0001101215-22-000038 | 10-K | XBRL Viewer | Alliance Data Systems Corp

Weighted-average remaining lease term (in years):

Operating leases

Weighted-average discount rate:

Operating leases

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Interest income
Interest and fees on loans	$ 3,861	$ 3,931	$ 4,729
Interest on cash and investment securities	7	21	98
Total interest income	3,868	3,952	4,827
Interest expense
Interest on deposits	167	238	307
Interest on borrowings	216	261	331
Total interest expense	383	499	638
Net interest income	3,485	3,453	4,189
Non-interest income
Interchange revenue, net of retailer share arrangements	(369)	(332)	(358)
Other	156	177	219
Total non-interest income	(213)	(155)	(139)
Total net interest and non-interest income	3,272	3,298	4,050
Provision for credit losses	544	1,266	1,188
Total net interest and non-interest income, after provision for credit losses	2,728	2,032	2,862
Non-interest expenses
Employee compensation and benefits	671	609	721
Card and processing expenses	323	396	479
Information processing and communication	216	191	187
Marketing expenses	160	143	205
Depreciation and amortization	92	106	96
Other	222	286	512
Total non-interest expenses	1,684	1,731	2,200
Income from continuing operations before income taxes	1,044	301	662
Provision for income taxes	247	93	156
Income from continuing operations	797	208	506
Income (loss) from discontinued operations, net of income taxes	4	6	(228)
Net income	$ 801	$ 214	$ 278
Basic income per share (Note 20):
Income from continuing operations (in dollars per share)	$ 16.02	$ 4.36	$ 9.94
Income (loss) from discontinued operations (in dollars per share)	0.07	0.11	(4.56)
Net income per share (in dollars per share)	16.09	4.47	5.38
Diluted income per share (Note 20):
Income from continuing operations (in dollars per share)	15.95	4.35	9.94
Income (loss) from discontinued operations	0.07	0.11	(4.48)
Net income per share (in dollars per share)	$ 16.02	$ 4.46	$ 5.46
Weighted average shares (Note 20):
Basic (in shares)	49.7	47.8	50.0
Diluted (in shares)	50.0	47.9	50.9

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 801	$ 214	$ 278
Other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities	(24)	22	15
Tax benefit (expense)	2	(1)	(2)
Unrealized (loss) gain on available-for-sale securities, net of tax	(22)	21	13
Unrealized gain (loss) on cash flow hedges	1	(1)
Unrealized gain (loss) on cash flow hedges, net of tax	1	(1)
Unrealized gain on net investment hedge	20		7
Tax expense	(13)		(2)
Unrealized gain on net investment hedge, net of tax	7		5
Foreign currency translation adjustments (inclusive of deconsolidation of $54 million, $4 million and $27 million for the years ended December 31, 2021, 2020 and 2019, respectively, related to the disposition of businesses)	17	75	20
Other comprehensive income, net of tax	3	95	38
Total comprehensive income, net of tax	$ 804	$ 309	$ 316

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Deconsolidation related to sale of businesses	$ 54	$ 4	$ 27

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
ASSETS
Cash and cash equivalents	$ 3,046	$ 2,796
Credit card and other loans:
Total credit card and other loans	17,399	16,784
Allowance for credit losses	(1,832)	(2,008)
Credit card and other loans, net	15,567	14,776
Available-for-sale securities	239	225
Property and equipment, net	215	213
Goodwill and intangible assets, net	687	711
Other assets	1,992	1,363
Assets of discontinued operations		2,463
Total assets	21,746	22,547
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits	11,027	9,793
Debt issued by consolidated variable interest entities	5,453	5,710
Long-term and other debt	1,986	2,806
Other liabilities	1,194	1,359
Liabilities of discontinued operations		1,357
Total liabilities	19,660	21,025
Commitments and contingencies (Note 15)
Stockholders' equity:
Common stock, $0.01 par value; authorized, 200.0 million shares; issued, 49.9 million and 117.1 million shares at December 31, 2021 and December 31, 2020, respectively	1	1
Additional paid-in capital	2,174	3,427
Treasury stock, at cost, no shares and 67.4 million shares at December 31, 2021 and December 31, 2020, respectively		(6,733)
(Accumulated deficit) retained earnings	(87)	4,832
Accumulated other comprehensive loss	(2)	(5)
Total stockholders' equity	2,086	1,522
Total liabilities and stockholders' equity	$ 21,746	$ 22,547

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Credit Card and Loan Receivables Restricted for Securitization Investors	$ 11,215	$ 11,208
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200.0	200.0
Common stock, issued shares	49.9	117.1
Treasury stock, shares	0.0	67.4
Consolidated Variable Interest Entities
Credit Card and Loan Receivables Restricted for Securitization Investors	$ 11,215	$ 11,208

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Common Stock	Preferred Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings Period of Adoption Adjustment	Retained Earnings	Accumulated Other Comprehensive Loss	Period of Adoption Adjustment	Total
Balance at Dec. 31, 2018	$ 1		$ 3,172	$ (5,715)		$ 5,012	$ (138)		$ 2,332
Balance (in shares) at Dec. 31, 2018	113.0
Increase (Decrease) in Stockholders' Equity
Net income						278			278
Other comprehensive income (loss)							38		38
Stock-based compensation			55						55
Issuance of preferred stock			42	(42)
Issuance of preferred stock (in shares)		0.2
Conversion of preferred stock to common stock (in shares)	1.5	(0.2)
Repurchases of common stock				(976)					(976)
Dividends and dividend equivalent rights declared						(127)			(127)
Issuance of shares to employees, net of shares withheld for employee taxes			(11)						(11)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)	0.5
Balance (ASU 2016-13) at Dec. 31, 2019					$ (485)			$ (485)
Balance at Dec. 31, 2019	$ 1		3,258	(6,733)		5,163	(100)		1,589
Balance (in shares) at Dec. 31, 2019	115.0
Increase (Decrease) in Stockholders' Equity
Net income						214			214
Other comprehensive income (loss)							95		95
Stock-based compensation			21						21
Dividends and dividend equivalent rights declared						(60)			(60)
Common stock issued as consideration for acquired business			149						149
Common stock issued as consideration for acquired business (in shares)	1.9
Issuance of shares to employees, net of shares withheld for employee taxes			(1)						(1)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)	0.2
Balance at Dec. 31, 2020	$ 1		3,427	(6,733)		4,832	(5)		1,522
Balance (in shares) at Dec. 31, 2020	117.1
Increase (Decrease) in Stockholders' Equity
Net income						801			801
Other comprehensive income (loss)							3		3
Stock-based compensation			29						29
Dividends and dividend equivalent rights declared						(42)			(42)
Retirement of treasury stock			(1,280)	$ 6,733		(5,453)
Retirement of treasury stock (in shares)	(67.4)
Spinoff of Loyalty Ventures Inc.						(225)			(225)
Issuance of shares to employees, net of shares withheld for employee taxes			(2)						(2)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)	0.2
Balance at Dec. 31, 2021	$ 1		$ 2,174			$ (87)	$ (2)		$ 2,086
Balance (in shares) at Dec. 31, 2021	49.9

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 1.26	$ 0.84	$ 2.52

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 801	$ 214	$ 278
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	544	1,266	1,188
Depreciation and amortization	123	184	249
Deferred income taxes	(15)	(223)	(186)
Non-cash stock compensation	29	21	55
Amortization of deferred financing costs	31	36	43
Gain on sale of business		(14)	(512)
Loss on extinguishment of debt			72
Asset impairment charges	0	64	52
Amortization of deferred origination costs and other charges	71	52	241
Change in other operating assets and liabilities, net of acquisitions and dispositions
Change in other assets	(30)	210	(43)
Change in other liabilities	(11)	73	(219)
Net cash provided by operating activities	1,543	1,883	1,218
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in credit card and other loans	(1,805)	1,784	(2,587)
Change in redemption settlement assets	(113)	(41)	(9)
Proceeds from sale of business		27	4,410
Payments for acquired businesses, net of cash and restricted cash	(75)	(267)	(7)
Proceeds from sale of credit card loan portfolio	512	289	2,062
Purchase of credit card loan portfolios	(110)		(925)
Capital expenditures	(84)	(54)	(142)
Purchases of available-for-sale securities	(93)	(40)	(20)
Maturities of available-for-sale securities	73	77	60
Other	4	(1)	19
Net cash (used in) provided by investing activities	(1,691)	1,774	2,861
CASH FLOWS FROM FINANCING ACTIVITIES:
Unsecured borrowings under debt agreements	38	1,276	3,111
Repayments/maturities of unsecured borrowings under debt agreements	(864)	(1,320)	(5,982)
Debt issued by consolidated variable interest entities	4,278	2,419	4,852
Repayments/maturities of debt issued by consolidated variable interest entities	(4,538)	(4,096)	(5,219)
Net increase (decrease) in deposits	1,228	(2,370)	356
Debt proceeds from spinoff of Loyalty Ventures Inc.	652
Transfers to Loyalty Ventures Inc. related to spinoff	(127)
Payment of debt extinguishment costs			(46)
Payment of deferred financing costs	(13)	(19)	(45)
Proceeds from issuance of common stock	4	3	12
Dividends paid	(42)	(61)	(127)
Purchase of treasury shares			(976)
Other	(8)	1	(28)
Net cash provided by (used in) financing activities	608	(4,167)	(4,092)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		15	3
Change in cash, cash equivalents and restricted cash	460	(495)	(10)
Cash, cash equivalents and restricted cash at beginning of year	3,463	3,958	3,968
Cash, cash equivalents and restricted cash at end of year	3,923	3,463	3,958
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for interest	357	488	672
Cash paid during the year for income taxes, net	$ 325	$ 268	$ 1,071

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

Alliance Data Systems Corporation (ADSC or, including its consolidated subsidiaries and variable interest entities, the Company) is a leading provider of tech-forward payment and lending solutions, serving customers and consumer-based industries in North America. Through omnichannel touch points and a comprehensive product suite that includes credit products and Bread^® digital payment solutions, the Company helps its partners drive loyalty and growth, while giving customers greater payment choices. Through its Comenity-branded financial services, it also offers credit and savings products to consumers. With the spinoff of its LoyaltyOne^® segment in November 2021, classified as discontinued operations herein, the Company operates in one reportable segment.

BASIS OF PRESENTATION

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation. In particular, as a result of the spinoff of its LoyaltyOne segment as discontinued operations, the Company has adjusted the presentation of its Consolidated Financial Statements from its historical approach under SEC Regulation S-X Article 5, which is broadly applicable to all “commercial and industrial companies,” to Article 9, which is applicable to “bank holding companies.” While neither the Company nor any of its subsidiaries are considered a “bank” within the meaning of the Bank Holding Company Act, the changes from the historical presentation, to the bank holding company presentation, the most significant of which reflect a reclassification of Interest expense within Net interest income, are intended to reflect the Company’s operations going forward and better align the Company with its peers for comparability purposes. As noted above, the Company’s Consolidated Financial Statements have been presented with its LoyaltyOne segment as discontinued operations. See Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation,” for more information.

SIGNIFICANT ACCOUNTING POLICIES

The Company presents its accounting policies within the Notes to the Consolidated Financial Statements to which they relate; the table below lists such accounting policies and the related Notes. The remaining significant accounting policies applied by the Company are included below.


Significant Accounting Policy	Note Number	Note Title
Credit Card and Other Loans	Note 3	Credit Card and Other Loans
Allowance for Credit Losses	Note 4	Allowance for Credit Losses
Transfers of Financial Assets	Note 5	Securitizations
Available-for-Sale Securities	Note 6	Available-for-Sale Securities
Property and Equipment	Note 7	Property and Equipment, Net
Goodwill	Note 8	Goodwill and Intangible Assets, Net
Intangible Assets, Net	Note 8	Goodwill and Intangible Assets, Net
Leases	Note 10	Leases
Stock Compensation Expense	Note 18	Stockholders' Equity
Income Taxes	Note 19	Income Taxes
Earnings Per Share	Note 20	Earnings Per Share

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of ADSC and all subsidiaries in which the Company has a controlling financial interest. For voting interest entities, a controlling financial interest is determined when the Company is able to exercise control over the operating and financial decisions of the investee. For variable interest entities (VIEs), which are themselves determined based on the amount and characteristics of the equity in the entity, the Company has a controlling financial interest when it is determined to be the primary beneficiary. The primary beneficiary is the party having both the power to exercise control over the activities that most significantly impact the

VIE’s financial performance, as well as the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE. The Company is the primary beneficiary of its securitization trusts and therefore consolidates these trusts within its Consolidated Financial Statements.

In cases where the Company does not have a controlling financial interest, but is able to exert significant influence over the operating and financial decisions of the entity, the Company accounts for such investments under the equity method.

All intercompany transactions have been eliminated.

Currency Translation

The Company’s monetary assets and liabilities denominated in foreign currencies, for example those of subsidiaries outside the U.S., are translated into U.S. dollars based on the rates of exchange in effect at the end of the reporting period, while non-monetary assets and liabilities are translated based on the rates of exchange in effect as of the date of the transaction giving rise to the asset or liability. Income and expense items are translated at the average exchange rates prevailing during the period. The resulting effects, along with any related hedge or tax impacts, are recorded in Accumulated other comprehensive loss, a component of stockholders’ equity. Translation adjustments, along with the related hedge and tax impacts, are recognized in the Consolidated Statements of Income upon the sale or substantial liquidation of an investment in a foreign subsidiary. Gains and losses resulting from transactions in currencies other than the entity’s functional currency are recognized in Other non-interest expenses in the Consolidated Statements of Income, and were insignificant for each of the periods presented. Historically, the Company’s impacts from foreign currency exchange rate fluctuations were most prevalent within businesses that have been spun off, such as LoyaltyOne, or sold, such as Epsilon, both of which are reflected as discontinued operations herein.

Amounts Based on Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported amounts of income and expenses during the reporting periods. The most significant of those estimates and judgments relate to the Company’s Allowance for credit losses; actual results could differ.

Revenue Recognition

The Company’s primary source of revenue is from Interest and fees on loans from its various credit card and other loan products, and to a lesser extent from contractual relationships with its brand partners. The following describes the Company’s recognition policies across its various sources of revenue.

Interest and fees on loans: Represent revenue earned on customer accounts owned by the Company, and is recognized in the period earned in accordance with the contractual provisions of the credit agreements. Interest and fees continue to accrue on all accounts, except in limited circumstances, until the account balance and all related interest and fees are paid or charged-off, in the month during which an account becomes 180 days past due for credit card loans or 120 days past due for installment loans. Charge-offs for unpaid interest and fees, as well as any adjustments to the allowance associated with unpaid interest and fees, are recorded as a reduction of Interest and fees on loans. Direct loan origination costs on credit card and other loans are deferred and amortized on a straight-line basis over a one-year period for credit card loans, or for installment loans over the life of the loan, and are recorded as a reduction to Interest and fees on loans. As of December 31, 2021 and 2020, the remaining unamortized deferred direct loan origination costs were $48 million and $38 million, respectively, and included in Total credit card and other loans.

Interest on cash and investment securities: Represents revenue earned on cash and cash equivalents as well as investments in debt and equity securities, and is recognized in the period earned.

Interchange revenue, net of retailer share arrangements: Represents revenue earned from merchants, including our brand partners, and cardholders from processing and servicing accounts, and is recognized as such services are performed. Revenue earned from merchants, including our brand partners, primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions and are recognized at the time the cardholder transaction occurs. Our credit card program agreements may also provide for royalty payments to our brand partners based on purchased volume, or if certain contractual incentives are met such as if the economic performance of the program exceeds a contractually defined threshold, or payments for new accounts. These amounts are recorded as a reduction of revenue in the period incurred.

Other non-interest income: Represents ancillary revenues earned from cardholders, consisting primarily of monthly fees from the purchase of certain payment protection products which are recognized based on the average cardholder account balance over time and can be cancelled at any point by the cardholder, as well as gains or losses on the sales of loan portfolios and income or losses from equity method investments.

Contract Costs: The Company recognizes as an asset contract costs, such as up-front payments pursuant to contractual agreements with brand partners. Such costs are deferred and recognized on a straight-line basis over the term of the related agreement. Depending on the nature of the contract costs, the amortization is recorded as a reduction to Non-interest income, or a charge to Non-interest expenses, in the Company’s consolidated statements of income. Amortization of contract costs recorded as a reduction to Interchange revenue, net of retailer share arrangements was $64 million, $65 million and $72 million for the years ended December 31, 2021, 2020 and 2019, respectively; amortization of contract costs recorded in Non-interest expenses totaled $11 million, $12 million and $12 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021 and 2020, the remaining unamortized contract costs were $364 million and $311 million, respectively, and are included in Other assets on the Consolidated Balance Sheets.

The Company performs an impairment assessment when events or changes in circumstances indicate that the carrying amount of contract costs may not be recoverable. For the year ended December 31, 2020, due to the global COVID-19 pandemic and resulting retail store closures and significant declines in credit sales, the Company recognized an impairment charge of $38 million in Non-interest expenses in its Consolidated Statement of Income. No impairment charges were recognized in either of the years ended December 31, 2021 or 2019.

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, interest-bearing cash balances such as those invested in money market funds, as well as other highly liquid short-term investments with an original maturity of three months or less, and restricted cash. As of December 31, 2021 and 2020, cash and due from banks was $251 million and $262 million, respectively, interest-bearing cash balances were $2.7 billion and $2.5 billion, respectively, and short-term investments were $80 million and $29 million, respectively.

Restricted cash primarily represents cash restricted for principal and interest repayments of debt issued by consolidated VIE securitization trusts, and is recorded in Other assets on the Consolidated Balance Sheets. Restricted cash totaled $877 million and $323 million at December 31, 2021 and 2020, respectively.

Derivative Financial Instruments

From time to time, the Company uses derivative financial instruments to manage its exposure to various financial risks; the Company does not trade or speculate in derivative financial instruments. Subject to the criteria set forth in GAAP, the Company will either designate its derivative financial instruments in hedging relationships, or as economic hedges should the criteria in GAAP not be met. For those derivatives designated in hedging relationships, changes in their fair values, excluding any ineffective portions, are recorded in Accumulated other comprehensive income, net of income taxes, until the hedged transactions affect net income; the ineffective portions of the derivative financial instruments are recognized through net income. For those derivatives not designated in hedging relationships, or economic hedges, changes in their fair values are recognized in the Consolidated Statements of Income as they occur.

The Company’s derivative financial instruments were immaterial to the Consolidated Financial Statements for the periods presented. With the spinoff of its LoyaltyOne segment in November 2021, the Company does not hold any derivative financial instruments as of December 31, 2021.

CONCENTRATIONS

We depend on a limited number of large partner relationships for a significant portion of our revenue. The business generated through our 10 largest partners represented approximately 59% and 65%, respectively, of our Total net interest and non-interest income during the years ended December 31, 2021 and 2020. Business generated through our relationship with Victoria’s Secret & Co. and its retail affiliates represented approximately 13% and 14% of our Total net interest and non-interest income during these same respective periods. We previously announced the non-renewal of our contract with BJ’s Wholesale Club (BJ’s). For the year ended December 31, 2021, BJ’s branded co-brand accounts generated approximately 8% of our Total net interest and non-interest income. As of December 31, 2021, BJ’s branded co-brand accounts were responsible for approximately 11% of our Total credit card and other loans.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities, and the adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

RECENTLY ADOPTED ACCOUNTING STANDARDS

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminated certain exceptions within Accounting Standards Codification (ASC) 740, “Income Taxes,” and clarified certain aspects of ASC 740 to promote consistency among reporting entities. Most amendments within the standard were required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company’s adoption of this standard on January 1, 2021 did not have a material impact on its financial position, results of operations or cash flows, and there were no significant changes to accounting policies, business processes or internal controls as a result of adopting the standard.

Effective January 1, 2020, the Company adopted the new credit reserving methodology referred to as Current Expected Credit Loss (CECL), following a modified retrospective transition which resulted in an increase to the Allowance for credit losses of $644 million, an increase to net deferred tax assets of $159 million, with the offset to the opening balance of Retained earnings, net of income taxes, of $485 million. Under the CECL methodology, the Company utilizes a financial instrument impairment model to establish an allowance based on expected losses over the estimated life of the exposure, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. This approach differs from the Company’s historic model prior to January 1, 2020, which was based on an incurred loss approach. Although there were no significant changes to the Company’s accounting systems or internal controls as a result of adopting the standard, the Company modified certain of its existing controls and added new controls around its loss forecasting models.

ACQUISITIONS

12 Months Ended

Dec. 31, 2021

ACQUISITIONS

ACQUISITIONS

2. ACQUISITIONS

Bread

On September 28, 2020, the Company acquired 3.5 million preferred Series D Shares of Lon Inc., a Delaware corporation (Bread), for approximately $25 million, which represented an approximate 6% ownership interest in Bread. On December 3, 2020, the Company acquired the remaining interest in Bread, and accordingly its approximate 6% interest was remeasured at fair value; no gain or loss was recognized on the remeasurement.

Consideration for the 100% ownership of Bread consisted of cash of $275 million, equity of $149 million with the issuance of 1.9 million shares of the Company’s common stock, and deferred cash consideration of approximately $75 million paid in December 2021. Consideration, net of cash and restricted cash acquired, was $491 million.

The following table summarizes the allocation of the consideration and the respective fair values of the assets acquired and liabilities assumed in the transaction, net of cash and restricted cash acquired, as of December 3, 2020 (in millions):


Installment loans	$	112
Developed technology		91
Right of use assets - operating		4
Deferred tax asset, net		7
Intangible assets		11
Goodwill		370
Total assets acquired		595

Accounts payable		2
Accrued expenses		3
Operating lease liabilities		3
Debt issued by consolidated variable interest entities		96
Total liabilities assumed		104

Net assets acquired, net of cash and restricted cash	$	491

The goodwill resulting from the acquisition was not deductible for tax purposes. Bread utilized certain statutory trusts to securitize its installment loans. As part of the acquisition, the Company acquired $112 million of installment loans restricted for securitization investors. In addition, the Company assumed two warehouse facilities totaling $96 million utilized to fund securitized loans, which were amended in December 2020 and repaid in full in August 2021. See Note 11, “Borrowings of Long-term and Other Debt,” for more information.

CREDIT CARD AND OTHER LOANS

12 Months Ended

Dec. 31, 2021

CREDIT CARD AND OTHER LOANS

CREDIT CARD AND OTHER LOANS

3. CREDIT CARD AND OTHER LOANS

The Company’s payment and lending solutions result in the generation of credit card and other loans, which are recorded at the time a cardholder enters into a point-of-sale transaction with a merchant. Credit card loans represent revolving amounts due 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 revolve their amounts 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, which are primarily installment loans offered to our customers, have a range of fixed terms such as interest rates, fees and repayment periods, and borrowers are required 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 are presented on the Consolidated Balance Sheets net of the Allowance for credit losses, and include principal and any related accrued interest and fees. The Company continues 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; an Allowance for credit losses is established for uncollectable interest and fees.

For the most part, the Company classifies its credit card and other loans as held for investment. The Company sells a majority of its credit card loans originated by Comenity Bank and by Comenity Capital Bank, which together are referred to herein as the “Banks,” to securitization master trusts, which are themselves consolidated VIEs, and therefore these loans are restricted for securitization investors. All new originations of credit card and other loans are determined to be held for investment at origination because the Company has the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, the Company considers the average life and homogenous nature of its credit card and other loans. In assessing whether its credit card and other loans continue to be held for investment, the Company also considers 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 the Company’s direct-to-consumer 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 its credit card and other loans. Due to the homogenous nature of the Company’s credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. From time to time certain credit card loans are classified as held for sale, as determined on a brand partner basis. The Company carries these assets at the lower of aggregate cost or fair value, and continues 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.

The Company’s credit card and other loans were as follows, as of December 31:


	2021		2020

	(in millions)
Credit card loans	$	17,217	$	16,666
Installment loans		182		118
Total credit card and other loans ⁽¹⁾⁽²⁾		17,399		16,784
Less: Allowance for credit losses		(1,832)		(2,008)
Credit card and other loans, net	$	15,567	$	14,776

(1)	Includes $11.2 billion of credit card and other loans available to settle obligations of consolidated VIEs as of both December 31, 2021 and 2020, respectively.

(2)	Includes $224 million and $219 million, of accrued interest and fees that have not yet been billed to cardholders as of December 31, 2021 and 2020, respectively.

Credit Card and Other Loans Aging

An account is contractually delinquent if the Company does not receive the minimum payment due by the specified due date. The Company’s 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, which is typically at 180 days past due for credit card loans and 120 days past due for installment loans. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent. This collection scoring algorithm then recommends a strategy for collecting on the past due account, including a contact schedule and collections priority. If, after exhausting all in-house collection efforts, the Company is unable to make a collection it may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances.

The following table presents the delinquency trends on the Company’s credit card and other loans portfolio based on the principal balances outstanding as of December 31, and excludes amounts that have not yet been billed to cardholders:


	Aging Analysis of Delinquent Amortized Cost Credit Card and Other Loans ⁽¹⁾
	31 to 60 days delinquent		61 to 90 days delinquent		91 or more days delinquent		Total delinquent		Current		Total

	(in millions)
As of December 31, 2021	$	262	$	186	$	401	$	849	$	16,284	$	17,133

As of December 31, 2020	$	273	$	203	$	440	$	916	$	15,578	$	16,494

(1)	Installment loan delinquencies have been included with credit card loan delinquencies in the table above, as amounts were insignificant at each period presented.

From time to time the Company may re-age cardholders’ accounts, which is intended to assist 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 charge-offs. 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. For the years ended December 31, 2021, 2020 and 2019, the Company’s re-aged accounts represented 1.7%, 2.8% and 2.4%, respectively, of total credit card and other loans. The Company’s re-aging practices comply with regulatory guidelines.

Net Principal Charge-offs

The Company’s net charge-offs include the principal amount of losses that are deemed uncollectible, less recoveries, and exclude charged-off interest, fees and fraud losses. Charged-off interest and fees reduce Interest and fees on loans, while fraud losses are recorded in Card and processing expenses. Credit card loans, including unpaid interest and fees, are generally charged-off in the month during which an account becomes 180 days past due. Installment loans, 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 in each month subsequent to 60 days after the receipt of notification of the bankruptcy or death, but in any case not later than 180 days past due. The Company records the actual charge-offs for unpaid interest and fees as a reduction to Interest and fees on loans, which were $456 million, $717 million and $809 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Modified Credit Card Loans

Forbearance Programs

In response to the global COVID-19 pandemic, the Company offered forbearance programs, which provided for short-term modifications in the form of payment deferrals and late fee waivers to borrowers who were current as of their most recent billing cycle, prior to the announcement of the forbearance programs. As of December 31, 2021 and 2020, the amount of credit card loans in these forbearance programs was approximately $86 million and $157 million, respectively. Additionally, the Company instituted two short-term forbearance programs with durations of three and six months, which provide concessions consisting primarily of a reduced minimum payment and an interest rate reduction, the balances of which were $12 million and $67 million as of December 31, 2021 and 2020, respectively. As a result of legislation enacted by the United States that provided companies with the option to temporarily suspend (a) certain requirements under GAAP for loan modifications directly related to the global COVID-19 pandemic that would otherwise be treated as troubled debt restructurings (TDRs) and (b) any determination that a loan modified as a result of the pandemic is a TDR, these short-term modifications offered by the Company are not considered TDRs.

Credit Card Loans Modified as TDRs

The Company considers impaired loans to be loans for which it is probable that it will be unable to collect all amounts due according to the original contractual terms of the cardholder agreement, including credit card loans modified as TDRs. In instances where cardholders are experiencing financial difficulty, the Company may modify its 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 TDRs, exclusive of forbearance programs described above. Modifications, including for temporary hardship and permanent workout programs, include concessions consisting primarily of a reduced minimum payment and an interest rate reduction. The temporary programs’ concessions remain in place for a period no longer than twelve months, while the permanent programs remain in place through the payoff of the credit card loans, if the cardholder complies with the terms of the program. Additionally, the Company instituted two temporary hardship programs with durations of three and six months with similar terms to our short-term forbearance programs described above. As of December 31, 2021 and 2020, the outstanding balance of credit card loans in these two short-term temporary hardship programs treated as troubled debt restructurings totaled approximately $9 million and $40 million, respectively.

TDR 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 the Company’s temporary hardship and permanent 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.

TDRs are collectively evaluated for impairment on a pooled basis. In measuring the appropriate allowance for credit losses, these modified credit card loans are included in the general pool of credit card loans, with the allowance determined under a contingent loss model. The Company’s impaired credit card loans represented less than 3% of total credit card loans as of December 31, 2021 and 2020, respectively. As of those same dates, the Company’s recorded investment in impaired credit card loans was $281 million and $490 million, respectively, with an associated allowance for credit losses of $81 million and $166 million, respectively. The average recorded investment in impaired credit card loans was $383 million and $412 million for the years ended December 31, 2021 and 2020, respectively.

Interest income on these impaired credit card loans is accounted for in the same manner as other non-impaired credit card loans, and cash collections are allocated according to the same payment hierarchy methodology applied for credit card loans not in modification programs. The Company recognized $26 million, $30 million and $23 million for the years ended December 31, 2021, 2020 and 2019, respectively, in interest income associated with credit card loans in modification programs, during the period that such loans were impaired.

The following table provides additional information regarding credit card loans modified as TDRs for the years ended December 31:

2021

2020

Pre-

Post-

Pre-

Post-

modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings

171,993

254

391,049

554

553

The following table provides additional information regarding credit card loans modified as TDRs that have subsequently defaulted within 12 months of their modification dates for the years ended December 31; the probability of default is factored into the allowance for credit losses:


	2021			2020
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance

	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted	114,531	$	154	118,600	$	162

Credit Quality

Credit Card Loans

As part of the Company’s credit risk management activities, the Company assesses overall credit quality by reviewing information related to the performance of a credit cardholder’s account, as well as information from credit bureaus relating to the cardholder’s broader credit performance. The Company utilizes VantageScore (Vantage) credit scores to assist in its assessment of credit quality. Vantage credit scores are obtained at origination of the account and are refreshed monthly thereafter to assist in predicting customer behavior. The Company categorizes these Vantage credit scores into the following three credit score categories: (i) 661 or higher, which are considered the strongest credits and therefore have the lowest credit risk; (ii) 601 to 660, considered to have moderate credit risk; and (iii) 600 or less, which are considered weaker credits and therefore have the highest credit risk. In certain limited circumstances there are customer accounts for which a Vantage score is not available and the Company uses alternative sources to assess credit risk and predict behavior. The table below excludes 0.1% of our total credit card loans balance at each of December 31, 2021 and 2020, representing those customer accounts for which a Vantage credit score is not available. The following table reflects the distribution of the Company’s credit card loans by Vantage score as of December 31:


	Vantage
	2021						2020
	661 or		601 to		600 or		661 or		601 to		600 or
	Higher		660		Less		Higher		660		Less
Credit card loans	62	%	26	%	12	%	60	%	28	%	12	%

Note: The Company’s credit card loans are revolving as they do not have stated maturities, and therefore are exempted from certain vintage disclosures otherwise required under GAAP.

Installment Loans

The amortized cost basis of the Company’s installment loans totaled $182 million and $118 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021, approximately 84% of these loans were originated by customers with Fair Isaac Corporation (FICO) scores of 660 or above, and approximately 16% of these loans were originated by customers with FICO scores below 660. Similarly, as of December 31, 2020, approximately 86% and 14% of these loans were originated by customers with FICO scores of 660 or above, and below 660, respectively.

Unfunded Loan Commitments

The Company is active in originating private label and co-brand credit cards in the United States. The Company manages potential credit risk in its 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. Cardholders reside throughout the United States and are not significantly concentrated in any one area.

The Company manages its potential risk in credit commitments by limiting the total amount of credit, both by individual customer and in total, by monitoring the size and maturity of its portfolios and applying consistent underwriting standards. The Company has the unilateral ability to cancel or reduce unused credit card lines at any time. Unused credit card lines available to cardholders totaled approximately $112 billion and $108 billion at December 31, 2021 and 2020, respectively. While these amounts represented the total available unused credit card lines, the Company has not experienced and does not anticipate that all cardholders will access their entire available line at any given point in time.

Portfolio Sales

As of December 31, 2021 and 2020, there were no credit card loans held for sale. During the years ended December 31, 2021 and 2020, the Company sold credit card loan portfolios for cash consideration of approximately $512 million

and $289 million, respectively, and recognized associated gains of approximately $10 million and $20 million, respectively, which were recorded in Other non-interest income in the Consolidated Statements of Income.

Also during the year ended December 31, 2020, the Company recorded $8 million in portfolio valuation adjustments, which are reflected in Non-interest expenses, and as of September 2020, one of the Company’s credit card loan portfolios totaling approximately $82 million was transferred from held for sale to held for investment, and was included in Total credit card and other loans as of December 31, 2020. No such valuation adjustments or transfers occurred in 2021.

Portfolio Acquisitions

During the year ended December 31, 2021, the Company acquired three credit card loan portfolios for aggregate cash consideration of approximately $110 million, which consisted of approximately $106 million of credit card loans and $4 million of purchased credit card relationships intangible assets. No portfolio acquisitions were made during the year ended December 31, 2020.

ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2021

Allowance for Credit Loss [Abstract]

Allowance for Credit Losses [Text Block]

4. ALLOWANCE FOR CREDIT LOSSES

Effective January 1, 2020, the Company adopted the CECL model on a modified retrospective approach and applied a CECL model to determine its allowance for credit losses. Reserves for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. The allowance for credit losses is an estimate of expected credit losses, measured over the estimated life of its credit card and other loans that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and other loans, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for credit losses includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. Charge-offs for unpaid interest and fees as well as any adjustments to the allowance associated with unpaid interest and fees are recorded as a reduction to Interest and fees on loans. The allowance is maintained through an adjustment to the Provision for credit losses and is evaluated for appropriateness.

In estimating its allowance for credit losses, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships with credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card and other loans, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects the Company’s best estimate of current expected credit losses. As permitted by GAAP, the Company excludes unbilled finance charges from its amortized cost basis of credit card and other loans. As of December 31, 2021 and 2020, unbilled finance charges were $224 million and $219 million, respectively, and included in Credit card and other loans on the Consolidated Balance Sheets.

Credit Card Loans

The Company uses a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. As part of its CECL implementation, the Company evaluated multiple risk characteristics of its credit card loans portfolio, and determined delinquency status and credit quality to be the most significant characteristics for estimating expected credit losses. To estimate its allowance for credit losses, the Company segregates its credit card loans into four groups with similar risk characteristics, on the basis of delinquency status and credit quality risk score. These risk characteristics are evaluated on at least an annual basis, or more frequently as facts and circumstances

warrant. In determining the estimated life of the Company’s credit card loans, payments were applied to the measurement date balance with no payments allocated to future purchase activity. The Company uses a combination of First In First Out (FIFO) and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) methodology to model balance paydown.

The Company’s groups of pooled financial assets with similar risk characteristics and their estimated life is as follows:


	Estimated Life
	(in months)
Group A (Current, risk score - high)		14
Group B (Current, risk score - low)		19
Group C (Delinquent, risk score - high)		17
Group D (Delinquent, risk score - low)		26

Installment Loans

The allowance for credit losses for installment loans utilizes a migration model over the remaining life of the loans. The model segmented accounts based on three attributes: delinquency, risk score and remaining term. As of December 31, 2021 and 2020, the allowance for credit losses related to installment loans was $14 million and $6 million, respectively.

Allowance for Credit Losses Rollforward

The following table presents the Company’s allowance for credit losses for its credit card and other loans. With the acquisition of Bread in December 2020, the Company acquired certain installment loans which represented a separate portfolio segment; the amount of the related allowance for credit losses was insignificant and therefore has been included in the table below. The amounts presented are for the years ended December 31:


	2021		2020			2019

	(in millions)
Beginning balance	$	2,008	$	1,815	⁽³⁾	$	1,038

Provision for credit losses ⁽¹⁾		544		1,266			1,188
Change in estimate for uncollectible unpaid interest and fees		—		10			—
Net principal charge-offs ⁽²⁾		(720)		(1,083)			(1,055)
Ending balance	$	1,832	$	2,008		$	1,171

(1)	Provision for credit losses includes a build/release for the allowance, as well as replenishment of Net principal charge-offs.

(2)	Principal charge-offs are presented net of recoveries of $163 million, $205 million and $234 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(3)	Includes an increase of $644 million as of January 1, 2020, related to the adoption of the CECL methodology.

During the year ended December 31, 2021, the decrease in the allowance for credit losses was due to improved credit performance, lower net charge-offs and improving macroeconomic variables. In addition, improvements in customer payment behavior, which include the effects of government stimulus actions, have contributed to a reduction in credit card and other loans, as well as delinquencies, which also contributed to the reduction in the allowance for credit losses. During the year ended December 31, 2020, the increase in the allowance for credit losses was due to a $644 million cumulative-effect adjustment for the adoption of the CECL methodology as well as deterioration of the macroeconomic outlook due to the global COVID-19 pandemic.

SECURITIZATIONS

12 Months Ended

Dec. 31, 2021

SECURITIZATIONS

SECURITIZATIONS

5. SECURITIZATIONS

The Company accounts for transfers of financial assets as either sales or financings. Transfers of financial assets that are accounted for as sales are removed from the Consolidated Balance Sheets with any realized gain or loss reflected in the Consolidated Statements of Income during the period in which the sale occurs. Transfers of financial assets that are not accounted for as a sale are treated as a financing.

The Company regularly securitizes the majority of its credit card loans through the transfer of those loans to one of its master trusts (the Trusts). The Company performs the decision making for the Trusts, as well as servicing the cardholder accounts that generate the credit card loans held by the Trusts. In its capacity as a servicer, the Company administers the loans, collects payments and charges-off uncollectible balances. Servicing fees are earned by a subsidiary of ADSC, which are eliminated in consolidation.

The Trusts are VIEs because they have insufficient equity at risk to finance their activities – being the issuance of debt securities and notes, collateralized by the underlying credit card loans. Because the Company performs the decision making and servicing for the Trusts, it has the power to direct the activities that most significantly impact the Trusts’ economic performance (the collection of the underlying credit card loans). In addition, the Company holds all of the variable interests in the Trusts, with the exception of the liabilities held by third-parties. These variable interests provide the Company with the right to receive benefits and the obligation to absorb losses, which could be significant to the Trusts. As a result of these considerations, the Company is deemed to be the primary beneficiary of the Trusts and therefore consolidates the Trusts.

The Trusts issue debt securities and notes, which are non-recourse to the Company. The collections on the securitized credit card loans held by the Trusts are available only for payment of those debt securities and notes, or other obligations arising in the securitization transactions. For its securitized credit card loans, during the initial phase of a securitization reinvestment period, the Company generally retains principal collections in exchange for the transfer of additional credit card loans into the securitized pool of assets. During the amortization or accumulation period of a securitization, the investors’ share of principal collections (in certain cases, up to a maximum specified amount each month) is either distributed to the investors or held in an account until it accumulates to the total amount due, at which time it is paid to the investors in a lump sum.

The Company is required to maintain minimum interests in its Trusts ranging from 4% to 10% of the securitized credit card loans. This requirement is met through a transferor’s interest and is supplemented through excess funding deposits which represent cash amounts deposited with the trustee of the securitizations. Cash collateral, restricted deposits are generally released proportionately as investors are repaid. Under the terms of the Trusts, the occurrence of certain triggering events associated with the performance of the securitized credit card loans in each Trust could result in certain required actions, including payment of Trust expenses, the establishment of reserve funds, or early amortization of the debt securities and/or notes, in a worst-case scenario. During the years ended December 31, 2021, 2020 and 2019, no such triggering events occurred.

The following tables provide the total securitized credit card loans and related delinquencies as of December 31, and net principal charge-offs of securitized credit card loans for the years ended December 31:


	2021		2020

	(in millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	11,215	$	11,208
Of which: principal amount of credit card loans 91 days or more past due	$	159	$	201


	2021		2020		2019

	(in millions)
Net charge-offs of securitized principal	$	453	$	756	$	908

AVAILABLE-FOR-SALE SECURITIES

12 Months Ended

Dec. 31, 2021

AVAILABLE-FOR-SALE SECURITIES

AVAILABLE-FOR-SALE SECURITIES

6. AVAILABLE-FOR-SALE SECURITIES

The Company’s available-for-sale (AFS) securities consist of available-for-sale debt securities, equity securities, U.S. Treasury bonds and mutual funds. These investments are carried at fair value on the Consolidated Balance Sheets within Other assets. For any AFS debt securities in an unrealized loss position, the CECL methodology requires estimation of the lifetime expected credit losses which then would be recognized in the Consolidated Statements of Income by establishing, or adjusting an existing allowance for those credit losses. The Company did not have any such credit losses for the periods presented. Any unrealized gains, or any portion of a security’s non-credit-related unrealized losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. The Company typically invests in highly-rated securities with low probabilities of default. Gains and losses on investments in equity securities are recorded in Other non-interest expenses in the Consolidated Statements of Income. Realized gains and losses are recognized upon disposition of the securities, using the specific identification method. The table below reflects unrealized gains and losses as of December 31:


	2021								2020
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value

	(in millions)
Available-for-sale securities	$	237	$	4	$	(2)	$	239	$	219	$	6	$	—	$	225
Total	$	237	$	4	$	(2)	$	239	$	219	$	6	$	—	$	225

The following table provides information about the Company’s AFS debt securities with gross unrealized losses, as of December 31, 2021, and the length of time such individual securities have been in a continuous unrealized loss position. The gross unrealized losses were insignificant on AFS debt securities as of December 31, 2020.


	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
Available-for-sale securities	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)
Total	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)

At December 31, 2021, the amortized cost and estimated fair value of the Company’s AFS securities by contractual maturity, are as follows:


	Amortized		Estimated
	Cost		Fair Value

	(in millions)
Due in one year or less ⁽¹⁾	$	65	$	65
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		172		174
Total	$	237	$	239

(1)	Includes mutual funds, which do not have a stated maturity.

There were no realized gains or losses from the sale of any AFS securities for the years ended December 31, 2021, 2020 and 2019.

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2021

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET

7. PROPERTY AND EQUIPMENT, NET

Furniture, equipment, buildings and leasehold improvements are carried at cost less accumulated depreciation, and depreciation is measured on a straight-line basis. Costs incurred during construction are capitalized; depreciation begins once the asset is placed in service. As of December 31, 2021, the Company’s furniture and equipment has remaining estimated useful lives ranging from less than one year to 10 years. Leasehold improvements are depreciated over the lesser of the remaining terms of the respective leases, or the economic lives of the improvements, and range from less than one year to 17 years, at December 31, 2021.

Costs associated with the acquisition or development of internal-use software are also capitalized and recorded in Property and equipment, net. Once the internal-use software is ready for its intended use, the cost is amortized on a straight-line basis over the software’s estimated useful life. As of December 31, 2021, the Company’s internal-use software has remaining estimated useful lives ranging from less than one year to four years.

The Company reviews long-lived assets and asset groups for impairment whenever events or circumstances indicate their carrying amounts may not be recoverable. An impairment is recognized if the carrying amount is not recoverable and exceeds the asset or asset group’s fair value.

With the Bread acquisition on December 3, 2020, the Company acquired $91 million of developed technology recorded in Property and equipment, net, which is being amortized over a 5 year life; the Company also impaired $4 million in capitalized software with the acquisition, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020. Also during the fourth quarter of 2020, the Company determined it would reduce its real estate footprint and cease use of certain properties with the intent to sublease, triggering an impairment analysis of certain property and equipment. As a result of the analysis, the Company recorded asset impairment charges of $3 million and accelerated depreciation expense of $25 million, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020.

Property and equipment consist of the following as of December 31:


	2021		2020

	(in millions)
Internal-use computer software and development	$	263	$	248
Furniture and equipment		107		122
Land and leasehold improvements		76		90
Construction in progress		25		24
Total		471		484
Accumulated depreciation and amortization		(256)		(271)
Property and equipment, net	$	215	$	213

Depreciation expense totaled $26 million, $57 million and $30 million for the years ended December 31, 2021, 2020 and 2019, respectively, and includes purchased software. Amortization expense on capitalized internal-use software costs totaled $37 million, $15 million and $18 million for the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021 and 2020, the net amount of unamortized capitalized internal-use software costs included in Property and equipment, net on the Consolidated Balance Sheets was $113 million and $118 million, respectively.

GOODWILL AND INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2021

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

8. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

Goodwill is reviewed at least annually for impairment, or more frequently if circumstances indicate that an impairment is probable, using qualitative or quantitative analysis. No goodwill impairment has been recognized during any of the years ended December 31, 2021, 2020, or 2019.

The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, respectively, were as follows (in millions):


Balance at December 31, 2019	$	264
Goodwill acquired during the period ⁽¹⁾		370
Balance at December 31, 2020	$	634
Goodwill acquired during the period		—
Balance at December 31, 2021	$	634

(1)	Fully related to the acquisition of Bread in December 2020.

There were no accumulated goodwill impairment losses as of both December 31, 2021 and 2020.

Intangible Assets, net

The Company’s identifiable intangible assets consist of both amortizable and non-amortizable intangible assets. Definite-lived intangible assets are subject to amortization and are amortized on a straight-line basis over their estimated useful lives; indefinite-lived intangible assets are not amortized. The Company reviews long-lived assets and asset groups, including intangible assets, for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable; recognizing an impairment if the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. No impairment of intangible assets has been recognized during any of the years ended December 31, 2021, 2020, or 2019.

Intangible assets consist of the following as of December 31:


	2021
	Gross		Accumulated
	Assets		Amortization		Net		Useful Life

	(in millions)
Definite-Lived Assets
Customer contracts and lists	$	9	$	(3)	$	6	3 years
Premium on purchased credit card loan portfolios		133		(89)		44	1-13 years
Non-compete agreements		2		—		2	5 years
	$	144	$	(92)	$	52
Indefinite-Lived Assets
Tradename		1		—		1	Indefinite life
Total intangible assets	$	145	$	(92)	$	53


	2020
	Gross		Accumulated
	Assets		Amortization		Net		Useful Life

	(in millions)
Definite-Lived Assets
Customer contracts and lists	$	9	$	—	$	9	3 years
Premium on purchased credit card loan portfolios		138		(73)		65	1-13 years
Non-compete agreements		2		—		2	5 years
	$	149	$	(73)	$	76
Indefinite-Lived Assets
Tradename		1		—		1	Indefinite life
Total intangible assets	$	150	$	(73)	$	77

With the Bread acquisition on December 3, 2020, the Company acquired $11 million of intangible assets, consisting of customer relationships of $9 million and a non-compete agreement of $2 million that are being amortized over weighted average lives of 3.0 years and 5.0 years, respectively.

Amortization expense related to intangible assets was approximately $29 million, $34 million and $48 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows for the years ending December 31 (in millions):


2022	$	20
2023		15
2024		11
2025		2
2026		1
Thereafter		3
	$	52

OTHER ASSETS

12 Months Ended

Dec. 31, 2021

Other Assets

Other Assets

9. OTHER ASSETS

The following is a summary of Other assets as of December 31:


	2021		2020

	(in millions)
Restricted cash ⁽¹⁾	$	877	$	323
Deferred contract costs		364		311
Deferred tax asset, net		302		289
Accounts receivable, net ⁽²⁾		151		114
Right of use assets - operating		97		119
Investment in LVI		50		—
Other ⁽³⁾		151		207
Total other assets	$	1,992	$	1,363

(1)	Represents principal accumulation for the repayment of debt issued by consolidated variable interest entities that matures in 2022 or that matured in 2021, at December 31, 2021 and 2020, respectively.

(2)	Primarily related to amounts receivable from brand partners, which are recorded at the invoiced amount and do not bear interest.

(3)	Primarily comprised of prepaid expenses and non-income-based tax receivables.

LEASES

12 Months Ended

Dec. 31, 2021

LEASES

LEASES

10. LEASES

The Company has various operating leases for facilities and equipment which are recorded as lease-related assets (right-of-use assets) and liabilities for those leases with terms greater than 12 months. The Company does not have any finance leases. The Company determines if an arrangement is a lease or contains a lease at inception, and does not separate lease and non-lease components. Right-of-use assets are recognized as of the lease commencement date at amounts equal to the respective lease liabilities, adjusted for any prepaid lease payments, initial direct costs and lease incentives. The Company’s lease liabilities are recognized at the present value of the contractual fixed lease payments discounted using the Company’s incremental borrowing rate, as the rate implicit in the lease is typically not readily determinable, as of the lease commencement date or upon modification of the lease. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. As of December 31, 2021, the Company’s leases have remaining lease terms ranging from less than one year, up to 17 years, some of which may include renewal options. Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets; lease expense for these leases is recognized on a straight-line basis over the lease term.

As with other long-lived assets, right-of-use assets are reviewed for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable. In the fourth quarter of 2020, the Company performed an impairment assessment for its right-of-use assets associated with its locations where it ceased use with the intent to

sublease. As a result, the Company recorded an asset impairment charge of $18 million, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020.

The components of lease expense were as follows for the years ended December 31:


	2021			2020	2019

	(in millions)
Operating lease cost	$	23	$	25	$	24
Short-term lease cost		—		1		1
Variable lease cost		2		2		3
Sublease income		(5)		(1)		—
Total	$	20	$	27	$	28

The table below reflects other lease-related information as of December 31:

Supplemental lease-related cash flow information was as follows for the years ended December 31:


	2021		2021		2020

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25	$	28	$	27
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5	$	1	$	23

Maturities of the Company’s lease liabilities by year were as follows as of December 31, 2021 (in millions):


2022	$	20
2023		21
2024		21
2025		20
2026		19
Thereafter		86
Total undiscounted lease liabilities		187
Less: Amount representing interest		(47)
Total present value of minimum lease payments	$	140

BORROWINGS OF LONG-TERM AND OTHER DEBT

12 Months Ended

Dec. 31, 2021

BORROWINGS OF LONG-TERM AND OTHER DEBT

BORROWINGS OF LONG-TERM AND OTHER DEBT

11. BORROWINGS OF LONG-TERM AND OTHER DEBT

Long-term and other debt consisted of the following as of December 31:


Description	2021		2020		Contractual Maturities	Interest Rates

	(Dollars in millions)
Long-term and other debt:
Revolving line of credit	$	—	$	—	July 2024	⁽¹⁾
Term loans		658		1,484	July 2024	⁽²⁾
Senior notes due 2024		850		850	December 2024	4.750%
Senior notes due 2026		500		500	January 2026	7.000%
Subtotal		2,008		2,834
Less: Unamortized debt issuance costs		22		28
Total long-term and other debt	$	1,986	$	2,806

Deposits:
Certificates of deposit	$	5,447	$	6,015	Various – Jan 2022 to Dec 2026	0.20% to 3.75%
Money market and other non-maturity deposits		5,586		3,790	Non-maturity	⁽³⁾
Subtotal		11,033		9,805
Less: Unamortized debt issuance costs		6		12
Total deposits	$	11,027	$	9,793

Debt issued by consolidated VIEs:
Fixed rate asset-backed term note securities	$	1,572	$	3,424	Various – Feb 2022 to Sep 2022	2.21% to 3.61%
Conduit asset-backed securities		3,883		2,205	Various – Aug 2022 to Oct 2023	⁽⁴⁾
Secured loan facility		—		86
Subtotal		5,455		5,715
Less: Unamortized debt issuance costs		2		5
Total debt issued by consolidated VIEs	$	5,453	$	5,710

Total borrowings of long-term and other debt	$	18,466	$	18,309

(1)	The interest rate is based upon LIBOR plus an applicable margin.

(2)	The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 1.85% and 1.90% at December 31, 2021 and 2020, respectively.

(3)	The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2021, the interest rates ranged from 0.05% to 3.50%. At December 31, 2020, the interest rates ranged from 0.38% to 3.50%.

(4)	The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2021, the interest rates ranged from 0.89% to 0.96%. At December 31, 2020, the interest rates ranged from 1.39% to 1.89%.

Certain of the Company’s long-term debt agreements contain various restrictive financial and non-financial covenants. If the Company does not satisfy these covenants, the maturity of amounts outstanding may be accelerated and become payable. The Company was in compliance with all such covenants at December 31, 2021.

Long-term and Other Debt

Credit Agreement

The Company, as borrower, and certain of its wholly owned subsidiaries, as guarantors, are party to a credit agreement with various agents and lenders dated June 14, 2017, as amended (the credit agreement). At December 31, 2021, the credit agreement had $658 million aggregate principal amount of term loans outstanding (the term loans) and provided for a $750 million revolving credit facility (the revolving line of credit) which was undrawn as of December 31, 2021.

The credit agreement contains the usual and customary negative and affirmative covenants, including, but not limited to, restrictions on the Company’s ability and in certain instances, its subsidiaries’ ability to consolidate or merge; substantially change the nature of its business; sell, lease, or otherwise transfer any substantial part of its assets; create or incur indebtedness; create liens; and make acquisitions. The negative covenants are subject to certain exceptions as specified in the credit agreement. The credit agreement also requires the Company to comply with certain financial covenants and includes customary events of default.

In July 2021, the Company amended its credit agreement to, among other things, (i) provide consent by the lenders to the spinoff or sale of our LoyaltyOne segment, (ii) extend the maturity date of the revolving loans and approximately 86% of the term loans from December 31, 2022 to July 1, 2024, (iii) revise the method of determining interest rates and commitment fees to be charged in connection with the loans, (iv) modify the financial and operational covenants and certain other provisions in the credit agreement to reflect our business and operations after giving effect to the LoyaltyOne spinoff, including a financial covenant that Comenity Bank and Comenity Capital Bank each maintain a common equity tier 1 capital ratio of at least 11% at all times there are term loans outstanding (or at least 10% if no term loans are outstanding), (v) require a prepayment of certain of the loans in an amount equal to the net proceeds from the LoyaltyOne spinoff or sale, including any net proceeds from debt that is distributed to us minus, in the case of the first transaction associated with the divestiture of the LoyaltyOne spinoff or sale, $25 million and (vi) add Lon Inc. and Lon Operations LLC acquired in our acquisition of Bread as additional guarantors. Following our receipt of $750 million in connection with the spinoff of our former LoyaltyOne segment in November 2021, we used $725 million of such amount to repay term loans under our credit agreement, as required by the July 2021 amendment, and used the remaining $25 million to make our scheduled fourth quarter amortization payment with respect to such loans.

As of December 31, 2021, the Company had $658 million aggregate principal amount of term loans outstanding with $750 million total availability under the revolving line of credit.

Senior Notes Due 2024 and 2026

The senior notes set forth below are each governed by their respective indenture that includes usual and customary negative covenants and events of default. These senior notes are unsecured and are guaranteed on a senior unsecured basis by certain of the Company’s existing and future domestic restricted subsidiaries that incurs or in any other manner becomes liable for any debt under the Company’s domestic credit facilities, including the credit agreement.

Due 2024: In December 2019, the Company issued and sold $850 million aggregate principal amount of 4.750% senior notes due December 15, 2024 (the Senior Notes due 2024). The Senior Notes due 2024 accrue interest on the outstanding principal amount at the rate of 4.750% per annum from December 20, 2019, payable semi-annually in arrears, on June 15 and December 15 of each year, beginning on June 15, 2020. The Senior Notes due 2024 will mature on December 15, 2024, subject to earlier repurchase or redemption.

Due 2026: In September 2020, the Company issued and sold $500 million aggregate principal amount of 7.000% senior notes due January 15, 2026 (the Senior Notes due 2026). The Senior Notes due 2026 accrue interest on the outstanding principal amount at the rate of 7.000% per annum from September 22, 2020, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2021. The Senior Notes due 2026 will mature on January 15, 2026, subject to earlier repurchase or redemption.

Deposits

The Company uses a variety of deposit products to finance its operating activities, including funding for its non-securitized credit card and other loans, and fund securitization enhancement requirements for the Banks. The Company offers both direct-to-consumer retail deposit products as well as deposits sourced through contractual arrangements with various financial counterparties. Direct-to-consumer retail deposits comprised approximately $3.2 billion and $1.7 billion of total deposits outstanding at December 31, 2021 and 2020, respectively. Other third-party sourced deposits (often referred to as wholesale deposits) comprised approximately $7.8 billion and $8.1 billion of total deposits outstanding at December 31, 2021 and 2020, respectively.

The Banks issue certificates of deposit in denominations of at least $1,000, across various maturities ranging between January 2022 and December 2026. As of December 31, 2021, the effective annual interest rates on the certificates of deposit ranged from 0.20% to 3.75%, with a weighted average interest rate of 1.91%; as of December 31, 2020, the effective annual interest rates ranged from 0.15% to 3.75%, with a weighted average interest rate of 2.58%. Interest is paid monthly and at maturity, depending on the certificate of deposit.

The Banks also offer various non-maturity deposits; these deposits are redeemable on demand by the customer and, as such, have no scheduled maturity dates. As of December 31, 2021, the effective annual interest rates on such deposits ranged from 0.05% to 3.50%, with a weighted average interest rate of 0.68%; as of December 31, 2020, the effective annual interest rates ranged from 0.38% to 3.50%, with a weighted average interest rate of 1.00%. Interest is paid either monthly or at maturity.

Debt Issued by Consolidated VIEs

An asset-backed security is a security whose value and income payments are derived from and collateralized by a specified pool of underlying assets – in the case of the Company, its credit card loans. The sale of the pool of underlying assets to general investors is accomplished through a securitization process. The Company regularly sells its credit card loans to its Trusts, which are consolidated by the Company. The liabilities of these consolidated VIEs include asset-backed securities for which creditors, or beneficial interest holders, do not have recourse to the general credit of the Company.

Asset-Backed Term Notes

For the year ended December 31, 2021, no asset-backed term notes were issued, and $2.1 billion of asset-backed term notes matured and were repaid, of which $281 million were previously retained by us and therefore eliminated from the Consolidated Balance Sheets.

As of December 31, 2021, the Company collected $846 million of principal payments made by its credit cardholders during the accumulation period for the repayment of the $563 million Series 2019-A notes, which matured and were repaid in February 2022, the $399 million Series 2019-B notes, which mature in June 2022, and the $684 million Series 2019-C notes, which mature in September 2022. The cash is restricted to the securitization investors and is reflected in Other assets in the Consolidated Balance Sheet as of December 31, 2021.

Conduit Facilities

The Company maintained committed syndicated bank conduit facilities to support the funding of its credit card loans for its Trusts. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the asset-backed commercial paper costs of each individual conduit provider. During the year ended December 31, 2021, the Company obtained increased lender commitments under its conduit facilities of $1.3 billion and extended the respective maturities to August 2022 and October 2023. Total capacity under the conduit facilities was $4.5 billion, of which $3.9 billion had been drawn and was included in Debt issued by consolidated variable interest entities on the Consolidated Balance Sheets.

Secured Loan Facility

At December 31, 2020, the Company had a secured loan facility related to the acquisition of Bread, with an outstanding balance of $86 million that was set to mature in November 2022, with prepayment permitted. In August 2021, the Company repaid this outstanding secured loan facility in full.

Maturities

The future principal payments for the Company’s long-term and other debt are as follows, as of December 31, 2021:


	Long-Term				Debt Issued by
	and				Consolidated
Year	Other Debt		Deposits		VIEs		Total

	(in millions)
2022	$	231	$	9,096	$	3,034	$	12,361
2023		177		1,217		2,421		3,815
2024		1,100		627		—		1,727
2025		—		57		—		57
2026		500		36		—		536
Thereafter		—		—		—		—
Total maturities		2,008		11,033		5,455		18,496
Unamortized debt issuance costs		(22)		(6)		(2)		(30)
	$	1,986	$	11,027	$	5,453	$	18,466

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
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-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

OTHER LIABILITIES

12 Months Ended

Dec. 31, 2021

OTHER LIABILITIES

OTHER LIABILITIES..

12. OTHER LIABILITIES

The following is a summary of Other liabilities as of December 31:


	2021		2020

	(in millions)
Accounts payable and other brand partner liabilities	$	291	$	354
Accrued liabilities ⁽¹⁾		314		384
Operating lease liabilities		140		172
Long-term tax reserves		313		347
Other⁽²⁾		136		102
Total other liabilities	$	1,194	$	1,359

(1)	Primarily related to accrued payroll and benefits, marketing, taxes and professional services expenses.

(2)	Primarily comprised of long-term unearned revenue and cardholder liabilities.

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

12 Months Ended

Dec. 31, 2021

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSE

13. OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

The following table provides the components of Other non-interest income for the years ended December 31:


	2021		2020		2019

	(in millions)
Payment protection products	$	141	$	156	$	174
Gain on portfolio and other sales		10		20		41
Other		5		1		4
Total other non-interest income	$	156	$	177	$	219

The following table provides the components of Other non-interest expenses for the years ended December 31:


	2021		2020		2019

	(in millions)
Professional services and regulatory fees	$	136		114	$	120
Asset impairment charges		—		64		11
Portfolio valuation adjustments (to reflect the lower of cost or market)		—		—		190
Loss on extinguishment of debt		—		—		72
Other ⁽¹⁾		86		108		119
Total other non-interest expenses	$	222	$	286	$	512

(1)	Primarily related to occupancy expense and non-income based taxes.

FAIR VALUES OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2021

FAIR VALUES OF FINANCIAL INSTRUMENTS

FAIR VALUES OF FINANCIAL INSTRUMENTS

14. FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair value is defined under GAAP as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; with such transaction based on the principal market, or in the absence of a principal market the most advantageous market for the specific instrument. GAAP provides for a three-level fair value hierarchy that classifies the inputs to valuation techniques used to measure fair value, defined as follows:

Level 1: Inputs that are unadjusted quoted prices for identical assets or liabilities in active markets that the entity can access.

Level 2: Inputs, other than those included within Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, or inputs other than quoted prices that are observable for the asset or liability.

Level 3: Inputs that are unobservable (e.g., internally derived assumptions) and reflect an entity’s own estimates about estimates market participants would use in pricing the asset or liability based on the best information available under the circumstances. In particular, Level 3 inputs and valuation techniques involve judgment and as a result are not necessarily indicative of amounts the Company would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts.

We monitor the market conditions and evaluate the fair value hierarchy levels quarterly. For the years ended December 31, 2021 and 2020, there were no transfers into or out of Level 3, and no transfers between Levels 1 and 2.

The following table summarizes the carrying values and fair values of the Company’s financial assets and financial liabilities as of December 31:


	2021				2020
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in millions)
Financial assets
Credit card and other loans, net	$	15,567	$	17,989	$	14,776	$	17,301
Available-for-sale securities		239		239		225		225
Financial liabilities
Deposits		11,027		11,135		9,793		10,016
Debt issued by consolidated variable interest entities		5,453		5,467		5,710		2,783
Long-term and other debt		1,986		2,053		2,806		2,875

Valuation Techniques Used in the Fair Value Measurement of Financial Assets and Financial Liabilities

Credit card and other loans, net: The Company’s Credit card and other loans are recorded at historical cost, less an allowance for credit losses, on the Consolidated Balance Sheets. In estimating the fair values, the Company uses a discounted cash flow model (i.e., Level 3 inputs), primarily because a comparable whole loan sales market for similar loans does not exist, and therefore there is a lack of observable pricing inputs. The Company uses various internally derived inputs, including projected income, discount rates and forecasted write-offs; economic value attributable to future loans generated by the cardholder accounts is not included in the fair values.

Available-for-sale securities: AFS securities consist of available-for-sale debt securities, equity securities, U.S. Treasury bonds and mutual funds, and are recorded at fair value on the Consolidated Balance Sheets. Quoted prices of identical or similar investment securities in active markets are used to estimate the fair values (i.e., Level 1 or Level 2 inputs).

Deposits: Money market and other non-maturity deposits carrying values approximate their fair values because they are short-term in duration and have no defined maturity. Certificates of deposit are recorded at their historical issuance cost on the Consolidated Balance Sheets, adjusted for unamortized fees, with fair value being estimated based on the currently observable market rates available to the Company for similar deposits with similar remaining maturities (i.e., Level 2 inputs). Interest payable is included within Other liabilities on the Consolidated Balance Sheets.

Debt issued by consolidated VIEs: The Company records debt issued by its consolidated VIEs at historical issuance cost on the Consolidated Balance Sheets, adjusted for unamortized fees, as well as premiums or discounts, as applicable. Interest payable is included within Other liabilities on the Consolidated Balance Sheets. Fair value is estimated based on the currently observable market rates available to the Company for similar debt instruments with similar remaining maturities or quoted market prices for the same transaction (i.e., Level 2 inputs).

Long-term and other debt: The Company records its long-term and other debt at historical issuance cost on the Consolidated Balance Sheets, adjusted for unamortized fees, as well as premiums or discounts, as applicable. Interest payable is included within Other liabilities on the Consolidated Balance Sheets. The fair value is estimated based on the currently observable market rates available to the Company for similar debt instruments with similar remaining maturities, or quoted market prices for the same transaction (i.e., Level 2 inputs).

The following tables summarize the Company’s financial assets and financial liabilities measured at fair value on a recurring basis, categorized by the fair value hierarchy described in the preceding paragraphs, as of December 31:


	2021
	Total		Level 1		Level 2		Level 3

	(in millions)
Available-for-sale securities	$	239	$	48	$	191	$	—
Total assets measured at fair value	$	239	$	48	$	191	$	—


	2020
	Total		Level 1		Level 2		Level 3

	(in millions)
Available-for-sale securities	$	225	$	34	$	191	$	—
Total assets measured at fair value	$	225	$	34	$	191	$	—

Financial Instruments Disclosed but Not Carried at Fair Value

The following tables summarize the Company’s financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of December 31, 2021 and 2020. The fair values of these financial instruments are estimates as of December 31, 2021 and 2020, and require management’s judgment; therefore, these figures may not be indicative of future fair values, nor can the fair value of the Company be estimated by aggregating all of the amounts presented.


	2021
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,989	$	—	$	—	$	17,989
Total	$	17,989	$	—	$	—	$	17,989

Financial liabilities:
Deposits	$	11,135	$	—	$	11,135	$	—
Debt issued by consolidated VIEs		5,467		—		5,467		—
Long-term and other debt		2,053		—		2,053		—
Total	$	18,655	$	—	$	18,655	$	—


	2020
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,301	$	—	$	—	$	17,301
Total	$	17,301	$	—	$	—	$	17,301

Financial liabilities:
Deposits	$	10,016	$	—	$	10,016	$	—
Debt issued by consolidated VIEs		5,783		—		5,783		—
Long-term and other debt		2,875		—		2,875		—
Total	$	18,674	$	—	$	18,674	$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including property and equipment, right-of-use assets, deferred contract assets, goodwill, and intangible assets. These assets are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances, such as upon impairment. The Company did not have any impairments for the year ended December 31, 2021.

For the year ended December 31, 2020, the Company recorded asset impairment charges of $64 million related to certain deferred contract costs, fixed assets and right-of-use assets. The fair values were determined by using discounted cash flow models over the estimated life of each asset; the principal assumptions used were forecasted future cash flows and the discount rate, which are considered Level 3 inputs. See Note 7, “Property and Equipment, Net,” and Note 10, “Leases,” for more information regarding asset impairments.

For the year ended December 31, 2019, as part of restructuring and other charges, the Company recorded asset impairments of $52 million.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

Comenity Bank is regulated, supervised and examined by the State of Delaware and the Federal Deposit Insurance Corporation (FDIC). The Company’s industrial bank, Comenity Capital Bank, is regulated, supervised and examined by the State of Utah and the FDIC. While neither of our Banks is currently subject to regular examinations by the CFPB due to each Bank’s total assets not having exceeded $10 billion for four consecutive quarters, we have in the past been, and may in the future become, subject to supervision and examination by the CFPB with respect to federal consumer protection laws.

Quantitative measures established by regulations to ensure capital adequacy require Comenity Bank and Comenity Capital Bank to maintain minimum amounts and ratios of Tier 1 capital to average assets, Common equity tier 1, Tier 1 capital and Total capital, all to risk weighted assets. Failure to meet these minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions by the Banks’ regulators that if undertaken, could have a direct material effect on Comenity Bank’s and/or Comenity Capital Bank’s operating activities, as well as those of the Company. Based on these regulations, as of December 31, 2021 and 2020, each Bank met all capital requirements to which it was subject, and maintained capital ratios in excess of the minimums required to qualify as well capitalized.

The actual capital ratios and minimum ratios for each Bank, as well as the Combined Banks, as of December 31, 2021, are as follows:


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets ⁽¹⁾	20.0	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	21.4		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	21.4		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	22.7		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets ⁽¹⁾	17.3	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	18.6		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	18.6		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	19.9		8.0		10.0

Combined Banks
Tier 1 capital to average assets ⁽¹⁾	18.6	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	20.0		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	20.0		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	21.3		8.0		10.0

(1)	Tier 1 capital to average assets ratio represents tier 1 capital divided by total assets for leverage ratio.

(2)	Common Equity Tier 1 capital to risk-weighted assets ratio represents common equity tier 1 capital divided by total risk-weighted assets.

(3)	Tier 1 capital to risk-weighted assets ratio represents tier 1 capital divided by total risk-weighted assets.

(4)	Total capital to risk-weighted assets ratio represents total capital divided by total risk-weighted assets.

On September 10, 2019, Comenity Capital Bank submitted a bank merger application to the FDIC seeking the FDIC’s approval to merge Comenity Bank with and into Comenity Capital Bank as the surviving bank entity. On the same date, Comenity Capital Bank and Comenity Bank each submitted counterpart bank merger applications to the Utah Department of Financial Institutions and the Delaware Office of the State Bank Commissioner, respectively, in connection with the proposed merger. On April 20, 2021, Comenity Capital Bank withdrew its bank merger application

with the FDIC. On May 3, 2021, each of Comenity Capital Bank and Comenity Bank similarly withdrew their counterpart bank merger applications in Utah and Delaware, respectively.

Indemnification

On July 1, 2019, the Company completed the sale of its Epsilon segment to Publicis Groupe S.A. (Publicis). Under the terms of the agreement governing that transaction, the Company agreed to indemnify Publicis and its affiliates from and against any losses arising out of or related to a United States Department of Justice (DOJ) investigation. The DOJ investigation related to third-party marketers who sent, or allegedly sent, deceptive mailings and the provision of data and services to those marketers by Epsilon’s data practice. Epsilon actively cooperated with the DOJ in connection with the investigation. On January 19, 2021, Epsilon entered into a deferred prosecution agreement (DPA) with the DOJ to resolve the matters that were the subject of the investigation. Pursuant to the DPA, Epsilon agreed, among other things, to pay penalties and consumer compensation in the aggregate amount of $150 million, to be paid in two equal installments, the first in January 2021 and the second in January 2022. A $150 million loss contingency was recorded as of December 31, 2020. The Company paid $75 million to Publicis pursuant to its contractual indemnification obligation in January 2021. As of December 31, 2021, the Company had $75 million included in Accrued expenses in its Consolidated Balance Sheets.

In January 2022, the Company paid the second remaining $75 million installment to Publicis pursuant to its contractual indemnification obligation.

Legal Proceedings

From time to time the Company is involved in various claims and lawsuits arising in the ordinary course of business that it believes will not have a material effect on its consolidated financial condition or liquidity, including claims and lawsuits alleging breaches of the Company’s contractual obligations.

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2021

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

16. EMPLOYEE BENEFIT PLANS

Employee Stock Purchase Plan

In March 2015, the Company’s Board of Directors adopted the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which was subsequently approved by the Company’s stockholders on June 3, 2015. The 2015 ESPP became effective July 1, 2015 with no definitive expiration date. The Company’s Board of Directors may at any time and for any reason terminate or amend the 2015 ESPP. No employee may purchase more than $25,000 worth of stock under the 2015 ESPP in any calendar year, and no employee may purchase stock under the 2015 ESPP if such purchase would cause the employee to own more than 5% of the voting rights or value of the Company’s common stock. The 2015 ESPP provides for six-month offering periods, commencing on the first trading day of the first and third calendar quarter of each year and ending on the last trading day of each subsequent calendar quarter. The purchase price of the common stock upon exercise is 85% of the fair market value of shares on the applicable purchase date as determined by averaging the high and low trading prices of the last trading day of each six-month period as defined above. An employee elects to participate and have contributions deducted through payroll deductions. The 2015 ESPP provides for the issuance of any remaining shares available for issuance under the 2005 ESPP, which were 441,327 shares at June 30, 2015. The 2015 ESPP reserved an additional 1,000,000 shares of the Company’s common stock for issuance under the 2015 Plan, bringing the maximum number of shares reserved for issuance under the 2015 ESPP to 1,441,327 shares, subject to adjustment as provided in the 2015 ESPP.

During the year ended December 31, 2021, the Company issued 57,713 shares of common stock under the 2015 ESPP at a weighted-average issue price of $70.44. Since its adoption on July 1, 2015, 571,825 shares of common stock have been issued, with 869,502 shares available for issuance under the 2015 ESPP.

401(k) Retirement Savings Plan

The Alliance Data Systems 401(k) and Retirement Savings Plan (the RSP) is a defined contribution plan that is qualified under Section 401(k) of the Internal Revenue Code of 1986. The Company amended the RSP effective December 3, 2020. The RSP is an IRS-approved safe harbor plan design that eliminates the need for most discrimination testing. Eligible employees can participate in the RSP immediately upon joining the Company and after 180 days of employment begin receiving company matching contributions; “seasonal” or “on-call” employees must complete a year of eligibility service before they may participate. The RSP covers U.S. employees of Alliance Data Systems, Inc. who are at least 18 years old, one of the Company’s wholly-owned subsidiaries, and any other subsidiary or affiliated organization that adopts the RSP; employees of the Company and all of its U.S. subsidiaries are currently covered.

The RSP permits eligible employees to make Roth elective deferrals, which are included in the employee’s taxable income at the time of contribution, but not when distributed. Regular, or Non-Roth, elective deferrals made by employees, together with contributions by the Company to the RSP, and income earned on these contributions, are not taxable until withdrawn from the RSP. The Company matches an employee’s contribution dollar-for-dollar up to five percent of the employee’s eligible compensation; all Company matching contributions immediately vest. For the years ended December 31, 2021, 2020 and 2019, Company matching contributions were $15 million, $16 million and $35 million, respectively.

Participants in the RSP can direct their contributions and the Company’s matching contribution to numerous investment options, including the Company’s common stock. On July 20, 2001, the Company registered 1,500,000 shares of its common stock for issuance in accordance with the RSP pursuant to a Registration Statement on Form S-8, File No. 333-65556. As of December 31, 2021, 290,897 of such shares remain available for issuance.

Executive Deferred Compensation Plan

The Company also maintains an Executive Deferred Compensation Plan (EDCP). The EDCP permits a defined group of management and highly compensated employees to defer on a pre-tax basis a portion of their base salary and incentive compensation (as defined in the EDCP) payable for services rendered. Deferrals under the EDCP are unfunded and subject to the claims of the Company’s creditors. Each participant in the EDCP is 100% vested in their account, and account balances accrue interest at a rate established and adjusted periodically by the Compensation and Human Capital committee of the Company’s Board of Directors. As of December 31, 2021 and 2020, the Company’s outstanding liability related to the EDCP, which was included in Other liabilities on the Consolidated Balance Sheets, was $18 million and $19 million, respectively.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Dec. 31, 2021

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

17. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of accumulated other comprehensive loss, net of tax effects, are as follows:


							Foreign Currency		Accumulated
	Net Unrealized		Net Unrealized		Net Unrealized		Translation		Other
	Gains (Losses) on		(Losses) Gains on		Gains (Losses) on		Adjustment		Comprehensive
	AFS Securities		Cash Flow Hedges		Net Investment Hedge		(Losses) Gains ⁽¹⁾		Loss

	(in millions)
Balance as of January 1, 2019	$	(11)	$	—	$	(12)	$	(115)	$	(138)
Changes in other comprehensive income (loss)		13		—		5		(7)		11
Recognition resulting from the sale of Epsilon's foreign subsidiaries		—		—		—		27		27
Balance at December 31, 2019	$	2	$	—	$	(7)	$	(95)	$	(100)
Changes in other comprehensive income (loss)		21		(1)		—		71		91
Recognition resulting from the sale of Precima's foreign subsidiaries		—		—		—		4		4
Balance at December 31, 2020	$	23	$	(1)	$	(7)	$	(20)	$	(5)
Changes in other comprehensive income (loss)		(21)		2		—		(37)		(56)
Recognition resulting from the spinoff of LoyaltyOne's foreign subsidiaries		(1)		(1)		7		54		59
Balance at December 31, 2021	$	1	$	—	$	—	$	(3)	$	(2)

(1)

Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates from the Company’s LoyaltyOne segment, which was spun off in November 2021.

With the spinoff of the Company’s LoyaltyOne segment on November 5, 2021, the $7 million net unrealized loss on its net investment hedge related to its net investment in BrandLoyalty was reclassified into net income. Upon the sale of Precima on January 10, 2020, $4 million of accumulated foreign currency translation adjustments attributable to Precima’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the gain on the sale of Precima. Upon the sale of Epsilon on July 1, 2019, $27 million of accumulated foreign currency translation adjustments attributable to Epsilon’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the loss on the sale of the Epsilon segment. Other reclassifications from accumulated other comprehensive loss into net income for each of the periods presented were not material.

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2021

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

18. STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

During the years ended December 31, 2021 and 2020, the Company did not repurchase any shares of its common stock. During the year ended December 31, 2019, the Company repurchased approximately 6.3 million shares of its common stock for an aggregate amount of $976 million. The stock repurchase program expired on June 30, 2020, and $348 million of this program expired unused.

Stock Compensation Plans

The Company has adopted equity compensation plans to advance the interests of the Company by rewarding certain employees for their contributions to the financial success of the Company and thereby motivating them to continue to make such contributions in the future.

The 2015 Omnibus Incentive Plan became effective July 1, 2015 and reserved 5,100,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock unit awards (RSUs), performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants who performed services for the Company or its affiliates, with only employees eligible to receive incentive stock options. The 2015 Omnibus Incentive Plan expired on June 30, 2020.

In March 2020, the Company’s Board of Directors adopted the 2020 Omnibus Incentive Plan (the 2020 Plan), which was subsequently approved by the Company’s stockholders on June 9, 2020. The 2020 Plan became effective July 1, 2020 and expires on June 30, 2030. The 2020 Plan reserves 2,400,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for the Company or its affiliates, with only employees being eligible to receive incentive stock options. The maximum amount that may be awarded to any independent member of the Company’s Board of Directors in any one calendar year may not exceed $1 million. On June 9, 2020, the Company registered 2,400,000 shares of its common stock for issuance in accordance with the 2020 Plan pursuant to a Registration Statement on Form S-8, File No. 333-239040. Terms of all awards under the 2020 Plan are determined by the Board of Directors or the Compensation & Human Capital Committee of the Board of Directors or its designee at the time of award.

Stock Compensation Expense

Stock-based compensation expense is measured at the grant date of the award, based on the fair value of the award and is recognized ratably over the requisite service period. Stock-based compensation expense recognized in Employee benefits and compensation expense in the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 was $25 million, $15 million and $18 million, respectively, with corresponding income tax benefits of $4 million, $3 million and $3 million, respectively. Stock-based compensation expense related to discontinued operations for the years ended December 31, 2021, 2020 and 2019 was $4 million, $6 million and $37 million, respectively.

As the amount of stock-based compensation expense recognized is based on awards ultimately expected to vest, the amount recognized in the Company’s Consolidated Statements of Income has been reduced for estimated forfeitures. The Company estimates forfeitures at each grant date based on historical experience, with forfeiture estimates to be revised, if necessary, in subsequent periods should actual forfeitures differ from those estimates; forfeitures were estimated at 5% for each of the years ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, there was approximately $35 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, stock-based equity awards granted to employees, which is expected to be recognized over a weighted average remaining period of approximately 1.8 years.

Restricted Stock Unit Awards

The following table summarizes RSUs activity under the Company’s equity compensation plans:


					Weighted
	Market-	Performance-	Service-		Average
	Based ⁽¹⁾	Based ⁽¹⁾	Based	Total	Fair Value
Balance at January 1, 2019	56,229	423,242	317,441	796,912	$	218.81
Shares granted	37,878	420,239	246,118	704,235		161.05
Shares vested	—	(262,773)	(178,730)	(441,503)		218.45
Shares forfeited	(69,819)	(350,436)	(126,257)	(546,512)		188.40
Balance at December 31, 2019	24,288	230,272	258,572	513,132	$	172.06
Shares granted	20,770	219,186	241,610	481,566		89.11
Shares vested	—	(42,097)	(127,921)	(170,018)		175.09
Shares forfeited	(22,831)	(186,135)	(38,447)	(247,413)		166.93
Balance at December 31, 2020	22,227	221,226	333,814	577,267	$	103.89
Shares granted ⁽²⁾	2,641	111,542	774,062	888,245		88.18
Shares vested	—	(24,677)	(167,723)	(192,400)		118.78
Shares forfeited	(5,801)	(216,675)	(291,201)	(513,677)		93.16
Balance at December 31, 2021	19,067	91,416	648,952	759,435	$	89.14
Outstanding and Expected to Vest				633,480	$	90.09

(1)	Shares granted reflect a 100% target attainment of the respective market-based or performance-based metric. Shares forfeited include those restricted stock units forfeited as a result of the Company not meeting the respective market-based or performance-based metric conditions.

(2)

Shares granted reflect a November 2021 make-whole equity adjustment to unvested shares due to the reduction in the Company’s share value resulting from the spinoff of Loyalty Ventures Inc. This adjustment increased shares granted by 2,641 shares, 12,659 shares and 96,556 shares for market-based, performance-based and service-based awards, respectively. These shares were excluded from the weighted average fair value calculation.

For performance-based and service-based awards, the fair value of the RSUs was estimated using the Company’s closing share price on the date of grant. Service-based RSUs typically vest ratably over a three year period. Performance-based RSUs typically vest ratably over a three year period if specified performance measures tied to the Company’s financial performance are met. For the performance-based RSUs awarded in 2021, the pre-defined vesting criteria typically permit a range from 0% to 170% to be earned. Accruals of compensation cost for an award with a performance condition are based on the probable outcome of that performance condition.

The total fair value of RSUs vested was $23 million, $30 million and $96 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the aggregate intrinsic value of RSUs outstanding and expected to vest was $42 million.

Dividends

For the year ended December 31, 2021, the Company declared cash dividends of $0.84 per share for a total of $42 million, and paid cash dividends and dividend equivalents totaling $42 million.

For the year ended December 31, 2020, the Company declared cash dividends of $1.26 per share for a total of $60 million, and paid cash dividends and dividend equivalents totaling $61 million.

For the year ended December 31, 2019, the Company declared cash dividends of $2.52 per share for a total of $127 million, and paid cash dividends and dividend equivalents totaling $127 million.

On January 27, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share on its common stock, payable on March 18, 2022 to stockholders of record at the close of business on February 11, 2022.

Treasury Stock

On July 30, 2021, the Company retired its 67.4 million shares of treasury stock outstanding, which increased Treasury stock by $6,733 million, reduced Retained earnings by $5,453 million, reduced Additional paid-in capital by $1,280 million and reduced Common stock by an immaterial amount, with no impact to total stockholders’ equity, on the Consolidated Balance Sheets.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2021

INCOME TAXES

INCOME TAXES

19. INCOME TAXES

The Company files income tax returns in federal, state, local and foreign jurisdictions, as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions.

The components of the Company’s Provision for income taxes for the years ended December 31 included in the Consolidated Statements of Income were are as follows:


	2021		2020		2019

	(in millions)
Current
Federal	$	218	$	228	$	123
State		49		36		35
Total current income tax expense		267		264		158
Deferred
Federal		(13)		(143)		(9)
State		(7)		(28)		7
Total deferred income tax benefit		(20)		(171)		(2)
Total Provision for income taxes	$	247	$	93	$	156

A reconciliation of the Company’s expected income tax expense computed by applying the federal statutory rate to income from continuing operations before income taxes to the recorded Provision for income taxes for the years ended December 31 is as follows:


	2021		2020		2019

	(in millions)
Expected expense at statutory rate	$	219	$	63	$	139
Increase (decrease) in income taxes resulting from:
State and local income taxes, net of federal benefit		33		6		33
Impact of 2017 Tax Reform		(8)		(2)		(30)
Non-deductible expenses		4		6		7
IRC Section 199, net of tax reserves		—		12		—
Other		(1)		8		7
Total	$	247	$	93	$	156

Differences between the Consolidated Financial Statements and tax bases of assets and liabilities give rise to deferred tax assets and liabilities, which measure the future tax effects of items recognized in the Consolidated Financial Statements. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment.

Deferred tax assets require certain estimates and judgments in order to determine whether it is more likely than not that all or a portion of the benefit of a deferred tax asset will not be realized. In evaluating the Company’s deferred tax assets on a quarterly basis as new facts and circumstances emerge, the Company analyzes and estimates the impact of future taxable income, reversing temporary differences and available tax planning strategies. Uncertainties can lead to changes in the ultimate realization of deferred tax assets. A liability for unrecognized tax benefits, representing the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized in the Consolidated Financial Statements, inherently requires estimates and judgments. A tax position is recognized only when it is more likely than not to be sustained, based purely on its technical merits after examination by the taxing authority, and the amount recognized is the benefit the Company believes is more likely than not to be realized upon ultimate settlement. The Company evaluates its tax positions as new facts and circumstances become available, making adjustments to unrecognized tax benefits as appropriate. Uncertainties can mean the tax benefits ultimately realized differ from amounts previously recognized, with any differences recorded in Provision for income taxes, along with amounts for estimated interest and penalties related to uncertain tax positions.

The following table reflects the significant components of Deferred tax assets and liabilities as of December 31:


	2021		2020

	(in millions)
Deferred tax assets
Deferred revenue	$	17	$	14
Allowance for credit losses		447		482
Net operating loss carryforwards and other carryforwards		42		43
Operating lease liabilities		33		42
Accrued expenses and other		65		75
Total deferred tax assets		604		656
Valuation allowance		(8)		(8)
Deferred tax assets, net of valuation allowance		596		648
Deferred tax liabilities
Deferred income	$	221	$	291
Depreciation		28		14
Right of use assets		22		28
Intangible assets		23		26
Total deferred tax liabilities		294		359

Net deferred tax assets	$	302	$	289

Amounts recognized on the Consolidated Balance Sheets:
Other assets	$	302	$	289

At December 31, 2021, included in the Company’s U.S. tax returns are approximately $132 million of U.S. federal net operating loss carryovers (“NOLs”) and approximately $34 million of foreign tax credits. With the exception of NOLs generated after December 31, 2017, these attributes expire at various times through the year 2037. As well, as of December 31, 2021, the Company has state income tax NOLs of approximately $231 million and state credits of approximately $3 million, both available to offset future state taxable income, and state capital losses of approximately $7 million to offset capital gains. The state NOLs, credits and capital losses will expire at various times through the year 2040.

The Company uses the portfolio approach relating to the release of stranded tax effects recorded in accumulated other comprehensive loss. Under the portfolio approach, the net unrealized gains or losses recorded in accumulated other comprehensive loss would be eliminated only on the date the entire portfolio of available-for-sale securities is sold or otherwise disposed of.

H.R. 1, originally known as the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Reform”) was enacted on December 22, 2017 and permanently reduced the corporate tax rate to 21% from 35%, effective January 1, 2018. For the year ended December 31, 2021, the Company recorded an income tax benefit of approximately $8 million related to the 2017 Tax Reform rate differential that was released from Other comprehensive income due to the divestiture of the LoyaltyOne segment.

For the year ended December 31, 2020, the Company recorded an income tax benefit of approximately $2 million related to the rate benefit for a capital loss that will be carried back to a year preceding the 2017 Tax Reform rate reduction. The Company is currently under audit with the Internal Revenue Service for years 2012-2018. For years 2012-2014, the audit is limited in scope to research and development tax credits and IRC Section 199 deductions claimed on amended returns. As a result of the preliminary audit findings, the Company increased its reserve for IRC Section 199 deductions by $12 million during the year ended December 31, 2020.

For the year ended December 31, 2019, the Company recorded an income tax benefit of approximately $30 million related to a decrease in unrecognized tax benefits as a result of a tax accounting method change required by the 2017 Tax Reform.

The following table presents changes in unrecognized tax benefits (in millions):


Balance at January 1, 2019	$	223
Increases related to prior years’ tax positions		2
Decreases related to prior years’ tax positions		(66)
Increases related to current year tax positions		58
Settlements during the period		(1)
Lapses of applicable statutes of limitation		(1)
Balance at December 31, 2019	$	215
Increases related to prior years’ tax positions		59
Decreases related to prior years’ tax positions		(23)
Increases related to current year tax positions		11
Settlements during the period		(5)
Lapses of applicable statutes of limitation		(2)
Balance at December 31, 2020	$	255
Increases related to prior years’ tax positions		1
Decreases related to prior years’ tax positions		(13)
Increases related to current year tax positions		12
Settlements during the period		(8)
Balance at December 31, 2021	$	247

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in Provision for income taxes. The Company has potential cumulative interest and penalties with respect to unrecognized tax benefits of approximately $76 million, $69 million and $60 million at December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recorded approximately $8 million, $9 million and $2 million, respectively, in Provision for income taxes for potential interest and penalties for unrecognized tax benefits.

At December 31, 2021, 2020 and 2019, the Company had unrecognized tax benefits of approximately $241 million, $243 million and $198 million, respectively, that, if recognized, would impact the effective tax rate. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits over the next twelve months.

The Company files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions, as applicable. With some exceptions, the tax returns filed by the Company are no longer subject to U.S. federal income tax and state and local examinations for the years before 2015 or foreign income tax examinations for years before 2017.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
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-Section 50
-Paragraph 21
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-Publisher FASB
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-Topic 740
-SubTopic 10
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-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 30
-Section 50
-Paragraph 2
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-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2021

EARNINGS PER SHARE

EARNINGS PER SHARE

20. EARNINGS PER SHARE

Basic earnings (losses) per share (EPS) is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of stock options, unvested restricted stock awards, or other dilutive securities. Diluted EPS is based on the weighted average number of common and potentially dilutive common shares (dilutive stock options, unvested restricted stock awards and other dilutive securities outstanding during the year) pursuant to the Treasury Stock method. For periods with participating securities, in this case 2019, the Company computes EPS using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the years ended December 31:


	2021		2020		2019

	(in millions, except per share amounts)
Basic EPS:
Numerator:
Income from continuing operations	$	797	$	208	$	506
Less: Dividends declared on preferred stock		—		—		3
Less: Allocation of undistributed earnings		—		—		6
Income from continuing operations		797		208		497
Income (loss) from discontinued operations, net of income taxes		4		6		(228)
Net income	$	801	$	214	$	269

Denominator:
Weighted average shares		49.7		47.8		50.0

Basic EPS:
Continuing operations	$	16.02	$	4.36	$	9.94
Discontinued operations	$	0.07	$	0.11	$	(4.56)
Total	$	16.09	$	4.47	$	5.38


Diluted EPS ⁽¹⁾:
Numerator:
Income from continuing operations	$	797	$	208	$	506
Income (loss) from discontinued operations, net of income taxes		4		6		(228)
Net income	$	801	$	214	$	278

Denominator:
Weighted average shares from Basic EPS above		49.7		47.8		50.0
Weighted average effect of dilutive securities ⁽²⁾:
Shares from assumed conversion of preferred stock		—		—		0.8
Net effect of dilutive unvested restricted stock awards ⁽¹⁾		0.3		0.1		0.1
Denominator for diluted calculation		50.0		47.9		50.9

Diluted EPS:
Continuing operations	$	15.95	$	4.35	$	9.94
Discontinued operations	$	0.07	$	0.11	$	(4.48)
Total	$	16.02	$	4.46	$	5.46

(1)	Computed using the if-converted method, as the result was more dilutive.

(2)	For the years ended December 31, 2021, 2020 and 2019, an insignificant amount of restricted stock awards were excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive.

On April 25, 2019, the Company entered into an exchange agreement with ValueAct Holdings, L.P. pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of Series A Non-Voting Convertible Preferred Stock (preferred stock). In October 2019, ValueAct converted all 150,000 shares of preferred stock back to common stock.

SUPPLEMENTAL CASH FLOW INFORMATION

12 Months Ended

Dec. 31, 2021

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

21. SUPPLEMENTAL CASH FLOW INFORMATION

The Consolidated Statements of Cash Flows are presented with the combined cash flows from continuing and discontinued operations. The following table provides a reconciliation of cash and cash equivalents to the total of the amounts reported in the Consolidated Statements of Cash Flows as of December 31:


	2021		2020

	(in millions)
Cash and cash equivalents	$	3,046	$	2,796
Restricted cash included within Other assets		877		323
Cash, cash equivalents and restricted cash included within Assets of discontinued operations		—		344
Total cash, cash equivalents and restricted cash	$	3,923	$	3,463

Non-cash investing and financing activities for the year ended December 31, 2021 included the Company’s equity method investment in Loyalty Ventures Inc. upon spinoff, which totaled $48 million on November 5, 2021, and the Company’s retirement of its outstanding treasury stock in July 2021. For more information, see Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation,” and Note 18, “Stockholders’ Equity.”

Non-cash investing and financing activities for the year ended December 31, 2020 included $75 million of deferred consideration and the issuance of approximately 1.9 million shares of the Company’s common stock as non-cash consideration in the acquisition of Bread on December 3, 2020. For more information, see Note 2, “Acquisitions.”

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION

12 Months Ended

Dec. 31, 2021

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION

22. DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION

DISCONTINUED OPERATIONS

LoyaltyOne

On November 5, 2021, the separation of Loyalty Ventures Inc. (Loyalty Ventures) from the Company was completed after market close (the Separation). The Separation of Loyalty Ventures, which comprised the LoyaltyOne segment and has been classified as discontinued operations, was achieved through the Company’s distribution of 81% of the shares of Loyalty Ventures common stock to holders of ADS common stock as of the close of business on the record date of October 27, 2021. ADS stockholders of record received one share of Loyalty Ventures common stock for every two and a half shares of ADS common stock. Following this distribution, Loyalty Ventures became an independent, publicly-traded company, in which the Company has retained a 19% ownership interest. As part of the plan regarding the Separation, the Company received distributions from Loyalty Ventures prior to the effectiveness of the Separation in the aggregate amount of $750 million, of which $725 million was used by the Company to repay certain term loans as required under the Company’s credit agreement and $25 million was used by the Company to make scheduled amortization payments for the fourth quarter of 2021 with respect to such term loans. See Note 11, “Borrowings of Long-term and Other Debt,” for further discussion on the Company’s outstanding long-term debt.

The Company accounts for its 19% ownership interest in Loyalty Ventures following the equity method of accounting. As of December 31, 2021, the carrying amount of the Company’s ownership interest in Loyalty Ventures, which investment totaled was $50 million, and is included in Other assets in the Consolidated Balance Sheet, while earnings (losses), which were immaterial for the period, are recorded in Other non-interest income in the Consolidated Statements of Income.

The following table summarizes the results of operations of the Company’s former LoyaltyOne segment, direct costs identifiable to the LoyaltyOne segment, and the allocation of interest expense on corporate debt, for the years ended December 31:


	2021		2020		2019

	(in millions)
Total interest income	$	1	$	1	$	2
Total interest expense ⁽¹⁾		11		17		31
Net interest income		(10)		(16)		(29)
Total non-interest income		574		765		1,033
Total non-interest expenses		519		656		927
Income before provision from income taxes		45		93		77
Provision for income taxes		36		6		10
Income from discontinued operations, net of income taxes	$	9	$	87	$	67

(1)

As described above, the Company’s credit agreement, as amended, required a $725 million prepayment of term loans in conjunction with the LoyaltyOne spinoff. As a result, the interest expense reflected above is the allocation to discontinued operations of interest on the basis of this $725 million mandatory prepayment.

The following table summarizes the assets and liabilities of the Company’s former LoyaltyOne segment as of December 31:


	2020
	(in millions)
Assets:
Cash and cash equivalents	$	286
Accounts receivable, net		270
Inventories		164
Redemption settlement assets, restricted		693
Property and equipment, net		98
Goodwill		736
Other assets		216
Total assets of discontinued operations	$	2,463

Liabilities:
Accounts payable	$	68
Accrued expenses		61
Deferred revenue		1,004
Other liabilities		224
Total liabilities of discontinued operations	$	1,357

The following table summarizes the depreciation and amortization, and capital expenditures of the Company’s former LoyaltyOne segment for the years ended December 31:


	2021		2020		2019

	(in millions)
Depreciation and amortization	$	31	$	78	$	80
Capital expenditures	$	15	$	24	$	41

Epsilon

Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4 billion in cash, subject to certain specified adjustments. Beginning in the first quarter of 2019, Epsilon met the criteria for classification as discontinued operations.

The sale of Epsilon was completed on July 1, 2019, and the pre-tax gain is shown in the table below (in millions).


Consideration received ⁽¹⁾	$	4,452
Net carrying value of assets and liabilities (including other comprehensive income)		3,940
Pre-tax gain on deconsolidation	$	512

(1)	Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million.

The Company recorded transaction costs of approximately $79 million for the year ended December 31, 2019 and recorded an after-tax loss on sale of $252 million, which is included in Loss from discontinued operations, net of taxes. Following the sale of Epsilon, the Company has continued its existing contractual relationships with Epsilon for digital marketing services.

The following table summarizes the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment, and the allocation of interest expense on corporate debt, for the years ended December 31:


	2021		2020		2019

	(in millions)
Total interest income	$	—	$	—	$	—
Total interest expense ⁽¹⁾		—		—		64
Net interest income		—		—		(64)
Total non-interest income		—		—		963
Total non-interest expenses		7		110		519
(Loss) income before (benefit) provision for income taxes		(7)		(110)		380
(Benefit) provision for income taxes		(2)		(29)		675
(Loss) income from discontinued operations, net of income taxes	$	(5)	$	(81)	$	(295)

(1)

The Company’s credit agreement, as amended, required a $500 million payment of the revolving credit facility and the redemption of all of the Company’s outstanding senior notes. As a result, the interest expense reflected above is the allocation to discontinued operations of interest on the basis of this $500 million mandatory repayment and redemption of its $2 billion in senior notes outstanding.

For the year ended December 31, 2021, loss from discontinued operations reflects a tax liability associated with indemnification issues with the purchaser. For the year ended December 31, 2020, loss from discontinued operations reflects a loss contingency associated with indemnification issues with the purchaser. For the year ended December 31, 2019, loss from discontinued operations reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment including a loss contingency associated with indemnification issues with the purchaser and the allocation of interest expense on corporate debt. See Note 15, “Commitments and Contingencies,” for additional information with respect to the loss contingency.

The following table summarizes the depreciation and amortization, and capital expenditures of the Company’s former Epsilon segment for the years ended December 31:


	2021		2020		2019

	(in millions)
Depreciation and amortization	$	—	$	—	$	73
Capital expenditures	$	—	$	—	$	56

BANK HOLDING COMPANY FINANCIAL PRESENTATION

As a result of the Separation and consequential classification of LoyaltyOne as discontinued operations, the Company has adjusted the presentation of its Consolidated Financial Statements from the Company’s historical approach under SEC Regulation S-X Article 5, which is broadly applicable to all “commercial and industrial companies,” to Article 9, which is applicable to “bank holding companies.” While neither the Company nor any of its subsidiaries are considered a “bank” within the meaning of the Bank Holding Company Act, the changes from the historical presentation, to the bank holding company presentation, the most significant of which reflect a reclassification of Interest expense within Net interest income, are intended to reflect the Company’s operations going forward and better align the Company with its peers for comparability purposes. The Separation and associated reporting changes applied herein also results in the Company reflecting one reportable operating segment.

The following tables reflect a reconciliation from the Company’s historical approach to the presentation of its Consolidated Statements of Income to the Company’s bank holding company presentation for the years ended December 31, 2020 and 2019. The “Adjustments for Discontinued Operations” column reflects the removal of the operations of Loyalty Ventures and is derived from the LoyaltyOne reportable operating segment, presented in the corresponding Annual Report on Form 10-K, adjusted to reflect directly attributable costs and allocations previously held in the Corporate segment, such as transaction costs, hedging costs, and interest on term loans required to be repaid as a result of the Separation. The “Adjustments for Bank Holding Company Presentation” column reflects the changes, due to the removal of the operations of Loyalty Ventures, in the presentation of the Company’s historic Consolidated Statements of Income from commercial and industrial company presentation to the bank holding company presentation.


	For the Year Ended December 31, 2020
	Historical as Reported		Adjustments for Discontinued Operations		As Adjusted for Discontinued Operations		Adjustments for Bank Holding Company Presentation		Per Consolidated Statements of Income

	(in millions)
Revenues
Services	$	117	$	(292)	$	(175)	$	175	$	—
Redemption, net		473		(473)		—		—		—
Finance charges, net		3,931		—		3,931		(3,931)		—
Interest and fees on loans		—		—		—		3,931		3,931	⁽¹⁾
Interest on cash and investment securities		—		—		—		21		21	⁽¹⁾
Total interest income*		4,521		(765)		3,756		196		3,952
Interest expense
Interest on deposits		—		—		—		238		238	⁽¹⁾
Interest on borrowings		—		—		—		261		261	⁽¹⁾
Total interest expense		—		—		—		499		499
Net interest income*		4,521		(765)		3,756		(303)		3,453
Non-interest income
Interchange revenue, net of retailer share arrangements		—		—		—		(332)		(332)	⁽²⁾
Other		—		—		—		177		177	⁽²⁾
Total non-interest income		—		—		—		(155)		(155)
Total net interest and non-interest income*		4,521		(765)		3,756		(458)		3,298
Provision for credit losses		1,266		—		1,266		—		1,266
Total net interest and non-interest income, after provision for credit losses*		3,255		(765)		2,490		(458)		2,032
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		2,077		(577)		1,500		(1,500)		—
General and administrative		106		(1)		105		(105)		—
Depreciation and other amortization		99		(29)		70		(70)		—
Amortization of purchased intangibles		85		(49)		36		(36)		—
Non-interest expenses
Employee compensation and benefits		—		—		—		609		609	⁽³⁾
Card and processing expenses		—		—		—		396		396	⁽³⁾
Information processing and communication		—		—		—		191		191	⁽³⁾
Marketing expense		—		—		—		143		143	⁽³⁾
Depreciation and amortization		—		—		—		106		106	⁽³⁾
Other		—		—		—		286		286	⁽³⁾
Total non-interest expenses*		2,367		(656)		1,711		20		1,731

Operating income		888		(109)		779		(478)		301
Interest expense
Securitization funding costs		166		—		166		(166)		—
Interest expense on deposits		220		—		220		(220)		—
Interest expense on long-term and other debt, net		108		(16)		92		(92)		—
Total interest expense, net		494		(16)		478		(478)		—
Income from continuing operations before income taxes		394		(93)		301		—		301
Provision for income taxes		99		(6)		93		—		93
Income from continuing operations		295		(87)		208		—		208
(Loss) income from discontinued operations, net of income taxes		(81)		87		6		—		6
Net income	$	214	$	—	$	214	$	—	$	214

* Caption total not historically provided.


	For the Year Ended December 31, 2019
	Historical as Reported		Adjustments for Discontinued Operations		As Adjusted for Discontinued Operations		Adjustments for Bank Holding Company Presentation		Per Consolidated Statements of Income

	(in millions)
Revenues
Services	$	216	$	(396)	$	(180)	$	180	$	—
Redemption, net		637		(637)		—		—		—
Finance charges, net		4,729		—		4,729		(4,729)		—
Interest and fees on loans		—		—		—		4,729		4,729	⁽¹⁾
Interest on cash and investment securities		—		—		—		98		98	⁽¹⁾
Total interest income*		5,582		(1,033)		4,549		278		4,827
Interest expense
Interest on deposits		—		—		—		307		307	⁽¹⁾
Interest on borrowings		—		—		—		331		331	⁽¹⁾
Total interest expense		—		—		—		638		638
Net interest income*		5,582		(1,033)		4,549		(360)		4,189
Non-interest income
Interchange revenue, net of retailer share arrangements		—		—		—		(358)		(358)	⁽²⁾
Other		—		—		—		219		219	⁽²⁾
Total non-interest income		—		—		—		(139)		(139)
Total net interest and non-interest income*		5,582		(1,033)		4,549		(499)		4,050
Provision for credit losses		1,188		—		1,188		—		1,188
Total net interest and non-interest income, after provision for credit losses*		4,394		(1,033)		3,361		(499)		2,862
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		2,688		(847)		1,841		(1,841)		—
General and administrative		150		—		150		(150)		—
Depreciation and other amortization		80		(32)		48		(48)		—
Amortization of purchased intangibles		96		(48)		48		(48)		—
Loss on extinguishment of debt		72		—		72		(72)		—
Non-interest expenses
Employee compensation and benefits		—		—		—		721		721	⁽³⁾
Card and processing expenses		—		—		—		479		479	⁽³⁾
Information processing and communication		—		—		—		187		187	⁽³⁾
Marketing expense		—		—		—		205		205	⁽³⁾
Depreciation and amortization		—		—		—		96		96	⁽³⁾
Other		—		—		—		512		512	⁽³⁾
Total non-interest expenses*		3,086		(927)		2,159		41		2,200

Operating income		1,308		(106)		1,202		(540)		662
Interest expense
Securitization funding costs		213		—		213		(213)		—
Interest expense on deposits		226		—		226		(226)		—
Interest expense on long-term and other debt, net		130		(29)		101		(101)		—
Total interest expense, net		569		(29)		540		(540)		—
Income from continuing operations before income taxes		739		(77)		662		—		662
Provision for income taxes		166		(10)		156		—		156
Income from continuing operations		573		(67)		506		—		506
(Loss) income from discontinued operations, net of income taxes		(295)		67		(228)		—		(228)
Net income	$	278	$	—	$	278	$	—	$	278

* Caption total not historically provided.

(1)

The following tables provide a net interest income reconciliation of interest income previously reported in Finance charges, net revenue, and represents interest income and interest expense previously reported in Total interest expense, net.


	For the Year Ended December 31, 2020
	Finance charges, net		Securitization funding costs		Interest expense on deposits		Interest expense on long-term and other debt, net		Total

	(in millions)
Interest income
Interest and fees on loans	$	3,931	$	—	$	—	$	—	$	3,931
Interest on cash and investment securities		—		1		18		2		21

Interest expense
Interest on deposits		—		—		(238)		—		(238)
Interest on borrowings		—		(167)		—		(94)		(261)

Net interest income	$	3,931	$	(166)	$	(220)	$	(92)	$	3,453


	For the Year Ended December 31, 2019
	Finance charges, net		Securitization funding costs		Interest expense on deposits		Interest expense on long-term and other debt, net		Total

	(in millions)
Interest income
Interest and fees on loans	$	4,729	$	—	$	—	$	—	$	4,729
Interest on cash and investment securities		—		7		81		10		98

Interest expense
Interest on deposits		—		—		(307)		—		(307)
Interest on borrowings		—		(220)		—		(111)		(331)

Net interest income	$	4,729	$	(213)	$	(226)	$	(101)	$	4,189

(2)

The following tables provide a non-interest income reconciliation of servicing fees previously reported in Services revenue, and the gain/loss on portfolio and other sales previously reported in Cost of operations expense.


	For the Year Ended December 31, 2020
	Services revenue		Cost of operations expense		Total

	(in millions)
Non-interest income
Interchange revenue, net of retailer share arrangements	$	(332)	$	—	$	(332)
Other
Payment protection products		157		—		157
Gain on portfolio and other sales		—		20		20
Subtotal		157		20		177

Total non-interest income	$	(175)	$	20	$	(155)


	For the Year Ended December 31, 2019
	Services revenue		Cost of operations expense		Total

	(in millions)
Non-interest income
Interchange revenue, net of retailer share arrangements	$	(358)	$	—	$	(358)
Other
Payment protection products		178		—		178
Gain on portfolio and other sales		—		41		41
Subtotal		178		41		219

Total non-interest income	$	(180)	$	41	$	(139)

(3)

The following tables provide a reconciliation of further detailed expense line items previously reported in Cost of operations expense, General and administrative expense, Depreciation and other amortization, Amortization of purchased intangibles, and Loss on extinguishment of debt.


	For the Year Ended December 31, 2020
	Cost of operations expense		General and administrative expense		Depreciation and other amortization		Amortization of purchased intangibles		Total

	(in millions)
Non-interest expenses
Employee compensation and benefits	$	562	$	47	$	—	$	—	$	609
Card and processing expenses		396		—		—		—		396
Information processing and communication		177		14		—		—		191
Marketing expense		143		—		—		—		143
Depreciation and amortization		—		—		70		36		106
Other		242		44		—		—		286
Total non-interest expenses	$	1,520	$	105	$	70	$	36	$	1,731

Gain on portfolio and other sales (non-interest income)		(20)		—		—		—		(20)

Total	$	1,500	$	105	$	70	$	36	$	1,711


	For the Year Ended December 31, 2019
	Cost of operations expense		General and administrative expense		Depreciation and other amortization		Amortization of purchased intangibles		Loss on extinguishment of debt		Total

	(in millions)
Non-interest expenses
Employee compensation and benefits	$	654	$	67	$	—	$	—	$	—	$	721
Card and processing expenses		479		—		—		—		—		479
Information processing and communication		168		19		—		—		—		187
Marketing expense		204		1		—		—		—		205
Depreciation and amortization		—		—		48		48		—		96
Other		377		63		—		—		72		512
Total non-interest expenses	$	1,882	$	150	$	48	$	48	$	72	$	2,200

Gain on portfolio and other sales (non-interest income)		(41)		—		—		—		—		(41)

Total	$	1,841	$	150	$	48	$	48	$	72	$	2,159

The adjustments to the presentation of the Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Stockholders' Equity and Consolidated Statements of Cash Flows, from the Company's historical approach under SEC Regulation S-X Article 5, to Article 9, were insignificant.

PARENT-ONLY FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2021

PARENT-ONLY FINANCIAL STATEMENTS

PARENT-ONLY FINANCIAL STATEMENTS

23. PARENT COMPANY FINANCIAL STATEMENTS

The following ADSC financial statements are provided in accordance with the rules of the Securities and Exchange Commission, which require such disclosure when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets. Certain of the Company’s subsidiaries may be restricted in distributing cash or other assets to ADSC, which could be utilized to service its indebtedness. The stand-alone parent-only financial statements are presented below.

Parent Company – Condensed Balance Sheets


	December 31,
	2021		2020

	(in millions)
Assets:
Cash and cash equivalents	$	—	$	—
Investment in subsidiaries		4,446		5,127
Investment in Loyalty Ventures		50		—
Other assets		123		42
Total assets	$	4,619	$	5,169
Liabilities:
Long-term and other debt	$	1,985	$	2,805
Intercompany liabilities, net		482		742
Other liabilities		66		100
Total liabilities		2,533		3,647
Stockholders’ equity		2,086		1,522
Total liabilities and stockholders’ equity	$	4,619	$	5,169

Parent Company – Condensed Statements of Income


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Total interest income	$	12	$	13	$	19
Total interest expense		103		110		130
Net interest expense		(91)		(97)		(111)
Dividends from subsidiaries		535		256		923
Total net interest and non-interest income		444		159		812
Total non-interest expenses		1		1		71
Income before income taxes and equity in undistributed net income (loss) of subsidiaries		443		158		741
Benefit for income taxes		36		21		42
Income before equity in undistributed net income (loss) of subsidiaries		479		179		783
Equity in undistributed net income (loss) of subsidiaries		322		35		(505)
Net income	$	801	$	214	$	278

Parent Company – Condensed Statements of Comprehensive Income


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Net income	$	801	$	214	$	278
Other comprehensive income, net of tax		7		—		5
Total comprehensive income, net of tax	$	808	$	214	$	283

Parent Company – Condensed Statements of Cash Flows


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Net cash used in operating activities	$	(398)	$	(138)	$	(1,029)
Investing activities:
Investment in subsidiaries		—		(3)		(135)
Proceeds from sale of business		—		—		4,118
Dividends received		533		256		923
Purchases of available-for-sale securities		(10)		—		—
Net cash provided by investing activities		523		253		4,906
Financing activities:
Debt proceeds from spinoff of Loyalty Ventures Inc.		750		—		—
Borrowings under debt agreements		38		1,276		3,083
Repayments of borrowings		(864)		(1,320)		(5,778)
Payment of debt extinguishment costs		—		—		(46)
Payment of deferred financing costs		(4)		(9)		(21)
Purchase of treasury shares		—		—		(976)
Dividends paid		(42)		(61)		(127)
Proceeds from issuance of common stock		4		3		12
Other		(7)		(4)		(24)
Net cash used in financing activities		(125)		(115)		(3,877)
Change in cash, cash equivalents and restricted cash		—		—		—
Cash, cash equivalents and restricted cash at beginning of year		—		—		—
Cash, cash equivalents and restricted cash at end of year	$	—	$	—	$	—

Non-cash investing and financing activities related to the Parent Company – Condensed Statements of Cash Flows for the year ended December 31, 2020, included the issuance of approximately 1.9 million shares of the Company’s common stock as non-cash consideration in the acquisition of Bread on December 3, 2020. For more information, see Note 2, “Acquisitions.”

Non-cash investing activities related to the Parent Company – Condensed Statements of Cash Flows for the year ended December 31, 2019, included a $3 billion non-cash dividend in the form of an intercompany return of capital from ADS Alliance Data Systems, Inc. to ADSC.

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2021
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	BASIS OF PRESENTATION The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation. In particular, as a result of the spinoff of its LoyaltyOne segment as discontinued operations, the Company has adjusted the presentation of its Consolidated Financial Statements from its historical approach under SEC Regulation S-X Article 5, which is broadly applicable to all “commercial and industrial companies,” to Article 9, which is applicable to “bank holding companies.” While neither the Company nor any of its subsidiaries are considered a “bank” within the meaning of the Bank Holding Company Act, the changes from the historical presentation, to the bank holding company presentation, the most significant of which reflect a reclassification of Interest expense within Net interest income, are intended to reflect the Company’s operations going forward and better align the Company with its peers for comparability purposes. As noted above, the Company’s Consolidated Financial Statements have been presented with its LoyaltyOne segment as discontinued operations. See Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation,” for more information.
Credit Card and Other Loans	The Company’s payment and lending solutions result in the generation of credit card and other loans, which are recorded at the time a cardholder enters into a point-of-sale transaction with a merchant. Credit card loans represent revolving amounts due 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 revolve their amounts 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, which are primarily installment loans offered to our customers, have a range of fixed terms such as interest rates, fees and repayment periods, and borrowers are required 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 are presented on the Consolidated Balance Sheets net of the Allowance for credit losses, and include principal and any related accrued interest and fees. The Company continues 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; an Allowance for credit losses is established for uncollectable interest and fees. For the most part, the Company classifies its credit card and other loans as held for investment. The Company sells a majority of its credit card loans originated by Comenity Bank and by Comenity Capital Bank, which together are referred to herein as the “Banks,” to securitization master trusts, which are themselves consolidated VIEs, and therefore these loans are restricted for securitization investors. All new originations of credit card and other loans are determined to be held for investment at origination because the Company has the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, the Company considers the average life and homogenous nature of its credit card and other loans. In assessing whether its credit card and other loans continue to be held for investment, the Company also considers 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 the Company’s direct-to-consumer 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 its credit card and other loans. Due to the homogenous nature of the Company’s credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. From time to time certain credit card loans are classified as held for sale, as determined on a brand partner basis. The Company carries these assets at the lower of aggregate cost or fair value, and continues 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.
Allowance for Credit Losses	Effective January 1, 2020, the Company adopted the CECL model on a modified retrospective approach and applied a CECL model to determine its allowance for credit losses. Reserves for reporting periods beginning after January 1, 2020 are presented using the CECL methodology, while comparative information continues to be reported in accordance with the incurred loss methodology in effect for prior periods. The allowance for credit losses is an estimate of expected credit losses, measured over the estimated life of its credit card and other loans that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and other loans, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for credit losses includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. Charge-offs for unpaid interest and fees as well as any adjustments to the allowance associated with unpaid interest and fees are recorded as a reduction to Interest and fees on loans. The allowance is maintained through an adjustment to the Provision for credit losses and is evaluated for appropriateness. In estimating its allowance for credit losses, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships with credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card and other loans, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects the Company’s best estimate of current expected credit losses. As permitted by GAAP, the Company excludes unbilled finance charges from its amortized cost basis of credit card and other loans. As of December 31, 2021 and 2020, unbilled finance charges were $224 million and $219 million, respectively, and included in Credit card and other loans on the Consolidated Balance Sheets. Credit Card Loans The Company uses a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. As part of its CECL implementation, the Company evaluated multiple risk characteristics of its credit card loans portfolio, and determined delinquency status and credit quality to be the most significant characteristics for estimating expected credit losses. To estimate its allowance for credit losses, the Company segregates its credit card loans into four groups with similar risk characteristics, on the basis of delinquency status and credit quality risk score. These risk characteristics are evaluated on at least an annual basis, or more frequently as facts and circumstances warrant. In determining the estimated life of the Company’s credit card loans, payments were applied to the measurement date balance with no payments allocated to future purchase activity. The Company uses a combination of First In First Out (FIFO) and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) methodology to model balance paydown.
Transfers of Financial Assets	The Company accounts for transfers of financial assets as either sales or financings. Transfers of financial assets that are accounted for as sales are removed from the Consolidated Balance Sheets with any realized gain or loss reflected in the Consolidated Statements of Income during the period in which the sale occurs. Transfers of financial assets that are not accounted for as a sale are treated as a financing. The Company regularly securitizes the majority of its credit card loans through the transfer of those loans to one of its master trusts (the Trusts). The Company performs the decision making for the Trusts, as well as servicing the cardholder accounts that generate the credit card loans held by the Trusts. In its capacity as a servicer, the Company administers the loans, collects payments and charges-off uncollectible balances. Servicing fees are earned by a subsidiary of ADSC, which are eliminated in consolidation. The Trusts are VIEs because they have insufficient equity at risk to finance their activities – being the issuance of debt securities and notes, collateralized by the underlying credit card loans. Because the Company performs the decision making and servicing for the Trusts, it has the power to direct the activities that most significantly impact the Trusts’ economic performance (the collection of the underlying credit card loans). In addition, the Company holds all of the variable interests in the Trusts, with the exception of the liabilities held by third-parties. These variable interests provide the Company with the right to receive benefits and the obligation to absorb losses, which could be significant to the Trusts. As a result of these considerations, the Company is deemed to be the primary beneficiary of the Trusts and therefore consolidates the Trusts. The Trusts issue debt securities and notes, which are non-recourse to the Company. The collections on the securitized credit card loans held by the Trusts are available only for payment of those debt securities and notes, or other obligations arising in the securitization transactions. For its securitized credit card loans, during the initial phase of a securitization reinvestment period, the Company generally retains principal collections in exchange for the transfer of additional credit card loans into the securitized pool of assets. During the amortization or accumulation period of a securitization, the investors’ share of principal collections (in certain cases, up to a maximum specified amount each month) is either distributed to the investors or held in an account until it accumulates to the total amount due, at which time it is paid to the investors in a lump sum.
Available-for-Sale Securities	The Company’s available-for-sale (AFS) securities consist of available-for-sale debt securities, equity securities, U.S. Treasury bonds and mutual funds. These investments are carried at fair value on the Consolidated Balance Sheets within Other assets. For any AFS debt securities in an unrealized loss position, the CECL methodology requires estimation of the lifetime expected credit losses which then would be recognized in the Consolidated Statements of Income by establishing, or adjusting an existing allowance for those credit losses. The Company did not have any such credit losses for the periods presented. Any unrealized gains, or any portion of a security’s non-credit-related unrealized losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. The Company typically invests in highly-rated securities with low probabilities of default. Gains and losses on investments in equity securities are recorded in Other non-interest expenses in the Consolidated Statements of Income. Realized gains and losses are recognized upon disposition of the securities, using the specific identification method.
Property and Equipment	Furniture, equipment, buildings and leasehold improvements are carried at cost less accumulated depreciation, and depreciation is measured on a straight-line basis. Costs incurred during construction are capitalized; depreciation begins once the asset is placed in service. As of December 31, 2021, the Company’s furniture and equipment has remaining estimated useful lives ranging from less than one year to 10 years. Leasehold improvements are depreciated over the lesser of the remaining terms of the respective leases, or the economic lives of the improvements, and range from less than one year to 17 years, at December 31, 2021. Costs associated with the acquisition or development of internal-use software are also capitalized and recorded in Property and equipment, net. Once the internal-use software is ready for its intended use, the cost is amortized on a straight-line basis over the software’s estimated useful life. As of December 31, 2021, the Company’s internal-use software has remaining estimated useful lives ranging from less than one year to four years. The Company reviews long-lived assets and asset groups for impairment whenever events or circumstances indicate their carrying amounts may not be recoverable. An impairment is recognized if the carrying amount is not recoverable and exceeds the asset or asset group’s fair value. With the Bread acquisition on December 3, 2020, the Company acquired $91 million of developed technology recorded in Property and equipment, net, which is being amortized over a 5 year life; the Company also impaired $4 million in capitalized software with the acquisition, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020. Also during the fourth quarter of 2020, the Company determined it would reduce its real estate footprint and cease use of certain properties with the intent to sublease, triggering an impairment analysis of certain property and equipment. As a result of the analysis, the Company recorded asset impairment charges of $3 million and accelerated depreciation expense of $25 million, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020.
Goodwill	Goodwill is reviewed at least annually for impairment, or more frequently if circumstances indicate that an impairment is probable, using qualitative or quantitative analysis. No goodwill impairment has been recognized during any of the years ended December 31, 2021, 2020, or 2019.
Intangible Assets, Net	The Company’s identifiable intangible assets consist of both amortizable and non-amortizable intangible assets. Definite-lived intangible assets are subject to amortization and are amortized on a straight-line basis over their estimated useful lives; indefinite-lived intangible assets are not amortized. The Company reviews long-lived assets and asset groups, including intangible assets, for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable; recognizing an impairment if the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. No impairment of intangible assets has been recognized during any of the years ended December 31, 2021, 2020, or 2019.
Leases	The Company has various operating leases for facilities and equipment which are recorded as lease-related assets (right-of-use assets) and liabilities for those leases with terms greater than 12 months. The Company does not have any finance leases. The Company determines if an arrangement is a lease or contains a lease at inception, and does not separate lease and non-lease components. Right-of-use assets are recognized as of the lease commencement date at amounts equal to the respective lease liabilities, adjusted for any prepaid lease payments, initial direct costs and lease incentives. The Company’s lease liabilities are recognized at the present value of the contractual fixed lease payments discounted using the Company’s incremental borrowing rate, as the rate implicit in the lease is typically not readily determinable, as of the lease commencement date or upon modification of the lease. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. As of December 31, 2021, the Company’s leases have remaining lease terms ranging from less than one year, up to 17 years, some of which may include renewal options. Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets; lease expense for these leases is recognized on a straight-line basis over the lease term. As with other long-lived assets, right-of-use assets are reviewed for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable. In the fourth quarter of 2020, the Company performed an impairment assessment for its right-of-use assets associated with its locations where it ceased use with the intent to sublease. As a result, the Company recorded an asset impairment charge of $18 million, which is included in Non-interest expenses in the Consolidated Statements of Income for the year ended December 31, 2020.
Stock Compensation Expense	Stock-based compensation expense is measured at the grant date of the award, based on the fair value of the award and is recognized ratably over the requisite service period. Stock-based compensation expense recognized in Employee benefits and compensation expense in the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 was $25 million, $15 million and $18 million, respectively, with corresponding income tax benefits of $4 million, $3 million and $3 million, respectively. Stock-based compensation expense related to discontinued operations for the years ended December 31, 2021, 2020 and 2019 was $4 million, $6 million and $37 million, respectively. As the amount of stock-based compensation expense recognized is based on awards ultimately expected to vest, the amount recognized in the Company’s Consolidated Statements of Income has been reduced for estimated forfeitures. The Company estimates forfeitures at each grant date based on historical experience, with forfeiture estimates to be revised, if necessary, in subsequent periods should actual forfeitures differ from those estimates; forfeitures were estimated at 5% for each of the years ended December 31, 2021, 2020 and 2019.
Income Taxes	The Company files income tax returns in federal, state, local and foreign jurisdictions, as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions.Differences between the Consolidated Financial Statements and tax bases of assets and liabilities give rise to deferred tax assets and liabilities, which measure the future tax effects of items recognized in the Consolidated Financial Statements. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Deferred tax assets require certain estimates and judgments in order to determine whether it is more likely than not that all or a portion of the benefit of a deferred tax asset will not be realized. In evaluating the Company’s deferred tax assets on a quarterly basis as new facts and circumstances emerge, the Company analyzes and estimates the impact of future taxable income, reversing temporary differences and available tax planning strategies. Uncertainties can lead to changes in the ultimate realization of deferred tax assets. A liability for unrecognized tax benefits, representing the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized in the Consolidated Financial Statements, inherently requires estimates and judgments. A tax position is recognized only when it is more likely than not to be sustained, based purely on its technical merits after examination by the taxing authority, and the amount recognized is the benefit the Company believes is more likely than not to be realized upon ultimate settlement. The Company evaluates its tax positions as new facts and circumstances become available, making adjustments to unrecognized tax benefits as appropriate. Uncertainties can mean the tax benefits ultimately realized differ from amounts previously recognized, with any differences recorded in Provision for income taxes, along with amounts for estimated interest and penalties related to uncertain tax positions.
Earnings Per Share	Basic earnings (losses) per share (EPS) is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of stock options, unvested restricted stock awards, or other dilutive securities. Diluted EPS is based on the weighted average number of common and potentially dilutive common shares (dilutive stock options, unvested restricted stock awards and other dilutive securities outstanding during the year) pursuant to the Treasury Stock method. For periods with participating securities, in this case 2019, the Company computes EPS using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the years ended December 31:
Principles of Consolidation	Principles of Consolidation The accompanying consolidated financial statements include the accounts of ADSC and all subsidiaries in which the Company has a controlling financial interest. For voting interest entities, a controlling financial interest is determined when the Company is able to exercise control over the operating and financial decisions of the investee. For variable interest entities (VIEs), which are themselves determined based on the amount and characteristics of the equity in the entity, the Company has a controlling financial interest when it is determined to be the primary beneficiary. The primary beneficiary is the party having both the power to exercise control over the activities that most significantly impact the VIE’s financial performance, as well as the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE. The Company is the primary beneficiary of its securitization trusts and therefore consolidates these trusts within its Consolidated Financial Statements. In cases where the Company does not have a controlling financial interest, but is able to exert significant influence over the operating and financial decisions of the entity, the Company accounts for such investments under the equity method. All intercompany transactions have been eliminated.
Currency Translation	Currency Translation The Company’s monetary assets and liabilities denominated in foreign currencies, for example those of subsidiaries outside the U.S., are translated into U.S. dollars based on the rates of exchange in effect at the end of the reporting period, while non-monetary assets and liabilities are translated based on the rates of exchange in effect as of the date of the transaction giving rise to the asset or liability. Income and expense items are translated at the average exchange rates prevailing during the period. The resulting effects, along with any related hedge or tax impacts, are recorded in Accumulated other comprehensive loss, a component of stockholders’ equity. Translation adjustments, along with the related hedge and tax impacts, are recognized in the Consolidated Statements of Income upon the sale or substantial liquidation of an investment in a foreign subsidiary. Gains and losses resulting from transactions in currencies other than the entity’s functional currency are recognized in Other non-interest expenses in the Consolidated Statements of Income, and were insignificant for each of the periods presented. Historically, the Company’s impacts from foreign currency exchange rate fluctuations were most prevalent within businesses that have been spun off, such as LoyaltyOne, or sold, such as Epsilon, both of which are reflected as discontinued operations herein.
Amounts Based on Estimates and Judgments	Amounts Based on Estimates and Judgments The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported amounts of income and expenses during the reporting periods. The most significant of those estimates and judgments relate to the Company’s Allowance for credit losses; actual results could differ.
Revenue Recognition	Revenue Recognition The Company’s primary source of revenue is from Interest and fees on loans from its various credit card and other loan products, and to a lesser extent from contractual relationships with its brand partners. The following describes the Company’s recognition policies across its various sources of revenue. Interest and fees on loans: Represent revenue earned on customer accounts owned by the Company, and is recognized in the period earned in accordance with the contractual provisions of the credit agreements. Interest and fees continue to accrue on all accounts, except in limited circumstances, until the account balance and all related interest and fees are paid or charged-off, in the month during which an account becomes 180 days past due for credit card loans or 120 days past due for installment loans. Charge-offs for unpaid interest and fees, as well as any adjustments to the allowance associated with unpaid interest and fees, are recorded as a reduction of Interest and fees on loans. Direct loan origination costs on credit card and other loans are deferred and amortized on a straight-line basis over a one-year period for credit card loans, or for installment loans over the life of the loan, and are recorded as a reduction to Interest and fees on loans. As of December 31, 2021 and 2020, the remaining unamortized deferred direct loan origination costs were $48 million and $38 million, respectively, and included in Total credit card and other loans. Interest on cash and investment securities: Represents revenue earned on cash and cash equivalents as well as investments in debt and equity securities, and is recognized in the period earned. Interchange revenue, net of retailer share arrangements: Represents revenue earned from merchants, including our brand partners, and cardholders from processing and servicing accounts, and is recognized as such services are performed. Revenue earned from merchants, including our brand partners, primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions and are recognized at the time the cardholder transaction occurs. Our credit card program agreements may also provide for royalty payments to our brand partners based on purchased volume, or if certain contractual incentives are met such as if the economic performance of the program exceeds a contractually defined threshold, or payments for new accounts. These amounts are recorded as a reduction of revenue in the period incurred. Other non-interest income: Represents ancillary revenues earned from cardholders, consisting primarily of monthly fees from the purchase of certain payment protection products which are recognized based on the average cardholder account balance over time and can be cancelled at any point by the cardholder, as well as gains or losses on the sales of loan portfolios and income or losses from equity method investments. Contract Costs: The Company recognizes as an asset contract costs, such as up-front payments pursuant to contractual agreements with brand partners. Such costs are deferred and recognized on a straight-line basis over the term of the related agreement. Depending on the nature of the contract costs, the amortization is recorded as a reduction to Non-interest income, or a charge to Non-interest expenses, in the Company’s consolidated statements of income. Amortization of contract costs recorded as a reduction to Interchange revenue, net of retailer share arrangements was $64 million, $65 million and $72 million for the years ended December 31, 2021, 2020 and 2019, respectively; amortization of contract costs recorded in Non-interest expenses totaled $11 million, $12 million and $12 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021 and 2020, the remaining unamortized contract costs were $364 million and $311 million, respectively, and are included in Other assets on the Consolidated Balance Sheets. The Company performs an impairment assessment when events or changes in circumstances indicate that the carrying amount of contract costs may not be recoverable. For the year ended December 31, 2020, due to the global COVID-19 pandemic and resulting retail store closures and significant declines in credit sales, the Company recognized an impairment charge of $38 million in Non-interest expenses in its Consolidated Statement of Income. No impairment charges were recognized in either of the years ended December 31, 2021 or 2019.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents include cash and due from banks, interest-bearing cash balances such as those invested in money market funds, as well as other highly liquid short-term investments with an original maturity of three months or less, and restricted cash. As of December 31, 2021 and 2020, cash and due from banks was $251 million and $262 million, respectively, interest-bearing cash balances were $2.7 billion and $2.5 billion, respectively, and short-term investments were $80 million and $29 million, respectively. Restricted cash primarily represents cash restricted for principal and interest repayments of debt issued by consolidated VIE securitization trusts, and is recorded in Other assets on the Consolidated Balance Sheets. Restricted cash totaled $877 million and $323 million at December 31, 2021 and 2020, respectively.
Derivative Financial Instruments	Derivative Financial Instruments From time to time, the Company uses derivative financial instruments to manage its exposure to various financial risks; the Company does not trade or speculate in derivative financial instruments. Subject to the criteria set forth in GAAP, the Company will either designate its derivative financial instruments in hedging relationships, or as economic hedges should the criteria in GAAP not be met. For those derivatives designated in hedging relationships, changes in their fair values, excluding any ineffective portions, are recorded in Accumulated other comprehensive income, net of income taxes, until the hedged transactions affect net income; the ineffective portions of the derivative financial instruments are recognized through net income. For those derivatives not designated in hedging relationships, or economic hedges, changes in their fair values are recognized in the Consolidated Statements of Income as they occur. The Company’s derivative financial instruments were immaterial to the Consolidated Financial Statements for the periods presented. With the spinoff of its LoyaltyOne segment in November 2021, the Company does not hold any derivative financial instruments as of December 31, 2021.
Concentrations	CONCENTRATIONS We depend on a limited number of large partner relationships for a significant portion of our revenue. The business generated through our 10 largest partners represented approximately 59% and 65%, respectively, of our Total net interest and non-interest income during the years ended December 31, 2021 and 2020. Business generated through our relationship with Victoria’s Secret & Co. and its retail affiliates represented approximately 13% and 14% of our Total net interest and non-interest income during these same respective periods. We previously announced the non-renewal of our contract with BJ’s Wholesale Club (BJ’s). For the year ended December 31, 2021, BJ’s branded co-brand accounts generated approximately 8% of our Total net interest and non-interest income. As of December 31, 2021, BJ’s branded co-brand accounts were responsible for approximately 11% of our Total credit card and other loans.
Recently Issued and Adopted Accounting Standards	RECENTLY ISSUED ACCOUNTING STANDARDS In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities, and the adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements. RECENTLY ADOPTED ACCOUNTING STANDARDS In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminated certain exceptions within Accounting Standards Codification (ASC) 740, “Income Taxes,” and clarified certain aspects of ASC 740 to promote consistency among reporting entities. Most amendments within the standard were required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company’s adoption of this standard on January 1, 2021 did not have a material impact on its financial position, results of operations or cash flows, and there were no significant changes to accounting policies, business processes or internal controls as a result of adopting the standard. Effective January 1, 2020, the Company adopted the new credit reserving methodology referred to as Current Expected Credit Loss (CECL), following a modified retrospective transition which resulted in an increase to the Allowance for credit losses of $644 million, an increase to net deferred tax assets of $159 million, with the offset to the opening balance of Retained earnings, net of income taxes, of $485 million. Under the CECL methodology, the Company utilizes a financial instrument impairment model to establish an allowance based on expected losses over the estimated life of the exposure, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. This approach differs from the Company’s historic model prior to January 1, 2020, which was based on an incurred loss approach. Although there were no significant changes to the Company’s accounting systems or internal controls as a result of adopting the standard, the Company modified certain of its existing controls and added new controls around its loss forecasting models.

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2021

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of other significant accounting policies


Significant Accounting Policy	Note Number	Note Title
Credit Card and Other Loans	Note 3	Credit Card and Other Loans
Allowance for Credit Losses	Note 4	Allowance for Credit Losses
Transfers of Financial Assets	Note 5	Securitizations
Available-for-Sale Securities	Note 6	Available-for-Sale Securities
Property and Equipment	Note 7	Property and Equipment, Net
Goodwill	Note 8	Goodwill and Intangible Assets, Net
Intangible Assets, Net	Note 8	Goodwill and Intangible Assets, Net
Leases	Note 10	Leases
Stock Compensation Expense	Note 18	Stockholders' Equity
Income Taxes	Note 19	Income Taxes
Earnings Per Share	Note 20	Earnings Per Share

ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2021

ACQUISITIONS

Summary of the fair values of the assets acquired and liabilities assumed


Installment loans	$	112
Developed technology		91
Right of use assets - operating		4
Deferred tax asset, net		7
Intangible assets		11
Goodwill		370
Total assets acquired		595

Accounts payable		2
Accrued expenses		3
Operating lease liabilities		3
Debt issued by consolidated variable interest entities		96
Total liabilities assumed		104

Net assets acquired, net of cash and restricted cash	$	491

CREDIT CARD AND OTHER LOANS (Tables)

12 Months Ended

Dec. 31, 2021

CREDIT CARD AND OTHER LOANS

Schedule of components of credit card and other loans


	2021		2020

	(in millions)
Credit card loans	$	17,217	$	16,666
Installment loans		182		118
Total credit card and other loans ⁽¹⁾⁽²⁾		17,399		16,784
Less: Allowance for credit losses		(1,832)		(2,008)
Credit card and other loans, net	$	15,567	$	14,776

(1)	Includes $11.2 billion of credit card and other loans available to settle obligations of consolidated VIEs as of both December 31, 2021 and 2020, respectively.

(2)	Includes $224 million and $219 million, of accrued interest and fees that have not yet been billed to cardholders as of December 31, 2021 and 2020, respectively.

Schedule of aging analysis of total credit card and other loans portfolio at amortized cost


	Aging Analysis of Delinquent Amortized Cost Credit Card and Other Loans ⁽¹⁾
	31 to 60 days delinquent		61 to 90 days delinquent		91 or more days delinquent		Total delinquent		Current		Total

	(in millions)
As of December 31, 2021	$	262	$	186	$	401	$	849	$	16,284	$	17,133

As of December 31, 2020	$	273	$	203	$	440	$	916	$	15,578	$	16,494

(1)	Installment loan delinquencies have been included with credit card loan delinquencies in the table above, as amounts were insignificant at each period presented.

Schedule of information on credit card loans that are considered troubled debt restructurings

2021

2020

Pre-

Post-

Pre-

Post-

modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings

171,993

254

391,049

554

553


	2021			2020
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance

	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted	114,531	$	154	118,600	$	162

Schedule of composition of obligor credit quality


	Vantage
	2021						2020
	661 or		601 to		600 or		661 or		601 to		600 or
	Higher		660		Less		Higher		660		Less
Credit card loans	62	%	26	%	12	%	60	%	28	%	12	%

ALLOWANCE FOR CREDIT LOSSES (Tables)

12 Months Ended

Dec. 31, 2021

Allowance for Credit Loss [Abstract]

Schedule of Company's group similar risk characteristics based on delinquency status and risk score, and estimated life


	Estimated Life
	(in months)
Group A (Current, risk score - high)		14
Group B (Current, risk score - low)		19
Group C (Delinquent, risk score - high)		17
Group D (Delinquent, risk score - low)		26

Schedule of Company's allowance for loan loss


	2021		2020			2019

	(in millions)
Beginning balance	$	2,008	$	1,815	⁽³⁾	$	1,038

Provision for credit losses ⁽¹⁾		544		1,266			1,188
Change in estimate for uncollectible unpaid interest and fees		—		10			—
Net principal charge-offs ⁽²⁾		(720)		(1,083)			(1,055)
Ending balance	$	1,832	$	2,008		$	1,171

(1)	Provision for credit losses includes a build/release for the allowance, as well as replenishment of Net principal charge-offs.

(2)	Principal charge-offs are presented net of recoveries of $163 million, $205 million and $234 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(3)	Includes an increase of $644 million as of January 1, 2020, related to the adoption of the CECL methodology.

SECURITIZATIONS (Tables)

12 Months Ended

Dec. 31, 2021

SECURITIZATIONS

Schedule of securitized credit card receivables, delinquencies and net charge-offs


	2021		2020

	(in millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	11,215	$	11,208
Of which: principal amount of credit card loans 91 days or more past due	$	159	$	201


	2021		2020		2019

	(in millions)
Net charge-offs of securitized principal	$	453	$	756	$	908

AVAILABLE-FOR-SALE SECURITIES (Tables)

12 Months Ended

Dec. 31, 2021

AVAILABLE-FOR-SALE SECURITIES

Schedule of principal components of other investments, which are carried at fair value


	2021								2020
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value

	(in millions)
Available-for-sale securities	$	237	$	4	$	(2)	$	239	$	219	$	6	$	—	$	225
Total	$	237	$	4	$	(2)	$	239	$	219	$	6	$	—	$	225

Schedule of unrealized losses and fair value for investments that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position


	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
Available-for-sale securities	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)
Total	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)

Schedule of securities by contractual maturity date


	Amortized		Estimated
	Cost		Fair Value

	(in millions)
Due in one year or less ⁽¹⁾	$	65	$	65
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		172		174
Total	$	237	$	239

(1)	Includes mutual funds, which do not have a stated maturity.

PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2021

PROPERTY AND EQUIPMENT, NET

Schedule of property and equipment, net


	2021		2020

	(in millions)
Internal-use computer software and development	$	263	$	248
Furniture and equipment		107		122
Land and leasehold improvements		76		90
Construction in progress		25		24
Total		471		484
Accumulated depreciation and amortization		(256)		(271)
Property and equipment, net	$	215	$	213

GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

12 Months Ended

Dec. 31, 2021

GOODWILL AND INTANGIBLE ASSETS, NET

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, respectively, were as follows (in millions):


Balance at December 31, 2019	$	264
Goodwill acquired during the period ⁽¹⁾		370
Balance at December 31, 2020	$	634
Goodwill acquired during the period		—
Balance at December 31, 2021	$	634

(1)	Fully related to the acquisition of Bread in December 2020.

Schedule of intangible assets


	2021
	Gross		Accumulated
	Assets		Amortization		Net		Useful Life

	(in millions)
Definite-Lived Assets
Customer contracts and lists	$	9	$	(3)	$	6	3 years
Premium on purchased credit card loan portfolios		133		(89)		44	1-13 years
Non-compete agreements		2		—		2	5 years
	$	144	$	(92)	$	52
Indefinite-Lived Assets
Tradename		1		—		1	Indefinite life
Total intangible assets	$	145	$	(92)	$	53


	2020
	Gross		Accumulated
	Assets		Amortization		Net		Useful Life

	(in millions)
Definite-Lived Assets
Customer contracts and lists	$	9	$	—	$	9	3 years
Premium on purchased credit card loan portfolios		138		(73)		65	1-13 years
Non-compete agreements		2		—		2	5 years
	$	149	$	(73)	$	76
Indefinite-Lived Assets
Tradename		1		—		1	Indefinite life
Total intangible assets	$	150	$	(73)	$	77

Schedule of estimated amortization expense related to intangible assets


2022	$	20
2023		15
2024		11
2025		2
2026		1
Thereafter		3
	$	52

OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2021

Other Assets

Schedule of other assets


	2021		2020

	(in millions)
Restricted cash ⁽¹⁾	$	877	$	323
Deferred contract costs		364		311
Deferred tax asset, net		302		289
Accounts receivable, net ⁽²⁾		151		114
Right of use assets - operating		97		119
Investment in LVI		50		—
Other ⁽³⁾		151		207
Total other assets	$	1,992	$	1,363

(1)	Represents principal accumulation for the repayment of debt issued by consolidated variable interest entities that matures in 2022 or that matured in 2021, at December 31, 2021 and 2020, respectively.

(2)	Primarily related to amounts receivable from brand partners, which are recorded at the invoiced amount and do not bear interest.

(3)	Primarily comprised of prepaid expenses and non-income-based tax receivables.

LEASES (Tables)

12 Months Ended

Dec. 31, 2021

LEASES

Schedule of lease cost


	2021			2020	2019

	(in millions)
Operating lease cost	$	23	$	25	$	24
Short-term lease cost		—		1		1
Variable lease cost		2		2		3
Sublease income		(5)		(1)		—
Total	$	20	$	27	$	28

The table below reflects other lease-related information as of December 31:

Supplemental lease-related cash flow information was as follows for the years ended December 31:


	2021		2021		2020

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25	$	28	$	27
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5	$	1	$	23

Schedule of maturities of lease liabilities

Maturities of the Company’s lease liabilities by year were as follows as of December 31, 2021 (in millions):


2022	$	20
2023		21
2024		21
2025		20
2026		19
Thereafter		86
Total undiscounted lease liabilities		187
Less: Amount representing interest		(47)
Total present value of minimum lease payments	$	140

BORROWINGS OF LONG-TERM AND OTHER DEBT (Tables)

12 Months Ended

Dec. 31, 2021

BORROWINGS OF LONG-TERM AND OTHER DEBT

Schedule of debt


Description	2021		2020		Contractual Maturities	Interest Rates

	(Dollars in millions)
Long-term and other debt:
Revolving line of credit	$	—	$	—	July 2024	⁽¹⁾
Term loans		658		1,484	July 2024	⁽²⁾
Senior notes due 2024		850		850	December 2024	4.750%
Senior notes due 2026		500		500	January 2026	7.000%
Subtotal		2,008		2,834
Less: Unamortized debt issuance costs		22		28
Total long-term and other debt	$	1,986	$	2,806

Deposits:
Certificates of deposit	$	5,447	$	6,015	Various – Jan 2022 to Dec 2026	0.20% to 3.75%
Money market and other non-maturity deposits		5,586		3,790	Non-maturity	⁽³⁾
Subtotal		11,033		9,805
Less: Unamortized debt issuance costs		6		12
Total deposits	$	11,027	$	9,793

Debt issued by consolidated VIEs:
Fixed rate asset-backed term note securities	$	1,572	$	3,424	Various – Feb 2022 to Sep 2022	2.21% to 3.61%
Conduit asset-backed securities		3,883		2,205	Various – Aug 2022 to Oct 2023	⁽⁴⁾
Secured loan facility		—		86
Subtotal		5,455		5,715
Less: Unamortized debt issuance costs		2		5
Total debt issued by consolidated VIEs	$	5,453	$	5,710

Total borrowings of long-term and other debt	$	18,466	$	18,309

(1)	The interest rate is based upon LIBOR plus an applicable margin.

(2)	The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 1.85% and 1.90% at December 31, 2021 and 2020, respectively.

(3)	The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2021, the interest rates ranged from 0.05% to 3.50%. At December 31, 2020, the interest rates ranged from 0.38% to 3.50%.

(4)	The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2021, the interest rates ranged from 0.89% to 0.96%. At December 31, 2020, the interest rates ranged from 1.39% to 1.89%.

Schedule of maturity of debt

The future principal payments for the Company’s long-term and other debt are as follows, as of December 31, 2021:


	Long-Term				Debt Issued by
	and				Consolidated
Year	Other Debt		Deposits		VIEs		Total

	(in millions)
2022	$	231	$	9,096	$	3,034	$	12,361
2023		177		1,217		2,421		3,815
2024		1,100		627		—		1,727
2025		—		57		—		57
2026		500		36		—		536
Thereafter		—		—		—		—
Total maturities		2,008		11,033		5,455		18,496
Unamortized debt issuance costs		(22)		(6)		(2)		(30)
	$	1,986	$	11,027	$	5,453	$	18,466

OTHER LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2021

OTHER LIABILITIES

Schedule of other liabilities


	2021		2020

	(in millions)
Accounts payable and other brand partner liabilities	$	291	$	354
Accrued liabilities ⁽¹⁾		314		384
Operating lease liabilities		140		172
Long-term tax reserves		313		347
Other⁽²⁾		136		102
Total other liabilities	$	1,194	$	1,359

(1)	Primarily related to accrued payroll and benefits, marketing, taxes and professional services expenses.

(2)	Primarily comprised of long-term unearned revenue and cardholder liabilities.

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES (Tables)

12 Months Ended

Dec. 31, 2021

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

Components of Other non-interest income

The following table provides the components of Other non-interest income for the years ended December 31:


	2021		2020		2019

	(in millions)
Payment protection products	$	141	$	156	$	174
Gain on portfolio and other sales		10		20		41
Other		5		1		4
Total other non-interest income	$	156	$	177	$	219

Components of Other non-interest expenses

The following table provides the components of Other non-interest expenses for the years ended December 31:


	2021		2020		2019

	(in millions)
Professional services and regulatory fees	$	136		114	$	120
Asset impairment charges		—		64		11
Portfolio valuation adjustments (to reflect the lower of cost or market)		—		—		190
Loss on extinguishment of debt		—		—		72
Other ⁽¹⁾		86		108		119
Total other non-interest expenses	$	222	$	286	$	512

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2021

FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of estimated fair value of Company's financial instruments


	2021				2020
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in millions)
Financial assets
Credit card and other loans, net	$	15,567	$	17,989	$	14,776	$	17,301
Available-for-sale securities		239		239		225		225
Financial liabilities
Deposits		11,027		11,135		9,793		10,016
Debt issued by consolidated variable interest entities		5,453		5,467		5,710		2,783
Long-term and other debt		1,986		2,053		2,806		2,875

Schedule of assets and liabilities carried at fair value measured on recurring basis


	2021
	Total		Level 1		Level 2		Level 3

	(in millions)
Available-for-sale securities	$	239	$	48	$	191	$	—
Total assets measured at fair value	$	239	$	48	$	191	$	—


	2020
	Total		Level 1		Level 2		Level 3

	(in millions)
Available-for-sale securities	$	225	$	34	$	191	$	—
Total assets measured at fair value	$	225	$	34	$	191	$	—

Schedule of assets and liabilities disclosed but not carried at fair value


	2021
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,989	$	—	$	—	$	17,989
Total	$	17,989	$	—	$	—	$	17,989

Financial liabilities:
Deposits	$	11,135	$	—	$	11,135	$	—
Debt issued by consolidated VIEs		5,467		—		5,467		—
Long-term and other debt		2,053		—		2,053		—
Total	$	18,655	$	—	$	18,655	$	—


	2020
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,301	$	—	$	—	$	17,301
Total	$	17,301	$	—	$	—	$	17,301

Financial liabilities:
Deposits	$	10,016	$	—	$	10,016	$	—
Debt issued by consolidated VIEs		5,783		—		5,783		—
Long-term and other debt		2,875		—		2,875		—
Total	$	18,674	$	—	$	18,674	$	—

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2021

COMMITMENTS AND CONTINGENCIES.

Schedule of actual capital ratios and minimum ratios


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets ⁽¹⁾	20.0	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	21.4		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	21.4		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	22.7		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets ⁽¹⁾	17.3	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	18.6		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	18.6		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	19.9		8.0		10.0

Combined Banks
Tier 1 capital to average assets ⁽¹⁾	18.6	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets ⁽²⁾	20.0		4.5		6.5
Tier 1 capital to risk-weighted assets ⁽³⁾	20.0		6.0		8.0
Total capital to risk-weighted assets ⁽⁴⁾	21.3		8.0		10.0

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2021

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Schedule of changes in each component of accumulated comprehensive income (loss), net of tax effects


							Foreign Currency		Accumulated
	Net Unrealized		Net Unrealized		Net Unrealized		Translation		Other
	Gains (Losses) on		(Losses) Gains on		Gains (Losses) on		Adjustment		Comprehensive
	AFS Securities		Cash Flow Hedges		Net Investment Hedge		(Losses) Gains ⁽¹⁾		Loss

	(in millions)
Balance as of January 1, 2019	$	(11)	$	—	$	(12)	$	(115)	$	(138)
Changes in other comprehensive income (loss)		13		—		5		(7)		11
Recognition resulting from the sale of Epsilon's foreign subsidiaries		—		—		—		27		27
Balance at December 31, 2019	$	2	$	—	$	(7)	$	(95)	$	(100)
Changes in other comprehensive income (loss)		21		(1)		—		71		91
Recognition resulting from the sale of Precima's foreign subsidiaries		—		—		—		4		4
Balance at December 31, 2020	$	23	$	(1)	$	(7)	$	(20)	$	(5)
Changes in other comprehensive income (loss)		(21)		2		—		(37)		(56)
Recognition resulting from the spinoff of LoyaltyOne's foreign subsidiaries		(1)		(1)		7		54		59
Balance at December 31, 2021	$	1	$	—	$	—	$	(3)	$	(2)

(1)

Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates from the Company’s LoyaltyOne segment, which was spun off in November 2021.

STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2021

STOCKHOLDERS' EQUITY

Schedule of performance-based and service-based restricted stock unit awards


					Weighted
	Market-	Performance-	Service-		Average
	Based ⁽¹⁾	Based ⁽¹⁾	Based	Total	Fair Value
Balance at January 1, 2019	56,229	423,242	317,441	796,912	$	218.81
Shares granted	37,878	420,239	246,118	704,235		161.05
Shares vested	—	(262,773)	(178,730)	(441,503)		218.45
Shares forfeited	(69,819)	(350,436)	(126,257)	(546,512)		188.40
Balance at December 31, 2019	24,288	230,272	258,572	513,132	$	172.06
Shares granted	20,770	219,186	241,610	481,566		89.11
Shares vested	—	(42,097)	(127,921)	(170,018)		175.09
Shares forfeited	(22,831)	(186,135)	(38,447)	(247,413)		166.93
Balance at December 31, 2020	22,227	221,226	333,814	577,267	$	103.89
Shares granted ⁽²⁾	2,641	111,542	774,062	888,245		88.18
Shares vested	—	(24,677)	(167,723)	(192,400)		118.78
Shares forfeited	(5,801)	(216,675)	(291,201)	(513,677)		93.16
Balance at December 31, 2021	19,067	91,416	648,952	759,435	$	89.14
Outstanding and Expected to Vest				633,480	$	90.09

(1)	Shares granted reflect a 100% target attainment of the respective market-based or performance-based metric. Shares forfeited include those restricted stock units forfeited as a result of the Company not meeting the respective market-based or performance-based metric conditions.

(2)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

INCOME TAXES

Schedule of components of income before income taxes and components of income tax expense


	2021		2020		2019

	(in millions)
Current
Federal	$	218	$	228	$	123
State		49		36		35
Total current income tax expense		267		264		158
Deferred
Federal		(13)		(143)		(9)
State		(7)		(28)		7
Total deferred income tax benefit		(20)		(171)		(2)
Total Provision for income taxes	$	247	$	93	$	156

Summary of reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate


	2021		2020		2019

	(in millions)
Expected expense at statutory rate	$	219	$	63	$	139
Increase (decrease) in income taxes resulting from:
State and local income taxes, net of federal benefit		33		6		33
Impact of 2017 Tax Reform		(8)		(2)		(30)
Non-deductible expenses		4		6		7
IRC Section 199, net of tax reserves		—		12		—
Other		(1)		8		7
Total	$	247	$	93	$	156

Summary of deferred tax assets and liabilities


	2021		2020

	(in millions)
Deferred tax assets
Deferred revenue	$	17	$	14
Allowance for credit losses		447		482
Net operating loss carryforwards and other carryforwards		42		43
Operating lease liabilities		33		42
Accrued expenses and other		65		75
Total deferred tax assets		604		656
Valuation allowance		(8)		(8)
Deferred tax assets, net of valuation allowance		596		648
Deferred tax liabilities
Deferred income	$	221	$	291
Depreciation		28		14
Right of use assets		22		28
Intangible assets		23		26
Total deferred tax liabilities		294		359

Net deferred tax assets	$	302	$	289

Amounts recognized on the Consolidated Balance Sheets:
Other assets	$	302	$	289

Summary of reconciliation of unrecognized tax benefits

The following table presents changes in unrecognized tax benefits (in millions):


Balance at January 1, 2019	$	223
Increases related to prior years’ tax positions		2
Decreases related to prior years’ tax positions		(66)
Increases related to current year tax positions		58
Settlements during the period		(1)
Lapses of applicable statutes of limitation		(1)
Balance at December 31, 2019	$	215
Increases related to prior years’ tax positions		59
Decreases related to prior years’ tax positions		(23)
Increases related to current year tax positions		11
Settlements during the period		(5)
Lapses of applicable statutes of limitation		(2)
Balance at December 31, 2020	$	255
Increases related to prior years’ tax positions		1
Decreases related to prior years’ tax positions		(13)
Increases related to current year tax positions		12
Settlements during the period		(8)
Balance at December 31, 2021	$	247

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2021

EARNINGS PER SHARE

Schedule of computation of basic and diluted net income per share


	2021		2020		2019

	(in millions, except per share amounts)
Basic EPS:
Numerator:
Income from continuing operations	$	797	$	208	$	506
Less: Dividends declared on preferred stock		—		—		3
Less: Allocation of undistributed earnings		—		—		6
Income from continuing operations		797		208		497
Income (loss) from discontinued operations, net of income taxes		4		6		(228)
Net income	$	801	$	214	$	269

Denominator:
Weighted average shares		49.7		47.8		50.0

Basic EPS:
Continuing operations	$	16.02	$	4.36	$	9.94
Discontinued operations	$	0.07	$	0.11	$	(4.56)
Total	$	16.09	$	4.47	$	5.38


Diluted EPS ⁽¹⁾:
Numerator:
Income from continuing operations	$	797	$	208	$	506
Income (loss) from discontinued operations, net of income taxes		4		6		(228)
Net income	$	801	$	214	$	278

Denominator:
Weighted average shares from Basic EPS above		49.7		47.8		50.0
Weighted average effect of dilutive securities ⁽²⁾:
Shares from assumed conversion of preferred stock		—		—		0.8
Net effect of dilutive unvested restricted stock awards ⁽¹⁾		0.3		0.1		0.1
Denominator for diluted calculation		50.0		47.9		50.9

Diluted EPS:
Continuing operations	$	15.95	$	4.35	$	9.94
Discontinued operations	$	0.07	$	0.11	$	(4.48)
Total	$	16.02	$	4.46	$	5.46

(1)	Computed using the if-converted method, as the result was more dilutive.

(2)	For the years ended December 31, 2021, 2020 and 2019, an insignificant amount of restricted stock awards were excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive.

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

12 Months Ended

Dec. 31, 2021

SUPPLEMENTAL CASH FLOW INFORMATION

Schedule of reconciliation of cash and cash equivalents


	2021		2020

	(in millions)
Cash and cash equivalents	$	3,046	$	2,796
Restricted cash included within Other assets		877		323
Cash, cash equivalents and restricted cash included within Assets of discontinued operations		—		344
Total cash, cash equivalents and restricted cash	$	3,923	$	3,463

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Bank Holding Company Financial Information


	For the Year Ended December 31, 2020
	Historical as Reported		Adjustments for Discontinued Operations		As Adjusted for Discontinued Operations		Adjustments for Bank Holding Company Presentation		Per Consolidated Statements of Income

	(in millions)
Revenues
Services	$	117	$	(292)	$	(175)	$	175	$	—
Redemption, net		473		(473)		—		—		—
Finance charges, net		3,931		—		3,931		(3,931)		—
Interest and fees on loans		—		—		—		3,931		3,931	⁽¹⁾
Interest on cash and investment securities		—		—		—		21		21	⁽¹⁾
Total interest income*		4,521		(765)		3,756		196		3,952
Interest expense
Interest on deposits		—		—		—		238		238	⁽¹⁾
Interest on borrowings		—		—		—		261		261	⁽¹⁾
Total interest expense		—		—		—		499		499
Net interest income*		4,521		(765)		3,756		(303)		3,453
Non-interest income
Interchange revenue, net of retailer share arrangements		—		—		—		(332)		(332)	⁽²⁾
Other		—		—		—		177		177	⁽²⁾
Total non-interest income		—		—		—		(155)		(155)
Total net interest and non-interest income*		4,521		(765)		3,756		(458)		3,298
Provision for credit losses		1,266		—		1,266		—		1,266
Total net interest and non-interest income, after provision for credit losses*		3,255		(765)		2,490		(458)		2,032
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		2,077		(577)		1,500		(1,500)		—
General and administrative		106		(1)		105		(105)		—
Depreciation and other amortization		99		(29)		70		(70)		—
Amortization of purchased intangibles		85		(49)		36		(36)		—
Non-interest expenses
Employee compensation and benefits		—		—		—		609		609	⁽³⁾
Card and processing expenses		—		—		—		396		396	⁽³⁾
Information processing and communication		—		—		—		191		191	⁽³⁾
Marketing expense		—		—		—		143		143	⁽³⁾
Depreciation and amortization		—		—		—		106		106	⁽³⁾
Other		—		—		—		286		286	⁽³⁾
Total non-interest expenses*		2,367		(656)		1,711		20		1,731

Operating income		888		(109)		779		(478)		301
Interest expense
Securitization funding costs		166		—		166		(166)		—
Interest expense on deposits		220		—		220		(220)		—
Interest expense on long-term and other debt, net		108		(16)		92		(92)		—
Total interest expense, net		494		(16)		478		(478)		—
Income from continuing operations before income taxes		394		(93)		301		—		301
Provision for income taxes		99		(6)		93		—		93
Income from continuing operations		295		(87)		208		—		208
(Loss) income from discontinued operations, net of income taxes		(81)		87		6		—		6
Net income	$	214	$	—	$	214	$	—	$	214

* Caption total not historically provided.


	For the Year Ended December 31, 2019
	Historical as Reported		Adjustments for Discontinued Operations		As Adjusted for Discontinued Operations		Adjustments for Bank Holding Company Presentation		Per Consolidated Statements of Income

	(in millions)
Revenues
Services	$	216	$	(396)	$	(180)	$	180	$	—
Redemption, net		637		(637)		—		—		—
Finance charges, net		4,729		—		4,729		(4,729)		—
Interest and fees on loans		—		—		—		4,729		4,729	⁽¹⁾
Interest on cash and investment securities		—		—		—		98		98	⁽¹⁾
Total interest income*		5,582		(1,033)		4,549		278		4,827
Interest expense
Interest on deposits		—		—		—		307		307	⁽¹⁾
Interest on borrowings		—		—		—		331		331	⁽¹⁾
Total interest expense		—		—		—		638		638
Net interest income*		5,582		(1,033)		4,549		(360)		4,189
Non-interest income
Interchange revenue, net of retailer share arrangements		—		—		—		(358)		(358)	⁽²⁾
Other		—		—		—		219		219	⁽²⁾
Total non-interest income		—		—		—		(139)		(139)
Total net interest and non-interest income*		5,582		(1,033)		4,549		(499)		4,050
Provision for credit losses		1,188		—		1,188		—		1,188
Total net interest and non-interest income, after provision for credit losses*		4,394		(1,033)		3,361		(499)		2,862
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		2,688		(847)		1,841		(1,841)		—
General and administrative		150		—		150		(150)		—
Depreciation and other amortization		80		(32)		48		(48)		—
Amortization of purchased intangibles		96		(48)		48		(48)		—
Loss on extinguishment of debt		72		—		72		(72)		—
Non-interest expenses
Employee compensation and benefits		—		—		—		721		721	⁽³⁾
Card and processing expenses		—		—		—		479		479	⁽³⁾
Information processing and communication		—		—		—		187		187	⁽³⁾
Marketing expense		—		—		—		205		205	⁽³⁾
Depreciation and amortization		—		—		—		96		96	⁽³⁾
Other		—		—		—		512		512	⁽³⁾
Total non-interest expenses*		3,086		(927)		2,159		41		2,200

Operating income		1,308		(106)		1,202		(540)		662
Interest expense
Securitization funding costs		213		—		213		(213)		—
Interest expense on deposits		226		—		226		(226)		—
Interest expense on long-term and other debt, net		130		(29)		101		(101)		—
Total interest expense, net		569		(29)		540		(540)		—
Income from continuing operations before income taxes		739		(77)		662		—		662
Provision for income taxes		166		(10)		156		—		156
Income from continuing operations		573		(67)		506		—		506
(Loss) income from discontinued operations, net of income taxes		(295)		67		(228)		—		(228)
Net income	$	278	$	—	$	278	$	—	$	278

* Caption total not historically provided.

(1)


	For the Year Ended December 31, 2020
	Finance charges, net		Securitization funding costs		Interest expense on deposits		Interest expense on long-term and other debt, net		Total

	(in millions)
Interest income
Interest and fees on loans	$	3,931	$	—	$	—	$	—	$	3,931
Interest on cash and investment securities		—		1		18		2		21

Interest expense
Interest on deposits		—		—		(238)		—		(238)
Interest on borrowings		—		(167)		—		(94)		(261)

Net interest income	$	3,931	$	(166)	$	(220)	$	(92)	$	3,453


	For the Year Ended December 31, 2019
	Finance charges, net		Securitization funding costs		Interest expense on deposits		Interest expense on long-term and other debt, net		Total

	(in millions)
Interest income
Interest and fees on loans	$	4,729	$	—	$	—	$	—	$	4,729
Interest on cash and investment securities		—		7		81		10		98

Interest expense
Interest on deposits		—		—		(307)		—		(307)
Interest on borrowings		—		(220)		—		(111)		(331)

Net interest income	$	4,729	$	(213)	$	(226)	$	(101)	$	4,189

(2)


	For the Year Ended December 31, 2020
	Services revenue		Cost of operations expense		Total

	(in millions)
Non-interest income
Interchange revenue, net of retailer share arrangements	$	(332)	$	—	$	(332)
Other
Payment protection products		157		—		157
Gain on portfolio and other sales		—		20		20
Subtotal		157		20		177

Total non-interest income	$	(175)	$	20	$	(155)


	For the Year Ended December 31, 2019
	Services revenue		Cost of operations expense		Total

	(in millions)
Non-interest income
Interchange revenue, net of retailer share arrangements	$	(358)	$	—	$	(358)
Other
Payment protection products		178		—		178
Gain on portfolio and other sales		—		41		41
Subtotal		178		41		219

Total non-interest income	$	(180)	$	41	$	(139)

(3)


	For the Year Ended December 31, 2020
	Cost of operations expense		General and administrative expense		Depreciation and other amortization		Amortization of purchased intangibles		Total

	(in millions)
Non-interest expenses
Employee compensation and benefits	$	562	$	47	$	—	$	—	$	609
Card and processing expenses		396		—		—		—		396
Information processing and communication		177		14		—		—		191
Marketing expense		143		—		—		—		143
Depreciation and amortization		—		—		70		36		106
Other		242		44		—		—		286
Total non-interest expenses	$	1,520	$	105	$	70	$	36	$	1,731

Gain on portfolio and other sales (non-interest income)		(20)		—		—		—		(20)

Total	$	1,500	$	105	$	70	$	36	$	1,711


	For the Year Ended December 31, 2019
	Cost of operations expense		General and administrative expense		Depreciation and other amortization		Amortization of purchased intangibles		Loss on extinguishment of debt		Total

	(in millions)
Non-interest expenses
Employee compensation and benefits	$	654	$	67	$	—	$	—	$	—	$	721
Card and processing expenses		479		—		—		—		—		479
Information processing and communication		168		19		—		—		—		187
Marketing expense		204		1		—		—		—		205
Depreciation and amortization		—		—		48		48		—		96
Other		377		63		—		—		72		512
Total non-interest expenses	$	1,882	$	150	$	48	$	48	$	72	$	2,200

Gain on portfolio and other sales (non-interest income)		(41)		—		—		—		—		(41)

Total	$	1,841	$	150	$	48	$	48	$	72	$	2,159

LoyaltyOne

Schedule of financial statement information for discontinued operations


	2021		2020		2019

	(in millions)
Total interest income	$	1	$	1	$	2
Total interest expense ⁽¹⁾		11		17		31
Net interest income		(10)		(16)		(29)
Total non-interest income		574		765		1,033
Total non-interest expenses		519		656		927
Income before provision from income taxes		45		93		77
Provision for income taxes		36		6		10
Income from discontinued operations, net of income taxes	$	9	$	87	$	67

(1)


	2020
	(in millions)
Assets:
Cash and cash equivalents	$	286
Accounts receivable, net		270
Inventories		164
Redemption settlement assets, restricted		693
Property and equipment, net		98
Goodwill		736
Other assets		216
Total assets of discontinued operations	$	2,463

Liabilities:
Accounts payable	$	68
Accrued expenses		61
Deferred revenue		1,004
Other liabilities		224
Total liabilities of discontinued operations	$	1,357


	2021		2020		2019

	(in millions)
Depreciation and amortization	$	31	$	78	$	80
Capital expenditures	$	15	$	24	$	41

Epsilon

Schedule of financial statement information for discontinued operations


Consideration received ⁽¹⁾	$	4,452
Net carrying value of assets and liabilities (including other comprehensive income)		3,940
Pre-tax gain on deconsolidation	$	512

(1)	Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million.


	2021		2020		2019

	(in millions)
Total interest income	$	—	$	—	$	—
Total interest expense ⁽¹⁾		—		—		64
Net interest income		—		—		(64)
Total non-interest income		—		—		963
Total non-interest expenses		7		110		519
(Loss) income before (benefit) provision for income taxes		(7)		(110)		380
(Benefit) provision for income taxes		(2)		(29)		675
(Loss) income from discontinued operations, net of income taxes	$	(5)	$	(81)	$	(295)

(1)


	2021		2020		2019

	(in millions)
Depreciation and amortization	$	—	$	—	$	73
Capital expenditures	$	—	$	—	$	56

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=d3e1474-107760

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721677-107760

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109222160&loc=SL51721533-107759

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721659-107760

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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-Topic 205
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721665-107760

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109226691&loc=d3e2941-110230

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721675-107760

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=109222650&loc=d3e1361-107760

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
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-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721671-107760

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721673-107760

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721663-107760

+ Details

PARENT-ONLY FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2021

PARENT-ONLY FINANCIAL STATEMENTS

Schedule of balance sheets

Parent Company – Condensed Balance Sheets


	December 31,
	2021		2020

	(in millions)
Assets:
Cash and cash equivalents	$	—	$	—
Investment in subsidiaries		4,446		5,127
Investment in Loyalty Ventures		50		—
Other assets		123		42
Total assets	$	4,619	$	5,169
Liabilities:
Long-term and other debt	$	1,985	$	2,805
Intercompany liabilities, net		482		742
Other liabilities		66		100
Total liabilities		2,533		3,647
Stockholders’ equity		2,086		1,522
Total liabilities and stockholders’ equity	$	4,619	$	5,169

Schedule of statements of income

Parent Company – Condensed Statements of Income


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Total interest income	$	12	$	13	$	19
Total interest expense		103		110		130
Net interest expense		(91)		(97)		(111)
Dividends from subsidiaries		535		256		923
Total net interest and non-interest income		444		159		812
Total non-interest expenses		1		1		71
Income before income taxes and equity in undistributed net income (loss) of subsidiaries		443		158		741
Benefit for income taxes		36		21		42
Income before equity in undistributed net income (loss) of subsidiaries		479		179		783
Equity in undistributed net income (loss) of subsidiaries		322		35		(505)
Net income	$	801	$	214	$	278

Schedule of statements of comprehensive income

Parent Company – Condensed Statements of Comprehensive Income


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Net income	$	801	$	214	$	278
Other comprehensive income, net of tax		7		—		5
Total comprehensive income, net of tax	$	808	$	214	$	283

Schedule of statements of cash flows

Parent Company – Condensed Statements of Cash Flows


	Years Ended December 31,
	2021		2020		2019

	(in millions)
Net cash used in operating activities	$	(398)	$	(138)	$	(1,029)
Investing activities:
Investment in subsidiaries		—		(3)		(135)
Proceeds from sale of business		—		—		4,118
Dividends received		533		256		923
Purchases of available-for-sale securities		(10)		—		—
Net cash provided by investing activities		523		253		4,906
Financing activities:
Debt proceeds from spinoff of Loyalty Ventures Inc.		750		—		—
Borrowings under debt agreements		38		1,276		3,083
Repayments of borrowings		(864)		(1,320)		(5,778)
Payment of debt extinguishment costs		—		—		(46)
Payment of deferred financing costs		(4)		(9)		(21)
Purchase of treasury shares		—		—		(976)
Dividends paid		(42)		(61)		(127)
Proceeds from issuance of common stock		4		3		12
Other		(7)		(4)		(24)
Net cash used in financing activities		(125)		(115)		(3,877)
Change in cash, cash equivalents and restricted cash		—		—		—
Cash, cash equivalents and restricted cash at beginning of year		—		—		—
Cash, cash equivalents and restricted cash at end of year	$	—	$	—	$	—

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) client segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jan. 01, 2020 USD ($)	Dec. 31, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of Reportable Segments \| segment	1
Retained Earnings (Accumulated Deficit)	$ (87)	$ 4,832
Allowance for credit losses	$ (1,832)	(2,008)	$ (1,171)		$ (1,038)
Period for which interest and fee income accrue until balance, interest and other fees are paid or charged off on installment loan receivables	120 days
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
Amortization term of direct loan amortization costs	1 year
Unamortized deferred costs related to loan origination	$ 48	38
Unamortized contract costs	364	311
Cash and Due from Banks	251	262
Short-term Investments	80	29
Interest-bearing Deposits in Banks and Other Financial Institutions	2,700	2,500
Restricted cash	$ 877	$ 323
Number of major customer \| client	10
Customer Concentration Risk \| Total net interest and non-interest income \| Largest clients
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration Risk, Percentage	59.00%	65.00%
Customer Concentration Risk \| Total net interest and non-interest income \| Victoria's Secret & Co. and its retail affiliates
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration Risk, Percentage	13.00%	14.00%
Customer Concentration Risk \| Total net interest and non-interest income \| BJs Wholesale Club (BJs)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration Risk, Percentage	8.00%
Customer Concentration Risk \| Total credit card and other loans \| BJs Wholesale Club (BJs)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration Risk, Percentage	11.00%
Interchange revenue, net of retailer share arrangements
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of contract costs	$ 64	$ 65	72
Non-interest expenses
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of contract costs	11	12	12
Impairment of contract costs	$ 0	38	$ 0
ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses		$ (644)
ASU 2016-13 \| Period of Adoption Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred Income Tax Assets, Net				$ 159
Retained Earnings (Accumulated Deficit)				485
Allowance for credit losses				$ 644

ACQUISITIONS (Details) shares in Millions, $ in Millions			1 Months Ended	12 Months Ended
ACQUISITIONS (Details) shares in Millions, $ in Millions	Dec. 03, 2020 USD ($) item	Sep. 28, 2020 USD ($) shares	Dec. 31, 2021 USD ($) shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019 USD ($)
Acquisition
Total consideration, net of cash and restricted cash acquired				$ 75	$ 267	$ 7
Developed technology
Fair values of assets acquired and liabilities assumed in acquisition
Developed technology	$ 91
Bread
Acquisition
Number of shares initially acquired \| shares		3.5
Percentage of interest acquired	6.00%	6.00%
Total acquisition percentage	100.00%
Equity consideration shares of common stock \| shares			1.9		1.9
Cash consideration		$ 25	$ 275
Equity consideration			149
Deferred consideration			75		$ 75
Total consideration paid			$ 491
Gain (loss) recognized on remeasurement	$ 0
Fair values of assets acquired and liabilities assumed in acquisition
Installment loan receivables	112
Developed technology	91
Right of use assets - operating	4
Deferred tax asset, net	7
Intangible assets	11
Goodwill	370
Total assets acquired	595
Accounts payable	2
Accrued expenses	3
Operating lease liabilities	3
Non-recourse borrowings of consolidated securitization entities	96
Debt issued by consolidated variable interest entities	96
Total liabilities assumed	104
Net assets acquired, net of cash and restricted cash	$ 491
Number of warehouse facilities acquired \| item	2

CREDIT CARD AND OTHER LOANS - Allowance for Loan Loss and Delinquencies (Details) $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Receivables	$ 16,284	$ 15,578
Total credit card and other loans	17,399	16,784
Less: Credit card and other loans - restricted for securitization investors	11,215	11,208
Unbilled finance charges	224	219
Allowance for credit losses	(1,832)	(2,008)	$ (1,171)	$ (1,038)
Loans and Leases Receivable, Net Amount	15,567	14,776
Unbilled to cardholders	$ 224	219
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
Period for which interest and fee income accrue until balance, interest and other fees are paid or charged off on installment loan receivables	120 days
Period an account becomes past due before a proprietary collection scoring algorithm automatically scores the risk of an account becoming further delinquent	30 days
Amortized cost of receivables balances contractually delinquent:
Financing Receivable, before Allowance for Credit Loss, Total	$ 16,284	$ 15,578
Principal receivables balances contractually delinquent:
Re-aged accounts as percentage of total credit card and loan receivables	1.70%	2.80%	2.40%
Modified Credit Card Receivables
Impaired credit card and loan receivables	$ 281	$ 490
Allowance for loan loss on impaired credit card receivables	$ 81	166
Maximum percentage of credit card receivables to total portfolio	3.00%
Average recorded investment in impaired credit card receivables	$ 383	412
Interest income on modified credit card receivables	26	30	$ 23
ASU 2016-13
Allowance for credit losses		(644)
Consolidated Variable Interest Entities
Total credit card and other loans	11,200	11,200
Less: Credit card and other loans - restricted for securitization investors	11,215	11,208
Credit Card and Loan Receivables
Receivables	17,217	16,666
Amortized cost of receivables balances contractually delinquent:
Financing Receivable, before Allowance for Credit Loss, Total	$ 17,217	16,666
Modified Credit Card Receivables
Number of short term forbearance programs \| item	2
Short-term forbearance programs	$ 12	67
Deferred forbearance programs	$ 86	157
Duration of short term program one	3 months
Duration of short term program two	6 months
Outstanding Balance	$ 9	40
Maximum period of time temporary programs' concessions remain in place	12 months
Installment Loan Receivables
Receivables	$ 182	118
Allowance for credit losses	$ (14)	(6)
Period for which interest and fee income accrue until balance, interest and other fees are paid or charged off on installment loan receivables	120 days
Amortized cost of receivables balances contractually delinquent:
Financing Receivable, before Allowance for Credit Loss, Total	$ 182	$ 118

CREDIT CARD AND OTHER LOANS - Amortized Cost Basis Credit Card and Loan Receivables (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Receivables	$ 16,284	$ 15,578
Total	17,133	16,494
31 to 60 days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	262	273
61 to 90 days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	186	203
91 or more days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	401	440
Total delinquent
Financing Receivable, Past Due [Line Items]
Receivables	$ 849	$ 916

- Definition

Amount, before allowance for credit loss, of financing receivable.

+ References + Details

CREDIT CARD AND OTHER LOANS - Troubled Debt Restructurings (Details) - Consumer Portfolio $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($) item
Troubled debt restructurings - credit card and loan receivables
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	171,993	391,049
Pre-modification Outstanding Balance	$ 254	$ 554
Post-modification Outstanding Balance	$ 254	$ 553
Troubled debt restructurings that subsequently defaulted - credit card and loan receivables
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	114,531	118,600
Outstanding Balance	$ 154	$ 162

CREDIT CARD AND OTHER LOANS - Credit Quality on Amortized Cost Basis (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Credit Quality
Receivables	$ 16,284	$ 15,578
Percentage of Financing Receivable, Credit Card Receivables, Outstanding	0.10%
Unused credit card lines available to cardholders	$ 112,000	108,000
Installment Loan Receivables
Credit Quality
Receivables	$ 182	$ 118
Installment Loan Receivables \| FICO Score, From 660 and Above
Credit Quality
Percentage of total amortized cost basis of revolving loan receivables outstanding	84	86
Percentage of Amortized Cost Basis Loan Receivables Outstanding	84	86
Installment Loan Receivables \| FICO Score, From 660 and Below
Credit Quality
Percentage of total amortized cost basis of revolving loan receivables outstanding		14
Percentage of Amortized Cost Basis Loan Receivables Outstanding		14
Installment Loan Receivables \| FICO Score Below 660
Credit Quality
Percentage of total amortized cost basis of revolving loan receivables outstanding	16
Percentage of Amortized Cost Basis Loan Receivables Outstanding	16
Credit Card Receivable \| No Score \| Credit Score, from 661 or Higher
Credit Quality
Percentage of amortized cost basis of credit card receivables outstanding	62.00%	60.00%
Credit Card Receivable \| No Score \| Credit Score, From 601 to 660
Credit Quality
Percentage of amortized cost basis of credit card receivables outstanding	26.00%	28.00%
Credit Card Receivable \| No Score \| Credit Score, From 600 or Less
Credit Quality
Percentage of amortized cost basis of credit card receivables outstanding	12.00%	12.00%

CREDIT CARD AND OTHER LOANS - Securitized Credit Card Receivables (Details) $ in Millions		12 Months Ended
	Sep. 30, 2020 USD ($) Asset	Dec. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Portfolio Held For Sale
Carrying value of the credit card portfolios held for sale		$ 0
Number of credit card portfolios transferred from held for sale to receivables \| Asset	1
Carring value of the loan and credit card portfolios transferred out of held for sale to receivables	$ 82
Valuation adjustment on credit card and loan portfolios held for sale		0	$ 8	$ (190)
Proceeds from sale of credit card loan portfolio		512	289	2,062
Gain (loss) on sales of credit card portfolio		$ 10	$ 20
Portfolio Acquisitions
Number of credit card portfolios acquired \| item		3	0
Purchase price of credit card portfolio		$ 110		925
Purchase price of credit card receivables portfolio		106
Purchase price of credit card receivables portfolio, intangible assets		4
Securitized Credit Card and Loan Receivables
Total credit card loans - available to settle obligations of consolidated VIEs		11,215	$ 11,208
Of which: principal amount of credit card loans 91 days or more past due		159	201
Net charge-offs of securitized principal		$ 453	$ 756	$ 908
Minimum
Securitized Credit Card and Loan Receivables
Minimum interests requirement (as a percent)		4.00%
Maximum
Securitized Credit Card and Loan Receivables
Minimum interests requirement (as a percent)		10.00%

ALLOWANCE FOR CREDIT LOSSES (Details) $ in Millions		12 Months Ended
ALLOWANCE FOR CREDIT LOSSES (Details) $ in Millions	Jan. 01, 2020 USD ($)	Dec. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Allowance for Loan Loss
Number of credit card and loan receivable groups \| item		4
Payments allocated to future purchase activity		$ 0
Balance at beginning of period	$ 1,171	2,008	$ 1,171	$ 1,038
Provision for credit losses		544	1,266	1,188
Change in estimate for uncollectible unpaid interest and fees			10
Recoveries		163	205	234
Principal charge-offs		(720)	(1,083)	(1,055)
Balance at end of period		$ 1,832	2,008	1,171
Number of days a loan is contractually past due before resulting in charge-off		180 days
Number of days after notification of creditor's bankruptcy or death when an account is charged-off		60 days
Actual charge-offs for unpaid interest and fees		$ 456	717	809
Unbilled Finance Charges		$ 224	219
Current Expected Credit Loss Methodology [Member]
Allowance for Loan Loss
Balance at beginning of period	1,815		$ 1,815
Balance at end of period				$ 1,815
Increase in allowance for credit losses	$ 644
Maximum
Allowance for Loan Loss
Number of days after notification of creditor's bankruptcy or death when an account is charged-off		180 days
Group A (Current, risk score - high)
Allowance for Loan Loss
Estimated Life (in months)		14 months
Group B (Current, risk score - low)
Allowance for Loan Loss
Estimated Life (in months)		19 months
Group C (Delinquent, risk score - high)
Allowance for Loan Loss
Estimated Life (in months)		17 months
Group D (Delinquent, risk score - low)
Allowance for Loan Loss
Estimated Life (in months)		26 months

SECURITIZATIONS (Details) - USD ($) $ in Millions	12 Months Ended
SECURITIZATIONS (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Total credit card loans - available to settle obligations of consolidated VIEs	$ 11,215	$ 11,208
Of which: principal amount of credit card loans 91 days or more past due	159	201
Net charge-offs of securitized principal	$ 453	$ 756	$ 908
Minimum
Minimum interests requirement (as a percent)	4.00%
Maximum
Minimum interests requirement (as a percent)	10.00%

AVAILABLE-FOR-SALE SECURITIES (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-Sale, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	$ 237	$ 219
Unrealized Gains	4	6
Unrealized Losses	(2)
Fair Value	239	225
Fair Value
Less than 12 months	57
12 Months or Greater	15
Total	72
Unrealized Losses
Less than 12 months	(1)
12 Months or Greater	(1)
Total	(2)
Amortized Cost
Due in one year or less	65
Due after ten years	172
Total	237
Estimated Fair Value
Due in one year or less	65
Due after ten years	174
Total	239
Gains or losses from the sale of AFS securities	$ 0	$ 0	$ 0

PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Millions		3 Months Ended	12 Months Ended
	Dec. 03, 2020	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property and equipment
Total		$ 484	$ 471	$ 484
Accumulated depreciation and amortization		(271)	(256)	(271)
Property and equipment, net		213	215	213
Depreciation
Depreciation			26	57	$ 30
Amortization on capitalized software			37	15	18
Unamortized capitalized software costs		118	113	118
Capitalized software, impairment				4
Impairment charges				64	$ 11
Internal-use computer software and development
Property and equipment
Total		248	$ 263	248
Internal-use computer software and development \| Minimum
Depreciation
Estimated useful life			1 year
Internal-use computer software and development \| Maximum
Depreciation
Estimated useful life			4 years
Furniture and equipment
Property and equipment
Total		122	$ 107	122
Furniture and equipment \| Minimum
Depreciation
Estimated useful life			1 year
Furniture and equipment \| Maximum
Depreciation
Estimated useful life			10 years
Land and leasehold improvements
Property and equipment
Total		90	$ 76	90
Construction in progress
Property and equipment
Total		24	$ 25	$ 24
Leasehold improvements \| Minimum
Depreciation
Estimated useful life			1 year
Leasehold improvements \| Maximum
Depreciation
Estimated useful life			17 years
Bread
Depreciation
Developed technology	$ 91
Developed technology
Depreciation
Developed technology	$ 91
Useful life	5 years
Private Label Services and Credit
Depreciation
Impairment charges		3
Accelerated depreciation		$ 25

GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Goodwill
Goodwill impairment	$ 0	$ 0	$ 0
Operating segment \| Private Label Services and Credit
Goodwill
Beginning Balance	634	264
Goodwill acquired during the year		370
Ending Balance	$ 634	$ 634	$ 264

GOODWILL AND INTANGIBLE ASSETS, NET - Finite Lived Assets and Indefinite Lived Assets (Details) - USD ($) $ in Millions		12 Months Ended
	Dec. 03, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross		$ 144	$ 149
Accumulated Amortization		(92)	(73)
Finite lived assets, net		52	76
Total Intangible Assets
Gross Assets		145	150
Accumulated Amortization		(92)	(73)
Net		53	77
Impairment of intangible assets		0	0	$ 0
Trade names
Indefinite Lived Assets
Indefinite lived assets		1	1
Total Intangible Assets
Net		1	1
Customer contracts and lists
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross		9	9
Accumulated Amortization		(3)
Finite lived assets, net		$ 6	$ 9
Amortization Life and Method
Useful life		3 years	3 years
Total Intangible Assets
Accumulated Amortization		$ (3)
Premium on purchased credit card loan portfolios
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross		133	$ 138
Accumulated Amortization		(89)	(73)
Finite lived assets, net		44	65
Total Intangible Assets
Accumulated Amortization		$ (89)	$ (73)
Premium on purchased credit card loan portfolios \| Minimum
Amortization Life and Method
Useful life		1 year	1 year
Premium on purchased credit card loan portfolios \| Maximum
Amortization Life and Method
Useful life		13 years	13 years
Noncompete agreements
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross		$ 2	$ 2
Finite lived assets, net		$ 2	$ 2
Amortization Life and Method
Useful life		5 years	5 years
Bread
Total Intangible Assets
Acquired intangible assets	$ 11
Bread \| Customer relationships
Total Intangible Assets
Acquired intangible assets	$ 9
Weighted average life	3 years
Bread \| Noncompete agreements
Total Intangible Assets
Acquired intangible assets	$ 2
Weighted average life	5 years

GOODWILL AND INTANGIBLE ASSETS, NET - Maturity Schedule (Details) - USD ($) $ in Millions		12 Months Ended
	Dec. 03, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Intangible assets
Amortization expense		$ 29	$ 34	$ 48
Estimated amortization expense related to intangible assets for the next five years and thereafter
2022		20
2023		15
2024		11
2025		2
2026		1
Thereafter		$ 3
Bread
Intangible assets
Acquired intangible assets	$ 11
Bread \| Customer relationships
Intangible assets
Acquired intangible assets	$ 9
Weighted average life	3 years
Bread \| Noncompete agreements
Intangible assets
Acquired intangible assets	$ 2
Weighted average life	5 years

OTHER ASSETS (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Other Assets
Restricted Cash	$ 877	$ 323
Deferred contract costs	364	311
Deferred tax asset, net	302	289
Accounts receivable, net	151	114
Right of use assets - operating	$ 97	$ 119
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Total	Other Assets, Total
Investment in LVI	$ 50
Other	151	$ 207
Other Assets, Total	$ 1,992	$ 1,363

LEASES (Details) - USD ($) $ in Millions	12 Months Ended
LEASES (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Lessee, Lease, Description [Line Items]
Asset impairments	$ 0	$ 64	$ 52
Non-interest expenses
Lessee, Lease, Description [Line Items]
Asset impairments	$ 18
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	17 years

LEASES - Lease expense (Details) - USD ($) $ in Millions	12 Months Ended
LEASES - Lease expense (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Lease expense
Operating lease cost	$ 23	$ 25	$ 24
Short-term lease cost		1	1
Variable lease cost	2	2	3
Sublease income	(5)	(1)
Total	$ 20	$ 27	28
Weighted-average remaining lease term (in years): operating leases	9 years 9 months 18 days	10 years 3 months 18 days
Weighted-average discount rate : operating leases	5.80%	5.80%
Supplemental cash flow information related to leases was as follows:
Operating cash flows from operating leases	$ 25	$ 28	27
Operating leases - Right-of-use assets obtained in exchange for lease obligations	$ 5	$ 1	$ 23

LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Lease liabilities
2022	$ 20
2023	21
2024	21
2025	20
2026	19
Thereafter	86
Total undiscounted lease liabilities	187
Less: Amount representing interest	(47)
Total present value of minimum lease payments	$ 140	$ 172

BORROWINGS OF LONG-TERM AND OTHER DEBT (Details) - USD ($)	1 Months Ended		3 Months Ended	12 Months Ended
	Nov. 30, 2021	Jul. 31, 2021	Dec. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2020	Sep. 22, 2020	Dec. 20, 2019
Debt
Total long-term and other debt			$ 2,008,000,000	$ 2,008,000,000
Less: Unamortized discount and debt issuance costs			22,000,000	22,000,000
Retail deposit			3,200,000,000	3,200,000,000	$ 1,700,000,000
Deposits			11,027,000,000	11,027,000,000	9,793,000,000
Debt issued by consolidated variable interest entities			5,453,000,000	5,453,000,000	5,710,000,000
Total borrowings of long-term and other debt			$ 18,466,000,000	$ 18,466,000,000	18,309,000,000
Loss from extinguishment of debt						$ (72,000,000)
Common equity tier 1 capital			20.0	20.0
Wholesale deposit			$ 7,800,000,000	$ 7,800,000,000	8,100,000,000
Maturities of long-term and other debt
2022			231,000,000	231,000,000
2023			177,000,000	177,000,000
2024			1,100,000,000	1,100,000,000
2026			500,000,000	500,000,000
Long-Term and Other Debt			1,986,000,000	1,986,000,000
Maturities Of Deposits
2022			9,096,000,000	9,096,000,000
2023			1,217,000,000	1,217,000,000
2024			627,000,000	627,000,000
2025			57,000,000	57,000,000
2026			36,000,000	36,000,000
Total maturities			11,033,000,000	11,033,000,000
Unamortized discount			(6,000,000)	(6,000,000)
Total Deposits			11,027,000,000	11,027,000,000
Maturities Of Debt by Consolidated VIEs
2022			3,034,000,000	3,034,000,000
2023			2,421,000,000	2,421,000,000
Total maturities			5,455,000,000	5,455,000,000
Unamortized discount			(2,000,000)	(2,000,000)
Total non-recourse borrowings of consolidated securitization entities			5,453,000,000	5,453,000,000	5,710,000,000
Maturities of total
2022			12,361,000,000	12,361,000,000
2023			3,815,000,000	3,815,000,000
2024			1,727,000,000	1,727,000,000
2025			57,000,000	57,000,000
2026			536,000,000	536,000,000
Total maturities			18,496,000,000	18,496,000,000
Unamortized discount on convertible senior notes			(30,000,000)	(30,000,000)
Total			18,466,000,000	18,466,000,000
Spinoff \| Loyalty One Segment
Debt
Spinoff adjustment to prepayment on loans		$ 25,000,000
Aggregate principal payments as a percentage of extended term loans		86.00%
Proceeds from spinoff	$ 750,000,000
Repayment of line of credit		$ 725,000,000	25,000,000
Term loan outstanding \| Spinoff \| Loyalty One Segment
Debt
Common equity tier 1 capital		11
No term loan outstanding \| Spinoff \| Loyalty One Segment
Debt
Common equity tier 1 capital		10
Series 2019-A asset backed term notes
Debt
Expected repayment amount			563,000,000	563,000,000
Series 2019-B asset backed term notes
Debt
Expected repayment amount			399,000,000	399,000,000
Series 2019-C asset backed term notes
Debt
Expected repayment amount			684,000,000	684,000,000
Series 2018-A Notes
Debt
Principal payments collected during accumulation period				846,000,000
Asset backed term notes
Debt
Debt repaid by the company				2,100,000,000
Amount borrowed				0
Retained amount of subordinated class of notes				281,000,000
Total deposits
Debt
Less: Unamortized discount and debt issuance costs			6,000,000	6,000,000	12,000,000
Deposits			11,033,000,000	11,033,000,000	9,805,000,000
Deposits			11,027,000,000	11,027,000,000	9,793,000,000
Certificates of deposit
Debt
Deposits			$ 5,447,000,000	$ 5,447,000,000	$ 6,015,000,000
Weighted average interest rate (as a percent)			1.91%	1.91%	2.58%
Certificates of deposit \| Minimum
Debt
Interest Rate (as a percent)			0.20%	0.20%	0.15%
Denomination amount of certificate of deposits				$ 1,000
Certificates of deposit \| Maximum
Debt
Interest Rate (as a percent)			3.75%	3.75%	3.75%
Money market deposits
Debt
Money market deposits			$ 5,586,000,000	$ 5,586,000,000	$ 3,790,000,000
Weighted average interest rate (as a percent)			0.68%	0.68%	1.00%
Debt instrument description of Variable rate basis				Federal Funds rate
Money market deposits \| Minimum
Debt
Interest Rate (as a percent)			0.05%	0.05%	0.38%
Money market deposits \| Maximum
Debt
Interest Rate (as a percent)			3.50%	3.50%	3.50%
Non-recourse borrowings of consolidated securitization entities
Debt
Less: Unamortized discount and debt issuance costs			$ 2,000,000	$ 2,000,000	$ 5,000,000
Total Debt issued by consolidated VIEs:			5,455,000,000	5,455,000,000	5,715,000,000
Debt issued by consolidated variable interest entities			5,453,000,000	5,453,000,000	5,710,000,000
Maturities Of Debt by Consolidated VIEs
Total non-recourse borrowings of consolidated securitization entities			5,453,000,000	5,453,000,000	5,710,000,000
Fixed rate asset-backed term note securities
Debt
Total Debt issued by consolidated VIEs:			$ 1,572,000,000	$ 1,572,000,000	3,424,000,000
Fixed rate asset-backed term note securities \| Minimum
Debt
Interest Rate (as a percent)			2.21%	2.21%
Fixed rate asset-backed term note securities \| Maximum
Debt
Interest Rate (as a percent)			3.61%	3.61%
Secured Loan Facility
Debt
Total Debt issued by consolidated VIEs:					86,000,000
Conduit asset-backed securities
Debt
Maximum borrowing capacity			$ 4,500,000,000	$ 4,500,000,000
Total Debt issued by consolidated VIEs:			3,883,000,000	3,883,000,000	$ 2,205,000,000
Reduction in Credit Facility			1,300,000,000	1,300,000,000
Line of credit amount outstanding			$ 3,900,000,000	$ 3,900,000,000
Debt instrument description of Variable rate basis				LIBOR
Conduit asset-backed securities \| Minimum
Debt
Interest Rate (as a percent)			0.89%	0.89%	1.39%
Conduit asset-backed securities \| Maximum
Debt
Interest Rate (as a percent)			0.96%	0.96%	1.89%
Long-term and other debt
Debt
Total long-term and other debt			$ 2,008,000,000	$ 2,008,000,000	$ 2,834,000,000
Less: Unamortized discount and debt issuance costs			22,000,000	22,000,000	28,000,000
Long-term and other debt			1,986,000,000	1,986,000,000	2,806,000,000
Senior Notes Due 2024
Debt
Principal amount of debt						$ 850,000,000
Total long-term and other debt			$ 850,000,000	$ 850,000,000	850,000,000
Interest Rate (as a percent)			4.75%	4.75%		4.75%			4.75%
Senior Notes Due 2026
Debt
Principal amount of debt							$ 500,000,000
Total long-term and other debt			$ 500,000,000	$ 500,000,000	500,000,000
Interest Rate (as a percent)			7.00%	7.00%			7.00%	7.00%
2017 Credit Agreement
Debt
Total availability under Credit Facility			$ 750,000,000	$ 750,000,000
Revolving line of credit
Debt
Maximum borrowing capacity					750,000,000
Debt instrument description of Variable rate basis				LIBOR
Term loans
Debt
Total long-term and other debt			$ 658,000,000	$ 658,000,000	$ 1,484,000,000
Weighted average interest rate (as a percent)			1.85%	1.85%	1.90%
Line of credit amount outstanding					$ 658,000,000
Debt instrument description of Variable rate basis				LIBOR	LIBOR

OTHER LIABILITIES (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
OTHER LIABILITIES
Account Payable And Other Brand Partner Liabilities	$ 291	$ 354
Accrued Liabilities	314	384
Operating lease liabilities	$ 140	$ 172
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Total other liabilities	Total other liabilities
Long Term Tax Reserves	$ 313	$ 347
Other Sundry Liabilities	136	102
Total other liabilities	$ 1,194	$ 1,359

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Other Noninterest Income [Abstract]
Payment protection products	$ 141	$ 156	$ 174
Gain on portfolio and other sales	10	20	41
Other	5	1	4
Total other non-interest income	156	177	219
Other Noninterest Expenses [Abstract]
Professional services and regulatory fees	136	114	120
Asset impairment charges		64	11
Portfolio valuation adjustments (to reflect the lower of cost or market)	0	(8)	190
Loss on extinguishment of debt			72
Other	86	108	119
Total other non-interest expenses	$ 222	$ 286	$ 512

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value of Financial Instruments
Transfers into or out of Level 3	$ 0	$ 0
Transfers between Levels 1 and 2	0	0
Financial assets
Credit card and loan receivables, net	15,567	14,776
Available-for-sale securities	239	225
Financial liabilities
Deposits	11,135	10,016
Debt issued by consolidated variable interest entities	5,453	5,710
Non-recourse borrowings of consolidated securitization entities	5,467	5,783
Long-term and other debt	2,053	2,875
Total liabilities measured at fair value	18,655	18,674
Carrying Amount
Financial assets
Credit card and loan receivables, net	15,567	14,776
Available-for-sale securities	239	225
Financial liabilities
Deposits	11,027	9,793
Debt issued by consolidated variable interest entities	5,453	5,710
Long-term and other debt	1,986	2,806
Fair Value
Financial assets
Credit card and loan receivables, net	17,989	17,301
Available-for-sale securities	239	225
Financial liabilities
Deposits	11,135	10,016
Debt issued by consolidated variable interest entities	5,467	2,783
Long-term and other debt	$ 2,053	$ 2,875

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Assets disclosed at fair value
Available-for-sale securities	$ 239	$ 225
Total assets measured at fair value	17,989	17,301
Level 3
Assets disclosed at fair value
Total assets measured at fair value	17,989	17,301
Recurring
Assets disclosed at fair value
Available-for-sale securities	239	225
Total assets measured at fair value	239	225
Recurring \| Level 1
Assets disclosed at fair value
Available-for-sale securities	48	34
Total assets measured at fair value	48	34
Recurring \| Level 2
Assets disclosed at fair value
Available-for-sale securities	191	191
Total assets measured at fair value	$ 191	$ 191

FAIR VALUES OF FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Financial assets
Credit card and loan receivables, net	$ 17,989	$ 17,301
Total assets measured at fair value	17,989	17,301
Financial liabilities
Deposits	11,135	10,016
Debt issued by consolidated VIEs	5,467	5,783
Long-term and other debt	2,053	2,875
Total liabilities measured at fair value	18,655	18,674
Level 2
Financial liabilities
Deposits	11,135	10,016
Debt issued by consolidated VIEs	5,467	5,783
Long-term and other debt	2,053	2,875
Total liabilities measured at fair value	18,655	18,674
Level 3
Financial assets
Credit card and loan receivables, net	17,989	17,301
Total assets measured at fair value	$ 17,989	$ 17,301

FAIR VALUES OF FINANCIAL INSTRUMENTS - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
FAIR VALUES OF FINANCIAL INSTRUMENTS
Asset Impairment Charges	$ 0	$ 64	$ 52

COMMITMENTS AND CONTINGENCIES - Regulatory Matters and Cardholders (Details) $ in Millions		1 Months Ended		12 Months Ended
	Jan. 19, 2021 USD ($) item	Jan. 31, 2022 USD ($)	Jan. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)
Tier 1 capital to average assets
Tier 1 capital to average assets, Actual Ratio (as a prcent)					18.6
Tier 1 capital to average assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.0
Tier 1 capital to average assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions					5.0
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)					20.0
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.50%
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					6.50%
Banking Regulation, Risk-Based Information [Abstract]
Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)					20.0
Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)					6.0
Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					8.0
Total capital to risk-weighted assets, Actual Ratio (as a percent)					21.3
Total capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)					8.0
Total capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent)					10.0
Discontinued Operations, Disposed of by Sale
Contingencies
Loss Contingency, Loss in Period				$ 150
Epsilon \| Discontinued Operations, Disposed of by Sale
Contingencies
Loss contingency, total	$ 150
Number of installment payments \| item	2
Loss contingency accrual					$ 75
Loss contingency, payment		$ 75	$ 75

EMPLOYEE BENEFIT PLANS (Details) - USD ($)	3 Months Ended	12 Months Ended
EMPLOYEE BENEFIT PLANS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jul. 01, 2015	Jul. 20, 2001
EDCP
Retirement Plans
Vested percentage		100.00%
Retirement Savings Plan
Retirement Plans
Number of shares registered for issuance						1,500,000
Number of shares available for issuance		290,897
Minimum age limit of employees covered by the plan		18 years
Service period after which seasonal employees begin receiving employer matching contribution		12 months
Service period after which employees begin receiving employer matching contribution		180 days
Percentage of employees' contribution matched by employer		5.00%
Company's matching and discretionary contributions		$ 15,000,000	$ 16,000,000	$ 35,000,000
Executive Deferred Compensation Plan \| EDCP
Retirement Plans
Deferred compensation liability		18,000,000	$ 19,000,000
2005 Employee Stock Purchase Plan \| Retirement Savings Plan
Retirement Plans
Number of shares available for issuance	441,327
2015 Employee Stock Purchase Plan
Employee Stock Purchase Plan
Maximum amount of common stock permitted to be purchased annually per employee		$ 25,000
Maximum percentage of voting power after purchase of common stock under ESPP		5.00%
Offering period under ESPP		6 months
Purchase price of common stock as a percentage of fair market value of shares		85.00%
Maximum number of shares reserved for issuance under the ESPP	1,441,327
Number of shares issued under the ESPP		57,713
Weighted-average issue price of shares issued under the ESPP (in dollars per share)		$ 70.44
Number of shares issued under the ESPP since the inception of the plan		571,825
Retirement Plans
Number of shares available for issuance		869,502			1,000,000

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions		12 Months Ended
	Nov. 05, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accumulated Other Comprehensive Income
Balance at the beginning of the period		$ (5)
Changes in other comprehensive income (loss)		3	$ 95	$ 38
Recognition of foreign currency translation adjustments upon sale of business		54	4	27
Balance at the end of the period		(2)	(5)
Unrealized gain (loss) on net investment hedges		7		5
Epsilon
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business			27
Precima
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		4
LoyaltyOne
Accumulated Other Comprehensive Income
Unrealized gain (loss) on net investment hedges	$ (7)
Net Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income
Balance at the beginning of the period		23	2	(11)
Changes in other comprehensive income (loss)		(21)	21	13
Balance at the end of the period		1	23	2
Net Unrealized Gains (Losses) on Securities \| LoyaltyOne
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		(1)
Net Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income
Balance at the beginning of the period		(1)
Changes in other comprehensive income (loss)		2	(1)
Balance at the end of the period			(1)
Net Unrealized Gains (Losses) on Cash Flow Hedges \| LoyaltyOne
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		(1)
Net Unrealized Gains (Losses) on Net Investment Hedge
Accumulated Other Comprehensive Income
Balance at the beginning of the period		(7)	(7)	(12)
Changes in other comprehensive income (loss)				5
Balance at the end of the period			(7)	(7)
Net Unrealized Gains (Losses) on Net Investment Hedge \| LoyaltyOne
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		7
Foreign Currency Translation Adjustment (Losses) Gains
Accumulated Other Comprehensive Income
Balance at the beginning of the period		(20)	(95)	(115)
Changes in other comprehensive income (loss)		(37)	71	(7)
Balance at the end of the period		(3)	(20)	(95)
Foreign Currency Translation Adjustment (Losses) Gains \| Epsilon
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business			4	27
Foreign Currency Translation Adjustment (Losses) Gains \| LoyaltyOne
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		54
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income
Balance at the beginning of the period		(5)	(100)	(138)
Changes in other comprehensive income (loss)		3	95	38
Changes in other comprehensive income (loss)		(56)	91	11
Balance at the end of the period		(2)	(5)	(100)
Accumulated Other Comprehensive Loss \| Epsilon
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business			$ 4	$ 27
Accumulated Other Comprehensive Loss \| LoyaltyOne
Accumulated Other Comprehensive Income
Recognition of foreign currency translation adjustments upon sale of business		$ 59

STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jul. 01, 2020	Jun. 30, 2020	Jun. 09, 2020	Jul. 01, 2015
Stock Repurchase Programs
Number of shares repurchased	0	0	6,300,000
Total cost of shares repurchased			$ 976
2019 Stock Repurchase Program
Stock Repurchase Programs
Amount remaining of a stock repurchase plan that expired					$ 348
2015 Omnibus Incentive Plan
Stock Compensation Plans
Shares of common stock reserved for grant							5,100,000
2020 Omnibus Incentive Plan
Stock Compensation Plans
Shares of common stock reserved for grant				2,400,000		2,400,000
Stock Repurchase Programs
Maximum award amount	$ 1

STOCKHOLDERS' EQUITY - Stock Compensation Plans (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 25	$ 15	$ 18
Forfeiture rate (as a percent)	5.00%	5.00%	5.00%
Unrecognized expenses	$ 35
Approximate weighted average period for recognizing expenses	1 year 9 months 18 days
Income tax benefits related to stock-based compensation expense	$ 4	$ 3	$ 3
Discontinued Operations, Held-for-sale
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 4	$ 6	$ 37

STOCKHOLDERS' EQUITY - Restricted Stock Unit Awards and Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended	3 Months Ended	12 Months Ended
	Jan. 27, 2022	Jul. 30, 2021	Nov. 30, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Dividends
Common Stock dividends and dividend equivalent rights declared (in dollars per share)				$ 1.26	$ 0.84		$ 2.52
Dividends declared					$ 42	$ 60	$ 127
Dividends paid					42	61	127
Treasury Stock
Dividends
Retirement of treasury stock		$ (6,733)			6,733
Retained Earnings
Dividends
Dividends declared					42	$ 60	$ 127
Retirement of treasury stock		5,453			(5,453)
Additional Paid-In Capital
Dividends
Retirement of treasury stock		$ 1,280			$ (1,280)
Common Stock
Dividends
Treasury stock, shares retired		67,400,000			67,400,000
Restricted stock units
Number of Shares
Balance at the beginning of the period (in shares)				513,132	577,267	513,132	796,912
Shares granted (in shares)					888,245	481,566	704,235
Shares vested (in shares)					(192,400)	(170,018)	(441,503)
Shares forfeited (in shares)					(513,677)	(247,413)	(546,512)
Balance at the end of the period (in shares)					759,435	577,267	513,132
Outstanding and Expected to Vest (in shares)					633,480
Weighted Average Fair Value
Balance at the beginning of the period (in dollars per share)				$ 172.06	$ 103.89	$ 172.06	$ 218.81
Shares granted (in dollars per share)					88.18	89.11	161.05
Shares vested (in dollars per share)					118.78	175.09	218.45
Shares forfeited (in dollars per share)					93.16	166.93	188.40
Balance at the end of the period (in dollars per share)					89.14	$ 103.89	$ 172.06
Outstanding and Expected to Vest (in dollars per share)					$ 90.09
Restricted stock, additional disclosures
Total fair value of units vested					$ 23	$ 30	$ 96
Aggregate intrinsic value of units outstanding and expected to vest					$ 42
Market-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)				24,288	22,227	24,288	56,229
Shares granted (in shares)					2,641	20,770	37,878
Shares forfeited (in shares)					(5,801)	(22,831)	(69,819)
Balance at the end of the period (in shares)					19,067	22,227	24,288
Restricted stock, additional disclosures
Attainment percentage					100.00%	100.00%	100.00%
Increase in granted shares			2,641
Performance-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)				230,272	221,226	230,272	423,242
Shares granted (in shares)					111,542	219,186	420,239
Shares vested (in shares)					(24,677)	(42,097)	(262,773)
Shares forfeited (in shares)					(216,675)	(186,135)	(350,436)
Balance at the end of the period (in shares)					91,416	221,226	230,272
Restricted stock, additional disclosures
Attainment percentage					100.00%	100.00%	100.00%
Increase in granted shares			12,659
Stock Compensation Plans, Additional Disclosures
Award vesting period					3 years
Service-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)				258,572	333,814	258,572	317,441
Shares granted (in shares)					774,062	241,610	246,118
Shares vested (in shares)					(167,723)	(127,921)	(178,730)
Shares forfeited (in shares)					(291,201)	(38,447)	(126,257)
Balance at the end of the period (in shares)					648,952	333,814	258,572
Restricted stock, additional disclosures
Increase in granted shares			96,556
Stock Compensation Plans, Additional Disclosures
Award vesting period					3 years
Subsequent event
Dividends
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21
Minimum \| Performance-based restricted stock unit awards
Stock Compensation Plans, Additional Disclosures
Earned percentage					0.00%
Maximum \| Performance-based restricted stock unit awards
Stock Compensation Plans, Additional Disclosures
Earned percentage					170.00%

INCOME TAXES - Components of Income Tax and Reconciliation and Deferred Taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2017
Components of income before income taxes:
Income from continuing operations before income taxes	$ 1,044	$ 301	$ 662
Deferred
Total deferred income tax benefit	(15)	(223)	(186)
Total provision for income taxes	$ 247	93	156
Federal statutory rate (as a percent)	21.00%			35.00%
Reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate
Expected expense at statutory rate	$ 219	63	139
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit	33	6	33
Impact of 2017 Tax Reform	(8)	(2)	(30)
Non-deductible expenses (non-taxable income)	4	6	7
IRC Section 199, net of tax reserves		12
Other	(1)	8	7
Total provision for income taxes	247	93	156
Deferred tax assets
Deferred revenue	17	14
Allowance for credit losses	447	482
Net operating loss carryforwards and other carryforwards	42	43
Operating lease liabilities	33	42
Accrued expenses and other	65	75
Total deferred tax assets	604	656
Valuation allowance	(8)	(8)
Deferred tax assets, net of valuation allowance	596	648
Deferred tax liabilities
Deferred income	221	291
Depreciation	28	14
Right of use assets	22	28
Intangible assets	23	26
Total deferred tax liabilities	294	359
Total - Net deferred tax asset (liability)	302	289
Amounts recognized in the consolidated balance sheets:
Total - Net deferred tax asset (liability)	302	289
Continuing Operations
Current
Federal	218	228	123
State	49	36	35
Total current income tax expense	267	264	158
Deferred
Federal	(13)	(143)	(9)
State	(7)	(28)	7
Total deferred income tax benefit	(20)	(171)	(2)
Total provision for income taxes	247	93	156
Increase (decrease) in income taxes resulting from:
Total provision for income taxes	$ 247	$ 93	$ 156

INCOME TAXES - Operating Loss Carryforward (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Reconciliation of unrecognized tax benefits
Balance at the beginning of the period	$ 255	$ 215	$ 223
Increases related to prior years' tax positions	1	59	2
Decreases related to prior years' tax positions	(13)	(23)	(66)
Increases related to current year tax positions	12	11	58
Settlements during the period	(8)	(5)	(1)
Lapses of applicable statutes of limitation		(2)	(1)
Balance at the end of the period	247	255	215
Cumulative interest and penalties with respect to unrecognized tax benefits	76	69	60
Potential interest and penalties with respect to unrecognized tax benefits	8	9	2
Unrecognized tax benefits, if recognized, would impact effective tax rate	241	$ 243	$ 198
Capital losses
Operating Loss, Carryforwards
Capital loss carryforward	7
Federal
Operating Loss, Carryforwards
Net operating loss carryovers	132
Foreign
Operating Loss, Carryforwards
Tax credits	34
State
Operating Loss, Carryforwards
Net operating loss carryovers	231
Tax credits	$ 3

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	12 Months Ended
	Apr. 25, 2019	Oct. 31, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Income from continuing operations			$ 797	$ 208	$ 506
Less: Dividends declared on preferred stock					3
Less: Allocation of undistributed earnings					6
Income from continuing operations - basic			797	208	497
Income (loss) from discontinued operations, net of tax			4	6	(228)
Net income - basic			$ 801	$ 214	$ 269
Denominator:
Weighted average shares, basic			49,700,000	47,800,000	50,000,000.0
Weighted average effect of dilutive securities:
Shares from assumed conversion of preferred stock (in shares)					800,000
Net effect of dilutive unvested restricted stock (1) (in shares)			300,000	100,000	100,000
Denominator for diluted calculations (in shares)			50,000,000.0	47,900,000	50,900,000
Basic income (loss) attributable to common stockholders per share:
Income from continuing operations (in dollars per share)			$ 16.02	$ 4.36	$ 9.94
Income (loss) from discontinued operations (in dollars per share)			0.07	0.11	(4.56)
Net income per share (in dollars per share)			$ 16.09	$ 4.47	$ 5.38
Diluted income per share (1):
Income from continuing operations			$ 797	$ 208	$ 506
Income (loss) from discontinued operations, net of tax			4	6	(228)
Net income			$ 801	$ 214	$ 278
Diluted income per share:
Income from continuing operations (in dollars per share)			$ 15.95	$ 4.35	$ 9.94
Income (loss) from discontinued operations			0.07	0.11	(4.48)
Net income per share (in dollars per share)			$ 16.02	$ 4.46	$ 5.46
Series A Non-Voting Convertible Preferred Stock
Diluted income per share:
Conversion of stock, shares converted		150,000
Conversion of stock, shares issued	150,000
Common Stock A Member
Diluted income per share:
Conversion of stock, shares converted	1,500,000

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions		1 Months Ended		12 Months Ended
	Apr. 25, 2019	Dec. 31, 2021	Oct. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash and cash equivalents		$ 3,046		$ 2,796
Restricted cash included within Other assets (1)		877		323
Cash, cash equivalents and restricted cash included within Assets of discontinued operations				344
Total cash, cash equivalents and restricted cash		3,923		3,463	$ 3,958	$ 3,968
Common Stock A Member
Conversion of stock, shares converted	1,500,000
Series A Non-Voting Convertible Preferred Stock
Conversion of stock, shares converted			150,000
Conversion of stock, shares issued	150,000
Spinoff
Equity method investment		48
Bread
Deferred consideration		$ 75		$ 75
Equity consideration shares of common stock		1,900,000		1,900,000

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION (Details) $ in Millions			12 Months Ended
	Nov. 05, 2021 USD ($)	Jul. 01, 2019 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Apr. 30, 2019 USD ($)	Apr. 12, 2019 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest	19.00%		19.00%
Investment carrying amount			$ 50.0
Assets :
Total assets of discontinued operations				$ 2,463.0
Liabilities:
Total liabilities of discontinued operations				1,357.0
Disposal Group, Including Discontinued Operation, Additional Disclosures
Long-term Debt			1,986.0
Depreciation and amortization					$ 73.0
Capital expenditures					56.0
LoyaltyOne
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of shares distributed to common stockholders	81.00%
Stockholders' Equity Note, Stock Split, Conversion Ratio	0.40
Proceeds from spinoff	$ 750.0
Debt repaid by the company	725.0
Repayments of borrowings	$ 25.0
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Total interest income			1.0	1.0	2.0
Total interest expense			11.0	17.0	31.0
Net interest income			(10.0)	(16.0)	(29.0)
Total non-interest income			574.0	765.0	1,033.0
Total non-interest expenses			519.0	656.0	927.0
Income before provision (benefit) from income taxes			45.0	93.0	77.0
Provision (benefit) for income taxes			36.0	6.0	10.0
(Loss) income from discontinued operations, net of taxes			9.0	87.0	67.0
Assets :
Cash and cash equivalents				286.0
Accounts receivable, net				270.0
Inventories				164.0
Redemption settlement assets, restricted				693.0
Property and equipment, net				98.0
Goodwill				736.0
Other assets				216.0
Total assets of discontinued operations				2,463.0
Liabilities:
Accounts payable				68.0
Accrued expenses				61.0
Deferred revenue				1,004.0
Other liabilities				224.0
Total liabilities of discontinued operations				1,357.0
Disposal Group, Including Discontinued Operation, Additional Disclosures
Mandatory payment per credit agreement			725.0
Depreciation and amortization			31.0	78.0	80.0
Capital expenditures			15.0	24.0	41.0
Epsilon
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration, cash associated with disposal group		$ 42.2
Transaction costs					79.0
After tax loss on sale					252.0
Disposal Group, Including Discontinued Operation, Additional Disclosures
Mandatory payment per credit agreement			500.0
Epsilon \| Senior Notes
Disposal Group, Including Discontinued Operation, Additional Disclosures
Long-term Debt						$ 2,000.0
Epsilon \| Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total consideration							$ 4,000.0
Epsilon \| Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total consideration		4,452.0
Net carrying value of assets and liabilities (including other comprehensive income)		3,940.0
Pre-tax gain on deconsolidation		$ 512.0
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Total interest expense					64.0
Net interest income					(64.0)
Total non-interest income					963.0
Total non-interest expenses			7.0	110.0	519.0
Income before provision (benefit) from income taxes			7.0	110.0	(380.0)
Provision (benefit) for income taxes			(2.0)	(29.0)	675.0
(Loss) income from discontinued operations, net of taxes			$ (5.0)	$ (81.0)	$ (295.0)

DISCONTINUED OPERATIONS AND BANK HOLDING COMPANY FINANCIAL PRESENTATION - Bank holding company financial presentation (Details) $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Revenues
Interest and fees on loans	$ 3,861	$ 3,931	$ 4,729
Interest on cash and investment securities	7	21	98
Total interest income	3,868	3,952	4,827
Interest expense
Interest on deposits	167	238	307
Interest on borrowings	216	261	331
Total interest expense	383	499	638
Net interest income	3,485	3,453	4,189
Non-interest income
Interchange Revenue, Net of Retailer Share Arrangements	(369)	(332)	(358)
Other	156	177	219
Payment protection products		157	178
Gain on portfolio and other sales	10	20	41
Total non-interest income	(213)	(155)	(139)
Total net interest and non-interest income	3,272	3,298	4,050
Provision for credit losses	544	1,266	1,188
Total net interest and non-interest income, after provision for credit losses	2,728	2,032	2,862
Operating expenses
Loss on extinguishment of debt			72
Non-interest expenses
Employee Compensation And Benefits	671	609	721
Card and processing expenses	323	396	479
Information processing and communication		191	187
Marketing expenses	160	143	205
Depreciation and amortization	92	106	96
Other	222	286	512
Gain on portfolio and other sales	(10)	(20)	(41)
Total non-interest expenses	1,684	1,731	2,200
Operating income		301	662
Income from continuing operations before income taxes	1,044	301	662
Provision for income taxes	247	93	156
Income from continuing operations	797	208	506
Income (loss) from discontinued operations, net of income taxes	4	6	(228)
Net income	$ 801	214	278
Number of Operating Segments \| segment	1
Finance charges, net
Revenues
Interest and fees on loans		3,931	4,729
Interest expense
Net interest income		3,931	4,729
Securitization funding costs
Revenues
Interest on cash and investment securities		1	7
Interest expense
Interest on borrowings		167	220
Net interest income		(166)	(213)
Interest expense on deposits
Revenues
Interest on cash and investment securities		18	81
Interest expense
Interest on deposits		238	307
Net interest income		(220)	(226)
Interest expense on long-term and other debt, net
Revenues
Interest on cash and investment securities		2	10
Interest expense
Interest on borrowings		94	111
Net interest income		(92)	(101)
Services revenue
Non-interest income
Interchange Revenue, Net of Retailer Share Arrangements		(332)	(358)
Other		157	178
Payment protection products		157	178
Total non-interest income		(175)	(180)
Cost of operations expense
Non-interest income
Other		20	41
Gain on portfolio and other sales		20	41
Total non-interest income		20	41
Non-interest expenses
Employee Compensation And Benefits		562	654
Card and processing expenses		396	479
Information processing and communication		177	168
Marketing expenses		143	204
Other		242	377
Gain on portfolio and other sales		(20)	(41)
Total non-interest expenses		1,520	1,882
General and administrative expense.
Non-interest expenses
Employee Compensation And Benefits		47	67
Information processing and communication		14	19
Marketing expenses			1
Other		44	63
Total non-interest expenses		105	150
Depreciation and other amortization
Non-interest expenses
Depreciation and amortization		70	48
Total non-interest expenses		70	48
Amortization of purchased intangibles
Non-interest expenses
Depreciation and amortization		36	48
Total non-interest expenses		36	48
Loss on extinguishment of debt
Non-interest expenses
Other			72
Total non-interest expenses			72
Historical as Reported
Revenues
Services		117	216
Redemption, net		473	637
Finance charges, net		3,931	4,729
Total interest income		4,521	5,582
Interest expense
Net interest income		4,521	5,582
Non-interest income
Total net interest and non-interest income		4,521	5,582
Provision for credit losses		1,266	1,188
Total net interest and non-interest income, after provision for credit losses		3,255	4,394
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		2,077	2,688
General and administrative		106	150
Depreciation and amortization		99	80
Amortization of purchased intangibles		85	96
Loss on extinguishment of debt			72
Non-interest expenses
Total non-interest expenses		2,367	3,086
Operating income		888	1,308
Securitization Funding Costs		166	213
Interest expense on deposits		220	226
Interest expense on long-term and other debt, net		108	130
Total interest expense, net		494	569
Income from continuing operations before income taxes		394	739
Provision for income taxes		99	166
Income from continuing operations		295	573
Income (loss) from discontinued operations, net of income taxes		(81)	(295)
Net income		214	278
Adjustments for Discontinued Operations
Revenues
Services		(292)	(396)
Redemption, net		(473)	(637)
Total interest income		(765)	(1,033)
Interest expense
Net interest income		(765)	(1,033)
Non-interest income
Total net interest and non-interest income		(765)	(1,033)
Total net interest and non-interest income, after provision for credit losses		(765)	(1,033)
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		(577)	(847)
General and administrative		(1)
Depreciation and amortization		(29)	(32)
Amortization of purchased intangibles		(49)	(48)
Non-interest expenses
Total non-interest expenses		(656)	(927)
Operating income		(109)	(106)
Interest expense on long-term and other debt, net		(16)	(29)
Total interest expense, net		(16)	(29)
Income from continuing operations before income taxes		(93)	(77)
Provision for income taxes		(6)	(10)
Income from continuing operations		(87)	(67)
Income (loss) from discontinued operations, net of income taxes		87	67
As Adjusted for Discontinued Operations
Revenues
Services		(175)	(180)
Finance charges, net		3,931	4,729
Total interest income		3,756	4,549
Interest expense
Net interest income		3,756	4,549
Non-interest income
Total net interest and non-interest income		3,756	4,549
Provision for credit losses		1,266	1,188
Total net interest and non-interest income, after provision for credit losses		2,490	3,361
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		1,500	1,841
General and administrative		105	150
Depreciation and amortization		70	48
Amortization of purchased intangibles		36	48
Loss on extinguishment of debt			72
Non-interest expenses
Total non-interest expenses		1,711	2,159
Operating income		779	1,202
Securitization Funding Costs		166	213
Interest expense on deposits		220	226
Interest expense on long-term and other debt, net		92	101
Total interest expense, net		478	540
Income from continuing operations before income taxes		301	662
Provision for income taxes		93	156
Income from continuing operations		208	506
Income (loss) from discontinued operations, net of income taxes		6	(228)
Net income		214	278
As Adjusted for Discontinued Operations \| Cost of operations expense
Non-interest expenses
Total non-interest expenses		1,500	1,841
As Adjusted for Discontinued Operations \| General and administrative expense.
Non-interest expenses
Total non-interest expenses		105	150
As Adjusted for Discontinued Operations \| Depreciation and other amortization
Non-interest expenses
Total non-interest expenses		70	48
As Adjusted for Discontinued Operations \| Amortization of purchased intangibles
Non-interest expenses
Total non-interest expenses		36	48
As Adjusted for Discontinued Operations \| Loss on extinguishment of debt
Non-interest expenses
Total non-interest expenses			72
Adjustments for Bank Holding Company Presentation
Revenues
Services		175	180
Finance charges, net		(3,931)	(4,729)
Interest and fees on loans		3,931	4,729
Interest on cash and investment securities		21	98
Total interest income		196	278
Interest expense
Interest on deposits		238	307
Interest on borrowings		261	331
Total interest expense		499	638
Net interest income		(303)	(360)
Non-interest income
Interchange Revenue, Net of Retailer Share Arrangements		(332)	(358)
Other		177	219
Total non-interest income		(155)	(139)
Total net interest and non-interest income		(458)	(499)
Total net interest and non-interest income, after provision for credit losses		(458)	(499)
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		(1,500)	(1,841)
General and administrative		(105)	(150)
Depreciation and amortization		(70)	(48)
Amortization of purchased intangibles		(36)	(48)
Loss on extinguishment of debt			(72)
Non-interest expenses
Employee Compensation And Benefits		609	721
Card and processing expenses		396	479
Information processing and communication		191	187
Marketing expenses		143	205
Depreciation and amortization		106	96
Other		286	512
Total non-interest expenses		20	41
Operating income		(478)	(540)
Securitization Funding Costs		(166)	(213)
Interest expense on deposits		(220)	(226)
Interest expense on long-term and other debt, net		(92)	(101)
Total interest expense, net		$ (478)	$ (540)

PARENT-ONLY FINANCIAL STATEMENTS (Details) - USD ($) shares in Millions, $ in Millions	1 Months Ended	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Assets:
Cash and cash equivalents	$ 3,046	$ 3,046	$ 2,796
Investment in LVI	50	50
Other assets	1,992	1,992	1,363
Total assets	21,746	21,746	22,547
Liabilities:
Long-term and other debt	1,986	1,986	2,806
Other liabilities	1,194	1,194	1,359
Total liabilities	19,660	19,660	21,025
Stockholders' equity	2,086	2,086	1,522	$ 1,589	$ 2,332
Total liabilities and stockholders' equity	21,746	21,746	22,547
Statements of Income
Investment income		3,868	3,952	4,827
Interest expense, net		383	499	638
Net interest income		3,485	3,453	4,189
Total net interest and non-interest income		3,272	3,298	4,050
Total non-interest expenses		1,684	1,731	2,200
Income before income taxes and equity in undistributed net income (loss) of subsidiaries		1,044	301	662
Benefit for income taxes		(247)	(93)	(156)
Net income		801	214	278
Other comprehensive income (loss):
Net income		801	214	278
Other comprehensive income, net of tax		3	95	38
Statements of Cash Flows
Net cash (used in) provided by operating activities		1,543	1,883	1,218
Investing activities:
Proceeds from sale of business			27	4,410
Net cash (used in) provided by investing activities		(1,691)	1,774	2,861
Financing activities:
Debt proceeds from spinoff of Loyalty Ventures Inc.		652
Payment of debt extinguishment costs				(46)
Payment of deferred financing costs		(13)	(19)	(45)
Purchase of treasury shares				(976)
Dividends paid		(42)	(61)	(127)
Proceeds from issuance of common stock		4	3	12
Other		(8)	1	(28)
Net cash provided by (used in) financing activities		608	(4,167)	(4,092)
Change in cash, cash equivalents and restricted cash		460	(495)	(10)
Cash, cash equivalents and restricted cash at end of year	3,923	3,923	3,463	3,958
Cash, cash equivalents and restricted cash at beginning of year		3,463	3,958	3,968
Parent company
Assets:
Investment in subsidiaries	4,446	4,446	5,127
Investment in LVI	50	50
Other assets	123	123	42
Total assets	4,619	4,619	5,169
Liabilities:
Long-term and other debt	1,985	1,985	2,805
Intercompany liabilities, net	482	482	742
Other liabilities	66	66	100
Total liabilities	2,533	2,533	3,647
Stockholders' equity	2,086	2,086	1,522
Total liabilities and stockholders' equity	4,619	4,619	5,169
Statements of Income
Investment income		12	13	19
Interest expense, net		103	110	130
Net interest income		(91)	(97)	(111)
Dividends from subsidiaries		535	256	923
Total net interest and non-interest income		444	159	812
Total non-interest expenses		1	1	71
Income before income taxes and equity in undistributed net income (loss) of subsidiaries		443	158	741
Benefit for income taxes		36	21	42
Income before equity in undistributed net income (loss) of subsidiaries		479	179	783
Equity in undistributed net income (loss) of subsidiaries		322	35	(505)
Net income		801	214	278
Other comprehensive income (loss):
Net income		801	214	278
Other comprehensive income, net of tax		7		5
Total comprehensive income, net of tax		808	214	283
Statements of Cash Flows
Net cash (used in) provided by operating activities		(398)	(138)	(1,029)
Investing activities:
Investment in subsidiaries			(3)	(135)
Proceeds from sale of business				4,118
Dividends received		533	256	923
Purchases of available-for-sale securities		(10)
Net cash (used in) provided by investing activities		523	253	4,906
Financing activities:
Debt proceeds from spinoff of Loyalty Ventures Inc.		750
Borrowings under debt agreements		38	1,276	3,083
Repayments of borrowings		(864)	(1,320)	(5,778)
Payment of debt extinguishment costs				(46)
Payment of deferred financing costs		(4)	(9)	(21)
Purchase of treasury shares				(976)
Dividends paid		(42)	(61)	(127)
Proceeds from issuance of common stock		4	3	12
Other		(7)	(4)	(24)
Net cash provided by (used in) financing activities		(125)	$ (115)	(3,877)
Non-cash investing items
Non-cash dividend				$ 3,000
Spinoff
Non-cash investing items
Equity method investment	$ 48	$ 48
Bread
Non-cash investing items
Equity consideration shares of common stock	1.9		1.9