Synchrony Financial

Good morning, and welcome to the Synchrony Financial Third Quarter 2020 Earnings Conference Call. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Craig Ketron. You may begin, sir.

Thanks, operator. Good morning, everyone, and welcome to our quarterly earnings conference call. Thanks for joining us. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules, and presentation are available on our website, synchronyfinancial.com. This information can be accessed by going to the investor relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty, and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. On the call this morning are Margaret King, Brian Wenzel, and Brian Doubles. I will now turn the call over to Margaret.

Thanks, Greg, and good morning, everyone. With the global health crisis still looming and continued racial injustice, there is a continued disruption to our lives, businesses, and the economy. As we continue to respond as a company, we have put people at the forefront of our decision, and I'm extremely proud of our actions to address these crises. We've made thoughtful, forward-looking decisions to support our employees and families, our customers, our partners, our communities, and our shareholders. Using agile principles, we have realigned and reimagined the way we work, quickly advancing our most important cultural and business priorities, including the successful launch of two new important programs in the midst of a pandemic. Using safety and maximum flexibility for employees as a backdrop, all of our U.S. employees can now permanently work from home. Doing so has also allowed us to transform our physical footprint. We have reduced the size of some of our sites and closing other sites entirely. These changes stem from our employees' desire to work from home. Their productivity in this environment will help us drive long-term efficiency and profitability of our business. As part of this effort, today we announced a restructuring charge of $89 million in the third quarter, which encompasses our new site footprint strategy. We are also being thoughtful, targeted, and aggressive on our cost structure as we move forward, allowing us to continue our focus and investment in future growth. Digital innovation is paramount to the success of our program. Consumers are rapidly adopting technologies that enable contactless commerce, and we are responding to ensure our partners are well positioned for this rapidly evolving dynamic. Deep technology investments have enabled the company to respond quickly to partners and cardholders with resources to help them adapt to the challenges of this new environment. We are providing enhanced, innovative digital solutions for our partners and cardholders, further strengthening our market position. Brian Dovels will cover some of our recent digital innovations shortly. Shifting quickly to change how we are operating our business where we are allocating capital and making investments is essential to our current and future success. We are confident that these actions and our long-term strategy will make us stronger and even more competitive as we manage through the economic cycle caused by the pandemic. I'll now turn specifically to our third quarter results and some of our recent successes, which are outlined on slide three. Earnings were $313 million or 52 cents per diluted share. This includes the restructuring charge of $89 million or $67 million after tax, which equates to an EPS reduction of 11 cents. It also includes an increase in provision for credit losses as a result of the CECL implementation this year, which was $66 million or $50 million after tax, which reduced EPS by 9 cents. The pandemic has continued to impact results this quarter. Brian Wenzel will provide details on the translator in the call, and I will provide a high-level overview here. On a core basis, which excludes Walmart and the Yamaha portfolios, the impact of COVID-19 drove a 5% decrease in loan receivables and a 12% decrease in interest and fees. Purchase volume was flat, and average active accounts decreased 8%. The efficiency ratio was 39.7% for the quarter. As a result of our liquidity and funding strategy in response to the COVID-19 impact on our balance sheet, deposits were down 2.5 billion or 4% versus last year. This includes a strategic decision to slow overall deposit growth given the excess liquidity we have. Total deposits comprise 80% of funding, and our direct deposit platform remains an important funding source. Our ability to service and provide digital tools to customers makes our bank attractive to depositors, and we will continue to build out additional capabilities. During the quarter, we returned 129 million in capital through common stock dividends. We also extended several programs and added new partnerships, which you can see on the slide. One of our most notable renewals is with Sam's Club. We are very pleased to extend our strategic partnership with a new multi-year agreement that builds upon our 25-year credit card relationship. The extension enhances rewards and drives incremental value for members and small businesses, and we continue to bridge the digital and physical experiences with innovative payment technologies. We have also successfully launched the Venmo program, and Brian Doubles will provide more details shortly. We are pleased with the strength of our business, our ability to win programs and launch innovative new products, and our capacity to rapidly adapt to ensure that we are well positioned to continue to help our cardholders and partners navigate these challenging times. I'm now going to turn the call over to Brian Double to discuss Venmo and our accelerating digital and product innovation.