Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report and in our 2025 Form 10-K. The discussion below contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. See “Cautionary Note Regarding Forward-Looking Statements.”

Introduction and Business Overview ____________________________________________________________________________________________

We are a premier consumer financial services company delivering one of the industry's most complete digitally-enabled product suites. Our experience, expertise and scale encompass a broad spectrum of industries including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. We have an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which we refer to as our “partners.” For the three and six months ended June 30, 2026, we financed $49.8 billion and $92.8 billion of purchase volume, respectively, and had 68.3 million and 68.7 million average active accounts, respectively, and at June 30, 2026, we had $102.2 billion of loan receivables.

We offer our credit products primarily through our wholly-owned subsidiary, the Bank. In addition, through the Bank, we offer, directly to retail, affinity relationships and commercial customers, a range of deposit products insured by the Federal Deposit Insurance Corporation (“FDIC”), including certificates of deposit, individual retirement accounts (“IRAs”), money market accounts, savings accounts and sweep and affinity deposits. We also take deposits at the Bank through third-party firms that offer our FDIC-insured deposit products to their customers. Our deposit base has continued to serve as a source of stable and diversified low-cost funding for our credit activities. At June 30, 2026, we had $82.8 billion in deposits, which represented 83% of our total funding sources.

Our Sales Platforms

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We conduct our operations through a single business segment. Profitability and expenses, including funding costs, credit losses and operating expenses, are managed for the business as a whole. Substantially all of our revenue generating activities are within the United States and are aligned through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle). Those platforms are organized by the types of partners we work with, and are measured on interest and fees on loans, loan receivables, active accounts and other sales metrics.

Platformpies.jpg

Home & Auto

Our Home & Auto sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through a broad network of partners and merchants providing home and automotive merchandise and services, as well as our Synchrony Car Care network and Synchrony HOME credit card offering. Our Home & Auto sales platform partners include a wide range of key retailers in the home improvement, furniture, bedding, flooring, appliance and electronics industries, such as Ashley HomeStores, Inc., Floor & Decor, Lowe's, and Mattress Firm, as well as automotive merchandise and services, such as Chevron and Discount Tire. In addition, we also have program agreements with manufacturers, buying groups and industry associations, such as Generac, Nationwide Marketing Group and the Home Furnishings Association.

Digital

Our Digital sales platform provides comprehensive payments and financing solutions with integrated digital experiences through partners and merchants who primarily engage with their consumers through digital channels. Our Digital sales platform includes key partners delivering digital payment solutions, such as PayPal, including our Venmo program, online marketplaces, such as Amazon, and digital-first brands and merchants, such as the QVC Group, Inc., Verizon and Virgin Red.

Diversified & Value

Our Diversified & Value sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through large retail partners who deliver everyday value to consumers shopping for daily needs or important life moments. Our Diversified & Value sales platform is comprised of six large retail partners: Belk, Fleet Farm, JCPenney, OnePay, Sam's Club and TJX Companies, Inc.

Health & Wellness

Our Health & Wellness sales platform provides comprehensive healthcare payments and financing solutions, through a network of providers and retail locations, for those seeking health and wellness care for themselves, their families and their pets, and includes our CareCredit brand, as well as partners such as Walgreens.

Lifestyle

Our Lifestyle sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through partners and merchants who offer merchandise in power sports, outdoor power equipment, and other industries such as sporting goods, apparel, jewelry and music. Our Lifestyle sales platform partners include a wide range of key retailers in the apparel, specialty retail, outdoor, music and luxury industry, such as American Eagle, DICK'S Sporting Goods, Guitar Center, Pandora, Polaris, Suzuki and Sweetwater.

Corp, Other

Corp, Other includes activity and balances related to certain program agreements with retail partners and merchants that will not be renewed beyond their current expiration date and certain programs that were previously terminated, which are not managed within the five sales platforms discussed above, as well as fee income generated from Versatile Credit. Corp, Other also includes amounts related to changes in the fair value of equity investments and realized gains or losses associated with the sale of businesses and investments.

Our Credit Products

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Through our sales platforms, we offer three principal types of credit products: credit cards, commercial credit products and consumer installment loans. We also offer our Payment Security program, which is a debt cancellation product.

The following table sets forth each credit product by type and indicates the percentage of our total loan receivables that are under standard terms only or pursuant to a promotional financing offer at June 30, 2026:

Promotional Offer
Credit ProductStandard Terms OnlyDeferred InterestOther PromotionalTotal
Credit cards62.3%17.1%12.8%92.2%
Commercial credit products2.6——2.6
Consumer installment loans—0.15.05.1
Other0.1——0.1
Total65.0%17.2%17.8%100.0%

Credit Cards

We offer the following principal types of consumer credit cards:

  • Private Label Credit Cards.** Private label credit cards are partner-branded credit cards (e.g., Lowe’s or Amazon) or program-branded credit cards (e.g., Synchrony Car Care or CareCredit) that are used primarily for the purchase of goods and services from the partner or within the program network. In addition, in some cases, cardholders may be permitted to access their credit card accounts for cash advances. Credit under our private label credit cards is extended either on standard terms only or pursuant to a promotional financing offer.

  • Co-Branded Cards.** Our co-branded cards comprise our patented Dual Cards and general purpose co-branded credit cards. Our Dual Cards are credit cards that function as private label credit cards when used to purchase goods and services from our partners, and as general purpose credit cards when used to make purchases from other retailers wherever cards from those card networks are accepted or for cash advance transactions. We also offer a Synchrony-branded general purpose credit card. Our co-branded cards are offered across all of our sales platforms and credit is typically extended on standard terms only. We offer consumer co-branded cards through over 15 of our large partners, of which the majority are Dual Cards, as well as our CareCredit Dual Card. Our consumer co-branded cards totaled 34% of our total loan receivables portfolio at June 30, 2026.

Commercial Credit Products

We offer private label cards and Dual Cards for commercial customers that are similar to our consumer offerings, and includes the Lowe's commercial co-branded credit card portfolio acquired in April 2026. We also offer a commercial pay-in-full accounts receivable product to a wide range of business customers.

Installment Loans

We originate secured installment loans to consumers in the United States, primarily in our Lifestyle sales platform for power products in our Outdoor market (motorcycles, ATVs and lawn and garden). We also offer unsecured installment loans to consumers across all of our sales platforms through various products, such as Synchrony's Pay Later solutions. Installment loans are closed-end credit accounts where the customer pays down the outstanding balance in installments. Installment loans, other than our Synchrony Pay Later Pay in 4 product, are generally assessed periodic finance charges using fixed interest rates.

Business Trends and Conditions

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We believe our business and results of operations will be impacted in the future by various trends and conditions. For a discussion of certain trends and conditions, see “Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Trends and Conditions” in our 2025 Form 10-K. For a discussion of how certain trends and conditions impacted the three and six months ended June 30, 2026, see “—Results of Operations.”

Seasonality

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Our business is typically influenced by a seasonal pattern, with purchase volume and loan receivables typically rising beginning in the third quarter and generally peaking in fourth quarter, including the impacts of consumer spending for U.S. holidays, then declining through the first and second quarters as customers pay their balances down.

Delinquency rates and delinquent loan receivables balances typically rise in the third and fourth quarters as customer payment rates typically decline, resulting in higher net charge-off rates in the first half of the calendar year. Delinquent loan receivables at year-end are more likely to return to current status than those delinquent at interim period ends. Consistent with this historical experience, our allowance for credit losses as a percentage of total loan receivables is generally higher at interim period ends than at year-end and may increase mid-year even when certain credit metrics improve.

These seasonal impacts to purchase volume and our loan receivables balances may materially affect our results of operations, delinquency metrics and the allowance for credit losses as a percentage of total loan receivables with the most pronounced effects typically occurring between the fourth quarter and the subsequent first quarter.

Results of Operations

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Summary Highlights for the Three and Six Months Ended June 30, 2026

Earnings

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Interest income$5,583$5,586$11,186$11,136
Interest expense9751,0651,9432,151
Net interest income4,6084,5219,2438,985
Retailer share arrangements(1,027)(992)(2,097)(1,887)
Provision for credit losses1,2011,1462,5362,637
Net interest income, after retailer share arrangements and provision for credit losses2,3802,3834,6104,461
Other income137118270267
Other expense1,3311,2452,6472,488
Earnings before provision for income taxes1,1861,2562,2332,240
Provision for income taxes301289543516
Net earnings$885$967$1,690$1,724
Net earnings available to common stockholders$864$946$1,648$1,682

Net earnings decreased to $885 million from $967 million and was flat at $1.7 billion for the three and six months ended June 30, 2026, respectively, primarily reflecting the following key drivers:

  • Increases in net interest income of $87 million and $258 million for the three and six months ended June 30, 2026, respectively, primarily driven by decreases in interest expense and increases in interest and fees on loans, partially offset by lower interest income from our liquidity portfolio.

  • Provision for credit losses increased $55 million for the three months ended June 30, 2026, primarily driven by a lower reserve release in the current year period, partially offset by a decrease in net charge-offs. Provision for credit losses decreased $101 million in the six months ended June 30, 2026, primarily driven by a decrease in net charge-offs, partially offset by a lower reserve release in the current year period.

  • Retailer share arrangements increased $35 million and $210 million for the three and six months ended June 30, 2026, respectively, reflecting program performance and higher purchase volume, and other expense increased $86 million and $159 million for the three and six months ended June 30, 2026, respectively, primarily driven by higher operational losses and costs related to technology investments.

Loan receivables and Asset Quality

  • Loan receivables increased 2.4% to $102.2 billion at June 30, 2026 compared to June 30, 2025, reflecting higher purchase volume, including the impact of the acquisition of the Lowe's commercial co-branded credit card portfolio, partially offset by the effects of higher payment rates.

  • Over-30 day loan delinquencies as a percentage of period-end loan receivables decreased 2 basis points to 4.16% at June 30, 2026 from 4.18% at June 30, 2025. The net charge-off rate decreased 27 basis points and 61 basis points for the three and six months ended June 30, 2026, respectively, to 5.43% for both periods.

  • Our allowance coverage ratio (allowance for credit losses as a percentage of period-end loan receivables) decreased to 10.09% at June 30, 2026, as compared to 10.59% at June 30, 2025.

Funding, Liquidity and Capital

  • At June 30, 2026, deposits represented 83% of our total funding sources. Total deposits increased by 2.0% to $82.8 billion at June 30, 2026, compared to December 31, 2025.

  • In June 2026, we issued depositary shares representing $500 million of 7.250% fixed rate reset non-cumulative perpetual preferred stock, Series C, with dividends payable quarterly beginning in August 2026.

  • During the six months ended June 30, 2026, we repurchased $1.8 billion of our outstanding common stock, and declared and paid cash dividends of $0.60 per share, or $204 million in the aggregate.

  • At June 30, 2026, we had a total remaining share repurchase authorization of $5.7 billion under the program that was announced in April 2026 and does not have an expiration date. In addition, the Company announced that the Board approved an increase of our quarterly dividend to $0.34 per common share commencing in the third quarter of 2026.

2026 Partner Agreements

During the six months ended June 30 2026, and to date, we continued to expand and diversify our portfolio with the addition or renewal of more than 30 partners, which included the following:

New partnerships:
• Indian MotorcycleLifestyle
Program extensions:
• AdoramaDigital
• Amerivet PartnersHealth & Wellness
• Harbor FreightHome & Auto
• LaserAwayHealth & Wellness
• Miracle-EarHealth & Wellness
• Roto-RooterHome & Auto
• SuzukiLifestyle

  • In our Health & Wellness sales platform, we also expanded CareCredit partnerships with pet insurance providers, Figo and Embrace, to enable reimbursements back to CareCredit accounts, making the solution available for more than 1.7 million pets.

  • In April 2026, we completed the acquisition of $0.7 billion of loan receivables associated with the Lowe's commercial co-branded credit card portfolio, which are included within our Home & Auto sales platform results.

Other Financial and Statistical Data

The following table sets forth certain other financial and statistical data for the periods indicated:

At and for theAt and for the
Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Financial Position Data (Average):
Loan receivables, including held for sale$100,702$99,236$100,698$100,123
Total assets$121,270$120,441$120,663$120,467
Deposits$82,698$82,426$82,410$82,606
Borrowings$16,429$16,195$15,986$16,119
Total equity$16,603$16,755$16,687$16,726
Selected Performance Metrics:
Purchase volume(1)(2)$49,827$46,084$92,811$86,804
Home & Auto$12,120$11,459$21,563$20,905
Digital$14,897$13,647$28,396$26,126
Diversified & Value$17,200$15,393$32,126$29,125
Health & Wellness$4,092$4,007$7,963$7,781
Lifestyle$1,518$1,432$2,763$2,600
Corp, Other$—$146$—$267
Average active accounts (in thousands)(2)(3)68,34168,05068,68568,810
Net interest margin(4)15.08%14.78%15.29%14.76%
Net charge-offs$1,364$1,411$2,710$2,999
Net charge-offs (annualized) as a % of average loan receivables, including held for sale5.43%5.70%5.43%6.04%
Allowance coverage ratio(5)10.09%10.59%10.09%10.59%
Return on assets(6)2.9%3.2%2.8%2.9%
Return on equity(7)21.4%23.1%20.4%20.8%
Equity to assets(8)13.69%13.91%13.83%13.88%
Other expense (annualized) as a % of average loan receivables, including held for sale5.30%5.03%5.30%5.01%
Efficiency ratio(9)35.8%34.1%35.7%33.8%
Effective income tax rate25.4%23.0%24.3%23.0%
Selected Period-End Data:
Loan receivables$102,208$99,776$102,208$99,776
Allowance for credit losses$10,312$10,564$10,312$10,564
30+ days past due as a % of period-end loan receivables(10)4.16%4.18%4.16%4.18%
90+ days past due as a % of period-end loan receivables(10)2.01%2.06%2.01%2.06%
Total active accounts (in thousands)(2)(3)68,41068,18668,41068,186

(1)Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.

(2)Includes activity and accounts associated with loan receivables held for sale.

(3)Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.

(4)Net interest margin represents annualized net interest income divided by average total interest-earning assets.

(5)Allowance coverage ratio represents allowance for credit losses divided by total period-end loan receivables.

(6)Return on assets represents annualized net earnings as a percentage of average total assets.

(7)Return on equity represents annualized net earnings as a percentage of average total equity.

(8)Equity to assets represents average total equity as a percentage of average total assets.

(9)Efficiency ratio represents (i) other expense, divided by (ii) sum of net interest income, plus other income, less retailer share arrangements.

(10)Based on customer statement-end balances extrapolated to the respective period-end date.

Average Balance Sheet

The following tables set forth information for the periods indicated regarding average balance sheet data, which are used in the discussion of interest income, interest expense and net interest income that follows:

20262025
Three months ended June 30 ($ in millions)Average BalanceInterest Income / ExpenseAverage Yield / Rate**(1)**Average BalanceInterest Income / ExpenseAverage Yield / Rate**(1)**
Assets
Interest-earning assets:
Interest-earning cash and equivalents(2)$18,067$1673.71%$20,699$2284.42%
Securities available for sale3,775363.83%2,774304.34%
Loan receivables, including held for sale(3):
Credit cards92,6905,09222.03%91,4605,07622.26%
Consumer installment loans5,28818714.18%5,69220714.59%
Commercial credit products2,64610015.16%1,981438.71%
Other7815.14%10327.79%
Total loan receivables, including held for sale100,7025,38021.43%99,2365,32821.54%
Total interest-earning assets122,5445,58318.27%122,7095,58618.26%
Non-interest-earning assets:
Cash and due from banks945868
Allowance for credit losses(10,428)(10,797)
Other assets8,2097,661
Total non-interest-earning assets(1,274)(2,268)
Total assets$121,270$120,441
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts$82,279$7673.74%$82,014$8554.18%
Borrowings of consolidated securitization entities8,9151114.99%7,9261045.26%
Senior and subordinated unsecured notes7,514975.18%8,2691065.14%
Total interest-bearing liabilities98,7089753.96%98,2091,0654.35%
Non-interest-bearing liabilities:
Non-interest-bearing deposit accounts419412
Other liabilities5,5405,065
Total non-interest-bearing liabilities5,9595,477
Total liabilities104,667103,686
Equity
Total equity16,60316,755
Total liabilities and equity$121,270$120,441
Interest rate spread**(4)**14.31%13.91%
Net interest income$4,608$4,521
Net interest margin**(5)**15.08%14.78%
20262025
Six months ended June 30 ($ in millions)Average BalanceInterest Income / ExpenseAverage Yield / Rate**(1)**Average BalanceInterest Income / ExpenseAverage Yield / Rate**(1)**
Assets
Interest-earning assets:
Interest-earning cash and equivalents(2)$18,030$3303.69%$19,625$4314.43%
Securities available for sale3,188633.99%3,001654.37%
Loan receivables, including held for sale(3):
Credit cards92,98910,24422.22%92,34510,13122.12%
Consumer installment loans5,37637514.07%5,76241814.63%
Commercial credit products2,25417215.39%1,912889.28%
Other7925.11%10435.82%
Total loan receivables, including held for sale100,69810,79321.61%100,12310,64021.43%
Total interest-earning assets121,91611,18618.50%122,74911,13618.29%
Non-interest-earning assets:
Cash and due from banks960868
Allowance for credit losses(10,429)(10,866)
Other assets8,2167,716
Total non-interest-earning assets(1,253)(2,282)
Total assets$120,663$120,467
Liabilities
Interest-bearing liabilities:
Interest-bearing deposit accounts$81,993$1,5373.78%$82,191$1,7374.26%
Borrowings of consolidated securitization entities8,7002175.03%8,0582085.21%
Senior and subordinated unsecured notes7,2861895.23%8,0612065.15%
Total interest-bearing liabilities97,9791,9434.00%98,3102,1514.41%
Non-interest-bearing liabilities:
Non-interest-bearing deposit accounts417415
Other liabilities5,5805,016
Total non-interest-bearing liabilities5,9975,431
Total liabilities103,976103,741
Equity
Total equity16,68716,726
Total liabilities and equity$120,663$120,467
Interest rate spread**(4)**14.50%13.88%
Net interest income$9,243$8,985
Net interest margin**(5)**15.29%14.76%

(1)Average yields/rates are based on annualized total interest income/expense divided by average balances.

(2)Includes average restricted cash balances of $691 million and $642 million for the three months ended June 30, 2026 and 2025, respectively, and $377 million and $666 million for the six months ended June 30, 2026 and 2025, respectively.

(3)Interest income on loan receivables includes fees on loans, which primarily consist of late fees on our credit products, of $508 million and $560 million for the three months ended June 30, 2026 and 2025, respectively, and $1.1 billion for both of the six months ended June 30, 2026 and 2025.

(4)Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.

(5)Net interest margin represents annualized net interest income divided by average total interest-earning assets.

For a summary description of the composition of our key line items included in our Statements of Earnings, see Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Form 10-K.

Interest Income

Interest income was flat for the three months ended June 30, 2026 reflecting an increase of 1.0% in interest and fees on loans offset by lower interest income from our liquidity portfolio. Interest income increased $50 million, or 0.4%, for the six months ended June 30, 2026 reflecting an increase of 1.4% in interest and fees on loans, partially offset by lower interest income from our liquidity portfolio. The increases in interest and fees on loans for the three and six months ended June 30, 2026 were primarily driven by growth in average loan receivables, as well as the impact of our product, pricing and policy changes for the six months ended June 30, 2026.

Average interest-earning assets

Three months ended June 30 ($ in millions)2026%2025%
Loan receivables, including held for sale$100,70282.2%$99,23680.9%
Liquidity portfolio and other21,84217.823,47319.1
Total average interest-earning assets$122,544100.0%$122,709100.0%
Six months ended June 30 ($ in millions)2026%2025%
Loan receivables, including held for sale$100,69882.6%$100,12381.6%
Liquidity portfolio and other21,21817.422,62618.4
Total average interest-earning assets$121,916100.0%$122,749100.0%

Average loan receivables, including held for sale, increased 1.5% and 0.6% for the three and six months ended June 30, 2026, respectively, reflecting higher purchase volume, partially offset by the effects of higher payment rates. Purchase volume increased by 8.1% and 6.9% for the three and six months ended June 30, 2026, respectively, primarily reflecting the impacts of partner expansion and higher spend per average active account.

Yield on average interest-earning assets

The yield on average interest-earning assets increased by one basis point and 21 basis points for the three and six months ended June 30, 2026, respectively.

The change in yield for the three months ended June 30, 2026 reflects the impact of the mix of loan receivables as a percentage of interest-earning assets versus the prior year, partially offset by decreases in the yield on both loan receivables and our liquidity portfolio. The loan receivables yield decreased 11 basis points to 21.43% for the three months ended June 30, 2026 primarily driven by lower benchmark rates and lower assessed late fees, partially offset by the impacts of our product, pricing and policy changes.

The increase in yield on average interest-earning assets for the six months ended June 30, 2026 was primarily driven by an 18 basis point increase in loan receivables yield, as well as the mix of loan receivables as a percentage of interest-earning assets. The higher loan receivables yield was primarily driven by the impacts of our product, pricing and policy changes, partially offset by the impact of lower benchmark rates and lower assessed late fees.

Interest Expense

Interest expense decreased by $90 million, or 8.5%, and $208 million, or 9.7%, for the three and six months ended June 30, 2026, respectively, primarily due to lower interest-bearing liabilities cost associated with lower benchmark rates. Our cost of funds decreased to 3.96% and 4.00% for the three and six months ended June 30, 2026, respectively, compared to 4.35% and 4.41% for the respective prior year periods.

Average interest-bearing liabilities

Three months ended June 30 ($ in millions)2026%2025%
Interest-bearing deposit accounts$82,27983.4%$82,01483.5%
Borrowings of consolidated securitization entities8,9159.07,9268.1
Senior and subordinated unsecured notes7,5147.68,2698.4
Total average interest-bearing liabilities$98,708100.0%$98,209100.0%
Six months ended June 30 ($ in millions)2026%2025%
Interest-bearing deposit accounts$81,99383.7%$82,19183.6%
Borrowings of consolidated securitization entities8,7008.98,0588.2
Senior and subordinated unsecured notes7,2867.48,0618.2
Total average interest-bearing liabilities$97,979100.0%$98,310100.0%

Net Interest Income

Net interest income increased by $87 million, or 1.9%, and $258 million, or 2.9%, for the three and six months ended June 30, 2026, respectively, resulting from the changes in interest income and interest expense discussed above.

Retailer Share Arrangements

Retailer share arrangements increased by $35 million, or 3.5%, and $210 million, or 11.1%, for the three and six months ended June 30, 2026, respectively, reflecting program performance, which included lower net charge-offs, and the impact of our product, pricing and policy changes, as well as higher purchase volume.

Provision for Credit Losses

Provision for credit losses increased by $55 million, or 4.8%, and decreased by $101 million, or 3.8%, for the three and six months ended June 30, 2026, respectively. The increase in the three months ended June 30, 2026 was primarily driven by a lower reserve release in the current year period, partially offset by lower net charge-offs. The decrease in the six months ended June 30, 2026 was primarily driven by lower net charge-offs, partially offset by a lower reserve release in the current year period.

The reserve releases for the three and six months ended June 30, 2026 were $163 million and $174 million, respectively, as compared to reserve releases of $265 million and $362 million in the respective prior year periods.

Net charge-offs for the three and six months ended June 30, 2026 decreased by $47 million and $289 million, respectively. The net charge-off rate decreased by 27 basis points and 61 basis points for the three and six months ended June 30, 2026, respectively, to 5.43% for both periods, and we expect our net charge-off rate for the year ended December 31, 2026 will be below our long-term target range of 5.5% to 6.0%.

Other Income

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Interchange revenue$300$268$564$506
Protection product revenue161144322291
Loyalty programs(436)(360)(797)(671)
Other11266181141
Total other income$137$118$270$267

Other income increased by $19 million, or 16.1%, and $3 million, or 1.1%, for the three and six months ended June 30, 2026, respectively.

The increases in the three and six months ended June 30, 2026 were primarily driven by increases in other income, interchange revenue, and protection product revenue. These increases were partially offset by higher loyalty costs. During the three months ended June 30, 2026, we participated in the Visa exchange offer, which included the exchange of Visa Class B-2 common stock for Visa Class C common stock, which was recorded at fair value. The increases in other income for the three and six months ended June 30, 2026 were driven primarily by a gain of $30 million related to the exchange of Visa Class B-2 common stock.

Other Expense

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Employee costs$516$509$1,031$1,015
Professional fees220236429453
Marketing and business development137127251243
Information processing248215510434
Other210158426343
Total other expense$1,331$1,245$2,647$2,488

Other expense increased by $86 million, or 6.9%, and $159 million, or 6.4%, for the three and six months ended June 30, 2026, respectively.

The increases for the three and six months ended June 30, 2026 were driven by higher other expense and information processing costs, reflecting increased operational losses and costs related to technology investments.

Provision for Income Taxes

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Effective tax rate25.4%23.0%24.3%23.0%
Provision for income taxes$301$289$543$516

The effective tax rate for the three and six months ended June 30, 2026 increased compared to the same periods in the prior year primarily due to tax benefits recognized in the prior year related to the remeasurement of deferred tax assets for increases in state tax rates. The effective tax rate differs from the applicable U.S. federal statutory tax rate primarily due to state income taxes.

Platform Analysis

As discussed above under “—Our Sales Platforms,” we offer our credit products primarily through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle). The following is a discussion of certain supplemental information for the three and six months ended June 30, 2026, for each of our five sales platforms and Corp, Other.

Home & Auto

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$12,120$11,459$21,563$20,905
Period-end loan receivables$30,351$30,374$30,351$30,374
Average loan receivables, including held for sale$29,868$30,137$29,619$30,472
Average active accounts (in thousands)17,38317,83117,17617,899
Interest and fees on loans$1,394$1,395$2,773$2,797
Other income$63$52$118$108

Home & Auto interest and fees on loans remained flat for the three months ended June 30, 2026 and decreased by $24 million, or 0.9%, for the six months ended June 30, 2026, reflecting lower average loan receivables, offset by higher loan receivables yield. The decrease in average loan receivables was primarily driven by higher payment rates, partially offset by the impact of the acquisition of the Lowe's commercial co-branded credit card portfolio. The increase in loan receivables yield reflects the impact of product, pricing and policy changes, partially offset by lower late fee incidence.

Purchase volume increased by 5.8% and 3.1% for the three and six months ended June 30, 2026, respectively, primarily reflecting the performance of new programs. Average active accounts decreased by 2.5% and 4.0% for the three and six months ended June 30, 2026, respectively.

Other income increased by $11 million, or 21.2%, and $10 million, or 9.3%, for the three and six months ended June 30, 2026, respectively, primarily due to higher protection product revenue and higher interchange revenue, partially offset by higher loyalty costs.

Digital

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$14,897$13,647$28,396$26,126
Period-end loan receivables$29,011$27,786$29,011$27,786
Average loan receivables, including held for sale$28,538$27,571$28,780$27,892
Average active accounts (in thousands)20,66220,36820,96220,554
Interest and fees on loans$1,604$1,576$3,236$3,120
Other income$(5)$—$4$9

Digital interest and fees on loans increased by $28 million, or 1.8%, and $116 million, or 3.7% for the three and six months ended June 30, 2026, respectively, primarily driven by higher average loan receivables, partially offset by lower benchmark rates.

Purchase volume increased by 9.2% and 8.7% for the three and six months ended June 30, 2026, respectively, primarily reflecting strong performance across partners with broad diversified offerings which drove both higher spend per average active account and higher average active accounts. Average active accounts increased by 1.4% and 2.0% for the three and six months ended June 30, 2026, respectively.

Diversified & Value

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$17,200$15,393$32,126$29,125
Period-end loan receivables$20,770$19,510$20,770$19,510
Average loan receivables, including held for sale$20,348$19,338$20,289$19,504
Average active accounts (in thousands)20,16019,47120,32919,858
Interest and fees on loans$1,177$1,159$2,372$2,337
Other income$(51)$(3)$(69)$(3)

Diversified & Value interest and fees on loans increased by $18 million, or 1.6%, and $35 million, or 1.5%, for the three and six months ended June 30, 2026, respectively, primarily driven by higher average loan receivables reflecting the impact of partner expansion, partially offset by decreases in loan receivables yield primarily reflecting lower benchmark rates and lower late fee incidence.

Purchase volume increased 11.7% and 10.3%, for the three and six months ended June 30, 2026, respectively, primarily reflecting the impact of partner expansion, as well as higher gas sales. Average active accounts increased by 3.5% and 2.4% for the three and six months ended June 30, 2026, respectively.

Other income decreased by $48 million and $66 million, for the three and six months ended June 30, 2026, respectively, primarily due to higher loyalty costs, partially offset by higher interchange revenue.

Health & Wellness

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$4,092$4,007$7,963$7,781
Period-end loan receivables$15,390$15,309$15,390$15,309
Average loan receivables, including held for sale$15,296$15,215$15,335$15,247
Average active accounts (in thousands)7,5807,6977,6317,740
Interest and fees on loans$948$923$1,896$1,837
Other income$82$66$162$141

Health & Wellness interest and fees on loans increased by $25 million, or 2.7%, and $59 million, or 3.2%, for the three and six months ended June 30, 2026, respectively, primarily driven by increases in loan receivables yield, reflecting the impact of product, pricing and policy changes.

Purchase volume increased 2.1% and 2.3% for the three and six months ended June 30, 2026, respectively, reflecting growth in Pet, partially offset by lower spend in Cosmetic. The increase in the six months ended June 30, 2026 also reflected growth in Audiology. In addition, higher spend per average active account exceeded the impact of lower average active accounts. Average active accounts decreased 1.5% and 1.4% for the three and six months ended June 30, 2026, respectively.

Other income increased by $16 million, or 24.2%, and $21 million, or 14.9%, for the three and six months ended June 30, 2026, respectively, primarily due to higher protection product revenue, lower loyalty costs and higher interchange revenue.

Lifestyle

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$1,518$1,432$2,763$2,600
Period-end loan receivables$6,613$6,673$6,613$6,673
Average loan receivables, including held for sale$6,561$6,646$6,584$6,681
Average active accounts (in thousands)2,5392,5312,5692,598
Interest and fees on loans$256$261$514$522
Other income$12$9$23$19

Lifestyle interest and fees on loans decreased by $5 million, or 1.9%, and $8 million, or 1.5%, for the three and six months ended June 30, 2026, respectively, primarily driven by lower average loan receivables and lower benchmark rates.

Purchase volume increased by 6.0% and 6.3% for the three and six months ended June 30, 2026, respectively, primarily reflecting higher spend in Other Apparel and Goods and Luxury and the performance of new programs, partially offset by lower spend in Outdoors. Average active accounts increased 0.3% and decreased 1.1% for the three and six months ended June 30, 2026, respectively.

Corp, Other

Three months ended June 30,Six months ended June 30,
($ in millions)2026202520262025
Purchase volume$—$146$—$267
Period-end loan receivables$73$124$73$124
Average loan receivables, including held for sale$91$329$91$327
Average active accounts (in thousands)1715218161
Interest and fees on loans$1$14$2$27
Other income$36$(6)$32$(7)

Other income increased by $42 million and $39 million for the three and six months ended June 30, 2026, primarily driven by a gain of $30 million related to the exchange of Visa Class B-2 common stock.

Loan Receivables

____________________________________________________________________________________________

Loan receivables are our largest category of assets and represent our primary source of revenue. The following discussion provides supplemental information regarding our loan receivables portfolio. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies and Note 4. Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for additional information related to our loan receivables.

The following table sets forth the composition of our loan receivables portfolio by product type at the dates indicated:

($ in millions)At June 30, 2026%At December 31, 2025%
Loan receivables
Credit cards$94,23392.2%$96,34692.8%
Consumer installment loans5,2335.15,5485.3
Commercial credit products2,6812.61,8331.8
Other610.1810.1
Total loan receivables$102,208100.0%$103,808100.0%

Loan receivables decreased 1.5% to $102.2 billion at June 30, 2026, compared to $103.8 billion at December 31, 2025, primarily driven by the seasonality of our business and the effects of higher payment rates, partially offset by higher purchase volume, including the impact of the acquisition of the Lowe's commercial co-branded credit card portfolio.

Loan receivables increased 2.4% to $102.2 billion at June 30, 2026, compared to $99.8 billion at June 30, 2025 reflecting higher purchase volume, including the impact of the acquisition of the Lowe's commercial co-branded credit card portfolio, partially offset by the effects of higher payment rates.

Our loan receivables portfolio had the following geographic concentration at June 30, 2026:

($ in millions)Loan Receivables Outstanding% of Total Loan Receivables Outstanding
State
Texas$11,29911.1%
California$10,35210.1%
Florida$9,5879.4%
New York$4,7834.7%
North Carolina$4,3394.2%

Delinquencies

Over-30 day loan delinquencies as a percentage of period-end loan receivables decreased by 2 basis points to 4.16% at June 30, 2026 from 4.18% at June 30, 2025, and decreased by 33 basis points from 4.49% at December 31, 2025.

Net Charge-Offs

Net charge-offs consist of the unpaid principal balance of loans held for investment that we determine are uncollectible, net of recovered amounts. We exclude accrued and unpaid finance charges and fees and third-party fraud losses from charge-offs. Charged-off and recovered finance charges and fees are included in Interest and fees on loans while third-party fraud losses are included in Other expense. Charge-offs are recorded as a reduction to the Allowance for credit losses and subsequent recoveries of previously charged-off amounts are credited to the Allowance for credit losses. Costs incurred to recover charged-off loans are recorded as collection expense and included in Other expense in our Condensed Consolidated Statements of Earnings.

The tables below set forth the net charge-offs and ratio of annualized net charge-offs to average loan receivables, including held for sale, (“net charge-off rate”) for the periods indicated:

Three months ended June 30,
20262025
($ in millions)AmountRateAmountRate
Credit cards$1,2365.34%$1,3045.72%
Consumer installment loans967.28%775.43%
Commercial credit products325.00%306.07%
Other——%——%
Total net charge-offs$1,3645.43%$1,4115.70%
Six months ended June 30,
20262025
($ in millions)AmountRateAmountRate
Credit cards$2,4695.35%$2,7666.04%
Consumer installment loans1796.71%1705.95%
Commercial credit products625.64%636.64%
Other——%——%
Total net charge-offs$2,7105.43%$2,9996.04%

Allowance for Credit Losses

The allowance for credit losses totaled $10.3 billion at June 30, 2026, compared to $10.4 billion at December 31, 2025, and $10.6 billion at June 30, 2025, and reflects our estimate of expected credit losses for the life of the loan receivables on our Condensed Consolidated Statements of Financial Position.

The decreases in allowance for credit losses compared to December 31, 2025 and June 30, 2025 were primarily driven by continued asset quality trends that reflect the impact of prior credit actions and elevated customer payment rates, as well as expectations of the macroeconomic environment. Our allowance for credit losses as a percentage of total period-end loan receivables increased to 10.09% at June 30, 2026, from 10.06% at December 31, 2025 and decreased from 10.59% at June 30, 2025. See Note 4. Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for additional information.

Funding, Liquidity and Capital Resources

____________________________________________________________________________________________

We maintain a strong focus on liquidity and capital. Our funding, liquidity and capital policies are designed to ensure that our business has the liquidity and capital resources to support our daily operations, our business growth, our credit ratings and our regulatory and policy requirements, in a cost effective and prudent manner through expected and unexpected market environments.

Funding Sources

Our primary funding sources include cash from operations, deposits (direct and brokered deposits), securitized financings and senior and subordinated unsecured notes.

The following tables summarize information concerning our funding sources during the periods indicated:

20262025
Three months ended June 30 ($ in millions)Average Balance%Average RateAverage Balance%Average Rate
Deposits(1)$82,27983.4%3.7%$82,01483.5%4.2%
Securitized financings8,9159.05.0%7,9268.15.3%
Senior and subordinated unsecured notes7,5147.65.2%8,2698.45.1%
Total$98,708100.0%4.0%$98,209100.0%4.3%

(1)Excludes $419 million and $412 million average balance of non-interest-bearing deposits for the three months ended June 30, 2026 and 2025, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the three months ended June 30, 2026 and 2025.

20262025
Six months ended June 30 ($ in millions)Average Balance%Average RateAverage Balance%Average Rate
Deposits(1)$81,99383.7%3.8%$82,19183.6%4.3%
Securitized financings8,7008.95.0%8,0588.25.2%
Senior and subordinated unsecured notes7,2867.45.2%8,0618.25.2%
Total$97,979100.0%4.0%$98,310100.0%4.4%

(1)Excludes $417 million and $415 million average balance of non-interest-bearing deposits for the six months ended June 30, 2026 and 2025, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the six months ended June 30, 2026 and 2025.

Deposits

We obtain deposits directly from retail customers, affinity relationships and commercial customers (“direct deposits”) and through third-party firms that offer our deposits to their customers (“brokered deposits”). At June 30, 2026, we had $76.7 billion in direct deposits and $6.1 billion in brokered deposits consisting of certificates of deposit and network deposit sweeps procured through a program arranger that channels account deposits to us. A key part of our liquidity plan and funding strategy is to continue to utilize our direct deposit base as a source of stable and diversified low-cost funding.

Our direct deposits are primarily from retail customers and include a range of FDIC-insured deposit products, including certificates of deposit, IRAs, money market accounts, savings accounts and affinity deposits.

Brokered deposits are primarily from retail customers of large brokerage firms. We have relationships with multiple brokers that offer our deposits through their networks. Our brokered deposits primarily consist of certificates of deposit that bear interest at a fixed rate. These deposits generally are not subject to early withdrawal.

Our ability to attract deposits is sensitive to, among other things, the interest rates we pay, and therefore, we bear funding risk if we fail to pay higher rates, or interest rate risk if we are required to pay higher rates, to retain existing deposits or attract new deposits. To mitigate these risks, our funding strategy includes a range of deposit products, and we seek to maintain access to multiple other funding sources, such as securitized financings (including our undrawn committed and uncommitted capacity) and unsecured debt.

The following tables summarize certain information regarding our interest-bearing deposits by type (all of which constitute U.S. deposits) for the periods indicated:

Three months ended June 30 ($ in millions)20262025
Average Balance%Average RateAverage Balance%Average Rate
Direct deposits:
Certificates of deposit (including IRA certificates of deposit)$43,58253.0%4.0%$40,16349.0%4.4%
Savings, money market, and demand accounts33,04640.13.4%33,27040.63.9%
Brokered deposits5,6516.94.0%8,58110.44.5%
Total interest-bearing deposits$82,279100.0%3.7%$82,014100.0%4.2%
Six months ended June 30 ($ in millions)20262025
Average Balance%Average RateAverage Balance%Average Rate
Direct deposits:
Certificates of deposit (including IRA certificates of deposit)$43,25552.8%4.0%$40,49949.3%4.5%
Savings, money market, and demand accounts32,97040.23.432,60139.73.9%
Brokered deposits5,7687.04.09,09111.04.4%
Total interest-bearing deposits$81,993100.0%3.8%$82,191100.0%4.3%

Our deposit liabilities provide funding with maturities ranging from one day to ten years. At June 30, 2026, the weighted average maturity of our interest-bearing time deposits was approximately one year. See Note 7. Deposits to our condensed consolidated financial statements for more information on the maturities of our time deposits.

The standard FDIC deposit insurance amount is $250,000 per depositor, for each account ownership category. Our estimate of the uninsured portion of total deposit balances, excluding any intercompany balance, at June 30, 2026 was $7.1 billion.

The following table summarizes the portion of uninsured deposits that are certificates of deposit by contractual maturity at June 30, 2026:

($ in millions)3 Months or LessOver 3 Months but within 6 MonthsOver 6 Months but within 12 MonthsOver 12 MonthsTotal
Certificates of deposit (including IRA certificates of deposit)$1,031$794$1,516$1,073$4,414

Securitized Financings

We access the asset-backed securitization market using the Synchrony Card Issuance Trust (“SYNIT”) through which we may issue asset-backed securities through both public transactions and private transactions funded by financial institutions and commercial paper conduits. In addition, we issue asset-backed securities in private transactions through the Synchrony Credit Card Master Note Trust (“SYNCT”) and the Synchrony Sales Finance Master Trust (“SFT”).

The following table summarizes expected contractual maturities of the investors’ interests in securitized financings, excluding debt premiums, discounts and issuance costs at June 30, 2026:

($ in millions)Less Than One Year**(2)**One Year Through Three YearsFour Years Through Five YearsAfter Five YearsTotal
Scheduled maturities of borrowings—owed to securitization investors:
SYNCT$1,050$600$—$—$1,650
SFT300975——1,275
SYNIT(1)2,5003,500——6,000
Total borrowings—owed to securitization investors$3,850$5,075$—$—$8,925

(1)Excludes any subordinated classes of SYNIT notes that we owned at June 30, 2026.

(2)Includes $1.0 billion of fixed securitized borrowings which matured and were repaid in July 2026.

We retain exposure to the performance of trust assets through: (i) in the case of SYNCT, SFT and SYNIT, subordinated retained interests in the loan receivables transferred to the trust in excess of the principal amount of the notes for a given series that provide credit enhancement for a particular series, as well as a pari passu seller’s interest in each trust and (ii) in the case of SYNIT, any subordinated classes of notes that we own.

All of our securitized financings include early repayment triggers, referred to as early amortization events. The occurrence of an early amortization event would limit or terminate our ability to issue future series out of the trust in which the early amortization event occurred. No early amortization event has occurred with respect to any of the securitized financings in SYNCT, SFT or SYNIT. For more information related to early amortization events with respect to our securitized financings, see "Funding, Liquidity and Capital Resources—Securitized Financings" in our 2025 Form 10-K.

The following table summarizes for each of our trusts the three-month rolling average excess spread at June 30, 2026:

Note Principal Balance ($ in millions)# of Series OutstandingThree-Month Rolling Average Excess Spread**(1)**
SYNCT$1,6503~ 16.6% to 17.1%
SFT$1,275513.8%
SYNIT$6,000116.9%

(1)Represents the excess spread (generally calculated as interest income collected from the applicable pool of loan receivables less applicable net charge-offs, interest expense and servicing costs, divided by the aggregate principal amount of loan receivables in the applicable pool) for SFT or, in the case of SYNCT, a range of the excess spreads relating to the particular series issued within such trust or, in the case of SYNIT, the excess spread relating to the one outstanding series issued within such trust, in all cases omitting any series that have not been outstanding for at least three full monthly periods and calculated in accordance with the applicable trust or series documentation, for the three securitization monthly periods ended June 30, 2026.

Senior and Subordinated Unsecured Notes

The following table provides a summary of our outstanding senior and subordinated unsecured notes at June 30, 2026, which includes $750 million of senior unsecured notes issued by Synchrony Financial in February 2026:

Issuance DateInterest Rate**(1)**Interest Rate Reset DateFloating Rate Spread**(2)**MaturityPrincipal Amount Outstanding**(3)**
($ in millions)
Fixed rate senior unsecured notes:
Synchrony Financial
August 20163.700%——August 2026500
December 20173.950%——December 20271,000
March 20195.150%——March 2029650
October 20212.875%——October 2031750
Synchrony Bank
August 20225.625%——August 2027600
Fixed-to-floating rate senior unsecured notes:
Synchrony Financial
August 20245.935%August 2, 2029213 bpsAugust 2030750
March 20255.450%March 6, 2030168 bpsMarch 2031800
July 20255.019%July 29, 2028139.5 bpsJuly 2029500
July 20256.000%July 29, 2035207 bpsJuly 2036500
February 20264.947%February 25, 2031153 bpsFebruary 2032750
Fixed rate subordinated unsecured notes:
Synchrony Financial
February 20237.250%——February 2033750
Total senior and subordinated unsecured notes$7,550

(1)Weighted average interest rate of all senior and subordinated unsecured notes at June 30, 2026 was 5.05%.

(2)Floating rate applicable at interest reset date through maturity, based on compounded Secured Overnight Financing Rate plus floating rate spread noted above.

(3)The amounts shown exclude unamortized debt discounts, premiums and issuance costs.

Short-Term Borrowings

Except as described above, there were no material short-term borrowings for the periods presented.

Covenants

The indentures pursuant to which our senior and subordinated unsecured notes have been issued include various covenants. If we do not satisfy any of these covenants, the maturity of amounts outstanding thereunder may be accelerated and become payable. We were in compliance with all of these covenants at June 30, 2026.

At June 30, 2026, we were not in default under any of our credit facilities.

Credit Ratings

Our borrowing costs and capacity in certain funding markets, including securitizations and senior and subordinated debt, may be affected by the credit ratings of the Company, the Bank and the ratings of our asset-backed securities.

The table below reflects our current credit ratings and outlooks:

S&PFitch Ratings
Synchrony Financial
Senior unsecured debtBBB-BBB
Subordinated unsecured debtBB+BBB-
Preferred stockBB-BB-
Outlook for Synchrony FinancialPositiveStable
Synchrony Bank
Senior unsecured debtBBBBBB
Outlook for Synchrony BankPositiveStable

In addition, certain of the asset-backed securities issued by SYNIT are rated by Fitch, S&P and/or Moody’s. A credit rating is not a recommendation to buy, sell or hold securities, may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. Downgrades in these credit ratings could materially increase the cost of our funding from, and restrict our access to, the capital markets.

Liquidity

____________________________________________________________________________________________

We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth, satisfy debt obligations and to meet regulatory expectations under normal and stress conditions.

We maintain policies outlining the overall framework and general principles for managing liquidity risk across our business, which is the responsibility of our Asset and Liability Management Committee, a management committee under the oversight of the Risk Committee of our Board of Directors. We employ a variety of metrics to monitor and manage liquidity. We perform regular liquidity stress testing and contingency planning as part of our liquidity management process. We evaluate a range of stress scenarios including Company specific and systemic events that could impact funding sources and our ability to meet liquidity needs.

We maintain a liquidity portfolio, which at June 30, 2026 had $19.8 billion of liquid assets, primarily consisting of cash and equivalents, less cash in transit which is not considered to be liquid, compared to $16.6 billion of liquid assets at December 31, 2025. The increase in liquid assets was primarily due to deposit growth, issuances of senior unsecured debt, securitized debt and preferred stock, as well as the seasonality of our business. We believe our liquidity position at June 30, 2026 remains strong as we continue to operate in a period of uncertain economic conditions and we will continue to closely monitor our liquidity as economic conditions change.

As a general matter, investments included in our liquidity portfolio are expected to be highly liquid, giving us the ability to readily convert them to cash. The level and composition of our liquidity portfolio may fluctuate based upon the level of expected maturities of our funding sources as well as operational requirements and market conditions.

We also have access to several additional sources of liquidity beyond our liquidity portfolio. At June 30, 2026, we had an aggregate of $13.1 billion of available borrowing capacity through the Federal Reserve’s discount window. In addition, we had $2.6 billion of undrawn capacity on our securitized financings, subject to customary borrowing conditions, from private lenders under our securitization programs, of which $2.1 billion was committed and $450 million was uncommitted. We also have other unencumbered assets in the Bank available to be used to generate additional liquidity through secured borrowings or asset sales or to be pledged to the Federal Reserve Board for credit at the discount window.

We rely significantly on dividends and other distributions and payments from the Bank for liquidity; however, bank regulations, contractual restrictions and other factors limit the amount of dividends and other distributions and payments that the Bank may pay to us. For a discussion of regulatory restrictions related to the Bank’s ability to pay dividends, see “Regulation—Risk Factors Relating to Regulation—We are subject to restrictions that limit our ability to pay dividends and repurchase our common stock; the Bank is subject to restrictions that limit its ability to pay dividends to us, which could limit our ability to pay dividends, repurchase our common stock or make payments on our indebtedness,” “Regulation—Regulation Relating to Our Business—Savings Association Regulation—Dividends and Stock Repurchases” and —Liquidity," and "Regulation—Savings and Loan Holding Company Regulation—Liquidity" in our 2025 Form 10-K.

Capital

____________________________________________________________________________________________

Our primary sources of capital have been earnings generated by our business and existing equity capital. We seek to manage capital to a level and composition sufficient to support the risks of our business, meet regulatory requirements, adhere to rating agency targets and support future business growth. The level, composition and utilization of capital are influenced by changes in the economic environment, strategic initiatives and legislative and regulatory developments. Within these constraints, we are focused on deploying capital in a manner that will provide attractive returns to our stockholders.

We are subject to the Federal Reserve Board's formal capital plan submission requirements and submitted our 2026 capital plan to the Federal Reserve Board. We are also subject to supervisory stress tests on a biennial basis, in even calendar years, and the 2026 supervisory stress test was the first stress test in which we participated. In February 2026, the Federal Reserve Board voted to maintain banking organizations’ current stress capital buffer requirements until 2027 at the earliest. As a result, following completion of the 2026 supervisory stress test, we remain subject to our initial stress capital buffer of 2.5% and as we are only subject to supervisory stress tests on a biennial basis, we will receive a new stress capital buffer in 2028. For more information, see “Regulation—Savings and Loan Holding Company Regulation” in our 2025 Form 10-K.

Dividend and Share Repurchases

Common Stock Cash Dividends DeclaredMonth of PaymentAmount per Common ShareAmount
Three months ended ($ in millions, except per share data)
March 31, 2026February 2026$0.30$104
June 30, 2026May 20260.30100
Total dividends declared$0.60$204
Series ASeries B
Preferred Stock Cash Dividends DeclaredMonth of PaymentAmount per Preferred ShareAmountAmount per Preferred ShareAmount
Three months ended ($ in millions, except per share data)
March 31, 2026February 2026$14.06$10$20.63$11
June 30, 2026May 202614.061120.6310
Total dividends declared$28.12$21$41.26$21

In April 2026, the Board approved an increase of our quarterly dividend to $0.34 per common share commencing in the third quarter of 2026. In addition, in June 2026, we issued depositary shares representing $500 million of 7.250% fixed rate reset non-cumulative perpetual preferred stock, Series C, with dividends payable quarterly beginning in August 2026. The declaration and payment of future dividends to holders of our common and preferred stock will be at the discretion of the Board and will depend on many factors.

Common Shares Repurchased Under Publicly Announced ProgramsTotal Number of Shares PurchasedDollar Value of Shares Purchased
Three months ended ($ and shares in millions)
March 31, 202612.5$900
June 30, 202611.7850
Total24.2$1,750

In April 2026, the Company announced that the Board approved a new share repurchase program of up to $6.5 billion of the Company’s common stock, which commenced in the second quarter of 2026 and, in a change from our prior share repurchase programs, does not have an expiration date (the "2026 program"). The new share repurchase program replaced the Company’s prior program, which was scheduled to expire on June 30, 2026. At June 30, 2026, we had a total remaining share repurchase authorization of $5.7 billion under the 2026 program. The pace and amount of share repurchases under the program are flexible, and will be executed from time to time subject to various factors, including capital levels, financial performance, market conditions and legal and regulatory requirements, and in accordance with our capital plans.

The Company's share repurchase program may be executed through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans, and may be modified, suspended or terminated at any time.

For a discussion of regulatory and other restrictions on our ability to pay dividends and repurchase stock, see “Regulation—Risk Factors Relating to Regulation—We are subject to restrictions that limit our ability to pay dividends and repurchase our common stock; the Bank is subject to restrictions that limit its ability to pay dividends to us, which could limit our ability to pay dividends, repurchase our common stock or make payments on our indebtedness” in our 2025 Form 10-K.

Regulatory Capital Requirements - Synchrony Financial

For Synchrony Financial to be a well-capitalized savings and loan holding company, Synchrony Bank must be well-capitalized and Synchrony Financial must not be subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the Federal Reserve Board to meet and maintain a specific capital level for any capital measure. At June 30, 2026, Synchrony Financial met all minimum capital ratio requirements and the requirements to be deemed well-capitalized.

The following table sets forth the composition of our capital ratios for the Company calculated under the Basel III Standardized Approach rules at June 30, 2026 and December 31, 2025, respectively:

At June 30, 2026At December 31, 2025**(1)**
($ in millions)AmountRatio**(2)**AmountRatio**(2)**
Total risk-based capital$17,78216.9%$17,69116.7%
Tier 1 risk-based capital$15,61614.9%$15,51214.6%
Tier 1 leverage$15,61613.0%$15,51213.3%
Common equity Tier 1 capital$13,90013.2%$14,29013.5%
Risk-weighted assets$104,969$105,934

(1)Amounts and ratios at December 31, 2025 have been recast to reflect the change in presentation of internal-use capitalized software on our Condensed Consolidated Statements of Financial Position. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our condensed consolidated financial statements for additional information.

(2)Tier 1 leverage ratio represents total Tier 1 capital as a percentage of total average assets, after certain adjustments. All other ratios presented above represent the applicable capital measure as a percentage of risk-weighted assets.

The decrease in our common equity Tier 1 capital ratio compared to December 31, 2025 was primarily due to share repurchases and common and preferred dividends in the six months ended June 30, 2026, partially offset by net earnings during the same period.

Regulatory Capital Requirements - Synchrony Bank

At June 30, 2026 and December 31, 2025, the Bank met all applicable requirements to be deemed well-capitalized pursuant to the Office of the Comptroller of the Currency of the U.S. Treasury (the “OCC”) regulations and for purposes of the Federal Deposit Insurance Act. The following table sets forth the composition of the Bank’s capital ratios calculated under the Basel III Standardized Approach rules at June 30, 2026 and December 31, 2025:

At June 30, 2026At December 31, 2025**(1)**
($ in millions)AmountRatio**(2)**AmountRatio**(2)**
Total risk-based capital$16,42716.5%$16,16216.1%
Tier 1 risk-based capital$14,32114.4%$14,04514.0%
Tier 1 leverage$14,32112.6%$14,04512.7%
Common equity Tier 1 capital$14,32114.4%$14,04514.0%

(1)Amounts and ratios at December 31, 2025 have been recast to reflect the change in presentation of internal-use capitalized software on our Condensed Consolidated Statements of Financial Position. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our condensed consolidated financial statements for additional information.

(2)Tier 1 leverage ratio represents total Tier 1 capital as a percentage of total average assets, after certain adjustments. All other ratios presented above represent the applicable capital measure as a percentage of risk-weighted assets.

For additional information on the minimum capital requirements for both Synchrony Financial and the Bank, See “Regulation—Regulation Relating to Our Business—Capital" for both Savings and Loan Holding Company Regulation and Savings Association Regulation, as applicable in our 2025 Form 10-K. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a material adverse effect on our business, results of operations and financial condition. See “Regulation—Risk Factors Relating to Regulation—Failure by Synchrony and the Bank to meet applicable capital adequacy and liquidity requirements could have a material adverse effect on us” in our 2025 Form 10-K.

Off-Balance Sheet Arrangements and Unfunded Lending Commitments

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We do not have any material off-balance sheet arrangements, including guarantees of third-party obligations. Guarantees are contracts or indemnification agreements that contingently require us to make a guaranteed payment or perform an obligation to a third-party based on certain trigger events. At June 30, 2026, we had not recorded any contingent liabilities in our Condensed Consolidated Statements of Financial Position related to any guarantees. See Note 5. Variable Interest Entities to our condensed consolidated financial statements for more information on our investment commitments for unconsolidated variable interest entities.

We extend credit, primarily arising from agreements with customers for unused lines of credit on our credit cards, in the ordinary course of business. Each unused credit card line is unconditionally cancellable by us. See Note 4. Loan Receivables and Allowance for Credit Losses to our condensed consolidated financial statements for more information on our unfunded lending commitments.

Critical Accounting Estimates

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In preparing our condensed consolidated financial statements, we have identified certain accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. The critical accounting estimates we have identified relate to allowance for credit losses and fair value measurements. These estimates reflect our best judgment about current, and for some estimates future, economic and market conditions and their effects based on information available as of the date of these financial statements. If these conditions change from those expected, it is reasonably possible that these judgments and estimates could change, which may result in incremental losses on loan receivables, or material changes to our Condensed Consolidated Statements of Financial Position, among other effects. See “Management's Discussion and Analysis—Critical Accounting Estimates” in our 2025 Form 10-K, for a detailed discussion of these critical accounting estimates.

New Accounting Standards

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See Note 2. Basis of Presentation and Summary of Significant Accounting Policies - New Accounting Standards, to our condensed consolidated financial statements for additional information related to recent accounting pronouncements.

Regulation and Supervision

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Our business, including our relationships with our customers, is subject to regulation, supervision and examination under U.S. federal, state and foreign laws and regulations. These laws and regulations cover all aspects of our business, including lending and collection practices, treatment of our customers, safeguarding deposits, customer privacy and information security, capital structure, liquidity, dividends and other capital distributions, transactions with affiliates, and conduct and qualifications of personnel. Such laws and regulations directly and indirectly affect key drivers of our profitability, including, for example, capital and liquidity, product offerings, risk management, and costs of compliance.

As a savings and loan holding company and a financial holding company, Synchrony is subject to regulation, supervision and examination by the Federal Reserve Board. As a large provider of consumer financial services, we are also subject to regulation, supervision and examination by the CFPB.

The Bank is a federally chartered savings association. As such, the Bank is subject to regulation, supervision and examination by the OCC, which is its primary regulator, and by the CFPB. In addition, the Bank, as an insured depository institution, is supervised by the FDIC.

On March 19, 2026, the federal banking agencies issued several rulemaking proposals to revise the U.S. regulatory capital framework. If finalized as proposed, the new rule would revise the standardized approach to calculating risk-weighted assets, including a 10% reduction in risk-weighting of retail exposures, and would require Category III and Category IV banking organizations, including Synchrony, to include most elements of accumulated other comprehensive income (“AOCI”) in their common equity Tier 1 capital, thereby requiring all net unrealized gains and losses on holdings of available-for-sale debt securities from changes in fair value to flow through to regulatory capital, the effects of which would be phased in over a five-year transitional period. We are evaluating the potential impacts of the proposals on the Company.

On June 25, 2026, the FDIC issued two proposals that would modify certain requirements applicable to the Bank. The first would streamline resolution planning requirements for insured depository institutions by eliminating, among other things, the need for institutions to provide a strategy for their own resolution and to provide interim resolution plan supplements annually, and also by removing the FDIC’s ability to deem resolution plans, which would be renamed “resolution submissions,” not credible. The second proposal would decrease initial base deposit insurance assessment rates for institutions with total assets of $30 billion or more, including the Bank, by one basis point. This proposal would provide an additional downward adjustment of 0.5 basis points to such an institution’s assessment rate if the institution successfully completed a virtual data room testing exercise, and a further downward adjustment of 0.5 basis points if the institution provided the FDIC with temporary access to certain data service providers and/or internal data systems. We are evaluating the potential impact of these two proposals on the Company.

See “Regulation—Regulation Relating to Our Business” in our 2025 Form 10-K for additional information on regulations that apply to us, and “—Capital” above, for discussion of the impact of regulations and supervision on our capital and liquidity, including our ability to pay dividends and repurchase stock.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Statements of Earnings33
Condensed Consolidated Statements of Comprehensive Income34
Condensed Consolidated Statements of Financial Position35
Condensed Consolidated Statements of Changes in Equity36
Condensed Consolidated Statements of Cash Flows38
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Business Description39
Note 2. Basis of Presentation and Summary of Significant Accounting Policies39
Note 3. Debt Securities42
Note 4. Loan Receivables and Allowance for Credit Losses43
Note 5. Variable Interest Entities49
Note 6. Other Assets51
Note 7. Deposits52
Note 8. Borrowings53
Note 9. Fair Value Measurements54
Note 10. Regulatory and Capital Adequacy56
Note 11. Earnings Per Share58
Note 12. Equity and Other Stock Related Information58
Note 13. Income Taxes59
Note 14. Segment Reporting60
Note 15. Legal Proceedings and Regulatory Matters61

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