Synchrony Financial (SYF) Risk Analysis

The management of Synchrony Financial ("the Company") is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined by Exchange Act Rules 13a-15 and 15d-15. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are made only in accordance with authorizations of the Company's management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on its financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Although any system of internal control can be compromised by human error or intentional circumvention of required procedures, we believe our system provides reasonable assurance that financial transactions are recorded and reported properly, providing an adequate basis for reliable financial statements. The Company's management has used the criteria established in Internal Control - Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") to evaluate the effectiveness of the Company's internal control over financial reporting. The Company's management has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024 and has concluded that such internal control over financial reporting is effective. There are no material weaknesses in the Company's internal control over financial reporting that have been identified by the Company's management. KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements of the Company for the year ended December 31, 2024 and has also issued an audit report, which is included in "Consolidated Financial Statements and Supplementary Data" of this Form 10-K Report, on internal control over financial reporting as of December 31, 2024 under Auditing Standard No. 2201 of the Public Company Accounting Oversight Board ("PCAOB").

For a description of how we estimate fair value, see Note 2. Basis of Presentation and Summary of Significant Accounting Policies. The following tables present our assets and liabilities measured at fair value on a recurring basis.Recurring Fair Value MeasurementsAt December 31, 2024 ($ in millions)Level 1Level 2Level 3Total(a)AssetsDebt securitiesU.S. government and federal agency$- $1,844 $- $1,844 State and municipal- - 16 16 Residential mortgage-backed- 289 - 289 Asset-backed- 922 - 922 Other- - 8 8 Other(b)14 - 6 20 Total $14 $3,055 $30 $3,099 LiabilitiesOther(c)- - 11 11 Total$- $- $11 $11 At December 31, 2023 ($ in millions)Level 1Level 2Level 3Total(a)AssetsDebt securitiesU.S. government and federal agency$- $2,264 $- $2,264 State and municipal- - 10 10 Residential mortgage-backed- 354 - 354 Asset-backed- 1,162 - 1,162 Other- - 8 8 Other(b)14 - 10 24 Total $14 $3,780 $28 $3,822 LiabilitiesOther(c)- - 4 4 Total$- $- $4 $4 _______________________(a)    For the years ended December 31, 2024 and 2023, there were no fair value measurements transferred between levels.(b)    Other is primarily comprised of equity investments measured at fair value, which are included in Other assets in our Consolidated Statements of Financial Position, as well as certain financial assets for which we have elected the fair value option which are included in Loan receivables in our Consolidated Statements of Financial Position.(c)    Other includes certain financial liabilities for which we have elected the fair value option. These liabilities are included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Position.Level 3 Fair Value MeasurementsOur Level 3 recurring fair value measurements primarily relate to state and municipal and corporate debt instruments, which are valued using non-binding broker quotes or other third-party sources, and financial assets and liabilities for which we have elected the fair value option. For a description of our process to evaluate third-party pricing servicers, see Note 2. Basis of Presentation and Summary of Significant Accounting Policies. Our state and municipal debt securities are classified as available-for-sale with changes in fair value included in Accumulated other comprehensive income. The changes in our Level 3 assets and liabilities that are measured on a recurring basis for the years ended December 31, 2024 and 2023 were not material.Financial Assets and Financial Liabilities Carried at Other Than Fair ValueCarryingCorresponding fair value amountAt December 31, 2024 ($ in millions)valueTotalLevel 1Level 2Level 3Financial AssetsFinancial assets for which carrying values equal or approximate fair value: Cash and equivalents(a)$14,711 $14,711 $14,711 $- $- Other assets(a)(b)$44 $44 $44 $- $- Financial assets carried at other than fair value: Loan receivables, net(c)$93,785 $106,632 $- $- $106,632 Financial Liabilities(d) Financial liabilities carried at other than fair value:Deposits(e)$82,062 $82,256 $- $82,256 $- Borrowings of consolidated securitization entities$7,842 $7,871 $- $4,950 $2,921 Senior and subordinated unsecured notes$7,620 $7,502 $- $7,502 $- CarryingCorresponding fair value amountAt December 31, 2023 ($ in millions)valueTotalLevel 1Level 2Level 3Financial AssetsFinancial assets for which carrying values equal or approximate fair value: Cash and equivalents(a)$14,259 $14,259 $14,259 $- $- Other assets(a)(b)$50 $50 $50 $- $- Assets held for sale(f)$112 $112 $112 $- $- Financial assets carried at other than fair value: Loan receivables, net(c)$92,407 $104,761 $- $- $104,761 Financial Liabilities(d) Financial liabilities carried at other than fair value:Deposits(e)$81,153 $80,935 $- $80,935 $- Borrowings of consolidated securitization entities$7,267 $7,250 $- $3,411 $3,839 Senior and subordinated unsecured notes$8,715 $8,423 $- $8,423 $- _______________________(a)For cash and equivalents and restricted cash and equivalents, carrying value approximates fair value due to the liquid nature and short maturity of these instruments.(b)This balance relates to restricted cash and equivalents, which is included in Other assets. Excludes accrued interest receivables of $25 million and $14 million at December 31, 2024 and 2023, respectively, for which carrying value approximates fair value. (c)Excludes financial assets for which we have elected the fair value option. Under certain retail partner program agreements, the expected sales proceeds in the event of a sale of their credit card portfolio may be limited to the amounts owed by our customers, which may be less than the fair value indicated above.(d)Excludes accrued interest payable of $339 million and $397 million, included in Accrued expenses and other liabilities, in our Consolidated Statements of Financial Position at December 31, 2024 and 2023, respectively, for which carrying values approximate fair value.(e)Includes demand deposits with no defined maturity.(f)Includes $19 million of cash and equivalents and $93 million of restricted cash and equivalents. Equity Securities Without Readily Determinable Fair ValuesAt or for the year ended December 31 ($ in millions)20242023Carrying Value$270 $270 Upward adjustments(a)- 17 Downward adjustments(a)(7)(6)_______________________(a)    Between January 1, 2018 and December 31, 2024, cumulative upward and downward carrying value adjustments were $205 million and $(21) million, respectively.

____________________________________________________________________________________________For the years ended December 31 ($ in millions)202420232022Cash flows - operating activitiesNet earnings$3,499 $2,238 $3,016 Adjustments to reconcile net earnings to cash provided from operating activitiesProvision for credit losses6,733 5,965 3,375 Deferred income taxes(98)(458)(421)Depreciation and amortization481 458 419 Gain on sale of business(1,069)- - All other operating activities507 735 574 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions(Increase) decrease in interest and fees receivable33 (645)(197)(Increase) decrease in other assets(117)7 21 Increase (decrease) in accrued expenses and other liabilities(121)293 (93)Cash provided from (used for) operating activities9,848 8,593 6,694 Cash flows - investing activitiesMaturity and sales of debt securities3,616 5,011 3,984 Purchases of debt securities(2,811)(3,623)(3,866)Acquisitions, net of cash acquired(1,935)- - Proceeds from sale of business, net of cash and restricted cash sold491 - - Proceeds from sale of loan receivables- - 3,930 Net (increase) decrease in loan receivables, including held for sale(7,576)(14,900)(13,733)All other investing activities (688)(722)(549)Cash provided from (used for) investing activities(8,903)(14,234)(10,234)Cash flows - financing activitiesBorrowings of consolidated securitization entitiesProceeds from issuance of securitized debt1,694 2,294 2,720 Maturities and repayment of securitized debt(1,125)(1,257)(3,784)Senior and subordinated unsecured notesProceeds from issuance of senior and subordinated unsecured notes745 740 2,235 Maturities and repayment of senior and subordinated unsecured notes(1,850)- (1,500)Proceeds from issuance of preferred stock488 - - Dividends paid on preferred stock(72)(42)(42)Net increase (decrease) in deposits879 9,437 9,453 Purchases of treasury stock(1,008)(1,112)(3,320)Dividends paid on common stock(398)(406)(434)All other financing activities36 (22)(44)Cash provided from (used for) financing activities(611)9,632 5,284 Increase (decrease) in cash and equivalents, including restricted and held for sale amounts334 3,991 1,744 Cash and equivalents, including restricted amounts, at beginning of year14,421 10,430 8,686 Cash and equivalents at end of year:Cash and equivalents14,711 14,259 10,294 Restricted cash and equivalents included in other assets44 50 136 Cash and equivalents, including restricted amounts, held for sale- 112 - Total cash and equivalents, including restricted and held for sale amounts, at end of year$14,755 $14,421 $10,430 Supplemental disclosure of cash flow informationCash paid during the year for interest$(4,662)$(3,551)$(1,356)Cash paid during the year for income taxes$(1,087)$(1,125)$(1,290)

PageCONSOLIDATED FINANCIAL STATEMENTSConsolidated Statements of Earnings112Consolidated Statements of Comprehensive Income113Consolidated Statements of Financial Position114Consolidated Statements of Changes in Equity115Consolidated Statements of Cash Flows116NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. Business Description117Note 2. Basis of Presentation and Summary Significant Accounting Policies117Note 3. Acquisitions and Dispositions127Note 4. Debt Securities129Note 5. Loan Receivables and Allowance for Credit Losses130Note 6. Variable Interest Entities136Note 7. Goodwill and Other Intangible Assets138Note 8. Deposits139Note 9. Borrowings140Note 10. Fair Value Measurements141Note 11. Regulatory and Capital Adequacy143Note 12. Employee Benefit Plans144Note 13. Earnings Per Share145Note 14. Equity and Other Stock Related Information146Note 15. Income Taxes147Note 16. Parent Company Financial Information149Note 17. Segment Reporting151Note 18. Legal Proceedings and Regulatory Matters152

Goodwill($ in millions)20242023Balance at January 1$1,018 $1,105 Change in amounts allocated to disposition of business(a)4 (87)Goodwill recognized upon acquisition252 - Balance at December 31$1,274 $1,018 _____________(a)    The change in the year ended December 31, 2024 was based upon the carrying amount of net assets of Pets Best and the final valuation of consideration received at closing.Intangible Assets20242023At December 31 ($ in millions)Gross carrying amountAccumulated amortizationNetGross carrying amountAccumulated amortizationNetCapitalized software$2,361 $(1,569)$792 $2,065 $(1,302)$763 Other$195 $(133)$62 $204 $(152)$52 Total$2,556 $(1,702)$854 $2,269 $(1,454)$815 During the year ended December 31, 2024, we recorded additions to intangible assets of $363 million, primarily related to capitalized software expenditures, as well as intangible assets of $18 million related to the Ally Lending acquisition. See Note 3. Acquisitions and Dispositions for additional information.Amortization expense was $324 million, $294 million and $252 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included as a component of Other expense in our Consolidated Statements of Earnings. We estimate annual amortization expense for existing intangible assets over the next five calendar years to be as follows: ($ in millions)20252026202720282029Amortization expense$295 $222 $165 $110 $47

Basis of PresentationThe accompanying consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles ("GAAP").Preparing financial statements in conformity with U.S. GAAP requires us to make estimates based on assumptions about current, and for some estimates, future, economic and market conditions (for example, unemployment, housing, interest rates and market liquidity) which affect reported amounts and related disclosures in our consolidated financial statements. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could be different than anticipated in those estimates, which could materially affect our results of operations and financial position. Among other effects, such changes could result in incremental losses on loan receivables, future impairments of debt securities, goodwill and intangible assets, increases in reserves for contingencies, establishment of valuation allowances on deferred tax assets and increases in our tax liabilities.We primarily conduct our business within the United States and substantially all of our revenues are from U.S. customers. The operating activities conducted by our non-U.S. affiliates use the local currency as their functional currency. The effects of translating the financial statements of these non-U.S. affiliates to U.S. dollars are included in equity. Asset and liability accounts are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the respective periods.Consolidated Basis of PresentationThe Company's financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all of our subsidiaries – i.e., entities in which we have a controlling financial interest, most often because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity ("VIE") model to the entity, otherwise the entity is evaluated under the voting interest model. Variable Interest EntitiesWhere we hold current or potential rights that give us the power to direct the activities of a VIE that most significantly impact the VIE's economic performance ("power") combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses ("significant economics"), we have a controlling financial interest in, and consolidate, the VIE. In evaluating whether we have power, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity's economic performance as compared to other economic interest holders. In determining whether we have the right to receive significant economics, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity's design, including: the entity's capital structure, contractual rights to earnings or losses, subordination of our interests relative to those of other investors, as well as any other contractual arrangements that might exist that could have the potential to be economically significant. The evaluation of all facts and circumstances to determine whether we have power and significant economics requires the exercise of professional judgment. Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights unilaterally. We consolidate certain securitization entities under the VIE model because we have both power to direct and significant economics, primarily because of Synchrony or the Bank's role as servicer. See Note 6. Variable Interest Entities.New Accounting StandardsNewly Adopted Accounting StandardsIn November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements and requires enhanced disclosures about significant segment expenses. The Company adopted this guidance as of December 31, 2024, on a retrospective basis. See Note 17. Segment Reporting for additional information.Recently Issued But Not Yet Adopted Accounting StandardsIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation, as well as additional qualitative information about the reconciliation, and additional disaggregated information about income taxes paid. The Company will adopt this guidance on a retrospective basis on its effective date, which for us is beginning within our December 31, 2025 Form 10-K. Management does not expect this guidance to have a material impact on the Consolidated Financial Statements.In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires disaggregated information about certain income statement line items in a tabular format in the notes to the financial statements. The Company will adopt this guidance on its effective date, which for us is beginning within our December 31, 2027 Form 10-K, and is currently determining the method of adoption, however, it is not expected to have a material impact to our Consolidated Financial Statements.Cash and EquivalentsDebt securities, money market instruments and bank deposits with original maturities of three months or less are included in cash and equivalents unless designated as available-for-sale and classified as debt securities. Cash and equivalents at December 31, 2024 primarily included cash and due from banks of $646 million and interest-bearing deposits in other banks of $14.0 billion. Cash and equivalents at December 31, 2023 primarily included cash and due from banks of $1.4 billion and interest-bearing deposits in other banks of $12.8 billion.Restricted Cash and EquivalentsRestricted cash and equivalents represent cash and equivalents that are not available to us due to restrictions related to its use. In addition, our securitization entities are required to fund segregated accounts that may only be used for certain purposes, including payment of interest and servicing fees and repayment of maturing debt. We include our restricted cash and equivalents in Other assets in our Consolidated Statements of Financial Position. Investment SecuritiesWe report investments in debt securities and equity securities with a readily determinable fair value at fair value. See Note 10. Fair Value Measurements for further information on fair value. Changes in fair value on debt securities, which are classified as available-for-sale, are included in other comprehensive income (loss), net of applicable taxes. Changes in fair value on equity securities are included in earnings. We regularly review investment securities for impairment using both quantitative and qualitative criteria. For debt securities, if we do not intend to sell the security, or it is not more likely than not, that we will be required to sell the security before recovery of our amortized cost, we evaluate other qualitative criteria to determine whether we do not expect to recover the amortized cost basis of the security, such as the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. We also evaluate quantitative criteria including determining whether there has been an adverse change in expected future cash flows. If we do not expect to recover the entire amortized cost basis of the security, we consider the debt security to be impaired. If the security is impaired, we determine whether the impairment is the result of a credit loss or other factors. If a credit loss exists, an allowance for credit losses is recorded, with a related charge to earnings, limited by the amount that the fair value of the security is less than its amortized cost. Given the nature of our current portfolio, we perform a qualitative assessment to determine whether any credit loss is warranted. The assessment considers factors such as adverse conditions and payment structure of the securities, history of payment, and market conditions. If we intend to sell the security or it is more likely than not we will be required to sell the debt security before recovery of its amortized cost basis, the security is also considered impaired and we recognize the entire difference between the security's amortized cost basis and its fair value in earnings. Realized gains and losses are accounted for on the specific identification method. Equity Method InvestmentsWe use the equity method of accounting for investments where we have significant influence, but not control, over the operating and financial policies of the investee. Our assessment of significant influence includes factors such as our ownership interest, legal form, and representation on the board of directors. The Company generally records the initial investment at cost or fair value, as appropriate. Subsequently, we adjust each investment for our proportionate share of net income or loss in the investee. We amortize, where appropriate, differences between the Company's cost basis and underlying equity in net assets, which are reported in Other income. The Company evaluates equity method investments for other-than-temporary impairment when events or changes in circumstance indicate that the carrying amount of the investment might not be recoverable. At December 31, 2024, our equity method investments included within Other assets in our Consolidated Statement of Financial Position totaled $816 million, primarily related to our equity interest in Independence Pet Holdings, Inc. See Note 3. Acquisitions and Dispositions for additional information. Loan ReceivablesLoan receivables primarily consist of open-end consumer revolving credit card accounts, closed-end consumer installment loans and open-end commercial revolving credit card accounts. Loan receivables are reported at the amounts due from customers, including unpaid interest and fees, net of unamortized purchase discounts, deferred income and costs. Loan Receivables Held for SaleLoans purchased or originated with the intent to sell are classified as loan receivables held for sale and carried at the lower of amortized cost or fair value. Loans initially classified as held for investment are transferred to loan receivables held for sale and carried at the lower of amortized cost or fair value once a decision has been made to sell the loans. We continue to recognize interest and fees on these loans on the accrual basis. The fair value of loan receivables held for sale is determined on an aggregate homogeneous portfolio basis. If a loan is transferred from held for investment to held for sale, any associated allowance for credit loss is reversed through earnings, and the loan is transferred to held for sale at amortized cost. The amount by which amortized cost basis exceeds fair value is accounted for as a valuation allowance. The loan is carried at the lower of amortized cost or fair value. Acquired LoansTo determine the fair value of loans at acquisition, we estimate expected cash flows and discount those cash flows using an observable market rate of interest, when available, adjusted for factors that a market participant would consider in determining fair value. In determining fair value, expected cash flows are adjusted to include prepayment, default rate, and loss severity estimates. The difference between the fair value and the amount contractually due is recorded as a loan discount or premium at acquisition. Loans acquired that have experienced more-than-insignificant deterioration in credit quality since origination (referred to as "purchased credit deteriorated" or "PCD" assets) are subject to specific guidance upon acquisition. An allowance for PCD assets is added to the purchase price or fair value of the acquired loans to arrive at the amortized cost basis. Subsequent to initial recognition, the accounting for the PCD asset will generally follow the Allowance for Credit Losses model described below. Loans acquired without a more-than-insignificant credit deterioration since origination are measured under the Allowance for Credit Losses model described below.Allowance for Credit LossesLosses on loan receivables are estimated and recognized upon origination of the loan, based on expected credit losses for the life of the loan balance as of the period end date. Expected credit loss estimates involve modeling loss projections attributable to existing loan balances, considering historical experience, current conditions and future expectations for pools of loans with similar risk characteristics over the reasonable and supportable forecast period. The model considers a macroeconomic forecast, with unemployment as the primary macroeconomic variable considered. We also perform a qualitative assessment in addition to model estimates and apply qualitative adjustments as necessary. The reasonable and supportable forecast period is determined primarily based upon an assessment of the current economic outlook, including our ability to use available data to accurately forecast losses over time. The reasonable and supportable forecast period used in our estimate of credit losses at December 31, 2024 was 12 months, consistent with the forecast period utilized since adoption of CECL. The Company reassesses the reasonable and supportable forecast period on a quarterly basis. Beyond the reasonable and supportable forecast period, we revert to historical loss information at the loan receivables segment level over a 6-month period, gradually increasing the weight of historical losses by an equal amount each month during the reversion period, and utilize historical loss information thereafter for the remaining life of the portfolio. The historical loss information is derived from a combination of recessionary and non-recessionary performance periods, weighted by the time span of each period. Similar to the reasonable and supportable forecast period, we also reassess the reversion period and historical mean on a quarterly basis, considering any required adjustments for differences in underwriting standards, portfolio mix, and other relevant data shifts over time.We generally segment our loan receivable population into pools of loans with similar risk characteristics at the major retailer and product level. Consistent with our other assumptions, we regularly review segmentation to determine whether the segmentation pools remain relevant as risk characteristics change.Our loan receivables generally do not have a stated life. The life of a credit card loan receivable is dependent upon the allocation of payments received, as well as a variety of other factors, including the principal balance, promotional terms, interest charges and fees and overall consumer credit profile and usage pattern. We determine the expected credit losses for credit card loan receivables as of the measurement date by using a combination of migration analysis, and other historical analyses, which implicitly consider the payments attributable to the measurement date balance. To do so, we utilize an approach which implicitly considers total expected future payments and applies appropriate allocations to reduce those payments in order to estimate losses pertaining to measurement date loan receivables. Based on our payments analyses, we also ensure that expected future payments from an account do not exceed the measurement date balance. We evaluate each portfolio quarterly. For credit card receivables, our estimation process includes analysis of historical data, and there is a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. We use an enhanced migration analysis to estimate the likelihood that a loan will progress through the various stages of delinquency. The enhanced migration analysis considers uncollectible principal, interest and fees reflected in the loan receivables, segmented by credit and business parameters. We use other analyses to estimate expected losses on non-delinquent accounts, which include past performance, bankruptcy activity such as filings, policy changes and loan volumes and amounts. Holistically, for assessing the portfolio credit loss content, we also evaluate portfolio risk management techniques applied to various accounts, historical behavior of different account vintages, account seasoning, economic conditions, recent trends in delinquencies, account collection management including the impact of modifications made to borrowers experiencing financial difficulties, forecasting uncertainties, expectations about the future and a qualitative assessment of the adequacy of the allowance for credit losses. Key factors that impact the accuracy of our historical loss forecast estimates include the models and methodology utilized, credit strategy and trends, and consideration of material changes in our loan portfolio such as changes in growth and portfolio mix. We regularly review our collection experience (including delinquencies and net charge-offs) in determining our allowance for credit losses. We also consider our historical loss experience to date based on actual defaulted loans and overall portfolio indicators including delinquent and non-accrual loans, trends in loan volume and lending terms, credit policies and other observable environmental factors such as unemployment and home price indices. Additionally, the estimate of expected credit losses includes expected recoveries of amounts previously charged-off and expected to be charged-off.The underlying assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current and forecasted conditions, and are subject to the regulatory examination process, which can result in changes to our assumptions. Changes in such estimates can significantly affect the allowance and provision for credit losses. It is possible that we will experience credit losses that are different from our current estimates. Charge-offs are deducted from the allowance for credit losses and are recorded in the period when we judge the principal to be uncollectible, and subsequent recoveries are added to the allowance, generally at the time cash is received on a charged-off account. Delinquent receivables are those that are 30 days or more past due based on their contractual payments. Non-accrual loan receivables are those on which we have stopped accruing interest. We typically continue to accrue interest until the earlier of the time at which collection of an account becomes doubtful, or in the period the account becomes 180 days past due, with the exception of non-credit card accounts, for which we stop accruing interest in the period that the account becomes 90 days past due.The same loan receivable may meet more than one of the definitions above. Accordingly, these categories are not mutually exclusive, and it is possible for a particular loan to meet the definitions of a non-accrual loan and a delinquent loan, or be modified to a borrower experiencing financial difficulty, and be included in each of these categories. The categorization of a particular loan also may not necessarily be indicative of the potential for loss. Loan Modifications to Borrowers Experiencing Financial DifficultyOur loss mitigation strategy is intended to minimize economic loss and, at times, can result in rate reductions, principal forgiveness, extensions or other actions, for borrowers experiencing financial difficulty. We primarily use long-term modification programs for borrowers experiencing financial difficulty as a loss mitigation strategy to improve long-term collectability of the loans. The long-term modification programs include changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months, reducing the interest rate on the loan, and stopping the assessment of penalty fees. We also make long-term loan modifications for customers who request financial assistance through external sources, such as through consumer credit counseling service agencies. Long-term loan modification programs do not normally include the forgiveness of unpaid principal, interest or fees. We may also provide certain borrowers with a short-term loan modification program (generally up to 3 months) that can include the forgiveness of a percentage of their unpaid principal balance, interest and/or fees. Effective in 2024, for borrowers that newly enroll in our short-term modification programs, we no longer charge interest and penalty fees during the term of the program and also typically waive accrued and unpaid interest and fees at the time of enrollment. We generally do not convert revolving loans to term loans, outside of loan modification programs for borrowers experiencing financial difficulties. The evaluation of whether a borrower is experiencing financial difficulty includes our consideration of all relevant facts and circumstances. See Note 5. Loan Receivables and Allowance for Credit Losses for additional information on our loan modifications to borrowers experiencing financial difficulty. Data related to redefault experience is also considered in our overall reserve adequacy review. Once the loan has been modified, it only returns to current status if the borrower pays the total minimum payment due or if the loan is re-aged after three consecutive monthly program payments are received post the modification date, subject to re-aging limitations of once a year, or twice in a five-year period.Charge-OffsNet 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, fees and third-party fraud losses from charge-offs. Charged-off and recovered accrued and unpaid finance charges and fees are included in interest and fees on loans while 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 are included in Other expense in our Consolidated Statements of Earnings. We charge-off our loans based upon days contractually past due, which is typically 120 days for our unsecured closed-end consumer installment loans and loans secured by collateral and in the period the account becomes 180 days for our unsecured open-ended revolving loans. Unsecured consumer loans in bankruptcy are charged-off within 60 days of notification of filing by the bankruptcy court or within contractual charge-off periods, whichever occurs earlier. Credit card loans of deceased account holders are charged-off within 60 days of receipt of notification. Goodwill and Intangible AssetsWe do not amortize goodwill but test it at least annually for impairment at the reporting unit level pursuant to ASC 350, Intangibles-Goodwill and Other. A reporting unit is defined under GAAP as the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. Our single operating segment comprises a single reporting unit, based on the level at which segment management regularly reviews and measures the business operating results.When a portion of a reporting unit constitutes a business that is being disposed of, the amount of goodwill to be included in the carrying amount of the business classified as held for sale is based upon the relative fair values of the business to be disposed of and the portion of the reporting unit that will be retained. Goodwill impairment risk is first assessed by performing a qualitative review of entity-specific, industry, market and general economic factors for our reporting unit. If potential goodwill impairment risk exists that indicates that it is more likely than not that the carrying value of our reporting unit exceeds its fair value, a quantitative test is performed. The quantitative test compares the reporting unit's estimated fair value with its carrying value, including goodwill. If the carrying value of our reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the amount of goodwill allocated to the reporting unit. The qualitative assessment for each period presented in the consolidated financial statements was performed without hindsight, assuming only factors and market conditions existing as of those dates, and resulted in no potential goodwill impairment risk for our reporting unit. Consequently, goodwill was not deemed to be impaired for any of the periods presented. Definite-lived intangible assets principally consist of certain costs incurred to develop or acquire capitalized software and customer-related assets including purchased credit card relationships. Capitalized software is amortized on a straight-line basis over its estimated useful life, generally 5 years. Customer-related assets are amortized over their estimated useful lives. Defined-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The evaluation compares the cash inflows expected to be generated from each intangible asset to its carrying value. If cash flows attributable to the intangible asset are less than the carrying value, the asset is considered impaired and written down to its estimated fair value. Other AssetsOther assets primarily consist of deferred income taxes, contract costs related to our retail partner agreements and equity investments. Retail partner contract costs are recognized over the life of the contract with the retail partner and are included as a component of Marketing and business development expense in our Consolidated Statements of Earnings. Discontinued Operations and Held for SaleAn entity is classified as held for sale in the period in which management approves and commits to a plan to sell the entity, the entity is available to be sold in its immediate condition subject to usual and customary terms, the entity is being actively marketed at a reasonable price with other actions required to complete the plan to sale initiated, the sale is generally probable to be completed within one year, and it is unlikely that there will be significant changes to the plan to sell.The disposal of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on the Company's operations and financial results, otherwise the results of the entity to be disposed continue to be presented within continuing operations on the Consolidated Statements of Earnings.Assets and liabilities to be disposed of are reclassified to held for sale in our Consolidated Statements of Financial Position. Revenue RecognitionInterest and Fees on LoansWe use the effective interest method to recognize income on loans. Interest and fees on loans is comprised largely of interest and late fees on credit card and other loans. Interest income is recognized based upon the amount of loans outstanding and their contractual interest rate. Late fees are recognized when billable to the customer. We typically continue to accrue interest and fees on credit cards until the accounts are charged-off in the period the account becomes 180 days past due. For non-credit card loans, we stop accruing interest and fees in the period when the account becomes 90 days past due. Previously recognized interest income that was accrued but not collected from the customer is reversed. Although we stop accruing interest in advance of payments, we recognize interest income as cash is collected when appropriate, provided the amount does not exceed that which would have been earned at the historical effective interest rate; otherwise, payments received are applied to reduce the principal balance of the loan. We resume accruing interest on non-credit card loans when the customer's account is less than 90 days past due and collection of such amounts is probable. Interest income from loans disclosed as long-term modifications to borrowers experiencing financial difficulty is accounted for in the same manner as other accruing loans. Effective in 2024, for borrowers that newly enroll in our short-term modification programs, we no longer charge interest and penalty fees during the term of the program and also typically waive accrued and unpaid interest and fees at the time of enrollment. Direct loan origination costs on credit card loans are deferred and amortized on a straight-line basis over a one-year period, or the estimated life of the loan for other loan receivables, and are included in interest and fees on loans in our Consolidated Statements of Earnings. See Note 5. Loan Receivables and Allowance for Credit Losses for further detail. Other loan and customer-related fees including miscellaneous fees charged to borrowers are recognized net of waivers and charge-offs when the related transaction or service is provided, and are included in Other income in our Consolidated Statements of Earnings. Promotional FinancingLoans originated with promotional financing may include deferred interest financing (interest accrues during a promotional period and becomes payable if the full purchase amount is not paid off during the promotional period), no interest financing (no interest accrues during a promotional period but begins to accrue thereafter on any outstanding amounts at the end of the promotional period) and reduced interest financing (interest accrues monthly at a promotional interest rate during the promotional period). For deferred interest financing, we bill interest to the borrower, retroactive to the inception of the loan, if the loan is not repaid prior to the specified date. Income is recognized on such loans when it is billable. In almost all cases, our retail partner will pay an upfront fee or reimburse us to compensate us for all or part of the costs associated with providing the promotional financing. Upfront fees are deferred and accreted to income over the promotional period. Reimbursements are estimated and accrued as income over the promotional period. Purchased LoansLoans acquired by purchase are recorded at fair value, which may result in the recognition of a loan premium or loan discount. For acquired loans with evidence of more-than-insignificant deterioration in credit quality since origination, the initial allowance for credit losses at acquisition is added to the purchase price to determine the initial cost basis of the loans and loan premium or loan discount. Loan premiums and loan discounts are recognized into interest income using the effective interest method over the estimated remaining life of the loans. The Company develops an allowance for credit losses for all purchased loans, which is recognized upon acquisition, similar to that of an originated financial asset. Subsequent changes to the expected credit losses for these loans follow the allowance for credit losses methodology described above under "-Allowance for Credit Losses." Retailer Share ArrangementsMost of our program agreements with large retail and certain other 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). Although the 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. These thresholds and the economic performance of a program are based on, among other things, agreed upon measures of program expenses. On a quarterly basis, we make a judgment as to whether it is probable that the performance threshold will be met under a particular retail partner's retailer share arrangement. The current period's estimated contribution to that ultimate expected payment is recorded as a liability. To the extent facts and circumstances change and the cumulative probable payment for prior months has changed, a cumulative adjustment is made to align the retailer share arrangement liability balance with the amount considered probable of being paid relating to past periods. Other Income Interchange and Protection Product RevenueOther Income primarily includes interchange and protection product revenue. We earn interchange revenue at the time the cardholder transaction occurs. Protection product revenue represents fees earned from our Payment Security offering, which is a debt cancellation product. Fees are assessed and recognized during the monthly coverage period, based upon a customer's account balance. Loyalty ProgramsOur loyalty programs are designed to generate increased purchase volume per customer while reinforcing the value of our credit cards and strengthening cardholder loyalty. These programs typically provide cardholders with statement credit or cash back rewards. Other programs include rewards points, which are redeemable for a variety of products or awards, or merchandise discounts that are earned by achieving a pre-set spending level on their private label credit card, Dual Card or general purpose co-branded credit card. We establish a rewards liability based on points and merchandise discounts earned that are ultimately expected to be redeemed and the average cost per point at redemption. The rewards liability is included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Position. Cash rebates are earned based on a tiered percentage of purchase volume. As points and discounts are redeemed or cash rebates and rewards are issued, the rewards liability is relieved. The estimated cost of loyalty programs is classified as a reduction to Other income in our Consolidated Statements of Earnings.Other ExpenseFraud LossesWe experience third-party fraud losses from the unauthorized use of credit cards and when loans are obtained through fraudulent means. Fraud losses are included as a charge within Other expense in our Consolidated Statements of Earnings, net of recoveries, when such losses are probable. Loans are charged-off, as applicable, after the investigation period has completed.Income TaxesWe recognize the current and deferred tax consequences of all transactions that have been recognized in the financial statements using the provisions of the enacted tax laws. The effects of tax adjustments and settlements from taxing authorities are presented in our consolidated financial statements in the period they occur. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws and rates that will be in effect when the differences are expected to reverse. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making decisions regarding our ability to realize tax assets, we evaluate all positive and negative evidence, including projected future taxable income, taxable income in carryback periods, expected reversal of deferred tax liabilities and the implementation of available tax planning strategies.We recognize the financial statement impact of uncertain income tax positions when we conclude that it is more likely than not, based on the technical merits of a position, that the position will be sustained upon examination. In certain situations, we establish a liability that represents the difference between a tax position taken (or expected to be taken) on an income tax return and the amount of taxes recognized in our financial statements. The liability associated with the unrecognized tax benefits is adjusted periodically when new information becomes available. We recognize accrued interest and penalties related to unrecognized tax benefits as interest expense and provision for income taxes, respectively, in our Consolidated Statements of Earnings. Fair Value MeasurementsFair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1- Quoted prices for identical instruments in active markets. Level 2- Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3- Significant inputs to the valuation are unobservable. We maintain policies and procedures to value instruments using the best and most relevant data available. In addition, we have risk management teams that review valuations, including independent price validation for certain instruments. We use non-binding broker quotes and third-party pricing services, when available, as our primary basis for valuation when there is limited or no relevant market activity for a specific instrument or for other instruments that share similar characteristics. We have not adjusted prices that we have obtained. In the absence of such data, such measurements involve developing assumptions based on internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.The third-party brokers and third-party pricing services do not provide us access to their proprietary valuation models, inputs and assumptions. Accordingly, our risk management, treasury and/or finance personnel conduct reviews of these brokers and services, as applicable. In addition, we conduct internal reviews of pricing provided by our third-party pricing service for all investment securities on a quarterly basis to ensure reasonableness of valuations used in the consolidated financial statements. These reviews are designed to identify prices that appear stale, those that have changed significantly from prior valuations and other anomalies that may indicate that a price may not be accurate. Based on the information available, we believe that the fair values provided by the third-party brokers and pricing services are representative of prices that would be received to sell the assets at the measurement date (exit prices) and are classified appropriately in the hierarchy. Recurring Fair Value MeasurementsOur investments in debt and certain equity securities, as well as certain financial assets and liabilities for which we have elected the fair value option, are measured at fair value every reporting period on a recurring basis. Non-Recurring Fair Value MeasurementsCertain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. Equity Securities Without Readily Determinable Fair ValuesThe company measures certain equity securities without readily determinable fair values using observable price changes in orderly transactions for the identical or a similar investment of the same issuer when they occur. Changes in observable price changes are recognized in Other income in our Consolidated Statements of Earnings.Financial Assets and Financial Liabilities Carried at Other than Fair ValueThe following is a description of the valuation techniques used to estimate the fair values of the financial assets and liabilities carried at other than fair value. Loan receivables, netIn estimating the fair value for our loan receivables, we use a discounted future cash flow model. We use various unobservable inputs including estimated interest and fee income, payment rates, loss rates and discount rates (which consider current market interest rate data adjusted for credit risk and other factors) to estimate the fair values of loans. When collateral dependent, loan receivables may be valued using collateral values. DepositsFor demand deposits with no defined maturity, carrying value approximates fair value due to the liquid nature of these deposits. For fixed-maturity certificates of deposit, fair values are estimated by discounting expected future cash flows using market rates currently offered for deposits with similar remaining maturities. BorrowingsThe fair values of borrowings of consolidated securitization entities are based on valuation methodologies that utilize current market interest rate data, which are comparable to market quotes adjusted for our non-performance risk. Borrowings that are publicly traded securities are classified as level 2. Borrowings that are not publicly traded are classified as level 3. The fair values of the senior and subordinated unsecured notes are based on secondary market trades and other observable inputs and are classified as level 2.

For the years ended December 31($ in millions, except per share data)202420232022Interest income:Interest and fees on loans (Note 5)$21,596 $19,902 $16,881 Interest on cash and debt securities1,049 808 265 Total interest income22,645 20,710 17,146 Interest expense:Interest on deposits3,806 2,952 1,008 Interest on borrowings of consolidated securitization entities427 340 196 Interest on senior and subordinated unsecured notes401 419 317 Total interest expense4,634 3,711 1,521 Net interest income18,011 16,999 15,625 Retailer share arrangements(3,407)(3,661)(4,331)Provision for credit losses (Note 5)6,733 5,965 3,375 Net interest income, after retailer share arrangements and provision for credit losses7,871 7,373 7,919 Other income:Interchange revenue1,026 1,031 982 Protection product revenue562 510 387 Loyalty programs(1,382)(1,370)(1,257)Other (Note 3)1,315 118 268 Total other income1,521 289 380 Other expense:Employee costs1,872 1,884 1,681 Professional fees936 842 832 Marketing and business development 524 527 487 Information processing 803 712 623 Other 704 793 714 Total other expense 4,839 4,758 4,337 Earnings before provision for income taxes4,553 2,904 3,962 Provision for income taxes (Note 15)1,054 666 946 Net earnings$3,499 $2,238 $3,016 Net earnings available to common stockholders$3,427 $2,196 $2,974 Earnings per share (Note 13)Basic$8.64 $5.21 $6.19 Diluted$8.55 $5.19 $6.15

For the years ended December 31 ($ in millions)202420232022Net earnings$3,499 $2,238 $3,016 Other comprehensive income (loss)Debt securities10 60 (97)Currency translation adjustments (6)- (12)Employee benefit plans5 (3)53 Other comprehensive income (loss)9 57 (56)Comprehensive income$3,508 $2,295 $2,960 Amounts presented net of taxes.

At December 31 ($ in millions)20242023Credit cards$96,818 $97,043 Consumer installment loans5,971 3,977 Commercial credit products1,826 1,839 Other 106 129 Total loan receivables, before allowance for credit losses(a)(b)(c)$104,721 $102,988 _______________________(a)Total loan receivables include $21.3 billion and $21.4 billion of restricted loans of consolidated securitization entities at December 31, 2024 and 2023, respectively. See Note 6. Variable Interest Entities for further information. (b)At December 31, 2024 and 2023, loan receivables included deferred costs, net of purchase discounts and deferred income, of $(212) million and $213 million, respectively.(c)At December 31, 2024 and 2023, $20.7 billion and $22.4 billion, respectively, of loan receivables were pledged by the Bank as collateral to the Federal Reserve to secure Federal Reserve discount window advances. Allowance for Credit Losses(a)(b) ($ in millions)Balance at January 1, 2024Provision charged to operations(c)Gross charge-offsRecoveriesOtherBalance at December 31, 2024Credit cards$10,156 $6,005 $(7,133)$1,224 $7 $10,259 Consumer installment loans279 595 (416)45 39 542 Commercial credit products131 135 (147)8 - 127 Other5 (3)(1)- - 1 Total$10,571 $6,732 $(7,697)$1,277 $46 $10,929 ($ in millions)Balance at January 1, 2023Impact of ASU 2022-02 AdoptionPost-Adoption Balance at January 1, 2023Provision charged to operations(d)Gross charge-offsRecoveriesBalance at December 31, 2023Credit cards$9,225 $(294)$8,931 $5,536 $(5,263)$952 $10,156 Consumer installment loans208 1 209 259 (218)29 279 Commercial credit products87 (1)86 164 (128)9 131 Other7 - 7 (1)(1)- 5 Total$9,527 $(294)$9,233 $5,958 $(5,610)$990 $10,571 ($ in millions)Balance at January 1, 2022Provision charged to operationsGross charge-offsRecoveriesOtherBalance at December 31, 2022Credit cards$8,512 $3,105 $(3,202)$810 $- $9,225 Consumer installment loans115 173 (97)17 - 208 Commercial credit products59 91 (70)7 - 87 Other2 6 (1)- - 7 Total$8,688 $3,375 $(3,370)$834 $- $9,527 _______________________(a)The allowance for credit losses at December 31, 2024, 2023 and 2022 reflects our estimate of expected credit losses for the life of the loan receivables on our Consolidated Statements of Financial Position at December 31, 2024, 2023 and 2022, which includes the consideration of current and expected macroeconomic conditions that existed at those dates.(b)Excluded from the table above are allowance for credit losses for loan receivables acquired and immediately written off within the period presented.(c)Provision for credit losses in the Consolidated Statements of Earnings for the year ended December 31, 2024 also includes amounts associated with off-balance sheet credit exposures recorded in Accrued expenses and other liabilities in the Consolidated Statements of Financial Position.(d)Provision for credit losses in the Consolidated Statements of Earnings for the year ended December 31, 2023 includes $7 million associated with a forward loan portfolio purchase recorded in Accrued expenses and other liabilities in the Consolidated Statements of Financial Position. The reasonable and supportable forecast period used in our estimate of credit losses at December 31, 2024 was 12 months, consistent with the forecast period utilized since the adoption of CECL. Beyond the reasonable and supportable forecast period, we revert to historical loss information at the loan receivables segment level over a 6-month period, gradually increasing the weight of historical losses by an equal amount each month during the reversion period, and utilize historical loss information thereafter for the remaining life of the portfolio. The reversion period and methodology remain unchanged since the adoption of CECL.Losses on loan receivables, including those which are modified for borrowers experiencing financial difficulty, are estimated and recognized upon origination of the loan, based on expected credit losses for the life of the loan balance at December 31, 2024. Expected credit loss estimates are developed using both quantitative models and qualitative adjustments, and incorporates a macroeconomic forecast, as described within Note 2. Basis of Presentation and Summary of Significant Accounting Policies. Our current estimate of expected credit losses is based on the current and forecasted economic conditions at the balance sheet date, which reflects our expectations of the macroeconomic environment. There have been no significant changes in our overall expectation of future credit losses during the year ended December 31, 2024. We continued to experience a decrease in payment rates and have also experienced an increase in net charge-offs during the year ended December 31, 2024 as compared to the prior year. These conditions are reflected in our current estimate of expected credit losses. Our allowance for credit losses increased to $10.9 billion during the year ended December 31, 2024, primarily reflecting these conditions and the impact of the Ally Lending acquisition. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies for additional information on our significant accounting policies related to our allowance for credit losses.Delinquent and Non-accrual LoansThe following table provides information on our delinquent and non-accrual loans:At December 31, 2024 ($ in millions)30-89 days delinquent90 or more days delinquentTotal past due90 or more days delinquent and accruingTotal non-accruingCredit cards$2,229 $2,431 $4,660 $2,431 $- Consumer installment loans139 39 178 - 39 Commercial credit products45 42 87 42 - Total delinquent loans$2,413 $2,512 $4,925 $2,473 $39 Percentage of total loan receivables2.3 %2.4 %4.7 %2.4 %- %At December 31, 2023 ($ in millions)30-89 days delinquent90 or more days delinquentTotal past due90 or more days delinquent and accruingTotal non-accruingCredit cards$2,375 $2,290 $4,665 $2,290 $- Consumer installment loans96 23 119 - 23 Commercial credit products61 40 101 40 - Total delinquent loans$2,532 $2,353 $4,885 $2,330 $23 Percentage of total loan receivables2.5 %2.3 %4.7 %2.3 %- % Credit Quality IndicatorsOur loan receivables portfolio includes both secured and unsecured loans. Secured loan receivables are largely comprised of consumer installment loans secured by equipment. Unsecured loan receivables are largely comprised of our open-ended consumer and commercial revolving credit card loans. As part of our credit risk management activities, on an ongoing basis, we assess overall credit quality by reviewing information related to the performance of a customer's account with us, including delinquency information, as well as information from credit bureaus relating to the customer's broader credit performance. We utilize VantageScore credit scores to assist in our assessment of consumer credit quality. VantageScore credit scores are obtained at origination of the account and are refreshed, at a minimum quarterly, but could be as often as weekly, to assist in predicting customer behavior. We categorize these credit scores into the following three credit score categories: (i) 651 or higher, which are considered the strongest credits; (ii) 591 to 650, considered moderate credit risk; and (iii) 590 or less, which are considered weaker credits. There are certain customer accounts, including for our commercial credit products, for which a VantageScore credit score may not be available where we use alternative sources to assess their credit quality and predict behavior. The following table provides the most recent VantageScore credit scores, or equivalent, available for our revolving credit card and commercial credit product customers at December 31, 2024 and 2023, respectively, as a percentage of each class of loan receivable. The table below excludes 0.3% of our total loan receivables balance for our credit cards and commercial credit products at both December 31, 2024 and 2023, which represents those customer accounts for which a VantageScore credit score, or equivalent, is not available. At December 3120242023651 or591 to590 or651 or591 to590 orhigher650 lesshigher650 lessCredit cards73 %19 %8 %72 %19 %9 %Commercial credit products 83 %7 %10 %83 %10 %7 %Consumer Installment LoansDelinquency trends are the primary credit quality indicator for our consumer installment loans, which we use to monitor credit quality and risk within the portfolio. The tables below include information on our consumer installment loans by origination year. The amounts for the current year period include information related to loan receivables associated with the Ally Lending acquisition. See Note 3. Acquisitions and Dispositions for additional information.Consumer Installment Loans by Origination YearBy origination yearAt December 31, 2024 ($ in millions)20242023202220212020PriorTotalAmortized cost basis$2,581 $1,761 $1,005 $424 $166 $34 $5,971 30-89 days delinquent$47 $44 $30 $12 $5 $1 $139 90 or more days delinquent$13 $13 $9 $3 $1 $- $39 By origination yearAt December 31, 2023 ($ in millions)20232022202120202019PriorTotalAmortized cost basis$2,097 $931 $541 $312 $69 $27 $3,977 30-89 days delinquent$44 $25 $15 $9 $2 $1 $96 90 or more days delinquent$11 $6 $4 $2 $- $- $23 Gross Charge-offs for Consumer Installment Loans by Origination YearBy origination yearFor the years ended ($ in millions)20242023202220212020PriorTotalDecember 31, 2024$55 $178 $117 $46 $16 $4 $416 December 31, 2023$- $65 $84 $42 $19 $8 $218 Loan Modifications to Borrowers Experiencing Financial DifficultyThe Company adopted ASU 2022-02 as of January 1, 2023 on a modified retrospective basis through a cumulative adjustment to retained earnings. The guidance is applicable for all loans modified to borrowers experiencing financial difficulties since January 1, 2023. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies - Allowance for Credit Losses - Loan Modifications to Borrowers Experiencing Financial Difficulty for additional information on our significant accounting policies related to loan modifications to borrowers experiencing financial difficulty. The following table provides information on our loan modifications made to borrowers experiencing financial difficulty during the periods presented, which do not include loans that are classified as loan receivables held for sale:Years ended December 3120242023($ in millions)Amount(a)% of Total Class of Loan ReceivablesAmount(a)% of Total Class of Loan ReceivablesLong-term modificationsCredit cards$1,743 1.8 %$1,573 1.6 %Consumer installment loans- - %- - %Commercial credit products10 0.5 %6 0.3 %Short-term modificationsCredit cards948 1.0 %628 0.6 %Consumer installment loans- - %- - %Commercial credit products1 - %1 - %Total$2,702 2.6 %$2,208 2.1 %_______________________(a)Represents balance at enrollment date.Financial Effects of Loan Modifications to Borrowers Experiencing Financial DifficultyAs part of our loan modifications to borrowers experiencing financial difficulty, we may provide multiple concessions to minimize our economic loss and improve long-term loan performance and collectability. For long-term modifications made in the years ended December 31, 2024 and 2023, the financial effect of these modifications reduced the weighted-average interest rates by 97% for both periods. For short-term modifications made in the years ended December 31, 2024 and 2023, unpaid balances of $316 million and $186 million, respectively, were forgiven. Additionally, effective in 2024, for borrowers that newly enroll in our short-term loan modification programs, we no longer charge interest and penalty fees during the term of the program and also typically waive accrued and unpaid interest and fees at the time of enrollment. Performance of Loans Modified to Borrowers Experiencing Financial DifficultyThe following tables provide information on the performance of loans modified to borrowers experiencing financial difficulty which have been modified within the previous 12 months from the applicable balance sheet date and remained in a modification program at the periods presented:Amortized cost basisAt December 31, 2024 ($ in millions)Current30-89 days delinquent90 or more days delinquentTotal past due(a)Long-term modificationsCredit cards$987 $169 $136 $305 Consumer installment loans- - - - Commercial credit products4 1 1 2 Short-term modificationsCredit cards65 37 45 82 Consumer installment loans- - - - Commercial credit products- - - - Total delinquent modified loans$1,056 $207 $182 $389 Percentage of total loan receivables1.0 %0.2 %0.2 %0.4 %Amortized cost basisAt December 31, 2023 ($ in millions)Current30-89 days delinquent90 or more days delinquentTotal past due(a)Long-term modificationsCredit cards$861 $180 $141 $321 Consumer installment loans- - - - Commercial credit products2 1 1 2 Short-term modificationsCredit cards53 32 41 73 Consumer installment loans- - - - Commercial credit products- - - - Total delinquent modified loans$916 $213 $183 $396 Percentage of total loan receivables0.9 %0.2 %0.2 %0.4 %___________________(a)    Once a loan has been modified, it only returns to current status if the borrower pays the total minimum payment due or if the loan is re-aged after three consecutive monthly program payments are received post the modification date.Payment DefaultsThe following table presents the type, number and amount of loans to borrowers experiencing financial difficulty that enrolled in a long-term modification program within the previous 12 months from the applicable balance sheet date, and experienced a payment default and charged-off during the periods presented:Year ended December 31, 2024Year ended December 31, 2023($ in millions, accounts in thousands)Accounts defaultedLoans defaultedAccounts defaultedLoans defaultedCredit cards97 $268 96 $233 Consumer installment loans- - - - Commercial credit products1 2 - 2 Total98 $270 96 $235 Of the loans modified to borrowers experiencing financial difficulty that enrolled in a short-term modification program within the previous 12 months from the applicable balance sheet date, 61% and 54% had fully completed all required payments and successfully exited the program during the years ended December 31, 2024 and 2023, respectively.Troubled Debt RestructuringsThe following information on loan modifications for the year ended December 31, 2022 is presented in accordance with the applicable accounting standards in effect at that time. For the year ended December 31, 2022, loan receivables of $996 million enrolled in a modification plan that was accounted for as a troubled debt restructuring ("TDR"), for which substantially all related to our credit card loans. For TDRs made in 2022, a total of $286 million of interest income was forgone as compared to the interest that would have been earned under the original terms of the loan, and $135 million of TDRs experienced a payment default and charged-off during the period.Unfunded Lending Commitments We manage the potential risk in credit commitments by limiting the total amount of credit, both by individual customer and in total, by monitoring the size and maturity of our portfolios and by applying the same credit standards for all of our credit products. Unused credit card lines available to our customers totaled approximately $433 billion and $427 billion at December 31, 2024 and 2023, respectively. While these amounts represented the total available unused credit card lines, we have not experienced and do not anticipate that all of our customers will access their entire available line at any given point in time. Interest Income by ProductThe following table provides additional information about our interest and fees on loans, including merchant discounts, from our loan receivables, including held for sale: For the years ended December 31 ($ in millions)202420232022Credit cards(a)$20,554 $19,341 $16,471 Consumer installment loans854 401 287 Commercial credit products179 150 117 Other9 10 6 Total(b)$21,596 $19,902 $16,881 _______________________(a)Interest income on credit cards that was reversed related to accrued interest and fees receivables written off was $2.4 billion, $1.8 billion and $1.1 billion for the years ended December 31, 2024, 2023 and 2022, respectively.(b)Deferred merchant discounts to be recognized in interest income at December 31, 2024 and December 31, 2023, were $1.8 billion and $1.9 billion, respectively, which are included in Accrued expenses and other liabilities in our Consolidated Statements of Financial Position.

We use VIEs to securitize loan receivables and arrange public and private asset-backed financing in the ordinary course of business through Synchrony Card Issuance Trust, as well as private asset-backed financing through Synchrony Credit Card Master Note Trust and Synchrony Sales Finance Master Trust. Investors in these entities only have recourse to the assets owned by the entity and not to our general credit. We do not have implicit support arrangements with any VIE and we did not provide non-contractual support for previously transferred loan receivables to any of these VIEs in the years ended December 31, 2024 and 2023. Our VIEs are able to accept new loan receivables and arrange new asset-backed financings, consistent with the requirements and limitations on such activities placed on the VIE by existing investors. Once an account has been designated to a VIE, the contractual arrangements we have require all existing and future loan receivables originated under such account to be transferred to the VIE. The amount of loan receivables held by our VIEs in excess of the minimum amount required under the asset-backed financing arrangements with investors may be removed by us under removal of accounts provisions. All loan receivables held by a VIE are subject to claims of third-party investors. The loan receivables in these entities have risks and characteristics similar to our other loan receivables and were underwritten to the same standard. Accordingly, the performance of these assets has been similar to our other comparable loan receivables, and the blended performance of the pools of receivables in these entities reflects the eligibility criteria that we apply to determine which receivables are selected for transfer. Contractually, the cash flows from these loan receivables must first be used to pay third-party debt holders, as well as other expenses of the entity. Excess cash flows, if any, are available to us. The creditors of these entities have no claim on our other assets. The table below summarizes the assets and liabilities of our consolidated securitization VIEs described above.At December 31 ($ in millions)20242023Assets Loan receivables, net(a)$19,439 $19,537 Other assets(b)44 47 Total$19,483 $19,584  LiabilitiesBorrowings$7,842 $7,267 Other liabilities27 31 Total$7,869 $7,298 _______________________(a)    Includes $1.9 billion and $1.9 billion of related allowance for credit losses resulting in gross restricted loan receivables of $21.3 billion and $21.4 billion at December 31, 2024 and 2023, respectively.(b)    Includes $40 million and $45 million of segregated funds held by the VIEs at December 31, 2024 and 2023, respectively, which are classified as restricted cash and equivalents and included as a component of Other assets in our Consolidated Statements of Financial Position. The balances presented above are net of intercompany balances and transactions that are eliminated in our consolidated financial statements. We provide servicing for all of our consolidated VIEs. Collections are required to be placed into segregated accounts owned by each VIE in amounts that meet contractually specified minimum levels. These segregated funds are invested in cash and cash equivalents and are restricted as to their use, principally to pay maturing principal and interest on debt and the related servicing fees. Collections above these minimum levels are remitted to us on a daily basis. Income (principally, interest and fees on loans) earned by our consolidated VIEs was $4.4 billion, $3.9 billion and $3.7 billion for the years ended December 31, 2024, 2023 and 2022, respectively. Related expenses consisted primarily of provision for credit losses of $963 million, $857 million and $365 million for the years ended December 31, 2024, 2023 and 2022, respectively, and interest expense of $427 million, $340 million and $196 million for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts do not include intercompany transactions, principally fees and interest, which are eliminated in our consolidated financial statements. Non-consolidated VIEsAs part of our community reinvestment initiatives, we invest in funds that invest in affordable housing properties and receive affordable housing tax credits for these investments. We account for these investments using the proportional amortization method, where the costs of the investment are amortized in proportion to the income tax credits and other income tax benefits received. These investments are included in Other assets within our Consolidated Statements of Financial Position totaled $776 million and $736 million at December 31, 2024 and December 31, 2023, respectively, and represents our total exposure for these entities. For the years ended December 31, 2024, 2023 and 2022, provision for income taxes included amortization of $90 million, $71 million and $44 million, respectively, and tax credits and other tax benefits of $108 million, $90 million and $56 million, respectively, associated with investments in affordable housing properties.Our other investments in non-consolidated VIEs totaled $274 million and $252 million at December 31, 2024 and 2023, respectively, are included in Other assets within our Consolidated Statements of Financial Position. At December 31, 2024, the Company also had investment commitments of $191 million related to these investments.

Synchrony and the Bank must meet rules for capital adequacy as discussed in "Regulation-Regulation Relating to Our Business." As a stand-alone savings and loan holding company, Synchrony is subject to capital requirements similar to those that apply to the Bank. Synchrony and the Bank may be subject to increasingly stringent capital adequacy standards in the future. For instance, because Synchrony now has over $100 billion in average total consolidated assets, following applicable transition periods, Synchrony has or will become subject to biennial supervisory stress tests, a formal capital plan submission requirement, and the stress capital buffer which could impose additional requirements and constraints on us, including additional restrictions on our ability to return capital to our shareholders. See "Regulation-Regulation Relating to Our Business- Savings and Loan Holding Company Regulation-Capital" and "Regulation-Regulation Relating to Our Business- Savings and Loan Holding Company Regulation-Dividends and Stock Repurchases." In addition, in July 2023 the federal banking agencies proposed changes to the capital requirements of banking organizations that have $100 billion or more in total assets. See "Regulation-Regulation Relating to Our Business- Savings and Loan Holding Company Regulation-Capital." To the extent the proposed changes are finalized and apply to us, they would likely increase our regulatory capital requirements, which may decrease our return on equity and could result in limitations on our ability to pay dividends or repurchase our stock. If Synchrony or the Bank fails to meet current or future minimum capital, leverage or other financial requirements, its operations, results of operations and financial condition could be materially adversely affected. Among other things, failure by Synchrony or the Bank to maintain its status as "well capitalized" (or otherwise meet current or future minimum capital, leverage or other financial requirements) could compromise our competitive position and result in restrictions imposed by the Federal Reserve Board or the OCC, including, potentially, on the Bank's ability to engage in certain activities. These could include restrictions on the Bank's ability to enter into transactions with affiliates, accept brokered deposits, grow its assets, engage in material transactions, extend credit in certain highly leveraged transactions, amend or change its charter, bylaws or accounting methods, pay interest on its liabilities without regard to regulatory caps on the rates that may be paid on deposits, and pay dividends or repurchase stock. In addition, failure to maintain the well capitalized status of the Bank could result in our having to invest additional capital in the Bank, which could in turn require us to raise additional capital. The market and demand for, and cost of, our asset-backed securities also could be adversely affected by failure to meet current or future capital requirements. Synchrony must also continue to comply with regulatory requirements related to the maintenance, management, monitoring and reporting of liquidity as discussed in "Regulation-Regulation Relating to Our Business." Under the Tailoring Rules, enhanced prudential standards with respect to liquidity management apply to covered savings and loan holding companies with $100 billion or more in average total consolidated assets. See "Regulation-Regulation Relating to Our Business." Because Synchrony now has met this threshold, such requirements have begun to apply or will apply to us in the future after applicable transition periods, which could cause our results of operations and financial condition to be materially adversely affected.