Le Lézard
Classified in: Business
Subjects: ERN, CCA

Synchrony Financial Reports Fourth Quarter Net Earnings of $731 Million or $1.15 Per Diluted Share


STAMFORD, Conn., Jan. 24, 2020 /PRNewswire/ -- Synchrony Financial (NYSE: SYF) today announced fourth quarter 2019 net earnings of $731 million, or $1.15 per diluted share; this includes a $38 million pre-tax, $28 million after-tax, or $0.05 per diluted share benefit from a reduction in the reserve related to the sale of the Walmart consumer portfolio, which was completed in October. Highlights included*.

Synchrony Logo (PRNewsfoto/Synchrony)

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

Business and Financial Highlights for the Fourth Quarter of 2019*

Earnings

Balance Sheet

Key Financial Metrics

Credit Quality

Sales Platforms

* All comparisons are for the fourth quarter of 2019 compared to the fourth quarter of 2018, unless otherwise noted.
**Financial measures shown above on a Core basis are non-GAAP measures and exclude from both the prior year and the current year amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively. See non-GAAP reconciliation in the financial tables.

Corresponding Financial Tables and Information

No representation is made that the information in this news release is complete.  Investors are encouraged to review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the detailed financial tables and information that follow and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed February 15, 2019, and the Company's forthcoming Annual Report on Form 10-K for the year ended December 31, 2019.  The detailed financial tables and other information are also available on the Investor Relations page of the Company's website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

Conference Call and Webcast Information

On Friday, January 24, 2020, at 7:30 a.m. Eastern Time, Margaret Keane, Chief Executive Officer, Brian Doubles, President, and Brian Wenzel, Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations page on the Synchrony Financial corporate website, www.investors.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 42019#, and can be accessed beginning approximately two hours after the event through February 7, 2020.

About Synchrony Financial

Synchrony (NYSE: SYF) is a premier consumer financial services company. We deliver a wide range of specialized financing programs, as well as innovative consumer banking products, across key industries including digital, retail, home, auto, travel, health and pet. Synchrony enables our partners to grow sales and loyalty with consumers. We are one of the largest issuers of private label credit cards in the United States; we also offer co-branded products, installment loans and consumer financing products for small- and medium-sized businesses, as well as healthcare providers.

Synchrony is changing what's possible through our digital capabilities, deep industry expertise, actionable data insights, frictionless customer experience and customized financing solutions.

For more information, visit www.synchrony.com and Twitter: @Synchrony.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "targets," "outlook," "estimates," "will," "should," "may" or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; cyber-attacks or other security breaches; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; damage to our reputation; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; a material indemnification obligation to GE under the tax sharing and separation agreement with GE if we cause the split-off from GE or certain preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislative and regulatory developments and the impact of the Consumer Financial Protection Bureau's regulation of our business; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit Synchrony Bank's ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this news release and in our public filings, including under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed on February 15, 2019. You should not consider any list of such factors to be an exhaustive statement of all the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

Non-GAAP Measures

The information provided herein includes measures we refer to as "tangible common equity" and certain "Core" financial measures that have been adjusted to exclude amounts related to the Walmart and Yamaha portfolios, sold in October 2019 and January 2020, respectively, which are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP").  For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please see the detailed financial tables and information that follow. For a statement regarding the usefulness of these measures to investors, please see the Company's Current Report on Form 8-K filed with the SEC today.

 

 

SYNCHRONY FINANCIAL




















FINANCIAL SUMMARY




















(unaudited, in millions, except per share statistics)





















Quarter Ended




Twelve Months Ended





Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


4Q'19 vs. 4Q'18


Dec 31,
2019


Dec 31,
2018


YTD'19 vs. YTD'18

EARNINGS




















Net interest income

$4,029


$4,389


$4,155


$4,226


$4,333


$(304)

(7.0)%


$16,799


$16,118


$681

4.2%

Retailer share arrangements

(1,029)


(1,016)


(859)


(954)


(855)


(174)

20.4%


(3,858)


(3,099)


(759)

24.5%

Provision for loan losses

1,104


1,019


1,198


859


1,452


(348)

(24.0)%


4,180


5,545


(1,365)

(24.6)%

Net interest income, after retailer share arrangements and provision for loan losses

1,896


2,354


2,098


2,413


2,026


(130)

(6.4)%


8,761


7,474


1,287

17.2%

Other income

104


85


90


92


64


40

62.5%


371


265


106

40.0%

Other expense

1,079


1,064


1,059


1,043


1,078


1

0.1%


4,245


4,095


150

3.7%

Earnings before provision for income taxes

921


1,375


1,129


1,462


1,012


(91)

(9.0)%


4,887


3,644


1,243

34.1%

Provision for income taxes

190


319


276


355


229


(39)

(17.0)%


1,140


854


286

33.5%

Net earnings

$731


$1,056


$853


$1,107


$783


$(52)

(6.6)%


$3,747


$2,790


$957

34.3%

Net earnings attributable to common stockholders

$731


$1,056


$853


$1,107


$783


$(52)

(6.6)%


$3,747


$2,790


$957

34.3%





























































COMMON SHARE STATISTICS




















Basic EPS   

$1.15


$1.60


$1.25


$1.57


$1.09


$0.06

5.5%


$5.59


$3.76


$1.83

48.7%

Diluted EPS   

$1.15


$1.60


$1.24


$1.56


$1.09


$0.06

5.5%


$5.56


$3.74


$1.82

48.7%





















Dividend declared per share

$0.22


$0.22


$0.21


$0.21


$0.21


$0.01

4.8%


$0.86


$0.72


$0.14

19.4%

Common stock price

$36.01


$34.09


$34.67


$31.90


$23.46


$12.55

53.5%


$36.01


$23.46


$12.55

53.5%

Book value per share   

$23.31


$23.13


$22.03


$21.35


$20.42


$2.89

14.2%


$23.31


$20.42


$2.89

14.2%

Tangible common equity per share(1)

$19.50


$19.68


$18.60


$17.96


$17.41


$2.09

12.0%


$19.50


$17.41


$2.09

12.0%





















Beginning common shares outstanding

653.7


668.9


688.8


718.8


718.7


(65.0)

(9.0)%


718.8


770.5


(51.7)

(6.7)%

Issuance of common shares

-


-


-


-


-


-

- %


-


-


-

- %

Stock-based compensation

0.6


0.4


1.2


0.9


0.1


0.5

NM


3.1


3.0


0.1

3.3%

Shares repurchased

(38.4)


(15.6)


(21.1)


(30.9)


-


(38.4)

NM


(106.0)


(54.7)


(51.3)

93.8%

Ending common shares outstanding

615.9


653.7


668.9


688.8


718.8


(102.9)

(14.3)%


615.9


718.8


(102.9)

(14.3)%





















Weighted average common shares outstanding 

633.7


658.3


683.6


706.3


718.7


(85.0)

(11.8)%


670.2


742.3


(72.1)

(9.7)%

Weighted average common shares outstanding (fully diluted) 

637.7


661.7


686.5


708.9


720.9


(83.2)

(11.5)%


673.5


746.9


(73.4)

(9.8)%





















(1) Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.

 

 

SYNCHRONY FINANCIAL




















SELECTED METRICS




















(unaudited, $ in millions, except account data)





















Quarter Ended




Twelve Months Ended





Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


4Q'19 vs. 4Q'18


Dec 31,
2019


Dec 31,
2018


YTD'19 vs. YTD'18

PERFORMANCE METRICS




















Return on assets(1)

2.7%


3.9%


3.3%


4.3%


2.9%



(0.2)%


3.5%


2.8%



0.7%

Return on equity(2)

19.0%


28.3%


23.1%


30.4%


21.5%



(2.5)%


25.1%


19.4%



5.7%

Return on tangible common equity(3)

23.0%


33.4%


27.4%


35.8%


25.2%



(2.2)%


29.9%


22.4%



7.5%

Net interest margin(4)

15.01%


16.29%


15.75%


16.08%


16.06%



(1.05)%


15.78%


15.97%



(0.19)%

Efficiency ratio(5)

34.8%


30.8%


31.3%


31.0%


30.4%



4.4%


31.9%


30.8%



1.1%

Other expense as a % of average loan receivables, including held for sale

5.01%


4.66%


4.78%


4.71%


4.79%



0.22%


4.79%


4.92%



(0.13)%

Effective income tax rate

20.6%


23.2%


24.4%


24.3%


22.6%



(2.0)%


23.3%


23.4%



(0.1)%









































CREDIT QUALITY METRICS




















Net charge-offs as a % of average loan receivables, including held for sale

5.15%


5.35%


6.01%


6.06%


5.54%



(0.39)%


5.65%


5.63%



0.02%

30+ days past due as a % of period-end loan receivables(6)

4.44%


4.47%


4.43%


4.92%


4.76%



(0.32)%


4.44%


4.76%



(0.32)%

90+ days past due as a % of period-end loan receivables(6)

2.15%


2.07%


2.16%


2.51%


2.29%



(0.14)%


2.15%


2.29%



(0.14)%

Net charge-offs

$1,109


$1,221


$1,331


$1,344


$1,248


$(139)

(11.1)%


$5,005


$4,692


$313

6.7%

Loan receivables delinquent over 30 days(6)

$3,874


$3,723


$3,625


$3,957


$4,430


$(556)

(12.6)%


$3,874


$4,430


$(556)

(12.6)%

Loan receivables delinquent over 90 days(6)

$1,877


$1,723


$1,768


$2,019


$2,135


$(258)

(12.1)%


$1,877


$2,135


$(258)

(12.1)%





















Allowance for loan losses (period-end)

$5,602


$5,607


$5,809


$5,942


$6,427


$(825)

(12.8)%


$5,602


$6,427


$(825)

(12.8)%

Allowance coverage ratio(7)

6.42%


6.74%


7.10%


7.39%


6.90%



(0.48)%


6.42%


6.90%



(0.48)%





















BUSINESS METRICS




















Purchase volume(8)(9)

$40,212


$38,395


$38,291


$32,513


$40,320


$(108)

(0.3)%


$149,411


$140,657


$8,754

6.2%

Period-end loan receivables

$87,215


$83,207


$81,796


$80,405


$93,139


$(5,924)

(6.4)%


$87,215


$93,139


$(5,924)

(6.4)%

Credit cards

$84,606


$79,788


$78,446


$77,251


$89,994


$(5,388)

(6.0)%


$84,606


$89,994


$(5,388)

(6.0)%

Consumer installment loans

$1,347


$2,050


$1,983


$1,860


$1,845


$(498)

(27.0)%


$1,347


$1,845


$(498)

(27.0)%

Commercial credit products

$1,223


$1,317


$1,328


$1,256


$1,260


$(37)

(2.9)%


$1,223


$1,260


$(37)

(2.9)%

Other

$39


$52


$39


$38


$40


$(1)

(2.5)%


$39


$40


$(1)

(2.5)%

Average loan receivables, including held for sale

$85,376


$90,556


$88,792


$89,903


$89,340


$(3,964)

(4.4)%


$88,649


$83,304


$5,345

6.4%

Period-end active accounts (in thousands)(9)(10)

75,471


77,094


76,065


74,812


80,339


(4,868)

(6.1)%


75,471


80,339


(4,868)

(6.1)%

Average active accounts (in thousands)(9)(10)

73,734


76,695


75,525


77,132


77,382


(3,648)

(4.7)%


75,721


73,847


1,874

2.5%





















LIQUIDITY




















Liquid assets




















Cash and equivalents

$12,147


$11,461


$11,755


$12,963


$9,396


$2,751

29.3%


$12,147


$9,396


$2,751

29.3%

Total liquid assets

$17,322


$15,201


$16,665


$17,360


$14,822


$2,500

16.9%


$17,322


$14,822


$2,500

16.9%

Undrawn credit facilities




















Undrawn credit facilities

$6,050


$6,500


$7,050


$6,050


$4,375


$1,675

38.3%


$6,050


$4,375


$1,675

38.3%

Total liquid assets and undrawn credit facilities

$23,372


$21,701


$23,715


$23,410


$19,197


$4,175

21.7%


$23,372


$19,197


$4,175

21.7%

Liquid assets % of total assets

16.52%


14.35%


15.66%


16.47%


13.88%



2.64%


16.52%


13.88%



2.64%

Liquid assets including undrawn credit facilities % of total assets

22.30%


20.48%


22.29%


22.21%


17.98%



4.32%


22.30%


17.98%



4.32%





















(1) Return on assets represents net earnings as a percentage of average total assets. 




















(2) Return on equity represents net earnings as a percentage of average total equity.




















(3) Return on tangible common equity represents net earnings as a percentage of average tangible common equity. Tangible common equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP
Measures and Calculations of Regulatory Measures.

(4) Net interest margin represents net interest income divided by average interest-earning assets. 

(5) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, plus other income, less retailer share arrangements.

(6) Based on customer statement-end balances extrapolated to the respective period-end date.



















(7) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.

(8) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period. 











(9) Includes activity and accounts associated with loan receivables held for sale.




















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











 

 

SYNCHRONY FINANCIAL




















STATEMENTS OF EARNINGS




















(unaudited, $ in millions)





















Quarter Ended




Twelve Months Ended





Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


4Q'19 vs. 4Q'18


Dec 31,
2019


Dec 31,
2018


YTD'19 vs. YTD'18

Interest income:




















Interest and fees on loans

$4,492


$4,890


$4,636


$4,687


$4,774


$(282)

(5.9)%


$18,705


$17,644


$1,061

6.0%

Interest on cash and investment securities

93


91


102


99


102


(9)

(8.8)%


385


344


41

11.9%

Total interest income

4,585


4,981


4,738


4,786


4,876


(291)

(6.0)%


19,090


17,988


1,102

6.1%





















Interest expense:




















Interest on deposits

383


411


397


375


350


33

9.4%


1,566


1,186


380

32.0%

Interest on borrowings of consolidated securitization entities

80


88


90


100


104


(24)

(23.1)%


358


344


14

4.1%

Interest on senior unsecured notes

93


93


96


85


89


4

4.5%


367


340


27

7.9%





















Total interest expense

556


592


583


560


543


13

2.4%


2,291


1,870


421

22.5%





















Net interest income

4,029


4,389


4,155


4,226


4,333


(304)

(7.0)%


16,799


16,118


681

4.2%





















Retailer share arrangements

(1,029)


(1,016)


(859)


(954)


(855)


(174)

20.4%


(3,858)


(3,099)


(759)

24.5%









































Provision for loan losses

1,104


1,019


1,198


859


1,452


(348)

(24.0)%


4,180


5,545


(1,365)

(24.6)%

Net interest income, after retailer share arrangements and provision for loan losses

1,896


2,354


2,098


2,413


2,026


(130)

(6.4)%


8,761


7,474


1,287

17.2%





















Other income:




















Interchange revenue

192


197


194


165


193


(1)

(0.5)%


748


710


38

5.4%

Debt cancellation fees

64


64


69


68


70


(6)

(8.6)%


265


267


(2)

(0.7)%

Loyalty programs

(181)


(203)


(192)


(167)


(208)


27

(13.0)%


(743)


(751)


8

(1.1)%

Other

29


27


19


26


9


20

NM


101


39


62

159.0%

Total other income

104


85


90


92


64


40

62.5%


371


265


106

40.0%





















Other expense:




















Employee costs

385


359


358


353


353


32

9.1%


1,455


1,427


28

2.0%

Professional fees

199


205


231


232


231


(32)

(13.9)%


867


806


61

7.6%

Marketing and business development

152


139


135


123


166


(14)

(8.4)%


549


528


21

4.0%

Information processing

122


127


123


113


118


4

3.4%


485


426


59

13.8%

Other

221


234


212


222


210


11

5.2%


889


908


(19)

(2.1)%

Total other expense

1,079


1,064


1,059


1,043


1,078


1

0.1%


4,245


4,095


150

3.7%





















Earnings before provision for income taxes

921


1,375


1,129


1,462


1,012


(91)

(9.0)%


4,887


3,644


1,243

34.1%

Provision for income taxes

190


319


276


355


229


(39)

(17.0)%


1,140


854


286

33.5%

Net earnings

$731


$1,056


$853


$1,107


$783


$(52)

(6.6)%


$3,747


$2,790


$957

34.3%





















Net earnings attributable to common stockholders

$731


$1,056


$853


$1,107


$783


$(52)

(6.6)%


$3,747


$2,790


$957

34.3%









































 

 

SYNCHRONY FINANCIAL













STATEMENTS OF FINANCIAL POSITION













(unaudited, $ in millions)














Quarter Ended




Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


Dec 31, 2019 vs.
Dec 31, 2018

Assets













Cash and equivalents

$12,147


$11,461


$11,755


$12,963


$9,396


$2,751

29.3%

Debt securities

5,911


4,584


6,147


5,506


6,062


(151)

(2.5)%

Loan receivables:













Unsecuritized loans held for investment

58,398


56,220


55,178


54,907


64,969


(6,571)

(10.1)%

Restricted loans of consolidated securitization entities

28,817


26,987


26,618


25,498


28,170


647

2.3%

Total loan receivables

87,215


83,207


81,796


80,405


93,139


(5,924)

(6.4)%

Less: Allowance for loan losses

(5,602)


(5,607)


(5,809)


(5,942)


(6,427)


825

(12.8)%

Loan receivables, net

81,613


77,600


75,987


74,463


86,712


(5,099)

(5.9)%

Loan receivables held for sale

725


8,182


8,096


8,052


-


725

NM

Goodwill

1,078


1,078


1,078


1,076


1,024


54

5.3%

Intangible assets, net

1,265


1,177


1,215


1,259


1,137


128

11.3%

Other assets

2,087


1,861


2,110


2,065


2,461


(374)

(15.2)%

Total assets

$104,826


$105,943


$106,388


$105,384


$106,792


$(1,966)

(1.8)%














Liabilities and Equity













Deposits:













Interest-bearing deposit accounts

$64,877


$65,677


$65,382


$63,787


$63,738


$1,139

1.8%

Non-interest-bearing deposit accounts

277


295


263


273


281


(4)

(1.4)%

Total deposits

65,154


65,972


65,645


64,060


64,019


1,135

1.8%

Borrowings:













Borrowings of consolidated securitization entities

10,412


10,912


11,941


12,091


14,439


(4,027)

(27.9)%














Senior unsecured notes

9,454


9,451


9,303


9,800


9,557


(103)

(1.1)%














Total borrowings

19,866


20,363


21,244


21,891


23,996


(4,130)

(17.2)%

Accrued expenses and other liabilities

4,718


4,488


4,765


4,724


4,099


619

15.1%

Total liabilities

89,738


90,823


91,654


90,675


92,114


(2,376)

(2.6)%

Equity:













Preferred stock

734


-


-


-


-


734

NM

Common stock

1


1


1


1


1


-

- %

Additional paid-in capital

9,537


9,520


9,500


9,489


9,482


55

0.6%

Retained earnings

12,117


11,533


10,627


9,939


8,986


3,131

34.8%

Accumulated other comprehensive income:

(58)


(44)


(43)


(56)


(62)


4

(6.5)%

Treasury stock

(7,243)


(5,890)


(5,351)


(4,664)


(3,729)


(3,514)

94.2%

Total equity

15,088


15,120


14,734


14,709


14,678


410

2.8%

Total liabilities and equity

$104,826


$105,943


$106,388


$105,384


$106,792


$(1,966)

(1.8)%








































 

 

SYNCHRONY FINANCIAL






























AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN



























(unaudited, $ in millions)





























































Quarter Ended


Dec 31, 2019


Sep 30, 2019


Jun 30, 2019


Mar 31, 2019


Dec 31, 2018




Interest


Average




Interest


Average




Interest


Average




Interest


Average




Interest


Average


Average


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/


Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate

Assets






























Interest-earning assets:






























Interest-earning cash and equivalents

$16,269


$68


1.66%


$10,947


$59


2.14%


$10,989


$66


2.41%


$11,033


$65


2.39%


$10,856


$62


2.27%

Securities available for sale

4,828


25


2.05%


5,389


32


2.36%


6,010


36


2.40%


5,640


34


2.44%


6,837


40


2.32%































Loan receivables, including held for sale:






























Credit cards

81,960


4,409


21.34%


87,156


4,807


21.88%


85,488


4,557


21.38%


86,768


4,611


21.55%


86,131


4,695


21.63%

Consumer installment loans

2,058


48


9.25%


2,022


48


9.42%


1,924


44


9.17%


1,844


42


9.24%


1,815


42


9.18%

Commercial credit products

1,311


34


10.29%


1,329


35


10.45%


1,330


34


10.25%


1,252


34


11.01%


1,344


37


10.92%

Other

47


1


NM


49


-


- %


50


1


NM


39


-


- %


50


-


- %

Total loan receivables, including held for sale

85,376


4,492


20.87%


90,556


4,890


21.42%


88,792


4,636


20.94%


89,903


4,687


21.14%


89,340


4,774


21.20%

Total interest-earning assets

106,473


4,585


17.08%


106,892


4,981


18.49%


105,791


4,738


17.96%


106,576


4,786


18.21%


107,033


4,876


18.07%































Non-interest-earning assets:






























Cash and due from banks

1,326






1,374






1,271






1,335






1,320





Allowance for loan losses

(5,593)






(5,773)






(5,911)






(6,341)






(6,259)





Other assets

3,872






3,920






3,752






3,729






3,688





Total non-interest-earning assets

(395)






(479)






(888)






(1,277)






(1,251)



































Total assets

$106,078






$106,413






$104,903






$105,299






$105,782



































Liabilities






























Interest-bearing liabilities:






























Interest-bearing deposit accounts

$65,380


$383


2.32%


$65,615


$411


2.49%


$64,226


$397


2.48%


$63,776


$375


2.38%


$62,999


$350


2.20%

Borrowings of consolidated securitization entities

10,831


80


2.93%


11,770


88


2.97%


11,785


90


3.06%


13,407


100


3.02%


14,223


104


2.90%

Senior unsecured notes

9,452


93


3.90%


9,347


93


3.95%


9,543


96


4.03%


8,892


85


3.88%


9,554


89


3.70%































Total interest-bearing liabilities

85,663


556


2.58%


86,732


592


2.71%


85,554


583


2.73%


86,075


560


2.64%


86,776


543


2.48%































Non-interest-bearing liabilities






























Non-interest-bearing deposit accounts

281






283






271






286






284





Other liabilities

4,906






4,570






4,260






4,148






4,283





Total non-interest-bearing liabilities

5,187






4,853






4,531






4,434






4,567



































Total liabilities

90,850






91,585






90,085






90,509






91,343



































Equity






























Total equity

15,228






14,828






14,818






14,790






14,439



































Total liabilities and equity

$106,078






$106,413






$104,903






$105,299






$105,782





Net interest income



$4,029






$4,389






$4,155






$4,226






$4,333

































Interest rate spread(1)





14.50%






15.78%






15.23%






15.57%






15.59%

Net interest margin(2)





15.01%






16.29%






15.75%






16.08%






16.06%































(1) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities. 




















(2) Net interest margin represents net interest income divided by average interest-earning assets. 



























 

 

SYNCHRONY FINANCIAL












AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN












(unaudited, $ in millions)

























Twelve Months Ended
Dec 31, 2019


Twelve Months Ended
Dec 31, 2018




Interest


Average




Interest


Average


Average


Income/


Yield/


Average


Income/


Yield/


Balance


Expense


Rate


Balance


Expense


Rate

Assets












Interest-earning assets:












Interest-earning cash and equivalents

$12,320


$258


2.09%


$11,059


$207


1.87%

Securities available for sale

5,464


127


2.32%


6,566


137


2.09%













Loan receivables, including held for sale:












Credit cards

85,334


18,384


21.54%


80,219


17,342


21.62%

Consumer installment loans

1,963


182


9.27%


1,698


156


9.19%

Commercial credit products

1,306


137


10.49%


1,333


144


10.80%

Other

46


2


4.35%


54


2


3.70%

Total loan receivables, including held for sale

88,649


18,705


21.10%


83,304


17,644


21.18%

Total interest-earning assets

106,433


19,090


17.94%


100,929


17,988


17.82%













Non-interest-earning assets:












Cash and due from banks

1,327






1,224





Allowance for loan losses

(5,902)






(5,900)





Other assets

3,819






3,315





Total non-interest-earning assets

(756)






(1,361)

















Total assets

$105,677






$99,568

















Liabilities












Interest-bearing liabilities:












Interest-bearing deposit accounts

$64,756


$1,566


2.42%


$59,216


$1,186


2.00%

Borrowings of consolidated securitization entities

11,941


358


3.00%


12,694


344


2.71%













Senior unsecured notes

9,310


367


3.94%


9,257


340


3.67%













Total interest-bearing liabilities

86,007


2,291


2.66%


81,167


1,870


2.30%













Non-interest-bearing liabilities












Non-interest-bearing deposit accounts

280






282





Other liabilities

4,473






3,733





Total non-interest-bearing liabilities

4,753






4,015

















Total liabilities

90,760






85,182

















Equity












Total equity

14,917






14,386

















Total liabilities and equity

$105,677






$99,568





Net interest income



$16,799






$16,118















Interest rate spread(1)





15.28%






15.52%

Net interest margin(2)





15.78%






15.97%













(1) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities. 


(2) Net interest margin represents net interest income divided by average interest-earning assets. 









 

 

SYNCHRONY FINANCIAL














BALANCE SHEET STATISTICS














(unaudited, $ in millions, except per share statistics)





























Quarter Ended





Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


Dec 31, 2019 vs.
Dec 31, 2018


BALANCE SHEET STATISTICS














Total common equity

$14,354


$15,120


$14,734


$14,709


$14,678


($324)

(2.2)%


Total common equity as a % of total assets

13.69%


14.27%


13.85%


13.96%


13.74%



(0.05)%
















Tangible assets

$102,483


$103,688


$104,095


$103,049


$104,631


$(2,148)

(2.1)%


Tangible common equity(1)

$12,011


$12,865


$12,441


$12,374


$12,517


($506)

(4.0)%


Tangible common equity as a % of tangible assets(1)

11.72%


12.41%


11.95%


12.01%


11.96%



(0.24)%


Tangible common equity per share(1)

$19.50


$19.68


$18.60


$17.96


$17.41


$2.09

12.0%
















REGULATORY CAPITAL RATIOS(2)















Basel III Fully Phased-in




Total risk-based capital ratio(3)

16.3%


15.8%


15.6%


15.8%


15.3%





Tier 1 risk-based capital ratio(4)

15.0%


14.5%


14.3%


14.5%


14.0%





Tier 1 leverage ratio(5)

12.6%


12.6%


12.4%


12.3%


12.3%





Common equity Tier 1 capital ratio

14.1%


14.5%


14.3%


14.5%


14.0%

































(1) Tangible common equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure of the net asset value of the Company to investors. For corresponding
reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.


(2) Regulatory capital metrics at December 31, 2019 are preliminary and therefore subject to change. 


(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.









(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.











(5) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments. Tier 1 leverage ratios are based upon the use of daily averages for all periods
presented.






 

 

SYNCHRONY FINANCIAL





















PLATFORM RESULTS





















(unaudited, $ in millions)






















Quarter Ended




Twelve Months Ended






Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018


4Q'19 vs. 4Q'18


Dec 31,
2019


Dec 31,
2018


YTD'19 vs. YTD'18


RETAIL CARD(1)





















Purchase volume(2)(3)

$30,968


$29,282


$29,530


$24,660


$31,755


$(787)

(2.5)%


$114,440


$107,685


$6,755

6.3%


Period-end loan receivables

$56,387


$52,697


$52,307


$51,572


$63,827


$(7,440)

(11.7)%


$56,387


$63,827


$(7,440)

(11.7)%


Average loan receivables, including held for sale

$54,505


$60,660


$59,861


$60,964


$60,604


$(6,099)

(10.1)%


$58,984


$55,739


$3,245

5.8%


Average active accounts (in thousands)(3)(4)

54,662


58,082


57,212


58,632


58,962


(4,300)

(7.3)%


57,073


55,828


1,245

2.2%























Interest and fees on loans

$3,143


$3,570


$3,390


$3,454


$3,502


$(359)

(10.3)%


$13,557


$12,815


$742

5.8%


Other income

$77


$65


$59


$76


$59


$18

30.5%


$277


$239


$38

15.9%























Retailer share arrangements

$(988)


$(998)


$(836)


$(940)


$(825)


$(163)

19.8%


$(3,762)


$(3,014)


$(748)

24.8%












































PAYMENT SOLUTIONS(1)





















Purchase volume(2)(3)

$6,402


$6,281


$5,948


$5,249


$6,035


$367

6.1%


$23,880


$22,808


$1,072

4.7%


Period-end loan receivables

$20,528


$20,478


$19,766


$19,379


$19,815


$713

3.6%


$20,528


$19,815


$713

3.6%


Average loan receivables, including held for sale

$20,701


$20,051


$19,409


$19,497


$19,333


$1,368

7.1%


$19,918


$18,509


$1,409

7.6%


Average active accounts (in thousands)(3)(4)

12,713


12,384


12,227


12,406


12,350


363

2.9%


12,451


12,087


364

3.0%























Interest and fees on loans

$737


$721


$685


$686


$708


$29

4.1%


$2,829


$2,678


$151

5.6%


Other income

$4


$(1)


$11


$1


$(2)


$6

NM


$15


$(8)


$23

NM























Retailer share arrangements

$(37)


$(15)


$(21)


$(12)


$(25)


$(12)

48.0%


$(85)


$(73)


$(12)

16.4%












































CARECREDIT





















Purchase volume(2)

$2,842


$2,832


$2,813


$2,604


$2,530


$312

12.3%


$11,091


$10,164


$927

9.1%


Period-end loan receivables

$10,300


$10,032


$9,723


$9,454


$9,497


$803

8.5%


$10,300


$9,497


$803

8.5%


Average loan receivables, including held for sale

$10,170


$9,845


$9,522


$9,442


$9,403


$767

8.2%


$9,747


$9,056


$691

7.6%


Average active accounts (in thousands)(4)

6,359


6,229


6,086


6,094


6,070


289

4.8%


6,197


5,932


265

4.5%























Interest and fees on loans

$612


$599


$561


$547


$564


$48

8.5%


$2,319


$2,151


$168

7.8%


Other income

$23


$21


$20


$15


$7


$16

NM


$79


$34


$45

132.4%























Retailer share arrangements

$(4)


$(3)


$(2)


$(2)


$(5)


$1

(20.0)%


$(11)


$(12)


$1

(8.3)%












































TOTAL SYF





















Purchase volume(2)(3)

$40,212


$38,395


$38,291


$32,513


$40,320


$(108)

(0.3)%


$149,411


$140,657


$8,754

6.2%


Period-end loan receivables

$87,215


$83,207


$81,796


$80,405


$93,139


$(5,924)

(6.4)%


$87,215


$93,139


$(5,924)

(6.4)%


Average loan receivables, including held for sale

$85,376


$90,556


$88,792


$89,903


$89,340


$(3,964)

(4.4)%


$88,649


$83,304


$5,345

6.4%


Average active accounts (in thousands)(3)(4)

73,734


76,695


75,525


77,132


77,382


(3,648)

(4.7)%


75,721


73,847


1,874

2.5%























Interest and fees on loans

$4,492


$4,890


$4,636


$4,687


$4,774


$(282)

(5.9)%


$18,705


$17,644


$1,061

6.0%


Other income

$104


$85


$90


$92


$64


$40

62.5%


$371


$265


$106

40.0%























Retailer share arrangements

$(1,029)


$(1,016)


$(859)


$(954)


$(855)


$(174)

20.4%


$(3,858)


$(3,099)


$(759)

24.5%












































(1) Beginning in 1Q 2019, our Oil and Gas retail credit programs are now included in our Payment Solutions sales platform. Prior period financial and operating metrics for Retail Card and Payment Solutions have been recast to reflect the
current period presentation.


(2) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period. 







(3) Includes activity and balances associated with loan receivables held for sale.


















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


 

 

SYNCHRONY FINANCIAL










RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1)







(unaudited, $ in millions, except per share statistics)











Quarter Ended


Dec 31,
2019


Sep 30,
2019


Jun 30,
2019


Mar 31,
2019


Dec 31,
2018

COMMON EQUITY AND REGULATORY CAPITAL MEASURES










GAAP Total equity

$15,088


$15,120


$14,734


$14,709


$14,678

Less: Preferred stock

(734)


-


-


-


-

Less: Goodwill

(1,078)


(1,078)


(1,078)


(1,076)


(1,024)

Less: Intangible assets, net

(1,265)


(1,177)


(1,215)


(1,259)


(1,137)

Tangible common equity

$12,011


$12,865


$12,441


$12,374


$12,517











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

319


290


283


287


284

Basel III - Common equity Tier 1 

$12,330


$13,155


$12,724


$12,661


$12,801

Preferred  stock

734


-


-


-


-

Basel III - Tier 1 capital

$13,064


$13,155


$12,724


$12,661


$12,801











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

1,147


1,190


1,169


1,152


1,212

Total Risk-based capital

$14,211


$14,345


$13,893


$13,813


$14,013











ASSET MEASURES










Total average assets

$106,078


$106,413


$104,903


$105,299


$105,782

Adjustments for:










Disallowed goodwill and other disallowed intangible assets
(net of related deferred tax liabilities) and other

(2,059)


(1,975)


(2,003)


(2,039)


(1,845)











Total assets for leverage purposes

$104,019


$104,438


$102,900


$103,260


$103,937





















Risk-weighted assets - Basel III (fully phased-in)

$87,302


$90,772


$88,890


$87,331


$91,742











CORE PURCHASE VOLUME










Purchase volume

$40,212


$38,395


$38,291


$32,513


$40,320

Less: Walmart and Yamaha Purchase volume

(267)


(2,381)


(2,512)


(2,151)


(3,028)

Core Purchase volume

$39,945


$36,014


$35,779


$30,362


$37,292











CORE LOAN RECEIVABLES










Loan receivables

$87,215


$83,207


$81,796


$80,405


$93,139

Less: Walmart and Yamaha Loan receivables

(3)


(872)


(1,188)


(1,420)


(10,264)

Core Loan receivables

$87,212


$82,335


$80,608


$78,985


$82,875











Retail Card Loan receivables(2)

$56,387


$52,697


$52,307


$51,572


$63,827

Less: Walmart Loan receivables

-


(112)


(431)


(692)


(9,519)

Core Loan receivables

$56,387


$52,585


$51,876


$50,880


$54,308











Payment Solutions Loan receivables(2)

$20,528


$20,478


$19,766


$19,379


$19,815

Less: Yamaha Loan receivables

(3)


(760)


(757)


(728)


(745)

Core Loan receivables

$20,525


$19,718


$19,009


$18,651


$19,070











CORE AVERAGE ACTIVE ACCOUNTS (in thousands)










Average active accounts (in thousands)

73,734


76,695


75,525


77,132


77,382

Less: Walmart and Yamaha Average active accounts (in thousands)

(1,777)


(7,001)


(7,215)


(7,618)


(7,720)

Core Average active accounts (in thousands)

$71,957


$69,694


$68,310


$69,514


$69,662











CORE INTEREST AND FEES ON LOANS










Interest and fees on loans

$4,492


$4,890


$4,636


$4,687


$4,774

Less: Walmart and Yamaha Interest and fees on loans

(69)


(531)


(520)


(549)


(559)

Core Interest and fees on loans

$4,423


$4,359


$4,116


$4,138


$4,215











TANGIBLE COMMON EQUITY PER SHARE










GAAP book value per share

$23.31


$23.13


$22.03


$21.35


$20.42

Less: Goodwill

(1.75)


(1.65)


(1.61)


(1.56)


(1.42)

Less: Intangible assets, net

(2.06)


(1.80)


(1.82)


(1.83)


(1.59)

Tangible common equity per share

$19.50


$19.68


$18.60


$17.96


$17.41











(1) Regulatory measures at December 31, 2019 are presented on an estimated basis.

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

 

 

Investor Relations                     
Greg Ketron                              
(203) 585-6291                         

Media Relations
Sue Bishop
(203) 585-2802

SOURCE Synchrony


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