SYF 8-K
Synchrony Financial (SYF)
8-K
2024-04-24
For: 2024-04-24
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Added on
July 04, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(203 ) 585-2400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth 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. ¨
Item 2.02 Results of Operations and Financial Condition.
On April 24, 2024 , Synchrony Financial (the “Company”) issued a press release setting forth the Company’s first quarter 2024 earnings. A copy of the Company’s press release is being furnished as Exhibit 99.1 and hereby incorporated by reference. The information furnished pursuant to this Item 2.02, including Exhibits, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being furnished as part of this report:
| Number | Description | |||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL | |||||||
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 hereunto duly authorized.
SYNCHRONY FINANCIAL | ||||||||||||||||||||
| Date: April 24, 2024 | By: | /s/ Jonathan Mothner | ||||||||||||||||||
Name: | Jonathan Mothner | |||||||||||||||||||
Title: | Executive Vice President, Chief Risk and Legal Officer | |||||||||||||||||||
Exhibit 99.1
For Immediate Release Synchrony Financial (NYSE: SYF) April 24, 2024 |  | |||||||
FIRST QUARTER 2024 RESULTS AND KEY METRICS
4.4% Return on Assets | 12.6% CET1 Ratio | $402M Capital Returned | CEO COMMENTARY | |||||||||||||||||||||||||||||
“Synchrony’s first quarter performance highlights the resiliency of our business model and focus on delivering sustainable, strong results for each of our stakeholders,” said Brian Doubles, Synchrony’s President and Chief Executive Officer. “Our differentiated model has empowered consistent performance through evolving environments, while our diversified product suite, compelling value propositions and innovative technology have continued to resonate with consumers and partners alike. “In the quarter we also successfully completed two previously-announced transactions, which together will broaden our expansive product offerings in the market while delivering compelling risk-adjusted returns. “We are confident that Synchrony is operating from a position of strength as we navigate the year ahead. We are excited about the opportunities we see to drive considerable long-term value as we continue to partner with hundreds of thousands of small- and mid-size businesses and health providers to help tens of millions of people access their everyday needs and wants.” | ||||||||||||||||||||||||||||||||
$101.7B Loan Receivables | ||||||||||||||||||||||||||||||||
 | Net Earnings of $1.3 Billion or $3.14 per Diluted Share; excluding the Pets Best gain on sale, Adjusted Net Earnings of $491 million or $1.18 per Diluted Share,* which includes a reserve build for the Ally Lending acquisition of $190 million or $(0.35) per Diluted Share | |||||||||||||||||||||||||||||||
 | Delivered Record First Quarter Purchase Volume and Strong Receivables Growth | |||||||||||||||||||||||||||||||
 | Returned $402 Million of Capital to Shareholders, including $300 Million of Share Repurchases; Board Approved $1.0 Billion of Incremental Share Repurchase Authorization | |||||||||||||||||||||||||||||||
STAMFORD, Conn. – Synchrony Financial (NYSE: SYF) today announced first quarter 2024 net earnings of $1.3 billion, or $3.14 per diluted share, compared to $601 million, or $1.35 per diluted share in the first quarter 2023. Excluding the $802 million post-tax impact of the Pets Best gain on sale, first quarter 2024 adjusted net earnings were $491 million, or $1.18 per diluted share,* which includes a reserve build for the Ally Lending acquisition of $190 million or $(0.35) per diluted share. | ||||||||||||||||||||||||||||||||
| KEY OPERATING & FINANCIAL METRICS** | ||||||||||||||||||||||||||||||||
| PERFORMANCE REFLECTS DIFFERENTIATED BUSINESS MODEL AND CONTINUED CONSUMER RESILIENCE | ||||||||||||||||||||||||||||||||
•Purchase volume increased 2% to $42.4 billion •Loan receivables increased 12% to $101.7 billion •Average active accounts increased 3% to 71.7 million •New accounts decreased 8% to 4.8 million •Net interest margin decreased 67 basis points to 14.55% •Efficiency ratio decreased 990 basis points to 25.1% or decreased 270 basis points to 32.3% on an adjusted basis* •Return on assets increased 210 basis points to 4.4% or decreased 60 basis points to 1.7% on an adjusted basis* •Return on equity increased 17.4 percentage points to 35.6% or decreased 4.4 percentage points to 13.8% on an adjusted basis* •Return on tangible common equity*** increased 21.5 percentage points to 43.6% or decreased 5.3 percentage points to 16.8% on an adjusted basis* | ||||||||||||||||||||||||||||||||
| CFO COMMENTARY | BUSINESS AND FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2024** | |||||||||||||||||||||||||
“Synchrony is executing on its business strategy, building on our long history of delivering steady growth at strong risk-adjusted returns through changing market conditions,” said Brian Wenzel, Synchrony’s Executive Vice President and Chief Financial Officer. "Our differentiated RSA model empowers our financial resilience, while our investments in sophisticated credit management tools empower our agility as we continue to monitor conditions and take actions where necessary to reinforce our positioning for 2024 and beyond. “In addition, as part of our capital plan, our Board approved an incremental share repurchase authorization of $1 billion and intends to maintain our regular quarterly dividend of $0.25 per share, underscoring their continued confidence in our operating performance and strong balance sheet. “Taken together, we remain confident that our differentiated model is well positioned to continue to consistently deliver value for each of our stakeholders.” | ||||||||||||||||||||||||||
| BUSINESS HIGHLIGHTS | ||||||||||||||||||||||||||
| CONTINUED TO EXPAND PORTFOLIO, ENHANCE PRODUCTS AND EXTEND REACH | ||||||||||||||||||||||||||
•Completed sale of Pets Best insurance to Independence Pet Holdings, providing the opportunity to build a strategic partnership with one of the leading pet-focused companies in North America. •Completed acquisition of Ally Lending’s point-of-sale financing business, creating a differentiated solution in the home improvement industry and expanding Synchrony's multi-product strategy within its Home & Auto and Health & Wellness platforms. •Added or renewed more than 25 programs, including BRP, and new strategic technology partnerships with Adit and ServiceTitan. | ||||||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||
| EARNINGS DRIVEN BY CORE BUSINESS DRIVERS | ||||||||||||||||||||||||||
•Interest and fees on loans increased 15% to $5.3 billion, driven primarily by growth in average loan receivables, lower payment rate, and higher benchmark rates. •Net interest income increased $354 million, or 9%, to $4.4 billion, driven by higher interest and fees on loans, partially offset by an increase in interest expense from higher benchmark rates and higher funding liabilities. •Retailer share arrangements decreased $153 million, or 17%, to $764 million, reflecting higher net charge-offs partially offset by higher net interest income. •Provision for credit losses increased $594 million to $1.9 billion, driven by higher net charge-offs and a $190 million reserve build related to the Ally Lending acquisition. •Other income increased $1.1 billion to $1.2 billion, driven primarily by the gain on sale of Pets Best of $1.1 billion. •Other expense increased $87 million, or 8%, to $1.2 billion, driven primarily by growth related items and technology investments. •Net earnings increased 115% to $1.3 billion, compared to $601 million. Excluding the $802 million after-tax gain on sale of Pets Best, adjusted net earnings declined 18% to $491 million.* | ||||||||||||||||||||||||||
| CREDIT QUALITY | ||||||||||||||||||||||||||
| CREDIT CONTINUES TO PERFORM IN LINE WITH EXPECTATIONS | ||||||||||||||||||||||||||
•Loans 30+ days past due as a percentage of total period-end loan receivables were 4.74% compared to 3.81% in the prior year, an increase of 93 basis points and approximately 18 basis points above the average of the first quarters in 2017 through 2019. •Net charge-offs as a percentage of total average loan receivables were 6.31% compared to 4.49% in the prior year, an increase of 182 basis points, performing within our expectations. •The allowance for credit losses as a percentage of total period-end loan receivables was 10.72%, compared to 10.26% in the fourth quarter 2023 primarily reflecting the impact of seasonal trends. | ||||||||||||||||||||||||||
| SALES PLATFORM HIGHLIGHTS | |||||||||||||||||||||||
| DIVERSITY ACROSS OUR PLATFORMS CONTINUES TO PROVIDE RESILIENCE | |||||||||||||||||||||||
•Home & Auto purchase volume decreased 3%, as the strong growth in Home Specialty, Auto Network, and the impact of the Ally Lending acquisition was offset by a combination of lower consumer traffic, fewer large ticket purchases, and lower gas prices as consumers continued to manage spend across their Home and Auto related needs. Period-end loan receivables increased 10%, reflecting the impacts of the Ally Lending acquisition and lower payment rates. Interest and fees on loans were up 13%, primarily driven by higher average loan receivables and higher benchmark rates. Average active accounts increased 2%. •Digital purchase volume increased 3%, primarily reflecting continued customer engagement through growth in average active accounts. Period-end loan receivables increased 11%, driven by lower payment rates and continued purchase volume growth. Interest and fees on loans increased 15%, reflecting the impacts of higher average loan receivables, lower payment rate, higher benchmark rates and maturation of newer programs. Average active accounts increased 4%. •Diversified & Value purchase volume increased 4%, driven by both partner and out-of-partner spend. Period-end loan receivables increased 10%, reflecting purchase volume growth and lower payment rates. Interest and fees on loans increased 13%, driven by the impacts of higher average loan receivables, lower payment rate and higher benchmark rates. Average active accounts increased 1%. •Health & Wellness purchase volume increased 8%, reflecting broad-based growth in active accounts led by Pet, Dental, and Cosmetic. Period-end loan receivables increased 20%, driven by continued higher purchase volume and lower payment rates, and also reflects the acquisition of Ally Lending. Interest and fees on loans increased 18%, reflecting the impacts of purchase volume growth, higher average loan receivables, and lower payment rate. Average active accounts increased 11%. •Lifestyle purchase volume decreased 4%, reflecting the impact of lower transaction values. Period-end loan receivables increased 11%, driven by strong prior period purchase volume and lower payment rates. Interest and fees on loans increased 14%, driven primarily by the impacts of higher average loan receivables, lower payment rate and higher benchmark rates. Average active accounts increased 1%. | |||||||||||||||||||||||
| BALANCE SHEET, LIQUIDITY & CAPITAL | |||||||||||||||||||||||
| FUNDING, CAPITAL & LIQUIDITY REMAIN ROBUST | |||||||||||||||||||||||
•Loan receivables of $101.7 billion increased 12%; purchase volume increased 2% and average active accounts increased 3%. •Deposits increased $9.1 billion, or 12%, to $83.6 billion and comprised 84% of funding. •Total liquid assets and undrawn credit facilities were $24.9 billion, or 20.5% of total assets. •The company returned $402 million in capital to shareholders, including $300 million of share repurchases and $102 million of common stock dividends. •As of March 31, 2024 the Company had a total remaining share repurchase authorization of $300 million. •In April, the Company’s Board approved an incremental share repurchase authorization of $1.0 billion through June 30, 2025, and intends to maintain the quarterly cash dividend at its current amount of $0.25 per share of common stock. Inclusive of the $300 million remaining under its prior share repurchase program as of March 31, 2024, the Company has a total share repurchase authorization of $1.3 billion through June 30, 2025. •The estimated Common Equity Tier 1 ratio was 12.6% compared to 13.0%, and the estimated Tier 1 Capital ratio was unchanged from the prior year at 13.8%. | |||||||||||||||||||||||
*Financial measures shown on an adjusted basis are non-GAAP measures and exclude the current year amounts related to the Pets Best gain on sale, which was sold in the first quarter of 2024. See non-GAAP reconciliation in the financial tables. ** All comparisons are for the first quarter of 2024 compared to the first quarter of 2023, unless otherwise noted. *** Tangible common equity is a non-GAAP financial measure. See non-GAAP reconciliation in the financial tables. | |||||||||||||||||||||||
| CORRESPONDING FINANCIAL TABLES AND INFORMATION | |||||||||||||||||||||||
No representation is made that the information in this news release is complete. Investors are encouraged to review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the detailed financial tables and information that follow, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed February 8, 2024, and the Company’s forthcoming Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. The detailed financial tables and other information are also available on the Investor Relations page of the Company’s website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today. | |||||||||||||||||||||||
CONFERENCE CALL AND WEBCAST | ||||||||||||||
On Wednesday, April 24, 2024, at 8:00 a.m. Eastern Time, Brian Doubles, President and Chief Executive Officer, and Brian Wenzel Sr., Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations page on the Synchrony Financial corporate website, www.investors.synchrony.com, under Events and Presentations. A replay will also be available on the website. | ||||||||||||||
ABOUT SYNCHRONY FINANCIAL
Synchrony (NYSE: SYF) is a premier consumer financial services company delivering one of the industry’s most complete digitally-enabled product suites. Our experience, expertise and scale encompass a broad spectrum of industries including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. We have an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which we refer to as our “partners.” We connect our partners and consumers through our dynamic financial ecosystem and provide them with a diverse set of financing solutions and innovative digital capabilities to address their specific needs and deliver seamless, omnichannel experiences. We offer the right financing products to the right customers in their channel of choice.
For more information, visit www.synchrony.com and Twitter: @Synchrony.
| Investor Relations | Media Relations | ||||
| Kathryn Miller | Lisa Lanspery | ||||
| (203) 585-6291 | (203) 585-6143 | ||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "targets," "outlook," "estimates," "will," "should," "may," “aim” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of partners, and promotion and support of our products by our partners; cyber-attacks or other security incidents or breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; the Consumer Financial Protection Bureau’s (the “CFPB”) final rule on credit card late fees; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions, dispositions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislative and regulatory developments and the impact of the CFPB’s regulation of our business, including new requirements and constraints that the Company and the Bank will become subject to as a result of having $100 billion or more in total assets; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit the Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS (Continued)
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this news release and in our public filings, including under the heading "Risk Factors Relating to our Business" and “Risk Factors Relating to Regulation” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 8, 2024. You should not consider any list of such factors to be an exhaustive statement of all the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.
NON-GAAP MEASURES
The information provided herein includes measures we refer to as “adjusted,” "tangible common equity," and certain “CECL fully phased-in" capital measures, which are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please see the detailed financial tables and information that follow. For a statement regarding the usefulness of these measures to investors, please see the Company's Current Report on Form 8-K filed with the SEC today.
Exhibit 99.2
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| FINANCIAL SUMMARY | ||||||||||||||||||||||||||||||||||||||
| (unaudited, in millions, except per share statistics) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | 1Q'24 vs. 1Q'23 | |||||||||||||||||||||||||||||||||
| EARNINGS | ||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,405 | $ | 4,466 | $ | 4,362 | $ | 4,120 | $ | 4,051 | $ | 354 | 8.7 | % | ||||||||||||||||||||||||
| Retailer share arrangements | (764) | (878) | (979) | (887) | (917) | 153 | (16.7) | % | ||||||||||||||||||||||||||||||
| Other income | 1,157 | 71 | 92 | 61 | 65 | 1,092 | NM | |||||||||||||||||||||||||||||||
| Net revenue | 4,798 | 3,659 | 3,475 | 3,294 | 3,199 | 1,599 | 50.0 | % | ||||||||||||||||||||||||||||||
| Provision for credit losses | 1,884 | 1,804 | 1,488 | 1,383 | 1,290 | 594 | 46.0 | % | ||||||||||||||||||||||||||||||
| Other expense | 1,206 | 1,316 | 1,154 | 1,169 | 1,119 | 87 | 7.8 | % | ||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 1,708 | 539 | 833 | 742 | 790 | 918 | 116.2 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | 415 | 99 | 205 | 173 | 189 | 226 | 119.6 | % | ||||||||||||||||||||||||||||||
| Net earnings | $ | 1,293 | $ | 440 | $ | 628 | $ | 569 | $ | 601 | $ | 692 | 115.1 | % | ||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 1,282 | $ | 429 | $ | 618 | $ | 559 | $ | 590 | $ | 692 | 117.3 | % | ||||||||||||||||||||||||
| COMMON SHARE STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Basic EPS | $ | 3.17 | $ | 1.04 | $ | 1.49 | $ | 1.32 | $ | 1.36 | $ | 1.81 | 133.1 | % | ||||||||||||||||||||||||
| Diluted EPS | $ | 3.14 | $ | 1.03 | $ | 1.48 | $ | 1.32 | $ | 1.35 | $ | 1.79 | 132.6 | % | ||||||||||||||||||||||||
| Dividend declared per share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.23 | $ | 0.23 | $ | 0.02 | 8.7 | % | ||||||||||||||||||||||||
| Common stock price | $ | 43.12 | $ | 38.19 | $ | 30.57 | $ | 33.92 | $ | 29.08 | $ | 14.04 | 48.3 | % | ||||||||||||||||||||||||
| Book value per share | $ | 35.03 | $ | 32.36 | $ | 31.50 | $ | 30.25 | $ | 29.08 | $ | 5.95 | 20.5 | % | ||||||||||||||||||||||||
Tangible common equity per share(1) | $ | 30.36 | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | $ | 5.65 | 22.9 | % | ||||||||||||||||||||||||
| Beginning common shares outstanding | 406.9 | 413.8 | 418.1 | 428.4 | 438.2 | (31.3) | (7.1) | % | ||||||||||||||||||||||||||||||
| Issuance of common shares | — | — | — | — | — | — | NM | |||||||||||||||||||||||||||||||
| Stock-based compensation | 2.0 | 0.4 | 0.2 | 0.2 | 1.5 | 0.5 | 33.3 | % | ||||||||||||||||||||||||||||||
| Shares repurchased | (7.5) | (7.3) | (4.5) | (10.5) | (11.3) | 3.8 | (33.6) | % | ||||||||||||||||||||||||||||||
| Ending common shares outstanding | 401.4 | 406.9 | 413.8 | 418.1 | 428.4 | (27.0) | (6.3) | % | ||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | 404.7 | 411.9 | 416.0 | 422.7 | 434.4 | (29.7) | (6.8) | % | ||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (fully diluted) | 408.2 | 414.6 | 418.4 | 424.2 | 437.2 | (29.0) | (6.6) | % | ||||||||||||||||||||||||||||||
| (1) Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures. | ||||||||||||||||||||||||||||||||||||||
1
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| SELECTED METRICS | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | 1Q'24 vs. 1Q'23 | |||||||||||||||||||||||||||||||||
| PERFORMANCE METRICS | ||||||||||||||||||||||||||||||||||||||
Return on assets(1) | 4.4 | % | 1.5 | % | 2.3 | % | 2.1 | % | 2.3 | % | 2.1 | % | ||||||||||||||||||||||||||
Return on equity(2) | 35.6 | % | 12.4 | % | 18.1 | % | 17.0 | % | 18.2 | % | 17.4 | % | ||||||||||||||||||||||||||
Return on tangible common equity(3) | 43.6 | % | 14.7 | % | 21.9 | % | 20.6 | % | 22.1 | % | 21.5 | % | ||||||||||||||||||||||||||
| — | % | |||||||||||||||||||||||||||||||||||||
| — | % | |||||||||||||||||||||||||||||||||||||
Net interest margin(4) | 14.55 | % | 15.10 | % | 15.36 | % | 14.94 | % | 15.22 | % | (0.67) | % | ||||||||||||||||||||||||||
| Net revenue as a % of average loan receivables, including held for sale | 19.11 | % | 14.56 | % | 14.33 | % | 14.29 | % | 14.29 | % | 4.82 | % | ||||||||||||||||||||||||||
Efficiency ratio(5) | 25.1 | % | 36.0 | % | 33.2 | % | 35.5 | % | 35.0 | % | (9.9) | % | ||||||||||||||||||||||||||
| Other expense as a % of average loan receivables, including held for sale | 4.80 | % | 5.24 | % | 4.76 | % | 5.07 | % | 5.00 | % | (0.20) | % | ||||||||||||||||||||||||||
| Effective income tax rate | 24.3 | % | 18.4 | % | 24.6 | % | 23.3 | % | 23.9 | % | 0.4 | % | ||||||||||||||||||||||||||
| CREDIT QUALITY METRICS | ||||||||||||||||||||||||||||||||||||||
| Net charge-offs as a % of average loan receivables, including held for sale | 6.31 | % | 5.58 | % | 4.60 | % | 4.75 | % | 4.49 | % | 1.82 | % | ||||||||||||||||||||||||||
30+ days past due as a % of period-end loan receivables(6) | 4.74 | % | 4.74 | % | 4.40 | % | 3.84 | % | 3.81 | % | 0.93 | % | ||||||||||||||||||||||||||
90+ days past due as a % of period-end loan receivables(6) | 2.42 | % | 2.28 | % | 2.06 | % | 1.77 | % | 1.87 | % | 0.55 | % | ||||||||||||||||||||||||||
| Net charge-offs | $ | 1,585 | $ | 1,402 | $ | 1,116 | $ | 1,096 | $ | 1,006 | $ | 579 | 57.6 | % | ||||||||||||||||||||||||
Loan receivables delinquent over 30 days(6) | $ | 4,820 | $ | 4,885 | $ | 4,304 | $ | 3,641 | $ | 3,474 | $ | 1,346 | 38.7 | % | ||||||||||||||||||||||||
Loan receivables delinquent over 90 days(6) | $ | 2,459 | $ | 2,353 | $ | 2,020 | $ | 1,677 | $ | 1,705 | $ | 754 | 44.2 | % | ||||||||||||||||||||||||
| Allowance for credit losses (period-end) | $ | 10,905 | $ | 10,571 | $ | 10,176 | $ | 9,804 | $ | 9,517 | $ | 1,388 | 14.6 | % | ||||||||||||||||||||||||
Allowance coverage ratio(7) | 10.72 | % | 10.26 | % | 10.40 | % | 10.34 | % | 10.44 | % | 0.28 | % | ||||||||||||||||||||||||||
| BUSINESS METRICS | ||||||||||||||||||||||||||||||||||||||
Purchase volume(8) | $ | 42,387 | $ | 49,339 | $ | 47,006 | $ | 47,276 | $ | 41,557 | $ | 830 | 2.0 | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 101,733 | $ | 102,988 | $ | 97,873 | $ | 94,801 | $ | 91,129 | $ | 10,604 | 11.6 | % | ||||||||||||||||||||||||
| Credit cards | $ | 93,736 | $ | 97,043 | $ | 92,078 | $ | 89,299 | $ | 86,113 | $ | 7,623 | 8.9 | % | ||||||||||||||||||||||||
| Consumer installment loans | $ | 5,957 | $ | 3,977 | $ | 3,784 | $ | 3,548 | $ | 3,204 | $ | 2,753 | 85.9 | % | ||||||||||||||||||||||||
| Commercial credit products | $ | 1,912 | $ | 1,839 | $ | 1,879 | $ | 1,826 | $ | 1,690 | $ | 222 | 13.1 | % | ||||||||||||||||||||||||
| Other | $ | 128 | $ | 129 | $ | 132 | $ | 128 | $ | 122 | $ | 6 | 4.9 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 100,957 | $ | 99,683 | $ | 96,230 | $ | 92,489 | $ | 90,815 | $ | 10,142 | 11.2 | % | ||||||||||||||||||||||||
Period-end active accounts (in thousands)(9) | 70,754 | 73,484 | 70,137 | 70,269 | 68,589 | 2,165 | 3.2 | % | ||||||||||||||||||||||||||||||
Average active accounts (in thousands)(9) | 71,667 | 71,526 | 70,308 | 69,517 | 69,494 | 2,173 | 3.1 | % | ||||||||||||||||||||||||||||||
| LIQUIDITY | ||||||||||||||||||||||||||||||||||||||
| Liquid assets | ||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 20,021 | $ | 14,259 | $ | 15,643 | $ | 12,706 | $ | 15,303 | $ | 4,718 | 30.8 | % | ||||||||||||||||||||||||
| Total liquid assets | $ | 21,929 | $ | 16,808 | $ | 17,598 | $ | 16,448 | $ | 18,778 | $ | 3,151 | 16.8 | % | ||||||||||||||||||||||||
| Undrawn credit facilities | ||||||||||||||||||||||||||||||||||||||
| Undrawn credit facilities | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | — | — | % | ||||||||||||||||||||||||
Total liquid assets and undrawn credit facilities(10) | $ | 24,879 | $ | 19,758 | $ | 20,548 | $ | 19,398 | $ | 21,728 | $ | 3,151 | 14.5 | % | ||||||||||||||||||||||||
| Liquid assets % of total assets | 18.10 | % | 14.31 | % | 15.58 | % | 15.13 | % | 17.41 | % | 0.69 | % | ||||||||||||||||||||||||||
| Liquid assets including undrawn credit facilities % of total assets | 20.53 | % | 16.82 | % | 18.19 | % | 17.85 | % | 20.15 | % | 0.38 | % | ||||||||||||||||||||||||||
| (1) Return on assets represents net earnings as a percentage of average total assets. | ||||||||||||||||||||||||||||||||||||||
| (2) Return on equity represents net earnings as a percentage of average total equity. | ||||||||||||||||||||||||||||||||||||||
| (3) Return on tangible common equity represents net earnings available to common stockholders as a percentage of average tangible common equity. Tangible common equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures. | ||||||||||||||||||||||||||||||||||||||
| (4) Net interest margin represents net interest income divided by average interest-earning assets. | ||||||||||||||||||||||||||||||||||||||
| (5) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, plus other income, less retailer share arrangements. | ||||||||||||||||||||||||||||||||||||||
| (6) Based on customer statement-end balances extrapolated to the respective period-end date. | ||||||||||||||||||||||||||||||||||||||
| (7) Allowance coverage ratio represents allowance for credit losses divided by total period-end loan receivables. | ||||||||||||||||||||||||||||||||||||||
| (8) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period. | ||||||||||||||||||||||||||||||||||||||
| (9) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. | ||||||||||||||||||||||||||||||||||||||
| (10) Excludes available borrowing capacity related to unencumbered assets. | ||||||||||||||||||||||||||||||||||||||
2
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| STATEMENTS OF EARNINGS | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | 1Q'24 vs. 1Q'23 | |||||||||||||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 5,293 | $ | 5,323 | $ | 5,151 | $ | 4,812 | $ | 4,616 | $ | 677 | 14.7 | % | ||||||||||||||||||||||||
| Interest on cash and debt securities | 275 | 226 | 203 | 209 | 170 | 105 | 61.8 | % | ||||||||||||||||||||||||||||||
| Total interest income | 5,568 | 5,549 | 5,354 | 5,021 | 4,786 | 782 | 16.3 | % | ||||||||||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||||||||||||||
| Interest on deposits | 954 | 878 | 800 | 717 | 557 | 397 | 71.3 | % | ||||||||||||||||||||||||||||||
| Interest on borrowings of consolidated securitization entities | 105 | 99 | 86 | 78 | 77 | 28 | 36.4 | % | ||||||||||||||||||||||||||||||
| Interest on senior unsecured notes | 104 | 106 | 106 | 106 | 101 | 3 | 3.0 | % | ||||||||||||||||||||||||||||||
| Total interest expense | 1,163 | 1,083 | 992 | 901 | 735 | 428 | 58.2 | % | ||||||||||||||||||||||||||||||
| Net interest income | 4,405 | 4,466 | 4,362 | 4,120 | 4,051 | 354 | 8.7 | % | ||||||||||||||||||||||||||||||
| Retailer share arrangements | (764) | (878) | (979) | (887) | (917) | 153 | (16.7) | % | ||||||||||||||||||||||||||||||
| Provision for credit losses | 1,884 | 1,804 | 1,488 | 1,383 | 1,290 | 594 | 46.0 | % | ||||||||||||||||||||||||||||||
| Net interest income, after retailer share arrangements and provision for credit losses | 1,757 | 1,784 | 1,895 | 1,850 | 1,844 | (87) | (4.7) | % | ||||||||||||||||||||||||||||||
| Other income: | ||||||||||||||||||||||||||||||||||||||
| Interchange revenue | 241 | 270 | 267 | 262 | 232 | 9 | 3.9 | % | ||||||||||||||||||||||||||||||
| Protection product revenue | 141 | 139 | 131 | 125 | 115 | 26 | 22.6 | % | ||||||||||||||||||||||||||||||
| Loyalty programs | (319) | (369) | (358) | (345) | (298) | (21) | 7.0 | % | ||||||||||||||||||||||||||||||
| Other | 1,094 | 31 | 52 | 19 | 16 | 1,078 | NM | |||||||||||||||||||||||||||||||
| Total other income | 1,157 | 71 | 92 | 61 | 65 | 1,092 | NM | |||||||||||||||||||||||||||||||
| Other expense: | ||||||||||||||||||||||||||||||||||||||
| Employee costs | 496 | 538 | 444 | 451 | 451 | 45 | 10.0 | % | ||||||||||||||||||||||||||||||
| Professional fees | 220 | 228 | 219 | 209 | 186 | 34 | 18.3 | % | ||||||||||||||||||||||||||||||
| Marketing and business development | 125 | 138 | 125 | 133 | 131 | (6) | (4.6) | % | ||||||||||||||||||||||||||||||
| Information processing | 186 | 190 | 177 | 179 | 166 | 20 | 12.0 | % | ||||||||||||||||||||||||||||||
| Other | 179 | 222 | 189 | 197 | 185 | (6) | (3.2) | % | ||||||||||||||||||||||||||||||
| Total other expense | 1,206 | 1,316 | 1,154 | 1,169 | 1,119 | 87 | 7.8 | % | ||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 1,708 | 539 | 833 | 742 | 790 | 918 | 116.2 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | 415 | 99 | 205 | 173 | 189 | 226 | 119.6 | % | ||||||||||||||||||||||||||||||
| Net earnings | $ | 1,293 | $ | 440 | $ | 628 | $ | 569 | $ | 601 | $ | 692 | 115.1 | % | ||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 1,282 | $ | 429 | $ | 618 | $ | 559 | $ | 590 | $ | 692 | 117.3 | % | ||||||||||||||||||||||||
3
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| STATEMENTS OF FINANCIAL POSITION | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Mar 31, 2024 vs. Mar 31, 2023 | |||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 20,021 | $ | 14,259 | $ | 15,643 | $ | 12,706 | $ | 15,303 | $ | 4,718 | 30.8 | % | ||||||||||||||||||||||||
| Debt securities | 3,005 | 3,799 | 2,882 | 4,294 | 4,008 | (1,003) | (25.0) | % | ||||||||||||||||||||||||||||||
| Loan receivables: | ||||||||||||||||||||||||||||||||||||||
| Unsecuritized loans held for investment | 81,642 | 81,554 | 78,470 | 75,532 | 72,079 | 9,563 | 13.3 | % | ||||||||||||||||||||||||||||||
| Restricted loans of consolidated securitization entities | 20,091 | 21,434 | 19,403 | 19,269 | 19,050 | 1,041 | 5.5 | % | ||||||||||||||||||||||||||||||
| Total loan receivables | 101,733 | 102,988 | 97,873 | 94,801 | 91,129 | 10,604 | 11.6 | % | ||||||||||||||||||||||||||||||
| Less: Allowance for credit losses | (10,905) | (10,571) | (10,176) | (9,804) | (9,517) | (1,388) | 14.6 | % | ||||||||||||||||||||||||||||||
| Loan receivables, net | 90,828 | 92,417 | 87,697 | 84,997 | 81,612 | 9,216 | 11.3 | % | ||||||||||||||||||||||||||||||
| Goodwill | 1,073 | 1,018 | 1,105 | 1,105 | 1,105 | (32) | (2.9) | % | ||||||||||||||||||||||||||||||
| Intangible assets, net | 800 | 815 | 680 | 717 | 768 | 32 | 4.2 | % | ||||||||||||||||||||||||||||||
| Other assets | 5,446 | 4,915 | 4,932 | 4,878 | 5,057 | 389 | 7.7 | % | ||||||||||||||||||||||||||||||
| Assets held for sale | — | 256 | — | — | — | — | NM | |||||||||||||||||||||||||||||||
| Total assets | $ | 121,173 | $ | 117,479 | $ | 112,939 | $ | 108,697 | $ | 107,853 | $ | 13,320 | 12.4 | % | ||||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 83,160 | $ | 80,789 | $ | 77,669 | $ | 75,344 | $ | 74,008 | $ | 9,152 | 12.4 | % | ||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 394 | 364 | 397 | 421 | 417 | (23) | (5.5) | % | ||||||||||||||||||||||||||||||
| Total deposits | 83,554 | 81,153 | 78,066 | 75,765 | 74,425 | 9,129 | 12.3 | % | ||||||||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 8,016 | 7,267 | 6,519 | 5,522 | 6,228 | 1,788 | 28.7 | % | ||||||||||||||||||||||||||||||
| Senior and Subordinated unsecured notes | 8,117 | 8,715 | 8,712 | 8,709 | 8,706 | (589) | (6.8) | % | ||||||||||||||||||||||||||||||
| Total borrowings | 16,133 | 15,982 | 15,231 | 14,231 | 14,934 | 1,199 | 8.0 | % | ||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 6,204 | 6,334 | 5,875 | 5,321 | 5,301 | 903 | 17.0 | % | ||||||||||||||||||||||||||||||
| Liabilities held for sale | — | 107 | — | — | — | — | NM | |||||||||||||||||||||||||||||||
| Total liabilities | 105,891 | 103,576 | 99,172 | 95,317 | 94,660 | 11,231 | 11.9 | % | ||||||||||||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||||||||||||||
| Preferred stock | 1,222 | 734 | 734 | 734 | 734 | 488 | 66.5 | % | ||||||||||||||||||||||||||||||
| Common stock | 1 | 1 | 1 | 1 | 1 | — | — | % | ||||||||||||||||||||||||||||||
| Additional paid-in capital | 9,768 | 9,775 | 9,750 | 9,727 | 9,705 | 63 | 0.6 | % | ||||||||||||||||||||||||||||||
| Retained earnings | 19,790 | 18,662 | 18,338 | 17,828 | 17,369 | 2,421 | 13.9 | % | ||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (69) | (68) | (96) | (96) | (102) | 33 | (32.4) | % | ||||||||||||||||||||||||||||||
| Treasury stock | (15,430) | (15,201) | (14,960) | (14,814) | (14,514) | (916) | 6.3 | % | ||||||||||||||||||||||||||||||
| Total equity | 15,282 | 13,903 | 13,767 | 13,380 | 13,193 | 2,089 | 15.8 | % | ||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 121,173 | $ | 117,479 | $ | 112,939 | $ | 108,697 | $ | 107,853 | $ | 13,320 | 12.4 | % | ||||||||||||||||||||||||
4
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Average | Interest | Average | Interest | Average | Interest | Average | Interest | Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning cash and equivalents | $ | 17,405 | $ | 236 | 5.45 | % | $ | 13,762 | $ | 188 | 5.42 | % | $ | 12,753 | $ | 172 | 5.35 | % | $ | 14,198 | $ | 178 | 5.03 | % | $ | 12,365 | $ | 140 | 4.59 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities available for sale | 3,432 | 39 | 4.57 | % | 3,895 | 38 | 3.87 | % | 3,706 | 31 | 3.32 | % | 3,948 | 31 | 3.15 | % | 4,772 | 30 | 2.55 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan receivables, including held for sale: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 94,216 | 5,096 | 21.75 | % | 93,744 | 5,162 | 21.85 | % | 90,587 | 5,003 | 21.91 | % | 87,199 | 4,679 | 21.52 | % | 85,904 | 4,497 | 21.23 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer installment loans | 4,734 | 149 | 12.66 | % | 3,875 | 116 | 11.88 | % | 3,656 | 108 | 11.72 | % | 3,359 | 94 | 11.22 | % | 3,103 | 83 | 10.85 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial credit products | 1,878 | 45 | 9.64 | % | 1,934 | 42 | 8.62 | % | 1,861 | 38 | 8.10 | % | 1,808 | 36 | 7.99 | % | 1,697 | 34 | 8.13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 129 | 3 | 9.35 | % | 130 | 3 | 9.16 | % | 126 | 2 | 6.30 | % | 123 | 3 | 9.78 | % | 111 | 2 | 7.31 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loan receivables, including held for sale | 100,957 | 5,293 | 21.09 | % | 99,683 | 5,323 | 21.19 | % | 96,230 | 5,151 | 21.24 | % | 92,489 | 4,812 | 20.87 | % | 90,815 | 4,616 | 20.61 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 121,794 | 5,568 | 18.39 | % | 117,340 | 5,549 | 18.76 | % | 112,689 | 5,354 | 18.85 | % | 110,635 | 5,021 | 18.20 | % | 107,952 | 4,786 | 17.98 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 944 | 886 | 964 | 976 | 1,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (10,677) | (10,243) | (9,847) | (9,540) | (9,262) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 6,973 | 6,616 | 6,529 | 6,330 | 6,128 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-earning assets | (2,760) | (2,741) | (2,354) | (2,234) | (2,110) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 119,034 | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 82,598 | $ | 954 | 4.65 | % | $ | 78,892 | $ | 878 | 4.42 | % | $ | 75,952 | $ | 800 | 4.18 | % | $ | 74,812 | $ | 717 | 3.84 | % | $ | 72,216 | $ | 557 | 3.13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 7,383 | 105 | 5.72 | % | 6,903 | 99 | 5.69 | % | 6,096 | 86 | 5.60 | % | 5,863 | 78 | 5.34 | % | 6,229 | 77 | 5.01 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior and Subordinated unsecured notes | 8,630 | 104 | 4.85 | % | 8,712 | 106 | 4.83 | % | 8,710 | 106 | 4.83 | % | 8,707 | 106 | 4.88 | % | 8,442 | 101 | 4.85 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 98,611 | 1,163 | 4.74 | % | 94,507 | 1,083 | 4.55 | % | 90,758 | 992 | 4.34 | % | 89,382 | 901 | 4.04 | % | 86,887 | 735 | 3.43 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 390 | 379 | 401 | 420 | 411 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 5,419 | 5,652 | 5,418 | 5,164 | 5,130 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-bearing liabilities | 5,809 | 6,031 | 5,819 | 5,584 | 5,541 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 104,420 | 100,538 | 96,577 | 94,966 | 92,428 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total equity | 14,614 | 14,061 | 13,758 | 13,435 | 13,414 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 119,034 | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,405 | $ | 4,466 | $ | 4,362 | $ | 4,120 | $ | 4,051 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate spread(1) | 13.64 | % | 14.22 | % | 14.51 | % | 14.16 | % | 14.55 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin(2) | 14.55 | % | 15.10 | % | 15.36 | % | 14.94 | % | 15.22 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Net interest margin represents net interest income divided by average interest-earning assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| BALANCE SHEET STATISTICS | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions, except per share statistics) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Mar 31, 2024 vs. Mar 31, 2023 | |||||||||||||||||||||||||||||||||
| BALANCE SHEET STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Total common equity | $ | 14,060 | $ | 13,169 | $ | 13,033 | $ | 12,646 | $ | 12,459 | $ | 1,601 | 12.9 | % | ||||||||||||||||||||||||
| Total common equity as a % of total assets | 11.60 | % | 11.21 | % | 11.54 | % | 11.63 | % | 11.55 | % | 0.05 | % | ||||||||||||||||||||||||||
| Tangible assets | $ | 119,300 | $ | 115,535 | $ | 111,154 | $ | 106,875 | $ | 105,980 | $ | 13,320 | 12.6 | % | ||||||||||||||||||||||||
Tangible common equity(1) | $ | 12,187 | $ | 11,225 | $ | 11,248 | $ | 10,824 | $ | 10,586 | $ | 1,601 | 15.1 | % | ||||||||||||||||||||||||
Tangible common equity as a % of tangible assets(1) | 10.22 | % | 9.72 | % | 10.12 | % | 10.13 | % | 9.99 | % | 0.23 | % | ||||||||||||||||||||||||||
Tangible common equity per share(1) | $ | 30.36 | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | $ | 5.65 | 22.9 | % | ||||||||||||||||||||||||
REGULATORY CAPITAL RATIOS(2)(3) | ||||||||||||||||||||||||||||||||||||||
| Basel III - CECL Transition | ||||||||||||||||||||||||||||||||||||||
Total risk-based capital ratio(4) | 15.8 | % | 14.9 | % | 15.7 | % | 15.7 | % | 15.9 | % | ||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio(5) | 13.8 | % | 12.9 | % | 13.6 | % | 13.6 | % | 13.8 | % | ||||||||||||||||||||||||||||
Tier 1 leverage ratio(6) | 12.0 | % | 11.7 | % | 12.2 | % | 12.0 | % | 12.1 | % | ||||||||||||||||||||||||||||
| Common equity Tier 1 capital ratio | 12.6 | % | 12.2 | % | 12.8 | % | 12.8 | % | 13.0 | % | ||||||||||||||||||||||||||||
| (1) Tangible common equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure of the net asset value of the Company to investors. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures. | ||||||||||||||||||||||||||||||||||||||
| (2) Regulatory capital ratios at March 31, 2024 are preliminary and therefore subject to change. | ||||||||||||||||||||||||||||||||||||||
| (3) Capital ratios reflect the phase-in of an estimate of CECL’s effect on regulatory capital over a three-year transitional period beginning in the first quarter of 2022 through 2024. Capital ratios for 2024 and 2023 reflect 75% and 50%, respectively, of the phase-in of CECL effects. | ||||||||||||||||||||||||||||||||||||||
| (4) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets. | ||||||||||||||||||||||||||||||||||||||
| (5) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets. | ||||||||||||||||||||||||||||||||||||||
| (6) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments. | ||||||||||||||||||||||||||||||||||||||
6
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| PLATFORM RESULTS | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | 1Q'24 vs. 1Q'23 | |||||||||||||||||||||||||||||||||
| HOME & AUTO | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 10,512 | $ | 11,421 | $ | 12,273 | $ | 12,853 | $ | 10,863 | $ | (351) | (3.2) | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 32,615 | $ | 31,969 | $ | 31,648 | $ | 30,926 | $ | 29,733 | $ | 2,882 | 9.7 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 31,865 | $ | 31,720 | $ | 31,239 | $ | 30,210 | $ | 29,690 | $ | 2,175 | 7.3 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 18,969 | 19,177 | 19,223 | 18,935 | 18,521 | 448 | 2.4 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,382 | $ | 1,403 | $ | 1,367 | $ | 1,275 | $ | 1,225 | $ | 157 | 12.8 | % | ||||||||||||||||||||||||
| Other income | $ | 33 | $ | 26 | $ | 28 | $ | 27 | $ | 25 | $ | 8 | 32.0 | % | ||||||||||||||||||||||||
| DIGITAL | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 12,628 | $ | 15,510 | $ | 13,808 | $ | 13,472 | $ | 12,261 | $ | 367 | 3.0 | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 27,734 | $ | 28,925 | $ | 26,685 | $ | 25,758 | $ | 24,944 | $ | 2,790 | 11.2 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 28,081 | $ | 27,553 | $ | 26,266 | $ | 25,189 | $ | 24,982 | $ | 3,099 | 12.4 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 21,349 | 21,177 | 20,768 | 20,559 | 20,564 | 785 | 3.8 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,567 | $ | 1,579 | $ | 1,530 | $ | 1,422 | $ | 1,363 | $ | 204 | 15.0 | % | ||||||||||||||||||||||||
| Other income | $ | 6 | $ | (7) | $ | (6) | $ | (2) | $ | 1 | $ | 5 | NM | |||||||||||||||||||||||||
| DIVERSIFIED & VALUE | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 14,023 | $ | 16,987 | $ | 15,445 | $ | 15,356 | $ | 13,439 | $ | 584 | 4.3 | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 19,559 | $ | 20,666 | $ | 18,865 | $ | 18,329 | $ | 17,702 | $ | 1,857 | 10.5 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 19,593 | $ | 19,422 | $ | 18,565 | $ | 17,935 | $ | 17,713 | $ | 1,880 | 10.6 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 21,032 | 21,038 | 20,410 | 20,346 | 20,807 | 225 | 1.1 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,214 | $ | 1,204 | $ | 1,168 | $ | 1,091 | $ | 1,070 | $ | 144 | 13.5 | % | ||||||||||||||||||||||||
| Other income | $ | (17) | $ | (30) | $ | (28) | $ | (21) | $ | (14) | $ | (3) | 21.4 | % | ||||||||||||||||||||||||
| HEALTH & WELLNESS | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 3,980 | $ | 3,870 | $ | 3,990 | $ | 4,015 | $ | 3,690 | $ | 290 | 7.9 | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 15,065 | $ | 14,521 | $ | 14,019 | $ | 13,327 | $ | 12,581 | $ | 2,484 | 19.7 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 14,697 | $ | 14,251 | $ | 13,600 | $ | 12,859 | $ | 12,309 | $ | 2,388 | 19.4 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 7,611 | 7,447 | 7,276 | 7,063 | 6,887 | 724 | 10.5 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 869 | $ | 866 | $ | 844 | $ | 786 | $ | 735 | $ | 134 | 18.2 | % | ||||||||||||||||||||||||
| Other income | $ | 66 | $ | 82 | $ | 74 | $ | 54 | $ | 61 | $ | 5 | 8.2 | % | ||||||||||||||||||||||||
| LIFESTYLE | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 1,244 | $ | 1,550 | $ | 1,490 | $ | 1,580 | $ | 1,302 | $ | (58) | (4.5) | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 6,604 | $ | 6,744 | $ | 6,483 | $ | 6,280 | $ | 5,971 | $ | 633 | 10.6 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 6,631 | $ | 6,568 | $ | 6,383 | $ | 6,106 | $ | 5,919 | $ | 712 | 12.0 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 2,642 | 2,620 | 2,556 | 2,529 | 2,611 | 31 | 1.2 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 255 | $ | 255 | $ | 249 | $ | 232 | $ | 223 | $ | 32 | 14.3 | % | ||||||||||||||||||||||||
| Other income | $ | 8 | $ | 7 | $ | 8 | $ | 7 | $ | 7 | $ | 1 | 14.3 | % | ||||||||||||||||||||||||
| CORP, OTHER | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | — | $ | 1 | $ | — | $ | — | $ | 2 | $ | (2) | (100.0) | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 156 | $ | 163 | $ | 173 | $ | 181 | $ | 198 | $ | (42) | (21.2) | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 90 | $ | 169 | $ | 177 | $ | 190 | $ | 202 | $ | (112) | (55.4) | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 64 | 67 | 75 | 85 | 104 | (40) | (38.5) | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 6 | $ | 16 | $ | (7) | $ | 6 | $ | — | $ | 6 | NM | |||||||||||||||||||||||||
| Other income | $ | 1,061 | $ | (7) | $ | 16 | $ | (4) | $ | (15) | $ | 1,076 | NM | |||||||||||||||||||||||||
| TOTAL SYF | ||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 42,387 | $ | 49,339 | $ | 47,006 | $ | 47,276 | $ | 41,557 | $ | 830 | 2.0 | % | ||||||||||||||||||||||||
| Period-end loan receivables | $ | 101,733 | $ | 102,988 | $ | 97,873 | $ | 94,801 | $ | 91,129 | $ | 10,604 | 11.6 | % | ||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 100,957 | $ | 99,683 | $ | 96,230 | $ | 92,489 | $ | 90,815 | $ | 10,142 | 11.2 | % | ||||||||||||||||||||||||
Average active accounts (in thousands)(2) | 71,667 | 71,526 | 70,308 | 69,517 | 69,494 | 2,173 | 3.1 | % | ||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 5,293 | $ | 5,323 | $ | 5,151 | $ | 4,812 | $ | 4,616 | $ | 677 | 14.7 | % | ||||||||||||||||||||||||
| Other income | $ | 1,157 | $ | 71 | $ | 92 | $ | 61 | $ | 65 | $ | 1,092 | NM | |||||||||||||||||||||||||
| (1) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period. | ||||||||||||||||||||||||||||||||||||||
| (2) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. | ||||||||||||||||||||||||||||||||||||||
7
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1) | |||||||||||||||||||||||||||||
| (unaudited, $ in millions, except per share statistics) | |||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | |||||||||||||||||||||||||
COMMON EQUITY AND REGULATORY CAPITAL MEASURES(2) | |||||||||||||||||||||||||||||
| GAAP Total equity | $ | 15,282 | $ | 13,903 | $ | 13,767 | $ | 13,380 | $ | 13,193 | |||||||||||||||||||
| Less: Preferred stock | (1,222) | (734) | (734) | (734) | (734) | ||||||||||||||||||||||||
| Less: Goodwill | (1,073) | (1,105) | (1,105) | (1,105) | (1,105) | ||||||||||||||||||||||||
| Less: Intangible assets, net | (800) | (839) | (680) | (717) | (768) | ||||||||||||||||||||||||
| Tangible common equity | $ | 12,187 | $ | 11,225 | $ | 11,248 | $ | 10,824 | $ | 10,586 | |||||||||||||||||||
| Add: CECL transition amount | 573 | 1,146 | 1,146 | 1,146 | 1,146 | ||||||||||||||||||||||||
| Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss) | 225 | 229 | 255 | 255 | 258 | ||||||||||||||||||||||||
| Common equity Tier 1 | $ | 12,985 | $ | 12,600 | $ | 12,649 | $ | 12,225 | $ | 11,990 | |||||||||||||||||||
| Preferred stock | 1,222 | 734 | 734 | 734 | 734 | ||||||||||||||||||||||||
| Tier 1 capital | $ | 14,207 | $ | 13,334 | $ | 13,383 | $ | 12,959 | $ | 12,724 | |||||||||||||||||||
| Add: Subordinated debt | 741 | 741 | 741 | 741 | 740 | ||||||||||||||||||||||||
| Add: Allowance for credit losses includible in risk-based capital | 1,399 | 1,389 | 1,322 | 1,282 | 1,239 | ||||||||||||||||||||||||
| Total Risk-based capital | $ | 16,347 | $ | 15,464 | $ | 15,446 | $ | 14,982 | $ | 14,703 | |||||||||||||||||||
ASSET MEASURES(2) | |||||||||||||||||||||||||||||
| Total average assets | $ | 119,034 | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | |||||||||||||||||||
| Adjustments for: | |||||||||||||||||||||||||||||
| Add: CECL transition amount | 573 | 1,146 | 1,146 | 1,146 | 1,146 | ||||||||||||||||||||||||
| Less: Disallowed goodwill and other disallowed intangible assets (net of related deferred tax liabilities) and other | (1,631) | (1,671) | (1,507) | (1,537) | (1,564) | ||||||||||||||||||||||||
| Total assets for leverage purposes | $ | 117,976 | $ | 114,074 | $ | 109,974 | $ | 108,010 | $ | 105,424 | |||||||||||||||||||
| Risk-weighted assets | $ | 103,242 | $ | 103,460 | $ | 98,451 | $ | 95,546 | $ | 92,379 | |||||||||||||||||||
| CECL FULLY PHASED-IN CAPITAL MEASURES | |||||||||||||||||||||||||||||
| Tier 1 capital | $ | 14,207 | $ | 13,334 | $ | 13,383 | $ | 12,959 | $ | 12,724 | |||||||||||||||||||
| Less: CECL transition adjustment | (573) | (1,146) | (1,146) | (1,146) | (1,146) | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) | $ | 13,634 | $ | 12,188 | $ | 12,237 | $ | 11,813 | $ | 11,578 | |||||||||||||||||||
| Add: Allowance for credit losses | 10,905 | 10,571 | 10,176 | 9,804 | 9,517 | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) + Reserves for credit losses | $ | 24,539 | $ | 22,759 | $ | 22,413 | $ | 21,617 | $ | 21,095 | |||||||||||||||||||
| Risk-weighted assets | $ | 103,242 | $ | 103,460 | $ | 98,451 | $ | 95,546 | $ | 92,379 | |||||||||||||||||||
| Less: CECL transition adjustment | (290) | (580) | (580) | (580) | (580) | ||||||||||||||||||||||||
| Risk-weighted assets (CECL fully phased-in) | $ | 102,952 | $ | 102,880 | $ | 97,871 | $ | 94,966 | $ | 91,799 | |||||||||||||||||||
| TANGIBLE COMMON EQUITY PER SHARE | |||||||||||||||||||||||||||||
| GAAP book value per share | $ | 35.03 | $ | 32.36 | $ | 31.50 | $ | 30.25 | $ | 29.08 | |||||||||||||||||||
| Less: Goodwill | (2.68) | (2.72) | (2.67) | (2.65) | (2.58) | ||||||||||||||||||||||||
| Less: Intangible assets, net | (1.99) | (2.05) | (1.65) | (1.71) | (1.79) | ||||||||||||||||||||||||
| Tangible common equity per share | $ | 30.36 | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | |||||||||||||||||||
| (1) Regulatory measures at March 31, 2024 are preliminary and therefore subject to change. | |||||||||||||||||||||||||||||
| (2) Capital ratios reflect the phase-in of an estimate of CECL’s effect on regulatory capital over a three-year transitional period beginning in the first quarter of 2022 through 2024. Capital ratios for 2024 and 2023 reflect 75% and 50%, respectively, of the phase-in of CECL effects. | |||||||||||||||||||||||||||||
8
| SYNCHRONY FINANCIAL | ||||||||
| RECONCILIATION OF NON-GAAP MEASURES (Continued) | ||||||||
| (unaudited, $ in millions, except per share statistics) | ||||||||
| ADJUSTED FINANCIAL MEASURES | Quarter Ended | |||||||
| Mar 31, 2024 | ||||||||
| Net revenue: | ||||||||
| Net revenue | $ | 4,798 | ||||||
| Less: Pets Best pre-tax gain on sale included in Other income | (1,069) | |||||||
| Adjusted Net revenue | $ | 3,729 | ||||||
| Net earnings: | ||||||||
| Net earnings | $ | 1,293 | ||||||
| Less: Pets Best gain on sale after-tax | (802) | |||||||
| Adjusted Net earnings | $ | 491 | ||||||
| Preferred dividends | (11) | |||||||
| Adjusted Net earnings available to common stockholders | $ | 480 | ||||||
| Diluted earnings per share: | ||||||||
| Diluted earnings per share | $ | 3.14 | ||||||
| Less: Pets Best gain on sale impact | (1.96) | |||||||
| Adjusted Diluted earnings per share | $ | 1.18 | ||||||
| Return on assets: | ||||||||
Return on assets(1) | 4.4 | % | ||||||
| Less: Pets Best gain on sale impact | (2.7) | % | ||||||
| Adjusted Return on assets | 1.7 | % | ||||||
| Return on equity: | ||||||||
Return on equity(2) | 35.6 | % | ||||||
| Less: Pets Best gain on sale impact | (21.8) | % | ||||||
| Adjusted Return on equity | 13.8 | % | ||||||
| Return on tangible common equity: | ||||||||
Return on tangible common equity(3) | 43.6 | % | ||||||
| Less: Pets Best gain on sale impact | (26.8) | % | ||||||
| Adjusted Return on tangible common equity | 16.8 | % | ||||||
| Efficiency ratio: | ||||||||
Efficiency Ratio(4) | 25.1 | % | ||||||
| Less: Pets Best gain on sale impact | 7.2 | % | ||||||
| Adjusted Efficiency ratio | 32.3 | % | ||||||
| (1) Return on assets represents net earnings as a percentage of average total assets. | ||||||||
| (2) Return on equity represents net earnings as a percentage of average total equity. | ||||||||
| (3) Return on tangible common equity represents net earnings available to common stockholders as a percentage of average tangible common equity. Tangible common equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures. | ||||||||
| (4) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, plus other income, less retailer share arrangements. | ||||||||
9
1Q'24 FINANCIAL RESULTS April 24, 2024 Exhibit 99.3
2 Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For additional information, see the earnings release and financial supplement included as exhibits to our Current Report on Form 8-K filed today and available on our website (www.synchronyfinancial.com) and the SEC's website (www.sec.gov). All references to net earnings and net income are intended to have the same meaning. All comparisons are for the first quarter of 2024 compared to the first quarter of 2023, unless otherwise noted. This presentation contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "targets," "outlook," "estimates," "will," "should," "may," “aim” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of partners, and promotion and support of our products by our partners; cyber-attacks or other security incidents or breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; the Consumer Financial Protection Bureau’s (the “CFPB”) final rule on credit card late fees; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions, dispositions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third-parties to provide various services that are important to our operations; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and other legislative and regulatory developments and the impact of the CFPB regulation of our business, including new requirements and constraints the Company and the Bank will become subject to as a result of having $100 billion or more in total assets; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit the Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws. For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this presentation and in our public filings, including under the headings “Risk Factors Relating to Our Business” and “Risk Factors Relating to Regulation” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 8, 2024. You should not consider any list of such factors to be an exhaustive statement of all the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law. Disclaimers
3 25.1% EFFICIENCY RATIO compared to 35.0% Excluding the Pets Best gain on sale, 1Q’24 Adjusted Efficiency ratio of 32.3%* $3.14 DILUTED EPS compared to $1.35 Excluding the Pets Best gain on sale, 1Q’24 Adjusted Diluted EPS of $1.18,* which includes a reserve build for the Ally Lending acquisition of $190 million or $(0.35) per Diluted Share 14.55% NET INTEREST MARGIN compared to 15.22% 12.6% CET1 liquid assets of $21.9 billion, 18.1% of total assets SUMMARY FINANCIAL METRICS CAPITAL 1Q'24 Financial Highlights $101.7 billion LOAN RECEIVABLES compared to $91.1 billion $83.6 billion DEPOSITS 84% of current funding 6.31% NET CHARGE-OFFS compared to 4.49% 71.7 million AVERAGE ACTIVE ACCOUNTS compared to 69.5 million $402 million CAPITAL RETURNED $300 million share repurchases * Adjusted Diluted EPS and Adjusted Efficiency ratio are non-GAAP measures, see non-GAAP reconciliation in appendix.
4 Delivering Consistent Returns Over Time NCOs/ALR(b) Prime & Super Prime/EOP(a)(b) 63% 72% 72% 74% 74% 72% 78% 73% RSA/Purchase Volume(b) 1.09% 1.83% 2.53% 2.41% 2.23% 2.58% 2.73% 1.98% RAR* RSA/ALR(b) LONG-TERM TARGETS: ~2.5+% ROA ~28+% ROTCE * Risk-adjusted return (“RAR”) represents Total interest income (Interest and fees on loans plus Interest on cash and debt securities) less interest expense, RSA and NCOs, stated as a percentage of average loan receivables. GFC CARD Act Took Effect Credit Normalization COVID-19 Pandemic (c)
5 12% 8% Dual Card / Co-Brand BUSINESS EXPANSION CONSUMER PERFORMANCE (8)% (1)% New accounts Average balance per account (c) (e) GROWTH METRICS 2% 3% Purchase volume Average active accounts Loan receivables $22.1 Dual Card / Co-Brand in millions $17.0 6%$18.0 $ billions $26.3 $ billions 1Q'24 Business Highlights 19% Purchase volume per account (a) (a) (d) (b) ©2024 Fortune Media IP Limited. All rights reserved. Used under license. Ranked #5 “Best Companies to Work For”
6 B/(W) $ in millions, except per share statistics 1Q'24 1Q'23 $ % Total interest income $5,568 $4,786 $782 16% Total interest expense 1,163 735 (428) (58)% Net interest income (NII) 4,405 4,051 354 9% Retailer share arrangements (RSA) (764) (917) 153 17% Provision for credit losses 1,884 1,290 (594) (46)% Other income 1,157 65 1,092 NM Other expense 1,206 1,119 (87) (8)% Pre-tax earnings 1,708 790 918 116% Provision for income taxes 415 189 (226) (120)% Net earnings 1,293 601 692 115% Preferred dividends 11 11 — NM Net earnings available to common stockholders $1,282 $590 $692 117% Diluted earnings per share $3.14 $1.35 $1.79 133% Summary earnings statement Financial Results 1Q'24 Highlights Net earnings of $1.3 billion or $3.14 per Diluted Share; excluding the Pets Best gain on sale, Adjusted Net earnings of $491 million or $1.18 per Diluted Share,* which includes a reserve build for the Ally Lending acquisition of $190 million or $(0.35) per Diluted Share – Other income includes $1.1 billion related to Pets Best gain on sale; $802 million after-tax or $1.96 EPS impact • Net interest income up 9% – Interest and fees on loans up 15% driven primarily by growth in average loan receivables, lower payment rate and higher benchmark rates – Interest expense increase attributed to higher benchmark rates and higher funding liabilities • Retailer share arrangements decreased (17)% – Decrease driven by higher net charge-offs partially offset by higher net interest income • Provision for credit losses up 46% – Higher provision driven by higher net charge-offs – Includes $190 million reserve build related to the Ally Lending acquisition • Total Other expense up 8% – Increase primarily driven by growth related items and technology investments * Adjusted Net earnings and Adjusted Diluted EPS are non-GAAP measures, see non-GAAP reconciliation in appendix.
7 11%20%10%11%10% 1Q'24 Platform Results Home & Auto Digital Diversified & Value Health & Wellness Lifestyle 1Q'23 1Q'24 V% $10.9 $10.5 (3)% 18.5 19.0 2% $1,225 $1,382 13% 1Q'23 1Q'24 V% $12.3 $12.6 3% 20.6 21.3 4% $1,363 $1,567 15% 1Q'23 1Q'24 V% $13.4 $14.0 4% 20.8 21.0 1% $1,070 $1,214 13% 1Q'23 1Q'24 V% $3.7 $4.0 8% 6.9 7.6 11% $735 $869 18% (a) Loan receivables Purchase volume Accounts Interest & fees on loans 1Q'23 1Q'24 V% $1.3 $1.2 (4)% 2.6 2.6 1% $223 $255 14%
8 Net revenue $ in millions Net Revenue 1Q'23 Net revenue $3,199 Interest and fees on loans $677 Interest on cash and debt securities $105 Total interest expense $(428) Net interest income change $354 Retailer share arrangements $153 Total other income $1,092 1Q'24 Net revenue $4,798 1Q'24 Highlights (a) (b) Payment Rate Trends Net revenue $ in millions • Net revenue increased $1.6 billion, or 50% – Net interest income increased $354 million, or 9%, driven primarily by higher interest & fees on loans – Loan receivables yield of 21.09%, up 48 bps driven by lower payment rate and higher benchmark rates – Total interest-bearing liabilities cost of 4.74%, up 131 bps driven by higher benchmark rates – Retailer share arrangements decreased $153 million driven by higher net charge-offs partially offset by higher net interest income – Other income includes a $1,069 million gain on sale of Pets Best Includes Pets Best gain on sale of $1,069 50% $4,798 (b) $3,199 (c) $65
9 • Total Other expense up 8% – Increase primarily driven by growth related items, technology investments, and includes transaction related activity and other notable expenses totaling $10 million (see appendix for details) – Employee cost increase primarily attributable to an increase in headcount driven by growth – Professional fees and information processing increase primarily driven by technology investments • Efficiency ratio 25.1% vs. 35.0% prior year – Decrease in ratio driven by Pets Best gain on sale and higher revenue partially offset by higher expenses – Excluding the impacts of Pets Best gain on sale, 1Q’24 efficiency ratio would have been 32.3%* B/(W) 1Q'23 1Q'24 V$ V% Employee costs $451 $496 $(45) (10)% Professional fees $186 $220 $(34) (18)% Marketing/BD $131 $125 $6 5% Information processing $166 $186 $(20) (12)% Other $185 $179 $6 3% Other expense $1,119 $1,206 $(87) (8)% Efficiency(a) 35.0% 25.1% 9.9 pts. Other Expense Other Expense $ in millions 1Q'24 Highlights8% * Adjusted Efficiency ratio is a non-GAAP measure, see non-GAAP reconciliation in appendix.
10 Asset Quality Metrics Allowance for credit losses $ in millions, % of period-end loan receivables Net charge-offs $ in millions, % of average loan receivables including held for sale 30+ days past due $ in millions, % of period-end loan receivables 90+ days past due $ in millions, % of period-end loan receivables (a)(b)
11 Delinquency Trends Basis point change versus prior year DQ % Rate Y/Y Change 30+ days past due % of period-end loan receivables (left axis); rate change versus prior year in basis points (right axis) 90+ days past due % of period-end loan receivables (left axis); rate change versus prior year in basis points (right axis) 3.81% 3.84% 4.40% 4.74% 4.74% +103 +110 +112 +109 +93 bps (200) bps 0 bps +200 bps 0.0% 2.5% 5.0% 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 0 bps 1.87% 1.77% 2.06% 2.28% 2.42% +57 +55 +63 +59 +55 bps (100) bps 0 bps +100 bps 0.0% 1.3% 2.5% 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 Basis point change versus prior year 0 bps
12 CET1% Walk Tier 1 Capital + Credit Loss Reserve Ratio* Capital ratios Funding, Capital and Liquidity Funding sources $ in billions % 8% 8% CET1 Capital Ratio Tier 1 Capital Ratio Total Capital Ratio * The “Tier 1 Capital + Credit Loss Reserve Ratio” is the sum of our “Tier 1 Capital” and “Allowance for Credit Losses,” divided by our “Total Risk-Weighted Assets”. Tier 1 Capital and Risk-Weighted Assets are adjusted to reflect the fully phased-in impact of CECL. These adjusted metrics are non-GAAP measures, see non-GAAP reconciliation in appendix. Unsecured Securitization Deposits Liquid assets $18.7 $21.9 Undrawn credit facilities $3.0 $3.0 Total $21.7 $24.9 % of Total assets 20.2% 20.5% (a) (b) 84% 1Q'23 CET1% 13.0% Net Earnings 2.5% Risk Weighted Asset changes (1.3)% Common & Preferred dividends (0.5)% Share repurchases (1.1)% CECL transition provisions (0.5)% Other activity, net 0.1% Pets Best disposition & Ally Lending acquisition 0.4% 1Q'24 CET1% 12.6%
13 2024 Business Trends 1Q’24 Performance • Receivables growth consistent with expectations; payment rate slightly lower than expectations and purchase volume below our expectations, especially in larger ticket items • Net interest income growth higher than expectations due to lower than expected payment rate and lower than expected deposit betas • Credit, RSA and other expense largely in-line with expectations Quarterly Trends • Continue to expect: – typical seasonality in purchase volume, loan receivables and net interest income – typical seasonality in credit performance – NCO’s to peak mid-year – Reserve coverage at year-end to be lower than ‘23 year-end rate – RSA to align to program performance and function as designed Implications of Late Fee Rule & Implementation of Product, Policy & Pricing Changes • Have commenced implementation of product, policy and pricing changes (or “PPPC”); majority will be completed over the next 2-3 months • Expect to evaluate impacts of PPPC as changes go into effect, likely 2H’24 • Continued uncertainty with regard to timing of final Late Fee Rule implementation Financial Implications • Changes to prior assumptions regarding timing of Late Fee Rule implementation, and/or consumer behavior changes in response to PPPC, could impact prior EPS expectations
14 Footnotes All amounts and metrics included in this presentation are as of, or for the three months ended, March 31, 2024, unless otherwise stated. Delivering Consistent Returns Over Time a. Classification of Prime & Super Prime refers to VantageScore credit scores of 651 or higher for 2019-2023 and FICO scores of 661 or higher for periods prior to 2019. b. RSA/ALR refers to Retailer share arrangements as a percentage of Average loan receivables; NCO/ALR refers to Net charge-offs as a percentage of Average loan receivables; Prime & Super Prime/EOP refers to Prime & Super Prime Loan receivables as a percentage of total period-end Loan receivables; RSA/Purchase volume refers to Retailer share arrangements as a percentage of Purchase volume. c. Data is presented on a managed-basis for 2009. See non-GAAP reconciliation in appendix. 1Q'24 Business Highlights a. Dual Card / Co-Brand metrics are consumer only and include in-partner and out-of-partner activity. b. Average active accounts are credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. c. New accounts represent accounts that were approved in the respective period, in millions. d. Purchase volume per account is calculated as total Purchase volume divided by Average active accounts, in $. e. Average balance per account is calculated as the Average loan receivables divided by Average active accounts, in $. Platform Results a. Accounts represent Average active accounts in millions. Loan receivables $ in billions, Purchase volume $ in billions and Interest and fees on loans $ in millions. Net Revenue: a. Payment rate is calculated as customer payments divided by beginning of period loan receivables. b. Historical payment rate excludes portfolios sold in 2019 and 2022. c. 1Q’24 payment rate excludes the impact of Ally Lending acquisition. Other Expense a. Efficiency ratio is calculated as Total Other expense divided by sum of Net interest income plus Other income less Retailer share arrangements (RSA). Asset Quality: a. Allowance for credit losses reflects the adoption of ASU 2022-22, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” on January 1, 2023, which included a $294 million reduction to the allowance for credit losses upon adoption. b. 1Q’24 Allowance for credit losses includes impact of Ally Lending acquisition. Funding, Capital and Liquidity a. Excludes available borrowing capacity related to unencumbered assets. b. Capital ratios reflect the phase-in of an estimate of CECL’s effect on regulatory capital over a three-year transitional period beginning in the first quarter of 2022, with effects fully phased-in beginning in the first quarter of 2025. CET1, Tier 1, and Total Capital Ratio are presented on a Transition basis and capital ratios for 2024 and 2023 reflect 75% and 50%, respectively, of the phase-in of CECL effects.
16 Transaction related activity and other notable items The following table sets forth transaction related activity and notable other expense items incurred during the quarter. Quarter Ended March 31, 2024 Transaction related activity Disposition of Pets Best: Other income - Pets Best gain on sale $1,069 Other expense - indirect sale-related expenses 3 Total $1,066 Ally Lending acquisition: Provision for loan losses - reserve build $190 Total $190 Notable Other expense items Total Other expenses: Prepatory expenses related to Late Fee rule change $7 Total $7 $ in millions
17 Non-GAAP Reconciliation* The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. $ in millions At March 31 Total 2023 2024 Tier 1 Capital $ 12,724 $ 14,207 Less: CECL transition adjustment (1,146) (573) Tier 1 capital (CECL fully phased-in) $ 11,578 $ 13,634 Add: Allowance for credit losses 9,517 10,905 Tier 1 capital (CECL fully phased-in) plus Reserves for credit losses $ 21,095 $ 24,539 Risk-weighted assets $ 92,379 $103,242 Less: CECL transition adjustment (580) (290) Risk-weighted assets (CECL fully phased-in) $ 91,799 $102,952 * Amounts at March 31, 2024 are preliminary and therefore subject to change.
18 Non-GAAP Reconciliation (Continued) The following table sets forth a reconciliation between GAAP results and non-GAAP adjusted results. Quarter Ended March 31, 2024 Net earnings: Net earnings $1,293 Less: Pets Best gain on sale after-tax (802) Adjusted Net earnings $491 Preferred dividends (11) Adjusted Net earnings available to common stockholders $480 Diluted earnings per share: Diluted earnings per share $3.14 Less: Pets Best gain on sale impact (1.96) Adjusted Diluted earnings per share $1.18 Efficiency ratio: Efficiency ratio 25.1% Less: Pets Best gain on sale impact 7.2% Adjusted Efficiency ratio 32.3% $ in millions
19 Non-GAAP Reconciliation (Continued) The following table sets forth a reconciliation between GAAP results and non-GAAP managed-basis results for 2009. Year Ended December 31, 2009 Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.26 % Securitization adjustments (0.59) % Managed basis 10.67 % Net interest income as a % of average loan receivables, including held for sale: GAAP 16.21 % Securitization adjustments 1.44 % Managed basis 17.65 % Retailer share arrangements as a % of average loan receivables, including held for sale: GAAP 3.40 % Securitization adjustments (1.80) % Managed basis 1.60 % Average loan receivables GAAP $23,485 Securitization adjustments 23,181 Managed basis $46,666 Period-end loan receivables GAAP $22,912 Securitization adjustments 23,964 Managed basis $46,876 $ in millions
Exhibit 99.4
Explanation of Non-GAAP Measures
The information provided in this Form 8-K and exhibits includes measures which are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
We present certain "adjusted" financial information and metrics in this Form 8-K and exhibits. Such measures have been adjusted to exclude the gain on sale recognized in our Condensed Consolidated Statement of Earnings in the first quarter of 2024 related to the disposition of Pets Best. These adjusted financial measures are not measures presented in accordance with GAAP. We believe the presentation of these adjusted financial measures is useful to investors as it provides more meaningful measures of the Company's ongoing performance. The reconciliation of these adjusted financial measures to the comparable GAAP component is included in Exhibit 99.3.
In addition, we also present certain capital measures in this Form 8-K and exhibits. Our “fully-phased Tier 1 Capital and Credit Loss Reserve Ratio” is not required by regulators to be disclosed, and therefore is considered a non-GAAP measure. We believe this ratio is a useful measure to investors as it provides a meaningful measure of what the Company’s total loss absorption capacity would be if the transitional rules currently in effect, which permit the temporary deferral of the regulatory capital effects of CECL, were no longer available for us to apply.
We also present a measure we refer to as “tangible common equity” in this Form 8-K and exhibits. Tangible common equity itself is not a measure presented in accordance with GAAP. We believe tangible common equity is a more meaningful measure to investors of the net asset value of the Company.
The reconciliations of these capital and equity related non-GAAP measures to the applicable comparable GAAP financial measures are included in the detailed financial tables included in Exhibit 99.2.