SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(614 ) 729-4000
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Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition.
On April 27, 2023, Bread Financial Holdings, Inc. (the “Company”) issued a press release regarding its results of operations for the first quarter ended March 31, 2023 (the “Q1 2023 Earnings Release”). A copy of the Q1 2023 Earnings Release is furnished as Exhibit 99.1 hereto.
Item 7.01 Regulation FD Disclosure.
In connection with the Q1 2023 Earnings Release, on April 27, 2023, the Company made available an investor presentation that may be used by the Company’s senior management during meetings and calls with analysts, investors and other market participants, a copy of which is furnished as Exhibit 99.2 hereto and is posted on the Company’s website at www.breadfinancial.com on the “Investors” page under “Events & Presentations.” Information on the Company’s website does not constitute a part of this Current Report on Form 8-K.
Item 8.01 Other Events.
On April 27, 2023, the Company issued a press release announcing that the Board of Directors of the Company declared a quarterly cash dividend of $0.21 per share of common stock, payable on June 16, 2023 to stockholders of record at the close of business on May 12, 2023. A copy of the press release announcing the Company‘s quarterly dividend is attached as Exhibit 99.3 hereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Document Description | |||||||
| Press Release dated April 27, 2023 announcing the Company’s results of operations for the first quarter ended March 31, 2023. | ||||||||
| Investor Presentation dated April 27, 2023. | ||||||||
| Press Release dated April 27, 2023 announcing the Company’s quarterly dividend. | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
Note: Except for the information in Item 8.01 hereof (including Exhibit 99.3 hereto), the information contained in this report (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Bread Financial Holdings, Inc. | ||||||||
Date: April 27, 2023 | By: | /s/ Joseph L. Motes III | ||||||
| Joseph L. Motes III Executive Vice President, Chief Administrative Officer, General Counsel and Secretary | ||||||||
Bread Financial | April 27, 2023 1 ($ in millions, except per share amounts) First Quarter 2023 Net income $455 Earnings per Diluted Share $9.08 Bread Financial Reports First Quarter 2023 Results CEO COMMENTARY “Bread Financial made great progress in the first quarter as we built our capital above our minimum target level, continued to onboard new business, and continued to achieve positive pretax pre-provision earnings (PPNR) growth. Tangible common equity of $1.9 billion grew 21% year-over-year, enabling us to nearly triple our TCE/TA ratio to 9.1% over the past three years. We are pleased with our progress on the financial transformation of our company and we remain focused on continued improvement. Our strengthened balance sheet provides increased flexibility and financial resilience, supporting our ability to grow responsibly. “As macroeconomic uncertainty continues, we are closely monitoring the impact of persistent inflation on consumers. We have observed a moderate shift toward non-discretionary spending with payment rates approaching pre-pandemic levels, and consequently, we continue to proactively adjust our underwriting and credit management accordingly. While our first quarter credit metrics were elevated by the transition of our credit card processing services in June 2022, and related favorable customer accommodations made in the second half of 2022, delinquencies are in line with the assumptions supporting our full year 2023 financial outlook. Our seasoned leadership team is experienced in responsibly managing through varied credit cycles and market conditions. “Bread Financial's long-term business strategy is rooted in our commitment to make responsible decisions that drive sustainable, profitable growth and build long-term value for our stakeholders.” - Ralph Andretta, president and chief executive officer COLUMBUS, Ohio, April 27, 2023 – Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions, today announced financial results for the first quarter ended March 31, 2023. • First quarter net income was $455 million, or $9.08 per diluted share, with a $230 million pretax gain on portfolio sale and a pretax reserve release of $235 million due primarily to the sale of the BJ's Wholesale Club portfolio in February. • First quarter revenue was $1,289 million, up $368 million, or 40%, and up 15%, excluding the gain on portfolio sale versus the first quarter of 2022. • As expected, credit metrics were impacted in the first quarter due to the June 2022 transition of our credit card processing services, with a delinquency rate of 5.7% and a net loss rate of 7.0%. • Total tangible common equity / tangible assets (TCE/TA) ratio increased to 9.1%. “Despite the recent volatility in the banking sector, disciplined financial oversight enabled Bread Financial to continue to execute on our strategic initiatives with ample liquidity and funding. In the first quarter, our Bread Savings™ direct-to- consumer deposit performance remained positive, increasing $2.1 billion, or 58% year-over-year and 3% from year-end. Growth and momentum continued during the last two weeks of March when many banks experienced outflows. Since the launch of our retail platform in 2019, direct-to-consumer deposits have increased to $5.6 billion and comprised 28% of our total funding in the quarter, with an expectation for continued growth. Given the broad cross-section of our depositor base, more than 90% of our total deposits are within the FDIC insurance limits. We remain confident in our liquidity and ability to support our long-term growth by further broadening our funding base,” said Ralph Andretta, president and chief executive officer of Bread Financial. “Our 2023 focus areas include four pillars underpinning our business strategy: growing responsibly, strengthening our balance sheet, optimizing data and technology, and investing in mobile and digital advancements. Our business development pipeline remains active with successful first quarter new partner launches including The Cleveland Cavaliers, Michaels, The New York Yankees, and World Market. Also, we are pleased to announce the extension of our long- standing relationship with Signet, the world’s largest retailer of diamond jewelry. Our five largest brand partners are now each secured through at least 2028. Additionally, we continue to enhance our capital position and refine our funding structure to strengthen our balance sheet. "Following last year’s significant technology investments, we are now focused on leveraging these innovative new capabilities to create additional value, platform optimization, and speed-to-market. We recently received industry recognition for our Bread Cashback™ card launch, which won a fintech innovation award for 'Best Credit Card Payments Solution.' We will remain disciplined while continuing to invest strategically in long-term, sustainable, and profitable growth," Andretta noted. Business Update Exhibit 99.1
Bread Financial | April 27, 2023 2 2023 Full Year Outlook • Our 2023 full year outlook remains unchanged from our guidance provided in January 2023. • Macroeconomic Assumptions: “Our outlook assumes a more challenging macroeconomic landscape with continued inflationary pressures and an unemployment rate gradually moving to the mid-to-upper 4% range by year-end 2023. Our outlook continues to assume that interest rate increases by the Federal Reserve will result in a nominal benefit to total net interest income. • Average Loan Growth: “Based on our new and renewed brand partner announcements, visibility into our pipeline, and the current economic outlook, we expect full year 2023 average credit card and other loans to grow at a mid-single digit rate relative to 2022. • Total Revenue: “Total revenue growth for 2023, excluding the gain on portfolio sale, is anticipated to align with average loan growth, with a full year net interest margin similar to 2022. • Total Expenses: “As a result of ongoing investments in technology modernization, marketing, and product innovation, along with continued portfolio growth, we anticipate an increase in total full year expenses versus 2022, although the pace of growth is projected to decelerate versus the 2022 rate. We remain focused on delivering positive operating leverage for the full year as we manage the pace and timing of our investments to align with our full year revenue and growth outlook. • Net Loss Rate: “We expect a net loss rate of approximately 7% for 2023, inclusive of impacts from the 2022 transition of our credit card processing services, as well as continued pressure on consumers’ ability to pay due to persistent inflation. We remain confident in our long-term guidance of a through-the-cycle average net loss rate below our historical average of 6%. • Effective Tax Rate: “We expect our full year normalized effective tax rate to be in the range of 25% to 26%, with quarter-over-quarter variability due to the timing of certain discrete items.” CFO COMMENTARY “Our first quarter financial results reflected continued strong momentum, including 40% year-over-year revenue growth driven by the $230 million gain on portfolio sale and 17% average loan growth. Credit sales grew 7% in the quarter benefiting from the addition of brand partners like AAA and the NFL, as well as growth across brand partners. “For the eighth consecutive quarter, PPNR (excluding gains on portfolio sales) grew year-over-year, reflecting our ability to deliver quality growth. As expected, first quarter expenses slightly decreased versus the fourth quarter of 2022. However, we continued to invest in technology modernization, digital advancement, marketing, and product innovation, consistent with our focus areas. “During the quarter, we made significant progress growing our retail direct-to-consumer deposits and strengthening our capital position. The stability of our deposits was evident during the market volatility in March and we believe remains a strategic advantage for our company. The sale of the BJ's portfolio in the first quarter meaningfully enhanced our capital levels resulting in a 21% year-over-year improvement in our tangible book value per common share, to over $38. “From a credit perspective, our first quarter results were in line with our expectations as persistent inflation continues to broadly impact consumers, and losses were impacted by timing-related effects of the customer accommodations made in third quarter 2022 following the transition of our credit card processing services. While the second quarter net loss rate will be elevated due to related customer accommodations from the fourth quarter 2022, we expect a lower net loss rate in the second half of the year as we move past the impacts of the customer accommodations. As we previously indicated, our credit loss absorption capacity increased during the quarter, with our reserve rate up 80 basis points from the fourth quarter of 2022 predominantly due to seasonality and the BJ's portfolio sale. We continued to maintain conservative economic scenario weightings in our credit reserve modeling. We believe that given our conservative model assumptions, our loan loss reserve provides protection should we enter a more challenging macroeconomic environment. “We remain confident in our ability to enhance our balance sheet and deliver on our 2023 financial outlook." - Perry Beberman, executive vice president and chief financial officer
Bread Financial | April 27, 2023 3 Continuing Operations(1) Three Months Ended March 31, ($ in millions, except per share amounts) 2023 2022 Change Total net interest and non-interest income (“Revenue”) $ 1,289 $ 921 40% Net principal losses $ 342 $ 199 71% Reserve (release) build $ (235) $ (6) nm Provision for credit losses $ 107 $ 193 (45%) Total non-interest expenses $ 544 $ 426 28% Income from continuing operations before income taxes $ 638 $ 302 nm Income from continuing operations $ 455 $ 211 nm Income from continuing operations per diluted share $ 9.08 $ 4.21 nm Weighted average shares outstanding – diluted 50.1 50.0 Pretax pre-provision earnings (PPNR)* $ 745 $ 495 50% Less: Gain on portfolio sale $ (230) $ — nm PPNR less gain on portfolio sale* $ 515 $ 495 4% PPNR* $495MM $745MM 1Q22 1Q23 Revenue $921MM $1,289MM 1Q22 1Q23 +40% +50% Key Operating and Financial Metrics(1) Credit Metrics (1) Reflective of the spinoff of Loyalty Ventures Inc. for all periods presented. * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non- GAAP Financial Measures". Note: The quarter ended March 31, 2023 Delinquency and Net loss rates were impacted by the transition of our credit card processing services. nm – Not meaningful, denoting a variance of 100 percent or more. Diluted EPS Credit Sales $6.9B $7.4B 1Q22 1Q23 +7% Net Loss Rate 4.8% 7.0% 1Q22 1Q23 Delinquency Rate 4.1% 5.7% 1Q22 1Q23 Total Company $4.20 $9.08 1Q22 1Q23 Continuing Ops. $4.21 $9.08 1Q22 1Q23 160 bps 220 bps
Bread Financial | April 27, 2023 4 First Quarter 2023 Compared with First Quarter 2022 – Continuing Operations • Credit sales were $7.4 billion for the first quarter of 2023, an increase of $0.5 billion, or 7%, versus the first quarter of 2022 driven by brand partner additions including AAA and the NFL, as well as growth across brand partners. • Average and end-of-period credit card and other loans were $19.4 billion and $18.1 billion, respectively, up 17% and 7%, respectively, driven by continued credit sales growth, new partner launches, as well as further moderation in the consumer payment rate, partially offset by the sale of the BJ's portfolio in February 2023. • Revenue increased $368 million, or 40%, resulting from a $230 million gain on portfolio sale and higher average loan balances. Excluding the gain on portfolio sale, revenue increased 15%. Net interest margin decreased 40 basis points year-over-year, due to increased reversals of interest and fee revenues resulting from higher gross losses. • Total non-interest expenses increased $118 million, or 28%, as employee compensation and benefit costs increased $41 million, or 23%, card and processing expenses increased $38 million, or 46%, and information processing and communications expenses increased $19 million, or 34%. • Income from continuing operations increased $244 million aligned with the improvement in PPNR and a lower provision for credit losses reflecting lower loan balances at quarter-end, due to both the sale of the BJ's portfolio and seasonal transactor balance paydowns. • PPNR, a non-GAAP financial measure, increased $250 million, or 50%, inclusive of the gain on portfolio sale. Excluding the sale, PPNR increased $20 million, or 4%, reflecting sustainable, quality growth and continued success in executing on our strategic priorities. • The delinquency rate of 5.7% increased from 4.1% in the first quarter of 2022 and increased from 5.5% in the fourth quarter of 2022. The increases were primarily the result of expected consumer payment rate normalization. • The net loss rate of 7.0% increased from 4.8% in the first quarter of 2022 and 6.3% in the fourth quarter of 2022. The first quarter of 2023 rate was impacted by the transition of our credit card processing services, as well as continued consumer payment rate normalization. Contacts Investor Relations: Brian Vereb (Brian.Vereb@breadfinancial.com) Media Relations: Rachel Stultz (Rachel.Stultz@breadfinancial.com)
Bread Financial | April 27, 2023 5 Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions. We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, rising interest rates, unemployment levels and the increased probability of a recession, and the related impact on consumer payment rates, savings rates and other behavior; global political and public health events and conditions, including the ongoing war in Ukraine and the continuing effects of the global COVID-19 pandemic; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax liability, disputes or other adverse impacts arising out of or relating to the spinoff of our former LoyaltyOne segment or the recent bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. Non-GAAP Financial Measures We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies. In particular, Pretax pre-provision earnings (PPNR) is calculated by increasing/decreasing Income from continuing operations before income taxes by the net provision/release in Provision for credit losses. PPNR less gain on portfolio sales then decreases PPNR by the gain on any portfolio sales in the period. We use PPNR and PPNR less gain on portfolio sales as metrics to evaluate our results of operations before income taxes, excluding the volatility that can occur within Provision for credit losses and the one-time nature of a gain on the sale of a portfolio. Tangible common equity over Tangible assets (TCE/TA) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net, (TCE) divided by Tangible assets (TA), which is Total assets reduced by Goodwill and intangible assets, net. We use TCE/TA as a metric to evaluate the Company’s capital adequacy and estimate its ability to cover potential losses. Tangible book value per common share represents TCE divided by shares outstanding. We use Tangible book value per common share as a metric to estimate the Company’s potential value in relation to tangible assets per share. We believe the use of these non- GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures”.
Bread Financial | April 27, 2023 6 Conference Call / Webcast Information Bread Financial will host a conference call on Thursday, April 27, 2023 at 8:30 a.m. (Eastern Time) to discuss the Company’s first quarter results. The conference call will be available via the Internet at investor.breadfinancial.com. There will be several slides accompanying the webcast. Please go to the website at least 15 minutes prior to the call to register, download, and install any necessary software. The recorded webcast will also be available on the Company’s website. About Bread Financial™ Bread FinancialTM (NYSE: BFH) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, Bread Financial delivers growth for its partners through a comprehensive product suite, including private label and co-brand credit cards, installment lending, and buy now, pay later (BNPL). Bread Financial also offers direct-to-consumer solutions that give customers more access, choice and freedom through its branded Bread CashbackTM American Express® Credit Card and Bread SavingsTM products. Headquartered in Columbus, Ohio, Bread Financial is powered by its 7,500+ global associates and is committed to sustainable business practices. To learn more about Bread Financial, visit BreadFinancial.com or follow us on Facebook, LinkedIn, Twitter and Instagram.
Bread Financial | April 27, 2023 7 BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non-GAAP Financial Measures". Three Months Ended March 31, 2023 2022 Interest income Interest and fees on loans $ 1,289 $ 1,066 Interest on cash and investment securities 46 2 Total interest income 1,335 1,068 Interest expense Interest on deposits 117 34 Interest on borrowings 101 45 Total interest expense 218 79 Net interest income 1,117 989 Non-interest income Interchange revenue, net of retailer share arrangements (87) (96) Gain on portfolio sale 230 — Other 29 28 Total non-interest income 172 (68) Total net interest and non-interest income 1,289 921 Provision for credit losses 107 193 Total net interest and non-interest income, after provision for credit losses 1,182 728 Non-interest expenses Employee compensation and benefits 220 179 Card and processing expenses 120 82 Information processing and communication 75 56 Marketing expenses 39 31 Depreciation and amortization 34 21 Other 56 57 Total non-interest expenses 544 426 Income from continuing operations before income taxes 638 302 Provision for income taxes 183 91 Income from continuing operations 455 211 Income (loss) from discontinued operations, net of taxes — (1) Net income $ 455 $ 210 Basic income per share Income from continuing operations $ 9.10 $ 4.23 Income (loss) from discontinued operations $ — $ (0.01) Net income per share $ 9.10 $ 4.22 Diluted income per share Income from continuing operations $ 9.08 $ 4.21 Income (loss) from discontinued operations $ — $ (0.01) Net income per share $ 9.08 $ 4.20 Weighted average common shares outstanding Basic 50.0 49.9 Diluted 50.1 50.0 Pretax pre-provision earnings (PPNR)* $ 745 $ 495 Less: Gain on portfolio sale (230) — PNR less gain on portfolio sale* $ 515 $ 495
Bread Financial | April 27, 2023 8 BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) March 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 3,611 $ 3,891 Credit card and other loans Total credit card and other loans 18,060 21,365 Allowance for credit losses (2,223) (2,464) Credit card and other loans, net 15,837 18,901 Investment securities 228 221 Property and equipment, net 180 195 Goodwill and intangible assets, net 790 799 Other assets 1,324 1,400 Total assets $ 21,970 $ 25,407 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Direct-to-consumer (retail) $ 5,630 $ 5,466 Wholesale and other 7,508 8,360 Total deposits 13,138 13,826 Debt issued by consolidated variable interest entities 3,015 6,115 Long-term and other debt 1,869 1,892 Other liabilities 1,232 1,309 Total liabilities 19,254 23,142 Total stockholders’ equity 2,716 2,265 Total liabilities and stockholders’ equity $ 21,970 $ 25,407 Shares of common stock outstanding 50.1 49.9
Bread Financial | April 27, 2023 9 Note: The unaudited Condensed Consolidated Statements of Cash Flows are presented reflecting the combined cash flows from continuing and discontinued operations. BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Three Months Ended March 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 455 $ 210 Adjustments to reconcile net income to net cash provided by operating activities Provision for credit losses 107 193 Depreciation and amortization 34 21 Deferred income taxes (19) (48) Non-cash stock compensation 9 7 Amortization of deferred financing costs 7 6 Amortization of deferred origination costs 22 21 Gain on portfolio sale (230) — Change in other operating assets and liabilities Change in other assets 81 (2) Change in other liabilities (77) 73 Other 9 16 Net cash provided by operating activities 398 497 CASH FLOWS FROM INVESTING ACTIVITIES Change in credit card and other loans 735 339 Proceeds from sale of credit card loan portfolio 2,502 — Purchase of credit card loan portfolio (81) — Net purchase of investment securities (4) (6) Other, including capital expenditures (11) (23) Net cash provided by investing activities 3,141 310 CASH FLOWS FROM FINANCING ACTIVITIES Unsecured borrowings under debt agreements 185 175 Repayments/maturities of unsecured borrowings under debt agreements (210) (200) Debt issued by consolidated variable interest entities 325 525 Repayments/maturities of debt issued by consolidated variable interest entities (3,425) (1,162) Net decrease in deposits (689) (405) Dividends paid (11) (10) Other (9) (19) Net cash used in financing activities (3,834) (1,096) Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash — — Change in cash, cash equivalents and restricted cash (295) (289) Cash, cash equivalents and restricted cash at beginning of period 3,927 3,923 Cash, cash equivalents and restricted cash at end of period $ 3,632 $ 3,634
Bread Financial | April 27, 2023 10 BREAD FINANCIAL HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except percentages) As of or for the Three Months Ended March 31, 2023 2022 Change Pretax pre-provision earnings: Income from continuing operations before income taxes $ 638 $ 302 nm Provision for credit losses 107 193 (45%) Pretax pre-provision earnings (PPNR) $ 745 $ 495 50% Less: Gain on portfolio sale (230) — nm PPNR less gain on portfolio sale $ 515 $ 495 4% Tangible common equity (TCE) Total stockholders’ equity 2,716 2,268 20% Less: Goodwill and intangible assets, net (790) (682) 16% Tangible common equity (TCE) $ 1,926 $ 1,586 21% Tangible assets (TA) Total assets 21,970 20,938 5% Less: Goodwill and intangible assets, net (790) (682) 16% Tangible assets (TA) $ 21,180 $ 20,256 5%
Bread Financial | April 27, 2023 11 BREAD FINANCIAL HOLDINGS, INC. UNAUDITED SUMMARY FINANCIAL HIGHLIGHTS (In millions, except per share amounts and percentages) As of or for the Three Months Ended March 31, 2023 2022 Change Credit sales $ 7,373 $ 6,887 7% Average credit card and other loans $ 19,405 $ 16,650 17% End-of-period credit card and other loans $ 18,060 $ 16,843 7% End-of-period direct-to-consumer deposits $ 5,630 $ 3,561 58% Return on average assets(1) 7.7% 4.0% 3.7% Return on average equity(2) 73.0% 38.5% 34.5% Net interest margin(3) 19.0% 19.4% (0.4%) Loan yield(4) 26.6% 25.6% 1.0% Efficiency ratio(5) 42.2% 46.2% (4.0%) Tangible common equity / tangible assets ratio (TCE/TA)(6) 9.1% 7.8% 1.3% Tangible book value per common share(7) $ 38.44 $ 31.87 20.6% Cash dividend per common share $ 0.21 $ 0.21 0.0% Payment rate(8) 15.6% 17.7% (2.1%) Delinquency rate(9) 5.7% 4.1% 1.6% Net loss rate(9) 7.0% 4.8% 2.2% Reserve rate 12.3% 10.8% 1.5% (1) Return on average assets represents annualized Income from continuing operations divided by average Total assets. (2) Return on average equity represents annualized Income from continuing operations divided by average Total stockholders’ equity. (3) Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (4) Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (5) Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. (6) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (7) Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. (8) Payment rate represents consumer payments during the last month of the period, divided by the beginning-of-month Credit card and other loans, including held for sale in applicable periods. (9) The three months ended March 31, 2023 Delinquency and Net Loss rates were impacted by the transition of our credit card processing services.
Bread Financial First Quarter 2023 Results April 27, 2023 © 2 0 2 2 B r e a d F i n a n c i a l | C o n f i d e n t i a l & P r o p r i e t a r y 1 Ralph Andretta | President & CEO Perry Beberman | EVP & CFO Exhibit 99.2
2©2023 Bread Financial Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions. We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, rising interest rates, unemployment levels and the increased probability of a recession, and the related impact on consumer payment rates, savings rates and other behavior; global political and public health events and conditions, including the ongoing war in Ukraine and the continuing effects of the global COVID-19 pandemic; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax liability, disputes or other adverse impacts arising out of or relating to the spinoff of our former LoyaltyOne segment or the recent bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. Non-GAAP Financial Measures We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes non- GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies. In particular, Pretax pre-provision earnings (PPNR) is calculated by increasing/decreasing Income from continuing operations before income taxes by the net provision/release in Provision for credit losses. PPNR less gain on portfolio sales then decreases PPNR by the gain on any portfolio sales in the period. We use PPNR and PPNR less gain on portfolio sales as metrics to evaluate our results of operations before income taxes, excluding the volatility that can occur within Provision for credit losses and the one-time nature of a gain on the sale of a portfolio. Tangible common equity over Tangible assets (TCE/TA) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net, (TCE) divided by Tangible assets (TA), which is Total assets reduced by Goodwill and intangible assets, net. We use TCE/TA as a metric to evaluate the Company’s capital adequacy and estimate its ability to cover potential losses. Tangible book value per common share represents TCE divided by shares outstanding. We use Tangible book value per common share as a metric to estimate the Company’s potential value in relation to tangible assets per share. We believe the use of these non-GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures”.
3©2023 Bread Financial 2023 Focus Areas Responsible Growth Support organic growth and new brand partner launches that deliver long-term value Enhance Balance Sheet Build capital and reduce parent-level debt; ensure proactive credit, liquidity, and interest rate risk management Strategically Invest Deliver exceptional value and experiences through marketing, loyalty, and technology innovation Optimize Data & Technology Leverage new capabilities to create additional value and drive efficiencies
4©2023 Bread Financial Enhanced credit risk management and underlying credit distribution Strengthened balance sheet and funding mixStrong corporate governance Prudent balance sheet management Expense discipline Proactive risk management Active recession readiness playbook Enhanced core capabilities Strengthened Financial Resilience Bread Financial is positioned to perform well through a full economic cycle Loan loss reserve materially higher Capital ratios significantly improved Increased mix of direct-to-consumer deposits Reduced debt levels Diversification across products and partners Prudent and proactive line management Credit mix shift to higher quality over time Well-established risk appetite metrics
5©2023 Bread Financial Strong, Stable Funding Base Growing online direct-to-consumer deposits; small average account size >90% FDIC insured Diverse funding sources Disciplined Financial Management Prudent interest rate risk management No Held-to-Maturity securities Liquidity portfolio held nearly all in cash at Fed Prudent Balance Sheet Management Loan loss reserve materially higher Capital ratios significantly improved Increased direct-to- consumer deposits Reduced debt Strengthened balance sheet and funding mix +$4.4B -39% +3x +300bps DTC deposits since 1Q20 to $5.6 billion reserve rate increase since CECL Day 1 parent debt reduction since 1Q20 TCE/TA ratio increase since 1Q20 to 9.1%
6©2023 Bread Financial First Quarter 2023 Financial Highlights $1,289 million Revenue $455 million Net Income $9.08 Diluted EPS Year-over-year comparisons • Credit sales of $7.4 billion increased 7% driven by brand partner additions and growth across brand partners • First quarter average loans of $19.4 billion grew 17% • Revenue, including gain on portfolio sale, increased 40%, well above total non-interest expense growth of 28% • Net income increased $245 million driven by PPNR improvement, that included a $230 million pretax gain on portfolio sale, and a lower provision for credit losses, due to both the sale of the BJ's portfolio and seasonal paydowns • Credit performance metrics in the quarter were impacted by the transition of our credit card processing services in June 2022, as expected
7©2023 Bread Financial $ in millions PPNR Growth* $495 $515 $230 1Q22 1Q23 * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non-GAAP Financial Measures". nm – Not meaningful, denoting a variance of 100 percent or more. ($ in millions, except per share) 1Q23 1Q22 $ Chg % Chg Total interest income $ 1,335 $ 1,068 $ 267 25% Total interest expense 218 79 139 nm Net interest income 1,117 989 128 13% Total non-interest income 172 (68) 240 nm Revenue 1,289 921 368 40% Net principal losses 342 199 143 71% Reserve (release) build (235) (6) (229) nm Provision for credit losses 107 193 (86) (45%) Total non-interest expenses 544 426 118 28% Income before income taxes 638 302 336 nm Provision for income taxes 183 91 92 nm Net income $ 455 $ 211 $ 244 nm Net income per diluted share $ 9.08 $ 4.21 $ 4.87 nm Weighted avg. shares outstanding – diluted 50.1 50.0 Pretax pre-provision earnings (PPNR)* $ 745 $ 495 $ 250 50% Less: Gain on portfolio sale (230) — (230) nm PPNR less gain on portfolio sale* $ 515 $ 495 $ 20 4% +50% Financial Results Continuing Operations +4% Gain on portfolio sale
8©2023 Bread Financial $17.4 $17.1 $17.3 $17.4 $17.8 $18.2 $18.8 $20.3 $19.9 Wholesale deposits Direct-to-consumer deposits Unsecured borrowings Secured borrowings 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 $18.9 $18.8 $19.1 $19.8 $20.4 $21.0 $21.8 $23.6 $23.5 Credit card and other loans Cash and investment securities 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Av er ag e in te re st -b ea rin g lia bi lit ie s ($ in b ill io ns ) Av er ag e in te re st -e ar ni ng a ss et s ($ in b ill io ns ) Interest-Earning Asset Yields & Mix 23.8% 23.9% 25.6% 25.2% 25.6% 25.0% 27.2% 26.0% 26.6% 19.9% 19.5% 20.8% 20.6% 20.9% 20.5% 22.3% 22.4% 22.7% 17.7% 17.3% 18.9% 18.8% 19.4% 18.6% 19.9% 19.1% 19.0% Loan yield Avg. earning asset yield Net interest margin Interest-Bearing Liability Costs & Funding Mix 2.5% 2.3% 2.1% 1.9% 1.8% 2.1% 2.8% 3.9% 4.4% 1.9% 1.8% 1.6% 1.4% 1.3% 1.5% 2.2% 3.1% 3.5% Cost of total Interest-bearing liabilities Cost of deposits Net Interest Margin 84% 81% 81% 81% 81% 81% 81% 84% 83% 16% 19% 19% 19% 19% 19% 19% 16% 17% 27% 26% 28% 26% 28% 29% 26% 25% 23% 16% 17% 16% 14% 11% 11% 10% 10% 9% 11% 13% 15% 18% 19% 22% 27% 26% 28% 46% 44% 41% 42% 42% 38% 37% 39% 40%
9©2023 Bread Financial Direct-to-Consumer Deposit Growth Strong growth in Bread SavingsTM direct-to-consumer deposits diversifies our funding mix ($ in b ill io ns ) Average Direct-to-Consumer Deposit Growth $1.9 $2.3 $2.7 $3.1 $3.3 $3.9 $4.9 $5.4 $5.6 1.2% 1.0% 0.8% 0.8% 0.8% 1.1% 2.0% 2.9% 3.5% Direct-to-consumer deposits Cost of direct-to-consumer deposits 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Average Direct-to-Consumer Deposit Mix 30% 19% 41% 28% 1Q22 1Q23 % of total deposits % of total funding +70%
10©2023 Bread Financial $1,843 $1,635 $1,645 $1,832 $1,826 $1,992 $2,073 $2,464 $2,223 11.9% 10.4% 10.5% 10.5% 10.8% 11.2% 11.4% 11.5% 12.3% ACL balance Reserve rate⁽²⁾ 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Net Loss Rates 5.0% 5.1% 3.9% 4.4% 4.8% 5.6% 5.0% 6.3% 7.0% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Delinquency Rates 3.8% 3.3% 3.8% 3.9% 4.1% 4.4% 5.7% 5.5% 5.7% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 5 year peak rate: 7.6% 5 year low rate: 3.9% 5 year avg rate: ~6.0% 5 year peak rate: 6.0% 5 year avg rate: ~5.0% 5 year low rate: 3.3% 61% 64% 62% 62% 61% 61% 60% 62% 58% 27% 26% 26% 26% 27% 27% 27% 26% 27% 12% 10% 12% 12% 12% 12% 13% 12% 15% Greater than 660 601-660 600 or below 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Reserve Rates ($ in millions) Revolving Credit Risk Distribution (Vantage score) Credit Quality and Allowance (1) The 2Q22 Net loss rate includes a 30 basis point increase from the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency. (2) Calculated as the percentage of the Allowance for credit losses to end-of-period Credit card and other loans. (1) Note: The 3Q22, 4Q22, and 1Q23 Delinquency and Net loss rates were impacted by the transition of our credit card processing services.
11©2023 Bread Financial (1) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (2) Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. Capital Allocation Tangible Book Value per Share⁽²⁾ $15.41 $21.32 $31.87 $38.44 1Q20 1Q21 1Q22 1Q23 Total Company Tangible Common Equity / Tangible Assets Ratio (TCE / TA)⁽¹⁾ 3.1% 5.2% 7.8% 9.1% 1Q20 1Q21 1Q22 1Q23 +3x +36% CAGR Drive shareholder valueImprove capital metrics $ in billions Parent Level Debt Outstanding $2.3 $1.5 $0.6 $0.5 $0.9 $1.4 $1.4 $1.4 Term Loan Senior Notes 1Q20 1Q21 1Q22 1Q23 -39% Reduce debt levels
12©2023 Bread Financial Full Year 2022 Actuals Full Year 2023 Outlook Commentary Average loans $17,768 million Up mid- single digits • We expect full year 2023 average credit card and other loans to grow in the mid-single digit range relative to 2022. Revenue $3,826 million Aligned with loan growth • Net interest margin is expected to remain similar to the 2022 full year rate of 19.2%. • Revenue guidance excludes the gain on portfolio sale. Total non-interest expenses $1,932 million Positive operating leverage • We expect to deliver full year positive operating leverage while we continue to strategically invest in technology modernization, marketing, and product innovation to drive growth and efficiencies. • With the magnitude of the gain on portfolio sale, we plan to invest up to $30 million of the gain in 2023 to accelerate our business transformation. Excluding the gain on portfolio sale from revenue and this $30 million investment from total expenses, we expect to achieve nominal positive operating leverage for the full year. Net loss rate 5.4% ~7% • Our outlook is inclusive of customer accommodations related to the 2022 transition of our credit card processing services as well as continued pressure on consumers’ ability to pay due to persistent inflation. • We remain confident in our long-term guidance of a through-the-cycle average net loss rate below our historical average of 6%. 2023 Financial Outlook Our 2023 financial outlook assumes a more challenging macroeconomic landscape with continued inflationary pressures and an unemployment rate gradually moving to the mid-to-upper 4% range by year end 2023. Our 2023 full year outlook remains unchanged from our guidance provided in January 2023
Appendix © 2 0 2 2 B r e a d F i n a n c i a l | C o n f i d e n t i a l & P r o p r i e t a r y 1 3
14©2023 Bread Financial ($ i n bi lli on s) $15.8 $15.3 $15.5 $16.1 $16.7 $17.0 $17.6 $19.8 $19.4 $6.0 $7.4 $7.4 $8.8 $6.9 $8.1 $7.7 $10.2 $7.4 -14% -5% 1% 2% 5% 11% 14% 23% 17% Average loans Credit sales Year-over-year change in average loans 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Average Loans and Credit Sales
15©2023 Bread Financial ($ i n bi lli on s) $400 $340 $410 $428 $495 $420 $493 $485 $515 $230 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Pretax Pre-Provision Earnings* The first quarter 2023 marks the eighth consecutive quarter with year-over-year PPNR growth * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non-GAAP Financial Measures". 14% 52% 24% 24% 17% 50% 23% Percentages equal year-over-year growth rate. 13% Gain on portfolio sale 4%
16©2023 Bread Financial Efficiency Ratio* 46% 42% 1Q22 1Q23 $ in millions Total Non-Interest Expenses $426 $544 1Q22 1Q23 Total non-interest expenses increased 28% versus 1Q22 • Employee compensation and benefit costs increased primarily driven by continued digital and technology modernization-related hiring and customer care and collections staffing • Card and processing expenses increased due to increased fraud costs and higher direct mail and statement volumes • Information processing and communications expenses increased as a result of the transition of our credit card processing services and other software licensing expenses Total Non-Interest Expenses $41 $38 $19 $8 $13 $(1) Employee comp. & benefits: Card and processing: Info. processing & comm.: Marketing: Depreciation & amortization: Other: 23% 46% 34% 26% 63% —% +28% -4% 1Q23 vs. 1Q22 Change in Non-Interest Expenses * Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income.
17©2023 Bread Financial (1) . (2) . (3) . (4) . (5) . (6) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (7) Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. (8) Payment rate represents consumer payments during the last month of the period, divided by the beginning-of-month Credit card and other loans, including held for sale in applicable periods. (9) The 1Q23 Delinquency and Net Loss rates were impacted by the transition of our credit card processing services. ($ in millions) 1Q23 1Q22 1Q23 vs 1Q22 4Q22 1Q23 vs 4Q22 Credit sales $ 7,373 $ 6,887 7% $ 10,166 (27%) Average credit card and other loans $ 19,405 $ 16,650 17% $ 19,820 (2%) End-of-period credit card and other loans $ 18,060 $ 16,843 7% $ 21,365 (15%) End-of-period direct-to-consumer deposits $ 5,630 $ 3,561 58% $ 5,466 3% Return on average assets(1) 7.7% 4.0% 3.7% (2.2%) 9.9% Return on average equity(2) 73.0% 38.5% 34.5% (23.3%) 96.3% Net interest margin(3) 19.0% 19.4% (0.4%) 19.1% (0.1%) Loan yield(4) 26.6% 25.6% 1.0% 26.0% 0.6% Efficiency ratio(5) 42.2% 46.2% (4.0%) 53.1% (10.9%) Tangible common equity / tangible assets ratio (TCE/TA)(6) 9.1% 7.8% 1.3% 6.0% 3.1% Tangible book value per common share(7) $ 38.44 $ 31.87 20.6% $ 29.42 30.7% Cash dividend declared per common share $ 0.21 $ 0.21 —% $ 0.21 —% Payment rate(8) 15.6% 17.7% (2.1%) 16.4% (0.8%) Delinquency rate(9) 5.7% 4.1% 1.6% 5.5% 0.2% Net loss rate(9) 7.0% 4.8% 2.2% 6.3% 0.7% Reserve rate 12.3% 10.8% 1.5% 11.5% 0.8% Summary Financial Highlights Continuing Operations (1) Return on average assets represents annualized Income from continuing operations divided by average Total assets. (2) Return on average equity represents annualized Income from continuing operations divided by average Total stockholders’ equity. (3) Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (4) Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (5) Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income.
18©2023 Bread Financial ($ in millions) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Credit sales $ 6,043 $ 7,401 $ 7,380 $ 8,778 $ 6,887 $ 8,140 $ 7,689 $ 10,166 $ 7,373 Year-over-year change (1%) 54% 20% 15% 14% 10% 4% 16% 7% Average credit card and other loans $ 15,785 $ 15,282 $ 15,471 $ 16,086 $ 16,650 $ 17,003 $ 17,598 $ 19,820 $ 19,405 Year-over-year change (14%) (5%) 1% 2% 5% 11% 14% 23% 17% End-of-period credit card and other loans $ 15,537 $ 15,724 $ 15,690 $ 17,399 $ 16,843 $ 17,769 $ 18,126 $ 21,365 $ 18,060 Year-over-year change (12%) (1%) 1% 4% 8% 13% 16% 23% 7% End-of-period direct-to-consumer deposits $ 2,152 $ 2,398 $ 3,052 $ 3,180 $ 3,561 $ 4,191 $ 5,176 $ 5,466 $ 5,630 Year-over-year change 81% 30% 79% 87% 66% 75% 70% 72% 58% Return on average assets(1) 4.9% 4.8% 3.7% 1.1% 4.0% 0.2% 2.4% (2.2%) 7.7% Return on average equity(2) 66.3% 56.4% 38.0% 11.1% 38.5% 2.2% 22.8% (23.3%) 73.0% Net interest margin(3) 17.7% 17.3% 18.9% 18.8% 19.4% 18.6% 19.9% 19.1% 19.0% Loan yield(4) 23.8% 23.9% 25.6% 25.2% 25.6% 25.0% 27.2% 26.0% 26.6% Efficiency ratio(5) 50.1% 55.5% 50.6% 50.0% 46.2% 52.9% 49.7% 53.1% 42.2% Tangible common equity / tangible assets ratio (TCE/TA)(6) 5.2% 6.4% 7.2% 6.6% 7.8% 7.5% 8.0% 6.0% 9.1% Tangible book value per common share(7) $ 21.32 $ 27.12 $ 31.18 $ 28.09 $ 31.87 $ 31.75 $ 34.30 $ 29.42 $ 38.44 Cash dividend declared per common share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.21 Payment rate(8) 18.8% 17.6% 16.7% 17.2% 17.7% 15.3% 15.5% 16.4% 15.6% Delinquency rate 3.8% 3.3% 3.8% 3.9% 4.1% 4.4% 5.7% 5.5% 5.7% Net principal loss rate 5.0% 5.1% 3.9% 4.4% 4.8% 5.6% 5.0% 6.3% 7.0% Reserve rate 11.9% 10.4% 10.5% 10.5% 10.8% 11.2% 11.4% 11.5% 12.3% Summary Financial Highlights Continuing Operations (1) Return on average assets represents annualized Income from continuing operations divided by average Total assets. (2) Return on average equity represents annualized Income from continuing operations divided by average Total stockholders’ equity. (3) Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (4) Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (5) Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. (1) . (2) . (3) . (4) . (5) . (6) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (7) Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. (8) Payment rate represents consumer payments during the last month of the period, divided by the beginning-of-month Credit card and other loans, including held for sale in applicable periods.
19©2023 Bread Financial ($ in millions, except per share) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Total interest income $ 942 $ 915 $ 994 $ 1,017 $ 1,068 $ 1,073 $ 1,218 $ 1,325 $ 1,335 Total interest expense 107 100 91 84 79 95 133 195 218 Net interest income 835 815 903 933 989 978 1,085 1,130 1,117 Total non-interest income (33) (51) (52) (78) (68) (85) (106) (97) 172 Revenue 802 764 851 855 921 893 979 1,033 1,289 Net principal losses 198 194 152 176 199 238 218 312 342 Reserve (release) build (165) (208) 9 187 (6) 166 86 380 (235) Provision for credit losses 33 (14) 161 363 193 404 304 692 107 Total non-interest expenses 402 424 431 427 426 473 486 548 544 Income (loss) before income taxes 367 354 259 65 302 16 189 (207) 638 Provision for income taxes 99 91 53 4 91 4 55 (73) 183 Net income (loss) $ 268 $ 263 $ 206 $ 61 $ 211 $ 12 $ 134 $ (134) $ 455 Net income (loss) per diluted share $ 5.38 $ 5.25 $ 4.11 $ 1.21 $ 4.21 $ 0.25 $ 2.69 $ (2.68) $ 9.08 Weighted average shares outstanding – diluted 49.8 50.0 50.0 50.0 50.0 49.9 49.9 50.0 50.1 Pretax pre-provision earnings (PPNR)* $ 400 $ 340 $ 420 $ 428 $ 495 $ 420 $ 493 $ 485 $ 745 Less: Gain on portfolio sale — — (10) — — — — — (230) PPNR less gain on portfolio sale* $ 400 $ 340 $ 410 $ 428 $ 495 $ 420 $ 493 $ 485 $ 515 * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non-GAAP Financial Measures". Financial Results Continuing Operations
20©2023 Bread Financial 1Q23 ($ in millions) Average Balance Interest Income / Expense Average Yield / Rate Cash and investment securities $ 4,087 $ 46 4.5% Credit card and other loans 19,405 1,289 26.6% Total interest-earning assets 23,492 1,335 22.7% Direct-to-consumer (Retail) 5,559 49 3.5% Wholesale deposits 7,866 68 3.5% Interest-bearing deposits 13,425 117 3.5% Secured borrowings 4,565 70 6.2% Unsecured borrowings 1,914 31 6.4% Interest-bearing borrowings 6,479 101 6.3% Total interest-bearing liabilities $ 19,904 $ 218 4.4% Net interest income $ 1,117 Net interest margin* 19.0% * Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. Net Interest Margin
21©2023 Bread Financial ($ in millions, except per share amounts) 1Q23 1Q22 $ Chg % Chg Income from continuing operations, net of taxes $ 455 $ 211 $ 244 nm Income (loss) from discontinued operations, net of taxes — (1) 1 nm Net income $ 455 $ 210 $ 245 nm Net income per diluted share from continuing ops $ 9.08 $ 4.21 $ 4.87 nm Net income (loss) per diluted share from discontinued ops $ — $ (0.01) $ 0.01 nm Net income per diluted share $ 9.08 $ 4.20 $ 4.88 nm Weighted average shares outstanding – diluted (in millions) 50.1 50.0 Financial Results nm – Not meaningful, denoting a variance of 100 percent or more.
22©2023 Bread Financial Banks Combined* Capital Ratios 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Common equity tier 1 capital ratio(2) 21.0% 22.1% 22.6% 20.0% 20.8% 20.1% 19.4% 17.0% 20.2% Tier 1 capital ratio(3) 21.0% 22.1% 22.6% 20.0% 20.8% 20.1% 19.4% 17.0% 20.2% Total risk-based capital ratio(4) 22.3% 23.4% 23.9% 21.3% 22.1% 21.5% 20.7% 18.3% 21.6% Tier 1 leverage capital ratio(5) 17.8% 19.2% 19.5% 18.6% 18.2% 17.7% 16.3% 15.6% 16.1% Parent Level: • Liquidity as of March 31, 2023, of $1.0 billion, consisting of cash on hand plus revolver capacity Bank Level (Banks Combined*): • As of March 31, 2023, the banks finished the quarter with $3.3 billion in cash on hand and $3.5 billion in equity • Total risk-based capital ratio at 21.6% - nearly double the 10% threshold to be considered well-capitalized; CET1 at 20.2% • Funding in place to support expected growth outlook – with continued long-term strategic focus on retail deposit growth (1) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (2) The Common Equity Tier 1 capital ratio represents common equity tier 1 capital divided by total risk-weighted assets. (3) The Tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. (4) The Total Risk-based capital ratio represents total capital divided by total risk-weighted assets. (5) The Tier 1 Leverage capital ratio represents tier 1 capital divided by total average assets, after certain adjustments. (6) The “Tangible Common Equity + Credit Reserves Rate” is calculated as the sum of Tangible common equity and Allowance for credit losses divided by End-of-period credit card and other loans. Total Company Tangible Common Equity/ Tangible Assets Ratio(1) 7.8% 9.1% 1Q22 1Q23 +1.3% Capital and Liquidity Total Company Tangible Common Equity + Credit Reserves Rate ⁶⁾ 16.3% 18.7% 20.3% 23.0% 1Q20 1Q21 1Q22 1Q23 +41% * Combined bank level represents Comenity Bank and Comenity Capital Bank.
23©2023 Bread Financial ($ in millions) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Pretax pre-provision earnings (PPNR) Income (loss) before income taxes $ 367 $ 354 $ 259 $ 65 $ 302 $ 16 $ 189 $ (207) $ 638 Provision for credit losses 33 (14) 161 363 193 404 304 692 107 Pretax pre-provision earnings (PPNR) $ 400 $ 340 $ 420 $ 428 $ 495 $ 420 $ 493 $ 485 $ 745 Less: Gain on portfolio sale — — (10) — — — — — (230) PPNR less gain on portfolio sale $ 400 $ 340 $ 410 $ 428 $ 495 $ 420 $ 493 $ 485 $ 515 Tangible common equity (TCE) Total stockholders’ equity $ 1,764 $ 2,048 $ 2,246 $ 2,086 $ 2,268 $ 2,275 $ 2,399 $ 2,265 $ 2,716 Less: Goodwill and intangible assets, net (704) (699) (694) (687) (682) (694) (690) (799) (790) Tangible common equity (TCE) $ 1,060 $ 1,349 $ 1,552 $ 1,399 $ 1,586 $ 1,581 $ 1,709 $ 1,466 $ 1,926 Tangible assets (TA) Total assets $ 21,163 $ 21,812 $ 22,257 $ 21,746 $ 20,938 $ 21,811 $ 21,960 $ 25,407 $ 21,970 Less: Goodwill and intangible assets, net (704) (699) (694) (687) (682) (694) (690) (799) (790) Tangible assets (TA) $ 20,459 $ 21,113 $ 21,563 $ 21,059 $ 20,256 $ 21,117 $ 21,270 $ 24,608 $ 21,180 Reconciliation of GAAP to Non-GAAP Financial Measures
24©2023 Bread Financial 6.1% 5.6% 6.3% 7.0% 7.6% 5.8% 6.0% 5.0% 5.1% 3.9% 4.4% 4.8% 5.6% 5.0% 6.3% 7.0% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 5.2% 5.9% 5.8% 6.0% 4.3% 4.7% 4.4% 3.8% 3.3% 3.8% 3.9% 4.1% 4.4% 5.7% 5.5% 5.7% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 5 year peak rate: 7.6% 5 year low rate: 3.9% 5 year avg rate: ~6.0% 5 year peak rate: 6.0% 5 year avg rate: ~5.0% 5 year low rate: 3.3% Credit Quality Trends (2) (1) Peak Delinquency and Net loss rates occurred in 2009. (2) The 2Q22 Net loss rate includes a 30 basis point increase from the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency. Note: The 3Q22, 4Q22, and 1Q23 Delinquency and Net loss rates were impacted by the transition of our credit card processing services. Delinquency Rates Net Loss Rates 15 year peak rate(1): 10.0% 15 year peak rate(1): 6.2%
Exhibit 99.3
Bread Financial Declares Dividend on Common Stock
COLUMBUS, Ohio – April 27, 2023 – Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, today announced that its Board of Directors declared a quarterly cash dividend of $0.21 per share on the Company’s common stock, payable on June 16, 2023 to stockholders of record at the close of business on May 12, 2023.
About Bread Financial™
Bread FinancialTM (NYSE: BFH) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, Bread Financial delivers growth for its partners through a comprehensive product suite, including private label and co-brand credit cards, installment lending, and buy now, pay later (BNPL). Bread Financial also offers direct-to-consumer solutions that give customers more access, choice and freedom through its branded Bread CashbackTM American Express® Credit Card and Bread SavingsTM products.
Headquartered in Columbus, Ohio, Bread Financial is powered by its 7,500+ global associates and is committed to sustainable business practices. To learn more about Bread Financial, visit BreadFinancial.com or follow us on Facebook, LinkedIn, Twitter and Instagram.
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Bread Financial
Brian Vereb — Investor Relations
Brian.Vereb@breadfinancial.com
Shelley Whiddon — Media
Shelley.Whiddon@breadfinancial.com
Rachel Stultz — Media
Rachel.Stultz@breadfinancial.com
Brian.Vereb@breadfinancial.com
Shelley Whiddon — Media
Shelley.Whiddon@breadfinancial.com
Rachel Stultz — Media
Rachel.Stultz@breadfinancial.com