01—Abstract
Summary
Summary of the 8-K filed September 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Synchrony Financial furnished Exhibit 99.1 under Item 7.01 of this Form 8-K (Regulation FD), presenting its monthly charge-off and delinquency statistics for the thirteen months ended August 31, 2024.
The statistics are unaudited and expressed in billions of dollars. The company states it intends to furnish these statistics monthly, and for the last month of each calendar quarter, it will furnish them together with its quarterly financial results announcement. At August 31, 2024, period-end loan receivables were $102.5 billiona, compared with $97.3 billion at August 31, 2023.
The 30+ delinquency rate was 4.6%b, up from 4.1% a year earlier. The net charge-off rate for August 2024 was 5.6% and the adjusted net charge-off rate was 5.7%, compared with 4.6% and 4.7%, respectively, in August 2023. The company attributes the year-over-year increases in the 30+ delinquency rate and the net charge-off rate to the continued impact of moderation in customer payment rates.
The filing shows that net charge-offs in August 2024 were lower than in July 2024, when the net charge-off rate was 6.2%c and the adjusted rate was 6.3%. The company says this decline was primarily due to four fewer charge-off cycles in August, which had 25 cycles versus 29 in July.
The company notes that charge-off cycle timing can shift monthly charge-off amounts without a corresponding change in portfolio performance. Consumer credit card loans represented approximately 92%d of total period-end loan receivables at August 31, 2024.
02—Key points
Key Highlights
- Period-end loan receivables were $102.5 billion at August 31, 2024, versus $97.3 billion at August 31, 2023.
- The 30+ delinquency rate was 4.6% at August 31, 2024, up from 4.1% a year earlier.
- The August 2024 net charge-off rate was 5.6% and the adjusted net charge-off rate was 5.7%, compared with 4.6% and 4.7% in August 2023.
- The company attributes the year-over-year increases in delinquency and net charge-off rates to the continued impact of moderation in customer payment rates.
- Net charge-offs fell from July to August 2024, with the net charge-off rate moving from 6.2% to 5.6%, primarily due to four fewer charge-off cycles.
- Consumer credit card loans represent approximately 92% of total period-end loan receivables at August 31, 2024.
- The company will furnish these statistics monthly, with quarter-end month data released alongside quarterly earnings.
03—Questions
Frequently Asked Questions
What information does this 8-K provide to investors?
It furnishes Exhibit 99.1, which contains monthly charge-off and delinquency statistics for the thirteen months ended August 31, 2024, including loan receivables, delinquency rates, net charge-off rates, and a recovery adjustment. The information is unaudited and is furnished under Item 7.01 (Regulation FD), so it is not deemed filed under Section 18 of the Exchange Act.
How did credit quality change compared with a year earlier?
The 30+ delinquency rate rose to 4.6% at August 31, 2024 from 4.1% at August 31, 2023. The net charge-off rate rose to 5.6% from 4.6%, and the adjusted net charge-off rate rose to 5.7% from 4.7%. The company attributes these increases to the continued impact of moderation in customer payment rates.
Why did net charge-offs decline from July to August 2024?
The company states that the decrease was primarily due to four fewer charge-off cycles. August 2024 had 25 charge-off cycle dates compared with 29 in July 2024. The filing notes that cycle timing can cause monthly charged-off amounts to vary without a corresponding change in portfolio performance.
What is the adjusted net charge-off rate and why is it presented?
The adjusted net charge-off rate includes a recovery adjustment that allocates recoveries, including debt sales, evenly across the three months of each quarter. The company says it considers this measure useful because it is a monthly measure more indicative of its quarterly and annual net charge-off rates. The company describes it as a non-GAAP financial measure.
How will these statistics be reported going forward?
The company intends to furnish these statistics monthly. For the last month of each calendar quarter, the statistics will be furnished at the same time as the company announces its quarterly financial results.
04—Continue