UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

Amendment No. 1


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

For the quarterly period ended ~~September 30,~~March 31, 2021


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			For the transition period from to

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)

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Outstanding shares at ~~October 25,~~April 26, 2021

Common Stock ($0.01 par value)

New York Stock Exchange

~~306,111,379~~306,035,735

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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

☒

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 ☒

EXPLANATORY NOTE

Santander Consumer USA Holdings Inc. ("SC" or the "Company") is filing this Amendment No. 1 on Form 10-Q/A for the quarter ended March 31, 2021 (the "Form 10-Q/A").

This Form 10-Q/A amends the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as originally filed with the Securities and Exchange Commission (the "SEC") on April 29, 2021 (the "Original Filing"). This Form 10-Q/A is being filed to restate our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2021, to make corrections to the Condensed Consolidated Statements of Cash Flows in the Original Filing. The restatement of our financial statements in this Form 10-Q/A reflects the correction of errors for the classification of certain loan activities related to finance receivables held for sale and finance receivables held for investment within the Condensed Consolidated Statements of Cash Flows. Further explanation regarding the restatement is set forth in Note 1 to the unaudited Condensed Consolidated Financial Statements included in this Form 10-Q/A.

The following sections in the Original Filing have been corrected in this Form 10-Q/A to reflect this restatement:

•Part I - Item 1: Condensed Consolidated Financial Information

•Part I - Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

•Part I - Item 4: Controls and Procedures

•Part II - Item 6: Exhibits

Our principal executive officer and principal financial officer have also provided new certifications as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications are included in this Form 10-Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2.

For the convenience of the reader, this Form 10-Q/A sets forth the information in the Original Filing in its entirety, as such information is modified and superseded where necessary to reflect the restatement. Except as provided above, this Amendment does not reflect events occurring subsequent to the filing of the Original Filing and does not amend or otherwise update any information in the Original Filing.

INDEX

~~INDEX~~


Cautionary Note Regarding Forward-Looking Information		34
PART I: FINANCIAL INFORMATION		78
Item 1.	Unaudited Condensed Consolidated Financial Statements	78
	Unaudited Condensed Consolidated Balance Sheets	78
	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income	89
	Unaudited Condensed Consolidated Statements of Equity	910
	Unaudited Condensed Consolidated Statements of Cash Flows (As Restated)	11
	Note 1. Description of Business, Basis of Presentation, and Accounting Policies	13
	Note 2. Finance Receivables	1415
	Note 3. Credit Loss Allowance and Credit Quality	1617
	Note 4. Leases	2021
	Note 5. Other Assets	22
	Note 6. Variable Interest Entities	24
	Note 7. Debt	2627
	Note 8. Shareholders' Equity	2930
	Note 9. Derivative Financial Instruments	3132
	Note 10. Fair Value of Financial Instruments	34
	Note 11. Investment ~~Gains (Losses),~~Losses, Net	38
	Note 12. Income Taxes	39
	Note 13. Computation of Basic and Diluted Earnings per Common Share	39
	Note 14. Commitments and Contingencies	39
	Note 15. Related-Party Transactions	42
	Note 16. Employee Benefit Plans	45
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4746
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6563
Item 4.	Controls and Procedures	6563
PART II: OTHER INFORMATION		6665
Item 1.	Legal Proceedings	6665
Item 1A.	Risk Factors	6665
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6665
Item 3.	Defaults upon Senior Securities	6665
Item 4.	Mine Safety Disclosures	6665
Item 5.	Other Information	6665
Item 6.	Exhibits	6867
SIGNATURES		6968

Unless otherwise specified or the context otherwise requires, the use herein of the terms “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~~10-Q/A 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. Among the factors that could cause the Company’s actual performance to differ materially from those suggested by the forward-looking statements are:

•There can be no assurance that the proposed acquisition of all of our outstanding common stock by SHUSA will be approved and ultimately consummated, and the terms of any such transaction may differ materially from those originally proposed by SHUSA;

•~~our agreement with Stellantis may not result in currently anticipated levels of growth;~~

•the adverse impact of COVID-19 on our business, financial condition, liquidity and results of operations;

•our agreement with Stellantis N.V. may not result in currently anticipated levels of growth and is subject to certain conditions that could result in termination of the agreement;

•continually changing federal, state, and local laws and regulations could materially adversely affect our business, including changes to tax laws and regulations and the outcome of ongoing tax audits by federal, state and local income tax authorities that may require the Company to pay additional taxes or recover fewer overpayments compared to what has been accrued or paid as of period-end;

•adverse economic conditions in the United States and worldwide may negatively impact our results;

•our business could suffer if our access to funding is reduced;

•significant risks we face implementing our growth strategy including our ability to grow revenue, manage expenses, attract and retain highly-skilled people and raise capital necessary to achieve our business goals;

•unexpected costs and delays in connection with exiting our personal lending business;

•our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships;

•our financial condition, liquidity, and results of operations depend on the credit performance of our loans;

•loss of our key management or other personnel, or an inability to attract such management and personnel;

•the effects of regulation, actions and/or policies of the Federal Reserve Bank of Boston (FRBB), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the European Central Bank (ECB), whose oversight and regulation may limit certain of our activities, including share repurchase programs, the timing and amount of dividends and other limitations on our business;

•acts of God, including pandemics and other significant public health emergencies, and other natural or man-made disasters, and the Company’s ability to deal with disruptions caused by such acts, emergencies and disasters;

•inflation, interest rate, market and monetary fluctuations, including effects from the pending discontinuation of LIBOR as an interest rate benchmark, may, among other things, reduce net interest margins and impact funding sources, revenue and expenses, and the value of assets and obligations;

•adverse publicity, and negative public opinion, whether specific to the Company or regarding other industry participants or industry-wide factors, or other reputational harm;

•the ability of the Company and its third-party vendors to convert, maintain and upgrade, as necessary, the Company’s data processing and other IT infrastructure on a timely and acceptable basis, within projected cost estimates and without significant disruption to the Company’s business;

•the Company’s ability to control operational risks, data security breach risks and outsourcing risks, and the possibility of errors in quantitative models and software the Company uses in its business, including as a result of cyberattacks, technological failure, human error, fraud or malice by internal or external parties, and the possibility that the Company’s controls will prove insufficient, fail or be circumvented;

•future changes in our relationship with SHUSA and Banco Santander that could adversely affect our operations; and

•the other factors that are described in Part I, Item IA – Risk Factors of the Annual Report of the Company on Form 10-K for the year ended December 31, 2020 (the 2020 Annual Report on Form 10-K).

If one or more of the factors affecting the Company’s forward-looking information and statements renders forward-looking information or statements incorrect, 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. 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. Forward-looking statements reflect the current beliefs and expectations of the Company's management and 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.


ABS			Asset-backed securities
ACL			Allowance for credit loss
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.
AFS			Available for sale
ALG			Automotive Lease Guide
Amortized costs			Includes unpaid principal balance (UPB), net of discounts and premiums
APR			Annual Percentage Rate
ARRC			Alternative Reference Rates Committee
ASC			Accounting Standards Codification
ASU			Accounting Standards Update

Bluestem			Bluestem Brands, Inc., an online retailer for whose customers SC provides financing
Board			SC’s Board of Directors

~~CARES Act~~			~~The Coronavirus Aid, Relief, and Economic Security Act~~
CBP			Citizens Bank of Pennsylvania
CCAR			Comprehensive Capital Analysis and Review
CCAP			Chrysler Capital


CDO			Chief Diversity Officer
CECL			Current Expected Credit Loss, Amendments based on ASU 2016-13, ASU 2019-04, and ASU 2019-11
CEO			Chief Executive Officer
CFPB			Consumer Financial Protection Bureau
CFO			Chief Financial Officer
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
COVID-19			Coronavirus disease 2019
Credit Enhancement			A method such as overcollateralization, insurance, or a third-party guarantee, whereby a borrower reduces default risk
DCF			Discounted Cash Flow Analysis


Dealer Loan			A Floorplan Loan, real estate loan, working capital loan, or other credit extended to an automobile dealer

DOJ			U.S. Department of Justice





EIR			Effective interest rate
ECL			Expected credit losses
Exchange Act			Securities Exchange Act of 1934, as amended

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 dealer inventory until sold
Federal Reserve Board			Board of Governors of the Federal Reserve System
FRBB			Federal Reserve Bank of Boston
FTC			Federal Trade Commission

GAP			Guaranteed Auto Protection
GAAP			U.S. Generally Accepted Accounting Principles
HPI			Housing Price Index
HTM			Held to maturity
IPO			SC’s Initial Public Offering
ISDA			International Swaps and Derivative Association


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


MPLFA			Ten-year master private-label financing agreement with Stellantis N.V., signed in May 2013


OCC			Office of the Comptroller of the Currency
Overcollateralization			A credit enhancement method whereby more collateral is posted than is required to obtain financing

PD			Probability of default


PD			~~Probability of default~~
~~PDLA~~			~~Platform Development and License Agreement~~
Private-label			Financing branded in the name of the product manufacturer rather than in the name of the finance provider


RC			The Risk Committee of the Board
Remarketing			The controlled disposal of vehicles at the end of the lease term or upon early termination or of financed vehicles obtained through repossession and their subsequent sale
Residual Value			The future value of a leased asset at the end of its lease term
Retail installment contracts			Includes retail installment contracts individually acquired or originated by the Company and purchased non-credit deteriorated finance receivables
ROU			Right-of-use (related to operating leases)
RSU			Restricted stock unit
SAF			Santander Auto Finance
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
SCART			Santander Consumer Auto Receivables Trust, a securitization platform

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


SHUSA			Santander Holdings USA, Inc., a wholly-owned subsidiary of Santander and the majority stockholder of SC
SPAIN			Santander Prime Auto Issuing Note Trust, a securitization platform
SRT			Santander Retail Auto Lease Trust, a lease securitization platform

Stellantis N.V.			FCA US LLC, its parent Stellantis N.V., and/or any affiliates
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 entities utilized in SC’s financing transactions


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 share amounts)


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents - $2,016,932 and $32,490 held at affiliates, respectively		$	2,106,405	$	109,053
Cash and cash equivalents - $356,911 and $32,490 held at affiliates, respectively						Cash and cash equivalents - $356,911 and $32,490 held at affiliates, respectively	$	415,969	$	109,053
Finance receivables held for sale, net	Finance receivables held for sale, net	359,561		1,567,527		Finance receivables held for sale, net	—		1,567,527
Finance receivables held for investment, at amortized cost	Finance receivables held for investment, at amortized cost	33,183,439		33,114,638		Finance receivables held for investment, at amortized cost	32,090,201		33,114,638
Allowance for credit loss	Allowance for credit loss	(5,699,698)		(6,110,633)		Allowance for credit loss	(6,005,115)		(6,110,633)
Finance receivables held for investment, at amortized cost, net	Finance receivables held for investment, at amortized cost, net	27,483,741		27,004,005		Finance receivables held for investment, at amortized cost, net	26,085,086		27,004,005
Restricted cash - $6,808 and $27 held at affiliates, respectively		2,248,667		2,221,094
Restricted cash - $27 and $27 held at affiliates, respectively						Restricted cash - $27 and $27 held at affiliates, respectively	2,623,565		2,221,094
Accrued interest receivable	Accrued interest receivable	323,469		415,765		Accrued interest receivable	345,769		415,765
Leased vehicles, net	Leased vehicles, net	15,529,610		16,391,107		Leased vehicles, net	16,478,224		16,391,107
Furniture and equipment, net of accumulated depreciation of $116,431 and $104,452, respectively		62,168		62,032
Furniture and equipment, net of accumulated depreciation of $106,292 and $104,452, respectively						Furniture and equipment, net of accumulated depreciation of $106,292 and $104,452, respectively	58,081		62,032

Goodwill	Goodwill	74,056		74,056		Goodwill	74,056		74,056
Intangible assets, net of amortization of $70,984 and $63,488, respectively		75,176		70,128
Intangible assets, net of amortization of $68,013 and $63,488, respectively						Intangible assets, net of amortization of $68,013 and $63,488, respectively	73,833		70,128

Other assets - $6,956 and $14,451 held at affiliates, respectively		811,597		972,726
Other assets - $5,886 and $14,451 held at affiliates, respectively						Other assets - $5,886 and $14,451 held at affiliates, respectively	1,079,419		972,726
TOTAL ASSETS	TOTAL ASSETS	$	49,074,450	$	48,887,493	TOTAL ASSETS	$	47,234,002	$	48,887,493
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
LIABILITIES	LIABILITIES					LIABILITIES
Borrowings and other debt obligations - $9,600,000 and $10,801,318 to/from affiliates, respectively		$	38,431,858	$	41,138,674
Borrowings and other debt obligations - $10,501,060 and $10,801,318 to/from affiliates, respectively						Borrowings and other debt obligations - $10,501,060 and $10,801,318 to/from affiliates, respectively	$	38,541,624	$	41,138,674

Deferred tax liabilities, net	Deferred tax liabilities, net	1,855,859		1,263,796		Deferred tax liabilities, net	1,497,829		1,263,796
Accounts payable and accrued expenses - $74,945 and $80,428 held at affiliates, respectively		554,581		531,369
Accounts payable and accrued expenses - $83,994 and $80,428 held at affiliates, respectively						Accounts payable and accrued expenses - $83,994 and $80,428 held at affiliates, respectively	567,474		531,369

Other liabilities - $2,368 and $463 held at affiliates, respectively		299,422		331,693
Other liabilities - $1,438 and $463 held at affiliates, respectively						Other liabilities - $1,438 and $463 held at affiliates, respectively	395,222		331,693
TOTAL LIABILITIES	TOTAL LIABILITIES	41,141,720		43,265,532		TOTAL LIABILITIES	41,002,149		43,265,532
Commitments and contingencies (Notes 7 and 14)	Commitments and contingencies (Notes 7 and 14)	0		0		Commitments and contingencies (Notes 7 and 14)	0		0
STOCKHOLDERS' EQUITY:	STOCKHOLDERS' EQUITY:					STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value — 1,100,000,000 shares authorized;	Common stock, $0.01 par value — 1,100,000,000 shares authorized;					Common stock, $0.01 par value — 1,100,000,000 shares authorized;
363,536,761 and 363,159,613 shares issued and 306,111,379 and 306,091,978 shares outstanding, respectively		3,061		3,061
363,459,117 and 363,159,613 shares issued and 306,033,735 and 306,091,978 shares outstanding, respectively						363,459,117 and 363,159,613 shares issued and 306,033,735 and 306,091,978 shares outstanding, respectively	3,060		3,061
Additional paid-in capital	Additional paid-in capital	391,343		393,800		Additional paid-in capital	387,946		393,800
Accumulated other comprehensive income (loss), net of taxes	Accumulated other comprehensive income (loss), net of taxes	(31,194)		(50,566)		Accumulated other comprehensive income (loss), net of taxes	(41,818)		(50,566)
Retained earnings	Retained earnings	7,569,520		5,275,666		Retained earnings	5,882,665		5,275,666
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	7,932,730		5,621,961		TOTAL STOCKHOLDERS' EQUITY	6,231,853		5,621,961
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	49,074,450	$	48,887,493	TOTAL LIABILITIES AND EQUITY	$	47,234,002	$	48,887,493

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				For the Nine Months Ended				For the Three Months Ended
		September 30,				September 30,						March 31,

		2021		2020		2021		2020				2021		2020
Interest on finance receivables and loans	Interest on finance receivables and loans	$	1,215,121	$	1,300,694	$	3,749,264	$	3,811,113		Interest on finance receivables and loans	$	1,304,651	$	1,273,819
Leased vehicle income	Leased vehicle income	670,334		725,156		2,115,134		2,210,684			Leased vehicle income	740,884		747,979
Other finance and interest income	Other finance and interest income	1,631		2,146		6,125		12,354			Other finance and interest income	1,426		7,551
Total finance and other interest income	Total finance and other interest income	1,887,086		2,027,996		5,870,523		6,034,151			Total finance and other interest income	2,046,961		2,029,349
Interest expense — Including $77,407, $87,851 , $247,327 and $221,676 to affiliates, respectively		218,747		292,118		709,479		929,934
Interest expense — Including $85,904 and $62,770 to affiliates, respectively											Interest expense — Including $85,904 and $62,770 to affiliates, respectively	253,537		328,834
Leased vehicle expense	Leased vehicle expense	325,259		467,172		1,043,774		1,630,945			Leased vehicle expense	423,795		552,912
Net finance and other interest income	Net finance and other interest income	1,343,080		1,268,706		4,117,270		3,473,272			Net finance and other interest income	1,369,629		1,147,603
Credit loss expense (benefit)		42,058		340,548		(85,484)		2,110,331
Credit loss expense											Credit loss expense	136,209		907,887
Net finance and other interest income after credit loss expense	Net finance and other interest income after credit loss expense	1,301,022		928,158		4,202,754		1,362,941			Net finance and other interest income after credit loss expense	1,233,420		239,716
Profit sharing	Profit sharing	41,009		30,414		158,888		56,239			Profit sharing	67,326		14,295
Net finance and other interest income after credit loss expense and profit sharing	Net finance and other interest income after credit loss expense and profit sharing	1,260,013		897,744		4,043,866		1,306,702			Net finance and other interest income after credit loss expense and profit sharing	1,166,094		225,421
Investment gains (losses), net		5,241		(68,989)		(7,057)		(279,997)
Servicing fee income — Including $9,916, $10,050, $29,217 and $33,923 from affiliates, respectively		19,975		18,574		61,481		56,797
Fees, commissions, and other — Including $2,965, $1,254, $10,429 and $11,127 from affiliates, respectively		48,867		78,924		200,242		256,123
Investment losses, net											Investment losses, net	(14,712)		(63,426)
Servicing fee income — Including $9,197 and $12,552 from affiliates, respectively											Servicing fee income — Including $9,197 and $12,552 from affiliates, respectively	18,694		19,103
Fees, commissions, and other — Including $3,330 and $3,306 from affiliates, respectively											Fees, commissions, and other — Including $3,330 and $3,306 from affiliates, respectively	100,528		95,130
Total other income	Total other income	74,083		28,509		254,666		32,923			Total other income	104,510		50,807
Compensation and benefits	Compensation and benefits	149,669		127,991		460,014		388,960			Compensation and benefits	153,895		133,326
Repossession expense	Repossession expense	33,349		35,910		117,540		115,861			Repossession expense	45,346		57,662
Other expenses — Including $2,144, $1,456, $5,679 and $3,762 to affiliates, respectively		179,147		99,761		382,313		308,193
Other expenses — Including $1,814 and $1,097 to affiliates, respectively											Other expenses — Including $1,814 and $1,097 to affiliates, respectively	95,251		91,685
Total operating expenses	Total operating expenses	362,165		263,662		959,867		813,014			Total operating expenses	294,492		282,673
Income before income taxes		971,931		662,591		3,338,665		526,611
Income tax expense		208,607		172,476		775,484		137,161
Net income		$	763,324	$	490,115	$	2,563,181	$	389,450
Income (loss) before income taxes											Income (loss) before income taxes	976,112		(6,445)
Income tax expense (benefit)											Income tax expense (benefit)	234,457		(2,458)
Net income (loss)											Net income (loss)	$	741,655	$	(3,987)

Net income		$	763,324	$	490,115	$	2,563,181	$	389,450
Net income (loss)											Net income (loss)	$	741,655	$	(3,987)
Other comprehensive income (loss):	Other comprehensive income (loss):										Other comprehensive income (loss):
Unrealized gains (losses) on cash flow hedges, net of tax of $2,006, $2,083, $6,568 and $(10,419) respectively		5,962		7,112		20,372		(31,726)
Unrealized gains (losses) on available-for-sale and held-to-maturity debt securities net of tax of $(100), $(88), $(324) and $500, respectively		(301)		(289)		(1,000)		1,537
Comprehensive income		$	768,985	$	496,938	$	2,582,553	$	359,261
Unrealized gains (losses) on cash flow hedges, net of tax of $2,949 and $(12,543) respectively											Unrealized gains (losses) on cash flow hedges, net of tax of $2,949 and $(12,543) respectively	9,066		(39,019)
Unrealized gains (losses) on available-for-sale and held-to-maturity debt securities net of tax of $(103) and $661, respectively											Unrealized gains (losses) on available-for-sale and held-to-maturity debt securities net of tax of $(103) and $661, respectively	(318)		2,057
Comprehensive income (loss)											Comprehensive income (loss)	$	750,403	$	(40,949)
Net income per common share (basic)	Net income per common share (basic)	$	2.49	$	1.58	$	8.37	$	1.21		Net income per common share (basic)	$	2.42	$	(0.01)
Net income per common share (diluted)	Net income per common share (diluted)	$	2.49	$	1.58	$	8.37	$	1.21		Net income per common share (diluted)	$	2.42	$	(0.01)
Dividend declared per common share	Dividend declared per common share	$	0.22	$	0.22	$	0.88	$	0.66		Dividend declared per common share	$	0.44	$	0.22
Weighted average common shares (basic)	Weighted average common shares (basic)	306,093,379		310,150,293		306,086,399		321,275,907			Weighted average common shares (basic)	306,108,987		334,026,052
Weighted average common shares (diluted)	Weighted average common shares (diluted)	306,378,733		310,307,265		306,354,463		321,492,331			Weighted average common shares (diluted)	306,325,155		334,346,122

See notes to unaudited condensed consolidated financial statements.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited) (In thousands except per share amounts)
Common Stock Additional
Paid-In Capital Accumulated
Other
Comprehensive Income (Loss) Retained Earnings Total Stockholders' Equity
Shares Amount
Balance — July 1, 2021 306,081 $ 3,060 $ 389,890 $ (36,855) $ 6,873,535 $ 7,229,630
Stock issued in connection with employee incentive compensation plans 30 1 219 — — 220
Stock-based compensation expense — — 1,234 — — 1,234
Dividends-Common stock, $0.22/share — — — — (67,339) (67,339)
Net income — — — — 763,324 763,324
Other comprehensive income, net of taxes — — — 5,661 — 5,661
Balance — September 30, 2021 306,111 $ 3,061 $ 391,343 $ (31,194) $ 7,569,520 $ 7,932,730
Balance — July 1, 2020 316,235 $ 3,162 $ 624,554 $ (63,705) $ 4,331,454 $ 4,895,465
Stock issued in connection with employee incentive compensation plans 34 — 237 — — 237
Stock-based compensation expense — — 1,010 — — 1,010
Stock repurchase/Treasury stock (10,198) (101) (223,415) — — (223,516)
Dividends-Common stock, $0.22/share — — — — (67,364) (67,364)
Tax sharing with affiliate — — (7,958) — — (7,958)
Net income — — — — 490,115 490,115
Other comprehensive income, net of taxes — — — 6,823 — 6,823
Balance — September 30, 2020 306,071 $ 3,061 $ 394,428 $ (56,882) $ 4,754,205 $ 5,094,812


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance — January 1, 2021	306,092	$	3,061	$	393,800	$	(50,566)	$	5,275,666	$	5,621,961

Stock issued in connection with employee incentive compensation plans	300	3		(1,832)		—		—		(1,829)
Stock-based compensation expense	—	—		5,448		—		—		5,448

Stock repurchase/Treasury stock	(358)	(4)		(9,470)		—		—		(9,474)
Dividends-Common stock, $0.44/share	—	—		—		—		(134,656)		(134,656)

Net income (loss)	—	—		—		—		741,655		741,655
Other comprehensive income (loss), net of taxes	—	—		—		8,748		—		8,748
Balance — March 31, 2021	306,034	$	3,060	$	387,946	$	(41,818)	$	5,882,665	$	6,231,853

Balance — January 1, 2020	339,202	$	3,392	$	1,173,262	$	(26,693)	$	6,168,659	$	7,318,620
Cumulative-effect adjustment upon adoption of ASU 2016-13	—	—		—		—		(1,590,885)		(1,590,885)
Stock issued in connection with employee incentive compensation plans	277	3		(1,634)		—		—		(1,631)
Stock-based compensation expense	—	—		4,038		—		—		4,038

Stock repurchase/Treasury stock	(18,361)	(184)		(468,282)		—		—		(468,466)
Dividends-Common stock, $0.22/share	—	—		—		—		(74,624)		(74,624)

Net income (loss)	—	—		—		—		(3,987)		(3,987)
Other comprehensive income (loss), net of taxes	—	—		—		(36,962)		—		(36,962)
Balance — March 31, 2020	321,118	$	3,211	$	707,384	$	(63,655)	$	4,499,163	$	5,146,103

See notes to unaudited condensed consolidated financial statements.

~~SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~(Unaudited) (In thousands except per share amounts)~~

Common Stock Additional
Paid-In Capital Accumulated
Other
Comprehensive Income (Loss) Retained Earnings Total Stockholders' Equity
Shares Amount
Balance — January 1, 2021 306,092 $ 3,061 $ 393,800 $ (50,566) $ 5,275,666 $ 5,621,961
Stock issued in connection with employee incentive compensation plans 377 4 (1,975) — — (1,971)
Stock-based compensation expense — — 8,989 — — 8,989
Stock repurchase/Treasury stock (358) (4) (9,471) — — (9,475)
Dividends-Common stock, $0.88/share — — — — (269,327) (269,327)
Net income — — — — 2,563,181 2,563,181
Other comprehensive income, net of taxes — — — 19,372 — 19,372
Balance — September 30, 2021 306,111 $ 3,061 $ 391,343 $ (31,194) $ 7,569,520 $ 7,932,730
Balance — January 1, 2020 339,202 3,392 1,173,262 (26,693) 6,168,659 7,318,620
Cumulative-effect adjustment upon adoption of ASU 2016-13 — — — — (1,590,885) (1,590,885)
Tax impact of adoption of ASU 2019-12 — — — — (382) (382)
Stock issued in connection with employee incentive compensation plans 340 3 (1,509) — — (1,506)
Stock-based compensation expense — — 6,161 — — 6,161
Stock repurchase/Treasury stock (33,471) (334) (775,636) — — (775,970)
Dividends-Common stock, $0.66/share — — — — (212,637) (212,637)
Tax sharing with affiliate — — (7,850) — — (7,850)
Net income — — — — 389,450 389,450
Other comprehensive income (loss), net of taxes — — — (30,189) — (30,189)
Balance — September 30, 2020 306,071 $ 3,061 $ 394,428 $ (56,882) $ 4,754,205 $ 5,094,812

~~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 Three Months Ended March 31,
		For the Nine Months Ended September 30,
				2021			2020
		2021			2020				As Restated - Note 1
Cash flows from operating activities:	Cash flows from operating activities:							Cash flows from operating activities:
Net income		$	2,563,181		$	389,450
Net income (loss)								Net income (loss)	$	741,655	$	(3,987)
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities							Adjustments to reconcile net income to net cash provided by operating activities
Derivative mark to market	Derivative mark to market	(1,205)			10,022			Derivative mark to market	(503)		8,923
Credit loss (benefit)/expense		(85,484)			2,110,331
Credit loss expense								Credit loss expense	136,209		907,887
Depreciation, amortization and accretion	Depreciation, amortization and accretion	1,262,383			1,711,125			Depreciation, amortization and accretion	477,423		564,878
Originations and purchases of receivables held for sale		(1,171,287)			(1,637,194)

Proceeds from sales of and collections on retail installment contracts held for sale (a)	Proceeds from sales of and collections on retail installment contracts held for sale (a)	1,747,471			545,293			Proceeds from sales of and collections on retail installment contracts held for sale (a)	1,333,954		24,263

Investment losses, net	Investment losses, net	7,057			279,997			Investment losses, net	14,712		63,426

Stock-based compensation	Stock-based compensation	8,989			6,161			Stock-based compensation	5,448		4,038
Deferred tax expense		585,820			142,554
Deferred tax expense/(benefit)								Deferred tax expense/(benefit)	231,187		(4,798)
Net change in:	Net change in:							Net change in:
Revolving personal loans	Revolving personal loans	34,247			(59,096)			Revolving personal loans	34,246		19,012
Other assets	Other assets	135,023			(203,634)			Other assets	80,933		(43,309)
Other liabilities	Other liabilities	45,380			(43,067)			Other liabilities	97,634		(145,217)
Net cash provided by operating activities	Net cash provided by operating activities	5,131,575			3,251,942			Net cash provided by operating activities	3,152,898		1,395,116
Cash flows from investing activities:	Cash flows from investing activities:							Cash flows from investing activities:
Originations and purchases of portfolios on finance receivables held for investment	Originations and purchases of portfolios on finance receivables held for investment	(13,816,075)			(12,782,253)			Originations and purchases of portfolios on finance receivables held for investment	(4,492,802)		(3,939,255)

Collections on finance receivables held for investment	Collections on finance receivables held for investment	11,685,416			9,223,448			Collections on finance receivables held for investment	3,610,444		3,294,442
Proceeds from sales of retail installment contracts held for sale, originated as held for investment (b)	Proceeds from sales of retail installment contracts held for sale, originated as held for investment (b)	2,356,205			803,614			Proceeds from sales of retail installment contracts held for sale, originated as held for investment (b)	1,812,552		—
Leased vehicles purchased	Leased vehicles purchased	(5,896,254)			(4,891,504)			Leased vehicles purchased	(2,172,167)		(2,030,936)
Manufacturer and Dealer incentives								Manufacturer and Dealer incentives	15,354		170,800
Proceeds from sale of leased vehicles	Proceeds from sale of leased vehicles	5,444,161			3,094,294			Proceeds from sale of leased vehicles	1,497,995		941,551
Manufacturer incentives received		73,920			339,717
Change in revolving personal loans, net	Change in revolving personal loans, net	31,121			75,318			Change in revolving personal loans, net	31,121		28,478

Proceeds from repayments and maturities of available-for-sale securities		5,000			—
Purchases of held-to-maturity investment securities		—			(54,584)

Proceeds from repayments and maturities of held-to-maturity securities	Proceeds from repayments and maturities of held-to-maturity securities	33,987			4,203			Proceeds from repayments and maturities of held-to-maturity securities	6,318		—
Purchases of furniture and equipment	Purchases of furniture and equipment	(20,557)			(18,117)			Purchases of furniture and equipment	(3,496)		(7,508)
Sales of furniture and equipment	Sales of furniture and equipment	13,580			3			Sales of furniture and equipment	1,332		1

Net cash used in investing activities		(89,496)			(4,205,861)
Net cash provided by (used in) investing activities								Net cash provided by (used in) investing activities	306,651		(1,542,427)
Cash flows from financing activities:	Cash flows from financing activities:							Cash flows from financing activities:
Proceeds from borrowings and other debt obligations, net of debt issuance costs - $4,731,607 and $11,545,000 from affiliates, respectively		28,769,569			37,972,329
Payments on borrowings and other debt obligations - $(5,931,607) and $(5,995,000) to affiliates, respectively		(31,508,722)			(35,818,793)
Proceeds from borrowings and other debt obligations, net of debt issuance costs - $2,200,000 and $1,835,000 from affiliates, respectively								Proceeds from borrowings and other debt obligations, net of debt issuance costs - $2,200,000 and $1,835,000 from affiliates, respectively	9,081,404		11,374,959
Payments on borrowings and other debt obligations - $(2,500,000) and $(1,835,000) to affiliates, respectively								Payments on borrowings and other debt obligations - $(2,500,000) and $(1,835,000) to affiliates, respectively	(11,687,888)		(10,357,462)

Proceeds from stock option exercises, gross	Proceeds from stock option exercises, gross	801			673			Proceeds from stock option exercises, gross	452		409
Shares repurchased	Shares repurchased	(9,475)			(775,970)			Shares repurchased	(9,474)		(468,466)
Dividends paid	Dividends paid	(269,327)			(212,637)			Dividends paid	(134,656)		(74,624)

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(3,017,154)			1,165,602			Net cash provided by (used in) financing activities	(2,750,162)		474,816

(a)Included in this balance is sales proceeds from Bluestem portfolio sale of ~~$608~~$608 million for loans originated as held for sale.

(b)Included in this balance is sales proceeds from Bluestem portfolio sale of ~~$188~~$188 million for loans originated as held for investment.

SANTANDER CONSUMER USA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited) (Dollars in thousands)


									For the Three Months Ended March 31,
		For the Nine Months Ended September 30,
				2021			2020
		2021			2020				As Restated - Note 1
Net increase (decrease) in cash and cash equivalents and restricted cash	Net increase (decrease) in cash and cash equivalents and restricted cash	2,024,925			211,683			Net increase (decrease) in cash and cash equivalents and restricted cash	709,387		327,505
Cash and cash equivalents and restricted cash— Beginning of year	Cash and cash equivalents and restricted cash— Beginning of year	2,330,147			2,161,087			Cash and cash equivalents and restricted cash— Beginning of year	2,330,147		2,161,087
Cash and cash equivalents and restricted cash— End of year	Cash and cash equivalents and restricted cash— End of year	$	4,355,072		$	2,372,770		Cash and cash equivalents and restricted cash— End of year	$	3,039,534	$	2,488,592
Supplemental cash flow information:	Supplemental cash flow information:							Supplemental cash flow information:
Cash and cash equivalents	Cash and cash equivalents	2,106,405			105,616			Cash and cash equivalents	415,969		501,588
Restricted cash	Restricted cash	2,248,667			2,267,154			Restricted cash	2,623,565		1,987,004
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	4,355,072		$	2,372,770		Total cash, cash equivalents and restricted cash	$	3,039,534	$	2,488,592

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 Accounting Policies

The Company is the holding company for SC Illinois, and its subsidiaries, a specialized consumer finance company focused on vehicle finance and third-party servicing and delivering service to dealers and customers across the full credit spectrum. The Company’s primary business is the indirect origination and servicing of retail installment contracts and leases, principally, through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. Additionally, the Company sells consumer retail installment contracts through flow agreements and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer retail installment contracts. SAF is our primary vehicle financing brand, and is available as a finance option for automotive dealers across the United States.

Since May 2013, under the MPLFA with Stellantis N.V., the Company has operated as ~~Stellantis’s~~Stellantis N.V.’s preferred provider for consumer loans, leases and dealer loans and provides services to Stellantis N.V. customers and dealers under the CCAP 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.

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 other relationships through which it provides other consumer finance products.

As of ~~September 30,~~March 31, 2021, the Company was owned approximately ~~80.2%~~80.3% by SHUSA, a subsidiary of Santander, and approximately ~~19.8%~~19.7% by other shareholders.

Correction of Errors

~~In August~~Subsequent to the issuance of the Company's March 31, 2021, Consolidated Financial Statements, errors were identified in the historical Consolidated Statement of Cash Flows for the three months ended March 31, 2021. Accordingly, the Company has restated the unaudited interim Condensed Consolidated Statements of Cash Flows for three months ended March 31, 2021, to reflect the error corrections.

•During three months ended March 31, 2021, the Company ~~entered into a definitive agreement whereby SHUSA agreed to acquire all~~reported $1,173 million of Originations and purchases of receivables held for salewithin Net Cash Provided by Operating Activities that should have been reported as Originations and purchases of portfolios on finance receivables held for investment within Net Cash Provided by Investing Activities.

•During the three months ended March 31, 2021, the Company reported $82 million as Proceeds from sales of and collections on retail installment contracts held for sale within Net Cash Provided by Operating Activities that should have been reported as Collections on finance receivables held for investment within Net Cash Provided by Investing Activities.

The impact of the ~~outstanding shares~~above two errors on the Company’s Consolidated Statement of Cash Flows for the three months ended March 31, 2021 is as follows:


	Three Months Ended March 31, 2021
	As Reported(1)		Corrections		As Restated
Originations and purchases of receivables held for sale	$	(1,173,287)	$	1,173,287	$	—
Proceeds from sales of and collections on retail installment contracts held for sale	1,415,460		(81,506)		1,333,954
Net cash provided by operating activities	$	2,061,117	$	1,091,781	$	3,152,898

Originations and purchases of portfolios on finance receivables held for investment	$	(3,319,515)	$	(1,173,287)	$	(4,492,802)
Collections on finance receivables held for investment	3,528,938		81,506		3,610,444
Net cash provided by investing activities	$	1,398,432	$	(1,091,781)	$	306,651

(1) - Originally reported amounts included in the Quarterly Report on Form 10-Q for the three-month period ended March 31, 2021 filed on April 29, 2021.

Sale of the common stock of the Company not already owned by SHUSA via an all-cash tender offer. Under the terms of the definitive agreement, a wholly-owned subsidiary of SHUSA commenced a tender offer to acquire all of the outstanding shares of the Company's common stock that SHUSA does not yet own at a price of $41.50 per share in cash. SHUSA agreed to acquire all remaining shares not tendered in the offer through a second- step merger at the same price as in the tender offer. Consummation of the tender offer is subject to various conditions, including regulatory approval of the Board of Governors of the Federal Reserve System and other customary conditions. Upon completion of the transaction, the Company would become a wholly-owned subsidiary of SHUSA.Personal Lending Portfolio

During the first quarter, ~~of 2021,~~ the Company completed the sale of the Bluestem personal lending portfolio to a third party. In addition, the Company executed a forward flow sale agreement with a third party to purchase ~~new advances of~~ all personal lending receivables that the Company purchases from Bluestem through the term of the agreement with Bluestem.

Basis of Presentation

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

These condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to SEC regulations. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature necessary for a fair statement of the Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholder's Equity and Statement of Cash Flow for the interim periods indicated, and contain adequate disclosure to make the information presented not misleading. 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 Annual Report of the Company on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report on Form 10-K").

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and those differences may be material. The most significant estimates include the determination of credit loss allowance, fair value measurements, expected end-of-term lease residual values, and income taxes. These estimates, although based on actual historical trends and modeling, may show significant variances over time.

Business Segment Information

The Company has 1 reportable segment, Consumer Finance, which includes the Company’s vehicle financial products and services, including retail installment contracts, vehicle leases, and financial products and services related to recreational vehicles and marine vehicles.

Accounting Policies

There have been no changes in the Company's accounting policies from those disclosed in Part II, Item 8 - Financial Statements and Supplementary Data in the 2020 Annual Report on Form 10-K.

2. Finance Receivables

Held for Investment

Finance receivables held for investment, net is comprised of the following at ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Retail installment contracts, net (a)	Retail installment contracts, net (a)	$	27,461,064	$	26,975,368	Retail installment contracts, net (a)	$	26,056,708	$	26,975,368
Purchased receivables - credit deteriorated	Purchased receivables - credit deteriorated	1,440		6,197		Purchased receivables - credit deteriorated	4,655		6,197

Finance lease receivables (Note 4)	Finance lease receivables (Note 4)	21,237		22,440		Finance lease receivables (Note 4)	23,723		22,440
Finance receivables held for investment, net	Finance receivables held for investment, net	$	27,483,741	$	27,004,005	Finance receivables held for investment, net	$	26,085,086	$	27,004,005

(a) The Company has elected the fair value option for certain retail installment contracts reported in finance receivables held for investment, net.

As of ~~September 30,~~March 31, 2021 and December 31, 2020, ~~$6,170~~$3,965 and $5,614 of loans were recorded at fair value, respectively (Note 10).

The Company’s held for investment portfolio of retail installment contracts is comprised of the following at ~~September 30,~~March 31, 2021 and December 31, 2020:
September 30, 2021
Retail Installment Contracts
Non-TDR TDR
Unpaid principal balance $ 28,779,433 $ 3,952,344
ACL (4,398,303) (1,297,841)
Discount/(premium) (net of subvention and participation) 326,675 (3,601)
Capitalized origination costs and fees 98,549 3,808
Net carrying balance $ 24,806,354 $ 2,654,710
ACL as a percentage of unpaid principal balance 15.3 % 32.8 %
ACL and discount as a percentage of unpaid principal balance 14.1 % 32.9 %


	March 31, 2021
	Retail Installment Contracts
	Non-TDR			TDR
Unpaid principal balance	$	27,442,853		$	4,357,438
ACL	(4,662,633)			(1,338,708)

Discount (net of subvention and participation)	166,786			(6,839)
Capitalized origination costs and fees	92,954			4,857
Net carrying balance	$	23,039,960		$	3,016,748
ACL as a percentage of unpaid principal balance	17.0		%	30.7		%
ACL and discount as a percentage of unpaid principal balance	16.4		%	30.9		%


	December 31, 2020
	Retail Installment Contracts
	Non-TDR			TDR
Unpaid principal balance	$	28,977,299		$	3,945,040
ACL	(4,792,464)			(1,314,170)

Discount (net of subvention and participation)	66,373			(8,389)
Capitalized origination costs and fees	97,638			4,041
Net carrying balance	$	24,348,846		$	2,626,522
ACL as a percentage of unpaid principal balance	16.5		%	33.3		%
ACL and discount as a percentage of unpaid principal balance	16.3		%	33.5		%

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 7). Most of the borrowers on the Company’s retail installment contracts held for investment are retail consumers; however, ~~$973,205~~$902,246 and $864,680 of the unpaid principal balance represented fleet contracts with commercial borrowers as of ~~September 30,~~March 31, 2021 and December 31, 2020, respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, the Company originated (including through the SBNA originations program) ~~$11,125,634~~$3,659,282 and ~~$11,145,890,~~$2,621,828, respectively, in CCAP loans which represented ~~53%~~57% and ~~61%~~53%, respectively, of the total retail installment contract originations (including the SBNA originations program).

As of ~~September 30,~~March 31, 2021, borrowers on the Company’s retail installment contracts held for investment are located in Texas ~~(17%~~(16%), Florida (11%), California (8%), Georgia ~~(5%~~(6%) and other states each individually representing less than 5% of the Company’s total portfolio.

Purchased receivables

During the three and nine months ended September 30, 2021 and 2020, the company purchased financial receivables from third party lenders for $67,018, and zero, respectively. The unpaid principal balance of these loans as of the acquisition date was $112,061 and zero, respectively.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company did not acquire any vehicle loan portfolios from third party lenders.

During the three months ended March 31, 2021 and 2020, the Company recognized certain retail installment contracts with an unpaid principal balance of ~~$42,264, $42,264,~~ zero and $76,878, respectively, ~~previously~~ held by non-consolidated securitization Trusts, under optional clean-up 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 the re-recognition date), for which it was probable that not all contractually required payments would be collected (Note 10).

Held for Sale

The carrying value of the Company’s finance receivables held for sale, net is comprised of the following at ~~September 30,~~March 31, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Retail installment contracts acquired individually $ 359,561 $ 674,048
Personal loans (a) — 893,479


	March 31, 2021		December 31, 2020
Retail installment contracts acquired individually	$	—	$	674,048

Personal loans (a)	—		893,479

(a) On March 31, 2021, the Company sold the personal lending portfolio. Refer to Note 1 – “Description of Business, Basis of Presentation, and Accounting Principles” to these Condensed Consolidated Financial Statements for more information.

Sales of retail installment contracts, personal loans to third parties ~~(unpaid principal balance),~~ and proceeds from sales of charged-off assets for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 were as follows:


		Three Months Ended				Nine Months Ended				Three Months Ended

		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020				March 31, 2021		March 31, 2020
Sales of retail installment contracts to third parties	Sales of retail installment contracts to third parties	$	277,898	$	636,301	$	2,968,467	$	1,148,587		Sales of retail installment contracts to third parties	$	2,380,785	$	—
Sales of Personal Loans to third parties	Sales of Personal Loans to third parties	—		—		1,253,746		—			Sales of Personal Loans to third parties	$	1,253,746	0

Proceeds from sales of charged-off assets to third parties	Proceeds from sales of charged-off assets to third parties	—		9,144		13,901		30,019			Proceeds from sales of charged-off assets to third parties	$	—	$	20,875

3. Allowance for Credit Loss and Credit Quality

Allowance for Credit Loss

The Company maintains an ACL on the retail installment contracts held for investment, excluding those loans measured at fair value in accordance with applicable accounting standards. The Company maintains an expected ACL for receivables from dealers based on risk ratings and individually evaluates loans for specific impairment as necessary. As of March 31, 2021, there is no ACL on receivables from dealers as the portfolio has a zero balance. As of March 31, 2020, the ACL for receivables from dealers was comprised entirely of general allowance as none of these receivables have been determined to be individually impaired. The Company estimates losses on the finance lease receivable portfolio based on delinquency status, loss experience to date, future expectation of losses as well as various economic factors.

Retail installment contracts

The activity in the ACL for the retail installment contracts for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 was as follows:

Three Months Ended
September 30, 2021 September 30, 2020
Retail Installment Contracts
Non-TDR TDR Non-TDR TDR
Balance — beginning of period $ 4,299,670 $ 1,514,994 $ 4,818,187 $ 1,037,628
Credit loss expense (benefit) 188,195 (144,772) 24,841 314,075
Charge-offs (427,659) (206,111) (334,938) (200,352)
Recoveries 338,097 133,730 392,042 97,171
Balance — end of period $ 4,398,303 $ 1,297,841 $ 4,900,132 $ 1,248,522

Nine Months Ended
September 30, 2021 September 30, 2020
Retail Installment Contracts
Non-TDR TDR Non-TDR TDR
Balance — beginning of period $ 4,792,464 $ 1,314,170 $ 2,123,878 $ 914,718
Day 1 - Adjustment to allowance for adoption of CECL standard — — 2,030,473 71,833
Credit loss expense (benefit) (252,963) 169,268 1,526,545 581,344
Charge-offs (a) (1,356,482) (599,083) (1,955,706) (617,536)
Recoveries 1,215,284 413,486 1,174,942 298,163
Balance — end of period $ 4,398,303 $ 1,297,841 $ 4,900,132 $ 1,248,522



	Three Months Ended
	March 31, 2021				March 31, 2020
	Retail Installment Contracts
	Non-TDR		TDR		Non-TDR		TDR

Balance — beginning of period	$	4,792,464	$	1,314,170	$	2,123,878	$	914,718
Day 1 - Adjustment to allowance for adoption of CECL standard	—		—		2,030,473		71,833
Credit loss expense	40,059		98,722		757,193		150,850
Charge-offs (a)	(586,793)		(202,461)		(899,550)		(289,567)
Recoveries	416,903		128,277		470,669		125,402

Balance — end of period	$	4,662,633	$	1,338,708	$	4,482,663	$	973,236

(a) ~~Charge-offs decreased significantly, primarily driven by macro-economic improvements. Additionally,~~ Charge-offs for retail installment contracts includes partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional ACL on these loans.

The credit risk in the Company’s loan portfolios is driven by credit and collateral quality, and is affected by ~~borrower-specific~~borrower-specific and economy-wide factors. In general, there is an inverse relationship between credit quality of loans and projections of impairment losses so that loans with better credit quality require a lower expected loss. The Company manages this risk through its underwriting, pricing strategies, credit policy standards, and servicing guidelines and practices, as well as ~~through~~ the application of geographic and other concentration limits.

The Company estimates current expected credit losses based on prospective information as well as account level models based on historical data. Unemployment, HPI, and used vehicle index growth rates, along with loan level characteristics, are the key inputs used in the models for prediction of the likelihood that the borrower will default in

the forecasted period (the probability of default). The used vehicle index is also used to estimate the loss in the event of default.

The Company has determined the reasonable and supportable period to be three years at which time economic forecasts generally tend to revert to historical averages. The Company utilizes qualitative factors to capture any additional risks that may not be captured in either the economic forecasts or in the historical data, including consideration of the current levels of delinquency and used vehicle prices.

The Company generally uses a third-party vendor's consensus baseline macroeconomic scenario for the quantitative estimate and additional positive and negative macroeconomic scenarios to make a qualitative adjustment for macroeconomic uncertainty, and considers adjustments to macroeconomic inputs and outputs based on market volatility. The scenarios used are periodically updated over a reasonable and supportable time horizon with weightings assigned by management and approved through established committee governance.

The Company’s ACL decreased ~~$119 million and $410 million~~$0.1 billion for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021. ~~The~~For the three months ended March 31, 2021, the decrease was primarily due to anvolume and improved macroeconomic ~~outlook as well as improved credit quality and performance.~~outlook.

Other portfolios

The ACL for the period end and its activity for the finance lease receivable portfolio and purchased receivable portfolio-credit deteriorated, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, was insignificant.

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. 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 loan. When an account is deferred, the loan is returned to accrual status during the deferral period and accrued interest related to the loan is evaluated for collectability.

The Company considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date. In each case, the period of delinquency is based on the number of days payments are contractually past due.

A summary of delinquencies as of ~~September 30,~~March 31, 2021, and December 31, 2020 is as follows:


		September 30, 2021									March 31, 2021
		Finance Receivables Held for Investment									Finance Receivables Held for Investment
		Retail Installment Contract Loans		Purchased Receivables Portfolios - credit deteriorated		Total		Percent			Retail Installment Contract Loans		Purchased Receivables Portfolios - credit deteriorated		Total		Percent

Amortized cost, 30-59 days past due	Amortized cost, 30-59 days past due	$	2,253,907	$	401	$	2,254,308	6.8	%	Amortized cost, 30-59 days past due	$	1,409,974	$	599	$	1,410,573	4.4	%
Amortized cost over 59 days	Amortized cost over 59 days	1,106,673		400		1,107,073		3.3	%	Amortized cost over 59 days	698,620		385		699,005		2.2	%
Total delinquent balance at amortized cost (a)	Total delinquent balance at amortized cost (a)	$	3,360,580	$	801	$	3,361,381	10.1	%	Total delinquent balance at amortized cost (a)	$	2,108,594	$	984	$	2,109,578	6.6	%

(a) The amount of accrued interest excluded from the disclosed amortized cost table is ~~$63,205.~~$49,165.


	December 31, 2020
	Finance Receivables Held for Investment
	Retail Installment Contract Loans		Purchased Receivables Portfolios - credit impaired		Total		Percent

Amortized cost, 30-59 days past due	$	1,971,766	$	687	$	1,972,453	6.0	%
Amortized cost over 59 days	1,038,869		441		1,039,310		3.1	%
Total delinquent balance at amortized cost (a)	$	3,010,635	$	1,128	$	3,011,763	9.1	%

(a) The amount of accrued interest excluded from the disclosed amortized cost table is $73,794.

The unpaid principal balance on revolving personal loans 90 days past due and still accruing totaled zero and $78,880 as of March 31, 2021 and December 31, 2020, respectively. On March 31, 2021, the Company sold the personal lending portfolio. Refer to Note 1 – “Description of Business, Basis of Presentation, and Accounting Principles” to these Condensed Consolidated Financial Statements for more information. ~~The unpaid principal balance on revolving personal loans 90 days past due and still accruing totaled $78,880 as of December 31, 2020.~~

Non-Accrual Loans for Retail Installment Contracts

The amortized cost basis of financial instruments that are either non-accrual with related expected credit loss or non-accrual without related expected credit loss for retail installment contracts is as follows:


		September 30, 2021									March 31, 2021
		Non-accrual loans		Non-accrual loans with no allowance (a)		Interest income recognized on nonaccrual loans (YTD)		Non-accrual loans as a percent of total amortized cost			Non-accrual loans		Non-accrual loans with no allowance (a)		Interest income recognized on nonaccrual loans (YTD)		Non-accrual loans as a percent of total amortized cost
Non-TDR	Non-TDR	$	818,292	$	157,314	$	46,445	2.5	%	Non-TDR	$	544,228	$	133,628	$	16,959	1.7	%
TDR	TDR	391,834		47,281		26,576		1.2	%	TDR	260,408		41,774		9,212		0.8	%
Total non-accrual loans	Total non-accrual loans	$	1,210,126	$	204,595	$	73,021	3.7	%	Total non-accrual loans	$	804,636	$	175,402	$	26,171	2.5	%

(a) These represent loans for which a bankruptcy notice was received, and have been partially write-down to the collateral value less estimated costs to sell. Accordingly, there is no additional ACL on these loans.


	December 31, 2020
	Non-accrual loans		Non-accrual loans with no allowance (a)		Interest income recognized on nonaccrual loans (YTD)		Non-accrual loans as a percent of total amortized cost
Non-TDR	$	748,026	$	145,287	$	72,926	2.3	%
TDR	385,021		46,498		35,620		1.2	%
Total nonaccrual loans	$	1,133,047	$	191,785	$	108,546	3.5	%

(a) These represent loans for which a bankruptcy notice was received and that have been partially written down to the collateral value less estimated costs to sell. Accordingly, there is no additional ACL on these loans.

Delinquent balances and nonaccrual balances are lower as of ~~December~~March 31, ~~2020~~2021 primarily due to government stimulus payments and tax refunds provided to ~~customers related to COVID-19 pandemic.~~customers.

Credit Quality Indicators

FICO® Distribution (determined at origination) — Amortized Cost Basis (in millions) by Origination Year for Retail Installment Contacts


																Total																		Total
September 30,		2021		2020		2019		2018		2017		2016		Prior		Amount		%
March 31, 2021																			March 31, 2021	2021		2020		2019		2018		2017		2016		Prior		Amount		%

No-FICO®s	No-FICO®s	1,603		1,173		738		337		266		112		50		4,279		12.9%	No-FICO®s	568		1,564		997		458		411		191		107		4,296		13.4%
<540	<540	1,573		1,306		948		608		283		151		125		4,994		15.1%	<540	523		1,649		1,226		806		391		221		211		5,027		15.7%
540-599	540-599	4,364		3,038		2,030		1,134		413		234		156		11,369		34.3%	540-599	1,384		3,923		2,685		1,526		578		351		272		10,719		33.4%
600-639	600-639	2,828		1,831		1,182		625		201		123		65		6,855		20.7%	600-639	914		2,424		1,590		853		283		185		124		6,373		19.9%
>=640 (a)	>=640 (a)	2,345		1,655		853		506		151		105		45		5,660		17.0%	>=640 (a)	925		2,331		1,202		707		223		154		101		5,643		17.6%
Total (b)	Total (b)	$	12,713	$	9,003	$	5,751	$	3,210	$	1,314	$	725	$	441	$	33,157	100.00%	Total (b)	$	4,314	$	11,891	$	7,700	$	4,350	$	1,886	$	1,102	$	815	$	32,058	100.00%

(a) Beginning in 2021, loans with FICO score of 640 are disclosed in the >=640 category.

(b) The amount of accrued interest excluded from the disclosed amortized cost table is ~~$323~~$346 million.


																Total																		Total
December 31,		2020		2019		2018		2017		2016		2015		Prior		Amount		%
December 31, 2020																			December 31, 2020	2020		2019		2018		2017		2016		2015		Prior		Amount		%

No-FICO®s	No-FICO®s	1,760		1,151		530		501		247		128		26		4,343		13.1%	No-FICO®s	1,760		1,151		530		501		247		128		26		4,343		13.1%
<540	<540	1,789		1,370		913		454		263		186		90		5,065		15.3%	<540	1,789		1,370		913		454		263		186		90		5,065		15.3%
540-599	540-599	4,269		3,005		1,736		673		423		264		96		10,466		31.7%	540-599	4,269		3,005		1,736		673		423		264		96		10,466		31.7%
600-639	600-639	2,759		1,838		990		335		230		126		47		6,325		19.1%	600-639	2,759		1,838		990		335		230		126		47		6,325		19.1%
>640 (a)	>640 (a)	4,040		1,411		810		265		200		124		33		6,883		20.8%	>640 (a)	4,040		1,411		810		265		200		124		33		6,883		20.8%
Total (b)	Total (b)	$	14,617	$	8,775	$	4,979	$	2,228	$	1,363	$	828	$	292	$	33,082	100.0%	Total (b)	$	14,617	$	8,775	$	4,979	$	2,228	$	1,363	$	828	$	292	$	33,082	100.0%

(a) As of December 31, 2020, loans with FICO score of 640 were included in the 600-639 category.

(b) The amount of accrued interest excluded from the disclosed amortized cost table is $416 million.

Troubled Debt Restructurings

In certain circumstances, the Company modifies the terms of its finance receivables to ~~financially~~ 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. The purchased receivables portfolio - credit deteriorated, operating and finance leases, and loans held for sale are excluded from the scope of the applicable guidance. The Company’s TDR balance as of ~~September 30,~~March 31, 2021 and December 31, 2020 primarily consisted of loans that had been deferred or modified to receive a temporary reduction in monthly payment. As of ~~September 30,~~March 31, 2021 and December 31, 2020, 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

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.

A loan that has been classified as a TDR remains so until the loan is liquidated through payoff or charge-off. 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, if not expected to be collected.

The table below presents the Company’s amortized cost of TDRs as of ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020

		Retail Installment Contracts					Retail Installment Contracts
Amortized Cost (including accrued interest) (a)	Amortized Cost (including accrued interest) (a)	$	3,980,920	$	4,011,780	Amortized Cost (including accrued interest) (a)	$	4,430,512	$	4,011,780
Impairment	Impairment	(1,297,841)		(1,314,170)		Impairment	(1,338,708)		(1,314,170)
Amortized cost including accrued interest, net of impairment	Amortized cost including accrued interest, net of impairment	$	2,683,079	$	2,697,610	Amortized cost including accrued interest, net of impairment	$	3,091,804	$	2,697,610

(a) As of ~~September 30,~~March 31, 2021, this balance excludes ~~$56.2~~$62.8 million of collateral-dependent bankruptcy TDRs that have been written down by ~~$8.9~~$21.1 million to fair value less cost to sell. As of December 31, 2020, this balance excludes $67.9 million of collateral-dependent bankruptcy TDRs that have been written down by $21.4 million to fair value less cost to sell.

A summary of the amortized cost of the Company’s delinquent TDRs at ~~September 30,~~March 31, 2021 and December 31, 2020 is as follows:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020

		Retail Installment Contracts					Retail Installment Contracts

30-59 days past due	30-59 days past due	$	744,637	$	637,560	30-59 days past due	$	548,849	$	637,560
Delinquent balance over 59 days	Delinquent balance over 59 days	381,840		344,776		Delinquent balance over 59 days	247,638		344,776
Total delinquent TDRs	Total delinquent TDRs	$	1,126,477	$	982,336	Total delinquent TDRs	$	796,487	$	982,336

Average amortized cost and interest income recognized on TDR loans are as follows:
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Retail Installment Contracts Retail Installment Contracts
Average amortized cost (including accrued interest) $ 4,142,089 $ 3,960,119 $ 4,203,685 $ 3,802,823
Interest income recognized 212,073 165,637 635,188 457,642



	Three Months Ended
		March 31, 2021		March 31, 2020
	Retail Installment Contracts
Average amortized cost (including accrued interest)		$	4,265,282	$	3,687,797
Interest income recognized		209,281		156,238

The following table summarizes the financial effects, excluding impacts related to credit loss allowance and impairment, of TDRs that occurred for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020:


		Three Months Ended				Nine Months Ended				Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020				March 31, 2021		March 31, 2020
		Retail Installment Contracts				Retail Installment Contracts				Retail Installment Contracts
Amortized cost (including accrued interest) before TDR	Amortized cost (including accrued interest) before TDR	$	219,898	$	317,455	$	1,326,077	$	1,399,813		Amortized cost (including accrued interest) before TDR	$	902,144	$	177,215
Amortized cost (including accrued interest) after TDR (a)	Amortized cost (including accrued interest) after TDR (a)	220,679		319,027		1,333,257		1,417,480			Amortized cost (including accrued interest) after TDR (a)	907,907		177,604
Number of contracts (not in thousands)	Number of contracts (not in thousands)	12,063		14,620		67,354		69,786			Number of contracts (not in thousands)	44,191		9,826

(a) excluding collateral-dependent bankruptcy TDRs

A TDR is considered to be in default at charge-off. For retail installment contracts, charge-off is at the earlier of the date of repossession or 120 days past due. Loan restructurings accounted for as TDRs within the previous twelve months that subsequently defaulted during the three ~~and nine~~ months ended ~~September 30, 2021 and~~March 31, 2021and 2020 are summarized in the following table:


		Three Months Ended				Nine Months Ended				Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020				March 31, 2021		March 31, 2020
		Retail Installment Contracts				Retail Installment Contracts				Retail Installment Contracts
Amortized cost (including accrued interest) in TDRs that subsequently defaulted (a)`		$	91,260	$	83,002	$	283,914	$	183,871
Amortized cost (including accrued interest) in TDRs that subsequently defaulted (a)											Amortized cost (including accrued interest) in TDRs that subsequently defaulted (a)	$	110,179	$	69,335
Number of contracts (not in thousands)	Number of contracts (not in thousands)	4,724		4,379		14,496		10,467			Number of contracts (not in thousands)	5,637		4,085

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

4. Leases (SC as Lessor)

The Company originates operating and finance 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 finance leases are included in finance receivables held for investment, net.

~~For modified or extended leases, income~~Income continues to accrue during the extension period and remaining lease payments are recorded on a straight-line basis over the modified lease term.

Beginning in the second quarter of 2021, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of vehicle leases, primarily from Stellantis dealers, that are funded and owned by SBNA. In addition, the Company has agreed to perform the servicing for any leases originated on SBNA's behalf. Refer to Note 15 – “Related Party Transactions" for additional information.

Operating Leases

Leased vehicles, net, which is comprised of leases originated under the MPLFA, consisted of the following as of ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Leased vehicles	Leased vehicles	$	20,032,832	$	22,056,063	Leased vehicles	$	21,907,106	$	22,056,063
Less: accumulated depreciation	Less: accumulated depreciation	(3,920,416)		(4,796,595)		Less: accumulated depreciation	(4,633,289)		(4,796,595)
Depreciated net capitalized cost	Depreciated net capitalized cost	16,112,416		17,259,468		Depreciated net capitalized cost	17,273,817		17,259,468
Manufacturer subvention payments, net of accretion	Manufacturer subvention payments, net of accretion	(700,783)		(934,381)		Manufacturer subvention payments, net of accretion	(867,231)		(934,381)
Origination fees and other costs	Origination fees and other costs	117,977		66,020		Origination fees and other costs	71,638		66,020
Net book value	Net book value	$	15,529,610	$	16,391,107	Net book value	$	16,478,224	$	16,391,107

The following summarizes the maturity analysis of lease payments due to the Company as lessor under operating leases as of ~~September 30,~~March 31, 2021:



Remainder of 2021	Remainder of 2021	$	910,739	Remainder of 2021	$	2,164,161
2022	2022	2,101,818		2022	1,678,058
2023	2023	1,363,807		2023	878,677
2024	2024	286,598		2024	72,105
2025	2025	25,093		2025	234
Thereafter	Thereafter	1,295		Thereafter	—
Total	Total	$	4,689,350	Total	$	4,793,235

Finance Leases

Certain leases originated by the Company are accounted for as direct financing leases, as the contractual residual values are nominal amounts. Finance lease receivables, net consisted of the following as of ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Gross investment in finance leases	Gross investment in finance leases	$	33,498	$	34,461	Gross investment in finance leases	$	35,745	$	34,461
Origination fees and other	Origination fees and other	283		289		Origination fees and other	298		289
Less: unearned income	Less: unearned income	(8,990)		(8,311)		Less: unearned income	(8,546)		(8,311)
Net investment in finance leases before allowance	Net investment in finance leases before allowance	24,791		26,439		Net investment in finance leases before allowance	27,497		26,439
Less: allowance for lease losses(a)	Less: allowance for lease losses(a)	(3,554)		(3,999)		Less: allowance for lease losses(a)	(3,774)		(3,999)
Net investment in finance leases	Net investment in finance leases	$	21,237	$	22,440	Net investment in finance leases	$	23,723	$	22,440

(a) The impact of day 1 - Adjustment to allowance for adoption of CECL standard was insignificant.

The following summarizes the maturity analysis of lease payments due to the Company, as lessor, under finance leases as of ~~September 30,~~March 31, 2021:

Remainder of 2021 $ 2,688
2022 10,275
2023 8,547
2024 6,509
2025 4,054
Thereafter 1,425
Total $ 33,498



Remainder of 2021	$	8,338
2022	9,957
2023	8,188
2024	5,839
2025	3,153
Thereafter	270
Total	$	35,745

5. Other Assets

Other assets were comprised as follows:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Vehicles (a)	Vehicles (a)	$	269,627	$	311,557	Vehicles (a)	$	371,110	$	311,557
Manufacturer subvention payments receivable (b)	Manufacturer subvention payments receivable (b)	29,361		57,996		Manufacturer subvention payments receivable (b)	43,744		57,996
Upfront fee (b)	Upfront fee (b)	47,015		69,286		Upfront fee (b)	61,862		69,286
Derivative assets at fair value (c)	Derivative assets at fair value (c)	13,314		4,740		Derivative assets at fair value (c)	16,548		4,740
Derivative - collateral	Derivative - collateral	23,037		92,132		Derivative - collateral	84,002		92,132
Operating leases (Right-of-use-assets)	Operating leases (Right-of-use-assets)	61,590		46,441		Operating leases (Right-of-use-assets)	50,468		46,441
Available-for-sale debt securities	Available-for-sale debt securities	90,688		95,654		Available-for-sale debt securities	95,689		95,654
Held-to-maturity debt securities (d)	Held-to-maturity debt securities (d)	101,874		44,875		Held-to-maturity debt securities (d)	129,537		44,875
Equity securities not held for trading	Equity securities not held for trading	2,671		1,380		Equity securities not held for trading	3,725		1,380
Prepaids	Prepaids	35,152		45,667		Prepaids	54,282		45,667
Accounts receivable	Accounts receivable	28,737		34,607		Accounts receivable	26,167		34,607
Federal and State tax receivable	Federal and State tax receivable	76,113		99,666		Federal and State tax receivable	94,143		99,666
Other	Other	32,418		68,725		Other	48,142		68,725
Other assets	Other assets	$	811,597	$	972,726	Other assets	$	1,079,419	$	972,726

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

(b)These amounts relate to the MPLFA. The Company paid a $150,000 upfront fee upon the May 2013 inception of the MPLFA. The fee is being amortized into finance and other interest income over a ten-year term. In addition, in June 2019, in connection with the execution of an amendment to the MPLFA, the Company paid a $60,000 upfront fee to ~~Stellantis.~~Stellantis N.V.. This fee is being amortized into finance and other interest income over the remaining term of the MPLFA.

(c)Derivative assets at fair value represent the gross amount of derivatives presented in the condensed consolidated financial statements. Refer to Note 9 - "Derivative Financial Instruments" to these Condensed Consolidated Financial Statements for the detail of these amounts.

(d)Held-to-maturity debt securities includes accrued interest as of ~~September 30,~~March 31, 2021.

Operating Leases (SC as Lessee)

The Company has entered into various operating leases, primarily for office space. Operating leases are included within other assets as operating lease ROU assets and other liabilities within our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Most of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one year to 15 years or more. The exercise of lease renewal options is at our sole discretion. The Company does not include any of the renewal options in the lease term as it is not reasonably certain that these options will be exercised.

Supplemental information relating to these operating leases is as follows:


		September 30, 2021			December 31, 2020				March 31, 2021
Operating leases-right of use assets	Operating leases-right of use assets	$	61,590		$	46,441		Operating leases-right of use assets	$	50,468
Other liabilities	Other liabilities	77,854			64,927			Other liabilities	68,187
Weighted average lease term	Weighted average lease term	6.2			5.5			Weighted average lease term	4.9
Weighted average discount rate	Weighted average discount rate	2.7		%	3.4		%	Weighted average discount rate	3.2		%

Lease expense incurred totaled ~~$3,084~~$3,267 and ~~$3,479~~$3,562 for the three months ended ~~September 30,~~March 31, 2021 and ~~2020, respectively, and $9,577 and $10,586 for the nine months ended September 30, 2021 and~~ 2020, respectively, and is included within “other operating costs” in the income statement. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a ~~straight-line~~straight-line basis over the lease term. Cash paid for amounts included in the measurement of operating lease liabilities was ~~$12,863 and $12,947~~$4,372 during the ~~nine~~three months ended ~~September 30, 2021 and~~March 31, 2021. ~~2020, respectively~~.

The maturity of lease liabilities at ~~September 30,~~March 31, 2021 are as follows:


		September 30, 2021			March 31, 2021
2021	2021	$	4,078	2021	$	12,547
2022	2022	17,409		2022	16,215
2023	2023	14,343		2023	12,761
2024	2024	14,313		2024	12,701
2025	2025	14,397		2025	12,765
Thereafter	Thereafter	18,029		Thereafter	6,926
Total	Total	$	82,569	Total	$	73,915
Less: Interest	Less: Interest	(4,715)		Less: Interest	(5,728)
Present value of lease liabilities	Present value of lease liabilities	$	77,854	Present value of lease liabilities	$	68,187

Available-for-sale and Held-to-maturity debt securities

Debt securities expected to be held for an indefinite period of time are classified as AFS and are carried at fair value, with temporary unrealized gains and losses reported as a component of accumulated other comprehensive income within stockholder's equity, net of estimated income taxes. ~~These~~All of these securities are used to satisfy collateral requirements for our derivative financial instruments.

Debt securities that the Company has the positive intent and ability to hold until maturity are classified as HTM securities. HTM securities are reported at cost and adjusted for payments, charge-offs, amortization of premium and accretion of discount. ~~These securities are used to meet risk retention requirements under regulatory rules.~~

Realized gains and losses on sales of investment securities are recognized on the trade date and are determined using the specific identification method and are included in earnings within Investment gain (losses) on sale of securities. Unamortized premiums and discounts are recognized in interest income over the estimated life of the security using the interest method.

The following tables present the amortized cost, gross unrealized gains and losses and approximate fair values of debt securities available-for-sale and held-to-maturity debt ~~securities:~~securities as of March 31, 2021:


		September 30, 2021									March 31, 2021
		Amortized cost (before unrealized gains / losses)		Gross Unrealized gain		Gross Unrealized loss		Fair value			Amortized cost (before unrealized gains / losses)		Gross Unrealized gain		Gross Unrealized loss		Fair value
Available-for-sale debt securities (US Treasury securities)	Available-for-sale debt securities (US Treasury securities)	$	89,437	$	1,251	$	—	$	90,688	Available-for-sale debt securities (US Treasury securities)	$	93,535	$	2,154	$	—	$	95,689
Held-to-maturity debt securities (Asset-Backed Notes)	Held-to-maturity debt securities (Asset-Backed Notes)	$	101,815	$	634	$	—	$	102,449	Held-to-maturity debt securities (Asset-Backed Notes)	$	129,484	$	697	$	—	$	130,181

Contractual Maturities

The contractual maturities of available-for-sale and held-to-maturity debt instruments are summarized in the following table:


		September 30, 2021									March 31, 2021
		Available-for-sale debt securities				Held-to-maturity debt securities					Available-for-sale debt securities				Held-to-maturity debt securities
		Amortized cost		Fair value		Amortized cost		Fair value			Amortized cost		Fair value		Amortized cost		Fair value
Due within one year	Due within one year	$	66,924	$	67,650	$	—	$	—	Due within one year	$	39,210	$	39,836	$	3,134	$	3,134
Due after one year but within 5 years	Due after one year but within 5 years	22,513		23,038		48,200		48,491		Due after one year but within 5 years	54,325		55,853		53,703		53,967
Due after 5 year but within 10 years	Due after 5 year but within 10 years	—		—		53,615		53,958		Due after 5 year but within 10 years	—		—		72,647		73,080
Total	Total	$	89,437	$	90,688	$	101,815	$	102,449	Total	$	93,535	$	95,689	$	129,484	$	130,181

There wwe~~ere~~re no transfers ofof securities between available-for-sale and held-to-maturity ~~periods~~for the three months ended ~~September 30,~~March 31, 2021 ~~or December 31, 2020.~~

The Company did not record an allowance for credit-related losses on available-for-sale and held-to-maturity securities at ~~September 30,~~March 31, 2021 or December 31, 2020. As discussed in Part II, Item 8 – Financial Statements and Supplementary Data (Note 1) in the 2020 Annual Report on Form 10-K, ~~there is no reserve for~~ securities for which management has an expectation that nonpayment of the amortized cost basis is ~~zero.~~zero, do not have a reserve.

Other Investments

Other investments includes equity securities not held for ~~trading. The Company generally retains~~trading as 5% of the ~~investments created in its~~certificate related to off-balance sheet ~~securitization to meet regulatory risk retention requirements.~~securitizations. Equity securities are measured at fair value as of ~~September 30,~~March 31, 2021 for ~~$2,671,~~$3,725, with changes in fair value recognized in net income.

6. Variable Interest Entities

The Company transfers retail installment contracts and 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 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 Part II, Item 8 – Financial Statements and Supplementary Data (Note 7) in the 2020 Annual Report on Form 10-K.

On-balance sheet variable interest entities

The assets of consolidated 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, 2021 December 31, 2020
Assets
Restricted cash $ 1,682,654 $ 1,737,021
Finance receivables held for sale, net 113,313 581,938
Finance receivables held for investment, net 21,785,308 22,572,549
Leased vehicles, net 15,529,610 16,391,107
Various other assets 706,130 791,306
Total assets $ 39,817,015 $ 42,073,921
Liabilities
Notes payable $ 30,632,558 $ 31,700,709
Various other liabilities 107,743 84,922
Total liabilities $ 30,740,301 $ 31,785,631

follows:



	March 31, 2021		December 31, 2020
Assets
Restricted cash	$	2,040,255	$	1,737,021
Finance receivables held for sale, net	—		581,938
Finance receivables held for investment, net	22,335,539		22,572,549
Leased vehicles, net	16,478,224		16,391,107
Various other assets	842,105		791,306
Total assets	$	41,696,123	$	42,073,921
Liabilities
Notes payable	$	29,670,906	$	31,700,709
Various other liabilities	55,669		84,922
Total liabilities	$	29,726,575	$	31,785,631

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 GAAP.

The Company retains servicing rights 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,~~March 31, 2021 and December 31, 2020, the Company was servicing $~~26,079,950~~27,284,782 and $27,658,182, respectively, of gross retail installment contracts that had 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, 2021 and 2020, is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended

		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2021		March 31, 2020

Assets securitized	Assets securitized	$	7,095,782	$	5,282,901	$	18,457,441	$	15,845,707	Assets securitized	$	4,123,051	$	6,675,730

Net proceeds from new securitizations (a)	Net proceeds from new securitizations (a)	$	6,591,786	$	4,662,211	$	16,168,394	$	11,470,857	Net proceeds from new securitizations (a)	$	3,586,124	$	3,876,529
Net proceeds from retained bonds	Net proceeds from retained bonds	—		1,293		195,967		57,286		Net proceeds from retained bonds	63,781		54,467
Cash received for servicing fees (b)	Cash received for servicing fees (b)	228,194		242,245		686,789		735,533		Cash received for servicing fees (b)	228,188		246,743
Net distributions from Trusts (b)	Net distributions from Trusts (b)	1,391,970		1,173,276		4,435,605		2,730,657		Net distributions from Trusts (b)	1,140,377		866,936
Total cash received from Trusts	Total cash received from Trusts	$	8,211,950	$	6,079,025	$	21,486,755	$	14,994,333	Total cash received from Trusts	$	5,018,470	$	5,044,675

(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 ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, the Company sold $1,891,278 and ~~$1,148,587~~zero respectively, of gross retail installment contracts to third party investors in off-balance sheet securitizations for a gain of $7,233 and ~~a loss of $40,553,~~zero, respectively. ~~Gains and losses are~~The gains were recorded in investment gains, net, in the accompanying condensed consolidated statements of income.

As of ~~September 30,~~March 31, 2021 and December 31, 2020, the Company was servicing ~~$2,754,314~~$3,707,862 and $2,226,786, 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, 2021		December 31, 2020			March 31, 2021		December 31, 2020

Related party SPAIN serviced securitizations	Related party SPAIN serviced securitizations	$	687,158	$	1,214,644	Related party SPAIN serviced securitizations	$	1,021,099	$	1,214,644
Third party SCART serviced securitizations	Third party SCART serviced securitizations	2,067,156		929,429		Third party SCART serviced securitizations	2,623,575		929,429
Third party CCAP serviced securitizations	Third party CCAP serviced securitizations	—		82,713		Third party CCAP serviced securitizations	63,188		82,713
Total serviced for others portfolio	Total serviced for others portfolio	$	2,754,314	$	2,226,786	Total serviced for others portfolio	$	3,707,862	$	2,226,786

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 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended

		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020				March 31, 2021		March 31, 2020
Receivables securitized (a)	Receivables securitized (a)	$	—	$	636,301	$	1,891,278	$	1,148,587	Receivables securitized (a)		$	1,891,278	$	—

Net proceeds from new securitizations	Net proceeds from new securitizations	—		592,455		1,779,532		1,052,541		Net proceeds from new securitizations		1,779,532		—
Cash received for servicing fees	Cash received for servicing fees	8,041		6,598		24,061		17,856		Cash received for servicing fees		6,726		6,179
Total cash received from securitization trusts	Total cash received from securitization trusts	8,041		599,053		$	1,803,593	$	1,070,397	Total cash received from securitization trusts		$	1,786,258	$	6,179

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

2526

7. Debt


Total borrowings and other debt obligations as of September 30, 2021 and December 31, 2020 consists of:
Total borrowings and other debt obligations as of March 31, 2021 and December 31, 2020 consists of:						Total borrowings and other debt obligations as of March 31, 2021 and December 31, 2020 consists of:
		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Notes Payable — Facilities with Third Parties	Notes Payable — Facilities with Third Parties	$	—	$	4,159,955	Notes Payable — Facilities with Third Parties	$	2,348,545	$	4,159,955
Notes Payable — Secured Structured Financings	Notes Payable — Secured Structured Financings	28,831,858		26,177,401		Notes Payable — Secured Structured Financings	25,692,019		26,177,401

Notes Payable — Facilities with Santander and Related Subsidiaries (a)	Notes Payable — Facilities with Santander and Related Subsidiaries (a)	9,600,000		10,801,318		Notes Payable — Facilities with Santander and Related Subsidiaries (a)	10,501,060		10,801,318
		$	38,431,858	$	41,138,674		$	38,541,624	$	41,138,674

Notes Payable - Credit Facilities

The following table presents information regarding the Company’s credit facilities as of ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021											March 31, 2021
		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:											Facilities with third parties:
Warehouse line	Warehouse line	June 2023	$	—	$	500,000	—%	$	367,404	$	—	Warehouse line	August 2022	$	167,000	$	500,000	1.95%	$	592,553	$	—
Warehouse line	Warehouse line	March 2023	—		1,250,000		—%	246,480		1		Warehouse line	March 2022	1,072,345		1,250,000		0.63%	1,719,708		1
Warehouse line	Warehouse line	October 2022	—		1,500,000		—%	121,046		—		Warehouse line	October 2022	—		1,500,000		2.59%	159,339		—
Warehouse line	Warehouse line	October 2022	—		3,500,000		—%	133,429		—		Warehouse line	October 2022	—		3,500,000		3.22%	1,378,224		—
Warehouse line	Warehouse line	October 2022	—		500,000		—%	13,409		500		Warehouse line	October 2022	—		500,000		3.96%	118,970		570
Warehouse line	Warehouse line	October 2022	—		2,100,000		—%	175,624		64		Warehouse line	October 2022	658,500		2,100,000		3.32%	968,850		103
Warehouse line	Warehouse line	January 2023	—		1,000,000		—%	477,840		—		Warehouse line	January 2023	450,700		1,000,000		1.16%	1,142,351		—
Warehouse line	Warehouse line	November 2022	—		500,000		—%	279,703		—		Warehouse line	November 2022	—		500,000		0.92%	392,637		—
Warehouse line	Warehouse line	July 2022	—		900,000		—%	—		—		Warehouse line	July 2022	—		900,000		—%	—		1,684
Total facilities with third parties	Total facilities with third parties		—		11,750,000			1,814,935		565		Total facilities with third parties		2,348,545		11,750,000			6,472,632		2,358
Facilities with Santander and related subsidiaries:	Facilities with Santander and related subsidiaries:											Facilities with Santander and related subsidiaries:
Promissory Note	Promissory Note	December 2021	250,000		250,000		3.58%	—		—		Promissory Note	December 2021	250,000		250,000		3.70%	—		—
Promissory Note	Promissory Note	December 2022	250,000		250,000		3.82%	—		—		Promissory Note	December 2022	250,000		250,000		3.95%	—		—
Promissory Note	Promissory Note	December 2023	250,000		250,000		5.07%	—		—		Promissory Note	December 2023	250,000		250,000		5.25%	—		—
Promissory Note	Promissory Note	December 2022	250,000		250,000		4.83%	—		—		Promissory Note	December 2022	250,000		250,000		5.00%	—		—
Promissory Note	Promissory Note	May 2023	350,000		350,000		3.67%	—		—		Promissory Note	May 2021	250,000		250,000		2.25%	—		—
Promissory Note	Promissory Note	November 2022	400,000		400,000		2.90%	—		—		Promissory Note	May 2023	350,000		350,000		3.80%	—		—
Promissory Note	Promissory Note	April 2023	450,000		450,000		5.92%	—		—		Promissory Note	November 2022	400,000		400,000		3.00%	—		—
Promissory Note	Promissory Note	June 2022	500,000		500,000		3.19%	—		—		Promissory Note	April 2023	450,000		450,000		6.13%	—		—
Promissory Note	Promissory Note	July 2024	500,000		500,000		3.77%	—		—		Promissory Note	June 2022	500,000		500,000		3.30%	—		—
Promissory Note	Promissory Note	March 2022	650,000		650,000		4.06%	—		—		Promissory Note	July 2024	500,000		500,000		3.90%	—		—

Promissory Note												Promissory Note	March 2022	650,000		650,000		4.20%	—		—
Promissory Note												Promissory Note	August 2021	650,000		650,000		3.44%	—		—
Promissory Note	Promissory Note	September 2023	750,000		750,000		3.17%	—		—		Promissory Note	September 2023	750,000		750,000		3.27%	—		—
Promissory Note	Promissory Note	May 2025	1,000,000		1,000,000		3.86%	—		—		Promissory Note	May 2025	1,000,000		1,000,000		3.99%	—		—
Promissory Note	Promissory Note	June 2022	2,000,000		2,000,000		2.03%	—		—		Promissory Note	June 2022	2,000,000		2,000,000		1.34%	—		—
Promissory Note	Promissory Note	September 2022	2,000,000		2,000,000		1.01%	—		—		Promissory Note	September 2022	2,000,000		2,000,000		1.04%	—		—
Line of credit	Line of credit	July 2024	—		500,000		2.08%	—		—		Line of credit	July 2021	—		500,000		2.14%	—		—
Line of credit	Line of credit	March 2023	—		2,500,000		3.28%	—		—		Line of credit	March 2023	—		2,500,000		3.31%	—		—
Total facilities with Santander and related subsidiaries	Total facilities with Santander and related subsidiaries		9,600,000		12,600,000			—		—		Total facilities with Santander and related subsidiaries		10,500,000		13,500,000			—		—
Total revolving credit facilities	Total revolving credit facilities		$	9,600,000	$	24,350,000		$	1,814,935	$	565	Total revolving credit facilities		$	12,848,545	$	25,250,000		$	6,472,632	$	2,358

(a) In 2017, the Company entered into an interest rate swap to hedge the interest rate risk on this fixed rate debt. This derivative was designated as fair value hedge at inception. This derivative was later terminated and the unamortized fair value hedge adjustment as of ~~September 30,~~March 31, 2021 and December 31, 2020 was ~~zero~~$1.1 million and $1.3 million, respectively, the amortization of which ~~reduced~~will reduce interest expense over the remaining life of the fixed rate debt.

2627


		December 31, 2020											December 31, 2020
		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:											Facilities with third parties:
Warehouse line	Warehouse line	August 2022	$	—	$	500,000	1.50%	$	159,348	$	—	Warehouse line	August 2022	$	—	$	500,000	1.50%	$	159,348	$	—
Warehouse line	Warehouse line	March 2022	942,845		1,250,000		1.34%	1,621,206		1		Warehouse line	March 2022	942,845		1,250,000		1.34%	1,621,206		1
Warehouse line	Warehouse line	October 2022	1,000,600		1,500,000		1.85%	639,875		—		Warehouse line	October 2022	1,000,600		1,500,000		1.85%	639,875		—
Warehouse line	Warehouse line	October 2022	441,143		3,500,000		3.45%	2,057,758		—		Warehouse line	October 2022	441,143		3,500,000		3.45%	2,057,758		—
Warehouse line	Warehouse line	October 2022	168,300		500,000		3.07%	243,649		1,201		Warehouse line	October 2022	168,300		500,000		3.07%	243,649		1,201
Warehouse line	Warehouse line	October 2022	845,800		2,100,000		3.29%	1,156,885		—		Warehouse line	October 2022	845,800		2,100,000		3.29%	1,156,885		—
Warehouse line	Warehouse line	January 2022	415,700		1,000,000		1.81%	595,518		—		Warehouse line	January 2022	415,700		1,000,000		1.81%	595,518		—
Warehouse line	Warehouse line	November 2022	177,600		500,000		1.18%	371,959		—		Warehouse line	November 2022	177,600		500,000		1.18%	371,959		—
Warehouse line	Warehouse line	July 2022	—		900,000		1.46%	—		1,684		Warehouse line	July 2022	—		900,000		1.46%	—		1,684
Repurchase facility	Repurchase facility	January 2021	167,967		167,967		1.64%	217,200		—		Repurchase facility	January 2021	167,967		167,967		1.64%	217,200		—

Total facilities with third parties	Total facilities with third parties		4,159,955		11,917,967			7,063,398		2,886		Total facilities with third parties		4,159,955		11,917,967			7,063,398		2,886
Facilities with Santander and related subsidiaries:	Facilities with Santander and related subsidiaries:											Facilities with Santander and related subsidiaries:
Promissory Note	Promissory Note	December 2021	250,000		250,000		3.70%	—		—		Promissory Note	December 2021	250,000		250,000		3.70%	—		—
Promissory Note	Promissory Note	December 2022	250,000		250,000		3.95%	—		—		Promissory Note	December 2022	250,000		250,000		3.95%	—		—
Promissory Note	Promissory Note	December 2023	250,000		250,000		5.25%	—		—		Promissory Note	December 2023	250,000		250,000		5.25%	—		—
Promissory Note	Promissory Note	December 2022	250,000		250,000		5.00%	—		—		Promissory Note	December 2022	250,000		250,000		5.00%	—		—
Promissory Note	Promissory Note	May 2021	250,000		250,000		2.25%	—		—		Promissory Note	May 2021	250,000		250,000		2.25%	—		—
Promissory Note	Promissory Note	March 2021	300,000		300,000		3.95%	—		—		Promissory Note	March 2021	300,000		300,000		3.95%	—		—
Promissory Note	Promissory Note	May 2023	350,000		350,000		3.80%	—		—		Promissory Note	May 2023	350,000		350,000		3.80%	—		—
Promissory Note	Promissory Note	November 2022	400,000		400,000		3.00%	—		—		Promissory Note	November 2022	400,000		400,000		3.00%	—		—
Promissory Note	Promissory Note	April 2023	450,000		450,000		6.13%	—		—		Promissory Note	April 2023	450,000		450,000		6.13%	—		—
Promissory Note	Promissory Note	June 2022	500,000		500,000		3.30%	—		—		Promissory Note	June 2022	500,000		500,000		3.30%	—		—
Promissory Note	Promissory Note	July 2024	500,000		500,000		3.90%	—		—		Promissory Note	July 2024	500,000		500,000		3.90%	—		—
Promissory Note	Promissory Note	March 2022	650,000		650,000		4.20%	—		—		Promissory Note	March 2022	650,000		650,000		4.20%	—		—
Promissory Note	Promissory Note	August 2021	650,000		650,000		3.44%	—		—		Promissory Note	August 2021	650,000		650,000		3.44%	—		—
Promissory Note	Promissory Note	September 2023	750,000		750,000		3.27%	—		—		Promissory Note	September 2023	750,000		750,000		3.27%	—		—
Promissory Note	Promissory Note	May 2025	1,000,000		1,000,000		3.99%	—		—		Promissory Note	May 2025	1,000,000		1,000,000		3.99%	—		—
Promissory Note	Promissory Note	June 2022	2,000,000		2,000,000		1.40%	—		—		Promissory Note	June 2022	2,000,000		2,000,000		1.40%	—		—
Promissory Note	Promissory Note	September 2022	2,000,000		2,000,000		1.04%	—		—		Promissory Note	September 2022	2,000,000		2,000,000		1.04%	—		—
Line of credit	Line of credit	July 2021	—		500,000		2.08%	—		—		Line of credit	July 2021	—		500,000		2.19%	—		—
Line of credit	Line of credit	March 2022	—		2,500,000		3.28%	—		—		Line of credit	March 2022	—		2,500,000		3.34%	—		—
Total facilities with Santander and related subsidiaries	Total facilities with Santander and related subsidiaries		10,800,000		13,800,000			—		—		Total facilities with Santander and related subsidiaries		10,800,000		13,800,000			—		—
Total revolving credit facilities	Total revolving credit facilities		14,959,955		25,717,967			7,063,398		2,886		Total revolving credit facilities		14,959,955		25,717,967			7,063,398		2,886

Notes Payable - 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 4), securitization notes payables and residuals retained by the Company.

Facilities with Santander and Related Subsidiaries

Lines of Credit

SHUSA provides the Company with ~~$500,000~~$500,000 of committed ~~revolving~~revolving credit and $2,500,000 of contingent liquidity that can be drawn on an unsecured basis.

Promissory Notes

SHUSA provides the Company wi~~th $5,600,000~~with $6,500,000 of unsecured promissory notes.

Santander provides the Company with $4,000,000 ofof unsecured promissory notes.

Notes Payable - Secured Structured Financings

The following table presents information regarding secured structured financings as of ~~September 30,~~March 31, 2021 and December 31, 2020:


		September 30, 2021											March 31, 2021
		Estimated Maturity Date(s) at Issuance	Balance		Initial Note Amounts Issued (d)		Initial Weighted Average Interest Rate	Collateral (b)		Restricted Cash			Estimated Maturity Date(s) at Issuance	Balance		Initial Note Amounts Issued (d)		Initial Weighted Average Interest Rate	Collateral (b)		Restricted Cash
2016 Securitizations												2016 Securitizations	March 2024	$	91,428	$	1,250,000	2.34%	$	160,734	$	46,666
2017 Securitizations	2017 Securitizations	July 2022 - September 2024	118,293		3,889,470		1.35% - 2.52%	564,070		90,895		2017 Securitizations	July 2022 - September 2024	864,178		8,262,940		1.35% - 2.52%	1,399,990		232,606
2018 Securitizations	2018 Securitizations	February 2024 - April 2026	1,606,743		11,000,280		2.41% - 3.42%	2,510,723		264,577		2018 Securitizations	February 2024 - April 2026	2,250,155		11,000,280		2.41% - 3.42%	3,435,529		372,049
2019 Securitizations	2019 Securitizations	May 2024 - February 2027	4,249,645		11,924,720		2.08% - 3.34%	5,788,406		466,789		2019 Securitizations	May 2024 - February 2027	5,959,087		11,924,720		2.08% - 3.34%	7,691,626		576,514
2020 Securitizations	2020 Securitizations	November 2024 - May 2028	5,629,703		10,028,425		0.60% - 2.73%	7,256,352		364,410		2020 Securitizations	November 2024 - May 2028	7,431,733		10,028,425		0.60% - 2.73%	9,345,987		633,342
2021 Securitizations	2021 Securitizations	November 2025 - March 2029	13,052,747		14,986,600		0.48% - 0.65%	15,283,626		479,199		2021 Securitizations	November 2026 - March 2027	3,429,197		3,497,230		0.50% - 0.51%	3,905,821		154,211
Public Securitizations (a)	Public Securitizations (a)		24,657,131		51,829,495			31,403,177		1,665,870		Public Securitizations (a)		20,025,778		45,963,595			25,939,687		2,015,388
2013 Private issuances	2013 Private issuances	July 2024 - September 2024	230,404		1,537,025		1.28%	1,015,024		751		2013 Private issuances	July 2024 - September 2024	521,397		1,537,025		1.28%	1,521,220		751
2018 Private issuances	2018 Private issuances	June 2022 - April 2024	1,452,711		2,200,002		2.42% - 3.17%	2,111,645		—		2018 Private issuances	June 2022 - April 2024	1,837,240		4,186,002		2.42% - 3.53%	2,774,962		6,561
2019 Private issuance	2019 Private issuance	September 2022 - November 2026	1,517,437		3,524,536		2.45% - 3.90%	2,300,073		10,566		2019 Private issuance	September 2022 - November 2026	2,335,820		3,524,536		2.45% - 3.90%	3,287,079		10,294
2020 Private issuance	2020 Private issuance	April 2024 - December 2027	974,175		1,500,000		1.29% - 2.68%	1,330,694		4,902		2020 Private issuance	April 2024 - December 2027	971,784		1,500,000		1.29% - 2.68%	1,351,381		4,902

Privately issued amortizing notes (c)	Privately issued amortizing notes (c)		4,174,727		8,761,563			6,757,436		16,219		Privately issued amortizing notes (c)		5,666,241		10,747,563			8,934,642		22,508
Total secured structured financings	Total secured structured financings		$	28,831,858	$	60,591,058		$	38,160,613	$	1,682,089	Total secured structured financings		$	25,692,019	$	56,711,158		$	34,874,329	$	2,037,896

(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.

(c)All privately issued amortizing notes issued in 2014 through 2017 were paid in full.

(d)Excludes securitizations that no longer have outstanding debt and excludes any incremental borrowings.

2829


	December 31, 2020
	Estimated Maturity Date(s) at Issuance	Balance		Initial Note Amounts Issued		Initial Weighted Average Interest Rate	Collateral		Restricted Cash
2016 Securitizations	August 2022 - March 2024	$	259,078	$	2,519,810	1.63% - 2.34%	$	354,985	$	85,041
2017 Securitizations	July 2022 - September 2024	1,049,867		8,262,940		1.35% - 2.52%	1,661,845		211,606
2018 Securitizations	May 2022 - April 2026	2,723,099		12,039,840		2.41% - 3.42%	4,130,936		376,246
2019 Securitizations	May 2024 - February 2027	6,653,226		11,924,720		2.08% - 3.34%	8,582,241		488,546
2020 Securitizations	November 2024 - May 2028	8,256,890		10,028,425		0.60% - 2.73%	10,292,570		548,912
Public Securitizations		18,942,160		44,775,735			25,022,577		1,710,351
2013 Private issuances	July 2024 - September 2024	777,210		1,537,025		1.28%	1,843,443		751
2018 Private issuances	June 2022 - April 2024	2,768,145		4,186,002		2.42%- 3.53%	4,223,567		7,675
2019 Private issuance	September 2022 - November 2026	2,584,974		3,524,536		2.45% - 3.90%	3,632,833		10,457
2020 Private issuance	April 2024 - December 2027	1,104,912		1,500,000		1.29% - 2.68%	1,532,280		4,902
Privately issued amortizing notes		7,235,241		10,747,563			11,232,123		23,785
Total secured structured financings		$	26,177,401	$	55,523,298		$	36,254,700	$	1,734,136

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,~~March 31, 2021 and December 31, 2020, the Company had private issuances of notes backed by vehicle leases totaling ~~$6.6~~$8.7 billion and ~~$8.7~~$8.7 billion, respectively.

Unamortized debt issuance costs are amortized as interest expense over the terms of the related notes payable using the ~~effective~~effective interest method and are classified as a discount to the related recorded debt balance. ~~Amortization of~~Amortized debt issuance costs were ~~$13,213~~$10,599 and ~~$10,265~~$9,352 for the three months ended ~~September 30, 2021 and 2020, respectively, and $37,100 and $28,301 for the nine months ended September 30,~~March 31, 2021 and 2020, 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 notes payable is also included in interest expense using the effective interest method over the estimated remaining life of the notes. Total interest expense on secured structured financings for the three months ended ~~September 30,~~March 31, 2021 and 2020 was ~~$103,511~~$122,514 and ~~$150,734,~~ $198,463, respectively ~~and for the nine months ended September 30, 2021 and 2020 was $342,168 and $522,266, respectively.~~.

8. Shareholders’ Equity

In August, the Company and SHUSA entered into a definitive agreement whereby SHUSA will acquire the remaining shares of the Company for $41.50 per share in cash, which represents a total equity value of $12.7 billion. Please refer to Note 1 - “~~Description of Business, Basis of Presentation, and Accounting Policies” to these Condensed Consolidated Financial Statements for additional information related to the agreement.~~

Share Repurchases

In June 2019, the Company announced that the Board had authorized purchases by the Company of up to $1.1 billion, excluding commissions, of its outstanding common stock effective from the third quarter of 2019 through the end of the second quarter of 2020. The Company extended the share repurchase program through the end of the third quarter of 2020. During the three months ended March 31, 2020, the Company purchased shares of its common stock through a modified Dutch Auction Tender Offer, and then extended the share repurchase program through the end of the third quarter of 2020.

On July 31, 2020, the Company announced that SHUSA’s request for certain exceptions to the Federal Reserve Board’s interim policy (the “Interim Policy”), prohibiting share repurchases (other than repurchases relating to issuances of common stock under employee stock ownership plans) and limiting dividends paid by certain CCAR institutions to the average trailing four quarters of net income, had been approved. Such exception approval permitted the Company to continue its share repurchase program through the end of the third quarter of 2020. On August 10, 2020, the Company announced that it had substantially exhausted the amount of shares the Company was permitted to repurchase under the exception approval and that the Company expected to repurchase an immaterial number of shares remaining under the exception approval. ~~After substantially exhausting its share repurchase authorization on August 10, 2020, and~~

Subsequently, the Federal Reserve Board extended the Interim Policy through ~~the end of~~ the second quarter of ~~2021,~~2021. As a result of the extension of the Interim Policy, the Company ~~was~~may continue, consistent with the Interim Policy, to repurchase only ~~permitted to repurchase~~a number of shares of the Company’s common stock equal to the amount of share issuances related to the Company’s expensed employee ~~compensation. The Company does not presently have permission to repurchase any shares~~compensation through the second quarter of ~~the Company’s common stock.~~2021.

Please find below the details of the Company's tender offer and other share repurchase programs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020:


		Three Months Ended				Nine Months Ended					Three Months Ended

		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2021		March 31, 2020
Tender offer (a):	Tender offer (a):									Tender offer (a):
Number of shares purchased	Number of shares purchased	—		—		—		17,514,707		Number of shares purchased	—		17,514,707
Average price per share	Average price per share	$	—	$	—	$	—	$	26.00	Average price per share	$	—	$	26.00
Cost of shares purchased (b)	Cost of shares purchased (b)	$	—	$	—	$	—	$	455,382	Cost of shares purchased (b)	$	—	$	455,382

Other share repurchases:	Other share repurchases:									Other share repurchases:
Number of shares purchased	Number of shares purchased	—		10,198,800		357,747		15,956,561		Number of shares purchased	357,747		846,461
Average price per share	Average price per share	$	—	$	21.91	$	26.46	$	20.00	Average price per share	$	26.46	$	13.82
Cost of shares purchased (b)	Cost of shares purchased (b)	$	—	$	223,485	$	9,468	$	319,075	Cost of shares purchased (b)	$	9,468	$	11,700

Total number of shares purchased	Total number of shares purchased	—		10,198,800		357,747		33,471,268		Total number of shares purchased	357,747		18,361,168
Average price per share	Average price per share	$	—	$	21.91	$	26.46	$	23.14	Average price per share	$	26.46	$	25.44
Total cost of shares purchased (b)	Total cost of shares purchased (b)	$	—	$	223,485	$	9,468	$	774,457	Total cost of shares purchased (b)	$	9,468	$	467,082

(a) During the three months ended March 31, 2020, the Company purchased shares of its common stock through a modified Dutch Auction Tender Offer.

(b) Cost of shares exclude commissions

Refer to Part II Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds" below section for additional details on share repurchases.

Treasury Stock

The Company had 57,425,382 and 57,067,635 shares of treasury stock outstanding, with a cost of ~~$1,311,339~~$1,311,339 and $1,301,864 as of ~~September 30,~~March 31, 2021 and December 31, 2020, ~~respectively.~~ respectively. No ~~shares~~ shares were withheld to cover income taxes related to stock issued in connection with employee incentive compensation plans for the ~~nine~~three months ended ~~September 30,~~March 31, 2021. The value of the treasury stock is included within the ~~additional~~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, 2021 and 2020 is as follows:
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Beginning balance, unrealized gains (losses) $ (36,855) $ (63,705) $ (50,566) $ (26,693)
Other comprehensive income (loss) before reclassifications (gross) 414 94 2,603 (43,212)
Amounts (gross) reclassified out of accumulated other comprehensive income (loss) 5,247 6,729 16,769 13,023
Ending balance, unrealized gains (losses) $ (31,194) $ (56,882) $ (31,194) $ (56,882)



	Three Months Ended

	March 31, 2021		March 31, 2020
Beginning balance, unrealized gains (losses)	$	(50,566)	$	(26,693)
Other comprehensive income (loss) before reclassifications (gross)	2,970		(37,585)
Amounts (gross) reclassified out of accumulated other comprehensive income (loss)	5,778		623
Ending balance, unrealized gains (losses)	$	(41,818)	$	(63,655)

Amounts (gross) reclassified out of accumulated other comprehensive income (loss) during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 consist of the following:


		Three Months Ended				Nine Months Ended				Income statement line item		Three Months Ended								Income statement line item

Reclassification	Reclassification	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			Reclassification	March 31, 2021				March 31, 2020
Cash flow hedges	Cash flow hedges	$	6,946	$	8,939	$	22,254	$	17,260		Interest expense		Cash flow hedges	$	7,657			$	824		Interest expense

Tax benefit	Tax benefit	(1,699)		(2,210)		(5,485)		(4,237)			Tax benefit	(1,879)				(201)
Net of tax	Net of tax	$	5,247	$	6,729	$	16,769	$	13,023		Net of tax	$	5,778			$	623

Dividends

~~The~~On March 31, 2021, the Company paid a cash dividend of $0.22 per share and a special dividend of $0.22 per share of common stock for a total of $0.44 per share to shareholders of record as of the close of business on March 29, 2021.

On April 27, 2021, the Company received written notification from the FRB that the FRB has approved SHUSA’s request for an exception from the prohibition in ~~August~~the Interim Policy restricting the payment of certain dividends in the second quarter of 2021. ~~SHUSA has requested regulatory approval to authorize the~~The Company’s Board of Directors ~~to consider declaring~~will determine whether a dividend inwill be declared and the ~~fourth quarter. To date, approval has not been received.~~timing and amount of any such dividend.

9. Derivative Financial Instruments

The Company uses derivative 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.

The underlying notional amounts of these derivative financial instruments at ~~September 30,~~March 31, 2021 and December 31, 2020, are as follows:


		September 30, 2021						December 31, 2020						March 31, 2021						December 31, 2020
		Notional		Asset		Liability		Notional		Asset		Liability				Notional		Asset		Liability		Notional		Asset		Liability
Interest rate swap agreements designated as cash flow hedges	Interest rate swap agreements designated as cash flow hedges	$	—	$	—	$	—	$	2,450,000	$	123	$	(70,589)		Interest rate swap agreements designated as cash flow hedges	$	2,150,000	$	765	$	(59,147)	$	2,450,000	$	123	$	(70,589)
Interest rate swap agreements not designated as hedges	Interest rate swap agreements not designated as hedges	250,000		—		(8,085)		250,000		—		(12,934)			Interest rate swap agreements not designated as hedges	250,000		—		(11,119)		250,000		—		(12,934)
Interest rate cap agreements	Interest rate cap agreements	7,649,971		13,314		—		10,199,134		4,617		—			Interest rate cap agreements	9,338,393		15,783		—		10,199,134		4,617		—
Options for interest rate cap agreements	Options for interest rate cap agreements	7,649,971		—		(13,314)		10,199,134		—		(4,617)			Options for interest rate cap agreements	9,338,393		—		(15,783)		10,199,134		—		(4,617)

The aggregate fair value of the interest rate swap agreements is included on the Company’s consolidated balance sheets in other assets and other liabilities, as appropriate. The aggregate fair value of interest rate cap agreements are included in other assets and the related options in other liabilities on the Company’s consolidated balance sheets. See Note 10 - “Fair Value of Financial Instruments” to these Condensed Consolidated Financial Statements for additional 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 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,~~March 31, 2021 and December ~~31, 2020:~~

3132

Gross Amounts Not Offset in the
Consolidated Balance Sheet
Assets Presented in the
Consolidated Balance Sheet Collateral
Received (a) Net
Amount
September 30, 2021
Interest rate caps - Santander and affiliates $ 2,334 $ (2,334) $ —
Interest rate caps - third party 10,980 (10,980) —
Total derivatives subject to a master netting arrangement or similar arrangement 13,314 (13,314) —
Total derivatives not subject to a master netting arrangement or similar arrangement — — —
Total derivative assets $ 13,314 $ (13,314) $ —
Total financial assets $ 13,314 $ (13,314) $ —
December 31, 2020
Interest rate swaps - third party (b) $ 123 $ (123) $ —
Interest rate caps - Santander and affiliates 463 (463) —
Interest rate caps - third party 4,154 (4,154) —
Total derivatives subject to a master netting arrangement or similar arrangement 4,740 (4,740) —
Total derivatives not subject to a master netting arrangement or similar arrangement — — —
Total derivative assets $ 4,740 $ (4,740) $ —
Total financial assets $ 4,740 $ (4,740) $ —
31, 2020:



	Gross Amounts Not Offset in the Consolidated Balance Sheet
	Assets Presented in the Consolidated Balance Sheet		Collateral Received (a)		Net Amount
March 31, 2021

Interest rate swaps - third party (b)	$	765	$	(765)	$	—
Interest rate caps - Santander and affiliates	$	1,438	$	(1,390)	$	48
Interest rate caps - third party	14,345		(14,345)		—


Total derivatives subject to a master netting arrangement or similar arrangement	16,548		(16,500)		48
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—		—
Total derivative assets	$	16,548	$	(16,500)	$	48
Total financial assets	$	16,548	$	(16,500)	$	48

December 31, 2020

Interest rate swaps - third party (b)	$	123	$	(123)	$	—
Interest rate caps - Santander and affiliates	463		(463)		—
Interest rate caps - third party	4,154		(4,154)		—
Total derivatives subject to a master netting arrangement or similar arrangement	4,740		(4,740)		—
Total derivatives not subject to a master netting arrangement or similar arrangement	—		—		—
Total derivative assets	$	4,740	$	(4,740)	$	—
Total financial assets	$	4,740	$	(4,740)	$	—

(a) Collateral received includes cash, cash equivalents, initial margin and other financial instruments. Cash collateral received is reported in Other liabilities in the consolidated balance sheet. Financial instruments that are pledged to the Company are not reflected in the accompanying balance sheet since the Company does not control or have the ability of rehypothecation of these instruments. In certain instances, the counter party is over-collateralized since the actual amount of collateral received exceeds the associated financial asset. As a result, the actual amount of collateral received that is reported may be greater than the amount shown in the table above.

(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 Consolidated Balance Sheet				Gross Amounts Not Offset in the Consolidated Balance Sheet
		Liabilities Presented in the Consolidated Balance Sheet		Collateral Pledged (a)			Net Amount			Liabilities Presented in the Consolidated Balance Sheet		Collateral Pledged (a)		Net Amount
September 30, 2021
March 31, 2021									March 31, 2021

Interest rate swaps - third party (b)	Interest rate swaps - third party (b)	$	8,085	$	(8,085)		$	—	Interest rate swaps - third party (b)	$	70,266	$	(70,266)	$	—

Interest rate caps - Santander and affiliates	Interest rate caps - Santander and affiliates	2,334		(2,334)			—		Interest rate caps - Santander and affiliates	1,438		(1,250)		188
Interest rate caps - third party	Interest rate caps - third party	10,980		(4,885)			6,095		Interest rate caps - third party	14,345		(6,323)		8,022

Total derivatives subject to a master netting arrangement or similar arrangement	Total derivatives subject to a master netting arrangement or similar arrangement	21,399		(15,304)			6,095		Total derivatives subject to a master netting arrangement or similar arrangement	86,049		(77,839)		8,210

Total derivatives not subject to a master netting arrangement or similar arrangement	Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—		Total derivatives not subject to a master netting arrangement or similar arrangement	—		—		—
Total derivative liabilities	Total derivative liabilities	$	21,399	$	(15,304)		$	6,095	Total derivative liabilities	$	86,049	$	(77,839)	$	8,210
Total financial liabilities	Total financial liabilities	$	21,399	$	(15,304)		$	6,095	Total financial liabilities	$	86,049	$	(77,839)	$	8,210

December 31, 2020	December 31, 2020								December 31, 2020

Interest rate swaps - third party	Interest rate swaps - third party	$	83,523	$	(83,523)		$	—	Interest rate swaps - third party	$	83,523	$	(83,523)	$	—
Interest rate caps - Santander and affiliates	Interest rate caps - Santander and affiliates	463		(463)			—		Interest rate caps - Santander and affiliates	463		(463)		—
Interest rate caps - third party	Interest rate caps - third party	4,154		(4,154)			—		Interest rate caps - third party	4,154		(4,154)		—
Total derivatives subject to a master netting arrangement or similar arrangement	Total derivatives subject to a master netting arrangement or similar arrangement	88,140		(88,140)			—		Total derivatives subject to a master netting arrangement or similar arrangement	88,140		(88,140)		—

Total derivatives not subject to a master netting arrangement or similar arrangement	Total derivatives not subject to a master netting arrangement or similar arrangement	—		—			—		Total derivatives not subject to a master netting arrangement or similar arrangement	—		—		—
Total derivative liabilities	Total derivative liabilities	$	88,140	$	(88,140)		$	—	Total derivative liabilities	$	88,140	$	(88,140)	$	—
Total financial liabilities	Total financial liabilities	$	88,140	$	(88,140)		$	—	Total financial liabilities	$	88,140	$	(88,140)	$	—

(a) Collateral pledged includes cash, cash equivalents, initial margin and other financial instruments. These balances are reported in Other assets in the consolidated balance sheet. In certain instances, the Company is over-collateralized since the actual amount of collateral pledged exceeds the associated financial liability. As a result, the actual amount of collateral pledged that is reported in Other assets may be greater than the amount shown in the table above.

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

During 2018, 2019 and 2020, the Company entered into interest rate swap agreements with an aggregate notional amount of $2.2 billion. The interest rate swaps were to be used to hedge the Company’s variable rate debt and had maturity dates ranging from ~~two~~ ~~to five years. During the third quarter of 2021, the Company de-designated the hedge~~

3233

relationships and terminated the swaps resulting in a fair value adjustment of $6.5 million recorded as a reduction to interest expense. Amounts previously recorded in accumulated other comprehensive income/loss related to these interest rate swaps, totaling $50.6 million, are being reclassified into earnings over the term as the previously hedged cash flows impact earnings. For the terminated swaps, the Company reclassified $7.9 million previously recorded in accumulated other comprehensive income/loss into interest expense during the quarter ending September 30, 2021.

The gross gains (losses) reclassified from accumulated other comprehensive income (loss) to net income, are included as components of interest expense. The impacts on the consolidated statements of income and comprehensive income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 were as follows:


		Three Months Ended September 30, 2021							Three Months Ended March 31, 2021
		Recognized in Earnings		Gross Gains (Loss) Recognized in Accumulated Other Comprehensive Income (Loss)		Gross amount Reclassified From Accumulated Other Comprehensive Income to Interest Expense			Recognized in Earnings		Gross Gains (Loss) 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	Interest rate swap agreements designated as cash flow hedges	$	—	$	1,023	$	(6,946)	Interest rate swap agreements designated as cash flow hedges	$	—	$	4,358	$	(7,657)

Derivative instruments not designated as hedges:
Derivative instruments not designated as hedges								Derivative instruments not designated as hedges
Losses (Gains) recognized in interest expenses	Losses (Gains) recognized in interest expenses	$	143					Losses (Gains) recognized in interest expenses	$	(244)

Three Months Ended September 30, 2020
Recognized in Earnings Gross Gains (Loss) 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 $ — $ 256 $ (8,939)
Derivative instruments not designated as hedges:
Losses (Gains) recognized in interest expenses $ 567

Nine Months Ended September 30, 2021
Recognized in Earnings Gross Gains (Loss) 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 $ — $ 4,687 $ (22,254)
Derivative instruments not designated as hedges:
Losses (Gains) recognized in interest expenses $ 113


		Nine Months Ended September 30, 2020							Three Months Ended March 31, 2020
		Recognized in Earnings		Gross Gains (Loss) Recognized in Accumulated Other Comprehensive Income (Loss)		Gross amount Reclassified From Accumulated Other Comprehensive Income to Interest Expense			Recognized in Earnings		Gross Gains (Loss) 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	Interest rate swap agreements designated as cash flow hedges	$	—	$	(59,405)	$	(17,260)	Interest rate swap agreements designated as cash flow hedges	$	—	$	(52,386)	$	(824)

Derivative instruments not designated as hedges:
Derivative instruments not designated as hedges								Derivative instruments not designated as hedges
Losses (Gains) recognized in interest expenses	Losses (Gains) recognized in interest expenses	$	10,774					Losses (Gains) recognized in interest expenses	$	9,171

The Company estimates that approximately ~~$24,259~~$29,585 of unrealized gains i~~ncluded~~included in accumulated other comprehensive income (loss) will be reclassified to interest expense within the next twelve months.

10. 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 the inputs to valuation techniques used to measure fair value into three levels 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 or not readily observable for the asset or liability and are used to measure fair value to the extent relevant observable inputs are not available.

Financial Instruments Measured At Fair Value on a Recurring Basis

The fo~~llowing~~following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at ~~September 30,~~March 31, 2021 and December 31, 2020, and the level within the fair value hierarchy:


		Level 1		Level 2		Level 3		Balance at September 30, 2021		Level 1		Level 2		Level 3		Balance at December 31, 2020			Level 1		Level 2		Level 3		Balance at March 31, 2021		Level 1		Level 2		Level 3		Balance at December 31, 2020
Other assets:	Other assets:																	Other assets:
Trading interest rate caps (a)	Trading interest rate caps (a)	$	—	$	13,314	$	—	$	13,314	$	—	$	4,617	$	—	$	4,617	Trading interest rate caps (a)	$	—	$	15,783	$	—	$	15,783	$	—	$	4,617	$	—	$	4,617
Cash flow hedging interest rate swaps (a)	Cash flow hedging interest rate swaps (a)	—		—		—		$	—	—		123		—		$	123	Cash flow hedging interest rate swaps (a)	—		765		—		$	765	—		123		—		$	123

Available-for-sale-debt securities (b)	Available-for-sale-debt securities (b)	—		90,688		—		$	90,688	—		95,654		—		$	95,654	Available-for-sale-debt securities (b)	—		95,689		—		$	95,689	—		95,654		—		$	95,654
Retail installment contracts (c)(d)	Retail installment contracts (c)(d)	—		3,774		2,396		$	6,170	—		—		5,614		$	5,614	Retail installment contracts (c)(d)	—		—		3,965		$	3,965	—		—		5,614		$	5,614
Other liabilities:	Other liabilities:																	Other liabilities:
Trading options for interest rate caps (a)	Trading options for interest rate caps (a)	—		13,314		—		$	13,314	—		4,617		—		$	4,617	Trading options for interest rate caps (a)	—		15,783		—		$	15,783	—		4,617		—		$	4,617
Cash flow hedging interest rate swaps (a)	Cash flow hedging interest rate swaps (a)	—		—		—		$	—	—		70,589		—		$	70,589	Cash flow hedging interest rate swaps (a)	—		59,147		—		$	59,147	—		70,589		—		$	70,589
Trading interest rate swaps (a)	Trading interest rate swaps (a)	—		8,085		—		$	8,085	—		12,934		—		$	12,934	Trading interest rate swaps (a)	—		11,119		—		$	11,119	—		12,934		—		$	12,934

(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 9).

(b)The Company's AFS debt securities includes U.S. Treasury securities that are valued utilizing observable market quotes. The Company obtains vendor trading platform data (actual prices) from a number of live data sources, including active market makers and interdealer brokers and its securities are therefore, classified as Level 2.

(c)The fair values of the retail installment contracts are estimated using a DCF model ~~and~~ are classified as Level 3. ~~As of September 30, 2021, the Company had used the most recent purchase price as the fair value for certain loans and hence classified those retail installment contracts as Level 2.~~ Changes in the fair value are recorded in investment gains (losses), net in the consolidated statement of income.

(d)The aggregate fair value of retail installment contracts in non-accrual status, as of ~~September 30,~~March 31, 2021 and December 31, 2020, is ~~is $541 a~~$656nd and $1,129, respectively.

Level 3 Rollforward for Assets and Liabilities Measured at Fair Value on a Recurring Basis

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 ~~September 30,~~March 31, 2021 and 2020:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2021		2020
Balance — beginning of year	Balance — beginning of year	$	2,841	$	10,585	$	5,614	$	4,719	Balance — beginning of year	$	5,614	$	4,719
Additions / issuances	Additions / issuances	1,171		—		1,171		2,512		Additions / issuances	—		2,512
Transfer from level 2 (a)	Transfer from level 2 (a)	—		—		—		17,634		Transfer from level 2 (a)	—		17,634
Net collection activities	Net collection activities	(1,616)		(2,410)		(4,389)		(16,854)		Net collection activities	(1,649)		(9,680)
Gains recognized in earnings	Gains recognized in earnings	—		73		—		237		Gains recognized in earnings	—		122
Balance — end of year	Balance — end of year	$	2,396	$	8,248	$	2,396	$	8,248	Balance — end of year	$	3,965	$	15,307

(a) The Company transferred retail installment contracts from Level 2 to Level 3 during the three months ended March 31, 2020 because the fair value for these assets could not be determined by using readily observable inputs at March 31, 2020. There were no other material transfers in or out of Level 3 during the three months ended ~~September 30, 2020~~March 31, 2021 and ~~during the three and nine months ended September 30, 2021.~~

2020.

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,~~March 31, 2021 and December 31, 2020, respectively:


		Nine Months Ended September 30, 2021				Year Ended December 31, 2020					Three Months Ended March 31, 2021				Year Ended December 31, 2020
		Total		Lower of cost or fair value expense		Total		Lower of cost or fair value expense			Total		Lower of cost or fair value expense		Total		Lower of cost or fair value expense
Other assets — vehicles (a)	Other assets — vehicles (a)	$	269,627	$	—	$	311,557	$	—	Other assets — vehicles (a)	$	371,110	$	—	$	311,557	$	—
Personal loans held for sale (b)	Personal loans held for sale (b)	—		—		893,479		355,136		Personal loans held for sale (b)	—		—		893,479		355,136
Retail installment contracts held for sale ~~(c)~~	Retail installment contracts held for sale ~~(c)~~	359,561		—		674,048		$	7,385	Retail installment contracts held for sale ~~(c)~~	—		—		674,048		$	7,385
Auto loans impaired due to bankruptcy ~~(d)~~(c)	Auto loans impaired due to bankruptcy ~~(d)~~(c)	204,594		—		191,785		—		Auto loans impaired due to bankruptcy ~~(d)~~(c)	175,401		—		191,785		—

(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) 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. 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. On March 31, 2021, the Company sold the personal lending portfolio. Refer to Note 1 – ~~“Description~~“ Description of Business, Basis of Presentation, and Accounting Principles” to these Condensed Consolidated Financial Statements for more information.

(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. No additional lower of cost or fair value expense was recorded for the ~~nine~~three months ended ~~September 30,~~March 31, 2021.

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, 2021 and December 31, 2020, ~~respectively:~~
respectively:

Financial Instruments

Fair Value at ~~September 30,~~March 31, 2021

Valuation Technique

Unobservable Inputs

Range (weighted average) (a)

Financial Assets:

Retail installment contracts held for investment

~~2,396~~3,965

Discounted Cash Flow

Discount Rate

7%-13% ~~(9%~~(8%)

Default Rate

4%~~-10% (7%~~-20% (6%)

Prepayment Rate

4%-15% (15%)

Loss Severity Rate

50%-60% ~~(56%~~(55%)

~~Retail installment contracts held for sale~~

~~359,561~~

~~Discounted Cash Flow~~

~~Discount Rate~~

~~1% - 2% (2%)~~

~~Default Rate~~

~~4% - 10% (7%)~~

~~Prepayment Rate~~

~~15% - 20% (17%)~~

~~Loss Severity Rate~~

~~50% - 55% (52%)~~

(a) Weighted average was developed by weighting the associated relative unpaid principal balances.


Financial Instruments	Fair Value at December 31, 2020		Valuation Technique	Unobservable Inputs	Range
Financial Assets:
Retail installment contracts held for investment	$	5,614	Discounted Cash Flow	Discount Rate	7%-11%
				Default Rate	4%-20%
				Prepayment Rate	15%-25%
				Loss Severity Rate	50%-60%
Personal loans held for sale	$	893,479	Lower of Market or Income Approach	Market Approach
				Market Participant View	60%-70%
				Income Approach
				Discount Rate	20%-30%

				Default Rate	35%-45%
				Net Principal & Interest Payment Rate	65%-75%
				Loss Severity Rate	90%-95%
Retail installment contracts held for sale	$	674,048	Discounted Cash Flow	Discount Rate	1.5% - 2.5%
				Default Rate	2% - 4%
				Prepayment Rate	10% - 20%
				Loss Severity Rate	50% - 60%

Financial Instruments Disclosed, But Not Carried, At Fair Value

~~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,~~March 31, 2021 and December 31, 2020, and the level within the fair value hierarchy:


		September 30, 2021										December 31, 2020											March 31, 2021										December 31, 2020
		Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3			Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Assets:	Assets:																					Assets:
Cash and cash equivalents (a)	Cash and cash equivalents (a)	$	2,106,405	$	2,106,405	$	2,106,405	$	—	$	—	$	109,053	$	109,053	$	109,053	$	—	$	—	Cash and cash equivalents (a)	$	415,969	$	415,969	$	415,969	$	—	$	—	$	109,053	$	109,053	$	109,053	$	—	$	—

Finance receivables held for investment, net (b)	Finance receivables held for investment, net (b)	27,272,976		29,878,212		—		47,691		29,830,521		26,806,606		29,464,066		—		—		29,464,066		Finance receivables held for investment, net (b)	25,905,719		28,546,529		—		—		28,546,529		26,806,606		29,464,066		—		—		29,464,066
Restricted cash (a)	Restricted cash (a)	2,248,667		2,248,667		2,248,667		—		—		2,221,094		2,221,094		2,221,094		—		—		Restricted cash (a)	2,623,565		2,623,565		2,623,565		—		—		2,221,094		2,221,094		2,221,094		—		—
Investments in debt securities held to maturity (c)	Investments in debt securities held to maturity (c)	101,815		102,449		—		102,449		—		44,841		45,606		—		45,606		—		Investments in debt securities held to maturity (c)	129,484		130,181		—		130,181		—		44,841		45,606		—		45,606		—
Total	Total	$	31,729,863	$	34,335,733	$	4,355,072	$	150,140	$	29,830,521	$	29,181,594	$	31,839,819	$	2,330,147	$	45,606	$	29,464,066	Total	$	29,074,737	$	31,716,244	$	3,039,534	$	130,181	$	28,546,529	$	29,181,594	$	31,839,819	$	2,330,147	$	45,606	$	29,464,066
Liabilities:	Liabilities:																					Liabilities:
Notes Payable:	Notes Payable:																					Notes Payable:
Facilities with third parties (d)	Facilities with third parties (d)	$	—	$	—	$	—	$	—	$	—	$	4,159,955	$	4,159,955	$	—	$	—	$	4,159,955	Facilities with third parties (d)	$	2,348,545	$	2,348,545	$	—	$	—	$	2,348,545	$	4,159,955	$	4,159,955	$	—	$	—	$	4,159,955
Secured structured financings (e)	Secured structured financings (e)	28,831,858		29,089,183		—		24,644,581		4,444,602		26,177,401		26,673,970		—		18,291,898		8,382,072		Secured structured financings (e)	25,692,019		26,122,220		—		20,154,566		5,967,654		26,177,401		26,673,970		—		18,291,898		8,382,072
Facilities with Santander and related subsidiaries (f)	Facilities with Santander and related subsidiaries (f)	9,600,000		9,798,720		—		—		9,798,720		10,801,318		11,333,823		—		—		11,333,823		Facilities with Santander and related subsidiaries (f)	10,501,060		10,707,931		—		—		10,707,931		10,801,318		11,333,823		—		—		11,333,823
Total	Total	$	38,431,858	$	38,887,903	$	—	$	24,644,581	$	14,243,322	$	41,138,674	$	42,167,748	$	—	$	18,291,898	$	23,875,850	Total	$	38,541,624	$	39,178,696	$	—	$	20,154,566	$	19,024,130	$	41,138,674	$	42,167,748	$	—	$	18,291,898	$	23,875,850

(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 is determined as follows:

•Retail installment contracts held for investment and purchased receivables - credit deteriorated — The estimated fair value ~~for certain~~of all finance receivables at ~~September 30, 2021 is based on the most recent purchase price and hence has classified these amounts as Level 2. The estimated fair value of these remaining finance receivables at September 30,~~March 31, 2021 is estimated using a DCF model, and such receivables are classified as Level 3.

•Finance lease receivables — Finance lease receivables are carried at gross investments, net of unearned income and allowance for lease losses. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements.

(c)Investments in debt securities held to maturity - Investments in debt securities held to maturity are recorded at amortized cost and are priced by third-party pricing vendors. The third-party vendors use a variety of methods when pricing these securities that incorporate relevant observable market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. These investment securities are, therefore, considered Level 2.

(d)Notes payable — facilities with third parties — 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.

(e)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 credit enhancement review, discounted cash flow analysis and review of market observable spreads for similar liabilities. In conducting this analysis, the Company uses significant unobservable inputs on key assumptions, which are considered Level 3 inputs.

(f)Notes payable — facilities with Santander and related subsidiaries — The carrying amount of floating rate 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. The fair value premium/discount of the fixed rate promissory notes are derived from changes in the Company’s unsecured cost of funds since the time of issuance and weighted average life of these notes.

11. Investment ~~Gains (Losses),~~Losses, Net

When the Company sells retail installment contracts, 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 ~~retained securities,~~ 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 amortized cost of finance receivables held for sale are also recorded in investment gains (losses), net.

Investment gains (losses), net was comprised of the following for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020:


		Three Months Ended				Nine Months Ended					Three Months Ended
											March 31, 2021		March 31, 2020

		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Gain (loss) on sale of loans and leases	Gain (loss) on sale of loans and leases	$	2,003	$	(13,669)	$	19,412	$	(40,553)	Gain (loss) on sale of loans and leases	$	16,357	$	—
Lower of cost or market adjustments	Lower of cost or market adjustments	—		(56,598)		(31,848)		(241,198)		Lower of cost or market adjustments	(31,848)		(62,958)
Other gains, net		3,238		1,278		5,379		1,754
Other gains, (losses and impairments), net										Other gains, (losses and impairments), net	779		(468)
		$	5,241	$	(68,989)	$	(7,057)	$	(279,997)		$	(14,712)	$	(63,426)

The lower of cost or market adjustments for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 included ~~zero,~~ $65,047 ~~$81,247~~ and ~~$278,144,~~$110,199, respectively, in customer default activity, and ~~unfavorable/(favorable)~~favorable adjustments of ~~zero, $(33,199), $24,649~~$33,199 and ~~$36,946~~$47,241 respectively, primarily related to net changes in the unpaid principal balance on the personal lending portfolio.

On March 31, 2021, the Company sold the personal lending portfolio. Refer to Note 1 - “Description of Business, Basis of Presentation, and Accounting Principles” to these Condensed Consolidated Financial Statements for more information.

12. Income Taxes

The Company recorded income tax ~~expense/(benefit)~~expense of ~~$208,607 (21.5% effective~~$234,457 (24.0% effective tax rate) and ~~$172,476 (26.0%~~$(2,458) (38.1% effective tax rate) during the three months ended ~~September 30,~~March 31, 2021 and 2020, respectively. The ~~Company recorded income tax expense/(benefit) of $775,484 (23.2% effective tax rate) and $137,161 (26.0% effective tax rate) during the nine months ended September 30, 2021 and 2020, respectiv~~e~~ly. The~~ effective tax rate decreased primarily

due ~~to increased benefits from electrical vehicle credits, lower effective state tax rate, discrete state tax return to provision adjustments and an increase~~ to pre-tax income in the first quarter of 2021 compared to discrete tax adjustments that ~~diluted unfavorable components~~increased the tax benefit recorded on the pre-tax loss in the first quarter of ~~the effective tax rate and allowed for absorption of favorable discrete activity to produce an effective tax rate reduction.~~2020.

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 s~~eparate~~separate company tax calculation method. The Company had a net receivable from affiliates under the tax sharing ~~agreement~~agreement of ~~$642~~$648 and $11,191 at ~~September 30,~~March 31, 2021 and December 31, 2020, 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 ~~September 30,~~March 31, 2021 and December 31, 2020, the Company has no earnings that are considered indefinitely reinvested.

The Company applies an aggregate portfolio approach whereby disproportionate 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.

13. Computation of Basic and Diluted Earnings per Common Share

Earnings per common share ~~("EPS"~~(“EPS”) is computed ~~by dividing net income by~~using the ~~weighted average number~~two-class method required for participating securities. Restricted stock awards are considered to be participating securities because holders of such awards have non-forfeitable dividend rights in the event of a declaration of a dividend on the Company’s common ~~shares outstanding during the period~~
shares.

The calculation of diluted EPS excludes the effect of exercise or settlement that would be anti-dilutive for employee stock ~~option~~options o~~s of~~f zero and 34,554 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, respectively.~~52,114~~ ~~for the three and nine months ended September 30, 2020.~~

The following table represents EPS numbers for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020:


	Three Months Ended March 31,

	2021		2020
Earnings per common share
Net income (loss)	$	741,655	$	(3,987)
Weighted average number of common shares outstanding before restricted participating shares (in thousands)	306,109		334,026

Weighted average number of common shares outstanding (in thousands)	306,109		334,026
Earnings per common share	$	2.42	$	(0.01)
Earnings per common share - assuming dilution
Net income (loss)	$	741,655	$	(3,987)
Weighted average number of common shares outstanding (in thousands)	306,109		334,026
Effect of employee stock-based awards (in thousands)	216		320
Weighted average number of common shares outstanding - assuming dilution (in thousands)	306,325		334,346
Earnings per common share - assuming dilution	$	2.42	$	(0.01)

Three Months Ended

September 30, Nine Months Ended

September 30,
2021 2020 2021 2020
Earnings per common share
Net income (loss) $ 763,324 $ 490,115 $ 2,563,181 $ 389,450
Weighted average number of common shares outstanding (in thousands) 306,093 310,150 306,086 321,276
Earnings per common share $ 2.49 $ 1.58 $ 8.37 $ 1.21
Earnings per common share - assuming dilution
Net income (loss) $ 763,324 $ 490,115 $ 2,563,181 $ 389,450
Weighted average number of common shares outstanding (in thousands) 306,093 310,150 306,086 321,276
Effect of employee stock-based awards (in thousands) 286 157 268 216
Weighted average number of common shares outstanding - assuming dilution (in thousands) 306,379 310,307 306,354 321,492
Earnings per common share - assuming dilution $ 2.49 $ 1.58 $ 8.37 $ 1.21

14. Commitments and Contingencies

The following table summarizes liabilities recorded for commitments and contingencies as of ~~September 30,~~March 31, 2021 and December 31, 2020, all of which are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets:


Agreement or Legal Matter	Agreement or Legal Matter	Commitment or Contingency	September 30, 2021		December 31, 2020		Agreement or Legal Matter	Commitment or Contingency	March 31, 2021		December 31, 2020
MPLFA	MPLFA	Revenue-sharing and gain/(loss), net-sharing payments	$	70,675	$	43,778	MPLFA	Revenue-sharing and gain/(loss), net-sharing payments	$	65,446	$	43,778
Agreement with Bank of America	Agreement with Bank of America	Servicer performance fee	462		1,200		Agreement with Bank of America	Servicer performance fee	182		1,200
Agreement with CBP	Agreement with CBP	Loss-sharing payments	286		181		Agreement with CBP	Loss-sharing payments	26		181

Other Contingencies	Other Contingencies	Consumer arrangements	29,070		22,155		Other Contingencies	Consumer arrangements	17,186		22,155
Legal and regulatory proceedings	Legal and regulatory proceedings	Aggregate legal and regulatory liabilities	6,348		31,936		Legal and regulatory proceedings	Aggregate legal and regulatory liabilities	28,812		31,936
		Total commitments and contingencies	$	106,841	$	99,250		Total commitments and contingencies	$	111,652	$	99,250

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

MPLFA

Under terms of the MPLFA, the Company must make revenue sharing payments to Stellantis N.V. and also must share with Stellantis N.V. when residual gains/(losses) on leased vehicles exceed a specified threshold. The Company had accrued ~~$70,675~~$65,446 and $43,778 at ~~September 30,~~March 31, 2021 and December 31, 2020, respectively, related to these obligations. The MPLFA also requires that the Company maintain at least $5.0 billion in funding available for Floorplan Loans and $4.5 billion of financing dedicated to Stellantis N.V. retail financing. In turn, Stellantis N.V. must provide designated minimum threshold percentages of its subvention business to the Company.

Agreement with Bank of America

Until January 2017, the Company had a flow agreement with Bank of America whereby the Company was committed to selling up to $300,000 of eligible loans to the bank each month. 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 ~~$462~~$182 and $1,200 at ~~September 30,~~March 31, 2021 and December 31, 2020, respectively, related to this obligation.

Agreement with CBP

Until May 2017, the Company sold loans to CBP under terms of a flow agreement and predecessor sale agreements. The Company retained servicing on the sold loans and owes 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 ~~$286~~$26 and $181 at ~~September 30,~~March 31, 2021 and December 31, 2020, 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 ~~$29,070~~$17,186 and $22,155 at ~~September 30,~~March 31, 2021 and December 31, 2020, respectively, for other miscellaneous contingencies.

Legal and regulatory proceedings

Periodically, the Company, including its subsidiaries, is and in the future expects to be party to, or otherwise involved in, various claims, disputes, lawsuits, investigations, regulatory matters and other legal matters and proceedings that arise in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of any such claims, disputes, ~~lawsuits,~~lawsuit, investigations, regulatory ~~matters~~matter or legal ~~proceedings,~~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, if any. Accordingly, except as provided below, the ~~Company~~company is unable to reasonably estimate a range of its potential exposure, if any, to these claims, disputes, lawsuits, investigations, regulatory matters, and other legal proceedings at this time. 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 materially and adversely affect the Company’s business, financial position, liquidity, and results of operation.

In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal and, regulatory proceedings when those matters present 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 legal or regulatory proceeding develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether the matter presents a loss contingency that is probable and estimable. If a determination is made during a given quarter that a loss contingency is probable and estimable, an accrued liability is established during such quarter with respect to such loss contingency and 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,~~March 31, 2021 and December 31, 2020, the Company accrued aggregate legal and regulatory liabilities of $6$29 million and $32 million, respectively. Further, the Company estimates the aggregate range of reasonably possible losses for legal and regulatory proceedings, in excess of reserves established, is zero as of ~~September 30,~~March 31, 2021. Set

forth below are descriptions of the material lawsuits, regulatory matters and other legal proceedings to which the Company is subject.

Shareholder Derivative Lawsuit

•Seattle City Employees’ Retirement System v. Santander Holdings USA, Inc., et al.: In November 2020, a shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, captioned Seattle

City v. Santander Holdings USA, Inc., C.A. No. 2020-0977-AGB. The plaintiff seeks unspecified monetary damages and other injunctive relief in the complaint. The complaint alleges, among other things, that SHUSA and the current ~~directors~~director breached their fiduciary duties by causing the Company to engage in share repurchases for the purpose of increasing SHUSA’s ownership of the ~~Company~~company above 80%, which the complaint alleges would allow SHUSA to obtain tax and other benefits not available to the rest of the Company’s shareholders. ~~The defendants filed an answer to the complaint.~~

•~~Caldwell v. Santander Consumer USA Holdings Inc.:~~ In September 2021, a purported shareholder of the Company’s common stock filed a complaint against the Company and its Board of Directors in the United States District Court for the Southern District of New York, captioned ~~Craig Caldwell v. Santander Consumer USA Holdings Inc. 1:21-cv-07842,~~ alleging violations of Sections 14 and 20 of the Exchange Act based on the assertion that the Board allegedly authorized the filing of a materially incomplete and misleading Solicitation/Recommendation Statement with the SEC in connection with SHUSA’s proposed purchase of the remaining outstanding common stock of the Company that SHUSA did not already own. The plaintiff seeks to enjoin the defendants from proceeding with the proposed transaction. The complaint has not been served on any of the defendants.

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.

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

•Mississippi Attorney General Lawsuit: In January 2017, the Attorney General of Mississippi filed a lawsuit against the Company in the Chancery Court of the First Judicial District of Hinds County, 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. ~~In July 2021,~~ 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 ~~state of~~ Mississippi ~~entered into a settlement agreement resolving this matter for a monetary payment of $3,700 to the state of Mississippi.~~Consumer Protection Act (the MCPA) and seeks unspecified civil penalties, equitable relief and other relief.

Agreements

•Bluestem

The Company is party to agreements with Bluestem whereby the Company is committed to purchase certain new advances on personal revolving financings receivables, along with existing balances on account with new advances originated by Bluestem through April 2022.

During the first quarter, ~~of 2021,~~ the Company completed the sale of the Bluestem personal lending portfolio to a third party. In addition, the Company executed a forward flow sale agreement with a third party to purchase all personal lending receivables that the Company purchases from Bluestem through the term of the agreement with Bluestem.

As of March 31, 2021 and December 31, 2020, the total unused credit available to customers was zero and $2.7 ~~billion.~~billion, respectively. In 2021, the Company purchased $0.3 billion of receivables, out of the $2.7 billion unused credit available to customers as of December 31, 2020. In 2020, the Company purchased $1.2 billion of receivables, out of the $3.0 billion unused credit available to customers as of December 31, 2019. In addition, the Company purchased $24,865 and ~~$151,163~~$20,943 of receivables related to newly opened customer accounts during ~~the nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively.

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 March 31, 2021 and December 31, 2020, the Company was obligated to purchase zero and $14,222, respectively, in receivables that had been originated by Bluestem but not yet purchased by the Company.

•Others

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

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,~~March 31, 2021, 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 is not expected to have a material adverse effect on the Company’s 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.

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. However, any sale more than $275,000 is subject to a market price check. The remaining aggregate commitment as of ~~September 30,~~March 31, 2021 and December 31, 2020, not subject to market price check was ~~$6,215 and $15,318, respectively.~~$15,318.

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 the 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.

15. 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 lines of credit from SHUSA (Note 7) totaled ~~$68,320~~$74,019 and ~~$79,854~~$63,018 for the three months ended ~~September 30, 2021 and 2020, respectively, and $214,550 and $213,224 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively. Accrued interest for lines of credit from SHUSA at ~~September 30,~~March 31, 2021 and December 31, 2020 was ~~$34,114~~$38,314 and $40,234, respectively.

Interest expense, including unused fees, for lines of credit from Santander (Note 7) totaled ~~$11,587~~$11,885 and ~~$7,997~~zero for the three months ended ~~September 30, 2021 and 2020, respectively, and $35,266 and $8,700 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively. Accrued interest for lines of credit from Santander at ~~September 30,~~March 31, 2021 and December 31, 2020 was ~~$1,472~~$1,609 and $1,603, respectively.

Derivatives

The Company has derivative financial instruments with Santander and affiliates with outstanding notional amounts of

$~~3,255,024~~2,984,250 and $3,148,850 as of ~~September 30,~~March 31, 2021 and December 31, 2020, respectively (Note 9). The Company had a collateral overage on derivative liabilities with Santander and affiliates of ~~$495~~zero and $907 as of ~~September 30,~~March 31, 2021 and December 31, 2020, respectively.

Retail Installment Contracts and RV Marine

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 ~~$317~~$402 and ~~$472~~$553 for the three months ended ~~September 30, 2021 and 2020, respectively, and $1,070 and $1,566 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively. Other information on the serviced auto loan and retail installment contract portfolios for

SBNA as of ~~September 30,~~March 31, 2021 and December 31, 2020 is as follows:


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Total serviced portfolio	Total serviced portfolio	$	135,532	$	190,504	Total serviced portfolio	$	171,450	$	190,504
Cash collections due to owner	Cash collections due to owner	24,395		19,650		Cash collections due to owner	24,281		19,650
Servicing fees receivable	Servicing fees receivable	4,194		1,769		Servicing fees receivable	2,788		1,769

Dealer Lending

Under the Company’s agreement with SBNA, the Company is required to permit SBNA a first right to review and assess CCAP dealer lending opportunities, and SBNA is required to pay the Company an origination fee for each loan originated under the agreement. The agreement also transferred the servicing of all CCAP receivables from dealers, including receivables held by SBNA to the Company and from the Company 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,~~March 31, 2021 or December 31, 2020 for such advances.

Other information related to the above transactions with SBNA is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2021		March 31, 2020
Origination and renewal fee income from SBNA	Origination and renewal fee income from SBNA	$	—	$	451	$	—	$	2,473	Origination and renewal fee income from SBNA	$	—	$	1,509
Servicing fees expenses charged by SBNA	Servicing fees expenses charged by SBNA	33		(9)		193		63		Servicing fees expenses charged by SBNA	90		74

Under the agreement with SBNA, the Company may originate retail consumer loans in connection with sales of vehicles that are collateral held against floorplan loans by SBNA. Upon origination, the Company remits payment to SBNA, which settles the transaction with the dealer. The Company owed SBNA ~~$5,431~~$9,073 and $7,548 related to such originations as of ~~September 30,~~March 31, 2021 and December 31, 2020, respectively.

The Company received a $9,000 referral fee in connection with a sourcing and servicing arrangement and is amortizing the fee into income over the ten-year term of the agreement through July 1, 2022, the termination date of the agreement. As of ~~September 30,~~March 31, 2021 and December 31, 2020, the unamortized fee balance was ~~$1,575~~$2,025 and $2,250, respectively. The Company recognized $225 ~~and $675~~ of income related to the referral fee for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, respectively.

Origination Support Services

~~Leases~~

~~Servicing fee income recognized on leases serviced for SBNA totaled $65 for the three and nine months ended~~

~~September 30, 2021~~

~~Other information on the consumer vehicle lease portfolio serviced for SBNA as of September 30, 2021 and December~~

~~31, 2020 is as follows:~~


	~~September 30, 2021~~		~~December 31, 2020~~
~~Total serviced portfolio~~	$	~~243,531~~	$	—
~~Origination and servicing fees receivable~~	~~342~~		—
~~Revenue share reimbursement receivable~~	48		—

~~Retail installment contracts~~

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 Stellantis N.V. dealers. In addition, the Company agreed to perform the servicing for any loans originated ~~by SBNA.~~on SBNA’s behalf. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 ~~the Company facilitated the purchase of $1.5 billion~~ and ~~$6.1 billion of retail installment contacts, respectively. For the three and nine months ended September 30,~~ 2020, the Company facilitated the purchase of ~~$1.1~~$2.0 billion and ~~$3.9~~$1.1 billion of retail installment contacts, respectively. The Company recognized origination fee and servicing fee income of ~~$13,408, $40,477, $7,902~~$11,566 and ~~$29,457~~$10,488 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, respectively, of which ~~$1,987 and $4,089 was~~$4,120 is receivable as of ~~September 30,~~March 31, 2021 and ~~2020, respectively.~~$970 was payable as of March 31, 2020.

Securitizations

The Company had a Master Securities Purchase Agreement (MSPA) with Santander, whereby the Company had the option to sell a contractually determined amount of eligible prime loans to Santander, through the SPAIN securitization platform, for a term that ended in December 2018. The Company provides servicing on all loans originated under this arrangement. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company received the servicing fee income of ~~$1,970, $7,263, $4,488~~$2,889 and ~~$15,680,~~$5,973, respectively, for the servicing of these loans.

Servicing fee receivable, as of ~~September 30,~~March 31, 2021 and December 31, 2020, was ~~$614~~$914 and $1,070, respectively. The Company had ~~$4,789~~$6,147 and $6,203 of collections due to Santander, as of ~~September 30,~~March 31, 2021 and December 31, 2020, respectively.

Santander Investment Securities Inc. (SIS), an affiliated entity, serves as joint book runner and co-manager on certain of the Company’s securitizations. Amounts paid to SIS for the three months ended ~~September 30,~~March 31, 2021 and 2020, totaled ~~$1,354~~$1,192 and ~~$103, respectively, and totaled $4,059 and $1,625 for the nine months ended September 30, 2021 and 2020,~~$808, respectively, and are included in debt issuance costs in the accompanying condensed consolidated financial statements.

Employee compensation

~~Certain~~Sandra Broderick is Head of Operations and Executive Vice President of the Company and Head of Operations and Senior Executive Vice President of SHUSA. During the three months ended March 31, 2021, SHUSA owed the Company $48 for the share of compensation expense based on time allocation between her services to the Company and SHUSA.

In addition, certain employees of the Company and SHUSA provide services to each other. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, the Company owed SHUSA approximately ~~$14,496~~$4,896 and ~~$9,221~~$4,479 and SHUSA owed the Company approximately ~~$4,467~~$2,303 and ~~$4,198~~$1,518 for such services, respectively.

Other related-party transactions

•The Company subleases approximately 13,000 square feet of its corporate office space to SBNA. For the three months ended ~~September 30,~~March 31, 2021 and 2020, the Company recorded $44 ~~and for the nine months ended September 30, 2021 and 2020, the Company recorded $132~~ in sublease revenue on this property.

•The Company has certain deposit and checking accounts with SBNA. As of ~~September 30,~~March 31, 2021 and December 31, 2020, the Company had a balance of ~~$2,016,932~~$356,911 and $32,490, ~~respectively, in these accounts.~~

•~~The Company has collateral accounts with SBNA with balances as of September 30, 2021 and December 31, 2020 of $6,808 and $27,~~ respectively, in these accounts.

•The Company and SBNA have a Credit Card Agreement (Card Agreement) whereby SBNA provides credit card services for travel and related business expenses for vendor payments. This service is at zero cost but generates rebates based on purchases made. As of ~~September 30,~~March 31, 2021, the activities associated with the program were insignificant.

•The Company pays SBNA a market rate-based fee expense for payments made at SBNA retail branch locations for accounts originated or serviced by the Company and the costs associated with modifying the Advanced Teller platform to the payments. The Company incurred expenses ~~totaled~~ $33 and ~~$39~~$58 for the three months ended ~~September 30, 2021 and 2020, respectively, and $100 and $140 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively.

•The Company has contracted Aquanima, a Santander affiliate, to provide procurement services. Expenses incurred totaled ~~$1,062~~$787 and ~~$785~~$510 for the three months ended ~~September 30, 2021, and 2020, respectively, and totaled $2,635 and $2,079 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively.

•Santander Global Tech (formerly known as Produban Servicios Informaticos Generales S.L.), a Santander affiliate, provides professional services, telecommunications, and internal and/or external applications to the Company. Expenses incurred, which are included as a component of other operating costs in the accompanying consolidated statements of income, totaled zero and ~~$279~~$179 for the three months ended ~~September 30, 2021 and 2020, respectively, and zero and $350 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively.

•The Company partners with SHUSA to place Cyber Liability Insurance in which participating worldwide Santander entities share €270 million aggregate limits. The Company repays SHUSA for the Company’s equitably allocated portion of insurance premiums and fees. Expenses incurred totaled ~~$150~~$188 and ~~$97~~$108 for the three months ended ~~September 30, 2021 and 2020, respectively, and totaled $451 and $313 for the nine months ended September 30,~~March 31, 2021 and 2020, respectively. In addition, the Company partners with SHUSA for various other insurance products. Expenses incurred totaled ~~$661~~$513 and ~~$416~~$183 and for the three months ended ~~September 30, 2021 and 2020, respectively, and totaled $1,687 and $781 and for the nine months ended September 30,~~March 31, 2021 and 2020, respectively.

•

In July 2021, the Company entered into a Platform Development and License Agreement ("PDLA") with AutoFi Inc. for the design and operation of a digital software platform for the sale and financing of automobiles. Mouro Capital, which is a wholly-owned subsidiary of Santander, owns 10.3% of the total equity of AutoFi Inc. The PDLA, requires the Company to pay $6,000 for the design and development of the digital software platform in the first year of the PDLA. After the first year of the PDLA, the Company has agreed to pay AutoFi, Inc. between $2,400 and $3,000 per year plus certain transaction-related fees for software development, dealer onboarding and support, and hosting services.

16. Employee Benefit Plans

The Company has granted stock options to certain executives, other employees, and independent directors under the Company’s 2011 Management Equity Plan (the MEP), which enabled the Company to grant stock option awards up to a total of approximately 29 million common shares (net of shares canceled and forfeited). The MEP expired in January 2015, and the Company will not grant any further awards under the MEP. The Company has granted stock options, restricted stock awards and restricted stock units (RSUs) under the Omnibus Incentive Plan (the 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 5,192,641 shares of common stock. The Plan was amended and restated as of June 16, 2016.

Stock options granted under the MEP and the Plan 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 expense over the vesting period as time and performance vesting conditions are met.

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. Under the Plan, a portion of these RSUs vest immediately upon grant, and a portion vest annually over the following three or five years. Awards granted to certain participants may also be subject to the achievement of certain performance conditions. After the shares subject to the RSUs vest and are settled, they are subject to transfer and sale restrictions for one year. In addition, the Company grants RSUs to certain officers and employees as part of variable compensation, and these RSUs typically vest over three years. The Company also has granted certain independent

directors RSUs that vest upon the earlier of the first anniversary of grant date or the first annual stockholder meeting following the grant date. RSUs are valued based upon the fair market value on the date of the grant.

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 zero recorded for the three months ended March 31, 2021 and 2020. The Company recognized ~~$8,989~~$5,448 and ~~$6,161~~$4,038 related to stock options and restricted stock units within compensation expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively. In addition, the Company recognizes forfeitures of awards 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,~~March 31, 2021 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, 2021	Options outstanding at January 1, 2021	169,369	$	13.01	1.9	$	1,543	Options outstanding at January 1, 2021	169,369	$	13.01	1.9	$	1,543
Granted	Granted	—	—		—	—		Granted	—	—		—	—
Exercised	Exercised	(77,885)	10.08		—	1,650		Exercised	(47,359)	9.22		—	775
Expired	Expired	—	—		—	—		Expired	—	—		—	—
Forfeited	Forfeited	—	—		—	—		Forfeited	—	—		—	—
Other (a)	Other (a)	—	—		—	—		Other (a)	—	—		—	—
Options outstanding at September 30, 2021		91,484	15.51		1.8	2,396
Options exercisable at September 30, 2021		91,484	$	15.51	1.8	$	2,396
Options expected to vest at September 30, 2021		—	$	—	0	$	—
Options outstanding at March 31, 2021								Options outstanding at March 31, 2021	122,010	14.49		2.1	1,534
Options exercisable at March 31, 2021								Options exercisable at March 31, 2021	122,010	$	14.49	2.1	$	1,534
Options expected to vest at March 31, 2021								Options expected to vest at March 31, 2021	—	$	—	0	$	—

(a) Represents stock options that were reinstated.

A summary of the Company’s Restricted Stock Units and performance stock units and related activity as of and for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 is as follows:
Shares Weighted
Average
Grant Date Fair Value Weighted
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value
Outstanding as of January 1, 2021 367,012 $ 19.78 0.8 $ 8,082
Granted 438,435 27.71 — —
Vested (401,549) 23.04 — 10,847
Forfeited/canceled (7,549) 14.67 — —
Non-vested at September 30, 2021 396,349 $ 25.10 1.1 $ 16,528


	Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2021	367,012	$	19.78	0.8	$	8,082
Granted	324,295	25.38		—	—
Vested	(340,511)	22.27		—	8,638
Forfeited/canceled	(7,362)	14.32		—	—
Non-vested at March 31, 2021	343,434	$	22.66	1.5	$	9,293


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 2020 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, Current Reports on Form 8-K, 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 Company’s filings with the SEC and other information may also be accessed at the SEC’s website at www.sec.gov.

Background and Overview

The Company was formed in 2013 as a corporation in the state of Delaware and is the holding company for SC Illinois, a full-service, technology-driven consumer finance company focused on vehicle finance and third-party servicing. The Company is majority-owned (as of ~~October 25,~~April 26, 2021, ~~approximately~~ approximately 80.2%) by SHUSA, a wholly-owned subsidiary of Santander. Refer to Note 1 - "Description of Business" to the accompanying condensed consolidated financial statements for the details regarding the definitive agreement entered into between SHUSA and the Company for SHUSA to acquire all of the outstanding shares of the Company's stock that is does not yet own.

The Company is managed through a single reporting segment, Consumer Finance, which includes vehicle financial products and services, including retail installment contracts, vehicle leases, and financial products and services related to recreational and marine vehicles, and other consumer finance products.

CCAP continues to be a focal point of the Company’s strategy. Since May 2013, under the MPLFA with ~~Stellantis,~~FCA, the Company has operated as ~~Stellantis's~~Stellantis N.V.'s preferred provider for consumer loans, leases and dealer loans and provides services to Stellantis N.V. customers and dealers under the CCAP brand. The Company’s average penetration rate under the MPLFA for the ~~third quarter~~three months ended ~~September 30,~~March 31, 2021 was ~~27%~~36%, a decrease from ~~33%~~39% for the same period in 2020.

The Company has dedicated financing facilities in place for its CCAP business and has ~~pursued a strategy of working~~worked strategically and collaboratively with Stellantis N.V. to continue to strengthen ~~their~~its relationship and to create value within the CCAP program. During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company originated ~~$11.1~~$3.7 billion in CCAP loans which represented ~~53%~~57% of total retail installment contract originations (unpaid principal balance), as well as ~~$5.8~~$2.2 billion in CCAP leases. Additionally, substantially all of the leases originated by the Company during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 were under the MPLFA.

Economic and Business Environment

Unemployment ~~rate is 4.80%~~rates are6.0% as reported by the Bureau of Labor Statistics for ~~September 30,~~March 31, 2021, and the federal funds rate was in the ~~range~~range of 0.00% to 0.25% on ~~September 30,~~March 31, 2021.

Additionally, the Company is exposed to geographic customer concentration risk, which could have an adverse effect on the

Company’s business, financial position, results of operations or cash flow. Refer to Note 2 - "Finance Receivables" to the

accompanying condensed consolidated financial statements for the details on the Company’s retail installment contracts by state

concentration.

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, Bank Secrecy Act, 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 SEC, the CFPB, the FTC, and 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 share repurchase program, 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.

The March 5, 2021, announcement by the U.K.’s Financial Conduct Authority (FCA) confirmed unavailability of USD LIBOR rates beyond June 30, 2023 and cessation of one-week and two-month USD LIBOR by December 31, 2021. ISDA announced these statements are an “Index Cessation Event” under the IBOR Fallbacks Supplement and the ISDA 2020 IBOR Fallbacks Protocol, which in turn triggers a “Spread Adjustment Fixing Date” under the Bloomberg IBOR Fallback Rate Adjustments Rule Book. As a result, when USD LIBOR tenors cease and the fallback rates apply, fallbacks for derivatives under ISDA’s documentation shift to forms of the Secured Overnight Financing Rate (SOFR) plus the fixed spread adjustment.

The regulatory agencies also confirmed that the March 5, 2021 announcements constitute a “Benchmark Transition Event” with respect to all LIBOR settings.

The Company holds debt, derivatives, and other financial instruments that use USD LIBOR as a reference rate and that will be impacted by the demise of LIBOR. Transition away from LIBOR to new reference rates presents legal, financial, reputational, and operational risks to the Company as well as to other participants in the market. As of ~~September 30,~~March 31, 2021, the Company has approximately $3$5 billion of liabilities with LIBOR exposure. The Company also had approximately ~~$16~~$21 billion in notional amounts of derivative contracts with LIBOR exposure.

Additional legal and regulatory matters affecting the Company’s activities are further discussed in Part I, Item 1A – Risk Factors of the 2020 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.

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 swap curve, spot and forward rates are monitored.

•Net credit losses — The Company performs net credit loss analysis at the vintage level for retail installment contracts, loans and leases, and at the pool level for purchased portfolios-credit deteriorated, enabling it to pinpoint drivers of any unusual or unexpected trends. The Company also monitors its and industry-wide recovery 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 ACL.

•Other income — The Company’s flow agreements and third-party servicing agreements 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.

•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).

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

COVID-19 Summary

Beginning in March 2020, the novel strain of coronavirus, or COVID-19, had materially impacted our business. Similar to many other financial institutions, we took measures to mitigate our customers’ COVID-19 related economic challenges. We experienced an increase in requests for extensions and modifications related to COVID-19 nationwide and a significant number of such extensions and modifications have been ~~granted.~~

granted as detailed in Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Credit Quality

Please refer to Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of the 2020 Annual Report on Form 10-K for additional details regarding COVID-19.

~~Acquisition by SHUSA~~

On July 2, 2021 the Company announced that it received a non-binding proposal (the “Proposal”) from SHUSA to acquire all of the outstanding shares of the Company’s common stock that are not currently owned by SHUSA, subject to the conditions set forth in the Proposal. The Board formed an independent special committee (the “Special Committee”), composed of William Rainer, William Muir, and Robert McCarthy and elected William Rainer as its chairperson, to consider the Proposal. The Special Committee engaged independent financial and legal advisors to assist in its evaluation of the Proposal.

In August 2021, the Company entered into a definitive agreement whereby SHUSA agreed to acquire all of the outstanding shares of the common stock of the Company not already owned by SHUSA via an all-cash tender offer. Under the terms of the definitive agreement, a wholly-owned subsidiary of SHUSA commenced a tender offer to acquire all of the outstanding shares of the Company's common stock that SHUSA does not yet own at a price of $41.50 per share in cash. SHUSA agreed to acquire all remaining shares not tendered in the offer through a second- step merger at the same price as in the tender offer. Consummation of the tender offer is subject to various conditions, including regulatory approval of the Board of Governors of the Federal Reserve System and other customary conditions. Upon completion of the transaction, the Company would become a wholly-owned subsidiary of SHUSA.

Volume

The Company’s originations of retail installment contracts and leases, including revolving loans, average APR, and dealer discount (net of dealer participation) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 were as follows:


		Three Months Ended						Nine Months Ended									Three Months Ended
		September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020						March 31, 2021			March 31, 2020
		(Dollar amounts in thousands)													(Dollar amounts in thousands)
Retained Originations	Retained Originations													Retained Originations
Retail installment contracts	Retail installment contracts	$	4,432,175		$	5,344,755		$	14,298,345		$	13,608,298				Retail installment contracts	$	4,383,146		$	3,846,226
Average APR	Average APR	14.8		%	13.7 %			15.0		%	13.8 %					Average APR	15.0		%	15.3		%
Average FICO® (a)	Average FICO® (a)	606			637			603			631					Average FICO® (a)	606			607
Premium		(2.4)		%	(1.3)		%	(2.1)		%	(1.0)		%
Discount/(premium)																Discount/(premium)	(1.6)		%	(0.8)		%

Personal loans (b)	Personal loans (b)	$	—		$	305,039		$	—		$	923,112				Personal loans (b)	$	—		$	270,835
Average APR	Average APR	—		%	29.4 %			—		%	29.4 %					Average APR	—		%	29.8		%

Leased vehicles	Leased vehicles	$	1,577,539		$	1,856,166		$	5,799,786		$	4,863,504				Leased vehicles	$	2,154,506		$	2,020,721

Finance lease	Finance lease	$	2,816		$	4,087		$	8,147		$	9,016				Finance lease	$	2,796		$	3,002
Total originations retained	Total originations retained	$	6,012,530		$	7,510,047		$	20,106,278		$	19,403,930				Total originations retained	$	6,540,448		$	6,140,784

Sold Originations	Sold Originations															Sold Originations
Retail installment contracts	Retail installment contracts	$	39,325		$	80,144		$	523,862		$	761,323				Retail installment contracts	$	95,738		$	—
Average APR	Average APR	4.9		%	5.2 %			5.3		%	4.8 %					Average APR	9.5		%	—		%
Average FICO® (c)	Average FICO® (c)	730			738			720			734					Average FICO® (c)	688			—

Personal Loans (d)	Personal Loans (d)	$	—		$	—		$	292,709		$	—				Personal Loans (d)	$	292,709		$	—
Average APR	Average APR	—		%	—		%	29.7		%	$	—				Average APR	29.7		%	—		%

Total Originations Sold	Total Originations Sold	$	39,325		$	80,144		$	816,571		$	761,323				Total Originations Sold	$	388,447		$	—

Total originations (excluding SBNA Originations Program)	Total originations (excluding SBNA Originations Program)	$	6,051,855		$	7,590,191		$	20,922,849		$	20,165,253				Total originations (excluding SBNA Originations Program)	$	6,928,895		$	6,140,784

(a)Unpaid principal balance excluded from the weighted average FICO score is ~~$386~~$450 million and ~~$571~~$432 million ~~for the three months ended September 30, 2021 and 2020, respectively,~~ as the borrowers on these loans did not have FICO scores at origination and of these amounts, ~~$129~~$154 million and ~~$145~~$139 million, respectively, were commercial ~~loans. Unpaid principal balance excluded from the weighted average FICO score is $1.4 billion and $1.5 billion~~loans for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, as the borrowers on these loans did not have FICO scores at origination and of these amounts, $469 million and $386 million, respectively, were commercial loans.~~respectively.

(b) Included in the total origination volume is ~~$72 million and $151~~$21 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 ~~respectively,~~ related to newly opened accounts.

(c) Unpaid principal balance excluded from the weighted average FICO score is ~~$28~~$2 million and ~~$80 million~~zero for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, zero were commercial loans for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively.

(d) Included in the total origination volume is $25 million for the three months ended March 31, 2021 related to ~~related to~~ newly opened accounts.

Total auto originations (excluding SBNA Origination Program) increased ~~$1.7~~$1.1 billion, or ~~8.7%~~18.0%, from the ~~nine~~three months ended ~~September 30,~~March 31, 2020 to ~~nine~~three months ended ~~September 30,~~March 31, 2021. The Company's initiatives to improve our pricing, as well as, our dealer and customer experience have increased our competitive position in the market. The Company continues to focus on optimizing the loan quality of its portfolio with an appropriate balance of volume and risk. CCAP volume and penetration rates are influenced by strategies implemented by Stellantis N.V. and the Company, including product mix and incentives.

Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail auto loans, primarily from Stellantis N.V. dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020

the Company facilitated the purchase of ~~$1.5 billion, $6.1 billion, $1.1~~$2.0 billion and ~~$3.9~~$1.1 billion of retail installment contacts, respectively.

The Company’s originations of retail installment contracts and leases by vehicle type during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 were as follows:


		Three Months Ended								Nine Months Ended									Three Months Ended

		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020						March 31, 2021						March 31, 2020
		(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Retail installment contracts	Retail installment contracts																	Retail installment contracts
Car	Car	$	1,537,270	34.4	%	$	1,516,163	27.9	%	$	4,998,645	33.7	%	$	3,926,126	27.3	%				Car	$	1,475,739	32.9	%		$	1,229,615	32.0	%
Truck and utility	Truck and utility	2,788,208		62.3	%	3,686,966		68.0	%	9,341,361		63.0	%	9,872,900		68.7	%				Truck and utility	2,847,447		63.6	%		2,425,512		63.0	%
Van and other (a)	Van and other (a)	146,022		3.3	%	221,770		4.1	%	482,201		3.3	%	570,595		4.0	%				Van and other (a)	155,698		3.5	%		191,099		5.0	%
		$	4,471,500	100.0	%	$	5,424,899	100.0	%	$	14,822,207	100.0	%	$	14,369,621	100.0	%					$	4,478,884	100.0	%		$	3,846,226	100.0	%

Leased vehicles	Leased vehicles																				Leased vehicles
Car	Car	$	36,489	2.3	%	$	53,985	2.9	%	$	109,199	1.9	%	$	167,432	3.4	%				Car	$	35,391	1.6	%		$	70,152	3.5	%
Truck and utility	Truck and utility	1,517,749		96.2	%	1,769,518		95.3	%	5,593,418		96.4	%	4,593,150		94.5	%				Truck and utility	2,069,909		96.1	%		1,899,568		94.0	%
Van and other (a)	Van and other (a)	23,301		1.5	%	32,663		1.8	%	97,169		1.7	%	102,922		2.1	%				Van and other (a)	49,206		2.3	%		51,001		2.5	%
		$	1,577,539	100.0	%	$	1,856,166	100.0	%	$	5,799,786	100.0	%	$	4,863,504	100.0	%					$	2,154,506	100.0	%		$	2,020,721	100.0	%

Total originations by vehicle type	Total originations by vehicle type																				Total originations by vehicle type
Car	Car	$	1,573,759	26.0	%	$	1,570,148	21.6	%	$	5,107,844	24.8	%	$	4,093,558	21.3	%				Car	$	1,511,130	22.8	%		$	1,299,767	22.2	%
Truck and utility	Truck and utility	4,305,957		71.2	%	5,456,484		74.9	%	14,934,779		72.4	%	14,466,050		75.2	%				Truck and utility	4,917,356		74.1	%		4,325,080		73.7	%
Van and other (a)	Van and other (a)	169,323		2.8	%	254,433		3.5	%	579,370		2.8	%	673,517		3.5	%				Van and other (a)	204,904		3.1	%		242,100		4.1	%
		$	6,049,039	100.0	%	$	7,281,065	100.0	%	$	20,621,993	100.0	%	$	19,233,125	100.0	%					$	6,633,390	100.0	%		$	5,866,947	100.0	%

(a) Other primarily consists of commercial vehicles.

The Company’s portfolio of retail installment contracts held for investment and leases by vehicle type as of ~~September 30,~~March 31, 2021 and December 31, 2020 are as follows:


		September 30, 2021				December 31, 2020					March 31, 2021				December 31, 2020
		(Dollar amounts in thousands)									(Dollar amounts in thousands)
Retail installment contracts	Retail installment contracts									Retail installment contracts
Car	Car	$	11,613,325	35.5	%	$	11,727,343	35.6	%	Car	$	11,578,356	36.4	%	$	11,727,343	35.6	%
Truck and utility	Truck and utility	19,741,505		60.3	%	19,939,215		60.5	%	Truck and utility	19,026,521		59.8	%	19,939,215		60.5	%
Van and other (a)	Van and other (a)	1,387,714		4.2	%	1,270,478		3.9	%	Van and other (a)	1,208,883		3.8	%	1,270,478		3.9	%
		$	32,742,544	100.0	%	$	32,937,036	100.0	%		$	31,813,760	100.0	%	$	32,937,036	100.0	%

Leased vehicles	Leased vehicles									Leased vehicles
Car	Car	$	450,467	2.8	%	$	766,451	4.4	%	Car	$	668,821	3.9	%	$	766,451	4.4	%
Truck and utility	Truck and utility	15,339,907		95.2	%	16,052,162		93.0	%	Truck and utility	16,188,643		93.7	%	16,052,162		93.0	%
Van and other (a)	Van and other (a)	322,042		2.0	%	440,855		2.6	%	Van and other (a)	416,353		2.4	%	440,855		2.6	%
		$	16,112,416	100.0	%	$	17,259,468	100.0	%		$	17,273,817	100.0	%	$	17,259,468	100.0	%

Total by vehicle type	Total by vehicle type									Total by vehicle type
Car	Car	$	12,063,792	24.7	%	$	12,493,794	24.9	%	Car	$	12,247,177	24.9	%	$	12,493,794	24.9	%
Truck and utility	Truck and utility	35,081,412		71.8	%	35,991,377		71.7	%	Truck and utility	35,215,164		71.8	%	35,991,377		71.7	%
Van and other (a)	Van and other (a)	1,709,756		3.5	%	1,711,333		3.4	%	Van and other (a)	1,625,236		3.3	%	1,711,333		3.4	%
		$	48,854,960	100.0	%	$	50,196,504	100.0	%		$	49,087,577	100.0	%	$	50,196,504	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, 2021 and 2020 were as follows:


		Three Months Ended					Nine Months Ended							Three Months Ended

		September 30, 2021			September 30, 2020		2021			2020				March 31, 2021			March 31, 2020
		(Dollar amounts in thousands)										(Dollar amounts in thousands)

Retail installment contracts	Retail installment contracts	$	277,898		$	636,301	$	2,968,467		$	1,148,587		Retail installment contracts	$	2,380,785		$	—
Average APR	Average APR	3.4		%	4.9 %		4.2		%	5.6 %			Average APR	4.0		%	—		%
Average FICO®	Average FICO®	737			735		737			715			Average FICO®	740			—

Personal Loans	Personal Loans	$	—		$	—	$	1,253,476		—			Personal Loans	$	1,253,476		$	—
Average APR	Average APR	—		%	—		29.7		%	—			Average APR	29.7		%	—

Total Asset Sales	Total Asset Sales	$	277,898		636,301		$	4,221,943		1,148,587			Total Asset Sales	$	3,634,261		—

The unpaid principal balance, average APR, and remaining unaccreted net discount of the Company’s held for investment portfolio as of ~~September 30,~~March 31, 2021 and December 31, 2020 are as follows:


		September 30, 2021			December 31, 2020				March 31, 2021			December 31, 2020
		(Dollar amounts in thousands)							(Dollar amounts in thousands)
Retail installment contracts	Retail installment contracts	$	32,742,544		$	32,937,036		Retail installment contracts	$	31,813,760		$	32,937,036
Average APR	Average APR	15.2		%	15.2		%	Average APR	15.9		%	15.2		%
Premium		(0.96)		%	(0.15)		%
Discount/(premium)								Discount/(premium)	(0.48)		%	(0.15)		%

Leased vehicles	Leased vehicles	$	16,112,416		$	17,259,468		Leased vehicles	$	17,273,817		$	17,259,468

Finance leases	Finance leases	$	24,508		$	26,150		Finance leases	$	27,199		$	26,150

The Company records interest income from retail installment contracts 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 at a discount. The Company amortizes discounts, subvention payments from manufacturers, and origination costs as adjustments to income from retail installment contracts using the effective yield method. The Company estimates future principal prepayments specific to pools of homogeneous loans 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, and 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 ~~11.2%~~9.9% to ~~15.9%~~16.1% as of ~~September 30,~~March 31, 2021, and ~~5.1%~~5.0% to ~~10.7%~~11.0% as of ~~September 30,~~March 31, 2020.

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.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 the Company recognized certain retail installment contracts with an unpaid principal balance of ~~$42,264, $42,264,~~ zero and $76,878, 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 ACL. 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. For the Company’s existing purchased receivables portfolios - credit deteriorated, 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 records 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.

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 on a straight-line basis over the contractual term of the lease to the expected residual value. The Company records lease payments due from customers 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 of revenue 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 on a straight-line basis over the contractual term of the lease.

Three ~~and Nine~~ Months ~~Ended September 30,~~March 31, 2021 Compared to Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020

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)
		2021		2020		Amount		Percent		2021		2020		Amount		Percent			2021		2020		Amount		Percent
		(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Income from retail installment contracts	Income from retail installment contracts	$	1,214,783	$	1,220,703	$	(5,920)	—	%	$	3,659,757	$	3,552,193	$	107,564	3	%	Income from retail installment contracts	$	1,215,905	$	1,179,436	$	36,469	3	%
Income from purchased receivables portfolios - credit deteriorated	Income from purchased receivables portfolios - credit deteriorated	338		649		(311)		(48)	%	1,247		2,164		(917)		(42)	%	Income from purchased receivables portfolios - credit deteriorated	486		788		(302)		(38)	%
Income from receivables from dealers	Income from receivables from dealers	—		(17)		17		(100)	%	—		48		(48)		(100)	%	Income from receivables from dealers	—		54		(54)		(100)	%
Income from personal loans	Income from personal loans	—		79,359		(79,359)		(100)	%	88,260		256,708		(168,448)		(66)	%	Income from personal loans	88,260		93,541		(5,281)		(6)	%
Total interest on finance receivables and loans	Total interest on finance receivables and loans	$	1,215,121	$	1,300,694	$	(85,573)	(7)	%	$	3,749,264	$	3,811,113	$	(61,849)	(1.6)	%	Total interest on finance receivables and loans	$	1,304,651	$	1,273,819	$	30,832	2	%

Income from retail installment ~~contracts~~contracts ~~remained relatively flat from the third quarter of 2020 to the third quarter of 2021, and~~ increased ~~$108~~$36 million or 3% ~~from~~from the ~~nine months ended September 30, 2020~~first quarter of 2021 to the ~~nine months ended September 30, 2021,~~ first quarter of 2020primarily due to an increase in average outstanding balance of the Company's portfolio, offset by sale of gross retail installment contracts to third party investors in off-balance sheet securitizations.

Income from personal loansdecreased $5 million or 6%, from the first quarter of2021 to the first quarter of 2020 primarily due to 28% decrease in average outstanding balance of the Company's portfolio. On March 31, 2021, the Company completed the sale of the $1.3 billion Bluestem personal lending portfolio BB Allium LLC. Refer to Note 1 – “Description of Business, Basis of Presentation, and Accounting Principles” to the condensed consolidated financial statements, for additional information regarding the sale.

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)
		2021		2020		Amount		Percent		2021		2020		Amount		Percent			2021		2020		Amount		Percent
		(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Leased vehicle income	Leased vehicle income	$	670,334	$	725,156	$	(54,822)	(8)	%	$	2,115,134	$	2,210,684	$	(95,550)	(4)	%	Leased vehicle income	$	740,884	$	747,979	$	(7,095)	(1)	%
Leased vehicle expense	Leased vehicle expense	325,259		467,172		(141,913)		(30)	%	1,043,774		1,630,945		(587,171)		(36)	%	Leased vehicle expense	423,795		552,912		(129,117)		(23)	%
Leased vehicle income, net	Leased vehicle income, net	$	345,075	$	257,984	$	87,091	34	%	$	1,071,360	$	579,739	$	491,621	85	%	Leased vehicle income, net	$	317,089	$	195,067	$	122,022	63	%

Leased vehicle income, netincreased ~~$87~~$122 million or ~~34%~~63% in the ~~from the third~~first quarter of ~~2020~~2021 compared to the ~~third~~first quarter of ~~2021 and increased $492 million or 85% from the nine months ended September 30,~~ 2020 ~~to the nine months ended September 30, 2021,~~ primarily driven by an increase in ~~residual value of~~ liquidated units. ~~Through~~Through the MPLFA, 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
September 30, Increase (Decrease) September 30, Increase (Decrease)
2021 2020 Amount Percent 2021 2020 Amount Percent
(Dollar amounts in thousands)
Interest expense on notes payable $ 210,072 $ 283,202 $ (73,130) (26) % $ 686,923 $ 902,081 $ (215,158) (24) %
Interest expense on derivatives 8,675 8,916 (241) (3) % 22,556 27,853 (5,297) (19) %
Total interest expense $ 218,747 $ 292,118 $ (73,371) (25) % $ 709,479 $ 929,934 $ (220,455) (24) %


	Three Months Ended
	March 31,				Increase (Decrease)
	2021		2020		Amount		Percent
	(Dollar amounts in thousands)
Interest expense on notes payable	$	246,426	$	318,714	$	(72,288)	(23)	%
Interest expense on derivatives	7,111		10,120		(3,009)		(30)	%
Total interest expense	$	253,537	$	328,834	$	(75,297)	(23)	%

Total interest expense decreased ~~$73.4~~$75 million or ~~25%~~ 23% from the ~~third~~first quarter of 2021 to the first quarter of 2020, ~~to the third quarter of 2021 and decreased $220 million or 24% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021,~~ primarily due to a lower interest rate environment and lower debt balances.

Credit Loss Expense ~~(benefit)~~
Three Months Ended Nine Months Ended
September 30, Increase (Decrease) September 30, Increase (Decrease)
2021 2020 Amount Percent 2021 2020 Amount Percent
(Dollar amounts in thousands)
Credit loss expense $ 42,058 $ 340,548 $ (298,490) (88) % $ (85,484) $ 2,110,331 $ (2,195,815) (104) %



	Three Months Ended
	March 31,				Increase (Decrease)
	2021		2020		Amount		Percent
	(Dollar amounts in thousands)





Credit loss expense	$	136,209	$	907,888	$	(771,679)	(85)	%

Credit loss expense ~~(benefit)~~ decreased ~~$0.3 billion~~$772 million or ~~88% from~~85% in the ~~third~~first quarter of ~~2020~~2021 as compared to the ~~third~~first quarter of ~~2021 and decreased $2.2 billion or 104% from the nine months ended September 30,~~ 2020 ~~to the nine months ended September 30, 2021,~~, primarily driven by the additional reserve to address credit risk associated with the COVID-19 outbreak and associated economic recession during ~~2020.~~the first quarter of 2020, and decrease in charge-offs in 2021.

Profit Sharing
Three Months Ended Nine Months Ended
September 30, Increase (Decrease) September 30, Increase (Decrease)
2021 2020 Amount Percent 2021 2020 Amount Percent
(Dollar amounts in thousands)
Profit sharing $ 41,009 $ 30,414 $ 10,595 35 % $ 158,888 $ 56,239 $ 102,649 183 %



	Three Months Ended
	March 31,				Increase (Decrease)
	2021		2020		Amount		Percent
	(Dollar amounts in thousands)
Profit sharing	$	67,326	$	14,295	$	53,031	371	%

Profit sharing expense consists of revenue sharing related to the MPLFA and profit sharing on personal loans originated pursuant to the agreements with ~~Bluestem during~~Bluestem. Profit sharing expense increased in the first quarter of ~~2021. Profit sharing expense increased from~~2021 as compared to the ~~third~~first quarter of 2020 ~~to the third quarter of 2021 and increased from the nine months ended September 30, 2020 to the nine months ended September 30, 2021,~~, primarily due to an increase in the lease portfolio, ~~income resulting from~~and an ~~increase~~improvement in ~~revenue share with Stellantis, and~~ Bluestem ~~credit improvements,~~results during the first quarter of 2021, prior to sale of the personal lending portfolio on March 31, 2021. Refer to Note 1 – “Description of Business, Basis of Presentation, and Accounting Principles” to the accompanying condensed consolidated financial statements , for additional information regarding the sale.

Other Income


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,				Increase (Decrease)				September 30,				Increase (Decrease)					March 31,				Increase (Decrease)
		2021		2020		Amount		Percent		2021		2020		Amount		Percent			2021		2020		Amount		Percent
		(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Investment gains (losses), net		$	5,241	$	(68,989)	$	74,230	(108)	%	$	(7,057)	$	(279,997)	$	272,940	(97)	%
Investment losses, net																		Investment losses, net	$	(14,712)	$	(63,426)	$	48,714	(77)	%
Servicing fee income	Servicing fee income	19,975		18,574		1,401		8	%	61,481		56,797		4,684		8	%	Servicing fee income	18,694		19,103		(409)		(2)	%
Fees, commissions, and other	Fees, commissions, and other	48,867		78,924		(30,057)		(38)	%	200,242		256,123		(55,881)		(22)	%	Fees, commissions, and other	100,528		95,130		5,398		6	%
Total other income	Total other income	$	74,083	$	28,509	$	45,574	160	%	$	254,666	$	32,923	$	221,743	674	%	Total other income	$	104,510	$	50,807	$	53,703	106	%

Average serviced for others portfolio	Average serviced for others portfolio	$	14,956,054	$	11,365,610	$	3,590,444	32	%	$	14,029,336	$	10,862,178	$	3,167,158	29	%	Average serviced for others portfolio	$	12,584,573	$	10,227,948	$	2,356,625	23	%

Investment ~~gains (losses),~~losses, net ~~increased$74 million from~~decreased in the ~~third quarter of 2020 to the third~~first quarter of 2021 ~~and increased $273 million from the nine months ended September 30, 2020~~as compared to the ~~nine months ended September 30, 2021,~~first quarter of 2020, primarily due to the sale of the personal lending portfolio.

Servicing fee income remained ~~relatively~~ flat in the ~~third~~first quarter of 2021 as compared to the ~~third~~first quarter of 2020 ~~and from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.~~. The Company records servicing fee income on loans that it services but does not own and does not report on its balance sheet. The serviced for others portfolio as

of ~~September 30,~~March 31, 2021 and 2020 was as follows:


		September 30,					March 31,
		2021		2020			2021		2020
		(Dollar amounts in thousands)					(Dollar amounts in thousands)
SBNA and Santander retail installment contracts	SBNA and Santander retail installment contracts	$	11,742,348	$	9,528,349	SBNA and Santander retail installment contracts	$	10,586,778	$	8,760,998
SBNA leases	SBNA leases	243,531		65		SBNA leases	—		131
Total serviced for related parties	Total serviced for related parties	$	11,985,879	$	9,528,414	Total serviced for related parties	$	10,586,778	$	8,761,129
CCAP securitizations	CCAP securitizations	—		103,579		CCAP securitizations	63,188		152,950
SCART securitizations	SCART securitizations	2,067,156		1,032,639		SCART securitizations	2,623,575		—
Other third parties	Other third parties	1,097,933		846,178		Other third parties	942,918		1,417,358
Total serviced for third parties	Total serviced for third parties	$	3,165,089	$	1,982,396	Total serviced for third parties	$	3,629,681	$	1,570,308
Total serviced for others portfolio	Total serviced for others portfolio	$	15,150,968	$	11,510,810	Total serviced for others portfolio	$	14,216,459	$	10,331,437

Fees, commissions, and other primarily includes late fees, miscellaneous, and other income and ~~decreased~~increased primarily due to growth in lease portfolio and increase in customer payments of late fees in the ~~sale~~first quarter of ~~Bluestem personal lending portfolio BB Allium LLC. Refer to Note 1 – “Description of Business, Basis of Presentation, and Accounting Principles”~~2021 as compared to the ~~condensed consolidated financial statements, for additional information regarding the sale.~~first quarter of 2020.

Total Operating Expenses


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,				Increase (Decrease)				September 30,				Increase (Decrease)					March 31,				Increase (Decrease)
		2021		2020		Amount		Percent		2021		2020		Amount		Percent			2021		2020		Amount		Percent
		(Dollar amounts in thousands)																	(Dollar amounts in thousands)
Compensation expense	Compensation expense	$	149,669	$	127,991	$	21,678	17	%	$	460,014	$	388,960	$	71,054	18	%	Compensation expense	$	153,895	$	133,326	$	20,569	15	%
Repossession expense	Repossession expense	33,349		35,910		(2,561)		(7)	%	117,540		115,861		1,679		1	%	Repossession expense	45,346		57,662		(12,316)		(21)	%
Other operating costs	Other operating costs	179,147		99,761		79,386		80	%	382,313		308,193		74,120		24	%	Other operating costs	95,251		91,685		3,566		4	%
Total operating expenses	Total operating expenses	$	362,165	$	263,662	$	98,503	37	%	$	959,867	$	813,014	$	146,853	18	%	Total operating expenses	$	294,492	$	282,673	$	11,819	4	%

Compensation ~~expenses~~expenses increased ~~$22~~$21 million or ~~17% from~~15% in the ~~third quarter of 2020 to the third~~first quarter of 2021 ~~and increased $71 million or 18% from the nine months ended September 30, 2020~~as compared to the ~~nine months ended September 30, 2021,~~first quarter of 2020, primarily due to an increase ~~in employee headcount resulting in a higher bonus accrual~~of 227 employees and an increase in medical claims ~~reserve, offset by a prior year pandemic adjustment.~~reserve.

Repossession expense ~~remained relatively flat from~~decreased $12 million or 21% in the ~~third~~first quarter of ~~2020~~2021 as compared to the ~~third~~first quarter of ~~2021 and from the nine months ended September 30,~~ 2020 ~~to the nine months ended September 30, 2021.~~

~~Other operating costs~~ increased $79 million or 80% from the third quarter of 2020 to the third quarter of 2021 and increased $74 million or 24% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021,, primarily due to ~~$50 million donation to~~continued lower volume of involuntary repossessions nationwide as a result of the SC Foundation, and $11.5 million impairment of Roadloans trade name which has been replaced with a Platform Development and License Agreement ("PDLA") with Autofi Inc. for the design and operation of a digital software platform for the sale and financing of automobiles.COVID-19 outbreak.

Income Tax Expense


		Three Months Ended									Nine Months Ended											Three Months Ended
		September 30,						Increase (Decrease)			September 30,						Increase (Decrease)					March 31,						Increase (Decrease)
		2021			2020			Amount		Percent	2021			2020			Amount		Percent			2021			2020			Amount		Percent
		(Dollar amounts in thousands)																				(Dollar amounts in thousands)
Income tax expense	Income tax expense	$	208,607		$	172,476		$	36,131	21%	$	775,484		$	137,161		$	638,323	465	%	Income tax expense	$	234,457		$	(2,458)		$	236,915	(9,639)%
Income before income taxes	Income before income taxes	971,931			662,591			309,340		47%	3,338,665			526,611			2,812,054		534	%	Income before income taxes	976,112			(6,445)			982,557		(15,245)%
Effective tax rate	Effective tax rate	21.5		%	26.0		%				23.2		%	26.0		%					Effective tax rate	24.0		%	38.1		%

The effective tax rate decreased from ~~26.0% for~~38.1% in the ~~third~~first quarter of 2020 to ~~21.5% for third~~24.0% in the first quarter of 2021, ~~and decreased from 26.0% for the nine months ended September 30, 2020 to 23.2% for the nine months ended September 30, 2021,~~ primarily

due to pre-tax income ~~during~~in the first quarter of 2021 compared to discrete tax adjustments that increased the tax benefit recorded on the pre-tax loss in the first ~~half~~quarter of 2020.

Other Comprehensive Income (Loss)
Three Months Ended Nine Months Ended
September 30, Increase (Decrease) September 30, Increase (Decrease)
2021 2020 Amount Percent 2021 2020 Amount Percent
(Dollar amounts in thousands)
Change in unrealized gains (losses) on cash flow hedges and available-for-sale securities, net of tax $ 5,661 $ 6,823 $ (1,162) (17) % $ 19,372 $ (30,189) $ 49,561 (164) %



	Three Months Ended
	March 31,				Increase (Decrease)
	2021		2020		Amount		Percent
	(Dollar amounts in thousands)


Change in unrealized gains (losses) on cash flow hedges and available-for-sale securities, net of tax	$	8,748	$	(36,962)	$	45,710	(124)	%

The change in unrealized gains (losses) ~~for~~in the ~~three and nine months ended September 30, 2021~~first quarter of 2020 as compared to ~~three and nine months ended September 30, 2020,~~the first quarter of 2021, was primarily driven by ~~decrease of notional and forward curve rates for the~~an increase in cash flow hedge portfolio related to mark-to-market valuation, as shown in Note 9 “Derivative Financial Instruments” to the accompanying condensed consolidated financial statements.

Credit Quality

Loans and Other Finance Receivables

Allowance for Credit losses

Non-prime loans comprise ~~80%~~79% of the Company’s portfolio as of ~~September 30,~~March 31, 2021. The Company records an ACL at a level considered adequate to cover current expected credit losses in the Company’s retail installment contracts and other loans and receivables held for investment, based upon a holistic assessment including both quantitative and qualitative considerations. Refer to Note 2 - "Finance Receivables" and Note 3 - "Credit Loss Allowance and Credit Quality" to the accompanying condensed consolidated financial statements for the details on the Company’s held for investment portfolio of retail installment contracts as of ~~September 30,~~March 31, 2021 and December 31, 2020.

Credit risk profile

A summary of the credit risk profile of the Company’s retail installment contracts held for investment, by FICO® score, number of trade lines (represents number of approved credit accounts reported to credit reporting agencies), and length of credit history, each as determined at origination, as of ~~September 30,~~March 31, 2021 and December 31, 2020 was as follows (dollar amounts in ~~billions, totals may not sum due to rounding):~~
September 30, 2021
Trade Lines 1 2 3 4+ Total
FICO Months History $ % $ % $ % $ % $ %
No-FICO (a) <36 $3.2 97 % $0.1 3 % $0.0 — % $0.0 — % $3.3 9 %
36+ 0.3 38 % 0.2 25 % 0.1 13 % 0.2 25 % 0.8 2 %
<540 <36 0.1 50 % 0.0 — % 0.0 — % 0.1 50 % 0.2 1 %
36+ 0.1 2 % 0.2 4 % 0.2 4 % 4.2 89 % 4.7 14 %
540-599 <36 0.3 33 % 0.2 22 % 0.1 11 % 0.3 33 % 0.9 3 %
36+ 0.1 1 % 0.3 3 % 0.3 3 % 9.8 93 % 10.5 32 %
600-639 <36 0.4 44 % 0.2 22 % 0.1 11 % 0.2 22 % 0.9 3 %
36+ 0.1 2 % 0.1 2 % 0.2 3 % 5.6 93 % 6.0 18 %
>=640 (b) <36 0.8 53 % 0.3 20 % 0.2 13 % 0.2 13 % 1.5 5 %
36+ 0.1 2 % 0.1 2 % 0.1 2 % 4.1 93 % 4.4 13 %
Total (c) $5.5 17 % $1.7 5 % $1.3 4 % $24.7 74 % $33.2 100 %

5654

billions, totals may not foot due to rounding):


March 31, 2021
Trade Lines		1			2			3			4+			Total
FICO	Months History	$	%		$	%		$	%		$	%		$	%
No-FICO (a)	<36	$3.1	97	%	$0.1	3	%	$0.0	—	%	$0.0	—	%	$3.2	10	%
	36+	0.3	38	%	0.2	25	%	0.1	13	%	0.2	25	%	0.8	2	%
<540	<36	0.1	33	%	0.1	33	%	0.0	—	%	0.1	33	%	0.3	1	%
	36+	0.1	2	%	0.2	4	%	0.2	4	%	4.3	90	%	4.8	15	%
540-599	<36	0.3	33	%	0.2	22	%	0.1	11	%	0.3	33	%	0.9	4	%
	36+	0.2	2	%	0.3	3	%	0.3	3	%	9.2	93	%	9.9	30	%
600-639	<36	0.4	44	%	0.2	22	%	0.1	11	%	0.2	22	%	0.9	3	%
	36+	0.1	2	%	0.1	2	%	0.1	2	%	5.1	94	%	5.4	17	%
>=640 (b)	<36	0.9	64	%	0.2	14	%	0.1	7	%	0.2	14	%	1.4	4	%
	36+	0.1	2	%	0.1	2	%	0.1	2	%	4.2	93	%	4.5	14	%
Total (c)		$5.6	17	%	$1.7	5	%	$1.1	3	%	$23.8	74	%	$32.1	100	%


December 31, 2020
Trade Lines		1				2				3				4+				Total
FICO	Months History	$		%		$		%		$		%		$		%		$		%
No-FICO (a)	<36	$3.0		97	%	$	0.1	3	%	$	0.0	—	%	$	0.0	—	%	$	3.1	9	%
	36+	0.3		38	%	0.2		25	%	0.1		13	%	0.2		25	%	0.8		2	%
<540	<36	0.0		—	%	—		—	%	0.1		50	%	0.1		50	%	0.2		1	%
	36+	0.1		2	%	0.2		4	%	0.2		4	%	4.3		90	%	4.8		15	%
540-599	<36	0.3		38	%	0.2		25	%	0.1		13	%	0.2		25	%	0.8		3	%
	36+	0.2		2	%	0.2		2	%	0.3		3	%	9.0		93	%	9.7		28	%
600-639	<36	0.4		44	%	0.2		22	%	0.1		11	%	0.2		22	%	0.9		3	%
	36+	0.1		2	%	0.1		2	%	0.1		2	%	5.0		94	%	5.3		16	%
>640 (b)	<36	1.0		59	%	0.3		18	%	0.2		12	%	0.2		12	%	1.7		5	%
	36+	0.1		2	%	0.1		2	%	0.1		2	%	5.5		95	%	5.8		18	%
Total (c)		$	5.5	17	%	$	1.6	5	%	$	1.3	4	%	$	24.7	75	%	$	33.1	100	%

(a) Includes commercial loans

(b)Beginning in 2021, loans with FICO score of 640 are disclosed in the >=640 category. As of December 31, 2020, loans with FICO score of 640 were included in the 600-639 category.

(c) The amount of accrued interest excluded from the disclosed amortized cost as of ~~September 30,~~March 31, 2021 and December 31, 2020 is ~~$323~~$346 million and $416 million, respectively.

Delinquencies

The Company considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date.

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. For the three months ended March 31, 2021, delinquency rates have been positively impacted (lower) due to the benefits of government stimulus payments and tax refunds provided to customers.

Refer to Note 3 - "Credit Loss Allowance and Credit Quality" to the accompanying condensed consolidated financial statements for the details on the retail installment contracts held for investment that were placed on nonaccrual status, as of ~~September 30,~~March 31, 2021 and December 31, 2020.

Credit Loss Experience

The following is a summary of net losses and repossession activity on retail installment contracts held for investment for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020.


		Nine Months Ended						Three Months Ended
		September 30, 2021			September 30, 2020			March 31, 2021			March 31, 2020

		(Dollar amounts in thousands)						(Dollar amounts in thousands)
Principal outstanding at period end	Principal outstanding at period end	$	32,742,544		$	33,485,342	Principal outstanding at period end	$	31,813,760		$	30,741,144
Average principal outstanding during the period	Average principal outstanding during the period	$	32,576,199		$	31,462,524	Average principal outstanding during the period	$	32,569,618		$	30,718,119
Number of receivables outstanding at period end	Number of receivables outstanding at period end	1,865,446			1,971,917		Number of receivables outstanding at period end	1,891,136			1,921,789
Average number of receivables outstanding during the period	Average number of receivables outstanding during the period	1,900,412			1,888,260		Average number of receivables outstanding during the period	1,920,459			1,839,800
Number of repossessions (a)	Number of repossessions (a)	122,769			131,522		Number of repossessions (a)	47,523			65,710
Number of repossessions as a percent of average number of receivables outstanding	Number of repossessions as a percent of average number of receivables outstanding	8.6		%	9.3 %		Number of repossessions as a percent of average number of receivables outstanding	9.9		%	14.3 %
Net losses	Net losses	$	326,795		$	1,100,138	Net losses	$	244,075		$	593,046
Net losses as a percent of average principal amount outstanding (b)	Net losses as a percent of average principal amount outstanding (b)	1.3		%	4.7 %		Net losses as a percent of average principal amount outstanding (b)	3.0		%	7.7 %

(a) Repossessions are net of redemptions. The number of repossessions includes repossessions from the outstanding portfolio and from accounts already charged off. The Company temporarily suspended involuntary repossession activities nationwide during the onset of COVID-19 and restarted these activities during ~~the third quarter of~~Q3 2020.

(b) Decrease is due to a reduction in ~~the~~ number of repossessions (refer to note (a) above), and an increase in ~~the~~ number of deferrals (explained in detail under "Deferrals and Troubled Debt Restructurings" below) as it relates to COVID-19.

There were no charge-offs on the Company’s receivables from dealers for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020. Net charge-offs on the finance lease receivables portfolio, totaled ~~$(51)~~$(1,101) and ~~$3,588~~$569 for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively.

Deferrals and Troubled Debt Restructurings

In accordance with the Company’s policies and guidelines, the Company may offer extensions (deferrals) to customers on its retail installment contracts, whereby the customer is allowed to defer a maximum of three payments per event to the end of the loan. The Company’s policies and guidelines limit the frequency of each new deferral to one deferral every six months, regardless of the length of any prior deferral. Further, 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 months have passed since origination. During the deferral period, the Company continues to accrue and collect interest on the loan in accordance with the terms of the deferral agreement.

In March 2020, the Company began actively working with its borrowers impacted by COVID-19 and provided loan modification programs ~~in accordance with the~~ ~~“Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus" issued by federal banking agencies and the CARES Act~~ to mitigate the adverse effects of ~~COVID-19 on modifications.~~COVID-19. These programs temporarily revised the practices noted above during ~~2020 and~~2020. As of March 31, 2021 the Company has generally returned to these servicing practices, with the exception of an increased ~~the volume~~limit on total months of ~~modifications provided to our customers.~~extensions allowed. The Company's predominant program offering is a two-month deferral of payments to the end of the loan term and waiver of late charges.

~~Effective January~~At the implementation of the COVID-19 programs in March 2020, we experienced an increase in requests for extensions related to COVID-19 and over 1 million COVID-19 loan extensions have been granted. As of March 31, 2021, over one third (or $12 billion in balances) of our customers have received a COVID-19 deferral. At March 31, 2021 and December 31, 2020, the Company had $184 million and $1.1 billion of loans in active deferral, representing 0.6% and 3.2% of the portfolio, respectively. In the first quarter of 2021 the number of COVID-19 deferrals has moderated and as of March 2021, the overall extension volumes are consistent with volumes experienced before the COVID-19 pandemic, and the Company has generally returned to ~~pre-pandemic~~its historic servicing practices with the exception of an increased limit on the total months of extensions allowed. As of September 30, 2021, the overall modification volumes were consistent with volumes experienced before COVID-19 pandemic, and the number and dollar amount of active COVID-19 modifications are immaterial.

The following is a summary of all deferrals (amortized cost) on the Company’s retail installment contracts held for investment as of the dates indicated:


		September 30, 2021				December 31, 2020					March 31, 2021				December 31, 2020
		(Dollar amounts in thousands)									(Dollar amounts in thousands)
Never deferred	Never deferred	$	24,353,207	73.4	%	$	20,824,336	63.0	%	Never deferred	$	20,997,437	65.5	%	$	20,824,336	63.0	%
Deferred once	Deferred once	3,543,563		10.7	%	5,245,471		15.8	%	Deferred once	4,504,374		14.0	%	5,245,471		15.8	%
Deferred twice	Deferred twice	2,022,010		6.1	%	3,083,542		9.3	%	Deferred twice	2,698,556		8.4	%	3,083,542		9.3	%
Deferred 3 - 4 times	Deferred 3 - 4 times	2,174,422		6.6	%	2,842,870		8.6	%	Deferred 3 - 4 times	2,693,759		8.4	%	2,842,870		8.6	%
Deferred greater than 4 times	Deferred greater than 4 times	1,074,914		3.2	%	1,104,369		3.3	%	Deferred greater than 4 times	1,177,502		3.7	%	1,104,369		3.3	%

Total (a)	Total (a)	$	33,168,116			$	33,100,588			Total (a)	$	32,071,628			$	33,100,588

(a) The amount of accrued interest excluded from the disclosed amortized cost as of ~~September 30,~~March 31, 2021 and December 31, 2020 is ~~$323~~$346 million and $416 million, respectively.

At the time a deferral is granted, all delinquent amounts may be deferred or paid. This may result in the classification of the loan as current and therefore not considered a delinquent account. 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. If a customer receives two or more deferrals over the life of the loan, the loan would generally advance to a TDR designation.

In March 2020, the federal bank regulatory agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus.” This guidance encouraged financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19 and concludes that short-term modifications (e.g. six months) made on a good faith basis to borrowers who were impacted by COVID-19 and who were less than 30 days past due as of the implementation date of a relief program are not TDRs. The Company applied this guidance to deferrals executed in response to COVID-19 and did not designate borrowers who were less than 30 days past due at the time of the COVID-19 extension program as TDRs, even if they would have otherwise qualified. Upon exceeding six months of COVID-19 extensions, borrowers are designated as a TDR. The Company ceased to apply this guidance effective January 1, 2021 and reverted back to our pre-COVID-19 method, as described above, of determining whether or not a modification qualifies as a TDR.

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, expected life of

the loan and cash flow forecasts for loans classified as TDRs used in the determination of the adequacy of the Company’s ACL are also impacted.

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 generally placed on nonaccrual status when the account becomes past due more than 60 days. For loans on nonaccrual status, interest income is recognized on a cash basis and the accrual of interest is resumed and reinstated if a delinquent account subsequently becomes 60 days or less past due.

The following is a summary of the amortized cost (including accrued interest) balance as of ~~September 30,~~March 31, 2021 and December 31, 2020 of loans that have received these modifications and concessions;


		September 30, 2021		December 31, 2020			March 31, 2021		December 31, 2020
		Retail Installment Contracts					Retail Installment Contracts
		(Dollar amounts in thousands)					(Dollar amounts in thousands)
Temporary reduction of monthly payment (a)	Temporary reduction of monthly payment (a)	$	267,880	$	579,187	Temporary reduction of monthly payment (a)	$	443,709	$	579,187
Bankruptcy-related accounts	Bankruptcy-related accounts	16,805		23,865		Bankruptcy-related accounts	19,543		23,865
Extension of maturity date	Extension of maturity date	91,555		69,613		Extension of maturity date	84,515		69,613
Interest rate reduction	Interest rate reduction	73,456		76,786		Interest rate reduction	77,773		76,786
Max buy rate and fair lending (b)	Max buy rate and fair lending (b)	8,533,585		7,459,761		Max buy rate and fair lending (b)	7,718,368		7,459,761
Other (c)	Other (c)	518,022		391,424		Other (c)	436,745		391,424
Total modified loans	Total modified loans	$	9,501,303	$	8,600,636	Total modified loans	$	8,780,653	$	8,600,636

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

(b) Max buy rate modifications comprise loans modified by the Company to adjust the interest rate quoted in a dealer-arranged financing. The Company reassesses the contracted APR when changes in the deal structure are made (e.g., higher down payment and lower vehicle 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 loans modified by the Company related to possible “disparate impact” credit discrimination in indirect vehicle finance. These modifications are not considered a TDR event because they do not relate to a concession provided to a customer experiencing financial difficulty.

(c) Includes various other types of modifications and concessions, such as hardship modifications that are considered a TDR event.

The following table shows the components of the changes in the amortized cost (including accrued interest) in retail installment contract TDRs for the three and nine months ended September 30, 2021 and 2020:
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Balance — beginning of period $ 4,210,211 $ 3,981,618 $ 4,011,780 $ 3,828,892
New TDRs 391,370 336,249 1,824,843 1,418,493
Charge-offs (206,111) (200,352) (599,083) (617,536)
Paydowns (a) (424,607) (278,242) (1,192,995) (817,069)
Others 10,057 4,197 (63,625) 30,690
Balance — end of period (b) $ 3,980,920 $ 3,843,470 $ 3,980,920 $ 3,843,470

~~(a) Includes net discount accreted in interest income for the period.~~

~~(b) excluding collateral-dependent bankruptcy TDRs~~

Refer to Note 3 - "Credit Loss Allowance and Credit Quality" to the accompanying condensed consolidated financial statements for the details on the Company’s amortized cost (including accrued interest) in TDRs and a summary of delinquent TDRs, as of ~~September 30,~~March 31, 2021 and December 31, 2020.

The following table shows the components of the changes in the amortized cost (including accrued interest) in retail installment contract TDRs for the three months ended March 31, 2021 and 2020:



	Three Months Ended
		March 31, 2021		March 31, 2020
Balance — beginning of period		$	4,011,780	$	3,828,892
New TDRs		1,022,154		185,767
Charge-offs		(202,461)		(289,567)
Paydowns (a)		(351,405)		(288,339)
Others		(49,556)		—
Balance — end of period (b)		$	4,430,512	$	3,436,753

(a) Includes net discount accreted in interest income for the period.

(b) excluding collateral-dependent bankruptcy 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 wi~~with~~th 13 third-party banks, Santander and SHUSA, and through securitizations in the ABS market and 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 ~~$7.9~~$6.2 billion of stockholders’ equity that supports its access to the securitization markets, credit facilities, and flow agreements.

During the ~~quarter~~three months ended ~~September 30,~~March 31, 2021, the Company completed on-balance sheet funding transactions totaling approximately ~~$6.2~~$3.5 billion, including:

•securitization on the Company’s SDART platform for approximately ~~$2.5 billion;~~$1.9 billion;

•~~securitizations on the Company's DRIVE, deeper subprime platform, for approximately $1.8 billion; and~~

•leas~~lease~~e securitization on our SRT platform for approximately ~~$1.9 billion~~$1.6 billion;

The Company also completed ~~approximately $0.3~~approximately $2.4 billion in asset sales to third parties.

Refer to Note 7 - "Debt" to the accompanying condensed consolidated financial statements for the details on the Company’s total debt.

Credit Facilities

Third-party Revolving Credit Facilities

Warehouse Lines

The Company has one credit facility with eight banks providing an aggregate commitment of $3.5 billion for the exclusive use of providing short-term liquidity needs to support Chrysler Finance lease financing. The facility requires reduced Advance Rates in the event of delinquency, credit loss, or residual loss ratios, as well as other metrics exceeding specified thresholds.

The Company has eight credit facilities with eleven banks providing an aggregate commitment of $8.3 billion for the exclusive use of providing short-term liquidity needs to support Core and CCAP Loan financing. As of ~~September 30,~~March 31, 2021 there was an outstanding balance of approximately ~~zero~~$2.3 billion on these facilities in aggregate. These facilities reduced Advance Rates in the event of delinquency, credit loss, as well as various other metrics exceeding specific thresholds.

Repurchase Agreements

The Company obtains financing through investment management or repurchase 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,~~March 31, 2021 there is no outstanding balance under any repurchase agreements.

Lines of Credit with Santander and Related Subsidiaries

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


		As of September 30, 2021 (amounts in thousands)										As of March 31, 2021 (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
Promissory Note	Promissory Note	SHUSA	$	250,000	$	250,000	$	250,000	$	250,000	Promissory Note	SHUSA	$	250,000	$	250,000	$	250,000	$	250,000
Promissory Note	Promissory Note	SHUSA	250,000		250,000		250,000		250,000		Promissory Note	SHUSA	250,000		250,000		250,000		250,000
Promissory Note	Promissory Note	SHUSA	250,000		250,000		250,000		250,000		Promissory Note	SHUSA	250,000		250,000		250,000		250,000
Promissory Note	Promissory Note	SHUSA	250,000		250,000		250,000		250,000		Promissory Note	SHUSA	250,000		250,000		250,000		250,000

Promissory Note	Promissory Note	SHUSA	350,000		350,000		350,000		350,000		Promissory Note	SHUSA	250,000		250,000		250,000		250,000
Promissory Note	Promissory Note	SHUSA	400,000		400,000		400,000		400,000		Promissory Note	SHUSA	350,000		350,000		350,000		350,000
Promissory Note	Promissory Note	SHUSA	450,000		450,000		450,000		450,000		Promissory Note	SHUSA	400,000		400,000		400,000		400,000
Promissory Note	Promissory Note	SHUSA	500,000		500,000		500,000		500,000		Promissory Note	SHUSA	450,000		450,000		450,000		450,000

Promissory Note											Promissory Note	SHUSA	500,000		500,000		500,000		500,000
Promissory Note											Promissory Note	SHUSA	500,000		500,000		500,000		500,000
Promissory Note	Promissory Note	SHUSA	500,000		500,000		500,000		500,000		Promissory Note	SHUSA	650,000		650,000		650,000		650,000
Promissory Note	Promissory Note	SHUSA	650,000		650,000		650,000		650,000		Promissory Note	SHUSA	650,000		650,000		650,000		650,000
Promissory Note	Promissory Note	SHUSA	750,000		750,000		750,000		750,000		Promissory Note	SHUSA	750,000		750,000		750,000		750,000
Promissory Note	Promissory Note	SHUSA	1,000,000		1,000,000		1,000,000		1,000,000		Promissory Note	SHUSA	1,000,000		1,000,000		1,000,000		1,000,000
Promissory Note	Promissory Note	Santander	2,000,000		2,000,000		2,000,000		2,000,000		Promissory Note	Santander	2,000,000		2,000,000		2,000,000		2,000,000
Promissory Note	Promissory Note	Santander	2,000,000		2,000,000		2,000,000		2,000,000		Promissory Note	Santander	2,000,000		2,000,000		2,000,000		2,000,000
Line of Credit	Line of Credit	SHUSA	—		500,000		82,271		480,000		Line of Credit	SHUSA	—		500,000		96,444		450,000
Line of Credit	Line of Credit	SHUSA	—		2,500,000		—		—		Line of Credit	SHUSA	—		2,500,000		—		—
			$	9,600,000	$	12,600,000							$	10,500,000	$	13,500,000

SHUSA provides the Company with $0.5 billion of committed revolving credit and $2.5 billion of contingent liquidity that can be drawn on an unsecured basis. SHUSA also provides the Company with ~~$5.6~~$6.5 billion of term promissory notes with maturities

ranging from ~~December~~May 2021 to May 2025. Santander provides the Company with $4 billion of unsecured promissory notes with maturities ranging from June 2022 and September 2022.

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 issues amortizing notes. The Company has on-balance sheet securitizations outstanding in the market with a cumulative ABS balance of ~~approxima~~approximat~~tely $29~~ely $26 billion.

Deficiency and Debt Forward Flow Agreement

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. 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.

Off-Balance Sheet Financing

Beginning in 2017, the Company had 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 were 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 consolidated balance sheets. Beginning in 2018, this program has been replaced with a new program with SBNA, whereby the Company has agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchasing of retail loans, primarily from Stellantis N.V. dealers, all of which are serviced by the Company.

The Company also continues to periodically execute securitizations under Rule 144A of the Securities Act. After retaining the required credit risk retention via a 5% vertical interest, the Company transfers all remaining notes and residual interests in these securitizations to third parties. The Company subsequently records these transactions as true sales of the retail installment contracts securitized, and removes the sold assets from the Company's consolidated balance sheet.

Cash Flow Comparison

The Company has historically produced positive net cash from operating activities. The Company’s investing activities primarily consist of originations, acquisitions, and collections from retail installment contracts. SC’s financing activities primarily consist of borrowing, repayments of debt, share repurchases, and payment of dividends.


									Three Months Ended March 31,
		Nine Months Ended September 30,				2021	2020
		2021		2020					(Dollar amounts in thousands)
		(Dollar amounts in thousands)				As Restated - Note 1
Net cash provided by operating activities	Net cash provided by operating activities	$	5,131,575	$	3,251,942			Net cash provided by operating activities	$	3,152,898	$	1,395,116
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(89,496)		(4,205,861)				Net cash provided by (used in) investing activities	306,651		(1,542,427)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(3,017,154)		1,165,602				Net cash provided by (used in) financing activities	(2,750,162)		474,816

Net Cash ~~Provided~~Provided by Operating Activities

Net cash provided by operating activities increased by ~~$1.9~~$1.8 billion from the ~~nine~~three months ended ~~September 30,~~March 31, 2020 to the ~~nine~~three months ended ~~September 30,~~March 31, 2021, primarily due to the sale of the personal loan portfolio and an increase in proceeds

on receivables held for sale.

Net Cash Provided by Investing Activities

Net cash provided by investing activities increased by ~~$4.1~~$1.8 billion from the ~~nine~~three months ended ~~September 30,~~March 31, 2020 to the ~~nine~~three months ended ~~September 30,~~March 31, 2021, primarily due to an$1.8 billion increase in ~~collections and~~ proceeds ~~on sale~~from sales of retail installment contracts held for sale, originated as held for investment.

Net Cash Used in Financing Activities

Net cash used in financing activities ~~decreased~~increased by ~~$4.2~~$3.2 billion from the ~~nine~~three months ended ~~September 30,~~March 31, 2020 to the ~~nine~~three months ended ~~September 30,~~March 31, 2021, primarily due to a decrease in ~~proceeds from~~payments for notes ~~payable.~~payable of $3.6 billion; offset by $0.5 billion increase of shares repurchased primarily due to tender offer program, which expired on February 27, 2020.

Contingencies and Off-Balance Sheet Arrangements

For information regarding the Company’s contingencies and off-balance sheet arrangements, refer to Note 6 - "Variable Interest Entities" and Note 14 - "Commitments and Contingencies" in the accompanying condensed consolidated financial statements.

Contractual Obligations

The ~~Company~~Company leases its headquarters in Dallas, Texas, its servicing centers in Texas, Colorado, Arizona, and Puerto Rico, and operations facilities in California, Texas and Colorado under non-cancelable operating leases that expire at various dates ~~through~~through 2027. ~~The~~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,~~March 31, 2021:


		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	Operating lease obligations	$	4,078	$	31,752	$	28,710	$	18,029	$	82,569	Operating lease obligations	$	12,547	$	28,976	$	25,466	$	6,926	$	73,915
Notes payable - credit facilities and related party	Notes payable - credit facilities and related party	5,400,000		3,200,000		1,000,000		—		9,600,000		Notes payable - credit facilities and related party	2,872,345		8,476,200		1,500,000		—		12,848,545
Notes payable - secured structured financings (a)	Notes payable - secured structured financings (a)	978,330		11,918,520		11,008,316		5,014,104		28,919,270		Notes payable - secured structured financings (a)	307,580		9,300,314		11,484,335		4,676,250		25,768,479
Contractual interest on debt	Contractual interest on debt	589,396		545,982		140,437		45,506		1,321,321		Contractual interest on debt	756,255		735,698		182,934		58,002		1,732,889
Total	Total	$	6,971,804	$	15,696,254	$	12,177,463	$	5,077,639	$	39,923,160	Total	$	3,948,727	$	18,541,188	$	13,192,735	$	4,741,178	$	40,423,828

(a)Adjusted for unamortized costs of ~~$87~~$76 million.

Risk Management Framework

The Company’s risk management framework is overseen by its Board, the 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, 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 2020 Annual Report on Form 10-K.

Credit Risk

The Company applies a qualitative framework to exercise judgment about matters that are inherently uncertain and that are not considered by the quantitative framework. These adjustments are documented and reviewed through the Company’s risk management processes. Furthermore, management reviews, updates, and validates its process and loss assumptions on a periodic basis. This process involves an analysis of data integrity, review of loss and credit trends, a retrospective evaluation of actual loss information to loss forecasts, and other analyses.

ACL levels are collectively reviewed for adequacy and approved quarterly. Required actions resulting from the Company's analysis, if necessary, are governed by its Allowance for Credit Losses Committee.The ACL levels are approved by the Board level committees quarterly.

Part II, Item 8 – Financial Statements and Supplementary Data (Note 1) in the 2020 Annual Report on Form 10-K described the methodology used to determine the ACL and reserve for unfunded lending commitments in the Consolidated Balance Sheets.

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 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 has policies in place 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,~~derivatives, such as interest rate swap agreements, to mitigate against interest rate risk. As of ~~September 30,~~March 31, 2021, the notional value of the Company’s interest rate swap agreements was ~~$0.3 billion.~~$2.4 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,~~March 31, 2021 the notional value of the Company’s interest rate cap agreements was ~~$15.3~~$18.7 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,~~March 31, 2021, the twelve-month impact of a 100 basis point parallel increase in the interest rate curve would ~~increase~~decrease the Company’s net interest income by ~~$14~~$2 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,~~March 31, 2021, the impact of a 100 basis point parallel increase in the interest rate curve would decrease the Company’s MVE by ~~$12~~$64 million.

Collateral Risk

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 residual risk-sharing agreement with ~~Stellantis.~~Stellantis N.V.. Under the agreement, the Company is responsible for incurring the first portion of any residual value gains or losses up to the first 8%. The Company and Stellantis N.V. 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, Stellantis N.V. is responsible for residual value gains or losses over 12%, capped at a certain limit, after which the Company incurs any remaining gains or losses. From the inception of the agreement with Stellantis N.V. through the ~~third~~first quarter of 2021, approximately ~~92%~~90% 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 employs 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.

Liquidity Risk

The Company views liquidity as integral to other key elements such as capital adequacy, asset quality and profitability. The Company’s primary liquidity risk relates to the ability to finance new originations through the Bank and ABS securitization markets. The Company has a robust liquidity policy that is intended to manage this risk. The liquidity risk policy establishes the following guidelines:

•that the Company maintain at least eight external credit providers (as of ~~September 30,~~March 31, 2021, it had ~~thirteen)~~thirteen);

•that the Company relies on Santander and affiliates for no more than 30% of its funding (as of ~~September 30,~~March 31, 2021, Santander and affiliates provided ~~25%~~27% of its funding);

•that no single lender’s commitment should comprise more than 33% of the overall committed external lines (as of ~~September 30,~~March 31, 2021, the highest single lender’s commitment was ~~16%~~15% (not including repo)); and

•that no more than 35% and 65% of the Company’s warehouse facilities mature in the next six months and twelve months respectively (as of ~~September 30,~~March 31, 2021, one of the Company’s warehouse facilities isare scheduled to mature in the next six or twelve months).

The Company’s liquidity risk 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 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, lending covenant breaches, lower dealer discount rates, and higher credit losses.

The Company generally seeks funding from the most efficient and cost-effective source of liquidity from the ABS markets, third-party facilities, and Santander and SHUSA. Additionally, the Company can reduce originations to significantly lower levels, if necessary, during times of limited liquidity.

The Company had established a qualified like-kind exchange program 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 resulted 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 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 includes Third Party Risk Management, Business Continuity 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 with 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 that assists the Company in analyzing potential breaches of regulatory requirements and customer service.

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.


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 CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules ~~13a- 15(e)~~13a-15(e) and ~~15d- 15(e)~~15d-15(e) under the Exchange Act, as of ~~September 30,~~March 31, 2021 (the “Evaluation Date”). Based on ~~that~~this evaluation, our CEO and CFO have concluded that as of the Evaluation Date, ~~our~~due to the material weakness in internal control over financial reporting described below, the Company’s disclosure controls and ~~procedures: (a) are~~procedures were not effective

to ensure that the information required to be disclosed by the Company in the reports ~~filed~~that it files or ~~submitted~~submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms;~~forms, and ~~(b) include controls and procedures designed to ensure~~ that ~~information required to be disclosed by the Company in~~ such ~~reports~~information is accumulated and communicated to ~~the Company’s~~our management, including ~~the~~our CEO and ~~the~~ CFO, as appropriate to allow timely decisions regarding required disclosure.In light of this material weakness, management completed additional procedures and analysis to validate the accuracy and completeness of the reported financial results within the Condensed Consolidated Statement of Cash Flows (“SCF”).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. Based on the additional analysis and other procedures performed, management concluded that the Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q/A present fairly, in all material respects our financial position, results of operations, capital position, and cash flows for the periods presented, in conformity with generally accepted accounting principles (“GAAP”).

A material weakness 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.

Management identified a material weakness in our internal control over financial reporting related to the lack of designing and maintaining effective controls to verify the proper classification of loan activities related to finance receivables held for sale and finance receivables held for investment within the SCF. This material weakness resulted in material misstatements to the classification of cash flows associated with finance receivables held for sale and finance receivables held for investment within the SCF, which resulted in the restatement of the Condensed Consolidated Financial Statements as of and for the period ending March 31, 2021. Additionally, this material weakness could result in further misstatements of the classification of cash flows for finance receivables held for sale and finance receivables held for investment that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan

Our remediation plan includes enhancing the documentation and review process around identification and tracking of the classification of loans at origination; and enhancing the review controls, and supporting documentation related to the nature and classification of finance receivables held for sale and finance receivables held for investment cash flows between operating activities and investing activities in the SCF.

Changes in Internal Control over Financial Reporting

There were no changes in the ~~Company’s~~Company's internal control over financial reporting ~~identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act~~ that occurred during the ~~quarter ended September 30, 2021~~period covered by this Quarterly Report on Form 10-Q/A that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. Although a substantial portion of the Company’s workforce continues to work remotely due to the COVID-19 pandemic, this has not materially affected our internal controls over financial reporting. We continue to monitor and assess the COVID-19 pandemic to minimize potential impacts, if any, it may have on the design and operating effectiveness of our internal controls.

6564

PART II: OTHER INFORMATION


Item 1.			Legal Proceedings

Reference should be made to Note 14 – “Commitments and Contingencies” to the accompanying 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 15 – “Related-Party Transactions” to the accompanying condensed consolidated financial statements included in the 2020 Annual Report on Form 10-K.


Item 1A.			Risk Factors

The Company is subject to a number of risks potentially impacting its business, financial condition, results of operations and cash flow. ~~Other than the risk factor noted below, there~~There have been no material changes from the risk factors set forth under Part I, Item 1A – Risk Factors, in the 2020 Annual Report on Form 10-K.

Santander Holdings USA, Inc.’s acquisition of the Company’s common stock not currently owned by it may not be completed within the expected timeframe, or at all, and the market price of our common stock could decline significantly if the transaction is not completed within the expected timeframe, or at all.

On August 24, 2021, the Company announced that SHUSA and it entered into a definitive agreement whereby SHUSA agreed to acquire all of the outstanding shares of common stock of the Company's that are not already owned by SHUSA via an all-cash tender offer, followed by a second-step merger. The consummation of the transaction with SHUSA is subject to closing conditions beyond the Company’s control, and there can be no assurance the transaction will be consummated. The consummation of the transaction may require the expenditure of significant time and resources by the Company. Further, the transaction may create uncertainty or be a distraction for our Board, management, employees, customers and business partners. Additionally, actions taken by the Company connection with the transaction could result in litigation against the Company, which may result in further significant costs, uncertainty and distraction. The market price of our common stock may reflect various assumptions as to whether the transaction will occur or perceived uncertainties in our future direction and the market price of our stock may change significantly as a result of changing assumptions or perceptions regarding the transaction. Failure to consummate the transaction within the expected timeframe, or at all, could cause the market price of our common stock to decline significantly.


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.

~~There were no share~~The following table presents information regarding repurchases of the ~~Company's~~Company’s common stock as part of publicly announced plans or programs during the quarter ended ~~September 30, 2021.~~ March 31, 2021:


Period	Total Number of Shares Purchased	Average Price paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
					$	547,825
January 1 - January 31	—	$	—	—	547,825
February 1 - February 28	—	—		—	547,825
March 1 - March 31	357,747	$	26.46	357,747	538,359
Total	357,747	$	26.46	357,747

Refer to Note 8 of the accompanying condensed consolidated financial statements for additional details on share repurchases.


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 the Group and its affiliates. During the period covered by this report:

•Santander UK holds ~~seven~~five blocked accounts for ~~five~~three customers, ~~that~~with the first customer holding one GBP savings account and one GBP current account, the second customer holding one GBP savings account and the third customer holding two GBP current accounts. All three customers, who are resident in the UK, are currently designated by the US under the Specially Designated Global Terrorist (SDGT) sanctions programme. Revenues and profits generated by Santander UK on these accounts in the ~~nine months ended 30 September~~first quarter of 2021 were negligible relative to the overall profits of Banco Santander S.A.

•Santander UK holds two frozen current accounts for two UK nationals who are designated by the US under the SDGT sanctions programme. The accounts held by one customer were fully inaccessible at the time of the US designation and were blocked at the time of the account going into a debit balance. The accounts held by the second customer were blocked immediately following the US designation and have remained frozen throughout the first quarter of 2021. These accounts are frozen in order to comply with Articles 2, 3 and 7 of Council Regulation (EC) No 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the Al-Qaeda network, by virtue of Commission Implementing Regulation (EU) 2015/1815. The accounts are in arrears (£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 these accounts in the first quarter of 2021.

•Santander Consumer Finance, S.A. holds through its Belgian branch seven blocked correspondent accounts for ~~an Iranian bank that~~Bank Melli. Three USD accounts and four EUR accounts. The accounts have been blocked since 2008. Bank Melli is currently designated by the US under the Specially Designated Global Terrorist (SDGT) sanctions programme. ~~The accounts have been blocked since 2008.~~ No revenues or profits were generated by Santander Consumer Bank, S.A. on these accounts in the ~~nine months ended 30 September 2021.~~

•Santander Brasil held a Brazilian Real account for a customer that was owned by an individual designated by the U.S. under the Specially Designated Global Terrorist (SDGT) sanctions programme. There has been no transactional activity in this account.~~Santander Brasil closed the account and exited the customer relationship.No revenues or profits were generated by Santander Brasil on this account in the nine months ended 30 September 2021.~~first quarter of 2021

•The Group also has certain legacy performance guarantees for the benefit of ~~an Iranian bank that is currently designated by the US under the Specially Designated Global Terrorist (SDGT) sanctions programme~~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 ~~nine months ended September 30,~~first quarter of 2021 which were negligible relative to the overall revenues and profits of Banco Santander, S.A. 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. 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, the Group intends to continue to provide the guarantees and hold these assets in accordance with company policy and applicable laws.

6766


Item 6.			Exhibits

The following exhibits are included herein:


Exhibit Number						Description

































2.1**						~~Agreement and Plan of Merger, dated as of August 23, 2021, by and among Santander Consumer USA Holdings Inc., Santander Holdings USA, Inc. and Max Merger Sub, Inc~~.
10.1*						~~Offer Letter, dated August 31, 2021, by and between Marc Womack and Santander Consumer USA Inc. and Santander Consumer USA Holdings Inc. #~~
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*						Inline XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*						Inline XBRL Taxonomy Extension Schema
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase
104*						Cover page formatted as Inline XBRL and contained in Exhibit 101


*			Filed herewith.
**			Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. SC hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that SC may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules so furnished.
#			~~Indicates management contract or compensatory plan or arrangement~~

6867

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/ Mahesh Aditya
						Name: Mahesh Aditya
						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/Mahesh Aditya

President and Chief Executive Officer

~~October 27, 2021~~March 3, 2022

Mahesh Aditya

(Principal Executive Officer)

/s/ Fahmi Karam

Chief Financial Officer

~~October 27, 2021~~March 3, 2022

Fahmi Karam

(Principal Financial and Accounting Officer)

6968



Remainder of 2021	$	2,688
2022	10,275
2023	8,547
2024	6,509
2025	4,054
Thereafter	1,425
Total	$	33,498


	Three Months Ended September 30, 2020
	Recognized in Earnings		Gross Gains (Loss) 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	$	—	$	256	$	(8,939)





Derivative instruments not designated as hedges:
Losses (Gains) recognized in interest expenses	$	567


	Three Months Ended September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020
Earnings per common share
Net income (loss)	$	763,324	$	490,115	$	2,563,181	$	389,450


Weighted average number of common shares outstanding (in thousands)	306,093		310,150		306,086		321,276
Earnings per common share	$	2.49	$	1.58	$	8.37	$	1.21
Earnings per common share - assuming dilution
Net income (loss)	$	763,324	$	490,115	$	2,563,181	$	389,450
Weighted average number of common shares outstanding (in thousands)	306,093		310,150		306,086		321,276
Effect of employee stock-based awards (in thousands)	286		157		268		216
Weighted average number of common shares outstanding - assuming dilution (in thousands)	306,379		310,307		306,354		321,492
Earnings per common share - assuming dilution	$	2.49	$	1.58	$	8.37	$	1.21