Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Q2 2024 Earnings Presentation
24 slides from Bread Financial's earnings presentation, Jul 25, 2024
Slide 1: Second quarter 2024 results
Bread Financial Second quarter 2024 results July 25, 2024 © 2 0 2 2 B r e a d F i n a n c i a l |
Slide 2: Key highlights
Demonstrated financial resilience Second quarter 2024 • Net income of $133 million and Earnings per diluted share of $2.66 Adjusted diluted EPS (a non-GAAP financial measure) of $2.67, reflecting the anti-dilutive Key ◦ impact of our Capped Call transactions • Tangible book value per share of $48.89
Slide 3: Capital allocation
Capital allocation Improve capital metrics Reduce debt levels Drive shareholder value CET1 ratio increased 410 bps over the last three years 110% double leverage ratio, achieving <115% target ~$22 increase in TBVPS over the last three years Common equity tier 1 capital ratio⁽¹⁾ Parent level debt out
Slide 4: Focus areas
Focus areas Responsible Manage Accelerate digital Operational growth macroeconomic and technology excellence Scale and diversify and regulatory capabilities Accelerate continuous product offerings to align environment Drive our digital-first improvement gains to with the changing strategy to enhance
Slide 5: Net income and diluted EPS
Net income and diluted EPS ($ in millions, except per share amounts) 2Q24 2Q23 $ Change YTD '24 YTD '23 $ Change Income from continuing operations, net of taxes $ 133 $ 64 $ 69 $ 269 $ 519 $ (250) Income (loss) from discontinued operations, net of taxes — (16) 16 (1) (16) 15 Net income $ 133 $ 48 $
Slide 6: Financial highlights
Continuing operations* $0.9 $133 Second quarter 2024 billion $2.66 million Financial Revenue Net income Adj. diluted EPS(1) Year-over-year comparisons highlights* • Credit sales of $6.6 billion decreased 7%, reflecting moderating consumer spending and strategic credit tightening, partially offset by
Slide 7: Summary P&L results
Summary P&L results Continuing operations ($ in millions) 2Q24 2Q23 $ Change % Change YTD '24 YTD '23 $ Change % Change PPNR less gain on portfolio sale* Total interest income $ 1,228 $ 1,197 $ 31 3 $ 2,528 $ 2,531 $ (3) — ($ in millions) Total interest expense 241 205 36 18 489 422 67 16 Net intere
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% 27.2% 27.0% 26.6% 26.1% 26.4% 5.4% 5.4% 26.0% 5.0% 5.2% 25.0% 24.
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% 8.5% 8.6% 6.3% 6.2% 6.0% 8.0% 8.0% 5.7% 5-year avg rate: ~5.0% 7.0% 6.9% 6.3% 5-year avg rate: ~6.3% (1) 4.4% 5.6% 5.0% 5-year low rate: 3.3% 5-year low rate: 3.9% 2Q22 3Q2
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.* Full year 2024 Full year 2023 actuals Commentary outlook • Based on our current economic outlook, strategic credit tightening actions, higher
Slide 11: 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 12: Appendix
Appendix © 2 0 2 2 ©2024 Bread Financial 12 B r e a d F i n a n c i a l |
Slide 13: Total non-interest expenses
Total non-interest expenses Total non-interest expenses Continuing operations ($ in millions) 2Q24 vs. 2Q23 change in non-interest expenses -12% $1,075 ($ in millions) $949 Employee comp. and benefits: -2% $(3) -12% $530 $469 Card and processing: -33% $(39) Info. processing and comm.: $(2) -3% 2Q23
Slide 14: Summary financial highlights
Summary financial highlights Continuing operations 2Q24 vs 2Q24 vs YTD '24 vs 2Q24 2Q23 1Q24 YTD '24 YTD '23 ($ in millions) 2Q23 1Q24 YTD '23 Credit sales $ 6,570 $ 7,057 (7%) $ 6,030 9% $ 12,600 $ 14,430 (13%) Average credit card and other loans $ 17,872 $ 17,652 1% $ 18,546 (4%) $ 18,209 $ 18,528
Slide 15: Summary financial highlights – trending
Summary financial highlights – trending Continuing operations ($ in millions) 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 YTD '23 YTD '24 Credit sales $ 8,140 $ 7,689 $ 10,166 $ 7,373 $ 7,057 $ 6,668 $ 7,802 $ 6,030 $ 6,570 $ 14,430 $ 12,600 Year-over-year change 10% 4% 16% 7% (13%) (13%) (23%) (18
Slide 16: Summary P&L results – trending
Summary P&L results – trending Continuing operations ($ in millions) 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 YTD '23 YTD '24 Total interest income $ 1,073 $ 1,218 $ 1,325 $ 1,335 $ 1,197 $ 1,301 $ 1,312 $ 1,300 $ 1,228 $ 2,531 $ 2,528 Total interest expense 95 133 195 218 205 219 237 248 241 42
Slide 17: Summary P&L results – trending
Summary P&L results – trending ($ in millions, except per share amounts) 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 YTD '23 YTD '24 Income (loss) from continuing operations, net of taxes $ 12 $ 134 $ (134) $ 455 $ 64 $ 173 $ 45 $ 135 $ 133 $ 519 $ 269 Income (loss) from discontinued operations, ne
Slide 18: Net interest margin
Net interest margin 2Q24 YTD '24 Interest income / Average yield / Interest income / Average yield / ($ in millions) Average balance Average balance expense rate expense rate Cash and investment securities $ 4,178 $ 54 5.2% $ 4,157 $ 106 5.2% Credit card and other loans 17,872 1,174 26.4% 18,209 2,4
Slide 19: Capital and liquidity
Capital and liquidity As of June 30, 2024: • Total company liquidity of $7.8 billion including all undrawn credit facilities and conduits at the banks; parent liquidity of $1.1 billion consisting of cash plus revolver capacity • Total company common equity tier 1 capital ratio of 13.8%, up 170 basis
Slide 20: Credit quality trends
Credit quality trends Delinquency rates 15-year peak rate: 6.5% 5.7% 6.5% 5.5% 5.5% 6.3% 6.2% 6.0% 15-year avg rate: ~5.0% 5.7% 4.7% 3.8% 3.8% 3.9% 4.4% 4.4% 4.1% 15-year low rate: 3.3% 3.3% 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Net loss rates 15-year peak r
Slide 21: Definition of terms
Definition of terms Note (1) Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of each month, averaged over t
Slide 22: Forward-looking statements
Forward-looking statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be iden
Slide 23: Non-GAAP financial measures
Non-GAAP financial measures We prepare our audited Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes non-GAAP financial measures. Our calculations of non-GAAP
Slide 24: Reconciliation of GAAP to non-GAAP financial measures
Reconciliation of GAAP to non-GAAP financial measures ($ in millions) 2Q21 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 YTD '23 YTD '24 Adjusted weighted average shares outstanding – diluted Weighted average shares outstanding – diluted 49.9 49.9 50.0 50.1 50.3 50.1 49.6 49.7 50.2 50.2 49.9 Less: An
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