☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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,
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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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Trading Symbol(s)
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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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SYF
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New York Stock Exchange
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Large Accelerated Filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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PART I - FINANCIAL INFORMATION
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Page
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Item 1. Financial Statements:
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PART II - OTHER INFORMATION
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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” or “Board” are to Synchrony's board of directors;
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•
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“GE” are to General Electric Company and its subsidiaries; 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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Promotional Offer
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||||||
Credit Product
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Standard Terms Only
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Deferred Interest
|
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Other Promotional
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Total
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||||
Credit cards
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62.6
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%
|
|
18.6
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%
|
|
14.8
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%
|
|
96.0
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%
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Commercial credit products
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1.6
|
|
|
—
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—
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1.6
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Consumer installment loans
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—
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—
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2.4
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2.4
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Other
|
—
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—
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—
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—
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Total
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64.2
|
%
|
|
18.6
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%
|
|
17.2
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%
|
|
100.0
|
%
|
•
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Private Label Credit Cards. Private label credit cards are partner-branded credit cards (e.g., Lowe’s or Amazon) or program-branded credit cards (e.g., Synchrony Car Care or CareCredit) that are used primarily for the purchase of goods and services from the partner or within the program network. In addition, in some cases, cardholders may be permitted to access their credit card accounts for cash advances. In Retail Card, credit under our private label credit cards typically is extended on standard terms only, and in Payment Solutions and CareCredit, credit under our private label credit cards typically is extended pursuant to a promotional financing offer.
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•
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Dual Cards and General Purpose Co-Brand Cards. Our patented Dual Cards are credit cards that function as private label credit cards when used to purchase goods and services from our partners, and as general purpose credit cards when used elsewhere. We also offer general purpose co-branded credit cards that do not function as private label cards. Credit extended under our Dual Cards and general purpose co-branded credit cards typically is extended under standard terms only. We offer either Dual Cards or general purpose co-branded credit cards across all of our sales platforms, spanning 21 ongoing credit partners and our CareCredit Dual Card.
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•
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Net earnings increased 22.6% to $853 million and 46.7% to $1,960 million for the three and six months ended June 30, 2019, respectively, driven by higher net interest income and decreases in provision for loan losses, partially offset by increases in retailer share arrangements, other expense and provision for income taxes.
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•
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Loan receivables increased 3.7% to $81,796 million at June 30, 2019 compared to June 30, 2018, primarily driven by the PayPal Credit acquisition, higher purchase volume and average active account growth, partially offset by the reclassification of $8.1 billion of loan receivables associated with the Walmart portfolio to loan receivables held for sale.
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•
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Net interest income increased 11.2% to $4,155 million and 10.6% to $8,381 million for the three and six months ended June 30, 2019, respectively, primarily due to higher average loan receivables growth, partially offset by increases in interest expense reflecting higher benchmark interest rates and growth.
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•
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Retailer share arrangements increased 31.5% to $859 million and 32.0% to $1,813 million for the three and six months ended June 30, 2019, respectively, primarily due to growth, including the PayPal Credit acquisition, and improved performance of the programs in which we have retailer share arrangements.
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•
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Over-30 day loan delinquencies as a percentage of period-end loan receivables increased 26 basis points to 4.43% at June 30, 2019 primarily due to the impact of reclassification of the Walmart portfolio to loan receivables held for sale, and the net charge-off rate remained relatively stable, increasing 4 basis points to 6.01% and decreasing 2 basis points to 6.04% for the three and six months ended June 30, 2019, respectively.
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•
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Provision for loan losses decreased by $82 million, or 6.4%, and $585 million, or 22.1%, for the three and six months ended June 30, 2019, respectively, primarily driven by reductions in reserves for loan losses related to the expected sale of the Walmart portfolio. These reductions totaled $247 million and $769 million for the three and six months ended June 30, 2019, respectively. These reductions in reserves were partially offset by higher net charge-offs in line with loan receivables growth. Our allowance coverage ratio (allowance for loan losses as a percent of end of period loan receivables) decreased to 7.10% at June 30, 2019, as compared to 7.43% at June 30, 2018.
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•
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Other expense increased by $84 million, or 8.6%, and $139 million, or 7.1%, for the three and six months ended June 30, 2019, respectively, primarily driven by the PayPal Credit acquisition.
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•
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At June 30, 2019, deposits represented 75% of our total funding sources. Total deposits increased 2.5% to $65.6 billion at June 30, 2019, compared to December 31, 2018. Growth in our direct deposits of 6.9% to $52.8 billion, was partially offset by lower brokered deposits.
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•
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On May 9, 2019, we announced that our Board approved a share repurchase program of up to $4.0 billion through June 30, 2020 and intends to increase our quarterly dividend to $0.22 per common share commencing in the third quarter of 2019. During the six months ended June 30, 2019, we repurchased $1.7 billion of our outstanding common stock, and declared and paid cash dividends of $0.42 per share, or $295 million.
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•
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In March 2019, we announced our acquisition of Pets Best and entry into the pet health insurance industry as a managing general agent.
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•
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In our Payment Solutions sales platform, we expanded our Synchrony Car Care program acceptance network, announced our new partnerships with Samsung HVAC and Zero Motorcycles, extended our program agreements with CCA Global Partners, P.C. Richard & Son, Penske, Rheem and Suzuki and launched our new program with Fanatics.
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•
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In our CareCredit sales platform, we expanded our network through our new partnerships with Baylor Scott & White Medical Center, Lehigh Valley Physician's Group and Simplee, renewed our agreement with Bosley and launched our new program with Lighthouse.
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Three months ended June 30,
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Six months ended June 30,
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||||||||||||
($ in millions)
|
2019
|
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2018
|
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2019
|
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2018
|
||||||||
Interest income
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$
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4,738
|
|
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$
|
4,174
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$
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9,524
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$
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8,418
|
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Interest expense
|
583
|
|
|
437
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|
|
1,143
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|
|
839
|
|
||||
Net interest income
|
4,155
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|
3,737
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|
|
8,381
|
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|
7,579
|
|
||||
Retailer share arrangements
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(859
|
)
|
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(653
|
)
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(1,813
|
)
|
|
(1,373
|
)
|
||||
Provision for loan losses
|
1,198
|
|
|
1,280
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|
|
2,057
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|
|
2,642
|
|
||||
Net interest income, after retailer share arrangements and provision for loan losses
|
2,098
|
|
|
1,804
|
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|
4,511
|
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|
3,564
|
|
||||
Other income
|
90
|
|
|
63
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|
|
182
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|
|
138
|
|
||||
Other expense
|
1,059
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|
975
|
|
|
2,102
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|
1,963
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|
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Earnings before provision for income taxes
|
1,129
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|
|
892
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2,591
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|
|
1,739
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||||
Provision for income taxes
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276
|
|
|
196
|
|
|
631
|
|
|
403
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|
||||
Net earnings
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$
|
853
|
|
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$
|
696
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$
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1,960
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$
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1,336
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At and for the
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At and for the
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||||||||||||
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Three months ended June 30,
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Six months ended June 30,
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||||||||||||
($ in millions)
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2019
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2018
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2019
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2018
|
||||||||
Financial Position Data (Average):
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||||||||
Loan receivables, including held for sale
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$
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88,792
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$
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77,853
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$
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89,344
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$
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78,468
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Total assets
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$
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104,903
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$
|
96,214
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$
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105,100
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$
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95,962
|
|
Deposits
|
$
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64,497
|
|
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$
|
57,573
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|
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$
|
64,280
|
|
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$
|
57,117
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Borrowings
|
$
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21,328
|
|
|
$
|
20,935
|
|
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$
|
21,811
|
|
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$
|
21,069
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|
Total equity
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$
|
14,818
|
|
|
$
|
14,407
|
|
|
$
|
14,804
|
|
|
$
|
14,342
|
|
Selected Performance Metrics:
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|
||||||||
Purchase volume(1)(2)
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$
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38,291
|
|
|
$
|
34,268
|
|
|
$
|
70,804
|
|
|
$
|
63,894
|
|
Retail Card
|
$
|
29,530
|
|
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$
|
25,926
|
|
|
$
|
54,190
|
|
|
$
|
48,067
|
|
Payment Solutions
|
$
|
5,948
|
|
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$
|
5,702
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|
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$
|
11,197
|
|
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$
|
10,766
|
|
CareCredit
|
$
|
2,813
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|
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$
|
2,640
|
|
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$
|
5,417
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|
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$
|
5,061
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Average active accounts (in thousands)(2)(3)
|
75,525
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|
69,344
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|
|
76,545
|
|
|
70,540
|
|
||||
Net interest margin(4)
|
15.75
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%
|
|
15.33
|
%
|
|
15.92
|
%
|
|
15.69
|
%
|
||||
Net charge-offs
|
$
|
1,331
|
|
|
$
|
1,159
|
|
|
$
|
2,675
|
|
|
$
|
2,357
|
|
Net charge-offs as a % of average loan receivables, including held for sale
|
6.01
|
%
|
|
5.97
|
%
|
|
6.04
|
%
|
|
6.06
|
%
|
||||
Allowance coverage ratio(5)
|
7.10
|
%
|
|
7.43
|
%
|
|
7.10
|
%
|
|
7.43
|
%
|
||||
Return on assets(6)
|
3.3
|
%
|
|
2.9
|
%
|
|
3.8
|
%
|
|
2.8
|
%
|
||||
Return on equity(7)
|
23.1
|
%
|
|
19.4
|
%
|
|
26.7
|
%
|
|
18.8
|
%
|
||||
Equity to assets(8)
|
14.13
|
%
|
|
14.97
|
%
|
|
14.09
|
%
|
|
14.95
|
%
|
||||
Other expense as a % of average loan receivables, including held for sale
|
4.78
|
%
|
|
5.02
|
%
|
|
4.74
|
%
|
|
5.04
|
%
|
||||
Efficiency ratio(9)
|
31.3
|
%
|
|
31.0
|
%
|
|
31.1
|
%
|
|
30.9
|
%
|
||||
Effective income tax rate
|
24.4
|
%
|
|
22.0
|
%
|
|
24.4
|
%
|
|
23.2
|
%
|
||||
Selected Period-End Data:
|
|
|
|
|
|
|
|
||||||||
Loan receivables
|
$
|
81,796
|
|
|
$
|
78,879
|
|
|
$
|
81,796
|
|
|
$
|
78,879
|
|
Allowance for loan losses
|
$
|
5,809
|
|
|
$
|
5,859
|
|
|
$
|
5,809
|
|
|
$
|
5,859
|
|
30+ days past due as a % of period-end loan receivables(10)
|
4.43
|
%
|
|
4.17
|
%
|
|
4.43
|
%
|
|
4.17
|
%
|
||||
90+ days past due as a % of period-end loan receivables(10)
|
2.16
|
%
|
|
1.98
|
%
|
|
2.16
|
%
|
|
1.98
|
%
|
||||
Total active accounts (in thousands)(2)(3)
|
76,065
|
|
|
69,767
|
|
|
76,065
|
|
|
69,767
|
|
(1)
|
Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
|
(2)
|
Includes activity and accounts associated with loan receivables held for sale.
|
(3)
|
Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
|
(4)
|
Net interest margin represents net interest income divided by average interest-earning assets.
|
(5)
|
Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
|
(6)
|
Return on assets represents net earnings as a percentage of average total assets.
|
(7)
|
Return on equity represents net earnings as a percentage of average total equity.
|
(8)
|
Equity to assets represents average equity as a percentage of average total assets.
|
(9)
|
Efficiency ratio represents (i) other expense, divided by (ii) sum of net interest income, plus other income, less retailer share arrangements.
|
(10)
|
Based on customer statement-end balances extrapolated to the respective period-end date.
|
|
2019
|
|
2018
|
||||||||||||||||||
Three months ended June 30 ($ in millions)
|
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)
|
$
|
10,989
|
|
|
$
|
66
|
|
|
2.41
|
%
|
|
$
|
13,097
|
|
|
$
|
59
|
|
|
1.81
|
%
|
Securities available for sale
|
6,010
|
|
|
36
|
|
|
2.40
|
%
|
|
6,803
|
|
|
34
|
|
|
2.00
|
%
|
||||
Loan receivables(3):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards, including held for sale
|
85,488
|
|
|
4,557
|
|
|
21.38
|
%
|
|
74,809
|
|
|
4,010
|
|
|
21.50
|
%
|
||||
Consumer installment loans
|
1,924
|
|
|
44
|
|
|
9.17
|
%
|
|
1,648
|
|
|
37
|
|
|
9.01
|
%
|
||||
Commercial credit products
|
1,330
|
|
|
34
|
|
|
10.25
|
%
|
|
1,346
|
|
|
34
|
|
|
10.13
|
%
|
||||
Other
|
50
|
|
|
1
|
|
|
NM
|
|
|
50
|
|
|
—
|
|
|
—
|
%
|
||||
Total loan receivables
|
88,792
|
|
|
4,636
|
|
|
20.94
|
%
|
|
77,853
|
|
|
4,081
|
|
|
21.03
|
%
|
||||
Total interest-earning assets
|
105,791
|
|
|
4,738
|
|
|
17.96
|
%
|
|
97,753
|
|
|
4,174
|
|
|
17.13
|
%
|
||||
Non-interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
1,271
|
|
|
|
|
|
|
1,161
|
|
|
|
|
|
||||||||
Allowance for loan losses
|
(5,911
|
)
|
|
|
|
|
|
(5,768
|
)
|
|
|
|
|
||||||||
Other assets
|
3,752
|
|
|
|
|
|
|
3,068
|
|
|
|
|
|
||||||||
Total non-interest-earning assets
|
(888
|
)
|
|
|
|
|
|
(1,539
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
104,903
|
|
|
|
|
|
|
$
|
96,214
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposit accounts
|
$
|
64,226
|
|
|
$
|
397
|
|
|
2.48
|
%
|
|
$
|
57,303
|
|
|
$
|
273
|
|
|
1.91
|
%
|
Borrowings of consolidated securitization entities
|
11,785
|
|
|
90
|
|
|
3.06
|
%
|
|
11,821
|
|
|
80
|
|
|
2.71
|
%
|
||||
Senior unsecured notes
|
9,543
|
|
|
96
|
|
|
4.03
|
%
|
|
9,114
|
|
|
84
|
|
|
3.70
|
%
|
||||
Total interest-bearing liabilities
|
85,554
|
|
|
583
|
|
|
2.73
|
%
|
|
78,238
|
|
|
437
|
|
|
2.24
|
%
|
||||
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing deposit accounts
|
271
|
|
|
|
|
|
|
270
|
|
|
|
|
|
||||||||
Other liabilities
|
4,260
|
|
|
|
|
|
|
3,299
|
|
|
|
|
|
||||||||
Total non-interest-bearing liabilities
|
4,531
|
|
|
|
|
|
|
3,569
|
|
|
|
|
|
||||||||
Total liabilities
|
90,085
|
|
|
|
|
|
|
81,807
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
14,818
|
|
|
|
|
|
|
14,407
|
|
|
|
|
|
||||||||
Total liabilities and equity
|
$
|
104,903
|
|
|
|
|
|
|
$
|
96,214
|
|
|
|
|
|
||||||
Interest rate spread(4)
|
|
|
|
|
15.23
|
%
|
|
|
|
|
|
14.89
|
%
|
||||||||
Net interest income
|
|
|
$
|
4,155
|
|
|
|
|
|
|
$
|
3,737
|
|
|
|
||||||
Net interest margin(5)
|
|
|
|
|
15.75
|
%
|
|
|
|
|
|
15.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2019
|
|
2018
|
||||||||||||||||||
Six months ended June 30 ($ in millions)
|
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)
|
$
|
11,011
|
|
|
$
|
131
|
|
|
2.40
|
%
|
|
$
|
12,768
|
|
|
$
|
106
|
|
|
1.67
|
%
|
Securities available for sale
|
5,826
|
|
|
70
|
|
|
2.42
|
%
|
|
6,197
|
|
|
59
|
|
|
1.92
|
%
|
||||
Loan receivables(3):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards, including held for sale
|
86,125
|
|
|
9,168
|
|
|
21.47
|
%
|
|
75,492
|
|
|
8,109
|
|
|
21.66
|
%
|
||||
Consumer installment loans
|
1,884
|
|
|
86
|
|
|
9.21
|
%
|
|
1,610
|
|
|
73
|
|
|
9.14
|
%
|
||||
Commercial credit products
|
1,291
|
|
|
68
|
|
|
10.62
|
%
|
|
1,316
|
|
|
70
|
|
|
10.73
|
%
|
||||
Other
|
44
|
|
|
1
|
|
|
4.58
|
%
|
|
50
|
|
|
1
|
|
|
4.03
|
%
|
||||
Total loan receivables
|
89,344
|
|
|
9,323
|
|
|
21.04
|
%
|
|
78,468
|
|
|
8,253
|
|
|
21.21
|
%
|
||||
Total interest-earning assets
|
106,181
|
|
|
9,524
|
|
|
18.09
|
%
|
|
97,433
|
|
|
8,418
|
|
|
17.42
|
%
|
||||
Non-interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
1,303
|
|
|
|
|
|
|
1,179
|
|
|
|
|
|
||||||||
Allowance for loan losses
|
(6,125
|
)
|
|
|
|
|
|
(5,689
|
)
|
|
|
|
|
||||||||
Other assets
|
3,741
|
|
|
|
|
|
|
3,039
|
|
|
|
|
|
||||||||
Total non-interest-earning assets
|
(1,081
|
)
|
|
|
|
|
|
(1,471
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
105,100
|
|
|
|
|
|
|
$
|
95,962
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposit accounts
|
$
|
64,002
|
|
|
$
|
772
|
|
|
2.43
|
%
|
|
$
|
56,832
|
|
|
$
|
522
|
|
|
1.85
|
%
|
Borrowings of consolidated securitization entities
|
12,592
|
|
|
190
|
|
|
3.04
|
%
|
|
12,114
|
|
|
154
|
|
|
2.56
|
%
|
||||
Senior unsecured notes
|
9,219
|
|
|
181
|
|
|
3.96
|
%
|
|
8,955
|
|
|
163
|
|
|
3.67
|
%
|
||||
Total interest-bearing liabilities
|
85,813
|
|
|
1,143
|
|
|
2.69
|
%
|
|
77,901
|
|
|
839
|
|
|
2.17
|
%
|
||||
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing deposit accounts
|
278
|
|
|
|
|
|
|
285
|
|
|
|
|
|
||||||||
Other liabilities
|
4,205
|
|
|
|
|
|
|
3,434
|
|
|
|
|
|
||||||||
Total non-interest-bearing liabilities
|
4,483
|
|
|
|
|
|
|
3,719
|
|
|
|
|
|
||||||||
Total liabilities
|
90,296
|
|
|
|
|
|
|
81,620
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
14,804
|
|
|
|
|
|
|
14,342
|
|
|
|
|
|
||||||||
Total liabilities and equity
|
$
|
105,100
|
|
|
|
|
|
|
$
|
95,962
|
|
|
|
|
|
||||||
Interest rate spread(4)
|
|
|
|
|
15.40
|
%
|
|
|
|
|
|
15.25
|
%
|
||||||||
Net interest income
|
|
|
$
|
8,381
|
|
|
|
|
|
|
$
|
7,579
|
|
|
|
||||||
Net interest margin(5)
|
|
|
|
|
15.92
|
%
|
|
|
|
|
|
15.69
|
%
|
(1)
|
Average yields/rates are based on total interest income/expense over average balances.
|
(2)
|
Includes average restricted cash balances of $426 million and $365 million for the three months ended June 30, 2019 and 2018, respectively and $706 million and $567 million for the six months ended June 30, 2019 and 2018, respectively.
|
(3)
|
Interest income on loan receivables includes fees on loans of $661 million and $595 million for the three months ended June 30, 2019 and 2018, respectively and $1,354 million and $1,239 million for the six months ended June 30, 2019 and 2018, respectively.
|
(4)
|
Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
|
(5)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Three months ended June 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Loan receivables, including held for sale
|
$
|
88,792
|
|
|
83.9
|
%
|
|
$
|
77,853
|
|
|
79.6
|
%
|
Liquidity portfolio and other
|
16,999
|
|
|
16.1
|
%
|
|
19,900
|
|
|
20.4
|
%
|
||
Total average interest-earning assets
|
$
|
105,791
|
|
|
100.0
|
%
|
|
$
|
97,753
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Loan receivables, including held for sale
|
$
|
89,344
|
|
|
84.1
|
%
|
|
$
|
78,468
|
|
|
80.5
|
%
|
Liquidity portfolio and other
|
16,837
|
|
|
15.9
|
%
|
|
18,965
|
|
|
19.5
|
%
|
||
Total average interest-earning assets
|
$
|
106,181
|
|
|
100.0
|
%
|
|
$
|
97,433
|
|
|
100.0
|
%
|
Three months ended June 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Interest-bearing deposit accounts
|
$
|
64,226
|
|
|
75.1
|
%
|
|
$
|
57,303
|
|
|
73.2
|
%
|
Borrowings of consolidated securitization entities
|
11,785
|
|
|
13.8
|
%
|
|
11,821
|
|
|
15.1
|
%
|
||
Senior unsecured notes
|
9,543
|
|
|
11.1
|
%
|
|
9,114
|
|
|
11.7
|
%
|
||
Total average interest-bearing liabilities
|
$
|
85,554
|
|
|
100.0
|
%
|
|
$
|
78,238
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Interest-bearing deposit accounts
|
$
|
64,002
|
|
|
74.6
|
%
|
|
$
|
56,832
|
|
|
73.0
|
%
|
Borrowings of consolidated securitization entities
|
12,592
|
|
|
14.7
|
%
|
|
12,114
|
|
|
15.5
|
%
|
||
Senior unsecured notes
|
9,219
|
|
|
10.7
|
%
|
|
8,955
|
|
|
11.5
|
%
|
||
Total average interest-bearing liabilities
|
$
|
85,813
|
|
|
100.0
|
%
|
|
$
|
77,901
|
|
|
100.0
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interchange revenue
|
$
|
194
|
|
|
$
|
177
|
|
|
$
|
359
|
|
|
$
|
335
|
|
Debt cancellation fees
|
69
|
|
|
66
|
|
|
137
|
|
|
132
|
|
||||
Loyalty programs
|
(192
|
)
|
|
(192
|
)
|
|
(359
|
)
|
|
(347
|
)
|
||||
Other
|
19
|
|
|
12
|
|
|
45
|
|
|
18
|
|
||||
Total other income
|
$
|
90
|
|
|
$
|
63
|
|
|
$
|
182
|
|
|
$
|
138
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Employee costs
|
$
|
358
|
|
|
$
|
351
|
|
|
$
|
711
|
|
|
$
|
709
|
|
Professional fees
|
231
|
|
|
177
|
|
|
463
|
|
|
343
|
|
||||
Marketing and business development
|
135
|
|
|
110
|
|
|
258
|
|
|
231
|
|
||||
Information processing
|
123
|
|
|
99
|
|
|
236
|
|
|
203
|
|
||||
Other
|
212
|
|
|
238
|
|
|
434
|
|
|
477
|
|
||||
Total other expense
|
$
|
1,059
|
|
|
$
|
975
|
|
|
$
|
2,102
|
|
|
$
|
1,963
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Effective tax rate
|
24.4
|
%
|
|
22.0
|
%
|
|
24.4
|
%
|
|
23.2
|
%
|
||||
Provision for income taxes
|
$
|
276
|
|
|
$
|
196
|
|
|
$
|
631
|
|
|
$
|
403
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
29,530
|
|
|
$
|
25,926
|
|
|
$
|
54,190
|
|
|
$
|
48,067
|
|
Period-end loan receivables
|
$
|
52,307
|
|
|
$
|
51,473
|
|
|
$
|
52,307
|
|
|
$
|
51,473
|
|
Average loan receivables, including held for sale
|
$
|
59,861
|
|
|
$
|
51,011
|
|
|
$
|
60,409
|
|
|
$
|
51,628
|
|
Average active accounts (in thousands)
|
57,212
|
|
|
51,680
|
|
|
58,132
|
|
|
52,769
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
3,390
|
|
|
$
|
2,915
|
|
|
$
|
6,844
|
|
|
$
|
5,930
|
|
Retailer share arrangements
|
$
|
(836
|
)
|
|
$
|
(637
|
)
|
|
$
|
(1,776
|
)
|
|
$
|
(1,345
|
)
|
Other income
|
$
|
59
|
|
|
$
|
54
|
|
|
$
|
135
|
|
|
$
|
123
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
5,948
|
|
|
$
|
5,702
|
|
|
$
|
11,197
|
|
|
$
|
10,766
|
|
Period-end loan receivables
|
$
|
19,766
|
|
|
$
|
18,320
|
|
|
$
|
19,766
|
|
|
$
|
18,320
|
|
Average loan receivables
|
$
|
19,409
|
|
|
$
|
17,978
|
|
|
$
|
19,453
|
|
|
$
|
18,014
|
|
Average active accounts (in thousands)
|
12,227
|
|
|
11,845
|
|
|
12,321
|
|
|
11,934
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
685
|
|
|
$
|
644
|
|
|
$
|
1,371
|
|
|
$
|
1,287
|
|
Retailer share arrangements
|
$
|
(21
|
)
|
|
$
|
(14
|
)
|
|
$
|
(33
|
)
|
|
$
|
(24
|
)
|
Other income
|
$
|
11
|
|
|
$
|
(2
|
)
|
|
$
|
12
|
|
|
$
|
(4
|
)
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
2,813
|
|
|
$
|
2,640
|
|
|
$
|
5,417
|
|
|
$
|
5,061
|
|
Period-end loan receivables
|
$
|
9,723
|
|
|
$
|
9,086
|
|
|
$
|
9,723
|
|
|
$
|
9,086
|
|
Average loan receivables
|
$
|
9,522
|
|
|
$
|
8,864
|
|
|
$
|
9,482
|
|
|
$
|
8,826
|
|
Average active accounts (in thousands)
|
6,086
|
|
|
5,819
|
|
|
6,092
|
|
|
5,837
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
561
|
|
|
$
|
522
|
|
|
$
|
1,108
|
|
|
$
|
1,036
|
|
Retailer share arrangements
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
Other income
|
$
|
20
|
|
|
$
|
11
|
|
|
$
|
35
|
|
|
$
|
19
|
|
($ in millions)
|
|
Loan Receivables
Outstanding
|
|
% of Total Loan
Receivables
Outstanding
|
|||
State
|
|
||||||
California
|
|
$
|
8,668
|
|
|
10.6
|
%
|
Texas
|
|
$
|
8,098
|
|
|
9.9
|
%
|
Florida
|
|
$
|
6,846
|
|
|
8.4
|
%
|
New York
|
|
$
|
4,698
|
|
|
5.7
|
%
|
Pennsylvania
|
|
$
|
3,401
|
|
|
4.2
|
%
|
($ in millions)
|
At June 30, 2019
|
|
At December 31, 2018
|
||||
Non-accrual loan receivables(1)
|
$
|
4
|
|
|
$
|
5
|
|
Loans contractually 90 days past-due and still accruing interest
|
1,759
|
|
|
2,116
|
|
||
Earning TDRs(2)
|
931
|
|
|
1,085
|
|
||
Non-accrual, past-due and restructured loan receivables
|
$
|
2,694
|
|
|
$
|
3,206
|
|
(1)
|
Excludes purchase credit impaired (“PCI”) loan receivables.
|
(2)
|
At June 30, 2019 and December 31, 2018, balances exclude $132 million and $122 million, respectively, of TDRs which are included in loans contractually 90 days past-due and still accruing interest on the balance. See Note 4. Loan Receivables and Allowance for Loan Losses to our condensed consolidated financial statements for additional information on the financial effects of TDRs for the three and six months ended June 30, 2019 and 2018.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gross amount of interest income that would have been recorded in accordance with the original contractual terms
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
130
|
|
|
$
|
127
|
|
Interest income recognized
|
11
|
|
|
12
|
|
|
22
|
|
|
24
|
|
||||
Total interest income foregone
|
$
|
55
|
|
|
$
|
53
|
|
|
$
|
108
|
|
|
$
|
103
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Ratio of net charge-offs to average loan receivables, including held for sale
|
6.01
|
%
|
|
5.97
|
%
|
|
6.04
|
%
|
|
6.06
|
%
|
($ in millions)
|
Balance at April 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,840
|
|
|
$
|
1,169
|
|
|
$
|
(1,568
|
)
|
|
$
|
261
|
|
|
$
|
5,702
|
|
Consumer installment loans
|
47
|
|
|
13
|
|
|
(14
|
)
|
|
4
|
|
|
50
|
|
|||||
Commercial credit products
|
54
|
|
|
14
|
|
|
(15
|
)
|
|
2
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|||||
Total
|
$
|
5,942
|
|
|
$
|
1,198
|
|
|
$
|
(1,598
|
)
|
|
$
|
267
|
|
|
$
|
5,809
|
|
($ in millions)
|
Balance at April 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,640
|
|
|
$
|
1,255
|
|
|
$
|
(1,375
|
)
|
|
$
|
237
|
|
|
$
|
5,757
|
|
Consumer installment loans
|
45
|
|
|
14
|
|
|
(12
|
)
|
|
4
|
|
|
51
|
|
|||||
Commercial credit products
|
52
|
|
|
11
|
|
|
(14
|
)
|
|
1
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,738
|
|
|
$
|
1,280
|
|
|
$
|
(1,401
|
)
|
|
$
|
242
|
|
|
$
|
5,859
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
($ in millions)
|
Balance at January 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2019 |
|
|||||
|
|
||||||||||||||||||
Credit cards
|
$
|
6,327
|
|
|
$
|
2,001
|
|
|
$
|
(3,162
|
)
|
|
$
|
536
|
|
|
$
|
5,702
|
|
Consumer installment loans
|
44
|
|
|
28
|
|
|
(31
|
)
|
|
9
|
|
|
50
|
|
|||||
Commercial credit products
|
55
|
|
|
26
|
|
|
(29
|
)
|
|
3
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|||||
Total
|
$
|
6,427
|
|
|
$
|
2,057
|
|
|
$
|
(3,223
|
)
|
|
$
|
548
|
|
|
$
|
5,809
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Balance at
January 1, 2018 |
|
|
Provision
charged to
operations
|
|
|
Gross charge-
offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2018 |
|
|||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
2,589
|
|
|
$
|
(2,747
|
)
|
|
$
|
432
|
|
|
$
|
5,757
|
|
Consumer installment loans
|
40
|
|
|
30
|
|
|
(27
|
)
|
|
8
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
23
|
|
|
(26
|
)
|
|
3
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
2,642
|
|
|
$
|
(2,800
|
)
|
|
$
|
443
|
|
|
$
|
5,859
|
|
|
2019
|
|
2018
|
||||||||||||||||
Three months ended June 30 ($ in millions)
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance
|
|
%
|
|
Average
Rate
|
||||||||
Deposits(1)
|
$
|
64,226
|
|
|
75.1
|
%
|
|
2.5
|
%
|
|
$
|
57,303
|
|
|
73.2
|
%
|
|
1.9
|
%
|
Securitized financings
|
11,785
|
|
|
13.8
|
|
|
3.1
|
|
|
11,821
|
|
|
15.1
|
|
|
2.7
|
|
||
Senior unsecured notes
|
9,543
|
|
|
11.1
|
|
|
4.0
|
|
|
9,114
|
|
|
11.7
|
|
|
3.7
|
|
||
Total
|
$
|
85,554
|
|
|
100.0
|
%
|
|
2.7
|
%
|
|
$
|
78,238
|
|
|
100.0
|
%
|
|
2.2
|
%
|
(1)
|
Excludes $271 million and $270 million average balance of non-interest-bearing deposits for the three months ended June 30, 2019 and 2018, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the three months ended June 30, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2019
|
|
2018
|
||||||||||||||||
Six months ended June 30 ($ in millions)
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance
|
|
%
|
|
Average
Rate
|
||||||||
Deposits(1)
|
$
|
64,002
|
|
|
74.6
|
%
|
|
2.4
|
%
|
|
$
|
56,832
|
|
|
73.0
|
%
|
|
1.9
|
%
|
Securitized financings
|
12,592
|
|
|
14.7
|
|
|
3.0
|
|
|
12,114
|
|
|
15.5
|
|
|
2.6
|
|
||
Senior unsecured notes
|
9,219
|
|
|
10.7
|
|
|
4.0
|
|
|
8,955
|
|
|
11.5
|
|
|
3.7
|
|
||
Total
|
$
|
85,813
|
|
|
100.0
|
%
|
|
2.7
|
%
|
|
$
|
77,901
|
|
|
100.0
|
%
|
|
2.2
|
%
|
(1)
|
Excludes $278 million and $285 million average balance of non-interest-bearing deposits for the six months ended June 30, 2019 and 2018, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the six months ended June 30, 2019 and 2018.
|
Three months ended June 30 ($ in millions)
|
2019
|
|
2018
|
||||||||||||||||
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit (including IRA certificates of deposit)
|
$
|
33,492
|
|
|
52.2
|
%
|
|
2.5
|
%
|
|
$
|
26,906
|
|
|
46.9
|
%
|
|
1.9
|
%
|
Savings accounts (including money market accounts)
|
18,628
|
|
|
29.0
|
|
|
2.2
|
|
|
18,206
|
|
|
31.8
|
|
|
1.6
|
|
||
Brokered deposits
|
12,106
|
|
|
18.8
|
|
|
2.8
|
|
|
12,191
|
|
|
21.3
|
|
|
2.5
|
|
||
Total interest-bearing deposits
|
$
|
64,226
|
|
|
100.0
|
%
|
|
2.5
|
%
|
|
$
|
57,303
|
|
|
100.0
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30 ($ in millions)
|
2019
|
|
2018
|
||||||||||||||||
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|
Average
Balance
|
|
% of
Total
|
|
Average
Rate
|
|||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit (including IRA certificates of deposit)
|
$
|
32,662
|
|
|
51.1
|
%
|
|
2.5
|
%
|
|
$
|
26,467
|
|
|
46.6
|
%
|
|
1.8
|
%
|
Savings accounts (including money market accounts)
|
18,509
|
|
|
28.9
|
|
|
2.2
|
|
|
18,011
|
|
|
31.7
|
|
|
1.5
|
|
||
Brokered deposits
|
12,831
|
|
|
20.0
|
|
|
2.7
|
|
|
12,354
|
|
|
21.7
|
|
|
2.4
|
|
||
Total interest-bearing deposits
|
$
|
64,002
|
|
|
100.0
|
%
|
|
2.4
|
%
|
|
$
|
56,832
|
|
|
100.0
|
%
|
|
1.9
|
%
|
($ 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)
|
$
|
10,329
|
|
|
$
|
2,833
|
|
|
$
|
7,603
|
|
|
$
|
7,940
|
|
|
$
|
28,705
|
|
U.S. deposits ($100,000 or more)
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit (including IRA certificates of deposit)
|
4,199
|
|
|
2,475
|
|
|
11,420
|
|
|
3,768
|
|
|
21,862
|
|
|||||
Savings accounts (including money market accounts)
|
13,301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,301
|
|
|||||
Brokered deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sweep accounts
|
1,777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,777
|
|
|||||
Total
|
$
|
29,606
|
|
|
$
|
5,308
|
|
|
$
|
19,023
|
|
|
$
|
11,708
|
|
|
$
|
65,645
|
|
(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
|
|
After
Three
Through
Five
Years
|
|
After Five
Years
|
|
Total
|
||||||||||
Scheduled maturities of long-term borrowings—owed to securitization investors:
|
|
|
|
|
|
|
|
|
|
||||||||||
SYNCT(1)
|
$
|
3,037
|
|
|
$
|
3,202
|
|
|
$
|
1,590
|
|
|
$
|
—
|
|
|
$
|
7,829
|
|
SFT
|
—
|
|
|
1,025
|
|
|
—
|
|
|
—
|
|
|
1,025
|
|
|||||
SYNIT(1)
|
—
|
|
|
3,100
|
|
|
—
|
|
|
—
|
|
|
3,100
|
|
|||||
Total long-term borrowings—owed to securitization investors
|
$
|
3,037
|
|
|
$
|
7,327
|
|
|
$
|
1,590
|
|
|
$
|
—
|
|
|
$
|
11,954
|
|
(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)
|
$
|
8,541
|
|
|
12
|
|
|
~14.4% to 16.1%
|
|
SFT
|
$
|
1,025
|
|
|
10
|
|
|
12.3
|
%
|
SYNIT(2)
|
$
|
3,115
|
|
|
5
|
|
|
~14.9% to 15.6%
|
|
(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 SFT or, in the case of SYNCT and SYNIT, a range of the excess spreads relating to the particular series issued within each trust and omitting any series that have not been outstanding for at least three full monthly periods, in each case calculated in accordance with the applicable trust or series documentation, for the three securitization monthly periods ended June 30, 2019.
|
(2)
|
Includes subordinated classes of SYNCT and SYNIT notes that we own.
|
Issuance Date
|
|
Interest Rate(1)
|
|
Maturity
|
|
Principal Amount Outstanding(2)
|
||
($ in millions)
|
|
|
|
|
|
|
||
Fixed rate senior unsecured notes:
|
|
|
|
|
|
|
||
Synchrony Financial
|
|
|
|
|
|
|
||
August 2014
|
|
3.000%
|
|
August 2019
|
|
$
|
600
|
|
August 2014
|
|
3.750%
|
|
August 2021
|
|
750
|
|
|
August 2014
|
|
4.250%
|
|
August 2024
|
|
1,250
|
|
|
February 2015
|
|
2.700%
|
|
February 2020
|
|
750
|
|
|
July 2015
|
|
4.500%
|
|
July 2025
|
|
1,000
|
|
|
August 2016
|
|
3.700%
|
|
August 2026
|
|
500
|
|
|
December 2017
|
|
3.950%
|
|
December 2027
|
|
1,000
|
|
|
March 2019
|
|
4.375%
|
|
March 2024
|
|
600
|
|
|
March 2019
|
|
5.150%
|
|
March 2029
|
|
650
|
|
|
Synchrony Bank
|
|
|
|
|
|
|
||
June 2017
|
|
3.000%
|
|
June 2022
|
|
750
|
|
|
May 2018
|
|
3.650%
|
|
May 2021
|
|
750
|
|
|
Total fixed rate senior unsecured notes
|
|
|
|
|
|
$
|
8,600
|
|
|
|
|
|
|
|
|
||
Floating rate senior unsecured notes:
|
|
|
|
|
|
|
||
Synchrony Financial
|
|
|
|
|
|
|
||
February 2015
|
|
Three-month LIBOR plus 1.23%
|
|
February 2020
|
|
$
|
250
|
|
Synchrony Bank
|
|
|
|
|
|
|
||
January 2018
|
|
Three-month LIBOR plus 0.625%
|
|
March 2020
|
|
500
|
|
|
Total floating rate senior unsecured notes
|
|
|
|
|
|
$
|
750
|
|
(1)
|
Weighted average interest rate of all senior unsecured notes at June 30, 2019 was 3.81%.
|
(2)
|
The amounts shown exclude unamortized debt discount, premiums and issuance cost.
|
|
|
S&P
|
|
Fitch Ratings
|
Synchrony Financial
|
|
|
|
|
Senior unsecured debt
|
|
BBB-
|
|
BBB-
|
Outlook for Synchrony Financial senior unsecured debt
|
|
Stable
|
|
Stable
|
Synchrony Bank
|
|
|
|
|
Senior unsecured debt
|
|
BBB
|
|
BBB-
|
Outlook for Synchrony Bank senior unsecured debt
|
|
Stable
|
|
Stable
|
|
|
|
|
|
|
At June 30, 2019
|
|
At December 31, 2018
|
||||||||||||
($ in millions)
|
Amortized
Cost
|
|
Estimated Fair Value
|
|
Amortized
Cost
|
|
Estimated Fair Value
|
||||||||
U.S. government and federal agency
|
$
|
2,813
|
|
|
$
|
2,816
|
|
|
$
|
2,889
|
|
|
$
|
2,888
|
|
State and municipal
|
48
|
|
|
47
|
|
|
50
|
|
|
48
|
|
||||
Residential mortgage-backed
|
1,118
|
|
|
1,107
|
|
|
1,180
|
|
|
1,139
|
|
||||
Asset-backed
|
2,174
|
|
|
2,177
|
|
|
1,988
|
|
|
1,985
|
|
||||
U.S. corporate debt
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Total
|
$
|
6,153
|
|
|
$
|
6,147
|
|
|
$
|
6,109
|
|
|
$
|
6,062
|
|
($ 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
|
||||||||||
U.S. government and federal agency
|
$
|
2,816
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,816
|
|
State and municipal
|
—
|
|
|
1
|
|
|
4
|
|
|
42
|
|
|
47
|
|
|||||
Residential mortgage-backed
|
—
|
|
|
—
|
|
|
141
|
|
|
966
|
|
|
1,107
|
|
|||||
Asset-backed
|
1,659
|
|
|
518
|
|
|
—
|
|
|
—
|
|
|
2,177
|
|
|||||
Total(1)
|
$
|
4,475
|
|
|
$
|
519
|
|
|
$
|
145
|
|
|
$
|
1,008
|
|
|
$
|
6,147
|
|
Weighted average yield(2)
|
2.4
|
%
|
|
2.6
|
%
|
|
3.2
|
%
|
|
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, 2019
|
|
February, 2019
|
|
$
|
0.21
|
|
|
$
|
150
|
|
Three months ended June 30, 2019
|
|
May, 2019
|
|
0.21
|
|
|
145
|
|
||
Total dividends declared
|
|
|
|
$
|
0.42
|
|
|
$
|
295
|
|
|
|
|
|
|
|
|
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, 2019
|
|
30.9
|
|
|
$
|
966
|
|
Three months ended June 30, 2019
|
|
21.1
|
|
|
$
|
725
|
|
Total
|
|
52.0
|
|
|
$
|
1,691
|
|
|
|
|
|
|
|
Basel III
|
||||||||||||
|
At June 30, 2019
|
|
At December 31, 2018
|
||||||||||
($ in millions)
|
Amount
|
|
Ratio(1)
|
|
Amount
|
|
Ratio(1)
|
||||||
Total risk-based capital
|
$
|
13,893
|
|
|
15.6
|
%
|
|
$
|
14,013
|
|
|
15.3
|
%
|
Tier 1 risk-based capital
|
$
|
12,724
|
|
|
14.3
|
%
|
|
$
|
12,801
|
|
|
14.0
|
%
|
Tier 1 leverage
|
$
|
12,724
|
|
|
12.4
|
%
|
|
$
|
12,801
|
|
|
12.3
|
%
|
Common equity Tier 1 capital
|
$
|
12,724
|
|
|
14.3
|
%
|
|
$
|
12,801
|
|
|
14.0
|
%
|
Risk-weighted assets
|
$
|
88,890
|
|
|
|
|
$
|
91,742
|
|
|
|
(1)
|
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 June 30, 2019
|
|
At December 31, 2018
|
|
Minimum to be Well-
Capitalized
under Prompt Corrective Action Provisions
|
||||||||||
($ in millions)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Ratio
|
||||||
Total risk-based capital
|
$
|
12,091
|
|
|
15.8
|
%
|
|
$
|
12,258
|
|
|
15.4
|
%
|
|
10.0%
|
Tier 1 risk-based capital
|
$
|
11,081
|
|
|
14.5
|
%
|
|
$
|
11,207
|
|
|
14.1
|
%
|
|
8.0%
|
Tier 1 leverage
|
$
|
11,081
|
|
|
12.3
|
%
|
|
$
|
11,207
|
|
|
12.4
|
%
|
|
5.0%
|
Common equity Tier 1 capital
|
$
|
11,081
|
|
|
14.5
|
%
|
|
$
|
11,207
|
|
|
14.1
|
%
|
|
6.5%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions, except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income:
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans (Note 4)
|
$
|
4,636
|
|
|
$
|
4,081
|
|
|
$
|
9,323
|
|
|
$
|
8,253
|
|
Interest on cash and debt securities
|
102
|
|
|
93
|
|
|
201
|
|
|
165
|
|
||||
Total interest income
|
4,738
|
|
|
4,174
|
|
|
9,524
|
|
|
8,418
|
|
||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
Interest on deposits
|
397
|
|
|
273
|
|
|
772
|
|
|
522
|
|
||||
Interest on borrowings of consolidated securitization entities
|
90
|
|
|
80
|
|
|
190
|
|
|
154
|
|
||||
Interest on senior unsecured notes
|
96
|
|
|
84
|
|
|
181
|
|
|
163
|
|
||||
Total interest expense
|
583
|
|
|
437
|
|
|
1,143
|
|
|
839
|
|
||||
Net interest income
|
4,155
|
|
|
3,737
|
|
|
8,381
|
|
|
7,579
|
|
||||
Retailer share arrangements
|
(859
|
)
|
|
(653
|
)
|
|
(1,813
|
)
|
|
(1,373
|
)
|
||||
Provision for loan losses (Note 4)
|
1,198
|
|
|
1,280
|
|
|
2,057
|
|
|
2,642
|
|
||||
Net interest income, after retailer share arrangements and provision for loan losses
|
2,098
|
|
|
1,804
|
|
|
4,511
|
|
|
3,564
|
|
||||
Other income:
|
|
|
|
|
|
|
|
||||||||
Interchange revenue
|
194
|
|
|
177
|
|
|
359
|
|
|
335
|
|
||||
Debt cancellation fees
|
69
|
|
|
66
|
|
|
137
|
|
|
132
|
|
||||
Loyalty programs
|
(192
|
)
|
|
(192
|
)
|
|
(359
|
)
|
|
(347
|
)
|
||||
Other
|
19
|
|
|
12
|
|
|
45
|
|
|
18
|
|
||||
Total other income
|
90
|
|
|
63
|
|
|
182
|
|
|
138
|
|
||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Employee costs
|
358
|
|
|
351
|
|
|
711
|
|
|
709
|
|
||||
Professional fees
|
231
|
|
|
177
|
|
|
463
|
|
|
343
|
|
||||
Marketing and business development
|
135
|
|
|
110
|
|
|
258
|
|
|
231
|
|
||||
Information processing
|
123
|
|
|
99
|
|
|
236
|
|
|
203
|
|
||||
Other
|
212
|
|
|
238
|
|
|
434
|
|
|
477
|
|
||||
Total other expense
|
1,059
|
|
|
975
|
|
|
2,102
|
|
|
1,963
|
|
||||
Earnings before provision for income taxes
|
1,129
|
|
|
892
|
|
|
2,591
|
|
|
1,739
|
|
||||
Provision for income taxes (Note 12)
|
276
|
|
|
196
|
|
|
631
|
|
|
403
|
|
||||
Net earnings
|
$
|
853
|
|
|
$
|
696
|
|
|
$
|
1,960
|
|
|
$
|
1,336
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.25
|
|
|
$
|
0.93
|
|
|
$
|
2.82
|
|
|
$
|
1.76
|
|
Diluted
|
$
|
1.24
|
|
|
$
|
0.92
|
|
|
$
|
2.81
|
|
|
$
|
1.75
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
853
|
|
|
$
|
696
|
|
|
$
|
1,960
|
|
|
$
|
1,336
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
15
|
|
|
(4
|
)
|
|
32
|
|
|
(24
|
)
|
||||
Currency translation adjustments
|
(1
|
)
|
|
(3
|
)
|
|
1
|
|
|
(6
|
)
|
||||
Employee benefit plans
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
||||
Other comprehensive income (loss)
|
13
|
|
|
(7
|
)
|
|
32
|
|
|
(29
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
866
|
|
|
$
|
689
|
|
|
$
|
1,992
|
|
|
$
|
1,307
|
|
($ in millions)
|
At June 30, 2019
|
|
At December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and equivalents
|
$
|
11,755
|
|
|
$
|
9,396
|
|
Debt securities (Note 3)
|
6,147
|
|
|
6,062
|
|
||
Loan receivables: (Notes 4 and 5)
|
|
|
|
||||
Unsecuritized loans held for investment
|
55,178
|
|
|
64,969
|
|
||
Restricted loans of consolidated securitization entities
|
26,618
|
|
|
28,170
|
|
||
Total loan receivables
|
81,796
|
|
|
93,139
|
|
||
Less: Allowance for loan losses
|
(5,809
|
)
|
|
(6,427
|
)
|
||
Loan receivables, net
|
75,987
|
|
|
86,712
|
|
||
Loan receivables held for sale (Note 4)
|
8,096
|
|
|
—
|
|
||
Goodwill
|
1,078
|
|
|
1,024
|
|
||
Intangible assets, net (Note 6)
|
1,215
|
|
|
1,137
|
|
||
Other assets
|
2,110
|
|
|
2,461
|
|
||
Total assets
|
$
|
106,388
|
|
|
$
|
106,792
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Deposits: (Note 7)
|
|
|
|
||||
Interest-bearing deposit accounts
|
$
|
65,382
|
|
|
$
|
63,738
|
|
Non-interest-bearing deposit accounts
|
263
|
|
|
281
|
|
||
Total deposits
|
65,645
|
|
|
64,019
|
|
||
Borrowings: (Notes 5 and 8)
|
|
|
|
||||
Borrowings of consolidated securitization entities
|
11,941
|
|
|
14,439
|
|
||
Senior unsecured notes
|
9,303
|
|
|
9,557
|
|
||
Total borrowings
|
21,244
|
|
|
23,996
|
|
||
Accrued expenses and other liabilities
|
4,765
|
|
|
4,099
|
|
||
Total liabilities
|
$
|
91,654
|
|
|
$
|
92,114
|
|
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common Stock, par share value $0.001 per share; 4,000,000,000 shares authorized; 833,984,684 shares issued at both June 30, 2019 and December 31, 2018; 668,908,144 and 718,758,598 shares outstanding at June 30, 2019 and December 31, 2018, respectively
|
$
|
1
|
|
|
$
|
1
|
|
Additional paid-in capital
|
9,500
|
|
|
9,482
|
|
||
Retained earnings
|
10,627
|
|
|
8,986
|
|
||
Accumulated other comprehensive income (loss):
|
|
|
|
||||
Debt securities
|
(5
|
)
|
|
(32
|
)
|
||
Currency translation adjustments
|
(27
|
)
|
|
(25
|
)
|
||
Other
|
(11
|
)
|
|
(5
|
)
|
||
Treasury Stock, at cost; 165,076,540 and 115,226,086 shares at June 30, 2019 and December 31, 2018, respectively
|
(5,351
|
)
|
|
(3,729
|
)
|
||
Total equity
|
14,734
|
|
|
14,678
|
|
||
Total liabilities and equity
|
$
|
106,388
|
|
|
$
|
106,792
|
|
|
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, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,445
|
|
|
$
|
6,809
|
|
|
$
|
(64
|
)
|
|
$
|
(1,957
|
)
|
|
$
|
14,234
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
640
|
|
|
—
|
|
|
—
|
|
|
640
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(410
|
)
|
|
(410
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
25
|
|
|
(1
|
)
|
|
—
|
|
|
4
|
|
|
28
|
|
||||||
Dividends - common stock ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
||||||
Balance at March 31, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,470
|
|
|
$
|
7,334
|
|
|
$
|
(86
|
)
|
|
$
|
(2,363
|
)
|
|
$
|
14,356
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
696
|
|
|
—
|
|
|
—
|
|
|
696
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(491
|
)
|
|
(491
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
16
|
|
|
(11
|
)
|
|
—
|
|
|
12
|
|
|
17
|
|
||||||
Dividends - common stock ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
||||||
Balance at June 30, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,486
|
|
|
$
|
7,906
|
|
|
$
|
(93
|
)
|
|
$
|
(2,842
|
)
|
|
$
|
14,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2019
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,482
|
|
|
$
|
8,986
|
|
|
$
|
(62
|
)
|
|
$
|
(3,729
|
)
|
|
$
|
14,678
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
1,107
|
|
|
—
|
|
|
—
|
|
|
1,107
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(967
|
)
|
|
(967
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7
|
|
|
(17
|
)
|
|
—
|
|
|
32
|
|
|
22
|
|
||||||
Dividends - common stock ($0.21 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(150
|
)
|
|
—
|
|
|
—
|
|
|
(150
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
||||||
Balance at March 31, 2019
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,489
|
|
|
$
|
9,939
|
|
|
$
|
(56
|
)
|
|
$
|
(4,664
|
)
|
|
$
|
14,709
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
853
|
|
|
—
|
|
|
—
|
|
|
853
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(725
|
)
|
|
(725
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
11
|
|
|
(20
|
)
|
|
—
|
|
|
38
|
|
|
29
|
|
||||||
Dividends - common stock ($0.21 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
||||||
Balance at June 30, 2019
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,500
|
|
|
$
|
10,627
|
|
|
$
|
(43
|
)
|
|
$
|
(5,351
|
)
|
|
$
|
14,734
|
|
|
Six months ended June 30,
|
||||||
($ in millions)
|
2019
|
|
2018
|
||||
Cash flows - operating activities
|
|
|
|
||||
Net earnings
|
$
|
1,960
|
|
|
$
|
1,336
|
|
Adjustments to reconcile net earnings to cash provided from operating activities
|
|
|
|
||||
Provision for loan losses
|
2,057
|
|
|
2,642
|
|
||
Deferred income taxes
|
135
|
|
|
(11
|
)
|
||
Depreciation and amortization
|
179
|
|
|
144
|
|
||
(Increase) decrease in interest and fees receivable
|
(133
|
)
|
|
16
|
|
||
(Increase) decrease in other assets
|
(65
|
)
|
|
(112
|
)
|
||
Increase (decrease) in accrued expenses and other liabilities
|
(162
|
)
|
|
(256
|
)
|
||
All other operating activities
|
284
|
|
|
322
|
|
||
Cash provided from (used for) operating activities
|
4,255
|
|
|
4,081
|
|
||
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
||||
Maturity and sales of debt securities
|
4,097
|
|
|
2,668
|
|
||
Purchases of debt securities
|
(4,224
|
)
|
|
(5,009
|
)
|
||
Net (increase) decrease in loan receivables, including held for sale
|
1,093
|
|
|
330
|
|
||
All other investing activities
|
(338
|
)
|
|
(263
|
)
|
||
Cash provided from (used for) investing activities
|
628
|
|
|
(2,274
|
)
|
||
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
||||
Borrowings of consolidated securitization entities
|
|
|
|
||||
Proceeds from issuance of securitized debt
|
3,045
|
|
|
2,121
|
|
||
Maturities and repayment of securitized debt
|
(5,547
|
)
|
|
(2,451
|
)
|
||
Senior unsecured notes
|
|
|
|
||||
Proceeds from issuance of senior unsecured notes
|
1,240
|
|
|
1,244
|
|
||
Maturities and repayment of senior unsecured notes
|
(1,500
|
)
|
|
—
|
|
||
Net increase (decrease) in deposits
|
1,616
|
|
|
2,484
|
|
||
Purchases of treasury stock
|
(1,692
|
)
|
|
(901
|
)
|
||
Dividends paid on common stock
|
(295
|
)
|
|
(227
|
)
|
||
All other financing activities
|
19
|
|
|
(4
|
)
|
||
Cash provided from (used for) financing activities
|
(3,114
|
)
|
|
2,266
|
|
||
|
|
|
|
||||
Increase (decrease) in cash and equivalents, including restricted amounts
|
1,769
|
|
|
4,073
|
|
||
Cash and equivalents, including restricted amounts, at beginning of period
|
10,376
|
|
|
11,817
|
|
||
Cash and equivalents at end of period:
|
|
|
|
||||
Cash and equivalents
|
11,755
|
|
|
15,675
|
|
||
Restricted cash and equivalents included in other assets
|
390
|
|
|
215
|
|
||
Total cash and equivalents, including restricted amounts, at end of period
|
$
|
12,145
|
|
|
$
|
15,890
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
|
|
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
|
$
|
2,813
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
2,816
|
|
|
$
|
2,889
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2,888
|
|
State and municipal
|
48
|
|
|
—
|
|
|
(1
|
)
|
|
47
|
|
|
50
|
|
|
—
|
|
|
(2
|
)
|
|
48
|
|
||||||||
Residential mortgage-backed(a)
|
1,118
|
|
|
5
|
|
|
(16
|
)
|
|
1,107
|
|
|
1,180
|
|
|
1
|
|
|
(42
|
)
|
|
1,139
|
|
||||||||
Asset-backed(b)
|
2,174
|
|
|
3
|
|
|
—
|
|
|
2,177
|
|
|
1,988
|
|
|
—
|
|
|
(3
|
)
|
|
1,985
|
|
||||||||
U.S. corporate debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||||
Total
|
$
|
6,153
|
|
|
$
|
11
|
|
|
$
|
(17
|
)
|
|
$
|
6,147
|
|
|
$
|
6,109
|
|
|
$
|
1
|
|
|
$
|
(48
|
)
|
|
$
|
6,062
|
|
(a)
|
All of our residential mortgage-backed securities have been issued by government-sponsored entities and are collateralized by U.S. mortgages. At June 30, 2019 and December 31, 2018, $343 million and $313 million of residential mortgage-backed securities, respectively, are pledged by the Bank as collateral to the Federal Reserve to secure Federal Reserve Discount Window advances.
|
(b)
|
All of our asset-backed securities are collateralized by credit card loans.
|
|
In loss position for
|
||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
||||||||||||
|
|
|
Gross
|
|
|
|
|
Gross
|
|
||||||
|
Estimated
|
|
|
unrealized
|
|
|
Estimated
|
|
|
unrealized
|
|
||||
($ in millions)
|
fair value
|
|
|
losses
|
|
|
fair value
|
|
|
losses
|
|
||||
At June 30, 2019
|
|
|
|
|
|
|
|
||||||||
U.S. government and federal agency
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal
|
—
|
|
|
—
|
|
|
27
|
|
|
(1
|
)
|
||||
Residential mortgage-backed
|
22
|
|
|
—
|
|
|
792
|
|
|
(16
|
)
|
||||
Asset-backed
|
177
|
|
|
—
|
|
|
47
|
|
|
—
|
|
||||
Total
|
$
|
199
|
|
|
$
|
—
|
|
|
$
|
866
|
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
|
|
||||||||
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
|
)
|
|
Amortized
|
|
|
Estimated
|
|
||
At June 30, 2019 ($ in millions)
|
cost
|
|
|
fair value
|
|
||
|
|
|
|
||||
Due
|
|
|
|
||||
Within one year
|
$
|
4,470
|
|
|
$
|
4,475
|
|
After one year through five years
|
$
|
518
|
|
|
$
|
519
|
|
After five years through ten years
|
$
|
143
|
|
|
$
|
145
|
|
After ten years
|
$
|
1,022
|
|
|
$
|
1,008
|
|
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
Credit cards
|
$
|
78,446
|
|
|
$
|
89,994
|
|
Consumer installment loans
|
1,983
|
|
|
1,845
|
|
||
Commercial credit products
|
1,328
|
|
|
1,260
|
|
||
Other
|
39
|
|
|
40
|
|
||
Total loan receivables, before allowance for losses(a)(b)
|
$
|
81,796
|
|
|
$
|
93,139
|
|
(a)
|
Total loan receivables include $26.6 billion and $28.2 billion of restricted loans of consolidated securitization entities at June 30, 2019 and December 31, 2018, respectively. See Note 5. Variable Interest Entities for further information on these restricted loans.
|
(b)
|
At June 30, 2019 and December 31, 2018, loan receivables included deferred costs, net of deferred income, of $98 million and $105 million, respectively.
|
($ in millions)
|
Balance at April 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,840
|
|
|
$
|
1,169
|
|
|
$
|
(1,568
|
)
|
|
$
|
261
|
|
|
$
|
5,702
|
|
Consumer installment loans
|
47
|
|
|
13
|
|
|
(14
|
)
|
|
4
|
|
|
50
|
|
|||||
Commercial credit products
|
54
|
|
|
14
|
|
|
(15
|
)
|
|
2
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|||||
Total
|
$
|
5,942
|
|
|
$
|
1,198
|
|
|
$
|
(1,598
|
)
|
|
$
|
267
|
|
|
$
|
5,809
|
|
($ in millions)
|
Balance at April 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,640
|
|
|
$
|
1,255
|
|
|
$
|
(1,375
|
)
|
|
$
|
237
|
|
|
$
|
5,757
|
|
Consumer installment loans
|
45
|
|
|
14
|
|
|
(12
|
)
|
|
4
|
|
|
51
|
|
|||||
Commercial credit products
|
52
|
|
|
11
|
|
|
(14
|
)
|
|
1
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,738
|
|
|
$
|
1,280
|
|
|
$
|
(1,401
|
)
|
|
$
|
242
|
|
|
$
|
5,859
|
|
($ in millions)
|
Balance at January 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
6,327
|
|
|
$
|
2,001
|
|
|
$
|
(3,162
|
)
|
|
$
|
536
|
|
|
$
|
5,702
|
|
Consumer installment loans
|
44
|
|
|
28
|
|
|
(31
|
)
|
|
9
|
|
|
50
|
|
|||||
Commercial credit products
|
55
|
|
|
26
|
|
|
(29
|
)
|
|
3
|
|
|
55
|
|
|||||
Other
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|||||
Total
|
$
|
6,427
|
|
|
$
|
2,057
|
|
|
$
|
(3,223
|
)
|
|
$
|
548
|
|
|
$
|
5,809
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
Balance at January 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
June 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
2,589
|
|
|
$
|
(2,747
|
)
|
|
$
|
432
|
|
|
$
|
5,757
|
|
Consumer installment loans
|
40
|
|
|
30
|
|
|
(27
|
)
|
|
8
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
23
|
|
|
(26
|
)
|
|
3
|
|
|
50
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
2,642
|
|
|
$
|
(2,800
|
)
|
|
$
|
443
|
|
|
$
|
5,859
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2019 ($ 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
|
$
|
1,797
|
|
|
$
|
1,745
|
|
|
$
|
3,542
|
|
|
$
|
1,740
|
|
|
$
|
—
|
|
Consumer installment loans
|
25
|
|
|
4
|
|
|
29
|
|
|
—
|
|
|
4
|
|
|||||
Commercial credit products
|
35
|
|
|
19
|
|
|
54
|
|
|
19
|
|
|
—
|
|
|||||
Total delinquent loans
|
$
|
1,857
|
|
|
$
|
1,768
|
|
|
$
|
3,625
|
|
|
$
|
1,759
|
|
|
$
|
4
|
|
Percentage of total loan receivables
|
2.3
|
%
|
|
2.2
|
%
|
|
4.4
|
%
|
|
2.2
|
%
|
|
—
|
%
|
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
|
%
|
(a)
|
Excludes purchase credit impaired loan receivables.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Credit cards
|
$
|
192
|
|
|
$
|
196
|
|
|
$
|
407
|
|
|
$
|
417
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Total
|
$
|
193
|
|
|
$
|
197
|
|
|
$
|
409
|
|
|
$
|
419
|
|
At June 30, 2019 ($ in millions)
|
Total recorded
investment
|
|
|
Related allowance
|
|
|
Net recorded investment
|
|
|
Unpaid principal balance
|
|
||||
Credit cards
|
$
|
1,059
|
|
|
$
|
(501
|
)
|
|
$
|
558
|
|
|
$
|
961
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
4
|
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
||||
Total
|
$
|
1,063
|
|
|
$
|
(503
|
)
|
|
$
|
560
|
|
|
$
|
965
|
|
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
|
|
Three months ended June 30,
|
2019
|
|
2018
|
||||||||||||||||
($ 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
|
|
||||||
Credit cards
|
$
|
11
|
|
$
|
66
|
|
$
|
1,060
|
|
|
$
|
12
|
|
$
|
65
|
|
$
|
1,085
|
|
Consumer installment loans
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial credit products
|
—
|
|
—
|
|
4
|
|
|
—
|
|
—
|
|
5
|
|
||||||
Total
|
$
|
11
|
|
$
|
66
|
|
$
|
1,064
|
|
|
$
|
12
|
|
$
|
65
|
|
$
|
1,090
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six months ended June 30,
|
2019
|
|
2018
|
||||||||||||||||
($ 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
|
|
||||||
Credit cards
|
$
|
22
|
|
$
|
130
|
|
$
|
1,107
|
|
|
$
|
24
|
|
$
|
127
|
|
$
|
1,069
|
|
Consumer installment loans
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial credit products
|
—
|
|
—
|
|
4
|
|
|
—
|
|
—
|
|
5
|
|
||||||
Total
|
$
|
22
|
|
$
|
130
|
|
$
|
1,111
|
|
|
$
|
24
|
|
$
|
127
|
|
$
|
1,074
|
|
Three months ended June 30,
|
2019
|
|
2018
|
||||||||||
($ in millions)
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
||
Credit cards
|
19,745
|
|
|
$
|
48
|
|
|
19,525
|
|
|
$
|
45
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Commercial credit products
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||
Total
|
19,777
|
|
|
$
|
48
|
|
|
19,557
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
||||||
Six months ended June 30,
|
2019
|
|
2018
|
||||||||||
($ in millions)
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
||
Credit cards
|
34,312
|
|
|
$
|
82
|
|
|
37,390
|
|
|
$
|
86
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Commercial credit products
|
51
|
|
|
—
|
|
|
74
|
|
|
—
|
|
||
Total
|
34,363
|
|
|
$
|
82
|
|
|
37,464
|
|
|
$
|
86
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2018
|
|||||||||||||||||||||
|
661 or
|
|
|
601 to
|
|
|
600 or
|
|
|
661 or
|
|
|
601 to
|
|
|
600 or
|
|
|
661 or
|
|
|
601 to
|
|
|
600 or
|
|
|
higher
|
|
|
660
|
|
|
less
|
|
|
higher
|
|
|
660
|
|
|
less
|
|
|
higher
|
|
|
660
|
|
|
less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Credit cards
|
76
|
%
|
|
17
|
%
|
|
7
|
%
|
|
74
|
%
|
|
18
|
%
|
|
8
|
%
|
|
75
|
%
|
|
18
|
%
|
|
7
|
%
|
Consumer installment loans
|
81
|
%
|
|
14
|
%
|
|
5
|
%
|
|
80
|
%
|
|
14
|
%
|
|
6
|
%
|
|
81
|
%
|
|
14
|
%
|
|
5
|
%
|
Commercial credit products
|
91
|
%
|
|
5
|
%
|
|
4
|
%
|
|
90
|
%
|
|
5
|
%
|
|
5
|
%
|
|
89
|
%
|
|
6
|
%
|
|
5
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Credit cards
|
$
|
4,557
|
|
|
$
|
4,010
|
|
|
$
|
9,168
|
|
|
$
|
8,109
|
|
Consumer installment loans
|
44
|
|
|
37
|
|
|
86
|
|
|
73
|
|
||||
Commercial credit products
|
34
|
|
|
34
|
|
|
68
|
|
|
70
|
|
||||
Other
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total
|
$
|
4,636
|
|
|
$
|
4,081
|
|
|
$
|
9,323
|
|
|
$
|
8,253
|
|
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Loan receivables, net(a)
|
$
|
25,007
|
|
|
$
|
26,454
|
|
Loan receivables held for sale
|
1,080
|
|
|
—
|
|
||
Other assets(b)
|
78
|
|
|
813
|
|
||
Total
|
$
|
26,165
|
|
|
$
|
27,267
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Borrowings
|
$
|
11,941
|
|
|
$
|
14,439
|
|
Other liabilities
|
29
|
|
|
36
|
|
||
Total
|
$
|
11,970
|
|
|
$
|
14,475
|
|
(a)
|
Includes $1.6 billion and $1.7 billion of related allowance for loan losses resulting in gross restricted loans of $26.6 billion and $28.2 billion at June 30, 2019 and December 31, 2018, respectively.
|
(b)
|
Includes $71 million and $803 million of segregated funds held by the VIEs at June 30, 2019 and December 31, 2018, respectively, which are classified as restricted cash and equivalents and included as a component of other assets in our Condensed Consolidated Statements of Financial Position.
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
($ in millions)
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
||||||
Customer-related
|
|
$
|
1,732
|
|
|
$
|
(879
|
)
|
|
$
|
853
|
|
|
$
|
1,630
|
|
|
$
|
(803
|
)
|
|
$
|
827
|
|
Capitalized software and other
|
|
680
|
|
|
(318
|
)
|
|
362
|
|
|
562
|
|
|
(252
|
)
|
|
310
|
|
||||||
Total
|
|
$
|
2,412
|
|
|
$
|
(1,197
|
)
|
|
$
|
1,215
|
|
|
$
|
2,192
|
|
|
$
|
(1,055
|
)
|
|
$
|
1,137
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||
($ in millions)
|
Amount
|
|
|
Average rate(a)
|
|
|
Amount
|
|
|
Average rate(a)
|
|
||
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits
|
$
|
65,382
|
|
|
2.4
|
%
|
|
$
|
63,738
|
|
|
2.0
|
%
|
Non-interest-bearing deposits
|
263
|
|
|
—
|
|
|
281
|
|
|
—
|
|
||
Total deposits
|
$
|
65,645
|
|
|
|
|
$
|
64,019
|
|
|
|
(a)
|
Based on interest expense for the six months ended June 30, 2019 and the year ended December 31, 2018 and average deposits balances.
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
||||||
Deposits
|
$
|
12,410
|
|
|
$
|
20,892
|
|
|
$
|
3,856
|
|
|
$
|
2,744
|
|
|
$
|
1,253
|
|
|
$
|
1,986
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
($ 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%
|
|
|
2.55
|
%
|
|
$
|
8,841
|
|
|
$
|
8,664
|
|
Floating securitized borrowings
|
2020 - 2022
|
|
2.99% - 3.19%
|
|
|
3.07
|
%
|
|
3,100
|
|
|
5,775
|
|
||
Total borrowings of consolidated securitization entities
|
|
|
|
|
2.69
|
%
|
|
11,941
|
|
|
14,439
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Synchrony Financial senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed senior unsecured notes
|
2019 - 2029
|
|
2.70% - 5.15%
|
|
|
3.98
|
%
|
|
7,063
|
|
|
7,318
|
|
||
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
|
%
|
|
1,491
|
|
|
1,490
|
|
||
Floating senior unsecured notes
|
2020
|
|
2.96
|
%
|
|
2.96
|
%
|
|
499
|
|
|
499
|
|
||
Total senior unsecured notes
|
|
|
|
|
3.81
|
%
|
|
9,303
|
|
|
9,557
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total borrowings
|
|
|
|
|
|
|
$
|
21,244
|
|
|
$
|
23,996
|
|
(a)
|
The amounts presented above for outstanding borrowings include unamortized debt premiums, discounts and issuance cost.
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
||||||
Borrowings
|
$
|
1,930
|
|
|
$
|
4,708
|
|
|
$
|
5,359
|
|
|
$
|
3,600
|
|
|
$
|
707
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|||
2019 Issuances ($ in millions):
|
|
|
|
|
|
|||
Synchrony Financial
|
|
|
|
|
|
|||
Issuance Date
|
Principal Amount
|
|
Maturity
|
|
Interest Rate
|
|||
March 2019
|
$
|
600
|
|
|
2024
|
|
4.375
|
%
|
March 2019
|
$
|
650
|
|
|
2029
|
|
5.150
|
%
|
At June 30, 2019 ($ in millions)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total(a)
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Federal Agency
|
$
|
—
|
|
|
$
|
2,816
|
|
|
$
|
—
|
|
|
$
|
2,816
|
|
State and municipal
|
—
|
|
|
—
|
|
|
47
|
|
|
47
|
|
||||
Residential mortgage-backed
|
—
|
|
|
1,107
|
|
|
—
|
|
|
1,107
|
|
||||
Asset-backed
|
—
|
|
|
2,177
|
|
|
—
|
|
|
2,177
|
|
||||
Other assets(b)
|
15
|
|
|
—
|
|
|
16
|
|
|
31
|
|
||||
Total
|
$
|
15
|
|
|
$
|
6,100
|
|
|
$
|
63
|
|
|
$
|
6,178
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2018 ($ in millions)
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
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 debt
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Other assets(b)
|
15
|
|
|
—
|
|
|
13
|
|
|
28
|
|
||||
Total
|
$
|
15
|
|
|
$
|
6,012
|
|
|
$
|
63
|
|
|
$
|
6,090
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
26
|
|
|
26
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
(a)
|
For the six months ended June 30, 2019, there were no fair value measurements transferred between levels.
|
(b)
|
Other assets primarily relate to equity investments measured at fair value.
|
|
Carrying
|
|
|
Corresponding fair value amount
|
|||||||||||||||
At June 30, 2019 ($ 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)
|
$
|
11,755
|
|
|
$
|
11,755
|
|
|
$
|
11,005
|
|
|
$
|
750
|
|
|
$
|
—
|
|
Other assets(a)(b)
|
$
|
390
|
|
|
$
|
390
|
|
|
$
|
390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial assets carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan receivables, net(c)
|
$
|
75,987
|
|
|
$
|
85,260
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,260
|
|
Loan receivables held for sale(c)
|
$
|
8,096
|
|
|
$
|
8,096
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,096
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
65,645
|
|
|
$
|
65,897
|
|
|
$
|
—
|
|
|
$
|
65,897
|
|
|
$
|
—
|
|
Borrowings of consolidated securitization entities
|
$
|
11,941
|
|
|
$
|
12,031
|
|
|
$
|
—
|
|
|
$
|
8,935
|
|
|
$
|
3,096
|
|
Senior unsecured notes
|
$
|
9,303
|
|
|
$
|
9,561
|
|
|
$
|
—
|
|
|
$
|
9,561
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
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(a)(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
|
|
|
$
|
—
|
|
(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. Cash equivalents classified as Level 2 represent U.S. Government and Federal Agency debt securities with original maturities or of three months or less or acquired within 3 months or less of their maturity.
|
(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 related to the 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 June 30, 2019 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
||||||||||
|
Amount
|
|
Ratio(a)
|
|
|
Amount
|
|
|
Ratio(b)
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total risk-based capital
|
$
|
13,893
|
|
|
15.6
|
%
|
|
$
|
7,111
|
|
|
8.0
|
%
|
Tier 1 risk-based capital
|
$
|
12,724
|
|
|
14.3
|
%
|
|
$
|
5,333
|
|
|
6.0
|
%
|
Tier 1 leverage
|
$
|
12,724
|
|
|
12.4
|
%
|
|
$
|
4,116
|
|
|
4.0
|
%
|
Common equity Tier 1 Capital
|
$
|
12,724
|
|
|
14.3
|
%
|
|
$
|
4,000
|
|
|
4.5
|
%
|
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 June 30, 2019 ($ 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
|
$
|
12,091
|
|
|
15.8
|
%
|
|
$
|
6,126
|
|
|
8.0
|
%
|
|
$
|
7,658
|
|
|
10.0
|
%
|
Tier 1 risk-based capital
|
$
|
11,081
|
|
|
14.5
|
%
|
|
$
|
4,595
|
|
|
6.0
|
%
|
|
$
|
6,126
|
|
|
8.0
|
%
|
Tier 1 leverage
|
$
|
11,081
|
|
|
12.3
|
%
|
|
$
|
3,601
|
|
|
4.0
|
%
|
|
$
|
4,502
|
|
|
5.0
|
%
|
Common equity Tier I capital
|
$
|
11,081
|
|
|
14.5
|
%
|
|
$
|
3,446
|
|
|
4.5
|
%
|
|
$
|
4,978
|
|
|
6.5
|
%
|
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 I capital
|
$
|
11,207
|
|
|
14.1
|
%
|
|
$
|
3,570
|
|
|
4.5
|
%
|
|
$
|
5,157
|
|
|
6.5
|
%
|
(a)
|
Capital ratios are calculated based on the Basel III Standardized Approach rules.
|
(b)
|
At June 30, 2019 and at December 31, 2018, 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 2.5 percentage points and 1.875 percentage points, respectively, to avoid limits on capital distributions and certain discretionary bonus payments to executive officers and similar employees.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
(in millions, except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
853
|
|
|
$
|
696
|
|
|
$
|
1,960
|
|
|
$
|
1,336
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, basic
|
683.6
|
|
|
752.2
|
|
|
694.8
|
|
|
757.9
|
|
||||
Effect of dilutive securities
|
2.9
|
|
|
6.1
|
|
|
2.9
|
|
|
6.4
|
|
||||
Weighted average common shares outstanding, dilutive
|
686.5
|
|
|
758.3
|
|
|
697.7
|
|
|
764.3
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Earnings per basic common share
|
$
|
1.25
|
|
|
$
|
0.93
|
|
|
$
|
2.82
|
|
|
$
|
1.76
|
|
Earnings per diluted common share
|
$
|
1.24
|
|
|
$
|
0.92
|
|
|
$
|
2.81
|
|
|
$
|
1.75
|
|
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Unrecognized tax benefits, excluding related interest expense and penalties(a)
|
$
|
234
|
|
|
$
|
251
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate(b)
|
$
|
170
|
|
|
$
|
164
|
|
(a)
|
Interest and penalties related to unrecognized tax benefits were not material for all periods presented.
|
(b)
|
Includes gross state and local unrecognized tax benefits net of the effects of associated U.S. federal income taxes. Excludes amounts attributable to any related valuation allowances resulting from associated increases in deferred tax assets.
|
($ 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 Programs(c)
|
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs(b)
|
|
||
|
|
|
|
|
|
|
|
||||||
April 1 - 30, 2019
|
228,409
|
|
|
$
|
32.58
|
|
|
—
|
|
|
$
|
—
|
|
May 1 - 31, 2019
|
10,197,678
|
|
|
34.72
|
|
|
10,197,678
|
|
|
3,645.9
|
|
||
June 1 - 30, 2019
|
10,923,014
|
|
|
33.96
|
|
|
10,922,783
|
|
|
3,275.0
|
|
||
Total
|
21,349,101
|
|
|
$
|
34.31
|
|
|
21,120,461
|
|
|
$
|
3,275.0
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes 228,409 shares, 0 shares and 231 shares withheld in April, May and June, respectively, to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying performance stock awards, restricted stock awards or upon the exercise of stock options.
|
(b)
|
Amounts exclude commission costs.
|
(c)
|
On May 9, 2019, the Board of Directors approved a share repurchase program of up to $4.0 billion through June 30, 2020 (the “2019 Share Repurchase Program”).
|
Exhibit Number
|
Description
|
101.INS
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed electronically herewith.
|
July 25, 2019
|
|
/s/ Brian J. Wenzel Sr.
|
Date
|
|
Brian J. Wenzel Sr.
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Synchrony Financial;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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)) for the registrant and have:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
/s/ Margaret M. Keane
|
Margaret M. Keane
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Synchrony Financial;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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)) for the registrant and have:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
/s/ Brian J. Wenzel Sr.
|
Brian J. Wenzel Sr.
Chief Financial Officer
|
1.
|
The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
|
/s/ Margaret M. Keane
|
Margaret M. Keane
Chief Executive Officer
|
/s/ Brian J. Wenzel Sr.
|
Brian J. Wenzel Sr.
Chief Financial Officer
|