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CREDIT CARD AND OTHER LOANS | 6 Months Ended
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Jun. 30, 2026
Receivables [Abstract] |
CREDIT CARD AND OTHER LOANS | CREDIT CARD AND OTHER LOANS Our payment and lending solutions result in the origination of Credit card and other loans, which are recorded at the time a borrower enters into a point-of-sale transaction with a merchant. Credit card loans represent revolving lines of credit and have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new information about the cardholder, in accordance with applicable regulations and the governing terms and conditions. Cardholders choosing to make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts. Other loans consist primarily of our pay-over-time products, which include installment loans and “split-pay” offerings, and have a range of fixed terms such as interest rates, fees and repayment periods, and require borrowers to make pre-established monthly payments over the term of the loan in accordance with the applicable terms and conditions. Credit card and other loans include principal and any related accrued interest and fees and are presented on the Consolidated Balance Sheets net of the Allowance for credit losses. We continue to accrue interest and fee income on all accounts, except in limited circumstances, until the related balance and all related interest and fees are paid or charged-off. We generally classify our Credit card and other loans as held for investment. We sell a significant portion of our credit card loans originated by Comenity Bank (CB) and by Comenity Capital Bank (CCB), to certain of our master securitization trusts (the Trusts), which are consolidated Variable Interest Entities (VIEs), and therefore these loans are restricted for securitization investors. New originations of Credit card and other loans are generally determined to be held for investment at origination because we have the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, we consider the average life and homogenous nature of our Credit card and other loans. In assessing whether our Credit card and other loans continue to be held for investment, we also consider capital levels and scheduled maturities of funding instruments used. The assertion regarding the intent and ability to hold Credit card and other loans for the foreseeable future can be made with a high degree of certainty given the maturity distribution of our direct-to-consumer (DTC or retail) deposits and other funding instruments; the demonstrated ability to replace maturing time-based deposits and other borrowings with new deposits or borrowings; and historic payment activity on Credit card and other loans. Due to the homogenous nature of our credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. Certain credit card loans and installment loans are classified as held for sale, as determined on a brand partner portfolio or program basis. We carry held for sale loans at the lower of aggregate cost or fair value, include such loans in Other assets on the Consolidated Balance Sheets, and typically continue to recognize finance charges on an accrual basis. Cash flows associated with Credit card and other loans originated or purchased for investment are classified as Cash flows from investing activities, regardless of any subsequent change in intent and ability. Cash flows associated with Credit card and other loans originated with the intent to sell are classified as Cash flows from operating activities, regardless of any subsequent change in intent. The disclosures below relate to our held for investment Credit card and other loans portfolios unless otherwise indicated. The following table provides Credit card and other loans, as of the dates presented:
| June 30, 2026 |  | December 31, 2025
(Millions) |  |  |
Credit card loans | $ | 17,808 |  |  | $ | 18,417 |
Other loans | 669 |  |  | 388 |
Total credit card and other loans (1)(2) | 18,477 |  |  | 18,805 |
Less: Allowance for credit losses | (2,075) |  |  | (2,106) |
Credit card and other loans, net | $ | 16,402 |  |  | $ | 16,699 |
__________________________________ (1)Includes $10.0 billion and $10.7 billion of Credit card and other loans available to settle obligations of consolidated VIEs as of June 30, 2026 and December 31, 2025, respectively. (2)Includes $386 million and $378 million, of accrued interest and fees that have not yet been billed to cardholders as of June 30, 2026 and December 31, 2025, respectively. Credit Card and Other Loans Aging The following table provides the delinquency trends of our Credit card and other loans portfolio, based on the amortized cost, as of the dates presented:
| Aging Analysis of Delinquent Amortized Cost Credit Card and Other Loans (1) |  |  |  |
| 30 to 59 Days Past Due |  | 60 to 89 Days Past Due |  | 90 or more Days Past Due |  | Total |  | Total Current |  | Total
(Millions) |  |  |  |  |  |  |  |  |  |  |
June 30, 2026 | $ | 334 |  |  | $ | 265 |  |  | $ | 585 |  |  | $ | 1,184 |  |  | $ | 16,873 |  |  | $ | 18,057 |
December 31, 2025 | $ | 359 |  |  | $ | 282 |  |  | $ | 676 |  |  | $ | 1,317 |  |  | $ | 17,076 |  |  | $ | 18,393 |
__________________________________ (1)Other loans delinquencies have been included with credit card loan delinquencies in the table above, as amounts were insignificant as of each period presented. As permitted by GAAP, the primary difference between the amortized cost basis included in the table above and the carrying value of our Credit card and other loans relates to the exclusion of unbilled finance charges and fees from the amortized cost basis. As of June 30, 2026 and December 31, 2025, accrued interest and fees that have not yet been billed to cardholders were $386 million and $378 million, respectively, included in Credit card and other loans on the Consolidated Balance Sheets. From time to time we may re-age cardholders’ accounts, with the intent of assisting delinquent cardholders who have experienced financial difficulties but who demonstrate both an ability and willingness to repay the amounts due. This practice affects credit card loan delinquencies and principal losses. Accounts meeting specific defined criteria are re-aged when the cardholder makes one or more consecutive payments aggregating to a certain pre-defined amount of their account balance. Upon re-aging, the outstanding balance of a delinquent account is returned to current status. Our re-aged accounts as a percentage of Total credit card and other loans represented 3.2% and 3.3% for the three months ended June 30, 2026 and 2025, respectively, and 3.3% and 3.4% for the six months ended June 30, 2026 and 2025, respectively. Our re-aging practices comply with regulatory guidelines. Credit Quality Indicators for Our Credit Card and Other Loans 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. 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. 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. As of June 30, 2026 and December 31, 2025 our Delinquency rates were 5.25% and 5.75%, respectively. Net Principal Losses: Our net principal losses include the principal amount of Credit card and other loans that are deemed uncollectible, less recoveries, and exclude charged-off interest, fees and third-party fraud losses (including synthetic fraud). Charged-off interest and fees reduce Interest and fees on loans, while third-party fraud losses are recorded in Card and processing expenses. Our credit card loans, including unpaid interest and fees, are generally charged-off in the month during which an account becomes 180 days past due. Our pay-over-time products, which include installment loans and “split-pay” offerings, including unpaid interest, are generally charged-off when a loan becomes 120 days past due. However, in the case of a customer bankruptcy or death, Credit card and other loans, including unpaid interest and fees, as applicable, are charged-off 60 days after receipt of the notification of the bankruptcy or death, but in any case no later than 180 days past due for credit card loans and 120 days past due for installment loans and “split-pay” offerings. We record the actual losses for unpaid interest and fees as a reduction to Interest and fees on loans, which were $215 million and $236 million for the three months ended June 30, 2026 and 2025, respectively, and $441 million and $486 million for the six months ended June 30, 2026 and 2025, respectively. The Net principal loss rate is calculated by dividing net principal losses for the period by the Average credit card and other loans for the same period, using an average daily balance calculation methodology. For the three months ended June 30, 2026 and 2025, our Net principal loss rates were 6.98% and 7.88%, respectively, and for the six months ended June 30, 2026 and 2025, respectively, our Net principal loss rates were 7.16% and 8.02%, respectively. Overall Credit Quality: As part of our credit risk management activities for our Credit card and other loans portfolio, we assess overall credit quality by reviewing information from credit bureaus and other sources relating to our cardholders’ broader credit performance. We utilize VantageScore (Vantage) credit scores to assist in our assessment of credit quality. Vantage credit scores are obtained at origination of the account and, for credit card loans, are refreshed monthly thereafter to assist in predicting customer behavior. We categorize these Vantage credit scores into the following three credit score ranges: (i) 651 or higher have the lowest credit risk; (ii) 591 to 650 are considered to have moderate credit risk; and (iii) 590 or lower have the highest credit risk. In certain limited circumstances there are customer accounts for which a Vantage score is not available and we use alternative sources to assess credit risk and predict behavior. The table below excludes less than 0.1% of the total credit card loans and total other loans balances as of both June 30, 2026 and December 31, 2025, representing those customer accounts for which a Vantage credit score is not available. The following table reflects the distribution of credit card and other loans by Vantage score as of the dates presented:
| June 30, 2026 |  | December 31, 2025
| 651 or Higher |  | 591 to 650 |  | 590 or Lower |  | 651 or Higher |  | 591 to 650 |  | 590 or Lower
Credit card loans | 65 | % |  | 23 | % |  | 12 | % |  | 64 | % |  | 23 | % |  | 13 | %
Other loans (1) | 94 | % |  | 6 | % |  | — | % |  | 90 | % |  | 9 | % |  | 1 | %
__________________________________ (1)Represents Vantage score distribution for our pay-over-time products that had an amortized cost basis of $647 million and $365 million as of June 30, 2026 and December 31, 2025, respectively. Modified Credit Card Loans Consumer Relief Programs 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. Loans in these short term programs that are determined to be Loan Modifications, will be included as such in the disclosure below. We do not offer Loan Modifications on our Other loans (i.e., our pay-over-time products). Credit Card Loans – Modifications for Borrowers Experiencing Financial Difficulty (Loan Modifications) In instances where cardholders are experiencing financial difficulty, we may modify our credit card loans with the intention of minimizing losses and improving collectability, while providing cardholders with financial relief; such credit card loans are classified as Loan Modifications, exclusive of the temporary, short-term consumer relief programs described above. Loan Modifications include concessions consisting primarily of a reduced minimum payment, late fee waiver, and/or an interest rate reduction. The majority of concessions remain in place for a period no longer than 12 months; however, for certain modifications the concessions remain in place through the payoff of the credit card loans if the cardholder complies with the terms of the program. Loan Modification concessions do not include the forgiveness of unpaid principal, but may involve the reversal of certain unpaid interest or fee assessments, and the cardholder’s ability to make future purchases is either limited or suspended until the cardholder successfully exits from the modification program. In accordance with the terms of our workout programs, the credit agreement reverts back to its original contractual terms (including the contractual interest rate) when the customer exits the program, which is either when all payments have been made in accordance with the program, or when the customer defaults out of the program. Loan Modifications are collectively evaluated for impairment on a pooled basis in measuring the appropriate Allowance for credit losses. The following table provides information relating to credit card loans to borrowers experiencing financial difficulty that were granted a concession under a Loan Modification program during the periods presented:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2026 |  | 2025 |  | 2026 |  | 2025
(Millions, except percentages) |  |  |  |  |  |  |
Account balance (1) | $ | 89 |  |  | $ | 87 |  |  | $ | 196 |  |  | $ | 182 |
% of Total credit card loans | 0.5 | % |  | 0.5 | % |  | 1.1 | % |  | 1.1 | %
Weighted average interest rate reduction (% points) | 23.5 | % |  | 22.9 | % |  | 23.7 | % |  | 23.0 | %
__________________________________ (1)Represents the outstanding balances as of June 30, 2026 and 2025, of all Loan Modifications undertaken in the past three and six months, respectively, for credit card loans that remain in modification programs as of June 30, 2026 and 2025, respectively. The outstanding balances include principal, accrued interest and fees. Interest income on these impaired credit card loans is accounted for in the same manner as non-impaired credit card loans, and cash collections are allocated according to the same payment hierarchy methodology applied for credit card loans not in Loan Modification programs. The following table provides the performance of our credit card loans that were modified within the 12 months prior to the dates presented and remain in a Loan Modification program as of the dates presented:
| Aging Analysis of Delinquent Amortized Cost Loan Modifications - Credit Card Loans |  |  |  |
| 30 to 59 Days Past Due |  | 60 to 89 Days Past Due |  | 90 or more Days Past Due |  | Total |  | Total Current |  | Total
(Millions) |  |  |  |  |  |  |  |  |  |  |
June 30, 2026 | $ | 21 |  |  | $ | 17 |  |  | $ | 23 |  |  | $ | 61 |  |  | $ | 264 |  |  | $ | 325 |
December 31, 2025 | $ | 24 |  |  | $ | 22 |  |  | $ | 26 |  |  | $ | 72 |  |  | $ | 253 |  |  | $ | 325 |
The following table provides additional information regarding credit card Loan Modifications that have subsequently defaulted within 12 months of their modification dates, for the periods presented; the probability of default is factored into the Allowance for credit losses:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2026 |  | 2025 |  | 2026 |  | 2025
(Millions, except for Number of modifications) |  |  |  |  |  |  |
Number of modifications | 7,683 |  |  | 7,312 |  |  | $ | 13,136 |  |  | $ | 12,609 |
Outstanding balance | $ | 15 |  |  | $ | 15 |  |  | $ | 26 |  |  | $ | 25 |
Unfunded Lending Commitments We manage potential credit risk in unfunded lending commitments by reviewing each potential customer’s credit application and evaluating the applicant’s financial history and ability and perceived willingness to repay. Credit card loans are made primarily on an unsecured basis, and our Cardholders reside throughout the U.S. and are not significantly concentrated in any one geographic area. We manage our potential risk in credit commitments by limiting the total amount of credit, both by individual customer and across our credit card loan portfolio, by monitoring the size and maturity of our loan portfolio and applying consistent risk-based underwriting standards reflective of current and anticipated macroeconomic conditions. We have the unilateral ability to cancel or reduce unused credit card lines at any time. Unused credit card lines available to cardholders totaled approximately $99 billion and $98 billion as of June 30, 2026 and December 31, 2025, respectively. While this amount represented the total available unused credit card lines, we have not experienced and do not anticipate that all cardholders will access their entire available line at any given point in time. Credit Card Loan Portfolio and Installment Loan Sales As of June 30, 2026 and December 31, 2025, there were no credit card loans held for sale. In the interest of expanding and diversifying our product offerings, we are now leveraging our loan origination, compliance and servicing-related capabilities through a partnership that relies upon established merchant networks to originate and sell installment loans, while providing compliance oversight. Installment loans sold under this program meet the conditions for sale accounting and are derecognized upon transfer. For the three and six months ended June 30, 2026, fees earned under this program were not material. Over those same respective periods in 2025, we did not earn any such fees as this was a new program in 2026. As of June 30, 2026, installment loans held for sale are included in Other assets on the Consolidated Balance Sheet and were not material. As of December 31, 2025, there were no installment loans held for sale. Credit Card Loan Portfolio Acquisitions During the three months ended June 30, 2026 and June 30, 2025, we did not acquire any credit card loan portfolios.

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