PR Newswire | Oct 27, 2021 06:15AM EDT

10/27 05:15 CDT

Santander Consumer USA Holdings Inc. Reports Third Quarter 2021 ResultsNet Income of $763 Million and $7.8 Billion in Originations in the Third Quarter 2021 DALLAS, Oct. 27, 2021

DALLAS, Oct. 27, 2021 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced net income for the third quarter ended September 30, 2021 ("Q3 2021") of $763 Million, or $2.49 per diluted common share.

The Company's parent, Santander Holdings USA, Inc. ("SHUSA"), has requested regulatory approval to authorize the SC Board of Directors to consider declaring a dividend in the fourth quarter. To date, approval has not been received.

Third Quarter of 2021 Highlights (variances compared to third quarter of 2020 ("Q3 2020"), unless otherwise noted)

* Net Income of $763 million in Q3 2021, or $2.49 of diluted EPS * Total auto originations of $7.8 billion, down 7% * Core retail auto loan originations of $3.1 billion, up 17% * Chrysler Capital loan originations of $2.8 billion, down 27% * Chrysler Capital lease originations of $1.8 billion, down 2% * Chrysler average quarterly penetration rate of 27%, down from 33% * Santander Bank, N.A. program originations of $1.8 billion1

* Donated $50 million to the SC Foundation * Announced launch of new dealer and consumer digital experience through partnership with AutoFi * Net finance and other interest income2 of $1.3 billion, up 5.8% * 30-59 delinquency ratio3 of 6.8%, up 180 basis points * 59-plus delinquency ratio3 of 3.3%, up 90 basis points * Retail Installment Contract ("RIC") gross charge-off ratio of 7.7%, up 90 basis points * Recovery rate of 74.4%, down from 91.4% * RIC net charge-off ratio4 of 2.0%, up 140 basis points * Allowance ratio of 17.4%, down from 17.8% as of June 30, 2021 * Troubled Debt Restructuring ("TDR") balance of $4.0 billion, down from $4.2 billion as of June 30, 2021 * Executed ~$300 million in off-balance sheet prime loan sales * Return on average assets ("ROA") of 6.3% * Expense ratio of 2.2%, up 50 basis points * Common equity tier 1 ("CET1") ratio of 19.5%

^1Includes SBNA retail originations of $1.5 billion and lease originations of$249 million for the current period

^2Includes Finance receivables held for investment, Finance receivables heldfor sale and Leased vehicles.

^3Delinquency Ratio is defined as the ratio of end of period delinquentprincipal, categorized as either 30-59 or over 59 days, to end of period grossbalance of the respective portfolio, excludes finance leases.

^4Net Charge-Off Ratio stated on a recorded investment basis, which is unpaidprincipal balance adjusted for unaccreted net discounts, subvention andorigination costs.

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, strategies, 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, seeks, believes, can, could, may, predicts, potential, should, would, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Examples of forward-looking statements include, but are not limited to, all statements we make relating to revenue, earnings, margins, growth rates, and other financial results for future periods. 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"). 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 include the following: (a) the adverse impact of COVID-19 or any future outbreak of any contagious diseases 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 could materially impact consumer spending behavior, unemployment and demand for our products, which could negatively impact our results; (d) the effects of inflation; (e) a reduction in our access to funding; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (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 regulators, including but not limited to 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; (l) there can be no assurance that the proposed acquisition of all of our outstanding common stock by Santander Holdings USA, Inc. ("SHUSA") will be approved and ultimately consummated, and the terms of any such transaction may differ materially from those originally proposed by SHUSA; (m) other future changes in our relationship with SHUSA and Banco Santander, S.A. that could adversely affect our operations; (n) our expectations regarding future litigation both known and unknown; (o) our inability to accurately forecast the amount and timing of future collections could have a material adverse effect on our results of operations; (p) our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace; and (q) our debt could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition. 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 $65 billion (for the third quarter ended September 30, 2021), and is headquartered in Dallas, Texas. (www.santanderconsumerusa.com)

Santander Consumer USA Holdings Inc.

Financial Supplement

Third Quarter 2021





Table of Contents



Table 1: Condensed Consolidated Balance Sheets 5

Table 2: Condensed Consolidated Statements of Income6

Table 3: Other Financial Information 7

Table 4: Credit Quality 8

Table 5: Originations 10

Table 6: Asset sales 11

Table 7: Ending Portfolio 12

Table 8: Reconciliation of Non-GAAP Measures 13

Table 1: Condensed Consolidated Balance Sheets



September 30, 2021December 31, 2020

Assets (Unaudited, Dollars in thousands)

Cash and cash equivalents $2,106,405 $109,053

Finance receivables held for sale, net 359,561 1,567,527

Finance receivables held for 33,183,439 33,114,638 investment, at amortized cost

Allowance for credit loss (5,699,698) (6,110,633)

Finance receivables held for 27,483,741 27,004,005 investment, at amortized cost, net

Restricted cash 2,248,667 2,221,094

Accrued interest receivable 323,469 415,765

Leased vehicles, net 15,529,610 16,391,107

Furniture and equipment, net 62,168 62,032

Goodwill 74,056 74,056

Intangible assets 75,176 70,128

Other assets 811,597 972,726

Total assets $49,074,450 $48,887,493

Liabilities and Equity

Liabilities:

Borrowings and other debt obligations $38,431,858 $41,138,674

Deferred tax liabilities, net 1,855,859 1,263,796

Accounts payable and accrued expenses 554,581 531,369

Other liabilities 299,422 331,693

Total liabilities $41,141,720 $43,265,532



Equity:

Common stock, $0.01 par value 3,061 3,061

Additional paid-in capital 391,343 393,800

Accumulated other comprehensive income,(31,194) (50,566) net

Retained earnings 7,569,520 5,275,666

Total stockholders' equity $7,932,730 $5,621,961

Total liabilities and equity $49,074,450 $48,887,493

Table 2: Condensed Consolidated Statements of Income



Three Months Ended September 30,Nine Months Ended September 30,

2021 2020 2021 2020

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

Interest on finance $1,215,121 $1,300,694 $3,749,264 $3,811,113 receivables and loans

Leased vehicle 670,334 725,156 2,115,134 2,210,684 income

Other finance and 1,631 2,146 6,125 12,354 interest income

Total finance and other 1,887,086 2,027,996 5,870,523 6,034,151 interest income

Interest 218,747 292,118 709,479 929,934 expense

Leased vehicle 325,259 467,172 1,043,774 1,630,945 expense

Net finance and other 1,343,080 1,268,706 4,117,270 3,473,272 interest income

Credit loss expense 42,058 340,548 (85,484) 2,110,331 (benefit)

Net finance and other interest 1,301,022 928,158 4,202,754 1,362,941 income after credit loss expense

Profit 41,009 30,414 158,888 56,239 sharing

Net finance and other interest income after1,260,013 897,744 4,043,866 1,306,702 credit loss expense and profit sharing

Investment gains 5,241 (68,989) (7,057) (279,997) (losses), net

Servicing 19,975 18,574 61,481 56,797 fee income

Fees, commissions,48,867 78,924 200,242 256,123 and other

Total other 74,083 28,509 254,666 32,923 income

Compensation149,669 127,991 460,014 388,960 and benefits

Repossession33,349 35,910 117,540 115,861 expense

Other 179,147 99,761 382,313 308,193 expenses

Total operating 362,165 263,662 959,867 813,014 expenses

Income (loss) 971,931 662,591 3,338,665 526,611 before income taxes

Income tax 208,607 172,476 775,484 137,161 expense

Net income $763,324 $490,115 $2,563,181 $389,450 (loss)



Net income per common $2.49 $1.58 $8.37 $1.21 share (basic)

Net income per common $2.49 $1.58 $8.37 $1.21 share (diluted)

Weighted average common 306,093,379 310,150,293 306,086,399 321,275,907 shares (basic)

Weighted average common 306,378,733 310,307,265 306,354,463 321,492,331 shares (diluted)

Number of shares 306,111,379 306,070,972 306,111,379 306,070,972 outstanding

Table 3: Other Financial Information



Three Months Ended September Nine Months Ended September 30, 30,

Ratios (Unaudited, Dollars in 2021 2020 2021 2020 thousands)

Yield on retail installment 14.6 % 14.9 % 14.8 % 15.0% contracts

Yield on leased 8.4 % 6.0 % 8.4 % 4.4 % vehicles

Yield on personal loans, held for - % 25.6 % 29.0 % 25.9% sale (1)

Yield on earning 12.6 % 12.2 % 12.8 % 11.6% assets (2)

Cost of debt (3) 2.3 % 2.8 % 2.4 % 3.1 %

Net interest margin10.8 % 9.9 % 10.9 % 9.2 % (4)

Expense ratio (5) 2.2 % 1.7 % 2.0 % 1.8 %

Return on average 6.3 % 4.1 % 7.1 % 1.1 % assets (6)

Return on average 40.3 % 38.9 % 50.8 % 9.6 % equity (7)

Net charge-off ratio on individually 2.0 % 0.6 % 1.3 % 4.7 % acquired retail installment contracts (8)

Net charge-off 2.0 % 0.6 % 1.3 % 4.7 % ratio (8)

Delinquency ratio on individually acquired retail installment 3.4 % 2.4 % 3.4 % 2.4 % contracts held for investment, end of period (9)

Allowance ratio 17.4 % 18.4 % 17.4 % 18.4% (10)

Common stock dividend payout 8.8 % 13.9 % 10.5 % 54.4% ratio (11)

Common Equity Tier 1 capital ratio 19.5 % 13.7 % 19.5 % 13.7% (12)

Charge-offs, net of recoveries, on individually $161,943 $ 46,078$326,795 $1,100,138 acquired retail installment contracts

End of period delinquent amortized cost over 59 days, retail 1,106,673 817,577 1,106,673 817,577 installment contracts held for investment

End of period personal loans delinquent - 93,296 - 93,296 principal over 59 days, held for sale

End of period delinquent amortized cost over1,107,073 817,911 1,107,073 817,911 59 days, loans held for investment

End of period assets covered by 32,767,052 33,515,634 32,767,052 33,515,634 allowance for credit losses

End of period gross retail installment 32,742,544 33,485,342 32,742,544 33,485,342 contracts held for investment

End of period gross personal loans held- 1,211,575 - 1,211,575 for sale

End of period gross finance receivables32,742,544 33,489,017 32,742,544 33,489,017 and loans held for investment

End of period gross finance 48,879,467 50,617,356 48,879,467 50,617,356 receivables, loans, and leases

Average gross retail installment 32,762,939 31,462,524 32,576,199 30,946,321 contracts held for investment

Average gross retail installment contracts held for 33,186,854 32,847,716 32,906,959 31,632,276 investment and held for sale

Average gross finance 33,222,223 34,135,256 33,351,219 33,008,338 receivables, loans and finance leases

Average gross 16,465,976 17,146,166 16,935,680 17,447,194 operating leases

Average gross finance 49,688,199 51,281,422 50,286,899 50,455,532 receivables, loans, and leases

Average managed 64,640,255 62,662,686 64,316,796 61,325,546 assets

Average total 48,594,272 47,979,008 48,291,222 47,581,031 assets

Average debt 38,296,862 41,064,441 39,029,273 40,262,948

Average total 7,578,893 5,044,976 6,731,687 5,429,924 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 Charge-offs,(8) 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 losses,(10) 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(11) declared per share of common stock to Earnings per share attributable to the Company's shareholders.

"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(12) (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 nine month ended September 30, 2021 and 2020 was as follows (Unaudited, Dollar amounts in thousands):



Three Months Ended September 30, 2021Three Months Ended September 30, 2020

Retail Installment Contracts Retail Installment Contracts

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

Balance - beginning of period $4,299,670 $1,514,994 $4,818,187 $1,037,628

Credit loss expense (benefit) 188,195 (144,772) 24,841 314,075

Charge-offs (a) (427,659) (206,111) (334,938) (200,352)

Recoveries 338,097 133,730 392,042 97,171

Balance - end of period $4,398,303 $1,297,841 $4,900,132 $1,248,522



Nine Months Ended September 30, 2021 Nine Months Ended September 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 - - 2,030,473 71,833 standard

Credit loss expense (benefit) (252,963) 169,268 1,526,545 581,344

Charge-offs (a) (1,356,482) (599,083) (1,955,706) (617,536)

Recoveries 1,215,284 413,486 1,174,942 298,163

Balance - end of period $4,398,303 $1,297,841 $4,900,132 $1,248,522

Charge-offs for retail installment contracts includes partial write-down of(a) 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 September30, 2021 and December 31, 2020 is as follows (Unaudited, Dollar amounts in thousands):



Delinquent Balance September 30, 2021

Amount Percent

Amortized cost, 30-59 days past due $ 2,253,907 6.8 %

Delinquent amortized cost over 59 days 1,106,673 3.3 %

Total delinquent balance at amortized cost $ 3,360,580 10.1 %



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 September 30, 2021 and December 31, 2020 (Unaudited,Dollar amounts in thousands):



Nonaccrual Balance September 30, 2021

Amount Percent

Non-TDR $818,292 2.5%

TDR 391,834 1.2%

Total non-accrual loans (a) $1,210,1263.7%

(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) $1,133,0473.5%

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



Allowance Ratios September 30, 2021 December 31, 2020

TDR - Unpaid principal balance $ 3,952,344 $ 3,945,040

TDR - Impairment 1,297,841 1,314,170

TDR - Allowance ratio 32.8% 33.3%



Non-TDR - Unpaid principal balance$ 28,779,433 $ 28,977,299

Non-TDR - Allowance 4,398,303 4,792,464

Non-TDR Allowance ratio 15.3% 16.5%



Total - Unpaid principal balance $ 32,731,777 $ 32,922,339

Total - Allowance 5,696,144 6,106,634

Total - Allowance ratio 17.4% 18.5%



The Company's ACL decreased $0.1 billion and $0.4 billion for the three and nine months ended September 30, 2021. The decrease was primarily due to an improved macroeconomic outlook as well as 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 Nine Months Ended Three Months Ended

September 30,September 30,September 30,September 30,June 30, 2021 2021 2020 2021 2020

Retained (Unaudited, Dollar amounts in thousands) Originations

Retail installment $ 4,432,175$ 5,344,755$14,298,345 $13,608,298 $ 5,871,823contracts

Average APR 14.8% 13.7 % 15.0% 13.8 % 14.4 %

Average FICO606 637 603 631 608 (r) (a)

Premium (2.4)% (1.3)% (2.1)% (1.0)% (2.3)%



Personal - 305,039 - 923,112 $ - loans (b)

Average APR -% 29.4 % -% 29.4 % -%



Leased 1,577,539 1,856,166 5,799,786 4,863,504 $ 2,067,741vehicles



Finance 2,816 4,087 8,147 $9,016 $ 2,534 lease

Total originations$ 6,012,530$ 7,510,047$20,106,278 $19,403,930 $ 7,942,098retained



Sold Originations

Retail installment $ 39,325 $ 80,144 $523,862 $761,323 $ - contracts

Average APR 4.9% 5.2 % 5.3% 4.8 % -%

Average FICO730 738 720 734 - (r) (c)



Personal $ - $ - $292,709 $- $ - Loans (d)

Average APR -% -% 29.7% $- -%



Total originations$ 39,325 $ 80,144 $816,571 $761,323 $ - sold



Total originations (excluding $ 6,051,855$ 7,590,191$20,922,849 $20,165,253 $ 7,942,098SBNA Originations Program)



Unpaid principal balance excluded from the weighted average FICO score is $386 million, $571 million, $1.4 billion, $1.5 billion and $559 million for the three months ended September 30, 2021 and 2020, nine months ended(a) September 30, 2021 and 2020, and for the three months ended June 30, 2021, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $129 million, $145 million, $469 million, $386 million and $187 million, respectively, were commercial loans.

Included in the total origination volume is $72 million and $151 million(b) for the three and nine months ended September 30, 2020, respectively, related to newly opened accounts.

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 $3 million, $28 million,(c) $11 million, $80 million and $0 million for the three and nine months ended September 30, 2021 and 2020, and for the three months ended June 30, 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 $1.5 billion and $6.1 billion of retail installment contacts during the three and nine months ended September 30, 2021, respectively.

Table 6: Asset Sales



Three Months Ended Nine Months Ended Three Months Ended

September 30,September 30, September 30,September 30, June 30, 2021 2021 2020 2021 2020

Assets Sold(Unaudited, Dollar amounts in thousands)

Retail installment$ 277,898$ 636,301$ 2,968,467$ 1,148,587$ 309,784contracts

Average APR3.4% 4.9 % 4.2% 5.6 % 5.9 %

Average $ 737 735 737 715 716 FICO(r)



Personal $ - - 1,253,476 - $ - loans

Average APR- % - % 29.7% - % - %

Discount - - - - -



Total asset$ 277,898$ 636,301$ 4,221,943$ 1,148,587$ 309,784sales



Table 7: Ending Portfolio



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



September 30, 2021 December 31, 2020

(Unaudited, Dollar amounts in thousands)

Retail installment contracts $ 32,742,544 $ 32,937,036

Average APR 15.2% 15.2%

Premium (0.96)% (0.15)%



Leased vehicles $ 16,112,416 $ 17,259,468



Finance leases $ 24,508 $ 26,150



Table 8: Reconciliation of Non-GAAP Measures



September 30, 2021September 30, 2020

(Unaudited, Dollar amounts in thousands)

Total equity $ 7,932,730$ 5,094,812

Add: Adjustment due to CECL capital 1,729,366 1,842,536 relief (c)

Deduct: Goodwill, intangibles, and other assets, net of deferred tax 156,942 159,907 liabilities

Deduct: Accumulated other (31,194) (56,882) comprehensive income (loss), net

Tier 1 common capital $ 9,536,348$ 6,834,323

Risk weighted assets (a)(c) 48,830,527 49,882,540

Common Equity Tier 1 capital ratio 19.5% 13.7% (b)(c)



Under the banking agencies' risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures(a) 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.

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,(c) 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.

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SOURCE Santander Consumer USA Holdings Inc.