Synchrony Financial - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
8-K - 8-K - Synchrony Financial	a8-k4q14earnings.htm
EX-99.1 - EXHIBIT 99.1 - Synchrony Financial	earningsrelease4q14.htm
EX-99.4 - EXHIBIT 99.4 - Synchrony Financial	non-gaapmeasures4q14.htm
EX-99.3 - EXHIBIT 99.3 - Synchrony Financial	a4q14earningspresentatio.htm

Exhibit 99.2



SYNCHRONY FINANCIAL
FINANCIAL SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																				Twelve months ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			4Q'14 vs. 4Q'13					Dec 31, 2014			Dec 31, 2013			YTD'14 vs. YTD'13
EARNINGS
Net interest income	$	2,978		$	2,879		$	2,720		$	2,743		$	2,849		$	129		4.5	%	$	11,320		$	10,571		$	749		7.1	%
Retailer share arrangements	(698		)	(693		)	(590		)	(594		)	(662		)	(36		)	5.4	%	(2,575		)	(2,373		)	(202		)	8.5	%
Net interest income, after retailer share arrangements	2,280			2,186			2,130			2,149			2,187			93			4.3	%	8,745			8,198			547			6.7	%
Provision for loan losses	797			675			681			764			818			(21		)	(2.6	)%	2,917			3,072			(155		)	(5.0	)%
Net interest income, after retailer share arrangements and provision for loan losses	1,483			1,511			1,449			1,385			1,369			114			8.3	%	5,828			5,126			702			13.7	%
Other income	162			96			112			115			130			32			24.6	%	485			500			(15		)	(3.0	)%
Other expense	792			728			797			610			807			(15		)	(1.9	)%	2,927			2,484			443			17.8	%
Earnings before provision for income taxes	853			879			764			890			692			161			23.3	%	3,386			3,142			244			7.8	%
Provision for income taxes	322			331			292			332			249			73			29.3	%	1,277			1,163			114			9.8	%
Net earnings	$	531		$	548		$	472		$	558		$	443		$	88		19.9	%	$	2,109		$	1,979		$	130		6.6	%
Net earnings attributable to common stockholders	$	531		$	548		$	472		$	558		$	443		$	88		19.9	%	$	2,109		$	1,979		$	130		6.6	%

COMMON SHARE STATISTICS
Basic EPS	$	0.64		$	0.70		$	0.67		$	0.79		$	0.63		$	0.01		1.6	%	$	2.78		$	2.81		$	(0.03	)	(1.1	)%
Diluted EPS	$	0.64		$	0.70		$	0.67		$	0.79		$	0.63		$	0.01		1.6	%	$	2.78		$	2.81		$	(0.03	)	(1.1	)%
Common stock price	$	29.75		$	24.55		n/a			n/a			n/a			$	29.75		n/a		$	29.75		n/a			$	29.75		n/a
Book value per share	$	12.57		$	11.92		$	9.06		$	8.57		$	8.45		$	4.12		48.8	%	$	12.57		$	8.45		$	4.12		48.8	%
Tangible book value per share⁽¹⁾	$	10.81		$	10.25		$	7.06		$	6.56		$	6.68		$	4.13		61.8	%	$	10.81		$	6.68		$	4.13		61.8	%

Beginning common shares outstanding	833.8			705.3			705.3			705.3			705.3			128.5			18.2	%	705.3			705.3			—			—	%
Issuance of common shares through initial public offering	—			128.5			—			—			—			—			NM		128.5			—			128.5			NM
Shares repurchased	—			—			—			—			—			—			NM		—			—			—			NM
Ending common shares outstanding	833.8			833.8			705.3			705.3			705.3			128.5			18.2	%	833.8			705.3			128.5			18.2	%

Weighted average common shares outstanding	833.8			781.8			705.3			705.3			705.3			128.5			18.2	%	757.4			705.3			52.1			7.4	%
Weighted average common shares outstanding (fully diluted)	834.3			781.9			705.3			705.3			705.3			129.0			18.3	%	757.6			705.3			52.3			7.4	%

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



SYNCHRONY FINANCIAL
SELECTED METRICS
(unaudited, $ in millions, except account data)
	Quarter Ended																				Twelve months ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			4Q'14 vs. 4Q'13					Dec 31, 2014			Dec 31, 2013			YTD'14 vs. YTD'13
PERFORMANCE METRICS
Return on assets⁽¹⁾	2.7		%	3.2		%	3.1		%	3.9		%	3.0		%				(0.3	)%	3.2		%	3.5		%			(0.3	)%
Return on equity⁽²⁾	20.2		%	26.8		%	29.9		%	35.3		%	31.1		%				(10.9	)%	26.7		%	38.6		%			(11.9	)%
Return on tangible common equity⁽³⁾	23.4		%	32.4		%	38.5		%	44.2		%	40.0		%				(16.6	)%	32.4		%	51.1		%			(18.7	)%
Net interest margin⁽⁴⁾	15.60		%	17.11		%	17.84		%	18.83		%	19.30		%				(3.70	)%	17.20		%	18.78		%			(1.58	)%
Efficiency ratio⁽⁵⁾	32.4		%	31.9		%	35.5		%	26.9		%	34.8		%				(2.4	)%	31.7		%	28.6		%			3.1	%
Other expense as a % of average loan receivables, including held for sale	5.16		%	5.09		%	5.77		%	4.51		%	5.77		%				(0.61	)%	5.13		%	4.74		%			0.39	%
Effective income tax rate	37.7		%	37.7		%	38.2		%	37.3		%	36.0		%				1.7	%	37.7		%	37.0		%			0.7	%

CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale	4.32		%	4.05		%	4.88		%	4.86		%	5.13		%				(0.81	)%	4.51		%	4.68		%			(0.17	)%
30+ days past due as a % of period-end loan receivables	4.14		%	4.26		%	3.82		%	4.09		%	4.35		%				(0.21	)%	4.14		%	4.35		%			(0.21	)%
90+ days past due as a % of period-end loan receivables	1.90		%	1.85		%	1.65		%	1.93		%	1.96		%				(0.06	)%	1.90		%	1.96		%			(0.06	)%
Net charge-offs	$	663		$	579		$	673		$	658		$	718		$	(55	)	(7.7	)%	$	2,573		$	2,454		$	119	4.8	%
Loan receivables delinquent over 30 days	$	2,536		$	2,416		$	2,097		$	2,220		$	2,488		$	48		1.9	%	$	2,536		$	2,488		$	48	1.9	%
Loan receivables delinquent over 90 days	$	1,162		$	1,051		$	908		$	1,046		$	1,121		$	41		3.7	%	$	1,162		$	1,121		$	41	3.7	%

Allowance for loan losses (period-end)	$	3,236		$	3,102		$	3,006		$	2,998		$	2,892		$	344		11.9	%	$	3,236		$	2,892		$	344	11.9	%
Allowance coverage ratio⁽⁶⁾	5.28		%	5.46		%	5.48		%	5.52		%	5.05		%				0.23	%	5.28		%	5.05		%			0.23	%

BUSINESS METRICS
Purchase volume⁽⁷⁾	$	30,081		$	26,004		$	25,978		$	21,086		$	27,002		$	3,079		11.4	%	$	103,149		$	93,858		$	9,291	9.9	%
Period-end loan receivables	$	61,286		$	56,767		$	54,873		$	54,285		$	57,254		$	4,032		7.0	%	$	61,286		$	57,254		$	4,032	7.0	%
Credit cards	$	58,880		$	54,263		$	52,406		$	52,008		$	54,958		$	3,922		7.1	%	$	58,880		$	54,958		$	3,922	7.1	%
Consumer installment loans	$	1,063		$	1,081		$	1,047		$	963		$	965		$	98		10.2	%	$	1,063		$	965		$	98	10.2	%
Commercial credit products	$	1,320		$	1,404		$	1,405		$	1,299		$	1,317		$	3		0.2	%	$	1,320		$	1,317		$	3	0.2	%
Other	$	23		$	19		$	15		$	15		$	14		$	9		64.3	%	$	23		$	14		$	9	64.3	%
Average loan receivables, including held for sale	$	59,547		$	57,391		$	55,363		$	55,495		$	54,895		$	4,652		8.5	%	$	57,101		$	52,407		$	4,694	9.0	%
Period-end active accounts (in thousands)⁽⁸⁾	64,286			60,489			59,248			57,349			61,957			2,329			3.8	%	64,286			61,957			2,329		3.8	%
Average active accounts (in thousands)⁽⁸⁾	61,667			59,907			58,386			59,342			58,402			3,265			5.6	%	60,009			56,253			3,756		6.7	%

LIQUIDITY
Liquid assets
Cash and equivalents	$	11,828		$	14,808		$	6,782		$	5,331		$	2,319		$	9,509		NM		$	11,828		$	2,319		$	9,509	NM
Total liquid assets	$	12,942		$	14,077		$	6,119		$	4,806		$	2,058		$	10,884		NM		$	12,942		$	2,058		$	10,884	NM
Undrawn credit facilities
Undrawn committed securitization financings	$	6,100		$	5,650		$	5,650		$	450		$	—		$	6,100		NM		$	6,100		$	—		$	6,100	NM
Total liquid assets and undrawn credit facilities	$	19,042		$	19,727		$	11,769		$	5,256		$	2,058		$	16,984		NM		$	19,042		$	2,058		$	16,984	NM
Liquid assets % of total assets	17.09		%	19.16		%	9.69		%	8.11		%	3.48		%				13.61	%	17.09		%	3.48		%			13.61	%
Liquid assets including undrawn committed securitization financings % of total assets	25.15		%	26.85		%	18.63		%	8.87		%	3.48		%				21.67	%	25.15		%	3.48		%			21.67	%

(1) Return on assets represents net earnings as a percentage of average total assets.
(2) Return on equity represents net earnings as a percentage of average total equity.
(3) Return on tangible common equity represents net earnings as a percentage of average tangible common equity. Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
(4) Net interest margin represents net interest income divided by average interest earning assets.
(5) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.
(6) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
(7) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(8) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.



SYNCHRONY FINANCIAL
STATEMENTS OF EARNINGS
(unaudited, $ in millions)
	Quarter Ended																				Twelve months ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			4Q'14 vs. 4Q'13					Dec 31, 2014			Dec 31, 2013			YTD'14 vs. YTD'13
Interest income:
Interest and fees on loans	$	3,252		$	3,116		$	2,920		$	2,928		$	3,032		$	220		7.3	%	$	12,216		$	11,295		$	921		8.2	%
Interest on investment securities	8			7			6			5			5			3			60.0	%	26			18			8			44.4	%
Total interest income	3,260			3,123			2,926			2,933			3,037			223			7.3	%	12,242			11,313			929			8.2	%

Interest expense:
Interest on deposits	139			126			109			96			93			46			49.5	%	470			374			96			25.7	%
Interest on borrowings of consolidated securitization entities	57			57			54			47			49			8			16.3	%	215			211			4			1.9	%
Interest on third party debt	78			46			—			—			—			78			NM		124			—			124			NM
Interest on related party debt	8			15			43			47			46			(38		)	(82.6	)%	113			157			(44		)	(28.0	)%
Total interest expense	282			244			206			190			188			94			50.0	%	922			742			180			24.3	%

Net interest income	2,978			2,879			2,720			2,743			2,849			129			4.5	%	11,320			10,571			749			7.1	%

Retailer share arrangements	(698		)	(693		)	(590		)	(594		)	(662		)	(36		)	5.4	%	(2,575		)	(2,373		)	(202		)	8.5	%
Net interest income, after retailer share arrangements	2,280			2,186			2,130			2,149			2,187			93			4.3	%	8,745			8,198			547			6.7	%

Provision for loan losses	797			675			681			764			818			(21		)	(2.6	)%	2,917			3,072			(155		)	(5.0	)%
Net interest income, after retailer share arrangements and provision for loan losses	1,483			1,511			1,449			1,385			1,369			114			8.3	%	5,828			5,126			702			13.7	%

Other income:
Interchange revenue	120			101			92			76			89			31			34.8	%	389			324			65			20.1	%
Debt cancellation fees	67			68			70			70			88			(21		)	(23.9	)%	275			324			(49		)	(15.1	)%
Loyalty programs	(91		)	(84		)	(63		)	(43		)	(57		)	(34		)	59.6	%	(281		)	(213		)	(68		)	31.9	%
Other	66			11			13			12			10			56			NM		102			65			37			56.9	%
Total other income	162			96			112			115			130			32			24.6	%	485			500			(15		)	(3.0	)%

Other expense:
Employee costs	227			239			207			193			190			37			19.5	%	866			698			168			24.1	%
Professional fees	152			159			155			141			157			(5		)	(3.2	)%	607			486			121			24.9	%
Marketing and business development	165			115			97			83			117			48			41.0	%	460			269			191			71.0	%
Information processing	60			47			53			52			52			8			15.4	%	212			193			19			9.8	%
Other	188			168			285			141			291			(103		)	(35.4	)%	782			838			(56		)	(6.7	)%
Total other expense	792			728			797			610			807			(15		)	(1.9	)%	2,927			2,484			443			17.8	%

Earnings before provision for income taxes	853			879			764			890			692			161			23.3	%	3,386			3,142			244			7.8	%
Provision for income taxes	322			331			292			332			249			73			29.3	%	1,277			1,163			114			9.8	%
Net earnings attributable to common shareholders	$	531		$	548		$	472		$	558		$	443		$	88		19.9	%	$	2,109		$	1,979		$	130		6.6	%



SYNCHRONY FINANCIAL
STATEMENTS OF FINANCIAL POSITION
(unaudited, $ in millions)
	Quarter Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Dec 31, 2014 vs. Dec 31, 2013
Assets
Cash and equivalents	$	11,828		$	14,808		$	6,782		$	5,331		$	2,319		$	9,509		NM
Investment securities	1,598			325			298			265			236			1,362			NM
Loan receivables:
Unsecuritized loans held for investment	34,335			30,474			28,280			29,101			31,183			3,152			10.1	%
Restricted loans of consolidated securitization entities	26,951			26,293			26,593			25,184			26,071			880			3.4	%
Total loan receivables	61,286			56,767			54,873			54,285			57,254			4,032			7.0	%
Less: Allowance for loan losses	(3,236		)	(3,102		)	(3,006		)	(2,998		)	(2,892		)	(344		)	11.9	%
Loan receivables, net	58,050			53,665			51,867			51,287			54,362			3,688			6.8	%
Loan receivables held for sale	332			1,493			1,458			—			—			332			NM
Goodwill	949			949			949			949			949			—			—	%
Intangible assets, net	519			449			463			464			300			219			73.0	%
Other assets	2,431			1,780			1,358			949			919			1,512			164.5	%
Total assets	$	75,707		$	73,469		$	63,175		$	59,245		$	59,085		$	16,622		28.1	%

Liabilities and Equity
Deposits:
Interest-bearing deposit accounts	$	34,847		$	32,480		$	30,258		$	27,123		$	25,360		$	9,487		37.4	%
Non-interest-bearing deposit accounts	108			209			204			235			359			(251		)	(69.9	)%
Total deposits	34,955			32,689			30,462			27,358			25,719			9,236			35.9	%
Borrowings:
Borrowings of consolidated securitization entities	14,967			15,091			15,114			14,642			15,362			(395		)	(2.6	)%
Bank term loan facility	8,245			7,495			—			—			—			8,245			NM
Senior unsecured notes	3,593			3,593			—			—			—			3,593			NM
Related party debt	655			1,405			7,859			8,062			8,959			(8,304		)	(92.7	)%
Total borrowings	27,460			27,584			22,973			22,704			24,321			3,139			12.9	%
Accrued expenses and other liabilities	2,814			3,255			3,347			3,141			3,085			(271		)	(8.8	)%
Total liabilities	65,229			63,528			56,782			53,203			53,125			12,104			22.8	%
Equity:
Parent’s net investment	—			—			—			6,052			5,973			(5,973		)	(100.0	)%
Common stock	1			1			1			—			—			1			NM
Additional paid-in-capital	9,408			9,401			6,399			—			—			9,408			NM
Retained earnings	1,079			548			—			—			—			1,079			NM
Accumulated other comprehensive income:	(10		)	(9		)	(7		)	(10		)	(13		)	3			(23.1	)%
Total equity	10,478			9,941			6,393			6,042			5,960			4,518			75.8	%
Total liabilities and equity	$	75,707		$	73,469		$	63,175		$	59,245		$	59,085		$	16,622		28.1	%



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

	Quarter Ended
	Dec 31, 2014							Sep 30, 2014							Jun 30, 2014							Mar 31, 2014							Dec 31, 2013
				Interest		Average					Interest		Average					Interest		Average					Interest		Average					Interest		Average
	Average			Income/		Yield/		Average			Income/		Yield/		Average			Income/		Yield/		Average			Income/		Yield/		Average			Income/		Yield/
	Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate
Assets
Interest-earning assets:
Interest-earning cash and equivalents	$	13,631		$	7	0.20	%	$	9,793		$	4	0.16	%	$	5,489		$	3	0.22	%	$	4,001		$	2	0.21	%	$	2,792		$	2	0.28	%
Securities available for sale	962			1		0.40	%	309			3		3.89	%	285			3		4.22	%	250			3		4.92	%	237			3		4.97	%

Loan receivables:
Credit cards, including held for sale	57,075			3,186		21.68	%	54,891			3,054		22.32	%	52,957			2,860		21.66	%	53,211			2,867		22.10	%	52,271			2,963		22.25	%
Consumer installment loans	1,072			27		9.78	%	1,070			25		9.37	%	1,004			24		9.59	%	959			23		9.84	%	1,249			29		9.11	%
Commercial credit products	1,379			38		10.70	%	1,412			37		10.51	%	1,387			36		10.41	%	1,311			38		11.89	%	1,362			39		11.24	%
Other	21			1		NM		18			—		—	%	15			—		—	%	14			—		—	%	13			1		NM
Total loan receivables, including held for sale	59,547			3,252		21.21	%	57,391			3,116		21.78	%	55,363			2,920		21.16	%	55,495			2,928		21.64	%	54,895			3,032		21.68	%
Total interest-earning assets	74,140			3,260		17.07	%	67,493			3,123		18.56	%	61,137			2,926		19.20	%	59,746			2,933		20.13	%	57,924			3,037		20.58	%

Non-interest-earning assets:
Cash and due from banks	1,220							1,260							637							561							533
Allowance for loans losses	(3,160		)					(3,058		)					(3,005		)					(2,931		)					(2,823		)
Other assets	2,831							2,605							2,446							2,045							2,072
Total non-interest-earning assets	891							807							78							(325		)					(218		)

Total assets	$	75,031						$	68,300						$	61,215						$	59,421						$	57,706

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	33,980		$	139	1.59	%	$	31,459		$	126	1.61	%	$	28,568		$	109	1.53	%	$	26,317		$	96	1.50	%	$	23,857		$	93	1.53	%
Borrowings of consolidated securitization entities	14,766			57		1.50	%	15,102			57		1.51	%	14,727			54		1.47	%	14,830			47		1.30	%	15,378			49		1.25	%
Bank term loan facility⁽¹⁾	8,057			46		2.22	%	3,747			28		3.00	%	—			—		—	%	—			—		—	%	—			—		—	%
Senior unsecured notes⁽¹⁾	3,593			32		3.46	%	1,797			18		4.02	%	—			—		—	%	—			—		—	%	—			—		—	%
Related party debt⁽¹⁾	843			8		3.68	%	4,582			15		1.31	%	7,959			43		2.17	%	8,286			47		2.33	%	9,037			46		2.00	%
Total interest-bearing liabilities	61,239			282		1.79	%	56,687			244		1.73	%	51,254			206		1.61	%	49,433			190		1.58	%	48,272			188		1.53	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	182							206							221							331							450
Other liabilities	3,382							3,208							3,412							3,182							3,391
Total non-interest-bearing liabilities	3,564							3,414							3,633							3,513							3,841

Total liabilities	64,803							60,101							54,887							52,946							52,113

Equity
Total equity	10,228							8,199							6,328							6,475							5,593

Total liabilities and equity	$	75,031						$	68,300						$	61,215						$	59,421						$	57,706
Net interest income				$	2,978						$	2,879						$	2,720						$	2,743						$	2,849

Interest rate spread⁽²⁾						15.28	%						16.83	%						17.59	%						18.55	%						19.05	%
Net interest margin⁽³⁾						15.60	%						17.11	%						17.84	%						18.83	%						19.30	%

(1) Interest on liabilities calculated above utilizes monthly average balances. The effective interest rates for the quarters ended December 31, 2014 and September 30, 2014, were as follows: GECC loan 4.21% and 4.21%, Bank term loan facility 2.19% and 2.21%, Senior unsecured notes 3.52% and 3.62% respectively. The Bank term loan facility effective rate for the quarter ended September 30, 2014 excludes the impact of a one time charge incurred in connection with the prepayment of the loan facility.
(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.



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

	Twelve months ended Dec 31, 2014							Twelve months ended Dec 31, 2013
				Interest		Average					Interest		Average
	Average			Income/		Yield/		Average			Income/		Yield/
	Balance			Expense		Rate		Balance			Expense		Rate
Assets
Interest-earning assets:
Interest-earning cash and equivalents	$	8,230		$	16	0.19	%	$	3,651		$	10	0.27	%
Securities available for sale	487			10		2.05	%	217			8		3.69	%

Loan receivables:
Credit cards, including held for sale	54,686			11,967		21.88	%	49,704			11,015		22.16	%
Consumer installment loans	1,025			99		9.66	%	1,336			129		9.66	%
Commercial credit products	1,373			149		10.85	%	1,355			150		11.07	%
Other	17			1		5.88	%	12			1		8.33	%
Total loan receivables, including held for sale	57,101			12,216		21.39	%	52,407			11,295		21.55	%
Total interest-earning assets	65,818			12,242		18.60	%	56,275			11,313		20.10	%

Non-interest-earning assets:
Cash and due from banks	881							552
Allowance for loans losses	(3,039		)					(2,693		)
Other assets	2,492							2,050
Total non-interest-earning assets	334							(91		)

Total assets	$	66,152						$	56,184

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	30,110		$	470	1.56	%	$	22,405		$	374	1.67	%
Borrowings of consolidated securitization entities	14,835			215		1.45	%	16,209			211		1.30	%
Bank term loan facility⁽¹⁾	3,056			74		2.42	%	—			—		—	%
Senior unsecured notes⁽¹⁾	1,382			50		3.62	%	—			—		—	%
Related party debt⁽¹⁾	5,335			113		2.12	%	9,000			157		1.74	%
Total interest-bearing liabilities	54,718			922		1.69	%	47,614			742		1.56	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	240							506
Other liabilities	3,306							2,943
Total non-interest-bearing liabilities	3,546							3,449

Total liabilities	58,264							51,063

Equity
Total equity	7,888							5,121

Total liabilities and equity	$	66,152						$	56,184
Net interest income				$	11,320						$	10,571

Interest rate spread⁽²⁾						16.91	%						18.54	%
Net interest margin⁽³⁾						17.20	%						18.78	%

(1) Interest on liabilities calculated above utilizes monthly average balances. The effective interest rates, from the date of issuance through December 31, 2014, were as follows: GECC loan 4.21%, Bank term loan facility 2.20%, Senior unsecured notes 3.55%. The Bank term loan facility effective rate excludes the impact of a one time charge incurred in connection with the prepayment of the loan facility.
(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.



SYNCHRONY FINANCIAL
BALANCE SHEET STATISTICS
(unaudited, $ in millions, except per share statistics)

	Quarter Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Dec 31, 2014 vs. Dec 31, 2013
BALANCE SHEET STATISTICS
Total common equity	$	10,478		$	9,941		$	6,393		$	6,042		$	5,960		$	4,518	75.8	%
Total common equity as a % of total assets	13.84		%	13.53		%	10.12		%	10.20		%	10.09		%			3.75	%

Tangible assets	$	74,239		$	72,071		$	61,763		$	57,832		$	57,836		$	16,403	28.4	%
Tangible common equity⁽¹⁾	$	9,010		$	8,543		$	4,981		$	4,629		$	4,711		$	4,299	91.3	%
Tangible common equity as a % of tangible assets⁽¹⁾	12.14		%	11.85		%	8.06		%	8.00		%	8.15		%			3.99	%
Tangible common equity per share⁽¹⁾	$	10.81		$	10.24		$	7.07		$	6.57		$	6.68		$	4.13	61.8	%

REGULATORY CAPITAL RATIOS⁽²⁾
Basel I
Total risk-based capital ratio⁽³⁾	16.2		%	16.4		%
Tier 1 risk-based capital ratio⁽⁴⁾	14.9		%	15.1		%
Tier 1 common ratio⁽⁵⁾	14.9		%	15.1		%
Tier 1 leverage ratio⁽⁶⁾	12.5		%	12.2		%

Basel III
Tier 1 common ratio⁽⁷⁾	14.5		%	14.6		%

(1) Tangible Common Equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure to investors of the net asset value of the Company. For corresponding reconciliation of TCE to a GAAP financial measure see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
(2) Regulatory capital metrics as of the end of 3Q 2014 are preliminary and therefore subject to change. As a new savings and loan holding company, the Company historically has not been required by regulators to disclose capital ratios, and therefore these ratios are non-GAAP measures. See Reconciliation of Non-GAAP Measures and Calculation of Regulatory Measures for components of capital ratio calculations.
(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
(5) Tier 1 common ratio is the ratio of common equity Tier 1 capital divided by risk-weighted assets.
(6) Tier 1 leverage ratio is calculated based on Tier 1 capital divided by total assets, after certain adjustments.
(7) Our Basel III Tier 1 common ratio is the ratio of common equity Tier 1 capital to total risk-weighted assets, each as calculated in accordance with the U.S. Basel III capital rules (on a fully phased-in basis). Our Basel III Tier 1 common ratio is a preliminary estimate reflecting management’s interpretation of the final Basel III capital rules adopted in July 2013 by the Federal Reserve Board, which have not been fully implemented, and our estimate and interpretations are subject to, among other things, ongoing regulatory review and implementation guidance.



SYNCHRONY FINANCIAL
PLATFORM RESULTS AND RECONCILIATION OF NON-GAAP MEASURES
(unaudited, in millions)
	Quarter Ended																				Twelve months ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			4Q'14 vs. 4Q'13					Dec 31, 2014			Dec 31, 2013			YTD'14 vs. YTD'13
RETAIL CARD
Purchase volume^(1),(2)	$	24,855		$	20,991		$	21,032		$	16,713		$	22,199		$	2,656		12.0	%	$	83,591		$	75,739		$	7,852		10.4	%
Period-end loan receivables	$	42,308		$	38,466		$	37,238		$	37,175		$	39,834		$	2,474		6.2	%	$	42,308		$	39,834		$	2,474		6.2	%
Average loan receivables, including held for sale	$	40,929		$	39,411		$	38,047		$	38,223		$	37,576		$	3,353		8.9	%	$	39,278		$	35,716		$	3,562		10.0	%
Average active accounts (in thousands)^(2),(3)	49,871			48,433			47,248			48,168			47,455			2,416			5.1	%	48,599			45,690			2,909			6.4	%

Interest and fees on loans⁽²⁾	$	2,405		$	2,299		$	2,158		$	2,178		$	2,234		$	171		7.7	%	$	9,040		$	8,317		$	723		8.7	%
Other income⁽²⁾	141			78			92			96			113			28			24.8	%	407			419			(12		)	(2.9	)%
Platform revenue, excluding retailer share arrangements⁽²⁾	2,546			2,377			2,250			2,274			2,347			199			8.5	%	9,447			8,736			711			8.1	%
Retailer share arrangements⁽²⁾	(686		)	(683		)	(577		)	(584		)	(651		)	(35		)	5.4	%	(2,530		)	(2,331		)	(199		)	8.5	%
Platform revenue⁽²⁾	$	1,860		$	1,694		$	1,673		$	1,690		$	1,696		$	164		9.7	%	$	6,917		$	6,405		$	512		8.0	%

PAYMENT SOLUTIONS
Purchase volume⁽¹⁾	$	3,419		$	3,226		$	3,115		$	2,687		$	3,111		$	308		9.9	%	$	12,447		$	11,360		$	1,087		9.6	%
Period-end loan receivables	$	12,095		$	11,514		$	11,014		$	10,647		$	10,893		$	1,202		11.0	%	$	12,095		$	10,893		$	1,202		11.0	%
Average loan receivables	$	11,772		$	11,267		$	10,785		$	10,775		$	10,844		$	928		8.6	%	$	11,171		$	10,469		$	702		6.7	%
Average active accounts (in thousands)⁽³⁾	7,113			6,892			6,692			6,737			6,566			547			8.3	%	6,869			6,330			539			8.5	%

Interest and fees on loans	$	426		$	405		$	379		$	372		$	399		$	27		6.8	%	$	1,582		$	1,506		$	76		5.0	%
Other income	9			7			8			8			4			5			125.0	%	32			36			(4		)	(11.1	)%
Platform revenue, excluding retailer share arrangements	435			412			387			380			403			32			7.9	%	1,614			1,542			72			4.7	%
Retailer share arrangements	(11		)	(9		)	(12		)	(9		)	(9		)	(2		)	22.2	%	(41		)	(36		)	(5		)	13.9	%
Platform revenue	$	424		$	403		$	375		$	371		$	394		$	30		7.6	%	$	1,573		$	1,506		$	67		4.4	%

CARECREDIT
Purchase volume⁽¹⁾	$	1,807		$	1,787		$	1,831		$	1,686		$	1,692		$	115		6.8	%	$	7,111		$	6,759		$	352		5.2	%
Period-end loan receivables	$	6,883		$	6,787		$	6,621		$	6,463		$	6,527		$	356		5.5	%	$	6,883		$	6,527		$	356		5.5	%
Average loan receivables	$	6,846		$	6,713		$	6,531		$	6,497		$	6,475		$	371		5.7	%	$	6,652		$	6,222		$	430		6.9	%
Average active accounts (in thousands)⁽³⁾	4,683			4,582			4,446			4,437			4,381			302			6.9	%	4,541			4,233			308			7.3	%

Interest and fees on loans	$	421		$	412		$	383		$	378		$	399		$	22		5.5	%	$	1,594		$	1,472		$	122		8.3	%
Other income	12			11			12			11			13			(1		)	(7.7	)%	46			45			1			2.2	%
Platform revenue, excluding retailer share arrangements	433			423			395			389			412			21			5.1	%	1,640			1,517			123			8.1	%
Retailer share arrangements	(1		)	(1		)	(1		)	(1		)	(2		)	1			(50.0	)%	(4		)	(6		)	2			(33.3	)%
Platform revenue	$	432		$	422		$	394		$	388		$	410		$	22		5.4	%	$	1,636		$	1,511		$	125		8.3	%

TOTAL SYF
Purchase volume^(1),(2)	$	30,081		$	26,004		$	25,978		$	21,086		$	27,002		$	3,079		11.4	%	$	103,149		$	93,858		$	9,291		9.9	%
Period-end loan receivables	$	61,286		$	56,767		$	54,873		$	54,285		$	57,254		$	4,032		7.0	%	$	61,286		$	57,254		$	4,032		7.0	%
Average loan receivables, including held for sale	$	59,547		$	57,391		$	55,363		$	55,495		$	54,895		$	4,652		8.5	%	$	57,101		$	52,407		$	4,694		9.0	%
Average active accounts (in thousands)^(2),(3)	61,667			59,907			58,386			59,342			58,402			3,265			5.6	%	60,009			56,253			3,756			6.7	%

Interest and fees on loans⁽²⁾	$	3,252		$	3,116		$	2,920		$	2,928		$	3,032		$	220		7.3	%	$	12,216		$	11,295		$	921		8.2	%
Other income⁽²⁾	162			96			112			115			130			32			24.6	%	485			500			(15		)	(3.0	)%
Platform revenue, excluding retailer share arrangements⁽²⁾	3,414			3,212			3,032			3,043			3,162			252			8.0	%	12,701			11,795			906			7.7	%
Retailer share arrangements⁽²⁾	(698		)	(693		)	(590		)	(594		)	(662		)	(36		)	5.4	%	(2,575		)	(2,373		)	(202		)	8.5	%
Platform revenue⁽²⁾	$	2,716		$	2,519		$	2,442		$	2,449		$	2,500		$	216		8.6	%	$	10,126		$	9,422		$	704		7.5	%

(1) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(2) Includes activity and balances associated with loan receivables held for sale.
(3) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.



SYNCHRONY FINANCIAL
RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES
(unaudited, $ in millions, except per share statistics)
	Quarter Ended
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013
COMMON EQUITY MEASURES
GAAP Total common equity	$	10,478		$	9,941		$	6,393		$	6,042		$	5,960
Less: Goodwill	(949		)	(949		)	(949		)	(949		)	(949		)
Less: Intangible assets, net	(519		)	(449		)	(463		)	(464		)	(300		)
Tangible common equity	$	9,010		$	8,543		$	4,981		$	4,629		$	4,711
Adjustments for certain other intangible assets, deferred tax liabilities and certain items in accumulated comprehensive income (loss)	287			292
Basel I - Tier 1 capital and Tier 1 common equity	$	9,297		$	8,835
Adjustments for certain other intangible assets and deferred tax liabilities	(20		)	(24		)
Basel III - Tier I common equity	$	9,277		$	8,811

RISK-BASED CAPITAL
Basel I - Tier 1 capital and Tier 1 common equity	$	9,297		$	8,835
Add: Allowance for loan losses includible in risk-based capital	808			760
Basel I - Risk-based capital	$	10,105		$	9,595

ASSET MEASURES
Total assets	$	75,707		$	73,469
Adjustments for:
Disallowed goodwill and other disallowed intangible assets, net of related deferred tax liabilities	(1,181		)	(1,110		)
Other	79			4
Total assets for leverage purposes - Basel I	$	74,605		$	72,363

Risk-weighted assets - Basel I	$	62,250		$	58,457
Additional risk weighting adjustments related to:
Deferred taxes	1,321			1,319
Loan receivables delinquent over 90 days	581			526
Other	(11		)	(2		)
Risk-weighted assets - Basel III (fully phased in)	$	64,141		$	60,300

TANGIBLE COMMON EQUITY PER SHARE
GAAP book value per share	$	12.57		$	11.92		$	9.06		$	8.57		$	8.45
Less: Goodwill	(1.14		)	(1.14		)	(1.34		)	(1.34		)	(1.34		)
Less: Intangible assets, net	(0.62		)	(0.53		)	(0.66		)	(0.67		)	(0.43		)
Tangible common equity per share	$	10.81		$	10.25		$	7.06		$	6.56		$	6.68

Synchrony Financial - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 23, 2015

Attached files

Synchrony Financial Reports