Summary of Bread Financial (BFH) 2025 Conference Call Company Overview - **Company**: Bread Financial (BFH) - **Date of Conference**: June 11, 2025 Key Industry Insights - **Consumer Spending Trends**: Positive trends observed in consumer spending and credit sales, with expectations for an increase in second quarter compared to the first quarter [5][6][10] - **Impact of Natural Disasters**: Anticipated $13 million impact on the non-performing loan (NCL) rate due to hurricane-related accommodations for affected consumers [6][10] - **Credit Quality**: Year-over-year improvement in credit quality, with a noted decrease in the NCL loss rate by 83 basis points in May [10][12] Financial Performance - **Guidance for Full Year**: Confidence in achieving the low end of the guidance at 8% for the year, contingent on June data and tariff resolutions [11][12] - **Bond Tender Offer**: Successful cash tender offer for $150 million of senior notes, with strong demand exceeding $500 million [14][15] - **Capital Management**: Focus on maintaining liquidity and capital levels while being opportunistic with buybacks and debt management [16][60][61] Strategic Transformation - **Company Evolution**: Significant transformation over the past four years, focusing on simplifying operations and enhancing financial discipline [20][21][22] - **Partnership Model**: Emphasis on building strong relationships with retail partners to drive co-branding opportunities and improve customer engagement [24][27] - **Credit Underwriting Improvements**: Shift in credit mix from subprime to higher quality, with subprime now at low 40% of the portfolio [30][31] Competitive Landscape - **Buy Now Pay Later (BNPL) Impact**: BNPL competition is acknowledged, but it primarily affects lower credit tiers, with Bread Financial focusing on prime and near-prime customers [28][29] - **Regulatory Environment**: Recent favorable rulings regarding late fees and pricing changes are expected to provide a tailwind to net interest margin (NIM) and revenues [46][50] Future Outlook - **Strategic Priorities**: Focus on operational excellence, optimizing the balance sheet, and enhancing technology capabilities to drive growth and efficiency [68][70] - **Long-term Goals**: Aim for a return on tangible common equity (ROTCE) target of over 20% through disciplined capital management and growth strategies [68][70] Additional Considerations - **Student Loan Impact**: Monitoring of consumers with student loans shows stable performance, with no significant uptick in delinquencies despite the resumption of payments [39][40][41] - **Market Conditions**: Caution regarding macroeconomic conditions and their potential impact on credit quality and consumer behavior [35][36] This summary encapsulates the key points discussed during the conference call, highlighting Bread Financial's current performance, strategic direction, and outlook in the context of the broader financial services industry.

Core Insights - Bread Financial Holdings, Inc. reported a performance update highlighting a decrease in net loss rate and delinquency rate year-over-year [1] Financial Performance - As of May 31, 2025, the end-of-period credit card and other loans stood at $17,702 million, a slight decrease from $17,847 million in the same period of 2024, reflecting a year-over-year change of -1% [1] - The net principal losses for May 2025 were $120 million, down from $133 million in May 2024, resulting in a net loss rate of 8.0%, compared to 8.8% a year earlier [1] - The delinquency rate as of May 31, 2025, was 5.7%, a decrease from 5.9% in May 2024, with 30 days + delinquencies totaling $926 million, down from $976 million [1] Company Overview - Bread Financial is a tech-forward financial services company that offers personalized payment, lending, and saving solutions to millions of U.S. consumers [2] - The company provides general purpose credit cards and savings products, aiming to empower customers and enhance their lifestyles [2] - Bread Financial also supports growth for recognized brands in various sectors through private label and co-brand credit cards [2]

Core Points - Bread Financial Holdings, Inc. announced a cash tender offer for its 9.750% Senior Notes due 2029, with approximately $536,786,000 validly tendered by the Early Participation Date [1][3] - The company plans to accept up to $150,000,000 in aggregate principal amount of the Notes, resulting in a Total Consideration of $1,071.25 for each $1,000 principal amount of Notes accepted [1][5] - The Tender Offer includes an early participation amount of $50.00 per $1,000 principal amount of Notes for those who tendered by the Early Participation Date [3][5] Tender Offer Details - The total outstanding principal amount of the 9.750% Senior Notes is $900,000,000, with $536,786,000 tendered as of the Early Participation Date [2] - The expected total consideration for the accepted Notes includes the early participation amount and accrued interest [3][5] - The company anticipates settlement of the accepted Notes on June 9, 2025, subject to the conditions set forth in the Offer to Purchase [7] Proration and Acceptance - Due to the Tender Cap being exceeded, the company will accept Notes on a prorated basis, with an expected proration factor of approximately 77.538% for those tendered at the Clearing Premium [7] - Notes tendered at a Bid Price resulting in a Bid Premium exceeding the Clearing Premium will not be accepted [7] Dealer Managers - J.P. Morgan Securities LLC is the sole lead dealer manager for the tender offer, with several co-dealer managers assisting in the process [8]

Core Viewpoint - Bread Financial Holdings, Inc. is actively participating in the Morgan Stanley US Financials Conference, highlighting its commitment to engaging with investors and stakeholders in the financial services sector [1]. Company Overview - Bread Financial is a tech-forward financial services company that offers personalized payment, lending, and saving solutions to millions of U.S. consumers [3]. - The company provides various payment solutions, including general purpose credit cards and savings products, aimed at empowering customers and enhancing their quality of life [3]. - Bread Financial also supports growth for well-known brands in sectors such as travel & entertainment, health & beauty, jewelry, and specialty apparel through private label and co-brand credit cards [3]. Event Participation - The Chief Financial Officer of Bread Financial, Perry Beberman, will participate in a fireside chat at the Morgan Stanley US Financials Conference on June 11 at 1:45 p.m. ET, which will be broadcast live [2]. - A replay of the webcast will be available for 90 days after the event, ensuring accessibility for interested parties [2].

Core Points - Bread Financial Holdings, Inc. has initiated a cash tender offer to purchase up to $150 million of its 9.750% Senior Notes maturing in March 2029 [1] - The tender offer will expire on June 20, 2025, with an early participation deadline on June 4, 2025 [2] Tender Offer Details - The total consideration for each $1,000 principal amount of Notes will be determined through a modified "Dutch Auction" procedure, with an early participation amount of $50 for those who tender before the early participation deadline [3][4] - Holders can specify a minimum total consideration (Bid Price) they are willing to accept, which must be within a specified range of $1,040 to $1,080 [4] - The expected final payment date for accepted Notes is June 25, 2025 [3] Participation and Withdrawal - Holders may withdraw their tendered Notes until the withdrawal date of June 4, 2025 [7][8] - The Company reserves the right to amend, extend, or terminate the tender offer at its discretion [9] Company Overview - Bread Financial is a tech-forward financial services company providing personalized payment, lending, and saving solutions to U.S. consumers [15]

Business Performance & Outlook - Strong business development activities and pipeline with balance and diversification of portfolio and products[9] - Continued investment in Bread to scale for growth in 2022[9] - Credit sales improvement offset by impact of non-renewal[9] - Business activity continues to gain momentum[9] Financial Performance & Outlook - The company expects year-end receivables to be in line with year-end 2020[10] - Credit sales are expected to be up double-digits in 2021[10] - LoyaltyOne full year revenue growth is expected in 2021[10] - Total revenue is expected to be down low-single-digits in 2021, compared to $4521 million in 2020[10] - Total expenses are expected to be flat, compared to $2861 million in 2020, including accelerated digital investment and an increase in marketing spend[10] - The company expects net loss rate in the low 5% range, compared to 6.6% in 2020[10] Strategic Initiatives - Spin of LoyaltyOne remains on track for 4Q21[9]

Core Insights - Bread Financial Holdings, Inc. reported a performance update highlighting a decrease in average credit card and other loans by 2% year-over-year, from $18,006 million in April 2024 to $17,712 million in April 2025 [1] - The net loss rate improved from 8.6% in April 2024 to 7.8% in April 2025, indicating better credit performance [1] - The delinquency rate also decreased from 6.0% in April 2024 to 5.7% in April 2025, reflecting an overall improvement in loan quality [1] Financial Performance - End-of-period credit card and other loans stood at $17,721 million as of April 30, 2025, compared to $17,891 million a year earlier [1] - Net principal losses decreased from $127 million in April 2024 to $114 million in April 2025 [1] - The company experienced a temporary freeze on delinquency progression due to hurricanes Helene and Milton, which affected the net principal losses and loss rate in the subsequent quarter [1] Company Overview - Bread Financial is a tech-forward financial services company that offers personalized payment, lending, and saving solutions to millions of U.S. consumers [2] - The company provides general purpose credit cards and savings products, aiming to empower customers and enhance their financial well-being [2] - Bread Financial also partners with recognized brands in various sectors, including travel, entertainment, health, beauty, jewelry, and specialty apparel, through private label and co-brand credit cards [2]

Core Insights - Bread Financial released its 2024 Sustainability Report, emphasizing its commitment to environmental stewardship, social progress, and governance [1][2] Group 1: Operational Excellence - In 2024, the company made significant strides in operational excellence, focusing on improving processes and driving efficiency across the enterprise [5] - The company began to mature its Enterprise Risk Management Framework and established an AI Council to enhance its operational capabilities [5] Group 2: Customer Empowerment - For the 19th consecutive year, Bread Financial was certified as a Center of Excellence by BenchmarkPortal for its customer service, reflecting its commitment to a customer-oriented culture [5] - The company expanded its mobile app to create best-in-class experiences and award-winning products [5] Group 3: Associate Engagement - Bread Financial improved career development tools and expanded options for virtual health care, enhancing the associate experience [5] - The company provided an annual "free money" deposit into each associate's 401(k), regardless of individual contributions, and received Great Place to Work Certification in the U.S. and India [5] Group 4: Environmental Protection - The company set greenhouse gas (GHG) emissions reduction targets to be met by 2030 and developed a sustainable IT framework [5] - Bread Financial issued nearly 1.5 million cards made from sustainable plastic and prioritized digitalization to enhance efficiency and reduce paper usage [5] Group 5: Community Engagement - The company increased associate donations and participation in its annual Giving Campaign, with total donations reaching $3 million after matching [5] - Associates recorded over 10,000 volunteer hours, and the company improved its measurement process for charitable donations, which exceeded $9 million in 2024 [5]

Group 1 - Banks have raised interest rates to record levels and added new monthly fees on credit cards, and are now reluctant to reverse these changes despite the Consumer Financial Protection Bureau (CFPB) rule being vacated [1] - Synchrony and Bread Financial, major players in branded credit card issuance, have no plans to roll back the higher rates implemented previously, indicating a shift in their revenue strategy [2] - The CFPB's proposed regulation aimed to limit credit card late fees, which was estimated to save families $10 billion annually, but instead led to higher rates and fees for consumers [2] Group 2 - Retail credit card interest rates reached a record high average of 30.5% last year and have remained close to those levels this year, indicating a significant profit margin for credit card companies [3] - Both Synchrony and Bread Financial exceeded first-quarter profit expectations, leading analysts to raise their earnings estimates for the year despite concerns about a potential U.S. economic slowdown [3]

Core Insights - Bread Financial is investing $3 million over three years to enhance mental health support for children in military families, in collaboration with the Bob Woodruff Foundation [1][2] - The initiative aims to address mental health challenges faced by military-connected children, which are exacerbated by frequent relocations and service-related stressors [2][4] - The investment will fund local mental health service providers to improve access to high-quality care for these children and their families [2][8] Company Overview - Bread Financial is a tech-forward financial services company that offers personalized payment, lending, and saving solutions to millions of U.S. consumers [5] - The company has a history of strategic investments aimed at strengthening communities, particularly in supporting military families [2][4] Partnership Details - The partnership with the Bob Woodruff Foundation will utilize the investment to support local mental health service providers through grants [2][8] - More than 70% of the Foundation's Got Your 6 Network partners reported caring for families with children needing mental health services, but only 13% felt they could meet the full demand [2] Program Focus - The funding will support direct clinical mental health care, training for clinicians, and proven programs that promote overall wellbeing and social connection for military-connected children [8]