Synchrony Financial Reports Second Quarter Net Earnings of $541 Million or $0.65 Per Diluted Share

STAMFORD, Conn.--()--Synchrony Financial (NYSE:SYF) today announced second quarter 2015 net earnings of $541 million, or $0.65 per diluted share. Highlights for the quarter included:

  • Total platform revenue increased 9% from the second quarter of 2014 to $2.7 billion
  • Loan receivables grew $7 billion, or 12%, from the second quarter of 2014 to $61 billion
  • Purchase volume increased 11% from the second quarter of 2014
  • Announced new partners—Mattress Firm, Newegg, and Stash Hotel Rewards
  • Extended Chevron, a top 20 partnership, and renewed a strategic CareCredit endorsement with American Society of Plastic Surgeons
  • Will be one of the first issuers to offer private label credit cards in Apple Pay
  • Strong deposit growth continued, up $7 billion, or 24%, over the second quarter of 2014
  • Continued progress on separation—Federal Reserve application to separate filed April 30th

“We continue to grow our industry-leading consumer finance business on several fronts. We have signed new partners across our platforms, extended key contracts, and made technology investments which are yielding innovative, value added services for our partners and customers. We also continued to deliver strong receivables, deposit, and revenue growth,” said Margaret Keane, President and Chief Executive Officer of Synchrony Financial. “We are focused on driving growth, delivering value to our partners and customers, and remaining at the forefront of the emerging digital payments and data analytics landscape.”

Business and Financial Highlights for the Second Quarter of 2015

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

Earnings

  • Net interest income increased $187 million, or 7%, to $2.9 billion, driven by strong loan receivables growth, partially offset by higher interest expense from funding issued to increase liquidity in 2014. Net interest income after retailer share arrangements increased 7%.
  • Total platform revenue increased $223 million, or 9%.
  • Provision for loan losses increased $59 million to $740 million largely due to loan receivables growth.
  • Other income increased $8 million to $120 million, driven by strong growth in interchange revenue and a pre-tax gain of $20 million due to portfolio sales, which were partially offset by higher loyalty and rewards costs associated with program initiatives.
  • Other expense increased $8 million to $805 million, primarily driven by investments in growth and infrastructure build in preparation for separation from the General Electric Company (GE). The increase is partially offset by consumer remediation expense in the second quarter of 2014.
  • Net earnings totaled $541 million for the quarter compared to $472 million in the second quarter of 2014.

Balance Sheet

  • Period-end loan receivables growth remained strong at 12%, primarily driven by purchase volume growth of 11% and average active account growth of 4%, and included the acquisition of the BP portfolio during the quarter.
  • Deposits grew to $38 billion, up $7 billion, or 24%, from the second quarter of 2014, and now comprise 61% of funding compared to 57% last year.
  • The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn securitization capacity) at $20 billion, or 26% of total assets.
  • The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 17.2% and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 16.4%.

Key Financial Metrics

  • Return on assets was 2.9% and return on equity was 19.2%.
  • Net interest margin declined 207 basis points to 15.77% primarily due to the impact from the significant increase in liquidity.
  • Efficiency ratio was 33.5%.

Credit Quality

  • Loans 30+ days past due as a percentage of period-end loan receivables improved 29 basis points to 3.53%.
  • Net charge-offs as a percentage of total average loan receivables improved 25 basis points to 4.63%.
  • The allowance for loan losses as a percentage of total period-end receivables was 5.38%.

Sales Platforms

  • Retail Card platform revenue increased 10%, driven primarily by purchase volume growth of 12% and period-end loan receivables growth of 14%, which included the acquisition of the BP portfolio. Loan receivables growth was broad-based across partner programs.
  • Payment Solutions platform revenue increased 7%, driven primarily by purchase volume growth of 8% and period-end loan receivables growth of 11%, with growth across industry segments led by home furnishing, automotive products, and power equipment.
  • CareCredit platform revenue increased 8%, driven primarily by purchase volume growth of 9% and period-end receivables growth of 5%, with growth led by dental and veterinary specialties.

Corresponding Financial Tables and Information

No representation is made that the information in this news release is complete. Investors are encouraged to review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the detailed financial tables and information that follow and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed February 23, 2015, and in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, as filed May 1, 2015. The detailed financial tables and other information are also available on the Investor Relations page of the Company’s website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

Conference Call and Webcast Information

On Friday, July 17, 2015, at 10:30 a.m. Eastern Time, Margaret Keane, President and Chief Executive Officer, and Brian Doubles, Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations page of our website, www.investors.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 22015#, and can be accessed beginning approximately two hours after the event through August 1, 2015.

About Synchrony Financial

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

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

Cautionary Statement Regarding Forward-Looking Statements

This news release contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as “outlook,” “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “targets,” “estimates,” “will,” “should,” “may” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our platform revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; our need for additional financing, higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to securitize our loans, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loans, and lower payment rates on our securitized loans; our reliance on dividends, distributions and other payments from Synchrony Bank; our ability to grow our deposits in the future; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of strategic investments; reductions in interchange fees; fraudulent activity; cyber-attacks or other security breaches; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; damage to our reputation; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and state sales tax rules and regulations; significant and extensive regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Act and the impact of the CFPB’s regulation of our business; changes to our methods of offering our CareCredit products; impact of capital adequacy rules; restrictions that limit Synchrony Bank’s ability to pay dividends; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; failure to comply with anti-money laundering and anti-terrorism financing laws; effect of General Electric Capital Corporation being subject to regulation by the Federal Reserve Board both as a savings and loan holding company and as a systemically important financial institution; GE not completing the separation from us as planned or at all, GE’s inability to obtain savings and loan holding company deregistration (GE SLHC Deregistration) and GE continuing to have significant control over us; completion by the Federal Reserve Board of a review (with satisfactory results) of our preparedness to operate on a standalone basis, independently of GE, and Federal Reserve Board approval required for us to continue to be a savings and loan holding company, including the timing of the approval and the imposition of any significant additional capital or liquidity requirements; our need to establish and significantly expand many aspects of our operations and infrastructure; delays in receiving or failure to receive Federal Reserve Board agreement required for us to be treated as a financial holding company after the GE SLHC Deregistration; loss of association with GE’s strong brand and reputation; limited right to use the GE brand name and logo and need to establish a new brand; GE’s significant control over us; terms of our arrangements with GE may be more favorable than what we will be able to obtain from unaffiliated third parties; obligations associated with being a public company; our incremental cost of operating as a standalone public company could be substantially more than anticipated; GE could engage in businesses that compete with us, and conflicts of interest may arise between us and GE; and failure caused by us of GE’s distribution of our common stock to its stockholders in exchange for its common stock to qualify for tax-free treatment, which may result in significant tax liabilities to GE for which we may be required to indemnify GE.

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this news release and in our public filings, including under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed on February 23, 2015. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

Non-GAAP Measures

The information provided herein includes measures we refer to as “platform revenue”, “platform revenue excluding retailer share arrangements” and “tangible common equity” and certain capital ratios, which are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please see the detailed financial tables and information that follow. For a statement regarding the usefulness of these measures to investors, please see the Company’s Current Report on Form 8-K filed with the SEC today.

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

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

2Q'15 vs. 2Q'14 Jun 30,

2015

Jun 30,

2014

YTD'15 vs. YTD'14

EARNINGS

Net interest income $ 2,907 $ 2,875 $ 2,978 $ 2,879 $ 2,720 $ 187 6.9 % $ 5,782 $ 5,463 $ 319 5.8 %
Retailer share arrangements   (621 )   (660 )   (698 )   (693 )   (590 )   (31 )   5.3 %   (1,281 )   (1,184 )   (97 )   8.2 %
Net interest income, after retailer share arrangements 2,286 2,215 2,280 2,186 2,130 156 7.3 % 4,501 4,279 222 5.2 %
Provision for loan losses   740     687     797     675     681     59     8.7 %   1,427     1,445     (18 )   (1.2 )%
Net interest income, after retailer share arrangements and provision for loan losses 1,546 1,528 1,483 1,511 1,449 97 6.7 % 3,074 2,834 240 8.5 %
Other income 120 101 162 96 112 8 7.1 % 221 227 (6 ) (2.6 )%
Other expense   805     746     792     728     797     8     1.0 %   1,551     1,407     144     10.2 %
Earnings before provision for income taxes 861 883 853 879 764 97 12.7 % 1,744 1,654 90 5.4 %
Provision for income taxes   320     331     322     331     292     28     9.6 %   651     624     27     4.3 %
Net earnings $ 541   $ 552   $ 531   $ 548   $ 472   $ 69     14.6 % $ 1,093   $ 1,030   $ 63     6.1 %
Net earnings attributable to common stockholders $ 541   $ 552   $ 531   $ 548   $ 472   $ 69     14.6 % $ 1,093   $ 1,030   $ 63     6.1 %
 

COMMON SHARE STATISTICS

Basic EPS $ 0.65 $ 0.66 $ 0.64 $ 0.70 $ 0.67 ($0.02 ) (3.0 )% $ 1.31 $ 1.46 ($0.15 ) (10.3 )%
Diluted EPS $ 0.65 $ 0.66 $ 0.64 $ 0.70 $ 0.67 ($0.02 ) (3.0 )% $ 1.31 $ 1.46 ($0.15 ) (10.3 )%
Common stock price $ 32.93 $ 30.35 $ 29.75 $ 24.55 n/a $ 32.93 n/a $ 32.93 n/a $ 32.93 n/a
Book value per share $ 13.89 $ 13.24 $ 12.57 $ 11.92 $ 9.06 $ 4.83 53.3 % $ 13.89 $ 9.06 $ 4.83 53.3 %
Tangible book value per share(1) $ 12.06 $ 11.43 $ 10.81 $ 10.25 $ 7.06 $ 5.00 70.8 % $ 12.06 $ 7.06 $ 5.00 70.8 %
 
Beginning common shares outstanding 833.8 833.8 833.8 705.3 705.3 128.5 18.2 % 833.8 705.3 128.5 18.2 %
Issuance of common shares through initial public offering - - - 128.5 - - NM - - - NM
Shares repurchased   -     -     -     -     -     -     NM   -     -     -     NM
Ending common shares outstanding 833.8 833.8 833.8 833.8 705.3 128.5 18.2 % 833.8 705.3 128.5 18.2 %
 
Weighted average common shares outstanding 833.8 833.8 833.8 781.8 705.3 128.5 18.2 % 833.8 705.3 128.5 18.2 %
Weighted average common shares outstanding (fully diluted) 835.4 835.0 834.3 781.9 705.3 130.1 18.4 % 835.2 705.3 129.9 18.4 %
                                                 

 

(1)   Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
                         
SYNCHRONY FINANCIAL
SELECTED METRICS
(unaudited, $ in millions, except account data)
Quarter Ended Six Months Ended
Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

2Q'15 vs. 2Q'14 Jun 30,

2015

Jun 30,

2014

YTD'15 vs. YTD'14

PERFORMANCE METRICS

Return on assets(1) 2.9 % 3.0 % 2.7 % 3.2 % 3.1 % (0.2 )% 3.0 % 3.5 % (0.5 )%
Return on equity(2) 19.2 % 20.8 % 20.2 % 26.8 % 29.9 % (10.7 )% 20.0 % 32.4 % (12.4 )%
Return on tangible common equity(3) 22.2 % 24.1 % 23.4 % 32.4 % 38.5 % (16.3 )% 23.1 % 40.9 % (17.8 )%
Net interest margin(4) 15.77 % 15.79 % 15.60 % 17.11 % 17.84 % (2.07 )% 15.75 % 18.29 % (2.54 )%
Efficiency ratio(5) 33.5 % 32.2 % 32.4 % 31.9 % 35.5 % (2.0 )% 32.8 % 31.2 % 1.6 %
Other expense as a % of average loan receivables, including held for sale 5.37 % 5.06 % 5.16 % 5.09 % 5.77 % (0.40 )% 5.20 % 5.13 % 0.07 %
Effective income tax rate 37.2 % 37.5 % 37.7 % 37.7 % 38.2 % (1.0 )% 37.3 % 37.7 % (0.4 )%
 

CREDIT QUALITY METRICS

Net charge-offs as a % of average loan receivables, including held for sale 4.63 % 4.53 % 4.32 % 4.05 % 4.88 % (0.25 )% 4.56 % 4.85 % (0.29 )%
30+ days past due as a % of period-end loan receivables 3.53 % 3.79 % 4.14 % 4.26 % 3.82 % (0.29 )% 3.53 % 3.82 % (0.29 )%
90+ days past due as a % of period-end loan receivables 1.52 % 1.81 % 1.90 % 1.85 % 1.65 % (0.13 )% 1.52 % 1.65 % (0.13 )%
Net charge-offs $ 693 $ 668 $ 663 $ 579 $ 673 $ 20 3.0 % $ 1,361 $ 1,331 $ 30 2.3 %
Loan receivables delinquent over 30 days $ 2,171 $ 2,209 $ 2,536 $ 2,416 $ 2,097 $ 74 3.5 % $ 2,171 $ 2,097 $ 74 3.5 %
Loan receivables delinquent over 90 days $ 933 $ 1,056 $ 1,162 $ 1,051 $ 908 $ 25 2.8 % $ 933 $ 908 $ 25 2.8 %
 
Allowance for loan losses (period-end) $ 3,302 $ 3,255 $ 3,236 $ 3,102 $ 3,006 $ 296 9.8 % $ 3,302 $ 3,006 $ 296 9.8 %
Allowance coverage ratio(6) 5.38 % 5.59 % 5.28 % 5.46 % 5.48 % (0.10 )% 5.38 % 5.48 % (0.10 )%
 

BUSINESS METRICS

Purchase volume(7) $ 28,810 $ 23,139 $ 30,081 $ 26,004 $ 25,978 $ 2,832 10.9 % $ 51,949 $ 47,064 $ 4,885 10.4 %
Period-end loan receivables $ 61,431 $ 58,248 $ 61,286 $ 56,767 $ 54,873 $ 6,558 12.0 % $ 61,431 $ 54,873 $ 6,558 12.0 %
Credit cards $ 58,827 $ 55,866 $ 58,880 $ 54,263 $ 52,406 $ 6,421 12.3 % $ 58,827 $ 52,406 $ 6,421 12.3 %
Consumer installment loans $ 1,138 $ 1,062 $ 1,063 $ 1,081 $ 1,047 $ 91 8.7 % $ 1,138 $ 1,047 $ 91 8.7 %
Commercial credit products $ 1,410 $ 1,295 $ 1,320 $ 1,404 $ 1,405 $ 5 0.4 % $ 1,410 $ 1,405 $ 5 0.4 %
Other $ 56 $ 25 $ 23 $ 19 $ 15 $ 41 NM $ 56 $ 15 $ 41 NM
Average loan receivables, including held for sale $ 60,094 $ 59,775 $ 59,547 $ 57,391 $ 55,363 $ 4,731 8.5 % $ 60,124 $ 55,593 $ 4,531 8.2 %
Period-end active accounts (in thousands)(8) 61,718 59,761 64,286 60,489 59,248 2,470 4.2 % 61,718 59,248 2,470 4.2 %
Average active accounts (in thousands)(8) 60,923 61,604 61,667 59,907 58,386 2,537 4.3 % 61,478 59,080 2,398 4.1 %
 

LIQUIDITY

Liquid assets
Cash and equivalents $ 10,621 $ 11,218 $ 11,828 $ 14,808 $ 6,782 $ 3,839 56.6 % $ 10,621 $ 6,782 $ 3,839 56.6 %
Total liquid assets $ 13,660 $ 13,813 $ 12,942 $ 14,077 $ 6,119 $ 7,541 123.2 % $ 13,660 $ 6,119 $ 7,541 123.2 %
Undrawn credit facilities
Undrawn committed securitization financings $ 6,125 $ 6,600 $ 6,100 $ 5,650 $ 5,650 $ 475 8.4 % $ 6,125 $ 5,650 $ 475 8.4 %
Total liquid assets and undrawn credit facilities $ 19,785 $ 20,413 $ 19,042 $ 19,727 $ 11,769 $ 8,016 68.1 % $ 19,785 $ 11,769 $ 8,016 68.1 %
Liquid assets % of total assets 18.03 % 18.99 % 17.09 % 19.16 % 9.69 % 8.34 % 18.03 % 9.69 % 8.34 %
Liquid assets including undrawn committed securitization financings % of total assets 26.12 % 28.07 % 25.15 % 26.85 % 18.63 % 7.49 % 26.12 % 18.63 % 7.49 %
                                                 
(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) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
(7) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(8) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
 
                         
SYNCHRONY FINANCIAL
STATEMENTS OF EARNINGS
(unaudited, $ in millions)
Quarter Ended Six Months Ended
Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

2Q'15 vs. 2Q'14 Jun 30,

2015

Jun 30,

2014

YTD'15 vs. YTD'14
Interest income:
Interest and fees on loans $ 3,166 $ 3,140 $ 3,252 $ 3,116 $ 2,920 $ 246 8.4 % $ 6,306 $ 5,848 $ 458 7.8 %
Interest on investment securities   11     10     8     7     6     5     83.3 %   21     11     10     90.9 %
Total interest income 3,177 3,150 3,260 3,123 2,926 251 8.6 % 6,327 5,859 468 8.0 %
 
Interest expense:
Interest on deposits 146 137 139 126 109 37 33.9 % 283 205 78 38.0 %
Interest on borrowings of consolidated securitization entities 53 52 57 57 54 (1 ) (1.9 )% 105 101 4 4.0 %
Interest on third-party debt 71 82 78 46 - 71 NM 153 - 153 NM
Interest on related party debt   -     4     8     15     43     (43 )   (100.0 )%   4     90     (86 )   (95.6 )%
Total interest expense 270 275 282 244 206 64 31.1 % 545 396 149 37.6 %
                         
Net interest income 2,907 2,875 2,978 2,879 2,720 187 6.9 % 5,782 5,463 319 5.8 %
 
Retailer share arrangements   (621 )   (660 )   (698 )   (693 )   (590 )   (31 )   5.3 %   (1,281 )   (1,184 )   (97 )   8.2 %
Net interest income, after retailer share arrangements 2,286 2,215 2,280 2,186 2,130 156 7.3 % 4,501 4,279 222 5.2 %
 
Provision for loan losses   740     687     797     675     681     59     8.7 %   1,427     1,445     (18 )   (1.2 )%
Net interest income, after retailer share arrangements and provision for loan losses 1,546 1,528 1,483 1,511 1,449 97 6.7 % 3,074 2,834 240 8.5 %
 
Other income:
Interchange revenue 123 100 120 101 92 31 33.7 % 223 168 55 32.7 %
Debt cancellation fees 61 65 67 68 70 (9 ) (12.9 )% 126 140 (14 ) (10.0 )%
Loyalty programs (94 ) (78 ) (91 ) (84 ) (63 ) (31 ) 49.2 % (172 ) (106 ) (66 ) 62.3 %
Other   30     14     66     11     13     17     130.8 %   44     25     19     76.0 %
Total other income   120     101     162     96     112     8     7.1 %   221     227     (6 )   (2.6 )%
 
Other expense:
Employee costs 250 239 227 239 207 43 20.8 % 489 400 89 22.3 %
Professional fees(1) 156 162 139 149 145 11 7.6 % 318 275 43 15.6 %
Marketing and business development 108 82 165 115 97 11 11.3 % 190 180 10 5.6 %
Information processing 74 63 60 47 53 21 39.6 % 137 105 32 30.5 %
Other(1)   217     200     201     178     295     (78 )   (26.4 )%   417     447     (30 )   (6.7 )%
Total other expense 805 746 792 728 797 8 1.0 % 1,551 1,407 144 10.2 %
                         
Earnings before provision for income taxes 861 883 853 879 764 97 12.7 % 1,744 1,654 90 5.4 %
Provision for income taxes   320     331     322     331     292     28     9.6 %   651     624     27     4.3 %
Net earnings attributable to common shareholders $ 541   $ 552   $ 531   $ 548   $ 472   $ 69     14.6 % $ 1,093   $ 1,030   $ 63     6.1 %
                                                 

 

(1)   We have reclassified certain amounts within Professional fees to Other for all periods in 2014 to conform to the current period classifications.
                 
SYNCHRONY FINANCIAL
STATEMENTS OF FINANCIAL POSITION
(unaudited, $ in millions)
Quarter Ended
Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

Jun 30, 2015 vs.

Jun 30, 2014

Assets
Cash and equivalents $ 10,621 $ 11,218 $ 11,828 $ 14,808 $ 6,782 $ 3,839 56.6 %
Investment securities 3,682 3,121 1,598 325 298 3,384 NM
Loan receivables:
Unsecuritized loans held for investment 36,019 33,424 34,335 30,474 28,280 7,739 27.4 %
Restricted loans of consolidated securitization entities   25,412     24,824     26,951     26,293     26,593     (1,181 )   (4.4 )%
Total loan receivables 61,431 58,248 61,286 56,767 54,873 6,558 12.0 %
Less: Allowance for loan losses   (3,302 )   (3,255 )   (3,236 )   (3,102 )   (3,006 )   (296 )   9.8 %
Loan receivables, net 58,129 54,993 58,050 53,665 51,867 6,262 12.1 %
Loan receivables held for sale - 359 332 1,493 1,458 (1,458 ) (100.0 )%
Goodwill 949 949 949 949 949 - - %
Intangible assets, net 575 557 519 449 463 112 24.2 %
Other assets   1,794     1,524     2,431     1,780     1,358     436     32.1 %
Total assets $ 75,750   $ 72,721   $ 75,707   $ 73,469   $ 63,175   $ 12,575     19.9 %
 
Liabilities and Equity
Deposits:
Interest-bearing deposit accounts $ 37,629 $ 34,788 $ 34,847 $ 32,480 $ 30,258 $ 7,371 24.4 %
Non-interest-bearing deposit accounts   143     162     108     209     204     (61 )   (29.9 )%
Total deposits 37,772 34,950 34,955 32,689 30,462 7,310 24.0 %
Borrowings:
Borrowings of consolidated securitization entities 13,948 13,817 14,967 15,091 15,114 (1,166 ) (7.7 )%
Bank term loan 5,151 5,651 8,245 7,495 - 5,151 NM
Senior unsecured notes 4,593 4,592 3,593 3,593 - 4,593 NM
Related party debt   -     -     655     1,405     7,859     (7,859 )   (100.0 )%
Total borrowings 23,692 24,060 27,460 27,584 22,973 719 3.1 %
Accrued expenses and other liabilities   2,708     2,675     2,814     3,255     3,347     (639 )   (19.1 )%
Total liabilities 64,172 61,685 65,229 63,528 56,782 7,390 13.0 %
Equity:
Parent’s net investment - - - - - - NM
Common stock 1 1 1 1 1 - - %
Additional paid-in capital 9,422 9,418 9,408 9,401 6,399 3,023 47.2 %
Retained earnings 2,172 1,631 1,079 548 - 2,172 NM
Accumulated other comprehensive income:   (17 )   (14 )   (10 )   (9 )   (7 )   (10 )   142.9 %
Total equity   11,578     11,036     10,478     9,941     6,393     5,185     81.1 %
Total liabilities and equity $ 75,750   $ 72,721   $ 75,707   $ 73,469   $ 63,175   $ 12,575     19.9 %
 
                                 
SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
(unaudited, $ in millions)
 
Quarter Ended
Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014
Interest Average Interest Average Interest Average Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance   Expense   Rate Balance   Expense   Rate Balance   Expense   Rate Balance   Expense   Rate Balance   Expense   Rate
Assets
Interest-earning assets:
Interest-earning cash and equivalents $ 10,728 $ 6 0.22 % $ 11,331 $ 6 0.21 % $ 13,631 $ 7 0.20 % $ 9,793 $ 4 0.16 % $ 5,489 $ 3 0.22 %
Securities available for sale 3,107 5 0.65 % 2,725 4 0.60 % 962 1 0.40 % 309 3 3.89 % 285 3 4.22 %
 
Loan receivables:
Credit cards, including held for sale 57,588 3,106 21.63 % 57,390 3,079 21.76 % 57,075 3,186 21.68 % 54,891 3,054 22.32 % 52,957 2,860 21.66 %
Consumer installment loans 1,101 26 9.47 % 1,057 25 9.59 % 1,072 27 9.78 % 1,070 25 9.37 % 1,004 24 9.59 %
Commercial credit products 1,372 34 9.94 % 1,305 36 11.19 % 1,379 38 10.70 % 1,412 37 10.51 % 1,387 36 10.41 %
Other   33     - - %   23     - - %   21     1 NM     18     - - %   15     - - %
Total loan receivables, including held for sale   60,094     3,166 21.13 %   59,775     3,140 21.30 %   59,547     3,252 21.21 %   57,391     3,116 21.78 %   55,363     2,920 21.16 %
Total interest-earning assets   73,929     3,177 17.24 %   73,831     3,150 17.30 %   74,140     3,260 17.07 %   67,493     3,123 18.56 %   61,137     2,926 19.20 %
 
Non-interest-earning assets:
Cash and due from banks 583 497 1,220 1,260 637
Allowance for loan losses (3,285 ) (3,272 ) (3,160 ) (3,058 ) (3,005 )
Other assets   2,916     2,802     2,831     2,605     2,446  
Total non-interest-earning assets   214     27     891     807     78  
         
Total assets $ 74,143   $ 73,858   $ 75,031   $ 68,300   $ 61,215  
 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts $ 35,908 $ 146 1.63 % $ 34,981 $ 137 1.59 % $ 33,980 $ 139 1.59 % $ 31,459 $ 126 1.61 % $ 28,568 $ 109 1.53 %
Borrowings of consolidated securitization entities 14,026 53 1.52 % 14,101 52 1.50 % 14,766 57 1.50 % 15,102 57 1.51 % 14,727 54 1.47 %
Bank term loan(1) 5,401 32 2.38 % 6,531 47 2.92 % 8,057 46 2.22 % 3,747 28 3.00 % - - - %
Senior unsecured notes(1) 4,592 39 3.41 % 4,093 35 3.47 % 3,593 32 3.46 % 1,797 18 4.02 % - - - %
Related party debt(1)   -     - - %   407     4 3.99 %   843     8 3.68 %   4,582     15 1.31 %   7,959     43 2.17 %
Total interest-bearing liabilities   59,927     270 1.81 %   60,113     275 1.86 %   61,239     282 1.79 %   56,687     244 1.73 %   51,254     206 1.61 %
 
Non-interest-bearing liabilities
Non-interest-bearing deposit accounts 166 142 182 206 221
Other liabilities   2,750     2,854     3,382     3,208     3,412  
Total non-interest-bearing liabilities   2,916     2,996     3,564     3,414     3,633  
         
Total liabilities   62,843     63,109     64,803     60,101     54,887  
 
Equity
Total equity 11,300 10,749 10,228 8,199 6,328
         
Total liabilities and equity $ 74,143   $ 73,858   $ 75,031   $ 68,300   $ 61,215  
Net interest income $ 2,907 $ 2,875 $ 2,978 $ 2,879 $ 2,720
 
Interest rate spread(2) 15.43 % 15.44 % 15.28 % 16.83 % 17.59 %
Net interest margin(3) 15.77 % 15.79 % 15.60 % 17.11 % 17.84 %
                                                                 
(1)  

Interest on liabilities calculated above utilizes monthly average balances. The effective interest rates for the Bank term loan for the quarters ended June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, were 2.21%, 2.21%, 2.19% and 2.21%, respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with prepayments of the loan.

(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
               
SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN
(unaudited, $ in millions)
 
Six Months Ended

Jun 30, 2015

Six Months Ended

Jun 30, 2014

Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets
Interest-earning assets:
Interest-earning cash and equivalents $ 11,006 $ 12 0.22 % $ 4,710 $ 5 0.22 %
Securities available for sale 2,887 9 0.63 % 268 6 4.54 %
 
Loan receivables:
Credit cards, including held for sale 57,670 6,185 21.63 % 53,238 5,727 21.81 %
Consumer installment loans 1,081 51 9.51 % 984 47 9.69 %
Commercial credit products 1,345 70 10.50 % 1,356 74 11.07 %
Other   28     - - %   15     - - %
Total loan receivables, including held for sale   60,124     6,306 21.15 %   55,593     5,848 21.33 %
Total interest-earning assets   74,017     6,327 17.24 %   60,571     5,859 19.61 %
 
Non-interest-earning assets:
Cash and due from banks 578 611
Allowance for loan losses (3,282 ) (2,964 )
Other assets   2,870     2,253  
Total non-interest-earning assets   166     (100 )
   
Total assets $ 74,183   $ 60,471  
 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts $ 35,538 $ 283 1.61 % $ 27,488 $ 205 1.51 %
Borrowings of consolidated securitization entities 14,099 105 1.50 % 14,799 101 1.38 %
Bank term loan(1) 6,011 79 2.65 % - - - %
Senior unsecured notes(1) 4,307 74 3.46 % - - - %
Related party debt(1)   232     4 3.48 %   8,131     90 2.24 %
Total interest-bearing liabilities   60,187     545 1.83 %   50,418     396 1.59 %
 
Non-interest-bearing liabilities
Non-interest-bearing deposit accounts 153 282
Other liabilities   2,820     3,319  
Total non-interest-bearing liabilities   2,973     3,601  
   
Total liabilities   63,160     54,019  
 
Equity
Total equity 11,023 6,452
   
Total liabilities and equity $ 74,183   $ 60,471  
Net interest income $ 5,782 $ 5,463
 
Interest rate spread(2) 15.41 % 18.02 %
Net interest margin(3) 15.75 % 18.29 %
                             
(1)   Interest on liabilities calculated above utilizes monthly average balances. The effective interest rate for the Bank term loan for the 6 months ended June 30, 2015 was 2.21%. The Bank term loan effective rate excludes the impact of charges incurred in connection with the prepayments of the loan.
(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
                 
SYNCHRONY FINANCIAL
BALANCE SHEET STATISTICS
(unaudited, $ in millions, except per share statistics)
 
Quarter Ended
Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

Jun 30, 2015 vs.

Jun 30, 2014

BALANCE SHEET STATISTICS

Total common equity $ 11,578 $ 11,036 $ 10,478 $ 9,941 $ 6,393 $ 5,185 81.1 %
Total common equity as a % of total assets 15.28 % 15.18 % 13.84 % 13.53 % 10.12 % 5.16 %
 
Tangible assets $ 74,226 $ 71,215 $ 74,239 $ 72,071 $ 61,763 $ 12,463 20.2 %
Tangible common equity(1) $ 10,054 $ 9,530 $ 9,010 $ 8,543 $ 4,981 $ 5,073 101.8 %
Tangible common equity as a % of tangible assets(1) 13.55 % 13.38 % 12.14 % 11.85 % 8.06 % 5.49 %
Tangible common equity per share (1) $ 12.06 $ 11.43 $ 10.81 $ 10.25 $ 7.06 $ 5.00 70.8 %
 

REGULATORY CAPITAL RATIOS(2)

Basel III

Transition

Basel I
Total risk-based capital ratio(3)(8) 18.5 % 18.2 % 16.2 % 16.4 %
Tier 1 risk-based capital ratio(4)(8) 17.2 % 16.9 % 14.9 % 15.1 %
Tier 1 common ratio(5)(8) n/a 16.9 % 14.9 % 15.1 %
Tier 1 leverage ratio(6)(8) 14.6 % 13.7 % 12.5 % 12.2 %
Common equity Tier 1 capital ratio(7)(8) 17.2 % n/a n/a n/a
 
Basel III Fully Phased-in
Common equity Tier 1 capital ratio(7) 16.4 % 16.4 % 14.5 % 14.6 %

(1)

 

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

(2)

Regulatory capital metrics at June 30, 2015 are preliminary and therefore subject to change. As a new savings and loan holding company, the Company historically has not been required by regulators to disclose capital ratios, and therefore these ratios are non-GAAP measures. See Reconciliation of Non-GAAP Measures and Calculation of Regulatory Measures for components of capital ratio calculations.

(3)

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

(4)

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

(5)

Tier 1 common ratio is the ratio of common equity Tier 1 capital divided by risk-weighted assets.

(6)

Tier 1 leverage ratio reported under Basel III transition rules is calculated based on Tier 1 capital divided by total average assets, after certain adjustments. Total assets, after certain adjustments is used as the denominator for prior periods calculated under Basel I rules.

(7)

Common equity Tier 1 capital ratio is the ratio of common equity Tier 1 capital to total risk-weighted assets, each as calculated under Basel III rules. Common equity Tier 1 capital ratio (fully phased-in) is a preliminary estimate reflecting management’s interpretation of the final Basel III rules adopted in July 2013 by the Federal Reserve Board, which have not been fully implemented, and our estimate and interpretations are subject to, among other things, ongoing regulatory review and implementation guidance.

(8)

Beginning June 30, 2015, regulatory capital ratios are calculated under Basel III rules subject to transition provisions. The Company reported under Basel I rules for periods prior to June 30, 2015.

                         
SYNCHRONY FINANCIAL
PLATFORM RESULTS AND RECONCILIATION OF NON-GAAP MEASURES
(unaudited, $ in millions)
Quarter Ended Six Months Ended
Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sep 30,

2014

Jun 30,

2014

2Q'15 vs. 2Q'14 Jun 30,

2015

Jun 30,

2014

YTD'15 vs. YTD'14

RETAIL CARD

Purchase volume(1),(2) $ 23,452 $ 18,410 $ 24,855 $ 20,991 $ 21,032 $ 2,420 11.5 % $ 41,862 $ 37,745 $ 4,117 10.9 %
Period-end loan receivables $ 42,315 $ 39,685 $ 42,308 $ 38,466 $ 37,238 $ 5,077 13.6 % $ 42,315 $ 37,238 $ 5,077 13.6 %
Average loan receivables, including held for sale $ 41,303 $ 40,986 $ 40,929 $ 39,411 $ 38,047 $ 3,256 8.6 % $ 41,302 $ 38,273 $ 3,029 7.9 %
Average active accounts (in thousands)(2),(3) 48,981 49,617 49,871 48,433 47,248 1,733 3.7 % 49,513 47,918 1,595 3.3 %
 
Interest and fees on loans(2) $ 2,335 $ 2,337 $ 2,405 $ 2,299 $ 2,158 $ 177 8.2 % $ 4,672 $ 4,336 $ 336 7.7 %
Other income(2)   107     86     141     78     92     15     16.3 %   193     188     5     2.7 %
Platform revenue, excluding retailer share arrangements(2) 2,442 2,423 2,546 2,377 2,250 192 8.5 % 4,865 4,524 341 7.5 %
Retailer share arrangements(2)   (606 )   (651 )   (686 )   (683 )   (577 )   (29 )   5.0 %   (1,257 )   (1,161 )   (96 )   8.3 %
Platform revenue(2) $ 1,836   $ 1,772   $ 1,860   $ 1,694   $ 1,673   $ 163     9.7 % $ 3,608   $ 3,363   $ 245     7.3 %
 

PAYMENT SOLUTIONS

Purchase volume(1) $ 3,371 $ 2,948 $ 3,419 $ 3,226 $ 3,115 $ 256 8.2 % $ 6,319 $ 5,802 $ 517 8.9 %
Period-end loan receivables $ 12,194 $ 11,833 $ 12,095 $ 11,514 $ 11,014 $ 1,180 10.7 % $ 12,194 $ 11,014 $ 1,180 10.7 %
Average loan receivables $ 11,971 $ 11,970 $ 11,772 $ 11,267 $ 10,785 $ 1,186 11.0 % $ 11,990 $ 10,799 $ 1,191 11.0 %
Average active accounts (in thousands)(3) 7,231 7,271 7,113 6,892 6,692 539 8.1 % 7,251 6,718 533 7.9 %
 
Interest and fees on loans $ 412 $ 403 $ 426 $ 405 $ 379 $ 33 8.7 % $ 815 $ 751 $ 64 8.5 %
Other income   4     5     9     7     8     (4 )   (50.0 )%   9     16     (7 )   (43.8 )%
Platform revenue, excluding retailer share arrangements 416 408 435 412 387 29 7.5 % 824 767 57 7.4 %
Retailer share arrangements   (14 )   (8 )   (11 )   (9 )   (12 )   (2 )   16.7 %   (22 )   (21 )   (1 )   4.8 %
Platform revenue $ 402   $ 400   $ 424   $ 403   $ 375   $ 27     7.2 % $ 802   $ 746   $ 56     7.5 %
 

CARECREDIT

Purchase volume(1) $ 1,987 $ 1,781 $ 1,807 $ 1,787 $ 1,831 $ 156 8.5 % $ 3,768 $ 3,517 $ 251 7.1 %
Period-end loan receivables $ 6,922 $ 6,730 $ 6,883 $ 6,787 $ 6,621 $ 301 4.5 % $ 6,922 $ 6,621 $ 301 4.5 %
Average loan receivables $ 6,820 $ 6,819 $ 6,846 $ 6,713 $ 6,531 $ 289 4.4 % $ 6,832 $ 6,521 $ 311 4.8 %
Average active accounts (in thousands)(3) 4,711 4,716 4,683 4,582 4,446 265 6.0 % 4,714 4,444 270 6.1 %
 
Interest and fees on loans $ 419 $ 400 $ 421 $ 412 $ 383 $ 36 9.4 % $ 819 $ 761 $ 58 7.6 %
Other income   9     10     12     11     12     (3 )   (25.0 )%   19     23     (4 )   (17.4 )%
Platform revenue, excluding retailer share arrangements 428 410 433 423 395 33 8.4 % 838 784 54 6.9 %
Retailer share arrangements   (1 )   (1 )   (1 )   (1 )   (1 )   -     - %   (2 )   (2 )   -     - %
Platform revenue $ 427   $ 409   $ 432   $ 422   $ 394   $ 33     8.4 % $ 836   $ 782   $ 54     6.9 %
 

TOTAL SYF

Purchase volume(1),(2) $ 28,810 $ 23,139 $ 30,081 $ 26,004 $ 25,978 $ 2,832 10.9 % $ 51,949 $ 47,064 $ 4,885 10.4 %
Period-end loan receivables $ 61,431 $ 58,248 $ 61,286 $ 56,767 $ 54,873 $ 6,558 12.0 % $ 61,431 $ 54,873 $ 6,558 12.0 %
Average loan receivables, including held for sale $ 60,094 $ 59,775 $ 59,547 $ 57,391 $ 55,363 $ 4,731 8.5 % $ 60,124 $ 55,593 $ 4,531 8.2 %
Average active accounts (in thousands)(2),(3) 60,923 61,604 61,667 59,907 58,386 2,537 4.3 % 61,478 59,080 2,398 4.1 %
 
Interest and fees on loans(2) $ 3,166 $ 3,140 $ 3,252 $ 3,116 $ 2,920 $ 246 8.4 % $ 6,306 $ 5,848 $ 458 7.8 %
Other income(2)   120     101       162       96       112     8     7.1 %   221     227     (6 )   (2.6 )%
Platform revenue, excluding retailer share arrangements(2) 3,286 3,241 3,414 3,212 3,032 254 8.4 % 6,527 6,075 452 7.4 %
Retailer share arrangements(2)   (621 )   (660 )   (698 )   (693 )   (590 )   (31 )   5.3 %   (1,281 )   (1,184 )   (97 )   8.2 %
Platform revenue(2) $ 2,665   $ 2,581   $ 2,716   $ 2,519   $ 2,442   $ 223     9.1 % $ 5,246   $ 4,891   $ 355     7.3 %

 

                                               
(1)   Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(2) Includes activity and balances associated with loan receivables held for sale.
(3) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
             
SYNCHRONY FINANCIAL
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES
(unaudited, $ in millions, except per share statistics)
Quarter Ended
Jun 30,

2015

  Mar 31,

2015

  Dec 31,

2014

  Sep 30,

2014

  Jun 30,

2014

COMMON EQUITY MEASURES

GAAP Total common equity $ 11,578 $ 11,036 $ 10,478 $ 9,941 $ 6,393
Less: Goodwill (949 ) (949 ) (949 ) (949 ) (949 )
Less: Intangible assets, net   (575 )   (557 )   (519 )   (449 )   (463 )
Tangible common equity $ 10,054 $ 9,530 $ 9,010 $ 8,543 $ 4,981
Adjustments for certain other intangible assets, deferred tax liabilities

and certain items in accumulated comprehensive income (loss)

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

Adjustments for certain deferred tax liabilities and certain items in accumulated

comprehensive income (loss)

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

RISK-BASED CAPITAL

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

ASSET MEASURES

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

related deferred tax liabilities

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

TANGIBLE COMMON EQUITY PER SHARE

GAAP book value per share $ 13.89 $ 13.24 $ 12.57 $ 11.92 $ 9.06
Less: Goodwill (1.14 ) (1.14 ) (1.14 ) (1.14 ) (1.34 )
Less: Intangible assets, net   (0.69 )   (0.67 )   (0.62 )   (0.53 )   (0.66 )
Tangible common equity per share $ 12.06   $ 11.43   $ 10.81   $ 10.25   $ 7.06  
                                             

(1)

 

Beginning June 30, 2015, regulatory capital amounts are calculated under Basel III rules subject to transition provisions. The company reported under Basel I rules for periods prior to June 30, 2015.

(2)

Represents total average assets at June 30, 2015 and total assets for all other periods presented.

(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.

Contacts

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

Release Summary

Synchrony Financial (NYSE: SYF) today announced second quarter 2015 net earnings of $541 million, or $0.65 per diluted share.

Contacts

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