Synchrony Financial (NYSE: SYF) today announced fourth quarter 2020 earnings results amid the continuing Coronavirus (COVID-19) pandemic. Synchrony reported fourth quarter 2020 net earnings of $738 million, or $1.24 per diluted share.

Key Highlights*.

• Loan receivables decreased 6% to $81.9 billion
• Interest and fees on loans decreased 11% to $4.0 billion
• Purchase volume decreased 1% to $39.9 billion
• Average active accounts decreased 10% to 66.3 million
• Deposits decreased $2.3 billion, or 4%, to $62.8 billion
• Renewed Payment Solutions programs with Mattress Firm and Kawasaki, and added a new program with Doosan Bobcat
• Added new CareCredit programs with Walgreens and the Community Veterinary Partners, renewed program with Aspen Dental, and acquired Allegro Credit, a leading provider of point-of-sale consumer financing for audiology products and dental services
• Returned $128 million in capital through common stock dividends
• The Board of Directors approved a share repurchase program of up to $1.6 billion, commencing in the first quarter of 2021, subject to capital plan and any regulatory restrictions

"Last year brought challenges the likes of which we have never before experienced, and I am proud of how we came together as an organization to help our employees, partners, customers, and communities. We never lost sight of the necessity to build for the future, one in which the acceleration of digital adoption is profound. We quickly deployed digital assets to help our partners navigate this new environment and we continue to make investments for the future. In 2020, we renewed 41 key relationships, won 25 new deals, and launched promising new programs with Verizon and Venmo. We also took a deep look at our organization to decisively reduce costs to appropriately align the expenses of our business while maintaining investments in our long-term strategy," said Margaret Keane, Chief Executive Officer, Synchrony Financial. "With Synchrony in a position of strength, now is the right time to implement the leadership transition announced earlier this month. Effective April 1, I will transition to the role of Executive Chair of our Board of Directors, and Brian Doubles will become President and CEO, allowing him to continue the incredible progress that has been made and drive the next stage of Synchrony's exciting growth journey."

Business and Financial Results for the Fourth Quarter of 2020*

Earnings

• Net interest income decreased $370 million, or 9%, to $3.7 billion, mainly due to the impact of COVID-19.
• Retailer share arrangements increased $18 million, or 2%, to $1.0 billion, reflecting the improvement in net charge-offs.
• Provision for credit losses decreased $354 million, or 32%, to $750 million, mainly driven by lower net charge-offs, partially offset by a $119 million reserve increase.
• Other income decreased $22 million, or 21%, to $82 million, largely driven by higher loyalty program costs.
• Other expense decreased $79 million, or 7%, to $1.0 billion, mainly driven by lower purchase volume and accounts, lower employee costs, and lower operational losses.
• Net earnings increased $7 million, or 1%, to $738 million .

Balance Sheet

• Period-end loan receivables decreased 6%; purchase volume decreased 1%; and average active accounts decreased 10%.
• Deposits decreased $2.3 billion, or 4%, to $62.8 billion and comprised 80% of funding.
• The Company's balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $23.7 billion, or 24.7% of total assets.
• The Company has elected to defer the regulatory capital effects of CECL for two years; the estimated Common Equity Tier 1 ratio was 15.9% compared to 14.1%, and the estimated Tier 1 Capital ratio was 16.8% compared to 15.0%, reflecting the Company's strong capital generation capabilities.
• The Board of Directors approved a share repurchase program of up to $1.6 billion, commencing in the first quarter of 2021 and expiring December 31, 2021.

Key Financial Metrics

• Return on assets was 3.1% and return on equity was 23.6%.
• Net interest margin was 14.64%.
• Efficiency ratio was 37.1%.

Credit Quality

• Loans 30+ days past due as a percentage of total period-end loan receivables were 3.07% compared to 4.44% last year.
• Net charge-offs as a percentage of total average loan receivables were 3.16% compared to 5.15% last year.
• The allowance for credit losses as a percentage of total period-end loan receivables was 12.54%.

Sales Platforms

• Retail Card period-end loan receivables decreased 8%, driven primarily by the impact from COVID-19, partially offset by growth in digital partners. Interest and fees on loans decreased 13%, driven primarily by COVID-19 and the decline in loan receivables. Purchase volume increased 1% and average active accounts decreased 10%.
• Payment Solutions period-end loan receivables decreased 2%, primarily due to the impact from COVID-19, partially offset by growth in Power Sports and Home Specialty. Interest and fees on loans decreased 9%, driven primarily by lower yield on loan receivables. Purchase volume decreased 7% and average active accounts decreased 9%.
• CareCredit period-end loan receivables decreased 7%, driven primarily by the impact from COVID-19. Interest and fees on loans decreased 4%, driven primarily by lower merchant discount as a result of the decline in purchase volume, which decreased 6%. Average active accounts decreased 10%.

* All comparisons are for the fourth quarter of 2020 compared to the fourth quarter of 2019, unless otherwise noted.

Corresponding Financial Tables and Information

No representation is made that the information in this news release is complete. Investors are encouraged to review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the detailed financial tables and information that follow and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed February 13, 2020, and the Company's forthcoming Annual Report on Form 10-K for the year ended December 31, 2020. The detailed financial tables and other information are also available on the Investor Relations page of the Company's website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

About Synchrony Financial

Synchrony (NYSE: SYF) is a premier consumer financial services company. We deliver a wide range of specialized financing programs, as well as innovative consumer banking products, across key industries including digital, retail, home, auto, travel, health and pet. Synchrony enables our partners to grow sales and loyalty with consumers. We are one of the largest issuers of private label credit cards in the United States; we also offer co-branded products, installment loans and consumer financing products for small- and medium-sized businesses, as well as healthcare providers.

Synchrony is changing what's possible through our digital capabilities, deep industry expertise, actionable data insights, frictionless customer experience and customized financing solutions.

For more information, visit www.synchrony.com and Twitter: @Synchrony.