0001558370-22-007234 | 10-Q | XBRL Viewer | Bread Financial Holdings INC

Three Months Ended March 31,

(in millions)

Net charge-offs of securitized principal

Print Document View Excel Document

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2022	Apr. 22, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Entity File Number	001-15749
Entity Registrant Name	BREAD FINANCIAL HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	31-1429215
Entity Address, Address Line One	3095 Loyalty Circle
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43219
City Area Code	614
Local Phone Number	729-4000
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	BFH
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		49,775,721
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001101215
Amendment Flag	false

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest income
Interest and fees on loans	$ 1,066	$ 941
Interest on cash and investment securities	2	1
Total interest income	1,068	942
Interest expense
Interest on deposits	34	47
Interest on borrowings	45	60
Total interest expense	79	107
Net interest income	989	835
Non-interest income
Interchange revenue, net of retailer share arrangements	(96)	(68)
Other	28	35
Total non-interest income	(68)	(33)
Total net interest and non-interest income	921	802
Provision for credit losses	193	33
Total net interest and non-interest income, after provision for credit losses	728	769
Non-interest expenses
Employee compensation and benefits	179	159
Card and processing expenses	82	78
Information processing and communication	56	51
Marketing expenses	31	42
Depreciation and amortization	21	25
Other	57	47
Total non-interest expenses	426	402
Income from continuing operations before income taxes	302	367
Provision for income taxes	91	99
Income from continuing operations	211	268
(Loss) income from discontinued operations, net of income taxes	(1)	18
Net income	$ 210	$ 286
Basic income per share (Note 13):
Income from continuing operations (in dollars per share)	$ 4.23	$ 5.39
(Loss) income from discontinued operations (in dollars per share)	(0.01)	0.37
Net income per share (in dollars per share)	4.22	5.76
Diluted income per share (Note 13):
Income from continuing operations (in dollars per share)	4.21	5.38
(Loss) income from discontinued operations (in dollars per share)	(0.01)	0.36
Net income per share (in dollars per share)	$ 4.20	$ 5.74
Weighted average shares (Note 13):
Basic (in shares)	49.9	49.7
Diluted (in shares)	50.0	49.8

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 210	$ 286
Other comprehensive loss:
Unrealized loss on available-for-sale debt securities	(9)	(9)
Tax benefit	2	1
Unrealized loss on available-for-sale debt securities, net of tax	(7)	(8)
Unrealized gain on cash flow hedges		1
Unrealized gain on cash flow hedges, net of tax		1
Foreign currency translation adjustments		(30)
Other comprehensive loss, net of tax	(7)	(37)
Total comprehensive income, net of tax	$ 203	$ 249

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Cash and cash equivalents	$ 2,930	$ 3,046
Credit card and other loans:
Total credit card and other loans (includes loans available to settle obligations of consolidated variable interest entities: 2022, $10,771; 2021, $11,215)	16,843	17,399
Allowance for credit losses	(1,826)	(1,832)
Credit card and other loans, net	15,017	15,567
Investment securities	233	239
Property and equipment, net	220	215
Goodwill and intangible assets, net	682	687
Other assets	1,856	1,992
Total assets	20,938	21,746
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits	10,646	11,027
Debt issued by consolidated variable interest entities	4,816	5,453
Long-term and other debt	1,962	1,986
Other liabilities	1,246	1,194
Total liabilities	18,670	19,660
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock, $0.01 par value; authorized, 200.0 million shares; issued, 49.8 million shares as of both March 31, 2022 and December 31, 2021	1	1
Additional paid-in capital	2,163	2,174
Retained earnings (accumulated deficit)	113	(87)
Accumulated other comprehensive loss	(9)	(2)
Total stockholders' equity	2,268	2,086
Total liabilities and stockholders' equity	$ 20,938	$ 21,746

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Credit Card and Loan Receivables Restricted for Securitization Investors	$ 10,771	$ 11,215
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200.0	200.0
Common stock, issued shares	49.8	49.8
Consolidated Variable Interest Entities
Credit Card and Loan Receivables Restricted for Securitization Investors	$ 10,771	$ 11,215

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2020	$ 1	$ 3,427	$ (6,734)	$ 4,832	$ (5)	$ 1,521
Balance (in shares) at Dec. 31, 2020	117,100,000
Increase (Decrease) in Stockholders' Equity
Net income				286		286
Other comprehensive loss					(37)	(37)
Stock-based compensation		7				$ 7
Repurchases of common stock (in shares)						0
Dividends and dividend equivalent rights declared				(10)		$ (10)
Other		(3)				(3)
Balance at Mar. 31, 2021	$ 1	3,431	$ (6,734)	5,108	(42)	1,764
Balance (in shares) at Mar. 31, 2021	117,100,000
Balance at Dec. 31, 2021	$ 1	2,174		(87)	(2)	2,086
Balance (in shares) at Dec. 31, 2021	49,900,000
Increase (Decrease) in Stockholders' Equity
Net income				210		210
Other comprehensive loss					(7)	(7)
Stock-based compensation		7				7
Repurchases of common stock		(12)				$ (12)
Repurchases of common stock (in shares)	(200,000)					(200,000)
Dividends and dividend equivalent rights declared				(10)		$ (10)
Other		(6)				(6)
Other (in shares)	100,000
Balance at Mar. 31, 2022	$ 1	$ 2,163		$ 113	$ (9)	$ 2,268
Balance (in shares) at Mar. 31, 2022	49,800,000

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares			3 Months Ended
	Apr. 28, 2022	Jan. 27, 2022	Mar. 31, 2022	Mar. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21	$ 0.21	$ 0.21	$ 0.21

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 210	$ 286
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	193	33
Depreciation and amortization	21	34
Deferred income taxes	(48)	(26)
Non-cash stock compensation	7	7
Amortization of deferred financing costs	6	8
Amortization of deferred origination costs	21	16
Change in other operating assets and liabilities:
Change in other assets	(2)	60
Change in other liabilities	73	95
Other	16	4
Net cash provided by operating activities	497	517
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in credit card and other loans	339	1,034
Change in redemption settlement assets		(13)
Capital expenditures	(20)	(12)
Purchases of investment securities	(18)	(22)
Maturities of investment securities	12	22
Other	(3)
Net cash provided by investing activities	310	1,009
CASH FLOWS FROM FINANCING ACTIVITIES:
Unsecured borrowings under debt agreements	175
Repayments/maturities of unsecured borrowings under debt agreements	(200)	(25)
Debt issued by consolidated variable interest entities	525	175
Repayments/maturities of debt issued by consolidated variable interest entities	(1,162)	(2,039)
Net (decrease) increase in deposits	(405)	162
Dividends paid	(10)	(11)
Repurchases of common stock	(12)
Other	(7)	(3)
Net cash used in financing activities	(1,096)	(1,741)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		(1)
Change in cash, cash equivalents and restricted cash	(289)	(216)
Cash, cash equivalents and restricted cash at beginning of period	3,923	3,463
Cash, cash equivalents and restricted cash at end of period	3,634	3,247
Cash and cash equivalents reconciliation:
Cash and cash equivalents	2,930	2,634
Restricted cash included within Other assets	704	314
Cash, cash equivalents and restricted cash included within Assets of discontinued operations		299
Cash, cash equivalents and restricted cash	$ 3,634	$ 3,247

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF THE BUSINESS

Effective March 23, 2022, Alliance Data Systems Corporation was renamed Bread Financial Holdings, Inc, and on April 4, 2022, its New York Stock Exchange ticker changed from “ADS” to “BFH”. Neither the name change nor the ticker change affected the legal entity structure, nor did it have an impact on the financial statements.

Bread Financial Holdings, Inc. (BFH or, including its consolidated subsidiaries and variable interest entities (VIEs), the Company) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The Company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, the Company delivers growth for its partners through a comprehensive product suite, including private label and co-brand credit cards, installment lending, and buy now, pay later (split-pay). The Company also offers direct-to-consumer solutions that give customers more access, choice and freedom through its branded Bread Cashback^TM American Express^® Credit Card and Bread Savings^TM products.

BASIS OF PRESENTATION

The accompanying unaudited Condensed 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 presentation, in particular, as a result of the spinoff of its LoyaltyOne segment and its classification 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.

The unaudited Condensed Consolidated Financial Statement should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022; if not significantly different, certain note disclosures included therein have been omitted from these unaudited Condensed Consolidated Financial Statements.

The unaudited Condensed Consolidated Financial Statements included herein reflect all adjustments, which consist of normal, recurring adjustments that are, in the opinion of management, necessary to state fairly the results for the interim periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates and assumptions reflect the best judgement of management, but actual results could differ. The most significant of those estimates and assumptions relate to the Company’s Allowance for credit losses.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. All intercompany transactions have been eliminated.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2022, the Financial Accounting Standards Board issued new accounting and disclosure guidance for troubled debt restructurings effective January 1, 2023, with early adoption permitted. Specifically, the new guidance eliminates the previous recognition and measurement guidance for troubled debt restructurings while enhancing the disclosure requirements for certain loan modifications, including requiring disclosure of gross charge-offs by year of loan origination. The Company is evaluating the new guidance and any impacts on its financial position, results of operations and regulatory risk-based capital, none of which are expected to be material, along with any anticipated impacts on its operational processes, controls and governance.

CREDIT CARD AND OTHER LOANS

3 Months Ended

Mar. 31, 2022

CREDIT CARD AND OTHER LOANS

CREDIT CARD AND OTHER LOANS

2. 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 make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts. Other loans, which are primarily installment loans offered to 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.

Primarily, 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 and ability.

The Company’s credit card and other loans were as follows, as of March 31, 2022 and December 31, 2021, respectively:


	March 31,		December 31,
	2022		2021

	(in millions)
Credit card loans	$	16,651	$	17,217
Installment (other) loans		192		182
Total credit card and other loans ⁽¹⁾⁽²⁾		16,843		17,399
Less: Allowance for credit losses		(1,826)		(1,832)
Credit card and other loans, net	$	15,017	$	15,567

(1)	Includes $10.8 billion and $11.2 billion of credit card and other loans available to settle obligations of consolidated VIEs as of March 31, 2022 and December 31, 2021, respectively.

(2)	Includes $228 million and $224 million, of accrued interest and fees that have not yet been billed to cardholders as of March 31, 2022 and December 31, 2021, 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. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent; based upon the level of risk indicated, a collection strategy is deployed. If, after exhausting all in-house collection efforts, the Company is unable to collect on the account, it may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances and accompanying account(s).

The following table presents the delinquency trends on the Company’s credit card and other loans portfolio based on the 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 March 31, 2022	$	241	$	190	$	435	$	866	$	15,709	$	16,575

As of December 31, 2021	$	262	$	186	$	401	$	849	$	16,284	$	17,133

(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 three months ended March 31, 2022 and 2021, the Company’s re-aged accounts represented 1.6% and 2.8%, 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 third-party fraud losses. Charged-off interest and fees reduce Interest and fees on loans, while third-party 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 $136 million and $131 million for the three months ended March 31, 2022 and 2021, respectively.

Modified Credit Card Loans

Forbearance Programs

As part of the Company’s collections strategy, the Company may offer temporary, short term (six-months or less) loan modifications in order to improve the likelihood of collections and meet the needs of the Company’s customers. The Company’s modifications for customers who have requested assistance and meet certain qualifying requirements, come in the form of reduced or deferred payment requirements, interest rate reductions and late fee waivers. The Company does not offer programs involving the forgiveness of principal. These temporary loan modifications may assist in cases where the Company believes the customer will recover from the short-term hardship and resume scheduled payments. Under these forbearance modification programs, those accounts receiving relief may not advance to the next delinquency cycle, including charge-off, in the same time frame that would have occurred had the relief not been granted. The Company evaluates its loan modification programs to determine if they represent a more than insignificant delay in payment, in which case they would then be considered a troubled debt restructuring (TDR). Loans in these short term programs that are determined to be TDR’s, will be included as such in the disclosures below.

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.

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 both March 31, 2022 and December 31, 2021. As of those same dates, the Company’s recorded investment in impaired credit card loans was $264 million and $281 million, respectively, with an associated allowance for credit losses of $88 million and $81 million, respectively. The average recorded investment in impaired credit card loans was $272 million and $482 million for the three months ended March 31, 2022 and 2021, 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 $4 million and $9 million for the three months ended

March 31, 2022 and 2021, 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 during the specified periods:

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Pre-modification

Post-modification

Pre-modification

Post-modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card loans

37,998

63,628

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



	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance

	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted	21,653	$	29	51,009	$	67

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 the total credit card loans balance at each of March 31, 2022 and December 31, 2021, 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 during the specified periods:


	Vantage
	March 31,						December 31,
	2022						2021
	661 or		601 to		600 or		661 or		601 to		600 or
	Higher		660		Less		Higher		660		Less
Credit card loans	61	%	27	%	12	%	62	%	26	%	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 $192 million and $182 million as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022, approximately 85% of these loans were originated by customers with Fair Isaac Corporation (FICO) scores of 660 or above, and approximately 15% of these loans were

originated by customers with FICO scores below 660. Similarly, as of December 31, 2021, approximately 84% and 16% 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 $112.0 billion as of both March 31, 2022 and December 31, 2021. While this amount 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 March 31, 2022 and December 31, 2021, there were no credit card loans held for sale and no portfolio sales were made during either of the three months ended March 31, 2022 or 2021.

Portfolio Acquisitions

No portfolio acquisitions were made during either of the three months ended March 31, 2022 or 2021.

ALLOWANCE FOR CREDIT LOSSES

3 Months Ended

Mar. 31, 2022

ALLOWANCE FOR CREDIT LOSSES

ALLOWANCE FOR CREDIT LOSSES

3. ALLOWANCE FOR CREDIT LOSSES

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 March 31, 2022 and December 31, 2021, accrued interest and fees that have not yet been billed to cardholders were $228 million and $224 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 Company measures its allowance for credit losses on installment loans using a statistical model to estimate projected losses over the remaining term of the loans, inclusive of an assumption for prepayments. The model is based on the historical statistical relationship between loan loss performance and certain macroeconomic data pooled based on credit quality risk score, term of the underlying loans, vintage and geographic location. As of March 31, 2022 and December 31, 2021, the allowance for credit losses on installment loans was $15 million and $14 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 three months ended March 31:


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Beginning balance	$	1,832	$	2,008

Provision for credit losses ⁽¹⁾		193		33
Net principal charge-offs ⁽²⁾		(199)		(198)
Ending balance	$	1,826	$	1,843

(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 $43 million and $51 million for the three months ended March 31, 2022 and 2021, respectively.

For the three months ended March 31, 2022, the allowance for credit losses remained relatively flat. For the three months ended March 31, 2021, the decrease in the allowance for credit losses was due to improvement in the macroeconomic outlook, a decline in credit card and other loans due to the pandemic and lower principal charge-offs.

SECURITIZATIONS

3 Months Ended

Mar. 31, 2022

SECURITIZATIONS

SECURITIZATIONS

4. 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 the Company, which are eliminated in consolidation.

The Trusts are consolidated 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 three months ended March 31, 2022 and 2021, no such triggering events occurred.

The following tables provide the total securitized credit card loans and related delinquencies, and net principal charge-offs of securitized credit card loans for the periods specified:


	March 31,		December 31,
	2022		2021

	(in millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	10,771	$	11,215
Of which: principal amount of credit card loans 91 days or more past due	$	169	$	159

INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2022

INVESTMENT SECURITIES

INVESTMENT SECURITIES

5. INVESTMENT SECURITIES

The Company’s investment securities consist of available-for-sale (AFS) securities, which are debt securities, U.S. Treasury bonds and mutual funds, as well as equity securities. These investments are carried at fair value on the Consolidated Balance Sheets within Investment securities. 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 March 31, 2022 and December 31, 2021, respectively:


	March 31, 2022								December 31, 2021
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value

	(in millions)
AFS and equity securities	$	241	$	—	$	(8)	$	233	$	237	$	4	$	(2)	$	239
Total	$	241	$	—	$	(8)	$	233	$	237	$	4	$	(2)	$	239

The following table provides information about the Company’s AFS debt securities with gross unrealized losses, as of March 31, 2022 and December 31, 2021, respectively.


	March 31, 2022
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
AFS debt securities	$	107	$	(5)	$	28	$	(3)	$	135	$	(8)
Total	$	107	$	(5)	$	28	$	(3)	$	135	$	(8)


	December 31, 2021
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
AFS debt securities	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)
Total	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)

As of March 31, 2022, the amortized cost and estimated fair value of the Company’s AFS debt securities, which are mortgage-backed securities with no stated maturities, was $175 million and $167 million, respectively.

There were no realized gains or losses from the sale of any investment securities for either of the three months ended March 31, 2022 or 2021.

DEPOSITS

3 Months Ended

Mar. 31, 2022

DEPOSITS.

DEPOSITS

6. DEPOSITS

As of March 31, 2022 and December 31, 2021, deposits were categorized as interest-bearing or non-interest-bearing as follows:



	March 31,		December 31,
	2022		2021

	(in millions)
Interest-bearing	$	10,620	$	11,027
Non-interest-bearing (including cardholder credit balances)		26		—
Total deposits	$	10,646	$	11,027

Deposits by deposit type as of March 31, 2022 and December 31, 2021 were as follows:


	March 31,		December 31,
	2022		2021

	(in millions)
Savings accounts:
Direct-to-consumer	$	2,045	$	1,713
Wholesale		3,865		3,873
Certificates of deposit:
Direct-to-consumer		1,516		1,467
Wholesale		3,194		3,974
Cardholder credit balances		26		—
Total deposits	$	10,646	$	11,027

The scheduled maturities of certificates of deposit as of March 31, 2022 were as follows:



(in millions)
2022⁽¹⁾	$	2,603
2023		1,329
2024		648
2025		70
2026		48
Thereafter		12
Total certificates of deposit		4,710

(1)	The 2022 balance includes $6 million in unamortized debt issuance costs, which are associated with the entire portfolio of certificates of deposit.

As of March 31, 2022 and December 31, 2021, certificates of deposit that exceeded applicable FDIC insurance limits which are generally $250,000 or more, in the aggregate, were $511 million and $500 million, respectively.

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

3 Months Ended

Mar. 31, 2022

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSE

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

The following table provides the components of Other non-interest income:


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Payment protection products	$	38	$	35
Loss from equity method investment		(12)		—
Other		2		—
Total other non-interest income	$	28	$	35

The following table provides the components of Other non-interest expenses:


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Professional services and regulatory fees	$	31	$	31
Occupancy expense		6		7
Other⁽¹⁾		20		9
Total other non-interest expenses	$	57	$	47

(1)	Primarily related to costs associated with various other individually insignificant operating activities.

FAIR VALUES OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2022

FAIR VALUES OF FINANCIAL INSTRUMENTS

FAIR VALUES OF FINANCIAL INSTRUMENTS

8. 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 three months ended March 31, 2022 and 2021, 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:


	March 31, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in millions)
Financial assets
Credit card and other loans, net	$	15,017	$	17,308	$	15,567	$	17,989
Investment securities		233		233		239		239
Financial liabilities
Deposits		10,646		10,675		11,027		11,135
Debt issued by consolidated VIEs		4,816		4,820		5,453		5,467
Long-term and other debt		1,962		1,980		1,986		2,053

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.

Investment securities: Investment securities consist of AFS securities, which are debt securities, U.S. Treasury bonds and mutual funds, as well as equity securities, 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:


	March 31, 2022
	Total		Level 1		Level 2		Level 3

	(in millions)
Investment securities	$	233	$	46	$	187	$	—
Total assets measured at fair value	$	233	$	46	$	187	$	—


	December 31, 2021
	Total		Level 1		Level 2		Level 3

	(in millions)
Investment securities	$	239	$	48	$	191	$	—
Total assets measured at fair value	$	239	$	48	$	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 March 31, 2022 and December 31, 2021 respectively. The fair values of these financial instruments are estimates as of March 31, 2022 and December 31, 2021, 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.


	March 31, 2022
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,308	$	—	$	—	$	17,308
Total	$	17,308	$	—	$	—	$	17,308

Financial liabilities:
Deposits	$	10,675	$	—	$	10,675	$	—
Debt issued by consolidated VIEs		4,820		—		4,820		—
Long-term and other debt		1,980		—		1,980		—
Total	$	17,475	$	—	$	17,475	$	—


	December 31, 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	$	—

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 either of the three months ended March 31, 2022 or 2021.

- 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

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

9. 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 the Banks is currently subject to regular examinations by the Consumer Financial Protection Bureau (CFPB) due to each Bank’s total assets not having exceeded $10.0 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 March 31, 2022, 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 March 31, 2022, 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 Leverage capital ratio ⁽¹⁾	19.4	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	22.5		4.5		6.5
Tier 1 capital ratio ⁽³⁾	22.5		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	23.8		8.0		10.0

Comenity Capital Bank
Tier 1 Leverage capital ratio ⁽¹⁾	17.2	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	19.3		4.5		6.5
Tier 1 capital ratio ⁽³⁾	19.3		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	20.7		8.0		10.0

Combined Banks
Tier 1 Leverage capital ratio ⁽¹⁾	18.2	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	20.8		4.5		6.5
Tier 1 capital ratio ⁽³⁾	20.8		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	22.1		8.0		10.0

(1)	The Tier 1 Leverage capital ratio represents tier 1 capital divided by total average assets, after certain adjustments.

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

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

(4)	The Total Risk-based capital ratio represents total capital divided by total risk-weighted assets.

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. 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 and other proceedings, arising in the ordinary course of business that it believes will not have a material adverse effect on its business, consolidated financial condition or liquidity, including claims and lawsuits alleging breaches of the Company’s contractual obligations, arbitrations, class actions and other litigation, arising in connection with its business activities. The Company is also involved, from time to time, in reviews, investigations, subpoenas and other proceedings (both formal and informal) by governmental agencies regarding its business (collectively, “regulatory matters”), which could subject the Company to significant fines, penalties, obligations to change its business practices or other requirements resulting in increased expenses, diminished income and damage to the Company’s reputation.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2022

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

10. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

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


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2022	on Securities		Flow Hedges		Investment Hedge		Adjustments		Loss

	(in millions)
Balance as of December 31, 2021	$	1	$	—	$	—	$	(3)	$	(2)
Changes in other comprehensive loss		(7)		—		—		—		(7)
Balance as of March 31, 2022	$	(6)	$	—	$	—	$	(3)	$	(9)


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2021	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss

	(in millions)
Balance as of December 31, 2020	$	23	$	(1)	$	(7)	$	(20)	$	(5)
Changes in other comprehensive (loss) income		(8)		1		—		(30)		(37)
Balance as of March 31, 2021	$	15	$	—	$	(7)	$	(50)	$	(42)

(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

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

11. STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

On February 28, 2022, the Company’s Board of Directors approved a stock repurchase program to acquire up to 200,000 shares of the Company’s outstanding common stock in the open market during the one-year period ending on February 28, 2023. As of March 31, 2022, the Company had repurchased 200,000 shares of its common stock under this program for $12 million. Following their repurchase, these 200,000 shares ceased to be outstanding shares of common stock and are now treated as authorized but unissued shares of common stock. As of March 31, 2022, the Company had no shares remaining for repurchase under the approved repurchase program.

During the three months ended March 31, 2021, the Company did not repurchase any shares of its common stock.

Stock Compensation Expense

During the three months ended March 31, 2022, the Company awarded 531,448 service-based restricted stock units with a weighted average grant date fair value per share of $72.21 as determined on the date of grant. Service-based restricted stock units typically vest ratably over three years provided that the participant is employed by the Company on each such vesting date.

During the three months ended March 31, 2022, the Company awarded 82,513 performance-based restricted stock units with pre-defined vesting criteria that permit a range from 0% to 150% to be earned. The fair market value of these awards is $72.42. If the performance targets are met, the restrictions will lapse (i.e., the awards will vest) with respect to the entire award on February 17, 2025, provided that the participant is employed by the Company on the vesting date.

For the three months ended March 31, 2022 and 2021, the Company recognized $7 million and $5 million in stock-based compensation expense, respectively.

Dividends

On January 27, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share on the Company’s common stock to stockholders of record at the close of business on February 11, 2022, resulting in a dividend payment of $10 million on March 18, 2022.

On April 28, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share on the Company’s common stock, payable on June 17, 2022, to stockholders of record at the close of business on May 13, 2022.

- 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI http://asc.fasb.org/topic&trid=2208762

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 15: 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(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

INCOME TAXES

3 Months Ended

Mar. 31, 2022

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

Provision for income taxes decreased $8 million, or 7%, to $91 million for the three months ended March 31, 2022, primarily driven by the decrease in Income from continuing operations before income taxes. The effective tax rate was 30.2% and 26.9% for the three months ended March 31, 2022 and March 31, 2021, respectively. The increase in the effective tax rate primarily related to discrete charges in the current period and an increase in nondeductible items over those in the prior year period.

The Company is under examination by the Internal Revenue Service as well as tax authorities in various states. The tax years under examination and open for examination vary by jurisdiction, but 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
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-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
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

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
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-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

3 Months Ended

Mar. 31, 2022

EARNINGS PER SHARE

EARNINGS PER SHARE

13. EARNINGS PER SHARE

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


	Three Months Ended March 31,
	2022		2021

	(in millions, except per share amounts)
Numerator:
Income from continuing operations	$	211	$	268
(Loss) income from discontinued operations, net of income taxes		(1)		18
Net income	$	210	$	286

Denominator:
Basic: Weighted average common stock		49.9		49.7
Weighted average effect of dilutive securities:
Add: net effect of dilutive unvested restricted stock awards ⁽¹⁾		0.1		0.1
Diluted		50.0		49.8

Basic EPS:
Income from continuing operations	$	4.23	$	5.39
(Loss) income from discontinued operations	$	(0.01)	$	0.37
Net income per share	$	4.22	$	5.76

Diluted EPS:
Income from continuing operations	$	4.21	$	5.38
(Loss) income from discontinued operations	$	(0.01)	$	0.36
Net income per share	$	4.20	$	5.74

(1)	For the three months ended March 31, 2022 and 2021, 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.

DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2022

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

14. 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, which 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 the Company’s common stock as of the close of business on the record date of October 27, 2021. The Company’s stockholders of record received one share of Loyalty Ventures common stock for every two and a half shares of the Company’s common stock. Following this distribution, Loyalty Ventures became an independent, publicly-traded company, in which the Company has retained a 19% ownership interest.

The Company accounts for its 19% ownership interest in Loyalty Ventures following the equity method of accounting. As of March 31, 2022, the carrying amount of the Company’s ownership interest in Loyalty Ventures, which investment totaled was $38 million, and is included in Other assets in the Consolidated Balance Sheet.

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 three months ended March 31, 2021:



(in millions)
Total interest income	$	—
Total interest expense ⁽¹⁾		3
Net interest income		(3)
Total non-interest income		176
Total non-interest expenses		145
Income before provision from income taxes		28
Provision for income taxes		10
Income from discontinued operations, net of income taxes	$	18

(1)	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 depreciation and amortization, and capital expenditures of the Company’s former LoyaltyOne segment for the three months ended March 31, 2021:


(in millions)
Depreciation and amortization	$	9
Capital expenditures	$	5

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies)	3 Months Ended
	Mar. 31, 2022
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
BASIS OF PRESENTATION	BASIS OF PRESENTATION The accompanying unaudited Condensed 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 presentation, in particular, as a result of the spinoff of its LoyaltyOne segment and its classification 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. The unaudited Condensed Consolidated Financial Statement should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022; if not significantly different, certain note disclosures included therein have been omitted from these unaudited Condensed Consolidated Financial Statements. The unaudited Condensed Consolidated Financial Statements included herein reflect all adjustments, which consist of normal, recurring adjustments that are, in the opinion of management, necessary to state fairly the results for the interim periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates and assumptions reflect the best judgement of management, but actual results could differ. The most significant of those estimates and assumptions relate to the Company’s Allowance for credit losses. The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. All intercompany transactions have been eliminated.
RECENTLY ISSUED ACCOUNTING STANDARDS	RECENTLY ISSUED ACCOUNTING STANDARDS In March 2022, the Financial Accounting Standards Board issued new accounting and disclosure guidance for troubled debt restructurings effective January 1, 2023, with early adoption permitted. Specifically, the new guidance eliminates the previous recognition and measurement guidance for troubled debt restructurings while enhancing the disclosure requirements for certain loan modifications, including requiring disclosure of gross charge-offs by year of loan origination. The Company is evaluating the new guidance and any impacts on its financial position, results of operations and regulatory risk-based capital, none of which are expected to be material, along with any anticipated impacts on its operational processes, controls and governance.
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 make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts. Other loans, which are primarily installment loans offered to 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. Primarily, 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 and ability.
Allowance for Credit Losses	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 March 31, 2022 and December 31, 2021, accrued interest and fees that have not yet been billed to cardholders were $228 million and $224 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 the Company, which are eliminated in consolidation. The Trusts are consolidated 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 investment securities consist of available-for-sale (AFS) securities, which are debt securities, U.S. Treasury bonds and mutual funds, as well as equity securities. These investments are carried at fair value on the Consolidated Balance Sheets within Investment securities. 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.

CREDIT CARD AND OTHER LOANS (Tables)

3 Months Ended

Mar. 31, 2022

CREDIT CARD AND OTHER LOANS

Schedule of components of credit card and other loans


	March 31,		December 31,
	2022		2021

	(in millions)
Credit card loans	$	16,651	$	17,217
Installment (other) loans		192		182
Total credit card and other loans ⁽¹⁾⁽²⁾		16,843		17,399
Less: Allowance for credit losses		(1,826)		(1,832)
Credit card and other loans, net	$	15,017	$	15,567

(1)	Includes $10.8 billion and $11.2 billion of credit card and other loans available to settle obligations of consolidated VIEs as of March 31, 2022 and December 31, 2021, respectively.

(2)	Includes $228 million and $224 million, of accrued interest and fees that have not yet been billed to cardholders as of March 31, 2022 and December 31, 2021, 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 March 31, 2022	$	241	$	190	$	435	$	866	$	15,709	$	16,575

As of December 31, 2021	$	262	$	186	$	401	$	849	$	16,284	$	17,133

(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

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Pre-modification

Post-modification

Pre-modification

Post-modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card loans

37,998

63,628



	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance

	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted	21,653	$	29	51,009	$	67

Schedule of composition of obligor credit quality


	Vantage
	March 31,						December 31,
	2022						2021
	661 or		601 to		600 or		661 or		601 to		600 or
	Higher		660		Less		Higher		660		Less
Credit card loans	61	%	27	%	12	%	62	%	26	%	12	%

ALLOWANCE FOR CREDIT LOSSES (Tables)

3 Months Ended

Mar. 31, 2022

ALLOWANCE FOR CREDIT LOSSES

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


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Beginning balance	$	1,832	$	2,008

Provision for credit losses ⁽¹⁾		193		33
Net principal charge-offs ⁽²⁾		(199)		(198)
Ending balance	$	1,826	$	1,843

(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 $43 million and $51 million for the three months ended March 31, 2022 and 2021, respectively.

SECURITIZATIONS (Tables)

3 Months Ended

Mar. 31, 2022

SECURITIZATIONS

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


	March 31,		December 31,
	2022		2021

	(in millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	10,771	$	11,215
Of which: principal amount of credit card loans 91 days or more past due	$	169	$	159

INVESTMENT SECURITIES (Tables)

3 Months Ended

Mar. 31, 2022

INVESTMENT SECURITIES

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


	March 31, 2022								December 31, 2021
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value

	(in millions)
AFS and equity securities	$	241	$	—	$	(8)	$	233	$	237	$	4	$	(2)	$	239
Total	$	241	$	—	$	(8)	$	233	$	237	$	4	$	(2)	$	239

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


	March 31, 2022
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
AFS debt securities	$	107	$	(5)	$	28	$	(3)	$	135	$	(8)
Total	$	107	$	(5)	$	28	$	(3)	$	135	$	(8)


	December 31, 2021
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(in millions)
AFS debt securities	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)
Total	$	57	$	(1)	$	15	$	(1)	$	72	$	(2)

DEPOSITS (Tables)

3 Months Ended

Mar. 31, 2022

DEPOSITS.

Schedule of Customer Deposits Based on Interest



	March 31,		December 31,
	2022		2021

	(in millions)
Interest-bearing	$	10,620	$	11,027
Non-interest-bearing (including cardholder credit balances)		26		—
Total deposits	$	10,646	$	11,027

Schedule of Customer Deposits by Deposit Type


	March 31,		December 31,
	2022		2021

	(in millions)
Savings accounts:
Direct-to-consumer	$	2,045	$	1,713
Wholesale		3,865		3,873
Certificates of deposit:
Direct-to-consumer		1,516		1,467
Wholesale		3,194		3,974
Cardholder credit balances		26		—
Total deposits	$	10,646	$	11,027

Schedule of Maturities of Certificates of Deposit

The scheduled maturities of certificates of deposit as of March 31, 2022 were as follows:



(in millions)
2022⁽¹⁾	$	2,603
2023		1,329
2024		648
2025		70
2026		48
Thereafter		12
Total certificates of deposit		4,710

(1)	The 2022 balance includes $6 million in unamortized debt issuance costs, which are associated with the entire portfolio of certificates of deposit.

- Definition

Tabular disclosure of type of deposit liability.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (e)

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(ii)

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (1)

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (1)

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (d)

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iv)

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (5)

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iii)

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (4)

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (c)

Reference 13: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (2)

Reference 14: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (3)

Reference 15: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)

+ Details

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

3 Months Ended

Mar. 31, 2022

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:


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Payment protection products	$	38	$	35
Loss from equity method investment		(12)		—
Other		2		—
Total other non-interest income	$	28	$	35

Components of Other non-interest expenses


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Payment protection products	$	38	$	35
Loss from equity method investment		(12)		—
Other		2		—
Total other non-interest income	$	28	$	35

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

FAIR VALUES OF FINANCIAL INSTRUMENTS

Schedule of estimated fair value of Company's financial instruments


	March 31, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in millions)
Financial assets
Credit card and other loans, net	$	15,017	$	17,308	$	15,567	$	17,989
Investment securities		233		233		239		239
Financial liabilities
Deposits		10,646		10,675		11,027		11,135
Debt issued by consolidated VIEs		4,816		4,820		5,453		5,467
Long-term and other debt		1,962		1,980		1,986		2,053

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


	March 31, 2022
	Total		Level 1		Level 2		Level 3

	(in millions)
Investment securities	$	233	$	46	$	187	$	—
Total assets measured at fair value	$	233	$	46	$	187	$	—


	December 31, 2021
	Total		Level 1		Level 2		Level 3

	(in millions)
Investment securities	$	239	$	48	$	191	$	—
Total assets measured at fair value	$	239	$	48	$	191	$	—

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


	March 31, 2022
	Fair Value		Level 1		Level 2		Level 3

	(in millions)
Financial assets:
Credit card and other loans, net	$	17,308	$	—	$	—	$	17,308
Total	$	17,308	$	—	$	—	$	17,308

Financial liabilities:
Deposits	$	10,675	$	—	$	10,675	$	—
Debt issued by consolidated VIEs		4,820		—		4,820		—
Long-term and other debt		1,980		—		1,980		—
Total	$	17,475	$	—	$	17,475	$	—


	December 31, 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	$	—

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENCIES.

Schedule of actual capital ratios and minimum ratios

The actual capital ratios and minimum ratios for each Bank, as well as the Combined Banks, as of March 31, 2022, 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 Leverage capital ratio ⁽¹⁾	19.4	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	22.5		4.5		6.5
Tier 1 capital ratio ⁽³⁾	22.5		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	23.8		8.0		10.0

Comenity Capital Bank
Tier 1 Leverage capital ratio ⁽¹⁾	17.2	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	19.3		4.5		6.5
Tier 1 capital ratio ⁽³⁾	19.3		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	20.7		8.0		10.0

Combined Banks
Tier 1 Leverage capital ratio ⁽¹⁾	18.2	%	4.0	%	5.0	%
Common Equity Tier 1 capital ratio ⁽²⁾	20.8		4.5		6.5
Tier 1 capital ratio ⁽³⁾	20.8		6.0		8.0
Total Risk-based capital ratio ⁽⁴⁾	22.1		8.0		10.0

(1)	The Tier 1 Leverage capital ratio represents tier 1 capital divided by total average assets, after certain adjustments.

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

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

(4)	The Total Risk-based capital ratio represents total capital divided by total risk-weighted assets.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Mar. 31, 2022

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

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


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2022	on Securities		Flow Hedges		Investment Hedge		Adjustments		Loss

	(in millions)
Balance as of December 31, 2021	$	1	$	—	$	—	$	(3)	$	(2)
Changes in other comprehensive loss		(7)		—		—		—		(7)
Balance as of March 31, 2022	$	(6)	$	—	$	—	$	(3)	$	(9)


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2021	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss

	(in millions)
Balance as of December 31, 2020	$	23	$	(1)	$	(7)	$	(20)	$	(5)
Changes in other comprehensive (loss) income		(8)		1		—		(30)		(37)
Balance as of March 31, 2021	$	15	$	—	$	(7)	$	(50)	$	(42)

(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.

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

EARNINGS PER SHARE

Schedule of computation of basic and diluted net income per share


	Three Months Ended March 31,
	2022		2021

	(in millions, except per share amounts)
Numerator:
Income from continuing operations	$	211	$	268
(Loss) income from discontinued operations, net of income taxes		(1)		18
Net income	$	210	$	286

Denominator:
Basic: Weighted average common stock		49.9		49.7
Weighted average effect of dilutive securities:
Add: net effect of dilutive unvested restricted stock awards ⁽¹⁾		0.1		0.1
Diluted		50.0		49.8

Basic EPS:
Income from continuing operations	$	4.23	$	5.39
(Loss) income from discontinued operations	$	(0.01)	$	0.37
Net income per share	$	4.22	$	5.76

Diluted EPS:
Income from continuing operations	$	4.21	$	5.38
(Loss) income from discontinued operations	$	(0.01)	$	0.36
Net income per share	$	4.20	$	5.74

(1)	For the three months ended March 31, 2022 and 2021, 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.

DISCONTINUED OPERATIONS (Tables)

3 Months Ended

Mar. 31, 2022

LoyaltyOne

Schedule of financial statement information for discontinued operations



(in millions)
Total interest income	$	—
Total interest expense ⁽¹⁾		3
Net interest income		(3)
Total non-interest income		176
Total non-interest expenses		145
Income before provision from income taxes		28
Provision for income taxes		10
Income from discontinued operations, net of income taxes	$	18

(1)	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.


(in millions)
Depreciation and amortization	$	9
Capital expenditures	$	5

- 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
-URI http://asc.fasb.org/extlink&oid=109226691&loc=SL51724579-110230

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-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
-Publisher FASB
-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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721659-107760

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4B
-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
-Section 50
-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
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-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
-SubTopic 20
-Section 50
-Paragraph 7
-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
-Paragraph 5A
-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

CREDIT CARD AND OTHER LOANS - Allowance for Loan Loss and Delinquencies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Receivables	$ 15,709		$ 16,284
Total credit card and other loans	16,843		17,399
Total credit card loans - available to settle obligations of consolidated VIEs	10,771		11,215
Unbilled Finance Charges	228	$ 224	224
Less: Credit card and other loans - restricted for securitization investors	10,771		11,215
Unbilled finance charges	228	224	224
Allowance for credit losses	(1,826)	$ (1,843)	(1,832)	$ (2,008)
Credit card and loan receivables, net	$ 15,017		15,567
Period an account becomes past due before a proprietary collection scoring algorithm automatically scores the risk of an account becoming further delinquent	30 days
Principal receivables balances contractually delinquent:
Re-aged accounts as percentage of total credit card and loan receivables	1.60%	2.80%
Modified Credit Card Receivables
Impaired credit card and loan receivables	$ 264		281
Allowance for loan loss on impaired credit card receivables	$ 88		$ 81
Maximum percentage of credit card receivables to total portfolio	3.00%		3.00%
Average recorded investment in impaired credit card receivables	$ 272	$ 482
Interest income on modified credit card receivables	$ 4	$ 9
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
Maximum
Modified Credit Card Receivables
Number of days after notification of creditor's bankruptcy or death when an account is charged-off	180 days
Consolidated Variable Interest Entities
Total credit card loans - available to settle obligations of consolidated VIEs	$ 10,771		$ 11,215
Less: Credit card and other loans - restricted for securitization investors	10,771		11,215
Credit card loans
Receivables	$ 16,651		17,217
Modified Credit Card Receivables
Maximum period of time temporary programs' concessions remain in place	12 months
Installment (other) loans
Receivables	$ 192		182
Allowance for credit losses	$ (15)		$ (14)
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

CREDIT CARD AND OTHER LOANS - Amortized Cost Basis Credit Card and Loan Receivables (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Receivables	$ 15,709	$ 16,284
Total	16,575	17,133
31 to 60 days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	241	262
61 to 90 days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	190	186
91 or more days delinquent
Financing Receivable, Past Due [Line Items]
Receivables	435	401
Total delinquent
Financing Receivable, Past Due [Line Items]
Receivables	$ 866	$ 849

- 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	3 Months Ended
	Mar. 31, 2022 USD ($) item	Mar. 31, 2021 USD ($) item
Troubled debt restructurings - credit card loans
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	37,998	63,628
Pre-modification Outstanding Balance	$ 56	$ 93
Post-modification Outstanding Balance	$ 56	$ 93
Troubled debt restructurings that subsequently defaulted
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	21,653	51,009
Outstanding Balance	$ 29	$ 67

CREDIT CARD AND OTHER LOANS - Credit Quality on Amortized Cost Basis (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Credit Quality
Receivables	$ 15,709	$ 16,284
Customer accounts as a percentage of total credit card loans balance for which a Vantage credit score is not available	0.10%	0.10%
Unused credit card lines available to cardholders	$ 112,000	$ 112,000
Installment (other) loans
Credit Quality
Receivables	$ 192	$ 182
Installment (other) loans \| FICO Score, From 660 and Above
Credit Quality
Percentage of total amortized cost basis of revolving loan receivables outstanding	85	84
Installment (other) loans \| FICO Score Below 660
Credit Quality
Percentage of total amortized cost basis of revolving loan receivables outstanding	15	16
Credit Card Receivable \| No Score \| Credit Score, from 661 or Higher
Credit Quality
Percentage of amortized cost basis of credit card receivables outstanding	61.00%	62.00%
Credit Card Receivable \| No Score \| Credit Score, From 601 to 660
Credit Quality
Percentage of amortized cost basis of credit card receivables outstanding	27.00%	26.00%
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	3 Months Ended
	Mar. 31, 2022 USD ($) item	Mar. 31, 2021 USD ($) item	Dec. 31, 2021 USD ($) item
Portfolio Held For Sale
Number of credit card portfolios held for sale \| item	0		0
Number of credit card portfolios sold \| item	0	0
Portfolio Acquisitions
Number of credit card portfolios acquired \| item	0	0
Securitized Credit Card and Loan Receivables
Total credit card loans - available to settle obligations of consolidated VIEs \| $	$ 10,771		$ 11,215
Of which: principal amount of credit card loans 91 days or more past due \| $	169		$ 159
Net charge-offs of securitized principal \| $	$ 116	$ 131
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	3 Months Ended
ALLOWANCE FOR CREDIT LOSSES (Details) $ in Millions	Mar. 31, 2022 USD ($) item	Mar. 31, 2021 USD ($)	Dec. 31, 2021 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	1,832	$ 2,008
Provision for credit losses	193	33
Net principal charge-offs	(199)	(198)
Balance at end of period	1,826	1,843
Recoveries	43	51
Actual charge-offs for unpaid interest and fees	136	131
Unbilled Finance Charges	228	$ 224	$ 224
Installment (other) loans
Allowance for Loan Loss
Balance at beginning of period	14
Balance at end of period	$ 15
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	3 Months Ended
SECURITIZATIONS (Details) - USD ($) $ in Millions	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Total credit card loans - available to settle obligations of consolidated VIEs	$ 10,771		$ 11,215
Of which: principal amount of credit card loans 91 days or more past due	169		$ 159
Net charge-offs of securitized principal	$ 116	$ 131
Minimum
Minimum interests requirement (as a percent)	4.00%
Maximum
Minimum interests requirement (as a percent)	10.00%

INVESTMENT SECURITIES (Details) - USD ($) $ in Millions	3 Months Ended
INVESTMENT SECURITIES (Details) - USD ($) $ in Millions	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Marketable Securities, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	$ 241		$ 237
Unrealized Gains			4
Unrealized Losses	(8)		(2)
Fair Value	233		239
Fair Value
Less than 12 months	107		57
12 Months or Greater	28		15
Total	135		72
Unrealized Losses
Less than 12 months	(5)		(1)
12 Months or Greater	(3)		(1)
Total	(8)		(2)
Estimated Fair Value
Gains or losses from the sale of investment securities	0	$ 0
AFS and equity securities
Marketable Securities, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	241		237
Unrealized Gains			4
Unrealized Losses	(8)		(2)
Fair Value	233		$ 239
Mortgage-backed securities
Amortized Cost
Mortgage-backed securities with no stated maturity	175
Estimated Fair Value
Mortgage-backed securities with no stated maturity	$ 167

DEPOSITS - Customer Deposits Based on Interest (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
DEPOSITS.
Interest-bearing	$ 10,620	$ 11,027
Non-interest-bearing (including cardholder credit balances)	26
Total deposits	$ 10,646	$ 11,027

DEPOSITS - Customer Deposits Based on Deposit Type (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Deposit Liability [Line Items]
Certificates of deposit	$ 4,710
Cardholder credit balances	26
Total deposits	10,646	$ 11,027
Direct-to-consumer
Deposit Liability [Line Items]
Savings accounts	2,045	1,713
Certificates of deposit	1,516	1,467
Wholesale
Deposit Liability [Line Items]
Savings accounts	3,865	3,873
Certificates of deposit	3,194	$ 3,974
Cardholder credit balances
Deposit Liability [Line Items]
Cardholder credit balances	$ 26

DEPOSITS - Maturities of Certificates of Deposit (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
DEPOSITS.
2022	$ 2,603
2023	1,329
2024	648
2025	70
2026	48
Thereafter	12
Deposits	4,710
Unamortized debt issuance costs	6
Certificates of deposit that exceeded applicable FDIC insurance limits which are generally $250,000 or more	$ 511	$ 500

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Other Noninterest Income [Abstract]
Payment protection products	$ 38	$ 35
Loss from equity method investment	(12)
Other	2
Total other non-interest income	28	35
Other Noninterest Expenses [Abstract]
Professional services and regulatory fees	31	31
Occupancy expense	6	7
Other	20	9
Total other non-interest expenses	$ 57	$ 47

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
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	15,017		$ 15,567
Financial liabilities
Deposits	10,675		11,135
Debt issued by consolidated variable interest entities	4,816		5,453
Non-recourse borrowings of consolidated securitization entities	4,820		5,467
Long-term and other debt	1,980		2,053
Total liabilities measured at fair value	17,475		18,655
Carrying Amount
Financial assets
Credit card and loan receivables, net	15,017		15,567
Investment securities	233		239
Financial liabilities
Deposits	10,646		11,027
Debt issued by consolidated variable interest entities	4,816		5,453
Long-term and other debt	1,962		1,986
Fair Value
Financial assets
Credit card and loan receivables, net	17,308		17,989
Investment securities	233		239
Financial liabilities
Deposits	10,675		11,135
Debt issued by consolidated variable interest entities	4,820		5,467
Long-term and other debt	$ 1,980		$ 2,053

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Assets disclosed at fair value
Total assets measured at fair value	$ 17,308	$ 17,989
Level 3
Assets disclosed at fair value
Total assets measured at fair value	17,308	17,989
Recurring
Assets disclosed at fair value
Investment securities	233	239
Total assets measured at fair value	233	239
Recurring \| Level 1
Assets disclosed at fair value
Investment securities	46	48
Total assets measured at fair value	46	48
Recurring \| Level 2
Assets disclosed at fair value
Investment securities	187	191
Total assets measured at fair value	$ 187	$ 191

FAIR VALUES OF FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Financial assets
Credit card and loan receivables, net	$ 17,308	$ 17,989
Total assets measured at fair value	17,308	17,989
Financial liabilities
Deposits	10,675	11,135
Debt issued by consolidated VIEs	4,820	5,467
Long-term and other debt	1,980	2,053
Total liabilities measured at fair value	17,475	18,655
Level 2
Financial liabilities
Deposits	10,675	11,135
Debt issued by consolidated VIEs	4,820	5,467
Long-term and other debt	1,980	2,053
Total liabilities measured at fair value	17,475	18,655
Level 3
Financial assets
Credit card and loan receivables, net	17,308	17,989
Total assets measured at fair value	$ 17,308	$ 17,989

FAIR VALUES OF FINANCIAL INSTRUMENTS - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
FAIR VALUES OF FINANCIAL INSTRUMENTS
Asset Impairment Charges	$ 0	$ 0

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 ($)	Dec. 31, 2020 USD ($)	Mar. 31, 2022
Comenity Bank
Tier 1 capital to average assets
Tier 1 Leverage capital ratio, Actual Ratio (as a percent)					19.4
Tier 1 Leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.0
Tier 1 Leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					5.0
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital ratio, Actual Ratio (as a percent)					22.5
Common Equity Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.50%
Common Equity Tier 1 capital ratio, 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 ratio, Actual Ratio (as a percent)					22.5
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					6.0
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					8.0
Total Risk-based capital ratio, Actual Ratio (as a percent)					23.8
Total Risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					8.0
Total Risk-based capital ratio, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent)					10.0
Comenity Capital Bank
Tier 1 capital to average assets
Tier 1 Leverage capital ratio, Actual Ratio (as a percent)					17.2
Tier 1 Leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.0
Tier 1 Leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					5.0
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital ratio, Actual Ratio (as a percent)					19.3
Common Equity Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.50%
Common Equity Tier 1 capital ratio, 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 ratio, Actual Ratio (as a percent)					19.3
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					6.0
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					8.0
Total Risk-based capital ratio, Actual Ratio (as a percent)					20.7
Total Risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					8.0
Total Risk-based capital ratio, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent)					10.0
Combined Banks
Tier 1 capital to average assets
Tier 1 Leverage capital ratio, Actual Ratio (as a percent)					18.2
Tier 1 Leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.0
Tier 1 Leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					5.0
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital ratio, Actual Ratio (as a percent)					20.8
Common Equity Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					4.50%
Common Equity Tier 1 capital ratio, 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 ratio, Actual Ratio (as a percent)					20.8
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					6.0
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)					8.0
Total Risk-based capital ratio, Actual Ratio (as a percent)					22.1
Total Risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes (as a percent)					8.0
Total Risk-based capital ratio, 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, payment		$ 75	$ 75

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Accumulated Other Comprehensive Income
Balance	$ 2,086	$ 1,521
Changes in other comprehensive income (loss)	(7)	(37)
Balance	2,268	1,764
Net Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income
Balance	1	23
Changes in other comprehensive income (loss)	(7)	(8)
Balance	(6)	15
Net Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income
Balance		(1)
Changes in other comprehensive income (loss)		1
Net Unrealized Gains (Losses) on Net Investment Hedge
Accumulated Other Comprehensive Income
Balance		(7)
Balance		(7)
Foreign Currency Translation Adjustment Gains
Accumulated Other Comprehensive Income
Balance	(3)	(20)
Changes in other comprehensive income (loss)		(30)
Balance	(3)	(50)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income
Balance	(2)	(5)
Changes in other comprehensive income (loss)	(7)	(37)
Balance	$ (9)	$ (42)

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=124509347&loc=SL7669619-108580

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=124431353&loc=SL124442407-227067

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=123467817&loc=d3e21463-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 17
-URI http://asc.fasb.org/extlink&oid=118261656&loc=d3e32136-110900

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=123367319&loc=SL114868664-224227

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 55
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=124507222&loc=d3e1436-108581

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 20
-URI http://asc.fasb.org/extlink&oid=118261656&loc=d3e32211-110900

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6450520&loc=d3e32583-110901

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=124431353&loc=SL124442411-227067

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=124509347&loc=SL7669625-108580

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 852
-SubTopic 10
-Section 55
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=84165509&loc=d3e56426-112766

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 4.E)
-URI http://asc.fasb.org/extlink&oid=122038336&loc=d3e74512-122707

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(31))
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(30))
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

+ Details

STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Feb. 28, 2022
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased			$ 200,000
Term of stock repurchase program	1 year
Number of shares repurchased	200,000	0
Total cost of shares repurchased	$ 12,000,000
Number of shares remaining under the repurchase plan	0

STOCKHOLDERS' EQUITY - Restricted Stock Unit Awards and Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
	Apr. 28, 2022	Mar. 18, 2022	Jan. 27, 2022	Mar. 31, 2022	Mar. 31, 2021
Dividends
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21		$ 0.21	$ 0.21	$ 0.21
Dividends declared				$ 10	$ 10
Dividends paid		$ 10		10	11
Stock-based compensation expense				7	5
Retained Earnings
Dividends
Dividends declared				$ 10	$ 10
Performance-based restricted stock unit awards
Number of Shares
Shares granted (in shares)				82,513
Weighted Average Fair Value
Weighted average grant-date fair value (in dollars per share)				$ 72.42
Dividends
Percentage of stock units on which restrictions will lapse in February 2025				100.00%
Service-based restricted stock unit awards
Number of Shares
Shares granted (in shares)				531,448
Weighted Average Fair Value
Weighted average grant-date fair value (in dollars per share)				$ 72.21
Stock Compensation Plans, Additional Disclosures
Award vesting period				3 years
Minimum \| Performance-based restricted stock unit awards
Dividends
Percentage of stock units to vest				0.00%
Maximum \| Performance-based restricted stock unit awards
Dividends
Percentage of stock units to vest				150.00%

INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended
INCOME TAXES (Details) - USD ($) $ in Millions	Mar. 31, 2022	Mar. 31, 2021
INCOME TAXES
Effective tax rate utilized (as a percent)	30.20%	26.90%
Decrease in provision for income taxes during the period	$ 8
Provision for income taxes	$ 91	$ 99
Decrease in income tax provision during the period (as a percent)	7.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Income from continuing operations	$ 211	$ 268
(Loss) income from discontinued operations, net of income taxes	(1)	18
Net income	$ 210	$ 286
Denominator:
Basic: Weighted average common stock	49.9	49.7
Weighted average effect of dilutive securities:
Add: net effect of dilutive unvested restricted stock awards (1) (in shares)	0.1	0.1
Diluted (in shares)	50.0	49.8
Basic EPS:
Income from continuing operations (in dollars per share)	$ 4.23	$ 5.39
(Loss) income from discontinued operations (in dollars per share)	(0.01)	0.37
Net income per share (in dollars per share)	4.22	5.76
Diluted EPS:
Income from continuing operations (in dollars per share)	4.21	5.38
(Loss) income from discontinued operations (in dollars per share)	(0.01)	0.36
Net income per share (in dollars per share)	$ 4.20	$ 5.74

DISCONTINUED OPERATIONS (Details) $ in Millions		3 Months Ended
DISCONTINUED OPERATIONS (Details) $ in Millions	Nov. 05, 2021	Mar. 31, 2021 USD ($)	Mar. 31, 2022 USD ($)
Loyalty Ventures
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest	19.00%		19.00%
Investment carrying amount			$ 38
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
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Total interest expense		$ 3
Net interest income		(3)
Total non-interest income		(176)
Total non-interest expenses		145
Income before provision from income taxes		28
Provision for income taxes		10
Income from discontinued operations, net of income taxes		18
Disposal Group, Including Discontinued Operation, Additional Disclosures
Mandatory payment per credit agreement		725
Depreciation and amortization		9
Capital expenditures		$ 5