UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
 Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 2018
SANTANDER CONSUMER USA HOLDINGS INC.
(Exact name of registrant as specified in its charter)

				
Delaware
(State or other Jurisdiction of Incorporation)	001-36270
(Commission File Number)	32-0414408
(IRS Employer Identification No.)	
 	 	 	
1601 Elm St. Suite #800
Dallas, Texas
(Address of Principal Executive Offices)	 
 75201
(Zip Code)	

Registrant’s telephone number, including area code: (214) 634-1110
n/a

(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

    

Item 2.02. Results of Operations and Financial Condition.
On April 24, 2018, Santander Consumer USA Holdings Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2018. Copies of the Company’s press release and an investor presentation for the quarter ended March 31, 2018 are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference.
Note : Information in this report (including Exhibits 99.1 and 99.2) furnished pursuant to Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

Item 9.01. Financial Statements and Exhibits.
Exhibit No.      Description
Exhibit 99.1     Press Release of Santander Consumer USA Holdings Inc., dated April 24, 2018

Exhibit 99.2	Presentation Materials of Santander Consumer USA Holdings Inc., dated April 24, 2018	

2

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		
Dated: April 24, 2018	SANTANDER CONSUMER USA HOLDINGS INC.

By: /s/ Christopher Pfirrman                                  
Name:    Christopher Pfirrman
Title:    Chief Legal Officer

 	 	

 

Exhibit 99.1

	
			
Contacts:
Investor Relations
Evan Black 
800.493.8219
InvestorRelations@santanderconsumerusa.com	  	Media Relations
Laurie Kight
214.801.6455
Media@santanderconsumerusa.com	
Santander Consumer USA Holdings Inc. Reports First Quarter 2018 Net Income of $242 million
Total Auto Originations of $6.3 Billion Increased 18% YoY, with Increased Volume Across All Origination Channels
Dallas, TX (April 24, 2018) – Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC”) today announced net income for the first quarter ended March 31, 2018 (“Q1 2018”) of $242 million , or $0.67 per diluted common share.
The Company has declared a cash dividend of $0.05 per share, to be paid on May 14, 2018, to shareholders of record as of the close of business on May 4, 2018.
“ Our focus has been on optimizing pricing, ensuring strong credit risk management and improving dealer and customer experience, ” said Scott Powell, SC President and CEO, who is also CEO of Santander US. “ We delivered strong financial performance in the first quarter and increased originations across all of our channels, including Chrysler loans and leases. ”

Juan Carlos Alvarez, Chief Financial Officer, added, “ During the quarter we saw continued stabilization in credit performance with a lower net-charge-off ratio and stable delinquency ratios compared to the first quarter of last year. This led to strong financial performance in the first quarter and we remain focused on increasing volume with the appropriate risk-adjusted returns and disciplined expense management. ”

Q1 2018 Highlights (variances compared to the first quarter of 2017 ( “ Q1 2017 ” ), unless otherwise noted) :
		
•	Total auto originations of $6.3 billion, up 18%	
		
◦	Core retail auto loan originations of $2.3 billion, up 4%	
		
◦	Chrysler Capital loan originations of $1.9 billion, up 24%	
		
◦	Chrysler Capital lease originations of $2.1 billion, up 31%	
		
•	Chrysler average quarterly penetration rate of 28%, up from 23% during the same quarter last year	
		
•	Net finance and other interest income of $1.0 billion , decreased 8%	
		
◦	Net leased vehicle income of $146 million , increased 14%	
		
•	Retail Installment Contract “RIC” gross charge-off ratio of 18.5%, up 40 basis points	
		
•	RIC net charge-off ratio of 8.3% , down 50 basis points	
		
•	Troubled Debt Restructuring (“TDR”) balance of $6.0 billion , down from $6.3 billion as of December 31, 2017	
		
•	Auction-plus recovery rate of 55.1%, up 400 basis points	
		
•	Return on average assets of 2.4% , up from 1.5%	
		
•	Common equity tier 1 (“CET1”) ratio of 16.9% , up from 13.8%	
		
•	Expense ratio of 2.4% , flat	
		
•	Asset sales of $1.5 billion executed through the Santander flow agreement	
		
•	$3.3 billion in asset-backed securities “ABS” offered and sold	
		
•	Launched pilot program with Santander Bank, N. A. to facilitate the origination and servicing of primarily Chrysler loans	
		
•	Reached agreements with AutoFi and AutoGravity expanding SC's digital partnerships in an effort to further streamline and simplify the car-buying process for consumers	

Subsequent Events:
		
•	Completed prime auto loan portfolio conversion with a new third party increasing serviced for others balance by $1.0 billion	
		
•	$1.0 billion in ABS offered and sold via the SDART platform	

1

Finance receivables, loans and leases, net 1 of $34.8 billion , flat compared to $34.8 billion at December 31, 2017.

Net finance and other interest income decreased 8 percent to $1.0 billion in Q1 2018 from $1.1 billion in Q1 2017, primarily driven by lower average RIC balances and an increase in benchmark rates.

Servicing fee income decreased 17 percent to $26 million in Q1 2018, from $32 million in Q1 2017, driven by lower prime originations and lower prime asset sales. SC's serviced for others portfolio of $8.7 billion as of Q1 2018 is down 21 percent from $11.0 billion the prior year quarter.

RIC delinquency ratio 2 of 3.8 percent in Q1 2018 was stable compared to 3.9 percent in Q1 2017.

RIC net charge-off ratio 3 improved to 8.3 percent in Q1 2018 from 8.8 percent in Q1 2017. Provision for credit losses decreased to $459 million in Q1 2018 from $635 million the prior year quarter.
Allowance ratio 4 decreased 30 basis points, to 12.3 percent at the end of Q1 2018, from 12.6 percent at the end of Q4 2017.

Recorded net investment losses of $87 million in Q1 2018, compared to net investment losses of $76 million in Q1 2017. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio 5 . Excluding the impact of personal lending, net investment losses totaled $28 million.

During Q1 2018 SC incurred $288 million of operating expenses, down 6 percent from $305 million in Q1 2017. SC's expense ratio of 2.4 percent for the quarter, was flat compared to 2.4 percent during the same period last year.

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 60 days to end of period gross balance of the respective portfolio, excludes capital 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.
4 Ratio for allowance for credit losses excludes end of period balances on purchased receivables portfolio of $39 million and finance receivables and personal loans held for sale of $1.6 billion .
5 The current period losses were primarily driven by $59 million of lower of cost or market adjustments related to the held for sale personal lending portfolio, comprised of $106 million in customer default activity, partially offset by a $47 million decrease in market discount, consistent with typical seasonal patterns.

2

Conference Call Information
SC will host a conference call and webcast to discuss its Q1 2018 results and other general matters at 9:00 a.m. Eastern Time on Tuesday, April 24, 2018. The conference call will be accessible by dialing 888-394-8218 (U.S. domestic), or 323-701-0225 (international), conference ID 7441298. 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 Q1 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 7441298, 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 Fiat Chrysler Automobiles 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, technology-driven 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 $48 billion (as of March 31, 2018 ), and is headquartered in Dallas. ( www.santanderconsumerusa.com )

3

Santander Consumer USA Holdings Inc.
Financial Supplement
First 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	10		
Table 6: Asset Sales	11		
Table 7: Ending Portfolio	12		
Table 8: Reconciliation of Non-GAAP Measures	13		

4

Table 1: Condensed Consolidated Balance Sheets

	
								
 	March 31,
2018	 	December 31,
2017	
Assets	(Unaudited, Dollars in thousands)	
Cash and cash equivalents	$	618,809		 	$	527,805		
Finance receivables held for sale, net	1,611,535		 	2,210,421		
Finance receivables held for investment, net	22,587,358		 	22,427,769		
Restricted cash	2,895,615		 	2,553,902		
Accrued interest receivable	269,258		 	326,640		
Leased vehicles, net	10,612,824		 	10,160,327		
Furniture and equipment, net	65,961		 	69,609		
Federal, state and other income taxes receivable	99,099		 	95,060		
Related party taxes receivable	634		 	467		
Goodwill	74,056		 	74,056		
Intangible assets	31,088		 	29,734		
Due from affiliates	53,408		 	33,270		
Other assets	1,125,543		 	913,244		
Total assets	$	40,045,188		 	$	39,422,304		
Liabilities and Equity	 	 	 	
Liabilities:	 	 	 	
Notes payable — credit facilities	$	5,294,358		 	$	4,848,316		
Notes payable — secured structured financings	22,862,607		 	22,557,895		
Notes payable — related party	3,148,194		 	3,754,223		
Accrued interest payable	38,375		 	38,529		
Accounts payable and accrued expenses	430,361		 	429,531		
Deferred tax liabilities, net	966,444		 	897,121		
Due to affiliates	103,012		 	82,382		
Other liabilities	475,822		 	333,806		
Total liabilities	$	33,319,173		 	$	32,941,803		
 	 	 	 	
Equity:	 	 	 	
Common stock, $0.01 par value	3,610		 	3,605		
Additional paid-in capital	1,689,996		 	1,681,558		
Accumulated other comprehensive income, net	63,211		 	44,262		
Retained earnings	4,969,198		 	4,751,076		
Total stockholders’ equity	$	6,726,015		 	$	6,480,501		
Total liabilities and equity	$	40,045,188		 	$	39,422,304		

5

Table 2: Condensed Consolidated Statements of Income

	
								
 	Three Months Ended 
 March 31,	
 	2018	 	2017	
 	(Unaudited, Dollars in thousands, except per share amounts)	
Interest on finance receivables and loans	$	1,114,137		 	$	1,209,186		
Leased vehicle income	504,278		 	418,233		
Other finance and interest income	7,137		 	3,825		
Total finance and other interest income	1,625,552		 	1,631,244		
Interest expense	241,028		 	227,089		
Leased vehicle expense	358,683		 	290,171		
Net finance and other interest income	1,025,841		 	1,113,984		
Provision for credit losses	458,995		 	635,013		
Net finance and other interest income after provision for credit losses	566,846		 	478,971		
Profit sharing	4,377		 	7,945		
Net finance and other interest income after provision for credit losses and profit sharing	562,469		 	471,026		
Investment losses, net	(86,520	)	 	(76,399	)	
Servicing fee income	26,182		 	31,684		
Fees, commissions, and other	85,391		 	100,195		
Total other income	25,053		 	55,480		
Compensation expense	122,005		 	136,262		
Repossession expense	72,081		 	71,299		
Other operating costs	93,826		 	97,517		
Total operating expenses	287,912		 	305,078		
Income before income taxes	299,610		 	221,428		
Income tax expense	57,311		 	78,001		
Net income	$	242,299		 	$	143,427		
 	 	 	 	
Net income per common share (basic)	$	0.67		 	$	0.40		
Net income per common share (diluted)	$	0.67		 	$	0.40		
Dividend paid per common share	$	0.05		 	$	—		
Weighted average common shares (basic)	360,703,234		 	359,105,050		
Weighted average common shares (diluted)	361,616,732		 	360,616,032		

6

Table 3: Other Financial Information

									
 	 	Three Months Ended 
 March 31,	
 	 	2018	 	2017	
Ratios	(Unaudited, Dollars in thousands)	
 	Yield on individually acquired retail installment contracts	15.2	 %	 	15.7	%	
 	Yield on purchased receivables portfolios	27.6	 %	 	20.2	%	
 	Yield on receivables from dealers	3.1	 %	 	5.3	%	
 	Yield on personal loans (1)	24.5	 %	 	24.8	%	
 	Yield on earning assets (2)	12.7	 %	 	13.5	%	
 	Cost of debt (3)	3.1	 %	 	2.9	%	
 	Net interest margin (4)	10.3	 %	 	11.2	%	
 	Expense ratio (5)	2.4	 %	 	2.4	%	
 	Return on average assets (6)	2.4	 %	 	1.5	%	
 	Return on average equity (7)	14.7	 %	 	10.8	%	
 	Net charge-off ratio on individually acquired retail installment contracts (8)	8.3	 %	 	8.8	%	
 	Net charge-off ratio on purchased receivables portfolios (8)	(4.2	)%	 	0.6	%	
 	Net charge-off ratio on personal loans (8)	49.9	 %	 	78.5	%	
 	Net charge-off ratio (8)	8.3	 %	 	8.8	%	
 	Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9)	3.8	 %	 	3.9	%	
 	Delinquency ratio on personal loans, end of period (9)	11.7	 %	 	12.0	%	
 	Delinquency ratio on loans held for investment, end of period (9)	3.8	 %	 	3.8	%	
 	Allowance ratio (10)	12.3	 %	 	12.7	%	
 	Common stock dividend payout ratio (11)	7.5	 %	 	—	%	
 	Common Equity Tier 1 capital ratio (12)	16.9	 %	 	13.8	%	
Other Financial Information	 	 	 	
 	Charge-offs, net of recoveries, on individually acquired retail installment contracts	$	537,792		 	$	598,933		
 	Charge-offs, net of recoveries, on purchased receivables portfolios	(428	)	 	353		
 	Charge-offs, net of recoveries, on personal loans	749		 	3,458		
 	Charge-offs, net of recoveries, on capital leases	306		 	1,314		
 	Total charge-offs, net of recoveries	$	538,419		 	$	604,058		
 	End of period delinquent principal over 60 days, individually acquired retail installment contracts held for investment	984,755		 	1,044,288		
 	End of period delinquent principal over 60 days, personal loans	162,061		 	169,429		
 	End of period delinquent principal over 60 days, loans held for investment	986,886		 	1,049,030		
 	End of period assets covered by allowance for credit losses	26,028,935		 	27,188,404		
 	End of period gross individually acquired retail installment contracts held for investment	25,986,531		 	27,074,856		
 	End of period gross personal loans	1,387,713		 	1,414,313		
 	End of period gross finance receivables and loans held for investment	26,046,356		 	27,371,719		
 	End of period gross finance receivables, loans, and leases held for investment	37,720,946		 	37,447,052		
 	Average gross individually acquired retail installment contracts held for investment	25,911,063		 	27,089,438		
 	Average gross personal loans held for investment	6,010		 	17,610		
 	Average gross individually acquired retail installment contracts held for investment and held for sale	26,820,166		 	28,200,907		
 	Average gross purchased receivables portfolios	41,209		 	220,786		
 	Average gross receivables from dealers	15,651		 	70,165		
 	Average gross personal loans	1,459,308		 	1,488,665		
 	Average gross capital leases	22,474		 	30,599		
 	Average gross finance receivables and loans	$	28,358,808		 	$	30,011,122		
 	Average gross operating leases	11,441,789		 	9,849,077		
 	Average gross finance receivables, loans, and leases	39,800,597		 	39,860,199		
 	Average managed assets	48,421,303		 	51,229,729		
 	Average total assets	39,694,041		 	38,910,193		
 	Average debt	31,208,250		 	31,553,342		
 	Average total equity	6,579,416		 	5,325,581		

7

		
(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 60 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)	

8

Table 4: Credit Quality

The activity in the credit loss allowance for individually acquired retail installment contracts for the three months ended March 31, 2018 and 2017 was as follows (Unaudited, Dollar amounts in thousands) :

								
 	Three Months Ended March 31,	
 	2018	 	2017	
Credit loss allowance — beginning of period	$	3,261,135		 	$	3,411,055		
Provision for credit losses	458,679		 	629,097		
Charge-offs	(1,199,021	)	 	(1,224,697	)	
Recoveries	661,229		 	625,764		
Credit loss allowance — end of period	$	3,182,022		 	$	3,441,219		
 	 	 	 	
Net charge-offs	$	537,792		 	$	598,933		
Average unpaid principal balance	25,911,063		 	27,089,438		
Net charge-off ratio 1	8.3	%	 	8.8	%	

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

														
 	March 31, 2018 2	 	December 31, 2017 2	
Principal 30-59 days past due	$	2,234,126		 	8.6	%	 	$	2,822,686		 	10.9	%	
Delinquent principal over 59 days 3	1,087,491		 	4.2	%	 	1,541,728		 	5.9	%	
Total delinquent contracts	$	3,321,617		 	12.8	%	 	$	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 March 31, 2018 and December 31, 2017 (Unaudited, Dollar amounts in thousands) :

														
 	March 31, 2018 2	 	December 31, 2017 2	
Non-TDR	$	470,674		 	1.8	%	 	$	666,926		 	2.6	%	
TDR	1,346,148		 	5.2	%	 	1,390,373		 	5.4	%	
Total nonaccrual principal	$	1,816,822		 	7.0	%	 	$	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 March 31, 2018 and December 31, 2017 (Unaudited, Dollar amounts in thousands) :

								
 	March 31,
2018	 	December 31,
2017	
TDR - Unpaid principal balance	$	5,998,768		 	$	6,261,894		
TDR - Impairment	1,595,465		 	1,731,320		
TDR allowance ratio	26.6	%	 	27.6	%	
 	 	 	 	
Non-TDR - Unpaid principal balance	$	19,987,763		 	$	19,681,394		
Non-TDR - Allowance	1,586,557		 	1,529,815		
Non-TDR allowance ratio	7.9	%	 	7.8	%	
 	 	 	 	
Total - Unpaid principal balance	$	25,986,531		 	$	25,943,288		
Total - Allowance	3,182,022		 	3,261,135		
Total allowance ratio	12.2	%	 	12.6	%	

1 “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
2 Percent of unpaid principal balance.
3 Interest is accrued until 60 days past due in accordance with the Company's account policy for retail installment contracts.

9

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	Three Months Ended	
 	March 31, 2018	 	March 31, 2017	December 31, 2017	
Retained Originations	(Unaudited, Dollar amounts in thousands)	
Retail installment contracts	$	3,866,494		 	$	3,185,373		$	3,014,433		
Average APR	16.1	%	 	17.0	%	14.0	%	
Average FICO® (a)	611		 	593		631		
Discount	0.3	%	 	0.4	%	0.2	%	
 	 	 	 	 	
Personal loans (b)	$	273,328		 	$	287,696		$	528,705		
Average APR	26.0	%	 	25.3	%	25.7	%	
 	 	 	 	 	
Leased vehicles	$	2,093,604		 	$	1,600,659		$	1,294,256		
 	 	 	 	 	
Capital lease	$	2,398		 	$	1,177		$	4,640		
Total originations retained	$	6,235,824		 	$	5,074,905		$	4,842,034		
 	 	 	 	 	
Sold Originations (c)	 	 	 	 	
Retail installment contracts	$	386,956		 	$	601,205		$	—		
Average APR	6.8	%	 	5.8	%	—	%	
Average FICO® (d)	732		 	727		—		
Total originations sold	$	386,956		 	$	601,205		$	—		
 	 	 	 	 	
Total originations	$	6,622,780		 	$	5,676,110		$	4,842,034		
		
(a)	Unpaid principal balance excluded from the weighted average FICO score is $461 million , $443 million , and $372 million for the three months ended March 31, 2018 and 2017 , and the three months ended December 31, 2017 , respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $54 million , $40 million , and $68 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 $17 million , $23 million and $132 million for the three months ended March 31, 2018 and 2017 , and the three months ended December 31, 2017 , 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 $32 million , $80 million , and zero for the three months ended March 31, 2018 and 2017 , and the three months ended December 31, 2017 , respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $20 million , $31 million , and zero , respectively, were commercial loans.	

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 months ended March 31, 2018 , the Company facilitated the purchase of $24 million of retail installment contacts.

10

Table 6: Asset Sales

Asset sales may include assets originated in prior periods. 

											
 	Three Months Ended	Three Months Ended	
 	March 31, 2018	 	March 31, 2017	December 31, 2017	
 	(Unaudited, Dollar amounts in thousands)	
Retail installment contracts	$	1,475,253		 	$	930,590		$	—		
Average APR	6.5	%	 	5.9	%	—	%	
Average FICO®	727		 	726		—		
 	 	 	 	 	
Total asset sales	$	1,475,253		 	$	930,590		$	—		

11

Table 7: Ending Portfolio

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

								
	March 31, 2018		December 31, 2017	
	( Unaudited, Dollar amounts in thousands)	
Retail installment contracts	$	26,025,703			$	25,986,532		
Average APR	16.6	%		16.5	%	
Discount	1.4	%		1.5	%	
	 		 	
Personal loans	$	5,158			$	6,887		
Average APR	31.8	%		31.8	%	
	 		 	
Receivables from dealers	$	15,495			$	15,787		
Average APR	4.2	%		4.2	%	
	 		 	
Leased vehicles	$	11,652,841			$	11,175,602		
	 		 	
Capital leases	$	21,750			$	22,857		

12

Table 8: Reconciliation of Non-GAAP Measures

	
								
 	March 31, 2018	 	March 31, 2017	
 	( Unaudited, Dollar amounts in thousands)	
Total equity	$	6,726,015		 	$	5,418,998		
  Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities	169,870		 	182,156		
  Deduct: Accumulated other comprehensive income (loss), net	63,211		 	35,504		
Tier 1 common capital	$	6,492,934		 	$	5,201,338		
Risk weighted assets (a)	$	38,517,988		 	$	37,799,513		
Common Equity Tier 1 capital ratio (b)	16.9	%	 	13.8	%	
		
(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.	

13

04.24.2018 First Quarter 2018 Exhibit 99.2 

 

2IMPORTANT INFORMATION Forward-Looking Statements This presentation 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 presentation and/or our financial performance to differ materially from that suggested by the forward-looking statements are: (a) the inherent limitations in internal controls 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 Fiat Chrysler Automobiles 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 Banco Santander which 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. 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. 

 

3 » Total auto originations of $6.3 billion, up 18% YoY » Core retail auto loan originations of $2.3 billion, up 4% YoY » Chrysler Capital1 loan originations of $1.9 billion, up 24% YoY » Chrysler average quarterly penetration rate of 28%, up from 23% during the same quarter last year » Net finance and other interest income of $1.0 billion, decreased 8% YoY » Net leased vehicle income of $146 million, increased 14% YoY » RIC net charge-off ratio of 8.3%, down 50 basis points YoY » Troubled Debt Restructuring (“TDR”) balance of $6.0 billion, down from $6.3 billion QoQ » Auction-plus recovery rate of 55.1%, up 400 basis points YoY » Return on average assets of 2.4%, up from 1.5% YoY » Asset sales of $1.5 billion executed through the Santander flow agreement » $3.3 billion in asset-backed securities “ABS” offered and sold » Launched pilot program with SBNA2 to facilitate the origination and servicing of primarily Chrysler loans » Reached agreements with AutoFi and AutoGravity expanding SC's digital partnerships » April 2018 - Completed prime auto loan portfolio conversion of $1.0 billion with a new third party » April 2018 - $1.0 billion in ABS offered and sold via the SDART platform Q1 2018 HIGHLIGHTS AND SUBSEQUENT EVENTS 1 Chrysler Capital is a dba of Santander Consumer USA 2Santander Bank N.A. 

 

4 17.0 Max 18.5 Min 9.0 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 ECONOMIC INDICATORS U.S. Auto Sales1 Units in Millions 1 Bloomberg 2 University of Michigan 3 U.S. Bureau of Economic Analysis Consumer Confidence2 Index Q1 1966=100 U.S. GDP3 % U.S. Unemployment Rate1 % OR IGIN A TI O N S CRE D IT Max 102.0 Min 55.3 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 2.9 Max 3.2 Min -4.0 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Max 10.0 Min 4.1 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 

 

5 44.9% 46.8% 51.1% 55.1% 35% 40% 45% 50% 55% 60% 65% 70% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 SC Auction Only Recovery Rate SC Auction Plus Recovery Rate (Quarterly) 100 105 110 115 120 125 130 135 110 115 120 125 130 135 140 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Manheim (Left Axis) JDP Used-Vehicle Price Index (Right Axis) AUTO INDUSTRY ANALYSIS Used Vehicle Indices1 Manheim: Seasonally Adjusted JD Power: Not Seasonally Adjusted SC Recovery Rates2 Industry Net Loss Rates3 SE V ER IT Y CRE D IT Industry 60+ Day Delinquency Rates3 1 Manheim, Inc.; Indexed to a basis of 100 at 1995 levels; JD Power Used-Vehicle Price Index (not seasonally adjusted) 2 Auction Only - includes all auto-related recoveries including inorganic/purchased receivables from auction lanes only 2 Auction Plus – Per the financial statements includes insurance proceeds, bankruptcy/deficiency sales, and timing impacts 3 Standard & Poor’s Rating Services (ABS Auto Trust Data – two-month lag on data, as of January 31, 2018) 10.0% Max 13.6% Min 3.3% Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Subprime Max 5.9% 5.9% Min 1.6% Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Subprime 

 

6DIVERSIFIED UNDERWRITING ACROSS THE CREDIT SPECTRUM YoY auto originations increase across all channels 1 Approximate FICOs 2 Includes nominal capital lease originations ($ in Millions) Q1 2018 Q4 2017 Q1 2017 QoQ YoY Total Core Retail Auto 2,291$ 1,469$ 2,198$ 56% 4% Chrysler Capital Loans (<640) 1 1,083 741 833 46% 30% Chrysler Capital Loans (≥640)1 879 804 755 9% 16% Total Chrysler Capital Retail 1,962$ 1,545$ 1,588$ 27% 24% Total Leases2 2,096 1,299 1,602 61% 31% Total Auto Originations 6,349$ 4,313$ 5,388$ 47% 18% Total Per onal Lending 273 529 288 (48%) (5%) Total SC Originations 6,623$ 4,842$ 5,676$ 37% 17% SBNA Originations 24 - - N/A N/A Total SC & SBNA Originations 6,647$ 4,842$ 5,676$ 37% 17% Asset Sales 1,475$ -$ 931$ N/A 58% Average Managed Assets 48,421$ 48,972$ 51,230$ (1%) (5%) % VarianceThree Months Ended Originations 

 

7 0.49 0.51 0.56 0.51 0.51 2.11 2.26 2.25 2.07 2014 2015 2016 2017 2018 YTD Full Year  Chrysler Capital average quarterly penetration rate of 28% as of Q1 2018  Through SBNA, SC has increased dealer receivables outstanding (“floorplan”) 9% QoQ FCA US LLC (FCA) RELATIONSHIP SC continues to optimize the Chrysler Capital program FCA Sales1 (units in millions) 1 FCA filings; sales as reported on 4/3/2018 2Dealer receivables originated through SBNA Dealer Floorplan2 Outstanding ($ in millions) $1,742 $1,723 $1,777 $1,963 $2,133 1Q17 2Q17 3Q17 4Q17 1Q18 

 

8 $11,015 $9,881 $9,957 $8,639 $8,723 1Q17 2Q17 3Q17 4Q17 1Q18 $ in Millions Santander Flow Sales 931 566 1,347 1,480 SBNA Originations 24 RV/Marine Sale 135  Santander Flow Sales totaling $1.5 billion in Q1 2018  Launched pilot program with SBNA to facilitate origination and servicing of primarily Chrysler loans  Recent trend in total balance related to lower prime originations and timing of asset sales to Santander SERVICED FOR OTHERS (SFO) PLATFORM Composition at 03/31/2018 RIC 92% Leases 1% RV/Marine 7% Total 100% Serviced for Others Balances (End of Period) *Sales with retained servicing during period, also include non-Santander sales. 

 

9 March 31, 2018 December 31, 2017 March 31, 2017 QoQ YoY Interest on finance receivables and loans 1,114,137$ 1,129,181$ 1,209,186$ (1%) (8%) Net leased vehicle income 145,595 112,491 128,062 29% 14% Other finance and interest income 7,137 4,470 3,825 60% 87% Interest expense 241,028 236,600 227,089 2% 6% Net finance and other interest income 1,025,841$ 1,009,542$ 1,113,984$ 2% (8%) Provision for credit losses 458,995 562,346 635,013 (18%) (28%) Profit sharing 4,377 7,235 7,945 (40%) (45%) Total other income 25,053 (37,716) 55,480 (166%) (55%) Total operating expenses 287,912 426,040 305,078 (32%) (6%) Income before tax 299,610$ (23,795)$ 221,428$ NM 35% Income tax expense 57,311 (603,911) 78,001 (109%) (27%) Net income 242,299$ 580,116$ 143,427$ (58%) 69% Diluted EPS ($) 0.67$ 1.61$ 0.40$ (58%) 68% Average total assets 39,694,041$ 38,992,937$ 38,910,193$ 2% 2% Average managed assets 48,421,303$ 48,971,677$ 51,229,729$ (1%) (5%) % Variance Three Months Ended (Unaudited, Dollars in Thousands, except per share) Q1 2018 FINANCIAL RESULTS 1 1 Q4 2017 was impacted by significant items. Please refer to the 8-K filed January 31, 2018 for further details. 

 

10 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Cum u la ti ve N et L o ss Ra te Months on Book Total Annual Vintage Cumulative Net Loss Rate 2014 2015 2016 CREDIT QUALITY: VINTAGE LOSS PERFORMANCE 2016 vintage continues to outperform the 2015 vintage on a gross and net loss basis *Retained originations only 0% 5% 10% 15% 20% 25% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Cum u la ti ve G ro ss L o ss Ra te Months on Book Total Annual Vintage Cumulative Gross Loss Rate 2014 2015 2016 

 

11DELINQUENCY AND LOSS  YoY delinquency ratios flat 18.1% 16.4% 18.0% 19.2% 18.5% 8.8% 7.5% 9.1% 10.3% 8.3% 51.1% 53.9% 49.3% 46.4% 55.1% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 110.0% 120.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Credit: Individually Acquired Retail Installment Contracts, Held for Investment Gross Charge- off Ratio Net Charge- off Ratio Recovery Rate (as % of recorded investment)  YoY gross charge-off ratio increased 40 basis points  YoY net charge-off ratio decreased 50 basis points 7.3% 9.4% 9.2% 10.3% 7.3% 3.9% 4.7% 5.1% 5.4% 3.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Delinquency: Individually Acquired Retail Installment Contracts, Held for Investment 31-60 >60 

 

12CREDIT QUALITY: LOSS DETAIL $599 $538 $24 $42 $27 $16 Q1 2017 Performance Recoveries Balance Other Q1 2018 Q1 2017 to Q1 2018 Net Charge-Off Walk ($ in millions) Gross Loss Performance 

 

13 $635 $521 $536 $562 $459 12.7% 12.6% 12.8% 12.6% 12.3% 12.0% 12.5% 13.0% 13.5% 14.0% $0 $100 $200 $300 $400 $500 $600 $700 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Provision Expense and Allowance Ratio ($ in millions) Provision for credit losses Allowance Ratio PROVISION AND RESERVES 1 TDR migration – the allowance for assets classified as TDRs or “troubled debt restructuring” takes into consideration expected lifetime losses, typically requiring additional coverage 2 Explanation of quarter over quarter variance are estimates  QoQ allowance decreased $80 million  New volume and TDR migration1 were offset by performance adjustment and liquidations and other  Allowance to loans ratio decreased 30 bps to 12.3% QoQ  Provision for credit losses decreased $176 million YoY $3,270 $3,190 $140 $59 ($70) ($209) $3,100 $3,150 $3,200 $3,250 $3,300 $3,350 $3,400 $3,450 $3,500 Q4 2017 New Volume TDR Migration Performance Adjustment Liquidations & Other Q1 2018 Q4 2017 to Q1 2018 ALLL Reserve Walk ($ in millions) 

 

14 TDR balances down two consecutive quarters TDR BALANCE COMPOSITION BY VINTAGE 59% 51% 44% 38% 32% 28% 23% 21% 19% 36% 36% 34% 32% 29% 26% 24% 22% 21% 5% 13% 22% 30% 35% 37% 37% 37% 35% 4% 9% 16% 20% 24% $ 4.7 $ 5.0 $ 5.3 $ 5.6 $ 5.8 $ 5.9 $ 6.3 $ 6.3 $ 6.0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 TDR Balance by Origination Vintage (% of total balance) 2013 & Prior 2014 2015 2016 2017 1% 

 

15EXPENSE MANAGEMENT  Operating expenses totaled $288 million, a decrease of 6% versus the same quarter last year 1 Q4 2017 was impacted by significant items. Please refer to the 8-K filed January 31, 2018 for further details. 1 $51,230 $50,436 $49,998 $48,972 $48,421 $305 $282 $298 $426 $288 2.4% 2.2% 2.4% 3.5% 2.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% $2 $10,002 $20,002 $30,002 $40,002 $50,002 $60,002 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Average Managed Assets ($ millions) Total Expenses ($ millions) Expense Ratio 

 

16 3.0 3.0 1.8 1.8 3.0 3.0 Q4 2017 Q1 2018 Term Revolving Contingent 4.1 4.6 5.8 5.4 Q4 2017 Q1 2018 Unused Used  $16.9 billion in commitments from 12 lenders1  54% unused capacity on revolving lines at Q1 2018 FUNDING AND LIQUIDITY Total funding of $42.2 billion at the end Q1 2018, up 5% from $40.3 billion at the end of Q4 2017 Asset-Backed Securities ($ Billions) Financings ($ Billions) Banco Santander & Subsidiaries ($ Billions) Asset Sales ($ Billions)  $3.3 billion in asset-backed securities (ABS) offered and sold  Executed second lease ABS securitization  $7.8 billion in total commitments  52% unused revolving capacity at Q1 2018  Fourth Santander flow sale of $1.5 billion Amortizing Revolving 9.9 10.0 Santander 7.87.8 1 Does not include repo facilities 1.5 Q4 2017 Q1 2018 7.6 6.9 Q4 2017 Q1 2018 15.0 16.0 Q4 2017 Q1 2018 

 

17 13.8% 14.3% 15.0% 16.3% 16.9% 13.6% 14.1% 14.9% 16.2% 16.6% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 CET1 TCE/TA CONSISTENT CAPITAL GENERATION 1 Common Equity Tier 1 (CET1) Capital Ratio is a non-GAAP financial measure that begins with stockholders’ equity and then adjusts for AOCI, goodwill/intangibles, DTAs, cash flow hedges and other regulatory exclusions over risk-weighted assets. See appendix for further details. 2 Tangible common equity to tangible assets is a non-GAAP financial measure defined as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets 1 2 SC has exhibited a strong ability to generate earnings and capital, while growing assets Tangible Assets $38,956 $39,401 $38,657 $39,319 $39,940 Tangible Common Equity $5,313 $5,572 $5,780 $6,377 $6,621 $ in millions  The Company has declared a cash dividend of $0.05 per share, to be paid on May 14, 2018, to shareholders of record as of the close of business on May 4, 2018 

 

APPENDIX 

 

19COMPANY ORGANIZATION Other Subsidiaries 100% Ownership Santander Holdings USA, Inc. (“SHUSA’) ~68% Ownership Santander Bank, N.A. Other Subsidiaries Banco Santander, S.A. Spain *Ownership percentages are approximates as of March 31, 2018 ~32% Ownership Santander Consumer USA Holdings Inc. (“SC”) Public Shareholders 

 

20 2% 2% 2% 2% 2% 12% 12% 10% 10% 12% 18% 17% 14% 14% 14% 25% 24% 23% 24% 26% 13% 13% 13% 13% 15% 30% 33% 38% 36% 31% 1Q17 2Q17 3Q17 4Q17 1Q18 Originations by Credit (RIC1 only) ($ in millions) >640 600-640 540-599 <540 No FICO Commercial $3,787 $4,055 $4,278$3,328 $3,014 DIVERSIFIED UNDERWRITING ACROSS FULL CREDIT SPECTRUM Average loan balance in dollars $20,193 $20,816 $21,825 $22,013 $21,699 $2,664 1 RIC; Retail Installment Contract 2 Loans to commercial borrowers; no FICO score obtained $2,940 2 47% 48% 55% 53% 50% 53% 52% 45% 47% 50% 1Q17 2Q17 3Q17 4Q17 1Q18 New/Used Originations ($ in millions) Used New $3,787 $4,055 $4,278$3,328 $3,014 

 

21HELD FOR INVESTMENT CREDIT TRENDS Retail Installment Contracts1 1Held for investment; excludes assets held for sale 2 .8 % 1 2 .0 % 2 2 .3 % 3 1 .7 % 1 7 .4 % 1 3 .8 % 2 .5 % 1 1 .9 % 2 2 .4 % 3 1 .9 % 1 7 .3 % 1 4 .0 % 2 .4 % 1 1 .6 % 2 2 .4 % 3 2 .4 % 1 7 .5 % 1 3 .7 % 2 .5 % 1 1 .2 % 2 1 .8 % 3 2 .0 % 1 7 .4 % 1 5 .1 % 2 .2 % 1 1 .2 % 2 1 .6 % 3 2 .4 % 1 7 .6 % 1 5 .0 % Commercial Unknown <540 540-599 600-639 >=640 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 

 

22EXCLUDING PERSONAL LENDING DETAIL 1The $59 million of investment losses related to personal lending in Q1 2018, comprised of $106 million in customer default activity, partially offset by a $47 million decrease in market discount, consistent with typical seasonal patterns. 1 Personal lending earned $68 million before operating expenses and taxes Total Personal Lending Excluding Personal Lending Total Personal Lending Excluding Personal Lending Total Personal Lending Excluding Personal Lending Interest on finance receivables and loans $ 1,114,137 $ 89,260 $ 1,024,877 $ 1,129,181 $ 83,080 $ 1,046,101 $ 1,209,186 $ 92,449 $ 1,116,737 Net leased vehicle income 145,595 - 145,595 112,491 - 112,491 128,062 - 128,062 Other finance and interest income 7,137 - 7,137 4,470 - 4,470 3,825 - 3,825 Interest expense 241,028 10,992 230,036 236,600 13,998 222,602 227,089 12,013 215,076 Net finance and other interest income $ 1,025,841 $ 78,268 $ 947,573 $ 1,009,542 $ 69,082 $ 940,460 $ 1,113,984 $ 80,436 $ 1,033,548 Provision for credit losses 458,995 102 458,892 562,346 415 561,931 635,013 - 635,013 Profit sharing 4,377 207 4,170 7,235 877 6,358 7,945 (242) 8,187 Investment Gains (losses), net (86,520) (58,963) (27,557) (137,926) (136,393) (1,533) (76,399) (64,639) (11,760) Servicing fee income 26,182 - 26,182 26,031 - 26,031 31,684 - 31,684 Fees, commissions and other 85,391 49,487 35,903 74,179 45,830 28,349 100,195 50,740 49,455 Total other income $ 25,053 $ (9,476) $ 34,529 $ (37,716) $ (90,563) $ 52,847 $ 55,480 $ (13,899) $ 69,379 Average gross individually acquired retail installment contracts $ 26,820,166 - $ 27,098,976 - $ 28,200,907 - Average gross personal loans - $ 1,459,308 - $ 1,392,529 - $ 1,488,665 Average gross operating leases $ 11,441,789 - $ 11,088,361 - $ 9,849,077 - March 31, 2018 December 31, 2017 March 31, 2017 

 

23CONSOLIDATED BALANCE SHEETS (Unaudited, dollars in thousands) March 31, 2018 December 31, 2017 Assets Cash and cash equivalents $ 618,809 $ 527,805 Finance receivables held for sale, net 1,611,535 2,210,421 Finance receivables held for investment, net 22,587,358 22,427,769 Restricted cash 2,895,615 2,553,902 Accrued interest receivable 269,258 326,640 Leased vehicles, net 10,612,824 10,160,327 Furniture and equipment, net 65,961 69,609 Federal, state and other income taxes receivable 99,099 95,060 Related party taxes receivable 634 467 Goodwill 74,056 74,056 Intangible assets 31,088 29,734 Due from affiliates 53,408 33,270 Other assets 1,125,544 913,244 Total assets $ 40,045,189 $ 39,422,304 Liabilities and Equity Liabilities: Notes payable — credit facilities $ 5,294,358 $ 4,848,316 Notes payable — secured structured financings 22,862,607 22,557,895 Notes payable — related party 3,148,194 3,754,223 Accrued interest payable 38,375 38,529 Accounts payable and accrued expenses 430,361 429,531 Deferred tax liabilities, net 966,444 897,121 Due to affiliates 103,012 82,382 Other liabilities 475,822 333,806 Total liabilities $ 33,319,174 $ 32,941,803 Equity: Common stock, $0.01 par value $ 3,610 $ 3,605 Additional paid-in capital 1,689,996 1,681,558 Accumulated other comprehensive income (loss), net 63,211 44,262 Retained earnings 4,969,198 4,751,076 Total stockholders’ equity $ 6,726,015 $ 6,480,501 Total liabilities and equity $ 40,045,189 $ 39,422,304 For the Three Months Ended 

 

24CONSOLIDATED INCOME STATEMENT (Unaudited, dollars in thousands, except per share amounts) March 31, 2018 March 31, 2017 Interest on finance receivables and loans $ 1,114,137 $ 1,209,186 Leased vehicle income 504,278 418,233 Other finance and interest income 7,137 3,825 Total finance and other interest income $ 1,625,552 $ 1,631,244 Interest expense 241,028 227,089 Leased vehicle expense 358,683 290,171 Net finance and other interest income $ 1,025,841 $ 1,113,984 Provision for credit losses 458,995 635,013 Net finance and other interest income after provision for credit losses $ 566,846 $ 478,971 Profit sharing 4,377 7,945 Net finance and other interest income after provision for credit losses and profit sharing $ 562,469 $ 471,026 Investment (losses), net (86,520) (76,399) Servicing fee income 26,182 31,684 Fees, commissions, and other 85,391 100,195 Total other income $ 25,053 $ 55,480 Compensation expense 122,005 136,262 Repossession expense 72,081 71,299 Other operating costs 93,826 97,517 Total operating expenses $ 287,912 $ 305,078 Income before income taxes 299,610 221,428 Income tax expense 57,311 78,001 Net income $ 242,299 $ 143,427 Net income per common share (basic) $ 0.67 $ 0.40 Net income per common share (diluted) $ 0.67 $ 0.40 Dividends paid per common share $0.05 - Weighted average common shares (basic) 360,703,234 359,105,050 Weighted average common shares (diluted) 361,616,732 360,616,032 For the Three Months Ended 

 

25RECONCILIATION OF NON-GAAP MEASURES (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 and the Bank's total Risk weighted assets (b) CET1 is calculated under Basel III regulations required as of January 1, 2015. March 31, December 31, September 30, June 30, March 31, 2018 2017 2017 2017 2017 Total equity $ 6,726,015 $ 6,480,501 $ 5,885,234 $ 5,678,733 $ 5,418,998 Deduct: Goodwill and intangibles 105,144 103,790 105,590 106,298 106,331 Tangible common equity $ 6,620,871 $ 6,376,711 $ 5,779,644 $ 5,572,435 $ 5,312,667 Total assets $ 40,045,188 $ 39,422,304 $ 38,765,557 $ 39,507,482 $ 39,061,940 Deduct: Goodwill and intangibles 105,144 103,790 105,590 106,298 106,331 Tangible assets $ 39,940,044 $ 39,318,514 $ 38,659,967 $ 39,401,184 $ 38,955,609 Equity to assets ratio 16.8% 16.4% 15.2% 14.4% 13.9% Tangible common equity to tangible assets 16.6% 16.2% 14.9% 14.1% 13.6% Total equity 6,726,015$ 6,480,501$ 5,885,234$ 5,678,733$ 5,418,998$ Deduct: Goodwill and other intangible assets, net of deferred tax liabilities 169,870 172,664 172,502 177,619 182,156 Deduct: Accumulated other comprehensive income, net 63,211 44,262 27,481 27,860 35,504 Tier 1 common capital 6,492,934$ 6,263,575$ 5,685,251$ 5,473,254$ 5,201,338$ Risk weighted assets (a) 38,517,988$ 38,473,339$ 37,828,130$ 38,368,928$ 37,799,513$ Common Equity Tier 1 capital ratio (b) 16.9% 16.3% 15.0% 14.3% 13.8% (Unaudited, dollars in thousands)