PR Newswire | Jul 29, 2020 06:15AM EDT

07/29 05:15 CDT

Santander Consumer USA Holdings Inc. Reports Second Quarter 2020 ResultsLoss of $97 Million; Approximately $8 Billion in Originations in the second quarter of 2020 DALLAS, July 29, 2020

DALLAS, July 29, 2020 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced net income for the second quarter ended June 30, 2020 ("Q2 2020") of $(97) million, or $(0.30) per diluted common share. The quarter included $400 million of incremental allowance for credit loss primarily driven by macroeconomic factors and COVID-19.

As previously announced, based on the interim Federal Reserve Board ("FRB") policy and SHUSA's expected average trailing four quarters of net income, SC is prohibited from paying a dividend in the third quarter of 2020. Although SC's standalone expected income is sufficient to declare and a pay a dividend in the third quarter, SC is consolidated into SHUSA's 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. SHUSA has requested certain exceptions to the interim policy, however the timing and outcome of the request is uncertain. SC does not currently expect to declare or pay a dividend in the third quarter of 2020 pending approval of SHUSA's exception request.

Management Quotes

"The duration of the pandemic has created significant macroeconomic uncertainty, and the speed of the economic recovery will dictate our performance over the next several months. While certain indicators are trending positive, we anticipate a delayed reversion to normal. Our results this quarter demonstrate the resiliency of our portfolio, the effectiveness of the hardship programs we instituted and the strength of our business model. Our employees, dealers and customers continue to be our priority as we endeavor to provide them the highest levels of service in these trying times. In the past weeks, we have also responded to the calls for an end to systemic racism by starting a conversation with our employees and committing to take action to make our company a place where all employees are valued, feel safe and have an opportunity to succeed. In the process, we will make sustained and material differences in the way we view race and interact with each other," said Mahesh Aditya, SC President and CEO.

Fahmi Karam, SC Chief Financial Officer, added, "This quarter's strong credit performance reflects the impact of the pandemic relief we provided to our customers and the improvement in auction recovery rates, particularly towards the end of the quarter. We continued to build reserves this quarter due to the COVID-19 uncertainty and we remain well capitalized with a 13.4% CET1 ratio, combining for an industry leading loss absorbing capacity to manage through the pandemic and position us for long-term success."

Second Quarter of 2020 Highlights(variances compared to second quarter of 2019 ("Q2 2019"), unless otherwise noted)

* Total auto originations of $7.8 billion, down 7% * Core retail auto loan originations of $2.1 billion, down 12% * Chrysler Capital loan originations of $4.7 billion, up 36% * Chrysler Capital lease originations of $989 million, down 61% * Chrysler average quarterly penetration rate of 37%, from 36% * Santander Bank, N.A. program originations of $1.7 billion

* Net finance and other interest income1 of $1.1 billion, down 7% * 30-59 delinquency ratio of 4.3%, down 510 basis points * 59-plus delinquency ratio2 of 2.4%, down 230 basis points * Retail Installment Contract ("RIC") gross charge-off ratio of 11.1%, down 500 basis points * Recovery rate of 46%, down from 60% * RIC net charge-off ratio3 of 6.0%, down 40 basis points * Troubled Debt Restructuring ("TDR") balance of $3.9 billion, down from $4.5 billion * Return on average assets of (0.8)%, down from 3.2% * $1.9 billion in asset-backed securities "ABS" issued * Expense ratio of 1.7%, down from 2.0% * Common equity tier 1 ("CET1") ratio of 13.4%, down from 15.7% as of June 30, 2019

1Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles. 2Delinquency 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.3Net 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 InformationSC will host a conference call and webcast to discuss its Q2 2020 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 29, 2020. The conference call will be accessible by dialing 888-394-8218 (U.S. domestic), or 323-701-0225 (international), conference ID 2177889. 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 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 2177889, 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 StatementsThis 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 $61 billion (for the second quarter ended June 30, 2020), and is headquartered in Dallas. (www.santanderconsumerusa.com)

CONTACTS:

Investor Relations Evan Black800.493.8219InvestorRelations@santanderconsumerusa.com

Media RelationsAnnette Rogers469.563.4157Media@santanderconsumerusa.com

Santander Consumer USA Holdings Inc.

Financial Supplement

Second Quarter 2020



Table of Contents



Table 1: Condensed Consolidated Balance Sheets 7

Table 2: Condensed Consolidated Statements of Income8

Table 3: Other Financial Information 9

Table 4: Credit Quality 11

Table 5: Originations 13

Table 6: Asset sales 14

Table 7: Ending Portfolio 15

Table 8: Reconciliation of Non-GAAP Measures 16

Table 1: Condensed Consolidated Balance Sheets

June 30, 2020December 31, 2019

Assets (Unaudited, Dollars in thousands)

Cash and cash equivalents $175,936 $ 81,848

Finance receivables held for sale, net 2,445,599 1,007,105

Finance receivables held for 30,606,438 30,810,487 investment, at amortized cost

Allowance for credit loss (5,859,954) (3,043,468)

Finance receivables held for investment, at24,746,484 27,767,019 amortized cost, net

Restricted cash 2,057,315 2,079,239

Accrued interest receivable 447,232 288,615

Leased vehicles, net 16,239,622 16,461,982

Furniture and equipment, net 61,653 59,873

Goodwill 74,056 74,056

Intangible assets 53,159 42,772

Other assets 967,639 1,071,020

Total assets $47,268,695$ 48,933,529

Liabilities and Equity

Liabilities:

Borrowings and other debt obligations $40,636,769$ 39,194,141

Deferred tax liabilities, net 910,448 1,468,222

Accounts payable and accrued expenses 508,290 563,277

Other liabilities 317,723 389,269

Total liabilities $42,373,230$ 41,614,909



Equity:

Common stock, $0.01 par value 3,162 3,392

Additional paid-in capital 624,554 1,173,262

Accumulated other comprehensive income, net(63,705) (26,693)

Retained earnings 4,331,454 6,168,659

Total stockholders' equity $4,895,465 $ 7,318,620

Total liabilities and equity $47,268,695$ 48,933,529

Table 2: Condensed Consolidated Statements of Income

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

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

Interest on finance $1,236,600 $1,261,098 $2,510,419 $2,514,678 receivables and loans

Leased vehicle737,549 676,236 1,485,528 1,325,796 income

Other finance and interest 2,657 11,437 10,208 21,684 income

Total finance and other 1,976,806 1,948,771 4,006,155 3,862,158 interest income

Interest 308,982 330,039 637,816 664,421 expense

Leased vehicle610,861 444,442 1,163,773 888,461 expense

Net finance and other 1,056,963 1,174,290 2,204,566 2,309,276 interest income

Credit loss 861,896 430,676 1,769,783 981,555 expense

Net finance and other interest 195,067 743,614 434,783 1,327,721 income after credit loss expense

Profit sharing11,530 13,345 25,825 20,313

Net finance and other interest income after 183,537 730,269 408,958 1,307,408 credit loss expense and profit sharing

Investment (147,582) (84,787) (211,008) (151,884) losses, net

Servicing fee 19,120 25,002 38,223 48,808 income

Fees, commissions, 82,069 90,196 177,199 184,572 and other

Total other (46,393) 30,411 4,414 81,496 income

Compensation 127,643 122,678 260,969 250,572 and benefits

Repossession 22,289 69,699 79,951 140,559 expense

Other expenses116,747 88,272 208,432 180,475

Total other 266,679 280,649 549,352 571,606 expenses

Income (loss) before income (129,535) 480,031 (135,980) 817,298 taxes

Income tax (32,857) 111,764 (35,315) 201,528 expense

Net income $(96,678) $368,267 $(100,665) $615,770 (loss)



Net income per common share $(0.30) $1.05 $(0.31) $1.75 (basic)

Net income per common share $(0.30) $1.05 $(0.31) $1.75 (diluted)

Weighted average common319,773,636 351,106,197 326,899,844 351,309,700 shares (basic)

Weighted average common$319,878,145$351,556,349$327,137,104$351,825,554shares (diluted)

Number of shares 316,235,387 348,130,140 316,235,387 348,130,140 outstanding

Table 3: Other Financial Information

Three Months Ended June 30, Six Months Ended June 30,

Ratios (Unaudited, Dollars in 2020 2019 2020 2019 thousands)

Yield on retail installment 14.8 % 16.1 % 15.0 %16.1 %contracts

Yield on leased 2.9 % 5.8 % 3.7 %5.6 %vehicles

Yield on personal loans, held for 25.6 % 26.3 % 26.0 %26.2 %sale (1)

Yield on earning 10.9 % 12.9 % 11.4 %12.9 %assets (2)

Cost of debt (3) 3.1 % 3.7 % 3.2 %3.7 %

Net interest margin8.4 % 10.1 % 8.8 %10.0 %(4)

Expense ratio (5) 1.7 % 2.0 % 1.8 %2.1 %

Return on average (0.8) % 3.2 % (0.4) %2.7 %assets (6)

Return on average (7.7) % 20.3 % (3.6) %17.2 %equity (7)

Net charge-off ratio on individually 6.0 % 6.4 % 6.9 %7.5 %acquired retail installment contracts (8)

Net charge-off 6.0 % 6.4 % 6.9 %7.5 %ratio (8)

Delinquency ratio on individually acquired retail installment 2.4 % 4.7 % 2.4 %4.7 %contracts held for investment, end of period (9)

Delinquency ratio on loans held for 2.4 % 4.7 % 2.4 %4.7 %investment, end of period (9)

Allowance ratio 19.2 % 10.8 % 19.2 %10.8 %(10)

Common stock dividend payout * 19.1 % * 22.8 %ratio (11)

Common Equity Tier 1 capital ratio 13.4 % 15.7 % 13.4 %15.7 %(12)

Charge-offs, net of recoveries, on individually $461,014 $462,427 $1,054,060 $1,077,631 acquired retail installment contracts

Total charge-offs, 461,925 464,277 $1,055,524 $1,079,892 net of recoveries

End of period delinquent amortized cost over 59 days, retail 743,693 1,367,310 743,693 1,367,310 installment contracts held for investment

End of period personal loans delinquent 127,504 167,033 127,504 167,033 principal over 59 days, held for sale

End of period delinquent amortized cost over744,170 1,368,427 744,170 1,368,427 59 days, loans held for investment

End of period assets covered by 30,522,963 29,007,585 30,522,963 29,007,585 allowance for credit losses

End of period gross retail installment 30,492,634 28,971,311 30,492,634 28,971,311 contracts held for investment

End of period gross retail installment 1,718,244 321,503 1,718,244 321,503 contracts held for sale

End of period gross personal loans held1,283,183 1,364,956 1,283,183 1,364,956 for sale

End of period gross finance receivables30,496,308 29,009,846 30,496,308 29,009,846 and loans held for investment

End of period gross finance receivables, loans,47,729,637 45,557,709 47,729,637 45,557,709 and leases held for investment

Average gross retail installment 30,493,604 29,017,122 30,586,535 28,816,732 contracts held for investment

Average gross retail installment 1,363,876 321,503 1,363,876 321,503 contracts held for sale

Average gross retail installment contracts held for 31,193,215 29,070,738 31,017,842 28,834,640 investment and held for sale

Average gross personal loans held1,307,609 1,375,306 1,363,023 1,424,717 for sale

Average gross finance receivables32,554,978 30,507,780 32,438,109 30,321,739 and loans

Average gross 17,492,255 16,043,654 17,584,849 15,752,705 operating leases

Average gross finance 50,047,233 46,551,434 50,022,958 46,074,444 receivables, loans, and leases

Average managed 61,001,767 55,545,503 60,652,091 55,043,583 assets

Average total 46,876,726 45,700,887 47,308,997 45,101,873 assets

Average debt 40,113,885 36,152,602 39,858,355 35,715,392

Average total 5,033,773 7,273,470 5,573,544 7,163,738 equity



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

"Yield on earning assets" is defined as the ratio of annualized Total (2) 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

"Net interest margin" is defined as the ratio of annualized Net finance (4) 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

"Net charge-off ratio" is defined as the ratio of annualized (8) Charge-offs, on a amortized cost basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio.

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

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

"Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share (11)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

"Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the (12)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 six months ended June 30, 2020 and 2019 was as follows (Unaudited, Dollar amounts in thousands)

Three Months Ended June 30, 2020Three Months Ended June 30, 2019

Retail Installment Contracts Retail Installment Contracts

Allowance for Credit Loss Non-TDR TDR Non-TDR TDR

Balance - beginning$4,482,663 $973,236 $1,891,351 $1,280,649 of period

Credit loss expense744,511 116,419 348,817 59,806 (a)

Charge-offs (b) (721,218) (127,617) (795,901) (369,523)

Recoveries 312,231 75,590 517,626 185,371

Balance - end of $4,818,187 $1,037,628 $1,961,893 $1,156,303 period





Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Retail Installment Contracts Retail Installment Contracts

Allowance for Credit Loss Non-TDR TDR Non-TDR TDR

Balance - beginning$2,123,878 $914,718 $1,819,360 $1,416,743 of period

Day 1 - Adjustment to allowance for 2,030,473 71,833 - - adoption of CECL standard

Credit loss expense1,501,704 267,268 795,305 164,419 (a)

Charge-offs (b) (1,620,768) (417,184) (1,723,358) (836,160)

Recoveries 782,900 200,993 1,070,586 411,301

Balance - end of $4,818,187 $1,037,628 $1,961,893 $1,156,303 period

Excluded from the credit loss expense is $39 million related to retail installment contracts sold in an off balance sheet securitization during the three and six months ended June 30, 2020. In addition, credit loss (a)expense excludes $12 million related to retail installment contracts transferred to held for sale during the three and six months ended June 30, 2020. Furthermore, credit loss expense includes $20 million related to retail installment contracts transferred to held for sale during the three and six months ended June 30, 2019.

Charge-offs for retail installment contracts includes partial write-down (b)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, 2020 and December 31, 2019 is as follows (Unaudited, Dollar amounts in thousands)

Delinquent Balance June 30, 2020

Amount Percent

Amortized cost, 30-59 days past due 1,308,305 4.3 %

Delinquent amortized cost over 59 days 743,693 2.4 %

Total delinquent balance at amortized cost$2,051,9986.7 %



Delinquent Balance December 31, 2019

Amount Percent

Principal 30-59 days past due $2,972,4959.7 %

Delinquent principal over 59 days 1,578,452 5.1 %

Total delinquent principal (a) $4,550,94714.8%

(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 June 30, 2020 and December 31, 2019(Unaudited, Dollar amounts in thousands)

Nonaccrual Balance June 30, 2020

Amount Percent

Non-TDR 622,126 2.0 %

TDR 242,037 0.8 %

Total non-accrual loans (a)$864,1632.8 %

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

Nonaccrual Balance December 31, 2019

Amount Percent

Non-TDR $1,099,4623.6 %

TDR 516,119 1.7 %

Total nonaccrual principal (a)$1,615,5815.3 %

(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 June 30, 2020 and December 31, 2019(Unaudited, Dollar amounts in thousands)

Allowance Ratios June 30, 2020 December 31, 2019

TDR - Unpaid principal balance $3,946,808 $3,859,040

TDR - Impairment 1,037,628 914,718

TDR - Allowance ratio 26.3 %23.7 %



Non-TDR - Unpaid principal balance$26,527,943 $26,895,551

Non-TDR - Allowance 4,818,187 2,123,878

Non-TDR Allowance ratio 18.2 %7.9 %



Total - Unpaid principal balance $30,474,751 $30,754,591

Total - Allowance 5,855,815 3,038,596

Total - Allowance ratio 19.2 %9.9 %

The Company's allowance for credit losses increased $0.4 billion and $2.8 billion for the three and six months ended June 30, 2020. For the three months ended June 30, 2020, the increase was primarily due to a reserve build associated with a weaker economic outlook related to COVID-19, partially offset by declines in balances. For the six months ended June 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, partially offset by decline in balances.

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, 2020June 30, 2019June 30, 2020 June 30, 2019 March 31, 2020

Retained (Unaudited, Dollar amounts in thousands) Originations

Retail installment $5,098,496 $3,949,648 $8,832,741 $7,975,975 $3,846,226 contracts

Average APR 11.7 %16.2 %13.3 % 16.7 %15.3 %

Average FICO657 601 635 597 607 (r) (a)

Discount (0.9) %(0.5) %(0.8) %(0.3) %(0.8) %



Personal 347,238 343,214 618,073 631,770 $270,835 loans (b)

Average APR 29.6 %29.7 %29.5 %29.8 %29.8 %



Leased 986,617 2,520,130 3,007,338 4,483,710 $2,020,721 vehicles



Finance 1,927 4,822 4,929 $8,129 $3,002 lease

Total originations$6,434,278 $6,817,814 $12,463,081 $13,099,584 $6,140,784 retained



Sold Originations

Retail installment $- $- $111,981 $- $- contracts

Average APR - %- %4.4 % - %- %

Average FICO- - 722 - - (r) (c)

Total originations$- $- $111,981 $- $- sold



Total originations (excluding $6,434,278 $6,817,814 $12,575,062 $13,099,584 $6,140,784 SBNA Originations Program)

Unpaid principal balance excluded from the weighted average FICO score is $586 million, $448 million, $1.0 billion, $941 million and $432 million for the three months ended June 30, 2020 and 2019, the six months ended (a)June 30, 2020 and 2019, and for the three months ended March 31, 2020, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $102 million, $141 million, $241 million, $247 million and $139 million, respectively, were commercial loans.

Included in the total origination volume is $58 million, $51 million, $79(b)million, $76 million and $21 million for the three months ended June 30, 2020 and 2019, the six months ended June 30, 2020 and 2019, and for the three months ended March 31, 2020, respectively, related to newly opened accounts.

Unpaid principal balance excluded from the weighted average FICO score is(c)$9 million for the six months ended June 30, 2020, 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 $1.7 billion and $2.8 billion of retail installment contacts during the three and six months ended June 30, 2020, respectively.

Table 6: Asset Sales

Three Months Ended Six Months Ended Three Months Ended

June 30, 2020June 30, 2019 June 30, 2020June 30, 2019 March 31, 2020

Assets Sold(Unaudited, Dollar amounts in thousands)

Retail installment$512,286 $ - $512,286 $ - $ - contracts

Average APR6.4 %- % 6.4 %- % - %

Average $691 - 691 - - FICO(r)

Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted net discount of our held for investment portfolio as of June 30, 2020 and December 31, 2019, are as follows:

June 30, 2020 December 31, 2019

(Unaudited, Dollar amounts in thousands)

Retail installment contracts $30,492,634 $30,776,038

Average APR 15.4 % 16.1 %

Discount 0.03 % 0.3 %



Receivables from dealers $3,675 $12,668

Average APR 3.9 % 4.0 %



Leased vehicles $17,206,674 $17,562,782



Finance leases $26,655 $27,584

Table 8: Reconciliation of Non-GAAP Measures

June 30, 2020 June 30, 2019

(Unaudited, Dollar amounts in thousands)

Total equity $4,895,465 $7,337,261

Add: Adjustment due to CECL capital 1,769,430 - relief (c)

Deduct: Goodwill, intangibles, and other assets, net of deferred tax 154,943 152,264 liabilities

Deduct: Accumulated other (63,705) (21,568) comprehensive income (loss), net

Tier 1 common capital $6,573,657 $7,206,565

Risk weighted assets (a)(c) 48,997,902 45,849,574

Common Equity Tier 1 capital ratio 13.4 %15.7 %(b)(c)

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 (a)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.

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 (c)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.