☒
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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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61.9
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%
|
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18.8
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%
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15.1
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%
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95.8
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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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—
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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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2.5
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2.5
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Other
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0.1
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—
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—
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0.1
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Total
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63.6
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%
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18.8
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%
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17.6
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%
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100.0
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%
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•
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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 57.4% to $1,056 million and 50.3% to $3,016 million for the three and nine months ended September 30, 2019, respectively, which included the impact of reductions in reserves related to the sale of the Walmart consumer portfolio of $248 million and $829 million, respectively. The increases in net earnings were also driven primarily by higher net interest income, partially offset by increases in retailer share arrangements, and other expense.
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•
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Loan receivables decreased 4.9% to $83,207 million at September 30, 2019 compared to September 30, 2018, primarily driven by the reclassification of $8.2 billion of loan receivables associated with the Walmart portfolio to loan receivables held for sale, partially offset by higher purchase volume and average active account growth.
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•
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Net interest income increased 4.4% to $4,389 million and 8.4% to $12,770 million for the three and nine months ended September 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 16.6% to $1,016 million and 26.1% to $2,829 million for the three and nine months ended September 30, 2019, respectively, primarily due to improved performance of the programs in which we have retailer share arrangements and growth.
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•
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Over-30 day loan delinquencies as a percentage of period-end loan receivables decreased 12 basis points to 4.47% at September 30, 2019, and the net charge-off rate increased 38 basis points to 5.35% and 13 basis points to 5.80% for the three and nine months ended September 30, 2019, respectively.
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•
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Provision for loan losses decreased by $432 million, or 29.8%, and $1,017 million, or 24.8%, for the three and nine months ended September 30, 2019, respectively, primarily driven by reductions in reserves for loan losses related to the Walmart consumer portfolio sale which was completed in October 2019. These reductions totaled $326 million and $1,095 million for the three and nine months ended September 30, 2019, respectively. Our allowance coverage ratio (allowance for loan losses as a percent of end of period loan receivables) decreased to 6.74% at September 30, 2019, as compared to 7.11% at September 30, 2018.
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•
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Other expense increased by $10 million, or 0.9%, and $149 million, or 4.9%, for the three and nine months ended September 30, 2019, respectively. The increase in the three months ended September 30, 2019 was primarily driven by business growth, partially offset by cost savings executed in advance of the Walmart consumer portfolio sale. The increase in the nine months ended September 30, 2019 was primarily driven by the PayPal Credit acquisition and business growth.
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•
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At September 30, 2019, deposits represented 76% of our total funding sources. Total deposits increased 3.1% to $66.0 billion at September 30, 2019, compared to December 31, 2018. Growth in our direct deposits of 8.7% to $53.7 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 plans to increase our quarterly dividend to $0.22 per common share commencing in the third quarter of 2019. During the nine months ended September 30, 2019, we repurchased $2.2 billion of our outstanding common stock, and declared and paid cash dividends of $0.64 per share, or $440 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 Retail Card sales platform, we extended and expanded our program with PayPal and will become the exclusive issuer of Venmo co-branded consumer credit card and extended our program agreement with Dick's Sporting Goods.
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•
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On October 11, 2019, we completed our sale and conversion of $8.2 billion of loan receivables associated with our Retail Card program agreement with Walmart.
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•
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In our Payment Solutions sales platform, we expanded our Synchrony Car Care program acceptance network, announced our new partnerships with Samsung HVAC and Zero Motorcycles, extended our program agreements with CCA Global Partners, Conn's HomePlus, La-Z-Boy, P.C. Richard & Son, Penske, Polaris, Rheem and Suzuki and launched our new program with Fanatics.
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•
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In our CareCredit sales platform, we expanded our network through our new partnerships with Baylor Scott & White Medical Center, Lehigh Valley Physician's Group, Loyale, Simplee and St. Luke's University Health Network, renewed our agreement with Bosley and launched our new program with Lighthouse.
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Three months ended September 30,
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Nine months ended September 30,
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($ in millions)
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2019
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2018
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2019
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2018
|
||||||||
Interest income
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$
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4,981
|
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$
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4,694
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$
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14,505
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$
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13,112
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Interest expense
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592
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488
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1,735
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1,327
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||||
Net interest income
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4,389
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4,206
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12,770
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11,785
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Retailer share arrangements
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(1,016
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)
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(871
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)
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(2,829
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)
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(2,244
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)
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||||
Provision for loan losses
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1,019
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1,451
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3,076
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4,093
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Net interest income, after retailer share arrangements and provision for loan losses
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2,354
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1,884
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6,865
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5,448
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Other income
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85
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63
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|
267
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201
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Other expense
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1,064
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1,054
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3,166
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|
3,017
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Earnings before provision for income taxes
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1,375
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|
893
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3,966
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2,632
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Provision for income taxes
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319
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222
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|
950
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|
625
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Net earnings
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$
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1,056
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$
|
671
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$
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3,016
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$
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2,007
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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 September 30,
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Nine months ended September 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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90,556
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$
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86,783
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$
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89,752
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$
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81,270
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Total assets
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$
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106,413
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$
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100,449
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$
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105,542
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$
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97,474
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Deposits
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$
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65,898
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|
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$
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60,398
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$
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64,826
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$
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58,223
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Borrowings
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$
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21,117
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$
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21,858
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$
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21,577
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|
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$
|
21,334
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Total equity
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$
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14,828
|
|
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$
|
14,421
|
|
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$
|
14,812
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|
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$
|
14,369
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Selected Performance Metrics:
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||||||||
Purchase volume(1)(2)
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$
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38,395
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$
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36,443
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$
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109,199
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|
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$
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100,337
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Retail Card
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$
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29,282
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|
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$
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27,863
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|
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$
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83,472
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|
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$
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75,930
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Payment Solutions
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$
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6,281
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|
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$
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6,007
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$
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17,478
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|
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$
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16,773
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CareCredit
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$
|
2,832
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|
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$
|
2,573
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|
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$
|
8,249
|
|
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$
|
7,634
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Average active accounts (in thousands)(2)(3)
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76,695
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|
75,482
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|
|
76,653
|
|
|
72,594
|
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||||
Net interest margin(4)
|
16.29
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%
|
|
16.41
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%
|
|
16.04
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%
|
|
15.94
|
%
|
||||
Net charge-offs
|
$
|
1,221
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|
|
$
|
1,087
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|
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$
|
3,896
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|
|
$
|
3,444
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|
Net charge-offs as a % of average loan receivables, including held for sale
|
5.35
|
%
|
|
4.97
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%
|
|
5.80
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%
|
|
5.67
|
%
|
||||
Allowance coverage ratio(5)
|
6.74
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%
|
|
7.11
|
%
|
|
6.74
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%
|
|
7.11
|
%
|
||||
Return on assets(6)
|
3.9
|
%
|
|
2.7
|
%
|
|
3.8
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%
|
|
2.8
|
%
|
||||
Return on equity(7)
|
28.3
|
%
|
|
18.5
|
%
|
|
27.2
|
%
|
|
18.7
|
%
|
||||
Equity to assets(8)
|
13.93
|
%
|
|
14.36
|
%
|
|
14.03
|
%
|
|
14.74
|
%
|
||||
Other expense as a % of average loan receivables, including held for sale
|
4.66
|
%
|
|
4.82
|
%
|
|
4.72
|
%
|
|
4.96
|
%
|
||||
Efficiency ratio(9)
|
30.8
|
%
|
|
31.0
|
%
|
|
31.0
|
%
|
|
31.0
|
%
|
||||
Effective income tax rate
|
23.2
|
%
|
|
24.9
|
%
|
|
24.0
|
%
|
|
23.7
|
%
|
||||
Selected Period-End Data:
|
|
|
|
|
|
|
|
||||||||
Loan receivables
|
$
|
83,207
|
|
|
$
|
87,521
|
|
|
$
|
83,207
|
|
|
$
|
87,521
|
|
Allowance for loan losses
|
$
|
5,607
|
|
|
$
|
6,223
|
|
|
$
|
5,607
|
|
|
$
|
6,223
|
|
30+ days past due as a % of period-end loan receivables(10)
|
4.47
|
%
|
|
4.59
|
%
|
|
4.47
|
%
|
|
4.59
|
%
|
||||
90+ days past due as a % of period-end loan receivables(10)
|
2.07
|
%
|
|
2.09
|
%
|
|
2.07
|
%
|
|
2.09
|
%
|
||||
Total active accounts (in thousands)(2)(3)
|
77,094
|
|
|
75,457
|
|
|
77,094
|
|
|
75,457
|
|
(1)
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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.
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(3)
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Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
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(4)
|
Net interest margin represents net interest income divided by average interest-earning assets.
|
(5)
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Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
|
(6)
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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.
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(10)
|
Based on customer statement-end balances extrapolated to the respective period-end date.
|
|
2019
|
|
2018
|
||||||||||||||||||
Three months ended September 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)
|
$
|
10,947
|
|
|
$
|
59
|
|
|
2.14
|
%
|
|
$
|
7,901
|
|
|
$
|
39
|
|
|
1.96
|
%
|
Securities available for sale
|
5,389
|
|
|
32
|
|
|
2.36
|
%
|
|
7,022
|
|
|
38
|
|
|
2.15
|
%
|
||||
Loan receivables(3):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards, including held for sale
|
87,156
|
|
|
4,807
|
|
|
21.88
|
%
|
|
83,609
|
|
|
4,538
|
|
|
21.53
|
%
|
||||
Consumer installment loans
|
2,022
|
|
|
48
|
|
|
9.42
|
%
|
|
1,753
|
|
|
41
|
|
|
9.28
|
%
|
||||
Commercial credit products
|
1,329
|
|
|
35
|
|
|
10.45
|
%
|
|
1,355
|
|
|
37
|
|
|
10.83
|
%
|
||||
Other
|
49
|
|
|
—
|
|
|
—
|
%
|
|
66
|
|
|
1
|
|
|
NM
|
|
||||
Total loan receivables
|
90,556
|
|
|
4,890
|
|
|
21.42
|
%
|
|
86,783
|
|
|
4,617
|
|
|
21.11
|
%
|
||||
Total interest-earning assets
|
106,892
|
|
|
4,981
|
|
|
18.49
|
%
|
|
101,706
|
|
|
4,694
|
|
|
18.31
|
%
|
||||
Non-interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
1,374
|
|
|
|
|
|
|
1,217
|
|
|
|
|
|
||||||||
Allowance for loan losses
|
(5,773
|
)
|
|
|
|
|
|
(5,956
|
)
|
|
|
|
|
||||||||
Other assets
|
3,920
|
|
|
|
|
|
|
3,482
|
|
|
|
|
|
||||||||
Total non-interest-earning assets
|
(479
|
)
|
|
|
|
|
|
(1,257
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
106,413
|
|
|
|
|
|
|
$
|
100,449
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposit accounts
|
$
|
65,615
|
|
|
$
|
411
|
|
|
2.49
|
%
|
|
$
|
60,123
|
|
|
$
|
314
|
|
|
2.07
|
%
|
Borrowings of consolidated securitization entities
|
11,770
|
|
|
88
|
|
|
2.97
|
%
|
|
12,306
|
|
|
86
|
|
|
2.77
|
%
|
||||
Senior unsecured notes
|
9,347
|
|
|
93
|
|
|
3.95
|
%
|
|
9,552
|
|
|
88
|
|
|
3.66
|
%
|
||||
Total interest-bearing liabilities
|
86,732
|
|
|
592
|
|
|
2.71
|
%
|
|
81,981
|
|
|
488
|
|
|
2.36
|
%
|
||||
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing deposit accounts
|
283
|
|
|
|
|
|
|
275
|
|
|
|
|
|
||||||||
Other liabilities
|
4,570
|
|
|
|
|
|
|
3,772
|
|
|
|
|
|
||||||||
Total non-interest-bearing liabilities
|
4,853
|
|
|
|
|
|
|
4,047
|
|
|
|
|
|
||||||||
Total liabilities
|
91,585
|
|
|
|
|
|
|
86,028
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
14,828
|
|
|
|
|
|
|
14,421
|
|
|
|
|
|
||||||||
Total liabilities and equity
|
$
|
106,413
|
|
|
|
|
|
|
$
|
100,449
|
|
|
|
|
|
||||||
Interest rate spread(4)
|
|
|
|
|
15.78
|
%
|
|
|
|
|
|
15.95
|
%
|
||||||||
Net interest income
|
|
|
$
|
4,389
|
|
|
|
|
|
|
$
|
4,206
|
|
|
|
||||||
Net interest margin(5)
|
|
|
|
|
16.29
|
%
|
|
|
|
|
|
16.41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2019
|
|
2018
|
||||||||||||||||||
Nine months ended September 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
|
|
|
$
|
190
|
|
|
2.31
|
%
|
|
$
|
11,128
|
|
|
$
|
145
|
|
|
1.74
|
%
|
Securities available for sale
|
5,679
|
|
|
102
|
|
|
2.40
|
%
|
|
6,475
|
|
|
97
|
|
|
2.00
|
%
|
||||
Loan receivables(3):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards, including held for sale
|
86,471
|
|
|
13,975
|
|
|
21.61
|
%
|
|
78,227
|
|
|
12,647
|
|
|
21.62
|
%
|
||||
Consumer installment loans
|
1,931
|
|
|
134
|
|
|
9.28
|
%
|
|
1,658
|
|
|
114
|
|
|
9.19
|
%
|
||||
Commercial credit products
|
1,304
|
|
|
103
|
|
|
10.56
|
%
|
|
1,329
|
|
|
107
|
|
|
10.76
|
%
|
||||
Other
|
46
|
|
|
1
|
|
|
2.91
|
%
|
|
56
|
|
|
2
|
|
|
4.77
|
%
|
||||
Total loan receivables
|
89,752
|
|
|
14,213
|
|
|
21.17
|
%
|
|
81,270
|
|
|
12,870
|
|
|
21.17
|
%
|
||||
Total interest-earning assets
|
106,420
|
|
|
14,505
|
|
|
18.22
|
%
|
|
98,873
|
|
|
13,112
|
|
|
17.73
|
%
|
||||
Non-interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
1,327
|
|
|
|
|
|
|
1,192
|
|
|
|
|
|
||||||||
Allowance for loan losses
|
(6,006
|
)
|
|
|
|
|
|
(5,779
|
)
|
|
|
|
|
||||||||
Other assets
|
3,801
|
|
|
|
|
|
|
3,188
|
|
|
|
|
|
||||||||
Total non-interest-earning assets
|
(878
|
)
|
|
|
|
|
|
(1,399
|
)
|
|
|
|
|
||||||||
Total assets
|
$
|
105,542
|
|
|
|
|
|
|
$
|
97,474
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposit accounts
|
$
|
64,546
|
|
|
$
|
1,183
|
|
|
2.45
|
%
|
|
$
|
57,941
|
|
|
$
|
836
|
|
|
1.93
|
%
|
Borrowings of consolidated securitization entities
|
12,315
|
|
|
278
|
|
|
3.02
|
%
|
|
12,178
|
|
|
240
|
|
|
2.63
|
%
|
||||
Senior unsecured notes
|
9,262
|
|
|
274
|
|
|
3.96
|
%
|
|
9,156
|
|
|
251
|
|
|
3.67
|
%
|
||||
Total interest-bearing liabilities
|
86,123
|
|
|
1,735
|
|
|
2.69
|
%
|
|
79,275
|
|
|
1,327
|
|
|
2.24
|
%
|
||||
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest-bearing deposit accounts
|
280
|
|
|
|
|
|
|
282
|
|
|
|
|
|
||||||||
Other liabilities
|
4,327
|
|
|
|
|
|
|
3,548
|
|
|
|
|
|
||||||||
Total non-interest-bearing liabilities
|
4,607
|
|
|
|
|
|
|
3,830
|
|
|
|
|
|
||||||||
Total liabilities
|
90,730
|
|
|
|
|
|
|
83,105
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity
|
14,812
|
|
|
|
|
|
|
14,369
|
|
|
|
|
|
||||||||
Total liabilities and equity
|
$
|
105,542
|
|
|
|
|
|
|
$
|
97,474
|
|
|
|
|
|
||||||
Interest rate spread(4)
|
|
|
|
|
15.53
|
%
|
|
|
|
|
|
15.49
|
%
|
||||||||
Net interest income
|
|
|
$
|
12,770
|
|
|
|
|
|
|
$
|
11,785
|
|
|
|
||||||
Net interest margin(5)
|
|
|
|
|
16.04
|
%
|
|
|
|
|
|
15.94
|
%
|
(1)
|
Average yields/rates are based on total interest income/expense over average balances.
|
(2)
|
Includes average restricted cash balances of $1,219 million and $480 million for the three months ended September 30, 2019 and 2018, respectively and $879 million and $538 million for the nine months ended September 30, 2019 and 2018, respectively.
|
(3)
|
Interest income on loan receivables includes fees on loans of $737 million and $732 million for the three months ended September 30, 2019 and 2018, respectively and $2,091 million and $1,971 million for the nine months ended September 30, 2019 and 2018, respectively.
|
(4)
|
Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
|
(5)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Three months ended September 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Loan receivables, including held for sale
|
$
|
90,556
|
|
|
84.7
|
%
|
|
$
|
86,783
|
|
|
85.3
|
%
|
Liquidity portfolio and other
|
16,336
|
|
|
15.3
|
%
|
|
14,923
|
|
|
14.7
|
%
|
||
Total average interest-earning assets
|
$
|
106,892
|
|
|
100.0
|
%
|
|
$
|
101,706
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Nine months ended September 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Loan receivables, including held for sale
|
$
|
89,752
|
|
|
84.3
|
%
|
|
$
|
81,270
|
|
|
82.2
|
%
|
Liquidity portfolio and other
|
16,668
|
|
|
15.7
|
%
|
|
17,603
|
|
|
17.8
|
%
|
||
Total average interest-earning assets
|
$
|
106,420
|
|
|
100.0
|
%
|
|
$
|
98,873
|
|
|
100.0
|
%
|
Three months ended September 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Interest-bearing deposit accounts
|
$
|
65,615
|
|
|
75.6
|
%
|
|
$
|
60,123
|
|
|
73.3
|
%
|
Borrowings of consolidated securitization entities
|
11,770
|
|
|
13.6
|
%
|
|
12,306
|
|
|
15.0
|
%
|
||
Senior unsecured notes
|
9,347
|
|
|
10.8
|
%
|
|
9,552
|
|
|
11.7
|
%
|
||
Total average interest-bearing liabilities
|
$
|
86,732
|
|
|
100.0
|
%
|
|
$
|
81,981
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Nine months ended September 30 ($ in millions)
|
2019
|
|
%
|
|
2018
|
|
%
|
||||||
Interest-bearing deposit accounts
|
$
|
64,546
|
|
|
74.9
|
%
|
|
$
|
57,941
|
|
|
73.1
|
%
|
Borrowings of consolidated securitization entities
|
12,315
|
|
|
14.3
|
%
|
|
12,178
|
|
|
15.4
|
%
|
||
Senior unsecured notes
|
9,262
|
|
|
10.8
|
%
|
|
9,156
|
|
|
11.5
|
%
|
||
Total average interest-bearing liabilities
|
$
|
86,123
|
|
|
100.0
|
%
|
|
$
|
79,275
|
|
|
100.0
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interchange revenue
|
$
|
197
|
|
|
$
|
182
|
|
|
$
|
556
|
|
|
$
|
517
|
|
Debt cancellation fees
|
64
|
|
|
65
|
|
|
201
|
|
|
197
|
|
||||
Loyalty programs
|
(203
|
)
|
|
(196
|
)
|
|
(562
|
)
|
|
(543
|
)
|
||||
Other
|
27
|
|
|
12
|
|
|
72
|
|
|
30
|
|
||||
Total other income
|
$
|
85
|
|
|
$
|
63
|
|
|
$
|
267
|
|
|
$
|
201
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Employee costs
|
$
|
359
|
|
|
$
|
365
|
|
|
$
|
1,070
|
|
|
$
|
1,074
|
|
Professional fees
|
205
|
|
|
232
|
|
|
668
|
|
|
575
|
|
||||
Marketing and business development
|
139
|
|
|
131
|
|
|
397
|
|
|
362
|
|
||||
Information processing
|
127
|
|
|
105
|
|
|
363
|
|
|
308
|
|
||||
Other
|
234
|
|
|
221
|
|
|
668
|
|
|
698
|
|
||||
Total other expense
|
$
|
1,064
|
|
|
$
|
1,054
|
|
|
$
|
3,166
|
|
|
$
|
3,017
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Effective tax rate
|
23.2
|
%
|
|
24.9
|
%
|
|
24.0
|
%
|
|
23.7
|
%
|
||||
Provision for income taxes
|
$
|
319
|
|
|
$
|
222
|
|
|
$
|
950
|
|
|
$
|
625
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
29,282
|
|
|
$
|
27,863
|
|
|
$
|
83,472
|
|
|
$
|
75,930
|
|
Period-end loan receivables
|
$
|
52,697
|
|
|
$
|
59,139
|
|
|
$
|
52,697
|
|
|
$
|
59,139
|
|
Average loan receivables, including held for sale
|
$
|
60,660
|
|
|
$
|
58,964
|
|
|
$
|
60,494
|
|
|
$
|
54,101
|
|
Average active accounts (in thousands)
|
58,082
|
|
|
57,459
|
|
|
58,156
|
|
|
54,717
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
3,570
|
|
|
$
|
3,383
|
|
|
$
|
10,414
|
|
|
$
|
9,313
|
|
Retailer share arrangements
|
$
|
(998
|
)
|
|
$
|
(844
|
)
|
|
$
|
(2,774
|
)
|
|
$
|
(2,189
|
)
|
Other income
|
$
|
65
|
|
|
$
|
57
|
|
|
$
|
200
|
|
|
$
|
180
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
6,281
|
|
|
$
|
6,007
|
|
|
$
|
17,478
|
|
|
$
|
16,773
|
|
Period-end loan receivables
|
$
|
20,478
|
|
|
$
|
19,064
|
|
|
$
|
20,478
|
|
|
$
|
19,064
|
|
Average loan receivables
|
$
|
20,051
|
|
|
$
|
18,659
|
|
|
$
|
19,654
|
|
|
$
|
18,231
|
|
Average active accounts (in thousands)
|
12,384
|
|
|
12,062
|
|
|
12,354
|
|
|
11,992
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
721
|
|
|
$
|
683
|
|
|
$
|
2,092
|
|
|
$
|
1,970
|
|
Retailer share arrangements
|
$
|
(15
|
)
|
|
$
|
(24
|
)
|
|
$
|
(48
|
)
|
|
$
|
(48
|
)
|
Other income
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
11
|
|
|
$
|
(6
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Purchase volume
|
$
|
2,832
|
|
|
$
|
2,573
|
|
|
$
|
8,249
|
|
|
$
|
7,634
|
|
Period-end loan receivables
|
$
|
10,032
|
|
|
$
|
9,318
|
|
|
$
|
10,032
|
|
|
$
|
9,318
|
|
Average loan receivables
|
$
|
9,845
|
|
|
$
|
9,160
|
|
|
$
|
9,604
|
|
|
$
|
8,938
|
|
Average active accounts (in thousands)
|
6,229
|
|
|
5,961
|
|
|
6,143
|
|
|
5,885
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
599
|
|
|
$
|
551
|
|
|
$
|
1,707
|
|
|
$
|
1,587
|
|
Retailer share arrangements
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
$
|
(7
|
)
|
Other income
|
$
|
21
|
|
|
$
|
8
|
|
|
$
|
56
|
|
|
$
|
27
|
|
($ in millions)
|
At September 30, 2019
|
|
(%)
|
|
At December 31, 2018
|
|
(%)
|
||||||
Loans
|
|
|
|
|
|
||||||||
Credit cards
|
$
|
79,788
|
|
|
95.8
|
%
|
|
$
|
89,994
|
|
|
96.6
|
%
|
Consumer installment loans
|
2,050
|
|
|
2.5
|
|
|
1,845
|
|
|
2.0
|
|
||
Commercial credit products
|
1,317
|
|
|
1.6
|
|
|
1,260
|
|
|
1.4
|
|
||
Other
|
52
|
|
|
0.1
|
|
|
40
|
|
|
—
|
|
||
Total loans
|
$
|
83,207
|
|
|
100.0
|
%
|
|
$
|
93,139
|
|
|
100.0
|
%
|
($ in millions)
|
|
Loan Receivables
Outstanding
|
|
% of Total Loan
Receivables
Outstanding
|
|||
State
|
|
||||||
California
|
|
$
|
8,836
|
|
|
10.6
|
%
|
Texas
|
|
$
|
8,301
|
|
|
10.0
|
%
|
Florida
|
|
$
|
7,004
|
|
|
8.4
|
%
|
New York
|
|
$
|
4,784
|
|
|
5.7
|
%
|
Pennsylvania
|
|
$
|
3,430
|
|
|
4.1
|
%
|
($ in millions)
|
At September 30, 2019
|
|
At December 31, 2018
|
||||
Non-accrual loan receivables(1)
|
$
|
5
|
|
|
$
|
5
|
|
Loans contractually 90 days past-due and still accruing interest
|
1,715
|
|
|
2,116
|
|
||
Earning TDRs(2)
|
978
|
|
|
1,085
|
|
||
Non-accrual, past-due and restructured loan receivables
|
$
|
2,698
|
|
|
$
|
3,206
|
|
(1)
|
Excludes purchase credit impaired (“PCI”) loan receivables.
|
(2)
|
At September 30, 2019 and December 31, 2018, balances exclude $114 million and $122 million, respectively, of TDRs which are included in loans contractually 90 days past-due and still accruing interest on the balance. See Note 4. Loan Receivables and Allowance for Loan Losses to our condensed consolidated financial statements for additional information on the financial effects of TDRs for the three and nine months ended September 30, 2019 and 2018.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gross amount of interest income that would have been recorded in accordance with the original contractual terms
|
$
|
68
|
|
|
$
|
68
|
|
|
$
|
198
|
|
|
$
|
195
|
|
Interest income recognized
|
11
|
|
|
13
|
|
|
33
|
|
|
37
|
|
||||
Total interest income foregone
|
$
|
57
|
|
|
$
|
55
|
|
|
$
|
165
|
|
|
$
|
158
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Ratio of net charge-offs to average loan receivables, including held for sale
|
5.35
|
%
|
|
4.97
|
%
|
|
5.80
|
%
|
|
5.67
|
%
|
($ in millions)
|
Balance at July 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,702
|
|
|
$
|
993
|
|
|
$
|
(1,422
|
)
|
|
$
|
225
|
|
|
$
|
5,498
|
|
Consumer installment loans
|
50
|
|
|
18
|
|
|
(16
|
)
|
|
4
|
|
|
56
|
|
|||||
Commercial credit products
|
55
|
|
|
9
|
|
|
(14
|
)
|
|
2
|
|
|
52
|
|
|||||
Other
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,809
|
|
|
$
|
1,019
|
|
|
$
|
(1,452
|
)
|
|
$
|
231
|
|
|
$
|
5,607
|
|
($ in millions)
|
Balance at July 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,757
|
|
|
$
|
1,427
|
|
|
$
|
(1,269
|
)
|
|
$
|
202
|
|
|
$
|
6,117
|
|
Consumer installment loans
|
51
|
|
|
9
|
|
|
(13
|
)
|
|
4
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
15
|
|
|
(13
|
)
|
|
2
|
|
|
54
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,859
|
|
|
$
|
1,451
|
|
|
$
|
(1,295
|
)
|
|
$
|
208
|
|
|
$
|
6,223
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
($ in millions)
|
Balance at January 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2019 |
|
|||||
|
|
||||||||||||||||||
Credit cards
|
$
|
6,327
|
|
|
$
|
2,994
|
|
|
$
|
(4,584
|
)
|
|
$
|
761
|
|
|
$
|
5,498
|
|
Consumer installment loans
|
44
|
|
|
46
|
|
|
(47
|
)
|
|
13
|
|
|
56
|
|
|||||
Commercial credit products
|
55
|
|
|
35
|
|
|
(43
|
)
|
|
5
|
|
|
52
|
|
|||||
Other
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
6,427
|
|
|
$
|
3,076
|
|
|
$
|
(4,675
|
)
|
|
$
|
779
|
|
|
$
|
5,607
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Balance at
January 1, 2018 |
|
|
Provision
charged to
operations
|
|
|
Gross charge-
offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2018 |
|
|||||
($ in millions)
|
|
||||||||||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
4,016
|
|
|
$
|
(4,016
|
)
|
|
$
|
634
|
|
|
$
|
6,117
|
|
Consumer installment loans
|
40
|
|
|
39
|
|
|
(40
|
)
|
|
12
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
38
|
|
|
(39
|
)
|
|
5
|
|
|
54
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
4,093
|
|
|
$
|
(4,095
|
)
|
|
$
|
651
|
|
|
$
|
6,223
|
|
|
2019
|
|
2018
|
||||||||||||||||
Three months ended September 30 ($ in millions)
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance
|
|
%
|
|
Average
Rate
|
||||||||
Deposits(1)
|
$
|
65,615
|
|
|
75.6
|
%
|
|
2.5
|
%
|
|
$
|
60,123
|
|
|
73.3
|
%
|
|
2.1
|
%
|
Securitized financings
|
11,770
|
|
|
13.6
|
|
|
3.0
|
|
|
12,306
|
|
|
15.0
|
|
|
2.8
|
|
||
Senior unsecured notes
|
9,347
|
|
|
10.8
|
|
|
4.0
|
|
|
9,552
|
|
|
11.7
|
|
|
3.7
|
|
||
Total
|
$
|
86,732
|
|
|
100.0
|
%
|
|
2.7
|
%
|
|
$
|
81,981
|
|
|
100.0
|
%
|
|
2.4
|
%
|
(1)
|
Excludes $283 million and $275 million average balance of non-interest-bearing deposits for the three months ended September 30, 2019 and 2018, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the three months ended September 30, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2019
|
|
2018
|
||||||||||||||||
Nine months ended September 30 ($ in millions)
|
Average
Balance
|
|
%
|
|
Average
Rate
|
|
Average
Balance
|
|
%
|
|
Average
Rate
|
||||||||
Deposits(1)
|
$
|
64,546
|
|
|
74.9
|
%
|
|
2.5
|
%
|
|
$
|
57,941
|
|
|
73.1
|
%
|
|
1.9
|
%
|
Securitized financings
|
12,315
|
|
|
14.3
|
|
|
3.0
|
|
|
12,178
|
|
|
15.4
|
|
|
2.6
|
|
||
Senior unsecured notes
|
9,262
|
|
|
10.8
|
|
|
4.0
|
|
|
9,156
|
|
|
11.5
|
|
|
3.7
|
|
||
Total
|
$
|
86,123
|
|
|
100.0
|
%
|
|
2.7
|
%
|
|
$
|
79,275
|
|
|
100.0
|
%
|
|
2.2
|
%
|
(1)
|
Excludes $280 million and $282 million average balance of non-interest-bearing deposits for the nine months ended September 30, 2019 and 2018, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the nine months ended September 30, 2019 and 2018.
|
Three months ended September 30 ($ 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)
|
$
|
34,100
|
|
|
52.0
|
%
|
|
2.6
|
%
|
|
$
|
28,804
|
|
|
47.9
|
%
|
|
2.0
|
%
|
Savings accounts (including money market accounts)
|
18,856
|
|
|
28.7
|
|
|
2.1
|
|
|
18,072
|
|
|
30.1
|
|
|
1.8
|
|
||
Brokered deposits
|
12,659
|
|
|
19.3
|
|
|
2.7
|
|
|
13,247
|
|
|
22.0
|
|
|
2.6
|
|
||
Total interest-bearing deposits
|
$
|
65,615
|
|
|
100.0
|
%
|
|
2.5
|
%
|
|
$
|
60,123
|
|
|
100.0
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 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)
|
$
|
33,147
|
|
|
51.3
|
%
|
|
2.5
|
%
|
|
$
|
27,255
|
|
|
47.1
|
%
|
|
1.9
|
%
|
Savings accounts (including money market accounts)
|
18,626
|
|
|
28.9
|
|
|
2.1
|
|
|
18,031
|
|
|
31.1
|
|
|
1.6
|
|
||
Brokered deposits
|
12,773
|
|
|
19.8
|
|
|
2.7
|
|
|
12,655
|
|
|
21.8
|
|
|
2.5
|
|
||
Total interest-bearing deposits
|
$
|
64,546
|
|
|
100.0
|
%
|
|
2.5
|
%
|
|
$
|
57,941
|
|
|
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)
|
$
|
10,507
|
|
|
$
|
3,865
|
|
|
$
|
5,490
|
|
|
$
|
8,626
|
|
|
$
|
28,488
|
|
U.S. deposits ($100,000 or more)
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit (including IRA certificates of deposit)
|
2,474
|
|
|
6,470
|
|
|
7,725
|
|
|
5,440
|
|
|
22,109
|
|
|||||
Savings accounts (including money market accounts)
|
13,520
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,520
|
|
|||||
Brokered deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sweep accounts
|
1,855
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,855
|
|
|||||
Total
|
$
|
28,356
|
|
|
$
|
10,335
|
|
|
$
|
13,215
|
|
|
$
|
14,066
|
|
|
$
|
65,972
|
|
(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)
|
$
|
2,408
|
|
|
$
|
2,800
|
|
|
$
|
1,591
|
|
|
$
|
—
|
|
|
$
|
6,799
|
|
SFT
|
300
|
|
|
725
|
|
|
—
|
|
|
—
|
|
|
1,025
|
|
|||||
SYNIT(1)
|
—
|
|
|
3,100
|
|
|
—
|
|
|
—
|
|
|
3,100
|
|
|||||
Total long-term borrowings—owed to securitization investors
|
$
|
2,708
|
|
|
$
|
6,625
|
|
|
$
|
1,591
|
|
|
$
|
—
|
|
|
$
|
10,924
|
|
(1)
|
Excludes any subordinated classes of SYNCT notes and SYNIT notes that we owned at September 30, 2019.
|
|
Note Principal Balance
($ in millions)
|
|
# of Series
Outstanding
|
|
Three-Month Rolling
Average Excess
Spread(1)
|
||||
SYNCT
|
$
|
7,324
|
|
|
11
|
|
|
~15.6% to 16.6%
|
|
SFT
|
$
|
1,025
|
|
|
9
|
|
|
12.5
|
%
|
SYNIT
|
$
|
3,100
|
|
|
5
|
|
|
~15.9% to 16.2%
|
|
(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 September 30, 2019.
|
Issuance Date
|
|
Interest Rate(1)
|
|
Maturity
|
|
Principal Amount Outstanding(2)
|
||
($ in millions)
|
|
|
|
|
|
|
||
Fixed rate senior unsecured notes:
|
|
|
|
|
|
|
||
Synchrony Financial
|
|
|
|
|
|
|
||
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
|
|
|
July 2019
|
|
2.850%
|
|
July 2022
|
|
750
|
|
|
Synchrony Bank
|
|
|
|
|
|
|
||
June 2017
|
|
3.000%
|
|
June 2022
|
|
750
|
|
|
May 2018
|
|
3.650%
|
|
May 2021
|
|
750
|
|
|
Total fixed rate senior unsecured notes
|
|
|
|
|
|
$
|
8,750
|
|
|
|
|
|
|
|
|
||
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 September 30, 2019 was 3.77%.
|
(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 September 30, 2019
|
|
At December 31, 2018
|
||||||||||||
($ in millions)
|
Amortized
Cost
|
|
Estimated Fair Value
|
|
Amortized
Cost
|
|
Estimated Fair Value
|
||||||||
U.S. government and federal agency
|
$
|
1,196
|
|
|
$
|
1,196
|
|
|
$
|
2,889
|
|
|
$
|
2,888
|
|
State and municipal
|
47
|
|
|
46
|
|
|
50
|
|
|
48
|
|
||||
Residential mortgage-backed
|
1,107
|
|
|
1,102
|
|
|
1,180
|
|
|
1,139
|
|
||||
Asset-backed
|
2,236
|
|
|
2,240
|
|
|
1,988
|
|
|
1,985
|
|
||||
U.S. corporate debt
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Total
|
$
|
4,586
|
|
|
$
|
4,584
|
|
|
$
|
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
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
State and municipal
|
—
|
|
|
1
|
|
|
3
|
|
|
42
|
|
|
46
|
|
|||||
Residential mortgage-backed
|
—
|
|
|
—
|
|
|
132
|
|
|
970
|
|
|
1,102
|
|
|||||
Asset-backed
|
1,745
|
|
|
495
|
|
|
—
|
|
|
—
|
|
|
2,240
|
|
|||||
Total(1)
|
$
|
2,941
|
|
|
$
|
496
|
|
|
$
|
135
|
|
|
$
|
1,012
|
|
|
$
|
4,584
|
|
Weighted average yield(2)
|
2.3
|
%
|
|
2.3
|
%
|
|
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
|
|
||
Three months ended September 30, 2019
|
|
August, 2019
|
|
0.22
|
|
|
145
|
|
||
Total dividends declared
|
|
|
|
$
|
0.64
|
|
|
$
|
440
|
|
|
|
|
|
|
|
|
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
|
|
Three months ended September 30, 2019
|
|
15.6
|
|
|
550
|
|
|
Total
|
|
67.6
|
|
|
$
|
2,241
|
|
|
|
|
|
|
|
Basel III
|
||||||||||||
|
At September 30, 2019
|
|
At December 31, 2018
|
||||||||||
($ in millions)
|
Amount
|
|
Ratio(1)
|
|
Amount
|
|
Ratio(1)
|
||||||
Total risk-based capital
|
$
|
14,345
|
|
|
15.8
|
%
|
|
$
|
14,013
|
|
|
15.3
|
%
|
Tier 1 risk-based capital
|
$
|
13,155
|
|
|
14.5
|
%
|
|
$
|
12,801
|
|
|
14.0
|
%
|
Tier 1 leverage
|
$
|
13,155
|
|
|
12.6
|
%
|
|
$
|
12,801
|
|
|
12.3
|
%
|
Common equity Tier 1 capital
|
$
|
13,155
|
|
|
14.5
|
%
|
|
$
|
12,801
|
|
|
14.0
|
%
|
Risk-weighted assets
|
$
|
90,772
|
|
|
|
|
$
|
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 September 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
|
$
|
12,504
|
|
|
15.9
|
%
|
|
$
|
12,258
|
|
|
15.4
|
%
|
|
10.0%
|
Tier 1 risk-based capital
|
$
|
11,470
|
|
|
14.6
|
%
|
|
$
|
11,207
|
|
|
14.1
|
%
|
|
8.0%
|
Tier 1 leverage
|
$
|
11,470
|
|
|
12.7
|
%
|
|
$
|
11,207
|
|
|
12.4
|
%
|
|
5.0%
|
Common equity Tier 1 capital
|
$
|
11,470
|
|
|
14.6
|
%
|
|
$
|
11,207
|
|
|
14.1
|
%
|
|
6.5%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions, except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income:
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans (Note 4)
|
$
|
4,890
|
|
|
$
|
4,617
|
|
|
$
|
14,213
|
|
|
$
|
12,870
|
|
Interest on cash and debt securities
|
91
|
|
|
77
|
|
|
292
|
|
|
242
|
|
||||
Total interest income
|
4,981
|
|
|
4,694
|
|
|
14,505
|
|
|
13,112
|
|
||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
Interest on deposits
|
411
|
|
|
314
|
|
|
1,183
|
|
|
836
|
|
||||
Interest on borrowings of consolidated securitization entities
|
88
|
|
|
86
|
|
|
278
|
|
|
240
|
|
||||
Interest on senior unsecured notes
|
93
|
|
|
88
|
|
|
274
|
|
|
251
|
|
||||
Total interest expense
|
592
|
|
|
488
|
|
|
1,735
|
|
|
1,327
|
|
||||
Net interest income
|
4,389
|
|
|
4,206
|
|
|
12,770
|
|
|
11,785
|
|
||||
Retailer share arrangements
|
(1,016
|
)
|
|
(871
|
)
|
|
(2,829
|
)
|
|
(2,244
|
)
|
||||
Provision for loan losses (Note 4)
|
1,019
|
|
|
1,451
|
|
|
3,076
|
|
|
4,093
|
|
||||
Net interest income, after retailer share arrangements and provision for loan losses
|
2,354
|
|
|
1,884
|
|
|
6,865
|
|
|
5,448
|
|
||||
Other income:
|
|
|
|
|
|
|
|
||||||||
Interchange revenue
|
197
|
|
|
182
|
|
|
556
|
|
|
517
|
|
||||
Debt cancellation fees
|
64
|
|
|
65
|
|
|
201
|
|
|
197
|
|
||||
Loyalty programs
|
(203
|
)
|
|
(196
|
)
|
|
(562
|
)
|
|
(543
|
)
|
||||
Other
|
27
|
|
|
12
|
|
|
72
|
|
|
30
|
|
||||
Total other income
|
85
|
|
|
63
|
|
|
267
|
|
|
201
|
|
||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Employee costs
|
359
|
|
|
365
|
|
|
1,070
|
|
|
1,074
|
|
||||
Professional fees
|
205
|
|
|
232
|
|
|
668
|
|
|
575
|
|
||||
Marketing and business development
|
139
|
|
|
131
|
|
|
397
|
|
|
362
|
|
||||
Information processing
|
127
|
|
|
105
|
|
|
363
|
|
|
308
|
|
||||
Other
|
234
|
|
|
221
|
|
|
668
|
|
|
698
|
|
||||
Total other expense
|
1,064
|
|
|
1,054
|
|
|
3,166
|
|
|
3,017
|
|
||||
Earnings before provision for income taxes
|
1,375
|
|
|
893
|
|
|
3,966
|
|
|
2,632
|
|
||||
Provision for income taxes (Note 12)
|
319
|
|
|
222
|
|
|
950
|
|
|
625
|
|
||||
Net earnings
|
$
|
1,056
|
|
|
$
|
671
|
|
|
$
|
3,016
|
|
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.60
|
|
|
$
|
0.91
|
|
|
$
|
4.42
|
|
|
$
|
2.68
|
|
Diluted
|
$
|
1.60
|
|
|
$
|
0.91
|
|
|
$
|
4.40
|
|
|
$
|
2.66
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
1,056
|
|
|
$
|
671
|
|
|
$
|
3,016
|
|
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
3
|
|
|
(5
|
)
|
|
35
|
|
|
(29
|
)
|
||||
Currency translation adjustments
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Employee benefit plans
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
—
|
|
||||
Other comprehensive income (loss)
|
(1
|
)
|
|
(6
|
)
|
|
31
|
|
|
(35
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
1,055
|
|
|
$
|
665
|
|
|
$
|
3,047
|
|
|
$
|
1,972
|
|
($ in millions)
|
At September 30, 2019
|
|
At December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and equivalents
|
$
|
11,461
|
|
|
$
|
9,396
|
|
Debt securities (Note 3)
|
4,584
|
|
|
6,062
|
|
||
Loan receivables: (Notes 4 and 5)
|
|
|
|
||||
Unsecuritized loans held for investment
|
56,220
|
|
|
64,969
|
|
||
Restricted loans of consolidated securitization entities
|
26,987
|
|
|
28,170
|
|
||
Total loan receivables
|
83,207
|
|
|
93,139
|
|
||
Less: Allowance for loan losses
|
(5,607
|
)
|
|
(6,427
|
)
|
||
Loan receivables, net
|
77,600
|
|
|
86,712
|
|
||
Loan receivables held for sale (Note 4)
|
8,182
|
|
|
—
|
|
||
Goodwill
|
1,078
|
|
|
1,024
|
|
||
Intangible assets, net (Note 6)
|
1,177
|
|
|
1,137
|
|
||
Other assets
|
1,861
|
|
|
2,461
|
|
||
Total assets
|
$
|
105,943
|
|
|
$
|
106,792
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Deposits: (Note 7)
|
|
|
|
||||
Interest-bearing deposit accounts
|
$
|
65,677
|
|
|
$
|
63,738
|
|
Non-interest-bearing deposit accounts
|
295
|
|
|
281
|
|
||
Total deposits
|
65,972
|
|
|
64,019
|
|
||
Borrowings: (Notes 5 and 8)
|
|
|
|
||||
Borrowings of consolidated securitization entities
|
10,912
|
|
|
14,439
|
|
||
Senior unsecured notes
|
9,451
|
|
|
9,557
|
|
||
Total borrowings
|
20,363
|
|
|
23,996
|
|
||
Accrued expenses and other liabilities
|
4,488
|
|
|
4,099
|
|
||
Total liabilities
|
$
|
90,823
|
|
|
$
|
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 September 30, 2019 and December 31, 2018; 653,656,880 and 718,758,598 shares outstanding at September 30, 2019 and December 31, 2018, respectively
|
$
|
1
|
|
|
$
|
1
|
|
Additional paid-in capital
|
9,520
|
|
|
9,482
|
|
||
Retained earnings
|
11,533
|
|
|
8,986
|
|
||
Accumulated other comprehensive income (loss):
|
|
|
|
||||
Debt securities
|
(2
|
)
|
|
(32
|
)
|
||
Currency translation adjustments
|
(28
|
)
|
|
(25
|
)
|
||
Other
|
(14
|
)
|
|
(5
|
)
|
||
Treasury Stock, at cost; 180,327,804 and 115,226,086 shares at September 30, 2019 and December 31, 2018, respectively
|
(5,890
|
)
|
|
(3,729
|
)
|
||
Total equity
|
15,120
|
|
|
14,678
|
|
||
Total liabilities and equity
|
$
|
105,943
|
|
|
$
|
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
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
671
|
|
|
—
|
|
|
—
|
|
|
671
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(967
|
)
|
|
(967
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(69
|
)
|
|
—
|
|
|
78
|
|
|
(7
|
)
|
||||||
Dividends - common stock ($0.21 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Balance at September 30, 2018
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,470
|
|
|
$
|
8,355
|
|
|
$
|
(99
|
)
|
|
$
|
(3,731
|
)
|
|
$
|
13,996
|
|
|
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, 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
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
1,056
|
|
|
—
|
|
|
—
|
|
|
1,056
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(550
|
)
|
|
(550
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
20
|
|
|
(5
|
)
|
|
—
|
|
|
11
|
|
|
26
|
|
||||||
Dividends - common stock ($0.22 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
||||||
Balance at September 30, 2019
|
833,985
|
|
|
$
|
1
|
|
|
$
|
9,520
|
|
|
$
|
11,533
|
|
|
$
|
(44
|
)
|
|
$
|
(5,890
|
)
|
|
$
|
15,120
|
|
|
Nine months ended September 30,
|
||||||
($ in millions)
|
2019
|
|
2018
|
||||
Cash flows - operating activities
|
|
|
|
||||
Net earnings
|
$
|
3,016
|
|
|
$
|
2,007
|
|
Adjustments to reconcile net earnings to cash provided from operating activities
|
|
|
|
||||
Provision for loan losses
|
3,076
|
|
|
4,093
|
|
||
Deferred income taxes
|
103
|
|
|
(53
|
)
|
||
Depreciation and amortization
|
273
|
|
|
222
|
|
||
(Increase) decrease in interest and fees receivable
|
(430
|
)
|
|
(36
|
)
|
||
(Increase) decrease in other assets
|
46
|
|
|
(39
|
)
|
||
Increase (decrease) in accrued expenses and other liabilities
|
125
|
|
|
120
|
|
||
All other operating activities
|
445
|
|
|
452
|
|
||
Cash provided from (used for) operating activities
|
6,654
|
|
|
6,766
|
|
||
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
||||
Maturity and sales of debt securities
|
6,766
|
|
|
3,961
|
|
||
Purchases of debt securities
|
(5,178
|
)
|
|
(6,805
|
)
|
||
Acquisition of loan receivables
|
(72
|
)
|
|
(7,342
|
)
|
||
Net (increase) decrease in loan receivables, including held for sale
|
(2,016
|
)
|
|
(1,950
|
)
|
||
All other investing activities
|
(442
|
)
|
|
(615
|
)
|
||
Cash provided from (used for) investing activities
|
(942
|
)
|
|
(12,751
|
)
|
||
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
||||
Borrowings of consolidated securitization entities
|
|
|
|
||||
Proceeds from issuance of securitized debt
|
3,345
|
|
|
4,493
|
|
||
Maturities and repayment of securitized debt
|
(6,877
|
)
|
|
(2,807
|
)
|
||
Senior unsecured notes
|
|
|
|
||||
Proceeds from issuance of senior unsecured notes
|
1,985
|
|
|
1,244
|
|
||
Maturities and repayment of senior unsecured notes
|
(2,100
|
)
|
|
—
|
|
||
Net increase (decrease) in deposits
|
1,940
|
|
|
5,792
|
|
||
Purchases of treasury stock
|
(2,242
|
)
|
|
(1,868
|
)
|
||
Dividends paid on common stock
|
(440
|
)
|
|
(383
|
)
|
||
All other financing activities
|
22
|
|
|
(32
|
)
|
||
Cash provided from (used for) financing activities
|
(4,367
|
)
|
|
6,439
|
|
||
|
|
|
|
||||
Increase (decrease) in cash and equivalents, including restricted amounts
|
1,345
|
|
|
454
|
|
||
Cash and equivalents, including restricted amounts, at beginning of period
|
10,376
|
|
|
11,817
|
|
||
Cash and equivalents at end of period:
|
|
|
|
||||
Cash and equivalents
|
11,461
|
|
|
12,068
|
|
||
Restricted cash and equivalents included in other assets
|
260
|
|
|
203
|
|
||
Total cash and equivalents, including restricted amounts, at end of period
|
$
|
11,721
|
|
|
$
|
12,271
|
|
|
September 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
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
|
$
|
2,889
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2,888
|
|
State and municipal
|
47
|
|
|
1
|
|
|
(2
|
)
|
|
46
|
|
|
50
|
|
|
—
|
|
|
(2
|
)
|
|
48
|
|
||||||||
Residential mortgage-backed(a)
|
1,107
|
|
|
6
|
|
|
(11
|
)
|
|
1,102
|
|
|
1,180
|
|
|
1
|
|
|
(42
|
)
|
|
1,139
|
|
||||||||
Asset-backed(b)
|
2,236
|
|
|
4
|
|
|
—
|
|
|
2,240
|
|
|
1,988
|
|
|
—
|
|
|
(3
|
)
|
|
1,985
|
|
||||||||
U.S. corporate debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||||
Total
|
$
|
4,586
|
|
|
$
|
11
|
|
|
$
|
(13
|
)
|
|
$
|
4,584
|
|
|
$
|
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 September 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 September 30, 2019
|
|
|
|
|
|
|
|
||||||||
U.S. government and federal agency
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal
|
—
|
|
|
—
|
|
|
25
|
|
|
(2
|
)
|
||||
Residential mortgage-backed
|
86
|
|
|
—
|
|
|
662
|
|
|
(11
|
)
|
||||
Asset-backed
|
396
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Total
|
$
|
482
|
|
|
$
|
—
|
|
|
$
|
697
|
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
||||||||
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 September 30, 2019 ($ in millions)
|
cost
|
|
|
fair value
|
|
||
|
|
|
|
||||
Due
|
|
|
|
||||
Within one year
|
$
|
2,938
|
|
|
$
|
2,941
|
|
After one year through five years
|
$
|
495
|
|
|
$
|
496
|
|
After five years through ten years
|
$
|
133
|
|
|
$
|
135
|
|
After ten years
|
$
|
1,020
|
|
|
$
|
1,012
|
|
($ in millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
Credit cards
|
$
|
79,788
|
|
|
$
|
89,994
|
|
Consumer installment loans
|
2,050
|
|
|
1,845
|
|
||
Commercial credit products
|
1,317
|
|
|
1,260
|
|
||
Other
|
52
|
|
|
40
|
|
||
Total loan receivables, before allowance for losses(a)(b)
|
$
|
83,207
|
|
|
$
|
93,139
|
|
(a)
|
Total loan receivables include $27.0 billion and $28.2 billion of restricted loans of consolidated securitization entities at September 30, 2019 and December 31, 2018, respectively. See Note 5. Variable Interest Entities for further information on these restricted loans.
|
(b)
|
At September 30, 2019 and December 31, 2018, loan receivables included deferred costs, net of deferred income, of $110 million and $105 million, respectively.
|
($ in millions)
|
Balance at July 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,702
|
|
|
$
|
993
|
|
|
$
|
(1,422
|
)
|
|
$
|
225
|
|
|
$
|
5,498
|
|
Consumer installment loans
|
50
|
|
|
18
|
|
|
(16
|
)
|
|
4
|
|
|
56
|
|
|||||
Commercial credit products
|
55
|
|
|
9
|
|
|
(14
|
)
|
|
2
|
|
|
52
|
|
|||||
Other
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,809
|
|
|
$
|
1,019
|
|
|
$
|
(1,452
|
)
|
|
$
|
231
|
|
|
$
|
5,607
|
|
($ in millions)
|
Balance at July 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,757
|
|
|
$
|
1,427
|
|
|
$
|
(1,269
|
)
|
|
$
|
202
|
|
|
$
|
6,117
|
|
Consumer installment loans
|
51
|
|
|
9
|
|
|
(13
|
)
|
|
4
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
15
|
|
|
(13
|
)
|
|
2
|
|
|
54
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,859
|
|
|
$
|
1,451
|
|
|
$
|
(1,295
|
)
|
|
$
|
208
|
|
|
$
|
6,223
|
|
($ in millions)
|
Balance at January 1, 2019
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2019 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
6,327
|
|
|
$
|
2,994
|
|
|
$
|
(4,584
|
)
|
|
$
|
761
|
|
|
$
|
5,498
|
|
Consumer installment loans
|
44
|
|
|
46
|
|
|
(47
|
)
|
|
13
|
|
|
56
|
|
|||||
Commercial credit products
|
55
|
|
|
35
|
|
|
(43
|
)
|
|
5
|
|
|
52
|
|
|||||
Other
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
6,427
|
|
|
$
|
3,076
|
|
|
$
|
(4,675
|
)
|
|
$
|
779
|
|
|
$
|
5,607
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
Balance at January 1, 2018
|
|
|
Provision charged to operations
|
|
|
Gross charge-offs
|
|
|
Recoveries
|
|
|
Balance at
September 30, 2018 |
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Credit cards
|
$
|
5,483
|
|
|
$
|
4,016
|
|
|
$
|
(4,016
|
)
|
|
$
|
634
|
|
|
$
|
6,117
|
|
Consumer installment loans
|
40
|
|
|
39
|
|
|
(40
|
)
|
|
12
|
|
|
51
|
|
|||||
Commercial credit products
|
50
|
|
|
38
|
|
|
(39
|
)
|
|
5
|
|
|
54
|
|
|||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total
|
$
|
5,574
|
|
|
$
|
4,093
|
|
|
$
|
(4,095
|
)
|
|
$
|
651
|
|
|
$
|
6,223
|
|
|
|
|
|
|
|
|
|
|
|
At September 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
|
$
|
1,935
|
|
|
$
|
1,703
|
|
|
$
|
3,638
|
|
|
$
|
1,700
|
|
|
$
|
—
|
|
Consumer installment loans
|
29
|
|
|
5
|
|
|
34
|
|
|
—
|
|
|
5
|
|
|||||
Commercial credit products
|
36
|
|
|
15
|
|
|
51
|
|
|
15
|
|
|
—
|
|
|||||
Total delinquent loans
|
$
|
2,000
|
|
|
$
|
1,723
|
|
|
$
|
3,723
|
|
|
$
|
1,715
|
|
|
$
|
5
|
|
Percentage of total loan receivables
|
2.4
|
%
|
|
2.1
|
%
|
|
4.5
|
%
|
|
2.1
|
%
|
|
—
|
%
|
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 September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Credit cards
|
$
|
226
|
|
|
$
|
227
|
|
|
$
|
633
|
|
|
$
|
644
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Total
|
$
|
227
|
|
|
$
|
228
|
|
|
$
|
636
|
|
|
$
|
647
|
|
At September 30, 2019 ($ in millions)
|
Total recorded
investment
|
|
|
Related allowance
|
|
|
Net recorded investment
|
|
|
Unpaid principal balance
|
|
||||
Credit cards
|
$
|
1,088
|
|
|
$
|
(513
|
)
|
|
$
|
575
|
|
|
$
|
985
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial credit products
|
4
|
|
|
(2
|
)
|
|
2
|
|
|
4
|
|
||||
Total
|
$
|
1,092
|
|
|
$
|
(515
|
)
|
|
$
|
577
|
|
|
$
|
989
|
|
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 September 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
|
|
$
|
67
|
|
$
|
1,074
|
|
|
$
|
13
|
|
$
|
67
|
|
$
|
1,122
|
|
Consumer installment loans
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial credit products
|
—
|
|
1
|
|
4
|
|
|
—
|
|
1
|
|
5
|
|
||||||
Total
|
$
|
11
|
|
$
|
68
|
|
$
|
1,078
|
|
|
$
|
13
|
|
$
|
68
|
|
$
|
1,127
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nine months ended September 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
|
$
|
33
|
|
$
|
197
|
|
$
|
1,103
|
|
|
$
|
37
|
|
$
|
194
|
|
$
|
1,089
|
|
Consumer installment loans
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial credit products
|
—
|
|
1
|
|
4
|
|
|
—
|
|
1
|
|
5
|
|
||||||
Total
|
$
|
33
|
|
$
|
198
|
|
$
|
1,107
|
|
|
$
|
37
|
|
$
|
195
|
|
$
|
1,094
|
|
Three months ended September 30,
|
2019
|
|
2018
|
||||||||||
($ in millions)
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
||
Credit cards
|
15,059
|
|
|
$
|
37
|
|
|
18,719
|
|
|
$
|
43
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Commercial credit products
|
40
|
|
|
—
|
|
|
74
|
|
|
—
|
|
||
Total
|
15,099
|
|
|
$
|
37
|
|
|
18,793
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
||||||
Nine months ended September 30,
|
2019
|
|
2018
|
||||||||||
($ in millions)
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
|
Accounts defaulted
|
|
|
Loans defaulted
|
|
||
Credit cards
|
36,529
|
|
|
$
|
88
|
|
|
43,361
|
|
|
$
|
101
|
|
Consumer installment loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Commercial credit products
|
80
|
|
|
1
|
|
|
340
|
|
|
1
|
|
||
Total
|
36,609
|
|
|
$
|
89
|
|
|
43,701
|
|
|
$
|
102
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
September 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
|
75
|
%
|
|
19
|
%
|
|
6
|
%
|
|
74
|
%
|
|
18
|
%
|
|
8
|
%
|
|
74
|
%
|
|
18
|
%
|
|
8
|
%
|
Consumer installment loans
|
80
|
%
|
|
14
|
%
|
|
6
|
%
|
|
80
|
%
|
|
14
|
%
|
|
6
|
%
|
|
81
|
%
|
|
14
|
%
|
|
5
|
%
|
Commercial credit products
|
91
|
%
|
|
5
|
%
|
|
4
|
%
|
|
90
|
%
|
|
5
|
%
|
|
5
|
%
|
|
91
|
%
|
|
5
|
%
|
|
4
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Credit cards
|
$
|
4,807
|
|
|
$
|
4,538
|
|
|
$
|
13,975
|
|
|
$
|
12,647
|
|
Consumer installment loans
|
48
|
|
|
41
|
|
|
134
|
|
|
114
|
|
||||
Commercial credit products
|
35
|
|
|
37
|
|
|
103
|
|
|
107
|
|
||||
Other
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Total
|
$
|
4,890
|
|
|
$
|
4,617
|
|
|
$
|
14,213
|
|
|
$
|
12,870
|
|
($ in millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Loan receivables, net(a)
|
$
|
25,481
|
|
|
$
|
26,454
|
|
Loan receivables held for sale
|
1,080
|
|
|
—
|
|
||
Other assets(b)
|
64
|
|
|
813
|
|
||
Total
|
$
|
26,625
|
|
|
$
|
27,267
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Borrowings
|
$
|
10,912
|
|
|
$
|
14,439
|
|
Other liabilities
|
29
|
|
|
36
|
|
||
Total
|
$
|
10,941
|
|
|
$
|
14,475
|
|
(a)
|
Includes $1.5 billion and $1.7 billion of related allowance for loan losses resulting in gross restricted loans of $27.0 billion and $28.2 billion at September 30, 2019 and December 31, 2018, respectively.
|
(b)
|
Includes $58 million and $803 million of segregated funds held by the VIEs at September 30, 2019 and December 31, 2018, respectively, which are classified as restricted cash and equivalents and included as a component of other assets in our Condensed Consolidated Statements of Financial Position.
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
($ in millions)
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
|
Gross carrying amount
|
|
|
Accumulated amortization
|
|
|
Net
|
|
||||||
Customer-related
|
|
$
|
1,752
|
|
|
$
|
(918
|
)
|
|
$
|
834
|
|
|
$
|
1,630
|
|
|
$
|
(803
|
)
|
|
$
|
827
|
|
Capitalized software and other
|
|
699
|
|
|
(356
|
)
|
|
343
|
|
|
562
|
|
|
(252
|
)
|
|
310
|
|
||||||
Total
|
|
$
|
2,451
|
|
|
$
|
(1,274
|
)
|
|
$
|
1,177
|
|
|
$
|
2,192
|
|
|
$
|
(1,055
|
)
|
|
$
|
1,137
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||
($ in millions)
|
Amount
|
|
|
Average rate(a)
|
|
|
Amount
|
|
|
Average rate(a)
|
|
||
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits
|
$
|
65,677
|
|
|
2.5
|
%
|
|
$
|
63,738
|
|
|
2.0
|
%
|
Non-interest-bearing deposits
|
295
|
|
|
—
|
|
|
281
|
|
|
—
|
|
||
Total deposits
|
$
|
65,972
|
|
|
|
|
$
|
64,019
|
|
|
|
(a)
|
Based on interest expense for the nine months ended September 30, 2019 and the year ended December 31, 2018 and average deposits balances.
|
($ in millions)
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Thereafter
|
|
||||||
Deposits
|
$
|
5,426
|
|
|
$
|
25,927
|
|
|
$
|
4,976
|
|
|
$
|
2,977
|
|
|
$
|
1,310
|
|
|
$
|
2,426
|
|
|
September 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
|
2020 - 2023
|
|
1.93% - 3.87%
|
|
|
2.71
|
%
|
|
$
|
7,512
|
|
|
$
|
8,664
|
|
Floating securitized borrowings
|
2020 - 2022
|
|
2.62% - 3.33%
|
|
|
2.80
|
%
|
|
3,400
|
|
|
5,775
|
|
||
Total borrowings of consolidated securitization entities
|
|
|
|
|
2.74
|
%
|
|
10,912
|
|
|
14,439
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Synchrony Financial senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed senior unsecured notes
|
2020 - 2029
|
|
2.70% - 5.15%
|
|
|
3.94
|
%
|
|
7,210
|
|
|
7,318
|
|
||
Floating senior unsecured notes
|
2020
|
|
3.52
|
%
|
|
3.52
|
%
|
|
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
|
|
2.73
|
%
|
|
2.73
|
%
|
|
500
|
|
|
499
|
|
||
Total senior unsecured notes
|
|
|
|
|
3.77
|
%
|
|
9,451
|
|
|
9,557
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Total borrowings
|
|
|
|
|
|
|
$
|
20,363
|
|
|
$
|
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
|
$
|
—
|
|
|
$
|
4,708
|
|
|
$
|
5,659
|
|
|
$
|
4,350
|
|
|
$
|
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
|
%
|
July 2019
|
$
|
750
|
|
|
2022
|
|
2.850
|
%
|
At September 30, 2019 ($ in millions)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total(a)
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Federal Agency
|
$
|
—
|
|
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
State and municipal
|
—
|
|
|
—
|
|
|
46
|
|
|
46
|
|
||||
Residential mortgage-backed
|
—
|
|
|
1,102
|
|
|
—
|
|
|
1,102
|
|
||||
Asset-backed
|
—
|
|
|
2,240
|
|
|
—
|
|
|
2,240
|
|
||||
Other assets(b)
|
15
|
|
|
—
|
|
|
17
|
|
|
32
|
|
||||
Total
|
$
|
15
|
|
|
$
|
4,538
|
|
|
$
|
63
|
|
|
$
|
4,616
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
||||||||
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 three and nine months ended September 30, 2019 and 2018, 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 September 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)
|
$
|
11,461
|
|
|
$
|
11,461
|
|
|
$
|
8,727
|
|
|
$
|
2,734
|
|
|
$
|
—
|
|
Other assets(a)(b)
|
$
|
260
|
|
|
$
|
260
|
|
|
$
|
260
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial assets carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan receivables, net(c)
|
$
|
77,600
|
|
|
$
|
86,753
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
86,753
|
|
Loan receivables held for sale(c)
|
$
|
8,182
|
|
|
$
|
8,182
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,182
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial liabilities carried at other than fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
65,972
|
|
|
$
|
66,358
|
|
|
$
|
—
|
|
|
$
|
66,358
|
|
|
$
|
—
|
|
Borrowings of consolidated securitization entities
|
$
|
10,912
|
|
|
$
|
11,026
|
|
|
$
|
—
|
|
|
$
|
7,627
|
|
|
$
|
3,399
|
|
Senior unsecured notes
|
$
|
9,451
|
|
|
$
|
9,835
|
|
|
$
|
—
|
|
|
$
|
9,835
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
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 September 30, 2019 ($ in millions)
|
Actual
|
|
Minimum for capital
adequacy purposes
|
||||||||||
|
Amount
|
|
Ratio(a)
|
|
|
Amount
|
|
|
Ratio(b)
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total risk-based capital
|
$
|
14,345
|
|
|
15.8
|
%
|
|
$
|
7,262
|
|
|
8.0
|
%
|
Tier 1 risk-based capital
|
$
|
13,155
|
|
|
14.5
|
%
|
|
$
|
5,446
|
|
|
6.0
|
%
|
Tier 1 leverage
|
$
|
13,155
|
|
|
12.6
|
%
|
|
$
|
4,178
|
|
|
4.0
|
%
|
Common equity Tier 1 Capital
|
$
|
13,155
|
|
|
14.5
|
%
|
|
$
|
4,085
|
|
|
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 September 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
|
$
|
12,504
|
|
|
15.9
|
%
|
|
$
|
6,295
|
|
|
8.0
|
%
|
|
$
|
7,868
|
|
|
10.0
|
%
|
Tier 1 risk-based capital
|
$
|
11,470
|
|
|
14.6
|
%
|
|
$
|
4,721
|
|
|
6.0
|
%
|
|
$
|
6,295
|
|
|
8.0
|
%
|
Tier 1 leverage
|
$
|
11,470
|
|
|
12.7
|
%
|
|
$
|
3,604
|
|
|
4.0
|
%
|
|
$
|
4,505
|
|
|
5.0
|
%
|
Common equity Tier I capital
|
$
|
11,470
|
|
|
14.6
|
%
|
|
$
|
3,541
|
|
|
4.5
|
%
|
|
$
|
5,114
|
|
|
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 September 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 September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in millions, except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
1,056
|
|
|
$
|
671
|
|
|
$
|
3,016
|
|
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, basic
|
658.3
|
|
|
734.9
|
|
|
682.5
|
|
|
750.2
|
|
||||
Effect of dilutive securities
|
3.4
|
|
|
3.9
|
|
|
3.1
|
|
|
5.5
|
|
||||
Weighted average common shares outstanding, dilutive
|
661.7
|
|
|
738.8
|
|
|
685.6
|
|
|
755.7
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Earnings per basic common share
|
$
|
1.60
|
|
|
$
|
0.91
|
|
|
$
|
4.42
|
|
|
$
|
2.68
|
|
Earnings per diluted common share
|
$
|
1.60
|
|
|
$
|
0.91
|
|
|
$
|
4.40
|
|
|
$
|
2.66
|
|
($ in millions)
|
September 30, 2019
|
|
December 31, 2018
|
||||
Unrecognized tax benefits, excluding related interest expense and penalties(a)
|
$
|
270
|
|
|
$
|
251
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate(b)
|
$
|
193
|
|
|
$
|
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.
|
Basis Point Change
|
|
At September 30, 2019
|
||
($ in millions)
|
|
|
||
-100 basis points
|
|
$
|
(159
|
)
|
+100 basis points
|
|
$
|
118
|
|
|
|
|
($ 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)
|
|
||
|
|
|
|
|
|
|
|
||||||
July 1 - 31, 2019
|
8,186,814
|
|
|
$
|
35.78
|
|
|
8,179,117
|
|
|
$
|
2,982.3
|
|
August 1 - 31, 2019
|
7,440,035
|
|
|
34.59
|
|
|
7,440,035
|
|
|
2,725.0
|
|
||
September 1 - 30, 2019
|
33,420
|
|
|
33.96
|
|
|
—
|
|
|
2,725.0
|
|
||
Total
|
15,660,269
|
|
|
$
|
35.21
|
|
|
15,619,152
|
|
|
$
|
2,725.0
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes 7,697 shares, 0 shares and 33,420 shares withheld in July, August and September, 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
|
104
|
The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL (included as Exhibit 101)
|
*
|
Filed electronically herewith.
|
October 24, 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)
|
SECTION 1.
|
PURPOSE
|
SECTION 2.
|
DEFINITIONS
|
(a)
|
“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
|
(b)
|
“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award granted under the Plan.
|
(c)
|
“Award Agreement” shall mean any written agreement, contract, or other instrument or document, including an electronic communication, as may from time to time be designated by the Company as evidencing any Award granted under the Plan.
|
(d)
|
“Board” shall mean the Board of Directors of the Company.
|
(e)
|
“Change in Control” shall mean any of the following events which occurs after the date of grant of an Award, but only if such event constitutes a “change in control event” for purposes of Treasury Regulation Section 1.409A-3(i)(5):
|
(i)
|
the acquisition by any Person, including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the
|
(ii)
|
the cessation of individuals who, as of the date of grant of the Award, constitute the Board (the “Incumbent Board”) to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date of grant of the Award whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; or
|
(iii)
|
the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (A) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a
|
(f)
|
“Code” shall mean the Internal Revenue Code of 1986, as amended.
|
(g)
|
“Committee” shall mean a committee of the Board, acting in accordance with the provisions of Section 3, designated by the Board to administer the Plan and composed of not less than two non-employee directors.
|
(h)
|
“Dividend Equivalent” shall mean any right granted under Section 7(e) of the Plan.
|
(i)
|
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
|
(j)
|
“Fair Market Value” shall mean, with respect to any Shares or other securities, the closing price of a Share on the date as of which the determination is being made as reported on the principal national stock exchange on which the Shares are then traded or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if the Shares are not listed on a national stock exchange or if the closing price of a Share for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate and, to the extent applicable, in compliance with Section 409A of the Code; provided, further, in the case of grants made in connection with the Initial Public Offering, Fair Market Value shall mean the price per Share at which the Shares are initially offered for sale to the public by the Company’s underwriters in the Initial Public Offering.
|
(k)
|
“Incentive Stock Option” shall mean an option granted under Section 7(a) of the Plan that is intended to meet the requirements of Sections 422 of the Code, or any successor provision thereto.
|
(l)
|
“Initial Public Offering” shall mean the initial public offering of the Company registered on Form S-1 (or any successor form under the Securities Act of 1933, as amended).
|
(m)
|
“Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Affiliate.
|
(n)
|
“Non-Qualified Stock Option” shall mean an option granted under Section 7(a) of the Plan that is not intended to be an Incentive Stock Option.
|
(o)
|
“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
|
(p)
|
“Other Stock-Based Award” shall mean any right granted under Section 7(f) of the Plan.
|
(q)
|
“Participant” shall mean an officer, employee or consultant of the Company or any of its Affiliates or a Non-Employee Director, in each case, as designated to be granted an Award under the Plan.
|
(r)
|
“Performance Award” shall mean any right granted under Section 7(d) of the Plan.
|
(s)
|
“Performance Criteria” shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria.
|
(t)
|
“Performance Period” shall mean any period as determined by the Committee in its sole discretion.
|
(u)
|
“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.
|
(v)
|
“Qualifying Performance Criteria” shall mean, to the extent necessary to qualify an Award as “performance-based compensation” under Section 162(m) of the Code, one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit or related company, and measured on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the Award: purchase volume; loan receivables; Tier 1 common ratio; liquidity as a percentage of total assets; liquidity coverage ratio; tangible common equity to tangible assets ratio; platform revenue; net earnings; earnings per share; diluted earnings per share; return on average assets; return on
|
(w)
|
“Restricted Securities” shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions.
|
(x)
|
“Restricted Stock” shall mean any award of Shares granted under Section 7(c) of the Plan.
|
(y)
|
“Restricted Stock Unit” shall mean any right granted under Section 7(c) of the Plan that is denominated in Shares.
|
(z)
|
“Shares” shall mean the common shares of the Company, $0.01 par value, and such other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan.
|
(aa)
|
“Stock Appreciation Right” shall mean any right granted under Section 7(b) of the Plan.
|
SECTION 3.
|
ADMINISTRATION
|
(a)
|
Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to:
|
(i)
|
designate Participants;
|
(ii)
|
determine the type or types of Awards to be granted to each Participant under the Plan;
|
(iii)
|
determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards;
|
(iv)
|
determine the terms and conditions of any Award, including any restrictive covenants, clawback or recoupment provisions or requirements that a Participant execute a waiver and release;
|
(v)
|
determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended;
|
(vi)
|
determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee;
|
(vii)
|
interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;
|
(viii)
|
establish, amend, suspend, or waive such rules and guidelines;
|
(ix)
|
appoint such agents as it shall deem appropriate for the proper administration of the Plan;
|
(x)
|
make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and
|
(xi)
|
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.
|
(b)
|
Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any shareowner, and any employee of the Company or of any Affiliate. To the extent permitted by Section 162(m) of the Code and Section 16 of the Exchange Act, actions of the Committee may be taken by:
|
(i)
|
the Chairman of the Committee;
|
(ii)
|
a subcommittee, designated by the Committee;
|
(iii)
|
the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such members, shall be the action of the Committee for purposes of the Plan; or
|
(iv)
|
one or more officers or managers of the Company or any Affiliate, or a committee of such officers or managers whose authority is subject to such terms and limitations set forth by the Committee, and only with respect to employees who are not officers or Non-Employee Directors of the Company for purposes of Section 16 of the Exchange Act. This delegation shall include modifications necessary to accommodate changes in the laws or regulations of jurisdictions outside the U.S.
|
SECTION 4.
|
SHARES AVAILABLE FOR AWARDS
|
(a)
|
SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b):
|
(i)
|
The total number of Shares reserved and available for delivery pursuant to Awards granted under the Plan shall be 62,605,417. If any Shares covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates without the delivery of Shares or of other consideration, or if an Award is settled in cash, then the Shares
|
(ii)
|
ACCOUNTING FOR AWARDS. For purposes of this Section 4,
|
(A)
|
If an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan; provided, however that if an Award is settled or paid by the Company in whole or in part through the delivery of consideration other than Shares, or by delivery of fewer than the full number of Shares that was counted against the Shares available for delivery as provided above, there shall be added back to the number of Shares available for delivery pursuant to Awards the excess of the number of Shares that had been so counted over the number of Shares (if any) actually delivered upon payment or settlement of the Award (including with respect to Awards that are outstanding as of the effective date of the amendment and restatement of the Plan).
|
(B)
|
If an Award is not denominated in Shares, the number of Shares available for delivery shall be reduced by the number of Shares actually delivered upon payment or settlement of the Award.
|
(C)
|
Dividend Equivalents denominated in Shares and Awards not denominated, but potentially payable, in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Dividend Equivalents and such Awards are settled in Shares; provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against the aggregate number of Shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company, shall
|
(D)
|
Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (x) Shares that were subject to an Option or a stock-settled Stock Appreciation Right and were not issued upon the net settlement or net exercise of such Option or Stock Appreciation Right, (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options or Stock Appreciation Rights, or (z) Shares repurchased on the open market with the proceeds of an Option exercise. Shares delivered to or withheld by the Company to pay the withholding taxes for Awards other than Options and Stock Appreciation Rights shall again be available for issuance under this Plan.
|
(iii)
|
SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.
|
(b)
|
ADJUSTMENTS.
|
(i)
|
In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in the Accounting Standards Codification 718 (or any successor accounting standard) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan:
|
(A)
|
the number and type of Shares or other securities which thereafter may be made the subject of Awards;
|
(B)
|
the number and type of Shares or other securities subject to outstanding Awards;
|
(C)
|
the number and type of Shares or other securities specified as the annual per-participant limitation under Section 7(g)(vi) and (vii);
|
(D)
|
the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and
|
(E)
|
other value determinations applicable to outstanding awards.
|
(ii)
|
ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the event the Company or any Affiliate shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another corporation or business entity, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan as so adjusted.
|
(iii)
|
ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan.
|
SECTION 5.
|
VESTING CONDITIONS
|
(a)
|
MINIMUM VESTING REQUIREMENT. No Award granted under the Plan after the date hereof shall become exercisable or vested prior to the one-year anniversary of the date of grant. Notwithstanding the foregoing, this Section 5(a) shall not (i) restrict the right of the Committee to provide in an Award Agreement for the vesting or exercisability of an Award upon or after death, disability, or a Change in Control or (ii) apply with respect to Awards representing not more than five percent (5%) of the Shares available for issuance under Section 4(a)(i) or with respect to Awards assumed under Section 4(b).
|
(b)
|
NO DISCRETION TO ACCELERATE VESTING. Notwithstanding Section 3, other than in connection with a Change in Control or the death or disability of a Participant, the Committee shall not have the discretion to accelerate the vesting or exercisability of any outstanding Award.
|
SECTION 6.
|
ELIGIBILITY
|
SECTION 7.
|
AWARDS
|
(a)
|
OPTIONS. The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
|
(i)
|
EXERCISE PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, and except as provided in Section 4(b), that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option.
|
(ii)
|
OPTION TERM. The term of each Option shall not exceed ten (10) years from the date of grant.
|
(iii)
|
TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which an Option may be exercised in whole or in part, and the method or methods by which, and the form or forms, including, without limitation, cash, Shares, or other Awards, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made.
|
(iv)
|
INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Option granted under the Plan shall be designed to comply in all respects with the provisions of Sections 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. Notwithstanding anything in this Section 7(a) to the contrary, Options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Non-Qualified Stock Options) to the extent that either (A) the aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (B) such Options otherwise remain
|
(b)
|
STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right as specified by the Committee.
|
(i)
|
GRANT PRICE. Shall be determined by the Committee, provided, however, and except as provided in Section 4(b), that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except that if a Stock Appreciation Right is at any time granted in tandem to an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option.
|
(ii)
|
TERM. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant.
|
(iii)
|
TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which a Stock Appreciation Right may be exercised in whole or in part.
|
(c)
|
RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
|
(i)
|
ISSUANCE. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants. Subject to the terms of the Plan or the applicable Award Agreement, a Restricted Stock Unit may be payable in Shares or cash.
|
(ii)
|
RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate; provided, however, that any dividend shall be subject to the same restrictions as the underlying Award. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such restrictions have lapsed.
|
(iii)
|
REGISTRATION. Any Restricted Stock or Restricted Stock Units granted under the Plan may be evidenced in such manner as the Committee may deem
|
(iv)
|
FORFEITURE. Upon termination of employment during the applicable restriction period, except as determined otherwise by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall be forfeited and reacquired by the Company.
|
(d)
|
PERFORMANCE AWARDS. The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate. Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan:
|
(i)
|
may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and
|
(ii)
|
shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such Performance Criteria during such Performance Periods as the Committee shall establish.
|
(e)
|
DIVIDEND EQUIVALENTS AND DIVIDENDS. The Committee is hereby authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine; provided, however, any Dividend Equivalents and dividends with respect to Awards shall be subject to the same restrictions as the underlying Awards.
|
(f)
|
OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase
|
(g)
|
GENERAL.
|
(ii)
|
AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
|
(iii)
|
FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments.
|
(iv)
|
LIMITS ON TRANSFER OF AWARDS. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be
|
(v)
|
RESTRICTION ON BUYOUTS OF OPTIONS AND STOCK APPRECIATION RIGHTS. The Committee shall not without the approval of the shareholders of the Company cancel any previously granted Option or Stock Appreciation Right in exchange for cash or another award if the exercise price of such Option or the grant price of such Stock Appreciation Right exceeds the Fair Market Value of a Share on the date of such cancellation, in each case other than in connection with a Change in Control or the adjustment provisions set forth in Section 4(b).
|
(vi)
|
PER-PERSON LIMITATION ON OPTIONS AND STOCK APPRECIATION RIGHTS. The number of Shares with respect to which Options and Stock Appreciation Rights may be granted under the Plan during any fiscal year to an individual Participant shall not exceed 3,000,000 Shares, subject to adjustment as provided in Section 4(b).
|
(vii)
|
PER-PERSON LIMITATION ON CERTAIN AWARDS. Other than Options and Stock Appreciation Rights, (A) the aggregate number of Shares with respect to which Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards may be granted under the Plan during any fiscal year to an individual Participant shall not exceed 1,000,000 Shares, subject to adjustment as provided in Section 4(b) and (B) with respect to Awards denominated in cash, the maximum amount that may be earned during any fiscal year by an individual Participant shall not exceed $20,000,000. The aggregate grant date fair value of the Awards that may be granted to any Non-Employee Director in any fiscal year shall not exceed $500,000.
|
(viii)
|
CONDITIONS AND RESTRICTIONS UPON SECURITIES SUBJECT TO AWARDS. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any re-sales by the Participant or other subsequent transfers by the
|
(ix)
|
SHARE CERTIFICATES. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal, state, or local securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
|
SECTION 8.
|
AMENDMENT AND TERMINATION
|
(a)
|
AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend, discontinue, or terminate the Plan, in whole or in part; provided, however, that without the prior approval of the Company’s shareowners, no material amendment shall be made if shareowner approval is required by law, regulation, or stock exchange on which the Company is listed, and; provided, further, that, notwithstanding any other provision of the Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the shareowners of the Company that would:
|
(i)
|
increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof; or
|
(ii)
|
except as provided in Section 4(b), permit Options, Stock Appreciation Rights, or other Stock-Based Awards encompassing rights to purchase Shares to be re-priced, replaced, or re-granted through cancellation, or by lowering the exercise price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of a previously granted Other Stock-Based Award.
|
(b)
|
AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or
|
SECTION 9.
|
GENERAL PROVISIONS
|
(a)
|
NO RIGHTS TO AWARDS. No Participant or other Person shall have any claim to be granted any Award under the Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of employees or consultants of the Company or any Affiliates, Non-Employee Directors, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient.
|
(b)
|
WITHHOLDING. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, or other Awards) of withholding taxes due in respect of an Award, its exercise, or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy statutory withholding obligations for the payment of such taxes.
|
(c)
|
NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.
|
(d)
|
NO RIGHT TO EMPLOYMENT. The grant of an Award shall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
|
(e)
|
GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law without regard to conflict of law.
|
(f)
|
SEVERABILITY. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person
|
(g)
|
NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
|
(h)
|
NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
|
(i)
|
HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
|
(j)
|
INDEMNIFICATION. Subject to requirements of Delaware State law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
|
(k)
|
COMPLIANCE WITH SECTION 409A OF THE CODE. Except to the extent specifically provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Section 409A of the Code (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Section 409A of the Code. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan or any Award Agreement would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A of the Code, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A of the Code to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.
|
(l)
|
NO REPRESENTATIONS OR COVENANTS WITH RESPECT TO TAX QUALIFICATION. Although the Company may endeavor to (i) qualify an Award for favorable U.S. or foreign tax treatment (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Plan.
|
(m)
|
AWARDS TO NON-U.S. EMPLOYEES. The Committee shall have the power and authority to determine which Affiliates shall be covered by this Plan and which employees outside the U.S. shall be eligible to participate in the Plan. The Committee may adopt, amend or rescind rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws, procedures, and practices. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, disability or retirement or on termination of employment; available methods of exercise or settlement of an award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements. The Committee may also adopt rules, procedures or sub-plans applicable to particular Affiliates or locations.
|
(n)
|
COMPLIANCE WITH LAWS. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges on which the Company is listed as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:
|
(i)
|
obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
|
(ii)
|
completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective.
|
(o)
|
AWARDS SUBJECT TO CLAWBACK. The Awards granted under this Plan and any cash payment, Shares or other securities delivered pursuant to an Award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Award Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
|
SECTION 10.
|
EFFECTIVE DATE; STOCKHOLDER APPROVAL
|
SECTION 11.
|
TERM OF THE PLAN
|
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
|