Synchrony Financial Reports Third Quarter Net Earnings of $574 Million or $0.69 Per Diluted Share

STAMFORD, Conn.--(BUSINESS WIRE)-- Synchrony Financial (NYSE:SYF) today announced third quarter 2015 net earnings of $574 million, or $0.69 per diluted share. Highlights for the quarter included:

  • Total platform revenue increased 9% from the third quarter of 2014 to $2.7 billion
  • Loan receivables grew $7 billion, or 12%, from the third quarter of 2014 to $64 billion
  • Purchase volume increased 12% from the third quarter of 2014
  • Renewed PayPal, a top 10 partnership, and Sleepy’s
  • Signed new partners - Citgo and The Container Store
  • Expanded our network - CareCredit cards will be accepted at all Rite Aid locations nationwide
  • Launched new programs with Guitar Center and Athleta
  • Launched Samsung Pay for Payment Solutions and CareCredit cardholders
  • Continued strong deposit growth, up $8 billion, or 24%, over the third quarter of 2014
  • Received approval from Federal Reserve Board to become a standalone savings and loan holding company following completion of GE’s proposed exchange offer

“The approval we received from the Federal Reserve is a major milestone in our journey towards being a fully independent company. The third quarter marked another period of strong performance with the signing or renewal of several significant partnerships, continued advancement of our mobile wallet strategy, solid financial results, and ongoing deposit growth through our fast-growing online bank,” said Margaret Keane, President and Chief Executive Officer of Synchrony Financial. “We are concurrently focused on completing the separation from GE and driving our business forward—staying at the forefront of consumer finance by developing innovative solutions for our partners, while continuing to drive incremental value for our customers.”

Business and Financial Highlights for the Third Quarter of 2015

All comparisons below are for the third quarter of 2015 compared to the third quarter of 2014, unless otherwise noted.

Earnings

  • Net interest income increased $224 million, or 8%, to $3.1 billion, driven by strong loan receivables growth, partially offset by higher interest expense driven by growth, funding issued to increase liquidity, and funding mix. Net interest income after retailer share arrangements increased 9%.
  • Total platform revenue increased $221 million, or 9%.
  • Provision for loan losses increased $27 million to $702 million largely due to loan receivables growth, partially offset by asset quality improvement.
  • Other income decreased $12 million to $84 million, driven by higher loyalty and rewards costs associated with program initiatives, partially offset by an increase in interchange revenue.
  • Other expense increased $115 million to $843 million, primarily driven by investments in growth and infrastructure build in preparation for separation from the General Electric Company (GE), and included expenses for the completion of the EMV card rollout for active Dual Card accounts.
  • Net earnings totaled $574 million for the quarter compared to $548 million in the third quarter of 2014.

Balance Sheet

  • Period-end loan receivables growth remained strong at 12%, primarily driven by purchase volume growth of 12% and average active account growth of 4%, and included the acquisition of the BP portfolio during the second quarter of 2015.
  • Deposits grew to $41 billion, up $8 billion, or 24%, from the third quarter of 2014, and comprised 63% of funding compared to 54% last year.
  • The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn securitization capacity) at $22 billion, or 28% of total assets.
  • The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 17.5% and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 16.6%.

Key Financial Metrics

  • Return on assets was 2.9% and return on equity was 19.2%.
  • Net interest margin declined 114 basis points to 15.97% primarily due to the impact from the significant increase in liquidity.
  • Efficiency ratio was 34.2%, and included expenses associated with the completion of the EMV card rollout for active Dual Card accounts.

Credit Quality

  • Loans 30+ days past due as a percentage of period-end loan receivables improved 24 basis points to 4.02%.
  • Net charge-offs as a percentage of total average loan receivables improved 3 basis points to 4.02%.
  • The allowance for loan losses as a percentage of total period-end receivables was 5.31%.

Sales Platforms

  • Retail Card platform revenue increased 10%, driven primarily by purchase volume growth of 12% and period-end loan receivables growth of 13%, which included the acquisition of the BP portfolio during the second quarter of 2015. Loan receivables growth was broad-based across partner programs.
  • Payment Solutions platform revenue increased 8%, driven primarily by purchase volume growth of 13% and period-end loan receivables growth of 12%. Loan receivables growth was led by home furnishing and automotive products.
  • CareCredit platform revenue increased 3%, driven primarily by purchase volume growth of 13% and period-end loan receivables growth of 5%, with growth led by dental and veterinary specialties.

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 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed February 23, 2015, and in the Company’s forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2015. The detailed financial tables and other information are also available on the Investor Relations page of the Company’s website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

Conference Call and Webcast Information

On Friday, October 16, 2015, at 10:30 a.m. Eastern Time, Margaret Keane, President and Chief Executive Officer, and Brian Doubles, 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 of our website, www.investors.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 32015#, and can be accessed beginning approximately two hours after the event through October 30, 2015.

About Synchrony Financial

Synchrony Financial (NYSE:SYF) is one of the nation’s premier consumer financial services companies. Our roots in consumer finance trace back to 1932, and today we are the largest provider of private label credit cards in the United States based on purchase volume and receivables*. We provide a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers to help generate growth for our partners and offer financial flexibility to our customers. Through our partners’ over 300,000 locations across the United States and Canada, and their websites and mobile applications, we offer our customers a variety of credit products to finance the purchase of goods and services. Our offerings include private label and co-branded Dual Card credit cards, promotional financing and installment lending, loyalty programs and FDIC-insured savings products through Synchrony Bank. More information can be found at www.synchronyfinancial.com and twitter.com/SYFNews.

*Source: The Nilson Report (April, 2015, Issue # 1062) - based on 2014 data.

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 “outlook,” “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “targets,” “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 platform revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; our need for additional financing, higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to securitize our loans, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loans, and lower payment rates on our securitized loans; our reliance on dividends, distributions and other payments from Synchrony Bank; our ability to grow our deposits in the future; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of strategic investments; reductions in interchange fees; fraudulent activity; cyber-attacks or other security breaches; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; damage to our reputation; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and state sales tax rules and regulations; significant and extensive regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Act and the impact of the CFPB’s regulation of our business; changes to our methods of offering our CareCredit products; impact of capital adequacy rules; restrictions that limit Synchrony Bank’s ability to pay dividends; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; failure to comply with anti-money laundering and anti-terrorism financing laws; effect of General Electric Capital Corporation being subject to regulation by the Federal Reserve Board both as a savings and loan holding company and as a systemically important financial institution; GE not completing the separation from us as planned or at all, GE’s inability to obtain savings and loan holding company deregistration (GE SLHC Deregistration) and GE continuing to have significant control over us; any conditions of the Federal Reserve Board approval required for us to continue to be a savings and loan holding company; our need to establish and significantly expand many aspects of our operations and infrastructure; loss of association with GE’s strong brand and reputation; limited right to use the GE brand name and logo and need to establish a new brand; GE’s significant control over us; terms of our arrangements with GE may be more favorable than what we will be able to obtain from unaffiliated third parties; obligations associated with being a public company; our incremental cost of operating as a standalone public company could be substantially more than anticipated; GE could engage in businesses that compete with us, and conflicts of interest may arise between us and GE; and failure caused by us of GE’s distribution of our common stock to its stockholders in exchange for its common stock to qualify for tax-free treatment, which may result in significant tax liabilities to GE for which we may be required to indemnify GE.

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, 2014, as filed on February 23, 2015. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

Non-GAAP Measures

The information provided herein includes measures we refer to as “platform revenue”, “platform revenue excluding retailer share arrangements” and “tangible common equity” and certain capital ratios, 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.

 
SYNCHRONY FINANCIAL
FINANCIAL SUMMARY
(unaudited, in millions, except per share statistics)
    Quarter Ended     Nine Months Ended  
Sep 30,

2015

  Jun 30,

2015

  Mar 31,

2015

  Dec 31,

2014

  Sep 30,

2014

  3Q'15 vs. 3Q'14 Sep 30,

2015

  Sep 30,

2014

YTD'15 vs. YTD'14
EARNINGS
Net interest income $ 3,103 $ 2,907 $ 2,875 $ 2,978 $ 2,879 $ 224 7.8 % $ 8,885 $ 8,342 $ 543 6.5 %
Retailer share arrangements   (723 )   (621 )   (660 )   (698 )   (693 )   (30 ) 4.3 %   (2,004 )   (1,877 )   (127 ) 6.8 %
Net interest income, after retailer share arrangements 2,380 2,286 2,215 2,280 2,186 194 8.9 % 6,881 6,465 416 6.4 %
Provision for loan losses   702     740     687     797     675     27   4.0 %   2,129     2,120     9   0.4 %
Net interest income, after retailer share arrangements and provision for loan losses 1,678 1,546 1,528 1,483 1,511 167 11.1 % 4,752 4,345 407 9.4 %
Other income 84 120 101 162 96 (12 ) (12.5 )% 305 323 (18 ) (5.6 )%
Other expense   843     805     746     792     728     115   15.8 %   2,394     2,135     259   12.1 %
Earnings before provision for income taxes 919 861 883 853 879 40 4.6 % 2,663 2,533 130 5.1 %
Provision for income taxes   345     320     331     322     331     14   4.2 %   996     955     41   4.3 %
Net earnings $ 574   $ 541   $ 552   $ 531   $ 548   $ 26   4.7 % $ 1,667   $ 1,578   $ 89   5.6 %
Net earnings attributable to common stockholders $ 574   $ 541   $ 552   $ 531   $ 548   $ 26   4.7 % $ 1,667   $ 1,578   $ 89   5.6 %
 
COMMON SHARE STATISTICS
Basic EPS $ 0.69 $ 0.65 $ 0.66 $ 0.64 $ 0.70 ($0.01 ) (1.4 )% $ 2.00 $ 2.16 ($0.16 ) (7.4 )%
Diluted EPS $ 0.69 $ 0.65 $ 0.66 $ 0.64 $ 0.70 ($0.01 ) (1.4 )% $ 2.00 $ 2.16 ($0.16 ) (7.4 )%
Common stock price $ 31.30 $ 32.93 $ 30.35 $ 29.75 $ 24.55 $ 6.75 27.5 % $ 31.30 $ 24.55 $ 6.75 27.5 %
Book value per share $ 14.58 $ 13.89 $ 13.24 $ 12.57 $ 11.92 $ 2.66 22.3 % $ 14.58 $ 11.92 $ 2.66 22.3 %
Tangible book value per share(1) $ 12.67 $ 12.06 $ 11.43 $ 10.81 $ 10.25 $ 2.42 23.6 % $ 12.67 $ 10.25 $ 2.42 23.6 %
 
Beginning common shares outstanding 833.8 833.8 833.8 833.8 705.3 128.5 18.2 % 833.8 705.3 128.5 18.2 %
Issuance of common shares through initial public offering - - - - 128.5 (128.5 ) (100.0 )% - 128.5 (128.5 ) (100.0 )%
Shares repurchased   -     -     -     -     -     -   - %   -     -     -   - %
Ending common shares outstanding 833.8 833.8 833.8 833.8 833.8 - - % 833.8 833.8 - - %
 
Weighted average common shares outstanding 833.8 833.8 833.8 833.8 781.8 52.0 6.7 % 833.8 731.0 102.8 14.1 %
Weighted average common shares outstanding (fully diluted) 835.8 835.4 835.0 834.3 781.9 53.9 6.9 % 835.4 731.0 104.4 14.3 %
                                           
(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.
 
SYNCHRONY FINANCIAL
SELECTED METRICS
(unaudited, $ in millions, except account data)
    Quarter Ended     Nine Months Ended  
Sep 30,

2015

Jun 30,

2015

  Mar 31,

2015

  Dec 31,

2014

  Sep 30,

2014

3Q'15 vs. 3Q'14 Sep 30,

2015

  Sep 30,

2014

YTD'15 vs. YTD'14
PERFORMANCE METRICS
Return on assets(1) 2.9 % 2.9 % 3.0 % 2.7 % 3.2 % (0.3 )% 3.0 % 3.4 % (0.4 )%
Return on equity(2) 19.2 % 19.2 % 20.8 % 20.2 % 26.8 % (7.6 )% 19.7 % 29.7 % (10.0 )%
Return on tangible common equity(3) 22.0 % 22.2 % 24.1 % 23.4 % 32.4 % (10.4 )% 22.7 % 36.7 % (14.0 )%
Net interest margin(4) 15.97 % 15.77 % 15.79 % 15.60 % 17.11 % (1.14 )% 15.81 % 17.80 % (1.99 )%
Efficiency ratio(5) 34.2 % 33.5 % 32.2 % 32.4 % 31.9 % 2.3 % 33.3 % 31.5 % 1.8 %
Other expense as a % of average loan receivables, including held for sale 5.35 % 5.37 % 5.06 % 5.16 % 5.09 % 0.26 % 5.25 % 5.11 % 0.14 %
Effective income tax rate 37.5 % 37.2 % 37.5 % 37.7 % 37.7 % (0.2 )% 37.4 % 37.7 % (0.3 )%
 
CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale 4.02 % 4.63 % 4.53 % 4.32 % 4.05 % (0.03 )% 4.37 % 4.57 % (0.20 )%
30+ days past due as a % of period-end loan receivables 4.02 % 3.53 % 3.79 % 4.14 % 4.26 % (0.24 )% 4.02 % 4.26 % (0.24 )%
90+ days past due as a % of period-end loan receivables 1.73 % 1.52 % 1.81 % 1.90 % 1.85 % (0.12 )% 1.73 % 1.85 % (0.12 )%
Net charge-offs $ 633 $ 693 $ 668 $ 663 $ 579 $ 54 9.3 % $ 1,994 $ 1,910 $ 84 4.4 %
Loan receivables delinquent over 30 days $ 2,553 $ 2,171 $ 2,209 $ 2,536 $ 2,416 $ 137 5.7 % $ 2,553 $ 2,416 $ 137 5.7 %
Loan receivables delinquent over 90 days $ 1,102 $ 933 $ 1,056 $ 1,162 $ 1,051 $ 51 4.9 % $ 1,102 $ 1,051 $ 51 4.9 %
 
Allowance for loan losses (period-end) $ 3,371 $ 3,302 $ 3,255 $ 3,236 $ 3,102 $ 269 8.7 % $ 3,371 $ 3,102 $ 269 8.7 %
Allowance coverage ratio(6) 5.31 % 5.38 % 5.59 % 5.28 % 5.46 % (0.15 )% 5.31 % 5.46 % (0.15 )%
 
BUSINESS METRICS
Purchase volume(7) $ 29,206 $ 28,810 $ 23,139 $ 30,081 $ 26,004 $ 3,202 12.3 % $ 81,155 $ 73,068 $ 8,087 11.1 %
Period-end loan receivables $ 63,520 $ 61,431 $ 58,248 $ 61,286 $ 56,767 $ 6,753 11.9 % $ 63,520 $ 56,767 $ 6,753 11.9 %
Credit cards $ 60,920 $ 58,827 $ 55,866 $ 58,880 $ 54,263 $ 6,657 12.3 % $ 60,920 $ 54,263 $ 6,657 12.3 %
Consumer installment loans $ 1,171 $ 1,138 $ 1,062 $ 1,063 $ 1,081 $ 90 8.3 % $ 1,171 $ 1,081 $ 90 8.3 %
Commercial credit products $ 1,380 $ 1,410 $ 1,295 $ 1,320 $ 1,404 ($24 ) (1.7 )% $ 1,380 $ 1,404 ($24 ) (1.7 )%
Other $ 49 $ 56 $ 25 $ 23 $ 19 $ 30 157.9 % $ 49 $ 19 $ 30 157.9 %
Average loan receivables, including held for sale $ 62,504 $ 60,094 $ 59,775 $ 59,547 $ 57,391 $ 5,113 8.9 % $ 60,946 $ 56,238 $ 4,708 8.4 %
Period-end active accounts (in thousands)(8) 62,831 61,718 59,761 64,286 60,489 2,342 3.9 % 62,831 60,489 2,342 3.9 %
Average active accounts (in thousands)(8) 62,247 60,923 61,604 61,667 59,907 2,340 3.9 % 61,762 59,394 2,368 4.0 %
 
LIQUIDITY
Liquid assets
Cash and equivalents $ 12,271 $ 10,621 $ 11,218 $ 11,828 $ 14,808 ($2,537 ) (17.1 )% $ 12,271 $ 14,808 ($2,537 ) (17.1 )%
Total liquid assets $ 15,305 $ 13,660 $ 13,813 $ 12,942 $ 14,077 $ 1,228 8.7 % $ 15,305 $ 14,077 $ 1,228 8.7 %
Undrawn credit facilities
Undrawn committed securitization financings $ 6,550 $ 6,125 $ 6,600 $ 6,100 $ 5,650 $ 900 15.9 % $ 6,550 $ 5,650 $ 900 15.9 %
Total liquid assets and undrawn credit facilities $ 21,855 $ 19,785 $ 20,413 $ 19,042 $ 19,727 $ 2,128 10.8 % $ 21,855 $ 19,727 $ 2,128 10.8 %
Liquid assets % of total assets 19.27 % 18.03 % 18.99 % 17.09 % 19.16 % 0.11 % 19.27 % 19.16 % 0.11 %
Liquid assets including undrawn committed securitization financings % of total assets 27.51 % 26.12 % 28.07 % 25.15 % 26.85 % 0.66 % 27.51 % 26.85 % 0.66 %
                                           

 

(1) Return on assets represents net earnings as a percentage of average total assets.
(2) Return on equity represents net earnings as a percentage of average total equity.
(3) Return on tangible common equity represents net earnings as a percentage of average tangible common equity. Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
(4) Net interest margin represents net interest income divided by average interest-earning assets.
(5) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.
(6) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
(7) 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.

(8) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.

 
SYNCHRONY FINANCIAL
STATEMENTS OF EARNINGS
(unaudited, $ in millions)
    Quarter Ended   Nine Months Ended  
Sep 30,

2015

Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

3Q'15 vs. 3Q'14 Sep 30,

2015

  Sep 30,

2014

YTD'15 vs. YTD'14
Interest income:
Interest and fees on loans $ 3,379 $ 3,166 $ 3,140 $ 3,252 $ 3,116 $ 263 8.4 % $ 9,685 $ 8,964 $ 721 8.0 %
Interest on investment securities   13     11     10     8     7     6   85.7 %   34     18     16   88.9 %
Total interest income 3,392 3,177 3,150 3,260 3,123 269 8.6 % 9,719 8,982 737 8.2 %
 
Interest expense:
Interest on deposits 159 146 137 139 126 33 26.2 % 442 331 111 33.5 %
Interest on borrowings of consolidated securitization entities 54 53 52 57 57 (3 ) (5.3 )% 159 158 1 0.6 %
Interest on third-party debt 76 71 82 78 46 30 65.2 % 229 46 183 NM
Interest on related party debt   -     -     4     8     15     (15 ) (100.0 )%   4     105     (101 ) (96.2 )%
Total interest expense 289 270 275 282 244 45 18.4 % 834 640 194 30.3 %
                     
Net interest income 3,103 2,907 2,875 2,978 2,879 224 7.8 % 8,885 8,342 543 6.5 %
 
Retailer share arrangements   (723 )   (621 )   (660 )   (698 )   (693 )   (30 ) 4.3 %   (2,004 )   (1,877 )   (127 ) 6.8 %
Net interest income, after retailer share arrangements 2,380 2,286 2,215 2,280 2,186 194 8.9 % 6,881 6,465 416 6.4 %
 
Provision for loan losses   702     740     687     797     675     27   4.0 %   2,129     2,120     9   0.4 %
Net interest income, after retailer share arrangements and provision for loan losses 1,678 1,546 1,528 1,483 1,511 167 11.1 % 4,752 4,345 407 9.4 %
 
Other income:
Interchange revenue 135 123 100 120 101 34 33.7 % 358 269 89 33.1 %
Debt cancellation fees 61 61 65 67 68 (7 ) (10.3 )% 187 208 (21 ) (10.1 )%
Loyalty programs (122 ) (94 ) (78 ) (91 ) (84 ) (38 ) 45.2 % (294 ) (190 ) (104 ) 54.7 %
Other   10     30     14     66     11     (1 ) (9.1 )%   54     36     18   50.0 %
Total other income   84     120     101     162     96     (12 ) (12.5 )%   305     323     (18 ) (5.6 )%
 
Other expense:
Employee costs 268 250 239 227 239 29 12.1 % 757 639 118 18.5 %
Professional fees(1) 162 156 162 139 149 13 8.7 % 480 424 56 13.2 %
Marketing and business development 115 108 82 165 115 - - % 305 295 10 3.4 %
Information processing 77 74 63 60 47 30 63.8 % 214 152 62 40.8 %
Other(1)   221     217     200     201     178     43   24.2 %   638     625     13   2.1 %
Total other expense 843 805 746 792 728 115 15.8 % 2,394 2,135 259 12.1 %
                     
Earnings before provision for income taxes 919 861 883 853 879 40 4.6 % 2,663 2,533 130 5.1 %
Provision for income taxes   345     320     331     322     331     14   4.2 %   996     955     41   4.3 %
Net earnings attributable to common shareholders $ 574   $ 541   $ 552   $ 531   $ 548   $ 26   4.7 % $ 1,667   $ 1,578   $ 89   5.6 %
                                           
(1) We have reclassified certain amounts within Professional fees to Other for all periods in 2014 to conform to the current period classifications.
 
SYNCHRONY FINANCIAL
STATEMENTS OF FINANCIAL POSITION
(unaudited, $ in millions)
    Quarter Ended
Sep 30,

2015

Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Sep 30, 2015 vs.

Sep 30, 2014

Assets
Cash and equivalents $ 12,271 $ 10,621 $ 11,218 $ 11,828 $ 14,808 ($2,537 ) (17.1 )%
Investment securities 3,596 3,682 3,121 1,598 325 3,271 NM
Loan receivables:
Unsecuritized loans held for investment 38,325 36,019 33,424 34,335 30,474 7,851 25.8 %
Restricted loans of consolidated securitization entities   25,195     25,412     24,824     26,951     26,293     (1,098 ) (4.2 )%
Total loan receivables 63,520 61,431 58,248 61,286 56,767 6,753 11.9 %
Less: Allowance for loan losses   (3,371 )   (3,302 )   (3,255 )   (3,236 )   (3,102 )   (269 ) 8.7 %
Loan receivables, net 60,149 58,129 54,993 58,050 53,665 6,484 12.1 %
Loan receivables held for sale - - 359 332 1,493 (1,493 ) (100.0 )%
Goodwill 949 949 949 949 949 - - %
Intangible assets, net 646 575 557 519 449 197 43.9 %
Other assets   1,831     1,794     1,524     2,431     1,780     51   2.9 %
Total assets $ 79,442   $ 75,750   $ 72,721   $ 75,707   $ 73,469   $ 5,973   8.1 %
 
Liabilities and Equity
Deposits:
Interest-bearing deposit accounts $ 40,408 $ 37,629 $ 34,788 $ 34,847 $ 32,480 $ 7,928 24.4 %
Non-interest-bearing deposit accounts   140     143     162     108     209     (69 ) (33.0 )%
Total deposits 40,548 37,772 34,950 34,955 32,689 7,859 24.0 %
Borrowings:
Borrowings of consolidated securitization entities 13,640 13,948 13,817 14,967 15,091 (1,451 ) (9.6 )%
Bank term loan 4,651 5,151 5,651 8,245 7,495 (2,844 ) (37.9 )%
Senior unsecured notes 5,590 4,593 4,592 3,593 3,593 1,997 55.6 %
Related party debt   -     -     -     655     1,405     (1,405 ) (100.0 )%
Total borrowings 23,881 23,692 24,060 27,460 27,584 (3,703 ) (13.4 )%
Accrued expenses and other liabilities   2,855     2,708     2,675     2,814     3,255     (400 ) (12.3 )%
Total liabilities 67,284 64,172 61,685 65,229 63,528 3,756 5.9 %
Equity:
Parent’s net investment - - - - - - - %
Common stock 1 1 1 1 1 - - %
Additional paid-in capital 9,431 9,422 9,418 9,408 9,401 30 0.3 %
Retained earnings 2,746 2,172 1,631 1,079 548 2,198 NM
Accumulated other comprehensive income:   (20 )   (17 )   (14 )   (10 )   (9 )   (11 ) 122.2 %
Total equity   12,158     11,578     11,036     10,478     9,941     2,217   22.3 %
Total liabilities and equity $ 79,442   $ 75,750   $ 72,721   $ 75,707   $ 73,469   $ 5,973   8.1 %
 
SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
(unaudited, $ in millions)
                       
Quarter Ended
Sep 30, 2015     Jun 30, 2015       Mar 31, 2015       Dec 31, 2014       Sep 30, 2014      
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 $ 11,059 $ 7 0.25 % $ 10,728 $ 6 0.22 % $ 11,331 $ 6 0.21 % $ 13,631 $ 7 0.20 % $ 9,793 $ 4 0.16 %
Securities available for sale 3,534 6 0.67 % 3,107 5 0.65 % 2,725 4 0.60 % 962 1 0.40 % 309 3 3.89 %
 
Loan receivables:
Credit cards, including held for sale 59,890 3,315 21.96 % 57,588 3,106 21.63 % 57,390 3,079 21.76 % 57,075 3,186 21.68 % 54,891 3,054 22.32 %
Consumer installment loans 1,160 27 9.23 % 1,101 26 9.47 % 1,057 25 9.59 % 1,072 27 9.78 % 1,070 25 9.37 %
Commercial credit products 1,400 36 10.20 % 1,372 34 9.94 % 1,305 36 11.19 % 1,379 38 10.70 % 1,412 37 10.51 %
Other   54     1 NM     33     - - %   23     - - %   21     1 NM     18     - - %
Total loan receivables, including held for sale   62,504     3,379 21.45 %   60,094     3,166 21.13 %   59,775     3,140 21.30 %   59,547     3,252 21.21 %   57,391     3,116 21.78 %
Total interest-earning assets   77,097     3,392 17.46 %   73,929     3,177 17.24 %   73,831     3,150 17.30 %   74,140     3,260 17.07 %   67,493     3,123 18.56 %
 
Non-interest-earning assets:
Cash and due from banks 1,216 583 497 1,220 1,260
Allowance for loan losses (3,341 ) (3,285 ) (3,272 ) (3,160 ) (3,058 )
Other assets   3,023     2,916     2,802     2,831     2,605  
Total non-interest-earning assets   898     214     27     891     807  
         
Total assets $ 77,995   $ 74,143   $ 73,858   $ 75,031   $ 68,300  
 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts $ 39,136 $ 159 1.61 % $ 35,908 $ 146 1.63 % $ 34,981 $ 137 1.59 % $ 33,980 $ 139 1.59 % $ 31,459 $ 126 1.61 %
Borrowings of consolidated securitization entities 13,730 54 1.56 % 14,026 53 1.52 % 14,101 52 1.50 % 14,766 57 1.50 % 15,102 57 1.51 %
Bank term loan(1) 4,901 29 2.35 % 5,401 32 2.38 % 6,531 47 2.92 % 8,057 46 2.22 % 3,747 28 3.00 %
Senior unsecured notes(1) 5,340 47 3.49 % 4,592 39 3.41 % 4,093 35 3.47 % 3,593 32 3.46 % 1,797 18 4.02 %
Related party debt(1)   -     - - %   -     - - %   407     4 3.99 %   843     8 3.68 %   4,582     15 1.31 %
Total interest-bearing liabilities   63,107     289 1.82 %   59,927     270 1.81 %   60,113     275 1.86 %   61,239     282 1.79 %   56,687     244 1.73 %
 
Non-interest-bearing liabilities
Non-interest-bearing deposit accounts 149 166 142 182 206
Other liabilities   2,859     2,750     2,854     3,382     3,208  
Total non-interest-bearing liabilities   3,008     2,916     2,996     3,564     3,414  
         
Total liabilities   66,115     62,843     63,109     64,803     60,101  
 
Equity
Total equity 11,880 11,300 10,749 10,228 8,199
         
Total liabilities and equity $ 77,995   $ 74,143   $ 73,858   $ 75,031   $ 68,300  
Net interest income $ 3,103 $ 2,907 $ 2,875 $ 2,978 $ 2,879
 
Interest rate spread(2) 15.64 % 15.43 % 15.44 % 15.28 % 16.83 %
Net interest margin(3) 15.97 % 15.77 % 15.79 % 15.60 % 17.11 %
                                                         

 

(1) Interest on liabilities calculated above utilizes monthly average balances. The effective interest rates for the Bank term loan for the quarters ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, were 2.23%, 2.21%, 2.21%, 2.19% and 2.21%, respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with prepayments of the loan.
(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
 
SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
(unaudited, $ in millions)
             
Nine Months Ended

Sep 30, 2015

Nine Months Ended

Sep 30, 2014

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 $ 11,144 $ 19 0.23 % $ 6,587 $ 9 0.18 %
Securities available for sale 3,066 15 0.65 % 281 9 4.31 %
 
Loan receivables:
Credit cards, including held for sale 58,442 9,500 21.73 % 53,836 8,781 21.97 %
Consumer installment loans 1,107 78 9.42 % 1,012 72 9.58 %
Commercial credit products 1,361 106 10.41 % 1,374 111 10.88 %
Other   36     1 NM     16     - - %
Total loan receivables, including held for sale   60,946     9,685 21.25 %   56,238     8,964 21.47 %
Total interest-earning assets   75,156     9,719 17.29 %   63,106     8,982 19.17 %
 
Non-interest-earning assets:
Cash and due from banks 782 863
Allowance for loan losses (3,304 ) (2,997 )
Other assets   2,917     2,360  
Total non-interest-earning assets   395     226  
   
Total assets $ 75,551   $ 63,332  
 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts $ 36,768 $ 442 1.61 % $ 28,799 $ 331 1.55 %
Borrowings of consolidated securitization entities 13,966 159 1.52 % 14,888 158 1.43 %
Bank term loan(1) 5,653 108 2.55 % 1,499 28 2.52 %
Senior unsecured notes(1) 4,692 121 3.45 % 719 18 3.37 %
Related party debt(1)   163     4 3.28 %   6,739     105 2.10 %
Total interest-bearing liabilities   61,242     834 1.82 %   52,644     640 1.64 %
 
Non-interest-bearing liabilities
Non-interest-bearing deposit accounts 153 259
Other liabilities   2,846     3,272  
Total non-interest-bearing liabilities   2,999     3,531  
   
Total liabilities   64,241     56,175  
 
Equity
Total equity 11,310 7,157
   
Total liabilities and equity $ 75,551   $ 63,332  
Net interest income $ 8,885 $ 8,342
 
Interest rate spread(2) 15.47 % 17.53 %
Net interest margin(3) 15.81 % 17.80 %
                           

 

(1) Interest on liabilities calculated above utilizes monthly average balances. The effective interest rate for the Bank term loan for the 9 months ended September 30, 2015 and September 30, 2014 were 2.22% and 2.21% respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with the prepayments of the loan. The effective interest rate for the Senior unsecured notes for the 9 months ended September 30, 2014 was 3.62%.
(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
 
SYNCHRONY FINANCIAL
BALANCE SHEET STATISTICS
(unaudited, $ in millions, except per share statistics)
           
Quarter Ended
Sep 30,

2015

Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Sep 30, 2015 vs.

Sep 30, 2014

BALANCE SHEET STATISTICS
Total common equity $ 12,158 $ 11,578 $ 11,036 $ 10,478 $ 9,941 $ 2,217 22.3 %
Total common equity as a % of total assets 15.30 % 15.28 % 15.18 % 13.84 % 13.53 % 1.77 %
 
Tangible assets $ 77,847 $ 74,226 $ 71,215 $ 74,239 $ 72,071 $ 5,776 8.0 %
Tangible common equity(1) $ 10,563 $ 10,054 $ 9,530 $ 9,010 $ 8,543 $ 2,020 23.6 %
Tangible common equity as a % of tangible assets(1) 13.57 % 13.55 % 13.38 % 12.14 % 11.85 % 1.72 %
Tangible common equity per share (1) $ 12.67 $ 12.06 $ 11.43 $ 10.81 $ 10.25 $ 2.42 23.6 %
 
REGULATORY CAPITAL RATIOS(2)
Basel III Transition Basel I
Total risk-based capital ratio(3)(8) 18.8 % 18.5 % 18.2 % 16.2 % 16.4 %
Tier 1 risk-based capital ratio(4)(8) 17.5 % 17.2 % 16.9 % 14.9 % 15.1 %
Tier 1 common ratio(5)(8) n/a n/a 16.9 % 14.9 % 15.1 %
Tier 1 leverage ratio(6)(8) 14.6 % 14.6 % 13.7 % 12.5 % 12.2 %
Common equity Tier 1 capital ratio(7)(8) 17.5 % 17.2 % n/a n/a n/a
 
Basel III Fully Phased-in
Common equity Tier 1 capital ratio(7) 16.6 % 16.4 % 16.4 % 14.5 % 14.6 %
                         

 

(1) Tangible common equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure of the net asset value of the Company to investors. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
(2) Regulatory capital metrics at September 30, 2015 are preliminary and therefore subject to change. As a new savings and loan holding company, the Company historically has not been required by regulators to disclose capital ratios, and therefore these ratios are non-GAAP measures. See Reconciliation of Non-GAAP Measures and Calculation of Regulatory Measures for components of capital ratio calculations.
(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
(5) Tier 1 common ratio is the ratio of common equity Tier 1 capital divided by risk-weighted assets.
(6) Tier 1 leverage ratio reported under Basel III transition rules is calculated based on Tier 1 capital divided by total average assets, after certain adjustments. Total assets, after certain adjustments is used as the denominator for prior periods calculated under Basel I rules.
(7) Common equity Tier 1 capital ratio is the ratio of common equity Tier 1 capital to total risk-weighted assets, each as calculated under Basel III rules. Common equity Tier 1 capital ratio (fully phased-in) is a preliminary estimate reflecting management’s interpretation of the final Basel III rules adopted in July 2013 by the Federal Reserve Board, which have not been fully implemented, and our estimate and interpretations are subject to, among other things, ongoing regulatory review and implementation guidance.
(8) Beginning June 30, 2015, regulatory capital ratios are calculated under Basel III rules subject to transition provisions. The Company reported under Basel I rules for periods prior to June 30, 2015.
 
SYNCHRONY FINANCIAL
PLATFORM RESULTS AND RECONCILIATION OF NON-GAAP MEASURES
(unaudited, $ in millions)
    Quarter Ended   Nine Months Ended  
Sep 30,

2015

Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

3Q'15 vs. 3Q'14 Sep 30,

2015

  Sep 30,

2014

YTD'15 vs. YTD'14
RETAIL CARD
Purchase volume(1),(2) $ 23,560 $ 23,452 $ 18,410 $ 24,855 $ 20,991 $ 2,569 12.2 % $ 65,422 $ 58,736 $ 6,686 11.4 %
Period-end loan receivables $ 43,432 $ 42,315 $ 39,685 $ 42,308 $ 38,466 $ 4,966 12.9 % $ 43,432 $ 38,466 $ 4,966 12.9 %
Average loan receivables, including held for sale $ 42,933 $ 41,303 $ 40,986 $ 40,929 $ 39,411 $ 3,522 8.9 % $ 41,853 $ 38,685 $ 3,168 8.2 %
Average active accounts (in thousands)(2),(3) 49,953 48,981 49,617 49,871 48,433 1,520 3.1 % 49,671 48,116 1,555 3.2 %
 
Interest and fees on loans(2) $ 2,508 $ 2,335 $ 2,337 $ 2,405 $ 2,299 $ 209 9.1 % $ 7,180 $ 6,635 $ 545 8.2 %
Other income(2)   70       107       86       141       78       (8 ) (10.3 )%   263     266     ($3 ) (1.1 )%
Platform revenue, excluding retailer share arrangements(2) 2,578 2,442 2,423 2,546 2,377 201 8.5 % 7,443 6,901 $ 542 7.9 %
Retailer share arrangements(2)   (708 )   (606 )   (651 )   (686 )   (683 )   (25 ) 3.7 %   (1,965 )   (1,844 )   ($121 ) 6.6 %
Platform revenue(2) $ 1,870   $ 1,836   $ 1,772   $ 1,860   $ 1,694   $ 176   10.4 % $ 5,478   $ 5,057   $ 421   8.3 %
 
PAYMENT SOLUTIONS
Purchase volume(1) $ 3,635 $ 3,371 $ 2,948 $ 3,419 $ 3,226 $ 409 12.7 % $ 9,954 $ 9,028 $ 926 10.3 %
Period-end loan receivables $ 12,933 $ 12,194 $ 11,833 $ 12,095 $ 11,514 $ 1,419 12.3 % $ 12,933 $ 11,514 $ 1,419 12.3 %
Average loan receivables $ 12,523 $ 11,971 $ 11,970 $ 11,772 $ 11,267 $ 1,256 11.1 % $ 12,183 $ 10,965 $ 1,218 11.1 %
Average active accounts (in thousands)(3) 7,468 7,231 7,271 7,113 6,892 576 8.4 % 7,335 6,784 551 8.1 %
 
Interest and fees on loans $ 442 $ 412 $ 403 $ 426 $ 405 $ 37 9.1 % $ 1,257 $ 1,156 $ 101 8.7 %
Other income   5       4       5       9       7       (2 ) (28.6 )%   14     23     ($9 ) (39.1 )%
Platform revenue, excluding retailer share arrangements 447 416 408 435 412 35 8.5 % 1,271 1,179 $ 92 7.8 %
Retailer share arrangements   (13 )   (14 )   (8 )   (11 )   (9 )   (4 ) 44.4 %   (35 )   (30 )   ($5 ) 16.7 %
Platform revenue $ 434   $ 402   $ 400   $ 424   $ 403   $ 31   7.7 % $ 1,236   $ 1,149   $ 87   7.6 %
 
CARECREDIT
Purchase volume(1) $ 2,011 $ 1,987 $ 1,781 $ 1,807 $ 1,787 $ 224 12.5 % $ 5,779 $ 5,304 $ 475 9.0 %
Period-end loan receivables $ 7,155 $ 6,922 $ 6,730 $ 6,883 $ 6,787 $ 368 5.4 % $ 7,155 $ 6,787 $ 368 5.4 %
Average loan receivables $ 7,048 $ 6,820 $ 6,819 $ 6,846 $ 6,713 $ 335 5.0 % $ 6,910 $ 6,588 $ 322 4.9 %
Average active accounts (in thousands)(3) 4,826 4,711 4,716 4,683 4,582 244 5.3 % 4,756 4,494 262 5.8 %
 
Interest and fees on loans $ 429 $ 419 $ 400 $ 421 $ 412 $ 17 4.1 % $ 1,248 $ 1,173 $ 75 6.4 %
Other income   9       9       10       12       11       (2 ) (18.2 )%   28     34     ($6 ) (17.6 )%
Platform revenue, excluding retailer share arrangements 438 428 410 433 423 15 3.5 % 1,276 1,207 $ 69 5.7 %
Retailer share arrangements   (2 )   (1 )   (1 )   (1 )   (1 )   (1 ) 100.0 %   (4 )   (3 )   (1 ) 33.3 %
Platform revenue $ 436   $ 427   $ 409   $ 432   $ 422   $ 14   3.3 % $ 1,272   $ 1,204   $ 68   5.6 %
 
TOTAL SYF
Purchase volume(1),(2) $ 29,206 $ 28,810 $ 23,139 $ 30,081 $ 26,004 $ 3,202 12.3 % $ 81,155 $ 73,068 $ 8,087 11.1 %
Period-end loan receivables $ 63,520 $ 61,431 $ 58,248 $ 61,286 $ 56,767 $ 6,753 11.9 % $ 63,520 $ 56,767 $ 6,753 11.9 %
Average loan receivables, including held for sale $ 62,504 $ 60,094 $ 59,775 $ 59,547 $ 57,391 $ 5,113 8.9 % $ 60,946 $ 56,238 $ 4,708 8.4 %
Average active accounts (in thousands)(2),(3) 62,247 60,923 61,604 61,667 59,907 2,340 3.9 % 61,762 59,394 2,368 4.0 %
 
Interest and fees on loans(2) $ 3,379 $ 3,166 $ 3,140 $ 3,252 $ 3,116 $ 263 8.4 % $ 9,685 $ 8,964 $ 721 8.0 %
Other income(2)   84       120       101       162       96       (12 ) (12.5 )%   305     323     ($18 ) (5.6 )%
Platform revenue, excluding retailer share arrangements(2) 3,463 3,286 3,241 3,414 3,212 251 7.8 % 9,990 9,287 $ 703 7.6 %
Retailer share arrangements(2)   (723 )   (621 )   (660 )   (698 )   (693 )   (30 ) 4.3 %   (2,004 )   (1,877 )   ($127 ) 6.8 %
Platform revenue(2) $ 2,740   $ 2,665   $ 2,581   $ 2,716   $ 2,519   $ 221   8.8 % $ 7,986   $ 7,410   $ 576   7.8 %
                                       
(1) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(2) Includes activity and balances associated with loan receivables held for sale.
(3) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
 
SYNCHRONY FINANCIAL
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES
(unaudited, $ in millions, except per share statistics)
    Quarter Ended
Sep 30,

2015

Jun 30,

2015

Mar 31,

2015

  Dec 31,

2014

Sep 30,

2014

COMMON EQUITY MEASURES

GAAP Total common equity $ 12,158 $ 11,578 $ 11,036 $ 10,478 $ 9,941
Less: Goodwill (949 ) (949 ) (949 ) (949 ) (949 )
Less: Intangible assets, net   (646 )   (575 )   (557 )   (519 )   (449 )
Tangible common equity $ 10,563 $ 10,054 $ 9,530 $ 9,010 $ 8,543
Adjustments for certain other intangible assets, deferred tax liabilities

and certain items in accumulated comprehensive income (loss)

  293     287     292  
Basel I - Tier 1 capital and Tier 1 common equity $ 9,823 $ 9,297 $ 8,835
Adjustments for certain other intangible assets and deferred tax liabilities   (12 )   (20 )   (24 )
 

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

  291     293        
Basel III - Common equity Tier 1 (fully phased-in) $ 10,854   $ 10,347   $ 9,811   $ 9,277   $ 8,811  
Adjustment related to capital components during transition   375     331  
Basel III - Common equity Tier I (transition) $ 11,229   $ 10,678  
 

RISK-BASED CAPITAL

Tier 1 capital and Tier 1 common equity (1) $ 11,229 $ 10,678 $ 9,823 $ 9,297 $ 8,835
Add: Allowance for loan losses includible in risk-based capital   835     806     759     809     760  
Risk-based capital(1) $ 12,064   $ 11,484   $ 10,582   $ 10,106   $ 9,595  
 

ASSET MEASURES

Total assets (2) $ 77,995 $ 74,143 $ 72,721 $ 75,707 $ 73,469
Adjustments for:
Disallowed goodwill and other disallowed intangible assets, net of

related deferred tax liabilities

(931 ) (903 ) (1,213 ) (1,181 ) (1,110 )
Other   104     60     136     79     4  
Total assets for leverage purposes(1) $ 77,168   $ 73,300   $ 71,644   $ 74,605   $ 72,363  
 
Risk-weighted assets - Basel I n/a n/a $ 58,184 $ 62,270 $ 58,457
Risk-weighted assets - Basel III (fully phased-in)(3) $ 65,278 $ 62,970 $ 59,926 $ 64,162 $ 60,300
Risk-weighted assets - Basel III (transition)(3) $ 64,244 $ 61,985 n/a n/a n/a
 

TANGIBLE COMMON EQUITY PER SHARE

GAAP book value per share $ 14.58 $ 13.89 $ 13.24 $ 12.57 $ 11.92
Less: Goodwill (1.14 ) (1.14 ) (1.14 ) (1.14 ) (1.14 )
Less: Intangible assets, net   (0.77 )   (0.69 )   (0.67 )   (0.62 )   (0.53 )
Tangible common equity per share $ 12.67   $ 12.06   $ 11.43   $ 10.81   $ 10.25  
                       

 

(1) Beginning June 30, 2015, regulatory capital amounts are calculated under Basel III rules subject to transition provisions. The company reported under Basel I rules for periods prior to June 30, 2015.
(2) Represents total average assets beginning June 30, 2015 and total assets for all periods prior to June 30, 2015.
(3) Key differences between Basel III transitional rules and fully phased-in Basel III rules in the calculation of risk-weighted assets include, but not limited to, risk weighting of deferred tax assets and adjustments for certain intangible assets.

Synchrony Financial
Investor Relations
Greg Ketron, 203-585-6291
or
Media Relations
Samuel Wang, 203-585-2933

Source: Synchrony Financial