Bread Financial Holdings, Inc.: Comprehensive Corporate Profile

Quick Facts / Company Snapshot

• Company Name: Bread Financial Holdings, Inc.
• Stock Ticker: BFH (NYSE)
• Headquarters: Columbus, Ohio
• Total Net Interest and Non-Interest Income (2024): $3,838 million
• Net Income (2024): $277 million
• Total Assets (2024): $22,891 million
• Total Deposits (2024): $13,082 million
• Common Equity Tier 1 Capital Ratio: 12.4%
• Tangible Book Value Per Common Share: $46.97
• Employees (Associates): Global associates referred to as “exceptional team members”
• CEO: Ralph J. Andretta
• Primary Business Model: Tech-forward financial services (Payment, Lending, Saving)
• Credit Sales (2024): $26,962 million
• Average Credit Card and Other Loans: $18,084 million
• Delinquency Rate (2024): 5.9%
• Net Loss Rate (2024): 8.2%
• Number of Brand Partners: Approximately 100 brands
• Direct-to-Consumer Deposits: $7.7 billion
• Community Investments (2024): $8 million
• Primary Subsidiaries: Comenity Bank, Comenity Capital Bank

Company Overview

Bread Financial Holdings, Inc. is a tech-forward financial services company dedicated to providing simple, personalized payment, lending, and saving solutions to millions of consumers across the United States. Headquartered in Columbus, Ohio, the company empowers customers to pursue their passions through a suite of payment solutions, including general-purpose credit cards and savings products.

Beyond direct consumer offerings, Bread Financial serves as a growth engine for some of the most recognized brands in sectors such as travel and entertainment, health and beauty, jewelry, and specialty apparel. This is achieved through private label and co-brand credit cards, as well as pay-over-time products that offer choice and value to shared customers.

The company defines its partner base as consisting of large consumer-based businesses, including iconic names like AAA, Dell Technologies, the NFL, and Victoria’s Secret, alongside small- and medium-sized businesses (SMBs). The organization prides itself on a comprehensive suite of solutions supported by marketing, data, and analytics capabilities, creating a significant competitive advantage relevant to all customer segments, from Gen Z to Baby Boomers.

Key operational highlights include:

• Customer-Centric Approach: A focus on breadth and quality of product offerings to maintain long-standing partner relationships.
• Tech-Forward Identity: Leveraging technology to provide simple, personalized financial solutions.
• Single Reportable Segment: The business is managed and financial performance assessed on a consolidated basis as a single reportable segment.

Business Segments

Bread Financial operates its business through a single reportable segment. Management assesses financial performance on a consolidated basis. The primary source of revenue is generated from interest and fees on loans associated with various credit card and other loan products. To a lesser extent, revenue is derived from contractual relationships with brand partners.

While the company does not report multiple operating segments, its revenue streams can be categorized by the nature of the income generated:

1. Interest Income This is the dominant driver of the company’s financial inflows. It includes interest earned on credit card and other loans, as well as interest income from cash and investment securities.

• 2024 Total Interest Income: $5,024 million
• Percentage of Total Revenue (calculated against Total Interest Income + Total Non-Interest Income): 104.7% (Note: This exceeds 100% due to negative figures in non-interest income components like interchange revenue net of retailer share).
• Operational Scope: Includes interest and fees on loans ($4,820 million) and interest on cash and investment securities ($204 million).

2. Non-Interest Income This stream includes interchange revenue (net of retailer share arrangements), gains on portfolio sales, and other income.

• 2024 Total Non-Interest Income: $(226) million
• Operational Scope: This figure is heavily impacted by retailer share arrangements, which are recorded as a reduction of revenue. It includes Interchange revenue, net of retailer share arrangements at $(381) million, Gain on portfolio sale at $11 million, and Other income at $144 million.

History and Evolution

Bread Financial has undergone a significant transformation from a marketing, loyalty, and payments company into a focused, tech-forward financial services company.

Transformation Milestones:

• March 2022: The company officially changed its name from Alliance Data Systems Corporation to Bread Financial Holdings, Inc.
• November 2021: Completed the spinoff of its former LoyaltyOne segment, which consisted of the Canadian AIR MILES® Reward Program and BrandLoyalty businesses, into an independent publicly traded company, LVI.
• 2019: Sale of the former Epsilon segment.
• 2022: Completed the transition of credit card processing services to Fiserv, a strategic outsourcing provider, to improve speed to market and strengthen the technology platform.
• Recent Strategic Actions: Between 2021 and 2024, the company reduced parent-level debt by 50%, or more than $1 billion.

The company has demonstrated resilience through challenging macroeconomic environments, including the Great Recession and the COVID-19 pandemic, by adapting its business model and capital structure.

Products and Services

Bread Financial offers a comprehensive suite of payment, lending, and saving products.

1. Interest and Fees on Loans (Core Product Revenue)

This category represents the revenue earned on customer accounts owned by the company, including private label and co-brand credit cards.

• 2024 Revenue: $4,820 million
• Profile:
  • Private Label Credit Cards: Partner-branded cards used exclusively for purchases from that specific partner. These accounts typically generate higher revenue yields but involve lower credit lines and higher delinquency risks.
  • Co-Brand Credit Cards: General-purpose credit cards bearing the partner’s brand and a network logo (e.g., Visa, Mastercard, American Express). These cards can be used anywhere the network is accepted. They typically attract customers with higher credit scores and higher credit lines ($1,840 average balance vs $738 for private label).
  • Promotional Financing: Offers deferred interest, reduced interest, or no interest for a set period (6 to 60 months).

2. Bread Pay (Pay-Over-Time)

Bread Pay is the company’s payment technology solution for installment loans and “split-pay” offerings.

• Revenue: Included within Interest and fees on loans.
• Profile:
  • Installment Loans: Fixed extensions of credit where the customer pays down the balance in monthly installments, typically over 3 to 48 months.
  • Split-Pay: Short-term, interest-free financing repaid in four equal installments.
  • Market Reach: Serves over 1,300 SMB retailers and merchants.

3. Direct-to-Consumer (DTC) Products

• Revenue: Included within Interest and fees on loans and Net Interest Income.
• Profile:
  • Bread Cashback™ American Express® Credit Card: Offers unlimited 2% cash back.
  • Bread Rewards™ American Express® Credit Card: Introduced in Q4 2023, offering 3% rewards on gas, grocery, dining, and utility purchases.
  • Bread Savings: High-yield savings accounts and certificates of deposit (CDs). Direct-to-consumer deposits grew to $7.7 billion in 2024, accounting for 43% of total funding.

Brand Portfolio

Bread Financial’s brand portfolio encompasses its proprietary financial brands and the partner brands it supports.

Proprietary Brands

• Bread Financial: The overarching corporate brand.
• Comenity Bank (CB): A Delaware-chartered bank operating as a credit card bank.
• Comenity Capital Bank (CCB): A Utah-chartered industrial bank.
• Bread Pay: The brand for installment and split-pay lending solutions.
• Bread Savings: The brand for direct-to-consumer deposit products.

Brand Partners

The company serves approximately 100 brands. Significant partners include:

• AAA
• Academy Sports + Outdoors
• Caesars
• Dell Technologies
• Hard Rock International (Added in 2024)
• HP (Added in 2024)
• The NFL
• Saks Fifth Avenue (Added in 2024)
• Signet Jewelers
• Ulta Beauty
• Victoria’s Secret

Revenue Concentration: The top five credit card programs accounted for approximately 48% of Total net interest and non-interest income (excluding gain on sale) in 2024. Signet, Ulta, and Victoria’s Secret each accounted for 10% or more of this income.

Geographical Presence

Bread Financial’s business is heavily concentrated in the United States.

Revenue by Region:

• Domestic (United States):
  • Income from continuing operations before income taxes: $375 million
  • Percentage of Total Pre-tax Income: 98.4%
• Foreign:
  • Income from continuing operations before income taxes: $6 million
  • Percentage of Total Pre-tax Income: 1.6%

Key Locations and Facilities: The company leases 12 general office properties totaling approximately 1.3 million square feet.

• Columbus, Ohio: Corporate Headquarters. 326,400 sq. ft. Lease expires 2032.
• Bangalore, Karnataka, India: 87,400 sq. ft. Lease expires 2029.
• Coeur D’Alene, Idaho: 23,500 sq. ft. Lease expires 2038.
• Draper, Utah: 22,900 sq. ft. Lease expires 2031.
• New York, New York: 18,500 sq. ft. Lease expires 2026.
• Plano, Texas: 28,000 sq. ft. Lease expires 2026.
• Chadds Ford, Pennsylvania: 9,900 sq. ft. Lease expires 2027.
• Wilmington, Delaware: 5,200 sq. ft. Lease expires 2027.

Financial Performance Analysis

In 2024, Bread Financial met its financial targets despite a challenging macroeconomic environment characterized by persistent inflation.

Multi-Year Trend Analysis:

• Total Net Interest and Non-Interest Income:
  • 2024: $3,838 million
  • 2023: $4,289 million
  • 2022: $3,826 million
  • Trend: Decreased 11% from 2023 to 2024, primarily due to lower finance charges, late fees, and the absence of the $230 million portfolio gain on sale recorded in 2023.
• Net Income:
  • 2024: $277 million
  • 2023: $718 million
  • 2022: $223 million
  • Trend: Decreased 61% year-over-year.
• Credit Sales:
  • 2024: $26,962 million
  • 2023: $28,900 million
  • Trend: Decreased 7% due to moderated consumer spending and proactive credit tightening.

Profit and Loss Analysis

2024 Key Metrics:

• Total Net Interest and Non-Interest Income: $3,838 million
• Provision for Credit Losses: $1,397 million. Increased 14% from 2023, driven by a smaller reserve release in 2024 compared to 2023.
• Total Non-Interest Expenses: $2,060 million. Decreased 2% year-over-year.
• Income from Continuing Operations Before Income Taxes: $381 million.
• Provision for Income Taxes: $102 million.
• Effective Income Tax Rate: 26.7%.
• Net Interest Margin: 18.3%, down 1.2 percentage points from 19.5% in 2023.

Expense Breakdown:

• Employee Compensation and Benefits: $897 million (Increased 3%).
• Card and Processing Expenses: $326 million (Decreased 24%).
• Information Processing and Communication: $300 million.
• Marketing Expenses: $147 million (Decreased 9%).

Balance Sheet Analysis

Bread Financial has focused heavily on strengthening its balance sheet and optimizing its capital structure.

Assets:

• Total Assets: $22,891 million (Decreased 1% from $23,141 million in 2023).
• Cash and Cash Equivalents: $3,679 million.
• Credit Card and Other Loans (Net): $16,655 million.
• Goodwill and Intangible Assets, Net: $746 million.

Liabilities:

• Total Liabilities: $19,840 million.
• Deposits: $13,082 million.
• Debt Issued by Consolidated VIEs: $4,558 million.
• Long-Term and Other Debt: $999 million. This represents a significant reduction from previous years as part of the deleveraging strategy.

Equity:

• Total Stockholders’ Equity: $3,051 million.
• Tangible Common Equity (TCE): $2,305 million.

Liquidity and Capital:

• Common Equity Tier 1 Capital Ratio: 12.4% (Increased 20 basis points).
• Tangible Common Equity / Tangible Assets Ratio: 10.4%.
• Double Leverage Ratio: 104.7% (Achieved target of <115%).

Cash Flow Analysis

Operating Activities:

• Net Cash Provided: $1,859 million.
• Insight: Decreased from $1,987 million in 2023. Primary adjustments included Provision for Credit Losses ($1,397 million) and Depreciation ($90 million).

Investing Activities:

• Net Cash Used: $(1,169) million.
• Insight: Primary drivers were Net principal losses and the purchase of a credit card loan portfolio. This contrasts with 2023 where cash was provided by the sale of the BJ’s portfolio.

Financing Activities:

• Net Cash Used: $(592) million.
• Insight: Driven by net repayments of unsecured borrowings, including repurchased Convertible Notes, and a net decrease in wholesale deposits.

Board of Directors and Leadership Team

Board of Directors:

• Roger H. Ballou: Chair of the Board.
• Ralph J. Andretta: Director, President, and CEO.
• John J. Fawcett: Director.
• John C. Gerspach, Jr.: Director.
• Praniti Lakhwara: Director.
• Rajesh Natarajan: Director.
• Joyce St. Clair: Director.
• Timothy J. Theriault: Director.
• Laurie A. Tucker: Director.
• Sharen J. Turney: Director.

Executive Leadership:

• Ralph J. Andretta: President and Chief Executive Officer.
• Perry S. Beberman: Executive Vice President and Chief Financial Officer.
• J. Bryan Campbell: Senior Vice President and Chief Accounting Officer.

Subsidiaries, Associates, Joint Ventures

The company operates primarily through its insured depository institution subsidiaries. While a complete list of every subsidiary is not provided in the summary text, the primary operating entities disclosed are:

1. Comenity Bank (CB)

• Type: Delaware-chartered bank.
• Role: Credit card issuer and lender. Operates under a CEBA exemption.
• Capital Ratios: Common Equity Tier 1 Capital Ratio of 16.5%.

2. Comenity Capital Bank (CCB)

• Type: Utah-chartered industrial bank.
• Role: Credit card issuer and lender. Exempt from the BHC Act definition of “bank”.
• Capital Ratios: Common Equity Tier 1 Capital Ratio of 15.4%.

3. Comenity Servicing LLC

• Role: Wholly-owned subsidiary that services substantially all of the company’s loans.

4. WFN Credit Company, LLC

• Role: Transferor in securitization agreements.

5. Bread Financial Payments, Inc.

• Role: Involved in intercompany return of capital transactions.

6. World Financial Network Credit Card Master Note Trust (WFNMNT)

• Role: Consolidated VIE used for securitization.

Physical Properties

Bread Financial leases its properties. As of December 31, 2024, the company leased 12 general office properties comprising approximately 1.3 million square feet.

Key Facilities List:

• Columbus, Ohio: 326,400 sq. ft. (Principal executive office).
• Bangalore, Karnataka, India: 87,400 sq. ft.
• Coeur D’Alene, Idaho: 23,500 sq. ft.
• Draper, Utah: 22,900 sq. ft.
• New York, New York: 18,500 sq. ft.
• Plano, Texas: 28,000 sq. ft.
• Chadds Ford, Pennsylvania: 9,900 sq. ft.
• Wilmington, Delaware: 5,200 sq. ft.

Note: Square footage excludes subleased portions. Approximately 0.8 million square feet are subleased or on the sublease market.

Segment-wise Performance

As Bread Financial operates as a single reportable segment, segment-wise performance is analyzed through its primary revenue and expense drivers on a consolidated basis.

Operational Performance:

• Credit Sales: Decreased 7% to $26,962 million in 2024.
• Average Credit Card and Other Loans: Decreased 1% to $18,084 million.
• End-of-Period Loans: Decreased 2% to $18,896 million.
• Payment Rate: Improved to 15.0% from 14.5% in 2023.

Financial Drivers:

• Loan Yield: Decreased to 26.7% from 27.2% in 2023.
• Net Loss Rate: Increased to 8.2% from 7.5% in 2023 due to inflationary pressures.
• Efficiency Ratio: Deteriorated to 53.7% from 48.8% in 2023.

Founders

Specific information regarding the original founders of the entity formerly known as Alliance Data Systems is not explicitly detailed in the 2024 Annual Report provided. The report focuses on the current leadership, specifically Ralph J. Andretta, who celebrated his five-year anniversary with the company in 2024.

Shareholding Pattern

As of February 7, 2025, there were 49,092,356 shares of common stock outstanding. There were 92 holders of record of common stock as of that date.

Authorized Shares: 200.0 million shares. Shares Reserved:

• 9,348,807 shares reserved for employee stock purchase and long-term incentive plans.
• 143,633 shares reserved under the 401(k) Plan.
• 337,216 shares reserved in connection with the 4.25% convertible senior notes.

Stock Repurchases: In 2024, the company repurchased 1.0 million shares for $55 million.

Parent

Bread Financial Holdings, Inc. is the parent company. It is a legal entity separate and distinct from its banks. Although it is not a Bank Holding Company (BHC) under the Bank Holding Company Act, it serves as a source of strength for its subsidiary banks, Comenity Bank and Comenity Capital Bank.

Investments and Capital Expenditure Plans

Bread Financial focuses its investments on technology, product innovation, and community support.

Strategic Investments:

• Technology: The company continues to invest in cloud capabilities, machine learning, AI, and data analytics.
• Digital: Investments are prioritized for the “Enhanced Digital Suite,” a group of marketing and credit application features to help partners capitalize on online trends.

Community Investments:

• Total Investment: $8 million in community investments in 2024.
• Small Business Support: $1.6 million in new financial commitments to support small businesses.

Capital Allocation Priorities:

• Share Repurchases: $55 million of common shares repurchased in 2024.
• Debt Reduction: Repurchased $306 million in principal amount of convertible notes in 2024.

Future Strategy

Bread Financial’s strategy is anchored in being a “tech-forward financial services company.”

Key Strategic Pillars:

• Responsible Growth: Expanding brand partners and diversifying product offerings while maintaining prudent capital management.
• Operational Excellence: Integrating operational excellence to drive continuous improvements and efficiencies.
• Digital Transformation: Leaning into innovation and emerging technology to drive efficiencies and better customer experiences.
• Financial Targets: The company aims to deliver solid financial results in 2025, driven by credit sales improvement and new and existing partner growth, despite macroeconomic unknowns.
• Capital Structure Optimization: Continuing to optimize the balance sheet, including reducing parent-level debt.

Key Strengths

• Robust Capital Position: A CET1 capital ratio of 12.4% and a reduction of parent-level debt by 50% between 2021 and 2024.
• Diversified Funding: Direct-to-consumer deposits grew to $7.7 billion, representing 43% of total funding, reducing reliance on wholesale funding.
• Long-Term Partner Stability: More than 85% of loans were secured through 2026, and 9 out of the top 10 programs were secured through at least 2028.
• Tangible Book Value Growth: Increased to $46.97 per share, reflecting a three-year compounded annual growth rate of 19%.
• Brand Partner Portfolio: diversified across industries such as travel, entertainment, beauty, and jewelry, with partners like Hard Rock International, HP, and Saks Fifth Avenue added in 2024.

Key Challenges and Risks

Regulatory Risks:

• CFPB Late Fee Rule: A final rule by the CFPB to reduce the safe harbor amount for late fees could have a significant adverse impact on revenue and operations. While currently enjoined by a court, the outcome remains uncertain.
• Capital Requirements: Failure to meet minimum capital requirements could result in mandatory regulatory actions.

Macroeconomic Risks:

• Inflation and Consumer Spending: Persistent inflation and high interest rates pressure consumer spending and debt repayment ability, leading to higher delinquency and net loss rates.
• Economic Volatility: Recessionary pressures could impact the ability of customers to pay amounts owed.

Operational Risks:

• Cybersecurity: Risks related to data protection failures, cyberattacks, and reliance on third-party vendors for IT systems.
• Partner Concentration: A significant percentage of revenue is generated from a limited number of partners. Loss of a major partner (like the BJ’s Wholesale Club non-renewal in 2023) can impact results.

Conclusion and Strategic Outlook

Bread Financial Holdings, Inc. has successfully navigated a period of significant transformation, reshaping itself into a streamlined, tech-forward financial services provider. By aggressively deleveraging its balance sheet, optimizing its capital structure, and diversifying its funding through robust growth in direct-to-consumer deposits, the company has built a resilient foundation.

Looking ahead to 2025, Bread Financial remains focused on responsible growth, operational excellence, and disciplined capital allocation. While mindful of the complex macroeconomic environment and potential regulatory headwinds regarding late fees, the company’s long-term vision remains intact. With a strengthened balance sheet, a secured portfolio of iconic brand partners, and a commitment to innovation, Bread Financial is positioned to deliver sustainable value to its stakeholders.

Official Site: https://www.breadfinancial.com

FAQ Section:

1. What is Bread Financial’s primary business? Bread Financial is a tech-forward financial services company providing payment, lending, and saving solutions, including private label and co-brand credit cards and pay-over-time products.
2. What was Bread Financial formerly known as? The company changed its name from Alliance Data Systems Corporation to Bread Financial Holdings, Inc. in March 2022.
3. What is the stock ticker for Bread Financial? Bread Financial trades on the New York Stock Exchange (NYSE) under the ticker symbol BFH.
4. Who are Bread Financial’s major banking subsidiaries? The company operates primarily through Comenity Bank and Comenity Capital Bank.
5. What was Bread Financial’s revenue in 2024? Total net interest and non-interest income for 2024 was $3,838 million.
6. Does Bread Financial offer direct-to-consumer products? Yes, they offer Bread Cashback™ and Bread Rewards™ American Express® Credit Cards, as well as high-yield savings accounts and CDs under Bread Savings.
7. How much debt did Bread Financial reduce recently? Between 2021 and 2024, the company reduced parent-level debt by 50%, or more than $1 billion.
8. Where is Bread Financial headquartered? The corporate headquarters are located in Columbus, Ohio.

Content is based on publicly available corporate filings, regulatory disclosures, annual reports, 10-K filings, Investor Relations materials, and direct mail communication with the company.