SYF 8-K
Synchrony Financial (SYF)
8-K
2024-01-23
For: 2024-01-23
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 January 23, 2024 , Synchrony Financial (the “Company”) issued a press release setting forth the Company’s fourth 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 January 23, 2024, issued by Synchrony Financial | |||||||
| 99.2 | Financial Data Supplement of the Company for the quarter ended December 31, 2023 | |||||||
| 99.3 | Financial Results Presentation of the Company for the quarter ended December 31, 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: January 23, 2024 | By: | /s/ Jonathan Mothner | ||||||||||||||||||
Name: | Jonathan Mothner | |||||||||||||||||||
Title: | Executive Vice President, Chief Risk and Legal Officer | |||||||||||||||||||
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) January 23, 2024 |  | |||||||
FOURTH QUARTER 2023 RESULTS AND KEY METRICS
1.5% Return on Assets | 12.2% CET1 Ratio | $353M Capital Returned | CEO COMMENTARY | |||||||||||||||||||||||||||||
“Synchrony’s strong fourth quarter performance underscored the power of our differentiated business model, supported by continued consumer resilience,” said Brian Doubles, Synchrony’s President and Chief Executive Officer. “During the year, we grew our existing partner programs and launched new programs, expanded our products and markets, and continued to scale our multi-product strategy across our portfolio – all with a commitment to delivering the power of choice through best-in-class experiences for our customers, partners and providers.” “As Synchrony continues to execute on these strategic priorities, we are confident in our ability to continue to deliver industry-leading financial solutions and experiences, while also driving sustainable growth at attractive risk-adjusted returns for our stakeholders.” | ||||||||||||||||||||||||||||||||
$103.0B Loan Receivables | ||||||||||||||||||||||||||||||||
 | Net Earnings of $440 Million or $1.03 per Diluted Share | |||||||||||||||||||||||||||||||
 | Delivered Record Purchase Volume and Strong Receivables Growth | |||||||||||||||||||||||||||||||
 | Returned $353 Million of Capital to Shareholders, including $250 Million of Share Repurchases | |||||||||||||||||||||||||||||||
STAMFORD, Conn. – Synchrony Financial (NYSE: SYF) today announced fourth quarter 2023 net earnings of $440 million, or $1.03 per diluted share, compared to $577 million, or $1.26 per diluted share in the fourth quarter 2022. | ||||||||||||||||||||||||||||||||
| KEY OPERATING & FINANCIAL METRICS* | ||||||||||||||||||||||||||||||||
| PERFORMANCE REFLECTS DIFFERENTIATED BUSINESS MODEL AND CONTINUED CONSUMER RESILIENCE | ||||||||||||||||||||||||||||||||
•Purchase volume increased 3% to $49.3 billion •Loan receivables increased 11% to $103.0 billion •Average active accounts increased 5% to 71.5 million •New accounts decreased 3% to 6.2 million •Net interest margin decreased 48 basis points to 15.10% •Efficiency ratio decreased 120 basis points to 36.0% •Return on assets decreased 70 basis points to 1.5% •Return on equity decreased 5.1 percentage points to 12.4%; return on tangible common equity** decreased 6.4 percentage points to 14.7% | ||||||||||||||||||||||||||||||||
| CFO COMMENTARY | BUSINESS AND FINANCIAL RESULTS FOR THE FOURTH QUARTER OF 2023* | |||||||||||||||||||||||||
“Synchrony’s strong fourth quarter financial results reflected a continuation of the strong performance we’ve achieved throughout 2023, including broad-based growth across our portfolio, credit normalization within our expectations, continued partner alignment through our RSA, and further progress toward our long-term operating efficiency target,” said Brian Wenzel, Synchrony’s Executive Vice President and Chief Financial Officer. "The strength of these core business drivers, in combination with our execution across our key strategic priorities, continue to enable Synchrony to deliver consistent growth and strong risk-adjusted returns through economic cycles and changing market conditions.” “As we look forward, we are confident that Synchrony is well-positioned to continue to deliver compelling outcomes for our customers, partners and providers, while also driving considerable long-term value for our stakeholders.” | ||||||||||||||||||||||||||
| BUSINESS HIGHLIGHTS | ||||||||||||||||||||||||||
| CONTINUED TO EXPAND PORTFOLIO, ENHANCE PRODUCTS AND EXTEND REACH | ||||||||||||||||||||||||||
•Announced sale of Pets Best insurance to Independence Pet Holdings, providing the opportunity to build a strategic partnership with one of the leading pet-focused companies in North America •Announced acquisition of Ally Lending’s point-of-sale financing business, creating a differentiated solution in the home improvement industry and expanding Synchrony's multi-product strategy within its Home & Auto and Health & Wellness platforms •Announced new program with J.Crew, which will launch in the first half of 2024 and include its first-ever co-branded card and a full suite of digital capabilities •Added or renewed more than 15 programs, including J.Crew, Rheem and PetVet Care Centers | ||||||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||
| EARNINGS DRIVEN BY CORE BUSINESS DRIVERS | ||||||||||||||||||||||||||
•Interest and fees on loans increased 16% to $5.3 billion, driven primarily by growth in average loan receivables, higher benchmark rates and lower payment rate. •Net interest income increased $360 million, or 9%, to $4.5 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 $165 million, or 16%, to $878 million, reflecting higher net charge-offs partially offset by higher net interest income. •Provision for credit losses increased $603 million to $1.8 billion, driven by higher net charge-offs. •Other expense increased $165 million, or 14%, to $1.3 billion, driven primarily by growth related items, restructuring and other notable expenses totaling $73 million and higher operational losses. •Provision for income taxes decreased $65 million, or 40%, to $99 million, primarily driven by the decrease in pre-tax income as well as additional discrete tax benefits recognized in the current period. •Net earnings decreased to $440 million, compared to $577 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 4.74% compared to 3.65% in the prior year, an increase of 109 basis points and approximately 12 basis points above the average of the fourth quarters in 2017 through 2019. •Net charge-offs as a percentage of total average loan receivables were 5.58% compared to 3.48% in the prior year, an increase of 210 basis points, normalizing within our expectations and in line with our underwriting target of 5.5-6.0% •The allowance for credit losses as a percentage of total period-end loan receivables was 10.26%, compared to 10.40% in the third quarter 2023. | ||||||||||||||||||||||||||
| SALES PLATFORM HIGHLIGHTS | |||||||||||||||||||||||
| DIVERSITY ACROSS OUR PLATFORMS CONTINUES TO PROVIDE RESILIENCE | |||||||||||||||||||||||
•Home & Auto purchase volume decreased 4%, as strong Home Specialty, Auto Network and commercial growth were offset by a combination of lower customer traffic and fewer large ticket purchases as customers manage spend in the remainder of Home, as well as lower gas prices. Period-end loan receivables increased 7%, reflecting lower payment rates. Interest and fees on loans were up 11%, primarily driven by loan receivables growth and higher benchmark rates. Average active accounts increased 3%. •Digital purchase volume increased 5%, reflecting growth in average active accounts and strong customer engagement. Period-end loan receivables increased 13%, driven by lower payment rates and continued purchase volume growth. Interest and fees on loans increased 19%, reflecting the impacts of loan receivables growth, lower payment rate, higher benchmark rates and maturation of newer programs. Average active accounts increased 5%. •Diversified & Value purchase volume increased 4%, driven by higher in- and out-of-partner spend. Period-end loan receivables increased 11%, reflecting purchase volume growth and lower payment rates. Interest and fees on loans increased 18%, driven by the impacts of loan receivables growth, lower payment rate and higher benchmark rates. Average active accounts increased 3%. •Health & Wellness purchase volume increased 10%, reflecting broad-based growth in active accounts led by Dental, Pet and Cosmetic. Period-end loan receivables increased 19%, driven by continued higher promotional purchase volume and lower payment rates. Interest and fees on loans increased 16%, reflecting the impacts of growth in purchase volume and loan receivables as well as lower payment rate. Average active accounts increased 12%. •Lifestyle purchase volume increased 3%, 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 15%, driven primarily by the impacts of loan receivables growth, lower payment rate and higher benchmark rates. Average active accounts increased 1%. | |||||||||||||||||||||||
| BALANCE SHEET, LIQUIDITY & CAPITAL | |||||||||||||||||||||||
| FUNDING, CAPITAL & LIQUIDITY REMAIN ROBUST | |||||||||||||||||||||||
•Loan receivables of $103.0 billion increased 11%; purchase volume increased 3% and average active accounts increased 5%. •Deposits increased $9.5 billion, or 13%, to $81.2 billion and comprised 84% of funding. •Total liquid assets and undrawn credit facilities were $19.8 billion, or 16.8% of total assets. •The company returned $353 million in capital to shareholders, including $250 million of share repurchases and $103 million of common stock dividends. •As of December 31, 2023, the Company had a total remaining share repurchase authorization of $600 million. •The estimated Common Equity Tier 1 ratio was 12.2% compared to 13.3%***, and the estimated Tier 1 Capital ratio was 12.9% compared to 14.1%*** | |||||||||||||||||||||||
*All comparisons are for the fourth quarter of 2023 compared to the fourth quarter of 2022, unless otherwise noted. ** Tangible common equity is a non-GAAP financial measure. See non-GAAP reconciliation in the financial tables. Prior period amounts have been recast. See *** for additional information. *** Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See the financial tables for additional information. | |||||||||||||||||||||||
| 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 December 31, 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, January 23, 2024, at 8:00 a.m. Eastern Time, Brian Doubles, President and Chief Executive Officer, and Brian Wenzel Sr., Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations page on the Synchrony Financial corporate website, www.investors.synchrony.com, under Events and Presentations. A replay will also be available on the website. | ||||||||||||||
ABOUT SYNCHRONY FINANCIAL
Synchrony (NYSE: SYF) is a premier consumer financial services company delivering one of the industry’s most complete digitally-enabled product suites. Our experience, expertise and scale encompass a broad spectrum of industries including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. We have an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which we refer to as our “partners.” We connect our partners and consumers through our dynamic financial ecosystem and provide them with a diverse set of financing solutions and innovative digital capabilities to address their specific needs and deliver seamless, omnichannel experiences. We offer the right financing products to the right customers in their channel of choice.
For more information, visit www.synchrony.com and Twitter: @Synchrony.
| Investor Relations | Media Relations | ||||
| Kathryn Miller | Lisa Lanspery | ||||
| (203) 585-6291 | (203) 585-6143 | ||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "targets," "outlook," "estimates," "will," "should," "may" or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of partners, and promotion and support of our products by our partners; cyber-attacks or other security breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; the Consumer Financial Protection Bureau’s (the “CFPB”) proposed rule on credit card late fees, if adopted; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions, dispositions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislative and regulatory developments and the impact of the CFPB’s regulation of our business; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit the Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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 "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 | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | 4Q'23 vs. 4Q'22 | Dec 31, 2023 | Dec 31, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,466 | $ | 4,362 | $ | 4,120 | $ | 4,051 | $ | 4,106 | $ | 360 | 8.8 | % | $ | 16,999 | $ | 15,625 | $ | 1,374 | 8.8 | % | |||||||||||||||||||||||||||||||||||||
| Retailer share arrangements | (878) | (979) | (887) | (917) | (1,043) | 165 | (15.8) | % | (3,661) | (4,331) | 670 | (15.5) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 1,804 | 1,488 | 1,383 | 1,290 | 1,201 | 603 | 50.2 | % | 5,965 | 3,375 | 2,590 | 76.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, after retailer share arrangements and provision for credit losses | 1,784 | 1,895 | 1,850 | 1,844 | 1,862 | (78) | (4.2) | % | 7,373 | 7,919 | (546) | (6.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income | 71 | 92 | 61 | 65 | 30 | 41 | 136.7 | % | 289 | 380 | (91) | (23.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other expense | 1,316 | 1,154 | 1,169 | 1,119 | 1,151 | 165 | 14.3 | % | 4,758 | 4,337 | 421 | 9.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 539 | 833 | 742 | 790 | 741 | (202) | (27.3) | % | 2,904 | 3,962 | (1,058) | (26.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 99 | 205 | 173 | 189 | 164 | (65) | (39.6) | % | 666 | 946 | (280) | (29.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 440 | $ | 628 | $ | 569 | $ | 601 | $ | 577 | $ | (137) | (23.7) | % | $ | 2,238 | $ | 3,016 | $ | (778) | (25.8) | % | |||||||||||||||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 429 | $ | 618 | $ | 559 | $ | 590 | $ | 567 | $ | (138) | (24.3) | % | $ | 2,196 | $ | 2,974 | $ | (778) | (26.2) | % | |||||||||||||||||||||||||||||||||||||
| COMMON SHARE STATISTICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic EPS | $ | 1.04 | $ | 1.49 | $ | 1.32 | $ | 1.36 | $ | 1.27 | $ | (0.23) | (18.1) | % | $ | 5.21 | $ | 6.19 | $ | (0.98) | (15.8) | % | |||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 1.03 | $ | 1.48 | $ | 1.32 | $ | 1.35 | $ | 1.26 | $ | (0.23) | (18.3) | % | $ | 5.19 | $ | 6.15 | $ | (0.96) | (15.6) | % | |||||||||||||||||||||||||||||||||||||
| Dividend declared per share | $ | 0.25 | $ | 0.25 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.02 | 8.7 | % | $ | 0.96 | $ | 0.90 | $ | 0.06 | 6.7 | % | |||||||||||||||||||||||||||||||||||||
| Common stock price | $ | 38.19 | $ | 30.57 | $ | 33.92 | $ | 29.08 | $ | 32.86 | $ | 5.33 | 16.2 | % | $ | 38.19 | $ | 32.86 | $ | 5.33 | 16.2 | % | |||||||||||||||||||||||||||||||||||||
| Book value per share | $ | 32.36 | $ | 31.50 | $ | 30.25 | $ | 29.08 | $ | 27.70 | $ | 4.66 | 16.8 | % | $ | 32.36 | $ | 27.70 | $ | 4.66 | 16.8 | % | |||||||||||||||||||||||||||||||||||||
Tangible common equity per share(1)(2) | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | $ | 23.49 | $ | 4.10 | 17.5 | % | $ | 27.59 | $ | 23.49 | $ | 4.10 | 17.5 | % | |||||||||||||||||||||||||||||||||||||
| Beginning common shares outstanding | 413.8 | 418.1 | 428.4 | 438.2 | 458.9 | (45.1) | (9.8) | % | 438.2 | 526.8 | (88.6) | (16.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares | — | — | — | — | — | — | NM | — | — | — | NM | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 0.4 | 0.2 | 0.2 | 1.5 | 0.1 | 0.3 | 300.0 | % | 2.3 | 2.1 | 0.2 | 9.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | (7.3) | (4.5) | (10.5) | (11.3) | (20.8) | 13.5 | (64.9) | % | (33.6) | (90.7) | 57.1 | (63.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Ending common shares outstanding | 406.9 | 413.8 | 418.1 | 428.4 | 438.2 | (31.3) | (7.1) | % | 406.9 | 438.2 | (31.3) | (7.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | 411.9 | 416.0 | 422.7 | 434.4 | 445.8 | (33.9) | (7.6) | % | 421.2 | 480.4 | (59.2) | (12.3) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (fully diluted) | 414.6 | 418.4 | 424.2 | 437.2 | 448.9 | (34.3) | (7.6) | % | 423.5 | 483.4 | (59.9) | (12.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See Statements of Financial Position for additional information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELECTED METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | 4Q'23 vs. 4Q'22 | Dec 31, 2023 | Dec 31, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| PERFORMANCE METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Return on assets(1) | 1.5 | % | 2.3 | % | 2.1 | % | 2.3 | % | 2.2 | % | (0.7) | % | 2.0 | % | 3.1 | % | (1.1) | % | |||||||||||||||||||||||||||||||||||||||||
Return on equity(2) | 12.4 | % | 18.1 | % | 17.0 | % | 18.2 | % | 17.5 | % | (5.1) | % | 16.4 | % | 22.6 | % | (6.2) | % | |||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity(3)(11) | 14.7 | % | 21.9 | % | 20.6 | % | 22.1 | % | 21.1 | % | (6.4) | % | 19.8 | % | 27.3 | % | (7.5) | % | |||||||||||||||||||||||||||||||||||||||||
Net interest margin(4) | 15.10 | % | 15.36 | % | 14.94 | % | 15.22 | % | 15.58 | % | (0.48) | % | 15.15 | % | 15.63 | % | (0.48) | % | |||||||||||||||||||||||||||||||||||||||||
Efficiency ratio(5) | 36.0 | % | 33.2 | % | 35.5 | % | 35.0 | % | 37.2 | % | (1.2) | % | 34.9 | % | 37.2 | % | (2.3) | % | |||||||||||||||||||||||||||||||||||||||||
| Other expense as a % of average loan receivables, including held for sale | 5.24 | % | 4.76 | % | 5.07 | % | 5.00 | % | 5.16 | % | 0.08 | % | 5.02 | % | 5.12 | % | (0.10) | % | |||||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | 18.4 | % | 24.6 | % | 23.3 | % | 23.9 | % | 22.1 | % | (3.7) | % | 22.9 | % | 23.9 | % | (1.0) | % | |||||||||||||||||||||||||||||||||||||||||
| CREDIT QUALITY METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs as a % of average loan receivables, including held for sale | 5.58 | % | 4.60 | % | 4.75 | % | 4.49 | % | 3.48 | % | 2.10 | % | 4.87 | % | 3.00 | % | 1.87 | % | |||||||||||||||||||||||||||||||||||||||||
30+ days past due as a % of period-end loan receivables(6) | 4.74 | % | 4.40 | % | 3.84 | % | 3.81 | % | 3.65 | % | 1.09 | % | 4.74 | % | 3.65 | % | 1.09 | % | |||||||||||||||||||||||||||||||||||||||||
90+ days past due as a % of period-end loan receivables(6) | 2.28 | % | 2.06 | % | 1.77 | % | 1.87 | % | 1.69 | % | 0.59 | % | 2.28 | % | 1.69 | % | 0.59 | % | |||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | 1,402 | $ | 1,116 | $ | 1,096 | $ | 1,006 | $ | 776 | $ | 626 | 80.7 | % | $ | 4,620 | $ | 2,536 | $ | 2,084 | 82.2 | % | |||||||||||||||||||||||||||||||||||||
Loan receivables delinquent over 30 days(6) | $ | 4,885 | $ | 4,304 | $ | 3,641 | $ | 3,474 | $ | 3,377 | $ | 1,508 | 44.7 | % | $ | 4,885 | $ | 3,377 | $ | 1,508 | 44.7 | % | |||||||||||||||||||||||||||||||||||||
Loan receivables delinquent over 90 days(6) | $ | 2,353 | $ | 2,020 | $ | 1,677 | $ | 1,705 | $ | 1,562 | $ | 791 | 50.6 | % | $ | 2,353 | $ | 1,562 | $ | 791 | 50.6 | % | |||||||||||||||||||||||||||||||||||||
| Allowance for credit losses (period-end) | $ | 10,571 | $ | 10,176 | $ | 9,804 | $ | 9,517 | $ | 9,527 | $ | 1,044 | 11.0 | % | $ | 10,571 | $ | 9,527 | $ | 1,044 | 11.0 | % | |||||||||||||||||||||||||||||||||||||
Allowance coverage ratio(7) | 10.26 | % | 10.40 | % | 10.34 | % | 10.44 | % | 10.30 | % | (0.04) | % | 10.26 | % | 10.30 | % | (0.04) | % | |||||||||||||||||||||||||||||||||||||||||
| BUSINESS METRICS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(8)(9) | $ | 49,339 | $ | 47,006 | $ | 47,276 | $ | 41,557 | $ | 47,923 | $ | 1,416 | 3.0 | % | $ | 185,178 | $ | 180,187 | $ | 4,991 | 2.8 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 102,988 | $ | 97,873 | $ | 94,801 | $ | 91,129 | $ | 92,470 | $ | 10,518 | 11.4 | % | $ | 102,988 | $ | 92,470 | $ | 10,518 | 11.4 | % | |||||||||||||||||||||||||||||||||||||
| Credit cards | $ | 97,043 | $ | 92,078 | $ | 89,299 | $ | 86,113 | $ | 87,630 | $ | 9,413 | 10.7 | % | $ | 97,043 | $ | 87,630 | $ | 9,413 | 10.7 | % | |||||||||||||||||||||||||||||||||||||
| Consumer installment loans | $ | 3,977 | $ | 3,784 | $ | 3,548 | $ | 3,204 | $ | 3,056 | $ | 921 | 30.1 | % | $ | 3,977 | $ | 3,056 | $ | 921 | 30.1 | % | |||||||||||||||||||||||||||||||||||||
| Commercial credit products | $ | 1,839 | $ | 1,879 | $ | 1,826 | $ | 1,690 | $ | 1,682 | $ | 157 | 9.3 | % | $ | 1,839 | $ | 1,682 | $ | 157 | 9.3 | % | |||||||||||||||||||||||||||||||||||||
| Other | $ | 129 | $ | 132 | $ | 128 | $ | 122 | $ | 102 | $ | 27 | 26.5 | % | $ | 129 | $ | 102 | $ | 27 | 26.5 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 99,683 | $ | 96,230 | $ | 92,489 | $ | 90,815 | $ | 88,436 | $ | 11,247 | 12.7 | % | $ | 94,832 | $ | 84,672 | $ | 10,160 | 12.0 | % | |||||||||||||||||||||||||||||||||||||
Period-end active accounts (in thousands)(10) | 73,484 | 70,137 | 70,269 | 68,589 | 70,763 | 2,721 | 3.8 | % | 73,484 | 70,763 | 2,721 | 3.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(9)(10) | 71,526 | 70,308 | 69,517 | 69,494 | 68,373 | 3,153 | 4.6 | % | 70,337 | 68,627 | 1,710 | 2.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| LIQUIDITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liquid assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 14,259 | $ | 15,643 | $ | 12,706 | $ | 15,303 | $ | 10,294 | $ | 3,965 | 38.5 | % | $ | 14,259 | $ | 10,294 | $ | 3,965 | 38.5 | % | |||||||||||||||||||||||||||||||||||||
| Total liquid assets | $ | 16,808 | $ | 17,598 | $ | 16,448 | $ | 18,778 | $ | 14,201 | $ | 2,607 | 18.4 | % | $ | 16,808 | $ | 14,201 | $ | 2,607 | 18.4 | % | |||||||||||||||||||||||||||||||||||||
| Undrawn credit facilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Undrawn credit facilities | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | 2,950 | $ | — | — | % | $ | 2,950 | $ | 2,950 | $ | — | — | % | |||||||||||||||||||||||||||||||||||||
Total liquid assets and undrawn credit facilities(12) | $ | 19,758 | $ | 20,548 | $ | 19,398 | $ | 21,728 | $ | 17,151 | $ | 2,607 | 15.2 | % | $ | 19,758 | $ | 17,151 | $ | 2,607 | 15.2 | % | |||||||||||||||||||||||||||||||||||||
| Liquid assets % of total assets | 14.31 | % | 15.58 | % | 15.13 | % | 17.41 | % | 13.58 | % | 0.73 | % | 14.31 | % | 13.58 | % | 0.73 | % | |||||||||||||||||||||||||||||||||||||||||
| Liquid assets including undrawn credit facilities % of total assets | 16.82 | % | 18.19 | % | 17.85 | % | 20.15 | % | 16.40 | % | 0.42 | % | 16.82 | % | 16.40 | % | 0.42 | % | |||||||||||||||||||||||||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (11) Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See Statements of Financial Position for additional information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (12) Excludes available borrowing capacity related to unencumbered assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STATEMENTS OF EARNINGS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | 4Q'23 vs. 4Q'22 | Dec 31, 2023 | Dec 31, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 5,323 | $ | 5,151 | $ | 4,812 | $ | 4,616 | $ | 4,576 | $ | 747 | 16.3 | % | $ | 19,902 | $ | 16,881 | $ | 3,021 | 17.9 | % | |||||||||||||||||||||||||||||||||||||
| Interest on cash and debt securities | 226 | 203 | 209 | 170 | 132 | 94 | 71.2 | % | 808 | 265 | 543 | 204.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest income | 5,549 | 5,354 | 5,021 | 4,786 | 4,708 | 841 | 17.9 | % | 20,710 | 17,146 | 3,564 | 20.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest on deposits | 878 | 800 | 717 | 557 | 441 | 437 | 99.1 | % | 2,952 | 1,008 | 1,944 | 192.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest on borrowings of consolidated securitization entities | 99 | 86 | 78 | 77 | 69 | 30 | 43.5 | % | 340 | 196 | 144 | 73.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest on senior unsecured notes | 106 | 106 | 106 | 101 | 92 | 14 | 15.2 | % | 419 | 317 | 102 | 32.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest expense | 1,083 | 992 | 901 | 735 | 602 | 481 | 79.9 | % | 3,711 | 1,521 | 2,190 | 144.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 4,466 | 4,362 | 4,120 | 4,051 | 4,106 | 360 | 8.8 | % | 16,999 | 15,625 | 1,374 | 8.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Retailer share arrangements | (878) | (979) | (887) | (917) | (1,043) | 165 | (15.8) | % | (3,661) | (4,331) | 670 | (15.5) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 1,804 | 1,488 | 1,383 | 1,290 | 1,201 | 603 | 50.2 | % | 5,965 | 3,375 | 2,590 | 76.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, after retailer share arrangements and provision for credit losses | 1,784 | 1,895 | 1,850 | 1,844 | 1,862 | (78) | (4.2) | % | 7,373 | 7,919 | (546) | (6.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interchange revenue | 270 | 267 | 262 | 232 | 251 | 19 | 7.6 | % | 1,031 | 982 | 49 | 5.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Protection product revenue(1) | 139 | 131 | 125 | 115 | 102 | 37 | 36.3 | % | 510 | 387 | 123 | 31.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Loyalty programs | (369) | (358) | (345) | (298) | (351) | (18) | 5.1 | % | (1,370) | (1,257) | (113) | 9.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | 31 | 52 | 19 | 16 | 28 | 3 | 10.7 | % | 118 | 268 | (150) | (56.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total other income | 71 | 92 | 61 | 65 | 30 | 41 | 136.7 | % | 289 | 380 | (91) | (23.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee costs | 538 | 444 | 451 | 451 | 459 | 79 | 17.2 | % | 1,884 | 1,681 | 203 | 12.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Professional fees | 228 | 219 | 209 | 186 | 233 | (5) | (2.1) | % | 842 | 832 | 10 | 1.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Marketing and business development | 138 | 125 | 133 | 131 | 121 | 17 | 14.0 | % | 527 | 487 | 40 | 8.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Information processing | 190 | 177 | 179 | 166 | 165 | 25 | 15.2 | % | 712 | 623 | 89 | 14.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | 222 | 189 | 197 | 185 | 173 | 49 | 28.3 | % | 793 | 714 | 79 | 11.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total other expense | 1,316 | 1,154 | 1,169 | 1,119 | 1,151 | 165 | 14.3 | % | 4,758 | 4,337 | 421 | 9.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | 539 | 833 | 742 | 790 | 741 | (202) | (27.3) | % | 2,904 | 3,962 | (1,058) | (26.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 99 | 205 | 173 | 189 | 164 | (65) | (39.6) | % | 666 | 946 | (280) | (29.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 440 | $ | 628 | $ | 569 | $ | 601 | $ | 577 | $ | (137) | (23.7) | % | $ | 2,238 | $ | 3,016 | $ | (778) | (25.8) | % | |||||||||||||||||||||||||||||||||||||
| Net earnings available to common stockholders | $ | 429 | $ | 618 | $ | 559 | $ | 590 | $ | 567 | $ | (138) | (24.3) | % | $ | 2,196 | $ | 2,974 | $ | (778) | (26.2) | % | |||||||||||||||||||||||||||||||||||||
(1) Protection product revenue, previously captioned 'Debt cancellation fees', represents fees earned from our debt cancellation product offered to our credit card customers. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| STATEMENTS OF FINANCIAL POSITION | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Dec 31, 2023 vs. Dec 31, 2022 | |||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 14,259 | $ | 15,643 | $ | 12,706 | $ | 15,303 | $ | 10,294 | $ | 3,965 | 38.5 | % | ||||||||||||||||||||||||
| Debt securities | 3,799 | 2,882 | 4,294 | 4,008 | 4,879 | (1,080) | (22.1) | % | ||||||||||||||||||||||||||||||
| Loan receivables: | ||||||||||||||||||||||||||||||||||||||
| Unsecuritized loans held for investment | 81,554 | 78,470 | 75,532 | 72,079 | 72,638 | 8,916 | 12.3 | % | ||||||||||||||||||||||||||||||
| Restricted loans of consolidated securitization entities | 21,434 | 19,403 | 19,269 | 19,050 | 19,832 | 1,602 | 8.1 | % | ||||||||||||||||||||||||||||||
| Total loan receivables | 102,988 | 97,873 | 94,801 | 91,129 | 92,470 | 10,518 | 11.4 | % | ||||||||||||||||||||||||||||||
| Less: Allowance for credit losses | (10,571) | (10,176) | (9,804) | (9,517) | (9,527) | (1,044) | 11.0 | % | ||||||||||||||||||||||||||||||
| Loan receivables, net | 92,417 | 87,697 | 84,997 | 81,612 | 82,943 | 9,474 | 11.4 | % | ||||||||||||||||||||||||||||||
| Goodwill | 1,018 | 1,105 | 1,105 | 1,105 | 1,105 | (87) | (7.9) | % | ||||||||||||||||||||||||||||||
Intangible assets, net(1) | 815 | 680 | 717 | 768 | 742 | 73 | 9.8 | % | ||||||||||||||||||||||||||||||
Other assets(1) | 4,915 | 4,932 | 4,878 | 5,057 | 4,601 | 314 | 6.8 | % | ||||||||||||||||||||||||||||||
| Assets held for sale | 256 | — | — | — | — | 256 | NM | |||||||||||||||||||||||||||||||
| Total assets | $ | 117,479 | $ | 112,939 | $ | 108,697 | $ | 107,853 | $ | 104,564 | $ | 12,915 | 12.4 | % | ||||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 80,789 | $ | 77,669 | $ | 75,344 | $ | 74,008 | $ | 71,336 | $ | 9,453 | 13.3 | % | ||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 364 | 397 | 421 | 417 | 399 | (35) | (8.8) | % | ||||||||||||||||||||||||||||||
| Total deposits | 81,153 | 78,066 | 75,765 | 74,425 | 71,735 | 9,418 | 13.1 | % | ||||||||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 7,267 | 6,519 | 5,522 | 6,228 | 6,227 | 1,040 | 16.7 | % | ||||||||||||||||||||||||||||||
| Senior and Subordinated unsecured notes | 8,715 | 8,712 | 8,709 | 8,706 | 7,964 | 751 | 9.4 | % | ||||||||||||||||||||||||||||||
| Total borrowings | 15,982 | 15,231 | 14,231 | 14,934 | 14,191 | 1,791 | 12.6 | % | ||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 6,334 | 5,875 | 5,321 | 5,301 | 5,765 | 569 | 9.9 | % | ||||||||||||||||||||||||||||||
| Liabilities held for sale | 107 | — | — | — | — | 107 | NM | |||||||||||||||||||||||||||||||
| Total liabilities | 103,576 | 99,172 | 95,317 | 94,660 | 91,691 | 11,885 | 13.0 | % | ||||||||||||||||||||||||||||||
| Equity: | ||||||||||||||||||||||||||||||||||||||
| Preferred stock | 734 | 734 | 734 | 734 | 734 | — | — | % | ||||||||||||||||||||||||||||||
| Common stock | 1 | 1 | 1 | 1 | 1 | — | — | % | ||||||||||||||||||||||||||||||
| Additional paid-in capital | 9,775 | 9,750 | 9,727 | 9,705 | 9,718 | 57 | 0.6 | % | ||||||||||||||||||||||||||||||
| Retained earnings | 18,662 | 18,338 | 17,828 | 17,369 | 16,716 | 1,946 | 11.6 | % | ||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (68) | (96) | (96) | (102) | (125) | 57 | (45.6) | % | ||||||||||||||||||||||||||||||
| Treasury stock | (15,201) | (14,960) | (14,814) | (14,514) | (14,171) | (1,030) | 7.3 | % | ||||||||||||||||||||||||||||||
| Total equity | 13,903 | 13,767 | 13,380 | 13,193 | 12,873 | 1,030 | 8.0 | % | ||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 117,479 | $ | 112,939 | $ | 108,697 | $ | 107,853 | $ | 104,564 | $ | 12,915 | 12.4 | % | ||||||||||||||||||||||||
| (1) At December 31, 2023, contract costs related to our retailer partner agreements of $489 million previously classified as Intangible Assets are now presented as a component of Other Assets on our Consolidated Statement of Financial Position. Reclassifications of prior period amounts have been made to conform with the current presentation. Prior period amounts subject to reclassification were $489 million, $509 million, $529 million and $545 million at September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively. | ||||||||||||||||||||||||||||||||||||||
4
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 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 | $ | 13,762 | $ | 188 | 5.42 | % | $ | 12,753 | $ | 172 | 5.35 | % | $ | 14,198 | $ | 178 | 5.03 | % | $ | 12,365 | $ | 140 | 4.59 | % | $ | 11,092 | $ | 104 | 3.72 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities available for sale | 3,895 | 38 | 3.87 | % | 3,706 | 31 | 3.32 | % | 3,948 | 31 | 3.15 | % | 4,772 | 30 | 2.55 | % | 5,002 | 28 | 2.22 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan receivables, including held for sale: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 93,744 | 5,162 | 21.85 | % | 90,587 | 5,003 | 21.91 | % | 87,199 | 4,679 | 21.52 | % | 85,904 | 4,497 | 21.23 | % | 83,597 | 4,462 | 21.18 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer installment loans | 3,875 | 116 | 11.88 | % | 3,656 | 108 | 11.72 | % | 3,359 | 94 | 11.22 | % | 3,103 | 83 | 10.85 | % | 2,991 | 78 | 10.35 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial credit products | 1,934 | 42 | 8.62 | % | 1,861 | 38 | 8.10 | % | 1,808 | 36 | 7.99 | % | 1,697 | 34 | 8.13 | % | 1,757 | 34 | 7.68 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 130 | 3 | 9.16 | % | 126 | 2 | 6.30 | % | 123 | 3 | 9.78 | % | 111 | 2 | 7.31 | % | 91 | 2 | 8.72 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loan receivables, including held for sale | 99,683 | 5,323 | 21.19 | % | 96,230 | 5,151 | 21.24 | % | 92,489 | 4,812 | 20.87 | % | 90,815 | 4,616 | 20.61 | % | 88,436 | 4,576 | 20.53 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 117,340 | 5,549 | 18.76 | % | 112,689 | 5,354 | 18.85 | % | 110,635 | 5,021 | 18.20 | % | 107,952 | 4,786 | 17.98 | % | 104,530 | 4,708 | 17.87 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 886 | 964 | 976 | 1,024 | 1,071 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (10,243) | (9,847) | (9,540) | (9,262) | (9,167) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 6,616 | 6,529 | 6,330 | 6,128 | 5,772 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-earning assets | (2,741) | (2,354) | (2,234) | (2,110) | (2,324) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | $ | 102,206 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 78,892 | $ | 878 | 4.42 | % | $ | 75,952 | $ | 800 | 4.18 | % | $ | 74,812 | $ | 717 | 3.84 | % | $ | 72,216 | $ | 557 | 3.13 | % | $ | 69,343 | $ | 441 | 2.52 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 6,903 | 99 | 5.69 | % | 6,096 | 86 | 5.60 | % | 5,863 | 78 | 5.34 | % | 6,229 | 77 | 5.01 | % | 6,231 | 69 | 4.39 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior and Subordinated unsecured notes | 8,712 | 106 | 4.83 | % | 8,710 | 106 | 4.83 | % | 8,707 | 106 | 4.88 | % | 8,442 | 101 | 4.85 | % | 7,962 | 92 | 4.58 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 94,507 | 1,083 | 4.55 | % | 90,758 | 992 | 4.34 | % | 89,382 | 901 | 4.04 | % | 86,887 | 735 | 3.43 | % | 83,536 | 602 | 2.86 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 379 | 401 | 420 | 411 | 388 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 5,652 | 5,418 | 5,164 | 5,130 | 5,217 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest-bearing liabilities | 6,031 | 5,819 | 5,584 | 5,541 | 5,605 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 100,538 | 96,577 | 94,966 | 92,428 | 89,141 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total equity | 14,061 | 13,758 | 13,435 | 13,414 | 13,065 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | $ | 102,206 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 4,466 | $ | 4,362 | $ | 4,120 | $ | 4,051 | $ | 4,106 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate spread(1) | 14.22 | % | 14.51 | % | 14.16 | % | 14.55 | % | 15.01 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin(2) | 15.10 | % | 15.36 | % | 14.94 | % | 15.22 | % | 15.58 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Net interest margin represents net interest income divided by average interest-earning assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN | |||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||
| Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 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 | $ | 13,272 | $ | 678 | 5.11 | % | $ | 10,215 | $ | 194 | 1.90 | % | |||||||||||||||||||||||
| Securities available for sale | 4,077 | 130 | 3.19 | % | 5,108 | 71 | 1.39 | % | |||||||||||||||||||||||||||
| Loan receivables, including held for sale: | |||||||||||||||||||||||||||||||||||
| Credit cards | 89,383 | 19,341 | 21.64 | % | 80,119 | 16,471 | 20.56 | % | |||||||||||||||||||||||||||
| Consumer installment loans | 3,501 | 401 | 11.45 | % | 2,834 | 287 | 10.13 | % | |||||||||||||||||||||||||||
| Commercial credit products | 1,826 | 150 | 8.21 | % | 1,642 | 117 | 7.13 | % | |||||||||||||||||||||||||||
| Other | 122 | 10 | 8.20 | % | 77 | 6 | 7.79 | % | |||||||||||||||||||||||||||
| Total loan receivables, including held for sale | 94,832 | 19,902 | 20.99 | % | 84,672 | 16,881 | 19.94 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 112,181 | 20,710 | 18.46 | % | 99,995 | 17,146 | 17.15 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 962 | 1,472 | |||||||||||||||||||||||||||||||||
| Allowance for credit losses | (9,726) | (8,844) | |||||||||||||||||||||||||||||||||
| Other assets | 6,402 | 5,529 | |||||||||||||||||||||||||||||||||
| Total non-interest-earning assets | (2,362) | (1,843) | |||||||||||||||||||||||||||||||||
| Total assets | $ | 109,819 | $ | 98,152 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing deposit accounts | $ | 75,487 | $ | 2,952 | 3.91 | % | $ | 65,624 | $ | 1,008 | 1.54 | % | |||||||||||||||||||||||
| Borrowings of consolidated securitization entities | 6,274 | 340 | 5.42 | % | 6,468 | 196 | 3.03 | % | |||||||||||||||||||||||||||
| Senior and subordinated unsecured notes | 8,644 | 419 | 4.85 | % | 7,315 | 317 | 4.33 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 90,405 | 3,711 | 4.10 | % | 79,407 | 1,521 | 1.92 | % | |||||||||||||||||||||||||||
| Non-interest-bearing liabilities | |||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposit accounts | 402 | 382 | |||||||||||||||||||||||||||||||||
| Other liabilities | 5,343 | 4,991 | |||||||||||||||||||||||||||||||||
| Total non-interest-bearing liabilities | 5,745 | 5,373 | |||||||||||||||||||||||||||||||||
| Total liabilities | 96,150 | 84,780 | |||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||
| Total equity | 13,669 | 13,372 | |||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 109,819 | $ | 98,152 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 16,999 | $ | 15,625 | |||||||||||||||||||||||||||||||
Interest rate spread(1) | 14.36 | % | 15.23 | % | |||||||||||||||||||||||||||||||
Net interest margin(2) | 15.15 | % | 15.63 | % | |||||||||||||||||||||||||||||||
| (1) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities. | |||||||||||||||||||||||||||||||||||
| (2) Net interest margin represents net interest income divided by average interest-earning assets. | |||||||||||||||||||||||||||||||||||
6
| SYNCHRONY FINANCIAL | ||||||||||||||||||||||||||||||||||||||
| BALANCE SHEET STATISTICS | ||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions, except per share statistics) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Dec 31, 2023 vs. Dec 31, 2022 | |||||||||||||||||||||||||||||||||
| BALANCE SHEET STATISTICS | ||||||||||||||||||||||||||||||||||||||
| Total common equity | $ | 13,169 | $ | 13,033 | $ | 12,646 | $ | 12,459 | $ | 12,139 | $ | 1,030 | 8.5 | % | ||||||||||||||||||||||||
| Total common equity as a % of total assets | 11.21 | % | 11.54 | % | 11.63 | % | 11.55 | % | 11.61 | % | (0.40) | % | ||||||||||||||||||||||||||
Tangible assets(7) | $ | 115,535 | $ | 111,154 | $ | 106,875 | $ | 105,980 | $ | 102,717 | $ | 12,818 | 12.5 | % | ||||||||||||||||||||||||
Tangible common equity(1)(7) | $ | 11,225 | $ | 11,248 | $ | 10,824 | $ | 10,586 | $ | 10,292 | $ | 933 | 9.1 | % | ||||||||||||||||||||||||
Tangible common equity as a % of tangible assets(1)(7) | 9.72 | % | 10.12 | % | 10.13 | % | 9.99 | % | 10.02 | % | (0.30) | % | ||||||||||||||||||||||||||
Tangible common equity per share(1)(7) | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | $ | 23.49 | $ | 4.10 | 17.5 | % | ||||||||||||||||||||||||
REGULATORY CAPITAL RATIOS(2)(3)(7) | ||||||||||||||||||||||||||||||||||||||
| Basel III - CECL Transition | ||||||||||||||||||||||||||||||||||||||
Total risk-based capital ratio(4) | 14.9 | % | 15.7 | % | 15.7 | % | 15.9 | % | 15.5 | % | ||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio(5) | 12.9 | % | 13.6 | % | 13.6 | % | 13.8 | % | 14.1 | % | ||||||||||||||||||||||||||||
Tier 1 leverage ratio(6) | 11.7 | % | 12.2 | % | 12.0 | % | 12.1 | % | 12.7 | % | ||||||||||||||||||||||||||||
| Common equity Tier 1 capital ratio | 12.2 | % | 12.8 | % | 12.8 | % | 13.0 | % | 13.3 | % | ||||||||||||||||||||||||||||
| (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 December 31, 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) Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See Statements of Financial Position for additional information. | ||||||||||||||||||||||||||||||||||||||
7
| SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PLATFORM RESULTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited, $ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | 4Q'23 vs. 4Q'22 | Dec 31, 2023 | Dec 31, 2022 | YTD'23 vs. YTD'22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| HOME & AUTO | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 11,421 | $ | 12,273 | $ | 12,853 | $ | 10,863 | $ | 11,860 | $ | (439) | (3.7) | % | $ | 47,410 | $ | 47,288 | $ | 122 | 0.3 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 31,969 | $ | 31,648 | $ | 30,926 | $ | 29,733 | $ | 29,978 | $ | 1,991 | 6.6 | % | $ | 31,969 | $ | 29,978 | $ | 1,991 | 6.6 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 31,720 | $ | 31,239 | $ | 30,210 | $ | 29,690 | $ | 29,402 | $ | 2,318 | 7.9 | % | $ | 30,722 | $ | 27,835 | $ | 2,887 | 10.4 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 19,177 | 19,223 | 18,935 | 18,521 | 18,539 | 638 | 3.4 | % | 18,967 | 18,080 | 887 | 4.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,403 | $ | 1,367 | $ | 1,275 | $ | 1,225 | $ | 1,264 | $ | 139 | 11.0 | % | $ | 5,270 | $ | 4,670 | $ | 600 | 12.8 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 26 | $ | 28 | $ | 27 | $ | 25 | $ | 23 | $ | 3 | 13.0 | % | $ | 106 | $ | 87 | $ | 19 | 21.8 | % | |||||||||||||||||||||||||||||||||||||
| DIGITAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 15,510 | $ | 13,808 | $ | 13,472 | $ | 12,261 | $ | 14,794 | $ | 716 | 4.8 | % | $ | 55,051 | $ | 51,394 | $ | 3,657 | 7.1 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 28,925 | $ | 26,685 | $ | 25,758 | $ | 24,944 | $ | 25,522 | $ | 3,403 | 13.3 | % | $ | 28,925 | $ | 25,522 | $ | 3,403 | 13.3 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 27,553 | $ | 26,266 | $ | 25,189 | $ | 24,982 | $ | 23,931 | $ | 3,622 | 15.1 | % | $ | 26,005 | $ | 22,185 | $ | 3,820 | 17.2 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 21,177 | 20,768 | 20,559 | 20,564 | 20,073 | 1,104 | 5.5 | % | 20,793 | 19,421 | 1,372 | 7.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,579 | $ | 1,530 | $ | 1,422 | $ | 1,363 | $ | 1,322 | $ | 257 | 19.4 | % | $ | 5,894 | $ | 4,599 | $ | 1,295 | 28.2 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | (7) | $ | (6) | $ | (2) | $ | 1 | $ | (14) | $ | 7 | (50.0) | % | $ | (14) | $ | (61) | $ | 47 | (77.0) | % | |||||||||||||||||||||||||||||||||||||
| DIVERSIFIED & VALUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 16,987 | $ | 15,445 | $ | 15,356 | $ | 13,439 | $ | 16,266 | $ | 721 | 4.4 | % | $ | 61,227 | $ | 56,666 | $ | 4,561 | 8.0 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 20,666 | $ | 18,865 | $ | 18,329 | $ | 17,702 | $ | 18,617 | $ | 2,049 | 11.0 | % | $ | 20,666 | $ | 18,617 | $ | 2,049 | 11.0 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 19,422 | $ | 18,565 | $ | 17,935 | $ | 17,713 | $ | 17,274 | $ | 2,148 | 12.4 | % | $ | 18,414 | $ | 16,042 | $ | 2,372 | 14.8 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 21,038 | 20,410 | 20,346 | 20,807 | 20,386 | 652 | 3.2 | % | 20,738 | 19,594 | 1,144 | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 1,204 | $ | 1,168 | $ | 1,091 | $ | 1,070 | $ | 1,023 | $ | 181 | 17.7 | % | $ | 4,533 | $ | 3,610 | $ | 923 | 25.6 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | (30) | $ | (28) | $ | (21) | $ | (14) | $ | (42) | $ | 12 | (28.6) | % | $ | (93) | $ | (105) | $ | 12 | (11.4) | % | |||||||||||||||||||||||||||||||||||||
| HEALTH & WELLNESS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 3,870 | $ | 3,990 | $ | 4,015 | $ | 3,690 | $ | 3,505 | $ | 365 | 10.4 | % | $ | 15,565 | $ | 13,569 | $ | 1,996 | 14.7 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 14,521 | $ | 14,019 | $ | 13,327 | $ | 12,581 | $ | 12,179 | $ | 2,342 | 19.2 | % | $ | 14,521 | $ | 12,179 | $ | 2,342 | 19.2 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 14,251 | $ | 13,600 | $ | 12,859 | $ | 12,309 | $ | 11,846 | $ | 2,405 | 20.3 | % | $ | 13,261 | $ | 10,975 | $ | 2,286 | 20.8 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 7,447 | 7,276 | 7,063 | 6,887 | 6,673 | 774 | 11.6 | % | 7,169 | 6,326 | 843 | 13.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 866 | $ | 844 | $ | 786 | $ | 735 | $ | 744 | $ | 122 | 16.4 | % | $ | 3,231 | $ | 2,710 | $ | 521 | 19.2 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 82 | $ | 74 | $ | 54 | $ | 61 | $ | 60 | $ | 22 | 36.7 | % | $ | 271 | $ | 217 | $ | 54 | 24.9 | % | |||||||||||||||||||||||||||||||||||||
| LIFESTYLE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1) | $ | 1,550 | $ | 1,490 | $ | 1,580 | $ | 1,302 | $ | 1,498 | $ | 52 | 3.5 | % | $ | 5,922 | $ | 5,498 | $ | 424 | 7.7 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 6,744 | $ | 6,483 | $ | 6,280 | $ | 5,971 | $ | 5,970 | $ | 774 | 13.0 | % | $ | 6,744 | $ | 5,970 | $ | 774 | 13.0 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 6,568 | $ | 6,383 | $ | 6,106 | $ | 5,919 | $ | 5,772 | $ | 796 | 13.8 | % | $ | 6,246 | $ | 5,552 | $ | 694 | 12.5 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(3) | 2,620 | 2,556 | 2,529 | 2,611 | 2,585 | 35 | 1.4 | % | 2,587 | 2,559 | 28 | 1.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 255 | $ | 249 | $ | 232 | $ | 223 | $ | 221 | $ | 34 | 15.4 | % | $ | 959 | $ | 814 | $ | 145 | 17.8 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 7 | $ | 8 | $ | 7 | $ | 7 | $ | 7 | $ | — | — | % | $ | 29 | $ | 28 | $ | 1 | 3.6 | % | |||||||||||||||||||||||||||||||||||||
CORP, OTHER(4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1)(2) | $ | 1 | $ | — | $ | — | $ | 2 | $ | — | $ | 1 | NM | $ | 3 | $ | 5,772 | $ | (5,769) | (99.9) | % | ||||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 163 | $ | 173 | $ | 181 | $ | 198 | $ | 204 | $ | (41) | (20.1) | % | $ | 163 | $ | 204 | $ | (41) | (20.1) | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 169 | $ | 177 | $ | 190 | $ | 202 | $ | 211 | $ | (42) | (19.9) | % | $ | 184 | $ | 2,083 | $ | (1,899) | (91.2) | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(2)(3) | 67 | 75 | 85 | 104 | 117 | (50) | (42.7) | % | 83 | 2,647 | (2,564) | (96.9) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 16 | $ | (7) | $ | 6 | $ | — | $ | 2 | $ | 14 | NM | $ | 15 | $ | 478 | $ | (463) | (96.9) | % | ||||||||||||||||||||||||||||||||||||||
| Other income | $ | (7) | $ | 16 | $ | (4) | $ | (15) | $ | (4) | $ | (3) | 75.0 | % | $ | (10) | $ | 214 | $ | (224) | (104.7) | % | |||||||||||||||||||||||||||||||||||||
TOTAL SYF(4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase volume(1)(2) | $ | 49,339 | $ | 47,006 | $ | 47,276 | $ | 41,557 | $ | 47,923 | $ | 1,416 | 3.0 | % | $ | 185,178 | $ | 180,187 | $ | 4,991 | 2.8 | % | |||||||||||||||||||||||||||||||||||||
| Period-end loan receivables | $ | 102,988 | $ | 97,873 | $ | 94,801 | $ | 91,129 | $ | 92,470 | $ | 10,518 | 11.4 | % | $ | 102,988 | $ | 92,470 | $ | 10,518 | 11.4 | % | |||||||||||||||||||||||||||||||||||||
| Average loan receivables, including held for sale | $ | 99,683 | $ | 96,230 | $ | 92,489 | $ | 90,815 | $ | 88,436 | $ | 11,247 | 12.7 | % | $ | 94,832 | $ | 84,672 | $ | 10,160 | 12.0 | % | |||||||||||||||||||||||||||||||||||||
Average active accounts (in thousands)(2)(3) | 71,526 | 70,308 | 69,517 | 69,494 | 68,373 | 3,153 | 4.6 | % | 70,337 | 68,627 | 1,710 | 2.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 5,323 | $ | 5,151 | $ | 4,812 | $ | 4,616 | $ | 4,576 | $ | 747 | 16.3 | % | $ | 19,902 | $ | 16,881 | $ | 3,021 | 17.9 | % | |||||||||||||||||||||||||||||||||||||
| Other income | $ | 71 | $ | 92 | $ | 61 | $ | 65 | $ | 30 | $ | 41 | 136.7 | % | $ | 289 | $ | 380 | $ | (91) | (23.9) | % | |||||||||||||||||||||||||||||||||||||
| (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) YTD 2022 includes activity and balances associated with 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 | |||||||||||||||||||||||||||||
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | |||||||||||||||||||||||||
COMMON EQUITY AND REGULATORY CAPITAL MEASURES(2)(3) | |||||||||||||||||||||||||||||
| GAAP Total equity | $ | 13,903 | $ | 13,767 | $ | 13,380 | $ | 13,193 | $ | 12,873 | |||||||||||||||||||
| Less: Preferred stock | (734) | (734) | (734) | (734) | (734) | ||||||||||||||||||||||||
Less: Goodwill(4) | (1,105) | (1,105) | (1,105) | (1,105) | (1,105) | ||||||||||||||||||||||||
Less: Intangible assets, net(5) | (839) | (680) | (717) | (768) | (742) | ||||||||||||||||||||||||
| Tangible common equity | $ | 11,225 | $ | 11,248 | $ | 10,824 | $ | 10,586 | $ | 10,292 | |||||||||||||||||||
| Add: CECL transition amount | 1,146 | 1,146 | 1,146 | 1,146 | 1,719 | ||||||||||||||||||||||||
| Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss) | 229 | 255 | 255 | 258 | 281 | ||||||||||||||||||||||||
| Common equity Tier 1 | $ | 12,600 | $ | 12,649 | $ | 12,225 | $ | 11,990 | $ | 12,292 | |||||||||||||||||||
| Preferred stock | 734 | 734 | 734 | 734 | 734 | ||||||||||||||||||||||||
| Tier 1 capital | $ | 13,334 | $ | 13,383 | $ | 12,959 | $ | 12,724 | $ | 13,026 | |||||||||||||||||||
| Add: Subordinated debt | 741 | 741 | 741 | 740 | — | ||||||||||||||||||||||||
| Add: Allowance for credit losses includible in risk-based capital | 1,389 | 1,322 | 1,282 | 1,239 | 1,227 | ||||||||||||||||||||||||
| Total Risk-based capital | $ | 15,464 | $ | 15,446 | $ | 14,982 | $ | 14,703 | $ | 14,253 | |||||||||||||||||||
ASSET MEASURES(2)(3) | |||||||||||||||||||||||||||||
| Total average assets | $ | 114,599 | $ | 110,335 | $ | 108,401 | $ | 105,842 | $ | 102,206 | |||||||||||||||||||
| Adjustments for: | |||||||||||||||||||||||||||||
| Add: CECL transition amount | 1,146 | 1,146 | 1,146 | 1,146 | 1,719 | ||||||||||||||||||||||||
| Less: Disallowed goodwill and other disallowed intangible assets (net of related deferred tax liabilities) and other | (1,671) | (1,507) | (1,537) | (1,564) | (1,513) | ||||||||||||||||||||||||
| Total assets for leverage purposes | $ | 114,074 | $ | 109,974 | $ | 108,010 | $ | 105,424 | $ | 102,412 | |||||||||||||||||||
| Risk-weighted assets | $ | 103,460 | $ | 98,451 | $ | 95,546 | $ | 92,379 | $ | 92,118 | |||||||||||||||||||
CECL FULLY PHASED-IN CAPITAL MEASURES(3) | |||||||||||||||||||||||||||||
| Tier 1 capital | $ | 13,334 | $ | 13,383 | $ | 12,959 | $ | 12,724 | $ | 13,026 | |||||||||||||||||||
| Less: CECL transition adjustment | (1,146) | (1,146) | (1,146) | (1,146) | (1,719) | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) | $ | 12,188 | $ | 12,237 | $ | 11,813 | $ | 11,578 | $ | 11,307 | |||||||||||||||||||
| Add: Allowance for credit losses | 10,571 | 10,176 | 9,804 | 9,517 | 9,527 | ||||||||||||||||||||||||
| Tier 1 capital (CECL fully phased-in) + Reserves for credit losses | $ | 22,759 | $ | 22,413 | $ | 21,617 | $ | 21,095 | $ | 20,834 | |||||||||||||||||||
| Risk-weighted assets | $ | 103,460 | $ | 98,451 | $ | 95,546 | $ | 92,379 | $ | 92,118 | |||||||||||||||||||
| Less: CECL transition adjustment | (580) | (580) | (580) | (580) | (870) | ||||||||||||||||||||||||
| Risk-weighted assets (CECL fully phased-in) | $ | 102,880 | $ | 97,871 | $ | 94,966 | $ | 91,799 | $ | 91,248 | |||||||||||||||||||
TANGIBLE COMMON EQUITY PER SHARE(3) | |||||||||||||||||||||||||||||
| GAAP book value per share | $ | 32.36 | $ | 31.50 | $ | 30.25 | $ | 29.08 | $ | 27.70 | |||||||||||||||||||
| Less: Goodwill | (2.72) | (2.67) | (2.65) | (2.58) | (2.52) | ||||||||||||||||||||||||
| Less: Intangible assets, net | (2.05) | (1.65) | (1.71) | (1.79) | (1.69) | ||||||||||||||||||||||||
| Tangible common equity per share | $ | 27.59 | $ | 27.18 | $ | 25.89 | $ | 24.71 | $ | 23.49 | |||||||||||||||||||
| (1) Regulatory measures at December 31, 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. | |||||||||||||||||||||||||||||
| (3) Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See Statements of Financial Position for additional information. | |||||||||||||||||||||||||||||
| (4) At December 31, 2023, includes $87 million of goodwill classified as assets held for sale on the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||
| (5) At December 31, 2023, includes $24 million of intangible assets, net classified as assets held for sale on the Consolidated Statement of Financial Position. | |||||||||||||||||||||||||||||
9
4Q'23 FINANCIAL RESULTS January 23, 2024 Exhibit 99.3
2 Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For additional information, see the earnings release and financial supplement included as exhibits to our Current Report on Form 8-K filed today and available on our website (www.synchronyfinancial.com) and the SEC's website (www.sec.gov). All references to net earnings and net income are intended to have the same meaning. All comparisons are for the fourth quarter of 2023 compared to the fourth 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; 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 Consumer Financial Protection Bureau’s (the “CFPB”) proposed rule on credit card late fees, if adopted; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions, dispositions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislative and regulatory developments and the impact of the CFPB’s regulation of our business; 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" 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 2023 Year in Review GENERATE STRONG FINANCIAL RESULTS DIVERSIFY PROGRAMS, PRODUCTS & MARKETS GROW & WIN NEW PARTNERS DELIVER BEST-IN-CLASS CUSTOMER EXPERIENCES 25+ NEW PARTNER DEALS ~23 NEW ACCOUNT ORIGINATIONS30+ PARTNER RENEWALS ROTCE* ROA NET EARNINGS $185 RECORD PURCHASE VOLUME CAPITAL RETURNED DRIVING VALUE FOR OUR STAKEHOLDERS *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. 475+ million billion $2.2 billion 2.0% 19.8% $1.5 billion 90% GROWTH IN ACCOUNTS PROVISIONED FOR DIGITAL WALLET PARTNER LOCATIONS thousand Synchrony Pay Later
4 -% 2% 4% 6% 8% 10% 12% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ~2.5+% ROA ~28+% ROTCE RSA / Purchase Volume(b) Prime & Super Prime/EOP(a)(b) 74% 72% 78%72% 72% 74%63% 73% 1.09% 1.83% 2.53% 2.41% 2.23% 2.58% 2.73% 1.98% RAR* RSA/ALR (b) NCOs/ALR (b) LONG-TERM TARGETS: GFC CARD Act Took Effect Credit Normalization COVID-19 Pandemic *Risk-adjusted return (“RAR”) represents Total interest income (Interest and fees on loans plus Interest on cash and debt securities) less interest expense, RSA and NCOs, stated as a percentage of average loan receivables. Delivering Consistent Returns Over Time
5 $1.03 DILUTED EPS compared to $1.26 15.10% NET INTEREST MARGIN compared to 15.58% 12.2% CET1 liquid assets of $16.8 billion, 14.3% of total assets SUMMARY FINANCIAL METRICS CAPITAL 4Q'23 Financial Highlights $103.0 billion LOAN RECEIVABLES compared to $92.5 billion $81.2 billion DEPOSITS 84% of current funding 5.58% NET CHARGE-OFFS compared to 3.48% 71.5 million AVERAGE ACTIVE ACCOUNTS compared to 68.4 million $353 million CAPITAL RETURNED $250 million share repurchases 36.0% EFFICIENCY RATIO compared to 37.2%
6 11% 8% Dual Card / Co-Brand BUSINESS EXPANSION CONSUMER PERFORMANCE (3)% (2)% New accounts Average balance per account (c) (e) GROWTH METRICS 3% 5% Purchase volume Average active accounts $22.4 Loan receivables Dual Card / Co-Brand in millions $19.3 9%$21.0 $ billions $27.3 $ billions 4Q'23 Business Highlights 22% Purchase volume per account (a) (a) (d) (b)
7 B/(W) $ in millions, except per share statistics 4Q'23 4Q'22 $ % Total interest income $5,549 $4,708 $841 18% Total interest expense 1,083 602 (481) (80)% Net interest income (NII) 4,466 4,106 360 9% Retailer share arrangements (RSA) (878) (1,043) 165 16% Provision for credit losses 1,804 1,201 (603) (50)% Other income 71 30 41 137% Other expense 1,316 1,151 (165) (14)% Pre-tax earnings 539 741 (202) (27)% Provision for income taxes 99 164 65 40% Net earnings 440 577 (137) (24)% Preferred dividends 11 10 (1) NM Net earnings available to common stockholders $429 $567 $(138) (24)% Diluted earnings per share $1.03 $1.26 $(0.23) (18)% Summary earnings statement Financial Results 4Q'23 Highlights $440 million Net earnings, $1.03 diluted EPS • Net interest income up 9% – Interest and fees on loans up 16% driven primarily by growth in average loan receivables, higher benchmark rates and lower payment rate – Interest expense increase attributed to higher benchmark rates and higher funding liabilities • Retailer share arrangements decreased (16)% – Decrease driven by higher net charge-offs partially offset by higher net interest income • Provision for credit losses up 50% – Higher provision driven by higher net charge-offs • Total Other expense up 14% – Increase primarily driven by growth related items, restructuring and other notable expenses totaling $73 million (see appendix for details) and higher operational losses • Provision for income taxes decreased (40)% – Reduction in tax expense primarily driven by the decrease in pre-tax income as well as additional discrete tax benefits recognized in the current period
8 13%19%11%13%7% 4Q'23 Platform Results Home & Auto Digital Diversified & Value Health & Wellness Lifestyle 4Q'22 4Q'23 V% $11.9 $11.4 (4)% 18.5 19.2 3% $1,264 $1,403 11% 4Q'22 4Q'23 V% $14.8 $15.5 5% 20.1 21.2 5% $1,322 $1,579 19% 4Q'22 4Q'23 V% $16.3 $17.0 4% 20.4 21.0 3% $1,023 $1,204 18% 4Q'22 4Q'23 V% $3.5 $3.9 10% 6.7 7.4 12% $744 $866 16% 4Q'22 4Q'23 V% $1.5 $1.6 3% 2.6 2.6 1% $221 $255 15% Loan receivables $ in billions Purchase volume Accounts Interest & fees on loans (a)
9 4Q’23 payment rate ~115 bps higher than 5-year historical average (‘15-’19) Payment Rate Trends Net Interest Income Net Interest Income $ in millions % of average interest-earning assets NIM Walk 9% 4Q'22 NIM 15.58% Interest-bearing liabilities cost (1.38)% Loan receivables yield 0.55% Liquidity portfolio yield 0.29% Mix of Interest-earning assets 0.06% 4Q'23 NIM 15.10% 4Q'23 Highlights (a) (b) • Net interest income increased 9% – Interest and fees on loans up 16% driven primarily by growth in average loan receivables, higher benchmark rates and lower payment rate – Interest expense increase attributed to higher benchmark rates and higher funding liabilities • Net interest margin (NIM) decreased 48 bps – Interest-bearing liabilities cost: (138) bps – Total cost increased 169 bps to 4.55% – Loan receivables yield: 55 bps – Loan receivables yield of 21.19%, up 66 bps – Liquidity portfolio yield: 29 bps – Mix of Interest-earnings assets: 6 bps – Loan receivable mix as a percent of total earning assets increased from 84.6% to 85.0% 15.58% 15.10%NIM %
10 Asset Quality Metrics Allowance for credit losses $ in millions, % of period-end loan receivables Net charge-offs $ in millions, % of average loan receivables including held for sale 30+ days past due $ in millions, % of period-end loan receivables 90+ days past due $ in millions, % of period-end loan receivables (a)
11 B/(W) 4Q'22 4Q'23 V$ V% Employee costs $459 $538 $(79) (17)% Professional fees $233 $228 $5 2% Marketing/BD $121 $138 $(17) (14)% Information processing $165 $190 $(25) (15)% Other $173 $222 $(49) (28)% Other expense $1,151 $1,316 $(165) (14)% Efficiency(a) 37.2% 36.0% (1.2) pts. Other Expense Other Expense $ in millions 4Q'23 Highlights14% • Total Other expense up 14% – Increase primarily driven by growth related items, restructuring and other notable expenses totaling $73 million (see appendix for details) and higher operational losses – Employee cost increase primarily attributable to $43 million of restructuring costs related to the voluntary early retirement program and an increase in headcount driven by growth – Other increase primarily driven by higher operational losses, $9 million FDIC special assessment and restructuring costs related to site strategy of $9 million • Efficiency ratio 36.0% vs. 37.2% prior year – Decrease in ratio driven by higher revenue partially offset by higher expenses – Excluding the impacts of restructuring costs, FDIC special assessment and other notable items (see appendix for details), efficiency ratio would have been an additional ~200bps lower in 4Q’23
12 Tier 1 Capital + Credit Loss Reserve Ratio* Capital ratios Funding, Capital and Liquidity Funding sources $ in billions % 9% 7% CET1% Walk CET1 Capital Ratio Tier 1 Capital Ratio Total Capital Ratio * The “Tier 1 Capital + Credit Loss Reserve Ratio” is the sum of our “Tier 1 Capital” and “Allowance for Credit Losses,” divided by our “Total Risk-Weighted Assets”. Tier 1 Capital and Risk-Weighted Assets are adjusted to reflect the fully phased-in impact of CECL. These adjusted metrics are non-GAAP measures, see non-GAAP reconciliation in appendix. Unsecured Securitization Deposits Liquid assets $14.2 $16.8 Undrawn credit facilities $3.0 $3.0 Total $17.2 $19.8 % of Total assets 16.4% 16.8% (b) (c) 84% 4Q'22 CET1% 13.3% Net Income 2.4% Risk Weighted Asset changes (1.5)% Common & Preferred dividends (0.5)% Share repurchases (1.2)% CECL transition provisions (0.6)% Adoption of ASU 2022-02 (TDR allowance change) 0.2% Other activity, net 0.1% 4Q'23 CET1% 12.2% (c) (a)
13 2023 Results vs. Outlook Key Driver 2023 Outlook 2023 Actual Drivers Loan receivables growth 8 – 10% 11% • Pace of payment rate moderation increased but remains well above pre- pandemic levels • Continued strong purchase volume growth Net interest margin 15.00 – 15.25% 15.15% • Lower interest expense driven by better-than-expected betas Net charge-offs 4.75 – 5.00% 4.87% • Credit performance in line with expectations • Delinquency metrics normalized back to pre-pandemic levels during 3Q’23 RSA / Average loan receivables 4.00 – 4.25% 3.86% • Performance of RSA driven by the mix of Loan receivables growth Operating expenses ~$1,125MM per qtr $1,190MM per qtr • Expense increase primarily driven by growth and higher operational losses • Results include $73 million of Q4’23 notable other expenses (see appendix for details) • Excluding these notable items, delivered positive operating leverage (expense growth lower than NII growth) during 2023 Full Year 2023
14 2024 Outlook Key Driver FY 2024 Full Year Framework Loan receivables growth 6 – 8% • Broad-based purchase volume growth • Payment rate moderation expected to continue, but remains above pre-pandemic levels throughout 2024 Net interest income $17.5 – $18.5B • Follow normal seasonal trends adjusted for the following items: • increase in Interest-bearing liabilities cost driven by the lagged impact of higher benchmark rates as fixed rate retail deposits reprice • competition for retail deposits and the pace of deposit repricing in response to potential rate cuts • higher Interest & Fee Yield partial offset by higher reversals Net charge-offs 5.75 – 6.00% • Expected to peak during 1H before returning to pre-pandemic seasonal trends for the remainder of 2024 • Outlook assumes stable macro environment RSA / Average loan receivables 3.50 – 3.75% • Moderation reflects impact of continued credit normalization, higher interest expense, and portfolio mix partially offset by higher purchase volume Efficiency ratio* 32.5 – 33.5% • Continue to drive positive operating leverage • Stabilization in operational losses (comments and trends in comparison to 2023, except where noted) * Excludes the impact of the gain on sale from Pets Best Baseline Macroeconomic Assumptions (excludes effects of qualitative overlays) U/E Rate (YE’24) Fed Funds (YE’24) Deposit Betas (FY’24) 4.0% 4.75% Sav/CDs: ~30% Additional Assumptions • Pets Best sale & Ally Lending purchase close in 1Q’24 • Given uncertainty surrounding potential late fee rule, no impact included GDP Growth (FY’24) 1.7%
15 All amounts and metrics included in this presentation are as of, or for the three months ended, December 31, 2023, unless otherwise stated. Delivering Consistent Returns Over Time a. Classification of Prime & Super Prime refers to VantageScore credit scores of 651 or higher for 2019-2023 and FICO scores of 661 or higher for periods prior to 2019. b. RSA/ALR refers to Retailer share arrangements as a percentage of Average loan receivables; NCO/ALR refers to Net charge-offs as a percentage of Average loan receivables; Prime & Super Prime/EOP refers to Prime & Super Prime Loan receivables as a percentage of total period-end Loan receivables; RSA/Purchase volume refers to Retailer share arrangements as a percentage of Purchase volume. 4Q'23 Business Highlights a. Dual Card / Co-Brand metrics are consumer only and include in-partner and out-of-partner activity. b. Average active accounts are credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. c. New accounts represent accounts that were approved in the respective period, in millions. d. Purchase volume per account is calculated as total Purchase volume divided by Average active accounts, in $. e. Average balance per account is calculated as the Average loan receivables divided by Average active accounts, in $. Platform Results a. Accounts represent Average active accounts in millions. 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. 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. Efficiency ratio is calculated as Total Other expense divided by sum of Net interest income plus Other income less Retailer share arrangements (RSA). Funding, Capital and Liquidity a. Excludes available borrowing capacity related to unencumbered assets. b. Capital ratios reflect the phase-in of an estimate of CECL’s effect on regulatory capital over a three-year transitional period beginning in the first quarter of 2022, with effects fully phased-in beginning in the first quarter of 2025. CET1, Tier 1, and Total Capital Ratio are presented on a Transition basis and capital ratios for 2023 and 2022 reflect 50% and 25%, respectively, of the phase-in of CECL effects. c. Prior period amounts have been recast to reflect the change in presentation of contract costs related to our retailer partner agreements on our Statement of Financial Condition. See Exhibit 99.2 Financial Data Supplement of the Company for the quarter ended December 31, 2023, Statements of Financial Position for additional information. Footnotes
17 Notable Other Expense Items Quarter ended December 31, 2023 Restructuring costs: Voluntary employee early retirement program $43 Site Strategy $9 FDIC Special Assessment $9 Preparatory expenses related to potential Late Fee rule change $7 Pets Best sale-related expenses $5 Total $73 The following table sets forth notable items incurred during the quarter included in Total Other expense $ in millions
18 Non-GAAP Reconciliation* The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. $ in millions At December 31 Total 2022 2023 Tier 1 Capital $ 13,026 $ 13,334 Less: CECL transition adjustment (1,719) (1,146) Tier 1 capital (CECL fully phased-in) $ 11,307 $ 12,188 Add: Allowance for credit losses 9,527 10,571 Tier 1 capital (CECL fully phased-in) plus Reserves for credit losses $ 20,834 $ 22,759 Risk-weighted assets $ 92,118 $103,460 Less: CECL transition adjustment (870) (580) Risk-weighted assets (CECL fully phased-in) $ 91,248 $102,880 * Estimated at December 31, 2023
19 Non-GAAP Reconciliation Continued The following table sets forth a reconciliation between GAAP results and non-GAAP managed-basis results for 2009 $ in millions Year Ended December 31, 2009 Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.26 % Securitization adjustments (0.59) % Managed basis 10.67 % Net interest income as a % of average loan receivables, including held for sale: GAAP 16.21 % Securitization adjustments 1.44 % Managed basis 17.65 % Retailer share arrangements as a % of average loan receivables, including held for sale: GAAP 3.40 % Securitization adjustments (1.80) % Managed basis 1.60 % Average loan receivables GAAP $23,485 Securitization adjustments 23,181 Managed basis $46,666 Period-end loan receivables GAAP $22,912 Securitization adjustments 23,964 Managed basis $46,876
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 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.