SANTANDER CONSUMER USA HOLDINGS INC . 2017 Analyst and Investor Day - - PowerPoint PPT Presentation

SANTANDER CONSUMER USA HOLDINGS INC.

2017 Analyst and Investor Day

02.23.2017

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IMPORTANT INFORMATION

Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our 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, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond our control. For additional discussion of these risks, refer to the section entitled Risk Factors and elsewhere in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed by us with the U.S. Securities and Exchange Commission (SEC). Among the factors that could cause the forward-looking statements in this presentation and/or our financial performance to differ materially from that suggested by the forward-looking statements are (a) the inherent limitations in internal controls over financial reporting; (b) our ability to remediate any material weaknesses in internal controls over financial reporting completely and in a timely manner; (c) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (d) adverse economic conditions in the United States and worldwide may negatively impact our results; (e) our business could suffer if our access to funding is reduced; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (g) unexpected costs and delays in connection with exiting our personal lending business; (h) our agreement with Fiat Chrysler Automobiles US LLC may not result in currently anticipated levels of growth and is subject to certain performance conditions that could result in termination of the agreement; (i) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (j) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (k) loss of our key management or other personnel, or an inability to attract such management and personnel; (l) certain regulations, including but not limited to oversight by the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the European Central Bank, and the Federal Reserve, whose oversight and regulation may limit certain of our activities, including the timing and amount of dividends and other limitations on our business; and (m) future changes in our relationship with Banco Santander that could adversely affect our operations. If one or more

• f the factors affecting our forward-looking information and statements proves incorrect, our actual results, performance or achievements could differ materially

from those expressed in, or implied by, forward-looking information and statements. Therefore, we caution 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 our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements only speak as of the date of this document, and we undertake 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 us are expressly qualified by these cautionary statements.

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SPEAKERS

Jason Kulas

President and Chief Executive Officer

• Mr. Kulas has served as Santander Consumer USA Holdings Inc.’s (SC) Chief Executive Officer and a member of our Board of Directors since July 2015. He was named

President in 2013 and was the Company’s Chief Financial Officer from 2007 to 2015. He also served on SC’s Board of Directors from 2007 to 2012. Mr. Kulas joined the Company after serving as a Managing Director in investment banking for J.P. Morgan Securities Inc., where he was employed from 1995 to 2007. In addition to his current service on SC’s Board, he serves as a director of the nonprofit Santander Consumer USA, Inc. Foundation. Mr. Kulas received his Bachelor’s Degree in Chemistry from Southern Methodist University and his MBA from Texas Christian University.

Izzy Dawood

Chief Financial Officer

• Mr. Dawood began serving as the Company’s Chief Financial Officer in December 2015. Prior to joining SC, Mr. Dawood served as Executive Vice President and Chief

Financial Officer of the Investment Services division of The Bank of New York Mellon Corporation (‘BNY Mellon’) since April 2013. He also served as Executive Vice President and Director of Investor Relations and Financial Planning and Analysis of BNY Mellon from June 2009 to March 2013, and as Senior Vice President and Global Head of Corporate Development and Strategy of BNY Mellon from November 2006 to May 2009. Prior to his tenure at BNY Mellon, Mr. Dawood served in various senior roles at Wachovia Corporation, where he was employed from 1994 to 2006, including Managing Director of Structured Treasury Activities and Managing Director of Corporate Development. Mr. Dawood holds a Bachelor’s Degree in finance from St. John's University, Jamaica (Queens), New York and an MBA from the Wharton School

• f Business at the University of Pennsylvania. Mr. Dawood is a Chartered Financial Analyst.

Rich Morrin

Chief Operating Officer

• Mr. Morrin was named the Company’s Chief Operating Officer in February 2016. He previously held the role of Executive Vice President of New Business at the Company, a

position he held since 2011. Prior to joining the Company, Mr. Morrin held a variety of management positions in 21 years of combined service at Ally Financial and General Motors Acceptance Corp. During his tenure at Ally, he managed the commercial lending operations for Ally automotive dealers in the United States and Canada. Mr. Morrin holds a Bachelor’s Degree in Economics from the University of Pennsylvania and an MBA from the University of Virginia.

Andrew Kang

Treasurer and Executive Vice President, Capital Markets

• Mr. Kang has served as the Company’s Treasurer and Executive Vice President of Capital Markets at SC since September 2015. Prior to that role, he served as Vice President
• f Capital Markets at SC from March 2010 to June 2014. During his career, Mr. Kang has also held the role of Treasurer at Exeter Finance Corp and various finance, treasury

and capital markets roles at HSBC Finance Corporation, Capital One Financial Corporation and Thomson Reuters. Mr. Kang received his Bachelor of Arts in Biology and Post-Baccalaureate Certificate in Accounting both from the University of Virginia.

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» Kalyan Seshan

Chief Risk Officer

» Evan Black

VP, Investor Relations

OTHER KEY ATTENDEES

» Fahmi Karam

EVP, Strategy and Corporate Development

» Christopher Pfirrman

Chief Legal Officer

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AGENDA

9:45 a.m. – 10:25 a.m. SC Today

Jason Kulas, President and Chief Executive Officer

10:25 a.m. – 10:55 a.m. Vehicle Finance

Rich Morrin, Chief Operating Officer

10:55 a.m. – 11:20 a.m. Break and Q&A 11:20 a.m. – 11:40 a.m. Funding and Liquidity

Andrew Kang, Treasurer and Executive Vice President, Capital Markets

11:40 a.m. – 12:15 p.m. Credit and Finance

Izzy Dawood, Chief Financial Officer

12:15 p.m. – 1:00 p.m. Lunch and Q&A

SC TODAY

Jason Kulas, President and Chief Executive Officer

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SC OVERVIEW

LEADERSHIP IN VEHICLE FINANCE

STRONG AND STABLE PERFORMANCE THROUGH CYCLES

STRONG AND GROWING CAPITAL BASE DATA-DRIVEN UNDERWRITING DISCIPLINE DEEP, SUSTAINED AND DIVERSE ACCESS TO FUNDING PREFERRED LENDER FOR FIAT CHRYSLER (FCA) EFFICIENT, SCALABLE, TECHNOLOGY-DRIVEN PLATFORM COMPLIANCE, CUSTOMER AND EMPLOYEE FOCUSED CULTURE BANCO SANTANDER S.A. OWNERSHIP AND SUPPORT

SIMPLE | PERSONAL | FAIR

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8

1995 1998 2000 2004 2006 2010 2011 2013 2014 – Current

Entrepreneurial partnership (including Tom Dundon and partners) founded in 1995 Entrepreneurial partnership merged with FirstCity Merged with HBOS HBOS and Drive Management acquired remaining shares

• f Drive

Banco Santander acquired majority

• wnership

First subvented subprime Chrysler deal in 2010 DDFS Private equity sponsors invest SC and Chrysler announced Chrysler Capital

• perations

(1) 1 No primary proceeds

FCA Agreement/Organic Growth

SC HISTORY

Big Bank Ownership Entrance Independent Ownership Private Equity Listed Company

SC’s fundamentals remain strong and the company is focused on maintaining disciplined underwriting standards to deliver strong returns, robust profitability and value to its shareholders through cycles

Inorganic Growth Phase Entrepreneurial Phase Organic Growth Phase

2008 2011

Throughout its evolution, SC has remained a sustainable and profitable business

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Revenue1

$1.1B $2.1B $3.7B $5.0B

Average Managed Assets2

$4.0B $18.2B $25.5B $52.7B

FICO3

538 582 612 632

Employees4

1,120 3,300 4,100 5,100

Locations4

1 4 5 6

Customers

350K 2.1M 1.9M 2.7M

SC EVOLUTION

1Interest on finance receivables and loans (figures prior to 2013 were not restated per the restatements filed on October 27, 2016) 2 Average Managed Assets comprises all assets including balance sheet and serviced for others 3 Average FICO Originated 4 Does not include third-party outsourced employees or locations

SC has experienced significant growth since 2007 through the acquisition or conversion of several portfolios and the agreement with Fiat Chrysler (FCA)

2007 2010 2013 2016 Years

10 VEHICLE FINANCE

LEVERAGING TECHNOLOGY IS INTEGRAL TO THE FOUR PILLARS OF OUR FOCUSED BUSINESS MODEL DISCIPLINED APPROACH TO MARKET SIMPLE, PERSONAL, FAIR APPROACH TO CUSTOMERS, EMPLOYEES AND ALL CONSTITUENCIES

SERVICED FOR OTHERS FUNDING AND LIQUIDITY CULTURE OF COMPLIANCE

FOCUSED BUSINESS MODEL

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3.9% 4.3% 3.8% 3.6% 3.8% 4.0% 4.2% 4.4% 1H 2014 1H 2015 1H 2016 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

• $1,000

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

RETAINED UNIT ECONOMICS BY ORIGINATION YEAR

Months on Book2

Underwriting discipline has resulted in every vintage being profitable in a competitive environment First Half Vintage Performance3, Net Losses4

1 Cumulative fully-loaded Net Income by vintage (pre-tax) divided by total loans originated in that vintage 2 Months on book depicts loans originated in specific vintage and may not reflect exact time on book 3First half vintage describes January through June vintage performance through the end of December (for each respective year) 4Auction fees excluded to align with U.S. GAAP reporting

Months on Book2

Cumulative Pre-Tax Net Income per unit by vintage year1

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5.2% 7.7% 7.8% 8.1% 8.2% 9.4% 12.7% 15.8% 16.6% 16.9% 21.1% 31.1% Peer 10 Peer 6 Peer 11 Peer 5 Peer 9 Peer 7 Peer 8 SC Peer 2 Peer 4 Peer 3 Peer 1 0.7% 0.7% 0.7% 0.7% 1.0% 1.1% 1.3% 1.3% 2.0% 2.6% 2.7% 8.3% Peer 11 Peer 10 Peer 9 Peer 8 Peer 7 Peer 6 Peer 5 Peer 4 SC Peer 3 Peer 2 Peer 1

PERFORMANCE VS PEERS

SC continues to demonstrate top tier returns and efficiency versus a broad set of peers Return on Average Tangible Assets Return on Average Equity

Source: SNL Financial Peers in no particular order: SYF, ALLY, CFG, HBAN, TD-TSX, FITB, COF, OMF, CPSS, DFS, CACC

Peer Median: 9.4% Peer Median: 1.1%

67.0% 64.4% 61.8% 61.7% 60.6% 56.7% 51.8% 39.4% 33.3% 32.6% 31.1% 28.7% Peer 11 Peer 10 Peer 8 Peer 7 Peer 9 Peer 5 Peer 6 Peer 3 Peer 4 SC Peer 2 Peer 1

Efficiency Ratio

Peer Median: 56.7%

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STATE OF THE CONSUMER

• 8%
• 4%

0% 4% 8% 12% 16% 2003 2004 2006 2007 2009 2010 2012 2013 2015 2016 Mortgage Consumer Consumer Avg Mortgage Avg 3% 6% 133 107 76 20 40 60 80 100 120 140 2013 2014 2015 2016 Nearprime/prime Nearprime Subprime

U.S. Unemployment Rate (%) Consumer Confidence Index1 U.S. Total Mortgage and Consumer Debt Expansion Y/Y% ∆1 Consumer Debt to Income Levels By Type1,2

1 Deutsche Bank “The State of US Consumer Report” November 2016 2 Data through end of 3Q16

9% pre-crisis mortgage growth since 1950

5.3% 10.6% 9.1% 0% 2% 4% 6% 8% 10% 12% 14% 16% 2003 2004 2006 2007 2009 2010 2012 2013 2015 2016 Card Auto/Personal loans Student

7% pre-crisis consumer growth since 1950

4.7% 0% 2% 4% 6% 8% 10% 12% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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$797 $830 $760 $684 $632 $678 $726 $822 $912 $1,013 $ $200 $400 $600 $800 $1000 $1200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 16.5 16.1 13.2 10.4 11.6 12.7 14.4 15.5 16.5 17.4 17.5 13.0% 12.9% 11.0% 9.0% 9.4% 10.7% 11.4% 11.6% 12.7% 12.9% 12.9% 0% 10% 20% 30% 5 10 15 20 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 US New Auto Light Vehicle Sales Chrysler % Market Share

(in millions)

• Auto vehicle sales have recovered from the lows of 2009 / 2010 and are approaching all-time highs
• Fiat Chrysler continues to remain a large player demonstrating stable market share over the past few years

U.S. New Auto Light Vehicle Sales1 U.S. Total Auto Loan Outstandings3 ($ in Billions) % of New Vehicles Leased4

1 U.S. New Auto Light Vehicle Sales – Bureau of Economic Analysis 2 Chrysler market share – AutoData 3 Big Wheels, “2016 Big Wheels Auto Finance Data Report”. Note data based on top 100 companies by U.S. auto leases and loans outstanding, as of 2015. 4 Experian, “State of the Automotive Finance Market Q3 2016”

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STATE OF THE AUTOMOTIVE FINANCE MARKET

29.5% 9.4% 0% 5% 10% 15% 20% 25% 30% 35% 2009 2010 2011 2012 2013 2014 2015 2016 New Vehicles Leased % of Chrysler New Vehicles Leased

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ROA HURDLE BY LOAN OFFER

Direct Auto Chrysler

Nissan Motor Acceptance Corp.

STRATEGIC DECISION TO EITHER RETAIN LOAN ON BALANCE SHEET OR SELL LOAN TO MAXIMIZE RISK-ADJUSTED RETURNS

ABUNDANT ORIGINATION OPPORTUNITIES

SC has significant access to applications via direct and indirect channels to drive volume Indirect Auto

15,000+ Dealer Network

• 5. Rehashes performed systemically and exceptions

approved by underwriters

• 4. Risk-based pricing to achieve target ROA
• 3. Systemic underwriting and pricing
• 2. Pre-bureau check and dedupe
• 1. Application received

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3.4 5.4 6.8 6.1 6.5 6.3 6.2 0.7 1.1 1.0 1.3 1.4 1.4 1.5 1.8 2.9 2.7 2.5 2 4 6 8 10 12 2010 2011 2012 2013 2014 2015 2016

Applications By Channel

(in Millions)

Indirect Direct Chrysler

APPLICATION GROWTH

1 Direct auto lending platform, RoadLoans.com 2 Chrysler includes lease applications

9.3

Application volumes have grown over time and stabilized at historically high levels

4.1 6.5 7.8 10.8 10.5 10.2

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SELL

(Nonprime) (Near-Prime) (Prime/Super-Prime) Decision

• Assets held for investment at
• rigination
• Once assets have aged, assets may

be sold

• Loans pass through hold versus sell

decisioning process

• Assets designated as held for sale

(HFS) at origination Provisions

• More upfront provisioning, higher

yielding assets, higher ongoing reserve percentage

• Mix of high and low provisioning/

yielding assets

• No provision required for HFS

Funding Strategy

• Assets pledged to conduit

facilities/warehouses

• Securitized on-balance sheet via

DRIVE and SDART platforms

• Assets pledged to conduit

facilities/warehouses

• Sold through one-time sales, flow

sales or CCART securitization platform

• Securitized on-balance sheet via

DRIVE and SDART securitization platform

• Assets pledged to conduit

facilities/warehouses

• Sold through one-time sales, flow

sales or CCART securitization platform

RETAIN

STRATEGIC APPROACH TO PORTFOLIO OPTIMIZATION

Leverage historical expertise in nonprime to retain higher margin assets, while also being uniquely positioned to sell assets through flow agreements. SC retains servicing rights on assets sold, creating a steady stream of capital-efficient fee income.

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BANCO SANTANDER FLOW AGREEMENT

Benefits Overview

• Duration – Two-year flow agreement between SC and Banco Santander (including optional renewal)
• Collateral – Certain retail loan assets originated by SC
• First transaction expected in Q1 2017
• Market-driven credit terms
• Banco Santander to provide SC with warehouse facility
• Provides a stable, consistent funding source
• Economics in line with current experience and
• ffer a more stable funding solution
• Expected to be beneficial to FCA relationship by

increasing Chrysler penetration

• Provides access to attractive ROA assets for

Banco Santander Banco Santander flow agreement is expected to improve competitiveness of Chrysler Capital and provide a stable platform for asset sales

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Funding Sources ($ billions) – Year-End 2016 Highlights

Ability to issue and sell AAA through BB bonds Top-tier rating agency relationships Santander support

Funding Efficiency

• 14 external lenders in committed third-party revolving facilities as of 2016 year-end
• SC has been the largest issuer of Auto loan ABS in the U.S. since 2015
• 200+ distinct investors participate in SC’s platform
• Santander Holdings USA commitment increased from $1.5 billion to $3.0 billion in 2016

FUNDING AND LIQUIDITY OVERVIEW

Diversified and resilient funding platform

Cost of funds advantage

Public Securitizations, $13.5 Third-Party Revolving, $10.4 Privately Issued Amortizing Notes, $8.2 Santander Related Funding, $6.3

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CONSUMER ADVOCACY AND COMPLIANCE

PROGRAM COMPONENTS

Compliance Technology Governance Risk Assessment Program Policies, Procedures, & Related Controls Compliance Testing & Monitoring Reporting & Communication Compliance Training Compliance Technology SC’s robust regulatory compliance risk management program Regulatory Interaction & Coordination

• Culture of Compliance begins with tone from the top

and permeates three lines of defense

• Committed to excellence and exceeding

regulatory expectations and industry standards

• Focus on internal controls and identify inherent

risks

• Business is responsible for compliance proactively

identifying, assessing, reporting and mitigating compliance and reputational risks with federal and state laws and regulations

• Compliance professionals and other senior executives

with large bank experience are in key leadership roles providing guidance and effective challenge to the business

SC is building a great business for all key stakeholders. Compliance excellence is key to achieving long term, sustainable and differentiated success.

SIMPLE | PERSONAL | FAIR

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CUSTOMER FOCUS

Ideas Into Action

• Launched employee campaign in 2016
• Encourage employees to submit ideas to improve processes and better serve our

customers Office of Consumer Practices Complaint Management

• Formal group formed in 2016
• Analyzes complaint trends
• Reviews complaint data and helps implement industry best practices
• Initiated first customer surveys in late 2016
• Intakes, researches and resolves complaints while also analyzing the root cause and

refines processes or products as needed

• Ensures a wider variety of customer needs are being addressed
• Broadened definition of complaint in early 2017 ensures a full spectrum of customer

needs are being addressed and handled appropriately

VEHICLE FINANCE

Rich Morrin, Chief Operating Officer

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ORIGINATIONS OVERVIEW

$22 BILLION AUTO ORIGINATIONS

M O R E T H A N 5 , 1 0 0 E M P L O Y E E S 1

MORE THAN TEN MILLION APPLICATIONS MULTIPLE AUTO ORIGINATION CHANNELS 900,000+ UNITS ORIGINATED DIRECT AND INDIRECT RETAIL LOAN, LEASE AND FLOORPLAN FROM JANUARY 2016 DECEMBER 2016 FCA AGREEMENT

SCALE | DIVERSITY

1 Excludes contingent employees

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VEHICLE FINANCE

Pricing Principles and Considerations

A

Originations and Dealer Performance Management

B

Servicing Efficiencies and Capabilities

C

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C B A PRICING PRINCIPLES

Credit Score Payment To Income (PTI) Loan To Value (LTV) LTV Credit Limit PTI Credit Limit

Actual Results Below ROA Target Adjust Price Low/High Penetration Evaluate Terms Actual Results Above ROA Target Evaluate Terms

SC utilizes a dynamic risk-based approach which is continuously refined based on return and penetration experience

• Credit actions to address risk-layered segments
• Seasonal strategies (e.g. Tax Season Programs)
• Price adjustments to reflect declining recovery rates
• Pricing strategy reflects residual risk on leases
• Price increases in tandem with rising interest rates and

cost of funds

• Pricing adjustments continually optimize originations based

upon up-to-date market intelligence and capture rates

• Credit policy adjustments based upon up-to-date information

available to ensure SC is within risk appetite

• Deal Structure Policy Limits (LTV/PTI)
• Dealer Programs to foster loyalty / incent profitable growth
• Harness consumer behavior insights from non-traditional data

and historical loan performance to develop pricing strategies and risk management

Proactively Adjust to Changes in Environment Key Levers Illustrative View of Buy Box and Considerations

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• SC’s marginal cost is minimized due to its scale, efficiency and experience
• Rising interest rates have a greater impact on consumer affordability as payment to income (PTI) increases
• SC may see upward pressure on delinquencies due to marginally higher PTI
• A portion of the population of nonprime is constrained by internal and external factors including

deal structure, interest rates, customer affordability, dealer discount, down payment, etc.

• Consumer refinance opportunities diminish resulting in slightly longer asset lives
• Expect increased competition from banks on non-subvented volume (near-term)
• Consumer is price sensitive and demand for subvention programs is likely to increase (long-term)

SC’s pricing moves in line with rising interest rates match funding new originations to prevailing interest rates without significant lag

C B A PRICING CONSIDERATION | INTEREST RATE ENVIRONMENT

Nonprime Prime

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42% 44% 46% 48% 50% 52% 54% 56% 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4

Top Ten vs. Others

Others - Combined Top 10 - Combined

Top ten lenders have lost market share since the beginning of 2015

• Competitors outside of the Top 10 continue to gain market share
• SC maintains disciplined underwriting standards in a competitive environment

1 Loan only – new and used combined; all FICOs; current view aggregates subsidiaries under the larger US captive arm (e.g. Toyota/Lexus)

INDUSTRY MARKET SHARE TRENDS

Retail Market Share1

C B A

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586 588 612 639 625 632

• Wtd. Avg FICO

Origination Characteristics1

UNDERWRITING TRENDS - ORIGINATIONS

1 Characteristics shown are for individually acquired retail installment contracts at time of origination

2015 2016

• Wtd. Avg FICO

625 632

• Wtd. Loan to Value

106.1% 104.7%

• Wtd. Payment to Income

10.7% 10.2%

• Wtd. Term

70 70

• Wtd. Avg Yield

15.2% 14.1% New % (RICs) 52.8% 54.2% Average Amount Financed $21,862 $21,667

SC has remained consistent in its underwriting discipline. Proactive changes in 2016 are expected to improve risk profile.

C B A

10.6% 10.2% 69 70 60 62 64 66 68 70 72 0% 2% 4% 6% 8% 10% 12% 2011 2012 2013 2014 2015 2016

• Wtd. Payment to Income
• Wtd. Term

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DEALER MANAGEMENT

Dealer Performance Management (DPM) – Dealer Performance Metrics Dealer Performance Management (DPM) – Credit Performance Metrics

• The assessment of dealer performance is based on metrics such as:
• Misrepresentation frequency
• Number of consumer complaints
• Negative media coverage
• Volume spikes
• Regulatory compliance failures
• SC’s DPM Process continuously monitors and evaluates dealers based on credit performance metrics to

identify issues as early as possible and ultimately mitigate risk for the Company and the customer.

• Early performance indicators
• Delinquency trends
• Loss vs. expectations

SC continuously enhances dealer management oversight and monitors several metrics to assess dealer behavior and credit performance

C B A

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SERVICING OVERVIEW

$52 BILLION ASSETS SERVICED

M O R E T H A N 2 . 7 M I L L I O N C U S T O M E R S

172 MILLION INBOUND/OUTBOUND CUSTOMER CALLS SIX SERVICED FOR OTHERS RELATIONSHIPS 2.2% EXPENSE RATIO $156 MILLION SERVICING FEE INCOME FROM JANUARY 2016 DECEMBER 2016 $14 BILLION CUSTOMER PAYMENTS COLLECTED

TECHNOLOGY | SCALE | CUSTOMER FOCUS

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Acquisition and Conversion History (Inorganic Assets)

• Nine different portfolio conversions from seven unique platforms
• 3.4 million accounts
• Inherited five new locations
• More than 1,000 new associates
• Two private-label platforms
• Santander Consumer USA
• Preferred lending relationship - Chrysler Capital (2013)
• Six current third-party servicing relationships
• Allows consistent communication regarding trends, compliance and best practices amongst

industry peers

• Dedicated team to ensure all requests/needs of partners are met

C B A PROVEN TRACK RECORD & SCALABILITY IN LOAN SERVICING

Current State Serviced for Others (Organic Assets) SC converted or acquired more than $34 billion in assets in the last financial downturn to drive scale

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SC has built an industry-leading loan servicing platform that maximizes efficiency and employs robust systemic controls to drive superior customer experience

C B A INDUSTRY LEADING SERVICING AND EFFICIENCY

Peer Standard SC

Point and click dialing Systemic time zone dialing controls with state restrictions for predictive and manual dialing 100% Call recording Record on demand ability Data mining/analytics of recordings Real-time call intervention Review of set number of associate calls for QA 100% of right person contacts and left messages scored System integrations with repo, insurance, impounds, and remarketing End to end servicing platform

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Note: SCI utilizes SC’s U.S. based call centers to perform a portion of customer and account services and early stage collections on performing accounts. SCI pays vendor services fee to SC for these services.

Note: SCI will have the ability to expand capacity up to 500 as needed **All figures as of 12/31/2016**

C B A GEOGRAPHIC AND TIME-ZONE DIVERSIFICATION

SC has capacity to accommodate anticipated growth in its servicing business through recent expansions in Mesa, Denver, and San Juan

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• Moves monthly payments to the end of the loan, extending the original maturity of the contract (maximum of eight months

extended for the life of the loan)

• Majority of extensions are two monthly payments
• Reduces a customer’s payment for a temporary time period (no more than six months)
• Any permanent change in the original contract terms including principal, interest or term of the contract

Extension Temporary Reduction in Payment Plan (TRIPP) Other Modifications

• In the event of a temporary hardship SC agents are trained to offer assistance primarily via an extension or TRIPP1
• All loans are scored to provide segmentation by performing a cash flow/sustainability analysis, which creates an exception

process for loans with a low probability of performing post modification is granted

C B A LOAN MODIFICATIONS

1 TRIPP – Temporary Reduction in Payment Plan

SC utilizes multiple tools to drive a customer-centric approach

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1 Graphs are normalized for Portfolio Sales

• SC maintains a disciplined

approach to the utilization of tools

• Tools become available for usage at

six months on book

• Consistent application of treatment

across delinquency buckets

• Migration to TRIPP is primary driver

for increase in earlier delinquency life-cycle

C B A APPLICATION OF MODIFICATION TOOLS

Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 <= 0 5.26% 5.13% 2.21% 2.21% 4.50% 4.04% 2.40% 3.31% 9.12% 11.00% 10.16% 9.63% 1-59 74.79% 76.51% 74.27% 74.43% 71.84% 75.30% 76.83% 76.58% 71.64% 72.95% 73.27% 73.79% >= 60 19.95% 18.36% 23.53% 23.36% 23.66% 20.66% 20.77% 20.11% 19.25% 16.06% 16.58% 16.58%

0% 20% 40% 60% 80% 100%

Tool Utilization by Delinquency at time of event1

Disciplined approach and consistency in SC’s usage of modification tools

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 13.83% 17.43% 18.00% 17.81% 15.98% 15.54% 13.55% 14.54% 15.82% 16.15% 15.56% 14.53% 2014 13.55% 17.27% 16.66% 16.09% 14.83% 14.59% 13.80% 13.88% 15.34% 16.79% 16.60% 13.70% 2015 13.16% 19.87% 19.61% 17.71% 16.71% 15.35% 14.35% 13.83% 13.87% 13.47% 14.53% 13.63% 2016 13.89% 17.15% 16.06% 14.94%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Tool Utilization by Origination Vintage at 9 Months on Book1

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MULTIPLE LEVERS FOR GROWTH

Serviced for Others

• Scalable platform
• Capital-efficient business model
• Banco Santander Agreement

Core Chrysler

• Continue to realize the full value of the relationship
• Dealer VIP national rollout in 2017
• SC has increased dealer receivable originations (“floorplan”) more than 60% compared

to 2015

• Banco Santander forward flow agreement
• Incremental opportunities exist for SC’s mature platform
• Improved liquidity positions to be opportunistic through credit cycles
• Strategic approach to portfolio optimization focused on retaining most profitable assets

SC is executing on its organic growth opportunities without sacrificing underwriting discipline

FUNDING AND LIQUIDITY

Andrew Kang, Treasurer and Executive Vice President, Capital Markets

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LIQUIDITY OVERVIEW

$38 BILLION IN COMMITTED LIQUIDITY

M O R E T H A N 2 0 0 U N I Q U E I N V E S T O R S

66 TOTAL TRANSACTIONS SINCE 2007 THREE SECURITIZATION PLATFORMS PARENT COMPANY SUPPORT LEADING AUTO ABS ISSUER 14 LENDER RELATIONSHIPS

39 Funding

A

Interest Rate Risk Management

B

2016 Accomplishments and 2017 Outlook

C

FUNDING AND LIQUIDITY OVERVIEW

40

$19.2 $23.9 $23.2 $31.1 $34.4 $35.9 $38.4

$0 $10 $20 $30 $40

2010 2011 2012 2013 2014 2015 2016

C B A COMMITTED LIQUIDITY

• Santander support totaling $6.3 billion; SHUSA commitment increased from $1.5 to $3.0 billion in Q4 2016
• 14 financial institution relationships with more than $18 billion in total commitments from third parties
• Issued and sold $8.3 billion in bonds across three distinct platforms in 2016

SC has grown liquidity through diverse funding sources

($ in billions)

41

C B A ABS MARKET OVERVIEW

• Of the $65 billion auto ABS issued in 2016, SC has issued 25% of the $26 billion subprime segment
• Both prime and nonprime ABS credit spreads improved through the end of 2016 and have continued to tighten in 2017

2016 Retail Auto Loan ABS Market Share1

Source: Wells Fargo Research

Prime Auto AAA & BBB Spreads Subprime Auto AAA & BBB Spreads

Source: Wells Fargo Research Source: JP Morgan

Historical Auto Loan & Lease ABS Issuance Volumes ($B)1

1As of December 31, 2016

Santander Consumer USA, 14% Other, 86%

SC is a leading issuer of auto ABS

37 43 39 39 21 22 27 26 15 16 18 14.5 8 9 11 8 10 20 30 40 50 2013 2014 2015 2016 Prime Subprime Lease SC 50 100 150 200 250 300 Subprime AAA (2yr) Subprime BBB (3yr) 50 100 150 200 250 300 Prime AAA (2yr) Prime BBB (3 yr)

42

C B A SECURITIZATION PERFORMANCE

• SC’s nonprime securitization platform has demonstrated consistent losses in current vintages
• Through the crisis, SC’s nonprime securitization platform did not breach any net loss triggers

Consistency in SC’s securitization performance drives stronger execution

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55

13.1%

1 Data as of 12/31/2016 for SDART vintages from 2010-2016 2 Illustrative approximation for SDART 2016-2 3 Approximation of S&P, Moodys and Fitch 4 SDART 2007 deals only structured through AAA. The BBB break is reflective of the 18.50-19.50% Rating Agency Loss Assumption and BBB 1.7x structuring multiple

BBB Break-Even Cumulative Net Loss at Closing2

Cumulative Net Loss (2010-Present) 1

17.50% of CNL Cushion

Rating Agency Loss Assumptions3

Cumulative Net Loss (2007 Transactions)

23.2%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

1 5 9 13 17 21 25 29 33 37 41 45

SDART 2007-1 SDART 2007-2 SDART 2007-3 BBB Break-Even Cumulative Net Loss at Closing4

6% of CNL Cushion

43

C B A SC MAINTAINS THREE DISTINCT ABS PLATFORMS

CCART DRIVE SDART

Trust Chrysler Capital Auto Receivables Trust Santander Drive Auto Receivables Trust Drive Auto Receivables Trust Launched 2013 2007 20151 Issuance Total2 $6.1 BN $42.5 BN $6.5 BN Total # of Transactions2,3 8 51 7 2016 Issuance2 $1.8b $3.4b $3.1b Weighted Average FICO4 712 600 551 APR5 7.86% 15.90% 18.79% Rating Agency Loss Expectation5 5.5% - 6.0% 17.0% 27.0% - 28.0% Advance Rate5 93.0% 85.0% 76.5% Weighted Average Life5 1.92 years 1.68 years 1.53 years Weighted Average Spread5 0.83% 1.01% 1.90% Weighted Average COF5 1.97% 2.07% 3.17%

1Re-launched in 2015 2 As of December 31, 2016 3 Inclusive of both SEC-registered and 144A transactions 4 Approximate weighted average Non-Zero FICO; from most recent transactions 5 Approximate, from most recent transactions

44

C B A LIQUIDITY AND RATINGS

100 200 300 400 500 600 700 800 900

Millions of Dollars Traded

SDART DRIVE CCART ACAR AMCAR CPS EART

• The strength of SC sponsorship, long history, large transaction sizes, regular issuance and high-level of secondary-market liquidity
• Experience in the capital markets going back to 1998 with 84 transactions totaling over $55 billion in issuance
• CCART, SDART and DRIVE have a proven track record of rating agency upgrades
• No SC auto loan bond has ever been downgraded for performance reasons

Consistent Rating Agency Upgrades Strong Secondary Market Liquidity1

TRACE reporting reflects original face amount of bonds

1Source: Bloomberg December 31, 2016

DRIVE SDART CCART

Deal Count Notches Upgraded Deal Count Notches Upgraded Deal Count Notches Upgraded 2013 Deals 5 199 n/a n/a 2 34 2014 Deals 5 160 n/a n/a 2 41 2015 Deals 5 43 4 30 2 15 2016 Deals 2 4 2 4 1 5 Total 17 406 6 34 7 95

Secondary market liquidity and ratings continue to drive investor demand

45

C B A INTEREST RATE RISK MANAGEMENT

SC structurally matches its fixed-rate assets via securitizations and interest rate swaps which significantly decrease exposure to interest rate fluctuations

CORE ASSET FIXED/FLOATING RATE COMPOSITION (%)

CORE LIABILITY FIXED/FLOATING RATE COMPOSITION (%) LIABILITY FIXED/FLOATING RATE COMPOSITION WITH DERIVATIVES (%)

PREDOMINANTLY FIXED ASSETS AND MAJORITY FLOATING RATE LIABILITIES

1 Market Value of Equity (+100bps) 2 Net Interest Income (+100bps)

* As of December 31, 2016

• SC proactively manages interest rate risk through interest rate swaps
• Core Assets nearly all fixed rate
• Core Liabilities majority floating rate but are duration matched via securitizations
• Interest Rate Swaps used to mitigate earnings and valuation risk of changing interest rates
• Derivatives reduce the 12 Month NII sensitivity of +100bp change in interest rates from

($125MM) to ($59MM)

INTEREST RATES SWAPS BETTER ALIGN INTEREST RATE RISK PROFILE

, ,

46

C B A ACCOMPLISHMENTS AND INITIATIVES

2016 Accomplishments

• Two new revolving warehouse facilities established in 2016, including one new lender
• $5.2 billion in new term financings with existing lenders for both auto loan and lease

2017 Initiatives

• Banco Santander flow agreement
• Lease funding including additional private term financing and potential ABS platform to fund leases
• Additional residual/equity financings
• Additional commitments for “ineligible” and “off-the-run” assets
• Maximize public ABS and private bank financing markets as a continued diversification of funding

Regulatory

• Additional SEC shelf registration (currently only SDART is registered)
• Regulation AB II implementation
• Loan level data reporting requirements
• Risk Retention requirements for all new auto ABS

CREDIT & FINANCE

Izzy Dawood, Chief Financial Officer

48

FINANCE OVERVIEW

$6.5 BILLION IN REVENUE

A PPROX I M AT E LY $ 7 6 0 M I L L I O N N E T I N CO M E

2.0% RETURN ON AVERAGE ASSETS $38+ BILLION IN ASSETS 15.8% RETURN ON AVERAGE EQUITY 13.4% COMMON EQUITY TIER 1 RATIO FROM JANUARY 2016 DECEMBER 2016 2.2% EXPENSE RATIO

49 Performance and Credit

A

Capital and Income

B

Recent Developments and Outlook

C

CREDIT & FINANCE UPDATE

50

REVENUE CONSISTENCY

Breadth and depth of origination channels drive ability to generate revenue. Recent growth in revenue driven by growth in leasing assets.

$600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total Interest & Other Income (Less PL) Total Interest & Other Income (Less PL & Lease)

($MM)

1 Total interest income and other income (Leased Vehicle Income, Servicing Fee Income and Fees Commissions Other (auto only)) 2PL – Personal Lending

C B A

51

CONSISTENT CAPITAL GENERATION

1 Common Equity Tier 1 (CET1) Capital Ratio begins with Stockholders’ Equity and then adjusts for AOCI, Goodwill/Intangibles, DTAs, cash flow hedges and other regulatory exclusions over Risk-

Weighted Assets; Non-GAAP measure

2Tangible Common Equity to Tangible Assets is defined as the ratio of Total Equity, excluding Goodwill and Intangible Assets, to Total Assets, excluding Goodwill and Intangible Assets; Non-

GAAP measure, reconciliation in the Appendix

Tangible Assets $36,342 $37,661 $38,383 $38,665 $38,432 Tangible Common Equity $4,325 $4,497 $4,769 $5,011 $5,132

11.2% 12.1% 12.6% 13.1% 13.4% 11.9% 11.9% 12.4% 13.0% 13.4%

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 CET1 TCE/TA

$ in millions

1 2

Strong ability to generate earnings and capital, while growing assets

C B A

52

20161 <640 (Nonprime and Other)3 >640 (Near – Super-Prime) Total Volume ($ Billions)

$9,970 $2,756 $12,727

% Total

78.3% 21.6% 100.0%

Modeled Effective Yield

17.0% 9.5% 15.4%

Adjusted Net Charge-off Ratio

7.6% 5.2% 7.1%

Expected Risk Adjusted Yield2

9.4% 4.3% 8.4%

20151 <640 (Nonprime and Other)3 >640 ( Near – Super-Prime) Total Volume ($ Billions)

$14,260 $2,270 $16,531

% Total

86.3% 13.7% 100.0%

Modeled Effective Yield

17.9% 10.4% 16.9%

Adjusted Net Charge-off Ratio

9.0% 4.9% 8.5%

Expected Risk Adjusted Yield2

8.9% 5.5% 8.4%

RISK ADJUSTED RETURNS – RETAINED

1 Performance through December 31, 2015 and through 2016 2 Expected Risk Adjusted Yield is a forward-looking non-GAAP financial measure. See appendix for details. 3 Other includes loans with limited bureau attributes and commercial loans

In 2016 SC maintained consistent risk adjusted yields (versus 2015) with a higher quality credit profile resulting in a lower net charge-off ratio and lower originated yields

C B A

53

EARLY CREDIT PERFORMANCE INDICATORS

2014 20.8% 24.8% 24.5% 24.6% 23.8% 24.0% 25.2% 25.2% 23.3% 23.3% 22.6% 2015 18.0% 27.0% 27.6% 26.4% 25.6% 25.4% 26.6% 25.7% 23.8% 21.3% 20.1% 2016 19.9% 24.6% 24.1% 23.1% 22.3% 22.3% 2014 9.0% 10.8% 10.5% 10.7% 10.2% 10.4% 11.0% 11.0% 9.9% 9.7% 9.5% 2015 7.2% 12.2% 12.7% 12.5% 12.0% 12.0% 12.8% 12.3% 10.8% 8.9% 8.4% 2016 8.9% 11.1% 11.3% 10.8% 10.3% 10.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Jan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec

Ever 60+ DPD1 at 6 Months on Book2

2014 2015 2016 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Jan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec

Ever 30+ DPD1 at 6 Months on Book2

2014 2015 2016

Early performance indicators are key drivers of loss performance expectations

C B A

1DPD = Days past due 2Ever delinquent 30+, 60+ days includes voluntary repo, retained auto loans only. Percentages reflect percent of monthly originations.

• 2016 early performance indicators show trends consistent with 2014 and better performance than 2015

54

VINTAGE VERSUS PORTFOLIO LOSS PERFORMANCE

2016 early loss performance better than 2015. However, portfolio effect is driving an increase in the charge-off ratio.

4.1% 5.4% 6.2% 6.7% 7.9% 2.0% 4.0% 6.0% 8.0% 10.0% 2012 2013 2014 2015 2016

Retail Installment Contracts Net Charge-Offs (Portfolio View)

C B A

• Early indications show the first half of the 2016 vintage is outperforming 2015 on a vintage basis
• On a portfolio basis, net charge-off ratio is higher as larger 2015 vintage ages and drives losses

*Retained originations only

1First half vintage describes January through June vintage performance through the end of December, for each respective year 2Auction fees excluded to align with U.S. GAAP reporting

3.9% 4.3% 3.8% 3.6% 3.8% 4.0% 4.2% 4.4% 1H 2014 1H 2015 1H 2016

First Half Vintage Performance1, Net Losses2

55

C B A PORTFOLIO, LOSS AND DELINQUENCY SCENARIO ANALYSIS

Meaningful changes in origination volume will impact reported metrics and can mask vintage performance

• Scenario 1 – $200mm monthly originations with no

growth or decline in originations volume

• Scenario 2 – $200mm originations in month one,

growing by an additional $5mm per month

• Scenario 3 – $200mm originations in month one,

decreasing by $5mm per month

1 Portfolio balance in millions

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 1 3 5 7 9 11 13 15 17 19 21 23

Net Credit Loss Ratio

– $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 1 3 5 7 9 11 13 15 17 19 21 23

Portfolio Balance1

0.0% 5.0% 10.0% 15.0% 20.0% 1 3 5 7 9 11 13 15 17 19 21 23

30+ Delinquency

56

COMMON MODIFICATION TYPES AND TDR1 CRITERIA

• Moves customer’s monthly payments to the end of the loan, extending the original maturity of the contract (maximum of eight

months extended for the life of the loan are permitted)

• Majority of extensions are of two monthly payments qualifies
• TDR Criteria: Two separate extensions or a single extension of three or more months
• Reduces a customer’s payment for a temporary time period (no more than six months permitted)
• TDR Criteria: Any instance immediately qualifies
• Any permanent change in the original contract terms including principal, interest or maturity of the contract due to customer’s

financial difficulty

• TDR Criteria: Any instance immediately qualifies

Extension Temporary Reduction in Payment Plan (TRIPP) Other Modifications

1 Troubled debt restructuring (TDR)

C B A

Accounting guidelines for TDRs drive allowance for loan loss. Modification performance not affected by allowance treatment.

57

TDR DISTRIBUTION TRENDS

• TRIPPs immediately qualify as TDRs increasing the balance of TDRs outstanding

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 0% 20% 40% 60% 80% 100%

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 % of Portfolio with TDR % of Tool Usage

Retained Portfolio TDRs

Extensions (Left Axis) Other TRIPP TDR % of Portfolio (Right Axis)

TDR balances have grown since 2014 and TRIPPs have grown as a percentage of the TDR balance

C B A

1 TDR definitional change to redefine items classified as Total Debt Restructuring

1

58

2014 TDR Vintage1 12 Months Charge-Off Rate 18 Months Charge-Off Rate 24 Months Charge-Off Rate 24 Months Paid Off % 24 Months Active % Extension 31% 41% 51% 8% 41% TRIPP 10% 18% 26% 20% 54% Other 23% 33% 38% 12% 50% Total 26% 35% 45% 10% 45% *2014 TDR vintage through Dec-14 TDR Performance Since Classification

MODIFICATION PERFORMANCE

Performance of TRIPPs are better relative to other modification types

C B A

1 Reflects loans that were classified as TDRs in 2014

• Up to six payments can be temporarily reduced for a TRIPP modification
• All accounts have to be current for six months to qualify for a modification
• TRIPPs are immediately classified as TDRs

59

2015 TDR Vintage1 12 Months Charge-Off Rate 18 Months Charge-Off Rate 12 Month Paid Off % 12 Month Active % % of TDR Portfolio Extension 32% 43% 4% 64% 60% TRIPP 12% 21% 10% 78% 38% Other 30% 34% 4% 66% 2% Total 26% 36% 6% 68% 100% *12 Month 2015 TDR vintage through Dec-15 *18 Month 2015 TDR vintage through Jun-16 2016 TDR Vintage1 12 Months Charge-Off Rate 18 Months Charge-Off Rate 12 Month Paid Off % 12 Month Active % % of TDR Portfolio Extension 30% N/A 5% 66% 65% TRIPP 14% N/A 9% 77% 34% Other 29% N/A 4% 67% 2% Total 24% N/A 7% 70% 100% *2016 TDR vintage through Dec-16

TDR Performance Since Classification TDR Performance Since Classification

MODIFICATION PERFORMANCE WITHIN TDR VINTAGES

The 2016 TDR vintage performance is marginally better than 2015

C B A

1 Reflects loans that were classified as TDRs in 2015 and 2016

60

TDR BALANCE COMPOSITION BY VINTAGE

Growth of TDRs from 2015 vintage is outpacing decline of TDRs from 2013 vintage

$2.3 $2.2 $1.1 $1.0 $0.9 $0.8 $0.7 $0.6 $1.9 $2.1 $2.1 $2.0 $1.9 $1.8 $1.7 $1.5 $0.3 $0.7 $1.1 $1.5 $1.7 $1.8 $1.8 $1.8 $4.6 $5.0 $4.3 $0.2 $0.7 $1.2 $1.6

$- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 TDR Portfolio Balance

Origination Vintage

TDR Balance by Origination Vintage $

2012 & Older 2013 2014 2015 2016

$4.6 $4.7 $5.0 $5.3 $5.6

C B A

61

ALLOWANCE SENSITIVITY TO TDRs

Changes to TDR balances drive higher variances to allowance relative to changes in the TDR coverage ratio

C B A

($MM)

TDR Coverage Ratio Change Q4 TDR UPB 28.3% 28.5% 28.8% 29.0% 29.3% ($400) $5,200 $141 $128 $115 $102 $89 ($200) $5,400 $85 $71 $58 $44 $31 – $5,600 $28 $14 $3,4111,2 ($14) ($28) $200 $5,800 ($29) ($43) ($58) ($72) ($87) $400 $6,000 ($85) ($100) ($115) ($130) ($145)

Sensitivity of Allowance for Credit Loss to Changes in TDR Balance and Coverage Ratio ($MM)

1 Allowance for Retail installment contracts held for investment, credit Loss as of 12/31/2016 2 The TDR impairment portion of the allowance is $1.6 billion

62

ROA PERFORMANCE OVER ASSET LIFE (ILLUSTRATIVE)

1 Illustrative of a vintage from 2014, performance of any other vintage will be affected by factors such as credit mix, recovery rates, prepayment speeds, cost of funds, etc.

C B A

Lifetime pre-tax cash ROA is approximately 4%, however, ROA declines as a vintage ages.

• Higher levels of interest income earlier in the vintage as a higher percentage of loans are performing
• Later periods have higher losses and lower balances impacting ROA

3.9% 6.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80

Months on Book

Monthly Pre-Tax Cash ROA1

ROA Monthly Loss

63

C B A CAPITAL GENERATION CAPABILITY (ILLUSTRATIVE)

Differences in originations (portfolio effect), accounting estimates and gains/losses on sale will impact reported ROA and EPS in a particular calendar year

Lifetime EPS2 $36B $40B $2.65 $2.95 $1.99 $2.21 Pre-tax Target Returns3,4 Lifetime Income5 Lifetime EPS2 $38B1 4% $1.52B $2.80 3% $1.14B $2.10

1 Approximate loan and lease balance as of year end 2016 2 Assuming 2016 tax rate of 34.0% and current share count of 358,281,000 3 Retained auto only. Includes interest income, losses, cost of funds, expenses, fees and excludes provision for loan loss and gain/loss on sale 4 Average return over life of assets 5 Pre-tax income

• Variability of returns driven by multiple factors such as credit mix and competition
• Changes in level of income and capital generation also impacted by ability to deploy balance sheet capacity

+ Serviced for others

64

BOOK VALUE ACCRETION

$2.1 $2.2 $2.7 $3.5 $4.4 $5.2 $0.9 $1.4 $2.1 $2.9 $3.2 $3.4

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2011 2012 2013 2014 2015 2016

Total Equity Plus Allowance for Credit Loss (Reserves)

ALL Reserve ($,B) Tot Eq ($, B)

($ in billions) $3.0 $3.6 $4.8 $6.4 $7.6 $8.6

C B A

Allowance Book Value

Consistent and profitable origination model continues to drive book value growth. Allowance levels provide greater cushion for losses which improves the credit profile and benefits funding access.

65

Peer 1 Peer 2 Peer 3 SC, 0.96x Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11

y = 8.7957x + 0.4907 R² = 0.466

0.00x 0.50x 1.00x 1.50x 2.00x 2.50x 3.00x 3.50x 4.00x 0% 5% 10% 15% 20% 25% 30% 35%

P/TBV1 2016 ROAE1

VALUATION GAP

Source: SNL Financial, FactSet Note: Peer set selected based upon size of auto portfolio, similar business model, or auto lender

1 ROAE = Net Income / (Average Equity less Intangible Assets) 2 Peers in no particular order: SYF, ALLY, CFG, HBAN, TD-TSX, FITB, COF, OMF, CPSS, DFS, CACC

Demonstrated ability to generate book value and strong return on equity performance warrants higher valuation based on market observation

C B A

66

LEASE RESIDUAL VALUES C B A

SC uses market and proprietary data to support a disciplined approach to establishing lease residual values Illustrative Residual Value Example

$10,000 $10,500 $14,500 ($500) $600 $400 $1,500 $2,500 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000 $15,000 Base ALG SC Adjustment Mileage Adjustment Other Adjustment Contract Residual Less Incentives and Taxes ("CRLIT") FCA Residual Incentive

• Govt. Electric Tax

Benefit Contract Residual Value

67

LEASE RESIDUAL PERFORMANCE

*Disposition data retrieved on 2017-02-02; includes Early Term and Full Term dispositions *Residual performance represents post risk share (included fees collected and paid) *Residual performance represents total SC lease portfolio

More than 105,000 lease dispositions since inception (Q2 2013) resulting in more than a 3% gain to CRLIT (or approximately $70 million)

C B A

$2 $7 $7 $3 $4 $12 $19 $11 103% 104% 103% 102% 102% 103% 105% 103% $- $5 $10 $15 $20 $25 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 98% 100% 102% 104% 106% 108% Lease Returns (Post Risk Share) Millions Liquidation Quarter % Gain/(Loss) vs CRLIT Lease Returns (Post Risk Share) Gain/(Loss) as % of CRLIT

68

MATERIAL WEAKNESS REMEDIATION PROGRESS

Material Weakness Planning Control Execution Validation Accounting (GAAP) Application and Controls

• Application of effective interest method for accretion
• Methodology to estimate credit loss allowance
• Review of new, unusual or significant transactions
• Loans modified as TDRs
• Statement of Cash Flows

Models/Governance

• Models used to estimate the credit loss allowance
• Models used to estimate discount accretion

Overall Control Environment

• Controls, Risks, Monitoring
• Review Financial Disclosures

` ` ` `

Not yet started In-progress

Legend

` ` ` `

Completed

C B A

69

• Continued focus on operational efficiency and

disciplined underwriting to maximize volume and profitability

• Leverage scale and technology advantage
• Recognize benefits of Banco Santander flow agreement

2017 PRIORITIES

• Focus on continuous improvement in compliance
• Simple, Personal, Fair approach with customers,

employees and all third parties

VEHICLE FINANCE SERVICED FOR OTHERS FUNDING AND LIQUIDITY CULTURE OF COMPLIANCE

• Optimize diverse sources of liquidity
• Maintain leadership in ABS markets

QUESTION & ANSWER SESSION

APPENDIX

72

RECONCILIATION OF NON-GAAP MEASURES

See slide 52: SC non-GAAP language

“Expected Risk Adjusted Yield” is a forward-looking non-GAAP measure that the Company believes is helpful to readers in evaluating the estimated profitability of retained loans from certain origination periods. The Expected Risk Adjusted Yield has two components: (1) The “Modeled Effective Yield” is the calculated yield at origination (including discount, subvention, etc.) updated in consideration of interest

• n loans that may not be received due to delinquency and charge-off.

(2) The “Adjusted Net Charge-Off Ratio” reflects the expected net charge-off at origination and is subsequently updated for performance at approximately 12 months on book.” These figures have been calculated per proprietary models