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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to         
001-36560
(Commission File Number)
synchronylogorgbpositivea02.jpg
SYNCHRONY FINANCIAL
(Exact name of registrant as specified in its charter) 
Delaware 51-0483352
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
777 Long Ridge Road 
Stamford,Connecticut06902
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code) -  (203) 585-2400
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareSYFNew York Stock Exchange
Depositary Shares Each Representing a 1/40th Interest in a Share of 5.625% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series ASYFPrANew York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer☒Accelerated Filer☐
Non-Accelerated Filer☐Smaller Reporting Company☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding as of October 19, 2023 was 413,804,360.


Synchrony Financial
PART I - FINANCIAL INFORMATIONPage
Item 1. Financial Statements:
PART II - OTHER INFORMATION
Item 6. Exhibits

3

Certain Defined Terms
Except as the context may otherwise require in this report, references to:
•“we,” “us,” “our” and the “Company” are to SYNCHRONY FINANCIAL and its subsidiaries;
•“Synchrony” are to SYNCHRONY FINANCIAL only;
•the “Bank” are to Synchrony Bank (a subsidiary of Synchrony);
•the “Board of Directors” or “Board” are to Synchrony's board of directors;
•“CECL” are to the impairment model known as the Current Expected Credit Loss model, which is based on expected credit losses; and
•“VantageScore” are to a credit score developed by the three major credit reporting agencies which is used as a means of evaluating the likelihood that credit users will pay their obligations.
We provide a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which, in our business and in this report, we refer to as our “partners.” The terms of the programs all require cooperative efforts between us and our partners of varying natures and degrees to establish and operate the programs. Our use of the term “partners” to refer to these entities is not intended to, and does not, describe our legal relationship with them, imply that a legal partnership or other relationship exists between the parties or create any legal partnership or other relationship.
Unless otherwise indicated, references to “loan receivables” do not include loan receivables held for sale.
For a description of certain other terms we use, including “active account” and “purchase volume,” see the notes to “Management’s Discussion and Analysis—Results of Operations—Other Financial and Statistical Data” in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”). There is no standard industry definition for many of these terms, and other companies may define them differently than we do.

“Synchrony” and its logos and other trademarks referred to in this report, including CareCredit®, Quickscreen®, Dual Card™, Synchrony Car Care™ and SyPI™, belong to us. Solely for convenience, we refer to our trademarks in this report without the ™ and ® symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Other service marks, trademarks and trade names referred to in this report are the property of their respective owners.
On our website at www.synchrony.com, we make available under the "Investors-SEC Filings" menu selection, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports or amendments are electronically filed with, or furnished to, the SEC. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC.
4

Cautionary Note Regarding Forward-Looking Statements:
Various statements in this Quarterly Report on Form 10-Q may contain “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “targets,” “outlook,” “estimates,” “will,” “should,” “may” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements.
Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated, including the future impacts of the novel coronavirus disease (“COVID-19”) outbreak and measures taken in response thereto for which future developments are highly uncertain and difficult to predict; retaining existing partners and attracting new partners, concentration of our revenue in a small number of partners, and promotion and support of our products by our partners; cyber-attacks or other security breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third-parties to provide various services that are important to our operations; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and other legislative and regulatory developments and the impact of the Consumer Financial Protection Bureau's (the “CFPB”) regulation of our business; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit the Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this report and in our public filings, including under the heading “Risk Factors Relating to Our Business” and “Risk Factors Relating to Regulation” in our 2022 Form 10-K. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.
5

PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report and in our 2022 Form 10-K. The discussion below contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. See “Cautionary Note Regarding Forward-Looking Statements.”
Introduction and Business Overview
____________________________________________________________________________________________
We are a premier consumer financial services company delivering one of the industry's most complete, digitally-enabled product suites. Our experience, expertise and scale encompass a broad spectrum of industries including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. We have an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which we refer to as our “partners.” For the three and nine months ended September 30, 2023, we financed $47.0 billion and $135.8 billion of purchase volume, respectively, and had 70.3 million and 69.8 million average active accounts, respectively, and at September 30, 2023, we had $97.9 billion of loan receivables.
We offer our credit products primarily through our wholly-owned subsidiary, the Bank. In addition, through the Bank, we offer, directly to retail, affinity relationships and commercial customers, a range of deposit products insured by the Federal Deposit Insurance Corporation (“FDIC”), including certificates of deposit, individual retirement accounts (“IRAs”), money market accounts, savings accounts and sweep and affinity deposits. We also take deposits at the Bank through third-party securities brokerage firms that offer our FDIC-insured deposit products to their customers. We have significantly expanded our online direct banking operations in recent years and our deposit base serves as a source of stable and diversified low cost funding for our credit activities. At September 30, 2023, we had $78.1 billion in deposits, which represented 84% of our total funding sources.
Our Sales Platforms
_________________________________________________________________
We conduct our operations through a single business segment. Profitability and expenses, including funding costs, credit losses and operating expenses, are managed for the business as a whole. Substantially all of our revenue activities are within the United States. We primarily manage our credit products through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle). Those platforms are organized by the types of partners we work with, and are measured on interest and fees on loans, loan receivables, active accounts and other sales metrics.
6

Platformpies.jpg
Home & Auto
Our Home & Auto sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through a broad network of partners and merchants providing home and automotive merchandise and services, as well as our Synchrony Car Care network and Synchrony HOME credit card offering. Our Home & Auto sales platform partners include a wide range of key retailers in the home improvement, furniture, bedding, appliance and electronics industry, such as Ashley HomeStores LTD, Lowe's, and Mattress Firm, as well as automotive merchandise and services, such as Chevron and Discount Tire. In addition, we also have program agreements with buying groups, manufacturers and industry associations, such as Nationwide Marketing Group and the Home Furnishings Association.
Digital
Our Digital sales platform provides comprehensive payments and financing solutions with integrated digital experiences through partners and merchants who primarily engage with their consumers through digital channels. Our Digital sales platform includes key partners delivering digital payment solutions, such as PayPal, including our Venmo program, online marketplaces, such as Amazon and eBay, and digital-first brands and merchants, such as Verizon, the Qurate brands, and Fanatics.
Diversified & Value
Our Diversified & Value sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through large retail partners who deliver everyday value to consumers shopping for daily needs or important life moments. Our Diversified & Value sales platform is comprised of five large retail partners: Belk, Fleet Farm, JCPenney, Sam's Club and TJX Companies, Inc.
Health & Wellness
Our Health & Wellness sales platform provides comprehensive healthcare payments and financing solutions, through a network of providers and health systems, for those seeking health and wellness care for themselves, their families and their pets, and includes key brands such as CareCredit and Pets Best, as well as partners such as Walgreens.
7

Lifestyle
Lifestyle provides comprehensive payments and financing solutions with integrated in-store and digital experiences through partners and merchants who offer merchandise in power sports, outdoor power equipment, and other industries such as sporting goods, apparel, jewelry and music. Our Lifestyle sales platform partners include a wide range of key retailers in the apparel, specialty retail, outdoor, music and luxury industry, such as
American Eagle, Dick's Sporting Goods, Guitar Center, Sweetwater, Kawasaki, Polaris, Suzuki and Pandora.
Corp, Other
Corp, Other includes activity and balances related to certain program agreements with retail partners and merchants that will not be renewed beyond their current expiration date and certain programs that were previously terminated, which are not managed within the five sales platforms discussed above. Prior year activity in Corp, Other primarily includes activity associated with the Gap Inc. and BP portfolios, which were both sold in the second quarter of 2022. Corp, Other also includes amounts related to changes in the fair value of equity investments and realized gains or losses associated with the sale of investments.

8

Our Credit Products
____________________________________________________________________________________________
Through our sales platforms, we offer three principal types of credit products: credit cards, commercial credit products and consumer installment loans. We also offer a debt cancellation product.
The following table sets forth each credit product by type and indicates the percentage of our total loan receivables that are under standard terms only or pursuant to a promotional financing offer at September 30, 2023.
Promotional Offer
Credit ProductStandard Terms OnlyDeferred InterestOther PromotionalTotal
Credit cards58.6 %19.6 %15.9 %94.1 %
Commercial credit products1.9 — — 1.9 
Consumer installment loans0.1 0.1 3.7 3.9 
Other0.1 — — 0.1 
Total60.7 %19.7 %19.6 %100.0 %
Credit Cards
We offer the following principal types of credit cards:
•Private Label Credit Cards. Private label credit cards are partner-branded credit cards (e.g., Lowe’s or Amazon) or program-branded credit cards (e.g., Synchrony Car Care or CareCredit) that are used primarily for the purchase of goods and services from the partner or within the program network. In addition, in some cases, cardholders may be permitted to access their credit card accounts for cash advances. Credit under our private label credit cards typically is extended either on standard terms only or pursuant to a promotional financing offer.
•Dual Cards and General Purpose Co-Branded Cards. Our patented Dual Cards are credit cards that function as private label credit cards when used to purchase goods and services from our partners, and as general purpose credit cards when used to make purchases from other retailers wherever cards from those card networks are accepted or for cash advance transactions. We also offer general purpose co-branded credit cards that do not function as private label credit cards, as well as a Synchrony-branded general purpose credit card. Dual Cards and general purpose co-branded credit cards are offered across all of our sales platforms and credit is typically extended on standard terms only. We offer either Dual Cards or general purpose co-branded credit cards through over 15 of our large partners, of which the majority are Dual Cards, as well as our CareCredit Dual Card. Consumer Dual Cards and Co-Branded cards totaled 26% of our total loan receivables portfolio at September 30, 2023.
Commercial Credit Products
We offer private label cards and Dual Cards for commercial customers that are similar to our consumer offerings. We also offer a commercial pay-in-full accounts receivable product to a wide range of business customers.
Installment Loans
We originate secured installment loans to consumers (and a limited number of commercial customers) in the United States, primarily for power products in our Outdoor market (motorcycles, ATVs and lawn and garden). We also offer unsecured installment loans primarily in our Health and Wellness sales platform and through our various other installment products, such as our Synchrony Pay Later solutions, including pay in 4 and pay monthly options for short-term loans. Installment loans are closed-end credit accounts where the customer pays down the outstanding balance in installments. Installment loans are generally assessed periodic finance charges using fixed interest rates.
9

Business Trends and Conditions
____________________________________________________________________________________________
We believe our business and results of operations will be impacted in the future by various trends and conditions. For a discussion of certain trends and conditions, see “Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Trends and Conditions” in our 2022 Form 10-K. For a discussion of how certain trends and conditions impacted the three and nine months ended September 30, 2023, see “—Results of Operations.”

Seasonality
____________________________________________________________________________________________
We experience fluctuations in transaction volumes and the level of loan receivables as a result of higher seasonal consumer spending and payment patterns that typically result in an increase of loan receivables from August through a peak in late December, with reductions in loan receivables typically occurring over the first and second quarters of the following year as customers pay their balances down.
The seasonal impact to transaction volumes and the loan receivables balance typically results in fluctuations in our results of operations, delinquency metrics and the allowance for credit losses as a percentage of total loan receivables between quarterly periods.
In addition to the seasonal variance in loan receivables discussed above, we also typically experience a seasonal increase in delinquency rates and delinquent loan receivables balances during the third and fourth quarters of each year due to lower customer payment rates, resulting in higher net charge-off rates in the first and second quarters. Our delinquency rates and delinquent loan receivables balances typically decrease during the subsequent first and second quarters as customers begin to pay down their loan balances and return to current status, resulting in lower net charge-off rates in the third and fourth quarters. Because customers who were delinquent during the fourth quarter of a calendar year have a higher probability of returning to current status when compared to customers who are delinquent at the end of each of our interim reporting periods, we expect that a higher proportion of delinquent accounts outstanding at an interim period end will result in charge-offs, as compared to delinquent accounts outstanding at a year end. Consistent with this historical experience, we generally experience a higher allowance for credit losses as a percentage of total loan receivables at the end of an interim period, as compared to the end of a calendar year. In addition, even in instances of improving credit metrics such as declining past due amounts, we may experience an increase in our allowance for credit losses at an interim period end compared to the prior year end, reflecting these same seasonal trends.
However, in addition to these seasonal trends, the elevated customer payment behavior we have experienced in recent years and more recently the subsequent moderation from these elevated levels, has also significantly impacted our key financial metrics and the fluctuations experienced between quarterly periods. The effects from these changes in customer payment behavior have resulted in either partial, or in some instances full, offset to the impact from the ongoing seasonal trends discussed above. For the three months ended September 30, 2023, this is most evident in our net charge-off rate which increased to 4.60% at September 30, 2023 from 3.48% at December 31, 2022 due to the impact from lower customer payment rates which exceeded the effects of the seasonal trends we experienced.
10

Results of Operations
____________________________________________________________________________________________
Highlights for the Three and Nine Months Ended September 30, 2023
Below are highlights of our performance for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022, as applicable, except as otherwise noted.
•Net earnings decreased to $628 million from $703 million and to $1.8 billion from $2.4 billion for the three and nine months ended September 30, 2022. The decreases in the three and nine months ended September 30, 2023 were primarily driven by increases in provision for credit losses and higher interest expense, partially offset by higher interest income and lower retailer share arrangements.
•Loan receivables increased 13.8% to $97.9 billion at September 30, 2023 compared to $86.0 billion at September 30, 2022, driven by lower customer payment rates and purchase volume growth.
•Net interest income increased 11.0% to $4.4 billion and 8.8% to $12.5 billion for the three and nine months ended September 30, 2023, respectively. Interest and fees on loans increased 21.0% and 18.5% for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables and higher benchmark rates. The increase in the nine months ended September 30, 2023 was partially offset by the impact of portfolios sold in the second quarter of 2022. For the three and nine months ended September 30, 2023, interest expense increased due to higher benchmark rates and higher funding liabilities.
•Retailer share arrangements decreased 7.4% to $979 million and 15.4% to $2.8 billion for the three and nine months ended September 30, 2023, primarily due to higher net charge-offs, partially offset by higher net interest income. The decrease in the nine months ended September 30, 2023 was also due to the impact of portfolios sold in the second quarter of 2022.
•Over-30 day loan delinquencies as a percentage of period-end loan receivables increased 112 basis points to 4.40% at September 30, 2023. The net charge-off rate increased 160 basis points to 4.60% and increased 180 basis points to 4.62% for the three and nine months ended September 30, 2023, respectively.
•Provision for credit losses increased to $1.5 billion from $929 million, and to $4.2 billion from $2.2 billion for the three and nine months ended September 30, 2023, respectively. The increases for the three and nine months ended September 30, 2023, were primarily driven by higher net charge-offs and higher reserve increases in the current year. The increases in reserves for credit losses were primarily driven by growth in loan receivables. Our allowance coverage ratio (allowance for credit losses as a percent of period-end loan receivables) decreased to 10.40% at September 30, 2023, as compared to 10.58% at September 30, 2022.

•Other expense increased by $90 million, or 8.5%, and $256 million, or 8.0%, for the three and nine months ended September 30, 2023, respectively. The increases for the three and nine months ended September 30, 2023 were primarily driven by growth related items as well as technology investments and higher operational losses.
•At September 30, 2023, deposits represented 84% of our total funding sources. Total deposits increased by 8.8% to $78.1 billion at September 30, 2023, compared to December 31, 2022.
•During the nine months ended September 30, 2023, we declared and paid cash dividends on our Series A 5.625% non-cumulative preferred stock of $42.18 per share, or $31 million.
•During the nine months ended September 30, 2023, we repurchased $850 million of our outstanding common stock, and declared and paid cash dividends of $0.71 per share, or $303 million. In April 2023, the Board of Directors approved an incremental share repurchase program of up to $1.0 billion, through June 30, 2024, and increased our quarterly dividend to $0.25 per common share commencing in the third quarter of 2023. At September 30, 2023 we have a total share repurchase authorization of $850 million remaining. For more information, see “Capital—Dividend and Share Repurchases.”
11

2023 Partner Agreements
During the nine months ended September 30, 2023, we continued to expand and diversify our portfolio with the addition or renewal of more than 40 partners, which included the following:
•In our Home & Auto sales platform, we announced our new partnerships with Big Brand Tire & Service, GreatWater 360 Auto Care, Installation Made Easy, LG Air Conditioning and Roto Rooter and extended our program agreements with CCA Global Partners, CertainPath, Conn's, Haverty's Furniture, Haynes, Horizon, Living Spaces, LoveSac and York.
•In our Digital sales platform, we extended our program agreement with Zulily.
•In our Diversified & Value sales platform, we extended our program agreement with Belk.
•In our Health & Wellness sales platform, we expanded our network through our new partnerships with AmeriVet Veterinary Partners, Destination Pet, Hand & Stone, Heart and Paw, Marquee Dental Partners, O'Brien Vet Group, Sonova, Specialty 1 Partners and Valley Veterinary, and also extended our endorsements with the American Dental Association, Academy of General Dentistry, The Aspen Group and NVA.
•In our Lifestyle sales platform, we extended our program agreement with Club Champion, Handi Quilter, JTV, Park West Gallery, Piaggio, Robbins Brothers, The Alliance of Independent Music Merchants and The Container Store and launched Synchrony’s Outdoor Card, enabling easy and affordable financing solutions to powersports customers.
Summary Earnings
The following table sets forth our results of operations for the periods indicated.
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Interest income$5,354 $4,342 $15,161 $12,438 
Interest expense992 414 2,628 919 
Net interest income4,362 3,928 12,533 11,519 
Retailer share arrangements(979)(1,057)(2,783)(3,288)
Provision for credit losses1,488 929 4,161 2,174 
Net interest income, after retailer share arrangements and provision for credit losses1,895 1,942 5,589 6,057 
Other income92 44 218 350 
Other expense1,154 1,064 3,442 3,186 
Earnings before provision for income taxes833 922 2,365 3,221 
Provision for income taxes205 219 567 782 
Net earnings$628 $703 $1,798 $2,439 
Net earnings available to common stockholders$618 $692 $1,767 $2,407 
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Other Financial and Statistical Data
The following table sets forth certain other financial and statistical data for the periods indicated.    
At and for theAt and for the
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Financial Position Data (Average):
Loan receivables, including held for sale$96,230 $84,038 $93,198 $83,404 
Total assets$110,335 $98,694 $108,209 $96,786 
Deposits$76,353 $67,158 $74,750 $64,751 
Borrowings$14,806 $13,360 $14,683 $13,645 
Total equity$13,758 $13,238 $13,537 $13,475 
Selected Performance Metrics:
Purchase volume(1)(2)
$47,006 $44,557 $135,839 $132,264 
Home & Auto$12,273 $12,273 $35,989 $35,428 
Digital$13,808 $12,941 $39,541 $36,600 
Diversified & Value$15,445 $14,454 $44,240 $40,400 
Health & Wellness$3,990 $3,514 $11,695 $10,064 
Lifestyle$1,490 $1,374 $4,372 $4,000 
Corp, Other$— $1 $2 $5,772 
Average active accounts (in thousands)(2)(3)
70,308 66,266 69,842 68,517 
Net interest margin(4)
15.36 %15.52 %15.17 %15.64 %
Net charge-offs$1,116 $635 $3,218 $1,760 
Net charge-offs as a % of average loan receivables, including held for sale4.60 %3.00 %4.62 %2.82 %
Allowance coverage ratio(5)
10.40 %10.58 %10.40 %10.58 %
Return on assets(6)
2.3 %2.8 %2.2 %3.4 %
Return on equity(7)
18.1 %21.1 %17.8 %24.2 %
Equity to assets(8)
12.47 %13.41 %12.51 %13.92 %
Other expense as a % of average loan receivables, including held for sale4.76 %5.02 %4.94 %5.11 %
Efficiency ratio(9)
33.2 %36.5 %34.5 %37.1 %
Effective income tax rate24.6 %23.8 %24.0 %24.3 %
Selected Period-End Data:
Loan receivables$97,873 $86,012 $97,873 $86,012 
Allowance for credit losses$10,176 $9,102 $10,176 $9,102 
30+ days past due as a % of period-end loan receivables(10)
4.40 %3.28 %4.40 %3.28 %
90+ days past due as a % of period-end loan receivables(10)
2.06 %1.43 %2.06 %1.43 %
Total active accounts (in thousands)(3)
70,137 66,503 70,137 66,503 
    ______________________
(1)Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.
(2)Includes activity and accounts associated with loan receivables held for sale.
(3)Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.
(4)Net interest margin represents net interest income divided by average interest-earning assets.
(5)Allowance coverage ratio represents allowance for credit losses divided by total period-end loan receivables.
(6)Return on assets represents net earnings as a percentage of average total assets.
(7)Return on equity represents net earnings as a percentage of average total equity.
(8)Equity to assets represents average total equity as a percentage of average total assets.
(9)Efficiency ratio represents (i) other expense, divided by (ii) sum of net interest income, plus other income, less retailer share arrangements.
(10)Based on customer statement-end balances extrapolated to the respective period-end date.
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Average Balance Sheet
The following tables set forth information for the periods indicated regarding average balance sheet data, which are used in the discussion of interest income, interest expense and net interest income that follows.
 20232022
Three months ended September 30 ($ in millions)Average
Balance		Interest
Income /
Expense
Average
Yield /
Rate(1)
Average
Balance		Interest
Income/
Expense
Average
Yield /
Rate(1)
Assets
Interest-earning assets:
Interest-earning cash and equivalents(2)
$12,753 $172 5.35 %$11,506 $65 2.24 %
Securities available for sale3,706 31 3.32 %4,861 19 1.55 %
Loan receivables, including held for sale(3):
Credit cards90,587 5,003 21.91 %79,354 4,153 20.76 %
Consumer installment loans3,656 108 11.72 %2,884 74 10.18 %
Commercial credit products1,861 38 8.10 %1,720 30 6.92 %
Other126 2 6.30 %80 1 4.96 %
Total loan receivables, including held for sale96,230 5,151 21.24 %84,038 4,258 20.10 %
Total interest-earning assets112,689 5,354 18.85 %100,405 4,342 17.16 %
Non-interest-earning assets:
Cash and due from banks964 1,580 
Allowance for credit losses(9,847)(8,878)
Other assets6,529 5,587 
Total non-interest-earning assets(2,354)(1,711)
Total assets$110,335 $98,694 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts$75,952 $800 4.18 %$66,787 $280 1.66 %
Borrowings of consolidated securitization entities6,096 86 5.60 %6,258 54 3.42 %
Senior and subordinated unsecured notes8,710 106 4.83 %7,102 80 4.47 %
Total interest-bearing liabilities90,758 992 4.34 %80,147 414 2.05 %
Non-interest-bearing liabilities:
Non-interest-bearing deposit accounts401 371 
Other liabilities5,418 4,938 
Total non-interest-bearing liabilities5,819 5,309 
Total liabilities96,577 85,456 
Equity
Total equity13,758 13,238 
Total liabilities and equity$110,335 $98,694 
Interest rate spread(4)
14.51 %15.11 %
Net interest income$4,362 $3,928 
Net interest margin(5)
15.36 %15.52 %

14

 20232022
Nine months ended September 30 ($ in millions)Average
Balance		Interest
Income /
Expense
Average
Yield /
Rate(1)
Average
Balance		Interest
Income/
Expense
Average
Yield /
Rate(1)
Assets
Interest-earning assets:
Interest-earning cash and equivalents(2)
$13,107 $490 5.00 %$9,920 $90 1.21 %
Securities available for sale4,138 92 2.97 %5,143 43 1.12 %
Loan receivables, including held for sale(3):
Credit cards87,914 14,179 21.56 %78,946 12,009 20.34 %
Consumer installment loans3,375 285 11.29 %2,781 209 10.05 %
Commercial credit products1,789 108 8.07 %1,604 83 6.92 %
Other120 7 7.80 %73 4 7.33 %
Total loan receivables, including held for sale93,198 14,579 20.91 %83,404 12,305 19.73 %
Total interest-earning assets110,443 15,161 18.35 %98,467 12,438 16.89 %
Non-interest-earning assets:
Cash and due from banks987 1,607 
Allowance for credit losses(9,552)(8,735)
Other assets6,331 5,447 
Total non-interest-earning assets(2,234)(1,681)
Total assets$108,209 $96,786 
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts$74,340 $2,074 3.73 %$64,371 $567 1.18 %
Borrowings of consolidated securitization entities6,062 241 5.32 %6,547 127 2.59 %
Senior and subordinated unsecured notes8,621 313 4.85 %7,098 225 4.24 %
Total interest-bearing liabilities89,023 2,628 3.95 %78,016 919 1.57 %
Non-interest-bearing liabilities:
Non-interest-bearing deposit accounts410 380 
Other liabilities5,239 4,915 
Total non-interest-bearing liabilities5,649 5,295 
Total liabilities94,672 83,311 
Equity
Total equity13,537 13,475 
Total liabilities and equity$108,209 $96,786 
Interest rate spread(4)
14.41 %15.32 %
Net interest income$12,533 $11,519 
Net interest margin(5)
15.17 %15.64 %
________________________________________
(1)Average yields/rates are based on total interest income/expense over average balances.
(2)Includes average restricted cash balances of $151 million and $688 million for the three months ended September 30, 2023 and 2022, respectively, and $324 million and $647 million for the nine months ended September 30, 2023 and 2022, respectively.
(3)Interest income on loan receivables includes fees on loans, which primarily consist of late fees on our credit products, of $694 million and $676 million for the three months ended September 30, 2023 and 2022, respectively, and $2.0 billion for both the nine months ended September 30, 2023 and 2022, respectively.
(4)Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.
(5)Net interest margin represents net interest income divided by average total interest-earning assets.
15

For a summary description of the composition of our key line items included in our Statements of Earnings, see Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K.
Interest Income
Interest income increased by $1.0 billion, or 23.3%, and $2.7 billion, or 21.9%, for the three and nine months ended September 30, 2023, respectively, primarily driven by increases in interest and fees on loans of 21.0% and 18.5%, respectively. The increases in interest and fees on loans were primarily driven by growth in average loan receivables and higher benchmark rates. The increase in the nine months ended September 30, 2023 was partially offset by the impact of portfolios sold in the second quarter of 2022.
Average interest-earning assets
Three months ended September 30 ($ in millions)2023%2022%
Loan receivables, including held for sale$96,230 85.4 %$84,038 83.7 %
Liquidity portfolio and other16,459 14.6 %16,367 16.3 %
Total average interest-earning assets$112,689 100.0 %$100,405 100.0 %
Nine months ended September 30 ($ in millions)2023%2022%
Loan receivables, including held for sale$93,198 84.4 %$83,404 84.7 %
Liquidity portfolio and other17,245 15.6 %15,063 15.3 %
Total average interest-earning assets$110,443 100.0 %$98,467 100.0 %

Average loan receivables, including held for sale, increased 14.5% and 11.7% for the three and nine months ended September 30, 2023, respectively, primarily driven by moderation in customer payment rates and growth in purchase volume. The increase in the nine months ended September 30, 2023 was partially offset by the impact from portfolios sold in the second quarter of 2022. Purchase volume increased by 5.5% and 2.7% for the three and nine months ended September 30, 2023, respectively.
Yield on average interest-earning assets
The yield on average interest-earning assets increased for the three and nine months ended September 30, 2023 primarily due to increases in the yield on average loan receivables. The increases in loan receivable yield were 114 basis points to 21.24% and 118 basis points to 20.91% for the three and nine months ended September 30, 2023, respectively.
Interest Expense
Interest expense increased by $578 million to $992 million, and $1.7 billion to $2.6 billion, for the three and nine months ended September 30, 2023, respectively, primarily attributed to higher benchmark interest rates and higher funding liabilities. Our cost of funds increased to 4.34% and 3.95% for the three and nine months ended September 30, 2023, respectively, compared to 2.05% and 1.57% for the three and nine months ended September 30, 2022, respectively.
Average interest-bearing liabilities
Three months ended September 30 ($ in millions)2023%2022%
Interest-bearing deposit accounts$75,952 83.7 %$66,787 83.3 %
Borrowings of consolidated securitization entities6,096 6.7 %6,258 7.8 %
Senior and subordinated unsecured notes8,710 9.6 %7,102 8.9 %
Total average interest-bearing liabilities$90,758 100.0 %$80,147 100.0 %
16

Nine months ended September 30 ($ in millions)2023%2022%
Interest-bearing deposit accounts$74,340 83.5 %$64,371 82.5 %
Borrowings of consolidated securitization entities6,062 6.8 %6,547 8.4 %
Senior and subordinated unsecured notes8,621 9.7 %7,098 9.1 %
Total average interest-bearing liabilities$89,023 100.0 %$78,016 100.0 %
Net Interest Income
Net interest income increased by $434 million, or 11.0%, and $1.0 billion, or 8.8%, for the three and nine months ended September 30, 2023, respectively, resulting from the changes in interest income and interest expense discussed above.
Retailer Share Arrangements
Retailer share arrangements decreased by $78 million, or 7.4%, and $505 million, or 15.4%, for the three and nine months ended September 30, 2023, respectively, primarily due to higher net charge-offs, partially offset by higher net interest income. The decrease in the nine months ended September 30, 2023 was also driven by the impact of portfolios sold in the second quarter of 2022.
Provision for Credit Losses
Provision for credit losses increased to $1.5 billion from $929 million, and $4.2 billion from $2.2 billion for the three and nine months ended September 30, 2023, respectively, primarily driven by higher net charge-offs and higher reserve increases in the current year. The increases in reserves for credit losses were primarily driven by growth in loan receivables.
Other Income
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Interchange revenue$267 $238 $761 $731 
Debt cancellation fees131 103 371 285 
Loyalty programs(358)(326)(1,001)(906)
Other52 29 87 240 
Total other income$92 $44 $218 $350 
Other income increased by $48 million, or 109.1%, and decreased by $132 million, or 37.7%,for the three and nine months ended September 30, 2023. The increase for the three months ended September 30, 2023 was driven primarily by higher interchange revenue and debt cancellation fees, partially offset by higher loyalty costs. The decrease for the nine months ended September 30, 2023 was primarily driven by the recognition in the prior year of the gain on sale of $120 million from the portfolio sales in the second quarter of 2022.
17

Other Expense
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Employee costs$444 $416 $1,346 $1,222 
Professional fees219 204 614 599 
Marketing and business development125 115 389 366 
Information processing177 150 522 458 
Other189 179 571 541 
Total other expense$1,154 $1,064 $3,442 $3,186 
Other expense increased by $90 million, or 8.5% and by $256 million, or 8.0%, for the three and nine months ended September 30, 2023, respectively, primarily driven by growth related items as well as higher technology investments and operational losses. These increases were partially offset by additional marketing and other actions taken in the prior year related to reinvestment of the gain on sale proceeds.
Employee costs increased for the three and nine months ended September 30, 2023 primarily attributable to an increase in headcount driven by growth and higher benefit costs.
Professional fees and information processing costs increased for the three and nine months ended September 30, 2023 primarily due to increased technology investments.

Marketing and business development costs increased for the three and nine months ended September 30, 2023, due to higher marketing investments in the current year to support business growth.
Other increased for the three and nine months ended September 30, 2023, primarily due to higher operational losses, partially offset by lower charitable contributions.
Provision for Income Taxes
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Effective tax rate24.6 %23.8 %24.0 %24.3 %
Provision for income taxes$205 $219 $567 $782 
The effective tax rate for the three months ended September 30, 2023 increased compared to the same period in the prior year primarily due to the benefit recorded in the prior period for favorable state tax apportionment changes. The effective tax rate for the nine months ended September 30, 2023 decreased compared to the same period in the prior year primarily due to the impact of higher research and development credits and low income housing tax credits recorded in the current year. For both periods presented, the effective tax rate differs from the applicable U.S. federal statutory tax rate primarily due to state income taxes.
Platform Analysis
As discussed above under “—Our Sales Platforms,” we offer our credit products primarily through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle), which management measures based on their revenue-generating activities. The following is a discussion of certain supplemental information for the three and nine months ended September 30, 2023, for each of our five sales platforms and Corp, Other.
18

Home & Auto
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$12,273 $12,273 $35,989 $35,428 
Period-end loan receivables$31,648 $29,017 $31,648 $29,017 
Average loan receivables, including held for sale$31,239 $28,387 $30,386 $27,307 
Average active accounts (in thousands)19,223 18,350 18,894 17,923 
Interest and fees on loans$1,367 $1,210 $3,867 $3,406 
Other income$28 $20 $80 $64 
Home & Auto interest and fees on loans increased by $157 million, or 13.0%, and increased by $461 million, or 13.5%, for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables and higher benchmark rates. The growth in average loan receivables for both periods primarily reflects the impact of lower customer payment rates, as well as purchase volume growth of 1.6% for the nine months ended September 30, 2023. Purchase volume remained flat for the three months ended September 30, 2023, as growth in commercial, Home Specialty and Auto were offset by lower retail traffic in Furniture and Electronics and the impact of lower gas and lumber prices.
Digital
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$13,808 $12,941 $39,541 $36,600 
Period-end loan receivables$26,685 $22,925 $26,685 $22,925 
Average loan receivables, including held for sale$26,266 $22,361 $25,484 $21,596 
Average active accounts (in thousands)20,768 19,418 20,641 19,176 
Interest and fees on loans$1,530 $1,197 $4,315 $3,277 
Other income$(6)$(22)$(7)$(47)
Digital interest and fees on loans increased by $333 million, or 27.8%, and $1.0 billion, or 31.7%, for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables, higher benchmark rates and the maturation of newer programs. The growth in average loan receivables for both periods reflected lower customer payment rates, purchase volume growth of 6.7% and 8.0%, respectively, and average active account growth of 7.0% and 7.6%, respectively.
Diversified & Value
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$15,445 $14,454 $44,240 $40,400 
Period-end loan receivables$18,865 $16,566 $18,865 $16,566 
Average loan receivables, including held for sale$18,565 $16,243 $18,074 $15,627 
Average active accounts (in thousands)20,410 19,411 20,571 19,258 
Interest and fees on loans$1,168 $935 $3,329 $2,587 
Other income$(28)$(19)$(63)$(63)
Diversified & Value interest and fees on loans increased by $233 million, or 24.9%, and $742 million, or 28.7%, for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables, and higher benchmark rates. The growth in average loan receivables for both periods reflected lower customer payment rates and purchase volume growth of 6.9% and 9.5%, respectively, reflecting higher out-of-partner spend, strong retailer performance and average active account growth of 5.1% and 6.8%, respectively.
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Health & Wellness
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$3,990 $3,514 $11,695 $10,064 
Period-end loan receivables$14,019 $11,590 $14,019 $11,590 
Average loan receivables, including held for sale$13,600 $11,187 $12,927 $10,681 
Average active accounts (in thousands)7,276 6,411 7,076 6,207 
Interest and fees on loans$844 $706 $2,365 $1,966 
Other income$74 $55 $189 $157 
Health & Wellness interest and fees on loans increased by $138 million, or 19.5%, and $399 million, or 20.3% for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables. The growth in average loan receivables for both periods reflected continued higher promotional purchase volume and lower customer payment rates. Purchase volume increased 13.5% and 16.2%, respectively, and average active accounts increased 13.5% and 14.0% for the three and nine months ended September 30, 2023, respectively, reflecting broad-based growth led by Dental, Pet and Cosmetic.
Other income increased by $19 million, or 34.5%, and $32 million, or 20.4%, for the three and nine months ended September 30, 2023, respectively, primarily due to higher debt cancellation fees.
Lifestyle
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$1,490 $1,374 $4,372 $4,000 
Period-end loan receivables$6,483 $5,686 $6,483 $5,686 
Average loan receivables, including held for sale$6,383 $5,610 $6,137 $5,478 
Average active accounts (in thousands)2,556 2,524 2,572 2,546 
Interest and fees on loans$249 $208 $704 $593 
Other income$8 $8 $22 $21 
Lifestyle interest and fees on loans increased by $41 million, or 19.7%, and $111 million, or 18.7%, for the three and nine months ended September 30, 2023, respectively, primarily driven by growth in average loan receivables and higher benchmark interest rates. The growth in average loan receivables for both periods reflected lower customer payment rates and purchase volume growth of 8.4% and 9.3% for the three and nine months ended September 30, 2023, respectively, which was driven by higher transaction values in Outdoor and Luxury.
Corp, Other
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Purchase volume$— $1 $2 $5,772 
Period-end loan receivables$173 $228 $173 $228 
Average loan receivables, including held for sale$177 $250 $190 $2,715 
Average active accounts (in thousands)75 152 88 3,407 
Interest and fees on loans$(7)$2 $(1)$476 
Other income$16 $2 $(3)$218 
The decreases shown above for the nine months ended September 30, 2023 for Corp, Other compared to the prior year period reflect the effects of the sale of the BP and Gap Inc. portfolios in May 2022 and June 2022, respectively.
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Other income decreased by $221 million, or 101.4%, for the nine months ended September 30, 2023 primarily due to the gain on sale of $120 million recognized in the prior year and lower interchange revenue related to the portfolios sold in the second quarter of 2022.
Loan Receivables
____________________________________________________________________________________________
Loan receivables are our largest category of assets and represent our primary source of revenue. The following discussion provides supplemental information regarding our loan receivables portfolio. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies and Note 4. Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for additional information related to our loan receivables.
The following table sets forth the composition of our loan receivables portfolio by product type at the dates indicated.
($ in millions)At September 30, 2023(%)At December 31, 2022(%)
Loans
Credit cards$92,078 94.1 %$87,630 94.8 %
Consumer installment loans3,784 3.9 %3,056 3.3 
Commercial credit products1,879 1.9 %1,682 1.8 
Other132 0.1 %102 0.1 
Total loans$97,873 100.0 %$92,470 100.0 %
Loan receivables increased 5.8% to $97.9 billion at September 30, 2023 compared to December 31, 2022, and increased 13.8% to $97.9 billion at September 30, 2023 compared to $86.0 billion at September 30, 2022. The increases in loan receivables were primarily driven by lower customer payment rates and purchase volume growth. The increase compared to December 31, 2022 was partially offset by the seasonality of our business.
Our loan receivables portfolio had the following geographic concentration at September 30, 2023.
($ in millions)Loan Receivables
Outstanding		% of Total Loan
Receivables
Outstanding
State
Texas$10,781 11.0 %
California$10,195 10.4 %
Florida$9,094 9.3 %
New York$4,778 4.9 %
North Carolina$4,035 4.1 %
Delinquencies
Over-30 day loan delinquencies as a percentage of period-end loan receivables increased to 4.40% at September 30, 2023 from 3.28% at September 30, 2022, and increased from 3.65% at December 31, 2022. These increases were primarily driven by lower customer payment rates.
Net Charge-Offs
Net charge-offs consist of the unpaid principal balance of loans held for investment that we determine are uncollectible, net of recovered amounts. We exclude accrued and unpaid finance charges and fees and third-party fraud losses from charge-offs. Charged-off and recovered finance charges and fees are included in interest and fees on loans while third-party fraud losses are included in other expense. Charge-offs are recorded as a reduction to the allowance for credit losses and subsequent recoveries of previously charged-off amounts are credited to the allowance for credit losses. Costs incurred to recover charged-off loans are recorded as collection expense and included in other expense in our Condensed Consolidated Statements of Earnings.
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The table below sets forth the net charge-offs and ratio of net charge-offs to average loan receivables, including held for sale, (“net charge-off rate”) for the periods indicated.
Three months ended September 30,
20232022
($ in millions)AmountRateAmountRate
Credit cards$1,040 4.56 %$596 2.98 %
Consumer installment loans49 5.32 %21 2.89 %
Commercial credit products26 5.54 %17 3.92 %
Other1 3.08 %1 4.96 %
Total net charge-offs$1,116 4.60 %$635 3.00 %
Nine months ended September 30,
20232022
($ in millions)AmountRateAmountRate
Credit cards$3,003 4.57 %$1,667 2.82 %
Consumer installment loans127 5.03 %49 2.36 %
Commercial credit products87 6.50 %43 3.58 %
Other1 1.10 %1 1.83 %
Total net charge-offs$3,218 4.62 %$1,760 2.82 %
Allowance for Credit Losses
The allowance for credit losses totaled $10.2 billion at September 30, 2023, compared to $9.5 billion at December 31, 2022, respectively, and $9.1 billion at September 30, 2022, and reflects our estimate of expected credit losses for the life of the loan receivables on our Consolidated Statement of Financial Position. Our allowance for credit losses as a percentage of total loan receivables increased to 10.40% at September 30, 2023, from 10.30% at December 31, 2022 and decreased from 10.58% at September 30, 2022.
The increase in allowance for credit losses compared to September 30, 2022 and December 31, 2022 was primarily driven by growth in loan receivables. The increase compared to December 31, 2022 was partially offset by a $294 million reduction related to the adoption of ASU 2022-02 on January 1, 2023 which eliminated the separate recognition and measurement guidance for troubled debt restructurings (“TDRs”). See Note 2. Basis of Presentation and Summary of Significant Accounting Policies and Note 4. Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for additional information on the effects of adoption of the new accounting guidance.


Funding, Liquidity and Capital Resources
____________________________________________________________________________________________
We maintain a strong focus on liquidity and capital. Our funding, liquidity and capital policies are designed to ensure that our business has the liquidity and capital resources to support our daily operations, our business growth, our credit ratings and our regulatory and policy requirements, in a cost effective and prudent manner through expected and unexpected market environments.
Funding Sources
Our primary funding sources include cash from operations, deposits (direct and brokered deposits), securitized financings and senior and subordinated unsecured notes.
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The following table summarizes information concerning our funding sources during the periods indicated:
 20232022
Three months ended September 30 ($ in millions)Average
Balance		%Average
Rate		Average
Balance		%Average
Rate
Deposits(1)
$75,952 83.7 %4.2 %$66,787 83.3 %1.7 %
Securitized financings6,096 6.7 5.6 6,258 7.8 3.4 
Senior and subordinated unsecured notes8,710 9.6 4.8 7,102 8.9 4.5 
Total$90,758 100.0 %4.3 %$80,147 100.0 %2.1 %
______________________
(1)Excludes $401 million and $371 million average balance of non-interest-bearing deposits for the three months ended September 30, 2023 and 2022, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the three months ended September 30, 2023 and 2022.
 20232022
Nine months ended September 30 ($ in millions)Average
Balance		%Average
Rate		Average
Balance		%Average
Rate
Deposits(1)
$74,340 83.5 %3.7 %$64,371 82.5 %1.2 %
Securitized financings6,062 6.8 5.3 6,547 8.4 2.6 
Senior and subordinated unsecured notes8,621 9.7 4.9 7,098 9.1 4.2 
Total$89,023 100.0 %3.9 %$78,016 100.0 %1.6 %
______________________
(1)Excludes $410 million and $380 million average balance of non-interest-bearing deposits for the nine months ended September 30, 2023 and 2022, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the nine months ended September 30, 2023 and 2022.

Deposits
We obtain deposits directly from retail, affinity relationships and commercial customers (“direct deposits”) or through third-party brokerage firms that offer our deposits to their customers (“brokered deposits”). At September 30, 2023, we had $64.1 billion in direct deposits and $14.0 billion in deposits originated through brokerage firms (including network deposit sweeps procured through a program arranger that channels brokerage account deposits to us). A key part of our liquidity plan and funding strategy is to continue to utilize our direct deposit base as a source of stable and diversified low-cost funding.
Our direct deposits are primarily from retail customers and include a range of FDIC-insured deposit products, including certificates of deposit, IRAs, money market accounts, savings accounts, sweep and affinity deposits.
Brokered deposits are primarily from retail customers of large brokerage firms. We have relationships with 10 brokers that offer our deposits through their networks. Our brokered deposits consist primarily of certificates of deposit that bear interest at a fixed rate. These deposits generally are not subject to early withdrawal.
Our ability to attract deposits is sensitive to, among other things, the interest rates we pay, and therefore, we bear funding risk if we fail to pay higher rates, or interest rate risk if we are required to pay higher rates, to retain existing deposits or attract new deposits. To mitigate these risks, our funding strategy includes a range of deposit products, and we seek to maintain access to multiple other funding sources, including securitized financings (including our undrawn committed capacity) and unsecured debt.
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The following table summarizes certain information regarding our interest-bearing deposits by type (all of which constitute U.S. deposits) for the periods indicated:
Three months ended September 30 ($ in millions)20232022
Average
Balance		%Average
Rate		Average
Balance		%Average
Rate
Direct deposits:
Certificates of deposit
(including IRA certificates of deposit)		$34,436 45.3 %4.1 %$22,789 34.1 %1.3 %
Savings, money market, and demand accounts 28,746 37.9 4.4 31,005 46.4 1.7 
Brokered deposits12,770 16.8 4.0 12,993 19.5 2.2 
Total interest-bearing deposits$75,952 100.0 %4.2 %$66,787 100.0 %1.7 %
Nine months ended September 30 ($ in millions)20232022
Average
Balance		%Average
Rate		Average
Balance		%Average
Rate
Direct deposits:
Certificates of deposit
(including IRA certificates of deposit)		$32,115 43.2 %3.5 %$21,552 33.5 %1.1 %
Savings, money market, and demand accounts 29,180 39.3 3.9 30,990 48.1 1.0 
Brokered deposits13,045 17.5 3.8 11,829 18.4 1.7 
Total interest-bearing deposits$74,340 100.0 %3.7 %$64,371 100.0 %1.2 %
Our deposit liabilities provide funding with maturities ranging from one day to ten years. At September 30, 2023, the weighted average maturity of our interest-bearing time deposits was 1.0 years. See Note 7. Deposits to our condensed consolidated financial statements for more information on the maturities of our time deposits.
The following table summarizes deposits by contractual maturity at September 30, 2023:
($ in millions)3 Months or
Less		Over
3 Months
but within
6 Months		Over
6 Months
but within
12 Months		Over
12 Months		Total
U.S. deposits (less than FDIC insurance limit)(1)(2)
$31,666 $8,002 $12,944 $10,147 $62,759 
U.S. deposits (in excess of FDIC insurance limit)(2)
Direct deposits:
Certificates of deposit
(including IRA certificates of deposit)		1,279 2,485 3,460 1,637 8,861 
Savings, money market, and demand accounts6,446 — — — 6,446 
Total$39,391 $10,487 $16,404 $11,784 $78,066 
______________________
(1)Includes brokered certificates of deposit for which underlying individual deposit balances are assumed to be less than $250,000.
(2)The standard deposit insurance amount is $250,000 per depositor, for each account ownership category. Deposits in excess of FDIC insurance limit presented above include partially insured accounts. Our estimate of the uninsured portion of these deposit balances at September 30, 2023 was approximately $5.2 billion.
Securitized Financings
We access the asset-backed securitization market using the Synchrony Card Issuance Trust (“SYNIT”) through which we may issue asset-backed securities through both public transactions and private transactions funded by financial institutions and commercial paper conduits. In addition, we issue asset-backed securities in private transactions through the Synchrony Credit Card Master Note Trust (“SYNCT”) and the Synchrony Sales Finance Master Trust (“SFT”).
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The following table summarizes expected contractual maturities of the investors’ interests in securitized financings, excluding debt premiums, discounts and issuance costs at September 30, 2023.
($ in millions)Less Than
One Year		One Year
Through
Three
Years		Four Years
Through
Five
Years		After Five
Years		Total
Scheduled maturities of long-term borrowings—owed to securitization investors:
SYNCT$1,350 $950 $— $— $2,300 
SFT300 1,250 — — 1,550 
SYNIT(1)
— 2,675 — — 2,675 
Total long-term borrowings—owed to securitization investors$1,650 $4,875 $— $— $6,525 
______________________
(1)Excludes any subordinated classes of SYNIT notes that we owned at September 30, 2023.
We retain exposure to the performance of trust assets through: (i) in the case of SYNCT, SFT and SYNIT, subordinated retained interests in the loan receivables transferred to the trust in excess of the principal amount of the notes for a given series that provide credit enhancement for a particular series, as well as a pari passu seller’s interest in each trust and (ii) in the case of SYNIT, any subordinated classes of notes that we own.
All of our securitized financings include early repayment triggers, referred to as early amortization events, including events related to material breaches of representations, warranties or covenants, inability or failure of the Bank to transfer loan receivables to the trusts as required under the securitization documents, failure to make required payments or deposits pursuant to the securitization documents, and certain insolvency-related events with respect to the related securitization depositor, Synchrony (solely with respect to SYNCT) or the Bank. In addition, an early amortization event will occur with respect to a series if the excess spread as it relates to a particular series or for the trust, as applicable, falls below zero. Following an early amortization event, principal collections on the loan receivables in the applicable trust are applied to repay principal of the trust's asset-backed securities rather than being available on a revolving basis to fund the origination activities of our business. The occurrence of an early amortization event also would limit or terminate our ability to issue future series out of the trust in which the early amortization event occurred. No early amortization event has occurred with respect to any of the securitized financings in SYNCT, SFT or SYNIT.
The following table summarizes for each of our trusts the three-month rolling average excess spread at September 30, 2023.
Note Principal Balance
($ in millions)		# of Series
Outstanding
Three-Month Rolling
Average Excess
Spread(1)
SYNCT$2,300 4 ~ 14.6% to 15.3%
SFT$1,550 6 13.0 %
SYNIT$2,675 1 17.7 %
______________________
(1)Represents the excess spread (generally calculated as interest income collected from the applicable pool of loan receivables less applicable net charge-offs, interest expense and servicing costs, divided by the aggregate principal amount of loan receivables in the applicable pool) for SFT or, in the case of SYNCT, a range of the excess spreads relating to the particular series issued within such trust or, in the case of SYNIT, the excess spread relating to the one outstanding series issued within such trust, in all cases omitting any series that have not been outstanding for at least three full monthly periods and calculated in accordance with the applicable trust or series documentation, for the three securitization monthly periods ended September 30, 2023.
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Senior and Subordinated Unsecured Notes
The following table provides a summary of our outstanding fixed rate senior and subordinated unsecured notes at September 30, 2023, which includes $750 million of subordinated unsecured notes issued by Synchrony Financial in February 2023.
Issuance Date
Interest Rate(1)
Maturity
Principal Amount Outstanding(2)
($ in millions)
Fixed rate senior unsecured notes:
Synchrony Financial
August 20144.250%August 20241,250 
July 20154.500%July 20251,000 
August 20163.700%August 2026500 
December 20173.950%December 20271,000 
March 20194.375%March 2024600 
March 20195.150%March 2029650 
October 20212.875%October 2031750 
June 20224.875%June 2025750 
Synchrony Bank
August 20225.400%August 2025900 
August 20225.625%August 2027600 
Fixed rate subordinated unsecured notes:
Synchrony Financial
February 20237.250%February 2033750 
Total fixed rate senior and subordinated unsecured notes$8,750 
______________________
(1)Weighted average interest rate of all senior and subordinated unsecured notes at September 30, 2023 was 4.69%.
(2)The amounts shown exclude unamortized debt discounts, premiums and issuance costs.
Short-Term Borrowings
Except as described above, there were no material short-term borrowings for the periods presented.
Other
At September 30, 2023, we had more than $25.0 billion of unencumbered assets in the Bank available to be used to generate additional liquidity through secured borrowings or asset sales or to be pledged to the Federal Reserve Board for credit at the discount window.
Covenants
The indenture pursuant to which our senior and subordinated unsecured notes have been issued includes various covenants. If we do not satisfy any of these covenants, the maturity of amounts outstanding thereunder may be accelerated and become payable. We were in compliance with all of these covenants at September 30, 2023.
At September 30, 2023, we were not in default under any of our credit facilities.
Credit Ratings
Our borrowing costs and capacity in certain funding markets, including securitizations and senior and subordinated debt, may be affected by the credit ratings of the Company, the Bank and the ratings of our asset-backed securities.
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The table below reflects our current credit ratings and outlooks:
S&PFitch Ratings
Synchrony Financial
Senior unsecured debtBBB-BBB-
Subordinated unsecured debtBB+BB+
Preferred stockBB-B+
Outlook for Synchrony FinancialStablePositive
Synchrony Bank
Senior unsecured debtBBBBBB-
Outlook for Synchrony BankStablePositive
In addition, certain of the asset-backed securities issued by SYNCT and SYNIT are rated by Fitch, S&P and/or Moody’s. A credit rating is not a recommendation to buy, sell or hold securities, may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. Downgrades in these credit ratings could materially increase the cost of our funding from, and restrict our access to, the capital markets.
Liquidity
____________________________________________________________________________________________
We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth, satisfy debt obligations and to meet regulatory expectations under normal and stress conditions.
We maintain policies outlining the overall framework and general principles for managing liquidity risk across our business, which is the responsibility of our Asset and Liability Management Committee, a subcommittee of the Risk Committee of our Board of Directors. We employ a variety of metrics to monitor and manage liquidity. We perform regular liquidity stress testing and contingency planning as part of our liquidity management process. We evaluate a range of stress scenarios including Company specific and systemic events that could impact funding sources and our ability to meet liquidity needs.
We maintain a liquidity portfolio, which at September 30, 2023 had $17.6 billion of liquid assets, primarily consisting of cash and equivalents and short-term obligations of the U.S. Treasury, less cash in transit which is not considered to be liquid, compared to $14.2 billion of liquid assets at December 31, 2022. The increase in liquid assets was primarily due to deposit growth and the issuance of secured and unsecured notes, partially offset by loan receivables growth in the nine months ended September 30, 2023. We believe our liquidity position at September 30, 2023 remains strong as we continue to operate in a period of uncertain economic conditions and we will continue to closely monitor our liquidity as economic conditions change.
As additional sources of liquidity, at September 30, 2023, we had an aggregate of $2.5 billion of undrawn committed capacity on our securitized financings, subject to customary borrowing conditions, from private lenders under our securitization programs and $0.5 billion of undrawn committed capacity under our unsecured revolving credit facility with private lenders, and we had more than $25.0 billion of unencumbered assets in the Bank available to be used to generate additional liquidity through secured borrowings or asset sales or to be pledged to the Federal Reserve Board for credit at the discount window.
As a general matter, investments included in our liquidity portfolio are expected to be highly liquid, giving us the ability to readily convert them to cash. The level and composition of our liquidity portfolio may fluctuate based upon the level of expected maturities of our funding sources as well as operational requirements and market conditions.
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We rely significantly on dividends and other distributions and payments from the Bank for liquidity; however, bank regulations, contractual restrictions and other factors limit the amount of dividends and other distributions and payments that the Bank may pay to us. For a discussion of regulatory restrictions on the Bank’s ability to pay dividends, see “Regulation—Risk Factors Relating to Regulation—We are subject to restrictions that limit our ability to pay dividends and repurchase our common stock; the Bank is subject to restrictions that limit its ability to pay dividends to us, which could limit our ability to pay dividends, repurchase our common stock or make payments on our indebtedness” and “Regulation—Regulation Relating to Our Business—Savings Association Regulation—Dividends and Stock Repurchases” in our 2022 Form 10-K.
Capital
____________________________________________________________________________________________
Our primary sources of capital have been earnings generated by our business and existing equity capital. We seek to manage capital to a level and composition sufficient to support the risks of our business, meet regulatory requirements, adhere to rating agency targets and support future business growth. The level, composition and utilization of capital are influenced by changes in the economic environment, strategic initiatives and legislative and regulatory developments. Within these constraints, we are focused on deploying capital in a manner that will provide attractive returns to our stockholders.
While we have not been subject to the Federal Reserve Board's formal capital plan submission requirements to-date, we submitted a capital plan to the Federal Reserve Board in 2023. While not currently required, our capital plan process does include certain internal stress testing.
In 2023, our average total consolidated assets exceeded $100 billion and we will now become subject to existing enhanced prudential standards following applicable transition periods. We will be subject to the Federal Reserve Board's formal capital plan submission requirements in 2024 and will be required to conduct stress tests beginning in 2026. See “Regulation—Regulation Relating to Our Business—Recent Legislative and Regulatory Developments” in our 2022 Form 10-K for additional information on regulations that are currently applicable to us, as well as these enhanced prudential standards.
Dividend and Share Repurchases
Common Stock Cash Dividends DeclaredMonth of PaymentAmount per Common ShareAmount
($ in millions, except per share data)
Three months ended March 31, 2023
February 2023
$0.23 $100 
Three months ended June 30, 2023
May 2023
0.23 99 
Three months ended September 30, 2023
August 2023
0.25 104 
Total dividends declared$0.71 $303 

Preferred Stock Cash Dividends DeclaredMonth of PaymentAmount per Preferred ShareAmount
($ in millions, except per share data)
Three months ended March 31, 2023
February 2023
$14.06 $11 
Three months ended June 30, 2023
May 2023
14.06 10 
Three months ended September 30, 2023
August 2023
14.06 10 
Total dividends declared$42.18 $31 
The declaration and payment of future dividends to holders of our common and preferred stock will be at the discretion of the Board and will depend on many factors. For a discussion of regulatory and other restrictions on our ability to pay dividends and repurchase stock, see “Regulation—Risk Factors Relating to Regulation—We are subject to restrictions that limit our ability to pay dividends and repurchase our common stock; the Bank is subject to restrictions that limit its ability to pay dividends to us, which could limit our ability to pay dividends, repurchase our common stock or make payments on our indebtedness” in our 2022 Form 10-K.
28

Common Shares Repurchased Under Publicly Announced ProgramsTotal Number of Shares
Purchased		Dollar Value of Shares
Purchased
($ and shares in millions)
Three months ended March 31, 2023
11.3 $400 
Three months ended June 30, 2023
10.5 300 
Three months ended September 30, 2023
4.5 150 
Total 26.3 $850 
In April 2023 the Board of Directors approved an incremental share repurchase program of up to $1.0 billion, through June 30, 2024. Repurchases under this program are subject to market conditions and other factors, including legal and regulatory restrictions and required approvals, if any. During the nine months ended September 30, 2023, we repurchased $850 million of common stock as part of our share repurchase programs, with remaining authorized share repurchase capacity of $850 million through June 2024.
Regulatory Capital Requirements - Synchrony Financial
As a savings and loan holding company, we are required to maintain minimum capital ratios, under the applicable U.S. Basel III capital rules. For more information, see “Regulation—Savings and Loan Holding Company Regulation” in our 2022 Form 10-K.
For Synchrony Financial to be a well-capitalized savings and loan holding company, Synchrony Bank must be well-capitalized and Synchrony Financial must not be subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve Board to meet and maintain a specific capital level for any capital measure. At September 30, 2023, Synchrony Financial met all the requirements to be deemed well-capitalized.
The following table sets forth the composition of our capital ratios for the Company calculated under the Basel III Standardized Approach rules at September 30, 2023 and December 31, 2022, respectively.
Basel III
 At September 30, 2023At December 31, 2022
($ in millions)Amount
Ratio(1)
Amount
Ratio(1)
Total risk-based capital$14,964 15.3 %$13,713 15.0 %
Tier 1 risk-based capital$12,906 13.2 %$12,493 13.6 %
Tier 1 leverage$12,906 11.8 %$12,493 12.3 %
Common equity Tier 1 capital$12,172 12.4 %$11,759 12.8 %
Risk-weighted assets$97,987 $91,596 
______________________
(1)Tier 1 leverage ratio represents total Tier 1 capital as a percentage of total average assets, after certain adjustments. All other ratios presented above represent the applicable capital measure as a percentage of risk-weighted assets.
The Company elected to adopt the option provided by the interim final rule issued by joint federal bank regulatory agencies, which largely delayed the effects of CECL on our regulatory capital. Beginning in the first quarter of 2022, the effects are being phased-in over a three-year transitional period through 2024, collectively the “CECL regulatory capital transition adjustment”. The effects of CECL on our regulatory capital will be fully phased-in beginning in the first quarter of 2025. For more information, see “Capital—Regulatory Capital Requirements - Synchrony Financial” in our 2022 Form 10-K.
Capital amounts and ratios in the above table all reflect the applicable CECL regulatory capital transition adjustment for each period. The decrease in our common equity Tier 1 capital ratio compared to December 31, 2022 was primarily due to an increase in risk-weighted assets during the nine months ended September 30, 2023 and the second year phase-in of the impact of CECL on our regulatory capital, partially offset by the retention of net earnings during the same period and the impact from the adoption of the new accounting standard for TDRs. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies for additional information on the new accounting standard.
29

Regulatory Capital Requirements - Synchrony Bank
At September 30, 2023 and December 31, 2022, the Bank met all applicable requirements to be deemed well-capitalized pursuant to OCC regulations and for purposes of the Federal Deposit Insurance Act. The following table sets forth the composition of the Bank’s capital ratios calculated under the Basel III Standardized Approach rules at September 30, 2023 and December 31, 2022, and also reflects the applicable CECL regulatory capital transition adjustment for each period.
 At September 30, 2023At December 31, 2022Minimum to be Well-Capitalized under Prompt Corrective Action Provisions
($ in millions)AmountRatioAmountRatioRatio
Total risk-based capital$14,401 15.6 %$13,313 15.6 %10.0%
Tier 1 risk-based capital$12,408 13.4 %$12,174 14.2 %8.0%
Tier 1 leverage$12,408 12.1 %$12,174 12.8 %5.0%
Common equity Tier 1 capital$12,408 13.4 %$12,174 14.2 %6.5%
Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a material adverse effect on our business, results of operations and financial condition. See “Regulation—Risk Factors Relating to Regulation—Failure by Synchrony and the Bank to meet applicable capital adequacy and liquidity requirements could have a material adverse effect on us” in our 2022 Form 10-K.
Off-Balance Sheet Arrangements and Unfunded Lending Commitments
____________________________________________________________________________________________
We do not have any material off-balance sheet arrangements, including guarantees of third-party obligations. Guarantees are contracts or indemnification agreements that contingently require us to make a guaranteed payment or perform an obligation to a third-party based on certain trigger events. At September 30, 2023, we had not recorded any contingent liabilities in our Condensed Consolidated Statement of Financial Position related to any guarantees. See Note 5 - Variable Interest Entities to our condensed consolidated financial statements for more information on our investment commitments for unconsolidated variable interest entities (“VIE's”).
We extend credit, primarily arising from agreements with customers for unused lines of credit on our credit cards, in the ordinary course of business. Each unused credit card line is unconditionally cancellable by us. See Note 4 - Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for more information on our unfunded lending commitments.
Critical Accounting Estimates
____________________________________________________________________________________________
In preparing our condensed consolidated financial statements, we have identified certain accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. The critical accounting estimates we have identified relate to allowance for credit losses and fair value measurements. These estimates reflect our best judgment about current, and for some estimates future, economic and market conditions and their effects based on information available as of the date of these financial statements. If these conditions change from those expected, it is reasonably possible that these judgments and estimates could change, which may result in incremental losses on loan receivables, or material changes to our Condensed Consolidated Statement of Financial Position, among other effects. See “Management's Discussion and Analysis—Critical Accounting Estimates” in our 2022 Form 10-K, for a detailed discussion of these critical accounting estimates.

30

Regulation and Supervision
____________________________________________________________________________________________
Our business, including our relationships with our customers, is subject to regulation, supervision and examination under U.S. federal, state and foreign laws and regulations. These laws and regulations cover all aspects of our business, including lending and collection practices, treatment of our customers, safeguarding deposits, customer privacy and information security, capital structure, liquidity, dividends and other capital distributions, transactions with affiliates, and conduct and qualifications of personnel. Such laws and regulations directly and indirectly affect key drivers of our profitability, including, for example, capital and liquidity, product offerings, risk management, and costs of compliance.
As a savings and loan holding company and a financial holding company, Synchrony is subject to regulation, supervision and examination by the Federal Reserve Board. As a large provider of consumer financial services, we are also subject to regulation, supervision and examination by the CFPB.
The Bank is a federally chartered savings association. As such, the Bank is subject to regulation, supervision and examination by the OCC, which is its primary regulator, and by the CFPB. In addition, the Bank, as an insured depository institution, is supervised by the FDIC.
In 2023, our average total consolidated assets exceeded $100 billion and we will now become subject to existing enhanced prudential standards following applicable transition periods. See “Regulation—Regulation Relating to Our Business—Recent Legislative and Regulatory Developments” in our 2022 Form 10-K for additional information on regulations that are currently applicable to us, as well as these enhanced prudential standards. See also “—Capital” above, for discussion of the impact of regulations and supervision on our capital and liquidity, including our ability to pay dividends and repurchase stock.
In July 2023, the federal banking agencies issued a notice of proposed rulemaking that would change the regulatory capital requirements for U.S. banking organizations with at least $100 billion in total assets. We are currently assessing the impact of the proposed rule to our business. However, to the extent the proposed changes are finalized and adopted, they would likely increase our regulatory capital requirements, which may decrease our return on equity and could result in limitations on our ability to pay dividends or repurchase our stock.
Additionally, the federal banking agencies have recently released several proposals intended to facilitate the orderly resolution of large banking organizations. For instance, an August 2023 interagency notice of proposed rulemaking would require depository institution holding companies with $100 billion or more in assets to issue minimum amounts of long-term debt and to maintain “clean” holding companies without certain types of liabilities, and, relatedly, would require insured depository institution subsidiaries with $100 billion or more in assets to issue minimum amounts of long-term debt to a holding company. While we are assessing the impact of the proposed rule to our business, if the proposed changes are finalized and adopted, they may require changes to our funding strategy and/or increase our cost of funding.



31

ITEM 1. FINANCIAL STATEMENTS
Synchrony Financial and subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
____________________________________________________________________________________________
Three months ended September 30,Nine months ended September 30,
($ in millions, except per share data)2023202220232022
Interest income:
Interest and fees on loans (Note 4)$5,151 $4,258 $14,579 $12,305 
Interest on cash and debt securities203 84 582 133 
Total interest income5,354 4,342 15,161 12,438 
Interest expense:
Interest on deposits800 280 2,074 567 
Interest on borrowings of consolidated securitization entities86 54 241 127 
Interest on senior and subordinated unsecured notes106 80 313 225 
Total interest expense992 414 2,628 919 
Net interest income4,362 3,928 12,533 11,519 
Retailer share arrangements(979)(1,057)(2,783)(3,288)
Provision for credit losses (Note 4)1,488 929 4,161 2,174 
Net interest income, after retailer share arrangements and provision for credit losses1,895 1,942 5,589 6,057 
Other income:
Interchange revenue267 238 761 731 
Debt cancellation fees131 103 371 285 
Loyalty programs(358)(326)(1,001)(906)
Other52 29 87 240 
Total other income92 44 218 350 
Other expense:
Employee costs444 416 1,346 1,222 
Professional fees219 204 614 599 
Marketing and business development 125 115 389 366 
Information processing 177 150 522 458 
Other 189 179 571 541 
Total other expense 1,154 1,064 3,442 3,186 
Earnings before provision for income taxes833 922 2,365 3,221 
Provision for income taxes (Note 12)205 219 567 782 
Net earnings$628 $703 $1,798 $2,439 
Net earnings available to common stockholders$618 $692 $1,767 $2,407 
Earnings per share
Basic$1.49 $1.48 $4.16 $4.89 
Diluted$1.48 $1.47 $4.14 $4.86 




See accompanying notes to condensed consolidated financial statements.
32

Synchrony Financial and subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
____________________________________________________________________________________________
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Net earnings$628 $703 $1,798 $2,439 
Other comprehensive income (loss)
Debt securities3 (33)31 (110)
Currency translation adjustments(2)(5)(1)(9)
Employee benefit plans(1)— (1)1 
Other comprehensive income (loss)— (38)29 (118)
Comprehensive income$628 $665 $1,827 $2,321 
Amounts presented net of taxes.







































See accompanying notes to condensed consolidated financial statements.
33

Synchrony Financial and subsidiaries
Condensed Consolidated Statements of Financial Position (Unaudited)
____________________________________________________________________________________________
($ in millions)At September 30, 2023At December 31, 2022
Assets
Cash and equivalents$15,643 $10,294 
Debt securities (Note 3)2,882 4,879 
Loan receivables: (Notes 4 and 5)
Unsecuritized loans held for investment78,470 72,638 
Restricted loans of consolidated securitization entities19,403 19,832 
Total loan receivables97,873 92,470 
Less: Allowance for credit losses(10,176)(9,527)
Loan receivables, net87,697 82,943 
Goodwill 1,105 1,105 
Intangible assets, net (Note 6)1,169 1,287 
Other assets4,443 4,056 
Total assets$112,939 $104,564 
Liabilities and Equity
Deposits: (Note 7)
Interest-bearing deposit accounts$77,669 $71,336 
Non-interest-bearing deposit accounts397 399 
Total deposits78,066 71,735 
Borrowings: (Notes 5 and 8)
Borrowings of consolidated securitization entities6,519 6,227 
Senior and subordinated unsecured notes8,712 7,964 
Total borrowings15,231 14,191 
Accrued expenses and other liabilities5,875 5,765 
Total liabilities$99,172 $91,691 
Equity:
Preferred stock, par share value $0.001 per share; 750,000 shares authorized; 750,000 shares issued and outstanding at both September 30, 2023 and December 31, 2022 and aggregate liquidation preference of $750 at both September 30, 2023 and December 31, 2022
$734 $734 
Common Stock, par share value $0.001 per share; 4,000,000,000 shares authorized; 833,984,684 shares issued at both September 30, 2023 and December 31, 2022; 413,785,325 and 438,216,755 shares outstanding at September 30, 2023 and December 31, 2022, respectively
1 1 
Additional paid-in capital9,750 9,718 
Retained earnings18,338 16,716 
Accumulated other comprehensive income (loss):
Debt securities(62)(93)
Currency translation adjustments(39)(38)
Employee benefit plans5 6 
Treasury stock, at cost; 420,199,359 and 395,767,929 shares at September 30, 2023 and December 31, 2022, respectively
(14,960)(14,171)
Total equity13,767 12,873 
Total liabilities and equity$112,939 $104,564 

See accompanying notes to condensed consolidated financial statements.
34

Synchrony Financial and subsidiaries
Condensed Consolidated Statements of Changes in Equity (Unaudited)
____________________________________________________________________________________________
Preferred StockCommon Stock
($ in millions,
shares in thousands)		Shares IssuedAmountShares IssuedAmountAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Equity
Balance at
January 1, 2022
750 $734 833,985 $1 $9,669 $14,245 $(69)$(10,925)$13,655 
Net earnings— — — — — 932 — — 932 
Other comprehensive income— — — — — — (52)— (52)
Purchases of treasury stock— — — — — — — (968)(968)
Stock-based compensation— — — — (26)(50)— 51 (25)
Dividends - preferred stock
($14.06 per share)
— — — — — (10)— — (10)
Dividends - common stock
($0.22 per share)
— — — — — (114)— — (114)
Balance at
March 31, 2022
750 $734 833,985 $1 $9,643 $15,003 $(121)$(11,842)$13,418 
Net earnings— — — — — 804 — — 804 
Other comprehensive income— — — — — — (28)— (28)
Purchases of treasury stock— — — — — — — (701)(701)
Stock-based compensation— — — — 20 (9)— 8 19 
Dividends - preferred stock
($14.06 per share)
— — — — — (11)— — (11)
Dividends - common stock
($0.22 per share)
— — — — — (108)— — (108)
Balance at
June 30, 2022
750 $734 833,985 $1 $9,663 $15,679 $(149)$(12,535)$13,393 
Net earnings— — — — — 703 — — 703 
Other comprehensive income— — — — — — (38)— (38)
Purchases of treasury stock— — — — — — — (951)(951)
Stock-based compensation— — — — 22 (10)— 13 25 
Dividends - preferred stock
($14.06 per share)
— — — — — (11)— — (11)
Dividends - common stock
($0.23 per share)
— — — — — (109)— — (109)
Balance at
September 30, 2022
750 $734 833,985 $1 $9,685 $16,252 $(187)$(13,473)$13,012 
35

Preferred StockCommon Stock
($ in millions,
shares in thousands)		Shares IssuedAmountShares IssuedAmountAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Equity
Balance at
January 1, 2023
750 $734 833,985 $1 $9,718 $16,716 $(125)$(14,171)$12,873 
Cumulative effect of change in accounting principle222 222 
Adjusted balance, beginning of period750 734 833,985 1 9,718 16,938 (125)(14,171)13,095 
Net earnings— — — 601 — — 601 
Other comprehensive income— — — — — — 23 23 
Purchases of treasury stock— — — — — — (404)(404)
Stock-based compensation— — — — (13)(59)61 (11)
Dividends - preferred stock
($14.06 per share)
(11)(11)
Dividends - common stock
($0.23 per share)
— — — — — (100)— — (100)
Balance at
March 31, 2023
750 $734 833,985 $1 $9,705 $17,369 $(102)$(14,514)$13,193 
Net earnings— — — — — 569 — — 569 
Other comprehensive income— — — — — — 6 — 6 
Purchases of treasury stock— — — — — — — (303)(303)
Stock-based compensation— — — — 22 (1)— 3 24 
Dividends - preferred stock
($14.06 per share)
— — — — — (10)— — (10)
Dividends - common stock
($0.23 per share)
— — — — — (99)— — (99)
Balance at
June 30, 2023
750 $734 833,985 $1 $9,727 $17,828 $(96)$(14,814)$13,380 
Net earnings— — — — — 628 — — 628 
Other comprehensive income— — — — — — — — — 
Purchases of treasury stock— — — — — — — (152)(152)
Stock-based compensation— — — — 23 (4)— 6 25 
Dividends - preferred stock
($14.06 per share)
— — — — — (10)— — (10)
Dividends - common stock
($0.25 per share)
— — — — — (104)— — (104)
Balance at September 30, 2023
750 $734 833,985 $1 $9,750 $18,338 $(96)$(14,960)$13,767 






See accompanying notes to condensed consolidated financial statements.
36

Synchrony Financial and subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
____________________________________________________________________________________________
Nine months ended September 30,
($ in millions)
20232022
Cash flows - operating activities
Net earnings$1,798 $2,439 
Adjustments to reconcile net earnings to cash provided from operating activities
Provision for credit losses4,161 2,174 
Deferred income taxes(271)(185)
Depreciation and amortization340 318 
(Increase) decrease in interest and fees receivable(323)74 
(Increase) decrease in other assets37 (26)
Increase (decrease) in accrued expenses and other liabilities(7)(322)
All other operating activities541 375 
Cash provided from (used for) operating activities6,276 4,847 
Cash flows - investing activities
Maturity and sales of debt securities3,882 3,659 
Purchases of debt securities(1,642)(3,624)
Proceeds from sale of loan receivables— 3,930 
Net (increase) decrease in loan receivables, including held for sale(8,797)(6,999)
All other investing activities (508)(342)
Cash provided from (used for) investing activities(7,065)(3,376)
Cash flows - financing activities
Borrowings of consolidated securitization entities
Proceeds from issuance of securitized debt1,547 1,670 
Maturities and repayment of securitized debt(1,257)(2,600)
Senior and subordinated unsecured notes
Proceeds from issuance of senior and subordinated unsecured notes740 2,235 
Maturities and repayment of senior and subordinated unsecured notes— (1,500)
Dividends paid on preferred stock(31)(32)
Net increase (decrease) in deposits6,354 6,125 
Purchases of treasury stock(859)(2,619)
Dividends paid on common stock(303)(331)
All other financing activities(32)(44)
Cash provided from (used for) financing activities6,159 2,904 
Increase (decrease) in cash and equivalents, including restricted amounts5,370 4,375 
Cash and equivalents, including restricted amounts, at beginning of period10,430 8,686 
Cash and equivalents at end of period:
Cash and equivalents15,643 11,962 
Restricted cash and equivalents included in other assets157 1,099 
Total cash and equivalents, including restricted amounts, at end of period$15,800 $13,061 

See accompanying notes to condensed consolidated financial statements.
37

Synchrony Financial and subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
____________________________________________________________________________________________
NOTE 1.    BUSINESS DESCRIPTION
Synchrony Financial (the “Company”) provides a range of credit products through financing programs it has established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. We primarily offer private label, Dual Card, co-brand and general purpose credit cards, as well as short- and long-term installment loans, and savings products insured by the Federal Deposit Insurance Corporation (“FDIC”) through Synchrony Bank (the “Bank”).
References to the “Company”, “we”, “us” and “our” are to Synchrony Financial and its consolidated subsidiaries unless the context otherwise requires.
NOTE 2.    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).
Preparing financial statements in conformity with U.S. GAAP requires us to make estimates based on assumptions about current, and for some estimates, future, economic and market conditions (for example, unemployment, housing, interest rates and market liquidity) which affect reported amounts and related disclosures in our condensed consolidated financial statements. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could be different than anticipated in those estimates, which could materially affect our results of operations and financial position. Among other effects, such changes could result in incremental losses on loan receivables, future impairments of debt securities, goodwill and intangible assets, increases in reserves for contingencies, establishment of valuation allowances on deferred tax assets and increases in our tax liabilities.
We primarily conduct our business within the United States and Canada and substantially all of our revenues are from U.S. customers. The operating activities conducted by our non-U.S. affiliates use the local currency as their functional currency. The effects of translating the financial statements of these non-U.S. affiliates to U.S. dollars are included in equity. Asset and liability accounts are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the respective periods.
Consolidated Basis of Presentation
The Company’s financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries – i.e., entities in which we have a controlling financial interest, most often because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model. We consolidate certain securitization entities under the VIE model. See Note 5. Variable Interest Entities.
Interim Period Presentation
The condensed consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these condensed consolidated financial statements should not be considered as necessarily indicative of results that may be expected for the entire year. These condensed consolidated financial statements should be read in conjunction with our 2022 annual consolidated financial statements and the related notes in our Annual Report on Form 10-K for the year ended December 31, 2022 (our "2022 Form 10-K").
38

New Accounting Standards
Newly Adopted Accounting Standards
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the separate recognition and measurement guidance for Troubled Debt Restructurings ("TDRs") by creditors. The elimination of the TDR guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses.
The Company adopted this guidance as of January 1, 2023, on a modified retrospective basis, which resulted in the recognition of the effects of adoption through a cumulative-effect adjustment to retained earnings. As a result of adoption, we incurred a reduction of $294 million to the Company's allowance for credit losses, and a corresponding increase, net of tax effect, to retained earnings of $222 million. Subsequent updates to our estimate of expected credit losses have been recorded through the provision for credit losses in our Condensed Consolidated Statement of Earnings.
Allowance for Credit Losses
Following the adoption of ASU 2022-02 on January 1, 2023 discussed above, we have made the following changes prospectively to our significant accounting policies.
We no longer separately measure our allowance for credit losses on TDRs, and we incorporate the impact of loan modifications made to borrowers experiencing financial difficulties into our overall assessment of portfolio loss content and estimate of expected credit losses. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our 2022 annual consolidated financial statements in our 2022 Form 10-K, for additional information on the methodology used to estimate expected credit losses.
Loan Modifications and Restructurings
Our loss mitigation strategy is intended to minimize economic loss and, at times, can result in rate reductions, principal forgiveness, extensions or other actions, for borrowers experiencing financial difficulty. We primarily use long-term modification programs for borrowers experiencing financial difficulty as a loss mitigation strategy to improve long-term collectability of the loans. The long-term modification programs include changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months, reducing the interest rate on the loan, and stopping the assessment of penalty fees. We also make long-term loan modifications for customers who request financial assistance through external sources, such as through consumer credit counseling service agencies. Long-term loan modification programs do not normally include the forgiveness of unpaid principal, interest or fees. We may also provide certain borrowers with a short-term loan modification program (generally up to 3 months) that can include the forgiveness of unpaid principal balance, interest and/or fees. The evaluation of whether a borrower is experiencing financial difficulty includes our consideration of all relevant facts and circumstances. See Note 4. Loan Receivables and Allowance for Credit Losses for additional information on our loan modifications and restructurings.
Once the loan has been modified, it only returns to current status (re-aged) after three consecutive monthly program payments are received post the modification date, subject to re-aging limitations in the Federal Financial Institutions Examination Council guidelines on Uniform Retail Credit Classification and Account Management policy issued in June 2000.
See Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our 2022 annual consolidated financial statements in our 2022 Form 10-K, for additional information on our applicable significant accounting policies in effect prior to the adoption of ASU 2022-02.

39

NOTE 3.    DEBT SECURITIES
All of our debt securities are classified as available-for-sale and are held to meet our liquidity objectives or to comply with the Community Reinvestment Act (“CRA”). Our debt securities consist of the following:
September 30, 2023December 31, 2022
GrossGrossGrossGross
AmortizedunrealizedunrealizedEstimatedAmortizedunrealizedunrealizedEstimated
 ($ in millions)costgainslossesfair valuecostgainslossesfair value
U.S. government and federal agency$1,445 $— $(9)$1,436 $3,917 $— $(53)$3,864 
State and municipal10 — (1)9 10 — — 10 
Residential mortgage-backed(a)
411 — (57)354 467 — (49)418 
Asset-backed(b)
1,090 — (15)1,075 599 — (19)580 
Other8 — 8 8 — (1)7 
Total$2,964 $— $(82)$2,882 $5,001 $— $(122)$4,879 
_______________________
(a)    All of our residential mortgage-backed securities have been issued by government-sponsored entities and are collateralized by U.S. mortgages. At September 30, 2023 and December 31, 2022, $86 million and $100 million of residential mortgage-backed securities, respectively, were pledged by the Bank as collateral to the Federal Reserve to secure Federal Reserve Discount Window advances.
(b)    Our asset-backed securities are collateralized by credit card and auto loans.
The following table presents the estimated fair values and gross unrealized losses of our available-for-sale debt securities:
In loss position for
Less than 12 months12 months or more
GrossGross
EstimatedunrealizedEstimatedunrealized
 ($ in millions)fair valuelossesfair valuelosses
At September 30, 2023
U.S. government and federal agency$544 $— $892 $(9)
State and municipal— — 9 (1)
Residential mortgage-backed8 — 347 (57)
Asset-backed783 (3)245 (12)
Other— — 8 — 
Total$1,335 $(3)$1,501 $(79)
At December 31, 2022
U.S. government and federal agency$3,032 $(30)$638 $(23)
State and municipal5 — 5 — 
Residential mortgage-backed316 (31)101 (18)
Asset-backed230 — 348 (19)
Other7 (1)— — 
Total$3,590 $(62)$1,092 $(60)
We regularly review debt securities for impairment resulting from credit loss using both qualitative and quantitative criteria, as necessary based on the composition of the portfolio at period end. Based on our assessment, no material impairments for credit losses were recognized during the period.
We presently do not intend to sell our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we will be required to sell these securities before recovery of our amortized cost.
40

Contractual Maturities of Investments in Available-for-Sale Debt Securities
AmortizedEstimated Weighted
At September 30, 2023 ($ in millions)costfair value
Average yield (a)
Due
Within one year$1,736 $1,721 2.7 %
After one year through five years$835 $824 4.7 %
After five years through ten years$190 $170 1.8 %
After ten years$203 $167 2.0 %
_____________________
(a)Weighted average yield is calculated based on the amortized cost of each security. In calculating yield, no adjustment has been made with respect to any tax-exempt obligations.
All securities are presented above based upon contractual maturity date, except our asset-backed securities which are allocated based upon expected final payment date. We expect actual maturities to differ from contractual maturities because borrowers have the right to prepay certain obligations.
There were no material realized gains or losses recognized for the nine months ended September 30, 2023 and 2022.
Although we generally do not have the intent to sell any specific securities held at September 30, 2023, in the ordinary course of managing our debt securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield, liquidity requirements and funding obligations.
NOTE 4.    LOAN RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
($ in millions)September 30, 2023December 31, 2022
Credit cards$92,078 $87,630 
Consumer installment loans3,784 3,056 
Commercial credit products1,879 1,682 
Other 132 102 
Total loan receivables, before allowance for credit losses(a)(b)
$97,873 $92,470 
_______________________
(a)Total loan receivables include $19.4 billion and $19.8 billion of restricted loans of consolidated securitization entities at September 30, 2023 and December 31, 2022, respectively. See Note 5. Variable Interest Entities for further information on these restricted loans.
(b)At September 30, 2023 and December 31, 2022, loan receivables included deferred costs, net of deferred income, of $201 million and $237 million, respectively.
Allowance for Credit Losses(a)(b)
 ($ in millions)Balance at July 1, 2023Provision charged to operationsGross charge-offsRecoveriesBalance at
September 30, 2023
Credit cards$9,464 $1,357 $(1,265)$225 $9,781 
Consumer installment loans221 92 (59)10 264 
Commercial credit products112 38 (28)2 124 
Other7 1 (1)— 7 
Total$9,804 $1,488 $(1,353)$237 $10,176 
41

($ in millions)Balance at July 1, 2022Provision charged to operationsGross charge-offsRecoveriesBalance at
September 30, 2022
Credit cards$8,605 $864 $(785)$189 $8,873 
Consumer installment loans129 38 (25)4 146 
Commercial credit products71 26 (19)2 80 
Other3 1 (1)— 3 
Total$8,808 $929 $(830)$195 $9,102 
 ($ in millions)Balance at January 1, 2023Impact of ASU 2022-02 AdoptionPost-Adoption Balance at January 1, 2023Provision charged to operationsGross charge-offsRecoveriesBalance at September 30, 2023
Credit cards$9,225 $(294)$8,931 $3,853 $(3,697)$694 $9,781 
Consumer installment loans208 1 209 182 (148)21 264 
Commercial credit products87 (1)85 126 (93)6 124 
Other7 — 8 — (1)— 7 
Total$9,527 $(294)$9,233 $4,161 $(3,939)$721 $10,176 
($ in millions)Balance at January 1, 2022Provision charged to operationsGross charge-offsRecoveriesBalance at
September 30, 2022
Credit cards$8,512 $2,028 $(2,273)$606 $8,873 
Consumer installment loans115 80 (63)14 146 
Commercial credit products59 64 (48)5 80 
Other2 2 (1)— 3 
Total$8,688 $2,174 $(2,385)$625 $9,102 
_______________________
(a)The allowance for credit losses at September 30, 2023 and 2022 reflects our estimate of expected credit losses for the life of the loan receivables on our Condensed Consolidated Statements of Financial Position at September 30, 2023 and 2022 which include the consideration of current and expected macroeconomic conditions that existed at those dates.
(b)Comparative information is presented in accordance with the applicable accounting standards in effect prior to the adoption of ASU 2022-02.
The reasonable and supportable forecast period used in our estimate of credit losses at September 30, 2023 was 12 months, consistent with the forecast period utilized since the adoption of CECL. Beyond the reasonable and supportable forecast period, we revert to historical loss information at the loan receivables segment level over a 6-month period, gradually increasing the weight of historical losses by an equal amount each month during the reversion period, and utilize historical loss information thereafter for the remaining life of the portfolio. The reversion period and methodology remain unchanged since the adoption of CECL.
Losses on loan receivables, including those which are modified for borrowers experiencing financial difficulty, are estimated and recognized upon origination of the loan, based on expected credit losses for the life of the loan balance at September 30, 2023. Expected credit loss estimates are developed using both quantitative models and qualitative adjustments, and incorporates a macroeconomic forecast, as described within the 2022 Form 10-K. The current and forecasted economic conditions at the balance sheet date influenced our current estimate of expected credit losses, which reflects our expectations of the macroeconomic environment. We continue to experience a decrease in payment rates and an increase in delinquencies and net charge-offs during the nine months ended September 30, 2023. We expect net charge-offs to continue to increase. These conditions are reflected in our current estimate of expected credit losses, which remain generally consistent with the prior quarter. Our allowance for credit losses increased to $10.2 billion during the nine months ended September 30, 2023, primarily due to growth in loan receivables, partially offset by the reserve reduction associated with the adoption of ASU 2022-02. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies for additional information on our significant accounting policies related to our allowance for credit losses.
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Delinquent and Non-accrual Loans
The following table provides information on our delinquent and non-accrual loans:
At September 30, 2023 ($ in millions)30-89 days delinquent90 or more days delinquentTotal past due90 or more days delinquent and accruingTotal non-accruing
Credit cards$2,159 $1,957 $4,116 $1,957 $— 
Consumer installment loans80 21 101 — 21 
Commercial credit products45 42 87 42 — 
Total delinquent loans$2,284 $2,020 $4,304 $1,999 $21 
Percentage of total loan receivables2.3 %2.1 %4.4 %2.0 %— %
At December 31, 2022 ($ in millions)30-89 days delinquent90 or more days delinquentTotal past due90 or more days delinquent and accruingTotal non-accruing
Credit cards$1,710 $1,516 $3,226 $1,516 $— 
Consumer installment loans61 14 75 — 14 
Commercial credit products44 32 76 32 — 
Total delinquent loans$1,815 $1,562 $3,377 $1,548 $14 
Percentage of total loan receivables2.0 %1.7 %3.7 %1.7 %— %
Consumer Installment Loans by Origination Year
By origination year
At or for the nine months ended
September 30, 2023 ($ in millions)		20232022202120202019PriorTotal
Amortized cost basis$1,664 $1,034 $611 $357 $82 $36 $3,784 
30-89 days delinquent33 22 14 8 2 1 80 
90 or more days delinquent10 6 3 2 — — 21 
Current period gross charge-offs29 66 32 15 4 2 148 
By origination year
At December 31, 2022 ($ in millions)20222021202020192018PriorTotal
Amortized cost basis$1,441 $868 $535 $135 $58 $19 $3,056 
30-89 days delinquent26 18 12 3 1 1 61 
90 or more days delinquent6 5 2 1 — — 14 
Delinquency trends are the primary credit quality indicator for our consumer installment loans, which we use to monitor credit quality and risk within the portfolio.

43

Loan Modifications to Borrowers Experiencing Financial Difficulty
We use certain loan modification programs for borrowers experiencing financial difficulties. We primarily use long-term modification programs for borrowers experiencing financial difficulty as a loss mitigation strategy to improve long-term collectability of the loans. The long-term programs involve changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months, reducing the interest rate on the loan, and stopping the assessment of penalty fees. We also make long-term loan modifications for customers who request financial assistance through external sources, such as through consumer credit counseling service agencies. Long-term loan modification programs do not normally include the forgiveness of unpaid principal, interest or fees. We may also provide certain borrowers with a short-term loan modification program (generally up to 3 months) that can include the forgiveness of unpaid principal balance, interest and/or fees. We generally do not convert revolving loans to term loans, outside of loan modification programs for borrowers experiencing financial difficulties.
Three and nine months ended September 30, 2023
The Company adopted ASU 2022-02 as of January 1, 2023 on a modified retrospective basis through a cumulative adjustment to retained earnings. The new guidance is applicable for all loans modified to borrowers experiencing financial difficulties as of the beginning of 2023. The following table provides information on our loan modifications to borrowers experiencing financial difficulty during the period presented, which do not include loans that are classified as loan receivables held for sale:
Three months ended September 30, 2023Nine months ended September 30, 2023
($ in millions)Amount
% of Loan Receivables
Amount
% of Loan Receivables
Long-term modifications
Credit cards$412 0.4 %$1,134 1.2 %
Consumer installment loans— — %— — %
Commercial credit products1 0.1 %4 0.2 %
Short-term modifications
Credit cards163 0.2 %440 0.5 %
Consumer installment loans— — %— — %
Commercial credit products— — %— — %
Total$576 0.6 %$1,578 1.6 %
Financial Effects of Loan Modifications to Borrowers Experiencing Financial Difficulty
As part of our loan modifications to borrowers experiencing financial difficulty, we may provide multiple concessions to minimize our economic loss and improve long-term loan performance and collectability. For long-term modifications made in the three and nine months ended September 30, 2023, the financial effect of these modifications reduced the weighted-average interest rates by 97% for both periods, respectively. For short-term modifications made in the three and nine months ended September 30, 2023, unpaid balances of $10 million and $123 million, respectively, were forgiven.

44

Performance of Loans Modified to Borrowers Experiencing Financial Difficulty
The following table provides information on the performance of loans modified to borrowers experiencing financial difficulty which have been modified subsequent to January 1, 2023 and remain in a modification program at September 30, 2023:
Amortized cost basis
At September 30, 2023 ($ in millions)Current30-89 days delinquent90 or more days delinquent
Total past due(a)
Long-term modifications
Credit cards$655 $150 $118 $268 
Consumer installment loans— — — — 
Commercial credit products2 1 1 2 
Short-term modifications
Credit cards40 28 39 67 
Consumer installment loans— — — — 
Commercial credit products— — — — 
Total delinquent modified loans$697 $179 $158 $337 
Percentage of total loan receivables0.7 %0.2 %0.1 %0.3 %
___________________
(a)    Once a loan has been modified, it only returns to current status (re-aged) after three consecutive monthly program payments are received post the modification date.
Payment Defaults
The following table presents the type, number and amount of loans to borrowers experiencing financial difficulty that enrolled in a long-term modification program between January 1, 2023 and September 30, 2023 and experienced a payment default and charged-off during the period presented:
Three months ended September 30, 2023Nine months ended September 30, 2023
($ in millions, accounts in thousands)Accounts defaultedLoans defaultedAccounts defaultedLoans defaulted
Credit cards31 $77 51 $122 
Consumer installment loans— — — — 
Commercial credit products— 1 — 1 
Total31 $78 51 $123 
Of the loans modified to borrowers experiencing financial difficulty that enrolled in a short-term modification program between January 1, 2023 and September 30, 2023, 50% have fully completed all required payments and successfully exited the program during the nine months ended September 30, 2023.
45

Three and nine months ended September 30, 2022
Troubled Debt Restructurings
Under our modified retrospective adoption of ASU 2022-02, the following information on loan modifications for periods prior to January 1, 2023 are presented in accordance with the applicable accounting standards in effect at that time. The following table provides information on our TDR loan modifications during the prior year period presented:
Three months ended September 30,Nine months ended September 30,
($ in millions)20222022
Credit cards$265 $681 
Consumer installment loans— — 
Commercial credit products1 2 
Total$266 $683 
Prior to January 1, 2023, our allowance for credit losses on TDRs was generally measured based on the difference between the recorded loan receivable and the present value of the expected future cash flows, discounted at the original effective interest rate of the loan. Interest income from loans accounted for as TDRs was accounted for in the same manner as other accruing loans.
The following table provides information about loans classified as TDRs and specific reserves at December 31, 2022. We do not evaluate credit card loans on an individual basis but instead estimate an allowance for credit losses on a collective basis.
At December 31, 2022 ($ in millions)Total recorded
investment		Related allowanceNet recorded investmentUnpaid principal balance
Credit cards$1,355 $(600)$755 $1,206 
Consumer installment loans— — — — 
Commercial credit products4 (2)2 4 
Total$1,359 $(602)$757 $1,210 
Financial Effects of TDRs
The following table presents the types and financial effects of loans modified and accounted for as TDRs during the prior year period presented:
Three months ended September 30,Nine months ended September 30,
20222022
($ in millions)Interest income recognized during period when loans were modifiedInterest income that would have been recorded with original termsAverage recorded investmentInterest income recognized during period when loans were modifiedInterest income that would have been recorded with original termsAverage recorded investment
Credit cards$9 $80 $1,218 $26 $234 $1,201 
Consumer installment loans— — — — — — 
Commercial credit products— 1 4 — 1 3 
Total$9 $81 $1,222 $26 $235 $1,204 
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Payment Defaults
The following table presents the type, number and amount of loans accounted for as TDRs that enrolled in a modification program within the previous 12 months from September 30, 2022 and experienced a payment default and charged-off during the prior year period presented:
Three months ended September 30,Nine months ended September 30,
20222022
($ in millions, accounts in thousands)Accounts defaultedLoans defaultedAccounts defaultedLoans defaulted
Credit cards25 $56 52 $116 
Consumer installment loans— — — — 
Commercial credit products— — — 1 
Total25 $56 52 $117 

Credit Quality Indicators
Our loan receivables portfolio includes both secured and unsecured loans. Secured loan receivables are largely comprised of consumer installment loans secured by equipment. Unsecured loan receivables are largely comprised of our open-ended consumer and commercial revolving credit card loans. As part of our credit risk management activities, on an ongoing basis, we assess overall credit quality by reviewing information related to the performance of a customer’s account with us, including delinquency information, as well as information from credit bureaus relating to the customer’s broader credit performance. We utilize VantageScore credit scores to assist in our assessment of credit quality. VantageScore credit scores are obtained at origination of the account and are refreshed, at a minimum quarterly, but could be as often as weekly, to assist in predicting customer behavior. We categorize these credit scores into the following three credit score categories: (i) 651 or higher, which are considered the strongest credits; (ii) 591 to 650, considered moderate credit risk; and (iii) 590 or less, which are considered weaker credits. There are certain customer accounts for which a VantageScore score is not available where we use alternative sources to assess their credit and predict behavior. The following table provides the most recent VantageScore scores available for our customers at September 30, 2023, December 31, 2022 and September 30, 2022, respectively, as a percentage of each class of loan receivable. The table below excludes 0.3%, 0.4% and 0.4% of our total loan receivables balance at each of September 30, 2023, December 31, 2022 and September 30, 2022, respectively, which represents those customer accounts for which a VantageScore score is not available.
September 30, 2023December 31, 2022September 30, 2022
651 or591 to590 or651 or591 to590 or651 or591 to590 or
higher650 lesshigher650 lesshigher650 less
Credit cards73 %19 %8 %74 %19 %7 %75 %18 %7 %
Consumer installment loans76 %17 %7 %77 %17 %6 %77 %17 %6 %
Commercial credit products 86 %7 %7 %88 %6 %6 %90 %6 %4 %
Unfunded Lending Commitments
We manage the potential risk in credit commitments by limiting the total amount of credit, both by individual customer and in total, by monitoring the size and maturity of our portfolios and by applying the same credit standards for all of our credit products. Unused credit card lines available to our customers totaled approximately $426 billion and $417 billion at September 30, 2023 and December 31, 2022, respectively. While these amounts represented the total available unused credit card lines, we have not experienced and do not anticipate that all of our customers will access their entire available line at any given point in time.
47

Interest Income by Product
The following table provides additional information about our interest and fees on loans, including merchant discounts, from our loan receivables, including held for sale:
Three months ended September 30,Nine months ended September 30,
($ in millions)2023202220232022
Credit cards(a)
$5,003 $4,153 $14,179 $12,009 
Consumer installment loans108 74 285 209 
Commercial credit products38 30 108 83 
Other2 1 7 4 
Total(b)
$5,151 $4,258 $14,579 $12,305 
_______________________
(a)Interest income on credit cards that was reversed related to accrued interest receivables written off was $422 million and $265 million for the three months ended September 30, 2023 and 2022, respectively, and $1.3 billion and $770 million for the nine months ended September 30, 2023 and 2022, respectively.
(b)Deferred merchant discounts to be recognized in interest income at September 30, 2023 and December 31, 2022, were $1.9 billion and $1.7 billion, respectively, which are included in Accrued expenses and other liabilities in our Condensed Consolidated Statement of Financial Position.
NOTE 5.    VARIABLE INTEREST ENTITIES
We use VIEs to securitize loan receivables and arrange asset-backed financing in the ordinary course of business. Investors in these entities only have recourse to the assets owned by the entity and not to our general credit. We do not have implicit support arrangements with any VIE and we did not provide non-contractual support for previously transferred loan receivables to any of these VIEs in the three and nine months ended September 30, 2023 and 2022. Our VIEs are able to accept new loan receivables and arrange new asset-backed financings, consistent with the requirements and limitations on such activities placed on the VIE by existing investors. Once an account has been designated to a VIE, the contractual arrangements we have require all existing and future loan receivables originated under such account to be transferred to the VIE. The amount of loan receivables held by our VIEs in excess of the minimum amount required under the asset-backed financing arrangements with investors may be removed by us under removal of accounts provisions. All loan receivables held by a VIE are subject to claims of third-party investors.
In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.
In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to a VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings or losses, subordination of our interests relative to those of other investors, as well as any other contractual arrangements that might exist that could have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.
We consolidate VIEs where we have the power to direct the activities that significantly affect the VIEs' economic performance, typically because of our role as either servicer or administrator for the VIEs. The power to direct exists because of our role in the design and conduct of the servicing of the VIEs’ assets as well as directing certain affairs of the VIEs, including determining whether and on what terms debt of the VIEs will be issued.
48

The loan receivables in these entities have risks and characteristics similar to our other financing receivables and were underwritten to the same standard. Accordingly, the performance of these assets has been similar to our other comparable loan receivables, and the blended performance of the pools of receivables in these entities reflects the eligibility criteria that we apply to determine which receivables are selected for transfer. Contractually, the cash flows from these financing receivables must first be used to pay third-party debt holders, as well as other expenses of the entity. Excess cash flows, if any, are available to us. The creditors of these entities have no claim on our other assets.
The table below summarizes the assets and liabilities of our consolidated securitization VIEs described above:
($ in millions)September 30, 2023December 31, 2022
Assets  
Loan receivables, net(a)
$17,610  $18,015 
Other assets(b)
63  61 
Total$17,673  $18,076 
  
Liabilities 
Borrowings$6,519  $6,227 
Other liabilities26  23 
Total$6,545  $6,250 
_______________________
(a)    Includes $1.8 billion and $1.8 billion of related allowance for credit losses resulting in gross restricted loans of $19.4 billion and $19.8 billion at September 30, 2023 and December 31, 2022, respectively.
(b)    Includes $60 million and $56 million of segregated funds held by the VIEs at September 30, 2023 and December 31, 2022, respectively, which are classified as restricted cash and equivalents and included as a component of other assets in our Condensed Consolidated Statements of Financial Position.
The balances presented above are net of intercompany balances and transactions that are eliminated in our condensed consolidated financial statements.
We provide servicing for all of our consolidated VIEs. Collections are required to be placed into segregated accounts owned by each VIE in amounts that meet contractually specified minimum levels. These segregated funds are invested in cash and cash equivalents and are restricted as to their use, principally to pay maturing principal and interest on debt and the related servicing fees. Collections above these minimum levels are remitted to us on a daily basis.
Income (principally, interest and fees on loans) earned by our consolidated VIEs was $1.0 billion and $896 million for the three months ended September 30, 2023 and 2022, respectively. Related expenses consisted primarily of provision for credit losses of $189 million and $23 million for the three months ended September 30, 2023 and 2022, respectively, and interest expense of $86 million and $54 million for the three months ended September 30, 2023 and 2022, respectively.
Income (principally, interest and fees on loans) earned by our consolidated VIEs was $2.9 billion and $2.7 billion for the nine months ended September 30, 2023 and 2022, respectively. Related expenses consisted primarily of provision for credit losses of $553 million and $151 million for the nine months ended September 30, 2023 and 2022, respectively, and interest expense of $241 million and $127 million for the nine months ended September 30, 2023 and 2022, respectively. These amounts do not include intercompany transactions, principally fees and interest, which are eliminated in our condensed consolidated financial statements.
49

Non-consolidated VIEs
As part of our community reinvestment initiatives, we invest in affordable housing properties and receive affordable housing tax credits for these investments. These investments included in our Condensed Consolidated Statement of Financial Position totaled $721 million and $557 million at September 30, 2023 and December 31, 2022, respectively, and represents our total exposure for these entities. Additionally, we have other investments in non-consolidated VIEs which totaled $252 million and $230 million at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023, the Company also had investment commitments of $186 million related to these investments.
NOTE 6.    INTANGIBLE ASSETS
September 30, 2023December 31, 2022
($ in millions)Gross carrying amountAccumulated amortizationNetGross carrying amountAccumulated amortizationNet
Customer-related$1,751 $(1,204)$547 $1,725 $(1,113)$612 
Capitalized software and other1,876 (1,254)622 1,721 (1,046)675 
Total$3,627 $(2,458)$1,169 $3,446 $(2,159)$1,287 
During the nine months ended September 30, 2023, we recorded additions to intangible assets subject to amortization of $182 million, primarily related to capitalized software expenditures, as well as customer-related intangible assets.
Customer-related intangible assets primarily relate to retail partner contract acquisitions and extensions, as well as purchased credit card relationships. During the nine months ended September 30, 2023 and 2022, we recorded additions to customer-related intangible assets subject to amortization of $26 million and $55 million, respectively, primarily related to payments made to acquire and extend certain retail partner relationships. These additions had a weighted average amortizable life of 7 years and 6 years for the nine months ended September 30, 2023 and 2022, respectively.
Amortization expense related to retail partner contracts was $28 million and $26 million for the three months ended September 30, 2023 and 2022, respectively, and $82 million and $86 million for the nine months ended September 30, 2023 and 2022, respectively, and is included as a component of marketing and business development expense in our Condensed Consolidated Statements of Earnings. All other amortization expense was $74 million and $64 million for the three months ended September 30, 2023 and 2022, respectively, and $217 million and $189 million for the nine months ended September 30, 2023 and 2022, respectively, and is included as a component of other expense in our Condensed Consolidated Statements of Earnings.

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NOTE 7.    DEPOSITS
September 30, 2023December 31, 2022
($ in millions)Amount
Average rate(a)
Amount
Average rate(a)
Interest-bearing deposits$77,669 3.7 %$71,336 1.5 %
Non-interest-bearing deposits397 — 399 — 
Total deposits$78,066 $71,735 
____________________
(a)Based on interest expense for the nine months ended September 30, 2023 and the year ended December 31, 2022 and average deposits balances.
At September 30, 2023 and December 31, 2022, interest-bearing deposits included $8.9 billion and $7.2 billion, respectively, of certificates of deposit that exceeded applicable FDIC insurance limits, which are generally $250,000 per depositor for each account ownership category.
At September 30, 2023, our interest-bearing time deposits maturing for the remainder of 2023 and over the next four years and thereafter were as follows:
($ in millions)20232024202520262027Thereafter
Deposits$6,087 $28,709 $4,683 $1,475 $2,546 $1,261 
The above maturity table excludes $29.0 billion of demand deposits with no defined maturity, of which $27.2 billion are savings accounts. In addition, at September 30, 2023, we had $3.9 billion of broker network deposit sweeps procured through a program arranger who channels brokerage account deposits to us that are also excluded from the above maturity table. Unless extended, the contracts associated with these broker network deposit sweeps will terminate between 2025 and 2026.
51

NOTE 8.    BORROWINGS
September 30, 2023December 31, 2022
($ in millions)Maturity dateInterest RateWeighted average interest rate
Outstanding Amount(a)(b)
Outstanding Amount(a)(b)
Borrowings of consolidated securitization entities:
Fixed securitized borrowings2025 - 2026
3.37% - 5.54%
4.30 %$2,669 $2,377 
Floating securitized borrowings2024 - 2026
6.07% - 6.45%
6.20 %3,850 3,850 
Total borrowings of consolidated securitization entities5.42 %6,519 6,227 
Senior unsecured notes:
Synchrony Financial senior unsecured notes:
Fixed senior unsecured notes2024 - 2031
2.87% - 5.15%
4.22 %6,478 6,473 
Synchrony Bank senior unsecured notes:
Fixed senior unsecured notes2025 - 2027
5.40% - 5.63%
5.49 %1,493 1,491 
Total senior unsecured notes4.45 %7,971 7,964 
Subordinated unsecured notes:
Synchrony Financial subordinated unsecured notes:
Fixed subordinated unsecured notes2033
7.25%
7.25 %741 — 
Total senior and subordinated unsecured notes4.69 %8,712 7,964 
Total borrowings$15,231 $14,191 
___________________
(a)Includes unamortized debt premiums, discounts and issuance costs.
(b)The Company may redeem certain borrowings prior to their original contractual maturity dates in accordance with the optional redemption provision specified in the respective instruments.
Debt Maturities
The following table summarizes the maturities of the principal amount of our borrowings of consolidated securitization entities and senior and subordinated unsecured notes for the remainder of 2023 and over the next four years and thereafter:
($ in millions)20232024202520262027Thereafter
Borrowings$— $4,225 $5,300 $2,000 $1,600 $2,150 
Third-Party Debt
2023 Issuance ($ in millions):
Issuance DatePrincipal AmountMaturityInterest Rate
Fixed rate subordinated unsecured notes:
Synchrony Financial
February 2023$750 February 20337.250%
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Credit Facilities
As additional sources of liquidity, we have undrawn committed capacity under certain credit facilities, primarily related to our securitization programs.
At September 30, 2023, we had an aggregate of $2.5 billion of undrawn committed capacity under our securitization financings, subject to customary borrowing conditions, from private lenders under our securitization programs, and an aggregate of $0.5 billion of undrawn committed capacity under our unsecured revolving credit facility with private lenders.
NOTE 9.    FAIR VALUE MEASUREMENTS
For a description of how we estimate fair value, see Note 2. Basis of Presentation and Summary of Significant Accounting Policies in our 2022 annual consolidated financial statements in our 2022 Form 10-K. The following tables present our assets and liabilities measured at fair value on a recurring basis.
Recurring Fair Value Measurements
At September 30, 2023 ($ in millions)Level 1Level 2Level 3
Total(a)
Assets
Debt securities
U.S. government and federal agency $— $1,436 $— $1,436 
State and municipal— — 9 9 
Residential mortgage-backed— 354 — 354 
Asset-backed— 1,075 — 1,075 
Other— — 8 8 
Other(b)
13 — 9 22 
Total $13 $2,865 $26 $2,904 
Liabilities
Other(c)
— — 6 6 
Total$— $— $6 $6 
At December 31, 2022 ($ in millions)
Assets
Debt securities
U.S. government and federal agency $— $3,864 $— $3,864 
State and municipal— — 10 10 
Residential mortgage-backed— 418 — 418 
Asset-backed— 580 — 580 
Other— — 7 7 
Other(b)
14 — 13 27 
Total $14 $4,862 $30 $4,906 
Liabilities
Other(c)
— — $7 $7 
Total$— $— $7 $7 
_______________________
(a)    For the nine months ended September 30, 2023 and 2022, there were no fair value measurements transferred between levels.
(b)    Other is primarily comprised of equity investments measured at fair value, which are included in Other assets in our Condensed Consolidated Statement of Financial Position, as well as certain financial assets for which we have elected the fair value option which are included in Loan receivables in our Condensed Consolidated Statement of Financial Position.
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(c)    Other is primarily comprised of certain financial liabilities for which we have elected the fair value option, which are included in Accrued expenses and other liabilities in our Condensed Consolidated Statement of Financial Position.
Level 3 Fair Value Measurements
Our Level 3 recurring fair value measurements primarily relate to state and municipal and corporate debt instruments, which are valued using non-binding broker quotes or other third-party sources, and financial assets and liabilities for which we have elected the fair value option. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies and Note 9. Fair Value Measurements in our 2022 annual consolidated financial statements in our 2022 Form 10-K for a description of our process to evaluate third-party pricing servicers. Our state and municipal debt securities are classified as available-for-sale with changes in fair value included in accumulated other comprehensive income.
The changes in our Level 3 assets and liabilities that are measured on a recurring basis for the three and nine months ended September 30, 2023 and 2022, respectively, were not material.
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Financial Assets and Financial Liabilities Carried at Other Than Fair Value
CarryingCorresponding fair value amount
At September 30, 2023 ($ in millions)valueTotalLevel 1Level 2Level 3
Financial Assets
Financial assets for which carrying values equal or approximate fair value:
Cash and equivalents(a)
$15,643 $15,643 $15,643 $— $— 
Other assets(a)(b)
$157 $157 $157 $— $— 
Financial assets carried at other than fair value:
Loan receivables, net(c)
$87,688 $99,153 $— $— $99,153 
Financial Liabilities
Financial liabilities carried at other than fair value:
Deposits$78,066 $77,710 $— $77,710 $— 
Borrowings of consolidated securitization entities$6,519 $6,454 $— $2,605 $3,849 
Senior and subordinated unsecured notes$8,712 $8,014 $— $8,014 $— 
CarryingCorresponding fair value amount
At December 31, 2022 ($ in millions)valueTotalLevel 1Level 2Level 3
Financial Assets
Financial assets for which carrying values equal or approximate fair value:
Cash and equivalents(a)
$10,294 $10,294 $10,294 $— $— 
Other assets(a)(b)
$136 $136 $136 $— $— 
Financial assets carried at other than fair value:
Loan receivables, net(c)
$82,930 $94,339 $— $— $94,339 
Financial Liabilities
Financial liabilities carried at other than fair value:
Deposits$71,735 $70,685 $— $70,685 $— 
Borrowings of consolidated securitization entities$6,227 $6,127 $— $2,327 $3,800 
Senior and subordinated unsecured notes$7,964 $7,530 $— $7,530 $— 
_______________________
(a)    For cash and equivalents and restricted cash and equivalents, carrying value approximates fair value due to the liquid nature and short maturity of these instruments.
(b)    This balance relates to restricted cash and equivalents, which is included in other assets.
(c)    Excludes financial assets for which we have elected the fair value option. Under certain retail partner program agreements, the expected sales proceeds in the event of a sale of their credit card portfolio may be limited to the amounts owed by our customers, which may be less than the fair value indicated above.



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Equity Securities Without Readily Determinable Fair Values
Three months ended September 30,Nine months ended September 30,
At or for the periods ended September 30 ($ in millions)2023202220232022
Carrying value(a)
$268 $246 $268 $246 
Upward adjustments(b)
17 — 17 7 
Downward adjustments(b)
(5)(1)(6)(3)
_______________________
(a)    Carrying value reflects cumulative purchases and sales in addition to upward and downward carrying value changes, and at December 31, 2022 was $245 million.
(b)    Between January 1, 2018 and September 30, 2023, cumulative upward and downward carrying value adjustments were $205 million and $(14) million, respectively.
NOTE 10.    REGULATORY AND CAPITAL ADEQUACY
As a savings and loan holding company and a financial holding company, we are subject to regulation, supervision and examination by the Federal Reserve Board and subject to the capital requirements as prescribed by Basel III capital rules and the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Bank is a federally chartered savings association. As such, the Bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency of the U.S. Treasury (the “OCC”), which is its primary regulator, and by the Consumer Financial Protection Bureau (“CFPB”). In addition, the Bank, as an insured depository institution, is supervised by the FDIC.
Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a material adverse effect on our consolidated financial statements. Under capital adequacy guidelines, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require us and the Bank to maintain minimum amounts and ratios (set forth in the tables below) of Total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined).
For Synchrony Financial to be a well-capitalized savings and loan holding company, the Bank must be well-capitalized and Synchrony Financial must not be subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve Board to meet and maintain a specific capital level for any capital measure.
The Company elected to adopt the option provided by the interim final rule issued by joint federal bank regulatory agencies, which largely delayed the effects of CECL on its regulatory capital. Beginning in the first quarter of 2022, the effects are being phased-in over a three-year period through 2024 and will be fully phased-in beginning in the first quarter of 2025. Under the interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period included both the initial impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during the two-year period ended December 31, 2021, collectively the “CECL regulatory capital transition adjustment”. Beginning in the first quarter of 2023 only 50% of the CECL regulatory capital transition adjustment is now deferred in our regulatory capital amounts and ratios, as compared to 75% at December 31, 2022.
At September 30, 2023 and December 31, 2022, Synchrony Financial met all applicable requirements to be deemed well-capitalized pursuant to Federal Reserve Board regulations. At September 30, 2023 and December 31, 2022, the Bank also met all applicable requirements to be deemed well-capitalized pursuant to OCC regulations and for purposes of the Federal Deposit Insurance Act. There are no conditions or events subsequent to September 30, 2023 that management believes have changed the Company's or the Bank’s capital category.
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The actual capital amounts, ratios and the applicable required minimums of the Company and the Bank are as follows:
Synchrony Financial
At September 30, 2023 ($ in millions)ActualMinimum for capital
adequacy purposes
Amount
Ratio(a)
Amount
Ratio(b)
Total risk-based capital$14,964 15.3 %$7,839 8.0 %
Tier 1 risk-based capital$12,906 13.2 %$5,879 6.0 %
Tier 1 leverage$12,906 11.8 %$4,380 4.0 %
Common equity Tier 1 Capital$12,172 12.4 %$4,409 4.5 %
At December 31, 2022 ($ in millions)ActualMinimum for capital
adequacy purposes
Amount
Ratio(a)
Amount
Ratio(b)
Total risk-based capital$13,713 15.0 %$7,328 8.0 %
Tier 1 risk-based capital$12,493 13.6 %$5,496 6.0 %
Tier 1 leverage$12,493 12.3 %$4,075 4.0 %
Common equity Tier 1 Capital$11,759 12.8 %$4,122 4.5 %
Synchrony Bank
At September 30, 2023 ($ in millions)ActualMinimum for capital
adequacy purposes		Minimum to be well-capitalized under prompt corrective action provisions
Amount
Ratio(a)
Amount
Ratio(b)
AmountRatio
Total risk-based capital$14,401 15.6 %$7,396 8.0 %$9,244 10.0 %
Tier 1 risk-based capital$12,408 13.4 %$5,547 6.0 %$7,396 8.0 %
Tier 1 leverage$12,408 12.1 %$4,108 4.0 %$5,136 5.0 %
Common equity Tier I capital$12,408 13.4 %$4,160 4.5 %$6,009 6.5 %
At December 31, 2022 ($ in millions)ActualMinimum for capital
adequacy purposes		Minimum to be well-capitalized under prompt corrective action provisions
Amount
Ratio(a)
Amount
Ratio(b)
AmountRatio
Total risk-based capital$13,313 15.6 %$6,838 8.0 %$8,547 10.0 %
Tier 1 risk-based capital$12,174 14.2 %$5,128 6.0 %$6,838 8.0 %
Tier 1 leverage$12,174 12.8 %$3,790 4.0 %$4,738 5.0 %
Common equity Tier I capital$12,174 14.2 %$3,846 4.5 %$5,556 6.5 %
_______________________
(a)Capital ratios are calculated based on the Basel III Standardized Approach rules. Capital amounts and ratios at September 30, 2023 and at December 31, 2022 in the above tables reflect the applicable CECL regulatory capital transition adjustment.
(b)At September 30, 2023 and at December 31, 2022, Synchrony Financial and the Bank also must maintain a capital conservation buffer of common equity Tier 1 capital in excess of minimum risk-based capital ratios by at least 2.5 percentage points to avoid limits on capital distributions and certain discretionary bonus payments to executive officers and similar employees.
The Bank may pay dividends on its stock, with consent or non-objection from the OCC and the Federal Reserve Board, among other things, if its regulatory capital would not thereby be reduced below the applicable regulatory capital requirements.
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NOTE 11.    EARNINGS PER SHARE
Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all dilutive securities.
The following table presents the calculation of basic and diluted earnings per common share:
Three months ended September 30,Nine months ended September 30,
(in millions, except per share data)2023202220232022
Net earnings$628 $703 $1,798 $2,439 
Preferred stock dividends(10)(11)$(31)$(32)
Net earnings available to common stockholders$618 $692 $1,767 $2,407 
Weighted average common shares outstanding, basic416.0 468.5 424.3 $492.1 
Effect of dilutive securities2.4 2.2 2.2 $2.9 
Weighted average common shares outstanding, dilutive418.4 470.7 $426.5 $495.0 
Earnings per basic common share$1.49 $1.48 $4.16 $4.89 
Earnings per diluted common share$1.48 $1.47 $4.14 $4.86 
We have issued certain stock-based awards under the Synchrony Financial 2014 Long-Term Incentive Plan. A total of 3 million shares and 5 million shares for the three months ended September 30, 2023 and 2022, respectively, and 5 million and 3 million shares for the nine months ended September 30, 2023 and 2022, respectively, related to these awards, were considered anti-dilutive and therefore were excluded from the computation of diluted earnings per common share.
NOTE 12.    INCOME TAXES
Unrecognized Tax Benefits
($ in millions)September 30, 2023December 31, 2022
Unrecognized tax benefits, excluding related interest expense and penalties(a)
$252  $267 
Portion that, if recognized, would reduce tax expense and effective tax rate(b)
$199 $177 
____________________
(a)Interest and penalties related to unrecognized tax benefits were not material for all periods presented.
(b)Comprised of federal unrecognized tax benefits and state and local unrecognized tax benefits net of the effects of associated U.S. federal income taxes. Excludes amounts attributable to any related valuation allowances resulting from associated increases in deferred tax assets.
We establish a liability that represents the difference between a tax position taken (or expected to be taken) on an income tax return and the amount of taxes recognized in our financial statements. The liability associated with the unrecognized tax benefits is adjusted periodically when new information becomes available. The amount of unrecognized tax benefits that is reasonably possible to be resolved in the next twelve months is expected to be $31 million, of which $24 million, if recognized, would reduce the Company's tax expense and effective tax rate.
In the current year, the Company executed a Memorandum of Understanding with the IRS to participate voluntarily in the IRS Compliance Assurance Process (“CAP”) program for the 2023 tax year, and thus the tax year is under IRS review. The IRS is also examining our 2022 tax year, and we expect the review will be completed in the current year. Additionally, we are under examination in various states going back to 2014.
We believe that there are no issues or claims that are likely to significantly impact our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties that could result from such examinations.
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NOTE 13.    LEGAL PROCEEDINGS AND REGULATORY MATTERS
In the normal course of business, from time to time, we have been named as a defendant in various legal proceedings, including arbitrations, class actions and other litigation, arising in connection with our business activities. Certain of the legal actions include claims for substantial compensatory and/or punitive damages, or claims for indeterminate amounts of damages. We are also involved, from time to time, in reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our business (collectively, “regulatory matters”), which could subject us to significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. We contest liability and/or the amount of damages as appropriate in each pending matter. In accordance with applicable accounting guidance, we establish an accrued liability for legal and regulatory matters when those matters present loss contingencies which are both probable and reasonably estimable.
Legal proceedings and regulatory matters are subject to many uncertain factors that generally cannot be predicted with assurance, and we may be exposed to losses in excess of any amounts accrued.
For some matters, we are able to determine that an estimated loss, while not probable, is reasonably possible. For other matters, including those that have not yet progressed through discovery and/or where important factual information and legal issues are unresolved, we are unable to make such an estimate. We currently estimate that the reasonably possible losses for legal proceedings and regulatory matters, whether in excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a possible loss, are immaterial. This represents management’s estimate of possible loss with respect to these matters and is based on currently available information. This estimate of possible loss does not represent our maximum loss exposure. The legal proceedings and regulatory matters underlying the estimate will change from time to time and actual results may vary significantly from current estimates.
Our estimate of reasonably possible losses involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years), unspecified damages and/or the novelty of the legal issues presented. Based on our current knowledge, we do not believe that we are a party to any pending legal proceeding or regulatory matters that would have a material adverse effect on our condensed consolidated financial condition or liquidity. However, in light of the uncertainties involved in such matters, the ultimate outcome of a particular matter could be material to our operating results for a particular period depending on, among other factors, the size of the loss or liability imposed and the level of our earnings for that period, and could adversely affect our business and reputation.

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Below is a description of certain of our regulatory matters and legal proceedings.
On November 2, 2018, a putative class action lawsuit, Retail Wholesale Department Store Union Local 338 Retirement Fund v. Synchrony Financial, et al., was filed in the U.S. District Court for the District of Connecticut, naming as defendants the Company and two of its officers. The lawsuit asserts violations of the Exchange Act for allegedly making materially misleading statements and/or omitting material information concerning the Company’s underwriting practices and private-label card business, and was filed on behalf of a putative class of persons who purchased or otherwise acquired the Company’s common stock between October 21, 2016 and November 1, 2018. The complaint seeks an award of unspecified compensatory damages, costs and expenses. On February 5, 2019, the court appointed Stichting Depositary APG Developed Markets Equity Pool as lead plaintiff for the putative class. On April 5, 2019, an amended complaint was filed, asserting a new claim for violations of the Securities Act in connection with statements in the offering materials for the Company’s December 1, 2017 note offering. The Securities Act claims are filed on behalf of persons who purchased or otherwise acquired Company bonds in or traceable to the December 1, 2017 note offering between December 1, 2017 and November 1, 2018. The amended complaint names as additional defendants two additional Company officers, the Company’s board of directors, and the underwriters of the December 1, 2017 note offering. The amended complaint is captioned Stichting Depositary APG Developed Markets Equity Pool and Stichting Depositary APG Fixed Income Credit Pool v. Synchrony Financial et al. On March 26, 2020, the District Court recaptioned the case In re Synchrony Financial Securities Litigation and on March 31, 2020, the District Court granted the defendants’ motion to dismiss the complaint with prejudice. On April 20, 2020, plaintiffs filed a notice to appeal the decision to the United States Court of Appeals for the Second Circuit. On February 16, 2021, the Court of Appeals affirmed the District Court’s dismissal of the Securities Act claims and all of the claims under the Exchange Act with the exception of a claim relating to a single statement on January 19, 2018 regarding whether Synchrony was receiving pushback on credit from its retail partners. On April 3, 2023, the parties executed a Stipulation and Agreement of Settlement, in which plaintiffs agreed to settle all remaining claims in the action in exchange for a payment of $34 million. The District Court preliminarily approved the settlement on April 12, 2023. On August 3, 2023, the District Court entered an order granting final approval to the settlement.
On January 28, 2019, a purported shareholder derivative action, Gilbert v. Keane, et al., was filed in the U.S. District Court for the District of Connecticut against the Company as a nominal defendant, and certain of the Company’s officers and directors. The lawsuit alleges breach of fiduciary duty claims based on the allegations raised by the plaintiff in the Stichting Depositary APG class action, unjust enrichment, waste of corporate assets, and that the defendants made materially misleading statements and/or omitted material information in violation of the Exchange Act. The complaint seeks a declaration that the defendants breached and/or aided and abetted the breach of their fiduciary duties to the Company, unspecified monetary damages with interest, restitution, a direction that the defendants take all necessary actions to reform and improve corporate governance and internal procedures, and attorneys’ and experts’ fees. On March 11, 2019, a second purported shareholder derivative action, Aldridge v. Keane, et al., was filed in the U.S. District Court for the District of Connecticut. The allegations in the Aldridge complaint are substantially similar to those in the Gilbert complaint. On March 26, 2020, the District Court recaptioned the Gilbert and Aldridge cases as In re Synchrony Financial Derivative Litigation. On August 11, 2023, the parties submitted a joint status report to the District Court indicating that the parties had reached a memorandum of understanding to settle the litigation, which is not expected to have a material financial impact on the Company.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, correlations or other market factors will result in losses for a position or portfolio. We are exposed to market risk primarily from changes in interest rates.
We borrow money from a variety of depositors and institutions in order to provide loans to our customers. Changes in market interest rates cause our net interest income to increase or decrease, as some of our assets and liabilities carry interest rates that fluctuate with market benchmarks. The interest rate benchmark for our floating rate assets is generally the prime rate, and the interest rate benchmark for our floating rate liabilities is generally either the Secured Overnight Financing Rate ("SOFR"), U.S. Treasury bills, or the federal funds rate. The prime rate and the SOFR, U.S. Treasury bills or federal funds rate could reset at different times or could diverge, leading to mismatches in the interest rates on our floating rate assets and floating rate liabilities. We completed our transition from the London Interbank Offered Rate (“LIBOR”) benchmark in the second quarter of 2023 and it did not have a material impact to our company.
The following table presents the approximate net interest income impacts forecasted over the next twelve months from an immediate and parallel change in interest rates affecting all interest rate sensitive assets and liabilities at September 30, 2023.
Basis Point ChangeAt September 30, 2023
($ in millions)
-100 basis points$(230)
+100 basis points$45 
For a more detailed discussion of our exposure to market risk and our transition from the LIBOR benchmark rate, refer to “Management's Discussion and Analysis—Quantitative and Qualitative Disclosures about Market Risk” in our 2022 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), and based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2023.

No change in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of legal proceedings, see Note 13. Legal Proceedings and Regulatory Matters to our condensed consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors included in our 2022 Form 10-K under the heading “Risk Factors Relating to Our Business” and “Risk Factors Relating to Regulation”.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information regarding purchases of our common stock primarily related to our share repurchase program that were made by us or on our behalf during the three months ended September 30, 2023.
($ in millions, except per share data)
Total Number of Shares Purchased(a)
Average Price Paid Per Share(b)
Total Number of Shares
Purchased as
Part of Publicly Announced Programs(c)
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs(b)
July 1 - 31, 2023
— $— — $1,000.0 
August 1 - 31, 2023
4,486,322 33.45 4,484,910 850.0 
September 1 - 30, 2023
5,034 30.67 — 850.0 
Total 4,491,356 $33.44 4,484,910 $850.0 
_______________________
(a)Includes 0 shares, 1,412 shares and 5034 shares withheld in July, August and September, respectively, to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying performance stock awards, restricted stock awards or upon the exercise of stock options.
(b)Amounts exclude commission costs.
(c)In April 2023 the Board of Directors approved an incremental share repurchase program of up to $1.0 billion, commencing this quarter through June 30, 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
(c)During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS
EXHIBIT INDEX

Exhibit NumberDescription
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL (included as Exhibit 101)
______________________ 
*Filed electronically herewith.


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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Synchrony Financial
(Registrant)

October 24, 2023/s/ Brian J. Wenzel Sr.
Date Brian J. Wenzel Sr.
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)

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