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OFFON

SYNCHRONY FINANCIAL

(SYF)
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Synchrony Financial : Q3'20 Earnings Press Release (with financial tables)

10/20/2020 | 07:15am EST

Investor Relations

Media Relations

Greg Ketron

Sue Bishop

(203) 585-6291

(203) 585-2802

For Immediate Release: October 20, 2020

Synchrony Reports Third Quarter Net Earnings of $313 Million or $0.52 Per Diluted Share

Included Restructuring Charge of $89 million, or $0.11 Per Diluted Share, and Provision for Credit Losses

Included CECL Impact of $66 Million, or $0.09 Per Diluted Share

STAMFORD, Conn. - Synchrony Financial (NYSE: SYF) today announced third quarter 2020 earnings results amid the continuing Coronavirus (COVID-19) pandemic. Synchrony reported third quarter 2020 net earnings of $313 million, or $0.52 per diluted share; this included a restructuring charge of $89 million, or $67 million after tax, which equates to an EPS reduction of $0.11, and an increase in the provision for credit losses as a result of CECL implementation earlier this year of $66 million, or $50 million after tax, which equates to an EPS reduction of $0.09.

Results included*:

  • Loan receivables decreased 6% to $78.5 billion, or 5% on a Core** basis
  • Interest and fees on loans decreased 22% to $3.8 billion, or 12% on a Core basis
  • Purchase volume decreased 6% to $36.0 billion, or flat on a Core basis
  • Average active accounts decreased 16% to 64.3 million, or 8% on a Core basis
  • Deposits decreased $2.5 billion, or 4%, to $63.5 billion
  • Renewed and extended a key relationship with Sam's Club
  • Successfully launched the new Venmo program
  • Added and extended Payment Solutions relationships with 4 Wheel Parts, Kane's Furniture, Levin Furniture and Mattress, SVP Sewing Brands LLC, and System Pavers
  • CareCredit successfully launched healthcare system partnerships with Lehigh Valley Health Network, St. Luke's University Health Network, and Cox Health and added and extended relationships with Blue River Pet Care and NVA
  • Returned $129 million in capital through common stock dividends

"During times of crisis and uncertainty, it is imperative to lead with the fundamental values and principles upon which an organization is built. At Synchrony, we continue to put our employees, partners, customers, shareholders and communities at the forefront of our decision making. Moving in an agile fashion, we quickly reallocated our resources to focus on the most critical priorities to sustain and drive business growth," said Margaret Keane, Chief Executive Officer, Synchrony Financial.

"In the third quarter, we successfully launched an innovative, digital-first program with Venmo, renewed and extended our relationship with Sam's Club, while also extending several programs and adding new partnerships. We've also deployed an array of enhanced digital solutions for our partners and cardholders, further strengthening our market position and meeting the evolving demands of the new environment," she added.

1

Business and Financial Results for the Third Quarter of 2020*

Earnings

  • Net interest income decreased $932 million, or 21%, to $3.5 billion, mainly due to the impact of COVID-19 and the Walmart consumer portfolio sale.
  • Retailer share arrangements decreased $117 million, or 12%, to $899 million, reflecting the impact of COVID-19 on program performance.
  • Provision for credit losses increased $191 million, or 19%, to $1.2 billion, mainly driven by the reserve increase for the projected impact of COVID-19 related losses and the prior year reserve reduction related to Walmart, partially offset by lower net charge-offs.
  • Other income increased $46 million, or 54%, to $131 million, largely driven by lower loyalty program costs which included the effects of the sale of the Walmart consumer portfolio.
  • Other expense was flat; the restructuring charge and expenses related to the COVID-19 response were offset by cost reductions from Walmart, lower purchase volume and accounts, and reductions in certain discretionary spend.
  • Net earnings totaled $313 million compared to $1.1 billion last year.

Balance Sheet

  • Period-endloan receivables decreased 6%, or 5% on a Core basis; purchase volume decreased 6%, or flat on a Core basis; and average active accounts decreased 16%, or 8% on a Core basis.
  • Deposits decreased $2.5 billion, or 4%, to $63.5 billion and comprised 80% of funding.
  • The Company's balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $26.8 billion, or 28.0% of total assets.
  • The Company has elected to defer the regulatory capital effects of CECL for two years; the estimated Common Equity Tier 1 ratio was 15.8% compared to 14.5%, and the estimated Tier 1 Capital ratio was 16.7% compared to 14.5%, reflecting the Company's strong capital generation capabilities. The estimated Tier 1 Capital ratio also reflects the $750 million preferred stock issuance in November 2019.

Key Financial Metrics

  • Return on assets was 1.3% and return on equity was 10.3%.
  • Net interest margin was 13.80%.
  • Efficiency ratio was 39.7%.

Credit Quality

  • Loans 30+ days past due as a percentage of total period-end loan receivables were 2.67% compared to 4.47% last year; excluding the Walmart consumer portfolio, the rate was down approximately 175 basis points compared to last year.
  • Through September 30th, we had granted minimum payment forbearance to a cumulative total of approximately 2 million accounts, or $3.8 billion in account balances at the time of forbearance. As of September 30th, only 119,000 accounts or $227 million in account balances remained in forbearance.
  • Net charge-offs as a percentage of total average loan receivables were 4.42% compared to 5.35% last year; excluding the Walmart consumer portfolio, the rate decreased approximately 45 basis points compared to last year.
  • The allowance for credit losses as a percentage of total period-end loan receivables was 12.92%.

2

Sales Platforms

    • Retail Card period-end loan receivables decreased 6%, driven primarily by the impact from COVID-19, partially offset by growth in digital partners. Interest and fees on loans decreased 27%, purchase volume decreased 7%, and average active accounts decreased 19%, driven primarily by the sale of the Walmart consumer portfolio and the decline in loan receivables.
    • Payment Solutions period-end loan receivables decreased 5%; period-end loan receivables decreased 1% on a Core basis primarily due to the impact from COVID-19, partially offset by growth in Power. Interest and fees on loans decreased 10%, driven primarily by lower late fees. Purchase volume decreased 6% and average active accounts decreased 7%.
    • CareCredit period-end loan receivables decreased 7%, driven primarily by the impact from COVID-19. Interest and fees on loans decreased 8%, driven primarily by lower merchant discount as a result of the decline in purchase volume, which decreased 3%. Average active accounts decreased 8%.
  • All comparisons are for the third quarter of 2020 compared to the third quarter of 2019, 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, 2019, as filed February 13, 2020, and the Company's forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. 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 Tuesday, October 20, 2020, at 8:30 a.m. Eastern Time, Margaret Keane, Chief Executive Officer, Brian Doubles, President, and Brian Wenzel Sr., 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 also be available on the website.

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.

3

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, including the future impacts of the novel coronavirus disease ("COVID-19") outbreak and measures taken in response thereto for which future developments are highly uncertain and difficult to predict; retaining existing partners and attracting new partners, concentration of our revenue in a small number of Retail Card partners, and promotion and support of our products by our partners; cyber-attacks or other security breaches; disruptions in the operations of our computer systems and data centers; the financial performance of our partners; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the new CECL accounting guidance; 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; damage to our reputation; 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; 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; 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; 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 the 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.

4

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, 2019, as filed on February 13, 2020, and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, as filed on July 23, 2020. 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.

5

SYNCHRONY FINANCIAL

FINANCIAL SUMMARY

(unaudited, in millions, except per share statistics)

Quarter Ended

Nine Months Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

3Q'20 vs. 3Q'19

Sep 30,

Sep 30,

YTD'20 vs. YTD'19

2020

2020

2020

2019

2019

2020

2019

EARNINGS

Net interest income

$

3,457

$

3,396

$

3,890

$

4,029

$

4,389

$

(932)

(21.2)%

$

10,743

$

12,770

$

(2,027)

(15.9)%

Retailer share arrangements

(899)

(773)

(926)

(1,029)

(1,016)

117

(11.5)%

(2,598)

(2,829)

231

(8.2)%

Provision for credit losses

1,210

1,673

1,677

1,104

1,019

191

18.7 %

4,560

3,076

1,484

48.2 %

Net interest income, after retailer share arrangements and provision for credit

1,348

950

1,287

1,896

2,354

(1,006)

(42.7)%

3,585

6,865

(3,280)

(47.8)%

losses

Other income

131

95

97

104

85

46

54.1 %

323

267

56

21.0 %

Other expense

1,067

986

1,002

1,079

1,064

3

0.3 %

3,055

3,166

(111)

(3.5)%

Earnings before provision for income taxes

412

59

382

921

1,375

(963)

(70.0)%

853

3,966

(3,113)

(78.5)%

Provision for income taxes

99

11

96

190

319

(220)

(69.0)%

206

950

(744)

(78.3)%

Net earnings

$

313

$

48

$

286

$

731

$

1,056

$

(743)

(70.4)%

$

647

$

3,016

$

(2,369)

(78.5)%

Net earnings available to common stockholders

$

303

$

37

$

275

$

731

$

1,056

$

(753)

(71.3)%

$

615

$

3,016

$

(2,401)

(79.6)%

COMMON SHARE STATISTICS

Basic EPS

$

0.52

$

0.06

$

0.45

$

1.15

$

1.60

$

(1.08)

(67.5)%

$

1.04

$

4.42

$

(3.38)

(76.5)%

Diluted EPS

$

0.52

$

0.06

$

0.45

$

1.15

$

1.60

$

(1.08)

(67.5)%

$

1.04

$

4.40

$

(3.36)

(76.4)%

Dividend declared per share

$

0.22

$

0.22

$

0.22

$

0.22

$

0.22

$

-

- %

$

0.66

$

0.64

$

0.02

3.1 %

Common stock price

$

26.17

$

22.16

$

16.09

$

36.01

$

34.09

$

(7.92)

(23.2)%

$

26.17

$

34.09

$

(7.92)

(23.2)%

Book value per share

$

19.47

$

19.13

$

19.27

$

23.31

$

23.13

$

(3.66)

(15.8)%

$

19.47

$

23.13

$

(3.66)

(15.8)%

Tangible common equity per share(1)

$

15.75

$

15.28

$

15.35

$

19.50

$

19.68

$

(3.93)

(20.0)%

$

15.75

$

19.68

$

(3.93)

(20.0)%

Beginning common shares outstanding

583.7

583.2

615.9

653.7

668.9

(85.2)

(12.7)%

615.9

718.8

(102.9)

(14.3)%

Issuance of common shares

-

-

-

-

-

-

- %

-

-

-

- %

Stock-based compensation

0.1

0.5

0.9

0.6

0.4

(0.3)

(75.0)%

1.5

2.5

(1.0)

(40.0)%

Shares repurchased

-

-

(33.6)

(38.4)

(15.6)

15.6

(100.0)%

(33.6)

(67.6)

34.0

(50.3)%

Ending common shares outstanding

583.8

583.7

583.2

615.9

653.7

(69.9)

(10.7)%

583.8

653.7

(69.9)

(10.7)%

Weighted average common shares outstanding

583.8

583.7

604.9

633.7

658.3

(74.5)

(11.3)%

590.8

682.5

(91.7)

(13.4)%

Weighted average common shares outstanding (fully diluted)

584.8

584.4

607.4

637.7

661.7

(76.9)

(11.6)%

592.2

685.6

(93.4)

(13.6)%

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

1

SYNCHRONY FINANCIAL

SELECTED METRICS

(unaudited, $ in millions)

Quarter Ended

Nine Months Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

3Q'20 vs. 3Q'19

Sep 30,

Sep 30,

YTD'20 vs. YTD'19

2020

2020

2020

2019

2019

2020

2019

PERFORMANCE METRICS

Return on assets(1)

1.3%

0.2%

1.1%

2.7%

3.9%

(2.6)%

0.9

%

3.8

%

(2.9)%

Return on equity(2)

10.3%

1.6%

9.1%

19.0%

28.3%

(18.0)%

7.0

%

27.2

%

(20.2)%

Return on tangible common equity(3)

13.1%

1.6%

11.6%

23.0%

33.4%

(20.3)%

8.8

%

32.2

%

(23.4)%

Net interest margin(4)

13.80%

13.53%

15.15%

15.01%

16.29%

(2.49)%

14.17

%

16.04

%

(1.87)%

Efficiency ratio(5)

39.7%

36.3%

32.7%

34.8%

30.8%

8.9 %

36.1

%

31.0

%

5.1

%

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

5.44%

5.04%

4.77%

5.01%

4.66%

0.78 %

5.08

%

4.72

%

0.36

%

Effective income tax rate

24.0%

18.6%

25.1%

20.6%

23.2%

0.8 %

24.2

%

24.0

%

0.2

%

CREDIT QUALITY METRICS

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

4.42%

5.35%

5.36%

5.15%

5.35%

(0.93)%

5.05

%

5.80

%

(0.75)%

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

2.67%

3.13%

4.24%

4.44%

4.47%

(1.80)%

2.67

%

4.47

%

(1.80)%

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

1.24%

1.77%

2.10%

2.15%

2.07%

(0.83)%

1.24

%

2.07

%

(0.83)%

Net charge-offs

$

866

$

1,046

$

1,125

$

1,109

$

1,221

$

(355)

(29.1)%

$

3,037

$

3,896

$

(859)

(22.0)%

Loan receivables delinquent over 30 days(6)

$

2,100

$

2,453

$

3,500

$

3,874

$

3,723

$

(1,623)

(43.6)%

$

2,100

$

3,723

$

(1,623)

(43.6)%

Loan receivables delinquent over 90 days(6)

$

973

$

1,384

$

1,735

$

1,877

$

1,723

$

(750)

(43.5)%

$

973

$

1,723

$

(750)

(43.5)%

Allowance for credit losses (period-end)

$

10,146

$

9,802

$

9,175

$

5,602

$

5,607

$

4,539

81.0 %

$

10,146

$

5,607

$

4,539

81.0

%

Allowance coverage ratio(7)

12.92%

12.52%

11.13%

6.42%

6.74%

6.18 %

12.92

%

6.74

%

6.18

%

BUSINESS METRICS

Purchase volume(8)(9)

$

36,013

$

31,155

$

32,042

$

40,212

$

38,395

$

(2,382)

(6.2)%

$

99,210

$

109,199

$

(9,989)

(9.1)%

Period-end loan receivables

$

78,521

$

78,313

$

82,469

$

87,215

$

83,207

$

(4,686)

(5.6)%

$

78,521

$

83,207

$

(4,686)

(5.6)%

Credit cards

$

75,204

$

75,353

$

79,832

$

84,606

$

79,788

$

(4,584)

(5.7)%

$

75,204

$

79,788

$

(4,584)

(5.7)%

Consumer installment loans

$

1,987

$

1,779

$

1,390

$

1,347

$

2,050

$

(63)

(3.1)%

$

1,987

$

2,050

$

(63)

(3.1)%

Commercial credit products

$

1,270

$

1,140

$

1,203

$

1,223

$

1,317

$

(47)

(3.6)%

$

1,270

$

1,317

$

(47)

(3.6)%

Other

$

60

$

41

$

44

$

39

$

52

$

8

15.4 %

$

60

$

52

$

8

15.4

%

Average loan receivables, including held for sale

$

78,005

$

78,697

$

84,428

$

85,376

$

90,556

$

(12,551)

(13.9)%

$

80,368

$

89,752

$

(9,384)

(10.5)%

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

64,800

63,430

68,849

75,471

77,094

(12,294)

(15.9)%

64,800

77,094

(12,294)

(15.9)%

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

64,270

64,836

72,078

73,734

76,695

(12,425)

(16.2)%

67,246

76,653

(9,407)

(12.3)%

LIQUIDITY

Liquid assets

Cash and equivalents

$

13,552

$

16,344

$

13,704

$

12,147

$

11,461

$

2,091

18.2 %

$

13,552

$

11,461

$

2,091

18.2

%

Total liquid assets

$

21,402

$

22,352

$

19,225

$

17,322

$

15,201

$

6,201

40.8 %

$

21,402

$

15,201

$

6,201

40.8

%

Undrawn credit facilities

Undrawn credit facilities

$

5,400

$

5,650

$

5,600

$

6,050

$

6,500

$

(1,100)

(16.9)%

$

5,400

$

6,500

$

(1,100)

(16.9)%

Total liquid assets and undrawn credit facilities

$

26,802

$

28,002

$

24,825

$

23,372

$

21,701

$

5,101

23.5 %

$

26,802

$

21,701

$

5,101

23.5

%

Liquid assets % of total assets

22.37%

23.15%

19.61%

16.52%

14.35%

8.02 %

22.37

%

14.35

%

8.02

%

Liquid assets including undrawn credit facilities % of total assets

28.02%

29.00%

25.32%

22.30%

20.48%

7.54 %

28.02

%

20.48

%

7.54

%

  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 available to common stockholders 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 credit 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.

2

SYNCHRONY FINANCIAL

STATEMENTS OF EARNINGS

(unaudited, $ in millions)

Quarter Ended

Nine Months Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

3Q'20 vs. 3Q'19

Sep 30,

Sep 30,

YTD'20 vs. YTD'19

2020

2020

2020

2019

2019

2020

2019

Interest income:

Interest and fees on loans

$

3,821

$

3,808

$

4,340

$

4,492

$

4,890

$

(1,069)

(21.9)%

$

11,969

$

14,213

$

(2,244)

(15.8)%

Interest on cash and debt securities

16

22

67

93

91

(75)

(82.4)%

105

292

(187)

(64.0)%

Total interest income

3,837

3,830

4,407

4,585

4,981

(1,144)

(23.0)%

12,074

14,505

(2,431)

(16.8)%

Interest expense:

Interest on deposits

245

293

356

383

411

(166)

(40.4)%

894

1,183

(289)

(24.4)%

Interest on borrowings of consolidated securitization entities

53

59

73

80

88

(35)

(39.8)%

185

278

(93)

(33.5)%

Interest on senior unsecured notes

82

82

88

93

93

(11)

(11.8)%

252

274

(22)

(8.0)%

Total interest expense

380

434

517

556

592

(212)

(35.8)%

1,331

1,735

(404)

(23.3)%

Net interest income

3,457

3,396

3,890

4,029

4,389

(932)

(21.2)%

10,743

12,770

(2,027)

(15.9)%

Retailer share arrangements

(899)

(773)

(926)

(1,029)

(1,016)

117

(11.5)%

(2,598)

(2,829)

231

(8.2)%

Provision for credit losses

1,210

1,673

1,677

1,104

1,019

191

18.7 %

4,560

3,076

1,484

48.2 %

Net interest income, after retailer share arrangements

1,348

950

1,287

1,896

2,354

(1,006)

(42.7)%

3,585

6,865

(3,280)

(47.8)%

and provision for credit losses

Other income:

Interchange revenue

172

134

161

192

197

(25)

(12.7)%

467

556

(89)

(16.0)%

Debt cancellation fees

68

69

69

64

64

4

6.3 %

206

201

5

2.5 %

Loyalty programs

(155)

(134)

(158)

(181)

(203)

48

(23.6)%

(447)

(562)

115

(20.5)%

Other

46

26

25

29

27

19

70.4 %

97

72

25

34.7 %

Total other income

131

95

97

104

85

46

54.1 %

323

267

56

21.0 %

Other expense:

Employee costs

382

327

324

385

359

23

6.4 %

1,033

1,070

(37)

(3.5)%

Professional fees

187

189

197

199

205

(18)

(8.8)%

573

668

(95)

(14.2)%

Marketing and business development

107

91

111

152

139

(32)

(23.0)%

309

397

(88)

(22.2)%

Information processing

125

116

123

122

127

(2)

(1.6)%

364

363

1

0.3 %

Other

266

263

247

221

234

32

13.7 %

776

668

108

16.2 %

Total other expense

1,067

986

1,002

1,079

1,064

3

0.3 %

3,055

3,166

(111)

(3.5)%

Earnings before provision for income taxes

412

59

382

921

1,375

(963)

(70.0)%

853

3,966

(3,113)

(78.5)%

Provision for income taxes

99

11

96

190

319

(220)

(69.0)%

206

950

(744)

(78.3)%

Net earnings

$

313

$

48

$

286

$

731

$

1,056

$

(743)

(70.4)%

$

647

$

3,016

$

(2,369)

(78.5)%

Net earnings available to common stockholders

$

303

$

37

$

275

$

731

$

1,056

$

(753)

(71.3)%

$

615

$

3,016

$

(2,401)

(79.6)%

3

SYNCHRONY FINANCIAL

STATEMENTS OF FINANCIAL POSITION

(unaudited, $ in millions)

Quarter Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Sep 30, 2020 vs. Sep 30, 2019

2020

2020

2020

2019

2019

Assets

Cash and equivalents

$

13,552

$

16,344

$

13,704

$

12,147

$

11,461

$

2,091

18.2 %

Debt securities

8,432

6,623

6,146

5,911

4,584

3,848

83.9 %

Loan receivables:

Unsecuritized loans held for investment

52,613

52,629

54,765

58,398

56,220

(3,607)

(6.4)%

Restricted loans of consolidated securitization entities

25,908

25,684

27,704

28,817

26,987

(1,079)

(4.0)%

Total loan receivables

78,521

78,313

82,469

87,215

83,207

(4,686)

(5.6)%

Less: Allowance for credit losses(1)

(10,146)

(9,802)

(9,175)

(5,602)

(5,607)

(4,539)

81.0 %

Loan receivables, net

68,375

68,511

73,294

81,613

77,600

(9,225)

(11.9)%

Loan receivables held for sale

4

4

5

725

8,182

(8,178)

(100.0)%

Goodwill

1,078

1,078

1,078

1,078

1,078

-

- %

Intangible assets, net

1,091

1,166

1,208

1,265

1,177

(86)

(7.3)%

Other assets

3,126

2,818

2,603

2,087

1,861

1,265

68.0 %

Total assets

$

95,658

$

96,544

$

98,038

$

104,826

$

105,943

$

(10,285)

(9.7)%

Liabilities and Equity

Deposits:

Interest-bearing deposit accounts

$

63,195

$

63,857

$

64,302

$

64,877

$

65,677

$

(2,482)

(3.8)%

Non-interest-bearing deposit accounts

298

291

313

277

295

3

1.0 %

Total deposits

63,493

64,148

64,615

65,154

65,972

(2,479)

(3.8)%

Borrowings:

Borrowings of consolidated securitization entities

7,809

8,109

9,291

10,412

10,912

(3,103)

(28.4)%

Senior unsecured notes

7,962

7,960

7,957

9,454

9,451

(1,489)

(15.8)%

Total borrowings

15,771

16,069

17,248

19,866

20,363

(4,592)

(22.6)%

Accrued expenses and other liabilities

4,295

4,428

4,205

4,718

4,488

(193)

(4.3)%

Total liabilities

83,559

84,645

86,068

89,738

90,823

(7,264)

(8.0)%

Equity:

Preferred stock

734

734

734

734

-

734

NM

Common stock

1

1

1

1

1

-

- %

Additional paid-in capital

9,552

9,532

9,523

9,537

9,520

32

0.3 %

Retained earnings

10,024

9,852

9,960

12,117

11,533

(1,509)

(13.1)%

Accumulated other comprehensive income (loss)

(31)

(37)

(49)

(58)

(44)

13

(29.5)%

Treasury stock

(8,181)

(8,183)

(8,199)

(7,243)

(5,890)

(2,291)

38.9 %

Total equity

12,099

11,899

11,970

15,088

15,120

(3,021)

(20.0)%

Total liabilities and equity

$

95,658

$

96,544

$

98,038

$

104,826

$

105,943

$

(10,285)

(9.7)%

  1. Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses ("CECL") that measures the allowance for credit losses based on management's best estimate of expected credit losses for the life of our loan receivables. Prior periods presented reflect measurement of the allowance based on management's estimate of probable incurred credit losses in accordance with the previous accounting guidance effective for those periods.

4

SYNCHRONY FINANCIAL

AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN (unaudited, $ in millions)

Quarter Ended

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

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

$

13,664

$

4

0.12%

$

15,413

$

3

0.08%

$

12,902

$

42

1.31%

$

16,269

$

68

1.66%

$

10,947

$

59

2.14%

Securities available for sale

7,984

12

0.60%

6,804

19

1.12%

5,954

25

1.69%

4,828

25

2.05%

5,389

32

2.36%

Loan receivables, including held for sale:

Credit cards

74,798

3,752

19.96%

75,942

3,740

19.81%

81,716

4,272

21.03%

81,960

4,409

21.34%

87,156

4,807

21.88%

Consumer installment loans

1,892

46

9.67%

1,546

37

9.63%

1,432

35

9.83%

2,058

48

9.25%

2,022

48

9.42%

Commercial credit products

1,238

22

7.07%

1,150

30

10.49%

1,243

33

10.68%

1,311

34

10.29%

1,329

35

10.45%

Other

77

1

NM

59

1

NM

37

-

- %

47

1

NM

49

-

- %

Total loan receivables, including held for sale

78,005

3,821

19.49%

78,697

3,808

19.46%

84,428

4,340

20.67%

85,376

4,492

20.87%

90,556

4,890

21.42%

Total interest-earning assets

99,653

3,837

15.32%

100,914

3,830

15.26%

103,284

4,407

17.16%

106,473

4,585

17.08%

106,892

4,981

18.49%

Non-interest-earning assets:

Cash and due from banks

1,489

1,486

1,450

1,326

1,374

Allowance for credit losses

(9,823)

(9,221)

(8,708)

(5,593)

(5,773)

Other assets

5,021

4,779

4,696

3,872

3,920

Total non-interest-earning assets

(3,313)

(2,956)

(2,562)

(395)

(479)

Total assets

$

96,340

$

97,958

$

100,722

$

106,078

$

106,413

Liabilities

Interest-bearing liabilities:

Interest-bearing deposit accounts

$

63,569

$

245

1.53%

$

64,298

$

293

1.83%

$

64,366

$

356

2.22%

$

65,380

$

383

2.32%

$

65,615

$

411

2.49%

Borrowings of consolidated securitization entities

8,057

53

2.62%

8,863

59

2.68%

9,986

73

2.94%

10,831

80

2.93%

11,770

88

2.97%

Senior unsecured notes

7,960

82

4.10%

7,958

82

4.14%

8,807

88

4.02%

9,452

93

3.90%

9,347

93

3.95%

Total interest-bearing liabilities

79,586

380

1.90%

81,119

434

2.15%

83,159

517

2.50%

85,663

556

2.58%

86,732

592

2.71%

Non-interest-bearing liabilities

Non-interest-bearing deposit accounts

307

309

299

281

283

Other liabilities

4,308

4,349

4,672

4,906

4,570

Total non-interest-bearing liabilities

4,615

4,658

4,971

5,187

4,853

Total liabilities

84,201

85,777

88,130

90,850

91,585

Equity

Total equity

12,139

12,181

12,592

15,228

14,828

Total liabilities and equity

$

96,340

$

97,958

$

100,722

$

106,078

$

106,413

Net interest income

$

3,457

$

3,396

$

3,890

$

4,029

$

4,389

Interest rate spread(1)

13.42%

13.11%

14.66%

14.50%

15.78%

Net interest margin(2)

13.80%

13.53%

15.15%

15.01%

16.29%

  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.

5

SYNCHRONY FINANCIAL

AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN (unaudited, $ in millions)

Nine Months Ended

Nine Months Ended

Sep 30, 2020

Sep 30, 2019

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

$

13,992

$

49

0.47%

$

10,989

$

190

2.31%

Securities available for sale

6,918

56

1.08%

5,679

102

2.40%

Loan receivables, including held for sale:

Credit cards, including held for sale

77,476

11,764

20.28%

86,471

13,975

21.61%

Consumer installment loans

1,624

118

9.71%

1,931

134

9.28%

Commercial credit products

1,210

85

9.38%

1,304

103

10.56%

Other

58

2

4.61%

46

1

2.91%

Total loan receivables, including held for sale

80,368

11,969

19.89%

89,752

14,213

21.17%

Total interest-earning assets

101,278

12,074

15.92%

106,420

14,505

18.22%

Non-interest-earning assets:

Cash and due from banks

1,475

1,327

Allowance for loan losses

(9,253)

(6,006)

Other assets

4,833

3,801

Total non-interest-earning assets

(2,945)

(878)

Total assets

$

98,333

$

105,542

Liabilities

Interest-bearing liabilities:

Interest-bearing deposit accounts

$

64,075

$

894

1.86%

$

64,546

$

1,183

2.45%

Borrowings of consolidated securitization entities

8,966

185

2.76%

12,315

278

3.02%

Senior unsecured notes

8,241

252

4.08%

9,262

274

3.96%

Total interest-bearing liabilities

81,282

1,331

2.19%

86,123

1,735

2.69%

Non-interest-bearing liabilities

Non-interest-bearing deposit accounts

305

280

Other liabilities

4,443

4,327

Total non-interest-bearing liabilities

4,748

4,607

Total liabilities

86,030

90,730

Equity

Total equity

12,303

14,812

Total liabilities and equity

$

98,333

$

105,542

Net interest income

$

10,743

$

12,770

Interest rate spread(1)

13.73%

15.53%

Net interest margin(2)

14.17%

16.04%

  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.

6

SYNCHRONY FINANCIAL BALANCE SHEET STATISTICS

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

Quarter Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Sep 30, 2020 vs.

2020

2020

2020

2019

2019

Sep 30, 2019

BALANCE SHEET STATISTICS

(3,755)

(24.8)%

Total common equity

$

11,365

$

11,165

$

11,236

$

14,354

$

15,120

$

Total common equity as a % of total assets

11.88%

11.56%

11.46%

13.69%

14.27%

(2.39)%

Tangible assets

$

93,489

$

94,300

$

95,752

$

102,483

$

103,688

$

(10,199)

(9.8)%

Tangible common equity(1)

$

9,196

$

8,921

$

8,950

$

12,011

$

12,865

$

(3,669)

(28.5)%

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

9.84%

9.46%

9.35%

11.72%

12.41%

(2.57)%

Tangible common equity per share(1)

$

15.75

$

15.28

$

15.35

$

19.50

$

19.68

$

(3.93)

(20.0)%

REGULATORY CAPITAL RATIOS(2)(3)

Basel III - CECL Transition

Basel III

Total risk-based capital ratio(4)

18.1%

17.6%

16.5%

16.3%

15.8%

Tier 1 risk-based capital ratio(5)

16.7%

16.3%

15.2%

15.0%

14.5%

Tier 1 leverage ratio(6)

13.3%

12.7%

12.3%

12.6%

12.6%

Common equity Tier 1 capital ratio

15.8%

15.3%

14.3%

14.1%

14.5%

  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 ratios at September 30, 2020 are preliminary and therefore subject to change.
  3. Capital ratios starting March 31, 2020 reflect election to delay for two years an estimate of CECL's effect on regulatory capital in accordance with the interim final rule issued by U.S. banking agencies in March 2020.
  4. Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
  5. Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
  6. 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.

7

SYNCHRONY FINANCIAL

PLATFORM RESULTS

(unaudited, $ in millions)

Quarter Ended

Nine Months Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

3Q'20 vs. 3Q'19

Sep 30,

Sep 30,

YTD'20 vs. YTD'19

RETAIL CARD

2020

2020

2020

2019

2019

2020

2019

Purchase volume(1)(2)

$

27,374

$

24,380

$

24,008

$

30,968

$

29,282

$

(1,908)

(6.5)%

$

75,762

$

83,472

$

(7,710)

(9.2)%

Period-end loan receivables

$

49,595

$

49,967

$

52,390

$

56,387

$

52,697

$

(3,102)

(5.9)%

$

49,595

$

52,697

$

(3,102)

(5.9)%

Average loan receivables, including held for sale

$

49,503

$

50,238

$

53,820

$

54,505

$

60,660

$

(11,157)

(18.4)%

$

51,181

$

60,494

$

(9,313)

(15.4)%

Average active accounts (in thousands)(2)(3)

47,065

46,970

53,018

54,662

58,082

(11,017)

(19.0)%

49,197

58,156

(8,959)

(15.4)%

Interest and fees on loans

$

2,619

$

2,640

$

3,037

$

3,143

$

3,570

$

(951)

(26.6)%

$

8,296

$

10,414

$

(2,118)

(20.3)%

Other income

$

84

$

56

$

59

$

77

$

65

$

19

29.2 %

$

199

$

200

$

(1)

(0.5)%

Retailer share arrangements

$

(877)

$

(752)

$

(904)

$

(988)

$

(998)

$

121

(12.1)%

$

(2,533)

$

(2,774)

$

241

(8.7)%

PAYMENT SOLUTIONS

Purchase volume(1)(2)

$

5,901

$

4,823

$

5,375

$

6,402

$

6,281

$

(380)

(6.0)%

$

16,099

$

17,478

$

(1,379)

(7.9)%

Period-end loan receivables

$

19,550

$

19,119

$

19,973

$

20,528

$

20,478

$

(928)

(4.5)%

$

19,550

$

20,478

$

(928)

(4.5)%

Average loan receivables, including held for sale

$

19,247

$

19,065

$

20,344

$

20,701

$

20,051

$

(804)

(4.0)%

$

19,551

$

19,654

$

(103)

(0.5)%

Average active accounts (in thousands)(2)(3)

11,497

11,900

12,681

12,713

12,384

(887)

(7.2)%

12,031

12,354

(323)

(2.6)%

Interest and fees on loans

$

650

$

632

$

706

$

737

$

721

$

(71)

(9.8)%

$

1,988

$

2,092

$

(104)

(5.0)%

Other income

$

13

$

14

$

13

$

4

$

(1)

$

14

NM

$

40

$

11

$

29

NM

Retailer share arrangements

$

(20)

$

(18)

$

(18)

$

(37)

$

(15)

$

(5)

33.3 %

$

(56)

$

(48)

$

(8)

16.7 %

CARECREDIT

Purchase volume(1)

$

2,738

$

1,952

$

2,659

$

2,842

$

2,832

$

(94)

(3.3)%

$

7,349

$

8,249

$

(900)

(10.9)%

Period-end loan receivables

$

9,376

$

9,227

$

10,106

$

10,300

$

10,032

$

(656)

(6.5)%

$

9,376

$

10,032

$

(656)

(6.5)%

Average loan receivables, including held for sale

$

9,255

$

9,394

$

10,264

$

10,170

$

9,845

$

(590)

(6.0)%

$

9,636

$

9,604

$

32

0.3 %

Average active accounts (in thousands)(3)

5,708

5,966

6,379

6,359

6,229

(521)

(8.4)%

6,018

6,143

(125)

(2.0)%

Interest and fees on loans

$

552

$

536

$

597

$

612

$

599

$

(47)

(7.8)%

$

1,685

$

1,707

$

(22)

(1.3)%

Other income

$

34

$

25

$

25

$

23

$

21

$

13

61.9 %

$

84

$

56

$

28

50.0 %

Retailer share arrangements

$

(2)

$

(3)

$

(4)

$

(4)

$

(3)

$

1

(33.3)%

$

(9)

$

(7)

$

(2)

28.6 %

TOTAL SYF

Purchase volume(1)(2)

$

36,013

$

31,155

$

32,042

$

40,212

$

38,395

$

(2,382)

(6.2)%

$

99,210

$

109,199

$

(9,989)

(9.1)%

Period-end loan receivables

$

78,521

$

78,313

$

82,469

$

87,215

$

83,207

$

(4,686)

(5.6)%

$

78,521

$

83,207

$

(4,686)

(5.6)%

Average loan receivables, including held for sale

$

78,005

$

78,697

$

84,428

$

85,376

$

90,556

$

(12,551)

(13.9)%

$

80,368

$

89,752

$

(9,384)

(10.5)%

Average active accounts (in thousands)(2)(3)

64,270

64,836

72,078

73,734

76,695

(12,425)

(16.2)%

67,246

76,653

(9,407)

(12.3)%

Interest and fees on loans

$

3,821

$

3,808

$

4,340

$

4,492

$

4,890

$

(1,069)

(21.9)%

$

11,969

$

14,213

$

(2,244)

(15.8)%

Other income

$

131

$

95

$

97

$

104

$

85

$

46

54.1 %

$

323

$

267

$

56

21.0 %

Retailer share arrangements

$

(899)

$

(773)

$

(926)

$

(1,029)

$

(1,016)

$

117

(11.5)%

$

(2,598)

$

(2,829)

$

231

(8.2)%

  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.

8

SYNCHRONY FINANCIAL

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

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

Quarter Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

COMMON EQUITY AND REGULATORY CAPITAL MEASURES(2)

2020

2020

2020

2019

2019

GAAP Total equity

$

12,099

$

11,899

$

11,970

$

15,088

$

15,120

Less: Preferred stock

(734)

(734)

(734)

(734)

-

Less: Goodwill

(1,078)

(1,078)

(1,078)

(1,078)

(1,078)

Less: Intangible assets, net

(1,091)

(1,166)

(1,208)

(1,265)

(1,177)

Tangible common equity

$

9,196

$

8,921

$

8,950

$

12,011

$

12,865

Add: CECL transition amount

2,656

2,570

2,417

-

-

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

305

302

304

319

290

Common equity Tier 1

$

12,157

$

11,793

$

11,671

$

12,330

$

13,155

Preferred stock

734

734

734

734

-

Tier 1 capital

$

12,891

$

12,527

$

12,405

$

13,064

$

13,155

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

1,034

1,031

1,082

1,147

1,190

Total Risk-based capital

$

13,925

$

13,558

$

13,487

$

14,211

$

14,345

ASSET MEASURES(2)

Total average assets

$

96,340

$

97,958

$

100,722

$

106,078

$

106,413

Adjustments for:

Add: CECL transition amount

2,656

2,570

2,417

-

-

Disallowed goodwill and other disallowed intangible assets

(1,906)

(1,980)

(2,010)

(2,059)

(1,975)

(net of related deferred tax liabilities) and other

Total assets for leverage purposes

$

97,090

$

98,548

$

101,129

$

104,019

$

104,438

Risk-weighted assets

$

76,990

$

77,048

$

81,639

$

87,302

$

90,772

CECL FULLY PHASED-IN CAPITAL MEASURES

Tier 1 capital

$

12,891

$

12,527

$

12,405

$

13,064

$

13,155

Less: CECL transition adjustment

(2,656)

(2,570)

(2,417)

-

-

Tier 1 capital (CECL fully phased-in)

$

10,235

$

9,957

$

9,988

$

13,064

$

13,155

Add: Allowance for credit losses

10,146

9,802

9,175

5,602

5,607

Tier 1 capital (CECL fully phased-in) + Reserves for credit losses

$

20,381

$

19,759

$

19,163

$

18,666

$

18,762

Risk-weighted assets

$

76,990

$

77,048

$

81,639

$

87,302

$

90,772

Less: CECL transition adjustment

(2,447)

(2,361)

(2,204)

-

-

Risk-weighted assets (CECL fully phased-in)

$

74,543

$

74,687

$

79,435

$

87,302

$

90,772

TANGIBLE COMMON EQUITY PER SHARE

GAAP book value per share

$

19.47

$

19.13

$

19.27

$

23.31

$

23.13

Less: Goodwill

(1.85)

(1.85)

(1.85)

(1.75)

(1.65)

Less: Intangible assets, net

(1.87)

(2.00)

(2.07)

(2.06)

(1.80)

Tangible common equity per share

$

15.75

$

15.28

$

15.35

$

19.50

$

19.68

  1. Regulatory measures at September 30, 2020 are presented on an estimated basis.
  2. Capital ratios starting March 31, 2020 reflect election to delay for two years an estimate of CECL's effect on regulatory capital in accordance with the interim final rule issued by U.S. banking agencies in March 2020

9

SYNCHRONY FINANCIAL

RECONCILIATION OF NON-GAAP MEASURES (Continued)

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

Quarter Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

ALLOWANCE FOR LOAN LOSSES(1)

2020

2020

2020

2019

2019

Allowance for credit losses

$

10,146

$

9,802

$

9,175

N/A

N/A

Less: Impact from CECL(2)

(3,671)

(3,605)

(3,122)

-

-

Allowance for loan losses(1)

$

6,475

$

6,197

$

6,053

$

5,602

$

5,607

ALLOWANCE FOR LOAN LOSSES AS A % OF PERIOD-END LOAN RECEIVABLES

Allowance for credit losses as a % of period-end loan receivables

12.92 %

12.52 %

11.13 %

N/A

N/A

Less: Impact from CECL(2)

(4.67)%

(4.61)%

(3.79)%

-%

-%

Allowance for loan losses as a % of period-end loan receivables

8.25 %

7.91 %

7.34 %

6.42%

6.74%

CORE PURCHASE VOLUME

Purchase Volume

$

36,013

$

31,155

$

32,042

$

40,212

$

38,395

Less: Walmart and Yamaha Purchase volume

-

-

-

(267)

(2,381)

Core Purchase volume

$

36,013

$

31,155

$

32,042

$

39,945

$

36,014

CORE LOAN RECEIVABLES

Loan receivables

$

78,521

$

78,313

$

82,469

$

87,215

$

83,207

Less: Walmart and Yamaha Loan receivables

-

-

-

(3)

(872)

Core Loan receivables

$

78,521

$

78,313

$

82,469

$

87,212

$

82,335

Retail Card Loan receivables

$

49,595

$

49,967

$

52,390

$

56,387

$

52,697

Less: Walmart Loan receivables

-

-

-

-

(112)

Core Loan receivables

$

49,595

$

49,967

$

52,390

$

56,387

$

52,585

Payment Solutions Loan receivables

$

19,550

$

19,119

$

19,973

$

20,528

$

20,478

Less: Yamaha Loan receivables

-

-

-

(3)

(760)

Core Loan receivables

$

19,550

$

19,119

$

19,973

$

20,525

$

19,718

CORE AVERAGE ACTIVE ACCOUNTS (in thousands)

Average active accounts (in thousands)

64,270

64,836

72,078

73,734

76,695

Less: Walmart and Yamaha average Active accounts (in thousands)

-

-

-

(1,777)

(7,001)

Core Average active accounts (in thousands)

64,270

64,836

72,078

71,957

69,694

CORE INTEREST AND FEES ON LOANS

Interest and fees on loans

$

3,821

$

3,808

$

4,340

$

4,492

$

4,890

Less: Walmart and Yamaha Interest and fees on loans

-

-

-

(69)

(531)

Core Interest and fees on loans

$

3,821

$

3,808

$

4,340

$

4,423

$

4,359

  1. Beginning in 1Q'20, allowance for loan losses is calculated based upon accounting standards no longer effective, and as such is a Non-GAAP measure.
  2. Impact from CECL reflects the additional allowance for credit losses recorded in accordance with ASC 2016-13, as compared to the allowance for credit losses required had the prior accounting guidance been applied.

10

Disclaimer

Synchrony Financial Inc. published this content on 20 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2020 11:14:05 UTC


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