BREAD FINANCIAL HOLDINGS, INC.
For the period ended Mar 31, 2026. Filed Apr 28, 2026.
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.
Mar 31, 2026 · Filed Apr 28, 2026
BFH$101.83-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-28.
0001101215-25-000173
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)Current report: 10-Q
Period ended 2026-03-31; filed 2026-04-28.
0001101215-26-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)The 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 220 previous paragraphs and 207 current paragraphs.
90 unchanged; 77 reworded; 36 added; 50 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 17 previous and 19 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 (36)
Current report
Total non-interest expenses of $472 million decreased 1% year-over year. The decrease reflects ongoing expense discipline, as well as a credit received in the current quarter which lowered outsourced data processing costs; partially offset by increased Employee compensation and benefits from increased wages.
Current report
Provision for income taxes increased $7 million year-over-year primarily driven by an increase in Income from continuing operations before income taxes.
Current report
Our 2026 financial outlook is unchanged and reflects continued consumer resilience, inflation remaining above the Federal Reserve Board’s (FRB) target rate of 2%, and a generally stable labor market.
Current report
Based on our current economic outlook and visibility into our new business pipeline and partner growth, as well as both the expected continued improvement in our Net principal loss rate and our ongoing expectations for strong cardholder payment rates, we expect growth in 2026 Average credit card and other loans to be up low-single digits on a percentage point basis from full year 2025. Growth in Total net interest and non-interest income is also anticipated to be up in the low-single digits on a percentage point basis from 2025, in line with the growth in Average credit card and other loans. We anticipate our full year Net interest margin to be higher than 2025 as a result of continued, albeit slowing benefits from implemented pricing actions and an improving cost of funds, partially offset by lower billed late fees from improving delinquency trends, and continued shifts in risk and product mix which are driving improvement in our payment rate trends. We continually focus on expanding and diversifying our product offerings, including ways to leverage our loan origination and servicing capabilities.
Current report
Expense growth is managed based on revenue generation and investment opportunities. We expect to deliver positive operating leverage in 2026, excluding the pretax impacts from our debt repurchases, a Non-GAAP financial measure. We continue to invest in AI capabilities, technology modernization, marketing, and product innovation to drive growth and efficiencies.
Current report
Our first quarter results demonstrate our success in driving responsible growth, and our ongoing focus on strategic capital allocation and disciplined credit risk management. We remain confident in our ability to generate strong returns and increased value for our stockholders in 2026.
Current report
(3)Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations, less Dividends to preferred stockholders, divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders’ equity reduced by Preferred stock and Goodwill and intangible assets, net.
Current report
•Other increased due primarily to an increase in revenue from our payment protection products as a result of new enrollment channels.
Current report
•Employee compensation and benefits increased primarily due to higher wages related to annual merit increases and incentive compensation, partially offset by operational excellence initiatives.
Current report
•Information processing and communication decreased due primarily to a credit received in the quarter, lowering outsourced data processing costs.
Current report
(4)Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations, less Dividends to preferred stockholders, divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders’ equity reduced by Preferred stock and Goodwill and intangible assets, net.
Current report
(9)Book value per common share represents Total stockholders' equity less Preferred stock, divided by common shares outstanding.
Current report
The table below provides a summary of the credit ratings for the outstanding senior unsecured debt, subordinated debt and preferred stock of Bread Financial Holdings, Inc. In October 2025 all three credit rating agencies issued their updated credit ratings and related outlooks, which remain unchanged as of March 31, 2026, and were as follows:
Current report
Senior and Subordinated Unsecured Notes
Current report
The following table provides a summary of our outstanding Long-term and other debt, consisting of senior and subordinated unsecured notes, as of March 31, 2026:
Current report
Table 9: Long-term and other debt
Current report
During the first quarter of 2026, we repurchased $50 million in aggregate principal amount of the 8.375% Fixed-Rate Reset Subordinated Notes Due 2035 in the open market with cash on hand.
Current report
Equity
Current report
Preferred Stock
Current report
In November 2025, we authorized and issued 75,000 shares of preferred stock as depositary shares (the Depositary Shares) for gross proceeds of $75 million, with each Depositary Share representing a 1/40th interest in our Series A 8.625% Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share (the Series A Preferred Stock). The Series A Preferred Stock has a liquidation preference of $25 per Depositary Share (equivalent to $1,000 per share of Series A Preferred Stock) and as of both March 31, 2026 and December 31, 2025, the aggregate liquidation value was $75 million.
Current report
Stock Repurchase Authorizations
Current report
The following table provides information about our common stock repurchases under our various Board-approved share repurchase authorizations, for the periods presented:
Current report
Table 12: Authorized Share Repurchases
Current report
(1)Upon repurchase, these shares were retired and ceased to be outstanding shares of common stock, and are now treated as authorized but unissued shares of common stock. Does not include the 1.5 million shares that were retired in connection with the termination of our Capped Call transactions, discussed below.
Current report
(2)Excludes excise taxes on stock repurchases.
Current report
Capped Call Transactions
Current report
In February 2026 we entered into a separate, privately negotiated termination agreement (each, a Capped Call Unwind Agreement) with each financial institution counterparty to the Capped Call transactions, thereby terminating all of the outstanding Capped Call transactions, and resulting in the receipt of an aggregate of 1.5 million shares of our common stock, with a value of $111 million, from the Capped Call counterparties pursuant to the Capped Call Unwind Agreements. Following their receipt, these shares were retired and ceased to be outstanding shares of common stock, and are now treated as authorized but unissued shares of common stock.
Current report
The table below summarizes the cash dividend activity we had on our preferred and common stock for the dates presented:
Current report
Table 13: Dividends
Current report
(1)Excludes dividend equivalent rights paid during the period.
Current report
On December 17, 2025, we filed applications with the federal and respective state banking regulators for permission to merge CB with and into CCB, with CCB being the surviving entity. Pending regulatory approval and the expiration of any applicable waiting periods, the merger of CB and CCB is expected to occur in the second half of 2026. The merger is not expected to have a significant impact on our consolidated financial position, results of operations, or liquidity. For additional discussion, refer to “Part I, Item 1. Business — Supervision and Regulation — Planned Merger of CB with and into CCB” in our 2025 Form 10-K.
Current report
*The listed capital adequacy ratios exclude the Capital Conservation Buffer.
Current report
(2)Tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders’ equity has been reduced, primarily by Goodwill and intangible assets, net. For us, tier 1 capital is primarily comprised of CET1 capital and Preferred stock. See below for a reconciliation of our Total stockholders’ equity under GAAP to tier 1 and tier 2 capital under the Basel III Standardized Approach.
Current report
Table 16: Capital Reconciliations
Current report
Table 17: Capital Rollforwards
Current report
•local or global public health issues, climate-related events, impacts to the power grid, and natural disasters;
Removed paragraphs (50)
Previous report
•We have previously repurchased and may, from time to time, in the future continue to repurchase debt, including our outstanding senior unsecured notes, subordinated notes or convertible notes. In such transactions, we may pay a premium to induce these repurchases, or in certain cases repurchase at a discount, which, from a GAAP perspective, would result in an impact to Total non-interest expenses, with a corresponding impact also reflected in Net income and consequently our Earnings per diluted share. For our prior debt repurchases, we show adjustments to these three financial statement line items, for total Company as well as for continuing operations, to exclude the impacts from our repurchased debt transactions. We use Adjusted total non-interest expenses, Adjusted net income, and Adjusted earnings per diluted share to evaluate the ongoing operations of the Company excluding the volatility that can occur from the impacts of our repurchased debt transactions.
Previous report
Overall, Total net interest and non-interest income for the quarter was $971 million, down 1% versus the third quarter of 2024.
Previous report
Total non-interest expenses of $476 million decreased 17% year-over year. The decrease was primarily driven by a $93 million decrease in Other expenses, which includes a $96 million impact in the prior year from our repurchased debt.
Previous report
Provision for income taxes decreased $29 million year-over-year due to a discrete tax benefit during the current year period, as well as larger nondeductible items in the prior year.
Previous report
Our 2025 financial outlook reflects continued consumer resiliency, inflation remaining above the Federal Reserve Board’s target rate, and a slowing, yet stable labor market. Our outlook also anticipates interest rate decreases by the Federal Reserve Board, which we would expect to result in slight Net interest margin compression. Overall, our year-over-year credit sales growth and gradual improvement in our credit metrics give us confidence in our financial outlook as we begin the final quarter of 2025.
Previous report
Based on our current economic outlook, an increased payment rate, the cumulative effect of ongoing elevated gross credit losses, and visibility into our new business pipeline and existing partners, we continue to expect 2025 Average credit card and other loans to be flat to slightly lower relative to 2024. For 2025 compared with 2024, Total net interest and non-interest income, excluding any gain on portfolio sale, a Non-GAAP financial measure, is anticipated to be relatively flat as our implemented pricing actions are offset by factors such as: (i) interest rate decreases by the Federal Reserve Board, which impact us due to our slight asset sensitivity and lagged cost of funds impacts, (ii) our continued shift in risk mix, from improving credit quality, and therefore lower delinquencies and consequently lower billed late fees, and (iii) the shift in our product mix to a higher proportion of co-brand, proprietary, and installment lending products, leading to lower finance charges and billed late fees.
Previous report
As a result of efficiencies gained from our ongoing operational excellence initiatives, along with disciplined expense management and prudent investments, we continue to expect to generate positive operating leverage in 2025, excluding any gain on portfolio sale and the pretax impacts from our repurchased debt, a Non-GAAP financial measure.
Previous report
We remain confident in our ability to achieve our 2025 financial outlook and will continue to successfully execute our strategic objectives and operational excellence efforts. We believe we are well-positioned to deliver strong returns while creating sustainable, long-term value for our shareholders.
Previous report
(2)Adjusted for the impacts from our repurchased debt, and therefore represent Non-GAAP financial measures. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous report
(4)Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders' equity reduced by Goodwill and intangible assets, net. ROTCE is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous report
(nm)Not meaningful, denoting a variance of 1,000 percent or more.
Previous report
•Other increased during the three and nine month periods due primarily to our implemented pricing actions, including paper statement fees, which we began assessing in the second quarter of 2024.
Previous report
(1)Adjusts Total non-interest expenses for the impacts from our repurchased debt, representing $3 million and $96 million for the three months ended September 30, 2025 and 2024, and $19 million and $105 million for the nine months ended September 30, 2025 and 2024, respectively, and therefore represent Non-GAAP financial measures. See “Non-GAAP Financial Measures” and Table 6:
Previous report
•Employee compensation and benefits decreased during the three and nine month periods due primarily to strategic adjustments in customer care staffing in the prior year.
Previous report
•Card and processing expenses increased during the three and nine month periods due to higher network fees driven by our gradual shift in product mix.
Previous report
•Information processing and communication was essentially flat during the three month period, and increased during the nine month period due to elevated software license renewal costs.
Previous report
•Marketing expenses remained flat during the three month period, and increased during the nine month period due primarily to incremental investments associated with our brand partner joint marketing campaigns.
Previous report
•Depreciation and amortization decreased due to lower amortization related to both capitalized software and premiums on historical credit card loan portfolio acquisitions.
Previous report
•Other decreased during the three and nine month periods due primarily to the prior year impact from our repurchased debt.
Previous report
On July 4, 2025, President Trump signed into law “The One Big Beautiful Bill Act” (the Bill). The Bill reinstates several provisions of the 2017 Tax Cuts and Jobs Act for businesses. We do not expect the Bill to have a significant impact on our financial position, results of operations or cash flows, nor do we expect significant changes to operational processes, controls or governance as a result of the Bill.
Previous report
(4)Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders' equity reduced by Goodwill and intangible assets, net. ROTCE is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous report
(9)Tangible book value per common share represents TCE divided by shares outstanding and is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous report
(nm)Not meaningful, denoting a variance of 1,000 percent or more.
Previous report
(1)As a result of hurricanes Helene and Milton we froze delinquency progression for cardholders in FEMA identified impact zones for one billing cycle, which resulted in modestly lower Net principal losses and Net principal losses as a percentage of average credit card and other loans in the fourth quarter of 2024, and consequently these actions negatively impacted Net principal losses and Net principal losses as a percentage of average credit card and other loans in the second quarter of 2025, which has been included in the nine months ended September 30, 2025.
Previous report
In October 2025 all three credit rating agencies refreshed their credit ratings and their related outlooks. Both Moody’s and Fitch upgraded their credit ratings. Moody’s also retained their “Positive” outlook, Fitch changed their outlook from “Positive” to “Stable” in conjunction with their credit ratings upgrade, and S&P changed their outlook from “Stable” to “Positive”. The table below provides a summary of the credit ratings for the senior unsecured and subordinated long-term debt of Bread Financial Holdings, Inc. as of the dates presented:
Previous report
Throughout 2025, we engaged in a number of financing-related transactions, including closing on our offering of $400 million aggregate principal amount of 8.375% Fixed-Rate Reset Subordinated Notes due 2035 (the Subordinated Notes), and the redemption of the remaining $100 million in aggregate principal amount of our 7.000% Senior Notes due 2026 (Senior Notes due 2026). We also had repurchases of $10 million in aggregate principal amount of our 4.25% Convertible Senior Notes due 2028 (the Convertible Notes), the completion of a cash tender offer (the Tender Offer) to repurchase $150 million in aggregate principal amount of our 9.750% Senior Notes due 2029 (Senior Notes due 2029), and another cash tender offer (the Third Quarter Tender Offer) to repurchase $31 million in aggregate principal amount of our Senior Notes due 2029 and $0.1 million in aggregate principal amount of our Subordinated Notes, in each case utilizing cash on hand. Each of these transactions, as well as other matters relating to our liquidity and capital resources during the year, are described in more detail below.
Previous report
7.000% Senior Notes Due 2026 - Redemption
Previous report
In January 2025, with cash on hand we redeemed the remaining $100 million in aggregate principal amount of our Senior Notes due 2026.
Previous report
4.25% Convertible Senior Notes Due 2028 - Repurchases
Previous report
In June 2023, we issued and sold $316 million aggregate principal amount of 4.25% Convertible Senior Notes due 2028. The Convertible Notes bear interest at an annual rate of 4.25%, payable semi-annually in arrears on June 15 and December 15 of each year. The Convertible Notes mature on June 15, 2028, unless earlier repurchased, redeemed or converted.
Previous report
For additional information on the June 2023 issuance, and subsequent repurchases during 2024, of our Convertible Notes, as well as our Capped Call transactions, see “Consolidated Liquidity and Capital Resources” under Part II of our 2024 Form 10-K.
Previous report
In the first quarter of 2025, a holder of Convertible Notes approached us to repurchase Convertible Notes, and we entered into a privately-negotiated repurchase agreement with the holder, repurchasing $7 million in aggregate principal amount of outstanding Convertible Notes. The final purchase price, or settlement value, for the repurchase was $11 million, which was funded with cash on hand. In connection with the repurchase, we recognized a $2 million inducement expense in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the total conversion value (calculated in accordance with the indenture governing the Convertible Notes), as well as a $2 million reduction in Additional paid-in capital (APIC) related to the total conversion value paid in excess of the carrying value of the Convertible Notes repurchased and a deferred tax impact.
Previous report
In the third quarter of 2025, we entered into privately-negotiated repurchase agreements with two additional holders of our Convertible Notes, repurchasing $3 million in aggregate principal amount of outstanding Convertible Notes. The final purchase price, or settlement value, for the repurchases was $5 million, which was funded with cash on hand. In connection with the repurchases, we recognized a $1 million inducement expense in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the total conversion value (calculated in accordance with the indenture governing the Convertible Notes), as well as a $2 million reduction in APIC related to the total conversion value paid in excess of the carrying value of the Convertible Notes repurchased and a deferred tax impact.
Previous report
All of the Capped Call transactions continue to remain outstanding, notwithstanding repurchases of our Convertible Notes. Although we do not trade or speculate in derivatives, we may seek to opportunistically terminate the Capped Call transactions (in full or in part from time to time) or leave the Capped Call transactions outstanding, possibly until maturity, in any such case with the objective of optimizing the shareholder value we receive under these transactions.
Previous report
9.750% Senior Notes Due 2029 - Tender Offers and Repurchases
Previous report
In June 2025, we completed the cash Tender Offer pursuant to which we repurchased $150 million in aggregate principal amount of our Senior Notes due 2029. The consideration paid in the Tender Offer for each $1,000 principal amount of the Senior Notes due 2029 was $1,071, plus accrued and unpaid interest. In connection with the repurchase, we recognized a $13 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029.
Previous report
In August 2025, we completed the cash Third Quarter Tender Offer pursuant to which we repurchased $31 million in aggregate principal amount of our Senior Notes due 2029. The consideration paid in the Third Quarter Tender Offer for each $1,000 principal amount of the Senior Notes due 2029 was $1,070, plus accrued and unpaid interest. In connection with the repurchase, we recognized a $3 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029. Following the completion of these two tender offers, $719 million in the aggregate principal amount of our Senior Notes due 2029 remained outstanding as of September 30, 2025, and will mature in March 2029, subject to any earlier repurchase or redemption.
Previous report
8.375% Subordinated Notes Due 2035 - Issuance, Tender Offer and Repurchase
Previous report
In March 2025, we issued and sold $400 million in aggregate principal amount of the Subordinated Notes. The Subordinated Notes were issued pursuant to an indenture between the Company and U.S. Bank Trust Company, National Association, as trustee. The Subordinated Notes accrue interest on the outstanding principal amount (i) at a rate per annum equal to 8.375% from, and including, March 10, 2025, to, but excluding, June 15, 2030 (the Reset Date), and (ii) from, and including, the Reset Date to, but excluding, the maturity date at a rate per annum equal to the Five-Year U.S. Treasury Rate as of the date that is two business days prior to the Reset Date, plus 430 basis points. Interest on the Subordinated Notes is payable semiannually in arrears in June and December of each year. The Subordinated Notes will mature in June 2035, unless earlier repurchased or redeemed. As noted above, included in the cash Third Quarter Tender Offer was a repurchase of $0.1 million aggregate principal amount of the Subordinated Notes.
Previous report
We used $250 million of the net proceeds from the Subordinated Notes offering to enter into a subordinated promissory note between Parent Company, as lender, and CCB, as borrower, on terms substantially the same as those of the Subordinated Notes. The subordinated promissory note is eliminated in consolidation.
Showing the first 40 of 50 passages. Open the source sections for the rest.
Reworded paragraphs (77)
Previous wording
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with the unaudited Consolidated Financial Statements and related notes thereto presented in this quarterly report and the audited Consolidated Financial Statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the SEC) on February 14, 2025 (the 2024 Form 10-K). Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those identified in our other filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our 2024 Form 10-K and this and our other Quarterly Reports on Form 10-Q.
Current wording
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our unaudited Consolidated Financial Statements and related Notes included elsewhere in this quarterly report, and our audited Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the SEC) on February 13, 2026 (the 2025 Form 10-K). Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and those identified in our other filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our 2025 Form 10-K and this Quarterly Report on Form 10-Q.
Previous wording
We are a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions to millions of U.S. consumers. Our payment solutions, including Bread Financial general purpose credit cards and savings products, empower our customers and their passions for a better life. Additionally, we deliver growth for some of the most recognized brands in travel and entertainment, health and beauty, jewelry and specialty apparel through our private label and co-brand credit cards and pay-over-time products providing choice and value to our shared customers.
Current wording
We are a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions to millions of U.S. consumers. Our payment solutions deliver growth for some of the most recognized brands in travel and entertainment, specialty apparel, health and beauty, jewelry, sporting goods, technology and electronics, as well as home and furniture through our co-brand and private label credit cards and pay-over-time products providing choice and value to our shared customers. Additionally, we offer Bread Financial general purpose credit cards and saving products that empower our customers and their passions for a better life.
Previous wording
Our partner base consists of large consumer-based businesses, including well-known brands such as (alphabetically) AAA, Academy Sports + Outdoors, Caesars, Dell Technologies, Hard Rock International, the NFL, Saks Fifth Avenue, Signet, Ulta and Victoria’s Secret, as well as small- and medium-sized businesses (SMBs). Our partner base is well diversified across a broad range of industries and retail verticals, including travel and entertainment, health and beauty, jewelry, sporting goods, technology and electronics, home and the industry in which we first began, specialty apparel. We believe our comprehensive suite of payment, lending and saving solutions, along with our related marketing and data and analytics, offers us a significant competitive advantage with products relevant across all customer segments (Gen Z, Millennial, Gen X and Baby Boomers). The breadth and quality of our product and service offerings, coupled with our customer-centric approach, have enabled us to establish and maintain long-standing partner relationships. We operate our business through a single reportable segment, with our primary source of revenue being from Interest and fees on loans from our various credit card and other loan products, and to a lesser extent from contractual relationships with our brand partners.
Current wording
Our partner base consists of large consumer-based businesses, including well-known brands such as (alphabetically) AAA, Academy Sports + Outdoors, Caesars, Dell Technologies, Hard Rock International, the NFL, Raymour & Flanigan, Saks Fifth Avenue, Signet, Ulta and Victoria’s Secret, as well as small- and medium-sized businesses (SMBs). Our partner base is well diversified across a broad range of industries and retail verticals, including travel and entertainment, specialty apparel, health and beauty, jewelry, sporting goods, technology and electronics, as well as home and furniture. We believe our comprehensive suite of payment, lending and saving solutions, along with our related marketing and data and analytics, offers us a significant competitive advantage with products relevant across all customer segments (Gen Z, Millennial, Gen X and Baby Boomers). The breadth and quality of our product and service offerings, coupled with our customer-centric approach, have enabled us to establish and maintain long-standing partner relationships. We operate our business through a single reportable segment, with our primary source of revenue being from Interest and fees on loans from our various credit card and other loan products, and to a lesser extent from contractual relationships with our brand partners.
Previous wording
•Pretax pre-provision earnings (PPNR) represents Income from continuing operations before income taxes and the Provision for credit losses. PPNR excluding any gain on portfolio sale and impacts from repurchased debt then excludes from PPNR the gain on any portfolio sale in the period, as well as the loss or gain on any repurchased debt in the period. We use PPNR and PPNR excluding any gain on portfolio sale and impacts from repurchased debt as metrics to evaluate our results of operations before income taxes, excluding the movements that can occur within Provision for credit losses and the one-time nature of a gain on the sale of a portfolio and/or the impacts from repurchased debt.
Current wording
•Pretax pre-provision earnings (PPNR) represents Income from continuing operations before income taxes and the Provision for credit losses. We use PPNR as a metric to evaluate our results of operations before income taxes, excluding the movements that can occur within Provision for credit losses.
Previous wording
•Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders' equity reduced by Goodwill and intangible assets, net. We use ROTCE as a metric to evaluate the Company's performance.
Current wording
•Return on average tangible common equity (ROTCE) represents annualized Income from continuing operations less Dividends to preferred stockholders, divided by average Tangible common equity. Tangible common equity (TCE) represents Total stockholders’ equity reduced by Preferred stock and Goodwill and intangible assets, net. We use ROTCE as a metric to evaluate the Company’s performance.
Previous wording
•Tangible book value per common share represents TCE divided by shares outstanding. We use Tangible book value per common share, a metric used across the industry, to estimate liquidation value.
Current wording
•Tangible book value per common share represents TCE divided by common shares outstanding. We use Tangible book value per common share, a metric used across the industry, to assess capital and performance, in conjunction with ROTCE.
Previous wording
We believe the use of these Non-GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these Non-GAAP financial measures to the most directly comparable GAAP measures, please see Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures that follows.
Current wording
We believe the use of these Non-GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these Non-GAAP financial measures to the most directly comparable GAAP measures, please see Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous wording
This Business Environment section provides an overview of our results of operations and financial position for the third quarter of 2025, as well as our related outlook for the remainder of 2025 and certain of the uncertainties associated with achieving that outlook. This section should be read in conjunction with the other information included or incorporated by reference in this Form 10-Q, including “Consolidated Results of Operations”, “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” herein, and in our 2024 Form 10-K, which provide further discussion of variances in our results of operations over the periods of comparison, along with other factors that could impact future results and the Company achieving its outlook. Unless otherwise specified, the discussion included herein is for the three months ended September 30, 2025, compared with the same period in the prior year.
Current wording
This Business Environment section provides an overview of our results of operations and financial position for the first quarter of 2026, as well as our related outlook for the remainder of 2026 and certain of the uncertainties associated with achieving that outlook. This section should be read in conjunction with the other information included or incorporated by reference in this Form 10-Q, including “Consolidated Results of Operations,” “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” herein, and in our 2025 Form 10-K, which provide further discussion of variances in our results of operations over the periods of comparison, along with other factors that could impact future results and the Company achieving its outlook. Unless otherwise specified, the discussion included herein is for the three months ended March 31, 2026, compared with the same period in the prior year.
Previous wording
Credit sales of $6.8 billion were up 5% year-over-year driven by new partner growth and increased general-purpose spending. Average and end-of-period credit card and other loans decreased 1% to $17.6 billion and 2% to $17.7 billion respectively, driven by an increasing payment rate and the ongoing effect of elevated gross credit losses as compared with historic trends. Total interest income was down 3% from the third quarter of 2024, primarily as a result of lower billed late fees and lower Average credit card and other loans balances, partially offset by lower reversals of finance charges and late fees, resulting from lower gross credit losses and the ongoing implementation of pricing actions. Our improved delinquency trends across our loan portfolio, as well as the gradual shift in product mix to a declining proportion of private label accounts, which tend to have higher billed late fees, have resulted in lower overall billed late fees. Net interest margin remained flat year-over-year but improved sequentially to 18.8%, from 17.7% in the second quarter of 2025, following seasonal loan yield trends. Our net interest margin continues to be impacted by lower billed late fees from lower delinquencies, as well as an elevated cash position and our gradual shift in product mix toward co-brand cards, offset by the ongoing implementation of pricing actions, such as increases to annual percentage rates. Non-interest income decreased $7 million from the third quarter of 2024, driven by increased costs associated with brand partner retailer share arrangements along with a decrease in merchant discount fees due to lower “big ticket” credit sales, partially offset by our implemented pricing actions, inclusive of paper statement fees which we began assessing in second quarter of 2024.
Current wording
Credit sales of $6.5 billion were up 7% year-over-year driven by new partner growth and increased general-purpose spending. Average and end-of-period credit card and other loans increased 1% to $18.3 billion and 2% to $18.1 billion, respectively, driven by increased credit sales and lower gross credit losses. Total interest income was up 2% from the first quarter of 2025, primarily as a result of the ongoing effects of pricing actions (such as increases to our annual percentage rates), higher Average credit card and other loans balances and lower reversals of finance charges and late fees, resulting from lower gross credit losses, partially offset by both a lower average Prime interest rate, which affects variable rate Credit card and other loans, and lower billed late fees. Our improved delinquency trends across our loan portfolio, as well as the gradual shift in product mix to a declining proportion of private label accounts, which tend to have higher billed late fees, have resulted in lower overall billed late fees. Net interest margin increased year-over-year to 19.25%, from 18.06%, and improved sequentially from 18.94%, as both, loan yields continued to benefit from the effects of pricing actions, and funding costs continued to improve. We anticipate the year-over-year benefits associated with our pricing actions to slow throughout the year as the majority of our credit card loan portfolio will have repriced. Net interest margin will also be affected by the ongoing gradual improvement in our payment and delinquency rate trends, and the continued shift in our product and risk mix. Non-interest income decreased $13 million from the first quarter of 2025, driven by increased costs associated with brand partner retailer share arrangements, partially offset by both an increase in merchant discount fees due to the addition of new brand partners, and an increase in revenue from our payment protection products as a result of new enrollment channels. We expect Non-interest income will continue to decrease throughout the year as a result of both, higher credit sales-related payments to brand partners, and higher brand partner profit sharing as a result of improving loan yields and gross credit losses. Overall, Total net interest and non-interest income for the quarter was $1.0 billion, up 5% versus the first quarter of 2025.
Previous wording
Provision for credit losses decreased for the quarter ended September 30, 2025, relative to the third quarter of 2024, driven by a $28 million reserve release and net principal losses of $327 million, compared with a $22 million reserve build and net principal losses of $347 million in the prior year period.
Current wording
Provision for credit losses increased during the three months ended March 31, 2026 driven by a $28 million reserve release and net principal losses of $331 million, compared with a $69 million reserve release and net principal losses of $365 million in the prior year period.
Previous wording
Our Allowance for credit losses decreased as of September 30, 2025, relative to December 31, 2024, due primarily to a lower Credit card and other loans balance, as seasonally higher transactor balances from the fourth quarter of 2024 were paid down in the first quarter of 2025. Our reserve rate was 11.7% as of September 30, 2025, reflecting our improving credit metrics and higher-quality new account acquisitions. We continue to maintain appropriately prudent weightings on the economic scenarios in our credit reserve modeling to ensure the adequacy of our Allowance for credit losses given the wide range of potential macroeconomic outcomes. From an overall credit quality perspective, our percentage of Vantage 660+ cardholders continues to remain above pre-pandemic levels due to prudent credit management and a more diversified product mix, with co-brand and proprietary cards representing a larger proportion of our portfolio.
Current wording
Our Allowance for credit losses decreased as of March 31, 2026, relative to December 31, 2025, due primarily to a lower Credit card and other loans balance, as seasonally higher transactor balances from the fourth quarter of 2025 were paid down in the first quarter of 2026. Our reserve rate was 11.46% and 12.19% as of March 31, 2026 and 2025, respectively, reflecting our improving credit metrics and higher-quality new account acquisitions. We continue to maintain appropriately prudent weightings on the economic scenarios in our credit reserve modeling to ensure the adequacy of our Allowance for credit losses given the wide range of potential macroeconomic dynamics, including ongoing uncertainty regarding trade policy and global conflicts, and downstream impacts on inflation and unemployment. From an overall credit quality perspective, our percentage of customers with Vantage scores greater than 650 remains above pre-pandemic levels due to prudent credit management and a more diversified product mix, in particular with co-brand cards representing a larger proportion of our portfolio.
Previous wording
Our efforts to strengthen and optimize our balance sheet continued in the third quarter of 2025. In August, we announced a $200 million board-authorized share repurchase program, and in September we repurchased 0.6 million shares for $40 million, bringing our year-to-date board-authorized share repurchases to 3.8 million shares. In August, we also completed a cash tender offer to repurchase $31 million in aggregate principal amount of our 9.750% Senior Notes due 2029 and $0.1 million in aggregate principal amount of our 8.375% Fixed-Rate Reset Subordinated Notes due 2035, using available cash, allowing us to continue to reduce higher cost debt. During the third quarter we also repurchased $3 million in aggregate principal amount of our 4.25% Convertible Senior Notes Due 2028. Our Common equity tier one capital ratio (CET1) of 14.0% increased from 13.3% in the third quarter of 2024, driven by net earnings over the period, partially offset by the effects from our repurchased shares and debt securities. Sequentially, our CET1 ratio improved to 14.0% from 13.0%. Additionally, relative to the third quarter of 2024 direct-to-consumer (DTC) deposits increased 9% to $8.2 billion as of September 30, 2025, with average DTC deposits now representing 47% of our total funding, up from 41% a year ago.
Current wording
Our efforts to strengthen and optimize our Consolidated Balance Sheet continued in the first quarter of 2026. During the quarter we retired 1.5 million shares of common stock from the full termination and unwind of our capped call transactions, as well as repurchased $150 million, or 2.0 million shares of common stock. In February, we announced a $600 million increase to our Board-approved common stock repurchase authorization, resulting in $690 million of outstanding share repurchase authorization as of March 31, 2026. Additionally, we repurchased $50 million of our 8.375% Fixed-Rate Reset Subordinated Notes Due 2035 utilizing cash on hand, and have $350 million in remaining principal outstanding as of March 31, 2026. Our Common equity tier one capital ratio (CET1) of 13.3% increased from 12.0% in the first quarter of 2025, driven by net earnings over the period, partially offset by the effects from our actions mentioned above related to our common stock and debt securities. Sequentially, our CET1 ratio improved to 13.3% from 13.0%. Additionally, relative to the first quarter of 2025 direct-to-consumer (DTC) deposits increased 10% to $8.7 billion as of March 31, 2026, with average DTC deposits representing 48% of our total funding, up from 43% a year ago.
Previous wording
Our 2025 financial outlook assumes a full year Net principal loss rate ranging from 7.8% to 7.9% , driven by continued consumer resiliency, our disciplined credit management and continued risk and product mix shifts. Nonetheless, given macroeconomic uncertainty, with potential changes in monetary and fiscal policies, including tariff and trade policies and the potential impacts on consumer spending and employment, we remain vigilant with our credit strategies.
Current wording
Our 2026 financial outlook assumes a full year Net principal loss rate ranging from 7.2% to 7.4% given a resilient consumer, our disciplined credit management, and continued risk and product mix shifts.
Previous wording
In our 2025 financial outlook, we now expect our full year effective tax rate to be in the range of 19% to 20% due to larger discrete items realized in 2025, with quarter-over-quarter variability due to the timing of certain discrete items.
Current wording
In our 2026 financial outlook, we expect our full year normalized effective tax rate to be in the range of 25% to 27% with quarter-over-quarter variability due to the timing of certain discrete items.
Previous wording
Note: We are unable to provide a quantitative reconciliation of the forward-looking 2025 financial outlook for the Non-GAAP financial measures above, to their most directly comparable forward-looking GAAP measures, as we cannot reliably predict all of the necessary components of such forward-looking GAAP measures without unreasonable effort.
Current wording
Note: We are unable to provide a quantitative reconciliation of the forward-looking 2026 financial outlook for the Non-GAAP financial measure above, to its most directly comparable forward-looking GAAP measure, as we cannot reliably predict all of the necessary components of such a forward-looking GAAP measure without unreasonable effort.
Previous wording
The following discussion provides commentary on the variances in our results of operations for the three and nine months ended September 30, 2025, compared with the same periods in the prior year, as presented in the accompanying tables. This discussion should be read in conjunction with the discussion under “Business Environment” above.
Current wording
The following discussion provides commentary on the variances in our results of operations for the three months ended March 31, 2026, compared with the same period in the prior year, as presented in the accompanying tables. This discussion should be read in conjunction with the discussion under “Business Environment” above.
Previous wording
Non-interest expenses: Total non-interest expenses decreased for the three and nine months ended September 30, 2025. Adjusted total non-interest expenses, which represents a Non-GAAP financial measure and has been adjusted for the impacts from our repurchased debt, also decreased over those same periods.
Current wording
*Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous wording
(1)Includes amounts that related to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. For additional information, refer to Note 1, “Description of Business, Basis of Presentation and Summary of Significant Accounting Policies” to the unaudited Consolidated Financial Statements.
Current wording
(1)Includes amounts that related to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. For additional information, refer to Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” to the unaudited Consolidated Financial Statements.
Previous wording
(3)Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. See also Table 5: Net Interest Margin.
Current wording
(2)Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. See also Table 5: Net Interest Margin.
Previous wording
Non-interest income: Total non-interest income decreased for the three months ended September 30, 2025, and increased for the nine months ended September 30, 2025, due to the following:
Current wording
Interest income: Total interest income increased for the three months ended March 31, 2026, due to the following:
Previous wording
•Interest and fees on loans decreased due primarily to lower billed late fees and lower Average credit card and other loans balances, partially offset by lower reversals of finance charges and late fees, resulting from lower gross credit losses, and the ongoing implementation of pricing actions; collectively decreasing finance charge and late fee yields by approximately 39 basis points and 46 basis points, over the respective periods of comparison. Our lower delinquency volumes and the gradual shift in product mix to a lower proportion of private label accounts, which tend to have higher billed late fees, have resulted in lower overall billed late fees.
Current wording
•Interest and fees on loans increased due to the ongoing effects of pricing actions, higher Average credit card and other loans balances and lower reversals of finance charges and late fees, resulting from lower gross credit losses, partially offset by both lower average interest rates which affects variable rate Credit card and other loans, and lower billed late fees; collectively increasing the yield from finance charges and late fees by approximately 68 basis points. Our lower delinquency volumes and the gradual shift in product mix to a lower proportion of private label accounts, which tend to have higher billed late fees, have resulted in lower overall billed late fees.
Previous wording
•Interest on cash and investment securities decreased due to lower average interest rates which decreased interest income by $9 million and $31 million, over the respective periods of comparison, partially offset during the nine month period by higher average balances, which increased interest income by $5 million.
Current wording
•Interest on cash and investment securities decreased due to lower average interest rates, which decreased interest income by $6 million, as well as lower average balances, which decreased interest income by $4 million.
Previous wording
Interest expense: Total interest expense decreased for the three and nine months ended September 30, 2025, due to the following:
Current wording
Interest expense: Total interest expense decreased for the three months ended March 31, 2026, due to the following:
Previous wording
•Interest on deposits decreased due to lower average interest rates which decreased interest expense by $21 million and $46 million, over the respective periods of comparison, partially offset by higher average wholesale deposit balances which increased funding costs by $7 million and $2 million over those same respective periods.
Current wording
•Interest on deposits decreased due to lower average interest rates, which decreased interest expense by $15 million, partially offset by higher average DTC deposit balances, which increased funding costs by $10 million.
Previous wording
•Interest on borrowings decreased due to lower average borrowings which decreased funding costs by $14 million and $11 million, over the respective periods of comparison, and due to lower average interest rates which decreased funding costs by $2 million and $19 million over those same respective periods.
Current wording
•Interest on borrowings decreased due to lower average borrowings, which decreased funding costs by $20 million, and lower average interest rates, which decreased funding costs by $7 million.
Previous wording
Interest income: Total interest income decreased for the three and nine months ended September 30, 2025, due to the following:
Current wording
Non-interest income: Total non-interest income decreased for the three months ended March 31, 2026, due to the following:
Previous wording
•Interchange revenue, net of retailer share arrangements, typically a contra-revenue item for us, increased during the three and nine month periods due to an increase in costs associated with brand partner retailer share arrangements along with a decrease in merchant discount fees due to lower “big ticket” credit sales.
Current wording
•Interchange revenue, net of retailer share arrangements, typically a contra-revenue item for us, increased due to an increase in costs associated with brand partner retailer share arrangements, partially offset by an increase in merchant discount fees due to the addition of new brand partners over the periods of comparison.
Previous wording
Provision for credit losses decreased for the three and nine months ended September 30, 2025. For the three month period, the decrease was driven by a $28 million reserve release and net principal losses of $327 million, compared with a $22 million reserve build and net principal losses of $347 million in the prior year period. For the nine month period, the decrease was driven by a $171 million reserve release and net principal losses of $1,040 million, compared with a $142 million reserve release and net principal losses of $1,122 million in the prior year period. Our reserve rate was 11.7% as of September 30, 2025, reflecting our improving credit metrics and higher-quality new account acquisitions. We continue to maintain appropriately prudent weightings on the economic scenarios in our credit reserve modeling to ensure the adequacy of our Allowance for credit losses given the wide range of potential macroeconomic outcomes.
Current wording
Provision for credit losses increased during the three months ended March 31, 2026 driven by a $28 million reserve release and net principal losses of $331 million, compared with a $69 million reserve release and net principal losses of $365 million in the prior year period. Our reserve rate was 11.46% and 12.19% as of March 31, 2026 and 2025, respectively, reflecting our improving credit metrics and higher-quality new account acquisitions. We continue to maintain appropriately prudent weightings on the economic scenarios in our credit reserve modeling to ensure the adequacy of our Allowance for credit losses given the wide range of potential macroeconomic dynamics, including ongoing uncertainty regarding trade policy and global conflicts, and downstream impacts on inflation and unemployment.
Previous wording
The Provision for income taxes decreased for thethree and nine months ended September 30, 2025. The effective tax rate was 4.3% and 92.2% for the three-month periods ended September 30, 2025 and 2024, respectively, and 17.5% and 33.4% for the nine-month periods ended September 30, 2025 and 2024, respectively. Both the decreases in the Provision for income taxes and in the effective tax rates over the periods of comparison were driven by a discrete tax benefit in the current year period and larger nondeductible items in the prior year period.
Current wording
The Provision for income taxes increased for thethree months ended March 31, 2026, primarily driven by an increase in Income from continuing operations before income taxes. The effective tax rate was 25.3% and 28.1% for the three-month periods ended March 31, 2026 and 2025, respectively. The decrease in the effective tax rate was due to a discrete tax benefit in the current year period.
Previous wording
(1)PPNR represents Income from continuing operations before income taxes and the Provision for credit losses. PPNR is a Non-GAAP financial measure. PPNR excluding any gain on portfolio sale and impacts from repurchased debt excludes from PPNR the gain on any portfolio sale in the period, as well as the impacts from our repurchased debt in the period, and is also a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Current wording
(1)PPNR represents Income from continuing operations before income taxes and the Provision for credit losses.
Previous wording
(7)Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. Adjusted efficiency ratio excludes any gain on portfolio sale and impacts from repurchased debt.
Current wording
(7)Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income.
Previous wording
(8)Common equity tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders' equity has been reduced, primarily by Goodwill and intangible assets, net. For additional information, see “Legislative, Regulatory Matters and Capital Adequacy” included elsewhere in this report.
Current wording
(8)Common equity tier 1 capital ratio represents tier 1 capital reduced by Preferred stock divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders’ equity has been reduced by Goodwill and intangible assets, net. For additional information, see “Legislative, Regulatory Matters and Capital Adequacy” included elsewhere in this report.
Previous wording
(10)Payment rate represents consumer payments during the period, divided by the aggregate of the opening monthly Credit card and other loans balances during the period, including held for sale in applicable periods.
Current wording
(11)Payment rate represents consumer payments during the period, divided by the aggregate of the opening monthly Credit card and other loans balances during the period, including held for sale in applicable periods.
Previous wording
(11)Delinquency rate represents outstanding balances that are contractually delinquent (i.e., principal balances greater than 30 days past due) as of the end of the period, divided by the outstanding principal amount of Credit card and other loans as of the same period-end.
Current wording
(12)Delinquency rate represents outstanding balances that are contractually delinquent (i.e., principal balances 30 days past due or more) as of the end of the period, divided by the outstanding principal amount of Credit card and other loans as of the same period-end.
Previous wording
(12)Net loss rate, an annualized rate, represents net principal losses for the period divided by Average credit card and other loans for the same period, using an average daily balance calculation methodology.
Current wording
(13)Net principal loss rate, an annualized rate, represents net principal losses for the period divided by Average credit card and other loans for the same period, using an average daily balance calculation methodology.
Previous wording
(13)Reserve rate represents the Allowance for credit losses divided by End-of-period credit card and other loans.
Current wording
(14)Reserve rate represents the Allowance for credit losses divided by End-of-period credit card and other loans.
Previous wording
Given the nature of our business, the credit quality of our assets, in particular our Credit card and other loans, is a key determinant underlying our ongoing financial performance and overall financial condition. When it comes to our Credit card and other loans portfolio, we closely monitor Delinquency rates and Net principal loss rates, which reflect, among other factors, our underwriting, the inherent credit risk in our portfolio and the success of our collection and recovery efforts. These rates also reflect, more broadly, the general macroeconomic conditions, including the compounding effect of persistent inflation relative to wage growth, and higher interest rates. Our Delinquency and Net principal loss rates are also impacted by the size of our Credit card and other loans portfolio, which serves as the denominator in the calculation of these rates. Accordingly, changes in the size of our portfolio (whether due to credit tightening, acquisitions or dispositions of portfolios, or otherwise) may cause movements in our Delinquency and Net principal loss rates that are not necessarily indicative of the underlying credit quality of the overall portfolio.
Current wording
Given the nature of our business, the credit quality of our assets, in particular our Credit card and other loans, is a key determinant underlying our ongoing financial performance and overall financial condition. When it comes to our Credit card and other loans portfolio, we closely monitor Delinquency rates and Net principal loss rates, which reflect, among other factors, our underwriting, the inherent credit risk in our portfolio and the success of our collection and recovery efforts. These rates also reflect, more broadly, the general macroeconomic conditions, including the compounding effect of persistent inflation relative to wage growth, and higher interest rates. Our Delinquency rates and Net principal loss rates are also impacted by the size of our Credit card and other loans portfolio, which serves as the denominator in the calculation of these rates. Accordingly, changes in the size of our portfolio (whether due to credit tightening, acquisitions or dispositions of portfolios, or otherwise) may cause movements in our Delinquency and Net principal loss rates that are not necessarily indicative of the underlying credit quality of the overall portfolio.
Previous wording
Delinquencies: An account is contractually delinquent if we do not receive the minimum payment due by the specified due date. Our policy is to continue to accrue interest and fee income on all accounts, except in limited circumstances, until the balance and all related interest and fees are paid or charged-off. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent; based upon the level of risk indicated, a collection strategy is deployed. If after exhausting all in-house collection efforts we are unable to collect on the account, we may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances.
Current wording
Delinquencies: An account is contractually delinquent if we do not receive the minimum payment due by the specified due date. Our policy is to continue to accrue interest and fee income on all accounts, except in limited circumstances, until the balance and all related interest and fees are paid or charged-off. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent; based upon the level of risk indicated, a collection strategy is deployed, which may include tech-enabled, targeted collections strategies to engage with cardholders in the most efficient communication channel. If after exhausting all in-house collection efforts we are unable to collect on the account, we may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances.
Previous wording
The Delinquency rate is calculated by dividing outstanding principal balances that are contractually delinquent (i.e., principal balances greater than 30 days past due) as of the end of the period, by the outstanding principal amount of Credit card and other loans as of the same period-end.
Current wording
The Delinquency rate is calculated by dividing outstanding principal balances that are contractually delinquent (i.e., principal balances 30 days past due or more) as of the end of the period, by the outstanding principal amount of Credit card and other loans as of the same period-end.
Previous wording
As part of our collections strategy, we may offer temporary and short term programs in order to improve the likelihood of collections and meet the needs of our customers. For example, as a result of hurricanes Helene and Milton in September and October of 2024, respectively, we froze delinquency progression for cardholders in Federal Emergency Management Agency (FEMA) identified impact zones for one billing cycle. Our modifications, for customers who have requested assistance and meet certain qualifying requirements, come in the form of reduced payment requirements, interest rate reductions and late fee waivers. We do not offer programs involving the forgiveness of principal. These temporary loan modifications may assist in cases where we believe the customer will recover from the short-term hardship and resume scheduled payments. Under these consumer relief programs, those accounts receiving relief may not advance to the next delinquency cycle, including charge-off, in the same time frame that would have occurred had the relief not been granted. We evaluate our consumer relief programs to determine if they represent a more than insignificant delay in payment granted to borrowers experiencing financial difficulty, in which case they would then be considered a Loan Modification. For additional information, see Note 2 “Credit Card and Other Loans – Modified Credit Card Loans” to our unaudited Consolidated Financial Statements.
Current wording
As part of our collections strategy, we may offer temporary and short term programs in order to improve the likelihood of collections and meet the needs of our customers. Our modifications, for customers who have requested assistance and meet certain qualifying requirements, come in the form of reduced payment requirements, interest rate reductions and late fee waivers. We do not offer programs involving the forgiveness of principal. These temporary loan modifications may assist in cases where we believe the customer will recover from the short-term hardship and resume scheduled payments. Under these consumer relief programs, those accounts receiving relief may not advance to the next delinquency cycle, including charge-off, in the same time frame that would have occurred had the relief not been granted. We evaluate our consumer relief programs to determine if they represent a more than insignificant delay in payment granted to borrowers experiencing financial difficulty, in which case they would then be considered a Loan Modification. For additional information, see Note 2 “Credit Card and Other Loans – Modified Credit Card Loans” to our unaudited Consolidated Financial Statements.
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Current report — wording carried from elsewhere
Non-interest expenses: Total non-interest expenses decreased for the three months ended March 31, 2026, due to the following:
Current report — wording carried from elsewhere
*Represents a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and Table 6: Reconciliation of GAAP to Non-GAAP Financial Measures.
Current report — wording carried from elsewhere
(10)Tangible book value per common share represents TCE divided by common shares outstanding.
Current report — wording carried from elsewhere
The table below summarizes our conduit capacities, borrowings and maturities for the periods presented:
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Reconciliation of GAAP to Non-GAAP Financial Measures.
Previous report — wording carried elsewhere
As of September 30, 2025, $0.1 million of Convertible Notes remained outstanding. We may, from time to time, seek to retire or repurchase our remaining outstanding Convertible Notes through cash purchases or exchanges for other securities, in open market purchases, tender offers, privately negotiated transactions or otherwise.
Previous report — wording carried elsewhere
(2)Tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders' equity has been reduced, primarily by Goodwill and intangible assets, net. See below for a reconciliation of our Total stockholders’ equity under GAAP to tier 1 and tier 2 capital under the Basel III Standardized Approach.