Form 8-K Santander Consumer USA For: Jul 30

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July 30, 2015 6:06 AM EDT



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): July 30, 2015
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))



    
    
    


Item 2.02. Results of Operations and Financial Condition.
On July 30, 2015, Santander Consumer USA Holdings Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2015. Copies of the Company’s press release and an investor presentation for the quarter ended June 30, 2015 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 July 30, 2015.
Exhibit 99.2    Presentation Materials of Santander Consumer USA Holdings Inc., dated July 30, 2015.


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: July 30, 2015
SANTANDER CONSUMER USA HOLDINGS INC.


By: /s/ Jason A. Kulas                                                  
Name: Jason A. Kulas
Title: Chief Executive Officer
 
 


 




Exhibit 99.1
 
Contacts:
 
Investor Relations
Evan Black & Kristina Carbonneau
800.493.8219
  
Media Relations
Laurie Kight
214.801.6455
Santander Consumer USA Holdings Inc. Reports Second Quarter 2015 Results
Dallas, TX (July 30, 2015) – Santander Consumer USA Holdings Inc. (NYSE: SC) (“SCUSA”) today announced net income for second quarter 2015 of $285.5 million, or $0.79 per diluted common share, up 16 percent from second quarter 2014 net income of $246.5 million, or $0.69 per diluted common share. First quarter 2015 net income was $289.2 million, or $0.81 per diluted common share.
Second Quarter 2015 Key Highlights:
•
Total originations of $7.6 billion, up from $7.4 billion originated in prior quarter and $6.7 billion originated in prior year second quarter
•
Asset sales of $2.8 billion, up from $1.5 billion in prior quarter and $1.8 billion in prior year second quarter
•
Serviced for others portfolio of $13.1 billion, up from $11.2 billion in prior quarter and $8.0 billion in prior year second quarter
•
Managed assets of $49.6 billion, up from $46.6 billion in the prior quarter and $38.6 billion in prior year second quarter
•
Net charge-off ratio of 5.3%, down from 6.7% in prior quarter and 5.8% in prior year second quarter
•
Return on average equity of 28.2%, down from 31.2% in prior quarter and 33.0% in prior year second quarter
•
Return on average assets of 3.2%, down from 3.5% in prior quarter and 3.4% in prior year second quarter
•
Provision for credit losses of $739 million, up from $606 million in the prior quarter and $589 million in prior year second quarter
•
Expense ratio of 2.1%, down from 2.2% in prior quarter and 2.3% in prior year second quarter

"Our company achieved strong results this quarter, producing a 16 percent year-over-year growth in net income. This evidences our robust business model and our team's ability to produce results. We continued to execute against our stated strategy of optimizing the mix of retained assets versus assets sold and serviced for others by originating more than $7.6 billion and selling more than $2.8 billion in assets, further strengthening our balance sheet while growing our consumer finance marketplace. We are confident the effective execution of this strategy will lead to continued growth in the serviced for others portfolio while generating attractive balance sheet returns as well as capital-light fee income," said Jason Kulas, Chief Executive Officer.

In the second quarter, total originations were more than $7.6 billion, including $2.7 billion in Chrysler Capital ("Chrysler") retail loans, $1.4 billion in Chrysler leases originated for our own portfolio, and $229 million in Chrysler lease originations facilitated for an affiliate. Other originations, including other auto and personal loans, totaled $3.3 billion for the second quarter 2015. Second quarter auto originations continued to see a seasonal benefit due to the tax refund season. Personal lending originations increased from a seasonal low in the first quarter, in line with the prior year second quarter.
Finance receivables, loans and leases, net1, increased 9 percent to $31.5 billion at June 30, 2015, from $28.8 billion at December 31, 2014, and increased 19 percent from $26.5 billion at June 30, 2014. Net finance and other interest income increased 16 percent to $1.3 billion in the second quarter 2015 from $1.1 billion in the second quarter 2014, driven by 20 percent growth in the average portfolio. SCUSA’s average APR as of the end of the second quarter 2015 for retail installment contracts held for investment was 16.9 percent, up from 16.6 percent as of the end of the first quarter 2015 and 16.3 percent as of the end of the second quarter 2014.


1 Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.

1


Portfolio trends are reflective of the mix of assets retained at the end of each quarter, which are affected by the credit quality and timing of asset sales, as well as normal seasonality of the business.

The provision for credit losses increased to $739 million in the second quarter 2015, from $606 million in the first quarter 2015, and $589 million in the second quarter 2014. The allowance ratio2 increased to 12.4 percent as of June 30, 2015 from 11.5 percent as of March 31, 2015 and 11.4 percent as of June 30, 2014. The increases from prior quarter were primarily driven by seasonality in our forward looking model, as well as a higher margin retained portfolio mix, which is accretive to future earnings. The increase from prior year is primarily driven by the designation of additional assets as held for sale, as well as higher margin retained portfolio mix.
"The second quarter is largely affected by the seasonality of the provision model, however, it is important to note credit trends are stable and in line with seasonality, the market is competitive, but rationally competitive, and performance is in line or slightly better than management expectations. Higher retained nonprime assets with higher yields are contributing to more revenue and a short-term increase in provisions," said Mr. Kulas.
Consistent with expected seasonal patterns, SCUSA’s net charge-off ratio decreased to 5.3 percent for the second quarter 2015 from 6.7 percent for the first quarter 2015, and 5.8 percent for the second quarter 2014; net charge-off performance benefited from bankruptcy and deficiency sale recoveries. Even excluding these bankruptcy and deficiency sales, credit performance remained slightly better year over year, due to better loan structures. SCUSA’s loan delinquency ratio increased to 3.6 percent as of the end of the second quarter 2015 from 3.2 percent at the end of the first quarter 2015, comparable to the 3.8 percent loan delinquency ratio as of the end of the second quarter 2014.
During the quarter, SCUSA incurred $253 million of operating expenses, up 20 percent from $211 million in the second quarter 2014, primarily attributable to a higher headcount, a result of SCUSA’s strong managed asset growth over the previous year. SCUSA produced a 2.1 percent expense ratio for the quarter, down from a 2.3 percent expense ratio in the same period last year as we recognize the benefits of scalability from larger managed assets, which should partially offset the impact of any future additional regulatory or compliance costs. SCUSA expects expenses to increase in the back half of the year as credit trends worsen, in line with normal seasonality of the business.
During the quarter, SCUSA executed four securitizations, totaling $4.5 billion3, including a CCART securitization sold through the residual, as well as a series of subordinate bond transactions on the SDART platform to fund residual interests from existing securitizations. Additionally, SCUSA advanced $1.5 billion on new and existing private term amortizing facilities and revolving facilities.
In line with SCUSA's strategy to leverage its servicing platform and increase servicing fee income, SCUSA executed asset sales of $2.8 billion during the quarter. In addition to selling $995 million of assets through existing monthly loan sale programs, $732 million in assets through a CCART securitization and $756 million4 in leases, SCUSA expanded its asset marketplace with the completion of a $253 million sale of prime auto retail installment contracts as well as bankruptcy and deficiency sales realizing $66 million in proceeds.
Servicing fee income totaled $28.0 million in the second quarter 2015, up from $22.1 million in the second quarter 2014, primarily due to the increase in the portfolio of loans and leases serviced for others to $13.1 billion as of June 30, 2015, up from $8.0 billion as of June 30, 2014. For the second quarter 2015, net investment gains, which primarily consist of gains on sale, totaled $86.7 million, up from $21.2 million in the first quarter 2015 and $21.6 million in the second quarter 2014, driven mostly by the timing of asset sales and the execution of a CCART securitization.




2 Excludes purchased receivables portfolio and finance receivables held for sale.
3 Net bonds sold of $4.1 billion.
4 Depreciated net capitalized cost.

2


Conference Call Information
SCUSA management will host a conference call and webcast to discuss the second quarter results and other general matters at 9 a.m. Eastern Time on Thursday, July 30, 2015. The conference call will be accessible by dialing 844-856-2691 (U.S. domestic), or 815-926-1990 (international), conference ID 76649569. Please dial in 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 the corporate website at http://investors.santanderconsumerusa.com. Choose “Events” and select the information pertaining to the Q2 2015 Earnings Call. Additionally there will be several slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download, and install any necessary software.
For those unable to listen to the live broadcast, a replay will be available on the company’s website or by dialing 855-859-2056 (U.S. domestic), or 404-537-3406 (international), conference ID 76649569, approximately two hours after the event. The dial-in replay will be available for two weeks after the conference call, and the webcast replay will be available through July 30, 2016. An investor presentation will also be available by visiting the Investor Relations page of SCUSA’s website at http://investors.santanderconsumerusa.com.

Non-GAAP Disclosure
This press release includes certain non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). SCUSA believes that this non-GAAP financial measure provides both management and investors a more complete understanding of the underlying operational results and trends and SCUSA’s marketplace performance. This additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other financial institutions.

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 which 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 SEC. Among the factors that could cause our financial performance to differ materially from that suggested by the forward-looking statements are: (a) we operate in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect our business; (b) adverse economic conditions in the United States and worldwide may negatively impact our results; (c) our business could suffer if our access to funding is reduced; (d) we face significant risks implementing our growth strategy, some of which are outside our control; (e) our agreement with FCA US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (f) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (g) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (h) loss of our key management or other personnel, or an inability to attract such management and personnel, could negatively impact our business; (i) we are subject to certain regulations, including oversight by the Office of the Comptroller of the Currency, the CFPB, the European Central Bank, and the Federal Reserve, which oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (j) future changes in our relationship with Santander 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 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. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. 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


About Santander Consumer USA Holdings Inc.
Santander Consumer USA Holdings Inc. (NYSE: SC) (“SCUSA”) is a full-service, technology-driven consumer finance company focused on vehicle finance and personal lending products. The company, which began originating retail installment contracts in 1997, has a managed assets portfolio of approximately $50 billion (as of June 30, 2015), has more than two million customers across all credit grades, and is headquartered in Dallas. (www.santanderconsumerusa.com)

4


Santander Consumer USA Holdings Inc.
Financial Supplement
Second Quarter 2015
 
 
 
Table of Contents
 
 
Table 1: Condensed Consolidated Balance Sheets
6

Table 2: Condensed Consolidated Statements of Income
7

Table 3: Other Financial Information
8

Table 4: Credit Quality
10

Table 5: Originations
11

Table 6: Asset Sales
12

Table 7: Ending Portfolio
13

Table 8: Reconciliation of Non-GAAP Measures
14


5


Table 1: Condensed Consolidated Balance Sheets
 
June 30,
2015
 
December 31,
2014
Assets
(Unaudited, Dollars in thousands, except per share amounts)
Cash and cash equivalents
$
28,886

 
$
33,157

Finance receivables held for sale
1,570,416

 
46,585

Finance receivables held for investment, net
24,778,311

 
23,915,551

Restricted cash
3,086,229

 
1,920,857

Accrued interest receivable
394,970

 
364,676

Leased vehicles, net
5,189,904

 
4,862,783

Furniture and equipment, net
50,786

 
41,218

Federal, state and other income taxes receivable
234,944

 
502,035

Related party taxes receivable
—

 
459

Deferred tax asset
5,152

 
21,244

Goodwill
74,056

 
74,056

Intangible assets
53,642

 
53,682

Due from affiliates
86,268

 
102,457

Other assets
486,355

 
403,416

Total assets
$
36,039,919

 
$
32,342,176

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Notes payable — credit facilities
$
6,012,337

 
$
6,402,327

Notes payable — secured structured financings
20,340,365

 
17,718,974

Notes payable — related party
4,260,000

 
3,690,000

Accrued interest payable
21,805

 
17,432

Accounts payable and accrued expenses
395,990

 
315,130

Federal, state and other income taxes payable
1,268

 
319

Deferred tax liabilities, net
556,013

 
492,303

Due to affiliates
47,295

 
48,688

Other liabilities
159,396

 
98,654

Total liabilities
31,794,469

 
28,783,827

 
 
 
 
Equity:
 
 
 
Common stock, $0.01 par value
3,578

 
3,490

Additional paid-in capital
1,682,097

 
1,560,519

Accumulated other comprehensive income (loss), net
(5,726
)
 
3,553

Retained earnings
2,565,501

 
1,990,787

Total stockholders’ equity
4,245,450

 
3,558,349

Total liabilities and equity
$
36,039,919

 
$
32,342,176



6


Table 2: Condensed Consolidated Statements of Income
 
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(Unaudited, Dollars in thousands, except per share amounts)
Interest on finance receivables and loans
$
1,321,245

 
$
1,163,448

 
$
2,551,247

 
$
2,303,777

Leased vehicle income
355,137

 
218,938

 
688,083

 
366,061

Other finance and interest income
6,738

 
874

 
14,079

 
1,124

Total finance and other interest income
1,683,120

 
1,383,260

 
3,253,409

 
2,670,962

Interest expense
150,622

 
128,314

 
299,478

 
252,760

Leased vehicle expense
281,118

 
179,135

 
554,182

 
299,204

Net finance and other interest income
1,251,380

 
1,075,811

 
2,399,749

 
2,118,998

Provision for credit losses
738,735

 
589,136

 
1,344,716

 
1,287,730

Net finance and other interest income after provision for credit losses
512,645

 
486,675

 
1,055,033

 
831,268

Profit sharing
21,501

 
24,056

 
35,017

 
56,217

Net finance and other interest income after provision for credit losses and profit sharing
491,144

 
462,619

 
1,020,016

 
775,051

Investment gains, net
86,667

 
21,602

 
107,914

 
57,416

Servicing fee income
28,043

 
22,099

 
52,846

 
32,504

Fees, commissions, and other
94,268

 
95,030

 
195,401

 
184,334

Total other income
208,978

 
138,731

 
356,161

 
274,254

Salary and benefits expense
110,973

 
93,689

 
211,513

 
295,604

Repossession expense
55,470

 
45,648

 
114,296

 
94,079

Other operating costs
86,985

 
71,889

 
172,998

 
139,991

Total operating expenses
253,428

 
211,226

 
498,807

 
529,674

Income before income taxes
446,694

 
390,124

 
877,370

 
519,631

Income tax expense
161,230

 
143,643

 
302,656

 
191,684

Net income
$
285,464

 
$
246,481

 
$
574,714

 
$
327,947

 
 
 
 
 
 
 
 
Net income per common share (basic)
$
0.80

 
$
0.71

 
$
1.63

 
$
0.94

Net income per common share (diluted)
$
0.79

 
$
0.69

 
$
1.61

 
$
0.92

Dividends declared per common share
$
—

 
$
0.15

 
$
—

 
$
0.15

Weighted average common shares (basic)
355,091,818

 
348,826,897

 
352,272,552

 
348,465,666

Weighted average common shares (diluted)
359,193,738

 
356,381,921

 
355,932,481

 
356,008,288






7


Table 3: Other Financial Information
 
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 


2015
 
2014
 
2015
 
2014
Ratios
(Unaudited, Dollars in thousands)
 
Yield on individually acquired retail installment contracts
17.6
 %
 
17.6
%
 
17.4
 %
 
17.6
%
 
Yield on purchased receivables portfolios
13.7
 %
 
14.8
%
 
13.9
 %
 
15.3
%
 
Yield on receivables from dealers
4.7
 %
 
3.9
%
 
4.9
 %
 
4.0
%
 
Yield on personal loans (1)
20.4
 %
 
25.2
%
 
20.7
 %
 
26.2
%
 
Yield on earning assets (2)
15.6
 %
 
16.0
%
 
15.4
 %
 
16.3
%
 
Cost of debt (3)
2.0
 %
 
2.0
%
 
2.0
 %
 
2.0
%
 
Net interest margin (4)
13.9
 %
 
14.3
%
 
13.7
 %
 
14.5
%
 
Expense ratio (5)
2.1
 %
 
2.3
%
 
2.2
 %
 
3.0
%
 
Return on average assets (6)
3.2
 %
 
3.4
%
 
3.4
 %
 
2.3
%
 
Return on average equity (7)
28.2
 %
 
33.0
%
 
29.6
 %
 
22.6
%
 
Net charge-off ratio on individually acquired retail installment contracts (8)
4.5
 %
 
5.2
%
 
5.3
 %
 
5.7
%
 
Net charge-off ratio on purchased receivables portfolios (8)
(3.3
)%
 
4.3
%
 
(2.2
)%
 
4.9
%
 
Net charge-off ratio on personal loans (8)
16.3
 %
 
18.1
%
 
16.9
 %
 
15.6
%
 
Net charge-off ratio (8)
5.3
 %
 
5.8
%
 
6.0
 %
 
6.1
%
 
Delinquency ratio on individually acquired retail installment contracts, end of period (9)
3.3
 %
 
3.4
%
 
3.3
 %
 
3.4
%
 
Delinquency ratio on personal loans, end of period (9)
6.8
 %
 
8.2
%
 
6.8
 %
 
8.2
%
 
Delinquency ratio, end of period (9)
3.6
 %
 
3.8
%
 
3.6
 %
 
3.8
%
 
Tangible common equity to tangible assets (10)
11.5
 %
 
10.0
%
 
11.5
 %
 
10.0
%
 
Common stock dividend payout ratio (11)
—

 
21.2
%
 
—

 
16.0
%
 
Allowance ratio (12)
12.4
 %
 
11.4
%
 
12.4
 %
 
11.4
%
 
 
 
 
 
 
 
 
 
Other Financial Information
 
 
 
 
 
 
 
 
Charge-offs, net of recoveries, on individually acquired retail installment contracts
$
306,889

 
$
303,326

 
$
690,546

 
$
648,114

 
Charge-offs, net of recoveries, on purchased receivables portfolios
(5,116
)
 
15,320

 
(7,666
)
 
38,843

 
Charge-offs, net of recoveries, on unsecured consumer loans
89,261

 
60,448

 
182,746

 
98,737

 
Charge-offs, net of recoveries, on capital leases
7,838

 
—

 
8,021

 
—

 
Total charge-offs, net of recoveries
$
398,872

 
$
379,094

 
$
873,647

 
$
785,694

 
End of period Individually acquired retail installment contracts Delinquent principal over 60 days
$
869,190

 
$
799,455

 
$
869,190

 
$
799,455

 
End of period Personal loans Delinquent principal over 60 days
$
153,485

 
$
119,443

 
$
153,485

 
$
119,443

 
End of period Delinquent principal over 60 days
$
1,052,561

 
$
1,016,020

 
$
1,052,561

 
$
1,016,020

 
End of period assets covered by allowance for credit losses
$
28,507,008

 
$
25,210,483

 
$
28,507,008

 
$
25,210,483

 
End of period Gross finance receivables and loans held for investment
$
29,020,270

 
$
26,483,290

 
$
29,020,270

 
$
26,483,290

 
End of period Gross finance receivables, loans, and leases held for investment
$
34,878,554

 
$
30,545,276

 
$
34,878,554

 
$
30,545,276

 
Average Gross individually acquired retail installment contracts
$
27,000,474

 
$
23,372,480

 
$
26,117,672

 
$
22,824,981

 
Average Gross purchased receivables portfolios
612,821

 
1,416,163

 
689,472

 
1,591,711

 
Average Gross receivables from dealers
99,369

 
130,769

 
100,690

 
129,579

 
Average Gross personal loans
2,184,577

 
1,333,612

 
2,162,490

 
1,267,853

 
Average Gross capital leases
136,973

 
10,139

 
124,045

 
5,794

 
Average Gross finance receivables, loans and capital leases
$
30,034,214

 
$
26,263,163

 
$
29,194,369

 
$
25,819,918

 
Average Gross finance receivables, loans, and leases
$
35,965,910

 
$
30,086,959

 
$
35,048,586

 
$
29,136,572

 
Average Managed assets
$
48,113,052

 
$
37,152,056

 
$
46,266,080

 
$
35,183,237

 
Average Total assets
$
35,188,090

 
$
29,306,142

 
$
34,212,891

 
$
28,525,476

 
Average Debt
$
29,977,311

 
$
25,852,175

 
$
29,242,830

 
$
25,190,609

 
Average Total equity
$
4,056,174

 
$
2,988,213

 
$
3,884,544

 
$
2,897,741




8


(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, net of recoveries, to average balance of the respective portfolio
(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*
(10)
“Tangible common equity to tangible assets" is defined as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets (for a reconciliation from GAAP to this non-GAAP measure, see “Reconciliation of Non-GAAP Measures” on Page 14 of this release)
(11)
“Common stock dividend payout ratio” is defined as the ratio of Dividends declared per share of common stock to Earnings per share
(12)
“Allowance ratio” is defined as the ratio of Allowance for credit losses to End of period assets covered by allowance for credit losses*
*Ratio excludes receivables held for sale








9


Table 4: Credit Quality

Amounts as of and for the three and six months ended June 30, 2015 are as follows:
(Dollars in thousands)
 
Three Months Ended June 30, 2015
 
Retail Installment
Contracts
Acquired
Individually
 
Personal Loans
Credit loss allowance — beginning of period
$
2,822,712

 
$
352,878

Provision for credit losses
613,823

 
121,118

Charge-offs
(835,283
)
 
(97,218
)
Recoveries
528,394

 
7,957

Credit loss allowance — end of period
$
3,129,646

 
$
384,735

 
 
 
 
Net charge-offs
$
306,889

 
$
89,261

Average unpaid principal balance (UPB)
27,000,474

 
2,184,577

Charge-off ratio
4.5
%
 
16.3
%

 
Six Months Ended June 30, 2015
 
Retail Installment
Contracts
Acquired
Individually
 
Personal Loans
Credit loss allowance — beginning of period
$
2,726,338

 
$
348,660

Provision for credit losses
1,120,971

 
218,821

Charge-offs
(1,762,276
)
 
(196,908
)
Recoveries
1,071,730

 
14,162

Transfers to held for sale
(27,117
)
 
—

Credit loss allowance — end of period
$
3,129,646

 
$
384,735

 
 
 
 
Net charge-offs
$
690,546

 
$
182,746

Average unpaid principal balance (UPB)
26,117,672

 
2,162,490

Charge-off ratio
5.3
%
 
16.9
%

 
Retail Installment Contracts
Acquired Individually
 
Personal
Loans
Principal, 31-60 days past due
$
2,010,352

 
7.7
%
 
$
57,285

 
2.5
%
Delinquent principal over 60 days
869,190

 
3.3
%
 
153,485

 
6.8
%
Total delinquent principal
$
2,879,542

 
11.1
%
 
$
210,770

 
9.3
%


10


Table 5: Originations
 
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
June 30, 2015
 
June 30, 2014
 
June 30, 2015
 
June 30, 2014
 
March 31, 2015
Retained Originations
(Dollars in thousands)
Retail installment contracts
$
4,765,800

 
$
3,466,983

 
$
9,054,701

 
$
7,643,978

 
$
4,791,581

Average APR
17.2
%
 
15.0
%
 
17.6
%
 
15.6
%
 
16.9
%
Discount
2.5
%
 
3.7
%
 
3.1
%
 
3.5
%
 
3.4
%
 
 
 
 
 
 
 
 
 
 
Personal loans
$
257,915

 
$
262,617

 
$
424,407

 
$
370,519

 
$
166,492

Average APR
19.4
%
 
20.0
%
 
18.9
%
 
20.2
%
 
18.1
%
Discount
—

 
—

 
 
 
—

 
—

 
 
 
 
 
 
 
 
 
 
Receivables from dealers
$
—

 
$
17,806

 
$
—

 
$
32,629

 
$
—

Average APR
—

 
3.8
%
 
—

 
3.5
%
 
—

Discount
—

 
—

 
 
 
—

 
—

 
 
 
 
 
 
 
 
 
 
Leased vehicles
$
1,424,308

 
$
889,381

 
$
2,554,423

 
$
2,101,380

 
$
1,130,115

 
 
 
 
 
 
 
 
 
 
Capital leases
$
8,073

 
$
16,527

 
$
63,803

 
$
19,573

 
$
55,730

Total originations retained
$
6,456,096

 
$
4,653,314

 
$
12,097,334

 
$
10,168,079

 
$
6,143,918

 
 
 
 
 
 
 
 
 
 
Sold Originations1 
Retail installment contracts
$
927,586

 
$
1,059,718

 
$
2,234,410

 
$
2,495,359

 
$
804,144

Average APR
4.3
%
 
4.1
%
 
5.1
%
 
4.3
%
 
4.7
%
 
 
 
 
 
 
 
 
 
 
Leased vehicles
$
—

 
$
389,657

 
$
—

 
$
389,657

 
$
—

Total originations sold
$
927,586

 
$
1,449,375

 
$
2,234,410

 
$
2,885,016

 
$
804,144

 
 
 
 
 
 
 
 
 
 
Total SCUSA originations
$
7,383,682

 
$
6,102,689

 
$
14,331,744

 
$
13,053,095

 
$
6,948,062

 
 
 
 
 
 
 
 
 
 
Facilitated Originations
 
 
 
 
 
 
 
 
 
Receivables from dealers
$
—

 
$
108,759

 
$
—

 
$
253,512

 
$
—

Leased vehicles
228,572

 
486,446

 
632,471

 
732,114

 
403,899

Total originations facilitated for affiliates
$
228,572

 
$
595,205

 
$
632,471

 
$
985,626

 
$
403,899

 
 
 
 
 
 
 
 
 
 
Total Originations
$
7,612,254

 
$
6,697,894

 
$
14,964,215

 
$
14,038,721

 
$
7,351,961

















1Only includes assets both originated and sold in the period. Total asset sales for the period are shown on page 12.

11


Table 6: Asset Sales

Asset sales may include assets originated in prior periods.
 
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
June 30, 2015
 
June 30, 2014
 
June 30, 2015
 
June 30, 2014
 
March 31, 2015
 
(Dollars in thousands)
Asset Sales
 
 
 
 
 
 
 
 
 
Retail installment contracts
$
2,016,675

 
$
1,384,174

 
$
2,935,753

 
$
3,069,898

 
$
919,078

Average APR
5.6
%
 
4.3
%
 
5.3
%
 
5.0
%
 
4.7
%
 
 
 
 
 
 
 
 
 
 
Leased vehicles
$
755,624

 
$
369,114

 
$
1,316,958

 
$
369,114

 
$
561,334

Total asset sales
$
2,772,299

 
$
1,753,288

 
$
4,252,711

 
$
3,439,012

 
$
1,480,412



12


Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted discount as of June 30, 2015, and December 31, 2014, are as follows:
 
June 30, 2015
 
December 31, 2014
 
(Dollars in thousands)
Retail installment contracts
$
26,540,938

 
$
25,401,461

Average APR
16.9
%
 
16.0
%
Discount
2.3
%
 
2.1
%
 
 
 
 
Personal loans
$
2,261,726

 
$
2,128,769

Average APR
22.8
%
 
23.1
%
Discount
0.1
%
 
0.1
%
 
 
 
 
Receivables from dealers
$
91,612

 
$
100,164

Average APR
4.3
%
 
4.3
%
Discount
—

 
—

 
 
 
 
Leased vehicles
$
5,858,284

 
$
5,504,467

 
 
 
 
Capital leases
$
125,994

 
$
91,350



13


Table 8: Reconciliation of Non-GAAP Measures

 
 
June 30, 2015
 
June 30, 2014
 
 
(Dollars in thousands, except per share data)
Total equity
 
$
4,245,450

 
$
3,102,258

  Deduct: Goodwill and intangibles
 
127,698

 
127,693

Tangible common equity
 
$
4,117,752

 
$
2,974,565

 
 
 
 
 
Total assets
 
$
36,039,919

 
$
29,732,396

  Deduct: Goodwill and intangibles
 
127,698

 
127,693

Tangible assets
 
$
35,912,221

 
$
29,604,703

 
 
 
 
 
Equity to assets ratio
 
11.8
%
 
10.4
%
Tangible common equity to tangible assets
 
11.5
%
 
10.0
%

14
Santander Consumer USA Holdings Inc. 2Q15 Company Update 07.30.2015

 
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 which 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 SEC. Among the factors that could cause our financial performance to differ materially from that suggested by the forward-looking statements are: (a) we operate in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect our business; (b) adverse economic conditions in the United States and worldwide may negatively impact our results; (c) our business could suffer if our access to funding is reduced; (d) we face significant risks implementing our growth strategy, some of which are outside our control; (e) our agreement with FCA US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (f) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (g) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (h) loss of our key management or other personnel, or an inability to attract such management and personnel, could negatively impact our business; (i) we are subject to certain regulations, including oversight by the Office of the Comptroller of the Currency, the CFPB, the European Central Bank, and the Federal Reserve, which oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (j) future changes in our relationship with Santander 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 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. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. 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 SECOND QUARTER HIGHLIGHTS

 
4 ▪ Q2 2015 net income of $285.5 million, or $0.79 per diluted common share, resulting in ROE and ROA of 28.2% and 3.2%, respectively ▪ QoQ decrease in net income given provision timing, offset by gains on asset sales ▪ YoY increase attributable to growth in average portfolio ▪ Net finance and other interest income increased 16% to $1.3 billion, driven by a 20% year-over-year growth in the average portfolio ▪ Strong capital base, TCE/TA of 11.5% ▪ Retention of additional capital leading to a lower ROE ▪ Current portfolio performance in line with expectations and consistent with retained mix and typical seasonal patterns ▪ Net charge-off ratio of 5.3%, positively impacted by asset and deficiency sales; excluding sales, credit performance is slightly better year over year ▪ Seasonally lower in the first half of the year; typical seasonal increase expected in the second half ▪ Allowance ratio1 of 12.4%, primarily driven by seasonality ▪ YoY increase driven by larger held for sale portfolio removing lower coverage assets from calculation ▪ Stable balance among balance sheet, provision, loss and yield ▪ Total originations and asset sales of $7.6 billion and $2.8 billion, respectively ▪ Strong demand for assets originated by SCUSA, including: ▪ $995 million in sales through monthly flow programs ▪ $756 million2 lease sale ▪ Prime asset sale of $253 million through a new relationship ▪ Bankruptcy and deficiency sales of charged-off assets realizing $66 million in proceeds ▪ Continued access to liquidity across multiple sources demonstrating quality of the platform (largest volume retail auto issuer since 20103) ▪ $2.7 billion in total transactions from SDART securitization platform4 ▪ $1.1 billion transaction from DRIVE securitization platform5 ▪ $732 million transaction from CCART securitization platform ▪ $1.5 billion of advances on new and existing private term amortizing and revolving facilities ▪ Q2 2015 servicing fee income of $28 million, driven by the growth in the portfolio of loans and leases serviced for others to $13.1 billion ▪ Remain focused on optimizing mix between higher margin retained versus sold assets serviced for others ▪ Total operating expenses up 20% to $253.4 million YoY driven by a 30% growth in average managed assets ▪ Seasonally lower in the first half of the year; typical seasonal increase expected in the second half ▪ Expense ratio of 2.1% • • Focused on balance sheet optimization, risk-adjusted returns and performance through cycles • Leveraging history of big bank ownership and compliance culture • Dynamic regulatory environment creating barrier to entry benefiting stronger industry players • Resources committed to meet regulatory expectations • Enhanced three lines of defense framework Robust Financial Performance Quality Originations & Asset Sales Serviced for Others Platform Stable Credit Performance Sound Risk Management & Compliance Capital Markets Expertise 1 Allowance ratio excludes purchased receivables portfolio and finance receivables held for sale 2 Depreciated net capitalized cost 3 As of June 2015 2Q15: HIGHLIGHTS 4 Net bonds sold of $2.4 billion 5 Net bonds sold of $1.0 billion

 
5 1 As defined in public filings 2 Expense ratio is defined as the ratio of Operating expenses to Average managed assets 3 Retained portfolio only 4 Non-GAAP measure; see reconciliation in Appendix Three Months Ended June 30, 2015 March 31, 2015 June 30, 2014 2Q15 vs. 1Q15 2Q15 vs. 2Q14 Yield on Earning Assets1 (%) 15.6% 15.2% 16.0% 42 bps (42) bps Cost of Debt (%) 2.0% 2.1% 2.0% (7) bps 2 bps Net Interest Margin1 (%) 13.9% 13.4% 14.3% 49 bps (39) bps Expense Ratio2 (%) 2.1% 2.2% 2.3% (8) bps (17) bps Return on Average Assets (%) 3.2% 3.5% 3.4% (22) bps (12) bps Return on Average Equity (%) 28.2% 31.2% 33.0% (308) bps (484) bps Retail Installment Contracts Average APR3 (%) 16.9% 16.6% 16.3% 26 bps 56 bps Diluted EPS ($) $0.79 $0.81 $0.69 $(0.02) $0.10 End of Period June 30, 2015 March 31, 2015 June 30, 2014 2Q15 vs. 1Q15 2Q15 vs. 2Q14 Tangible Common Equity to Tangible Assets4 (%) 11.5% 10.8% 10.0% 69 bps 142 bps 2Q15: OPERATING METRICS AND DRIVERS Finance and Other Interest Income ▪ Yield and NIM up QoQ due to mix of retained portfolio toward higher margin assets as evidenced by the increase in average APR on retail installment contracts to 16.9% ▪ YoY decrease in yield and NIM primarily driven by growth in leases and personal installment loans as a percentage of the portfolio Expenses ▪ Lower expenses in the first half of the year due to better credit performance, expecting seasonal increase in the second half ▪ 20% YoY increase driven by 30% growth in average managed assets Profit ▪ Driven by provision timing due to retained volume and mix towards higher margin assets, offset by gains on asset sales in the quarter ▪ YoY increase driven by growth in average portfolio Capital ▪ Retention of additional capital leading to increased TCE/TA ratio and lower ROE compared to prior quarter and Q2 2014

 
6 1 Excludes purchased receivables portfolios and finance receivables held for sale 2 Excluding lease Three Months Ended (Dollars in Thousands) June 30, 2015 March 31, 2015 June 30, 2014 2Q15 vs. 1Q15 2Q15 vs. 2Q14 Net Charge-Offs ($) $398,872 $474,775 $379,094 $(75,903) $19,778 Net Charge-Off Ratio (%) 5.3% 6.7% 5.8% (136) bps (46) bps Provision for Credit Losses ($) $738,735 $605,981 $589,136 $132,754 $149,599 End of Period June 30, 2015 March 31, 2015 June 30, 2014 2Q15 vs. 1Q15 2Q15 vs. 2Q14 Delinquency Ratio (%) 3.6% 3.2% 3.8% 41 bps (21) bps Credit Loss Allowance1 ($) $3,530,919 $3,191,902 $2,882,464 $339,017 $648,455 Allowance Ratio1 (%) 12.4% 11.5% 11.4% 93 bps 95 bps 2Q15: CREDIT METRICS AND DRIVERS Net Charge-Offs ▪ Net charge-offs and ratio down seasonally QoQ as losses tend to trail delinquencies; positively impacted by asset and deficiency sales ▪ Excluding sales, YoY credit performance is stable Delinquency ▪ Slight increase in QoQ delinquencies expected given portfolio seasonal trends ▪ YoY decrease due to better performing loans despite a higher margin portfolio Provisions ▪ QoQ provision increase of $133 million driven by seasonality of the forward-looking model from second quarter than from first ▪ YoY increase driven by 34% increase in retained volume2 as well as the mix of higher margin retained assets (reflected in slide 22) Allowance Ratio ▪ QoQ increase driven by seasonality ▪ YoY increase driven primarily by increase in held for sale portfolio leading to lower coverage assets being removed from allowance calculation, as well as a shift in portfolio mix towards higher margin assets

 
7 BUSINESS AND STRATEGY

 
8 ▪ ▪ Jason Kulas, former President and Chief Financial Officer, appointed Chief Executive Officer ▪ Jason Grubb, Chief Operating Officer of Originations, appointed President ▪ Jennifer Davis, Chief Accounting Officer, appointed to serve as Interim Chief Financial Officer Executive Leadership Continuity ENHANCED GOVERNANCE STRUCTURE New Board of Directors Elected1 1 As of July 15, 2015 annual shareholders meeting * Denotes new board member After Thomas Dundon's decision to step down as Chairman and CEO in early July, SCUSA's Board of Directors selected Jason Kulas to replace him as CEO, in line with SCUSA's previously approved succession plans. Blythe Masters* Chair (Independent) Eldridge Burns Secretary Stephen Ferriss (Independent) Jason Kulas* Jose Garcia Cantera* Thomas Dundon Victor Hill* Monica Lopez-Monis Gallego* Javier Maldonado* Robert McCarthy* (Independent) Gerald Plush William Rainer* (Independent) Wolfgang Schoellkopf (Independent) Heidi Ueberroth (Independent)

 
9 SCUSA's fundamentals are strong, and the Company is focused on maintaining disciplined underwriting standards to deliver strong returns, robust profitability and value to its shareholders 1 As of June 30, 2015. On July 3, 2015, SHUSA elected to exercise the right to purchase shares of SCUSA common stock owned by DDFS LLC, an entity owned by former Chairman and Chief Executive Officer, Tom Dundon, subject to regulatory approval and applicable law 2 Chrysler Capital is a dba of SCUSA ▪ Santander Consumer USA Holdings Inc. (NYSE: SC) ("SCUSA") is approximately 59.0% owned by Santander Holdings USA, Inc., a wholly-owned subsidiary of Banco Santander, S.A. (NYSE:SAN)1 ▪ SCUSA is a full-service, technology-driven consumer finance company focused on consumer lending, and third-party servicing ▪ Historically focused on nonprime markets; established and continued presence in prime and lease ▪ Approximately 4,900 full-time, 400 part-time and 900 vendor-based employees across multiple locations in the U.S. and the Caribbean Overview ▪ Our strategy is to continue leveraging our efficient, scalable infrastructure and data to underwrite, originate and service profitable assets ▪ Focus on optimizing the mix of retained assets vs. assets sold and serviced for others ▪ Continued presence in prime markets through Chrysler Capital2 ▪ Efficient funding through third parties and Santander ▪ Continued focus on compliance excellence Strategy SCUSA

 
10 ▪ Originate loans through select independent dealers and OEMs, and leases through FCA US LLC ("Chrysler") ▪ Substantial dealer network throughout the United States ▪ Originate and refinance loans via SCUSA's branded tech-enabled platform, RoadLoans.com Vehicle Finance Direct Auto Finance Indirect Auto Finance and OEM Relationships ▪ Finance third-party receivables for revolving and installment consumer products Personal Lending ▪ Proprietary systems leverage SCUSA's robust database and knowledge of consumer behavior across the full credit spectrum, and enables SCUSA to effectively price, manage and monitor risk ▪ Scalability evidenced by acquisitions and/or conversions and originations of more than $115 billion of assets since 2008 ▪ Capital-light, higher-ROE serviced for others platform Origination & Servicing Platforms SCUSA TODAY

 
11 Chrysler Capital Overview Chrysler Relationship Highlights ▪ 10-year private-label agreement, effective May 1, 2013 ▪ Substantial dealer network in the U.S. ▪ Products include: retail loans, lease and dealer lending ▪ Chrysler subvention dollars enhance access to prime and nonprime customers ▪ Ability to sell higher quality loans with lower margins and retain servicing increases servicing revenue ▪ Residual risk-sharing agreement with Chrysler for leases The optimal success, per the terms of the agreement between Chrysler and SCUSA, is dependent upon the ability of both parties to meet and uphold certain agreed-upon standards Since its May 1, 2013, launch, Chrysler Capital has originated approximately $24.4 billion in retail loans and $9.4 billion in leases, and facilitated the origination of approximately $3.0 billion in leases and dealer loans for an affiliate2 Chrysler interfaces with SCUSA in a manner consistent with comparable OEMs' treatment of their captive finance providers SCUSA attempts to meet penetration and approval rate targets, and maintains service-level standards Chrysler Sales (units in millions) 2010 2011 2012 2013 2014 1.1 1.4 1.7 1.8 2.114% CAG R 1 Company filings; total sales 2 As of June 30, 2015 1 CHRYSLER CAPITAL

 
12SERVICED FOR OTHERS (SFO) STRATEGY Runoff Over Period Asset Sales 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 $ (M illi on s) 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Runoff Ending Balance $13,121 $4,537 $1,686 $1,753 $2,431 $1,137 $1,480 $2,772 $2,675 SFO Composition at 6/30/15 Retail Installment 62% Leases 29% RV/Marine 9% Total 100% 103% CAGR ▪ In addition to SCUSA's strategy to optimize retained balance sheet assets, the Company continues to develop a higher- ROE, capital-light serviced for others platform, leading to a stable fee income stream ▪ Servicing fee income in Q2 2015 increased to $28.0 million from $4.5 million in Q4 2013 1 Runoff over period includes assets that have charged off, prepaid, paid off, etc. from 12/31/2013 to 06/30/2015 1 Highlights

 
13 Gross Outstanding Balances ($ in billions) Revolving Installment Total Adjusted Yield (Right Axis) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 39.7% 33.2% 30.2% 30.9% 29.4% 1 Defined as personal lending interest income and fees, commissions and other to average gross personal loans 2 FICO at time of application Revolving2 592 589 585 582 577 Installment 679 678 680 672 678 1 FICO Adjusted yields are strong and reflect mix shift 57% 41% 62% 72% 63% 43% 59% 38% 28% 37% $2.3 $2.1 $2.1 $1.4 $1.6 PERSONAL LENDING

 
14 The Company leverages history of big bank ownership and compliance culture Compliance Culture Governance Technology Compliance Staffing and Training Complaints Monitoring and Testing Policies and Procedures ▪ CEO tone from the top ▪ Bank-affiliated for 15 years ▪ Three lines of defense ▪ Compliance involved at all levels ▪ Integrated into risk framework ▪ Updated annually and located in centralized intranet for ease of associate access ▪ Compliance monitoring and testing based on Comprehensive Risk Assessments ▪ Escalated complaint process ▪ Expansion of vendor oversight ▪ Dedicated regulatory liaison team ▪ Mandatory annual regulatory training delivered to all associates, management and the Board ▪ Technology enhances ability to adhere to various state and federal regulations KEY COMPLIANCE PROGRAM ELEMENTS

 
15 RESULTS

 
16 $211 $202 $230 $245 $253 Expenses and Expense Ratio ($ in millions) Income ($ in millions) ▪ Q2 2015 net income of $285.5 million, representing 16% year-over-year growth ▪ $0.79 per diluted common share and ROE and ROA of 28.2% and 3.2%, respectively ▪ Q2 2015 net finance and other interest income increased $176 million or 16% from Q2 2014, driven by the 20% year- over-year increase in the average portfolio ▪ SCUSA continues to demonstrate disciplined expense management, evidencing continued ability to scale despite increases in regulatory and compliance costs ▪ Total operating expenses increased 20% to $253 million in Q2 2015 from Q2 2014 driven by a 30% year-over-year growth in average managed assets Highlights Net Finance and Other Interest Income Net Income Net Interest Margin Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 $1,076 $1,114 $1,073 $1,148 $1,251 $246 $191 $247 $289 $285 14.3% 14.1% 13.1% 13.4% 13.9% Average Managed Assets Operating Expenses Expense Ratio Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 $37,152 $40,397 $42,676 $44,782 $48,113 2.3% 2.0% 2.2% 2.2% 2.1% INCOME & OPERATING EXPENSES

 
17 Provision Expense and Net Charge-offs ($ in millions)Delinquency Trends 31-60 Day Delinquency 61+ Day Delinquency Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 7.8% 8.5% 9.0% 6.6% 7.3% 3.8% 4.1% 4.5% 3.2% 3.6% Provision Expense Net Charge-offs Net Charge-off Ratio Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 $589 $770 $560 $606 $739 $379 $565 $591 $475 $399 5.8% 8.4% 8.6% 6.7% 5.3% ▪ Consistent with expected seasonal patterns, the net charge-off ratio in Q2 2015 decreased from the previous quarter ▪ Net charge-off ratio of 5.3% in Q2 2015 decreased from 5.8% in the prior year second quarter driven primarily by a positive impact from bankruptcy sales ▪ Provision expense increased quarter-over-quarter primarily due to seasonality of the forward-looking model capturing seasonally worse performance looking forward from second quarter than from first, as well as higher retained asset balances and the mix of retained assets during the quarter ▪ Year-over-year increase driven by higher asset balances as well as the mix of retained assets Highlights CREDIT

 
18 1 Unpaid principal balance; does not include loans owned by SCUSA serviced by others 2 Includes capital leases 3 Securitizations sold through the residual are accounted for as sales 4 Depreciated net capitalized cost SCUSA retains servicing on loans sold to third parties and affiliates or facilitated for affiliates, through bulk sales, flow programs and securitizations3 Originations (in millions) Total Serviced Portfolio1 (in millions) Three Months Ended June 30, 2014 March 31, 2015 June 30, 2015 Retail Installment Contracts $ 4,527 $ 5,596 $ 5,693 Personal Loans 263 166 258 Receivables from Dealers 18 — — Leases2 1,296 1,186 1,432 Subtotal - SCUSA $ 6,104 $ 6,948 $ 7,383 Originations for an affiliate 595 404 229 Total Originations $ 6,699 $ 7,352 $ 7,612 Owned and Serviced Serviced for Others June 30, 2014 March 31, 2015 June 30, 2015 $29,110 $33,089 $34,080 $7,977 $11,221 $13,121$37,087 $44,310 $47,201 27% ORIGINATION TRENDS ▪ Produced strong originations during Q2 2015, originating and facilitating the origination of $7.6 billion in loans and leases ▪ Consistent with capital-light, higher ROE servicing strategy, the serviced for others portfolio grew 17% from prior quarter, driven by $995 million in monthly retail loan flow sales, a lease sale of $756 million4, a $253 million prime asset sale and a $732 million CCART transaction Highlights

 
19 Diverse Funding Sources ($ in billions) Santander and Related Subsidiaries Third-Party Revolving Privately Issued Amortizing Notes Public Securitizations 4.8 4.4 4.8 4.3 11.8 7.3 11.6 6.0 6.2 6.2 6.8 6.8 11.8 11.8 13.6 13.6 Santander Drive Auto Receivables Trust (SDART) - ~590 weighted average FICO3. DRIVE - Re-launched platform in 1Q15 to further diversify funding sources and to accommodate strong investor demand. Assets historically funded via warehouses/term amortizing facilities. ~550 weighted average FICO. 1 Includes both SEC registered and 144A 2 As of June 2015 3 Reflects weighted average FICO of more recent transactions 4 Net bonds sold of $2.4 billion Residual Interest Retained (SC retains first loss position) Residual Interest Sold Chrysler Capital Auto Receivables Trust (CCART) - Designed to efficiently fund Chrysler near-prime assets. SCUSA continues to service these assets earning stable servicing fee income. ~705 weighted average FICO. ▪ SDART Platform - $2.7 billion4 ▪ DRIVE 2015-B - $1.1 billion5 ▪ $1.5 billion of advances on new and existing private term amortizing and revolving facilities Efficient ABS Platforms $36.7 $30.6 ▪ Flow Programs - $995 million6 ▪ Lease Sale - $756 million7 ▪ CCART 2015-A - $732 million Committed Utilized ▪ Prime Loan Sale - $253 million ▪ Bankruptcy Sales - $66 million in proceeds Committed Utilized $34.6 $29.7 June 30, 2015 March 31, 2015 ▪ 75 primary issuances historically1 ▪ Largest volume retail auto issuer since 20102 ▪ SCUSA-issued bonds have consistently performed through cycles 5 Net bonds sold of $1.0 billion 6 Monthly retail loan flow programs 7 Depreciated net capitalized cost FUNDING & LIQUIDITY Balance Sheet Transactions Sold and Serviced for Others

 
20 APPENDIX FINANCIAL AND SUPPLEMENTAL INFORMATION

 
21 Other Subsidiaries 100% Ownership Santander Holdings USA, Inc. ("SHUSA") 59.0% Ownership2 Santander Consumer USA Holdings Inc. ("SCUSA") Santander Bank, N.A. Other Subsidiaries 9.8% Ownership (11.3% Beneficial Ownership)2 DDFS LLC and Tom Dundon 0.1% Ownership (0.4% Beneficial Ownership)1 31.1% Ownership Other Management Public Shareholders **Ownership percentages are approximates as of June 30, 2015 1 Beneficial ownership includes options currently exercisable or exercisable within 60 days of June 30, 2015 2 On July 3, 2015, SHUSA elected to exercise the right to purchase shares of SCUSA common stock owned by DDFS LLC, an entity owned by former Chairman and Chief Executive Officer, Thomas Dundon, subject to regulatory approval and applicable law Banco Santander, S.A. Spain COMPANY ORGANIZATION

 
22 1 Held for investment; excludes prime assets held for sale ($1.6 billion retail installment contracts held for sale as of June 30, 2015); percentages may not sum to 100% due to rounding Retail Installment Contracts1 Personal Loans Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 40 35 30 25 20 15 10 >640 639-600 599-540 <540 FICO 20.6% 20.3% 32.3% 26.7% 19.2% 20.7% 33.2% 26.9% 20.5% 20.5% 32.6% 26.4% 17.2% 20.5% 34.2% 28.1% 14.7% 20.5% 35.8% 29.0% Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 60 50 40 30 20 10 0 >640 639-600 599-540 <540 FICO 45.6% 23.1% 21.3% 10.0% 54.0% 22.1% 20.7% 3.2% 55.2% 21.4% 20.1% 3.3% 56.5% 21.1% 19.2% 3.2% 56.6% 21.4% 18.7% 3.3% CREDIT PROFILES 2015 mix shift toward higher margin assets in sub-600 FICO retail installment contract buckets, consistent with balance sheet optimization strategy. Higher margin assets require more upfront provision, but are critical to long-term profitability.

 
23 Q2 Allowance Walk Total Company excluding operating lease & purchased receivables portfolios Beginning of Period Q2 CoverageAllowance% UPB EOP Gross Unpaid Principal Balance 27,868.5 3,191.9 11.5% Total Company excluding operating lease & purchased receivables portfolios End of Period Q21 28,507.0 3,530.9 12.4% 1 Quarter-end balance of loans originated during the quarter; the initial coverage for new loans is lower than the overall portfolio as the loans have not yet seasoned and developed delinquency 2 Held for sale as of June 30 includes $782 million of loans associated with the SDART residual sale, which settled on July 6. These loans are more seasoned than SCUSA's historical held-for-sale portfolio 3 Includes performing loan paydowns, which may not significantly alter future unit loss forecast Individually acquired retail installment contracts Beginning of Period Q2 25,507.0 2,822.7 11.1% New Originations in Q2, net of sales1 3,998.6 347.9 8.7% Net Liquidations3 (2,373.4) (100.4) 4.2% Other - 145.3 End of Period Q2 26,027.7 91.3% 3,129.6 12.0% Seasonality, Performance & Model Inputs Receivables from dealers Personal loans Capital leases Beginning of Period Q2 End of Period Q2 Beginning of Period Q2 End of Period Q2 Beginning of Period Q2 End of Period Q2 102.4 91.6 1.1 1.0 1.1% 1.1% 0.4% 0.3% 2,115.5 2,261.7 352.9 384.7 16.7% 17.0% 7.6% 7.9% 143.6 126.0 15.2 15.6 10.6% 12.4% 0.5% 0.4% Sold & Held For Sale2 (1,104.5) (85.9) 7.8% ($ in millions) LOAN LOSS ALLOWANCE - Q2 2015 91.5%

 
24 (units in millions) Consumer Sentiment Index1 Motor Vehicle Sales1 100 90 80 70 60 50 Ju n-0 7 De c-0 7 Ju n-0 8 De c-0 8 Ju n-0 9 De c-0 9 Ju n-1 0 De c-1 0 Ju n-1 1 De c-1 1 Ju n-1 2 De c-1 2 Ju n-1 3 De c-1 3 Ju n-1 4 De c-1 4 Ju n-1 5 HIGH, 98.1 LOW, 55.3 18 16 14 12 10 8 6 Ju n-0 7 De c-0 7 Ju n-0 8 De c-0 8 Ju n-0 9 De c-0 9 Ju n-1 0 De c-1 0 Ju n-1 1 De c-1 1 Ju n-1 2 De c-1 2 Ju n-1 3 De c-1 3 Ju n-1 4 De c-1 4 Ju n-1 5 HIGH, 17.7 AVERAGE, 13.9 LOW, 9.0 AVERAGE, 74.3 ▪ Consumer sentiment up 3.3% quarter over quarter and up 16.5% year over year ▪ Consumer demand for motor vehicles has remained high 1Source: Bloomberg June 30, 2015 ECONOMIC INDICATORS

 
25 (units in millions) Manheim Index1 60+ Day Delinquency Rates3 1 Manheim, Inc.; Indexed to a basis of 100 at 1995 levels 2 On a mix-, mileage-, and seasonally-adjusted basis 3 Standard & Poor’s Ratings Services (ABS Auto Trust Data – two month lag on data) • Wholesale used vehicle prices2 rose 0.1% in June • Year over year, the Manheim Index is down 0.1% Prime (left scale) Subprime (right scale) 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 6 5 4 3 2 1 Ap r-0 7 Oc t-0 7 Ap r-0 8 Oc t-0 8 Ap r-0 9 Oc t-0 9 Ap r-1 0 Oc t-1 0 Ap r-1 1 Oc t-1 1 Ap r-1 2 Oc t-1 2 Ap r-1 3 Oc t-1 3 Ap r-1 4 Oc t-1 4 Ap r-1 5 130 125 120 115 Ju n-1 1 De c-1 1 Ju n-1 2 De c-1 2 Ju n-1 3 De c-1 3 Ju n-1 4 De c-1 4 Ju n-1 5 Source: Bloomberg 6/2015 123.9 Net Loss Rates3 Prime (left scale) Subprime (right scale) 2.5 2.0 1.5 1.0 0.5 0.0 14 12 10 8 6 4 2 0 Ap r-0 7 Oc t-0 7 Ap r-0 8 Oc t-0 8 Ap r-0 9 Oc t-0 9 Ap r-1 0 Oc t-1 0 Ap r-1 1 Oc t-1 1 Ap r-1 2 Oc t-1 2 Ap r-1 3 Oc t-1 3 Ap r-1 4 Oc t-1 4 Ap r-1 5 CONSUMER FINANCE ENVIRONMENT

 
26 (Unaudited, dollars in thousands, except per share amounts) June 30, 2015 December 31, 2014 Assets Cash and cash equivalents $ 28,886 $ 33,157 Finance receivables held for sale 1,570,416 46,585 Finance receivables held for investment, net 24,778,311 23,915,551 Restricted cash 3,086,229 1,920,857 Accrued interest receivable 394,970 364,676 Leased vehicles, net 5,189,904 4,862,783 Furniture and equipment, net 50,786 41,218 Federal, state and other income taxes receivable 234,944 502,035 Related party tax receivable — 459 Deferred tax asset 5,152 21,244 Goodwill 74,056 74,056 Intangible assets, net 53,642 53,682 Due from affiliates 86,268 102,457 Other assets 486,355 403,416 Total assets $ 36,039,919 $ 32,342,176 Liabilities and Equity Liabilities: Notes payable — credit facilities $ 6,012,337 $ 6,402,327 Notes payable — secured structured financings 20,340,365 17,718,974 Notes payable — related party 4,260,000 3,690,000 Accrued interest payable 21,805 17,432 Accounts payable and accrued expenses 395,990 315,130 Federal, state and other income taxes payable 1,268 319 Deferred tax liabilities, net 556,013 492,303 Due to affiliates 47,295 48,688 Other liabilities 159,396 98,654 Total liabilities 31,794,469 28,783,827 Equity: Common stock, $0.01 par value 3,578 3,490 Additional paid-in capital 1,682,097 1,560,519 Accumulated other comprehensive income (loss), net (5,726) 3,553 Retained earnings 2,565,501 1,990,787 Total stockholders’ equity 4,245,450 3,558,349 Total liabilities and equity $ 36,039,919 $ 32,342,176 CONSOLIDATED BALANCE SHEET

 
27 For the Three Months Ended (Unaudited, dollars in thousands, except per share amounts) June 30,2015 June 30, 2014 Interest on finance receivables and loans $ 1,321,245 $ 1,163,448 Leased vehicle income 355,137 218,938 Other finance and interest income 6,738 874 Total finance and other interest income 1,683,120 1,383,260 Interest expense 150,622 128,314 Leased vehicle expense 281,118 179,135 Net finance and other interest income 1,251,380 1,075,811 Provision for credit losses 738,735 589,136 Net finance and other interest income after provision for credit losses 512,645 486,675 Profit sharing 21,501 24,056 Net finance and other interest income after provision for credit losses and profit sharing 491,144 462,619 Investment gains, net 86,667 21,602 Servicing fee income 28,043 22,099 Fees, commissions, and other 94,268 95,030 Total other income 208,978 138,731 Salary and benefits expense 110,973 93,689 Repossession expense 55,470 45,648 Other operating costs 86,985 71,889 Total operating expenses 253,428 211,226 Income before income taxes 446,694 390,124 Income tax expense 161,230 143,643 Net income $ 285,464 $ 246,481 Net income per common share (basic) $ 0.80 $ 0.71 Net income per common share (diluted) $ 0.79 $ 0.69 Weighted average common shares (basic) 355,091,818 348,826,897 Weighted average common shares (diluted) 359,193,738 356,381,921 CONSOLIDATED INCOME STATEMENT

 
28 (Dollars in thousands, except per share data) June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 Total equity $ 4,245,450 $ 3,850,481 $ 3,558,349 $ 3,303,213 $ 3,102,258 Deduct: Goodwill and intangibles 127,698 127,646 127,738 127,991 127,693 Tangible common equity $ 4,117,752 $ 3,722,835 $ 3,430,611 $ 3,175,222 $ 2,974,565 Total assets $ 36,039,919 $ 34,665,571 $ 32,342,176 $ 30,641,292 $ 29,732,396 Deduct: Goodwill and intangibles 127,698 127,646 127,738 127,991 127,693 Tangible assets $ 35,912,221 $ 34,537,925 $ 32,214,438 $ 30,513,301 $ 29,604,703 Equity to assets ratio 11.8% 11.1% 11.0% 10.8% 10.4% Tangible common equity to tangible assets 11.5% 10.8% 10.6% 10.4% 10.0% RECONCILIATION OF NON-GAAP MEASURES

 

 

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