BREAD FINANCIAL HOLDINGS, INC.

Previous 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.

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 and our other Quarterly Reports on Form 10-Q.

Previous 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.

Current wording

•Pretax pre-provision earnings (PPNR) represents Income from continuing operations before income taxes and the Provision for credit losses. PPNR excluding impacts from debt repurchases then excludes from PPNR the loss or gain on any debt repurchases in the period. We use PPNR and PPNR excluding impacts from debt repurchases 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 the impacts from debt repurchases.

Previous 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.

Current wording

This Business Environment section provides an overview of our results of operations and financial position for the second 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 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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 June 30, 2026, compared with the same period in the prior year.

Previous 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.

Current wording

Credit sales of $7.5 billion were up 11% year-over-year driven by the addition of new brand partners and increased general-purpose spending. Average and end-of-period credit card and other loans increased 3% to $18.2 billion and 5% to $18.5 billion, respectively, driven by new brand partners and increased credit sales. Total interest income was up 3% from the second quarter of 2025. Higher Average credit card and other loans balances, the ongoing effects of pricing actions (such as increases to our annual percentage rates) and lower reversals of finance charges and late fees, resulting from lower gross credit losses were 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 18.49%, from 17.71%, as 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 is also expected to 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 $1 million from the second quarter of 2025, driven by increased costs associated with brand partner retailer share arrangements, partially offset by both an increase in interchange and 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 7% versus the second quarter of 2025.

Previous 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.

Current wording

Provision for credit losses increased during the three months ended June 30, 2026 driven by a $3 million reserve release and net principal losses of $316 million, compared with a $74 million reserve release and net principal losses of $348 million in the prior year period.

Previous 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.

Current wording

Our Allowance for credit losses decreased as of June 30, 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, as well as the improving credit quality in our credit card and other loans portfolio. Our reserve rate was 11.23% and 11.89% as of June 30, 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 outcomes, 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

Provision for income taxes increased $7 million year-over-year primarily driven by an increase in Income from continuing operations before income taxes.

Current wording

Provision for income taxes increased $16 million year-over-year, driven by an increase in Income from continuing operations before income taxes, as well as a discrete tax benefit in the prior year period.

Previous wording

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 wording

Our revised 2026 financial outlook is based on strong year-to-date results, reflecting continued consumer resilience, inflation remaining above the Federal Reserve Board’s (FRB) target rate of 2%, and a generally stable labor market.

Previous wording

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 wording

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 now expect growth in 2026 Average credit card and other loans to be up low- to mid-single digits on a percentage point basis from full year 2025. Growth in Total net interest and non-interest income is now also anticipated to be up low- to mid-single digits on a percentage point basis from 2025, primarily driven by the growth in Average credit card and other loans. We anticipate our full year Net interest margin to be flat to slightly 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-related capabilities.

Previous wording

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 wording

We manage our expense growth based on revenue generation and ongoing investment in our business. Accordingly, 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.

Previous 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.

Current wording

Our 2026 financial outlook now assumes a full year Net principal loss rate ranging from 7.0% to 7.1% given a resilient consumer, our disciplined credit management, and continued risk and product mix shifts.

Previous 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.

Current wording

The following discussion provides commentary on the variances in our results of operations for the three and six months ended June 30, 2026, 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.

Previous wording

(2)Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. See also Table 5: Net Interest Margin.

Current wording

(3)Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. See also Table 5: Net Interest Margin.

Previous wording

Interest income: Total interest income increased for the three months ended March 31, 2026, due to the following:

Current wording

Interest income: Total interest income increased for the three and six months ended June 30, 2026, due to the following:

Previous 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.

Current wording

•Interest and fees on loans increased due to higher Average credit card and other loans balances, the ongoing effects of pricing actions and lower reversals of finance charges and late fees, resulting from lower gross credit losses, partially offset by both lower average Prime 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 32 basis points and 49 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.

Previous 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.

Current wording

•Interest on cash and investment securities decreased due to lower average interest rates, which decreased interest income by $7 million and $14 million, over the respective periods of comparison, as well as lower average balances in the six month period, which decreased interest income by $2 million.

Previous wording

Interest expense: Total interest expense decreased for the three months ended March 31, 2026, due to the following:

Current wording

Interest expense: Total interest expense decreased for the three and six months ended June 30, 2026, due to the following:

Previous 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.

Current wording

$12 million. Interest on deposits decreased for the six month period due to lower average interest rates, which decreased interest expense by $27 million, partially offset by higher average DTC deposit balances, which increased funding costs by $22 million.

Previous 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.

Current wording

•Interest on borrowings decreased due to lower average borrowings, which decreased funding costs by $17 million and $36 million, over the respective periods of comparison, and lower average interest rates, which decreased funding costs by $8 million and $15 million, over those same respective periods.

Previous wording

Non-interest income: Total non-interest income decreased for the three months ended March 31, 2026, due to the following:

Current wording

Non-interest income: Total non-interest income decreased for the three and six months ended June 30, 2026, due to the following:

Previous 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.

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 interchange and merchant discount fees due to the addition of new brand partners over the periods of comparison.

Previous 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.

Current wording

Provision for credit losses increased for the three and six months ended June 30, 2026. For the three month period, the increase was driven by a $3 million reserve release and net principal losses of $316 million, compared with a $74 million reserve release and net principal losses of $348 million in the prior year period. For the six month period, the increase was driven by a $31 million reserve release and net principal losses of $647 million, compared with a $143 million reserve release and net principal losses of $713 million in the prior year period. Our reserve rate was 11.23% and 11.89% as of June 30, 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 outcomes, including ongoing uncertainty regarding trade policy and global conflicts, and downstream impacts on inflation and unemployment.

Previous wording

Non-interest expenses: Total non-interest expenses decreased for the three months ended March 31, 2026, due to the following:

Current wording

Non-interest expenses: Total non-interest expenses were relatively flat for both the three and six months ended June 30, 2026. Adjusted total non-interest expenses, which represents a Non-GAAP financial measure and has been adjusted for the impacts from our debt repurchases, increased 3% and 1% for the three and six months ended June 30, 2026, respectively.

Previous wording

•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 wording

•Employee compensation and benefits increased primarily due to higher wages related to annual merit increases and incentive compensation, as well as increased medical claims, partially offset by operational excellence initiatives.

Previous 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.

Current wording

The Provision for income taxes increased for the three and six months ended June 30, 2026. The effective tax rate was 25.7% and 20.5% for the three months ended June 30, 2026 and 2025, respectively, and 25.4% and 24.5% for the six months ended June 30, 2026 and 2025, respectively. Both the increases in the Provision for income taxes and in the effective tax rates over the periods of comparison were primarily driven by a discrete tax benefit in the prior year period related to a California law change.

Previous wording

(1)PPNR represents Income from continuing operations before income taxes and the Provision for credit losses.

Current wording

(1)PPNR represents Income from continuing operations before income taxes and the Provision for credit losses. PPNR excluding impacts from debt repurchases excludes from PPNR impacts from our debt repurchases in the period.

Previous wording

(7)Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income.

Current wording

(7)Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. Adjusted efficiency ratio excludes impacts from debt repurchases in the period.

Previous wording

Our primary sources of liquidity include cash generated from operating activities, our bank credit facility, issuances of senior or subordinated unsecured notes and preferred stock by our Parent Company, as well as financings through our securitization programs, and deposits with the Banks. In particular, our DTC deposits increased 10% year-over-year to $8.7 billion as of March 31, 2026, with our average direct-to-consumer deposits representing 48% of total funding, up from 43% a year ago. More broadly, we continuously evaluate opportunities to renew and expand our various sources of liquidity. We aim to satisfy our financing needs with a diverse set of funding sources, and we seek to maintain diversity of funding sources by type of instrument, by tenor and by investor base, among other factors, which we believe will mitigate the impact of disruptions in any one type of instrument, tenor or investor.

Current wording

Our primary sources of liquidity include cash generated from operating activities, our bank credit facility, issuances of senior and/or subordinated unsecured notes and preferred stock by our Parent Company, as well as financings through our securitization programs, and deposits with the Banks. In particular, our DTC deposits increased 16% year-over-year to $9.4 billion as of June 30, 2026, with our average direct-to-consumer deposits representing 50% of total funding, up from 45% a year ago. More broadly, we continuously evaluate opportunities to renew and expand our various sources of liquidity. We aim to satisfy our financing needs with a diverse set of funding sources, and we seek to maintain diversity of funding sources by type of instrument, by tenor and by investor base, among other factors, which we believe will mitigate the impact of disruptions in any one type of instrument, tenor or investor.

Previous wording

We will also need additional financing in the future to repay or refinance our existing debt at or prior to maturity, and to fund our growth, which may include the issuance of additional debt or equity securities or engaging in other capital markets or financing transactions. In 2025, as part of our financing strategy and capital structure optimization, we issued our inaugural series of subordinated notes and publicly-traded preferred stock, and in the future we may continue to seek to further optimize our capital structure. Given the maturities of certain of our outstanding debt instruments and depending on the prevailing macroeconomic conditions, it is possible that we may be required to repay, extend or refinance some or all of our future debt maturities in volatile and/or unfavorable markets.

Current wording

We will also need additional financing in the future to repay or refinance our existing debt at or prior to maturity, and to fund our growth, which may include the issuance of additional debt or equity securities or engaging in other capital markets or financing transactions. As part of our financing strategy and capital structure optimization, we have issued subordinated notes and publicly-traded preferred stock, and in the future we may continue to seek to further optimize our capital structure. Given the maturities of certain of our outstanding debt instruments and depending on the prevailing macroeconomic conditions, it is possible that we may be required to repay, extend or refinance some or all of our future debt maturities in volatile and/or unfavorable markets.

Previous wording

We also seek to maintain appropriate and stable credit ratings for our credit card securitizations issued through World Financial Network Credit Card Master Note Trust (WFNMNT) from the rating agencies (DBRS, S&P and Fitch). The table below provides a summary of the structured finance credit ratings for certain of the asset-backed securities, specifically the outstanding Class A notes of WFNMNT as of March 31, 2026:

Current wording

We also seek to maintain appropriate and stable credit ratings for our credit card securitizations. The table below provides a summary of the structured finance credit ratings for certain of the asset-backed securities issued through World Financial Network Credit Card Master Note Trust (WFNMNT) from the rating agencies (DBRS, S&P and Fitch), specifically the outstanding Class A notes of WFNMNT as of June 30, 2026:

Previous wording

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 wording

During the first half 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.

Previous wording

As of March 31, 2026 and December 31, 2025, retail deposits that exceeded applicable Federal Deposit Insurance Corporation (FDIC) insurance limits, which are generally $250,000 per depositor, per insured bank, per ownership category, were estimated to be $658 million (5% of Total deposits) and $638 million (5% of Total deposits), respectively. The measurement of estimated uninsured deposits aligns with regulatory guidelines.

Current wording

As of June 30, 2026 and December 31, 2025, retail deposits that exceeded applicable Federal Deposit Insurance Corporation (FDIC) insurance limits, which are generally $250,000 per depositor, per insured bank, per ownership category, were estimated to be $736 million (5% of Total deposits) and $638 million (5% of Total deposits), respectively. The measurement of estimated uninsured deposits aligns with regulatory guidelines.

Previous wording

We sell the majority of the credit card loans originated by the Banks to certain of our master trusts (the Trusts). These securitization programs are a principal vehicle through which we finance the Banks’ credit card loans. For this purpose, we use a combination of public term asset-backed notes and private conduit facilities (the Conduit Facilities) with a consortium of lenders, including domestic money center, regional and international banks. Both our public term asset-backed notes and borrowings under the Conduit Facilities are included in Debt issued by consolidated Variable Interest Entities (VIEs) in the Consolidated Balance Sheets.

Current wording

We sell the majority of the credit card loans originated by the Banks to certain of our master trusts (the Trusts). These securitization programs are a principal vehicle through which we finance the Banks’ credit card loans. For this purpose, we use a combination of public term asset-backed notes and private conduit facilities (the Conduit Facilities) with a consortium of lenders, including domestic money center, regional and international banks. Both our public term asset-backed notes and borrowings under the Conduit Facilities are included in Debt issued by consolidated Variable Interest Entities (VIEs) in the Consolidated Balance Sheets. During the three months ended June 30, 2026, $399 million of public term asset-backed notes matured and were repaid, of which $49 million were previously retained by us and therefore eliminated from the Consolidated Balance Sheets.

Previous wording

As of March 31, 2026, we had approximately $10.1 billion of securitized credit card loans. Securitizations require credit enhancements in the form of cash, spread deposits, additional loans and subordinated classes. The credit enhancement is principally based on the outstanding balances of the series issued by the Trusts and by the performance of the credit card loans in the Trusts.

Current wording

As of June 30, 2026, we had approximately $10.0 billion of securitized credit card loans. Securitizations require credit enhancements, which may be provided in the form of cash, spread deposits, excess collateral, additional loans and/or subordinated classes. The credit enhancement is principally based on the outstanding balances of the series issued by the Trusts and by the performance of the credit card loans in the Trusts.

Previous wording

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 wording

As reflected in the table below, in May 2026 we authorized and issued 135,000 shares of preferred stock as depositary shares (the Depositary Shares) for gross proceeds of $135 million, with each Depositary Share representing a 1/40th interest in our Series B 8.875% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share (the Series B Preferred Stock). The Series B Preferred Stock has a liquidation preference of $25 per Depositary Share (equivalent to $1,000 per share of Series B Preferred Stock) and as of June 30, 2026, the aggregate liquidation value was $135 million. We used the net proceeds of the offering to enter into a preferred stock transaction with one of our subsidiary banks, CCB, pursuant to which CCB issued preferred stock to Parent Company on terms substantially the same as those of the Series B Preferred Stock. The CCB preferred stock is eliminated in consolidation.

Previous wording

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 wording

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 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.

Previous wording

On April 23, 2026, our Board of Directors declared a quarterly cash dividend of $21.56 per share on our preferred stock and $0.23 per share on our common stock, each payable on June 15, 2026, to stockholders of record at the close of business on May 29, 2026.

Current wording

On July 23, 2026, our Board of Directors declared a quarterly cash dividend of$21.56 per share on our Series A preferred stock, $30.32 per share on our Series B preferred stock, and $0.23 per share on our common stock, each payable on September 15, 2026, to the applicable stockholders of record at the close of business on August 31, 2026. The declaration and payment of future dividends on our preferred and common stock are subject to approval by our Board of Directors, based upon a review of relevant considerations and regulatory and other restrictions on our ability to pay dividends, including restrictions imposed by the terms of each series of our outstanding preferred stock.

Previous wording

Cash Flows from Operating Activities primarily include Net income adjusted for (i) non-cash items included in Net income, such as Provision for credit losses, Depreciation and amortization, deferred taxes and other non-cash items, and (ii) changes in the balances of operating assets and liabilities, which can fluctuate in the normal course of business due to the amount and timing of payments. We generated Cash flows from operating activities of $487 million and $393 million for the three months ended March 31, 2026 and 2025, respectively. The Net cash provided by operating activities during these periods was primarily driven by cash generated from Net income after adjusting for the Provision for credit losses.

Current wording

Cash Flows from Operating Activities primarily include Net income adjusted for (i) non-cash items included in Net income, such as Provision for credit losses, Depreciation and amortization, deferred taxes and other non-cash items, and (ii) changes in the balances of operating assets and liabilities, which can fluctuate in the normal course of business due to the amount and timing of payments. We generated Cash flows from operating activities of $1,020 million and $919 million for the six months ended June 30, 2026 and 2025, respectively. The Net cash provided by operating activities during these periods was primarily driven by cash generated from Net income after adjusting for the Provision for credit losses.

Previous wording

Cash Flows from Investing Activities primarily include changes in Credit card and other loans. Cash provided by investing activities was $317 million and $691 million for the three months ended March 31, 2026 and 2025, respectively. The Net cash provided by investing activities during these periods was primarily due to the seasonal paydown of Credit card and other loans.

Current wording

Cash Flows from Investing Activities primarily include changes in Credit card and other loans. Net cash used in investing activities was $355 million for the six months ended June 30, 2026 and Net cash provided by investing activities was $470 million for the six months ended June 30, 2025. The Net cash used in investing activities for the six months ended June 30, 2026 was primarily driven by Net principal losses and an increase in installment loans, partially offset by the seasonal paydown of credit card loans. The Net cash provided by investing activities for the six months ended June 30, 2025 was primarily due to the seasonal paydown of Credit card and other loans.

Previous wording

Cash Flows from Financing Activities primarily include changes in deposits and long-term debt. Cash used in financing activities was $475 million and $562 million for the three months ended March 31, 2026 and 2025, respectively. The Net cash used in financing activities during the three months ended March 31, 2026 was primarily driven by repayments of debt issued by consolidated variable interest entities (i.e., securitizations) and the repurchases of common stock and subordinated debt, partially offset by a net increase in deposits. For the three months ended March 31, 2025 the net cash used in financing activities was primarily driven by repayments of debt issued by consolidated variable interest entities and the repurchases of common stock, partially offset by the net issuance of unsecured borrowings under debt agreements.

Current wording

Cash Flows from Financing Activities primarily include changes in deposits and long-term debt. Cash used in financing activities was $534 million and $1,285 million for the six months ended June 30, 2026 and 2025, respectively. The Net cash used in financing activities during the six months ended June 30, 2026 was primarily driven by net repayments of debt issued by consolidated variable interest entities (i.e., securitizations) and the repurchases of common stock and subordinated debt, partially offset by a net increase in deposits and net proceeds from the issuance of preferred stock. For the six months ended June 30, 2025 the net cash used in financing activities was primarily driven by repayments of debt issued by consolidated variable interest entities and the repurchases of common stock, partially offset by the net increase in deposits.