Santander Consumer USA Holdings Inc. Reports Second Quarter 2019 Results and Key Leadership Appointments

Net Income of $368 million and Total Auto Originations of $8.4 billion

Published

DALLAS, July 24, 2019 /PRNewswire/ -- Santander Consumer USA Holdings Inc. (NYSE: SC) ("SC" or the "Company") today announced the Boards of Directors of Santander Holdings USA, Inc. and SC have approved several senior management appointments to further strengthen Santander's US leadership teams.

  • Fahmi Karam, SC's Head of Pricing and Analytics, will succeed Juan Carlos "JC" Alvarez as CFO, effective September 16, 2019. He will continue to lead the Pricing and Analytics group in addition to his new role.
  • Shawn Allgood, currently EVP at Chrysler Capital, succeeds Richard Morrin as Head of Chrysler Capital and Auto Relationships, effective immediately. Morrin has resigned to assume a CEO role with a privately-held company outside of the auto finance industry.
  • Juan Carlos "JC" Alvarez, will become CFO of Santander US and Santander Bank, N.A. ("SBNA"), effective September 16, 2019. Alvarez currently serves as the CFO at SC, a role he has held since 2017. Alvarez succeeds Duke Dayal in his capacity as Santander US CFO.

Management Quotes

"We are pleased with our second quarter results. We reached a mutually beneficial agreement with Fiat Chrysler, we saw strong originations driven by our FCA relationship and Santander Bank program - where we originated almost two billion dollars in loans through SBNA in the quarter, demonstrating the strength in the collaboration between our US platforms," said Scott Powell, SC President and CEO, also CEO of Santander US. "We also made important leadership appointments to further strengthen the SC and US management teams to help take the company into the future. I want to congratulate JC, Fahmi and Shawn and I want to thank Rich Morrin for his many years of service at Santander and Chrysler Capital. We wish him well."

Juan Carlos Alvarez, SC Chief Financial Officer, added, "We delivered another strong quarter with steady credit performance and disciplined expense management. We were also pleased to have announced our plan to repurchase up to $1.1 billion in common stock and the dividend increase to $0.22 from $0.20. This announcement demonstrates our progress toward a more efficient capital base, a longstanding corporate objective."

Fahmi Karam has been appointed CFO of SC in addition to his current leadership position as Head of SC's Pricing and Analytics. He joined SC in September 2015 as Executive Vice President of Strategy and Corporate Development, where he was responsible for overseeing financial planning and analysis, asset acquisitions and sales, and other strategic initiatives. Previously, Karam spent 12 years with J.P. Morgan's investment banking unit. He also held positions at Deloitte in its audit and assurance services.

Shawn Allgood assumes the role of Head of Chrysler Capital and Auto Relationships from his current position as Executive Vice President, where he led consumer underwriting. In his new role, Shawn will be focused on, and responsible for, Chrysler Capital and SC's sales and marketing activities, and its dealer and customer relationships. He joined Santander in April 2017 from Ally Financial Inc., where he held a series of leadership roles with increasing responsibility for nearly three decades, serving most recently as Executive Director for Collections.

Juan Carlos "JC" Alvarez joins Santander US from SC, where he has served as CFO since October 2017. A highly experienced finance professional, Alvarez joined Santander in 1996 and has held roles with increasing responsibility, including Corporate Treasurer for Santander US. In that role, Alvarez oversaw Santander US's liquidity risk management, asset liability management, fixed-income investor relations and treasury functions.

Q2 2019 Highlights (variances compared to the second quarter of 2018 ("Q2 2018"), unless otherwise noted):

  • SC announced net income for the second quarter ended June 30, 2019 ("Q2 2019") of $368 million, or $1.05 per diluted common share.
  • The Company has declared a cash dividend of $0.22 per share, to be paid on August 15, 2019, to shareholders of record as of the close of business on August 5, 2019.
  • Total auto originations of $8.4 billion, up 5%
  • Core retail auto loan originations of $2.4 billion, down 7%
  • Chrysler Capital loan originations of $3.5 billion, up 25%
  • Chrysler Capital lease originations of $2.5 billion, down 4%
  • Chrysler average quarterly penetration rate of 36%, up from 32%
  • Santander Bank, N.A. program originations of $1.9 billion
  • Net finance and other interest income of $1.2 billion, up 5%
  • 30-59 delinquency ratio of 9.4%, down 20 basis points
  • 59-plus delinquency ratio of 4.7%, up 20 basis points
  • Retail Installment Contract ("RIC") gross charge-off ratio of 16.1%, up 90 basis points
  • Recovery rate of 60.3%, stable
  • RIC net charge-off ratio of 6.4%, up 30 basis points
  • Troubled Debt Restructuring ("TDR") balance of $4.5 billion, down $397 million vs. March 31, 2019
  • Return on average assets of 3.2%, down from 3.3%
  • $3.4 billion in loan asset-backed securities "ABS"
  • Expense ratio of 2.0%, down from 2.2%
  • Common equity tier 1 ("CET1") ratio of 15.7% , down from 16.9% as of June 30, 2018

Net finance and other interest income1 increased 5 percent to $1.17 billion in Q2 2019 from $1.12 billion in Q2 2018, driven by increased loan and lease balances.

SC's serviced for others portfolio decreased 3 percent to $9.3 billion as of Q2 2019 versus the prior year quarter. Servicing fee income decreased 9 percent to $25 million in Q2 2019, from $28 million in Q2 2018, driven by the change in the composition of those balances. Fees, commissions and other increased to $90 million in Q2 2019, from $77 million in Q2 2018, driven by origination fees from the SBNA program.

RIC delinquency ratio2 of 4.7 percent in Q2 2019 increased 20 basis points compared to 4.5 percent in Q2 2018.

RIC net charge-off ratio3 increased to 6.4 percent in Q2 2019, from 6.1 percent in Q2 2018. Provision for credit losses of $431 million in Q2 2019 were up from $407 million the prior year quarter.

Allowance ratio4 decreased 20 basis points, to 10.8 percent at the end of Q2 2019, from 11.0 percent at the end of Q1 2019.

Recorded net investment losses of $85 million in Q2 2019, compared to net investment losses of $83 million in Q2 2018. The current period losses were primarily driven by held for sale accounting for SC's personal lending portfolio.5

During Q2 2019 SC incurred $281 million of operating expenses, up 1 percent from $277 million in Q2 2018. SC's expense ratio decreased to 2.0 percent during the quarter, compared to 2.2 percent during the same period last year.

1Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.2Delinquency ratio is defined as the ratio of end of period delinquent principal, over 59 days, to end of period gross balance of the respective portfolio, excludes finance leases.3Net charge-off ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.4Ratio for allowance for credit losses excludes end of period balances on purchased receivables portfolio of $26 million and finance receivables and personal loans held for sale of $1.2 billion.5The current period losses were primarily driven by $85 million of lower of cost or market adjustments related to the held for sale personal lending portfolio, comprised of $97 million in customer default activity, partially offset by a $12 million decrease in market discount, consistent with typical seasonal patterns.

Conference Call InformationSC will host a conference call and webcast to discuss its Q2 2019 results and other general matters at 9:00 a.m. Eastern Time on Wednesday, July 24, 2019. The conference call will be accessible by dialing 800-263-0877 (U.S. domestic), or 646-828-8143 (international), conference ID 8209516. Please join 10 minutes prior to the start of the call. The conference call will also be accessible via live audio webcast through the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com. Choose "Events" and select the information pertaining to the Q2 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 8209516, approximately two hours after the conference call. An audio webcast of the call and investor presentation will also be archived on the Investor Relations section of SC's corporate website at http://investors.santanderconsumerusa.com, under "Events".

Forward-Looking 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 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 $56 billion (as of June 30, 2019), and is headquartered in Dallas. (www.santanderconsumerusa.com)

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us

 

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc.
Financial Supplement
Second Quarter 2019
Table of Contents
Table 1: Condensed Consolidated Balance Sheets 5
Table 2: Condensed Consolidated Statements of Income 6
Table 3: Other Financial Information 7
Table 4: Credit Quality 9
Table 5: Originations 10
Table 6: Asset Sales 11
Table 7: Ending Portfolio 12
Table 8: Reconciliation of Non-GAAP Measures 13

 

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets
Financial Supplement
Second Quarter 2019 June 30,2019 December 31,2018
Assets (Unaudited, Dollars in thousands)
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436
Finance receivables held for sale, net 1,249,101 1,068,757
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056
Intangible assets 34,117 35,195
Due from affiliates 19,581 8,920
Other assets 1,089,746 963,347
Total assets $ 46,416,093 $ 43,959,855
Liabilities and Equity
Liabilities:
Notes payable — credit facilities $ 6,514,163 $ 4,478,214
Notes payable — secured structured financings 26,248,528 26,901,530
Notes payable — related party 4,002,814 3,503,293
Accrued interest payable 46,817 49,370
Accounts payable and accrued expenses 431,004 422,951
Deferred tax liabilities, net 1,327,342 1,155,883
Due to affiliates 91,320 63,219
Other liabilities 416,844 367,037
Total liabilities $ 39,078,832 $ 36,941,497
Equity:
Common stock, $0.01 par value 3,481 3,523
Additional paid-in capital 1,413,461 1,515,572
Accumulated other comprehensive income, net (20,567) 33,515
Retained earnings 5,940,886 5,465,748
Total stockholders' equity $ 7,337,261 $ 7,018,358
Total liabilities and equity $ 46,416,093 $ 43,959,855

 

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income
Financial Supplement
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30,
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts)
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154)
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871
Liabilities: Total other income 30,411 22,384 81,496 47,437
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640
Other liabilities 416,844 367,037
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283
Additional paid-in capital 1,413,461 1,515,572
Accumulated other comprehensive income, net (20,567) 33,515
Retained earnings 5,940,886 5,465,748
Total stockholders' equity $ 7,337,261 $ 7,018,358
Total liabilities and equity $ 46,416,093 $ 43,959,855

 

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information
Financial Supplement
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30,
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 %
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 %
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 %
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 %
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 %
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 %
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 %
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 %
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 %
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information
Financial Supplement (1) Includes Finance and other interest income; excludes fees
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio.
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

Table 4: Credit Quality

The activity in the credit loss allowance for individually acquired retail installment contracts for the three and six months ended June 30, 2019 and 2018 was as follows (Unaudited, Dollar amounts in thousands):

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710)
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

 

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053)
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608) Transfers to held-for-sale $ (16,787) $ (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

A summary of delinquencies of our individually acquired retail installment contracts as of June 30, 2019 and December 31, 2018 is as follows (Unaudited, Dollar amounts in thousands):

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Delinquent Principal June 30, 2019 December 31, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Principal 30-59 days past due $ 2,723,639 9.4 % $ 3,118,869 11.0 %
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Delinquent principal over 59 days2 1,367,310 4.7 % 1,712,243 6.0 %
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt Total delinquent contracts $ 4,090,949 14.1 % $ 4,831,112 17.0 %
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053)
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608) Transfers to held-for-sale $ (16,787) $ (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

Within the total delinquent principal above, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of June 30, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Delinquent Principal June 30, 2019 December 31, 2018 Nonaccrual Principal June 30, 2019 December 31, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Principal 30-59 days past due $ 2,723,639 9.4 % $ 3,118,869 11.0 % Non-TDR $ 864,619 3.0 % $ 834,921 2.9 %
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Delinquent principal over 59 days2 1,367,310 4.7 % 1,712,243 6.0 % TDR 546,495 1.9 % 733,218 2.6 %
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt Total delinquent contracts $ 4,090,949 14.1 % $ 4,831,112 17.0 % Total nonaccrual principal $ 1,411,114 4.9 % $ 1,568,139 5.5 %
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053)
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608) Transfers to held-for-sale $ (16,787) $ (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

The table below presents the Company's allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of June 30, 2019 and December 31, 2018 (Unaudited, Dollar amounts in thousands):

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Delinquent Principal June 30, 2019 December 31, 2018 Nonaccrual Principal June 30, 2019 December 31, 2018 Allowance Ratios June 30, 2019 December 31, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Principal 30-59 days past due $ 2,723,639 9.4 % $ 3,118,869 11.0 % Non-TDR $ 864,619 3.0 % $ 834,921 2.9 % TDR - Unpaid principal balance $ 4,519,334 $ 5,378,603
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Delinquent principal over 59 days2 1,367,310 4.7 % 1,712,243 6.0 % TDR 546,495 1.9 % 733,218 2.6 % TDR - Impairment 1,156,303 1,416,743
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt Total delinquent contracts $ 4,090,949 14.1 % $ 4,831,112 17.0 % Total nonaccrual principal $ 1,411,114 4.9 % $ 1,568,139 5.5 % TDR - Allowance ratio 25.6 % 26.3 %
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324 Non-TDR - Unpaid principal balance $ 24,451,977 $ 23,054,157
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053) Non-TDR - Allowance 1,961,893 1,819,360
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819 Non-TDR Allowance ratio 8.0 % 7.9 %
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608) Transfers to held-for-sale $ (16,787) $ (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Total - Unpaid principal balance $ 28,971,311 $ 28,432,760
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses Total - Allowance 3,118,196 3,236,103
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders. Total - Allowance ratio 10.8 % 11.4 %
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Delinquent Principal June 30, 2019 December 31, 2018 Nonaccrual Principal June 30, 2019 December 31, 2018 Allowance Ratios June 30, 2019 December 31, 2018
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Principal 30-59 days past due $ 2,723,639 9.4 % $ 3,118,869 11.0 % Non-TDR $ 864,619 3.0 % $ 834,921 2.9 % TDR - Unpaid principal balance $ 4,519,334 $ 5,378,603 1Percent of unpaid principal balance.
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Delinquent principal over 59 days2 1,367,310 4.7 % 1,712,243 6.0 % TDR 546,495 1.9 % 733,218 2.6 % TDR - Impairment 1,156,303 1,416,743 2Interest is accrued until 60 days past due in accordance with the Company's account policy for retail installment contracts.
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt Total delinquent contracts $ 4,090,949 14.1 % $ 4,831,112 17.0 % Total nonaccrual principal $ 1,411,114 4.9 % $ 1,568,139 5.5 % TDR - Allowance ratio 25.6 % 26.3 %
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324 Non-TDR - Unpaid principal balance $ 24,451,977 $ 23,054,157
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053) Non-TDR - Allowance 1,961,893 1,819,360
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819 Non-TDR Allowance ratio 8.0 % 7.9 %
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio" is defined as the ratio of annualized Charge-offs, on a recorded investment basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio. Transfers to held-for-sale (16,787) (3,608) Transfers to held-for-sale $ (16,787) $ (3,608)
Table 4: Credit Quality 9 Leased vehicles, net 15,313,369 13,978,855 Interest expense 330,039 273,953 664,421 514,981 Cost of debt (3) 3.7 % 3.4 % 3.7 % 3.3 % (9) "Delinquency ratio" is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Balance — end of period $ 1,961,893 $ 1,156,303 $ 1,651,714 $ 1,664,222 Total - Unpaid principal balance $ 28,971,311 $ 28,432,760
Table 5: Originations 10 Furniture and equipment, net 59,176 61,280 Leased vehicle expense 444,442 360,335 888,461 719,018 Net interest margin (4) 10.1 % 10.9 % 10.0 % 10.8 % (10) "Allowance ratio" is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses Total - Allowance 3,118,196 3,236,103
Table 6: Asset Sales 11 Federal, state and other income taxes receivable 83,427 97,087 Net finance and other interest income 1,174,290 1,123,109 2,309,276 2,203,353 Expense ratio (5) 2.0 % 2.2 % 2.1 % 2.3 % (11) "Common stock dividend payout ratio" is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders. Total - Allowance ratio 10.8 % 11.4 %
Table 7: Ending Portfolio 12 Related party taxes receivable 4,581 734 Provision for credit losses 430,676 406,544 981,555 916,885 Return on average assets (6) 3.2 % 3.3 % 2.7 % 2.9 % (12) "Common Equity Tier 1 Capital ratio" is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see "Reconciliation of Non-GAAP Measures" in Table 8 of this release)
Table 8: Reconciliation of Non-GAAP Measures 13 Goodwill 74,056 74,056 Net finance and other interest income after provision for credit losses 743,614 716,565 1,327,721 1,286,468 Return on average equity (7) 20.3 % 19.5 % 17.2 % 17.2 %
Intangible assets 34,117 35,195 Profit sharing 13,345 12,853 20,313 17,230 Net charge-off ratio on individually acquired retail installment contracts (8) 6.4 % 6.1 % 7.5 % 7.2 %
Due from affiliates 19,581 8,920 Net finance and other interest income after provision for credit losses and profit sharing 730,269 703,712 1,307,408 1,269,238 Net charge-off ratio (8) 6.4 % 6.0 % 7.5 % 7.2 %
Other assets 1,089,746 963,347 Investment losses, net (84,787) (82,634) (151,884) (169,154) Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Total assets $ 46,416,093 $ 43,959,855 Servicing fee income 25,002 27,538 48,808 53,720 Delinquency ratio on loans held for investment, end of period (9) 4.7 % 4.5 % 4.7 % 4.5 %
Liabilities and Equity Fees, commissions, and other 90,196 77,480 184,572 162,871 Allowance ratio (10) 10.8 % 12.1 % 10.8 % 12.1 %
Liabilities: Total other income 30,411 22,384 81,496 47,437 Common stock dividend payout ratio (11) 19.1 % 5.4 % 22.8 % 6.2
Notes payable — credit facilities $ 6,514,163 $ 4,478,214 Compensation expense 122,678 118,598 250,572 240,603 Common Equity Tier 1 capital ratio (12) 15.7 % 16.9 % 15.7 % 16.9 %
Notes payable — secured structured financings 26,248,528 26,901,530 Repossession expense 69,699 63,660 140,559 135,741 Charge-offs, net of recoveries, on individually acquired retail installment contracts $ 462,427 $ 405,651 $ 1,077,631 $ 946,934
Notes payable — related party 4,002,814 3,503,293 Other operating costs 88,272 94,692 180,475 188,518 Charge-offs, net of recoveries, on purchased receivables portfolios (565) (993)
Accrued interest payable 46,817 49,370 Total operating expenses 280,649 276,950 571,606 564,862 Charge-offs, net of recoveries, on personal loans 1,675 515 1,914 1,264
Accounts payable and accrued expenses 431,004 422,951 Income before income taxes 480,031 449,146 817,298 751,813 Charge-offs, net of recoveries, on finance leases 175 406 347 712
Deferred tax liabilities, net 1,327,342 1,155,883 Income tax expense 111,764 114,120 201,528 172,172 Total charge-offs, net of recoveries $ 464,277 $ 406,007 $ 1,079,892 $ 947,917
Due to affiliates 91,320 63,219 Net income $ 368,267 $ 335,026 $ 615,770 $ 579,640 End of period delinquent principal over 59 days, individually acquired retail installment contracts held for investment 1,368,427 1,232,521 1,368,427 1,232,521
Other liabilities 416,844 367,037 End of period delinquent principal over 59 days, personal loans 167,033 164,458 167,033 183,919
Total liabilities $ 39,078,832 $ 36,941,497 Net income per common share (basic) $ 1.05 $ 0.93 $ 1.75 $ 1.61 End of period delinquent principal over 59 days, loans held for investment 1,368,427 1,234,502 1,368,427 1,234,502
Net income per common share (diluted) $ 1.05 $ 0.93 $ 1.75 $ 1.60 End of period assets covered by allowance for credit losses 29,007,585 27,551,134 29,007,585 27,551,134
Equity: Weighted average common shares (basic) 351,106,197 361,268,112 351,309,700 360,987,233 End of period gross individually acquired retail installment contracts held for investment 28,971,311 27,511,718 28,971,311 27,511,718
Common stock, $0.01 par value 3,481 3,523 Weighted average common shares (diluted) 351,556,349 362,057,614 351,825,554 361,829,283 End of period gross personal loans held for sale 1,364,956 1,370,888 1,364,956 1,370,888
Additional paid-in capital 1,413,461 1,515,572 End of period gross finance receivables and loans held for investment 29,009,846 27,566,517 29,009,846 27,566,517
Accumulated other comprehensive income, net (20,567) 33,515 End of period gross finance receivables, loans, and leases held for investment 45,557,709 40,422,435 45,557,709 40,422,435
Retained earnings 5,940,886 5,465,748 Average gross individually acquired retail installment contracts held for investment 29,017,122 26,772,369 28,816,732 26,402,688
Total stockholders' equity $ 7,337,261 $ 7,018,358 Average gross personal loans held for investment 1,337 4,562 1,809 5,304
Total liabilities and equity $ 46,416,093 $ 43,959,855 Average gross individually acquired retail installment contracts held for investment and held for sale $ 29,070,738 $ 27,673,016 $ 28,834,640 $ 27,305,408
Average gross purchased receivables portfolios 26,759 37,284 28,020 39,257
Average gross receivables from dealers 13,088 15,361 13,368 15,507
Average gross personal loans held for sale 1,375,306 1,375,877 1,424,717 1,421,861
Average gross finance leases 21,889 20,937 20,994 21,699
Average gross finance receivables and loans $ 30,507,780 $ 29,122,475 $ 30,321,739 $ 28,803,732
Average gross operating leases 16,043,654 12,219,612 15,752,705 11,856,109
Average gross finance receivables, loans, and leases 46,551,434 41,342,087 46,074,444 40,659,841
Average managed assets 55,545,503 50,445,203 55,043,583 49,632,691
Average total assets 45,700,887 40,885,720 45,101,873 40,316,990
Average debt 36,152,602 31,898,900 35,715,392 31,589,063
Average total equity 7,273,470 6,879,749 7,163,738 6,724,157

Table 5: Originations

The Company's originations of individually acquired loans and leases, including revolving loans, average APR, and discount were as follows:

Contacts: Investor Relations Evan Black 800.493.8219 InvestorRelations@santanderconsumerusa.com Media Relations Laurie Kight 214.801.6455 MediaRelations@santander.us Santander Consumer USA Holdings Inc. Table 1: Condensed Consolidated Balance Sheets Table 2: Condensed Consolidated Statements of Income Table 3: Other Financial Information Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Delinquent Principal June 30, 2019 December 31, 2018 Nonaccrual Principal June 30, 2019 December 31, 2018 Allowance Ratios June 30, 2019 December 31, 2018 Three Months Ended Six Months Ended Three Months Ended
Financial Supplement (1) Includes Finance and other interest income; excludes fees Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Retail Installment Contracts AcquiredIndividually Principal 30-59 days past due $ 2,723,639 9.4 % $ 3,118,869 11.0 % Non-TDR $ 864,619 3.0 % $ 834,921 2.9 % TDR - Unpaid principal balance $ 4,519,334 $ 5,378,603 1Percent of unpaid principal balance. June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 March 31, 2019
Second Quarter 2019 June 30,2019 December 31,2018 Three Months EndedJune 30, Six Months EndedJune 30, Three Months EndedJune 30, Six Months EndedJune 30, (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 Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Allowance for Credit Loss Non-TDR TDR Non-TDR TDR Delinquent principal over 59 days2 1,367,310 4.7 % 1,712,243 6.0 % TDR 546,495 1.9 % 733,218 2.6 % TDR - Impairment 1,156,303 1,416,743 2Interest is accrued until 60 days past due in accordance with the Company's account policy for retail installment contracts. Retained Originations (Unaudited, Dollar amounts in thousands)
Assets (Unaudited, Dollars in thousands) 2019 2018 2019 2018 Ratios (Unaudited, Dollars in thousands) 2019 2018 2019 2018 (3) "Cost of debt" is defined as the ratio of annualized Interest expense to Average debt Total delinquent contracts $ 4,090,949 14.1 % $ 4,831,112 17.0 % Total nonaccrual principal $ 1,411,114 4.9 % $ 1,568,139 5.5 % TDR - Allowance ratio 25.6 % 26.3 % Retail installment contracts $ 3,949,648 $ 4,630,704 $ 7,975,975 $ 8,014,110 $ 4,026,327
Table of Contents Cash and cash equivalents $ 99,756 $ 148,436 (Unaudited, Dollars in thousands, except per share amounts) Yield on individually acquired retail installment contracts 16.1 % 16.2 % 16.1 % 16.1 % (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 Balance — beginning of period $ 1,891,351 $ 1,280,649 $ 1,597,057 $ 1,716,132 Balance — beginning of period $ 1,819,360 $ 1,416,743 $ 1,540,315 $ 1,804,132 Average APR 16.2 % 16.8 % 16.7 % 17.0 % 17.2 %
Finance receivables held for sale, net 1,249,101 1,068,757 Interest on finance receivables and loans $ 1,261,098 $ 1,211,006 $ 2,514,678 $ 2,379,546 Yield on purchased receivables portfolios 14.0 % 24.1 % 16.8 % 25.9 % (5) "Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed assets Provision for credit losses 365,604 63,414 263,648 144,750 Provision for credit losses $ 812,092 $ 168,027 550,099 368,324 Non-TDR - Unpaid principal balance $ 24,451,977 $ 23,054,157 Average FICO® (a) 601 602 597 599 593
Table 1: Condensed Consolidated Balance Sheets 5 Finance receivables held for investment, net 25,838,749 25,117,454 Leased vehicle income 676,236 537,897 1,325,796 1,042,175 Yield on receivables from dealers 1.6 % 3.4 % 2.6 % 3.2 % (6) "Return on average assets" is defined as the ratio of annualized Net income to Average total assets Charge-offs (795,901) (369,523) (605,658) (412,710) Charge-offs $ (1,723,358) $ (836,160) (1,260,827) (960,053) Non-TDR - Allowance 1,961,893 1,819,360 Discount (0.5) % 0.004 % (0.3) % 0.2 % (0.1) %
Table 2: Condensed Consolidated Statements of Income 6 Restricted cash 2,272,621 2,102,048 Other finance and interest income 11,437 8,494 21,684 15,631 Yield on personal loans, held for sale (1) 26.3 % 24.6 % 26.2 % 24.5 % (7) "Return on average equity" is defined as the ratio of annualized Net income to Average total equity Recoveries 517,626 185,371 396,667 216,050 Recoveries $ 1,070,586 $ 411,301 822,127 451,819 Non-TDR Allowance ratio 8.0 % 7.9 %
Table 3: Other Financial Information 7 Accrued interest receivable 277,813 303,686 Total finance and other interest income 1,948,771 1,757,397 3,862,158 3,437,352 Yield on earning assets (2) 12.9 % 13.5 % 12.9 % 13.4 % (8) "Net charge-off ratio"