EX-99.1 2 a2021q3exhibit991.htm EX-99.1 Document


Exhibit 99.1
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Santander Consumer USA Holdings Inc. Reports
Third Quarter 2021 Results

Net Income of $763 Million and $7.8 Billion in Originations in the Third Quarter 2021

Dallas, TX - October 27, 2021 - PRESS RELEASE
Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC” or the “Company”) today announced net income for the third quarter ended September 30, 2021 ("Q3 2021") of $763 Million, or $2.49 per diluted common share.

The Company’s parent, Santander Holdings USA, Inc. (“SHUSA”), has requested regulatory approval to authorize the SC Board of Directors to consider declaring a dividend in the fourth quarter. To date, approval has not been received.

Third Quarter of 2021 Highlights (variances compared to third quarter of 2020 ("Q3 2020"), unless otherwise noted)
• Net Income of $763 million in Q3 2021, or $2.49 of diluted EPS
• Total auto originations of $7.8 billion, down 7%
◦Core retail auto loan originations of $3.1 billion, up 17%
◦Chrysler Capital loan originations of $2.8 billion, down 27%
◦Chrysler Capital lease originations of $1.8 billion, down 2%
◦Chrysler average quarterly penetration rate of 27%, down from 33%
◦Santander Bank, N.A. program originations of $1.8 billion1
• Donated $50 million to the SC Foundation
• Announced launch of new dealer and consumer digital experience through partnership with AutoFi
• Net finance and other interest income2 of $1.3 billion, up 5.8%
• 30-59 delinquency ratio3 of 6.8%, up 180 basis points
• 59-plus delinquency ratio3 of 3.3%, up 90 basis points
• Retail Installment Contract (“RIC”) gross charge-off ratio of 7.7%, up 90 basis points
• Recovery rate of 74.4%, down from 91.4%
• RIC net charge-off ratio4 of 2.0%, up 140 basis points
• Allowance ratio of 17.4%, down from 17.8% as of June 30, 2021
• Troubled Debt Restructuring (“TDR”) balance of $4.0 billion, down from $4.2 billion as of June 30, 2021
• Executed ~$300 million in off-balance sheet prime loan sales
• Return on average assets ("ROA") of 6.3%
• Expense ratio of 2.2%, up 50 basis points
• Common equity tier 1 (“CET1”) ratio of 19.5%











1Includes SBNA retail originations of $1.5 billion and lease originations of $249 million for the current period
2Includes Finance receivables held for investment, Finance receivables held for sale and Leased vehicles.
3Delinquency Ratio is defined as the ratio of end of period delinquent principal, categorized as either 30-59 or over 59 days, to end of period gross balance of the respective portfolio, excludes finance leases.
4Net Charge-Off Ratio stated on a recorded investment basis, which is unpaid principal balance adjusted for unaccreted net discounts, subvention and origination costs.
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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, strategies, 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, seeks, believes, can, could, may, predicts, potential, should, would, will, estimates, plans, projects, continuing, ongoing, expects, intends, and similar words or phrases. Examples of forward-looking statements include, but are not limited to, all statements we make relating to revenue, earnings, margins, growth rates, and other financial results for future periods. 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 or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (collectively, our "SEC filings"). The factors that could cause the forward-looking statements in this press release and/or our financial performance to differ materially from that suggested by the forward-looking statements include the following: (a) the adverse impact of COVID-19 or any future outbreak of any contagious diseases on our business, financial condition, liquidity and results of operations; (b) continually changing federal, state, and local laws and regulations could materially adversely affect our business; (c) adverse economic conditions in the United States and worldwide could materially impact consumer spending behavior, unemployment and demand for our products, which could negatively impact our results; (d) the effects of inflation; (e) a reduction in our access to funding; (f) significant risks we face implementing our growth strategy, some of which are outside our control; (g) our agreement with FCA US LLC may not result in currently anticipated levels of growth and is subject to certain conditions that could result in termination of the agreement; (h) our business could suffer if we are unsuccessful in developing and maintaining relationships with automobile dealerships; (i) our financial condition, liquidity, and results of operations depend on the credit performance of our loans; (j) loss of our key management or other personnel, or an inability to attract such management and personnel; (k) certain regulators, including but not limited to 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; (l) there can be no assurance that the proposed acquisition of all of our outstanding common stock by Santander Holdings USA, Inc. (“SHUSA”) will be approved and ultimately consummated, and the terms of any such transaction may differ materially from those originally proposed by SHUSA; (m) other future changes in our relationship with SHUSA and Banco Santander, S.A. that could adversely affect our operations; (n) our expectations regarding future litigation both known and unknown; (o) our inability to accurately forecast the amount and timing of future collections could have a material adverse effect on our results of operations; (p) our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace; and (q) our debt could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition. If one or more of 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 as new factors emerge from time to time. 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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About Santander Consumer USA Holdings Inc.
Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC”) is a full-service consumer finance company focused on vehicle finance, third-party servicing and delivering superior service to our more than 3.1 million customers across the full credit spectrum. SC, which began originating retail installment contracts in 1997, had an average managed asset portfolio of approximately $65 billion (for the third quarter ended September 30, 2021), and is headquartered in Dallas, Texas. (www.santanderconsumerusa.com)

CONTACTS:

Investor Relations
Evan Black
800.493.8219
InvestorRelations@santanderconsumerusa.com

Media Relations
Laurie Kight
214.801.6455
Media@santanderconsumerusa.com

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Santander Consumer USA Holdings Inc.
Financial Supplement
Third Quarter 2021
 
Table of Contents
 
Table 1: Condensed Consolidated Balance Sheets
Table 2: Condensed Consolidated Statements of Income
Table 3: Other Financial Information
Table 4: Credit Quality
Table 5: Originations
Table 6: Asset sales
Table 7: Ending Portfolio
Table 8: Reconciliation of Non-GAAP Measures

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Table 1: Condensed Consolidated Balance Sheets
September 30, 2021December 31, 2020
Assets(Unaudited, Dollars in thousands)
Cash and cash equivalents$2,106,405 $109,053 
Finance receivables held for sale, net359,561 1,567,527 
       Finance receivables held for investment, at amortized cost33,183,439 33,114,638 
       Allowance for credit loss(5,699,698)(6,110,633)
Finance receivables held for investment, at amortized cost, net27,483,741 27,004,005 
Restricted cash2,248,667 2,221,094 
Accrued interest receivable323,469 415,765 
Leased vehicles, net15,529,610 16,391,107 
Furniture and equipment, net62,168 62,032 
Goodwill74,056 74,056 
Intangible assets75,176 70,128 
Other assets811,597 972,726 
Total assets$49,074,450 $48,887,493 
Liabilities and Equity
Liabilities:
Borrowings and other debt obligations$38,431,858 $41,138,674 
Deferred tax liabilities, net1,855,859 1,263,796 
Accounts payable and accrued expenses554,581 531,369 
Other liabilities299,422 331,693 
Total liabilities$41,141,720 $43,265,532 
Equity:
Common stock, $0.01 par value3,061 3,061 
Additional paid-in capital391,343 393,800 
Accumulated other comprehensive income, net(31,194)(50,566)
Retained earnings7,569,520 5,275,666 
Total stockholders’ equity$7,932,730 $5,621,961 
Total liabilities and equity$49,074,450 $48,887,493 

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Table 2: Condensed Consolidated Statements of Income
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
(Unaudited, Dollars in thousands, except per share amounts)
Interest on finance receivables and loans $1,215,121 $1,300,694 $3,749,264 $3,811,113 
Leased vehicle income670,334 725,156 2,115,134 2,210,684 
Other finance and interest income1,631 2,146 6,125 12,354 
Total finance and other interest income1,887,086 2,027,996 5,870,523 6,034,151 
Interest expense218,747 292,118 709,479 929,934 
Leased vehicle expense325,259 467,172 1,043,774 1,630,945 
Net finance and other interest income1,343,080 1,268,706 4,117,270 3,473,272 
Credit loss expense (benefit)42,058 340,548 (85,484)2,110,331 
Net finance and other interest income after credit loss expense1,301,022 928,158 4,202,754 1,362,941 
Profit sharing41,009 30,414 158,888 56,239 
Net finance and other interest income after credit loss expense and profit sharing1,260,013 897,744 4,043,866 1,306,702 
Investment gains (losses), net5,241 (68,989)(7,057)(279,997)
Servicing fee income19,975 18,574 61,481 56,797 
Fees, commissions, and other48,867 78,924 200,242 256,123 
Total other income74,083 28,509 254,666 32,923 
Compensation and benefits149,669 127,991 460,014 388,960 
Repossession expense33,349 35,910 117,540 115,861 
Other expenses179,147 99,761 382,313 308,193 
Total operating expenses362,165 263,662 959,867 813,014 
Income (loss) before income taxes971,931 662,591 3,338,665 526,611 
Income tax expense208,607 172,476 775,484 137,161 
Net income (loss)$763,324 $490,115 $2,563,181 $389,450 
Net income per common share (basic)$2.49 $1.58 $8.37 $1.21 
Net income per common share (diluted)$2.49 $1.58 $8.37 $1.21 
Weighted average common shares (basic)306,093,379 310,150,293 306,086,399 321,275,907 
Weighted average common shares (diluted)306,378,733 310,307,265 306,354,463 321,492,331 
Number of shares outstanding 306,111,379 306,070,972 306,111,379 306,070,972 




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Table 3: Other Financial Information
Three Months Ended September 30,Nine Months Ended September 30,
Ratios (Unaudited, Dollars in thousands)2021202020212020
Yield on retail installment contracts14.6 %14.9 %14.8 %15.0 %
Yield on leased vehicles8.4 %6.0 %8.4 %4.4 %
Yield on personal loans, held for sale (1)— %25.6 %29.0 %25.9 %
Yield on earning assets (2)12.6 %12.2 %12.8 %11.6 %
Cost of debt (3)2.3 %2.8 %2.4 %3.1 %
Net interest margin (4)10.8 %9.9 %10.9 %9.2 %
Expense ratio (5)2.2 %1.7 %2.0 %1.8 %
Return on average assets (6)6.3 %4.1 %7.1 %1.1 %
Return on average equity (7)40.3 %38.9 %50.8 %9.6 %
Net charge-off ratio on individually acquired retail installment contracts (8)2.0 %0.6 %1.3 %4.7 %
Net charge-off ratio (8)2.0 %0.6 %1.3 %4.7 %
Delinquency ratio on individually acquired retail installment contracts held for investment, end of period (9)3.4 %2.4 %3.4 %2.4 %
Allowance ratio (10)17.4 %18.4 %17.4 %18.4 %
Common stock dividend payout ratio (11)8.8 %13.9 %10.5 %54.4 %
Common Equity Tier 1 capital ratio (12)19.5 %13.7 %19.5 %13.7 %
Charge-offs, net of recoveries, on individually acquired retail installment contracts$161,943 $46,078$326,795 $1,100,138
End of period delinquent amortized cost over 59 days, retail installment contracts held for investment1,106,673 817,5771,106,673 817,577
End of period personal loans delinquent principal over 59 days, held for sale— 93,296— 93,296
End of period delinquent amortized cost over 59 days, loans held for investment1,107,073 817,9111,107,073 817,911
End of period assets covered by allowance for credit losses32,767,052 33,515,63432,767,052 33,515,634
End of period gross retail installment contracts held for investment32,742,544 33,485,34232,742,544 33,485,342
End of period gross personal loans held for sale— 1,211,575— 1,211,575
End of period gross finance receivables and loans held for investment32,742,544 33,489,01732,742,544 33,489,017
End of period gross finance receivables, loans, and leases48,879,467 50,617,35648,879,467 50,617,356
Average gross retail installment contracts held for investment32,762,939 31,462,52432,576,199 30,946,321
Average gross retail installment contracts held for investment and held for sale33,186,854 32,847,71632,906,959 31,632,276
Average gross finance receivables, loans and finance leases33,222,223 34,135,25633,351,219 33,008,338
Average gross operating leases16,465,976 17,146,16616,935,680 17,447,194
Average gross finance receivables, loans, and leases49,688,199 51,281,42250,286,899 50,455,532
Average managed assets64,640,255 62,662,68664,316,796 61,325,546
Average total assets48,594,272 47,979,00848,291,222 47,581,031
Average debt38,296,862 41,064,44139,029,273 40,262,948
Average total equity7,578,893 5,044,9766,731,687 5,429,924

(1)Includes Finance and other interest income; excludes fees
(2)“Yield on earning assets” is defined as the ratio of annualized Total finance and other interest income, net of Leased vehicle expense, to Average gross finance receivables, loans and leases
(3)“Cost of debt” is defined as the ratio of annualized Interest expense to Average debt
(4)“Net interest margin” is defined as the ratio of annualized Net finance and other interest income to Average gross finance receivables, loans and leases
(5)“Expense ratio” is defined as the ratio of annualized Operating expenses to Average managed assets
(6)“Return on average assets” is defined as the ratio of annualized Net income to Average total assets
(7)“Return on average equity” is defined as the ratio of annualized Net income to Average total equity
(8)“Net charge-off ratio” is defined as the ratio of annualized Charge-offs, on a amortized cost basis, net of recoveries, to average unpaid principal balance of the respective held-for-investment portfolio.
(9)“Delinquency ratio” is defined as the ratio of End of period Delinquent principal over 59 days to End of period gross balance of the respective portfolio, excludes finance leases
(10)“Allowance ratio” is defined as the ratio of Allowance for credit losses, which excludes impairment on purchased receivables portfolios, to End of period assets covered by allowance for credit losses
(11)“Common stock dividend payout ratio” is defined as the ratio of Dividends declared per share of common stock to Earnings per share attributable to the Company's shareholders.
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(12)“Common Equity Tier 1 Capital ratio” is a non-GAAP ratio defined as the ratio of Total common equity tier 1 capital to Total risk-weighted assets (for a reconciliation from GAAP to this non-GAAP measure, see “Reconciliation of Non-GAAP Measures” in Table 8 of this release). CET1 Ratio is provided as a preliminary calculation.



Table 4: Credit Quality

The activity in the credit loss allowance for retail installment contracts for the three and nine month ended September 30, 2021 and 2020 was as follows (Unaudited, Dollar amounts in thousands):
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Retail Installment ContractsRetail Installment Contracts
Allowance for Credit LossNon-TDRTDRNon-TDRTDR
Balance — beginning of period$4,299,670 $1,514,994 $4,818,187 $1,037,628 
Credit loss expense (benefit)188,195 (144,772)24,841 314,075 
Charge-offs (a)(427,659)(206,111)(334,938)(200,352)
Recoveries338,097 133,730 392,042 97,171 
Balance — end of period$4,398,303 $1,297,841 $4,900,132 $1,248,522 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Retail Installment ContractsRetail Installment Contracts
Allowance for Credit LossNon-TDRTDRNon-TDRTDR
Balance — beginning of period$4,792,464 $1,314,170 $2,123,878 $914,718 
Day 1 - Adjustment to allowance for adoption of CECL standard— — 2,030,473 71,833 
Credit loss expense (benefit)(252,963)169,268 1,526,545 581,344 
Charge-offs (a)(1,356,482)(599,083)(1,955,706)(617,536)
Recoveries1,215,284 413,486 1,174,942 298,163 
Balance — end of period$4,398,303 $1,297,841 $4,900,132 $1,248,522 
(a) Charge-offs for retail installment contracts includes partial write-down of loans to the collateral value less estimated costs to sell, for which a bankruptcy notice was received. There is no additional ACL on these loans.

A summary of delinquencies of our retail installment contracts as of September 30, 2021 and December 31, 2020 is as follows (Unaudited, Dollar amounts in thousands):
Delinquent BalanceSeptember 30, 2021
AmountPercent
Amortized cost, 30-59 days past due$2,253,907 6.8 %
Delinquent amortized cost over 59 days1,106,673 3.3 %
Total delinquent balance at amortized cost$3,360,580 10.1 %
Delinquent BalanceDecember 31, 2020
AmountPercent
Principal 30-59 days past due$1,971,766 6.0 %
Delinquent principal over 59 days1,038,869 3.1 %
Total delinquent principal (a)$3,010,635 9.1 %










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The retail installment contracts held for investment that were placed on nonaccrual status, as of September 30, 2021 and December 31, 2020 (Unaudited, Dollar amounts in thousands):
Nonaccrual BalanceSeptember 30, 2021
AmountPercent
Non-TDR$818,292 2.5 %
TDR391,834 1.2 %
Total non-accrual loans (a)$1,210,126 3.7 %
(a) The table includes balances based on amortized cost.
Nonaccrual BalanceDecember 31, 2020
AmountPercent
Non-TDR$748,026 2.3 %
TDR 385,021 1.2 %
Total nonaccrual principal (a)$1,133,047 3.5 %

The table below presents the Company’s allowance ratio for TDR and non-TDR individually acquired retail installment contracts as of September 30, 2021 and December 31, 2020 (Unaudited, Dollar amounts in thousands):
Allowance RatiosSeptember 30, 2021December 31, 2020
TDR - Unpaid principal balance$3,952,344$3,945,040
TDR - Impairment1,297,8411,314,170
TDR - Allowance ratio32.8 %33.3 %
Non-TDR - Unpaid principal balance$28,779,433$28,977,299
Non-TDR - Allowance4,398,3034,792,464
Non-TDR Allowance ratio15.3 %16.5 %
Total - Unpaid principal balance$32,731,777$32,922,339
Total - Allowance5,696,1446,106,634
Total - Allowance ratio17.4 %18.5 %

The Company’s ACL decreased $0.1 billion and $0.4 billion for the three and nine months ended September 30, 2021. The decrease was primarily due to an improved macroeconomic outlook as well as credit quality and performance.

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Table 5: Originations
The Company's originations of loans and leases, including revolving loans, average APR, and dealer discount (net of dealer participation) were as follows:
Three Months EndedNine Months EndedThree Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020June 30, 2021
Retained Originations(Unaudited, Dollar amounts in thousands)
Retail installment contracts$4,432,175$5,344,755$14,298,345$13,608,298$5,871,823
Average APR14.8 %13.7 %15.0 %13.8 %14.4 %
Average FICO® (a)606637603631608
Premium(2.4)%(1.3)%(2.1)%(1.0)%(2.3)%
Personal loans (b)—305,039—923,112$—
Average APR— %29.4 %— %29.4 %— %
Leased vehicles1,577,5391,856,1665,799,7864,863,504$2,067,741
Finance lease 2,8164,0878,147$9,016$2,534
Total originations retained$6,012,530$7,510,047$20,106,278$19,403,930$7,942,098
Sold Originations
Retail installment contracts$39,325$80,144$523,862$761,323$—
Average APR4.9 %5.2 %5.3 %4.8 %— %
Average FICO® (c)730738720734—
Personal Loans (d)$—$—$292,709$—$—
Average APR— %— %29.7%$—— %
Total originations sold $39,325$80,144$816,571$761,323$—
Total originations (excluding SBNA Originations Program)$6,051,855$7,590,191$20,922,849$20,165,253$7,942,098

(a)Unpaid principal balance excluded from the weighted average FICO score is $386 million, $571 million, $1.4 billion, $1.5 billion and $559 million for the three months ended September 30, 2021 and 2020, nine months ended September 30, 2021 and 2020, and for the three months ended June 30, 2021, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, $129 million, $145 million, $469 million, $386 million and $187 million, respectively, were commercial loans.
(b)Included in the total origination volume is $72 million and $151 million for the three and nine months ended September 30, 2020, respectively, related to newly opened accounts.
(c)Only includes assets both originated and sold in the period. Total asset sales for the period are shown in table 6. Unpaid principal balance excluded from the weighted average FICO score is $3 million, $28 million, $11 million, $80 million and $0 million for the three and nine months ended September 30, 2021 and 2020, and for the three months ended June 30, 2021, respectively, as the borrowers on these loans did not have FICO scores at origination. Of these amounts, the commercial loans were zero.
(d)Included in the total origination volume is $25 million for the three months ended March 31, 2021 related to newly opened accounts.

SBNA Originations Program

Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Chrysler dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. The Company facilitated the purchase of $1.5 billion and $6.1 billion of retail installment contacts during the three and nine months ended September 30, 2021, respectively.


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Table 6: Asset Sales
Three Months EndedNine Months EndedThree Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020June 30, 2021
Assets Sold(Unaudited, Dollar amounts in thousands)
Retail installment contracts$277,898$636,301$2,968,467$1,148,587$309,784
Average APR3.4 %4.9 %4.2 %5.6 %5.9 %
Average FICO®$737735737715716
Personal loans$——1,253,476—$—
Average APR— %— %29.7 %— %— %
Discount— — — — — 
Total asset sales$277,898$636,301$4,221,943$1,148,587$309,784

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Table 7: Ending Portfolio

Ending outstanding balance, average APR and remaining unaccreted net discount of our held for investment portfolio as of September 30, 2021 and December 31, 2020, are as follows:
September 30, 2021December 31, 2020
(Unaudited, Dollar amounts in thousands)
Retail installment contracts$32,742,544$32,937,036
Average APR15.2 %15.2 %
Premium(0.96)%(0.15)%
Leased vehicles $16,112,416$17,259,468
Finance leases$24,508$26,150


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Table 8: Reconciliation of Non-GAAP Measures
September 30, 2021September 30, 2020
(Unaudited, Dollar amounts in thousands)
Total equity$7,932,730$5,094,812
Add: Adjustment due to CECL capital relief (c)1,729,3661,842,536
Deduct: Goodwill, intangibles, and other assets, net of deferred tax liabilities156,942159,907
Deduct: Accumulated other comprehensive income (loss), net(31,194)(56,882)
Tier 1 common capital$9,536,348$6,834,323
Risk weighted assets (a)(c)48,830,52749,882,540
Common Equity Tier 1 capital ratio (b)(c)19.5 %13.7 %
(a)Under the banking agencies' risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet exposures are assigned to broad risk categories. The aggregate dollar amount in each risk category is multiplied by the associated risk weight of the category. The resulting weighted values are added together with the measure for market risk, resulting in the Company's total Risk weighted assets.
(b)CET1 is calculated under Basel III regulations required as of January 1, 2015. The fully phased-in capital ratios are non-GAAP financial measures.
(c)As described in our 2020 annual report on Form 10-K, on January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (“CECL”), which upon adoption resulted in a reduction to our opening retained earnings balance, net of income tax, and increase to the allowance for credit losses of approximately $2 billion. As also described in our 2019 10-K, the U.S. banking agencies in December 2018 had approved a final rule to address the impact of CECL on regulatory capital by allowing banking organizations, including the Company, the option to phase in the day-one impact of CECL until the first quarter of 2023. In March 2020, the U.S. banking agencies issued an interim final rule that provides banking organizations with an alternative option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period. The Company elected this alternative option instead of the one described in the December 2018 rule.

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