• Adjusted Net Income: $93 million.

• Adjusted Diluted Earnings Per Share (EPS): $1.83.

• Tangible Book Value Per Share: $47.48, increased 12% year over year.

• Common Equity Tier One Capital Ratio: 13.3%, increased 40 basis points year over year.

• Credit Sales: $6.5 billion, decreased 3% year over year.

• Average Loans: $17.8 billion, increased 1% year over year.

• Revenue: $1.0 billion, down 5% year over year.

• Adjusted Total Noninterest Expenses: Decreased 5%, excluding $96 million pretax impact from repurchase of convertible notes.

• Net Loss Rate: 7.8% for the quarter.

• Loan Yield: 27.4%.

• Net Interest Margin: 18.8%.

• Direct to Consumer Deposits: $7.5 billion, accounting for 41% of average funding.

• Delinquency Rate: 6.4%.

• Reserve Rate: 12.2%.

• Warning! GuruFocus has detected 2 Warning Sign with BFH.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bread Financial Holdings Inc (NYSE:BFH) demonstrated a commitment to growing responsibly by repurchasing $262 million of convertible notes, which improved their balance sheet.

• The company reported an adjusted net income of $93 million and adjusted diluted earnings per share of $1.83, excluding the impact of the convertible notes repurchase.

• Tangible book value per share increased by 12% year over year, indicating strong financial health.

• BFH successfully launched new credit card programs with Saks Fifth Avenue and Hard Rock, expanding their portfolio and partnerships.

• The company has a diversified product suite and industry verticals, which provides stability and helps achieve long-term financial targets.

Negative Points

• Credit sales decreased by 3% year over year, reflecting moderating consumer spending and strategic credit tightening.

• Total revenue for the quarter was down 5% year over year, primarily due to lower late fees and merchant discount fees.

• The net loss rate increased to 7.8% for the quarter, up from 6.9% in the third quarter of 2023.

• Loan yield decreased by 120 basis points year over year, impacted by a shift in product mix and higher credit losses.

• The company faces potential regulatory challenges with the CFPB's final rule on credit card late fees, which could impact future earnings.

Q & A Highlights

Q: Are you close to peak losses right now, and will 2025 losses be better than 2024 losses if the macro stays stable? A: Perry Beberman, CFO, stated that the outlook depends heavily on the macroeconomic environment. While delinquency rates are stable, any improvements in losses will be gradual, reflecting the prolonged impact of high inflation and interest rates. The expectation is for slow, gradual improvements in consumer behavior over several quarters.