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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | | | | |
| ☑ | | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2025
| | | | | | | | |
| ☐ | | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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) |
Registrant’s telephone number including area code (800) 493-8219
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbols | | Name of each exchange on which registered |
| Not Applicable | | Not Applicable | | Not Applicable |
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 ☑. No ☐.
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 ☑. No ☐.
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.
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Large accelerated filer ☐ | | Accelerated filer ☐ | | Emerging growth company ☐ |
| | | | |
Non-accelerated Filer ☑ | | Smaller reporting company ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐. No ☑.
Number of shares of common stock outstanding at October 31, 2025: 530,391,043 shares
INDEX
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| 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 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
SANTANDER HOLDINGS USA, INC., AND SUBSIDIARIES
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about the Company’s 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 and phrases such as “may,” “could,” “should,” “will,” “would,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “assumes," "goal," "seeks," "can," "predicts," "potential," "projects," "continuing," "ongoing," and similar expressions.
Although the Company 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 which are subject to change based on various important factors and assumptions, some of which are beyond the Company's control. Among the factors that could cause the Company’s financial performance to differ materially from that suggested by forward-looking statements are:
•the effects of regulation, actions and/or policies of the Federal Reserve, the FDIC, the OCC and the CFPB, and other changes in monetary and fiscal policies and regulations, including policies that affect market interest rates and money supply, as well as the impact of changes in and interpretations of GAAP, the failure to adhere to which could subject SHUSA and/or its subsidiaries to formal or informal regulatory compliance and enforcement actions and result in fines, penalties, restitution and other costs and expenses, changes in our business practice, and reputational harm;
•increased credit risk exposure to the extent our loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral, and changes in the credit quality of SHUSA's customers and counterparties;
•adverse economic conditions in the United States and worldwide, including the extent of recessionary conditions in the U.S. 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 credit loss expense;
•inflation, interest rate, market and monetary fluctuations may, among other things, reduce net interest margins and impact funding sources, revenue and expenses, the value of assets and obligations, and the ability to originate and distribute financial products in the primary and secondary markets;
•the pursuit of trade related policies, including reciprocal tariffs and sanctions among global trade partners and/or other countries, and/or trade disputes generally;
•bank failures and actual or perceived adverse developments at other banks, including financial or operational failures and concerns about creditworthiness or the ability of other banks to fulfill their obligations, may lead to decreased customer and investor sentiment regarding the stability and liquidity of banks in general, reduced interest by customers and investors to use banking services and enter into transactions with banks, disruption in the financial markets, increased expenses for banks such as higher FDIC insurance premiums, and increased regulation of banks by supervisory authorities as they seek to manage or mitigate such adverse developments;
•risks SHUSA faces implementing its growth strategy, including SHUSA's ability to grow revenue, manage expenses, attract and retain highly-skilled people, successfully complete and integrate mergers and acquisitions, 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 non-objection to its capital plans by its regulators and its subsidiaries' ability to continue to pay dividends to it;
•reduction in SHUSA's access to funding or increases in the cost of its funding, such as in connection with changes in credit ratings assigned to SHUSA or its subsidiaries, or a significant reduction in customer deposits;
•adverse movements and volatility in debt and equity capital markets and adverse changes in securities markets, including those related to the financial condition of significant issuers in SHUSA’s investment portfolio;
•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 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 success of our marketing efforts to 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 who 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 and cause SHUSA to lose business or market share and impact our net income adversely;
•Investments SHUSA makes in non-publicly traded securities of startup and small companies that we may not be able to reduce or exit quickly and that may as a result reduce compensation we receive for such investments in such an event;
•changes in customer spending, investment or savings behavior;
•the ability of SHUSA and its third-party vendors to convert, maintain and upgrade, as necessary, SHUSA’s data processing and other IT infrastructure on a timely and acceptable basis, within projected cost estimates and without significant disruption to our business;
•SHUSA's ability to control operational risks, data security breach risks and outsourcing risks, and the possibility of errors in quantitative models and software SHUSA uses in its business, including as a result of cyberattacks, technological failure, human error, fraud or malice by internal or external parties, and the possibility that SHUSA's controls will prove insufficient, fail or be circumvented;
•changing federal, state, and local tax laws and regulations, which may include tax rates changes, that could materially adversely affect our business, including changes to tax laws and regulations and 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;
•the costs and effects of regulatory or judicial actions or proceedings, including possible business restrictions resulting from such actions or proceedings;
•adverse publicity or negative public opinion, whether specific to SHUSA or regarding other industry participants or industry-wide factors, or other reputational harm;
•SHUSA’s ability to address social, environmental and sustainability matters that may arise from its activities;
•natural or man-made disasters including pandemics and other significant public health emergencies, effects of climate change, and SHUSA's ability to deal with disruptions caused by such disasters and emergencies;
•local, regional or global geopolitical tensions and hostilities, including acts of terrorism or domestic or foreign military conflicts and escalations of hostilities; and
•the other factors that are described in Part I, Item IA - Risk Factors of the Company's Annual Report on Form 10-K for 2024.
If one or more of the factors affecting the Company’s forward-looking information and statements renders forward-looking information or statements incorrect, the Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and statements. Therefore, the Company cautions the reader not to place undue reliance on any forward-looking information or statements herein. The effect of these factors is difficult to predict. Factors other than these also could adversely affect the Company’s 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. Management cannot assess the impact of any such factor on the Company’s 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 reflect the current beliefs and expectations of the Company's management and only speak as of the date of this document, and the Company undertakes 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 the Company are expressly qualified by these cautionary statements.
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 the Condensed Consolidated Financial Statements.
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| ABS: Asset-backed securities | | Early stage delinquency: loans that are greater than 30 DPD, but less than 90 DPD |
| ACL: Allowance for credit losses | | EFG: Enterprise Financial Group |
| AFS: Available-for-sale | | EIR: Effective interest rate |
| ALLL: Allowance for loan and lease losses | | ERISA: Employee Retirement Security Act of 1974, as amended |
| AOCI: Accumulated other comprehensive income | | ESG: Environmental, Social, and Governance |
| ASC: Accounting Standards Codification | | ETR: Effective tax rate |
| ASU: Accounting Standards Update | | Evaluation Date: September 30, 2025 |
| ATM: Automated teller machine | | Exchange Act: Securities Exchange Act of 1934, as amended |
| BHC: Bank holding company | | Expanded Risk-Based Approach: New approach for calculating risk-weighted assets proposed by the federal banking agencies |
| BHCA: Bank Holding Company Act of 1956, as amended | | FASB: Financial Accounting Standards Board |
| BOLI: Bank-owned life insurance | | FBO: Foreign banking organization |
| Broker-Dealers: SanCap and SSLLC | | FDIA: Federal Deposit Insurance Corporation Improvement Act |
| BSI: Banco Santander International | | FDIC: Federal Deposit Insurance Corporation |
| C&I: Commercial and Industrial Banking | | Federal Reserve: Board of Governors of the Federal Reserve System |
| Capital Proposal: Proposed revisions to capital rules issued by federal banking agencies on July 27, 2023 | | FHLB: Federal Home Loan Bank |
| CBB: Consumer and Business Banking | | FHLMC: Federal Home Loan Mortgage Corporation |
| CCAP: Chrysler Capital; trade name used in providing services under the MPLFA | | FICO®: Fair Isaac Corporation credit scoring model |
| CD: Certificate of deposit | | FNMA: Federal National Mortgage Association |
| CECL: Current expected credit losses as defined by FASB ASC Topic 326 | | FOMC: Federal Open Market Committee |
| CEO: Chief Executive Officer | | FRB: Federal Reserve Bank |
| CET1: Common equity Tier 1 | | FTP: Funds transfer pricing |
| CEVF: Commercial equipment vehicle financing | | FVO: Fair value option |
| CFPB: Consumer Financial Protection Bureau | | GAAP: Accounting principles generally accepted in the United States of America |
| CFO: Chief Financial Officer | | GDP: Gross domestic product |
| CFTC: Commodity Futures Trading Commission | | GNMA: Government National Mortgage Association |
| CIB: Corporate and Investment Banking | | GSIB: Globally systemically important bank |
| CID: Civil investigative demand | | HFI: Held-for-investment |
| CLTV: Combined loan-to-value | | HFS: Held-for-sale |
| CME: Chicago Mercantile Exchange | | HPI: Housing Price Index |
| Company: Santander Holdings USA, Inc. | | HTM: Held-to-maturity |
| Covered Fund: a hedge fund or a private equity fund | | IBOR: Inter-bank offered rate |
| COVID-19: a novel strain of coronavirus declared a pandemic by the World Health Organization in March 2020 | | IDI: Insured depository institution |
| CPR: Constant prepayment rate | | IHC: U.S. intermediate holding company |
| CRA: Community Reinvestment Act | | IRS: Internal Revenue Service |
| CRE: Commercial Real Estate | | ISDA: International Swaps and Derivatives Association, Inc. |
| DCF: Discounted cash flow | | IT: Information technology |
| DFA: Dodd-Frank Wall Street Reform and Consumer Protection Act | | LBO: Large banking organizations with assets of $100 billion or more |
| DIF: Deposit Insurance Fund | | LCR: Liquidity coverage ratio |
| DOJ: Department of Justice | | LGD: Loss given default |
| DPD: Days past due | | LHFI: Loans held for investment |
| DRIVE: Drive Auto Receivables Trust, a securitization platform | | LHFS: Loans held for sale |
| DTI: Debt-to-income | | LIBOR: London Interbank Offered Rate |
| EAD: Exposure at default | | LIHTC: Low income housing tax credit |
| | LTD: Long-term debt |
| | LTV: Loan-to-value |
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| MBS: Mortgage-backed securities | | SBALT: SBNA Auto Lease Trust |
| MD&A: Management's Discussion and Analysis of Financial Condition and Results of Operations | | SBAT: SBNA Auto Receivable Trust |
| MMNA: Mitsubishi Motors North America, Inc. | | SBNA or the Bank: Santander Bank, National Association |
| Moody’s: Moody's Investors Service, Inc. | | SC: Santander Consumer USA Holdings Inc. and its subsidiaries |
| MPLFA: Master private-label financing agreement with Stellantis | | SCARF: Santander Consumer Auto Receivables Funding |
| MSR: Mortgage servicing right | | SCART: Santander Consumer Auto Receivables Trust |
| MVE: Market value of equity | | SCB: Stress capital buffer |
| NCI: Non-controlling interest | | SCF: Statement of cash flows |
| NCO: Net charge-off | | SDART: Santander Drive Auto Receivables Trust |
| NFA: National Futures Association | | SDGT: Specially Designated Global Terrorist |
| NMDs: Non-maturity deposits | | SEC: Securities and Exchange Commission |
| NMTC: New market tax credits | | Securities Act: Securities Act of 1933, as amended |
| NOI: Net operating income | | Securities Financing Activities: Resale, repurchase securities borrowed and securities lending agreements |
| NPL: Non-performing loan | | SHUSA: Santander Holdings USA, Inc. |
| NPR: Notice of proposed rule-making | | SOFR: Secured overnight financing rate |
OBBBA - One Big Beautiful Bill Act | | SPE: Special purpose entity |
| OCC: Office of the Comptroller of the Currency | | SSLLC: Santander Securities LLC |
| OCI: Other comprehensive income | | Stellantis: Fiat Chrysler Automobiles U.S. LLC parent Stellantis N.V. and/or any affiliates |
| OECD: Organization for Economic Cooperation and Development | | 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. |
| OEM: Original equipment manufacturer | | TDR: Troubled debt restructuring |
| OIS: Overnight indexed swap | | TLAC: Total loss-absorbing capacity |
| OREO: Other real estate owned | | TLAC Rule: The Federal Reserve's TLAC rule |
| Parent Company: The parent holding company of SBNA and other consolidated subsidiaries | | Trusts: Securitization trusts |
| PD: Probability of default | | UK Limited Partnership: SHUSA's investment in a United Kingdom limited partnership formed to invest in early-stage financial technology companies. The transaction involved a transfer of ownership between entities under common control |
| Related Party Acquirer: Santander subsidiary that acquired Services and Promotions Delaware Corp. | | UPB: Unpaid principal balance |
| RIC: Retail installment contract | | VIE: Variable interest entity |
| ROU: Right-of-use | | VOE: Voting interest entity |
| RV: Recreational vehicle | | YTD: Year-to-date |
| RWA: Risk-weighted asset | | |
| S&P: Standard & Poor's | | |
| SanCap: Santander US Capital Markets LLC | | |
| Santander: Banco Santander, S.A. | | |
| Santander UK: Santander UK plc | | |
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PART I. FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (In thousands)
| | | | | | | | | | | |
| September 30, 2025 | | December 31, 2024 |
| | | |
| ASSETS | | | |
| Cash and cash equivalents | $ | 15,708,891 | | | $ | 18,546,918 | |
Federal funds sold and securities purchased under resale agreements or similar arrangements | 8,515,777 | | | 8,132,230 | |
| Investment securities: | | | |
AFS at fair value (amortized cost of $8,146,642 and $7,833,617 as of September 30, 2025 and December 31, 2024, respectively) | 7,461,372 | | | 7,132,632 | |
| Trading securities | 16,553,573 | | | 10,322,823 | |
HTM (fair value of $10,404,901 and $8,306,417 as of September 30, 2025 and December 31, 2024, respectively) | 11,797,677 | | | 9,914,288 | |
| Other investments | 2,376,186 | | | 1,549,634 | |
LHFI (1) | 84,550,188 | | | 87,304,499 | |
ALLL | (6,148,617) | | | (6,562,012) | |
Net LHFI(5) | 78,401,571 | | | 80,742,487 | |
LHFS (2) | 1,567,815 | | | 1,333,953 | |
Premises and equipment, net (3) | 963,047 | | | 986,953 | |
Operating lease assets, net (5)(6) | 9,543,028 | | | 11,667,951 | |
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| Goodwill | 2,766,665 | | | 2,766,665 | |
| Intangible assets, net | 222,149 | | | 248,920 | |
| BOLI | 2,046,290 | | | 2,013,692 | |
Restricted cash (5) | 5,338,444 | | | 5,029,088 | |
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Other assets (4) (5) | 4,852,479 | | | 4,860,516 | |
| TOTAL ASSETS | $ | 168,114,964 | | | $ | 165,248,750 | |
| LIABILITIES | | | |
| Accounts payables and accrued expenses | $ | 6,039,643 | | | $ | 5,244,272 | |
Deposits and other customer accounts (includes $580,460 and zero of deposits held for sale as of September 30, 2025 and December 31, 2024, respectively) | 76,360,591 | | | 78,114,605 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 21,297,036 | | | 16,302,948 | |
| Trading liabilities | 3,269,470 | | | 2,460,613 | |
Borrowings and other debt obligations (5) | 40,886,853 | | | 44,010,910 | |
| Advance payments by borrowers for taxes and insurance | 188,448 | | | 150,777 | |
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Other liabilities (5) | 1,110,587 | | | 1,289,098 | |
| TOTAL LIABILITIES | 149,152,628 | | | 147,573,223 | |
Commitments and contingencies (Note 16) | | | |
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| MEZZANINE EQUITY | | | |
Preferred stock (no par value; 7,500,000 shares authorized; 2,000,000 shares outstanding at September 30, 2025 and December 31, 2024, respectively) | 2,000,000 | | | 2,000,000 | |
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| STOCKHOLDER'S EQUITY | | | |
| | | |
Common stock and paid-in capital (no par value; 800,000,000 shares authorized; 530,391,043 shares outstanding at both September 30, 2025 and December 31, 2024, respectively) | 17,314,362 | | | 17,335,889 | |
Accumulated other comprehensive loss, net of tax | (596,828) | | | (717,700) | |
Retained earnings / (accumulated deficit) | 244,802 | | | (942,662) | |
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| TOTAL STOCKHOLDER'S EQUITY | 16,962,336 | | | 15,675,527 | |
| TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDER'S EQUITY | $ | 168,114,964 | | | $ | 165,248,750 | |
(1) Includes $5.8 million and $9.0 million of loans recorded at fair value at September 30, 2025 and December 31, 2024, respectively.
(2) Includes $1.5 billion and $1.3 billion of loans recorded at the FVO at September 30, 2025 and December 31, 2024, respectively.
(3) Net of accumulated depreciation of $2.7 billion and $2.5 billion at September 30, 2025 and December 31, 2024, respectively.
(4) Includes MSRs of $81.0 million and $91.0 million at September 30, 2025 and December 31, 2024, respectively, for which the Company has elected the FVO.
(5) The Company has interests in certain Trusts that are considered VIEs for accounting purposes. At September 30, 2025 and December 31, 2024, net LHFI included $24.1 billion and $24.6 billion, Operating leases assets, net included $9.5 billion and $11.7 billion, restricted cash included $759.6 million and $706.6 million, Other assets included $636.3 million and $693.1 million, Borrowings and other debt obligations included $25.6 billion and $26.2 billion, and Other liabilities included $81.7 million and $99.6 million of assets or liabilities, respectively, that were included within VIEs. See Note 7 to these Condensed Consolidated Financial Statements for additional information.
(6) Net of accumulated depreciation of $2.8 billion and $3.1 billion at September 30, 2025 and December 31, 2024, respectively.
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (In thousands)
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| Three months ended September 30, | | Nine months ended September 30, |
| | 2025 | | 2024 | | 2025 | | 2024 | | |
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| INTEREST INCOME: |
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| Loans | $ | 2,093,139 | | | $ | 2,166,424 | | | $ | 6,309,836 | | | $ | 6,443,691 | | | |
| Interest-earning deposits | 231,214 | | | 222,492 | | | 745,696 | | | 648,631 | | | |
| Interest and fees on federal funds sold and securities purchased under resale agreements or similar arrangements | 414,452 | | | 728,670 | | | 1,313,419 | | | 2,210,518 | | | |
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| Investment securities: | | | | | | | | | |
AFS | 97,893 | | | 93,057 | | | 289,031 | | | 287,729 | | | |
| HTM | 77,648 | | | 54,371 | | | 196,642 | | | 145,165 | | | |
| Trading securities | 209,663 | | | 150,944 | | | 566,583 | | | 414,215 | | | |
| Other investments | 9,319 | | | 10,372 | | | 31,172 | | | 35,304 | | | |
| TOTAL INTEREST INCOME | 3,133,328 | | | 3,426,330 | | | 9,452,379 | | | 10,185,253 | | | |
| INTEREST EXPENSE: | | | | | | | | | |
| Deposits and other customer accounts | 460,813 | | | 527,556 | | | 1,438,116 | | | 1,545,493 | | | |
| Interest expense on federal funds purchased and securities loaned or sold under repurchase agreements | 567,609 | | | 860,769 | | | 1,719,233 | | | 2,589,950 | | | |
| Interest expense on trading liabilities | 36,258 | | | 45,507 | | | 109,459 | | | 129,342 | | | |
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| Borrowings and other debt obligations | 549,473 | | | 609,471 | | | 1,726,949 | | | 1,756,708 | | | |
| TOTAL INTEREST EXPENSE | 1,614,153 | | | 2,043,303 | | | 4,993,757 | | | 6,021,493 | | | |
| NET INTEREST INCOME | 1,519,175 | | | 1,383,027 | | | 4,458,622 | | | 4,163,760 | | | |
Credit loss expense | 368,066 | | | 431,339 | | | 1,166,876 | | | 1,317,569 | | | |
NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE | 1,151,109 | | | 951,688 | | | 3,291,746 | | | 2,846,191 | | | |
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| NON-INTEREST INCOME: | | | | | | | | | |
| Consumer and commercial fees | 127,894 | | | 104,948 | | | 363,691 | | | 285,027 | | | |
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| Capital markets and foreign exchange income | 153,768 | | | 102,075 | | | 382,479 | | | 316,349 | | | |
| Lease income | 394,740 | | | 535,872 | | | 1,279,449 | | | 1,688,602 | | | |
Miscellaneous income, net (1) | 144,188 | | | 7,099 | | | 481,864 | | | 264,388 | | | |
| TOTAL FEES AND OTHER INCOME | 820,590 | | | 749,994 | | | 2,507,483 | | | 2,554,366 | | | |
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Securities gains, net | 53,169 | | | 55,117 | | | 115,091 | | | 184,304 | | | |
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| TOTAL NON-INTEREST INCOME | 873,759 | | | 805,111 | | | 2,622,574 | | | 2,738,670 | | | |
| GENERAL, ADMINISTRATIVE AND OTHER EXPENSES: | | | | | | | | | |
| Compensation and benefits | 533,951 | | | 532,890 | | | 1,607,098 | | | 1,600,393 | | | |
| Occupancy and equipment expenses | 167,650 | | | 157,017 | | | 525,301 | | | 473,847 | | | |
| Technology, outside service, and marketing expense | 202,601 | | | 196,345 | | | 620,003 | | | 575,244 | | | |
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| Loan expense | 101,561 | | | 87,287 | | | 262,971 | | | 254,822 | | | |
| Lease expense | 335,561 | | | 442,947 | | | 1,030,580 | | | 1,334,384 | | | |
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| Other expenses | 137,545 | | | 179,221 | | | 403,866 | | | 469,325 | | | |
| TOTAL GENERAL, ADMINISTRATIVE AND OTHER EXPENSES | 1,478,869 | | | 1,595,707 | | | 4,449,819 | | | 4,708,015 | | | |
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INCOME BEFORE INCOME TAX | 545,999 | | | 161,092 | | | 1,464,501 | | | 876,846 | | | |
Income tax provision / (benefit) | 89,628 | | | (32,187) | | | 144,512 | | | (74,254) | | | |
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| NET INCOME | $ | 456,371 | | | $ | 193,279 | | | $ | 1,319,989 | | | $ | 951,100 | | | |
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(1) Includes equity investment income/(expense), net.
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited (In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2025 | | 2024 | | 2025 | | 2024 | | |
| | | | | | | | | |
| NET INCOME | $ | 456,371 | | | $ | 193,279 | | | $ | 1,319,989 | | | $ | 951,100 | | | |
OTHER COMPREHENSIVE INCOME, NET OF TAX | | | | | | | | | |
Net unrealized changes in cash flow hedge derivative financial instruments, net of tax | 19,960 | | | 71,122 | | | 89,330 | | | 174,194 | | | |
Net unrealized gains on investment in debt securities, net of tax | 41,867 | | | 147,796 | | | 16,415 | | | 198,663 | | | |
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Other | 61 | | | 449 | | | 15,127 | | | 1,105 | | | |
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX | 61,888 | | | 219,367 | | | 120,872 | | | 373,962 | | | |
COMPREHENSIVE INCOME | $ | 518,259 | | | $ | 412,646 | | | $ | 1,440,861 | | | $ | 1,325,062 | | | |
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|
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Unaudited (In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Common Shares Outstanding | | | | Common Stock and Paid-in Capital | | Accumulated Other Comprehensive Loss, Net of Tax | | (Accumulated Deficit) / Retained Earnings | | | | Total Stockholder's Equity | | Preferred Stock Mezzanine |
| Balance, July 1, 2025 | 530,391 | | | | | $ | 17,314,362 | | | $ | (658,716) | | | $ | (167,394) | | | | | $ | 16,488,252 | | | $ | 2,000,000 | |
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| Comprehensive income | — | | | | | — | | | 61,888 | | | 456,371 | | | | | 518,259 | | | — | |
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| Dividends declared and payable on preferred stock | — | | | | | — | | | — | | | (44,175) | | | | | (44,175) | | | — | |
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Balance, September 30, 2025 | 530,391 | | | | | $ | 17,314,362 | | | $ | (596,828) | | | $ | 244,802 | | | | | $ | 16,962,336 | | | $ | 2,000,000 | |
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| Common Shares Outstanding | | | | Common Stock and Paid-in Capital | | Accumulated Other Comprehensive Loss, Net of Tax | | Accumulated Deficit | | | | Total Stockholder's Equity | | Preferred Stock Mezzanine |
| Balance, July 1, 2024 | 530,391 | | | | | $ | 17,335,889 | | | $ | (910,973) | | | $ | (298,890) | | | | | $ | 16,126,026 | | | $ | 2,000,000 | |
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| Comprehensive income | — | | | | | — | | | 219,367 | | | 193,279 | | | | | 412,646 | | | — | |
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| Dividends paid on preferred stock | — | | | | | — | | | — | | | (44,175) | | | | | (44,175) | | | — | |
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Balance, September 30, 2024 | 530,391 | | | | | $ | 17,335,889 | | | $ | (691,606) | | | $ | (149,786) | | | | | $ | 16,494,497 | | | $ | 2,000,000 | |
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| Common Shares Outstanding | | | | Common Stock and Paid-in Capital | | Accumulated Other Comprehensive Loss, Net of Tax | | (Accumulated Deficit) / Retained Earnings | | | | Total Stockholder's Equity | | Preferred Stock Mezzanine | |
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| Balance, January 1, 2025 | 530,391 | | | | | $ | 17,335,889 | | | $ | (717,700) | | | $ | (942,662) | | | | | $ | 15,675,527 | | | $ | 2,000,000 | | |
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| Comprehensive income | — | | | | | — | | | 120,872 | | | 1,319,989 | | | | | 1,440,861 | | | — | | |
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| Dividends declared and paid on preferred stock | — | | | | | — | | | — | | | (88,350) | | | | | (88,350) | | | — | | |
| Dividends declared and payable on preferred stock | — | | | | | — | | | — | | | (44,175) | | | | | (44,175) | | | — | | |
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| Stock compensation | — | | | | | (21,527) | | | — | | | — | | | | | (21,527) | | | — | | |
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Balance, September 30, 2025 | 530,391 | | | | | $ | 17,314,362 | | | $ | (596,828) | | | $ | 244,802 | | | | | $ | 16,962,336 | | | $ | 2,000,000 | | |
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| Common Shares Outstanding | | | | Common Stock and Paid-in Capital | | Accumulated Other Comprehensive Loss, Net of Tax | | Accumulated Deficit | | | | Total Stockholder's Equity | | Preferred Stock Mezzanine | |
| Balance, January 1, 2024 | 530,391 | | | | | $ | 17,284,611 | | | $ | (1,065,568) | | | $ | (718,134) | | | | | $ | 15,500,909 | | | $ | 2,000,000 | | |
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| Comprehensive income | — | | | | | — | | | 373,962 | | | 951,100 | | | | | 1,325,062 | | | — | | |
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| Dividends paid on common stock | — | | | | | — | | | — | | | (250,000) | | | | | (250,000) | | | — | | |
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| Dividends paid on preferred stock | — | | | | | — | | | — | | | (132,752) | | | | | (132,752) | | | — | | |
| Sale of subsidiary (Note 1) | — | | | | | 51,278 | | | — | | | — | | | | | 51,278 | | | — | | |
Balance, September 30, 2024 | 530,391 | | | | | $ | 17,335,889 | | | $ | (691,606) | | | $ | (149,786) | | | | | $ | 16,494,497 | | | $ | 2,000,000 | | |
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements
SANTANDER HOLDINGS USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (in thousands)
| | | | | | | | | | | | | | | |
| Nine months ended September 30, |
| | 2025 | | 2024 | | |
| | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
| Net income | $ | 1,319,989 | | | $ | 951,100 | | | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| | | | | |
| Credit loss expense | 1,166,876 | | | 1,317,569 | | | |
| Deferred tax benefit | (142,850) | | | (317,232) | | | |
| Depreciation, amortization and accretion | 1,891,916 | | | 1,968,333 | | | |
Net gain on sale or disposal of loans, investment securities, and other assets | (132,552) | | | (36,956) | | | |
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| Originations and purchases of LHFS | (4,721,443) | | | (2,310,819) | | | |
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| Proceeds from sales of and collections on LHFS | 4,138,380 | | | 1,319,940 | | | |
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| Net change in: | | | | | |
| Trading securities and trading liabilities, net | (5,321,947) | | | (3,383,714) | | | |
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| Other assets and BOLI | 681 | | | (917,270) | | | |
| Other liabilities | 714,142 | | | 145,986 | | | |
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| Other operating activities, net | (7,380) | | | (10,339) | | | |
| NET CASH USED IN OPERATING ACTIVITIES | (1,094,188) | | | (1,273,402) | | | |
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| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
| Proceeds from sales of AFS investment securities | 300,354 | | | 200,344 | | | |
| Proceeds from prepayments and maturities of AFS investment securities | 605,937 | | | 587,985 | | | |
| Purchases of AFS investment securities | (1,171,099) | | | (465,391) | | | |
| Proceeds from prepayments and maturities of HTM investment securities | 887,327 | | | 424,578 | | | |
| Purchases of HTM investment securities | (1,523,324) | | | (876,711) | | | |
| Proceeds from sales and maturities of equity method and other investments | 220,748 | | | 286,611 | | | |
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| Purchases of and contributions to equity method and other investments | (525,453) | | | (417,716) | | | |
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| Net change in federal funds sold and securities purchased under resale agreements | (383,547) | | | 1,600,840 | | | |
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| Proceeds from sales of LHFI | 223,489 | | | 2,201,432 | | | |
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| Purchases of LHFI | (281,966) | | | (112,334) | | | |
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| Net change in loans other than purchases and sales | 83,152 | | | (1,477,475) | | | |
| Purchases and originations of operating leases | (2,014,393) | | | (3,941,865) | | | |
| Proceeds from the sale and termination of operating leases | 2,826,940 | | | 3,744,908 | | | |
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| Purchases and sales of premises and equipment, net | (136,658) | | | (186,596) | | | |
| Proceeds from sale of residual interest in VIE | 96,449 | | | 71,468 | | | |
Acquisition of interest in limited partnership | (801,568) | | | — | | | |
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| Proceeds from the sale of subsidiary | — | | | 71,018 | | | |
| Other investing activities, net | 22,507 | | | 29,999 | | | |
| NET CASH (USED IN) / PROVIDED BY INVESTING ACTIVITIES | (1,571,105) | | | 1,741,095 | | | |
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| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
| Net change in deposits and other customer accounts | (1,754,014) | | | 471,291 | | | |
| Net change in short-term borrowings | 831,460 | | | (564,642) | | | |
| Net proceeds from long-term borrowings | 21,845,360 | | | 26,491,938 | | | |
| Repayments of long-term borrowings | (25,708,066) | | | (25,232,449) | | | |
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| Net change in federal funds purchased and securities loaned or sold under repurchase agreements | 4,994,088 | | | 1,812,427 | | | |
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| Dividends paid on common stock and preferred stock | (88,350) | | | (382,752) | | | |
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| Other financing activities, net | 16,144 | | | 77,607 | | | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 136,622 | | | 2,673,420 | | | |
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| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (2,528,671) | | | 3,141,113 | | | |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 23,576,006 | | | 18,668,129 | | | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (1) | $ | 21,047,335 | | | $ | 21,809,242 | | | |
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(1) The nine months ended September 30, 2025 and 2024 include cash and cash equivalents balances of $15.7 billion and $16.7 billion, respectively, and restricted cash balances of $5.3 billion and $5.1 billion, respectively.
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements
NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ACCOUNTING POLICIES
SHUSA is the parent holding company of SBNA, a national banking association; SC, a consumer finance company headquartered in Dallas, Texas; BSI, a financial services company headquartered in Miami, Florida that offers a full range of banking services to foreign individuals and corporations based primarily in Latin America; SanCap, an institutional broker-dealer headquartered in New York which has significant capabilities in market-making via an experienced fixed-income sales and trading team and a focus on structuring and advisory services for asset originators in the real estate and specialty finance markets; SSLLC, a broker-dealer headquartered in Boston, Massachusetts; and several other subsidiaries. SHUSA is headquartered in Boston and SBNA's home office is in Wilmington, Delaware. SSLLC is a registered investment adviser with the SEC. SHUSA's two largest subsidiaries by asset size and revenue are SBNA and SC. SHUSA is a wholly-owned subsidiary of Santander.
The Company specializes in banking and consumer finance. Its consumer financing is focused on vehicle finance, servicing of third-party vehicle financing, and delivering service to dealers and customers across the full credit spectrum. This includes indirect origination and servicing of vehicle loans and leases, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers, origination of vehicle loans through a web-based direct lending program, purchases of vehicle loans from other lenders, and servicing of automobile and recreational and marine vehicle portfolios for other lenders. The Company sells consumer vehicle loans and leases through flow agreements and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer vehicle loans and leases.
In addition to specialized consumer finance, the Company also attracts deposits and provides other retail banking services through its network of retail branches with locations in Connecticut, Delaware, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island and originates small business, middle market, large and global commercial loans, multifamily loans, construction loans and other consumer loans and leases throughout the United States, with a focus on the Mid-Atlantic and Northeastern region. The Company also acquires deposits nationally through SBNA's online Openbank platform. For large institutional investors, the Company provides structured products, emerging markets credit and U.S. investment grade credit, U.S. rates, short-term fixed-income, debt and equity capital markets, investment banking, exchange-traded derivatives, and cash equities, benefiting from a combination of Santander’s global reach and access to financial hubs together with extensive local market knowledge and regional expertise.
In December 2023, SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Structured LLC was established by the FDIC to hold and service a $9 billion portfolio primarily consisting of New York-based rent-controlled and rent-stabilized multifamily loans retained by the FDIC following a recent bank failure. SBNA classifies its 20 percent interest in the Structured LLC as an AFS debt security. Under the terms of the arrangement, SBNA receives payments from the Structured LLC generated from net cash flows of the underlying loans based on its proportionate interest in the Structured LLC. SBNA is manager and servicer of the loan portfolio and is paid market rate fees by the Structured LLC.
On June 24, 2025, SBNA entered into an agreement with Community Bank, N.A., a subsidiary of Community Financial System, Inc., for the sale of seven branches located in the Allentown, Pennsylvania area. This transaction continues SBNA's transformation into a national, digital-first bank with branches. The transaction is expected to close in the fourth quarter of 2025, with the recognition of an immaterial gain on sale by SBNA. At September 30, 2025, SBNA disclosed approximately $0.6 billion of deposits as HFS and approximately $30 million of retail and business loans as HFS.
Acquisition of Interest in U.K. Limited Partnership
On September 24, 2025, SHUSA acquired Santander's indirect interest in a U.K. Limited Partnership from Investment Holdings 1857, S.L., a wholly-owned subsidiary of Santander. SHUSA acquired the interest at fair value, for approximately $801.9 million which was Santander's historical carrying amount. The U.K. Limited Partnership was formed to invest in early-stage financial technology companies. SHUSA financed the purchase with an unsecured intercompany loan from Santander. The transaction was accounted for as an asset acquisition using the predecessor basis of accounting. Accordingly, no goodwill or gain were recognized.
SHUSA consolidates the U.K. Limited Partnership and presents the results since the acquisition within its Condensed Consolidated Financial Statements.
The assets consist primarily of equity investments in privately held financial technology companies and are classified in Other Investments on the Condensed Consolidated Balance Sheets, at fair value, with changes in value since the acquisition recorded in Miscellaneous income, net.
NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)
Sale of Subsidiary
In May 2024, the Company sold its wholly-owned subsidiary Services and Promotions Delaware Corp. to an affiliate of Santander. Services and Promotions Delaware Corp. through a wholly-owned subsidiary owned and managed the corporate office building located at 1401 Brickell Avenue, Miami, Florida, which leased space to BSI and other tenants until the sale. The affiliate paid fair value of approximately $134.0 million. The Company recorded proceeds in excess of its carrying value (approximately $51.3 million, net of a tax effect of $7.9 million) to additional paid-in capital as a result of the transaction between entities under common control.
Basis of Presentation
These Condensed Consolidated Financial Statements include the accounts of the Company and its consolidated subsidiaries, including certain Trusts that are considered VIEs. The Company generally consolidates VIEs for which it is deemed to be the primary beneficiary and VOEs in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.
NOTE 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ACCOUNTING POLICIES (continued)
These Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and pursuant to SEC regulations. 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 Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholder's Equity and Statement of Cash Flows for the periods indicated, and contain adequate disclosure to make the information presented not misleading.
Certain prior-period amounts have been reclassified to conform to the current period presentation. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates, and those differences may be material. The most significant estimates include the ACL, expected end-of-term lease residual values, and goodwill. These estimates, although based on actual historical trends and modeling, may potentially show significant variances over time.
Recently Adopted Accounting Standards
On January 1, 2025, the Company adopted ASU 2023-05 Business Combinations - Joint Venture Formations, Recognition and Initial Measurement, requiring most assets and liabilities contributed to a joint venture upon formation to be measured at fair value. This updated standard was applied prospectively, and it did not impact the Company's financial position or results of operations.
Recently Issued Accounting Standards Not Yet Adopted
On December 14, 2023, the FASB issued ASU 2023-09 Income Taxes – Improvements to Income Tax Disclosures, requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. The new disclosure requirements are effective for annual periods beginning in 2025, with early adoption permitted. The adoption of this ASU will not impact the Company’s financial position or results of operations and will have a minimal impact on disclosures.
On November 26, 2024, the FASB issued ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses, which requires a breakout of expenses in specific areas including employee compensation, depreciation, and intangible asset amortization. The new disclosure requirements are effective for annual reporting periods beginning in 2027 and interim periods thereafter, with early adoption permitted. The new guidance can be applied either prospectively to reporting periods after the effective date, or retrospectively to any or all prior periods presented. We are currently evaluating the impact of this update.
On September 18, 2025, the FASB issued ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software. This update is intended to modernize the accounting for internal-use software development costs. This update is effective beginning January 1, 2028, with early adoption permitted. The adoption of this ASU will not materially impact the Company’s financial position or results of operations.
Subsequent Events
The Company evaluated events from the date of these Condensed Consolidated Financial Statements on September 30, 2025 through the issuance of these Condensed Consolidated Financial Statements. Except as noted in Note 17 to these Consolidated Financial Statements, there were no material events in that period that would require recognition or disclosure in its Condensed Consolidated Financial Statements as of September 30, 2025.
NOTE 2. INVESTMENT SECURITIES
Summary of Investments in Debt Securities - AFS and HTM
The following table presents the amortized cost, gross unrealized gains and losses and approximate fair values of investments in debt securities AFS at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| (in thousands) | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Loss | | Fair
Value | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Loss | | Fair
Value |
| U.S. Treasury securities | | $ | 710,401 | | | $ | 5,437 | | | $ | — | | | $ | 715,838 | | | $ | 304,292 | | | $ | 148 | | | $ | — | | | $ | 304,440 | |
| Corporate debt securities | | 13 | | | — | | | — | | | 13 | | | 13 | | | — | | | — | | | 13 | |
| ABS | | 996,432 | | | 856 | | | (3,377) | | | 993,911 | | | 749,608 | | | 505 | | | (2,080) | | | 748,033 | |
Beneficial interest in Structured LLC (1) | | 1,078,548 | | | 19,163 | | | — | | | 1,097,711 | | | 1,099,000 | | | 99,985 | | | — | | | 1,198,985 | |
| MBS: | | | | | | | | | | | | | | | | |
| GNMA - Residential | | 2,700,878 | | | 6 | | | (284,563) | | | 2,416,321 | | | 2,905,020 | | | 17 | | | (339,740) | | | 2,565,297 | |
| GNMA - Commercial | | 626,290 | | | 3 | | | (144,280) | | | 482,013 | | | 643,010 | | | 3 | | | (154,312) | | | 488,701 | |
| FHLMC and FNMA - Residential | | 1,978,329 | | | 154 | | | (304,460) | | | 1,674,023 | | | 2,122,647 | | | 79 | | | (381,470) | | | 1,741,256 | |
| FHLMC and FNMA - Commercial | | 82,894 | | | — | | | (1,352) | | | 81,542 | | | 88,416 | | | — | | | (2,509) | | | 85,907 | |
Unallocated fair value hedge basis adjustment (2) | | (27,143) | | | — | | | 27,143 | | | — | | | (78,389) | | | — | | | 78,389 | | | — | |
| Total investments in debt securities AFS | | $ | 8,146,642 | | | $ | 25,619 | | | $ | (710,889) | | | $ | 7,461,372 | | | $ | 7,833,617 | | | $ | 100,737 | | | $ | (801,722) | | | $ | 7,132,632 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
(1) Represents a 20 percent interest in the Structured LLC to hold and service a pool of multi-family loans.
(2) The Company has entered into fair value hedges of portions of a closed portfolio of AFS debt securities, using the portfolio layer method. Refer to Note 12 for additional information.
The following table presents the amortized cost, gross unrealized gains and losses and approximate fair values of investments in debt securities HTM at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| (in thousands) | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Loss | | Fair
Value | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Loss | | Fair
Value |
| U.S. Treasury securities | | $ | 1,192,656 | | | $ | 5,454 | | | $ | (88) | | | $ | 1,198,022 | | | $ | 584,277 | | | $ | 159 | | | $ | (352) | | | $ | 584,084 | |
| | | | | | | | | | | | | | | | |
ABS and other interests in structured securities | | 1,462,762 | | | 1,106 | | | (2,287) | | | 1,461,581 | | | 70,236 | | | 188 | | | (49) | | | 70,375 | |
| | | | | | | | | | | | | | | | |
| MBS: | | | | | | | | | | | | | | | | |
| GNMA - Residential | | 3,049,415 | | | 4,710 | | | (417,964) | | | 2,636,161 | | | 3,010,357 | | | 3,118 | | | (502,165) | | | 2,511,310 | |
| GNMA - Commercial | | 4,561,550 | | | 325 | | | (903,163) | | | 3,658,712 | | | 4,696,532 | | | 56 | | | (975,516) | | | 3,721,072 | |
| FHLMC and FNMA - Residential | | 1,531,294 | | | 3,630 | | | (84,499) | | | 1,450,425 | | | 1,552,886 | | | 1,832 | | | (135,142) | | | 1,419,576 | |
| | | | | | | | | | | | | | | | |
| Total investments in debt securities HTM | | $ | 11,797,677 | | | $ | 15,225 | | | $ | (1,408,001) | | | $ | 10,404,901 | | | $ | 9,914,288 | | | $ | 5,353 | | | $ | (1,613,224) | | | $ | 8,306,417 | |
As of September 30, 2025 and December 31, 2024, the Company had investment securities with an estimated carrying value of $10.9 billion and $11.5 billion, respectively, pledged as collateral. The Company's investment securities pledged as collateral were comprised of the following: $3.6 billion and $3.9 billion, respectively, were pledged as collateral for the Company's borrowing capacity with the FRB; $2.5 billion and $2.5 billion, respectively, were pledged to secure public fund deposits; $22.4 million and $20.4 million, respectively, were pledged to various independent parties to secure repurchase agreements, support hedging relationships, and for recourse on loan sales; $304.6 million and $372.8 million, respectively, were pledged to secure the Company's customer overnight sweep product; and $4.5 billion and $4.7 billion, respectively, were pledged as collateral for the Company's borrowing capacity with the FHLB as of September 30, 2025 and December 31, 2024. There were no amounts pledged to secure repurchase agreements in which the secured party had the right to sell or repledge the collateral as of September 30, 2025 or December 31, 2024. The Company also participates in Securities Financing Activities discussed further in Note 11 to these Condensed Consolidated Financial Statements.
At September 30, 2025 and December 31, 2024, the Company had $177.7 million and $116.2 million, respectively, of accrued interest related to investment securities which is included in the Other assets line of the Company's Condensed Consolidated Balance Sheets. No accrued interest related to investment securities was written off during the periods ended September 30, 2025 or December 31, 2024.
NOTE 2. INVESTMENT SECURITIES (continued)
Contractual Maturity of Investments in Debt Securities
Contractual maturities of the Company’s investments in debt securities AFS at September 30, 2025 were as follows:
| | | | | | | | | | | | | | |
| | | | |
| (in thousands) | | Amortized Cost(1) | | Fair Value |
| Due within one year | | $ | 120,597 | | | $ | 120,947 | |
| Due after 1 year but within 5 years | | 713,925 | | | 716,984 | |
| Due after 5 years but within 10 years | | 836,658 | | | 825,236 | |
| Due after 10 years | | 6,502,605 | | | 5,798,205 | |
| Total | | $ | 8,173,785 | | | $ | 7,461,372 | |
(1) Does not include unallocated fair value hedge basis adjustment. | | | | |
Contractual maturities of the Company’s investments in debt securities HTM at September 30, 2025 were as follows:
| | | | | | | | | | | | | | |
| | | | |
| (in thousands) | | Amortized Cost | | Fair Value |
| Due within one year | | $ | 320,139 | | | $ | 320,499 | |
| Due after 1 year but within 5 years | | 957,483 | | | 962,838 | |
| Due after 5 years but within 10 years | | 1,210,496 | | | 1,205,872 | |
| Due after 10 years | | 9,309,559 | | | 7,915,692 | |
| Total | | $ | 11,797,677 | | | $ | 10,404,901 | |
Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.
NOTE 2. INVESTMENT SECURITIES (continued)
Gross Unrealized Loss and Fair Value of Investments in Debt Securities AFS and HTM
The following table presents the aggregate amount of unrealized losses on debt securities in the Company’s AFS investment portfolios classified according to the amount of time those securities have been in a continuous loss position as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| | | Less than 12 months | | 12 months or longer | | Less than 12 months | | 12 months or longer |
| (in thousands) | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses |
| | | | | | | | | | | | | | | | |
| Corporate debt securities | | — | | | — | | | — | | | — | | | — | | | — | | | 13 | | | — | |
| ABS | | 511,336 | | | (1,957) | | | 116,705 | | | (1,420) | | | 353,501 | | | (1,724) | | | 11,250 | | | (356) | |
| | | | | | | | | | | | | | | | |
| MBS: | | | | | | | | | | | | | | | | |
| GNMA - Residential | | 24,540 | | | (56) | | | 2,378,227 | | | (284,507) | | | — | | | — | | | 2,539,940 | | | (339,740) | |
| GNMA - Commercial | | — | | | — | | | 482,010 | | | (144,280) | | | — | | | — | | | 488,698 | | | (154,312) | |
| FHLMC and FNMA - Residential | | — | | | — | | | 1,659,854 | | | (304,460) | | | — | | | — | | | 1,724,770 | | | (381,470) | |
| FHLMC and FNMA - Commercial | | — | | | — | | | 81,543 | | | (1,352) | | | — | | | — | | | 85,907 | | | (2,509) | |
| | | | | | | | | | | | | | | | |
Total investments in debt securities AFS (1) | | $ | 535,876 | | | $ | (2,013) | | | $ | 4,718,339 | | | $ | (736,019) | | | $ | 353,501 | | | $ | (1,724) | | | $ | 4,850,578 | | | $ | (878,387) | |
(1) Does not include unallocated fair value hedge basis adjustment.
The following table presents the aggregate amount of unrealized losses on debt securities in the Company’s HTM investment portfolios classified according to the amount of time those securities have been in a continuous loss position as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 | | December 31, 2024 |
| | Less than 12 months | | 12 months or longer | | Less than 12 months | | 12 months or longer |
| (in thousands) | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses | | Fair Value | | Unrealized
Losses |
| U.S. Treasury securities | | $ | 301,860 | | | $ | (88) | | | $ | — | | | $ | — | | | $ | 401,232 | | | $ | (352) | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
| ABS and other interests in structured securities | | 1,093,023 | | | (2,287) | | | — | | | — | | | — | | | — | | | 16,000 | | | (49) | |
| | | | | | | | | | | | | | | | |
| MBS: | | | | | | | | | | | | | | | | |
| GNMA - Residential | | 45,922 | | | (32) | | | 1,889,755 | | | (417,932) | | | 245,812 | | | (1,647) | | | 1,944,400 | | | (500,518) | |
| GNMA - Commercial | | 21,636 | | | (354) | | | 3,613,528 | | | (902,809) | | | 23,637 | | | (43) | | | 3,675,226 | | | (975,473) | |
| FHLMC and FNMA - Residential | | — | | | — | | | 1,064,512 | | | (84,499) | | | 71,995 | | | (699) | | | 1,103,973 | | | (134,443) | |
| | | | | | | | | | | | | | | | |
| Total investments in debt securities HTM | | $ | 1,462,441 | | | $ | (2,761) | | | $ | 6,567,795 | | | $ | (1,405,240) | | | $ | 742,676 | | | $ | (2,741) | | | $ | 6,739,599 | | | $ | (1,610,483) | |
Allowance for credit-related losses on AFS and HTM securities
The Company did not record an allowance for credit-related losses on AFS or HTM securities at September 30, 2025 or December 31, 2024. As discussed in Note 1 to the Company's Annual Report on Form 10-K for 2024, securities for which management expects risk of nonpayment of the amortized cost basis is zero do not have a reserve.
For securities that do not qualify for the zero credit loss expectation exception, management has concluded that the unrealized losses are not credit-related since (1) they are not related to the underlying credit quality of the issuers, (2) the entire contractual principal and interest due on these securities is currently expected to be recoverable, (3) the Company does not intend to sell these investments at a loss and (4) it is more likely than not that the Company will not be required to sell the investments before recovery of the amortized cost basis, which for the Company's debt securities may be at maturity.
NOTE 2. INVESTMENT SECURITIES (continued)
Gains (Losses) on Sales of Investment Securities
The realized gross gains and losses from sales of investment securities were as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
| | | | | | | | | | |
| | | | | | | | | | |
| AFS debt and other securities: | | | | | | | | | | |
| Gross realized gains | | $ | — | | | $ | 444 | | | $ | 100 | | | $ | 444 | | | |
| Gross realized losses | | — | | | — | | | (165) | | | — | | | |
| | | | | | | | | | |
| Net realized gains/(losses) on AFS and other securities | | $ | — | | | $ | 444 | | | $ | (65) | | | $ | 444 | | | |
Total trading securities gains | | 53,169 | | | 54,673 | | | 115,156 | | | 183,860 | | | |
| | | | | | | | | | |
Securities gains, net | | $ | 53,169 | | | $ | 55,117 | | | $ | 115,091 | | | $ | 184,304 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
The Company uses the specific identification method to determine the cost of the securities sold and the gain or loss recognized.
Trading Securities
At September 30, 2025 and December 31, 2024, the Company held $16.6 billion and $10.3 billion, respectively, of trading securities. Gains and losses on trading securities are recorded within Securities gains, net on the Company's Condensed Consolidated Statements of Operations. At September 30, 2025 and December 31, 2024, the Company had $15.2 billion and $10.0 billion, respectively, of assets classified as trading securities pledged as collateral to counterparties that have the right to repledge these securities.
Other Investments
Other investments consisted of the following as of the dates indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | September 30, 2025 | | December 31, 2024 |
| FHLB of Pittsburgh and FRB stock | | $ | 525,299 | | | $ | 588,250 | |
| LIHTC investments | | 963,794 | | | 899,925 | |
| | | | |
Equity securities (1) | | 882,093 | | | 56,459 | |
| Interest-bearing deposits with an affiliate bank | | 5,000 | | | 5,000 | |
| | | | |
| Total | | $ | 2,376,186 | | | $ | 1,549,634 | |
(1) Includes $7.3 million and $8.0 million of retained interests in structured entities related to off-balance sheet securitizations as of September 30, 2025 and December 31, 2024, respectively, and $43.0 million and $48.2 million of equity securities accounted for at cost less impairment.
Other investments include the Company's investment in the stock of the FHLB of Pittsburgh and the FRB. These stocks do not have readily determinable fair values because their ownership is restricted and there is no market for their sale. The stocks can be sold back only at their par value of $100 per share, and FHLB stock can be sold back only to the FHLB or to another member institution. Accordingly, these stocks are carried at cost. During the three months and nine months ended September 30, 2025, the Company purchased $124.1 million and $124.3 million of FHLB stock at par, and redeemed $117.4 million and $206.5 million of FHLB stock at par. The Company purchased $11.0 million and $19.3 million of FRB stock at par and redeemed no FRB stock during the three months and nine months ended September 30, 2025. There was no gain or loss associated with these redemptions.
The Company's LIHTC investments are accounted for using the proportional amortization method. Equity securities and retained interests in structured entities are generally measured at fair value with changes in fair value recognized in net income. Certain privately held equity investments without a readily determinable fair value are accounted for at cost less impairment under the measurement alternative in ASC 321.
Interest-bearing deposits include deposits maturing in more than 90 days with Santander affiliates that are not consolidated.
With the exception of equity and trading securities, which are measured at fair value, the Company evaluates these other investments for impairment based on the ultimate recoverability of the carrying value, rather than by recognizing temporary declines in value.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES
Overall
The Company's LHFI are generally reported at their outstanding principal balances net of any cumulative charge-offs, unamortized deferred fees and costs and unamortized premiums or discounts. Certain LHFI are accounted for at fair value under the FVO. Certain loans are pledged as collateral for borrowings, securitizations, or SPEs. These pledged loans totaled $55.3 billion at September 30, 2025 and $59.1 billion at December 31, 2024.
LHFS includes loans the Company has the intent to sell or securitize in an off-balance sheet securitization and loans that the Company no longer intends to hold to maturity or for the foreseeable future. The LHFS portfolio balance at September 30, 2025 was $1.6 billion, compared to $1.3 billion at December 31, 2024. For a discussion on the composition and valuation of LHFS at fair value, see Note 13 to these Condensed Consolidated Financial Statements.
During the nine months ended September 30, 2025, the Company securitized $1.5 billion of mortgage LHFS in off-balance transactions. The Company has retained a 5% interest in the new securitizations totaling $74.8 million, for risk retention purposes.
During the second quarter of 2025, the Company (i) transferred $1.3 billion in RIC loans to a newly-formed off-balance sheet trust, and (ii) transferred its financial interests of approximately $242.9 million in an on-balance sheet auto RIC Trust to a third party and to a newly-formed off-balance sheet trust. Refer to Note 7 of these Condensed Consolidated Financial Statements.
During the third quarter of 2025, the Company completed clean up calls of existing off-balance sheet securitizations, which resulted in the repurchase of approximately $297.1 million of gross RICs.
Interest on loans is credited to income as it is earned. Loan origination fees and certain direct loan origination costs are deferred and recognized as adjustments to interest income in the Condensed Consolidated Statements of Operations generally over the contractual life of the loan utilizing the interest method. Loan origination costs and fees and premiums and discounts on RICs are deferred and recognized in interest income over their estimated lives using estimated prepayment speeds, which are updated on a monthly basis. At September 30, 2025 and December 31, 2024, accrued interest receivable on the Company's loans was $603.9 million and $632.4 million, respectively.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Loan and Lease Portfolio Composition
The following presents the composition of loans and leases HFI by portfolio and by rate type as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| | | | | | |
| (dollars in thousands) | | Amount | | Percent | | Amount | | Percent |
| Commercial LHFI: | | | | | | | | |
| CRE loans | | $ | 8,471,776 | | | 10.0 | % | | $ | 8,624,800 | | | 9.9 | % |
| C&I loans | | 7,785,693 | | | 9.2 | % | | 8,386,344 | | | 9.6 | % |
| Multifamily loans | | 9,921,672 | | | 11.7 | % | | 9,840,692 | | | 11.3 | % |
Other commercial (2) | | 7,951,400 | | | 9.4 | % | | 7,608,933 | | | 8.7 | % |
| Total commercial LHFI | | $ | 34,130,541 | | | 40.3 | % | | $ | 34,460,769 | | | 39.5 | % |
| Consumer loans secured by real estate: | | | | | | | | |
| Residential mortgages | | 4,134,536 | | | 4.9 | % | | 4,415,747 | | | 5.1 | % |
| Home equity loans and lines of credit | | 1,857,288 | | | 2.2 | % | | 2,091,365 | | | 2.4 | % |
| Total consumer loans secured by real estate | | $ | 5,991,824 | | | 7.1 | % | | $ | 6,507,112 | | | 7.5 | % |
| Consumer loans not secured by real estate: | | | | | | | | |
| RICs and auto loans | | 42,975,831 | | | 50.8 | % | | 44,585,718 | | | 50.9 | % |
| Personal unsecured loans | | 1,429,855 | | | 1.7 | % | | 1,715,727 | | | 2.0 | % |
Other consumer (3) | | 22,137 | | | 0.1 | % | | 35,173 | | | 0.1 | % |
| Total consumer loans | | $ | 50,419,647 | | | 59.7 | % | | $ | 52,843,730 | | | 60.5 | % |
Total LHFI (1) | | $ | 84,550,188 | | | 100.0 | % | | $ | 87,304,499 | | | 100.0 | % |
| Total LHFI: | | | | | | | | |
| Fixed rate | | $ | 60,440,824 | | | 71.5 | % | | $ | 62,085,179 | | | 71.1 | % |
| Variable rate | | 24,109,364 | | | 28.5 | % | | 25,219,320 | | | 28.9 | % |
Total LHFI (1) | | $ | 84,550,188 | | | 100.0 | % | | $ | 87,304,499 | | | 100.0 | % |
(1)Total LHFI includes unamortized deferred loan fees, net of deferred origination costs; unamortized purchase premiums, net of discounts; unamortized
participation fees; accretable Subvention; as well as purchase accounting adjustments. These items resulted in a net positive adjustment to the loan balances of $568.5 million and $425.4 million as of September 30, 2025 and December 31, 2024, respectively.
(2)Other commercial includes CEVF leveraged leases and loans.
(3)Other consumer primarily includes RV and marine loans.
Portfolio segments and classes
The Company discloses information about the credit quality of its loans and leases at disaggregated levels, specifically defined as “portfolio segments” and “classes,” based on management’s systematic methodology for determining the ACL. The Company utilizes similar categorization compared to the financial statement categorization of loans to model and calculate the ACL and track the credit quality, delinquency and impairment status of the underlying loan populations. In disaggregating its financing receivables portfolio, the Company’s methodology begins with the commercial and consumer portfolio segments.
The commercial portfolio segmentation reflects line of business distinctions. The CRE line of business includes C&I owner-occupied real estate and specialized lending for investment real estate. C&I includes non-real estate-related commercial loans. "Multifamily" represents loans for multifamily residential housing units. “Other commercial” includes loans to global customer relationships in Latin America which are not defined as commercial or consumer for regulatory purposes. The remainder of the portfolio primarily represents the CEVF portfolio.
The Company's portfolio classes are substantially the same as its financial statement categorization of loans for consumer loan populations. “Residential mortgages” includes mortgages on residential property, including single family and 1-4 family units. "Home equity loans and lines of credit" include all organic home equity contracts and purchased home equity portfolios. "RICs and auto loans" includes the Company's direct automobile loan portfolios but excludes RV and marine RICs. "Personal unsecured loans" includes personal revolving loans and credit cards. “Other consumer” includes an acquired portfolio of marine RICs and RV contracts.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
ACL Rollforward by Portfolio Segment
The ACL is comprised of the ALLL and the reserve for unfunded lending commitments. The activity in the ACL by portfolio segment was as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended September 30, 2025 |
| (in thousands) | | Commercial | | Consumer | | | | Total |
| ALLL, beginning of period | | $ | 522,765 | | | $ | 5,833,935 | | | | | $ | 6,356,700 | |
| | | | | | | | |
Credit loss expense/(benefit) | | (6,874) | | | 378,332 | | | | | 371,458 | |
| Charge-offs | | (36,948) | | | (1,162,239) | | | | | (1,199,187) | |
| Recoveries | | 10,592 | | | 609,054 | | | | | 619,646 | |
| Charge-offs, net of recoveries | | $ | (26,356) | | | $ | (553,185) | | | | | $ | (579,541) | |
| ALLL, end of period | | $ | 489,535 | | | $ | 5,659,082 | | | | | $ | 6,148,617 | |
| | | | | | | | |
Reserve for unfunded lending commitments, beginning of period | | $ | 43,007 | | | $ | 11,011 | | | | | $ | 54,018 | |
Credit loss (benefit) on unfunded lending commitments | | (2,678) | | | (714) | | | | | (3,392) | |
| | | | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 40,329 | | | $ | 10,297 | | | | | $ | 50,626 | |
| Total ACL, end of period | | $ | 529,864 | | | $ | 5,669,379 | | | | | $ | 6,199,243 | |
| | | | | | | | |
| | Three months ended September 30, 2024 |
| (in thousands) | | Commercial | | Consumer | | | | Total |
| ALLL, beginning of period | | $ | 582,760 | | | $ | 6,135,120 | | | | | $ | 6,717,880 | |
Credit loss expense | | 13,495 | | | 424,549 | | | | | 438,044 | |
| Charge-offs | | (25,079) | | | (1,196,715) | | | | | (1,221,794) | |
| Recoveries | | 18,182 | | | 609,118 | | | | | 627,300 | |
| Charge-offs, net of recoveries | | $ | (6,897) | | | $ | (587,597) | | | | | $ | (594,494) | |
| ALLL, end of period | | $ | 589,358 | | | $ | 5,972,072 | | | | | $ | 6,561,430 | |
| | | | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 50,052 | | | $ | 3,042 | | | | | $ | 53,094 | |
Credit loss (benefit) on unfunded lending commitments | | (6,447) | | | (258) | | | | | (6,705) | |
| | | | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 43,605 | | | $ | 2,784 | | | | | $ | 46,389 | |
| Total ACL, end of period | | $ | 632,963 | | | $ | 5,974,856 | | | | | $ | 6,607,819 | |
| | | | | | | | |
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | Nine months ended September 30, 2025 |
| (in thousands) | | Commercial | | Consumer | | Total |
| ALLL, beginning of period | | $ | 565,685 | | | $ | 5,996,327 | | | $ | 6,562,012 | |
| | | | | | |
Credit loss expense | | 2,622 | | | 1,161,571 | | | 1,164,193 | |
| Charge-offs | | (117,810) | | | (3,359,065) | | | (3,476,875) | |
| Recoveries | | 39,038 | | | 1,860,249 | | | 1,899,287 | |
| Charge-offs, net of recoveries | | $ | (78,772) | | | $ | (1,498,816) | | | $ | (1,577,588) | |
| ALLL, end of period | | $ | 489,535 | | | $ | 5,659,082 | | | $ | 6,148,617 | |
| | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 46,026 | | | $ | 1,917 | | | $ | 47,943 | |
Credit loss expense/ (benefit) on unfunded lending commitments | | (5,697) | | | 8,380 | | | 2,683 | |
| | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 40,329 | | | $ | 10,297 | | | $ | 50,626 | |
| Total ACL, end of period | | $ | 529,864 | | | $ | 5,669,379 | | | $ | 6,199,243 | |
| | | | | | |
| | Nine months ended September 30, 2024 |
| (in thousands) | | Commercial | | Consumer | | Total |
| ALLL, beginning of period | | $ | 616,788 | | | $ | 6,315,265 | | | $ | 6,932,053 | |
| | | | | | |
| Credit loss expense | | 3,251 | | | 1,328,691 | | | 1,331,942 | |
| Charge-offs | | (77,698) | | | (3,579,151) | | | (3,656,849) | |
| Recoveries | | 47,017 | | | 1,907,267 | | | 1,954,284 | |
| Charge-offs, net of recoveries | | $ | (30,681) | | | $ | (1,671,884) | | | $ | (1,702,565) | |
| ALLL, end of period | | $ | 589,358 | | | $ | 5,972,072 | | | $ | 6,561,430 | |
| | | | | | |
| Reserve for unfunded lending commitments, beginning of period | | $ | 55,846 | | | $ | 4,916 | | | $ | 60,762 | |
Credit loss (benefit) on unfunded lending commitments | | (12,241) | | | (2,132) | | | (14,373) | |
| | | | | | |
| Reserve for unfunded lending commitments, end of period | | $ | 43,605 | | | $ | 2,784 | | | $ | 46,389 | |
| Total ACL, end of period | | $ | 632,963 | | | $ | 5,974,856 | | | $ | 6,607,819 | |
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
The credit risk in the Company’s loan portfolios is driven by credit and collateral quality and is affected by borrower-specific and economy-wide factors. In general, there is an inverse relationship between the credit quality of loans and projections of impairment losses, so that loans with better credit quality require a lower expected loss reserve. The Company manages this risk through its underwriting, pricing strategies, credit policy standards, and servicing guidelines and practices, as well as the application of geographic and other concentration limits.
The Company estimates CECL based on prospective information as well as account-level models based on historical data. Unemployment, HPI, CRE price index and used vehicle index growth rates, along with loan level characteristics, are the key inputs used in the models for prediction of the likelihood that the borrower will default in the forecasted period (the PD) and the loss in the event of default (the LGD). GDP is also a key input used in the models for the prediction of the likelihood that a borrower will default.
The Company has determined the reasonable and supportable period to be three years, at which time the economic forecasts generally tend to revert to historical averages. The Company also utilizes qualitative adjustments to capture any additional risks that may not be captured in either the economic forecasts or in the historical data, including consideration of several factors such as the interpretation of economic trends and uncertainties, changes in the nature and volume of loan portfolios, trends in delinquency and collateral values, and concentration risk.
The Company generally uses a third-party vendor's consensus baseline macroeconomic scenario for the quantitative estimate and additional positive and negative macroeconomic scenarios to make qualitative adjustments for macroeconomic uncertainty and considers adjustments to macroeconomic inputs and outputs based on market volatility. Based on the baseline economic forecast scenario, we estimated at September 30, 2025 that the unemployment rate is expected to be approximately 4.8% at the end of 2025. The Company has adjusted the path of the weighted used vehicle index considering macroeconomic uncertainty due to tariffs and other trade policies of the U.S. and its global trading partners and an increasing unemployment rate (which is a key driver to losses). Additional downward side risks continue to exist due to uncertainties related to increasing consumer indebtedness, and restricted job growth undermining consumer spending and growth.
The Company's ACL was $6.2 billion at September 30, 2025, a decrease of $410.7 million from December 31, 2024. The decrease in the ACL was primarily driven by the sale of certain RICs and auto loans, improvement in used car prices, lower exposure in Personal unsecured loans, and rating improvement in certain loans in Commercial. The ACL for the consumer portfolio segment decreased by $328.9 million and the ACL for the commercial portfolio segment decreased by $81.8 million at September 30, 2025 compared to December 31, 2024.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Non-accrual loans by Class of Financing Receivable
The amortized cost basis of financing receivables that are non-accrual and other non-performing assets disaggregated by class of financing receivables (as well as the amount of non-accrual loans for which no related allowance is recorded) are as follows at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Non-accrual loans and other non-performing assets as of:(1) | | Non-accrual loans with no related allowance |
| (in thousands) | | September 30, 2025 | | December 31, 2024 | | September 30, 2025 | | December 31, 2024 |
| | | | | | | | |
| Non-accrual loans: | | | | | | | | |
| Commercial: | | | | | | | | |
| CRE | | $ | 201,929 | | | $ | 243,761 | | | $ | 42,515 | | | $ | 36,643 | |
| C&I | | 114,240 | | | 132,146 | | | 32,863 | | | 70,153 | |
| Multifamily | | 306,410 | | | 226,448 | | | 90,291 | | | 81,480 | |
| Other commercial | | 4,499 | | | 8,037 | | | — | | | 9 | |
| Total commercial loans | | $ | 627,078 | | | $ | 610,392 | | | $ | 165,669 | | | $ | 188,285 | |
| Consumer: | | | | | | | | |
| Residential mortgages | | 48,921 | | | 52,170 | | | 1,836 | | | 1,436 | |
| Home equity loans and lines of credit | | 56,468 | | | 70,414 | | | 11,830 | | | 12,681 | |
| RICs and auto loans | | 2,496,321 | | | 2,241,575 | | | 167,444 | | | 147,574 | |
| Personal unsecured loans | | 215 | | | 486 | | | — | | | — | |
| Other consumer | | 19,777 | | | 15,198 | | | 403 | | | 201 | |
| Total consumer loans | | $ | 2,621,702 | | | $ | 2,379,843 | | | $ | 181,513 | | | $ | 161,892 | |
| Total non-accrual loans | | $ | 3,248,780 | | | $ | 2,990,235 | | | $ | 347,182 | | | $ | 350,177 | |
| | | | | | | | |
| OREO | | 42,573 | | | 54,121 | | | — | | | — | |
| Repossessed vehicles | | 254,220 | | | 249,209 | | | — | | | — | |
| Foreclosed and other repossessed assets | | 2,252 | | | 25,182 | | | — | | | — | |
| Total OREO and other repossessed assets | | $ | 299,045 | | | $ | 328,512 | | | $ | — | | | $ | — | |
| Total non-performing assets | | $ | 3,547,825 | | | $ | 3,318,747 | | | $ | 347,182 | | | $ | 350,177 | |
|
(1) Interest income recognized on a cash basis on nonaccrual loans was $77.0 million and $211.7 million for the three months and nine months ended September 30, 2025, respectively, and $61.2 million and $178.1 million for the three months and nine months ended September 30, 2024, respectively. |
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Age Analysis of Past Due Loans
The Company generally considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date. When an account is deferred, the loan is returned to accrual status during the deferral period and accrued interest related to the loan is evaluated for collectability.
The amortized cost of past due loans and accruing loans 90 days or greater past due disaggregated by class of financing receivables is summarized as follows at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of: | | September 30, 2025 |
| (in thousands) | | 30-89
Days Past
Due | | 90
Days or Greater | | Total
Past Due | | Current | | Total
Financing
Receivables | | Amortized Cost
> 90 Days and
Accruing |
| Commercial: | | | | | | | | | | | | |
CRE (1) | | $ | 41,468 | | | $ | 154,254 | | | $ | 195,722 | | | $ | 8,544,453 | | | $ | 8,740,175 | | | $ | — | |
C&I (2) | | 48,553 | | | 26,254 | | | 74,807 | | | 7,856,971 | | | 7,931,778 | | | — | |
Multifamily (3) | | 48,018 | | | 235,626 | | | 283,644 | | | 9,645,028 | | | 9,928,672 | | | — | |
| Other commercial | | 25,807 | | | 2,653 | | | 28,460 | | | 7,922,941 | | | 7,951,401 | | | 1 | |
| Consumer: | | | | | | | | | | | | |
Residential mortgages (4) | | 78,232 | | | 52,100 | | | 130,332 | | | 5,124,785 | | | 5,255,117 | | | — | |
Home equity loans and lines of credit5) | | 27,930 | | | 46,348 | | | 74,278 | | | 1,799,808 | | | 1,874,086 | | | — | |
RICs and auto loans | | 5,897,419 | | | 597,768 | | | 6,495,187 | | | 36,480,644 | | | 42,975,831 | | | — | |
Personal unsecured loans(6) | | 34,307 | | | 19,103 | | | 53,410 | | | 1,385,395 | | | 1,438,805 | | | 8,362 | |
| Other consumer | | 990 | | | 125 | | | 1,115 | | | 21,023 | | | 22,138 | | | — | |
| Total | | $ | 6,202,724 | | | $ | 1,134,231 | | | $ | 7,336,955 | | | $ | 78,781,048 | | | $ | 86,118,003 | | | $ | 8,363 | |
(1) CRE loans include $268.4 million of LHFS at September 30, 2025.
(2) C&I loans include $146.1 million of LHFS at September 30, 2025.
(3) Multifamily loans include $7.0 million of LHFS at September 30, 2025.
(4) Residential mortgages include $1.1 billion of LHFS at September 30, 2025.
(5) Home equity loans and lines of credit include $16.8 million of LHFS at September 30, 2025.
(6) Personal unsecured loans include $9.0 million of LHFS at September 30, 2025.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of: | | December 31, 2024 |
| (in thousands) | | 30-89
Days Past
Due | | 90
Days or Greater | | Total
Past Due | | Current | | Total
Financing
Receivables | | Recorded
Investment
> 90 Days and Accruing |
| Commercial: | | | | | | | | | | | | |
| CRE | | $ | 14,113 | | | $ | 107,189 | | | $ | 121,302 | | | $ | 8,503,498 | | | $ | 8,624,800 | | | $ | — | |
C&I (1) | | 54,966 | | | 30,007 | | | 84,973 | | | 8,497,612 | | | 8,582,585 | | | — | |
| Multifamily | | 55,813 | | | 140,025 | | | 195,838 | | | 9,644,854 | | | 9,840,692 | | | — | |
| Other commercial | | 53,345 | | | 3,289 | | | 56,634 | | | 7,552,299 | | | 7,608,933 | | | — | |
| Consumer: | | | | | | | | | | | | |
Residential mortgages (2) | | 71,252 | | | 48,511 | | | 119,763 | | | 5,433,696 | | | 5,553,459 | | | — | |
| Home equity loans and lines of credit | | 34,698 | | | 60,302 | | | 95,000 | | | 1,996,365 | | | 2,091,365 | | | — | |
| RICs and auto loans | | 5,377,426 | | | 591,437 | | | 5,968,863 | | | 38,616,855 | | | 44,585,718 | | | — | |
| Personal unsecured loans | | 41,673 | | | 22,296 | | | 63,969 | | | 1,651,758 | | | 1,715,727 | | | 8,796 | |
| Other consumer | | 1,078 | | | 146 | | | 1,224 | | | 33,949 | | | 35,173 | | | — | |
| Total | | $ | 5,704,364 | | | $ | 1,003,202 | | | $ | 6,707,566 | | | $ | 81,930,886 | | | $ | 88,638,452 | | | $ | 8,796 | |
(1)C&I loans included $196.2 million of LHFS at December 31, 2024.
(2) Residential mortgages included $1.1 billion of LHFS at December 31, 2024.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Commercial Lending Asset Quality Indicators
The Company's Risk Department performs a credit analysis and classifies certain loans over an internal threshold based on the commercial lending classifications described below:
PASS. Asset is well-protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value less costs to acquire and sell any underlying collateral in a timely manner.
SPECIAL MENTION. Asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for an asset at some future date. Special mention assets are not adversely classified.
SUBSTANDARD. Asset is inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. A well-defined weakness or weaknesses exist that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected.
DOUBTFUL. Exhibits the inherent weaknesses of a substandard credit. Additional characteristics exist that make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. Possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the credit, an estimated loss cannot yet be determined.
LOSS. Credit is considered uncollectible and of such little value that it does not warrant consideration as an active asset. There may be some recovery or salvage value, but there is doubt as to whether, how much or when the recovery would occur.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Each commercial loan is evaluated to determine its risk rating at least annually. The indicators represent the rating for loans as of the date presented based on the most recent assessment performed. Amortized cost basis of loans in the commercial portfolio segment by credit quality indicator, class of financing receivable, and year of origination are summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2025 | | Commercial Loan Portfolio (2) |
| (dollars in thousands) | | Amortized Cost by Origination Year |
| Regulatory Rating: | | 2025(1) | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Total (3) | | |
| CRE | | | | | | | | | | | | | | | | |
| Pass | | $ | 555,104 | | | $ | 797,161 | | | $ | 1,464,065 | | | $ | 2,061,738 | | | $ | 576,824 | | | $ | 1,132,883 | | | $ | 6,587,775 | | | |
| Special mention | | — | | | 23,903 | | | 69,819 | | | 573,903 | | | 352,796 | | | 320,623 | | | 1,341,044 | | | |
| Substandard | | 4,758 | | | 146 | | | 7,739 | | | 375,690 | | | 98,636 | | | 291,899 | | | 778,868 | | | |
| Doubtful | | — | | | — | | | — | | | — | | | — | | | 32,488 | | | 32,488 | | | |
| | | | | | | | | | | | | | | | |
| Total CRE | | $ | 559,862 | | | $ | 821,210 | | | $ | 1,541,623 | | | $ | 3,011,331 | | | $ | 1,028,256 | | | $ | 1,777,893 | | | $ | 8,740,175 | | | |
| Current period gross write-offs - CRE | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 46,374 | | | $ | 46,374 | | | |
| C&I | | | | | | | | | | | | | | | | |
| Pass | | $ | 536,122 | | | $ | 910,224 | | | $ | 613,075 | | | $ | 1,052,925 | | | $ | 612,154 | | | $ | 2,487,449 | | | $ | 6,211,949 | | | |
| Special mention | | 4,546 | | | 9,771 | | | 32,762 | | | 98,540 | | | 104,623 | | | 165,428 | | | 415,670 | | | |
| Substandard | | 15,967 | | | 25,755 | | | 36,210 | | | 109,465 | | | 60,277 | | | 188,906 | | | 436,580 | | | |
| | | | | | | | | | | | | | | | |
N/A(4) | | 290,514 | | | 287,732 | | | 136,805 | | | 105,941 | | | 38,242 | | | 8,345 | | | 867,579 | | | |
| Total C&I | | $ | 847,149 | | | $ | 1,233,482 | | | $ | 818,852 | | | $ | 1,366,871 | | | $ | 815,296 | | | $ | 2,850,128 | | | $ | 7,931,778 | | | |
| Current period gross write-offs - C&I | | $ | 1,266 | | | $ | 11,845 | | | $ | 9,691 | | | $ | 11,632 | | | $ | 3,983 | | | $ | 13,254 | | | $ | 51,671 | | | |
| Multifamily | | | | | | | | | | | | | | | | |
| Pass | | $ | 501,270 | | | $ | 87,416 | | | $ | 1,020,017 | | | $ | 2,831,113 | | | $ | 1,303,484 | | | $ | 2,546,572 | | | $ | 8,289,872 | | | |
| Special mention | | — | | | — | | | 100,490 | | | 196,658 | | | 89,496 | | | 109,949 | | | 496,593 | | | |
| Substandard | | — | | | — | | | 86,940 | | | 445,416 | | | 227,546 | | | 382,305 | | | 1,142,207 | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total multifamily | | $ | 501,270 | | | $ | 87,416 | | | $ | 1,207,447 | | | $ | 3,473,187 | | | $ | 1,620,526 | | | $ | 3,038,826 | | | $ | 9,928,672 | | | |
| Current period gross write-offs - Multifamily | | $ | — | | | $ | — | | | $ | — | | | $ | 2,545 | | | $ | 1,247 | | | $ | 9,849 | | | $ | 13,641 | | | |
| Remaining commercial | | | | | | | | | | | | | | | | |
| Pass | | $ | 3,446,971 | | | $ | 1,615,321 | | | $ | 917,828 | | | $ | 616,538 | | | $ | 369,585 | | | $ | 980,660 | | | $ | 7,946,903 | | | |
| | | | | | | | | | | | | | | | |
| Substandard | | — | | | 1,191 | | | 647 | | | 1,062 | | | 730 | | | 868 | | | 4,498 | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total remaining commercial | | $ | 3,446,971 | | | $ | 1,616,512 | | | $ | 918,475 | | | $ | 617,600 | | | $ | 370,315 | | | $ | 981,528 | | | $ | 7,951,401 | | | |
| Current period gross write-offs - Remaining commercial | | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 6,124 | | | $ | 6,124 | | | |
| Total commercial loans | | | | | | | | | | | | | | | | |
| Pass | | $ | 5,039,467 | | | $ | 3,410,122 | | | $ | 4,014,985 | | | $ | 6,562,314 | | | $ | 2,862,047 | | | $ | 7,147,564 | | | $ | 29,036,499 | | | |
| Special mention | | 4,546 | | | 33,674 | | | 203,071 | | | 869,101 | | | 546,915 | | | 596,000 | | | 2,253,307 | | | |
| Substandard | | 20,725 | | | 27,092 | | | 131,536 | | | 931,633 | | | 387,189 | | | 863,978 | | | 2,362,153 | | | |
| Doubtful | | — | | | — | | | — | | | — | | | — | | | 32,488 | | | 32,488 | | | |
N/A(4) | | 290,514 | | | 287,732 | | | 136,805 | | | 105,941 | | | 38,242 | | | 8,345 | | | 867,579 | | | |
| Total commercial loans | | $ | 5,355,252 | | | $ | 3,758,620 | | | $ | 4,486,397 | | | $ | 8,468,989 | | | $ | 3,834,393 | | | $ | 8,648,375 | | | $ | 34,552,026 | | | |
| Current period gross write-offs - Total commercial | | $ | 1,266 | | | $ | 11,845 | | | $ | 9,691 | | | $ | 14,177 | | | $ | 5,230 | | | $ | 75,601 | | | $ | 117,810 | | | |
(1)Loans originated during the nine months ended September 30, 2025.
(2)Includes $421.5 million of LHFS at September 30, 2025.
(3)Includes $5.3 million of revolving loans converted to term loans.
(4)Not subject to internal risk rating process
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | Commercial Loan Portfolio (2) |
| (dollars in thousands) | | Amortized Cost by Origination Year |
| Regulatory Rating: | | 2024(1) | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total (3) | | |
| CRE | | | | | | | | | | | | | | | | |
| Pass | | $ | 338,140 | | | $ | 824,121 | | | $ | 2,829,501 | | | $ | 1,098,765 | | | $ | 740,463 | | | $ | 1,387,777 | | | $ | 7,218,767 | | | |
| Special mention | | 18,961 | | | 32,300 | | | 276,613 | | | 311,328 | | | 22,486 | | | 98,887 | | | 760,575 | | | |
| Substandard | | 29,011 | | | 10,662 | | | 243,510 | | | 49,001 | | | 65,937 | | | 198,848 | | | 596,969 | | | |
| Doubtful | | — | | | — | | | — | | | — | | | — | | | 48,489 | | | 48,489 | | | |
| | | | | | | | | | | | | | | | |
| Total CRE | | $ | 386,112 | | | $ | 867,083 | | | $ | 3,349,624 | | | $ | 1,459,094 | | | $ | 828,886 | | | $ | 1,734,001 | | | $ | 8,624,800 | | | |
| Current period gross write-offs - CRE | | $ | 3,184 | | | $ | — | | | $ | — | | | $ | 19,709 | | | $ | — | | | $ | 681 | | | $ | 23,574 | | | |
| C&I | | | | | | | | | | | | | | | | |
| Pass | | $ | 1,196,845 | | | $ | 675,221 | | | $ | 1,291,707 | | | $ | 808,286 | | | $ | 412,971 | | | $ | 2,501,415 | | | $ | 6,886,445 | | | |
| Special mention | | 15,888 | | | 18,633 | | | 198,737 | | | 70,428 | | | 10,973 | | | 98,450 | | | 413,109 | | | |
| Substandard | | — | | | 125,253 | | | 33,951 | | | 73,032 | | | 25,830 | | | 211,237 | | | 469,303 | | | |
| | | | | | | | | | | | | | | | |
N/A(4) | | 364,947 | | | 190,867 | | | 163,191 | | | 67,654 | | | 17,237 | | | 9,832 | | | 813,728 | | | |
| Total C&I | | $ | 1,577,680 | | | $ | 1,009,974 | | | $ | 1,687,586 | | | $ | 1,019,400 | | | $ | 467,011 | | | $ | 2,820,934 | | | $ | 8,582,585 | | | |
| Current period gross write-offs - C&I | | $ | 2,018 | | | $ | 13,647 | | | $ | 21,267 | | | $ | 10,256 | | | $ | 5,040 | | | $ | 6,956 | | | $ | 59,184 | | | |
| Multifamily | | | | | | | | | | | | | | | | |
| Pass | | $ | 57,650 | | | $ | 1,004,387 | | | $ | 2,690,142 | | | $ | 1,266,945 | | | $ | 823,374 | | | $ | 2,107,406 | | | $ | 7,949,904 | | | |
| Special mention | | — | | | 164,750 | | | 197,385 | | | 157,652 | | | 28,969 | | | 101,130 | | | 649,886 | | | |
| Substandard | | — | | | 86,516 | | | 490,480 | | | 212,479 | | | 90,304 | | | 361,123 | | | 1,240,902 | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total multifamily | | $ | 57,650 | | | $ | 1,255,653 | | | $ | 3,378,007 | | | $ | 1,637,076 | | | $ | 942,647 | | | $ | 2,569,659 | | | $ | 9,840,692 | | | |
| Current period gross write-offs - Multifamily | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,100 | | | $ | 14,100 | | | |
| Remaining commercial | | | | | | | | | | | | | | | | |
| Pass | | $ | 3,700,349 | | | $ | 1,230,676 | | | $ | 1,019,522 | | | $ | 518,369 | | | $ | 330,432 | | | $ | 797,060 | | | $ | 7,596,408 | | | |
| Special mention | | — | | | 710 | | | 596 | | | 2,667 | | | — | | | 514 | | | 4,487 | | | |
| Substandard | | — | | | 1,151 | | | 2,141 | | | 1,242 | | | 303 | | | 3,201 | | | 8,038 | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total remaining commercial | | $ | 3,700,349 | | | $ | 1,232,537 | | | $ | 1,022,259 | | | $ | 522,278 | | | $ | 330,735 | | | $ | 800,775 | | | $ | 7,608,933 | | | |
| Current period gross write-offs - Remaining commercial | | $ | — | | | $ | 267 | | | $ | 13 | | | $ | 20 | | | $ | — | | | $ | 10,874 | | | $ | 11,174 | | | |
| Total commercial loans | | | | | | | | | | | | | | | | |
| Pass | | $ | 5,292,984 | | | $ | 3,734,405 | | | $ | 7,830,872 | | | $ | 3,692,365 | | | $ | 2,307,240 | | | $ | 6,793,658 | | | $ | 29,651,524 | | | |
| Special mention | | 34,849 | | | 216,393 | | | 673,331 | | | 542,075 | | | 62,428 | | | 298,981 | | | 1,828,057 | | | |
| Substandard | | 29,011 | | | 223,582 | | | 770,082 | | | 335,754 | | | 182,374 | | | 774,409 | | | 2,315,212 | | | |
| Doubtful | | — | | | — | | | — | | | — | | | — | | | 48,489 | | | 48,489 | | | |
N/A(4) | | 364,947 | | | 190,867 | | | 163,191 | | | 67,654 | | | 17,237 | | | 9,832 | | | 813,728 | | | |
| Total commercial loans | | $ | 5,721,791 | | | $ | 4,365,247 | | | $ | 9,437,476 | | | $ | 4,637,848 | | | $ | 2,569,279 | | | $ | 7,925,369 | | | $ | 34,657,010 | | | |
| Current period gross write-offs - Total commercial | | $ | 5,202 | | | $ | 13,914 | | | $ | 21,280 | | | $ | 29,985 | | | $ | 5,040 | | | $ | 32,611 | | | $ | 108,032 | | | |
(1)Loans originated during the year ended December 31, 2024.
(2)Includes $196.2 million of LHFS at December 31, 2024.
(3)Includes $8.9 million of revolving loans converted to term loans.
(4)Not subject to internal risk rating process
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Consumer Lending Asset Quality Indicators-Credit Score
Consumer financing receivables for which either an internal or external credit score is a core component of the allowance model are summarized by credit score determined at origination as follows:
RICs and Auto Loans
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of September 30, 2025 | | RICs and auto loans |
| (dollars in thousands) | | Amortized Cost by Origination Year (3) |
| Credit Score Range | | 2025(1) | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Total | Percent |
No FICO (2) | | $ | 1,016,171 | | | $ | 922,009 | | | $ | 394,728 | | | $ | 281,363 | | | $ | 112,005 | | | $ | 55,339 | | | $ | 2,781,615 | | 6.5 | % |
| <600 | | 4,924,730 | | | 4,705,639 | | | 2,730,643 | | | 1,836,066 | | | 801,835 | | | 412,609 | | | 15,411,522 | | 35.8 | % |
| 600-639 | | 2,531,300 | | | 2,701,284 | | | 1,564,547 | | | 1,045,971 | | | 384,059 | | | 137,934 | | | 8,365,095 | | 19.5 | % |
| 640-679 | | 1,539,015 | | | 1,913,035 | | | 974,157 | | | 652,367 | | | 219,575 | | | 72,022 | | | 5,370,171 | | 12.5 | % |
| 680-719 | | 888,882 | | | 1,285,753 | | | 724,071 | | | 453,692 | | | 209,638 | | | 97,216 | | | 3,659,252 | | 8.5 | % |
| 720-759 | | 471,567 | | | 820,347 | | | 466,949 | | | 339,857 | | | 202,102 | | | 88,853 | | | 2,389,675 | | 5.6 | % |
>=760 | | 948,670 | | | 1,862,349 | | | 726,283 | | | 727,384 | | | 539,154 | | | 194,661 | | | 4,998,501 | | 11.6 | % |
| Total | | $ | 12,320,335 | | | $ | 14,210,416 | | | $ | 7,581,378 | | | $ | 5,336,700 | | | $ | 2,468,368 | | | $ | 1,058,634 | | | $ | 42,975,831 | | 100.0 | % |
| Current period gross write-offs - RICs and auto loans | | $ | 182,525 | | | $ | 1,201,911 | | | $ | 890,310 | | | $ | 612,815 | | | $ | 213,605 | | | $ | 132,658 | | | $ | 3,233,824 | | |
(1) Loans originated during the nine months ended September 30, 2025.
(2) Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.
(3) Excludes LHFS.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2024 | | RICs and auto loans |
| (dollars in thousands) | | Amortized Cost by Origination Year (3) |
| Credit Score Range | | 2024(1) | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total | Percent |
No FICO (2) | | $ | 1,405,385 | | | $ | 619,855 | | | $ | 439,495 | | | $ | 203,482 | | | $ | 75,220 | | | $ | 59,112 | | | $ | 2,802,549 | | 6.3 | % |
| <600 | | 6,226,932 | | | 3,802,976 | | | 2,684,114 | | | 1,300,940 | | | 430,387 | | | 467,173 | | | 14,912,522 | | 33.4 | % |
| 600-639 | | 3,666,764 | | | 2,210,937 | | | 1,570,957 | | | 580,838 | | | 156,518 | | | 156,414 | | | 8,342,428 | | 18.7 | % |
| 640-679 | | 2,584,001 | | | 1,381,664 | | | 991,775 | | | 327,850 | | | 88,443 | | | 84,671 | | | 5,458,404 | | 12.2 | % |
| 680-719 | | 1,876,930 | | | 1,021,254 | | | 692,491 | | | 322,204 | | | 131,317 | | | 72,779 | | | 4,116,975 | | 9.2 | % |
| 720-759 | | 1,196,671 | | | 664,152 | | | 524,294 | | | 321,172 | | | 133,447 | | | 49,809 | | | 2,889,545 | | 6.5 | % |
| >=760 | | 2,538,495 | | | 1,042,245 | | | 1,155,983 | | | 910,962 | | | 335,186 | | | 80,424 | | | 6,063,295 | | 13.7 | % |
| Total | | $ | 19,495,178 | | | $ | 10,743,083 | | | $ | 8,059,109 | | | $ | 3,967,448 | | | $ | 1,350,518 | | | $ | 970,382 | | | $ | 44,585,718 | | 100.0 | % |
| Current period gross write-offs - RICs and auto loans | | $ | 527,058 | | | $ | 1,545,761 | | | $ | 1,295,970 | | | $ | 618,628 | | | $ | 395,766 | | | $ | 10,081 | | | $ | 4,393,264 | | |
(1) Loans originated during the year ended December 31, 2024.
(2) Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.
(3) Excludes LHFS.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Personal Unsecured Loans
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
As of September 30, 2025 | | Personal Unsecured loans |
| (dollars in thousands) | | Amortized Cost by Origination Year(3) |
| Credit Score Range | | 2025(1) | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Total | Percent |
No FICO (2) | | $ | 16,448 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 117 | | | $ | 16,565 | | 1.2 | % |
| <600 | | 4 | | | 30 | | | 63 | | | 48 | | | 22 | | | 2,730 | | | 2,897 | | 0.2 | % |
| 600-639 | | 410 | | | 836 | | | 3,058 | | | 3,750 | | | 432 | | | 4,743 | | | 13,229 | | 0.9 | % |
| 640-679 | | 2,306 | | | 8,877 | | | 31,560 | | | 21,247 | | | 3,437 | | | 26,367 | | | 93,794 | | 6.6 | % |
| 680-719 | | 51,701 | | | 94,410 | | | 112,520 | | | 47,649 | | | 9,084 | | | 55,393 | | | 370,757 | | 25.9 | % |
| 720-759 | | 78,844 | | | 135,517 | | | 120,607 | | | 57,367 | | | 11,226 | | | 55,872 | | | 459,433 | | 32.1 | % |
>=760 | | 95,546 | | | 151,136 | | | 103,268 | | | 51,295 | | | 12,722 | | | 59,213 | | | 473,180 | | 33.1 | % |
| Total | | $ | 245,259 | | | $ | 390,806 | | | $ | 371,076 | | | $ | 181,356 | | | $ | 36,923 | | | $ | 204,435 | | | $ | 1,429,855 | | 100.0 | % |
| Current period gross write-offs - personal unsecured loans | | $ | 2,245 | | | $ | 26,448 | | | $ | 53,130 | | | $ | 24,405 | | | $ | 4,456 | | | $ | 12,143 | | | $ | 122,827 | | |
(1) Loans originated during the nine months ended September 30, 2025.
(2) Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.
(3) Excludes LHFS.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
As of December 31, 2024 | | Personal Unsecured loans |
| (dollars in thousands) | | Amortized Cost by Origination Year(3) |
| Credit Score Range | | 2024(1) | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total | Percent |
No FICO (2) | | $ | 12,247 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 44 | | | $ | 12,291 | | 0.7 | % |
| <600 | | 41 | | | 69 | | | 55 | | | 70 | | | 28 | | | 2,831 | | | 3,094 | | 0.2 | % |
| 600-639 | | 697 | | | 4,621 | | | 6,309 | | | 721 | | | 202 | | | 5,208 | | | 17,758 | | 1.0 | % |
| 640-679 | | 10,606 | | | 50,854 | | | 35,095 | | | 5,764 | | | 1,971 | | | 28,655 | | | 132,945 | | 7.7 | % |
| 680-719 | | 129,635 | | | 175,986 | | | 77,455 | | | 14,800 | | | 5,161 | | | 60,513 | | | 463,550 | | 27.0 | % |
| 720-759 | | 191,798 | | | 180,368 | | | 90,523 | | | 18,019 | | | 4,944 | | | 60,515 | | | 546,167 | | 31.8 | % |
| >=760 | | 220,123 | | | 154,570 | | | 75,909 | | | 19,481 | | | 5,433 | | | 64,406 | | | 539,922 | | 31.6 | % |
| Total | | $ | 565,147 | | | $ | 566,468 | | | $ | 285,346 | | | $ | 58,855 | | | $ | 17,739 | | | $ | 222,172 | | | $ | 1,715,727 | | 100.0 | % |
| Current period gross write-offs - personal unsecured loans | | $ | 7,457 | | | $ | 129,396 | | | $ | 146,710 | | | $ | 39,248 | | | $ | 2,229 | | | $ | 7,555 | | | $ | 332,595 | | |
(1) Loans originated during the year ended December 31, 2024.
(2) Consists primarily of loans for which credit scores are not available or are not considered in the ALLL model.
(3) Excludes LHFS.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Consumer Lending Asset Quality Indicators-FICO and LTV Ratio
For both residential and home equity loans, loss severity assumptions are incorporated in the loan and lease loss reserve models to estimate loan balances that will ultimately charge off. These assumptions are based on recent loss experience within various current LTV bands within these portfolios. LTVs are refreshed quarterly by applying Federal Housing Finance Agency Home price index changes at a state-by-state level to the last known appraised value of the property to estimate the current LTV. The Company's CECL loss calculation incorporates the refreshed LTV information to update the distribution of defaulted loans by LTV as well as the associated LGD for each LTV band. Reappraisals on a recurring basis at the individual property level are not considered cost-effective or necessary; however, reappraisals are performed on certain higher risk accounts to support line management activities, default servicing decisions, or when other situations arise for which, the Company believes the additional expense is warranted.
FICO scores are refreshed quarterly, where possible. The indicators disclosed represent the credit scores for loans as of the date presented based on the most recent assessment performed.
Residential mortgage and home equity financing receivables by LTV and FICO range are summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of September 30, 2025 | | Amortized Cost by Origination Year (4) | | |
| (dollars in thousands) | | | | |
| Residential mortgages | | 2025(1) | 2024(1) | 2023(1) | 2022 | 2021 | Prior | | Grand Total | | Revolving Loans |
LTV ratios (3) | | | | | | | | | | | |
No LTV available (2) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,638 | | | $ | 1,638 | | | $ | — | |
| <= 70% | | — | | — | | — | | 211,183 | | 985,797 | | 2,897,611 | | | 4,094,591 | | | — | |
| 70.01% - 110% | | — | | — | | — | | 35,975 | | 230 | | 1,751 | | | 37,956 | | | — | |
| Greater than 110% | | — | | — | | — | | — | | — | | 351 | | | 351 | | | — | |
| Total residential mortgages | | $ | — | | $ | — | | $ | — | | $ | 247,158 | | $ | 986,027 | | $ | 2,901,351 | | | $ | 4,134,536 | | | $ | — | |
| | | | | | | | | | | |
FICO scores | | | | | | | | | | | |
| No FICO score available | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,212 | | | $ | 2,212 | | | $ | — | |
| <600 | | — | | — | | — | | 13,018 | | 22,844 | | 150,704 | | | 186,566 | | | — | |
| 600-679 | | — | | — | | — | | 20,341 | | 41,960 | | 217,889 | | | 280,190 | | | — | |
| 680-759 | | — | | — | | — | | 64,111 | | 206,585 | | 702,222 | | | 972,918 | | | — | |
| >=760 | | — | | — | | — | | 149,688 | | 714,638 | | 1,828,324 | | | 2,692,650 | | | — | |
| Total residential mortgages | | $ | — | | $ | — | | $ | — | | $ | 247,158 | | $ | 986,027 | | $ | 2,901,351 | | | $ | 4,134,536 | | | $ | — | |
| Current period gross write-offs - residential mortgages | | $ | — | | $ | — | | $ | — | | $ | 25 | | $ | — | | $ | 14 | | | $ | 39 | | | |
| | | | | | | | | | | |
| Home equity | | | | | | | | | | | |
LTV ratios | | | | | | | | | | | |
No LTV available (2) | | $ | — | | $ | — | | $ | — | | $ | 674 | | $ | 2,612 | | $ | 45,481 | | | $ | 48,767 | | | $ | 46,623 | |
| <= 70% | | — | | — | | — | | 37,104 | | 147,629 | | 1,616,061 | | | 1,800,794 | | | 1,736,349 | |
| 70.01% - 110% | | — | | — | | — | | 3,142 | | 477 | | 2,551 | | | 6,170 | | | 5,201 | |
| Greater than 110% | | — | | — | | — | | 487 | | 608 | | 462 | | | 1,557 | | | 1,493 | |
| Total home equity | | $ | — | | $ | — | | $ | — | | $ | 41,407 | | $ | 151,326 | | $ | 1,664,555 | | | $ | 1,857,288 | | | $ | 1,789,666 | |
| | | | | | | | | | | |
FICO scores | | | | | | | | | | | |
| No FICO score available | | $ | — | | $ | — | | $ | — | | $ | 618 | | $ | 2,257 | | $ | 44,014 | | | $ | 46,889 | | | $ | 44,747 | |
| <600 | | — | | — | | — | | 1,312 | | 5,575 | | 123,370 | | | 130,257 | | | 112,161 | |
| 600-679 | | — | | — | | — | | 2,178 | | 11,428 | | 201,606 | | | 215,212 | | | 199,715 | |
| 680-759 | | — | | — | | — | | 14,669 | | 47,861 | | 512,887 | | | 575,417 | | | 562,079 | |
| >=760 | | — | | — | | — | | 22,630 | | 84,205 | | 782,678 | | | 889,513 | | | 870,964 | |
| Total home equity | | $ | — | | $ | — | | $ | — | | $ | 41,407 | | $ | 151,326 | | $ | 1,664,555 | | | $ | 1,857,288 | | | $ | 1,789,666 | |
| Current period gross write-offs - home equity | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,573 | | | $ | 1,573 | | | |
(1) The Company ceased origination of new residential mortgage and home equity loans in 2022.
(2) Balances in the "No LTV available" or "No FICO score available" ranges primarily represent loans serviced by others, in run-off portfolios or for which a current LTV or FICO score is unavailable.
(3) The ALLL model considers LTV for financing receivables in first lien position and CLTV for financing receivables in second lien position for the Company.
(4) Excludes LHFS.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2024 | | Amortized Cost by Origination Year (4) | | |
| (dollars in thousands) | | | | |
| Residential mortgages | | 2024(1) | 2023(1) | 2022 | 2021 | 2020 | Prior | | Grand Total | | Revolving Loans |
LTV ratios (3) | | | | | | | | | | | |
No LTV available (2) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,532 | | | $ | 2,532 | | | $ | — | |
| <= 70% | | — | | — | | 205,291 | | 1,018,821 | | 825,279 | | 2,294,350 | | | 4,343,741 | | | — | |
| 70.01% - 110% | | — | | — | | 52,481 | | 14,558 | | — | | 2,073 | | | 69,112 | | | — | |
| Greater than 110% | | — | | — | | — | | — | | — | | 362 | | | 362 | | | — | |
| Total residential mortgages | | $ | — | | $ | — | | $ | 257,772 | | $ | 1,033,379 | | $ | 825,279 | | $ | 2,299,317 | | | $ | 4,415,747 | | | $ | — | |
| | | | | | | | | | | |
FICO scores | | | | | | | | | | | |
| No FICO score available | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,633 | | | $ | 2,633 | | | $ | — | |
| <600 | | — | | — | | 13,735 | | 20,510 | | 15,011 | | 134,634 | | | 183,890 | | | — | |
| 600-679 | | — | | — | | 18,057 | | 45,160 | | 33,077 | | 201,710 | | | 298,004 | | | — | |
| 680-759 | | — | | — | | 69,337 | | 233,824 | | 181,819 | | 609,774 | | | 1,094,754 | | | — | |
| >=760 | | — | | — | | 156,643 | | 733,885 | | 595,372 | | 1,350,566 | | | 2,836,466 | | | — | |
| Total residential mortgages | | $ | — | | $ | — | | $ | 257,772 | | $ | 1,033,379 | | $ | 825,279 | | $ | 2,299,317 | | | $ | 4,415,747 | | | $ | — | |
| Current period gross write-offs - residential mortgages | | $ | — | | $ | — | | $ | 26 | | $ | 63 | | $ | 17 | | $ | 47 | | | $ | 153 | | | |
| | | | | | | | | | | |
| Home equity | | | | | | | | | | | |
LTV ratios | | | | | | | | | | | |
No LTV available (2) | | $ | — | | $ | — | | $ | 1,636 | | $ | 5,278 | | $ | 4,648 | | $ | 49,780 | | | $ | 61,342 | | | $ | 40,996 | |
| <= 70% | | — | | — | | 39,288 | | 152,644 | | 161,525 | | 1,665,349 | | | 2,018,806 | | | 1,946,324 | |
| 70.01% - 110% | | — | | — | | 3,741 | | 1,474 | | — | | 4,324 | | | 9,539 | | | 8,412 | |
| Greater than 110% | | — | | — | | 690 | | 545 | | — | | 443 | | | 1,678 | | | 1,678 | |
| Total home equity | | $ | — | | $ | — | | $ | 45,355 | | $ | 159,941 | | $ | 166,173 | | $ | 1,719,896 | | | $ | 2,091,365 | | | $ | 1,997,410 | |
| | | | | | | | | | | |
FICO scores | | | | | | | | | | | |
| No FICO score available | | $ | — | | $ | — | | $ | 678 | | $ | 2,392 | | $ | 2,485 | | $ | 46,861 | | | $ | 52,416 | | | $ | 32,071 | |
| <600 | | — | | — | | 928 | | 4,302 | | 6,270 | | 130,273 | | | 141,773 | | | 122,068 | |
| 600-679 | | — | | — | | 3,828 | | 10,849 | | 8,516 | | 209,631 | | | 232,824 | | | 216,096 | |
| 680-759 | | — | | — | | 15,820 | | 52,248 | | 54,234 | | 533,004 | | | 655,306 | | | 639,403 | |
| >=760 | | — | | — | | 24,101 | | 90,150 | | 94,668 | | 800,127 | | | 1,009,046 | | | 987,772 | |
| Total home equity | | $ | — | | $ | — | | $ | 45,355 | | $ | 159,941 | | $ | 166,173 | | $ | 1,719,896 | | | $ | 2,091,365 | | | $ | 1,997,410 | |
| Current period gross write-offs - home equity | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 544 | | $ | 3,198 | | | $ | 3,742 | | | |
(1) The Company ceased origination of new residential mortgage and home equity loans in 2022.
(2) Balances in the "No LTV available" or "No FICO score available" ranges primarily represent loans serviced by others, in run-off portfolios or for which a current LTV or FICO score is unavailable.
(3) The ALLL model considers LTV for financing receivables in first lien position and CLTV for financing receivables in second lien position for the Company.
(4) Excludes LHFS.
During the nine months ended September 30, 2025, the Company reported $0.8 million in gross charge-offs related to other consumer portfolios.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Loan Modifications
Occasionally the Company modifies loans to customers in financial difficulty by providing term extensions, payment deferrals, and interest rate reductions. When a loan is modified, the related unamortized net fees and costs and any prepayment penalties are carried forward and any fees received, and direct loan origination costs associated with the refinancing or restructuring, are deferred. Additionally, the EIR is recalculated based upon the amortized cost basis of the modified loan and its revised contractual cash flows.
All of the Company’s commercial loan modifications are based on the circumstances of the individual customer, including specific customers' complete relationship with the Company. Loan terms are modified to meet each borrower’s specific circumstances at a point in time and may allow for modifications such as term extensions, covenant waivers, payment holidays and interest rate reductions. Commercial loan modifications are generally restructured to allow for an upgraded risk rating and return to accrual status after a sustained period of payment performance has been achieved (typically 12 months for monthly payment schedules).
The primary modification program for the Company’s residential mortgage and home equity portfolios is a proprietary program designed to keep customers in their homes and, when appropriate, prevent them from entering into foreclosure. The program is available to all customers facing a financial hardship regardless of their delinquency status. The main goal of the modification program is to review the customer’s entire financial condition to ensure that the proposed modified payment solution is affordable according to a specific DTI ratio range. The main modification benefits of the program allow for term extensions, interest rate reductions, and/or deferment of principal. The Company reviews each customer on a case-by-case basis to determine which benefit or combination of benefits will be offered to achieve the target DTI range.
For RICs and auto loans, the Company at times offers deferrals under which the consumer is allowed to defer a maximum of three payments per event to the end of the loan. We limit the frequency of each new deferral that may be granted to one deferral after completion of at least eight payments from origination and eight payments between each extension. The maximum number of months extended for the life of the loan for all automobile RICs is eight for non-natural disaster extensions and twelve for natural disaster extensions. Some marine and RV contracts also have a maximum of twelve months' extension to reflect their longer terms. Additionally, we generally limit the granting of deferrals on new accounts until a requisite number of payments has been received. During the deferral period, we continue to accrue and collect interest on the loan in accordance with the terms of the deferral agreement. Some auto loan modifications include a reduction of the interest rate and may include an extension of term to eligible borrowers at risk of default and repossession of the financed vehicle.
When estimating the ACL, the Company uses a statistical methodology based on an expected credit loss approach that focuses on forecasting the expected credit loss components (i.e., PD, payoff, LGD and EAD) on a loan level basis to estimate the expected future lifetime losses. This methodology generally does not change when loans are modified. However, the Company monitors credit quality indicators and delinquency, and adjusts the allowance as those factors change. The Company generally uses a DCF approach for large impaired commercial loans. For all collateral-dependent loans, the Company measures the ACL as the difference between the asset’s amortized cost basis and the fair value of the underlying collateral as of the reporting date, adjusted for expected costs to sell. Refer to Note 1 for more information on the ACL.
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
The following table shows the amortized cost basis at the end of the reporting period for loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification granted. Short-term modifications (three months or less) are not included in these tables.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost |
| Three months ended | | Three months ended |
| September 30, 2025 | | September 30, 2024 |
| (dollars in thousands): | Payment Deferral Only | | All Other Modifications | | Total | | % of Total Class of Financing Receivable | | Payment Deferral Only | | All Other Modifications | | Total | | % of Total Class of Financing Receivable |
| Commercial: | | | | | | | | | | | | | | | |
| CRE | $ | 277,961 | | | $ | 54,217 | | | $ | 332,178 | | | 3.80 | % | | $ | 112,108 | | | $ | 66,090 | | | $ | 178,198 | | | 2.02 | % |
| C&I | 16,339 | | | 11,051 | | | 27,390 | | | 0.35 | % | | 5,838 | | | 13,141 | | | 18,979 | | | 0.19 | % |
| Multifamily | 117,028 | | | 67,615 | | | 184,643 | | | 1.86 | % | | 99,439 | | | 75,325 | | | 174,764 | | | 1.75 | % |
| | | | | | | | | | | | | | | |
| Consumer: | | | | | | | | | | | | | | | |
| Residential mortgages | — | | | 1,245 | | | 1,245 | | | 0.02 | % | | — | | | 2,533 | | | 2,533 | | | 0.06 | % |
| Home equity loans and lines of credit | — | | | 943 | | | 943 | | | 0.05 | % | | — | | | 1,305 | | | 1,305 | | | 0.06 | % |
| RICs and auto loans | 405,964 | | | 42,214 | | | 448,178 | | | 1.04 | % | | 386,084 | | | 37,706 | | | 423,790 | | | 0.94 | % |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Total | $ | 817,292 | | | $ | 177,285 | | | $ | 994,577 | | | 1.15 | % | | $ | 603,469 | | | $ | 196,100 | | | $ | 799,569 | | | 0.89 | % |
| | | | | | | | | | | | | | | |
| Amortized Cost |
| Nine months ended | | Nine months ended |
| September 30, 2025 | | September 30, 2024 |
| (dollars in thousands): | Payment Deferral Only | | All Other Modifications | | Total | | % of Total Class of Financing Receivable | | Payment Deferral Only | | All Other Modifications | | Total | | % of Total Class of Financing Receivable |
| Commercial: | | | | | | | | | | | | | | | |
| CRE | $ | 670,882 | | | $ | 160,543 | | | $ | 831,425 | | | 9.51 | % | | $ | 246,517 | | | $ | 101,410 | | | $ | 347,927 | | | 3.94 | % |
| C&I | 24,254 | | | 28,920 | | | 53,174 | | | 0.67 | % | | 8,296 | | | 85,287 | | | 93,583 | | | 0.96 | % |
| Multifamily | 141,742 | | | 73,703 | | | 215,445 | | | 2.17 | % | | 99,439 | | | 75,325 | | | 174,764 | | | 1.75 | % |
| Other commercial | — | | | 100 | | | 100 | | | — | % | | — | | | 160 | | | 160 | | | — | % |
| Consumer: | | | | | | | | | | | | | | | |
| Residential mortgages | — | | | 1,554 | | | 1,554 | | | 0.03 | % | | — | | | 2,811 | | | 2,811 | | | 0.06 | % |
| Home equity loans and lines of credit | — | | | 2,249 | | | 2,249 | | | 0.12 | % | | — | | | 4,743 | | | 4,743 | | | 0.22 | % |
| RICs and auto loans | 913,072 | | | 86,191 | | | 999,263 | | | 2.33 | % | | 824,913 | | | 80,713 | | | 905,626 | | | 2.02 | % |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Total | $ | 1,749,950 | | | $ | 353,260 | | | $ | 2,103,210 | | | 2.44 | % | | $ | 1,179,165 | | | $ | 350,449 | | | $ | 1,529,614 | | | 1.71 | % |
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
The following table describes the financial effects of the modifications made to borrowers experiencing financial difficulty:
| | | | | | | | |
Loan Type | Modification Type | Financial Effect |
| RICs and auto loans | Payment deferral | Provide payment deferrals to borrowers through our deferral program, which generally allows a customer to defer payments for a maximum of up to eight months over the life of the loan. The deferred payments are added to the end of the original loan term. |
| Commercial loans | Payment deferral | Provide payment deferrals to commercial borrowers through our deferral program. The deferred payments are added to the end of the original loan term. |
| Consumer secured by real estate | All other modification types | Provide modifications consisting of a combination of term extension, interest rate reduction, and/or deferment of principal on a case-by-case basis to determine which benefit or combination of benefits will be offered to achieve the target DTI range. |
| RICs and auto loans | All other modification types | Provides reduction in interest rate and maturity date extension of up to 36 months beyond the current maturity date resulting in reduction to monthly payment. |
NOTE 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES (continued)
Performance of Modified Loans
The Company monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the 12- month period prior to period-end:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Amortized Cost |
| As of September 30, 2025 | | As of September 30, 2024 |
(in thousands) | Current | | 30-89 DPD | | 90+ DPD | | Current | | 30-89 DPD | | 90+ DPD |
| | | | | | | | | | | |
| Commercial: | | | | | | | | | | | |
| CRE | $ | 880,259 | | | $ | — | | | $ | 83,278 | | | $ | 409,566 | | | $ | 35,319 | | | $ | — | |
| C&I | 142,092 | | | 2,058 | | | 13,857 | | | 191,306 | | | 4,565 | | | 939 | |
| Multifamily | 215,305 | | | 11,619 | | | — | | | 130,096 | | | 53,486 | | | — | |
| Other commercial | 125 | | | — | | | — | | | 275 | | | — | | | — | |
| Consumer: | | | | | | | | | | | |
| Residential mortgages | 1,307 | | | 390 | | | — | | | 3,356 | | | 241 | | | — | |
| Home equity loans and lines of credit | 1,900 | | | 375 | | | 545 | | | 6,471 | | | 17 | | | 168 | |
| RICs and auto loans | 880,053 | | | 433,775 | | | 43,081 | | | 766,107 | | | 313,047 | | | 25,580 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total | $ | 2,121,041 | | | $ | 448,217 | | | $ | 140,761 | | | $ | 1,507,177 | | | $ | 406,675 | | | $ | 26,687 | |
Payment Defaults Which Have Had a Prior Modification
A modified loan is generally considered to have subsequently defaulted if, after modification, the loan becomes 90 DPD. For RICs, a modified loan is considered to have subsequently defaulted after modification at the earlier of the date of repossession or 120 DPD. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for 2024 for more information on the Company's charge-off policy. The following table provides the amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12-month period prior to default due to the borrower's financial difficulty:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Amortized Cost |
| Three months ended | | Nine months ended |
| September 30, 2025 | | September 30, 2024 | | September 30, 2025 | | September 30, 2024 |
| Payment deferral | | All other modification types | | Payment deferral | | All other modification types | | Payment deferral | | All other modification types | | Payment deferral | | All other modification types |
(in thousands) | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | |
| CRE | $ | 45,980 | | | $ | — | | | $ | — | | | $ | — | | | $ | 45,980 | | | $ | — | | | $ | — | | | $ | — | |
| C&I | $ | 287 | | | $ | 13,344 | | | $ | 1,064 | | | $ | 13 | | | $ | 8,324 | | | $ | 13,385 | | | $ | 1,630 | | | $ | 87 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Consumer: | | | | | | | | | | | | | | | |
| Residential mortgages | — | | | — | | | — | | | — | | | — | | | 196 | | | — | | | 47 | |
| Home equity loans and lines of credit | — | | | 166 | | | — | | | 84 | | | — | | | 319 | | | — | | | 168 | |
| RICs and auto loans | 62,654 | | | 880 | | | 39,354 | | | 947 | | | 184,272 | | | 2,650 | | | 101,644 | | | 12,748 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Total | $ | 108,921 | | | $ | 14,390 | | | $ | 40,418 | | | $ | 1,044 | | | $ | 238,576 | | | $ | 16,550 | | | $ | 103,274 | | | $ | 13,050 | |
NOTE 4. OPERATING LEASE ASSETS, NET
The Company has operating leases, including leased vehicles, which are included in the Company's Condensed Consolidated Balance Sheets as Operating lease assets, net.
Operating lease assets, net consisted of the following as of the periods indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | September 30, 2025 | | December 31, 2024 |
| | | | |
| Leased vehicles | | $ | 12,255,620 | | | $ | 14,831,709 | |
| Less: accumulated depreciation | | (2,767,697) | | | (3,070,657) | |
| Depreciated net capitalized cost | | $ | 9,487,923 | | | $ | 11,761,052 | |
Manufacturer Subvention payments, net of accretion | | (434,154) | | | (561,366) | |
Unamortized origination fees and other costs | | 489,259 | | | 468,265 | |
| Leased vehicles, net | | $ | 9,543,028 | | | $ | 11,667,951 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Total operating lease assets, net | | $ | 9,543,028 | | | $ | 11,667,951 | |
The following summarizes the future minimum rental payments due to the Company as lessor under operating leases as of September 30, 2025:
| | | | | | | | |
| | (in thousands) |
| 2025 | | $ | 447,245 | |
| 2026 | | 1,346,354 | |
| 2027 | | 474,815 | |
| 2028 | | 63,246 | |
| 2029 | | 3,198 | |
| | |
| Total | | $ | 2,334,858 | |
NOTE 5. GOODWILL AND OTHER INTANGIBLES
Goodwill
Goodwill is assigned to reporting units, which are operating segments or one level below an operating segment, as of the acquisition date. The following table presents the balance of the Company's goodwill by its reporting units for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Auto | | CBB | | C&I | | CRE | | CIB | | | | | | | | Total |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
December 31, 2024 and September 30, 2025 | | $ | 1,238,676 | | | $ | 159,027 | |
| $ | 52,198 | | | $ | 1,015,130 | |
| $ | 301,634 | |
| | | | | | | $ | 2,766,665 | |
During the nine months ended September 30, 2025 and 2024, there were no material additions, re-allocations, impairments, or disposals of goodwill.
NOTE 5. GOODWILL AND OTHER INTANGIBLES (continued)
The Company evaluates goodwill for impairment at the reporting unit level. The Company conducted its last annual goodwill impairment tests as of October 1, 2024 using generally accepted valuation methods. As a result of that impairment test, no goodwill impairment was identified.
Other Intangible Assets
The following table details amounts related to the Company's intangible assets subject to amortization for the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| (in thousands) | | Net Carrying
Amount | | Accumulated
Amortization | | Net Carrying
Amount | | Accumulated
Amortization |
| Intangibles subject to amortization: | | | | | | | | |
| Dealer networks | | $ | 195,833 | | | $ | (274,167) | | | $ | 213,458 | | | $ | (256,542) | |
| Stellantis relationship | | — | | | (138,750) | | | 1,754 | | | (136,996) | |
| Other intangibles | | 26,316 | | | (57,594) | | | 33,708 | | | (50,302) | |
| Total intangibles subject to amortization | | $ | 222,149 | | | $ | (470,511) | | | $ | 248,920 | | | $ | (443,840) | |
At September 30, 2025 and December 31, 2024, the Company did not have any intangibles, other than goodwill, which were not subject to amortization.
Amortization expense on intangible assets was $9.0 million and $26.8 million and $9.5 million and $28.7 million for the three months and nine months ended September 30, 2025 and 2024, respectively.
The estimated aggregate amortization expense related to intangibles, excluding any impairment charges, for each of the five succeeding calendar years ending December 31 is:
| | | | | | | | | | | | | | | | | | | | |
| Year | | Calendar Year Amount | | Recorded To Date | | Remaining Amount To Record |
| | (in thousands) | | | | |
| 2025 | | $ | 34,768 | | | $ | 26,771 | | | $ | 7,997 | |
| 2026 | | 32,487 | | | — | | | 32,487 | |
| 2027 | | 28,645 | | | — | | | 28,645 | |
| 2028 | | 26,340 | | | — | | | 26,340 | |
| 2029 | | 26,340 | | | — | | | 26,340 | |
| Thereafter | | 100,340 | | | — | | | 100,340 | |
NOTE 6. OTHER ASSETS
The following is a detail of items that comprised Other assets at the periods indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | September 30, 2025 | | December 31, 2024 |
| Operating lease ROU assets | | $ | 458,273 | | | $ | 493,217 | |
| Deferred tax assets | | 425,352 | | | 364,309 | |
| Accrued interest receivable | | 860,702 | | | 847,830 | |
| Derivative assets at fair value | | 772,603 | | | 1,121,980 | |
| Other real estate owned and other repossessed assets | | 299,045 | | | 328,512 | |
| Equity method investments | | 431,201 | | | 262,377 | |
| MSRs | | 80,950 | | | 90,958 | |
| Income tax receivables | | 391,534 | | | 466,422 | |
| Prepaid expense | | 119,429 | | | 152,358 | |
| Capital markets receivables | | 483,289 | | | 282,926 | |
| Miscellaneous assets and receivables | | 530,101 | | | 449,627 | |
| Total Other assets | | $ | 4,852,479 | | | $ | 4,860,516 | |
Operating lease ROU assets
We have operating leases for real estate and non-real estate assets. Real estate leases relate to office space and bank/lending retail branches. Non-real estate leases include disaster recovery centers, data centers, ATMs, vehicles and certain equipment leases. Real estate leases may include one or more options to renew, with renewal terms that can extend the lease term generally from one to five years. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
| | |
|
For the three months and nine months ended September 30, 2025, ROU operating lease expenses were $29.3 million and $91.8 million, respectively, compared to $31.8 million and $97.8 million for the corresponding periods in 2024. Sublease income was $0.2 million and $1.8 million, respectively, for the three months and nine months ended September 30, 2025, compared to $1.0 million and $2.8 million for the corresponding periods in 2024. These are reported within Occupancy and equipment expenses in the Company’s Condensed Consolidated Statements of Operations. |
|
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | |
Maturity of Lease Liabilities at September 30, 2025 | | Total Operating leases |
| | (in thousands) |
| 2025 | | $ | 29,972 | |
| 2026 | | 116,173 | |
| 2027 | | 108,764 | |
| 2028 | | 83,006 | |
| 2029 | | 65,519 | |
| Thereafter | | 195,529 | |
| Total lease liabilities | | $ | 598,963 | |
| Less: Interest | | (65,222) | |
| Present value of lease liabilities | | $ | 533,741 | |
NOTE 6. OTHER ASSETS (continued)
| | | | | | | | | | | | | | |
| Supplemental Balance Sheet Information | | September 30, 2025 | | December 31, 2024 |
| Operating lease ROU assets | | $458,273 | | $493,217 |
| Other liabilities | | $533,741 | | $557,419 |
| Weighted-average remaining lease term (years) | | 6.4 | | 6.6 |
| Weighted-average discount rate | | 3.5% | | 3.4% |
| | | | | | | | | | | | | | |
| | Nine months ended September 30, |
| Other Information | | 2025 | | 2024 |
| | (in thousands) |
Operating cash flows from operating leases (1) | | $ | (90,295) | | | $ | (103,536) | |
| Leased assets obtained in exchange for new operating lease liabilities | | $ | 59,357 | | | $ | 166,654 | |
(1) Activity is included within the net change in other liabilities on the SCF.
The remainder of Other assets is comprised of:
•Deferred tax asset - Refer to Note 15 of these Condensed Consolidated Financial Statements for more information on tax-related activities.
•Accrued interest receivable - Includes accrued interest receivable on the Company's investments, loans, and other interest-earning portfolios.
•Derivative assets at fair value - Refer to the "Offsetting of Financial Assets" table in Note 12 to these Condensed Consolidated Financial Statements for the detail of these amounts.
•OREO and other repossessed assets includes property and vehicles recovered through foreclosure and repossession.
•Equity method investments - The Company makes certain equity investments in various limited partnerships, some of which are considered VIEs, that invest in and lend to renewable energy projects and qualified community development entities, such as CRA programs. The Company acts only in a limited partner capacity in connection with these partnerships, so the Company has determined that it is not the primary beneficiary of the partnerships because it does not have the power to direct the activities of the partnerships that most significantly impact the partnerships' economic performance.
•MSRs - See further discussion on the valuation of the MSRs in Note 13.
•Income tax receivables - Refer to Note 15 of these Condensed Consolidated Financial Statements for more information on tax-related activities.
•Prepaid expenses includes advanced payments for cloud-based hosting, prepaid taxes, and outside services.
•Capital markets receivables includes receivables from broker dealers, financial institutions, clearing organizations, customers and other receivables associated with capital markets activities.
•Miscellaneous assets and receivables includes investment receivables, Subvention receivables, derivatives trading receivables, and unapplied payments.
NOTE 7. VIEs
The Company transfers RICs and vehicle leases into newly-formed Trusts that then issue one or more classes of notes payable backed by the collateral. The Company’s continuing involvement with these Trusts is in the form of servicing the assets and, generally, through holding residual interests in the Trusts. The Trusts are considered VIEs under GAAP, and the Company may or may not consolidate these VIEs on its Condensed Consolidated Balance Sheets.
The collateral and borrowings under credit facilities and securitization notes payable of the Company’s consolidated VIEs remain on the Condensed Consolidated Balance Sheets. The Company recognizes finance charges, fee income, and provisions for credit losses on the RICs, and leased vehicles and interest expense on the debt. Revolving credit facilities generally also utilize entities that are considered VIEs which are included on the Condensed Consolidated Balance Sheets.
The Company also uses a titling trust to originate and hold its leased vehicles and the associated leases, for administrative efficiency and also to facilitate the pledging of leases to financing facilities or the sale of leases to other parties without incurring the costs and administrative burden of retitling the leased vehicles. In this process, the leases may be transferred to separate legal units within the titling trust to segregate them for ownership purposes, including for securitizations. This does not result in any changes to the accounting for the leases. This titling trust is considered a VIE. Refer to Note 4 to these Condensed Consolidated Financial Statements for further information on the Company's leased vehicles.
On-balance sheet VIEs
The assets of consolidated VIEs are presented based upon the legal transfer of the underlying assets in order to reflect legal ownership. Certain of these assets can be used only to settle obligations of the consolidated VIEs and the liabilities of those entities for which creditors (or beneficial interest holders) do not have recourse to the Company's general credit.
The assets and liabilities of consolidated VIEs included the following at the dates indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | September 30, 2025 | | December 31, 2024 |
| Assets | | | | |
| Restricted cash | | $ | 759,621 | | | $ | 706,571 | |
| | | | |
| Net LHFI | | 24,093,409 | | | 24,635,642 | |
Operating lease assets, net (1) | | 9,543,028 | | | 11,667,951 | |
| Various other assets | | 636,341 | | | 693,090 | |
| Total Assets | | $ | 35,032,399 | | | $ | 37,703,254 | |
| Liabilities | | | | |
| Notes payable | | $ | 25,621,541 | | | $ | 26,208,911 | |
| Various other liabilities | | 81,685 | | | 99,587 | |
| Total Liabilities | | $ | 25,703,226 | | | $ | 26,308,498 | |
(1) As noted above, all leased vehicles are originated through a titling trust. At September 30, 2025 and December 31, 2024, $4.4 billion and $4.3 billion, respectively, of leased vehicle assets included in this amount were in a titling trust, but not in a securitization trust.
The Company services receivables transferred to the Trusts and receives a monthly servicing fee on the outstanding principal balance. Supplemental fees, such as late charges, for servicing the receivables are reflected in Miscellaneous income, net.
As of September 30, 2025 and December 31, 2024, the Company was servicing $27.3 billion and $29.0 billion, respectively, of gross RICs that have been transferred to consolidated Trusts. Certain amounts shown above are greater than the amounts shown in the corresponding line items in the accompanying Condensed Consolidated Balance Sheets due to intercompany eliminations between the VIEs and other entities consolidated by the Company. For example, for most of its securitizations, the Company retains one or more of the lowest tranches of bonds. Rather than showing investment in bonds as an asset and the associated debt as a liability, these amounts are eliminated in consolidation as required by GAAP.
NOTE 7. VIEs (continued)
A summary of the cash flows received from the consolidated Trusts for the respective periods is as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
| Assets securitized | | $ | 3,955,328 | | | $ | 5,509,331 | | | $ | 11,345,062 | | | $ | 16,512,805 | | | |
| | | | | | | | | | |
Net proceeds from new securitizations (1) | | $ | 3,132,910 | | | $ | 4,304,041 | | | $ | 9,201,881 | | | $ | 12,924,231 | | | |
Net proceeds on retained bonds from new securitizations | | 518,650 | | | 503,320 | | | 1,365,070 | | | 1,737,210 | | | |
Cash received for servicing fees (2) | | 254,784 | | | 218,467 | | | 718,452 | | | 664,355 | | | |
| | | | | | | | | | |
Net distributions from Trusts (2) | | 1,431,501 | | | 1,181,158 | | | 4,608,941 | | | 3,513,978 | | | |
| Total cash received from Trusts | | $ | 5,337,845 | | | $ | 6,206,986 | | | $ | 15,894,344 | | | $ | 18,839,774 | | | |
(1) Includes additional advances on existing securitizations.
(2) These amounts are not reflected in the SCF because the cash flows are between the VIEs and other entities included in the consolidation.
Off-balance sheet VIEs
At September 30, 2025 and December 31, 2024, the Company was servicing RICs of $2.5 billion and $2.3 billion, respectively, that have been sold in off-balance sheet securitizations and were subject to an optional clean-up call.
During the second quarter of 2025, the Company sold all of its residual certificates of an on-balance sheet auto RIC Trust (related to a 2021 securitization) to a new off-balance sheet Trust established in 2025. In addition, the Company sold all of its debt that had been held from the 2021 on-balance sheet Trust to third parties and to the 2025 off-balance sheet Trust. This new off-balance sheet Trust sold 95% of its debt and equity tranches to third-party investors, and the Company retained a 5% share. As a result of the Company’s sale of the debt and equity from the 2021 on-balance sheet Trust, the Company is no longer identified as the primary beneficiary and the Company therefore de-consolidated the 2021 Trust from its Consolidated Balance Sheets. As a result, the Company de-recognized approximately $242.9 million of auto RICs previously classified as HFI, resulting in a release of the ACL in the amount of approximately $42.1 million, offset by a loss on securitization of approximately $21.8 million.
In addition, during the second quarter of 2025, the Company sold $1.3 billion of gross RICs to a newly formed off-balance sheet securitization VIE which resulted in a pre-tax gain of $22.8 million, and there was a release of the ACL of approximately $40.0 million. The Company retained the servicing of the RICs sold and provided a loan, classified by the Company as an investment in debt security HTM, in the amount of $65.0 million to the VIE to satisfy regulatory risk retention requirements. The Company also retained $1.1 billion of the Class A notes which are classified as an investment in debt security HTM. The Company is not obligated to provide any financial support to the VIE. All of the notes and residual equity interests issued by the VIE were sold to third-party investors. Gains and losses on securitizations are recorded in Miscellaneous income, net in the accompanying Condensed Consolidated Statements of Operations.
A summary of cash flows received from Trusts for the respective periods were as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
Receivables securitized (1)(2) | | — | | | — | | | 1,307,339 | | | 1,060,931 | | | |
| | | | | | | | | | |
| Net proceeds from new securitizations | | — | | | — | | | 174,863 | | | 1,003,695 | | | |
| Cash received for servicing fees | | $ | 23,106 | | | $ | 4,319 | | | $ | 47,703 | | | $ | 8,455 | | | |
Total cash received from Trusts | | $ | 23,106 | | | $ | 4,319 | | | $ | 222,566 | | | $ | 1,012,150 | | | |
(1) Represents the UPB at the time of original securitization. (2) Table excludes impacts of non-cash deconsolidation transaction referred to above. | | |
| | |
NOTE 7. VIEs (continued)
Other than repurchases of sold assets due to claims against standard representations and warranties, the Company's exposure to loss as a result of its involvement with these VIEs includes the portion of securitizations retained by the Company. The carrying value of this exposure at September 30, 2025 was $1.5 billion and $6.7 million of debt and equity investments, respectively, compared to $70.2 million and $8.0 million at December 31, 2024. These amounts are reported in debt securities HTM and other investments, respectively, in Note 2 to these Condensed Consolidated Financial Statements.
As discussed in Note 1 to these Condensed Consolidated Financial Statements, in December 2023 SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Company did not transfer any assets to the VIE and does not control nor consolidate it. SBNA's 20 percent interest is reported as an AFS debt security that has a fair value of approximately $1.1 billion and $1.2 billion at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, SBNA serviced approximately $8.2 billion in multi-family loans for the Structured LLC and received a market rate servicing fee. For the three months and nine months ended September 30, 2025 and September 30, 2024, SBNA recognized $14.1 million and $42.4 million, and $14.1 million and $38.1 million, respectively, in servicing fee income from the servicing of these assets which is recorded in Miscellaneous income, net, in the accompanying Condensed Consolidated Statements of Operations.
NOTE 8. DEPOSITS AND OTHER CUSTOMER ACCOUNTS
Deposits and other customer accounts are summarized as follows at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 | | December 31, 2024 |
| (dollars in thousands) | | Balance | | Percent of total deposits | | Balance | | Percent of total deposits |
| Interest-bearing demand deposits | | $ | 11,754,453 | | | 15.4 | % | | $ | 11,850,043 | | | 15.2 | % |
| Non-interest-bearing demand deposits | | 13,350,573 | | | 17.5 | % | | 14,539,985 | | | 18.6 | % |
| Savings | | 9,429,757 | | | 12.3 | % | | 5,045,668 | | | 6.5 | % |
| Customer repurchase accounts | | 236,768 | | | 0.3 | % | | 299,216 | | | 0.4 | % |
| Money market | | 25,697,028 | | | 33.7 | % | | 25,197,858 | | | 32.2 | % |
| CDs | | 15,892,012 | | | 20.8 | % | | 21,181,835 | | | 27.1 | % |
Total deposits (1) | | $ | 76,360,591 | | | 100.0 | % | | $ | 78,114,605 | | | 100.0 | % |
(1) Includes foreign deposits, as defined by the FRB, of $5.4 billion and $4.9 billion at September 30, 2025 and December 31, 2024, respectively.
Demand deposit overdrafts that have been reclassified as loan balances were $273.3 million and $305.2 million at September 30, 2025 and December 31, 2024, respectively.
At September 30, 2025 and December 31, 2024, the Company had $6.3 billion and $6.5 billion, respectively, of CDs greater than $250 thousand.
The Company's subsidiaries had outstanding irrevocable letters of credit totaling $45.0 million and $30.0 million from the FHLB of Pittsburgh at September 30, 2025 and December 31, 2024, respectively, used to secure uninsured deposits placed with the Bank by state and local governments and their political subdivisions.
NOTE 9. BORROWINGS
Total borrowings and other debt obligations at September 30, 2025 were $40.9 billion, compared to $44.0 billion at December 31, 2024. The Company's debt agreements impose certain limitations on dividend payments and other transactions. The Company is currently in compliance with these limitations.
During the nine months ended September 30, 2025, the Company issued the following debt:
•$850 million in aggregate principal amount of its 5.47% fixed-to-floating rate senior notes due March 2029.
•$400 million in aggregate principal amount of its floating rate senior notes due March 2029.
•$750 million in aggregate principal amount of its 5.74% fixed-to-floating rate senior notes due March 2031.
•$850 million floating rate promissory note with Santander due September 2026.
•$860.4 million of secured structured financings in its SBALT platform, of which approximately $110.4 million was retained in interests in the VIE.
•$6.2 billion of secured structured financings in its SDART platform, of which it retained approximately $912.8 million in interests in the VIE.
•$2.9 billion of secured structured financings in its DRIVE platform, of which it retained approximately $341.9 million in interest in the VIE.
•$532.5 million secured amortizing notes in its SCARF platform.
The Company continues to consolidate these VIEs on its Condensed Consolidated Balance Sheets.
NOTE 9. BORROWINGS (continued)
Parent Company and other Subsidiary Borrowings and Debt Obligations
The following table presents information regarding the Parent Company and its subsidiaries' borrowings and other debt obligations at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | December 31, 2024 |
| (dollars in thousands) | | Balance | | Effective
Rate | | Balance | | Effective
Rate |
| Parent Company | | | | | | | | |
3.45% senior notes due June 2025 | | — | | | — | % | | 999,567 | | | 3.45 | % |
4.50% senior notes due July 2025 | | — | | | — | % | | 1,099,617 | | | 4.50 | % |
Senior notes due April 2026 (1) | | — | | | — | % | | 433,505 | | | 5.76 | % |
Senior note due September 2026 (2) (3) | | 850,000 | | | 4.70 | % | | — | | | — | % |
5.81% senior sustainability notes due September 2026 | | — | | | — | % | | 499,614 | | | 5.92 | % |
3.24% senior notes due October 2026 | | 941,999 | | | 3.24 | % | | 937,090 | | | 3.24 | % |
6.12% senior notes due May 2027 | | 499,426 | | | 6.20 | % | | 499,173 | | | 6.20 | % |
6.89% senior notes due June 2027 (2) | | 750,000 | | | 6.89 | % | | 750,000 | | | 6.89 | % |
4.40% senior notes due July 2027 | | 1,049,719 | | | 4.40 | % | | 1,049,684 | | | 4.40 | % |
2.49% senior notes due January 2028 | | 998,963 | | | 2.57 | % | | 998,364 | | | 2.57 | % |
Senior notes due March 2029 (4) | | 399,054 | | | 6.09 | % | | — | | | — | % |
5.47% senior notes due March 2029 | | 847,991 | | | 5.58 | % | | — | | | — | % |
6.50% senior notes due March 2029 | | 997,895 | | | 6.59 | % | | 997,313 | | | 6.59 | % |
6.57% senior notes due June 2029 | | 498,739 | | | 6.67 | % | | 498,427 | | | 6.67 | % |
6.17% senior notes due January 2030 | | 997,317 | | | 6.26 | % | | 996,776 | | | 6.26 | % |
5.35% senior notes due September 2030 | | 996,919 | | | 5.44 | % | | 996,402 | | | 5.44 | % |
5.74% senior notes due March 2031 | | 747,394 | | | 5.83 | % | | — | | | — | % |
7.66% senior notes due November 2031 | | 498,178 | | | 7.73 | % | | 498,008 | | | 7.73 | % |
2.88% subordinated notes due November 2031 (2) | | 500,000 | | | 2.88 | % | | 500,000 | | | 2.88 | % |
7.18% subordinated notes due December 2032 (2) | | 500,000 | | | 7.18 | % | | 500,000 | | | 7.18 | % |
6.34% senior notes due May 2035 | | 746,688 | | | 6.40 | % | | 746,499 | | | 6.40 | % |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Total Parent Company borrowings | | 12,820,282 | | | | | 13,000,039 | | | |
| Subsidiaries | | | | | | | | |
| Short-term borrowing due within one year, maturing through May 2026 | | 833,732 | | | 4.00 | % | | 702,272 | | | 4.41 | % |
FHLB advances, maturing through April 2027 | | 2,643,824 | | | 4.50 | % | | 4,699,407 | | | 4.69 | % |
CLNs due December 2031 (5) | | 5,161 | | | 6.36 | % | | 33,811 | | | 5.86 | % |
CLNs due May 2032 (6) | | 33,229 | | | 12.83 | % | | 95,552 | | | 9.36 | % |
CLNs due June 2032 (7) | | 172,598 | | | 7.89 | % | | 232,122 | | | 7.89 | % |
CLNs due August 2032 (8) | | 32,095 | | | 13.77 | % | | 86,884 | | | 12.34 | % |
CLNs due December 2032 (9) | | 74,865 | | | 15.42 | % | | 139,681 | | | 12.22 | % |
CLNs due January 2033 (10) | | 259,260 | | | 7.03 | % | | 262,323 | | | 7.01 | % |
CLNs due June 2033 (11) | | 35,782 | | | 14.83 | % | | 56,482 | | | 12.04 | % |
CLNs due December 2033 (12) | | 116,614 | | | 9.26 | % | | 174,448 | | | 9.27 | % |
CLNs due February 2052 (13) (14) | | 99,466 | | | 11.15 | % | | 107,641 | | | 11.46 | % |
Warehouse lines maturing through April 2027 (15) | | 2,769,074 | | | 5.08 | % | | 4,036,778 | | | 5.75 | % |
| | | | | | | | |
| | | | | | | | |
Secured structured financings maturing through September 2032 | | 20,990,871 | | | 0.58% - 7.69% | | 20,383,470 | | | 0.58% - 7.69% |
| Total subsidiary borrowings and other debt obligations | | 28,066,571 | | | | | 31,010,871 | | | |
| | | | | | | | |
| Total Parent Company and subsidiaries' borrowings and other debt obligations | | $ | 40,886,853 | | | | | $ | 44,010,910 | | | |
(1) These notes bear interest at a rate equal to the SOFR index rate plus 135 basis points per year.
(2) These notes are payable to SHUSA's parent company, Santander.
(3) These notes bear interest at a rate equal to the SOFR index rate plus 57 basis points per year.
(4) These notes bear interest at a rate equal to the SOFR index rate plus 161 basis points per year.
(5) Notes are tied to the performance of a $2.0 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $36.0 million.
(6) Notes are tied to the performance of a $3.5 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $63.0 million.
(7) Notes are tied to the performance of a $2.3 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $75.2 million.
(8) Notes are tied to the performance of a $3.5 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $63.0 million.
(9) Notes are tied to the performance of a $3.6 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $65.3 million.
(10) Notes are tied to the performance of a $2.6 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $84.2 million.
(11) Notes are tied to the performance of a $1.1 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $22.0 million.
(12) Notes are tied to the performance of a $2.1 billion original reference pool of SBNA prime auto loans. The contractual residual amount is $62.3 million.
(13) Notes are tied to the performance of a $2.5 billion original reference pool of SBNA residential mortgage loans. The contractual residual amount is $5.1 million.
(14) Variable rate notes issued in tranches that bear interest at a rate equal to the SOFR index plus varying spreads ranging from 4.15% to 13.90% and re-set monthly.
(15) Benchmark rates used included commercial paper, daily simple SOFR, one-month term SOFR, and three-month term SOFR.
NOTE 9. BORROWINGS (continued)
CLNs transfer credit risk on a reference pool of loans to the purchaser of the notes. In the event of credit losses on the reference pool in excess of the contractual residual amount, the principal balance of the notes will be reduced to the extent of such loss up to the amount of notes issued and recognized as a debt extinguishment gain within Miscellaneous income, net. The Company has the option to redeem the notes once the UPB of the reference pool is less than or equal to 10% of the initial principal balance.
In connection with certain of its CLNs, the Company is required to maintain a letter of credit, as well as a collateral account with a third-party financial institution, with the amount equal to at least the outstanding balances of the transaction’s CLN. This is reported as restricted cash in these Condensed Consolidated Financial Statements.
Warehouse Lines
The following tables present information regarding the Company's warehouse lines at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2025 | | |
| (dollars in thousands) | | Balance | | Committed Amount | | Effective
Rate | | Assets Pledged | | Restricted Cash Pledged | | |
| Warehouse line due July 2026 | | $ | 234,800 | | | $ | 500,000 | | | 5.10 | % | | $ | 323,352 | | | $ | — | | | |
| Warehouse line due October 2026 | | 992,300 | | | 2,100,000 | | | 5.06 | % | | 1,355,773 | | | 65 | | | |
| Warehouse line due November 2026 | | 290,600 | | | 500,000 | | | 5.04 | % | | 404,730 | | | — | | | |
| Warehouse line due January 2027 | | 608,000 | | | 1,000,000 | | | 5.09 | % | | 827,951 | | | 2,767 | | | |
| Warehouse line due April 2027 | | 378,774 | | | 750,000 | | | 5.12 | % | | 603,440 | | | 26,236 | | | |
| Warehouse line due April 2027 | | 264,600 | | | 1,000,000 | | | 5.04 | % | | 374,892 | | | 1 | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total credit facilities | | $ | 2,769,074 | | | $ | 5,850,000 | | | 5.08 | % | | $ | 3,890,138 | | | $ | 29,069 | | | |
The warehouse lines and repurchase facilities are fully collateralized by a designated portion of the Company's RICs, leased vehicles, securitization notes payable, and residuals retained by the Company.
Secured Structured Financings
The following tables present information regarding the Company's secured structured financings at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 |
| (dollars in thousands) | | Balance | | Initial Note Amounts Issued (3) | | Initial Weighted Average Interest Rate Range | | Collateral (2) | | Restricted Cash |
Public securitizations maturing on various dates through September 2032(1) | | $ | 19,479,660 | | | $ | 44,562,305 | | | 0.58% - 7.69% | | $ | 26,512,800 | | | $ | 709,952 | |
Privately issued amortizing notes maturing on various dates through August 2030 (3) | | 1,511,211 | | | 7,232,571 | | | 3.13% - 6.73% | | 2,558,400 | | | 20,599 | |
| Total secured structured financings | | $ | 20,990,871 | | | $ | 51,794,876 | | | 0.58% - 7.69% | | $ | 29,071,200 | | | $ | 730,551 | |
(1) Securitizations executed under Rule 144A of the Securities Act are included within this balance.
(2) Secured structured financings may be collateralized by collateral overages of other issuances.
(3) Excludes securitizations which no longer have outstanding debt and excludes any incremental borrowings. Most of the Company's secured structured financings are in the form of public, SEC-registered securitizations. The Company also executes private securitizations under Rule 144A of the Securities Act, and periodically issues private term amortizing notes, which are structured similarly to securitizations but are acquired by banks and conduits. The Company's securitizations and private issuances are collateralized by vehicle RICs and loans or leases.
NOTE 10. ACCUMULATED OTHER COMPREHENSIVE INCOME / (LOSS)
The following table presents the components of AOCI / (loss), net of related tax, for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Total Other
Comprehensive Income/(Loss) | | Total Accumulated Other Comprehensive Loss |
| | | Three months ended September 30, 2025 | | June 30, 2025 | | | | September 30, 2025 |
| (in thousands) | | Pre-tax
Activity | | Tax
Effect | | Net Activity | | Beginning
Balance | | Net
Activity | | Ending
Balance |
| Change in AOCI on cash flow hedge derivative financial instruments | | | $ | 30,568 | | | $ | (7,620) | | | $ | 22,948 | | | | | | | |
Reclassification adjustment for net losses/(gains) on cash flow hedge derivative financial instruments (1) | | | (4,006) | | | 1,018 | | | (2,988) | | | | | | | |
| Net unrealized (losses)/gains on cash flow hedge derivative financial instruments | | | 26,562 | | | (6,602) | | | 19,960 | | | $ | (2,800) | | | $ | 19,960 | | | $ | 17,160 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Change in unrealized (losses)/gains on investments in debt securities | | | 55,783 | | | (13,916) | | | 41,867 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net unrealized (losses)/gains on investments in debt securities | | | 55,783 | | | (13,916) | | | 41,867 | | | (655,798) | | | 41,867 | | | (613,931) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Other | | | 48 | | | 13 | | | 61 | | | (118) | | | 61 | | | (57) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
As of September 30, 2025 | | | $ | 82,393 | | | $ | (20,505) | | | $ | 61,888 | | | $ | (658,716) | | | $ | 61,888 | | | $ | (596,828) | |
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Other
Comprehensive Income/(Loss) | | Total Accumulated Other Comprehensive Loss |
| | Three months ended September 30, 2024 | | June 30, 2024 | | | | September 30, 2024 |
| (in thousands) | | Pre-tax
Activity | | Tax
Effect | | Net Activity | | Beginning
Balance | | Net
Activity | | Ending
Balance |
| Change in AOCI on cash flow hedge derivative financial instruments | | $ | 106,354 | | | $ | (29,599) | | | $ | 76,755 | | | | | | | |
Reclassification adjustment for net (gains)/losses on cash flow hedge derivative financial instruments (1) | | (7,605) | | | 1,972 | | | (5,633) | | | | | | | |
| Net unrealized gains/(losses) on cash flow hedge derivative financial instruments | | 98,749 | | | (27,627) | | | 71,122 | | | $ | (151,447) | | | $ | 71,122 | | | $ | (80,325) | |
| | | | | | | | | | | | |
| Change in unrealized (losses)/gains on investments in debt securities | | 194,778 | | | (46,653) | | | 148,125 | | | | | | | |
Reclassification adjustment for net (gains)/losses included in net income/(expense) on debt securities AFS (2) | | (444) | | | 115 | | | (329) | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Net unrealized gains/(losses) on investments in debt securities | | 194,334 | | | (46,538) | | | 147,796 | | | (739,684) | | | 147,796 | | | (591,888) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Other | | 606 | | | (157) | | | 449 | | | (19,842) | | | 449 | | | (19,393) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
As of September 30, 2024 | | $ | 293,689 | | | $ | (74,322) | | | $ | 219,367 | | | $ | (910,973) | | | $ | 219,367 | | | $ | (691,606) | |
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.
(2) Net (gains)/losses reclassified into Securities gains, net in the Condensed Consolidated Statements of Operations for the sale of debt securities.
NOTE 10. ACCUMULATED OTHER COMPREHENSIVE INCOME / (LOSS) (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Total Other
Comprehensive Income/(Loss) | | Total Accumulated Other Comprehensive Loss |
| | | Nine months ended September 30, 2025 | | December 31, 2024 | | | | September 30, 2025 |
| (in thousands) | | Pre-tax
Activity | | Tax
Effect | | Net Activity | | Beginning
Balance | | Net
Activity | | Ending
Balance |
| Change in AOCI on cash flow hedge derivative financial instruments | | | $ | 127,982 | | | $ | (30,652) | | | $ | 97,330 | | | | | | | |
Reclassification adjustment for net losses/(gains) on cash flow hedge derivative financial instruments (1) | | | (10,725) | | | 2,725 | | | (8,000) | | | | | | | |
| Net unrealized (losses)/gains on cash flow hedge derivative financial instruments | | | 117,257 | | | (27,927) | | | 89,330 | | | $ | (72,170) | | | $ | 89,330 | | | $ | 17,160 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Change in unrealized (losses)/gains on investments in debt securities | | | 25,337 | | | (8,970) | | | 16,367 | | | | | | | |
Reclassification adjustment for net losses/(gains) included in net income/(expense) on debt securities AFS (2) | | | 65 | | | (17) | | | 48 | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net unrealized (losses)/gains on investments in debt securities | | | 25,402 | | | (8,987) | | | 16,415 | | | (630,346) | | | 16,415 | | | (613,931) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Other | | | 20,357 | | | (5,230) | | | 15,127 | | | (15,184) | | | 15,127 | | | (57) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
As of September 30, 2025 | | | $ | 163,016 | | | $ | (42,144) | | | $ | 120,872 | | | $ | (717,700) | | | $ | 120,872 | | | $ | (596,828) | |
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.
(2) Net (gains)/losses reclassified into Securities gains, net in the Condensed Consolidated Statements of Operations for the sale of debt securities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Other
Comprehensive Income/(Loss) | | Total Accumulated Other Comprehensive Loss |
| | Nine months ended September 30, 2024 | | December 31, 2023 | | | | September 30, 2024 |
| (in thousands) | | Pre-tax
Activity | | Tax
Effect | | Net Activity | | Beginning
Balance | | Net
Activity | | Ending
Balance |
| Change in AOCI on cash flow hedge derivative financial instruments | | $ | 242,560 | | | $ | (62,733) | | | $ | 179,827 | | | | | | | |
Reclassification adjustment for net (gains)/losses on cash flow hedge derivative financial instruments (1) | | (7,605) | | | 1,972 | | | (5,633) | | | | | | | |
| Net unrealized gains/(losses) on cash flow hedge derivative financial instruments | | 234,955 | | | (60,761) | | | 174,194 | | | $ | (254,519) | | | $ | 174,194 | | | $ | (80,325) | |
| | | | | | | | | | | | |
| Change in unrealized (losses)/gains on investments in debt securities | | 261,990 | | | (62,998) | | | 198,992 | | | | | | | |
Reclassification adjustment for net (gains)/losses included in net income/(expense) on debt securities AFS (2) | | (444) | | | 115 | | | (329) | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Net unrealized gains/(losses) on investments in debt securities | | 261,546 | | | (62,883) | | | 198,663 | | | (790,551) | | | 198,663 | | | (591,888) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Other | | 1,457 | | | (352) | | | 1,105 | | | (20,498) | | | 1,105 | | | (19,393) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
As of September 30, 2024 | | $ | 497,958 | | | $ | (123,996) | | | $ | 373,962 | | | $ | (1,065,568) | | | $ | 373,962 | | | $ | (691,606) | |
(1) Net gains/(losses) reclassified into Interest on borrowings and other debt obligations in the Condensed Consolidated Statements of Operations for settlements of interest rate swap contracts designated as cash flow hedges.
(2) Net (gains)/losses reclassified into Securities gains, net in the Condensed Consolidated Statements of Operations for the sale of debt securities.
NOTE 11. SECURITIES FINANCING ACTIVITIES
The Company may enter into Securities Financing Activities primarily to deploy the Company’s excess cash and investment positions. Securities Financing Activities are treated as collateralized financings and are included in "Federal funds sold and securities purchased under resale agreements or similar arrangements" and "Federal funds purchased and securities loaned or sold under repurchase agreements" on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for 2024 for further discussion of accounting for and the offsetting of securities financing assets and liabilities.
The Company has elected the FVO for certain of its Securities Financing Activities. Refer to Note 13 to these Condensed Consolidated Financial Statements for the amounts recorded at FVO.
Securities borrowed and purchased under agreements to resell, at their respective carrying values, consisted of the following at the dates indicated:
| | | | | | | | | | | |
| (in thousands) | September 30, 2025 | | December 31, 2024 |
| Securities purchased under agreements to resell | $ | 6,976,145 | | | $ | 7,151,510 | |
| Securities borrowed | 1,539,632 | | | 980,720 | |
| Total | $ | 8,515,777 | | | $ | 8,132,230 | |
| | | |
| | | |
Securities loaned or sold under agreements to repurchase, at their respective carrying values, consisted of the following at the dates indicated:
| | | | | | | | | | | |
| (in thousands) | September 30, 2025 | | December 31, 2024 |
| Securities sold under agreements to repurchase | $ | 21,296,824 | | | $ | 16,302,948 | |
| Securities lending | 212 | | | — | |
| Total | $ | 21,297,036 | | | $ | 16,302,948 | |
Securities Financing Activities are generally executed under standard industry agreements, including master agreements that create a single contract under which all transactions between two counterparties are executed, allowing for trade aggregation of receivables and payables into a single net payment or settlement. The amounts of securities financing assets or liabilities qualified for offset in the Condensed Consolidated Balance Sheets were as follows for the dates indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | September 30, 2025 |
(in thousands) | | Gross amounts of recognized assets | | Gross amounts offset on the Condensed Consolidated Balance Sheets (1) | | Net amounts of assets included on the Condensed Consolidated Balance Sheets | | | | |
| | | | | | | | | | |
| Securities purchased under agreements to resell | | $ | 29,130,164 | | | $ | (22,154,020) | | | $ | 6,976,144 | | | | | |
| Securities borrowed | | 1,539,633 | | | — | | | 1,539,633 | | | | | |
Total | | $ | 30,669,797 | | | $ | (22,154,020) | | | $ | 8,515,777 | | | | | |
| | | | | | | | | | |
| | September 30, 2025 |
| (in thousands) | | Gross amounts of recognized liabilities | | Gross amounts offset on the Condensed Consolidated Balance Sheets (1) | | Net amounts of liabilities included on the Condensed Consolidated Balance Sheets | | | | |
| | | | | | | | | | |
| Securities sold under agreements to repurchase | | $ | 43,450,844 | | | $ | (22,154,020) | | | $ | 21,296,824 | | | | | |
| Securities lending | | 212 | | | — | | | 212 | | | | | |
Total | | $ | 43,451,056 | | | $ | (22,154,020) | | | $ | 21,297,036 | | | | | |
| (1) Includes financial instruments subject to enforceable master netting agreements that are permitted to be offset under ASC 210-20-45. | | | | |
NOTE 11. SECURITIES FINANCING ACTIVITIES (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | December 31, 2024 |
(in thousands) | | Gross amounts of recognized assets | | Gross amounts offset on the Consolidated Balance Sheets (1) | | Net amounts of assets included on the Consolidated Balance Sheets | | | | |
| | | | | | | | | | |
| Securities purchased under agreements to resell | | $ | 31,858,795 | | | $ | (24,707,285) | | | $ | 7,151,510 | | | | | |
| Securities borrowed | | 980,720 | | | — | | | 980,720 | | | | | |
Total | | $ | 32,839,515 | | | $ | (24,707,285) | | | $ | 8,132,230 | | | | | |
| | | | | | | | | | |
| | December 31, 2024 |
| (in thousands) | | Gross amounts of recognized liabilities | | Gross amounts offset on the Consolidated Balance Sheets (1) | | Net amounts of liabilities included on the Consolidated Balance Sheets | | | | |
| | | | | | | | | | |
| Securities sold under agreements to repurchase | | $ | 41,010,233 | | | $ | (24,707,285) | | | $ | 16,302,948 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| (1) Includes financial instruments subject to enforceable master netting agreements that are permitted to be offset under ASC 210-20-45. | | | | |
The following table presents the gross amounts of liabilities associated with Securities Financing Activities by remaining contractual maturity as of the date indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2025 |
| (in thousands) | Open and overnight | | Up to 30 days | | 31-90 days | | Greater than 90 days | | Total |
| Securities sold under agreements to repurchase | $ | 27,615,699 | | | $ | 6,624,755 | | | $ | 4,605,452 | | | $ | 4,604,938 | | | $ | 43,450,844 | |
| Securities lending | 212 | | | — | | | — | | | — | | | 212 | |
| Total | $ | 27,615,911 | | | $ | 6,624,755 | | | $ | 4,605,452 | | | $ | 4,604,938 | | | $ | 43,451,056 | |
The following table presents the gross amounts of liabilities associated with Securities Financing Activities by class of underlying collateral as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 | December 31, 2024 |
| (in thousands) | | Repurchase agreements | | Securities lending | | Total | Repurchase agreements | | Securities lending | | Total |
| | | | | | | | | | | |
U.S. Treasury | | $ | 22,167,925 | | | $ | — | | | $ | 22,167,925 | | $ | 23,367,567 | | | $ | — | | | $ | 23,367,567 | |
Residential agency MBS | | 19,429,528 | | | — | | | 19,429,528 | | 15,896,929 | | | — | | | 15,896,929 | |
| Corporate and other securities | | 1,853,391 | | | 212 | | | 1,853,603 | | 1,745,737 | | | — | | | 1,745,737 | |
Total | | $ | 43,450,844 | | | $ | 212 | | | $ | 43,451,056 | | $ | 41,010,233 | | | $ | — | | | $ | 41,010,233 | |
NOTE 12. DERIVATIVES
General
Derivatives represent contracts between parties that usually require little or no initial net investment and result in one or both parties delivering cash or another type of asset to the other party based on a notional amount and an underlying asset, index, interest rate or future purchase commitment or option as specified in the contract. Derivative transactions are often measured in terms of notional amount, but this amount is generally not exchanged, is not recorded on the balance sheet and does not represent the Company`s exposure to credit loss. The notional amount is the basis on which the financial obligation of each party to the derivative contract is calculated to determine required payments under the contract. The Company controls the credit risk of its derivative contracts through credit approvals, limits and monitoring procedures. The underlying variable is typically a referenced interest rate (commonly the OIS rate or a SOFR-based rate), security, credit spread or index.
The Company’s capital markets and mortgage banking activities are subject to price risk. The Company employs various tools to measure and manage price risk in its portfolios. In addition, the Board of Directors has established certain limits relative to positions and activities. The level of price risk exposure at any given time depends on the market environment and expectations of future price and market movements and will vary from period to period.
See Note 13 to the Condensed Consolidated Financial Statements for discussion of the valuation methodology for derivative instruments.
Credit Risk Contingent Features
The Company has entered into certain derivative contracts that require the posting of collateral to counterparties when those contracts are in a net liability position. The amount of collateral to be posted is based on the amount of the net liability and thresholds generally related to the Company's long-term senior unsecured credit ratings. In a limited number of instances, counterparties also have the right to terminate their ISDA Master Agreements if the Company's ratings fall below a specified level, typically investment grade. As of September 30, 2025, derivatives in this category had a fair value of zero. The credit ratings of the Company and SBNA are currently considered investment grade. As of September 30, 2025, no additional collateral would be required if there were a further 1- or 2- notch downgrade by either S&P or Moody's.
As of September 30, 2025 and December 31, 2024, the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting or termination provisions based on the Company's ratings) that were in a net liability position totaled $6.7 million and $7.5 million, respectively. The Company had $7.0 million and $6.2 million in cash and securities collateral posted to cover those positions as of September 30, 2025 and December 31, 2024, respectively.
Hedge Accounting
Management uses derivative instruments designated as hedges to mitigate the impact of interest rate and foreign exchange rate movements on the fair value of certain assets and liabilities and on highly probable forecasted cash flows. These instruments primarily include interest rate swaps that have underlying interest rates based on key benchmark indices. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated interest rate environment.
Interest rate swaps are generally used to convert fixed-rate assets and liabilities to variable rate assets and liabilities and vice versa. The Company utilizes interest rate swaps that have a high degree of correlation to the related financial instrument.
Fair Value Hedges
The Company enters into derivatives to hedge the risk of changes in fair value of a portion of its AFS debt securities portfolio. These derivatives are designated as fair value hedges at inception. The gains/(losses) from changes in the fair value of the hedging derivative and the offsetting gains/(losses) from changes in the fair value of the related underlying hedged items due to the hedged risk are reported in the same line item in the Condensed Consolidated Statements of Operations as earnings from the hedged items. The cumulative fair value hedge basis adjustments included in the carrying amount of hedged assets is reversed through earnings in future periods as an adjustment to yield. The Company includes gains/(losses) on the hedging derivatives and the related hedged items in the assessment of hedge effectiveness. All of these swaps have been deemed highly effective fair value hedges. The last of the hedges is scheduled to expire in February 2030. The Company has entered into fair value hedges of portions of a closed portfolio of approximately $2.5 billion of AFS debt securities, using the portfolio layer method.
NOTE 12. DERIVATIVES (continued)
The carrying amount and fair value hedge adjustment of hedged assets at the dates indicated was:
| | | | | | | | | | | | | | | | | | | | | | | |
| Carrying Amount of Hedged Assets | | Amount of Fair Value Hedge Adjustment Included in the Carrying Amount |
| September 30, 2025 | | December 31, 2024 | | September 30, 2025 | | December 31, 2024 |
| Debt securities AFS (Note 2) | $ | 1,872,857 | | | $ | 2,446,611 | | | $ | 27,143 | | | $ | 78,389 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Cash Flow Hedges
The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating-rate assets and liabilities and forecasted issuances of borrowed funds. The Company also has foreign exchange contracts designed to hedge certain contractual payments in foreign currencies.
Except as noted below, all of these derivatives have been deemed highly effective cash flow hedges. The gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same Condensed Consolidated Statements of Operations line item as the earnings effect of the hedged item.
During the third quarter of 2024, the Company discontinued cash flow hedges with an aggregate notional amount of $500.0 million that were no longer highly effective and it is probable that the forecasted transaction will not occur. The Company de-designated the hedge relationship, resulting in the reclassification of $4.6 million from AOCI to non-interest income.
The last of the hedges is scheduled to expire in January 2028. The Company includes all components of each derivative's gain or loss in the assessment of hedge effectiveness. As of September 30, 2025, the Company estimated that approximately $28.0 million of unrealized losses included in AOCI would be reclassified to earnings during the subsequent twelve months as the future cash flows occur.
Derivatives Designated in Hedge Relationships – Notional and Fair Values
Derivatives designated as accounting hedges included the following as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | Notional
Amount | | Asset | | Liability | | Weighted Average Receive Rate | | Weighted Average Pay
Rate | | Weighted Average Life
(Years) |
| September 30, 2025 | | | | | | | | | | | | |
| Fair value hedges: | | | | | | | | | | | | |
| Cross-currency swaps | | $ | 18,766 | | | $ | 123 | | | $ | 1,487 | | | 4.67 | % | | 9.90 | % | | 2.08 |
Interest rate swaps | | 3,900,000 | | | 17,029 | | | 4,375 | | | 2.13 | % | | 3.34 | % | | 2.27 |
| | | | | | | | | | | | |
| Cash flow hedges: | | | | | | | | | | | | |
Pay fixed - receive variable interest rate swaps | | $ | 1,145,500 | | | $ | 981 | | | $ | — | | | 4.24 | % | | 3.72 | % | | 3.05 |
| Pay variable - receive fixed interest rate swaps | | 14,250,000 | | | 59,327 | | | 51,259 | | | 3.29 | % | | 1.20 | % | | 1.23 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total | | $ | 19,314,266 | | | $ | 77,460 | | | $ | 57,121 | | | 3.11 | % | | 1.79 | % | | 1.55 |
| | | | | | | | | | | | |
| December 31, 2024 | | | | | | | | | | | | |
| Fair value hedges: | | | | | | | | | | | | |
| Cross-currency swaps | | $ | 18,766 | | | $ | 532 | | | $ | 137 | | | 4.97 | % | | 9.90 | % | | 2.83 |
Interest rate swaps | | 5,525,000 | | | 61,708 | | | — | | | 2.12 | % | | 3.45 | % | | 2.30 |
| Cash flow hedges: | | | | | | | | | | | | |
| Pay fixed — receive variable interest rate swaps | | $ | 4,280,700 | | | $ | 33,116 | | | $ | 75 | | | 2.20 | % | | 3.53 | % | | 2.32 |
| Pay variable - receive fixed interest rate swaps | | 11,650,000 | | | 12,700 | | | 143,872 | | | 3.02 | % | | 2.00 | % | | 1.25 |
| | | | | | | | | | | | |
| Total | | $ | 21,474,466 | | | $ | 108,056 | | | $ | 144,084 | | | 2.63 | % | | 2.68 | % | | 1.73 |
NOTE 12. DERIVATIVES (continued)
Other Derivative Activities
The Company also enters into derivatives that are not designated as accounting hedges under GAAP. Although these derivatives are used to hedge risk and are considered economic hedges, they are not designated as accounting hedges because the contracts they are hedging are often carried at fair value on the balance sheet, resulting in generally symmetrical accounting treatment for the hedging instrument and the hedged item.
Customer-related derivatives
The Company offers derivatives to its customers in connection with their risk management requirements related to foreign exchange and lending arrangements. These derivatives primarily consist of interest rate swaps, caps, floors, and foreign exchange contracts. Risk exposure from customer positions is managed through offsetting transactions with other dealers, including Santander. Refer to Note 17 for related party transactions.
Broker dealer activities
The Company uses exchange-traded options and futures, credit default swaps, and forward-settling securities trades as part of its trading business, as well as to actively manage risk exposures that arise from its trading in cash instruments.
Structured financing activities
In certain circumstances, the Company is required to hedge its interest rate risk on revolving credit and term borrowings related to its secured structured financings. The Company uses interest rate caps to satisfy these requirements and enters into offsetting option contracts.
Foreign exchange activities
The Company uses foreign exchange contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities. Foreign exchange contracts, which include spot and forward contracts as well as cross-currency swaps, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date and may or may not be physically settled depending on the Company’s needs. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate.
Mortgage Banking Derivatives
The Company typically retains the servicing rights related to residential mortgage loans that are sold. Most of the Company`s residential MSRs are accounted for at fair value. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase MBS.
Other derivative activities
Other derivative instruments primarily include forward contracts related to certain investment securities sales, loan sales, an OIS, and a total return swap on Visa, Inc. Class B common shares.
NOTE 12. DERIVATIVES (continued)
Derivatives Not Designated in Hedge Relationships – Notional and Fair Values
Other derivative activities included the following as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Notional | | Asset derivatives
Fair value | | Liability derivatives
Fair value |
| (in thousands) | | September 30, 2025 | | December 31, 2024 | | September 30, 2025 | | December 31, 2024 | | September 30, 2025 | | December 31, 2024 |
| Mortgage banking derivatives: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total mortgage banking risk management | | $ | 611,000 | | | $ | 601,000 | | | $ | 4,326 | | | $ | 9,329 | | | $ | 14,895 | | | $ | 26,777 | |
| | | | | | | | | | | | |
| Customer-related derivatives: | | | | | | | | | | | | |
| Swaps receive fixed | | 13,667,056 | | | 15,236,535 | | | 54,107 | | | 8,817 | | | 356,606 | | | 633,072 | |
| Swaps pay fixed | | 14,874,898 | | | 15,631,475 | | | 367,579 | | | 648,895 | | | 57,692 | | | 9,432 | |
| | | | | | | | | | | | |
| Other | | 9,471,757 | | | 8,976,013 | | | 140,433 | | | 65,124 | | | 138,348 | | | 64,461 | |
| Total customer-related derivatives | | 38,013,711 | | | 39,844,023 | | | 562,119 | | | 722,836 | | | 552,646 | | | 706,965 | |
| | | | | | | | | | | | |
| Other derivative activities: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Foreign exchange contracts | | 9,548,150 | | | 7,376,101 | | | 87,200 | | | 125,642 | | | 101,467 | | | 86,461 | |
| Interest rate swap agreements | | 100 | | | 100 | | | 3 | | | 5 | | | — | | | — | |
| Interest rate cap agreements | | 799,600 | | | 1,324,775 | | | 68 | | | 23,133 | | | — | | | — | |
| Options for interest rate cap agreements | | 799,600 | | | 1,324,775 | | | — | | | — | | | 68 | | | 23,133 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Other | | 89,826,691 | | | 48,909,284 | | | 41,427 | | | 138,124 | | | 34,599 | | | 31,290 | |
| | | | | | | | | | | | |
| Total | | $ | 139,598,852 | | | $ | 99,380,058 | | | $ | 695,143 | | | $ | 1,019,069 | | | $ | 703,675 | | | $ | 874,626 | |
NOTE 12. DERIVATIVES (continued)
Gains (Losses) on all Derivatives
The following Condensed Consolidated Statements of Operations line items were impacted by the Company’s derivative activities for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | | | Three months ended September 30, | | Nine months ended September 30, |
| | Line Item | | 2025 | | 2024 | | 2025 | | 2024 | | |
| | | | | | | | |
| Fair value hedges: | | | | | | | | | | | | |
| Cross-currency swaps | | Net interest income | | $ | (148) | | | $ | (528) | | | $ | (890) | | | $ | (526) | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Interest rate swaps | | Net interest income | | 6,607 | | | 9,872 | | | 18,394 | | | 34,158 | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Derivative Activity (1) | | | | | | | | | | | | |
| Cash flow hedges: | | | | | | | | | | | | |
| Pay fixed-receive variable interest rate swaps | | Interest expense on borrowings | | 6,106 | | | 15,823 | | | 18,444 | | | 42,435 | | | |
| Pay variable receive-fixed interest rate swap | | Interest income on loans | | (38,318) | | | (72,727) | | | (109,649) | | | (248,896) | | | |
| | | | | | | | | | | | |
| Interest rate floors | | Interest income on loans | | — | | | — | | | — | | | (46) | | | |
| Other derivative activities: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Mortgage banking derivatives | | Non Interest income | | 49 | | | 5,362 | | | 3,437 | | | (492) | | | |
| Customer-related derivatives | | Non interest income | | (3,294) | | | (30,740) | | | 80,365 | | | (20,810) | | | |
| | | | | | | | | | | | |
| Foreign exchange | | Non interest income | | 32,601 | | | 31,971 | | | (57,081) | | | 47,212 | | | |
| Interest rate swaps, caps, and options | | Non interest income | | — | | | (1,340) | | | (2) | | | 24,068 | | | |
| Net interest income | | (100) | | | (721) | | | (599) | | | (3,031) | | | |
| | | | | | | | | | | | |
| Other | | Non interest income | | (90,368) | | | (39,787) | | | (286,961) | | | (6,706) | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(1) Gains are disclosed as positive numbers while losses are shown as a negative number regardless of the line item being affected.
The net amount of change recognized in OCI for cash flow hedge derivatives were gains of $22.9 million and $97.3 million, and $76.8 million and $179.8 million, net of tax, for the three months and nine months ended September 30, 2025 and 2024, respectively.
The net amount of changes reclassified from OCI into earnings for cash flow hedge derivatives were gains of $3.0 million and $8.0 million, and $5.6 million and $5.6 million, net of tax, for the three months and nine months ended September 30, 2025 and 2024, respectively.
Disclosures about Offsetting Assets and Liabilities
The Company enters into legally enforceable master netting agreements which reduce risk by permitting netting of transactions with the same counterparty on the occurrence of certain events. A master netting agreement allows two counterparties the ability to net-settle amounts under all contracts, including any related collateral posted, through a single payment and in a single currency. The right to offset and certain terms regarding the collateral process, such as valuation, credit events and settlement, are contained in the applicable master agreement. The Company's financial instruments, including resell and repurchase agreements, securities lending arrangements, derivatives, and cash collateral, may be eligible for offset on its Condensed Consolidated Balance Sheets.
The Company has elected to present derivative balances on a gross basis even if the derivative is subject to a legally enforceable nettable ISDA Master Agreement for all trades executed after April 1, 2013. Collateral that is received or pledged for these transactions is disclosed within the “Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets” section of the tables below.
NOTE 12. DERIVATIVES (continued)
Information about financial assets and liabilities that are eligible for offset on the Condensed Consolidated Balance Sheets was as follows for the dates indicated:
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| | Offsetting of Financial Assets |
| | | | | | | | | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets |
| (in thousands) | | Gross Amounts of Recognized Assets | | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | | Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets | | | Collateral Received (2) | | | Net Amount |
| September 30, 2025 | | | | | | | | | | | | |
| Fair value hedges | | $ | 17,152 | | | $ | — | | | $ | 17,152 | | | | $ | (10,488) | | | | $ | 6,664 | |
| Cash flow hedges | | 60,308 | | | — | | | 60,308 | | | | (37,918) | | | | 22,390 | |
Other derivative activities (1) | | 695,143 | | | — | | | 695,143 | | | | (70,368) | | | | 624,775 | |
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| Total Derivative Assets | | $ | 772,603 | | | $ | — | | | $ | 772,603 | | | | $ | (118,774) | | | | $ | 653,829 | |
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| December 31, 2024 | | | | | | | | | | | | |
| Fair value hedges | | $ | 62,240 | | | $ | — | | | $ | 62,240 | | | | $ | (23,509) | | | | $ | 38,731 | |
| Cash flow hedges | | 45,816 | | | — | | | 45,816 | | | | (39,703) | | | | 6,113 | |
Other derivative activities (1) | | 1,019,069 | | | (5,145) | | | 1,013,924 | | | | (238,021) | | | | 775,903 | |
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| Total Derivative Assets | | $ | 1,127,125 | | | $ | (5,145) | | | $ | 1,121,980 | | | | $ | (301,233) | | | | $ | 820,747 | |
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(1)Includes customer-related and other derivatives.
(2)Collateral received includes cash, cash equivalents, and other financial instruments. Cash collateral received is reported in Other liabilities, as applicable, in the Condensed Consolidated Balance Sheets. Financial instruments that are pledged to the Company are not reflected in the accompanying Condensed Consolidated Balance Sheets since the Company does not control or have the ability to re-hypothecate these instruments.
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| | Offsetting of Financial Liabilities |
| | | | | | | | | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets |
| (in thousands) | | Gross Amounts of Recognized Liabilities | | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | | Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets | | | Collateral Pledged (2) | | | Net Amount |
| September 30, 2025 | | | | | | | | | | | | |
| Fair value hedges | | $ | 5,862 | | | $ | — | | | $ | 5,862 | | | | $ | (265) | | | | $ | 5,597 | |
| Cash flow hedges | | 51,259 | | | — | | | 51,259 | | | | (27,340) | | | | 23,919 | |
Other derivative activities (1) | | 703,675 | | | — | | | 703,675 | | | | (25,426) | | | | 678,249 | |
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| Total Derivative Liabilities | | $ | 760,796 | | | $ | — | | | $ | 760,796 | | | | $ | (53,031) | | | | $ | 707,765 | |
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| December 31, 2024 | | | | | | | | | | | | |
| Fair value hedges | | $ | 137 | | | $ | — | | | $ | 137 | | | | $ | — | | | | $ | 137 | |
| Cash flow hedges | | 143,947 | | | — | | | 143,947 | | | | (72,891) | | | | 71,056 | |
Other derivative activities (1) | | 874,626 | | | (5,145) | | | 869,481 | | | | (29,281) | | | | 840,200 | |
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| Total Derivative Liabilities | | $ | 1,018,710 | | | $ | (5,145) | | | $ | 1,013,565 | | | | $ | (102,172) | | | | $ | 911,393 | |
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(1)Includes customer-related and other derivatives.
(2)Cash collateral pledged and financial instruments pledged is reported in Other assets in the Condensed Consolidated Balance Sheets. In certain instances, the Company is over-collateralized since the actual amount of collateral pledged exceeds the associated financial liability. As a result, the actual amount of collateral pledged that is reported in Other assets may be greater than the amount shown in the table above.
NOTE 13. FAIR VALUE
The Company estimates the fair value of certain assets and liabilities for both measurement and disclosure purposes. The fair value hierarchy categorizes the underlying assumptions and inputs to valuation techniques that are used to measure fair value into three levels as follows:
•Level 1 inputs are quoted prices in active markets for identical assets or liabilities that can be accessed as of the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
•Level 2 inputs are those other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3 inputs are those that are unobservable or not readily observable for the asset or liability and are used to measure fair value to the extent relevant observable inputs are not available.
Assets and liabilities measured at fair value, by their nature, result in a higher degree of financial statement volatility. See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for 2024 for a broad discussion of fair value measurement techniques. When available, the Company uses quoted market prices or matrix pricing in active markets to determine fair value and classifies such items as Level 1 or Level 2 assets or liabilities. If quoted market prices in active markets are not available, fair value is determined using third-party broker quotes and/or DCF models incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and liabilities valued using broker quotes and/or DCF models are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation.
The Company values assets and liabilities based on the principal market in which each would be sold (in the case of assets) or transferred (in the case of liabilities). The principal market is the forum with the greatest volume and level of activity. In the absence of a principal market, the valuation is based on the most advantageous market. In the absence of observable market transactions, the Company considers liquidity valuation adjustments to reflect the uncertainty in pricing the instruments.
The fair value of a financial asset is measured on a stand-alone basis and cannot be measured as a group, with the exception of certain financial instruments held and managed on a net portfolio basis. In measuring the fair value of a nonfinancial asset, the Company assumes the highest and best use of the asset by a market participant, not just the intended use, to maximize the value of the asset. The Company also considers whether any credit valuation adjustments are necessary based on the counterparty's credit quality. Any models used to determine fair values or validate dealer quotes based on the descriptions below are subject to review and testing as part of the Company's model validation and internal control testing processes.
NOTE 13. FAIR VALUE (continued)
The Company's Market Risk Department approves the methodologies used in the estimations of fair value, including the Company's Level 3 assets and liabilities. Price validation procedures are performed, and the results are reviewed for Level 3 assets and liabilities by the Market Risk Department. Price validation procedures performed for these assets and liabilities can include comparing current prices to historical pricing trends by collateral type and vintage, comparing prices by product type to indicative pricing grids published by market makers, and obtaining corroborating dealer prices for significant securities.
The Company reviews the assumptions utilized to determine fair value on a quarterly basis. Any changes in methodologies or significant inputs used in determining fair values are further reviewed to determine if a change in fair value level hierarchy has occurred. At December 31, 2023, the beneficial interest in the Structured LLC was determined to be Level 2 based on observed market execution. As a result of moving further from the purchase date and observed market execution, the Company is relying on a DCF method going forward for valuation. As a result, the $1.1 billion beneficial interest in the Structured LLC transferred from Level 2 to Level 3 during the first quarter of 2024.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the assets and liabilities that are measured at fair value on a recurring basis by major product category and fair value hierarchy as of the dates indicated:
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| (in thousands) | | Level 1 | | Level 2 | | Level 3 | | Balance at September 30, 2025 | | Level 1 | | Level 2 | | Level 3 | | Balance at December 31, 2024 |
| Financial assets: | | | | | | | | | | | | | | | | |
| U.S. Treasury securities | | $ | 715,838 | | | $ | — | | | $ | — | | | $ | 715,838 | | | $ | 304,440 | | | $ | — | | | $ | — | | | $ | 304,440 | |
| Corporate debt | | — | | | 13 | | | — | | | 13 | | | — | | | 13 | | | — | | | 13 | |
| ABS | | — | | | 993,911 | | | — | | | 993,911 | | | — | | | 748,033 | | | — | | | 748,033 | |
Beneficial interest in Structured LLC | | — | | | — | | | 1,097,711 | | | 1,097,711 | | | — | | | — | | | 1,198,985 | | | 1,198,985 | |
| MBS | | — | | | 4,653,899 | | | — | | | 4,653,899 | | | — | | | 4,881,161 | | | — | | | 4,881,161 | |
Investment in debt securities AFS (2) | | $ | 715,838 | | | $ | 5,647,823 | | | $ | 1,097,711 | | | $ | 7,461,372 | | | $ | 304,440 | | | $ | 5,629,207 | | | $ | 1,198,985 | | | $ | 7,132,632 | |
| Trading securities | | 3,635,654 | | | 12,711,312 | | | 206,607 | | | 16,553,573 | | | 2,150,785 | | | 8,165,771 | | | 6,267 | | | 10,322,823 | |
| Equity securities | | — | | | — | | | 831,512 | | | 831,512 | | | — | | | — | | | — | | | — | |
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RICs HFI (3) | | — | | | — | | | 5,818 | | | 5,818 | | | — | | | — | | | 9,039 | | | 9,039 | |
LHFS (1)(4) | | — | | | 1,474,755 | | | — | | | 1,474,755 | | | — | | | 1,256,401 | | | — | | | 1,256,401 | |
| MSRs | | — | | | — | | | 80,950 | | | 80,950 | | | — | | | — | | | 90,958 | | | 90,958 | |
Other assets - derivatives (2) | | 794 | | | 771,771 | | | 38 | | | 772,603 | | | 485 | | | 1,121,472 | | | 23 | | | 1,121,980 | |
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Total financial assets (5) | | $ | 4,352,286 | | | $ | 20,605,661 | | | $ | 2,222,636 | | | $ | 27,180,583 | | | $ | 2,455,710 | | | $ | 16,172,851 | | | $ | 1,305,272 | | | $ | 19,933,833 | |
| Financial liabilities: | | | | | | | | | | | | | | | | |
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| Trading liabilities | | 2,979,823 | | | 289,647 | | | — | | | 3,269,470 | | | 2,220,496 | | | 240,117 | | | — | | | 2,460,613 | |
Other liabilities - derivatives (2) | | 142 | | | 759,563 | | | 1,091 | | | 760,796 | | | 217 | | | 1,013,296 | | | 52 | | | 1,013,565 | |
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| Total financial liabilities | | $ | 2,979,965 | | | $ | 1,049,210 | | | $ | 1,091 | | | $ | 4,030,266 | | | $ | 2,220,713 | | | $ | 1,253,413 | | | $ | 52 | | | $ | 3,474,178 | |
(1) LHFS disclosed on the Condensed Consolidated Balance Sheets also includes LHFS that are held at the lower of cost or fair value and are not presented within this table.
(2) Refer to Note 2 for the fair value of investment securities and to Note 12 for the fair values of derivative assets and liabilities on a further disaggregated basis.
(3) Certain RICs collateralized by vehicle titles and RV/marine loans.
(4) Residential mortgage loans and commercial mortgage loans.
(5) Approximately $2.2 billion of these financial assets were measured using model-based techniques, or Level 3 inputs, and represented approximately 8.2% of total assets measured at fair value on a recurring basis and approximately 1.3% of total consolidated assets.
NOTE 13. FAIR VALUE (continued)
Valuation Processes and Techniques - Recurring Fair Value Assets and Liabilities
The following is a description of the valuation techniques used for instruments measured at fair value on a recurring basis:
Investments in debt securities AFS
Investments in debt securities AFS are accounted for at fair value. The Company utilizes a third-party pricing service to value its investment securities portfolios on a global basis. Its primary pricing service has consistently proved to be a high quality third-party pricing provider. For those investments not valued by pricing vendors, other trusted market sources are utilized. The Company monitors and validates the reliability of vendor pricing on an ongoing basis, which can include pricing methodology reviews, performing detailed reviews of the assumptions and inputs used by the vendor to price individual securities, and price validation testing. Price validation testing is performed independently of the risk-taking function and can include corroborating the prices received from third-party vendors with prices from another third-party source, reviewing valuations of comparable instruments, comparison to internal valuations, or by reference to recent sales of similar securities.
The classification of securities within the fair value hierarchy is based upon the activity level in the market for the security type and the observability of the inputs used to determine their fair values. Actively traded quoted market prices for debt securities AFS, such as government agency securities, corporate debt, state and municipal securities, and MBS, are not readily available. The Company's principal markets for its investment securities are the secondary institutional markets with an exit price that is predominantly reflective of bid-level pricing in these markets. These investment securities are priced by third-party pricing vendors. The third-party vendors use a variety of methods when pricing these securities that incorporate relevant observable market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. These investment securities are, therefore, considered Level 2.
Certain ABS are valued using DCF models. The DCF models are obtained from a third-party pricing vendor which uses observable market data and therefore are classified as Level 2.
The Company's beneficial interest in the Structured LLC was acquired in December 2023, and is valued using an internally-developed DCF model and is classified as Level 3 at September 30, 2025. Significant assumptions used in evaluation include, discount spread, loss estimates, and extension of loans. Significant changes in any of these inputs could result in a higher or lower fair value measurement.
Securities Financing Activities
No quoted prices exist for Securities Financing Activities, so fair value is determined using a DCF technique. Cash flows are estimated based on the terms of the contract. These cash flows are discounted using interest rates appropriate to the maturity of the instrument as well as the nature of the underlying collateral. Securities Financing Activities are classified as Level 2.
LHFI
For certain RICs reported in LHFI, net, the Company has elected the FVO. The estimated fair value of all RICs HFI is estimated using a DCF model and is classified as Level 3.
LHFS
For certain LHFS portfolios, the Company has elected the FVO and the portfolios are measured at fair value on a recurring basis. These loans consisted primarily of loans attributed to CIB whole loan aggregation and bridge lending programs. The fair value of these loans was based on estimated market rates for similar loans and certain forward sale agreements and the loans are considered Level 2. See further discussion below in the section captioned "FVO for Financial Assets and Financial Liabilities."
NOTE 13. FAIR VALUE (continued)
MSRs
The Company maintains an MSR asset accounted for at fair value for sold residential real estate loans serviced for others. At September 30, 2025 and December 31, 2024, the balance of these loans serviced for others was $6.8 billion and $7.4 billion, respectively. Changes in fair value of the MSR are recorded through Miscellaneous income, net on the Condensed Consolidated Statements of Operations.
The Company has elected to measure its residential MSRs at fair value to be consistent with the risk management strategy to hedge changes in the fair value of these assets. The fair value of residential MSRs is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates (reflective of a market participant’s return on an investment for similar assets), servicing costs, and other economic factors which are determined based on current market conditions. Historically, servicing costs and discount rates have been less volatile than prepayment rates, which are directly correlated with changes in market interest rates. Increases in prepayment rates, discount rates and servicing costs result in lower valuations of MSRs. Decreases in the anticipated earnings rate on escrow and similar balances result in lower valuations of MSRs. Assumptions incorporated into the residential MSR valuation model reflect management's best estimate of factors that a market participant would use in valuing the residential MSRs, as well as future expectations. Although sales of residential MSRs do occur, residential MSRs do not trade in an active market with readily observable prices. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase MBS. See further discussion on these derivative activities in Note 12 to these Condensed Consolidated Financial Statements.
As a benchmark for the reasonableness of the residential MSRs' fair value, opinions of value from Brokers are obtained. Brokers provide a range of values based upon their own DCF calculations of our portfolio that reflect conditions in the secondary market and any recently executed servicing transactions. Management compares the internally-developed residential MSR values to the ranges of values received from brokers. If the residential MSRs' fair value falls outside of the Brokers' ranges, management will assess whether a valuation adjustment is warranted. The residential MSRs value is considered to represent a reasonable estimate of fair value. MSRs are classified as Level 3.
Gains and losses on MSRs are recognized on the Condensed Consolidated Statements of Operations through Miscellaneous income, net.
Significant assumptions used in the valuation of residential MSRs include CPRs and the discount rate. Other important valuation assumptions include market-based servicing costs and the anticipated earnings on escrow and similar balances held by the Company in the normal course of mortgage servicing activities. Below is a sensitivity analysis of the most significant inputs utilized by the Company in the evaluation of residential MSRs:
•A 10% and 20% increase in the CPR speed would decrease the fair value of the residential servicing asset by $2.2 million and $4.3 million, respectively, at September 30, 2025.
•A 10% and 20% increase in the discount rate would decrease the fair value of the residential servicing asset by $3.0 million and $5.7 million, respectively, at September 30, 2025.
Significant increases/(decreases) in any of those inputs in isolation would result in significantly (lower)/higher fair value measurements, respectively. These sensitivity calculations are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption, while in reality changes in one factor may result in changes in another, which may either magnify or counteract the effect of the change. Prepayment estimates generally increase when market interest rates decline and decrease when market interest rates rise. Discount rates typically increase when market interest rates increase and/or credit and liquidity risks increase and decrease when market interest rates decline and/or credit and liquidity conditions improve.
NOTE 13. FAIR VALUE (continued)
Derivatives
The valuation of these instruments is determined using commonly accepted valuation techniques, including DCF analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable and unobservable market-based inputs. The fair value represents the estimated amount the Company would receive or pay to terminate the contract or agreement, taking into account current interest rates, foreign exchange rates, equity prices and, when appropriate, the current creditworthiness of the counterparties.
The Company incorporates credit valuation adjustments in the fair value measurement of its derivatives to reflect the counterparty's nonperformance risk, except for those derivative contracts with associated credit support annexes which provide credit enhancements, such as collateral postings and guarantees. The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. Certain of the Company's derivatives utilize Level 3 inputs, which are primarily related to total return settlement derivative contracts.
The DCF model is utilized to determine the fair value of the total return settlement derivative contracts. The significant unobservable inputs for total return settlement derivative contracts used in the fair value measurement of the Company's liabilities are discount percentages, which are based on comparable financial instruments. See Note 12 to the Condensed Consolidated Financial Statements for a discussion of derivatives activity.
Trading liabilities
The sales and trading of financial instruments are recorded on the trade date. Trading liabilities includes amounts payable for securities transactions that have not reached their contractual settlement date. Financial instruments owned and securities sold, not yet purchased, are carried at fair value.
Equity securities
The Company holds interests in nonmarketable equity investments through a U.K. Limited Partnership formed to invest in early-stage financial technology companies. The valuation of direct and indirect private equity investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. In accordance with ASC 820, Fair Value Measurement, management uses all available information in making fair value estimates of these investments. Various valuation techniques are used for direct investments as appropriate for the nature of the security, including multiples of revenues of the entity, independent appraisals, and recent and anticipated financing and sale transactions with third parties. A multiple of revenue calculation is the valuation technique utilized most frequently and is the most significant unobservable input used in such calculation. In addition, the Company applies a liquidity discount factor to adjust for the inherent inability to convert the underlying investments in early-stage financial technology companies to cash quickly and at a minimal cost.
Management evaluates the reasonableness of these assumptions each reporting period in light of current market conditions, the investee’s financial performance, and other factors that could affect the estimated fair value. The use of different assumptions or methodologies could result in materially different fair value estimates. Significant decreases (increases) in the multiple of earnings could result in a significantly lower (higher) fair value measurement. Generally, direct equity investments are classified as Level 3.
NOTE 13. FAIR VALUE (continued)
Level 3 Rollforward for Assets and Liabilities Measured at Fair Value on a Recurring Basis
The tables below present the changes in Level 3 balances for those assets and liabilities measured at fair value on a recurring basis for the periods indicated.
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| | Three months ended September 30, 2025 | | Three months ended September 30, 2024 | | |
| (in thousands) | | Beneficial Interest in Structured LLC | | RICs HFI | | MSRs | | Derivatives, net | | Equity Securities | | Other | | Total | | Beneficial interest in Structured LLC | | RICs HFI | | MSRs | | Derivatives, net | | Equity Securities | | Other | | Total | | |
| Balances, beginning of period | | $ | 1,117,878 | | | $ | 6,890 | | | $ | 81,842 | | | $ | (20) | | | $ | — | | | $ | 156,547 | | | $ | 1,363,137 | | | $ | 1,120,639 | | | $ | 11,373 | | | $ | 96,298 | | | $ | (146) | | | $ | — | | | $ | 7,896 | | | $ | 1,236,060 | | | |
| Gains / (losses) in OCI | | (10,409) | | | — | | | — | | | — | | | — | | | — | | | (10,409) | | | 89,020 | | | — | | | — | | | — | | | — | | | — | | | 89,020 | | | |
| Gains/(losses) in earnings | | — | | | — | | | 1,570 | | | (1,033) | | | — | | | (6,485) | | | (5,948) | | | — | | | — | | | (6,755) | | | 17 | | | — | | | (3,742) | | | (10,480) | | | |
| Additions/Issuances | | — | | | — | | | — | | | — | | | 831,512 | | | 10,048 | | | 841,560 | | | — | | | — | | | — | | | — | | | — | | | 1,538 | | | 1,538 | | | |
| Transfer from Level 2 | | — | | | — | | | — | | | — | | | — | | | 67,844 | | | 67,844 | | | — | | | — | | | — | | | — | | | — | | | 6 | | | 6 | | | |
Settlements(1) | | (9,758) | | | (1,072) | | | (2,462) | | | — | | | — | | | (21,347) | | | (34,639) | | | (3,884) | | | (1,264) | | | (2,351) | | | — | | | — | | | (236) | | | (7,735) | | | |
| Balances, end of period | | $ | 1,097,711 | | | $ | 5,818 | | | $ | 80,950 | | | $ | (1,053) | | | $ | 831,512 | | | $ | 206,607 | | | $ | 2,221,545 | | | $ | 1,205,775 | | | $ | 10,109 | | | $ | 87,192 | | | $ | (129) | | | $ | — | | | $ | 5,462 | | | $ | 1,308,409 | | | |
| Changes in unrealized gains (losses) included in earnings related to balances still held at end of period | | $ | — | | | $ | — | | | $ | 1,570 | | | $ | (1,034) | | | $ | — | | | $ | (6,485) | | | $ | (5,949) | | | $ | — | | | $ | — | | | $ | (6,755) | | | $ | 17 | | | $ | — | | | $ | (3,742) | | | $ | (10,480) | | | |
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| | Nine months ended September 30, 2025 | | Nine months ended September 30, 2024 | | |
| (in thousands) | | Beneficial Interest in Structured, LLC | | RICs HFI | | MSRs | | Derivatives, net | | Equity Securities | | Other | | Total | | Beneficial interest in Structured, LLC | | RICs HFI | | MSRs | | Derivatives, net | | Equity Securities | | Other | | Total | | |
| Balances, beginning of period | | $ | 1,198,985 | | | $ | 9,039 | | | $ | 90,958 | | | $ | (29) | | | $ | — | | | $ | 6,267 | | | $ | 1,305,220 | | | $ | — | | | $ | 13,888 | | | $ | 94,266 | | | $ | (596) | | | $ | — | | | $ | 552 | | | $ | 108,110 | | | |
| Gain / (losses) in OCI | | (80,823) | | | — | | | — | | | — | | | — | | | — | | | (80,823) | | | 106,931 | | | — | | | — | | | — | | | — | | | — | | | 106,931 | | | |
| Gains/(losses) in earnings | | — | | | — | | | (3,236) | | | (1,024) | | | — | | | (6,352) | | | (10,612) | | | — | | | — | | | 23 | | | 467 | | | — | | | (1,138) | | | (648) | | | |
| Additions/Issuances | | — | | | — | | | — | | | — | | | 831,512 | | | 10,098 | | | 841,610 | | | — | | | — | | | — | | | — | | | — | | | 3,242 | | | 3,242 | | | |
| Transfers from Level 2 | | — | | | — | | | — | | | — | | | — | | | 220,247 | | | 220,247 | | | 1,122,510 | | | — | | | — | | | — | | | — | | | 5,583 | | | 1,128,093 | | | |
Settlements (1) | | (20,451) | | | (3,221) | | | (6,772) | | | — | | | — | | | (23,653) | | | (54,097) | | | (23,666) | | | (3,779) | | | (7,097) | | | — | | | — | | | (2,777) | | | (37,319) | | | |
| Balances, end of period | | $ | 1,097,711 | | | $ | 5,818 | | | $ | 80,950 | | | $ | (1,053) | | | $ | 831,512 | | | $ | 206,607 | | | $ | 2,221,545 | | | $ | 1,205,775 | | | $ | 10,109 | | | $ | 87,192 | | | $ | (129) | | | $ | — | | | $ | 5,462 | | | $ | 1,308,409 | | | |
| Changes in unrealized gains (losses) included in earnings related to balances still held at end of period | | $ | — | | | $ | — | | | $ | (3,236) | | | $ | (1,025) | | | $ | — | | | $ | (6,352) | | | $ | (10,613) | | | $ | — | | | $ | — | | | $ | 23 | | | $ | 467 | | | $ | — | | | $ | (1,138) | | | $ | (648) | | | |
(1)Settlements include charge-offs, prepayments, paydowns and maturities.
NOTE 13. FAIR VALUE (continued)
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company may be required to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP from time to time. These adjustments to fair value usually result from application of lower-of-cost-or-fair value accounting or certain impairment measures. Assets measured at fair value on a nonrecurring basis that were still held on the balance sheet were as follows at the dates indicated:
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| (in thousands) | | Level 1 | | Level 2 | | Level 3 | | Balance at September 30, 2025 | | Level 1 | | Level 2 | | Level 3 | | Balance at December 31, 2024 |
| Impaired commercial LHFI | | $ | — | | | $ | 334,587 | | | $ | 36,521 | | | $ | 371,108 | | | $ | — | | | $ | 208,820 | | | $ | 35,030 | | | $ | 243,850 | |
| Foreclosed assets | | — | | | 32,750 | | | — | | | 32,750 | | | — | | | 74,759 | | | — | | | 74,759 | |
| Vehicle inventory | | — | | | 369,587 | | | — | | | 369,587 | | | — | | | 348,603 | | | — | | | 348,603 | |
| LHFS | | — | | | — | | | 93,060 | | | 93,060 | | | — | | | — | | | 77,552 | | | 77,552 | |
| Auto loans impaired due to bankruptcy | | — | | | 167,960 | | | — | | | 167,960 | | | — | | | 148,053 | | | — | | | 148,053 | |
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Valuation Processes and Techniques - Nonrecurring Fair Value Assets and Liabilities
Impaired commercial LHFI in the table above represents the recorded investment of impaired commercial loans for which the Company measures impairment during the period based on the fair value of the underlying collateral supporting the loan. Written offers to purchase a specific impaired loan are considered observable market inputs, which are considered Level 1 inputs. Appraisals are obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and are considered Level 2 inputs. Loans for which the value of the underlying collateral is determined using a combination of real estate appraisals, field examinations and internal calculations are classified as Level 3. The inputs in the internal calculations may include the loan balance, estimation of the collectability of the underlying receivables held by the customer used as collateral, sale and liquidation value of the inventory held by the customer used as collateral and historical loss-given-default parameters. In cases in which the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized.
Foreclosed assets represent the recorded investment in assets taken during the period presented in foreclosure of defaulted loans and are primarily comprised of commercial and residential real properties and generally measured at fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of market value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace.
The Company estimates the fair value of its vehicles, which are obtained either through repossession or lease termination, using historical auction rates and current market values of used cars.
The Company has LHFS portfolios that are measured at fair value on a nonrecurring basis primarily consisting of commercial loans. The estimated fair value of these LHFS is calculated based on a combination of estimated market rates for similar loans with similar credit risks and a DCF analysis in which the Company uses significant unobservable inputs on key assumptions, including historical default rates and adjustments to reflect voluntary prepayments, prepayment rates, discount rates reflective of the cost of funding, and credit loss expectations. These are classified Level 3.
For loans that are considered collateral-dependent, such as certain bankruptcy loans, impairment is measured based on the fair value of the collateral less its estimated cost to sell. For the underlying collateral, the estimated fair value is obtained using historical auction rates and current market levels of the collateral securing the loans.
NOTE 13. FAIR VALUE (continued)
The estimated fair value of goodwill is calculated using unobservable inputs and is classified as Level 3. Goodwill is written down to fair value when, as a result of an annual or interim goodwill impairment test, an impairment is identified and recognized. Fair value is calculated using widely-accepted valuation techniques, such as the guideline public company market approach (earnings and price-to-tangible book value multiples of comparable public companies) and the income approach (the DCF method). The Company uses a combination of these accepted methodologies to determine the fair valuation of reporting units. Several factors are taken into account, including actual operating results, future business plans, economic projections, and market data. On a quarterly basis, the Company assesses whether or not impairment indicators are present. For information on the Company's goodwill impairment test and the results of the most recent goodwill impairment test, see Note 5 for a further description of the Company's goodwill valuation methodology.
Fair Value Adjustments
The following table presents the increases and decreases in value of certain assets that are measured at fair value on a nonrecurring basis for which a fair value adjustment has been included in the Condensed Consolidated Statements of Operations relating to assets held at period-end:
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| | | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | Statement of Operations Location | | 2025 | | 2024 | | 2025 | | 2024 | | |
| Impaired LHFI | Credit loss expense / (benefit) | | $ | (8,332) | | | $ | 2,869 | | | $ | (8,978) | | | $ | 343 | | | |
| Foreclosed assets | Miscellaneous income, net (1) | | (163) | | | — | | | (10,765) | | | (3,983) | | | |
| LHFS | Credit loss expense / (benefit) | | 520 | | | (33,785) | | | 9,102 | | | (33,785) | | | |
| LHFS | Miscellaneous income, net (1) | | — | | | (8,395) | | | 49 | | | (9,293) | | | |
| Auto loans impaired due to bankruptcy | Credit loss expense / (benefit) | | 15 | | | 5,070 | | | 3,636 | | | 20,807 | | | |
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(1) Gains are disclosed as positive numbers while losses are shown as a negative number regardless of the line item being affected.
Level 3 Inputs - Significant Recurring and Nonrecurring Fair Value Assets and Liabilities
The following table presents quantitative information about the significant unobservable inputs within significant Level 3 recurring and nonrecurring assets and liabilities at the dates indicated:
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| (dollars in thousands) | | Fair Value at September 30, 2025 (4) | | Valuation Technique | | Unobservable Inputs | | Range
(Weighted Average) |
| Financial Assets: | | |
| | | | | | | | |
| Beneficial interest in Structured LLC | | $ | 1,097,711 | | | DCF | | Discount spread | | 2.75% - 25.00% (13.67%) |
| | | | | | Loss estimate | | 0.00% - 82.76% (7.12%) |
| | | | | | Extension of loan(1) | | 48 or 60 months |
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| Equity securities | | 831,512 | | | Market comparable pricing | | Liquidity discount | | 22.00% - 22.00% (22.00%) |
| | | | | | Multiples of revenue | | 1.1x - 17.7x (4.4x) |
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| MSRs | | 80,950 | | | DCF | | CPR (2) | | 0.00% - 34.34% (7.04%) |
| | | | | | Discount rate (3) | | 9.23 | % |
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(1) Includes extensions related to workouts and contractual extensions.
(2) Average CPR projected from collateral stratified by loan type and note rate. Weighted average amount was developed by weighting the associated relative UPB.
(3) Average discount rate from collateral stratified by loan type and note rate. Weighted average amount was developed by weighting the associated relative UPB.
(4) Excluded insignificant Level 3 assets and liabilities.
NOTE 13. FAIR VALUE (continued)
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| (dollars in thousands) | Fair Value at December 31, 2024 (4) | | Valuation Technique | | Unobservable Inputs | | Range
(Weighted Average) |
| Financial Assets: | |
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| Beneficial interest in Structured LLC | $ | 1,198,985 | | | DCF | | Discount spread | | 2.75% - 25.00% (11.77%) |
| | | | | Loss estimate | | 0.01% - 44.27% (7.07%) |
| | | | | Extension of loan (1) | | 48 or 60 months |
| MSRs | $ | 90,958 | | | DCF | | CPR (2) | | 3.09% - 100.00% (7.00%) |
| | | | | Discount rate (3) | | 9.81 | % |
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(1), (2), (3), (4) - See corresponding footnotes to the September 30, 2025 Level 3 significant inputs table above.
Fair Value of Financial Instruments
The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company's financial instruments are as follows as of the dates indicated:
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| | | September 30, 2025 | | December 31, 2024 |
| (in thousands) | | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
| Financial assets: | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 15,708,891 | | | $ | 15,708,891 | | | $ | 15,708,891 | | | $ | — | | | $ | — | | | $ | 18,546,918 | | | $ | 18,546,918 | | | $ | 18,546,918 | | | $ | — | | | $ | — | |
| Federal funds sold and securities purchased under resale agreements or similar arrangements | | 8,515,777 | | | 8,519,759 | | | — | | | 8,519,759 | | | — | | | 8,132,230 | | | 8,140,742 | | | — | | | 8,140,742 | | | — | |
| Investments in debt securities AFS | | 7,461,372 | | | 7,461,372 | | | 715,838 | | | 5,647,823 | | | 1,097,711 | | | 7,132,632 | | | 7,132,632 | | | 304,440 | | | 5,629,207 | | | 1,198,985 | |
| Investments in debt securities HTM | | 11,797,677 | | | 10,404,901 | | | 1,198,022 | | | 9,206,879 | | | — | | | 9,914,288 | | | 8,306,417 | | | 584,084 | | | 7,722,333 | | | — | |
Trading securities | | 16,553,573 | | | 16,553,573 | | | 3,635,654 | | | 12,711,312 | | | 206,607 | | | 10,322,823 | | | 10,322,823 | | | 2,150,785 | | | 8,165,771 | | | 6,267 | |
Equity and other investments (2) | | 836,512 | | | 836,512 | | | — | | | 5,000 | | | 831,512 | | | 5,000 | | | 5,000 | | | — | | | 5,000 | | | — | |
| LHFI, net | | 78,401,571 | | | 79,698,664 | | | — | | | 502,547 | | | 79,196,117 | | | 80,742,487 | | | 80,633,333 | | | — | | | 208,820 | | | 80,424,513 | |
| LHFS | | 1,567,815 | | | 1,567,815 | | | — | | | 1,474,755 | | | 93,060 | | | 1,333,953 | | | 1,333,953 | | | — | | | 1,256,401 | | | 77,552 | |
| Restricted cash | | 5,338,444 | | | 5,338,444 | | | 5,338,444 | | | — | | | — | | | 5,029,088 | | | 5,029,088 | | | 5,029,088 | | | — | | | — | |
| MSRs | | 80,950 | | | 80,950 | | | — | | | — | | | 80,950 | | | 90,958 | | | 90,958 | | | — | | | — | | | 90,958 | |
| Derivatives | | 772,603 | | | 772,603 | | | 794 | | | 771,771 | | | 38 | | | 1,121,980 | | | 1,121,980 | | | 485 | | | 1,121,472 | | | 23 | |
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| Financial liabilities: | | | | | | | | | | | | | | | | | | | | |
Deposits (1) | | 15,892,012 | | | 15,944,680 | | | — | | | 15,944,680 | | | — | | | 21,181,835 | | | 21,314,519 | | | — | | | 21,314,519 | | | — | |
| Federal funds purchased and securities loaned or sold under repurchase agreements | | 21,297,036 | | | 21,301,839 | | | — | | | 21,301,839 | | | — | | | 16,302,948 | | | 16,309,678 | | | — | | | 16,309,678 | | | — | |
| Trading liabilities | | 3,269,470 | | | 3,269,470 | | | 2,979,823 | | | 289,647 | | | — | | | 2,460,613 | | | 2,460,613 | | | 2,220,496 | | | 240,117 | | | — | |
| Borrowings and other debt obligations | | 40,886,853 | | | 41,997,875 | | | — | | | 37,273,761 | | | 4,724,114 | | | 44,010,910 | | | 44,327,760 | | | — | | | 38,394,469 | | | 5,933,291 | |
| Derivatives | | 760,796 | | | 760,796 | | | 142 | | | 759,563 | | | 1,091 | | | 1,013,565 | | | 1,013,565 | | | 217 | | | 1,013,296 | | | 52 | |
(1) This line item excludes deposit liabilities with no defined or contractual maturities.
(2) This line item includes CDs with a maturity greater than 90 days and equity securities.
NOTE 13. FAIR VALUE (continued)
Valuation Processes and Techniques - Financial Instruments
The preceding tables present disclosures about the fair value of the Company's financial instruments. Those fair values for certain instruments are presented based upon subjective estimates of relevant market conditions at a specific point in time and information about each financial instrument. In cases in which quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties resulting in variability in estimates affected by changes in assumptions and risks of the financial instruments at a certain point in time. Therefore, the derived fair value estimates presented above for certain instruments cannot be substantiated by comparison to independent markets. In addition, the fair values do not reflect any premium or discount that could result from offering for sale at one time an entity’s entire holding of a particular financial instrument, nor do they reflect potential taxes and the expenses that would be incurred in an actual sale or settlement. Accordingly, the aggregate fair value amounts presented above do not represent the underlying value of the Company.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments not measured at fair value on the Condensed Consolidated Balance Sheets:
Cash, cash equivalents and restricted cash
Cash and cash equivalents include cash and due from depository institutions, interest-bearing deposits in other banks, federal funds sold, and securities purchased under agreements to resell. The related fair value measurements have been classified as Level 1, since their carrying value approximates fair value due to the short-term nature of the asset.
Restricted cash is related to cash restricted for investment purposes, cash posted for collateral purposes, cash advanced for loan purchases, and lockbox collections. Cash and cash equivalents, including restricted cash, have maturities of three months or less and, accordingly, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value.
Securities Financing Activities
No quoted prices exist for Securities Financing Activities, so fair value is determined using a DCF technique. Cash flows are estimated based on the terms of the contract. These cash flows are discounted using interest rates appropriate to the maturity of the instrument as well as the nature of the underlying collateral. Securities Financing Activities are classified as Level 2. At September 30, 2025, the fair value of the underlying collateral was $43.7 billion before netting of $22.2 billion, all of which was sold or re-pledged.
Investments in debt securities HTM
Investments in debt securities HTM are recorded at amortized cost and are priced by third-party pricing vendors. The third-party vendors use a variety of methods when pricing these securities that incorporate relevant observable market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. These investment securities are, therefore, considered Level 2.
LHFI, net
The fair values of loans are estimated based on groupings of similar loans, including but not limited to stratification by type, interest rate, maturity, and borrower creditworthiness. Discounted future cash flow analyses are performed for these loans incorporating assumptions of current and projected voluntary prepayment speeds. Discount rates are determined using the Company's current origination rates on similar loans, adjusted for changes in current liquidity and credit spreads (if necessary). Because the current liquidity spreads are generally not observable in the market and the expected loss assumptions are based on the Company's experience, these are Level 3 valuations. Impaired loans are valued at fair value on a nonrecurring basis. See further discussion under the section captioned "Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis" above.
LHFS
The Company has LHFS portfolios that are accounted for at the lower of cost or market. Estimated fair value for these portfolios is generally based on prices obtained from agreements to sell the specific assets, if available, recent market transactions for similar assets or prices expected to be obtained in the subsequent sales.
NOTE 13. FAIR VALUE (continued)
Deposits
For deposits with no stated maturity, such as non-interest-bearing and interest-bearing demand deposit accounts, savings accounts, and certain money market accounts, the carrying value approximates fair values. The fair value of fixed-maturity deposits is estimated by discounting cash flows using currently offered rates for deposits of similar remaining maturities and have been classified as Level 2.
Borrowings and other debt obligations
Fair value is estimated by discounting cash flows using rates currently available to the Company for other borrowings with similar terms and remaining maturities. Certain other debt obligation instruments are valued using available market quotes for similar instruments, which contemplates issuer default risk. The related fair value measurements have generally been classified as Level 2. A certain portion of debt relating to revolving credit facilities is classified as Level 3. Management believes that the terms of these credit agreements approximate market terms for similar credit agreements and, therefore, they are considered to be Level 3.
FVO for Financial Assets and Financial Liabilities
RICs HFI
To reduce accounting and operational complexity, the Company elected the FVO for certain of its RICs HFI. These loans consisted primarily of NPLs acquired by the Company under optional clean-up calls from its non-consolidated Trusts.
LHFS
At September 30, 2025 and December 31, 2024, the Company had LHFS for which the FVO has been elected, primarily related to loans that are attributed to CIB whole loan aggregation and bridge lending programs. Electing the FVO allows the Company to record loans in these programs at fair value. The Company may enter into hedges on these LHFS portfolios, These hedges are reported at fair value; as a result, the loans and associated hedges are carried at fair value, reducing earnings volatility.
Securities Financing Activities
The Company has elected the FVO for certain of its Securities Financing Activities, primarily to align the accounting with the derivatives that are used to economically hedge changes in fair value of the assets and liabilities. Changes in fair value for Securities Financing Activities under an FVO are recording in non-interest income.
The following table summarizes the differences between the fair value and the principal balance of financial instruments measured at fair value on a recurring basis as of the dates indicated:
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| | September 30, 2025 | | December 31, 2024 |
| (in thousands) | | Fair Value | | Principal Balance | | Difference | | Fair Value | | Principal Balance | | Difference |
LHFS(1) | | $ | 1,474,755 | | | $ | 1,422,410 | | | $ | 52,345 | | | $ | 1,256,401 | | | $ | 1,230,119 | | | $ | 26,282 | |
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| RICs HFI | | 5,818 | | | 5,818 | | | — | | | 9,039 | | | 9,039 | | | — | |
| Nonaccrual loans | | — | | | — | | | — | | | 83 | | | 83 | | | — | |
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(1) LHFS disclosed on the Condensed Consolidated Balance Sheets also includes $93.1 million and $77.6 million of LHFS valued on a non-recurring basis at September 30, 2025 and December 31, 2024, respectively, that are held at the lower of cost or fair value that are not presented within this table. There were no nonaccrual loans related to the LHFS measured using the FVO.
NOTE 14. NON-INTEREST INCOME AND OTHER EXPENSES
The following table presents the details of the Company's non-interest income for the following periods:
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| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
| Non-interest income: | | | | | | | | | | |
| Consumer and commercial fees | | $ | 127,894 | | | $ | 104,948 | | | $ | 363,691 | | | $ | 285,027 | | | |
| Lease income | | 394,740 | | | 535,872 | | | 1,279,449 | | | 1,688,602 | | | |
| Capital markets and foreign exchange income | | 153,768 | | | 102,075 | | | 382,479 | | | 316,349 | | | |
| Miscellaneous income, net | | | | | | | | | | |
Mortgage banking income and multifamily servicing fees, net | | 14,564 | | | 15,302 | | | 53,540 | | | 48,599 | | | |
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| BOLI | | 16,604 | | | 15,640 | | | 47,739 | | | 49,103 | | | |
Net gain on operating leases | | 10,129 | | | 17,494 | | | 21,188 | | | 61,847 | | | |
| Asset and wealth management fees | | 77,253 | | | 73,506 | | | 248,448 | | | 220,615 | | | |
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Gain / (loss) on non-mortgage loans | | 1,723 | | | (663) | | | 4,644 | | | (2,629) | | | |
Other miscellaneous income /(loss), net | | 23,915 | | | (114,180) | | | 106,305 | | | (113,147) | | | |
Securities gains, net | | 53,169 | | | 55,117 | | | 115,091 | | | 184,304 | | | |
Total non-interest income | | $ | 873,759 | | | $ | 805,111 | | | $ | 2,622,574 | | | $ | 2,738,670 | | | |
Disaggregation of Revenue from Contracts with Customers
The following table presents the Company's non-interest income disaggregated by revenue source:
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| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
| Non-interest income: | | | | | | | | | | |
| In-scope of revenue from contracts with customers: | | | | | | | | | | |
Depository services (1) | | $ | 33,180 | | | $ | 32,246 | | | $ | 96,415 | | | $ | 94,542 | | | |
Commission and trailer fees (2) | | 79,601 | | | 70,439 | | | 248,528 | | | 210,809 | | | |
Interchange income, net (2) | | 22,431 | | | 23,023 | | | 60,507 | | | 62,825 | | | |
Underwriting service fees (2) | | 75,680 | | | 80,441 | | | 219,873 | | | 217,176 | | | |
Asset and wealth management fees (2) | | 100,487 | | | 66,704 | | | 273,528 | | | 190,282 | | | |
Other revenue from contracts with customers (2) | | 102 | | | 2,034 | | | 6,735 | | | 6,786 | | | |
| Total in-scope of revenue from contracts with customers | | 311,481 | | | 274,887 | | | 905,586 | | | 782,420 | | | |
| Out-of-scope of revenue from contracts with customers: | | | | | | | | | | |
Consumer and commercial fees (3) | | 70,115 | | | 55,049 | | | 204,213 | | | 135,618 | | | |
| Lease income | | 394,740 | | | 535,872 | | | 1,279,449 | | | 1,688,602 | | | |
Other miscellaneous income/(loss), net (3) | | 44,254 | | | (115,814) | | | 118,235 | | | (52,274) | | | |
| Securities gains, net | | 53,169 | | | 55,117 | | | 115,091 | | | 184,304 | | | |
| Total out-of-scope of revenue from contracts with customers | | 562,278 | | | 530,224 | | | 1,716,988 | | | 1,956,250 | | | |
| Total non-interest income | | $ | 873,759 | | | $ | 805,111 | | | $ | 2,622,574 | | | $ | 2,738,670 | | | |
(1) Primarily recorded in the Company's Condensed Consolidated Statements of Operations within Consumer and commercial fees.
(2) Primarily recorded in the Company's Condensed Consolidated Statements of Operations within Miscellaneous income, net.
(3) The balance presented excludes certain revenue streams that are considered in-scope and presented above.
NOTE 14. NON-INTEREST INCOME AND OTHER EXPENSES (continued)
Other Expenses
The following table presents the Company's other expenses for the following periods:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | |
| Other expenses: | | | | | | | | | | |
| Amortization of intangibles | | $ | 8,998 | | | $ | 9,538 | | | $ | 26,771 | | | $ | 28,664 | | | |
| Deposit insurance premiums and other expenses | | 18,047 | | | 12,772 | | | 54,590 | | | 52,528 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Other administrative and miscellaneous expenses | | 110,500 | | | 156,911 | | | 322,505 | | | 388,133 | | | |
| | | | | | | | | | |
| Total Other expenses | | $ | 137,545 | | | $ | 179,221 | | | $ | 403,866 | | | $ | 469,325 | | | |
NOTE 15. INCOME TAXES
An income tax provision of $89.6 million and $144.5 million was recorded for the three months and nine months ended September 30, 2025, compared to an income tax benefit of $32.2 million and $74.3 million for the corresponding periods in 2024. This resulted in an ETR of 16.4% and 9.9% for the three months and nine months ended September 30, 2025, compared to (20.0)% and (8.5)% for the corresponding periods in 2024. The ETR for the three months and nine months ended September 30, 2025, when compared to the same periods in 2024, was directly impacted by (i) an increase in forecasted pre-tax income in 2025 and (ii) a decrease in electric vehicle tax credits expected to be generated in 2025.
The Company is subject to the income tax laws of the U.S., its states and municipalities and certain foreign countries. These tax laws are complex and are potentially subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, the Company must make judgments and interpretations about the application of these inherently complex tax laws.
Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. The Company reviews its tax balances quarterly and, as new information becomes available, the balances are adjusted as appropriate. The Company is subject to ongoing tax examinations and assessments in various jurisdictions.
In December 2021, a framework known as Pillar Two was established by the OECD. Pillar Two is designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they have operations. Although it became effective for Spain in 2024, the Pillar Two framework has not been adopted by the U.S. per the G-7 statement on Global Minimum Tax. Accordingly, no incremental potential tax liability is expected for SHUSA.
With few exceptions, the Company is no longer subject to federal and non-U.S. income tax examinations by tax authorities for years prior to 2011 and state income tax examinations for years prior to 2010.
The Company applies an aggregate portfolio approach whereby income tax effects from AOCI are released only when an entire portfolio (i.e., all related units of account) of a particular type is liquidated, sold or extinguished.
The Company had a net deferred tax asset balance of $425.4 million at September 30, 2025 (consisting of a federal deferred tax asset balance of $300.6 million and a state deferred tax asset balance of $124.8 million with respect to jurisdictional netting), compared to a net deferred tax asset balance of $364.3 million at December 31, 2024 (consisting of a state deferred tax asset balance of $168.0 million and a federal deferred tax asset balance of $196.3 million). The $61.1 million change in net deferred tax asset for the period ended September 30, 2025 was primarily due to a decrease in the deferred tax liability related to leasing transactions.
On July 4, 2025, the OBBBA was enacted into law. The OBBBA includes the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, specifically bonus depreciation and research and development cost expensing, modifications to the international tax framework and significant changes to clean energy tax credits including the repeal of electric vehicle credits effective October 1, 2025. The Company has incorporated the impact of the OBBBA in its Consolidated Financial Statements, including the impacts to the effective tax rate and net deferred tax position in 2025 and future periods.
NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
Off-Balance Sheet Risk - Financial Instruments
In the normal course of business, the Company utilizes a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers and manage its exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, letters of credit, loans sold with recourse, forward contracts, and interest rate and cross currency swaps, caps, and floors. These financial instruments may involve, to varying degrees, elements of credit, liquidity, and interest rate risk in excess of the amount recognized on the Condensed Consolidated Balance Sheets. The contractual or notional amounts of these financial instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, letters of credit and loans sold with recourse is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and meeting conditional obligations as it does for on-balance sheet instruments. For forward contracts and interest rate swaps, caps and floors, the contract or notional amounts do not represent exposure to credit loss. The Company controls the credit risk of its forward contracts and interest rate swaps, caps and floors through credit approvals, limits, and monitoring procedures. See Note 12 to these Condensed Consolidated Financial Statements for discussion of all derivative contract commitments.
The following table details the amount of commitments at the dates indicated:
| | | | | | | | | | | | | | |
| Other Commitments | | September 30, 2025 | | December 31, 2024 |
| | | (in thousands) |
| Commitments to extend credit | | $ | 22,792,158 | | | $ | 24,202,682 | |
| Letters of credit | | 1,372,034 | | | 1,243,122 | |
| | | | |
| | | | |
| Recourse exposure on sold loans | | 4,545 | | | 5,669 | |
| Total commitments | | $ | 24,168,737 | | | $ | 25,451,473 | |
Commitments to Extend Credit
Commitments to extend credit generally have fixed expiration dates, are variable rate, and contain provisions that permit the Company to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.
Included within the reported balances for commitments to extend credit at September 30, 2025 and December 31, 2024 were $4.2 billion and $4.1 billion, respectively, of commitments that can be canceled by the Company without notice.
Commitments to extend credit also include amounts committed by the Company to fund its investments in CRA, LIHTC, and other equity method investments in which it is a limited partner.
During 2024, the Company sold an investment tax credit to a third party for approximately $21.4 million. The Company is obligated to indemnify the purchaser for losses incurred as a result of recapture or reductions of the tax credit. The indemnification expires at the later of the end of the recapture period (2029) or when the purchaser's tax returns are no longer subject to audit.
NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)
Letters of Credit
The Company’s letters of credit meet the definition of a guarantee. Letters of credit commit the Company to make payments on behalf of its customers if specified future events occur. The guarantees are primarily issued to support public and private borrowing arrangements. The weighted average term of these commitments at September 30, 2025 was 8.5 months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. In the event of a requested draw by the beneficiary that complies with the terms of the letter of credit, the Company would be required to honor the commitment. The Company has various forms of collateral for these letters of credit, including real estate assets and other customer business assets. The maximum undiscounted exposure related to these commitments at September 30, 2025 was $1.4 billion. The fees related to letters of credit are deferred and amortized over the lives of the respective commitments and were immaterial to the Company’s financial statements at September 30, 2025. Management believes that the utilization rate of these letters of credit will continue to be substantially less than the amount of the commitments, as has been the Company’s experience to date. The credit risk associated with letters of credit is monitored using the same risk rating system utilized within the loan and financing lease portfolio. As of September 30, 2025 and December 31, 2024, the liability related to unfunded lending commitments was $50.6 million and $47.9 million, respectively.
Unsecured Revolving Lines of Credit
Such commitments arise primarily from agreements with customers for unused lines of credit on unsecured revolving accounts and credit cards, provided there is no violation of conditions in the underlying agreement. These commitments, substantially all of which the Company can terminate at any time, and which do not necessarily represent future cash requirements, are reviewed periodically based on account usage, customer creditworthiness and loan qualifications.
Loans Sold with Recourse
The Company has loans sold with recourse that meet the definition of a guarantee. For loans sold with recourse under the terms of its multifamily sales program with the FNMA, the Company retained a portion of the associated credit risk.
MPLFA
Under the terms of the MPLFA, SC is required to make revenue-sharing payments to Stellantis and also must share with Stellantis when residual gains/(losses) on leased vehicles exceed a specified threshold. In turn, Stellantis must provide designated minimum threshold percentages of its Subvention business to SC. On July 28, 2025, SC and Stellantis entered into an agreement to accelerate the termination of the MPLFA, resulting in the discontinuation of revenue-sharing to Stellantis and sharing of Stellantis residual gains/(losses) for all originations after September 15, 2025.
Agreements
In connection with the sale of RICs through securitizations and other sales, SC and SBNA have made standard representations and warranties customary in the consumer finance industry. Violations of these representations and warranties may require SC or SBNA to repurchase loans previously sold to on or off-balance sheet Trusts or other third parties. As of September 30, 2025, there were no loans that were the subject of a demand to repurchase or replace for breach of representations and warranties for SC's or SBNA's ABS or other sales. In the opinion of management, the potential exposure of other recourse obligations related to SC’s RIC sale agreements is not expected to have a material adverse effect on the Company's or SC’s or SBNA's business, consolidated financial position, results of operations, or cash flows.
Santander has provided guarantees on the covenants, agreements, and obligations of SC under the governing documents of its warehouse facilities and privately issued amortizing notes. These guarantees are limited to the obligations of SC as servicer.
Since November 2015, SC is party to a forward flow asset sale agreement with a third party under the terms of which SC is committed to sell $350.0 million in charged-off loan receivables in bankruptcy status on a quarterly basis. However, any sale of more than $275.0 million is subject to a market price check. The remaining aggregate commitment as of September 30, 2025 and December 31, 2024 not subject to a market price check was zero.
NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)
Other Off-Balance Sheet Risk
Other off-balance sheet risk stems from financial instruments that do not meet the definition of guarantees under applicable accounting guidance and from other relationships that include items such as indemnifications provided in the ordinary course of business and intercompany guarantees.
Legal and Regulatory Proceedings
The Company, including its subsidiaries, are and in the future periodically expects to be party to, or otherwise involved in, various claims, disputes, lawsuits, investigations, regulatory matters and other legal matters and proceedings that arise in the ordinary course of business. In view of the inherent difficulty of predicting the outcome of any such claim, dispute, lawsuit, investigation, regulatory matter and/or legal proceeding, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of the matters, or the eventual loss, fines or penalties related to the matters, if any. Accordingly, except as provided below, the Company is unable to reasonably estimate a range of its potential exposure, if any, to these claims, disputes, lawsuits, investigations, regulatory matters and other legal proceedings at this time. It is reasonably possible that actual outcomes or losses may differ materially from the Company's current assessments and estimates, and any adverse resolution of any of these matters against it could materially and adversely affect the Company's business, financial position, liquidity, and results of operations.
The Company establishes an accrued liability for legal and regulatory proceedings when those matters present material loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued that are reasonably possible.
As of September 30, 2025 and December 31, 2024, the Company accrued aggregate legal and regulatory liabilities of approximately $16.2 million and $18.8 million, respectively. Further, the Company estimates the aggregate range of reasonably possible losses for legal and regulatory proceedings in excess of reserves established of up to approximately $37.2 million and $38.6 million as of September 30, 2025 and December 31, 2024, respectively. Set forth below are descriptions of the significant lawsuits, regulatory matters, and other legal proceedings to which the Company is subject.
Consumer Lending Cases
The Company and its subsidiaries are party to various lawsuits pending in federal and state courts alleging violations of state and federal consumer lending laws, including, without limitation, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, Section 5 of the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Truth in Lending Act, wrongful repossession laws, usury laws and laws related to unfair and deceptive acts or practices. In general, these cases seek damages and equitable and/or other relief.
Enterprise Financial Group v. SC. EFG, a former service provider to SC that provided a guaranteed asset protection debt insurance program, sued SC for breach of contract, alleging that SC placed non-conforming loans in the program, resulting in EFG losses. The case is pending in Texas District Court, Dallas County, and is captioned Enterprise Financial Group v. SC, Case No. 18-08119. SC asserted a counterclaim against EFG seeking approximately $10.5 million in connection with EFG’s refusal to pay claims. A jury trial concluded on November 2, 2022 and the jury awarded EFG $5 million and SC $4.2 million. On May 9, 2023, the court issued a final judgment awarding EFG approximately $10.6 million, and eliminating the jury award of $4.2 million in favor of SC. On July 17, 2023, the court heard arguments on SC’s motion for judgment notwithstanding the verdict, a new trial and remittitur. The court denied SC's motions for judgment notwithstanding the verdict, new trial, or remittitur. On December 31, 2024, the Court of Appeals for the Fifth District of Texas at Dallas denied SC's appeal of the trial court judgment. SC filed a petition for rehearing with the appellate court on January 14, 2025. On January 31, 2025, the court denied rehearing before the panel that heard the appeal; SC's petition for rehearing en banc remains pending. On June 18, 2025, the court of appeals withdrew its previous opinion denying SC’s first motion for rehearing and issued a ‘clarifying’ opinion affirming the trial court’s judgment and denying both motions for rehearing. SC filed a petition for appeal to the Texas Supreme Court, and the requested briefing on the merits to be completed by October 21, 2025.
NOTE 16. COMMITMENTS, CONTINGENCIES, AND GUARANTEES (continued)
These matters are ongoing and could in the future result in the imposition of damages, fines, or other penalties. No assurance can be given that the ultimate outcome of these matters or any resulting proceedings would not materially and adversely affect the Company's business, financial condition, and results of operations.
Regulatory Investigations and Proceedings
The Company is party to, or is periodically otherwise involved in, reviews, investigations, examinations, and proceedings (both formal and informal), and information-gathering requests, by government and self-regulatory agencies, including the FRB of Boston, the CFPB, the DOJ, the SEC, the CFTC, the Federal Trade Commission and various state regulatory and enforcement agencies.
SanCap
SanCap is cooperating with the SEC in connection with an inquiry focused on compliance with business-related communications on messaging platforms that were not approved by SanCap. The inquiry follows a number of regulatory settlements with other firms covering similar matters. On January 13, 2025, the SEC announced resolution of this investigation, along with similar resolutions with 11 other firms. Under the SEC order resolving the investigation, SanCap agreed to pay a $4 million civil penalty and have its internal audit function perform an audit of SanCap's policies and procedures regarding such communications.
The CFTC also initiated an investigation focused on business-related communications. SanCap cooperated with the CFTC’s investigation and, on September 4, 2025, the CFTC announced a resolution of this inquiry, along with the resolution of ten other similar inquiries conducted with other firms. SanCap agreed to pay a civil penalty of $500,000 and complete an audit of its electronic communications compliance program.
NOTE 17. RELATED PARTY TRANSACTIONS
In the normal course of business, the Company conducts business with Santander and its subsidiaries. Santander policy requires that these transactions occur at prevailing market rates and terms, and, where applicable, these transactions are compliant with United States banking regulations. All extensions of credit by (and certain credit exposures of) the Bank to other Santander affiliates are legally required to be secured by eligible collateral. The following disclosures below are the more significant related party transactions entered into:
On September 24, 2025, the Company acquired Investment Holdings 1857, S.L.'s interest in a U.K. Limited Partnership which is consolidated and presented within its Condensed Consolidated Financial Statements. The Company issued debt to Santander in support of this transaction disclosed in Note 9 to these Condensed Consolidated Financial Statements.
Debt and derivative activities
The Company and its affiliates have various debt and derivative agreements with Santander. For further details of these agreements, see Note 10 and Note 21 to the Consolidated Financial Statements of the Company's Annual Report on Form 10-K for 2024.
In October 2025, the Company entered into a revolving warehouse line with a commitment amount of $2.0 billion with Santander New York Branch.
Mezzanine and Stockholder's Equity
During the second quarter of 2025, the Company acquired shares of Common stock from Santander to satisfy vested stock awards granted to SHUSA employees. The share price paid to Santander was in excess of the price at the grant date by approximately $21.5 million. The excess was recorded as a return of capital to Santander.
On December 21, 2022, the Company issued 500,000 shares of Series E Preferred Stock. Dividends on the Series E Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including December 21, 2022 to but excluding December 21, 2027, dividends accrue on a non-cumulative basis a rate of 8.41% per annum, payable quarterly in arrears. From and including December 21, 2027, dividends on the Series E Preferred Stock will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 4.74% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series E Preferred Stock on, among others, any dividend payment date on or after December 31, 2027.
On June 15, 2023, the Company issued 1,000,000 shares of Series F Preferred Stock. Dividends on the Series F Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including June 15, 2023 to but excluding June 21, 2028, dividends accrue on the Series F Preferred Stock on a non-cumulative basis at a rate of 9.380% per annum, payable quarterly in arrears. From and including June 21, 2028, dividends will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 5.467% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series F Preferred Stock on, among others, any dividend payment date on or after June 21, 2028.
On December 19, 2023, the Company issued 500,000 shares of Series G Preferred Stock. Dividends on the Series G Preferred Stock are payable when, as and if authorized by the Company’s Board of Directors or a duly authorized committee thereof. From and including December 19, 2023 to but excluding December 21, 2028, dividends accrue on the Series G Preferred Stock on a non-cumulative basis a rate of 8.170% per annum, payable quarterly in arrears. From and including December 21, 2028, dividends will accrue on a non-cumulative basis at the five-year U.S. Treasury rate as of the most recent re-set dividend determination date plus 4.360% for each dividend re-set period, payable quarterly in arrears. The Company may redeem the Series G Preferred Stock on, among others, any dividend payment date on or after December 21, 2028.
As of September 30, 2025, Santander was the sole holder of the Series E, F, and G Preferred Stock.
During the nine months ended September 30, 2025, the Company declared and paid dividends to its preferred shareholder, Santander, in the amount of $88.4 million and declared additional dividends of $44.2 million that were paid in the fourth quarter of 2025.
NOTE 17. RELATED PARTY TRANSACTIONS (continued)
Deposit and checking accounts
Affiliates of Santander that are not consolidated by SHUSA had deposits with SBNA of $326.1 million and $256.9 million as of September 30, 2025 and December 31, 2024, respectively.
Repurchase Agreements
During the three months and nine months ended September 30, 2025, SanCap entered into intercompany Securities Financing Activities with Santander and its affiliates. The gross principal amount outstanding on repurchase and reverse repurchase agreements, which do not eliminate in consolidation, was $1.4 billion and $11.6 million, respectively, at September 30, 2025. During the three months and nine months ended September 30, 2025, the amount of income / expense related to this activity was negligible to the overall results of the Company and Santander.
NOTE 18. BUSINESS SEGMENT INFORMATION
Business Segment Products and Services
The Company’s reportable segments are based principally around the customers the Company serves. The Company has identified the following reportable segments: Auto, CBB, C&I, CRE, CIB, and Wealth Management.
•The Auto segment includes the Company's consumer and commercial auto loans and leases and the Company's commercial loans to dealers and dealer floorplan financing products. This includes the Company's specialized consumer finance subsidiary focused on vehicle finance and third-party servicing. The specialized consumer finance subsidiary's primary business is the indirect origination of RICs, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. The Company offers a full spectrum of auto financing products and services to captive financing companies. 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. The Company also originates vehicle loans through a web-based direct lending program, purchases vehicle RICs from other lenders, and services automobile, recreational and marine vehicle portfolios for other lenders.
•The CBB segment includes the products and services provided to consumer and small business banking customers, including consumer deposit, small business banking, unsecured lending, and investment services. This segment offers a wide range of products and services to consumers and business banking customers, including demand and interest-bearing demand deposit accounts, money market and savings accounts, CDs, and retirement savings products. It also offers lending products such as credit cards and small business loans such as business lines of credit. In addition, the Company makes investment services available to its retail customers, including products such as annuities, mutual funds, managed accounts, and insurance products through a networking agreement with a consolidated affiliate.
•The C&I segment currently provides commercial lines, loans, letters of credit, receivables financing, commercial credit cards, and cash management and deposit services to lower middle market commercial customers and to medium- and large-sized commercial customers, as well as financing and deposits for government entities. This segment also provides niche product financing for specific industries.
•The CRE segment offers CRE loans, CEVF, and multifamily loans, as well as cash management and deposit services to customers. This category also includes community development finance activities, including originating CRA-eligible loans and making CRA-eligible investments.
•The CIB segment serves the needs of global corporate and institutional customers by leveraging the international footprint of Santander to provide financing and banking services to corporations with over $500 million in annual revenues. CIB's offerings and strategy are based on Santander's local and global capabilities in wholesale banking. CIB also includes the Company's institutional broker-dealer that provides services in investment banking, sales, trading, and equity research reports.
•The Wealth Management segment includes the Company's international private banking, financial operations services, and portfolio management. This includes the full range of banking and asset management services to foreign individuals and corporations based primarily in Latin America and the Company's investment in the U.K. Limited Partnership.
The Company also offers customer-related derivatives across segments to hedge interest rate risk. In the C&I, CRE, and CIB business segments and the dealer commercial lending division of the Auto business segment, the Company offers derivatives relating to foreign exchange and lending arrangements. See Note 12 to these Condensed Consolidated Financial Statements for additional details.
The Other category includes certain immaterial subsidiaries, the unallocated interest expense on the Company's borrowings and other debt obligations and certain unallocated corporate income and indirect expenses.
NOTE 18. BUSINESS SEGMENT INFORMATION (continued)
The Chief Operating Decision Maker is the Company's CEO. The Company's segment results are derived from the Company’s business unit profitability reporting system by specifically attributing managed balance sheet assets, deposits and other liabilities and their related interest income or expense to each of the segments. Funds transfer pricing methodologies are utilized to allocate a cost for funds used or a credit for funds provided to business line deposits, loans and selected other assets using a matched funding concept. The methodology includes a liquidity premium adjustment, which considers an appropriate market participant spread for commercial loans and deposits based on the mix of borrowings available to the Company with comparable maturity periods.
Other income and expenses are managed directly by each reportable segment, including fees, service charges, salaries and benefits, and other direct expenses, as well as certain allocated corporate expenses. These are accounted for within each segment’s financial results. Accounting policies for the lines of business are the same as those used in preparation of these Condensed Consolidated Financial Statements with respect to activities specifically attributable to each business line. However, the preparation of business line results requires management to establish methodologies to allocate funding costs and benefits, expenses, and other financial elements to each line of business. Where practical, the results are adjusted to present consistent methodologies for the segments.
The application and development of management reporting methodologies are dynamic processes and are subject to periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment with no impact on consolidated results. Whenever significant changes to management reporting methodologies take place, prior period information is reclassified wherever practical.
Results of Segments
The following tables outline the discreet financial information regularly provided to the CODM. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Three months ended | SHUSA Reportable Segments | |
| Consumer Activities | | Commercial Activities | | | | | |
| September 30, 2025 | Auto | CBB | | C&I | CRE | CIB | Wealth Management | Other(1) | | Total |
| (in thousands) |
Interest income | $ | 1,632,745 | | $ | 752,137 | | | $ | 219,536 | | $ | 366,470 | | $ | 734,094 | | $ | 86,743 | | $ | (658,397) | | | $ | 3,133,328 | |
Interest expense | 676,182 | | 370,676 | | | 136,914 | | 242,642 | | 666,828 | | 39,356 | | (518,445) | | | 1,614,153 | |
Fees and other income | 50,102 | | 77,588 | | | 15,765 | | 22,477 | | 210,378 | | 90,144 | | 12,565 | | | 479,019 | |
Lease income | 394,740 | | — | | | — | | — | | — | | — | | — | | | 394,740 | |
| Credit loss expense / (benefit) | 382,495 | | 2,708 | | | (4,392) | | (11,282) | | (1,129) | | — | | (334) | | | 368,066 | |
Lease expense | 335,389 | | — | | | — | | — | | 172 | | — | | — | | | 335,561 | |
General, administrative and other expenses | 307,998 | | 381,099 | | | 48,303 | | 31,746 | | 213,542 | | 75,457 | | 85,163 | | | 1,143,308 | |
| Income/(loss) before income taxes | 375,523 | | 75,242 | | | 54,476 | | 125,841 | | 65,059 | | 62,074 | | (212,216) | | | 545,999 | |
| | | | | | | | | | |
| (1) Other includes the results of the immaterial entities, earnings from non-strategic assets, the investment portfolio, interest expense on SBNA’s and the Company's borrowings and other debt obligations, amortization of intangible assets and certain unallocated corporate income and indirect expenses. |
| | | | | | | | | | |
NOTE 18. BUSINESS SEGMENT INFORMATION (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Three months ended | SHUSA Reportable Segments | |
| Consumer Activities | | Commercial Activities | | | | | |
| September 30, 2024 | Auto | CBB | | C&I | CRE | CIB | Wealth Management | Other(1) | | Total |
| (in thousands) |
Interest income | $ | 1,637,082 | | $ | 730,344 | | | $ | 255,080 | | $ | 388,592 | | $ | 1,011,325 | | $ | 98,040 | | $ | (694,133) | | | $ | 3,426,330 | |
Interest expense | 729,516 | | 369,614 | | | 164,769 | | 264,675 | | 985,415 | | 44,762 | | (515,448) | | | 2,043,303 | |
Fees and other income | 9,808 | | (39,004) | | | 17,793 | | 20,933 | | 152,849 | | 82,106 | | 24,754 | | | 269,239 | |
Lease income | 535,872 | | — | | | — | | — | | — | | — | | — | | | 535,872 | |
| Credit loss expense / (benefit) | 519,758 | | (82,682) | | | (12,677) | | 15,940 | | (8,343) | | — | | (657) | | | 431,339 | |
Lease expense | 442,810 | | — | | | — | | — | | 137 | | — | | — | | | 442,947 | |
General, administrative and other expenses | 331,427 | | 348,891 | | | 45,033 | | 34,282 | | 222,055 | | 70,185 | | 100,887 | | | 1,152,760 | |
| Income/(loss) before income taxes | 159,251 | | 55,517 | | | 75,748 | | 94,628 | | (35,090) | | 65,199 | | (254,161) | | | 161,092 | |
| | | | | | | | | | |
(1) Refer to corresponding notes above. |
| | | | | | | | | | |
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Nine months ended | SHUSA Reportable Segments | |
| Consumer Activities | | Commercial Activities | | | | | |
| September 30, 2025 | Auto | CBB | | C&I | CRE | CIB | Wealth Management | Other (1) | | Total |
| (in thousands) |
Interest income | $ | 4,873,484 | | $ | 2,216,981 | | | $ | 665,943 | | $ | 1,085,414 | | $ | 2,213,237 | | $ | 259,880 | | $ | (1,862,560) | | | $ | 9,452,379 | |
Interest expense | 2,040,994 | | 1,105,778 | | | 410,701 | | 721,182 | | 2,019,660 | | 111,507 | | (1,416,065) | | | 4,993,757 | |
Fees and other income | 139,837 | | 212,100 | | | 50,943 | | 55,500 | | 563,250 | | 281,684 | | 39,811 | | | 1,343,125 | |
Lease income | 1,279,449 | | — | | | — | | — | | — | | — | | — | | | 1,279,449 | |
| Credit loss expense / (benefit) | 1,121,393 | | 67,431 | | | (11,083) | | (2,186) | | (6,916) | | — | | (1,763) | | | 1,166,876 | |
Lease expense | 1,030,081 | | — | | | — | | — | | 499 | | — | | — | | | 1,030,580 | |
General, administrative and other expenses | 907,480 | | 1,135,250 | | | 142,575 | | 108,708 | | 627,593 | | 212,342 | | 285,291 | | | 3,419,239 | |
| Income/(loss) before income taxes | 1,192,822 | | 120,622 | | | 174,693 | | 313,210 | | 135,651 | | 217,715 | | (690,212) | | | 1,464,501 | |
| Total assets | 56,863,896 | | 9,212,708 | | | 3,612,795 | | 23,221,161 | | 32,686,610 | | 9,082,196 | | 33,435,598 | | | 168,114,964 | |
|
(1) Other includes the results of the immaterial entities, earnings from non-strategic assets, the investment portfolio, interest expense on the Company's borrowings and other debt obligations, amortization of intangible assets and certain unallocated corporate income and indirect expenses. |
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NOTE 18. BUSINESS SEGMENT INFORMATION (continued)
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Nine months ended | SHUSA Reportable Segments | | | | |
| Consumer Activities | | Commercial Activities | | | | | | | | | |
| September 30, 2024 | Auto | CBB | | C&I | CRE | CIB | Wealth Management | Other (1) | | | | | | Total |
| (in thousands) |
Interest income | $ | 4,780,351 | | $ | 2,223,643 | | | $ | 744,217 | | $ | 1,161,537 | | $ | 3,041,402 | | $ | 283,306 | | $ | (2,049,203) | | | | | | | $ | 10,185,253 | |
Interest expense | 2,063,910 | | 1,108,988 | | | 480,211 | | 782,450 | | 2,962,457 | | 115,703 | | (1,492,226) | | | | | | | 6,021,493 | |
Fees and other income | 32,670 | | 91,604 | | | 49,541 | | 56,986 | | 502,304 | | 241,848 | | 75,115 | | | | | | | 1,050,068 | |
Lease income | 1,688,602 | | — | | | — | | — | | — | | — | | — | | | | | | | 1,688,602 | |
| Credit loss expense / (benefit) | 1,347,400 | | 360 | | | (54,782) | | 57,376 | | (30,443) | | — | | (2,342) | | | | | | | 1,317,569 | |
Lease expense | 1,333,917 | | — | | | — | | — | | 467 | | — | | — | | | | | | | 1,334,384 | |
General, administrative and other expenses | 1,007,658 | | 1,055,481 | | | 140,621 | | 104,544 | | 622,168 | | 200,343 | | 242,816 | | | | | | | 3,373,631 | |
| Income/(loss) before income taxes | 748,738 | | 150,418 | | | 227,708 | | 274,153 | | (10,943) | | 209,108 | | (722,336) | | | | | | | 876,846 | |
| Total assets | 62,094,480 | | 9,891,925 | | | 4,156,606 | | 23,442,878 | | 27,474,238 | | 8,137,399 | | 32,821,823 | | | | | | | 168,019,349 | |
(1) Refer to corresponding notes above. | | | | |
NOTE 19. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information for the nine months ended September 30, 2025 and 2024, was as follows:
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| | Nine months ended September 30, |
| | 2025 | | 2024 | | |
| | (in thousands) |
| | | | | | |
| | | | | | |
| | | | | | |
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| NON-CASH TRANSACTIONS | | | | | | |
Loans transferred to/(from) OREO and other repossessed assets | | $ | 21,370 | | | $ | 34,360 | | | |
| Loans transferred from/(to) LHFI (from)/to LHFS, net | | 40,603 | | | 346,887 | | | |
| Transfer of financial interest in a VIE - Loans | | 244,693 | | | 507,744 | | | |
Transfer of financial interest in a VIE - Borrowings | | 153,572 | | | 451,356 | | | |
| Unsettled purchases of investment securities | | 108,803 | | | 19,172 | | | |
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| Non-cash transfer of financial assets in an off-balance sheet securitization transaction | | 1,149,278 | | | 53,050 | | | |
| Dividends declared and payable to Shareholder | | 44,175 | | | — | | | |
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE SUMMARY
SHUSA is the parent holding company of SBNA, a national banking association; SC, a consumer finance company headquartered in Dallas, Texas; BSI, a financial services company headquartered in Miami, Florida that offers a full range of banking services to foreign individuals and corporations based primarily in Latin America; SanCap, an institutional broker-dealer headquartered in New York which has significant capabilities in market-making via an experienced fixed-income sales and trading team and a focus on structuring and advisory services for asset originators in the real estate and specialty finance markets; SSLLC, a broker-dealer headquartered in Boston, Massachusetts; and several other subsidiaries. SHUSA is headquartered in Boston and SBNA's home office is in Wilmington, Delaware. SSLLC is a registered investment adviser with the SEC. SHUSA's two largest subsidiaries by asset size and revenue are SBNA and SC. SHUSA is a wholly-owned subsidiary of Santander.
The Company specializes in banking and consumer finance. Its consumer financing is focused on vehicle finance, servicing of third-party vehicle financing, and delivering service to dealers and customers across the full credit spectrum. This includes indirect origination and servicing of vehicle loans and leases, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers, origination of vehicle loans through a web-based direct lending program, purchases of vehicle loans from other lenders, and servicing of automobile and recreational and marine vehicle portfolios for other lenders. The Company sells consumer vehicle loans and leases through flow agreements and, when market conditions are favorable, it accesses the ABS market through securitizations of consumer vehicle loans and leases.
From May 2013 to July 2025, under the MPLFA with Stellantis, the Company operated as Stellantis' preferred provider for consumer loans, leases and dealer loans and provides services to Stellantis customers and dealers under the CCAP brand. In the second quarter of 2022, the Company announced it had reached an agreement with Stellantis to amend and extend the MPLFA. On July 28, 2025, the MPLFA was terminated effective September 15, 2025, except for certain trailing obligations for revenue- and risk-sharing on originations up to the termination's effective date.
In addition to specialized consumer finance, the Company also attracts deposits and provides other retail banking services through its network of retail branches with locations in Connecticut, Delaware, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island and originates small business, middle market, large and global commercial loans, multifamily loans, construction loans and other consumer loans and leases throughout the United States, with a focus on the Mid-Atlantic and Northeastern region. The Company also acquires deposits nationally through SBNA's online Openbank platform. For large institutional investors, the Company provides structured products, emerging markets credit and U.S. investment grade credit, U.S. rates, short-term fixed-income, debt and equity capital markets, investment banking, exchange-traded derivatives, and cash equities, benefiting from a combination of Santander’s global reach and access to financial hubs together with extensive local market knowledge and regional expertise.
The Company uses its deposits, public and private borrowings, as well as other financing sources, to fund its loan and investment portfolios.
In December 2023, SBNA acquired a 20 percent interest in the Structured LLC for approximately $1.1 billion. The Structured LLC was established by the FDIC to hold and service a $9.0 billion portfolio primarily consisting of New York based rent-controlled and rent-stabilized multifamily loans retained by the FDIC following a recent bank failure. SBNA's 20 percent interest is reported as an AFS debt security that had a fair value of approximately $1.1 billion and $1.2 billion at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, SBNA serviced approximately $8.2 billion of multi-family loans for the Structured LLC and receives a market rate servicing fee in the accompanying Condensed Consolidated Statements of Operations.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ECONOMIC AND BUSINESS ENVIRONMENT
Overview
The unemployment rate at August 31, 2025 was 4.3% compared to 4.1% at June 30, 2025 and 4.1% one year ago. According to the U.S. Bureau of Labor Statistics, job gains in health care were partially offset by losses in government.
Market year-to-date returns for the following indices based on closing prices for the period indicated were:
| | | | | | | | | | | | |
| | September 30, 2025 | | |
| Dow Jones Industrial Average | | 9.1% | | |
| S&P 500 | | 13.7% | | |
| NASDAQ Composite | | 17.3% | | |
At its September 2025 meeting, the FOMC lowered the federal funds rate target range to 4.00% - 4.25%. The FOMC continues to focus its policy making on maximum employment and achieving a 2.0% inflation target rate.
The ten-year Treasury bond rate at September 30, 2025 was 4.15%, down from 4.57% at December 31, 2024.
Changing market conditions are considered a significant risk factor to the Company. The interest rate environment can present challenges in the growth of net interest income for the banking industry, which continues to rely on non-interest activities to support revenue growth. Changing market conditions and political uncertainty could have an overall impact on the Company's results of operations and financial condition. Such conditions could also impact the Company's credit risk and the associated credit loss expense and legal expense.
Credit Rating Actions
The following table presents Moody’s, S&P and Fitch credit ratings for SBNA, SHUSA, and Santander senior debt / long-term issuer:
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| | SANTANDER (1) (2) | | SHUSA | | SBNA (3) | Overall Outlook |
| Fitch | | A+ / A | | A- | | A- | Stable |
| Moody's | | A1 / Baa1 | | Baa2 | | Baa1 | Stable |
| S&P | | A+ / A- | | BBB+ | | A- | Stable |
(1) Senior preferred debt / senior non-preferred debt rating.
(2) On October 3rd, 2025 Moody's upgraded Santander's senior preferred debt rating from A2 to A1.
(3) Moody's rating represents SBNA long-term issuer rating.
SHUSA funds its operations independently of the other entities owned by Santander, and believes its business is not necessarily closely related to the business or outlook of other entities owned by Santander. Future changes in the credit ratings of its parent, Santander, or the Kingdom of Spain, however, could impact SHUSA's or its subsidiaries' credit ratings, and any other change in the condition of Santander could affect SHUSA.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
REGULATORY MATTERS
The activities of the Company and its subsidiaries are subject to regulation under various U.S. federal laws and regulatory agencies which impose regulations, supervise and conduct examinations, and may affect the operations and management of the Company and its ability to take certain actions, including making distributions to our parent, Santander. The Company is regulated on a consolidated basis by the Federal Reserve, including the FRB of Boston. The Company's subsidiaries are further supervised by the OCC, the FRB of Atlanta, and the CFPB. Refer to the Company’s Annual Report on Form 10-K as of December 31, 2024 for more information on regulatory and supervisory matters affecting the Company and its subsidiaries.
The Federal Reserve tailors its supervisory programs and regulatory requirements by category based on firm-specific characteristics such as total assets, cross-jurisdictional activity, and nonbank asset or off-balance sheet exposure. As of September 30, 2025, SHUSA was designated a Category IV institution under the Federal Reserve's tailoring rule. Institutions that change to a higher category would become subject to the requirements of the new category, as outlined by the Federal Reserve, generally within two quarters of the change in category.
Regulatory Capital Requirements
U.S. Basel III regulatory capital rules are applicable to both SHUSA and SBNA.
These rules include prompt corrective action thresholds that require banking organizations, including the Company and SBNA, to maintain a minimum CET1 capital ratio of 4.5%, a minimum Tier 1 capital ratio of 6.0%, a minimum total capital ratio of 8.0% and a minimum leverage ratio, calculated as the ratio of Tier 1 capital to average consolidated assets for the quarter, of 4.0%. A further capital conservation buffer of 2.5% above these minimum ratios is required for banking institutions to make capital distributions, including paying dividends.
See the "Bank Regulatory Capital" section of this MD&A for the Company's capital ratios under Basel III standards. The implementation of certain regulations and standards relating to regulatory capital could disproportionately affect the Company's regulatory capital position relative to that of its competitors, including those that may not be subject to the same regulatory requirements as the Company.
Material restrictions can be imposed on SBNA, including restrictions on interest payable on accounts, dismissal of management and, in critically undercapitalized situations, appointment of a receiver or conservator. Critically undercapitalized banks generally may not make any payment of principal or interest on their subordinated debt and all, but well-capitalized banks are prohibited from accepting brokered deposits without prior regulatory approval. Pursuant to the FDIA and OCC regulations, institutions which are not categorized as well-capitalized or adequately-capitalized are restricted from making capital distributions, which include cash dividends, stock redemptions or repurchases, cash-out mergers, interest payments on certain convertible debt and other transactions charged to the capital account of the institution. At September 30, 2025, SBNA met the criteria to be classified as “well-capitalized.”
CRA
In March 2025, the federal banking regulatory agencies announced, in light of pending litigation, their intent to issue a proposal to rescind a final rule issued in October 2023 intended to modernize the CRA framework. The agencies stated they will continue to work together to promote a consistent regulatory approach to implement CRA.
SBNA remains committed to complying with the CRA and achieving the goal of supporting local communities and expanding economic opportunities for families and small businesses.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
RESULTS OF OPERATIONS
CONSOLIDATED AVERAGE BALANCE SHEET / NET INTEREST MARGIN ANALYSIS
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| CONSOLIDATED AVERAGE BALANCE SHEET / NET INTEREST MARGIN ANALYSIS |
| Three months ended September 30, 2025 and 2024 |
| 2025 (1) | | 2024 (1) | | Interest | Change due to | |
| (dollars in thousands) | Average
Balance | | Interest | | Yield/ Rate(2) | | Average
Balance | | Interest | | Yield/
Rate(2) | | Increase/(Decrease) | Volume | Rate | | | | | |
| Interest-earning deposits | $ | 16,099,373 | | | $ | 231,214 | | | 5.74 | % | | $ | 12,727,793 | | | $ | 222,492 | | | 6.99 | % | | $ | 8,722 | | $ | 26,843 | | $ | (18,121) | | | | | | |
Federal funds sold and securities purchased under resale or similar agreements, gross (3) | 38,590,766 | | | 414,452 | | | 4.30 | % | | 54,254,688 | | | 728,670 | | | 5.37 | % | | (314,218) | | (185,923) | | (128,295) | | | | | | |
| Federal funds sold and securities purchased under resale or similar agreements, netting | (28,064,092) | | | | | | | (42,098,401) | | | | | | | | | | | | | | |
| Federal funds sold and securities purchased under resale or similar agreements, net | 10,526,674 | | | | | | | 12,156,287 | | | | | | | | | | | | | | |
| AFS | 7,435,575 | | | 97,893 | | | 5.27 | % | | 6,867,852 | | | 93,057 | | | 5.42 | % | | 4,836 | | 7,270 | | (2,434) | | | | | | |
| HTM | 11,210,984 | | | 77,648 | | | 2.77 | % | | 9,491,578 | | | 54,371 | | | 2.29 | % | | 23,277 | | 10,791 | | 12,486 | | | | | | |
| Trading securities | 17,154,361 | | | 209,663 | | | 4.89 | % | | 12,487,618 | | | 150,944 | | | 4.83 | % | | 58,719 | | 56,828 | | 1,891 | | | | | | |
| Other investments | 1,578,704 | | | 9,319 | | | 2.36 | % | | 1,333,486 | | | 10,372 | | | 3.11 | % | | (1,053) | | 3,381 | | (4,434) | | | | | | |
| TOTAL SECURITIES FINANCING ACTIVITIES, INVESTMENTS AND INTEREST-EARNING DEPOSITS | $ | 64,005,671 | | | $ | 1,040,189 | | | 6.50 | % | | $ | 55,064,614 | | | $ | 1,259,906 | | | 9.15 | % | | $ | (219,717) | | $ | (80,810) | | $ | (138,907) | | | | | | |
LOANS (4): | | | | | | | | | | | | | | | | | | | | |
| C&I | 8,656,088 | | | 95,802 | | | 4.43 | % | | 10,270,070 | | | 117,079 | | | 4.56 | % | | (21,277) | | (18,383) | | (2,894) | | | | | | |
| CRE | 8,890,997 | | | 158,465 | | | 7.13 | % | | 8,823,284 | | | 168,094 | | | 7.62 | % | | (9,629) | | 1,305 | | (10,934) | | | | | | |
| Other commercial loans | 8,082,036 | | | 98,889 | | | 4.89 | % | | 7,791,979 | | | 104,807 | | | 5.38 | % | | (5,918) | | 4,091 | | (10,009) | | | | | | |
| Multifamily | 9,633,078 | | | 112,183 | | | 4.66 | % | | 10,177,761 | | | 125,037 | | | 4.91 | % | | (12,854) | | (6,588) | | (6,266) | | | | | | |
| Total commercial loans | 35,262,199 | | | 465,339 | | | 5.28 | % | | 37,063,094 | | | 515,017 | | | 5.56 | % | | (49,678) | | (19,575) | | (30,103) | | | | | | |
| Consumer loans: | | | | | | | | | | | | | | | | | | | | |
| Residential mortgages | 5,517,087 | | | 55,463 | | | 4.02 | % | | 4,755,796 | | | 43,356 | | | 3.65 | % | | 12,107 | | 7,413 | | 4,694 | | | | | | |
| Home equity loans and lines of credit | 1,910,336 | | | 34,157 | | | 7.15 | % | | 2,211,267 | | | 44,133 | | | 7.98 | % | | (9,976) | | (5,654) | | (4,322) | | | | | | |
| Total consumer loans secured by real estate | 7,427,423 | | | 89,620 | | | 4.83 | % | | 6,967,063 | | | 87,489 | | | 5.02 | % | | 2,131 | | 1,759 | | 372 | | | | | | |
| RICs and auto loans | 42,955,721 | | | 1,484,410 | | | 13.82 | % | | 45,296,016 | | | 1,491,109 | | | 13.17 | % | | (6,699) | | (149,698) | | 142,999 | | | | | | |
| Personal unsecured | 1,509,101 | | | 50,188 | | | 13.30 | % | | 2,936,495 | | | 72,155 | | | 9.83 | % | | (21,967) | | (80,232) | | 58,265 | | | | | | |
| Other consumer | 24,019 | | | 3,582 | | | 59.65 | % | | 43,391 | | | 654 | | | 6.03 | % | | 2,928 | | (155) | | 3,083 | | | | | | |
| Total consumer | 51,916,264 | | | 1,627,800 | | | 12.54 | % | | 55,242,965 | | | 1,651,407 | | | 11.96 | % | | (23,607) | | (228,326) | | 204,719 | | | | | | |
| Total loans | 87,178,463 | | | 2,093,139 | | | 9.60 | % | | 92,306,059 | | | 2,166,424 | | | 9.39 | % | | (73,285) | | (247,901) | | 174,616 | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL EARNING ASSETS | 151,184,134 | | | 3,133,328 | | | 8.29 | % | | 147,370,673 | | | 3,426,330 | | | 9.30 | % | | (293,002) | | (328,711) | | 35,709 | | | | | | |
Non-interest bearing assets (5) | 21,655,532 | | | | | | | 24,054,067 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | $ | 172,839,666 | | | | | | | $ | 171,424,740 | | | | | | | | | | | | | | |
| INTEREST BEARING FUNDING LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits and other customer related accounts: | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 12,155,487 | | | $ | 40,634 | | | 1.34 | % | | $ | 12,419,797 | | | $ | 49,875 | | | 1.61 | % | | $ | (9,241) | | $ | (1,041) | | $ | (8,200) | | | | | | |
| Savings | 9,180,190 | | | 61,291 | | | 2.67 | % | | 3,890,971 | | | 1,877 | | | 0.19 | % | | 59,414 | | 5,603 | | 53,811 | | | | | | |
| Money market | 26,041,804 | | | 195,578 | | | 3.00 | % | | 24,868,556 | | | 214,939 | | | 3.46 | % | | (19,361) | | 10,650 | | (30,011) | | | | | | |
| CDs | 16,464,363 | | | 163,310 | | | 3.97 | % | | 20,859,378 | | | 260,865 | | | 5.00 | % | | (97,555) | | (49,324) | | (48,231) | | | | | | |
| TOTAL INTEREST-BEARING DEPOSITS | 63,841,844 | | | 460,813 | | | 2.89 | % | | 62,038,702 | | | 527,556 | | | 3.40 | % | | (66,743) | | (34,112) | | (32,631) | | | | | | |
Federal funds purchased and securities sold under agreements to repurchase, gross (3) | 52,345,351 | | | 567,609 | | | 4.34 | % | | 63,752,588 | | | 860,769 | | | 5.40 | % | | (293,160) | | (139,808) | | (153,352) | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase, netting | (28,064,092) | | | | | | | (42,098,401) | | | | | | | | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase, net | 24,281,259 | | | | | | | 21,654,187 | | | | | | | | | | | | | | |
| Trading liabilities | 3,342,681 | | | 36,258 | | | 4.34 | % | | 3,911,482 | | | 45,507 | | | 4.65 | % | | (9,249) | | (6,342) | | (2,907) | | | | | | |
| FHLB advances | 1,967,806 | | | 21,625 | | | 4.40 | % | | 2,551,016 | | | 28,267 | | | 4.43 | % | | (6,642) | | (6,451) | | (191) | | | | | | |
| Other borrowings | 39,330,718 | | | 527,848 | | | 5.37 | % | | 40,691,172 | | | 581,204 | | | 5.71 | % | | (53,356) | | (19,187) | | (34,169) | | | | | | |
| TOTAL SECURITIES FINANCING ACTIVITIES AND BORROWED FUNDS | 68,922,464 | | | 1,153,340 | | | 6.69 | % | | 68,807,857 | | | 1,515,747 | | | 8.81 | % | | (362,407) | | (171,788) | | (190,619) | | | | | | |
| TOTAL INTEREST-BEARING FUNDING LIABILITIES | 132,764,308 | | | 1,614,153 | | | 4.86 | % | | 130,846,559 | | | 2,043,303 | | | 6.25 | % | | (429,150) | | (205,900) | | (223,250) | | | | | | |
Non-interest bearing liabilities (6) | 20,994,772 | | | | | | | 21,862,060 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL LIABILITIES | 153,759,080 | | | | | | | 152,708,619 | | | | | | | | | | | | | | |
| Mezzanine equity | 2,000,000 | | | | | | | 2,000,000 | | | | | | | | | | | | | | |
| STOCKHOLDER’S EQUITY | 17,080,586 | | | | | | | 16,716,121 | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | 172,839,666 | | | | | | | $ | 171,424,740 | | | | | | | | | | | | | | |
NET INTEREST SPREAD (7) | | | | | 3.43 | % | | | | | | 3.05 | % | | | | | | | | | |
NET INTEREST MARGIN (8) | | | | | 4.02 | % | | | | | | 3.75 | % | | | | | | | | | |
| NET INTEREST INCOME | | | $ | 1,519,175 | | | | | | | $ | 1,383,027 | | | | | | | | | | | | |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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| | | | | |
| Nine months ended September 30, 2025 and 2024 | | | | | |
| 2025 (1) | | 2024 (1) | | Interest | Change due to | | | | | |
| (dollars in thousands) | Average
Balance | | Interest | | Yield/
Rate(2) | | Average
Balance | | Interest | | Yield/
Rate(2) | | Increase/(Decrease) | Volume | Rate | | | | | |
| Interest-earning deposits | $ | 18,065,719 | | | $ | 745,696 | | | 5.50 | % | | $ | 12,193,903 | | | $ | 648,631 | | | 7.09 | % | | $ | 97,065 | | $ | 181,677 | | $ | (84,612) | | | | | | |
Federal funds sold and securities purchased under resale or similar agreements, gross (3) | 40,149,196 | | | 1,313,419 | | | 4.36 | % | | 54,876,266 | | | 2,210,518 | | | 5.37 | % | | (897,099) | | (527,405) | | (369,694) | | | | | | |
| Federal funds sold and securities purchased under resale or similar agreements, netting | (29,547,974) | | | | | | | (43,696,572) | | | | | | | | | | | | | | |
| Federal funds sold and securities purchased under resale or similar agreements, net | 10,601,222 | | | | | | | 11,179,694 | | | | | | | | | | | | | | |
| AFS | 7,284,476 | | | 289,031 | | | 5.29 | % | | 6,969,297 | | | 287,729 | | | 5.50 | % | | 1,302 | | 8,361 | | (7,059) | | | | | | |
| HTM | 10,291,445 | | | 196,642 | | | 2.55 | % | | 9,148,384 | | | 145,165 | | | 2.12 | % | | 51,477 | | 19,623 | | 31,854 | | | | | | |
| Trading securities | 15,544,807 | | | 566,583 | | | 4.86 | % | | 11,700,468 | | | 414,215 | | | 4.72 | % | | 152,368 | | 139,752 | | 12,616 | | | | | | |
| Other investments | 1,532,497 | | | 31,172 | | | 2.71 | % | | 1,331,942 | | | 35,304 | | | 3.53 | % | | (4,132) | | 7,613 | | (11,745) | | | | | | |
| TOTAL SECURITIES FINANCING ACTIVITIES, INVESTMENTS AND INTEREST-EARNING DEPOSITS | $ | 63,320,166 | | | $ | 3,142,543 | | | 6.62 | % | | $ | 52,523,688 | | | $ | 3,741,562 | | | 9.50 | % | | $ | (599,019) | | $ | (170,379) | | $ | (428,640) | | | | | | |
LOANS (4): | | | | | | | | | | | | | | | | | | | | |
| C&I | 8,513,052 | | | 288,122 | | | 4.51 | % | | 11,144,201 | | | 344,926 | | | 4.13 | % | | (56,804) | | (93,079) | | 36,275 | | | | | | |
| CRE | 8,907,145 | | | 462,395 | | | 6.92 | % | | 8,934,259 | | | 509,984 | | | 7.61 | % | | (47,589) | | (1,542) | | (46,047) | | | | | | |
| Other commercial loans | 8,066,822 | | | 305,506 | | | 5.05 | % | | 7,670,776 | | | 306,182 | | | 5.32 | % | | (676) | | 7,595 | | (8,271) | | | | | | |
| Multifamily | 9,692,242 | | | 333,371 | | | 4.59 | % | | 10,250,016 | | | 376,116 | | | 4.89 | % | | (42,745) | | (20,094) | | (22,651) | | | | | | |
| Total commercial loans | 35,179,261 | | | 1,389,394 | | | 5.27 | % | | 37,999,252 | | | 1,537,208 | | | 5.39 | % | | (147,814) | | (107,120) | | (40,694) | | | | | | |
| Consumer loans: | | | | | | | | | | | | | | | | | | | | |
| Residential mortgages | 5,461,401 | | | 166,711 | | | 4.07 | % | | 4,734,454 | | | 126,678 | | | 3.57 | % | | 40,033 | | 20,937 | | 19,096 | | | | | | |
| Home equity loans and lines of credit | 1,980,946 | | | 105,382 | | | 7.09 | % | | 2,300,922 | | | 136,731 | | | 7.92 | % | | (31,349) | | (17,878) | | (13,471) | | | | | | |
| Total consumer loans secured by real estate | 7,442,347 | | | 272,093 | | | 4.87 | % | | 7,035,376 | | | 263,409 | | | 4.99 | % | | 8,684 | | 3,059 | | 5,625 | | | | | | |
| RICs and auto loans | 44,078,600 | | | 4,489,768 | | | 13.58 | % | | 44,543,210 | | | 4,353,513 | | | 13.03 | % | | 136,255 | | (44,719) | | 180,974 | | | | | | |
| Personal unsecured | 1,616,213 | | | 157,367 | | | 12.98 | % | | 3,517,749 | | | 287,297 | | | 10.89 | % | | (129,930) | | (201,456) | | 71,526 | | | | | | |
| Other consumer | 28,250 | | | 1,214 | | | 5.73 | % | | 49,685 | | | 2,264 | | | 6.08 | % | | (1,050) | | (926) | | (124) | | | | | | |
| Total consumer | 53,165,410 | | | 4,920,442 | | | 12.34 | % | | 55,146,020 | | | 4,906,483 | | | 11.86 | % | | 13,959 | | (244,042) | | 258,001 | | | | | | |
| Total loans | 88,344,671 | | | 6,309,836 | | | 9.52 | % | | 93,145,272 | | | 6,443,691 | | | 9.22 | % | | (133,855) | | (351,162) | | 217,307 | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL EARNING ASSETS | 151,664,837 | | | 9,452,379 | | | 8.31 | % | | 145,668,960 | | | 10,185,253 | | | 9.32 | % | | (732,874) | | (521,541) | | (211,333) | | | | | | |
Non-interest bearing assets (5) | 22,172,840 | | | | | | | 24,241,314 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | $ | 173,837,677 | | | | | | | $ | 169,910,274 | | | | | | | | | | | | | | |
| INTEREST BEARING FUNDING LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits and other customer related accounts: | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 12,201,858 | | | $ | 119,947 | | | 1.31 | % | | $ | 12,395,100 | | | $ | 143,045 | | | 1.54 | % | | $ | (23,098) | | $ | (2,183) | | $ | (20,915) | | | | | | |
| Savings | 7,837,994 | | | 141,844 | | | 2.41 | % | | 4,081,153 | | | 6,275 | | | 0.21 | % | | 135,569 | | 10,954 | | 124,615 | | | | | | |
| Money market | 26,024,876 | | | 597,905 | | | 3.06 | % | | 25,009,453 | | | 627,713 | | | 3.35 | % | | (29,808) | | 26,329 | | (56,137) | | | | | | |
| CDs | 18,536,547 | | | 578,420 | | | 4.16 | % | | 20,401,330 | | | 768,460 | | | 5.02 | % | | (190,040) | | (66,115) | | (123,925) | | | | | | |
| TOTAL INTEREST-BEARING DEPOSITS | 64,601,275 | | | 1,438,116 | | | 2.97 | % | | 61,887,036 | | | 1,545,493 | | | 3.33 | % | | (107,377) | | (31,015) | | (76,362) | | | | | | |
Federal funds purchased and securities sold under agreements to repurchase, gross (3) | 52,509,774 | | | 1,719,233 | | | 4.37 | % | | 63,979,450 | | | 2,589,950 | | | 5.40 | % | | (870,717) | | (421,862) | | (448,855) | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase, netting | (29,547,974) | | | | | | | (43,696,572) | | | | | | | | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase, net | 22,961,800 | | | | | | | 20,282,878 | | | | | | | | | | | | | | |
| Trading liabilities | 3,328,603 | | | 109,459 | | | 4.38 | % | | 3,678,059 | | | 129,342 | | | 4.69 | % | | (19,883) | | (11,725) | | (8,158) | | | | | | |
| FHLB advances | 2,840,519 | | | 99,903 | | | 4.69 | % | | 3,709,297 | | | 135,693 | | | 4.88 | % | | (35,790) | | (30,690) | | (5,100) | | | | | | |
| Other borrowings | 40,140,086 | | | 1,627,046 | | | 5.40 | % | | 39,862,951 | | | 1,621,015 | | | 5.42 | % | | 6,031 | | 12,853 | | (6,822) | | | | | | |
| TOTAL SECURITIES FINANCING ACTIVITIES AND BORROWED FUNDS | 69,271,008 | | | 3,555,641 | | | 6.84 | % | | 67,533,185 | | | 4,476,000 | | | 8.84 | % | | (920,359) | | (451,424) | | (468,935) | | | | | | |
| TOTAL INTEREST-BEARING FUNDING LIABILITIES | 133,872,283 | | | 4,993,757 | | | 4.97 | % | | 129,420,221 | | | 6,021,493 | | | 6.20 | % | | (1,027,736) | | (482,439) | | (545,297) | | | | | | |
Non-interest-bearing liabilities (6) | 21,346,968 | | | | | | | 22,380,568 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL LIABILITIES | 155,219,251 | | | | | | | 151,800,789 | | | | | | | | | | | | | | |
| Mezzanine equity | 2,000,000 | | | | | | | 2,000,000 | | | | | | | | | | | | | | |
| STOCKHOLDER’S EQUITY | 16,618,426 | | | | | | | 16,109,485 | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | 173,837,677 | | | | | | | $ | 169,910,274 | | | | | | | | | | | | | | |
NET INTEREST SPREAD (7) | | | | | 3.34 | % | | | | | | 3.12 | % | | | | | | | | | |
NET INTEREST MARGIN (8) | | | | | 3.92 | % | | | | | | 3.81 | % | | | | | | | | | |
| NET INTEREST INCOME | | | $ | 4,458,622 | | | | | | | $ | 4,163,760 | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(1)Average balances are based on daily averages when available. When daily averages are unavailable, mid-month averages are substituted.
(2)Yields calculated using taxable equivalent net interest income.
(3)Represents the average gross Securities Financing Activities balance, including activity that qualifies for balance sheet netting, as discussed further in Note 11 to these Condensed Consolidated Financial Statements.
(4)Interest on loans includes amortization of premiums and discounts on purchased loan portfolios and amortization of deferred loan fees, net of origination costs. Average loan balances include non-accrual loans and LHFS.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(5)Includes allowance for loan losses and Other assets including leases, goodwill and intangibles, premises and equipment, net deferred tax assets, equity method investments, BOLI, accrued interest receivable, derivative assets, miscellaneous receivables, prepaid expenses and MSRs. Refer to Note 6 to the Condensed Consolidated Financial Statements for further discussion.
(6)Includes Non-interest-bearing deposits and Other liabilities primarily including accounts payable and accrued expenses, derivative liabilities, net deferred tax liabilities and the unfunded lending commitments liability.
(7)Represents the difference between the yield on total earning assets and the cost of total funding liabilities on a managed basis.
(8)Represents annualized, taxable equivalent net interest income divided by average interest-earning assets.
.
NET INTEREST INCOME
Net interest income increased $136.1 million and increased $294.9 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The most significant factors contributing to these changes were as follows:
•Interest income on loans decreased $73.3 million and decreased $133.9 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to a decrease in average loan volume of $247.9 million and an increase in average rates of $174.6 million. The nine-month period change is attributable to a decrease in average loan volume of $351.2 million and an increase in average rates of $217.3 million. Refer to the discussion of changes in loan balances in the "Loan Portfolio" section of this MD&A.
•Interest income on interest-earning deposits increased $8.7 million and increased $97.1 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to an increase in average interest-bearing deposits volume of $26.8 million and a decrease in average rates of $18.1 million. The nine-month period change is attributable to an increase in average interest-bearing deposits volume of $181.7 million and a decrease in average rates of $84.6 million.
•Interest and fees on federal funds sold and securities purchased under resale agreements or similar arrangements decreased $314.2 million and decreased $897.1 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to a decrease in average federal funds sold and securities purchased under resale agreements or similar arrangements volume of $185.9 million and a decrease in average rates of $128.3 million. The nine-month period change is attributable to a decrease in average federal funds sold and securities purchased under resale agreements or similar arrangements volume of $527.4 million and a decrease in average rates of $369.7 million.
•Interest income on investment securities increased $85.8 million and increased $201.0 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to an increase in average investment securities volume of $78.3 million and an increase in average rates of $7.5 million. The nine-month period change is attributable to an increase in average investment securities volume of $175.3 million and an increase in average rates of $25.7 million.
•Interest expense on deposits and related customer accounts decreased $66.7 million and decreased $107.4 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to a decrease in average interest-bearing deposit volume of $34.1 million and a decrease in average rates of $32.6 million. The nine-month period change is attributable to a decrease in average interest-bearing deposit volume of $31.0 million and a decrease in average rates of $76.4 million. The decrease in average rates is primarily attributable to money market and CD products.
•Interest expense on Securities Financing Activities and borrowed funds decreased $362.4 million and decreased $920.4 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The three-month period change is attributable to a decrease in average Securities Financing Activities and borrowed funds volume of $171.8 million and a decrease in average rates of $190.6 million. The nine-month period change is attributable to a decrease in average Securities Financing Activities and borrowed funds volume of $451.4 million and a decrease in average rates of $468.9 million.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CREDIT LOSS EXPENSE (BENEFIT)
The Company had credit loss expense of $368.1 million and $1.2 billion for the three months and nine months ended September 30, 2025, compared to a credit loss expense of $431.3 million and $1.3 billion for the corresponding periods in 2024. The lower credit loss expense during the three months and nine months ended September 30, 2025 was mainly due to lower net charge-offs in RICs and auto loans, partially offset by the decrease in the ACL driven by the sale of certain RICs and auto loans, improvement in used car prices, lower exposure in Personal unsecured loans and rating improvement in certain loans in Commercial.
Credit loss expense on commercial loans decreased $20.4 million and decreased $0.6 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024.
Credit loss expense on consumer loans decreased $46.2 million and decreased $167.1 million for the three months and nine months ended September 30, 2025 compared to the corresponding periods in 2024 due to lower net charge-offs in RICs and auto loans, improvement in used car prices and lower exposure in Personal unsecured loans.
The credit loss expense on unfunded credit losses for the three months and nine months ended September 30, 2025 increased $3.3 million and increased $17.1 million compared to the corresponding periods in 2024.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
NON-INTEREST INCOME
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| | Three months Ended September 30, | | Nine months ended September 30, | | QTD Change | | YTD Change |
| (dollars in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Consumer fees | | $ | 103,806 | | | $ | 78,834 | | | $ | 282,190 | | | $ | 211,843 | | | $ | 24,972 | | | 31.7 | % | | $ | 70,347 | | | 33.2 | % |
| Commercial fees | | 24,088 | | | 26,114 | | | 81,501 | | | 73,184 | | | (2,026) | | | (7.8) | % | | 8,317 | | | 11.4 | % |
| Lease income | | 394,740 | | | 535,872 | | | 1,279,449 | | | 1,688,602 | | | (141,132) | | | (26.3) | % | | (409,153) | | | (24.2) | % |
| Capital markets and foreign exchange income | | 153,768 | | | 102,075 | | | 382,479 | | | 316,349 | | | 51,693 | | | 50.6 | % | | 66,130 | | | 20.9 | % |
| Miscellaneous income, net | | 144,188 | | | 7,099 | | | 481,864 | | | 264,388 | | | 137,089 | | | 1,931.1 | % | | 217,476 | | | 82.3 | % |
Securities gains, net | | 53,169 | | | 55,117 | | | 115,091 | | | 184,304 | | | (1,948) | | | (3.5) | % | | (69,213) | | | (37.6) | % |
| Total non-interest income | | $ | 873,759 | | | $ | 805,111 | | | $ | 2,622,574 | | | $ | 2,738,670 | | | $ | 68,648 | | | 8.5 | % | | $ | (116,096) | | | (4.2) | % |
Total non-interest income increased $68.6 million and decreased $116.1 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These changes were primarily comprised of:
•Consumer fees increased $25.0 million and $70.3 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, primarily due to an increase in consumer loan fees.
•Lease income decreased $141.1 million and $409.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, primarily driven by a lower number of active leased vehicle units and lower purchase option fees.
•Capital market revenue increased $51.7 million and $66.1 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, primarily due to an increase in investment banking income.
•Miscellaneous income, net increased $137.1 million and $217.5 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, discussed further below.
•Securities gains, net decreased $1.9 million and $69.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, primarily due to a decrease in trading securities gains.
Miscellaneous income
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| | Three months Ended September 30, | | Nine months ended September 30, | | QTD Change | | YTD Change |
| (dollars in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Mortgage banking income, net | | $ | 14,564 | | | $ | 15,302 | | | $ | 53,540 | | | $ | 48,599 | | | $ | (738) | | | (4.8) | % | | $ | 4,941 | | | 10.2 | % |
| BOLI | | 16,604 | | | 15,640 | | | 47,739 | | | 49,103 | | | 964 | | | 6.2 | % | | (1,364) | | | (2.8) | % |
Net gain on operating leases | | 10,129 | | | 17,494 | | | 21,188 | | | 61,847 | | | (7,365) | | | (42.1) | % | | (40,659) | | | (65.7) | % |
| Asset and wealth management fees | | 77,253 | | | 73,506 | | | 248,448 | | | 220,615 | | | 3,747 | | | 5.1 | % | | 27,833 | | | 12.6 | % |
Gain/(loss) on sale of non-mortgage loans | | 1,723 | | | (663) | | | 4,644 | | | (2,629) | | | 2,386 | | | 359.9 | % | | 7,273 | | | 276.6 | % |
Other miscellaneous income/(loss), net | | 23,915 | | | (114,180) | | | 106,305 | | | (113,147) | | | 138,095 | | | 120.9 | % | | 219,452 | | | 194.0 | % |
| Total miscellaneous income | | $ | 144,188 | | | $ | 7,099 | | | $ | 481,864 | | | $ | 264,388 | | | $ | 137,089 | | | 1,931.1 | % | | $ | 217,476 | | | 82.3 | % |
Miscellaneous income increased $137.1 million and increased $217.5 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These changes were primarily comprised of:
•A decrease in Net gain on operating leases, led by a decrease in volume of leased vehicles liquidated.
•An increase in Other miscellaneous income/(loss), net, primarily due to more favorable outcomes on securitization transactions.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
GENERAL, ADMINISTRATIVE AND OTHER EXPENSES
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| Three months Ended September 30, | | Nine months Ended September 30, | | QTD Change | | YTD Change |
| (dollars in thousands) | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Compensation and benefits | $ | 533,951 | | | $ | 532,890 | | | $ | 1,607,098 | | | $ | 1,600,393 | | | $ | 1,061 | | | 0.2 | % | | $ | 6,705 | | | 0.4 | % |
| Occupancy and equipment expenses | 167,650 | | | 157,017 | | | 525,301 | | | 473,847 | | | 10,633 | | | 6.8 | % | | 51,454 | | | 10.9 | % |
| Technology, outside services, and marketing expense | 202,601 | | | 196,345 | | | 620,003 | | | 575,244 | | | 6,256 | | | 3.2 | % | | 44,759 | | | 7.8 | % |
| Loan expense | 101,561 | | | 87,287 | | | 262,971 | | | 254,822 | | | 14,274 | | | 16.4 | % | | 8,149 | | | 3.2 | % |
| Lease expense | 335,561 | | | 442,947 | | | 1,030,580 | | | 1,334,384 | | | (107,386) | | | (24.2) | % | | (303,804) | | | (22.8) | % |
| | | | | | | | | | | | | | | |
| Other expenses | 137,545 | | | 179,221 | | | 403,866 | | | 469,325 | | | (41,676) | | | (23.3) | % | | (65,459) | | | (13.9) | % |
| Total general, administrative and other expenses | $ | 1,478,869 | | | $ | 1,595,707 | | | $ | 4,449,819 | | | $ | 4,708,015 | | | $ | (116,838) | | | (7.3) | % | | $ | (258,196) | | | (5.5) | % |
Total general, administrative and other expenses decreased $116.8 million and $258.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The most significant factors contributing to these changes were as follows:
•Lease expense decreased $107.4 million and $303.8 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, due to lower auto lease volumes resulting in lower depreciation expense.
•Other expenses decreased $41.7 million and $65.5 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024, primarily due to lower litigation reserve expense.
INCOME TAX PROVISION
An income tax provision of $89.6 million and $144.5 million was recorded for the three months and nine months ended September 30, 2025, respectively, compared to a benefit of $32.2 million and $74.3 million for the corresponding periods in 2024. This resulted in an ETR of 16.4% and 9.9% for the three months and nine months ended September 30, 2025, respectively, compared to (20.0)% and (8.5)% for the corresponding periods in 2024.
The ETR for the three months and nine months ended September 30, 2025, when compared to the same periods in 2024, was directly impacted by (i) an increase in forecasted pre-tax income in 2025 and (ii) a decrease in electric vehicle tax credits expected to be generated in 2025.
The Company's ETR in future periods will be affected by the results of operations allocated to the various tax jurisdictions in which the Company operates, any change in income tax laws or regulations within those jurisdictions, and interpretations of income tax regulations that differ from the Company's interpretations by tax authorities that examine tax returns filed by the Company or any of its subsidiaries.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
LINE OF BUSINESS RESULTS
The Company manages its business activities by it six reportable segments, Auto, CBB, C&I, CRE, CIB, and Wealth Management. The tables below reflect certain information by reportable segment and includes additional supplementary information related to consumer activities and commercial activities. The supplementary information is deemed to be useful as it represents a view in how we manage the business and also aligns with how our parent, Santander, manages its business from a global perspective.
Consumer Activities
Consumer activities consist of the Company's Auto and CBB reportable segments.
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| Three months ended | September 30, 2025 | | September 30, 2024 | Total Consumer Activities |
| Auto | CBB | Total Consumer activities | | Auto | CBB | Total Consumer Activities | Dollar increase/(decrease) | Percentage |
| Interest income | 1,632,745 | | 752,137 | | 2,384,882 | | | 1,637,082 | | 730,344 | | 2,367,426 | | 17,456 | | 0.7 | % |
| Interest expense | 676,182 | | 370,676 | | 1,046,858 | | | 729,516 | | 369,614 | | 1,099,130 | | (52,272) | | (4.8) | % |
| Fees and other income | 50,102 | | 77,588 | | 127,690 | | | 9,808 | | (39,004) | | (29,196) | | 156,886 | | 537.4 | % |
| Lease income | 394,740 | | — | | 394,740 | | | 535,872 | | — | | 535,872 | | (141,132) | | (26.3) | % |
Credit loss expense | 382,495 | | 2,708 | | 385,203 | | | 519,758 | | (82,682) | | 437,076 | | (51,873) | | (11.9) | % |
| Lease expense | 335,389 | | — | | 335,389 | | | 442,810 | | — | | 442,810 | | (107,421) | | (24.3) | % |
| General, administrative and other expenses | 307,998 | | 381,099 | | 689,097 | | | 331,427 | | 348,891 | | 680,318 | | 8,779 | | 1.3 | % |
Income before income taxes | 375,523 | | 75,242 | | 450,765 | | | 159,251 | | 55,517 | | 214,768 | | 235,997 | | 109.9 | % |
| | | | | | | | | |
| | | | | | | | | |
Nine months ended | September 30, 2025 | | September 30, 2024 | Total Consumer Activities |
| Auto | CBB | Total Consumer activities | | Auto | CBB | Total Consumer Activities | Dollar increase/(decrease) | Percentage |
| Interest income | 4,873,484 | | 2,216,981 | | 7,090,465 | | | 4,780,351 | | 2,223,643 | | 7,003,994 | | 86,471 | | 1.2 | % |
| Interest expense | 2,040,994 | | 1,105,778 | | 3,146,772 | | | 2,063,910 | | 1,108,988 | | 3,172,898 | | (26,126) | | (0.8) | % |
| Fees and other income | 139,837 | | 212,100 | | 351,937 | | | 32,670 | | 91,604 | | 124,274 | | 227,663 | | 183.2 | % |
| Lease income | 1,279,449 | | — | | 1,279,449 | | | 1,688,602 | | — | | 1,688,602 | | (409,153) | | (24.2) | % |
Credit loss expense | 1,121,393 | | 67,431 | | 1,188,824 | | | 1,347,400 | | 360 | | 1,347,760 | | (158,936) | | (11.8) | % |
| Lease expense | 1,030,081 | | — | | 1,030,081 | | | 1,333,917 | | — | | 1,333,917 | | (303,836) | | (22.8) | % |
| General, administrative and other expenses | 907,480 | | 1,135,250 | | 2,042,730 | | | 1,007,658 | | 1,055,481 | | 2,063,139 | | (20,409) | | (1.0) | % |
| Income before income taxes | 1,192,822 | | 120,622 | | 1,313,444 | | | 748,738 | | 150,418 | | 899,156 | | 414,288 | | 46.1 | % |
| Total assets | 56,863,896 | | 9,212,708 | | 66,076,604 | | | 62,094,480 | | 9,891,925 | | 71,986,405 | | (5,909,801) | | (8.2) | % |
The Company reported total income before income taxes related to its Consumer activities of $450.8 million and $1.3 billion for the three months and nine months ended September 30, 2025, respectively, compared to income before income taxes of $214.8 million and $899.2 million for the corresponding periods in 2024. The most significant drivers of these changes were:
•Fees and other income for Auto increased $40.3 million and increased $107.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These changes were primarily driven by higher auto servicing fees and gains on securitization of loan portfolios.
•Lease income decreased $141.1 million and $409.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These changes where primarily driven by lower average auto lease volumes.
•Credit loss expense in Auto decreased $137.3 million and decreased $226.0 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These decreases were driven by lower loan volume and improved net charge-off rates.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
•Lease expense decreased $107.4 million and $303.8 million three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These changes where primarily driven by lower average auto lease balances.
•Total assets in Auto at September 30, 2025 decreased by $5.2 billion compared to the corresponding date in 2024. This decrease was driven by loan securitizations.
Commercial Activities
Commercial activities consists of the Company's C&I reportable segment and CRE reportable segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | September 30, 2025 | | | September 30, 2024 | Total Commercial Activities |
| C&I | CRE | Total Commercial Activities | | | C&I | CRE | Total Commercial Activities | Dollar increase/(decrease) | Percentage |
| Interest income | $ | 219,536 | | $ | 366,470 | | $ | 586,006 | | | | $ | 255,080 | | $ | 388,592 | | $ | 643,672 | | $ | (57,666) | | (9.0) | % |
| Interest expense | 136,914 | | 242,642 | | 379,556 | | | | 164,769 | | 264,675 | | 429,444 | | (49,888) | | (11.6) | % |
| Fees and other income | 15,765 | | 22,477 | | 38,242 | | | | 17,793 | | 20,933 | | 38,726 | | (484) | | (1.2) | % |
| | | | | | | | | | |
| Credit loss expense / (benefit) | (4,392) | | (11,282) | | (15,674) | | | | (12,677) | | 15,940 | | 3,263 | | (18,937) | | (580.4) | % |
| | | | | | | | | | |
| General, administrative and other expenses | 48,303 | | 31,746 | | 80,049 | | | | 45,033 | | 34,282 | | 79,315 | | 734 | | 0.9 | % |
Income before income taxes | 54,476 | | 125,841 | | 180,317 | | | | 75,748 | | 94,628 | | 170,376 | | 9,941 | | 5.8 | % |
| | | | | | | | | | |
| | | | | | | | | | |
Nine months ended | September 30, 2025 | | | September 30, 2024 | Total Commercial Activities |
| C&I | CRE | Total Commercial Activities | | | C&I | CRE | Total Commercial Activities | Dollar increase/(decrease) | Percentage |
| Interest income | $ | 665,943 | | $ | 1,085,414 | | $ | 1,751,357 | | | | $ | 744,217 | | $ | 1,161,537 | | $ | 1,905,754 | | $ | (154,397) | | (8.1) | % |
| Interest expense | 410,701 | | 721,182 | | 1,131,883 | | | | 480,211 | | 782,450 | | 1,262,661 | | (130,778) | | (10.4) | % |
| Fees and other income | 50,943 | | 55,500 | | 106,443 | | | | 49,541 | | 56,986 | | 106,527 | | (84) | | (0.1) | % |
| | | | | | | | | | |
| Credit loss expense / (benefit) | (11,083) | | (2,186) | | (13,269) | | | | (54,782) | | 57,376 | | 2,594 | | (15,863) | | (611.5) | % |
| | | | | | | | | | |
| General, administrative and other expenses | 142,575 | | 108,708 | | 251,283 | | | | 140,621 | | 104,544 | | 245,165 | | 6,118 | | 2.5 | % |
Income before income taxes | 174,693 | | 313,210 | | 487,903 | | | | 227,708 | | 274,153 | | 501,861 | | (13,958) | | (2.8) | % |
| Total assets | 3,612,795 | | 23,221,161 | | 26,833,956 | | | | 4,156,606 | | 23,442,878 | | 27,599,484 | | (765,528) | | (2.8) | % |
The Company reported total income before income taxes related to its Commercial activities of $180.3 million and $487.9 million for the three months and nine months ended September 30, 2025, respectively, compared to income before income taxes of $170.4 million and $501.9 million for the corresponding periods in 2024. The most significant drivers of these changes were:
•Credit loss expense in CRE decreased $27.2 million and $59.6 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods of 2024. These decreases were due to improved portfolio performance.
•Credit loss expense in C&I increased $8.3 million and increased $43.7 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods of 2024. These increases were primarily due to prior year credit loss releases related to loan payoffs.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CIB
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30 | | Nine months ended September 30 | | QTD Change | | YTD Change |
| (dollars in thousands) | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Interest income | $ | 734,094 | | | $ | 1,011,325 | | | $ | 2,213,237 | | | $ | 3,041,402 | | | $ | (277,231) | | | (27.4) | % | | $ | (828,165) | | | (27.2) | % |
| Interest expense | 666,828 | | | 985,415 | | | 2,019,660 | | | 2,962,457 | | | (318,587) | | | (32.3) | % | | (942,797) | | | (31.8) | % |
| Fees and other income | 210,378 | | | 152,849 | | | 563,250 | | | 502,304 | | | 57,529 | | | 37.6 | % | | 60,946 | | | 12.1 | % |
| | | | | | | | | | | | | | | |
| Credit loss expense / (benefit) | (1,129) | | | (8,343) | | | (6,916) | | | (30,443) | | | 7,214 | | | 86.5 | % | | 23,527 | | | 77.3 | % |
| Lease expense | 172 | | | 137 | | | 499 | | | 467 | | | 35 | | | 25.5 | % | | 32 | | | 6.9 | % |
| General, administrative and other expenses | 213,542 | | | 222,055 | | | 627,593 | | | 622,168 | | | (8,513) | | | (3.8) | % | | 5,425 | | | 0.9 | % |
Income / (loss) before income taxes | 65,059 | | | (35,090) | | | 135,651 | | | (10,943) | | | 100,149 | | | 285.4 | % | | 146,594 | | | 1,339.6 | % |
| Total assets | | | | | 32,686,610 | | | 27,474,238 | | | | | | | 5,212,372 | | | 19.0 | % |
CIB reported income before income taxes of $65.1 million and $135.7 million for the three months and nine months ended September 30, 2025, respectively, compared to a loss before income taxes of $35.1 million and $10.9 million for the corresponding periods in 2024, respectively. Factors contributing to these changes were:
•Interest income decreased $277.2 million and $828.2 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. The decreases were due to Securities Financing activities.
•Interest expense decreased $318.6 million and $942.8 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These decreases were primarily due to interest expense associated with Securities Financing activities.
•Fees and other income increased $57.5 million and $60.9 million for the three months and nine months ended September 30, 2025, respectively compared to the corresponding periods in 2024. These increases were primarily due to increased Global Banking Fees.
•Total assets at September 30, 2025 increased $5.2 billion compared to the corresponding date in 2024. This increase was primarily due to trading inventory.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Wealth Management
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30 | | Nine months ended September 30 | | QTD Change | | YTD Change |
| (dollars in thousands) | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Interest income | $ | 86,743 | | | $ | 98,040 | | | $ | 259,880 | | | $ | 283,306 | | | $ | (11,297) | | | (11.5) | % | | $ | (23,426) | | | (8.3) | % |
| Interest expense | 39,356 | | | 44,762 | | | 111,507 | | | 115,703 | | | (5,406) | | | (12.1) | % | | (4,196) | | | (3.6) | % |
| Fees and other income | 90,144 | | | 82,106 | | | 281,684 | | | 241,848 | | | 8,038 | | | 9.8 | % | | 39,836 | | | 16.5 | % |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| General, administrative and other expenses | 75,457 | | | 70,185 | | | 212,342 | | | 200,343 | | | 5,272 | | | 7.5 | % | | 11,999 | | | 6.0 | % |
Income before income taxes | 62,074 | | | 65,199 | | | 217,715 | | | 209,108 | | | (3,125) | | | (4.8) | % | | 8,607 | | | 4.1 | % |
| Total assets | | | | | 9,082,196 | | | 8,137,399 | | | | | | | 944,797 | | | 11.6 | % |
| | | | | | | | | | | | | | | |
Wealth Management reported income before income taxes of $62.1 million and $217.7 million for the three months and nine months ended September 30, 2025, respectively, compared to income before income taxes of $65.2 million and $209.1 million for the corresponding periods in 2024. The primary factors contributing to these changes were:
•Total fees and other income increased $8.0 million and $39.8 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods in 2024. These increases were primarily driven by additional transaction fees on increased securities transaction activity and higher foreign exchange activity.
•Total assets increased $944.8 million compared to the corresponding date in 2024. This increase was primarily due to acquisition of the interest in the U.K. Limited Partnership.
Other
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30 | | Nine months ended September 30 | | QTD Change | | YTD Change |
| (dollars in thousands) | 2025 | | 2024 | | 2025 | | 2024 | | Dollar increase/(decrease) | | Percentage | | Dollar increase/(decrease) | | Percentage |
| Interest income | $ | (658,397) | | | $ | (694,133) | | | $ | (1,862,560) | | | $ | (2,049,203) | | | $ | 35,736 | | | 5.1 | % | | $ | 186,643 | | | 9.1 | % |
| Interest expense | (518,445) | | | (515,448) | | | (1,416,065) | | | (1,492,226) | | | (2,997) | | | (0.6) | % | | 76,161 | | | 5.1 | % |
| Fees and other income | 12,565 | | | 24,754 | | | 39,811 | | | 75,115 | | | (12,189) | | | (49.2) | % | | (35,304) | | | (47.0) | % |
| | | | | | | | | | | | | | | |
| Credit loss expense / (benefit) | (334) | | | (657) | | | (1,763) | | | (2,342) | | | 323 | | | 49.2 | % | | 579 | | | 24.7 | % |
| | | | | | | | | | | | | | | |
| General, administrative and other expenses | 85,163 | | | 100,887 | | | 285,291 | | | 242,816 | | | (15,724) | | | (15.6) | % | | 42,475 | | | 17.5 | % |
Loss before income taxes | (212,216) | | | (254,161) | | | (690,212) | | | (722,336) | | | 41,945 | | | 16.5 | % | | 32,124 | | | 4.4 | % |
| Total assets | | | | | 33,435,598 | | | 32,821,823 | | | | | | | 613,775 | | | 1.9 | % |
| | | | | | | | | | | | | | | |
The Other category reported losses before income taxes of $212.2 million and $690.2 million for the three months and nine months ended September 30, 2025, respectively, compared to losses before income taxes of $254.2 million and $722.3 million for the corresponding periods in 2024. The primary factors contributing to these changes were:
•Fees and other income decreased $12.2 million and decreased $35.3 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods of 2024. These changes were primarily due to changes in mark-to-market hedge positions.
•General, administrative and other expenses decreased $15.7 million and increased $42.5 million for the three months and nine months ended September 30, 2025, respectively, compared to the corresponding periods of 2024. These changes were primarily the result of timing in strategic investment and restructuring charges.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL CONDITION
LOAN PORTFOLIO
The Company's LHFI portfolio consisted of the following at the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2025 | | December 31, 2024 | | Dollar Increase / (Decrease) | Percent Increase (Decrease) | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in thousands) | | Amount | | Percent | | Amount | | Percent | | | | | | | | | | | | | | | |
| Commercial LHFI: | | | | | | | | | | | | | | | | | | | | | | | |
| CRE | | $ | 8,471,776 | | | 10.0 | % | | $ | 8,624,800 | | | 9.9 | % | | $ | (153,024) | | (1.8) | % | | | | | | | | | | | | |
| C&I | | 7,785,693 | | | 9.2 | % | | 8,386,344 | | | 9.6 | % | | (600,651) | | (7.2) | % | | | | | | | | | | | | |
| Multifamily | | 9,921,672 | | | 11.7 | % | | 9,840,692 | | | 11.3 | % | | 80,980 | | 0.8 | % | | | | | | | | | | | | |
| Other commercial | | 7,951,400 | | | 9.4 | % | | 7,608,933 | | | 8.7 | % | | 342,467 | | 4.5 | % | | | | | | | | | | | | |
Total commercial loans (1) | | 34,130,541 | | | 40.3 | % | | 34,460,769 | | | 39.5 | % | | (330,228) | | (1.0) | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Consumer loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgages | | 4,134,536 | | | 4.9 | % | | 4,415,747 | | | 5.1 | % | | (281,211) | | (6.4) | % | | | | | | | | | | | | |
| Home equity loans and lines of credit | | 1,857,288 | | | 2.2 | % | | 2,091,365 | | | 2.4 | % | | (234,077) | | (11.2) | % | | | | | | | | | | | | |
| Total consumer loans secured by real estate | | 5,991,824 | | | 7.1 | % | | 6,507,112 | | | 7.5 | % | | (515,288) | | (7.9) | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Consumer loans not secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | |
| RICs and auto loans | | 42,975,831 | | | 50.8 | % | | 44,585,718 | | | 50.9 | % | | (1,609,887) | | (3.6) | % | | | | | | | | | | | | |
| Personal unsecured loans | | 1,429,855 | | | 1.7 | % | | 1,715,727 | | | 2.0 | % | | (285,872) | | (16.7) | % | | | | | | | | | | | | |
| Other consumer | | 22,137 | | | 0.1 | % | | 35,173 | | | 0.1 | % | | (13,036) | | (37.1) | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total consumer loans | | 50,419,647 | | | 59.7 | % | | 52,843,730 | | | 60.5 | % | | (2,424,083) | | (4.6) | % | | | | | | | | | | | | |
| Total LHFI | | $ | 84,550,188 | | | 100.0 | % | | $ | 87,304,499 | | | 100.0 | % | | $ | (2,754,311) | | (3.2) | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total LHFI with: | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed | | $ | 60,440,824 | | | 71.5 | % | | $ | 62,085,179 | | | 71.1 | % | | $ | (1,644,355) | | (2.6) | % | | | | | | | | | | | | |
| Variable | | 24,109,364 | | | 28.5 | % | | 25,219,320 | | | 28.9 | % | | (1,109,956) | | (4.4) | % | | | | | | | | | | | | |
| Total LHFI | | $ | 84,550,188 | | | 100.0 | % | | $ | 87,304,499 | | | 100.0 | % | | $ | (2,754,311) | | (3.2) | % | | | | | | | | | | | | |
(1) As of September 30, 2025, the Company had $425.9 million of commercial loans that were denominated in a currency other than the U.S. dollar.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Loans by Maturity and Interest Rate Sensitivity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | At September 30, 2025, Maturing |
| (in thousands) | | In One Year
Or Less | | One to Five
Years | | Five to 15 Years | | After 15
Years | | Total |
| Fixed Rates: | | | | | | | | | | |
| CRE loans | | $ | 48,632 | | | $ | 221,274 | | | $ | 54,818 | | | $ | 225,939 | | | $ | 550,663 | |
| C&I | | 229,096 | | | 744,056 | | | 292,161 | | | 17,862 | | | 1,283,175 | |
| Multifamily loans | | 911,779 | | | 4,852,186 | | | 1,736,215 | | | — | | | 7,500,180 | |
| Other commercial | | 557,368 | | | 1,842,494 | | | 1,171,233 | | | — | | | 3,571,095 | |
| Total Commercial | | $ | 1,746,875 | | | $ | 7,660,010 | | | $ | 3,254,427 | | | $ | 243,801 | | | $ | 12,905,113 | |
| Residential mortgages | | 759 | | | 38,911 | | | 555,997 | | | 4,163,721 | | | 4,759,388 | |
| Home equity loans and lines of credit | | 1,337 | | | 11,999 | | | 40,290 | | | 30,794 | | | 84,420 | |
| RICs and auto loans | | 607,927 | | | 26,539,790 | | | 15,828,113 | | | 1 | | | 42,975,831 | |
| Personal unsecured loans | | 21,317 | | | 807,441 | | | 200,029 | | | — | | | 1,028,787 | |
| Other consumer | | 1,759 | | | 14,332 | | | 2,562 | | | 3,485 | | | 22,138 | |
| Total Fixed Rates | | $ | 2,379,974 | | | $ | 35,072,483 | | | $ | 19,881,418 | | | $ | 4,441,802 | | | $ | 61,775,677 | |
| Variable Rates: | | | | | | | | | | |
| CRE loans | | $ | 3,851,107 | | | $ | 3,935,054 | | | $ | 320,473 | | | $ | 82,878 | | | $ | 8,189,512 | |
| C&I | | 937,202 | | | 5,184,632 | | | 502,047 | | | 24,722 | | | 6,648,603 | |
| Multifamily loans | | 893,120 | | | 1,385,762 | | | 148,749 | | | 861 | | | 2,428,492 | |
| Other commercial | | 4,219,823 | | | 160,483 | | | — | | | — | | | 4,380,306 | |
| Total Commercial | | $ | 9,901,252 | | | $ | 10,665,931 | | | $ | 971,269 | | | $ | 108,461 | | | $ | 21,646,913 | |
| Residential mortgages | | 497 | | | 2,823 | | | 89,389 | | | 403,020 | | | 495,729 | |
| Home equity loans and lines of credit | | 10,807 | | | 1,145 | | | 371,016 | | | 1,406,698 | | | 1,789,666 | |
| | | | | | | | | | |
| Personal unsecured loans | | 6,792 | | | 147,916 | | | 253,945 | | | 1,365 | | | 410,018 | |
| Other consumer | | — | | | — | | | — | | | — | | | — | |
| Total Variable Rates | | $ | 9,919,348 | | | $ | 10,817,815 | | | $ | 1,685,619 | | | $ | 1,919,544 | | | $ | 24,342,326 | |
| Total | | $ | 12,299,322 | | | $ | 45,890,298 | | | $ | 21,567,037 | | | $ | 6,361,346 | | | $ | 86,118,003 | |
Commercial
Commercial loans decreased approximately $330.2 million, or 1.0%, from December 31, 2024 to September 30, 2025. This decrease was primarily attributable to a decrease in C&I loans of $600.7 million, and a decrease in CRE loans of $153.0 million, partially offset by an increase in Other commercial loans of $342.5 million.
Consumer Loans Secured By Real Estate
Consumer loans secured by real estate decreased $515.3 million from December 31, 2024 to September 30, 2025 due to continued run-off in these portfolios.
Consumer Loans Not Secured By Real Estate
RICs and auto loans
RICs and auto loans HFI decreased $1.6 billion from December 31, 2024 to September 30, 2025. This decrease represents off-balance sheet securitizations and collections offset by new origination activity. RICs are collateralized by vehicle titles, and the lender has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. A significant portion of the Company's RICs HFI are pledged against warehouse lines or securitization bonds. Refer to further discussion of these in Note 9 to the Condensed Consolidated Financial Statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As of September 30, 2025, 61.8% of the Company's RIC and auto loan portfolio balance was comprised of nonprime loans (defined by the Company as customers with a FICO score of below 640) with customers who did not qualify for conventional consumer finance products as a result of, among other things, a lack of or adverse credit history, low income levels and/or the inability to provide adequate down payments. This also includes 6.5% of loans for which no FICO score was available. While underwriting guidelines are designed to establish that the customer would be a reasonable credit risk, nonprime loans will nonetheless experience higher default rates than a portfolio of obligations of prime customers. Additionally, higher unemployment rates, higher gasoline prices, unstable real estate values, re-sets of adjustable rate mortgages to higher interest rates, the general availability of consumer credit, and other factors that impact consumer confidence or disposable income could lead to an increase in delinquencies, defaults, and repossessions, as well as decreased consumer demand for used automobiles and other consumer products, weaken collateral values and increase losses in the event of default. Because the historical focus for such credit has been predominantly on nonprime consumers, the actual rates of delinquencies, defaults, repossessions, and losses on these loans could be more dramatically affected by a general economic downturn.
The Company's automated originations process for these credits reflects a disciplined approach to credit risk management to mitigate the risks of nonprime customers. The Company's robust historical data on both organically originated and acquired loans provides it with the ability to perform advanced loss forecasting. Each applicant is automatically assigned a proprietary custom score using information such as FICO scores, DTI ratios, LTV ratios, and over 30 other predictive factors, placing the applicant in one of 100 pricing tiers. The pricing in each tier is continuously monitored and adjusted to reflect market and risk trends. In addition to the Company's automated process, it maintains a team of underwriters for manual review, consideration of exceptions, and review of deal structures with dealers.
Personal unsecured and other consumer loans
Personal unsecured and other consumer loans HFI decreased $298.9 million from December 31, 2024 to September 30, 2025. This decrease was primarily attributable to run-off in the portfolio.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
At September 30, 2025, the CRE and multifamily portfolios included the following:
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| | As of September 30, 2025 |
| (in thousands) | | Balance | | Percentage of Total CRE and Multifamily | | | | |
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| CRE loans | | $ | 8,471,776 | | | 46.1 | % | | | | |
Multifamily loans (1) | | 9,921,672 | | | 53.9 | % | | | | |
| Total CRE and multifamily loans | | $ | 18,393,448 | | | 100.0 | % | | | | |
| CRE loans by type | | | | | | | | |
| Multifamily construction | | $ | 4,137,292 | | | 22.5 | % | | | | |
| Office | | 1,552,425 | | | 8.4 | % | | | | |
| Retail | | 838,604 | | | 4.6 | % | | | | |
| Industrial | | 1,080,632 | | | 5.9 | % | | | | |
| Other | | 862,823 | | | 4.7 | % | | | | |
| Total | | $ | 8,471,776 | | | | | | | |
| (1) Occupied properties | | | | | | | | |
Multifamily lending (occupied and construction) continues to be our focus, representing 76% of the total CRE and multifamily portfolio and 16.6% of total LHFI. Overall, occupancy across the multifamily loan portfolio and our primary markets, such as New York City, continues to be stable. Our construction originations are concentrated to well-established and proven builders and sponsors.
Office CRE loans represent 8.4% of the total CRE and multifamily portfolio and 2% of total LHFI. The Company's office exposure primarily consists of investment grade, single tenants with long leases.
The Company's retail CRE portfolio represents 4.6% of the total CRE and multifamily portfolio and 1% of total LHFI. The retail portfolio is anchored by institutional or investment grade tenants, which have demonstrated recovery following the COVID-19 pandemic.
The Company's CRE and Multifamily portfolios, by state at the date indicated was:
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| | As of September 30, 2025 |
| (dollars in thousands) | | Balance | | Percentage of Total CRE and Multifamily |
| State | | |
| New York | | $ | 5,091,641 | | | 27.7 | % |
| New Jersey | | 2,331,118 | | | 12.7 | % |
| Florida | | 1,593,475 | | | 8.7 | % |
| Texas | | 1,570,809 | | | 8.5 | % |
| All other states | | 7,806,405 | | | 42.4 | % |
| Total | | $ | 18,393,448 | | | 100.0 | % |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
NON-PERFORMING ASSETS
The following table presents the composition of non-performing assets at the dates indicated:
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| | Period Ended | | Change | | | | | | |
| (dollars in thousands) | | September 30, 2025 | | December 31, 2024 | | Dollar | | Percentage | | | | | | |
| Non-accrual loans: | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | |
| CRE | | $ | 201,929 | | | $ | 243,761 | | | $ | (41,832) | | | (17.2) | % | | | | | | |
| C&I | | 114,240 | | | 132,146 | | | (17,906) | | | (13.6) | % | | | | | | |
| Multifamily | | 306,410 | | | 226,448 | | | 79,962 | | | 35.3 | % | | | | | | |
| Other commercial | | 4,499 | | | 8,037 | | | (3,538) | | | (44.0) | % | | | | | | |
| Total commercial loans | | 627,078 | | | 610,392 | | | 16,686 | | | 2.7 | % | | | | | | |
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| Consumer loans secured by real estate: | | | | | | | | | | | | | | |
| Residential mortgages | | 48,921 | | | 52,170 | | | (3,249) | | | (6.2) | % | | | | | | |
| Home equity loans and lines of credit | | 56,468 | | | 70,414 | | | (13,946) | | | (19.8) | % | | | | | | |
| Consumer loans not secured by real estate: | | | | | | | | | | | | | | |
| RICs and auto loans | | 2,496,321 | | | 2,241,575 | | | 254,746 | | | 11.4 | % | | | | | | |
| Personal unsecured loans | | 215 | | | 486 | | | (271) | | | (55.8) | % | | | | | | |
| Other consumer | | 19,777 | | | 15,198 | | | 4,579 | | | 30.1 | % | | | | | | |
| Total consumer loans | | 2,621,702 | | | 2,379,843 | | | 241,859 | | | 10.2 | % | | | | | | |
| Total non-accrual loans | | 3,248,780 | | | 2,990,235 | | | 258,545 | | | 8.6 | % | | | | | | |
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| OREO | | 42,573 | | | 54,121 | | | (11,548) | | | (21.3) | % | | | | | | |
| Repossessed vehicles | | 254,220 | | | 249,209 | | | 5,011 | | | 2.0 | % | | | | | | |
Foreclosed and other repossessed assets | | 2,252 | | | 25,182 | | | (22,930) | | | (91.1) | % | | | | | | |
| Total OREO and other repossessed assets | | 299,045 | | | 328,512 | | | (29,467) | | | (9.0) | % | | | | | | |
| Total non-performing assets | | $ | 3,547,825 | | | $ | 3,318,747 | | | $ | 229,078 | | | 6.9 | % | | | | | | |
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| Past due 90 days or more as to interest or principal and accruing interest | | $ | 8,363 | | | $ | 8,796 | | | $ | (433) | | | (4.9)% | | | | | | |
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| Non-performing assets as a percentage of total assets | | 2.1 | % | | 2.0 | % | | n/a | | n/a | | | | | | |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CREDIT RATIOS
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| | As of and for the year ended |
| (dollars in thousands) | | September 30, 2025 | | December 31, 2024 | | September 30, 2024 |
| ACL to total loan outstanding | | 7.2% | | 7.5% | | 7.3% |
| ACL | | $6,199,243 | | $6,609,955 | | $6,607,819 |
| Total loans outstanding | | 86,118,003 | | 88,638,452 | | 91,072,278 |
| NPL to total loans outstanding | | 3.8% | | 3.4% | | 3.2% |
| NPL | | $3,248,780 | | $2,990,235 | | $2,899,068 |
| Total loans outstanding | | 86,118,003 | | 88,638,452 | | 91,072,278 |
| ACL to NPL | | 190.8% | | 221.1% | | 227.9% |
| ACL | | $6,199,243 | | $6,609,955 | | $6,607,819 |
| NPL | | 3,248,780 | | 2,990,235 | | 2,899,068 |
Net charge-offs during the period to average loans outstanding: | | | | | | |
| Commercial | | 0.2% | | 0.1% | | 0.1% |
NCOs during the period | | $78,772 | | $46,530 | | $30,681 |
| Average amount outstanding | | 35,179,261 | | 37,540,690 | | 37,999,252 |
| Consumer | | 2.8% | | 4.1% | | 3.0% |
NCOs during the period | | $1,498,816 | | $2,273,449 | | $1,671,884 |
| Average amount outstanding | | 53,165,410 | | 54,808,673 | | 55,146,020 |
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Commercial NCOs during the period to average loans increased from September 30, 2024 to September 30, 2025. The increase in NCOs was primarily in the CRE portfolio. Consumer NCOs during the period to average loans decreased from September 30, 2024 to September 30, 2025. This decrease was primarily due to the sale of loans in the Personal unsecured portfolio in 2024.
Commercial
Commercial NPLs increased $16.7 million from December 31, 2024 to September 30, 2025. Commercial NPLs accounted for 1.8% of commercial LHFI at September 30, 2025. The change in commercial NPLs was primarily comprised of an increase of $80.0 million in the Multifamily portfolio, a decrease of $41.8 million in the CRE portfolio, and a decrease of $17.9 million in the C&I portfolio.
Consumer Loans Secured by Real Estate
NPLs in the consumer loans secured by real estate portfolio decreased year-over-year primarily resulting from the continued run-off of the portfolio. Non-performing consumer loans secured by real estate in foreclosure were $46.3 million, or 43.9%, of non-performing consumer loans secured by real estate at September 30, 2025, compared to $55.4 million, or 45.2%, at December 31, 2024.
Consumer Loans Not Secured by Real Estate
RICs
RICs are classified as non-performing when they are more than 60 DPD (i.e., 61 or more DPD) with respect to principal or interest. Except for loans accounted for using the FVO, at the time a loan is placed on non-performing status, previously accrued and uncollected interest is reversed against interest income. When an account is 60 days or less past due, it is returned to performing status and the Company returns to accruing interest on the loan. NPLs in the RIC and auto loan portfolio increased by $254.7 million from December 31, 2024 to September 30, 2025. Non-performing RICs and auto loans accounted for 5.8% and 5.0% of total RICs and auto loans at September 30, 2025 and December 31, 2024, respectively.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Personal unsecured loans
The accrual of interest on revolving personal loans continues until the loan is charged off. Credit cards are charged off when they are 180 days delinquent or within 60 days after the receipt of notification of the cardholder’s death or bankruptcy. NPLs in the personal unsecured portfolio decreased by $271.0 thousand from December 31, 2024 to September 30, 2025. Non-performing personal unsecured loans accounted for 0.02% and 0.03% of total personal unsecured loans at September 30, 2025 and December 31, 2024, respectively.
Delinquencies
Early stage delinquency in commercial loans totaled approximately $163.8 million and $178.2 million at September 30, 2025 and December 31, 2024, respectively. Early stage delinquency consumer loans amounted to $6.0 billion and $5.5 billion at September 30, 2025 and December 31, 2024, respectively. Management has included these loans in its evaluation of the Company's ACL and reserved for them during the respective periods.
The Company generally considers an account delinquent when an obligor fails to pay substantially all (defined as 90%) of the scheduled payment by the due date. Overall, total delinquencies increased by $629.4 million from December 31, 2024 to September 30, 2025. The main driver of this is the increase in past due loans in the RIC and auto loan portfolio.
Loan Modifications
During the three months and nine months ended September 30, 2025, the Company provided loan modifications to customers with an amortized cost basis at September 30, 2025 of $994.6 million and $2.1 billion, respectively, compared to $799.6 million and $1.5 billion for the corresponding periods in 2024. Loan modifications primarily consist of payment deferrals in the RIC and auto loan portfolio. The increase in payment deferrals in the RIC and auto loan portfolio during the three months and nine months ended September 30, 2025 compared to the corresponding periods in 2024 was primarily driven by increased demand for payment deferrals, higher loan balances and the use of payment deferrals in place of other loan modification programs.
CREDIT RISK
The risk inherent in the Company’s loan and lease portfolios is driven by credit and collateral quality and is affected by borrower-specific and economy-wide factors such as changes in unemployment, GDP, HPI, the CRE price index, used vehicle index, and other factors. In general, there is an inverse relationship between credit quality of transactions and projections of impairment losses so that transactions with better credit quality require a lower expected loss. The Company manages this risk through its underwriting, pricing and credit approval guidelines and servicing policies and practices, as well as geographic and other concentration limits.
The Company's ACL is principally based on various models subject to the Company's Model Risk Management Framework. New models are approved by the Company's Model Risk Management Committee. Models, inputs and documentation are further reviewed and validated at least annually, and the Company completes a detailed variance analysis of historical model projections against actual observed results on a quarterly basis. Required actions resulting from the Company's analysis, if necessary, are governed by its ACL Committee.
Management uses the qualitative framework to exercise judgment about matters that are inherently uncertain and that are not considered by the quantitative framework. These adjustments are documented and reviewed through the Company’s risk management processes. Furthermore, management reviews, updates, and validates its process and loss assumptions on a periodic basis. This process involves an analysis of data integrity, review of loss and credit trends, a retrospective evaluation of actual loss information to loss forecasts, and other analyses.
ACL levels are collectively reviewed for adequacy and approved quarterly. Required actions resulting from the Company's analysis, if necessary, are governed by its ACL Committee. The ACL levels are approved by the Board-level committees quarterly.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ACL
The Company's ACL was $6.2 billion at September 30, 2025, a decrease of $410.7 million from December 31, 2024. The decrease in the ACL was primarily driven by the sale of certain RICs and auto loans, improvement in used car prices, lower exposure in Personal unsecured loans, and rating improvement in certain loans in Commercial. The ACL for the consumer portfolio segment decreased by $328.9 million and the ACL for the commercial segment decreased $81.8 million for the period ended September 30, 2025 compared to the period ended December 31, 2024. Refer to the rollforward of the ACL in Note 3 to the Condensed Consolidated Financial Statements.
Reserve for Unfunded Lending Commitments
The reserve for unfunded lending commitments increased from $47.9 million at December 31, 2024 to $50.6 million at September 30, 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
INVESTMENT SECURITIES
The following table presents the Company's investment portfolio at the dates indicated:
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| (in thousands) | | September 30, 2025 | | December 31, 2024 |
| Investment securities AFS: | | | | |
| U.S. Treasury securities and government agencies | | $ | 3,614,172 | | | $ | 3,358,438 | |
| FNMA and FHLMC securities | | 1,755,565 | | | 1,827,163 | |
Beneficial interest in Structured LLC | | 1,097,711 | | | 1,198,985 | |
Other securities (1) | | 993,924 | | | 748,046 | |
| Total investment securities AFS | | 7,461,372 | | | 7,132,632 | |
| Investment securities HTM: | | | | |
U.S. Treasury securities, government agencies, and other securities (1) | | 10,266,383 | | | 8,361,402 | |
| FNMA and FHLMC securities | | 1,531,294 | | | 1,552,886 | |
| Total investment securities HTM | | 11,797,677 | | | 9,914,288 | |
| Trading securities | | 16,553,573 | | | 10,322,823 | |
| Other investments | | 2,376,186 | | | 1,549,634 | |
| Total investment portfolio | | $ | 38,188,808 | | | $ | 28,919,377 | |
(1) Other securities primarily include ABS.
The Company’s AFS investment strategy is to purchase liquid fixed-rate and floating-rate investments to manage the Company's liquidity position and interest rate risk adequately. The Company's AFS investment portfolio consisted of the following at the dates indicated:
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| | | September 30, 2025 | | December 31, 2024 | | Change | | Percent |
| (in thousands) | | Fair Value | | Fair Value | | | | |
| U.S. Treasury securities | | $ | 715,838 | | | $ | 304,440 | | | $ | 411,398 | | | 135.1 | % |
| Corporate debt securities | | 13 | | | 13 | | | — | | | — | % |
| ABS | | 993,911 | | | 748,033 | | | 245,878 | | | 32.9 | % |
Beneficial interest in Structured LLC | | 1,097,711 | | | 1,198,985 | | | (101,274) | | | (8.4) | % |
MBS(1): | | | | | | | | |
| GNMA - Residential | | 2,416,321 | | | 2,565,297 | | | (148,976) | | | (5.8) | % |
| GNMA - Commercial | | 482,013 | | | 488,701 | | | (6,688) | | | (1.4) | % |
| FHLMC and FNMA - Residential | | 1,674,023 | | | 1,741,256 | | | (67,233) | | | (3.9) | % |
| FHLMC and FNMA - Commercial | | 81,542 | | | 85,907 | | | (4,365) | | | (5.1) | % |
| Total investments in debt securities AFS | | $ | 7,461,372 | | | $ | 7,132,632 | | | $ | 328,740 | | | 4.6 | % |
(1) The Company’s MBS are either guaranteed as to principal and interest by the issuer or have ratings of “AAA” by S&P and Moody’s at the date of issuance.
The following represents the unrealized gain / (loss) position of the AFS investment portfolio.
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| (in thousands) | | September 30, 2025 | | December 31, 2024 | | Change in unrealized gain/(loss) | | Percent |
| Total unrealized loss | | $ | (710,889) | | | $ | (801,722) | | | $ | 90,833 | | | (11.3) | % |
| Total unrealized gain | | 25,619 | | | 100,737 | | | (75,118) | | | (74.6) | % |
| Total unrealized gain/(loss) position | | $ | (685,270) | | | $ | (700,985) | | | $ | 15,715 | | | (2.2) | % |
The change in unrealized gains is primarily related to the beneficial interest in the Structured LLC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The average life of the AFS investment portfolio (excluding certain ABS) at September 30, 2025 was approximately 6.74 years. The average effective duration of the Company's AFS investment portfolio (excluding certain ABS) at September 30, 2025 was approximately 4.29 years. The actual maturities of MBS AFS will differ from contractual maturities because borrowers have the right to prepay obligations without prepayment penalties.
HTM securities are reported at cost and adjusted for amortization of premium and accretion of discount. The Company had 422 investment securities classified as HTM as of September 30, 2025. The following table presents the securities of single issuers (other than obligations of the United States and its political subdivisions, agencies, and corporations) having an aggregate book value in excess of 10% of the Company's stockholder's equity that were held by the Company at September 30, 2025:
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| | September 30, 2025 |
| (in thousands) | | Amortized Cost | | Fair Value |
| FNMA | | $ | 1,641,771 | | | $ | 1,482,875 | |
| FHLMC | | 1,950,746 | | | 1,723,115 | |
GNMA (1) | | 10,938,133 | | | 9,193,207 | |
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| Total | | $ | 14,530,650 | | | $ | 12,399,197 | |
(1) Includes U.S. government agency MBS.
GOODWILL
At September 30, 2025, goodwill totaled $2.8 billion and represented 1.6% of total assets and 16.3% of total stockholder's equity. The Company conducted its most recent annual goodwill impairment tests as of October 1, 2024 using generally accepted valuation methods and noted no impairment.
The Company completes a quarterly review for impairment indicators over each of its reporting units, which includes consideration of economic and organizational factors that could impact the fair value of the Company's reporting units. As of the most recent review completed at the end of the third quarter of 2025, the Company did not identify any indicators which resulted in the Company's conclusion that an interim impairment test would be required to be completed.
DEFERRED TAXES AND OTHER TAX ACTIVITY
The Company had a net deferred tax asset balance of $425.4 million at September 30, 2025 (consisting of a federal deferred tax asset balance of $300.6 million and a state deferred tax asset balance of $124.8 million with respect to jurisdictional netting), compared to a net deferred tax asset balance of $364.3 million at December 31, 2024 (consisting of a state deferred tax asset balance of $168.0 million and a federal deferred tax asset balance of $196.3 million). Refer to Note 15 to the Condensed Consolidated Financial Statements for further discussion of the change in deferred tax balances.
Tax Legislative Update
In December 2021, a framework known as Pillar Two was established by the OECD. Pillar Two is designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they have operations. Although it became effective for Spain in 2024, the Pillar Two framework has not been adopted by the U.S. per the G-7 statement on Global Minimum Tax issued on June 28, 2025. Accordingly, no incremental potential tax liability is expected for SHUSA.
On July 4, 2025, the OBBBA was enacted into law. The OBBBA includes the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, specifically bonus depreciation and research and development cost expensing, modifications to the international tax framework (e.g., Pillar 2) and significant changes to clean energy tax credits including the repeal of electric vehicle credits effective October 1, 2025. The Company has incorporated the impact of OBBBA in its Consolidated Financial Statements, including the impacts to the effective tax rate and net deferred tax position in 2025 and future periods.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
DEPOSITS
The Company reported deposits of $76.4 billion and $78.1 billion at September 30, 2025 and December 31, 2024, respectively.
At September 30, 2025, SBNA had $74.3 billion of U.S.-based deposits, including $3.7 billion of deposits from SHUSA affiliates that eliminate in consolidation. Uninsured U.S.-based deposits were $26.4 billion and $27.9 billion at September 30, 2025 and December 31, 2024, respectively, and represented approximately 36% and 36% of all U.S. deposits at September 30, 2025 and December 31, 2024, respectively.
During the third quarter of 2024, SBNA began participating in a network that offers FDIC deposit placement services. This network spreads a customer's large deposit account among interconnected banks to increase the FDIC insurance coverage for that customer and to help the Bank retain the customer and the relationship.
SBNA attracts deposits primarily through its retail branch network located within the Mid-Atlantic and Northeastern areas of the United States, located throughout Pennsylvania, New Jersey, New York, New Hampshire, Massachusetts, Connecticut, Rhode Island, and Delaware, with two locations outside this region in Florida. Many of these deposit customers have more than one bank product including small business loans, middle market, large and global commercial loans, multi-family loans, and auto and other consumer loans. In addition, SBNA obtains deposits through third-party brokerage firms. The Company also acquires deposits nationally through SBNA's online Openbank platform.
The following shows the Company's deposits by business as of September 30, 2025:
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| | Consumer (1) | Commercial (2) | CIB | Wealth Management | Other and eliminations (3) | Total |
| (dollars in thousands) | | Balance | | | | | |
| Interest-bearing demand deposits | | $ | 44,112,911 | | $ | 10,693,181 | | $ | 2,170,398 | | $ | 3,482,902 | | $ | 2,550,626 | | $ | 63,010,018 | |
| Non-interest-bearing demand deposits | | 8,043,019 | | 2,976,358 | | 79,379 | | 2,249,191 | | 2,626 | | 13,350,573 | |
Total deposits (1) | | $ | 52,155,930 | | $ | 13,669,539 | | $ | 2,249,777 | | $ | 5,732,093 | | $ | 2,553,252 | | $ | 76,360,591 | |
(1) Consumer consists of deposits related to the Company's Auto and CBB reportable segments.
(2) Commercial consists of deposits related to the Company's C&I and CRE reportable segments.
(3) Other consists of deposits related to certain of the Company's immaterial subsidiaries and corporate treasury deposits.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
BANK REGULATORY CAPITAL
The Company’s capital priorities are to support client growth and business investment while maintaining appropriate capital for a range of macroeconomic outcomes.
The Company is subject to the regulations of certain federal, state, and foreign agencies and undergoes periodic examinations by those regulatory authorities. At September 30, 2025 and 2024, based on SBNA’s capital calculations, SBNA was considered well-capitalized under the applicable capital framework. In addition, the Company's capital levels as of September 30, 2025 and 2024, based on the Company’s capital calculations, exceeded the required capital ratios for BHCs.
For a discussion of U.S. Basel III, including the standardized approach and related anticipated future changes to the minimum U.S. regulatory capital ratios, see the section captioned "Regulatory Matters" in this MD&A.
Federal banking laws, regulations and policies also limit SBNA’s ability to pay dividends and make other distributions to the Company. SBNA must obtain prior OCC approval to declare a dividend or make any other capital distribution if, after such dividend or distribution: (1) the Bank's total distributions to SHUSA within that calendar year would exceed 100% of its net income during the year plus retained net income for the prior two years, (2) the Bank would not meet capital levels imposed by the OCC in connection with any order, (3) the Bank has negative retained earnings, or (4) the Bank is not adequately capitalized at the time. The OCC's prior approval would also be required if SBNA were notified by the OCC that it is a problem institution or in troubled condition.
Any dividend declared and paid or return of capital has the effect of reducing capital ratios. Refer to the section captioned "Liquidity and Capital Resources" in this MD&A for discussion of the Company's dividends.
The following schedule summarizes the actual capital ratios of SHUSA and SBNA at September 30, 2025:
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| | SHUSA |
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| | September 30, 2025 | | Well-capitalized Requirement | | Minimum Requirement |
| CET1 capital ratio | | 13.16 | % | | 6.50 | % | | 4.50 | % |
| Tier 1 capital ratio | | 14.97 | % | | 8.00 | % | | 6.00 | % |
| Total capital ratio | | 17.07 | % | | 10.00 | % | | 8.00 | % |
| Leverage ratio | | 9.74 | % | | 5.00 | % | | 4.00 | % |
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| | SBNA |
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| | September 30, 2025 | | Well-capitalized Requirement | | Minimum Requirement |
| CET1 capital ratio | | 19.50 | % | | 6.50 | % | | 4.50 | % |
| Tier 1 capital ratio | | 19.50 | % | | 8.00 | % | | 6.00 | % |
| Total capital ratio | | 20.76 | % | | 10.00 | % | | 8.00 | % |
| Leverage ratio | | 12.95 | % | | 5.00 | % | | 4.00 | % |
The Company utilizes fair value hedging strategies to mitigate the risk of unrealized losses in its investments in debt securities AFS. As of December 31, 2024, the Company had $5.5 billion of notional in fair value hedges which decreased to $3.9 billion at September 30, 2025. Refer to Note 12 to the Consolidated Financial Statements for information about the notional and fair value of these hedging instruments.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Overall
The Company continues to maintain strong liquidity. Liquidity represents the ability of the Company to obtain cost-effective funding to meet the needs of customers as well as the Company's financial obligations. Factors that impact the liquidity position of the Company include loan origination volumes, loan prepayment rates, the maturity structure of existing loans, core deposit growth levels, CD maturity structure and retention, the Company's credit ratings, investment portfolio cash flows, the maturity structure of the Company's wholesale funding, and other factors. These risks are monitored and managed centrally. The Company's Asset/Liability Committee reviews and approves the Company's liquidity policy and guidelines on a regular basis. This process includes reviewing all available wholesale liquidity sources. The Company also forecasts future liquidity needs and develops strategies to ensure adequate liquidity is available at all times. SHUSA conducts monthly liquidity stress test analyses to manage its liquidity under a variety of scenarios, all of which demonstrate that the Company has ample liquidity to meet its short-term and long-term cash requirements.
Enhanced Monitoring of Liquidity
In addition to its normal monitoring of liquidity, SBNA enhanced monitoring of its liquidity position since the recent financial system market disruption that began in March 2023 and the ensuing market volatility. Additionally, SBNA continues to optimize contingent sources of liquidity. Some of these actions include the pledge of additional loans to the FRB discount window, and the transfer of loans from the discount window to the FHLB in order to receive more favorable discounts. Overall, the available capacity from the FRB and FHLB remained stable throughout and since 2023.
Impact of Changes to Credit Rating on Liquidity and Capital Resources
Changes to the credit ratings of SHUSA, Santander and its affiliates or the Kingdom of Spain could have a material adverse effect on SHUSA's business, including its liquidity and capital resources. The credit ratings of SHUSA have changed in the past and may change in the future, which could impact its cost of and access to sources of financing and liquidity. Any reductions in the long-term or short-term credit ratings of SHUSA would increase its borrowing costs and require it to replace funding lost due to the downgrade, which may include the loss of customer deposits, limit its access to capital and money markets and trigger additional collateral requirements in derivatives contracts and other secured funding arrangements. See further discussion on the impacts of credit ratings actions in the "Economic and Business Environment" section of this MD&A.
Sources of Liquidity
The Company has several sources of funding to meet liquidity requirements, including the core deposit base, liquid investment securities portfolio, ability to acquire large deposits, FHLB borrowings, wholesale deposit purchases, and federal funds purchased, as well as through securitizations in the ABS market and committed credit lines from third-party banks and Santander. In addition, the Company has other sources of funding to meet its liquidity requirements such as dividends and returns of investments from its subsidiaries, short-term investments held by non-bank affiliates, and access to the capital markets.
The specialized consumer financing of RICs requires a significant amount of liquidity to originate and acquire loans and leases and to service debt. The Company funds these operations through its lending relationships with third-party banks, Santander and affiliates, and through securitizations in the ABS market. The Company seeks to issue debt that appropriately matches the cash flows of the assets that it originates. The Company uses liquidity for debt service and repayment of borrowings, as well as for funding loan commitments.
During the nine months ended September 30, 2025, the Company's subsidiaries completed on-balance and off-balance sheet funding transactions of:
•securitizations on the SDART platform for approximately $6.2 billion
•securitizations on the DRIVE platform for approximately $2.9 billion
•lease securitizations on the SBALT platform for approximately $860.4 million
•secured amortizing notes on the SCARF platform for approximately $532.5 million
•off-balance sheet securitizations on the SBAT platform for approximately $1.2 billion
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Santander provides a liquidity line to SHUSA for the purpose of supporting additional liquidity for SHUSA's and its subsidiaries' CIB business activities. At September 30, 2025, SHUSA had $4.0 billion in uncommitted available liquidity on the line, of which it had drawn zero.
In October 2025, the Company entered into a revolving warehouse line with a commitment amount of $2.0 billion with Santander New York Branch.
Intercompany Borrowings with SHUSA Affiliates
SHUSA provides notes payable and revolving loans and lines to its subsidiaries as needed for the purpose of providing additional liquidity to support business operations at the subsidiary level.
Available Liquidity
As of the periods indicated, the Company and its subsidiaries had the following available liquidity:
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| | September 30, 2025 | | June 30, 2025 | | |
| | Total Capacity | | Used | | Available | | Total Capacity | | Used | | Available | | | | | | |
| Cash on deposit at FRB | | | | | | $ | 13,210,647 | | | | | | | $ | 18,506,278 | | | | | | | |
Liquidity from released government deposit collateral (1) | | 2,531,753 | | | — | | | 2,531,753 | | | 2,531,032 | | | — | | | 2,531,032 | | | | | | | |
| Liquidity from unencumbered securities | | 4,133,398 | | | — | | | 4,133,398 | | | 3,260,439 | | | — | | | 3,260,439 | | | | | | | |
| FHLB | | 15,392,223 | | | 2,688,824 | | | 12,703,399 | | | 15,553,919 | | | 2,524,412 | | | 13,029,507 | | | | | | | |
| FRB: | | | | | | | | | | | | | | | | | | |
| Discount window | | 11,017,656 | | | — | | | 11,017,656 | | | 10,693,188 | | | — | | | 10,693,188 | | | | | | | |
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| Total available liquidity | | | | | | $ | 43,596,853 | | | | | | | $ | 48,020,444 | | | | | | | |
(1) Includes high quality liquid assets that are encumbered as collateral for uninsured government deposits.
At September 30, 2025, unencumbered highly liquid assets (cash and cash equivalents, investments in Level 1 through Level 2 qualifying debt securities AFS, and other liquid assets exclusive of securities encumbered pledged as collateral) totaled approximately $27.3 billion. This amount represented 35.8% of total deposits at September 30, 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cash, cash equivalents, and restricted cash
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| | Nine months ended September 30, | | YTD Change |
| (in thousands) | | 2025 | | 2024 | | | | Increase/(Decrease) |
| Net cash flows from operating activities | | $ | (1,094,188) | | | $ | (1,273,402) | | | | | $ | 179,214 | |
| Net cash flows from investing activities | | (1,571,105) | | | 1,741,095 | | | | | (3,312,200) | |
| Net cash flows from financing activities | | 136,622 | | | 2,673,420 | | | | | (2,536,798) | |
Cash flows from operating activities
Net cash flow from operating activities increased by $179.2 million from the nine months ended September 30, 2024 to the nine months ended September 30, 2025, primarily due to an increase in proceeds from the sales of and collections on LHFS, offset by the change in net trading activity and an increase in originations and purchases of LHFS during the nine months ended September 30, 2025.
Cash flows from investing activities
Net cash flow from investing activities decreased by $3.3 billion from the nine months ended September 30, 2024 to the nine months ended September 30, 2025, primarily driven by the net change in Securities Financing Activities, a decrease in proceeds from sales of LHFI, a decrease in proceeds from the sales and terminations of operating leases, and the acquisition of interest in limited partnership, offset by the net change in loans other than purchases and sales and a decrease in the purchases and originations of operating leases.
Cash flows from financing activities
Net cash flow from financing activities decreased by $2.5 billion from the nine months ended September 30, 2024 to the nine months ended September 30, 2025, primarily driven by the net change in deposits and the net change in net borrowings activity, offset by net change in Securities Financing Activities.
See the SCF for further details on the Company's sources and uses of cash.
Credit Facilities
Third-Party Revolving Credit Facilities
Warehouse Lines
The Company's subsidiaries have a credit facility with several banks providing an aggregate commitment of $1.0 billion for the exclusive use of providing short-term liquidity needs to support preferred auto lessor financing. As of September 30, 2025, there was an outstanding balance of $264.6 million on this facility. The facility requires reduced advance rates in the event of delinquency, credit loss, or residual loss ratios, as well as other metrics exceeding specified thresholds.
In addition, the Company's subsidiaries have credit facilities with several banks providing an aggregate commitment of $4.9 billion for the exclusive use of providing short-term liquidity to support core and preferred auto lender financing. As of September 30, 2025, there was an outstanding balance of $2.5 billion on these facilities in the aggregate. These facilities reduce advance rates in the event of delinquency or credit loss, as well as various other metrics exceeding specific thresholds.
Securities Financing Activities
The Company may enter into Securities Financing Activities primarily to deploy the Company’s excess cash and investment positions. Securities Financing Activities are treated as collateralized financings and are included in "Federal funds sold and securities purchased under resale agreements or similar arrangements" and "Federal funds purchased and securities loaned or sold under repurchase agreements" on the Company’s Condensed Consolidated Balance Sheets. Refer to Note 11 to the Condensed Consolidated Financial Statements for additional information about the Company's Securities Financing Activities.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Secured Structured Financings
The Company's subsidiaries' secured structured financings primarily consist of public, SEC-registered securitizations, as well as private securitizations under Rule 144A of the Securities Act, and privately issued amortizing notes. As of September 30, 2025, there were on-balance sheet securitizations outstanding in the market with a cumulative balance of approximately $21.0 billion.
Deficiency and Debt Forward Flow Agreement
In addition to SC's credit facilities and secured structured financings, SC has a flow agreement in place with a third party for charged-off assets. Loans and leases sold under these flow agreements are not on SC's balance sheet.
Uses of Liquidity
The Company uses liquidity for debt service and repayment of borrowings. In addition, our subsidiaries use liquidity for funding loan commitments, satisfying deposit withdrawal requests, supporting underwriting transactions and meeting customer liquidity requirements.
At September 30, 2025, the Company's liquidity to meet debt payments, debt service and debt maturities was in excess of 12 months.
Contractual Obligations and Other Commitments
The Company enters into contractual obligations in the normal course of business as a source of funds for its asset growth and asset/liability management and to meet required capital needs. These obligations require the Company to make cash payments over time.
As of September 30, 2025, the Company had total contractual cash obligations of $84.8 billion, which included FHLB advances, notes payable, other debt obligations, CDs, repurchase agreements, non-qualified pension and post-retirement benefits, and operating leases. The Company’s near-term cash obligations largely stem from maturing short-term liabilities (CDs, repurchase agreements, and short-term borrowings) and long-term debt. Our primary funding sources to meet these obligations include retail, commercial and brokered deposits of $76.4 billion, secured and other financing of $28.1 billion, short-term repurchase agreements of $21.3 billion and long-term unsecured debt of $12.8 billion, as well as cash flows from continuing operations. Additionally, on September 30, 2025, the Company had $43.6 billion of readily available liquidity to support near-term requirements and ensure it maintains the sufficiency of the liquidity portfolio over stressed horizons ranging from 30 days to 12 months. In addition, the Company had other commitments of $24.2 billion, which consisted of commitments to extend credit and letters of credit. Of this amount, approximately $9.2 billion of the other commitments have maturity dates within one year.
The Company is a party to financial instruments and other arrangements with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and manage its exposure to fluctuations in interest rates. See further discussion on these risks in Note 12 and Note 16 to the Condensed Consolidated Financial Statements.
Dividends, Contributions and Stock Issuances
As of September 30, 2025, the Company had 530,391,043 shares of common stock outstanding.
During the nine months ended September 30, 2025, the Company paid dividends of zero on its common stock and paid $88.4 million of dividends on its preferred stock and declared additional dividends on its preferred stock of $44.2 million that were paid in the fourth quarter of 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ASSET AND LIABILITY MANAGEMENT
Interest Rate Risk
Interest rate risk arises primarily through the Company’s traditional business activities of extending loans and accepting deposits. Many factors, including economic and financial conditions, movements in market interest rates, and consumer preferences, affect the spread between interest earned on assets and interest paid on liabilities. Interest rate risk is managed by the Company's Treasury group and measured by its Market Risk Department, with oversight by the Asset/Liability Committee. In managing interest rate risk, the Company seeks to minimize the variability of net interest income across various likely scenarios, while at the same time maximizing net interest income and the net interest margin. To achieve these objectives, the Treasury group works closely with each business line in the Company. The Treasury group also uses various other tools to manage interest rate risk, including wholesale funding maturity targeting, investment portfolio purchase strategies, asset securitizations/sales, and financial derivatives.
Interest rate risk focuses on managing four elements of risk associated with interest rates: basis risk, repricing risk, yield curve risk and option risk. Basis risk stems from rate index timing differences with rate changes, such as differences in the extent of changes in Federal funds rates compared with the three-month term SOFR. Repricing risk stems from the different timing of contractual repricing, such as one-month versus three-month reset dates, as well as the related maturities. Yield curve risk stems from the impact on earnings and market value resulting from different shapes and levels of yield curves. Option risk stems from prepayment or early withdrawal risk embedded in various products. These four elements of risk are analyzed through a combination of net interest income and balance sheet valuation simulations, shocks to those simulations, and scenario and market value analyses, and the subsequent results are reviewed by management. Several assumptions and models are used to produce these analyses, including assumptions about new business volumes, loan and investment prepayment rates, deposit flows, interest rate curves, economic conditions, and competitor pricing. Certain models use historical data analyses to estimate future customer behavior, such as deposit re-pricing and attrition. Estimates from these models can differ from actual behavior, depending on various factors such as macroeconomic conditions or competitor response.
Net Interest Income Simulation Analysis
The Company utilizes a variety of measurement techniques to evaluate the impact of interest rate risk, including simulating the impact of changing interest rates on expected future interest income and interest expense, to estimate the Company's net interest income sensitivity. This simulation is run monthly and includes various scenarios that help management understand the potential risks in the Company's net interest income sensitivity. These various scenarios include parallel, non-parallel, gradual parallel and gradual non-parallel rate shocks applied relative to the implied market-based forward curve, as well as other scenarios that are consistent with quantifying the four measures of risk described above. The shocks below are extended using the parallel scenario and are applied instantaneously to the implied forward curve as of the stated month-end. The 200 basis point-down shock has been added as market rates have increased. This set of shocks represents a range of plausible rate shocks, as an instantaneous shock 200 basis points down can be analogous to a gradual ramp-down of 400 basis points over one year. This information is used to develop proactive strategies to ensure that the Company’s risk position remains within SHUSA Board of Directors-approved limits so that future earnings are not significantly adversely affected by future interest rates.
The table below reflects the estimated sensitivity to the Company’s net interest income based on interest rate changes at September 30, 2025 and December 31, 2024:
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| | The following estimated percentage increase/(decrease) to
net interest income would result |
| If interest rates changed in parallel by the amounts below | | September 30, 2025 | | December 31, 2024 |
| Down 200 basis points | | (2.43) | % | | (4.53) | % |
| Down 100 basis points | | (1.00) | % | | (2.12) | % |
| Up 100 basis points | | 0.78 | % | | 1.89 | % |
| Up 200 basis points | | 1.44 | % | | 3.71 | % |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
MVE Analysis
The Company also evaluates the impact of interest rate risk by utilizing MVE modeling. This analysis measures the present value of all estimated future cash flows of the Company over the estimated remaining life of the balance sheet. MVE is calculated as the difference between the market value of assets and liabilities. The MVE calculation utilizes only the current balance sheet and therefore does not factor in any future changes in balance sheet size, balance sheet mix, yield curve relationships or product spreads, which may mitigate the impact of any interest rate changes.
Management examines the effect of interest rate changes on MVE. The sensitivity of MVE to changes in interest rates is a measure of longer-term interest rate risk and highlights the potential capital at risk due to adverse changes in market interest rates. The following table discloses the estimated sensitivity to the Company’s MVE at September 30, 2025 and December 31, 2024.
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| | The following estimated percentage
increase/(decrease) to MVE would result |
| If interest rates changed in parallel by the amounts below | | September 30, 2025 | | December 31, 2024 |
| Down 200 basis points | | 1.68 | % | | 3.02 | % |
| Down 100 basis points | | 2.39 | % | | 2.93 | % |
| Up 100 basis points | | (4.57) | % | | (4.22) | % |
| Up 200 basis points | | (9.90) | % | | (8.88) | % |
As of September 30, 2025, the Company’s profile reflected an increase of MVE of 2.39% for downward parallel interest rate shocks of 100 basis points and a decrease of 4.57% for upward parallel interest rate shocks of 100 basis points. The asymmetrical sensitivity between a 100 basis point increase and a 100 basis point decrease is due to the negative convexity as a result of the prepayment option embedded in mortgage-related products, the impact of which is not fully offset by the behavior of the funding base (largely NMDs). NMD sensitivity increased as rates declined and duration extended, driven by growth in Openbank deposits. This decreased overall MVE sensitivity as it offset more sensitivity on the asset side.
In downward parallel interest rate shocks, mortgage-related products’ prepayments increase, their duration decreases, and their market value appreciation is therefore limited. At the same time, with deposit rates remaining at comparatively low levels, the Company cannot effectively transfer interest rate declines to its NMD customers. For upward parallel interest rate shocks, extension risk weighs on a sizable portion of the Company’s mortgage-related products, which are predominantly long-term and fixed-rate; for larger shocks, the loss in market value is not offset by the change in NMDs.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Limitations of Interest Rate Risk Analyses
Since the assumptions used are inherently uncertain, the Company cannot predict precisely the effect of higher or lower interest rates on net interest income or MVE. Actual results will differ from simulated results due to the timing, magnitude and frequency of interest rate changes, the difference between actual experience and the assumed volume, characteristics of new business, behavior of existing positions, and changes in market conditions and management strategies, among other factors.
Uses of Derivatives to Manage Interest Rate and Other Risks
To mitigate interest rate risk and, to a lesser extent, foreign exchange, equity and credit risks, the Company uses derivative financial instruments to reduce the effects that changes in interest rates may have on net income, the fair value of assets and liabilities, and cash flows.
The Company is subject to price risk through its capital markets and mortgage banking activities. The Company employs various tools to measure and manage price risk in its portfolios. In addition, SHUSA's Board of Directors has established certain limits relative to positions and activities. The level of price risk exposure at any point in time depends on the market environment and expectations of future price and market movements and will vary from period to period.
Management uses derivative instruments to mitigate the impact of interest rate movements on the fair value of certain liabilities, assets and highly probable forecasted cash flows. These instruments primarily include interest rate swaps that have underlying interest rates based on key benchmark indices and forward sale or purchase commitments. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated interest rate environments.
The Company typically retains the servicing rights related to residential mortgage loans that are sold. The majority of the Company's residential MSRs are accounted for at fair value. As deemed appropriate, the Company economically hedges MSRs, using interest rate swaps and forward contracts to purchase MBS. For additional information on MSRs, see Note 13 to the Condensed Consolidated Financial Statements.
The Company uses foreign exchange contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities. Foreign exchange contracts, which include spot and forward contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate. The Company also utilizes forward contracts to manage market risk associated with certain expected investment securities sales.
For additional information on foreign exchange contracts, derivatives and hedging activities, see Note 12 to the Condensed Consolidated Financial Statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated by reference from Part I, Item 2, MD&A — "Asset and Liability Management" above.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the Evaluation Date, management of the Company, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d- 15(e) of the Exchange Act. Based on this evaluation, our CEO and CFO have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Refer to Note 16 to the Condensed Consolidated Financial Statements for SHUSA’s litigation disclosures, which are incorporated herein by reference.
ITEM 1A - RISK FACTORS
We are subject to a number of risks potentially impacting our business, financial condition, results of operations, and cash flow that are set forth under Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to the risk factors disclosed in our Form 10-K, we are subject to risks related to recent executive orders, discussed further below.
Recent Executive Orders Related to Tariffs May Result in Increased Risks to our Businesses
Several actions related to international trade have taken place in recent months, including reciprocal tariffs among global trade partners. The announcements of these new tariffs as well as exemptions and temporary postponements of certain tariffs, and retaliative tariffs and similar measures announced by some foreign countries, have led to significant volatility in U.S. and global financial markets and concerns related to the possibility of recessionary conditions. If there is an economic downturn or continued significant disruption in financial markets, we may experience increased likelihood of risks to our businesses, including reduced demand for our products and services, reduced capability of our borrowers to timely or fully comply with their existing obligations, adverse effects on the value and liquidity of investment securities we hold or issue, and greater uncertainty related to financial estimates we use in our businesses.
Some observers have suggested that tariffs could lead to significantly increased prices for goods and services in the U.S. Any such increased prices could increase our operating costs, decrease the purchasing power of customers leading to a greater potential for delinquencies in our credit portfolios and reduced demand for our products and services, and reduce our overall economic growth.
Our auto lending business is a significant source of our lending and funding. We may experience reduced demand for auto lending products and services in the event that tariffs have negative effects on the auto industry and the U.S. economy in general, including reduced auto sales as a result of, among other things, fewer vehicles being manufactured due to supply chain disruptions and higher manufacturing costs, reduced consumer demand for vehicles due to increased manufacturing costs and corresponding higher prices, and a decrease in automobile sales and loan volumes due to the closure and overall reduction in dealerships operating in the U.S. as a result of an economic downturn.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 - MINE SAFETY DISCLOSURES
None.
ITEM 5 - OTHER INFORMATION
Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Exchange Act, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law.
The following activities are disclosed in response to Section 13(r) with respect to Santander and its affiliates. During the period covered by this report:
•Frozen accounts and transactions: A limited number of accounts for customers subsequently designated over time by the U.S. under the SDGT sanctions programme, were or are maintained with certain non-U.S. affiliates of Santander. All accounts have been frozen or cancelled to comply with applicable legal requirements.
•Legacy contractual obligations related to guarantees: Santander also has certain legacy performance guarantees for the benefit of an Iranian bank that is currently designated by the U.S. under the SDGT sanctions programme (stand-by letters of credit to guarantee the obligations - either under tender documents or under contractual agreements - of contractors who participated in public bids in Iran) that were in place prior to April 27, 2007. Santander is not contractually permitted to cancel these arrangements without paying the guaranteed amount. As such, Santander intends to continue to provide the guarantees in accordance with company policy and applicable laws.
In the aggregate, all of the transactions described above resulted in gross revenues and net profits in the nine months ended September 30, 2025 which were negligible relative to the overall revenues and profits of Santander. Santander has undertaken significant steps to withdraw from the Iranian market such as closing its representative office in Iran and ceasing all banking activities therein, including correspondent relationships, deposit-taking from Iranian entities and issuing export letters of credit, except for the legacy transactions described above.
ITEM 6 - EXHIBITS
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| (4.1) | | Santander Holdings USA, Inc. has certain debt obligations outstanding. None of the instruments evidencing such debt authorizes an amount of securities in excess of 10% of the total assets of Santander Holdings USA, Inc. and its subsidiaries on a consolidated basis; therefore, copies of such instruments are not included as exhibits to this Quarterly Report on Form 10-Q. Santander Holdings USA, Inc. agrees to furnish copies to the SEC on request. | | | | | | | | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | SANTANDER HOLDINGS USA, INC.
(Registrant) |
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| Date: | November 3, 2025 | | /s/ Juan Carlos Alvarez de Soto |
| | | Juan Carlos Alvarez de Soto |
| | | Chief Financial Officer and Senior Executive Vice President |
| | | |
| | | |
| Date: | November 3, 2025 | | /s/ David L. Cornish |
| | | David L. Cornish |
| | | Chief Accounting Officer, Corporate Controller and Executive Vice President |