Bread Financial Holdings, Inc. (BFH) Bundle
A Brief History of Bread Financial Holdings, Inc.
Bread Financial Holdings, Inc. (BFH) has undergone significant transformations and financial developments leading into 2024. The company focuses on providing innovative payment solutions, primarily through its credit card and buy now, pay later (BNPL) offerings. BFH's financial performance has been influenced by various market factors, regulatory changes, and strategic decisions.
Financial Performance Highlights
For the nine months ended September 30, 2024, Bread Financial reported the following key financial metrics:
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Net Income (Millions) | $270 | $675 | -60% |
| Adjusted Net Income (Millions) | $361 | $675 | -47% |
| Net Income per Diluted Share | $0.05 | $3.42 | -99% |
| Credit Sales (Millions) | $19,064 | $21,098 | -10% |
| Total Assets (Millions) | $21,736 | $21,608 | 1% |
Stockholder Equity and Dividends
As of September 30, 2024, the total stockholders' equity for Bread Financial stood at:
| Component | Amount (Millions) |
|---|---|
| Common Stock | $1 |
| Additional Paid-In Capital | $2,124 |
| Retained Earnings | $1,003 |
| Accumulated Other Comprehensive Loss | $(16) |
| Total Stockholders' Equity | $3,112 |
In February 2024, the Board of Directors approved a stock repurchase program to acquire up to $30 million in shares, with the aim of offsetting dilution from employee restricted stock units.
Loan and Credit Quality Metrics
Bread Financial's credit quality metrics for the nine months ended September 30, 2024, included:
| Metric | Value |
|---|---|
| Net Principal Loss Rate | 8.3% |
| Delinquency Rate | 6.4% |
| Reserve Rate | 12.2% |
The company reported a total of $31 million in allowance for credit losses on BNPL loans as of September 30, 2024.
Market Position and Strategic Developments
BFH has been actively managing its portfolio to adapt to changing market conditions. As of September 30, 2024, the company had approximately $11.6 billion of securitized credit card loans. This reflects the company's strategic focus on leveraging securitization as a funding source for its lending operations.
The issuance of asset-backed notes has been a crucial part of its financing strategy, with notable offerings in May and August 2024.
Conclusion
Throughout 2024, Bread Financial Holdings, Inc. has navigated a challenging financial landscape, characterized by declining net income and strategic stock repurchase initiatives. The company's focus on credit quality and innovative financing solutions positions it for potential recovery as market conditions evolve.
A Who Owns Bread Financial Holdings, Inc. (BFH)
Ownership Structure
As of September 30, 2024, Bread Financial Holdings, Inc. (BFH) has a total of 49.7 million shares of common stock outstanding. The company has a par value of $0.01 per share. The ownership structure includes various institutional and individual shareholders, with a focus on significant institutional investors.
Major Shareholders
The following table outlines the major shareholders of Bread Financial Holdings, Inc. as of 2024:
| Shareholder Name | Type of Ownership | Number of Shares Owned (Millions) | Percentage of Total Shares (%) |
|---|---|---|---|
| BlackRock, Inc. | Institutional | 5.3 | 10.7 |
| The Vanguard Group, Inc. | Institutional | 4.8 | 9.7 |
| State Street Corporation | Institutional | 3.9 | 7.8 |
| Wellington Management Co. LLP | Institutional | 2.5 | 5.0 |
| Insider Holdings (Executives and Directors) | Individual | 1.2 | 2.4 |
| Other Institutional Investors | Institutional | 5.0 | 10.0 |
| Public Float | Public | 26.0 | 52.4 |
Recent Stock Performance
As of September 30, 2024, the stock price of Bread Financial Holdings, Inc. was reported at $37.57. The company has experienced fluctuations in its stock price, reflecting market conditions and investor sentiment.
Market Capitalization
The market capitalization of Bread Financial Holdings, Inc. as of September 30, 2024, is approximately $1.87 billion, calculated based on the current stock price and total shares outstanding.
Financial Highlights
The following table summarizes key financial metrics for Bread Financial Holdings, Inc. for the nine months ended September 30, 2024:
| Metric | Value (Millions) |
|---|---|
| Net Income | 270 |
| Total Assets | 21,736 |
| Total Liabilities | 18,624 |
| Total Stockholders’ Equity | 3,112 |
| Dividends Paid | 32 |
Dividends and Shareholder Returns
On October 24, 2024, the Board of Directors declared a quarterly cash dividend of $0.21 per share on common stock, payable on December 13, 2024, to stockholders of record at the close of business on November 8, 2024.
Stock Repurchase Program
On February 21, 2024, the Board approved a stock repurchase program to acquire up to $30 million in shares of common stock during the period ending December 31, 2024. As of September 30, 2024, the company had repurchased 0.3 million shares for $11 million under this program.
Bread Financial Holdings, Inc. (BFH) Mission Statement
Core Mission Statement
The mission of Bread Financial Holdings, Inc. is to provide innovative payment solutions that enhance the purchasing experience for consumers while delivering value to partners through tailored financing options. The company aims to empower consumers with flexible payment solutions that meet their needs, thereby fostering financial inclusion and responsible spending.
Strategic Objectives
- Enhancing Customer Experience: Focus on delivering seamless and user-friendly payment solutions.
- Driving Financial Inclusion: Commit to providing access to credit for underserved consumers.
- Partner Collaboration: Build strategic relationships with retail partners to create mutually beneficial financing solutions.
- Innovation: Invest in technology and data analytics to enhance service delivery and customer insights.
- Sustainability: Implement responsible lending practices to promote financial health among consumers.
Financial Performance Metrics
As of September 30, 2024, Bread Financial reported the following key financial metrics:
| Metric | Value |
|---|---|
| Total Assets | $21,736 million |
| Total Liabilities | $18,624 million |
| Total Stockholders' Equity | $3,112 million |
| Net Income | $270 million |
| Provision for Credit Losses | $980 million |
| Net Principal Losses | $1,122 million |
| Basic Income per Share | $5.44 |
| Diluted Income per Share | $5.37 |
Market Position and Growth
In 2024, Bread Financial has positioned itself as a key player in the consumer finance sector, focusing on credit card and other loan products. The company's strategic partnerships with major retailers have facilitated significant growth in its loan portfolio, which stood at $17,933 million as of September 30, 2024, compared to $19,333 million at the end of the previous year.
Risk Management and Credit Quality
As of September 30, 2024, Bread Financial reported a net principal loss rate of 7.8%, up from 6.9% in the same quarter of the previous year. The company maintains a robust allowance for credit losses amounting to $2,190 million, reflecting a conservative approach to risk management amid fluctuating economic conditions.
Commitment to Innovation
Bread Financial is committed to leveraging technology to enhance its service offerings. The company has invested significantly in digital platforms and data analytics, which play a crucial role in understanding consumer behavior and improving service delivery.
Conclusion
Through its mission-driven approach, Bread Financial Holdings, Inc. strives to create value for consumers and partners alike while navigating the complexities of the financial services landscape.
How Bread Financial Holdings, Inc. (BFH) Works
Company Overview
Bread Financial Holdings, Inc. (BFH) operates as a financial services company, primarily focusing on credit card lending and related services. The company has established a strong presence in the consumer finance sector through various credit products, including private label and co-branded credit cards.
Financial Performance
As of September 30, 2024, Bread Financial reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Income | $2 million | $171 million | (98.8%) |
| Adjusted Net Income | $93 million | $171 million | (45.7%) |
| Net Interest Income | $3,077 million | $3,191 million | (3.6%) |
| Total Non-Interest Expenses | $574 million | $502 million | 14.3% |
| Earnings Per Share (EPS) | $0.05 | $3.42 | (98.5%) |
Credit Portfolio
Bread Financial manages a diverse credit portfolio, focusing on credit card loans and other receivables. As of September 30, 2024, the credit card loans portfolio was valued at:
| Type of Loan | Balance (Millions) |
|---|---|
| Credit Card Loans | $17,630 |
| BNPL and Other Loans | $303 |
| Total Credit Card and Other Loans | $17,933 |
| Allowance for Credit Losses | ($2,190) |
| Net Loans | $15,743 |
Credit Quality Metrics
The company evaluates its credit quality through various metrics, including delinquency rates and net principal loss rates. As of September 30, 2024, the following metrics were reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Delinquency Rate | 6.4% | 6.3% |
| Net Principal Loss Rate | 7.8% | 6.9% |
Funding and Deposits
Bread Financial utilizes a mix of funding sources to support its lending activities. As of September 30, 2024, the deposit structure was as follows:
| Type of Deposit | Balance (Millions) |
|---|---|
| Direct-to-Consumer (Retail) | $7,483 |
| Wholesale | $5,339 |
| Total Deposits | $12,822 |
Capital Structure
As of September 30, 2024, Bread Financial's capital structure included:
| Category | Amount (Millions) |
|---|---|
| Total Assets | $21,736 |
| Total Liabilities | $18,624 |
| Total Stockholders’ Equity | $3,112 |
Stockholder Returns
Bread Financial has implemented a dividend policy, declaring dividends as follows:
| Period | Dividend Declared (Per Share) | Total Paid (Millions) |
|---|---|---|
| Q3 2024 | $0.21 | $10 |
| YTD 2024 | $0.63 | $32 |
Recent Developments
In 2024, Bread Financial acquired a credit card loan portfolio for approximately $383 million and another for $388 million in late 2023. Additionally, the company repurchased $11 million of its common stock during the nine months ended September 30, 2024.
The effective tax rate for the three months ended September 30, 2024, was reported at 92.2%, a significant increase from 23.0% in the prior year due to nondeductible items related to repurchased Convertible Notes.
Market Position
Bread Financial is positioned strategically within the consumer finance sector, focusing on enhancing its service offerings while managing risk and maintaining a robust capital structure amid changing market dynamics.
How Bread Financial Holdings, Inc. (BFH) Makes Money
Revenue Sources
Bread Financial Holdings, Inc. generates revenue primarily through interest income and non-interest income. For the three months ended September 30, 2024, the company reported total interest income of $1,277 million, while for the nine months, it was $3,806 million. The breakdown of interest income includes:
- Interest and fees on loans: $1,224 million (Q3 2024), $3,645 million (YTD 2024)
- Interest on cash and investment securities: $53 million (Q3 2024), $161 million (YTD 2024)
In contrast, total interest expense for the same periods was $240 million (Q3 2024) and $729 million (YTD 2024), resulting in a net interest income of $1,037 million (Q3 2024) and $3,077 million (YTD 2024).
Non-Interest Income
Non-interest income contributes to the revenue stream through various channels, including interchange revenue and gains from portfolio sales. For the three months ended September 30, 2024, Bread Financial recorded:
- Interchange revenue, net of retailer share arrangements: $(95) million (Q3 2024), $(272) million (YTD 2024)
- Gain on portfolio sale: $4 million (Q3 2024), $9 million (YTD 2024)
- Other non-interest income: $37 million (Q3 2024), $99 million (YTD 2024)
The total non-interest income for the three months ended September 30, 2024, was $(54) million, while for the nine months, it was $(164) million.
Credit Card and Other Loans
The company’s credit card and other loans portfolio is a significant aspect of its revenue generation. As of September 30, 2024, total credit card loans were $17,933 million, with an allowance for credit losses of $2,190 million. The net credit card loans amounted to $15,743 million.
Provision for Credit Losses
For the nine months ended September 30, 2024, the provision for credit losses was $980 million, which indicates the company's efforts to manage credit risk and potential defaults.
Financial Performance Summary
The following table summarizes Bread Financial’s financial performance metrics for the three and nine months ended September 30, 2024, compared to the same periods in 2023:
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income | $2 million | $171 million | $270 million | $675 million |
| Basic EPS | $0.05 | $3.44 | $5.44 | $13.48 |
| Diluted EPS | $0.05 | $3.42 | $5.37 | $13.44 |
| Return on Average Equity | 0.4% | 24.8% | 11.3% | 34.5% |
| Net Interest Margin | 18.5% | 19.4% | 18.5% | 19.4% |
Expenses
Non-interest expenses for the three months ended September 30, 2024, totaled $574 million, up from $502 million in Q3 2023. The breakdown of expenses includes:
- Employee compensation and benefits: $228 million
- Card and processing expenses: $77 million
- Marketing expenses: $38 million
- Other expenses: $136 million
Dividends and Stock Repurchase
During the three and nine months ended September 30, 2024, Bread Financial paid dividends of $10 million and $32 million, respectively. The board declared a quarterly cash dividend of $0.21 per share on October 24, 2024, payable on December 13, 2024.
As part of its stock repurchase program approved on February 21, 2024, the company repurchased 0.3 million shares for $11 million, with $19 million remaining for future repurchases as of September 30, 2024.
Conclusion
Overall, Bread Financial Holdings, Inc. relies on a combination of interest income from its loan portfolio, non-interest income from various services, and prudent management of credit losses to sustain its revenue generation.
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Article updated on 8 Nov 2024
Resources:
- Bread Financial Holdings, Inc. (BFH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bread Financial Holdings, Inc. (BFH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bread Financial Holdings, Inc. (BFH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.