Synchrony Financial
For the period ended Jun 30, 2024. Filed Jul 19, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 19, 2024
SYF$73.74-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0001601712-24-000172
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCondensed Consolidated Statements of Earnings –Three months ended March 31, 2024 and 2023Condensed Consolidated Statements of Comprehensive Income –Three months ended March 31, 2024 and 2023Condensed Consolidated Statements of Financial Position –March 31, 2024 and December 31, 2023Condensed Consolidated Statements of Changes in Equity –Three months ended March 31, 2024 and 2023Condensed Consolidated Statements of Cash Flows –Three months ended March 31, 2024 and 2023Notes to Condensed Consolidated Financial StatementsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-19.
0001601712-24-000250
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCondensed Consolidated Statements of Earnings –Three and six months ended June 30, 2024 and 2023Condensed Consolidated Statements of Comprehensive Income –Three and six months ended June 30, 2024 and 2023Condensed Consolidated Statements of Financial Position –June 30, 2024 and December 31, 2023Condensed Consolidated Statements of Changes in Equity –Three and six months ended June 30, 2024 and 2023Condensed Consolidated Statements of Cash Flows –Six months ended June 30, 2024 and 2023Notes to Condensed Consolidated Financial StatementsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 387 previous paragraphs and 395 current paragraphs.
281 unchanged; 90 reworded; 22 added; 14 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 70 previous and 82 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Growth in loan receivables and interest income.
Current report
During the three months ended June 30, 2024, we experienced a decrease in purchase volume of 0.9% primarily driven by lower consumer spending and the impacts from credit actions we have taken across our portfolio where we have seen indications of higher probability of default. We expect these same factors to now result in flat or a low single digit decrease in purchase volume for the second half of 2024. As a result, while we still anticipate loan receivables to increase for the remainder of 2024, we expect the rate of growth to moderate.
Current report
All of the factors discussed above and in our 2023 Form 10-K, such as customer payment behavior and the CFPB final rule on credit card late fees, will continue to have an effect on our loan receivables and interest income. For additional discussion of those factors, please see “Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Trends and Conditions-CFPB final rule on credit card late fees" and "—Growth in loan receivables and interest income” in our 2023 Form 10-K.
Current report
•Loan receivables increased 7.9% to $102.3 billion at June 30, 2024 compared to $94.8 billion at June 30, 2023, primarily driven by lower customer payment rates and the completion of the Ally Lending acquisition.
Current report
•Other expense increased by $8 million, or 0.7%, and $95 million, or 4.2%, for the three and six months ended June 30, 2024, respectively. The increase in the three months ended June 30, 2024 was primarily driven by technology investments, preparatory expenses related to the late fee rule change and servicing costs related to the newly acquired business, partially offset by lower operational losses and cost discipline resulting in lower employee and marketing costs. The increase for the six months ended June 30, 2024 was primarily driven by these same factors, other than employee costs which increased primarily attributable to an increase in headcount driven by growth.
Current report
•In our Digital sales platform, we announced our new partnership with Virgin Red and extended our program agreement with Verizon.
Current report
•We entered into a relationship with Atlanticus Holdings Corporation to deliver a preferred second look financing solution for private label credit cards and installment loan products across our business.
Current report
Average loan receivables, including held for sale, increased 9.7% and 10.4% for the three and six months ended June 30, 2024, respectively, primarily driven by lower customer payment rates. Purchase volume decreased by 0.9% for the three months ended June 30, 2024 reflecting lower consumer spend as well as the impact of credit actions. Purchase volume increased 0.5% for the six months ended June 30, 2024 reflecting growth in average active accounts and the impact of the Ally Lending acquisition, partially offset by lower consumer spend and the impact of credit actions.
Current report
Provision for credit losses increased by $308 million, or 22.3%, and $902 million, or 33.7%, for the three and six months ended June 30, 2024, respectively, primarily driven by higher net charge-offs, partially offset by lower reserve builds in the current year. The reserve build in the six months ended June 30, 2024 included $180 million related to the Ally Lending acquisition.
Current report
Other income increased by $56 million to $117 million, and $1.1 billion to $1.3 billion, for the three and six months ended June 30, 2024, respectively. During the three months ended June 30, 2024, we participated in the Visa exchange offer, which included the exchange of Visa Class B-1 common stock for Visa Class C common stock, which was recorded at fair value. The increase in other income for the three months ended June 30, 2024 was driven primarily by a gain of $51 million related to the exchange of Visa Class B-1 common stock and the initial impact of our product, pricing and policy change related fees, partially offset by lower commission fees following the Pets Best disposition.
Current report
Other expense increased by $8 million, or 0.7% and by $95 million, or 4.2%, for the three and six months ended June 30, 2024, respectively.
Current report
The increase in the three months ended June 30, 2024 was primarily driven by technology investments, preparatory expenses related to the late fee rule change and servicing costs related to the newly acquired business, partially offset by lower operational losses and cost discipline resulting in lower employee and marketing costs.
Current report
Digital interest and fees on loans increased by $122 million, or 8.6%, and $326 million, or 11.7%, for the three and six months ended June 30, 2024, respectively, primarily driven by growth in average loan receivables, lower payment rates and higher benchmark rates. Purchase volume decreased by 0.5% for the three months ended June 30, 2024 as continued customer engagement through growth in average active accounts was more than offset by lower consumer spend per account and the impact of credit actions. Purchase volume increased by 1.2% for the six months ended June 30, 2024, primarily reflecting continued customer engagement through growth in average active accounts. Average active accounts increased 1.8% and 2.8%, for the three and six months ended June 30, 2024, respectively.
Current report
Diversified & Value interest and fees on loans increased by $74 million, or 6.8%, and $218 million, or 10.1%, for the three and six months ended June 30, 2024, respectively, primarily driven by growth in average loan receivables, lower payment rates and higher benchmark rates. Purchase volume was flat for the three months ended June 30, 2024 as growth in out-of-partner spend was offset by the impact of credit actions. Purchase volume increased by 1.9%, for the six months ended June 30, 2024, reflecting growth in both in-partner and out-of-partner spend, partially offset by the impact of credit actions. Average active accounts remained flat and increased by 0.2%, for the three and six months ended June 30, 2024, respectively.
Current report
Other income decreased by $6 million, or 11.1%, and $1 million, or 0.9%, for the three and six months ended June 30, 2024, respectively. The decrease for the three months ended June 30, 2024 was primarily due to lower commission fees following the Pets Best disposition, partially offset by lower loyalty costs. The decrease for the six months ended June 30, 2024 was primarily due to lower commission fees following the Pets Best disposition, partially offset by higher protection product revenue.
Current report
Lifestyle interest and fees on loans increased by $26 million, or 11.2%, and $58 million, or 12.7%, for the three and six months ended June 30, 2024, 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. Purchase volume decreased by 3.5% and 3.9% for the three and six months ended June 30, 2024, respectively, reflecting lower transaction values and the impact of credit actions.
Current report
Other income increased by $51 million for the three months ended June 30, 2024, primarily due to the gain related to the exchange of Visa B-1 shares.
Current report
On June 20, 2024, the FDIC released a final rule imposing additional requirements for the content of resolution plans submitted by insured depository institutions with $100 billion or more in total assets, including the Bank, following the rule’s effective date of October 1, 2024. Under the final rule, if the FDIC deems a resolution plan filing not credible and the insured depository institution fails to resubmit a credible plan, the institution could become subject to an enforcement action. Our first resolution plan under the final rule is due on July 1, 2025 and we will be required to file a resolution plan once every three years thereafter. Additionally, we will be required to submit interim supplements annually. We are evaluating the impact of the final rule.
Current report
During the three months ended June 30, 2024, adjustments to the fair value of assets acquired and liabilities assumed (measurement period adjustments) were recognized related to the acquisition as detailed in the table below.
Current report
(a) Loan discounts are recognized into interest income over the estimated remaining life of the acquired loans. The change to the provisional amount of loan discount recorded in the current period resulted in an increase in the amount of discount amortized into interest income for the three months ended June 30, 2024, including $9 million which relates to the previous quarter.
Current report
The amounts above represent the current provisional estimated fair values of the respective assets acquired and liabilities assumed as of the date of acquisition. The changes in the estimated fair values during the three months ended June 30, 2024 reflect market participant assumptions about facts and circumstances existing at the acquisition date. The measurement period adjustments did not result from events occurring subsequent to the acquisition date.
Current report
The valuation of the assets acquired and liabilities assumed is substantially complete and will be finalized no later than one year after the acquisition date. The goodwill recognized related to the acquisition is tax-deductible and reflects the expected synergies and operational efficiencies arising from the transaction.
Removed paragraphs (14)
Previous report
The seasonal trends discussed above are most evident between the fourth quarter and the first quarter of the following year, particularly with respect to our loan receivables which decreased by $1.3 billion, or 1.2% to $101.7 billion at March 31, 2024 compared to $103.0 billion at December 31, 2023, and our allowance for credit losses as a percentage of total loan receivables that increased to 10.72% at March 31, 2024, from 10.26% at December 31, 2023.
Previous report
•Other expense increased by $87 million, or 7.8%, for the three months ended March 31, 2024. The increase for the three months ended March 31, 2024 was primarily driven by growth related items and technology investments.
Previous report
Average loan receivables, including held for sale, increased 11.2% for the three months ended March 31, 2024, primarily driven by growth in purchase volume and lower customer payment rates. Purchase volume increased by 2.0% for the three months ended March 31, 2024.
Previous report
Provision for credit losses increased by $594 million to $1.9 billion, for the three months ended March 31, 2024, primarily driven by higher net charge-offs and a $299 million reserve build, which included $190 million related to the Ally Lending acquisition.
Previous report
Digital interest and fees on loans increased by $204 million, or 15.0%, for the three months ended March 31, 2024, primarily driven by growth in average loan receivables, higher benchmark rates and the maturation of newer programs. The growth in average loan receivables reflects lower customer payment rates, purchase volume growth of 3.0% and average active account growth of 3.8%.
Previous report
Diversified & Value interest and fees on loans increased by $144 million, or 13.5%, for the three months ended March 31, 2024, primarily driven by growth in average loan receivables and higher benchmark rates. The growth in average loan receivables reflected lower customer payment rates and purchase volume growth of 4.3%, reflecting growth in both in-partner and out-of-partner spend and average active account growth of 1.1%.
Previous report
Other income increased by $5 million, or 8.2%, for the three months ended March 31, 2024, primarily due to higher protection product revenue, partially offset by higher loyalty costs.
Previous report
Lifestyle interest and fees on loans increased by $32 million, or 14.3%, for the three months ended March 31, 2024, primarily driven by growth in average loan receivables and higher benchmark interest rates. The growth in average loan receivables was primarily driven by continued purchase volume growth in 2023 and lower customer payment rates in the current quarter. Purchase volume decreased by 4.5% for the three months ended March 31, 2024, reflecting lower transaction values in Specialty and fewer transactions in Music.
Previous report
Loan receivables increased 11.6% to $101.7 billion at March 31, 2024 compared to $91.1 billion at March 31, 2023 driven by purchase volume growth, lower customer payment rates and the completion of the Ally Lending acquisition.
Previous report
The above represents the provisional estimated fair values of the respective assets acquired and liabilities assumed as of the date of acquisition. We have not yet completed the valuation of the assets acquired and liabilities assumed. Any subsequent measurement period adjustments to our provisional estimate, including changes to the loan discount discussed below, may be recognized during the measurement period, which shall not exceed one year after the acquisition date.
Previous report
Below is a description of certain of our regulatory matters and legal proceedings. Other than as described below, during the quarter ended March 31, 2024, there were no material changes to the legal proceedings previously disclosed in our 2023 Form 10-K.
Previous report
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.
Previous report
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.
Previous report
On March 26, 2020, the District Court recaptioned the Gilbertand 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. On December 21, 2023, the District Court entered an order preliminarily approving the settlement. On April 5, 2024, the District Court entered an order granting final approval of the settlement.
Reworded paragraphs (90)
Previous wording
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 months ended March 31, 2024, we financed $42.4 billion of purchase volume and had 71.7 million average active accounts and at March 31, 2024, we had $101.7 billion of loan receivables.
Current wording
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 six months ended June 30, 2024, we financed $46.8 billion and $89.2 billion of purchase volume, respectively, and had 71.0 million and 71.4 million average active accounts, respectively, and at June 30, 2024, we had $102.3 billion of loan receivables.
Previous wording
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 has continued to serve as a source of stable and diversified low cost funding for our credit activities. At March 31, 2024, we had $83.6 billion in deposits, which represented 84% of our total funding sources.
Current wording
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 has continued to serve as a source of stable and diversified low cost funding for our credit activities. At June 30, 2024, we had $83.1 billion in deposits, which represented 84% of our total funding sources.
Previous wording
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 Home and Auto and Health and Wellness sales platforms and through our various other installment products, such as our Synchrony Pay Later solutions, including pay monthly and pay in 4 products, 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. Installment loans at March 31, 2024 include loan receivables acquired through the Ally Lending acquisition.
Current wording
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 Home and Auto and Health and Wellness sales platforms and through our various other installment products, such as our Synchrony Pay Later solutions, including pay monthly and pay in 4 products, 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. Installment loans at June 30, 2024 include loan receivables related to Ally Financial Inc.'s point of sale financing business, ("Ally Lending") that was acquired in March 2024.
Previous wording
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 2023 Form 10-K. For a discussion of how certain trends and conditions impacted the three months ended March 31, 2024, see “—Results of Operations.”
Current wording
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 2023 Form 10-K. For a discussion of how certain trends and conditions impacted the three and six months ended June 30, 2024, see “—Results of Operations.”
Previous wording
On March 5, 2024, the CFPB released a final rule amending its regulations that implement the Truth in Lending Act to lower the safe harbor dollar amount for credit card late fees from the prior $30 (adjusted to $41 for each subsequent late payment within the next six billing cycles) to $8 and to eliminate the automatic annual inflation adjustment to such safe harbor dollar amount. The final rule, when effective, will result in a significant reduction in our interest and fees on loan receivables. Industry organizations have challenged the final rule in court, and the outcome of such challenge, including the impact on the final rule, is uncertain. The final rule, if not impacted by litigation, has an effective date of May 14, 2024.
Current wording
On March 5, 2024, the CFPB released a final rule amending its regulations that implement the Truth in Lending Act to, among other things, lower the safe harbor dollar amount for credit card late fees from the prior $30 (adjusted to $41 for each subsequent late payment within the next six billing cycles) to $8 and to eliminate the automatic annual inflation adjustment to such safe harbor dollar amount. The final rule, when effective, will result in a significant reduction in our interest and fees on loan receivables. Industry organizations have challenged the final rule in court, and the ultimate outcome of such challenge, including the impact on the final rule, is uncertain. The final rule had an original effective date of May 14, 2024; however, on May 10, 2024, the United States District Court for the Northern District of Texas granted an injunction and stay of the final rule, and the injunction granted remains in effect.
Previous wording
While we continue to believe that the strategies we have identified and started to implement will fully offset the decline in late fee income over time, it will take time for such product, policy and pricing changes to offset the reduction in the late fees and therefore we expect the final rule will have an adverse effect on our results of operations in 2024. The magnitude of these effects in 2024 remain uncertain due to the pending litigation discussed above, which could result in a delay in the final rule’s effective date. To the extent the final rule becomes effective in May 2024, the final rule would have a material impact to our net income for the year ended December 31, 2024. In addition, the effects of the final rule are also subject to other factors which could increase the adverse effects to our results of operations, including our ability to successfully implement the product, policy and pricing changes we have identified, as well as any potential changes in consumer behavior in response to these changes or the final rule itself.
Current wording
While we continue to believe that the strategies we have identified and started to implement will fully offset the decline in late fee income over time, it will take time for such product, policy and pricing changes to offset the reduction in the late fees. Therefore we expect the final rule, if effective in 2024, will have an adverse effect on our results of operations in 2024. The magnitude of these effects in 2024 remain uncertain due to the pending litigation discussed above, which has resulted in a delay in the final rule’s effective date. In addition, the effects of the final rule are also subject to other factors that could increase the adverse effects to our results of operations, including our ability to successfully implement the product, policy and pricing changes we have identified, as well as any potential changes in consumer behavior in response to these changes or the final rule itself.
Previous wording
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 March 31, 2024, this is most evident in our loan receivables 90 days past due which increased to $2.5 billion at March 31, 2024 from $2.4 billion at December 31, 2023 due to the impact from lower customer payment rates which exceeded the effects of the seasonal trends we experienced. The same factors also provided a partial offset to the seasonal decrease in our total loan receivables in the first quarter of 2024.
Current wording
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.
Previous wording
Highlights for the Three Months Ended March 31, 2024
Current wording
Highlights for the Three and Six Months Ended June 30, 2024
Previous wording
Below are highlights of our performance for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, as applicable, except as otherwise noted.
Current wording
Below are highlights of our performance for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, as applicable, except as otherwise noted.
Previous wording
•Net earnings increased to $1.3 billion from $601 million for the three months ended March 31, 2023, primarily driven by the after-tax gain on sale related to Pets Best of $802 million, higher interest income and lower retailer share arrangements, partially offset by increases in provision for credit losses and higher interest expense.
Current wording
•Net earnings increased to $643 million from $569 million and to $1.9 billion from $1.2 billion for the three and six months ended June 30, 2024. The increase in the three months ended June 30, 2024 was primarily driven by higher net interest income and lower retailer share arrangements, partially offset by an increase in provision for credit losses. The increase in the six months ended June 30, 2024 was primarily driven by the after-tax gain on sale related to Pets Best of $802 million, as well as the same trends experienced in the three months ended June 30, 2024.
Previous wording
•Net interest income increased 8.7% to $4.4 billion for the three months ended March 31, 2024. Interest and fees on loans increased 14.7% for the three months ended March 31, 2024, primarily driven by growth in average loan receivables, lower customer payment rates and higher benchmark rates. Interest expense increased 58.2%, due to higher benchmark rates and higher funding liabilities.
Current wording
•Net interest income increased 6.9% to $4.4 billion and 7.8% to $8.8 billion for the three and six months ended June 30, 2024, respectively. Interest and fees on loans increased 10.2% and 12.4% for the three and six months ended June 30, 2024, respectively, primarily driven by growth in average loan receivables and higher benchmark rates. For the three and six months ended June 30, 2024, interest expense increased 30.6% and 43.0%, respectively, due to higher benchmark rates and higher interest-bearing liabilities.
Previous wording
•Retailer share arrangements decreased 16.7% to $764 million for the three months ended March 31, 2024, primarily due to higher net charge-offs, partially offset by higher net interest income.
Current wording
•Retailer share arrangements decreased 8.7% to $810 million and 12.7% to $1.6 billion for the three and six months ended June 30, 2024, respectively, primarily due to higher net charge-offs, partially offset by higher net interest income.
Previous wording
•Over-30 day loan delinquencies as a percentage of period-end loan receivables increased 93 basis points to 4.74% at March 31, 2024. The net charge-off rate increased 182 basis points to 6.31% for the three months ended March 31, 2024.
Current wording
•Over-30 day loan delinquencies as a percentage of period-end loan receivables increased 63 basis points to 4.47% at June 30, 2024 compared to June 30, 2023. The net charge-off rate increased 167 basis points to 6.42% and increased 175 basis points to 6.37% for the three and six months ended June 30, 2024, respectively.
Previous wording
•Provision for credit losses increased by $594 million to $1.9 billion for the three months ended March 31, 2024. The increase for the three months ended March 31, 2024, was primarily driven by higher net charge-offs and a $299 million reserve build, which included $190 million related to the Ally Lending acquisition. Our allowance coverage ratio (allowance for credit losses as a percent of period-end loan receivables) increased to 10.72% at March 31, 2024, as compared to 10.44% at March 31, 2023.
Current wording
•Provision for credit losses increased by $308 million, or 22.3%, and $902 million, or 33.7%, for the three and six months ended June 30, 2024, respectively, primarily driven by higher net charge-offs, partially offset by lower reserve builds. The reserve build in the six months ended June 30, 2024 included $180 million related to the Ally Lending acquisition. Our allowance coverage ratio (allowance for credit losses as a percentage of period-end loan receivables) increased to 10.74% at June 30, 2024, as compared to 10.34% at June 30, 2023.
Previous wording
•Other income increased by $1.1 billion to $1.2 billion for the three months ended March 31, 2024, primarily driven by the gain on sale related to Pets Best.
Current wording
•Other income increased by $56 million to $117 million, and by $1.1 billion to $1.3 billion for the three and six months ended June 30, 2024, respectively. The increase in the three months ended June 30, 2024 was primarily driven by a gain of $51 million related to an exchange of Visa Class B-1 common stock as well as the initial impact of our product, pricing and policy change related fees, partially offset by the impact of the Pets Best disposition. The increase in the six months ended June 30, 2024 was primarily driven by the gain on sale related to the Pets Best disposition.
Previous wording
•At March 31, 2024, deposits represented 84% of our total funding sources. Total deposits increased by 3.0% to $83.6 billion at March 31, 2024, compared to December 31, 2023.
Current wording
•At June 30, 2024, deposits represented 84% of our total funding sources. Total deposits increased by 2.4% to $83.1 billion at June 30, 2024, compared to December 31, 2023.
Previous wording
•During the three months ended March 31, 2024, we declared and paid cash dividends on our Series A 5.625% non-cumulative perpetual preferred stock of $14.06 per share, or $11 million.
Current wording
•During the six months ended June 30, 2024, we declared and paid cash dividends totaling $30 million on our Series A 5.625% fixed rate non-cumulative perpetual preferred stock and our Series B 8.250% fixed rate reset non-cumulative perpetual preferred stock.
Previous wording
•During the three months ended March 31, 2024, we repurchased $300 million of our outstanding common stock, and declared and paid cash dividends of $0.25 per share, or $102 million. In April 2024, the Board of Directors approved an incremental share repurchase program of up to $1.0 billion, through June 30, 2025, bringing the total amount of share repurchase authorization to $1.3 billion, and intends to maintain the quarterly dividend at its current amount of $0.25 per common share. For more information, see “Capital—Dividend and Share Repurchases.”
Current wording
•During the six months ended June 30, 2024, we repurchased $600 million of our outstanding common stock, and declared and paid cash dividends of $0.50 per share, or $202 million in the aggregate. In April 2024, the Board of Directors approved an incremental share repurchase program of up to $1.0 billion, through June 30, 2025, and maintained the quarterly dividend at its current amount of $0.25 per common share. At June 30, 2024 we had a total share repurchase authorization of $1.0 billion remaining. For more information, see “Capital—Dividend and Share Repurchases.”
Previous wording
•In March 2024, we acquired Ally Financial Inc.'s point of sale financing business, Ally Lending, for cash consideration of $2.0 billion. The assets and liabilities of Ally Lending primarily included loan receivables with an unpaid principal balance of $2.2 billion. See Note 3. Acquisitions and Dispositions to our condensed consolidated financial statements for additional information.
Current wording
•In March 2024, we acquired Ally Lending for cash consideration of $2.0 billion. The assets and liabilities of Ally Lending primarily included loan receivables with an unpaid principal balance of $2.2 billion. See Note 3. Acquisitions and Dispositions to our condensed consolidated financial statements for additional information.
Previous wording
During the three months ended March 31, 2024, we continued to expand and diversify our portfolio with the addition or renewal of more than 25 partners, which included the following:
Current wording
During the six months ended June 30, 2024, we continued to expand and diversify our portfolio with the addition or renewal of more than 40 partners, which included the following:
Previous wording
•In our Home & Auto sales platform, we announced our new partnership with The Carpet Guys and extended our program agreements with Associated Materials and Brandsmart.
Current wording
•In our Home & Auto sales platform, we announced our new partnerships with Bel Furniture and The Carpet Guys and extended our program agreements with Associated Materials, BrandsMart and Jerome's Furniture Warehouse.
Previous wording
•In our Health & Wellness sales platform, we expanded our network through our new partnership with LaserAway.
Current wording
•In our Health & Wellness sales platform, we expanded our network through our new partnership with Lakefield Veterinary Group and LaserAway and extended our program agreements with Bosley, Innovetive and SCI.
Previous wording
•In our Lifestyle sales platform, we announced our new partnership with BRP.
Current wording
•In our Lifestyle sales platform, we announced our new partnership with BRP and extended our program agreement with EC Barton.
Previous wording
(2)Includes average restricted cash balances of $109 million and $351 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(2)Includes average restricted cash balances of $61 million and $472 million for the three months ended June 30, 2024 and 2023, respectively, and $85 million and $412 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
(3)Interest income on loan receivables includes fees on loans, which primarily consist of late fees on our credit products, of $652 million and $639 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(3)Interest income on loan receivables includes fees on loans, which primarily consist of late fees on our credit products, of $609 million and $644 million for the three months ended June 30, 2024 and 2023, respectively, and $1.3 billion for both the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Interest income increased by $782 million, or 16.3%, for the three months ended March 31, 2024, primarily driven by an increase in interest and fees on loans of 14.7%.The increase in interest and fees on loans was primarily driven by growth in average loan receivables, lower customer payment rates and higher benchmark rates.
Current wording
Interest income increased by $561 million, or 11.2%, and $1.3 billion, or 13.7%, for the three and six months ended June 30, 2024, respectively, primarily driven by increases in interest and fees on loans of 10.2% and 12.4%, respectively. The increases in the three and six months ended June 30, 2024 in interest and fees on loans were primarily driven by growth in average loan receivables, lower customer payment rates and higher benchmark rates.
Previous wording
The yield on average interest-earning assets increased for the three months ended March 31, 2024 primarily due to an increase in the yield on average loan receivables. The increase in loan receivable yield was 48 basis points to 21.09% for the three months ended March 31, 2024.
Current wording
The yield on average interest-earning assets increased for the three and six months ended June 30, 2024 primarily due to increases in the yield on average loan receivables. The increases in loan receivable yield were 14 basis points to 21.01% and 31 basis points to 21.05% for the three and six months ended June 30, 2024, respectively.
Previous wording
Interest expense increased by $428 million to $1.2 billion for the three months ended March 31, 2024, primarily attributed to higher benchmark interest rates and higher funding liabilities. Our cost of funds increased to 4.74% for the three months ended March 31, 2024, compared to 3.43% for the three months ended March 31, 2023.
Current wording
Interest expense increased by $276 million to $1.2 billion, and $704 million to $2.3 billion, for the three and six months ended June 30, 2024, respectively, due to higher benchmark rates and higher interest-bearing liabilities. Our cost of funds increased to 4.80% and 4.77% for the three and six months ended June 30, 2024, respectively, compared to 4.04% and 3.74% for the three and six months ended June 30, 2023, respectively.
Previous wording
Net interest income increased by $354 million, or 8.7%, for the three months ended March 31, 2024, resulting from the changes in interest income and interest expense discussed above.
Current wording
Net interest income increased by $285 million, or 6.9%, and $639 million, or 7.8%, for the three and six months ended June 30, 2024, respectively, resulting from the changes in interest income and interest expense discussed above.
Previous wording
Retailer share arrangements decreased by $153 million, or 16.7%, for the three months ended March 31, 2024, primarily due to higher net charge-offs, partially offset by higher net interest income.
Current wording
Retailer share arrangements decreased by $77 million, or 8.7%, and $230 million, or 12.7%, for the three and six months ended June 30, 2024, respectively, primarily due to higher net charge-offs, partially offset by higher net interest income.
Previous wording
Other income increased by $1.1 billion for the three months ended March 31, 2024, primarily driven by the gain on sale related to Pets Best. The pre-tax gain amount of $1.1 billion is included within the Other component of Other Income in our Condensed Consolidated Statements of Earnings.
Current wording
The increase for the six months ended June 30, 2024 was primarily driven by the gain on sale related to the Pets Best disposition. The pre-tax gain amount of $1.1 billion is included within the Other component of Other Income in our Condensed Consolidated Statements of Earnings for the six months ended June 30, 2024.
Previous wording
Other expense increased by $87 million, or 7.8% for the three months ended March 31, 2024, primarily driven by growth related items and higher technology investments. Employee costs increased for the three months ended March 31, 2024 primarily attributable to an increase in headcount driven by growth. Professional fees and information processing costs increased for the three months ended March 31, 2024 primarily due to increased technology investments.
Current wording
The increase in the six months ended June 30, 2024 was primarily driven by the same factors for the three months ended June 30, 2024, other than employee costs, which increased for the six months ended June 30, 2024 primarily attributable to an increase in headcount driven by growth.
Previous wording
The effective tax rate for the three months ended March 31, 2024 increased compared to the same period in the prior year primarily due to an increase in state tax expense in the current period related to the sale of Pets Best. The effective tax rate differs from the applicable U.S. federal statutory tax rate primarily due to state income taxes.
Current wording
The effective tax rate for the three months ended June 30, 2024 increased compared to the same period in the prior year primarily due to the impact of research and development credits recorded in the prior period. The effective tax rate for the six months ended June 30, 2024 increased compared to the same period in the prior year primarily due to an increase in state tax expense in the current period related to the Pets Best disposition. For both periods presented, the effective tax rate differs from the applicable U.S. federal statutory tax rate primarily due to state income taxes.
Previous wording
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 months ended March 31, 2024, for each of our five sales platforms and Corp, Other.
Current wording
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 six months ended June 30, 2024, for each of our five sales platforms and Corp, Other.
Previous wording
Home & Auto interest and fees on loans increased by $157 million, or 12.8%, for the three months ended March 31, 2024, primarily driven by higher average loan receivables and higher benchmark rates. The increase in average loan receivables primarily reflected lower customer payment rates as well as the completion of the Ally Lending acquisition. Purchase volume decreased 3.2% for the three months ended March 31, 2024, as growth in Home Specialty and Auto and the impact of the Ally Lending acquisition were offset by a combination of lower retail traffic, fewer large ticket purchases and the impact of lower gas prices.
Current wording
Home & Auto interest and fees on loans increased by $144 million, or 11.3%, and increased by $301 million, or 12.0%, for the three and six months ended June 30, 2024, respectively, primarily driven by higher average loan receivables and higher benchmark rates. The increase in average loan receivables for both periods primarily reflects the completion of the Ally Lending acquisition as well as the impact of lower customer payment rates. Purchase volume decreased 2.8% and 3.0% for the three and six months ended June 30, 2024, as growth in Home Specialty and the impact of the Ally Lending acquisition were more than offset by a combination of lower consumer traffic, fewer large ticket purchases and the impact of credit actions.
Previous wording
Health & Wellness interest and fees on loans increased by $134 million, or 18.2%, for the three months ended March 31, 2024, primarily driven by higher average loan receivables. The growth in average loan receivables reflected higher purchase volume and lower customer payment rates, as well as the completion of the Ally Lending acquisition. Purchase volume increased 7.9% and average active accounts increased 10.5% for the three months ended March 31, 2024, reflecting broad-based growth led by Pet, Dental and Cosmetic.
Current wording
Health & Wellness interest and fees on loans increased by $125 million, or 15.9%, and $259 million, or 17.0%, for the three and six months ended June 30, 2024, respectively, primarily driven by higher average loan receivables. The growth in average loan receivables for both periods reflected higher purchase volume and lower customer payment rates, as well as the completion of the Ally Lending acquisition. Purchase volume increased 1.8% and 4.7%, respectively, and average active accounts increased 9.8% and 9.9% for the three and six months ended June 30, 2024, respectively, reflecting broad-based growth led by Pet, partially offset by lower spend in Vision.
Previous wording
Other income for the three months ended March 31, 2024 in Corp, Other primarily included the gain on sale of Pets Best of $1.1 billion.
Current wording
Other income for the six months ended June 30, 2024 in Corp, Other primarily included the gain on sale related to the Pets Best disposition of $1.1 billion.
Previous wording
Loan receivables decreased 1.2% to $101.7 billion at March 31, 2024 compared to $103.0 billion at December 31, 2023, primarily driven by the seasonality of our business, partially offset by the Ally Lending acquisition and lower customer payment rates. Loan receivables acquired through the Ally Lending acquisition are included within Consumer installment loans at March 31, 2024 in the table above.
Current wording
Loan receivables decreased 0.7% to $102.3 billion at June 30, 2024 compared to $103.0 billion at December 31, 2023, primarily driven by the seasonality of our business, partially offset by the Ally Lending acquisition and lower customer payment rates. Loan receivables related to the Ally Lending acquisition are included within Consumer installment loans at June 30, 2024 in the table above.
Previous wording
•Loan receivables increased 11.6% to $101.7 billion at March 31, 2024 compared to $91.1 billion at March 31, 2023, driven by purchase volume growth, lower customer payment rates and the completion of the Ally Lending acquisition.
Current wording
Loan receivables increased 7.9% to $102.3 billion at June 30, 2024 compared to $94.8 billion at June 30, 2023 driven by lower customer payment rates and the completion of the Ally Lending acquisition.
Previous wording
Over-30 day loan delinquencies as a percentage of period-end loan receivables increased to 4.74% at March 31, 2024 from 3.81% at March 31, 2023, and remained flat compared to 4.74% at December 31, 2023. The increase compared to the prior year was primarily driven by lower customer payment rates.
Current wording
Over-30 day loan delinquencies as a percentage of period-end loan receivables increased to 4.47% at June 30, 2024 from 3.84% at June 30, 2023, and decreased from 4.74% at December 31, 2023. The increase compared to June 30, 2023, was primarily driven by lower customer payment rates. The decrease in delinquency rate during the six months ended June 30, 2024, was primarily driven by the seasonality of our business.
Showing the first 40 of 90 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(1)Excludes $393 million and $415 million average balance of non-interest-bearing deposits for the six months ended June 30, 2024 and 2023, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Income (principally, interest and fees on loans) earned by our consolidated VIEs was $1.0 billion and $1.0 billion for the three months ended June 30 2024 and 2023, respectively. Related expenses consisted primarily of provision for credit losses of $257 million and $244 million for the three months ended June 30 2024 and 2023, respectively, and interest expense of $110 million and $78 million for the three months ended June 30 2024 and 2023, respectively.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
•In February 2024, we issued depositary shares representing $500 million of Series B 8.250% fixed rate reset non-cumulative perpetual preferred stock, with dividends payable quarterly beginning in May 2024.
Previous report — wording carried elsewhere
The results of operations related to the acquired business are included in our Condensed Consolidated Statements of Earnings subsequent to the acquisition date and were not material for the three months ended March 31, 2024.