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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Securities registered pursuant to Section 12(b) of the Act:
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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 25, 2024, Bread Financial Holdings, Inc. (the “Company”) issued a press release regarding its results of operations for the first quarter ended March 31, 2024 (the “Q1 2024 Earnings Release”). A copy of the Q1 2024 Earnings Release is furnished as Exhibit 99.1 hereto.
Item 7.01 Regulation FD Disclosure.
In connection with the Q1 2024 Earnings Release, on April 25, 2024, 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 25, 2024, 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 14, 2024 to stockholders of record at the close of business on May 10, 2024. 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 25, 2024 announcing the Company’s results of operations for the first quarter ended March 31, 2024. | ||||||||
| Investor Presentation dated April 25, 2024. | ||||||||
| Press Release dated April 25, 2024 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 25, 2024 | By: | /s/ Joseph L. Motes III | ||||||
| Joseph L. Motes III Executive Vice President, Chief Administrative Officer, General Counsel and Secretary | ||||||||
Bread Financial | April 25, 2024 1 "Our financial resilience was evident in the first quarter of 2024 as we generated net income of $134 million, driven by a strong risk-adjusted loan yield which contemplates higher credit losses as a result of the challenging macroeconomic environment. We continued to strengthen our balance sheet, including opportunistically extending our senior debt maturities and reducing parent-level debt by $100 million. Additionally, we increased our tangible book value by 20% year-over-year to $45.96, while our common equity tier 1 capital ratio increased 80 basis points year-over-year to 12.6%. We are focused on responsibly managing our capital and maintaining our financial flexibility given macroeconomic and regulatory uncertainties. "Consumer spending continues to moderate given persistent inflation and higher interest rates. We observed a continued reduction in discretionary and big ticket spending in the first quarter with consumers focusing on non-discretionary purchases. Although consumers increased the frequency of shopping in-store and online, average transaction value decreased on those non-discretionary purchases. First quarter loan growth was further impacted by our proactive credit tightening initiatives as we remain disciplined with credit risk management given economic pressures that affect consumer spending and payment capacity. "During the quarter we made meaningful progress in the implementation of our mitigation strategy in response to the CFPB's final rule on credit card late fees. Some of the early mitigating actions underway reflect various pricing changes such as increased APRs and statement fees, among others. We are deeply engaged with our brand partners regarding these and other mitigation plans. Collectively, these actions along with our future mitigation strategies, as well as the diversification of our products and industry verticals, and our improved credit profile over the past five years, better position Bread Financial to adapt to the rule change. We continue to expect the financial impact of the late fee rule will lessen over time as our mitigation actions mature. We are also closely monitoring the ongoing litigation related to the rule, but will continue to execute on our mitigation strategy given the uncertainty surrounding the timing and outcome. "Our seasoned leadership team remains focused on generating strong returns through prudent capital and risk management, reflecting our unwavering commitment to drive sustainable, profitable growth and build long-term value for our stakeholders." - Ralph Andretta, president and chief executive officer First quarter 2024 ($ in millions, except per share amounts) Total company Continuing operations Net income $134 $135 Earnings per diluted share $2.70 $2.73 Bread Financial reports first quarter 2024 results CEO COMMENTARY COLUMBUS, Ohio, April 25, 2024 – 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, 2024. • Relative to the first quarter of 2023: • Average credit card and other loans decreased 4%, due both to the sale of the BJ's Wholesale Club portfolio in 1Q23 as well as our ongoing strategic credit tightening, partially offset by growth from new partners. • Revenue decreased $298 million, or 23%, while net income decreased $321 million, or 71%, as 1Q23 benefited from the BJ's gain on sale and related reserve release. ◦ Excluding the gain on sale, PPNR of $509 million was down $6 million, nearly flat. • Common equity tier 1 (CET1) capital ratio increased 80 basis points. • Tangible book value per share increased $7.52, or 20%. • First quarter delinquency rate was 6.2% and net loss rate was 8.5%. • Completed $11 million of share repurchases, representing 293,000 shares at an average price per share of $37.54. • Upsized senior unsecured notes offering to $900 million in January 2024; reduced parent-level debt by $100 million. • Grew direct-to-consumer deposits to $7 billion at quarter-end. $18.5B 1Q24 Average loans $991MM 1Q24 Revenue 12.6% Common equity tier 1 capital ratio $45.96 Tangible book value per share Exhibit 99.1
Bread Financial | April 25, 2024 2 "Our first quarter financial results reflect our focus on responsible risk management and strong, durable profit margins with a double-digit risk-adjusted loan yield despite a higher loss rate in the quarter. As a result of our ongoing discipline, expenses decreased 12% year-over- year and PPNR was nearly flat when excluding the BJ's gain on sale from the prior year. As expected, first quarter net interest margin decreased sequentially reflecting higher reversals of interest and fees due to an increase in gross credit losses in the quarter, as well as typical seasonal pressure in the first half of each year. "Credit sales and loan growth were impacted by the sale of the BJ's portfolio in early 2023, our continued responsible tightening of underwriting and credit lines, as well as a moderation in consumer spending given ongoing consumer payment pressures and the resumption of student loan payments. "Growth in direct-to-consumer deposits increased 24% versus the first quarter of 2023 to $7 billion. Our direct-to-consumer deposits now represent 36% of total funding, up from 28% a year ago. Additionally, we reduced our parent-level unsecured debt by $100 million, increased our regulatory capital levels, and completed a portion of our $30 million authorized share repurchase plan in the quarter. "From a credit perspective, our first quarter 2024 results were consistent with our expectations, with the delinquency rate beginning to show signs of stability. We expect our net loss rate to peak in the second quarter of 2024 at around 9%, with May being the high point for the year driven by continued consumer payment pressures and reduced loan growth. "Our reserve rate increased from 12.0% in the fourth quarter of 2023 to 12.4%, near the 12.3% reported in the third quarter of 2023, as seasonally higher transactor balances from the fourth quarter were paid down in the first quarter. We will maintain conservative economic scenario weightings in our credit reserve modeling and believe our loan loss reserve provides an appropriate margin of protection in this challenging macroeconomic environment. "We have been actively implementing our CFPB late fee mitigation plans intended to limit the financial impact of the final rule on our business. As a result of our initiatives and clarity on the specifics of the final rule, we are now better positioned from a mitigation perspective than a quarter ago when we provided a preliminary estimate of the impact. Given the progress in discussions with our brand partners regarding customer pricing actions and the timing for implementing such actions, we now assign higher levels of confidence to our actions and the corresponding mitigation offsets. Because of the timeframe required for certain of our actions to roll through our existing portfolio, we expect the net impact of the rule to lessen over time. Our current actions, together with underwriting adjustments, changes in brand partner program economics, and continued product diversification strategies, will affect various components of our loan portfolio including pricing, size, and credit quality beyond 2024. "We remain pleased with our ability to drive consistently strong financial results despite the challenging macroeconomic environment." - Perry Beberman, executive vice president and chief financial officer 2024 full year outlook Our 2024 outlook now factors in the potential impacts of the CFPB late fee rule based on a May 14 effective date, acknowledging uncertainty surrounding the timing and outcome of the ongoing litigation. • "Our 2024 outlook reflects slower sales growth as a result of ongoing strategic credit tightening and continued moderation in consumer spending, both of which are pressuring loan and revenue growth and the net loss rate. In addition, our 2024 outlook assumes multiple interest rate decreases by the Federal Reserve, which will pressure total net interest income. • Average loan growth: "Based on our current economic outlook, CFPB late fee rule impacts, ongoing strategic credit tightening actions, higher gross credit losses, and visibility into our pipeline, we expect 2024 average credit card and other loans to be down low-single digits relative to 2023. • Total revenue: "Total revenue growth for 2024, excluding gains on portfolio sales, is anticipated to be down in the mid- to high-teen range as a result of the impact of the CFPB late fee rule, net of mitigation actions, as well as higher reversals of interest and fees due to expected higher gross credit losses, among other previously disclosed headwinds. Assuming a May 14 effective date, the rule is expected to reduce fourth quarter total revenue in the mid-teen range on an isolated basis relative to the fourth quarter of 2023, net of mitigation actions. This reflects an improvement from our previously disclosed estimated impact. We continue to expect the financial impact of the late fee rule will lessen over time as our mitigation actions mature. • Total expenses: "As a result of efficiencies gained from ongoing investments in technology modernization and digital advancement, along with disciplined expense management, we expect expenses to be down low- to mid-single digits relative to 2023, inclusive of additional CFPB late fee rule expenses. • Net loss rate: "We expect a net loss rate in the low 8% range for 2024. We are projecting a lower loss rate in the second half of 2024 versus the first as a result of the strategic credit actions we have taken and an assumed gradual modest improvement in economic conditions throughout the year. • Effective tax rate: "We expect our full year normalized effective tax rate to be in the range of 27% to 30%, given the CFPB late fee rule change, with quarter-over-quarter variability due to the timing of certain discrete items." CFO COMMENTARY
Bread Financial | April 25, 2024 3 PPNR* $515MM $509MM $230MM 1Q23 1Q24 Continuing operations(1) Quarter ended March 31, ($ in millions, except per share amounts) 2024 2023 % Change Total net interest and non-interest income (“Revenue”) $ 991 $ 1,289 (23) Net principal losses $ 394 $ 342 15 Reserve release $ (73) $ (235) (69) Provision for credit losses $ 321 $ 107 nm Total non-interest expenses $ 482 $ 544 (12) Income from continuing operations before income taxes $ 188 $ 638 (70) Income from continuing operations $ 135 $ 455 (70) Income from continuing operations per diluted share $ 2.73 $ 9.08 (70) Weighted average shares outstanding – diluted 49.7 50.1 Pretax pre-provision earnings (PPNR)* $ 509 $ 745 (32) Less: Gain on portfolio sale $ — $ (230) nm PPNR less gain on portfolio sale* $ 509 $ 515 (1) Revenue $1,289MM $991MM 1Q23 1Q24 -23% Key operating and financial metrics Credit metrics (1) Excludes amounts associated with our former LoyaltyOne segment and our former Epsilon segment which previously have been disclosed as discontinued operations and classified accordingly. * 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: Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022. nm – Not meaningful, denoting a variance of 100 percent or more. Diluted EPS Credit sales $7.4B $6.0B 1Q23 1Q24 -18% Net loss rate 7.0% 8.5% 1Q23 1Q24 Delinquency rate 5.7% 6.2% 1Q23 1Q24 Total company $9.08 $2.70 1Q23 1Q24 Continuing ops. $9.08 $2.73 1Q23 1Q24 +50 bps +150 bps -32% (1) -1%
Bread Financial | April 25, 2024 4 First quarter 2024 compared with first quarter 2023 – continuing operations • Credit sales were $6.0 billion for the first quarter of 2024, a decrease of approximately $1.3 billion, or 18%, reflecting the sale of the BJ's portfolio in late February 2023, ongoing strategic credit tightening, and moderating consumer spending, partially offset by new partner growth. • Average and end-of-period credit card and other loans were $18.5 billion and $18.2 billion, respectively, down 4% and up 1%, respectively. The decrease was driven by the decline in credit sales and contributing factors noted above. • Revenue decreased $298 million, or 23%, driven by the benefit from the BJ's gain on sale in the prior year, lower net late fee revenue, and higher interest expense. • Total non-interest expenses decreased $62 million, or 12%, as card and processing expenses decreased $34 million, or 28%; marketing expenses decreased $11 million, or 28%; depreciation and amortization expenses decreased $11 million, or 34%; and employee compensation and benefit costs decreased $7 million, or 3%. • Income from continuing operations decreased $320 million, or 70%, as the prior year benefited from the BJ's gain on sale and related reserve release. • PPNR, a non-GAAP financial measure, decreased $236 million, or 32%, as the prior year benefited from the BJ's gain on sale. PPNR less gain on portfolio sale was down $6 million, or 1%. • The delinquency rate of 6.2% increased from 5.7% in the first quarter of 2023 and decreased 30 basis points sequentially. • The net loss rate of 8.5% increased from 7.0% in the first quarter of 2023 and increased 50 basis points sequentially. • CET1 of 12.6% increased from 11.8% in the first quarter of 2023. Contacts Investor Relations: Brian Vereb (brian.vereb@breadfinancial.com) Susan Haugen (susan.haugen@breadfinancial.com) Media Relations: Rachel Stultz (rachel.stultz@breadfinancial.com)
Bread Financial | April 25, 2024 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 ongoing wars and military conflicts; 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 bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. In addition, the CFPB recently issued a final rule that, absent a successful legal challenge, will place significant limits on credit card late fees, which would have a significant impact on our business and results of operations for at least the short term and, depending on the effectiveness of the mitigating actions that we may take in response to the final rule, potentially over the long term; we cannot provide any assurance as to the effective date of the rule, the result of any pending or future challenges or other litigation relating to the rule, or our ability to mitigate or offset the impact of the rule on our business and results of operations. 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 audited 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. 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 25, 2024 6 Conference call / webcast information Bread Financial will host a conference call on Thursday, April 25, 2024, 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 Financial™ (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 suite of payment solutions that includes private label and co-brand credit cards and Bread Pay™ buy now, pay later products. Bread Financial also offers direct-to-consumer products that give customers more access, choice and freedom through its branded Bread Cashback™ American Express® Credit Card and Bread Savings™ products. Headquartered in Columbus, Ohio, Bread Financial is powered by its approximately 7,000 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/X and Instagram.
Bread Financial | April 25, 2024 7 Three months ended March 31, 2024 2023 Interest income Interest and fees on loans $ 1,247 $ 1,289 Interest on cash and investment securities 53 46 Total interest income 1,300 1,335 Interest expense Interest on deposits 155 117 Interest on borrowings 93 101 Total interest expense 248 218 Net interest income 1,052 1,117 Non-interest income Interchange revenue, net of retailer share arrangements (92) (87) Gain on portfolio sale — 230 Other 31 29 Total non-interest income (61) 172 Total net interest and non-interest income 991 1,289 Provision for credit losses 321 107 Total net interest and non-interest income, after provision for credit losses 670 1,182 Non-interest expenses Employee compensation and benefits 213 220 Card and processing expenses 86 120 Information processing and communication 74 75 Marketing expenses 28 39 Depreciation and amortization 23 34 Other 58 56 Total non-interest expenses 482 544 Income from continuing operations before income taxes 188 638 Provision for income taxes 53 183 Income from continuing operations 135 455 (Loss) income from discontinued operations, net of income taxes (1) — Net income $ 134 $ 455 Basic income per share Income from continuing operations $ 2.74 $ 9.10 (Loss) income from discontinued operations $ (0.03) $ — Net income per share $ 2.71 $ 9.10 Diluted income per share Income from continuing operations $ 2.73 $ 9.08 (Loss) income from discontinued operations $ (0.03) $ — Net income per share $ 2.70 $ 9.08 Weighted average common shares outstanding Basic 49.5 50.0 Diluted 49.7 50.1 Pretax pre-provision earnings (PPNR)* $ 509 $ 745 Less: Gain on portfolio sale — (230) PPNR less gain on portfolio sale* $ 509 $ 515 BREAD FINANCIAL HOLDINGS, INC. UNAUDITED 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".
Bread Financial | April 25, 2024 8 BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (In millions) March 31, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 3,789 $ 3,590 Credit card and other loans Total credit card and other loans 18,185 19,333 Allowance for credit losses (2,255) (2,328) Credit card and other loans, net 15,930 17,005 Investments 258 253 Property and equipment, net 166 167 Goodwill and intangible assets, net 753 762 Other assets 1,403 1,364 Total assets $ 22,299 $ 23,141 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Direct-to-consumer (retail) $ 6,984 $ 6,454 Wholesale and other 6,343 7,166 Total deposits 13,327 13,620 Debt issued by consolidated variable interest entities 3,358 3,898 Long-term and other debt 1,294 1,394 Other liabilities 1,288 1,311 Total liabilities 19,267 20,223 Total stockholders’ equity 3,032 2,918 Total liabilities and stockholders’ equity $ 22,299 $ 23,141 Shares of common stock outstanding 49.6 49.3
Bread Financial | April 25, 2024 9 Note: The unaudited Consolidated Statements of Cash Flows are presented reflecting the combined cash flows from continuing and discontinued operations. BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Three months ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 134 $ 455 Adjustments to reconcile net income to net cash provided by operating activities Provision for credit losses 321 107 Depreciation and amortization 23 34 Deferred income taxes (56) (19) Non-cash stock compensation 15 9 Amortization of deferred financing costs 6 7 Amortization of deferred origination costs 26 22 Gain on portfolio sale — (230) Change in other operating assets and liabilities Change in other assets (3) 81 Change in other liabilities (23) (77) Other 4 9 Net cash provided by operating activities 447 398 CASH FLOWS FROM INVESTING ACTIVITIES Change in credit card and other loans 746 735 Proceeds from sale of credit card loan portfolio — 2,502 Purchase of credit card loan portfolio — (81) Purchases of investments (12) (7) Maturities of investments 3 3 Other, including capital expenditures (17) (11) Net cash provided by investing activities 720 3,141 CASH FLOWS FROM FINANCING ACTIVITIES Unsecured borrowings under debt agreements 300 185 Repayments/maturities of unsecured borrowings under debt agreements (407) (210) Debt issued by consolidated variable interest entities 200 325 Repayments/maturities of debt issued by consolidated variable interest entities (740) (3,425) Net decrease in deposits (293) (689) Payment of deferred financing costs (4) — Dividends paid (11) (11) Repurchase of common stock (11) — Other (9) (9) Net cash used in financing activities (975) (3,834) Change in cash, cash equivalents and restricted cash 192 (295) Cash, cash equivalents and restricted cash at beginning of period 3,616 3,927 Cash, cash equivalents and restricted cash at end of period $ 3,808 $ 3,632
Bread Financial | April 25, 2024 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, 2024 2023 % Change Pretax pre-provision earnings: Income from continuing operations before income taxes $ 188 $ 638 (70) Provision for credit losses 321 107 nm Pretax pre-provision earnings (PPNR) $ 509 $ 745 (32) Less: Gain on portfolio sale — (230) nm PPNR less gain on portfolio sale $ 509 $ 515 (1) Tangible common equity (TCE) Total stockholders’ equity 3,032 2,716 12 Less: Goodwill and intangible assets, net (753) (790) (5) Tangible common equity (TCE) $ 2,279 $ 1,926 18 Tangible assets (TA) Total assets 22,299 21,970 1 Less: Goodwill and intangible assets, net (753) (790) (5) Tangible assets (TA) $ 21,546 $ 21,180 2
Bread Financial | April 25, 2024 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, 2024 2023 % Change Credit sales $ 6,030 $ 7,373 (18) Average credit card and other loans $ 18,546 $ 19,405 (4) End-of-period credit card and other loans $ 18,185 $ 18,060 1 End-of-period direct-to-consumer deposits $ 6,984 $ 5,630 24 Return on average assets(1) 2.4% 7.7% (5) Return on average equity(2) 17.5% 73.0% (56) Return on average tangible common equity(3) 23.1 % 107.0 % (84) Net interest margin(4) 18.7% 19.0% — Loan yield(5) 27.0% 26.6% — Efficiency ratio(6) 48.6% 42.2% 6 Double leverage ratio(7) 118.0% 158.6% (41) Common equity tier 1 capital ratio(8) 12.6% 11.8% 1 Total risk-weighted assets(9) $ 19,344 $ 18,893 2 Tangible common equity / tangible assets ratio (TCE/TA)(10) 10.6% 9.1% 2 Tangible book value per common share(11) $ 45.96 $ 38.44 20 Payment rate(12) 14.8% 15.6% (1) Delinquency rate(13) 6.2% 5.7% 1 Net loss rate(13) 8.5% 7.0% 2 Reserve rate 12.4% 12.3% — (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) Return on average tangible common equity represents annualized Income from continuing operations divided by average Tangible common equity, which itself is defined below. (4) Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (5) Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (6) Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. (7) Double leverage ratio represents Parent Company investment in subsidiaries divided by BFH consolidated equity. (8) The Common equity tier 1 capital ratio represents common equity tier 1 capital divided by total risk-weighted assets. (9) Total risk-weighted assets are generally measured by allocating assets, and specified off-balance sheet exposures, to various risk categories as defined by the Basel III standardized approach. (10) 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. (11) Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. (12) 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. (13) Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022. Note: Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated.
Bread Financial First quarter 2024 results April 25, 2024 © 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©2024 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 ongoing wars and military conflicts; 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 bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. In addition, the CFPB recently issued a final rule that, absent a successful legal challenge, will place significant limits on credit card late fees, which would have a significant impact on our business and results of operations for at least the short term and, depending on the effectiveness of the mitigating actions that we may take in response to the final rule, potentially over the long term; we cannot provide any assurance as to the effective date of the rule, the result of any pending or future challenges or other litigation relating to the rule, or our ability to mitigate or offset the impact of the rule on our business and results of operations. 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 audited 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. 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©2024 Bread Financial Demonstrated financial resilience • Net income of $134 million and Earnings per diluted share of $2.70 • Tangible book value per share of $45.96 increased 20% year-over-year • Shares repurchased totaled $11 million, representing 293,000 shares at an average price per share of $37.54 • Direct-to-consumer deposits increased 24% versus the first quarter of 2023 to approximately $7 billion • Given strong investor demand, upsized senior unsecured notes offering to $900 million in January 2024 Proactive risk management • Meaningful progress made in implementing mitigation plans to limit the financial impact of the CFPB late fee rule ◦ Actions taken have improved previously estimated 4Q24 revenue impact • Consumer spending continues to moderate as consumers self-regulate and macroeconomic pressures persist ◦ Ongoing strategic credit tightening to balance macroeconomic headwinds and returns First quarter 2024 highlights
4©2024 Bread Financial Parent level debt outstanding $2.3 $1.5 $0.6 $0.5 $0.9 $1.4 $1.4 $1.4 $1.3 Term loan & revolver Senior & convertible notes 1Q20 1Q21 1Q22 1Q23 1Q24 (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 (TBVPS)⁽²⁾ $15.41 $21.32 $31.87 $38.44 $45.96 1Q20 1Q21 1Q22 1Q23 1Q24 Total company tangible common equity / tangible assets ratio⁽¹⁾ 3.1% 5.2% 7.8% 9.1% 10.6% 1Q20 1Q21 1Q22 1Q23 1Q24 +3x +31% CAGR Drive shareholder valueImprove capital metrics -58% Reduce debt levels $1.5 billion tangible common equity build since 2020 ~$31 increase in TBVPS since 2020Paid down $1.8 billion since 2020 ($ in billions)
5©2024 Bread Financial 2024 focus areas Responsible growth Scale and diversify product offerings to align with the changing macroeconomic landscape, while optimizing brand partner growth and revenue opportunities Manage macroeconomic and regulatory environment Proactively execute strategies to mitigate business impacts resulting from government regulation and macroeconomic challenges Operational excellence Accelerate continuous improvement gains to drive technology advancements, improved customer satisfaction, control enhancements, enterprise-wide efficiency, and value creation Accelerate digital and technology capabilities Drive our digital-first strategy to enhance product offerings, increase customer self-servicing, and improve the overall customer experience
6©2024 Bread Financial First quarter 2024 financial highlights Continuing operations $1.0 billion Revenue $135 million Income from continuing operations $2.73 Diluted EPS Year-over-year comparisons • Credit sales of $6.0 billion decreased 18%, reflecting the sale of the BJ's Wholesale Club portfolio in late February 2023, ongoing strategic credit tightening, and moderating consumer spending, partially offset by new partner growth. • Average loans of $18.5 billion decreased 4% year-over-year driven by the decline in credit sales and contributing factors noted above. • Revenue decreased $298 million, or 23%, driven by the benefit from the BJ's gain on sale in the prior year, lower net late fee revenue, and higher interest expense. • Income from continuing operations decreased by $320 million, or 70%, as the prior year benefited from the BJ's gain on sale and related reserve release. • The delinquency rate of 6.2% increased from 5.7% in the first quarter of 2023 and decreased 30 basis points sequentially. • The net loss rate of 8.5% increased from 7.0% in the first quarter of 2023 and increased 50 basis points sequentially. Notes: Continuing operations excludes amounts associated with our former LoyaltyOne segment and our former Epsilon segment which previously have been disclosed as discontinued operations and classified accordingly. As well, beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated.
7©2024 Bread Financial ($ in millions, except per share) 1Q24 1Q23 $ Change % Change Total interest income $ 1,300 $ 1,335 $ (35) (3) Total interest expense 248 218 30 14 Net interest income 1,052 1,117 (65) (6) Total non-interest income (61) 172 (233) nm Revenue 991 1,289 (298) (23) Net principal losses 394 342 52 15 Reserve release (73) (235) 162 (69) Provision for credit losses 321 107 214 nm Total non-interest expenses 482 544 (62) (12) Income before income taxes 188 638 (450) (70) Provision for income taxes 53 183 (130) (71) Net income $ 135 $ 455 $ (320) (70) Net income per diluted share $ 2.73 $ 9.08 $ (6.35) (70) Weighted avg. shares outstanding – diluted 49.7 50.1 Pretax pre-provision earnings (PPNR)* $ 509 $ 745 $ (236) (32) Less: Gain on portfolio sale — (230) 230 nm PPNR less gain on portfolio sale* $ 509 $ 515 $ (6) (1) PPNR growth* $515 $509 $230 PPNR less gain on portfolio sale Gain on portfolio sale 1Q23 1Q24 * PPNR and PPNR less gain on portfolio sale are non-GAAP financial measures. See “Non-GAAP Financial Measures” and "Reconciliation of GAAP to Non-GAAP Financial Measures". nm – Not meaningful, denoting a variance of 100 percent or more. Summary P&L results Continuing operations -1% -32% ($ in millions)
8©2024 Bread Financial $17.8 $18.2 $18.8 $20.3 $19.9 $17.8 $17.5 $18.1 $18.5 Wholesale deposits Direct-to-consumer deposits Unsecured borrowings Secured borrowings 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 $20.4 $21.0 $21.8 $23.6 $23.5 $21.3 $21.0 $21.9 $22.7 Credit card and other loans Cash and investment securities 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Av er ag e in te re st -b ea rin g lia bi lit ie s ($ 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 25.6% 25.0% 27.2% 26.0% 26.6% 26.1% 28.6% 27.7% 27.0% 20.9% 20.5% 22.3% 22.4% 22.7% 22.5% 24.8% 23.9% 23.1% 19.4% 18.6% 19.9% 19.1% 19.0% 18.7% 20.6% 19.6% 18.7% Loan yield Avg. earning asset yield Net interest margin Interest-bearing liability costs & funding mix 1.8% 2.1% 2.8% 3.9% 4.4% 4.6% 5.0% 5.2% 5.4% 1.3% 1.5% 2.2% 3.1% 3.5% 3.9% 4.3% 4.6% 4.6% Cost of total interest-bearing liabilities Cost of deposits Net interest margin 81% 81% 81% 84% 83% 83% 83% 83% 82% 19% 19% 19% 16% 17% 17% 17% 17% 18% 28% 29% 26% 25% 23% 16% 17% 18% 20% 11% 11% 10% 10% 9% 10% 8% 8% 7% 19% 22% 27% 26% 28% 33% 35% 35% 36% 42% 38% 37% 39% 40% 41% 40% 39% 37% Note: Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated.
9©2024 Bread Financial $1,826 $1,992 $2,073 $2,464 $2,223 $2,208 $2,207 $2,328 $2,255 10.8% 11.2% 11.4% 11.5% 12.3% 12.3% 12.3% 12.0% 12.4% ACL balance Reserve rate⁽²⁾ 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Net loss rates 4.8% 5.6% 5.0% 6.3% 7.0% 8.0% 6.9% 8.0% 8.5% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Delinquency rates 4.1% 4.4% 5.7% 5.5% 5.7% 5.5% 6.3% 6.5% 6.2% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 5-year peak rate: 8.5% 5-year low rate: 3.9% 5-year avg rate: ~6.0% 5-year peak rate: 6.5% 5-year avg rate: ~5.0% 5-year low rate: 3.3% 61% 61% 60% 62% 58% 59% 57% 57% 56% 27% 27% 27% 26% 27% 27% 27% 27% 27% 12% 12% 13% 12% 15% 14% 16% 16% 17% Greater than 660 601-660 600 or below 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Reserve rates ($ 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) Notes: Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022. As well, beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated.
10©2024 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
11©2024 Bread Financial 2024 financial outlook Our outlook now includes the forecasted impacts of the CFPB late fee rule and assumes a May 14th effective date* * The CFPB's final late fee rule is currently slated to become effective May 14, 2024. A lawsuit has been filed challenging the rule and seeking an injunction of the rule's effectiveness during the pendency of the litigation, but we can provide no assurance regarding the outcome of this or any other litigation relating to the rule. See "Forward-Looking Statements" included elsewhere in this presentation." Full year 2023 actuals Full year 2024 outlook Commentary Average loans 2023: $18,216 million Down low-single digits • Based on our current economic outlook, CFPB late fee rule impacts, ongoing strategic credit tightening actions, higher gross credit losses, and visibility into our pipeline, we expect 2024 average credit card and other loans to be down low-single digits relative to 2023. Revenue (excl. Gain on sale) 2023: $4,059 million Down mid- to high-teens • Revenue, excluding gains on portfolio sales, is anticipated to be down in the mid- to high-teen range as a result of the impact of the CFPB late fee rule, net of mitigation actions, as well as previously disclosed higher reversals of interest and fees due to expected higher gross credit losses, lower merchant discount fees, a continued shift in product mix, and projected interest rate reductions by the Federal Reserve. • The CFPB late fee rule is expected to reduce fourth quarter total revenue in the mid-teen range on an isolated basis relative to the fourth quarter of 2023, net of mitigation actions. This reflects an improvement from our previously disclosed estimated impact. We continue to expect the financial impact of the late fee rule will lessen over time as our mitigation actions mature. Total non-interest expenses 2023: $2,092 million Down low- to mid- single digits • We continue to strategically invest in technology modernization, marketing, and product innovation to drive growth and efficiencies. Net loss rate 2023: 7.5% Low 8% range • Our outlook is inclusive of continued inflationary pressure on consumers’ ability to pay, our credit management actions, CFPB late fee rule impacts, and expected slower loan growth.
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 2
13©2024 Bread Financial Total non-interest expenses decreased 12% versus 1Q23 • Employee compensation and benefit costs decreased due to a reduction in demand-based outsourced and contract labor and decreased headcount driven by a decrease in collections and customer care staffing. • Card and processing expenses decreased due primarily to lower fraud losses, as well as reduced volume- related card and statement costs. • Marketing expenses decreased primarily due to decreased spending associated with brand partner joint marketing campaigns and direct-to-consumer offerings. • Depreciation and amortization costs decreased due to lower amortization of developed technology. Efficiency ratio* 42% 49% 1Q23 1Q24 Total non-interest expenses $544 $482 1Q23 1Q24 Total non-interest expenses Continuing operations $(7) $(34) $(1) $(11) $(11) $2 Employee comp. & benefits: Card and processing: Info. processing & comm.: Marketing: Depreciation & amortization: Other: -3% -28% —% -28% -34% —% 1Q24 vs. 1Q23 change in non-interest expenses * Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. ($ in millions) -12% +6% 51% -2% Efficiency ratio less gain on portfolio sale ($ in millions)
14©2024 Bread Financial ($ in millions) 1Q24 1Q23 1Q24 vs 1Q23 4Q23 1Q24 vs 4Q23 Credit sales $ 6,030 $ 7,373 (18%) $ 7,802 (23%) Average credit card and other loans $ 18,546 $ 19,405 (4%) $ 18,267 2% End-of-period credit card and other loans $ 18,185 $ 18,060 1% $ 19,333 (6%) End-of-period direct-to-consumer deposits $ 6,984 $ 5,630 24% $ 6,454 8% Return on average assets(1) 2.4% 7.7% (5.3%) 0.8% 1.6% Return on average equity(2) 17.5% 73.0% (55.5%) 6.2% 11.3% Return on average tangible common equity(3) 23.1% 107.0% (83.9%) 8.5% 14.6% Net interest margin(4) 18.7% 19.0% (0.3%) 19.6% (0.9%) Loan yield(5) 27.0% 26.6% 0.4% 27.7% (0.7%) Efficiency ratio(6) 48.6% 42.2% 6.4% 50.8% (2.2%) Double leverage ratio(7) 118.0% 158.6% (40.6%) 123.9% (5.9%) Common equity tier 1 capital ratio(8) 12.6% 11.8% 0.8% 12.2% 0.4% Total risk-weighted assets(9) $ 19,344 $ 18,893 2% $ 20,140 (4%) Tangible common equity / tangible assets ratio(10) 10.6% 9.1% 1.5% 9.6% 1.0% Tangible book value per common share(11) $ 45.96 $ 38.44 20% $ 43.70 5% Payment rate(12) 14.8% 15.6% (0.8%) 14.5% 0.3% Delinquency rate 6.2% 5.7% 0.5% 6.5% (0.3%) Net loss rate 8.5% 7.0% 1.5% 8.0% 0.5% Reserve rate 12.4% 12.3% 0.1% 12.0% 0.4% Summary financial highlights Continuing operations The terms associated with footnotes (1) through (12) are defined on the Definition of Terms slide at the end of the Appendix. Note: Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022.
15©2024 Bread Financial ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Credit sales $ 6,887 $ 8,140 $ 7,689 $ 10,166 $ 7,373 $ 7,057 $ 6,668 $ 7,802 $ 6,030 Year-over-year change 14% 10% 4% 16% 7% (13%) (13%) (23%) (18%) Average credit card and other loans $ 16,650 $ 17,003 $ 17,598 $ 19,820 $ 19,405 $ 17,652 $ 17,540 $ 18,267 $ 18,546 Year-over-year change 5% 11% 14% 23% 17% 4% —% (8%) (4%) End-of-period credit card and other loans $ 16,843 $ 17,769 $ 18,126 $ 21,365 $ 18,060 $ 17,962 $ 17,922 $ 19,333 $ 18,185 Year-over-year change 8% 13% 16% 23% 7% 1% (1%) (10%) 1% End-of-period direct-to-consumer deposits $ 3,561 $ 4,191 $ 5,176 $ 5,466 $ 5,630 $ 5,993 $ 6,098 $ 6,454 $ 6,984 Year-over-year change 66% 75% 70% 72% 58% 43% 18% 18% 24% Return on average assets(1) 4.0% 0.2% 2.4% (2.2%) 7.7% 1.2% 3.2% 0.8% 2.4% Return on average equity(2) 38.5% 2.2% 22.8% (23.3%) 73.0% 9.4% 24.8% 6.2% 17.5% Return on average tangible common equity(3) 56.0% 3.1% 32.3% (35.5%) 107.0% 13.2% 34.3% 8.5% 23.1% Net interest margin(4) 19.4% 18.6% 19.9% 19.1% 19.0% 18.7% 20.6% 19.6% 18.7% Loan yield(5) 25.6% 25.0% 27.2% 26.0% 26.6% 26.1% 28.6% 27.7% 27.0% Efficiency ratio(6) 46.2% 52.9% 49.7% 53.1% 42.2% 55.7% 48.7% 50.8% 48.6% Double leverage ratio(7) 201.8% 187.7% 182.4% 183.6% 158.6% 141.4% 127.4% 123.9% 118.0% Common equity tier 1 capital ratio(8) 10.9% 10.7% 11.5% 8.7% 11.8% 12.1% 12.9% 12.2% 12.6% Total risk-weighted assets(9) $ 18,560 $ 19,050 $ 18,830 $ 22,065 $ 18,893 $ 18,745 $ 18,730 $ 20,140 $ 19,344 Tangible common equity / tangible assets ratio(10) 7.8% 7.5% 8.0% 6.0% 9.1% 9.4% 10.0% 9.6% 10.6% Tangible book value per common share(11) $ 31.87 $ 31.75 $ 34.30 $ 29.42 $ 38.44 $ 38.99 $ 42.45 $ 43.70 $ 45.96 Payment rate(12) 17.7% 15.3% 15.5% 16.4% 15.6% 15.0% 14.4% 14.5% 14.8% Delinquency rate 4.1% 4.4% 5.7% 5.5% 5.7% 5.5% 6.3% 6.5% 6.2% Net loss rate 4.8% 5.6% 5.0% 6.3% 7.0% 8.0% 6.9% 8.0% 8.5% Reserve rate 10.8% 11.2% 11.4% 11.5% 12.3% 12.3% 12.3% 12.0% 12.4% Summary financial highlights - trending Continuing operations The terms associated with footnotes (1) through (12) are defined on the Definition of Terms slide at the end of the Appendix. Note: Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022.
16©2024 Bread Financial ($ in millions, except per share) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Total interest income $ 1,068 $ 1,073 $ 1,218 $ 1,325 $ 1,335 $ 1,197 $ 1,301 $ 1,312 $ 1,300 Total interest expense 79 95 133 195 218 205 219 237 248 Net interest income 989 978 1,085 1,130 1,117 992 1,082 1,075 1,052 Total non-interest income (68) (85) (106) (97) 172 (40) (51) (58) (61) Revenue 921 893 979 1,033 1,289 952 1,031 1,017 991 Net principal losses 199 238 218 312 342 351 304 367 394 Reserve (release) build (6) 166 86 380 (235) (15) — 115 (73) Provision for credit losses 193 404 304 692 107 336 304 482 321 Total non-interest expenses 426 473 486 548 544 530 502 516 482 Income (loss) before income taxes 302 16 189 (207) 638 86 225 19 188 Provision for income taxes 91 4 55 (73) 183 22 52 (26) 53 Net income (loss) $ 211 $ 12 $ 134 $ (134) $ 455 $ 64 $ 173 $ 45 $ 135 Net income (loss) per diluted share $ 4.21 $ 0.25 $ 2.69 $ (2.68) $ 9.08 $ 1.27 $ 3.46 $ 0.90 $ 2.73 Weighted average shares outstanding – diluted 50.0 49.9 49.9 50.0 50.1 50.3 50.1 49.6 49.7 Pretax pre-provision earnings (PPNR)* $ 495 $ 420 $ 493 $ 485 $ 745 $ 422 $ 529 $ 501 $ 509 Less: Gain on portfolio sale — — — — (230) — — — — PPNR less gain on portfolio sale* $ 495 $ 420 $ 493 $ 485 $ 515 $ 422 $ 529 $ 501 $ 509 * 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". Summary P&L results - trending Continuing operations
17©2024 Bread Financial 1Q24 ($ in millions) Average balance Interest income / expense Average yield / rate Cash and investment securities $ 4,135 $ 53 5.1% Credit card and other loans 18,546 1,247 27.0% Total interest-earning assets 22,681 1,300 23.1% Direct-to-consumer (Retail) 6,739 81 4.9% Wholesale deposits 6,771 74 4.4% Interest-bearing deposits 13,510 155 4.6% Secured borrowings 3,663 63 6.8% Unsecured borrowings 1,354 30 9.0% Interest-bearing borrowings 5,017 93 7.4% Total interest-bearing liabilities $ 18,527 $ 248 5.4% Net interest income $ 1,052 Net interest margin* 18.7% * Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. Note: Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated. Net interest margin
18©2024 Bread Financial ($ in millions, except per share amounts) 1Q24 1Q23 $ Change % Change Income from continuing operations, net of taxes $ 135 $ 455 $ (320) (70) (Loss) income from discontinued operations, net of taxes (1) — (1) nm Net income $ 134 $ 455 $ (321) (71) Net income per diluted share from continuing ops $ 2.73 $ 9.08 $ (6.35) (70) Net (loss) income per diluted share from discontinued ops $ (0.03) $ — $ (0.03) nm Net income per diluted share $ 2.70 $ 9.08 $ (6.38) (70) Weighted average shares outstanding – diluted (in millions) 49.7 50.1 Net income and diluted EPS components nm – Not meaningful, denoting a variance of 100 percent or more.
19©2024 Bread Financial Capital ratios 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Rolling 4 quarter avg. Total company Common equity tier 1 capital ratio(1) 10.9% 10.7% 11.5% 8.7% 11.8% 12.1% 12.9% 12.2% 12.6% 12.5% Total risk-based capital ratio(2) 12.3% 12.0% 12.9% 10.1% 13.2% 13.4% 14.2% 13.6% 14.0% 13.8% Total risk-weighted assets(3) $ 18,560 $ 19,050 $ 18,830 $ 22,065 $ 18,893 $ 18,745 $ 18,730 $ 20,140 $ 19,344 $ 19,240 Tangible common equity / tangible assets ratio(4) 7.8% 7.5% 8.0% 6.0% 9.1% 9.4% 10.0% 9.6% 10.6% 9.9% Comenity Bank Common equity tier 1 capital ratio(1) 22.5% 22.7% 20.7% 18.4% 18.3% 18.8% 20.3% 19.7% 18.2% 19.2% Total risk-based capital ratio(2) 23.8% 24.0% 22.0% 19.7% 19.7% 20.1% 21.6% 21.1% 19.6% 20.6% Comenity Capital Bank Common equity tier 1 capital ratio(1) 19.3% 18.1% 18.4% 16.1% 21.7% 18.2% 18.5% 16.6% 17.5% 17.7% Total risk-based capital ratio(2) 20.7% 19.4% 19.7% 17.5% 23.0% 19.6% 19.9% 18.0% 18.9% 19.1% As of March 31, 2024: • Total company liquidity of $7.1 billion including all undrawn credit facilities and conduits at the banks; parent liquidity of $0.9 billion consisting of cash plus revolver capacity • Total company common equity tier 1 capital ratio of 12.6%, up 80 basis points versus a year ago • Banks remain well capitalized on a total risk-based capital basis, nearly double the 10% well-capitalized threshold • Prudent interest rate management with no held-to-maturity securities Capital and liquidity The terms associated with footnotes (1) through (4) are defined on the Definition of Terms slide at the end of the Appendix. Note: The Common equity tier 1 capital ratio and Total risk-based capital ratio include adjustments for the phase-in of the effect of the current expected credit loss (CECL) model on regulatory capital over a three-year period beginning in the first quarter of 2022, through 2024. 75%, 50% and 25% of the phase-in is included in 2024, 2023 and 2022, respectively. The effects of CECL on our regulatory capital will be fully phased-in beginning in the first quarter of 2025.
20©2024 Bread Financial ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Pretax pre-provision earnings (PPNR) Income (loss) before income taxes $ 302 $ 16 $ 189 $ (207) $ 638 $ 86 $ 225 $ 19 $ 188 Provision for credit losses 193 404 304 692 107 336 304 482 321 Pretax pre-provision earnings (PPNR) $ 495 $ 420 $ 493 $ 485 $ 745 $ 422 $ 529 $ 501 $ 509 Less: Gain on portfolio sale — — — — (230) — — — — PPNR less gain on portfolio sale $ 495 $ 420 $ 493 $ 485 $ 515 $ 422 $ 529 $ 501 $ 509 1Q20 1Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Tangible common equity (TCE) Total stockholders’ equity $ 1,088 $ 1,764 $ 2,268 $ 2,275 $ 2,399 $ 2,265 $ 2,716 $ 2,736 $ 2,864 $ 2,918 $ 3,032 Less: Goodwill and intangible assets, net (354) (704) (682) (694) (690) (799) (790) (780) (771) (762) (753) Tangible common equity (TCE) $ 734 $ 1,060 $ 1,586 $ 1,581 $ 1,709 $ 1,466 $ 1,926 $ 1,956 $ 2,093 $ 2,156 $ 2,279 Tangible assets (TA) Total assets $ 24,235 $ 21,163 $ 20,938 $ 21,811 $ 21,960 $ 25,407 $ 21,970 $ 21,609 $ 21,608 $ 23,141 $ 22,299 Less: Goodwill and intangible assets, net (354) (704) (682) (694) (690) (799) (790) (780) (771) (762) (753) Tangible assets (TA) $ 23,881 $ 20,459 $ 20,256 $ 21,117 $ 21,270 $ 24,608 $ 21,180 $ 20,829 $ 20,837 $ 22,379 $ 21,546 Reconciliation of GAAP to non-GAAP financial measures
21©2024 Bread Financial 7.6% 5.8% 6.0% 5.0% 5.1% 3.9% 4.4% 4.8% 5.6% 5.0% 6.3% 7.0% 8.0% 6.9% 8.0% 8.5% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 4.3% 4.7% 4.4% 3.8% 3.3% 3.8% 3.9% 4.1% 4.4% 5.7% 5.5% 5.7% 5.5% 6.3% 6.5% 6.2% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 15-year low rate(1): 3.8% 15-year avg rate: ~6.0% 15-year avg rate: ~5.0% 15-year low rate: 3.3% Credit quality trends (2) Delinquency rates Net loss rates 15-year peak rate(1): 10.0% 15-year peak rate(1): 6.5% (1) Peak Delinquency rate occurred in 2023 and peak Net loss rate occurred in 2009. Low Net loss rate occurred in 2014. (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. Notes: Starting with 3Q22 through 2Q23, the Delinquency and Net loss rates were impacted by the transition of our credit card processing services in June 2022. As well, beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated.
22©2024 Bread Financial Definition of terms Note (1) Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over the periods indicated. Summary financial highlights (1) Return on average assets: Return on average assets represents annualized Income from continuing operations divided by average Total assets. (2) Return on average equity: Return on average equity represents annualized Income from continuing operations divided by average Total stockholders’ equity. (3) Return on average tangible common equity: Return on average tangible common equity represents annualized Income from continuing operations divided by average Tangible common equity, which itself is defined below. (4) Net interest margin: Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (5) Loan yield: Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (6) Efficiency ratio: Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. (7) Double leverage: Double leverage ratio represents Parent Company investment in subsidiaries divided by BFH consolidated equity. (8) Common equity tier 1 capital ratio: The Common equity tier 1 capital ratio represents common equity tier 1 capital divided by total risk-weighted assets. (9) Total risk-weighted assets: Total risk-weighted assets are generally measured by allocating assets, and specified off-balance sheet exposures, to various risk categories as defined by the Basel III standardized approach. (10) Tangible common equity / tangible assets ratio: 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. (11) Tangible book value per share: Tangible book value per common share represents TCE divided by shares outstanding and is a non-GAAP financial measure. (12) Payment rate: 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. Capital and liquidity (1) Common equity tier 1 capital ratio: The Common equity tier 1 capital ratio represents common equity tier 1 capital divided by total risk-weighted assets. (2) Total risk-based capital ratio: The Total risk-based capital ratio represents total capital divided by total risk-weighted assets. (3) Total risk-weighted assets: Total risk-weighted assets are generally measured by allocating assets, and specified off-balance sheet exposures, to various risk categories as defined by the Basel III standardized approach. (4) Tangible common equity / tangible assets ratio: 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.
Exhibit 99.3
Bread FinancialTM Declares Dividend on Common Stock
COLUMBUS, Ohio – April 25, 2024 – 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 14, 2024 to stockholders of record at the close of business on May 10, 2024.
About Bread FinancialTM
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 suite of payment solutions that includes private label and co-brand credit cards and Bread Pay™ buy now, pay later products. Bread Financial also offers direct-to-consumer products 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 approximately 7,000 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/X and Instagram.
Contacts
Brian Vereb – Investor Relations
Brian.Vereb@BreadFinancial.com
Susan Haugen – Investor Relations
Susan.Haugen@BreadFinancial.com
Rachel Stultz – Media
Rachel.Stultz@BreadFinancial.com
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