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

Attached files

file	filename
EX-99.4 - EXHIBIT 99.4 - Synchrony Financial	non-gaapmeasures3q16.htm
EX-99.3 - EXHIBIT 99.3 - Synchrony Financial	a3q16earningspresentatio.htm
EX-99.1 - EXHIBIT 99.1 - Synchrony Financial	earningsrelease3q16.htm
8-K - 8-K - Synchrony Financial	a8-k3q16earnings.htm

Exhibit 99.2



SYNCHRONY FINANCIAL
FINANCIAL SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			3Q'16 vs. 3Q'15					Sep 30, 2016			Sep 30, 2015			YTD'16 vs. YTD'15
EARNINGS
Net interest income	$	3,481		$	3,212		$	3,209		$	3,208		$	3,103		$	378		12.2	%	$	9,902		$	8,885		$	1,017		11.4	%
Retailer share arrangements	(757		)	(664		)	(670		)	(734		)	(723		)	(34		)	4.7	%	(2,091		)	(2,004		)	(87		)	4.3	%
Net interest income, after retailer share arrangements	2,724			2,548			2,539			2,474			2,380			344			14.5	%	7,811			6,881			930			13.5	%
Provision for loan losses	986			1,021			903			823			702			284			40.5	%	2,910			2,129			781			36.7	%
Net interest income, after retailer share arrangements and provision for loan losses	1,738			1,527			1,636			1,651			1,678			60			3.6	%	4,901			4,752			149			3.1	%
Other income	84			83			92			87			84			—			—	%	259			305			(46		)	(15.1	)%
Other expense	859			839			800			870			843			16			1.9	%	2,498			2,394			104			4.3	%
Earnings before provision for income taxes	963			771			928			868			919			44			4.8	%	2,662			2,663			(1		)	0.0	%
Provision for income taxes	359			282			346			321			345			14			4.1	%	987			996			(9		)	(0.9	)%
Net earnings	$	604		$	489		$	582		$	547		$	574		$	30		5.2	%	$	1,675		$	1,667		$	8		0.5	%
Net earnings attributable to common stockholders	$	604		$	489		$	582		$	547		$	574		$	30		5.2	%	$	1,675		$	1,667		$	8		0.5	%

COMMON SHARE STATISTICS
Basic EPS	$	0.73		$	0.59		$	0.70		$	0.66		$	0.69		$	0.04		5.8	%	$	2.01		$	2.00		$	0.01		0.5	%
Diluted EPS	$	0.73		$	0.58		$	0.70		$	0.65		$	0.69		$	0.04		5.8	%	$	2.01		$	2.00		$	0.01		0.5	%
Dividend declared per share	$	0.13		$	—		$	—		$	—		$	—		$	0.13		NM		$	0.13		$	—		$	0.13		NM
Common stock price	$	28.00		$	25.28		$	28.66		$	30.41		$	31.30		$	(3.30	)	(10.5	)%	$	28.00		$	31.30		$	(3.30	)	(10.5	)%
Book value per share	$	16.94		$	16.45		$	15.84		$	15.12		$	14.58		$	2.36		16.2	%	$	16.94		$	14.58		$	2.36		16.2	%
Tangible common equity per share⁽¹⁾	$	14.90		$	14.46		$	13.86		$	13.14		$	12.67		$	2.23		17.6	%	$	14.90		$	12.67		$	2.23		17.6	%

Beginning common shares outstanding	833.9			833.8			833.8			833.8			833.8			0.1			0.0	%	833.8			833.8			—			—	%
Issuance of common shares	—			—			—			—			—			—			—	%	—			—			—			—	%
Stock-based compensation	0.1			0.1			—			—			—			0.1			NM		0.2			—			0.2			NM
Shares repurchased	(8.5		)	—			—			—			—			(8.5		)	NM		(8.5		)	—			(8.5		)	NM
Ending common shares outstanding	825.5			833.9			833.8			833.8			833.8			(8.3		)	(1.0	)%	825.5			833.8			(8.3		)	(1.0	)%

Weighted average common shares outstanding	828.4			833.9			833.8			833.8			833.8			(5.4		)	(0.6	)%	832.1			833.8			(1.7		)	(0.2	)%
Weighted average common shares outstanding (fully diluted)	830.6			836.2			835.5			835.8			835.8			(5.2		)	(0.6	)%	834.1			835.4			(1.3		)	(0.2	)%

(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⁽¹⁾
(unaudited, $ in millions, except account data)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			3Q'16 vs. 3Q'15					Sep 30, 2016			Sep 30, 2015			YTD'16 vs. YTD'15
PERFORMANCE METRICS
Return on assets⁽²⁾	2.8		%	2.4		%	2.8		%	2.7		%	2.9		%				(0.1	)%	2.7		%	3.0		%				(0.3	)%
Return on equity⁽³⁾	17.4		%	14.6		%	18.1		%	17.5		%	19.2		%				(1.8	)%	16.7		%	19.7		%				(3.0	)%
Return on tangible common equity⁽⁴⁾	19.8		%	16.6		%	20.8		%	20.1		%	22.0		%				(2.2	)%	19.1		%	22.7		%				(3.6	)%
Net interest margin⁽⁵⁾	16.27		%	15.86		%	15.76		%	15.73		%	15.97		%				0.30	%	15.94		%	15.81		%				0.13	%
Efficiency ratio⁽⁶⁾	30.6		%	31.9		%	30.4		%	34.0		%	34.2		%				(3.6	)%	31.0		%	33.3		%				(2.3	)%
Other expense as a % of average loan receivables, including held for sale	4.92		%	5.04		%	4.82		%	5.28		%	5.35		%				(0.43	)%	4.92		%	5.25		%				(0.33	)%
Effective income tax rate	37.3		%	36.6		%	37.3		%	37.0		%	37.5		%				(0.2	)%	37.1		%	37.4		%				(0.3	)%

CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale	4.38		%	4.49		%	4.70		%	4.23		%	4.02		%				0.36	%	4.51		%	4.37		%				0.14	%
30+ days past due as a % of period-end loan receivables⁽⁷⁾	4.26		%	3.79		%	3.85		%	4.06		%	4.02		%				0.24	%	4.26		%	4.02		%				0.24	%
90+ days past due as a % of period-end loan receivables⁽⁷⁾	1.89		%	1.67		%	1.84		%	1.86		%	1.73		%				0.16	%	1.89		%	1.73		%				0.16	%
Net charge-offs	$	765		$	747		$	780		$	697		$	633		$	132		20.9	%	$	2,292		$	1,994		$	298		14.9	%
Loan receivables delinquent over 30 days⁽⁷⁾	$	3,008		$	2,585		$	2,538		$	2,772		$	2,553		$	455		17.8	%	$	3,008		$	2,553		$	455		17.8	%
Loan receivables delinquent over 90 days⁽⁷⁾	$	1,334		$	1,143		$	1,212		$	1,273		$	1,102		$	232		21.1	%	$	1,334		$	1,102		$	232		21.1	%

Allowance for loan losses (period-end)	$	4,115		$	3,894		$	3,620		$	3,497		$	3,371		$	744		22.1	%	$	4,115		$	3,371		$	744		22.1	%
Allowance coverage ratio⁽⁸⁾	5.82		%	5.70		%	5.50		%	5.12		%	5.31		%				0.51	%	5.82		%	5.31		%				0.51	%

BUSINESS METRICS
Purchase volume⁽⁹⁾	$	31,615		$	31,507		$	26,977		$	32,460		$	29,206		$	2,409		8.2	%	$	90,099		$	81,155		$	8,944		11.0	%
Period-end loan receivables	$	70,644		$	68,282		$	65,849		$	68,290		$	63,520		$	7,124		11.2	%	$	70,644		$	63,520		$	7,124		11.2	%
Credit cards	$	67,858		$	65,511		$	63,309		$	65,773		$	60,920		$	6,938		11.4	%	$	67,858		$	60,920		$	6,938		11.4	%
Consumer installment loans	$	1,361		$	1,293		$	1,184		$	1,154		$	1,171		$	190		16.2	%	$	1,361		$	1,171		$	190		16.2	%
Commercial credit products	$	1,385		$	1,389		$	1,318		$	1,323		$	1,380		$	5		0.4	%	$	1,385		$	1,380		$	5		0.4	%
Other	$	40		$	89		$	38		$	40		$	49		$	(9	)	(18.4	)%	$	40		$	49		$	(9	)	(18.4	)%
Average loan receivables, including held for sale	$	69,525		$	66,943		$	66,705		$	65,406		$	62,504		$	7,021		11.2	%	$	67,856		$	60,946		$	6,910		11.3	%
Period-end active accounts (in thousands)⁽¹⁰⁾	66,781			66,491			64,689			68,314			62,831			3,950			6.3	%	66,781			62,831			3,950			6.3	%
Average active accounts (in thousands)⁽¹⁰⁾	66,639			65,531			66,134			64,892			62,247			4,392			7.1	%	66,204			61,762			4,442			7.2	%

LIQUIDITY
Liquid assets
Cash and equivalents	$	13,588		$	11,787		$	12,500		$	12,325		$	12,271		$	1,317		10.7	%	$	13,588		$	12,271		$	1,317		10.7	%
Total liquid assets	$	16,362		$	13,956		$	14,915		$	14,836		$	15,305		$	1,057		6.9	%	$	16,362		$	15,305		$	1,057		6.9	%
Undrawn facilities
Undrawn facilities	$	7,150		$	7,025		$	7,325		$	6,075		$	6,550		$	600		9.2	%	$	7,150		$	6,550		$	600		9.2	%
Total liquid assets and undrawn facilities	$	23,512		$	20,981		$	22,240		$	20,911		$	21,855		$	1,657		7.6	%	$	23,512		$	21,855		$	1,657		7.6	%
Liquid assets % of total assets	18.77		%	16.94		%	18.27		%	17.66		%	19.30		%				(0.53	)%	18.77		%	19.30		%				(0.53	)%
Liquid assets including undrawn facilities % of total assets	26.98		%	25.47		%	27.24		%	24.90		%	27.56		%				(0.58	)%	26.98		%	27.56		%				(0.58	)%

(1) Certain balance sheet amounts and related metrics have been updated to reflect the adoption of ASU 2015-03. More detail on this update is in footnote (1) on the Statements of Financial Position.
(2) Return on assets represents net earnings as a percentage of average total assets.
(3) Return on equity represents net earnings as a percentage of average total equity.
(4) 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.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
(6) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.
(7) Based on customer statement-end balances extrapolated to the respective period-end date.
(8) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.
(9) 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.
(10) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.



SYNCHRONY FINANCIAL
STATEMENTS OF EARNINGS
(unaudited, $ in millions)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			3Q'16 vs. 3Q'15					Sep 30, 2016			Sep 30, 2015			YTD'16 vs. YTD'15
Interest income:
Interest and fees on loans	$	3,771		$	3,494		$	3,498		$	3,494		$	3,379		$	392		11.6	%	$	10,763		$	9,685		$	1,078		11.1	%
Interest on investment securities	25			21			22			15			13			12			92.3	%	68			34			34			100.0	%
Total interest income	3,796			3,515			3,520			3,509			3,392			404			11.9	%	10,831			9,719			1,112			11.4	%

Interest expense:
Interest on deposits	188			179			172			165			159			29			18.2	%	539			442			97			21.9	%
Interest on borrowings of consolidated securitization entities	63			59			58			56			54			9			16.7	%	180			159			21			13.2	%
Interest on third-party debt	64			65			81			80			76			(12		)	(15.8	)%	210			229			(19		)	(8.3	)%
Interest on related party debt	—			—			—			—			—			—			—	%	—			4			(4		)	(100.0	)%
Total interest expense	315			303			311			301			289			26			9.0	%	929			834			95			11.4	%

Net interest income	3,481			3,212			3,209			3,208			3,103			378			12.2	%	9,902			8,885			1,017			11.4	%

Retailer share arrangements	(757		)	(664		)	(670		)	(734		)	(723		)	(34		)	4.7	%	(2,091		)	(2,004		)	(87		)	4.3	%
Net interest income, after retailer share arrangements	2,724			2,548			2,539			2,474			2,380			344			14.5	%	7,811			6,881			930			13.5	%

Provision for loan losses	986			1,021			903			823			702			284			40.5	%	2,910			2,129			781			36.7	%
Net interest income, after retailer share arrangements and provision for loan losses	1,738			1,527			1,636			1,651			1,678			60			3.6	%	4,901			4,752			149			3.1	%

Other income:
Interchange revenue	154			151			130			147			135			19			14.1	%	435			358			77			21.5	%
Debt cancellation fees	67			63			64			62			61			6			9.8	%	194			187			7			3.7	%
Loyalty programs	(145		)	(135		)	(110		)	(125		)	(122		)	(23		)	18.9	%	(390		)	(294		)	(96		)	32.7	%
Other	8			4			8			3			10			(2		)	(20.0	)%	20			54			(34		)	(63.0	)%
Total other income	84			83			92			87			84			—			—	%	259			305			(46		)	(15.1	)%

Other expense:
Employee costs	311			301			280			285			268			43			16.0	%	892			757			135			17.8	%
Professional fees	174			154			146			165			162			12			7.4	%	474			480			(6		)	(1.3	)%
Marketing and business development	92			107			94			128			115			(23		)	(20.0	)%	293			305			(12		)	(3.9	)%
Information processing	87			81			82			83			77			10			13.0	%	250			214			36			16.8	%
Other	195			196			198			209			221			(26		)	(11.8	)%	589			638			(49		)	(7.7	)%
Total other expense	859			839			800			870			843			16			1.9	%	2,498			2,394			104			4.3	%

Earnings before provision for income taxes	963			771			928			868			919			44			4.8	%	2,662			2,663			(1		)	0.0	%
Provision for income taxes	359			282			346			321			345			14			4.1	%	987			996			(9		)	(0.9	)%
Net earnings attributable to common stockholders	$	604		$	489		$	582		$	547		$	574		$	30		5.2	%	$	1,675		$	1,667		$	8		0.5	%



SYNCHRONY FINANCIAL
STATEMENTS OF FINANCIAL POSITION⁽¹⁾
(unaudited, $ in millions)
	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015
Assets
Cash and equivalents	$	13,588		$	11,787		$	12,500		$	12,325		$	12,271		$	1,317		10.7	%
Investment securities	3,356			2,723			2,949			3,142			3,596			(240		)	(6.7	)%
Loan receivables:
Unsecuritized loans held for investment	47,517			44,854			41,730			42,826			38,325			9,192			24.0	%
Restricted loans of consolidated securitization entities	23,127			23,428			24,119			25,464			25,195			(2,068		)	(8.2	)%
Total loan receivables	70,644			68,282			65,849			68,290			63,520			7,124			11.2	%
Less: Allowance for loan losses	(4,115		)	(3,894		)	(3,620		)	(3,497		)	(3,371		)	(744		)	22.1	%
Loan receivables, net	66,529			64,388			62,229			64,793			60,149			6,380			10.6	%
Goodwill	949			949			949			949			949			—			—	%
Intangible assets, net	733			704			702			701			646			87			13.5	%
Other assets	2,004			1,833			2,327			2,080			1,679			325			19.4	%
Total assets	$	87,159		$	82,384		$	81,656		$	83,990		$	79,290		$	7,869		9.9	%

Liabilities and Equity
Deposits:
Interest-bearing deposit accounts	$	49,611		$	46,220		$	44,721		$	43,215		$	40,323		$	9,288		23.0	%
Non-interest-bearing deposit accounts	204			207			256			152			140			64			45.7	%
Total deposits	49,815			46,427			44,977			43,367			40,463			9,352			23.1	%
Borrowings:
Borrowings of consolidated securitization entities	12,411			12,236			12,423			13,589			13,624			(1,213		)	(8.9	)%
Bank term loan	—			—			1,494			4,133			4,630			(4,630		)	(100.0	)%
Senior unsecured notes	7,756			7,059			6,559			6,557			5,560			2,196			39.5	%
Related party debt	—			—			—			—			—			—			—	%
Total borrowings	20,167			19,295			20,476			24,279			23,814			(3,647		)	(15.3	)%
Accrued expenses and other liabilities	3,196			2,947			2,999			3,740			2,855			341			11.9	%
Total liabilities	73,178			68,669			68,452			71,386			67,132			6,046			9.0	%
Equity:
Common stock	1			1			1			1			1			—			—	%
Additional paid-in capital	9,381			9,370			9,359			9,351			9,431			(50		)	(0.5	)%
Retained earnings	4,861			4,364			3,875			3,293			2,746			2,115			77.0	%
Accumulated other comprehensive income:	(24		)	(20		)	(31		)	(41		)	(20		)	(4		)	20.0	%
Treasury Stock	(238		)	—			—			—			—			(238		)	NM
Total equity	13,981			13,715			13,204			12,604			12,158			1,823			15.0	%
Total liabilities and equity	$	87,159		$	82,384		$	81,656		$	83,990		$	79,290		$	7,869		9.9	%

(1) In January 2016, we adopted ASU 2015-03, Interest–Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the presentation of deferred issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of the debt liability. Accordingly, we have reclassified issuance costs associated with our borrowings and certain brokered deposits, from other assets, and reflected as a reduction of borrowings and interest-bearing deposit accounts, as applicable, for each period presented to conform to the current period presentation. Related selected financial metrics included within this Financial Data Supplement have also been updated where applicable to reflect this reclassification.



SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN⁽¹⁾
(unaudited, $ in millions)

	Quarter Ended
	September 30, 2016							June 30, 2016							March 31, 2016							December 31, 2015							September 30, 2015
				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	$	12,574		$	16	0.51	%	$	11,692		$	14	0.48	%	$	12,185		$	16	0.53	%	$	12,070		$	9	0.30	%	$	11,059		$	7	0.25	%
Securities available for sale	3,018			9		1.19	%	2,805			7		1.00	%	2,995			6		0.81	%	3,445			6		0.69	%	3,534			6		0.67	%

Loan receivables:
Credit cards, including held for sale	66,746			3,705		22.08	%	64,269			3,432		21.48	%	64,194			3,436		21.53	%	62,834			3,432		21.67	%	59,890			3,315		21.96	%
Consumer installment loans	1,331			31		9.27	%	1,235			28		9.12	%	1,159			27		9.37	%	1,163			26		8.87	%	1,160			27		9.23	%
Commercial credit products	1,390			35		10.02	%	1,373			33		9.67	%	1,313			35		10.72	%	1,361			36		10.49	%	1,400			36		10.20	%
Other	58			—		—	%	66			1		NM		39			—		—	%	48			—		—	%	54			1		NM
Total loan receivables, including held for sale	69,525			3,771		21.58	%	66,943			3,494		20.99	%	66,705			3,498		21.09	%	65,406			3,494		21.19	%	62,504			3,379		21.45	%
Total interest-earning assets	85,117			3,796		17.74	%	81,440			3,515		17.36	%	81,885			3,520		17.29	%	80,921			3,509		17.20	%	77,097			3,392		17.46	%

Non-interest-earning assets:
Cash and due from banks	641							774							1,277							1,268							1,216
Allowance for loan losses	(3,977		)					(3,729		)					(3,583		)					(3,440		)					(3,341		)
Other assets	3,240							3,209							3,256							3,133							2,869
Total non-interest-earning assets	(96		)					254							950							961							744

Total assets	$	85,021						$	81,694						$	82,835						$	81,882						$	77,841

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	47,926		$	188	1.56	%	$	45,490		$	179	1.58	%	$	44,101		$	172	1.57	%	$	42,079		$	165	1.56	%	$	39,048		$	159	1.62	%
Borrowings of consolidated securitization entities	12,369			63		2.03	%	12,291			59		1.93	%	12,950			58		1.80	%	13,550			56		1.64	%	13,715			54		1.56	%
Bank term loan⁽²⁾	—			—		—	%	374			7		7.53	%	2,565			24		3.76	%	4,507			28		2.46	%	4,878			29		2.36	%
Senior unsecured notes	7,408			64		3.44	%	6,809			58		3.43	%	6,558			57		3.50	%	5,810			52		3.55	%	5,312			47		3.51	%
Related party debt	—			—		—	%	—			—		—	%	—			—		—	%	—			—		—	%	—			—		—	%
Total interest-bearing liabilities	67,703			315		1.85	%	64,964			303		1.88	%	66,174			311		1.89	%	65,946			301		1.81	%	62,953			289		1.82	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	203							217							226							147							149
Other liabilities	3,314							3,046							3,534							3,396							2,859
Total non-interest-bearing liabilities	3,517							3,263							3,760							3,543							3,008

Total liabilities	71,220							68,227							69,934							69,489							65,961

Equity
Total equity	13,801							13,467							12,901							12,393							11,880

Total liabilities and equity	$	85,021						$	81,694						$	82,835						$	81,882						$	77,841
Net interest income				$	3,481						$	3,212						$	3,209						$	3,208						$	3,103

Interest rate spread⁽³⁾						15.89	%						15.48	%						15.40	%						15.39	%						15.64	%
Net interest margin⁽⁴⁾						16.27	%						15.86	%						15.76	%						15.73	%						15.97	%

(1) Certain balance sheet amounts and related metrics have been updated to reflect the adoption of ASU 2015-03. More detail on this update is in footnote (1) on the Statements of Financial Position.
(2) Average interest rate on liabilities calculated above utilizes monthly average balances. The effective interest rates for the Bank term loan for the quarters ended June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015 were 2.51%, 2.47%, 2.26%, and 2.23%, respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with prepayments of the loan.
(3) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.



SYNCHRONY FINANCIAL
AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN⁽¹⁾
(unaudited, $ in millions)

	Nine Months Ended September 30, 2016							Nine Months Ended September 30, 2015
				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	$	12,172		$	46	0.50	%	$	11,144		$	19	0.23	%
Securities available for sale	2,960			22		0.99	%	3,066			15		0.65	%

Loan receivables:
Credit cards, including held for sale	65,201			10,573		21.66	%	58,442			9,500		21.73	%
Consumer installment loans	1,242			86		9.25	%	1,107			78		9.42	%
Commercial credit products	1,360			103		10.12	%	1,361			106		10.41	%
Other	53			1		NM		36			1		NM
Total loan receivables, including held for sale	67,856			10,763		21.19	%	60,946			9,685		21.25	%
Total interest-earning assets	82,988			10,831		17.43	%	75,156			9,719		17.29	%

Non-interest-earning assets:
Cash and due from banks	942							782
Allowance for loan losses	(3,764		)					(3,304		)
Other assets	3,250							2,759
Total non-interest-earning assets	428							237

Total assets	$	83,416						$	75,393

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	45,913		$	539	1.57	%	$	36,677		$	442	1.61	%
Borrowings of consolidated securitization entities	12,578			180		1.91	%	13,952			159		1.52	%
Bank term loan⁽²⁾	1,026			31		4.04	%	5,625			108		2.57	%
Senior unsecured notes	6,948			179		3.44	%	4,667			121		3.47	%
Related party debt	—			—		—	%	163			4		3.28	%
Total interest-bearing liabilities	66,465			929		1.87	%	61,084			834		1.83	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	212							153
Other liabilities	3,363							2,846
Total non-interest-bearing liabilities	3,575							2,999

Total liabilities	70,040							64,083

Equity
Total equity	13,376							11,310

Total liabilities and equity	$	83,416						$	75,393
Net interest income				$	9,902						$	8,885

Interest rate spread⁽³⁾						15.56	%						15.46	%
Net interest margin⁽⁴⁾						15.94	%						15.81	%

(1) Certain balance sheet amounts and related metrics have been updated to reflect the adoption of ASU 2015-03. More detail on this update is in footnote (1) on the Statements of Financial Position.
(2) Average interest rate on liabilities calculated above utilizes monthly average balances. The effective interest rates for the Bank term loan for the 9 months ended September 30, 2016 and September 30, 2015 were 2.48% and 2.22%, respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with prepayments of the loan.
(3) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.



SYNCHRONY FINANCIAL
BALANCE SHEET STATISTICS⁽¹⁾
(unaudited, $ in millions, except per share statistics)

	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016 vs. Sep 30, 2015
BALANCE SHEET STATISTICS
Total common equity	$	13,981		$	13,715		$	13,204		$	12,604		$	12,158		$	1,823	15.0	%
Total common equity as a % of total assets	16.04		%	16.65		%	16.17		%	15.01		%	15.33		%			0.71	%

Tangible assets	$	85,477		$	80,731		$	80,005		$	82,340		$	77,695		$	7,782	10.0	%
Tangible common equity⁽²⁾	$	12,299		$	12,062		$	11,553		$	10,954		$	10,563		$	1,736	16.4	%
Tangible common equity as a % of tangible assets⁽²⁾	14.39		%	14.94		%	14.44		%	13.30		%	13.60		%			0.79	%
Tangible common equity per share⁽²⁾	$	14.90		$	14.46		$	13.86		$	13.14		$	12.67		$	2.23	17.6	%

REGULATORY CAPITAL RATIOS⁽³⁾
	Basel III Transition
Total risk-based capital ratio⁽⁴⁾	19.5		%	19.8		%	19.4		%	18.1		%	18.8		%
Tier 1 risk-based capital ratio⁽⁵⁾	18.2		%	18.5		%	18.1		%	16.8		%	17.5		%
Tier 1 leverage ratio⁽⁶⁾	15.3		%	15.6		%	14.8		%	14.4		%	14.6		%
Common equity Tier 1 capital ratio⁽⁷⁾	18.2		%	18.5		%	18.1		%	16.8		%	17.5		%

	Basel III Fully Phased-in
Common equity Tier 1 capital ratio⁽⁷⁾	17.9		%	18.0		%	17.5		%	15.9		%	16.7		%

(1) Certain balance sheet amounts and related metrics have been updated to reflect the adoption of ASU 2015-03. More detail on this update is in footnote (1) on the Statements of Financial Position.
(2) Tangible common equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure of the net asset value of the Company to investors. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.
(3) Regulatory capital metrics at September 30, 2016 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 prior to December 31, 2015, 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.
(4) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.
(5) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.
(6) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments.
(7) Common equity Tier 1 capital ratio is the ratio of common equity Tier 1 capital to total risk-weighted assets, each as calculated under Basel III rules. Common equity Tier 1 capital ratio (fully phased-in) is a preliminary estimate reflecting management’s interpretation of the final Basel III 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
(unaudited, $ in millions)
	Quarter Ended																				Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			3Q'16 vs. 3Q'15					Sep 30, 2016			Sep 30, 2015			YTD'16 vs. YTD'15
RETAIL CARD
Purchase volume⁽¹⁾⁽²⁾	$	25,285		$	25,411		$	21,550		$	26,768		$	23,560		$	1,725		7.3	%	$	72,246		$	65,422		$	6,824		10.4	%
Period-end loan receivables	$	48,010		$	46,705		$	45,113		$	47,412		$	43,432		$	4,578		10.5	%	$	48,010		$	43,432		$	4,578		10.5	%
Average loan receivables, including held for sale	$	47,420		$	45,861		$	45,900		$	44,958		$	42,933		$	4,487		10.5	%	$	46,491		$	41,853		$	4,638		11.1	%
Average active accounts (in thousands)⁽²⁾⁽³⁾	52,959			52,314			52,969			52,038			49,953			3,006			6.0	%	52,834			49,671			3,163			6.4	%

Interest and fees on loans⁽²⁾	$	2,790		$	2,585		$	2,614		$	2,594		$	2,508		$	282		11.2	%	$	7,989		$	7,180		$	809		11.3	%
Other income⁽²⁾	$	70		$	69		$	79		$	76		$	70		$	—		—	%	$	218		$	263		$	(45	)	(17.1	)%
Retailer share arrangements⁽²⁾	$	(752	)	$	(656	)	$	(661	)	$	(723	)	$	(708	)	$	(44	)	6.2	%	$	(2,069	)	$	(1,965	)	$	(104	)	5.3	%

PAYMENT SOLUTIONS
Purchase volume⁽¹⁾	$	4,152		$	3,903		$	3,392		$	3,714		$	3,635		$	517		14.2	%	$	11,447		$	9,954		$	1,493		15.0	%
Period-end loan receivables	$	14,798		$	13,997		$	13,420		$	13,543		$	12,933		$	1,865		14.4	%	$	14,798		$	12,933		$	1,865		14.4	%
Average loan receivables	$	14,391		$	13,644		$	13,482		$	13,192		$	12,523		$	1,868		14.9	%	$	13,865		$	12,183		$	1,682		13.8	%
Average active accounts (in thousands)⁽³⁾	8,461			8,153			8,134			7,896			7,468			993			13.3	%	8,261			7,335			926			12.6	%

Interest and fees on loans	$	505		$	467		$	457		$	462		$	442		$	63		14.3	%	$	1,429		$	1,257		$	172		13.7	%
Other income	$	3		$	3		$	4		$	3		$	5		$	(2	)	(40.0	)%	$	10		$	14		$	(4	)	(28.6	)%
Retailer share arrangements	$	(3	)	$	(7	)	$	(7	)	$	(10	)	$	(13	)	$	10		(76.9	)%	$	(17	)	$	(35	)	$	18		(51.4	)%

CARECREDIT
Purchase volume⁽¹⁾	$	2,178		$	2,193		$	2,035		$	1,978		$	2,011		$	167		8.3	%	$	6,406		$	5,779		$	627		10.8	%
Period-end loan receivables	$	7,836		$	7,580		$	7,316		$	7,335		$	7,155		$	681		9.5	%	$	7,836		$	7,155		$	681		9.5	%
Average loan receivables	$	7,714		$	7,438		$	7,323		$	7,256		$	7,048		$	666		9.4	%	$	7,500		$	6,910		$	590		8.5	%
Average active accounts (in thousands)⁽³⁾	5,219			5,064			5,031			4,958			4,826			393			8.1	%	5,109			4,756			353			7.4	%

Interest and fees on loans	$	476		$	442		$	427		$	438		$	429		$	47		11.0	%	$	1,345		$	1,248		$	97		7.8	%
Other income	$	11		$	11		$	9		$	8		$	9		$	2		22.2	%	$	31		$	28		$	3		10.7	%
Retailer share arrangements	$	(2	)	$	(1	)	$	(2	)	$	(1	)	$	(2	)	$	—		—	%	$	(5	)	$	(4	)	$	(1	)	25.0	%

TOTAL SYF
Purchase volume⁽¹⁾⁽²⁾	$	31,615		$	31,507		$	26,977		$	32,460		$	29,206		$	2,409		8.2	%	$	90,099		$	81,155		$	8,944		11.0	%
Period-end loan receivables	$	70,644		$	68,282		$	65,849		$	68,290		$	63,520		$	7,124		11.2	%	$	70,644		$	63,520		$	7,124		11.2	%
Average loan receivables, including held for sale	$	69,525		$	66,943		$	66,705		$	65,406		$	62,504		$	7,021		11.2	%	$	67,856		$	60,946		$	6,910		11.3	%
Average active accounts (in thousands)⁽²⁾⁽³⁾	66,639			65,531			66,134			64,892			62,247			4,392			7.1	%	66,204			61,762			4,442			7.2	%

Interest and fees on loans⁽²⁾	$	3,771		$	3,494		$	3,498		$	3,494		$	3,379		$	392		11.6	%	$	10,763		$	9,685		$	1,078		11.1	%
Other income⁽²⁾	$	84		$	83		$	92		$	87		$	84		$	—		—	%	$	259		$	305		$	(46	)	(15.1	)%
Retailer share arrangements⁽²⁾	$	(757	)	$	(664	)	$	(670	)	$	(734	)	$	(723	)	$	(34	)	4.7	%	$	(2,091	)	$	(2,004	)	$	(87	)	4.3	%

(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⁽¹⁾⁽²⁾
(unaudited, $ in millions, except per share statistics)
	Quarter Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
COMMON EQUITY MEASURES
GAAP Total common equity	$	13,981		$	13,715		$	13,204		$	12,604		$	12,158
Less: Goodwill	(949		)	(949		)	(949		)	(949		)	(949		)
Less: Intangible assets, net	(733		)	(704		)	(702		)	(701		)	(646		)
Tangible common equity	$	12,299		$	12,062		$	11,553		$	10,954		$	10,563

Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss)	299			282			281			280			291
Basel III - Common equity Tier 1 (fully phased-in)	$	12,598		$	12,344		$	11,834		$	11,234		$	10,854
Adjustment related to capital components during transition	273			266			265			399			375
Basel III - Common equity Tier 1 (transition)	$	12,871		$	12,610		$	12,099		$	11,633		11,229

RISK-BASED CAPITAL
Common equity Tier 1	$	12,871		$	12,610		$	12,099		$	11,633		$	11,229
Add: Allowance for loan losses includible in risk-based capital	923			890			869			898			833
Risk-based capital	$	13,794		$	13,500		$	12,968		$	12,531		$	12,062

ASSET MEASURES
Total average assets	$	85,021		$	81,694		$	82,835		$	81,882		$	77,841
Adjustments for:
Disallowed goodwill and other disallowed intangible assets, net of related deferred tax liabilities	(1,117		)	(1,113		)	(1,117		)	(991		)	(931		)
Other	—			—			—			—			104
Total assets for leverage purposes	$	83,904		$	80,581		$	81,718		$	80,891		$	77,014

Risk-weighted assets - Basel III (fully phased-in)⁽³⁾	$	70,448		$	68,462		$	67,697		$	70,493		$	65,125
Risk-weighted assets - Basel III (transition)⁽³⁾	$	70,660		$	68,188		$	66,689		69,224			64,090

TANGIBLE COMMON EQUITY PER SHARE
GAAP book value per share	$	16.94		$	16.45		$	15.84		$	15.12		$	14.58
Less: Goodwill	(1.14		)	(1.14		)	(1.14		)	(1.14		)	(1.14		)
Less: Intangible assets, net	(0.90		)	(0.85		)	(0.84		)	(0.84		)	(0.77		)
Tangible common equity per share	$	14.90		$	14.46		$	13.86		$	13.14		$	12.67

(1) Certain balance sheet amounts and related metrics have been updated to reflect the adoption of ASU 2015-03. More detail on this update is in footnote (1) on the Statements of Financial Position.
(2) Regulatory measures at September 30, 2016 are presented on an estimated basis.
(3) Key differences between Basel III transitional rules and fully phased-in Basel III rules in the calculation of risk-weighted assets include, but not limited to, risk weighting of deferred tax assets and adjustments for certain intangible assets.

Synchrony Financial - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 21, 2016

Attached files

Synchrony Financial Reports