How much of the first-quarter earnings increase was from one-time items?

Most of it. The Pets Best gain on sale contributed $802 million after tax ($1.96 per diluted share). Excluding this gain, adjusted net earnings were $491 million, or $1.18 per diluted share, compared to $601 million, or $1.35 per diluted share, in the first quarter of 2023.

What drove the increase in credit losses?

The provision for credit losses rose $594 million to $1.9 billion, driven by higher net charge-offs and a $190 million reserve build tied to the Ally Lending acquisition. Net charge-offs were $1.585 billion, up from $1.006 billion a year earlier.

What did the company do with capital in the quarter?

Synchrony returned $402 million to shareholders, including $300 million of share repurchases and $102 million of common stock dividends. In April, the Board approved an incremental $1.0 billion repurchase authorization through June 30, 2025, and the quarterly dividend remains $0.25 per share.

How did the company's capital ratios change?

The estimated CET1 ratio was 12.6%, compared to 13.0% a year earlier. The estimated Tier 1 capital ratio was unchanged from the prior year at 13.8%. The company noted that regulatory capital ratios at March 31, 2024 are preliminary.

What acquisitions and dispositions were completed in the quarter?

Synchrony completed the sale of its Pets Best insurance business to Independence Pet Holdings and completed the acquisition of Ally Lending's point-of-sale financing business, which expands its home improvement financing offerings.

Synchrony Financial 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Synchrony Financial (NYSE: SYF) reported first quarter 2024 net earnings of $1.3 billion^a, or $3.14 per diluted share, compared to $601 million, or $1.35 per diluted share, in the first quarter of 2023.

The results include a $1.1 billion^b pre-tax gain on the sale of Pets Best ($802 million after tax, or $1.96 per diluted share). Excluding that gain, adjusted net earnings were $491 million, or $1.18 per diluted share, which includes a $190 million reserve build related to the Ally Lending acquisition, or $(0.35) per diluted share. Core operating trends were mixed.

Loan receivables rose 12% to $101.7 billion^c and average active accounts rose 3% to 71.7 million, while purchase volume increased 2% to $42.4 billion and new accounts decreased 8% to 4.8 million. Credit deteriorated year over year: net charge-offs were 6.31% of average loan receivables versus 4.49%, and 30+ day delinquencies were 4.74% versus 3.81%. The provision for credit losses rose $594 million to $1.9 billion.

Net interest margin declined to 14.55% from 15.22%. Capital and liquidity remained strong. The company returned $402 million^d to shareholders, including $300 million of share repurchases, and the Board approved an incremental $1.0 billion repurchase authorization through June 30, 2025.

The estimated CET1 ratio was 12.6% versus 13.0% a year earlier, and deposits reached $83.6 billion, or 84% of funding. The company intends to maintain its quarterly dividend at $0.25 per share.

02—Key points

Key Highlights

Reported net earnings of $1.3 billion ($3.14 diluted EPS), boosted by the $802 million after-tax Pets Best gain on sale; adjusted net earnings were $491 million ($1.18 diluted EPS).
Ally Lending acquisition led to a $190 million reserve build, reducing adjusted diluted EPS by $0.35.
Loan receivables grew 12% to $101.7 billion, while purchase volume rose only 2% to $42.4 billion and new accounts fell 8%.
Credit quality weakened year over year: net charge-offs of 6.31% (vs. 4.49%) and 30+ day delinquencies of 4.74% (vs. 3.81%); the allowance for credit losses was 10.72% of period-end loan receivables.
Net interest margin compressed to 14.55% from 15.22%, while interest and fees on loans rose 15% to $5.3 billion.
Returned $402 million to shareholders, and the Board approved an incremental $1.0 billion share repurchase authorization, bringing total authorization to $1.3 billion through June 30, 2025.
CET1 ratio was 12.6% (vs. 13.0%); deposits grew 12% to $83.6 billion, comprising 84% of funding.

03—Questions

Frequently Asked Questions

How much of the first-quarter earnings increase was from one-time items?
Most of it. The Pets Best gain on sale contributed $802 million after tax ($1.96 per diluted share). Excluding this gain, adjusted net earnings were $491 million, or $1.18 per diluted share, compared to $601 million, or $1.35 per diluted share, in the first quarter of 2023.
What drove the increase in credit losses?
The provision for credit losses rose $594 million to $1.9 billion, driven by higher net charge-offs and a $190 million reserve build tied to the Ally Lending acquisition. Net charge-offs were $1.585 billion, up from $1.006 billion a year earlier.
What did the company do with capital in the quarter?
Synchrony returned $402 million to shareholders, including $300 million of share repurchases and $102 million of common stock dividends. In April, the Board approved an incremental $1.0 billion repurchase authorization through June 30, 2025, and the quarterly dividend remains $0.25 per share.
How did the company's capital ratios change?
The estimated CET1 ratio was 12.6%, compared to 13.0% a year earlier. The estimated Tier 1 capital ratio was unchanged from the prior year at 13.8%. The company noted that regulatory capital ratios at March 31, 2024 are preliminary.
What acquisitions and dispositions were completed in the quarter?
Synchrony completed the sale of its Pets Best insurance business to Independence Pet Holdings and completed the acquisition of Ally Lending's point-of-sale financing business, which expands its home improvement financing offerings.

04—Continue

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