NEW YORK — DBRS recently assigned final ratings to several non-prime classes issued by Santander Drive Auto Receivables Trust 2010-A. The ratings firm gives Santander Consumer strong marks, saying the company is maintaining the philosophy of Drive Financial. The ratings include:

—Series 2010-A Notes, Class A-1 rated R-1 (high)
—Series 2010-A Notes, Class A-2 rated AAA
—Series 2010-A Notes, Class A-3 rated AAA
—Series 2010-A Notes, Class A-4 rated AAA

According to DBRS, the primary assets are a pool of non-prime installment contracts secured by new and used vehicles, light-duty trucks, vans and minivans.

The transaction represents Santander Consumer's second securitization in 2010 and fifth securitization of auto receivables originated through former Drive Financial Services.

The rating firm said, "Santander Consumer's management and operating philosophy remain consistent with its predecessor companies (Drive Financial from FirstCity Financial). It also includes receivables acquired from HSBC through Santander Consumer's strategic partnership with HSBC."

The transaction is structured as 114A. There will be one class of notes (tranched into four pari-passu tranches, including Class A1, A-2, A-3 and A-4). The initial Class A credit enhancement of 42.25 percent will include a reserve account 2 percent of initial securitization value, funding at inception and non-declining, according to the ratings firm. Also it will have overcollateralization of 40.25 percent of the initial securitization value.

Overcollateralization will build to a target of 48.50 percent of the securitization value based upon excess spread available in the structure and will be subject to a floor of 4.5 percent of the initial securitization value. The overcollateralization target will step to 58.50 percent if Level I net loss triggers are breached and all available cash will be paid to the noteholders if a Level II net loss trigger is breached.

Ultimately, the ratings firm indicated, "DBRS has performed an operational review of Santander Consumer and considers the entity to be a capable originator and servicer of subprime and non-prime auto loans."

The company is owned 91.5 percent by Banco Santander, which was the world's third largest bank by profitability in 2009, DBRS pointed out.

When it comes to the HSBC and the performance of Santander Consumer's portfolios, the ratings firm said the collateral is "highly seasoned" with a weighted average of about 18 months. The average remaining life of the pool is 50 months. The non-zero weighted average FICO scores is 561.

DBRS noted that the performance of the portfolio has "improved significantly" over the last few years due to tighter underwriting and "implementation and refinement of Santander Consumer's proprietary loss forecasting tools."

The HSBC portion, which represents 26 percent of the 2010-A transaction pool, has showed historically lower aggregate losses.

As a recap of the company's history, it purchased the unsecuritized assets of Triad Financial in 2008. Then in January 2009, it purchased Sovereign Bank by Banco Santander. The company soon thereafter started servicing Soverign's $4 billion prime portfolio (more than 323,000 accounts). According to the ratings firm, the performance of the Sovereign portfolio improved "immediately" due to the company's servicing capabilities.

Then, in March 2010, Santander Consumer purchased HSBC's U.S. auto loan servicing operations and entered into a servicing agreement for the remainder of the company's portfolio.

In the latest move, Santander Consumer announced that it will purchase $3.2 billion of CitiFinancial Auto's loan portfolio.

The company agreed to service a portfolio of approximately $7.2 billion of auto loans that will be held onto by Citi.

At the time of the Citi transaction, Santander Consumer officials said, "The purchase supports Santander Consumer USA's strategy to explore partnerships and transactions that complement the company's existing business model and provide incremental benefits from a service and growth perspective.

"Santander continues to be committed to originating and servicing indirect and direct auto loans that meet Banco Santander's strict standards related to prudent underwriting and risk mitigation," officials added.