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Regulatory and Capital Adequacy
3 Months Ended
Mar. 31, 2018
Banking and Thrift [Abstract]  
Regulatory and Capital Adequacy
REGULATORY AND CAPITAL ADEQUACY
As a savings and loan holding company and a financial holding company, we are subject to regulation, supervision and examination by the Federal Reserve Board and subject to the capital requirements as prescribed by Basel III capital rules and the requirements of the Dodd-Frank Act. The Bank is a federally chartered savings association. As such, the Bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency of the U.S. Treasury (the “OCC”), which is its primary regulator, and by the Consumer Financial Protection Bureau (“CFPB”). In addition, the Bank, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation.
Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a material adverse effect on our consolidated financial statements. Under capital adequacy guidelines, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require us and the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined).
For Synchrony Financial to be a well-capitalized savings and loan holding company, the Bank must be well-capitalized and Synchrony Financial must not be subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve Board to meet and maintain a specific capital level for any capital measure.
At March 31, 2018 and December 31, 2017, Synchrony Financial met all applicable requirements to be deemed well-capitalized pursuant to Federal Reserve Board regulations. At March 31, 2018 and December 31, 2017, the Bank also met all applicable requirements to be deemed well-capitalized pursuant to OCC regulations and for purposes of the Federal Deposit Insurance Act. There are no conditions or events subsequent to March 31, 2018 that management believes have changed the Company's or the Bank’s capital category.
The actual capital amounts, ratios and the applicable required minimums of the Company and the Bank are as follows:
Synchrony Financial
At March 31, 2018 ($ in millions)
Actual
 
Minimum for capital
adequacy purposes
 
Amount
 
Ratio(a)

 
Amount

 
Ratio(b)

 
 
 
 
 
 
 
 
Total risk-based capital
$
13,878

 
18.1
%
 
$
6,121

 
8.0
%
Tier 1 risk-based capital
$
12,863

 
16.8
%
 
$
4,591

 
6.0
%
Tier 1 leverage
$
12,863

 
13.7
%
 
$
3,766

 
4.0
%
Common equity Tier 1 Capital
$
12,863

 
16.8
%
 
$
3,443

 
4.5
%
At December 31, 2017 ($ in millions)
Actual
 
Minimum for capital
adequacy purposes
 
Amount
 
Ratio(a)

 
Amount

 
Ratio(b)

 
 
 
 
 
 
 
 
Total risk-based capital
$
13,954

 
17.3
%
 
$
6,454

 
8.0
%
Tier 1 risk-based capital
$
12,890

 
16.0
%
 
$
4,840

 
6.0
%
Tier 1 leverage
$
12,890

 
13.8
%
 
$
3,724

 
4.0
%
Common equity Tier 1 Capital
$
12,890

 
16.0
%
 
$
3,630

 
4.5
%
Synchrony Bank
At March 31, 2018 ($ in millions)
Actual
 
Minimum for capital
adequacy purposes
 
Minimum to be well-capitalized under prompt corrective action provisions
 
Amount
 
Ratio(a)
 
Amount

 
Ratio(b)

 
Amount

 
Ratio

 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
$
11,054

 
17.4
%
 
$
5,091

 
8.0
%
 
$
6,364

 
10.0
%
Tier 1 risk-based capital
$
10,205

 
16.0
%
 
$
3,818

 
6.0
%
 
$
5,091

 
8.0
%
Tier 1 leverage
$
10,205

 
13.1
%
 
$
3,127

 
4.0
%
 
$
3,909

 
5.0
%
Common equity Tier I capital
$
10,205

 
16.0
%
 
$
2,864

 
4.5
%
 
$
4,136

 
6.5
%
At December 31, 2017 ($ in millions)
Actual
 
Minimum for capital
adequacy purposes
 
Minimum to be well-capitalized under prompt corrective action provisions
 
Amount
 
Ratio(a)
 
Amount
 
Ratio(b)
 
Amount
 
Ratio
 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
$
10,842

 
16.2
%
 
$
5,340

 
8.0
%
 
$
6,675

 
10.0
%
Tier 1 risk-based capital
$
9,958

 
14.9
%
 
$
4,005

 
6.0
%
 
$
5,340

 
8.0
%
Tier 1 leverage
$
9,958

 
12.9
%
 
$
3,083

 
4.0
%
 
$
3,854

 
5.0
%
Common equity Tier I capital
$
9,958

 
14.9
%
 
$
3,004

 
4.5
%
 
$
4,339

 
6.5
%
_______________________
(a)
Capital ratios are calculated based on the Basel III Standardized Approach rules which, at December 31, 2017, also included applicable transition provisions.
(b)
At March 31, 2018 and at December 31, 2017, Synchrony Financial and the Bank also must maintain a capital conservation buffer of common equity Tier 1 capital in excess of minimum risk-based capital ratios by at least 1.875 percentage points and 1.25 percent percentage points, respectively, to avoid limits on capital distributions and certain discretionary bonus payments to executive officers and similar employees.
The Bank may pay dividends on its stock, with consent or non-objection from the OCC and the Federal Reserve Board, among other things, if its regulatory capital would not thereby be reduced below the applicable regulatory capital requirements.