Slide 1: First quarter 2024 results
Bread Financial First quarter 2024 results April 25, 2024 Ralph Andretta | President & CEO Perry Beberman | EVP & CFO © 2 0 2 2 B r e a d F i n a n c i a l |
Slide 2: Forward-looking statements; Non-GAAP financial measures
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 3: First quarter 2024 highlights
First quarter 2024 highlights Demonstrated financial resilience • Net income of $134 million and Earnings per diluted share of $2.70 • Tangible book value per share of $45.96 increased 20% year-over-year • Shares repurchased totaled $11 million, representing 293,000 shares at an average price per sh
Slide 4: Capital allocation
Capital allocation Improve capital metrics Reduce debt levels Drive shareholder value $1.5 billion tangible common equity build since 2020 Paid down $1.8 billion since 2020 ~$31 increase in TBVPS since 2020 Total company tangible common equity / tangible Parent level debt outstanding Tangible book v
Slide 5: 2024 focus areas
2024 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 en
Slide 6: First quarter 2024 financial highlights
First quarter 2024 financial highlights Continuing operations $1.0 billion $135 million $2.73 Revenue Income from continuing operations Diluted EPS Year-over-year comparisons • Credit sales of $6.0 billion decreased 18%, reflecting the sale of the BJ's Wholesale Club portfolio in late February 2023,
Slide 7: Summary P&L results
Summary P&L results Continuing operations ($ in millions, except per share) 1Q24 1Q23 $ Change % Change Total interest income $ 1,300 $ 1,335 $ (35) (3) Total interest expense 248 218 30 14 Net interest income 1,052 1,117 (65) (6) PPNR growth* Total non-interest income (61) 172 (233) nm ($ in millio
Slide 8: Net interest margin
Net interest margin Interest-earning asset yields & mix Interest-bearing liability costs & 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% 5.4% 25.6% 26.0% 5.0% 5.2% 25.0% 24.8% 4.6% 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: 8.5% 5.7% 5.7% 6.2% 5.5% 5.5% 6.5% 8.5% 6.3% 8.0% 8.0% 5-year avg rate: ~5.0% 6.3% 5-year avg rate: ~6.0% 7.0% 6.9% (1) 4.4% 5.6% 4.1% 4.8% 5.0% 5-year low rate: 3.3% 5-year low rate: 3.9% 1Q22 2Q2
Slide 10: Strengthened financial resilience
Strengthened financial resilience Bread Financial is positioned to perform well through a full economic cycle Strong corporate Strengthened balance sheet and funding mix governance Capital ratios Increased mix of Loan loss reserve Reduced debt Proactive risk significantly direct-to-consumer material
Slide 11: 2024 financial outlook
2024 financial outlook Our outlook now includes the forecasted impacts of the CFPB late fee rule and assumes a May 14th effective date* Full year 2024 Full year 2023 actuals Commentary outlook • Based on our current economic outlook, CFPB late fee rule impacts, ongoing strategic credit tightening ac
Slide 12: Appendix
Appendix © 2 0 2 2 B r e a d F i n a n c i a l |
Slide 13: Total non-interest expenses
Total non-interest expenses Continuing operations 1Q24 vs. 1Q23 change in non-interest expenses Total non-interest expenses ($ in millions) ($ in millions) -3% -12% Employee comp. & benefits: $(7) $544 $482 Card and processing: -28% $(34) Info. processing & comm.: $(1) —% Marketing: -28% $(11) Depre
Slide 14: Summary financial highlights
Summary financial highlights Continuing operations 1Q24 vs 1Q24 vs 1Q24 1Q23 4Q23 ($ in millions) 1Q23 4Q23 Credit sales $ 6,030 $ 7,373 (18%) $ 7,802 (23%) Average credit card and other loans $ 18,546 $ 19,405 (4%) $ 18,267 2% End-of-period credit card and other loans $ 18,185 $ 18,060 1% $ 19,333
Slide 15: Summary financial highlights - trending
Summary financial highlights - trending Continuing operations ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Credit sales $ 6,887 $ 8,140 $ 7,689 $ 10,166 $ 7,373 $ 7,057 $ 6,668 $ 7,802 $ 6,030 Year-over-year change 14% 10% 4% 16% 7% (13%) (13%) (23%) (18%) Average credit card and oth
Slide 16: Summary P&L results - trending
Summary P&L results - trending Continuing operations ($ in millions, except per share) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Total interest income $ 1,068 $ 1,073 $ 1,218 $ 1,325 $ 1,335 $ 1,197 $ 1,301 $ 1,312 $ 1,300 Total interest expense 79 95 133 195 218 205 219 237 248 Net interest inco
Slide 17: Net interest margin
Net interest margin 1Q24 ($ in millions) Average balance Interest income / expense Average yield / rate Cash and investment securities $ 4,135 $ 53 5.1% Credit card and other loans 18,546 1,247 27.0% Total interest-earning assets 22,681 1,300 23.1% Direct-to-consumer (Retail) 6,739 81 4.9% Wholesale
Slide 18: Net income and diluted EPS components
Net income and diluted EPS components ($ in millions, except per share amounts) 1Q24 1Q23 $ Change % Change Income from continuing operations, net of taxes $ 135 $ 455 $ (320) (70) (Loss) income from discontinued operations, net of taxes (1) — (1) nm Net income $ 134 $ 455 $ (321) (71) Net income pe
Slide 19: Capital and liquidity
Capital and liquidity As of March 31, 2024: • Total company liquidity of $7.1 billion including all undrawn credit facilities and conduits at the banks; parent liquidity of $0.9 billion consisting of cash plus revolver capacity • Total company common equity tier 1 capital ratio of 12.6%, up 80 basis
Slide 20: Reconciliation of GAAP to non-GAAP financial measures
Reconciliation of GAAP to non-GAAP financial measures ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Pretax pre-provision earnings (PPNR) Income (loss) before income taxes $ 302 $ 16 $ 189 $ (207) $ 638 $ 86 $ 225 $ 19 $ 188 Provision for credit losses 193 404 304 692 107 336 304 482 3
Slide 21: Credit quality trends
Credit quality trends Delinquency rates 15-year peak rate(1): 6.5% 5.7% 6.5% 5.5% 5.5% 6.3% 6.2% 15-year avg rate: ~5.0% 5.7% 4.1% 4.7% 3.8% 3.8% 3.9% 4.3% 4.4% 4.4% 3.3% 15-year low rate: 3.3% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Net loss rates (1) 15-year
Slide 22: 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