SYF 8-K
Synchrony Financial (SYF)
8-K
2023-07-18
For: 2023-07-18
View Original
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 July 18, 2023 , Synchrony Financial (the “Company”) issued a press release setting forth the Company’s second quarter 2023 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 July 18, 2023, issued by Synchrony Financial | |||||||
| 99.2 | Financial Data Supplement of the Company for the quarter ended June 30, 2023 | |||||||
| 99.3 | Financial Results Presentation of the Company for the quarter ended June 30, 2023 | |||||||
| 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: July 18, 2023 | 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
For Immediate Release Synchrony Financial (NYSE: SYF) July 18, 2023 |  | |||||||
SECOND QUARTER 2023 RESULTS AND KEY METRICS
2.1% Return on Assets | 12.3% CET1 Ratio | $399M Capital Returned | CEO COMMENTARY | |||||||||||||||||||||||||||||
| “Synchrony continues to demonstrate strong growth and financial performance as consumer behavior reverts to pre-pandemic norms - and as our products and value propositions resonate strongly across our diversified set of platforms and partners,” said Brian Doubles, Synchrony’s President and Chief Executive Officer. “As we monitor the health of our customers, we are also advancing our key strategic priorities, including the expansion of our multi-product strategy. We have now launched our installment solution suite with over 700 partners, providers and merchants, and are seeing the benefits of deeper relationships with our customers. “Our differentiated model has benefited the company through evolving environments. We consistently strive to power best-in-class experiences for our customers and strong outcomes for our partners, even as their needs change. As I look ahead to the remainder of this year, I am confident in our ability to execute on our strategic priorities and deliver value to our many stakeholders.” | ||||||||||||||||||||||||||||||||
$94.8B Loan Receivables | ||||||||||||||||||||||||||||||||
 | Net Earnings of $569 Million or $1.32 per Diluted Share | |||||||||||||||||||||||||||||||
 | Continued Record Level of Purchase Volume, and Strong Receivables Growth | |||||||||||||||||||||||||||||||
 | Returned $399 Million of Capital to Shareholders, including $300 Million of Share Repurchases | |||||||||||||||||||||||||||||||
STAMFORD, Conn. – Synchrony Financial (NYSE: SYF) today announced second quarter 2023 net earnings of $569 million, or $1.32 per diluted share, compared to $804 million, or $1.60 per diluted share in the second quarter 2022. | ||||||||||||||||||||||||||||||||
| KEY OPERATING & FINANCIAL METRICS* | ||||||||||||||||||||||||||||||||
| PERFORMANCE REFLECTS DIFFERENTIATED BUSINESS MODEL AND CONTINUED STRENGTH OF THE CONSUMER | ||||||||||||||||||||||||||||||||
•Purchase volume remained largely unchanged at $47.3 billion, and increased 6% on a Core basis** •Loan receivables were $94.8 billion and increased 15% •Average active accounts increased 1% to 69.5 million, and 7% on a Core basis •New accounts decreased 1% to 5.9 million, and remained largely unchanged on a Core basis •Net interest margin decreased 66 basis points to 14.94% •Efficiency ratio decreased 220 basis points to 35.5% •Return on assets decreased 130 basis points to 2.1% •Return on equity decreased 7 percentage points to 17%; return on tangible common equity*** decreased 8.6 percentage points to 21.7% | ||||||||||||||||||||||||||||||||
| CFO COMMENTARY | BUSINESS AND FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2023* | |||||||||||||||||||||||||
| “Synchrony’s second quarter results demonstrated the benefit of our differentiated model. Our broad reach across industries and compelling value propositions drove continued volume growth, while our disciplined underwriting, diverse funding opportunities and RSA provided effective offsets to changes in the macroeconomic environment,” said Brian Wenzel, Synchrony’s Executive Vice President and Chief Financial Officer. “Continuing our commitment to robust capital returns, we announced an incremental $1 billion share repurchase authorization through June of 2024, and a 9% increase in our common stock dividend. “Synchrony has a long history of capital generation and management, which is empowered by our resilient business model. Given the uncertainties in both the macro environment and the financial services industry, we remain focused on actively managing the assets that we originate, and prudently managing the capital we generate, to optimize Synchrony’s long-term value creation and resiliency.” | ||||||||||||||||||||||||||
| BUSINESS HIGHLIGHTS | ||||||||||||||||||||||||||
| CONTINUED TO EXPAND PORTFOLIO, ENHANCE PRODUCTS AND EXTEND REACH | ||||||||||||||||||||||||||
•Added or renewed more than 15 programs, including The Container Store, Zulily and NVA •Expanded multi-product strategy through our installment solution suite, including expanded partnership with At Home as the exclusive provider of a buy now, pay later financing option, Synchrony Pay Later, to offer customers more options and flexibility in how they make their purchases | ||||||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||
| EARNINGS DRIVEN BY CORE BUSINESS DRIVERS | ||||||||||||||||||||||||||
•Interest and fees on loans increased 19% to $4.8 billion, driven primarily by growth in average loan receivables and higher benchmark rates, partially offset by impacts of portfolios sold during 2Q’22. •Net interest income increased $318 million, or 8%, to $4.1 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 $240 million, or 21%, to $887 million, reflecting higher net charge-offs and the impact of portfolios sold during 2Q’22, partially offset by higher net interest income. •Provision for credit losses increased $659 million to $1.4 billion, driven by higher net charge-offs and a higher reserve build in 2Q’23. •Other income decreased $137 million, or 69%, to $61 million, driven primarily by a $120 million gain on portfolio sales in 2Q’22. •Other expense increased $86 million, or 8%, to $1.2 billion, driven primarily by growth related items, as well as operational losses and technology investments, partially offset by additional marketing and site strategy actions in 2Q’22 related to reinvestment of Gain on Sale proceeds. •Net earnings decreased to $569 million, compared to $804 million. | ||||||||||||||||||||||||||
| CREDIT QUALITY | ||||||||||||||||||||||||||
| CREDIT CONTINUES TO NORMALIZE IN LINE WITH EXPECTATIONS | ||||||||||||||||||||||||||
•Loans 30+ days past due as a percentage of total period-end loan receivables were 3.84% compared to 2.74% in the prior year, an increase of 110 basis points. •Net charge-offs as a percentage of total average loan receivables were 4.75% compared to 2.73% in the prior year, an increase of 202 basis points, and continue to normalize consistently with our expectations toward our underwriting target of 5.5-6.0% •The allowance for credit losses as a percentage of total period-end loan receivables was 10.34%, compared to 10.44% in the first quarter 2023. | ||||||||||||||||||||||||||
| SALES PLATFORM HIGHLIGHTS | |||||||||||||||||||||||
| DIVERSITY ACROSS OUR PLATFORMS CONTINUES TO PROVIDE RESILIENCE | |||||||||||||||||||||||
•Home & Auto purchase volume remained flat, as higher transaction values in Furniture and Home Specialty and commercial sales growth were generally offset by lower retail traffic and a reduction in gas prices. Period-end loan receivables increased 10%, reflecting lower payment rates. Interest and fees on loans were up 15%, primarily driven by the growth in loan receivables and higher benchmark rates. Average active accounts increased 6%. •Digital purchase volume increased 8%, reflecting growth in average active accounts. Period-end loan receivables increased 18%, driven by lower payment rates and continued purchase volume growth. Interest and fees on loans increased 34%, reflecting loan receivables growth, the impact of higher benchmark rates and maturation of newer programs. Average active accounts increased 8%. •Diversified & Value purchase volume increased 7%, driven by higher out-of-partner spend, strong retailer performance and penetration growth. Period-end loan receivables increased 14%, reflecting purchase volume growth and lower payment rates. Interest and fees on loans increased 32%, driven by the growth in loan receivables and higher benchmark rates. Average active accounts increased 7%. •Health & Wellness purchase volume increased 17%, reflecting broad-based growth in active accounts and strong customer engagement. Period-end loan receivables increased 22%, driven by continued higher promotional purchase volume and lower payment rates. Interest and fees on loans increased 22%, reflecting the growth in volume and loan receivables. Average active accounts increased 14%. •Lifestyle purchase volume increased 10%, reflecting stronger transaction values in Outdoor and Luxury. Period-end loan receivables increased 13%, driven by purchase volume growth and lower payment rates. Interest and fees on loans increased 20%, driven primarily by the growth in loan receivables and higher benchmark rates. Average active accounts increased 1%. | |||||||||||||||||||||||
| BALANCE SHEET, LIQUIDITY & CAPITAL | |||||||||||||||||||||||
| FUNDING, CAPITAL & LIQUIDITY REMAIN ROBUST | |||||||||||||||||||||||
•Loan receivables of $94.8 billion increased 15%; purchase volume remained flat and average active accounts increased 1%. •Deposits increased $11.1 billion, or 17%, to $75.8 billion and comprised 84% of funding. •Total liquidity, consisting of liquid assets and undrawn credit facilities, was $19.4 billion, or 17.9% of total assets. •The company returned $399 million in capital to shareholders, including $300 million of share repurchases and $99 million of common stock dividends. •As of June 30, 2023, the Company had a total remaining share repurchase authorization of $1 billion. •The estimated Common Equity Tier 1 ratio was 12.3% compared to 15.2%, and the estimated Tier 1 Capital ratio was 13.1% compared to 16.1%. | |||||||||||||||||||||||
*All comparisons are for the second quarter of 2023 compared to the second quarter of 2022, unless otherwise noted. ** Financial measures shown on a Core basis are non-GAAP measures and exclude from both the prior and current years amounts related to portfolios sold in the second quarter of 2022. See non-GAAP reconciliation in the financial tables. *** 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 and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed February 9, 2023, and the Company’s forthcoming Quarterly Report on Form 10-Q for the quarter ended June 30, 2023. 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 Tuesday, July 18, 2023, 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.synchronyfinancial.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" 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, including the future impacts of the novel coronavirus disease (“COVID-19”) outbreak and measures taken in response thereto for which future developments are highly uncertain and difficult to predict; 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 breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; 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 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 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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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, 2022, as filed on February 9, 2023. 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 “Core,” "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 | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | 2Q'23 vs. 2Q'22 | Jun 30, 2023 | Jun 30, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,120 | $ | 4,051 | $ | 4,106 | $ | 3,928 | $ | 3,802 | $ | 318 | 8.4 | % | $ | 8,171 | $ | 7,591 | $ | 580 | 7.6 | % | |||||||||||||||||||||||||||||||||||||
| Retailer share arrangements | (887) | (917) | (1,043) | (1,057) | (1,127) | 240 | (21.3) | % | (1,804) | (2,231) | 427 | (19.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 1,383 | 1,290 | 1,201 | 929 | 724 | 659 | 91.0 | % | 2,673 | 1,245 | 1,428 | 114.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, after retailer share arrangements and provision for credit losses | 1,850 | 1,844 | 1,862 | 1,942 | 1,951 | (101) | (5.2) | % | 3,694 | 4,115 | (421) | (10.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income | 61 | 65 | 30 | 44 | 198 | (137) | (69.2) | % | 126 | 306 | (180) | (58.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other expense | 1,169 | 1,119 | 1,151 | 1,064 | 1,083 | 86 | 7.9 | % | 2,288 | 2,122 | 166 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 742 | 790 | 741 | 922 | 1,066 | (324) | (30.4) | % | 1,532 | 2,299 | (767) | (33.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 173 | 189 | 164 | 219 | 262 | (89) | (34.0) | % | 362 | 563 | (201) | (35.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 569 | $ | 601 | $ | 577 | $ | 703 | $ | 804 | $ | (235) | (29.2) | % | $ | 1,170 | $ | 1,736 | $ | (566) | (32.6) | % | |||||||||||||||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 559 | $ | 590 | $ | 567 | $ | 692 | $ | 793 | $ | (234) | (29.5) | % | $ | 1,149 | $ | 1,715 | $ | (566) | (33.0) | % | |||||||||||||||||||||||||||||||||||||
| COMMON SHARE STATISTICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic EPS | $ | 1.32 | $ | 1.36 | $ | 1.27 | $ | 1.48 | $ | 1.61 | $ | (0.29) | (18.0) | % | $ | 2.74 | $ | 3.40 | $ | (0.66) | (19.4) | % | |||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 1.32 | $ | 1.35 | $ | 1.26 | $ | 1.47 | $ | 1.60 | $ | (0.28) | (17.5) | % | $ | 2.73 | $ | 3.38 | $ | (0.65) | (19.2) | % | |||||||||||||||||||||||||||||||||||||
| Dividend declared per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.22 | $ | 0.01 | 4.5 | % | $ | 0.46 | $ | 0.44 | $ | 0.02 | 4.5 | % | |||||||||||||||||||||||||||||||||||||
| Common stock price | $ | 33.92 | $ | 29.08 | $ | 32.86 | $ | 28.19 | $ | 27.62 | $ | 6.30 | 22.8 | % | $ | 33.92 | $ | 27.62 | $ | 6.30 | 22.8 | % | |||||||||||||||||||||||||||||||||||||
| Book value per share | $ | 30.25 | $ | 29.08 | $ | 27.70 | $ | 26.76 | $ | 25.95 | $ | 4.30 | 16.6 | % | $ | 30.25 | $ | 25.95 | $ | 4.30 | 16.6 | % | |||||||||||||||||||||||||||||||||||||
Tangible common equity per share(1) | $ | 24.67 | $ | 23.48 | $ | 22.24 | $ | 22.10 | $ | 21.39 | $ | 3.28 | 15.3 | % | $ | 24.67 | $ | 21.39 | $ | 3.28 | 15.3 | % | |||||||||||||||||||||||||||||||||||||
| Beginning common shares outstanding | 428.4 | 438.2 | 458.9 | 487.8 | 506.2 | (77.8) | (15.4) | % | 438.2 | 526.8 | (88.6) | (16.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares | — | — | — | — | — | — | — | % | — | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0.2 | 1.5 | 0.1 | 0.4 | 0.2 | — | — | % | 1.7 | 1.6 | 0.1 | 6.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | (10.5) | (11.3) | (20.8) | (29.3) | (18.6) | 8.1 | (43.5) | % | (21.8) | (40.6) | 18.8 | (46.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Ending common shares outstanding | 418.1 | 428.4 | 438.2 | 458.9 | 487.8 | (69.7) | (14.3) | % | 418.1 | 487.8 | (69.7) | (14.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | 422.7 | 434.4 | 445.8 | 468.5 | 493.0 | (70.3) | (14.3) | % | 418.9 | 504.1 | (85.2) | (16.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (fully diluted) | 424.2 | 437.2 | 448.9 | 470.7 | 495.3 | (71.1) | (14.4) | % | 421.1 | 507.3 | (86.2) | (17.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| (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 | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | 2Q'23 vs. 2Q'22 | Jun 30, 2023 | Jun 30, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| PERFORMANCE METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on assets(1) | 2.1 | % | 2.3 | % | 2.2 | % | 2.8 | % | 3.4 | % | (1.3) | % | 2.2 | % | 3.7 | % | (1.5) | % | |||||||||||||||||||||||||||||||||||||||||
Return on equity(2) | 17.0 | % | 18.2 | % | 17.5 | % | 21.1 | % | 24.0 | % | (7.0) | % | 17.6 | % | 25.8 | % | (8.2) | % | |||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity(3) | 21.7 | % | 23.2 | % | 22.1 | % | 26.6 | % | 30.3 | % | (8.6) | % | 22.5 | % | 32.6 | % | (10.1) | % | |||||||||||||||||||||||||||||||||||||||||
Net interest margin(4) | 14.94 | % | 15.22 | % | 15.58 | % | 15.52 | % | 15.60 | % | (0.66) | % | 15.08 | % | 15.70 | % | (0.62) | % | |||||||||||||||||||||||||||||||||||||||||
Efficiency ratio(5) | 35.5 | % | 35.0 | % | 37.2 | % | 36.5 | % | 37.7 | % | (2.2) | % | 35.2 | % | 37.5 | % | (2.3) | % | |||||||||||||||||||||||||||||||||||||||||
| Other expense as a % of average loan receivables, including held for sale | 5.07 | % | 5.00 | % | 5.16 | % | 5.02 | % | 5.21 | % | (0.14) | % | 5.03 | % | 5.15 | % | (0.12) | % | |||||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | 23.3 | % | 23.9 | % | 22.1 | % | 23.8 | % | 24.6 | % | (1.3) | % | 23.6 | % | 24.5 | % | (0.9) | % | |||||||||||||||||||||||||||||||||||||||||
| CREDIT QUALITY METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs as a % of average loan receivables, including held for sale | 4.75 | % | 4.49 | % | 3.48 | % | 3.00 | % | 2.73 | % | 2.02 | % | 4.62 | % | 2.73 | % | 1.89 | % | |||||||||||||||||||||||||||||||||||||||||
30+ days past due as a % of period-end loan receivables(6) | 3.84 | % | 3.81 | % | 3.65 | % | 3.28 | % | 2.74 | % | 1.10 | % | 3.84 | % | 2.74 | % | 1.10 | % | |||||||||||||||||||||||||||||||||||||||||
90+ days past due as a % of period-end loan receivables(6) | 1.77 | % | 1.87 | % | 1.69 | % | 1.43 | % | 1.22 | % | 0.55 | % | 1.77 | % | 1.22 | % | 0.55 | % | |||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | 1,096 | $ | 1,006 | $ | 776 | $ | 635 | $ | 567 | $ | 529 | 93.3 | % | $ | 2,102 | $ | 1,125 | $ | 977 | 86.8 | % | |||||||||||||||||||||||||||||||||||||
Loan receivables delinquent over 30 days(6) | $ | 3,641 | $ | 3,474 | $ | 3,377 | $ | 2,818 | $ | 2,262 | $ | 1,379 | 61.0 | % | $ | 3,641 | $ | 2,262 | $ | 1,379 | 61.0 | % | |||||||||||||||||||||||||||||||||||||
Loan receivables delinquent over 90 days(6) | $ | 1,677 | $ | 1,705 | $ | 1,562 | $ | 1,232 | $ | 1,005 | $ | 672 | 66.9 | % | $ | 1,677 | $ | 1,005 | $ | 672 | 66.9 | % | |||||||||||||||||||||||||||||||||||||
| Allowance for credit losses (period-end) | $ | 9,804 | $ | 9,517 | $ | 9,527 | $ | 9,102 | $ | 8,808 | $ | 996 | 11.3 | % | $ | 9,804 | $ | 8,808 | $ | 996 | 11.3 | % | |||||||||||||||||||||||||||||||||||||
Allowance coverage ratio(7) | 10.34 | % | 10.44 | % | 10.30 | % | 10.58 | % | 10.65 | % | (0.31) | % | 10.34 | % | 10.65 | % | (0.31) | % | |||||||||||||||||||||||||||||||||||||||||
| BUSINESS METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(8)(9) | $ | 47,276 | $ | 41,557 | $ | 47,923 | $ | 44,557 | $ | 47,217 | $ | 59 | 0.1 | % | $ | 88,833 | $ | 87,707 | $ | 1,126 | 1.3 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 94,801 | $ | 91,129 | $ | 92,470 | $ | 86,012 | $ | 82,674 | $ | 12,127 | 14.7 | % | $ | 94,801 | $ | 82,674 | $ | 12,127 | 14.7 | % | |||||||||||||||||||||||||||||||||||||
| Credit cards | $ | 89,299 | $ | 86,113 | $ | 87,630 | $ | 81,254 | $ | 78,062 | $ | 11,237 | 14.4 | % | $ | 89,299 | $ | 78,062 | $ | 11,237 | 14.4 | % | |||||||||||||||||||||||||||||||||||||
| Consumer installment loans | $ | 3,548 | $ | 3,204 | $ | 3,056 | $ | 2,945 | $ | 2,847 | $ | 701 | 24.6 | % | $ | 3,548 | $ | 2,847 | $ | 701 | 24.6 | % | |||||||||||||||||||||||||||||||||||||
| Commercial credit products | $ | 1,826 | $ | 1,690 | $ | 1,682 | $ | 1,723 | $ | 1,689 | $ | 137 | 8.1 | % | $ | 1,826 | $ | 1,689 | $ | 137 | 8.1 | % | |||||||||||||||||||||||||||||||||||||
| Other | $ | 128 | $ | 122 | $ | 102 | $ | 90 | $ | 76 | $ | 52 | 68.4 | % | $ | 128 | $ | 76 | $ | 52 | 68.4 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 92,489 | $ | 90,815 | $ | 88,436 | $ | 84,038 | $ | 83,412 | $ | 9,077 | 10.9 | % | $ | 91,656 | $ | 83,081 | $ | 8,575 | 10.3 | % | |||||||||||||||||||||||||||||||||||||
Period-end active accounts (in thousands)(10) | 70,269 | 68,589 | 70,763 | 66,503 | 65,969 | 4,300 | 6.5 | % | 70,269 | 65,969 | 4,300 | 6.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(9)(10) | 69,517 | 69,494 | 68,373 | 66,266 | 68,671 | 846 | 1.2 | % | 69,637 | 69,438 | 199 | 0.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| LIQUIDITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liquid assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 12,706 | $ | 15,303 | $ | 10,294 | $ | 11,962 | $ | 10,682 | $ | 2,024 | 18.9 | % | $ | 12,706 | $ | 10,682 | $ | 2,024 | 18.9 | % | |||||||||||||||||||||||||||||||||||||
| Total liquid assets | $ | 16,448 | $ | 18,778 | $ | 14,201 | $ | 16,566 | $ | 15,177 | $ | 1,271 | 8.4 | % | $ | 16,448 | $ | 15,177 | $ | 1,271 | 8.4 | % | |||||||||||||||||||||||||||||||||||||
| Undrawn credit facilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Undrawn credit facilities | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | 3,700 | $ | 3,700 | $ | (750) | (20.3) | % | $ | 2,950 | $ | 3,700 | $ | (750) | (20.3) | % | |||||||||||||||||||||||||||||||||||||
| Total liquid assets and undrawn credit facilities | $ | 19,398 | $ | 21,728 | $ | 17,151 | $ | 20,266 | $ | 18,877 | $ | 521 | 2.8 | % | $ | 19,398 | $ | 18,877 | $ | 521 | 2.8 | % | |||||||||||||||||||||||||||||||||||||
| Liquid assets % of total assets | 15.13 | % | 17.41 | % | 13.58 | % | 16.44 | % | 15.94 | % | (0.81) | % | 15.13 | % | 15.94 | % | (0.81) | % | |||||||||||||||||||||||||||||||||||||||||
| Liquid assets including undrawn credit facilities % of total assets | 17.85 | % | 20.15 | % | 16.40 | % | 20.11 | % | 19.83 | % | (1.98) | % | 17.85 | % | 19.83 | % | (1.98) | % | |||||||||||||||||||||||||||||||||||||||||
| (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) 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 | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | 2Q'23 vs. 2Q'22 | Jun 30, 2023 | Jun 30, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 4,812 | $ | 4,616 | $ | 4,576 | $ | 4,258 | $ | 4,039 | $ | 773 | 19.1 | % | $ | 9,428 | $ | 8,047 | $ | 1,381 | 17.2 | % | |||||||||||||||||||||||||||||||||||||
| Interest on cash and debt securities | 209 | 170 | 132 | 84 | 35 | 174 | NM | 379 | 49 | 330 | NM | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest income | 5,021 | 4,786 | 4,708 | 4,342 | 4,074 | 947 | 23.2 | % | 9,807 | 8,096 | 1,711 | 21.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest on deposits | 717 | 557 | 441 | 280 | 160 | 557 | NM | 1,274 | 287 | 987 | NM | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest on borrowings of consolidated securitization entities | 78 | 77 | 69 | 54 | 40 | 38 | 95.0 | % | 155 | 73 | 82 | 112.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest on senior unsecured notes | 106 | 101 | 92 | 80 | 72 | 34 | 47.2 | % | 207 | 145 | 62 | 42.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest expense | 901 | 735 | 602 | 414 | 272 | 629 | 231.3 | % | 1,636 | 505 | 1,131 | 224.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 4,120 | 4,051 | 4,106 | 3,928 | 3,802 | 318 | 8.4 | % | 8,171 | 7,591 | 580 | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Retailer share arrangements | (887) | (917) | (1,043) | (1,057) | (1,127) | 240 | (21.3) | % | (1,804) | (2,231) | 427 | (19.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 1,383 | 1,290 | 1,201 | 929 | 724 | 659 | 91.0 | % | 2,673 | 1,245 | 1,428 | 114.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, after retailer share arrangements and provision for credit losses | 1,850 | 1,844 | 1,862 | 1,942 | 1,951 | (101) | (5.2) | % | 3,694 | 4,115 | (421) | (10.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interchange revenue | 262 | 232 | 251 | 238 | 263 | (1) | (0.4) | % | 494 | 493 | 1 | 0.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Debt cancellation fees | 125 | 115 | 102 | 103 | 93 | 32 | 34.4 | % | 240 | 182 | 58 | 31.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Loyalty programs | (345) | (298) | (351) | (326) | (322) | (23) | 7.1 | % | (643) | (580) | (63) | 10.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | 19 | 16 | 28 | 29 | 164 | (145) | (88.4) | % | 35 | 211 | (176) | (83.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | 61 | 65 | 30 | 44 | 198 | (137) | (69.2) | % | 126 | 306 | (180) | (58.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee costs | 451 | 451 | 459 | 416 | 404 | 47 | 11.6 | % | 902 | 806 | 96 | 11.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Professional fees | 209 | 186 | 233 | 204 | 185 | 24 | 13.0 | % | 395 | 395 | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Marketing and business development | 133 | 131 | 121 | 115 | 135 | (2) | (1.5) | % | 264 | 251 | 13 | 5.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Information processing | 179 | 166 | 165 | 150 | 163 | 16 | 9.8 | % | 345 | 308 | 37 | 12.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | 197 | 185 | 173 | 179 | 196 | 1 | 0.5 | % | 382 | 362 | 20 | 5.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total other expense | 1,169 | 1,119 | 1,151 | 1,064 | 1,083 | 86 | 7.9 | % | 2,288 | 2,122 | 166 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 742 | 790 | 741 | 922 | 1,066 | (324) | (30.4) | % | 1,532 | 2,299 | (767) | (33.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 173 | 189 | 164 | 219 | 262 | (89) | (34.0) | % | 362 | 563 | (201) | (35.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 569 | $ | 601 | $ | 577 | $ | 703 | $ | 804 | $ | (235) | (29.2) | % | $ | 1,170 | $ | 1,736 | $ | (566) | (32.6) | % | |||||||||||||||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 559 | $ | 590 | $ | 567 | $ | 692 | $ | 793 | $ | (234) | (29.5) | % | $ | 1,149 | $ | 1,715 | $ | (566) | (33.0) | % | |||||||||||||||||||||||||||||||||||||
3
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| STATEMENTS OF FINANCIAL POSITION | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Jun 30, 2023 vs. Jun 30, 2022 | |||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 12,706 | $ | 15,303 | $ | 10,294 | $ | 11,962 | $ | 10,682 | $ | 2,024 | 18.9 | % | ||||||||||||||||||||||||
| Debt securities | 4,294 | 4,008 | 4,879 | 5,082 | 5,012 | (718) | (14.3) | % | ||||||||||||||||||||||||||||||
| Loan receivables: | ||||||||||||||||||||||||||||||||||||||
| Unsecuritized loans held for investment | 75,532 | 72,079 | 72,638 | 67,651 | 63,350 | 12,182 | 19.2 | % | ||||||||||||||||||||||||||||||
| Restricted loans of consolidated securitization entities | 19,269 | 19,050 | 19,832 | 18,361 | 19,324 | (55) | (0.3) | % | ||||||||||||||||||||||||||||||
| Total loan receivables | 94,801 | 91,129 | 92,470 | 86,012 | 82,674 | 12,127 | 14.7 | % | ||||||||||||||||||||||||||||||
| Less: Allowance for credit losses | (9,804) | (9,517) | (9,527) | (9,102) | (8,808) | (996) | 11.3 | % | ||||||||||||||||||||||||||||||
| Loan receivables, net | 84,997 | 81,612 | 82,943 | 76,910 | 73,866 | 11,131 | 15.1 | % | ||||||||||||||||||||||||||||||
| Goodwill | 1,105 | 1,105 | 1,105 | 1,105 | 1,105 | — | — | % | ||||||||||||||||||||||||||||||
| Intangible assets, net | 1,226 | 1,297 | 1,287 | 1,033 | 1,118 | 108 | 9.7 | % | ||||||||||||||||||||||||||||||
| Other assets | 4,369 | 4,528 | 4,056 | 4,674 | 3,417 | 952 | 27.9 | % | ||||||||||||||||||||||||||||||
| Total assets | $ | 108,697 | $ | 107,853 | $ | 104,564 | $ | 100,766 | $ | 95,200 | $ | 13,497 | 14.2 | % | ||||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 75,344 | $ | 74,008 | $ | 71,336 | $ | 68,032 | $ | 64,328 | $ | 11,016 | 17.1 | % | ||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 421 | 417 | 399 | 372 | 381 | 40 | 10.5 | % | ||||||||||||||||||||||||||||||
| Total deposits | 75,765 | 74,425 | 71,735 | 68,404 | 64,709 | 11,056 | 17.1 | % | ||||||||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 5,522 | 6,228 | 6,227 | 6,360 | 5,687 | (165) | (2.9) | % | ||||||||||||||||||||||||||||||
| Senior and subordinated unsecured notes | 8,709 | 8,706 | 7,964 | 7,961 | 6,470 | 2,239 | 34.6 | % | ||||||||||||||||||||||||||||||
| Total borrowings | 14,231 | 14,934 | 14,191 | 14,321 | 12,157 | 2,074 | 17.1 | % | ||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 5,321 | 5,301 | 5,765 | 5,029 | 4,941 | 380 | 7.7 | % | ||||||||||||||||||||||||||||||
| Total liabilities | 95,317 | 94,660 | 91,691 | 87,754 | 81,807 | 13,510 | 16.5 | % | ||||||||||||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||||||||||||||
| Preferred stock | 734 | 734 | 734 | 734 | 734 | — | — | % | ||||||||||||||||||||||||||||||
| Common stock | 1 | 1 | 1 | 1 | 1 | — | — | % | ||||||||||||||||||||||||||||||
| Additional paid-in capital | 9,727 | 9,705 | 9,718 | 9,685 | 9,663 | 64 | 0.7 | % | ||||||||||||||||||||||||||||||
| Retained earnings | 17,828 | 17,369 | 16,716 | 16,252 | 15,679 | 2,149 | 13.7 | % | ||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (96) | (102) | (125) | (187) | (149) | 53 | (35.6) | % | ||||||||||||||||||||||||||||||
| Treasury stock | (14,814) | (14,514) | (14,171) | (13,473) | (12,535) | (2,279) | 18.2 | % | ||||||||||||||||||||||||||||||
| Total equity | 13,380 | 13,193 | 12,873 | 13,012 | 13,393 | (13) | (0.1) | % | ||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 108,697 | $ | 107,853 | $ | 104,564 | $ | 100,766 | $ | 95,200 | $ | 13,497 | 14.2 | % | ||||||||||||||||||||||||
4
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 14,198 | $ | 178 | 5.03 | % | $ | 12,365 | $ | 140 | 4.59 | % | $ | 11,092 | $ | 104 | 3.72 | % | $ | 11,506 | $ | 65 | 2.24 | % | $ | 9,249 | $ | 20 | 0.87 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities available for sale | 3,948 | 31 | 3.15 | % | 4,772 | 30 | 2.55 | % | 5,002 | 28 | 2.22 | % | 4,861 | 19 | 1.55 | % | 5,063 | 15 | 1.19 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan receivables, including held for sale: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 87,199 | 4,679 | 21.52 | % | 85,904 | 4,497 | 21.23 | % | 83,597 | 4,462 | 21.18 | % | 79,354 | 4,153 | 20.76 | % | 78,912 | 3,943 | 20.04 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer installment loans | 3,359 | 94 | 11.22 | % | 3,103 | 83 | 10.85 | % | 2,991 | 78 | 10.35 | % | 2,884 | 74 | 10.18 | % | 2,775 | 69 | 9.97 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial credit products | 1,808 | 36 | 7.99 | % | 1,697 | 34 | 8.13 | % | 1,757 | 34 | 7.68 | % | 1,720 | 30 | 6.92 | % | 1,654 | 25 | 6.06 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 123 | 3 | 9.78 | % | 111 | 2 | 7.31 | % | 91 | 2 | 8.72 | % | 80 | 1 | 4.96 | % | 71 | 2 | 11.30 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loan receivables, including held for sale | 92,489 | 4,812 | 20.87 | % | 90,815 | 4,616 | 20.61 | % | 88,436 | 4,576 | 20.53 | % | 84,038 | 4,258 | 20.10 | % | 83,412 | 4,039 | 19.42 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 110,635 | 5,021 | 18.20 | % | 107,952 | 4,786 | 17.98 | % | 104,530 | 4,708 | 17.87 | % | 100,405 | 4,342 | 17.16 | % | 97,724 | 4,074 | 16.72 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 976 | 1,024 | 1,071 | 1,580 | 1,614 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (9,540) | (9,262) | (9,167) | (8,878) | (8,651) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 6,330 | 6,128 | 5,772 | 5,587 | 5,386 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-earning assets | (2,234) | (2,110) | (2,324) | (1,711) | (1,651) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 108,401 | $ | 105,842 | $ | 102,206 | $ | 98,694 | $ | 96,073 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 74,812 | $ | 717 | 3.84 | % | $ | 72,216 | $ | 557 | 3.13 | % | $ | 69,343 | $ | 441 | 2.52 | % | $ | 66,787 | $ | 280 | 1.66 | % | $ | 63,961 | $ | 160 | 1.00 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 5,863 | 78 | 5.34 | % | 6,229 | 77 | 5.01 | % | 6,231 | 69 | 4.39 | % | 6,258 | 54 | 3.42 | % | 6,563 | 40 | 2.44 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior and subordinated unsecured notes | 8,707 | 106 | 4.88 | % | 8,442 | 101 | 4.85 | % | 7,962 | 92 | 4.58 | % | 7,102 | 80 | 4.47 | % | 6,974 | 72 | 4.14 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 89,382 | 901 | 4.04 | % | 86,887 | 735 | 3.43 | % | 83,536 | 602 | 2.86 | % | 80,147 | 414 | 2.05 | % | 77,498 | 272 | 1.41 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 420 | 411 | 388 | 371 | 396 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 5,164 | 5,130 | 5,217 | 4,938 | 4,717 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-bearing liabilities | 5,584 | 5,541 | 5,605 | 5,309 | 5,113 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 94,966 | 92,428 | 89,141 | 85,456 | 82,611 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total equity | 13,435 | 13,414 | 13,065 | 13,238 | 13,462 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 108,401 | $ | 105,842 | $ | 102,206 | $ | 98,694 | $ | 96,073 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,120 | $ | 4,051 | $ | 4,106 | $ | 3,928 | $ | 3,802 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate spread(1) | 14.16 | % | 14.55 | % | 15.01 | % | 15.11 | % | 15.31 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin(2) | 14.94 | % | 15.22 | % | 15.58 | % | 15.52 | % | 15.60 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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) | |||||||||||||||||||||||||||||||||||
| Six Months Ended Jun 30, 2023 | Six Months Ended Jun 30, 2022 | ||||||||||||||||||||||||||||||||||
| 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 | $ | 13,287 | $ | 318 | 4.83 | % | $ | 9,113 | $ | 25 | 0.55 | % | |||||||||||||||||||||||
| Securities available for sale | 4,358 | 61 | 2.82 | % | 5,287 | 24 | 0.92 | % | |||||||||||||||||||||||||||
| Loan receivables, including held for sale: | |||||||||||||||||||||||||||||||||||
| Credit cards | 86,555 | 9,176 | 21.38 | % | 78,738 | 7,856 | 20.12 | % | |||||||||||||||||||||||||||
| Consumer installment loans | 3,232 | 177 | 11.04 | % | 2,729 | 135 | 9.98 | % | |||||||||||||||||||||||||||
| Commercial credit products | 1,753 | 70 | 8.05 | % | 1,545 | 53 | 6.92 | % | |||||||||||||||||||||||||||
| Other | 116 | 5 | 8.69 | % | 69 | 3 | 8.77 | % | |||||||||||||||||||||||||||
| Total loan receivables, including held for sale | 91,656 | 9,428 | 20.74 | % | 83,081 | 8,047 | 19.53 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 109,301 | 9,807 | 18.09 | % | 97,481 | 8,096 | 16.75 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 1,000 | 1,620 | |||||||||||||||||||||||||||||||||
| Allowance for loan losses | (9,402) | (8,663) | |||||||||||||||||||||||||||||||||
| Other assets | 6,229 | 5,378 | |||||||||||||||||||||||||||||||||
| Total non-interest-earning assets | (2,173) | (1,665) | |||||||||||||||||||||||||||||||||
| Total assets | $ | 107,128 | $ | 95,816 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 73,521 | $ | 1,274 | 3.49 | % | $ | 63,142 | $ | 287 | 0.92 | % | |||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 6,045 | 155 | 5.17 | % | 6,695 | 73 | 2.20 | % | |||||||||||||||||||||||||||
| Senior and subordinated unsecured notes | 8,575 | 207 | 4.87 | % | 7,096 | 145 | 4.12 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 88,141 | 1,636 | 3.74 | % | 76,933 | 505 | 1.32 | % | |||||||||||||||||||||||||||
| Non-interest-bearing liabilities | |||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 415 | 385 | |||||||||||||||||||||||||||||||||
| Other liabilities | 5,147 | 4,903 | |||||||||||||||||||||||||||||||||
| Total non-interest-bearing liabilities | 5,562 | 5,288 | |||||||||||||||||||||||||||||||||
| Total liabilities | 93,703 | 82,221 | |||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||
| Total equity | 13,425 | 13,595 | |||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 107,128 | $ | 95,816 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 8,171 | $ | 7,591 | |||||||||||||||||||||||||||||||
Interest rate spread(1) | 14.35 | % | 15.43 | % | |||||||||||||||||||||||||||||||
Net interest margin(2) | 15.08 | % | 15.70 | % | |||||||||||||||||||||||||||||||
| (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 | ||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Jun 30, 2023 vs. Jun 30, 2022 | |||||||||||||||||||||||||||||||||
| BALANCE SHEET STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Total common equity | $ | 12,646 | $ | 12,459 | $ | 12,139 | $ | 12,278 | $ | 12,659 | $ | (13) | (0.1) | % | ||||||||||||||||||||||||
| Total common equity as a % of total assets | 11.63 | % | 11.55 | % | 11.61 | % | 12.18 | % | 13.30 | % | (1.67) | % | ||||||||||||||||||||||||||
| Tangible assets | $ | 106,366 | $ | 105,451 | $ | 102,172 | $ | 98,628 | $ | 92,977 | $ | 13,389 | 14.4 | % | ||||||||||||||||||||||||
Tangible common equity(1) | $ | 10,315 | $ | 10,057 | $ | 9,747 | $ | 10,140 | $ | 10,436 | $ | (121) | (1.2) | % | ||||||||||||||||||||||||
Tangible common equity as a % of tangible assets(1) | 9.70 | % | 9.54 | % | 9.54 | % | 10.28 | % | 11.22 | % | (1.52) | % | ||||||||||||||||||||||||||
Tangible common equity per share(1) | $ | 24.67 | $ | 23.48 | $ | 22.24 | $ | 22.10 | $ | 21.39 | $ | 3.28 | 15.3 | % | ||||||||||||||||||||||||
REGULATORY CAPITAL RATIOS(2)(3) | ||||||||||||||||||||||||||||||||||||||
| Basel III - CECL Transition | ||||||||||||||||||||||||||||||||||||||
Total risk-based capital ratio(4) | 15.2 | % | 15.4 | % | 15.0 | % | 16.5 | % | 17.4 | % | ||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio(5) | 13.1 | % | 13.3 | % | 13.6 | % | 15.2 | % | 16.1 | % | ||||||||||||||||||||||||||||
Tier 1 leverage ratio(6) | 11.6 | % | 11.6 | % | 12.3 | % | 13.2 | % | 13.8 | % | ||||||||||||||||||||||||||||
| Common equity Tier 1 capital ratio | 12.3 | % | 12.5 | % | 12.8 | % | 14.3 | % | 15.2 | % | ||||||||||||||||||||||||||||
| (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 June 30, 2023 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 2023 and 2022 reflect 50% and 25%, 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. | ||||||||||||||||||||||||||||||||||||||
7
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PLATFORM RESULTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | 2Q'23 vs. 2Q'22 | Jun 30, 2023 | Jun 30, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| HOME & AUTO | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 12,853 | $ | 10,863 | $ | 11,860 | $ | 12,273 | $ | 12,895 | $ | (42) | (0.3) | % | $ | 23,716 | $ | 23,155 | $ | 561 | 2.4 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 30,926 | $ | 29,733 | $ | 29,978 | $ | 29,017 | $ | 27,989 | $ | 2,937 | 10.5 | % | $ | 30,926 | $ | 27,989 | $ | 2,937 | 10.5 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 30,210 | $ | 29,690 | $ | 29,402 | $ | 28,387 | $ | 27,106 | $ | 3,104 | 11.5 | % | $ | 29,951 | $ | 26,758 | $ | 3,193 | 11.9 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 18,935 | 18,521 | 18,539 | 18,350 | 17,942 | 993 | 5.5 | % | 18,769 | 17,746 | 1,023 | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,275 | $ | 1,225 | $ | 1,264 | $ | 1,210 | $ | 1,108 | $ | 167 | 15.1 | % | $ | 2,500 | $ | 2,196 | $ | 304 | 13.8 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 27 | $ | 25 | $ | 23 | $ | 20 | $ | 23 | $ | 4 | 17.4 | % | $ | 52 | $ | 44 | $ | 8 | 18.2 | % | |||||||||||||||||||||||||||||||||||||
| DIGITAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 13,472 | $ | 12,261 | $ | 14,794 | $ | 12,941 | $ | 12,463 | $ | 1,009 | 8.1 | % | $ | 25,733 | $ | 23,659 | $ | 2,074 | 8.8 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 25,758 | $ | 24,944 | $ | 25,522 | $ | 22,925 | $ | 21,842 | $ | 3,916 | 17.9 | % | $ | 25,758 | $ | 21,842 | $ | 3,916 | 17.9 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 25,189 | $ | 24,982 | $ | 23,931 | $ | 22,361 | $ | 21,255 | $ | 3,934 | 18.5 | % | $ | 25,086 | $ | 21,208 | $ | 3,878 | 18.3 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 20,559 | 20,564 | 20,073 | 19,418 | 19,069 | 1,490 | 7.8 | % | 20,570 | 19,042 | 1,528 | 8.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,422 | $ | 1,363 | $ | 1,322 | $ | 1,197 | $ | 1,058 | $ | 364 | 34.4 | % | $ | 2,785 | $ | 2,080 | $ | 705 | 33.9 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | (2) | $ | 1 | $ | (14) | $ | (22) | $ | (13) | $ | 11 | (84.6) | % | $ | (1) | $ | (25) | $ | 24 | (96.0) | % | |||||||||||||||||||||||||||||||||||||
| DIVERSIFIED & VALUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 15,356 | $ | 13,439 | $ | 16,266 | $ | 14,454 | $ | 14,388 | $ | 968 | 6.7 | % | $ | 28,795 | $ | 25,946 | $ | 2,849 | 11.0 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 18,329 | $ | 17,702 | $ | 18,617 | $ | 16,566 | $ | 16,076 | $ | 2,253 | 14.0 | % | $ | 18,329 | $ | 16,076 | $ | 2,253 | 14.0 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 17,935 | $ | 17,713 | $ | 17,274 | $ | 16,243 | $ | 15,498 | $ | 2,437 | 15.7 | % | $ | 17,825 | $ | 15,314 | $ | 2,511 | 16.4 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 20,346 | 20,807 | 20,386 | 19,411 | 19,026 | 1,320 | 6.9 | % | 20,652 | 19,189 | 1,463 | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,091 | $ | 1,070 | $ | 1,023 | $ | 935 | $ | 826 | $ | 265 | 32.1 | % | $ | 2,161 | $ | 1,652 | $ | 509 | 30.8 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | (21) | $ | (14) | $ | (42) | $ | (19) | $ | (35) | $ | 14 | (40.0) | % | $ | (35) | $ | (44) | $ | 9 | (20.5) | % | |||||||||||||||||||||||||||||||||||||
| HEALTH & WELLNESS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 4,015 | $ | 3,690 | $ | 3,505 | $ | 3,514 | $ | 3,443 | $ | 572 | 16.6 | % | $ | 7,705 | $ | 6,550 | $ | 1,155 | 17.6 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 13,327 | $ | 12,581 | $ | 12,179 | $ | 11,590 | $ | 10,932 | $ | 2,395 | 21.9 | % | $ | 13,327 | $ | 10,932 | $ | 2,395 | 21.9 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 12,859 | $ | 12,309 | $ | 11,846 | $ | 11,187 | $ | 10,596 | $ | 2,263 | 21.4 | % | $ | 12,585 | $ | 10,424 | $ | 2,161 | 20.7 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 7,063 | 6,887 | 6,673 | 6,411 | 6,177 | 886 | 14.3 | % | 6,976 | 6,102 | 874 | 14.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 786 | $ | 735 | $ | 744 | $ | 706 | $ | 644 | $ | 142 | 22.0 | % | $ | 1,521 | $ | 1,260 | $ | 261 | 20.7 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 54 | $ | 61 | $ | 60 | $ | 55 | $ | 49 | $ | 5 | 10.2 | % | $ | 115 | $ | 102 | $ | 13 | 12.7 | % | |||||||||||||||||||||||||||||||||||||
| LIFESTYLE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 1,580 | $ | 1,302 | $ | 1,498 | $ | 1,374 | $ | 1,431 | $ | 149 | 10.4 | % | $ | 2,882 | $ | 2,626 | $ | 256 | 9.7 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 6,280 | $ | 5,971 | $ | 5,970 | $ | 5,686 | $ | 5,558 | $ | 722 | 13.0 | % | $ | 6,280 | $ | 5,558 | $ | 722 | 13.0 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 6,106 | $ | 5,919 | $ | 5,772 | $ | 5,610 | $ | 5,443 | $ | 663 | 12.2 | % | $ | 6,013 | $ | 5,411 | $ | 602 | 11.1 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 2,529 | 2,611 | 2,585 | 2,524 | 2,510 | 19 | 0.8 | % | 2,575 | 2,551 | 24 | 0.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 232 | $ | 223 | $ | 221 | $ | 208 | $ | 194 | $ | 38 | 19.6 | % | $ | 455 | $ | 385 | $ | 70 | 18.2 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 7 | $ | 7 | $ | 7 | $ | 8 | $ | 7 | $ | — | — | % | $ | 14 | $ | 13 | $ | 1 | 7.7 | % | |||||||||||||||||||||||||||||||||||||
CORP, OTHER(4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1)(2) | $ | — | $ | 2 | $ | — | $ | 1 | $ | 2,597 | $ | (2,597) | (100.0) | % | $ | 2 | $ | 5,771 | $ | (5,769) | (100.0) | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 181 | $ | 198 | $ | 204 | $ | 228 | $ | 277 | $ | (96) | (34.7) | % | $ | 181 | $ | 277 | $ | (96) | (34.7) | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 190 | $ | 202 | $ | 211 | $ | 250 | $ | 3,514 | $ | (3,324) | (94.6) | % | $ | 196 | $ | 3,966 | $ | (3,770) | (95.1) | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(2)(3) | 85 | 104 | 117 | 152 | 3,947 | (3,862) | (97.8) | % | 95 | 4,808 | (4,713) | (98.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 6 | $ | — | $ | 2 | $ | 2 | $ | 209 | $ | (203) | (97.1) | % | $ | 6 | $ | 474 | $ | (468) | (98.7) | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | (4) | $ | (15) | $ | (4) | $ | 2 | $ | 167 | $ | (171) | (102.4) | % | $ | (19) | $ | 216 | $ | (235) | (108.8) | % | |||||||||||||||||||||||||||||||||||||
| TOTAL SYF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1)(2) | $ | 47,276 | $ | 41,557 | $ | 47,923 | $ | 44,557 | $ | 47,217 | $ | 59 | 0.1 | % | $ | 88,833 | $ | 87,707 | $ | 1,126 | 1.3 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 94,801 | $ | 91,129 | $ | 92,470 | $ | 86,012 | $ | 82,674 | $ | 12,127 | 14.7 | % | $ | 94,801 | $ | 82,674 | $ | 12,127 | 14.7 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 92,489 | $ | 90,815 | $ | 88,436 | $ | 84,038 | $ | 83,412 | $ | 9,077 | 10.9 | % | $ | 91,656 | $ | 83,081 | $ | 8,575 | 10.3 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(2)(3) | 69,517 | 69,494 | 68,373 | 66,266 | 68,671 | 846 | 1.2 | % | 69,637 | 69,438 | 199 | 0.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 4,812 | $ | 4,616 | $ | 4,576 | $ | 4,258 | $ | 4,039 | $ | 773 | 19.1 | % | $ | 9,428 | $ | 8,047 | $ | 1,381 | 17.2 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 61 | $ | 65 | $ | 30 | $ | 44 | $ | 198 | $ | (137) | (69.2) | % | $ | 126 | $ | 306 | $ | (180) | (58.8) | % | |||||||||||||||||||||||||||||||||||||
| (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) Includes activity and balances associated with loan receivables held for sale. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (4) Includes activity and balances associated with the Gap Inc. and BP portfolios which were both sold in 2Q 2022. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1) | |||||||||||||||||||||||||||||
| (unaudited, $ in millions, except per share statistics) | |||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | |||||||||||||||||||||||||
COMMON EQUITY AND REGULATORY CAPITAL MEASURES(2) | |||||||||||||||||||||||||||||
| GAAP Total equity | $ | 13,380 | $ | 13,193 | $ | 12,873 | $ | 13,012 | $ | 13,393 | |||||||||||||||||||
| Less: Preferred stock | (734) | (734) | (734) | (734) | (734) | ||||||||||||||||||||||||
| Less: Goodwill | (1,105) | (1,105) | (1,105) | (1,105) | (1,105) | ||||||||||||||||||||||||
| Less: Intangible assets, net | (1,226) | (1,297) | (1,287) | (1,033) | (1,118) | ||||||||||||||||||||||||
| Tangible common equity | $ | 10,315 | $ | 10,057 | $ | 9,747 | $ | 10,140 | $ | 10,436 | |||||||||||||||||||
| Add: CECL transition amount | 1,146 | 1,146 | 1,719 | 1,719 | 1,719 | ||||||||||||||||||||||||
| Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss) | 267 | 270 | 293 | 419 | 391 | ||||||||||||||||||||||||
| Common equity Tier 1 | $ | 11,728 | $ | 11,473 | $ | 11,759 | $ | 12,278 | $ | 12,546 | |||||||||||||||||||
| Preferred stock | 734 | 734 | 734 | 734 | 734 | ||||||||||||||||||||||||
| Tier 1 capital | $ | 12,462 | $ | 12,207 | $ | 12,493 | $ | 13,012 | $ | 13,280 | |||||||||||||||||||
| Add: Subordinated debt | 741 | 740 | — | — | — | ||||||||||||||||||||||||
| Add: Allowance for credit losses includible in risk-based capital | 1,276 | 1,233 | 1,220 | 1,142 | 1,099 | ||||||||||||||||||||||||
| Total Risk-based capital | $ | 14,479 | $ | 14,180 | $ | 13,713 | $ | 14,154 | $ | 14,379 | |||||||||||||||||||
ASSET MEASURES(2) | |||||||||||||||||||||||||||||
| Total average assets | $ | 108,401 | $ | 105,842 | $ | 102,206 | $ | 98,694 | $ | 96,073 | |||||||||||||||||||
| Adjustments for: | |||||||||||||||||||||||||||||
| Add: CECL transition amount | 1,146 | 1,146 | 1,719 | 1,719 | 1,719 | ||||||||||||||||||||||||
| Disallowed goodwill and other disallowed intangible assets (net of related deferred tax liabilities) and other | (2,035) | (2,081) | (2,046) | (1,776) | (1,878) | ||||||||||||||||||||||||
| Total assets for leverage purposes | $ | 107,512 | $ | 104,907 | $ | 101,879 | $ | 98,637 | $ | 95,914 | |||||||||||||||||||
| Risk-weighted assets | $ | 95,060 | $ | 91,873 | $ | 91,596 | $ | 85,664 | $ | 82,499 | |||||||||||||||||||
| CECL FULLY PHASED-IN CAPITAL MEASURES | |||||||||||||||||||||||||||||
| Tier 1 capital | $ | 12,462 | $ | 12,207 | $ | 12,493 | $ | 13,012 | $ | 13,280 | |||||||||||||||||||
| Less: CECL transition adjustment | (1,146) | (1,146) | (1,719) | (1,719) | (1,719) | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) | $ | 11,316 | $ | 11,061 | $ | 10,774 | $ | 11,293 | $ | 11,561 | |||||||||||||||||||
| Add: Allowance for credit losses | 9,804 | 9,517 | 9,527 | 9,102 | 8,808 | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) + Reserves for credit losses | $ | 21,120 | $ | 20,578 | $ | 20,301 | $ | 20,395 | $ | 20,369 | |||||||||||||||||||
| Risk-weighted assets | $ | 95,060 | $ | 91,873 | $ | 91,596 | $ | 85,664 | $ | 82,499 | |||||||||||||||||||
| Less: CECL transition adjustment | (580) | (580) | (870) | (870) | (870) | ||||||||||||||||||||||||
| Risk-weighted assets (CECL fully phased-in) | $ | 94,480 | $ | 91,293 | $ | 90,726 | $ | 84,794 | $ | 81,629 | |||||||||||||||||||
| TANGIBLE COMMON EQUITY PER SHARE | |||||||||||||||||||||||||||||
| GAAP book value per share | $ | 30.25 | $ | 29.08 | $ | 27.70 | $ | 26.76 | $ | 25.95 | |||||||||||||||||||
| Less: Goodwill | (2.65) | (2.58) | (2.52) | (2.41) | (2.27) | ||||||||||||||||||||||||
| Less: Intangible assets, net | (2.93) | (3.02) | (2.94) | (2.25) | (2.29) | ||||||||||||||||||||||||
| Tangible common equity per share | $ | 24.67 | $ | 23.48 | $ | 22.24 | $ | 22.10 | $ | 21.39 | |||||||||||||||||||
| (1) Regulatory measures at June 30, 2023 are presented on an estimated basis. | |||||||||||||||||||||||||||||
| (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 2023 and 2022 reflect 50% and 25%, respectively, of the phase-in of CECL effects. | |||||||||||||||||||||||||||||
9
| SYNCHRONY FINANCIAL | ||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES (Continued) | ||||||||||||||
| (unaudited, $ and accounts in millions) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| Jun 30, 2023 | Jun 30, 2022 | |||||||||||||
| CORE PURCHASE VOLUME | ||||||||||||||
| Purchase Volume | $ | 47,276 | $ | 47,217 | ||||||||||
| Less: Gap and BP Purchase volume | — | (2,597) | ||||||||||||
| Core Purchase volume | $ | 47,276 | $ | 44,620 | ||||||||||
| CORE LOAN RECEIVABLES | ||||||||||||||
| Loan receivables | $ | 94,801 | $ | 82,674 | ||||||||||
| Less: Gap and BP Loan receivables | (67) | (174) | ||||||||||||
| Core Loan receivables | $ | 94,734 | $ | 82,500 | ||||||||||
| CORE AVERAGE ACTIVE ACCOUNTS | ||||||||||||||
| Average active accounts | 69.5 | 68.7 | ||||||||||||
| Less: Gap and BP Average active accounts | — | (3.9) | ||||||||||||
| Core Average active accounts | 69.5 | 64.8 | ||||||||||||
| CORE NEW ACCOUNTS | ||||||||||||||
| New accounts | 5.9 | 6.0 | ||||||||||||
| Less: Gap and BP New accounts | — | (0.1) | ||||||||||||
| Core New accounts | 5.9 | 5.9 | ||||||||||||
10
2Q'23 FINANCIAL RESULTS July 18, 2023 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 second quarter of 2023 compared to the second quarter of 2022, 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" 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, including the future impacts of the novel coronavirus disease (“COVID-19”) outbreak and measures taken in response thereto for which future developments are highly uncertain and difficult to predict; 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 breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; 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 sub-service 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 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 Consumer Financial Protection Bureau’s (the “CFPB”) 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 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 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, 2022, as filed on February 9, 2023. 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 $1.32 DILUTED EPS compared to $1.60 14.94% NET INTEREST MARGIN compared to 15.60% 12.3% CET1 liquid assets of $16.4 billion, 15.1% of total assets SUMMARY FINANCIAL METRICS CAPITAL 2Q'23 Financial Highlights $94.8 billion LOAN RECEIVABLES compared to $82.7 billion $75.8 billion DEPOSITS 84% of current funding 4.75% NET CHARGE-OFFS compared to 2.73% 69.5 million AVERAGE ACTIVE ACCOUNTS compared to 68.7 million $399 million CAPITAL RETURNED $300 million share repurchases 35.5% EFFICIENCY RATIO compared to 37.7%
4 9% Average Balance per Account Dual Card / Co-Brand(b) BUSINESS EXPANSION CONSUMER PERFORMANCE (1)% (1)% New Accounts Purchase Volume per Account (c) (d) (e) GROWTH METRICS -% 15% 1% Purchase Volume Average active accounts 15% Loan receivables $82.5 $94.7Core(a) in millions $18.6 Dual Card / Co-Brand(b) $17.0 14%$19.4 $ billions $23.7 $ billions 2Q'23 Business Highlights 6% 7% Core(a) 44.6 47.3 Core(a) 69.5 5.95.9Core(a) -% 28% 64.8 (a) All metrics shown above on a Core basis are non-GAAP measures and exclude from both prior year and current year amounts related to portfolios that were sold in 2Q’22. See non- GAAP reconciliation in the appendix.
5 $569 million Net earnings, $1.32 diluted EPS • Net interest income up 8% – Interest and fees on loans up 19% driven primarily by growth in average loan receivables and higher benchmark rates, partially offset by impacts of portfolios sold during 2Q’22 – Interest expense increase attributed to higher benchmark rates and higher funding liabilities • Retailer share arrangements decreased (21)% – Decrease driven by higher net charge-offs and the impact of portfolios sold during 2Q’22, partially offset by higher net interest income • Provision for credit losses up 91% – Higher provision driven by higher net charge-offs and a higher reserve build in 2Q’23 • Other income down (69)% – Decrease driven primarily by $120 million gain on portfolio sales in 2Q’22 • Total Other expense up 8% – Increase primarily driven by growth related items as well as operational losses and technology investments – Increases were partially offset by additional marketing and site strategy actions in 2Q’22 related to reinvestment of Gain on Sale proceeds 2Q'23 Highlights B/(W) $ in millions, except per share statistics 2Q'23 2Q'22 $ % Total interest income $5,021 $4,074 $947 23 % Total interest expense 901 272 (629) (231) % Net interest income (NII) 4,120 3,802 318 8 % Retailer share arrangements (RSA) (887) (1,127) 240 21 % Provision for credit losses 1,383 724 (659) (91) % Other income 61 198 (137) (69) % Other expense 1,169 1,083 (86) (8) % Pre-tax earnings 742 1,066 (324) (30) % Provision for income taxes 173 262 89 34 % Net earnings 569 804 (235) (29) % Preferred dividends 10 11 1 NM Net earnings available to common stockholders $559 $793 $(234) (30) % Diluted earnings per share $1.32 $1.60 $(0.28) (18) % Summary earnings statement Financial Results
6 2Q'23 Platform Results 2Q'22 2Q'23 V% $12.9 $12.9 -% 17.9 18.9 6% $1,108 $1,275 15% 2Q'22 2Q'23 V% $12.5 $13.5 8% 19.1 20.6 8% $1,058 $1,422 34% 2Q'22 2Q'23 V% $14.4 $15.4 7% 19.0 20.3 7% $826 $1,091 32% 2Q'22 2Q'23 V% $3.4 $4.0 17% 6.2 7.1 14% $644 $786 22% 2Q'22 2Q'23 V% $1.4 $1.6 10% 2.5 2.5 1% $194 $232 20% Loan receivables $ in billions (a) Purchase Volume Accounts Interest & Fees on Loans Home & Auto Digital Diversified & Value Health & Wellness Lifestyle 10% 14% 22% 13%18%
7 Net Interest Income Net Interest Income $ in millions % of average interest-earning assets NIM Walk Payment Rate Trends (both periods exclude portfolios sold in 2Q’22) (a) 8% • Net interest income increased 8% – Interest and fees on loans up 19% driven primarily by growth in average loan receivables and higher benchmark rates, partially offset by impacts of portfolios sold during 2Q’22 – Interest expense increase attributed to higher benchmark rates and higher funding liabilities • Net interest margin (NIM) decreased 66 bps – Interest-bearing liabilities cost: (215) bps – Total cost increased 263 bps to 4.04% – Loan receivables yield: 124 bps – Loan receivables yield of 20.87%, up 145 bps – Liquidity portfolio yield: 53 bps – Mix of Interest-earnings assets: (28) bps – Loan receivable mix as a percent of total Earning Assets decreased from 85.4% to 83.6% • 2Q’23 payment rate ~130 bps lower than prior year and ~150 bps higher than 5-year historical average (‘15-’19) (b) 2Q'22 NIM 15.60% Interest-bearing liabilities cost (2.15)% Loan receivables yield 1.24% Liquidity portfolio yield 0.53% Mix of Interest-earning assets (0.28)% 2Q'23 NIM 14.94% 2Q'23 Highlights
8 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)
9 • Total other expense up 8% – Increase primarily driven by growth related items as well as operational losses and technology investments – Increases were partially offset by additional marketing and site strategy actions in 2Q’22 related to reinvestment of Gain on Sale proceeds – Employee cost increase primarily attributable to an increase in headcount driven by growth and higher benefit costs – Increased technology investments drove higher professional fees and information processing expenses • Efficiency ratio 35.5% vs. 37.7% prior year – Decrease in ratio driven by higher revenue partially offset by higher expenses B/(W) 2Q'22 2Q'23 V$ V% Employee costs $404 $451 $(47) (12)% Professional fees $185 $209 $(24) (13)% Marketing/BD $135 $133 $2 1% Information processing $163 $179 $(16) (10)% Other $196 $197 $(1) (1)% Other expense $1,083 $1,169 $(86) (8)% Efficiency(a) 37.7% 35.5% (2.2) pts. Other Expense Other expense $ in millions 2Q'23 Highlights8%
10 Tier 1 Capital + Credit Loss Reserve Ratio* Capital ratios Funding, Capital and Liquidity Funding sources $ in billions V$ $2.2 $(0.2) $11.1 V% Liquidity $ in billions 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 Deposits 84% 84% 0 pts. Securitization 8% 6% (2) pts. Unsecured 8% 10% 2 pts. Liquid assets $15.2 $16.4 Undrawn credit facilities $ 3.7 $ 3.0 Total liquidity $18.9 $19.4 % of Total assets 19.8 % 17.9 % (a) (b)
11 2023 Outlook Key Driver Original Current Trends / Update Loan Receivables Growth 8 – 10% 10+% • 1H driven by payment rate moderation and Purchase Volume growth • Expect payment rate moderation to continue, but remain above pre- pandemic levels through year-end Net Interest Margin 15.00 – 15.25% 15.00 – 15.15% • 1H NIM influenced by: – Higher liquidity, reflecting stronger than anticipated deposit flows and pre-funding for 2H growth – Better than expected deposit betas • Expect 2H NIM in line with 1H, driven by potential variables: – Higher liquidity to pre-fund 2H growth – Higher deposit betas driven by competition and benchmark rate increases – Interest & fee growth, partly offset by rising reversals Net Charge-Offs 4.75 – 5.00% 4.75 – 4.90% • Credit performance remains in line with expectations – Delinquencies expected to reach pre-pandemic levels during 2H – Net charge-off dollars to continue rising through year; not expected to reach pre-pandemic levels on an annual basis until 2024 RSA / Average Loan Receivables 4.00 – 4.25% 3.95 – 4.10% • Improvement in RSA driven by continued credit normalization, lower Net Interest Margin, and the mix of loan receivables growth, partially offset by higher Purchase Volume Operating Expenses ~$1,125MM per qtr ~$1,150MM per qtr • Expense increase driven by growth and operational losses • Managing expenses to deliver positive operating leverage (expense growth lower than NII growth) for the full year (comments and trends in comparison to 2022, except where noted) Full Year 2023
12 Footnotes All amounts and metrics included in this presentation are as of, or for the three months ended, June 30, 2023, unless otherwise stated. 2Q'23 Business Highlights b. Dual Card / Co-Brand metrics shown above are consumer only and excludes amounts related to portfolios that were sold in 2Q’22. 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, 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. Net Interest Income: a. Payment rate is calculated as customer payments divided by beginning of period loan receivables and excludes loan receivables and payments related to portfolios that were sold in 2Q’22. b. Historical payment rate excludes portfolios sold in 2019 and 2022. 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. Other Expense a. Other expense divided by sum of Net interest income plus Other income less Retailer share arrangements (RSA). Funding, Capital and Liquidity a. Does not include unencumbered assets in the Bank that could be pledged. 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 through 2024. CET1, Tier 1, and Total Capital Ratio are presented on a Transition basis and capital ratios for 2023 and 2022 reflect 50% and 25%, respectively, of the phase-in of CECL effects.
14 Non-GAAP Reconciliation The following table sets forth the components of our Core key metrics for the periods indicated below. $ and accounts in millions Quarter Ended June 30 Total 2022 2023 Loan receivables $ 82,674 $ 94,801 Less: Gap and BP Loan receivables (174) (67) Core Loan receivables $ 82,500 $ 94,734 Purchase volume $ 47,217 $ 47,276 Less: Gap and BP Purchase volume (2,597) — Core Purchase volume $ 44,620 $ 47,276 Average active accounts 68.7 69.5 Less: Gap and BP Average active accounts (3.9) — Core Average active accounts 64.8 69.5 New Accounts 6.0 5.9 Less: Gap and BP New Accounts (0.1) — Core New Accounts 5.9 5.9
15 Non-GAAP Reconciliation Continued* The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. $ in millions At June 30 Total 2022 2023 Tier 1 Capital $ 13,280 $ 12,462 Less: CECL transition adjustment (1,719) (1,146) Tier 1 capital (CECL fully phased-in) $ 11,561 $ 11,316 Add: Allowance for credit losses 8,808 9,804 Tier 1 capital (CECL fully phased-in) plus Reserves for credit losses $ 20,369 $ 21,120 Risk-weighted assets $ 82,499 $ 95,060 Less: CECL transition adjustment (870) (580) Risk-weighted assets (CECL fully phased-in) $ 81,629 $ 94,480 * Estimated at June 30, 2023
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 information on our loan receivables that have been adjusted to exclude amounts related to portfolio sales in the second quarter of 2022, 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. 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 99.3.
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.