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Michelle Romero: Michelle.Romero@syf.com Tyler Allen: Tyler.Allen@syf.com
Press Release
July 21, 2017, 2:46 PM EDT
“Strong execution of our strategies yielded solid performance across our three sales platforms. Organic growth remains an important business driver and contributed meaningfully to this quarter’s results. Our focus on the application and development of digital innovations is yielding results as we continue to drive strong online sales volume growth and penetration. A primary funding objective for us is growing deposits, and we continued to execute on this, achieving double-digit growth again this quarter,” said Margaret Keane, President and Chief Executive Officer of Synchrony Financial. “We were pleased to announce a meaningful increase in our capital return to shareholders through dividends and share repurchases--this is a key priority, along with continued growth of the business while maintaining solid returns and a strong balance sheet.”
Business and Financial Highlights for the Second Quarter of 2017
All comparisons below are for the second quarter of 2017 compared to the second quarter of 2016, unless otherwise noted.
Earnings
Balance Sheet
Key Financial Metrics
Credit Quality
Sales Platforms
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, 2016, as filed February 23, 2017, and the Company’s forthcoming Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 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, July 21, 2017, at 8:30 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 on the Synchrony Financial corporate website, www.investors.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 22017#, and can be accessed beginning approximately two hours after the event through August 4, 2017.
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 365,000 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. Synchrony Financial offers 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, facebook.com/SynchronyFinancial, www.linkedin.com/company/synchrony-financial and twitter.com/SYFNews.
*Source: The Nilson Report (June 2017, Issue # 1112) - based on 2016 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 “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “targets,” “outlook,” “estimates,” “will,” “should,” “may” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; cyber-attacks or other security breaches; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to 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 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; 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; a material indemnification obligation to GE under the tax sharing and separation agreement with GE if we cause the split-off from GE or certain preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the impact of the Consumer Financial Protection Bureau’s regulation of our business; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit Synchrony Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this 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, 2016, as filed on February 23, 2017. 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 “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
2Q'17 vs. 2Q'16
Six Months Ended
YTD'17 vs. YTD'16
Jun 30,
Mar 31,
Dec 31,
Sep 30,
2017
2016
EARNINGS
Net interest income
$3,637
$3,587
$3,628
$3,481
$3,212
$425
13.20%
$7,224
$6,421
$803
12.50%
Retailer share arrangements
-669
-684
-811
-757
-664
-5
0.80%
-1,353
-1,334
-19
1.40%
Net interest income, after retailer share arrangements
2,968
2,903
2,817
2,724
2,548
420
16.50%
5,871
5,087
784
15.40%
Provision for loan losses
1,326
1,306
1,076
986
1,021
305
29.90%
2,632
1,924
708
36.80%
Net interest income, after retailer share arrangements and provision for loan losses
1,642
1,597
1,741
1,738
1,527
115
7.50%
3,239
3,163
76
2.40%
Other income
57
93
85
84
83
-26
-31.30%
150
175
-25
-14.30%
Other expense
911
908
918
859
839
72
8.60%
1,819
1,639
180
11%
Earnings before provision for income taxes
788
782
963
771
17
2.20%
1,570
1,699
-129
-7.60%
Provision for income taxes
292
283
332
359
282
10
3.50%
575
628
-53
-8.40%
Net earnings
$496
$499
$576
$604
$489
$7
$995
$1,071
($76)
-7.10%
Net earnings attributable to common stockholders
COMMON SHARE STATISTICS
Basic EPS
$0.62
$0.61
$0.70
$0.73
$0.59
$0.03
5.10%
$1.23
$1.28
($0.05)
-3.90%
Diluted EPS
$0.58
5.20%
Dividend declared per share
$0.13
-
NM
$0.26
Common stock price
$29.82
$34.30
$36.27
$28.00
$25.28
$4.54
18%
Book value per share
$18.02
$17.71
$17.37
$16.94
$16.45
$1.57
9.50%
Tangible common equity per share(1)
$15.79
$15.47
$15.34
$14.90
$14.46
$1.33
9.20%
Beginning common shares outstanding
810.8
817.4
825.5
833.9
833.8
-23
-2.80%
-16.4
-2.00%
Issuance of common shares
Stock-based compensation
0.2
0.1
100
100%
Shares repurchased
-15.7
-6.6
-8.1
-8.5
-22.3
Ending common shares outstanding
795.3
(38.6
-4.60%
-38.6
Weighted average common shares outstanding
804
813.1
820.5
828.4
-29.9
-3.60%
808.5
-25.4
-3%
Weighted average common shares outstanding (fully diluted)
807.4
817.1
823.8
830.6
836.2
-28.8
-3.40%
812.2
835.8
-23.6
(1) Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
SELECTED METRICS
(unaudited, $ in millions, except account data)
PERFORMANCE METRICS
Return on assets(1)
2.30%
2.60%
2.80%
-0.20%
-0.40%
Return on equity(2)
13.80%
14.10%
16.20%
17.30%
14.50%
-0.70%
14%
16.30%
-2.30%
Return on tangible common equity(3)
15.70%
16.10%
18.40%
19.6
-0.80%
15.90%
18.60%
-2.70%
Net interest margin(4)
16.18%
16.26%
16.34%
15.94%
0.26%
16.19%
15.89%
0.30%
Efficiency ratio(5)
30.10%
30.30%
31.60%
30.60%
31.90%
-1.80%
30.20%
31.10%
-0.90%
Other expense as a % of average loan receivables, including held for sale
4.93%
4.97%
5.04%
5.07%
-0.14%
4.95%
-0.02%
Effective income tax rate
37.10%
36.20%
36.60%
37.30%
0.50%
37%
CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale
5.42%
5.33%
4.65%
4.39%
4.51%
0.91%
5.37%
4.63%
0.74%
30+ days past due as a % of period-end loan receivables(6)
4.25%
4.32%
4.26%
3.79%
0.46%
90+ days past due as a % of period-end loan receivables(6)
1.90%
2.06%
2.03%
1.89%
1.67%
0.23
0.23%
Net charge-offs
$1,001
$974
$847
$765
$747
$254
34%
$1,975
$1,527
$448
29.30%
Loan receivables delinquent over 30 days(6)
$3,208
$3,120
$3,295
$3,008
$2,585
$623
24.10%
Loan receivables delinquent over 90 days(6)
$1,435
$1,508
$1,546
$1,334
$1,143
$292
25.50%
Allowance for loan losses (period-end)
$5,001
$4,676
$4,344
$4,115
$3,894
$1,107
28.40%
Allowance coverage ratio(7)
6.63%
6.37%
5.69%
5.82%
5.70%
0.93%
BUSINESS METRICS
Purchase volume(8)
$33,476
$28,880
$35,369
$31,615
$31,507
$1,969
6.20%
$62,356
$58,484
$3,872
6.6
Period-end loan receivables
$75,458
$73,350
$76,337
$70,644
$68,282
$7,176
10.50%
10.5
Credit cards
$72,492
$70,587
$73,580
$67,858
$65,511
$6,981
10.70%
10.7
Consumer installment loans
$1,514
$1,411
$1,384
$1,361
$1,293
$221
17.10%
Commercial credit products
$1,386
$1,311
$1,333
$1,385
$1,389
($3)
Other
$66
$41
$40
$89
($23)
-25.80%
Average loan receivables, including held for sale
$74,090
$74,132
$72,476
$69,316
$66,561
$7,529
11.30%
$74,111
$66,377
$7,734
11.70%
Period-end active accounts (in thousands)(9)
69,277
67,905
71,890
66,781
66,491
2,786
4.20%
Average active accounts (in thousands)(9)
68,635
69,629
68,701
66,639
65,531
3,104
4.70%
69,307
65,996
3,311
5%
LIQUIDITY
Liquid assets
Cash and equivalents
$12,020
$11,392
$9,321
$13,588
$11,787
$233
2%
Total liquid assets
$15,274
$16,158
$13,612
$16,362
$13,956
$1,318
9.40%
Undrawn credit facilities
$6,650
$5,600
$6,700
$7,150
$7,025
($375)
-5.30%
Total liquid assets and undrawn credit facilities
$21,924
$21,758
$20,312
$23,512
$20,981
$943
4.50%
Liquid assets % of total assets
16.76%
18.14%
15.09%
18.77%
16.94
-0.18%
16.94%
Liquid assets including undrawn credit facilities % of total assets
24.06%
24.43%
22.52%
26.98%
25.47
-1.41%
25.47%
(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) Based on customer statement-end balances extrapolated to the respective period-end date.
(7) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
(8) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(9) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
STATEMENTS OF EARNINGS
(unaudited, $ in millions)
Interest income:
Interest and fees on loans
$3,927
$3,877
$3,919
$3,771
$3,494
$433
12.40%
$7,804
$6,992
$812
11.60%
Interest on investment securities
43
36
28
25
21
22
104.80%
79
83.70%
Total interest income
3,970
3,913
3,947
3,796
3,515
455
12.90%
7,883
7,035
848
12.10%
Interest expense:
Interest on deposits
202
194
188
179
23
12.80%
396
351
45
Interest on borrowings of consolidated securitization entities
63
65
64
59
4
6.80%
128
117
11
Interest on third-party debt
68
67
3
4.60%
135
146
-11
-7.50%
Total interest expense
333
326
319
315
303
30
9.90%
659
614
7.30%
3,637
3,587
3,628
3,481
3,212
425
7,224
6,421
803
Other income:
Interchange revenue
165
145
167
154
151
14
9.30%
310
281
29
10.30%
Debt cancellation fees
5
7.90%
136
127
9
7.10%
Loyalty programs
-206
-137
-157
-145
-135
-71
52.60%
-343
-245
-98
40%
7
8
26
47
12
35
Total other income
Other expense:
Employee costs
321
325
311
301
20
6.60%
646
581
11.20%
Professional fees
158
164
174
309
300
3%
Marketing and business development
124
94
130
92
107
218
201
8.50%
Information processing
88
90
87
81
178
163
15
220
248
221
195
196
24
12.20%
468
394
74
18.80%
Total other expense
STATEMENTS OF FINANCIAL POSITION
Jun 30, 2017 vs. Jun 30, 2016
Assets
Investment securities
3,997
5,328
5,110
3,356
2,723
1,274
46.80%
Loan receivables:
Unsecuritized loans held for investment
52,550
50,398
52,332
47,517
44,854
7,696
17.20%
Restricted loans of consolidated securitization entities
22,908
22,952
24,005
23,127
23,428
-520
-2.20%
Total loan receivables
75,458
73,350
76,337
70,644
68,282
7,176
Less: Allowance for loan losses
-5,001
-4,676
-4,344
-4,115
-3,894
-1,107
Loan receivables, net
70,457
68,674
71,993
66,529
64,388
6,069
Goodwill
991
992
949
42
4.40%
Intangible assets, net
787
826
712
733
704
11.80%
Other assets
2,888
1,838
2,122
2,004
1,833
1,055
57.60%
Total assets
$91,140
$89,050
$90,207
$87,159
$82,384
$8,756
10.60%
Liabilities and Equity
Deposits:
Interest-bearing deposit accounts
$52,659
$51,359
$51,896
$49,611
$46,220
$6,439
13.90%
Non-interest-bearing deposit accounts
226
246
159
204
207
19
Total deposits
52,885
51,605
52,055
49,815
46,427
6,458
Borrowings:
Borrowings of consolidated securitization entities
12,204
12,433
12,388
12,411
12,236
-32
-0.30%
Bank term loan
Senior unsecured notes
8,505
7,761
7,759
7,756
7,059
1,446
20.50%
Total borrowings
20,709
20,194
20,147
20,167
19,295
1,414
Accrued expenses and other liabilities
3,214
3,809
3,196
2,947
267
9.10%
Total liabilities
76,808
74,687
76,011
73,178
68,669
8,139
11.90%
Equity:
Common stock
1
Additional paid-in capital
9,415
9,405
9,393
9,381
9,370
Retained earnings
6,109
5,724
5,330
4,861
4,364
1,745
Accumulated other comprehensive income:
-49
-55
-24
-20
-29
145%
Treasury Stock
-1,144
-712
-475
-238
Total equity
14,332
14,363
14,196
13,981
13,715
617
Total liabilities and equity
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
30-Jun-17
31-Mar-17
31-Dec-16
30-Sep-16
30-Jun-16
Interest
Average
Income/
Yield/
Balance
Expense
Rate
Interest-earning assets:
Interest-earning cash and equivalents
$10,758
$28
1.04%
$10,552
$21
0.81%
$12,210
$17
0.55%
$12,480
$16
0.51%
$11,623
$14
0.48%
Securities available for sale
5,195
1.16%
5,213
1.17%
4,076
1.07%
2,960
1.21%
2,858
0.99%
Credit cards, including held for sale
71,206
3,858
21.73%
71,365
3,811
21.66%
69,660
3,851
21.99%
66,519
3,705
22.16%
63,876
3,432
21.61%
1,461
34
9.33%
1,389
32
9.34%
1,373
31
8.98%
1,333
9.25%
1,233
9.13%
1,378
1,317
10.47%
1,386
10.33%
1,401
9.94%
1,388
33
9.56%
61
Total loan receivables, including held for sale
74,090
3,927
21.26%
74,132
3,877
21.21%
72,476
3,919
21.51%
69,316
3,771
21.64%
66,561
3,494
21.11%
Total interest-earning assets
90,043
17.68%
89,897
17.65%
88,762
17.69%
84,756
17.82%
81,042
17.44%
Non-interest-earning assets:
Cash and due from banks
829
802
739
862
895
Allowance for loan losses
-4,781
-4,408
-4,228
-3,933
-3,732
3,303
3,177
3,479
3,189
3,208
Total non-interest-earning assets
-649
-429
-10
118
371
$89,394
$89,468
$88,752
$84,874
$81,413
Liabilities
Interest-bearing liabilities:
$51,836
$202
1.56%
$51,829
$194
1.52%
$51,006
$188
1.47%
$47,895
$45,523
$179
1.58%
12,213
2.07%
12,321
2.14%
12,389
12,254
2.05%
12,211
1.94%
7,933
3.44%
7,760
7,757
7,448
3.42%
6,861
58
3.40%
Total interest-bearing liabilities
71,982
1.86%
71,910
1.84%
71,152
1.78%
67,597
1.85%
64,660
1.88%
Non-interest-bearing liabilities
240
176
208
Other liabilities
2,752
2,995
3,321
3,175
3,002
Total non-interest-bearing liabilities
2,970
3,235
3,497
3,379
3,210
74,952
75,145
74,649
70,976
67,870
Equity
14,442
14,323
14,103
13,898
13,543
Interest rate spread(1)
15.82%
15.81%
15.91%
15.97%
15.56%
Net interest margin(2)
(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.
$10,656
$49
0.93%%
$11,957
$30
5,204
2,918
13
0.90%
71,285
7,669
21.69%
63,781
6,868
21.65%
1,425
66
1,194
55
9.26%
1,348
10.17%
1,350
10.13%
53
3.80%
52
3.87%
74,111
7,804
21.23%
66,377
6,992
21.18%
89,971
17.67%
81,252
17.41%
816
1,131
-4,595
-3,661
3,240
-540
710
$89,431
$81,962
$51,833
$396
1.54%
$44,914
$351
1.57%
12,267
2.10%
12,535
Bank term loan(1)
1,118
5.58%
7,847
3.47%
6,709
3.45%
71,947
65,276
229
2,872
3,229
3,101
3,450
75,048
68,726
14,383
13,236
Interest rate spread(2)
15.52%
Net interest margin(3)
(1) The effective interest rate for the Bank term loan for the 6 months ended June 30, 2016 was 2.48%. 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.
BALANCE SHEET STATISTICS
(unaudited, $ in millions, except per share statistics)
Total common equity
$14,332
$14,363
$14,196
$13,981
$13,715
$617
Total common equity as a % of total assets
15.73%
16.13%
15.74%
16.04%
16.65%
-0.92%
Tangible assets
$89,362
$87,232
$88,546
$85,477
$80,731
$8,631
Tangible common equity(1)
$12,554
$12,545
$12,535
$12,299
$12,062
$492
4.10%
Tangible common equity as a % of tangible assets(1)
14.05%
14.38%
14.16%
14.39%
14.94%
-0.89%
REGULATORY CAPITAL RATIOS(2)
Basel III Transition
Total risk-based capital ratio(3)
18.70%
19.30%
18.50%
19.50%
19.80%
Tier 1 risk-based capital ratio(4)
17.40%
18.20%
Tier 1 leverage ratio(5)
14.80%
15%
Common equity Tier 1 capital ratio(6)
Basel III Fully Phased-in
17.70%
17%
17.90%
(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 June 30, 2017 are preliminary and therefore subject to change.
(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
(5) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments. Tier 1 leverage ratios are based upon the use of daily averages for all periods presented.
(6) 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.
PLATFORM RESULTS
RETAIL CARD
Purchase volume(1)(2)
$27,101
$22,952
$28,996
$25,285
$25,411
$1,690
6.70%
$50,053
$46,961
$3,092
$51,437
$49,905
$52,701
$48,010
$46,705
$4,732
10.10%
$50,533
$50,644
$49,476
$47,274
$45,593
$4,940
10.80%
$50,588
$45,536
$5,052
11.10%
Average active accounts (in thousands)(2)(3)
54,058
55,049
54,489
52,959
52,314
1,744
3.30%
54,729
52,798
1,931
3.70%
Interest and fees on loans(2)
$2,900
$2,888
$2,909
$2,790
$315
$5,788
$5,199
$589
Other income(2)
$25
$77
$70
$69
($44)
-63.80%
$102
$148
($46)
-31.10%
Retailer share arrangements(2)
($657)
($681)
($801)
($752)
($656)
($1)
0.20%
($1,338)
($1,317)
($21)
1.60%
PAYMENT SOLUTIONS
Purchase volume(1)
$3,930
$3,686
$4,194
$4,152
$3,903
$27
0.70%
$7,616
$7,295
$321
$15,595
$15,320
$15,567
$14,798
$13,997
$1,598
11.40%
Average loan receivables
$15,338
$15,424
$15,076
$14,367
$13,554
$1,784
$15,381
$13,492
$1,889
Average active accounts (in thousands)(3)
9,031
9,090
8,844
8,461
8,153
878
9,061
8,148
913
$533
$515
$523
$505
$467
$1,048
$924
$124
13.40%
$6
$4
$3
$10
42.90%
($9)
($7)
($2)
28.60%
($10)
($14)
-28.60%
CARECREDIT
$2,445
$2,242
$2,179
$2,178
$2,193
$252
11.50%
$4,687
$4,228
$459
10.90%
$8,426
$8,125
$8,069
$7,836
$7,580
$846
$8,219
$8,064
$7,924
$7,675
$7,414
$805
$8,142
$7,349
$793
5,546
5,490
5,368
5,219
5,064
482
5,517
5,050
467
$494
$474
$487
$476
$442
$52
$968
$869
$99
$26
$12
$11
$15
136.40%
$38
$20
$18
90%
($5)
66.70%
TOTAL SYF
$57
$93
$85
$84
$83
($26)
$150
$175
($25)
($669)
($684)
($811)
($757)
($664)
($1,353)
($1,334)
($19)
(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.
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1)
COMMON EQUITY MEASURES
GAAP Total common equity
Less: Goodwill
-991
-992
-949
Less: Intangible assets, net
-787
-826
-733
-704
Tangible common equity
Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss)
337
340
299
Basel III - Common equity Tier 1 (fully phased-in)
$12,891
$12,885
$12,872
$12,598
$12,344
Adjustment related to capital components during transition
263
273
266
Basel III - Common equity Tier 1 (transition)
$13,037
$13,039
$13,135
$12,871
$12,610
RISK-BASED CAPITAL
Common equity Tier 1
Add: Allowance for loan losses includible in risk-based capital
985
954
994
923
890
Risk-based capital
$14,022
$13,993
$14,129
$13,794
$13,500
ASSET MEASURES
Total average assets(2)
Adjustments for:
Disallowed goodwill, other disallowed intangible assets (net of related deferred tax liabilities) and other
-1,325
-1,358
-1,059
-1,117
-1,113
Total assets for leverage purposes
$88,069
$88,110
$87,693
$83,757
$80,300
Risk-weighted assets - Basel III (fully phased-in)(3)
$74,748
$72,596
$75,941
$70,448
$68,462
Risk-weighted assets - Basel III (transition)(3)
$74,792
$72,627
$76,179
$70,660
$68,188
TANGIBLE COMMON EQUITY PER SHARE
GAAP book value per share
-1.25
-1.22
-1.16
-1.14
-0.98
-1.02
-0.87
-0.9
-0.85
Tangible common equity per share
(1) Regulatory measures at June 30, 2017 are presented on an estimated basis.
(2) Total average assets are presented based upon the use of daily averages.
(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
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