x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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51-0483352
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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777 Long Ridge Road
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Stamford, Connecticut
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06902
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.001 per share
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New York Stock Exchange
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Title of class
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None
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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Our Company
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7
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Our Sales Platforms
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8
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Our Customers
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14
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Our Credit Products
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17
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Direct Banking
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19
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Credit Risk Management
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20
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Customer Service
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22
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Production Services
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22
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New Accounting Standards
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62
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(a)
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Incorporated by reference to “Management”, “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Governance Principles,” “Code of Conduct” and “Committees of the Board of the Directors” in our definitive proxy statement for our 2019 Annual Meeting of Stockholders to be held on May 23, 2019, which will be filed within 120 days of the end our fiscal year ended December 31, 2018 (the “2019 Proxy Statement”).
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(b)
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Incorporated by reference to “Compensation Discussion and Analysis,” “2018 Executive Compensation,” “Management Development and Compensation Committee Report” and “Management Development and Compensation Committee Interlocks and Insider Participation” and “CEO Pay Ratio” in the 2019 Proxy Statement.
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(c)
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Incorporated by reference to “Beneficial Ownership” and “Equity Compensation Plan Information” in the 2019 Proxy Statement.
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(d)
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Incorporated by reference to “Related Person Transactions,” “Election of Directors” and “Committees of the Board of Directors” in the 2019 Proxy Statement.
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(e)
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Incorporated by reference to “Independent Auditor” in the 2019 Proxy Statement.
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•
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“we,” “us,” “our” and the “Company” are to SYNCHRONY FINANCIAL and its subsidiaries;
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•
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“Synchrony” are to SYNCHRONY FINANCIAL only;
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•
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the “Bank” are to Synchrony Bank (a subsidiary of Synchrony);
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•
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the “Board of Directors” are to Synchrony’s board of directors;
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•
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“GE” are to General Electric Company and its subsidiaries;
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•
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the “Bank Term Loan” are to the term loan agreement, dated as of July 30, 2014, among Synchrony, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto, as amended;
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•
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the “Tax Act” are to P.L. 115-97, commonly referred to as the Tax Cut and Jobs Act, signed into law on December 22, 2017; and
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•
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“FICO” are to a credit score developed by Fair Isaac & Co., which is widely used as a means of evaluating the likelihood that credit users will pay their obligations.
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(1)
|
Based on interest and fees on loans for the year ended December 31, 2018.
|
|
|
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Promotional Offer
|
|
|
||||||
Credit Product
|
Standard Terms Only
|
|
Deferred Interest
|
|
Other Promotional
|
|
Total
|
||||
Credit cards
|
66.8
|
%
|
|
16.7
|
%
|
|
13.1
|
%
|
|
96.6
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%
|
Commercial credit products
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
2.0
|
|
|
2.0
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
68.2
|
%
|
|
16.7
|
%
|
|
15.1
|
%
|
|
100.0
|
%
|
•
|
payment processing (more than
672 million
paper and electronic payments in
2018
);
|
•
|
embossing and mailing credit cards (more than
59 million
cards in
2018
);
|
•
|
printing and mailing and eService delivery of credit card statements (more than
766 million
paper and electronic statements in
2018
); and
|
•
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other letters mailed or sent electronically (more than
93 million
in
2018
).
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|
Years Ended December 31,
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||||||||||||||||||
($ in millions, except per share data)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Interest income
|
$
|
17,988
|
|
|
$
|
16,407
|
|
|
$
|
14,778
|
|
|
$
|
13,228
|
|
|
$
|
12,242
|
|
Interest expense
|
1,870
|
|
|
1,391
|
|
|
1,248
|
|
|
1,135
|
|
|
922
|
|
|||||
Net interest income
|
16,118
|
|
|
15,016
|
|
|
13,530
|
|
|
12,093
|
|
|
11,320
|
|
|||||
Retailer share arrangements
|
(3,099
|
)
|
|
(2,937
|
)
|
|
(2,902
|
)
|
|
(2,738
|
)
|
|
(2,575
|
)
|
|||||
Net interest income, after retailer share arrangements
|
13,019
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|
|
12,079
|
|
|
10,628
|
|
|
9,355
|
|
|
8,745
|
|
|||||
Provision for loan losses
|
5,545
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|
|
5,296
|
|
|
3,986
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|
|
2,952
|
|
|
2,917
|
|
|||||
Net interest income, after retailer share arrangements and provision for loan losses
|
7,474
|
|
|
6,783
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|
|
6,642
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|
|
6,403
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|
|
5,828
|
|
|||||
Other income
|
265
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|
|
288
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|
|
344
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|
|
392
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|
|
485
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|
|||||
Other expense
|
4,095
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|
|
3,747
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|
|
3,416
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|
|
3,264
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|
|
2,927
|
|
|||||
Earnings before provision for income taxes
|
3,644
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|
|
3,324
|
|
|
3,570
|
|
|
3,531
|
|
|
3,386
|
|
|||||
Provision for income taxes
|
854
|
|
|
1,389
|
|
|
1,319
|
|
|
1,317
|
|
|
1,277
|
|
|||||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
|
$
|
2,214
|
|
|
$
|
2,109
|
|
Weighted average shares outstanding (in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
742.3
|
|
|
795.6
|
|
|
829.2
|
|
|
833.8
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|
|
757.4
|
|
|||||
Diluted
|
746.9
|
|
|
799.7
|
|
|
831.5
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|
|
835.5
|
|
|
757.6
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|
|||||
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.76
|
|
|
$
|
2.43
|
|
|
$
|
2.71
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|
|
$
|
2.66
|
|
|
$
|
2.78
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
2.42
|
|
|
$
|
2.71
|
|
|
$
|
2.65
|
|
|
$
|
2.78
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|
Dividends declared per common share
|
$
|
0.72
|
|
|
$
|
0.56
|
|
|
$
|
0.26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
($ in millions)
|
At December 31,
|
||||||||||||||||||
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
9,396
|
|
|
$
|
11,602
|
|
|
$
|
9,321
|
|
|
$
|
12,325
|
|
|
$
|
11,828
|
|
Debt securities
|
6,062
|
|
|
4,473
|
|
|
5,095
|
|
|
3,127
|
|
|
1,583
|
|
|||||
Loan receivables
|
93,139
|
|
|
81,947
|
|
|
76,337
|
|
|
68,290
|
|
|
61,286
|
|
|||||
Allowance for loan losses
|
(6,427
|
)
|
|
(5,574
|
)
|
|
(4,344
|
)
|
|
(3,497
|
)
|
|
(3,236
|
)
|
|||||
Loan receivables held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332
|
|
|||||
Goodwill
|
1,024
|
|
|
991
|
|
|
949
|
|
|
949
|
|
|
949
|
|
|||||
Intangible assets, net
|
1,137
|
|
|
749
|
|
|
712
|
|
|
701
|
|
|
519
|
|
|||||
Other assets
|
2,461
|
|
|
1,620
|
|
|
2,137
|
|
|
2,095
|
|
|
2,273
|
|
|||||
Total assets
|
$
|
106,792
|
|
|
$
|
95,808
|
|
|
$
|
90,207
|
|
|
$
|
83,990
|
|
|
$
|
75,534
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total deposits
|
$
|
64,019
|
|
|
$
|
56,488
|
|
|
$
|
52,055
|
|
|
$
|
43,367
|
|
|
$
|
34,859
|
|
Total borrowings
|
23,996
|
|
|
20,799
|
|
|
20,147
|
|
|
24,279
|
|
|
27,383
|
|
|||||
Accrued expenses and other liabilities
|
4,099
|
|
|
4,287
|
|
|
3,809
|
|
|
3,740
|
|
|
2,814
|
|
|||||
Total liabilities
|
92,114
|
|
|
81,574
|
|
|
76,011
|
|
|
71,386
|
|
|
65,056
|
|
|||||
Total equity
|
14,678
|
|
|
14,234
|
|
|
14,196
|
|
|
12,604
|
|
|
10,478
|
|
|||||
Total liabilities and equity
|
$
|
106,792
|
|
|
$
|
95,808
|
|
|
$
|
90,207
|
|
|
$
|
83,990
|
|
|
$
|
75,534
|
|
•
|
Net earnings increased
44.2%
to
$2,790 million
for the
year ended
December 31, 2018
, primarily driven by higher net interest income and lower provision for income taxes, partially offset by increases in provision for loan losses and other expense.
|
•
|
Loan receivables increased
13.7%
to
$93,139 million
at
December 31, 2018
compared to
December 31, 2017
, primarily driven by the PayPal Credit acquisition, higher purchase volume and average active account growth.
|
•
|
Net interest income increased
7.3%
to
$16,118 million
for the
year ended
December 31, 2018
, primarily due to the PayPal Credit acquisition and higher average loan receivables, partially offset by increases in interest expense reflecting higher benchmark interest rates.
|
•
|
Retailer share arrangements increased
5.5%
to
$3,099 million
for the
year ended
December 31, 2018
, primarily due to growth of the programs in which we have retailer share arrangements, including the PayPal Credit acquisition, partially offset by the impact from the Toys "R" Us bankruptcy.
|
•
|
Over-30 day loan delinquencies as a percentage of period-end loan receivables increased
9
basis points to
4.76%
at
December 31, 2018
from
4.67%
at
December 31, 2017
, and net charge-off rate increased 26 basis points to
5.63%
for the
year ended
December 31, 2018
.
|
•
|
Provision for loan losses increased by
$249 million
, or
4.7%
, for the
year ended
December 31, 2018
, primarily due to the reserve build for the PayPal Credit portfolio, as well as higher net charge-offs. These increases were partially offset by a lower loan loss reserve build for our existing portfolio. Our allowance coverage ratio (allowance for loan losses as a percentage of end of period loan receivables) increased to
6.90%
at
December 31, 2018
, as compared to
6.80%
at
December 31, 2017
.
|
•
|
Other expense increased by
$348 million
, or
9.3%
, for the year ended
December 31, 2018
, primarily driven by the PayPal Credit acquisition and business growth.
|
•
|
Provision for income taxes decreased by
$535 million
, or
38.5%
, for the year ended
December 31, 2018
. This decrease was primarily due to the reduction in the 2018 U.S. corporate tax rate included in the Tax Act and $160 million of additional tax expense recognized in 2017 primarily related to the remeasurement of our net deferred tax asset.
|
•
|
We continue to invest in our direct banking activities to grow our deposit base. Total deposits increased
13.3%
to
$64.0 billion
at
December 31, 2018
, compared to December 31, 2017, primarily driven by growth in our direct deposits of
15.7%
to
$49.4 billion
.
|
•
|
On May 17, 2018, the Board announced plans to increase our quarterly dividend to $0.21 per share commencing in the third quarter of 2018 and approval of a share repurchase program of up to $2.2 billion through June 30, 2019. During the
year ended
December 31, 2018
, we repurchased
$1.9 billion
of our outstanding common stock, and also declared and paid cash dividends of
$0.72
per share, or
$534 million
.
|
•
|
During the year ended December 31, 2018, we announced our acquisition of Loop Commerce, a provider of digital and in-store gifting services.
|
•
|
We completed our acquisition of the U.S. PayPal Credit financing program, comprising of $7.6 billion of outstanding loan receivables. We also extended our existing co-brand credit card program with PayPal and Synchrony Bank is now PayPal’s exclusive issuing bank for the PayPal Credit consumer financing program in the United States.
|
•
|
In July 2018, we announced that we will not be renewing our Retail Card program agreement with Walmart and on January 23, 2019, we announced our agreement to sell the outstanding loan receivables related to the program. The sale of the portfolio, which is subject to customary closing conditions, is expected to be completed late in the third quarter or early fourth quarter of 2019.
|
•
|
During the year ended
December 31, 2018
, and to date, we extended our Retail Card program agreements with Amazon, Google, JCPenney, Lowe's and Sam's Club and announced our new partnerships with Crate and Barrel, Harbor Freight Tools and with Qurate Retail Group, which included a new program agreement with HSN and multi-year extensions of our existing program agreements with QVC and zulily.
|
•
|
We extended our Payment Solutions program agreements with American Signature Furniture, Ashley HomeStore, Associated Materials, Briggs & Stratton, Generac, Havertys, Mohawk, Nationwide Marketing Group, Robbins Brothers and Sleep Number and announced our new partnerships with Fanatics, Furniture Row, Fred Meyer Jewelers, Mahindra and jtv.
|
•
|
In our CareCredit sales platform, we renewed our agreement with LCA Vision in our network of providers and expanded our network to include American Med Spa Association, the American Veterinary Medical Association, Eargo, The Good Feet Store, the Spa Industry Association and Walgreens.
|
•
|
Net earnings decreased 14.0% to $1,935 million for the
year ended
December 31, 2017
, primarily driven by increases in provision for loan losses and other expense, as well as the impact related to the Tax Act enacted in December 2017, partially offset by higher net interest income. Adjusted net earnings, excluding the additional tax expense related to the Tax Act, was $2,095 million.
|
•
|
Loan receivables increased 7.3% to $81,947 million at
December 31, 2017
compared to December 31, 2016, primarily driven by higher purchase volume and average active account growth.
|
•
|
Net interest income increased 11.0% to $15,016 million for the
year ended
December 31, 2017
, primarily due to higher average loan receivables.
|
•
|
Retailer share arrangements increased 1.2% to $2,937 million for the
year ended
December 31, 2017
, primarily as a result of growth and margin improvement of the programs in which we have retailer share arrangements, largely offset by higher provision for loan losses associated with these programs.
|
•
|
Over-30 day loan delinquencies as a percentage of period-end loan receivables increased 35 basis points to 4.67% at
December 31, 2017
from 4.32% at December 31, 2016, and net charge-off rate increased 80 basis points to 5.37% for the
year ended
December 31, 2017
.
|
•
|
Provision for loan losses increased by $1,310 million, or 32.9%, for the
year ended
December 31, 2017
, primarily due to an increase in net charge-offs and higher loan loss reserve. Our allowance coverage ratio (allowance for loan losses as a percentage of end of period loan receivables) increased to 6.80% at
December 31, 2017
, as compared to 5.69% at December 31, 2016.
|
•
|
Other expense increased by $331 million, or 9.7%, for the year ended
December 31, 2017
, primarily driven by business growth and marketing.
|
•
|
The enactment of the Tax Act in December 2017 resulted in additional tax expense of $160 million primarily due to the remeasurement of our net deferred tax asset and impacted certain financial measures for the year ended
December 31, 2017
as follows:
|
($ in millions)
|
|
|
|
|
|||
Net earnings
|
$
|
(160
|
)
|
|
Return on assets
|
(0.2
|
)%
|
Effective income tax rate
|
4.8
|
%
|
|
Return on equity
|
(1.1
|
)%
|
•
|
We continue to invest in our direct banking activities to grow our deposit base. Total deposits increased 8.5% to $56.5 billion at
December 31, 2017
, compared to December 31, 2016, primarily driven by growth in our direct deposits of 12.7% to $42.7 billion, partially offset by a reduction in our brokered deposits.
|
•
|
On May 18, 2017, the Board announced plans to increase our quarterly dividend to $0.15 per share commencing in the third quarter of 2017 and approval of a share repurchase program of up to $1.64 billion through June 30, 2018. During the
year ended
December 31, 2017
, we repurchased $1,496 million of our outstanding common stock, and also declared and paid cash dividends of $0.56 per share, or $446 million.
|
•
|
During the year ended
December 31, 2017
, we announced our acquisition of GPShopper, a developer of mobile applications that offers retailers and brands a full suite of commerce, engagement and analytical tools.
|
•
|
We extended our Retail Card program agreements with Belk, Evine, Men's Wearhouse and QVC, and launched our new programs with At Home, Cathay Pacific, Nissan and Infiniti and zulily.
|
•
|
We launched our Synchrony Car Care program and our new Synchrony HOME credit card network in our Payment Solutions sales platform and extended our program agreements with BrandsMart U.S.A.; City Furniture; Home Furnishings Association; Husqvarna Viking; MEGA Group USA, subsequently merged with Nationwide Buying Group to form Nationwide Marketing Group; Midas; Nautilus; Sweetwater and Yamaha.
|
•
|
In our CareCredit sales platform, we acquired the Citi Health Card portfolio, renewed Bosley, Mars Petcare, National Veterinary Associates and Sono Bello in our network of providers and launched our new CareCredit Dual Card.
|
At and for the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Financial Position Data (Average):
|
|
|
|
|
|
||||||
Loan receivables, including held for sale
|
$
|
83,304
|
|
|
$
|
75,702
|
|
|
$
|
68,649
|
|
Total assets
|
$
|
99,568
|
|
|
$
|
91,107
|
|
|
$
|
84,400
|
|
Deposits
|
$
|
59,498
|
|
|
$
|
53,400
|
|
|
$
|
47,399
|
|
Borrowings
|
$
|
21,951
|
|
|
$
|
20,151
|
|
|
$
|
20,142
|
|
Total equity
|
$
|
14,386
|
|
|
$
|
14,427
|
|
|
$
|
13,620
|
|
Selected Performance Metrics:
|
|
|
|
|
|
||||||
Purchase volume
(1)
|
$
|
140,657
|
|
|
$
|
131,814
|
|
|
$
|
125,468
|
|
Retail Card
|
$
|
113,066
|
|
|
$
|
106,239
|
|
|
$
|
101,242
|
|
Payment Solutions
|
$
|
17,427
|
|
|
$
|
16,160
|
|
|
$
|
15,641
|
|
CareCredit
|
$
|
10,164
|
|
|
$
|
9,415
|
|
|
$
|
8,585
|
|
Average active accounts (in thousands)
(2)
|
73,847
|
|
|
69,968
|
|
|
66,928
|
|
|||
Net interest margin
(3)
|
15.97
|
%
|
|
16.35
|
%
|
|
16.10
|
%
|
|||
Net charge-offs
|
$
|
4,692
|
|
|
$
|
4,066
|
|
|
$
|
3,139
|
|
Net charge-offs as a % of average loan receivables, including held for sale
|
5.63
|
%
|
|
5.37
|
%
|
|
4.57
|
%
|
|||
Allowance coverage ratio
(4)
|
6.90
|
%
|
|
6.80
|
%
|
|
5.69
|
%
|
|||
Return on assets
(5)
|
2.8
|
%
|
|
2.1
|
%
|
|
2.7
|
%
|
|||
Return on equity
(6)
|
19.4
|
%
|
|
13.4
|
%
|
|
16.5
|
%
|
|||
Equity to assets
(7)
|
14.45
|
%
|
|
15.84
|
%
|
|
16.14
|
%
|
|||
Other expense as a % of average loan receivables, including held for sale
|
4.92
|
%
|
|
4.95
|
%
|
|
4.98
|
%
|
|||
Efficiency ratio
(8)
|
30.8
|
%
|
|
30.3
|
%
|
|
31.1
|
%
|
|||
Effective income tax rate
|
23.4
|
%
|
|
41.8
|
%
|
|
36.9
|
%
|
|||
Selected Period End Data:
|
|
|
|
|
|
||||||
Loan receivables
|
$
|
93,139
|
|
|
$
|
81,947
|
|
|
$
|
76,337
|
|
Allowance for loan losses
|
$
|
6,427
|
|
|
$
|
5,574
|
|
|
$
|
4,344
|
|
30+ days past due as a % of period-end loan receivables
(9)
|
4.76
|
%
|
|
4.67
|
%
|
|
4.32
|
%
|
|||
90+ days past due as a % of period-end loan receivables
(9)
|
2.29
|
%
|
|
2.28
|
%
|
|
2.03
|
%
|
|||
Total active accounts (in thousands)
(2)
|
80,339
|
|
|
74,541
|
|
|
71,890
|
|
(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. Purchase volume includes activity related to our portfolios classified as held for sale.
|
(2)
|
Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
|
(3)
|
Net interest margin represents net interest income divided by average interest-earning assets.
|
(4)
|
Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
|
(5)
|
Return on assets represents net earnings as a percentage of average total assets.
|
(6)
|
Return on equity represents net earnings as a percentage of average total equity.
|
(7)
|
Equity to assets represents average equity as a percentage of average total assets.
|
(8)
|
Efficiency ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.
|
(9)
|
Based on customer statement-end balances extrapolated to the respective period-end date.
|
|
2018
|
|
2017
|
2016
|
||||||||||||||||||||||||||||
Years ended December 31 ($ in millions)
|
Average
Balance
|
|
Interest
Income /
Expense
|
|
Average
Yield /
Rate
(1)
|
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Average
Yield /
Rate
(1)
|
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Average
Yield /
Rate
(1)
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-earning cash and equivalents
(2)
|
$
|
11,059
|
|
|
$
|
207
|
|
|
1.87
|
%
|
|
$
|
11,707
|
|
|
$
|
129
|
|
|
1.10
|
%
|
|
$
|
12,152
|
|
|
$
|
63
|
|
|
0.52
|
%
|
Securities available for sale
|
6,566
|
|
|
137
|
|
|
2.09
|
%
|
|
4,449
|
|
|
59
|
|
|
1.33
|
%
|
|
3,220
|
|
|
33
|
|
|
1.02
|
%
|
||||||
Loan receivables
(3)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Credit cards, including held for sale
|
80,219
|
|
|
17,342
|
|
|
21.62
|
%
|
|
72,795
|
|
|
15,941
|
|
|
21.90
|
%
|
|
65,947
|
|
|
14,424
|
|
|
21.87
|
%
|
||||||
Consumer installment loans
|
1,698
|
|
|
156
|
|
|
9.19
|
%
|
|
1,491
|
|
|
137
|
|
|
9.19
|
%
|
|
1,274
|
|
|
117
|
|
|
9.18
|
%
|
||||||
Commercial credit products
|
1,333
|
|
|
144
|
|
|
10.80
|
%
|
|
1,366
|
|
|
139
|
|
|
10.18
|
%
|
|
1,372
|
|
|
139
|
|
|
10.13
|
%
|
||||||
Other
|
54
|
|
|
2
|
|
|
3.70
|
%
|
|
50
|
|
|
2
|
|
|
4.00
|
%
|
|
56
|
|
|
2
|
|
|
3.57
|
%
|
||||||
Total loan receivables
|
83,304
|
|
|
17,644
|
|
|
21.18
|
%
|
|
75,702
|
|
|
16,219
|
|
|
21.42
|
%
|
|
68,649
|
|
|
14,682
|
|
|
21.39
|
%
|
||||||
Total interest-earning assets
|
100,929
|
|
|
17,988
|
|
|
17.82
|
%
|
|
91,858
|
|
|
16,407
|
|
|
17.86
|
%
|
|
84,021
|
|
|
14,778
|
|
|
17.59
|
%
|
||||||
Non-interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash and due from banks
|
1,224
|
|
|
|
|
|
|
887
|
|
|
|
|
|
|
965
|
|
|
|
|
|
||||||||||||
Allowance for loan losses
|
(5,900
|
)
|
|
|
|
|
|
(4,942
|
)
|
|
|
|
|
|
(3,872
|
)
|
|
|
|
|
||||||||||||
Other assets
|
3,315
|
|
|
|
|
|
|
3,304
|
|
|
|
|
|
|
3,286
|
|
|
|
|
|
||||||||||||
Total non-interest-earning assets
|
(1,361
|
)
|
|
|
|
|
|
(751
|
)
|
|
|
|
|
|
379
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
99,568
|
|
|
|
|
|
|
$
|
91,107
|
|
|
|
|
|
|
$
|
84,400
|
|
|
|
|
|
|||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing deposit accounts
|
$
|
59,216
|
|
|
$
|
1,186
|
|
|
2.00
|
%
|
|
$
|
53,173
|
|
|
$
|
848
|
|
|
1.59
|
%
|
|
$
|
47,194
|
|
|
$
|
727
|
|
|
1.54
|
%
|
Borrowings of consolidated securitization entities
|
12,694
|
|
|
344
|
|
|
2.71
|
%
|
|
12,179
|
|
|
263
|
|
|
2.16
|
%
|
|
12,428
|
|
|
244
|
|
|
1.96
|
%
|
||||||
Bank Term Loan
(4)
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
556
|
|
|
31
|
|
|
5.58
|
%
|
||||||
Senior unsecured notes
|
9,257
|
|
|
340
|
|
|
3.67
|
%
|
|
7,972
|
|
|
280
|
|
|
3.51
|
%
|
|
7,158
|
|
|
246
|
|
|
3.44
|
%
|
||||||
Total interest-bearing liabilities
|
81,167
|
|
|
1,870
|
|
|
2.30
|
%
|
|
73,324
|
|
|
1,391
|
|
|
1.90
|
%
|
|
67,336
|
|
|
1,248
|
|
|
1.85
|
%
|
||||||
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-interest-bearing deposit accounts
|
282
|
|
|
|
|
|
|
227
|
|
|
|
|
|
|
205
|
|
|
|
|
|
||||||||||||
Other liabilities
|
3,733
|
|
|
|
|
|
|
3,129
|
|
|
|
|
|
|
3,239
|
|
|
|
|
|
||||||||||||
Total non-interest-bearing liabilities
|
4,015
|
|
|
|
|
|
|
3,356
|
|
|
|
|
|
|
3,444
|
|
|
|
|
|
||||||||||||
Total liabilities
|
85,182
|
|
|
|
|
|
|
76,680
|
|
|
|
|
|
|
70,780
|
|
|
|
|
|
||||||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total equity
|
14,386
|
|
|
|
|
|
|
14,427
|
|
|
|
|
|
|
13,620
|
|
|
|
|
|
||||||||||||
Total liabilities and equity
|
$
|
99,568
|
|
|
|
|
|
|
$
|
91,107
|
|
|
|
|
|
|
$
|
84,400
|
|
|
|
|
|
|||||||||
Interest rate spread
(5)
|
|
|
|
|
15.52
|
%
|
|
|
|
|
|
15.96
|
%
|
|
|
|
|
|
15.74
|
%
|
||||||||||||
Net interest income
|
|
|
$
|
16,118
|
|
|
|
|
|
|
$
|
15,016
|
|
|
|
|
|
|
$
|
13,530
|
|
|
|
|||||||||
Net interest margin
(6)
|
|
|
|
|
15.97
|
%
|
|
|
|
|
|
16.35
|
%
|
|
|
|
|
|
16.10
|
%
|
(1)
|
Average yields/rates are based on total interest income/expense over average balances.
|
(2)
|
Includes average restricted cash balances of
$512 million
,
$642 million
and
$436 million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(3)
|
Interest income on loan receivables includes fees on loans of
$2,723 million
,
$2,609 million
and
$2,458 million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(4)
|
The effective interest rates for the Bank Term Loan for the year ended December 31, 2016 was 2.48%. The Bank Term Loan's effective rate excludes the impact of charges incurred in connection with prepayments of the loan.
|
(5)
|
Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
|
(6)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||||||
|
Increase (decrease) due to change in:
|
|
Increase (decrease) due to change in:
|
||||||||||||||||||||
($ in millions)
|
Average Volume
|
|
Average Yield / Rate
|
|
Net Change
|
|
Average Volume
|
|
Average Yield / Rate
|
|
Net Change
|
||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-earning cash and equivalents
|
$
|
(7
|
)
|
|
$
|
85
|
|
|
$
|
78
|
|
|
$
|
(2
|
)
|
|
$
|
68
|
|
|
$
|
66
|
|
Securities available for sale
|
35
|
|
|
43
|
|
|
78
|
|
|
15
|
|
|
11
|
|
|
26
|
|
||||||
Loan receivables:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Credit cards, including held for sale
|
1,607
|
|
|
(206
|
)
|
|
1,401
|
|
|
1,497
|
|
|
20
|
|
|
1,517
|
|
||||||
Consumer installment loans
|
19
|
|
|
—
|
|
|
19
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||||
Commercial credit products
|
(3
|
)
|
|
8
|
|
|
5
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total loan receivables
|
1,623
|
|
|
(198
|
)
|
|
1,425
|
|
|
1,516
|
|
|
21
|
|
|
1,537
|
|
||||||
Change in interest income from total interest-earning assets
|
$
|
1,651
|
|
|
$
|
(70
|
)
|
|
$
|
1,581
|
|
|
$
|
1,529
|
|
|
$
|
100
|
|
|
$
|
1,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposit accounts
|
$
|
103
|
|
|
$
|
235
|
|
|
$
|
338
|
|
|
$
|
96
|
|
|
$
|
25
|
|
|
$
|
121
|
|
Borrowings of consolidated securitization entities
|
11
|
|
|
70
|
|
|
81
|
|
|
(5
|
)
|
|
24
|
|
|
19
|
|
||||||
Bank term loan
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
(31
|
)
|
||||||
Senior unsecured notes
|
47
|
|
|
13
|
|
|
60
|
|
|
29
|
|
|
5
|
|
|
34
|
|
||||||
Change in interest expense from total interest-bearing liabilities
|
161
|
|
|
318
|
|
|
479
|
|
|
89
|
|
|
54
|
|
|
143
|
|
||||||
Total change in net interest income
|
$
|
1,490
|
|
|
$
|
(388
|
)
|
|
$
|
1,102
|
|
|
$
|
1,440
|
|
|
$
|
46
|
|
|
$
|
1,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Growth in loan receivables and interest income
. We believe continuing stability in the U.S. economy and employment rates will contribute to an increase in consumer credit spending. In addition, we expect the use of credit cards to continue to increase versus other forms of payment such as cash and checks. We anticipate that these trends, combined with our marketing and partner engagement strategies, will contribute to growth in our loan receivables. In the near-to-medium term, we expect our total interest income to continue to grow, driven by the expected growth in average loan receivables. Our historical growth rates in loan receivables and interest income have benefited from new partner acquisitions, and therefore, if we do not continue to acquire new partners, replace the programs that are not extended or otherwise grow our business, our growth rates in loan receivables and interest income in the future will be lower than in recent periods. On January 23, 2019, we announced our agreement to sell the outstanding loan receivables related to our Walmart program agreement. The sale of the portfolio, which is subject to customary closing conditions, is expected to be completed late in the third quarter or early fourth quarter of 2019. Beginning in the first quarter of 2019, we will present these loan receivables as loan receivables held for sale on our Consolidated Statement of Financial Position. The reclassification of these loan receivables will result in a reduction in the growth of our loan receivables, as compared to the prior year. In addition, we do not expect to make any significant changes to customer pricing or merchant discount pricing in the near term other than those associated with changes in the prime rate and LIBOR, and therefore we expect yields generated from interest and fees on interest-earning assets will remain relatively stable.
|
•
|
Increases in retailer share arrangement payments under our program agreements.
We believe that the payments we make to our partners under our retailer share arrangements, in the aggregate, are likely to increase in absolute terms compared to the year ended December 31, 2018, primarily as a result of both the overall growth and performance of our programs. See
Management’s Discussion and Analysis—Retailer Share Arrangements
for additional information on these agreements.
|
•
|
Asset quality.
In 2018, the trend of increases in our net charge-off rates and allowance coverage continued, but at a more modest rate as compared to what we experienced in 2017 and our delinquency rate remained largely in line with 2017 rates, as U.S. unemployment rates continued to stabilize and we experienced the favorable effects from certain refinements to our underwriting standards which we began to implement in the second half of 2016 and continued in 2017. Our actual net charge-off rates increased by 26 basis points to
5.63%
for the year ended
December 31, 2018
compared to
5.37%
for the year ended
December 31, 2017
. In connection with the sale of the Walmart portfolio, we expect decreases to both our Allowance for Loan Losses and Provision for Loan Losses in our Consolidated Statement of Financial Position and Consolidated Statement of Earnings, respectively, beginning in the first quarter of 2019 through to the date of sale. In addition, the loan receivables held for sale will not include certain loan receivables we estimate will charge-off prior to the expected closing date of the sale of the Walmart portfolio
.
The effects of this, and the exclusion of the loan receivables held for sale from the denominator for certain credit quality metrics, is expected to contribute to a temporary increase to our delinquency metrics primarily in the first half of 2019. The assessment of our credit profile includes the evaluation of portfolio mix, account maturation, as well as broader consumer trends, such as payment behavior and overall indebtedness. We expect our net charge-off rate for the year ended December 31, 2019 to increase slightly, primarily due to the PayPal Credit portfolio, partially offset by the effects of the Walmart portfolio sale. We expect credit trends in the near term for our remaining portfolio to be relatively stable.
|
•
|
Extended duration of our Retail Card program agreements
. Our Retail Card program agreements typically have contract terms ranging from approximately five to ten years, and the average length of our relationship with our Retail Card partners is
20
years. We expect to continue to benefit from these programs on a long-term basis.
|
•
|
Growth in interchange revenues and loyalty program costs.
We believe that as a result of the overall growth in Dual Card and general purpose co-branded credit card transactions occurring outside of our Retail Card partners’ locations, interchange revenues will continue to increase in excess of the growth of our Retail Card loan receivables. The expected growth in these transactions is driven, in part, by both existing and new loyalty programs with our Retail Card partners. In addition, we continue to offer and add new loyalty programs for our private label credit cards, for which we typically do not receive interchange fees. The growth in these existing and new loyalty programs will result in an increase in costs associated with these programs. Overall, we expect our loyalty program costs to continue to be largely offset by our interchange revenues. These changes have been contemplated in our program agreements with our Retail Card partners and are a component of the calculation of our payments due under our retailer share arrangements.
|
•
|
Capital and liquidity levels.
We continue to expect to maintain sufficient capital and liquidity resources to support our daily operations, our business growth, and our credit ratings as well as regulatory and compliance requirements in a cost effective and prudent manner through expected and unexpected market environments. During the year ended
December 31, 2018
, we declared and paid dividends of
$534 million
and repurchased
$1.9 billion
of our outstanding common stock. We plan to continue to deploy capital through both dividends and share repurchases subject to regulatory approval, as well as to support business growth. We continue to expect to maintain capital ratios well in excess of minimum regulatory requirements. At
December 31, 2018
, the Company had a Basel III common equity Tier 1 ratio of
14.0%
. We expect that our liquidity portfolio will continue to be sufficient to support all of our business objectives and to meet all regulatory requirements for the foreseeable future.
|
•
|
purchase volumes, which are influenced by a number of factors including macroeconomic conditions and consumer confidence generally, our partners’ sales and our ability to increase our share of those sales;
|
•
|
payment rates, reflecting the extent to which customers maintain a credit balance;
|
•
|
charge-offs, reflecting the receivables that are deemed not to be collectible;
|
•
|
the size of our liquidity portfolio; and
|
•
|
portfolio acquisitions when we enter into new partner relationships.
|
•
|
pricing (contractual rates of interest, movement in prime rates, late fees and merchant discount rates);
|
•
|
changes to our mix of loans (e.g., the number of loans bearing promotional rates as compared to standard rates);
|
•
|
frequency of late fees incurred when account holders fail to make their minimum payment by the required due date;
|
•
|
credit performance and accrual status of our loans; and
|
•
|
yield earned on our liquidity portfolio.
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Loan receivables, including held for sale
|
$
|
83,304
|
|
|
$
|
75,702
|
|
|
$
|
68,649
|
|
Liquidity portfolio and other
|
17,625
|
|
|
16,156
|
|
|
15,372
|
|
|||
Total average interest-earning assets
|
$
|
100,929
|
|
|
$
|
91,858
|
|
|
$
|
84,021
|
|
•
|
the amounts outstanding of our deposits and borrowings;
|
•
|
the interest rate environment and its effect on interest rates paid on our funding sources; and
|
•
|
the changing mix in our funding sources.
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest-bearing deposit accounts
|
$
|
59,216
|
|
|
$
|
53,173
|
|
|
$
|
47,194
|
|
Borrowings of consolidated securitization entities
|
12,694
|
|
|
12,179
|
|
|
12,428
|
|
|||
Third-party debt
|
9,257
|
|
|
7,972
|
|
|
7,714
|
|
|||
Total average interest-bearing liabilities
|
$
|
81,167
|
|
|
$
|
73,324
|
|
|
$
|
67,336
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Interchange revenue
|
$
|
710
|
|
|
$
|
653
|
|
|
$
|
602
|
|
Debt cancellation fees
|
267
|
|
|
272
|
|
|
262
|
|
|||
Loyalty programs
|
(751
|
)
|
|
(704
|
)
|
|
(547
|
)
|
|||
Other
|
39
|
|
|
67
|
|
|
27
|
|
|||
Total other income
|
$
|
265
|
|
|
$
|
288
|
|
|
$
|
344
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Employee costs
|
$
|
1,427
|
|
|
$
|
1,304
|
|
|
$
|
1,198
|
|
Professional fees
|
806
|
|
|
629
|
|
|
638
|
|
|||
Marketing and business development
|
528
|
|
|
498
|
|
|
423
|
|
|||
Information processing
|
426
|
|
|
373
|
|
|
338
|
|
|||
Other
|
908
|
|
|
943
|
|
|
819
|
|
|||
Total other expense
|
$
|
4,095
|
|
|
$
|
3,747
|
|
|
$
|
3,416
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Effective tax rate
|
23.4
|
%
|
|
41.8
|
%
|
|
36.9
|
%
|
|||
Provision for income taxes
|
$
|
854
|
|
|
$
|
1,389
|
|
|
$
|
1,319
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Purchase volume
|
$
|
113,066
|
|
|
$
|
106,239
|
|
|
$
|
101,242
|
|
Period-end loan receivables
|
$
|
65,224
|
|
|
$
|
56,230
|
|
|
$
|
52,701
|
|
Average loan receivables, including held for sale
|
$
|
57,155
|
|
|
$
|
51,570
|
|
|
$
|
46,963
|
|
Average active accounts (in thousands)
|
58,223
|
|
|
55,142
|
|
|
53,344
|
|
|||
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
13,137
|
|
|
$
|
12,023
|
|
|
$
|
10,898
|
|
Retailer share arrangements
|
$
|
(3,044
|
)
|
|
$
|
(2,904
|
)
|
|
$
|
(2,870
|
)
|
Other income
|
$
|
219
|
|
|
$
|
212
|
|
|
$
|
288
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Purchase volume
|
$
|
17,427
|
|
|
$
|
16,160
|
|
|
$
|
15,641
|
|
Period-end loan receivables
|
$
|
18,418
|
|
|
$
|
16,857
|
|
|
$
|
15,567
|
|
Average loan receivables
|
$
|
17,093
|
|
|
$
|
15,752
|
|
|
$
|
14,110
|
|
Average active accounts (in thousands)
|
9,692
|
|
|
9,192
|
|
|
8,410
|
|
|||
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
2,356
|
|
|
$
|
2,181
|
|
|
$
|
1,952
|
|
Retailer share arrangements
|
$
|
(43
|
)
|
|
$
|
(24
|
)
|
|
$
|
(26
|
)
|
Other income
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
13
|
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Purchase volume
|
$
|
10,164
|
|
|
$
|
9,415
|
|
|
$
|
8,585
|
|
Period-end loan receivables
|
$
|
9,497
|
|
|
$
|
8,860
|
|
|
$
|
8,069
|
|
Average loan receivables
|
$
|
9,056
|
|
|
$
|
8,380
|
|
|
$
|
7,576
|
|
Average active accounts (in thousands)
|
5,932
|
|
|
5,634
|
|
|
5,174
|
|
|||
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
2,151
|
|
|
$
|
2,015
|
|
|
$
|
1,832
|
|
Retailer share arrangements
|
$
|
(12
|
)
|
|
$
|
(9
|
)
|
|
$
|
(6
|
)
|
Other income
|
$
|
34
|
|
|
$
|
62
|
|
|
$
|
43
|
|
At December 31 ($ in millions)
|
2018
|
|
(%)
|
|
2017
|
|
(%)
|
|
2016
|
|
(%)
|
|
2015
|
|
(%)
|
|
2014
|
|
(%)
|
|||||||||||||||
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Credit cards
|
$
|
89,994
|
|
|
96.6
|
%
|
|
$
|
79,026
|
|
|
96.5
|
%
|
|
$
|
73,580
|
|
|
96.4
|
%
|
|
$
|
65,773
|
|
|
96.3
|
%
|
|
$
|
58,880
|
|
|
96.1
|
%
|
Consumer installment loans
|
1,845
|
|
|
2.0
|
|
|
1,578
|
|
|
1.9
|
|
|
1,384
|
|
|
1.8
|
|
|
1,154
|
|
|
1.7
|
|
|
1,063
|
|
|
1.7
|
|
|||||
Commercial credit products
|
1,260
|
|
|
1.4
|
|
|
1,303
|
|
|
1.6
|
|
|
1,333
|
|
|
1.7
|
|
|
1,323
|
|
|
1.9
|
|
|
1,320
|
|
|
2.2
|
|
|||||
Other
|
40
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
0.1
|
|
|
40
|
|
|
0.1
|
|
|
23
|
|
|
—
|
|
|||||
Total loans
|
$
|
93,139
|
|
|
100.0
|
%
|
|
$
|
81,947
|
|
|
100.0
|
%
|
|
$
|
76,337
|
|
|
100.0
|
%
|
|
$
|
68,290
|
|
|
100.0
|
%
|
|
$
|
61,286
|
|
|
100.0
|
%
|
($ in millions)
|
Within 1
Year
(1)
|
|
1-5 Years
(2)
|
|
After
5 Years
|
|
Total
|
||||||||
Loans
|
|
|
|
|
|
|
|
||||||||
Credit cards
|
$
|
89,198
|
|
|
$
|
796
|
|
|
$
|
—
|
|
|
$
|
89,994
|
|
Consumer installment loans
(3)
|
548
|
|
|
1,151
|
|
|
146
|
|
|
1,845
|
|
||||
Commercial credit products
|
1,257
|
|
|
3
|
|
|
—
|
|
|
1,260
|
|
||||
Other
|
5
|
|
|
16
|
|
|
19
|
|
|
40
|
|
||||
Total loans
|
$
|
91,008
|
|
|
$
|
1,966
|
|
|
$
|
165
|
|
|
$
|
93,139
|
|
Loans due after one year at fixed interest rates
|
N/A
|
|
|
$
|
1,966
|
|
|
$
|
165
|
|
|
$
|
2,131
|
|
|
Loans due after one year at variable interest rates
|
N/A
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total loans due after one year
|
N/A
|
|
|
$
|
1,966
|
|
|
$
|
165
|
|
|
$
|
2,131
|
|
(1)
|
Credit card loans have minimum payment requirements but no stated maturity and therefore are included in the due within one year category. However, many of our credit card holders will revolve their balances, which may extend their repayment period beyond one year for balances at
December 31, 2018
.
|
(2)
|
Credit card and commercial loans due after one year relate to Troubled Debt Restructuring ("TDR") assets.
|
(3)
|
Reflects scheduled repayments up to the final contractual maturity of our installment loans.
|
($ in millions)
|
|
Loan Receivables
Outstanding
|
|
% of Total Loan
Receivables
Outstanding
|
|||
State
|
|
||||||
California
|
|
$
|
9,745
|
|
|
10.5
|
%
|
Texas
|
|
$
|
9,282
|
|
|
10.0
|
%
|
Florida
|
|
$
|
7,737
|
|
|
8.3
|
%
|
New York
|
|
$
|
5,306
|
|
|
5.7
|
%
|
Pennsylvania
|
|
$
|
3,893
|
|
|
4.2
|
%
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Non-accrual loan receivables
(1)
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Loans contractually 90 days past-due and still accruing interest
|
2,116
|
|
|
1,864
|
|
|
1,542
|
|
|
1,270
|
|
|
1,160
|
|
|||||
Earning TDRs
(2)
|
1,085
|
|
|
940
|
|
|
802
|
|
|
712
|
|
|
670
|
|
|||||
Non-accrual, past-due and restructured loan receivables
(1)
|
$
|
3,206
|
|
|
$
|
2,809
|
|
|
$
|
2,348
|
|
|
$
|
1,985
|
|
|
$
|
1,832
|
|
(1)
|
Excludes purchase credit impaired (“PCI”) loan receivables. See Note 4.
Loan Receivables and Allowance for Loan Losses
to our consolidated financial statements for additional information on our PCI loan receivables.
|
(2)
|
At December 31, 2018
,
2017
, 2016, 2015 and 2014, balances exclude
$122 million
,
$103 million
,
$66 million
, $51 million and $54 million, respectively, of TDRs which are included in loans contractually 90 days past-due and still accruing interest balance. See Note 4.
Loan Receivables and Allowance for Loan Losses
to our consolidated financial statements for additional information on the financial effects of TDRs for the years ended
December 31, 2018
and
2017
, respectively.
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
Gross amount of interest income that would have been recorded in accordance with the original contractual terms
|
$
|
267
|
|
|
$
|
222
|
|
Interest income recognized
|
49
|
|
|
48
|
|
||
Total interest income foregone
|
$
|
218
|
|
|
$
|
174
|
|
Years ended December 31
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||
Ratio of net charge-offs to average loan receivables, including held for sale
|
5.63
|
%
|
|
5.37
|
%
|
|
4.57
|
%
|
|
4.36
|
%
|
|
4.51
|
%
|
|
Balance at January 1, 2018
|
|
Provision charged to operations
|
|
Gross charge-offs
(1)
|
|
Recoveries
(1)
|
|
Balance at December 31, 2018
|
||||||||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
5,448
|
|
|
$
|
(5,435
|
)
|
|
$
|
831
|
|
|
$
|
6,327
|
|
Consumer installment loans
|
40
|
|
|
45
|
|
|
(56
|
)
|
|
15
|
|
|
44
|
|
|||||
Commercial credit products
|
50
|
|
|
52
|
|
|
(53
|
)
|
|
6
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
5,545
|
|
|
$
|
(5,544
|
)
|
|
$
|
852
|
|
|
$
|
6,427
|
|
|
Balance at January 1, 2017
|
|
Provision charged to operations
|
|
Gross charge-offs
(1)
|
|
Recoveries
(1)
|
|
Balance at December 31, 2017
|
||||||||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
4,254
|
|
|
$
|
5,200
|
|
|
$
|
(4,883
|
)
|
|
$
|
912
|
|
|
$
|
5,483
|
|
Consumer installment loans
|
37
|
|
|
41
|
|
|
(52
|
)
|
|
14
|
|
|
40
|
|
|||||
Commercial credit products
|
52
|
|
|
55
|
|
|
(63
|
)
|
|
6
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
4,344
|
|
|
$
|
5,296
|
|
|
$
|
(4,998
|
)
|
|
$
|
932
|
|
|
$
|
5,574
|
|
|
Balance at January 1, 2016
|
|
Provision charged to operations
|
|
Gross charge-offs
(1)
|
|
Recoveries
(1)
|
|
Balance at December 31, 2016
|
||||||||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
3,420
|
|
|
$
|
3,898
|
|
|
$
|
(3,873
|
)
|
|
$
|
809
|
|
|
$
|
4,254
|
|
Consumer installment loans
|
26
|
|
|
43
|
|
|
(45
|
)
|
|
13
|
|
|
37
|
|
|||||
Commercial credit products
|
50
|
|
|
45
|
|
|
(51
|
)
|
|
8
|
|
|
52
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
3,497
|
|
|
$
|
3,986
|
|
|
$
|
(3,969
|
)
|
|
$
|
830
|
|
|
$
|
4,344
|
|
|
Balance at
January 1,
2015
|
|
Provision
charged to
operations
|
|
Gross charge-offs
(1)
|
|
Recoveries
(1)
|
|
Balance at December 31, 2015
|
||||||||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
3,169
|
|
|
$
|
2,880
|
|
|
$
|
(3,289
|
)
|
|
$
|
660
|
|
|
$
|
3,420
|
|
Consumer installment loans
|
22
|
|
|
25
|
|
|
(35
|
)
|
|
14
|
|
|
26
|
|
|||||
Commercial credit products
|
45
|
|
|
46
|
|
|
(47
|
)
|
|
6
|
|
|
50
|
|
|||||
Other
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
3,236
|
|
|
$
|
2,952
|
|
|
$
|
(3,371
|
)
|
|
$
|
680
|
|
|
$
|
3,497
|
|
|
Balance at
January 1,
2014
|
|
Provision
charged to
operations
|
|
Gross charge-offs
(1)
|
|
Recoveries
(1)
|
|
Balance at December 31, 2014
|
||||||||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
2,827
|
|
|
$
|
2,858
|
|
|
$
|
(3,111
|
)
|
|
$
|
595
|
|
|
$
|
3,169
|
|
Consumer installment loans
|
19
|
|
|
20
|
|
|
(30
|
)
|
|
13
|
|
|
22
|
|
|||||
Commercial credit products
|
46
|
|
|
39
|
|
|
(48
|
)
|
|
8
|
|
|
45
|
|
|||||
Total
|
$
|
2,892
|
|
|
$
|
2,917
|
|
|
$
|
(3,189
|
)
|
|
$
|
616
|
|
|
$
|
3,236
|
|
(1)
|
Net charge-offs (gross charge-offs less recoveries) in certain portfolios may exceed the beginning allowance for loan losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect losses that are incurred subsequent to the beginning of the period due to information becoming available during the period, which may identify further deterioration of existing loan receivables.
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
Years ended December 31 ($ in millions)
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance |
|
%
|
|
Average
Rate |
||||||||||||
Deposits
(1)
|
$
|
59,216
|
|
|
73.0
|
%
|
|
2.0
|
%
|
|
$
|
53,173
|
|
|
72.5
|
%
|
|
1.6
|
%
|
|
$
|
47,194
|
|
|
70.1
|
%
|
|
1.5
|
%
|
Securitized financings
|
12,694
|
|
|
15.6
|
|
|
2.7
|
|
|
12,179
|
|
|
16.6
|
|
|
2.2
|
|
|
12,428
|
|
|
18.5
|
|
|
2.0
|
|
|||
Senior unsecured notes
|
9,257
|
|
|
11.4
|
|
|
3.7
|
|
|
7,972
|
|
|
10.9
|
|
|
3.5
|
|
|
7,158
|
|
|
10.6
|
|
|
3.4
|
|
|||
Bank term loan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
556
|
|
|
0.8
|
|
|
5.6
|
|
|||
Total
|
$
|
81,167
|
|
|
100.0
|
%
|
|
2.3
|
%
|
|
$
|
73,324
|
|
|
100.0
|
%
|
|
1.9
|
%
|
|
$
|
67,336
|
|
|
100.0
|
%
|
|
1.9
|
%
|
(1)
|
Excludes
$282 million
,
$227 million
and
$205 million
average balance of non-interest-bearing deposits for the years ended
December 31, 2018
,
2017
and
2016
, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the years ended
December 31, 2018
,
2017
and
2016
.
|
Years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|
Average
Balance |
|
% of
Total |
|
Average
Rate |
|||||||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Certificates of deposit (including IRA certificates of deposit)
|
$
|
28,152
|
|
|
47.5
|
%
|
|
1.9
|
%
|
|
$
|
22,657
|
|
|
42.6
|
%
|
|
1.6
|
%
|
|
$
|
19,736
|
|
|
41.8
|
%
|
|
1.5
|
%
|
Savings accounts (including money market accounts)
|
17,989
|
|
|
30.4
|
%
|
|
1.7
|
|
|
17,604
|
|
|
33.1
|
|
|
1.1
|
|
|
14,244
|
|
|
30.2
|
|
|
1.0
|
|
|||
Brokered deposits
|
13,075
|
|
|
22.1
|
%
|
|
2.5
|
|
|
12,912
|
|
|
24.3
|
|
|
2.2
|
|
|
13,214
|
|
|
28.0
|
|
|
2.1
|
|
|||
Total interest-bearing deposits
|
$
|
59,216
|
|
|
100.0
|
%
|
|
2.0
|
%
|
|
$
|
53,173
|
|
|
100.0
|
%
|
|
1.6
|
%
|
|
$
|
47,194
|
|
|
100.0
|
%
|
|
1.5
|
%
|
($ in millions)
|
3 Months or
Less
|
|
Over
3 Months
but within
6 Months
|
|
Over
6 Months
but within
12 Months
|
|
Over
12 Months
|
|
Total
|
||||||||||
U.S. deposits (less than $100,000)
(1)
|
$
|
11,251
|
|
|
$
|
2,858
|
|
|
$
|
4,412
|
|
|
$
|
10,391
|
|
|
$
|
28,912
|
|
U.S. deposits ($100,000 or more)
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit (including IRA certificates of deposit)
|
4,534
|
|
|
2,526
|
|
|
6,687
|
|
|
6,497
|
|
|
20,244
|
|
|||||
Savings accounts (including money market accounts)
|
13,085
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,085
|
|
|||||
Brokered deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sweep accounts
|
1,778
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,778
|
|
|||||
Total
|
$
|
30,648
|
|
|
$
|
5,384
|
|
|
$
|
11,099
|
|
|
$
|
16,888
|
|
|
$
|
64,019
|
|
(1)
|
Includes brokered certificates of deposit for which underlying individual deposit balances are assumed to be less than $100,000.
|
($ in millions)
|
Less Than
One Year
|
|
One Year
Through
Three
Years
|
|
Four
Years
Through
Five
Years
|
|
After Five
Years
|
|
Total
|
||||||||||
Scheduled maturities of long-term borrowings—owed to securitization investors:
|
|
|
|
|
|
|
|
|
|
||||||||||
SYNCT
(1)
|
$
|
2,752
|
|
|
$
|
3,933
|
|
|
$
|
1,591
|
|
|
$
|
—
|
|
|
$
|
8,276
|
|
SFT
|
1,133
|
|
|
2,542
|
|
|
—
|
|
|
—
|
|
|
3,675
|
|
|||||
SYNIT
(1)
|
—
|
|
|
2,500
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
|||||
Total long-term borrowings—owed to securitization investors
|
$
|
3,885
|
|
|
$
|
8,975
|
|
|
$
|
1,591
|
|
|
$
|
—
|
|
|
$
|
14,451
|
|
(1)
|
Excludes subordinated classes of SYNCT notes and SYNIT notes that we own.
|
|
Note Principal Balance
($ in millions)
|
|
# of Series
Outstanding
|
|
Three-Month Rolling
Average Excess
Spread
(1)
|
||||
SYNCT
(2)
|
$
|
9,256
|
|
|
14
|
|
|
~14% to 15.4%
|
|
SFT
|
$
|
3,675
|
|
|
10
|
|
|
10.6
|
%
|
SYNIT
(2)
|
$
|
2,515
|
|
|
5
|
|
|
~17.1% to 17.3%
|
|
(1)
|
Represents the excess spread (generally calculated as interest income collected from the applicable pool of loan receivables less applicable net charge-offs, interest expense and servicing costs, divided by the aggregate principal amount of loan receivables in the applicable pool) for each trust (or, in the case of SYNCT and SYNIT, represents a range of the excess spreads relating to the particular series issued within the trust, omitting any series that have not been outstanding for at least three monthly periods), in each case calculated in accordance with the applicable trust or series documentation, for the three securitization monthly periods ended
December 31, 2018
.
|
(2)
|
Includes subordinated classes of SYNCT and SYNIT notes that we own.
|
($ in millions)
|
|
Maturity
|
|
Principal Amount Outstanding
(1)
|
||
Fixed rate senior unsecured notes:
|
|
|
|
|
||
Synchrony Financial
|
|
|
|
|
||
2.600% senior unsecured notes
|
|
January, 2019
|
|
$
|
1,000
|
|
3.000% senior unsecured notes
|
|
August, 2019
|
|
1,100
|
|
|
2.700% senior unsecured notes
|
|
February, 2020
|
|
750
|
|
|
3.750% senior unsecured notes
|
|
August, 2021
|
|
750
|
|
|
4.250% senior unsecured notes
|
|
August, 2024
|
|
1,250
|
|
|
4.500% senior unsecured notes
|
|
July, 2025
|
|
1,000
|
|
|
3.700% senior unsecured notes
|
|
August, 2026
|
|
500
|
|
|
3.950% senior unsecured notes
|
|
December, 2027
|
|
1,000
|
|
|
Synchrony Bank
|
|
|
|
|
||
3.650% senior unsecured notes
|
|
May, 2021
|
|
750
|
|
|
3.000% senior unsecured notes
|
|
June, 2022
|
|
750
|
|
|
Total fixed rate senior unsecured notes
|
|
|
|
$
|
8,850
|
|
|
|
|
|
|
||
Floating rate senior unsecured notes:
|
|
|
|
|
||
Synchrony Financial
|
|
|
|
|
||
Three-month LIBOR plus 1.23% senior unsecured notes
|
|
February, 2020
|
|
$
|
250
|
|
Synchrony Bank
|
|
|
|
|
||
Three-month LIBOR plus 0.625% senior unsecured notes
|
|
March, 2020
|
|
500
|
|
|
Total floating rate senior unsecured notes
|
|
|
|
$
|
750
|
|
(1)
|
The amounts shown exclude unamortized debt discounts, premiums and issuance costs.
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
At December 31 ($ in millions)
|
Amortized
Cost
|
|
Estimated Fair Value
|
|
Amortized
Cost
|
|
Estimated Fair Value
|
|
Amortized
Cost |
|
Estimated Fair Value
|
||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and federal agency
|
$
|
2,889
|
|
|
$
|
2,888
|
|
|
$
|
2,419
|
|
|
$
|
2,416
|
|
|
$
|
3,676
|
|
|
$
|
3,676
|
|
State and municipal
|
50
|
|
|
48
|
|
|
44
|
|
|
44
|
|
|
47
|
|
|
46
|
|
||||||
Residential mortgage-backed
|
1,180
|
|
|
1,139
|
|
|
1,258
|
|
|
1,231
|
|
|
1,400
|
|
|
1,373
|
|
||||||
Asset-backed
|
1,988
|
|
|
1,985
|
|
|
781
|
|
|
780
|
|
|
—
|
|
|
—
|
|
||||||
U.S. corporate debt
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
6,109
|
|
|
$
|
6,062
|
|
|
$
|
4,504
|
|
|
$
|
4,473
|
|
|
$
|
5,123
|
|
|
$
|
5,095
|
|
($ in millions)
|
Due in 1 Year
or Less
|
|
Due After 1
through
5 Years
|
|
Due After 5
through
10 Years
|
|
Due After
10 years
|
|
Total
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and federal agency
|
$
|
2,888
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,888
|
|
State and municipal
|
—
|
|
|
—
|
|
|
5
|
|
|
43
|
|
|
48
|
|
|||||
Residential mortgage-backed
|
1
|
|
|
—
|
|
|
158
|
|
|
980
|
|
|
1,139
|
|
|||||
Asset-backed
|
1,613
|
|
|
372
|
|
|
—
|
|
|
—
|
|
|
1,985
|
|
|||||
U.S. corporate debt
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Total
(1)
|
$
|
4,504
|
|
|
$
|
372
|
|
|
$
|
163
|
|
|
$
|
1,023
|
|
|
$
|
6,062
|
|
Weighted average yield
(2)
|
2.4
|
%
|
|
2.7
|
%
|
|
3.3
|
%
|
|
2.9
|
%
|
|
2.5
|
%
|
(1)
|
Amounts stated represent estimated fair value.
|
(2)
|
Weighted average yield is calculated based on the amortized cost of each security. In calculating yield, no adjustment has been made with respect to any tax-exempt obligations.
|
Cash Dividends Declared
|
|
Month of Payment
|
|
Amount per Common Share
|
|
Amount
|
||||
($ in millions, except per share data)
|
|
|
|
|
|
|
||||
Three months ended March 31, 2018
|
|
February 2018
|
|
$
|
0.15
|
|
|
$
|
114
|
|
Three months ended June 30, 2018
|
|
May 2018
|
|
0.15
|
|
|
113
|
|
||
Three months ended September 30, 2018
|
|
August 2018
|
|
0.21
|
|
|
156
|
|
||
Three months ended December 31, 2018
|
|
November 2018
|
|
0.21
|
|
|
151
|
|
||
Total dividends declared
|
|
|
|
$
|
0.72
|
|
|
$
|
534
|
|
|
|
|
|
|
|
|
Shares Repurchased Under Publicly Announced Programs
|
|
Total Number of Shares Purchased
|
|
Dollar Value of Shares Purchased
|
|||
|
|
|
|
|
|||
($ and shares in millions)
|
|
|
|
|
|||
Three months ended March 31, 2018
|
|
10.4
|
|
|
$
|
410
|
|
Three months ended June 30, 2018
|
|
14.0
|
|
|
491
|
|
|
Three months ended September 30, 2018
|
|
30.3
|
|
|
966
|
|
|
Three months ended December 31, 2018
|
|
—
|
|
|
—
|
|
|
Total
|
|
54.7
|
|
|
$
|
1,867
|
|
|
|
|
|
|
|
Basel III
|
||||||||||||
|
At December 31, 2018
(1)
|
|
At December 31, 2017
(2)
|
||||||||||
($ in millions)
|
Amount
|
|
Ratio
(3)
|
|
Amount
|
|
Ratio
|
||||||
Total risk-based capital
|
$
|
14,013
|
|
|
15.3
|
%
|
|
$
|
13,954
|
|
|
17.3
|
%
|
Tier 1 risk-based capital
|
$
|
12,801
|
|
|
14.0
|
%
|
|
$
|
12,890
|
|
|
16.0
|
%
|
Tier 1 leverage
|
$
|
12,801
|
|
|
12.3
|
%
|
|
$
|
12,890
|
|
|
13.8
|
%
|
Common equity Tier 1 capital
|
$
|
12,801
|
|
|
14.0
|
%
|
|
$
|
12,890
|
|
|
16.0
|
%
|
Risk-weighted assets
|
$
|
91,742
|
|
|
|
|
$
|
80,669
|
|
|
|
(1)
|
Amounts presented do not reflect certain modifications to the regulatory capital rules proposed by the federal banking agencies in September 2017, which among other things, may increase the risk weighting of certain deferred tax assets from 100% to 250% if the proposed rule becomes effective.
|
(2)
|
Amounts at
December 31, 2017
are presented in accordance with applicable transition guidelines.
|
(3)
|
Tier 1 leverage ratio represents total tier 1 capital as a percentage of total average assets, after certain adjustments. All other ratios presented above represent the applicable capital measure as a percentage of risk-weighted assets.
|
|
At December 31, 2018
|
|
At December 31, 2017
|
|
Minimum to be Well-
Capitalized under Prompt Corrective Action Provisions |
|||||||||||||||
($ in millions)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
Total risk-based capital
|
$
|
12,258
|
|
|
15.4
|
%
|
|
$
|
10,842
|
|
|
16.2
|
%
|
|
$
|
7,934
|
|
|
10.0
|
%
|
Tier 1 risk-based capital
|
$
|
11,207
|
|
|
14.1
|
%
|
|
$
|
9,958
|
|
|
14.9
|
%
|
|
$
|
6,348
|
|
|
8.0
|
%
|
Tier 1 leverage
|
$
|
11,207
|
|
|
12.4
|
%
|
|
$
|
9,958
|
|
|
12.9
|
%
|
|
$
|
4,515
|
|
|
5.0
|
%
|
Common equity Tier 1 capital
|
$
|
11,207
|
|
|
14.1
|
%
|
|
$
|
9,958
|
|
|
14.9
|
%
|
|
$
|
5,157
|
|
|
6.5
|
%
|
Year ended December 31 ($ in millions)
|
2017
|
||
GAAP net earnings
|
$
|
1,935
|
|
Adjustment for the Tax Act
|
160
|
|
|
|
|
||
Adjusted net earnings
|
$
|
2,095
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
($ in millions)
|
Total
|
|
2019
|
|
2020 - 2021
|
|
2022 - 2023
|
|
2024 and Thereafter
|
||||||||||
Deposits
(1)(2)
|
$
|
64,068
|
|
|
$
|
47,133
|
|
|
$
|
11,943
|
|
|
$
|
3,639
|
|
|
$
|
1,353
|
|
Securitized financings
(3)
|
14,911
|
|
|
4,070
|
|
|
9,196
|
|
|
1,645
|
|
|
—
|
|
|||||
Senior unsecured notes
(4)
|
11,045
|
|
|
2,400
|
|
|
3,465
|
|
|
1,073
|
|
|
4,107
|
|
|||||
Operating leases
|
268
|
|
|
42
|
|
|
81
|
|
|
73
|
|
|
72
|
|
|||||
Purchase obligations
(5)
|
607
|
|
|
262
|
|
|
240
|
|
|
71
|
|
|
34
|
|
|||||
Total contractual obligations
(6)(7)
|
$
|
90,899
|
|
|
$
|
53,907
|
|
|
$
|
24,925
|
|
|
$
|
6,501
|
|
|
$
|
5,566
|
|
(1)
|
Savings accounts (including money market accounts), brokered network deposits sweeps, and non-interest-bearing deposits are assumed for purposes of this table to be due in 2019 because they may be withdrawn at any time without payment of any penalty.
|
(2)
|
Deposits do not include interest payments because the amount and timing of these payments cannot be reasonably estimated as certain deposits have early withdrawal rights and also the option to roll interest payments into the balance. The average interest rate on our interest-bearing deposits for the
year ended December 31, 2018
was
2.0%
. See Note 7.
Deposits
to our consolidated financial statements.
|
(3)
|
These amounts shown exclude interest on floating rate securitized borrowings. The weighted average interest rate at
December 31, 2018
was
2.78%
. See Note 8.
Borrowings
to our consolidated financial statements.
|
(4)
|
The amounts shown exclude interest for the floating rate senior unsecured debt as payments of interest on these senior unsecured notes are based on floating rates.
|
(5)
|
Purchase obligations at
December 31, 2018
reflect the minimum purchase obligation under legally binding contracts with contract terms that are both fixed and determinable. These amounts exclude obligations for goods and services that already have been incurred and are reflected on our Consolidated Statement of Financial Position.
|
(6)
|
The table above does not include estimated payments of liabilities associated with uncertain income tax positions. The inherent complexity and uncertainty around the timing and amount of future outflows for uncertain tax positions do not permit a reasonably reliable estimate of payments, if any, to be made in connection with these liabilities. At
December 31, 2018
, we had unrecognized tax benefits of
$251 million
, excluding related interest and penalties. See Note 14.
Income Taxes
to the consolidated financial statements.
|
(7)
|
The table above excludes our reimbursement obligations to GE for certain retiree benefits obligations of
$176 million
at December 31, 2018. See Note 11.
Employee Benefit Plans
to the consolidated financial statements for additional information.
|
•
|
under the Basel III standardized approach, a common equity Tier 1 capital to risk-weighted assets ratio of 7% (the minimum of 4.5% plus a mandatory conservation buffer of
2.5%
), a Tier 1 capital to risk-weighted assets ratio of 8.5% (the minimum of 6% plus a mandatory conservation buffer of
2.5%
), and a total capital to risk-weighted assets ratio of 10.5% (a minimum of 8% plus a mandatory conservation buffer of
2.5%
); and
|
•
|
a leverage ratio of Tier 1 capital to total consolidated assets of
4%
.
|
•
|
under the Basel III standardized approach, a common equity Tier 1 capital to risk-weighted assets ratio of 7% (the minimum of 4.5% plus a mandatory conservation buffer of 2.5%), a Tier 1 capital to risk-weighted assets ratio of 8.5% (the minimum of 6% plus a mandatory conservation buffer of 2.5%), and a total capital to risk-weighted assets ratio of 10.5% (a minimum of 8% plus a mandatory conservation buffer of 2.5%); and
|
•
|
a leverage ratio of Tier 1 capital to total consolidated assets of 4%.
|
For the years ended December 31 ($ in millions, except per share data)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Interest and fees on loans (Note 4)
|
$
|
17,644
|
|
|
$
|
16,219
|
|
|
$
|
14,682
|
|
Interest on investment securities
|
344
|
|
|
188
|
|
|
96
|
|
|||
Total interest income
|
17,988
|
|
|
16,407
|
|
|
14,778
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Interest on deposits
|
1,186
|
|
|
848
|
|
|
727
|
|
|||
Interest on borrowings of consolidated securitization entities
|
344
|
|
|
263
|
|
|
244
|
|
|||
Interest on third-party debt
|
340
|
|
|
280
|
|
|
277
|
|
|||
Total interest expense
|
1,870
|
|
|
1,391
|
|
|
1,248
|
|
|||
Net interest income
|
16,118
|
|
|
15,016
|
|
|
13,530
|
|
|||
Retailer share arrangements
|
(3,099
|
)
|
|
(2,937
|
)
|
|
(2,902
|
)
|
|||
Net interest income, after retailer share arrangements
|
13,019
|
|
|
12,079
|
|
|
10,628
|
|
|||
Provision for loan losses (Note 4)
|
5,545
|
|
|
5,296
|
|
|
3,986
|
|
|||
Net interest income, after retailer share arrangements and provision for loan losses
|
7,474
|
|
|
6,783
|
|
|
6,642
|
|
|||
Other income:
|
|
|
|
|
|
||||||
Interchange revenue
|
710
|
|
|
653
|
|
|
602
|
|
|||
Debt cancellation fees
|
267
|
|
|
272
|
|
|
262
|
|
|||
Loyalty programs
|
(751
|
)
|
|
(704
|
)
|
|
(547
|
)
|
|||
Other
|
39
|
|
|
67
|
|
|
27
|
|
|||
Total other income
|
265
|
|
|
288
|
|
|
344
|
|
|||
Other expense:
|
|
|
|
|
|
||||||
Employee costs
|
1,427
|
|
|
1,304
|
|
|
1,198
|
|
|||
Professional fees
|
806
|
|
|
629
|
|
|
638
|
|
|||
Marketing and business development
|
528
|
|
|
498
|
|
|
423
|
|
|||
Information processing
|
426
|
|
|
373
|
|
|
338
|
|
|||
Other
|
908
|
|
|
943
|
|
|
819
|
|
|||
Total other expense
|
4,095
|
|
|
3,747
|
|
|
3,416
|
|
|||
Earnings before provision for income taxes
|
3,644
|
|
|
3,324
|
|
|
3,570
|
|
|||
Provision for income taxes (Note 14)
|
854
|
|
|
1,389
|
|
|
1,319
|
|
|||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
|
|
|
|
|
|
||||||
Earnings per share
|
|
|
|
|
|
||||||
Basic
|
$
|
3.76
|
|
|
$
|
2.43
|
|
|
$
|
2.71
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
2.42
|
|
|
$
|
2.71
|
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Debt securities
|
(13
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|||
Currency translation adjustments
|
(8
|
)
|
|
3
|
|
|
(1
|
)
|
|||
Employee benefit plans
|
23
|
|
|
(13
|
)
|
|
(3
|
)
|
|||
Other comprehensive income (loss)
|
2
|
|
|
(11
|
)
|
|
(12
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
2,792
|
|
|
$
|
1,924
|
|
|
$
|
2,239
|
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash and equivalents
|
$
|
9,396
|
|
|
$
|
11,602
|
|
Debt securities (Note 3)
|
6,062
|
|
|
4,473
|
|
||
Loan receivables: (Notes 4 and 5)
|
|
|
|
||||
Unsecuritized loans held for investment
|
64,969
|
|
|
55,526
|
|
||
Restricted loans of consolidated securitization entities
|
28,170
|
|
|
26,421
|
|
||
Total loan receivables
|
93,139
|
|
|
81,947
|
|
||
Less: Allowance for loan losses
|
(6,427
|
)
|
|
(5,574
|
)
|
||
Loan receivables, net
|
86,712
|
|
|
76,373
|
|
||
Goodwill (Note 6)
|
1,024
|
|
|
991
|
|
||
Intangible assets, net (Note 6)
|
1,137
|
|
|
749
|
|
||
Other assets
|
2,461
|
|
|
1,620
|
|
||
Total assets
|
$
|
106,792
|
|
|
$
|
95,808
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Deposits: (Note 7)
|
|
|
|
||||
Interest-bearing deposit accounts
|
$
|
63,738
|
|
|
$
|
56,276
|
|
Non-interest-bearing deposit accounts
|
281
|
|
|
212
|
|
||
Total deposits
|
64,019
|
|
|
56,488
|
|
||
Borrowings: (Notes 5 and 8)
|
|
|
|
||||
Borrowings of consolidated securitization entities
|
14,439
|
|
|
12,497
|
|
||
Senior unsecured notes
|
9,557
|
|
|
8,302
|
|
||
Total borrowings
|
23,996
|
|
|
20,799
|
|
||
Accrued expenses and other liabilities
|
4,099
|
|
|
4,287
|
|
||
Total liabilities
|
$
|
92,114
|
|
|
$
|
81,574
|
|
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common Stock, par share value $0.001 per share; 4,000,000,000 shares authorized; 833,984,684 shares issued at both December 31, 2018 and 2017; 718,758,598 and 770,531,433 shares outstanding at December 31, 2018 and 2017, respectively
|
$
|
1
|
|
|
$
|
1
|
|
Additional paid-in capital
|
9,482
|
|
|
9,445
|
|
||
Retained earnings
|
8,986
|
|
|
6,809
|
|
||
Accumulated other comprehensive income (loss):
|
|
|
|
||||
Investment securities
|
(32
|
)
|
|
(19
|
)
|
||
Currency translation adjustments
|
(25
|
)
|
|
(17
|
)
|
||
Employee benefit plans
|
(5
|
)
|
|
(28
|
)
|
||
Treasury Stock, at cost; 115,226,086 and 63,453,251 shares at December 31, 2018 and 2017, respectively
|
(3,729
|
)
|
|
(1,957
|
)
|
||
Total equity
|
14,678
|
|
|
14,234
|
|
||
Total liabilities and equity
|
$
|
106,792
|
|
|
$
|
95,808
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
($ in millions, shares in thousands)
|
Shares Issued
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total Equity
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2016
|
833,828
|
|
|
$
|
1
|
|
|
$
|
9,351
|
|
|
$
|
3,293
|
|
|
$
|
(41
|
)
|
|
$
|
—
|
|
|
$
|
12,604
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
2,251
|
|
|
—
|
|
|
—
|
|
|
2,251
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(476
|
)
|
|
(476
|
)
|
||||||
Stock-based compensation
|
157
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
43
|
|
||||||
Dividends - common stock ($0.26 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
||||||
Balance at December 31, 2016
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,393
|
|
|
$
|
5,330
|
|
|
$
|
(53
|
)
|
|
$
|
(475
|
)
|
|
$
|
14,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2017
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,393
|
|
|
$
|
5,330
|
|
|
$
|
(53
|
)
|
|
$
|
(475
|
)
|
|
$
|
14,196
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
1,935
|
|
|
—
|
|
|
—
|
|
|
1,935
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,497
|
)
|
|
(1,497
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
52
|
|
|
(10
|
)
|
|
—
|
|
|
15
|
|
|
57
|
|
||||||
Dividends - common stock ($0.56 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(446
|
)
|
|
—
|
|
|
—
|
|
|
(446
|
)
|
||||||
Balance at December 31, 2017
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,445
|
|
|
$
|
6,809
|
|
|
$
|
(64
|
)
|
|
$
|
(1,957
|
)
|
|
$
|
14,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,445
|
|
|
$
|
6,809
|
|
|
$
|
(64
|
)
|
|
$
|
(1,957
|
)
|
|
$
|
14,234
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
2,790
|
|
|
—
|
|
|
—
|
|
|
2,790
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,868
|
)
|
|
(1,868
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
37
|
|
|
(82
|
)
|
|
—
|
|
|
96
|
|
|
51
|
|
||||||
Dividends - common stock ($0.72 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(534
|
)
|
|
—
|
|
|
—
|
|
|
(534
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
|
|
3
|
|
|||||||
Balance at December 31, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,482
|
|
|
$
|
8,986
|
|
|
$
|
(62
|
)
|
|
$
|
(3,729
|
)
|
|
$
|
14,678
|
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows - operating activities
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
Adjustments to reconcile net earnings to cash provided from operating activities
|
|
|
|
|
|
||||||
Provision for loan losses
|
5,545
|
|
|
5,296
|
|
|
3,986
|
|
|||
Deferred income taxes
|
(53
|
)
|
|
385
|
|
|
389
|
|
|||
Depreciation and amortization
|
302
|
|
|
254
|
|
|
219
|
|
|||
(Increase) decrease in interest and fees receivable
|
(280
|
)
|
|
(298
|
)
|
|
(429
|
)
|
|||
(Increase) decrease in other assets
|
81
|
|
|
144
|
|
|
(398
|
)
|
|||
Increase (decrease) in accrued expenses and other liabilities
|
356
|
|
|
210
|
|
|
(32
|
)
|
|||
All other operating activities
|
601
|
|
|
649
|
|
|
525
|
|
|||
Cash provided from (used for) operating activities
|
9,342
|
|
|
8,575
|
|
|
6,511
|
|
|||
|
|
|
|
|
|
||||||
Cash flows - investing activities
|
|
|
|
|
|
||||||
Maturity and sales of debt securities
|
5,668
|
|
|
3,762
|
|
|
1,380
|
|
|||
Purchases of debt securities
|
(7,271
|
)
|
|
(3,159
|
)
|
|
(3,380
|
)
|
|||
Acquisition of loan receivables
|
(8,183
|
)
|
|
(433
|
)
|
|
(54
|
)
|
|||
Net (increase) decrease in loan receivables
|
(8,448
|
)
|
|
(9,238
|
)
|
|
(11,092
|
)
|
|||
All other investing activities
|
(802
|
)
|
|
(474
|
)
|
|
(218
|
)
|
|||
Cash provided from (used for) investing activities
|
(19,036
|
)
|
|
(9,542
|
)
|
|
(13,364
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows - financing activities
|
|
|
|
|
|
||||||
Borrowings of consolidated securitization entities
|
|
|
|
|
|
||||||
Proceeds from issuance of securitized debt
|
5,093
|
|
|
4,311
|
|
|
3,791
|
|
|||
Maturities and repayment of securitized debt
|
(3,157
|
)
|
|
(4,210
|
)
|
|
(4,999
|
)
|
|||
Third-party debt
|
|
|
|
|
|
||||||
Proceeds from issuance of third-party debt
|
1,244
|
|
|
1,732
|
|
|
1,193
|
|
|||
Maturities and repayment of third-party debt
|
—
|
|
|
(1,200
|
)
|
|
(4,151
|
)
|
|||
Net increase (decrease) in deposits
|
7,509
|
|
|
4,431
|
|
|
8,666
|
|
|||
Purchases of treasury stock
|
(1,868
|
)
|
|
(1,497
|
)
|
|
(476
|
)
|
|||
Dividends paid on common stock
|
(534
|
)
|
|
(446
|
)
|
|
(214
|
)
|
|||
All other financing activities
|
(34
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||
Cash provided from (used for) financing activities
|
8,253
|
|
|
3,116
|
|
|
3,805
|
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash and equivalents, including restricted amounts
|
(1,441
|
)
|
|
2,149
|
|
|
(3,048
|
)
|
|||
Cash and equivalents, including restricted amounts, at beginning of period
|
11,817
|
|
|
9,668
|
|
|
12,716
|
|
|||
Cash and equivalents at end of year:
|
|
|
|
|
|
|
|
|
|||
Cash and equivalents
|
9,396
|
|
|
11,602
|
|
|
9,321
|
|
|||
Restricted cash and equivalents included in other assets
|
980
|
|
|
215
|
|
|
$
|
347
|
|
||
Total cash and equivalents, including restricted amounts, at end of year
|
$
|
10,376
|
|
|
$
|
11,817
|
|
|
$
|
9,668
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
(1,815
|
)
|
|
$
|
(1,350
|
)
|
|
$
|
(1,160
|
)
|
Cash paid during the year for income taxes
|
$
|
(772
|
)
|
|
$
|
(754
|
)
|
|
$
|
(1,771
|
)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
||||||||||||
|
Amortized
|
|
|
unrealized
|
|
|
unrealized
|
|
|
Estimated
|
|
|
Amortized
|
|
|
unrealized
|
|
|
unrealized
|
|
|
Estimated
|
|
||||||||
($ in millions)
|
cost
|
|
|
gains
|
|
|
losses
|
|
|
fair value
|
|
|
cost
|
|
|
gains
|
|
|
losses
|
|
|
fair value
|
|
||||||||
U.S. government and federal agency
|
$
|
2,889
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2,888
|
|
|
$
|
2,419
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
2,416
|
|
State and municipal
|
50
|
|
|
—
|
|
|
(2
|
)
|
|
48
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
||||||||
Residential mortgage-backed
(a)
|
1,180
|
|
|
1
|
|
|
(42
|
)
|
|
1,139
|
|
|
1,258
|
|
|
1
|
|
|
(28
|
)
|
|
1,231
|
|
||||||||
Asset-backed
(b)
|
1,988
|
|
|
—
|
|
|
(3
|
)
|
|
1,985
|
|
|
781
|
|
|
—
|
|
|
(1
|
)
|
|
780
|
|
||||||||
U.S. corporate debt
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||||
Total
|
$
|
6,109
|
|
|
$
|
1
|
|
|
$
|
(48
|
)
|
|
$
|
6,062
|
|
|
$
|
4,504
|
|
|
$
|
1
|
|
|
$
|
(32
|
)
|
|
$
|
4,473
|
|
(a)
|
All of our residential mortgage-backed securities have been issued by government-sponsored entities and are collateralized by U.S. mortgages. At
December 31, 2018
and
2017
,
$313
million and
$344
million of residential mortgage-backed securities, respectively, are pledged by the Bank as collateral to the Federal Reserve to secure Federal Reserve Discount Window advances.
|
(b)
|
All of our asset-backed securities are collateralized by credit card loans.
|
|
In loss position for
|
||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
||||||||||||
|
|
|
Gross
|
|
|
|
|
Gross
|
|
||||||
|
Estimated
|
|
|
unrealized
|
|
|
Estimated
|
|
|
unrealized
|
|
||||
($ in millions)
|
fair value
|
|
|
losses
|
|
|
fair value
|
|
|
losses
|
|
||||
|
|
|
|
|
|
|
|
||||||||
At December 31, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. government and federal agency
|
$
|
2,838
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal
|
23
|
|
|
(1
|
)
|
|
8
|
|
|
(1
|
)
|
||||
Residential mortgage-backed
|
102
|
|
|
—
|
|
|
933
|
|
|
(42
|
)
|
||||
Asset-backed
|
1,665
|
|
|
(2
|
)
|
|
114
|
|
|
(1
|
)
|
||||
Total
|
$
|
4,628
|
|
|
$
|
(4
|
)
|
|
$
|
1,055
|
|
|
$
|
(44
|
)
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. government and federal agency
|
$
|
2,416
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
||||
Residential mortgage-backed
|
142
|
|
|
(1
|
)
|
|
1,026
|
|
|
(27
|
)
|
||||
Asset-backed
|
626
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
3,184
|
|
|
$
|
(5
|
)
|
|
$
|
1,055
|
|
|
$
|
(27
|
)
|
|
Amortized
|
|
|
Estimated
|
|
||
At December 31, 2018 ($ in millions)
|
cost
|
|
|
fair value
|
|
||
|
|
|
|
||||
Due
|
|
|
|
||||
Within one year
|
$
|
4,506
|
|
|
$
|
4,504
|
|
After one year through five years
|
$
|
373
|
|
|
$
|
372
|
|
After five years through ten years
|
$
|
164
|
|
|
$
|
163
|
|
After ten years
|
$
|
1,066
|
|
|
$
|
1,023
|
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Credit cards
|
$
|
89,994
|
|
|
$
|
79,026
|
|
Consumer installment loans
|
1,845
|
|
|
1,578
|
|
||
Commercial credit products
|
1,260
|
|
|
1,303
|
|
||
Other
|
40
|
|
|
40
|
|
||
Total loan receivables, before allowance for losses
(a)(b)
|
$
|
93,139
|
|
|
$
|
81,947
|
|
(a)
|
Total loan receivables include
$28.2 billion
and
$26.4 billion
of restricted loans of consolidated securitization entities at
December 31, 2018
and
2017
, respectively. See Note 5.
Variable Interest Entities
for further information on these restricted loans.
|
(b)
|
At
December 31, 2018
and
2017
, loan receivables included deferred costs, net of deferred income, of
$105 million
and
$97 million
, respectively.
|
($ in millions)
|
Balance at January 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at December 31, 2018
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
5,448
|
|
|
$
|
(5,435
|
)
|
|
$
|
831
|
|
|
$
|
6,327
|
|
Consumer installment loans
|
40
|
|
|
45
|
|
|
(56
|
)
|
|
15
|
|
|
44
|
|
|||||
Commercial credit products
|
50
|
|
|
52
|
|
|
(53
|
)
|
|
6
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
5,545
|
|
|
$
|
(5,544
|
)
|
|
$
|
852
|
|
|
$
|
6,427
|
|
($ in millions)
|
Balance at January 1, 2017
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at December 31, 2017
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
4,254
|
|
|
$
|
5,200
|
|
|
$
|
(4,883
|
)
|
|
$
|
912
|
|
|
$
|
5,483
|
|
Consumer installment loans
|
37
|
|
|
41
|
|
|
(52
|
)
|
|
14
|
|
|
40
|
|
|||||
Commercial credit products
|
52
|
|
|
55
|
|
|
(63
|
)
|
|
6
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
4,344
|
|
|
$
|
5,296
|
|
|
$
|
(4,998
|
)
|
|
$
|
932
|
|
|
$
|
5,574
|
|
($ in millions)
|
Balance at January 1, 2016
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at December 31, 2016
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
3,420
|
|
|
$
|
3,898
|
|
|
$
|
(3,873
|
)
|
|
$
|
809
|
|
|
$
|
4,254
|
|
Consumer installment loans
|
26
|
|
|
43
|
|
|
(45
|
)
|
|
13
|
|
|
37
|
|
|||||
Commercial credit products
|
50
|
|
|
45
|
|
|
(51
|
)
|
|
8
|
|
|
52
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
3,497
|
|
|
$
|
3,986
|
|
|
$
|
(3,969
|
)
|
|
$
|
830
|
|
|
$
|
4,344
|
|
At December 31, 2018 ($ in millions)
|
30-89 days delinquent
|
|
|
90 or more days delinquent
|
|
|
Total past due
|
|
|
90 or more days delinquent and accruing
|
|
|
Total non-accruing
(a)
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
2,229
|
|
|
$
|
2,113
|
|
|
$
|
4,342
|
|
|
$
|
2,099
|
|
|
$
|
—
|
|
Consumer installment loans
|
28
|
|
|
5
|
|
|
33
|
|
|
—
|
|
|
5
|
|
|||||
Commercial credit products
|
38
|
|
|
17
|
|
|
55
|
|
|
17
|
|
|
—
|
|
|||||
Total delinquent loans
|
$
|
2,295
|
|
|
$
|
2,135
|
|
|
$
|
4,430
|
|
|
$
|
2,116
|
|
|
$
|
5
|
|
Percentage of total loan receivables
|
2.5
|
%
|
|
2.3
|
%
|
|
4.8
|
%
|
|
2.3
|
%
|
|
0.1
|
%
|
At December 31, 2017 ($ in millions)
|
30-89 days delinquent
|
|
|
90 or more days delinquent
|
|
|
Total past due
|
|
|
90 or more days delinquent and accruing
|
|
|
Total non-accruing
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
1,906
|
|
|
$
|
1,849
|
|
|
$
|
3,755
|
|
|
$
|
1,849
|
|
|
$
|
—
|
|
Consumer installment loans
|
25
|
|
|
5
|
|
|
30
|
|
|
—
|
|
|
5
|
|
|||||
Commercial credit products
|
31
|
|
|
15
|
|
|
46
|
|
|
15
|
|
|
—
|
|
|||||
Total delinquent loans
|
$
|
1,962
|
|
|
$
|
1,869
|
|
|
$
|
3,831
|
|
|
$
|
1,864
|
|
|
$
|
5
|
|
Percentage of total loan receivables
|
2.4
|
%
|
|
2.3
|
%
|
|
4.7
|
%
|
|
2.3
|
%
|
|
—
|
%
|
(a)
|
Excludes PCI loan receivables.
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
||||
Credit cards
|
$
|
886
|
|
|
$
|
753
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
||
Commercial credit products
|
3
|
|
|
3
|
|
||
Total
|
$
|
889
|
|
|
$
|
756
|
|
At December 31, 2018 ($ in millions)
|
Total recorded
investment
|
|
|
Related allowance
|
|
|
Net recorded investment
|
|
|
Unpaid principal balance
|
|
||||
Credit cards
|
$
|
1,203
|
|
|
$
|
(546
|
)
|
|
$
|
657
|
|
|
$
|
1,086
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
4
|
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
||||
Total
|
$
|
1,207
|
|
|
$
|
(548
|
)
|
|
$
|
659
|
|
|
$
|
1,090
|
|
At December 31, 2017 ($ in millions)
|
Total recorded
investment
|
|
|
Related allowance
|
|
|
Net recorded investment
|
|
|
Unpaid principal balance
|
|
||||
Credit cards
|
$
|
1,038
|
|
|
$
|
(444
|
)
|
|
$
|
594
|
|
|
$
|
925
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
5
|
|
|
(2
|
)
|
|
3
|
|
|
5
|
|
||||
Total
|
$
|
1,043
|
|
|
$
|
(446
|
)
|
|
$
|
597
|
|
|
$
|
930
|
|
Years ended December 31,
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
($ in millions)
|
Interest income recognized during period when loans were impaired
|
|
Interest income that would have been recorded with original terms
|
|
Average recorded investment
|
|
|
Interest income recognized during period when loans were impaired
|
|
Interest income that would have been recorded with original terms
|
|
Average recorded investment
|
|
|
Interest income recognized during period when loans were impaired
|
|
Interest income that would have been recorded with original terms
|
|
Average recorded investment
|
|
|||||||||
Credit cards
|
$
|
49
|
|
$
|
266
|
|
$
|
1,112
|
|
|
$
|
48
|
|
$
|
220
|
|
$
|
960
|
|
|
$
|
48
|
|
$
|
178
|
|
$
|
805
|
|
Consumer installment loans
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Commercial credit products
|
—
|
|
1
|
|
5
|
|
|
—
|
|
2
|
|
5
|
|
|
—
|
|
1
|
|
6
|
|
|||||||||
Total
|
$
|
49
|
|
$
|
267
|
|
$
|
1,117
|
|
|
$
|
48
|
|
$
|
222
|
|
$
|
965
|
|
|
$
|
48
|
|
$
|
179
|
|
$
|
811
|
|
Years ended December 31,
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
($ in millions)
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|||
Credit cards
|
38,976
|
|
|
$
|
91
|
|
|
40,316
|
|
|
$
|
90
|
|
|
35,648
|
|
|
$
|
72
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Commercial credit products
|
76
|
|
|
1
|
|
|
110
|
|
|
1
|
|
|
84
|
|
|
1
|
|
|||
Total
|
39,052
|
|
|
$
|
92
|
|
|
40,426
|
|
|
$
|
91
|
|
|
35,732
|
|
|
$
|
73
|
|
At December 31
|
2018
|
|
2017
|
||||||||||||||
|
661 or
|
|
|
601 to
|
|
|
600 or
|
|
|
661 or
|
|
|
601 to
|
|
|
600 or
|
|
|
higher
|
|
|
660
|
|
|
less
|
|
|
higher
|
|
|
660
|
|
|
less
|
|
Credit cards
|
74
|
%
|
|
18
|
%
|
|
8
|
%
|
|
73
|
%
|
|
19
|
%
|
|
8
|
%
|
Consumer installment loans
|
80
|
%
|
|
14
|
%
|
|
6
|
%
|
|
79
|
%
|
|
15
|
%
|
|
6
|
%
|
Commercial credit products
|
90
|
%
|
|
5
|
%
|
|
5
|
%
|
|
88
|
%
|
|
7
|
%
|
|
5
|
%
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Credit cards
|
$
|
17,342
|
|
|
$
|
15,941
|
|
|
$
|
14,424
|
|
Consumer installment loans
|
156
|
|
|
137
|
|
|
117
|
|
|||
Commercial credit products
|
144
|
|
|
139
|
|
|
139
|
|
|||
Other
|
2
|
|
|
2
|
|
|
2
|
|
|||
Total
|
$
|
17,644
|
|
|
$
|
16,219
|
|
|
$
|
14,682
|
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Loan receivables, net
(a)
|
$
|
26,454
|
|
|
$
|
24,990
|
|
Other assets
(b)
|
813
|
|
|
62
|
|
||
Total
|
$
|
27,267
|
|
|
$
|
25,052
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Borrowings
|
$
|
14,439
|
|
|
$
|
12,497
|
|
Other liabilities
|
36
|
|
|
30
|
|
||
Total
|
$
|
14,475
|
|
|
$
|
12,527
|
|
(a)
|
Includes
$1.7 billion
and
$1.4 billion
of related allowance for loan losses resulting in gross restricted loans of
$28.2 billion
and
$26.4 billion
at
December 31, 2018
and
2017
, respectively.
|
(b)
|
Includes
$803 million
and
$55 million
of segregated funds held by the VIEs at
December 31, 2018
and
2017
, respectively, which are classified as restricted cash and equivalents and included as a component of other assets in our Consolidated Statements of Financial Position.
|
($ in millions)
|
2018
|
|
2017
|
||||
Balance at January 1
|
$
|
991
|
|
|
$
|
949
|
|
Acquisitions
|
33
|
|
|
42
|
|
||
Balance at December 31
|
$
|
1,024
|
|
|
$
|
991
|
|
|
|
2018
|
|
2017
|
||||||||||||||||||||
At December 31 ($ in millions)
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
||||||
Customer-related
|
|
$
|
1,630
|
|
|
$
|
(803
|
)
|
|
$
|
827
|
|
|
$
|
1,242
|
|
|
$
|
(679
|
)
|
|
$
|
563
|
|
Capitalized software and other
|
|
562
|
|
|
(252
|
)
|
|
310
|
|
|
368
|
|
|
(182
|
)
|
|
186
|
|
||||||
Total
|
|
$
|
2,192
|
|
|
$
|
(1,055
|
)
|
|
$
|
1,137
|
|
|
$
|
1,610
|
|
|
$
|
(861
|
)
|
|
$
|
749
|
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|||||
Amortization expense
|
$
|
240
|
|
|
$
|
214
|
|
|
$
|
167
|
|
|
$
|
125
|
|
|
$
|
85
|
|
|
2018
|
|
2017
|
||||||||||
At December 31 ($ in millions)
|
Amount
|
|
Average rate
(a)
|
|
Amount
|
|
Average rate
(a)
|
||||||
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits
|
$
|
63,738
|
|
|
2.0
|
%
|
|
$
|
56,276
|
|
|
1.6
|
%
|
Non-interest-bearing deposits
|
281
|
|
|
—
|
|
|
212
|
|
|
—
|
|
||
Total deposits
|
$
|
64,019
|
|
|
|
|
$
|
56,488
|
|
|
|
(a)
|
Based on interest expense for the years ended
December 31, 2018
and
2017
and average deposits balances.
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
||||||
Deposits
|
$
|
25,298
|
|
|
$
|
9,125
|
|
|
$
|
2,805
|
|
|
$
|
2,457
|
|
|
$
|
1,164
|
|
|
$
|
1,336
|
|
|
2018
|
|
2017
|
||||||||||||
At December 31 ($ in millions)
|
Maturity date
|
|
Interest Rate
|
|
Weighted average interest rate
|
|
Outstanding Amount
(a)
|
|
Outstanding Amount
(a)
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Borrowings of consolidated securitization entities:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed securitized borrowings
|
2019 - 2023
|
|
1.58% - 3.87%
|
|
|
2.47
|
%
|
|
$
|
8,664
|
|
|
$
|
8,347
|
|
Floating securitized borrowings
|
2019 - 2021
|
|
3.05% - 3.66%
|
|
|
3.23
|
%
|
|
5,775
|
|
|
4,150
|
|
||
Total borrowings of consolidated securitization entities
|
|
|
|
|
2.78
|
%
|
|
14,439
|
|
|
12,497
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Synchrony Financial senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed senior unsecured notes
|
2019 - 2027
|
|
2.60% - 4.50%
|
|
|
3.59
|
%
|
|
7,318
|
|
|
7,310
|
|
||
Floating senior unsecured notes
|
2020
|
|
3.81
|
%
|
|
3.81
|
%
|
|
250
|
|
|
250
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
Synchrony Bank senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed senior unsecured notes
|
2021 - 2022
|
|
3.00% - 3.65%
|
|
3.33
|
%
|
|
1,490
|
|
|
742
|
|
|||
Floating senior unsecured notes
|
2020
|
|
3.43
|
%
|
|
3.43
|
%
|
|
499
|
|
|
—
|
|
||
Total senior unsecured notes
|
|
|
|
|
3.54
|
%
|
|
9,557
|
|
|
8,302
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total borrowings
|
|
|
|
|
|
|
$
|
23,996
|
|
|
$
|
20,799
|
|
(a)
|
The amounts presented above for outstanding borrowings include unamortized debt premiums, discounts and issuance costs.
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
||||||
Borrowings
|
$
|
5,985
|
|
|
$
|
6,575
|
|
|
$
|
5,400
|
|
|
$
|
1,634
|
|
|
$
|
707
|
|
|
$
|
3,750
|
|
2018 Issuances
($ in millions)
:
|
|
|
|
|
|
|||
Issuance Date
|
Principal Amount
|
|
Maturity
|
|
Interest Rate
|
|||
Synchrony Bank
|
|
|
|
|
|
|||
January 2, 2018
|
$
|
500
|
|
|
2020
|
|
Floating rate (three-month LIBOR plus 0.625%)
|
|
May 24, 2018
|
$
|
750
|
|
|
2021
|
|
3.650
|
%
|
|
|
|
|
|
|
At December 31, 2018 ($ in millions)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
(a)
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Federal Agency
|
$
|
—
|
|
|
$
|
2,888
|
|
|
$
|
—
|
|
|
$
|
2,888
|
|
State and municipal
|
—
|
|
|
—
|
|
|
48
|
|
|
48
|
|
||||
Residential mortgage-backed
|
—
|
|
|
1,139
|
|
|
—
|
|
|
1,139
|
|
||||
Asset-backed
|
—
|
|
|
1,985
|
|
|
—
|
|
|
1,985
|
|
||||
U.S. Corporate
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Other Assets
(b)
|
15
|
|
|
—
|
|
|
13
|
|
|
28
|
|
||||
Total
|
$
|
15
|
|
|
$
|
6,012
|
|
|
$
|
63
|
|
|
$
|
6,090
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
26
|
|
|
26
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2017 ($ in millions)
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Federal Agency
|
$
|
—
|
|
|
$
|
2,416
|
|
|
$
|
—
|
|
|
$
|
2,416
|
|
State and municipal
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
||||
Residential mortgage-backed
|
—
|
|
|
1,231
|
|
|
—
|
|
|
1,231
|
|
||||
Asset-backed
|
—
|
|
|
780
|
|
|
—
|
|
|
780
|
|
||||
U.S. corporate debt
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Other Assets
(b)
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Total
|
$
|
15
|
|
|
$
|
4,427
|
|
|
$
|
46
|
|
|
$
|
4,488
|
|
(a)
|
For the years ended
December 31, 2018
and
2017
, there were no securities transferred between levels.
|
(b)
|
Other assets primarily relate to equity investments measured at fair value.
|
|
Carrying
|
|
|
Corresponding fair value amount
|
|||||||||||||||
At December 31, 2018 ($ in millions)
|
value
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets for which carrying values equal or approximate fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
(a)
|
$
|
9,396
|
|
|
$
|
9,396
|
|
|
$
|
9,396
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other assets
(b)
|
$
|
980
|
|
|
$
|
980
|
|
|
$
|
980
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial assets carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan receivables, net
(c)
|
$
|
86,712
|
|
|
$
|
95,305
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,305
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
64,019
|
|
|
$
|
63,942
|
|
|
$
|
—
|
|
|
$
|
63,942
|
|
|
$
|
—
|
|
Borrowings of consolidated securitization entities
|
$
|
14,439
|
|
|
$
|
14,400
|
|
|
$
|
—
|
|
|
$
|
8,626
|
|
|
$
|
5,774
|
|
Senior unsecured notes
|
$
|
9,557
|
|
|
$
|
9,062
|
|
|
$
|
—
|
|
|
$
|
9,062
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Carrying
|
|
|
Corresponding fair value amount
|
|||||||||||||||
At December 31, 2017 ($ in millions)
|
value
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets for which carrying values equal or approximate fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
(a)
|
$
|
11,602
|
|
|
$
|
11,602
|
|
|
$
|
11,602
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other assets
(b)
|
$
|
215
|
|
|
$
|
215
|
|
|
$
|
215
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial assets carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan receivables, net
(c)
|
$
|
76,373
|
|
|
$
|
85,871
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,871
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
56,488
|
|
|
$
|
56,754
|
|
|
$
|
—
|
|
|
$
|
56,754
|
|
|
$
|
—
|
|
Borrowings of consolidated securitization entities
|
$
|
12,497
|
|
|
$
|
12,475
|
|
|
$
|
—
|
|
|
$
|
8,323
|
|
|
$
|
4,152
|
|
Senior unsecured notes
|
$
|
8,302
|
|
|
$
|
8,471
|
|
|
$
|
—
|
|
|
$
|
8,471
|
|
|
$
|
—
|
|
(a)
|
For cash and equivalents and restricted cash and equivalents, carrying value approximates fair value due to the liquid nature and short maturity of these instruments.
|
(b)
|
This balance relates to restricted cash and equivalents, which is included in other assets.
|
(c)
|
Under certain retail partner program agreements, the expected sales proceeds in the event of a sale of their credit card portfolio may be limited to the amounts owed by our customers, which may be less than the fair value indicated above.
|
At December 31, 2018 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
||||||||||
|
Amount
|
|
Ratio
(a)
|
|
|
Amount
|
|
|
Ratio
(b)
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total risk-based capital
|
$
|
14,013
|
|
|
15.3
|
%
|
|
$
|
7,339
|
|
|
8.0
|
%
|
Tier 1 risk-based capital
|
$
|
12,801
|
|
|
14.0
|
%
|
|
$
|
5,505
|
|
|
6.0
|
%
|
Tier 1 leverage
|
$
|
12,801
|
|
|
12.3
|
%
|
|
$
|
4,157
|
|
|
4.0
|
%
|
Common equity Tier 1 Capital
|
$
|
12,801
|
|
|
14.0
|
%
|
|
$
|
4,128
|
|
|
4.5
|
%
|
At December 31, 2017 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
||||||||||
|
Amount
|
|
Ratio
(a)
|
|
|
Amount
|
|
|
Ratio
(b)
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total risk-based capital
|
$
|
13,954
|
|
|
17.3
|
%
|
|
$
|
6,454
|
|
|
8.0
|
%
|
Tier 1 risk-based capital
|
$
|
12,890
|
|
|
16.0
|
%
|
|
$
|
4,840
|
|
|
6.0
|
%
|
Tier 1 leverage
|
$
|
12,890
|
|
|
13.8
|
%
|
|
$
|
3,724
|
|
|
4.0
|
%
|
Common equity Tier 1 Capital
|
$
|
12,890
|
|
|
16.0
|
%
|
|
$
|
3,630
|
|
|
4.5
|
%
|
At December 31, 2018 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
|
Minimum to be well-capitalized under prompt corrective action provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
(a)
|
|
|
Amount
|
|
|
Ratio
(b)
|
|
|
Amount
|
|
|
Ratio
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total risk-based capital
|
$
|
12,258
|
|
|
15.4
|
%
|
|
$
|
6,348
|
|
|
8.0
|
%
|
|
$
|
7,934
|
|
|
10.0
|
%
|
Tier 1 risk-based capital
|
$
|
11,207
|
|
|
14.1
|
%
|
|
$
|
4,761
|
|
|
6.0
|
%
|
|
$
|
6,348
|
|
|
8.0
|
%
|
Tier 1 leverage
|
$
|
11,207
|
|
|
12.4
|
%
|
|
$
|
3,612
|
|
|
4.0
|
%
|
|
$
|
4,515
|
|
|
5.0
|
%
|
Common equity Tier 1 Capital
|
$
|
11,207
|
|
|
14.1
|
%
|
|
$
|
3,570
|
|
|
4.5
|
%
|
|
$
|
5,157
|
|
|
6.5
|
%
|
At December 31, 2017 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
|
Minimum to be well-capitalized under prompt corrective action provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
(a)
|
|
|
Amount
|
|
|
Ratio
(b)
|
|
|
Amount
|
|
|
Ratio
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total risk-based capital
|
$
|
10,842
|
|
|
16.2
|
%
|
|
$
|
5,340
|
|
|
8.0
|
%
|
|
$
|
6,675
|
|
|
10.0
|
%
|
Tier 1 risk-based capital
|
$
|
9,958
|
|
|
14.9
|
%
|
|
$
|
4,005
|
|
|
6.0
|
%
|
|
$
|
5,340
|
|
|
8.0
|
%
|
Tier 1 leverage
|
$
|
9,958
|
|
|
12.9
|
%
|
|
$
|
3,083
|
|
|
4.0
|
%
|
|
$
|
3,854
|
|
|
5.0
|
%
|
Common equity Tier 1 Capital
|
$
|
9,958
|
|
|
14.9
|
%
|
|
$
|
3,004
|
|
|
4.5
|
%
|
|
$
|
4,339
|
|
|
6.5
|
%
|
(a)
|
Capital ratios are calculated based on the Basel III Standardized Approach rules which, at December 31, 2017 included applicable transition provisions.
|
(b)
|
At December 31, 2018 and 2017, Synchrony Financial and the Bank also must maintain a capital conservation buffer of common equity Tier 1 capital in excess of minimum risk-based capital ratios by at least
1.875
percentage points and
1.25
percentage points, respectively, to avoid limits on capital distributions and certain discretionary bonus payments to executive officers and similar employees.
|
|
Years ended December 31,
|
||||||||||
(in millions, except per share data)
|
2018
|
|
2017
|
|
2016
|
||||||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding, basic
|
742.3
|
|
|
795.6
|
|
|
829.2
|
|
|||
Effect of dilutive securities
|
4.6
|
|
|
4.1
|
|
|
2.3
|
|
|||
Weighted average common shares outstanding, dilutive
|
746.9
|
|
|
799.7
|
|
|
831.5
|
|
|||
|
|
|
|
|
|
||||||
Earnings per basic common share
|
$
|
3.76
|
|
|
$
|
2.43
|
|
|
$
|
2.71
|
|
Earnings per diluted common share
|
$
|
3.74
|
|
|
$
|
2.42
|
|
|
$
|
2.71
|
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
U.S.
|
$
|
3,628
|
|
|
$
|
3,334
|
|
|
$
|
3,545
|
|
Non-U.S.
|
16
|
|
|
(10
|
)
|
|
25
|
|
|||
Earnings before provision for income taxes
|
$
|
3,644
|
|
|
$
|
3,324
|
|
|
$
|
3,570
|
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Current provision for income taxes
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
775
|
|
|
$
|
900
|
|
|
$
|
829
|
|
U.S. state and local
|
115
|
|
|
92
|
|
|
86
|
|
|||
Non-U.S.
|
17
|
|
|
12
|
|
|
15
|
|
|||
Total current provision for income taxes
|
907
|
|
|
1,004
|
|
|
930
|
|
|||
|
|
|
|
|
|
||||||
Deferred (benefit) provision for income taxes
|
|
|
|
|
|
||||||
U.S. Federal
|
(55
|
)
|
|
367
|
|
|
357
|
|
|||
U.S. state and local
|
(7
|
)
|
|
20
|
|
|
33
|
|
|||
Non-U.S.
|
9
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Deferred (benefit) provision for income taxes
|
(53
|
)
|
|
385
|
|
|
389
|
|
|||
Total provision for income taxes
|
$
|
854
|
|
|
$
|
1,389
|
|
|
$
|
1,319
|
|
For the years ended December 31
|
2018
|
|
2017
|
|
2016
|
|||
U.S. federal statutory income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
U.S. state and local income taxes, net of federal benefit
|
2.4
|
|
|
2.2
|
|
|
2.2
|
|
Tax Act enactment
|
—
|
|
|
4.8
|
|
|
—
|
|
All other, net
|
—
|
|
|
(0.2
|
)
|
|
(0.3
|
)
|
Effective tax rate
|
23.4
|
%
|
|
41.8
|
%
|
|
36.9
|
%
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Allowance for loan losses
|
$
|
1,588
|
|
|
$
|
1,381
|
|
Compensation and employee benefits
|
110
|
|
|
95
|
|
||
Other assets
|
113
|
|
|
90
|
|
||
Total deferred income tax assets before valuation allowance
|
1,811
|
|
|
1,566
|
|
||
Valuation allowance
|
—
|
|
|
—
|
|
||
Total deferred income tax assets
|
$
|
1,811
|
|
|
$
|
1,566
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Original issue discount
|
$
|
(1,198
|
)
|
|
$
|
(1,053
|
)
|
Goodwill and identifiable intangibles
|
(187
|
)
|
|
(141
|
)
|
||
Other liabilities
|
(133
|
)
|
|
(120
|
)
|
||
Total deferred income tax liabilities
|
(1,518
|
)
|
|
(1,314
|
)
|
||
Net deferred income tax assets
|
$
|
293
|
|
|
$
|
252
|
|
($ in millions)
|
2018
|
|
2017
|
||||
Balance at January 1
|
$
|
255
|
|
|
$
|
150
|
|
Additions:
|
|
|
|
||||
Tax positions of the current year
|
85
|
|
|
99
|
|
||
Tax positions of prior years
|
3
|
|
|
16
|
|
||
Reductions:
|
|
|
|
||||
Prior year tax positions
|
(64
|
)
|
|
(4
|
)
|
||
Settlements with tax authorities
|
(3
|
)
|
|
—
|
|
||
Expiration of the statute of limitation
|
(25
|
)
|
|
(6
|
)
|
||
Balance at December 31
|
$
|
251
|
|
|
$
|
255
|
|
Portion of balance that, if recognized, would impact the effective income tax rate
|
$
|
164
|
|
|
$
|
173
|
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Interest income from subsidiaries
|
$
|
220
|
|
|
$
|
125
|
|
|
$
|
65
|
|
Interest on debt securities
|
20
|
|
|
23
|
|
|
13
|
|
|||
Total interest income
|
240
|
|
|
148
|
|
|
78
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Interest on third-party debt
|
287
|
|
|
268
|
|
|
277
|
|
|||
Total interest expense
|
287
|
|
|
268
|
|
|
277
|
|
|||
Net interest income
|
(47
|
)
|
|
(120
|
)
|
|
(199
|
)
|
|||
Dividends from bank subsidiaries
|
950
|
|
|
1,040
|
|
|
320
|
|
|||
Dividends from nonbank subsidiaries
|
318
|
|
|
1,133
|
|
|
2,290
|
|
|||
Other income
|
115
|
|
|
91
|
|
|
90
|
|
|||
Other expense
|
120
|
|
|
115
|
|
|
141
|
|
|||
Earnings before benefit from income taxes
|
1,216
|
|
|
2,029
|
|
|
2,360
|
|
|||
Benefit from income taxes
|
(8
|
)
|
|
(89
|
)
|
|
(77
|
)
|
|||
Equity in undistributed net earnings of subsidiaries
|
1,566
|
|
|
(183
|
)
|
|
(186
|
)
|
|||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
2,792
|
|
|
$
|
1,924
|
|
|
$
|
2,239
|
|
At December 31 ($ in millions)
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Cash and equivalents
|
$
|
3,356
|
|
|
$
|
1,975
|
|
Debt securities
|
869
|
|
|
1,687
|
|
||
Investments in and amounts due from subsidiaries
(a)
|
18,566
|
|
|
18,655
|
|
||
Goodwill
|
17
|
|
|
17
|
|
||
Other assets
|
89
|
|
|
172
|
|
||
Total assets
|
$
|
22,897
|
|
|
$
|
22,506
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Amounts due to subsidiaries
|
$
|
184
|
|
|
$
|
260
|
|
Senior unsecured notes
|
7,568
|
|
|
7,560
|
|
||
Accrued expenses and other liabilities
|
467
|
|
|
452
|
|
||
Total liabilities
|
8,219
|
|
|
8,272
|
|
||
Equity:
|
|
|
|
||||
Total equity
|
14,678
|
|
|
14,234
|
|
||
Total liabilities and equity
|
$
|
22,897
|
|
|
$
|
22,506
|
|
(a)
|
Includes investments in and amounts due from bank subsidiaries of
$13.1 billion
and
$12.3 billion
at
December 31, 2018
and
2017
, respectively.
|
For the years ended December 31 ($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows - operating activities
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,790
|
|
|
$
|
1,935
|
|
|
$
|
2,251
|
|
Adjustments to reconcile net earnings to cash provided from operating activities
|
|
|
|
|
|
||||||
Deferred income taxes
|
8
|
|
|
(43
|
)
|
|
9
|
|
|||
(Increase) decrease in other assets
|
106
|
|
|
18
|
|
|
95
|
|
|||
Increase (decrease) in accrued expenses and other liabilities
|
6
|
|
|
(38
|
)
|
|
34
|
|
|||
Equity in undistributed net earnings of subsidiaries
|
(1,566
|
)
|
|
183
|
|
|
186
|
|
|||
All other operating activities
|
66
|
|
|
53
|
|
|
72
|
|
|||
Cash provided from (used for) operating activities
|
1,410
|
|
|
2,108
|
|
|
2,647
|
|
|||
|
|
|
|
|
|
||||||
Cash flows - investing activities
|
|
|
|
|
|
||||||
Net (increase) decrease in investments in and amounts due from subsidiaries
|
1,687
|
|
|
(947
|
)
|
|
(1,641
|
)
|
|||
Maturity and sales of debt securities
|
1,493
|
|
|
1,914
|
|
|
1,249
|
|
|||
Purchases of debt securities
|
(681
|
)
|
|
(1,402
|
)
|
|
(1,452
|
)
|
|||
All other investing activities
|
(94
|
)
|
|
(45
|
)
|
|
(3
|
)
|
|||
Cash provided from (used for) investing activities
|
2,405
|
|
|
(480
|
)
|
|
(1,847
|
)
|
|||
|
|
|
|
|
|
|
|
|
|||
Cash flows - financing activities
|
|
|
|
|
|
||||||
Third-party debt
|
|
|
|
|
|
||||||
Proceeds from issuance of third-party debt
|
—
|
|
|
991
|
|
|
1,193
|
|
|||
Maturities and repayment of third-party debt
|
—
|
|
|
(1,200
|
)
|
|
(4,151
|
)
|
|||
Purchases of treasury stock
|
(1,868
|
)
|
|
(1,497
|
)
|
|
(476
|
)
|
|||
Dividends paid on common stock
|
(534
|
)
|
|
(446
|
)
|
|
(214
|
)
|
|||
Increase (decrease) in amounts due to subsidiaries
|
(4
|
)
|
|
27
|
|
|
21
|
|
|||
All other financing activities
|
(28
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Cash provided from (used for) financing activities
|
(2,434
|
)
|
|
(2,127
|
)
|
|
(3,627
|
)
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash and equivalents
|
1,381
|
|
|
(499
|
)
|
|
(2,827
|
)
|
|||
Cash and equivalents at beginning of year
|
1,975
|
|
|
2,474
|
|
|
5,301
|
|
|||
Cash and equivalents at end of year
|
$
|
3,356
|
|
|
$
|
1,975
|
|
|
$
|
2,474
|
|
|
Quarterly Periods Ended
|
||||||||||||||||||||||||||||||
($ in millions)
|
December 31, 2018
|
|
September 30,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
|
December 31, 2017
|
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
||||||||||||||||
Interest income
|
$
|
4,876
|
|
|
$
|
4,694
|
|
|
$
|
4,174
|
|
|
$
|
4,244
|
|
|
$
|
4,291
|
|
|
$
|
4,233
|
|
|
$
|
3,970
|
|
|
$
|
3,913
|
|
Interest expense
|
543
|
|
|
488
|
|
|
437
|
|
|
402
|
|
|
375
|
|
|
357
|
|
|
333
|
|
|
326
|
|
||||||||
Net interest income
|
4,333
|
|
|
4,206
|
|
|
3,737
|
|
|
3,842
|
|
|
3,916
|
|
|
3,876
|
|
|
3,637
|
|
|
3,587
|
|
||||||||
Earnings before provision for income taxes
|
1,012
|
|
|
893
|
|
|
892
|
|
|
847
|
|
|
875
|
|
|
879
|
|
|
788
|
|
|
782
|
|
||||||||
Provision for income taxes
|
229
|
|
|
222
|
|
|
196
|
|
|
207
|
|
|
490
|
|
|
324
|
|
|
292
|
|
|
283
|
|
||||||||
Net earnings
|
$
|
783
|
|
|
$
|
671
|
|
|
$
|
696
|
|
|
$
|
640
|
|
|
$
|
385
|
|
|
$
|
555
|
|
|
$
|
496
|
|
|
$
|
499
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
1.09
|
|
|
$
|
0.91
|
|
|
$
|
0.93
|
|
|
$
|
0.84
|
|
|
$
|
0.49
|
|
|
$
|
0.70
|
|
|
$
|
0.62
|
|
|
$
|
0.61
|
|
Diluted
|
$
|
1.09
|
|
|
$
|
0.91
|
|
|
$
|
0.92
|
|
|
$
|
0.83
|
|
|
$
|
0.49
|
|
|
$
|
0.70
|
|
|
$
|
0.61
|
|
|
$
|
0.61
|
|
Location
|
|
Owned/Leased
|
Corporate Headquarters:
|
|
|
Stamford, CT
|
|
Leased
|
|
|
|
Bank Headquarters:
|
|
|
Draper, UT
|
|
Leased
|
|
|
|
Payment Processing Centers:
|
|
|
Atlanta, GA
|
|
Leased
|
Longwood, FL
|
|
Leased
|
|
|
|
Customer Service Centers:
|
|
|
Altamonte Springs, FL
|
|
Leased
|
Canton, OH
|
|
Leased
|
Charlotte, NC
|
|
Leased
|
Hyderabad, India
|
|
Leased
|
Kettering, OH
|
|
Leased
|
Manila, Philippines (2)
|
|
Leased
|
Cebu, Philippines
|
|
Leased
|
Merriam, KS
|
|
Owned
|
Phoenix, AZ
|
|
Leased
|
Rapid City, SD
|
|
Leased
|
San Juan, PR
|
|
Leased
|
|
|
|
Other Support Centers:
|
|
|
Alpharetta, GA
(2)
|
|
Leased
|
Bellevue, WA
|
|
Leased
|
Bentonville, AR
|
|
Leased
|
Champaign, IL
|
|
Leased
|
Chicago, IL (2)
|
|
Leased
|
Costa Mesa, CA
|
|
Leased
|
Frisco, TX
|
|
Leased
|
Menlo Park, CA
|
|
Leased
|
New York, NY
|
|
Leased
|
San Francisco, CA
|
|
Leased
|
St. Paul, MN
|
|
Leased
|
Walnut Creek, CA
|
|
Leased
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
|
||
($ in dollars)
|
|||
2018
|
|
||
Fourth quarter
|
$
|
0.21
|
|
Third quarter
|
$
|
0.21
|
|
Second quarter
|
$
|
0.15
|
|
First quarter
|
$
|
0.15
|
|
|
|
||
2017
|
|
||
Fourth quarter
|
$
|
0.15
|
|
Third quarter
|
$
|
0.15
|
|
Second quarter
|
$
|
0.13
|
|
First quarter
|
$
|
0.13
|
|
|
|
July 31,
2014
|
|
December 31, 2014
|
|
December 31, 2015
|
|
December 31, 2016
|
|
December 31, 2017
|
|
December 31, 2018
|
||||||||||||
Synchrony Financial
|
|
$
|
100.00
|
|
|
$
|
129.35
|
|
|
$
|
132.22
|
|
|
$
|
159.07
|
|
|
$
|
172.39
|
|
|
$
|
107.21
|
|
S&P 500
|
|
$
|
100.00
|
|
|
$
|
107.60
|
|
|
$
|
109.09
|
|
|
$
|
122.14
|
|
|
$
|
148.80
|
|
|
$
|
142.28
|
|
S&P 500 Financials
|
|
$
|
100.00
|
|
|
$
|
111.35
|
|
|
$
|
109.65
|
|
|
$
|
134.65
|
|
|
$
|
164.52
|
|
|
$
|
143.08
|
|
($ in millions, except per share data)
|
Total Number of Shares Purchased
(a)
|
|
|
Average Price Paid Per Share
(b)
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(c)
|
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
(b)
|
|
||
|
|
|
|
|
|
|
|
||||||
October 1 - 31, 2018
|
4,249
|
|
|
$
|
31.39
|
|
|
—
|
|
|
$
|
953.0
|
|
November 1 - 30, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
953.0
|
|
December 1 - 31, 2018
|
3
|
|
|
$
|
23.76
|
|
|
—
|
|
|
$
|
953.0
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
4,252
|
|
|
$
|
31.39
|
|
|
—
|
|
|
$
|
953.0
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes 4,249 shares, 0 shares and 3 shares withheld in October, November and December, respectively, to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying restricted stock awards or upon the exercise of stock options.
|
(b)
|
Amounts exclude commission costs.
|
(c)
|
On May 17, 2018, the Board of Directors approved the 2018 Share Repurchase Program.
|
Reports of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Earnings for the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Financial Position as of December 31, 2018 and 2017
|
|
Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
|
|
Notes to the Consolidated Financial Statements
|
Exhibit Number
|
Description
|
|
|
101
|
The following materials from Synchrony Financial’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Statements of Earnings for the years ended December 31, 2018, 2017 and 2016, (ii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Financial Position at December 31, 2018 and 2017, (iv) Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 and 2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016, and (vi) Notes to Consolidated Financial Statements
|
*
|
Filed electronically herewith.
|
†
|
Confidential treatment granted to certain portions, which portions have been provided separately to the Securities and Exchange Commission.
|
|
|
/s/ Brian D. Doubles
|
|
|
Brian D. Doubles
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ Margaret M. Keane
|
|
Principal Executive Officer
Director
|
February 15, 2019
|
Margaret M. Keane
Director, President and Chief Executive Officer |
|
|
|
|
|
|
|
/s/ Brian D. Doubles
|
|
Principal Financial Officer
|
February 15, 2019
|
Brian D. Doubles
Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) |
|
|
|
|
|
|
|
/s/ David P. Melito
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Principal Accounting Officer
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February 15, 2019
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David P. Melito
Senior Vice President and Controller |
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/s/ Paget L. Alves
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Director
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February 15, 2019
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Paget L. Alves
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/s/ Arthur W. Coviello, Jr.
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Director
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February 15, 2019
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Arthur W. Coviello, Jr.
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/s/ William W. Graylin
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Director
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February 15, 2019
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William W. Graylin
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/s/ Roy A. Guthrie
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Director
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February 15, 2019
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Roy A. Guthrie
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/s/ Richard C. Hartnack
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Director
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February 15, 2019
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Richard C. Hartnack
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/s/ Jeffrey G. Naylor
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Director
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February 15, 2019
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Jeffrey G. Naylor
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/s/ Laurel J. Richie
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Director
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February 15, 2019
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Laurel J. Richie
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/s/ Olympia J. Snowe
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Director
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February 15, 2019
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Olympia J. Snowe
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/s/ Ellen M. Zane
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Director
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February 15, 2019
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Ellen M. Zane
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1.
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I have reviewed this annual report on Form 10-K of Synchrony Financial;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have
:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Margaret M. Keane
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Margaret M. Keane
President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Synchrony Financial;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have
:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Brian D. Doubles
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Brian D. Doubles
Chief Financial Officer
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1.
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The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
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/s/ Margaret M. Keane
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Margaret M. Keane
President and Chief Executive Officer
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/s/ Brian D. Doubles
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Brian D. Doubles
Chief Financial Officer
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