Santander Holdings USA, Inc 8-K, filed Nov 15, 2022
Santander Holdings USA, Inc. (SNUS-PH)
8-K
2022-11-15
For: 2022-11-15
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August 21, 2026
About this 8-K
Santander Holdings USA, Inc filed this 8-K on November 15, 2022.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 2022
(Exact name of registrant as specified in its charter)
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Registrant's telephone number, including area code: (617 ) 346-7200
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth 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 ☐
Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
Santander Holdings USA, Inc. (the “Company”) is furnishing copies of slides which will be used in connection with presentations on one or more occasions. The presentation materials are attached hereto as Exhibit 99.1 and incorporated herein solely for purposes of Items 2.02 and 7.01.
The information contained in the attached presentation materials is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission filings and other public announcements. The Company undertakes no duty or obligation to publicly update or revise this information, although it may do so from time to time.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that Section. Further, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933. Item 7.01 of this Current Report on Form 8-K will not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 15, 2022 | SANTANDER HOLDINGS USA, INC. By:/s/ Gerard A. Chamberlain Name: Gerard A. Chamberlain Title: Senior Deputy General Counsel and Executive Vice President | ||||
1
► ► ► ► ► ► ► ► ► ► ► ► ► ► 1 2 Pre-provision net revenue Asset-backed securities, Q3’22 transactions include three Santander Drive Auto Receivables Trust transactions
SHUSA2 SBNA – Retail Bank ~$97B Assets SC – Auto Finance ~$43B Assets BSI – Private Banking ~$8B Assets SIS – Broker Dealer ~$3B Assets • • • • • • • • • • • 1 Data as of September 30, 2022 2 Includes SSLLC, which offers personal investment & financial planning services to clients Santander • • • APS – Broker Dealer ~$16B Assets
NET INTEREST INCOME (NII) ($M) PRE-TAX INCOME ($M) NET INCOME ATTRIBUTABLE TO SHUSA1,2 ($M) PPNR ($M) 1 Net income includes noncontrolling interest (“NCI”). 2 See Appendix for the consolidating income statement. $1,534 $1,505 $1,480 $1,533 $1,599 3Q21 4Q21 1Q22 2Q22 3Q22 $1,084 $903 $778 $546 $304 3Q21 4Q21 1Q22 2Q22 3Q22 $707 $570 $616 $439 $228 3Q21 4Q21 1Q22 2Q22 3Q22 $1,104 $917 $995 $950 $940 3Q21 4Q21 1Q22 2Q22 3Q22
1 Includes restricted cash and federal funds sold and securities purchased under resale agreements or similar arrangements 2 Operating leases 3 Includes federal funds purchased and securities loaned or sold under repurchase agreements 4 Includes Federal Home Loan Bank (“FHLB”) borrowings 5 Certificates of deposit Noninterest- bearing Demand (NIB), 12% Interest-bearing Demand (IB), 8% Savings, 3% Money market, 19% CDs⁵, 3%Secured Structured Financings, 16% Other Borrowings⁴, 9% Other Liabilities³, 15% Equity, 12% Trading Liabilities, 1% Revolving Credit Facilities, 2%
LOANS & LEASES ($B) LIABILITIES & EQUITY ($B)ASSETS ($B) DEPOSITS ($B) 1 Other assets includes securities purchased under repurchase agreements 2 Other liabilities includes securities sold under repurchase agreements 92 92 92 93 97 18 19 19 24 23 16 15 15 15 1519 19 14 10 9 11 14 14 23 23 $156 $159 $154 $165 $167 3Q21 4Q21 1Q22 2Q22 3Q22 Gross Loans Investments Leases Short-Term Funds Other Assets¹ 43 43 43 44 45 23 23 22 21 23 16 15 15 15 15 15 15 15 16 17 9 9 9 9 82 2 3 4 4 $108 $107 $107 $109 $112 3Q21 4Q21 1Q22 2Q22 3Q22 Auto C&I Leases CRE Res. Mtg Other 33 34 35 32 31 24 23 22 20 20 13 16 13 14 14 6 6 6 6 5 3 3 3 2 6 $79 $82 $79 $74 $76 3Q21 4Q21 1Q22 2Q22 3Q22 Money Market NIB Deposits IB Deposits Savings CD 55 59 57 54 56 44 41 40 43 45 24 23 22 20 20 24 24 22 21 19 9 12 13 27 27 $156 $159 $154 $165 $167 3Q21 4Q21 1Q22 2Q22 3Q22 IB Deposits Borrowed Funds NIB Deposits Equity Other Liabilities²
SHUSA NIM INTEREST RATE RISK SENSITIVITY (Change in annual net interest income for parallel rate movements) -1.7% -2.6% -3.5% -2.6% -2.3% 4.7% 4.3% 3.6% 2.2% 2.1% 3Q21 4Q21 1Q22 2Q22 3Q22
1 Approximate FICO scores 2 Includes nominal capital lease originations 3 Includes SBNA loan originations of $1.8 billion and lease originations of $1.1 billion for Q3 2022 4 SBNA Originations remain off SC’s balance sheet in the Service For Others portfolio Q3 auto originations of $8.2 billion are flat QoQ and up 5% YoY Three Months Ended Originations ($ in Millions) Q3 2022 Q2 2022 Q3 2021 QoQ YoY Total Core Retail Auto $3,489 $3,695 $3,146 (6%) 11% Chrysler Capital Loans (<640)1 $1,296 $1,321 $1,162 (2%) 12% Chrysler Capital Loans (≥640)1 $2,058 $1,455 $1,687 41% 22% Total Chrysler Capital Retail $3,354 $2,776 $2,848 21% 17% Total Leases2 $1,336 $1,701 $1,829 (21%) (27%) Total Auto Originations3 $8,179 $8,171 $7,823 0% 5% SBNA Originations4 $2,925 $2,620 $1,772 12% 65% % Variance
Net charge-off (NCO) and nonperforming loan (NPL) ratios continue to normalize, but remain below pre-pandemic levels TOTAL NET CHARGE-OFF RATIO ALLOWANCE COVERAGE1 RESERVE COVERAGE2 TOTAL NONPERFORMING LOAN RATIO 1 Allowance for Credit Losses (ACL) / Loans held for investment (LHFI) 2 Allowance for loans and leases losses / NPL
1 Based on a percentage of financing receivables for their respective loan business 2 Retail installment contracts 3 Other Consumer primarily includes recreational vehicle ("RV") and marine loans 4 Other Commercial includes commercial equipment vehicle financing leveraged leases and loans. 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% Consumer: 30-89 Days Past Due1 Residential Mortgage Home Equity RIC² & Auto Loans Personal Unsecured Other Consumer ³ 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Consumer: 90+ Days Past Due1 Residential Mortgage Home Equity RIC² & Auto Loans Personal Unsecured Other Consumer ³ 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% Commercial: 30-89 Days Past Due1 CRE C&I Multifamily Other Commercial ⁴ 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% Commercial: 90+ Days Past Due1 CRE C&I Multifamily Other Commercial ⁴
1 Charge-offs and NCO are based on a percentage of their respective loan business 2 Recoveries are based as a percentage of gross charge-offs 0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16% 0.18% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% Co m m er ci al Co ns um er Charge Offs1 Consumer Commercial 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% Recoveries2 Consumer Commercial 0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% Co m m er ci al Co ns um er NCOs1 Consumer Commercial
Under the Federal Reserve’s April 2022 stress test (severely adverse scenario): ►Q3 2022 ending ACL represents ~70% of stress test losses ►SHUSA’s stressed capital ratio2 of 18.7% ranked in the top quartile among participating banks ►PPNR3 of $7.3B (4.6% of average assets) ranked in the top quartile among participating banks 1 Includes ACL for unfunded commitments 2 Projected minimum CET1 ratio (minimum and ending) under the severely adverse scenario over the nine-quarter projection horizon, 2022:Q1–2024:Q1 3 Projected PPNR under the severely adverse scenario through the nine-quarter projection horizon, 2022:Q1–2024:Q1 Allowance ratio stable QoQ Allowance Ratios September 30, 2022 June 30, 2022 December 31, 2021 (Dollars in Millions) (Unaudited) (Unaudited) (Audited) Total loans held for investment (“LHFI”) $96,826 $92,762 $92,076 Total ACL1 $6,757 $6,641 $6,566 Total Allowance Ratio 7.0% 7.2% 7.1%
• • •
Total Funding ($ in billions) Total funding of $45B in Q3, up 4% QoQ ►Increase in FHLB advances QoQ driven by loan growth ►Amortizing notes increased due to favorable pricing and execution 3Q22 2Q22 3Q21 QoQ (%) YoY (%) Senior Unsecured Debt 9.7 10.4 10.1 (6.3) (3.5) FHLB & CLN 6.0 3.5 0.8 73.0 650.0 Third-Party Secured Funding 2.6 3.3 0.0 (22.1) 0.0 Amortizing Notes 3.8 2.0 4.2 94.3 (9.3) Securitizations 22.7 22.0 24.6 3.0 (7.7) Intragroup 0.0 2.0 4.0 (100.0) (100.0) Total SHUSA Funding 44.8 43.2 43.7 3.8 2.6
1 SHUSA’s requirement is 20.5% for TLAC and 6.0% for LTD as a percentage of risk weighted assets 2 Senior debt issuance. Data as of September 30, 2022 * 3-Month LIBOR Debt Maturity Schedule2 ($ In billions) As of Q3 2022, SHUSA met the Federal Reserve’s TLAC and LTD requirements1 with 22.6% TLAC, 6.65% eligible LTD and a CET1 ratio of 15.17% ► ►
CET1 TIER 1 RISK-BASED CAPITAL RATIO TOTAL RISK-BASED CAPITAL RATIO TIER 1 LEVERAGE RATIO CET1 decreased 170bps QoQ due to the SHUSA dividend of $1.75B paid to Santander 18.4% 18.8% 18.5% 16.9% 15.2% 3Q21 4Q21 1Q22 2Q22 3Q22 14.9% 15.0% 13.6% 11.8% 11.1% 3Q21 4Q21 1Q22 2Q22 3Q22 20.2% 20.7% 18.8% 17.2% 15.5% 3Q21 4Q21 1Q22 2Q22 3Q22 21.6% 22.7% 20.6% 18.9% 17.2% 3Q21 4Q21 1Q22 2Q22 3Q22
Santander1 A2/Baa1 SHUSA Baa3 SBNA2 Baa1 Santander1 A+/A- SHUSA BBB+ SBNA A- Stable outlook (June 14, 2022) SHUSA and SBNA ratings outlook remained “stable” SR. DEBT RATINGS BY SANTANDER ENTITY Santander1 A/A- SHUSA BBB+ SBNA BBB+ Stable outlook (June 25, 2021) Stable outlook (July 22, 2022) 1 Senior preferred debt / senior non-preferred debt 2 SBNA long-term issuer rating
($ in 000's) Auto CBB Total Consumer Activities Auto CBB Total Consumer Activities Dol lar Increase / (Decrease) Percentage Net interest income 3,093,143$ 1,002,014$ 4,095,157$ 3,268,208$ 1,001,957$ 4,270,165$ (175,008)$ -4.1% Non-interest income 2,098,391 234,359 2,332,750 2,664,788 242,573 2,907,361 (574,611) -19.8% Credit losses expense / (benefit) 1,075,942 148,794 1,224,736 (130,171) (10,088) (140,259) 1,364,995 973.2% Total expenses 2,488,529 1,156,170 3,644,699 2,599,919 1,152,024 3,751,943 (107,244) -2.9% Income/(loss) before income taxes 1,627,063$ (68,591)$ 1,558,472$ 3,463,248$ 102,594$ 3,565,842$ (2,007,370)$ -56.3% Total assets 62,490,143 13,072,265 75,562,408 63,074,062 12,641,882 75,715,944 (153,536) -0.2% Total Consumer ActivitiesYear-To-Date Ended September 30, 2022 2022 2021 ($ in 000's) Auto CBB 1 Total Consumer Activities Auto CBB Total Consumer Activities Dol lar Increase / (Decrease) Percentage Net interest income 1,020,542$ 368,627$ 1,389,169$ 1,099,090$ 298,204$ 1,397,294$ (8,125)$ -0.6% Non-interest income 695,355 77,321 772,676 818,350 89,453 907,803 (135,127) -14.9% Credit losses expense / (benefit) 521,235 83,451 604,686 20,156 7,148 27,304 577,382 2114.6% Total expenses 856,372 388,733 1,245,105 854,084 376,777 1,230,861 14,244 1.2% Income/(loss) before income taxes 338,290$ (26,236)$ 312,054$ 1,043,200$ 3,732$ 1,046,932$ (734,878)$ -70.2% Total Consumer Activities2021 Quarter-To-Date Ended September 30, 2022 2022 1| Consumer and Business Banking
($ in 000's) C&I CRE Total Commercial Activities C&I CRE Total Commercial Activities Dol lar Increase / (Decrease) Percentage Net interest income 80,734$ 92,271$ 173,005$ 71,184$ 85,335$ 156,519$ 16,486$ 10.5% Non-interest income 18,992 10,810 29,802 16,468 7,340 23,808 5,994 25.2% Credit losses expense / (benefit) 27,295 6,243 33,538 6,826 (4,580) 2,246 31,292 -1393.2% Total expenses 60,796 28,219 89,015 61,976 27,136 89,112 (97) -0.1% Income/(loss) before income taxes 11,635$ 68,619$ 80,254$ 18,850$ 70,119$ 88,969$ (8,715)$ -9.8% Quarter-To-Date Ended September 30, 2022 2022 2021 Total Commercial Activities ($ in 000's) C&I CRE Total Commercial Activities C&I CRE Total Commercial Activities Dol lar Increase / (Decrease) Percentage Net interest income 224,191$ 255,453$ 479,644$ 217,450$ 253,402$ 470,852$ 8,792$ 1.9% Non-interest income 49,250 33,841 83,091 51,486 28,117 79,603 3,488 4.4% Credit losses expense / (benefit) 39,551 (8,544) 31,007 (45,236) (231) (45,467) 76,474 168.2% Total expenses 192,984 86,827 279,811 188,138 84,300 272,438 7,373 2.7% Income/(loss) before income taxes 40,906$ 211,011$ 251,917$ 126,034$ 197,450$ 323,484$ (71,567)$ -22.1% Total assets 6,559,994 19,663,939 26,223,933 7,129,274 17,115,659 24,244,933 1,979,000 8.2% Year-To-Date Ended September 30, 2022 2022 2021 Total Commercial Activities
CIB ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income 50,364$ 25,516$ 24,848$ 97.4% Non-interest income 54,470 48,348 6,122 12.7% Credit losses expense / (benefit) 905 (9,775) 10,680 109.3% Total expenses 124,778 68,191 56,587 83.0% Income/(loss) before income taxes (20,849)$ 15,448$ (36,297)$ -235.0% Quarter-To-Date Ended September 30, 2022 QTD Change CIB ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income 124,613$ 83,172$ 41,441$ 49.8% Non-interest income 192,389 180,426 11,963 6.6% Credit losses expense / (benefit) 4,295 (32,102) 36,397 113.4% Total expenses 317,425 198,302 119,123 60.1% Income/(loss) before income taxes (4,718)$ 97,398$ (102,116)$ -104.8% Total assets 30,358,386 12,560,907 17,797,479 141.7% Year-To-Date Ended September 30, 2022 YTD Change
Wealth Management ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income 53,870$ 24,371$ 29,499$ 121.0% Non-interest income 63,748 63,940 (192) -0.3% Credit losses expense / (benefit) - (95) 95 100.0% Total expenses 62,110 58,248 3,862 6.6% Income/(loss) before income taxes 55,508$ 30,158$ 25,350$ 84.1% Quarter-To-Date Ended September 30, 2022 QTD Change Wealth Management ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income 118,239$ 71,222$ 47,017$ 66.0% Non-interest income 203,986 190,182 13,804 7.3% Credit losses expense / (benefit) - (265) 265 100.0% Total expenses 183,142 161,565 21,577 13.4% Income/(loss) before income taxes 139,083$ 100,104$ 38,979$ 38.9% Total assets 7,944,125 7,845,899 98,226 1.3% Year-To-Date Ended September 30, 2022 YTD Change
* Other includes the results of immaterial entities, earnings from non-strategic assets, the investment portfolio, interest expense on SBNA’s and SHUSA's borrowings and other debt obligations, amortization of intangible .assets and certain unallocated corporate income and indirect expenses. Other ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income (205,068)$ (210,093)$ 5,025$ 2.4% Non-interest income 33,956 76,775 (42,819) -55.8% Credit losses expense / (benefit) (2,622) (3,631) 1,009 27.8% Total expenses 148,909 155,266 (6,357) -4.1% Income/(loss) before income taxes (317,399)$ (284,953)$ (32,446)$ -11.4% Total assets 26,739,976 35,492,824 (8,752,848) -24.7% Year-To-Date Ended September 30, 2022 YTD Change Other ($ in 000's) 2022 2021 Dollar Increase / (Decrease) Percentage Net interest income (67,240)$ (69,549)$ 2,309$ 3.3% Non-interest income (5,180) 23,665 (28,845) -121.9% Credit losses expense / (benefit) (2,723) (187) (2,536) -1356.1% Total expenses 53,216 51,791 1,425 2.8% Income/(loss) before income taxes (122,913)$ (97,488)$ (25,425)$ -26.1% Quarter-To-Date Ended September 30, 2022 QTD Change
($ in Millions) 3Q21 4Q21 1Q22 2Q22 3Q22 Interest income 1,796$ 1,758$ 1,722$ 1,908$ 2,238$ Interest expense (262) (253) (242) (375) (639) Net interest income 1,534$ 1,505$ 1,480$ 1,533$ 1,599$ Fees & other income 1,068 1,018 967 939 934 Other non interest income - (1)$ 14 11 (19)$ Net revenue 2,602$ 2,522$ 2,461$ 2,483$ 2,514$ General, administrative, and other expenses (1,498) (1,605) (1,466) (1,533) (1,574) Credit loss (expense) / benefit (20) (14) (217) (404) (636) Income before taxes 1,084$ 903$ 778$ 546$ 304$ Income tax (expense)/benefit (227) (198) (162) (107) (76) Net income 857 705 616 439 228 Less: Net income attributable to NCI 150 135 - - - Net income attributable to SHUSA 707 570 616 439 228 3Q21 4Q21 1Q22 2Q22 3Q22 NIM 4.8% 4.6% 4.5% 4.3% 4.5%
($ in Millions) 3Q21 4Q21 1Q22 2Q22 3Q22 SHUSA pre-tax pre-provision income Pre-tax income, as reported 1,084$ 903$ 778$ 546$ 304$ (Release of)/provision for credit losses 20 14 217 404 636 Pre-tax pre-provision Income 1,104 917 995 950 940 CET1 to risk-weighted assets CET1 capital 20,573 21,068 20,576 19,565 18,025 Risk-weighted assets 112,068 111,820 111,181 115,655 118,818 Ratio 18.4% 18.8% 18.5% 16.9% 15.2% Tier 1 leverage Tier 1 capital 22,631 23,175 20,921 19,910 18,370 Avg total assets, leverage capital purposes 152,058 154,429 154,305 168,042 165,054 Ratio 14.9% 15.0% 13.6% 11.8% 11.1% Tier 1 risk-based Tier 1 capital 22,631$ 23,175$ 20,921$ 19,910$ 18,370$ Risk-weighted assets 112,068 111,820 111,181 115,655 118,818 Ratio 20.2% 20.7% 18.8% 17.2% 15.5% Total risk-based Risk-based capital 24,192$ 25,333$ 22,848$ 21,896$ 20,396$ Risk-weighted assets 112,068 111,820 111,181 115,655 118,818 Ratio 21.6% 22.7% 20.6% 18.9% 17.2%
32 SC Recovery Rates1 (% of Gross Loss) Net Charge-off Rates2 Late stage delinquencies increased 130 bps YoY Gross charge-off rate increased 480 bps YoY SC’s Q3 recovery rate of 55% is continues to normalize Net charge-off rate increased 360 bps YoY Early stage delinquencies increased 150 bps YoY Delinquencies and charge-offs continue to normalize Delinquency Ratios: 30-59 Days Delinquent, RICs, Held For Investment (“HFI”) 1 Recovery rate – Includes insurance proceeds, bankruptcy/deficiency sales, and timing impacts 2 Net charge-off rates on RICs, HFI Delinquency Ratios: >59 Days Delinquent, RICs, HFI Gross Charge-off Rates Q4 2017 Q4 2018 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 4Q 2021 Q1 2022 Q2 2022 3Q 2022
