Synchrony Financial (SYF)

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 months ended March 31, 2026, we financed $43.0 billion of purchase volume and had 68.8 million average active accounts and at March 31, 2026, we had $100.1 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 March 31, 2026, we had $82.9 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.

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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.

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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 March 31, 2026:

Credit Cards

We offer the following principal types of 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 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 March 31, 2026.

Commercial Credit Products

We offer private label cards and Dual Cards for commercial customers that are similar to our consumer offerings. 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.

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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 months ended March 31, 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 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. Our loan receivables decreased by $3.7 billion, or 3.6% to $100.1 billion at March 31, 2026 compared to $103.8 billion at December 31, 2025, and our allowance for credit losses as a percentage of total loan receivables increased to 10.42% at March 31, 2026, from 10.06% at December 31, 2025, reflecting th

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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 consolidated financial statements and related notes included elsewhere in this report. For a discussion and analysis of our financial condition and results of operations comparing 2024 vs. 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 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.”

Results of Operations for the Three Years Ended December 31, 2025

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Key Earnings Metrics

Performance Metrics

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Growth Metrics

Asset Quality Metrics

Funding, Liquidity and Capital(1)

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(1)Reported metrics represent amounts at December 31 of the applicable year.

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Summary Highlights for the Year Ended December 31, 2025

Earnings

Trends disclosed below are compared to the year ended December 31, 2024, as applicable, except as otherwise noted.

Net earnings increased 1.5% to $3.6 billion for the year ended December 31, 2025, primarily reflecting the following key drivers:

•Decrease in provision for credit losses of $1.5 billion, primarily driven by lower net charge-offs, as well as a reserve release in the current year as compared to a reserve build in the prior year.

•Increase in net interest income of $455 million, primarily driven by lower interest expense and an increase in interest and fees on loans of 0.5%, partially offset by lower interest income on investment securities.

•These drivers were partially offset by lower other income due to the gain on sale related to Pets Best of $1.1 billion in the prior year, as well as higher retailer share arrangements.

Loan receivables and Asset Quality

•Loan receivables decreased 0.9% to $103.8 billion at December 31, 2025, reflecting the effects of higher payment rates as a result of our improved credit mix as well as flat purchase volume and lower average active accounts compared to the prior year.

•Over-30 day loan delinquencies as a percentage of period-end loan receivables decreased 21 basis points to 4.49% at December 31, 2025 from 4.70% at December 31, 2024. The net charge-off rate decreased 66 basis points to 5.65% for the year ended December 31, 2025.

•Our allowance coverage ratio (allowance for credit losses as a percentage of period-end loan receivables) decreased to 10.06% at December 31, 2025, as compared to 10.44% at December 31, 2024.

Funding, Liquidity and Capital

•At December 31, 2025, deposits represented 84% of our total funding sources. Total deposits decreased 1.1% to $81.1 billion at December 31, 2025, compared to December 31, 2024.

•During the year ended December 31, 2025, we repurchased $2.9 billion of our outstanding common stock, and declared and paid cash dividends of $1.15 per common share, or $427 million in the aggregate. At December 31, 2025 we had a total share repurchase authorization of $1.2 billion remaining.

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2025 Acquisitions and Partner Agreements

In October 2025, we acquired Versatile Credit, Inc. ("Versatile Credit"), a leading multi-source financing platform connecting merchants, lenders and consumers through point-of-sale solutions.

During the year ended December 31, 2025, and to date, we continued to expand and diversify our portfolios with the addition or renewal of more than 75 partners, which included the following:

•In addition, we expanded our existing Lowe's commercial program and announced the acquisition of the Lowe's commercial co-branded credit card portfolio, with loan receivables of approximately $0.8 billion, which is expected to close in the first half of 2026.

•In October 2025, we also sold $0.2 billion of loan receivables associated with a Home & Auto partner program agreement.

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Other Financial and Statistical Data

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

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(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 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 net earnings as a percentage of average total assets.

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

(8)Equity to assets represents average 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.

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Average Balance Sheet

The following table sets 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.

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

(2)Includes average restricted cash balances of $380 million, $73 million and $279 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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(3)Interest income on loan receivables includes fees on loans, which primarily consist of late fees on our credit products, of $2.3 billion, $2.5 billion and $2.7 billion for the years ended December 31, 2025, 2024 and 2023, respectively.

(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 net interest income divided by average total interest-earning assets.

The following table sets forth the amount of changes in interest income and interest expense due to changes in average volume and average yield / rate. Variances due to changes in both average volume and average yield / rate have been allocated between the average volume and average yield / rate variances on a consistent basis based upon the respective percentage changes in average volume and average yield/rate.

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Business Trends and Conditions

We believe our business and results of operations will be impacted in the future by various trends and conditions, including the following:

•Growth in loan receivables and interest and fees on loans. For the year ended December 31, 2025 we experienced a decrease in period-end loan receivables of 0.9%, reflecting higher payment rates as a result of our improved credit mix, as well as flat purchase volume and lower average active accounts compared to the year ended December 31, 2024 as the credit actions we took across our portfolio in prior years continued to impact loan receivable growth. Interest and fees on loans increased by 0.5%, driven primarily by the impacts of our product, pricing and policy changes, offset by a combination of lower benchmark rates and a decrease in average loan receivables, as well as lower late fee incidence. In 2026, we expect loan receivables to increase, reflecting growth in both purchase volume and average active accounts, including the impact from new or recently launched programs, partially offset by continued effects from elevated payment rates. In addition, we expect interest and fees on loans to increase, primarily reflecting the continued impact of our product, pricing and policy changes, and growth in loan receivables. In addition, the amount of the increases will be dependent on various factors, including whether customer payment rate trends and consumer spend behavior differs from our expectations, as well as any changes in benchmark interest rates or other regulatory or legislative developments that may impact the yield on our loan receivables.

•Asset quality. During the year ended December 31, 2025 our asset quality metrics improved as compared to the prior year, reflecting the impact of prior credit actions and elevated customer payment rates. Our net charge-off rate for the year ended December 31, 2025 decreased by 66 basis points to 5.65% and both over-30 and over-90 day loan delinquencies as a percentage of period-end loan receivables at December 31, 2025 decreased by over 20 basis points compared to the prior year. As a result of these credit trends, we expect our net charge-offs for the year ended December 31, 2026 will remain in line with our long-term target range of 5.5% to 6.0%. At December 31, 2025 our allowance coverage rate was 10.06%. We anticipate that our allowance coverage rate will remain consistent in 2026 reflecting the credit trends discussed above.

•Funding costs. During the year ended December 31, 2025 benchmark interest rates decreased from their elevated levels for the majority of 2024, which contributed to a decrease in our cost of funds of 44 basis points compared to the prior year, to 4.28%. In addition, our average funding liabilities also decreased by 1.4%. As a result, interest expense for the year ended December 31, 2025 decreased by $499 million or 10.8%, compared to the prior year. We anticipate both interest expense and our cost of funds will decrease in 2026 due to the lower benchmark rates, including the effects of our certificates of deposit maturities repricing. The amount of the decreases, however, will be dependent on any further benchmark rate changes, competition for our deposit product offerings, the extent of the growth in our loan receivables and the funding mix utilized to support our growth in loan receivables.

•Retailer share arrangement payments under our program agreements. Retailer share arrangements increased 17.6% to $4.0 billion for the year ended December 31, 2025, primarily due to lower net charge-offs and the impact of our product, pricing and policy changes. We believe that the payments we make to our partners under our retailer share arrangements, in the aggregate, in 2026 will increase compared to the year ended December 31, 2025, reflecting continued improvement in program performance, as well as growth in loan receivables. See Management’s Discussion and Analysis—Retailer Share Arrangements for additional information on these agreements.

•Extended duration of our credit card program agreements. Our credit card program agreements typically have contract terms ranging from approximately three to ten years, and the length of our relationship with each of our five largest partners is over 14 years, and in the case of Lowe's, 46 years. We expect to continue to benefit from these and our other programs on a long-term basis.

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The current expiration dates of our program agreements with our five largest partners range from 2030 through 2035. In addition, a total of 22 of our 25 largest program agreements have an expiration date in 2028 or beyond. These 22 program agreements represented, in the aggregate as a percentage of the total attributable to our 25 largest programs, 97% of interest and fees on loans for the year ended December 31, 2025 and 95% of loan receivables at December 31, 2025.

•Growth in interchange revenue and loyalty program costs. During the year ended December 31, 2025, interchange revenues and loyalty costs both increased as compared to the prior year. We believe that as a result of the overall growth in Dual Card transactions occurring outside of our credit card partners’ locations and general purpose co-branded credit card transactions, interchange revenues will continue to increase in 2026. The expected growth in these transactions is driven, in part, by both existing and new loyalty programs with our credit card partners. In addition, we continue to offer and add new loyalty programs for our private label credit cards, for which we typically do not receive interchange fees. We expect the continued growth in these existing and new loyalty programs will result in an increase in costs associated with these programs. As a result of these factors, our loyalty program costs exceeded our interchange revenues for the year ended December 31, 2025. In 2026, we expect the growth in loyalty program costs will exceed the growth in interchange revenues, reflecting these same factors. These trends have been contemplated in our program agreements with our partners and are a component of the calculation of our payments due under our retailer share arrangements.

•Capital and liquidity levels. At December 31, 2025, the Company had a Basel III common equity Tier 1 ratio of 12.6%. We continue to expect to maintain capital ratios well in excess of minimum regulatory requirements and sufficient capital and liquidity resources to support our daily operations, our business growth, and our credit ratings. During the year ended December 31, 2025, we declared and paid common stock dividends of $427 million and repurchased $2.9 billion of our outstanding common stock. At December 31, 2025 we had $1.2 billion remaining in share repurchase authorization. We plan to continue to deploy capital through both dividends and share repurchases, as guided by our business performance, market conditions and subject to regulatory restrictions.

We expect that our liquidity portfolio will continue to be sufficient to support all of our business objectives and to meet all regulatory requirements for the foreseeable future. At December 31, 2025 our liquid assets were $16.6 billion, or 13.9% of total assets.

Seasonality

Our business is characterized by a consistent 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 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 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.

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Interest Income

Interest income is comprised of interest and fees on loans, which includes merchant discounts provided by partners to compensate us in almost all cases for all or part of the promotional financing provided to their customers, and interest on cash and equivalents and investment securities. We include in interest and fees on loans any past due interest and fees deemed to be collectible. Direct loan origination costs on credit card loans are deferred and amortized on a straight-line basis over a one-year period and recorded in interest and fees on loans. For non-credit card receivables, direct loan origination costs are deferred and amortized over the life of the loan and recorded in interest and fees on loans.

We analyze interest income as a function of two principal components: average interest-earning assets and yield on average interest-earning assets. Key drivers of average interest-earning assets include:

•purchase volumes, which are influenced by a number of factors including macroeconomic conditions and consumer confidence generally, our partners’ sales and our ability to increase our share of those sales;

•payment rates, reflecting the extent to which customers maintain a credit balance;

•charge-offs, reflecting the receivables that are deemed not to be collectible;

•the size of our liquidity portfolio; and

•portfolio acquisitions when we enter into new partner relationships.

Key drivers of yield on average interest-earning assets include:

•pricing (contractual rates of interest, movement in prime rates, late fees and merchant discount rates);

•changes to our mix of loans (e.g., the number of loans bearing promotional rates as compared to standard rates);

•frequency of late fees incurred when account holders fail to make their minimum payment by the required due date;

•credit performance and accrual status of our loans, including reversals of interest and fees; and

•yield earned on our liquidity portfolio.

Interest income decreased 0.2% for the year ended December 31, 2025, reflecting lower interest income from our liquidity portfolio, partially offset by an increase in interest and fees on loans of 0.5%. The trend in interest and fees on loans reflects the impacts of our product, pricing and policy changes, offset by a combination of lower benchmark rates and a decrease in average loan receivables, as well as lower late fee incidence.

Average interest-earning assets

Average loan receivables, including held for sale, decreased 1.4% for the year ended December 31, 2025, reflecting the effects of higher payment rates as a result of our improved credit mix as well as flat purchase volume and lower average active accounts compared to the prior year.

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Yield on average interest-earning assets

The yield on average interest-earning assets increased for the year ended December 31, 2025 primarily due to increases in the yield on average loan receivables, partially offset by a lower yield on our liquidity portfolio and a decrease in the percentage of interest-earning assets attributable to loan receivables. The loan receivables yield increased 41 basis points to 21.64% for the year ended December 31, 2025, primarily driven by the impacts of our product, pricing and policy changes, partially offset by a combination of lower benchmark rates and lower late fee incidence.

Interest Expense

Interest expense is incurred on our interest-bearing liabilities, which consists of interest-bearing deposit accounts, borrowings of consolidated securitization entities and senior and subordinated unsecured notes.

Key drivers of interest expense include:

•the amounts outstanding of our deposits and borrowings;

•the interest rate environment and its effect on interest rates paid on our funding sources; and

•the changing mix in our funding sources.

Interest expense decreased by $499 million, or 10.8%, for the year ended December 31, 2025, primarily due to lower benchmark rates. Our cost of funds decreased to 4.28% for the year ended December 31, 2025 compared to 4.72% for the year ended December 31, 2024.

Average interest-bearing liabilities

Net Interest Income

Net interest income represents the difference between interest income and interest expense.

Net interest income increased by $455 million, or 2.5%, for the year ended December 31, 2025, resulting from the changes in interest income and interest expense discussed above.

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Retailer Share Arrangements

Most of our program agreements with large retail and digital partners contain retailer share arrangements that provide for payments to our partners if the economic performance of the program exceeds a contractually defined threshold. We also provide other economic benefits to our partners such as royalties on purchase volume or payments for new accounts, in some cases instead of retailer share arrangements (for example, on our co-branded credit cards). All of these arrangements are designed to align our interests and provide an additional incentive to our partners to promote our credit products. Although the retailer share arrangements vary by partner, these arrangements are generally structured to measure the economic performance of the program, based typically on agreed upon program revenues (including interest income and certain other income) less agreed upon program expenses (including interest expense, provision for credit losses, retailer payments and operating expenses), and share portions of this amount above a negotiated threshold. The threshold and economic performance of a program that are used to calculate payments to our partners may be based on, among other things, agreed upon measures of program expenses rather than our actual expenses, and therefore increases in our actual expenses (such as funding costs, higher provision for credit losses or operating expenses) may not necessarily result in reduced payments under our retailer share arrangements. These arrangements are typically designed to permit us to achieve an economic return before we are required to make payments to our partners based on the agreed contractually defined threshold. Our payments to partners pursuant to these retailer share arrangements are dependent upon the growth and performance, including credit trends, of the programs in which we have retailer share arrangements, as well as changes to the terms of certain program agreements that have been renegotiated in the past few years. See above in Business Trends and Conditions, for a discussion of our expected trends in retailer share arrangements for 2026.

We believe that our retailer share arrangements have been effective in helping us to grow our business by aligning our partners’ interests with ours. We also believe that the changes to the terms of certain program agreements in recent years will help us to grow our business by providing an additional incentive to the relevant partners to promote our credit products going forward. Payments to partners pursuant to these retailer share arrangements would generally decrease, and mitigate the impact on our profitability, in the event of declines in the performance of the programs or the occurrence of other unfavorable developments that impact the calculation of payments to our partners pursuant to our retailer share arrangements.

Retailer share arrangements increased by $598 million, or 17.6%, for the year ended December 31, 2025, reflecting lower net charge-offs and the impact of our product, pricing and policy changes.

Provision for Credit Losses

Provision for credit losses is the expense related to maintaining the allowance for credit losses at an appropriate level to absorb the expected credit losses for the life of the loan balance as of the period end date. Provision for credit losses in each period is primarily a function of net charge-offs (gross charge-offs net of recoveries) and changes in our allowance for credit losses. Our process to determine our allowance for credit losses is based upon our estimate of expected credit losses for the life of the loan balance as of the period end date. See “Critical Accounting Estimates - Allowance for Credit Losses” and Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our consolidated financial statements for additional information on our allowance for credit loss methodology.

Provision for credit losses decreased by $1.5 billion to $5.2 billion, for the year ended December 31, 2025, primarily driven by lower net charge-offs, as well as a reserve release in the current year as compared to a reserve build in the prior year.

The reserve release for the year ended December 31, 2025 was $439 million, as compared to a reserve build of $313 million, in the prior year period. The current year reserve release included the impact of a $44 million reserve build for off-balance sheet credit exposures associated with the acquisition of the Lowe's commercial co-branded credit card portfolio, expected to close in the first half of 2026. The reserve build for the year ended December 31, 2024 included $180 million related to the Ally Lending acquisition.

Net charge-offs for the year ended December 31, 2025 decreased by $756 million. The net charge-off rate for the year ended December 31, 2025 decreased by 66 basis points to 5.65%, as compared to the prior year.

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Other Income

Interchange revenue

We earn interchange fees on Dual Card transactions outside of our partners’ sales channels, and from general purpose co-branded credit cards, generally based on a flat fee plus a percentage of the purchase amount. Interchange revenue has been, and is expected to continue to be, driven primarily by growth in our Dual Card and general purpose co-branded credit card products.

Interchange revenue increased by $41 million, or 4.0%, for the year ended December 31, 2025, driven by an increase in purchase volume outside of our retail partners' sales channels.

Protection product revenue

We offer our Payment Security program, which is a debt cancellation product, to our credit card customers via direct to consumer online and mobile channels. For customers who choose to purchase these products, we earn a monthly fee based on their account balance. In return, we will cancel all or a portion of a customer’s credit card balance in the event of certain qualifying life events.

Protection product revenue increased by $34 million, or 6.0%, for the year ended December 31, 2025, primarily as a result of higher average balances on enrolled accounts and increases in customer enrollment.

Loyalty programs

We operate a number of loyalty programs that provide rewards to our customers that are designed to foster engagement, drive incremental purchases, and promote customer retention. These programs typically provide cardholders with statement credit or cash back rewards. Other programs include reward offers that accrue, typically based upon customer spend, and can be applied toward a future purchase. In addition, certain partners maintain and operate separate loyalty programs for which we make payments to the partner in order to contribute towards the costs of the program. Growth in loyalty program costs has been, and is expected to continue to be, driven by growth in purchase volume related to existing loyalty programs and the rollout of new loyalty programs.

Loyalty programs cost increased by $56 million, or 4.1%, for the year ended December 31, 2025, primarily as a result of growth in purchase volume associated with new and existing loyalty programs.

Other

Other comprises a variety of items including servicing and other customer-related fees such as paper statement fees, changes in the fair value of equity investments and realized gains or losses associated with the sale of businesses, investments, loan receivables or other assets.

Other decreased by $1.0 billion for the year ended December 31, 2025 primarily driven by the $1.1 billion gain on sale related to the Pets Best disposition in the prior year.

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Other Expense

Employee costs

Employee costs primarily consist of employee compensation and benefit costs.

Employee costs increased by $221 million, or 11.8%, for the year ended December 31, 2025, primarily driven by restructuring costs related to a voluntary early retirement program, higher variable compensation, as well as changes in headcount mix to support technology investments and higher medical benefit costs.

Professional fees

Professional fees primarily consist of consulting services, outsourced provider fees (e.g., collection agencies and call centers), legal, accounting and recruiting expenses.

Professional fees were flat for the year ended December 31, 2025, as higher collection costs were offset by lower consulting services.

Marketing and business development

Marketing and business development costs primarily consist of our contractual and discretionary marketing and business development spend, as well as amortization expense associated with contract costs related to our retail partner agreements.

Marketing and business development decreased by $13 million, or 2.5%, for the year ended December 31, 2025, primarily driven by lower promotional marketing in the current year.

Information processing

Information processing costs primarily consist of fees related to outsourced information processing providers, credit card associations and software licensing agreements, as well as amortization of capitalized software expenditures.

Information processing costs increased by $96 million, or 12.0%, for the year ended December 31, 2025, primarily driven by technology investments, including an increase in software licensing costs and higher amortization of capitalized software expenditures.

Other

Other primarily consists of postage, fraud-related operational losses, litigation and regulatory matters expense and various other corporate overhead items such as facilities' costs and telephone charges. Postage is driven primarily by the number of our active accounts and the percentage of customers that utilize our electronic billing option. Fraud-related operational losses are driven primarily by the number of our active Dual Card and general purpose co-branded credit card accounts.

Other decreased by $8 million, or 1.1%, for the year ended December 31, 2025, primarily due to lower postage reflecting increased utilization of our electronic billing option.

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Provision for Income Taxes

The effective tax rate for the year ended December 31, 2025, was in line with the prior year. The effective tax rate differs from the U.S. federal statutory tax rate primarily due to state income taxes. See Note 15. Income Taxes to our consolidated financial statements for additional information.

On July 4, 2025, Public Law 119-21 known as the One Big Beautiful Bill Act or the Working Families Tax Cut Act (the “Act”) was enacted into law, which included certain modifications to U.S. tax law. The Company has completed its initial evaluation of the provisions of the Act and does not expect it to have a material impact on our Consolidated Financial Statements.

Platform Analysis

As discussed above under “Our Business—Our Sales Platforms,” we offer our credit products through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle). The following is a discussion of certain supplemental information for the years ended December 31, 2025 and 2024, for each of our five sales platforms and Corp, Other.

In 2025, we entered into an agreement to sell $0.2 billion of loan receivables associated with a Home & Auto partner program agreement, which closed in October 2025. In connection with this agreement, revenue activities for the portfolio were no longer managed within our Home & Auto sales platform. All related metrics previously reported within our Home & Auto sales platform, are now reported within Corp, Other below. We have also recast all prior-period reported metrics for our Home & Auto sales platform and Corp, Other to conform to the current-period presentation.

Home & Auto

Home & Auto interest and fees on loans decreased by $52 million, or 0.9%, for the year ended December 31, 2025, primarily driven by lower average loan receivables, partially offset by higher loan receivables yield.

The increase in loan receivables yield primarily reflects the impact of product, pricing and policy changes, partially offset by lower late fee incidence. Purchase volume decreased 4.9%, for the year ended December 31, 2025, reflecting consumers continuing to manage discretionary spend, lower average active accounts and the impacts from our previous credit actions, partially offset by growth in spend per account. Average active accounts decreased by 6.2% for the year ended December 31, 2025.

Other income increased by $28 million, or 15.1%, for the year ended December 31, 2025 primarily due to the impact of product, pricing and policy change related fees.

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Digital

Digital interest and fees on loans increased by $128 million, or 2.0%, for the year ended December 31, 2025, primarily driven by higher average loan receivables yield, reflecting the impacts of product, pricing and policy changes, partially offset by lower benchmark rates and lower late fee incidence.

Purchase volume increased 3.1% for the year ended December 31, 2025, primarily driven by higher spend per account and customer response to enhanced product offerings and refreshed value propositions, partially offset by lower active accounts and the impacts from our previous credit actions. Average active accounts decreased by 0.9% for the year ended December 31, 2025.

Other income decreased by $3 million for the year ended December 31, 2025 primarily due to higher loyalty costs, partially offset by an increase in interchange revenue and the impact of product, pricing and policy change related fees.

Diversified & Value

Diversified & Value interest and fees on loans decreased by $65 million, or 1.4%, for the year ended December 31, 2025, primarily driven by lower average loan receivables yield, reflecting lower benchmark rates and lower late fee incidence, partially offset by the impacts of our product, pricing and policy changes.

Purchase volume increased by 1.5%, for the year ended December 31, 2025 reflecting the impact of partner expansion and retailer performance, growth in out-of-partner spend and growth in spend per account, partially offset by lower active accounts and the impacts from our prior credit actions. Average active accounts decreased 2.7% for the year ended December 31, 2025.

Other income increased by $40 million for the year ended December 31, 2025 primarily due to the impact of product, pricing and policy change related fees and higher interchange revenue, partially offset by higher loyalty costs.

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Health & Wellness

Health & Wellness interest and fees on loans increased by $112 million, or 3.1%. for the year ended December 31, 2025, primarily driven by an increase in loan receivables yield, reflecting the impact of product, pricing and policy changes, as well as higher average loan receivables, partially offset by lower late fee incidence and higher reversals.

Purchase volume decreased 0.2% for the year ended December 31, 2025 reflecting lower spend in Cosmetic and Dental, combined with the impact of previous credit actions, partially offset by growth in Pet and Audiology. Average active accounts were flat for the year ended December 31, 2025.

Other income increased by $39 million for the year ended December 31, 2025, primarily due to higher protection product revenue and the impact of product, pricing and policy change related fees, partially offset by lower commission fees following the Pets Best disposition in the prior year.

Lifestyle

Lifestyle interest and fees on loans were flat for the year ended December 31, 2025, primarily driven by higher loan receivables yield, reflecting the impact of product, pricing and policy changes, offset by lower late fee incidence and lower benchmark rates.

Purchase volume decreased 3.0% for the year ended December 31, 2025, primarily reflecting lower average active accounts, as well as lower spend in Outdoor and Specialty as consumers continued to manage discretionary spend and the impacts from our previous credit actions.

Other income increased by $11 million for the year ended December 31, 2025 primarily due to the impact of product, pricing and policy change related fees and higher protection product revenue.

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Corp, Other

Other income for the year ended December 31, 2024 in Corp, Other primarily included the gain on sale related to the Pets Best disposition of $1.1 billion.

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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 5. Loan Receivables and Allowance for Credit Losses to our 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.

Loan receivables decreased 0.9% to $103.8 billion at December 31, 2025 compared to $104.7 billion at December 31, 2024, reflecting the effects of higher payment rates as a result of our improved credit mix as well as flat purchase volume and lower average active accounts compared to the prior year.

The decrease in Loan receivables also included the impact of the sale of $0.2 billion of loan receivables associated with a Home & Auto partner program agreement in October 2025.

Our loan receivables portfolio, excluding held for sale, had the following maturity distribution at December 31, 2025.

______________________

(1)Credit card loans have minimum payment requirements but no stated maturity and therefore are included in the due within one year category. However, many of our credit card holders will revolve their balances, which may extend their repayment period beyond one year for balances at December 31, 2025.

(2)Credit card and commercial loans due after one year relate to loans modified to borrowers experiencing financial difficulty.

(3)Reflects scheduled repayments up to the final contractual maturity of our installment loans.

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Our loan receivables portfolio had the following geographic concentration at December 31, 2025.

Delinquencies

Over-30 day loan delinquencies as a percentage of period-end loan receivables decreased to 4.49% at December 31, 2025, as compared to 4.70% at December 31, 2024. This decrease reflects the impact of the previous credit actions we have taken across our portfolio.

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 Consolidated Statements of Earnings.

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

Allowance for Credit Losses

The allowance for credit losses totaled $10.4 billion at December 31, 2025, compared to $10.9 billion at December 31, 2024, and reflects our estimate of expected credit losses for the life of the loan receivables on our Consolidated Statements of Financial Position.

The decrease in the allowance for credit losses compared to December 31, 2024 primarily reflects the decrease in delinquent balances as a percentage of loan receivables, as compared to the prior year period, as well as expectations of the macroeconomic environment. Our allowance for credit losses as a percentage of total loan receivables decreased to 10.06% at December 31, 2025, from 10.44% at December 31, 2024. See Note 5. Loan Receivables and Allowance for Credit Losses to our consolidated financial statements for additional information.

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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 table summarizes information concerning our funding sources during the periods indicated:

______________________

(1)Excludes $405 million, $388 million and $402 million average balance of non-interest-bearing deposits for the years ended December 31, 2025, 2024 and 2023, respectively. Non-interest-bearing deposits comprise less than 10% of total deposits for the years ended December 31, 2025, 2024 and 2023.

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 December 31, 2025, we had $75.2 billion in direct deposits and $5.9 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, including securitized financings (including our undrawn committed and uncommitted capacity) and unsecured debt.

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

Our deposit liabilities provide funding with maturities ranging from one day to ten years. At December 31, 2025, the weighted average maturity of our interest-bearing time deposits was approximately one year. See Note 8. Deposits to our 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 December 31, 2025 was $6.8 billion.

The following table summarizes the portion of uninsured deposits that are certificates of deposit by contractual maturity at December 31, 2025.

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”).

At December 31, 2025, we had $2.9 billion of outstanding private asset-backed securities and $5.5 billion of outstanding public asset-backed securities, in each case held by unrelated third parties.

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The following table summarizes expected contractual maturities of the investors’ interests in securitized financings, excluding debt premiums, discounts and issuance costs at December 31, 2025.

______________________

(1)Excludes any subordinated classes of SYNIT notes that we owned at December 31, 2025.

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, including events related to material breaches of representations, warranties or covenants, inability or failure of the Bank to transfer loan receivables to the trusts as required under the securitization documents, failure to make required payments or deposits pursuant to the securitization documents, and certain insolvency-related events with respect to the related securitization depositor, Synchrony (solely with respect to SYNCT) or the Bank. In addition, an early amortization event will occur with respect to a series if the excess spread as it relates to a particular series or for the trust, as applicable, falls below zero. Following an early amortization event, principal collections on the loan receivables in the applicable trust are applied to repay principal of the trust's asset-backed securities rather than being available on a revolving basis to fund the origination activities of our business. The occurrence of an early amortization event also 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.

The following table summarizes for each of our trusts the three-month rolling average excess spread at December 31, 2025.

______________________

(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 December 31, 2025.

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Senior and Subordinated Unsecured Notes

During the year ended December 31, 2025, we made repayments totaling $1.8 billion of senior unsecured notes issued by Synchrony Financial and $900 million of senior unsecured notes issued by Synchrony Bank.

The following table provides a summary of our outstanding senior and subordinated unsecured notes at December 31, 2025, which includes $800 million and $1.0 billion of senior unsecured notes issued by Synchrony Financial in March 2025 and July 2025, respectively.

______________________

(1)Weighted average interest rate of all senior and subordinated unsecured notes at December 31, 2025 was 5.06%.

(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, including covenants that restrict (subject to certain exceptions) Synchrony’s ability to dispose of, or incur liens on, any of the voting stock of the Bank or otherwise permit the Bank to be merged, consolidated, leased or sold in a manner that results in the Bank being less than 80% controlled by us.

If we do not satisfy any of these covenants discussed above, the maturity of amounts outstanding thereunder may be accelerated and become payable. We were in compliance with all of these covenants at December 31, 2025.

At December 31, 2025, we were not in default under any of our credit facilities.

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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:

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.

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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 December 31, 2025 had $16.6 billion of liquid assets, primarily consisting of cash and equivalents, less cash in transit which is not considered to be liquid, compared to $17.2 billion of liquid assets at December 31, 2024. The decrease in liquid assets primarily reflects lower deposits and a reduction in senior unsecured debt, partially offset by the decrease in loan receivables as compared to December 31, 2024. We believe our liquidity position at December 31, 2025 remains strong 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 December 31, 2025, we had an aggregate of $10.0 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—Savings Association Regulation—Dividends and Stock Repurchases” and —Liquidity," and Regulation—Savings and Loan Holding Company Regulation—Liquidity."

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