SYF
$34.75
Synchrony Financial
($.49)
(1.39%)
Earnings Details
1st Quarter March 2019
Thursday, April 18, 2019 6:30:00 AM
Tweet Share Watch
Summary

Synchrony Financial Beats

Synchrony Financial (SYF) reported 1st Quarter March 2019 earnings of $1.00 per share on revenue of $4.8 billion. The consensus earnings estimate was $0.88 per share on revenue of $4.3 billion. The Earnings Whisper number was $0.98 per share. Revenue grew 12.8% on a year-over-year basis.

Synchrony Financial provides credit products through programs established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers.

Results
Reported Earnings
$1.00
Earnings Whisper
$0.98
Consensus Estimate
$0.88
Reported Revenue
$4.79 Bil
Revenue Estimate
$4.29 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Synchrony Financial Reports First Quarter Net Earnings of $1.1 Billion or $1.56 Per Diluted Share

STAMFORD, Conn., April 18, 2019 /PRNewswire/ -- Synchrony Financial (NYSE: SYF) today announced first quarter 2019 net earnings of $1.1 billion, or $1.56 per diluted share; this includes a $522 million pre-tax, $395 million after-tax, or $0.56 per diluted share benefit from reserves released related to the reclassification of the Walmart portfolio to loans held for sale during the quarter. Highlights included*:

  • Loan receivables grew 3% to $80.4 billion; excluding the Walmart portfolio from both periods, loan receivables grew 17% to $79.7 billion
  • Net interest income increased 10% to $4.2 billion
  • Purchase volume grew 10% to $32.5 billion; and average active accounts grew 8% to 77.1 million
  • Deposits grew $7.5 billion, or 13% to $64.1 billion
  • Renewed key Payment Solutions relationships with P.C. Richard & Son, Rheem, and Suzuki
  • Expanded networks to create broader acceptance for Synchrony Car Care and Synchrony HOME in Payment Solutions and through a partnership with Simplee in CareCredit
  • Continued to expand CareCredit product offerings with entry into pet insurance as managing general agent through the acquisition of Pets Best
  • Paid quarterly common stock dividend of $0.21 per share and repurchased $966 million of Synchrony Financial common stock

Synchrony Logo (PRNewsfoto/Synchrony)

* All comparisons are for the first quarter of 2019 compared to the first quarter of 2018, unless otherwise noted

"We are maintaining the momentum we generated over the last several quarters. Our focus on organic growth, program renewals, valuable strategic partnerships, forward-thinking technology investments, and actionable data analytics, continue to be key factors in driving solid growth and strong partnerships," said Margaret Keane, President and Chief Executive Officer of Synchrony Financial.  "Synchrony's balance sheet remains strong as we continue to focus on creating value for shareholders through growth, portfolio acquisitions, and the execution of our capital plan."

Business and Financial Highlights for the First Quarter of 2019

All comparisons are for the first quarter of 2019 compared to the first quarter of 2018, unless otherwise noted.

Earnings

  • Net interest income increased $384 million, or 10%, to $4.2 billion, primarily driven by the PayPal Credit program acquisition and loan receivables growth. Net interest income after retailer share arrangements increased 5%.
  • Provision for loan losses decreased $503 million, or 37%, to $859 million, largely driven by the $522 million reserve release related to the reclassification of the Walmart portfolio to loans held for sale during the quarter.
  • Other income was up $17 million to $92 million.
  • Other expense increased $55 million, or 6%, to $1.0 billion, primarily driven by the PayPal Credit program acquisition and growth-related expenses.
  • Net earnings totaled $1.1 billion compared to $640 million last year.

Balance Sheet

  • Period-end loan receivables growth was 3%; excluding the Walmart portfolio from both periods, period-end loan receivables growth was 17%; purchase volume growth was 10% and average active accounts increased 8%, primarily driven by the PayPal Credit program acquisition and growth.
  • Deposits grew to $64.1 billion, up $7.5 billion, or 13%, and comprised 75% of funding.
  • The Company's balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $23.4 billion, or 22.2% of total assets.
  • The estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 14.5%, compared to 16.8%, reflecting the impact of capital deployment through the PayPal Credit program acquisition and continued execution of our capital plan.

Key Financial Metrics

  • Return on assets was 4.3% and return on equity was 30.4%.
  • Net interest margin was 16.08%.
  • Efficiency ratio was 31.0%.

Credit Quality

  • Loans 30+ days past due as a percentage of total period-end loan receivables were 4.92% compared to 4.52% last year; excluding the PayPal Credit program and the Walmart portfolio, the rate decreased approximately 10 basis points.
  • Net charge-offs as a percentage of total average loan receivables were 6.06% compared to 6.14% last year; excluding the PayPal Credit program and the Walmart portfolio, the rate decreased approximately 30 basis points.
  • The allowance for loan losses as a percentage of total period-end loan receivables was 7.39% compared to 7.37% last year.

Sales Platforms

  • Retail Card period-end loan receivables growth was 1%; excluding the Walmart portfolio from both periods, period-end loan receivables growth was 22%; interest and fees on loans increased 15%, purchase volume growth was 11%, and average active accounts increased 10%, all largely driven by the PayPal Credit program acquisition.
  • Payment Solutions period-end loan receivables grew 8%, led by home furnishings and luxury products. Interest and fees on loans increased 7%, primarily driven by the loan receivables growth. Purchase volume growth was 4% and average active accounts increased 3%.
  • CareCredit period-end loan receivables grew 7%, led by dental and veterinary. Interest and fees on loans increased 6%, primarily driven by the loan receivables growth. Purchase volume growth was 8% and average active accounts increased 4%.

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 Quarterly Report on Form 10-Q for the quarter ended March 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 Thursday, April 18, 2019, 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 12019#, and can be accessed beginning approximately two hours after the event through May 3, 2019.

About Synchrony Financial

Synchrony Financial (NYSE: SYF) is a premier consumer financial services company delivering customized financing programs across key industries including retail, health, auto, travel and home, along with award-winning consumer banking products. With more than $140 billion in sales financed and 80.3 million active accounts, Synchrony Financial brings deep industry expertise, actionable data insights, innovative solutions and differentiated digital experiences to improve the success of every business we serve and the quality of each life we touch. More information can be found at www.synchronyfinancial.com and through 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 portfolio, 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.

Investor Relations

Media Relations



Greg Ketron

Sue Bishop

(203) 585-6291

(203) 585-2802

 

 

SYNCHRONY FINANCIAL

FINANCIAL SUMMARY

(unaudited, in millions, except per share statistics)


Quarter Ended




Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


1Q'19 vs. 1Q'18

EARNINGS













Net interest income

$4,226


$4,333


$4,206


$3,737


$3,842


$384

10.0%

Retailer share arrangements

(954)


(855)


(871)


(653)


(720)


(234)

32.5%

Net interest income, after retailer share arrangements

3,272


3,478


3,335


3,084


3,122


150

4.8%

Provision for loan losses

859


1,452


1,451


1,280


1,362


(503)

(36.9)%

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

2,413


2,026


1,884


1,804


1,760


653

37.1%

Other income

92


64


63


63


75


17

22.7%

Other expense

1,043


1,078


1,054


975


988


55

5.6%

Earnings before provision for income taxes

1,462


1,012


893


892


847


615

72.6%

Provision for income taxes

355


229


222


196


207


148

71.5%

Net earnings

$1,107


$783


$671


$696


$640


$467

73.0%

Net earnings attributable to common stockholders

$1,107


$783


$671


$696


$640


$467

73.0%














COMMON SHARE STATISTICS













Basic EPS   

$1.57


$1.09


$0.91


$0.93


$0.84


$0.73

86.9%

Diluted EPS   

$1.56


$1.09


$0.91


$0.92


$0.83


$0.73

88.0%

Dividend declared per share

$0.21


$0.21


$0.21


$0.15


$0.15


$0.06

40.0%

Common stock price

$31.90


$23.46


$31.08


$33.38


$33.53


$(1.63)

(4.9)%

Book value per share   

$21.35


$20.42


$19.47


$19.37


$18.88


$2.47

13.1%

Tangible common equity per share(1)

$17.96


$17.41


$16.51


$16.84


$16.55


$1.41

8.5%

Beginning common shares outstanding

718.8


718.7


746.6


760.3


770.5


(51.7)

(6.7)%

Issuance of common shares

-


-


-


-


-


-

- %

Stock-based compensation

0.9


0.1


2.4


0.3


0.2


0.7

NM

Shares repurchased

(30.9)


-


(30.3)


(14.0)


(10.4)


(20.5)

197.1%

Ending common shares outstanding

688.8


718.8


718.7


746.6


760.3


(71.5)

(9.4)%

Weighted average common shares outstanding 

706.3


718.7


734.9


752.2


763.7


(57.4)

(7.5)%

Weighted average common shares outstanding (fully diluted) 

708.9


720.9


738.8


758.3


770.3


(61.4)

(8.0)%


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

 

 

SYNCHRONY FINANCIAL













SELECTED METRICS













(unaudited, $ in millions, except account data)














Quarter Ended





Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


1Q'19 vs. 1Q'18

PERFORMANCE METRICS













Return on assets(1)

4.3%


2.9%


2.7%


2.9%


2.7%



1.6%

Return on equity(2)

30.4%


21.5%


18.5%


19.4%


18.2%



12.2%

Return on tangible common equity(3)

35.8%


25.2%


21.5%


22.1%


20.7%



15.1%

Net interest margin(4)

16.08%


16.06%


16.41%


15.33%


16.05%



0.03%

Efficiency ratio(5)

31.0%


30.4%


31.0%


31.0%


30.9%



0.1%

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

4.71%


4.79%


4.82%


5.02%


5.07%



(0.36)%

Effective income tax rate

24.3%


22.6%


24.9%


22.0%


24.4%



(0.1)%














CREDIT QUALITY METRICS













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

6.06%


5.54%


4.97%


5.97%


6.14%



(0.08)%

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

4.92%


4.76%


4.59%


4.17%


4.52%



0.40%

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

2.51%


2.29%


2.09%


1.98%


2.28%



0.23%

Net charge-offs

$1,344


$1,248


$1,087


$1,159


$1,198


$146

12.2%

Loan receivables delinquent over 30 days(6)

$3,957


$4,430


$4,021


$3,293


$3,521


$436

12.4%

Loan receivables delinquent over 90 days(6)

$2,019


$2,135


$1,833


$1,561


$1,776


$243

13.7%

Allowance for loan losses (period-end)

$5,942


$6,427


$6,223


$5,859


$5,738


$204

3.6%

Allowance coverage ratio(7)

7.39%


6.90%


7.11%


7.43%


7.37%



0.02%














BUSINESS METRICS













Purchase volume(8)(9)

$32,513


$40,320


$36,443


$34,268


$29,626


$2,887

9.7%

Period-end loan receivables

$80,405


$93,139


$87,521


$78,879


$77,853


$2,552

3.3%

Credit cards

$77,251


$89,994


$84,319


$75,753


$74,952


$2,299

3.1%

Consumer installment loans

$1,860


$1,845


$1,789


$1,708


$1,590


$270

17.0%

Commercial credit products

$1,256


$1,260


$1,353


$1,356


$1,275


$(19)

(1.5)%

Other

$38


$40


$60


$62


$36


$2

5.6%

Average loan receivables, including held for sale

$89,903


$89,340


$86,783


$77,853


$79,090


$10,813

13.7%

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

74,812


80,339


75,457


69,767


68,891


5,921

8.6%

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

77,132


77,382


75,482


69,344


71,323


5,809

8.1%














LIQUIDITY













Liquid assets













Cash and equivalents

$12,963


$9,396


$12,068


$15,675


$13,044


$(81)

(0.6)%

Total liquid assets

$17,360


$14,822


$18,214


$21,491


$18,557


$(1,197)

(6.5)%

Undrawn credit facilities













Undrawn credit facilities

$6,050


$4,375


$5,125


$6,500


$6,000


$50

0.8%

Total liquid assets and undrawn credit facilities

$23,410


$19,197


$23,339


$27,991


$24,557


$(1,147)

(4.7)%

Liquid assets % of total assets

16.47%


13.88%


17.42%


21.68%


19.42%



(2.95)%

Liquid assets including undrawn credit facilities % of total assets

22.21%


17.98%


22.32%


28.24%


25.70%



(3.49)%














(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) 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





Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


1Q'19 vs. 1Q'18

Interest income:













Interest and fees on loans

$4,687


$4,774


$4,617


$4,081


$4,172


$515

12.3%

Interest on investment securities

99


102


77


93


72


27

37.5%

Total interest income

4,786


4,876


4,694


4,174


4,244


542

12.8%

Interest expense:













Interest on deposits

375


350


314


273


249


126

50.6%

Interest on borrowings of consolidated securitization entities

100


104


86


80


74


26

35.1%

Interest on third-party debt

85


89


88


84


79


6

7.6%

Total interest expense

560


543


488


437


402


158

39.3%

Net interest income

4,226


4,333


4,206


3,737


3,842


384

10.0%














Retailer share arrangements

(954)


(855)


(871)


(653)


(720)


(234)

32.5%

Net interest income, after retailer share arrangements

3,272


3,478


3,335


3,084


3,122


150

4.8%

Provision for loan losses

859


1,452


1,451


1,280


1,362


(503)

(36.9)%

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

2,413


2,026


1,884


1,804


1,760


653

37.1%

Other income:













Interchange revenue

165


193


182


177


158


7

4.4%

Debt cancellation fees

68


70


65


66


66


2

3.0%

Loyalty programs

(167)


(208)


(196)


(192)


(155)


(12)

7.7%

Other

26


9


12


12


6


20

NM

Total other income

92


64


63


63


75


17

22.7%

Other expense:













Employee costs

353


353


365


351


358


(5)

(1.4)%

Professional fees

232


231


232


177


166


66

39.8%

Marketing and business development

123


166


131


110


121


2

1.7%

Information processing

113


118


105


99


104


9

8.7%

Other

222


210


221


238


239


(17)

(7.1)%

Total other expense

1,043


1,078


1,054


975


988


55

5.6%














Earnings before provision for income taxes

1,462


1,012


893


892


847


615

72.6%

Provision for income taxes

355


229


222


196


207


148

71.5%

Net earnings attributable to common stockholders

$1,107


$783


$671


$696


$640


$467

73.0%














 

 

SYNCHRONY FINANCIAL













STATEMENTS OF FINANCIAL POSITION













(unaudited, $ in millions)














Quarter Ended





Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


Mar 31, 2019 vs.
Mar 31, 2018

Assets













Cash and equivalents

$12,963


$9,396


$12,068


$15,675


$13,044


$(81)

(0.6)%

Debt securities

5,506


6,062


7,281


6,779


6,259


(753)

(12.0)%

Loan receivables:













Unsecuritized loans held for investment

54,907


64,969


59,868


50,884


52,469


2,438

4.6%

Restricted loans of consolidated securitization entities

25,498


28,170


27,653


27,995


25,384


114

0.4%

Total loan receivables

80,405


93,139


87,521


78,879


77,853


2,552

3.3%

Less: Allowance for loan losses

(5,942)


(6,427)


(6,223)


(5,859)


(5,738)


(204)

3.6%

Loan receivables, net

74,463


86,712


81,298


73,020


72,115


2,348

3.3%

Loan receivables held for sale

8,052


-


-


-


-


8,052

NM

Goodwill

1,076


1,024


1,024


1,024


991


85

8.6%

Intangible assets, net

1,259


1,137


1,105


863


780


479

61.4%

Other assets

2,065


2,461


1,769


1,761


2,370


(305)

(12.9)%

Total assets

$105,384


$106,792


$104,545


$99,122


$95,559


$9,825

10.3%














Liabilities and Equity













Deposits:













Interest-bearing deposit accounts

$63,787


$63,738


$62,030


$58,734


$56,285


$7,502

13.3%

Non-interest-bearing deposit accounts

273


281


287


277


285


(12)

(4.2)%

Total deposits

64,060


64,019


62,317


59,011


56,570


7,490

13.2%

Borrowings:













Borrowings of consolidated securitization entities

12,091


14,439


14,187


12,170


12,214


(123)

(1.0)%

Senior unsecured notes

9,800


9,557


9,554


9,551


8,801


999

11.4%

Total borrowings

21,891


23,996


23,741


21,721


21,015


876

4.2%

Accrued expenses and other liabilities

4,724


4,099


4,491


3,932


3,618


1,106

30.6%

Total liabilities

90,675


92,114


90,549


84,664


81,203


9,472

11.7%

Equity:













Common stock

1


1


1


1


1


-

- %

Additional paid-in capital

9,489


9,482


9,470


9,486


9,470


19

0.2%

Retained earnings

9,939


8,986


8,355


7,906


7,334


2,605

35.5%

Accumulated other comprehensive income:

(56)


(62)


(99)


(93)


(86)


30

(34.9)%

Treasury Stock

(4,664)


(3,729)


(3,731)


(2,842)


(2,363)


(2,301)

97.4%

Total equity

14,709


14,678


13,996


14,458


14,356


353

2.5%

Total liabilities and equity

$105,384


$106,792


$104,545


$99,122


$95,559


$9,825

10.3%

 

 

SYNCHRONY FINANCIAL






























AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN



























(unaudited, $ in millions)





























































Quarter Ended


Mar 31, 2019


Dec 31, 2018


Sep 30, 2018


Jun 30, 2018


Mar 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

$11,033


$65


2.39%


$10,856


$62


2.27%


$7,901


$39


1.96%


$13,097


$59


1.81%


$12,434


$47


1.53%

Securities available for sale

5,640


34


2.44%


6,837


40


2.32%


7,022


38


2.15%


6,803


34


2.00%


5,584


25


1.82%

Loan receivables:






























Credit cards, including held for sale

86,768


4,611


21.55%


86,131


4,695


21.63%


83,609


4,538


21.53%


74,809


4,010


21.50%


76,181


4,099


21.82%

Consumer installment loans

1,844


42


9.24%


1,815


42


9.18%


1,753


41


9.28%


1,648


37


9.01%


1,572


36


9.29%

Commercial credit products

1,252


34


11.01%


1,344


37


10.92%


1,355


37


10.83%


1,346


34


10.13%


1,286


36


11.35%

Other

39


-


- %


50


-


- %


66


1


NM


50


-


- %


51


1


NM

Total loan receivables, including held for sale

89,903


4,687


21.14%


89,340


4,774


21.20%


86,783


4,617


21.11%


77,853


4,081


21.03%


79,090


4,172


21.39%

Total interest-earning assets

106,576


4,786


18.21%


107,033


4,876


18.07%


101,706


4,694


18.31%


97,753


4,174


17.13%


97,108


4,244


17.72%

Non-interest-earning assets:






























Cash and due from banks

1,335






1,320






1,217






1,161






1,197





Allowance for loan losses

(6,341)






(6,259)






(5,956)






(5,768)






(5,608)





Other assets

3,729






3,688






3,482






3,068






3,010





Total non-interest-earning assets

(1,277)






(1,251)






(1,257)






(1,539)






(1,401)



































Total assets

$105,299






$105,782






$100,449






$96,214






$95,707





Liabilities






























Interest-bearing liabilities:






























Interest-bearing deposit accounts

$63,776


$375


2.38%


$62,999


$350


2.20%


$60,123


$314


2.07%


$57,303


$273


1.91%


$56,356


$249


1.79%

Borrowings of consolidated securitization entities

13,407


100


3.02%


14,223


104


2.90%


12,306


86


2.77%


11,821


80


2.71%


12,410


74


2.42%

Senior unsecured notes

8,892


85


3.88%


9,554


89


3.70%


9,552


88


3.66%


9,114


84


3.70%


8,795


79


3.64%

Total interest-bearing liabilities

86,075


560


2.64%


86,776


543


2.48%


81,981


488


2.36%


78,238


437


2.24%


77,561


402


2.10%

Non-interest-bearing liabilities






























Non-interest-bearing deposit accounts

286






284






275






270






300





Other liabilities

4,148






4,283






3,772






3,299






3,570





Total non-interest-bearing liabilities

4,434






4,567






4,047






3,569






3,870



































Total liabilities

90,509






91,343






86,028






81,807






81,431





Equity






























Total equity

14,790






14,439






14,421






14,407






14,276



































Total liabilities and equity

$105,299






$105,782






$100,449






$96,214






$95,707





Net interest income



$4,226






$4,333






$4,206






$3,737






$3,842



Interest rate spread(1)





15.57%






15.59%






15.95%






14.89%






15.62%

Net interest margin(2)





16.08%






16.06%






16.41%






15.33%






16.05%































(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




Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


Mar 31, 2019 vs.
Mar 31, 2018

BALANCE SHEET STATISTICS













Total common equity

$14,709


$14,678


$13,996


$14,458


$14,356


$353

2.5%

Total common equity as a % of total assets

13.96%


13.74%


13.39%


14.59%


15.02%



(1.06)%














Tangible assets

$103,049


$104,631


$102,416


$97,235


$93,788


$9,261

9.9%

Tangible common equity(1)

$12,374


$12,517


$11,867


$12,571


$12,585


$(211)

(1.7)%

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

12.01%


11.96%


11.59%


12.93%


13.42%



(1.41)%

Tangible common equity per share(1)

$17.96


$17.41


$16.51


$16.84


$16.55


$1.41

8.5%














REGULATORY CAPITAL RATIOS(2)














Basel III Fully Phased-in




Total risk-based capital ratio(3)

15.8%


15.3%


15.5%


18.0%


18.1%




Tier 1 risk-based capital ratio(4)

14.5%


14.0%


14.2%


16.6%


16.8%




Tier 1 leverage ratio(5)

12.3%


12.3%


12.3%


13.6%


13.7%




Common equity Tier 1 capital ratio

14.5%


14.0%


14.2%


16.6%


16.8%






























(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 March 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





Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018


1Q'19 vs. 1Q'18

RETAIL CARD(1)













Purchase volume(2)(3)

$24,660


$31,755


$27,863


$25,926


$22,141


$2,519

11.4%

Period-end loan receivables

$51,572


$63,827


$59,139


$51,473


$51,117


$455

0.9%

Average loan receivables, including held for sale

$60,964


$60,604


$58,964


$51,011


$52,251


$8,713

16.7%

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

58,632


58,962


57,459


51,680


53,463


5,169

9.7%

Interest and fees on loans

$3,454


$3,502


$3,383


$2,915


$3,015


$439

14.6%

Other income

$76


$59


$57


$54


$69


$7

10.1%

Retailer share arrangements

$(940)


$(825)


$(844)


$(637)


$(708)


$(232)

32.8%














PAYMENT SOLUTIONS(1)













Purchase volume(2)

$5,249


$6,035


$6,007


$5,702


$5,064


$185

3.7%

Period-end loan receivables

$19,379


$19,815


$19,064


$18,320


$17,927


$1,452

8.1%

Average loan receivables, including held for sale

$19,497


$19,333


$18,659


$17,978


$18,051


$1,446

8.0%

Average active accounts (in thousands)(4)

12,406


12,350


12,062


11,845


12,009


397

3.3%

Interest and fees on loans

$686


$708


$683


$644


$643


$43

6.7%

Other income

$1


$(2)


$(2)


$(2)


$(2)


$3

(150.0)%

Retailer share arrangements

$(12)


$(25)


$(24)


$(14)


$(10)


$(2)

20.0%














CARECREDIT













Purchase volume(2)

$2,604


$2,530


$2,573


$2,640


$2,421


$183

7.6%

Period-end loan receivables

$9,454


$9,497


$9,318


$9,086


$8,809


$645

7.3%

Average loan receivables, including held for sale

$9,442


$9,403


$9,160


$8,864


$8,788


$654

7.4%

Average active accounts (in thousands)(4)

6,094


6,070


5,961


5,819


5,851


243

4.2%

Interest and fees on loans

$547


$564


$551


$522


$514


$33

6.4%

Other income

$15


$7


$8


$11


$8


$7

87.5%

Retailer share arrangements

$(2)


$(5)


$(3)


$(2)


$(2)


$-

- %














TOTAL SYF













Purchase volume(2)(3)

$32,513


$40,320


$36,443


$34,268


$29,626


$2,887

9.7%

Period-end loan receivables

$80,405


$93,139


$87,521


$78,879


$77,853


$2,552

3.3%

Average loan receivables, including held for sale

$89,903


$89,340


$86,783


$77,853


$79,090


$10,813

13.7%

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

77,132


77,382


75,482


69,344


71,323


5,809

8.1%

Interest and fees on loans

$4,687


$4,774


$4,617


$4,081


$4,172


$515

12.3%

Other income

$92


$64


$63


$63


$75


$17

22.7%

Retailer share arrangements

$(954)


$(855)


$(871)


$(653)


$(720)


$(234)

32.5%














(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


Mar 31,
2019


Dec 31,
2018


Sep 30,
2018


Jun 30,
2018


Mar 31,
2018

COMMON EQUITY MEASURES










GAAP Total common equity

$14,709


$14,678


$13,996


$14,458


$14,356

Less: Goodwill

(1,076)


(1,024)


(1,024)


(1,024)


(991)

Less: Intangible assets, net

(1,259)


(1,137)


(1,105)


(863)


(780)

Tangible common equity

$12,374


$12,517


$11,867


$12,571


$12,585

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

287


284


311


287


278

Basel III - Common equity Tier 1 (fully phased-in)

$12,661


$12,801


$12,178


$12,858


$12,863











RISK-BASED CAPITAL










Common equity Tier 1

$12,661


$12,801


$12,178


$12,858


$12,863

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

1,152


1,211


1,137


1,027


1,015

Risk-based capital

$13,813


$14,012


$13,315


$13,885


$13,878











ASSET MEASURES










Total average assets

$105,299


$105,782


$100,449


$96,214


$95,707

Adjustments for:










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

(2,039)


(1,845)


(1,836)


(1,670)


(1,560)

Total assets for leverage purposes

$103,260


$103,937


$98,613


$94,544


$94,147











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

$87,331


$91,742


$85,941


$77,322


$76,509











TANGIBLE COMMON EQUITY PER SHARE










GAAP book value per share

$21.35


$20.42


$19.47


$19.37


$18.88

Less: Goodwill

(1.56)


(1.42)


(1.42)


(1.37)


(1.30)

Less: Intangible assets, net

(1.83)


(1.59)


(1.54)


(1.16)


(1.03)

Tangible common equity per share

$17.96


$17.41


$16.51


$16.84


$16.55





















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

 

 

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SOURCE Synchrony