[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20quarter%202025%20results) Bread Financial reported Q2 2025 net income of $139 million, improved credit quality, and executed significant capital allocation initiatives [Second Quarter 2025 Key Highlights](index=2&type=section&id=Second%20quarter%202025%20Key%20Highlights) Bread Financial reported Q2 2025 net income of $139 million, improved credit quality, and completed capital allocation programs Q2 2025 Key Financial Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Income | $139 million | +4% | | Diluted EPS | $2.93 | +11% | | Adjusted Net Income(1) | $149 million | +12% | | Adjusted Diluted EPS(1) | $3.14 | +18% | | Revenue | $0.9 billion | -1% | | Credit Sales | $6.8 billion | +4% | | Average Loans | $17.7 billion | -1% | | Delinquency Rate | 5.7% | -0.3 ppt | | Net Loss Rate | 7.9% | -0.7 ppt | - Completed a **$150 million** board-authorized share repurchase program, with **3.2 million shares** repurchased year-to-date[5](index=5&type=chunk) - Completed a **$150 million** tender offer for its 9.75% senior notes due 2029, resulting in **$13 million** in debt extinguishment costs[5](index=5&type=chunk)[11](index=11&type=chunk) - Renewed a long-term partnership with Caesars Entertainment and launched a new, fee-based credit card[5](index=5&type=chunk) - Direct-to-consumer deposits grew **12%** year-over-year to **$8.1 billion**, now representing **45%** of average total funding[5](index=5&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Financial%20Performance%20Analysis) Q2 2025 financial performance analysis covers P&L, net interest margin, funding, capital, liquidity, and credit quality metrics [Summary P&L Results](index=4&type=section&id=Summary%20P%26L%20results) For Q2 2025, revenue decreased by 1% year-over-year to $929 million, while net income increased by 4% to $139 million Q2 2025 vs Q2 2024 Profit & Loss Statement | ($ in millions) | 2Q25 | 2Q24 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $929 | $939 | -1% | | Provision for credit losses | $274 | $290 | -6% | | Total non-interest expenses | $481 | $469 | +3% | | Income before income taxes | $174 | $180 | -3% | | Net income | $139 | $133 | +4% | YTD 2025 vs YTD 2024 Profit & Loss Statement | ($ in millions) | YTD '25 | YTD '24 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1,899 | $1,929 | -2% | | Provision for credit losses | $570 | $611 | -7% | | Total non-interest expenses | $958 | $949 | +1% | | Net income | $280 | $269 | +4% | - Adjusted Pre-tax Pre-provision Net Revenue (PPNR) was **$458 million** in Q2 2025, a slight decrease of **1%** from **$465 million** in Q2 2024[12](index=12&type=chunk)[13](index=13&type=chunk) [Net Interest Margin](index=5&type=section&id=Net%20interest%20margin) The net interest margin for Q2 2025 was 17.7%, a slight decrease from 18.0% in Q2 2024, with direct-to-consumer deposits comprising 45% of average interest-bearing liabilities Key Margin and Yield Metrics | Metric | 2Q25 (%) | 2Q24 (%) | Change (ppt) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 17.7% | 18.0% | -0.3 ppt | | Loan Yield | 26.0% | 26.4% | -0.4 ppt | | Avg. Earning Asset Yield | 21.7% | 22.0% | -0.3 ppt | | Cost of Total Interest-Bearing Liabilities | 4.9% | 5.4% | -0.5 ppt | - The funding mix has evolved, with direct-to-consumer deposits increasing to **45%** of average interest-bearing liabilities in Q2 2025, up from **40%** in Q2 2024[16](index=16&type=chunk) [Funding, Capital, and Liquidity](index=6&type=section&id=Funding%2C%20capital%20and%20liquidity) The company maintained a robust capital and liquidity position in Q2 2025, with a CET1 ratio of 13.0% and stable total liquid resources of $7.7 billion Capital Ratios | Ratio | 2Q25 (%) | 2Q24 (%) | | :--- | :--- | :--- | | CET1 Capital Ratio | 13.0% | 13.8% | | Tier 1 Capital Ratio | 13.0% | 13.8% | | Total Risk-Based Capital Ratio | 16.5% | 15.1% | | TCE + Credit Reserve Rate(1) | 25.7% | 25.9% | - The CET1 ratio decreased from **13.8%** in Q2 2024 to **13.0%** in Q2 2025, primarily impacted by share repurchases (**-1.1%**) and repurchased debt (**-1.1%**), partially offset by net earnings (**+2.2%**)[19](index=19&type=chunk) - Total end-of-period liquid resources stood at **$7.7 billion**, representing **35.1%** of total assets[18](index=18&type=chunk) [Credit Quality and Allowance](index=7&type=section&id=Credit%20quality%20and%20allowance) Credit quality metrics improved year-over-year in Q2 2025, with the delinquency rate declining to 5.7% and the net loss rate decreasing to 7.9% Credit Quality Metrics | Metric | 2Q25 (%) | 2Q24 (%) | Change (ppt) | | :--- | :--- | :--- | :--- | | Delinquency Rate | 5.7% | 6.0% | -0.3 ppt | | Net Loss Rate | 7.9% | 8.6% | -0.7 ppt | Allowance for Credit Losses (ACL) | Metric | 2Q25 ($ in millions) | 2Q24 ($ in millions) | | :--- | :--- | :--- | | ACL Balance | $2,098 million | $2,172 million | | Reserve Rate | 11.9% | 12.2% | - The revolving credit risk distribution remained consistent, with **58%** of the portfolio having a VantageScore greater than 660, **27%** between 601-660, and **15%** at 600 or below[23](index=23&type=chunk) [2025 Financial Outlook](index=8&type=section&id=2025%20financial%20outlook) Bread Financial provided its full-year 2025 outlook, anticipating average loans to be flat to slightly down compared to 2024, with revenue relatively flat and an improved net loss rate [Full Year 2025 Guidance](index=8&type=section&id=Full%20Year%202025%20Guidance) The company projects flat to slightly down average loans for 2025, with flat revenue, targeted positive operating leverage, and an improved net loss rate between 7.8% and 7.9% Full Year 2025 Financial Outlook | Metric | Full Year 2024 Actuals ($ in millions) | Full Year 2025 Outlook | | :--- | :--- | :--- | | Average loans | $18,084 million | Flat to slightly down | | Revenue (excl. gain on sale) | $3,827 million | Flat | | Adjusted total non-interest expenses | $1,943 million | Positive operating leverage | | Net loss rate | 8.2% | 7.8% to 7.9% | [Appendix](index=9&type=section&id=Appendix) The appendix details strategic focus, comprehensive financial tables, and non-GAAP reconciliations for in-depth analysis [Strategic Focus and Portfolio Details](index=10&type=section&id=Strategic%20Focus%20and%20Portfolio%20Details) The appendix details the company's four strategic focus areas for 2025, explains the 3% YoY rise in non-interest expenses, and illustrates the loan portfolio's diversification - The company's 2025 strategic pillars are: Responsible growth, Managing the macroeconomic and regulatory environment, Disciplined capital allocation and risk management, and Operational excellence[29](index=29&type=chunk)[30](index=30&type=chunk) - Total non-interest expenses increased **3%** YoY in Q2 2025[33](index=33&type=chunk)[35](index=35&type=chunk) - The loan portfolio is diversified by product, with co-brand cards accounting for **54%** of credit sales and **55%** of end-of-period loans in Q2 2025[40](index=40&type=chunk) [Detailed Financial Tables](index=13&type=section&id=Detailed%20Financial%20Tables) This section provides extensive historical financial data, including summary financial highlights, quarterly trending data, detailed net interest margin calculations, and historical capital and credit quality trends - Provides a comprehensive summary of financial highlights for Q2'25, comparing YoY, QoQ, and YTD performance across sales, loans, deposits, returns, margins, capital, and credit rates[43](index=43&type=chunk) - Includes detailed quarterly trending data from Q2 2023 to Q2 2025 for P&L results, financial highlights, capital ratios, and credit quality, allowing for in-depth trend analysis[45](index=45&type=chunk)[47](index=47&type=chunk)[51](index=51&type=chunk) - A detailed table breaks down the components of the Q2 2025 Net Interest Margin, showing average balances, interest income/expense, and average yields for all interest-earning assets and interest-bearing liabilities[49](index=49&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=22&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP financial measures like Adjusted Net Income and PPNR, and provides detailed reconciliation tables to their most directly comparable GAAP measures for historical periods - Defines key non-GAAP metrics used by management to evaluate performance, including Adjusted Net Income (excluding debt repurchase impacts), PPNR, ROTCE, and Tangible Book Value per common share[65](index=65&type=chunk)[66](index=66&type=chunk) - Presents detailed tables reconciling GAAP to Non-GAAP financial measures, including Total non-interest expenses, Net income, EPS, and PPNR, for quarterly periods from Q2 2023 to Q2 2025[67](index=67&type=chunk)[69](index=69&type=chunk)

Core Insights - Bread Financial Holdings, Inc. reported its second quarter 2025 financial results, emphasizing its position as a tech-forward financial services company [1] - The company provides a range of payment, lending, and saving solutions tailored to U.S. consumers, enhancing customer experience and brand partnerships [3] Financial Performance - The financial results for the second quarter of 2025 were announced, with all related materials available on the investor relations website [1] - A conference call was scheduled to discuss these results, indicating a commitment to transparency and investor engagement [2] Company Overview - Bread Financial specializes in personalized financial solutions, including general purpose credit cards and savings products, aimed at improving customers' financial well-being [3] - The company collaborates with well-known brands across various sectors, including travel, entertainment, health, beauty, jewelry, and specialty apparel, through private label and co-brand credit card offerings [3]

Core Points - Bread Financial Holdings, Inc. has initiated cash tender offers to purchase up to $150 million of its Senior Notes and Subordinated Notes [1] - The tender offers are subject to specific sublimits for each series of notes, with a maximum of $100 million for the 2029 Notes and $50 million for the 2035 Notes [1] - The tender offers will expire on August 21, 2025, with an early participation deadline on August 6, 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 [3] - Holders who tender their notes before the early participation deadline will receive an additional $50 for each $1,000 principal amount [3][11] - The expected final payment date for accepted notes is August 26, 2025 [3] Participation and Bidding - Holders can specify a minimum bid price for their notes, which must be within a defined range and in increments of $1.25 [4] - The aggregate principal amount of notes accepted may be subject to proration if the total validly tendered exceeds the applicable sublimits [6] Withdrawal and Conditions - Notes can be withdrawn until the withdrawal date of August 6, 2025 [7] - The tender offers are subject to various conditions that may be waived or modified by the company [8] Management and Agents - J.P. Morgan Securities LLC is the lead dealer manager for the tender offers, with several co-dealer managers assisting [9] - D.F. King, Inc. serves as the information and tender agent for the offers [9]

Core Insights - Caesars Entertainment is launching a new premium credit card, the Caesars Rewards Prestige Visa Signature, in partnership with Bread Financial, aimed at enhancing customer experience and loyalty [1][2][3] Group 1: Credit Card Features - The Caesars Rewards Prestige Visa Signature credit card has a $149 annual fee and offers up to $450 in annual value through various perks [1][2] - Cardmembers can earn rewards on everyday purchases and unlock exclusive benefits in travel, entertainment, dining, and gaming [2][3] - The card includes a complimentary hotel night upon anniversary (up to $300), $50 Slot Play, and $100 Caesars dining credit [4] Group 2: Tier Credits and Bonuses - New cardholders can earn up to 25,000 additional Tier Credits in their first year, accelerating their progress in the Caesars Rewards loyalty program [2][5] - The card provides multiple opportunities for earning Tier Credits, including bonuses for spending outside Caesars Rewards destinations [5] Group 3: Company Background - Caesars Entertainment is the largest casino entertainment company in the U.S., operating under various brand names and offering a wide range of gaming and hospitality services [7] - The company focuses on enhancing guest value through its Caesars Rewards loyalty program and a commitment to operational excellence and technology leadership [7] Group 4: Partner Company Overview - Bread Financial is a tech-forward financial services company that provides personalized payment and lending solutions, enhancing customer experiences in various sectors [8]

Core Viewpoint - Bread Financial Holdings (BFH) is highlighted as a strong candidate for investors due to its consistent performance in beating earnings estimates and its positive outlook for future earnings reports [1]. Earnings Performance - The company has a solid track record of exceeding earnings estimates, with an average surprise of 30.22% over the last two quarters [2]. - For the last reported quarter, Bread Financial achieved earnings of $2.86 per share, surpassing the Zacks Consensus Estimate of $2.1 per share by 36.19% [3]. - In the previous quarter, the company was expected to earn $0.33 per share but delivered $0.41 per share, resulting in a surprise of 24.24% [3]. Earnings Estimates and Predictions - Recent estimates for Bread Financial have been trending upward, indicating a positive outlook for the company's earnings [5]. - The Zacks Earnings ESP (Expected Surprise Prediction) for Bread Financial is currently positive, suggesting a strong likelihood of an earnings beat [5][8]. - The company has an Earnings ESP of +1.98%, reflecting increased analyst optimism regarding its earnings prospects [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being more reflective of recent analyst revisions [7]. Upcoming Earnings Report - The next earnings report for Bread Financial is anticipated to be released on July 24, 2025 [8].

Core Insights - Bread Financial Holdings, Inc. is set to host a conference call on July 24, 2025, at 8:30 a.m. ET to discuss its second quarter 2025 results [1] - The company is recognized as a tech-forward financial services provider, offering personalized payment, lending, and saving solutions [3] Company Overview - Bread Financial provides payment solutions, including general purpose credit cards and savings products, aimed at enhancing customer experiences [3] - The company supports growth for well-known brands in various sectors such as travel & entertainment, health & beauty, jewelry, and specialty apparel through private label and co-brand credit cards [3] Conference Call Details - Participants can register in advance for the conference call, which will also feature accompanying slides [2] - The webcast will be archived on the company's investor relations website for future access [2]

Core Insights - The rising trend of bankruptcy filings among consumers with retail credit card debt is linked to record-high interest rates, which have reached an average of 30.45% as of September [2][3] - The proportion of bankruptcy filings that include retail credit card debt has increased at a faster rate than overall new filings, with a 12% rise in such cases compared to a 5.8% increase in total consumer bankruptcy filings between 2023 and 2024 [3] Industry Context - Retail credit cards typically have higher interest rates than traditional credit cards due to the lower credit scores of their holders, making them riskier for banks [1] - The increase in interest rates was influenced by banks anticipating regulatory changes regarding credit card late fees, which ultimately did not take effect, leading to sustained high rates [2] - The Consumer Bankers Association emphasized the role of retail credit cards in helping consumers manage expenses and build credit, while also highlighting the availability of various financial tools for consumers [4]

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]