Exhibit 99.1
Unaudited Pro Forma Financial Information
The pro forma adjustments in the accompanying Unaudited Pro Forma Consolidated Balance Sheet have been prepared as if the transaction was completed on September 30, 2011. The pro forma adjustments in the accompanying Unaudited Pro Forma Consolidated Statements of Operations have been prepared as if the transaction was completed on January 1, 2010.
The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period. You should read the information set forth below together with SHUSA’s Form 10-K for the year ended December 31, 2010, filed on March 10, 2011, and Form 10-Q for the nine months ended September 30, 2011, which was filed on November 14, 2011.
The adjustments presented in the unaudited Pro Forma consolidated financial statements are based on currently available information and certain estimates and assumptions. Therefore, actual results may differ from the pro forma adjustments. However, management believes that the estimates and assumptions used provide a reasonable basis for presenting the significant effects of the transaction. Management also believes the pro forma adjustments give appropriate effect to the estimates and assumptions and are applied in conformity with U.S. generally accepted accounting principles.
Santander Holdings USA, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
September 30, 2011
(in thousands)
SHUSA Historical | Deconsolidation of SCUSA (a) | Unaudited Pro Forma Adjustments | Unaudited Pro Forma Balance Sheet | ||||||||||||||
| ASSETS | |||||||||||||||||
| Cash and amounts due from depository institutions | $ | 3,184,550 | $ | (16,348 | ) | $ | (10,000 | ) | (f) | $ | 3,158,202 | ||||||
| Investment securities: | |||||||||||||||||
| Available-for-sale | 13,834,050 | (216,586 | ) | ‒ | 13,617,464 | ||||||||||||
| Other investments | 524,899 | ‒ | ‒ | 524,899 | |||||||||||||
| Loans held for investment | 65,626,619 | (14,794,865 | ) | ‒ | 50,831,754 | ||||||||||||
| Allowance for loan losses | (2,185,302 | ) | 1,033,742 | ‒ | (1,151,560 | ) | |||||||||||
| Net loans held for investment | 63,441,317 | (13,761,123 | ) | ‒ | 49,680,194 | ||||||||||||
| Loans held for sale | 141,096 | ‒ | ‒ | 141,096 | |||||||||||||
| Premises and equipment, net | 657,742 | (22,336 | ) | ‒ | 635,406 | ||||||||||||
| Investment in subsidiary | ‒ | 1,451,938 | (1,451,938 | ) | (a) | ‒ | |||||||||||
| Equity in unconsolidated affiliate | ‒ | ‒ | 2,557,871 | (b)(c) | 2,557,871 | ||||||||||||
| Accrued interest receivable | 365,999 | (165,039 | ) | 200,960 | |||||||||||||
| Goodwill | 4,124,351 | (692,870 | ) | ‒ | 3,431,481 | ||||||||||||
| Core deposit intangibles and other intangibles | 160,103 | (49,467 | ) | ‒ | 110,636 | ||||||||||||
| Bank owned life insurance | 1,550,216 | ‒ | ‒ | 1,550,216 | |||||||||||||
| Restricted cash | 487,179 | (450,502 | ) | ‒ | 36,677 | ||||||||||||
| Other assets | 3,331,689 | (148,368 | ) | (409,195 | ) | (d) | 2,774,126 | ||||||||||
| TOTAL ASSETS | $ | 91,803,191 | $ | (14,070,701 | ) | $ | 686,738 | $ | 78,419,228 | ||||||||
| LIABILITIES | |||||||||||||||||
| Deposits and other customer accounts | $ | 47,363,568 | $ | ‒ | $ | ‒ | $ | 47,363,568 | |||||||||
| Borrowings and other debt obligations | 30,191,424 | (13,859,934 | ) | ‒ | 16,331,490 | ||||||||||||
| Advance payments by borrowers for taxes and insurance | 137,493 | ‒ | ‒ | 137,493 | |||||||||||||
| Other liabilities | 2,004,066 | (172,133 | ) | ‒ | 1,831,933 | ||||||||||||
| TOTAL LIABILITIES | 79,696,551 | (14,032,067 | ) | ‒ | 65,664,484 | ||||||||||||
| EQUITY | |||||||||||||||||
| Preferred stock | 195,445 | ‒ | ‒ | 195,445 | |||||||||||||
| Common stock | 11,118,007 | ‒ | 11,000 | (f) | 11,129,007 | ||||||||||||
| Warrants | 285,435 | ‒ | ‒ | 285,435 | |||||||||||||
| Accumulated other comprehensive loss | (140,847 | ) | ‒ | ‒ | (140,847 | ) | |||||||||||
| Retained earnings/(deficit) | 609,966 | ‒ | 675,738 | (e) | 1,285,704 | ||||||||||||
| TOTAL STOCKHOLDER’S EQUITY | 12,068,006 | ‒ | 686,738 | 12,754,744 | |||||||||||||
| Noncontrolling interest | 38,634 | (38,634 | ) | ‒ | ‒ | ||||||||||||
| TOTAL EQUITY | 12,106,640 | (38,634 | ) | 686,738 | 12,754,744 | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 91,803,191 | $ | (14,070,701 | ) | $ | 686,738 | $ | 78,419,228 | ||||||||
Santander Holdings USA, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2011
(in thousands)
SHUSA Historical | Deconsolidation of SCUSA (a) | Unaudited Pro Forma Adjustments (i) | Unaudited Pro Forma Statement of Operations | ||||||||||||||
| INTEREST INCOME | |||||||||||||||||
| Interest on loans | $ | 3,576,430 | $ | (1,885,414 | ) | $ | ‒ | $ | 1,691,016 | ||||||||
| Interest-earning deposits | 5,051 | (271 | ) | ‒ | 4,780 | ||||||||||||
| Investment securities: | |||||||||||||||||
| Available-for-sale | 316,528 | (10,973 | ) | ‒ | 305,555 | ||||||||||||
| Other investments | 114 | ‒ | ‒ | 114 | |||||||||||||
| TOTAL INTEREST INCOME | 3,898,123 | (1,896,658 | ) | ‒ | 2,001,465 | ||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||
| Deposits and customer accounts | 187,837 | ‒ | ‒ | 187,837 | |||||||||||||
| Borrowings and other debt obligations | 823,564 | (273,372 | ) | ‒ | 550,192 | ||||||||||||
| TOTAL INTEREST EXPENSE | 1,011,401 | (273,372 | ) | ‒ | 738,029 | ||||||||||||
| NET INTEREST INCOME | 2,886,722 | (1,623,286 | ) | ‒ | 1,263,436 | ||||||||||||
| Provision for credit losses | 949,629 | (508,516 | ) | ‒ | 441,113 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 1,937,093 | (1,114,770 | ) | ‒ | 822,323 | ||||||||||||
| OTHER INCOME: | |||||||||||||||||
| Consumer banking fees | 498,181 | (259,153 | ) | ‒ | 239,028 | ||||||||||||
| Commercial banking fees | 130,195 | ‒ | ‒ | 130,195 | |||||||||||||
| Mortgage banking income, net | (13,714 | ) | ‒ | ‒ | (13,714 | ) | |||||||||||
| Capital markets revenue, net | 18,723 | 115 | ‒ | 18,838 | |||||||||||||
| Bank owned life insurance | 42,858 | ‒ | ‒ | 42,858 | |||||||||||||
| Miscellaneous income | 595 | 8,031 | ‒ | 8,626 | |||||||||||||
| TOTAL FEES AND OTHER INCOME | 676,838 | (251,007 | ) | ‒ | 425,831 | ||||||||||||
| Total other-than-temporary impairment (“OTTI”) losses | (38,446 | ) | ‒ | ‒ | (38,446 | ) | |||||||||||
| Portion of OTTI recognized in other comprehensive income before taxes | 38,121 | ‒ | ‒ | 38,121 | |||||||||||||
| OTTI recognized in earnings | (325 | ) | ‒ | ‒ | (325 | ) | |||||||||||
| Gains on the sale of investment securities | 124,192 | ‒ | ‒ | 124,192 | |||||||||||||
| Net gain on investment securities recognized in earnings | 123,867 | ‒ | ‒ | 123,867 | |||||||||||||
| TOTAL OTHER INCOME | 800,705 | (251,007 | ) | ‒ | 549,698 | ||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES: | |||||||||||||||||
| Compensation and benefits | 599,358 | (158,801 | ) | ‒ | 440,557 | ||||||||||||
| Occupancy and equipment expenses | 254,497 | (27,608 | ) | ‒ | 226,889 | ||||||||||||
| Technology expense | 91,938 | (15,244 | ) | ‒ | 76,694 | ||||||||||||
| Outside services | 104,049 | (47,435 | ) | ‒ | 56,614 | ||||||||||||
| Marketing expense | 26,739 | (5,090 | ) | ‒ | 21,649 | ||||||||||||
| Loan expense | 165,951 | (111,000 | ) | ‒ | 54,951 | ||||||||||||
| Other administrative expenses | 117,500 | (28,302 | ) | ‒ | 89,198 | ||||||||||||
| TOTAL GENERAL AND ADMINISTRATIVE EXPENSES | 1,360,032 | (393,480 | ) | ‒ | 966,552 | ||||||||||||
| OTHER EXPENSES: | |||||||||||||||||
| Amortization of intangibles | 43,041 | (3,244 | ) | ‒ | 39,797 | ||||||||||||
| Deposit insurance premiums | 66,279 | ‒ | ‒ | 66,279 | |||||||||||||
| Equity method investments | 9,444 | ‒ | (629,884 | ) | (g) | (620,440 | ) | ||||||||||
| Loss on debt extinguishment | 29,712 | ‒ | ‒ | 29,712 | |||||||||||||
| TOTAL OTHER EXPENSES | 148,476 | (3,244 | ) | (629,884 | ) | (484,652 | ) | ||||||||||
| INCOME BEFORE INCOME TAXES | 1,229,290 | (969,053 | ) | 629,884 | 890,121 | ||||||||||||
| Income tax provision/(benefit) | 426,840 | (350,823 | ) | 217,320 | (h) | 293,337 | |||||||||||
| NET INCOME INCLUDING NONCONTROLLING INTEREST | 802,450 | (618,230 | ) | 412,564 | 596,784 | ||||||||||||
| Less: | |||||||||||||||||
| NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 52,550 | (52,550 | ) | ‒ | ‒ | ||||||||||||
| NET INCOME ATTRIBUTABLE TO SHUSA | $ | 749,900 | $ | (565,680 | ) | $ | 412,564 | $ | 596,784 | ||||||||
Santander Holdings USA, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2010
(in thousands)
SHUSA Historical | Deconsolidation of SCUSA (a) | Unaudited Pro Forma Adjustments (i) | Unaudited Pro Forma Statement of Operations | ||||||||||||||
| INTEREST INCOME | |||||||||||||||||
| Interest on loans | $ | 4,313,793 | $ | (2,054,148 | ) | $ | ‒ | $ | 2,259,645 | ||||||||
| Interest-earning deposits | 3,320 | (335 | ) | ‒ | 2,985 | ||||||||||||
| Investment securities: | |||||||||||||||||
| Available-for-sale | 466,141 | (16,897 | ) | ‒ | 449,244 | ||||||||||||
| Other investments | 1,235 | ‒ | ‒ | 1,235 | |||||||||||||
| TOTAL INTEREST INCOME | 4,784,489 | (2,071,380 | ) | ‒ | 2,713,109 | ||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||
| Deposits and customer accounts | 228,633 | ‒ | ‒ | 228,633 | |||||||||||||
| Borrowings and other debt obligations | 1,157,217 | (315,941 | ) | ‒ | 841,276 | ||||||||||||
| TOTAL INTEREST EXPENSE | 1,385,850 | (315,941 | ) | ‒ | 1,069,909 | ||||||||||||
| NET INTEREST INCOME | 3,398,639 | (1,755,439 | ) | ‒ | 1,643,200 | ||||||||||||
| Provision for credit losses | 1,627,026 | (888,225 | ) | ‒ | 738,801 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 1,771,613 | (867,214 | ) | ‒ | 904,399 | ||||||||||||
| OTHER INCOME: | |||||||||||||||||
| Consumer banking fees | 531,337 | (219,411 | ) | ‒ | 311,926 | ||||||||||||
| Commercial banking fees | 180,295 | (119 | ) | ‒ | 180,176 | ||||||||||||
| Mortgage banking income, net | 47,955 | ‒ | ‒ | 47,955 | |||||||||||||
| Capital markets revenue, net | 7,972 | ‒ | ‒ | 7,972 | |||||||||||||
| Bank owned life insurance | 54,112 | ‒ | ‒ | 54,112 | |||||||||||||
| Miscellaneous income | 7,242 | 3,039 | ‒ | 10,281 | |||||||||||||
| TOTAL FEES AND OTHER INCOME | 828,913 | (216,491 | ) | ‒ | 612,422 | ||||||||||||
| Total other-than-temporary impairment losses | (58,526 | ) | ‒ | ‒ | (58,526 | ) | |||||||||||
| Portion of loss recognized in other comprehensive income before taxes | 53,763 | ‒ | ‒ | 53,763 | |||||||||||||
| Gains on the sale of investment securities | 205,319 | ‒ | ‒ | 205,319 | |||||||||||||
| Net gain on investment securities recognized in earnings | 200,556 | ‒ | ‒ | 200,556 | |||||||||||||
| TOTAL OTHER INCOME | 1,029,469 | (216,491 | ) | ‒ | 812,978 | ||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES: | |||||||||||||||||
| Compensation and benefits | 707,593 | (150,913 | ) | ‒ | 556,680 | ||||||||||||
| Occupancy and equipment expenses | 312,295 | (32,849 | ) | ‒ | 279,446 | ||||||||||||
| Technology expense | 112,058 | (15,777 | ) | ‒ | 96,281 | ||||||||||||
| Outside services | 123,958 | (49,983 | ) | ‒ | 73,975 | ||||||||||||
| Marketing expense | 37,177 | (2,177 | ) | ‒ | 35,000 | ||||||||||||
| Other administrative expenses | 280,019 | (111,008 | ) | ‒ | 169,011 | ||||||||||||
| TOTAL GENERAL AND ADMINISTRATIVE EXPENSES | 1,573,100 | (362,707 | ) | ‒ | 1,210,393 | ||||||||||||
| OTHER EXPENSES: | |||||||||||||||||
| Amortization of intangibles | 63,401 | (4,943 | ) | ‒ | 58,458 | ||||||||||||
| Deposit insurance premiums | 93,225 | ‒ | ‒ | 93,225 | |||||||||||||
| Equity method investments | 26,613 | ‒ | (465,435 | ) | (g) | (438,822 | ) | ||||||||||
| Loss on debt extinguishment | 25,758 | ‒ | ‒ | 25,758 | |||||||||||||
| TOTAL OTHER EXPENSES | 208,997 | (4,943 | ) | (465,435 | ) | (261,381 | ) | ||||||||||
| INCOME BEFORE INCOME TAXES | 1,018,985 | (716,055 | ) | 465,435 | 768,366 | ||||||||||||
| Income tax provision/(benefit) | (40,390 | ) | (277,944 | ) | 162,902 | (h) | (155,432 | ) | |||||||||
| NET INCOME INCLUDING NONCONTROLLING INTEREST | 1,059,375 | (438,111 | ) | 302,533 | 923,798 | ||||||||||||
| Less: | |||||||||||||||||
| NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 37,239 | (37,239 | ) | ‒ | ‒ | ||||||||||||
| NET INCOME ATTRIBUTABLE TO SHUSA | $ | 1,022,136 | $ | (400,872 | ) | $ | 302,533 | $ | 923,798 | ||||||||
Notes to the unaudited pro forma consolidated balance sheet as of September 30, 2011, unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2011 and for the year ended December 31, 2010.
| (a) | Reflects the deconsolidation of SCUSA, net of eliminations, assumed to be on September 30, 2011 for the pro forma balance sheet (which represents SHUSA's most recently-filed 10-Q) and on January 1, 2010 for the pro forma income statement (which represents the beginning of the most recently completed fiscal year in SHUSA's most recently filed Form 10-K). | |
| (b) | Reflects the elimination of the carrying value of the investment in SCUSA. | |
| (c) | Represents the fair value of the 65% ownership interest in SCUSA based on an approximate fair value of $4.0 billion. | |
| (d) | Represents the tax effect of the gain on the deconsolidation of SCUSA. | |
| (e) | Represents the after-tax gain on the deconsolidation of SCUSA calculated as the pre-tax gain of approximately $1.1 billion less the tax effect of $409.2 million. | |
| (f) | Represents transaction expenses of $10.0 million and $11.0 million, paid by SHUSA and Banco Santander S.A., respectively. | |
| (g) | Represents the equity method investment income calculated as 65% of SCUSA’s income before taxes. | |
| (h) | Represents the tax effect of the equity method investment income. | |
| (i) | The pro-forma consolidated statement of operations do not reflect the non-recurring pre-tax gain upon the deconsolidation of SCUSA. |