Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Q4 2024 Earnings Presentation
26 slides from Bread Financial's earnings presentation, Jan 30, 2025
Slide 1: Fourth quarter and full year 2024 results
Fourth quarter and full year 2024 results January 30, 2025 © 2 0 2 2 B r e a d F i n a n c i a l |
Slide 2: 2024 achievements
2024 achievements Delivered responsible growth Achieved full year 2024 • Launched new programs with Hard Rock International, HP, and Saks Fifth Avenue • 9 out of 10 largest programs are secured through at least 2028 financial targets • Maintained stable credit risk distribution despite a challenging
Slide 3: Key highlights
Demonstrated financial resilience and opportunistic capital allocation Fourth quarter 2024 • Repurchased $44 million in principal amount of our convertible notes, leaving $10 million outstanding • Net income of $7 million and earnings per diluted share of $0.14 Key ◦ Adjusted income from continuing
Slide 4: Capital allocation
Capital allocation Improve capital metrics Reduce debt levels Drive shareholder value CET1 ratio increased 210 bps over the last three years 105% double leverage ratio, achieving <115% target ~$19 increase in TBVPS over the last three years Common equity tier 1 capital ratio⁽¹⁾ Parent level debt out
Slide 5: Full year 2024 financial highlights
Full year 2024 financial highlights Continuing operations(1) Year-over-year comparisons • Credit sales of $27.0 billion decreased 7%, reflecting moderated consumer spending and strategic credit tightening, partially offset Revenue by new partner growth. $3.8 billion • Average loans of $18.1 billion
Slide 6: Fourth quarter 2024 financial highlights
Fourth quarter 2024 financial highlights Continuing operations(1) Year-over-year comparisons • Credit sales of $7.9 billion increased 1%, primarily reflecting new partner growth and stronger holiday sales. Revenue • Average loans of $18.2 billion decreased 1%, primarily driven by lower full year cre
Slide 7: Summary P&L results
Summary P&L results Continuing operations ($ in millions) 4Q24 4Q23 $ change % change 2024 2023 $ change % change PPNR excluding gain on portfolio Total interest income $ 1,219 $ 1,312 $ (93) (7) $ 5,024 $ 5,145 $ (121) (2) sale and impact from repurchased Total interest expense 231 237 (6) (3) 960
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% 26.6% 27.0% 26.0% 26.1% 26.4% 25.7% 24.8% 5.4% 5.4% 5.4% 5.
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% 5.9% 8.0% 8.0% 8.0% 7.8% 5-year avg rate: ~5.1% 7.0% 6.9% 6.3% 5-year avg rate: ~6.5% 5-year low rate: 3.3% 5-year low rate: 3.9% 4Q22 1Q23 2Q
Slide 10: 2025 financial outlook
2025 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 2024 actuals Full year 2025 outlook Commentary • Based on our current economic outlook, strategic credit tightening actions, antic
Slide 11: Building on our position of strength
Building on our position of strength 2025 focus areas Responsible Manage to the Disciplined Operational growth macroeconomic capital allocation excellence Scale diversified product and regulatory and risk Accelerate continuous suite enabling growth and environment management improvement initiatives
Slide 12: Appendix
Appendix © 2 0 2 2 ©2025 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 excluding impact from Continuing operations repurchased Convertible Notes⁽¹⁾ ($ in millions) 4Q24 vs. 4Q23 change in non-interest expenses -7% ($ in millions) $2,092 $1,953 Employee comp. and benefits: $22 10% Card and processing: -4% $(3) +1%
Slide 14: Diversified product and partner mix
Diversified product and partner mix Product diversification Partner diversification End-of-period loans Credit sales End-of-period loans Credit sales 1% 2% 4% 5% 3% 3% 4% 4% 3% 36% 48% 4% 4% 5% 3% 6% 9% 13% 27% 59% 16% 47% 22% 18% 25% 29% 4Q24 4Q24 4Q24 4Q24 Private label Co-brand Proprietary Bread
Slide 15: Summary financial highlights
Summary financial highlights Continuing operations 4Q24 vs 4Q24 vs 2024 vs 4Q24 4Q23 3Q24 2024 2023 ($ in millions) 4Q23 3Q24 2023 Credit sales $ 7,898 $ 7,802 1% $ 6,464 22% $ 26,962 $ 28,900 (7%) Average credit card and other loans $ 18,156 $ 18,267 (1%) $ 17,766 2% $ 18,084 $ 18,216 (1%) End-of-p
Slide 16: Summary financial highlights – trending
Summary financial highlights – trending Continuing operations ($ in millions) 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 Credit sales $ 10,166 $ 7,373 $ 7,057 $ 6,668 $ 7,802 $ 6,030 $ 6,570 $ 6,464 $ 7,898 $ 28,900 $ 26,962 Year-over-year change 16% 7% (13%) (13%) (23%) (18%) (7%) (3%)
Slide 17: Summary P&L results – trending
Summary P&L results – trending Continuing operations ($ in millions) 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 Total interest income $ 1,325 $ 1,335 $ 1,197 $ 1,301 $ 1,312 $ 1,300 $ 1,228 $ 1,277 $ 1,219 $ 5,145 $ 5,024 Total interest expense 195 218 205 219 237 248 241 240 231 879 960
Slide 18: Net interest margin
Net interest margin 4Q24 2024 Interest income / Average yield / Interest income / Average yield / ($ in millions) Average balance Average balance expense rate expense rate Cash and investment securities $ 3,927 $ 44 4.4% $ 4,116 $ 204 5.0% Credit card and other loans 18,156 1,175 25.7% 18,084 4,820
Slide 19: Capital and liquidity
Capital and liquidity As of December 31, 2024: • Total company liquidity of $6.6 billion, including all undrawn credit facilities and conduits at the banks; parent liquidity of $1.0 billion consisting of cash plus revolver capacity • Total company common equity tier 1 capital ratio of 12.4%, up 20 b
Slide 20: Credit quality trends
Credit quality trends Delinquency rates 15-year peak rate: 6.5% 5.7% 5.7% 6.5% 6.4% 5.5% 5.5% 6.3% 6.2% 6.0% 5.9% 15-year avg rate: ~4.9% 3.8% 3.8% 3.9% 4.4% 4.1% 15-year low rate: 3.3% 3.3% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Net loss rates 15-year peak r
Slide 21: Additional footnotes and definitions of terms
Additional footnotes and definitions of terms Note (1) Beginning in 2024, we revised the calculation of average balances to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, average balances represent the average balance at the beginning and end of e
Slide 22: Additional footnotes and definitions of terms
Additional footnotes and definitions of terms Capital and liquidity (1) Common equity tier 1 capital ratio: Common equity tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets. In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and ther
Slide 23: Forward-looking statements
Forward-looking statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be iden
Slide 24: Non-GAAP financial measures
Non-GAAP financial measures We prepare our audited Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included herein constitutes Non-GAAP Financial Measures. Our calculations of Non-GAAP
Slide 25: Reconciliation of GAAP to Non-GAAP financial measures
Reconciliation of GAAP to Non-GAAP financial measures ($ in millions, except per share amounts) 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 Adjusted total non-interest expenses Total non-interest expenses $ 548 $ 544 $ 530 $ 502 $ 516 $ 482 $ 469 $ 574 $ 536 $ 2,092 $ 2,060 Impact from re
Slide 26: Reconciliation of GAAP to Non-GAAP financial measures
Reconciliation of GAAP to Non-GAAP financial measures ($ in millions) 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 Pretax pre-provision earnings (PPNR) (Loss) income before income taxes $ (207) $ 638 $ 86 $ 225 $ 19 $ 188 $ 180 $ 40 $ (27) $ 968 $ 381 Provision for credit losses 692 107 33
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