0001101215-23-000190 | 10-Q | XBRL Viewer | Bread Financial Holdings INC

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ALLOWANCE FOR CREDIT LOSSES - Narrative (Details) - USD ($)	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Payments allocated to future purchase activity	$ 0
Allowance for credit loss	2,207,000,000	$ 2,207,000,000	$ 2,464,000,000	$ 2,073,000,000	$ 1,992,000,000	$ 1,832,000,000
BNPL
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for credit loss	$ 25,000,000		$ 21,000,000

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

INVESTMENT SECURITIES - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
INVESTMENT SECURITIES - Narrative (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Securities, Available-for-Sale [Line Items]
Gains or losses from the sale of AFS securities	$ 0	$ 0	$ 0	$ 0
Collateralized Mortgage-Backed Securities
Debt Securities, Available-for-Sale [Line Items]
Available-for-sale, mortgage-backed securities with no stated maturities, amortized cost	191,000,000		191,000,000
Available-for-sale, mortgage-backed securities with no stated maturities, fair value	$ 160,000,000		$ 160,000,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aa)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Name Accounting Standards Codification
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-Paragraph 2
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Name Accounting Standards Codification
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-Paragraph 2
-Subparagraph (d)
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Name Accounting Standards Codification
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-Paragraph 3
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 320
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-Section 50
-Paragraph 3
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

+ Details

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Assets disclosed at fair value
Investment securities	$ 240	$ 221
Total assets measured at fair value	240	221
Level 1
Assets disclosed at fair value
Investment securities	44	44
Total assets measured at fair value	44	44
Level 2
Assets disclosed at fair value
Investment securities	196	177
Total assets measured at fair value	196	177
Level 3
Assets disclosed at fair value
Investment securities	0	0
Total assets measured at fair value	$ 0	$ 0

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Other Noninterest Income [Abstract]
Payment protection products	$ 32	$ 39	$ 99	$ 116
Loss from equity method investment	0	(11)	(5)	(44)
Other	1	2	2	3
Total other non-interest income	33	30	96	75
Other Noninterest Expenses [Abstract]
Professional services and regulatory fees	29	33	101	102
Occupancy expense	5	5	16	17
Other	22	16	44	48
Total other non-interest expenses	$ 56	$ 54	$ 161	$ 167

UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200.0	200.0
Common stock, issued shares	49.3	49.9
Variable Interest Entity, Primary Beneficiary
Credit card and loan receivables restricted for securitization investors	$ 12,100	$ 15,383

INVESTMENT SECURITIES - Amortized Cost (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Amortized Cost	$ 191	$ 175
Unrealized Gains	0	0
Unrealized Losses	(31)	(23)
Fair Value	160	152
Equity Securities, cost	80	69
Equity securities, Unrealized Gains	0	0
Equity securities, Unrealized Loss	0	0
Equity securities, Fair Value	80	69
Available-for-sale and Equity Securities, Amortized Cost	271	244
Available-For-Sale And Equity Securities, Unrealized Gains	0	0
Available-For-Sale And Equity Securities, Unrealized Loss	(31)	(23)
Available-for-sale and Equity Securities, Fair Value	$ 240	$ 221

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted net income per share

The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions, except per share amounts)
Numerator
Income from continuing operations	$	173	$	134	$	693	$	358
(Loss) income from discontinued operations, net of income taxes	(2)		—		(18)		(1)
Net income	$	171	$	134	$	675	$	357

Denominator
Basic: Weighted average common stock	49.9		49.8		50.0		49.9
Weighted average effect of dilutive securities
Add: net effect of dilutive unvested restricted stock awards (1)	0.2		0.1		0.2		0.1
Diluted	50.1		49.9		50.2		50.0

Basic EPS
Income from continuing operations	$	3.47	$	2.69	$	13.85	$	7.17
(Loss) income from discontinued operations	$	(0.03)	$	—	$	(0.37)	$	(0.01)
Net income per share	$	3.44	$	2.69	$	13.48	$	7.16

Diluted EPS
Income from continuing operations	$	3.46	$	2.69	$	13.80	$	7.16
(Loss) income from discontinued operations	$	(0.04)	$	—	$	(0.36)	$	(0.01)
Net income per share	$	3.42	$	2.69	$	13.44	$	7.15

__________________________________

(1)For the three and nine months ended September 30, 2023 and 2022, 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.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Balance (in shares) at Dec. 31, 2021		49.9
Beginning balance at Dec. 31, 2021	$ 2,086	$ 1	$ 2,174	$ (87)	$ (2)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	357			357
Other comprehensive loss	(19)				(19)
Stock-based compensation	23		23
Repurchase of common stock (in shares)		(0.2)
Repurchase of common stock	(12)		(12)
Dividends and dividend equivalent rights declared	(32)			(32)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)		0.1
Issuance of shares to employees, net of shares withheld for employee taxes	(4)		(4)
Balance (in shares) at Sep. 30, 2022		49.8
Ending balance at Sep. 30, 2022	2,399	$ 1	2,181	238	(21)
Balance (in shares) at Jun. 30, 2022		49.8
Beginning balance at Jun. 30, 2022	2,275	$ 1	2,174	114	(14)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	134			134
Other comprehensive loss	(7)				(7)
Stock-based compensation	7		7
Dividends and dividend equivalent rights declared	(10)			(10)
Balance (in shares) at Sep. 30, 2022		49.8
Ending balance at Sep. 30, 2022	2,399	$ 1	2,181	238	(21)
Balance (in shares) at Dec. 31, 2022		49.9
Beginning balance at Dec. 31, 2022	2,265	$ 1	2,192	93	(21)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	675			675
Other comprehensive loss	(6)				(6)
Stock-based compensation	32		32
Capped call transactions for convertible senior notes due 2028	(30)		(30)
Repurchase of common stock (in shares)		(0.9)
Repurchase of common stock	(35)		(35)
Dividends and dividend equivalent rights declared	(33)			(33)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)		0.3
Issuance of shares to employees, net of shares withheld for employee taxes	(4)		(4)
Balance (in shares) at Sep. 30, 2023		49.3
Ending balance at Sep. 30, 2023	2,864	$ 1	2,155	735	(27)
Balance (in shares) at Jun. 30, 2023		50.1
Beginning balance at Jun. 30, 2023	2,736	$ 1	2,181	574	(20)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	171			171
Other comprehensive loss	(7)				(7)
Stock-based compensation	$ 10		10
Repurchase of common stock (in shares)	(0.9)	(0.9)
Repurchase of common stock	$ (35)		(35)
Dividends and dividend equivalent rights declared	(10)			(10)
Issuance of shares to employees, net of shares withheld for employee taxes (in shares)		0.1
Issuance of shares to employees, net of shares withheld for employee taxes	(1)		(1)
Balance (in shares) at Sep. 30, 2023		49.3
Ending balance at Sep. 30, 2023	$ 2,864	$ 1	$ 2,155	$ 735	$ (27)

UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 3,380	$ 3,891
Credit card and other loans
Total credit card and other loans (includes loans available to settle obligations of consolidated variable interest entities September 30, 2023, $12,100; December 31, 2022, $15,383, respectively)	17,922	21,365
Allowance for credit losses	(2,207)	(2,464)
Credit card and other loans, net	15,715	18,901
Investment securities	240	221
Property and equipment, net	160	195
Goodwill and intangible assets, net	771	799
Other assets	1,342	1,400
Total assets	21,608	25,407
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	13,268	13,826
Debt issued by consolidated variable interest entities	2,848	6,115
Long-term and other debt	1,375	1,892
Other liabilities	1,253	1,309
Total liabilities	18,744	23,142
Commitments and contingencies (Note 10)
Stockholders’ equity
Common stock, $0.01 par value; authorized, 200.0 million shares; issued, 49.3 million shares as of September 30, 2023 and 49.9 million shares as of December 31, 2022, respectively.	1	1
Additional paid-in capital	2,155	2,192
Retained earnings	735	93
Accumulated other comprehensive loss	(27)	(21)
Total stockholders’ equity	2,864	2,265
Total liabilities and stockholders’ equity	$ 21,608	$ 25,407

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21	$ 0.21	$ 0.63	$ 0.63

STOCKHOLDERS' EQUITY - Dividends (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Oct. 26, 2023
Stockholders' Equity Note [Abstract]
Dividends paid	$ 11	$ 32	$ 32
Subsequent Event
Subsequent Event [Line Items]
Cash dividend (usd per share)				$ 0.21

FAIR VALUES OF FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Financial assets
Credit card and other loans, net	$ 18,048	$ 21,328
Total assets measured at fair value	18,048	21,328
Financial liabilities
Deposits	13,164	13,731
Debt issued by consolidated VIEs	2,844	6,115
Long-term and other debt	1,392	1,759
Total liabilities measured at fair value	17,400	21,605
Level 1
Financial assets
Credit card and other loans, net	0	0
Total assets measured at fair value	0	0
Financial liabilities
Deposits	0	0
Debt issued by consolidated VIEs	0	0
Long-term and other debt	0	0
Total liabilities measured at fair value	0	0
Level 2
Financial assets
Credit card and other loans, net	0	0
Total assets measured at fair value	0	0
Financial liabilities
Deposits	13,164	13,731
Debt issued by consolidated VIEs	2,844	6,115
Long-term and other debt	1,392	1,759
Total liabilities measured at fair value	17,400	21,605
Level 3
Financial assets
Credit card and other loans, net	18,048	21,328
Total assets measured at fair value	18,048	21,328
Financial liabilities
Deposits	0	0
Debt issued by consolidated VIEs	0	0
Long-term and other debt	0	0
Total liabilities measured at fair value	$ 0	$ 0

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

9 Months Ended

Sep. 30, 2023

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

The following table provides the components of Other non-interest income for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Payment protection products	$	32	$	39	$	99	$	116
Loss from equity method investment	—		(11)		(5)		(44)
Other	1		2		2		3
Total other non-interest income	$	33	$	30	$	96	$	75

The following table provides the components of Other non-interest expenses for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Professional services and regulatory fees	$	29	$	33	$	101	$	102
Occupancy expense	5		5		16		17
Other (1)	22		16		44		48
Total other non-interest expenses	$	56	$	54	$	161	$	167

__________________________________

(1)Primarily related to costs associated with various other individually insignificant operating activities; also includes the net gain on debt extinguishment for the nine months ended September 30, 2023.

SECURITIZATIONS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
SECURITIZATIONS (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Offsetting Assets [Line Items]
Of which: principal amount of credit card loans 91 days or more past due	$ 296		$ 296		$ 307
Net principal losses of securitized credit card loans	179	$ 123	592	$ 363
Variable Interest Entity, Primary Beneficiary
Offsetting Assets [Line Items]
Total credit card loans - available to settle obligations of consolidated VIEs	$ 12,100		$ 12,100		$ 15,383
Minimum
Offsetting Assets [Line Items]
Minimum interests requirement			4.00%
Maximum
Offsetting Assets [Line Items]
Minimum interests requirement			10.00%

SECURITIZATIONS

9 Months Ended

Sep. 30, 2023

SECURITIZATIONS

SECURITIZATIONS

We account 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.

We regularly securitize the majority of our credit card loans through the transfer of those loans to one of our Trusts. We perform the decision making for the Trusts, as well as servicing the cardholder accounts that generate the credit card loans held by the Trusts. In our capacity as a servicer, we administer the loans, collect payments and charge-off uncollectible balances. Servicing fees are earned by a subsidiary, which are eliminated in consolidation.

The Trusts are consolidated VIEs because they have insufficient equity at risk to finance their activities – the issuance of debt securities and notes, collateralized by the underlying credit card loans. Because we perform the decision making and servicing for the Trusts, we have the power to direct the activities that most significantly impact the Trusts’ economic performance (the collection of the underlying credit card loans). In addition, we hold all of the variable interests in the Trusts, with the exception of the liabilities held by third-parties. These variable interests provide us 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, we are deemed to be the primary beneficiary of the Trusts and therefore consolidate the Trusts.

The Trusts issue debt securities and notes, which are non-recourse to us. 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 our securitized credit card loans, during the initial phase of a securitization reinvestment period, we generally retain 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.

We are required to maintain minimum interests in our 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 and nine months ended September 30, 2023 and 2022, no such triggering events occurred.

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


	September 30, 2023		December 31, 2022
(Millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	12,100	$	15,383
Of which: principal amount of credit card loans 91 days or more past due	$	296	$	307


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Net principal losses of securitized credit card loans	$	179	$	123	$	592	$	363

DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2023

Other Liabilities Disclosure [Abstract]

Deposit by type

Deposits were categorized as interest-bearing or non-interest-bearing as follows, as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
(Millions)
Interest-bearing	$	13,244	$	13,787
Non-interest-bearing (including cardholder credit balances)	24		39
Total deposits	$	13,268	$	13,826

Deposits by deposit type as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023		December 31, 2022
(Millions)
Savings accounts
Direct-to-consumer (retail)	$	2,814	$	2,782
Wholesale	3,746		3,954
Certificates of deposit
Direct-to-consumer (retail)	3,284		2,684
Wholesale	3,400		4,367
Cardholder credit balances	24		39
Total deposits	$	13,268	$	13,826

Time deposit maturities

The scheduled maturities of certificates of deposit were as follows as of September 30, 2023:


(Millions)
2023 (1)	$	505
2024	3,894
2025	1,095
2026	411
2027	634
Thereafter	145
Total certificates of deposit	$	6,684

__________________________________

(1)The 2023 balance includes $8 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
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Reference 14: http://www.xbrl.org/2009/role/commonPracticeRef
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iii)
-Publisher SEC

Reference 15: http://www.xbrl.org/2009/role/commonPracticeRef
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iv)
-Publisher SEC

+ Details

CREDIT CARD AND OTHER LOANS - Troubled Debt Restructurings (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($) loan	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($) loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Interest income on modified credit card receivables		$ 4,000,000		$ 11,000,000
Consumer Portfolio Segment \| Troubled debt restructurings – credit card loans
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Restructurings \| loan		37,363		107,577
Pre-modification Outstanding Balance		$ 52,000,000		$ 154,000,000
Post-modification Outstanding Balance		$ 52,000,000		$ 154,000,000
Consumer Portfolio Segment \| Troubled debt restructurings that subsequently defaulted
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Restructurings	4,047	11,511	6,567	51,201
Troubled debt restructurings that subsequently defaulted	$ 7,000,000	$ 16,000,000	$ 11,000,000	$ 70,000,000

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Oct. 20, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
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		49,330,625
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001101215
Amendment Flag	false

INCOME TAXES (Details)	3 Months Ended		9 Months Ended
INCOME TAXES (Details)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	23.00%	28.90%	27.10%	29.50%

DEPOSITS - Interest and Non-Interest Bearing (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Other Liabilities Disclosure [Abstract]
Interest-bearing	$ 13,244	$ 13,787
Non-interest-bearing (including cardholder credit balances)	24	39
Total deposits	$ 13,268	$ 13,826

INVESTMENT SECURITIES - Continuous Loss Position (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Less than 12 months, Fair Value	$ 27	$ 95
Less than 12 months, Unrealized Losses	(2)	(9)
12 Months or Greater, Fair Value	133	57
12 Months or Greater, Unrealized Losses	(29)	(14)
Fair Value	160	152
Unrealized Losses	$ (31)	$ (23)

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

9 Months Ended

Sep. 30, 2023

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

Components of other non-interest income

The following table provides the components of Other non-interest income for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Payment protection products	$	32	$	39	$	99	$	116
Loss from equity method investment	—		(11)		(5)		(44)
Other	1		2		2		3
Total other non-interest income	$	33	$	30	$	96	$	75

Components of other non-interest expenses

The following table provides the components of Other non-interest expenses for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Professional services and regulatory fees	$	29	$	33	$	101	$	102
Occupancy expense	5		5		16		17
Other (1)	22		16		44		48
Total other non-interest expenses	$	56	$	54	$	161	$	167

__________________________________

CREDIT CARD AND OTHER LOANS - Credit Quality on Amortized Cost Basis (Details) - Credit card loans - No Score	Sep. 30, 2023	Dec. 31, 2022
661 or Higher
Financing Receivable, Credit Quality Indicator [Line Items]
Credit card loans	57.00%	62.00%
601 to 660
Financing Receivable, Credit Quality Indicator [Line Items]
Credit card loans	27.00%	26.00%
600 or Lower
Financing Receivable, Credit Quality Indicator [Line Items]
Credit card loans	16.00%	12.00%

CREDIT CARD AND OTHER LOANS - Amortized Cost Basis Credit Card and Loan Receivables (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	$ 17,561	$ 21,031
Unbilled to cardholders	341	307
Total
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	1,396	1,472
31 to 60 Days Past Due
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	382	444
61 to 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	292	296
91 or more Days Past Due
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	722	732
Total Current
Financing Receivable, Past Due [Line Items]
Total credit card and other loans	$ 16,165	$ 19,559

- Definition

Amortized cost, before allowance for credit loss, of financing receivable. Excludes financing receivable covered under loss sharing agreement and net investment in lease.

+ References

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-Section 55
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-Number 229
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-Subparagraph (1)
-Publisher SEC

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Name Regulation S-K (SK)
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Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Name Regulation S-K (SK)
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-Name Accounting Standards Codification
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+ Details

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Basic earnings (losses) per share (EPS) is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of stock options, unvested restricted stock awards, or other dilutive securities. Diluted EPS is based on the weighted average number of common and potentially dilutive common shares (dilutive stock options, unvested restricted stock awards and other dilutive securities outstanding during the year) pursuant to the Treasury Stock method.

The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions, except per share amounts)
Numerator
Income from continuing operations	$	173	$	134	$	693	$	358
(Loss) income from discontinued operations, net of income taxes	(2)		—		(18)		(1)
Net income	$	171	$	134	$	675	$	357

Denominator
Basic: Weighted average common stock	49.9		49.8		50.0		49.9
Weighted average effect of dilutive securities
Add: net effect of dilutive unvested restricted stock awards (1)	0.2		0.1		0.2		0.1
Diluted	50.1		49.9		50.2		50.0

Basic EPS
Income from continuing operations	$	3.47	$	2.69	$	13.85	$	7.17
(Loss) income from discontinued operations	$	(0.03)	$	—	$	(0.37)	$	(0.01)
Net income per share	$	3.44	$	2.69	$	13.48	$	7.16

Diluted EPS
Income from continuing operations	$	3.46	$	2.69	$	13.80	$	7.16
(Loss) income from discontinued operations	$	(0.04)	$	—	$	(0.36)	$	(0.01)
Net income per share	$	3.42	$	2.69	$	13.44	$	7.15

__________________________________

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION These unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 28, 2023. If not significantly different, certain note disclosures included therein have been omitted from these unaudited Consolidated Financial Statements. The unaudited 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. The unaudited Consolidated Financial Statements also include amounts that relate to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. Such amounts have been classified within Discontinued operations and primarily relate to the after-tax impact of contractual indemnification and tax-related matters. For additional information refer to Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. 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 Allowance for credit losses. The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and all subsidiaries in which we have a controlling financial interest. All intercompany transactions have been eliminated.
RECENTLY ADOPTED ACCOUNTING STANDARDS AND RECENTLY ISSUED ACCOUNTING STANDARDS	RECENTLY ADOPTED ACCOUNTING STANDARDS In March 2022, the Financial Accounting Standards Board (FASB) 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 and write-offs. Effective January 1, 2023 we adopted the guidance, with no significant impact on our results of operations, financial position, regulatory risk-based capital, or on our operational processes, controls and governance in support of the new guidance. RECENTLY ISSUED ACCOUNTING STANDARDS The recently issued accounting standards from our standard setters e.g., the FASB, relate to topics that are outside our industry or are otherwise not impactful on our results of operations, financial position, cash flows, or disclosures related thereto.
CREDIT CARD AND OTHER LOANS	Our payment and lending solutions result in the generation of Credit card and other loans, which are recorded at the time a borrower enters into a point-of-sale transaction with a merchant. Credit card loans represent revolving lines of credit and have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new information about the cardholder, in accordance with applicable regulations and the governing terms and conditions. Cardholders choosing to make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts. Other loans, which consist of BNPL products such as installment loans and our “split-pay” offerings, 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 include principal and any related accrued interest and fees and are presented on the Consolidated Balance Sheets net of the Allowance for credit losses. We continue to accrue interest and fee income on all accounts, except in limited circumstances, until the related balance and all related interest and fees are paid or charged-off.We generally classify our Credit card and other loans as held for investment. We sell a majority of our Credit card loans originated by Comenity Bank (CB) and by Comenity Capital Bank (CCB), which together are referred to herein as the “Banks”, to certain of our master trusts (the Trusts), which are 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 we have the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, we consider the average life and homogenous nature of our Credit card and other loans. In assessing whether our Credit card and other loans continue to be held for investment, we also consider capital levels and scheduled maturities of funding instruments used. The assertion regarding the intent and ability to hold Credit card and other loans for the foreseeable future can be made with a high degree of certainty given the maturity distribution of our direct-to-consumer (retail) deposits and other funding instruments; the demonstrated ability to replace maturing time-based deposits and other borrowings with new deposits or borrowings; and historic payment activity on Credit card and other loans. Due to the homogenous nature of our Credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. From time to time certain Credit card loans are classified as held for sale, as determined on a brand partner portfolio basis. We carry these assets at the lower of aggregate cost or fair value and continue to recognize finance charges on an accrual basis. Cash flows associated with Credit card and other loans originated or purchased for investment are classified as Cash flows from investing activities, regardless of any subsequent change in intent and ability.
ALLOWANCE FOR CREDIT LOSSES	The Allowance for credit losses is an estimate of expected credit losses, measured over the estimated life of our 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 credit reserving methodology referred to as the Current Expected Credit Loss (CECL) model is significantly influenced by the composition, characteristics and quality of our 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. Principal losses, net of recoveries are deducted from the Allowance. Principal losses 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 our 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, to determine expected credit performance. Our quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. We consider 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, we also incorporate 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 our best estimate of current expected credit losses. Credit Card Loans We use a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. We have evaluated multiple risk characteristics across our credit card loans portfolio, and determined delinquency status and overall credit quality to be the most significant characteristics for estimating expected credit losses. To estimate our Allowance for credit losses, we segment our credit card loans on the basis of delinquency status, credit quality risk score and product. 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 our Credit card loans, payments were applied to the measurement date balance with no payments allocated to future purchase activity. We use a combination of First In First Out and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) methodologies to model balance paydown.
SECURITIZATIONS	We account 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. We regularly securitize the majority of our credit card loans through the transfer of those loans to one of our Trusts. We perform the decision making for the Trusts, as well as servicing the cardholder accounts that generate the credit card loans held by the Trusts. In our capacity as a servicer, we administer the loans, collect payments and charge-off uncollectible balances. Servicing fees are earned by a subsidiary, which are eliminated in consolidation. The Trusts are consolidated VIEs because they have insufficient equity at risk to finance their activities – the issuance of debt securities and notes, collateralized by the underlying credit card loans. Because we perform the decision making and servicing for the Trusts, we have the power to direct the activities that most significantly impact the Trusts’ economic performance (the collection of the underlying credit card loans). In addition, we hold all of the variable interests in the Trusts, with the exception of the liabilities held by third-parties. These variable interests provide us 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, we are deemed to be the primary beneficiary of the Trusts and therefore consolidate the Trusts. The Trusts issue debt securities and notes, which are non-recourse to us. 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 our securitized credit card loans, during the initial phase of a securitization reinvestment period, we generally retain 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.
INVESTMENT SECURITIES	Investment securities primarily consist of available-for-sale (AFS) debt securities, including both mortgage-backed securities and mutual funds. We also hold equity securities within our investment securities portfolio. Collectively, 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, any estimated credit loss would be recognized in the Consolidated Statements of Income by establishing, or adjusting an existing allowance for those credit losses. We did not have any such credit losses for the periods presented. Any unrealized gains, or any portion of an AFS debt security’s non-credit-related unrealized losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We typically invest 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 investment securities, using the specific identification method. The table below reflects unrealized gains and losses as of September 30, 2023 and December 31, 2022, respectively:

- Definition

Disclosure of accounting policy for financing receivable.

+ References + Details

- Definition

Disclosure of accounting policy for investment in financial asset.

+ References + Details

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 2,736	$ 2,275	$ 2,265	$ 2,086
Changes in other comprehensive loss	(7)	(7)	(6)	(19)
Ending balance	2,864	2,399	2,864	2,399
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(20)	(14)	(21)	(2)
Ending balance	(27)	(21)	(27)	(21)
Net Unrealized Losses on AFS Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(17)	(11)	(18)	1
Changes in other comprehensive loss	(7)	(7)	(6)	(19)
Ending balance	(24)	(18)	(24)	(18)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(3)	(3)	(3)	(3)
Changes in other comprehensive loss	0	0	0	0
Ending balance	$ (3)	$ (3)	$ (3)	$ (3)

- Definition

Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

+ References

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+ Details

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 171	$ 675	$ 357
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses	304	747	902
Depreciation and amortization		92	80
Deferred income taxes		(35)	(137)
Non-cash stock compensation		32	24
Amortization of deferred financing costs		20	18
Amortization of deferred origination costs		67	64
Gain on portfolio sale	0	(230)	0
Change in other operating assets and liabilities
Change in other assets		38	(25)
Change in other liabilities		(56)	11
Other		20	57
Net cash provided by operating activities		1,370	1,351
CASH FLOWS FROM INVESTING ACTIVITIES
Change in credit card and other loans		217	(1,171)
Proceeds from sale of credit card loan portfolio		2,499	0
Purchase of credit card loan portfolio		(81)	(249)
Net purchase of investment securities		(29)	(10)
Other, including capital expenditures		(27)	(58)
Net cash provided by (used in) investing activities		2,579	(1,488)
CASH FLOWS FROM FINANCING ACTIVITIES
Unsecured borrowings under debt agreements		801	218
Repayments/maturities of unsecured borrowings under debt agreements		(1,299)	(294)
Debt issued by consolidated variable interest entities		1,517	1,723
Repayments/maturities of debt issued by consolidated variable interest entities		(4,782)	(3,162)
Net (decrease) increase in deposits		(559)	1,395
Payment of deferred financing costs		(50)	(10)
Payment for capped call transactions		(39)	0
Dividends paid	(11)	(32)	(32)
Repurchase of common stock		(35)	(12)
Other		(3)	(4)
Net cash used in financing activities		(4,481)	(178)
Change in cash, cash equivalents and restricted cash		(532)	(315)
Cash, cash equivalents and restricted cash at beginning of period		3,927	3,923
Cash, cash equivalents and restricted cash at end of period	3,395	3,395	3,608
Cash and cash equivalents reconciliation
Cash and cash equivalents	3,380	3,380	3,583
Restricted cash included within Other assets	15	15	25
Total cash, cash equivalents and restricted cash	$ 3,395	$ 3,395	$ 3,608

DEPOSITS - Deposits by Type (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Deposit Liability [Line Items]
Certificates of deposit	$ 6,684
Non-interest-bearing (including cardholder credit balances)	24	$ 39
Deposits	13,268	13,826
Direct-to-consumer (retail)
Deposit Liability [Line Items]
Savings accounts	2,814	2,782
Certificates of deposit	3,284	2,684
Wholesale
Deposit Liability [Line Items]
Savings accounts	3,746	3,954
Certificates of deposit	3,400	4,367
Cardholder credit balances
Deposit Liability [Line Items]
Non-interest-bearing (including cardholder credit balances)	$ 24	$ 39

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of estimated fair value of Company's financial instruments

The following table summarizes the carrying values and fair values of our financial assets and financial liabilities:


	September 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
(Millions)
Financial assets
Credit card and other loans, net	$	15,715	$	18,048	$	18,901	$	21,328
Investment securities	240		240		221		221
Financial liabilities
Deposits	13,268		13,164		13,826		13,731
Debt issued by consolidated VIEs	2,848		2,844		6,115		6,115
Long-term and other debt	1,375		1,392		1,892		1,759

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

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, categorized by the fair value hierarchy described in the preceding paragraphs:


	September 30, 2023
	Total		Level 1		Level 2		Level 3
(Millions)
Investment securities	$	240	$	44	$	196	$	—
Total assets measured at fair value	$	240	$	44	$	196	$	—


	December 31, 2022
	Total		Level 1		Level 2		Level 3
(Millions)
Investment securities	$	221	$	44	$	177	$	—
Total assets measured at fair value	$	221	$	44	$	177	$	—

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

The following tables summarize 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 September 30, 2023 and December 31, 2022, respectively. The fair values of these financial instruments are estimates as of those dates, and require management’s judgment; therefore, these fair value estimates may not be indicative of future fair values, nor can our fair value be estimated by aggregating all of the amounts presented.


	September 30, 2023
	Fair Value		Level 1		Level 2		Level 3
(Millions)
Financial assets
Credit card and other loans, net	$	18,048	$	—	$	—	$	18,048
Total	$	18,048	$	—	$	—	$	18,048

Financial liabilities
Deposits	$	13,164	$	—	$	13,164	$	—
Debt issued by consolidated VIEs	2,844		—		2,844		—
Long-term and other debt	1,392		—		1,392		—
Total	$	17,400	$	—	$	17,400	$	—


	December 31, 2022
	Fair Value		Level 1		Level 2		Level 3
(Millions)
Financial assets
Credit card and other loans, net	$	21,328	$	—	$	—	$	21,328
Total	$	21,328	$	—	$	—	$	21,328

Financial liabilities
Deposits	$	13,731	$	—	$	13,731	$	—
Debt issued by consolidated VIEs	6,115		—		6,115		—
Long-term and other debt	1,759		—		1,759		—
Total	$	21,605	$	—	$	21,605	$	—

CREDIT CARD AND OTHER LOANS - Narrative (Details) $ in Millions	1 Months Ended		3 Months Ended		9 Months Ended
	Oct. 31, 2023 USD ($)	Feb. 28, 2023 USD ($)	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) loan
Financing Receivable, Allowance for Credit Loss [Line Items]
Re-aged accounts as percentage of total credit card and loan receivables			2.80%	1.40%	2.70%	1.50%
Number of days a loan is contractually past due before resulting in charge-off					30 days
Delinquency rate			6.30%		6.30%		5.50%
Actual charge-offs for unpaid interest and fees			$ 204	$ 145	$ 689	$ 429
Net principal loss rate			6.90%	5.00%	7.30%	5.10%
Percentage of financing receivable outstanding			0.10%		0.10%		0.60%
Total credit card and other loans			$ 17,561		$ 17,561		$ 21,031
Interest income on modified credit card receivables				$ 4		$ 11
Unused credit card lines available to cardholders			$ 109,000		$ 109,000		$ 128,000
Number of credit card portfolios held for sale \| loan			0		0		0
Proceeds from sale of credit card loan portfolio					$ 2,499	0
Gain on portfolio sale			$ 0	$ 0	230	$ 0
Term or Payment Extensions and Repayment Plans
Financing Receivable, Allowance for Credit Loss [Line Items]
Maximum percentage of credit card receivables to total portfolio				2.00%		2.00%
Impaired credit card and loan receivables				$ 248		$ 248
Allowance for credit loss on TDRs				62		62
Average recorded investment in impaired credit card receivables				$ 248		$ 259
BJs Wholesale Club (BJs)
Financing Receivable, Allowance for Credit Loss [Line Items]
Total credit card and other loans		$ 2,300
Proceeds from sale of credit card loan portfolio		2,500
Gain on portfolio sale		$ 230
BNPL (other) loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Total credit card and other loans			$ 306		$ 306		$ 299
BNPL (other) loans \| FICO Score, From 660 and Above
Financing Receivable, Allowance for Credit Loss [Line Items]
Percentage of total amortized cost basis of revolving loan receivables outstanding			0.83		0.83		0.86
BNPL (other) loans \| FICO Score Below 660
Financing Receivable, Allowance for Credit Loss [Line Items]
Percentage of total amortized cost basis of revolving loan receivables outstanding			0.17		0.17		0.14
Credit card loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Maximum period of time temporary programs' concessions remain in place					12 months
Credit card loans \| Subsequent Event
Financing Receivable, Allowance for Credit Loss [Line Items]
Payments to acquire loans receivable	$ 390

BORROWINGS OF LONG-TERM AND OTHER DEBT (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of debt

Long-term and other debt consisted of the following as of September 30, 2023 and December 31, 2022:


Description	September 30, 2023		December 31, 2022		Contractual Maturities	Interest Rates
(Millions, except percentages)
Long-term and other debt:
2023 revolving line of credit	$	—	$	—	June 2026	(1)
2023 term loans	298		—		June 2026	7.40%
2017 revolving line of credit	—		—		—	—
2017 term loans	—		556		—	—
Convertible senior notes due 2028	316		—		June 2028	4.25%
Senior notes due 2024	285		850		December 2024	4.75%
Senior notes due 2026	500		500		January 2026	7.00%
Subtotal	1,399		1,906
Less: Unamortized debt issuance costs	24		14
Total long-term and other debt	$	1,375	$	1,892

Debt issued by consolidated VIEs:
Fixed rate asset-backed term note securities	$	350	$	—	May 2026	5.02%
Conduit asset-backed securities	2,500		6,115		Various – Oct. 2024 to Sep. 2025	(2)
Subtotal	2,850		6,115
Less: Unamortized debt issuance costs	2		—
Total debt issued by consolidated VIEs	$	2,848	$	6,115

Total borrowings of long-term and other debt	$	4,223	$	8,007

______________________________

(1)The interest rate is based upon the Secured Overnight Financing Rate (SOFR) plus an applicable margin.

(2)The interest rate is based upon SOFR, or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. As of September 30, 2023, the interest rates ranged from 6.37% to 6.53% with a weighted average rate of 6.41%. As of December 31, 2022, the interest rates ranged from 5.08% to 5.93% with a weighted average rate of 5.38%.

DEPOSITS - Maturity of Deposits (Details) $ in Millions	Sep. 30, 2023 USD ($)
Other Liabilities [Abstract]
2023	$ 505
2024	3,894
2025	1,095
2026	411
2027	634
Thereafter	145
Total certificates of deposit	6,684
Time deposits, unamortized debt discount	$ 8

CREDIT CARD AND OTHER LOANS (Tables)

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Schedule of components of credit card and other loans

The following table presents Credit card and other loans, as of September 30, 2023 and December 31, 2022, respectively:


	September 30, 2023		December 31, 2022
(Millions)
Credit card loans	$	17,616	$	21,065
BNPL (other) loans	306		300
Total credit card and other loans (1)(2)	17,922		21,365
Less: Allowance for credit losses	(2,207)		(2,464)
Credit card and other loans, net	$	15,715	$	18,901

__________________________________

(1)Includes $12.1 billion and $15.4 billion of Credit card and other loans available to settle obligations of consolidated VIEs as of September 30, 2023 and December 31, 2022, respectively.

(2)Includes $341 million and $307 million, of accrued interest and fees that have not yet been billed to cardholders as of September 30, 2023 and December 31, 2022, respectively.

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

The following table presents the delinquency trends of our 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 Past Due		61 to 90 Days Past Due		91 or more Days Past Due		Total		Total Current		Total
(Millions)
As of September 30, 2023	$	382	$	292	$	722	$	1,396	$	16,165	$	17,561

As of December 31, 2022	$	444	$	296	$	732	$	1,472	$	19,559	$	21,031

__________________________________

(1)BNPL loan delinquencies have been included with credit card loan delinquencies in the table above, as amounts were insignificant as of each period presented. As permitted by GAAP, we exclude unbilled finance charges and fees from our amortized cost basis of Credit card and other loans. As of September 30, 2023 and December 31, 2022, accrued interest and fees that have not yet been billed to cardholders were $341 million and $307 million, respectively, included in Credit card and other loans on the Consolidated Balance Sheets.

The following table presents the performance of our credit card loans that were modified on or after January 1, 2023 and remain in a Loan Modification program as of September 30, 2023:


	Aging Analysis of Delinquent Amortized Cost Loan Modifications - Credit Card Loans
	31 to 60 Days Past Due		61 to 90 Days Past Due		91 or more Days Past Due		Total		Total Current		Total
(Millions)
As of September 30, 2023	$	15	$	12	$	17	$	44	$	145	$	189

Schedule of composition of obligor credit quality

The following table reflects the distribution of our Credit card loans by Vantage score as of September 30, 2023 and December 31, 2022:


	September 30, 2023						December 31, 2022
	661 or Higher		601 to 660		600 or Lower		661 or Higher		601 to 660		600 or Lower
Credit card loans	57	%	27	%	16	%	62	%	26	%	12	%

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

The following table provides information relating to credit card loans to borrowers experiencing financial difficulty that were granted a concession under a Loan Modification program during the periods presented:


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
	Account Balances (1)		% of Total Credit Card Loans		Weighted Average Interest Rate Reduction (% points)		Account Balances (1)		% of Total Credit Card Loans		Weighted Average Interest Rate Reduction (% points)
(Millions, except percentages)
Credit card loans	$	86	0.5	%	20.2	%	$	189	1.1	%	20.1	%

__________________________________

(1)Represents the outstanding balances as of September 30, 2023 of all Loan Modifications undertaken in the past three and nine months, respectively, for credit card loans that remain in modification programs on September 30, 2023. The outstanding balances include principal, accrued interest and fees.

The following table provides additional information regarding credit card Loan Modifications that have subsequently defaulted within 12 months of their modification dates, for the periods specified; the probability of default is factored into the Allowance for credit losses:


	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
	Number of Modifications	Outstanding Balance		Number of Modifications	Outstanding Balance
(Millions, except for Number of modifications)
Loan Modifications that subsequently defaulted	4,047	$	7	6,567	$	11

Troubled Debt Restructurings (TDRs)

The following table provides information on credit card loans modified as troubled debt restructurings (TDRs) in accordance with the applicable accounting guidance in effect during the periods presented, which was effective prior to our adoption of the new guidance that eliminated TDRs effective January 1, 2023.


	Three Months Ended September 30, 2022					Nine Months Ended September 30, 2022
	Number of Restructurings	Pre-modification Outstanding Balance		Post-modification Outstanding Balance		Number of Restructurings	Pre-modification Outstanding Balance		Post-modification Outstanding Balance
(Millions, except for Number of restructurings)
Troubled debt restructurings – credit card loans	37,363	$	52	$	52	107,577	$	154	$	154

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 September 30, 2022			Nine Months Ended September 30, 2022
	Number of Restructurings	Outstanding Balance		Number of Restructurings	Outstanding Balance
(Millions, except for Number of restructurings)
Troubled debt restructurings that subsequently defaulted	11,511	$	16	51,201	$	70

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2023

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

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


Three Months Ended September 30, 2023	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of June 30, 2023	$	(17)	$	(3)	$	(20)
Changes in other comprehensive loss	(7)		—		(7)
Balance as of September 30, 2023	$	(24)	$	(3)	$	(27)


Three Months Ended September 30, 2022	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of June 30, 2022	$	(11)	$	(3)	$	(14)
Changes in other comprehensive loss	(7)		—		(7)
Balance as of September 30, 2022	$	(18)	$	(3)	$	(21)


Nine Months Ended September 30, 2023	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of December 31, 2022	$	(18)	$	(3)	$	(21)
Changes in other comprehensive loss	(6)		—		(6)
Balance as of September 30, 2023	$	(24)	$	(3)	$	(27)


Nine Months Ended September 30, 2022	Net Unrealized Gains (Losses) on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of December 31, 2021	$	1	$	(3)	$	(2)
Changes in other comprehensive loss	(19)		—		(19)
Balance as of September 30, 2022	$	(18)	$	(3)	$	(21)

STOCKHOLDERS' EQUITY	9 Months Ended
STOCKHOLDERS' EQUITY	Sep. 30, 2023
Stockholders' Equity Note [Abstract]
STOCKHOLDERS' EQUITY	STOCKHOLDERS’ EQUITY Stock Repurchase Programs On July 27, 2023, our Board of Directors approved a stock repurchase program to acquire up to $35 million in shares of our outstanding common stock in the open market during the period ending on December 31, 2023. The rationale for this repurchase program, and the amount thereof, was to offset the impact of dilution associated with issuances of employee restricted stock units, with the objective of reducing the Company’s weighted average diluted share count to approximately 50 million shares for the second half of 2023, subject to then current estimates and assumptions applicable as of the date of approval. During the quarter ended September 30, 2023, under the authorized stock repurchase program, we acquired a total of 0.9 million shares of our common stock for $35 million. Following their repurchase, these 0.9 million shares ceased to be outstanding shares of common stock and are now treated as authorized but unissued shares of common stock. As of September 30, 2023, we did not have any amounts remaining for future repurchases under the authorized stock repurchase program. Stock Compensation Expense During the nine months ended September 30, 2023, we awarded 1,135,383 service-based restricted stock units (RSUs) with a weighted average grant date fair value per share of $39.92 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 us on each such vesting date. During the nine months ended September 30, 2023, we awarded 175,587 performance-based restricted stock units with a fair market value of $27.76 to our Named Executive Officers. Performance-based RSUs cliff vest at the end of three years, if specific performance measures tied to our financial performance are met, which are measured annually over the three-year period. For the performance-based RSUs awarded in 2023, the predefined vesting criteria typically permit a range from 0% to 150% to be earned. Accruals of compensation cost for an award with a performance condition are based on the probable outcome of that performance condition. If the performance targets are met, the awards will vest with respect to the entire award on February 16, 2026, provided that the participant is employed by us on the vesting date. For the three months ended September 30, 2023 and 2022, we recognized $10 million and $8 million in stock-based compensation expense, respectively. For the nine months ended September 30, 2023 and 2022, we recognized $32 million and $24 million in stock-based compensation expense, respectively. Dividends During the three and nine months ended September 30, 2023, we paid $11 million and $32 million, respectively, in dividends to holders of our common stock. On October 26, 2023, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our common stock, payable on December 15, 2023, to stockholders of record at the close of business on November 13, 2023.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

BORROWINGS OF LONG-TERM AND OTHER DEBT - Schedule of Long Term Debt and Other Debt (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2020	Dec. 31, 2019
Long-term and other debt:
Total long-term and other debt	$ 1,375	$ 1,892
Debt issued by consolidated VIEs:
Total debt issued by consolidated VIEs	2,848	6,115
Total borrowings of long-term and other debt	4,223	8,007
Long-term and other debt
Long-term and other debt:
Long-term and other debt	1,399	1,906
Less: Unamortized discount and debt issuance costs	24	14
Total long-term and other debt	1,375	1,892
Convertible Debt
Long-term and other debt:
Long-term and other debt	$ 316	0
Debt issued by consolidated VIEs:
Interest Rates	4.25%
2023 term loans \| Line of Credit
Long-term and other debt:
Long-term and other debt	$ 298	0
Debt issued by consolidated VIEs:
Interest Rates	7.40%
2017 term loans \| Line of Credit
Long-term and other debt:
Long-term and other debt	$ 0	556
Senior notes due 2024 \| Senior Notes
Long-term and other debt:
Long-term and other debt	$ 285	850
Debt issued by consolidated VIEs:
Interest Rates	4.75%			4.75%
Senior notes due 2026 \| Senior Notes
Long-term and other debt:
Long-term and other debt	$ 500	500
Debt issued by consolidated VIEs:
Interest Rates	7.00%		7.00%
Debt issued by consolidated VIEs
Debt issued by consolidated VIEs:
Debt issued by consolidated VIEs	$ 2,850	6,115
Less: Unamortized debt issuance costs	2	0
Total debt issued by consolidated VIEs	2,848	6,115
Fixed rate asset-backed term note securities
Debt issued by consolidated VIEs:
Debt issued by consolidated VIEs	$ 350	0
Interest Rates	5.02%
Conduit asset-backed securities
Debt issued by consolidated VIEs:
Debt issued by consolidated VIEs	$ 2,500	$ 6,115
Weighted average interest rate	6.41%	5.38%
Conduit asset-backed securities \| Minimum
Debt issued by consolidated VIEs:
Interest Rates	6.37%	5.08%
Conduit asset-backed securities \| Maximum
Debt issued by consolidated VIEs:
Interest Rates	6.53%	5.93%
Revolving Credit Facility \| 2023 revolving line of credit \| Line of Credit
Long-term and other debt:
Long-term and other debt	$ 0	$ 0
Revolving Credit Facility \| 2017 revolving line of credit \| Line of Credit
Long-term and other debt:
Long-term and other debt	$ 0	$ 0

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	Sep. 30, 2023
Accounting Policies [Abstract]
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION DESCRIPTION OF THE BUSINESS We are a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions. We create opportunities for our 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, we deliver growth for our partners through a comprehensive product suite, including private label and co-brand credit cards and buy now, pay later (BNPL) products such as installment loans and our “split-pay” offerings. We also offer direct-to-consumer solutions that give customers more access, choice and freedom through our branded Bread CashbackTM American Express® Credit Card and Bread SavingsTM products. Our partner base consists of large consumer-based businesses, including well-known brands such as (alphabetically) AAA, Academy Sports + Outdoors, Caesars, Michaels, the NFL, Signet, Ulta and Victoria’s Secret, as well as small- and medium-sized businesses (SMBs). Our partner base is well diversified across a broad range of industries, including health and beauty, travel and entertainment, jewelry, home goods, sporting goods and specialty apparel. We believe our comprehensive suite of payment, lending and saving solutions, along with our related marketing and data and analytics, offers us a significant competitive advantage with products relevant across customer segments (Gen Z, Millennial, Gen X and Baby Boomers). The breadth and quality of our product and service offerings have enabled us to establish and maintain long-standing partner relationships. Our primary source of revenue is from Interest and fees on loans from our various credit card and other loan products, and to a lesser extent from contractual relationships with our brand partners. Throughout these unaudited Consolidated Financial Statements, unless stated otherwise, the terms “Bread Financial”, the “Company”, “we”, “our” or “us” refer to Bread Financial Holdings, Inc. and our subsidiaries and variable interest entities (VIEs) on a consolidated basis. References to “Parent Company” refer to Bread Financial Holdings, Inc. on a parent-only stand-alone basis. In December 2020 we acquired Lon Inc., known at the time as Bread, which has been fully integrated into our ongoing business strategy and operations. BASIS OF PRESENTATION These unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 28, 2023. If not significantly different, certain note disclosures included therein have been omitted from these unaudited Consolidated Financial Statements. The unaudited 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. The unaudited Consolidated Financial Statements also include amounts that relate to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. Such amounts have been classified within Discontinued operations and primarily relate to the after-tax impact of contractual indemnification and tax-related matters. For additional information refer to Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. 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 Allowance for credit losses. The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and all subsidiaries in which we have a controlling financial interest. All intercompany transactions have been eliminated. RECENTLY ADOPTED ACCOUNTING STANDARDS In March 2022, the Financial Accounting Standards Board (FASB) 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 and write-offs. Effective January 1, 2023 we adopted the guidance, with no significant impact on our results of operations, financial position, regulatory risk-based capital, or on our operational processes, controls and governance in support of the new guidance. RECENTLY ISSUED ACCOUNTING STANDARDS The recently issued accounting standards from our standard setters e.g., the FASB, relate to topics that are outside our industry or are otherwise not impactful on our results of operations, financial position, cash flows, or disclosures related thereto.

COMMITMENTS AND CONTINGENCIES - Regulatory Matters and Cardholders (Details) $ in Millions			1 Months Ended
	Jan. 19, 2021 installment	Dec. 31, 2020 USD ($)	Jan. 31, 2023 USD ($)	Jan. 31, 2022 USD ($)	Jan. 31, 2021 USD ($)	Sep. 30, 2023
Combined Banks
Common Equity Tier 1 capital to risk-weighted assets
Common equity tier 1 capital ratio						0.129
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						4.50%
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						6.50%
Banking Regulation, Risk-Based Information [Abstract]
Tier 1 capital ratio, Actual Ratio						0.129
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.060
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.080
Total risk-based capital ratio, Actual Ratio						0.142
Total risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.080
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions						0.100
Tier 1 capital to average assets
Tier 1 leverage capital ratio, Actual Ratio						0.114
Tier 1 leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.040
Tier 1 leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.050
Comenity Bank
Common Equity Tier 1 capital to risk-weighted assets
Common equity tier 1 capital ratio						0.203
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						4.50%
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						6.50%
Banking Regulation, Risk-Based Information [Abstract]
Tier 1 capital ratio, Actual Ratio						0.203
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.060
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.080
Total risk-based capital ratio, Actual Ratio						0.216
Total risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.080
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions						0.100
Tier 1 capital to average assets
Tier 1 leverage capital ratio, Actual Ratio						0.175
Tier 1 leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.040
Tier 1 leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.050
Comenity Capital Bank
Common Equity Tier 1 capital to risk-weighted assets
Common equity tier 1 capital ratio						0.185
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						4.50%
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						6.50%
Banking Regulation, Risk-Based Information [Abstract]
Tier 1 capital ratio, Actual Ratio						0.185
Tier 1 capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.060
Tier 1 capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.080
Total risk-based capital ratio, Actual Ratio						0.199
Total risk-based capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.080
Total risk-based capital ratio, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions						0.100
Tier 1 capital to average assets
Tier 1 leverage capital ratio, Actual Ratio						0.165
Tier 1 leverage capital ratio, Minimum Ratio for Capital Adequacy Purposes						0.040
Tier 1 leverage capital ratio, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions						0.050
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		$ 150
Number of installment payments \| installment	2
Loss contingency, payment				$ 75	$ 75

BORROWINGS OF LONG-TERM AND OTHER DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

BORROWINGS OF LONG-TERM AND OTHER DEBT

Long-term and other debt consisted of the following as of September 30, 2023 and December 31, 2022:


Description	September 30, 2023		December 31, 2022		Contractual Maturities	Interest Rates
(Millions, except percentages)
Long-term and other debt:
2023 revolving line of credit	$	—	$	—	June 2026	(1)
2023 term loans	298		—		June 2026	7.40%
2017 revolving line of credit	—		—		—	—
2017 term loans	—		556		—	—
Convertible senior notes due 2028	316		—		June 2028	4.25%
Senior notes due 2024	285		850		December 2024	4.75%
Senior notes due 2026	500		500		January 2026	7.00%
Subtotal	1,399		1,906
Less: Unamortized debt issuance costs	24		14
Total long-term and other debt	$	1,375	$	1,892

Debt issued by consolidated VIEs:
Fixed rate asset-backed term note securities	$	350	$	—	May 2026	5.02%
Conduit asset-backed securities	2,500		6,115		Various – Oct. 2024 to Sep. 2025	(2)
Subtotal	2,850		6,115
Less: Unamortized debt issuance costs	2		—
Total debt issued by consolidated VIEs	$	2,848	$	6,115

Total borrowings of long-term and other debt	$	4,223	$	8,007

______________________________

(1)The interest rate is based upon the Secured Overnight Financing Rate (SOFR) plus an applicable margin.

Certain of our long-term debt agreements include various restrictive financial and non-financial covenants. If we do not comply with certain of these covenants and an event of default occurs and remains uncured, the maturity of amounts outstanding may be accelerated and become payable, and, with respect to our credit agreement, the associated commitments may be terminated. As of September 30, 2023, we were in compliance with all such covenants.

Long-term and Other Debt

Credit Agreement

On June 7, 2023, we entered into a new credit agreement (the 2023 Credit Agreement) with Parent Company, as borrower, certain of our domestic subsidiaries, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent and lender, and various other financial institutions, as lenders, which provides for a $700 million senior unsecured revolving credit facility (the Revolving Credit Facility) and a $575 million senior unsecured delayed draw term loan facility (the Term Loan Facility), all on terms and subject to the conditions set forth in the 2023 Credit Agreement. The 2023 Credit Agreement replaced, in its entirety, our prior credit agreement dated June 14, 2017, as amended (the 2017 Credit Agreement), which was repaid in full and terminated on June 13, 2023 in connection with the closing of our offering of convertible notes, described below. The 2023 Credit Agreement matures on June 13, 2026.

As of September 30, 2023 under the 2023 Credit Agreement, we had $298 million aggregate principal amount of term loans outstanding and $275 million available for future borrowings under the Term Loan Facility, and all $700 million remained available for future borrowings under the Revolving Credit Facility. The proceeds from the Term Loan Facility

may only be used for refinancing existing debt and paying fees, expenses and premiums in connection therewith, while the proceeds from the Revolving Credit Facility may be used for general corporate purposes and working capital needs, including refinancing existing debt, investments, payment of dividends and repurchases of capital stock. Borrowings under the 2023 Credit Agreement bear interest at an annual rate equal to, at our option, either (a) Term Secured Overnight Financing Rate (SOFR) plus a credit adjustment spread and the applicable margin, (b) Daily Simple SOFR plus a credit adjustment spread and the applicable margin or (c) a base rate set forth in the 2023 Credit Agreement plus the applicable margin, with the applicable margin in each case dependent upon our ratio of (i) consolidated tangible net worth to (ii) consolidated total assets, minus the sum of goodwill and intangible assets, net.

Senior Notes Due 2024 and 2026

The Senior Notes set forth below are each governed by their respective indentures that include usual and customary negative covenants and events of default. These Senior Notes are unsecured and are guaranteed on a senior unsecured basis by certain of our existing and future domestic restricted subsidiaries that incur or in any other manner become liable for any debt under our domestic credit facilities, including the 2023 Credit Agreement.

Due December 15, 2024: In December 2019, we issued and sold $850 million aggregate principal amount of 4.750% Senior Notes due December 15, 2024 (the Senior Notes due 2024). The Senior Notes due 2024 accrue interest on the outstanding principal amount at the rate of 4.750% per annum from December 20, 2019, payable semi-annually in arrears, on June 15 and December 15 of each year. Concurrently with the launch of the convertible notes offering (see further discussion below), we commenced a cash tender offer (the Tender Offer) for any and all of the $850 million in aggregate principal amount of our outstanding 4.750% Senior Notes due 2024. The consideration offered for each $1,000 principal amount of the Senior Notes due 2024 was $980, plus accrued and unpaid interest, for any and all notes validly tendered. The Tender Offer expired on June 14, 2023, with the holders of $565 million in aggregate principal amount of the Senior Notes due 2024 validly tendering pursuant to the Tender Offer. The remaining $285 million in aggregate principal amount of Senior Notes due 2024 were outstanding as of September 30, 2023, maturing on December 15, 2024, subject to earlier repurchase or redemption.

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

4.25% Convertible Senior Notes Due 2028

On June 13, 2023, we issued $316 million aggregate principal amount of 4.25% Convertible Senior Notes due 2028 (the Convertible Notes). The Convertible Notes were issued pursuant to an indenture dated as of June 13, 2023, among Parent Company, as issuer, certain of our domestic subsidiaries, as guarantors, and U.S. Bank Trust Company, National Association, as trustee. The Convertible Notes bear interest at an annual rate of 4.25%, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The Convertible Notes mature on June 15, 2028, unless earlier repurchased, redeemed or converted.

The Convertible Notes are convertible, under certain conditions, until March 15, 2028, and on or after such date without condition, at an initial conversion rate of 26.0247 shares of our common stock per $1,000 principal amount of Convertible Notes, subject to adjustment, which represents a 25% conversion premium based on the last reported sale price of our common stock of $30.74 on June 8, 2023 prior to issuing the Convertible Notes. Upon any such conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock (at our election), in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

At our option, we may redeem for cash, all or a portion of the Convertible Notes on or after June 21, 2026, and before the 51st scheduled trading day before the maturity date, but only if the closing price of our common stock reaches specified targets as defined in the indenture governing the Convertible Notes. The redemption price will equal 100% of the principal amount of the redeemed Convertible Notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the Convertible Notes, the note holders may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the Convertible Notes plus any accrued and unpaid interest.

In connection with the issuance of the Convertible Notes, we entered into privately negotiated capped call transactions (the Capped Call) with certain financial institution counterparties. These transactions are expected generally to reduce potential dilution to our common stock upon any conversion of Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Convertible Notes, with such reduction and/or offset subject to a cap, based on the cap price. The base price of the Capped Call transactions is $38.43, representing a premium of 25% over the last reported sale price of our common stock of $30.74 on June 8, 2023, while the cap price is initially $61.48, which represents a premium of 100% over that same sale price on June 8, 2023. Within the share price range of $38.43 to $61.48 the Capped Call transactions provide economic value to us from the counterparties, upon maturity or earlier conversion. The Capped Call transactions met the conditions under the related accounting guidance for equity classification and are not measured at fair value on a recurring basis; the price paid of $39 million was recorded in Additional paid-in capital, net of tax, in the Consolidated Balance Sheet.

Debt Issued by Consolidated VIEs

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

Fixed Rate Asset-Backed Term Notes

In May 2023, World Financial Network Credit Card Master Note Trust issued $399 million of Series 2023-A public term asset-backed notes, which mature in May 2026. The offering consisted of $350 million of Class A notes with a fixed interest rate of 5.02% per year, $31 million of Class M notes with a fixed interest rate of 5.27% per year, and $18 million of zero coupon Class B notes. The Class M and B notes were retained by us and eliminated from the Consolidated Balance Sheet.

Conduit Facilities

We maintained committed syndicated bank Conduit Facilities to support the funding of our credit card loans for our Trusts. Borrowings outstanding under each private Conduit Facility bear interest at a margin above SOFR, or the asset-backed commercial paper costs of each individual conduit provider.

As of December 31, 2022, total capacity under our Conduit Facilities was $6.5 billion, of which $6.1 billion had been drawn down and was included in Debt issued by consolidated variable interest entities (VIEs) in the Consolidated Balance Sheet.

During the nine months ended September 30, 2023, we renewed lender commitments under our Conduit Facilities of $5.4 billion and extended the various maturities to October 2024, February 2025 and September 2025. Specifically, in February 2023, the World Financial Network Credit Card Master Note Trust amended its 2009-VFN Conduit Facility, decreasing the capacity from $2.8 billion to $2.7 billion and extending the maturity to October 2024. Also in February 2023, in connection with the sale of the BJ’s portfolio, the World Financial Capital Master Note Trust amended its 2009-VFN Conduit Facility removing the assets related to the BJ’s portfolio. In April 2023, this same facility was again amended decreasing the capacity from $2.5 billion to $2.3 billion and extending the maturity to February 2025. In March 2023, CCB repaid the Comenity Capital Asset Securitization Trust’s 2022-VFN Conduit Facility and terminated the related lending commitment, decreasing capacity by $1.0 billion. However, the structure of the applicable Trust did not change, including the Trust assets, providing for the option to pledge those assets in the future, and in September 2023, the Comenity Capital Asset Securitization Trust was amended to include a new credit commitment of $250 million with a maturity of September 2025. In June 2023, the World Financial Network Credit Card Master Trust III amended its 2009-VFC conduit facility,

extending a portion of the maturity to October 2023, and another portion of the maturity to October 2024. In August 2023, this same facility was amended to replace the maturing commitment with a new $100 million commitment with a maturity of October 2024.

As of September 30, 2023, total capacity under our Conduit Facilities was $5.4 billion, of which $2.5 billion had been drawn and included in Debt issued by consolidated VIEs in the Consolidated Balance Sheet.

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

EARNINGS PER SHARE (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Numerator

Income from continuing operations

$ 173

$ 134

$ 693

$ 358

(Loss) income from discontinued operations, net of income taxes

^[1]

(2)

(18)

(1)

Net income

$ 171

$ 134

$ 675

$ 357

Denominator

Basic: Weighted average common stock (in shares)

49.9

49.8

50.0

49.9

Add: net effect of dilutive unvested restricted stock awards (in shares)

0.2

0.1

0.2

0.1

Diluted (in shares)

50.1

49.9

50.2

50.0

Basic EPS

Income from continuing operations (in dollars per share)

$ 3.47

$ 2.69

$ 13.85

$ 7.17

(Loss) income from discontinued operations(in dollars per share)

(0.03)

(0.37)

(0.01)

Net income per share (in dollars per share)

3.44

2.69

13.48

7.16

Diluted EPS

Income from continuing operations (in dollars per share)

3.46

2.69

13.80

7.16

(Loss) income from discontinued operations (in dollars per share)

(0.04)

(0.36)

(0.01)

Net income per share (in dollars per share)

$ 3.42

$ 2.69

$ 13.44

$ 7.15

[1]

Includes amounts that related to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. For additional information refer to Note 1, “Description of Business and Basis of Presentation” to the unaudited Consolidated Financial Statements.

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Regulatory Matters

CB is regulated, supervised and examined by the State of Delaware and the Federal Deposit Insurance Corporation (FDIC). Our industrial bank, CCB, is regulated, supervised and examined by the State of Utah and the FDIC.

The Consumer Financial Protection Bureau (CFPB) promulgates regulations for the federal consumer financial protection laws and supervises and examines large banks (those with more than $10 billion of total assets) with respect to those laws. Banks in a multi-bank organization, such as CB and CCB, are subject to supervision and examination by the CFPB with respect to the federal consumer financial protection laws if at least one bank reports total assets over $10 billion for four consecutive quarters. While the Banks were subject to supervision and examination by the CFPB with respect to the federal consumer financial protection laws between 2016 and 2021, this reverted to the FDIC in 2022. Beginning September 30, 2022, CCB’s total assets exceeded $10 billion for four consecutive quarters and both Banks are now again 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 CB and CCB 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 CB’s and/or CCB’s operating activities, as well as those of Bread Financial. Based on these regulations, as of September 30, 2023, 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 Banks are considered well capitalized and seek to maintain capital levels and ratios in excess of the minimum regulatory requirements inclusive of the 2.5% Capital Conservation Buffer. Although Bread Financial is not a bank holding company, as defined, we seek to maintain capital levels and ratios in excess of the minimums required for bank holding companies. The actual capital ratios and minimum ratios for each Bank, as well as Bread Financial, as of September 30, 2023, are as follows:


	Actual Ratio		Minimum Ratio for Capital Adequacy Purposes		Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions
Total Company
Common equity tier 1 capital ratio (1)	12.9	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	12.9		6.0		8.0
Total risk-based capital ratio (3)	14.2		8.0		10.0
Tier 1 leverage capital ratio (4)	11.4		4.0		5.0

Comenity Bank
Common equity tier 1 capital ratio (1)	20.3	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	20.3		6.0		8.0
Total risk-based capital ratio (3)	21.6		8.0		10.0
Tier 1 leverage capital ratio (4)	17.5		4.0		5.0

Comenity Capital Bank
Common equity tier 1 capital ratio (1)	18.5	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	18.5		6.0		8.0
Total risk-based capital ratio (3)	19.9		8.0		10.0
Tier 1 leverage capital ratio (4)	16.5		4.0		5.0

__________________________________

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

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

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

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

Indemnification

On July 1, 2019, we completed the sale of Epsilon segment to Publicis Groupe S.A. (Publicis). Under the terms of the agreement governing that transaction, we agreed to indemnify Publicis and our affiliates from and against any losses arising out of or related to a U.S. 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. Pursuant to our contractual indemnification obligation, in January 2021 we paid $75 million to Publicis, and in January 2022, we paid the remaining $75 million installment to Publicis. Our indemnification obligation also covers certain ongoing legal, consulting and claims administration fees and expenses incurred in connection with this matter, which we expect to diminish through the remainder of 2023.

Legal Proceedings

From time to time we are subject to various lawsuits, claims, disputes, or potential claims or disputes, and other proceedings, arising in the ordinary course of business that we believe, based on our current knowledge, will not have a material adverse effect on our business, consolidated financial condition or liquidity, including claims and lawsuits alleging breaches of our contractual obligations, arbitrations, class actions and other litigation, arising in connection with our business activities. We are also involved, from time to time, in reviews, investigations, subpoenas, supervisory actions and other proceedings (both formal and informal) by governmental agencies regarding our business, which could subject us to

significant fines, penalties, obligations to change our business practices, significant restrictions on our existing business or ability to develop new business, cease-and-desist orders, safety-and-soundness directives or other requirements resulting in increased expenses, diminished income and damage to our reputation.

SECURITIZATIONS (Tables)

9 Months Ended

Sep. 30, 2023

SECURITIZATIONS

Schedule of securitized credit card loans and related delinquencies, and net principal losses

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


	September 30, 2023		December 31, 2022
(Millions)
Total credit card loans – available to settle obligations of consolidated VIEs	$	12,100	$	15,383
Of which: principal amount of credit card loans 91 days or more past due	$	296	$	307


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Net principal losses of securitized credit card loans	$	179	$	123	$	592	$	363

DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Other Liabilities [Abstract]
Time deposits, at or above FDIC insurance limit	$ 497	$ 719
Time deposits, at or above FDIC insurance limit of total deposits	4.00%	5.00%

INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

Investment securities primarily consist of available-for-sale (AFS) debt securities, including both mortgage-backed securities and mutual funds. We also hold equity securities within our investment securities portfolio. Collectively, 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, any estimated credit loss would be recognized in the Consolidated Statements of Income by establishing, or adjusting an existing allowance for those credit losses. We did not have any such credit losses for the periods presented. Any unrealized gains, or any portion of an AFS debt security’s non-credit-related unrealized losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We typically invest 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 investment securities, using the specific identification method. The table below reflects unrealized gains and losses as of September 30, 2023 and December 31, 2022, respectively:


	September 30, 2023								December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
(Millions)
Available-for-sale securities	$	191	$	—	$	(31)	$	160	$	175	$	—	$	(23)	$	152
Equity securities	80		—		—		80		69		—		—		69
Total	$	271	$	—	$	(31)	$	240	$	244	$	—	$	(23)	$	221

The following tables provide information about AFS debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2023 and December 31, 2022, respectively:


	September 30, 2023
	Less than 12 months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Millions)
Available-for-sale securities	$	27	$	(2)	$	133	$	(29)	$	160	$	(31)
Total	$	27	$	(2)	$	133	$	(29)	$	160	$	(31)


	December 31, 2022
	Less than 12 months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Millions)
Available-for-sale securities	$	95	$	(9)	$	57	$	(14)	$	152	$	(23)
Total	$	95	$	(9)	$	57	$	(14)	$	152	$	(23)

As of September 30, 2023, the amortized cost and estimated fair value of AFS debt securities, which are mortgage-backed securities with no stated maturities, was $191 million and $160 million, respectively.

There were no realized gains or losses from the sale of any investment securities for the three and nine months ended September 30, 2023 and 2022.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
shares in Millions, $ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Interest income

Interest and fees on loans

$ 1,256

$ 1,195

$ 3,697

$ 3,325

Interest on cash and investment securities

135

Total interest income

1,301

1,218

3,832

3,359

Interest expense

Interest on deposits

143

387

142

Interest on borrowings

254

166

Total interest expense

219

133

641

308

Net interest income

1,082

1,085

3,191

3,051

Non-interest income

Interchange revenue, net of retailer share arrangements

(84)

(136)

(244)

(333)

Gain on portfolio sale

230

Other

Total non-interest income

(51)

(106)

(258)

Total net interest and non-interest income

1,031

979

3,273

2,793

Provision for credit losses

304

747

902

Total net interest and non-interest income, after provision for credit losses

727

675

2,526

1,891

Non-interest expenses

Employee compensation and benefits

210

202

647

572

Card and processing expenses

104

339

248

Information processing and communication

222

192

Marketing expenses

115

124

Depreciation and amortization

Other

161

167

Total non-interest expenses

502

486

1,576

1,383

Income from continuing operations before income taxes

225

189

950

508

Provision for income taxes

257

150

Income from continuing operations

173

134

693

358

(Loss) income from discontinued operations, net of income taxes

^[1]

(2)

(18)

(1)

Net income

$ 171

$ 134

$ 675

$ 357

Basic income per share (Note 14)

Income from continuing operations (in dollars per share)

$ 3.47

$ 2.69

$ 13.85

$ 7.17

(Loss) income from discontinued operations(in dollars per share)

(0.03)

(0.37)

(0.01)

Net income per share (in dollars per share)

3.44

2.69

13.48

7.16

Diluted income per share (Note 14)

Income from continuing operations (in dollars per share)

3.46

2.69

13.80

7.16

(Loss) income from discontinued operations (in dollars per share)

(0.04)

(0.36)

(0.01)

Net income per share (in dollars per share)

$ 3.42

$ 2.69

$ 13.44

$ 7.15

Weighted average common shares outstanding (Note 14)

Basic (in shares)

49.9

49.8

50.0

49.9

Diluted (in shares)

50.1

49.9

50.2

50.0

[1]

Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income	$ 171	$ 134	$ 675	$ 357

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2023

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

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

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


Three Months Ended September 30, 2023	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of June 30, 2023	$	(17)	$	(3)	$	(20)
Changes in other comprehensive loss	(7)		—		(7)
Balance as of September 30, 2023	$	(24)	$	(3)	$	(27)


Three Months Ended September 30, 2022	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of June 30, 2022	$	(11)	$	(3)	$	(14)
Changes in other comprehensive loss	(7)		—		(7)
Balance as of September 30, 2022	$	(18)	$	(3)	$	(21)


Nine Months Ended September 30, 2023	Net Unrealized Losses on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of December 31, 2022	$	(18)	$	(3)	$	(21)
Changes in other comprehensive loss	(6)		—		(6)
Balance as of September 30, 2023	$	(24)	$	(3)	$	(27)


Nine Months Ended September 30, 2022	Net Unrealized Gains (Losses) on AFS Securities		Foreign Currency Translation Adjustments		Accumulated Other Comprehensive Loss
(Millions)
Balance as of December 31, 2021	$	1	$	(3)	$	(2)
Changes in other comprehensive loss	(19)		—		(19)
Balance as of September 30, 2022	$	(18)	$	(3)	$	(21)

CREDIT CARD AND OTHER LOANS - Financing Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Total credit card and other loans	$ 17,922		$ 21,365
Less: Allowance for credit losses	(2,207)	$ (2,207)	(2,464)	$ (2,073)	$ (1,992)	$ (1,832)
Credit card and other loans, net	15,715		18,901
Unbilled to cardholders	341		307
Variable Interest Entity, Primary Beneficiary
Financing Receivable, Allowance for Credit Loss [Line Items]
Credit card and loan receivables restricted for securitization investors	12,100		15,383
Credit card loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Total credit card and other loans	17,616		21,065
BNPL (other) loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Total credit card and other loans	306		300
Less: Allowance for credit losses	$ (25)		$ (21)

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

CREDIT CARD AND OTHER LOANS - Credit Cards (Details) - Credit Card Loans - Contractual Interest Rate Reduction - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Financing Receivable, Troubled Debt Restructuring [Line Items]
Account Balances (1)	$ 86	$ 189
% of Total Credit Card Loans	0.50%	1.10%
Weighted Average Interest Rate Reduction (% points)	20.20%	20.10%

CREDIT CARD AND OTHER LOANS

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

CREDIT CARD AND OTHER LOANS

Our payment and lending solutions result in the generation of Credit card and other loans, which are recorded at the time a borrower enters into a point-of-sale transaction with a merchant. Credit card loans represent revolving lines of credit and have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new information about the cardholder, in accordance with applicable regulations and the governing terms and conditions. Cardholders choosing to make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts. Other loans, which consist of BNPL products such as installment loans and our “split-pay” offerings, 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 include principal and any related accrued interest and fees and are presented on the Consolidated Balance Sheets net of the Allowance for credit losses. We continue to accrue interest and fee income on all accounts, except in limited circumstances, until the related balance and all related interest and fees are paid or charged-off.

We generally classify our Credit card and other loans as held for investment. We sell a majority of our Credit card loans originated by Comenity Bank (CB) and by Comenity Capital Bank (CCB), which together are referred to herein as the “Banks”, to certain of our master trusts (the Trusts), which are 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 we have the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, we consider the average life and homogenous nature of our Credit card and other loans. In assessing whether our Credit card and other loans continue to be held for investment, we also consider capital levels and scheduled maturities of funding instruments used. The assertion regarding the intent and ability to hold Credit card and other loans for the foreseeable future can be made with a high degree of certainty given the maturity distribution of our direct-to-consumer (retail) deposits and other funding instruments; the demonstrated ability to replace maturing time-based deposits and other borrowings with new deposits or borrowings; and historic payment activity on Credit card and other loans. Due to the homogenous nature of our Credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. From time to time certain Credit card loans are classified as held for sale, as determined on a brand partner portfolio basis. We carry these assets at the lower of aggregate cost or fair value and continue to recognize finance charges on an accrual basis. Cash flows associated with Credit card and other loans originated or purchased for investment are classified as Cash flows from investing activities, regardless of any subsequent change in intent and ability.

The following table presents Credit card and other loans, as of September 30, 2023 and December 31, 2022, respectively:


	September 30, 2023		December 31, 2022
(Millions)
Credit card loans	$	17,616	$	21,065
BNPL (other) loans	306		300
Total credit card and other loans (1)(2)	17,922		21,365
Less: Allowance for credit losses	(2,207)		(2,464)
Credit card and other loans, net	$	15,715	$	18,901

__________________________________

(1)Includes $12.1 billion and $15.4 billion of Credit card and other loans available to settle obligations of consolidated VIEs as of September 30, 2023 and December 31, 2022, respectively.

(2)Includes $341 million and $307 million, of accrued interest and fees that have not yet been billed to cardholders as of September 30, 2023 and December 31, 2022, respectively.

Credit Card and Other Loans Aging

The following table presents the delinquency trends of our 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 Past Due		61 to 90 Days Past Due		91 or more Days Past Due		Total		Total Current		Total
(Millions)
As of September 30, 2023	$	382	$	292	$	722	$	1,396	$	16,165	$	17,561

As of December 31, 2022	$	444	$	296	$	732	$	1,472	$	19,559	$	21,031

__________________________________

From time to time we may re-age cardholders’ accounts, with the intent of assisting delinquent cardholders who have experienced financial difficulties but who demonstrate both an ability and willingness to repay the amounts due, this practice affects credit card loan delinquencies and principal losses. Accounts meeting specific defined criteria are re-aged when the cardholder makes one or more consecutive payments aggregating to a certain pre-defined amount of their account balance. Upon re-aging, the outstanding balance of a delinquent account is returned to current status. Our re-aged accounts as a percentage of Total credit card and other loans represented 2.8% and 1.4% for the three months ended September 30, 2023 and 2022, respectively, and 2.7% and 1.5% for the nine months ended September 30, 2023 and 2022, respectively. Our re-aging practices comply with regulatory guidelines.

Credit Quality Indicators for Our Credit Card and Other Loans

Given the nature of our business, the credit quality of our assets, in particular our Credit card and other loans, is a key determinant underlying our ongoing financial performance and overall financial condition. When it comes to our Credit card and other loans portfolio, we closely monitor Delinquency rates and Net principal loss rates which reflect, among other factors, our underwriting, the inherent credit risk in our portfolio, the success of our collection and recovery efforts, and more broadly, the general macroeconomic conditions.

Delinquencies: An account is contractually delinquent if we do not receive the minimum payment due by the specified due date. Our policy is to continue to accrue interest and fee income on all accounts, except in limited circumstances, until the balance and all related interest and fees are paid or charged-off. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent; based upon the level of risk indicated, a collection strategy is deployed. If after exhausting all in-house collection efforts we are unable to collect on the account, we may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances.

The Delinquency rate is calculated by dividing outstanding principal balances that are contractually delinquent (i.e., balances greater than 30 days past due) as of the end of the period, by the outstanding principal amount of Credit cards and other loans as of the same period-end. As of September 30, 2023 and December 31, 2022, our Delinquency rates were 6.3% and 5.5%, respectively.

Net Principal Losses: Our net principal losses include the principal amount of losses that are deemed uncollectible, less recoveries, and exclude charged-off interest, fees and third-party fraud losses (including synthetic fraud). Charged-off interest and fees reduce Interest and fees on loans while third-party fraud losses are recorded in Card and processing expenses. Credit card loans, including unpaid interest and fees, are generally charged-off in the month during which an account becomes 180 days past due. BNPL loans such as our installment loans and our “split-pay” offerings, including unpaid interest, are generally charged-off when a loan becomes 120 days past due. However, in the case of a customer bankruptcy or death, Credit card and other loans, including unpaid interest and fees, as applicable, are charged-off 60 days after receipt of the notification of the bankruptcy or death, but in any case no later than 180 days past due for Credit card loans and 120 days past due for BNPL loans. We record the actual losses for unpaid interest and fees as a reduction to Interest and fees on loans, which were $204 million and $145 million for the three months ended September 30, 2023 and 2022, respectively, and $689 million and $429 million for the nine months ended September 30, 2023 and 2022, respectively.

The net principal loss rate is calculated by dividing net principal losses for the period by the Average credit card and other loans for the same period. Average credit card and other loans represent the average balance of the loans at the beginning and end of each month, averaged over the periods indicated. For the three months ended September 30, 2023 and 2022, our Net principal loss rates were 6.9% and 5.0%, respectively, for the nine months ended September 30, 2023 and 2022, our Net principal loss rates were 7.3% and 5.1%, respectively.

Overall Credit Quality: As part of our credit risk management activities for our credit card loans portfolio, we assess overall credit quality by reviewing information from credit bureaus and other sources relating to our cardholders’ broader credit performance. We utilize VantageScore (Vantage) credit scores to assist in our assessment of credit quality. Vantage credit scores are obtained at origination of the account and are refreshed monthly thereafter to assist in predicting customer behavior. We categorize 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 we use alternative sources to assess credit risk and predict behavior. The table below excludes 0.1% and 0.6% of the total credit card loans balance as of September 30, 2023 and December 31, 2022, respectively, representing those customer accounts for which a Vantage credit score is not available. The following table reflects the distribution of our Credit card loans by Vantage score as of September 30, 2023 and December 31, 2022:


	September 30, 2023						December 31, 2022
	661 or Higher		601 to 660		600 or Lower		661 or Higher		601 to 660		600 or Lower
Credit card loans	57	%	27	%	16	%	62	%	26	%	12	%

As part of our credit risk management activities for our BNPL loans portfolio, we also assess overall credit quality by reviewing information from credit bureaus. In this case we utilize Fair Isaac Corporation (FICO) credit scores to assist in our assessment of credit quality. The amortized cost basis of BNPL loans totaled $306 million and $299 million as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, approximately 83% of these loans

were originated with customers with FICO scores of 661 or above, and correspondingly approximately 17% of these loans were originated with customers with FICO scores below 661. Similarly, as of December 31, 2022, approximately 86% and 14% of these loans were originated with customers with FICO scores of 661 or above, and below 661, respectively.

Modified Credit Card Loans

Forbearance Programs

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

Credit Card Loans - Modifications for Borrowers Experiencing Financial Difficulty (Loan Modifications)

In instances where cardholders are experiencing financial difficulty, we may modify our credit card loans with the intention of minimizing losses and improving collectability, while providing cardholders with financial relief; such credit card loans are classified as Loan Modifications, exclusive of the temporary, short-term forbearance programs described above. Loan Modifications, include concessions consisting primarily of a reduced minimum payment, late fee waiver, and/or an interest rate reduction. The majority of concessions remain in place for a period no longer than twelve months; however, for certain modifications the concessions remain in place through the payoff of the credit card loans if the cardholder complies with the terms of the program.

Loan Modification concessions do not include the forgiveness of unpaid principal, but may involve the reversal of certain unpaid interest or fee assessments, and the cardholder’s ability to make future purchases is either limited, or suspended until the cardholder successfully exits from the modification program. In accordance with the terms of our workout programs, the credit agreement reverts back to its original contractual terms (including the contractual interest rate) when the customer exits the program, which is either when all payments have been made in accordance with the program, or when the customer defaults out of the program.

Loan Modifications are collectively evaluated for impairment on a pooled basis in measuring the appropriate Allowance for credit losses. The following table provides information relating to credit card loans to borrowers experiencing financial difficulty that were granted a concession under a Loan Modification program during the periods presented:


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
	Account Balances (1)		% of Total Credit Card Loans		Weighted Average Interest Rate Reduction (% points)		Account Balances (1)		% of Total Credit Card Loans		Weighted Average Interest Rate Reduction (% points)
(Millions, except percentages)
Credit card loans	$	86	0.5	%	20.2	%	$	189	1.1	%	20.1	%

__________________________________

Interest income on these impaired credit card loans is accounted for in the same manner as non-impaired credit card loans, and cash collections are allocated according to the same payment hierarchy methodology applied for credit card loans not in Loan Modification programs.

The following table presents the performance of our credit card loans that were modified on or after January 1, 2023 and remain in a Loan Modification program as of September 30, 2023:


	Aging Analysis of Delinquent Amortized Cost Loan Modifications - Credit Card Loans
	31 to 60 Days Past Due		61 to 90 Days Past Due		91 or more Days Past Due		Total		Total Current		Total
(Millions)
As of September 30, 2023	$	15	$	12	$	17	$	44	$	145	$	189


	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
	Number of Modifications	Outstanding Balance		Number of Modifications	Outstanding Balance
(Millions, except for Number of modifications)
Loan Modifications that subsequently defaulted	4,047	$	7	6,567	$	11

Troubled Debt Restructurings (TDRs)


	Three Months Ended September 30, 2022					Nine Months Ended September 30, 2022
	Number of Restructurings	Pre-modification Outstanding Balance		Post-modification Outstanding Balance		Number of Restructurings	Pre-modification Outstanding Balance		Post-modification Outstanding Balance
(Millions, except for Number of restructurings)
Troubled debt restructurings – credit card loans	37,363	$	52	$	52	107,577	$	154	$	154

TDRs are collectively evaluated for impairment on a pooled basis in measuring the appropriate Allowance for credit losses. Our impaired credit card loans represented less than 2% of total credit card loans as of September 30, 2022. As of the same date, our recorded investment in impaired credit card loans was $248 million, with an associated allowance for credit losses of $62 million. The average recorded investment in impaired credit card loans was $248 million and $259 million for the three and nine months ended September 30, 2022, respectively.

accounted for as TDRs. We recognized $4 million and $11 million in interest income associated with credit card loans accounted for as TDRs for the three and nine months ended September 30, 2022, respectively.


	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
	Number of Restructurings	Outstanding Balance		Number of Restructurings	Outstanding Balance
(Millions, except for Number of restructurings)
Troubled debt restructurings that subsequently defaulted	11,511	$	16	51,201	$	70

Unfunded Loan Commitments

We are active in originating private label and co-brand credit cards in the U.S. We manage potential credit risk in unfunded lending commitments by reviewing each potential customer’s credit application and evaluating the applicant’s financial history and ability and perceived willingness to repay. Credit card loans are made primarily on an unsecured basis. Cardholders reside throughout the U.S. and are not significantly concentrated in any one geographic area.

We manage our potential risk in credit commitments by limiting the total amount of credit, both by individual customer and in total, by monitoring the size and maturity of our portfolios and applying consistent risk-based underwriting standards. We have the unilateral ability to cancel or reduce unused credit card lines at any time. Unused credit card lines available to cardholders totaled approximately $109 billion and $128 billion as of September 30, 2023 and December 31, 2022, respectively. While this amount represented the total available unused credit card lines, we have not experienced and do not anticipate that all cardholders will access their entire available line at any given point in time.

Portfolio Sales

As of September 30, 2023 and December 31, 2022, there were no credit card loans held for sale.

We previously announced the non-renewal of our contract with BJ’s Wholesale Club (BJ’s) and the sale of the BJ’s portfolio, which closed in late February 2023, for a total purchase price of $2.5 billion on a loan portfolio of $2.3 billion, resulting in a $230 million Gain on portfolio sale.

Portfolio Acquisition

In October 2023, we acquired a credit card portfolio for cash consideration of approximately $390 million, which primarily consisted of credit card loans and is subject to customary purchase price adjustments.

DEPOSITS

9 Months Ended

Sep. 30, 2023

Other Liabilities Disclosure [Abstract]

DEPOSITS

Deposits were categorized as interest-bearing or non-interest-bearing as follows, as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
(Millions)
Interest-bearing	$	13,244	$	13,787
Non-interest-bearing (including cardholder credit balances)	24		39
Total deposits	$	13,268	$	13,826

Deposits by deposit type as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023		December 31, 2022
(Millions)
Savings accounts
Direct-to-consumer (retail)	$	2,814	$	2,782
Wholesale	3,746		3,954
Certificates of deposit
Direct-to-consumer (retail)	3,284		2,684
Wholesale	3,400		4,367
Cardholder credit balances	24		39
Total deposits	$	13,268	$	13,826

The scheduled maturities of certificates of deposit were as follows as of September 30, 2023:


(Millions)
2023 (1)	$	505
2024	3,894
2025	1,095
2026	411
2027	634
Thereafter	145
Total certificates of deposit	$	6,684

__________________________________

(1)The 2023 balance includes $8 million in unamortized debt issuance costs, which are associated with the entire portfolio of certificates of deposit.

As of September 30, 2023 and December 31, 2022, deposits that exceeded applicable FDIC insurance limits, which are generally $250,000 per depositor, per insured bank, were estimated to be $497 million (4% of Total deposits) and $719 million (5% of Total deposits), respectively. The measurement of estimated uninsured deposits aligns with regulatory guidelines.

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of actual capital ratios and minimum ratios

The actual capital ratios and minimum ratios for each Bank, as well as Bread Financial, as of September 30, 2023, are as follows:


	Actual Ratio		Minimum Ratio for Capital Adequacy Purposes		Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions
Total Company
Common equity tier 1 capital ratio (1)	12.9	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	12.9		6.0		8.0
Total risk-based capital ratio (3)	14.2		8.0		10.0
Tier 1 leverage capital ratio (4)	11.4		4.0		5.0

Comenity Bank
Common equity tier 1 capital ratio (1)	20.3	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	20.3		6.0		8.0
Total risk-based capital ratio (3)	21.6		8.0		10.0
Tier 1 leverage capital ratio (4)	17.5		4.0		5.0

Comenity Capital Bank
Common equity tier 1 capital ratio (1)	18.5	%	4.5	%	6.5	%
Tier 1 capital ratio (2)	18.5		6.0		8.0
Total risk-based capital ratio (3)	19.9		8.0		10.0
Tier 1 leverage capital ratio (4)	16.5		4.0		5.0

__________________________________

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

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

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

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

FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Financial assets
Credit card and other loans, net	$ 18,048	$ 21,328
Investment securities	240	221
Financial liabilities
Deposits	13,164	13,731
Debt issued by consolidated VIEs	2,844	6,115
Carrying Amount
Financial assets
Credit card and other loans, net	15,715	18,901
Investment securities	240	221
Financial liabilities
Deposits	13,268	13,826
Debt issued by consolidated VIEs	2,848	6,115
Long-term and other debt	1,375	1,892
Fair Value
Financial assets
Credit card and other loans, net	18,048	21,328
Investment securities	240	221
Financial liabilities
Deposits	13,164	13,731
Debt issued by consolidated VIEs	2,844	6,115
Long-term and other debt	$ 1,392	$ 1,759

INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

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

The table below reflects unrealized gains and losses as of September 30, 2023 and December 31, 2022, respectively:


	September 30, 2023								December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
(Millions)
Available-for-sale securities	$	191	$	—	$	(31)	$	160	$	175	$	—	$	(23)	$	152
Equity securities	80		—		—		80		69		—		—		69
Total	$	271	$	—	$	(31)	$	240	$	244	$	—	$	(23)	$	221

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


	September 30, 2023
	Less than 12 months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Millions)
Available-for-sale securities	$	27	$	(2)	$	133	$	(29)	$	160	$	(31)
Total	$	27	$	(2)	$	133	$	(29)	$	160	$	(31)


	December 31, 2022
	Less than 12 months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Millions)
Available-for-sale securities	$	95	$	(9)	$	57	$	(14)	$	152	$	(23)
Total	$	95	$	(9)	$	57	$	(14)	$	152	$	(23)

STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - USD ($) shares in Millions	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2023	Sep. 30, 2023	Sep. 30, 2022	Jul. 27, 2023
Equity, Class of Treasury Stock [Line Items]
Authorized repurchase amount						$ 35,000,000
Diluted (in shares)	50.1	49.9		50.2	50.0
Number of shares repurchased	0.9
Total cost of shares repurchased	$ 35,000,000			$ 35,000,000	$ 12,000,000
Remaining authorized repurchase amount	$ 0			$ 0
Forecast
Equity, Class of Treasury Stock [Line Items]
Diluted (in shares)			50.0

ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2023

Credit Loss [Abstract]

Allowance for loan loss

The following table presents our Allowance for credit losses for our Credit card and other loans. The amount of the related Allowance for credit losses on BNPL loans is insignificant and therefore has been included in the table below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Beginning balance	$	2,207	$	1,992	$	2,464	$	1,832

Provision for credit losses (1)	304		304		747		902
Change in the estimate for uncollectible unpaid interest and fees	—		—		5		—
Net principal losses (2)	(304)		(223)		(1,009)		(661)
Ending balance	$	2,207	$	2,073	$	2,207	$	2,073

__________________________________

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

(2)Net principal losses are presented net of recoveries of $69 million and $47 million for the three months ended September 30, 2023 and 2022, respectively, and $242 million and $126 million for the nine months ended September 30, 2023 and 2022, respectively. Net principal losses for the nine months ended September 30, 2023 include a $10 million adjustment related to the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency; no such adjustment was made in the comparative period.

ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2023

Credit Loss [Abstract]

ALLOWANCE FOR CREDIT LOSSES

The Allowance for credit losses is an estimate of expected credit losses, measured over the estimated life of our 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 credit reserving methodology referred to as the Current Expected Credit Loss (CECL) model is significantly influenced by the composition, characteristics and quality of our 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. Principal losses, net of recoveries are deducted from the Allowance. Principal losses 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 our 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, to determine expected credit performance. Our quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. We consider 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, we also incorporate 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 our best estimate of current expected credit losses.

Credit Card Loans

We use a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. We have evaluated multiple risk characteristics across our credit card loans portfolio, and determined delinquency status and overall credit quality to be the most significant characteristics for estimating expected credit losses. To estimate our Allowance for credit losses, we segment our credit card loans on the basis of delinquency status, credit quality risk score and product. 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 our Credit card loans, payments were applied to the measurement date balance with no payments allocated to future purchase activity. We use a combination of First In First Out and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) methodologies to model balance paydown.

BNPL Loans

We measure our Allowance for credit losses on BNPL loans using a statistical model to estimate projected losses over the remaining terms 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 September 30, 2023 and December 31, 2022, the Allowance for credit losses on BNPL loans was $25 million and $21 million, respectively.

Allowance for Credit Losses Rollforward


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
(Millions)
Beginning balance	$	2,207	$	1,992	$	2,464	$	1,832

Provision for credit losses (1)	304		304		747		902
Change in the estimate for uncollectible unpaid interest and fees	—		—		5		—
Net principal losses (2)	(304)		(223)		(1,009)		(661)
Ending balance	$	2,207	$	2,073	$	2,207	$	2,073

__________________________________

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

For the three and nine months ended September 30, 2023, the factors that influenced the increase in the Allowance for credit losses are higher net principal losses and a higher reserve rate due to the the compounding effect of persistent inflation relative to wage growth, the increased cost of consumer debt, the possibility of higher unemployment levels and the potential impacts from the resumption of student loan repayments.

CREDIT CARD AND OTHER LOANS - Aging Analysis (Details) $ in Millions	Sep. 30, 2023 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	$ 189
Total
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	44
31 to 60 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	15
61 to 90 Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	12
91 or more Days Past Due
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	17
Total Current
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized cost basis	$ 145

BORROWINGS OF LONG-TERM AND OTHER DEBT - Narrative (Details)		1 Months Ended
	Jun. 13, 2023 USD ($) d $ / shares	Mar. 31, 2023 USD ($)	Sep. 30, 2023 USD ($) $ / shares	Jun. 14, 2023 USD ($)	Jun. 08, 2023 $ / shares	Jun. 07, 2023 USD ($)	May 31, 2023 USD ($)	Apr. 30, 2023 USD ($)	Feb. 28, 2023 USD ($)	Jan. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Share price (usd per share) \| $ / shares					$ 30.74
Convertible Debt
Debt Instrument [Line Items]
Long-term and other debt			$ 316,000,000								$ 0
Stated interest rate			4.25%
2023 Credit Agreement \| Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity						$ 575,000,000
2023 Credit Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						700,000,000
Remaining borrowing capacity						$ 700,000,000
Term Loan Facility \| Line of Credit
Debt Instrument [Line Items]
Long-term and other debt			$ 298,000,000
Remaining borrowing capacity			275,000,000
Senior notes due 2024 \| Senior Notes
Debt Instrument [Line Items]
Long-term and other debt			$ 285,000,000								850,000,000
Debt amount issued													$ 850,000,000
Stated interest rate			4.75%										4.75%
Discount amount for each $1000				$ 980
Repurchase amount				$ 565,000,000
Senior notes due 2026 \| Senior Notes
Debt Instrument [Line Items]
Long-term and other debt			$ 500,000,000								500,000,000
Debt amount issued												$ 500,000,000
Stated interest rate			7.00%									7.00%
4.250% Convertible Senior Notes Due 2028
Debt Instrument [Line Items]
Conversion price premium	25.00%
Share price (usd per share) \| $ / shares					$ 30.74
Stock price trigger (usd per share) \| $ / shares	$ 38.43
Convertible debt carrying amount of equity component			$ 39,000,000
4.250% Convertible Senior Notes Due 2028 \| Minimum
Debt Instrument [Line Items]
Stock price trigger (usd per share) \| $ / shares	38.43
4.250% Convertible Senior Notes Due 2028 \| Maximum
Debt Instrument [Line Items]
Stock price trigger (usd per share) \| $ / shares	$ 61.48
4.250% Convertible Senior Notes Due 2028 \| Debt Conversion Terms One
Debt Instrument [Line Items]
Redemption price	100.00%
4.250% Convertible Senior Notes Due 2028 \| Debt Conversion Terms Two
Debt Instrument [Line Items]
Redemption price	100.00%
4.250% Convertible Senior Notes Due 2028 \| Convertible Debt
Debt Instrument [Line Items]
Debt amount issued	$ 316,000,000
Stated interest rate	4.25%
Conversion ratio	0.0260247
Conversion price premium			100.00%
Conversion price (usd per share) \| $ / shares			$ 61.48
4.250% Convertible Senior Notes Due 2028 \| Convertible Debt \| Debt Conversion Terms One
Debt Instrument [Line Items]
Threshold for redemption, days prior to maturity \| d	51
Series 2023-A Asset-Backed Term Notes
Debt Instrument [Line Items]
Debt amount issued							$ 399,000,000
Series 2023-A Asset-Backed Term Notes - Class A
Debt Instrument [Line Items]
Debt amount issued							$ 350,000,000
Stated interest rate							5.02%
Series 2023-A Asset-Backed Term Notes - Class M
Debt Instrument [Line Items]
Debt amount issued							$ 31,000,000
Stated interest rate							5.27%
Series 2023-A Asset-Backed Term Notes - Class B
Debt Instrument [Line Items]
Debt amount issued							$ 18,000,000
Conduit asset-backed securities
Debt Instrument [Line Items]
Maximum borrowing capacity											$ 6,500,000,000
Conduit asset-backed securities \| Minimum
Debt Instrument [Line Items]
Stated interest rate			6.37%								5.08%
Conduit asset-backed securities \| Maximum
Debt Instrument [Line Items]
Stated interest rate			6.53%								5.93%
Conduit asset-backed securities \| Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 5,400,000,000
Line of credit facility decrease		$ 1,000,000,000
2009-VFN Conduit Facility \| Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 2,500,000,000						$ 2,300,000,000	$ 2,700,000,000	$ 2,800,000,000
Line of Credit Maturity September 2025 \| Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity			250,000,000
Line of Credit - Maturity October 2024 \| Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 100,000,000

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 171	$ 134	$ 675	$ 357
Other comprehensive loss
Unrealized loss on available-for-sale debt securities	(9)	(9)	(8)	(25)
Tax benefits	2	2	2	6
Unrealized loss on available-for-sale debt securities, net of tax	(7)	(7)	(6)	(19)
Other comprehensive loss, net of tax	(7)	(7)	(6)	(19)
Total comprehensive income, net of tax	$ 164	$ 127	$ 669	$ 338

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

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

+ References

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+ Details

ALLOWANCE FOR CREDIT LOSSES - Rollforward (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 2,207,000,000	$ 1,992,000,000	$ 2,464,000,000	$ 1,832,000,000
Provision for credit losses	304,000,000	304,000,000	747,000,000	902,000,000
Change in the estimate for uncollectible unpaid interest and fees	0	0	5,000,000	0
Net principal charge-off	(304,000,000)	(223,000,000)	(1,009,000,000)	(661,000,000)
Ending balance	2,207,000,000	2,073,000,000	2,207,000,000	2,073,000,000
Recovery	69,000,000	47,000,000	242,000,000	126,000,000
Recovery adjustment			10,000,000
Adjustment related to the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency	$ 0	$ 0	$ 0	$ 0

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

FAIR VALUES OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into or out of Level 3	$ 0	$ 0	$ 0	$ 0
Transfers between Levels 1 and 2	$ 0	0	0	0
Loyalty Ventures Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investment, other than temporary impairment		$ 11,000,000	$ 6,000,000	$ 44,000,000

INCOME TAXES	9 Months Ended
INCOME TAXES	Sep. 30, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The Provision for income taxes remained relatively flat for the three months ended September 30, 2023, compared with the same period in the prior year. The effective tax rate was 23.0% and 28.9% for the same three month periods, respectively. The decrease in the effective tax rate primarily related to a discrete benefit in the current year period. For the nine months ended September 30, 2023, compared with the same period in the prior year, the Provision for income taxes increased due to the increase in Income from continuing operations before income taxes. The effective tax rate was 27.1% and 29.5% for the nine months ended September 30, 2023 and 2022, respectively. The decrease in the effective tax rate primarily related to a discrete benefit in the current year period. We are 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; with some exceptions, the tax returns filed by us 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 2018.

- 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
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+ Details

STOCKHOLDERS' EQUITY - Stock Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense	$ 10	$ 8	$ 32	$ 24
Service-based restricted stock unit awards
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares granted (in shares)			1,135,383
Weighted average grant-date fair value (in dollars per share)	$ 39.92		$ 39.92
Award vesting period			3 years
Performance-based restricted stock unit awards
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares granted (in shares)			175,587
Weighted average grant-date fair value (in dollars per share)	$ 27.76		$ 27.76
Performance-based restricted stock unit awards \| Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Percentage of stock units to vest			0.00%
Performance-based restricted stock unit awards \| Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Percentage of stock units to vest			150.00%

FAIR VALUES OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

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 we 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 and nine months ended September 30, 2023 and 2022, 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 our financial assets and financial liabilities:


	September 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
(Millions)
Financial assets
Credit card and other loans, net	$	15,715	$	18,048	$	18,901	$	21,328
Investment securities	240		240		221		221
Financial liabilities
Deposits	13,268		13,164		13,826		13,731
Debt issued by consolidated VIEs	2,848		2,844		6,115		6,115
Long-term and other debt	1,375		1,392		1,892		1,759

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

Credit card and other loans, net: Our Credit card and other loans are recorded at historical cost, less the Allowance for credit losses, on the Consolidated Balance Sheets. In estimating the fair values, we use 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. We use 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 primarily consist of AFS debt securities, including both mortgage-backed securities 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 us 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: We record debt issued by consolidated VIEs at amortized cost (including unamortized fees, issuance costs, premiums and discounts, where applicable) on the Consolidated Balance Sheets. 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 us 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: We record long-term and other debt at amortized cost (including unamortized fees, issuance costs, premiums and discounts, where applicable) on the Consolidated Balance Sheets. 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 us for similar debt instruments with similar remaining maturities, or quoted market prices for the same transaction (i.e., Level 2 inputs).

Financial Instruments Measured at Fair Value on a Recurring Basis

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, categorized by the fair value hierarchy described in the preceding paragraphs:


	September 30, 2023
	Total		Level 1		Level 2		Level 3
(Millions)
Investment securities	$	240	$	44	$	196	$	—
Total assets measured at fair value	$	240	$	44	$	196	$	—


	December 31, 2022
	Total		Level 1		Level 2		Level 3
(Millions)
Investment securities	$	221	$	44	$	177	$	—
Total assets measured at fair value	$	221	$	44	$	177	$	—

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. In the nine months ended September 30, 2023 we wrote-off the remaining $6 million of our equity method investment in Loyalty Ventures Inc. (LVI). For the three and nine months ended September 30, 2022 we recognized a write-down of our equity method investment in LVI of $11 million and $44 million, respectively.

Financial Instruments Disclosed but Not Carried at Fair Value


	September 30, 2023
	Fair Value		Level 1		Level 2		Level 3
(Millions)
Financial assets
Credit card and other loans, net	$	18,048	$	—	$	—	$	18,048
Total	$	18,048	$	—	$	—	$	18,048

Financial liabilities
Deposits	$	13,164	$	—	$	13,164	$	—
Debt issued by consolidated VIEs	2,844		—		2,844		—
Long-term and other debt	1,392		—		1,392		—
Total	$	17,400	$	—	$	17,400	$	—


	December 31, 2022
	Fair Value		Level 1		Level 2		Level 3
(Millions)
Financial assets
Credit card and other loans, net	$	21,328	$	—	$	—	$	21,328
Total	$	21,328	$	—	$	—	$	21,328

Financial liabilities
Deposits	$	13,731	$	—	$	13,731	$	—
Debt issued by consolidated VIEs	6,115		—		6,115		—
Long-term and other debt	1,759		—		1,759		—
Total	$	21,605	$	—	$	21,605	$	—

- 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.

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