Synchrony Financial
Annual Report 2021

Plain-text annual report

A look inside the future of commerce 2021 ANNUAL REPORT LET TER FROM BR I AN DOUBLES President and Chief Executive Officer DE AR SYNCHRONY STAK EHOLDERS, We created new digital products and capabilities. In 2021, Synchrony delivered record purchase volume and record net earnings. We managed the company through the ongoing pandemic while building for the future. We launched new partner programs and extended existing ones. BRIAN DOUBLES President and Chief Executive Officer And we built out our product suite and distribution channels through strategic partnerships and investments. We did all this so Synchrony’s products and capabilities could reach and serve more consumers. Consumers who increasingly want simplicity and choice in how they purchase and pay for the things that matter to them. Synchrony is delivering. Synchrony also continued our investments and commitments to our culture and people through progressive, industry-leading compensation and benefits, maximum work-life flexibility, Agile methodologies and substantive action around equity, diversity and inclusion. 01 / 2021 ANNUAL REPORT SYNCHRONY ’S 2021 PERFORMANCE In 2021, we executed on our strategy and delivered strong financial results. We delivered nearly 25 million new account originations, record purchase volume of $166 billion, a 19% increase in spend per active account and record net earnings of $4.2 billion. In addition, we operated with a very strong balance sheet; our liquid assets as a percentage of total assets were 13.6%, and our CET1 capital ratio was 15.6%. From 2020 to 2021, our reserve coverage dropped from 12.5% to 10.8%, and our net charge-off rate went from 4.6% to 2.9%. Our bank continues to be an important funding mechanism with total deposits of $62.3 billion, accounting for 81% of Synchrony’s funding. Synchrony’s record financial results for 2021 are attributed to our deep partnership model, superb underwriting capabilities, improved consumer spending and strong credit performance. Our focus on driving sustainable growth at appropriate risk-adjusted returns, coupled with the scalability of our technology platform and continued cost discipline, allowed us to achieve strong returns while continuing to invest for the future and returning $3.4 billion to shareholders. These investments pay off in an engaged workforce that drive innovation and great service to our partners and customers. I am proud to say we were once again recognized on Fortune’s “100 Best Companies to Work For®” list for 2022 by Great Place to Work,® one of the many accolades for our business, people and culture. We accomplished all of this, guided by our long-term strategy to: 01. Win and grow large partner programs. 02. Diversify and expand with new products and markets. 03. Deliver best-in-class customer experiences. 04. Operate with a strong financial profile to deliver attractive total shareholder returns. This strategy is the right one for Synchrony because it enables us to do what we do best: building the relationships, developing the solutions and advancing the technologies that are creating the future of commerce. I want to thank Synchrony’s 18,000-plus employees, as well as our Board of Directors, partners, customers and shareholders. Through the support of all our stakeholders, we were able to overcome challenges, take advantage of opportunities and deliver strong financial results in 2021, all while setting the company up for continued prosperity in the long term. 2021 ANNUAL REPORT / 02 ORGANIZING OUR COMPANY FOR CONT INUED GROW TH Our 2021 financial results show a healthy, well-managed, diversified business that is expanding through the continuing pandemic. To achieve these results and build for the future, we positioned the company to more effectively go after the more than $5 trillion of consumer spend across the many industries we operate in today. Last year, we expanded our sales platforms from three to five—Digital, Health & Wellness, Home & Auto, Diversified & Value, and Lifestyle— to align to industry verticals and better serve our partners and their customers’ evolving expectations. Through these platforms, we can better scale our products and digital capabilities while deploying Synchrony’s deep industry and domain expertise and consumer financing know-how to meet our partners’ needs. Across these platforms, we signed 36 new partners and renewed 38 existing ones, such as long-term partners American Eagle, Ashley HomeStore and the TJX Companies. We continued to grow our digital platform, which grew 25% year to year in purchase volume and 6% year to year in receivables across digital partners such as Amazon, PayPal (including Venmo) and Verizon. Reflecting our deep partner relationship and commitment to Agile innovation, we also expanded our work with PayPal beyond financing through the PayPal Savings program, which went live for consumers in early 2022. This savings program provides consumers access to a competitive high-yield interest rate and encourages the development of healthy savings habits. Additionally, our collaboration on marketing innovations has driven strong value for both our cardholders and partners, including purchase volume growth in partner programs such as those we have with Sam’s Club and TJX, among others. Our expansion in the vast and rapidly growing health-and-wellness market continued in 2021. We partnered with Walgreens to launch the first- of-its-kind myWalgreens credit card program, featuring two industry-first retail health-and-wellness credit cards that reward customers for their personalized well-being purchases at more than 9,000 locations and online. We acquired Allegro Credit, a consumer finance provider that is now part of our Health & Wellness platform, to further accelerate our leadership in audiology and dental financing. We’ve signed 20 health system partners since moving into the health systems space in 2019, with seven new ones in 2021. These partners are using Synchrony’s products to help patients pay for the care they need. We also continued to broaden our reach from “vet to pet,” including through Synchrony’s acquisition of Pets Best in 2019, which gave us an entry point into the fast-growing pet insurance market. In the three years since acquiring Pets Best, we have significantly grown the business, quadrupling the number of pets we cover to more than 500,000 today. Synchrony also excelled in our Home & Auto platform, which had $43 billion in purchase volume and $27 billion in receivables—up 14% and 3% year to year, respectively. The increase demonstrates the effectiveness of our three-pillar Home & Auto growth strategy of integrating more deeply with current partners while growing the networks and exploring adjacent markets, like smart home and rideshare. 03 / 2021 ANNUAL REP ORT BROADEST R ANGE OF FINANCING OPT IONS POWERED BY SCAL ABLE TECH OFFERS CONSUMERS FLEX IBIL I T Y AND CHOICE Synchrony has more than 200 Agile build teams that provide the broadest portfolio of financing products across our partner portfolios, offering consumers the right financing option at the right time in the channel of their choosing. PAYMENT INTEGR ATIONS Client Wallet Third-Party Wallet QR Code POS APIs Revolving Business Installments Growth Adjacencies PLCC CO- BR AND DUAL CARD BUSINESS REVOLV ING INSTALLMENTS & BNPL PET INSUR ANCE SECURED NET WORK SYNCHRONY MASTERCARD COMMERCI AL ACCOUNT INSTALLMENTS & LEASING HEALTH SYSTEMS SECURED GIF TNOW COMMON PL ATFORMS Digital Acquisitions Native Plug-In Digital Servicing Rewards Digital Marketing BR INGING OUR CAPABIL I T IES TO MARKET FASTER; SCAL ING TO MORE CONSUMERS To bring Synchrony’s products and capabilities to market faster and scale them more seamlessly, we combined our data, marketing and product teams into our new Growth Organization last year. We also merged our Technology and Operations teams to fuel digital innovation, drive operational excellence and efficiency, and improve customer service across our contact centers. These moves are supported by our long-term investments in our company. For example, since our 2014 IPO, Synchrony has invested nearly $5 billion in our digital and technology capabilities, in areas such as analytics, AI, cloud, customer experience and data. Today, we have more than 200 Agile build teams that provide the broadest portfolio of financing products, offering consumers the right financing option at the right time in the channel of their choosing. In 2021, we continued to expand this digitally enabled product suite: • We offer a wide range of “buy now, pay later” (BNPL) options that provide more choice and flexibility for the consumer while driving sales and growth for partners: - Our BNPL installment product, SetPay, enables customers to take out a loan for the exact amount of a one-time purchase, then pay it off over time through equal monthly payments. Terms are three months or longer with order values typically above $500— and sometimes significantly higher. - To broaden our SetPay offering, and in the spirit of flexibility and choice, we introduced SetPay pay in 4, Synchrony’s short-term BNPL product for smaller purchases of $40–$500, which allows for four equal, interest-free payments made over six weeks. - Our revolving BNPL offering allows consumers a way to make a new BNPL purchase in equal payments without having to open an account by connecting it with an existing revolving credit card account. This gives consumers an easy way to make repeat purchases and drives higher engagement and loyalty for partners. 2021 ANNUAL REPORT / 04 • Approximately 65%1 of our total payments and 55% of our total applications came through our digital channels, as we continued to drive advancements in our digital capabilities. These include: - SyPI, our Synchrony plug-in that integrates with our partners’ retail apps. It has been upgraded with several new features, including digital wallet provisioning and enhancements to push notifications and e-bill. Collectively, the availability of these features contributed to a 40% increase in unique visitors in 2021 and 56% growth in the number of payments we receive in SyPI. - Our Prequalification preapproval engine, which helped drive 5.6 million requests and more than 1.3 million new customer accounts in 2021. - Direct to Device applications for providing in-store contactless engagement with customers. - dApply, which reduces the number of fields required for a customer to open an account, and QR Codes that allow consumers to apply for credit as well as pay, all by scanning a code on their own device. 14Q21 percentage of total payments We’ve also made collaborating with startups and other innovative companies a priority. Our Synchrony Ventures team backs early-stage entrepreneurs who help us better serve our customers and complement our own innovations. We invest in startups that offer seamless experiences, user-centered design and a deep, intuitive understanding of the customers they aim to serve. For example, last year we acquired a minority stake in Skipify, which allows shoppers to purchase directly from blog posts, reviews, product links and emails, eliminating the multiple screens and clicks often associated with online shopping to provide a much better customer experience. We’re also excited about the expansion of Synchrony products and capabilities through new distribution channels, particularly third-party digital platforms that reach large and small merchants, hospitals, healthcare providers and more. We signed partnerships with Clover and Epic Systems, expanding our reach to consumers. Merchants using Clover point-of-sale terminals can add Synchrony services to accept private-label card payments as well as new applications for credit through their Clover terminals and apps. Working with Epic Systems, we have made our CareCredit patient financing available in the Epic App Orchard. The app allows health systems and providers to offer patients flexible, convenient and easy payment options. DIGI TAL CONT INUES AS A CHANNEL OF CHOICE FOR CONSUMERS Consumers continue to shift to the digital channel, and Synchrony’s innovative technology is serving their needs. ~65% DIGITAL PAYMENTS* * *4Q21 Percentage of Total Payments ~55% DIGITAL APPLICATIONS ~35% ~40% MOBILE CHANNEL APPLICATIONS ONLINE SALES† †Excluding Health & Wellness 05 / 2021 ANNUAL RE PORT L I V ING OUR VALUES, ENHANCING OUR CULTURE I am proud that we have evolved our company from a consumer lending business into a digitally powered financial ecosystem that is driving great experiences and choices for customers—and value and growth for our partners and Synchrony. I’m equally proud of our culture and company, especially of the team we have built to help execute our strategy. Synchrony is a great place to work because we have great people who believe in and live our values: We are honest, passionate, caring, responsible, bold and driven. These values underpin the innovations we create and the trust we build with our partners and customers. Our clients feel it, too, as evidenced by our deep and long-lasting business relationships. We have fostered a culture where employees are empowered to do their best work—taking smart risks, trying new things and iterating rapidly on the way to success. The kind of work that was front and center in 2021. Our people stay—and thrive—at Synchrony because they can do innovative work and because we have made work more flexible. We’ve adapted it to their lives. For example, we no longer wait for the annual cycle to roll out new benefits; instead, we move fast, testing and learning and adapting as we go. Since the start of the pandemic, we’ve introduced new wellness offerings and new learning, compensation, rewards and other programs. We launched flexibility for all, providing Synchrony employees the opportunity to work remotely full-time, coming in when business needs require, or in a hybrid fashion for those who want to come into the office a few days a week. We’ve also reinvented our approach to attracting new talent to Synchrony. Nearly all open jobs can be based anywhere we do business. This change, combined with our progressive approach to flexibility, has helped expand our applicant pools by more than 25% as compared with the pre-pandemic period. Last year, we established a $20 per hour minimum wage in the U.S. for our contact center associates, and we paid them their highest bonus ever in recognition of our results and their outstanding service to our partners and customers in 2021. Firm in our belief that every Synchrony employee deserves respect, support and the opportunity to achieve their full potential, we accelerated our actions around equity, diversity and inclusion. Our goal is to achieve measurable results across all areas of our business and communities with a focus in three areas: culture, growth and investment, and citizenship. I am proud to say we are making progress in all three areas. For example, in 2021, Synchrony increased representation of Black and Hispanic employees at the vice president level and higher in the U.S. We also increased the number of diverse suppliers participating in requests for proposals by 300% year to year. We partnered with the Synchrony Foundation through our Education as an Equalizer program, investing $50 million in helping underrepresented groups acquire the skills they need to earn college degrees or certificates to advance their careers. We also joined OneTen, a coalition of leading and former CEOs and companies that will train, hire and advance 1 million Black individuals into family-sustaining American jobs over the next decade. These are just a few of the examples of progress we are making (you can read more on pages 10 and 11). We also know we have continuing work to do and remain committed to keeping equity, diversity and inclusion (ED&I) as a strategic priority for our business. We’ve proven that investing in our people and our communities creates engaged, innovative employees, and a faster, nimbler Synchrony. It is our belief that this formula allows us to better serve our partners and customers, and ultimately drive growth for our partners, shareholders and Synchrony, too. 2021 ANNUAL REPORT / 06 A LOOK TO THE FUTURE: 2022 AND BEYOND Proud of all we accomplished in 2021, I’m confident about the road ahead. We’ve created an enterprise that can succeed in good times and in challenging ones because it is built on a very strong foundation based on 90 years of experience. Our ability to quickly adapt has allowed us to transform our business to meet fast-changing partner and consumer needs. We’re well positioned to outperform over the long term as we continue to win new partners and renew existing ones; further diversify our programs, products and the markets we operate in; and provide consumers the broadest range of choice with the most comprehensive, integrated product set in the industry. Our team is flexible, agile and adaptable—anticipating new customer needs and driving innovations for seamless, digital-first experiences. We did it in 2021, and we will do it again in 2022 and beyond. We believe, with our great team, we’ll deliver on our long-term strategy and continue to generate sustainable growth at attractive returns, unlocking even greater value for our stakeholders. Our results to date show how we have strengthened our position as the trusted partner of choice as a leading financial service provider for retailers, merchants, providers and consumers alike. That is an enduring competitive advantage. That is Synchrony. BRIAN DOUBLES President and CEO 07 / 2021 ANNUAL REP ORT ORGANIZING OUR COMPANY FOR CONT INUED GROW TH FOR SYNCHRONY AND OUR PARTNERS In 2021, we positioned our company to more effectively go after the more than $5 trillion of consumer spend across the many industries we operate in today. Our five platforms enable Synchrony to better scale our products and digital capabilities while deploying Synchrony’s deep industry and domain expertise and consumer financing know-how to meet our partners’ needs. DIGITAL Enables our digital-first partners to deepen consumer engagement and extend digital relationships into in-person commerce. HEALTH & WELLNESS Provides comprehensive healthcare financing and payments solutions through a network of providers and partners for those seeking health- and-wellness care for themselves, their families and their pets. HOME & AUTO Works with partners to offer flexible financing options to customers, whether they want to realize their dreams or need value and utility to stay on the go. DI VERSIFIED & VALUE Helps large retail partners deliver everyday value to consumers shopping for daily needs or important life moments, in-store or online. LIFEST YLE Partners with a diverse set of merchants to extend the passion for their brands and products to the customer, offering seamless financing while building a relationship grounded in special experiences across multiple generations. Sample partners across Synchrony’s five platforms EQUI T Y, DI VERSI T Y AND INCLUSION: TAK ING A STAND THROUGH MEANINGFUL ACT ION Synchrony has long stood for equity, diversity and inclusion. We have recommitted to further action and advancement to address challenges facing those who are underrepresented, marginalized or discriminated against. Our senior-level committee and leaders company-wide are focused on driving measurable results across all areas of our business and our communities: CULTURE: Increasing diverse employee talent at all levels of the workforce and strengthening a culture of inclusion and well-being for all • Launched the Latinx Executive Alliance, dedicated to advancing Latinx talent in corporate America; launched an internal sponsorship program for high-potential Latinx talent. • Joined the OneTen coalition and committed to hire or advance Black individuals with high school diplomas and other certifications into middle-skill jobs. • Launched a global expansion of Advancing Diverse Talent, Synchrony’s data analytics initiative to increase the hiring, development and advancement of underrepresented minorities. • Hosted the sixth annual Global Diversity Symposium, a three-day employee event that deepened our commitment to drive lasting change. GROW TH AND INVESTMENT: Advancing financial opportunities, growth and wellness among diverse communities and businesses • In 2021, Synchrony Ventures committed up to $100 million toward opportunities in diverse-owned businesses spearheaded by Ariel Alternatives, LLC. Our ventures team also committed $15 million in venture capital funds led by diverse partners with a track record of investing in underrepresented startups. • Committed $5 million to community organizations that help small businesses, including $2 million to the Local Initiatives Support Corporation, for emergency grants to minority- and women-owned businesses. • Joined the National Minority Supplier Diversity Council with an expanded $50,000 pledge. Since 2018, our annual diverse supplier spend has increased 20%. MORE THAN 10,000 SYNCHRONY EMPLOYEES ARE ACT I VE IN OUR SYNCHRONY DI VERSI T Y NET WORKS Synchrony’s diversity networks help cultivate a culture of inclusion where employees can bring their best selves to work every day. 09 / 2021 ANNUAL REPORT CI T I ZENSHIP: Increasing our commitment to addressing deeply rooted gender and racial inequality and disparities within the communities we serve. • Launched Education as an Equalizer, a $50 million, five-year initiative to advance education equity for underrepresented communities and our own workforce. This includes $20 million in Synchrony Foundation grants to academic institutions, nonprofits and skills-credentialing organizations. • Continued our actions to support the Business Roundtable’s series of recommendations on corporate and public policies for advancing racial equity and justice. • Expanded partnership with the Executive Leadership Council to enhance the role of Black executives while preparing the next generation of corporate leaders. 2021 ANNUAL REPORT / 10 A MESSAGE FROM THE BOARD OF DIRECTORS Dear Stakeholders: Working closely with Synchrony’s management, the Board of Directors oversees the company’s evolving business operations and strategy, including its environmental, social and governance (ESG) initiatives. In a highly competitive environment, our close working relationship with management helps create long-term value for stockholders, employees and other stakeholders by ensuring the company can quickly address challenges, capitalize on opportunities and maximize efficiency. One of the most important responsibilities of the Board is ensuring successful leadership transitions. Last year, we oversaw the retirement of longtime Chair Richard Hartnack. We thank Richard for his many contributions to Synchrony since being named founding Chair of the Board of Directors in 2014. We also managed the successful transition of Brian Doubles to President, CEO and Director; Margaret Keane to Executive Chair; and Jeffrey G. Naylor to Lead Independent Director. These three leaders moved seamlessly into their new roles. Moreover, the Board and its Nominating and Corporate Governance Committee (NCGC) managed the leadership transition of the Management Development and Compensation Committee (MDCC) from Richard Hartnack to Laurel J. Richie. Given these changes, the NCGC and the Board made it a top priority to maintain strong board performance. We moved up by one year the hiring of an external consultant to facilitate the annual board self-evaluation during the transition year. The Board intends to return to its established practice of hiring an external consultant every third year. OVERSEEING STR ATEGY The Board provides active oversight of the company’s strategic direction and the performance of its business and management. As part of Synchrony’s annual strategic planning process, we conducted an intensive, multiday review of Synchrony’s short-, medium- and long-term strategic plans, considering economic, consumer, technology, healthcare, sustainability and other significant trends, as well as developments in industry and regulatory initiatives. Our input was then incorporated into the strategic plan and approved at our next meeting. Throughout the year, we provided regular feedback on the progress of the company’s strategic plan as well as deep dives on devel- opments in important areas, such as cybersecurity. In addition, the Board regularly discussed and reviewed feedback from our stockholders and other stakeholders, and we engaged with internal and external experts and advisors to ensure our strategy reflects the latest competitive landscape. 11 / 2021 ANNUAL RE PORT This process supported management’s execution of key strategic imperatives, including: ORGANIZING FOR GROWTH STAKEHOLDER ENGAGEMENT As Brian Doubles noted in his shareholder letter, Synchrony organized partner portfolios across five sales platforms to better serve partners, deepen industry focus and enhance customer experiences. The company created a growth organization to scale products, capabilities and services more quickly across these five platforms, and combined the technology and operations teams to fuel digital innovation and drive operational excellence and efficiency. R ISK MANAGEMENT Synchrony hosted its first investor day for the financial community and all stakeholders. Themes included our diversified business operations and large addressable market opportunity (more than $5 trillion of consumer spend across the many industries we operate in today), as well as our multiproduct suite and digital capabilities. We believe our stakeholders walked away knowing that Synchrony is well positioned to generate sustainable growth, attractive returns and significant capital over the long term. The Board and the Risk Committee oversee Synchrony’s enterprise-wide risk management program to ensure that all relevant risks, including credit risk, market risk, liquidity risk, operational risk (including compliance risk), strategic risk and reputational risk, are appropriately identified and controlled. For example, we have devoted significant resources and board attention to topics such as information security, including privacy, data security and cybersecurity, the company’s response to the COVID-19 pandemic, and capital planning. We believe the corporate culture and enterprise-wide risk governance framework established by the board and management facilitate an effective risk presence across the company. OVERSEEING ESG PROGRESS Since our IPO in 2014, the Board has consistently prioritized environmental, social and governance (ESG) programs. We believe that caring for our business, our customers, our partners, our employees, our communities and the environment creates sustainable, long-term stockholder value while reducing risk. We wholeheartedly agree with stakeholders’ recent focus on ESG matters and have responded through action. ESG is now a quarterly agenda item for the Nominating and Corporate Governance Committee, including a joint meeting with the Management Development and Compensation Committee to focus on ESG and equity, diversity and inclusion. The MDCC added culture— including ESG factors, such as employee support during the pandemic, pay equity and our new, agile ways of working—as a funding component in the 2021 annual incentive plan, a cash bonus plan offered to approximately 3,500 Synchrony leaders. The Board managed and provided oversight for the company’s best-in-class ESG policies. These include programs to aid employees during the pandemic, as well as the introduction of a $20 minimum wage for all hourly workers in the U.S. and Puerto Rico. We also continued to oversee other important initiatives, such as the company’s debt-free tuition reimbursement program, ongoing work to ensure pay equity, the new way of working and hybrid work options. We also provided oversight of progress against Synchrony’s ED&I goals. In 2021, Synchrony increased representation of Black and Hispanic employees at the vice president level and higher in the U.S., and increased the number of female employees in executive-level roles globally. The company launched its Education as an Equalizer program, backed by $50 million over five years, to expand access to higher education and skills training in high-growth fields, and financial literacy for underserved communities and our own workforce. The company also committed $15 million to venture capital funds led by Black, Latinx and women-led investing partners. Lastly, our directors delivered on personal commitments to engage on ED&I issues: • Fernando Aguirre helped lead the development and launch of Synchrony’s Latinx Executive Alliance, a coalition of C-suite executives and business leaders from different companies, industries and sectors, dedicated to collectively helping Latinx employees advance in corporate America. He continues as a co-sponsor of the alliance. • In celebration of National Hispanic Heritage Month, Aguirre led a conversation sponsored by the Synchrony Hispanic Network—our internal Hispanic diversity network—on “Why Hispanic Representation Matters,” focusing on the importance of driving Hispanic representation. • William Graylin led a conversation sponsored by Synchrony’s internal Asian Professional Engagement Network on experiences, perspectives and career recommendations. • Laurel J. Richie and Margaret Keane led a town hall on diversity, focusing on women’s empowerment in celebration of International Women’s Day. • Keane participated in a session with the U.S. Chamber of Commerce on how businesses can lead the way to an inclusive recovery, with a specific focus on how to keep women in the workforce. She also engaged the Synchrony team on these topics through our Women’s Network. It is our privilege to serve all Synchrony stakeholders in building this great company. We are confident in the company’s strategy and pleased with all that was accomplished in 2021. THANK YOU FOR YOUR CONTINUED SUPPORT AND TRUST. MARGARET KEANE FERNANDO AGUIRRE PAGET ALVES ARTHUR COVIELLO JR. BRIAN DOUBLES ROY GUTHRIE WILLIAM GRAYLIN JEFFREY NAYLOR BILL PARKER LAUREL RICHIE OLYMPIA SNOWE ELLEN ZANE 2021 ANNUAL REPORT / 12 EXECUTIVE LEADERSHIP TEAM President & CEO EVP, Chief Growth Officer EVP & CEO, Health & Wellness EVP, Chief Human Resources Officer EVP, Chief Credit Officer & Capital Management Leader BRIAN DOUBLES EVP & CEO, Home & Auto MICHAEL BOPP EVP, Chief Technology & Operating Officer ALBERTO CASELLAS EVP, Chief Audit Executive DJ CASTO HENRY GREIG EVP, Chief Strategy Officer & Corporate Development Leader EVP, General Counsel & Secretary CURTIS HOWSE CAROL JUEL MARK MARTINELLI TRISH MOSCONI JONATHAN MOTHNER EVP & CEO, Diversified & Value and Lifestyle Platforms EVP & CEO, Digital EVP, Chief Financial Officer EVP, Chief Risk Officer TOM QUINDLEN BART SCHALLER BRIAN J. WENZEL SR. PAUL WHYNOTT 13 / 2021 ANNUAL RE PORT BOARD OF DIRECTORS Executive Chair of Synchrony; Former President & CEO of Synchrony Former Chairman, President & CEO of Chiquita Brands International, Inc. Former Chief Sales Officer of Sprint Corporation Chief Operating Officer of DentaQuest LLC1 Former EVP of EMC Corporation; Former Executive Chairman of RSA Security, Inc. MARGARET KEANE FERNANDO AGUIRRE PAGET ALVES KAMILA CHYTIL ARTHUR COVIELLO JR. President & CEO of Synchrony Former CEO of Renovate America, Inc.; Former EVP & CFO of Discover Financial Services, Inc. Chairman & CEO of OV Loop, Inc.; Chairman & CEO of Indigo Technologies, Inc.; Former Global Co-General Manager of Samsung Pay, Samsung Electronics America, Inc. Lead Independent Director of the Board; Former Senior EVP, CFO and CAO of the TJX Companies, Inc. Former Vice Chairman and Chief Risk Officer of U.S. Bancorp BRIAN DOUBLES ROY GUTHRIE WILLIAM GRAYLIN JEFFREY NAYLOR BILL PARKER Former President of the Women’s National Basketball Association LLC Chairman and CEO of Olympia Snowe, LLC; U.S. Senator 1995–2013 and Member of U.S. House of Representatives 1979–1995.2 Former President and CEO of Tufts Medical Center and Tufts Children’s Hospital LAUREL RICHIE OLYMPIA SNOWE ELLEN ZANE Synchrony has one of the most diverse Board of Directors among commercial banks and diversified financials in the Fortune 200.3 1Named to the Board effective April 1, 2022. 2Effective May 19, 2022, Ms. Snowe will retire from the Board in accordance with our governance principles. 3Based on publicly available information as of February 24, 2022. 2021 ANNUAL REPORT / 14 FINANCI AL HIGHLIGHTS FOR THE YEARS ENDED, AND AT, DECEMBER 31, 2021 (in millions unless otherwise stated except for per share data and ratios) FINANCIAL HIGHLIGHTS Net interest income Interest and fees on loans Net earnings Diluted earnings per share Shares outstanding1 PERIOD END Total assets Loan receivables Deposits Common equity Tier 1 capital ratio PERFORMANCE METRICS Purchase volume (in billions)2 Period-end active accounts (in thousands)3 Average active accounts (in thousands)3 Net interest margin4 Net charge-off rate5 30+ delinquency rate6 Efficiency ratio7 Return on assets8 1Diluted weighted average common shares outstanding. 2Purchase 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. Purchase volume includes activity related to our portfolios classified as held for sale. 3Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month. Includes activity and accounts associated with loan receivables held for sale. 4Net interest margin represents net interest income divided by average interest-earning assets. 5Net charge-off rate represents net charge-offs as a percentage of average loan receivables, including those held for sale. 15 / 2021 ANNUAL R EPORT $ $ $ $ $ $ $ 2021 14,239 15,228 4,221 7.34 569.3 95,748 80,740 62,270 15.6% $ $ $ $ $ $ $ 2020 14,402 15,950 1,385 2.27 590.8 95,948 81,867 62,782 15.9% $ 165.9 $ 139.1 72,420 67,334 14.74% 2.92% 2.62% 38.9% 4.5% 68,540 67,131 14.29% 4.58% 3.07% 36.3% 1.4% 6Based on customer statement-end balances extrapolated to the respective period-end date. 7Efficiency ratio represents (i) other expense, divided by (ii) net interest income, plus other income, less retailer share agreements. 8Return on assets represents net earnings as a percentage of average total assets. 

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