Risk Factors Update Summary

• Audited consolidated financial statements now include detailed information on Goodwill Impairment testing procedures.
• Increased reliance on models for managing business aspects, with potential material adverse effects.
• The number of reserved shares for grants decreased from 5,000 to 2,000 shares. This change is important for potential dilution of shares.
• President Biden signed the Inflation Reduction Act imposing a 15% CAMT on large corporations. This could significantly increase future U.S. federal income tax obligations.
• Company matching contributions to the 401(k) plan increased from $17 million to $30 million. This affects employee benefits.
• Operating lease expense decreased from $25 million to $13 million. This impacts financial performance.
• Efficiencies gained in 2023 from technology investments and expense management aim to deliver nominal positive operating leverage in 2024.
• The Company changed the credit card loans delinquency thresholds from 120 days to 180 days.
• The company implemented a Compensation Recoupment Policy to recoup executive compensation in case of financial restatements.
• Enhanced daily monitoring of liquidity and funding positions due to financial sector volatility.
• Unrecognized expense decreased from $55 million to $51 million as of December 31, 2023. This change impacts future financial liabilities.
• Net principal losses decreased from $954 million in 2021 to $651 million in 2022.
• The registered shares of common stock increased from 3,075,000 to 3,075,000 shares. This change is important for potential stock issuances.
• Debt issued by consolidated variable interest entities decreased by $686 million from $4,278 million to $3,592 million.
• Long-term debt decreased from $1,986 million to $892 million. This affects the company's debt profile.
• Added discussion of impairment of deferred contract costs. This might impact financial statements.
• Net loss rate expected to be in the low 8% range in 2024, peaking in the first half.
• The net investment in BrandLoyalty was reclassified into net income. This change might result in a significant impact on reported earnings.
• The Company's Allowance for credit losses on BNPL loans increased from $21 million in 2021 to $32 million in 2022.
• Recently adopted and issued accounting standards are now included in the audited financial statements.
• Participant authorizes the Company to issue instructions to return shares upon enforcement.
• Covered Executives are defined as current or former Executive Officers subject to the Recoupment Policy.
• Issued Convertible Notes in 2023 may dilute existing stockholders' ownership and affect per share results.
• Series 2023 - VFN1 now includes interest and earnings on funds in the Reserve Account for Available Finance Charge Collections.
• Obtained credit ratings from major agencies to facilitate debt financings and broaden investor base.
• Provision for credit losses increased due to economic scenario weightings, reflecting an increased recession probability.
• The issuance of shares upon conversion of Convertible Notes may dilute ownership interests and affect per share results.
• Long-term and other debt decreased by $592 million from $1,986 million to $1,394 million.
• Total Income for 2023 increased to $44 million from $32 million in 2022. This change reflects improved financial performance.
• Issued 140 shares of common stock under the 2015 ESPP at $27. This impacts equity dilution.
• Lease liabilities increased from $126 million to $148 million. This affects financial obligations.
• Anticipation of CFPB rule changes on credit card late fees may reduce safe harbor amount, impacting income by 25% in Q4 2024.
• Delinquency rate increased to 6.5% in 2023 from 5.5% in 2022, impacting financial performance.
• The Required Excess Collateral Reserve Account Amount decreased from 30% to 15%.
• The Company acquired a credit card portfolio for $388 million in October 2023.
• The Company increased the average net principal loss rate from 5.4% in 2022 to 7.5% in 2023.
• The audited consolidated financial statements have been updated to reflect changes in reporting units and compliance policies.
• Reduced outstanding debt by approximately $500 million and refinanced nearer-term debt maturities.
• The Omnibus Incentive Plan was updated from 2015 to 2020, effective July 1. This change reflects current compensation practices.
• Participant may receive a refund of over-withheld tax amounts in cash instead of stock.
• The Recoupment Period for recovering Erroneously Awarded Compensation includes the three fiscal years preceding.
• The Servicing Fee Percentage increased from 1.0% to 2.0% annually.
• The Company added a new credit scoring system, VantageScore, to assess credit quality.
• The audited consolidated financial statements now provide a breakdown of unrecognized tax benefits, showing a decrease from $282 million to $265 million.
• Total liabilities decreased by $2,266 million from $21,746 million to $19,480 million.
• The Board adopted the 2022 Omnibus Incentive Plan, approved by stockholders. This change impacts employee incentives and retention.
• Total deposits increased from $13,620 million to $13,826 million. This shows changes in liquidity.
• The sale of the BJ's portfolio in February 2023 led to a decline in credit sales by 12%.
• The Policy allows recovery of Erroneously Awarded Compensation calculated on a pre-tax basis.
• Increased annual percentage rates and fee-based pricing actions are being evaluated to mitigate CFPB rule impact.
• The Company's total investment securities increased from $196 million in 2022 to $217 million in 2023.
• Company may withhold Tax-Related Items by considering statutory withholding rates, including maximum rates.
• Engaged in various financing transactions, reducing outstanding debt by approximately $500 million.
• Total net interest and non-interest income increased by 12% to $4,289 million.
• Delinquency rates and net principal loss rates are monitored closely, impacted by credit card processing services transition.
• Vesting date changed from January 17, 2024, to January 17, 2023, affecting stock payment timing.
• The audited consolidated financial statements now include a detailed description of recently adopted accounting standards.
• The Committee has the discretion to determine the manner and timing of recovering Erroneously Awarded Compensation.
• Repurchased and cancelled $565 million of Senior Notes due 2024 through a tender offer.
• Provision for credit losses decreased due to a reserve release from the sale of the BJ's portfolio.
• Forfeiture for early termination of service now includes any unvested portion of outstanding awards.
• The audited consolidated financial statements have been updated to reflect changes in the reporting date from 2022 to 2023.
• Total non-interest expenses increased due to higher employee compensation, card and processing expenses, and marketing expenses.
• The Policy may be amended or terminated by the Committee at any time, subject to regulatory requirements.
• Issued and sold $600 million of 9.750% Senior Notes due 2029, using proceeds to redeem outstanding debt.
• Provision for credit losses decreased in 2023 due to reserve releases and reserve build differences compared to 2022.
• Allowance for credit losses decreased as of December 31, 2023, relative to December 31, 2022, despite the Reserve rate increasing to 12.0%.
• Adjustments allowed for corporate events to prevent dilution or enlarge participant rights.
• The Company has no obligation to seek recoupment of nonfinancial event-based compensation granted to Covered Executives.
• Increased lender commitments under Conduit Facilities to $5.4 billion, extending maturities.
• The audited consolidated financial statements now include a detailed description of the recently adopted and issued accounting standards.
• The Company reserves the right to unilaterally amend the agreement to ensure compliance.