finance receivables, loans, and leases

49,610,560



47,729,637



49,610,560



47,729,637


Average gross retail installment contracts held for investment

32,249,024



30,493,604



32,494,401



30,586,535


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

32,462,553



31,193,215



32,780,361



31,017,842


Average gross finance receivables, loans and finance leases

32,500,748



32,554,978



33,399,959



32,438,109


Average gross operating leases

17,118,763



17,492,255



17,189,819



17,584,849


Average gross finance receivables, loans, and leases

49,619,511



50,047,233



50,589,778



50,022,958


Average managed assets

64,483,261



61,001,767



64,245,652



60,652,091


Average total assets

47,741,178



46,876,726



48,111,581



47,308,997


Average debt

38,392,143



40,113,885



39,329,703



39,858,355


Average total equity

6,692,791



5,033,773



6,318,704



5,573,544




















(1)

Includes Finance and other interest income; excludes fees

(2)

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

(3)

"Cost of debt" is defined as the ratio of annualized Interest expense to Average debt

(4)

"Net interest margin" is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and leases

(5)

"Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets

(6)

"Return on average assets" is defined as the ratio of annualized Net income to Average total assets

(7)

"Return on average equity" is defined as the ratio of annualized Net income to Average total equity

(8)

"Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a amortized cost basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio.

(9)

"Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases

(10)

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

(11)

"Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders. The Common stock dividend payout ratio for the three and six months ended June 30, 2020 has not been disclosed since the earnings per share for the three and six months ended June 30, 2020 was a negative number.

(12)

"Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release). CET1 Ratio is provided as a preliminary calculation.

Table 4: Credit Quality


The activity in the credit loss allowance for retail installment contracts for the three and six month ended June 30, 2021 and 2020 was as follows (Unaudited, Dollar amounts in thousands):



Three Months Ended June 30, 2021


Three Months Ended June 30, 2020


Retail Installment Contracts


Retail Installment Contracts

Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR


Balance — beginning of period

$

4,662,633



$

1,338,708



$

4,482,663



$

973,236


Credit loss expense (benefit)

(282,249)



16,350



744,511



116,419


Charge-offs (a)

(540,998)



8,457



(721,218)



(127,617)


Recoveries

460,284



151,479



312,231



75,590


Balance — end of period

$

4,299,670



$

1,514,994



$

4,818,187



$

1,037,628



Six Months Ended June 30, 2021


Six Months Ended June 30, 2020


Retail Installment Contracts


Retail Installment Contracts

Allowance for Credit Loss

Non-TDR


TDR


Non-TDR


TDR


Balance — beginning of period

$

4,792,464



$

1,314,170



$

2,123,878



$

914,718


Day 1 - Adjustment to allowance for adoption of CECL standard

—



—



2,030,473



71,833


Credit loss expense (benefit)

(242,190)



115,072



1,501,704



267,268


Charge-offs (a)

(1,127,791)



(194,004)



(1,620,768)



(417,184)


Recoveries

877,187



279,756



782,900



200,993


Balance — end of period

$

4,299,670



$

1,514,994



$

4,818,187



$

1,037,628


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

A summary of delinquencies of our retail installment contracts as of June 30, 2021 and December 31, 2020 is as follows (Unaudited, Dollar amounts in thousands):


Delinquent Balance


June 30, 2021



Amount


Percent

Amortized cost, 30-59 days past due


$

1,816,384



5.5

%

Delinquent amortized cost over 59 days


791,144



2.4

%

Total delinquent balance at amortized cost


$

2,607,528



7.9

%






Delinquent Balance


December 31, 2020



Amount


Percent

Principal 30-59 days past due


$

1,971,766



6.0

%

Delinquent principal over 59 days


1,038,869



3.1

%

Total delinquent principal (a)


$

3,010,635



9.1

%

The retail installment contracts held for investment that were placed on nonaccrual status, as of June 30, 2021 and December 31, 2020 (Unaudited, Dollar amounts in thousands):


Nonaccrual Balance

June 30, 2021


Amount


Percent

Non-TDR

$

585,677



1.8

%

TDR

318,933



1.0

%

Total non-accrual loans (a)

$

904,610



2.8

%

(a) The table includes balances based on amortized cost.






Nonaccrual Balance


December 31, 2020



Amount


Percent

Non-TDR


$

748,026



2.3

%

TDR


385,021



1.2

%

Total nonaccrual principal (a)


$

1,133,047



3.5

%

The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of June 30, 2021 and December 31, 2020 (Unaudited, Dollar amounts in thousands):


Allowance Ratios

June 30, 2021


December 31, 2020

TDR - Unpaid principal balance

$

4,161,892


$

3,945,040

TDR - Impairment

1,514,994


1,314,170

TDR - Allowance ratio

36.4%


33.3%





Non-TDR - Unpaid principal balance

$

28,576,765


$

28,977,299

Non-TDR - Allowance

4,299,670


4,792,464

Non-TDR Allowance ratio

15.0%


16.5%





Total - Unpaid principal balance

$

32,738,657


$

32,922,339

Total - Allowance

5,814,664


6,106,634

Total - Allowance ratio

17.8%


18.5%









The Company's ACL decreased $0.2 billion and $0.3 billion for the three and six months ended June 30, 2021. The decrease was primarily due to an improved macroeconomic outlook and a decrease of lifetime expected credit losses for non-TDR loans mainly due to credit quality and performance.

Table 5: Originations


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



Three Months Ended


Six Months Ended


Three Months Ended


June 30, 2021


June 30, 2020


June 30, 2021


June 30, 2020


March 31, 2021

Retained Originations

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

5,871,823


$

5,098,496


$

10,115,312


$

8,832,741


$

4,383,146

Average APR

14.4%


11.7 %


14.7%


13.3 %


15.0%

Average FICO® (a)

608


657


606


635


606

Premium

(2.3)%


(0.9)%


(2.0)%


(0.8)%


(1.6)%











Personal loans (b)

—


347,238


—


618,073


$

—

Average APR

—%


29.6 %


—%


29.5 %


—%











Leased vehicles

2,067,741


986,617


4,222,247


3,007,338


$

2,154,506











Finance lease

2,534


1,927


5,331


$

4,929


$

2,796

Total originations retained

$

7,942,098


$

6,434,278


$

14,342,890


$

12,463,081


$

6,540,448











Sold Originations










Retail installment contracts

$

—


$

—


$

235,395


$

111,981


$

95,738

Average APR

—%


—%


7.7 %


4.4 %


9.5%

Average FICO® (c)

—


—


699


722


688











Personal Loans (d)

$

—


$

—


$

292,709


$

—


$

292,709

Average APR

—%


—%


29.7%


$

—


29.7%











Total originations sold

$

—


$

—


$

528,104


$

111,981


$

388,447











Total originations (excluding SBNA Originations Program)

$

7,942,098


$

6,434,278


$

14,870,994


$

12,575,062


$

6,928,895























(a)    

Unpaid principal balance excluded from the weighted average FICO score is $559 million, $586 million, $1.0 billion, $1.0 billion and $450 million for the three months ended June 30, 2021 and 2020, six months ended June 30, 2021 and 2020, and for the three months ended March 31, 2021, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $187 million, $102 million, $341 million, $241 million and $154 million, respectively, were commercial loans.

(b)    

Included in the total origination volume is $58 million and $79 million for the three and six months ended June 30, 2020, 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. Unpaid principal balance excluded from the weighted average FICO score is zero, $8 million, zero, $9 million and $2 million for the three and six months ended June 30, 2021 and 2020, and for the three months ended March 31, 2021, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, the commercial loans were zero.

(d)  

Included in the total origination volume is $25 million for the three months ended March 31, 2021 related to newly opened accounts.

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 $2.6 billion and $4.5 billion of retail installment contacts during the three and six months ended June 30, 2021, respectively.

Table 6: Asset Sales


Three Months Ended


Six Months Ended


Three Months Ended


June 30, 2021


June 30, 2020


June 30, 2021


June 30, 2020


March 31, 2021

Assets Sold

(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

309,784


$

512,286


$

2,690,569


$

512,286


$

2,380,785

Average APR

5.9%


6.4%


4.2%


6.4%


4.0%

Average FICO®

$

716


691


737


691


740











Personal loans

$

—


—


1,253,476


—


$

1,253,476

Average APR

—%


—%


29.7%


—%


29.7%

Discount

—


—


—


—


—











Total asset sales

$

309,784


$

512,286


$

3,944,045


$

512,286


$

3,634,261





















Table 7: Ending Portfolio


Ending outstanding balance, average APR and remaining unaccreted net discount of our held for investment portfolio as of June 30, 2021 and December 31, 2020, are as follows:



June 30, 2021


December 31, 2020


(Unaudited, Dollar amounts in thousands)

Retail installment contracts

$

32,750,571


$

32,937,036

Average APR

15.7%


15.2%

Premium

(0.74)%


(0.15)%





Leased vehicles

$

16,835,839


$

17,259,468





Finance leases

$

24,150


$

26,150









Table 8: Reconciliation of Non-GAAP Measures


June 30, 2021


June 30, 2020


(Unaudited, Dollar amounts in thousands)

Total equity

$

7,229,630


$

4,895,465

Add: Adjustment due to CECL capital relief (c)

1,759,037


1,769,430

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

164,585


154,943

Deduct: Accumulated other comprehensive income (loss), net

(36,855)


(63,705)

Tier 1 common capital

$

8,860,937


$

6,573,657

Risk weighted assets (a)(c)

49,014,663


48,997,902

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

18.1%


13.4%











(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 2020 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 elected this alternative option instead of the one described in the December 2018 rule.

SOURCE Santander Consumer USA Holdings Inc.