UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2018



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-36270

SANTANDER CONSUMER USA HOLDINGS INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		32-0414408
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)



1601 Elm Street, Suite 800, Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (214) 634-1110

Not Applicable

(Former name, former address, and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	ý	Accelerated filer	¨	Emerging growth company	¨

Non-accelerated filer	¨	Smaller reporting company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at ~~October 31, 2017~~April 30, 2018
Common Stock ($0.01 par value)		~~359,946,656~~361,263,822 shares

INDEX




Cautionary Note Regarding Forward-Looking Information		3
PART I: FINANCIAL INFORMATION		6
Item 1.	Unaudited Condensed Consolidated Financial Statements	6
	Unaudited Condensed Consolidated Balance Sheets	6
	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income	8
	Unaudited Condensed Consolidated Statements of Equity	9
	Unaudited Condensed Consolidated Statements of Cash Flows	10
	Note 1. Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices	11
	Note 2. Finance Receivables	1614
	Note 3. Leases	1816
	Note 4. Credit Loss Allowance and Credit Quality	1917
	Note 5. Debt	2522
	Note 6. Variable Interest Entities	2825
	Note 7. Derivative Financial Instruments	3027
	Note 8. Other Assets	3329
	Note 9. Income Taxes	3429
	Note 10. Commitments and Contingencies	3430
	Note 11. Related-Party Transactions	4035
	Note 12. Computation of Basic and Diluted Earnings per Common Share	4538
	Note 13. Fair Value of Financial Instruments	4539
	Note 14. Employee Benefit Plans	5044
	Note 15. Shareholders' Equity	5145
	Note 16. Investment Gains (Losses), Net	5246
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5246
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8477
Item 4.	Controls and Procedures	8477
PART II: OTHER INFORMATION		8980
Item 1.	Legal Proceedings	8980
Item 1A.	Risk Factors	8980
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8980
Item 3.	Defaults upon Senior Securities	8980
Item 4.	Mine Safety Disclosures	8980
Item 5.	Other Information	8980
Item 6.	Exhibits	9182
SIGNATURES		9283
EXHIBITS

Unless otherwise specified or the context otherwise requires, the use herein of the terms ~~“ we,~~“we,” “our,” “us,” “SC,” and the “Company” refer to Santander Consumer USA Holdings Inc. and its consolidated subsidiaries.

Cautionary Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about the Company's 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,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends,” and similar words or phrases. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors, some of which are beyond the Company's control. For more information regarding these risks and uncertainties as well as certain additional risks that the Company faces, refer to the Risk Factors detailed in Item 1A of Part I of the ~~2016~~2017 Annual Report on Form 10-K, as well as factors more fully described in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, including the exhibits hereto, and subsequent reports and registration statements filed from time to time with the SEC. Among the factors that could cause the Company's actual results to differ materially from those suggested by the forward-looking statements are:

the Company operates in a highly regulated industry and continually changing federal, state, and local laws and regulations could materially adversely affect its business;

the Company's ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner;

adverse economic conditions in the United States and worldwide may negatively impact the Company's results;

the business could suffer if access to funding is ~~reduced;~~reduced or if there is a change in the Company's funding costs or ability to execute securitizations;

the Company faces significant risks implementing its growth strategy, some of which are outside of its control;

the Company may not realize the anticipated benefits from, and may incur unexpected costs and delays in connection with, exiting its personal lending business;

the Company's agreement with FCA may not result in currently anticipated levels of growth and is subject to performance conditions that could result in termination of the agreement;

the business could suffer if the Company is unsuccessful in developing and maintaining relationships with automobile dealerships;

the Company's financial condition, liquidity, and results of operations depend on the credit performance of its loans;

loss of the Company's key management or other personnel, or an inability to attract such management and personnel, could negatively impact its business;

the Company is directly and indirectly, through its relationship with SHUSA, subject to certain banking and financial services regulations, including oversight by the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), the European Central Bank, and the Federal Reserve Bank of Boston (FRBB); such oversight and regulation may limit certain of the Company's activities, including the timing and amount of dividends and other limitations on the Company's business; and

future changes in the Company's relationship ownership by, or with SHUSA or Santander could adversely affect its operations.

If one or more of the factors affecting the Company's forward-looking information and statements ~~proves~~renders forward-looking information and statements incorrect, ~~its~~the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Therefore, the Company cautions 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 the Company's 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.~~time and management cannot assess the impact of any such factor on the Company's 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 the Company undertakes 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 the Company are expressly qualified by these cautionary statements.

Glossary

The following is a list of abbreviations, acronyms, and commonly used terms used in this Quarterly Report on Form 10-Q.



~~2016~~2017 Annual Report on Form 10-K	Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 filed with the SEC on February 28, ~~2017 and Amendment No. 1 on Form 10-K/A filed with the SEC on March 2, 2017~~2018.
ABS	Asset-backed securities
Advance Rate	The maximum percentage of collateral that a lender is willing to lend.
Affiliates	A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity.
ALG	Automotive Lease Guide
APR	Annual Percentage Rate
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
~~Auto Finance Holdings~~	~~Sponsor Auto Finance Holdings Series LP, a former investor in SC~~
Bluestem	Bluestem Brands, Inc., an online retailer for whose customers SC provides financing
Board	SC’s Board of Directors
CBP	Citizens Bank of Pennsylvania
CCART	Chrysler Capital Auto Receivables Trust, a securitization platform
CEO	Chief Executive Officer
CFPB	Consumer Financial Protection Bureau
CFO	Chief Financial Officer
Chrysler Agreement	Ten-year private-label financing agreement with FCA
Clean-up Call	The early redemption of a debt instrument by the issuer, generally when the underlying portfolio has amortized to 5% or 10% of its original balance
Commission	U.S. Securities and Exchange Commission
Credit Enhancement	A method such as overcollateralization, insurance, or a third-party guarantee, whereby a borrower reduces default risk
DCF	Discounted Cash Flow Analysis
~~DDFS~~	~~Dundon DFS LLC~~
Dealer Loan	A floorplan line of credit, real estate loan, working capital loan, or other credit extended to an automobile dealer
Dodd-Frank Act	Comprehensive financial regulatory reform legislation enacted by the U.S. Congress on July 21, 2010
DOJ	U.S. Department of Justice
DRIVE	Drive Auto Receivables Trust, a securitization platform
ECOA	Equal Credit Opportunity Act
~~Employment Agreement~~	~~The amended and restated employment agreement, executed as of December 31, 2011, by and among SC, Banco Santander, S.A. and Thomas G. Dundon~~
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FCA	Fiat Chrysler Automobiles US LLC, formerly Chrysler Group LLC
FICO®	A common credit score created by Fair Isaac Corporation that is used on the credit reports that lenders use to assess an applicant’s credit risk. FICO® is computed using mathematical models that take into account five factors: payment history, current level of indebtedness, types of credit used, length of credit history, and new credit
FIRREA	Financial Institutions Reform, Recovery and Enforcement Act of 1989
Floorplan Loan	A revolving line of credit that finances inventory until sold
Federal Reserve	Board of Governors of the Federal Reserve System
FRBB	Federal Reserve Bank of Boston
FTC	Federal Trade Commission



GAP	Guaranteed Auto Protection
IPO	SC's Initial Public Offering
ISDA	International Swaps and Derivative Association

~~LendingClub~~
	~~LendingClub Corporation, a peer-to-peer personal lending platform company from which SC acquired loans under terms of flow agreements~~
Managed Assets	Managed assets included assets (a) owned and serviced by the Company; (b) owned by the Company and serviced by others; and (c) serviced for others
MSA	Master Service Agreement
Nonaccretable Difference	The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows of a portfolio acquired with deteriorated credit quality
OCC	Office of the Comptroller of the Currency
Overcollateralization	A credit enhancement method whereby more collateral is posted than is required to obtain financing
OEM	Original equipment manufacturer
Private-label	Financing branded in the name of the product manufacturer rather than in the name of the finance provider
RC	Risk Committee
Remarketing	The controlled disposal of leased vehicles that have been reached the end of their lease term or of financed vehicles obtained through repossession
Residual Value	The future value of a leased asset at the end of its lease term
RSU	Restricted stock unit
Santander	Banco Santander, S.A.
SBNA	Santander Bank, N.A., a wholly-owned subsidiary of SHUSA. Formerly Sovereign Bank, N.A.
SC	Santander Consumer USA Holdings Inc., a Delaware corporation, and its consolidated subsidiaries
SCI	Santander Consumer International Puerto Rico, LLC
SC Illinois	Santander Consumer USA Inc., an Illinois Corporation and wholly-owned subsidiary of SC
SCRA	Servicemembers Civil Relief Act
SDART	Santander Drive Auto Receivables Trust, a securitization platform
SEC	U.S. Securities and Exchange Commission
~~Separation Agreement~~	~~The Separation Agreement dated July 2, 2015 entered into by Thomas G. Dundon with SC, DDFS LLC, SHUSA, Santander Consumer USA Inc. (the wholly owned subsidiary of SC) and Banco Santander, S.A.~~
~~Shareholders Agreement~~	The Shareholders Agreement dated January 28, 2014, by and among the Company, SHUSA, DDFS, Thomas G. Dundon, Sponsor Auto Finance Holdings Series LP, and, for the certain sections set forth therein, Banco Santander, as amended
SHUSA	Santander Holdings USA, Inc., a wholly-owned subsidiary of Santander and the majority owner of SC
SPAIN	Santander Prime Auto Issuing Note Trust, a securitization platform
SRT	Santander Retail Auto Lease Trust, a lease securitization platform
Subvention	Reimbursement of the finance provider by a manufacturer for the difference between a market loan or lease rate and the below-market rate given to a customer
TDR	Troubled Debt Restructuring
Trusts	Special purpose financing trusts utilized in SC’s financing transactions
U.S. GAAP	U.S. Generally Accepted Accounting Principles
VIE	Variable Interest Entity
Warehouse Line	A revolving line of credit generally used to fund finance receivable originations

PART I: FINANCIAL INFORMATION



Item 1.	Condensed Consolidated Financial Statements (Unaudited)

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (Dollars in thousands, except per share amounts)


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Assets
Cash and cash equivalents - $71,870 and $98,536 held at affiliates, respectively	$	397,311	$	160,180
Cash and cash equivalents - $188,747 and $106,295 held at affiliates, respectively					$	618,809	$	527,805
Finance receivables held for sale, net	1,775,459		2,123,415		1,611,535		2,210,421
Finance receivables held for investment, net (includes $24,799 and $24,495 of loans recorded at fair value, respectively)	22,667,203		23,481,001
Restricted cash - $3,035 and $11,629 held at affiliates, respectively	2,559,246		2,757,299
Finance receivables held for investment, net					22,587,358		22,427,769
Restricted cash - $1,802 and $2,529 held at affiliates, respectively					2,895,615		2,553,902
Accrued interest receivable	330,554		373,274		269,258		326,640
Leased vehicles, net	9,931,283		8,564,628		10,612,824		10,160,327
Furniture and equipment, net of accumulated depreciation of $49,963 and $47,365, respectively	72,519		67,509
Furniture and equipment, net of accumulated depreciation of $58,650 and $55,525, respectively					65,961		69,609
Federal, state and other income taxes receivable	112,794		87,352		99,099		95,060
Related party taxes receivable	467		1,087		634		467
Goodwill	74,056		74,056		74,056		74,056
Intangible assets, net of amortization of $39,265 and $33,652, respectively	31,534		32,623
Intangible assets, net of amortization of $45,900 and $36,616, respectively					31,088		29,734
Due from affiliates	26,871		31,270		53,408		33,270
Other assets	786,260		785,410		1,125,543		913,244
Total assets	$	38,765,557	$	38,539,104	$	40,045,188	$	39,422,304
Liabilities and Equity
Liabilities:
Notes payable — credit facilities	$	4,965,888	$	6,739,817	$	5,294,358	$	4,848,316
Notes payable — secured structured financings	23,258,363		21,608,889		22,862,607		22,557,895
Notes payable — related party	2,369,850		2,975,000		3,148,194		3,754,223
Accrued interest payable	38,012		33,346		38,375		38,529
Accounts payable and accrued expenses	336,390		379,021		430,361		429,531
Deferred tax liabilities, net	1,515,932		1,278,064		966,444		897,121
Due to affiliates	67,059		50,620		103,012		82,382
Other liabilities	328,829		235,728		475,822		333,806
Total liabilities	32,880,323		33,300,485		33,319,173		32,941,803
Commitments and contingencies (Notes 5 and 10)
Equity:
Common stock, $0.01 par value — 1,100,000,000 shares authorized;
359,873,905 and 359,002,145 shares issued and 359,750,398 and 358,907,550 shares outstanding, respectively	3,598		3,589
361,260,828 and 360,779,465 shares issued and 361,008,826 and 360,527,463 shares outstanding, respectively					3,610		3,605
Additional paid-in capital	1,672,392		1,657,611		1,689,996		1,681,558
Accumulated other comprehensive income, net	27,481		28,259		63,211		44,262
Retained earnings	4,181,763		3,549,160		4,969,198		4,751,076
Total stockholders’ equity	5,885,234		5,238,619		6,726,015		6,480,501
Total liabilities and equity	$	38,765,557	$	38,539,104	$	40,045,188	$	39,422,304

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (Dollars in thousands)

The assets of consolidated ~~variable interest entities~~ (~~VIEs),~~VIEs, presented based upon the legal transfer of the underlying assets in order to reflect legal ownership, that can be used only to settle obligations of the consolidated VIE and the liabilities of these entities for which creditors (or beneficial interest holders) do not have recourse to the Company's general credit were as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Assets
Restricted cash	$	1,969,094	$	2,087,177	$	2,380,619	$	1,995,557
Finance receivables held for sale, net	832,394		1,012,277		452,984		1,106,393
Finance receivables held for investment, net	21,902,383		22,919,312		21,760,294		21,715,365
Leased vehicles, net	9,931,283		8,564,628		10,612,824		10,160,327
Various other assets	634,338		686,253		810,497		733,123
Total assets	$	35,269,492	$	35,269,647	$	36,017,218	$	35,710,765
Liabilities
Notes payable	$	28,651,897	$	31,659,203	$	28,634,202	$	28,467,942
Various other liabilities	153,942		91,234		193,133		197,969
Total liabilities	$	28,805,839	$	31,750,437	$	28,827,335	$	28,665,911

Certain amounts shown above are greater than the amounts shown in the corresponding line items in the accompanying condensed consolidated balance sheets due to intercompany eliminations between the VIEs and other entities consolidated by the Company. For example, for most of its securitizations, the Company retains one or more of the lowest tranches of bonds. Rather than showing investment in bonds as an asset and the associated debt as a liability, these amounts are eliminated in consolidation as required by U.S. GAAP.

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (Dollars in thousands, except per share amounts)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
Interest on finance receivables and loans	$	1,185,059		$	1,246,386		$	3,626,497		$	3,804,322		$	1,114,137		$	1,209,186
Leased vehicle income	457,932			388,501			1,305,429			1,086,651			504,278			418,233
Other finance and interest income	6,385			3,638			15,415			11,440			7,137			3,825
Total finance and other interest income	1,649,376			1,638,525			4,947,341			4,902,413			1,625,552			1,631,244
Interest expense — Including $35,132, $28,131, $109,648 and $88,814 to affiliates, respectively	250,674			207,175			711,134			590,504
Interest expense — Including $42,033 and $37,724 to affiliates, respectively													241,028			227,089
Leased vehicle expense	339,581			252,730			927,976			717,230			358,683			290,171
Net finance and other interest income	1,059,121			1,178,620			3,308,231			3,594,679			1,025,841			1,113,984
Provision for credit losses	536,447			610,398			1,692,015			1,782,489			458,995			635,013
Net finance and other interest income after provision for credit losses	522,674			568,222			1,616,216			1,812,190			566,846			478,971
Profit sharing	5,945			6,400			22,333			35,640			4,377			7,945
Net finance and other interest income after provision for credit losses and profit sharing	516,729			561,822			1,593,883			1,776,550			562,469			471,026
Investment gains (losses), net — Including $29,081, $346, $22,900, and $346 from affiliates, respectively	(52,592		)	(106,050		)	(228,513		)	(276,415		)
Servicing fee income — Including $2,739, $4,049, $8,627 and $13,180 from affiliates, respectively	28,673			36,447			92,310			123,929
Fees, commissions, and other — Including $225, $225, $830 and $675 from affiliates, respectively	82,866			96,285			275,025			294,028
Investment gains (losses), net — Including $(16,903) and $2,719 from affiliates, respectively													(86,520		)	(76,399		)
Servicing fee income — Including $7,811 and $3,263 from affiliates, respectively													26,182			31,684
Fees, commissions, and other — Including $225 and $225 from affiliates, respectively													85,391			100,195
Total other income	58,947			26,682			138,822			141,542			25,053			55,480
Compensation expense	134,169			128,056			398,325			371,242			122,005			136,262
Repossession expense	66,877			75,920			205,445			217,816			72,081			71,299
Other operating costs — Including $1,037, ($871), $3,403, and $3,615 to affiliates, respectively	96,857			80,508			281,626			258,509
Other operating costs — Including $1,161 and $21,644 to affiliates, respectively													93,826			97,517
Total operating expenses	297,903			284,484			885,396			847,567			287,912			305,078
Income before income taxes	277,773			304,020			847,309			1,070,525			299,610			221,428
Income tax expense	78,385			90,473			239,819			365,334			57,311			78,001
Net income	$	199,388		$	213,547		$	607,490		$	705,191		$	242,299		$	143,427

Net income	$	199,388		$	213,547		$	607,490		$	705,191		$	242,299		$	143,427
Other comprehensive income (loss):
Change in unrealized gains (losses) on cash flow hedges, net of tax of $201, (14,397), $297, and $17,081, respectively	(379		)	24,168			(778		)	(28,723		)
Change in unrealized gains (losses) on cash flow hedges, net of tax of $2,903 and $4,327, respectively													12,800			7,245
Comprehensive income	$	199,009		$	237,715		$	606,712		$	676,468		$	255,099		$	150,672
Net income per common share (basic)	$	0.55		$	0.60		$	1.69		$	1.97		$	0.67		$	0.40
Net income per common share (diluted)	$	0.55		$	0.59		$	1.69		$	1.96		$	0.67		$	0.40
Dividend paid per common share													$	0.05		$	—
Weighted average common shares (basic)	359,619,083			358,343,781			359,397,063			358,179,618			360,703,234			359,105,050
Weighted average common shares (diluted)	360,460,353			360,087,749			360,069,449			359,635,034			361,616,732			360,616,032

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited) (In thousands)


	Common Stock				Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity			Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Total Stockholders’ Equity
	Shares		Amount					Shares				Retained Earnings		Amount							Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings			Total Stockholders’ Equity
Balance — January 1, 2016	357,946		$	3,579	Additional Paid-In Capital			$	Accumulated Other Comprehensive Income (Loss)	1,644,151		$	2,125		Total Stockholders’ Equity		$	2,782,694	$	4,432,549
Balance — January 1, 2017																		358,908	$	3,589	$	1,657,611		$	28,259	$	3,549,160		$	5,238,619
Cumulative-effect adjustment upon adoption of ASU 2016-09																		—	—		1,439			—		25,113			26,552
Stock issued in connection with employee incentive compensation plans	410		5		2,014				—			—			2,019			487	5		1,085			—		—			1,090
Stock-based compensation expense	—		—		7,013				—			—			7,013			—	—		2,067			—		—			2,067
Tax sharing with affiliate	—		—		(392		)		—			—			(392		)	—	—		(2		)	—		—			(2		)
Net income	—		—		—				—			705,191			705,191			—	—		—			—		143,427			143,427
Other comprehensive income (loss), net of taxes	—		—		—				(28,723		)	—			(28,723		)	—	—		—			7,245		—			7,245
Balance — September 30, 2016	358,356		$	3,584	$	1,652,786			$	(26,598	)	$	3,487,885		$	5,117,657
Balance — March 31, 2017																		359,395	$	3,594	$	1,662,200		$	35,504	$	3,717,700		$	5,418,998

Balance — January 1, 2017	358,908		$	3,589	$	1,657,611			$	28,259		$	3,549,160		$	5,238,619
Cumulative-effect adjustment upon adoption of ASU 2016-09 (Note 1)	—		—		1,439				—			25,113			26,552
Balance — January 1, 2018																		360,527	$	3,605	$	1,681,558		$	44,262	$	4,751,076		$	6,480,501
Cumulative-effect adjustment upon adoption of ASU 2018-02 (Note 1)																		—	—		—			6,149		(6,149		)	—
Stock issued in connection with employee incentive compensation plans	871		9		1,582				—			—			1,591			481	5		464			—		—			469
Stock-based compensation expense	—		—		12,166				—			—			12,166			—	—		4,208			—		—			4,208
Purchase of treasury stock	(29	)	—		(404		)		—			—			(404		)	—	—		—			—		—			—
Dividends																		—	—		—			—		(18,028		)	(18,028		)
Tax sharing with affiliate	—		—		(2		)		—			—			(2		)	—	—		3,766			—		—			3,766
Net income	—		—		—				—			607,490			607,490			—	—		—			—		242,299			242,299
Other comprehensive income (loss), net of taxes	—		—		—				(778		)	—			(778		)	—	—		—			12,800		—			12,800
Balance — September 30, 2017	359,750		$	3,598	$	1,672,392			$	27,481		$	4,181,763		$	5,885,234
Balance — March 31, 2018																		361,008	$	3,610	$	1,689,996		$	63,211	$	4,969,198		$	6,726,015

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (Dollars in thousands)


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2018			2017
Cash flows from operating activities:
Net income	$	607,490		$	705,191		$	242,299		$	143,427
Adjustments to reconcile net income to net cash provided by operating activities
Derivative mark to market	(7,694		)	4,653			(7,164		)	(760		)
Provision for credit losses	1,692,015			1,782,489			458,995			635,013
Depreciation and amortization	1,013,738			788,084			392,847			317,154
Accretion of discount	(193,473		)	(281,295		)	(48,075		)	(69,945		)
Originations and purchases of receivables held for sale	(2,773,407		)	(3,018,287		)	(1,019,425		)	(818,817		)
Proceeds from sales of and collections on receivables held for sale	3,032,688			2,460,399			1,551,109			973,118
Change in revolving personal loans	(139,358		)	(471,061		)	5,722			(5,064		)
Investment losses, net	228,513			276,415			86,520			76,399
Stock-based compensation	12,166			7,013			4,208			2,067
Deferred tax expense	264,720			363,036			64,048			86,218
Changes in assets and liabilities:
Accrued interest receivable	21,729			13,591			37,118			49,650
Accounts receivable	(6,049		)	7,161			11,760			(8,420		)
Federal income tax and other taxes	(24,823		)	176,978			(4,215		)	(5,415		)
Other assets	(61,765		)	(31,572		)	(46,923		)	(10,435		)
Accrued interest payable	(86		)	6,657			(2,529		)	1,086
Other liabilities	(28,176		)	(106,879		)	113,090			53,708
Due to/from affiliates	27,858			(6,440		)	(4,150		)	45,026
Net cash provided by operating activities	3,666,086			2,676,133			1,835,235			1,464,010
Cash flows from investing activities:
Originations of and disbursements on finance receivables held for investment	(8,448,231		)	(9,769,563		)	(3,253,263		)	(2,985,822		)
Purchases of portfolios of finance receivables held for investment	(228,843		)	(427,384		)	(43,177		)	(152,208		)
Collections on finance receivables held for investment	7,744,969			7,875,592			2,673,428			2,585,085
Proceeds from sale of loans held for investment	135,577			823,877
Leased vehicles purchased	(4,718,388		)	(4,624,096		)	(2,118,545		)	(1,608,151		)
Manufacturer incentives received	787,093			1,081,399			215,113			330,017
Proceeds from sale of leased vehicles	1,807,729			1,135,723			957,863			625,628
Change in revolving personal loans	57,761			362,671			45,184			49,236
Purchases of furniture and equipment	(15,113		)	(19,971		)	(1,012		)	(7,551		)
Sales of furniture and equipment	747			1,985			57			409
Change in restricted cash	191,842			(460,749		)
Other investing activities	(5,852		)	(6,165		)	(3,705		)	(1,931		)
Net cash used in investing activities	(2,690,709		)	(4,026,681		)	(1,528,057		)	(1,165,288		)
Cash flows from financing activities:
Proceeds from notes payable related to secured structured financings — net of debt issuance costs	12,272,344			9,637,933			3,687,932			5,692,771
Payments on notes payable related to secured structured financings	(10,638,153		)	(9,130,280		)	(3,386,999		)	(3,638,774		)
Proceeds from unsecured notes payable	6,165,000			6,718,900			—			4,315,000
Payments on unsecured notes payable	(4,885,577		)	(6,968,900		)	—			(3,887,283		)
Proceeds from notes payable	15,466,611			15,885,951			7,795,002			4,772,034
Payments on notes payable	(19,123,441		)	(14,738,924		)	(7,954,759		)	(7,105,930		)
Proceeds from stock option exercises, gross	4,970			2,848			2,391			3,543
Net cash provided by (used in) financing activities	(738,246		)	1,407,528
Net increase in cash and cash equivalents	237,131			56,980
Cash — Beginning of period	160,180			18,893
Cash — End of period	$	397,311		$	75,873

Dividends paid							(18,028		)	—
Net cash provided by financing activities							125,539			151,361
Net increase in cash and cash equivalents and restricted cash							432,717			450,083
Cash and cash equivalent and restricted cash — Beginning of period							3,081,707			2,917,479
Cash and cash equivalents and restricted cash — End of period							$	3,514,424		$	3,367,562
Supplemental cash flow information:
Cash and cash equivalents							$	618,809		$	420,826
Restricted cash							2,895,615			2,946,736
Total cash and cash equivalents and restricted cash							$	3,514,424		$	3,367,562
Noncash investing and financing transactions:
Transfer of secured notes payable to (from) unsecured notes payable	$	(495,991	)	$	—
Transfer of notes payable between secured and unsecured notes payable							$	300,000		$	120,748

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Description of Business, Basis of Presentation, and Significant Accounting Policies and Practices

Santander Consumer USA Holdings Inc., a Delaware corporation (together with its subsidiaries, SC or the Company), is the holding company for Santander Consumer USA Inc., an Illinois corporation (SC Illinois), and its subsidiaries, a specialized consumer finance company focused on vehicle finance and third-party servicing. The Company’s primary business is the indirect origination and securitization of retail installment contracts principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers.

~~In conjunction with~~Since May 1, 2013, under the terms of a ten-year private label financing agreement (the Chrysler Agreement) with Fiat Chrysler Automobiles US LLC (FCA) ~~that became effective May 1, 2013,~~, the Company has been FCA's preferred provider for consumer loans and leases and dealer loans. In conjunction with the Chrysler Agreement, the Company offers a full spectrum of auto financing products and services to FCA customers and dealers under the Chrysler Capital brand. These products and services include consumer retail installment contracts and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit. Retail installment contracts and vehicle leases entered into with FCA customers, as part of the Chrysler Agreement, represent a significant concentration of those portfolios and there is a risk that the Chrysler Agreement could be terminated prior to its expiration date. Termination of the Chrysler Agreement could result in a decrease in the amount of new retail installment contracts and vehicle leases entered into with FCA customers.

The Company also originates vehicle loans through a web-based direct lending program, purchases vehicle retail installment contracts from other lenders, and services automobile and recreational and marine vehicle portfolios for other lenders. Additionally, the Company has ~~several~~other relationships through which it provides personal loans, private-label ~~credit cards~~revolving lines and other consumer finance products.

As of ~~September 30, 2017,~~March 31, 2018, the Company was owned approximately ~~58.7%~~68.0% by Santander Holdings USA, Inc. (SHUSA), a subsidiary of Banco Santander, S.A. (Santander), and approximately ~~31.6% by public shareholders, approximately 9.7% by DDFS LLC, an entity affiliated with Thomas G. Dundon, the Company’s former Chairman and CEO, and an insignificant amount held~~32.0% by other ~~holders, primarily members of senior management.~~shareholders.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries, including certain Trusts, which are considered ~~variable interest entities (VIEs).~~VIEs. The Company also consolidates other VIEs for which it was deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the financial position, results of operations and cash flows for the periods indicated. Results of operations for the periods presented herein are not necessarily indicative of results of operations for the entire year. These financial statements should be read in conjunction with the ~~2016~~2017 Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosures of contingent assets and liabilities, as of the date of the financial statements and the amount of revenue and expenses during the reporting periods. Actual results could differ from those estimates and those differences may be material. These estimates include the determination of credit loss allowance, discount accretion, impairment, fair value, expected end-of-term lease residual values, values of repossessed assets, and income taxes. These estimates, although based on actual historical trends and modeling, may potentially show significant variances over time.

Business Segment Information

The Company has one reportable segment: Consumer Finance, which includes the Company’s vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to ~~motorcycles,~~ recreational vehicles, and marine vehicles. It also includes the Company’s personal loan and point-of-sale financing operations.

Accounting Policies

There have been no material changes in the Company's accounting policies from those disclosed in Part II, Item 8 - Financial Statements and Supplementary Data in the ~~2016~~2017 Annual Report on Form 10-K.

Recently Adopted Accounting Standards

Since January 1, ~~2017,~~2018, the Company adopted the following Financial Accounting Standards Board (FASB) Accounting Standards Updates (ASUs):

ASU ~~2016-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~. This new guidance simplifies certain aspects related to income taxes, the Statement of Cash Flows (SCF), and forfeitures when accounting for share-based payment transactions. ASU 2016-09 eliminates the requirement to recognize excess tax benefits in APIC pools, and instead requires companies to record all excess tax benefits and deficiencies at settlement, vesting or expiration in the income statement as provision for income taxes. At adoption of ASU 2016-09 on January 1, 2017, the cumulative-effect for previously unrecognized excess tax benefits totaled $26,552 net of tax, and was recognized, as an increase, through an adjustment in beginning retained earnings. The Company recorded excess tax deficiency, net of tax of $671 and $430 in the provision for income taxes rather than as an increase to additional paid-in capital for the three and nine months ended September 30, 2017, respectively, on a prospective basis. Therefore, the prior period presented has not been adjusted. All excess tax benefits along with other income tax cash flows are now being classified as operating activities rather than financing activities in the SCF on a prospective basis.

In addition, the Company changed its accounting policy on forfeitures from previously recognizing forfeitures based on estimating the number of awards expected to be forfeited to electing to recognize forfeiture of awards as they occur to simplify the accounting for forfeitures. This resulted in a cumulative adjustment, as a decrease to, beginning retained earnings of $1,439.

~~ASU 2016-05,~~ ~~Derivatives and Hedging (Topic 815): Effect of Derivative ContractNovations on Existing Hedge Accounting Relationships~~. The new guidance clarifies that a change in the counterparties to a derivative contract, i.e., a novation, in and of itself, does not require the de-designation of a hedging relationship. An entity will, however, still need to evaluate whether it is probable that the counterparty will perform under the contract as part of its ongoing effectiveness assessment for hedge accounting. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows.

~~ASU 2016-06,~~ ~~Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments.~~ This new guidance clarifies that an exercise contingency does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis of hybrid financial instruments. In other words, a contingent put or call option embedded in a debt instrument would be evaluated for possible separate accounting as a derivative instrument without regard to the nature of the exercise contingency. However, as required under existing guidance, companies will still need to evaluate other relevant embedded derivative guidance, such as whether the payoff from the contingent put or call option is adjusted based on changes in an index other than interest rates or credit risk, and whether the debt involves a substantial premium or discount. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows.

~~ASU 2016-07,~~ ~~Investments-Equity Method and Joint Ventures (Topic 323)~~. The new guidance eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead, the equity method of accounting should be applied prospectively from the date significant influence is obtained. Investors should add the cost of acquiring the additional interest in the investee (if any) to the current basis of their previously held interest. The new standard also provides specific guidance for available-for-sale securities that become eligible for the equity method of accounting. In those cases, any unrealized gain

or loss recorded within accumulated other comprehensive income should be recognized in earnings at the date the investment initially qualifies for the use of the equity method of accounting. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows.

~~ASU 2016-17,~~ ~~Consolidation (Topic 810), Interest Held Through Related Parties That Are Under Common Control,~~ which amends the guidance in U.S. GAAP on related parties that are under common control. Specifically, the new ASU requires that a single decision maker consider indirect interests held by related parties under common control on a proportionate basis in a manner consistent with its evaluation of indirect interests held through other related parties. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows.

~~Recently Issued Accounting Pronouncements~~

~~In May 2014, the FASB issued ASU~~ 2014-09, Revenue from Contracts with Customers (Topic 606) as amended~~, superseding the revenue recognition requirements in ASC 605.~~. This ASU, requires an entity to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ~~The amendment~~It includes a five-step process to assist an entity in achieving the main ~~principle(s)~~principles of revenue recognition under ASC ~~605. In August 2015,~~606. Because the ~~FASB issued~~ ASU 2015-14, which formalized the deferral of the effective date of the amendment for a period of one year from the original effective date. Following the issuance of ASU 2015-14, the amendment will be effective for the Company for the first annual period beginning after December 15, 2017. In March 2016, the FASB also issued ASU 2016-08, an amendment to the guidance in ASU 2014-09, which revises the structure of the indicators to provide indicators of when the entity is the principal or agent in a revenue transaction, and eliminated two of the indicators (“the entity’s consideration is in the form of a commission” and “the entity is not exposed to credit risk”) in making that determination. This amendment also clarifies that each indicator may be more or less relevant to the assessment depending on the terms and conditions of the contract. In April 2016, the FASB issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity’s promise to grant a license with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-12, an amendment to ASU 2014-09, which provided practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on transition, collectability, non-cash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB issued ASU 2016-20, a separate update for technical corrections and improvements to Topic 606 and other Topics amended by Update 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to Update 2014-09. The amendments, collectively, should be applied retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption.

~~Because ASU 2014-09~~ does not apply to revenue associated with leases and financial instruments (including loans, securities, and ~~securities)~~derivatives), ~~the Company does~~it did not ~~expect the new guidance to~~ have a material impact on the elements of ~~its~~the Company's Consolidated Statements of Operations most closely associated with leases and financial instruments (such as interest income, interest expense and investment ~~gain)~~gains and losses). The Company expects to adopt this ASU in the first quarter of 2018 with a cumulative-effect adjustment to opening retained earnings. The Company’s ongoing implementation efforts include the identification ofAll other revenue streams ~~that are within~~in the scope of the new ~~guidance and reviewing related contracts with customers. Upon~~standard were not material. The Company adopted this standard as of January 1, 2018 using a modified retrospective approach. The adoption of this standard did not require any adjustments to the opening balance of retained earnings as of January 1, 2018.

ASU 2016-18, Statement of Cash Flows (Topic 230). Restricted Cash (A consensus of the FASB Emerging Issues Task Force), which requires that the statement of cash flows include restricted cash in the beginning and end-of-period total amounts shown on the statement of cash flows and that the statement of cash flows explain changes in restricted cash during the period. The Company ~~does not expect~~adopted this standard as of January 1, 2018 using retrospective approach. The impact of this adoption was disclosure only for periods presented on the ~~impact~~Company's Statements of Cash Flows.

ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The new guidance amends the hedge accounting model to enable entities to more accurately reflect their risk management activities in the financial statements. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be ~~material~~presented in the same income statement line in which the earnings effect of the hedged item is reported. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company elected to ~~its~~early adopt this standard as of January 1, 2018 using modified retrospective approach. The adoption of this standard did not require any adjustments to the opening balance of retained earnings for cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness.

ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company elected to early adopt this standard as of January 1, 2018 and has reclassified $6,149 stranded income tax effects from accumulated other comprehensive income to retained earnings.

The adoption of the following ASUs did not have an impact on the Company's business financial position or results of ~~operation or cash flow and expects the impact to be disclosure only.~~operations.

~~In January 2016, the FASB issued~~ ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition andMeasurement of Financial Assets and Financial Liabilities, as amended

ASU 2016-15, ~~. This amendment requires that equity investments, except those accounted for under~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments

ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory

ASU 2017-01, Business Combinations (Topic 805): Clarifying the equity method of accounting or which result in consolidation of the investee, to be measured at fair value, with changes in the fair value being recorded in net income. However, equity investments that do not have readily determinable fair values will be measured at cost less impairment, if any, plus the effect of changes resulting from observable price transactions in orderly transactions or for the identical or similar investment of the same issuer. The amendment also simplifies the impairment assessment of equity instruments that do not have readily determinable fair values, eliminates the requirement to disclose methods and assumptions used to estimate fair value of instruments measured at their amortized cost on the balance sheet, requires that the disclosed

~~fair values of financial instruments represent "exit price," requires entities to separately present in other comprehensive income the portion of the total change in fair value~~Definition of a ~~liability resulting~~Business

ASU 2017-05, Other Income - Gains and Losses from ~~instrument-specific credit risk when~~ the ~~fair value option has been elected~~Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for ~~that liability, requires separate presentation~~Partial Sales of ~~financial assets~~Nonfinancial Assets

ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and ~~financial liabilities by measurement category and form~~Net Periodic Postretirement Benefit Cost

ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of ~~financial asset on the balance sheet or in the accompanying notes, and clarifies that an entity should evaluate the need for a valuation allowance on its deferred tax asset related~~Modification Accounting

ASU 2018-05, Income Taxes (Topic 740): Amendments to its available-for-sale securities in combination with its other deferred tax assets. This amendment will be effective for the Company for the first reporting period beginning after December 15, 2017, with earlier adoption permitted by public entities on a limited basis. Adoption of the amendment must be applied by means of a cumulative-effect adjustmentSEC Paragraphs Pursuant to the balance sheet as of the beginning of the fiscal year of adoption, except for amendments related to equity instruments that do not have readily determinable fair values, for which it should be applied prospectively. Upon adoption of this standard, the Company does not expect the impact to be material to its financial position, results of operations, cash flows or disclosures.SEC Staff Accounting Bulletin No. 118

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which will, among other impacts, change the criteria under which leases are identified and accounted for as on- or off-balance sheet. The guidance will be effective for the fiscal year beginning after December 15, 2018, including interim periods within that year. Once effective, the new guidance must be applied for all periods presented. The Company ~~does not expect~~is in the ~~new guidance to have a material impact on the Consolidated Statements~~process of ~~Income or the Consolidated Statements of Shareholders' Equity, since the Company recognizes assets~~reviewing its existing property and ~~liabilities for all of its vehicle~~equipment lease ~~transactions. The Company will continue to evaluate the impact of the new guidance on its operating leases primarily for office space and computer equipment.~~contracts as well as service contracts that may include embedded leases. Upon adoption, the Company will gross up its balance sheet by the present value of future minimum lease payments for these operating leases. The Company does not intend to early adopt this ASU.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses, which changes the criteria under which credit losses are measured. The amendment introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to establish credit loss estimates. The guidance will be effective for the fiscal year beginning after December 15, 2019, including interim periods within that year. The Company does not intend to adopt the new standard early and is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows; however, it is expected that the new CECL model will alter the assumptions used in calculating the Company's credit losses, given the change to estimated losses for the estimated life of the financial asset, and will likely result in material changes to the Company’s credit and capital reserves.

In ~~August 2016,~~addition to those described in detail above, the ~~FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230), Classification of Certain CashReceipts and Cash Payments. This update amends the guidance in ASC 230 on the classification of certain cash receipts and payments~~Company is also in the ~~SCF. The ASU’s amendments add or clarify guidance on eight cash flow issues including debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from~~process of evaluating the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions,following ASUs and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for the fiscal year beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted, including adoption in an interim period, however any adjustments should be reflected as of the beginning of the fiscal year that includes the period of adoption. All of the amended guidance must be adopted in the same period. Upon adoption of this standard, the Company does not expect them to have a material impact on the ~~impact to be material to its~~Company's business, financial position, results of operations or ~~cash flows.~~disclosures:

~~In October 2016, the FASB issued~~ ASU ~~2016-16,~~2017-06, ~~Income Taxes~~Plan Accounting: Defined Benefit Pension Plans (Topic ~~740)~~960), ~~Intra-Entity Transfers of Assets Other Than Inventory~~Defined Contribution Pension Plans (Topic 962), which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a third party or otherwise recovered through use. The guidance will be effective for the Company for annual reporting periods beginning after December 15, 2017, including interim reporting periods. Early adoption is permitted at the beginning of an annual reporting period for which annual or interim financial statements have not been issued or made available for issuance. Upon

~~adoption of this standard, the Company does not expect the impact to be material to its financial position, results of operation or cash flow.~~

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows~~Health and Welfare Benefit Plans (Topic ~~230)~~965): ~~Restricted Cash (A~~Employee Benefit Plan Master Trust Reporting (a consensus of the ~~FASB~~ Emerging Issues Task Force)

~~, which requires that the statement of cash flows include restricted cash in the beginning~~ASU 2017-08, Receivables - Nonrefundable Fees and ~~end-of-period total amounts shown~~Other Costs (Subtopic 310-20): Premium Amortization on ~~the statement of cash flows~~Purchased Callable Debt Securities

ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and ~~that the statement of cash flows explain changes in restricted cash during the period. The guidance will be effective~~Hedging (Topic 815): (Part I) Accounting for ~~the Company for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, however, adjustments should be reflected as~~Certain Financial Instruments with Down Round Features, (Part II) Replacement of the ~~beginning~~Indefinite Deferral for Mandatorily Redeemable Financial Instruments of ~~the fiscal year that includes that interim period. The Company does not expect the adoption of this ASU to have an impact on its financial position, results of operations or cash flows~~Certain Nonpublic Entities and ~~expects the impact to be disclosure only.~~Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of aBusiness~~. The new guidance revises the definition of a business, potentially affecting areas of accounting such as acquisitions, disposals, goodwill impairment, and consolidation. Under the new guidance, when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the assets acquired (or disposed of) would not represent a business. If this initial screen is met, no further analysis would be required. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create an output. In addition, the amendments narrow the definition of the term “output” so that it is consistent with how outputs are defined in ASC Topic 606, ~~Revenue from Contracts with Customers~~. This new guidance will be effective for the Company for the first reporting period beginning after December 15, 2017, with earlier adoption permitted. Adoption of the amendments must be applied on a prospective basis. The Company does not expect the adoption of this ASU to have an impact on its financial position, results of operations or cash flows.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill & Other (Topic 350): Simplifying the Accounting for Goodwill Impairment~~. It removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The new rules state that a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The revised guidance will be applied prospectively, and is effective January 1, 2020, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company expects to early adopt this ASU in the fourth quarter of 2017 and does not expect the adoption of this ASU to have an impact on its financial position, results of operations or cash flows and expects the impact to be disclosure only.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting~~ which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the ASU, entities will apply modification accounting guidance if the value, vesting conditions or classification of award changes. The new guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. The guidance will be applied prospectively to awards modified on or after the adoption date and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including in an interim period. The Company does not expect the adoption of this ASU to have an impact on its financial position, results of operations or cash flows.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities~~. The new guidance amends the hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line in which the earnings effect of the hedged item is reported. The new guidance is effective for public business entities for fiscal years beginning after December 15,

~~2018, with early adoption, including adoption in an interim period, permitted. The Company is in the process of evaluating the impact of the adoption of this ASU.~~


2.	Finance Receivables

Held For Investment

Finance receivables held for investment, net is comprised of the following at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Retail installment contracts acquired individually (a)	$	22,599,161	$	23,219,724	$	22,526,948	$	22,362,509
Purchased receivables	30,396		158,264		25,345		27,839
Receivables from dealers	15,902		68,707		15,334		15,623
Personal loans	5,623		12,272		3,582		4,459
Capital lease receivables (Note 3)	16,121		22,034		16,149		17,339
Finance receivables held for investment, net	$	22,667,203	$	23,481,001	$	22,587,358	$	22,427,769

(a) The Company has elected the fair value option for certain retail installment contracts reported in finance receivables held for investment, net. As at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016, $24,799~~2017, $18,850 and ~~$24,495~~$22,124 of loans were recorded at fair value (Note 13).

The Company's held for investment portfolio of retail installment contracts acquired individually, receivables from dealers, and personal loans is comprised of the following at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017													March 31, 2018
	Retail Installment Contracts Acquired Individually						Receivables from Dealers				Personal Loans			Retail Installment Contracts Acquired Individually								Receivables from Dealers				Personal Loans
	Non-TDR			TDR						Non-TDR					TDR							Receivables from Dealers				Personal Loans
Unpaid principal balance	$	20,044,330		$	6,276,659		Receivables from Dealers	$	16,069		Personal Loans			$	9,188		$	19,987,763			$	5,998,768			$	15,495			$	5,158
Credit loss allowance - specific	—			(1,782,114		)	—				—			—				(1,595,465		)		—				—
Credit loss allowance - collective	(1,589,151		)	—			(167		)		(3,725		)	(1,586,557		)		—				(161		)		(1,714		)
Discount	(331,179		)	(84,588		)	—				(16		)	(281,345		)		(64,034		)		—				—
Capitalized origination costs and fees	59,295			5,909			—				176			62,400				5,418				—				138
Net carrying balance	$	18,183,295		$	4,415,866		$	15,902			$	5,623		$	18,182,261			$	4,344,687			$	15,334			$	3,582


	December 31, 2016													December 31, 2017
	Retail Installment Contracts Acquired Individually						Receivables from Dealers				Personal Loans			Retail Installment Contracts Acquired Individually								Receivables from Dealers				Personal Loans
	Non-TDR			TDR						Non-TDR					TDR							Receivables from Dealers				Personal Loans
Unpaid principal balance	$	21,528,406		$	5,599,567		Receivables from Dealers	$	69,431		Personal Loans			$	19,361		$	19,681,394			$	6,261,894			$	15,787			$	6,887
Credit loss allowance - specific	—			(1,611,295		)	—				—			—				(1,731,320		)		—
Credit loss allowance - collective	(1,799,760		)	—			(724		)		—			(1,529,815		)		—				(164		)		(2,565		)
Discount	(467,757		)	(91,359		)	—				(7,721		)	(309,191		)		(74,832		)		—				(1		)
Capitalized origination costs and fees	56,704			5,218			—				632			58,638				5,741				—				138
Net carrying balance	$	19,317,593		$	3,902,131		$	68,707			$	12,272		$	17,901,026			$	4,461,483			$	15,623			$	4,459

Retail installment contracts

Retail installment contracts are collateralized by vehicle titles, and the Company has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. Most of the Company’s retail installment contracts held for investment are pledged against warehouse lines or securitization bonds (Note 5). Most of the borrowers on the Company’s retail installment contracts held for investment are retail consumers; however, ~~$634,677~~$579,578 and ~~$848,918~~$641,003 of the unpaid principal balance represented fleet contracts with commercial borrowers as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company originated ~~$5,168,089~~$1,962,180 and ~~$6,507,597,~~$1,588,506, respectively, in Chrysler Capital loans which represented 46% and ~~51%~~42%, respectively, of the total retail installment contract originations. ~~Additionally, during the nine months ended September 30, 2017 and 2016, the Company originated $4,693,392 and $4,612,284, respectively, in Chrysler Capital leases.~~ As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company's auto retail installment contract

portfolio consisted of ~~$6,936,988~~$7,045,671 and ~~$7,365,444,~~$8,234,653, respectively, of Chrysler loans which represents 31% and ~~32%~~37%, respectively, of the Company's auto retail installment contract portfolio. Retail installment contracts and vehicle leases entered into with FCA customers, as part of the Chrysler Agreement, represent a significant concentration of those portfolios and there is a risk that the Chrysler Agreement could be terminated prior to its expiration date. Termination of the Chrysler Agreement could result in a decrease in the amount of new retail installment contracts and vehicle leases entered into with FCA customers.

As of ~~September 30, 2017,~~March 31, 2018, borrowers on the Company’s retail installment contracts held for investment are located in Texas (16%), Florida (12%), California (9%), Georgia (6%) and other states each individually representing less than 5% of the Company’s total portfolio.

Purchased receivables

Purchased receivables portfolios, which were acquired with deteriorated credit quality, is comprised of the following at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Outstanding balance	$	49,089	$	231,360	$	39,361	$	43,474
Outstanding recorded investment, net of impairment	30,646		159,451		25,534		28,069

Changes in accretable yield on the Company’s purchased receivables portfolios for the periods indicated were as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
Balance — beginning of period	$	87,994		$	137,747		$	107,041		$	178,582		$	19,464		$	107,041
Accretion of accretable yield	(5,223		)	(17,830		)	(26,670		)	(58,774		)	(2,840		)	(11,144		)
Disposals/transfers	(62,183		)	—			(62,183		)	—			—			—
Reclassifications from (to) nonaccretable difference (a)	1,648			(8,627		)	4,048			(8,518		)	1,822			2,049
Balance — end of period	$	22,236		$	111,290		$	22,236		$	111,290		$	18,446		$	97,946

(a) Reclassifications from (to) nonaccretable difference represents the increases (decreases) in accretable yield resulting from higher (lower) estimated undiscounted cash flows.

During the three months ended ~~September 30,~~March 31, 2018 and 2017, the Company sold receivables previously acquired with deteriorated credit quality to SBNA (Note 11). Carrying value of the receivables at the date of sale was $99,301. No such sales occurred during the three or nine months ended September 30, 2016.

~~During the three and nine months ended September 30, 2017 and 2016,~~ the Company did not acquire any vehicle loan portfolios for which it was probable at acquisition that not all contractually required payments would be collected. However, during the three months ended ~~September 30, 2016,~~March 31, 2018 and 2017, the Company recognized certain retail installment contracts with an unpaid principal balance of ~~$135,772 (nil for the three months ended September 30, 2017)~~$42,996 and ~~for the nine months ended September 30, 2017 and 2016, the Company recognized certain retail installment contracts with an unpaid principal balance of $226,613 and $327,443,~~$152,208, respectively, held by non-consolidated securitization Trusts, under optional clean-up ~~calls.~~calls (Note 6). Following the initial recognition of these loans at fair value, the performing loans in the portfolio are carried at amortized cost, net of allowance for credit losses. The Company elected the fair value option for all non-performing loans acquired (more than 60 days delinquent as of re-recognition date), for which it was probable that not all contractually required payments would be collected (Note 13).

Receivable from Dealers

The receivables from dealers held for investment are all Chrysler Agreement-related. As of ~~September 30, 2017,~~March 31, 2018, borrowers on these dealer receivables are located in Virginia (62%), New York ~~(28%~~(27%), Missouri (10%) and Wisconsin (1%). The Company previously held a term loan with a third-party vehicle dealer and lender that operates in multiple states. The loan allowed committed borrowings of $50,000 at December 31, 2016. During the three months ended September 30, 2017, the unpaid principal balance of the facility of $50,000 along with accrued interest was repaid.

Personal Loans

At September 30, 2016, the Company determined that its intent to sell certain personal revolving loans had changed and now expects to hold these loans through their maturity. The Company recorded a lower of cost or market adjustment through investment gains (losses), net, immediately prior to transferring the loans to finance receivables held for investment at their new recorded investment. The carrying value of these loans was ~~$5,623~~$3,582 and ~~$11,733~~$4,459 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Held For Sale

The carrying value of the Company's finance receivables held for sale, net is comprised of the following at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Retail installment contracts acquired individually	$	845,910	$	1,045,815	$	643,746	$	1,148,332
Personal loans	929,549		1,077,600		967,789		1,062,089
Finance receivables held for sale, net	$	1,775,459	$	2,123,415	$	1,611,535	$	2,210,421

Sales of retail installment contracts ~~to third parties~~ and proceeds from sales of charged-off assets for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:


	For the Three Months Ended September 30,			For the Nine Months Ended September 30,			For the Three Months Ended March 31,
	2017	2016		2017	2016		2018		2017
Sales of retail installment contracts to third parties	—	$	793,804	260,568	$	2,312,983	$	—	$	230,568
Proceeds from sales of charged-off assets	27,954	12,521		76,746	47,594
Sales of retail installment contracts to affiliates							1,475,253		700,022
Proceeds from sales of charged-off assets to third parties							18,237		21,343

The Company retains servicing of retail installment contracts and leases sold to third parties. Total contracts sold to unrelated third parties and serviced as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:

September 30,
2017 December 31, 2016
Serviced balance of retail installment contracts and leases sold to third parties $ 6,674,980
$ 10,116,788



	March 31, 2018		December 31, 2017
Serviced balance of retail installment contracts and leases sold to third parties	$	4,965,059	$	5,771,085


3.	Leases

The Company has both operating and capital leases, which are separately accounted for and recorded on the Company's condensed consolidated balance sheets. Operating leases are reported as leased vehicles, net, while capital leases are included in finance receivables held for investment, net.

Operating Leases

Leased vehicles, net, which is comprised of leases originated under the Chrysler Agreement, consisted of the following as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~

2017:

September 30,
2017 December 31,
2016
Leased vehicles $ 13,831,441
$ 11,939,295
Less: accumulated depreciation (2,830,041 ) (2,326,342 )
Depreciated net capitalized cost 11,001,400
9,612,953
Manufacturer subvention payments, net of accretion (1,098,331 ) (1,066,531 )
Origination fees and other costs 28,214
18,206
Net book value $ 9,931,283
$ 8,564,628

Periodically, the Company executes bulk sales of Chrysler Capital leases to a third party. The bulk sale agreements include certain provisions whereby the Company agrees to share in residual losses for lease terminations with losses over a specific percentage threshold (Note 10). The Company has retained servicing on the sold leases. During the three and nine months ended September 30, 2017 and 2016, the Company did not execute any bulk sales of leases originated under the Chrysler Capital program.



	March 31, 2018			December 31, 2017
Leased vehicles	$	14,660,698		$	14,285,769
Less: accumulated depreciation	(3,007,858		)	(3,110,167		)
Depreciated net capitalized cost	11,652,840			11,175,602
Manufacturer subvention payments, net of accretion	(1,076,716		)	(1,042,477		)
Origination fees and other costs	36,700			27,202
Net book value	$	10,612,824		$	10,160,327

The following summarizes the future minimum rental payments due to the Company as lessor under operating leases as of ~~September 30, 2017:~~March 31, 2018:



Remainder of 2017	$	474,217
2018	1,497,436
Remainder of 2018			$	1,376,726
2019	859,498		1,309,509
2020	219,541		634,099
2021	4,282		49,097
2022			153
Thereafter	—		—
Total	$	3,054,974	$	3,369,584

Capital Leases

Certain leases originated by the Company are accounted for as capital leases, as the contractual residual values are nominal amounts. Capital lease receivables, net consisted of the following as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Gross investment in capital leases	$	25,725		$	39,417		$	25,992		$	27,234
Origination fees and other	79			150			155			124
Less: unearned income	(4,077		)	(7,545		)	(4,241		)	(4,377		)
Net investment in capital leases before allowance	21,727			32,022			21,906			22,981
Less: allowance for lease losses	(5,606		)	(9,988		)	(5,757		)	(5,642		)
Net investment in capital leases	$	16,121		$	22,034		$	16,149		$	17,339

The following summarizes the future minimum lease payments due to the Company as lessor under capital leases as of ~~September 30, 2017:~~March 31, 2018:



Remainder of 2017	$	2,864
2018	11,004
Remainder of 2018			$	7,809
2019	5,907		7,046
2020	3,206		5,004
2021	1,994		3,322
2022			2,752
Thereafter	750		59
Total	$	25,725	$	25,992


4.	Credit Loss Allowance and Credit Quality

Credit Loss Allowance

The Company estimates the allowance for credit losses on individually acquired retail installment contracts and personal loans held for investment not classified as TDRs based on delinquency status, historical loss experience, estimated values of underlying collateral, when applicable, and various economic factors. In developing the allowance, the Company utilizes a loss emergence period assumption, a loss given default assumption applied to recorded investment, and a probability of default ~~assumption based on a loss forecasting model.~~assumption. The loss emergence period assumption represents the average length of time between when a loss event is first estimated to have occurred and when the account is charged-off. The recorded investment represents unpaid principal balance adjusted for unaccreted net discounts, subvention from manufacturers, and origination costs. Under this approach, the resulting allowance represents the expected net losses of recorded investment inherent in the portfolio. The Company uses a transition based Markov model for estimating the allowance for credit losses on individually acquired retail installment contracts. This model utilizes the recently observed loan transition rates from various loan statuses, including delinquency and accounting statuses from performing to charge off, to forecast future losses.

For loans classified as TDRs, impairment is generally measured based on the present value of expected future cash flows discounted at the original effective interest rate. For loans that are considered collateral-dependent, such as certain bankruptcy modifications, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. The amount of the allowance is equal to the difference between the loan’s impaired value and the recorded investment.

The Company maintains a general credit loss allowance for receivables from dealers based on risk ratings and individually evaluates loans for specific impairment as necessary. As of ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the credit loss allowance for receivables from dealers is comprised entirely of a general allowance ~~of $167 and $648, respectively,~~ as none of these receivables have been determined to be individually impaired.

The activity in the credit loss allowance for individually acquired and dealer loans for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ was as follows:


	Three Months Ended September 30, 2017										Three Months Ended September 30, 2016						Three Months Ended March 31, 2018
	Retail Installment Contracts Acquired Individually			Receivables from Dealers				Personal Loans			Retail Installment Contracts Acquired Individually			Receivables from Dealers			Retail Installment Contracts Acquired Individually			Receivables from Dealers			Personal Loans
	Retail Installment Contracts Acquired Individually										Retail Installment Contracts Acquired Individually			Receivables from Dealers			Retail Installment Contracts Acquired Individually			Receivables from Dealers			Personal Loans
Balance — beginning of period	$	3,446,968		Receivables from Dealers			$	Personal Loans	713		$	4,362		$	3,422,736			$	837	$	3,261,135		$	164		$	2,565
Provision for credit losses	535,427			(546		)		1,134			609,396			(189		)	458,679			(3		)	(102		)
Charge-offs (a)	(1,206,059		)	—				(1,976		)	(1,246,760		)	—			(1,199,021		)	—			(1,068		)
Recoveries	594,929			—				205			615,913			—			661,229			—			319
Balance — end of period	$	3,371,265		$	167			$	3,725		$	3,401,285		$	648		$	3,182,022		$	161		$	1,714

(a) For the three months ended ~~September 30, 2017,~~March 31, 2018, charge-offs for retail installment contracts acquired individually includes approximately ~~$18~~$7 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. ~~No such charge-offs were recorded for~~There is no additional credit loss allowance on these loans.



	Three Months Ended March 31, 2017
	Retail Installment Contracts Acquired Individually			Receivables from Dealers		Personal Loans
	Retail Installment Contracts Acquired Individually			Receivables from Dealers		Personal Loans
Balance — beginning of period	$	3,411,055		$	724	$	—
Provision for credit losses	629,097			10		7,975
Charge-offs (a)	(1,224,697		)	—		(3,632		)
Recoveries	625,764			—		174
Balance — end of period	$	3,441,219		$	734	$	4,517

(a) For the three months ended ~~September 30, 2016.~~

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Retail Installment Contracts Acquired Individually Receivables from Dealers Personal Loans Retail Installment Contracts Acquired Individually Receivables from Dealers

Balance — beginning of period $ 3,411,055
$ 724
$ —
$ 3,197,414
$ 916
Provision for credit losses 1,682,894
(557 ) 10,275
1,787,277
(133 )
Charge-offs (a) (3,542,471 ) —
(7,194 ) (3,429,905 ) (135 )
Recoveries 1,819,787
—
644
1,846,499
—
Balance — end of period $ 3,371,265
$ 167
$ 3,725
$ 3,401,285
$ 648

~~(a) For the nine months ended September 30,~~March 31, 2017, charge-offs for retail installment contracts acquired individually includes approximately ~~$66~~$24 million for the partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. ~~No such charge-offs were recorded for the nine months ended September 30, 2016.~~

~~The impairment activity related to purchased receivables portfolios for the three and nine months ended September 30, 2017 and 2016 was as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Balance — beginning of period $ 169,323
$ 168,518
$ 169,323
$ 172,308
Incremental provisions for purchased receivable portfolios —
—
—
—
Incremental reversal of provisions for purchased receivable portfolios —
804
—
(2,986 )
Balance — end of period $ 169,323
$ 169,322
$ 169,323
$ 169,322
There is no additional credit loss allowance on these loans.

The Company estimates lease losses on the capital lease receivable portfolio based on delinquency status and loss experience to date, as well as various economic factors. The activity in the lease loss allowance for capital leases for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
Balance — beginning of period	$	6,367		$	12,752		$	9,988		$	19,878		$	5,642		$	9,988
Provision for lease losses	432			387			(597		)	(1,669		)	421			(2,069		)
Charge-offs	(2,655		)	(5,712		)	(9,415		)	(28,267		)	(1,381		)	(3,679		)
Recoveries	1,462			3,617			5,630			21,102			1,075			2,365
Balance — end of period	$	5,606		$	11,044		$	5,606		$	11,044		$	5,757		$	6,605

There was no impairment activity noted for purchased receivable portfolio for the three months ended March 31, 2018 and March 31, 2017.

Delinquencies

Retail installment contracts and personal amortizing term loans are ~~generally~~ classified as non-performing (or nonaccrual) when they are greater than 60 days past due as to contractual principal or interest payments. See discussion of TDR ~~loans~~under the "Troubled Debt Restructurings" section below. Dealer receivables are classified as non-performing when they are greater than 90 days past due. At the time a loan is placed in non-performing (nonaccrual) status, previously accrued and uncollected interest is reversed against interest income. If an account is returned to a performing (accrual) status, the Company returns to accruing interest on the ~~contract.~~loan.

The Company considers an account delinquent when an obligor fails to pay the required minimum portion of the scheduled payment by the due date. With respect to receivables originated by the Company ~~prior to January 1, 2017 and~~ through its “Chrysler Capital” channel, the required minimum payment is 90% of the scheduled payment. With respect to all other receivables originated by the Company or acquired by the Company from an unaffiliated third-party originator prior to January 1, 2017, the required minimum payment is 50% of the scheduled payment. With respect to receivables originated by the Company or acquired by the Company from an unaffiliated third-party originator on or after January 1, 2017, the required minimum payment is 90% of the scheduled payment, ~~regardless~~whereas previous to January 1, 2017 the required minimum payment was 50% of ~~which channel~~ the ~~receivable was originated through.~~scheduled payment. In each case, the period of delinquency is based on the number of days payments are contractually past due.

AsThe accrual of ~~September 30, 2017~~interest on personal loans continues until the loan is charged off. The unpaid principal balance on personal loans (including revolving personal loans) 90 days past due and still accruing totaled $108,022 and $130,034 as of March 31, 2018 and December 31, ~~2016, a~~2017, respectively.

A summary of delinquencies ~~on retail installment contracts held for investment portfolio~~as of March 31, 2018 and December 31, 2017 is as follows:


	September 30, 2017						March 31, 2018
	Retail Installment Contracts Held for Investment						Retail Installment Contracts Held for Investment
	Loans Acquired Individually		Purchased Receivables Portfolios		Total		Loans Acquired Individually		Purchased Receivables Portfolios		Total
Principal, 30-59 days past due	$	2,574,165	$	6,061	$	2,580,226	$	2,234,126	$	4,299	$	2,238,425
Delinquent principal over 59 days (a)	1,460,793		3,750		1,464,543		1,087,491		2,157		1,089,648
Total delinquent principal	$	4,034,958	$	9,811	$	4,044,769	$	3,321,617	$	6,456	$	3,328,073


	December 31, 2016						December 31, 2017
	Retail Installment Contracts Held for Investment						Retail Installment Contracts Held for Investment
	Loans Acquired Individually		Purchased Receivables Portfolios		Total		Loans Acquired Individually		Purchased Receivables Portfolios		Total
Principal, 30-59 days past due	$	2,911,800	$	13,703	$	2,925,503	$	2,822,686	$	4,992	$	2,827,678
Delinquent principal over 59 days (a)	1,520,105		6,638		1,526,743		1,541,728		2,855		1,544,583
Total delinquent principal	$	4,431,905	$	20,341	$	4,452,246	$	4,364,414	$	7,847	$	4,372,261

(a) Interest is accrued until 60 days past due in accordance with the Company's accounting policy for retail installment contracts. The Company's delinquency ratio continues to be calculated using the end of period delinquent principal over 60 days. Refer to Item 2 "Selected Financial Data" for details on delinquent principal over 60 days and related delinquency ratios.

In addition, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of March 31, 2018 and December 31, 2017:



	March 31, 2018				December 31, 2017
	Amount		Percent (a)		Amount		Percent (a)
Non-TDR	$	470,674	1.8	%	$	666,926	2.6	%
TDR	1,346,148		5.2	%	1,390,373		5.4	%
Total nonaccrual principal	$	1,816,822	7.0	%	$	2,057,299	7.9	%

(a) Percent of unpaid principal balance of retail installment contracts individually held for investment.

The balances in the above tables reflect total unpaid principal balance rather than net recorded investment before allowance.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there were no receivables from dealers that were 30 days or more delinquent. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there were ~~$34,109~~$1,244 and ~~$33,886,~~$1,701, respectively, of retail installment contracts held for sale that were 30 days or more delinquent.

Credit Quality Indicators

FICO^® Distribution — A summary of the credit risk profile of the Company’s retail installment contracts held for investment by FICO^® distribution, determined at origination, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 was as follows:


FICO^® Band	September 30, 2017	December 31, 2016	March 31, 2018 (b)	December 31, 2017 (b)
Commercial (a)	2.4%	3.1%	2.2%	2.5%
No-FICOs	11.6%	12.2%	11.2%	11.2%
<540	22.4%	22.1%	21.6%	21.8%
540-599	32.4%	31.4%	32.4%	32.0%
600-639	17.5%	17.4%	17.6%	17.4%
>640	13.7%	13.8%	15.0%	15.1%

(a)No FICO ~~scores are not~~score is obtained on loans to commercial borrowers.

(b)Percentages are based on unpaid principal balance.

Commercial Lending — The Company's risk department performs a ~~commercial~~credit analysis and classifies certain loans over an internal threshold based on the commercial lending classifications described in Note 4 of the ~~2016~~2017 Annual Report on Form 10-K. Fleet loan credit quality indicators for retail installment contracts held for investment with commercial borrowers as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Pass	$	13,482	$	17,585	$	11,154	$	12,276
Special Mention	5,688		2,790		4,812		5,324
Substandard	808		1,488		600		715
Doubtful	—		—		—		—
Loss	—		—		—		—
Total	$	19,978	$	21,863
Total (Unpaid principal balance)					$	16,566	$	18,315

Commercial loan credit quality indicators for receivables from dealers held for investment as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Pass	$	14,340	$	67,681	$	13,910	$	14,130
Special Mention	117		—		1,585		1,657
Substandard	1,613		1,750		—		—
Doubtful	—		—		—		—
Loss	—		—		—		—
Unpaid principal balance	$	16,069	$	69,431
Total (Unpaid principal balance)					$	15,495	$	15,787

Troubled Debt Restructurings

In certain circumstances, the Company modifies the terms of its finance receivables to troubled borrowers. Modifications may include a temporary reduction in monthly payment, reduction in interest rate, an extension of the maturity date, rescheduling of future cash flows, or a combination thereof. A modification of finance receivable terms is considered a TDR if the Company grants a concession to a borrower for economic or legal reasons related to the debtor’s financial difficulties that would not otherwise have been considered. Management considers TDRs to include all individually acquired retail installment contracts that have been modified at least once, deferred for a period of 90 days or more, or deferred at least twice. Additionally, restructurings through bankruptcy proceedings are deemed to be TDRs. The purchased receivables portfolio, operating and capital leases, and loans held for sale, including personal loans, are excluded from the scope of the applicable guidance. The Company's TDR balance as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 primarily consisted of loans that had been deferred or modified to receive a temporary reduction in monthly payment. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there were no receivables from dealers classified as a TDR.

For loans not classified as TDRs, the Company generally estimates an appropriate allowance for credit losses based on delinquency status, the Company’s historical loss experience, estimated values of underlying collateral, and various economic factors. Once a loan has been classified as a TDR, it is generally assessed for impairment based on the present value of expected future cash flows discounted at the loan's original effective interest rate considering all available evidence. For loans that are considered collateral-dependent, such as certain bankruptcy modifications, impairment is measured based on the fair value of the collateral, less its estimated cost to sell.

The table below presents the Company’s TDRs as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	Retail Installment Contracts						Retail Installment Contracts
Outstanding recorded investment (a)	$	6,330,331		$	5,637,792		$	5,978,182		$	6,261,432
Impairment	(1,782,114		)	(1,611,295		)	(1,595,465		)	(1,731,320		)
Outstanding recorded investment, net of impairment	$	4,548,217		$	4,026,497		$	4,382,717		$	4,530,112

(a) As of ~~September 30, 2017,~~March 31, 2018, the outstanding recorded investment excludes ~~$50.7~~$68.1 million of collateral-dependent bankruptcy TDRs that has been written down by ~~$23.7~~$31.1 million to fair value less cost to sell. As of December 31, 2017, the outstanding recorded investment excludes $64.7 million of collateral-dependent bankruptcy TDRs that has been written down by $29.2 million to fair value less cost to sell.

A summary of the Company’s delinquent TDRs at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, is as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	Retail Installment Contracts				Retail Installment Contracts (a)
Principal, 30-59 days past due	$	1,184,804	$	1,253,848	$	1,097,661	$	1,332,239
Delinquent principal over 59 days	753,606		736,691		576,396		818,938
Total delinquent TDR principal	$	1,938,410	$	1,990,539	$	1,674,057	$	2,151,177

(a) The balances in the above table reflects total unpaid principal balance rather than net recorded investment before allowance.

~~A loan that has been classified~~Within the total non-accrual principal in the "Delinquencies" section above, as ~~a TDR remains so until the loan is liquidated through payoff or charge-off. TDRs are placed on nonaccrual status when the Company believes repayment under the revised terms is not reasonably assured~~of March 31, 2018 and ~~at the latest, when the account becomes past due more than 60 days, and considered for return to accrual when a sustained period of repayment performance has been achieved. As of September 30,~~December 31, 2017, the Company had ~~$482,593~~

$1,346,148 and $1,390,373 of TDRs on nonaccrual status respectively, of which $942,890 and $790,461 of TDRs as of March 31, 2018 and December 31, 2017 followed cost recovery basis respectively. The remaining nonaccrual TDR loans ~~which~~follow cash basis of accounting. Out of the total TDRs on cost recovery basis, $832,066 and $652,679 of TDRs were less than 60 days past due ~~but for which repayment was not reasonably assured,~~as of March 31, 2018 and ~~were therefore~~December 31, 2017 respectively. The Company applied $99,860 and $56,740 of interest received, on these loans, towards recorded investment (as compared to interest income), in ~~nonaccrual status.~~accordance with cost recovery method as of March 31, 2018 and December 31, 2017 respectively.

Average recorded investment and income recognized on TDR loans are as follows:


	Three Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
	Retail Installment Contracts				Retail Installment Contracts
Average outstanding recorded investment in TDRs	$	6,143,345	$	5,213,132	$	6,078,203	$	5,711,412
Interest income recognized	$	225,871	$	207,115	$	241,211	$	260,352

Nine Months Ended
September 30, 2017 September 30, 2016
Retail Installment Contracts
Average outstanding recorded investment in TDRs $ 5,929,146
$ 4,940,280
Interest income recognized $ 711,033
$ 576,682

The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs that occurred ~~during~~for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
	Retail Installment Contracts				Retail Installment Contracts
Outstanding recorded investment before TDR	$	1,123,080	$	929,871	$	584,448	$	881,699
Outstanding recorded investment after TDR	$	1,122,450	$	932,472	$	582,664	$	866,278
Number of contracts (not in thousands)	66,001		52,780		34,374		49,499

Nine Months Ended
September 30, 2017 September 30, 2016
Retail Installment Contracts
Outstanding recorded investment before TDR $ 2,778,407
$ 2,463,409
Outstanding recorded investment after TDR $ 2,776,006
$ 2,478,035
Number of contracts (not in thousands) 160,098
139,524

Loan restructurings accounted for as TDRs within the previous twelve months that subsequently defaulted during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ are summarized in the following table:

Three Months Ended
September 30, 2017 September 30, 2016
Retail Installment Contracts
Recorded investment in TDRs that subsequently defaulted (a) $ 197,953
$ 206,247
Number of contracts (not in thousands) 11,219
11,745


	Nine Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
	Retail Installment Contracts				Retail Installment Contracts
Recorded investment in TDRs that subsequently defaulted (a)	$	600,117	$	565,724	$	195,265	$	211,697
Number of contracts (not in thousands)	33,735		32,256		11,540		11,894

(a) For TDR modifications and TDR modifications that subsequently defaults, the allowance methodology remains ~~unchanged.~~unchanged, however the transition rates of the TDR loans are adjusted to reflect the respective risks.

5. Debt

Revolving Credit Facilities

The following table presents information regarding credit facilities as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017										March 31, 2018
	Maturity Date(s)	Utilized Balance		Committed Amount		Effective Rate	Assets Pledged		Restricted Cash Pledged		Maturity Date(s)	Utilized Balance		Committed Amount		Effective Rate	Assets Pledged		Restricted Cash Pledged
Facilities with third parties:
Facilities with third parties
Warehouse line	January 2018	$	181,083	$	500,000	2.96%	$	276,519	$	—	August 2019	$	229,984	$	500,000	3.74%	$	348,645	$	19,915
Warehouse line	Various (a)	258,545		1,250,000		1.21%	387,668		11,554		Various (a)	603,145		1,250,000		2.71%	865,991		24,063
Warehouse line (b)	August 2018	—		780,000		1.39%	2,329		121		August 2019	2,105,843		3,900,000		3.42%	3,108,422		68,631
Warehouse line (c)	August 2018	2,766,543		3,120,000		2.22%	3,724,088		61,367
Warehouse line											December 2018	—		300,000		—%	—		—
Warehouse line	October 2018	445,277		1,800,000		3.45%	661,090		12,644		October 2019	611,477		1,800,000		3.43%	839,499		14,727
Repurchase facility (d)	December 2017	254,120		254,120		3.35%	—		13,708		Various (c)	291,949		291,949		3.49%	407,299		12,962
Repurchase facility (d)	April 2018	202,311		202,311		2.62%	—		—		April 2018 (e)	196,727		196,727		3.06%	257,054		—
Repurchase facility (d)	March 2018	148,690		148,690		3.88%	—		—		June 2018	153,177		153,177		3.80%	222,108		—
Repurchase facility (d)	November 2017	53,335		53,335		2.43%	—		—		December 2018	67,772		67,772		3.55%	156,202		—
Warehouse line	November 2018	274,499		1,000,000		3.44%	401,219		7,920		November 2019	297,699		1,000,000		3.63%	420,623		11,557
Warehouse line	October 2018	87,965		400,000		3.72%	132,197		2,852		October 2019	148,565		400,000		3.65%	206,287		4,070
Warehouse line	November 2018	57,820		500,000		4.54%	63,712		2,215		November 2019	358,220		500,000		2.06%	421,622		21,337
Warehouse line (e)	October 2017	235,700		300,000		2.67%	276,521		9,278
Warehouse line											October 2018	229,800		300,000		3.37%	268,054		10,719
Total facilities with third parties		4,965,888		10,308,456			5,925,343		121,659			5,294,358		10,659,625			7,521,806		187,981
Facilities with Santander and related subsidiaries (f,g):
Line of credit	December 2017	—		1,000,000		3.04%	—		—
Line of credit	December 2018	—		1,000,000		3.09%	—		—
Promissory Note	March 2019	300,000		300,000		2.45%	—		—
Promissory Note	May 2020	500,000		500,000		3.49%	—		—
Promissory Note (h)	March 2022	650,000		650,000		4.20%	—		—
Promissory Note	August 2021	650,000		650,000		3.44%	—		—
Line of credit	December 2018	265,400		750,000		3.77%	—		—
Line of credit	March 2019	—		3,000,000		3.94%	—		—
Facilities with Santander and related subsidiaries:
Line of credit (f)											December 2018	30,000		1,000,000		3.09%	30,000		—
Promissory Note (g)											December 2021	250,000		250,000		3.70%	—		—
Promissory Note (g)											December 2022	250,000		250,000		3.95%	—		—
Promissory Note (g)											March 2019	300,000		300,000		3.38%	—		—
Promissory Note (g)											October 2020	400,000		400,000		3.10%	—		—
Promissory Note (g)											May 2020	500,000		500,000		3.49%	—		—
Promissory Note (g) (h)											March 2022	650,000		650,000		4.20%	—		—
Promissory Note (g)											August 2021	650,000		650,000		3.44%	—		—
Line of credit (f)											December 2018	114,200		750,000		4.34%	126,392		2,376
Line of credit (f)											March 2019	—		3,000,000		3.94%	—		—
Total facilities with Santander and related subsidiaries		2,365,400		7,850,000			—		—			3,144,200		7,750,000			156,392		2,376
Total revolving credit facilities		$	7,331,288	$	18,158,456		$	5,925,343	$	121,659		$	8,438,558	$	18,409,625		$	7,678,198	$	190,357


~~(a)~~	~~Half of the outstanding balance on this facility matures in March 2018 and half matures in March 2019.~~


~~(b)~~	~~This line is held exclusively for financing of Chrysler Capital loans.~~


~~(c)~~	~~This line is held exclusively for financing of Chrysler Capital leases.~~


~~(d)~~	~~These repurchase facilities are collateralized by securitization notes payable retained by the Company. These facilities have rolling maturities of up to one year.~~


~~(e)~~	~~In October 2017, the warehouse line that matured was extended to December 2017.~~

(a) Half of the outstanding balance on this facility matures in March 2019 and remaining balance matures in March 2020.

(b) This line is held exclusively for financing of Chrysler Capital leases.

(d) These repurchase facilities are collateralized by securitization notes payable retained by the Company. These facilities have rolling maturities of up to one year. As the borrower, we are exposed to liquidity risk due to changes in the market value of the retained securities pledged. In some instances, we place or receive cash collateral with counterparties under collateral arrangements associated with our repurchase agreements.

(e) Half of this repurchase facility was settled on maturity in April 2018 and remaining balance of this repurchase facility was extended to July 2018.


(f)	~~The~~These lines ~~of credit generally~~ are also collateralized by securitization notes payable and residuals retained by the Company.


(g)	As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016, zero~~2017, $3,000,000 and ~~$1,316,568,~~$3,000,000, respectively, of the aggregate outstanding balances on these facilities were unsecured.


~~(g)~~(h)	In ~~October~~ 2017, the ~~Company executed a $400 million promissory note with SHUSA. The promissory note matures October 10, 2020.~~

~~(h)~~

~~The~~ Company entered into an interest rate swap to hedge the interest rate risk on this fixed rate debt. ~~During the three months ended September 30, 2017, the Company terminated the~~This derivative was designated as fair value ~~hedge. At~~hedge at inception. This was later terminated and the ~~time of termination, the~~unamortized fair value hedge adjustment as of March 31, 2018 and December 31, 2017 was ~~$4.5 million,~~$$3,994 and $4,223, the amortization of which will reduce interest expense over the remaining life of the fixed rate debt.


	December 31, 2016										December 31, 2017
	Maturity Date(s)	Utilized Balance		Committed Amount		Effective Rate	Assets Pledged		Restricted Cash Pledged		Maturity Date(s)	Utilized Balance		Committed Amount		Effective Rate	Assets Pledged		Restricted Cash Pledged
Facilities with third parties:
Warehouse line	January 2018	$	153,784	$	500,000	3.17%	$	213,578	$	—	January 2018	$	336,484	$	500,000	2.87%	$	473,208	$	—
Warehouse line	Various	462,085		1,250,000		2.52%	653,014		14,916		Various	339,145		1,250,000		2.53%	461,353		12,645
Warehouse line	August 2018	534,220		780,000		1.98%	608,025		24,520		August 2019	2,044,843		3,900,000		2.96%	2,929,890		53,639
Warehouse line	August 2018	3,119,943		3,120,000		1.91%	4,700,774		70,991		December 2018	—		300,000		1.49%	—		—
Warehouse line	October 2018	702,377		1,800,000		2.51%	994,684		23,378		October 2019	226,577		1,800,000		4.95%	311,336		6,772
Repurchase facility	December 2017	507,800		507,800		2.83%	—		22,613		Various	325,775		325,775		3.24%	474,188		13,842
Repurchase facility	April 2017	235,509		235,509		2.04%	—		—		April 2018	202,311		202,311		2.67%	264,120		—
Repurchase facility											March 2018	147,500		147,500		3.91%	222,108		—
Repurchase facility											March 2018	68,897		68,897		3.04%	95,762		—
Warehouse line	November 2018	578,999		1,000,000		1.56%	850,758		17,642		November 2019	403,999		1,000,000		2.66%	546,782		14,729
Warehouse line	October 2018	202,000		400,000		2.22%	290,867		5,435		October 2019	81,865		400,000		4.09%	114,021		3,057
Warehouse line	November 2018	—		500,000		2.07%	—		—		November 2019	435,220		500,000		1.92%	521,365		16,866
Warehouse line	October 2017	243,100		300,000		2.38%	295,045		9,235		October 2018	235,700		300,000		2.84%	289,634		10,474
Total facilities with third parties		6,739,817		10,393,309			8,606,745		188,730			4,848,316		10,694,483			6,703,767		132,024
Facilities with Santander and related subsidiaries:
Line of credit	December 2017	500,000		500,000		3.04%	—		—		December 2018	—		1,000,000		3.09%	—		—
Line of credit	December 2018	175,000		500,000		3.87%	—		—
Line of credit	December 2017	1,000,000		1,000,000		2.86%	—		—
Line of credit	December 2018	1,000,000		1,000,000		2.88%	—		—
Promissory Note											December 2021	250,000		250,000		3.70%	—		—
Promissory Note											December 2022	250,000		250,000		3.95%	—		—
Promissory Note											March 2019	300,000		300,000		2.67%	—		—
Promissory Note											October 2020	400,000		400,000		3.10%	—		—
Promissory Note											May 2020	500,000		500,000		3.49%	—		—
Promissory Note											March 2022	650,000		650,000		4.20%	—		—
Promissory Note											August 2021	650,000		650,000		3.44%	—		—
Line of credit	March 2017	300,000		300,000		2.25%	—		—		December 2018	750,000		750,000		1.33%	—		—
Line of credit	March 2019	—		3,000,000		3.74%	—		—		March 2019	—		3,000,000		3.94%	—		—
Total facilities with Santander and related subsidiaries		2,975,000		6,300,000			—		—			3,750,000		7,750,000			—		—
Total revolving credit facilities		$	9,714,817	$	16,693,309		$	8,606,745	$	188,730		$	8,598,316	$	18,444,483		$	6,703,767	$	132,024

Facilities with Third Parties

The warehouse lines and repurchase facilities are fully collateralized by a designated portion of the Company’s retail installment contracts (Note 2), leased vehicles (Note 3), securitization notes payables and residuals retained by the Company.`

Facilities with Santander and Related Subsidiaries

Lines of Credit

Through SHUSA, Santander provides the Company with $3,000,000 of committed revolving credit that can be drawn on an unsecured basis. Through its New York branch, Santander provides the Company with ~~$2,750,000~~$1,750,000 of long-term committed revolving credit facilities. The $1,750,000 of longer-term committed revolving credit facilities ~~offered through the New York branch are structured as three-~~is composed of a $1,000,000 facility that permits unsecured borrowing but is generally collateralized by retained residuals and ~~five-year floating rate~~$750,000 facility that is securitized by Prime retail installment loans. Both facilities ~~with~~have current maturity dates of December 31, 2017 and December 31, 2018, respectively. These facilities currently permit unsecured borrowing but generally are collateralized by retail installment contracts and retained residuals. Any secured balances outstanding under the facilities at the time of their maturity will amortize to match the maturities and expected cash flows of the corresponding collateral.2018.

Promissory Notes

Through SHUSA, Santander provides the Company with ~~$2,100,000~~$3,000,000 of promissory notes. Santander Consumer ABS Funding 2, LLC (a subsidiary) established a committed facility of $300 million with SHUSA on March 6, 2014. This facility matured on March 6, 2017 and was replaced on the same day with a $300 million term promissory note executed by SC Illinois as the borrower and SHUSA as the lender. Interest accrues on this note at a rate equal to three-month LIBOR plus 1.35%. The note has a maturity date of March 6, 2019.

~~In addition, SC Illinois as borrower executed the following promissory notes with SHUSA;~~

•~~a $500 million term promissory note on May 11, 2017. Interest accrues on this note at the rate of 3.49%. The note has a maturity date of May 11, 2020.~~

•~~a $650 million term promissory note on March 31, 2017. Interest accrues on this note at the rate of 4.20%. The note has a maturity date of March 31, 2022.~~

•~~a $650 million term promissory note on August 3, 2017. Interest accrues on this note at the rate of 3.44%. The note has a maturity date of August 3, 2021.~~

Secured Structured Financings

The following table presents information regarding secured structured financings as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017										March 31, 2018
	Original Estimated Maturity Date(s)	Balance		Initial Note Amounts Issued		Initial Weighted Average Interest Rate	Collateral (b)		Restricted Cash		Estimated Maturity Date(s)	Balance		Initial Note Amounts Issued		Initial Weighted Average Interest Rate	Collateral (b)		Restricted Cash
2013 Securitizations	April 2019 - March 2021	$	612,494	$	5,439,700	0.90% - 1.59%	$	797,901	$	166,215
2013 Securitization											March 2021	$	159,041	$	2,260,930	1.24%	$	183,756	$	46,212
2014 Securitizations	February 2020 - April 2022	1,340,311		6,391,020		1.16% - 1.72%	1,584,279		220,843		February 2020 - April 2022	982,601		6,391,020		1.16% - 1.72%	1,163,941		218,420
2015 Securitizations	April 2020- January 2023	2,821,425		9,185,032		1.33% - 2.29%	3,964,228		387,272		June 2020 - January 2023	2,132,438		9,158,532		1.33% - 2.29%	3,019,846		378,911
2016 Securitizations	April 2022 - March 2024	4,087,267		7,462,790		1.63% - 2.80%	5,425,003		366,363		April 2022 - March 2024	3,153,267		7,462,790		1.63%-2.80%	4,221,844		366,250
2017 Securitizations	April 2023 - Sept 2024	6,066,240		7,391,890		1.35% - 2.52%	7,853,934		346,534		April 2023 - September 2024	6,433,289		9,296,570		1.35% - 2.52%	8,691,397		487,993
Public securitizations (a)		14,927,737		35,870,432			19,625,345		1,487,227
2011 Private issuances	December 2018	360,029		1,700,000		1.46%	475,937		23,648
2018 Securitizations											May 2022 - May 2025	3,082,538		3,415,030		2.41% - 2.77%	3,629,647		131,952
Public Securitizations (a)												15,943,174		37,984,872			20,910,431		1,629,738
2011 Private issuance											September 2028	213,510		1,700,000		1.46%	332,325		21,100
2013 Private issuances	September 2018	2,379,762		2,044,054		1.28% - 1.38%	3,716,406		153,499		August 2021-September 2024	1,848,474		2,044,054		1.28%-1.38%	3,118,953		221,752
2014 Private issuances	March 2018 -November 2021	159,957		1,530,125		1.05% - 1.40%	274,552		11,055
2014 Private issuance											November 2021	74,908		1,530,125		1.10%	157,838		8,355
2015 Private issuances	December 2016 - July 2019	2,223,017		2,305,062		0.88% - 2.81%	1,137,412		52,172		November 2018 - September 2021	1,723,235		2,058,187		0.88%-2.80%	733,193		101,080
2016 Private issuances	May 2020 - September 2024	1,720,933		3,050,000		1.55% - 2.86%	2,441,657		89,456		May 2020 - September 2024	1,215,814		3,050,000		1.55%-2.86%	1,799,082		122,417
2017 Private issuances	April 2021 - September 2021	1,486,928		1,600,000		1.85% - 2.44%	1,877,131		41,287		April 2021 - September 2021	1,214,597		1,600,000		1.85%-2.44%	1,550,015		83,298
2018 Private issuance											June 2022	628,895		650,002		2.42%	831,285		15,484
Privately issued amortizing notes		8,330,626		12,229,241			9,923,095		371,117			6,919,433		12,632,368			8,522,691		573,486
Total secured structured financings		$	23,258,363	$	48,099,673		$	29,548,440	$	1,858,344		$	22,862,607	$	50,617,240		$	29,433,122	$	2,203,224


~~(a)~~	~~Secured structured financings executed under Rule 144A of the Securities Act are included within this balance.~~


~~(b)~~	~~Secured structured financings may be collateralized by the Company's collateral overages of other issuances.~~

(a)Securitizations executed under Rule 144A of the Securities Act are included within this balance.

(b)Secured structured financings may be collateralized by the Company's collateral overages of other issuances.


	December 31, 2016										December 31, 2017
	Original Estimated Maturity Date(s)	Balance		Initial Note Amounts Issued		Initial Weighted Average Interest Rate	Collateral		Restricted Cash		Estimated Maturity Date(s)	Balance		Initial Note Amounts Issued		Initial Weighted Average Interest Rate	Collateral		Restricted Cash
2012 Securitizations	September 2018	$	197,470	$	2,525,540	0.92%-1.23%	$	312,710	$	73,733
2013 Securitizations	January 2019 - January 2021	1,172,904		6,689,700		0.89%-1.59%	1,484,014		222,187		January 2019 - March 2021	$	418,806	$	4,239,700	0.89%-1.59%	$	544,948	$	125,696
2014 Securitizations	February 2020 - January 2021	1,858,600		6,391,020		1.16%-1.72%	2,360,939		250,806		February 2020 - April 2022	1,150,422		6,391,020		1.16%-1.72%	1,362,814		210,937
2015 Securitizations	September 2019 - January 2023	4,326,292		9,317,032		1.33%-2.29%	5,743,884		468,787		September 2019 - January 2023	2,484,051		9,171,332		1.33%-2.29%	3,465,671		366,062
2016 Securitizations	April 2022 - March 2024	5,881,216		7,462,790		1.63%-2.46%	7,572,977		408,086		April 2022 - March 2024	3,596,822		7,462,790		1.63%-2.80%	4,798,807		344,899
Securitizations		13,436,482		32,386,082			17,474,524		1,423,599
2010 Private issuances	June 2011	113,157		516,000		1.29%	213,235		6,270
2011 Private issuances	December 2018	342,369		1,700,000		1.46%	617,945		31,425
2017 Securitizations											April 2023 - September 2024	7,343,157		9,535,800		2.01%-2.52%	9,701,381		422,865
Public Securitizations												14,993,258		36,800,642			19,873,621		1,470,459
2011 Private issuance											September 2028	281,946		1,700,000		1.46%	398,051		20,356
2013 Private issuances	September 2018-September 2020	2,375,964		2,693,754		1.13%-1.38%	4,122,963		164,740		August 2021 - September 2024	2,292,279		2,044,054		1.28%-1.38%	3,719,148		155,066
2014 Private issuances	March 2018 - December 2021	643,428		3,271,175		1.05%-1.40%	1,129,506		68,072		March 2018 - November 2021	117,730		1,538,087		1.05%-1.40%	231,997		9,552
2015 Private issuances	December 2016 - July 2019	2,185,166		2,855,062		0.88%-2.81%	2,384,661		140,269		November 2018 - September 2021	2,009,627		2,305,062		0.88%-4.09%	988,247		55,451
2016 Securitizations	May 2020 - September 2024	2,512,323		3,050,000		1.55%-2.86%	3,553,577		90,092
2016 Private issuances											May 2020 - September 2024	1,489,464		3,050,000		1.55%-2.86%	2,147,988		89,460
2017 Private issuances											April 2021 - September 2021	1,373,591		1,641,079		1.85%-2.27%	1,747,227		47,415
Privately issued amortizing notes		8,172,407		14,085,991			12,021,887		500,868			7,564,637		12,278,282			9,232,658		377,300
Total secured structured financings		$	21,608,889	$	46,472,073		$	29,496,411	$	1,924,467		$	22,557,895	$	49,078,924		$	29,106,279	$	1,847,759

Most of the Company’s secured structured financings are in the form of public, SEC-registered securitizations. The Company also executes private securitizations under Rule 144A of the Securities Act and periodically issues private term amortizing notes, which are structured similarly to securitizations but are acquired by banks and conduits. The Company’s securitizations and private issuances are collateralized by vehicle retail installment contracts and loans or leases. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had private issuances of notes backed by vehicle leases totaling ~~$5,507,315~~$4,604,923 and ~~$3,862,274,~~$3,710,377, respectively.

Unamortized debt issuance costs are amortized as interest expense over the terms of the related notes payable using the effective interest method and are classified as a discount to the related recorded debt balance. Amortized debt issuance costs were ~~$9,489~~$7,920 and ~~$7,021~~$8,729 for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $26,595 and $20,224 for the nine months ended September 30, 2017 and 2016,~~ respectively. For securitizations, the term takes into consideration the expected execution of the contractual call option, if applicable. Amortization of premium or accretion of discount on acquired notes payable is also included in interest expense using the effective interest method over the estimated remaining life of the acquired notes. Total interest expense on secured structured financings for the three months ended ~~September 30,~~March 31, 2018 and 2017 was $150,675 and ~~2016 was $152,950 and $108,720, respectively and for the nine months ended September 30, 2017 and 2016 was $409,968 and $305,677,~~$124,065, respectively.


6.	Variable Interest Entities

The Company transfers retail installment contracts and ~~leased vehicles~~vehicle leases into newly formed Trusts that then issue one or more classes of notes payable backed by the collateral. The Company’s continuing involvement with these Trusts is in the form of servicing the assets and, generally, through holding residual interests in the Trusts. The Trusts are considered VIEs under U.S. GAAP and the Company may or may not consolidate these VIEs on the condensed consolidated balance sheets.

For further description of the Company’s securitization activities, involvement with VIEs and accounting policies regarding consolidation of VIEs, see Note 7 of the ~~2016~~2017 Annual Report on Form 10-K.

On-balance sheet variable interest entities

The Company retains servicing for receivables transferred to the Trusts and receives a monthly servicing fee on the outstanding principal balance. Supplemental fees, such as late charges, for servicing the receivables are reflected in fees, commissions and other income. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was servicing ~~$26,315,659~~$25,500,802 and ~~$27,802,971,~~$26,250,482, respectively, of gross retail installment contracts that have been transferred to consolidated Trusts. The remainder of the Company’s retail installment contracts remain unpledged.

A summary of the cash flows received from consolidated securitization trusts during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ is as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
Assets securitized	$	2,998,430	$	2,043,114	$	15,395,158	$	12,026,706	$	7,240,944	$	7,646,625

Net proceeds from new securitizations (a)	$	2,936,719	$	1,688,822	$	11,998,611	$	9,509,135	$	3,476,322	$	5,576,801
Net proceeds from sale of retained bonds	—		—		273,733		128,798		211,610		115,970
Cash received for servicing fees (b)	228,131		200,634		653,048		595,070		215,790		208,923
Net distributions from Trusts (b)	666,179		776,306		2,073,965		2,167,512		545,152		678,229
Total cash received from Trusts	$	3,831,029	$	2,665,762	$	14,999,357	$	12,400,515	$	4,448,874	$	6,579,923


(a)	Includes additional advances on existing securitizations.


(b)	These amounts are not reflected in the accompanying condensed consolidated statements of cash flows because these cash flows are intra-company and eliminated in consolidation.

Off-balance sheet variable interest entities

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 the Company sold ~~$1,347,010~~$1,475,253 and ~~$2,583,341~~$700,022 of gross retail installment contracts to VIEs in off-balance sheet securitizations for a loss of ~~$6,846~~$16,903 and ~~$13,026,~~$2,719, respectively, which is recorded in investment losses, net in the accompanying condensed consolidated statements of income. ~~The~~These transactions were executed under securitization platforms with Santander. Santander, as a majority owned affiliate, ~~will hold~~holds eligible vertical interest in Notes and Certificates of not less than 5% to comply with the Dodd-Frank Act risk retention rules. ~~For the three and nine months ended September 30, 2016, the Company executed no off-balance sheet securitizations with VIEs with which it has continuing involvement.~~

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was servicing ~~$3,955,935~~$4,358,695 and ~~$2,741,101,~~$3,428,248, respectively, of gross retail installment contracts that have been sold in off-balance sheet securitizations and were subject to an optional clean-up call. The portfolio was comprised as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
SPAIN	$	2,265,206	$	—	$	3,176,238	$	2,024,016
Total serviced for related parties	2,265,206		—		3,176,238		2,024,016
Chrysler Capital securitizations	1,690,729		2,472,756		1,182,457		1,404,232
Other third parties	—		268,345
Total serviced for third parties	1,690,729		2,741,101		1,182,457		1,404,232
Total serviced for others portfolio	$	3,955,935	$	2,741,101	$	4,358,695	$	3,428,248

Other than repurchases of sold assets due to standard representations and warranties, the Company has no exposure to loss as a result of its involvement with these VIEs.

A summary of the cash flows received from off-balance sheet securitization trusts during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ is as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
Receivables securitized (a)	$	1,347,010	$	—	$	2,583,341	$	—	$	1,475,253	$	700,022

Net proceeds from new securitizations	$	1,347,430	$	—	$	2,588,227	$	—	$	1,474,820	$	702,319
Cash received for servicing fees	12,309		10,027		25,677		38,885		8,078		1,398
Total cash received from securitization trusts	$	1,359,739	$	10,027	$	2,613,904	$	38,885	$	1,482,898	$	703,717

(a) Represents the unpaid principal balance at the time of original securitization.


7.	Derivative Financial Instruments

The Company uses derivatives financial instruments such as interest rate swaps, interest rate caps and the corresponding options written in order to offset the interest rate caps to manage the Company's exposure to changing interest rates. The Company uses both derivatives that qualify for hedge accounting treatment and economic hedges.

In addition, the Company is the holder of a warrant that gives it the right, if certain vesting conditions are satisfied, to purchase additional shares in a company in which it has a cost method investment. This warrant was issued in 2012 and is carried at its estimated fair value of zero at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

The underlying notional amounts and aggregate fair values of these derivatives financial instruments at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, are as follows:


	September 30, 2017										March 31, 2018
	Notional		Fair Value			Asset		Liability			Notional		Fair Value			Asset		Liability
Interest rate swap agreements designated as cash flow hedges	$	4,978,500	$	39,986		$	39,986	$	—		$	4,682,300	$	71,351		$	71,351	$	—
Interest rate swap agreements not designated as hedges	1,493,800		8,801			8,801		—			2,163,600		16,474			16,685		(211		)
Interest rate cap agreements	11,900,578		90,313			116,568		(26,255		)	10,825,149		197,667			197,667		—
Options for interest rate cap agreements	11,900,578		(90,259		)	26,304		(116,563		)	10,825,149		(197,548		)	—		(197,548		)

December 31, 2016
Notional Fair Value Asset Liability
Interest rate swap agreements designated as cash flow hedges $ 7,854,700
$ 44,618
$ 45,551
$ (933 )
Interest rate swap agreements not designated as hedges 1,019,900
1,939
2,076
(137 )
Interest rate cap agreements 9,463,935
76,269
76,269
—
Options for interest rate cap agreements 9,463,935
(76,281 ) —
(76,281 )
Total return settlement 658,471
(30,618 ) —
(30,618 )

During the three months ended June 30, 2017, the Company entered into an interest rate swap to hedge the interest rate risk on a certain fixed rate debt. This derivative was designated as a fair value hedge at inception and was accounted for by recording the change in the fair value of the derivative instrument and the related hedged item attributable to interest rate risk on the Condensed Consolidated Balance Sheets, with the corresponding income or expense recorded in the Condensed Consolidated Statements of Operations. During the three months ended September 30, 2017, the Company terminated the interest rate swap.

The Company purchased price holdback payments and total return settlement payments that were considered to be derivatives, collectively referred to herein as “total return settlement,” and accordingly were marked to fair value each reporting period. The Company was obligated to make purchase price holdback payments on a periodic basis to a third-party originator of loans that the Company has purchased, when losses are lower than originally expected. The Company also was obligated to make total return settlement payments to this third-party originator in 2016 and 2017 if returns on the purchased loans are greater than originally expected. All purchase price holdback payments and all total return settlement payments due in 2016 and 2017 have been made and as of September 30, 2017, the derivative instrument has been settled.



	December 31, 2017
	Notional		Fair Value			Asset		Liability
Interest rate swap agreements designated as cash flow hedges	$	4,926,900	$	45,986		$	45,986	$	—
Interest rate swap agreements not designated as hedges	1,736,400		9,596			9,596		—
Interest rate cap agreements	10,906,081		103,721			135,830		(32,109		)
Options for interest rate cap agreements	10,906,081		(103,659		)	32,165		(135,824		)

See Note 13 for disclosure of fair value and balance sheet location of the Company's derivative financial instruments.

The Company enters into legally enforceable master netting agreements that reduce risk by permitting netting of transactions, such as derivatives and collateral posting, with the same counterparty on the occurrence of certain events. A master netting agreement allows two counterparties the ability to net-settle amounts under all contracts, including any related collateral posted, through a single payment. The right to offset and certain terms regarding the collateral process, such as valuation, credit events and settlement, are contained in ISDA master agreements. The Company has elected to present derivative balances on a gross basis even if the derivative is subject to a legally enforceable master netting (ISDA) agreement. Collateral that is received or pledged for these transactions is disclosed within the “Gross amounts not offset in the Condensed Consolidated Balance Sheet” section of the tables below. Information on the offsetting of derivative assets and derivative liabilities due to the right of offset was as follows, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:

Gross Amounts Not Offset in the
Condensed Consolidated Balance Sheet
Assets Presented
in the
Condensed Consolidated
Balance Sheet Cash
Collateral
Received (a) Net
Amount
September 30, 2017
Interest rate swaps - Santander and affiliates $ 6,042
$ (336 ) $ 5,706
Interest rate swaps - third party 42,745
(27,146 ) 15,599
Interest rate caps - Santander and affiliates 5,053
(5,053 ) —
Interest rate caps - third party 111,515
(78,896 ) 32,619
Back to back - Santander & affiliates $ 9,775
—
$ 9,775
Back to back - third party $ 16,529
—
$ 16,529
Total derivatives subject to a master netting arrangement or similar arrangement 191,659
(111,431 ) 80,228
Total derivatives not subject to a master netting arrangement or similar arrangement —
—
—
Total derivative assets $ 191,659
$ (111,431 ) $ 80,228
Total financial assets $ 191,659
$ (111,431 ) $ 80,228

December 31, 2016
Interest rate swaps - Santander and affiliates $ 5,372
$ —
$ 5,372
Interest rate swaps - third party 42,254
(22,100 ) 20,154
Interest rate caps - Santander and affiliates 7,593
—
7,593
Interest rate caps - third party 68,676
—
68,676
Total derivatives subject to a master netting arrangement or similar arrangement 123,895
(22,100 ) 101,795
Total derivatives not subject to a master netting arrangement or similar arrangement —
—
—
Total derivative assets $ 123,895
$ (22,100 ) $ 101,795
Total financial assets $ 123,895
$ (22,100 ) $ 101,795


~~(a)~~	~~Cash collateral received is reported in Other liabilities or Due to affiliate, as applicable, in the condensed consolidated balance sheet.~~

Gross Amounts Not Offset in the
Condensed Consolidated Balance Sheet
Liabilities Presented
in the Condensed
Consolidated
Balance Sheet Cash
Collateral
Pledged (a) Net
Amount
September 30, 2017
Interest rate swaps - Santander & affiliates $ —
$ —
$ —
Interest rate swaps - third party —
—
—
Interest rate caps - Santander and affiliates 9,775
—
9,775
Interest rate caps - third party 16,480
$ (372 ) 16,108
Back to back - Santander & affiliates 5,053
(5,053 ) —
Back to back - third party 111,510
(46,650 ) 64,860
Total derivatives subject to a master netting arrangement or similar arrangement 142,818
(52,075 ) 90,743
Total derivatives not subject to a master netting arrangement or similar arrangement —
—
—
Total derivative liabilities $ 142,818
$ (52,075 ) $ 90,743
Total financial liabilities $ 142,818
$ (52,075 ) $ 90,743

December 31, 2016
Interest rate swaps - Santander & affiliates $ 546
$ (546 ) $ —
Interest rate swaps - third party 524
(524 ) —
Back to back - Santander & affiliates 7,593
(7,593 ) —
Back to back - third party 68,688
(68,688 ) —
Total derivatives subject to a master netting arrangement or similar arrangement 77,351
(77,351 ) —
Total return settlement 30,618
—
30,618
Total derivatives not subject to a master netting arrangement or similar arrangement 30,618
—
30,618
Total derivative liabilities $ 107,969
$ (77,351 ) $ 30,618
Total financial liabilities $ 107,969
$ (77,351 ) $ 30,618



	Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Assets Presented in the Condensed Consolidated Balance Sheet		Cash Collateral Received (a)			Net Amount
March 31, 2018
Interest rate swaps - Santander and affiliates	$	—	$	—		$	—
Interest rate swaps - third party (b)	88,036		(61,617		)	26,419
Interest rate caps - Santander and affiliates	21,241		(12,240		)	9,001
Interest rate caps - third party	176,426		(64,993		)	111,433
Total derivatives subject to a master netting arrangement or similar arrangement	285,703		(138,850		)	146,853
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—
Total derivative assets	$	285,703	$	(138,850	)	$	146,853
Total financial assets	$	285,703	$	(138,850	)	$	146,853

December 31, 2017
Interest rate swaps - Santander and affiliates	$	8,621	$	(3,461	)	$	5,160
Interest rate swaps - third party	46,961		(448		)	46,513
Interest rate caps - Santander and affiliates	18,201		(12,240		)	5,961
Interest rate caps - third party	149,794		(55,835		)	93,959
Total derivatives subject to a master netting arrangement or similar arrangement	223,577		(71,984		)	151,593
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—
Total derivative assets	$	223,577	$	(71,984	)	$	151,593
Total financial assets	$	223,577	$	(71,984	)	$	151,593

~~(a)~~

Cash collateral pledged is reported in Other assets or Due from affiliate, as applicable, in the condensed consolidated balance sheet. In certain instances, the Company is over-collateralized since the actual amount of cash pledged as collateral exceeds the associated financial liability. As a result, the actual amount of cash collateral pledged that is reported in Other assets or Due from affiliates may be greater than the amount shown in the table above.

(a) Cash collateral received is reported in Other liabilities or Due to affiliate, as applicable, in the consolidated balance sheet.

(b) Includes derivative instruments originally transacted with Santander and affiliates and subsequently amended to reflect clearing with central clearing counterparties.



	Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Liabilities Presented in the Condensed Consolidated Balance Sheet		Cash Collateral Pledged (a)			Net Amount
March 31, 2018
Interest rate swaps - third party	211		(211		)	—
Back to back - Santander & affiliates	21,241		(21,241		)	—
Back to back - third party	176,307		(176,307		)	—
Total derivatives subject to a master netting arrangement or similar arrangement	197,759		(197,759		)	—
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—
Total derivative liabilities	$	197,759	$	(197,759	)	$	—
Total financial liabilities	$	197,759	$	(197,759	)	$	—

December 31, 2017
Back to back - Santander & affiliates	18,201		(18,201		)	—
Back to back - third party	149,732		(133,540		)	16,192
Total derivatives subject to a master netting arrangement or similar arrangement	167,933		(151,741		)	16,192
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—
Total derivative liabilities	$	167,933	$	(151,741	)	$	16,192
Total financial liabilities	$	167,933	$	(151,741	)	$	16,192

(a) Cash collateral pledged is reported in Other assets or Due from affiliate, as applicable, in the consolidated balance sheet. In certain instances, the Company is over-collateralized since the actual amount of cash pledged as collateral exceeds the associated financial liability. As a result, the actual amount of cash collateral pledged that is reported in Other assets or Due from affiliates may be greater than the amount shown in the table above.

The gross gains (losses) reclassified from accumulated other comprehensive income (loss) to ~~net income, and gains (losses) recognized in~~ net income, are included as components of interest expense. The impacts on the condensed consolidated statements of income and comprehensive income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

Three Months Ended September 30, 2017
Recognized in Earnings Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss) Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive
Income to Interest Expense
Interest rate swap agreements designated as cash flow hedges $ (2,061 ) $ (882 ) $ 1,461
Interest rate swap agreements designated as fair value hedges (1,232 ) —
—
Total $ (3,293 ) $ (882 ) $ 1,461

Derivative instruments not designated as hedges:
Gains (losses) recognized in interest expense $ 90

Gains (losses) recognized in operating expenses $ (2,723 )


	Three Months Ended September 30, 2016								Three Months Ended March 31, 2018
	Recognized in Earnings			Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss)		Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive Income to Interest Expense			Recognized in Earnings			Gross Gains Recognized in Accumulated Other Comprehensive Income (Loss)		Gross amount Reclassified From Accumulated Other Comprehensive Income to Interest Expense
Interest rate swap agreements designated as cash flow hedges	$	293		$	27,764	$	(10,799	)	$	—		$	26,429	$	4,578

Derivative instruments not designated as hedges:
Gains (losses) recognized in interest expense	$	(3,769	)
Gains (losses) recognized in operating expenses	$	343
Gains (losses) recognized in interest expenses									$	(9,717	)


	Nine Months Ended September 30, 2017								Three Months Ended March 31, 2017
	Recognized in Earnings			Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss)		Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive Income to Interest Expense			Recognized in Earnings			Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss)		Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive Income to Interest Expense
Interest rate swap agreements designated as cash flow hedges	$	(11,573	)	$	4,233	$	(3,158	)	$	383		$	7,332	$	4,240

Derivative instruments not designated as hedges:
Gains (losses) recognized in interest expense	$	90							$	(1,204	)
Gains (losses) recognized in operating expenses	$	(2,297	)						$	(505	)

Nine Months Ended September 30, 2016
Recognized in Earnings Gross Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss) Gross Gains (Losses) Reclassified From Accumulated Other Comprehensive
Income to Interest Expense
Interest rate swap agreements designated as cash flow hedges $ 528

$ (81,247 )
$ (35,442 )

Derivative instruments not designated as hedges:
Gains (losses) recognized in interest expense $ 2,428

Gains (losses) recognized in operating expenses $ (2,337 )

~~The ineffectiveness related to the interest rate swap agreements designated as cash flow hedges was insignificant for the nine months ended September 30, 2017 and 2016.~~ The Company estimates that approximately ~~$12,648~~$34,698 of unrealized gains included in accumulated other comprehensive income (loss) will be reclassified to interest expense within the next twelve months.


8.	Other Assets

Other assets were comprised as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Vehicles (a)	$	206,076	$	257,382	$	383,657	$	293,546
Manufacturer subvention payments receivable (b)	102,383		161,447		120,268		83,910
Upfront fee (b)	83,750		95,000		76,250		80,000
Derivative assets at fair value (c)	170,789		110,930		264,462		196,755
Derivative - third party collateral	120,711		75,089		187,226		149,805
Prepaids	41,324		46,177		37,702		40,830
Accounts receivable	28,758		22,480		26,799		38,583
Other	32,469		16,905		29,179		29,815
Other assets	$	786,260	$	785,410	$	1,125,543	$	913,244


(a)	Includes vehicles obtained through repossession as well as vehicles obtained due to lease terminations.


(b)	These amounts relate to the Chrysler Agreement. The Company paid a $150,000 upfront fee upon the May 2013 inception of the agreement. The fee is being amortized into finance and other interest income over a ten-year term. As the preferred financing provider for FCA, the Company is entitled to subvention payments on loans and leases with below-market customer payments.


(c)	Derivative assets at fair value represent the gross amount of derivatives presented in the condensed consolidated financial statements. Refer to Note 7 to these Condensed Consolidated Financial Statements for the detail of these amounts.


9.	Income Taxes

The Company recorded income tax expense of ~~$78,385 (28.2%~~$57,311 (19.1% effective tax rate) and ~~$90,473 (29.8%~~$78,001 (35.2% effective tax rate) during the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $239,819 (28.3% effective tax rate) and $365,334 (34.1%effective tax rate) during the nine months ended September 30, 2017 and 2016,~~ respectively.

The Company has historically provided deferred taxes under ASC 740-30-25, formerly APB 23, for the presumed repatriation to the United States earnings from the Company’s Puerto Rican subsidiary, SCI. In June 2017, the Company asserted that undistributed net earnings of SCI would be indefinitely reinvested outside the United States. This change in assertion was primarily driven by future United States cash projections and the Company’s intent to invest the earnings generated outside the United States. Under ASC 740-30 (formerly APB 23), unremitted earnings that are no longer permanently invested would become subject to deferred income taxes under United States law. The Company had $156.7 million of undistributed net earnings and a $52.8 million unrecorded deferred tax liability at September 30, 2017.

The Company is a party to a tax sharing agreement requiring that the unitary state tax liability among affiliates included in unitary state tax returns be allocated using the hypothetical separate company tax calculation method. The

Company had a net receivable from affiliates under the tax sharing agreement of $634 and $467 ~~and $1,087~~ at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, which was included in related party taxes receivable in the condensed consolidated balance sheet.

The Company provides U.S. income taxes on earnings of foreign subsidiaries unless the subsidiaries' earnings are considered indefinitely reinvested outside of the United States. As of December 31, 2017 and March 31, 2018, the Company has no earnings that are considered indefinitely reinvested.

During the three months ended March 31, 2018, the Company adopted ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This standard requires entities to reclassify from accumulated other comprehensive income to retained earnings stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The Company reclassified $6,149 related to stranded tax effects.

The Company applies an aggregate portfolio approach whereby income tax effects from accumulated other comprehensive income are released only when an entire portfolio (i.e. all related units of account) of a particular type is liquidated, sold or extinguished.

Significant judgment is required in evaluating and reserving for uncertain tax positions. Although management believes adequate reserves have been established for all uncertain tax positions, the final outcomes of these matters may differ. Management does not believe the outcome of any uncertain tax position, individually or combined, will have a material effect on the Company's business, financial position or results of operations. The reserve for uncertain tax positions, as well as associated penalties and interest, is a component of the income tax provision.


10.	Commitments and Contingencies

The following table summarizes liabilities recorded for commitments and contingencies as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, all of which are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets:


Agreement or Legal Matter	Commitment or Contingency	September 30, 2017		December 31, 2016		Commitment or Contingency	March 31, 2018		December 31, 2017
Chrysler Agreement	Revenue-sharing and gain-sharing payments	$	13,270	$	10,134	Revenue-sharing and gain-sharing payments	$	11,571	$	6,580
Agreement with Bank of America	Servicer performance fee	8,066		9,797		Servicer performance fee	7,453		8,072
Agreement with CBP	Loss-sharing payments	4,874		4,563		Loss-sharing payments	5,506		5,625
Other Contingencies	Consumer arrangements	8,637		—		Consumer arrangements	3,410		6,326
Legal and regulatory proceedings	Aggregate legal and regulatory liabilities	17,800		39,200		Aggregate legal and regulatory liabilities	115,600		108,800

Following is a description of the agreements and legal matters pursuant to which the liabilities in the preceding table were recorded.

Chrysler Agreement

Underterms of the Chrysler Agreement, the Company must make revenue sharing payments to FCA and also must make gain-sharing payments to FCA when residual gains on leased vehicles exceed a specified threshold. The Company had accrued ~~$13,270~~$11,571 and ~~$10,134~~$6,580 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, related to these obligations.

The Chrysler Agreement requires, among other things, that the Company bear the risk of loss on loans originated pursuant to the agreement, but also that FCA shares in any residual gains and losses from consumer leases. The agreement also requires that ~~the~~ Company maintain at least $5.0 billion in funding available for dealer inventory financing and $4.5 billion of financing dedicated to FCA retail financing. In turn, FCA must provide designated minimum threshold percentages of its subvention business to the Company. The Chrysler Agreement is subject to early termination in certain circumstances, including the failure by either party to comply with certain of their ongoing obligations under the Chrysler Agreement. These obligations include the Company's meeting specified escalating penetration rates for the first five years of the agreement. The Company has not met these penetration rates at ~~September 30, 2017.~~

March 31, 2018. If the Chrysler Agreement were to terminate, there could be a materially adverse impact to the Company's business, financial ~~condition~~position and results of operations.

Agreement with Bank of America

Until January 31, 2017, the Company had a flow agreement with Bank of America whereby the Company was committed to sell up to $300,000 of eligible loans to the bank each month. ~~On October 27, 2016, Bank of America notified the Company that it was terminating the flow agreement effective January 31, 2017, and accordingly, the flow agreement is terminated.~~ The Company retains servicing on all sold loans and may receive or pay a servicer performance payment based on an agreed-upon formula if performance on the sold loans is better or worse, respectively, than expected performance at time of sale. Servicer performance payments are due six years from the cut-off date of each loan sale. The Company had accrued ~~$8,066~~$7,453 and ~~$9,797~~$8,072 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, related to this obligation.

Agreement with CBP

Until May 1, 2017, the Company sold loans to CBP under terms of a flow agreement and predecessor sale agreements. ~~Under the flow agreement, as amended, CBP's committed purchases of Chrysler Capital prime loans were a maximum of $200,000 and a minimum of $50,000 per quarter.~~ The Company retained servicing on the sold loans and will owe CBP a loss-sharing payment capped at 0.5% of the original pool balance if losses exceed a specified threshold, established on a pool-by-pool basis. Loss-sharing payments are due the month in which net losses exceed the established threshold of each loan sale. The Company had accrued ~~$4,874~~$5,506 and ~~$4,563~~$5,625 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, related to the loss-sharing obligation.

Other Contingencies

The Company is or may be subject to potential liability under various other contingent exposures. The Company had accrued ~~$8,637~~$3,410 and ~~zero~~$6,326 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, for other miscellaneous contingencies.

Legal and regulatory proceedings

Periodically, the Company is party to, or otherwise involved in, various lawsuits and other legal proceedings that arise in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of any such lawsuit, regulatory matter and legal proceeding, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of the matters, or the eventual loss, fines or penalties related to the matter. Accordingly, except as provided below, the Company is unable to reasonably estimate its potential exposure, if any, to these lawsuits, regulatory matters and other legal proceedings at this time. However,Further, it is reasonably possible that actual outcomes or losses may differ materially from the Company's current assessments and estimates and any adverse resolution of any of these matters against it could ~~have a material adverse effect on~~materially and adversely affect the Company's business, financial ~~position, liquidity,~~condition and results of operation.

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation, regulatory matters and other legal proceedings when those matters present material loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation, regulatory matter or other legal proceeding develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether the matter presents a material loss contingency that is probable and estimable. If a determination is made during a given quarter that a material loss contingency is probable and estimable, an accrued liability is established during such quarter with respect to such loss contingency. The Company continues to monitor the matter for further developments that could affect the amount of the accrued liability previously established.

As of ~~September 30, 2017,~~March 31, 2018, the Company has accrued aggregate legal and regulatory liabilities of ~~$17,800.~~$115,600. Further, the Company believes that the estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for legal and regulatory proceedings is up to ~~$18,000~~$207,000 as of ~~September 30, 2017.~~March 31, 2018. Set forth below are descriptions of the material lawsuits, regulatory matters and other legal proceedings to which the Company is subject.

Securities Class Action and Shareholder Derivative Lawsuits

•Deka ~~Lawsuit~~Lawsuit:

~~On August 26, 2014,~~The Company is a defendant in a purported securities class action lawsuit ~~was filed~~(the Deka Lawsuit) in the United States District Court, ~~Southern~~Northern District of ~~New York,~~Texas, captioned ~~Steck~~Deka Investment GmbH et al. v. Santander Consumer USA Holdings Inc. et al., No. ~~1:14-cv-06942 (the Deka Lawsuit).~~3:15-cv-2129-K. The Deka Lawsuit, which was filed in August 26, 2014, was

brought against the Company, certain of its current and former directors and executive officers and certain institutions that served as underwriters in the ~~Company's~~Company’s IPO on behalf of a class consisting of those who purchased or otherwise acquired our securities between January 23, 2014 and June 12, 2014. In June 2015, the venue of the Deka Lawsuit was transferred to the United States District Court, Northern District of Texas. In September 2015, the court granted a motion to appoint lead plaintiffs and lead counsel, and the Deka Lawsuit is now captioned Deka Investment GmbH et al. v. Santander Consumer USA Holdings Inc. et al., No. 3:15-cv-2129-K.

The ~~amended class action~~ complaint ~~in the Deka Lawsuit~~ alleges, among other things, that our ~~Registration Statement~~IPO registration statement and ~~Prospectus~~prospectus and certain subsequent public disclosures ~~contained~~violated federal securities laws by containing misleading statements concerning the Company’s ability to pay dividends and the adequacy of the Company’s compliance systems and oversight. The amended complaint asserts claims under Sections 11, 12(a) and 15 of the Securities Act of 1933 and under Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and seeks damages and other relief. On December 18, 2015, the Company and the individual defendants moved to dismiss the ~~amended class action complaint, and on June 13, 2016, the motion to dismiss~~lawsuit, which was denied. On December 2, 2016, the plaintiffs moved to certify the proposed ~~classes, on February 17, 2017, the Company filed an opposition to the plaintiffs' motion to certify the proposed classes, and on March 31, 2017, the plaintiffs filed their reply brief.~~classes. On July 11, 2017, the court ~~granted~~entered an order staying the Deka Lawsuit pending the resolution of the appeal of a class certification order in In re Cobalt Int’l Energy, Inc. Sec. Litig., No. H-14-3428, 2017 U.S. Dist. LEXIS 91938 (S.D. Tex. June 15, 2017).

•Feldman ~~Lawsuit~~Lawsuit:

On October 15, 2015, a shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, captioned Feldman v. Jason A. Kulas, et al., C.A. No. 11614 (the Feldman Lawsuit). The Feldman Lawsuit names as defendants current and former members of the Board, and names the Company as a nominal defendant. The complaint alleges, among other things, that the current and former director defendants breached their fiduciary duties in connection with overseeing the Company’s ~~subprime auto~~nonprime vehicle lending practices, resulting in harm to the Company. The

complaint seeks unspecified damages and equitable relief. On December 29, 2015, the Feldman Lawsuit was stayed pending the resolution of the Deka Lawsuit.

•Parmelee ~~Lawsuit~~Lawsuit:

~~On March 18, 2016,~~The Company is adefendant in two purported securities class ~~action lawsuit was~~actions lawsuits that were filed in March and April 2016 in the United States District Court, Northern District of ~~Texas,~~Texas. The lawsuits were consolidated and are now captioned Parmelee v. Santander Consumer USA Holdings Inc. et al., No. 3:16-cv-783 (the Parmelee Lawsuit). On April 4, 2016, another purported securities class action lawsuit was filed in the United States District Court, Northern District of Texas, captioned Benson v. Santander Consumer USA Holdings Inc. et al., No. 3:16-cv-919 (the Benson Lawsuit). Both the Parmelee Lawsuit and the Benson Lawsuit16-cv-783. The lawsuits were filed against the Company and certain of its current and former directors and executive officers on behalf of a class consisting of all those who purchased or otherwise acquired our securities between February 3, 2015 and March 15, 2016. ~~On May 25, 2016, the Benson Lawsuit was consolidated into the Parmelee Lawsuit, with the consolidated case captioned as Parmelee v. Santander Consumer USA Holdings Inc. et al., No. 3:16-cv-783.~~

~~On December 20, 2016, the plaintiffs filed an amended class action complaint.~~ The ~~amended class action~~ complaint ~~in the Parmelee Lawsuit~~ alleges that the Company ~~made~~violated federal securities laws by making false or misleading statements, as well as ~~failed~~failing to disclose material adverse facts, in ~~prior Annual and Quarterly Reports~~its periodic reports filed under the Exchange Act and certain other public disclosures, in connection with, among other things, the Company’s change in its methodology for estimating its allowance for credit losses and correction of such allowance for prior periods in, among other public disclosures, the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, and the Company’s amended filings for prior reporting periods. ~~The amended class action complaint asserts claims under Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and seeks damages and other relief.~~ On March 14, 2017, the Company filed a motion to dismiss the ~~Parmelee Lawsuit, on April 25, 2017,~~lawsuit. On January 3, 2018, the ~~plaintiffs filed an opposition~~court granted the Company’s motion as to defendant Ismail Dawood (the Company’s former Chief Financial Officer) and denied the motion as to ~~dismiss, and on June 9, 2017, the Company filed a reply to the plaintiffs’ opposition.~~all other defendants.

•Jackie888 ~~Lawsuit~~Lawsuit:

On September 27, 2016, a shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, captioned Jackie888, Inc. v. Jason Kulas, et al., C.A. # 12775 (the Jackie888 Lawsuit). The Jackie888 Lawsuit names as defendants current and former members of the Board, and names the Company as a nominal defendant. The complaint alleges, among other things, that the defendants breached their fiduciary duties in connection with the Company’s accounting practices and controls. The complaint seeks unspecified damages and equitable relief. On April 13, 2017, the Jackie888 Lawsuit was stayed pending the resolution of the Deka Lawsuit.

Consumer Lending Cases

The Company is also party to various lawsuits pending in federal and state courts alleging violations of state and federal consumer lending laws, including, without limitation, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, Fair Credit Reporting Act, Section 5 of the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Truth in Lending Act, wrongful repossession laws, usury laws and laws related to unfair and deceptive acts or practices. In general, these cases seek damages and equitable and/or other relief.

Regulatory Investigations and Proceedings

The Company is party to, or is periodically otherwise involved in, reviews, investigations, examinations and proceedings (both formal and informal), and information-gathering requests, by government and self-regulatory agencies, including the FRBB, the CFPB, the DOJ, the SEC, the FTC and various state regulatory and enforcement agencies.

•~~Civil Subpoenas Relating to Underwriting and Securitization of Nonprime Loans~~

Currently, such ~~proceedings~~matters include, but are not limited to, the following:

The Company received a civil subpoena from the DOJ, under FIRREA, requesting the production of documents and communications that, among other things, relate to the underwriting and securitization of nonprime ~~auto~~vehicle loans, ~~since 2007,~~ and also from the SEC requesting the production of documents and communications that, among other

things, relate to the underwriting and securitization of nonprime ~~auto loans since 2013.~~

•~~2017 Written Agreement~~vehicle loans. The Company has responded to these requests within the deadlines specified in the subpoenas and has otherwise cooperated with the ~~Federal Reserve~~DOJ and SEC with respect to these matters.

On March 21, 2017, the Company and SHUSA entered into a written agreement (the “2017 Written Agreement”) with the FRBB. Under the terms of the 2017 Written Agreement, the Company is required to enhance its compliance risk management program, board oversight of risk management and senior management oversight of risk management, and SHUSA is required to enhance its oversight of SC’s management and operations.

•~~Attorneys General Enforcement Actions~~

In October 2014, May 2015, July 2015 and February 2017, the Company received subpoenas and/or Civil Investigative Demands (CIDs) from the Attorneys General of California, Illinois, Oregon, New Jersey, Maryland and Washington under the authority of each state's consumer protection statutes. The Company has been informed that these states will serve as an executive committee on behalf of a group of 30 state Attorneys General. The subpoenas and/or CIDs from the executive committee states contain broad requests for information and the production of documents related to the ~~Company's~~Company’s underwriting, securitization, servicing and collection of nonprime ~~auto~~vehicle loans. The Company ~~believes that several other companies~~has responded to these requests within the deadlines specified in the ~~auto finance sector have received similar subpoenas~~CIDs and ~~CIDs. The Company is cooperating~~has otherwise cooperated with the Attorneys General with respect to this matter.

In February 2016, the CFPB issued a supervisory letter relating to its investigation of the ~~states involved.~~Company’s compliance systems, Board and senior management oversight, consumer complaint handling, marketing of GAP coverage and loan deferral disclosure practices. The Company ~~believes~~subsequently received a series of CIDs from the CFPB requesting information and testimony regarding the Company’s marketing of GAP coverage and loan deferral disclosure practices. The Company has responded to these requests within the deadlines specified in the CIDs and has otherwise cooperated with the CFPB with respect to this matter.

In August 2017, the Company received a CID from the CFPB. The stated purpose of the CID is to determine whether the Company has complied with the Fair Credit Reporting Act and related regulations. The Company has responded to these requests within the deadlines specified in the CIDs and has otherwise cooperated with the CFPB with respect to this matter.

These matters are ongoing and could in the future result in the imposition of damages, fines or other penalties. No assurance can be given that itthe ultimate outcome of these matters or any resulting proceedings would not materially and adversely affect the Company’s business, financial condition and results of operations.

•2017 Written Agreement with the Federal Reserve

On March 21, 2017, the Company and SHUSA entered into a written agreement with the FRBB. Under the terms of the agreement, the Company is ~~reasonably possible that it will suffer a loss related~~required to enhance its compliance risk management program, Board oversight of risk management and senior management oversight of risk management, and SHUSA is required to enhance its oversight of the ~~Attorneys General, however, any such loss is not currently estimable.~~Company's management and operations.

•Mississippi Attorney General Lawsuit

On January 10, 2017, the Attorney General of ~~the State of~~ Mississippi ~~(the Mississippi AG)~~ filed a lawsuit against the Company in the Chancery Court of the First Judicial District of Hinds County, ~~State of~~ Mississippi, captioned State of Mississippi ex rel. Jim Hood, Attorney General of the State of Mississippi v. Santander Consumer USA Inc., C.A. # G-2017-28. The complaint alleges that the Company engaged in unfair and deceptive business practices to induce Mississippi consumers to apply for loans that they could not afford. The complaint asserts claims under the Mississippi Consumer Protection Act (the MCPA) and seeks unspecified civil penalties, equitable relief and other relief. On March 31, 2017, the Company filed motions to dismiss the ~~Mississippi AG’s lawsuit. On May 18, 2017, the Company~~lawsuit and subsequently filed a motion to stay the ~~Mississippi AG’s~~ lawsuit pending the resolution of an interlocutory appeal relating to the MCPA before the Mississippi Supreme Court in Purdue Pharma, L.P., et al. v. State, No. 2017-IA- ~~00300-SCT, on May 30, 2017, the Mississippi AG filed an opposition to the motion to stay, and on June 14, 2017, the Company filed a reply to the Mississippi AG’s opposition.~~00300-SCT. On September 25, 2017, the court granted the motion to stay and ordered a stay of all proceedings, excluding discovery and final briefing on motions to dismiss.

•SCRA Consent Order

In February ~~25,~~ 2015, the Company entered into a consent order with the DOJ, approved by the United States District Court for the Northern District of Texas, that resolves the ~~DOJ's~~DOJ’s claims against the Company that certain of its repossession and collection activities during the period of time between January 2008 and February 2013 violated the Servicemembers Civil Relief Act (SCRA). ~~The~~ The consent order requires the Company to pay a civil fine in the amount of $55, as well as at least $9,360 to affected servicemembers consisting of $10 per servicemember plus compensation for any lost equity (with interest) for each repossession by the Company, and $5 per servicemember for each instance where the Company sought to collect repossession-related fees on accounts where a repossession was conducted by a

prior account holder. The consent order also provides for monitoring by the DOJ for the Company’s SCRA compliance for a period of five years and requires the Company to undertake certain additional remedial measures.

•~~ECOA Investigation~~

On July 31, 2015, the CFPB notified the Company that it had referred to the DOJ certain alleged violations by the Company of the ECOA regarding statistical disparities in markups charged by automobile dealers to protected groups on loans originated by those dealers and purchased by the Company and the treatment of certain types of income in the Company’s underwriting process. On September 25, 2015, the DOJ notified the Company that it has initiated, based on the referral from the CFPB, an investigation under the ECOA of the Company's pricing of automobile loans.

Agreements

The Company is party to agreements with Bluestem whereby the Company is committed to purchase certain new advances on personal revolving financings ~~originated by a third party retailer,~~receivables, along with existing balances on accounts with new advances, originated by Bluestem for an initial term ending in April 2020 and renewing through April 2022 at Bluestem's option. As of March 31, 2018 and December 31, 2017, the ~~retailer's option.~~ total unused credit available to customers was $3.7 billion, and $3.9 billion, respectively. In 2017, the Company purchased $1.2 billion of receivables, out of the $4.0 billion unused credit available to customers as of December 31, 2016. In addition, the Company purchased $263,831 of receivables related to newly opened customer accounts in 2017. During the three months ended March 31, 2018, the Company purchased $0.3 billion of receivables, out of the $3.9 billion unused credit available to customers as of December 31, 2017. In addition, the Company purchased $17,398 of receivables related to newly opened customer accounts during the three months ended March 31, 2018.

Each customer account generated under the agreements generally is approved with a credit limit higher than the amount of the initial purchase, with each subsequent purchase automatically approved as long as it does not cause the account to exceed its limit and the customer is in good standing. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company was obligated to purchase ~~$12,865~~$10,345 and ~~$12,634,~~$11,539, respectively, in receivables that had been originated by ~~the retailer~~Bluestem but not yet purchased by the Company.

The Company also is required to make a profit-sharing payment to ~~the retailer~~Bluestem each month if performance exceeds a specified return threshold. During the year ended December 31, 2015, the Company and ~~the third-party retailer~~Bluestem executed an amendment that, among other provisions, increases the profit-sharing percentage retained by the Company, gives ~~the retailer~~Bluestem the right to repurchase up to 9.99% of the existing portfolio at any time during the term of the agreement, and, provided that repurchase right is exercised, gives ~~the retailer~~Bluestem the right to retain up to 20% of new accounts subsequently originated.

Under terms of an application transfer agreement with ~~another OEM,~~Nissan, the Company has the first opportunity to review for its own portfolio any credit applications turned down by the ~~OEM's~~Nissan's captive finance company. The agreement does not require the Company to originate any loans, but for each loan originated the Company will pay ~~the OEM~~Nissan a referral fee.

The Company also has agreements with SBNA to service recreational and marine vehicle portfolios. These agreements call for a periodic retroactive adjustment, based on cumulative return performance, of the servicing fee rate to inception of the contract. ~~The Company recorded no~~There were zero adjustments for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~downward adjustments of zero and $836 for the three and nine months ended September 30, 2016, respectively.~~ March 31, 2017.

In connection with the sale of retail installment contracts through securitizations and other sales, the Company has made standard representations and warranties customary to the consumer finance industry. Violations of these representations and warranties may require the Company to repurchase loans previously sold to on- or off-balance sheet Trusts or other third parties. As of ~~September 30, 2017,~~March 31, 2018, there were no loans that were the subject of a demand to repurchase or replace for breach of representations and warranties for the Company's asset-backed securities or other sales. In the opinion of management, the potential exposure of other recourse obligations related to the Company’s retail installment contract sales agreements ~~will~~is not expected to have a material adverse effect on the Company’s ~~consolidated~~business, financial position, results of operations, or cash flows.

Santander has provided guarantees on the covenants, agreements, and obligations of the Company under the governing documents of its warehouse lines and privately issued amortizing notes. These guarantees are limited to the obligations of the Company as servicer.

The Company provided SBNA with the first right to review and approve consumer vehicle lease applications, subject to volume constraints, under terms of a flow agreement that was terminated on May 9, 2015. The Company has indemnified SBNA for potential credit and residual losses on $48,226 of leases that had been originated by SBNA under this program but were subsequently determined not to meet SBNA’s underwriting requirements. This indemnification agreement is supported by an equal amount of cash collateral posted by the Company in an SBNA bank account. The collateral account balance is included in restricted cash in the Company's ~~condensed~~ consolidated balance sheets. As of ~~September 30, 2017,~~March 31, 2018, the balance in the collateral account is ~~$22.~~$18. In January 2015, the Company additionally agreed to indemnify SBNA for residual losses, up to a cap, on certain leases originated under the flow agreement between September 24, 2014 and May 9, 2015 for which SBNA and the Company had differing residual value

expectations at lease inception. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had a recorded liability of ~~$2,983~~$1,481 and ~~$2,691,~~$2,206, respectively, related to the residual losses covered under the agreement.

~~On March 31,~~In November 2015, the Company executed a forward flow asset sale agreement with a third party under terms of which the Company committed to sell $350,000 in charged off loan receivables in bankruptcy status on a quarterly basis until sales total at least $200,000 in proceeds. On June 29, 2015, the Company and the third party executed an amendment to the forward flow asset sale agreement, which increased the committed sales of charged off loan receivables in bankruptcy status to $275,000. On September 30, 2015, the Company and the third party executed a second amendment to the forward flow asset sale agreement, which required sales to occur quarterly. On November 13, 2015, the Company and the third party executed a third amendment to the forward flow asset sale agreement, which increased the committed sales of charged off loan receivables in bankruptcy status to $350,000.. However, any sale more than $275,000 is subject to a market price check. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the remaining aggregate commitment was ~~$108,403~~$87,998 and ~~$166,167,~~$98,858, respectively.

~~Employment Agreements~~

Pursuant to the terms of a Separation Agreement among former CEO Thomas G. Dundon, the Company, DDFS LLC, SHUSA and Santander, upon satisfaction of applicable conditions, including receipt of required regulatory approvals, the Company will owe Mr. Dundon a cash payment of up to $115,139 (Note 11).

Leases

The Company has entered into various operating leases, primarily for office space and computer equipment. Lease expense incurred totaled ~~$2,773~~$2,559 and ~~$8,240~~$2,739 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~respectively and $2,749 and $8,588 for the three and nine months ended September 30, 2016,~~ respectively. The remaining obligations under lease commitments at ~~September 30, 2017~~March 31, 2018 are as follows:


Years ended December 31,
2017	$	2,992
2018	12,645		$	9,462
2019	12,773		12,771
2020	13,035		13,032
2021	12,910		12,907
2022			12,282
Thereafter	56,794		44,663
Total	$	111,149	$	105,117


11.	Related-Party Transactions

Related-party transactions not otherwise disclosed in these footnotes to the condensed consolidated financial statements include the following:

Credit Facilities

Interest expense, including unused fees, for affiliate lines/letters of credit for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ was as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016		March 31, 2018		March 31, 2017
Line of credit agreement with Santander - New York Branch (Note 5)	$	8,158	$	16,404	$	46,624	$	52,800	$	4,367	$	22,976
Debt facilities with SHUSA (Note 5)	26,211		6,023		59,105		14,892		35,846		12,634

Accrued interest for affiliate lines/letters of credit at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, was as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Line of credit agreement with Santander - New York Branch (Note 5)	$	1,409	$	6,297	$	563	$	1,435
Debt facilities with SHUSA (Note 5)	15,192		1,737		18,073		18,670

In August 2015, under an agreement with Santander, the Company agreed to begin incurring a fee of 12.5 basis points (per annum) on certain warehouse lines, as they renew, for which Santander provides a guarantee of the Company's servicing obligations. The Company recognized guarantee fee expense of ~~$1,672~~$2,048 and ~~$4,620~~$1,465 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~respectively, and $1,616 and $4,783 for the three and nine months ended September 30, 2016,~~ respectively. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had ~~$6,239~~$9,647 and ~~$1,620~~$7,598 of related fees payable to Santander, respectively.

Derivatives

The Company has derivative financial instruments with Santander and affiliates with outstanding notional amounts of ~~$4,372,800~~$2,532,000 and ~~$7,259,400~~$3,734,400 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively (Note 7). The Company had a collateral overage on derivative liabilities with Santander and affiliates of ~~$9,169~~$11,898 and ~~$15,092~~$1,622 at ~~September 30, 2017~~March 31, 2018 and

December 31, ~~2016,~~2017, respectively. Interest ~~expense~~ and mark-to-market adjustments on these agreements totaled ~~$1,227~~$229 and ~~$1,932~~$29 for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $1,443 and $16,098 for the nine months ended September 30, 2017 and 2016,~~ respectively.

Originations

The Company is required to permit SBNA a first right to review and assess Chrysler Capital dealer lending opportunities, and SBNA is required to pay the Company a relationship management fee based upon the performance and yields of Chrysler Capital dealer loans held by SBNA. On April 15, 2016, the relationship management fee was replaced with an origination fee and annual renewal fee for each loan. The Company did not recognize any relationship management fee income the three ~~and nine month~~months period ended ~~September 30,~~March 31, 2018 and 2017. The Company recognized ~~relationship management fee income of zero~~$456 and ~~$419 for the three and nine month period ended September 30, 2016. The Company recognized $246 and $1,009~~$600 of origination fee income for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $1,213 and $2,292 of origination fee income for the nine months ended September 30, 2017 and 2016,~~ respectively. Additionally, the Company recognized ~~$357~~$384 and ~~$158~~$306 of renewal fee income for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $935 and $271 for the nine months ended September 30, 2017 and 2016,~~ respectively. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had origination and renewal fees receivable from SBNA of ~~$237~~$268 and ~~$552.~~$369. The agreement also transferred the servicing of all Chrysler Capital receivables from dealers, including receivables held by SBNA and by the Company, from the Company to SBNA. Servicing fee expense under this agreement totaled ~~$21 and $77~~$20 for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2018. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had ~~$16~~$9 and ~~$21,~~$9, respectively, of servicing fees payable to SBNA. The Company may provide advance funding for dealer loans originated by SBNA, which is reimbursed to the Company by SBNA. The Company had no outstanding receivable from SBNA as of ~~September 30, 2017 or~~March 31, 2018 and December 31, ~~2016~~2017 for such advances.

Under the agreement with SBNA, the Company may originate retail consumer loans in connection with sales of vehicles that are ~~collateral~~collaterally held against floorplan loans by SBNA. Upon origination, the Company remits payment to SBNA, who settles the transaction with the dealer. The Company owed SBNA ~~$3,482~~$6,708 and ~~$2,761~~$4,481 related to such originations as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

The Company received a $9,000 referral fee in connection with the original arrangement and was amortizing the fee into income over the ten-year term of the agreement. The remaining balance of the referral fee SBNA paid to the Company in connection with the original sourcing and servicing agreement is considered a referral fee in connection with the new agreements and will continue to be amortized into income through the July 1, 2022 termination date of the new agreements. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the unamortized fee balance was ~~$5,175~~$4,725 and ~~$5,850,~~$4,950, respectively. The Company recognized $225 and ~~$675~~$225 of income related to the referral fee for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

The Company also has agreements with SBNA to service auto retail installment contracts and recreational and marine vehicle portfolios. Servicing fee income recognized under these agreements totaled ~~$887~~$742 and ~~$1,140~~$925 for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively and $2,658 and $4,457 for the nine months ended September 30, 2017 and 2016,~~ respectively. Other information on the serviced auto loan and retail installment contract portfolios for SBNA as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 is as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Total serviced portfolio	$	427,168	$	531,117	$	371,622	$	400,788
Cash collections due to owner	13,425		21,427		12,917		11,870
Servicing fees receivable	983		1,123		819		839

During the ~~three months~~year ended ~~September 30,~~December 31, 2017, the Company sold certain receivables previously acquired with deteriorated credit quality to SBNA. These loans were sold with a gain of $35,927 recognized in investment losses, net in the accompanying condensed consolidated financial statements. The Company will continue to perform the servicing of these assets and has recorded ~~$231~~$297 of servicing fee income from SBNA ~~during~~for the ~~period~~three months ended ~~September 30,~~March 31, 2018. There were no such sales of receivables previously acquired with deteriorated credit quality to SBNA for the three months ended March 31, 2017.

Other information on the serviced receivables for SBNA as of ~~September 30, 2017~~March 31, 2018 is as follows:


	September 30, 2017		March 31, 2018
Total serviced portfolio	$	129,727	$	112,900
Cash collections due to owner	273		291
Servicing fees receivable	110		96

Beginning in 2016, the Company agreed to pay SBNA a market rate-based fee expense for payments made at SBNA retail branch locations for accounts originated/serviced by the Company and the costs associated with modifying the

Advanced Teller platform to the payments. The Company incurred ~~$62~~$187 and ~~$178~~$197 for these services during the three ended March 31, 2018 and ~~nine~~2017.

Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. The Company facilitated the purchase of $24 million of retail installment contacts. The Company recognized referral fee and servicing fee income of $146 and $26, respectively, for the three months ended ~~September 30, 2017.~~March 31, 2018 of which $155 is receivable as of March 31, 2018.

Flow Agreements

Until May 9, 2015, the Company was party to a flow agreement with SBNA whereby SBNA had the first right to review and approve Chrysler Capital consumer vehicle lease applications. The Company could review any applications declined by SBNA for the Company’s own portfolio. The Company received an origination fee on all leases originated under this agreement and continues to service these vehicles leases. Pursuant to the Chrysler Agreement, the Company pays FCA on behalf of SBNA for residual gains and losses on the flowed leases. Servicing fee income recognized on leases serviced for SBNA totaled ~~$1,066~~$781 and ~~$1,742~~$1,393 for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $4,115 and $5,741 for the nine months ended September 30, 2017 and 2016,~~ respectively.

Other information on the consumer vehicle lease portfolio serviced for SBNA as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 is as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Total serviced portfolio	$	459,524	$	1,297,317	$	97,274	$	321,629
Cash collections due to owner	—		78		—		—
Origination and servicing fees receivable	2,020		926		238		2,067
Revenue share reimbursement receivable	3,365		612		3,793		1,548

On June 30, 2014, the Company entered into an indemnification agreement with SBNA whereby the Company indemnifies SBNA for any credit or residual losses on a pool of $48,226 in leases originated under the flow agreement. The covered leases are non-conforming units because they did not meet SBNA’s credit criteria at origination. At the time of the agreement, the Company established a $48,226 collateral account with SBNA in restricted cash that will be released over time to SBNA, in the case of losses, and the Company, in the case of payments and sale proceeds. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the balance in the collateral account is ~~$22~~$18 and ~~$11,329,~~$18, respectively. The Company recognized no$722 and zero indemnification expense for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018 and ~~2016.~~2017.

Also, in January 2015, the Company agreed to indemnify SBNA for residual losses, up to a cap, on certain leases originated under the flow agreement between September 24, 2014 and May 9, 2015 for which SBNA and the Company had differing residual value expectations at lease inception. At the time of the agreement, the Company established a collateral account held by SBNA to cover the expected losses, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the balance in the collateral account was ~~$2,713~~$1,483 and ~~$2,706,~~$2,210, respectively. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had a recorded liability of ~~$2,983~~$1,481 and ~~$2,691~~$2,206 respectively, related to the residual losses covered under the agreement.

Securitizations

On March 29, 2017, the Company entered into a Master Securities Purchase Agreement (MSPA) with Santander, whereby itthe Company has the option to sell a contractually determined amount of eligible prime loans to Santander, through the SPAIN securitization platform, for a term ending in December 2018. The Company will provide servicing on all loans originated under this arrangement. ~~As at September 30,~~For the three months ended March 31, 2017, the Company sold ~~$1,236,331~~$700,000 of loans at fair value under this MSPA arrangement. ~~Under a separate securities purchase~~The MSPA was amended in March 2018 and under this amended agreement, the Company sold ~~$1,347,010~~$1,475,253 of prime loans at fair value to Santander ~~during~~for the three months ended ~~September 30, 2017.~~March 31, 2018. A total loss of ~~$6,846~~$16,903 and ~~$13,026~~$2,700 was recognized for the three months ended March 31, 2018 and ~~nine months period ended September 30,~~March 31, 2017 respectively, which is included in investment losses, net in the accompanying condensed consolidated financial statements. Servicing fee income recognized totaled ~~$529~~$4,792 and ~~$1,419~~zero for the three months ended

March 31, 2018 and ~~nine ended September 30, 2017.~~March 31, 2017 respectively of which $2,755 and $1,848 was receivable as of March 31, 2018 and December 31, 2017 respectively. The Company had ~~$14,083~~$15,408 and $12,961 of collections due to Santander as of ~~September 30, 2017.~~March 31, 2018 and December 31, 2017 respectively.

~~Employment Agreements~~CEO compensation

On ~~July 2, 2015,~~August 28, 2017, the Board of the Company announced ~~the departure of Thomas G. Dundon from his roles~~that Scott Powell would succeed Jason Kulas as ~~Chairman of the Board~~President and CEO, effective immediately. During the first quarter of year 2018, the Company ~~effective~~paid $250 as of the close of business on July 2, 2015. In connection with his departure, and subject to the terms and conditions of his Employment Agreement, including Mr. Dundon's execution of a release of claims against the Company, Mr. Dundon became entitled to receive certain payments and benefits under his Employment Agreement.

Also in connection with his departure, Mr. Dundon entered into a Separation Agreement with the Company, DDFS LLC, SHUSA and Santander. Subject to applicable regulatory approvals and law, the Separation Agreement provided, among other things, that Mr. Dundon’s outstanding stock options would remain exercisable until the third anniversary of his resignation, and subject to certain time limitations, Mr. Dundon would be permitted to exercise such options in whole, but not in part, and settle such options for a cash payment equal to the difference between the closing trading price of aits share of ~~Company common stock as of the date immediately preceding such exercise and the exercise price of such option. Mr. Dundon exercised this cash settlement option~~compensation expense based on July 2, 2015. The Separation Agreement also provided for the modification of terms for certain other equity-based awards (Note 14), subject to limitations of banking regulators and applicable law. The Separation Agreement also provided that Mr. Dundon would serve as a consultanttime allocation between his services to the Company ~~for twelve months from the date of the Separation Agreement at a mutually agreed rate, subject to required regulatory approvals.~~

As of September 30, 2017, the Company has not made any payments to Mr. Dundon, nor recorded any liability or obligation arising from or pursuant to the terms of the Separation Agreement. If all applicable conditions are satisfied, including receipt of required regulatory approvals and satisfaction of any conditions thereto, the Company will be obligated to make a cash payment to Mr. Dundon of up to $115,139. This amount would be recorded as compensation expense in the condensed consolidated statement of income and comprehensive income in the period in which approval is obtained.

Also, in connection with, and pursuant to, the Separation Agreement, on July 2, 2015, Mr. Dundon, the Company, DDFS LLC, SHUSA and Santander entered into an amendment to the Shareholders Agreement (the Second Amendment). The Second Amendment amended, for purposes of calculating the price per share to be paid in the event that a put or call option was exercised with respect to the shares of Company Common Stock owned by DDFS LLC in accordance with the terms and conditions of the Shareholders Agreement, the definition of the term “Average Stock Price” to mean $26.83. Pursuant to the Separation Agreement, SHUSA was deemed to have delivered as of July 3, 2015 an irrevocable notice to exercise the call option with respect to all 34,598,506 shares of the Company's Common Stock owned by DDFS LLC and consummate the transactions contemplated by such call option notice, subject to the receipt of required bank regulatory approvals and any other approvals required by law (the Call Transaction). Because the Call Transaction was not consummated prior to the Call End Date, DDFS LLC is free to transfer any or all shares of Company Common Stock it owns, subject to the terms and conditions of the Amended and Restated Loan Agreement, dated as of July 16, 2014, between DDFS LLC and Santander (the Loan Agreement). The Loan Agreement provides for a $300,000 revolving loan which, as of the maturity date, had a $290,000 unpaid principal balance. Pursuant to the Loan Agreement, 29,598,506 shares of the Company’s common stock owned by DDFS LLC are pledged as collateral under a related pledge agreement (the Pledge Agreement). Because the Call Transaction was not completed on or before the Call End Date, interest began accruing on the price paid per share in the Call Transaction at the overnight LIBOR rate on the third business day preceding the consummation of the Call Transaction plus 100 basis points with respect to any shares of Company Common Stock ultimately sold in the Call Transaction. The Shareholder Agreement further provides that Santander may, at its option, become the direct beneficiary of the Call Option. If consummated in full, SHUSA would pay DDFS LLC $928,278 plus interest that has accrued since the Call End Date. To date, the Call Transaction has not been consummated.

Pursuant to the Loan Agreement, if at any time the value of the Common Stock pledged under the Pledge Agreement is less than 150% of the aggregate principal amount outstanding under the Loan Agreement, DDFS LLC has an obligation to either (a) repay a portion of such outstanding principal amount such that the value of the pledged collateral is equal to at least 200% of the outstanding principal amount, or (b) pledge additional shares of Company Common Stock such that the value of the additional shares of Common Stock, together with the 29,598,506 shares already pledged under the Pledge Agreement, is equal to at least 200% of the outstanding principal amount. The value of the pledged collateral is less than 150% of aggregate principal amount outstanding under the Loan Agreement, and DDFS LLC has not taken any of the collateral posting actions described in clauses (a) or (b) above. If Santander declares the borrower’s obligations under the Loan Agreement due and payable as a result of an event of default (including with respect to the collateral posting obligations described above), under the terms of the Loan Agreement and the Pledge Agreement, Santander’s ability to rely upon the shares of SC Common Stock subject to the Pledge Agreement is, subject to certain exceptions, limited to the exercise by SHUSA and/or Santander of the right to deliver the call option notice and to consummate the Call Transaction at the price specified in the Shareholders Agreement. If the borrower fails to pay obligations under the Loan Agreement when due, including because of Santander’s declaration of such obligations as due and payable as a result of an event of default, a higher default interest rate will apply to such overdue amounts.

In connection with, and pursuant to, the Separation Agreement, on July 2, 2015, DDFS LLC and Santander entered into an amendment to the Loan Agreement and an amendment to the Pledge Agreement that provide, among other things, that outstanding balance under the Loan Agreement shall become due and payable upon the consummation of the Call Transaction and that the amount otherwise payable to DDFS LLC under the Call Transaction shall be reduced by the amount outstanding under the Loan Agreement, including principal, interest and fees, and further that any net cash proceeds received by DDFS LLC on account of sales of Company Common Stock after the Call End Date shall be applied to the outstanding balance under the Loan Agreement.

On August 31, 2016, Mr. Dundon, DDFS LLC, the Company, Santander and SHUSA entered into a Second Amendment to the Separation Agreement, and Mr. Dundon, DDFS LLC, Santander and SHUSA entered into a Third Amendment to the Shareholders Agreement, whereby the price per share to be paid to DDFS LLC in connection with the Call Transaction was reduced from $26.83 to $26.17, the arithmetic mean of the daily volume-weighted average price for a share of Company common stock for each of the ten consecutive complete trading days immediately prior to July 2, 2015, the date on which the call option was exercised.

On April 17, 2017, the Loan Agreement matured and became due and payable with an unpaid principal balance of approximately $290,000 as of that date. Because the borrower failed to pay obligations under the Loan Agreement on April 17, 2017, the borrower is in default and is currently being charged the default interest rate as defined by the Loan Agreement. The Loan Agreement generally defines the default interest rate as the Base Rate plus 2%. The Base Rate as defined in the Loan Agreement is the higher of (i) the federal funds rate plus ½ of 1% or (ii) the prime rate, which is the annual rate of interest publicly announced by the New York Branch of Santander from time to time. As of April 21, 2017, the prime rate as announced by the New York Branch of Santander was 4%.

The parties continue in discussions on these matters. Any future agreement on these matters would be subject to any required internal and regulatory approvals and execution of definitive documentation.SHUSA.

Other related-party transactions

As of ~~September 30, 2017,~~March 31, 2018, Jason Kulas and Mr. Thomas G. Dundon, both being former members of the Board and CEO of the Company, along with a Santander employee who was a member of the Board until the second quarter of 2015, each had a minority equity investment in a property in which the Company leases 373,000 square feet as its corporate headquarters. For the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company recorded ~~$1,275~~$1,194 and ~~$1,361, respectively, in lease expenses on this property and for the nine months ended September 30, 2017 and 2016, the Company recorded $3,836 and $3,832,~~$1,275, respectively, in lease expenses on this property. The Company subleases ~~approximately13,000~~approximately 13,000 square feet of its corporate office space to SBNA. For the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company recorded $41 ~~in sublease revenue on this property,~~ and ~~for the nine months ended September 30, 2017 and 2016, the Company recorded $122~~$41 respectively, in sublease revenue on this property. Future minimum lease payments over the remainder of the 9-year term of the lease, which extends through 2026, total ~~$64,050.~~$60,697.

The Company's wholly-owned subsidiary, Santander Consumer International Puerto Rico, LLC (SCI), opened deposit accounts with Banco Santander Puerto Rico, an affiliated entity. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, SCI had cash of ~~$72,170~~$189,049 and ~~$98,836,~~$106,596, respectively, on deposit with Banco Santander Puerto Rico.

~~During 2015,~~ Santander Investment Securities Inc. (SIS), an affiliated entity, purchased an investment of $2,000 in the Class A3 notes of CCART 2013-A, a securitization Trust formed by the Company in 2013. Although CCART 2013-A is not a consolidated entity of the Company, the Company continues to service the assets of the associated trust. SIS also serves as co-manager on certain of the Company’s securitizations. Amounts paid to SIS as co-manager for the three months ended ~~September 30,~~March 31, 2018 and 2017, totaled $710 and ~~2016, totaled $100 and zero, respectively, and totaled $1,259 and $1,049 for the nine months ended September 30, 2017 and 2016,~~$150, respectively, and are included in debt issuance costs in the accompanying condensed consolidated financial statements.

Produban Servicios Informaticos Generales S.L., a Santander affiliate, is under contract with the Company to provide professional services, telecommunications, and internal and/or external applications. Expenses incurred, which are included as a component of other operating costs in the accompanying consolidated statements of income, totaled ~~$16~~zero and ~~$64~~$21 for the three ~~and nine~~ months ended ~~September 30, 2016. No such expenses were incurred for the three~~March 31, 2018 and ~~nine months ended September 30,~~ 2017.

The Company is party to an MSA with a company in which it has a cost method investment and holds a warrant to increase its ownership if certain vesting conditions are satisfied. This cost method investment was carried at a value of zero in the Company's condensed consolidated balance sheets as of September 30, 2017, as it had been fully impaired. The MSA enables the Company to review point-of-sale credit applications of retail store customers. During the six months ending June 30, 2016, the Company did not originate any loans under the MSA and effective August 17, 2016, the Company ceased funding new originations from all of the retailers for which it reviews credit applications under this MSA.

Beginning in 2017, the Company and SBNA entered into a Credit Card Agreement (Card Agreement) whereby SBNA will provide credit card services for travel and related business expenses and for vendor payments. This service is at zero cost but generate rebates based on purchases made. As ~~at September 30, 2017,~~of March 31, 2018, the activities associated with the program were insignificant.

Effective April 1, 2017, the Company contracted Aquanima, a Santander affiliate, to provide procurement services. Expenses incurred and paid for totaled ~~$142 and $354~~$379 for the three ~~and nine~~ months ended ~~September 30, 2017. As~~March 31, 2018.

The Company partners with SHUSA to place Cyber Liability Insurance in which participating national entities share $150 million aggregate limits. The Company repays SHUSA for the Company’s equitably allocated portion of ~~September 30,~~insurance premiums and fees. Expenses incurred totaled $92 and $78 for the three months ended March 31, 2018 and 2017, ~~the amount outstanding was $354.~~

respectively.


12.	Computation of Basic and Diluted Earnings per Common Share

Earnings per common share (EPS) is computed using the two-class method required for participating securities. Restricted stock awards ~~whereby the~~are considered to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of a declaration of a dividend on the ~~Company’s~~Company's common ~~shares are considered to be participating securities.~~shares.

The calculation of diluted EPS excludes ~~778,019~~284,951 and 973,230 employee stock ~~option awards~~options and zero RSUs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, respectively, as the effect of those securities would be anti-dilutive if exercised and issued. The calculation of diluted EPS excludes 1,933,659 employee stock option awards for the three and nine months ended September 30, 2016, as the effect of those securities would be anti-dilutive if exercised and issued.

Restricted stock units of zero and 620,625 for three and nine months ended September 30, 2017 (nil for three and nine months ended September 30, 2016), respectively, were excluded from the calculation of diluted EPS as the effectexercise or settlement of those securities would be anti-dilutive.

The following table represents EPS numbers for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Earnings per common share
Net income	$	199,388	$	213,547	$	607,490	$	705,191	$	242,299	$	143,427
Weighted average number of common shares outstanding before restricted participating shares (in thousands)	359,496		357,994		359,274		357,830		360,703		358,939
Weighted average number of participating restricted common shares outstanding (in thousands)	123		350		123		350		—		166
Weighted average number of common shares outstanding (in thousands)	359,619		358,344		359,397		358,180		360,703		359,105
Earnings per common share	$	0.55	$	0.60	$	1.69	$	1.97	$	0.67	$	0.40
Earnings per common share - assuming dilution
Net income	$	199,388	$	213,547	$	607,490	$	705,191	$	242,299	$	143,427
Weighted average number of common shares outstanding (in thousands)	359,619		358,344		359,397		358,180		360,703		359,105
Effect of employee stock-based awards (in thousands)	841		1,743		672		1,455		914		1,511
Weighted average number of common shares outstanding - assuming dilution (in thousands)	360,460		360,088		360,069		359,635		361,617		360,616
Earnings per common share - assuming dilution	$	0.55	$	0.59	$	1.69	$	1.96	$	0.67	$	0.40


13.	Fair Value of Financial Instruments

Fair value measurement requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs and also establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that can be accessed as of the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 inputs are those that are unobservable for the asset or liability and are used to measure fair value to the extent relevant observable inputs are not available.

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following tables present the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and the level within the fair value hierarchy:


	September 30, 2017										March 31, 2018
	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents (a)	$	397,311	$	397,311	$	397,311	$	—	$	—	$	618,809	$	618,809	$	618,809	$	—	$	—
Finance receivables held for investment, net (b)	22,540,414		23,590,105		—		—		23,590,105		22,439,866		24,369,757		—		—		24,369,757
Restricted cash (a)	2,559,246		2,559,246		2,559,246		—		—		2,895,615		2,895,615		2,895,615		—		—
Total	$	25,496,971	$	26,546,662	$	2,956,557	$	—	$	23,590,105	$	25,954,290	$	27,884,181	$	3,514,424	$	—	$	24,369,757
Liabilities:
Notes payable — credit facilities (c)	$	4,965,888	$	4,965,888	$	—	$	—	$	4,965,888	$	5,294,358	$	5,294,358	$	—	$	—	$	5,294,358
Notes payable — secured structured financings (d)	23,258,363		23,541,974		—		13,889,699		9,652,275		22,862,607		22,932,974		—		13,657,638		9,275,336
Notes payable — related party (e)	2,369,850		2,369,850		—		—		2,369,850		3,148,194		3,148,194		—		—		3,148,194
Total	$	30,594,101	$	30,877,712	$	—	$	13,889,699	$	16,988,013	$	31,305,159	$	31,375,526	$	—	$	13,657,638	$	17,717,888


	December 31, 2016										December 31, 2017
	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents (a)	$	160,180	$	160,180	$	160,180	$	—	$	—	$	527,805	$	527,805	$	527,805	$	—	$	—
Finance receivables held for investment, net (b)	23,456,506		24,630,599		—		—		24,630,599		22,284,068		24,340,739		—		—		24,340,739
Restricted cash (a)	2,757,299		2,757,299		2,757,299		—		—		2,553,902		2,553,902		2,553,902		—		—
Total	$	26,373,985	$	27,548,078	$	2,917,479	$	—	$	24,630,599	$	25,365,775	$	27,422,446	$	3,081,707	$	—	$	24,340,739
Liabilities:
Notes payable — credit facilities (c)	$	6,739,817	$	6,739,817	$	—	$	—	$	6,739,817	$	4,848,316	$	4,848,316	$	—	$	—	$	4,848,316
Notes payable — secured structured financings (d)	21,608,889		21,712,691		—		13,530,045		8,182,646		22,557,895		22,688,381		—		12,275,408		10,412,973
Notes payable — related party (e)	2,975,000		2,975,000		—		—		2,975,000		3,754,223		3,754,223		—		—		3,754,223
Total	$	31,323,706	$	31,427,508	$	—	$	13,530,045	$	17,897,463	$	31,160,434	$	31,290,920	$	—	$	12,275,408	$	19,015,512


(a)	Cash and cash equivalents and restricted cash — The carrying amount of cash and cash equivalents, including restricted cash, is at an approximated fair value as the instruments mature within 90 days or less and bear interest at market rates.


(b)	Finance receivables held for investment, net — Finance receivables held for investment, net are carried at amortized cost, net of an allowance. These receivables exclude retail installment contracts that are measured at fair value on a recurring and nonrecurring basis. The estimated fair value for the underlying financial instruments are determined as follows:

Retail installment contracts held for investment, net — The estimated fair value is calculated based on a DCF in which the Company uses significant unobservable inputs on key assumptions, including

historical default rates and adjustments to reflect prepayment rates, expected recovery rates, discount rates reflective of the cost of funding, and credit loss expectations.

Receivables from dealers held for investment and Capital lease receivables, net — Receivables from dealers held for investment and capital lease receivables are carried at amortized cost, net of credit loss ~~allowance. Capital lease receivables are carried at~~allowance and gross ~~investment,~~investments, net of unearned income and allowance for lease ~~losses.~~losses, respectively. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements.


(c)	Notes payable — credit facilities — The carrying amount of notes payable related to revolving credit facilities is estimated to approximate fair value. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements as the facilities are subject to short-term floating interest rates that approximate rates available to the Company.

(d)

Notes payable — secured structured financings — The estimated fair value of notes payable related to secured structured financings is calculated based on market observable prices and spreads for the Company's publicly traded debt and market observed prices of similar notes issued by the Company, or recent market transactions involving similar debt with similar credit risks, which are considered level 2 inputs. The estimated fair value of notes payable related to privately issued amortizing notes is calculated based on a combination of discounted cash flow analysis and market observable spreads for similar liabilities in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations, which are considered level 3 inputs.


(e)	Notes payable — related party — The carrying amount of notes payable to a related party is estimated to approximate fair value as the facilities are subject to short-term floating interest rates that approximate rates available to the Company.

Financial Instruments Measured At Fair Value On A Recurring Basis

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and the level within the fair value hierarchy:

Fair Value Measurements at September 30, 2017
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Other assets — trading interest rate caps (a) $ 111,515
$ —
$ 111,515
$ —
Due from affiliates — trading interest rate caps (a) 5,053
—
5,053
—
Other assets — cash flow hedging interest rate swaps (a) 35,381
—
35,381
—
Due from affiliates — cash flow hedging interest rate swaps (a) 4,605
—
4,605
—
Other assets — trading interest rate swaps (a) 7,364
—
7,364
—
Due from affiliates — trading interest rate swaps (a) 1,437
—
1,437
—
Other assets — trading options for interest rate caps (a)

16,529
—
16,529
—
Due from affiliates — trading options for interest rate caps (a)
9,775
—
9,775
—
Other liabilities — trading options for interest rate caps (a) 111,510
—
111,510
—
Due to affiliates — trading options for interest rate caps (a) 5,053
—
5,053
—
Other liabilities — trading interest rate caps (a) 16,480
—
16,480
—
Due to affiliates — trading interest rate caps (a) 9,775
—
9,775
—
Retail installment contracts acquired individually (c) 24,799
—
—
24,799



	Fair Value Measurements at March 31, 2018
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other assets — trading interest rate caps (a)	$	176,426	$	—	$	176,426	$	—
Due from affiliates — trading interest rate caps (a)	21,241		—		21,241		—
Other assets — cash flow hedging interest rate swaps (a)	71,351		—		71,351		—
Other assets — trading interest rate swaps (a)	16,685		—		16,685		—
Other liabilities — trading options for interest rate caps (a)	176,307		—		176,307		—
Due to affiliates — trading options for interest rate caps (a)	21,241		—		21,241		—
Other liabilities — trading interest rate swaps (a)	211		—		211		—
Retail installment contracts acquired individually (b)	18,850		—		—		18,850


	Fair Value Measurements at December 31, 2016								Fair Value Measurements at December 31, 2017
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other assets — trading interest rate caps (a)	$	68,676	$	—	$	68,676	$	—	$	129,718	$	—	$	129,718	$	—
Due from affiliates — trading interest rate caps (a)	7,593		—		7,593		—		6,112		—		6,112		—
Other assets — cash flow hedging interest rate swaps (a)	41,471		—		41,471		—		39,036		—		39,036		—
Due from affiliates — cash flow hedging interest rate swaps (a)	4,080		—		4,080		—		6,950		—		6,950		—
Other assets — trading interest rate swaps (a)	783		—		783		—		7,925		—		7,925		—
Due from affiliates — trading interest rate swaps (a)	1,292		—		1,292		—		1,671		—		1,671		—
Other assets — trading options for interest rate caps (a)									20,075		—		20,075		—
Due from affiliates — trading options for interest rate caps (a)									12,090		—		12,090		—
Other liabilities — trading options for interest rate caps (a)	68,688		—		68,688		—		129,712		—		129,712		—
Due to affiliates — trading options for interest rate caps (a)	7,593		—		7,593		—		6,112		—		6,112		—
Other liabilities — cash flow hedging interest rate swaps (a)	482		—		482		—
Due to affiliates — cash flow hedging interest rate swaps (a)	451		—		451		—
Other liabilities — trading interest rate swaps (a)	42		—		42		—
Due to affiliates — trading interest rate swaps (a)	95		—		95		—
Other liabilities — total return settlement (a,b)	30,618		—		—		30,618
Retail installment contracts acquired individually (c)	24,495		—		—		24,495
Other liabilities — trading interest rate caps (a)									20,019		—		20,019		—
Due to affiliates — trading interest rate caps (a)									12,090		—		12,090		—
Retail installment contracts acquired individually (b)									22,124		—		—		22,124

(a)

The valuation is determined using widely accepted valuation techniques including a DCF on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurement of its derivatives. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings and guarantees. The Company utilizes the exception in ASC 820-10-35-18D (commonly referred to as the “portfolio exception”) with respect to measuring counterparty credit risk for instruments (Note 7).


(b)	The significant unobservable inputs for total return settlement derivative contracts used in the fair value measurement of the Company's liabilities are discount percentages, which are based on comparable financial instruments.

~~(c)~~

For certain retail installment contracts reported in finance receivables held for investment, net, the Company has elected the fair value option. The fair values of the retail installment contracts are estimated using a DCF model. When estimating the fair value using this model, the Company uses significant unobservable inputs on key assumptions, which includes historical default rates and adjustments to reflect prepayment rates based on available data from a comparable market securitization of similar assets, discount rates reflective of the cost of funding of debt issuance and recent historical equity yields, and recovery rates based on the average severity utilizing reported severity rates and loss severity utilizing available market data from a comparable securitized pool. Accordingly, retail installment contracts held for investment are classified as Level 3. Changes in the fair value are recorded in investment gains (losses), net in the condensed consolidated statement of income.

The following table presents the changes in retail installment contracts held for investment balances classified as Level 3 balances for the three ~~and nine~~ months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
	2018			2017
Balance — beginning of period	$	22,124		$	24,495
Additions / issuances	1,349			13,331
Net collection activities	(5,594		)	(10,113		)
Loans sold	—			—
Transfers to held for sale	—			(12		)
Gains recognized in earnings	971			2,951
Balance — end of period	$	18,850		$	30,652

All total return settlement payments were made as of September 30, 2017, and ~~2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Balance — beginning of period $ 30,489
$ 12,602
$ 24,495
$ 6,770
Additions / issuances —
11,838
19,727
23,712
Net collection activities (6,517 ) (5,740 ) (23,640 ) (11,782 )
Gains recognized in earnings 827
—
4,217
—
Balance — end of period $ 24,799
$ 18,700
$ 24,799
$ 18,700

the derivative instrument has been settled. The following table presents the changes in the total return settlement balance, which iswas classified as Level 3, for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016:~~

March 31, 2017:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Balance — beginning of period	$	31,123		$	53,543		$	30,618		$	53,432		$	30,618
(Gains)/losses recognized in earnings	—			(343		)	505			2,337			505
Settlements	(31,123		)	(23,336		)	(31,123		)	(25,905		)	—
Balance — end of period	$	—		$	29,864		$	—		$	29,864		$	31,123

The Company did not have any transfers between Levels 1 and 2 during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017. There were no amounts transferred into or out of Level 3 during the three ~~and nine~~ months ended and ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.

Financial Instruments Measured At Fair Value On A Nonrecurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a nonrecurring basis at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and ~~the level within~~are categorized using the fair value hierarchy:


	Fair Value Measurements at September 30, 2017										Fair Value Measurements at March 31, 2018
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Lower of cost or fair value expense for the nine months ended September 30, 2017		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Lower of cost or fair value expense for the three months ended March 31, 2018
Other assets — vehicles (a)	$	206,076	$	—	$	206,076	$	—	$	—	$	383,657	$	—	$	383,657	$	—	$	—
Personal loans held for sale (b)	929,549		—		—		929,549		237,980		967,789		—		—		967,789		58,963
Retail installment contracts held for sale (c)	845,910		—		—		845,910		8,542		643,746		—		—		643,746		11,536
Auto loans impaired due to bankruptcy (d)	101,990		—		101,990		—		65,584		128,641		—		128,641				82,145


	Fair Value Measurements at December 31, 2016										Fair Value Measurements at December 31, 2017
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Lower of cost or fair value expense for the year ended December 31, 2016		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Lower of cost or fair value expense for the year ended December 31, 2017
Other assets — vehicles (a)	$	257,382	$	—	$	257,382	$	—	$	—	$	293,546	$	—	$	293,546	$	—	$	—
Personal loans held for sale (b)	1,077,600		—		—		1,077,600		414,703		1,062,089		—		—		1,062,089		374,374
Retail installment contracts held for sale (c)	1,045,815		—		—		1,045,815		8,913		1,148,332		—		—		1,148,332		11,686
Auto loans impaired due to bankruptcy (d)											$	121,578	—		$	121,578	—		75,194


~~(a)~~	~~The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market levels of used car prices.~~

~~(b)~~

Represents the portion of the portfolio specifically impaired as of period-end. The estimated fair value for personal loans held for sale is calculated based on a combination of estimated cash flows and market rates for similar loans with similar credit risks and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations. The lower of cost or fair value adjustment for personal loans held for sale includes customer default activity and adjustments related to the net change in the portfolio balance during the reporting period.


~~(c)~~	The estimated fair value is calculated based on a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including expected default rates, prepayment rates, recovery rates, and discount rates reflective of the cost of funds and appropriate rate of returns.


~~(d)~~	For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of used car prices.

(a) The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market levels of used car prices.

(b) Represents the portion of the portfolio specifically impaired as of period-end. The estimated fair value for personal loans held for sale is calculated based on the lower of market participant view and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations. The lower of cost or fair value adjustment for personal loans held for sale includes customer default activity and adjustments related to the net change in the portfolio balance during the reporting period.

(c) At March 31, 2018, as the SPAIN ABS platform matures with several market executions over the last few quarters, the fair value of the retail installments contracts held for sale reserved for future SPAIN transactions are estimated based on contractual pricing methodology used for previous SPAIN transactions. This pricing methodology includes consideration of significant unobservable inputs including investor return expectations (i.e., Yield), expected lifetime cumulative net loss and weighted average life of the retail installment contracts. At December 31, 2017, the estimated fair value was calculated based on a DCF analysis in which the Company used significant unobservable inputs on key assumptions, including expected default rates, prepayment rates, recovery rates, and discount rates reflective of the cost of funds and appropriate rate of returns. The change in methodology did not have a material impact on the fair value of the retail installments contacts held for sale.

(d) For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral, less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of used car prices.

Quantitative Information about Level 3 Fair Value Measurements

The following table presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at ~~September 30,~~March 31, 2018 and December 31, 2017:



Financial Instruments	Fair Value at March 31, 2018		Valuation Technique	Unobservable Inputs	Range
Financial Assets:
Retail installment contracts held for investment	$	18,850	Discounted Cash Flow	Discount Rate	8%-10%
				Default Rate	15%-20%
				Prepayment Rate	6%-8%
				Loss Severity Rate	50%-60%
Personal loans held for sale	$	967,789	Lower of Market or Income Approach	Market Approach
				Market Participant View	70%-80%
				Income Approach
				Discount Rate	15%-20%

				Default Rate	30%-40%
				Net Principal Payment Rate	50%-70%
				Loss Severity Rate	90%-95%
Retail installment contracts held for sale	$	643,746	Income Approach	Expected Yield	1%-2%
				Expected Lifetime Cumulative Net Loss	4%-6%
				Weighted Average Life	2 - 3 years

Financial Instruments Fair Value at September 30, 2017 Valuation Technique Unobservable Inputs Range
Financial Assets:
Retail installment contracts held for investment $ 24,799
Discounted Cash Flow Discount Rate 9.0% - 9.5%
Default Rate 18% - 22%
Prepayment Rate 6%
Personal loans held for sale $ 929,549
Market / Income Approach Discount Rate 15% - 30%

Default Rate 30% - 40%
Retail installment contracts held for sale $ 845,910
Discounted Cash Flow Discount Rate 3% - 8%
Default Rate 3.8% - 8.3%
Prepayment Rate 17.8%



Financial Instruments	Fair Value at December 31, 2017		Valuation Technique	Unobservable Inputs	Range
Financial Assets:
Retail installment contracts held for investment	$	22,124	Discounted Cash Flow	Discount Rate	8%-10%
				Default Rate	15%-20%
				Prepayment Rate	6%-8%
				Loss Severity Rate	50%-60%
Personal loans held for sale	$	1,062,089	Lower of Market or Income Approach	Market Approach
				Market Participant View	70%-80%
				Income Approach
				Discount Rate	15%-20%

				Default Rate	30%-40%
				Net Principal Payment Rate	50%-70%
				Loss Severity Rate	90%-95%
Retail installment contracts held for sale	$	1,148,332	Discounted Cash Flow	Discount Rate	3%-6%
				Default Rate	3%-4%
				Prepayment Rate	15%-20%
				Loss Severity Rate	50%-60%

14. Employee Benefit Plans

The Company has granted stock options to certain executives, other employees, and independent directors under the 2011 Management Equity Plan (the Plan), which enabled the Company to make stock awards up to a total of approximately 29 million common shares (net of shares canceled and forfeited), and expired on January 31, 2015. The Company has granted stock options, restricted stock awards and restricted stock units (RSUs) under the Omnibus Incentive Plan, which was established in 2013 and enables the Company to grant awards of cash and of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, RSUs, and other awards that may be settled in or based upon the value of the Company's common stock up to a total of ~~5,192,640~~5,192,641 common shares. The Omnibus Incentive Plan was amended and restated as of June 16, 2016.

Stock options granted have an exercise price based on the estimated fair market value of the Company’s common stock on the grant date. The stock options expire ten years after grant date and include both time vesting options and performance vesting options. The fair value of the stock options is amortized into income over the vesting period as time and performance vesting conditions are met.

Compensation expense related to the 583,890 shares of restricted stock that the Company has issued to certain executives is recognized over a five-year vesting period, with ~~$(220)~~zero and ~~$182~~$178 recorded for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, and $139 and $543 for~~respectively. During the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, the Company recognized $4,208 and ~~2016,~~$2,067 respectively related to stock options and restricted stock units within compensation expense. In addition, the Company recognize forfeitures as they occur.

A summary of the Company’s stock options and related activity as of and for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 is as follows:


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value		Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2017	4,295,830		$	12.70	5.6	$	12,982
Options outstanding at January 1, 2018								1,695,008		$	12.39	4.7	$	12,058
Granted	—		—		—	—		—		—		—	—
Exercised	(594,110	)	9.40		—	2,503		(205,306	)	9.48		—	1,553
Expired	(142,795	)	12.64		—	—		(4,200	)	22.72		—	—
Forfeited	(653,258	)	14.57		—	—		(64,268	)	23.72		—	—
Options outstanding at September 30, 2017	2,905,667		12.96		5.0	6,999
Options exercisable at September 30, 2017	2,641,214		$	12.15	4.8	$	8,517
Options outstanding at March 31, 2018								1,421,234		12.26		3.8	7,546
Options exercisable at March 31, 2018								1,279,659		$	11.37	3.5	$	7,465

In connection with compensation restrictions imposed on certain executive officers and other employees by the European Central Bank under the Capital Requirements Directive IV prudential rules, which require a portion of such officers' and employees' variable compensation to be paid in the form of equity, the Company periodically grants RSUs. Such RSUs were granted during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. Under the Company's Omnibus

Incentive Plan, a portion of these RSUs vest immediately upon grant, and a portion vest annually over the following three or five ~~years. The Company also has granted~~years or subject to the achievement of certain ~~officers RSUs that vest over either a three or five year period, with vesting dependent on Banco Santander~~ performance ~~over that time.~~conditions as applicable. After the shares subject to the RSUs vest and are settled, they are subject to transfer and sale restrictions for one year. The Company also has granted certain directors RSUs that vest either upon the earlier of the first anniversary of grant date or the first annual meeting following the grant date.

~~On July 2, 2015, Mr. Dundon exercised a right under~~A summary of the ~~Separation Agreement to settle his vested options~~Company’s Restricted Stock Units and Performance stock units and related activity as of and for a cash payment. Subject to limitations of banking regulators and applicable law, Mr. Dundon’s Separation Agreement also provided that his unvested stock options would vest in full and his unvested restricted stock awards would continue to vest in accordance with their termsthe three months ended March 31, 2018 is as if he remained employed by the Company. In addition, any service-based vesting requirements that were applicable to Mr. Dundon’s outstanding RSUs in respect of his 2014 annual bonus were waived, and such RSUs continue to vest and be settled in accordance with the underlying award agreement. However, because the Separation Agreement did not receive the required regulatory approvals within 60 days of Mr. Dundon’s termination without cause, both the vested and unvested stock options are considered to have expired.follows:



	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2018	$	650,252		$	12.68	1.0	$	12,108
Granted	519,772			16.12		—	—
Vested	(377,233		)	14.53		—	6,107
Forfeited/canceled	(13,909		)	12.81		—	—
Unvested as of March 31, 2018	778882			14.09		1.5	12696


15.	Shareholders' Equity

Treasury Stock

The Company had ~~123,507~~252,002 shares of treasury stock outstanding, with a cost of ~~$2,004,~~$5,370, as of ~~September 30, 2017~~March 31, 2018 and ~~94,595 shares of treasury stock outstanding, with a cost of $1,600, as of~~ December 31, ~~2016.~~2017. Prior to the IPO, the Company repurchased 3,154 shares as a result of an employee leaving the Company. Additionally, ~~120,353~~248,848 shares were withheld to cover income taxes related to ~~the vesting of RSUs awarded to certain executive officers.~~stock issued in connection with employee incentive compensation plans. The value of the treasury stock is immaterial and included within additional paid-in-capital.

Accumulated Other Comprehensive Income (Loss)

A summary of changes in accumulated other comprehensive income (loss), net of tax, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ is as follows:

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Beginning balance, unrealized gains (losses) on cash flow hedges $ 27,860
$ (50,766 ) $ 28,259
$ 2,125
Other comprehensive gain (loss) before reclassifications 1,061
17,391
(3,062 ) (50,949 )
Amounts reclassified out of accumulated other comprehensive income (loss) (a) (1,440 ) 6,777
2,284
22,226
Ending balance, unrealized gains (losses) on cash flow hedges $ 27,481
$ (26,598 ) $ 27,481
$ (26,598 )


~~(a)~~	~~Amounts reclassified out of accumulated other comprehensive income (loss) during the three and nine months ended September 30, 2017 and 2016 consist of the following:~~

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Reclassification Amount reclassified Income statement line item Amount reclassified Income statement line item
Cash flow hedges:
Settlements of derivatives $ (1,461 ) Interest expense $ 10,799
Interest expense
Tax expense (benefit) 21
(4,022 )
Net of tax $ (1,440 ) $ 6,777

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Reclassification Amount reclassified Income statement line item Amount reclassified Income statement line item
Cash flow hedges:
Settlements of derivatives $ 3,158
Interest expense $ 35,442
Interest expense
Tax expense (benefit) (874 ) (13,216 )
Net of tax $ 2,284
$ 22,226



	Three Months Ended
	March 31, 2018			March 31, 2017
Beginning balance, unrealized gains (losses) on cash flow hedges	$	44,262		$	28,259
Other comprehensive income (loss) before reclassifications (gross) (a)	22,919			9,900
Amounts (gross) reclassified out of accumulated other comprehensive income (loss)	(3,970		)	(2,655		)
Ending balance, unrealized gains (losses) on cash flow hedges	$	63,211		$	35,504

(a) Includes impact of accumulated other comprehensive income reclassified to Retained earnings, primarily comprised of $6,149 as a result of the adoption of ASU 2018-02. Refer to Note 1 for further discussion.

Amounts (gross) reclassified out of accumulated other comprehensive income (loss) during the three months ended March 31, 2018 and 2017 consist of the following:



	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017
Reclassification	Amount reclassified			Income statement line item	Amount reclassified			Income statement line item

Cash flow hedges	$	(4,578	)	Interest expense	$	(4,240	)	Interest expense
Tax expense (benefit)	608				1,585
Net of tax	$	(3,970	)		$	(2,655	)

Dividends

~~On October 25, 2017, the~~The Company paid dividend of $0.05 per share in February 2018 and has declared a cash dividend of ~~$0.03~~$0.05 per share, to be paid ~~November 17, 2017~~on May 14, 2018, to shareholders of record as of the close of business on ~~November 7, 2017. The Company's capital action plan also includes dividend payments for the Company’s stockholders of $0.05 per share in the first and second quarters of~~May 4, 2018.


16.	Investment Losses, Net

When the Company sells ~~individually acquired~~ retail installment contracts acquired individually, personal loans or leases to unrelated third parties or to VIEs and determines that such sale meets the applicable criteria for sale accounting, the Company recognizes a gain or loss for the difference between the cash proceeds and carrying value of the assets sold. The gain or loss is recorded in investment gains (losses), net. Lower of cost or market adjustments on the recorded investment of finance receivables held for sale are also recorded in investment gains (losses), net.

Investment ~~losses,~~gains (losses), net was comprised of the following for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Gain (loss) on sale of loans and leases	$	29,974		$	(3,765	)	$	16,913		$	(1,418	)	$	(16,696	)	$	(10,882	)
Lower of cost or market adjustments	(84,718		)	(97,532		)	(246,522		)	(266,506		)	(70,499		)	(66,121		)
Other gains, losses and impairments, net	2,152			(4,753		)	1,096			(8,491		)	675			604
	$	(52,592	)	$	(106,050	)	$	(228,513	)	$	(276,415	)	$	(86,520	)	$	(76,399	)

The lower of cost or market adjustments for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 included ~~$112,055~~$105,774 and ~~$336,413~~$116,641 in customer default activity, respectively, and net favorable adjustments of ~~$27,337~~$35,275 and ~~$89,891,~~$50,520, respectively, primarily related to net changes in the unpaid principal balance on the personal lending portfolio, most of which has been classified as held for sale since September 30, 2015. The lower of cost or market adjustments for the three and nine months ended September 30, 2016 included $114,477 and $312,993 in customer default activity and favorable adjustments of 18,831 and 48,373, respectively, related to net changes in the unpaid principal balance on the personal lending portfolio. The key driver to continued write-downs due to customer default activity, is the lower of cost or market adjustment recorded for each new originated loan, based on forecasted lifetime loss.



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q should be read in conjunction with the ~~2016~~2017 Annual Report on Form 10-K and in conjunction with the condensed consolidated financial statements and the accompanying notes included elsewhere in this report. Additional information, not part of this filing, about the Company is available on the Company’s website at www.santanderconsumerusa.com. The Company’s recent annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, as well as other filings with the SEC, are available free of charge through the Company’s website by clicking on the “Investors” page and selecting “SEC Filings.” The SEC’s website also contains current reports and other information regarding the Company at www.sec.gov.

Overview

Santander Consumer USA Holdings Inc. is the holding company for Santander Consumer USA Inc., a full-service, technology-driven consumer finance company focused on vehicle finance and third-party servicing. The Company is majority-owned (as of ~~September 30, 2017,~~March 31, 2018, approximately ~~58.7%~~68.0%) by SHUSA, a wholly-owned subsidiary of Santander.

The Company is managed through a single reporting segment, Consumer Finance, which includes its vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to ~~motorcycles,~~ RVs, and marine vehicles. The Consumer Finance segment also includes personal loan and point-of-sale financing operations.

Since May 1, 2013, under terms of the Chrysler Agreement, a ten-year private-label financing agreement with FCA, the Company has been ~~the~~FCA's preferred provider for ~~FCA’s~~ consumer loans and leases and dealer ~~loans under terms of a ten-year agreement with FCA.~~loans. Business generated under terms of the Chrysler Agreement is branded as Chrysler Capital. In conjunction with the Chrysler Agreement, the Company offers a full spectrum of auto financing products and services to FCA customers and dealers under the Chrysler Capital brand. These products and services include consumer retail installment contracts and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit.

Under the terms of the Chrysler Agreement, ~~the parties~~certain standards were agreed to, ~~certain standards,~~ including the Company meeting specified escalating penetration rates ~~that escalate over~~for the first five years, and FCA treating the Company in a manner consistent with comparable OEMs' treatment of their captive providers, primarily in regard to sales support. The failure of either party to meet its respective obligations under the agreement, including SC’s failure to meet target penetration rates, could result in the agreement being terminated. The targeted penetration rates and the actual penetration rates that the Company must meet under the terms of the Chrysler Agreement are as ~~follows:~~follows as of March 31, 2018.


	Program Year (a)										Program Year (a)
	1		2		3		4		5-10		1		2		3		4		5-10
Retail	20	%	30	%	40	%	50	%	50	%	20	%	30	%	40	%	50	%	50	%
Lease	11	%	14	%	14	%	14	%	15	%	11	%	14	%	14	%	14	%	15	%
Total	31	%	44	%	54	%	64	%	65	%	31	%	44	%	54	%	64	%	65	%

Actual Penetration (b)	30	%	29	%	26	%	19	%	21	%	30	%	29	%	26	%	19	%	28	%


(a)	Program years run from May 1 to April 30. Retail and lease penetration is based on a percentage of FCA retail sales.


(b)	Actual penetration rates shown for Program Year 1, 2, , 3 and 4 are as of April 30, 2014, 2015, 2016 and 2017, respectively, the end date of each of those Program Years. Actual penetration rate shown for Program Year 5, which ends April 30, 2018, is for the three months ended ~~September 30, 2017.~~March 31, 2018.

The target penetration rate as of April 30, 2018 is 65%. The Company's actual penetration rate for three months ended ~~September 30, 2017~~March 31, 2018 was ~~21%~~28%. The penetration rate has been constrained due to the competitive landscape and low interest rates, causing the subvented loan offers not to be materially more attractive than other lenders' offers. While the Company has not achieved the target penetration rates to date, Chrysler Capital continues to be a focal point of ~~its~~the Company's strategy, the Company continues to work with FCA to improve penetration rates, and it remains committed to the Chrysler Agreement.

The Company has worked strategically and collaboratively with FCA to continue to strengthen its relationship and create value within the Chrysler Capital program. The Company has partnered with FCA to roll out two pilot programs, including a dealer rewards program and a nonprime subvention program. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the Company originated ~~$5.2~~$2.0 billion in Chrysler Capital loans which represented 46% of total retail installment contract originations, with an approximately even share between prime and non-prime, as well as more than ~~$4.7~~$2.1 billion in Chrysler Capital leases. Since its May 1, 2013, launch, Chrysler Capital has originated ~~$43.7~~more than $47.2 billion in retail loans and ~~$22.3~~$25.7 billion in leases, and facilitated the origination of $3.0 billion in leases and dealer loans for an affiliate. As of ~~September 30, 2017,~~March 31, 2018, the Company's auto retail installment contract portfolio consisted of ~~$6.9~~$7.0 billion of Chrysler Capital loans which represents 31% of the Company's auto retail installment contract portfolio.

The Company also originates vehicle loans through a web-based direct lending program, purchases vehicle retail installment contracts from other lenders, and services automobile and recreational and marine vehicle portfolios for other lenders. Additionally, the Company has several relationships through which it has provided personal loans, private-label credit cards and other consumer finance products. In October 2015, the Company announced ~~its~~a planned exit from the personal lending business.

The Company has dedicated financing facilities in place for its Chrysler Capital business. The Company periodically sells consumer retail installment contracts through these flow agreements, and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer retail installment contracts. The Company also periodically enters into bulk sales of consumer vehicle leases with a third party. The Company typically retains servicing of loans and leases sold or securitized, and may also retain some residual risk in sales of leases. The Company has also entered into an agreement with a third party whereby the Company will periodically sell charged-off loans.

Economic and Business Environment

The U.S. economy continues to stabilize. Unemployment rates ~~declined~~continues to be at pre-recession levels of ~~4.2%~~4.1% as reported by the Bureau of Labor Statistics for ~~September 30, 2017.~~March 31, 2018. The Federal Reserve raised its federal funds rate by 25 basis points in March 2018 and is expected to ~~100 - 125 basis points in June 2017, the second~~raise its benchmark interest rate ~~increase during fiscal 2017. The energy sector has also stabilized after the market for oil bottomed out in January 2016 and has since continued~~ to ~~recover throughout the year.~~a range of 1.5% to 1.75%.

Despite this stability, consumer debt levels continued to rise, specifically auto debt. As consumers assume higher debt levels, the Company may experience an increase in delinquencies and credit losses. Additionally, the Company is exposed to geographic customer concentration risk, which could have an adverse effect on the Company's financial position, results of operations or cash flow.

The following table shows the percentage of unpaid principal balance on the Company's retail installment contracts by state concentration. Total unpaid principal balance of retail installment contracts held for investment was ~~$26,369,828~~$26,025,703 and ~~$27,358,147~~$25,986,532 at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.


	September 30, 2017		December 31, 2016		March 31, 2018	December 31, 2017
	Retail Installment Contracts Held for Investment				Retail Installment Contracts Held for Investment
Texas	16	%	17	%	16%	16%
Florida	12	%	13	%	12%	12%
California	9	%	10	%	9%	9%
Georgia	6	%	5	%	6%	6%
Illinois					4%	4%
North Carolina	4	%	4	%	4%	4%
Illinois	4	%	4	%
New York	4	%	4	%	4%	4%
Pennsylvania	3	%	3	%	3%	3%
South Carolina					3%	3%
Louisiana	3	%	3	%	3%	3%
Ohio	3	%	2	%	3%	3%
Other states	36	%	35	%	33%	33%
	100	%	100	%	100%	100%

Regulatory Matters

The U.S. lending industry is highly regulated under various U.S. federal laws, including the Truth-in-Lending, Equal Credit Opportunity, Fair Credit Reporting, Fair Debt Collection Practices, SCRA, and Unfair, Deceptive, or Abusive Acts or Practices, Credit CARD, Telephone Consumer Protection, FIRREA, and Gramm-Leach-Bliley Acts, as well as various state laws. The Company is subject to inspections, examinations, supervision, and regulation by the Commission, the CFPB, the FTC, the DOJ and by regulatory agencies in each state in which the Company is licensed. In addition, the Company is directly and indirectly, through its relationship with SHUSA, subject to certain bank regulations, including oversight by the OCC, the European Central Bank, and the Federal Reserve, which have the ability to limit certain of the Company's activities, such as the timing and amount of dividends and certain transactions that the Company might otherwise desire to enter into, such as merger and acquisition opportunities, or to impose other limitations on the Company's growth.

Additional legal and regulatory matters affecting the Company's activities are further discussed in Part I, Item 1A - Risk Factors of the ~~2016~~2017 Annual Report on Form 10-K.

How the Company Assesses its Business Performance

Net income, and the associated return on assets and equity, are the primary metrics by which the Company judges the performance of its business. Accordingly, the Company closely monitors the primary drivers of net income:

Net financing income — The Company tracks the spread between the interest and finance charge income earned on assets and the interest expense incurred on liabilities, and continually monitors the components of its yield and cost of funds. The Company's effective interest rate on borrowing is driven by various items including, but not limited to, credit quality of the collateral assigned, used/unused portion of facilities, and reference rate for the credit spread. These drivers, as well as external rate trends, including the ~~Treasury~~ swap curve, ~~and~~ spot and forward rates are monitored.

Net credit losses — The Company performs net credit loss analysis at the vintage level for individually acquired retail installment contracts, loans and leases, and at the pool level for purchased portfolios, enabling it to pinpoint drivers of any unusual or unexpected trends. The Company also monitors its recovery rates as well as industry-wide rates. Additionally, because delinquencies are an early indicator of future net credit losses, the Company analyzes delinquency trends, adjusting for seasonality, to determine if the Company's loans are performing in line with original estimations. The net credit loss analysis does not include considerations of the Company's estimated allowance for credit losses.

Other income — The Company's flow agreements entered in connection with the Chrysler Agreement have resulted in a large portfolio of assets serviced for others. These assets provide a steady stream of servicing income and may provide a gain or loss on sale. The Company monitors the size of the portfolio and average servicing fee rate and gain. Additionally, due to the classification of the Company's personal lending portfolio as held for sale upon the decision to exit the personal lending line of business, adjustments to record this portfolio at the lower of cost or market are included in investment gains (losses), net, which is a component of other income (losses).

Operating expenses — The Company assesses its operational efficiency using the cost-to-managed assets ratio. The Company performs extensive analysis to determine whether observed fluctuations in operating expense levels indicate a trend or are the nonrecurring impact of large projects. The operating expense analysis also includes a loan- and portfolio-level review of origination and servicing costs to assist the Company in assessing profitability by pool and vintage.

Because volume and portfolio size determine the magnitude of the impact of each of the above factors on the Company's earnings, the Company also closely monitors origination and sales volume along with APR and discounts (including subvention and net of dealer participation).

~~Third~~First Quarter ~~2017~~2018 Summary of Results

Key highlights of the Company's performance in the ~~third~~first quarter of ~~2017~~2018 included:

Total auto originations of ~~$5.0~~$6.3 billion, ~~down 3%~~up 17.8% from ~~$5.2~~$5.4 billion originated in the same quarter in ~~2016;~~2017;

Net finance and other interest income of ~~$1.1~~$1.0 billion, down ~~10%~~8% compared to the same quarter in ~~2016;~~2017;

Return on average assets of ~~2.0%~~2.4%, ~~down~~up from ~~2.2%~~1.5% compared to the same quarter in ~~2016;~~2017;

Common equity tier 1 (CET1) ratio of ~~15.0%~~16.8%, up ~~190~~300 bps compared to the same quarter in ~~2016;~~2017; and

Net leased vehicle income of ~~$118.4~~$145.6 million, ~~down 13%~~up 14% compared to the same quarter in ~~2016.~~2017.

Recent Developments and Other Factors Affecting The Company's Results of Operations

Changes to Board of Directors ~~& Management Team~~

On August 28, 2017, the Company announced the departure of its President and Chief Executive Officer (CEO), Mr. Jason Kulas, effective August 27, 2017. Mr. Scott Powell was named successor and was also appointed to the Executive CommitteeApril 19, 2018, Brian Gunn submitted his resignation as a member of the ~~Board. Both appointments were effective August 27, 2017. Mr. Mahesh Aditya was also elected to~~Board of Directors of Santander Consumer USA Holdings Inc. (“SC Holdings”) and of the Board ~~to fill the vacancy created by the departure~~ of ~~Mr. Kulas~~Directors of Santander Consumer USA Inc., a wholly-owned subsidiary of SC Holdings, effective ~~August 27, 2017.~~on April 19, 2018.

On October 2, 2017, the Company announced the departure of its Chief Financial Officer (CFO), Mr. Ismail Dawood, effective September 29, 2017. Mr. Juan Carlos Alvarez de Soto was named successor effective September 29, 2017.

~~Impact from Hurricanes~~

During the three months ended September 30, 2017, the Company's operations were impacted by Hurricanes Harvey and Irma. As a result of the hurricanes, the Company incurred costs to repair damaged assets and facilities, suffered losses under its contracts, and incurred costs to clean up and recover its operations. At the time of the hurricanes, the Company had insurance that provided coverage for, among other things, property damage and business interruption impact on net profitability. The Company has yet to submit or recover any losses under its insurance program and accordingly, no insurance recoveries were recorded in the condensed consolidated financial statements as of and during the period ended September 30, 2017. The Company has considered the impact of both Hurricanes in its allowance for credit losses recorded as of September 30, 2017.

~~Personal Lending~~

As a result of the strategic evaluation of its personal lending portfolio, in the third quarter of 2015, the Company began reviewing strategic alternatives for exiting the personal loan portfolios. On February 1, 2016, the Company completed the sale of substantially all LendingClub loans to a third-party buyer at an immaterial premium to par value. On April 14, 2017, the Company sold the remaining portfolio comprised of personal installment loans to a third-party buyer.

The Company's other significant personal lending relationship is with Bluestem. The Company continues to perform in accordance with the terms and operative provisions of agreements under which it is obligated to purchase personal revolving loans originated by Bluestem for a term ending in 2020, or 2022 if extended at Bluestem's option. The Bluestem portfolio is carried as held for sale in the Company's condensed consolidated financial statements. Accordingly, the Company has recorded $238 million million year-to-date in lower of cost or market adjustments on this portfolio, and there may be further such adjustments required in future periods' financial statements. The Company is currently evaluating alternatives for sale of the Bluestem portfolio, which had a carrying value of $930 million at September 30, 2017.

~~Securitizations~~

On March 29, 2017, the Company entered into a Master Securities Purchase Agreement (MSPA) with Santander, whereby the Company has the option to sell a contractually determined amount of eligible prime loans to Santander, through the SPAIN securitization platform, for a term ending in December 2018. The Company provides servicing on all loans originated under this arrangement. For the nine months ended September 30, 2017, the Company sold $1.2 billion of loans under this agreement. Under a separate securities purchase agreement, the Company sold $1.3 billion of prime loans to Santander during the three months ended September 30, 2017. The Company provides servicing of these loans sold.

~~Dividends~~

The Company was restricted from declaring or paying any future dividends, or making any capital distribution, until such time as the FRBB issues a written non-objection to a revised capital plan submitted by SHUSA or the FRBB otherwise issues its written non-objection to the payment of a dividend by the Company. In June 2017, SHUSA announced that the FRBB did not

object to the planned capital actions described in SHUSA’s 2017 Capital Plan that was submitted as part of the annual Comprehensive Capital Analysis and Review (CCAR). Included in SHUSA’s capital actions were proposed dividend payments for the Company’s stockholders.

On October 25, 2017, the Company declared a cash dividend of $0.03 per share, to be paid November 17, 2017 to shareholders of record as of close of business on November 7, 2017. The Company's capital action plan also includes dividend payments for the Company’s stockholders of $0.05 per share in the first and second quarters of 2018.

Volume

The Company's originations of individually acquired loans and leases, including ~~net balance increases on~~ revolving loans, average APR, and discount during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
	(Dollar amounts in thousands)												(Dollar amounts in thousands)
Retained Originations
Retail installment contracts	$	2,570,228		$	3,281,112		$	8,619,961		$	10,545,592		$	3,866,494		$	3,185,373
Average APR	16.1		%	14.7		%	17.2		%	15.1		%	16.1		%	17.0		%
Average FICO® (a)	605			612			591			606			611			593
Discount	1.2		%	0.1		%	0.8		%	0.4		%	0.3		%	0.4		%

Personal loans(b)	$	—		$	—		$	5,660		$	9,281		$	273,328		$	287,696
Average APR	—			—			25.7		%	25.0		%	26.0			25.3

Leased vehicles	$	1,665,776		$	1,300,375		$	4,693,392		$	4,612,284		$	2,093,604		$	1,600,659

Capital lease	$	2,477		$	2,319		$	4,655		$	5,977		$	2,398		$	1,177
Total originations retained	$	4,238,481		$	4,583,806		$	13,323,668		$	15,173,134		$	6,235,824		$	5,074,905

Sold Originations
Retail installment contracts	$	757,720		$	580,242		$	2,550,065		$	2,201,659		$	386,956		$	601,205
Average APR	6.0		%	3.2		%	6.2		%	3.0		%	6.8		%	5.8		%
Average FICO® ~~(b)~~(c)	729			760			727			759			732			727

Total originations	$	4,996,201		$	5,164,048		$	15,873,733		$	17,374,793		$	6,622,780		$	5,676,110


(a)	Unpaid principal balance excluded from the weighted average FICO score is ~~$311~~$461 million and ~~$492~~$443 million for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, ~~$37~~$54 million and ~~$74~~$40 million, respectively, were commercial loans.

(b)

Effective as of three months ended December 31, 2017, the Company revised its approach to define origination volumes for Personal Loans to include new originations, gross of paydowns and charge-offs, related to customers who took additional advances on existing accounts (including capitalized late fees, interest and other charges), and newly opened accounts. In the prior periods, the Company reported net balance increases on personal loans as origination volume. Included in the total origination volume is $17 million and $23 million for the three months ended March 31, 2018 and 2017 respectively, related to newly opened accounts.

(c)

Unpaid principal balance excluded from the weighted average FICO score is ~~$1.2 billion~~$32 million and ~~$1.8 billion~~$80 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, ~~$95~~$20 million and ~~$370~~$31 million, ~~respectively, were commercial loans.~~

~~(b)~~

Unpaid principal balance excluded from the weighted average FICO score is $93 million and $59 million for the three months ended September 30, 2017 and 2016, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $26 million and zero, respectively, were commercial loans. Unpaid principal balance excluded from the weighted average FICO score is $319 million and $263 million for the nine months ended September 30, 2017 and 2016, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $102 million and zero, respectively, were commercial loans.

Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. During the three months ended March 31, 2018, the Company facilitated the purchase of $24 million of retail installment contacts.

Total originations ~~decreased $1.5~~increased $0.9 billion, or 9%17%, from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~decrease~~increase was primarily attributable to ~~the continued high competition~~our new initiatives, starting in the ~~auto loan originations market, particularly~~second half of 2017, to improve our pricing as well as dealer and customer experience, which we believe increased our competitive position in the ~~prime environment.~~market. The Company continues to focus on optimizing the loan quality of its portfolio with an appropriate balance of volume and risk. Chrysler Capital volume and penetration rates are influenced by strategies implemented by FCA, including product mix and incentives.

The Company's originations of individually acquired retail installment contracts and leases by vehicle type during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:


	Three Months Ended								Nine Months Ended								Three Months Ended
	September 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016				March 31, 2018				March 31, 2017
	(Dollars amounts in thousands)																(Dollars amounts in thousands)
Retail installment contracts
Car	$	1,265,729	38.0	%	$	1,599,590	41.4	%	$	4,657,357	41.7	%	$	5,356,793	42.0	%	$	1,544,947	36.3	%	$	1,658,618	43.8	%
Truck and utility	1,727,628		51.9	%	1,938,720		50.2	%	5,582,482		50.0	%	6,402,820		50.2	%	2,213,400		52.0	%	1,869,235		49.4	%
Van and other (a)	334,591		10.1	%	323,044		8.4	%	930,187		8.3	%	987,638		7.7	%	495,103		11.7	%	258,725		6.8	%
	$	3,327,948	100.0	%	$	3,861,354	100.0	%	$	11,170,026	100.0	%	$	12,747,251	100.0	%	$	4,253,450	100.0	%	$	3,786,578	100.0	%

Leased vehicles
Car	$	239,628	14.4	%	$	193,759	14.9	%	$	875,862	18.7	%	$	522,437	11.3	%	$	158,869	7.6	%	$	300,896	18.8	%
Truck and utility	1,359,411		81.6	%	944,137		72.6	%	3,543,077		75.5	%	3,588,033		77.8	%	1,658,957		79.2	%	1,177,079		73.5	%
Van and other (a)	66,737		4.0	%	162,479		12.5	%	274,453		5.8	%	501,814		10.9	%	275,778		13.2	%	122,684		7.7	%
	$	1,665,776	100.0	%	$	1,300,375	100.0	%	$	4,693,392	100.0	%	$	4,612,284	100.0	%	$	2,093,604	100.0	%	$	1,600,659	100.0	%

Total originations by vehicle type
Car	$	1,505,357	30.1	%	$	1,793,349	34.7	%	$	5,533,219	34.9	%	$	5,879,230	33.9	%	$	1,703,816	26.8	%	$	1,959,514	36.4	%
Truck and utility	3,087,039		61.8	%	2,882,857		55.9	%	9,125,559		57.5	%	9,990,853		57.6	%	3,872,357		61.0	%	3,046,314		56.5	%
Van and other (a)	401,328		8.0	%	485,523		9.4	%	1,204,640		7.6	%	1,489,452		8.6	%	770,881		12.2	%	381,409		7.1	%
	$	4,993,724	100.0	%	$	5,161,729	100.0	%	$	15,863,418	100.0	%	$	17,359,535	100.0	%	$	6,347,054	100.0	%	$	5,387,237	100.0	%

(a) Other primarily consists of commercial vehicles.

The Company's asset sales for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
	(Dollar amounts in thousands)												(Dollar amounts in thousands)
Retail installment contracts	$	1,482,134		$	793,804		$	2,979,033		$	2,312,983		$	1,475,253		$	930,590
Average APR	6.2		%	3.0		%	6.2		%	2.9		%	6.5		%	5.9		%
Average FICO®	716			762			721			762			727			726

Personal loans	$	—		$	—		$	—		$	869,349
Average APR	—			—			—			17.9		%
Total asset sales	$	1,482,134		$	793,804		$	2,979,033		$	3,182,332		$	1,475,253		$	930,590

Total assets sales ~~decreased $203~~increased $545 million, or 6%59% from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~decrease~~increase resulted due to a securitization executed in 2018, whereby eligible prime loans are sold to Santander. This was partially offset by from terminations of the forward flow agreements with CBP and Bank of America during fiscal ~~2017, partially offset by the two new securitizations executed in 2017, whereby eligible prime loans are sold to Santander.~~2017.

The Company's portfolio of retail installment contracts held for investment and leases by vehicle type as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are as follows:


	September 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
	(Dollars amounts in thousands)								(Dollars amounts in thousands)
Retail installment contracts
Car	$	14,056,979	53.3	%	$	14,835,303	54.2	%	$	13,245,621	50.9	%	$	13,509,708	52.0	%
Truck and utility	11,023,428		41.8	%	10,967,816		40.1	%	11,381,368		43.7	%	11,144,712		42.9	%
Van and other (a)	1,289,421		4.9	%	1,555,028		5.7	%	1,398,714		5.4	%	1,332,112		5.1	%
	$	26,369,828	100.0	%	$	27,358,147	100.0	%	$	26,025,703	100.0	%	$	25,986,532	100.0	%

Leased vehicles
Car	$	1,599,837	14.5	%	$	1,213,371	12.6	%	$	1,508,080	12.9	%	$	1,571,170	14.1	%
Truck and utility	8,502,258		77.3	%	7,447,718		77.5	%	9,152,693		78.6	%	8,704,623		77.9	%
Van and other (a)	899,305		8.2	%	951,864		9.9	%	992,068		8.5	%	899,809		8.0	%
	$	11,001,400	100.0	%	$	9,612,953	100.0	%	$	11,652,841	100.0	%	$	11,175,602	100.0	%

Total by vehicle type
Car	$	15,656,816	41.9	%	16,048,674		43.4	%	14,753,701		39.2	%	15,080,878		40.6	%
Truck and utility	19,525,686		52.2	%	18,415,534		49.8	%	20,534,061		54.5	%	19,849,335		53.4	%
Van and other (a)	2,188,726		5.9	%	2,506,892		6.8	%	2,390,782		6.3	%	2,231,921		6.0	%
	$	37,371,228	100.0	%	$	36,971,100	100.0	%	$	37,678,544	100.0	%	$	37,162,134	100.0	%

(a) Other primarily consists of commercial vehicles.

The unpaid principal balance, average APR, and remaining unaccreted dealer discount of the Company's held for investment portfolio as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are as follows:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Dollar amounts in thousands)						(Dollar amounts in thousands)
Retail installment contracts (a)	$	26,369,828		$	27,358,147		$	26,025,703		$	25,986,532
Average APR	16.7		%	16.4		%	16.6		%	16.5		%
Discount	1.6		%	2.3		%	1.4		%	1.5		%

Personal loans	$	9,188		$	19,361		$	5,158		$	6,887
Average APR	31.9		%	31.5		%	31.8		%	31.8		%

Receivables from dealers	$	16,069		$	69,431		$	15,495		$	15,787
Average APR	4.2		%	4.9		%	4.2		%	4.2		%

Leased vehicles	$	11,001,400		$	9,612,953		$	11,652,841		$	11,175,602

Capital leases	$	21,648		$	31,872		$	21,750		$	22,857

(a) Of this balance as of ~~September 30, 2017, $7.4~~March 31, 2018, $3.2 billion, ~~$7.4~~$7.9 billion, $6.1 billion, and ~~$2.9~~$4.9 billion was originated during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, and the years ended 2017, 2016, ~~2015,~~ and ~~2014,~~2015, respectively.

The Company records interest income from individually acquired retail installment contracts, personal loans, and receivables from dealers in accordance with the terms of the loans, generally discontinuing and reversing accrued income once a loan becomes more than 60 days past due, except in the case of revolving personal loans, for which the Company continues to accrue interest until charge-off, in the month in which the loan becomes 180 days past due, and receivables from dealers, for which the Company continues to accrue interest until the loan becomes more than 90 days past due. The Company generally does not acquire receivables from dealers and term personal loans at a discount. The Company amortizes discounts, subvention payments from manufacturers, and origination costs as adjustments to income from individually acquired retail

installment contracts using the effective yield method. The Company estimates future principal prepayments specific to pools of ~~homogenous~~homogeneous loans which are based on the vintage, credit quality at origination and term of the loan. Prepayments in our portfolio are sensitive to credit quality, with higher credit quality loans generally experiencing higher voluntary prepayment rates than lower credit quality loans. The impact of defaults is not considered in the prepayment rate; the prepayment rate only considers voluntary prepayments. The resulting prepayment rate specific to each pool is based on historical experience, and is used as an input in the calculation of the constant effective yield. Our estimated weighted average prepayment rates ranged from 6.1% to 10.5% as of March 31, 2018, and 6.0% to 10.4% as of March 31, 2017.

The Company amortizes the discount, if applicable, on revolving personal loans straight-line over the estimated period over which the receivables are expected to be outstanding. For individually acquired retail installment contracts, personal loans, capital leases, and receivables from dealers, the Company also establishes a credit loss allowance for the estimated losses inherent in the portfolio. The Company estimates probable losses based on contractual delinquency status, historical loss experience, expected recovery rates from sale of repossessed collateral, bankruptcy trends, and general economic ~~conditions.~~conditions such as unemployment rates. For loans within these portfolios that are classified as TDRs, impairment is ~~generally~~ measured based on the present value of expected future cash flows discounted at the original effective interest rate. For loans that are considered collateral-dependent, such as certain bankruptcy modifications, impairment is measured based on the fair value of the collateral, less its estimated cost to sell.

The Company classifies most of its vehicle leases as operating leases. The Company records the net capitalized cost of each lease as an asset, which is depreciated straight-line over the contractual term of the lease to the expected residual value. ~~Lease~~The Company records lease payments due from customers ~~are recorded~~ as income until and unless a customer becomes more than 60 days delinquent, at which time the accrual of revenue is discontinued and reversed. The Company resumes and reinstates the accrual if a delinquent account subsequently becomes 60 days or less past due. The Company amortizes subvention payments from the manufacturer, down payments from the customer, and initial direct costs incurred in connection with originating the lease straight-line over the contractual term of the lease.

Historically, the Company's primary means of acquiring retail installment contracts has been through individual acquisitions immediately after origination by a dealer. The Company also periodically purchases pools of receivables and had significant volumes of these purchases during the credit crisis. While the Company continues to pursue such opportunities when available, it did not purchase any pools during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017. However, during the three months ended ~~September 30, 2016,~~March 31, 2017, the Company recognized certain retail installment contracts with an unpaid principal balance of ~~$135,772~~$42,996 (nil for the three months ended ~~September 30, 2017)~~March 31, 2018), and for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company recognized certain retail installment contracts with an unpaid principal balance of ~~$226,613~~$42,996 and ~~$327,443,~~$152,208, respectively, held by non-consolidated securitization Trusts under optional clean-up calls. Following the initial recognition of these loans at fair value, the performing loans in the portfolio will be carried at amortized cost, net of allowance for credit losses. The Company elected the fair value option for all non-performing loans acquired (more than 60 days delinquent as of re-recognition date), for which it was probable that not all contractually required payments would be collected. All of the retail installment contracts acquired during these periods were acquired individually. For the Company's existing purchased receivables portfolios, which were acquired at a discount partially attributable to credit deterioration since origination, the Company estimates the expected yield on each portfolio at acquisition and record monthly accretion income based on this expectation. The Company periodically re-evaluates performance expectations and may increase the accretion rate if a pool is performing better than expected. If a pool is performing worse than expected, the Company is required to continue to record accretion income at the previously established rate and to record impairment to account for the worsening performance.

Selected Financial Data


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Income Statement Data	(Dollar amounts in thousands, except per share data)												(Dollar amounts in thousands, except per share data)
Interest on individually acquired retail installment contracts	$	1,095,554		$	1,148,669		$	3,332,339		$	3,485,106		$	1,021,916		$	1,104,672
Interest on purchased receivables portfolios	5,223			17,830			26,670			58,774			2,841			11,144
Interest on receivables from dealers	808			1,176			2,696			2,822			120			921
Interest on personal loans	83,474			78,711			264,792			257,620			89,260			92,449
Interest on finance receivables and loans	1,185,059			1,246,386			3,626,497			3,804,322			1,114,137			1,209,186
Net leased vehicle income	118,351			135,771			377,453			369,421			145,595			128,062
Other finance and interest income	6,385			3,638			15,415			11,440			7,137			3,825
Interest expense	250,674			207,175			711,134			590,504			241,028			227,089
Net finance and other interest income	1,059,121			1,178,620			3,308,231			3,594,679			1,025,841			1,113,984
Provision for credit losses on individually acquired retail installment contracts	535,427			609,396			1,682,894			1,787,277			458,679			629,097
Increase (decrease) in impairment related to purchased receivables portfolios	—			804			—			(2,986		)
Provision for credit losses on receivables from dealers	(546		)	(189		)	(557		)	(133		)	(3		)	10
Provision for credit losses on personal loans	1,134			—			10,275			—			(102		)	7,975
Provision for credit losses on capital leases	432			387			(597		)	(1,669		)	421			(2,069		)
Provision for credit losses	536,447			610,398			1,692,015			1,782,489			458,995			635,013
Profit sharing	5,945			6,400			22,333			35,640			4,377			7,945
Other income	58,947			26,682			138,822			141,542			25,053			55,480
Operating expenses	297,903			284,484			885,396			847,567			287,912			305,078
Income before tax expense	277,773			304,020			847,309			1,070,525			299,610			221,428
Income tax expense	78,385			90,473			239,819			365,334			57,311			78,001
Net income	$	199,388		$	213,547		$	607,490		$	705,191		$	242,299		$	143,427
Share Data
Weighted-average common shares outstanding
Basic	359,619,083			358,343,781			359,397,063			358,179,618			360,703,234			359,105,050
Diluted	360,460,353			360,087,749			360,069,449			359,635,034			361,616,732			360,616,032
Earnings per share
Basic	$	0.55		$	0.60		$	1.69		$	1.97		$	0.67		$	0.40
Diluted	$	0.55		$	0.59		$	1.69		$	1.96		$	0.67		$	0.40
Balance Sheet Data
Finance receivables held for investment, net	$	22,667,203		$	23,686,391		$	22,667,203		$	23,686,391		$	22,587,358		$	23,444,625
Finance receivables held for sale, net	1,775,459			2,572,429			1,775,459			2,572,429			1,611,535			1,856,019
Goodwill and intangible assets	105,590			107,084			105,590			107,084			105,144			106,331
Total assets	38,765,557			38,771,636			38,765,557			38,771,636			40,045,188			39,061,940
Total borrowings	30,594,101			31,799,895			30,594,101			31,799,895			31,305,159			31,475,304
Total liabilities	32,880,323			33,653,979			32,880,323			33,653,979			33,319,173			33,642,942
Total equity	5,885,234			5,117,657			5,885,234			5,117,657			6,726,015			5,418,998
Allowance for credit losses	3,380,763			3,412,977			3,380,763			3,412,977			3,189,654			3,453,075


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Other Information	(Dollar amounts in thousands)												(Dollar amounts in thousands)
Charge-offs, net of recoveries, on individually acquired retail installment contracts	$	611,130		$	630,847		$	1,722,684		$	1,583,406		$	537,792		$	598,933
Charge-offs, net of recoveries, on purchased receivables portfolios	769			254			1,541			(807		)	(428		)	353
Charge-offs, net of recoveries, on receivables from dealers	—			—			—			135			—			—
Charge-offs, net of recoveries, on personal loans	1,771			—			6,550			—			749			3,458
Charge-offs, net of recoveries, on capital leases	1,193			2,095			3,785			7,165			306			1,314
Total charge-offs, net of recoveries	614,863			633,196			1,734,560			1,589,899			538,419			604,058
End of period delinquent principal over 60 days, individually acquired retail installment contracts held for investment	1,338,635			1,260,255			1,338,635			1,260,255			984,755			1,044,288
End of period personal loans delinquent principal over 60 days	183,919			179,443			183,919			179,443			162,061			169,429
End of period delinquent principal over 60 days, loans held for investment	1,342,335			1,267,950			1,342,335			1,267,950			986,886			1,049,030
End of period assets covered by allowance for credit losses	26,367,894			27,490,290			26,367,894			27,490,290			26,028,935			27,188,404
End of period gross individually acquired retail installment contracts held for investment	26,320,989			27,370,995			26,320,989			27,370,995			25,986,531			27,074,856
End of period gross personal loans	1,337,114			1,337,692			1,337,114			1,337,692			1,387,713			1,414,313
End of period gross finance receivables and loans held for investment	26,395,085			27,706,307			26,395,085			27,706,307			26,046,356			27,371,719
End of period gross finance receivables, loans, and leases held for investment	37,418,133			37,295,993			37,418,133			37,295,993			37,720,946			37,447,052
Average gross individually acquired retail installment contracts held for investment	26,762,472			27,075,151			26,976,810			27,276,903			25,911,063			27,089,438
Average gross personal loans held for investment	10,549			6,937			13,935			6,869			6,010			17,610
Average gross individually acquired retail installment contracts	28,144,133			28,970,039			28,182,386			28,710,402
Average gross individually acquired retail installment contracts held for investment and held for sale													26,820,166			28,200,907
Average gross purchased receivables portfolios	120,245			266,749			176,792			301,026			41,209			220,786
Average gross receivables from dealers	53,715			70,392			63,401			72,735			15,651			70,165
Average gross personal loans	1,367,445			1,343,099			1,419,223			1,572,297			1,459,308			1,488,665
Average gross capital leases	22,544			39,974			26,415			49,625			22,474			30,599
Average gross finance receivables and loans	29,708,082			30,690,253			29,868,217			30,706,085			28,358,808			30,011,122
Average gross operating leases													11,441,789			9,849,077
Average gross finance receivables, loans, and leases	40,419,023			40,037,873			40,125,969			39,299,213			39,800,597			39,860,199
Average managed assets	49,998,111			52,675,379			50,555,068			52,983,740			48,421,303			51,229,729
Average total assets	39,496,278			38,473,832			39,192,434			37,844,330			39,694,041			38,910,193
Average debt	31,554,026			31,671,237			31,538,355			31,343,204			31,208,250			31,553,342
Average total equity	5,764,119			4,994,511			5,542,255			4,736,826			6,579,416			5,325,581
Ratios
Yield on individually acquired retail installment contracts	15.6		%	15.9		%	15.8		%	16.2		%	15.2		%	15.7		%
Yield on purchased receivables portfolios	17.4		%	26.7		%	20.1		%	26.0		%	27.6		%	20.2		%
Yield on receivables from dealers	6.0		%	6.7		%	5.7		%	5.2		%	3.1		%	5.3		%
Yield on personal loans (1)	24.4		%	23.4		%	24.9		%	21.8		%	24.5		%	24.8		%
Yield on earning assets (2)	13.0		%	13.8		%	13.4		%	14.2		%	12.7		%	13.5		%
Cost of debt (3)	3.2		%	2.6		%	3.0		%	2.5		%	3.1		%	2.9		%
Net interest margin (4)	10.5		%	11.8		%	11.0		%	12.2		%	10.3		%	11.2		%
Expense ratio (5)	2.4		%	2.2		%	2.3		%	2.1		%	2.4		%	2.4		%
Return on average assets (6)	2.0		%	2.2		%	2.1		%	2.5		%	2.4		%	1.5		%
Return on average equity (7)	13.8		%	17.1		%	14.6		%	19.8		%	14.7		%	10.8		%
Net charge-off ratio on individually acquired retail installment contracts (8)	9.1		%	9.3		%	8.5		%	7.7		%	8.3		%	8.8		%
Net charge-off ratio on purchased receivables portfolios (8)	2.6		%	0.4		%	1.2		%	(0.4		)%	(4.2		)%	0.6		%
Net charge-off ratio on receivables from dealers (8)	—			—			—			0.2		%	—			—
Net charge-off ratio on personal loans (8)	67.2		%	—			62.7		%	—			49.9		%	78.5		%
Net charge-off ratio (8)	9.1		%	9.2		%	8.5		%	7.7		%	8.3		%	8.8		%
Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9)	5.1		%	4.6		%	5.1		%	4.6		%	3.8		%	3.9		%
Delinquency ratio on personal loans, end of period (9)	13.8		%	13.4		%	13.8		%	13.4		%	11.7		%	12.0		%
Delinquency ratio on loans held for investment, end of period (9)	5.1		%	4.6		%	5.1		%	4.6		%	3.8		%	3.8		%
Equity to assets ratio (10)	15.2		%	13.2		%	15.2		%	13.2		%	16.8		%	13.9		%
Tangible common equity to tangible assets (10)	14.9		%	13.0		%	14.9		%	13.0		%	16.6		%	13.6		%
Allowance ratio (11)	12.8		%	12.4		%	12.8		%	12.4		%
Common Equity Tier 1 capital ratio (12)	15.0		%	13.1		%	15.0		%	13.1		%
Common stock dividend payout ratio (11)													7.5		%	—
Allowance ratio (12)													12.3		%	12.7		%
Common Equity Tier 1 capital ratio (13)													16.8		%	13.8		%


(1)	Includes finance and other interest income; excludes ~~fees~~fees.


(2)	“Yield on earning assets” is defined as the ratio of annualized Total finance and other interest income, net of Leased vehicle expense, to Average gross finance receivables, loans and ~~leases~~leases.


(3)	“Cost of debt” is defined as the ratio of annualized Interest expense to Average ~~debt~~debt.


(4)	“Net interest margin” is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and ~~leases~~leases.


(5)	"Expense ratio" is defined as the ratio of annualized Operating expenses to Average managed ~~assets~~assets.


(6)	“Return on average assets” is defined as the ratio of annualized Net income to Average total ~~assets~~assets.


(7)	“Return on average equity” is defined as the ratio of annualized Net income to Average total ~~equity~~equity.

(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. Effective as of September 30, 2016, the Company records the charge-off activity for certain personal loans within the provision for credit losses due to the reclassification of these loans from held for sale to held for investment.


(9)	“Delinquency ratio” is defined as the ratio of End of period Delinquent principal over 60 days to End of period gross balance of the respective portfolio, excludes capital ~~leases~~leases.

(10)

“Tangible common equity to tangible assets” is defined as the ratio of Total equity, excluding Goodwill and intangible assets, to Total assets, excluding Goodwill and intangible assets. Management believes this non-GAAP financial measure is useful to assess and monitor the adequacy of the Company's capitalization. This additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures used by other financial institutions. A reconciliation from GAAP to this non-GAAP measure for the periods ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ is as follows:


	September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
	(Dollar amounts in thousands)						(Dollar amounts in thousands)
Total equity	$	5,885,234		$	5,117,657		$	6,726,015		$	5,418,998
Deduct: Goodwill and intangibles	105,590			107,084			105,144			106,331
Tangible common equity	$	5,779,644		$	5,010,573		$	6,620,871		$	5,312,667

Total assets	$	38,765,557		$	38,771,636		$	40,045,188		$	39,061,940
Deduct: Goodwill and intangibles	105,590			107,084			105,144			106,331
Tangible assets	$	38,659,967		$	38,664,552		$	39,940,044		$	38,955,609

Equity to assets ratio	15.2		%	13.2		%	16.8		%	13.9		%
Tangible common equity to tangible assets	14.9		%	13.0		%	16.6		%	13.6		%


(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.


(12)	“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.


~~(12)~~(13)	"Common Equity Tier 1 Capital ratio" is defined as the ratio of Total Common Equity Tier 1 Capital (CET1) to Total risk-weighted assets.


	September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Total equity	$	5,885,234		$	5,117,657		$	6,726,015		$	5,418,998
Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities	172,502			191,850			169,870			182,156
Deduct: Accumulated other comprehensive income (loss), net	27,481			(26,598		)	63,211			35,504
Tier 1 common capital	$	5,685,251		$	4,952,405		$	6,492,934		$	5,201,338
Risk weighted assets (a)	$	37,828,130		$	37,828,982		$	38,596,789		$	37,799,513
Common Equity Tier 1 capital ratio (b)	15.0		%	13.1		%	16.8		%	13.8		%

(a)

Under the banking agencies' risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together with the measure for market risk, resulting in the Company's total Risk weighted assets.


(b)	CET1 is calculated under Basel III regulations required as of January 1, 2015. The fully phased-in capital ratios are non-GAAP financial measures.

The following tables present an analysis of net yield on interest earning assets:


	Three Months Ended September 30,														Three Months Ended March 31,
	2017							2016							2018							2017
	(Dollar amounts in thousands)														(Dollar amounts in thousands)
	Average Balances			Interest Income/Interest Expense		Yield/Rate		Average Balances			Interest Income/Interest Expense		Yield/Rate		Average Balances			Interest Income/Interest Expense		Yield/Rate		Average Balances			Interest Income/Interest Expense		Yield/Rate
Assets
Retail installment contracts acquired individually	$	28,144,133		$	1,095,554	15.6	%	$	28,970,039		$	1,148,669	15.9	%	$	26,820,166		$	1,021,916	15.2	%	$	28,200,907		$	1,104,672	15.7	%
Purchased receivables	120,245			5,223		17.4	%	266,749			17,830		26.7	%	41,209			2,841		27.6	%	220,786			11,144		20.2	%
Receivables from dealers	53,715			808		6.0	%	70,392			1,176		6.7	%	15,651			120		3.1	%	70,165			921		5.3	%
Personal loans	1,367,445			83,474		24.4	%	1,343,099			78,711		23.4	%	1,459,308			89,260		24.5	%	1,488,665			92,449		24.8	%
Capital lease receivables	22,544			775		13.8	%	39,974			2,062		20.6	%	22,474			1,468		26.1	%	30,599			1,468		19.2	%
Finance receivables held for investment, net	29,708,082			1,185,834		16.0	%	30,690,253			1,248,448		16.3	%	28,358,808			1,115,605		15.7	%	30,011,122			1,210,654		16.1	%
Leased vehicles, net	10,710,941			118,351		4.4	%	9,347,620			135,771		5.8	%	11,441,789			145,595		5.1	%	9,849,077			128,062		5.2	%
Other assets	2,516,253			5,610		0.9	%	1,866,410			1,576		0.3	%	3,132,737			5,669		0.7	%	2,480,715			2,357		0.4	%
Allowance for credit losses	(3,438,998		)	—		—		(3,430,451		)	—		—		(3,239,293		)	—		—		(3,430,721		)	—		—
Total assets	$	39,496,278		$	1,309,795			$	38,473,832		$	1,385,795			$	39,694,041		$	1,266,869			$	38,910,193		$	1,341,073
Liabilities and equity
Liabilities:
Notes payable	$	31,554,026		$	250,674	3.2	%	$	31,671,237		$	207,175	2.6	%	$	31,208,250		$	241,028	3.1	%	$	31,553,342		$	227,089	2.9	%
Other liabilities	2,178,133			—		—		1,808,084			—		—		1,906,375			—		—		2,022,763			—		—
Total liabilities	33,732,159			250,674				33,479,321			207,175				33,114,625			241,028				33,576,105			227,089

Total stockholders' equity	5,764,119			—				4,994,511			—				6,579,416			—				5,325,581			—
Total liabilities and equity	$	39,496,278		$	250,674			$	38,473,832		$	207,175			$	39,694,041		$	241,028			$	38,901,686		$	227,089

Nine Months Ended September 30,
2017 2016
(Dollar amounts in thousands)
Average Balances Interest Income/Interest Expense Yield/Rate Average Balances Interest Income/Interest Expense Yield/Rate
Assets
Retail installment contracts acquired individually $ 28,182,386
$ 3,332,339
15.8 % $ 28,710,402
$ 3,485,106
16.2 %
Purchased receivables 176,792
26,670
20.1 % 301,026
58,774
26.0 %
Receivables from dealers 63,401
2,696
5.7 % 72,735
2,822
5.2 %
Personal loans 1,419,223
264,792
24.9 % 1,572,297
257,620
21.8 %
Capital lease receivables 26,415
3,302
16.7 % 49,625
7,093
19.1 %
Finance receivables held for investment, net 29,868,217
3,629,799
16.2 % 30,706,085
3,811,415
16.6 %
Leased vehicles, net 10,257,752
377,453
4.9 % 8,593,128
369,421
5.7 %
Other assets 2,504,968
12,113
0.6 % 1,953,562
4,347
0.3 %
Allowance for credit losses (3,438,503 ) —
—
(3,408,445 ) —
—
Total assets $ 39,192,434
$ 4,019,365
$ 37,844,330
$ 4,185,183

Liabilities and equity
Liabilities:
Notes payable $ 31,538,355
$ 711,134
3.0 % $ 31,343,204
$ 590,504
2.5 %
Other liabilities 2,111,824
—
—
1,764,300
—
—
Total liabilities 33,650,179
711,134
33,107,504
590,504

Total stockholders' equity 5,542,255
—
4,736,826
—

Total liabilities and equity $ 39,192,434
$ 711,134
$ 37,844,330
$ 590,504

Results of Operations

The following table presents the Company's results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016		2017			2016			2018		2017
	(Dollar amounts in thousands)											(Dollar amounts in thousands)
Interest on finance receivables and loans	$	1,185,059		$	1,246,386	$	3,626,497		$	3,804,322		$	1,114,137	$	1,209,186
Leased vehicle income	457,932			388,501		1,305,429			1,086,651			504,278		418,233
Other finance and interest income	6,385			3,638		15,415			11,440			7,137		3,825
Total finance and other interest income	1,649,376			1,638,525		4,947,341			4,902,413			1,625,552		1,631,244
Interest expense	250,674			207,175		711,134			590,504			241,028		227,089
Leased vehicle expense	339,581			252,730		927,976			717,230			358,683		290,171
Net finance and other interest income	1,059,121			1,178,620		3,308,231			3,594,679			1,025,841		1,113,984
Provision for credit losses	536,447			610,398		1,692,015			1,782,489			458,995		635,013
Net finance and other interest income after provision for credit losses	522,674			568,222		1,616,216			1,812,190			566,846		478,971
Profit sharing	5,945			6,400		22,333			35,640			4,377		7,945
Net finance and other interest income after provision for credit losses and profit sharing	516,729			561,822		1,593,883			1,776,550			562,469		471,026
Total other income	58,947			26,682		138,822			141,542			25,053		55,480
Total operating expenses	297,903			284,484		885,396			847,567			287,912		305,078
Income before income taxes	277,773			304,020		847,309			1,070,525			299,610		221,428
Income tax expense	78,385			90,473		239,819			365,334			57,311		78,001
Net income	$	199,388		$	213,547	$	607,490		$	705,191		$	242,299	$	143,427

Net income	$	199,388		$	213,547	$	607,490		$	705,191		$	242,299	$	143,427
Change in unrealized gains (losses) on cash flow hedges, net of tax	(379		)	24,168		(778		)	(28,723		)	12,800		7,245
Comprehensive income	$	199,009		$	237,715	$	606,712		$	676,468		$	255,099	$	150,672

Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2018 Compared to Three ~~and Nine~~ Months Ended ~~September 30, 2016~~March 31, 2017

Interest on Finance Receivables and Loans


	Three Months Ended									Nine Months Ended									Three Months Ended
	September 30,				Increase (Decrease)					September 30,				Increase (Decrease)					March 31,				Increase (Decrease)
	2017		2016		Amount			Percent		2017		2016		Amount			Percent		2018		2017		Amount			Percent
	(Dollar amounts in thousands)																		(Dollar amounts in thousands)
Income from individually acquired retail installment contracts	$	1,095,554	$	1,148,669	$	(53,115	)	(5	)%	$	3,332,339	$	3,485,106	$	(152,767	)	(4	)%	$	1,021,916	$	1,104,672	$	(82,756	)	(7	)%
Income from purchased receivables portfolios	5,223		17,830		(12,607		)	(71	)%	26,670		58,774		(32,104		)	(55	)%	2,841		11,144		(8,303		)	(75	)%
Income from receivables from dealers	808		1,176		(368		)	(31	)%	2,696		2,822		(126		)	(4	)%	120		921		(801		)	(87	)%
Income from personal loans	83,474		78,711		4,763			6	%	264,792		257,620		7,172			3	%	89,260		92,449		(3,189		)	(3	)%
Total interest on finance receivables and loans	$	1,185,059	$	1,246,386	$	(61,327	)	(5	)%	$	3,626,497	$	3,804,322	$	(177,825	)	(5	)%	$	1,114,137	$	1,209,186	$	(95,049	)	(8	)%

Income from individually acquired retail installment contracts decreased ~~$53~~$83 million, or 5%7%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and decreased $153 million, or 4%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30, 2017, greater than the 2.9% and 1.8%~~first quarter of 2018, primarily due to 4.9% decline ~~respectively,~~ in the average outstanding balance of the portfolio, ~~primarily due to~~because of lower interest income accruals for specific categories of loans classified as ~~TDRs.~~TDRs and better overall credit performance.

Income from purchased receivables portfolios decreased ~~$13~~$8 million, or ~~71%~~75%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and decreased $32 million, or 55%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30, 2017,~~first quarter of 2018, due to the sale of a majority of the purchased receivables to SHUSA during the third quarter of 2017 and the continued runoff of the portfolios, as the Company has made no portfolio acquisitions accounted for under ASC 310-30 since 2012. The average balance of the portfolio decreased from $267 million in the third quarter of 2016, to $120 million in the third quarter of 2017, and decreased from $301 million from the nine months ended September 30, 2016 to $177 million for the nine months ended September 30, 2017.

Income from personal loans ~~increased $5 million, or 6%, from the third quarter of 2016 to the third quarter of 2017, and increased $7~~decreased $3 million, or 3%, from the ~~nine months ended September 30, 2016~~first quarter of 2017 to the ~~nine months ended September 30, 2017, as~~first quarter of 2018, primarily due to 2.0% decline in the ~~sale~~average outstanding balance of the ~~entire LendingClub personal loan portfolio left only higher-yielding revolving loan~~ portfolio.

Leased Vehicle Income and Expense


	Three Months Ended									Nine Months Ended								Three Months Ended
	September 30,				Increase (Decrease)					September 30,				Increase (Decrease)				March 31,				Increase (Decrease)
	2017		2016		Amount			Percent		2017		2016		Amount		Percent		2018		2017		Amount		Percent
	(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Leased vehicle income	$	457,932	$	388,501	$	69,431		18	%	$	1,305,429	$	1,086,651	$	218,778	20	%	$	504,278	$	418,233	$	86,045	21	%
Leased vehicle expense	339,581		252,730		86,851			34	%	927,976		717,230		210,746		29	%	358,683		290,171		68,512		24	%
Leased vehicle income, net	$	118,351	$	135,771	$	(17,420	)	(13	)%	$	377,453	$	369,421	$	8,032	2	%	$	145,595	$	128,062	$	17,533	14	%

Leased vehicle income and expense increased in the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 when compared to the same periods in ~~2016,~~2017, due to the continual growth in the portfolio since the Company launched Chrysler Capital in ~~2013.~~2013, as the average outstanding balance of the portfolio increased 16.2%. Through the Chrysler Agreement, the Company receives manufacturer incentives on new leases originated under the program in the form of lease subvention payments, which are amortized over the term of the lease and reduce depreciation expense within Leased vehicle expense.

Interest Expense


	Three Months Ended										Nine Months Ended									Three Months Ended
	September 30,					Increase (Decrease)					September 30,				Increase (Decrease)					March 31,					Increase (Decrease)
	2017			2016		Amount			Percent		2017		2016		Amount			Percent		2018			2017		Amount			Percent
	(Dollar amounts in thousands)																			(Dollar amounts in thousands)
Interest expense on notes payable	$	253,478		$	194,602	$	58,876		30	%	$	709,001	$	547,160	$	161,841		30	%	$	253,372		$	222,269	$	31,103		14	%
Interest expense on derivatives	(2,804		)	12,573		(15,377		)	(122	)%	2,133		43,344		(41,211		)	(95	)%	(12,344		)	4,820		(17,164		)	(356	)%
Total interest expense	$	250,674		$	207,175	$	43,499		21	%	$	711,134	$	590,504	$	120,630		20	%	$	241,028		$	227,089	$	13,939		6	%

Interest expense on notes payable increased ~~$59~~$31 million, or ~~30%~~14%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and increased $162 million, or 30%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30,~~

~~2017,~~first quarter of 2018, primarily due to the increased cost of funds resulting from higher market rates and wider spreads. The average balance of the portfolio also increased slightly from $31.3 billion from the nine months ended September 30, 2016 to $31.5 billion for the nine months ended September 30, 2017.rates.

Interest expense on derivatives decreased ~~$15~~$17 million, or ~~122%~~356%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and decreased $41 million, or 95%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30, 2017~~first quarter of 2018, primarily due to a favorable mark-to-market impact based on interest rate changes in late 2017.

Provision for Credit Losses


	Three Months Ended											Nine Months Ended											Three Months Ended
	September 30,						Increase (Decrease)					September 30,						Increase (Decrease)					March 31,						Increase (Decrease)
	2017			2016			Amount			Percent		2017			2016			Amount			Percent		2018			2017			Amount			Percent
	(Dollar amounts in thousands)																						(Dollar amounts in thousands)
Provision for credit losses on individually acquired retail installment contracts	$	535,427		$	609,396		$	(73,969	)	(12	)%	$	1,682,894		$	1,787,277		$	(104,383	)	(6	)%	$	458,679		$	629,097		$	(170,418	)	(27	)%
Incremental increase (decrease) in impairment related to purchased receivables portfolios	—			804			(804		)	(100	)%	—			(2,986		)	2,986			(100	)%
Provision for credit losses on receivables from dealers	(546		)	(189		)	(357		)	189	%	(557		)	(133		)	(424		)	319	%	(3		)	10			(13		)	(130	)%
Provision for credit losses on personal loans	1,134			—			1,134			100	%	10,275			—			10,275			100	%	(102		)	7,975			(8,077		)	(101	)%
Provision for credit losses on capital leases	432			387			45			12	%	(597		)	(1,669		)	1,072			(64	)%	421			(2,069		)	2,490			(120	)%
Provision for credit losses	$	536,447		$	610,398		$	(73,951	)	(12	)%	$	1,692,015		$	1,782,489		$	(90,474	)	(5	)%	$	458,995		$	635,013		$	(176,018	)	(28	)%

Provision for credit losses on the Company's individually acquired retail installment contracts decreased ~~$104~~$170 million, or 6%(27)%, from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, primarily due to a lower ~~build of the allowance~~portfolio balances at March 31, 2018. The portfolio decreased 4.0% from $27.1 billion as at March 31, 2017 to $26.0 billion at March 31, 2017. In addition, provision for credit losses is impacted by nonaccrual of interest income for certain TDR loans, which is offset in the impairment as ~~a result~~it reduces the carrying value of the decline in originations during the nine months ended September 30, 2017, as compared to the same period in 2016, improved credit performance, and stabilizing recovery rates. This is partially offset by the lower benefit from bankruptcy sales and to a lesser extent, the additional allowance for credit losses recorded for customers affected by Hurricanes Harvey and Irma.TDR loans.

Provision for credit losses on personal loans was recorded for the first time during ~~fiscal~~three months ended March 31, 2017 due to the reclassification of personal loans from held for sale to held for investment effective as of the end on the third quarter of 2016. The balance in this portfolio is in a runoff stage.

Profit Sharing

Three Months Ended Nine Months Ended
September 30, Increase (Decrease) September 30, Increase (Decrease)
2017 2016 Amount Percent 2017 2016 Amount Percent
(Dollar amounts in thousands)
Profit sharing $ 5,945
$ 6,400
$ (455 ) (7 )% $ 22,333
$ 35,640
$ (13,307 ) (37 )%



	Three Months Ended
	March 31,				Increase (Decrease)
	2018		2017		Amount			Percent
	(Dollar amounts in thousands)
Profit sharing	$	4,377	$	7,945	$	(3,568	)	(45	)%

Profit sharing consists of revenue sharing related to the Chrysler Agreement and profit sharing on personal loans originated pursuant to the agreements with Bluestem. Profit sharing ~~with Bluestem~~ decreased in the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the same periods in ~~2016,~~2017, primarily ~~due to amendments to the agreement governing the~~because of decrease in Chrysler profit sharing ~~calculation, including an~~expense based on increase in ~~the percentage of profit retained by the Company. This effect was partially offset by an increase in Chrysler Capital revenue sharing due to continued growth in the portfolio.~~

lease depreciation expense.

Other Income


	Three Months Ended											Nine Months Ended											Three Months Ended
	September 30,						Increase (Decrease)					September 30,						Increase (Decrease)					March 31,						Increase (Decrease)
	2017			2016			Amount			Percent		2017			2016			Amount			Percent		2018			2017			Amount			Percent
	(Dollar amounts in thousands)																						(Dollar amounts in thousands)
Investment losses, net	$	(52,592	)	$	(106,050	)	$	(53,458	)	(50	)%	$	(228,513	)	$	(276,415	)	$	(47,902	)	(17	)%	$	(86,520	)	$	(76,399	)	$	(10,121	)	(13	)%
Servicing fee income	28,673			36,447			(7,774		)	(21	)%	92,310			123,929			(31,619		)	(26	)%	26,182			31,684			(5,502		)	(17	)%
Fees, commissions, and other	82,866			96,285			(13,419		)	(14	)%	275,025			294,028			(19,003		)	(6	)%	85,391			100,195			(14,804		)	(15	)%
Total other income	$	58,947		$	26,682		$	32,265		121	%	$	138,822		$	141,542		$	(2,720	)	(2	)%	$	25,053		$	55,480		$	(30,427	)	(55	)%
Average serviced for others portfolio	$	9,579,089		$	12,622,328		$	(3,043,239	)	(24	)%	$	10,426,323		$	13,674,454		$	(3,248,131	)	(24	)%	$	8,697,711		$	11,368,726		$	(2,671,015	)	(23	)%

•Investment losses, net for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ were as follows:


	Three Months Ended							Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016				September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Gain (loss) on sale of loans and leases	$	29,974		$	(3,765	)		$	16,913		$	(1,418	)	$	(16,696	)	$	(10,882	)
Lower of cost or market adjustments	(84,718		)	(97,532		)		(246,522		)	(266,506		)	(70,499		)	(66,121		)
Other gains, losses and impairments, net	2,152			(4,753		)	4	1,096			(8,491		)	675			604
	$	(52,592	)	$	(106,050	)		$	(228,513	)	$	(276,415	)
Total investment losses, net														$	(86,520	)	$	(76,399	)

Gain (loss) on sale of loans and leases changed from a ~~$3.8~~$11 million loss during ~~third~~first quarter of ~~2016,~~2017, to a ~~gain~~loss of ~~$30.0~~$17 million for the ~~third~~first quarter of ~~2017, and changed from a $1.4 million loss during the nine months ended September 30, 2016, to a gain of $16.9 million as of September 30, 2017. These changes were~~2018. The change was driven primarily by the ~~$36 million gain recognized upon the sale of receivables previously acquired with deteriorated credit quality to SBNA~~significantly higher assets sales during the ~~quarter. The gain is partially offset by losses recognized from off-balance sheet securitizations and flow agreements.~~

first quarter of 2018 as compared to the first quarter 2017.

The change in lower of cost or market adjustments primarily relates to customer default activity and net changes in the unpaid principal balance on the personal lending portfolio, most of which has been classified as held for sale since September 30, 2015. Refer to Note 16 - "Investment Gains (Losses), Net".

The Company records servicing fee income on loans that it services but does not own and does not report on its balance sheet. Servicing fee income decreased $8$6 million, or ~~21%~~17%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and decreased $32 million, or 26%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30, 2017~~first quarter of 2018, due to the decline in the Company's serviced portfolio. The serviced for others portfolio as of ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ was as follows:


	September 30,				March 31,
	2017		2016		2018		2017
	(Dollar amounts in thousands)				(Dollar amounts in thousands)
SBNA and Santander retail installment contracts	$	2,822,102	$	566,088	$	3,660,760	$	1,162,231
SBNA leases	459,524		1,502,518		97,274		926,377
Total serviced for related parties	3,281,626		2,068,606		3,758,034		2,088,608
Chrysler Capital securitizations	1,690,729		1,840,684		1,182,457		2,188,452
Other third parties	4,984,251		8,247,402		3,782,602		6,738,004
Total serviced for third parties	6,674,980		10,088,086		4,965,059		8,926,456
Total serviced for others portfolio	$	9,956,606	$	12,156,692	$	8,723,093	$	11,015,064

The Company's serviced for others balances has decreased versus the prior year due to lower prime originations and the timing of prime asset sales.

The Company's fees, commissions, and other primarily includes late fees, miscellaneous, and other income. This income decreased 15% from the first quarter of 2017 to the first quarter of 2018, due to the discontinuance of certain revenue streams in late 2017.

Total Operating Expenses


	Three Months Ended									Nine Months Ended									Three Months Ended
	September 30,				Increase (Decrease)					September 30,				Increase (Decrease)					March 31,				Increase (Decrease)
	2017		2016		Amount			Percent		2017		2016		Amount			Percent		2018		2017		Amount			Percent
	(Dollar amounts in thousands)																		(Dollar amounts in thousands)
Compensation expense	$	134,169	$	128,056	$	6,113		5	%	$	398,325	$	371,242	$	27,083		7	%	$	122,005	$	136,262	$	(14,257	)	(10	)%
Repossession expense	66,877		75,920		(9,043		)	(12	)%	205,445		217,816		(12,371		)	(6	)%	72,081		71,299		782			1	%
Other operating costs	96,857		80,508		16,349			20	%	281,626		258,509		23,117			9	%	93,826		97,517		(3,691		)	(4	)%
Total operating expenses	$	297,903	$	284,484	$	13,419		5	%	$	885,396	$	847,567	$	37,829		4	%	$	287,912	$	305,078	$	(17,166	)	(6	)%

Compensation expense ~~increased $6~~decreased $14 million, or 5%(10)%, from the ~~third quarter of 2016 to the third~~first quarter of 2017 ~~and increased $27 million, or 7%, from the nine months ended September 30, 2016~~ to the ~~nine months ended September 30, 2017,~~first quarter of 2018, primarily due to ~~the increase~~a decrease in severance expenses incurred in the first quarter of 2017 related to management changes and efficiency ~~efforts and continued investment in compliance and control functions.~~

Repossession expense decreased $9 million, or 12% from the third quarter of 2016 to the third quarter of 2017, and decreased $12 million, or 6%, from the nine months ended September 30, 2016 to the nine months ended September 30, 2017, primarily due to a decrease in repossessions related to repossessions held due to the impact of Hurricanes Harvey and Irma.

Other operating costs expense increased $16 million, or 20% from the third quarter of 2016 to the third quarter of 2017, and increased $23 million, or 9%, from the nine months ended September 30, 2016 to the nine months ended September 30, 2017, primarily due to the loss recorded for certain contingencies.efforts.

Income Tax Expense


	Three Months Ended											Nine Months Ended											Three Months Ended
	September 30,						Increase (Decrease)					September 30,						Increase (Decrease)					March 31,						Increase (Decrease)
	2017			2016			Amount			Percent		2017			2016			Amount			Percent		2018			2017			Amount			Percent
	(Dollar amounts in thousands)																						(Dollar amounts in thousands)
Income tax expense	$	78,385		$	90,473		$	(12,088	)	(13	)%	$	239,819		$	365,334		$	(125,515	)	(34	)%	$	57,311		$	78,001		$	(20,690	)	(27	)%
Income before income taxes	277,773			304,020			(26,247		)	(9	)%	847,309			1,070,525			(223,216		)	(21	)%	299,610			221,428			78,182			35	%
Effective tax rate	28.2		%	29.8		%						28.3		%	34.1		%						19.1		%	35.2		%

The effective tax rate decreased from ~~29.8%~~35.2% in the ~~third quarter of 2016 to 28.2% in the third~~first quarter of 2017 ~~and decreased from 34.1% for~~to 19.1% in the ~~nine month period ended September 30, 2016 to 28.3% for the nine month period ended September 30, 2017. The decreases were~~first quarter of 2018, primarily due to the tax benefit recognized upon the assertion that undistributed net earnings of the Company’s Puerto Rico subsidiary would be indefinitely reinvested outside the United States in the current year offset by the release of the valuation allowanceTax Cuts and Jobs Act enacted on ~~capital losses in the prior year.~~December 22, 2017 and effective January 1, 2018.

Other Comprehensive Income (Loss)

Three Months Ended Nine Months Ended
September 30, Increase (Decrease) September 30, Increase (Decrease)
2017 2016 Amount Percent 2017 2016 Amount Percent
(Dollar amounts in thousands)
Change in unrealized gains (losses) on cash flow hedges, net of tax $ (379 ) $ 24,168
$ (24,547 ) 102 % $ (778 ) $ (28,723 ) $ 27,945
97 %



	Three Months Ended
	March 31,				Increase (Decrease)
	2018		2017		Amount		Percent
	(Dollar amounts in thousands)
Change in unrealized gains (losses) on cash flow hedges, net of tax	$	12,800	$	7,245	$	5,555	77	%

The change in unrealized gains (losses) on cash flow hedges for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 as compared to the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 was primarily driven by more favorable interest rate movements in ~~2017~~2018 than in ~~2016.~~2017.

Credit Quality

Loans and Other Finance Receivables

Nonprime loans comprise ~~84%~~83% of the Company's portfolio as of ~~September 30, 2017.~~March 31, 2018. The Company records an allowance for credit losses to cover the estimate of inherent losses on individually acquired retail installment contracts and other loans and receivables held for investment. The Company's held for investment portfolio of retail installment contracts acquired individually, receivables from dealers, and personal loans was comprised of the following at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017													March 31, 2018
	Retail Installment Contracts Acquired Individually (a)						Receivables from Dealers				Personal Loans			Retail Installment Contracts Acquired Individually (a)								Receivables from Dealers				Personal Loans
	Non-TDR			TDR						Non-TDR					TDR							Receivables from Dealers				Personal Loans
Unpaid principal balance	$	20,044,330		$	6,276,659		Receivables from Dealers	$	16,069		Personal Loans			$	9,188		$	19,987,763			$	5,998,768			$	15,495			$	5,158
Credit loss allowance - specific	—			(1,782,114		)	—				—			—				(1,595,465		)		—				—
Credit loss allowance - collective	(1,589,151		)	—			(167		)		(3,725		)	(1,586,557		)		—				(161		)		(1,714		)
Discount	(331,179		)	(84,588		)	—				(16		)	(281,345		)		(64,034		)		—				—
Capitalized origination costs and fees	59,295			5,909			—				176			62,400				5,418				—				138
Net carrying balance	$	18,183,295		$	4,415,866		$	15,902			$	5,623		$	18,182,261			$	4,344,687			$	15,334			$	3,582
Allowance as a percentage of unpaid principal balance	7.9		%	28.4		%	1.0		%		40.5		%	7.9		%		26.6		%		1.0		%		33.2		%
Allowance and discount as a percentage of unpaid principal balance	9.6		%	29.7		%	1.0		%		40.7		%	9.3		%		27.7		%		1.0		%		33.2		%

(a) As of ~~September 30,~~March 31, 2018, used car financing represented 61% of our outstanding retail installment contracts acquired individually. 87% of this used car financing consisted of nonprime auto loans.



	December 31, 2017
	Retail Installment Contracts Acquired Individually (a)						Receivables from Dealers			Personal Loans
	Non-TDR			TDR			Receivables from Dealers			Personal Loans
Unpaid principal balance	$	19,681,394		$	6,261,894		$	15,787		$	6,887
Credit loss allowance - specific	—			(1,731,320		)	—			(2,565		)
Credit loss allowance - collective	(1,529,815		)	—			(164		)	—
Discount	(309,191		)	(74,832		)	—			(1		)
Capitalized origination costs and fees	58,638			5,741			—			138
Net carrying balance	$	17,901,026		$	4,461,483		$	15,623		$	4,459
Allowance as a percentage of unpaid principal balance	7.8		%	27.6		%	1.0		%	37.2
Allowance and discount as a percentage of unpaid principal balance	9.3		%	28.8		%	1.0		%	37.3		%

(a) As of December 31, 2017, used car financing represented 61% of our outstanding retail installment contracts acquired individually. ~~88%~~87% of this

used car financing consisted of nonprime auto loans.

December 31, 2016
Retail Installment Contracts
Acquired
Individually Receivables from
Dealers Personal Loans
Non-TDR TDR
Unpaid principal balance $ 21,528,406
$ 5,599,567
$ 69,431
$ 19,361
Credit loss allowance - specific —
(1,611,295 ) —
—
Credit loss allowance - collective (1,799,760 ) —
(724 ) —
Discount (467,757 ) (91,359 ) —
(7,721 )
Capitalized origination costs and fees 56,704
5,218
—
632
Net carrying balance $ 19,317,593
$ 3,902,131
$ 68,707
$ 12,272
Allowance as a percentage of unpaid principal balance 8.4 % 28.8 % 1.0 % —
Allowance and discount as a percentage of unpaid principal balance 10.5 % 30.4 % 1.0 % 39.9 %

~~For most~~The Company acquired certain retail installment contracts ~~that the Company acquired~~ in pools at a discount due to credit deterioration subsequent to their origination, the Company anticipates the expected credit losses at purchase and records income thereafter based on the expected effective yield, recording impairment if performance is worse than expected at purchase. Any deterioration in the performance of the purchased portfolios results in an incremental impairment. The balances of these purchased receivables portfolios were as follows at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Dollar amounts in thousands)				(Dollar amounts in thousands)
Outstanding balance	$	49,089	$	231,360	$	39,361	$	43,474
Outstanding recorded investment, net of impairment	$	30,646	$	159,451	$	25,534	$	28,069

A summary of the credit risk profile of the Company's consumer loans by FICO® score, number of trade lines, and length of credit history, each as determined at origination, as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 was as follows (dollar amounts in billions, totals may not foot due to rounding):


September 30, 2017
March 31, 2018																						March 31, 2018
Trade Lines	Trade Lines	1				2				3				4+				Total				Trade Lines	1				2				3				4+				Total
FICO	Months History	$		%		$		%		$		%		$		%		$		%		Months History	$		%		$		%		$		%		$		%		$		%
No-FICO	<36	$	2.3	96	%	$	0.1	4	%	$	—	—		$	—	—		$	2.4	9	%	<36	$	2.3	96	%	$	0.1	4	%	$	—	—		$	—	—		$	2.4	9	%
No-FICO	36+	0.4		40	%	0.2		20	%	0.1		10	%	0.3		30	%	1.0		4	%	36+	0.4		40	%	0.2		20	%	0.1		10	%	0.3		30	%	1.0		4	%
<540	<36	0.2		40	%	0.1		20	%	0.1		20	%	0.1		20	%	0.5		2	%	<36	0.1		25	%	0.1		25	%	0.1		25	%	0.1		25	%	0.4		2	%
<540	36+	0.2		4	%	0.3		5	%	0.3		5	%	4.7		85	%	5.5		21	%	36+	0.2		4	%	0.3		6	%	0.3		6	%	4.4		85	%	5.2		20	%
540-599	<36	0.3		38	%	0.2		25	%	0.1		13	%	0.2		25	%	0.8		3	%	<36	0.3		38	%	0.2		25	%	0.1		13	%	0.2		25	%	0.8		3	%
540-599	36+	0.2		3	%	0.3		4	%	0.3		4	%	7.0		90	%	7.8		29	%	36+	0.2		3	%	0.2		3	%	0.3		4	%	6.8		91	%	7.5		29	%
600-639	<36	0.2		33	%	0.1		17	%	0.1		17	%	0.2		33	%	0.6		2	%	<36	0.2		33	%	0.1		17	%	0.1		17	%	0.2		33	%	0.6		2	%
600-639	36+	0.1		2	%	0.1		2	%	0.1		2	%	3.8		93	%	4.1		16	%	36+	0.1		2	%	0.1		2	%	0.1		2	%	3.8		93	%	4.1		16	%
>640	<36	0.2		40	%	0.1		20	%	0.1		20	%	0.1		20	%	0.5		2	%	<36	0.3		50	%	0.1		17	%	0.1		17	%	0.1		17	%	0.6		2	%
>640	36+	—		—		0.1		3	%	0.1		3	%	3.0		94	%	3.2		12	%	36+	—		—		0.1		3	%	0.1		3	%	3.2		94	%	3.4		13	%
Total	Total	$	4.1	16	%	$	1.6	6	%	$	1.3	5	%	$	19.4	73	%	$	26.4	100	%	Total	$	4.1	16	%	$	1.5	6	%	$	1.3	5	%	$	19.1	73	%	$	26.0	100	%


December 31, 2016
December 31, 2017																						December 31, 2017
Trade Lines	Trade Lines	1				2				3				4+				Total				Trade Lines	1				2				3				4+				Total
FICO	Months History	$		%		$		%		$		%		$		%		$		%		Months History	$		%		$		%		$		%		$		%		$		%
No-FICO	<36	$	2.8	97	%	$	0.1	3	%	$	—	—		$	—	—		$	2.9	11	%	<36	$	2.3	97	%	$	0.1	3	%	$	—	—		$	—	—		$	2.4	9	%
No-FICO	36+	0.5		42	%	0.2		17	%	0.1		8	%	0.4		33	%	1.2		4	%	36+	0.4		38	%	0.2		20	%	0.1		11	%	0.3		31	%	1.0		4	%
<540	<36	0.2		40	%	0.1		20	%	0.1		20	%	0.1		20	%	0.5		2	%	<36	0.2		40	%	0.1		23	%	0.1		14	%	0.1		23	%	0.5		2	%
<540	36+	0.2		4	%	0.3		5	%	0.3		5	%	4.7		85	%	5.5		20	%	36+	0.2		3	%	0.3		5	%	0.3		6	%	4.5		87	%	5.3		21	%
540-599	<36	0.3		38	%	0.2		25	%	0.1		13	%	0.2		25	%	0.8		3	%	<36	0.3		35	%	0.2		23	%	0.1		15	%	0.2		27	%	0.8		3	%
540-599	36+	0.2		3	%	0.3		4	%	0.3		4	%	7.0		90	%	7.8		28	%	36+	0.2		2	%	0.2		3	%	0.3		4	%	6.8		91	%	7.5		29	%
600-639	<36	0.2		40	%	0.1		20	%	0.1		20	%	0.1		20	%	0.5		2	%	<36	0.2		36	%	0.1		22	%	0.1		15	%	0.1		27	%	0.5		2	%
600-639	36+	0.1		2	%	0.1		2	%	0.1		2	%	4.0		93	%	4.3		16	%	36+	0.1		1	%	0.1		3	%	0.1		2	%	3.6		95	%	3.9		15	%
>640	<36	0.3		50	%	0.1		17	%	0.1		17	%	0.1		17	%	0.6		2	%	<36	0.3		42	%	0.1		21	%	0.1		13	%	0.1		24	%	0.6		2	%
>640	36+	—		—		0.1		3.0	%	0.1		3.0	%	3.1		94	%	3.3		12	%	36+	—		—		0.1		2	%	0.1		3	%	3.3		95	%	3.5		13	%
Total	Total	$	4.8	18	%	$	1.6	6	%	$	1.3	5	%	$	19.7	72	%	$	27.4	100	%	Total	$	4.2	16	%	$	1.5	6	%	$	1.3	5	%	$	19.0	73	%	$	26.0	100	%

~~Delinquency~~Delinquencies

The Company considers an account delinquent when an obligor fails to pay the required minimum portion of the scheduled payment by the due date. The Company noted some deterioration in the performance of recent originations, particularly those loans originated in 2015, and addressed those trends with the introduction of more disciplined underwriting standards in late 2016. Based on this more disciplined underwriting (among other things), the servicing practices for retail installment contracts originated after January 1, 2017 changed, such that there is an increase in the minimum payment requirements. Although these changes impact the measurement of customer delinquencies, the Company does not believe they have a significant impact on the amount or timing of the recognition of credit losses and allowance for loan losses. With respect to receivables originated by the Company ~~prior to January 1, 2017 and~~ through its “Chrysler Capital” channel, the required minimum payment is 90% of the scheduled payment. With respect to all other receivables originated by the Company or acquired by the Company from an unaffiliated third-party originator prior to January 1, 2017, the required minimum payment is 50% of the scheduled payment. With respect to receivables originated by the Company or acquired by the Company from an unaffiliated third-party originator on or after January 1, 2017, the required minimum payment is 90% of the scheduled payment, ~~regardless~~whereas previous to January 1, 2017 the required minimum payment was 50% of ~~which channel~~ the ~~receivable was originated through.~~ scheduled payment. The payment following the partial payment must be a full payment, or the account will move into delinquency status at that time.

In each case, the period of delinquency is based on the number of days payments are contractually past due. Delinquencies may vary from period to period based upon the average age or seasoning of the portfolio, seasonality within the calendar year, and economic factors. Historically, the Company's delinquencies have been highest in the period from November through January due to consumers’ holiday spending.

~~As of September 30, 2017 and December 31, 2016,~~The following is a summary of delinquencies on retail installment contracts held for investment ~~were~~ as ~~follows:~~of March 31, 2018 and December 31, 2017:


	September 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
	Dollars (in thousands)		Percent (a)		Dollars (in thousands)		Percent (a)		Dollars (in thousands)		Percent (a)		Dollars (in thousands)		Percent (a)
Principal 30-59 days past due	$	2,580,226	9.8	%	$	2,925,503	10.7	%	$	2,238,425	8.6	%	$	2,827,678	10.9	%
Delinquent principal over 59 days (b)	1,464,543		5.6	%	1,526,743		5.6	%	1,089,648		4.2	%	1,544,583		5.9	%
Total delinquent principal	$	4,044,769	15.4	%	$	4,452,246	16.3	%	$	3,328,073	12.8	%	$	4,372,261	16.8	%

(a) Percent of unpaid principal ~~balance.~~

balance of total retail installment contracts acquired individually held for investment.

(b) Interest is accrued until 60 days past due in accordance with the Company's accounting policy for retail installment contracts. The Company's delinquency ratio continues to be calculated using the end of period delinquent principal over 60 days. Refer to Item 2-"Selected Financial Data" for details on delinquent principal over 60 days and related delinquency ratios.

In addition, retail installment contracts acquired individually held for investment that were placed on nonaccrual status, as of March 31, 2018 and December 31, 2017:



	March 31, 2018				December 31, 2017
	Amount		Percent (a)		Amount		Percent (a)
Non-TDR	$	470,674	1.8	%	$	666,926	2.6	%
TDR	1,346,148		5.2	%	1,390,373		5.4	%
Total nonaccrual principal	$	1,816,822	7.0	%	$	2,057,299	7.9	%

(a) Percent of unpaid principal balance of total retail installment contracts acquired individually held for investment.

All of the Company's receivables from dealers were current as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

Credit Loss Experience

The following is a summary of net losses and repossession activity on finance receivables held for investment for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
	Retail Installment Contracts			Retail Installment Contracts			Retail Installment Contracts			Retail Installment Contracts
	(Dollar amounts in thousands)						(Dollar amounts in thousands)
Principal outstanding at period end	$	26,369,828		$	27,624,259		$	26,025,703		$	27,285,930
Average principal outstanding during the period	$	27,153,602		$	27,577,929		$	25,952,272		$	27,310,224
Number of receivables outstanding at period end	1,714,785			1,656,786			1,717,403			1,731,011
Average number of receivables outstanding during the period	1,727,313			1,669,992			1,704,781			1,715,874
Number of repossessions ~~(1)~~(a)	225,393			221,298			77,763			80,734
Number of repossessions as a percent of average number of receivables outstanding ~~(2)~~	17.4		%	17.7		%	18.2		%	18.8		%
Net losses	$	1,724,225		$	1,582,599		$	537,364		$	599,286
Net losses as a percent of average principal amount outstanding ~~(2)~~	8.5		%	7.7		%	8.3		%	8.8		%

~~(1)~~(a) Repossessions are net of redemptions. The number of repossessions includes repossessions from the outstanding portfolio and from accounts already charged off.

~~(2) Annualized; not necessarily indicative of a full year's actual results.~~

There were no charge-offs on the Company's receivables from dealers ~~during 2017. There were charge-offs of zero and $135 on the Company's receivables from dealers~~ for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2018 and 2017.

Deferrals and Troubled Debt Restructurings

In accordance with the Company's policies and guidelines, the Company from time to time, offer extensions (deferrals) to consumers on its retail installment contracts, whereby the consumer is allowed to move a maximum of three payments per event to the end of the loan. More than 90% of deferrals granted are for two months. The Company's policies and guidelines limit the frequency of each new deferral that may be granted to one deferral every six months, regardless of the length of any prior deferral. The maximum number of lifetime months extended for all automobile retail installment contracts is eight, while some marine and recreational vehicle contracts have a maximum of twelve months extended to reflect their longer term. Additionally, the Company generally limits the granting of deferrals on new accounts until a requisite number of payments has been received. During the deferral period, the Company continues to accrue and collect interest on the loan in accordance with the terms of the deferral agreement.

At the time a deferral is granted, all delinquent amounts may be deferred or ~~paid, resulting~~paid. This may result in the classification of the loan as current and therefore not considered a delinquent account. ~~Thereafter,~~However, there are other instances when a deferral is granted but the loan is not brought completely current, such as when the account days past due is greater than the deferment period granted. Such accounts are aged based on the timely payment of future installments in the same manner as any other account.

Historically, the majority of deferrals are approved for borrowers who are either 31-60 or 61-90 days delinquent, and these borrowers are typically reported as current after deferral. A customer is limited to one deferral each six months, and if a customer receives two or more deferrals over the life of the loan, ~~that has been classified as~~the loan will advance to a TDR remains so until the loan is liquidated through payoff or charge-off. TDRs are placed on nonaccrual status when the Company believes repayment under the revised terms is not reasonably assured and, at the latest when the account becomes past due more than 60 days, and considered for return to accrual when a sustained period of repayment performance has been achieved.designation.

The following is a summary of deferrals on the Company's retail installment contracts held for investment as of the dates indicated:


	September 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
	(Dollar amounts in thousands)								(Dollar amounts in thousands)
Never deferred	$	17,047,199	64.6	%	$	18,624,208	68.1	%	$	16,797,115	64.5	%	$	16,407,960	63.1	%
Deferred once	4,430,862		16.8	%	4,428,467		16.2	%	4,513,884		17.3	%	4,724,987		18.2	%
Deferred twice	2,209,958		8.4	%	2,110,758		7.7	%	2,076,899		8.0	%	2,168,424		8.3	%
Deferred 3 - 4 times	2,612,620		9.9	%	2,130,140		7.8	%	2,564,239		9.9	%	2,614,421		10.1	%
Deferred greater than 4 times	69,189		0.3	%	64,574		0.2	%	73,566		0.3	%	70,740		0.3	%
Total	$	26,369,828			$	27,358,147			$	26,025,703			$	25,986,532

The Company evaluates the results of deferral strategies based upon the amount of cash installments that are collected on accounts after they have been deferred versus the extent to which the collateral underlying the deferred accounts has depreciated over the same period of time. Based on this evaluation, the Company believes that payment deferrals granted according to its policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Changes in deferral levels do not have a direct impact on the ultimate amount of consumer finance receivables charged off. However, the timing of a charge-off may be affected if the previously deferred account ultimately results in a charge-off. To the extent that deferrals impact the ultimate timing of when an account is charged off, historical charge-off ratios, loss confirmation periods, and cash flow forecasts for loans classified as TDRs used in the determination of the adequacy of the Company's allowance for credit losses are also impacted. The change to the Company’s servicing practices (i.e., aging reflective partial

payments) did not have a significant impact to delinquencies, deferral strategies period over period, amount or timing of the

recognition of credit losses or allowance for loan losses.

Increased use of deferrals may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio and therefore increase the allowance for credit losses and related provision for credit losses. Changes in ~~these~~the charge-off ratios and loss confirmation periods are considered in determining the appropriate level of allowance for credit losses and related provision for credit losses, including the allowance and provision for loans that are not classified as TDRs. For loans that are classified as TDRs, the Company generally compares the present value of expected cash flows to the outstanding recorded investment of TDRs to determine the amount of TDR impairment and related provision for credit losses that should be recorded. For loans that are considered collateral-dependent, such as certain bankruptcy modifications, impairment is measured based on the fair value of the collateral, less its estimated cost to sell.

The Company also may agree, or be required by operation of law or by a bankruptcy court, to grant a modification involving one or a combination of the following: a reduction in interest rate, a reduction in loan principal balance, a temporary reduction of monthly payment, or an extension of the maturity date. The servicer of the Company's revolving personal loans also may grant modifications in the form of principal or interest rate reductions or payment plans. Similar to deferrals, the Company believes modifications are an effective portfolio management technique. Not all modifications are classified as TDRs as the loan may not meet the scope of the applicable guidance or the modification may have been granted for a reason other than the borrower's financial difficulties.

A loan that has been classified as a TDR remains so until the loan is liquidated through payoff or charge-off. TDRs are placed on nonaccrual status when the Company believes repayment under the revised terms is not reasonably assured and, at the latest when the account becomes past due more than 60 days. For loans on nonaccrual status, interest income is recognized on a cash basis; however, the Company continues to assess the recognition of cash received on those loans in order to identify whether certain of those loans should also be placed on a cost recovery basis. For TDR loans on nonaccrual status, the accrual of interest is resumed and reinstated if a delinquent account subsequently becomes 60 days or less past due. However, for TDR loans placed on cost recovery basis, the Company returns to accrual when a sustained period of repayment performance has been

achieved (typically defined as six months). The impact to interest income of TDR loans that were on cost recovery which moved back to accrual, was insignificant as of March 31, 2018 and December 31, 2017.

While the Company's nonaccrual designation remains consistent at more than 60 days past due, the Company continuously assesses TDR collection performance. The recognition of interest income on impaired loans (such as TDR loans) is based on an expectation of whether the contractually due interest income is reasonably assured of collection. Prior to January 1, 2017, the collection performance of TDR loans supported classifying TDRs as nonaccrual only when past due more than 60 days, regardless of delinquency status at the time of the TDR event. However, the Company noted emerging trends related to recent TDR vintage performance that caused the Company to review whether collection of interest income was reasonably assured for certain TDRs. Accordingly, beginning January 1, 2017, based on observed TDR performance, the Company places certain additional TDRs on nonaccrual status when the Company believes repayment under the revised terms is not reasonably assured; and at the latest, when the account becomes past due more than 60 days. The Company believes repayment under the revised terms is not reasonably assured for a retail installment contract that is already on nonaccrual (i.e., more than 60 days past due) and has received a modification or deferment that qualifies for a TDR event. In addition, any TDR that subsequently receives a third deferral is placed on nonaccrual status. Further, the Company has determined that certain of these loans should also be placed on a cost recovery basis. If the portfolio of TDRs with these characteristics continues to grow, this change would affect the magnitude of interest income to be recognized in the future.

TDR loans are generally measured based on the present value of expected cash flows. The recognition of interest income on TDR loans reflects management’s best estimate of the amount that is reasonably assured of collection and is consistent with the estimate of future cash flows used in the impairment measurement. Any accrued but unpaid interest is fully reserved for through the recognition of additional impairment on the recorded investment, if not expected to be collected. Accordingly, the placement of TDR loans on nonaccrual reduces the interest income recorded but that reduction is completely offset by a reduction in the impairment required for that loan; therefore the result is a net zero impact to the income statement.

The following is a summary of the principal balance as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 of loans that have received these modifications and concessions:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	Retail Installment Contracts		Retail Installment Contracts		Retail Installment Contracts		Retail Installment Contracts
	(Dollar amounts in thousands)				(Dollar amounts in thousands)
Temporary reduction of monthly payment(a)	$	2,860,010	$	2,472,432	$	2,718,053	$	2,864,363
Bankruptcy-related accounts	85,114		109,494		68,909		77,992
Extension of maturity date	23,843		24,032		24,438		25,332
Interest rate reduction	57,410		64,180		56,199		56,764
Max buy rate (a)	2,783,465		1,308,506
Max buy rate and fair lending (b)					3,451,099		3,067,624
Other	124,356		79,554		164,937		176,838
Total modified loans	$	5,934,198	$	4,058,198	$	6,483,635	$	6,268,913

(a) ~~Amount~~Reduces a customer's payment for a temporary time period (no more than six months)

(b) Max buy rate modifications comprises of loans modified by the Company to adjust the interest rate quoted in a dealer-arranged financing. Beginning in the third quarter of 2016, ~~in conjunction with consumer practices,~~ the Company reassesses the contracted APR when changes in the deal structure are made (e.g. higher down payment and lower vehicle ~~price, etc.)~~price). If any of the changes result in a lower APR, the contracted rate is reduced. Substantially all deal structure changes occur within seven days of the date the contract is signed. These deal structure changes are made primarily to give the consumer the benefit of a lower rate due to an improved contracted deal structure compared to the deal structure that was approved during the underwriting process. Fair Lending modifications comprises of loans modified by the Company related to possible "disparate impact" credit discrimination in indirect vehicle finance. These modifications are not considered a TDR event asbecause they do not relate to a concession provided to a customer experiencing financial difficulty.

A summary of the Company's recorded investment in TDRs as of the dates indicated is as follows:



	March 31, 2018			December 31, 2017
	Retail Installment Contracts
	(Dollar amounts in thousands)
Outstanding recorded investment (a)	$	5,978,182		$	6,261,432
Impairment	(1,595,465		)	(1,731,320		)
Outstanding recorded investment, net of impairment	$	4,382,717		$	4,530,112

September 30, 2017 December 31,
2016
Retail Installment Contracts
(Dollar amounts in thousands)
Outstanding recorded investment (a) $ 6,330,331
$ 5,637,792
Impairment (1,782,114 ) (1,611,295 )
Outstanding recorded investment, net of impairment $ 4,548,217
$ 4,026,497

A summary of ~~the principal balance on~~ the Company's delinquent TDRs as of the dates indicated is as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	Retail Installment Contracts				Retail Installment Contracts
	(Dollar amounts in thousands)				(Dollar amounts in thousands)
Principal 30-59 days past due	$	1,184,804	$	1,253,848	$	1,097,661	$	1,332,239
Delinquent principal over 59 days	753,606		736,691		576,396		818,938
Total delinquent TDRs	$	1,938,410	$	1,990,539	$	1,674,057	$	2,151,177

(a) Interest is accrued until 60 days past due in accordance with the Company's accounting policy for retail installment contracts. The Company's delinquency ratio continues to be calculated using the end of period delinquent principal over 60 days. Refer to Part I, Item 2 -"Selected Financial Data" for details on delinquent principal over 60 days and related delinquency ratios.

Within the total non-accrual principal in the "Delinquencies" section above, as of March 31, 2018 and December 31, 2017, the Company had $1,346,148 and $1,390,373 of TDRs on nonaccrual status respectively, of which $942,890 and $790,461 of TDRs as of March 31, 2018 and December 31, 2017 followed cost recovery basis respectively. The remaining nonaccrual TDR loans follow cash basis of accounting. Out of the total TDRs on cost recovery basis, $832,066 and $652,679 of TDRs were less than 60 days past due as of March 31, 2018 and December 31, 2017 respectively. The Company applied $99,860 and $56,740 of interest received, on these loans, towards recorded investment (as compared to interest income), in accordance with cost recovery method as of March 31, 2018 and December 31, 2017 respectively.

As of ~~September 30, 2017~~March 31, 2018, and December 31, ~~2016,~~2017, the Company did not have any dealer loans classified as TDRs and had not granted deferrals or modifications on any of these loans.

The following table shows the components of the changes in the recorded investment in retail installment contract TDRs (excluding collateral-dependent bankruptcy TDRs) during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Balance — beginning of period	$	5,929,392		$	5,061,608		$	5,637,792		$	4,601,502		$	6,261,432		$	5,637,792
New TDRs	1,122,450			932,472			2,776,006			2,478,035			582,664			866,278
Charge-offs	(488,646		)	(448,418		)	(1,420,073		)	(1,119,730		)	(545,436		)	(482,925		)
Paydowns	(210,299		)	(180,396		)	(644,190		)	(594,695		)	(321,366		)	(231,729		)
Other transfers	4,400			(610		)	7,762			(456		)	888			2,686
Balance — end of period	$	6,357,297		$	5,364,656		$	6,357,297		$	5,364,656		$	5,978,182		$	5,792,102

The table below presents the Company’s allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016:~~2017:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Dollar amounts in thousands)						(Dollar amounts in thousands)
TDR - Unpaid principal balance	$	6,276,659		$	5,599,567		$	5,998,768		$	6,261,894
TDR - Impairment	1,782,114			1,611,295			1,595,465			1,731,320
TDR allowance ratio	28.4		%	28.8		%
TDR - Allowance ratio							26.6		%	27.6		%

Non-TDR - Unpaid principal balance	$	20,044,330		$	21,528,406		$	19,987,763		$	19,681,394
Non-TDR - Allowance	1,589,151			1,799,760			1,586,557			1,529,815
Non-TDR allowance ratio	7.9		%	8.4		%
Non-TDR Allowance ratio							7.9		%	7.8		%

Total - Unpaid principal balance	$	26,320,989		$	27,127,973		$	25,986,531		$	25,943,288
Total - Allowance	3,371,265			3,411,055			3,182,022			3,261,135
Total allowance ratio	12.8		%	12.6		%
Total - Allowance ratio							12.2		%	12.6		%

The allowance ratio for ~~both~~ TDR ~~and non-TDR~~ retail installment contracts decreased from December 31, ~~2016~~2017 to ~~September 30, 2017.~~March 31, 2018. The decrease in the TDR allowance ratio is primarily driven by the non-accrual of interest income for certain TDR loans which is offset in the impairment as it reduces the carrying value of TDR loans. The allowance ratio for the non-TDR is driven by a combination of improved credit performance and stabilizing recovery rates. The total allowance on retail installment contracts however, increased from December 31, 2016 to September 30, 2017 due to an increase in the proportion of assets classified as TDRs.

Liquidity Management, Funding and Capital Resources

Source of Funding

The Company requires a significant amount of liquidity to originate and acquire loans and leases and to service debt. The Company funds its operations through its lending relationships with 13 third-party banks, SHUSA and Santander, as well as through securitizations in the ABS market and large flow agreements. The Company seeks to issue debt that appropriately matches the cash flows of the assets that it originates. The Company has more than ~~$5.8~~$6.7 billion of stockholders’ equity that supports its access to the securitization markets, credit facilities, and flow agreements.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the Company completed on-balance sheet funding transactions totaling approximately ~~$12.3~~$3.8 billion, including:

~~three securitizations~~a securitization on the Company's SDART platform for ~~$3.1~~$1.1 billion;

issuance of ~~two~~a retained bonds on the Company's SDART platform for ~~$155~~$92 million;

~~four securitizations~~a securitization on the Company's DRIVE, deeper subprime platform, for ~~$4.1 billion;~~$880 million;

issuance of a retained bond on the Company's DRIVE platform for ~~$113~~$58 million;

~~four~~one private amortizing lease ~~facilities~~facility for ~~$1.6 billion;~~$650 million; and

~~seven top-ups and two re-levers of private amortizing loan and~~

one lease ~~facilities~~securitization on our SRT Platform for ~~$3.2~~$1 billion.

The Company also completed ~~$3.0~~$1.5 billion in asset sales ~~which consists of $0.3 billion recurring monthly sales with its third party flow partners, $2.6~~to Santander.

In addition, the Company completed another on-balance sheet securitization on the SDART platform for approximately $1.1 billion in ~~sales to Santander and $0.1 billion in sales to SBNA.~~April 2018.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company's debt consisted of the following:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Third party revolving credit facilities	$	4,965,888	$	6,739,817
Related party revolving credit facilities	2,369,850		2,975,000
Third - party revolving credit facilities					$	5,294,358	$	4,848,316
Related - party revolving credit facilities					3,148,194		3,754,223
Total revolving credit facilities	7,335,738		9,714,817		8,442,552		8,602,539

Public securitizations	14,927,738		13,436,482		15,943,174		14,993,258
Privately issued amortizing notes	8,330,625		8,172,407		6,919,433		7,564,637
Total secured structured financings	23,258,363		21,608,889		22,862,607		22,557,895
Total debt	$	30,594,101	$	31,323,706	$	31,305,159	$	31,160,434

Credit Facilities

Third-party Revolving Credit Facilities

Warehouse Lines

The Company has two credit facilities with ~~eight~~seven banks providing an aggregate commitment of ~~$3.9~~$4.2 billion for the exclusive use of providing short-term liquidity needs to support Chrysler Capital retail financing. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there was an outstanding balance of ~~$2.8~~$2.1 billion and ~~$3.7~~$2.0 billion, respectively, on these facilities in aggregate. ~~One of the facilities can be used exclusively for loan financing and the other for lease financing. Both~~These facilities require reduced advance rates in the event of delinquency, credit loss, or residual loss ratios exceeding specified thresholds.

Repurchase Facilities

The Company obtains financing through four investment management agreements whereby the Company pledges retained subordinate bonds on its own securitizations as collateral for repurchase agreements with various borrowers and at renewable terms ranging up to one year. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, there was an outstanding balance of ~~$658~~$710 million and ~~$743~~$744 million, respectively, under these repurchase facilities.

~~Facilities~~

Lines of Credit with Santander and Related Subsidiaries

Santander and certain of its subsidiaries, such as SHUSA, historically have provided, and ~~continues~~continue to provide, the Company with significant funding support in the form of committed credit ~~facilities.The~~facilities. The Company's debt with these affiliated entities consisted of the following:


	As of September 30, 2017 (amounts in thousands)									As of March 31, 2018 (amounts in thousands)
	Counterparty	Utilized Balance		Committed Amount		Average Outstanding Balance		Maximum Outstanding Balance		Counterparty	Utilized Balance		Committed Amount		Average Outstanding Balance		Maximum Outstanding Balance
Line of credit	Santander-NY	$	—	$	2,000,000	$	1,407,335	$	2,000,000	Santander-NY	$	30,000	$	1,000,000	$	166,444	$	610,000
Line of credit	Santander-NY	265,400		750,000		57,845		435,900		Santander-NY	114,200		750,000		498,973		750,000
Line of credit	SHUSA	—		3,000,000		139,973		750,000		SHUSA	250,000		250,000		250,000		250,000
Promissory Note	SHUSA	300,000		300,000		228,832		300,000		SHUSA	250,000		250,000		250,000		250,000
Promissory Note	SHUSA	650,000		650,000		436,496		650,000		SHUSA	300,000		300,000		300,000		300,000
Promissory Note	SHUSA	650,000		650,000		257,383		650,000		SHUSA	400,000		400,000		400,000		400,000
Promissory Note	SHUSA	500,000		500,000		305,556		500,000		SHUSA	500,000		500,000		500,000		500,000
Promissory Note										SHUSA	650,000		650,000		650,000		650,000
Promissory Note										SHUSA	650,000		650,000		650,000		650,000
Line of Credit										SHUSA	—		3,000,000		—		—
		$	2,365,400	$	7,850,000						$	3,144,200	$	7,750,000


	As of September 30, 2016 (amounts in thousands)									As of March 31, 2017 (amounts in thousands)
	Counterparty	Utilized Balance		Committed Amount		Average Outstanding Balance		Maximum Outstanding Balance		Counterparty	Utilized Balance		Committed Amount		Average Outstanding Balance	Maximum Outstanding Balance
Line of credit	Santander-NY	$	2,050,000	$	3,000,000	$	2,500,000	$	3,000,000	Santander-NY	1,900,000		$	3,000,000	2,800,000	3,000,000
Line of credit	SHUSA	—		1,500,000		10,200		200,000
Promissory Note										SHUSA	300,000		300,000		300,000	300,000
Promissory Note										SHUSA	650,000		650,000		650,000	650,000
Line of credit	SHUSA	300,000		300,000		300,000		300,000		SHUSA	—		3,000,000		270,000	750,000
		$	2,350,000	$	4,800,000						$	2,850,000	$	6,950,000

Through SHUSA, Santander provides the Company with $3.0 billion of committed revolving credit that can be drawn on an unsecured basis. Santander, through its New York branch, provides the Company with ~~$2.8~~$1.75 billion of long-term committed revolving credit facilities. The $1.75 billion of long-term committed revolving credit facilities ~~offered through the New York branch are structured as three-~~is composed of a $1 billion facility that permits unsecured borrowing but is generally collateralized by retained residuals and ~~five-year floating rate~~$750 million facility that is securitized by prime retail installment loans. Both facilities ~~with~~have current maturity dates of December 31, ~~2017 and~~ 2018. These facilities currently permit unsecured borrowing and can also be collateralized by auto retail installment contracts and auto leases as well as securitization notes payables and residuals of the Company. Any balances outstanding under these facilities at the time of their commitment termination date will amortize to match the maturities and expected cash flows of the corresponding collateral.

SHUSA provides the Company with ~~$2.1~~$3.0 billion of term promissory notes with maturities ranging from March 2019 to ~~March~~December 2022.

~~In August 2015,~~Under an agreement with Santander, the Company ~~began incurring~~pays a fee of 12.5 basis points ~~(per annum)~~per annum on certain warehouse facilities, as they renew, for which Santander provides a guarantee of the Company's servicing obligations. For revolving commitments, the guarantee fee will be paid on the total committed amount and for amortizing commitments, the guarantee fee ~~will be~~is paid against each month's ending balance. The guarantee fee ~~will be applicable~~ only ~~for~~applies to additional facilities upon the execution of the counter-guaranty agreement related to a new facility or if reaffirmation is required on existing revolving or amortizing commitments as evidenced by ana duly executed counter-guaranty agreement. The Company recognized guarantee fee expense of ~~$4.6~~$2.0 million and ~~$4.8~~$1.5 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

The Company also has derivative financial instruments with Santander and affiliates as counterparty with outstanding notional amounts of ~~$4.4~~$2.5 billion and ~~$7.3~~$3.7 billion at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The Company had a collateral overage on derivative liabilities with Santander and affiliates of $9$12 million and ~~$15~~$2 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. Interest ~~expense~~ on these agreements includes amounts totaling ~~$1 million~~$229 thousand and ~~$16 million~~$29 thousand for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

Secured Structured Financings

The Company's secured structured financings primarily consist of public, SEC-registered securitizations. The Company also executes private securitizations under Rule 144A of the Securities Act and privately issue amortizing notes. The Company has completed ~~eleven~~five securitizations year-to-date in ~~2017~~2018 and currently has 3734 securitizations outstanding in the market with a cumulative ABS balance of approximately ~~$15~~$17 billion.

Flow Agreements

In addition to the Company's credit facilities and secured structured financings, the Company has a flow agreement in place with a third party for charged off assets. ~~Previously, the Company also had flow agreements with Bank of America and CBP. However, those agreements were terminated effective January 31 and May 1, 2017, respectively.~~

Loans and leases sold under these flow agreements are not on the Company's balance sheet but provide a stable stream of servicing fee income and may also provide a gain or loss on sale. The Company continues to actively seek additional such flow agreements.

Off-Balance Sheet Financing

Beginning in March 2017, the Company has the option to sell a contractually determined amount of eligible prime loans to Santander, through securitization platforms. As all of the notes and residual interests in the securitizations are issued to Santander, the Company recorded these transactions as true sales of the retail installment contracts securitized, and removed the sold assets from the Company's condensed consolidated balance sheets.

The Company also continues to periodically execute Chrysler Capital-branded securitizations under Rule 144A of the Securities Act. Upon transferring all of the notes and residual interests in these securitizations to third parties, the Company records these transactions as true sales of the retail installment contracts securitized, and removes the sold assets from the Company's condensed consolidated balance sheet.

~~Use of Funds~~

The Company believes that the liquidity and capital resources from U.S. operations are adequate to fund its U.S. operations and corporate activities. The Company has asserted indefinite reinvestment of earnings from its Puerto Rico operations as determined by management’s judgment about its intentions concerning the future operations of the Company. The Company does not believe that the amounts reinvested will have a material impact on liquidity.

~~The Company uses liquidity to service its debt, repay borrowings, as well as for funding loan commitments and to pay dividends to shareholders.~~

Cash Flow Comparison

The Company ~~continues to produce~~has produced positive net cash from operating ~~activities.~~activities every year since 2003. The Company's investing activities primarily consist of originations and acquisitions of ~~finance receivables and leased vehicles. The~~retail installment contracts. SC's financing activities primarily consist of borrowing, ~~and~~ repayments of ~~debt.~~debt, and payment of dividends.


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
	(Dollar amounts in thousands)						(Dollar amounts in thousands)
Net cash provided by operating activities	$	3,666,086		$	2,676,133		$	1,835,235		$	1,464,010
Net cash used in investing activities	(2,690,709		)	(4,026,681		)	(1,528,057		)	(1,165,288		)
Net cash provided by (used in) financing activities	(738,246		)	1,407,528
Net cash provided by financing activities							125,539			151,361

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased by ~~$990 million~~$0.4 billion from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, mainly due to the ~~decrease in outflows~~lower provision for credit losses of ~~$245~~$176 million ~~for originations of assets held for sale~~ and ~~the~~ higher proceeds of ~~$572~~$578 million from assets held for sale.

Net Cash Used in Investing Activities

Net cash used in investing activities ~~decreased~~increased by ~~$1.3~~$0.4 billion from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, primarily due to the increase of $0.5 billion lease vehicle purchases, offset by ~~the decrease~~increase of ~~$1.3~~$0.3 billion in ~~originations held for investment.~~proceeds from sale of lease vehicles.

Net Cash Provided by Financing Activities

Net cash provided by ~~(used in)~~ financing activities decreased by ~~$2.1 billion~~$26 million from the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, primarily due to the ~~higher payments on borrowings.~~dividend payment of $18 million.

Contingencies and Off-Balance Sheet Arrangements

For information regarding the Company's contingencies and off-balance sheet arrangements, refer to Note 10 - Commitments and Contingencies in the accompanying condensed consolidated financial statements.

Contractual Obligations

The Company leases its headquarters in Dallas, Texas, its servicing centers in Texas, Colorado, Arizona, and Puerto Rico, and an operations facilities in California, Texas and Colorado under non-cancelable operating leases that expire at various dates through 2027. The Company also has various debt obligations entered into in the normal course of business as a source of funds.

The following table summarizes the Company's contractual obligations as of ~~September 30, 2017:~~March 31, 2018:


	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(In thousands)										(In thousands)
Operating lease obligations	$	12,518	$	25,785	$	25,275	$	47,571	$	111,149	$	12,654	$	25,934	$	24,982	$	41,547	$	105,117
Notes payable - revolving facilities	3,971,054		2,060,234		1,300,000		—		7,331,288		1,685,198		4,953,360		1,800,000		—		8,438,558
Notes payable - secured structured financings	1,619,104		5,219,206		12,065,609		4,406,565		23,310,484		481,731		7,219,786		10,866,345		4,353,581		22,921,443
Contractual interest on debt	690,654		697,847		215,708		34,562		1,638,771		720,061		754,547		208,469		—		1,683,077
	$	6,293,330	$	8,003,072	$	13,606,592	$	4,488,698	$	32,391,692	$	2,899,644	$	12,953,627	$	12,899,796	$	4,395,128	$	33,148,195

Risk Management Framework

The Company's risk management framework is overseen by its board of directors, its Risk Committee (RC), its management committees, its executive management team, an independent risk management function, an internal audit function and all of its associates. The RC, along with the Company's full board of directors, is responsible for establishing the governance over the risk management process, providing oversight in managing the aggregate risk position and reporting on the comprehensive portfolio of risk categories and the potential impact these risks can have on the Company's risk profile. The Company's primary risks include, but are not limited to, credit risk, market risk, liquidity risk, operational risk and model risk. For more information regarding the Company's risk management framework, please refer to the Risk Management Framework section of the Company's ~~2016~~2017 Annual Report on Form 10-K.

Credit Risk

The risk inherent in the Company's loan and lease portfolios is driven by credit and collateral quality, and is affected by borrower-specific and economy-wide factors such as changes in employment. The Company manages this risk through its underwriting, pricing and credit approval guidelines and servicing policies and practices, as well as geographic and ~~manufacturer~~other concentration limits.

The Company's automated originations process ~~reflects~~is intended to reflect a disciplined approach to credit risk management. The Company's robust historical data on both organically originated and acquired loans ~~provides the~~is used by Company ~~with the ability~~ to perform advanced loss forecasting. Each applicant is automatically assigned a proprietary loss forecasting score ~~(LFS)~~ using information such as ~~FICO~~®FICO®, debt-to-income ratio, loan-to-value ratio, and ~~over~~more than 30 other predictive factors, placing the applicant in one of 100 pricing tiers. The Company continuously maintains and adjusts the pricing in each tier ~~is continuously monitored and adjusted~~ to reflect market and risk trends. In addition to the automated process, the Company maintains a team of underwriters for manual review, consideration of exceptions, and review of deal structures with dealers. The Company generally tightens its underwriting requirements in times of greater economic uncertainty ~~(including during the recent financial crisis)~~ to compete in the market at loss and approval rates acceptable for meeting the Company's required returns. The Company's underwriting policy has also been adjusted to meet the requirements of the Company's contracts such as the Chrysler Agreement. In both cases, the Company has accomplished this by adjusting risk-based pricing, the material components of which include interest rate, down payment, and loan-to-value.

The Company monitors early payment defaults and other potential indicators of dealer or customer fraud and uses the monitoring results to identify dealers who will be subject to more extensive ~~stipulations~~requirements when presenting customer applications, as well as dealers with whom the Company will not do business at all.

Market Risk

Interest Rate Risk

The Company measures and monitors interest rate risk on at least a monthly basis. The Company borrows money from a variety of market participants in to provide loans and leases to the Company's customers. The Company's gross interest rate spread, which is the difference between the income earned through the interest and finance charges on the Company's finance receivables and lease contracts and the interest paid on the Company's funding, will be negatively affected if the expense incurred on the Company's borrowings increases at a faster pace than the income generated by the Company's assets.

The Company's Interest Rate Risk policy is designed to measure, monitor and manage the potential volatility in earnings stemming from changes in interest rates. The Company generates finance receivables which are predominantly fixed rate and borrow with a mix of fixed and variable rate funding. To the extent that the Company's asset and liability re-pricing

characteristics are not effectively matched, the Company may utilize interest rate derivatives, such as interest rate swap agreements, to manage its desired outcome. As of ~~September 30, 2017,~~March 31, 2018, the notional value of the Company's interest rate swap agreements was ~~$6.5~~$6.8 billion. The Company also enters into Interest Rate Cap agreements as required under certain lending agreements. In order to mitigate any interest rate risk assumed in the Cap agreement required under the lending agreement, the Company may enter into a second interest rate cap (Back-to-Back). As of ~~September 30, 2017~~March 31, 2018 the notional value of the Company’s interest rate cap agreements was ~~$11.9~~$21.7 billion, under which, all notional was executed Back-to-Back.

The Company monitors its interest rate exposure by conducting interest rate sensitivity analysis. For purposes of reflecting a possible impact to earnings, the twelve-month net interest income impact of an instantaneous 100 basis point parallel shift in prevailing interest rates is measured. As of ~~September 30, 2017,~~March 31, 2018, the twelve-month impact of a 100 basis point parallel increase in the interest rate curve would decrease the Company's net interest income by ~~$22~~$7 million. In addition to the sensitivity analysis on net interest income, the Company also measures Market Value of Equity (MVE) to view the interest rate risk position. MVE measures the change in value of Balance Sheet instruments in response to an instantaneous 100 basis point parallel increase, including and beyond the net interest income twelve-month horizon. As of ~~September 30, 2017,~~March 31, 2018, the impact of a 100 basis point parallel increase in the interest rate curve would decrease the Company's MVE by ~~$81~~$72 million.

Collateral Risk ~~and FCA Residual Risk Sharing Agreement~~

The Company's lease portfolio presents an inherent risk that residual values recognized upon lease termination will be lower than those used to price the contracts at inception. Although the Company has elected not to purchase residual value insurance at the present time, the Company's residual risk is somewhat mitigated by the ~~Company's~~ residual risk-sharing agreement with ~~FCA.The mechanics of~~FCA. Under the agreement, ~~hold~~ the Company is responsible for incurring the first portion of any residual value gains or losses up to the first 8%. The Company and FCA then equally share the next 4% of any residual value gains or losses (i.e., those gains or losses that exceed 8% but are less than 12%). Finally, FCA is responsible for residual value gains or losses over 12%, capped at a certain limit, after which SCthe Company incurs any remaining gains or losses. From the inception of the agreement with FCA through the ~~third~~first quarter of ~~2017,~~2018, approximately ~~87%~~86% of full term leases have not exceeded the first and second portions of any residual losses under the agreement. The Company also utilizes industry data, including the ALG benchmark for residual values, and employ a team of individuals experienced in forecasting residual values.

Similarly, lower used vehicle prices also reduce the amount that can be recovered when remarketing repossessed vehicles that serve as collateral underlying loans. The Company manages this risk through loan-to-value limits on originations, monitoring of new and used vehicle values using standard industry guides, and active, targeted management of the repossession process.

The Company does not currently have material exposure to currency fluctuations or inflation.

Liquidity Risk

The Company views liquidity as integral to other key elements such as capital adequacy, asset quality and profitability. ~~Because the Company's debt is nearly entirely serviced by collections on consumer receivables, the Company's~~The Company’s primary liquidity risk relates to the ability to ~~fund originations.~~finance new originations through the Bank and ABS securitization markets. The Company has a robust liquidity policy ~~in place~~that is intended to manage this risk. The liquidity policy establishes the following guidelines:

that the Company maintain at least eight external credit providers (as of ~~September 30, 2017,~~March 31, 2018, it had ~~fourteen)~~thirteen);

that the Company relies on Santander and affiliates for no more than 30% of its funding (as of ~~September 30, 2017,~~March 31, 2018, Santander and affiliates provided 8%10% of its funding);

that no single lender's commitment should comprise more than 33% of the overall committed external lines (as of ~~September 30, 2017,~~March 31, 2018, the highest single lender's commitment was ~~21%~~22%);

that no more than 35% of the Company's debt mature in the next six months and no more than 65% of the Company's debt mature in the next twelve months (as of ~~September 30, 2017, 15%~~March 31, 2018, 0% and ~~55%~~32% of the Company's debt is scheduled to mature in the next six and twelve months, respectively); and

that the Company maintain unused capacity of at least $6.0 billion, including flow agreements, in excess of the Company's expected peak usage over the following twelve months (as of ~~September 30, 2017,~~March 31, 2018, the Company had twelve-month rolling unused capacity of ~~$12.2~~$11.5 billion).

The Company's liquidity policy also requires that the Company's Asset Liability Committee monitor many indicators, both market-wide and company-specific, to determine if action may be necessary to maintain the Company's liquidity position. The Company's liquidity management tools include daily, monthly and twelve-month rolling cash requirements forecasts, long term strategic planning forecasts, monthly funding usage and availability reports, daily sources and uses reporting, structural liquidity risk exercises, key risk indicators, and the establishment

of liquidity contingency plans. The Company also performs ~~quarterly~~

monthly stress tests in which it forecasts the impact of various negative scenarios (alone and in combination), including reduced credit availability, higher funding costs, lower advance rates, ~~lower customer interest rates,~~lending covenant breaches, lower dealer discount rates, and higher credit losses.

The Company generally looks for funding first from structured secured financings, second from third-party credit facilities, and last from Santander. The Company believes this strategy helps ~~avoid being overly reliant~~reduce its reliance on borrowings under funding commitments from Santander ~~for funding.~~ and SHUSA.Additionally, the Company can reduce originations to significantly lower levels if necessary during times of limited liquidity.

The Company has established a qualified like-kind exchange program ~~in order~~ to defer tax liability on gains on sale of vehicle assets at lease termination. If the Company does not meet the safe harbor requirements of IRS Revenue Procedure 2003-39, the Company may be subject to large, unexpected tax liabilities, thereby generating immediate liquidity needs. The Company believes that its compliance monitoring policies and procedures are adequate to enable the Company to remain in compliance with the program requirements. The Tax Cuts and Jobs Act permanently eliminated the ability to exchange personal property after January 1, 2018, which will result in the like-kind exchange program being discontinued in 2018.

Operational Risk

The Company is exposed to operational risk loss arising from failures in the execution of ~~its~~our business activities. These relate to failures arising from inadequate or failed processes, failures in its people or systems, or from external events. The Company's operational risk management program ~~encompasses~~ Third Party Risk Management, Business Continuity Management, Information Risk Management, Information Risk Management, Fraud Risk Management, and Operational Risk Management, with key program elements covering Loss Event, Issue Management, Risk Reporting and Monitoring, and Risk Control Self-Assessment (RCSA).

To mitigate operational risk, the Company maintains an extensive compliance, internal control, and monitoring framework, which includes the gathering of corporate control performance threshold indicators, Sarbanes-Oxley testing, monthly quality control tests, ongoing compliance monitoring ~~of compliance~~ with ~~all~~ applicable regulations, internal control documentation and review of processes, and internal audits. The Company also utilizes internal and external legal counsel for expertise when needed. Upon hire and annually, all associates receive comprehensive mandatory regulatory compliance training. In addition, the Board receives annual regulatory and compliance training. The Company uses industry-leading call mining ~~and other software solutions~~ that assist the Company in analyzing potential breaches of regulatory requirements and customer service. The Company's call mining software analyzes all customer service calls, converting speech to text, and mining for specific words and phrases that may indicate inappropriate comments by a representative. The software also detects escalated voice volume, enabling a supervisor to intervene if necessary. This tool ~~enables~~is intended to enable the Company to effectively manage and identify training opportunities for associates, as well as track and resolve customer complaints through a robust quality assurance program.

Model Risk

The Company mitigates model risk through a robust model validation process, which includes committee governance and a series of tests and controls. The Company utilizes SHUSA's Model Risk Management group for all model validation to verify models are performing as expected and in line with their design objectives and business uses.

Critical Accounting Estimates

Accounting policies are integral to understanding the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations. The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company reviews its accounting policies, assumptions, estimates and judgments to ensure that its financial statements are presented fairly and in accordance with U.S. GAAP. There have been no material changes in the Company's critical accounting estimates from those disclosed in Item 7 of the ~~2016~~2017 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information concerning the Company's implementation and impact of new accounting standards issued by the Financial Accounting Standards Board (FASB) is discussed in Note 1 to the Consolidated Financial Statements under "Recently Issued Accounting Pronouncements."

~~Other Information~~

~~Further information on risk factors can be found under Part II, Item 1A - “Risk Factors.”~~



Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Incorporated by reference from Part I, Item 2 - “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Risk Management Framework” above.



Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of ~~September 30, 2017,~~March 31, 2018, we did not maintain effective disclosure controls and procedures because of the material weaknesses in internal control over financial reporting described below. In light of these material weaknesses, management completed additional procedures and analyses to validate the accuracy and completeness of the financial results impacted by the control deficiencies including the validation of data underlying key financial models and the addition of substantive logic inspection, fluctuation analysis and testing procedures. In addition, management engaged the Audit Committee directly, in detail, to discuss the procedures and analysis performed to ensure the reliability of the Company’s financial reporting. As a result, management concluded the condensed consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations, capital position, and cash flows for the periods presented, in conformity with U.S. GAAP.

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.

Based on the assessment, management determined that the Company did not maintain effective internal control over financial reporting as of ~~September 30, 2017,~~March 31, 2018, as a result of material weaknesses in the following areas:

1.1. Control Environment, Risk Assessment, Control Activities and Monitoring

We did not maintain effective internal control over financial reporting related to the following areas: control environment, risk assessment, control activities and monitoring:

Management did not effectively execute a strategy to hire and retain a sufficient complement of personnel with an appropriate level of knowledge, experience, and training in certain areas important to financial reporting.

The tone at the top was insufficient to ensure there were adequate mechanisms and oversight to ensure accountability for the performance of internal control over financial reporting responsibilities and to ensure corrective actions were appropriately prioritized and implemented in a timely manner.

There was not adequate management oversight of accounting and financial reporting activities in implementing certain accounting practices to conform to the Company’s policies and U.S. GAAP.

There was not an adequate assessment of changes in risks by management that could significantly impact internal control over financial reporting or an adequate determination and prioritization of how those risks should be managed.

There was not adequate management oversight and identification of models, spreadsheets and completeness and accuracy of data material to financial reporting.

There were insufficiently documented Company accounting policies and insufficiently detailed Company procedures to put policies into effective action.

There was a lack of appropriate tone at the top in establishing an effective control owner risk and controls self-assessment process which contributed to a lack of clarity about ownership of risks assessments and control design and effectiveness. There was insufficient governance, oversight and monitoring of the credit loss allowance and accretion processes and a lack of defined roles and responsibilities in monitoring functions.

This material weakness in control environment contributes to each of the following identified material weaknesses:

2. ~~Application of Effective Interest Method for Accretion~~

The Company’s policies and controls related to the methodology used for applying the effective interest rate method in accordance with U.S. GAAP, specifically as it relates the review of key assumptions over prepayment curves, pool segmentation and presentation in financial statements either were not designed appropriately or failed to operate effectively. Additionally the resources dedicated to the reviews were not sufficient to identify all relevant instances of non-compliance with policies and U.S. GAAP and did not sufficiently review supporting methodologies and practices to identify variances from the Company’s policy and U.S. GAAP.

This resulted in errors in the Company’s application of the effective interest method for accreting discounts, which include discounts upon origination of the loan, subvention payments from manufacturers, and other origination costs on individually acquired retail installment contracts.

This material weakness relates to the following financial statement line items: finance receivables held for investment, net, finance receivables held for sale, net, interest on finance receivables and loans, provision for credit losses, investment gains and losses, net, and the related disclosures within Note 2 - Finance Receivables, Note 4 - Credit Loss Allowance and Credit Quality and Note 16 - Investment Gains (Losses), Net.

~~3. Methodology to Estimate Credit Loss Allowance~~

The Company’s policies and controls related to the methodology used for estimating the credit loss allowance in accordance with U.S. GAAP, specifically as it relates to the calculation of impairment for TDRs separately from the general allowance on loans not classified as TDRs, the consideration of net discounts and the calculation of selling costs when estimating the allowance either were not designed appropriately or failed to operate effectively. Additionally the resources dedicated to the reviews were not sufficient to identify all relevant instances of non-compliance with policies and U.S. GAAP and did not sufficiently review supporting methodologies and practices to identify variances from the Company’s policy and U.S. GAAP.

This resulted in errors in the Company’s methodology for determining the credit loss allowance, specifically not calculating impairment for TDRs separately from a general allowance on loans not classified as TDRs, inappropriately omitting the consideration of net discounts when estimating the allowance and recording charge-offs, and calculating appropriate selling costs for inclusion in the analysis.

This material weakness relates to the following financial statement line items: the credit loss allowance, provision for credit losses, and the related disclosures within Note 2 - Finance Receivables and Note 4 - Credit Loss Allowance and Credit Quality.

4. ~~Loans Modified as TDRs~~

~~The following controls over the identification of TDRs and inputs used to estimate TDR impairment did not operate effectively:~~

~~Review controls of the TDR footnote disclosures and supporting information did not effectively identify that parameters used to query the loan data were incorrect.~~

A review of inputs used to estimate the expected and present value of cash flows of loans modified in TDRs did not identify errors in types of cash flows included and in the assumed timing and amount of defaults and did not identify that the discount rate was incorrect.

As a result, management determined that it had incorrectly identified the population of loans that should be classified as TDRs and, separately, had incorrectly estimated the impairment on these loans due to model input errors.

This material weakness relates to the following financial statement line items: the credit loss allowance and provision for credit losses, specifically for TDR loans, and the related disclosures within Note 2 - Finance Receivables and Note 4 - Credit Loss Allowance and Credit Quality.

5. Development, Approval, and Monitoring of Models Used to Estimate the Credit Loss Allowance

Various deficiencies were identified in the credit loss allowance process related to review, monitoring and approval processes over models and model changes that aggregated to a material weakness. The following controls did not operate effectively:

Review controls over completeness and accuracy of data, inputs and assumptions in models and spreadsheets used for estimating credit loss allowance and related model changes were not effective and management did not adequately challenge significant assumptions.

Review and approval controls over the development of new models to estimate credit loss allowance and related model changes were ineffective.

Adequate and comprehensive performance monitoring over related model output results was not performed and we did not maintain adequate model documentation.

6.3. Identification, Governance, and Monitoring of Models Used to Estimate Accretion

Various deficiencies were identified in the accretion process related to review, monitoring and ~~approval~~governance processes over models ~~and model changes~~ that aggregated to a material weakness. The following controls did not operate effectively:

Review controls over completeness and accuracy of data, inputs, calculation and assumptions in models and spreadsheets used for estimating accretion were not effective, and management did not adequately challenge significant assumptions.

Review and approval controls over the development of new models to estimate accretion and related model changes were ineffective.

Adequate and comprehensive performance monitoring over related model output results was not performed, and we did not maintain adequate model documentation.

~~7. Review of New, Unusual or Significant Transactions~~

Management identified an error in the accounting treatment of certain transactions related to separation agreements with the former Chairman of the Board and CEO of the Company. Specifically, controls over the review of new, unusual or significant transactions related to application of the appropriate accounting and tax treatment to this transaction in accordance with U.S. GAAP did not operate effectively in that management failed to detect as part of the review procedures that regulatory approval was a prerequisite to recording the transaction and that approval had not been obtained prior to recording the transaction and therefore should have not been recorded.

This material weakness relates to the following financial statement line items: compensation expense, other liabilities, deferred tax liabilities, net, and additional paid in capital and the related disclosures within Note 15 - Shareholders' Equity.

~~8. Review of Financial Statement Disclosures~~

Management identified errors relating to financial statement disclosures. Specifically, the Company's controls over both the preparation and review and over the completeness and accuracy of financial statement disclosures did not operate effectively to ensure complete, accurate, and proper presentation of the financial statement disclosures in accordance with U.S. GAAP.

~~This material weakness relates to various disclosures in the financial statements.~~

~~9. Preparation and Review of Consolidated Statement of Cash Flows~~

The controls over the review of the impact of significant and unusual transactions on the classification and presentation of the Consolidated Statement of Cash Flows (SCF) did not operate effectively, which led to the misclassification of cash flows between operating activities and investing activities in the preliminary SCF for certain proceeds from loan sales. The misclassification was corrected prior to the issuance of our Quarterly Report on Form 10-Q for the period ended June 30, 2015 and had no impact to previously issued interim or annual financial statements of the Company.

These control deficiencies could result in misstatements of the aforementioned accounts and disclosures that would result in a material misstatement of the consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitutes material weaknesses.

Remediation Status of Reported Material Weaknesses

The Company is currently working to remediate the material weaknesses described above, including assessing the need for additional remediation steps and implementing additional measures to remediate the underlying causes that gave rise to the material weaknesses. The Company is committed to maintaining a strong internal control environment and to ensure that a proper, consistent tone is communicated throughout the organization, including the expectation that previously existing deficiencies will be remediated through implementation of processes and controls to ensure strict compliance with U.S. GAAP.

To address the material weakness in the Control Environment, Risk Assessment, Control Activities and Monitoring (Material Weakness 1, noted above), the Company has taken the following measures:

Appointed an additional independent director to the Audit Committee of the Board with extensive experience as a financial expert in our industry to provide further experience on the committee.

Established regular working group meetings, with appropriate oversight by management of both the Company and its parent to strengthen accountability for performance of internal control over financial reporting responsibilities and prioritization of corrective actions.

Hired a Chief Accounting Officer and other key personnel with significant public-company financial reporting experience and the requisite skillsets in areas important to financial reporting.

Developed and implemented a plan to enhance its risk assessment processes, control procedures and documentation.

Reallocated additional Company resources to improve the oversight for certain financial models.

Increased accounting resources with qualified permanent resources to ensure sufficient staffing to conduct enhanced financial reporting procedures and to ~~begin~~continue the remediation efforts.

Improved management documentation, review controls and oversight of accounting and financial reporting activities to ensure accounting practices conform to the Company’s policies and U.S. GAAP.

Increased accounting participation in critical governance activities to ensure an adequate assessment of risk activities which may impact financial reporting or the related internal controls.

Completed a comprehensive review and update of all accounting policies, process descriptions and control activities.

Developed and implemented additional documentation, controls and governance for the credit loss allowance and accretion processes.

To address the material weaknesses related to the Application of Effective Interest Method for Accretion (Material Weakness 2, noted above) and the Identification, Governance and Monitoring of Models Used to Estimate Accretion (Material Weakness 6, noted above), the Company is in process of strengthening its processes and controls as follows:

~~Enhanced its accounting documentation and review procedures of key assumptions to ensure the Company’s accretion methodology conforms to Company policy and U.S. GAAP.~~

Automated the process for the application of the effective interest rate method for accreting discounts, subvention payments from manufacturers and other origination costs on individually acquired retail installment contracts.

~~Implemented a comprehensive review controls over data, inputs and assumptions used in the models.~~

~~Strengthened review controls and change management procedures over the models used to estimate accretion.~~

~~Increased accounting resources with qualified, permanent resources to ensure an adequate level of review and execution of control activities.~~

~~Developed a comprehensive accretion model documentation manual and implemented on-going performance monitoring to ensure compliance with required standards.~~

~~To address the material weaknesses related to theMethodology to Estimate Credit Loss Allowance (Material Weakness 3, noted above), Loans Modified as TDRs (Material Weakness 4, noted above), and~~ Development, Approval, and Monitoring of Models Used to Estimate the Credit Loss Allowance (Material Weakness 5,2, noted above), the Company has taken the following measures:

~~Conducted~~Completed a comprehensive design effectiveness review and augmentation of the controls to ensure all critical risks are addressed.

Enhanced its accounting documentation and review procedures relating to credit loss allowance and TDRs to demonstrate how the Company’s policies and procedures align with U.S. GAAP and produce a repeatable process.

~~Implemented enhanced review controls over financial statement disclosures for credit loss allowance and TDR’s to ensure compliance with the Company’s polices and U. S. GAAP.~~

Implemented a more comprehensive monitoring plan for credit loss allowance ~~and TDRs~~ with a specific focus on model inputs, changes in model assumptions and model outputs to ensure an effective execution of the Company’s risk strategy.

Implemented improved controls over the development of new models or changes to models used to estimate credit loss allowance.

Implemented enhanced on-going performance monitoring procedures.

Developed comprehensive model documentation.

Enhanced the Company’s communication on related issues with its senior leadership team and the Board, including the Risk Committee and the Audit Committee.

Increased resources dedicated to the analysis, review and documentation to ensure compliance with U.S. GAAP and the Company’s policy.

To address the material weaknesses inrelated to the ~~Review~~Identification, Governance and Monitoring of ~~New, Unusual or Significant Transactions~~Models Used to Estimate Accretion (Material Weakness ~~7, noted above), Review of Financial Statement Disclosures (Material Weakness 8, noted above) and Preparation and Review of Consolidated Statement of Cash Flows (Material Weakness 9,~~3, noted above), the Company ~~is in~~has taken the following measures:

Developed a comprehensive accretion model documentation manual and implemented on-going performance monitoring to ensure compliance with required standards.

Automated the process for the application of ~~strengthening its processes~~the effective interest rate method for accreting discounts, subvention payments from manufacturers and ~~controls as follows:~~other origination costs on individually acquired retail installment contracts.

~~Increased the documentation, analysis and governance over new, significant and unusual transactions~~Implemented a comprehensive plan to ~~ensure that these transactions are recorded in accordance with Company’s policies and U.S. GAAP.~~

~~Improved the~~ review controls over ~~financial statements~~data, inputs and assumptions used in the ~~related disclosures to include a more comprehensive disclosure checklist and improved review procedures from certain members of the management.~~models.

Strengthened ~~the~~ review controls ~~reconciliations~~ and ~~supporting documentation related~~change management procedures over the models used to ~~the classification~~estimate accretion.

Increased accounting resources with qualified, permanent resources to ensure an adequate level of ~~cash flows between operating activities~~review and ~~investing activities in the Statement~~execution of ~~Cash Flows.~~control activities.

While progress has been made to remediate all of these areas, as of ~~September 30, 2017,~~March 31, 2018, we are still in the process of developing and implementing the enhanced processes and procedures and testing the operating effectiveness of these improved controls. We believe our actions will be effective in remediating the material weaknesses, and we continue to devote significant time and attention to these efforts. In addition, the material weaknesses will not be considered remediated until the applicable remedial processes and procedures have been in place for a sufficient period of time and management has concluded, through testing, that these controls are effective. Accordingly, the material weaknesses are not remediated as of ~~September 30, 2017.~~March 31, 2018.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended ~~September 30, 2017~~March 31, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.

PART II: OTHER INFORMATION



Item 1.	Legal Proceedings

Reference should be made to Note 10 to the Condensed Consolidated Financial Statements, which is incorporated herein by reference, for information regarding legal proceedings in which the Company is involved, which supplements the discussion of legal proceedings set forth in Note 11 to the Condensed Consolidated Financial Statements of the ~~2016~~2017 Annual Report on Form 10-K.



Item 1A.	Risk Factors

There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A “Risk Factors” in the ~~2016~~2017 Annual Report on Form 10-K.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of the Company’s common stock during the period covered by this Quarterly Report on Form 10-Q.



Item 3.	Defaults upon Senior Securities

None.



Item 4.	Mine Safety Disclosures

Not applicable.



Item 5.	Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

(Amounts presented as actuals)

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended (the Exchange Act), an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law.

The following activities are disclosed in response to Section 13(r) with respect to Santander UK and certain other affiliates of Santander ~~UK within Santander.~~(collectively, the Group). During the period covered by this report:

Santander UK holds two savings accounts and one current account for two customers resident in the UKU.K. who are currently designated by the USU.S. under the Specially Designated Global Terrorist (SDGT) sanctions program. Revenues and profits generated by Santander UKU.K. on these accounts ~~for~~in the ~~nine months during 2017~~first quarter of 2018 were negligible relative to the overall ~~revenues and~~ profits of Santander.

Santander UK holds two frozen current accounts for two UKU.K. nationals who are designated by the USU.S. under the ~~Specially Designated Global Terrorist (SDGT)~~SDGT sanctions program. The accounts held by each customer have been frozen since their designation and have remained frozen through the ~~nine months~~first quarter of ~~2017.~~2018. The accounts are in arrears (£~~1,844~~1,844.73 in debit combined) and are currently being managed by Santander UK Collections & Recoveries department. No revenues or profits were generated by Santander UK on ~~this account during~~these accounts in the ~~nine months~~first quarter of ~~2017.~~2018.

In addition, on September 6, 2017, Santander Brasil received a payment order in an amount of €1,603 in favor of a Brazilian recipient from an entity based in Turkey. Upon receipt of the supporting documentation, Santander Brasil became aware of the fact that the ultimate payer was actually Iran Water and Electrical Equipments Engineering Co., an entity based in Iran and controlled by the Iranian government. Santander Brasil therefore declined to process the transaction. The intended recipient of the funds obtained an order from the Court of Justice of the State of São Paulo (Tribunal de Justiça Estado de São Paulo) requiring Santander Brasil to process the payment. Santander Brasil complied with the court order and processed the payment accordingly. Revenues and profits generated by Santander Brasil on this transaction were negligible relative to the overall profits of Santander.

The Group also has certain legacy performance guarantees for the benefit of Bank Sepah and Bank Mellat (stand-by letters of credit to guarantee the obligations - either under tender documents or under contracting agreements - of contractors who participated in public bids in Iran) that were in place prior to April 27, 2007.

In the aggregate, all of the transactions described above resulted in gross revenues and net profits in the period ended ~~September 30, 2017,~~March 31, 2018, which were negligible relative to the overall revenues and profits of Santander. ~~Santander~~The Group has undertaken significant steps to withdraw from the Iranian market such as closing its representative office in Iran and ceasing all banking activities therein,

including correspondent relationships, deposit taking from Iranian entities and issuing export letters of credit, except for the legacy transactions described above. ~~Santander~~The Group is not contractually permitted to cancel these arrangements without either (i) paying the guaranteed amount (in the case of the performance guarantees), or (ii) forfeiting the outstanding amounts due to it (in the case of the export credits). As such, ~~Santander~~the Group intends to continue to provide the guarantees and hold these assets in accordance with company policy and applicable laws.



Item 6.	Exhibits

The following exhibits are included herein:



Exhibit Number		Description
~~10.1~~		Waiver and Release of Claims Agreement, effective September 7, 2017, executed by Jason A. Kulas in favor of Santander Consumer USA Holdings Inc., Santander Holdings USA Inc., Santander Consumer USA, Inc., Santander Consumer USA Inc. Foundation, Santander Bank, N.A., and Banco Santander, S.A. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on September 13, 2017).
~~10.2~~10.1*		Offer Letter, by and among ~~Sandra Broderick~~Joshua Baer and Santander Consumer USA Holdings, Inc. and Santander Consumer USA Inc., dated ~~September 20, 2017 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on October 2, 2017).~~
~~10.3~~		Offer Letter, by and among Juan Carlos Alvarez de Soto and Santander Consumer USA Holdings Inc. and Santander Consumer USA Inc., dated September 28, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on October 2, 2017).
~~10.4~~		Separation Agreement and Release and Waiver of Claims, by and among Ismail Dawood and Santander Consumer USA Holdings Inc. and Santander Consumer USA Inc., dated October 3, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on October 3, 2017).February 23, 2018. #
31.1*		Chief Executive Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Chief Financial Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase



*	Filed herewith.
#	Indicates management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Santander Consumer USA Holdings Inc. (Registrant)

By:		/s/ Scott Powell
		Name: Scott Powell
		Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



Signature	Title	Date
/s/ Scott Powell	President and Chief Executive Officer	~~November~~May 2, ~~2017~~2018
Scott Powell	(Principal Executive Officer)
/s/ Juan Carlos Alvarez de Soto	Chief Financial Officer	~~November~~May 2, ~~2017~~2018
Juan Carlos Alvarez de Soto	(Principal Financial and Accounting Officer)

9283



	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Retail Installment Contracts Acquired Individually			Receivables from Dealers			Personal Loans			Retail Installment Contracts Acquired Individually			Receivables from Dealers
	Retail Installment Contracts Acquired Individually			Receivables from Dealers			Personal Loans			Retail Installment Contracts Acquired Individually			Receivables from Dealers
Balance — beginning of period	$	3,411,055		$	724		$	—		$	3,197,414		$	916
Provision for credit losses	1,682,894			(557		)	10,275			1,787,277			(133		)
Charge-offs (a)	(3,542,471		)	—			(7,194		)	(3,429,905		)	(135		)
Recoveries	1,819,787			—			644			1,846,499			—
Balance — end of period	$	3,371,265		$	167		$	3,725		$	3,401,285		$	648



Financial Instruments	Fair Value at September 30, 2017		Valuation Technique	Unobservable Inputs	Range
Financial Assets:
Retail installment contracts held for investment	$	24,799	Discounted Cash Flow	Discount Rate	9.0% - 9.5%
				Default Rate	18% - 22%
				Prepayment Rate	6%
Personal loans held for sale	$	929,549	Market / Income Approach	Discount Rate	15% - 30%

				Default Rate	30% - 40%
Retail installment contracts held for sale	$	845,910	Discounted Cash Flow	Discount Rate	3% - 8%
				Default Rate	3.8% - 8.3%
				Prepayment Rate	17.8%