Exhibit 99.1
Financial Summary Third Quarter 2022 Year-to-Date 2022 Net Income ($ millions) $134 $357 Earnings per Diluted Share $2.69 $7.15 Business Highlights “We are pleased to announce a new long-term credit card relationship with World Market, a specialty retailer of home furniture, decor, apparel, and international food products. Bread Financial draws on its decades of experience with specialty retailers like World Market to provide best-in-class payment, lending, and loyalty solutions, and expand the options for World Market customers,” said Ralph Andretta, president and chief executive officer of Bread Financial. “During the third quarter, we also announced a partnership with Marqeta that will further enable our in-store virtual payment solutions for Bread Financial. The Marqeta-supported product allows customers to provision a one-time-use virtual card, without a mobile app download, to check out in-store at point of sale with Bread Financial’s loan products. Through our relationship with Marqeta, Bread Pay now delivers SplitPay and installment loan products both online and in-store. “We continued to maintain a strong renewal rate as we renewed our relationship with Buckle, a valued brand partner, in the third quarter. Buckle operates over 440 retail stores in 42 states and has grown to become one of America's favorite denim destinations. We remain committed to providing Buckle’s guests with lending and loyalty products that meet their evolving needs. “We successfully completed the AAA portfolio conversion in October, achieving our target of greater than $2 billion in loan balances from new partner signings in 2022. Now, we are driving engagement with AAA’s more than 56 million U.S. members through our enhanced cardholder value propositions. “We remain focused on driving sustainable, profitable growth leveraging our technology enhancements and business development success,” Andretta noted. 1 Bread Financial Reports Third Quarter 2022 Results CEO Commentary “Our third quarter results reflect additional progress toward our 2022 financial targets, with double-digit loan growth and a pretax pre-provision earnings (PPNR) increase of 17% versus the third quarter of 2021. We remain on track to deliver positive operating leverage for the full year while continuing to invest in enhanced technology, digital modernization, and new product innovation. We continue to transform Bread Financial and invest in our future to deliver long-term sustainable value for our stakeholders. “The ongoing successful execution of our strategy has strengthened our financial resilience as evidenced by the improvement in our capital and funding metrics, as well as enhanced diversification across our products and portfolio. Our improved credit profile supports sustained performance as we move into a more challenging economic environment. “We are closely monitoring consumer economic indicators, including how consumers are navigating the changing economic environment. Consumer payment behaviors show continued signs of normalization toward pre-pandemic levels. We proactively adjust our underwriting and credit management to account for the challenges inflation and other factors present to consumers. Our seasoned leadership team is experienced in managing through credit cycles, with an emphasis on responsible risk management and proactive recession readiness planning. “We remain focused on our continued transformation and the investments that position Bread Financial to drive profitable growth through the full economic cycle.” - Ralph Andretta, president and chief executive officer COLUMBUS, Ohio, October 27, 2022 – Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions, today announced financial results for the third quarter ended September 30, 2022. Third quarter net income was $134 million, or $2.69 per diluted share. Total third quarter revenue was $979 million, up $128 million, or 15%, versus the third quarter of 2021. Expected normalization of credit metrics continued in the third quarter, with a quarter-end delinquency rate of 5.7% and a net loss rate of 5.0%. Bread Financial | October 27, 2022
“We are pleased with our third quarter financial results, which include year-over-year revenue growth of 15%, driven by 14% average loan growth and improved net interest margin. Credit sales growth in the quarter of 4% was impacted by both the transition of our credit card processing services and the temporary spike in fuel prices in July. For the sixth consecutive quarter, PPNR grew year-over-year at a double-digit rate, reflective of the quality growth we are delivering. Retail direct-to-consumer deposit balances exceeded $5 billion in the quarter further improving our cost of funds mix and funding diversification. Third quarter expenses were lower than anticipated as some expenses were shifted to the fourth quarter and we received payment network expense credits that were projected in the fourth quarter. “Our expectation for the normalization of consumer payment behavior is reflected in our 2022 guidance, and our results this quarter were within the range of our expectations considering temporary impacts from the transition of our credit card processing services. We anticipate delinquency rates to move lower in the fourth quarter driven by improvement in early stage delinquency performance, while losses are expected to be higher in the fourth quarter, which is typically the highest quarter of the year for this metric based on seasonality. “Additionally, we have maintained conservative economic scenario weightings in our credit reserve modeling as a result of an increasing probability of a recession, more persistent inflation, and the increased cost of overall consumer debt. “Despite these macroeconomic headwinds, we remain confident in our full year guidance and our long-term outlook. We will continue to act prudently and responsibly in our allocation of capital and will moderate our growth as appropriate as we manage risk-reward tradeoffs to maintain long-term sustainable, profitable growth.” CFO Commentary - Perry Beberman, executive vice president and chief financial officer 2022 Full Year CFO Outlook Macroeconomic Assumptions: “Our outlook continues to assume a moderation in the consumer payment rate throughout the remainder of 2022. We also expect further interest rate increases by the Federal Reserve to result in a nominal benefit to total net interest income, which is factored into our outlook. Average Loan Growth: “Based on our new and renewed business announcements, visibility into our pipeline, and the current economic outlook, we reiterate our expectation for low-double-digit growth in full year 2022 average credit card and other loans relative to 2021. Total Revenue: “Total revenue growth for 2022 is anticipated to align with average loan growth, with slight upside from improved full year net interest margin versus 2021. Total Expenses: “As a result of ongoing investment in technology modernization, digital advancement, marketing, and product innovation, along with strong portfolio growth, we expect a sequential increase in total expenses in the fourth quarter. We remain focused on delivering positive operating leverage for the full year as we manage the pace and timing of our investments to align with our full year revenue and growth outlook. Net Loss Rate: “We expect a net loss rate at the high end of our previously communicated low-to-mid 5% range for 2022. We remain confident in our long-term guidance of a through-the-cycle average net loss rate below our historical average of 6%. Effective Tax Rate: “We continue to expect our full year normalized effective tax rate to be in the range of 25% to 26%, with quarter-over-quarter volatility due to the timing of various discrete items.” 2 Bread Financial | October 27, 2022
+4% +15% +17% +1.9% +1.1% Key Operating and Financial Metrics(1) Credit Metrics nm – not meaningful (1) Reflective of the spinoff of Loyalty Ventures Inc. for all periods presented. (2) Pretax pre-provision earnings (PPNR) is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below. (3) The 3Q22 Delinquency rate was impacted by the transition of our credit card processing services. (4) The 3Q22 Net loss rate was impacted by the transition of our credit card processing services. Excluding this impact, which is timing-related, the Net loss rate for the quarter would have been higher. 3 Diluted EPS Continuing Operations(1) Quarter Ended Year-to-Date September 30, through September 30, ($ in millions, except per share amounts) 2022 2021 Change 2022 2021 Change Total net interest and non-interest income (“Revenue”) $979 $851 15% $2,793 $2,416 16% Net principal losses $218 $151 44% $656 $543 21% Reserve build (release) $86 $10 nm $246 $(363) nm Provision for credit losses $304 $161 89% $902 $180 nm Total non-interest expenses $486 $431 13% $1,383 $1,256 10% Income from continuing operations before income taxes $189 $259 (27)% $508 $980 (48)% Income from continuing operations $134 $206 (35)% $358 $737 (51)% Income from continuing operations per diluted share $2.69 $4.11 (35)% $7.16 $14.74 (51)% Weighted average shares outstanding – diluted 49.9 50.0 50.0 50.0 ********************************** Pretax pre-provision earnings (PPNR)(2) $493 $420 17% $1,410 $1,160 21% Bread Financial | October 27, 2022 -40% -35%
Third Quarter 2022 Compared with Third Quarter 2021 – Continuing Operations Credit sales increased 4% to $7.7 billion driven by existing partners, as well as new product and brand partner additions. Average and end-of-period credit card and other loans increased 14% and 16% to $17.6 billion and $18.1 billion, respectively, driven by continued credit sales growth, as well as further moderation in the consumer payment rate. Revenue increased 15%, or $128 million, resulting from higher average loan balances and improved loan yields. Net interest margin increased 94 basis points year-over-year and 123 basis points sequentially. Total non-interest expenses increased 13%, or $55 million, as employee compensation and benefit costs increased 20%, or $34 million, information processing and communication expenses increased 39%, or $21 million, as a result of the transition of our credit card processing services, and other expenses decreased 22%, or $16 million, primarily due to decreased legal and other business activity costs. PPNR, a non-GAAP financial measure, improved by $73 million, or 17%, reflecting sustainable, profitable growth and continued success with our business transformation efforts. Income from continuing operations decreased $72 million, as the improvement in PPNR was offset by a higher provision for credit losses reflecting both loan growth in the quarter and a higher reserve rate, as well as increased net principal losses. Delinquency rate of 5.7% increased from 3.8% in 3Q21 and 4.4% in 2Q22; the 3Q22 rate was impacted by the transition of our credit card processing services, and increased as a result of expected consumer payment rate normalization, as well as seasonal trends. Net loss rate of 5.0% increased from 3.9% in 3Q21, and decreased from 5.6% in 2Q22. The third quarter rate was impacted by the transition of our credit card processing services. Excluding the transition impact, which is timing-related, the net loss rate for the quarter would have been higher. 4 Contacts Investor Relations: Brian Vereb (Brian.Vereb@breadfinancial.com), 614-528-4516 Media Relations: Shelley Whiddon (Shelley.Whiddon@breadfinancial.com), 214-494-3811 Rachel Stultz (Rachel.Stultz@breadfinancial.com), 614-729-4890 Bread Financial | October 27, 2022
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 identified by the use of words such as "believe," "expect," "anticipate," "estimate," "intend," "project," "plan," "likely," "may," "should" or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, initiation or completion of strategic initiatives, including the ability to realize the intended benefits of the spinoff of our former LoyaltyOne® segment, future dividend declarations, future economic conditions, including, but not limited to, market conditions, persistent inflation, rising interest rates, the increased probability of a recession and related impacts on consumer behavior, future legislative or regulatory actions that could have impact on our business and results of operations, including any such actions that may be taken with respect to late fees, interchange fees, or other charges, developments in the geopolitical environment, including the war in Ukraine, and the ongoing effects of the global COVID-19 pandemic, all of which factors remain difficult to predict. We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. These risks and uncertainties include, but are not limited to, factors set forth in the Risk Factors section and elsewhere in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. Non-GAAP Financial Measures We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (GAAP). However, certain information included within this presentation, constitutes non-GAAP financial measures. Our calculations of non-GAAP financial measures may differ from the calculations of similarly titled measures by other companies. In particular, Pretax pre-provision earnings (PPNR) is calculated by increasing/decreasing Income from continuing operations before income taxes by the net build/release in Provision for credit losses. We use PPNR as a metric to evaluate our results of operations before income taxes, excluding the volatility that can occur within Provision for credit losses. Tangible common equity over Tangible assets (TCE/TA) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net, (TCE) divided by Tangible assets (TA), which is Total assets reduced by Goodwill and intangible assets, net. We use TCE/TA as a metric to evaluate the Company’s capital adequacy and estimate its ability to cover potential losses. Tangible book value per common share represents TCE divided by shares outstanding. We use Tangible book value per common share as a metric to estimate the Company’s potential value in relation to tangible assets per share. We believe the use of these non-GAAP financial measures provide additional clarity in understanding our results of operations and trends. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please see the Reconciliation of GAAP to Non-GAAP Financial Measures that follows. Conference Call / Webcast Information Bread Financial will host a conference call on Thursday, October 27, 2022 at 8:30 a.m. (Eastern Time) to discuss the Company’s third quarter 2022 results. The conference call will be available via the Internet at www.breadfinancial.com. There will be several slides accompanying the webcast. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary software. The recorded webcast will also be available on the Company’s website. A replay of the conference call will be available two hours after the end of the call until 11:59 p.m. ET on Thursday, October 27, 2022. To access the replay, please dial (866) 813-9403 or (929) 458-6194 and reference conference ID number “656109”. 5 Bread Financial | October 27, 2022
About Bread Financial™ Bread FinancialTM (NYSE: BFH) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, Bread Financial delivers growth for its partners through a comprehensive product suite, including private label and co-brand credit cards, installment lending, and buy now, pay later (BNPL). Bread Financial also offers direct-to-consumer solutions that give customers more access, choice and freedom through its branded Bread CashbackTM American Express® Credit Card and Bread SavingsTM products. Bread Financial is an S&P MidCap 400 company headquartered in Columbus, Ohio, and committed to sustainable business practices powered by its 6,000+ global associates. To learn more about Bread Financial, visit BreadFinancial.com or follow us on Facebook, LinkedIn, Twitter and Instagram. 6 Bread Financial | October 27, 2022
BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) * Pretax pre-provision earnings (PPNR) is a non-GAAP financial measure. 7 Bread Financial | October 27, 2022 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest income: Interest and fees on loans $ 1,195 $ 992 $ 3,325 $ 2,845 Interest on cash and investment securities 23 2 34 6 Total interest income 1,218 994 3,359 2,851 Interest expense: Interest on deposits 66 39 142 130 Interest on borrowings 67 52 166 168 Total interest expense 133 91 308 298 Net interest income 1,085 903 3,051 2,553 Non-interest income: Interchange revenue, net of retailer share arrangements (136) (97) (333) (251) Other 30 45 75 114 Total non-interest income (106) (52) (258) (137) Total net interest and non-interest income 979 851 2,793 2,416 Provision for credit losses 304 161 902 180 Total net interest and non-interest income, after provision for credit losses 675 690 1,891 2,236 Non-interest expenses: Employee compensation and benefits 202 168 572 489 Card and processing expenses 82 81 248 242 Information processing and communication 75 54 192 161 Marketing expense 44 35 124 113 Depreciation and amortization 29 23 80 70 Other 54 70 167 181 Total non-interest expenses 486 431 1,383 1,256 Income from continuing operations before income taxes 189 259 508 980 Provision for income taxes 55 53 150 243 Income from continuing operations 134 206 358 737 (Loss) income from discontinued operations, net of taxes - 18 (1) 46 Net income $ 134 $ 224 $ 357 $ 783 Basic earnings per share: Income from continuing operations $ 2.69 $ 4.14 $ 7.17 $ 14.81 (Loss) income from discontinued operations - 0.36 (0.01) 0.94 Net income per share $ 2.69 $ 4.50 $ 7.16 $ 15.75 Diluted earnings per share: Income from continuing operations $ 2.69 $ 4.11 $ 7.16 $ 14.74 (Loss) income from discontinued operations - 0.36 (0.01) 0.94 Net income per diluted share $ 2.69 $ 4.47 $ 7.15 $ 15.68 Weighted average shares: Basic 49.8 49.8 49.9 49.7 Diluted 49.9 50.0 50.0 50.0 Pre-tax pre-provision earnings*: Income from continuing operations before income taxes $ 189 $ 259 $ 508 $ 980 Provision for credit losses 304 161 902 180 Pre-tax pre-provision earnings $ 493 $ 420 $ 1,410 $ 1,160
BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) 8 Bread Financial | October 27, 2022 September 30, December 31, 2022 2021 Assets Cash and cash equivalents $ 3,583 $ 3,046 Credit card and other loans: Credit card and other loans 18,126 17,399 Allowance for credit losses (2,073) (1,832) Credit card and other loans, net 16,053 15,567 Available-for-sale securities 218 239 Property and equipment, net 204 215 Goodwill and intangible assets, net 690 687 Other assets 1,212 1,992 Total assets $ 21,960 $ 21,746 Liabilities and Stockholders’ Equity Deposits $ 12,444 $ 11,027 Debt issued by consolidated variable interest entities 4,015 5,453 Long-term and other debt 1,916 1,986 Other liabilities 1,186 1,194 Total liabilities 19,561 19,660 Stockholders’ equity 2,399 2,086 Total liabilities and stockholders’ equity $ 21,960 $ 21,746 Shares of common stock outstanding 49.8 49.8
Nine Months Ended September 30, 2022 2021 Cash Flows from Operating Activities: Net income $ 357 $ 783 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 902 180 Depreciation and amortization 80 97 Deferred income taxes (137) 20 Non-cash stock compensation 24 25 Amortization of deferred financing costs 18 23 Amortization of deferred origination costs 64 54 Change in other operating assets and liabilities: Change in other assets (25) (89) Change in other liabilities 11 115 Other 57 — Net cash provided by operating activities 1,351 1,208 Cash Flows from Investing Activities: Change in credit card and other loans (1,171) 88 Change in redemption settlement assets — (47) Proceeds from sale of credit card portfolio — 512 Purchase of credit card portfolios (249) (99) Capital expenditures (53) (59) Purchase of investment securities (35) (77) Maturities of investment securities 25 61 Other (5) 2 Net cash (used in) provided by investing activities (1,488) 381 Cash Flows from Financing Activities: Unsecured borrowings under debt agreements 218 38 Repayments/maturities of unsecured borrowings under debt agreements (294) (114) Debt issued by consolidated variable interest entities 1,723 2,768 Repayments/maturities of debt issued by consolidated variable interest entities (3,162) (3,891) Net increase in deposits 1,395 88 Payment of deferred financing costs (10) (13) Dividends paid (32) (31) Repurchase of common stock (12) — Other (4) (2) Net cash used in financing activities (178) (1,157) Effect of exchange rate changes on cash, cash equivalents and restricted cash — (4) Change in cash, cash equivalents and restricted cash (315) 428 Cash, cash equivalents and restricted cash at beginning of period 3,923 3,463 Cash, cash equivalents and restricted cash at end of period $ 3,608 $ 3,891 Note: The unaudited Condensed Consolidated Statements of Cash Flows are presented reflecting the combined cash flows from continuing and discontinued operations. BREAD FINANCIAL HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) 9 Bread Financial | October 27, 2022
BREAD FINANCIAL HOLDINGS, INC. UNAUDITED SUMMARY FINANCIAL HIGHLIGHTS (In millions, except per share amounts and percentages) 10 (1) Return on average assets represents annualized Income from continuing operations divided by average Total assets. (2) Return on average equity represents annualized Income from continuing operations divided by average Total stockholders’ equity. (3) Net interest margin represents annualized Net interest income divided by average Total interest-earning assets. (4) Loan yield represents annualized Interest and fees on loans divided by Average credit card and other loans. (5) Efficiency ratio represents Total non-interest expenses divided by Total net interest and non-interest income. (6) Tangible common equity (TCE) represents Total stockholders’ equity reduced by Goodwill and intangible assets, net. Tangible assets (TA) represents Total assets reduced by Goodwill and intangible assets, net. TCE/TA is a non-GAAP financial measure. (7) Tangible book value per common share represents TCE divided by shares outstanding, and is a non-GAAP financial measure. (8) The 3Q22 Delinquency rate was impacted by the transition of our credit card processing services. (9) The 3Q22 Net loss rate was impacted by the transition of our credit card processing services. Excluding this impact, which is timing-related, the Net loss rate for the quarter would have been higher. Bread Financial | October 27, 2022 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change 2022 2021 Change Credit sales $ 7,689 $ 7,380 4% $ 22,716 $ 20,825 9% Average credit card and other loans $ 17,598 $ 15,471 14% $ 17,084 $ 15,512 10% End-of-period credit card and other loans $ 18,126 $ 15,690 16% $ 18,126 $ 15,690 16% End-of-period direct-to-consumer deposits $ 5,176 $ 3,052 70% $ 5,176 $ 3,052 70% Return on average assets(1) 2.4% 3.7% (1.3)% 2.2% 4.5% (2.3)% Return on average equity(2) 22.8% 38.0% (15.2)% 20.9% 52.2% (31.3)% Net interest margin(3) 19.9% 18.9% 1.0% 19.3% 18.0% 1.3% Loan yield(4) 27.2% 25.6% 1.6% 25.9% 24.5% 1.4% Efficiency ratio(5) 49.7% 50.6% (0.9)% 49.6% 52.0% (2.4)% Tangible common equity / tangible assets ratio (TCE/TA)(6) 8.0% 7.2% 0.8% 8.0% 7.2% 0.8% Tangible book value per common share(7) $ 34.30 $ 31.18 10.0% $ 34.30 $ 31.18 10.0% Cash dividend per common share $ 0.21 $ 0.21 0.0% $ 0.63 $ 0.63 0.0% Delinquency rate(8) 5.7% 3.8% 1.9% 5.7% 3.8% 1.9% Net loss rate(9) 5.0% 3.9% 1.1% 5.1% 4.7% 0.4% Reserve rate 11.4% 10.5% 0.9% 11.4% 10.5% 0.9%
BREAD FINANCIAL HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except percentages) 11 Bread Financial | October 27, 2022 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 % Change 2022 2021 % Change (Millions, except percentages) Pretax pre-provision earnings (PPNR) Income from continuing operations before income taxes 189 259 (27)% 508 980 (48)% Provision for credit losses 304 161 89% 902 180 400% Pretax pre-provision earnings (PPNR) 493 420 17% 1,410 1,160 21% Tangible common equity (TCE) Total stockholders' equity 2,399 2,246 7% 2,399 2,246 7% Less: Goodwill and intangible assets, net (690) (694) (1)% (690) (694) (1)% Tangible common equity (TCE) 1,709 1,552 10% 1,709 1,552 10% Tangible assets (TA) Total assets 21,960 22,257 (1)% 21,960 22,257 (1)% Less: Goodwill and intangible assets, net (690) (694) (1)% (690) (694) (1)% Tangible assets (TA) 21,270 21,563 (1)% 21,270 21,563 (1)%