Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Q3 2024 Earnings Presentation
25 slides from Bread Financial's earnings presentation, Oct 24, 2024
Slide 1: Third quarter 2024 results
Bread Financial Third quarter 2024 results October 24, 2024 © 2 0 2 2 B r e a d F i n a n c i a l |
Slide 2: Key highlights
Third quarter 2024 Demonstrated financial resilience and opportunistic capital allocation • Net income of $2 million and Earnings per diluted share of $0.05 Key ◦ Adjusted net income(1) of $93 million and adjusted diluted EPS(1) of $1.83 exclude the $91 million post-tax impact from the premium paid
Slide 3: Capital allocation
Capital allocation Improve capital metrics Reduce debt levels Drive shareholder value CET1 ratio increased 270 bps over the last three years 103% double leverage ratio, achieving <115% target ~$16 increase in TBVPS over the last three years Common equity tier 1 capital ratio⁽¹⁾ Parent level debt out
Slide 4: Diversified product and partner mix
Diversified product and partner mix Product diversification Partner diversification End-of-period loans Credit sales End-of-period loans Credit sales 2% 1% 2% 4% 4% 6% 5% 52% 4% 4% 35% 4% 4% 5% 3% 6% 7% 13% 32% 59% 16% 43% 22% 19% 24% 24% 3Q24 3Q24 3Q24 3Q24 Private label Co-brand Proprietary Bread
Slide 5: Focus areas
Focus areas Responsible Manage Accelerate digital Operational growth macroeconomic and technology excellence Scale and diversify and regulatory capabilities Accelerate continuous product offerings to align environment Drive our digital-first improvement gains to with the changing strategy to enhance
Slide 6: Third quarter 2024 financial highlights
Third quarter 2024 financial highlights Continuing operations(1) Year-over-year comparisons • Credit sales of $6.5 billion decreased 3%, reflecting moderated consumer spending and ongoing strategic credit Revenue tightening, partially offset by new partner growth. $1 billion • Average loans of $17.8
Slide 7: Summary P&L results
Summary P&L results Continuing operations ($ in millions) 3Q24 3Q23 $ change % change YTD '24 YTD '23 $ change % change PPNR excluding gain on portfolio Total interest income $ 1,277 $ 1,301 $ (24) (2) $ 3,806 $ 3,832 $ (26) (1) sale and impact from repurchased Total interest expense 240 219 21 9 72
Slide 8: Net interest margin
Net interest margin Interest-earning asset yields and mix Interest-bearing liability costs and funding mix Loan yield Avg. earning asset yield Net interest margin Cost of total interest-bearing liabilities Cost of deposits 28.6% 27.7% 27.4% 27.2% 27.0% 26.6% 26.1% 26.4% 5.4% 5.4% 5.4% 26.0% 5.0% 5.2
Slide 9: Credit quality and allowance
Credit quality and allowance Delinquency rates Net loss rates 5-year peak rate: 6.5% 5-year peak rate: 8.6% 5.7% 6.5% 5.5% 5.5% 6.4% 8.5% 8.6% 6.3% 6.2% 6.0% 8.0% 8.0% 7.8% 5.7% 5-year avg rate: ~5.1% 7.0% 6.9% 6.3% 5-year avg rate: ~6.4% 5.0% 5-year low rate: 3.3% 5-year low rate: 3.9% 3Q22 4Q22 1Q
Slide 10: 2024 financial outlook
2024 financial outlook Our outlook assumes no impact from the CFPB late fee rule given uncertainty surrounding the timing and outcome of ongoing litigation.(1) Full year 2023 actuals Full year 2024 outlook Commentary • Based on our current economic outlook, strategic credit tightening actions, highe
Slide 11: Appendix
Appendix © 2 0 2 2 ©2024 Bread Financial 11 B r e a d F i n a n c i a l |
Slide 12: Total non-interest expenses
Total non-interest expenses Total non-interest expenses excluding impact from Continuing operations repurchased Convertible Notes⁽¹⁾ ($ in millions) 3Q24 vs. 3Q23 change in non-interest expenses -9% $1,576 ($ in millions) $1,429 Employee comp. and benefits: $18 9% Card and processing: -26% $(27) -5%
Slide 13: Financial targets
Financial targets Near term Build on position of strength Execute CFPB late fee rule mitigation strategy Medium term Sustainable, responsible growth Low- to mid-single-digit loan growth Long term Deliver value Mid- to high-single-digit loan growth Reduce double leverage ratio to <115% Build total ri
Slide 14: Summary financial highlights
Summary financial highlights Continuing operations 3Q24 vs 3Q24 vs YTD '24 vs 3Q24 3Q23 2Q24 YTD '24 YTD '23 ($ in millions) 3Q23 2Q24 YTD '23 Credit sales $ 6,464 $ 6,668 (3%) $ 6,570 (2%) $ 19,064 $ 21,098 (10%) Average credit card and other loans $ 17,766 $ 17,540 1% $ 17,872 (1%) $ 18,060 $ 18,1
Slide 15: Summary financial highlights – trending
Summary financial highlights – trending Continuing operations ($ in millions) 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 YTD '23 YTD '24 Credit sales $ 7,689 $ 10,166 $ 7,373 $ 7,057 $ 6,668 $ 7,802 $ 6,030 $ 6,570 $ 6,464 $ 21,098 $ 19,064 Year-over-year change 4% 16% 7% (13%) (13%) (23%) (18%) (
Slide 16: Summary P&L results – trending
Summary P&L results – trending Continuing operations ($ in millions) 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 YTD '23 YTD '24 Total interest income $ 1,218 $ 1,325 $ 1,335 $ 1,197 $ 1,301 $ 1,312 $ 1,300 $ 1,228 $ 1,277 $ 3,832 $ 3,806 Total interest expense 133 195 218 205 219 237 248 241 240 6
Slide 17: Net interest margin
Net interest margin 3Q24 YTD '24 Interest income / Average yield / Interest income / Average yield / ($ in millions) Average balance Average balance expense rate expense rate Cash and investment securities $ 4,208 $ 53 5.1% $ 4,174 $ 161 5.1% Credit card and other loans 17,766 1,224 27.4% 18,060 3,6
Slide 18: Capital and liquidity
Capital and liquidity As of September 30, 2024: • Total company liquidity of $7.6 billion, including all undrawn credit facilities and conduits at the banks; parent liquidity of $1.1 billion consisting of cash plus revolver capacity • Total company common equity tier 1 capital ratio of 13.3%, up 40
Slide 19: Credit quality trends
Credit quality trends Delinquency rates 15-year peak rate: 6.5% 5.7% 6.5% 6.4% 5.5% 5.5% 6.3% 6.2% 6.0% 15-year avg rate: ~5.0% 5.7% 4.1% 3.8% 3.8% 3.9% 4.4% 4.4% 3.3% 15-year low rate: 3.3% 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Net loss rates 15-year peak r
Slide 20: Definition of terms
Definition of terms Note (1) Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over t
Slide 21: Definition of terms
Definition of terms Capital and liquidity (1) Common equity tier 1 capital ratio: Common equity tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders'
Slide 22: Forward-looking statements
Forward-looking statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be iden
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures We prepare our audited Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes Non-GAAP Financial Measures. Our calculations of Non-GAAP
Slide 24: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures ($ in millions, except per share amounts) 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 YTD '23 YTD '24 Income (loss) from continuing operations, net of taxes $ 134 $ (134) $ 455 $ 64 $ 173 $ 45 $ 135 $ 133 $ 3 $ 693 $ 272 Income (loss) from disco
Slide 25: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures ($ in millions) 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 YTD '23 YTD '24 Pretax pre-provision earnings (PPNR) Income (loss) before income taxes $ 189 $ (207) $ 638 $ 86 $ 225 $ 19 $ 188 $ 180 $ 40 $ 950 $ 408 Provision for credit losses 304 6
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