Company Quick10K Filing
Quick10K
Santander Holdings
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2018-11-28 Other Events, Exhibits
8-K 2018-11-16 Regulation FD, Exhibits
8-K 2018-11-01 Other Events
8-K 2018-09-14 Officers, Exhibits
8-K 2018-08-17 Regulation FD, Exhibits
8-K 2018-06-29 Other Events, Exhibits
8-K 2018-06-28 Other Events, Exhibits
8-K 2018-06-25 Other Events, Exhibits
8-K 2018-06-22 Other Events
8-K 2018-05-18 Regulation FD, Exhibits
8-K 2018-03-30 Regulation FD, Exhibits
8-K 2018-03-07 Other Events, Exhibits
8-K 2018-02-15 Regulation FD, Exhibits
8-K 2018-02-01 Regulation FD, Exhibits
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SOV 2018-09-30
Part I. Financial Information
Item 1 - Condensed Consolidated Financial Statements
Note 1. Basis of Presentation and Accounting Policies
Note 2. Recent Accounting Developments
Note 3. Investment Securities
Note 4. Loans and Allowance for Credit Losses
Note 5. Operating Lease Assets, Net
Note 6. Vies
Note 7. Goodwill and Other Intangibles
Note 8. Other Assets
Note 9. Deposits and Other Customer Accounts
Note 10. Borrowings
Note 11. Accumulated Other Comprehensive Income / (Loss)
Note 12. Derivatives
Note 13. Income Taxes
Note 14. Fair Value
Note 15. Non-Interest Income
Note 16. Commitments, Contingencies and Guarantees
Note 17. Related Party Transactions
Note 18. Business Segment Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ("Md&Amp;A")
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Item 4 - Controls and Procedures
Part II. Other Information
Item 1 - Legal Proceedings
Item 1A - Risk Factors
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 - Defaults Upon Senior Securities
Item 4 - Mine Safety Disclosures
Item 5 - Other Information
Item 6 - Exhibits
EX-31.1 a10-q_3q18exhibit311.htm
EX-31.2 a10-q_3q18exhibit312.htm
EX-32.1 a10-q_3q18exhibit321.htm
EX-32.2 a10-q_3q18exhibit322.htm

Santander Holdings Earnings 2018-09-30

SOV 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 santanderholdingsq32018.htm 10-Q Document

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
OR
o
 
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: 001-16581
SANTANDER HOLDINGS USA, INC.
 
(Exact name of registrant as specified in its charter)
  
Virginia
(State or other jurisdiction of
incorporation or organization)
 
23-2453088
(I.R.S. Employer
Identification No.)
 
 
 
75 State Street, Boston, Massachusetts
(Address of principal executive offices)
 
02109
(Zip Code)
(617) 346-7200
Registrant’s telephone number including area code
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 þ. No o.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (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 þ. No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
        
Large accelerated filer o
 
Accelerated filer o
 
 
 
Non-accelerated filer þ
 
(Do not check if smaller reporting company)
 
 
 
 
 
Smaller reporting company o
 
 
 
 
 
Emerging growth company o



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 o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o. No þ.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class
 
Outstanding at October 31, 2018
Common Stock (no par value)
 
530,391,043 shares



INDEX
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Ex-31.1 Certification
 Ex-31.2 Certification
 Ex-32.1 Certification
 Ex-32.2 Certification
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT
 EX-101 DEFINITION LINKBASE DOCUMENT




FORWARD-LOOKING STATEMENTS
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES

This Quarterly Report on Form 10-Q of Santander Holdings USA, Inc. (“SHUSA” or the “Company”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of the Company. Words such as “may,” “could,” “should,” “looking forward,” “will,” “would,” “believe,” “expect,” “hope,” “anticipate,” “estimate,” “intend,” “plan,” “assume," "goal," "seek" or similar expressions are intended to indicate forward-looking statements.

Although SHUSA believes that the expectations reflected in these forward-looking statements are reasonable as of the date on which the statements are made, these statements are not guarantees of future performance and involve risks and uncertainties based on various factors and assumptions, many of which are beyond the Company's control. Among the factors that could cause SHUSA’s financial performance to differ materially from that suggested by forward-looking statements are:

the effects of regulation and/or policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation (the "FDIC"), the Office of the Comptroller of the Currency (the “OCC”) and the Consumer Financial Protection Bureau (the “CFPB”), and other changes in monetary and fiscal policies and regulations, including interest rate policies of the Federal Reserve, as well as in the impact of changes in and interpretations of generally accepted accounting principles in the United States of America ("GAAP"), the failure to adhere to which could subject SHUSA to formal or informal regulatory compliance and enforcement actions;
the slowing or reversal of the current U.S. economic expansion and the strength of the U.S. economy in general and regional and local economies in which SHUSA conducts operations in particular, which may affect, among other things, the level of non-performing assets, charge-offs, and provisions for credit losses;
the ability of certain European member countries to continue to service their debt and the risk that a weakened European economy could negatively affect U.S.-based financial institutions, counterparties with which SHUSA does business, as well as the stability of global financial markets, including economic instability and recessionary conditions in Europe and the eventual exit of the United Kingdom from the European Union;
inflation, interest rate, market and monetary fluctuations, which may, among other things, reduce net interest margins and impact funding sources and the ability to originate and distribute financial products in the primary and secondary markets;
the pursuit of protectionist trade or other related policies by the U.S. and/or other countries
adverse movements and volatility in debt and equity capital markets and adverse changes in the securities markets, including those related to the financial condition of significant issuers in SHUSA’s investment portfolio;
SHUSA's ability to grow revenue, manage expenses, attract and retain highly-skilled people and raise capital necessary to achieve its business goals and comply with regulatory requirements;
SHUSA’s ability to effectively manage its capital and liquidity, including approval of its capital plans by its regulators and its ability to continue to receive dividends from its subsidiaries or other investments;
changes in credit ratings assigned to SHUSA or its subsidiaries;
the ability to manage risks inherent in our businesses, including through effective use of systems and controls, insurance, derivatives and capital management;
SHUSA’s ability to manage credit risk that may increase to the extent our loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;
SHUSA’s ability to timely develop competitive new products and services in a changing environment that are responsive to the needs of SHUSA's customers and are profitable to SHUSA, the acceptance of such products and services by customers, and the potential for new products and services to impose additional unexpected costs, losses, or other liabilities not anticipated at their initiation, and expose SHUSA to increased operational risk;
competitors of SHUSA may have greater financial resources or lower costs, or be subject to different regulatory requirements than SHUSA, may innovate more effectively, or may develop products and technology that enable those competitors to compete more successfully than SHUSA;
consumers and small businesses may decide not to use banks for their financial transactions, which could impact our net income;
Santander Consumer USA Inc.'s ("SC's") agreement with Fiat Chrysler Automobiles US LLC ("FCA") may not result in currently anticipated levels of growth, is subject to performance conditions that could result in termination of the agreement, and is also subject to an option giving FCA the right to acquire an equity participation in the Chrysler Capital portion of SC's business;
changes in customer spending or savings behavior, including changes due to recently enacted tax legislation;
the ability of SHUSA and its third-party vendors to convert and maintain SHUSA’s data processing and related systems on a timely and acceptable basis and within projected cost estimates;
loss of customer deposits that could increase our funding costs;
SHUSA's ability to control operational risks, data security breach risks and outsourcing risks, and the possibility of errors in quantitative models SHUSA uses to manage its business, including as a result of cyber-attacks, technological failure, human error, fraud or malice, and the possibility that SHUSA's controls will prove insufficient, fail or be circumvented;
the outcome of ongoing tax audits by federal, state and local income tax authorities that may require SHUSA to pay additional taxes or recover fewer overpayments compared to what has been accrued or paid as of period-end;
changes to income tax laws and regulations;
acts of terrorism or domestic or foreign military conflicts; and acts of God, including natural disasters;
the costs and effects of regulatory or judicial proceedings, including possible business restrictions resulting from such proceedings; and
adverse publicity, and negative public opinion, whether specific to SHUSA or regarding other industry participants or industry-wide factors, or other reputational harm.

1




GLOSSARY OF ABBREVIATIONS AND ACRONYMS
SHUSA provides the following list of abbreviations and acronyms as a tool for the readers that are used in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements.
ABS: Asset-backed securities
 
DCF: Discounted cash flow
ACL: Allowance for credit losses
 
DFA: Dodd-Frank Wall Street Reform and Consumer Protection Act
AFS: Available-for-sale
 
DOJ: Department of Justice
ALLL: Allowance for loan and lease losses
 
DRIVE: Drive Auto Receivables Trust
Alt-A: Loans originated through brokers outside the Bank's geographic footprint, often lacking full documentation
 
DTI: Debt-to-income
ASC: Accounting Standards Codification
 
ECOA: Equal Credit Opportunity Act
ASU: Accounting Standards Update
 
EPS: Enhanced Prudential Standards
Bank: Santander Bank, National Association
 
ETR: Effective tax rate
BEA: Bureau of Economic Analysis
 
Exchange Act: Securities Exchange Act of 1934, as amended
BHC: Bank holding company
 
FASB: Financial Accounting Standards Board
BOLI: Bank-owned life insurance
 
FBO: Foreign banking organization
BSI: Banco Santander International
 
FCA: Fiat Chrysler Automobiles US LLC
BSPR: Banco Santander Puerto Rico
 
FDIA: Federal Deposit Insurance Corporation Improvement Act
CBP: Citizens Bank of Pennsylvania
 
FDIC: Federal Deposit Insurance Corporation
CCAR: Comprehensive Capital Analysis and Review
 
Federal Reserve: Board of Governors of the Federal Reserve System
CD: Certificate of deposit
 
FHLB: Federal Home Loan Bank
CEF: Closed-end fund
 
FHLMC: Federal Home Loan Mortgage Corporation
CEO: Chief Executive Officer
 
FICO®: Fair Isaac Corporation credit scoring model
CEVF: Commercial equipment vehicle financing
 
Final Rule: Rule implementing certain of the EPS mandated by Section 165 of the DFA
CET1: Common equity Tier 1
 
FINRA: Financial Industrial Regulatory Authority
CFPB: Consumer Financial Protection Bureau
 
FNMA: Federal National Mortgage Association
Change in Control: First quarter 2014 change in control and consolidation of SC
 
FOB: Financial Oversight and Management Board of Puerto Rico
Chrysler Agreement: Ten-year private label financing agreement with Fiat Chrysler Automobiles US LLC, formerly Chrysler Group LLC, signed by SC
 
FRB: Federal Reserve Bank
Chrysler Capital: Trade name used in providing services under the Chrysler Agreement
 
FVO: Fair value option
CIB: Corporate and Investment Banking
 
GAAP: Accounting principles generally accepted in the United States of America
CID: Civil investigative demand
 
GAP: Guaranteed auto protection
CLTV: Combined loan-to-value
 
 
CMO: Collateralized mortgage obligation
 
HFI: Held for investment
CMP: Civil monetary penalty
 
HTM: Held to maturity
CODM: Chief Operating Decision Maker
 
IHC: U.S. intermediate holding company
Company: Santander Holdings USA, Inc.
 
IPO: Initial public offering
COSO: Committee of Sponsoring Organizations
 
IRS: Internal Revenue Service
Covered Fund: hedge fund or a private equity fund under the Volcker Rule
 
ISDA: International Swaps and Derivatives Association, Inc.
CPR: Changes in anticipated loan prepayment rates
 
LendingClub: LendingClub Corporation, a peer-to-peer personal lending platform company from which SC acquires loans under flow agreements
CRA: Community Reinvestment Act
 
LCR: Liquidity coverage ratio
CRE: Commercial Real Estate
 
LHFI: Loans held-for-investment
 
 
 
 
 
 

2




LHFS: Loans held-for-sale
 
SAM: Santander Asset Management, LLC
LIBOR: London Interbank Offered Rate
 
Santander NY: New York branch of Santander
LTD: Long-term debt
 
Santander UK: Santander UK plc
LTV: Loan-to-value
 
SBNA: Santander Bank, National Association
MBS: Mortgage-backed securities
 
SC: Santander Consumer USA Holdings Inc. and its subsidiaries
MD&A: Management's Discussion and Analysis of Financial Condition and Results of Operations
 
SC Common Stock: Common shares of SC
MSR: Mortgage servicing right
 
SCF: Statement of cash flows
MVE: Market value of equity
 
SCRA: Servicemembers' Civil Relief Act
NCI: Non-controlling interest
 
SDART: Santander Drive Auto Receivables Trust, a SC securitization platform
NMD: Non-maturity deposits
 
SDGT: Specially Designated Global Terrorist
NMTC: New market tax credits
 
SEC: Securities and Exchange Commission
NPL: Non-performing loan
 
Securities Act: Securities Act of 1933, as amended
NSFR: Net stable funding ratio
 
SFS: Santander Financial Services, Inc.
NYSE: New York Stock Exchange
 
SHUSA: Santander Holdings USA, Inc.
OCC: Office of the Comptroller of the Currency
 
SIS: Santander Investment Securities Inc.
OEM: Original equipment manufacturer
 
SPAIN: Santander Prime Auto Issuing Note Trust, a securitization platform
OREO: Other real estate owned
 
SPE: Special purpose entity
OTTI: Other-than-temporary impairment
 
Sponsor Holdings: Sponsor Auto Finance Holding Series LP
Parent Company: the parent holding company of SBNA and other consolidated subsidiaries
 
SSLLC: Santander Securities LLC
PROMESA: Puerto Rico Management and Economic Stability Act
 
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.
REIT: Real estate investment trust
 
TCJA: Tax Cut and Jobs Act of 2017
RIC: Retail installment contract
 
TDR: Troubled debt restructuring
RV: Recreational vehicle
 
TLAC: Total loss-absorbing capacity
RWA: Risk-weighted asset
 
Trusts: Securitization trusts
S&P: Standard & Poor's
 
UPB: Unpaid principal balance
Santander: Banco Santander, S.A.
 
VIE: Variable interest entity
Santander BanCorp: Santander BanCorp and its subsidiaries
 
VOE: Voting rights entity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3




PART I. FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 
September 30, 2018
 
December 31, 2017
 
 
 
(As Revised - Note 1)
 
(in thousands)
ASSETS
 
 
 
Cash and cash equivalents
$
6,505,522

 
$
6,519,967

Investment securities:
 
 
 
Available-for-sale ("AFS") at fair value
11,760,512

 
14,413,183

Held-to-maturity ("HTM") (fair value of $2,713,695 and $1,773,938 as of September 30, 2018 and December 31, 2017, respectively)
2,825,768

 
1,799,808

Other investments (includes Trading securities of $1,992 and $1 as of September 30, 2018 and December 31, 2017, respectively)
743,965

 
658,864

Loans held-for-investment ("LHFI")(1) (5)
85,061,913

 
80,790,681

Allowance for loan and lease losses ("ALLL") (5)
(3,956,973
)
 
(3,994,887
)
Net LHFI
81,104,940

 
76,795,794

Loans held-for-sale ("LHFS") (2)
1,147,033

 
2,522,486

Premises and equipment, net (3)
772,406

 
849,061

Operating lease assets, net (5)(6)
13,278,888

 
10,474,308

Goodwill
4,444,389

 
4,444,389

Intangible assets, net
489,978

 
535,753

Bank-owned life insurance ("BOLI")
1,823,078

 
1,795,700

Restricted cash (5)
2,830,691

 
3,818,807

Other assets (4) (5)
3,900,905

 
3,646,405

TOTAL ASSETS
$
131,628,075

 
$
128,274,525

LIABILITIES
 
 
 
Accrued expenses and payables
$
2,951,645

 
$
2,825,263

Deposits and other customer accounts
60,941,997

 
60,831,103

Borrowings and other debt obligations (5)
41,517,752

 
39,003,313

Advance payments by borrowers for taxes and insurance
184,642

 
159,321

Deferred tax liabilities, net
1,207,468

 
965,290

Other liabilities (5)
1,093,672

 
799,403

TOTAL LIABILITIES
107,897,176

 
104,583,693

Commitments and Contingencies (Note 16)

 

STOCKHOLDER'S EQUITY
 
 
 
Preferred stock (no par value; $25,000 liquidation preference; 7,500,000 shares authorized; zero and 8,000 shares outstanding at September 30, 2018 and December 31, 2017, respectively)

 
195,445

Common stock and paid-in capital (no par value; 800,000,000 shares authorized; 530,391,043 shares outstanding at both September 30, 2018 and December 31, 2017)
17,736,580

 
17,723,010

Accumulated other comprehensive loss
(462,990
)
 
(198,431
)
Retained earnings
3,758,505

 
3,453,957

TOTAL SHUSA STOCKHOLDER'S EQUITY
21,032,095

 
21,173,981

Noncontrolling interest ("NCI")
2,698,804

 
2,516,851

TOTAL STOCKHOLDER'S EQUITY
23,730,899

 
23,690,832

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
131,628,075

 
$
128,274,525

 
(1) LHFI includes $136.5 million and $186.5 million of loans recorded at fair value at September 30, 2018 and December 31, 2017, respectively.
(2) Includes $207.6 million and $197.7 million of loans recorded at the fair value option ("FVO") at September 30, 2018 and December 31, 2017, respectively.
(3) Net of accumulated depreciation of $1.4 billion and $1.4 billion at September 30, 2018 and December 31, 2017, respectively.
(4) Includes mortgage servicing rights ("MSRs") of $160.1 million and $146.0 million at September 30, 2018 and December 31, 2017, respectively, for which the Company has elected the FVO. See Note 8 to these Condensed Consolidated Financial Statements for additional information.
(5) The Company has interests in certain securitization trusts ("Trusts") that are considered variable interest entities ("VIEs") for accounting purposes. At September 30, 2018 and December 31, 2017, LHFI included $23.9 billion and $22.7 billion, Operating leases assets, net included $13.2 billion and $10.2 billion, restricted cash included $1.6 billion and $2.0 billion, other assets included $721.8 million and $747.1 million, Borrowings and other debt obligations included $31.2 billion and $28.5 billion, and Other Liabilities included $113.2 million and $198.0 million of assets or liabilities that were included within VIEs, respectively. See Note 6 to these Condensed Consolidated Financial Statements for additional information.
(6) Net of accumulated depreciation of $3.3 billion and $3.4 billion at September 30, 2018 and December 31, 2017, respectively.
See accompanying notes to Condensed Consolidated Financial Statements.

4




SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
Three-Month Period
Ended September 30,
 
Nine-Month Period Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
(As Revised - Note 1)
 
 
 
(As Revised - Note 1)
 
(in thousands)
INTEREST INCOME:
 
 
 
 
 
 
 
Loans
$
1,914,528

 
$
1,855,624

 
$
5,584,979

 
$
5,584,275

Interest-earning deposits
32,202

 
24,370

 
98,655

 
63,279

Investment securities:
 
 
 
 
 
 
 
AFS
75,136

 
93,599

 
225,673

 
270,041

HTM
16,931

 
8,859

 
51,176

 
29,502

Other investments
4,141

 
4,688

 
13,989

 
15,876

TOTAL INTEREST INCOME
2,042,938

 
1,987,140

 
5,974,472

 
5,962,973

INTEREST EXPENSE:
 
 
 
 
 
 
 
Deposits and other customer accounts
103,265

 
56,707

 
271,020

 
177,524

Borrowings and other debt obligations
340,912

 
323,133

 
962,259

 
913,040

TOTAL INTEREST EXPENSE
444,177

 
379,840

 
1,233,279

 
1,090,564

NET INTEREST INCOME
1,598,761

 
1,607,300

 
4,741,193

 
4,872,409

Provision for credit losses
621,014

 
686,685

 
1,608,697

 
2,065,837

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
977,747

 
920,615

 
3,132,496

 
2,806,572

NON-INTEREST INCOME:
 
 
 
 
 
 
 
Consumer and commercial fees
144,505

 
151,906

 
420,843

 
468,609

Lease income
610,324

 
509,714

 
1,720,526

 
1,494,801

Miscellaneous income, net(1) (2)
68,915

 
127,154

 
302,998

 
271,678

TOTAL FEES AND OTHER INCOME
823,744

 
788,774

 
2,444,367

 
2,235,088

Net (losses)/gains on sale of investment securities
(1,688
)
 
6,707

 
(1,931
)
 
16,276

TOTAL NON-INTEREST INCOME
822,056

 
795,481

 
2,442,436

 
2,251,364

GENERAL AND ADMINISTRATIVE EXPENSES:
 
 
 
 
 
 
 
Compensation and benefits
436,202

 
452,587

 
1,332,708

 
1,360,444

Occupancy and equipment expenses
169,595

 
165,201

 
492,106

 
491,465

Technology, outside service, and marketing expense
146,652

 
129,474

 
454,944

 
427,244

Loan expense
83,190

 
91,147

 
277,683

 
285,364

Lease expense
455,344

 
409,424

 
1,316,404

 
1,137,456

Other administrative expenses
119,385

 
95,712

 
359,132

 
293,046

TOTAL GENERAL AND ADMINISTRATIVE EXPENSES
1,410,368

 
1,343,545

 
4,232,977

 
3,995,019

OTHER EXPENSES:
 
 
 
 
 
 
 
Amortization of intangibles
15,288

 
15,288

 
45,864

 
46,204

Deposit insurance premiums and other expenses
15,861

 
19,792

 
47,425

 
55,218

Loss on debt extinguishment
57

 
5,582

 
3,470

 
16,321

Other miscellaneous expenses
8,813

 
2,739

 
11,761

 
11,774

TOTAL OTHER EXPENSES
40,019

 
43,401

 
108,520

 
129,517

INCOME BEFORE INCOME TAX PROVISION
349,416

 
329,150

 
1,233,435

 
933,400

Income tax provision
109,949

 
92,942

 
374,162

 
257,033

NET INCOME INCLUDING NCI
239,467

 
236,208

 
859,273

 
676,367

LESS: NET INCOME ATTRIBUTABLE TO NCI
72,491

 
74,851

 
251,770

 
225,451

NET INCOME ATTRIBUTABLE TO SHUSA
$
166,976

 
$
161,357

 
$
607,503

 
$
450,916

(1) Includes impact of $86.8 million and $236.5 million for the three-month and nine-month periods ended September 30, 2018, respectively, compared to $84.8 million and $246.9 million for the three-month and nine-month periods ended September 30, 2017 of lower of cost or market adjustments on a portion of the Company's LHFS portfolio.
(2) Includes equity investment (income)/expense, net.

See accompanying notes to Condensed Consolidated Financial Statements.

5




SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(unaudited)

 
Three-Month Period
Ended September 30,
 
Nine-Month Period Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
(As Revised - Note 1)
 
 
 
(As Revised - Note 1)
 
(in thousands)
 
(in thousands)
NET INCOME INCLUDING NCI
$
239,467

 
$
236,208

 
$
859,273

 
$
676,367

OTHER COMPREHENSIVE INCOME, NET OF TAX
 
 
 
 
 
 
 
Net unrealized (losses) / gains on cash flow hedge derivative financial instruments, net of tax (1)
(3,822
)
 
(492
)
 
(25,926
)
 
3,544

Net unrealized (losses) / gains on AFS investment securities, net of tax (2)
(50,345
)
 
6,538

 
(196,328
)
 
42,856

Pension and post-retirement actuarial gains / (losses), net of tax
626

 
557

 
(3,211
)
 
1,598

TOTAL OTHER COMPREHENSIVE (LOSS) / GAIN, NET OF TAX
(53,541
)
 
6,603

 
(225,465
)
 
47,998

COMPREHENSIVE INCOME
185,926

 
242,811

 
633,808

 
724,365

NET INCOME ATTRIBUTABLE TO NCI
72,491

 
74,851

 
251,770

 
225,451

COMPREHENSIVE INCOME ATTRIBUTABLE TO SHUSA
$
113,435

 
$
167,960

 
$
382,038

 
$
498,914


(1) Excludes $(0.2) million and $3.9 million of other comprehensive income attributable to NCI for the three-month and nine-month periods ended September 30, 2018 respectively, compared to $0.2 million and $0.3 million for the corresponding periods in 2017.
(2) Excludes $39.1 million impact of other comprehensive income reclassified to Retained earnings as a result of the adoption of ASU 2018-02.

See accompanying notes to Condensed Consolidated Financial Statements.


6




SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
FOR THE NINE-MONTH PERIODS ENDED September 30, 2018 AND 2017 (in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Shares Outstanding
 
Preferred Stock
 
Common Stock and Paid-in Capital
 
Accumulated Other Comprehensive (Loss)/Income
 
Retained Earnings
 
Noncontrolling Interest
 
Total Stockholder's Equity
Balance, January 1, 2017
530,391

 
195,445

 
16,599,497

 
(193,208
)
 
3,020,149

 
2,756,875

 
22,378,758

Cumulative effect adjustment upon adoption of ASU 2016-09

 

 
(26,456
)
 

 
14,764

 
37,401

 
25,709

Comprehensive (loss)/income attributable to SHUSA (As revised - Note 1)

 

 

 
47,998

 
450,916

 

 
498,914

Other comprehensive income attributable to NCI

 

 

 

 

 
(321
)
 
(321
)
Net income attributable to NCI (As revised - Note 1)

 

 

 

 

 
225,451

 
225,451

Impact of SC stock option activity

 

 

 

 

 
14,193

 
14,193

Contribution of SFS from shareholder (Note 1)

 

 
430,783

 

 
(108,705
)
 

 
322,078

Capital contribution from shareholder

 

 
9,000

 

 

 

 
9,000

Stock issued in connection with employee benefit and incentive compensation plans

 

 
(164
)
 

 

 

 
(164
)
Dividends declared and paid on common stock

 

 

 

 
(5,000
)
 

 
(5,000
)
Dividends declared and paid on preferred stock

 

 

 

 
(10,950
)
 

 
(10,950
)
Balance, September 30, 2017
530,391

 
$
195,445

 
$
17,012,660

 
$
(145,210
)
 
$
3,361,174

 
$
3,033,599

 
$
23,457,668

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2018
530,391

 
195,445

 
17,723,010

 
(198,431
)
 
3,453,957

 
2,516,851

 
23,690,832

Cumulative-effect adjustment upon adoption of new accounting standards and other (Note 1)

 

 

 
(39,094
)
 
47,550

 

 
8,456

Comprehensive income attributable to SHUSA

 

 

 
(225,465
)
 
607,503

 

 
382,038

Other comprehensive income attributable to NCI

 

 

 

 

 
3,916

 
3,916

Net income attributable to NCI

 

 

 

 

 
251,770

 
251,770

Contribution from shareholder and related tax impact (Note 17)

 

 
9,174

 

 

 

 
9,174

Contribution of SAM from shareholder (Note 1)

 

 
4,396

 

 

 

 
4,396

Redemption of preferred stock

 
(195,445
)
 

 

 
(4,555
)
 

 
(200,000
)
Impact of stock issued in connection with employee benefit and incentive compensation plans

 

 

 

 

 
11,235

 
11,235

Dividends declared and paid on common stock

 

 

 

 
(335,000
)
 

 
(335,000
)
Dividends declared and paid to NCI

 

 

 

 

 
(34,757
)
 
(34,757
)
Stock Repurchase attributable to NCI

 

 

 

 

 
(50,211
)
 
(50,211
)
Dividends declared and paid on preferred stock

 

 

 

 
(10,950
)
 

 
(10,950
)
Balance, September 30, 2018
530,391

 
$


$
17,736,580

 
$
(462,990
)
 
$
3,758,505

 
$
2,698,804

 
$
23,730,899

See accompanying notes to Condensed Consolidated Financial Statements.

7




SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)





Nine-Month Period Ended September 30,
 
2018

2017
 
 
 
(As Revised - Note 1)
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income including NCI
$
859,273

 
$
676,367

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for credit losses
1,608,697

 
2,065,837

Deferred tax expense
332,297

 
248,776

Depreciation, amortization and accretion(1)
1,411,482

 
1,142,390

Net loss on sale of loans
233,977

 
256,072

Net loss/(gain) on sale of investment securities
1,931

 
(16,276
)
Loss on debt extinguishment
3,470

 
16,321

Net loss/(gain) on real estate owned and premises and equipment
10,300

 
(23,395
)
Stock-based compensation
704

 
940

Equity (income)/loss on equity method investments
(5,051
)
 
747

Originations of LHFS, net of repayments
(2,683,847
)
 
(3,805,625
)
Purchases of LHFS
(1,301
)
 
(4,021
)
Proceeds from sales of LHFS
3,925,429

 
4,272,628

Purchases of trading securities
(3,627
)
 
(9,734
)
Proceeds from sales of trading securities
3,532

 
18,074

Net change in:
 
 
 
Revolving personal loans
(147,975
)
 
(139,360
)
Other assets and BOLI
(293,470
)
 
(235,730
)
Other liabilities
384,524

 
(49,535
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
5,640,345

 
4,414,476

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Proceeds from sales of AFS investment securities
968,487

 
1,763,305

Proceeds from prepayments and maturities of AFS investment securities
2,060,524

 
3,791,545

Purchases of AFS investment securities
(1,900,147
)
 
(6,088,005
)
Proceeds from prepayments and maturities of HTM investment securities
266,616

 
140,992

Purchases of HTM investment securities
(135,898
)
 
(51,506
)
Proceeds from sales of other investments
94,053

 
205,445

Proceeds from maturities of other investments

 
560

Purchases of other investments
(120,692
)
 
(154,928
)
Proceeds from sales of LHFI
935,471

 
1,085,985

Proceeds from the sales of equity method investments

 
17,717

Distributions from equity method investments
3,316

 
7,572

Contributions to equity method and other investments
(81,132
)
 
(55,236
)
Proceeds from settlements of BOLI policies
16,434

 
25,008

Purchases of LHFI
(776,059
)
 
(517,844
)
Net change in loans other than purchases and sales
(5,958,162
)
 
2,255,406

Purchases and originations of operating leases
(7,717,157
)
 
(4,739,735
)
Proceeds from the sale and termination of operating leases(1)
2,979,649

 
2,528,179

Manufacturer incentives
781,752

 
778,748

Proceeds from sales of real estate owned and premises and equipment
42,130

 
97,976

Purchases of premises and equipment
(105,530
)
 
(103,695
)
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES
(8,646,345
)
 
987,489

 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net change in deposits and other customer accounts
110,894

 
(5,171,305
)
Net change in short-term borrowings
1,014,519

 
2,105,048

Net proceeds from long-term borrowings
33,477,492

 
35,094,920

Repayments of long-term borrowings
(32,007,516
)
 
(36,057,264
)
Proceeds from Federal Home Loan Bank ("FHLB") advances (with terms greater than 3 months)
1,400,000

 
1,000,000

Repayments of FHLB advances (with terms greater than 3 months)
(1,400,000
)
 
(4,500,000
)
Net change in advance payments by borrowers for taxes and insurance
25,321

 
18,405

Cash dividends paid to preferred stockholders
(10,950
)
 
(10,950
)
Dividends paid on common stock
(335,000
)
 
(5,000
)
Dividends paid to noncontrolling interest
(34,757
)
 

Stock repurchase attributable to NCI
(50,211
)
 

Proceeds from the issuance of common stock
7,906

 
5,586

Capital contribution from shareholder
5,741

 
9,000

Redemption of preferred stock
(200,000
)
 

NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
2,003,439

 
(7,511,560
)
 
 
 
 
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (2)
(1,002,561
)
 
(2,109,595
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD (2)
10,338,774

 
13,052,807

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (2)
$
9,336,213

 
$
10,943,212

 
 
 
 
NON-CASH TRANSACTIONS
 
 
 
Loans transferred to/(from) other real estate owned
57,482

 
9,536

Loans transferred from/(to) held-for-investment ("HFI") (from)/to held-for-sale, net ("HFS")
732,527

 
4,899

Unsettled sales of investment securities
58,311

 
109,106

Contribution of SFS from shareholder (3)

 
322,078

Contribution of SAM from shareholder (3)
4,396

 

AFS investment securities transferred to HTM investment securities
1,167,189

 


(1) September 30, 2017 cash flow activity has been updated for the operating lease cash flow classification correction. Refer to Note 1 - Basis of Presentation and Accounting Policies for additional information.
(2) The beginning, ending and net change balances for the periods ended September 30, 2018 and September 30, 2017 include restricted cash balances of $3.8 billion, $2.8 billion, and $(988.1) million; and $3.0 billion, $3.0 billion, and $16.6 million, respectively.
(3) The contributions of Santander Financial Services, Inc. ("SFS") and Santander Asset Management, LLC ("SAM") were accounted for as non-cash transactions. Refer to Note 1 - Basis of Presentation and Accounting Policies for additional information.

See accompanying notes to Condensed Consolidated Financial Statements.

8





NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Introduction

Santander Holdings USA, Inc. ("SHUSA" or "the Company") is the parent company (the "Parent Company") of Santander Bank, National Association, (the "Bank" or "SBNA"), a national banking association; Santander Consumer USA Holdings Inc. (together with its subsidiaries, "SC"), a consumer finance company; Santander BanCorp (together with its subsidiaries, "Santander BanCorp"), a financial holding company headquartered in Puerto Rico that offers a full range of financial services through its wholly-owned banking subsidiary, Banco Santander Puerto Rico ("BSPR"); Santander Securities LLC ("SSLLC"), a broker-dealer headquartered in Boston, Massachusetts; Banco Santander International ("BSI"), an Edge corporation located in Miami, Florida, that offers a full range of banking services to foreign individuals and corporations based primarily in Latin America; and Santander Investment Securities Inc. ("SIS"), a registered broker-dealer located in New York providing services in investment banking, institutional sales, and trading and offering research reports of Latin American and European equity and fixed income securities; as well as several other subsidiaries. SHUSA is headquartered in Boston and the Bank's home office is in Wilmington, Delaware. SHUSA is a wholly-owned subsidiary of Banco Santander, S.A. ("Santander"). The Parent Company's two largest subsidiaries by asset size and revenue are the Bank and SC.

The Bank’s primary business consists of attracting deposits and providing other retail banking services through its network of retail branches, and originating small business loans, middle market, large and global commercial loans, multifamily loans, residential mortgage loans, home equity lines of credit, and auto and other consumer loans throughout the Mid-Atlantic and Northeastern areas of the United States, focused throughout Pennsylvania, New Jersey, New York, New Hampshire, Massachusetts, Connecticut, Rhode Island, and Delaware. The Bank uses its deposits, as well as other financing sources, to fund its loan and investment portfolios.

SC is a specialized consumer finance company focused on vehicle finance and third-party servicing. SC's primary business is the indirect origination and securitization of retail installment contracts ("RICs") principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to subprime retail consumers.

In conjunction with a ten-year private label financing agreement with Fiat Chrysler Automobiles US LLC ("FCA") that became effective May 1, 2013 (the "Chrysler Agreement"), SC offers a full spectrum of auto financing products and services to FCA customers and dealers under the Chrysler Capital brand. These products and services include consumer RICs and leases, as well as dealer loans for inventory, construction, real estate, working capital and revolving lines of credit. Refer to Note 16 for additional details.

In June 2018, SC announced that it was in exploratory discussions with FCA regarding the future of FCA's U.S. finance operations. FCA has announced its intention to establish a captive U.S. auto finance unit and indicated that acquiring Chrysler Capital is one option it will consider. Under the Chrysler Agreement, FCA has the option to acquire, for fair market value, an equity participation in the business offering and providing financial services contemplated by the Chrysler Agreement. The likelihood, timing and structure of any such transaction, and the likelihood that the Chrysler Agreement will terminate, cannot be reasonably determined. On July 11, 2018, in order to facilitate discussions regarding the Chrysler Agreement, FCA and the Company entered into a tolling agreement pursuant to which the parties agreed to preserve their respective rights, claims and defenses under the Chrysler Agreement as they existed on April 30, 2018.

SC also originates vehicle loans through a web-based direct lending program, purchases vehicle RICs 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 personal loans, private-label revolving lines of credit and other consumer finance products.

As of September 30, 2018, SC was owned approximately 68.3% by SHUSA and 31.7% by other shareholders. During 2017, SHUSA increased its ownership in SC; refer to additional details in Note 21 of the Company's Annual Report on Form 10-K as of December 31, 2017. Common shares of SC ("SC Common Stock") are listed on the New York Stock Exchange (the "NYSE") under the trading symbol "SC."

Intermediate Holding Company ("IHC")

The enhanced prudential standards mandated by Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "DFA")(the “Final Rule") were enacted by the Federal Reserve System (the "Federal Reserve") to strengthen regulatory oversight of foreign banking organizations ("FBOs"). Under the Final Rule, FBOs with over $50 billion of U.S. non-branch assets, including Santander, were required to consolidate U.S. subsidiary activities under an IHC. Due to its U.S. non-branch total consolidated asset size, Santander is subject to the Final Rule. As a result of this rule, Santander transferred substantially all of its equity interests in

9





NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)

U.S. bank and non-bank subsidiaries previously outside the Company to the Company, which became an IHC effective July 1, 2016. These subsidiaries included Santander BanCorp, BSI, SIS and SSLLC, as well as several other subsidiaries. On July 1, 2017, an additional Santander subsidiary, SFS, a finance company located in Puerto Rico, was transferred to the Company. Additionally, effective July 2, 2018, Santander transferred SAM to the IHC. The contribution of SAM to the Company transferred approximately $5.4 million of assets, $1.0 million of liabilities, and $4.4 million of equity to the Company.

Although SAM is an entity under common control, its results of operations, financial condition, and cash flows are immaterial to the historical financial results of the Company. As a result, the Company elected to report the results of SAM on a prospective basis beginning July 2, 2018. As a result of the 2017 contribution of SFS in 2017 and SAM in 2018, SHUSA's net income is understated $1.0 million and $5.3 million for the nine-month period ended September 30, 2018 and 2017, respectively, and a contribution to stockholder's equity of $4.4 million and $322.1 million was recorded on July 2, 2018, and July 1, 2017, respectively, which are immaterial to the overall presentation of the Company's financial statements for each of the periods presented.

Basis of Presentation

These Condensed Consolidated Financial Statements include accounts of the Company and its consolidated subsidiaries, and certain special purpose financing trusts that are considered VIEs. The Company generally consolidates VIEs for which it is deemed to be the primary beneficiary and voting interest entities ("VOEs") in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and pursuant to Securities and Exchange Commission ("SEC") regulations. Additionally, where applicable, the Company's accounting policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. 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 Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholder's Equity and Statements of Cash Flows ("SCF") for the periods indicated, and contain adequate disclosure for the fair statement of this interim financial information. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

Corrections to Previously Reported Amounts

Certain accounting for retail installment contracts and auto loans

In connection with preparing its financial statements for the quarter ended September 30, 2018, the Company identified and corrected two immaterial errors impacting its previously issued 2018 and 2017 financial statements. To correct the misstatements, the Company has revised its Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements as of and for the periods ended September 30, 2017.  Financial reporting periods not presented herein will be revised, as applicable, in future periods and filings.  The matters giving rise to the corrections are summarized below:

For core retail auto loans originated at SC after January 1, 2017, as previously disclosed, the Company had determined past due status using a 90% required minimum payment threshold, while continuing to use a 50% threshold to report past due status on core retail auto loans originated prior to that date. SC had accounted for this change as a change in accounting estimate. In the third quarter of 2018, the Company and SC determined that loan contract terms alone, exclusive of alternative terms agreed with borrowers during loan servicing, should always have been the basis for determining the past due status of a loan. The consolidated financial statements and related delinquency disclosures for the three- and nine- month periods ended September 30, 2018 have been prepared, for all loans, with loan past due status based on a 90% required minimum payment threshold; and the financial statements and related disclosures for the period ended September 30, 2017 have been revised to conform with this same basis of determining loan past due status.

On January 1, 2017, as previously disclosed, SC prospectively began classifying as non-accrual loans (1) any loans designated as troubled debt restructurings (“TDRs") and 60+ days past due at the time of TDR and (2) any loans less than 60 days past due at the time of TDR that had a third instance of deferral. These TDR loans were also placed on a cost recovery basis from that time forward and not returned to accrual status until there was sustained evidence of collectability. The Company had accounted for these changes as changes in an accounting estimate. In the third quarter of 2018, the Company determined the changes in both nonaccrual designation and cost recovery basis, if preferable, would have been more appropriately accounted for as changes in accounting principle, not changes in estimate. As it was not management's intention to account

10





NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)

for the changes retrospectively, as is required for changes in accounting principle, management has determined the change was an error and, in turn, to correct the error by reversing the impacts of the change.

The following tables summarize the impacts of the corrections on the Company's Condensed Consolidated Balance Sheets for the periods indicated:

 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LHFI
$
83,136,904

 
$
138,537

 
$
83,275,441

 
$
80,118,328

 
$
95,455

 
$
80,213,783

 
$
80,740,852

 
$
49,829

 
$
80,790,681

ALLL
(3,810,734
)
 
(178,142
)
 
(3,988,876
)
 
(3,853,209
)
 
(131,167
)
 
(3,984,376
)
 
(3,911,575
)
 
(83,312
)
 
(3,994,887
)
Other assets
3,930,251

 
23,658

 
3,953,909

 
3,994,748

 
19,264

 
4,014,012

 
3,632,427

 
13,978

 
3,646,405

TOTAL ASSETS
130,138,694

 
(15,947
)
 
130,122,747

 
129,227,891

 
(16,448
)
 
129,211,443

 
128,294,030

 
(19,505
)
 
128,274,525

LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liabilities, net
1,144,002

 
(3,849
)
 
1,140,153

 
1,037,909

 
(3,965
)
 
1,033,944

 
969,996

 
(4,706
)
 
965,290

TOTAL LIABILITIES
105,986,215

 
(3,849
)
 
105,982,366

 
105,384,810

 
(3,965
)
 
105,380,845

 
104,588,399

 
(4,706
)
 
104,583,693

STOCKHOLDER'S EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retained earnings
3,931,614

 
(6,880
)
 
3,924,734

 
3,685,111

 
(7,142
)
 
3,677,969

 
3,462,674

 
(8,717
)
 
3,453,957

TOTAL SHUSA STOCKHOLDER'S EQUITY
21,449,794

 
(6,880
)
 
21,442,914

 
21,242,459

 
(7,142
)
 
21,235,317

 
21,182,698

 
(8,717
)
 
21,173,981

Noncontrolling interest ("NCI")
2,702,685

 
(5,218
)
 
2,697,467

 
2,600,622

 
(5,341
)
 
2,595,281

 
2,522,933

 
(6,082
)
 
2,516,851

TOTAL STOCKHOLDER'S EQUITY
24,152,479

 
(12,098
)
 
24,140,381

 
23,843,081

 
(12,483
)
 
23,830,598

 
23,705,631

 
(14,799
)
 
23,690,832

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
130,138,694

 
$
(15,947
)
 
$
130,122,747

 
$
129,227,891

 
$
(16,448
)
 
$
129,211,443

 
$
128,294,030

 
$
(19,505
)
 
$
128,274,525


 
September 30, 2017
 
June 30, 2017
 
March 31, 2017(1)
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LHFI
$
81,548,699

 
$
21,689

 
$
81,570,388

 
$
82,956,779

 
$
7,672

 
$
82,964,451

 
$
83,714,900

 
$
(1,340
)
 
$
83,713,560

ALLL
(3,956,145
)
 
(50,900
)
 
(4,007,045
)
 
(3,953,608
)
 
(28,837
)
 
(3,982,445
)
 
(3,922,863
)
 
(8,033
)
 
(3,930,896
)
Other assets
3,871,053

 
9,744

 
3,880,797

 
4,091,273

 
3,023

 
4,094,296

 
4,084,593

 
2,123

 
4,086,716

TOTAL ASSETS
131,986,117

 
(19,467
)
 
131,966,650

 
134,755,695

 
(18,142
)
 
134,737,553

 
136,091,168

 
(7,250
)
 
136,083,918

LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liabilities, net
1,642,549

 
(7,335
)
 
1,635,214

 
1,553,283

 
(6,829
)
 
1,546,454

 
1,474,337

 
(2,714
)
 
1,471,623

TOTAL LIABILITIES
108,516,317

 
(7,335
)
 
108,508,982

 
111,858,441

 
(6,829
)
 
111,851,612

 
113,491,418

 
(2,714
)
 
113,488,704

STOCKHOLDER'S EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retained earnings
3,368,210

 
(7,037
)
 
3,361,173

 
3,315,083

 
(6,562
)
 
3,308,521

 
3,144,344

 
(2,631
)
 
3,141,713

TOTAL SHUSA STOCKHOLDER'S EQUITY
20,431,105

 
(7,037
)
 
20,424,068

 
19,940,592

 
(6,562
)
 
19,934,030

 
19,747,425

 
(2,631
)
 
19,744,794

NCI
3,038,695

 
(5,095
)
 
3,033,600

 
2,956,662

 
(4,752
)
 
2,951,910

 
2,852,325

 
(1,905
)
 
2,850,420

TOTAL STOCKHOLDER'S EQUITY
23,469,800

 
(12,132
)
 
23,457,668

 
22,897,254

 
(11,314
)
 
22,885,940

 
22,599,750

 
(4,536
)
 
22,595,214

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
131,986,117

 
$
(19,467
)
 
$
131,966,650

 
$
134,755,695

 
$
(18,143
)
 
$
134,737,552

 
$
136,091,168

 
$
(7,250
)
 
$
136,083,918

(1) The March 31, 2017 as reported balances have been adjusted for the correction of a deferred tax classification error disclosed in the June 30, 2017 Form 10-Q filed on August 11, 2017.


11





NOTE 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)

The following tables summarize the impacts of the corrections on the Company's Condensed Consolidated Statements of Operations for the periods indicated:

 
For the six-month period ended
 
For the three-month period ended
 
For the three-month period ended
 
June 30, 2018
 
June 30, 2018
 
March 31, 2018
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
$
3,561,579

 
$
108,873

 
$
3,670,452

 
$
1,813,853

 
$
54,470

 
$
1,868,323

 
$
1,747,734

 
$
54,403

 
$
1,802,137

TOTAL INTEREST INCOME
3,822,660

 
108,873

 
3,931,533

 
1,946,603

 
54,470

 
2,001,073

 
1,876,064

 
54,403

 
1,930,467

NET INTEREST INCOME
3,033,558

 
108,873

 
3,142,431

 
1,537,616

 
54,470

 
1,592,086

 
1,495,950

 
54,403

 
1,550,353

Provision for credit losses
882,368

 
105,315

 
987,683

 
379,834

 
53,969

 
433,803

 
502,534

 
51,346

 
553,880

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
2,151,190

 
3,558

 
2,154,748

 
1,157,782

 
501

 
1,158,283

 
993,416

 
3,057

 
996,473

Income tax provision / (benefit)
263,356

 
857

 
264,213

 
168,035

 
116

 
168,151

 
95,321

 
741

 
96,062

NET INCOME including NCI
617,107

 
2,700

 
619,807

 
359,171

 
385

 
359,556

 
257,935

 
2,315

 
260,250

Less: Net income attributable to NCI
178,416

 
864

 
179,280

 
104,018

 
123

 
104,141

 
74,397

 
741

 
75,138

NET INCOME ATTRIBUTABLE TO SHUSA
$
438,691

 
1,836

 
440,527

 
255,153

 
262

 
255,415

 
183,538

 
1,574

 
185,112


The following tables summarize the impacts of the corrections on the Company's Condensed Consolidated Statements of Operations for the periods indicated:

 
For the year ended
 
For the nine-month period ended
 
For the three-month period ended
 
December 31, 2017
 
September 30, 2017
 
September 30, 2017
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
$
7,287,400

 
$
89,945

 
$
7,377,345

 
$
5,530,239

 
$
54,036

 
$
5,584,275

 
$
1,822,384

 
$
33,240

 
$
1,855,624

TOTAL INTEREST INCOME
7,786,134

 
89,945

 
7,876,079

 
5,908,937

 
54,036

 
5,962,973

 
1,953,900

 
33,240

 
1,987,140

NET INTEREST INCOME
6,334,005

 
89,945

 
6,423,950

 
4,818,373

 
54,036

 
4,872,409

 
1,574,060

 
33,240

 
1,607,300

Provision for credit losses
2,650,494

 
109,450

 
2,759,944

 
1,992,334

 
73,503

 
2,065,837

 
652,120

 
34,565

 
686,685

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
3,683,511

 
(19,505
)
 
3,664,006

 
2,826,039

 
(19,467
)
 
2,806,572

 
921,940

 
(1,325
)
 
920,615

Income tax provision / (benefit)
(152,334
)
 
(4,706
)
 
(157,040
)
 
264,368

 
(7,335
)
 
257,033

 
93,448

 
(506
)
 
92,942

NET INCOME including NCI
972,774

 
(14,799
)
 
957,975

 
688,499

 
(12,132
)
 
676,367

 
237,027

 
(819
)
 
236,208

Less: Net income attributable to NCI
411,707

 
(6,082
)
 
405,625

 
230,547

 
(5,096
)
 
225,451

 
75,195

 
(344
)
 
74,851

NET INCOME ATTRIBUTABLE TO SHUSA
$
561,067

 
(8,717
)
 
552,350

 
457,952

 
(7,036
)
 
450,916

 
161,832

 
(475
)
 
161,357


 
For the six-month period ended
 
For the three-month period ended
 
For the three-month period ended
 
June 30, 2017
 
June 30, 2017
 
March 31, 2017
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
 
As Reported
 
Corrections
 
As Revised
INTEREST INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
$
3,707,856

 
$
20,796

 
$
3,728,652

 
$
1,868,918

 
$
(8,167
)
 
$
1,860,751

 
$
1,838,938

 
$
28,963

 
$
1,867,901

TOTAL INTEREST INCOME
3,955,038

 
20,796

 
3,975,834

 
1,999,445

 
(8,167
)
 
1,991,278

 
1,955,593

 
28,963

 
1,984,556

NET INTEREST INCOME
3,244,313

 
20,796

 
3,265,109

 
1,641,749

 
(8,167
)
 
1,633,582

 
1,602,565

 
28,963

 
1,631,528

Provision for credit losses
1,340,214

 
38,938

 
1,379,152

 
604,768

 
2,725

 
607,493

 
735,445

 
36,213

 
771,658

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
1,904,099

 
(18,142
)
 
1,885,957

 
1,036,981

 
(10,892
)
 
1,026,089

 
867,120

 
(7,250
)
 
859,870

Income tax provision / (benefit)
170,920

 
(6,829
)
 
164,091

 
91,983

 
(4,115
)
 
87,868

 
78,937

 
(2,714
)</