Bread Financial (BFH) investor relations material

Quarterly performance and credit trends

• End-of-period loans are projected just under $18.9 billion, with credit stats outperforming expectations and a stable CECL reserve rate anticipated.

• Non-interest income saw a $30 million step-down due to higher RSA payments and renewals, but overall trends remain stable.

• Consumer spend remains resilient, with loan growth over 6% in August and favorable comps benefiting September.

• Credit improvement is driven by disciplined underwriting, favorable risk mix, and resilient consumer behavior despite inflationary pressures.

• Net charge-off guidance was lowered to 7.0%-7.1% for the year, with confidence in reaching a 6% target if macro conditions remain stable.

Strategic initiatives and bank charter developments

• Recent approval to merge two bank charters enhances funding flexibility, scale, and operational efficiency.

• The single-bank structure allows broader use of funding products and may yield cost of funds benefits over time.

• Conversion to a bank holding company is under consideration as a defensive regulatory measure, with potential ratings benefits.

• Preferred share issuances optimize the capital stack, reducing the CET1 target and unlocking balance sheet efficiency.

Growth drivers and partnership strategy

• Loan growth is supported by steady payment rates, new partner signings, and deepening existing relationships.

• Bread Pay installment loans, focused on large brand partners, contributed a third of loan growth last quarter.

• The partnership pipeline is strong, with disciplined pursuit of mid-sized programs and high renewal success rates.

• Early renewals, such as with Signet, align incentives and secure better economics for both parties.

• Diversification into new verticals and co-brand programs is driving growth and expanding the customer base.