Bread Financial : Q1 2025 Results Earnings Realease

Published: 2025-04-24 06:53:09 ET BFH

Bread Financial reports first quarter 2025 results

COLUMBUS, Ohio, April 24, 2025 - Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions, today announced financial results for the first quarter ended March 31, 2025.

($ in millions,

except per share amounts)

Net income

Earnings per diluted share

First quarter 2025

Total company

Continuing operations

$138

$142

$2.78

$2.86

"Reconciliation of GAAP to Non-GAAP Financial Measures".

$18.2B

$970MM

12.0%

$48.92

1Q25 Average loans

1Q25 Revenue

Common equity

Tangible book value

tier 1 capital ratio

per common share(1)

(1) Represents a Non-GAAP financial measure. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures".

CEO COMMENTARY

"In the first quarter, we continued to demonstrate our financial resilience with net income of $138 million and by increasing our tangible book value per common share to $48.92. We advanced our ongoing efforts to optimize our capital structure and strengthen our balance sheet with the successful execution of a $400 million subordinated notes offering during the first quarter, increasing tier 2 capital, and the recent completion of our $150 million board-authorized share repurchase program. These actions and the strong capital and cash flow generation of our business create additional capital flexibility and opportunities to deliver further value to our shareholders.

"For the first quarter, credit sales grew 1% year-over-year, driven by higher general-purpose spending and overall transaction volume, as consumers are likely advancing purchases ahead of potential price increases, along with lower gas prices helping to bolster their discretionary purchasing power. The risk of disruption to the economy continues to grow as evidenced by the uncertainty reflected in lower consumer and small business confidence and sentiment. While our industry will benefit from the CFPB's late fee rule having been vacated, as well as from a reduced regulatory environment, risks associated with tariffs, trade policies, and inflation may adversely impact consumer strength. We will continue to monitor economic and consumer financial health closely and remain disciplined with our credit risk management.

"We are pleased with our new partner signings in the quarter, including today's card program announcement with Crypto.com, further diversifying our industry verticals. We also renewed multiple brand partners, including extending our long-term agreement with Academy Sports where we offer both our card and Bread Pay products.

"Looking ahead, we remain focused on responsible growth, disciplined capital allocation, and continued execution on our operational excellence efforts, while maintaining flexibility to adapt to changing fiscal and monetary policies, and the regulatory landscape. We are well-positioned to generate additional capital, deliver strong returns, and create sustainable, long-term value for our shareholders."

- Ralph Andretta, president and chief executive officer

Bread Financial | April 24, 2025

CFO COMMENTARY

"Our first quarter results reflect our resilient business model, strategic credit tightening actions, and ability to deliver solid results despite a challenging macroeconomic environment. During the quarter, credit sales grew 1% as consumer financial health remained relatively steady, reflected in our improving credit metrics. Income from continuing operations increased 5% as expenses decreased 1% year-over-year, driven by our enterprise- wide focus on driving operational excellence.

"Net interest margin improved sequentially to 18.1% following the seasonal trend of decreasing transactor balances from fourth quarter holiday spending. Net interest margin trends continue to be impacted by a lower average prime rate, a shift in mix toward co-brand products, and lower billed late fees, partially offset by our implementation of pricing changes.

"This quarter we continued to strengthen and optimize our balance sheet. We completed a $400 million subordinated notes offering, increasing our total risk-based capital ratio to 15.5%. In addition, in March we commenced our $150 million board-authorized share repurchase program, completing the program in April with 3.2 million total shares repurchased. We also repurchased $7 million in principal value of our convertible notes, leaving only $3 million remaining. Direct-to-consumer deposits increased 13% year-over- year to $7.9 billion at quarter-end. Our average direct-to- consumer deposits now represent 43% of total funding, up from 36% a year ago and approaching our targeted threshold of over 50%.

"In the first quarter of 2025, the net loss rate was at the lower end of our expectations, as we have started to observe favorable trends in our later-stage roll rates. As previously mentioned, the hurricane-related customer-friendly actions we took in October and November of 2024 are estimated to negatively impact second quarter of 2025 losses by approximately $13 million. Given the current macroeconomic uncertainty, we remain vigilant around our credit strategies, yet we remain cautiously optimistic for a gradual improvement in credit performance during the second half of 2025.

"Our improving credit results, partially offset by weaker economic scenarios, resulted in a reserve rate of 12.2% as of quarter-end 2025, a slight improvement year-over-year and in line with the third quarter of 2024. We continue to maintain prudent weightings on the economic scenarios in our credit reserve modeling given the wide range of potential macroeconomic outcomes.

"We are proud of the progress we have made to enhance our balance sheet and are confident in our ability to achieve solid financial results in 2025."

2025 full year outlook

"Our 2025 outlook assumed no late fee reduction related to the CFPB late fee rule, which has recently been vacated by a U.S. District Court.

Bread Financial | April 24, 2025

Key operating and financial metrics

Credit sales

Revenue

+1%

-2%

$6.0B

$6.1B

$991MM

$970MM

1Q24

1Q25

1Q24

1Q25

Pretax pre-provisionPPNRadjustedearnings (PPNR)(1) for unique items*

-3%

$509MM $493MM

1Q24 1Q25

Credit metrics

Delinquency rate

Net loss rate

Diluted EPS

Total company

Continuing ops.(2)

-30 bps

6.2% 5.9%

-30 bps

8.5% 8.2%

+3%

+5%

$2.70

$2.78

$2.73

$2.86

1Q24

1Q25

1Q24

1Q25

Continuing operations(2)

($ in millions, except per share amounts)

Total net interest and non-interest income ("Revenue") Net principal losses

Reserve release

Provision for credit losses

Total non-interest expenses

Income from continuing operations before income taxes Income from continuing operations

Weighted average shares outstanding - diluted

Income from continuing operations per diluted share

Pretax pre-provision earnings (PPNR)(1)

1Q24

1Q25

1Q24

1Q25

First quarter

2025

2024

% change

970

991

(2)

365

394

(7)

(69)

(73)

(4)

296

321

(8)

477

482

(1)

197

188

142

135

49.6

49.7

2.86

2.73

493

509

(3)

Bread Financial | April 24, 2025

First quarter 2025 compared with first quarter 2024 - continuing operations

Contacts

Investor Relations: Brian Vereb ([email protected])

Susan Haugen ([email protected])

Media Relations: Rachel Stultz ([email protected])

Bread Financial | April 24, 2025

Forward-looking statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as "believe," "expect," "anticipate," "estimate," "intend," "project," "plan," "likely," "may," "should" or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions.

We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, interest rates, labor market conditions, recessionary pressures or concerns over a prolonged economic slowdown, and the related impact on consumer spending behavior, payments, debt levels, savings rates and other behaviors; global political and public health events and conditions, including significant shifts in trade policy, such as changes to, or the imposition of, tariffs and/or trade barriers and any economic impacts, volatility, uncertainty and geopolitical instability resulting therefrom, as well as ongoing wars and military conflicts and natural disasters; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future federal and state legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax or other liability or adverse impacts arising out of or related to the spinoff of our former LoyaltyOne segment or the bankruptcy filings of Loyalty Ventures Inc. (LVI) and certain of its subsidiaries and subsequent litigation or other disputes. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Bread Financial | April 24, 2025

Non-GAAP financial measures

We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes Non-GAAP Financial Measures. Our calculations of Non-GAAP Financial Measures may differ from the calculations of similarly titled measures by other companies. In particular:

We believe the use of these Non-GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these Non-GAAP financial measures to the most directly comparable GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures".

Bread Financial | April 24, 2025

Conference call/webcast information

Bread Financial will host a conference call on Thursday, April 24, 2025, at 8:30 a.m. (Eastern Time) to discuss the company's first quarter results. The conference call will be available via the internet at investor.breadfinancial.com. There will be several slides accompanying the webcast. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary software. The recorded webcast will also be available on the company's website.

About Bread Financial®

Bread Financial® (NYSE: BFH) is a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions to millions of U.S. consumers. Our payment solutions, including Bread Financial general purpose credit cards and savings products, empower our customers and their passions for a better life. Additionally, we deliver growth for some of the most recognized brands in travel & entertainment, health & beauty, jewelry and specialty apparel through our private label and co-brand credit cards and pay-over-time products providing choice and value to our shared customers.

To learn more about Bread Financial, our global associates and our sustainability commitments, visit breadfinancial.comor follow us on Instagramand LinkedIn.

Bread Financial | April 24, 2025

BREAD FINANCIAL HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

Three months ended March 31,

2025

2024

Interest income

Interest and fees on loans

1,185

1,247

Interest on cash and investment securities

Total interest income

1,231

1,300

Interest expense

Interest on deposits

138

155

Interest on borrowings

Total interest expense

225

248

Net interest income

1,006

1,052

Non-interest income

Interchange revenue, net of retailer share arrangements

(83)

(92)

Other

Total non-interest income

(36)

(61)

Total net interest and non-interest income

970

991

Provision for credit losses

296

321

Total net interest and non-interest income, after provision for credit losses

674

670

Non-interest expenses

Employee compensation and benefits

215

213

Card and processing expenses

Information processing and communication

Marketing expenses

Depreciation and amortization

Other

Total non-interest expenses

477

482

Income from continuing operations before income taxes

197

188

Provision for income taxes

Income from continuing operations

142

135

Loss from discontinued operations, net of income taxes

(4)

(1)

Net income

138

134

Basic income per share

Income from continuing operations

2.89

2.74

Loss from discontinued operations

(0.08)

(0.03)

Net income per share

2.81

2.71

Diluted income per share

Income from continuing operations

2.86

2.73

Loss from discontinued operations

(0.08)

(0.03)

Net income per share

2.78

2.70

Weighted average common shares outstanding

Basic

49.0

49.5

Diluted

49.6

49.7

Pretax pre-provision earnings (PPNR)(1)

493

509

(1) Represents a Non-GAAP financial measure. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures".

Bread Financial | April 24, 2025

BREAD FINANCIAL HOLDINGS, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In millions)

March 31,

December 31,

2025

2024

ASSETS

Cash and cash equivalents

4,212

3,679

Credit card and other loans

Total credit card and other loans

17,815

18,896

Allowance for credit losses

(2,172)

(2,241)

Credit card and other loans, net

15,643

16,655

Investments

272

266

Property and equipment, net

133

142

Goodwill and intangible assets, net

738

746

Other assets

1,384

1,403

Total assets

22,382

22,891

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits

Direct-to-consumer (retail)

7,922

7,687

Wholesale and other

5,177

5,395

Total deposits

13,099

13,082

Debt issued by consolidated variable interest entities

3,835

4,558

Long-term and other debt

1,286

999

Other liabilities

1,094

1,201

Total liabilities

19,314

19,840

Total stockholders' equity

3,068

3,051

Total liabilities and stockholders' equity

22,382

22,891

Shares of common stock outstanding

47.6

49.1

Bread Financial | April 24, 2025

BREAD FINANCIAL HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Three months ended March 31,

2025

2024

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

138

134

Adjustments to reconcile net income to net cash provided by operating activities

Provision for credit losses

296

321

Depreciation and amortization

Deferred income taxes

(56)

Non-cash stock compensation

Amortization of deferred financing costs

Amortization of deferred origination costs

Change in other operating assets and liabilities

Change in other assets

(12)

(3)

Change in other liabilities

(109)

(23)

Other

Net cash provided by operating activities

393

447

CASH FLOWS FROM INVESTING ACTIVITIES

Change in credit card and other loans

697

746

Purchases of investments

(6)

(12)

Maturities of investments

Other, including capital expenditures

(5)

(17)

Net cash provided by investing activities

691

720

CASH FLOWS FROM FINANCING ACTIVITIES

Unsecured borrowings under debt agreements

400

300

Repayments/maturities of unsecured borrowings under debt agreements

(111)

(407)

Debt issued by consolidated variable interest entities

200

Repayments/maturities of debt issued by consolidated variable interest entities

(724)

(740)

Net (decrease) increase in deposits

(293)

Payment of deferred financing costs

(8)

(4)

Dividends paid

(12)

(11)

Repurchase of common stock

(103)

(11)

Other

(21)

(9)

Net cash used in financing activities

(562)

(975)

Change in cash, cash equivalents and restricted cash

522

192

Cash, cash equivalents and restricted cash at beginning of period

3,714

3,616

Cash, cash equivalents and restricted cash at end of period

4,236

3,808

Note: The unaudited Consolidated Statements of Cash Flows are presented reflecting the combined cash flows from continuing and discontinued operations.

Bread Financial | April 24, 2025

Disclaimer

Bread Financial Holdings Inc. published this content on April 24, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 24, 2025 at 10:52 UTC.