Document
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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
January 24, 2020
Date of Report
(Date of earliest event reported) 
 
 
SYNCHRONY FINANCIAL
(Exact name of registrant as specified in its charter) 
 
 
Delaware
 
001-36560
 
51-0483352
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
777 Long Ridge Road
 
 
Stamford,
Connecticut
 
06902
(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
Common stock, par value $0.001 per share
SYF
New York Stock Exchange
Depositary Shares Each Representing a 1/40th Interest in a Share of 5.625% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A
SYFPrA
New York Stock Exchange






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 January 24, 2020, Synchrony Financial (the “Company”) issued a press release setting forth the Company’s fourth quarter 2019 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
 
 
99.1
  
Press release, dated January 24, 2020, issued by Synchrony Financial
99.2
 
Financial Data Supplement of the Company for the quarter ended December 31, 2019
99.3
 
Financial Results Presentation of the Company for the quarter ended December 31, 2019
99.4
 
Explanation of Non-GAAP Measures
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: January 24, 2020
 
 
 
By:
 
/s/ Jonathan Mothner
 
 
 
 
Name:
 
Jonathan Mothner
 
 
 
 
Title:
 
Executive Vice President, General Counsel and Secretary






EXHIBIT INDEX
 
 
 
 
Number
  
Description
 
 
  
 
 
 
104
 
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL



Exhibit 99.1

syf-earningsreleasimage1a08.jpg
Investor Relations    Media Relations
Greg Ketron    Sue Bishop
(203) 585-6291    (203) 585-2802
For Immediate Release: January 24, 2020
Synchrony Financial Reports Fourth Quarter Net Earnings of $731 Million
or $1.15 Per Diluted Share
Includes Benefit from Walmart Portfolio Reserve Reduction of $0.05 Per Diluted Share
STAMFORD, Conn. – Synchrony Financial (NYSE: SYF) today announced fourth quarter 2019 net earnings of $731 million, or $1.15 per diluted share; this includes a $38 million pre-tax, $28 million after-tax, or $0.05 per diluted share benefit from a reduction in the reserve related to the sale of the Walmart consumer portfolio, which was completed in October. Highlights included*.
•
Loan receivables decreased 6% to $87.2 billion; loan receivables grew 5% on a Core** basis
•
Interest and fees on loans decreased 6% to $4.5 billion; interest and fees on loans increased 5% on a Core basis
•
Purchase volume was flat at $40.2 billion; purchase volume was up 7% on a Core basis
•
Average active accounts decreased 5% to 74 million; average active accounts grew 3% on a Core basis
•
Deposits grew $1.1 billion, or 2%, to $65.1 billion
•
Announced a new partnership with Verizon making Synchrony the exclusive issuer of Verizon’s co-branded consumer credit card which will be launched in the first half of this year
•
Established new Payment Solutions relationships: Mor Furniture for Less, Grand Home Furnishings, Travis Industries, and Leisure Pro
•
Renewed key Payment Solutions relationships: Rooms To Go, BuyMax Alliance, CFMOTO, and Continental Tires
•
CareCredit established a new relationship with Kaiser Permanente, bringing the number of health systems under contract to five, and renewed a key relationship with Demant
•
Paid quarterly common stock dividend of $0.22 per share and repurchased $1.4 billion of Synchrony Financial common stock
•
Issued $750 million of preferred stock

“2019 marked another year of significant transformation for Synchrony. During the year we renewed over 50 partnerships and won 30 new business deals, expanded our CareCredit, Auto and Home networks, significantly enhanced the digital experience for our cardholders, and substantially grew our direct-to-consumer deposit platform. The consistent investments we have made in people and technology have propelled our company forward and empowered leading offerings for our partners and enhanced capabilities and user experiences for our cardholders. Organic growth continues to present the largest opportunity as we have demonstrated in our ability to not only grow existing programs, but also launch new programs with fast-growing partners in new markets,” said Margaret Keane, Chief Executive Officer of Synchrony Financial. “Further, we remain focused on executing a capital allocation strategy that helps to drive growth at attractive risk adjusted returns, while maintaining a strong balance sheet and the ability to continue to return capital to shareholders.”

1

Business and Financial Highlights for the Fourth Quarter of 2019*
Earnings
•
Net interest income decreased $304 million, or 7%, to $4.0 billion, with the impact from the sale of the Walmart consumer portfolio offsetting loan receivables growth.
•
Retailer share arrangements increased $174 million, or 20%, to $1.0 billion, mainly driven by improved program performance and growth in loan receivables.
•
Provision for loan losses decreased $348 million, or 24%, to $1.1 billion, largely driven by a lower core reserve build and a reduction in net charge-offs.
•
Other income increased $40 million, or 63%, to $104 million, largely driven by lower loyalty program costs as a result of the sale of the Walmart consumer portfolio.
•
Other expense remained flat at $1.1 billion and included a restructuring charge of $21 million included in employee costs.
•
Net earnings totaled $731 million compared to $783 million last year.
Balance Sheet
•
Period-end loan receivables decreased 6%; On a Core basis, loan receivables increased 5%, purchase volume growth was 7%, and average active accounts increased 3%.
•
Deposits grew to $65.1 billion, up $1.1 billion, or 2%, and comprised 77% of funding.
•
The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $23.4 billion, or 22.3% of total assets.
•
The estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 14.1%, compared to 14.0%, reflecting the Company’s strong capital generation capabilities while deploying capital through organic growth, program acquisitions, and continued execution of our capital plans.
Key Financial Metrics
•
Return on assets was 2.7% and return on equity was 19.0%.
•
Net interest margin was 15.01%.
•
Efficiency ratio was 34.8%.
Credit Quality
•
Loans 30+ days past due as a percentage of total period-end loan receivables were 4.44% compared to 4.76% last year; excluding the PayPal Credit program and the Walmart portfolio, the rate was flat compared to last year.
•
Net charge-offs as a percentage of total average loan receivables were 5.15% compared to 5.54% last year; excluding the PayPal Credit program and the Walmart portfolio, the rate decreased approximately 15 basis points compared to last year.
•
The allowance for loan losses as a percentage of total period-end loan receivables was 6.42% compared to 6.90% last year.
Sales Platforms
•
Retail Card period-end loan receivables decreased 12%; period-end loan receivables increased 4% on a Core basis primarily driven by digital partners. Interest and fees on loans decreased 10%, purchase volume decreased 2%, and average active accounts decreased 7%, primarily driven by the sale of the Walmart consumer portfolio.

2

•
Payment Solutions period-end loan receivables grew 4%, which included the impact of the reclassification of the Yamaha portfolio to loan receivables held for sale; period-end loan receivables increased 7% on a Core basis led by home furnishings and home specialty. Interest and fees on loans increased 4%, primarily driven by the loan receivables growth. Purchase volume growth was 6% and average active accounts increased 3%.
•
CareCredit period-end loan receivables grew 8%, led by dental and veterinary. Interest and fees on loans increased 9%, primarily driven by the loan receivables growth. Purchase volume growth was 12% and average active accounts increased 5%.
* All comparisons are for the fourth quarter of 2019 compared to the fourth quarter of 2018, unless otherwise noted.
**Financial measures shown above on a Core basis are non-GAAP measures and exclude from both the prior year and the current year amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively. 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 and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed February 15, 2019, and the Company's forthcoming Annual Report on Form 10-K for the year ended December 31, 2019. 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 Information
On Friday, January 24, 2020, at 7:30 a.m. Eastern Time, Margaret Keane, Chief Executive Officer, Brian Doubles, President, and Brian Wenzel, 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.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 42019#, and can be accessed beginning approximately two hours after the event through February 7, 2020.
About Synchrony Financial
Synchrony (NYSE: SYF) is a premier consumer financial services company. We deliver a wide range of specialized financing programs, as well as innovative consumer banking products, across key industries including digital, retail, home, auto, travel, health and pet. Synchrony enables our partners to grow sales and loyalty with consumers. We are one of the largest issuers of private label credit cards in the United States; we also offer co-branded products, installment loans and consumer financing products for small- and medium-sized businesses, as well as healthcare providers.
Synchrony is changing what’s possible through our digital capabilities, deep industry expertise, actionable data insights, frictionless customer experience and customized financing solutions.
For more information, visit www.synchrony.com and Twitter: @Synchrony.


3


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" 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 Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; cyber-attacks or other security breaches; 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; 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, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; 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 and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; 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; damage to our reputation; 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; a material indemnification obligation to GE under the tax sharing and separation agreement with GE if we cause the split-off from GE or certain preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; 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 Consumer Financial Protection Bureau's regulation of our business; 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 Synchrony 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.

4

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" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed on February 15, 2019. 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 "tangible common equity" and certain “Core” financial measures that have been adjusted to exclude amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively, 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.


5
Exhibit 99.2


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL SUMMARY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited, in millions, except per share statistics)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
Twelve Months Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
4Q'19 vs. 4Q'18
 
Dec 31,
2019
 
Dec 31,
2018
 
YTD'19 vs. YTD'18
EARNINGS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
4,029

 
$
4,389

 
$
4,155

 
$
4,226

 
$
4,333

 
$
(304
)
(7.0
)%
 
$
16,799

 
$
16,118

 
$
681

4.2
 %
Retailer share arrangements
(1,029
)
 
(1,016
)
 
(859
)
 
(954
)
 
(855
)
 
(174
)
20.4
 %
 
(3,858
)
 
(3,099
)
 
(759
)
24.5
 %
Provision for loan losses
1,104

 
1,019

 
1,198

 
859

 
1,452

 
(348
)
(24.0
)%
 
4,180

 
5,545

 
(1,365
)
(24.6
)%
Net interest income, after retailer share arrangements and provision for loan losses
1,896

 
2,354

 
2,098

 
2,413

 
2,026

 
(130
)
(6.4
)%
 
8,761

 
7,474

 
1,287

17.2
 %
Other income
104

 
85

 
90

 
92

 
64

 
40

62.5
 %
 
371

 
265

 
106

40.0
 %
Other expense
1,079

 
1,064

 
1,059

 
1,043

 
1,078

 
1

0.1
 %
 
4,245

 
4,095

 
150

3.7
 %
Earnings before provision for income taxes
921

 
1,375

 
1,129

 
1,462

 
1,012

 
(91
)
(9.0
)%
 
4,887

 
3,644

 
1,243

34.1
 %
Provision for income taxes
190

 
319

 
276

 
355

 
229

 
(39
)
(17.0
)%
 
1,140

 
854

 
286

33.5
 %
Net earnings
$
731

 
$
1,056

 
$
853

 
$
1,107

 
$
783

 
$
(52
)
(6.6
)%
 
$
3,747

 
$
2,790

 
$
957

34.3
 %
Net earnings attributable to common stockholders
$
731

 
$
1,056

 
$
853

 
$
1,107

 
$
783

 
$
(52
)
(6.6
)%
 
$
3,747


$
2,790


$
957

34.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMMON SHARE STATISTICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
$
1.15

 
$
1.60

 
$
1.25

 
$
1.57

 
$
1.09

 
$
0.06

5.5
 %
 
$
5.59

 
$
3.76

 
$
1.83

48.7
 %
Diluted EPS
$
1.15

 
$
1.60

 
$
1.24

 
$
1.56

 
$
1.09

 
$
0.06

5.5
 %
 
$
5.56

 
$
3.74

 
$
1.82

48.7
 %
Dividend declared per share
$
0.22

 
$
0.22

 
$
0.21

 
$
0.21

 
$
0.21

 
$
0.01

4.8
 %
 
$
0.86

 
$
0.72

 
$
0.14

19.4
 %
Common stock price
$
36.01

 
$
34.09

 
$
34.67

 
$
31.90

 
$
23.46

 
$
12.55

53.5
 %
 
$
36.01

 
$
23.46

 
$
12.55

53.5
 %
Book value per share
$
23.31

 
$
23.13

 
$
22.03

 
$
21.35

 
$
20.42

 
$
2.89

14.2
 %
 
$
23.31

 
$
20.42

 
$
2.89

14.2
 %
Tangible common equity per share(1)
$
19.50

 
$
19.68

 
$
18.60

 
$
17.96

 
$
17.41

 
$
2.09

12.0
 %
 
$
19.50

 
$
17.41

 
$
2.09

12.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning common shares outstanding
653.7

 
668.9

 
688.8

 
718.8

 
718.7

 
(65.0
)
(9.0
)%
 
718.8

 
770.5

 
(51.7
)
(6.7
)%
Issuance of common shares
—

 
—

 
—

 
—

 
—

 
—

—
 %
 
—

 
—

 
—

—
 %
Stock-based compensation
0.6

 
0.4

 
1.2

 
0.9

 
0.1

 
0.5

NM

 
3.1

 
3.0

 
0.1

3.3
 %
Shares repurchased
(38.4
)
 
(15.6
)
 
(21.1
)
 
(30.9
)
 
—

 
(38.4
)
NM

 
(106.0
)
 
(54.7
)
 
(51.3
)
93.8
 %
Ending common shares outstanding
615.9

 
653.7

 
668.9

 
688.8

 
718.8

 
(102.9
)
(14.3
)%
 
615.9

 
718.8

 
(102.9
)
(14.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
633.7

 
658.3

 
683.6

 
706.3

 
718.7

 
(85.0
)
(11.8
)%
 
670.2

 
742.3

 
(72.1
)
(9.7
)%
Weighted average common shares outstanding (fully diluted)
637.7

 
661.7

 
686.5

 
708.9

 
720.9

 
(83.2
)
(11.5
)%
 
673.5

 
746.9

 
(73.4
)
(9.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, except account data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
 
Twelve Months Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
4Q'19 vs. 4Q'18
 
Dec 31,
2019
 
Dec 31,
2018
 
YTD'19 vs. YTD'18
PERFORMANCE METRICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on assets(1)
2.7
%
 
3.9
%
 
3.3
%
 
4.3
%
 
2.9
%
 


(0.2
)%
 
3.5
%
 
2.8
%
 


0.7
 %
Return on equity(2)
19.0
%
 
28.3
%
 
23.1
%
 
30.4
%
 
21.5
%
 


(2.5
)%
 
25.1
%
 
19.4
%
 


5.7
 %
Return on tangible common equity(3)
23.0
%
 
33.4
%
 
27.4
%
 
35.8
%
 
25.2
%
 


(2.2
)%
 
29.9
%
 
22.4
%
 


7.5
 %
Net interest margin(4)
15.01
%
 
16.29
%
 
15.75
%
 
16.08
%
 
16.06
%
 


(1.05
)%
 
15.78
%
 
15.97
%
 


(0.19
)%
Efficiency ratio(5)
34.8
%
 
30.8
%
 
31.3
%
 
31.0
%
 
30.4
%
 


4.4
 %
 
31.9
%
 
30.8
%
 


1.1
 %
Other expense as a % of average loan receivables, including held for sale
5.01
%
 
4.66
%
 
4.78
%
 
4.71
%
 
4.79
%
 


0.22
 %
 
4.79
%
 
4.92
%
 


(0.13
)%
Effective income tax rate
20.6
%
 
23.2
%
 
24.4
%
 
24.3
%
 
22.6
%
 


(2.0
)%
 
23.3
%
 
23.4
%
 


(0.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY METRICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs as a % of average loan receivables, including held for sale
5.15
%
 
5.35
%
 
6.01
%
 
6.06
%
 
5.54
%
 


(0.39
)%
 
5.65
%
 
5.63
%
 


0.02
 %
30+ days past due as a % of period-end loan receivables(6)
4.44
%
 
4.47
%
 
4.43
%
 
4.92
%
 
4.76
%
 


(0.32
)%
 
4.44
%
 
4.76
%
 


(0.32
)%
90+ days past due as a % of period-end loan receivables(6)
2.15
%
 
2.07
%
 
2.16
%
 
2.51
%
 
2.29
%
 


(0.14
)%
 
2.15
%
 
2.29
%
 


(0.14
)%
Net charge-offs
$
1,109

 
$
1,221

 
$
1,331

 
$
1,344

 
$
1,248

 
$
(139
)
(11.1
)%
 
$
5,005

 
$
4,692

 
$
313

6.7
 %
Loan receivables delinquent over 30 days(6)
$
3,874

 
$
3,723

 
$
3,625

 
$
3,957

 
$
4,430

 
$
(556
)
(12.6
)%
 
$
3,874

 
$
4,430

 
$
(556
)
(12.6
)%
Loan receivables delinquent over 90 days(6)
$
1,877

 
$
1,723

 
$
1,768

 
$
2,019

 
$
2,135

 
$
(258
)
(12.1
)%
 
$
1,877

 
$
2,135

 
$
(258
)
(12.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses (period-end)
$
5,602

 
$
5,607

 
$
5,809

 
$
5,942

 
$
6,427

 
$
(825
)
(12.8
)%
 
$
5,602

 
$
6,427

 
$
(825
)
(12.8
)%
Allowance coverage ratio(7)
6.42
%
 
6.74
%
 
7.10
%
 
7.39
%
 
6.90
%
 


(0.48
)%
 
6.42
%
 
6.90
%
 


(0.48
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BUSINESS METRICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume(8)(9)
$
40,212

 
$
38,395

 
$
38,291

 
$
32,513

 
$
40,320

 
$
(108
)
(0.3
)%
 
$
149,411

 
$
140,657

 
$
8,754

6.2
 %
Period-end loan receivables
$
87,215

 
$
83,207

 
$
81,796

 
$
80,405

 
$
93,139

 
$
(5,924
)
(6.4
)%
 
$
87,215

 
$
93,139

 
$
(5,924
)
(6.4
)%
Credit cards
$
84,606

 
$
79,788

 
$
78,446

 
$
77,251

 
$
89,994

 
$
(5,388
)
(6.0
)%
 
$
84,606

 
$
89,994

 
$
(5,388
)
(6.0
)%
Consumer installment loans
$
1,347

 
$
2,050

 
$
1,983

 
$
1,860

 
$
1,845

 
$
(498
)
(27.0
)%
 
$
1,347

 
$
1,845

 
$
(498
)
(27.0
)%
Commercial credit products
$
1,223

 
$
1,317

 
$
1,328

 
$
1,256

 
$
1,260

 
$
(37
)
(2.9
)%
 
$
1,223

 
$
1,260

 
$
(37
)
(2.9
)%
Other
$
39

 
$
52

 
$
39

 
$
38

 
$
40

 
$
(1
)
(2.5
)%
 
$
39

 
$
40

 
$
(1
)
(2.5
)%
Average loan receivables, including held for sale
$
85,376

 
$
90,556

 
$
88,792

 
$
89,903

 
$
89,340

 
$
(3,964
)
(4.4
)%
 
$
88,649

 
$
83,304

 
$
5,345

6.4
 %
Period-end active accounts (in thousands)(9)(10)
75,471

 
77,094

 
76,065

 
74,812

 
80,339

 
(4,868
)
(6.1
)%
 
75,471

 
80,339

 
(4,868
)
(6.1
)%
Average active accounts (in thousands)(9)(10)
73,734

 
76,695

 
75,525

 
77,132

 
77,382

 
(3,648
)
(4.7
)%
 
75,721

 
73,847

 
1,874

2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIQUIDITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liquid assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and equivalents
$
12,147

 
$
11,461

 
$
11,755

 
$
12,963

 
$
9,396

 
$
2,751

29.3
 %
 
$
12,147

 
$
9,396

 
$
2,751

29.3
 %
Total liquid assets
$
17,322

 
$
15,201

 
$
16,665

 
$
17,360

 
$
14,822

 
$
2,500

16.9
 %
 
$
17,322

 
$
14,822

 
$
2,500

16.9
 %
Undrawn credit facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undrawn credit facilities
$
6,050

 
$
6,500

 
$
7,050

 
$
6,050

 
$
4,375

 
$
1,675

38.3
 %
 
$
6,050

 
$
4,375

 
$
1,675

38.3
 %
Total liquid assets and undrawn credit facilities
$
23,372

 
$
21,701

 
$
23,715

 
$
23,410

 
$
19,197

 
$
4,175

21.7
 %
 
$
23,372

 
$
19,197

 
$
4,175

21.7
 %
Liquid assets % of total assets
16.52
%
 
14.35
%
 
15.66
%
 
16.47
%
 
13.88
%
 


2.64
 %
 
16.52
%
 
13.88
%
 


2.64
 %
Liquid assets including undrawn credit facilities % of total assets
22.30
%
 
20.48
%
 
22.29
%
 
22.21
%
 
17.98
%
 


4.32
 %
 
22.30
%
 
17.98
%
 


4.32
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 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 loan 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) Includes activity and accounts associated with loan receivables held for sale.
(10) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.


2


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENTS OF EARNINGS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
 
Twelve Months Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
4Q'19 vs. 4Q'18
 
Dec 31,
2019
 
Dec 31,
2018
 
YTD'19 vs. YTD'18
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
4,492

 
$
4,890

 
$
4,636

 
$
4,687

 
$
4,774

 
$
(282
)
(5.9
)%
 
$
18,705

 
$
17,644

 
$
1,061

6.0
 %
Interest on cash and investment securities
93

 
91

 
102

 
99

 
102

 
(9
)
(8.8
)%
 
385

 
344

 
41

11.9
 %
Total interest income
4,585

 
4,981

 
4,738

 
4,786

 
4,876

 
(291
)
(6.0
)%
 
19,090

 
17,988

 
1,102

6.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
383

 
411

 
397

 
375

 
350

 
33

9.4
 %
 
1,566

 
1,186

 
380

32.0
 %
Interest on borrowings of consolidated securitization entities
80

 
88

 
90

 
100

 
104

 
(24
)
(23.1
)%
 
358

 
344

 
14

4.1
 %
Interest on senior unsecured notes
93

 
93

 
96

 
85

 
89

 
4

4.5
 %
 
367

 
340

 
27

7.9
 %
Total interest expense
556

 
592

 
583

 
560

 
543

 
13

2.4
 %
 
2,291

 
1,870

 
421

22.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
4,029

 
4,389

 
4,155

 
4,226

 
4,333

 
(304
)
(7.0
)%
 
16,799

 
16,118

 
681

4.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retailer share arrangements
(1,029
)
 
(1,016
)
 
(859
)
 
(954
)
 
(855
)
 
(174
)
20.4
 %
 
(3,858
)
 
(3,099
)
 
(759
)
24.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for loan losses
1,104

 
1,019

 
1,198

 
859

 
1,452

 
(348
)
(24.0
)%
 
4,180

 
5,545

 
(1,365
)
(24.6
)%
Net interest income, after retailer share arrangements and provision for loan losses
1,896

 
2,354

 
2,098

 
2,413

 
2,026

 
(130
)
(6.4
)%
 
8,761

 
7,474

 
1,287

17.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interchange revenue
192

 
197

 
194

 
165

 
193

 
(1
)
(0.5
)%
 
748

 
710

 
38

5.4
 %
Debt cancellation fees
64

 
64

 
69

 
68

 
70

 
(6
)
(8.6
)%
 
265

 
267

 
(2
)
(0.7
)%
Loyalty programs
(181
)
 
(203
)
 
(192
)
 
(167
)
 
(208
)
 
27

(13.0
)%
 
(743
)
 
(751
)
 
8

(1.1
)%
Other
29

 
27

 
19

 
26

 
9

 
20

NM

 
101

 
39

 
62

159.0
 %
Total other income
104

 
85

 
90

 
92

 
64

 
40

62.5
 %
 
371

 
265

 
106

40.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee costs
385

 
359

 
358

 
353

 
353

 
32

9.1
 %
 
1,455

 
1,427

 
28

2.0
 %
Professional fees
199

 
205

 
231

 
232

 
231

 
(32
)
(13.9
)%
 
867

 
806

 
61

7.6
 %
Marketing and business development
152

 
139

 
135

 
123

 
166

 
(14
)
(8.4
)%
 
549

 
528

 
21

4.0
 %
Information processing
122

 
127

 
123

 
113

 
118

 
4

3.4
 %
 
485

 
426

 
59

13.8
 %
Other
221

 
234

 
212

 
222

 
210

 
11

5.2
 %
 
889

 
908

 
(19
)
(2.1
)%
Total other expense
1,079

 
1,064

 
1,059

 
1,043

 
1,078

 
1

0.1
 %
 
4,245

 
4,095

 
150

3.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before provision for income taxes
921

 
1,375

 
1,129

 
1,462

 
1,012

 
(91
)
(9.0
)%
 
4,887

 
3,644

 
1,243

34.1
 %
Provision for income taxes
190

 
319

 
276

 
355

 
229

 
(39
)
(17.0
)%
 
1,140

 
854

 
286

33.5
 %
Net earnings
$
731

 
$
1,056

 
$
853

 
$
1,107

 
$
783

 
$
(52
)
(6.6
)%
 
$
3,747

 
$
2,790

 
$
957

34.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to common stockholders
$
731

 
$
1,056

 
$
853

 
$
1,107

 
$
783

 
$
(52
)
(6.6
)%
 
$
3,747

 
$
2,790

 
$
957

34.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


3


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENTS OF FINANCIAL POSITION
 
 
 
 
 
 
 
 
 
 
(unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Dec 31, 2019 vs.
Dec 31, 2018
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and equivalents
$
12,147

 
$
11,461

 
$
11,755

 
$
12,963

 
$
9,396

 
$
2,751

29.3
 %
Debt securities
5,911

 
4,584

 
6,147

 
5,506

 
6,062

 
(151
)
(2.5
)%
Loan receivables:
 
 
 
 
 
 
 
 
 
 
 
 
Unsecuritized loans held for investment
58,398

 
56,220

 
55,178

 
54,907

 
64,969

 
(6,571
)
(10.1
)%
Restricted loans of consolidated securitization entities
28,817

 
26,987

 
26,618

 
25,498

 
28,170

 
647

2.3
 %
Total loan receivables
87,215

 
83,207

 
81,796

 
80,405

 
93,139

 
(5,924
)
(6.4
)%
Less: Allowance for loan losses
(5,602
)
 
(5,607
)
 
(5,809
)
 
(5,942
)
 
(6,427
)
 
825

(12.8
)%
Loan receivables, net
81,613

 
77,600

 
75,987

 
74,463

 
86,712

 
(5,099
)
(5.9
)%
Loan receivables held for sale
725

 
8,182

 
8,096

 
8,052

 
—

 
725

NM

Goodwill
1,078

 
1,078

 
1,078

 
1,076

 
1,024

 
54

5.3
 %
Intangible assets, net
1,265

 
1,177

 
1,215

 
1,259

 
1,137

 
128

11.3
 %
Other assets
2,087

 
1,861

 
2,110

 
2,065

 
2,461

 
(374
)
(15.2
)%
Total assets
$
104,826

 
$
105,943

 
$
106,388

 
$
105,384

 
$
106,792

 
$
(1,966
)
(1.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposit accounts
$
64,877

 
$
65,677

 
$
65,382

 
$
63,787

 
$
63,738

 
$
1,139

1.8
 %
Non-interest-bearing deposit accounts
277

 
295

 
263

 
273

 
281

 
(4
)
(1.4
)%
Total deposits
65,154

 
65,972

 
65,645

 
64,060

 
64,019

 
1,135

1.8
 %
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings of consolidated securitization entities
10,412

 
10,912

 
11,941

 
12,091

 
14,439

 
(4,027
)
(27.9
)%
Senior unsecured notes
9,454

 
9,451

 
9,303

 
9,800

 
9,557

 
(103
)
(1.1
)%
Total borrowings
19,866

 
20,363

 
21,244

 
21,891

 
23,996

 
(4,130
)
(17.2
)%
Accrued expenses and other liabilities
4,718

 
4,488

 
4,765

 
4,724

 
4,099

 
619

15.1
 %
Total liabilities
89,738

 
90,823

 
91,654

 
90,675

 
92,114

 
(2,376
)
(2.6
)%
Equity:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
734

 
—

 
—

 
—

 
—

 
734

NM

Common stock
1

 
1

 
1

 
1

 
1

 
—

—
 %
Additional paid-in capital
9,537

 
9,520

 
9,500

 
9,489

 
9,482

 
55

0.6
 %
Retained earnings
12,117

 
11,533

 
10,627

 
9,939

 
8,986

 
3,131

34.8
 %
Accumulated other comprehensive income:
(58
)
 
(44
)
 
(43
)
 
(56
)
 
(62
)
 
4

(6.5
)%
Treasury stock
(7,243
)
 
(5,890
)
 
(5,351
)
 
(4,664
)
 
(3,729
)
 
(3,514
)
94.2
 %
Total equity
15,088

 
15,120

 
14,734

 
14,709

 
14,678

 
410

2.8
 %
Total liabilities and equity
$
104,826

 
$
105,943

 
$
106,388

 
$
105,384

 
$
106,792

 
$
(1,966
)
(1.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 


4


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Dec 31, 2019
 
Sep 30, 2019
 
Jun 30, 2019
 
Mar 31, 2019
 
Dec 31, 2018
 
 
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
$
16,269

 
$
68

 
1.66
%
 
$
10,947

 
$
59

 
2.14
%
 
$
10,989

 
$
66

 
2.41
%
 
$
11,033

 
$
65

 
2.39
%
 
$
10,856

 
$
62

 
2.27
%
Securities available for sale
4,828

 
25

 
2.05
%
 
5,389

 
32

 
2.36
%
 
6,010

 
36

 
2.40
%
 
5,640

 
34

 
2.44
%
 
6,837

 
40

 
2.32
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan receivables, including held for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit cards
81,960

 
4,409

 
21.34
%
 
87,156

 
4,807

 
21.88
%
 
85,488

 
4,557

 
21.38
%
 
86,768

 
4,611

 
21.55
%
 
86,131

 
4,695

 
21.63
%
Consumer installment loans
2,058

 
48

 
9.25
%
 
2,022

 
48

 
9.42
%
 
1,924

 
44

 
9.17
%
 
1,844

 
42

 
9.24
%
 
1,815

 
42

 
9.18
%
Commercial credit products
1,311

 
34

 
10.29
%
 
1,329

 
35

 
10.45
%
 
1,330

 
34

 
10.25
%
 
1,252

 
34

 
11.01
%
 
1,344

 
37

 
10.92
%
Other
47

 
1

 
NM

 
49

 
—

 
—
%
 
50

 
1

 
NM

 
39

 
—

 
—
%
 
50

 
—

 
—
%
Total loan receivables, including held for sale
85,376

 
4,492

 
20.87
%
 
90,556

 
4,890

 
21.42
%
 
88,792

 
4,636

 
20.94
%
 
89,903

 
4,687

 
21.14
%
 
89,340

 
4,774

 
21.20
%
Total interest-earning assets
106,473

 
4,585

 
17.08
%
 
106,892

 
4,981

 
18.49
%
 
105,791

 
4,738

 
17.96
%
 
106,576

 
4,786

 
18.21
%
 
107,033

 
4,876

 
18.07
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
1,326

 
 
 
 
 
1,374

 
 
 
 
 
1,271

 
 
 
 
 
1,335

 
 
 
 
 
1,320

 
 
 
 
Allowance for loan losses
(5,593
)
 
 
 
 
 
(5,773
)
 
 
 
 
 
(5,911
)
 
 
 
 
 
(6,341
)
 
 
 
 
 
(6,259
)
 
 
 
 
Other assets
3,872

 
 
 
 
 
3,920

 
 
 
 
 
3,752

 
 
 
 
 
3,729

 
 
 
 
 
3,688

 
 
 
 
Total non-interest-earning assets
(395
)
 
 
 
 
 
(479
)
 
 
 
 
 
(888
)
 
 
 
 
 
(1,277
)
 
 
 
 
 
(1,251
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
106,078

 
 
 
 
 
$
106,413

 
 
 
 
 
$
104,903

 
 
 
 
 
$
105,299

 
 
 
 
 
$
105,782

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposit accounts
$
65,380

 
$
383

 
2.32
%
 
$
65,615

 
$
411

 
2.49
%
 
$
64,226

 
$
397

 
2.48
%
 
$
63,776

 
$
375

 
2.38
%
 
$
62,999

 
$
350

 
2.20
%
Borrowings of consolidated securitization entities
10,831

 
80

 
2.93
%
 
11,770

 
88

 
2.97
%
 
11,785

 
90

 
3.06
%
 
13,407

 
100

 
3.02
%
 
14,223

 
104

 
2.90
%
Senior unsecured notes
9,452

 
93

 
3.90
%
 
9,347

 
93

 
3.95
%
 
9,543

 
96

 
4.03
%
 
8,892

 
85

 
3.88
%
 
9,554

 
89

 
3.70
%
Total interest-bearing liabilities
85,663

 
556

 
2.58
%
 
86,732

 
592

 
2.71
%
 
85,554

 
583

 
2.73
%
 
86,075

 
560

 
2.64
%
 
86,776

 
543

 
2.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing deposit accounts
281

 
 
 
 
 
283

 
 
 
 
 
271

 
 
 
 
 
286

 
 
 
 
 
284

 
 
 
 
Other liabilities
4,906

 
 
 
 
 
4,570

 
 
 
 
 
4,260

 
 
 
 
 
4,148

 
 
 
 
 
4,283

 
 
 
 
Total non-interest-bearing liabilities
5,187

 
 
 
 
 
4,853

 
 
 
 
 
4,531

 
 
 
 
 
4,434

 
 
 
 
 
4,567

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
90,850

 
 
 
 
 
91,585

 
 
 
 
 
90,085

 
 
 
 
 
90,509

 
 
 
 
 
91,343

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total equity
15,228

 
 
 
 
 
14,828

 
 
 
 
 
14,818

 
 
 
 
 
14,790

 
 
 
 
 
14,439

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and equity
$
106,078

 
 
 
 
 
$
106,413

 
 
 
 
 
$
104,903

 
 
 
 
 
$
105,299

 
 
 
 
 
$
105,782

 
 
 
 
Net interest income
 
 
$
4,029

 
 
 
 
 
$
4,389

 
 
 
 
 
$
4,155

 
 
 
 
 
$
4,226

 
 
 
 
 
$
4,333

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread(1)
 
 
 
 
14.50
%
 
 
 
 
 
15.78
%
 
 
 
 
 
15.23
%
 
 
 
 
 
15.57
%
 
 
 
 
 
15.59
%
Net interest margin(2)
 
 
 
 
15.01
%
 
 
 
 
 
16.29
%
 
 
 
 
 
15.75
%
 
 
 
 
 
16.08
%
 
 
 
 
 
16.06
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
 
 
 
 
 
 
 
 
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
 
 
 
 
 
 
(unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
Dec 31, 2019
 
Twelve Months Ended
Dec 31, 2018
 
 
 
Interest
 
Average
 
 
 
Interest
 
Average
 
Average
 
Income/
 
Yield/
 
Average
 
Income/
 
Yield/
 
Balance
 
Expense
 
Rate
 
Balance
 
Expense
 
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning cash and equivalents
$
12,320

 
$
258

 
2.09
%
 
$
11,059

 
$
207

 
1.87
%
Securities available for sale
5,464

 
127

 
2.32
%
 
6,566

 
137

 
2.09
%
 
 
 
 
 
 
 
 
 
 
 
 
Loan receivables, including held for sale:
 
 
 
 
 
 
 
 
 
 
 
Credit cards
85,334

 
18,384

 
21.54
%
 
80,219

 
17,342

 
21.62
%
Consumer installment loans
1,963

 
182

 
9.27
%
 
1,698

 
156

 
9.19
%
Commercial credit products
1,306

 
137

 
10.49
%
 
1,333

 
144

 
10.80
%
Other
46

 
2

 
4.35
%
 
54

 
2

 
3.70
%
Total loan receivables, including held for sale
88,649

 
18,705

 
21.10
%
 
83,304

 
17,644

 
21.18
%
Total interest-earning assets
106,433

 
19,090

 
17.94
%
 
100,929

 
17,988

 
17.82
%
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
1,327

 
 
 
 
 
1,224

 
 
 
 
Allowance for loan losses
(5,902
)
 
 
 
 
 
(5,900
)
 
 
 
 
Other assets
3,819

 
 
 
 
 
3,315

 
 
 
 
Total non-interest-earning assets
(756
)
 
 
 
 
 
(1,361
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
105,677

 
 
 
 
 
$
99,568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposit accounts
$
64,756

 
$
1,566

 
2.42
%
 
$
59,216

 
$
1,186

 
2.00
%
Borrowings of consolidated securitization entities
11,941

 
358

 
3.00
%
 
12,694

 
344

 
2.71
%
Senior unsecured notes
9,310

 
367

 
3.94
%
 
9,257

 
340

 
3.67
%
Total interest-bearing liabilities
86,007

 
2,291

 
2.66
%
 
81,167

 
1,870

 
2.30
%
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing deposit accounts
280

 
 
 
 
 
282

 
 
 
 
Other liabilities
4,473

 
 
 
 
 
3,733

 
 
 
 
Total non-interest-bearing liabilities
4,753

 
 
 
 
 
4,015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
90,760

 
 
 
 
 
85,182

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
Total equity
14,917

 
 
 
 
 
14,386

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and equity
$
105,677

 
 
 
 
 
$
99,568

 
 
 
 
Net interest income
 
 
$
16,799

 
 
 
 
 
$
16,118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread(1)
 
 
 
 
15.28
%
 
 
 
 
 
15.52
%
Net interest margin(2)
 
 
 
 
15.78
%
 
 
 
 
 
15.97
%
 
 
 
 
 
 
 
 
 
 
 
 
(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.



6


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET STATISTICS
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited, $ in millions, except per share statistics)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
Dec 31, 2019 vs.
Dec 31, 2018
BALANCE SHEET STATISTICS
 
 
 
 
 
 
 
 
 
 
 
 
Total common equity
$
14,354

 
$
15,120

 
$
14,734

 
$
14,709

 
$
14,678

 
$
(324
)
(2.2
)%
Total common equity as a % of total assets
13.69
%
 
14.27
%
 
13.85
%
 
13.96
%
 
13.74
%
 
 
(0.05
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Tangible assets
$
102,483

 
$
103,688

 
$
104,095

 
$
103,049

 
$
104,631

 
$
(2,148
)
(2.1
)%
Tangible common equity(1)
$
12,011

 
$
12,865

 
$
12,441

 
$
12,374

 
$
12,517

 
$
(506
)
(4.0
)%
Tangible common equity as a % of tangible assets(1)
11.72
%
 
12.41
%
 
11.95
%
 
12.01
%
 
11.96
%
 
 
(0.24
)%
Tangible common equity per share(1)
$
19.50

 
$
19.68

 
$
18.60

 
$
17.96

 
$
17.41

 
$
2.09

12.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
REGULATORY CAPITAL RATIOS(2)
 
 
 
 
 
 
 
 
 
 
 
 

Basel III Fully Phased-in
 
 
 
Total risk-based capital ratio(3)
16.3
%
 
15.8
%
 
15.6
%
 
15.8
%
 
15.3
%
 
 
 
Tier 1 risk-based capital ratio(4)
15.0
%
 
14.5
%
 
14.3
%
 
14.5
%
 
14.0
%
 
 
 
Tier 1 leverage ratio(5)
12.6
%
 
12.6
%
 
12.4
%
 
12.3
%
 
12.3
%
 
 
 
Common equity Tier 1 capital ratio
14.1
%
 
14.5
%
 
14.3
%
 
14.5
%
 
14.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 metrics at December 31, 2019 are preliminary and therefore subject to change.
(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
(5) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments. Tier 1 leverage ratios are based upon the use of daily averages for all periods presented.



7


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PLATFORM RESULTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
 
 
Twelve Months Ended
 
 
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
4Q'19 vs. 4Q'18
 
Dec 31,
2019
 
Dec 31,
2018
 
YTD'19 vs. YTD'18
RETAIL CARD(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume(2)(3)
$
30,968

 
$
29,282

 
$
29,530

 
$
24,660

 
$
31,755

 
$
(787
)
(2.5
)%
 
$
114,440

 
$
107,685

 
$
6,755

6.3
 %
Period-end loan receivables
$
56,387

 
$
52,697

 
$
52,307

 
$
51,572

 
$
63,827

 
$
(7,440
)
(11.7
)%
 
$
56,387

 
$
63,827

 
$
(7,440
)
(11.7
)%
Average loan receivables, including held for sale
$
54,505

 
$
60,660

 
$
59,861

 
$
60,964

 
$
60,604

 
$
(6,099
)
(10.1
)%
 
$
58,984

 
$
55,739

 
$
3,245

5.8
 %
Average active accounts (in thousands)(3)(4)
54,662

 
58,082

 
57,212

 
58,632

 
58,962

 
(4,300
)
(7.3
)%
 
57,073

 
55,828

 
1,245

2.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
3,143

 
$
3,570

 
$
3,390

 
$
3,454

 
$
3,502

 
$
(359
)
(10.3
)%
 
$
13,557

 
$
12,815

 
$
742

5.8
 %
Other income
$
77

 
$
65

 
$
59

 
$
76

 
$
59

 
$
18

30.5
 %
 
$
277

 
$
239

 
$
38

15.9
 %
Retailer share arrangements
$
(988
)
 
$
(998
)
 
$
(836
)
 
$
(940
)
 
$
(825
)
 
$
(163
)
19.8
 %
 
$
(3,762
)
 
$
(3,014
)
 
$
(748
)
24.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PAYMENT SOLUTIONS(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume(2)(3)
$
6,402

 
$
6,281

 
$
5,948

 
$
5,249

 
$
6,035

 
$
367

6.1
 %
 
$
23,880

 
$
22,808

 
$
1,072

4.7
 %
Period-end loan receivables
$
20,528

 
$
20,478

 
$
19,766

 
$
19,379

 
$
19,815

 
$
713

3.6
 %
 
$
20,528

 
$
19,815

 
$
713

3.6
 %
Average loan receivables, including held for sale
$
20,701

 
$
20,051

 
$
19,409

 
$
19,497

 
$
19,333

 
$
1,368

7.1
 %
 
$
19,918

 
$
18,509

 
$
1,409

7.6
 %
Average active accounts (in thousands)(3)(4)
12,713

 
12,384

 
12,227

 
12,406

 
12,350

 
363

2.9
 %
 
12,451

 
12,087

 
364

3.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
737

 
$
721

 
$
685

 
$
686

 
$
708

 
$
29

4.1
 %
 
$
2,829

 
$
2,678

 
$
151

5.6
 %
Other income
$
4

 
$
(1
)
 
$
11

 
$
1

 
$
(2
)
 
$
6

NM

 
$
15

 
$
(8
)
 
$
23

NM

Retailer share arrangements
$
(37
)
 
$
(15
)
 
$
(21
)
 
$
(12
)
 
$
(25
)
 
$
(12
)
48.0
 %
 
$
(85
)
 
$
(73
)
 
$
(12
)
16.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CARECREDIT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume(2)
$
2,842

 
$
2,832

 
$
2,813

 
$
2,604

 
$
2,530

 
$
312

12.3
 %
 
$
11,091

 
$
10,164

 
$
927

9.1
 %
Period-end loan receivables
$
10,300

 
$
10,032

 
$
9,723

 
$
9,454

 
$
9,497

 
$
803

8.5
 %
 
$
10,300

 
$
9,497

 
$
803

8.5
 %
Average loan receivables, including held for sale
$
10,170

 
$
9,845

 
$
9,522

 
$
9,442

 
$
9,403

 
$
767

8.2
 %
 
$
9,747

 
$
9,056

 
$
691

7.6
 %
Average active accounts (in thousands)(4)
6,359

 
6,229

 
6,086

 
6,094

 
6,070

 
289

4.8
 %
 
6,197

 
5,932

 
265

4.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
612

 
$
599

 
$
561

 
$
547

 
$
564

 
$
48

8.5
 %
 
$
2,319

 
$
2,151

 
$
168

7.8
 %
Other income
$
23

 
$
21

 
$
20

 
$
15

 
$
7

 
$
16

NM

 
$
79

 
$
34

 
$
45

132.4
 %
Retailer share arrangements
$
(4
)
 
$
(3
)
 
$
(2
)
 
$
(2
)
 
$
(5
)
 
$
1

(20.0
)%
 
$
(11
)
 
$
(12
)
 
$
1

(8.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL SYF
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume(2)(3)
$
40,212

 
$
38,395

 
$
38,291

 
$
32,513

 
$
40,320

 
$
(108
)
(0.3
)%
 
$
149,411

 
$
140,657

 
$
8,754

6.2
 %
Period-end loan receivables
$
87,215

 
$
83,207

 
$
81,796

 
$
80,405

 
$
93,139

 
$
(5,924
)
(6.4
)%
 
$
87,215

 
$
93,139

 
$
(5,924
)
(6.4
)%
Average loan receivables, including held for sale
$
85,376

 
$
90,556

 
$
88,792

 
$
89,903

 
$
89,340

 
$
(3,964
)
(4.4
)%
 
$
88,649

 
$
83,304

 
$
5,345

6.4
 %
Average active accounts (in thousands)(3)(4)
73,734

 
76,695

 
75,525

 
77,132

 
77,382

 
(3,648
)
(4.7
)%
 
75,721

 
73,847

 
1,874

2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
4,492

 
$
4,890

 
$
4,636

 
$
4,687

 
$
4,774

 
$
(282
)
(5.9
)%
 
$
18,705

 
$
17,644

 
$
1,061

6.0
 %
Other income
$
104

 
$
85

 
$
90

 
$
92

 
$
64

 
$
40

62.5
 %
 
$
371

 
$
265

 
$
106

40.0
 %
Retailer share arrangements
$
(1,029
)
 
$
(1,016
)
 
$
(859
)
 
$
(954
)
 
$
(855
)
 
$
(174
)
20.4
 %
 
$
(3,858
)
 
$
(3,099
)
 
$
(759
)
24.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Beginning in 1Q 2019, our Oil and Gas retail credit programs are now included in our Payment Solutions sales platform. Prior period financial and operating metrics for Retail Card and Payment Solutions have been recast to reflect the current period presentation.
(2) 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.
(3) Includes activity and balances associated with loan receivables held for sale.
(4) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.

8


SYNCHRONY FINANCIAL
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1)
 
 
 
 
 
(unaudited, $ in millions, except per share statistics)
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
Dec 31,
2019
 
Sep 30,
2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31,
2018
 
COMMON EQUITY AND REGULATORY CAPITAL MEASURES
 
 
 
 
 
 
 
 
 
 
GAAP Total equity
$
15,088

 
$
15,120

 
$
14,734

 
$
14,709

 
$
14,678

 
Less: Preferred stock
(734
)
 
—

 
—

 
—

 
—

 
Less: Goodwill
(1,078
)
 
(1,078
)
 
(1,078
)
 
(1,076
)
 
(1,024
)
 
Less: Intangible assets, net
(1,265
)
 
(1,177
)
 
(1,215
)
 
(1,259
)
 
(1,137
)
 
Tangible common equity
$
12,011

 
$
12,865

 
$
12,441

 
$
12,374

 
$
12,517

 
Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss)
319

 
290

 
283

 
287

 
284

 
Basel III - Common equity Tier 1
$
12,330

 
$
13,155

 
$
12,724

 
$
12,661

 
$
12,801

 
Preferred stock
734

 
—

 
—

 
—

 
—

 
Basel III - Tier 1 capital
$
13,064

 
$
13,155

 
$
12,724

 
$
12,661

 
$
12,801

 
 
 
 
 
 
 
 
 
 
 
 
Add: Allowance for loan losses includible in risk-based capital
1,147

 
1,190

 
1,169

 
1,152

 
1,212

 
Total Risk-based capital
$
14,211

 
$
14,345

 
$
13,893

 
$
13,813

 
$
14,013

 
 
 
 
 
 
 
 
 
 
 
 
ASSET MEASURES
 
 
 
 
 
 
 
 
 
 
Total average assets
$
106,078

 
$
106,413

 
$
104,903

 
$
105,299

 
$
105,782

 
Adjustments for:
 
 
 
 
 
 
 
 
 
 
Disallowed goodwill and other disallowed intangible assets
(net of related deferred tax liabilities) and other
(2,059
)
 
(1,975
)
 
(2,003
)
 
(2,039
)
 
(1,845
)
 
Total assets for leverage purposes
$
104,019

 
$
104,438

 
$
102,900

 
$
103,260

 
$
103,937

 
 
 
 
 
 
 
 
 
 
 
 
Risk-weighted assets - Basel III (fully phased-in)
$
87,302

 
$
90,772

 
$
88,890

 
$
87,331

 
$
91,742

 
 
 
 
 
 
 
 
 
 
 
 
CORE PURCHASE VOLUME
 
 
 
 
 
 
 
 
 
 
Purchase volume
$
40,212

 
$
38,395

 
$
38,291

 
$
32,513

 
$
40,320

 
Less: Walmart and Yamaha Purchase volume
(267
)
 
(2,381
)
 
(2,512
)
 
(2,151
)
 
(3,028
)
 
Core Purchase volume
$
39,945

 
$
36,014

 
$
35,779

 
$
30,362

 
$
37,292

 
 
 
 
 
 
 
 
 
 
 
 
CORE LOAN RECEIVABLES
 
 
 
 
 
 
 
 
 
 
Loan receivables
$
87,215

 
$
83,207

 
$
81,796

 
$
80,405

 
$
93,139

 
Less: Walmart and Yamaha Loan receivables
(3
)
 
(872
)
 
(1,188
)
 
(1,420
)
 
(10,264
)
 
Core Loan receivables
$
87,212

 
$
82,335

 
$
80,608

 
$
78,985

 
$
82,875

 
 
 
 
 
 
 
 
 
 
 
 
Retail Card Loan receivables(2)
$
56,387

 
$
52,697

 
$
52,307

 
$
51,572

 
$
63,827

 
Less: Walmart Loan receivables
—

 
(112
)
 
(431
)
 
(692
)
 
(9,519
)
 
Core Loan receivables
$
56,387

 
$
52,585

 
$
51,876

 
$
50,880

 
$
54,308

 
 
 
 
 
 
 
 
 
 
 
 
Payment Solutions Loan receivables(2)
$
20,528

 
$
20,478

 
$
19,766

 
$
19,379

 
$
19,815

 
Less: Yamaha Loan receivables
(3
)
 
(760
)
 
(757
)
 
(728
)
 
(745
)
 
Core Loan receivables
$
20,525

 
$
19,718

 
$
19,009

 
$
18,651

 
$
19,070

 
 
 
 
 
 
 
 
 
 
 
 
CORE AVERAGE ACTIVE ACCOUNTS (in thousands)
 
 
 
 
 
 
 
 
 
 
Average active accounts (in thousands)
73,734

 
76,695

 
75,525

 
77,132

 
77,382

 
Less: Walmart and Yamaha Average active accounts (in thousands)
(1,777
)
 
(7,001
)
 
(7,215
)
 
(7,618
)
 
(7,720
)
 
Core Average active accounts (in thousands)
71,957

 
69,694

 
68,310

 
69,514

 
69,662

 
 
 
 
 
 
 
 
 
 
 
 
CORE INTEREST AND FEES ON LOANS
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
4,492

 
$
4,890

 
$
4,636

 
$
4,687

 
$
4,774

 
Less: Walmart and Yamaha Interest and fees on loans
(69
)
 
(531
)
 
(520
)
 
(549
)
 
(559
)
 
Core Interest and fees on loans
$
4,423

 
$
4,359

 
$
4,116

 
$
4,138

 
$
4,215

 
 
 
 
 
 
 
 
 
 
 
 
TANGIBLE COMMON EQUITY PER SHARE
 
 
 
 
 
 
 
 
 
 
GAAP book value per share
$
23.31

 
$
23.13

 
$
22.03

 
$
21.35

 
$
20.42

 
Less: Goodwill
(1.75
)
 
(1.65
)
 
(1.61
)
 
(1.56
)
 
(1.42
)
 
Less: Intangible assets, net
(2.06
)
 
(1.80
)
 
(1.82
)
 
(1.83
)
 
(1.59
)
 
Tangible common equity per share
$
19.50

 
$
19.68

 
$
18.60

 
$
17.96

 
$
17.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Regulatory measures at December 31, 2019 are presented on an estimated basis.
 
(2) Beginning in 1Q 2019, our Oil and Gas retail credit programs are now included in our Payment Solutions sales platform. Prior period financial and operating metrics for Retail Card and Payment Solutions have been recast to reflect the current period presentation.
 

 

 


9

Exhibit 99.3 4Q'19 Financial Results January 24, 2020

 
Disclaimers 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. 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” 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 Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; cyber-attacks or other security breaches; 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; 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, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; 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 and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; 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; damage to our reputation; 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; a material indemnification obligation to GE under the Tax Sharing and Separation Agreement with GE if we cause the split-off from GE or certain preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; 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 the impact of the Consumer Financial Protection Bureau’s regulation of our business; 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 Synchrony 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 heading “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed on February 15, 2019. You should not consider any list of such factors to be an exhaustive statement of all of 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. Differences between this presentation and the supplemental financials may occur due to rounding. 2

 
4Q’19 Highlights Financial Highlights Business Highlights • $731 million Net earnings, $1.15 diluted EPS • Added new partnerships ‒ Reduction in the reserve related to the Walmart consumer portfolio sale completed in October was $38 million, or $28 million after-tax; EPS benefit of $0.05 • Solid Core Growth metrics(a) in 4Q’19 ‒ Loan receivables down 6%; up 5% on a Core basis ‒ Interest and fees on loans down 6%; up 5% on a Core basis ‒ Purchase volume flat; up 7% on a Core basis ‒ Average active accounts down 5%; up 3% on a Core basis • Net charge-offs 5.15% compared to 5.54% in the prior year • Provision for loan losses down 24% primarily driven by lower core • Renewed and extended key relationships reserve build and reduction in net charge-offs • Efficiency ratio 34.8% compared to 30.4% in the prior year ‒ Operating expenses include a restructuring charge of $21 million increasing efficiency ratio 0.6pts • Deposits up $1.1 billion compared to prior year • Strong capital and liquidity ‒ 14.1% CET1 & $17.3 billion liquid assets ‒ Returned $1.5 billion in capital through $1.4 billion of share • Renewed and Extended CareCredit key relationship repurchases and $141 million in common stock dividends ‒ Issued $750 million preferred stock (a) Growth Metrics shown above on a Core basis are non-GAAP measures and excludes from both the prior year and the current year amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively. See non-GAAP reconciliation in the appendix. 3

 
Platform Results(a) (b) (b) Retail Card Payment Solutions CareCredit Loan receivables, $ in billions Loan receivables, $ in billions Loan receivables, $ in billions (12)% +4% +8% $63.8 $20.5 $10.3 $56.4 $19.8 $9.5 Core(c) $54.3 $56.4 +4% $19.1 $20.5 +7% 4Q'18 4Q'19 V% 4Q'18 4Q'19 V% 4Q'18 4Q'19 V% Purchase volume $31.8 $31.0 (2)% $6.0 $6.4 +6% $2.5 $2.8 +12% Accounts 58.9 54.6 (7)% 12.4 12.7 +3% 6.1 6.4 +5% Interest and $3,502 $3,143 (10)% $708 $737 +4% $564 $612 +9% fees on loans • Decline due to Walmart portfolio; • Strong growth led by home • Strong growth led by dental and solid Core receivable growth furnishings and home specialty veterinary primarily driven by digital partners • Interest and Fees on Loans up 4% • Interest and Fees on Loans up 9% • Interest and Fees on Loans down driven by receivable growth driven by receivable growth 10% driven by the Walmart sale (a) Accounts represent average active accounts in millions, which are credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. Purchase volume $ in billions and Interest and fees on loans $ in millions. (b) Beginning in 1Q 2019, our Oil and Gas retail partners are now included in our Payment Solutions sales platform. Prior period financial and operating metrics for Retail Card and Payment Solutions have been recast to reflect the current period presentation. (c) Loan receivables shown above on a Core basis is a non-GAAP measure. See non-GAAP reconciliation in the appendix. 4

 
Financial Results Summary earnings statement 4Q'19 Highlights B/(W) • $731 million Net earnings, $1.15 diluted EPS $ in millions, except per share statistics 4Q'19 4Q'18 $ % • Net interest income down 7% driven by the Total interest income $4,585 $4,876 $(291) (6)% Walmart sale Total interest expense 556 543 (13) (2)% − Interest and fees on loans down 6% driven by the Net interest income (NII) 4,029 4,333 (304) (7)% Walmart sale − Interest expense increase driven primarily by Retailer share arrangements (RSA) (1,029) (855) (174) (20)% increased benchmark rates Provision for loan losses 1,104 1,452 348 24% • Retailer share arrangements up 20% Other income 104 64 40 63% − Increase driven primarily by improved performance and growth Other expense 1,079 1,078 (1) (0)% • Provision for loan losses down 24% primarily Pre-Tax earnings 921 1,012 (91) (9)% driven by lower core reserve build and reduction Provision for income taxes 190 229 39 17% in net charge-offs − Net charge-offs of 5.15% compared to 5.54% in Net earnings $731 $783 $(52) (7)% the prior year primarily driven by the Walmart sale Diluted earnings per share $1.15 $1.09 $0.06 • Other expense remained flat − Includes a restructuring charge of $21 million 5

 
Growth Metrics Purchase volume (0)% Loan receivables (6)% $ in billions $ in billions $40.3 $40.2 $93.1 $87.2 Core (a) $37.3 $39.9 +7% Core (a) $82.9 $87.2 +5% 4Q'18 4Q'19 4Q'18 4Q'19 Average active accounts (5)% Interest and fees on loans (6)% in millions $ in millions 77.4 $4,774 73.7 $4,492 Core (a) 69.7 72.0 +3% Core (a) $4,215 $4,423 +5% 4Q'18 4Q'19 4Q'18 4Q'19 a) Financial measures shown above on a Core basis are non-GAAP measures. See non-GAAP reconciliation in the appendix. 6

 
Net Interest Income Net interest income $ in millions, % of average interest-earning assets 4Q'19 Highlights (7)% • Net interest income decreased 7% compared to prior year driven by the Walmart sale $4,333 − Interest and fees on loans down 6% driven by $4,029 the Walmart sale • Net interest margin down 105bps. − Loan receivables mix as a percent of total Earning Assets decreased from 83.5% to 80.2% driven by the proceeds of the Walmart sale 16.06% 15.01% − Loan receivables yield 20.87%, down 33bps. versus prior year primarily driven by the Walmart sale − Total interest-bearing liabilities cost increased 10bps. to 2.58%, due primarily to increased benchmark rates 4Q'18 4Q'19 7

 
Asset Quality Metrics 30+ days past due Net charge-offs $ in millions, % of period-end loan receivables $ in millions, % of average loan receivables including held for sale $4,430 $4,021 $1,344 $1,331 $3,831 $3,957 $3,874 $3,625 $3,723 $1,198 $1,248 $1,221 $3,521 $1,141 $1,159 $3,293 $1,087 $1,109 4.67% 4.59% 4.76% 4.92% (a) 4.52% 4.17% 4.43% 4.47% 4.44% 5.78% 6.14% 5.97% 6.06% 6.01% (b) 4.97% 5.54% 5.35% 5.15% 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 90+ days past due Allowance for loan losses $ in millions, % of period-end loan receivables $ in millions, % of period-end loan receivables $6,427 $2,135 $6,223 $2,019 $5,859 $5,942 $5,809 $5,574 $5,738 $5,607 $5,602 $1,869 $1,833 $1,877 $1,776 $1,768 $1,723 $1,561 2.51% 7.37% 7.43% 7.11% 7.39% 7.10% 2.28% 2.28% 2.29% (c) 6.80% 6.90% 6.74% 6.42% 1.98% 2.09% 2.16% 2.07% 2.15% 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 (a) Excluding the PayPal Credit program and Walmart Portfolio, 4Q'19 30+ rate was flat versus 4Q'18 (b) Excluding the PayPal Credit program and Walmart Portfolio, 4Q'19 net charge-off rate was down ~15bps versus 4Q'18 8 (c) Excluding the PayPal Credit program and Walmart Portfolio, 4Q'19 90+ rate was flat versus 4Q'18

 
Other Expense Other expense $ in millions 0% 4Q'19 Highlights $1,078 $1,079 • Other expense remained flat • Efficiency ratio increased 4.4pts to 34.8%, driven primarily by the impact of the Walmart sale and increased RSA, and included a restructuring charge of $21 million 4Q'18 4Q'19 V$ V% Employee costs $353 $385 $32 9% Professional fees 231 199 (32) (14)% Marketing/BD 166 152 (14) (8)% Information processing 118 122 4 3% Other 210 221 11 5% Other expense $1,078 $1,079 $1 0% (a) Efficiency 30.4% 34.8% 4.4 pts. (a) “Other expense” divided by sum of “NII” plus “Other income” less “Retailer share arrangements (RSA)” 9

 
Funding, Capital and Liquidity Funding sources Capital ratios $ in billions Common equity Tier 1 % - Basel III fully phased-in $88.0 V$ $85.0 14.0% 14.1% $9.6 $9.5 $(0.1) Unsecured $14.4 $10.4 $(4.0) Securitization 4Q'18 4Q'19 Deposits $64.0 $65.1 +$1.1 Liquidity(a) $ in billions $23.4 $19.2 4Q'18 4Q'19 Variance Deposits 73% 77% +4 pts. Securitization 16% 12% (4) pts. 4Q'18 4Q'19 Unsecured 11% 11% – pts. Liquid assets $14.8 $17.3 Undrawn credit facilities 4.4 6.1 Total liquidity $19.2 $23.4 % of Total assets 18.0% 22.3% (a) Does not include unencumbered assets in the Bank that could be pledged 10

 
2019 Performance 2019 Outlook 2019 Actual In-line with expectations with (a) solid Core growth across each Core Loan Receivables Growth 5% - 7% 5% platform Net Interest Margin 15.75% - 16.00% 15.78% In-line with expectations Improved program and credit RSAs/Average Receivables 4.0% - 4.2% 4.4% performance Better than expectations with Net Charge-Off Rate 5.7% - 5.9% 5.6% favorable credit trends Higher RSAs due to improved program Efficiency Ratio ~ 31.0% 31.9% and credit performance (b) ROA ~ 2.5% 2.7% Drivers noted above led to higher ROA (a) Loan Receivable growth shown on a Core basis is a non-GAAP measure and excludes from both the prior year and the current year amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively. See non-GAAP reconciliation in the appendix. (b) Excludes impact of reductions in reserve related to the Walmart consumer portfolio sale. Total ROA for 2019 was 3.5%. 11

 
Estimated CECL Adoption Impact $ in billions Impact to consolidated balance sheet Adoption Impact Estimated • Adoption of CECL was effective on CECL January 1, 2020 – no impact to 2019 12/31/19 Impact 1/1/20 Allowance for loan losses $(5.6) $(3.0) $(8.6) − Initial adjustment recorded through retained earnings and does not impact Deferred tax asset $0.7 Net Earnings Total Equity $15.1 $(2.3) $12.8 • Impact of CECL does not impact or change the following: − Cash flows generated by the Company Impact to Common equity Tier 1 (CET1) – applying phase-in − Lifetime value of an account or the IRR of marketing investments Estimated CECL • On a regulatory basis, elected to phase- 12/31/19 Impact 1/1/20 in the approximate $2.3 billion capital impact at 25% per year in each of 2020 Common equity Tier 1 $12.3 $(0.6) $11.7 to 2023 CET1% 14.1% (0.6)% 13.5% − Approximate 60 bps impact to CET1% per year during the phase-in period • Expected increase in reserves was in line with expectations provided 12

 
2020 Outlook 2020 Outlook 2020 Impact of With CECL (GAAP) CECL Expect growth to accelerate in Loan Receivables Growth 5% - 7% No impact 2H20 as new programs launch Walmart conversion impact— Net Interest Margin 15.25% - 15.50% No impact excess liquidity (~$3B) and higher Walmart loan yield No change to the CECL impact not expected to RSAs/Average Receivables 4.3% - 4.5% range change range Net Charge-Off Rate 5.4% - 5.6% No impact Benefit from Walmart Stable credit and larger CECL Reserve Build $800MM - $900MM ~+$300MM reserve build for growth Walmart impact and new Efficiency Ratio ~ 32% No impact program investments CECL and new program ROA ~ 2.2% ~(0.3)% investments 13

 
Focus on Long-Term Value Creation While Diversifying for the Future Grow core partnerships and continue to add new programs at attractive returns Strategic Purpose: Ensure continued growth of our core business at appropriate risk-adjusted returns • Drive growth for our partners and continue to strengthen our relationships by delivering new products and capabilities • Launch new programs with a focus on fast-growing partners where we can leverage our technology and capabilities Diversify the business through targeted strategies in Payment Solutions, CareCredit, and Synchrony branded products Strategic Purpose: Diversify and expand business by accelerating growth in smaller programs and new products • Grow Payment Solutions through point-of-sale capabilities and innovative product offerings • Grow CareCredit through broader acceptance and further expansion of the network (health systems) • Invest in Synchrony branded products – Auto and Home Networks, Synchrony Mastercard, and additional deposit products • Leverage acquisitions to develop and grow new revenue sources (e-gifting, pets) Deliver best in class customer experience through technology and data analytics Strategic Purpose: Drive a customer first approach to deliver exceptional customer experiences to drive growth • Continue expansion of advanced analytics leveraging customer level performance dynamics • Further develop capabilities to deliver a frictionless customer experience • Leverage alternative data and machine learning to further drive innovation (e.g. underwriting and authentication) Operate with a strong balance sheet and financial profile Strategic Purpose: Drive growth at attractive risk-adjusted returns while maintaining strong capital and liquidity levels • Disciplined capital allocation approach to drive growth, launch new programs and invest in new products and capabilities and continue to return capital to shareholders(a) 14 (a) Subject to board and regulatory approvals

 
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Appendix 16

 
Non-GAAP Reconciliation (a) The following table sets forth the components of our Growth Metrics for the periods indicated below. At December 31, Total Retail Card Payment Solutions 2018 2019 2018 2019 2018 2019 Loan receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $93.1 $87.2 $63.8 $56.4 $19.8 $20.5 Less: Walmart and Yamaha Loan receivables . . . . . . . . . . (10.2) (0.0) (9.5) - (0.7) (0.0) Core Loan receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $82.9 $87.2 $54.3 $56.4 $19.1 $20.5 For the quarter ended December 31, Total 2018 2019 Purchase volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40.3 $40.2 Less: Walmart and Yamaha Purchase volume . . . . . . . . . (3.0) (0.3) Core Purchase volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37.3 $39.9 Average active accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.4 73.7 Less: Walmart and Yamaha Average active accounts . . . (7.7) (1.7) Core Average active accounts . . . . . . . . . . . . . . . . . . . . . . 69.7 72.0 Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,774 $4,492 Less: Walmart and Yamaha Interest and fees on loans . . (559) (69) Core Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . $4,215 $4,423 (a) Accounts represent average active accounts in millions, which are credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. Loan receivables and Purchase volume $ in billions, and Interest and fees on loans $ in millions. 17

 
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 financial measures that have been adjusted to exclude amounts related to the Walmart and Yamaha portfolios, which we refer to as "Core" financial measures, in this Form 8-K and exhibits. These Core financial measures are not measures presented in accordance with GAAP. Given the sale of the Walmart and Yamaha portfolios which were completed in October 2019 and January 2020, respectively, we believe the presentation of certain Core financial measures is a more meaningful measure to investors of the Company's ongoing credit programs. The reconciliation of these Core financial measures to the comparable GAAP component is included in Exhibit 99.2.
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 reconciliation of tangible common equity to total equity reported in accordance with GAAP is included in the detailed financial tables included in Exhibit 99.2.