Summary of Bread Financial Conference Call Company Overview - **Company**: Bread Financial - **CFO**: Perry Beberman, with over 30 years of experience in financial services, including 17 years at Bank of America [1][2] Industry Insights - **Consumer Health**: The consumer has shown resilience despite economic challenges, with inflation rising approximately 30% post-pandemic. Real wage growth has outpaced inflation in 8 out of the last 9 quarters, with recent figures showing 3.5% wage growth against 3% inflation [7][12] - **Consumer Behavior**: Consumers are becoming more "choiceful," opting for lower-priced alternatives rather than premium products. This trend is evident in retail, where consumers are adjusting their purchasing decisions based on price sensitivity [8][21] - **Credit Sales**: Credit sales have remained strong through October and early November, although there is caution regarding early November trends due to potential holiday purchasing patterns [8][11] Key Financial Metrics - **Delinquency and Loss Rates**: The company expects a gradual improvement in delinquency trends, with a target loss rate of 6% through the cycle. The current reserve rate stands at approximately 11.7% [20][28] - **Loan Growth**: Loan growth has been slightly negative, but the company anticipates a return to low to mid-single-digit growth rates by 2026, contingent on macroeconomic conditions and consumer health [38][104] Strategic Initiatives - **Partnerships**: The company is focused on expanding its partnerships, particularly in the home vertical, with new signings expected to drive loan growth. The pipeline for new business remains robust, with a preference for smaller, manageable portfolios [47][49] - **Co-brand vs. Private Label**: There is a strategic shift towards co-brand offerings, which are expected to increase as a percentage of total loans. This shift is aimed at capturing a higher-end customer base and improving overall returns [54][58] Market Dynamics - **Competitive Landscape**: The market remains competitive, with the company emphasizing its unique partnership model and disciplined approach to capital management. The company is not pursuing aggressive acquisitions but is open to opportunities that align with its strategic goals [77][117] - **Buy Now, Pay Later (BNPL)**: Bread Financial has been cautious in the BNPL space, focusing on sustainable lending practices rather than competing with irrational market players. The company aims to offer a full suite of products to its brand partners [78][79] Technology and Innovation - **Tech Stack**: The company has made significant investments in its technology platform, which has helped secure partnerships with sophisticated clients like Crypto.com. Continuous improvements in technology are expected to enhance operational efficiency and product offerings [87][90] Consumer Cohorts - **Monitoring Trends**: The company is closely monitoring various consumer segments, including recent graduates and low-FICO individuals, to identify potential risks or opportunities. Currently, there are no significant signs of distress within the consumer base [96][97] Conclusion - Bread Financial is positioned for gradual growth, with a focus on maintaining strong consumer relationships, expanding partnerships, and leveraging technology to enhance its offerings. The company remains cautious yet optimistic about future performance, particularly as it navigates the evolving economic landscape [118][119]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a GAAP net income of approximately $700,000 or $0.01 per share, and distributable earnings of approximately $1 million or $0.02 per share [11][4] - Net interest income for Q3 was $5.1 million, down from $7 million in Q2, primarily due to a decline in the average outstanding unpaid principal balance (UPB) of the portfolio and the reversal of certain accrued interest [12][11] - Total operating expenses decreased slightly to $3.1 million in Q3 from $3.2 million in Q2, mainly due to lower fees paid to the manager [12] Business Line Data and Key Metrics Changes - The loan portfolio consisted of 51 floating-rate loans with an aggregate UPB of approximately $840 million, with a weighted average floating rate of SOFR plus 355 basis points [17] - The weighted average risk rating remained flat at 3.5, with 46% of loans rated 3 or better, down from 63% in the previous quarter [17][18] Market Data and Key Metrics Changes - The multifamily sector showed stable fundamentals with modest rent growth and strong occupancy rates, supported by a slowdown in new supply [6] - Year-to-date issuance in the CRECLO market exceeded $25 billion, indicating healthy liquidity and investor confidence [6] Company Strategy and Development Direction - The company aims to redeploy capital into its core lending strategy focused on middle-market multifamily properties, emphasizing active asset management and resolving legacy positions efficiently [10] - The recent financing agreement with J.P. Morgan provides up to $450 million in aggregate advances, enhancing the company's flexibility to manage capital and pursue new financing opportunities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in having a good handle on the portfolio and identified known issues, with no expectation of further downgrades unless market conditions change [23] - The company remains focused on asset management and cash preservation while looking to add new assets as market conditions stabilize [24] Other Important Information - The company recorded a provision for credit losses of approximately $900,000 and charged off $200,000 against the allowance for an asset that went REO in Q3 [13] - The total equity at the end of the quarter was approximately $230 million, with a total book value of common stock at approximately $170 million or $3.25 per share [15] Q&A Session Summary Question: Have the bulk of the issues in the portfolio been identified? - Management feels confident in their understanding of the portfolio and believes they have identified all known issues, with no expectation of further downgrades unless market conditions change [23] Question: What is the focus for portfolio growth in the coming quarters? - The company plans to focus on asset management while also looking to add new assets, supported by the new financing [24] Question: What is the timing for expectations for REO sales? - REO sales timing is asset-specific, with potential for quick disposals or longer-term holds depending on the asset's condition and management improvements [25][26] Question: Is there any change in the relationship with ORC USA? - There is no change in the relationship, and the acquisition of Hilco is not expected to create any material conflict with LFT's business [31] Question: How does the value increase of REO affect shareholders? - Any increase in value after foreclosure would benefit the shareholders of LFT, as the company owns the REO [32] Question: Can the new financing with J.P. Morgan be used to retire existing debt? - The J.P. Morgan line provides flexibility and liquidity that can indirectly support the retirement of existing debt, but not directly [43]

Key Insight: Sallie Mae, the nation's preeminent private student lender, is teaming up with a private equity giant as it prepares for a future in which the federal government is retreating from the student loan industry. Supporting Data: KKR plans to buy more than $6 billion in student loans from Sallie Mae over the next three years. Expert Quote: "We're excited to work with KKR on this first-of-its-kind deal and look forward to growing this into a new business," said Sallie Mae CEO Jon Witter. America ...

Financial Data and Key Metrics Changes - Pagaya achieved consistent GAAP net income profitability, with an exit rate of over $120 million on an annual basis [5] - Network volume grew 19% year over year to a record $2.8 billion, with a 31% growth in personal loans [21] - Total revenue and other income rose 36% to a record $350 million, driven by fee revenue growth outpacing volume [21] - Adjusted EBITDA increased 91% to a record $107 million, with margins expanding 9 percentage points to 30.6% [22] - GAAP net income of $23 million represented a significant improvement from a net loss of $67 million in Q3 2024 [23] Business Line Data and Key Metrics Changes - Personal loans accounted for a significant portion of growth, with cumulative net losses trending approximately 35%-40% lower than peak levels in Q4 2021 [27] - Point of Sale (POS) volumes grew to about $1.4 billion, up from $1.2 billion last quarter [19] - Auto annualized volumes increased to $2.2 billion, up from $2 billion last quarter [19] - Multi-product partners represent only 30% of Pagaya's partners by number but contribute more than two-thirds of the volume [16] Market Data and Key Metrics Changes - Pagaya issued $1.8 billion in ABS programs across four transactions during the third quarter [29] - The company raised $500 million in corporate debt and expanded its corporate revolver with four new major banks [9] - The demand for Pagaya's assets remained consistent and robust, with strong investor interest across all asset classes [25] Company Strategy and Development Direction - The company is focusing on product-led growth and enhancing its product offerings to solve fundamental challenges facing lenders and consumers [6] - Pagaya aims to become a necessary utility for every lender in the U.S. by deepening partner engagement and expanding its funding network [8] - The strategy includes institutionalizing relationships with lending partners through long-term agreements and product agreements [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate through economic cycles, emphasizing a disciplined approach to underwriting and risk management [20] - The macroeconomic environment remains stable, with no significant deterioration in credit performance observed [56] - The company expects to maintain steady growth in personal loans and continued expansion in auto and POS products [32] Other Important Information - Pagaya introduced a new reporting line for Gains and Losses on Investments in Loans and Securities to enhance transparency [23] - The company ended the quarter with $265 million in cash and cash equivalents and $888 million in investments in loans and securities [30] Q&A Session Summary Question: Can you provide perspective on credit quality and borrowers' ability to manage their credits? - Management stated that credit performance is well within expectations, reflecting a balanced and conservative underwriting approach [34][35] Question: How has risk retention changed with successful ABS issuances? - The company noted robust demand for origination and a diversified funding strategy, with a current mix of approximately 60-40% between ABS and other structures [41] Question: Can you discuss the differences between Pagaya's B2B model and traditional B2C lenders? - Management highlighted that Pagaya's B2B model allows for more stable growth without the fluctuations associated with B2C marketing spend [44][49] Question: What is the outlook for potential new asset classes? - Management indicated that home improvement credit is gaining traction, but any expansion will be approached with strict criteria to ensure market stability and partner interest [60][63]

Financial Performance - Net investment income for the quarter ended September 30, 2025, was $353 million, or $038 per share[9] - Net realized and change in unrealized gains (losses) on investments for the quarter ended September 30, 2025, were $(79) million, or $(008) per share[9] - Net asset value per share as of the end of the quarter was $1466, a decrease of 06% compared to June 30, 2025[9] Investment Portfolio - New investment commitments made during the quarter totaled $138 million across 21 companies for an average new commitment of $66 million[9] - Gross fundings for the quarter, excluding revolver fundings, totaled $142 million[9] - The company received a net repayment of approximately $97 million from Merx Aviation Finance, LLC during the September quarter, reducing its exposure to approximately 33% of the total portfolio, at fair value[9] - The total investment portfolio was $318 billion, with 95% in direct origination and other investments, 3% in Merx Aviation, and 2% in acquired non-direct origination assets[10, 11] - Non-accrual investments represented 31% of the total portfolio at fair value[10] Portfolio Characteristics - The direct origination portfolio had a weighted average yield of 103% and a weighted average spread over SOFR of 559 bps[10] - First lien investments comprised 98% of the direct origination portfolio, which was 100% floating rate and 91% sponsored[10] - 93% of the direct origination portfolio was pursuant to co-investment order[10] Debt and Funding - Net leverage was 135x as of September 30, 2025[9] - Lender commitments under the Amended Senior Secured Facility decreased from $1660 billion to $1610 billion[8] - The weighted average annualized interest cost on total debt obligations was 6368%[32]

Core Viewpoint - Pagaya Technologies Ltd. (PGY) is expected to report strong third-quarter earnings, with revenues projected to increase significantly year-over-year, driven by growth in fee revenues and network volume [2][9]. Financial Performance - In Q2, PGY achieved total revenues and other income of $326 million, marking a 30% year-over-year increase, primarily due to higher fee revenues [2]. - The Zacks Consensus Estimate for Q3 revenues is $339 million, indicating a 31.9% year-over-year improvement [2][7]. - The earnings estimate for the upcoming quarter remains unchanged at 62 cents per share, reflecting a 40.9% growth from the same quarter last year [3][4]. Estimate Revision Trend - The earnings estimates for the current quarter have remained stable over the past 30 days, with no changes noted [4]. - The consensus estimate for network volume is $2.84 billion, which represents a 20.7% increase from the prior year [8]. Growth Strategy - Pagaya's growth strategy includes expanding product offerings, enhancing monetization of existing partnerships, and adding new enterprise lending partners, particularly large U.S. banks and auto captives [9][20]. - The company anticipates total revenues and other income for Q3 to be between $330 million and $350 million [9]. Valuation and Market Performance - PGY shares have outperformed the S&P 500 Index in Q3 but are considered expensive relative to the industry, with a trailing 12-month price/book (P/B) ratio of 4.19X compared to the industry average of 3.35X [13][16]. - While PGY trades at a premium to LendingClub, it is at a discount to LendingTree, which has a P/B of 5.97X [19]. Business Model Resilience - The company has diversified its business model beyond personal loans into auto lending and point-of-sale financing, which helps mitigate cyclical risks [20]. - Pagaya has established a network of over 135 institutional funding partners to support its asset-backed securities, enhancing liquidity and stability [21].

Core Insights - Upstart, an AI lending marketplace, has secured a forward-flow commitment from Castlelake, a global alternative investment firm, to purchase up to $1.5 billion in consumer loans [1] Company Summary - Upstart has entered into a new 12-month forward flow arrangement with Castlelake for the purchase of consumer loans originated through its platform [1]

Core Insights - Upstart, an AI lending marketplace, reported significant growth in consumer demand and credit strength in Q3, with a notable increase in loan originations [1][2][3] Company Performance - Loan originations increased by 80% year-over-year in Q3, reaching $2.9 billion [2] - Personal loan originations rose by 73% to $2.7 billion, auto loan originations increased fivefold to $128 million, and home loan originations grew fourfold to $72 million [3] - Over 2 million applications were submitted in Q3, marking a 30% increase from Q2 and the highest level in over three years [3] Consumer Credit Strength - Upstart's macro indicator showed a modest uptick in July and August, leading to a temporary reduction in approvals and an increase in interest rates, but overall consumer credit strength remains stable with signs of improvement [4][5] - The company perceives the broader economic backdrop for credit as favorable, with decelerating personal consumption growth indicating improving credit health [6] Automation and Process Improvements - 91% of loans enabled by Upstart in Q3 were fully automated, requiring no human intervention [6] - The company successfully automated the home equity line of credit (HELOC) approval process, increasing the automated approval rate from less than 1% in June to 20% by October [7][8]

Core Insights - Upstart's revenue for the December quarter is anticipated to decelerate more than Wall Street's previous expectations [1] Group 1 - The company is facing a slowdown in revenue growth for the upcoming quarter [1]

Core Insights - Upstart Holdings reported its first earnings miss in five consecutive quarters, with adjusted EPS of $0.23 against expectations of $0.43 and revenue of $277.11 million, missing the $285.22 million estimate [2][4][7] Financial Performance - Revenue increased by 71% year over year, with loan originations surging 80% to $2.9 billion [3][7] - The company returned to GAAP profitability with a net income of $31.81 million, compared to a loss of $6.76 million in Q3 2024 [3][6] - Adjusted EBITDA rose dramatically to $71.16 million from $1.41 million, representing a 26% margin [3][7] - Fee revenue grew 54% year over year to $259 million, with over 90% of loans processed fully automated [5] Cash Flow and Guidance - Operating cash flow turned negative at -$256.28 million, and free cash flow fell to -$270.58 million, indicating a significant weakness despite strong profitability metrics [6][10] - Management guided Q4 2025 revenue to approximately $288 million with adjusted EBITDA of $63 million and a contribution margin of 53% [6] Management Commentary - CEO Dave Girouard expressed optimism about the company's execution on its 2025 growth plan, emphasizing strong credit performance and the adaptability of its AI platform [8] - Management did not signal material concerns about demand or market conditions heading into the final quarter [8] Key Metrics - Adjusted EPS: $0.23 (down 47% from estimate) [7] - Revenue: $277.11 million (down 2.8% from estimate) [7] - Gross Profit: $258.54 million [7] - Operating Income: $23.71 million [7] - Loan Originations: $2.9 billion (up 80% year over year) [7]