BFH.NYSEBread Financial Holdings, INC
10-K: Bread Financial Holdings Reports 2024 Results: Focus on Balance Sheet Strength and Strategic Growth
Bread Financial Holdings, Inc. reports its 2024 financial results, highlighting balance sheet improvements and strategic initiatives in a challenging macroeconomic environment.
Summary
- Bread Financial Holdings, Inc. reported its financial results for the fiscal year ended December 31, 2024.
- The company holds $17.4 billion in credit card and other loans with approximately 38 million open accounts.
- The average balance for accounts with outstanding balances was $975.
- Parent Company debt levels have been reduced by approximately 50% since December 31, 2021.
- Retail deposits grew 19% from $6.5 billion as of December 31, 2023, to $7.7 billion as of December 31, 2024.
- Average retail deposits represented 43% of total funding sources as of December 31, 2024.
- The company's delinquency rate was 5.9% as of December 31, 2024, and the net principal loss rate was 8.2% for 2024.
- The company expects 2025 Average credit card and other loans to be relatively flat to 2024.
- Total net interest and non-interest income, excluding any gains on portfolio sales, is anticipated to be up in the low-single digits on a percentage point basis from 2024.
- The company expects a Net principal loss rate ranging from 8.0% to 8.2% for 2025.
- The company expects its full year normalized effective tax rate to be in the range of 25% to 26% for 2025.
Positives
- The company has significantly strengthened its capital levels and balance sheet.
- The company has refinanced and extended its near-term debt maturities.
- The company has diversified its funding mix.
- The company has increased its tangible book value per common share by a compound annual growth rate of approximately 19% since December 31, 2021.
- The company is focused on creating an inclusive culture that attracts and values diversity of thought, experience, background, skills and ideas, driving our associates sense of belonging.
- The company is dedicated to empowering our customers and optimizing opportunities to create value for all our stakeholders, while advancing long-term financial and reputational goals.
Negatives
- Credit sales were down 7% compared to 2023, reflecting self-moderated consumer spending and strategic credit tightening.
- Average credit card and other loans decreased 1% while End-of-period credit card and other loans were down 2%.
- Net interest margin decreased from 19.5% in 2023 to 18.3% in 2024.
- Total net interest and non-interest income was down 11% versus 2023.
- The company expects a Net principal loss rate ranging from 8.0% to 8.2% for 2025.
Risks
- Weakness and instability in the macroeconomic environment could have a material adverse effect on our business, results of operations and financial condition.
- The loans we make are unsecured, and we may not be able to ultimately collect from customers that default on their loans.
- A significant percentage of our Total net interest and non-interest income, or revenue, is generated through our relationships with a limited number of partners, and a decrease in business from, or the loss of, any of these partners could cause a significant drop in our revenue.
- Our business is heavily concentrated in U.S. consumer credit, and therefore our results are more susceptible to fluctuations in that market than a more diversified company.
- Our risk management policies and procedures may not be effective, and the models we rely on may not be accurate or may be misinterpreted.
- Fraudulent activity associated with our products and services could negatively impact our operating results, brand and reputation and cause the use of our products and services to decrease and our fraud losses to increase.
- The amount of our Allowance for credit losses could adversely affect our business and may prove to be insufficient to cover actual losses on our loans.
- Adverse financial market conditions or our inability to effectively manage our funding and liquidity risk could have a material adverse effect on our business, liquidity and ability to meet our debt service requirements and other obligations.
- The CFPB has issued a final rule regarding credit card late fees, which represents a significant departure from the rules that are currently in effect.
- Litigation and other actions and disputes could subject us to significant fines, penalties, judgments and/or requirements resulting in significantly increased expenses, damage to our reputation and/or a material adverse effect on our business.
- Our Banks are subject to extensive federal and state regulation that may restrict their ability to make cash available to us and may require us to make capital contributions to them.
- We rely on third-party vendors to provide various products and services that are important to our operations, and our business could be adversely impacted if our vendors fail to fulfill their obligations.
- Failures in data protection, cybersecurity and information security, as well as business interruptions to our data centers and other systems, could critically impair our products, services and ability to conduct business.
- The development and use of AI present risks and challenges that may adversely impact our business or customers.
- The LoyaltyOne spinoff could result in substantial tax liability to us and our stockholders, and more generally, we may be adversely affected by LVIs ongoing bankruptcy proceedings or pending or future litigation or other disputes involving or relating to LVI.
Key Dates
| Date | Description |
|---|---|
| 1933 | Reference to Section 27A of the Securities Act of 1933, as amended. |
| 1934 | Reference to Section 21E of the Securities Exchange Act of 1934, as amended. |
| 1977 | Reference to the Community Reinvestment Act of 1977 (CRA). |
| 1995 | BenchmarkPortal founded by Purdue University. |
| 1996 | Reference to Second Amended and Restated Pooling and Servicing Agreement, dated as of January 17, 1996. |
| 1999 | Reference to Second Amended and Restated Pooling and Servicing Agreement, dated as of September 17, 1999. |
| 2001 | Reference to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 1, 2001. |
| 2001 | Reference to Collateral Series Supplement to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 21, 2001. |
| 2001 | Reference to Transfer and Servicing Agreement, dated as of August 1, 2001. |
| 2001 | Reference to Receivables Purchase Agreement, dated as of September 28, 2001. |
| 2001 | Reference to Master Indenture, dated as of August 1, 2001. |
| 2001 | Reference to Amended and Restated Trust Agreement, dated as of August 1, 2001. |
| 2001 | Reference to Administration Agreement, dated as of August 1, 2001. |
| 2002 | Reference to First Amendment to Collateral Series Supplement, dated as of November 7, 2002. |
| 2003 | Reference to Omnibus Amendment, dated as of March 31, 2003. |
| 2003 | Reference to Supplemental Indenture No. 1, dated as of August 13, 2003. |
| 2004 | Reference to Second Amendment to Collateral Series Supplement, dated as of July 6, 2016. |
| 2004 | Reference to Second Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of May 19, 2004. |
| 2005 | Reference to Third Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of March 30, 2005. |
| 2005 | Reference to Fourth Amendment to the Transfer and Servicing Agreement, dated as of March 30, 2005. |
| 2006 | Reference to Bread Financial Holdings, Inc. Non-Employee Director Deferred Compensation Plan. |
| 2007 | Reference to Fourth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of June 13, 2007. |
| 2007 | Reference to Fifth Amendment to the Transfer and Servicing Agreement, dated as of June 13, 2007. |
| 2007 | Reference to Sixth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of October 26, 2007. |
| 2007 | Reference to Seventh Amendment to the Transfer and Servicing Agreement, dated as of October 26, 2007. |
| 2008 | Reference to Sixth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of May 27, 2008. |
| 2008 | Reference to Seventh Amendment to Transfer and Servicing Agreement, dated as of June 28, 2010. |
| 2008 | Reference to Receivables Purchase Agreement, dated as of September 29, 2008. |
| 2008 | Reference to Transfer and Servicing Agreement, dated as of September 29, 2008. |
| 2008 | Reference to Master Indenture, dated as of September 29, 2008. |
| 2008 | Reference to Amended and Restated Trust Agreement, dated as of August 1, 2001. |
| 2008 | Reference to Receivables Purchase Agreement, dated as of September 29, 2008. |
| 2008 | Reference to Transfer and Servicing Agreement, dated as of September 29, 2008. |
| 2008 | Reference to Master Indenture, dated as of September 29, 2008. |
| 2009 | Reference to Delinquency and Net loss rates peaked in 2009 during the Great Recession. |
| 2009 | Reference to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). |
| 2010 | Reference to Bread Financial Holdings, Inc. 2010 Omnibus Incentive Plan. |
| 2010 | Reference to First Amendment to Receivables Purchase Agreement, dated as of June 4, 2010. |
| 2010 | Reference to Supplemental Agreement to Receivables Purchase Agreement, dated as of August 9, 2010. |
| 2010 | Reference to Seventh Amendment to Transfer and Servicing Agreement, dated as of June 28, 2010. |
| 2010 | Reference to Supplemental Agreement to Transfer and Servicing Agreement, dated as of August 9, 2010. |
| 2010 | Reference to Supplemental Indenture No. 4, dated as of June 28, 2010. |
| 2010 | Reference to Supplemental Agreement to Receivables Purchase Agreement, dated as of August 9, 2010. |
| 2010 | Reference to Bread Financial Holdings, Inc. 2010 Omnibus Incentive Plan. |
| 2011 | Reference to Eighth Amendment to Transfer and Servicing Agreement, dated as of June 15, 2011. |
| 2011 | Reference to Second Amendment to Receivables Purchase Agreement, dated as of November 9, 2011. |
| 2011 | Reference to Ninth Amendment to Transfer and Servicing Agreement, dated as of November 9, 2011. |
| 2011 | Reference to Supplemental Indenture No. 5, dated as of February 20, 2013. |
| 2011 | Reference to Eighth Amendment to Transfer and Servicing Agreement, dated as of June 15, 2011. |
| 2011 | Reference to Ninth Amendment to Transfer and Servicing Agreement, dated as of November 9, 2011. |
| 2012 | Reference to transition of credit card processing services to strategic outsourcing providers in 2022. |
| 2012 | Reference to Supplemental Indenture No. 1, dated as of August 17, 2012. |
| 2013 | Reference to Supplemental Indenture No. 5, dated as of February 20, 2013. |
| 2015 | Reference to Bread Financial Holdings, Inc. 2015 Omnibus Incentive Plan. |
| 2015 | Reference to Bread Financial Holdings, Inc. Amended and Restated 2015 Employee Stock Purchase Plan, effective March 23, 2022. |
| 2016 | Reference to Third Amendment to Receivables Purchase Agreement, dated as of July 6, 2016. |
| 2016 | Reference to Tenth Amendment to Transfer and Servicing Agreement, dated as of July 6, 2016. |
| 2016 | Reference to Supplemental Indenture No. 6 to Master Indenture, dated as of July 6, 2016. |
| 2016 | Reference to Asset Representations Review Agreement, dated as of July 6, 2016. |
| 2016 | Reference to Tenth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of December 1, 2016. |
| 2017 | Reference to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of February 28, 2014. |
| 2017 | Reference to First Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of July 10, 2017. |
| 2017 | Reference to Second Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of December 1, 2017. |
| 2017 | Reference to Third Amendment to the Amended and Restated Pooling and Servicing Agreement, dated as of October 26, 2007. |
| 2017 | Reference to Bread Financial Associate Confidentiality Agreement. |
| 2018 | Reference to Eleventh Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 16, 2018. |
| 2018 | Reference to Fourth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of August 31, 2018. |
| 2019 | Reference to the sale of former Epsilon segment in 2019. |
| 2019 | Reference to Third Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of May 3, 2018. |
| 2019 | Reference to Fourth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of August 31, 2018. |
| 2020 | Reference to the CECL accounting standard became effective for us on January 1, 2020. |
| 2020 | Reference to Fourth Amendment to Receivables Purchase Agreement, dated as of June 11, 2020. |
| 2020 | Reference to Supplemental Indenture No. 7 to Master Indenture, dated as of June 11, 2020. |
| 2020 | Reference to Fifth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of February 1, 2019. |
| 2020 | Reference to Sixth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of June 11, 2020. |
| 2020 | Reference to the COVID-19 pandemic. |
| 2021 | Reference to the spinoff of former LoyaltyOne segment in November 2021. |
| 2021 | Reference to the annual indexation of the reserve requirement exemption amount and the low reserve tranche for the years 2021-2025. |
| 2021 | Reference to Seventh Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of September 10, 2020. |
| 2021 | Reference to Agreement of Resignation, Appointment and Acceptance, dated as of May 25, 2021. |
| 2021 | Reference to Succession Agreement, dated as of June 18, 2021. |
| 2021 | Reference to the spinoff of our former LoyaltyOne segment in November 2021. |
| 2022 | Reference to name change from Alliance Data Systems Corporation to Bread Financial Holdings, Inc. in March 2022. |
| 2022 | Reference to launch of branded Bread Cashback American Express Credit Card in 2022. |
| 2022 | Reference to completion of transition of credit card processing services to Fiserv in 2022. |
| 2022 | Reference to a final rule issued by the Federal Reserve, OCC, and FDIC, which became effective in May 2022. |
| 2022 | Reference to the CCPA/CPRA which became effective on January 1, 2023. |
| 2022 | Reference to the transition of our credit card processing services to strategic outsourcing providers that we completed in 2022. |
| 2022 | Reference to the SEC has also adopted rules on Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure. |
| 2022 | Reference to the FDIC in 2022 reverted to the FDIC in 2022. |
| 2022 | Reference to CCBs total assets then exceeded $10 billion for four consecutive quarters as of September 30, 2022. |
| 2023 | Reference to introduction of Bread Rewards American Express Credit Card in the fourth quarter of 2023. |
| 2023 | Reference to sale of the BJs portfolio, which closed in late February 2023. |
| 2023 | Reference to U.S. federal banking regulators proposed new rules in July 2023, commonly referred to as the Basel III Endgame or B3E. |
| 2023 | Reference to the lifting of the moratorium on federal student loan payments in October 2023. |
| 2023 | Reference to the Federal Banking Agencies issued a final rule overhauling the process and substantive tests used by the agencies to assess a banks record of meeting the credit needs of its community in October 2023. |
| 2023 | Reference to the District Court for the Northern District of Texas enjoined the Federal Banking Agencies from enforcing the final rule in March 2024. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 | Reference to the FDIC updated its regulations that implement Section 29 of the FDIA in December 2020. |
| 2023 | Reference to the FDIC issued a proposed rule in the third quarter of 2024. |
| 2023 | Reference to the FDIC issued a consent order in late November 2023. |
| 2023 |
Keywords
financial results, credit cards, retail deposits, net interest margin, delinquency rate, capital ratios, Bread Financial, loan portfolio, CFPB, regulation
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