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

Attached files

file	filename
EX-99.4 - EXHIBIT 99.4 - Synchrony Financial	non-gaapmeasures2q16.htm
EX-99.3 - EXHIBIT 99.3 - Synchrony Financial	a2q16earningspresentatio.htm
EX-99.1 - EXHIBIT 99.1 - Synchrony Financial	earningsrelease2q16.htm
8-K - 8-K - Synchrony Financial	a8-k2q16earnings.htm

Exhibit 99.2



SYNCHRONY FINANCIAL
FINANCIAL SUMMARY
(unaudited, in millions, except per share statistics)
	Quarter Ended																				Six Months Ended
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			2Q'16 vs. 2Q'15					Jun 30, 2016			Jun 30, 2015			YTD'16 vs. YTD'15
EARNINGS
Net interest income	$	3,212		$	3,209		$	3,208		$	3,103		$	2,907		$	305		10.5	%	$	6,421		$	5,782		$	639		11.1	%
Retailer share arrangements	(664		)	(670		)	(734		)	(723		)	(621		)	(43		)	6.9	%	(1,334		)	(1,281		)	(53		)	4.1	%
Net interest income, after retailer share arrangements	2,548			2,539			2,474			2,380			2,286			262			11.5	%	5,087			4,501			586			13.0	%
Provision for loan losses	1,021			903			823			702			740			281			38.0	%	1,924			1,427			497			34.8	%
Net interest income, after retailer share arrangements and provision for loan losses	1,527			1,636			1,651			1,678			1,546			(19		)	(1.2	)%	3,163			3,074			89			2.9	%
Other income	83			92			87			84			120			(37		)	(30.8	)%	175			221			(46		)	(20.8	)%
Other expense	839			800			870			843			805			34			4.2	%	1,639			1,551			88			5.7	%
Earnings before provision for income taxes	771			928			868			919			861			(90		)	(10.5	)%	1,699			1,744			(45		)	(2.6	)%
Provision for income taxes	282			346			321			345			320			(38		)	(11.9	)%	628			651			(23		)	(3.5	)%
Net earnings	$	489		$	582		$	547		$	574		$	541		$	(52	)	(9.6	)%	$	1,071		$	1,093		$	(22	)	(2.0	)%
Net earnings attributable to common stockholders	$	489		$	582		$	547		$	574		$	541		$	(52	)	(9.6	)%	$	1,071		$	1,093		$	(22	)	(2.0	)%

COMMON SHARE STATISTICS
Basic EPS	$	0.59		$	0.70		$	0.66		$	0.69		$	0.65		$	(0.06	)	(9.2	)%	$	1.28		$	1.31		$	(0.03	)	(2.3	)%
Diluted EPS	$	0.58		$	0.70		$	0.65		$	0.69		$	0.65		$	(0.07	)	(10.8	)%	$	1.28		$	1.31		$	(0.03	)	(2.3	)%
Common stock price	$	25.28		$	28.66		$	30.41		$	31.30		$	32.93		$	(7.65	)	(23.2	)%	$	25.28		$	32.93		$	(7.65	)	(23.2	)%
Book value per share	$	16.45		$	15.84		$	15.12		$	14.58		$	13.89		$	2.56		18.4	%	$	16.45		$	13.89		$	2.56		18.4	%
Tangible common equity per share⁽¹⁾	$	14.46		$	13.86		$	13.14		$	12.67		$	12.06		$	2.40		19.9	%	$	14.46		$	12.06		$	2.40		19.9	%

Beginning common shares outstanding	833.8			833.8			833.8			833.8			833.8			—			—	%	833.8			833.8			—			—	%
Issuance of common shares	—			—			—			—			—			—			—	%	—			—			—			—	%
Stock-based compensation	0.1			—			—			—			—			0.1			NM		0.1			—			0.1			NM
Shares repurchased	—			—			—			—			—			—			—	%	—			—			—			—	%
Ending common shares outstanding	833.9			833.8			833.8			833.8			833.8			0.1			—	%	833.9			833.8			0.1			—	%

Weighted average common shares outstanding	833.9			833.8			833.8			833.8			833.8			0.1			—	%	833.9			833.8			0.1			—	%
Weighted average common shares outstanding (fully diluted)	836.2			835.5			835.8			835.8			835.4			0.8			0.1	%	835.8			835.2			0.6			0.1	%

(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																				Six Months Ended
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			2Q'16 vs. 2Q'15					Jun 30, 2016			Jun 30, 2015			YTD'16 vs. YTD'15
PERFORMANCE METRICS
Return on assets⁽²⁾	2.4		%	2.8		%	2.7		%	2.9		%	2.9		%				(0.5	)%	2.6		%	3.0		%				(0.4	)%
Return on equity⁽³⁾	14.6		%	18.1		%	17.5		%	19.2		%	19.2		%				(4.6	)%	16.3		%	20.0		%				(3.7	)%
Return on tangible common equity⁽⁴⁾	16.6		%	20.8		%	20.1		%	22.0		%	22.2		%				(5.6	)%	18.7		%	23.1		%				(4.4	)%
Net interest margin⁽⁵⁾	15.86		%	15.76		%	15.73		%	15.97		%	15.77		%				0.09	%	15.80		%	15.75		%				0.05	%
Efficiency ratio⁽⁶⁾	31.9		%	30.4		%	34.0		%	34.2		%	33.5		%				(1.6	)%	31.1		%	32.8		%				(1.7	)%
Other expense as a % of average loan receivables, including held for sale	5.04		%	4.82		%	5.28		%	5.35		%	5.37		%				(0.33	)%	4.92		%	5.20		%				(0.28	)%
Effective income tax rate	36.6		%	37.3		%	37.0		%	37.5		%	37.2		%				(0.6	)%	37.0		%	37.3		%				(0.3	)%

CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale	4.49		%	4.70		%	4.23		%	4.02		%	4.63		%				(0.14	)%	4.59		%	4.56		%				0.03	%
30+ days past due as a % of period-end loan receivables⁽⁷⁾	3.79		%	3.85		%	4.06		%	4.02		%	3.53		%				0.26	%	3.79		%	3.53		%				0.26	%
90+ days past due as a % of period-end loan receivables⁽⁷⁾	1.67		%	1.84		%	1.86		%	1.73		%	1.52		%				0.15	%	1.67		%	1.52		%				0.15	%
Net charge-offs	$	747		$	780		$	697		$	633		$	693		$	54		7.8	%	$	1,527		$	1,361		$	166		12.2	%
Loan receivables delinquent over 30 days⁽⁷⁾	$	2,585		$	2,538		$	2,772		$	2,553		$	2,171		$	414		19.1	%	$	2,585		$	2,171		$	414		19.1	%
Loan receivables delinquent over 90 days⁽⁷⁾	$	1,143		$	1,212		$	1,273		$	1,102		$	933		$	210		22.5	%	$	1,143		$	933		$	210		22.5	%

Allowance for loan losses (period-end)	$	3,894		$	3,620		$	3,497		$	3,371		$	3,302		$	592		17.9	%	$	3,894		$	3,302		$	592		17.9	%
Allowance coverage ratio⁽⁸⁾	5.70		%	5.50		%	5.12		%	5.31		%	5.38		%				0.32	%	5.70		%	5.38		%				0.32	%

BUSINESS METRICS
Purchase volume⁽⁹⁾	$	31,507		$	26,977		$	32,460		$	29,206		$	28,810		$	2,697		9.4	%	$	58,484		$	51,949		$	6,535		12.6	%
Period-end loan receivables	$	68,282		$	65,849		$	68,290		$	63,520		$	61,431		$	6,851		11.2	%	$	68,282		$	61,431		$	6,851		11.2	%
Credit cards	$	65,511		$	63,309		$	65,773		$	60,920		$	58,827		$	6,684		11.4	%	$	65,511		$	58,827		$	6,684		11.4	%
Consumer installment loans	$	1,293		$	1,184		$	1,154		$	1,171		$	1,138		$	155		13.6	%	$	1,293		$	1,138		$	155		13.6	%
Commercial credit products	$	1,389		$	1,318		$	1,323		$	1,380		$	1,410		$	(21	)	(1.5	)%	$	1,389		$	1,410		$	(21	)	(1.5	)%
Other	$	89		$	38		$	40		$	49		$	56		$	33		58.9	%	$	89		$	56		$	33		58.9	%
Average loan receivables, including held for sale	$	66,943		$	66,705		$	65,406		$	62,504		$	60,094		$	6,849		11.4	%	$	66,963		$	60,124		$	6,839		11.4	%
Period-end active accounts (in thousands)⁽¹⁰⁾	66,491			64,689			68,314			62,831			61,718			4,773			7.7	%	66,491			61,718			4,773			7.7	%
Average active accounts (in thousands)⁽¹⁰⁾	65,531			66,134			64,892			62,247			60,923			4,608			7.6	%	65,996			61,478			4,518			7.3	%

LIQUIDITY
Liquid assets
Cash and equivalents	$	11,787		$	12,500		$	12,325		$	12,271		$	10,621		$	1,166		11.0	%	$	11,787		$	10,621		$	1,166		11.0	%
Total liquid assets	$	13,956		$	14,915		$	14,836		$	15,305		$	13,660		$	296		2.2	%	$	13,956		$	13,660		$	296		2.2	%
Undrawn credit facilities
Undrawn committed securitization financings	$	7,025		$	7,325		$	6,075		$	6,550		$	6,125		$	900		14.7	%	$	7,025		$	6,125		$	900		14.7	%
Total liquid assets and undrawn credit facilities	$	20,981		$	22,240		$	20,911		$	21,855		$	19,785		$	1,196		6.0	%	$	20,981		$	19,785		$	1,196		6.0	%
Liquid assets % of total assets	16.94		%	18.27		%	17.66		%	19.30		%	18.07		%				(1.13	)%	16.94		%	18.07		%				(1.13	)%
Liquid assets including undrawn committed securitization financings % of total assets	25.47		%	27.24		%	24.90		%	27.56		%	26.17		%				(0.70	)%	25.47		%	26.17		%				(0.70	)%

(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																				Six Months Ended
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			2Q'16 vs. 2Q'15					Jun 30, 2016			Jun 30, 2015			YTD'16 vs. YTD'15
Interest income:
Interest and fees on loans	$	3,494		$	3,498		$	3,494		$	3,379		$	3,166		$	328		10.4	%	$	6,992		$	6,306		$	686		10.9	%
Interest on investment securities	21			22			15			13			11			10			90.9	%	43			21			22			104.8	%
Total interest income	3,515			3,520			3,509			3,392			3,177			338			10.6	%	7,035			6,327			708			11.2	%

Interest expense:
Interest on deposits	179			172			165			159			146			33			22.6	%	351			283			68			24.0	%
Interest on borrowings of consolidated securitization entities	59			58			56			54			53			6			11.3	%	117			105			12			11.4	%
Interest on third-party debt	65			81			80			76			71			(6		)	(8.5	)%	146			153			(7		)	(4.6	)%
Interest on related party debt	—			—			—			—			—			—			—	%	—			4			(4		)	(100.0	)%
Total interest expense	303			311			301			289			270			33			12.2	%	614			545			69			12.7	%

Net interest income	3,212			3,209			3,208			3,103			2,907			305			10.5	%	6,421			5,782			639			11.1	%

Retailer share arrangements	(664		)	(670		)	(734		)	(723		)	(621		)	(43		)	6.9	%	(1,334		)	(1,281		)	(53		)	4.1	%
Net interest income, after retailer share arrangements	2,548			2,539			2,474			2,380			2,286			262			11.5	%	5,087			4,501			586			13.0	%

Provision for loan losses	1,021			903			823			702			740			281			38.0	%	1,924			1,427			497			34.8	%
Net interest income, after retailer share arrangements and provision for loan losses	1,527			1,636			1,651			1,678			1,546			(19		)	(1.2	)%	3,163			3,074			89			2.9	%

Other income:
Interchange revenue	151			130			147			135			123			28			22.8	%	281			223			58			26.0	%
Debt cancellation fees	63			64			62			61			61			2			3.3	%	127			126			1			0.8	%
Loyalty programs	(135		)	(110		)	(125		)	(122		)	(94		)	(41		)	43.6	%	(245		)	(172		)	(73		)	42.4	%
Other	4			8			3			10			30			(26		)	(86.7	)%	12			44			(32		)	(72.7	)%
Total other income	83			92			87			84			120			(37		)	(30.8	)%	175			221			(46		)	(20.8	)%

Other expense:
Employee costs	301			280			285			268			250			51			20.4	%	581			489			92			18.8	%
Professional fees	154			146			165			162			156			(2		)	(1.3	)%	300			318			(18		)	(5.7	)%
Marketing and business development	107			94			128			115			108			(1		)	(0.9	)%	201			190			11			5.8	%
Information processing	81			82			83			77			74			7			9.5	%	163			137			26			19.0	%
Other	196			198			209			221			217			(21		)	(9.7	)%	394			417			(23		)	(5.5	)%
Total other expense	839			800			870			843			805			34			4.2	%	1,639			1,551			88			5.7	%

Earnings before provision for income taxes	771			928			868			919			861			(90		)	(10.5	)%	1,699			1,744			(45		)	(2.6	)%
Provision for income taxes	282			346			321			345			320			(38		)	(11.9	)%	628			651			(23		)	(3.5	)%
Net earnings attributable to common shareholders	$	489		$	582		$	547		$	574		$	541		$	(52	)	(9.6	)%	$	1,071		$	1,093		$	(22	)	(2.0	)%



SYNCHRONY FINANCIAL
STATEMENTS OF FINANCIAL POSITION⁽¹⁾
(unaudited, $ in millions)
	Quarter Ended
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			Jun 30, 2016 vs. Jun 30, 2015
Assets
Cash and equivalents	$	11,787		$	12,500		$	12,325		$	12,271		$	10,621		$	1,166		11.0	%
Investment securities	2,723			2,949			3,142			3,596			3,682			(959		)	(26.0	)%
Loan receivables:
Unsecuritized loans held for investment	44,854			41,730			42,826			38,325			36,019			8,835			24.5	%
Restricted loans of consolidated securitization entities	23,428			24,119			25,464			25,195			25,412			(1,984		)	(7.8	)%
Total loan receivables	68,282			65,849			68,290			63,520			61,431			6,851			11.2	%
Less: Allowance for loan losses	(3,894		)	(3,620		)	(3,497		)	(3,371		)	(3,302		)	(592		)	17.9	%
Loan receivables, net	64,388			62,229			64,793			60,149			58,129			6,259			10.8	%
Loan receivables held for sale	—			—			—			—			—			—			—	%
Goodwill	949			949			949			949			949			—			—	%
Intangible assets, net	704			702			701			646			575			129			22.4	%
Other assets	1,833			2,327			2,080			1,679			1,640			193			11.8	%
Total assets	$	82,384		$	81,656		$	83,990		$	79,290		$	75,596		$	6,788		9.0	%

Liabilities and Equity
Deposits:
Interest-bearing deposit accounts	$	46,220		$	44,721		$	43,215		$	40,323		$	37,539		$	8,681		23.1	%
Non-interest-bearing deposit accounts	207			256			152			140			143			64			44.8	%
Total deposits	46,427			44,977			43,367			40,463			37,682			8,745			23.2	%
Borrowings:
Borrowings of consolidated securitization entities	12,236			12,423			13,589			13,624			13,933			(1,697		)	(12.2	)%
Bank term loan	—			1,494			4,133			4,630			5,126			(5,126		)	(100.0	)%
Senior unsecured notes	7,059			6,559			6,557			5,560			4,569			2,490			54.5	%
Related party debt	—			—			—			—			—			—			—	%
Total borrowings	19,295			20,476			24,279			23,814			23,628			(4,333		)	(18.3	)%
Accrued expenses and other liabilities	2,947			2,999			3,740			2,855			2,708			239			8.8	%
Total liabilities	68,669			68,452			71,386			67,132			64,018			4,651			7.3	%
Equity:
Common stock	1			1			1			1			1			—			—	%
Additional paid-in capital	9,370			9,359			9,351			9,431			9,422			(52		)	(0.6	)%
Retained earnings	4,364			3,875			3,293			2,746			2,172			2,192			100.9	%
Accumulated other comprehensive income:	(20		)	(31		)	(41		)	(20		)	(17		)	(3		)	17.6	%
Total equity	13,715			13,204			12,604			12,158			11,578			2,137			18.5	%
Total liabilities and equity	$	82,384		$	81,656		$	83,990		$	79,290		$	75,596		$	6,788		9.0	%

(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
	Jun 30, 2016							Mar 31, 2016							Dec 31, 2015							Sep 30, 2015							Jun 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	$	11,692		$	14	0.48	%	$	12,185		$	16	0.53	%	$	12,070		$	9	0.30	%	$	11,059		$	7	0.25	%	$	10,728		$	6	0.22	%
Securities available for sale	2,805			7		1.00	%	2,995			6		0.81	%	3,445			6		0.69	%	3,534			6		0.67	%	3,107			5		0.65	%

Loan receivables:
Credit cards, including held for sale	64,269			3,432		21.48	%	64,194			3,436		21.53	%	62,834			3,432		21.67	%	59,890			3,315		21.96	%	57,588			3,106		21.63	%
Consumer installment loans	1,235			28		9.12	%	1,159			27		9.37	%	1,163			26		8.87	%	1,160			27		9.23	%	1,101			26		9.47	%
Commercial credit products	1,373			33		9.67	%	1,313			35		10.72	%	1,361			36		10.49	%	1,400			36		10.20	%	1,372			34		9.94	%
Other	66			1		NM		39			—		—	%	48			—		—	%	54			1		NM		33			—		—	%
Total loan receivables, including held for sale	66,943			3,494		20.99	%	66,705			3,498		21.09	%	65,406			3,494		21.19	%	62,504			3,379		21.45	%	60,094			3,166		21.13	%
Total interest-earning assets	81,440			3,515		17.36	%	81,885			3,520		17.29	%	80,921			3,509		17.20	%	77,097			3,392		17.46	%	73,929			3,177		17.24	%

Non-interest-earning assets:
Cash and due from banks	774							1,277							1,268							1,216							583
Allowance for loan losses	(3,729		)					(3,583		)					(3,440		)					(3,341		)					(3,285		)
Other assets	3,209							3,256							3,133							2,869							2,758
Total non-interest-earning assets	254							950							961							744							56

Total assets	$	81,694						$	82,835						$	81,882						$	77,841						$	73,985

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	45,490		$	179	1.58	%	$	44,101		$	172	1.57	%	$	42,079		$	165	1.56	%	$	39,048		$	159	1.62	%	$	35,816		$	146	1.64	%
Borrowings of consolidated securitization entities	12,291			59		1.93	%	12,950			58		1.80	%	13,550			56		1.64	%	13,715			54		1.56	%	14,011			53		1.52	%
Bank term loan⁽²⁾	374			7		7.53	%	2,565			24		3.76	%	4,507			28		2.46	%	4,878			29		2.36	%	5,374			32		2.39	%
Senior unsecured notes	6,809			58		3.43	%	6,558			57		3.50	%	5,810			52		3.55	%	5,312			47		3.51	%	4,568			39		3.42	%
Related party debt	—			—		—	%	—			—		—	%	—			—		—	%	—			—		—	%	—			—		—	%
Total interest-bearing liabilities	64,964			303		1.88	%	66,174			311		1.89	%	65,946			301		1.81	%	62,953			289		1.82	%	59,769			270		1.81	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	217							226							147							149							166
Other liabilities	3,046							3,534							3,396							2,859							2,750
Total non-interest-bearing liabilities	3,263							3,760							3,543							3,008							2,916

Total liabilities	68,227							69,934							69,489							65,961							62,685

Equity
Total equity	13,467							12,901							12,393							11,880							11,300

Total liabilities and equity	$	81,694						$	82,835						$	81,882						$	77,841						$	73,985
Net interest income				$	3,212						$	3,209						$	3,208						$	3,103						$	2,907

Interest rate spread⁽³⁾						15.48	%						15.40	%						15.39	%						15.64	%						15.43	%
Net interest margin⁽⁴⁾						15.86	%						15.76	%						15.73	%						15.97	%						15.77	%

(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, September 30, 2015, and June 30, 2015 were 2.51%, 2.47%, 2.26%, 2.23%, and 2.21%, 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)

	Six Months Ended Jun 30, 2016							Six Months Ended Jun 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	$	11,874		$	30	0.51	%	$	11,006		$	12	0.22	%
Securities available for sale	2,893			13		0.90	%	2,887			9		0.63	%

Loan receivables:
Credit cards, including held for sale	64,363			6,868		21.46	%	57,670			6,185		21.63	%
Consumer installment loans	1,199			55		9.22	%	1,081			51		9.51	%
Commercial credit products	1,346			68		10.16	%	1,345			70		10.50	%
Other	55			1		NM		28			—		—	%
Total loan receivables, including held for sale	66,963			6,992		21.00	%	60,124			6,306		21.15	%
Total interest-earning assets	81,730			7,035		17.31	%	74,017			6,327		17.24	%

Non-interest-earning assets:
Cash and due from banks	1,036							578
Allowance for loan losses	(3,661		)					(3,282		)
Other assets	3,246							2,710
Total non-interest-earning assets	621							6

Total assets	$	82,351						$	74,023

Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts	$	44,807		$	351	1.58	%	$	35,445		$	283	1.61	%
Borrowings of consolidated securitization entities	12,648			117		1.86	%	14,085			105		1.50	%
Bank term loan⁽²⁾	1,466			31		4.25	%	5,981			79		2.66	%
Senior unsecured notes	6,701			115		3.45	%	4,284			74		3.48	%
Related party debt	—			—		—	%	232			4		3.48	%
Total interest-bearing liabilities	65,622			614		1.88	%	60,027			545		1.83	%

Non-interest-bearing liabilities
Non-interest-bearing deposit accounts	217							153
Other liabilities	3,331							2,820
Total non-interest-bearing liabilities	3,548							2,973

Total liabilities	69,170							63,000

Equity
Total equity	13,181							11,023

Total liabilities and equity	$	82,351						$	74,023
Net interest income				$	6,421						$	5,782

Interest rate spread⁽³⁾						15.43	%						15.41	%
Net interest margin⁽⁴⁾						15.80	%						15.75	%

(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 6 months ended June 30, 2016 and June 30, 2015 were 2.48% and 2.21%, 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
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			Jun 30, 2016 vs. Jun 30, 2015
BALANCE SHEET STATISTICS
Total common equity	$	13,715		$	13,204		$	12,604		$	12,158		$	11,578		$	2,137	18.5	%
Total common equity as a % of total assets	16.65		%	16.17		%	15.01		%	15.33		%	15.32		%			1.33	%

Tangible assets	$	80,731		$	80,005		$	82,340		$	77,695		$	74,072		$	6,659	9.0	%
Tangible common equity⁽²⁾	$	12,062		$	11,553		$	10,954		$	10,563		$	10,054		$	2,008	20.0	%
Tangible common equity as a % of tangible assets⁽²⁾	14.94		%	14.44		%	13.30		%	13.60		%	13.57		%			1.37	%
Tangible common equity per share⁽²⁾	$	14.46		$	13.86		$	13.14		$	12.67		$	12.06		$	2.40	19.9	%

REGULATORY CAPITAL RATIOS⁽³⁾
	Basel III Transition
Total risk-based capital ratio⁽⁴⁾	19.8		%	19.4		%	18.1		%	18.8		%	18.6		%
Tier 1 risk-based capital ratio⁽⁵⁾	18.5		%	18.1		%	16.8		%	17.5		%	17.3		%
Tier 1 leverage ratio⁽⁶⁾	15.6		%	14.8		%	14.4		%	14.6		%	14.6		%
Common equity Tier 1 capital ratio⁽⁷⁾	18.5		%	18.1		%	16.8		%	17.5		%	17.3		%

	Basel III Fully Phased-in
Common equity Tier 1 capital ratio⁽⁷⁾	18.0		%	17.5		%	15.9		%	16.7		%	16.5		%

(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 June 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																				Six Months Ended
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015			2Q'16 vs. 2Q'15					Jun 30, 2016			Jun 30, 2015			YTD'16 vs. YTD'15
RETAIL CARD
Purchase volume⁽¹⁾⁽²⁾	$	25,411		$	21,550		$	26,768		$	23,560		$	23,452		$	1,959		8.4	%	$	46,961		$	41,862		$	5,099		12.2	%
Period-end loan receivables	$	46,705		$	45,113		$	47,412		$	43,432		$	42,315		$	4,390		10.4	%	$	46,705		$	42,315		$	4,390		10.4	%
Average loan receivables, including held for sale	$	45,861		$	45,900		$	44,958		$	42,933		$	41,303		$	4,558		11.0	%	$	45,990		$	41,302		$	4,688		11.4	%
Average active accounts (in thousands)⁽²⁾⁽³⁾	52,314			52,969			52,038			49,953			48,981			3,333			6.8	%	52,798			49,513			3,285			6.6	%

Interest and fees on loans⁽²⁾	$	2,585		$	2,614		$	2,594		$	2,508		$	2,335		$	250		10.7	%	$	5,199		$	4,672		$	527		11.3	%
Other income⁽²⁾	$	69		$	79		$	76		$	70		$	107		$	(38	)	(35.5	)%	$	148		$	193		$	(45	)	(23.3	)%
Retailer share arrangements⁽²⁾	$	(656	)	$	(661	)	$	(723	)	$	(708	)	$	(606	)	$	(50	)	8.3	%	$	(1,317	)	$	(1,257	)	$	(60	)	4.8	%

PAYMENT SOLUTIONS
Purchase volume⁽¹⁾	$	3,903		$	3,392		$	3,714		$	3,635		$	3,371		$	532		15.8	%	$	7,295		$	6,319		$	976		15.4	%
Period-end loan receivables	$	13,997		$	13,420		$	13,543		$	12,933		$	12,194		$	1,803		14.8	%	$	13,997		$	12,194		$	1,803		14.8	%
Average loan receivables	$	13,644		$	13,482		$	13,192		$	12,523		$	11,971		$	1,673		14.0	%	$	13,584		$	11,990		$	1,594		13.3	%
Average active accounts (in thousands)⁽³⁾	8,153			8,134			7,896			7,468			7,231			922			12.8	%	8,148			7,251			897			12.4	%

Interest and fees on loans	$	467		$	457		$	462		$	442		$	412		$	55		13.3	%	$	924		$	815		$	109		13.4	%
Other income	$	3		$	4		$	3		$	5		$	4		$	(1	)	(25.0	)%	$	7		$	9		$	(2	)	(22.2	)%
Retailer share arrangements	$	(7	)	$	(7	)	$	(10	)	$	(13	)	$	(14	)	$	7		(50.0	)%	$	(14	)	$	(22	)	$	8		(36.4	)%

CARECREDIT
Purchase volume⁽¹⁾	$	2,193		$	2,035		$	1,978		$	2,011		$	1,987		$	206		10.4	%	$	4,228		$	3,768		$	460		12.2	%
Period-end loan receivables	$	7,580		$	7,316		$	7,335		$	7,155		$	6,922		$	658		9.5	%	$	7,580		$	6,922		$	658		9.5	%
Average loan receivables	$	7,438		$	7,323		$	7,256		$	7,048		$	6,820		$	618		9.1	%	$	7,389		$	6,832		$	557		8.2	%
Average active accounts (in thousands)⁽³⁾	5,064			5,031			4,958			4,826			4,711			353			7.5	%	5,050			4,714			336			7.1	%

Interest and fees on loans	$	442		$	427		$	438		$	429		$	419		$	23		5.5	%	$	869		$	819		$	50		6.1	%
Other income	$	11		$	9		$	8		$	9		$	9		$	2		22.2	%	$	20		$	19		$	1		5.3	%
Retailer share arrangements	$	(1	)	$	(2	)	$	(1	)	$	(2	)	$	(1	)	$	—		—	%	$	(3	)	$	(2	)	$	(1	)	50.0	%

TOTAL SYF
Purchase volume⁽¹⁾⁽²⁾	$	31,507		$	26,977		$	32,460		$	29,206		$	28,810		$	2,697		9.4	%	$	58,484		$	51,949		$	6,535		12.6	%
Period-end loan receivables	$	68,282		$	65,849		$	68,290		$	63,520		$	61,431		$	6,851		11.2	%	$	68,282		$	61,431		$	6,851		11.2	%
Average loan receivables, including held for sale	$	66,943		$	66,705		$	65,406		$	62,504		$	60,094		$	6,849		11.4	%	$	66,963		$	60,124		$	6,839		11.4	%
Average active accounts (in thousands)⁽²⁾⁽³⁾	65,531			66,134			64,892			62,247			60,923			4,608			7.6	%	65,996			61,478			4,518			7.3	%

Interest and fees on loans⁽²⁾	$	3,494		$	3,498		$	3,494		$	3,379		$	3,166		$	328		10.4	%	$	6,992		$	6,306		$	686		10.9	%
Other income⁽²⁾	$	83		$	92		$	87		$	84		$	120		$	(37	)	(30.8	)%	$	175		$	221		$	(46	)	(20.8	)%
Retailer share arrangements⁽²⁾	$	(664	)	$	(670	)	$	(734	)	$	(723	)	$	(621	)	$	(43	)	6.9	%	$	(1,334	)	$	(1,281	)	$	(53	)	4.1	%

(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
	Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015
COMMON EQUITY MEASURES
GAAP Total common equity	$	13,715		$	13,204		$	12,604		$	12,158		$	11,578
Less: Goodwill	(949		)	(949		)	(949		)	(949		)	(949		)
Less: Intangible assets, net	(704		)	(702		)	(701		)	(646		)	(575		)
Tangible common equity	$	12,062		$	11,553		$	10,954		$	10,563		$	10,054

Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss)	282			281			280			291			293
Basel III - Common equity Tier 1 (fully phased-in)	$	12,344		$	11,834		$	11,234		$	10,854		$	10,347
Adjustment related to capital components during transition	266			265			399			375			331
Basel III - Common equity Tier I (transition)	$	12,610		$	12,099		$	11,633		$	11,229		10,678

RISK-BASED CAPITAL
Common equity Tier 1	$	12,610		$	12,099		$	11,633		$	11,229		$	10,678
Add: Allowance for loan losses includible in risk-based capital	890			869			898			833			804
Risk-based capital	$	13,500		$	12,968		$	12,531		$	12,062		$	11,482

ASSET MEASURES
Total average assets	$	81,694		$	82,835		$	81,882		$	77,841		$	73,985
Adjustments for:
Disallowed goodwill and other disallowed intangible assets, net of related deferred tax liabilities	(1,113		)	(1,117		)	(991		)	(931		)	(903		)
Other	—			—			—			104			60
Total assets for leverage purposes	$	80,581		$	81,718		$	80,891		$	77,014		$	73,142

Risk-weighted assets - Basel III (fully phased-in)⁽³⁾	$	68,462		$	67,697		$	70,493		$	65,125		$	62,814
Risk-weighted assets - Basel III (transition)⁽³⁾	$	68,188		$	66,689		$	69,224		64,090			61,829

TANGIBLE COMMON EQUITY PER SHARE
GAAP book value per share	$	16.45		$	15.84		$	15.12		$	14.58		$	13.89
Less: Goodwill	(1.14		)	(1.14		)	(1.14		)	(1.14		)	(1.14		)
Less: Intangible assets, net	(0.85		)	(0.84		)	(0.84		)	(0.77		)	(0.69		)
Tangible common equity per share	$	14.46		$	13.86		$	13.14		$	12.67		$	12.06

(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 June 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 - July 22, 2016

Attached files

Synchrony Financial Reports