Exhibit 99.2
Third Quarter 2020
October 28, 2020
Forward-Looking Statements
IMPORTANT
INFORMATION
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 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 presentation and/or our financial performance to differ materially from that suggested by the forward-looking statements are (a) the adverse impact of COVID-19 on our business, financial condition, liquidity and results of operations; (b) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (c) adverse economic conditions in the United States and worldwide may negatively impact our results; (d) a reduction in our access to funding; (e) significant risks we face implementing our growth strategy, some of which are outside our control; (f) 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.
2
Earnings Highlights
Q3 results reflect unique environment with low losses and strong
recoveries; liquidity, reserves and capital remain strong
Originations
Reserves
Credit
Performance
Liquidity &
Capital
- Total auto originations of ~$8.4B in Q3 2020, flat versus prior year quarter
- FCA penetration rate of 33%, down from 36% in Q3 2019
- $293M increase in reserves due to balance growth
- Allowance ratio of 18.4%, down 80bps from Q2 2020 allowance ratio due to improved credit mix
- Early stage delinquency ratio of 5.0%, down 450 bps YoY
- Late stage delinquency ratio of 2.4%, down 230 bps YoY
- Gross charge-off ratio of 6.8%, down 1150 bps YoY
- Net charge-off ratio of 0.6%, down 750 bps YoY
- ABS market demand at recent highs, issued $3.3 billion in new ABS
- $2.0B in liquidity from Banco Santander
- $1.2B in additional private term financings
- CET1 Ratio of 13.7%
3
Economic Indicators
Consumer Confidence1
59.8 53.1 48.5 45.4
119.8 138.4 125.1
103.0 104.1 | 101.8 |
70.3 79.7 86.0
Consumer confidence index remains low due to the
economic impact of the pandemic
U.S. Unemployment Statistics2 | 14.7% |
9.8% 9.5% 9.0%
7.8% 7.2%
6.1% | 5.9% | 7.9% |
5.0% 5.0%
4.2% 3.7% 3.5%
U.S. GDP QoQ Change3
-0.3% | 3.1% | 1.2% | 2.4% | 1.5% | 2.9% | 2.1% | 2.9% | 3.2% | 3.4% | 2.1% |
-3.3% |
-31.4%
Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep | Sep |
08 | 09 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 |
Unemployment rate of 7.9% in September decreased from 14.7% in April when the impact of stay-at-homeorders were more severe
US GDP decreased 31% in Q2 2020 vs Q1 2019 due to
the impact of COVID-19
1 | The Conference Board's consumer confidence index, monthly data as of September 30, 2020 | 4 | |
2 | U.S. Bureau of Labor Statistics, monthly data as of September 30, 2020 | ||
3 | U.S. Bureau of Economic Analysis, quarterly lagged data as of June 30, 2020 |
Auto Industry Overview
New Vehicle SAAR1
17.3 17.2 17.1 16.617.0
13.0
11.4
Used Vehicle SAAR2
39.2 | 39.8 | 39.8 | 40.0 | 32.0 | 36.0 | 38.0 |
Used Vehicle Price Indices3
161.2
Manheim
149.3 | |||
140.5 | 139.9 | 141.1 | 141.9 |
136.0
139.5
JDP
126.8 | ||||||
118.4 | 122.0 | 121.8 | 121.6 | |||
117.9 | ||||||
1Q 2019 | 2Q 2019 | 3Q 2019 | 4Q 2019 | 1Q 2020 | 2Q 2020 | 3Q 2020 |
Auto sales of 17.0M, up 31% QoQ as dealerships and manufacturer sales increased after the shutdowns caused by COVID-19
Used auto sales of 38.0M, up 6% QoQ
Used vehicle prices increased to record levels
due to demand and lower supply
1 U.S. Bureau of Economic Analysis, Light Weight Vehicle Sales: Autos and Light Trucks, monthly data as of September 30, 2020 | 5 |
- Cox Automotive, 13-Month Rolling Used-Vehicle SAAR, monthly data as of September 30, 2020
- Manheim, Inc.; Indexed to a basis of 100 at 1995 levels; JD Power Used-Vehicle Price Index (not seasonally adjusted), both monthly, quarter end
Quarterly Originations
Total volume flat year-over-year;mix-shift from lease to prime retail loan
Three Months Ended Originations | % Variance | ||||||||||||||
($ in Millions) | Q3 2020 | Q2 2020 | Q3 2019 | QoQ | YoY | ||||||||||
Total Core Retail Auto | $ | 2,690 | $ | 2,135 | $ | 2,572 | 26% | 5% | |||||||
Chrysler Capital Loans (<640)1 | 1,353 | 1,131 | 1,500 | 20% | (10%) | ||||||||||
Chrysler Capital Loans (≥640)1 | 2,482 | 3,557 | 2,119 | (30%) | 17% | ||||||||||
Total Chrysler Capital Retail | 3,835 | 4,688 | 3,619 | (18%) | 6% | ||||||||||
Total Leases2 | 1,860 | 989 | 2,230 | 88% | (17%) | ||||||||||
Total Auto Originations3 | $ | 8,385 | $ | 7,812 | $ | 8,421 | 7% | Flat | |||||||
Asset Sales4 | $ | 636 | $ | 512 | - | 21% | NM | ||||||||
SBNA Originations4 | $ | 1,100 | $ | 1,724 | $ | 2,112 | (36%) | (48%) |
1 | Approximate FICOs | |
2 | Includes nominal capital lease originations | 6 |
- Includes SBNA Originations
- Asset Sales and SBNA Originations remain off of SC's balance sheet in the Service For Others portfolio
Year-to-Date Monthly Originations
Core Retail Auto ($ in Millions) | Chrysler Lease ($ in Millions) | ||||||||||||||||||||||
1 | |||||||||||||||||||||||
$1,200 | $1,000 | ||||||||||||||||||||||
$1,000 | $800 | ||||||||||||||||||||||
$800 | |||||||||||||||||||||||
$600 | |||||||||||||||||||||||
$600 | |||||||||||||||||||||||
$400 | |||||||||||||||||||||||
$400 | |||||||||||||||||||||||
$200 | |||||||||||||||||||||||
$200 | |||||||||||||||||||||||
$0 | $0 | ||||||||||||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | ||||||
YoY | -4% | -14% | -17% | -44% | -8% | 23% | 8% | -6% | 13% | YoY | 14% | 17% | -18% | -73% | -64% | -48% | -26% | -21% | 0% | ||||
Chrysler Capital Loans, <6401 ($ in Millions) | Chrysler Capital Loans, ≥6401 ($ in Millions) | ||||||||||||||||||||||
$600 | $1,400 | ||||||||||||||||||||||
$500 | $1,200 | ||||||||||||||||||||||
$1,000 | |||||||||||||||||||||||
$400 | |||||||||||||||||||||||
$800 | |||||||||||||||||||||||
$300 | |||||||||||||||||||||||
$600 | |||||||||||||||||||||||
$200 | |||||||||||||||||||||||
$400 | |||||||||||||||||||||||
$100 | |||||||||||||||||||||||
$200 | |||||||||||||||||||||||
$0 | $0 | ||||||||||||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | ||||||
YoY | -7% | -13% | -12% | -40% | -24% | -5% | -11% | -19% | 2% | YoY | 22% | 22% | 45% | 125% | 79% | 45% | 23% | 6% | 23% | ||||
1 Approximate FICOs
2019 | 2020 | 7 | |
Fiat Chrysler (FCA) Relationship
SC continues to partner with FCA to drive sales
- Continue to support both retail and lease incentives
- Penetration rate normalizing following 0% APR incentives due to COVID-19
FCA Sales1 (units in '000s) | ||||
1,661 | ||||
1,321 | ||||
565 | 507 | |||
367 | ||||
3Q19 | 2Q20 | 3Q20 | YTD'19 | YTD'20 |
Chrysler Penetration Rate2 | ||||
35.7% | 37.1% | 35.8% | ||
34.5% | ||||
32.5% | ||||
3Q19 | 2Q20 | 3Q20 | YTD'19 | YTD'20 |
1 | FCA filings; sales as reported on 10/01/2020 | 8 | |
2 | Auto loans and leases financed by Chrysler Capital | ||
Serviced for Others (SFO) Platform
Balances Up QoQ
Serviced for others balance growth driven by prime originations from FCA and the SBNA program
Off-balance sheet securitization of $636M also added to the SFO platform
Serviced for Others Balances, End of Period ($ in Millions)
$11,511 | |||
$10,414 | $10,331 | $10,727 | |
17% | |||
$9,979 | 12% | ||
15% | 15% | ||
20% |
85% | 85% | 88% | 83% | |
80% | ||||
3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | ||
Related Party | 3rd Party | |||||
9
Diversified Funding and Liquidity
Total unutilized capacity of approximately $12 billion at the end of Q3 2020
Asset-Backed Securities1 ($ in Billions) | Financings ($ in Billions) | |||||||||
17.9 | 18.8 | Amortizing1 | Revolving 2 | |||||||
12.1 | ||||||||||
11.7 | ||||||||||
9.6 | 8.6 | |||||||||
7.8 | 9.3 | |||||||||
Unused | ||||||||||
3.9 | 2.8 | Used | ||||||||
Q2 2020 | Q3 2020 | Q2 2020 | Q3 2020 | Q2 2020 | Q3 2020 | |||||
► $3.3B of new issuance in Q3: 2 SDART | ► ~$1.2B of private term financings in Q3 |
► 77% unused capacity on warehouse lines from 12 lenders
Santander2 ($ in Billions)
14.2 | |
12.2 | 0.5 |
0.5 | 2.5 |
2.5 |
9.2 | 11.2 |
Asset Sales ($ in Billions)
2.2
Revolving | 0.5 | 1.7 | Asset Sales | ||
Contingent | 1.7 | 0.6 | |||
Term | 1.1 | SBNA | |||
Originations |
Q2 2020 | Q3 2020 | Q2 2020 | Q3 2020 |
► $2.0B in new term funding in Q3 | ► Off-balance sheet securitization of $636M |
- $3.0B in unutilized revolving and contingent liquidity
1 | Total outstanding as of September 30, 2020 | 10 | |
2 | Total commitment as of September 30, 2020 | ||
Q3 2020 Financial Results
Three Months Ended (Unaudited, Dollars in Thousands, except per share) | |||||||||
September 30, 2020 | June 30, 2020 | September 30, 2019 | |||||||
Interest on finance receivables and loans | $ | 1,300,694 | $ | 1,236,600 | $ | 1,273,022 | |||
Net leased vehicle income | 257,984 | 126,688 | 250,109 | ||||||
Other finance and interest income | 2,146 | 2,657 | 9,926 | ||||||
Interest expense | 292,118 | 308,982 | 335,212 | ||||||
Net finance and other interest income | $ | 1,268,706 | $ | 1,056,963 | $ | 1,197,845 | |||
Credit Loss Expense | 340,548 | 861,896 | 566,849 | ||||||
Profit sharing | 30,414 | 11,530 | 18,125 | ||||||
Total other income | 28,509 | (46,393) | 31,293 | ||||||
Total operating expenses | 263,662 | 266,679 | 329,470 | ||||||
Income before tax | $ | 662,591 | $ | (129,535) | $ | 314,694 | |||
Income tax expense | 172,476 | (32,857) | 82,156 | ||||||
Net income | $ | 490,115 | $ | (96,678) | $ | 232,538 | |||
Diluted EPS ($) | $ | 1.58 | $ | (0.30) | $ | 0.67 | |||
Average total assets | $ | 47,979,008 | $ | 46,876,726 | $ | 46,915,965 | |||
Average managed assets | $ | 62,662,686 | $ | 61,001,767 | $ | 57,379,308 |
11
Customer Relief Loan Deferrals
Since the beginning of the pandemic through the end of the third quarter, ~645,000 unique accounts received deferrals 86% of unique accounts that received deferrals have had those deferrals expire
80% of these accounts remain <30 days past due
Percent Deferred
27.0% | ||
Pandemic | ||
30% | Peak | |
Accounts | 25% | |
20% | ||
Activeof | 15% | |
10% | ||
% | 5% | |
0% |
17.7%
As of Q2
4.5%
As of Q3
September 2020 | Balance | |||
Ending Deferral Status | Units | % | (in '000s) | |
Active | 89,000 | 14% | $ | 1,690,000 |
Expired and <30 DPD | 427,000 | 66% | $ | 7,730,000 |
Expired and >30 DPD | 84,000 | 13% | $ | 1,520,000 |
Paid Off (cumulative) | 33,000 | 5% | $ | 320,000 |
Charge Off (cumulative) | 12,000 | 2% | $ | 220,000 |
Unique Accounts Deferred | 645,000 | 100% | $ | 11,480,000 |
12 | ||
* | Approximate data from March 1, 2020 - September 30, 2020 | |
Quarterly Delinquency & Loss
Delinquency Ratios: 30-59 Days Delinquent, RICs, HFI
9.5% | 9.7% | 8.3% |
4.3%5.0%
Delinquency Ratios: >59 Days Delinquent, RICs, HFI
4.7%5.1%4.6%
2.4%2.4%
Gross Charge-off Rates
18.3% 17.3% 15.5%
11.1%
6.8%
SC Recovery Rates1 (% of Gross Loss)
55.9% | 52.2% | 50.1% | 91.4% |
45.7% | |||
Net Charge-off Rates2
8.1% | 8.3% | 7.7% | 6.0% | |
0.6% | ||||
Q3 2019 | Q4 2019 | 1Q 2020 | 2Q 2020 | Q3 2020 |
COVID-19 hardship relief programs and strong payment rates led to lower delinquencies and charge- offs during the period
Early stage delinquencies decreased 450 bps YoY
Late stage delinquencies decreased 230 bps YoY
Gross charge-offrate decreased more than 11 percentage points YoY
SC's Q3 recovery rate of 91% driven by record wholesale prices at auction and low gross losses for the quarter
Net charge-offrate decreased 750 bps YoY
1 | Recovery Rate - Per the financial statements includes insurance proceeds, bankruptcy/deficiency sales, and timing impacts | 13 | |
2 | Net Charge-off rates on retail installment contracts, held for investment |
Loss and Recovery Ratios (Annualized)
Gross Charge-off Ratio (%) | Recovery Rates (% of Gross Loss) |
25.0% | ||||||||||||
20.0% | ||||||||||||
15.0% | ||||||||||||
10.0% | ||||||||||||
5.0% | ||||||||||||
0.0% | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug Sep Oct Nov Dec | ||||
2019 | 22.3 | 19.1 | 17.0 | 16.1 | 16.1 | 15.8 | 17.9 | 18.4 | 18.5 | 18.3 | 17.1 | 16.1 |
2020 | 17.2 | 15.6 | 13.7 | 12.9 | 12.6 | 8.1 | 6.7 | 5.5 | 7.9 |
125.0% | ||||||||||||
100.0% | ||||||||||||
75.0% | ||||||||||||
50.0% | ||||||||||||
25.0% | ||||||||||||
0.0% | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
2019 | 49.0 | 54.6 | 66.1 | 62.5 | 62.4 | 56.0 | 55.2 | 59.2 | 53.2 | 52.9 | 57.5 | 46.2 |
2020 | 46.0 | 53.0 | 52.1 | 32.1 | 49.1 | 62.1 | 81.7 | 126.1 | 76.4 |
Net Charge-off Ratio (%)
15.0%
12.0%
9.0%
6.0%
3.0%
0.0% | |||||||||||||
-3.0% | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
2019 | 11.3 | 8.7 | 5.8 | 6.1 | 6.1 | 7.0 | 8.0 | 7.5 | 8.6 | 8.6 | 7.3 | 8.7 | |
2020 | 9.3 | 7.3 | 6.6 | 8.7 | 6.4 | 3.1 | 1.2 | -1.4 | 1.9 | ||||
2019 | 2020 | 14 | |
Loss Detail
Net charge-offs for RICs decreased ~$546M versus prior year quarter to $46M
$72M increase in losses due to higher loan balances
$446M decrease due to lower gross charge off rate and $172M decrease due improved recovery performance
Q3 2019 to Q3 2020: Net Charge-off Walk, ($ in Billions)
$592 | $72 | |||
($446) | ||||
($172) | ||||
$46 | ||||
Q3 2019 | Balance | Gross Loss | Recoveries | Q3 2020 |
Performance & | ||||
Other |
15
Reserves
Q2 2020 to Q3 2020 Allowance for Credit Loss Walk (RICs, HFI1 $ in Millions)
Allowance for credit loss increased by $293M QoQ
$474M increase due to balance growth, offset by portfolio and other factors including macro economic outlook
($181)
$474
$6,149$6,149
$5,856$5,856
2Q 2020 | Portfolio Changes - | Portfolio & Economic | 3Q 2020 |
Volume | Factors |
Credit loss expense decreased $226M YoY driven by lower net charge-offs
Allowance to loans ratio decreased 80 bps driven by asset mix
$2,000Credit Loss Expense and Allowance Ratio ($ in Millions)
$1,800
$1,600 | 17.8% | 19.2% | 18.4% | ||||
$1,400 | |||||||
$1,200 | |||||||
$1,000 | 10.5% | 9.9% | $908 | $861 | |||
$800 | $567 | ||||||
$600 | $545 | ||||||
$400 | $341 | ||||||
$200 | |||||||
$- | |||||||
Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | |||
Credit loss expense | Allowance Ratio | ||||||
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
16 | |
1 | Allowance for credit loss related to retail installment contracts, held for investment |
Allowance for Credit Loss
As of the end of Q3 2020, total allowance increased $293M compared to Q2 2020, driven by asset balance growth
- TDR coverage ratio increased QoQ as delinquency and performance deteriorated
- Non-TDRcoverage ratio down due to increased balances in prime assets
- Total allowance coverage ratio decreased to 18.4%
Dollars in Millions | (Unaudited) | (Unaudited) | (Audited) |
Allowance Ratios | September 30, | June 30, | December 31, |
2020 | 2020 | 2019 | |
TDR Unpaid principal balance | $3,802 | $3,947 | $3,859 |
TDR Impairment | $1,249 | $1,038 | $915 |
TDR Allowance ratio | 32.8% | 26.3% | 23.7% |
Non-TDR Unpaid principal balance | $29,667 | $26,528 | $26,896 |
Non-TDR Allowance | $4,900 | $4,818 | $2,124 |
Non-TDR Allowance ratio | 16.5% | 18.2% | 7.9% |
Total Unpaid principal balance | $33,469 | $30,475 | $30,755 |
Total Allowance | $6,149 | $5,856 | $3,039 |
Total Allowance ratio | 18.4% | 19.2% | 9.9% |
17
Expense Management
Operating expenses totaled $264M, expense ratio down 60bps YoY
Operating expenses decreased $65M YoY primarily driven by lower repossession expense and other expenses
Operating Expenses ($ in Millions) | ||||||||||
$400 | 7.0% | |||||||||
$350 | $329 | $309 | 6.0% | |||||||
$283 | ||||||||||
$300 | $267 | $264 | 5.0% | |||||||
$250 | 4.0% | |||||||||
$200 | ||||||||||
$150 | 2.3% | 2.1% | 3.0% | |||||||
1.9% | ||||||||||
1.7% | 1.7% | |||||||||
2.0% | ||||||||||
$100 | ||||||||||
$50 | 1.0% | |||||||||
$- | 0.0% | |||||||||
Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | ||||||
Operating Expense | Expense Ratio | |||||||||
18
CET1 Ratio
Common Equity Tier 1 Capital Ratio1
Strong capital base
$120,00018.0%
15.4%16.0%
14.8%
$110,000
13.8% | 13.4% | 13.7% |
14.0% | ||
$100,000 | 12.0% |
SC maintains strong capital levels in addition to its loan loss reserves
10.0%
$90,000
8.0%
Under the Federal Reserve's interim | |||||||
policy, SC cannot pay a dividend or buy | 6.0% | ||||||
$80,000 | |||||||
back shares in Q4 | |||||||
4.0% | |||||||
$70,000 | |||||||
2.0% | |||||||
$60,000 | 0.0% | ||||||
Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | |||
Tier 1 common capital | $7,226 | $7,193 | $6,726 | $6,574 | $6,834 | ||
Risk weighted assets 2 | $46,870 | $48,762 | $48,830 | $48,998 | $49,883 | ||
CET1 | 15.4% | 14.8% | 13.8% | 13.4% | 13.7% | ||
19 | |||||||
1 CET1 is calculated under Basel III regulations required as of January 1, 2015. Please see the appendix for further details related to CECL phase-in impact. |
2 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
Appendix
Diversified Underwriting Across Full Credit Spectrum
Originations by Credit (RICs)1
$6,823 | $6,525 | |||||||||
$6,192 | ||||||||||
$5,674 | ||||||||||
$4,927 | 55% | 44% | ||||||||
41% | ||||||||||
40% | ||||||||||
36% | ||||||||||
14% | 14% | 15% | 10% | 14% | ||||||
23% | 21% | 24% | 15% | 21% | ||||||
9% | 10% | 11% | 7% | 8% | ||||||
14% | 15% | 14% | 13% | 14% | ||||||
3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | ||||||
No FICO 2 | <540 | 540-599 | 600-639 | >640 | ||||||
Average Loan Balance in Dollars
$25,627 | $25,706 | $24,776 | $28,820 | $25,781 | |||||
New/Used Originations | $6,823 | ||||||||
$6,525 | |||||||||
$6,192 | |||||||||
$5,674 | |||||||||
34% | |||||||||
$4,927 | 42% | ||||||||
39% | |||||||||
39% | |||||||||
45% | |||||||||
61% | 61% | 66% | 58% | ||||||
55% | |||||||||
3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | |||||
1 | RIC; Retail Installment Contract | New | Used | 21 | |||||
2 | No FICO score obtained; Includes commercial loans. | ||||||||
Held for Investment Credit Trends
Retail Installment Contracts1
32.9% | 31.9% | 31.9% | 32.6% | 30.8% | |||||||||||||||||||||||
2.2% | 2.4% | 2.5% | 2.6% | 2.5% | 10.6% | 10.0% | 12.4% | 10.1% | 10.1% | 17.9% | 16.9% | 16.7% | 16.7% | 15.3% | 19.0% | 19.0% | 18.9% | 19.2% | 18.3% | 17.4% | 19.8% | 17.5% | 18.8% | 23.0% |
Commercial | Unknown | <540 | 540-599 | 600-639 | >=640 | |||||||
Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | ||||||||
22 | ||
1 | Held for investment; excludes assets held for sale | |
Excluding Personal Lending Detail
Personal lending earned of $49M before operating expenses and taxes in Q3 2020
Interest on finance receivables and loans | $ |
Net leased vehicle income | |
Other finance and interest income | |
Interest expense | |
Net finance and other interest income | $ |
Provision for credit losses | $ |
Profit sharing | |
Investment gains (losses), net1 | $ |
Servicing fee income | |
Fees, commissions and other | |
Total other income | $ |
Average gross individually acquired retail installment | $ |
contracts, held for investment and held for sale | |
Average gross personal loans | |
Average gross operating leases | $ |
Three | |||||
September 30, 2020 | |||||
Personal | Excluding | ||||
Total | Personal | ||||
Lending | |||||
Lending | |||||
1,300,694 | $ | 79,359 | $ | 1,221,335 | $ |
257,984 | - | 257,984 | |||
2,146 | - | 2,146 | |||
292,118 | 10,286 | 281,832 | |||
1,268,706 | $ | 69,073 | $ | 1,199,633 | $ |
340,548 | $ | (23) | $ | 340,571 | $ |
30,414 | 3,607 | 26,807 | |||
(68,989) | $ | (56,598) | $ | (12,391) | $ |
18,574 | - | 18,574 | |||
78,924 | 40,140 | 38,784 | |||
28,509 | $ | (16,458) | $ | 44,967 | $ |
30,768,423 | - | $ | |||
- | $ | 1,413,021 | |||
17,735,640 | $ | - | $ |
Months Ended, (Unaudited, Dollars in Thousands) | ||||||||||
June 30, 2020 | September 30, 2019 | |||||||||
Personal | Excluding | Personal | Excluding | |||||||
Total | Personal | Total | Personal | |||||||
Lending | Lending | |||||||||
Lending | Lending | |||||||||
1,236,600 | $ | 83,808 | $ | 1,152,792 | $ | 1,273,022 | $ | 88,449 | $ | 1,184,573 |
126,688 | - | 126,688 | 250,109 | - | 250,109 | |||||
2,657 | - | 2,657 | 9,926 | - | 9,926 | |||||
308,982 | 11,016 | 297,966 | 335,212 | 11,419 | 323,793 | |||||
1,056,963 | $ | 72,792 | $ | 984,171 | $ | 1,197,845 | $ | 77,030 | $ | 1,120,815 |
861,896 | $ | - | $ | 861,896 | $ | 566,849 | $ | (14) | $ | 566,863 |
11,530 | 6,587 | 4,943 | 18,125 | - | 18,125 | |||||
(147,582) | $ | (121,642) | $ | (25,940) | $ | (86,397) | $ | (87,454) | $ | 1,057 |
19,120 | - | 19,120 | 21,447 | - | 21,447 | |||||
82,069 | 36,911 | 45,158 | 96,243 | 48,097 | 48,146 | |||||
(46,393) | $ | (84,731) | $ | 38,338 | $ | 31,293 | $ | (39,357) | $ | 70,650 |
31,193,215 | - | $ | 29,450,778 | - | ||||||
- | $ | 1,307,609 | - | $ | 1,343,098 | |||||
17,492,255 | $ | - | $ | 16,902,932 | $ | - |
23 | ||
1 | The current period losses were primarily driven by $57 million of lower of cost or market adjustments related to the held for sale personal | |
..lending portfolio, comprised of $81 million in customer default activity, and a $24 million favorable market discount. |
Reconciliation of Non-GAAP Measures
Total equity
Deduct: Goodwill and intangibles
Tangible common equity
Total assets
Deduct: Goodwill and intangibles
Tangible assets
Equity to assets ratio
Tangible common equity to tangible assets
Total equity
Add: Adjustment due to CECL capital relief (c)
Deduct: Goodwill and other intangible assets, net of DTL
Deduct: Accumulated other comprehensive income, net Tier 1 common capital
Risk weighted assets (a)(c)
Common Equity Tier 1 capital ratio (b)(c )
Three Months Ended (Unaudited, Dollars in Thousands) | ||||
Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 |
$5,094,812 | $4,895,465 | $5,146,103 | $7,318,620 | $7,345,202 |
136,397 | 127,215 | 121,879 | 116,828 | 110,683 |
$4,958,415 | $4,768,250 | $5,024,224 | $7,201,792 | $7,234,519 |
$48,448,921 | $47,268,695 | $47,106,931 | $48,933,529 | $47,279,015 |
136,397 | 127,215 | 121,879 | 116,828 | 110,683 |
$48,312,524 | $47,141,480 | $46,985,052 | $48,816,701 | $47,168,332 |
10.5% | 10.4% | 10.9% | 15.0% | 15.5% |
10.3% | 10.1% | 10.7% | 14.8% | 15.3% |
$5,094,812 | $4,895,465 | $5,146,103 | $7,318,620 | $7,345,202 |
1,842,536 | 1,769,430 | 1,669,466 | - | - |
159,907 | 154,943 | 153,712 | 152,756 | 150,644 |
(56,882) | (63,705) | (63,655) | (26,693) | (31,836) |
$6,834,323 | $6,573,657 | $6,725,512 | $7,192,557 | $7,226,394 |
$49,882,540 | $48,997,902 | $48,829,941 | $48,761,825 | $46,870,019 |
13.7% | 13.4% | 13.8% | 14.8% | 15.4% |
- 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.
- CET1 is calculated under Basel III regulations required since 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 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.
24
Thank You
Our purpose is to help people and business prosper.
Our culture is based on believing that everything we do should be:
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Santander Consumer USA Holdings Inc. published this content on 28 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 13:59:03 UTC