SANTANDER CONSUMER USA HOLDINGS INC . 2016 ABS Investor Day December - PowerPoint PPT Presentation

SANTANDER CONSUMER USA HOLDINGS INC . 2016 ABS Investor Day December 8, 2016

2 IMPORTANT INFORMATION Forward ‐ Looking Statements This presentation contains forward ‐ looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward ‐ looking. These statements are often, but not always, made through the use of words or phrases such as anticipates, believes, can, could, may, predicts, potential, should, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Although we believe that the expectations reflected in these forward ‐ looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties 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 controls 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 Fiat Chrysler Automobiles US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (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 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 not to place undue reliance on any forward ‐ looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward ‐ looking statement. Any forward ‐ looking statements only speak as of the date of this document, and we undertake no obligation to update any forward ‐ looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward ‐ looking statements attributable to us are expressly qualified by these cautionary statements.

3 AGENDA CORPORATE OVERVIEW AND STRATEGY ORIGINATIONS, UNDERWRITING AND DEALER MANAGEMENT SERVICING, COLLECTIONS AND REMARKETING

4 FOCUSED BUSINESS MODEL SIMPLE, PERSONAL, FAIR APPROACH WITH DISCIPLINED APPROACH TO MARKET CUSTOMERS, EMPLOYEES AND ALL CONSTITUENCIES SERVICED FOR OTHERS VEHICLE FINANCE CULTURE OF COMPLIANCE FUNDING AND LIQUIDITY LEVERAGING TECHNOLOGY IS INTEGRAL TO THE FOUR PILLARS OF OUR FOCUSED BUSINESS MODEL

5 INDUSTRY MARKET SHARE TRENDS – ALL FICOS Top 10 lenders have lost market share compared to the remaining players in the space since the beginning of 2015  SC maintains disciplined underwriting standards in a competitive environment  Increased competition from banks in the prime space  Competitors outside of the Top 10 continue to gain market share Retail Loans 1 53% 52% 51% 50% 49% 48% 47% 46% 45% 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 TOP 10 ‐ COMBINED 50.41% 48.82% 48.59% 47.60% 50.44% 50.19% 50.51% 49.78% 49.41% 48.00% 47.83% OTHERS ‐ COMBINED 49.46% 50.92% 51.36% 52.28% 49.33% 49.67% 49.51% 50.05% 50.55% 51.97% 52.12% 1 Loan only – new and used combined

6 DISCIPLINED LOAN UNDERWRITING CONTINUES IN 3Q16 Average managed assets remain stable. Originations decreased as a result of disciplined underwriting and increased competition.  Originations initiatives:  Banco Santander Flow Agreement 1  Dealer VIP Program (national rollout in 2017) and dealer floorplan expansion  Core Retail Auto – ongoing efforts to identify pockets of opportunity while maintaining discipline  Ample liquidity to capitalize on potential market dislocations Three Months Ended Originations % Variance Q3 2016 Q2 2016 Q3 2015 QoQ YoY Total Core Retail Auto 1,972 1,654 2,788 19% (29%) Chrysler Capital Loans (<640) 2 855 857 1,374 0% (38%) Chrysler Capital Loans ( ≥ 640) 2 1,034 1,212 1,732 (15%) (40%) Total Chrysler Capital Retail 1,889 2,069 3,106 (9%) (39%) Total Leases 3 1,303 1,697 1,569 (23%) (17%) Total Auto Originations 5,164 5,420 7,463 (5%) (31%) Total Personal Lending ‐ 9 158 N/A N/A Total Originations 5,164 5,429 7,621 (5%) (32%) Asset Sales 794 659 3,058 20% (74%) Serviced for Others Portfolio 12,157 13,034 14,788 (7%) (18%) Average Managed Assets 52,675 53,237 50,961 (1%) 3% 1 SC is finalizing a strategic agreement with Banco Santander to originate and flow prime and near ‐ prime retail loan assets 2 Approximate FICO score 3 Includes some capital lease originations

7 STRATEGIC APPROACH TO PORTFOLIO OPTIMIZATION Leverage historical expertise in nonprime to retain higher margin assets, while also being uniquely positioned to sell assets through flow agreements. RETAIN SELL FICO Ranges (Approx.) <640 (Nonprime) 640 ‐ 720 (Near ‐ Prime) 720+ (Prime/Super ‐ Prime)  Assets held for investment at  Near ‐ Prime loans pass through hold  Assets designated as held for sale origination Decision  Once assets have aged, nonprime versus sell decisioning process at origination assets may be sold  More upfront provisioning, higher  Mix of high and low provisioning/  No provision required Provisions yielding assets, higher ongoing yielding assets reserve percentage  Assets pledged to conduit  Assets pledged to conduit facilities/warehouses, sold to third  Sold through various bank flow facilities/warehouses and Funding Strategy parties through one ‐ time sales or securitized via DRIVE and SDART programs and one ‐ time sales strategic flow programs and platforms securitized via CCART platform  Retaining servicing rights creates a steady stream of capital ‐ efficient fee  N/A Serviced for Others income Banco Santander Flow  N/A  Vertical slice of Near ‐ Prime through Super ‐ Prime originations Agreement 1 1 SC is finalizing a strategic agreement with Banco Santander to originate and flow prime and near ‐ prime retail loan assets

8 SERVICED FOR OTHERS (SFO) PLATFORM Serviced for Others Balances  Impacted by timing of asset sales  CCART 2016 ‐ B closed and residual $ in Millions sold during Q4, adding $15,047 $14,788 $14,235 approximately $900M in assets to $13,034 the SFO platform $12,157 Composition at 9/30/2016 RIC 75%  Banco Santander flow agreement 1 Leases 19%  Beneficial to SFO platform RV/Marine 7% Total 100% 3Q15 4Q15 1Q16 2Q16 3Q16 Flow Programs 1,348 1,081 860 659 794 CCART 788 Residual Sales 1,710 *Sales with retained servicing during period 1 SC is finalizing a strategic agreement with Banco Santander to originate and flow prime and near ‐ prime retail loan assets