Related-Party Transactions

6 Months Ended

Jun. 30, 2021

Related-party transactions not otherwise disclosed in these footnotes to the condensed consolidated financial statements include the following:

Credit Facilities

Interest expense, including unused fees, for lines of credit from SHUSA (Note 7) totaled $72,211 and $70,352 for the three months ended June 30, 2021 and 2020, respectively, and $146,230 and $133,370 for the six months ended June 30, 2021 and 2020, respectively. Accrued interest for lines of credit from SHUSA at June 30, 2021 and December 31, 2020 was $37,489 and $40,234, respectively.

Interest expense, including unused fees, for lines of credit from Santander (Note 7) totaled $11,795 and $703 for the three months ended June 30, 2021 and 2020, respectively, and $23,680 and $703 for the six months ended June 30, 2021 and 2020, respectively. Accrued interest for lines of credit from Santander at June 30, 2021 and December 31, 2020 was $1,512 and $1,603, respectively.

Derivatives

The Company has derivative financial instruments with Santander and affiliates with outstanding notional amounts of

$3,611,862 and $3,148,850 as of June 30, 2021 and December 31, 2020, respectively (Note 9). The Company had a collateral overage on derivative liabilities with Santander and affiliates of zero and $907 as of June 30, 2021 and December 31, 2020, respectively.

Retail Installment Contracts and RV Marine

The Company also has agreements with SBNA to service auto retail installment contracts and recreational and marine vehicle portfolios.

Servicing fee income recognized under these agreements totaled $350 and $541 for the three months ended June 30, 2021 and 2020, respectively, and $752 and $1,093 for the six months ended June 30, 2021 and 2020, respectively. Other information on the serviced auto loan and retail installment contract portfolios for SBNA as of June 30, 2021 and December 31, 2020 is as follows:


	June 30, 2021		December 31, 2020
Total serviced portfolio	$	151,917	$	190,504
Cash collections due to owner	27,449		19,650
Servicing fees receivable	4,066		1,769

Dealer Lending

Under the Company’s agreement with SBNA, the Company is required to permit SBNA a first right to review and assess CCAP dealer lending opportunities, and SBNA is required to pay the Company an origination fee for each loan originated under the agreement. The agreement also transferred the servicing of all CCAP receivables from dealers, including receivables held by SBNA to the Company and from the Company to SBNA. The Company may provide advance funding for dealer loans originated by SBNA, which is reimbursed to the Company by SBNA. The Company had no outstanding receivable from SBNA as of June 30, 2021 or December 31, 2020 for such advances.

Other information related to the above transactions with SBNA is as follows:



	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Origination and renewal fee income from SBNA	$	—	$	512	$	—	$	2,021
Servicing fees expenses charged by SBNA	70		(2)		160		72

Under the agreement with SBNA, the Company may originate retail consumer loans in connection with sales of vehicles that are collateral held against floorplan loans by SBNA. Upon origination, the Company remits payment to SBNA, which settles the transaction with the dealer. The Company owed SBNA $6,743 and $7,548 related to such originations as of June 30, 2021 and December 31, 2020, respectively.

The Company received a $9,000 referral fee in connection with a sourcing and servicing arrangement and is amortizing the fee into income over the ten-year term of the agreement through July 1, 2022, the termination date of the agreement. As of June 30, 2021 and December 31, 2020, the unamortized fee balance was $1,800 and $2,250, respectively. The Company recognized $225 and $450 of income related to the referral fee for the three and six months ended June 30, 2021 and 2020, respectively.

Origination Support Services

Beginning in 2018, the Company agreed to provide SBNA with origination support services in connection with the processing, underwriting and purchase of retail loans, primarily from Stellantis N.V. dealers. In addition, the Company agreed to perform the servicing for any loans originated on SBNA’s behalf. For the three and six months ended June 30, 2021, the Company facilitated the purchase of $2.6 billion and $4.5 billion of retail installment contacts, respectively. For the three and six months ended June 30, 2020, the Company facilitated the purchase of $1.7 billion and $2.8 billion of retail installment contacts, respectively. The Company recognized origination fee and servicing fee income of $15,503, $27,069, $11,067 and $21,555 for the three and six months ended June 30, 2021 and 2020, respectively, of which $4,386 and $2,271 was receivable as of June 30, 2021 and 2020, respectively.

Securitizations

The Company had a Master Securities Purchase Agreement (MSPA) with Santander, whereby the Company had the option to sell a contractually determined amount of eligible prime loans to Santander, through the SPAIN securitization platform, for a term that ended in December 2018. The Company provides servicing on all loans originated under this arrangement. For the three and six months ended June 30, 2021 and 2020, the Company received the servicing fee income of $2,404, $5,293, $5,220 and $11,193, respectively, for the servicing of these loans.

Servicing fee receivable, as of June 30, 2021 and December 31, 2020, was $750 and $1,070, respectively. The Company had $5,988 and $6,203 of collections due to Santander, as of June 30, 2021 and December 31, 2020, respectively.

Santander Investment Securities Inc. (SIS), an affiliated entity, serves as joint book runner and co-manager on certain of the Company’s securitizations. Amounts paid to SIS for the three months ended June 30, 2021 and 2020 totaled $1,512 and $713, respectively, and totaled $2,704 and $1,522 for the six months ended June 30, 2021 and 2020, respectively, and are included in debt issuance costs in the accompanying condensed consolidated financial statements.

Employee compensation

Certain employees of the Company and SHUSA provide services to each other. For the six months ended June 30, 2021 and 2020, the Company owed SHUSA approximately $9,582 and $5,114 and SHUSA owed the Company approximately $2,703 and $2,413 for such services, respectively.

Other related-party transactions

•The Company subleases approximately 13,000 square feet of its corporate office space to SBNA. For the three months ended June 30, 2021 and 2020, the Company recorded $44 and for the six months ended June 30, 2021 and 2020, the Company recorded $88 in sublease revenue on this property.

•The Company has certain deposit and checking accounts with SBNA. As of June 30, 2021 and December 31, 2020, the Company had a balance of $262,805 and $32,490, respectively, in these accounts. The Company has

collateral accounts with SBNA with balances as of June 30, 2021 and December 31, 2020 of $6,027 and $27, respectively, in these accounts.

•The Company and SBNA have a Credit Card Agreement (Card Agreement) whereby SBNA provides credit card services for travel and related business expenses for vendor payments. This service is at zero cost but generates rebates based on purchases made. As of June 30, 2021, the activities associated with the program were insignificant.

•The Company pays SBNA a market rate-based fee expense for payments made at SBNA retail branch locations for accounts originated or serviced by the Company and the costs associated with modifying the Advanced Teller platform to the payments. The Company incurred expenses totaled $34 and $43 for the three months ended June 30, 2021 and 2020, respectively, and $67 and $101 for the six months ended June 30, 2021 and 2020, respectively.

•The Company has contracted Aquanima, a Santander affiliate, to provide procurement services. Expenses incurred totaled $786 and $784 for the three months ended June 30, 2021, and 2020, respectively, and totaled $1,573 and $1,294 for the six months ended June 30, 2021 and 2020, respectively.

•Santander Global Tech (formerly known as Produban Servicios Informaticos Generales S.L.), a Santander affiliate, provides professional services, telecommunications, and internal and/or external applications to the Company. Expenses incurred, which are included as a component of other operating costs in the accompanying consolidated statements of income, totaled zero and $(108) for the three months ended June 30, 2021 and 2020, respectively, and zero and $71 for the six months ended June 30, 2021 and 2020, respectively.

•The Company partners with SHUSA to place Cyber Liability Insurance in which participating worldwide Santander entities share €270 million aggregate limits. The Company repays SHUSA for the Company’s equitably allocated portion of insurance premiums and fees. Expenses incurred totaled $150 and $108 for the three months ended June 30, 2021 and 2020, respectively, and totaled $301 and $216 for the six months ended June 30, 2021 and 2020, respectively. In addition, the Company partners with SHUSA for various other insurance products. Expenses incurred totaled $513 and $183 for the three months ended June 30, 2021 and 2020, respectively, and totaled $1,027 and $365 and for the six months ended June 30, 2021 and 2020, respectively.

•In April 2021, the Company entered into a non-binding term sheet with AutoFi Inc. for the design and operation of a digital software platform for the sale and financing of automobiles. Mouro Capital, which is a wholly-owned subsidiary of Santander, owns 10.3% of the total equity of AutoFi Inc. The term sheet, which may be terminated by either party without penalty, requires the Company to pay $250 per month for the design and development of the digital software platform until the parties execute a definitive agreement.

Santander Consumer USA Holdings Inc. 10-Q/A