COLUMBUS, Ohio, Nov. 07, 2024 (GLOBE NEWSWIRE) --  Bread Financial Holdings, Inc.® (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, today announced the company’s participation in KBW’s Fintech & Payments Conference on Thursday, Nov. 14. Bread Financial EVP and Chief Financial Officer Perry Beberman will participate in a fireside chat. The fireside chat will take place at 10:15 a.m. ET and will be broadcast live here. The firesid ...

[Part I: FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=28&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited consolidated financial statements, including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with related notes, detailing financial position and operating results as of September 30, 2024, and December 31, 2023 [Consolidated Statements of Income](index=30&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income for the three and nine months ended September 30, 2024, show a significant decrease in net income and diluted earnings per share, primarily due to increased provision for credit losses and higher non-interest expenses, including the impact of convertible note repurchases Consolidated Statements of Income (Million USD) | Metric (Million USD) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest Income | 1,277 | 1,301 | 3,806 | 3,832 | | Interest Expense | 240 | 219 | 729 | 641 | | Net Interest Income | 1,037 | 1,082 | 3,077 | 3,191 | | Non-interest Income | (54) | (51) | (164) | 82 | | Provision for Credit Losses | 369 | 304 | 980 | 747 | | Non-interest Expense | 574 | 502 | 1,525 | 1,576 | | Income Before Income Taxes from Continuing Operations | 40 | 225 | 408 | 950 | | Provision for Income Taxes | 37 | 52 | 136 | 257 | | Income from Continuing Operations | 3 | 173 | 272 | 693 | | Net Income | 2 | 171 | 270 | 675 | | Diluted Net Income Per Share | 0.05 | 3.42 | 5.37 | 13.44 | [Consolidated Statements of Comprehensive Income](index=31&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated statements of comprehensive income for the three and nine months ended September 30, 2024, indicate a substantial decline in both net income and comprehensive income, though unrealized gains/losses on available-for-sale debt securities improved in 2024 Consolidated Statements of Comprehensive Income (Million USD) | Metric (Million USD) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | 2 | 171 | 270 | 675 | | Unrealized Gains (Losses) on Available-for-Sale Debt Securities (Net of Tax) | 6 | (7) | 3 | (6) | | Comprehensive Income | 8 | 164 | 273 | 669 | [Consolidated Balance Sheets](index=32&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2024, the company's total assets and liabilities decreased from December 31, 2023, mainly due to reductions in net credit card and other loans and deposits, while stockholders' equity increased Consolidated Balance Sheets (Million USD) | Metric (Million USD) | Sep 30, 2024 | Dec 31, 2023 | | :------------------- | :----------- | :----------- | | **Assets** | | | | Cash and Cash Equivalents | 3,451 | 3,590 | | Credit Card and Other Loans, Net | 15,743 | 17,005 | | Investments | 277 | 253 | | Goodwill and Intangible Assets, Net | 754 | 762 | | Total Assets | 21,736 | 23,141 | | **Liabilities** | | | | Deposits | 12,847 | 13,620 | | Debt Issued by Consolidated Variable Interest Entities | 3,543 | 3,898 | | Long-Term and Other Debt | 1,041 | 1,394 | | Total Liabilities | 18,624 | 20,223 | | **Stockholders' Equity** | | | | Total Stockholders' Equity | 3,112 | 2,918 | [Consolidated Statements of Stockholders' Equity](index=33&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) The consolidated statements of stockholders' equity for the three and nine months ended September 30, 2024, show an increase in total stockholders' equity, primarily from net income, despite negative impacts from convertible note repurchases and common stock repurchases Consolidated Statements of Stockholders' Equity (Million USD) | Metric (Million USD) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Beginning Balance | 3,170 | 2,736 | 2,918 | 2,265 | | Net Income | 2 | 171 | 270 | 675 | | Other Comprehensive Income (Loss) | 6 | (7) | 3 | (6) | | Share-Based Compensation | 12 | 10 | 41 | 32 | | Convertible Note Repurchases | (67) | — | (67) | — | | Common Stock Repurchases | — | (35) | (11) | (35) | | Dividends | (11) | (10) | (33) | (33) | | Ending Balance | 3,112 | 2,864 | 3,112 | 2,864 | [Consolidated Statements of Cash Flows](index=35&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, operating cash flow remained stable, investing cash flow significantly decreased, and financing cash outflow reduced, primarily reflecting debt repayments and a net decrease in deposits Consolidated Statements of Cash Flows (Million USD) | Metric (Million USD) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | 1,380 | 1,370 | | Net Cash Provided by Investing Activities | 182 | 2,579 | | Net Cash Used in Financing Activities | (1,707) | (4,481) | | Net Decrease in Cash and Cash Equivalents | (145) | (532) | | Cash and Cash Equivalents at End of Period | 3,471 | 3,395 | [Notes to Consolidated Financial Statements](index=36&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business, accounting policies, loans, credit loss allowance, securitizations, investments, deposits, long-term debt, non-interest income/expense, fair value of financial instruments, regulatory matters, capital adequacy, commitments, contingencies, changes in accumulated other comprehensive loss, stockholders' equity, income taxes, and earnings per share - The company primarily offers credit products through its insured depository institution subsidiaries, **Comenity Bank** and **Comenity Capital Bank**[137](index=137&type=chunk) - The company has adopted revised accounting standards to expand the option of applying the proportional amortization method for tax credit investments, with no significant impact on retained earnings[143](index=143&type=chunk) - The company will implement new segment reporting disclosure requirements starting with the annual report for the year ended December 31, 2024, which are expected to expand disclosures but not materially impact financial reporting[143](index=143&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=3&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) This section provides a detailed discussion and analysis of the company's financial condition and operating results for the three and nine months ended September 30, 2024, covering business overview, non-GAAP financial measures, operating environment, consolidated operating results, asset quality, liquidity and capital resources, inflation and seasonality, regulatory matters, and forward-looking statements [OVERVIEW](index=3&type=section&id=OVERVIEW) Bread Financial is a technology-driven financial services company offering payment, lending, and savings solutions through private label and co-brand credit cards and BNPL products, serving diverse partners and consumers, with primary revenue from loan interest and fees - The company offers **private label and co-brand credit cards** as well as **Buy Now, Pay Later (BNPL) products**, such as installment loans and "Pay in 4" services[5](index=5&type=chunk) - The company's partner base is diversified, spanning industries such as **travel and entertainment, health and beauty, jewelry, sporting goods, home goods, technology and electronics, and specialty apparel**[5](index=5&type=chunk) - Primary revenue sources are **interest and fees from various credit card and other loan products**, followed by contractual relationships with brand partners[5](index=5&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=3&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) The company uses several non-GAAP financial measures to more clearly assess ongoing operating performance and capital adequacy, including adjusted non-interest expense, adjusted net income, adjusted diluted EPS, pre-provision net revenue (PPNR), return on average tangible common equity (ROTCE), tangible common equity to tangible assets (TCE/TA), and tangible book value per share - The company uses **adjusted non-interest expense, adjusted net income, and adjusted diluted EPS** to exclude the impact of convertible note repurchases, providing a clearer assessment of continuing operations[7](index=7&type=chunk) - **Pre-provision net revenue (PPNR)** is used to assess operating performance before income taxes and provision for credit losses, and can further exclude portfolio sale gains and convertible note repurchase impacts[7](index=7&type=chunk) - **Return on average tangible common equity (ROTCE)** and **tangible common equity to tangible assets (TCE/TA)** are used to evaluate company performance and capital adequacy[7](index=7&type=chunk) [BUSINESS ENVIRONMENT](index=4&type=section&id=BUSINESS%20ENVIRONMENT) In Q3 2024, credit sales decreased 3% year-over-year, while average credit card and other loans grew 1%; net interest margin fell from 20.6% to 18.8% due to reduced late fees and higher funding costs; provision for credit losses increased, but the company maintained high credit reserves and a strong Vantage 660+ cardholder base through prudent credit tightening and diversified products, strengthening its balance sheet with improved CET1 capital ratio and increased DTC deposits; the full-year 2024 outlook anticipates slower loan and net income growth, a net loss rate around 8%, and declining non-interest expenses Q3 2024 Business Environment Key Metrics | Metric | Q3 2024 | Q3 2023 | YoY Change | | :----- | :------ | :------ | :--------- | | Credit Sales | $6.5 billion | $6.7 billion | -3% | | Average Credit Card and Other Loans | $17.8 billion | $17.5 billion | +1% | | End-of-Period Credit Card and Other Loans | $17.9 billion | $17.9 billion | 0% | | Net Interest Margin | 18.8% | 20.6% | -1.8% | | Total Net Interest and Non-interest Income | $983 million | $1,031 million | -5% | | Provision for Credit Losses | Increased | Increased | +21% | | Total Non-interest Expense | $574 million | $502 million | +14% | | Adjusted Total Non-interest Expense | $478 million | $502 million | -5% | | Common Equity Tier 1 Capital Ratio | 13.3% | 12.9% | +0.4% | | DTC Deposits | $7.5 billion | $6.1 billion | +23% | - The company continues to execute strategies to mitigate the CFPB's final rule on credit card late fees, but the **full-year 2024 financial outlook assumes the rule will not take effect this year**[16](index=16&type=chunk) - The **full-year 2024 outlook** anticipates average credit card and other loans to decrease by a **low single-digit percentage**, total net interest and non-interest income (excluding portfolio sale gains) to decrease by a **low to mid-single-digit percentage**, and a **net loss rate around 8%**[18](index=18&type=chunk)[21](index=21&type=chunk) [CONSOLIDATED RESULTS OF OPERATIONS](index=7&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) The company's consolidated operating results for Q3 and the first nine months of 2024 show a decline in total net interest and non-interest income, coupled with increased provision for credit losses, leading to a significant reduction in income from continuing operations and net income; non-interest expenses rose due to convertible note repurchases but decreased on an adjusted basis; income tax provision and effective tax rate were also impacted by non-deductible portions of convertible note repurchases Consolidated Financial Performance Summary (Million USD) | Metric (Million USD) | Q3 2024 | Q3 2023 | Change ($) | Change (%) | YTD 2024 | YTD 2023 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | :------- | :------- | :--------- | :--------- | | Total Net Interest and Non-interest Income | 983 | 1,031 | (48) | (5) | 2,913 | 3,273 | (360) | (11) | | Provision for Credit Losses | 369 | 304 | 65 | 21 | 980 | 747 | 233 | 31 | | Total Non-interest Expense | 574 | 502 | 72 | 14 | 1,525 | 1,576 | (51) | (3) | | Income Before Income Taxes from Continuing Operations | 40 | 225 | (185) | (82) | 408 | 950 | (542) | (57) | | Income from Continuing Operations | 3 | 173 | (170) | (98) | 272 | 693 | (421) | (61) | | Net Income | 2 | 171 | (169) | (99) | 270 | 675 | (405) | (60) | | Diluted Net Income Per Share | $0.05 | $3.42 | ($3.37) | (99) | $5.37 | $13.44 | ($8.07) | (60) | | Net Interest Margin | 18.8% | 20.6% | (1.8) | | 18.5% | 19.4% | (0.9) | | [Total Net Interest and Non-interest Income, After Provision for Credit Losses](index=8&type=section&id=Total%20Net%20Interest%20and%20Non-interest%20Income%2C%20After%20Provision%20for%20Credit%20Losses) Total interest income decreased in both Q3 and the first nine months of 2024, primarily due to lower loan interest and fees, partially offset by increased interest on cash and investment securities; total interest expense rose due to higher average rates on deposits and borrowings; non-interest income declined, mainly affected by reduced merchant discount fees and changes in portfolio sale gains Total Net Interest and Non-interest Income Composition (Million USD) | Metric (Million USD) | Q3 2024 | Q3 2023 | Change ($) | Change (%) | YTD 2024 | YTD 2023 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | :------- | :------- | :--------- | :--------- | | Loan Interest and Fees | 1,224 | 1,256 | (32) | (3) | 3,645 | 3,697 | (52) | (1) | | Interest on Cash and Investment Securities | 53 | 45 | 8 | 19 | 161 | 135 | 26 | 19 | | Total Interest Income | 1,277 | 1,301 | (24) | (2) | 3,806 | 3,832 | (26) | (1) | | Interest Expense on Deposits | 153 | 143 | 10 | 7 | 461 | 387 | 74 | 19 | | Interest Expense on Borrowings | 87 | 76 | 11 | 13 | 268 | 254 | 14 | 5 | | Total Interest Expense | 240 | 219 | 21 | 9 | 729 | 641 | 88 | 14 | | Net Interest Income | 1,037 | 1,082 | (45) | (4) | 3,077 | 3,191 | (114) | (4) | | Portfolio Sale Gains | 4 | — | 4 | nm | 9 | 230 | (221) | (96) | | Total Non-interest Income | (54) | (51) | (3) | 7 | (164) | 82 | (246) | (301) | | Provision for Credit Losses | 369 | 304 | 65 | 21 | 980 | 747 | 233 | 31 | - Loan interest and fees decreased primarily due to **reduced late fees**, a **shift in product mix towards lower private label account penetration**, and **higher interest and fee write-offs** resulting from increased gross credit losses[28](index=28&type=chunk) - The **provision for credit losses increased in Q3 2024**, mainly due to a **$22 million increase in current period reserves**, compared to flat reserves in the prior year period[31](index=31&type=chunk) [Total Non-interest Expenses](index=9&type=section&id=Total%20Non-interest%20Expenses) Total non-interest expenses increased 14% year-over-year in Q3 2024, primarily due to the impact of convertible note repurchases; excluding this, adjusted non-interest expenses decreased 5% year-over-year, driven by lower card and processing expenses (including fraud losses), partially offset by increased associate compensation and benefits Total Non-interest Expense Composition (Million USD) | Metric (Million USD) | Q3 2024 | Q3 2023 | Change ($) | Change (%) | YTD 2024 | YTD 2023 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | :------- | :------- | :--------- | :--------- | | Associate Compensation and Benefits | 228 | 210 | 18 | 9 | 655 | 647 | 8 | 1 | | Card and Processing Expenses | 77 | 104 | (27) | (26) | 241 | 339 | (98) | (29) | | Information Processing and Communications | 73 | 73 | 0 | 0 | 220 | 222 | (2) | (1) | | Marketing Expenses | 38 | 36 | 2 | 5 | 99 | 115 | (16) | (14) | | Depreciation and Amortization | 22 | 23 | (1) | (7) | 68 | 92 | (24) | (27) | | Other | 136 | 56 | 80 | 142 | 242 | 161 | 81 | 51 | | Total Non-interest Expense | 574 | 502 | 72 | 14 | 1,525 | 1,576 | (51) | (3) | | Adjusted Total Non-interest Expense | 478 | 502 | (24) | (5) | 1,429 | 1,576 | (147) | (9) | - The increase in **associate compensation and benefits** is due to **higher short-term and long-term incentive compensation**, partially offset by strategic adjustments in customer service staffing and reduced outsourced labor needs[35](index=35&type=chunk) - The decrease in **card and processing expenses** is primarily due to **lower fraud losses** and reduced card and billing costs associated with transaction volumes[35](index=35&type=chunk) [Income Taxes](index=10&type=section&id=Income%20Taxes) Income tax provision decreased in both Q3 and the first nine months of 2024, primarily due to lower income from continuing operations before income taxes; the effective tax rate significantly increased, mainly due to higher non-deductible items from the convertible note repurchase transaction Income Tax Provision and Effective Tax Rate | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----- | :------ | :------ | :------- | :------- | | Income Tax Provision | $37 million | $52 million | $136 million | $257 million | | Effective Tax Rate from Continuing Operations | 92.2% | 23.0% | 33.4% | 27.1% | - The **effective tax rate increased** primarily due to **higher non-deductible items** from the convertible note repurchase transaction[36](index=36&type=chunk) [Discontinued Operations](index=10&type=section&id=Discontinued%20Operations) Losses from discontinued operations are primarily related to contractual indemnifications and tax matters associated with the 2021 LoyaltyOne divestiture and 2019 Epsilon sale - Losses from discontinued operations are primarily related to the **divestiture and sale of LoyaltyOne and Epsilon businesses**, involving contractual indemnifications and tax matters[37](index=37&type=chunk) [Summary Financial Highlights – Continuing Operations](index=11&type=section&id=Summary%20Financial%20Highlights%20%E2%80%93%20Continuing%20Operations) This section provides key financial metrics for continuing operations, including credit sales, loan balances, deposits, profitability ratios, capital adequacy, and asset quality indicators, reflecting the company's overall financial performance and trends for Q3 and the first nine months of 2024 Continuing Operations Financial Highlights | Metric | Q3 2024 | Q3 2023 | Change (%) | YTD 2024 | YTD 2023 | Change (%) | | :----- | :------ | :------ | :--------- | :------- | :------- | :--------- | | Credit Sales | $6,464 million | $6,668 million | (3) | $19,064 million | $21,098 million | (10) | | Average Credit Card and Other Loans | $17,766 million | $17,540 million | 1 | $18,060 million | $18,199 million | (1) | | End-of-Period DTC Deposits | $7,483 million | $6,098 million | 23 | $7,483 million | $6,098 million | 23 | | Net Interest Margin | 18.8% | 20.6% | (1.8) | 18.5% | 19.4% | (0.9) | | Return on Average Tangible Common Equity | 0.5% | 34.3% | (33.8) | 14.8% | 48.9% | (34.1) | | Efficiency Ratio | 58.4% | 48.7% | 9.7 | 52.3% | 48.2% | 4.1 | | Common Equity Tier 1 Capital Ratio | 13.3% | 12.9% | 0.4 | 13.3% | 12.9% | 0.4 | | Delinquency Rate | 6.4% | 6.3% | 0.1 | 6.4% | 6.3% | 0.1 | | Net Loss Rate | 7.8% | 6.9% | 0.9 | 8.3% | 7.3% | 1.0 | | Reserve Rate | 12.2% | 12.3% | (0.1) | 12.2% | 12.3% | (0.1) | [ASSET QUALITY](index=15&type=section&id=ASSET%20QUALITY) Asset quality, a key determinant of the company's financial performance, is measured primarily by delinquency and net principal loss rates; as of September 30, 2024, the delinquency rate slightly increased to 6.4%, and the net principal loss rate rose to 7.8%; the company maintained a high proportion of Vantage 660+ cardholders through credit tightening and a diversified product portfolio, also offering temporary loan modification programs to assist financially distressed customers without principal forgiveness - The company closely monitors **delinquency rates and net principal loss rates**, which reflect the effectiveness of underwriting, inherent portfolio credit risk, and collection and recovery efforts[48](index=48&type=chunk) Credit Card and Other Loans Delinquency Trends (Million USD) | Days Delinquent (Million USD) | Sep 30, 2024 | Percentage of Total | Dec 31, 2023 | Percentage of Total | | :---------------------------- | :----------- | :------------------ | :----------- | :------------------ | | 31 to 60 Days | $308 | 1.9% | $346 | 1.9% | | 61 to 90 Days | $235 | 1.4% | $250 | 1.4% | | 91 Days or More | $519 | 3.1% | $567 | 3.2% | | Total | $1,062 | 6.4% | $1,163 | 6.5% | Credit Card and Other Loans Net Principal Losses (Million USD) | Metric (Million USD) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :------------------- | :------ | :------ | :------- | :------- | | Average Credit Card and Other Loans | $17,766 | $17,540 | $18,060 | $18,199 | | Net Principal Losses | $347 | $304 | $1,122 | $998 | | Net Principal Loss Rate | 7.8% | 6.9% | 8.3% | 7.3% | [CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES](index=16&type=section&id=CONSOLIDATED%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company is committed to maintaining a strong liquidity and capital position, supported by diversified funding sources including operating cash flow, bank credit, unsecured debt, securitizations, and deposits; in Q3 2024, the company further strengthened its balance sheet by repurchasing convertible notes and reducing debt, while maintaining stable credit ratings; new senior notes were issued, and DTC deposits increased to optimize the funding structure; cash flow from operating activities remained stable, investing cash flow fluctuated due to loan portfolio sales and acquisitions, and financing cash outflows were primarily for debt repayment and deposit reduction - The company's primary liquidity sources include **cash flow from operating activities, bank credit facilities, issuance of senior unsecured or convertible debt securities, securitization program financing, and bank deposits**[56](index=56&type=chunk) Parent Company Senior Unsecured Long-Term Debt Credit Ratings (As of Sep 30, 2024) | Rating Agency | Rating | Outlook | | :------------ | :----- | :------ | | Moody's | Ba3 | Stable | | S&P | BB- | Stable | | Fitch | BB | Stable | - The company repurchased a total of **$263 million of convertible notes** in August and September 2024, resulting in a **$96 million inducement expense** and a **$67 million reduction in additional paid-in capital**[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) Deposit Composition (Million USD) | Deposit Type | Sep 30, 2024 | Dec 31, 2023 | | :----------- | :----------- | :----------- | | DTC (Retail) | $7,483 | $6,454 | | Wholesale | $5,339 | $7,140 | | Total Deposits | $12,822 | $13,594 | Cash Flow Summary (Million USD) | Activity Type | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------ | :----------------------------- | :----------------------------- | | Operating Activities | 1,380 | 1,370 | | Investing Activities | 182 | 2,579 | | Financing Activities | (1,707) | (4,481) | [INFLATION AND SEASONALITY](index=23&type=section&id=INFLATION%20AND%20SEASONALITY) The company mitigates inflation-driven cost increases through operational efficiency and technology modernization, but inflation and high interest rates may negatively impact customer repayment ability, leading to increased credit losses; the company's revenue, earnings, and cash flow are affected by seasonal patterns of Q4 holiday shopping and Q1 loan repayments, though macroeconomic trends typically have a greater impact - **Inflation and high interest rates** may negatively impact customer repayment ability, leading to **higher delinquency rates and increased credit losses**[98](index=98&type=chunk) - The company's revenue, earnings, and cash flow are affected by **seasonal patterns of Q4 holiday shopping and Q1 loan repayments**, though macroeconomic trends typically have a greater impact[99](index=99&type=chunk) [LEGISLATIVE, REGULATORY MATTERS AND CAPITAL ADEQUACY](index=23&type=section&id=LEGISLATIVE%2C%20REGULATORY%20MATTERS%20AND%20CAPITAL%20ADEQUACY) The company and its bank subsidiaries are strictly regulated by federal and state laws, including the FDIC and CFPB; banks must meet minimum capital requirements and maintain a "well-capitalized" status, which all banks met as of September 30, 2024; the company also faces legal and regulatory actions related to the former LoyaltyOne business divestiture, including FDIC consent orders for service providers and civil money penalties for the banks, which the company is actively addressing - **Comenity Bank and Comenity Capital Bank** must meet various regulatory capital requirements administered by the **State of Delaware, State of Utah, and the FDIC**[100](index=100&type=chunk) Capital Ratios (As of Sep 30, 2024) | Metric | Company's Actual Ratio | Minimum Capital Adequacy Ratio | Minimum Well-Capitalized Ratio | | :----- | :--------------------- | :----------------------------- | :----------------------------- | | Common Equity Tier 1 Capital Ratio | 13.3% | 4.5% | 6.5% | | Tier 1 Capital Ratio | 13.3% | 6.0% | 8.0% | | Total Risk-Based Capital Ratio | 14.6% | 8.0% | 10.0% | | Tier 1 Leverage Capital Ratio | 11.7% | 4.0% | 5.0% | - In November 2023, the FDIC issued a **consent order to Comenity Servicing LLC**, the company's servicer, citing deficiencies in IT system development, program management, business continuity management, cloud operations, and third-party oversight[111](index=111&type=chunk) - On August 22, 2024, the banks reached an agreement with the FDIC to pay **civil money penalties of $1 million each**, related to customer rewards program and auto-pay disruptions during the 2022 credit card processing services transition[113](index=113&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Key accounting policies and estimates in this report are not materially different from those disclosed in the company's 2023 Form 10-K - Key accounting policies and estimates are **not materially different** from those disclosed in the **2023 Form 10-K**[114](index=114&type=chunk) [RECENTLY ISSUED ACCOUNTING STANDARDS](index=27&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) Information on recently issued accounting standards in this report can be found in Note 1 to the consolidated financial statements - Information on recently issued accounting standards can be found in **Note 1 to the consolidated financial statements**[115](index=115&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=28&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements involving expectations and projections of future events, subject to various risks and uncertainties such as macroeconomic conditions, credit performance, regulatory changes, technological failures, and legal proceedings, where actual results may differ materially from expectations; specifically, the CFPB's final rule on credit card late fees could significantly impact the business - Forward-looking statements are subject to various risks and uncertainties, including **macroeconomic conditions, future credit performance of customers, loss of significant brand partners or customers, business concentration, volatility in credit loss reserves, increased fraudulent activity, limited access to funding markets, regulatory changes, and legal proceedings**[118](index=118&type=chunk) - The **CFPB's final rule on credit card late fees** could have a **significant impact on the company's business and operating results**, with uncertainty regarding its effective date and the outcome of legal challenges[120](index=120&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company primarily faces market risk from interest rate fluctuations and changes in the interest rate relationship between assets and liabilities, including repricing risk, basis risk, yield curve risk, and option risk; there have been no material changes in the company's exposure to interest rate or other market risks compared to the 2023 Form 10-K - The company's primary market risk exposure arises from **fluctuations in interest rates** and changes in the interest rate relationship between assets (such as credit card and other loans, investments) and liabilities (such as deposits, debt issued by consolidated variable interest entities, and long-term and other debt)[269](index=269&type=chunk) - There have been **no material changes** in the company's exposure to interest rate or other market risks compared to the **2023 Form 10-K**[270](index=270&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management evaluated the effectiveness of disclosure controls and procedures as of the end of the reporting period and concluded they are effective; there were no material changes in internal control over financial reporting during the quarter - The company's **Chief Executive Officer and Chief Financial Officer** evaluated and determined that the company's **disclosure controls and procedures are effective** as of the end of the reporting period[271](index=271&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the reporting period[272](index=272&type=chunk) [Part II: OTHER INFORMATION](index=63&type=section&id=Part%20II%3A%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to previously disclosed legal proceedings, particularly risk factors and commitments and contingencies related to the LoyaltyOne divestiture, which could materially impact the company's business - Legal proceedings information can be found in the company's **Form 10-Q for the quarter ended March 31, 2024**, under "Risk Factors" and Note 10 "Commitments and Contingencies" to the unaudited consolidated financial statements, as well as in the **2023 Form 10-K** under "Risk Factors"[274](index=274&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the company's 2023 Form 10-K, but information has been supplemented by quarterly reports for the periods ended March 31, 2024, and June 30, 2024; the company's business may still be affected by additional risks and uncertainties not yet disclosed or currently deemed immaterial - There have been **no material changes** to the risk factors disclosed in the company's **2023 Form 10-K**, but they have been supplemented by **quarterly reports for the periods ended March 31, 2024, and June 30, 2024**[275](index=275&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) For the three months ended September 30, 2024, the company did not repurchase common stock, but the administrator of the Bread Financial 401(k) Plan purchased a small number of common shares for employees Common Stock Purchase Information (Three Months Ended Sep 30, 2024) | Period | Total Number of Shares Purchased | Average Price Per Share | | :--------- | :------------------------------- | :---------------------- | | July 1-31 | 2,798 | $49.22 | | August 1-31 | 1,609 | $53.86 | | September 1-30 | 1,456 | $53.26 | | Total | 5,863 | $51.50 | - During the reporting period, the company did not repurchase common stock, but the administrator of the **Bread Financial 401(k) Plan purchased 5,863 shares of common stock** for employees[276](index=276&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - **No defaults upon senior securities** occurred[277](index=277&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[277](index=277&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) For the three months ended September 30, 2024, no Section 16 officers or directors adopted or terminated "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements" - As of the three months ended September 30, 2024, **no Section 16 officers or directors adopted or terminated "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements"**[278](index=278&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with Form 10-Q, including articles of incorporation, service agreement amendments, securitization documents, CEO and CFO certifications, and financial information in Inline XBRL format - Exhibits include **articles of incorporation, service agreement amendments, securitization documents, CEO and CFO certifications, and financial information in Inline XBRL format**[280](index=280&type=chunk)[281](index=281&type=chunk)

Core Insights - Bread Financial Holdings (BFH) reported an operating income of $1.84 per share for Q3 2024, missing the Zacks Consensus Estimate of $1.88, with a significant year-over-year decline of 88% [1] - The company's revenues decreased by 4.7% year-over-year to $983 million, primarily due to lower late fees and reduced merchant discount fees, although it slightly beat the consensus estimate by 0.8% [2] - Credit sales fell to $6.5 billion, down 3% year-over-year, reflecting moderated consumer spending and strategic credit tightening [2] - Average loans increased by 1% to $17.8 billion, supported by new partner growth and stabilizing consumer spending [2] - Total non-interest expenses rose by 14% to $574 million, driven by increased employee compensation and other expenses [2] Financial Performance - The delinquency rate increased to 6.4%, worsening by 10 basis points year-over-year, while the net loss rate rose to 7.8%, deteriorating by 90 basis points [3] - Pre-tax pre-provision earnings decreased by 22.7% year-over-year to $409 million [3] - As of September 30, 2024, cash and cash equivalents were $3.5 billion, up 33.3% from the previous year, while long-term debt declined by 25.3% to $1 billion [4] - Tangible book value increased by 12% year-over-year to $47.48 per share, but return on average equity contracted to 0.4%, down 2440 basis points year-over-year [4] Capital Deployment - The board approved a quarterly dividend of 21 cents, payable on December 13 to stockholders of record as of November 8, and the company repurchased shares worth $11 million [5] 2024 Guidance - Management anticipates average receivables to decline in the low single-digit range from 2023 levels, with expectations for average credit card and other loans to also decrease in low single digits [6] - Total revenues are projected to decline in low-to-mid single digits, with total non-interest expenses expected to follow a similar trend [7] - The net loss rate is guided to be in the low 8% range [7] Zacks Rank - Bread Financial currently holds a Zacks Rank 3 (Hold) [8]

Bread Financial Holdings, Inc. (NYSE:BFH) Q3 2024 Earnings Conference Call October 24, 2024 8:30 AM ET Company Participants Brian Vereb - Head, Investor Relations Ralph Andretta - President & Chief Executive Officer Perry Beberman - Executive Vice President & Chief Financial Officer Conference Call Participants Mihir Bhatia - Bank of America Sanjay Sakhrani - KBW Vincent Caintic - BTIG Jeff Adelson - Morgan Stanley Bill Carcache - Wolfe Research Securities David Rochester - Compass Point Research & Trading ...

For the quarter ended September 2024, Bread Financial Holdings (BFH) reported revenue of $983 million, down 4.7% over the same period last year. EPS came in at $1.84, compared to $3.46 in the year-ago quarter.The reported revenue represents a surprise of +0.77% over the Zacks Consensus Estimate of $975.46 million. With the consensus EPS estimate being $1.88, the EPS surprise was -2.13%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to ...

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Bread Financial Holdings (BFH) came out with quarterly earnings of $1.84 per share, missing the Zacks Consensus Estimate of $1.88 per share. This compares to earnings of $3.46 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.13%. A quarter ago, it was expected that this manager of loyalty and rewards programs for retailers and others would post earnings of $1.60 per share when it actually produced earnings of $2.66, deliveri ...

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COLUMBUS, Ohio, Oct. 24, 2024 (GLOBE NEWSWIRE) -- Bread Financial Holdings, Inc.® (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, provided a performance update. The following tables present the Company’s net loss rate and delinquency rate for the periods indicated.  For themonth endedSeptember 30, 2024 For the three months endedSeptember 30, 2024 (dollars in millions)End-of-period credit card and other loans$17,933  $17,933 Ave ...

COLUMBUS, Ohio, Oct. 24, 2024 (GLOBE NEWSWIRE) -- Bread Financial Holdings, Inc.® (NYSE: BFH), a tech-forward financial services company that provides simple, flexible payment, lending and saving solutions, today announced its third quarter 2024 financial results. All earnings-related materials are now available at the company’s investor relations website, here. Bread Financial President and Chief Executive Officer Ralph Andretta and Chief Financial Officer Perry Beberman will host a conference call at 8:30 ...