DALLAS, April 30, 2019 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced net income for the first quarter ended March 31, 2019 ("Q1 2019") of $248 million, or $0.70 per diluted common share.
The Company has declared a cash dividend of $0.20 per share, to be paid on May 20, 2019, to shareholders of record as of the close of business on May 10, 2019.
"Santander Consumer is off to a good start in 2019," said Scott Powell, SC President and CEO, who is also CEO of Santander US. "Our strategy has continued to show results as we increased year-over-year originations for a fifth consecutive quarter. Our overall performance was driven by a sustained focus on operations and dealer experience, as well as the strength of our partnership with Fiat Chrysler."
Juan Carlos Alvarez, SC Chief Financial Officer, added, "We are pleased with our good start to the year supported by solid auction prices, lower TDR balances and disciplined expense management."
Q1 2019 Highlights (variances compared to the first quarter of 2018 ("Q1 2018"), unless otherwise noted):
- Total auto originations of $7.0 billion, up 10%
- Core retail auto loan originations of $2.6 billion, up 14%
- Chrysler Capital loan originations of $2.4 billion, up 23%
- Chrysler Capital lease originations of $2.0 billion, down 6%
- Chrysler average quarterly penetration rate of 31%, up from 28% from the same quarter last year
- Santander Bank, N.A. program originations of $1.0 billion
- Net finance and other interest income of $1.1 billion, up 5%
- 30-59 delinquency ratio of 8.4%, down 50 basis points
- 59-plus delinquency ratio of 4.2%, down 20 basis points
- Retail Installment Contract ("RIC") gross charge-off ratio of 19.5%, up 100 basis points
- Recovery rate of 55.9%, up 90 basis points
- RIC net charge-off ratio of 8.6%, up 30 basis points
- Troubled Debt Restructuring ("TDR") balance of $4.9 billion, down $462 million vs. December 31, 2018
- Return on average assets of 2.2%, down from 2.5%
- $2.9 billion in loan asset-backed securities "ABS"
- Expense ratio of 2.1%, down from 2.4%
- Common equity tier 1 ("CET1") ratio of 15.8%, down from 17.0% vs. March 31, 2018
Net finance and other interest income1 increased 5 percent to $1.13 billion in Q1 2019 from $1.08 billion in Q1 2018, driven by increased loan and lease balances.
SC's serviced for others portfolio of $8.7 billion as of Q1 2019 remained relatively flat versus the prior year quarter. Servicing fee income decreased 9 percent to $24 million in Q1 2019, from $26 million in Q1 2018, driven by the change in the composition of those balances. Fees, commissions and other increased from $85 million in Q1 2018 to $94 million in Q1 2019, driven by origination fees from the SBNA program.
RIC delinquency ratio2 of 4.2 percent in Q1 2019 decreased 20 basis points compared to 4.4 percent in Q1 2018.
RIC net charge-off ratio3 increased to 8.6 percent in Q1 2019 from 8.3 percent in Q1 2018. Provision for credit losses of $551 million in Q1 2019 were up from $510 million the prior year quarter.
Allowance ratio4 decreased 40 basis points, to 11.0 percent at the end of Q1 2019, from 11.4 percent at the end of Q4 2018.
Recorded net investment losses of $67 million in Q1 2019, compared to net investment losses of $87 million in Q1 2018. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio.5
During Q1 2019 SC incurred $291 million of operating expenses, up 1 percent from $288 million in Q1 2018. SC's expense ratio of 2.1 percent for the quarter, down compared to 2.4 percent during the same period last year.
Conference Call Information
SC will host a conference call and webcast to discuss its Q1 2019 results and other general matters at 9:00 a.m. Eastern Time on Tuesday, April 30, 2019. The conference call will be accessible by dialing 888-394-8218 (U.S. domestic), or 323-701-0225 (international), conference ID 2036898. Please join 10 minutes prior to the start of the call. The conference call will also be accessible via live audio webcast through the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com . Choose "Events" and select the information pertaining to the Q1 2019 SC Earnings Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software prior to the call.
For those unable to listen to the live broadcast, a replay of the call will be available on the Company's website or by dialing 844-512-2921 (U.S. domestic), or 412-317-6671 (international), conference ID 2036898, approximately two hours after the conference call. An audio webcast of the call and investor presentation will also be archived on the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com , under "Events".
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as anticipates, believes, can, could, may, predicts, potential, should, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond our control. For additional discussion of these risks, refer to the section entitled Risk Factors and elsewhere in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed by us with the U.S. Securities and Exchange Commission (SEC). Among the factors that could cause the forward-looking statements in this press release and/or our financial performance to differ materially from that suggested by the forward-looking statements are (a) the inherent limitations in internal control over financial reporting; (b) our ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner; (c) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (d) adverse economic conditions in the United States and worldwide may negatively impact our results; (e) our business could suffer if our access to funding is reduced; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (g) unexpected costs and delays in connection with exiting our personal lending business; (h) our agreement with 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; (i) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (j) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (k) loss of our key management or other personnel, or an inability to attract such management and personnel; (l) certain regulations, including but not limited to oversight by the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the European Central Bank, and the Federal Reserve, whose oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (m) future changes in our relationship with SHUSA and Banco Santander that could adversely affect our operations. If one or more of the factors affecting our forward-looking information and statements proves incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution the reader not to place undue reliance on any forward-looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties as new factors emerge from time to time. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
About Santander Consumer USA Holdings Inc.
Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC") is a full-service consumer finance company focused on vehicle finance, third-party servicing and delivering superior service to our more than 2.7 million customers across the full credit spectrum. The company, which began originating retail installment contracts in 1997, had an average managed asset portfolio of approximately $54 billion (as of March 31, 2019), and is headquartered in Dallas. (www.santanderconsumerusa.com )
Table 4: Credit Quality
The activity in the credit loss allowance for individually acquired retail installment contracts for the three months ended March 31, 2019 and 2018 was as follows (Unaudited, Dollar amounts in thousands):
A summary of delinquencies of our individually acquired retail installment contracts as of March 31, 2019 and December 31, 2018 is as follows (Unaudited, Dollar amounts in thousands):
Within the total delinquent principal above, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of March 31, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):
The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of March 31, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):
Table 5: Originations
The Company's originations of individually acquired loans and leases, including revolving loans, average APR, and discount were as follows:
SBNA Originations Program
Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA's behalf. The Company facilitated the purchase of $1 billion and $24 million of retail installment contacts during the three months ended March 31, 2019, and March 31, 2018 respectively.
There were no asset sales for the three months ended March 31, 2019 and December 31, 2018. Please see the bottom of Table 5 for further details regarding the SBNA Originations Program.
Table 7: Ending Portfolio
Ending outstanding balance, average APR and remaining unaccreted dealer discount of our held for investment portfolio as of March 31, 2019, and December 31, 2018, are as follows:
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SOURCE Santander Consumer USA Holdings Inc.