BFH

Bread Financial delivered a second quarter that met Wall Street’s expectations for both revenue and non-GAAP profit, with management attributing performance to accelerating credit sales and broad-based loan growth. CEO Ralph Andretta noted that key verticals like travel and sporting goods, along with the expansion of co-brand partnerships and new program launches, underpinned the company’s credit sales growth. Management emphasized that the quarter’s results benefitted from disciplined underwriting and operational improvements, reflected in improving credit performance and a lower net loss rate. Is now the time to buy BFH? Find out in our full research report (it’s free). Revenue: $993 million vs analyst estimates of $959.3 million (6.9% year-on-year growth, 3.5% beat) Adjusted EPS: $3.55 vs analyst estimates of $2.77 (28.3% beat) Operating Margin: 19.8%, up from 18.7% in the same quarter last year Market Capitalization: $4.11 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Moshe Orenbuch (TD Cowen) asked about the sustainability of loan growth in the second half of the year. CFO Perry Beberman explained that growth may slow due to tougher year-over-year comparisons and seasonal holiday variability. Sanjay Sakhrani (KBW) inquired about the interplay between higher retailer share arrangements and noninterest income. Beberman clarified that while RSAs rise with credit sales, these payments reflect positive business momentum, and their percentage may increase over time with performance. Terry Ma (Barclays) asked how much of the credit sales acceleration came from new versus existing partners. CEO Ralph Andretta said growth was broad but highlighted travel, sporting goods, and new furniture partners as key contributors. Mihir Bhatia (Bank of America) questioned the outlook for expenses and operating leverage. Beberman responded that variable costs will rise with volume but operational efficiencies should support positive leverage for the year. Dominick Gabriele (Loop Capital) queried whether Bread Financial can sustain double-digit EPS growth. Andretta replied that while the business is well-positioned, growth remains dependent on macroeconomic conditions. In upcoming quarters, the StockStory team will monitor (1) the pace of loan and credit sales growth, particularly as new partner programs mature, (2) trends in credit performance and whether improvements in net loss and delinquency rates persist, and (3) the impact of continued investments in technology and artificial intelligence on both efficiency and customer experience. Shifts in the macroeconomic environment and consumer behavior will also be important factors to watch. Bread Financial currently trades at $106.99, up from $101.87 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Coinbase Global, Inc. COIN reported a second-quarter 2026 adjusted operating loss of 39 cents per share, against the Zacks Consensus Estimate of earnings of 14 cents. COIN had reported an operating income of 12 cents per share in the prior-year quarter. The quarter reflected lower transaction and subscription revenues, weaker crypto asset prices and higher restructuring costs, partially offset by growth in institutional transaction revenues. Coinbase Global, Inc. price-consensus-eps-surprise-chart | Coinbase Global, Inc. Quote Total Monthly Transacting Users declined to $7.6 million from $8.7 million a year ago, which was lower than the Zacks Consensus Estimate of $8.1 million. Assets on Platform fell to $245.9 billion from $425 billion, primarily due to lower crypto asset prices. The Zacks Consensus Estimate was pegged at $295 million. Total revenues of $1.2 billion missed the Zacks Consensus Estimate by 5.8%. The top line decreased 18.5% year over year due to lower transaction revenues, subscription and services revenues, and other revenues. Total transaction revenues decreased 21.6% year over year to $599.2 million in the second quarter. The downside was due to a decrease in consumer transaction revenues, offset by an increase in institutional transaction revenues. The Zacks Consensus Estimate was pegged at $640 million. Total subscription and services revenues decreased 12.2% year over year to $555.1 million in the reported quarter. The downside was due to a decrease in blockchain rewards and reduced stablecoin revenues, offset by higher average USDC balances and growth in interest and finance fee income. The Zacks Consensus Estimate was pegged at $600.5 million. Adjusted EBITDA was $207.8 million in the reported quarter, which fell 59.4% from the year-ago quarter. Total operating expenses decreased 12.4% to $1.3 billion in the second quarter due to lower transaction expenses and other operating expenses, partly offset by higher technology and development expenses, restructuring charges and losses on crypto assets held for operations. Coinbase exited the second quarter with cash and cash equivalents of $8.6 billion as of June 30, 2026, down 23.9% from 2025-end. As of June 30, 2026, long-term debt remained flat from 2025-end at $5.9 billion. Shareholders' equity was $13.1 billion at second-quarter 2026, down 11.6% from 2025-end. Net cash used in operating activities was $380.1 million in the second quarterfirst half of 2026, which decreased 65.2% year over year. Coinbase expects subscription and services revenues to be in the range of $500-$580 million. Coinbase expects third-quarter 2026 transaction expenses to be in the mid-teens as a percentage of net revenues, while adjusted expenses are projected to be in the range of $980-$1,080 million. Coinbase expects stock-based compensation to be approximately $245 million. COIN also expects 2026 adjusted expenses between $4.2 billion-$4.45 billion, revised from $4.25 billion-$4.6 billion. COIN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Synchrony Financial SYF reported second-quarter 2026 adjusted earnings per share (EPS) of $2.59, which surpassed the Zacks Consensus Estimate by 24.5%. The bottom line increased 3.6% year over year. Net interest income increased 1.9% year over year to $4.6 billion but missed the Zacks Consensus Estimate by 1.1%. Bread Financial Holdings, Inc. BFH reported second-quarter 2026 operating income of $3.55 per share, outperforming the Zacks Consensus Estimate by 40.9%. The bottom line rose 20.7% year over year. Revenues increased 7% from the prior-year level to $993 million, exceeding the consensus estimate by 4.2%. Credit sales of $7.5 billion increased 11% year over year, driven by growth in new partnerships and increased general-purpose spending. Average loans increased 3% to $18.2 billion, while end-of-period loans rose 5% to $18.5 billion. Virtu Financial, Inc. VIRT reported second-quarter 2026 adjusted earnings of $1.82 per share, which beat the Zacks Consensus Estimate by 8.3%. The bottom line increased 19% year over year. Adjusted Net Trading Income rose 26.4% year over year to $717.9 million. Revenues from commissions, net and technology services rose 16.7% year over year to $179.5 million. The metric beat the Zacks Consensus Estimate and our model estimate of $177.9 million. Interest and dividend income of $145.9 million increased 13.6% year over year, surpassing the Zacks Consensus Estimate of $134.4 million. Adjusted EBITDA increased 18.2% year over year to $436.8 million. Adjusted EBITDA margin declined year over year to 60.8% from 65.1% a year ago. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Coinbase Global, Inc. (COIN) : Free Stock Analysis Report Synchrony Financial (SYF) : Free Stock Analysis Report Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Bread Financial Holdings (BFH) caught investor attention after second quarter results topped market expectations, with higher credit sales, loan and deposit growth, improved credit performance, and direct to consumer deposits reaching 50% of its funding mix. See our latest analysis for Bread Financial Holdings. Against this backdrop of earnings, Bread Financial Holdings' share price shows building momentum, with a 21.07% 90 day share price return and 38.53% year to date share price return, contributing to a 66.98% 1 year total shareholder return. If Bread Financial's move has you thinking about where else growth and risk might be shifting, it could be a good moment to scan 18 top founder-led companies Bread Financial’s strong quarter, buybacks and dividend decision are now reflected in the share price to some extent, but the stock still trades below analyst targets and an intrinsic value estimate. How much of the upside might already be on the table? The most followed narrative puts Bread Financial Holdings' fair value at $110.00, slightly above the last close of $104.31. This frames a modest valuation gap for investors to unpack. Read the complete narrative. Want to see what sits behind that mix of rising sales and thinner margins? The fair value hinges on how those profit trade offs reshape earnings power. The full narrative sets out the numbers driving that $110.00 figure. Result: Fair Value of $110.00 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Bread Financial’s narrative could still be tested if tighter credit standards keep loan volumes subdued or if funding and operating costs rise faster than expected. Find out about the key risks to this Bread Financial Holdings narrative. If the mix of optimism and concern around Bread Financial Holdings leaves you undecided, now is a good time to review the details yourself and pressure test the key assumptions behind both the upside and downside cases by weighing up the 3 key rewards and 2 important warning signs If Bread Financial Holdings has sharpened your focus on where risk and reward might be shifting, do not stop here. Broaden your watchlist with a few targeted screens. Use the Simply Wall St Screener to uncover stocks and ideas that match your risk profile and income goals before the next round of market moves leaves you catching up. Target steady cash generators by scanning companies highlighted in the solid balance sheet and fundamentals stocks screener (49 results) that pair robust finances with room for future decisions. Hunt for potential mispricings by reviewing the 49 high quality undervalued stocks where quality businesses trade at prices that may not fully reflect their fundamentals. Strengthen your income watchlist by checking out the 9 dividend fortresses focused on higher yielding stocks that aim to combine payouts with resilience. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BFH. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by broad-based credit sales growth of 11% year-over-year, particularly in travel, sporting goods, and new furniture vertical partnerships. Management attributed the 16% growth in direct-to-consumer deposits to a strategic shift in the funding mix, which now reaches a 50% milestone of total funding. Improving credit metrics, including a 90 basis point year-over-year reduction in net loss rates, reflect proactive risk management and the maturation of higher-quality new account vintages. The company is strategically integrating AI to enhance operational excellence, focusing on productivity, risk management, and agentic commerce use cases with brand partners. Revenue growth of 7% was supported by average loan growth and the gradual realization of previously implemented pricing changes. Management emphasized a disciplined capital allocation strategy, prioritizing profitable loan growth and strategic technology investments over aggressive expansion. The consumer base remains resilient despite persistent inflation, evidenced by stable payment rates and an improving credit risk score distribution. Full-year average loan growth guidance was raised to low-to-mid single digits, assuming continued consumer resilience and a stable labor market. Net loss rate guidance was improved to a range of 7.0% to 7.1%, supported by visibility into the current delinquency pipeline and a shift toward higher credit quality. Management expects positive operating leverage for the full year, despite anticipated sequential expense increases in Q3 and Q4 driven by seasonal growth and technology investments. Net interest margin is projected to be flat to slightly higher than 2025, as pricing benefits and improved funding costs are offset by lower late fees from better credit performance. The company maintains a clear path toward a mid-20% ROTCE target, contingent on continued credit loss improvement and further optimization of the capital stack. The company repurchased 7% of outstanding common shares in Q2, though management noted the pace of buybacks will slow in Q3 to prioritize capital for accelerating loan growth. A second round of preferred stock totaling $135 million was issued to optimize the capital structure, with potential for an additional issuance no sooner than Q4. Retailer share arrangements (RSAs) are expected to increase in the second half of the year, which management views as a positive indicator of higher credit sales and improved loan yields. Total loss absorption capacity remains robust at 24.6% of total loans, providing a significant margin of safety against potential macroeconomic deterioration. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while June was exceptionally strong across the industry, July has shown signs of pulling back. Growth comparisons may slow in late 2026 as the company laps the initial ramp-up of major furniture partner launches from the prior year. Higher RSA payments are driven by improved risk-adjusted margins; when credit losses decrease, there is more profit to share back with partners. Management expects the RSA as a percentage of credit sales to trend upward over time due to competitive markets and the success of pricing actions. The current macro environment is sufficient to reach the 6% target over the next few years, provided unemployment stays below 5% and inflation drifts toward 2%. Management clarified they will not 'force' the 6% target through over-tightening, as their primary role is enabling sales for brand partners. Share buybacks will be dictated by loan growth; the seasonal uplift in Q4 loans typically requires more capital, naturally slowing repurchase activity. The timing of future buybacks is also linked to the opportunistic issuance of preferred stock to manage the 12% to 13% CET1 target range.

Bread Financial Holdings, Inc. BFH reported second-quarter 2026 operating income of $3.55 per share, outperforming the Zacks Consensus Estimate by 40.9%. The bottom line rose 20.7% year over year. Revenues increased 7% from the prior-year level to $993 million, exceeding the consensus estimate by 4.2%. The solid performance reflected higher revenues driven by loan growth, pricing actions, lower interest expense and higher interchange and merchant fees, along with improved credit quality. However, the gains were partially offset by higher provision for credit losses and elevated compensation costs. Bread Financial Holdings, Inc. price-consensus-eps-surprise-chart | Bread Financial Holdings, Inc. Quote Credit sales of $7.5 billion increased 11% year over year, driven by growth in new partnerships and increased general-purpose spending. Average loans increased 3% to $18.2 billion, while end-of-period loans rose 5% to $18.5 billion, supported by strong credit sales and partner expansion. Total interest income increased 3% to $1.2 billion, beating the Zacks Consensus Estimate by 0.8%, and our model estimate by 0.02%. The net interest margin improved 78 basis points to 18.5%, whereas the Zacks Consensus Estimate was pegged at 16.9%. Total non-interest expenses remained flat year over year at $483 million, as higher employee compensation and benefits costs were offset by the prior-year impact of debt repurchases. The delinquency rate of 5.7% improved from 5.2% year over year. The net loss rate of 6.9% improved 90 basis points year over year. Pre-tax pre-provision earnings increased 14% year over year to $510 million. Adjusted PPNR, a non-GAAP financial measure that excludes gains on portfolio sales and the impact of debt repurchases, increased 11% year over year to $510 million. Bread Financial exited the second quarter of 2026 with cash and cash equivalents of $3.6 billion, largely unchanged from the 2025-end level. Tangible book value was $63.66 per share as of June 30, 2026, up 22% year over year. Return on average equity was 17.1%, which decreased 40 basis points year over year. BFH repurchased 2.8 million shares of common stock for $241 million during the second quarter of 2026. It ended the second quarter with $449 million remaining under its share repurchase authorization. Management expects average loan growth to increase year over year at a low- to mid-single-digit rate. It expects total revenues to grow at a low- to mid-single-digit pace, broadly in line with loan growth. The net loss rate is expected to be 7-7.1%. The effective tax rate is anticipated to be 25-27%, with some quarterly variability. Bread Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Synchrony Financial SYF reported second-quarter 2026 adjusted earnings per share (EPS) of $2.59, which surpassed the Zacks Consensus Estimate by 24.5%. The bottom line increased 3.6% year over year. Net interest income increased 1.9% year over year to $4.6 billion but missed the consensus estimate by 1.1%. Alerus Financial ALRS is set to report second-quarter 2026 results on July 29, after the market closes. The Zacks Consensus Estimate for earnings is pegged at 78 cents per share, which has witnessed one upward revision in the past 60 days, with no movement in the opposite direction. The company beat earnings estimates in each of the trailing four quarters, with the average surprise being 35.8%. The consensus estimate for Alerus Financial’s second-quarter revenues is pinned at $76.85 million. Acadian Asset Management Inc. AAMI is set to report second-quarter 2026 results on July 30, before the market opens. The Zacks Consensus Estimate for earnings is pegged at $1.05 per share, which has witnessed one upward revision in the past 60 days, with no movement in the opposite direction. The company beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 8.6%. The consensus estimate for Acadian Asset Management’s second-quarter revenues is pinned at $179.43 million. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report Synchrony Financial (SYF) : Free Stock Analysis Report Alerus Financial (ALRS) : Free Stock Analysis Report Acadian Asset Management Inc. (AAMI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 23, 2026 at 8:30 a.m. ET Head of Investor Relations - Brian Vereb President and Chief Executive Officer - Ralph Andretta Executive Vice President and Chief Financial Officer - Perry Beberman Operator: Good morning, and welcome to Bread Financial's Second Quarter 2026 Earnings Conference Call. My name is Shannon, and I will be coordinating your call today. It is now my pleasure to introduce Mr. Brian Vereb, Head of Investor Relations at Bread Financial. The floor is yours. Brian Vereb: Thank you. A copy of the slides we will be reviewing and the earnings release can be found on the Investor Relations section of our website at breadfinancial.com. On the call today, we have Ralph Andretta, President and Chief Executive Officer; and Perry Beberman, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are based on management's current expectations and assumptions and are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. Reconciliation of those measures to GAAP are included in our quarterly earnings materials posted on our Investor Relations website. With that, I would like to turn the call over to Ralph Andretta. Ralph Andretta: Thank you, Brian, and good morning to everyone joining us today. We are pleased with the strong financial results Bread Financial delivered in the second quarter. We saw accelerating credit sales, continued loan and deposit growth, increased revenue and PPNR, and improving credit performance. These results demonstrate the strength of our business model and the benefits of our continued emphasis on responsible growth and operational excellence, positioning Bread Financial for sustained positive long-term performance. For the quarter, net income was $146 million, and tangible book value per common share increased 22% year-over-year to $63.66. Adjusted PPNR grew 11% year-over-year, supported by 7% revenue growth and ongoing disciplined expense management. Our strong execution across product mix and industry verticals is reflected in our second quarter credit sales growth of 11% year-over-year and 5% end-of-period loan growth. Our growth in the quarter was broad. Our existing co-brand partnerships, especially in travel and sporting goods, continue to see healthy growth. In addition, we continue to expand our reach to our Ford program launch, new home partnership with Raymour & Flanigan, Furniture First, and Ethan Allen, and our Bread Pay partnership with Vivint. These relationships reinforce the value we deliver through flexible payment solutions, disciplined underwriting, and a strong partner focus. End-of-period direct-to-consumer deposits grew 16% year-over-year to $9.4 billion. This marks our second strongest quarter of growth since the program began in 2019. Our direct-to-consumer deposits now comprise 50% of our funding mix, achieving an important milestone for the company and a target we set during our initial Investor Day. I am pleased with the growth and see further opportunity to build on this success. Also during the second quarter, we continued to optimize our capital stack, issuing a second round of preferred stock and repurchasing 7% of our outstanding common shares. We will remain disciplined in our capital allocation strategy, prioritizing responsible, profitable loan growth and strategic investments in our business. Our results underscore our success in executing our priorities despite ongoing macroeconomic uncertainty. Persistent inflation continues to influence household decision-making. Even so, our consumers' financial health remains resilient, as evidenced by continued sales growth, a stable payment rate, and improving credit performance. We saw improvement in both our net loss rate and delinquency rate, reflecting the benefits of proactive credit risk management, disciplined underwriting, and the quality of our customer base. We will remain appropriately cautious given the broader macroeconomic environment. These trends reinforce our confidence in our business outlook and the effectiveness of the actions we have taken. Finally, turning to our investment priorities. We continue to make targeted investments that support growth for Bread Financial and our partners. These efforts span digital and technology enhancements across the enterprise, including the responsible use of AI. We are strategically integrating AI in ways that advance operational excellence by improving productivity and efficiency, enabling innovation, and enhancing risk management. Additionally, we are collaborating with our partners to develop use cases in agentic commerce and servicing, further advancing innovation across the customer experience. We prioritize AI outcomes that remove friction and drive results so ideas can turn into measurable progress for our brand partners and customers. As I highlighted, this was another strong quarter for our company. Our success is a result of the efforts of our associates and leadership team. As we transformed Bread Financial over the past 6 years, we focused on building a resilient business through strengthening our balance sheet, investing in areas that drive responsible, profitable growth, and efficiencies. The transformation of our company is now evident in our results. Investors are increasingly recognizing the value our business model creates and the remaining catalyst to drive further improvement in our financial results. We are proud of the progress, and we remain focused on delivering sustainable shareholder returns over the long term. Now I'll pass it over to Perry. Perry Beberman: Thank you, Ralph. Slide 3 highlights our second quarter performance. We delivered a solid quarter. Average loans increased 3% to $18.2 billion, while end-of-period loans increased 5% to $18.5 billion, reflecting the new partner and credit sales momentum that Ralph mentioned, as well as improving credit performance. Revenue increased $64 million, or 7% year-over-year. The increase was primarily driven by average loan growth, impacts from previously implemented pricing changes, lower interest expense, and higher interchange and merchant discount fees related to higher credit sales. These benefits were partially offset by higher retailer share arrangements and lower billed late fees. We generated net income of $146 million and a diluted EPS of $3.55. Net income increased $7 million, or 5%, primarily due to loan growth resulting in higher revenue, partially offset by higher provisions for credit losses and income taxes. The higher provision for credit losses reflects a reserve release of $3 million this year, compared to a release of $74 million last year, with the variance primarily driven by the strong sequential period-end loan growth in the second quarter of this year. Looking at the financials in more detail on Slide 4. Second quarter net interest income increased 7% year-over-year, driven by the gradual build of our pricing changes and lower interest expense. Noninterest income was lower year-over-year by $1 million, or 4%, driven by higher retailer share arrangements, or RSAs, which includes both higher credit sales-related partner payments and increased profit share driven by improved loan yields and credit losses. Sequentially, while payments under our retailer share arrangements were higher, the impact was offset by stronger-than-expected interchange revenue, merchant discount, and other fees. We expect the RSA payments to increase in the third quarter as a result of our continued expected growth as well as timing. To be clear, these higher payments are a positive indicator, reflecting stronger credit sales, growing loan balances, and the benefits of our pricing actions, all of which have driven revenue growth. Additionally, these payments are impacted by an improving net loss rate, stronger partner retention, and new partner additions. Total noninterest expenses were nearly flat year-over-year, as higher employee compensation and benefit costs were offset by the prior year impacts from debt purchases. Excluding the impacts from debt repurchases, expenses were up $15 million, or 3%. Looking at the expense line item variances, which can be seen in the appendix, employee compensation and benefits costs increased primarily due to higher wages related to annual merit increases and incentive compensation, as well as increased medical claims, partially offset by operational excellence initiatives. Given our expectation for continued loan growth and strong seasonal sales activity in the second half of the year, we anticipate expenses will increase sequentially in the third and fourth quarters. These increases reflect higher growth-related variable expenses as well as continued investments in growth, efficiencies and new capabilities. Finally, PPNR was strong, increasing $62 million or 14% year-over-year, while adjusted PPNR, which excludes impacts from debt repurchases, increased $49 million, or 11%. These results were driven by growth in our loan portfolio and ongoing pricing and expense discipline. Turning to Slide 5. Net interest margin of 18.5% increased year-over-year, while sequential movement reflected normal seasonal trends. Billed late fees continued to move lower sequentially and pressured NIM as delinquency rates improved. We are also seeing interest expense decrease as our cost of funds benefits from the funding actions we have taken over the past year. As Ralph highlighted, our direct-to-consumer deposit platform continues to grow, reinforcing a cost-effective and steady, reliable funding source. Average direct-to-consumer deposits represented 50% of total funding, up from 45% a year ago. We continue to see value in this program, with a goal of increasing our DTC deposits as a percent of our overall funding mix. Moving to Slide 6. Our liquidity position remains strong. Total liquid assets and undrawn credit facilities were $6.7 billion at the end of the quarter, representing nearly 30% of total assets. At quarter end, deposits comprised 80% of our total funding with the majority being FDIC insured direct-to-consumer deposits. Shifting to capital, we ended the quarter with a CET1 ratio of 12.9%, down 10 basis points compared to the last year. As shown in the upper right table, our CET1 ratio benefited by 340 basis points from core earnings, Common stock repurchases and preferred and common stock dividends reduced our capital ratios by 320 basis points, while the impact from costs related to debt repurchases accounted for approximately 30 basis points impact to CET1 since the second quarter of 2025. Adding some detail to the capital items Ralph mentioned. In the quarter, we further optimized our capital structure by issuing $135 million of 8.875% preferred stock. This successful issuance, combined with continued strong earnings, positioned Bread Financial to return value to shareholders through share repurchases, buying back 2.8 million shares or $241 million of common stock. We ended the second quarter with $449 million remaining under our current stock repurchase authorization. The pace of our share repurchase activity will slow in the third quarter compared to the second quarter as loan growth is anticipated to increase for the remainder of the year. For context, the month of July, we plan to repurchase $25 million of common stock. Additionally, the timing of a potential additional preferred share issuance will likely occur no sooner than the fourth quarter of this year, depending on market conditions. Finally, looking at the bottom right of the slide, our total loss absorption capacity, comprising total company tangible common equity plus credit reserves, ended the quarter at 24.6% of total loans, demonstrating a strong margin of safety should economic conditions deteriorate. We have a proven track record of building capital and generating strong cash flow, and we remain well positioned across capital, liquidity, and reserves. This foundation provides the stability and financial flexibility needed to navigate an ever-evolving economic environment while continuing to create value for our shareholders. We continue to maintain our commitment to disciplined capital allocation. First and foremost, support responsible, profitable loan growth with the right returns that will regenerate capital for years to come. As we are experiencing faster loan growth this year, it will become a more important and prevalent use of capital. Invest in core technology and AI capabilities to support existing and new partners, improve customer experience, and increase risk management, allowing us to remain competitive and more efficient over time. Lastly, return unused capital back to shareholders in the form of dividends and share buybacks while maintaining appropriate capital levels. Moving to credit on Slide 7. Our delinquency rate for the second quarter was 5.25%, down 48 basis points from last year and down 34 basis points sequentially. Our net loss rate was 6.98%, down 90 basis points from last year and down 35 basis points sequentially. These results reflect the benefits of our disciplined credit risk management, sophisticated underwriting, and the continued maturation of higher-quality new accounts. We anticipate that the third quarter net loss rate will be approximately 30 basis points better than the second quarter. Overall, consumers managed well throughout the quarter. The tailwind of tax season, along with generally healthy employment and wage growth, helped blunt inflationary pressure, inclusive of elevated fuel prices, resulting in strong sales and payments with an improving credit risk score mix. The second quarter reserve rate improved 66 basis points year-over-year to 11.23%, driven by our improving credit metrics, higher credit quality new vintages and stronger credit risk distribution, with 65% of cardholders having a prime score above 650. Regarding our credit reserve modeling, we continue to apply prudent weightings on downside economic scenarios given the wide range of potential macroeconomic dynamics, including ongoing uncertainty related to global conflicts and their downstream impacts, including on inflation. These weightings remained unchanged from the prior quarter. Turning to Slide 8. Our revised 2026 outlook is based on the strong results we delivered in the first half of the year and a macroeconomic forecast that assumes continued consumer resilience, inflation remaining above the Federal Reserve's target rate of 2% and a generally stable labor market. We are pleased with the solid loan growth we produced in the second quarter. Given our results to date, we now expect full year 2026 average credit card and other loan growth to be up low to mid-single digits compared to 2025 versus our prior guidance of low single digits. Growth will continue to be supported by our stable partner base and new business launches, resulting in strong credit sales coupled with continued gross credit loss improvements. Total revenue growth is now also anticipated to be up low to mid-single digits, primarily driven by average loan growth. We anticipate full year net interest margin to be flat to slightly higher than 2025 as a result of ongoing benefits, albeit slowing, from previously implemented pricing changes and improved funding costs. These NIM tailwinds will be partially offset by lower billed late fees from improving delinquency trends and continued product mix shift with better credit risk. As I mentioned previously, for noninterest income, we expect higher retailer share arrangements going forward as a result of both higher credit sales-related partner payments and increased profit share driven by improved loan yields and credit losses. We manage expense growth based on revenue generation and ongoing investment in our business, and we anticipate delivering positive operating leverage in 2026, excluding the pretax impacts from debt repurchases. As I mentioned, we will continue to invest in our business to drive growth, build new capabilities for our partners and customers, and deliver future efficiencies. Given the continued improvement in our credit metrics, we have improved our full year net loss rate guidance to an expected range of 7.0% to 7.1%, versus our prior guidance of the low end of 7.2% to 7.4%. This updated guidance contemplates our visibility into the current delinquency pipeline, combined with stable macroeconomic conditions, continued risk and product mix shifts, and a resilient consumer. We continue to expect our full year normalized effective tax rate to be in the range of 25% to 27% with quarter-to-quarter variability due to timing of certain discrete items. Overall, we delivered impressive financial performance in the second quarter, continued to generate capital, and demonstrated our ability to manage effectively through an uncertain operating environment. As we move to the second half of the year, we remain confident in our ability to deliver on our revised 2026 financial targets. Finally, Slide 9 highlights the financial targets initially discussed during our Investor Day in June of 2024. Given the progress we have made executing on our initiatives over the past few years, we are well positioned to deliver on our updated near-term targets. With continued PPNR growth momentum driven by responsible loan growth and operating efficiency, along with progress optimizing our capital stack and achieving our targeted credit metrics, we have a clear path to achieving our long-term mid-20s percent ROTCE target in the coming years. Delivering these returns, combined with business growth, should provide significant value to Bread Financial shareholders. Operator, we are now ready to open the lines for questions. Operator: Our first question comes from the line of Moshe Orenbuch with TD Cowen. Moshe Orenbuch: Great. Thanks. Thanks very much. And maybe, Ralph and Perry, the period-end loan growth already is kind of in the mid-single digits as of this quarter. As you look at both credit sales growth and kind of its impact on loan growth and everything else that's out there, how do you think about the possibility of that accelerating during the second half of the year? Perry Beberman: Thanks, Moshe. Appreciate the question. Yes, we're really pleased with the performance of loan growth and credit sales growth so far this year. I think as you look towards the back half of the year, one, there is a little bit of uncertainty. I think across the industry, the month of June in and of itself was a stronger-than-usual month. And I think already July is showing signs of pulling back, and that's industry-wide, not just unique to us. And then for us, particularly as you look in the back part of the year, we're going to start comping and growing over some product launches or new partner launches that we had in our furniture vertical that was in the fourth quarter, particularly, and that will, I'd say, slow the growth comparison considering those programs are ramping up throughout the end of last year and obviously through the first half of this year. And then for us overall, when you look at the guide, it's an average loan guide. To your point, you'd expect the end-of-period loans to be higher than that, probably more than that mid-singles. But holiday spend has a lot to do with the variability of the end loans. Moshe Orenbuch: Got it. Makes a lot of sense. Thanks, Perry. And maybe could you just talk about in maybe a little more detail. I know you spoke about it a little bit on -- in your prepared remarks, but in terms of how to think about your relationship with the retailers and the RSA as you go forward and what is a better growth environment and potentially better profitability as well? Perry Beberman: Yes, I appreciate that question. RSA is a -- noninterest income in total, too. It is a challenging line because of all the things that net in it, right? So you have higher credit sales. That's great because it's driving more interchange, more merchant discount fees, more activity through there. And then conversely, it means you're paying more back to -- in customer rewards, you're paying more to retailers in terms of the share agreements, and that's in the form of basis points on spend. It's on revenue share or profit share, and that can have different elements depending on the partner and the mix of how much they want to be. They're compensated based on credit sales alone or more robust, sophisticated ones want more of that revenue share arrangement. So as we continue to improve our overall performance, as noted, the revenue through RSA is going to increase over time. And that's why we say that's a good thing overall. And then as you bring in newer partners, they have different types of constructs, renewals are always happening. So all these things together, you should expect the RSA payments to increase. Operator: Our next question comes from the line of Sanjay Sakhrani with KBW. Sanjay Sakhrani: I kind of want to follow up on Moshe's question on the credit sales specifically, Perry. So I understand like the comp does get a little bit more difficult for credit sales, but it still seems like it's relatively low a year ago. We shouldn't see a significant step down in the growth in sales unless there's seasonality, correct? And then as we think about how to factor in the RSAs, we tend to look at like that revenue line relative to sales. Is that the way to think about it? And obviously, that compressed sequentially, so should we assume it stabilizes here? Maybe you could just give us a little bit of color as to how we model that line, given the higher RSAs. Perry Beberman: Yes. Thank you for the question, Sanjay. Look, on the credit sales, I think we're now hitting that inflection where we've got good momentum. We're really encouraged. The business development team and our client partnership team, making great progress with our partners and the new additions we've had. And as I mentioned, some of that sales growth is comping off a lower first half of 2025. And then back -- towards the back end of 2025, we started to ramp up those new partners. So the comps will start to look a little less. So I'm not suggesting that we won't have really strong credit sales growth. It might -- but it won't look like necessarily 11% the rest of the way because June was an exceptionally strong month across the industry. And then as you think about your question on RSA, we've always said you can look at that as a percent of credit sales, and that's probably the best way to look at it. But over time, I would expect that percent to most likely increase as -- through competitive markets, better performance in the P&Ls, so more revenues getting shared, right? True profit share, if credit losses go down, and the margins -- the risk-adjusted margins widen, there's more to share back to the partners. As well as some of the pricing changes that are working through, we did say the idea was that, that was going to result in more sharing back to partners, and that's going to play through as well. Sanjay Sakhrani: Okay. Maybe I'll follow up with Brian after the call. And then just credit quality, you mentioned very strong. The delinquency rate dropped below sort of the 5-year average. Seems like the mix shift is moving towards higher credit quality loans as well. So should we expect that to continue to track down or inflect at some point because you do have this growth coming on and the seasoning related to that? Because I think that's something we need to start thinking about a little bit. And then how should we also think about that reserve rate on a go-forward basis relative to whatever the new normal of CECL Day 1 could be? Perry Beberman: Sure. So I'll take those 2 questions. Look, on credit, we're really pleased with the performance. I would tell you, the improvement is across the board, whether it's the existing portfolio or the new vintages that we're booking. Everything is moving in the right direction from entry rates are looking better, performance through the different buckets of the roll rates are improving. Everything we said we were looking for to improve our outlook is playing through. Some of it is, as you noted, a little bit of that's some growth benefit that we're getting, but it's not a material amount of that. And we're very pleased with the new vintages that are coming in. And again, we've talked about trying to book new vintages that are around that 6%. We underwrite for profit. So the seasoning is less of what I'd say is a worry. And as you think about the guide that we just gave, where we reaffirmed that our near-term growth outlook should be low to mid-single-digit average loan growth, and that striving to get more towards that mid- to high single digit. I think we've got plenty of runway in front of us before we start thinking that the seasoning of the portfolio is going to slow the improvement that we should see as we glide our way to 6% loss rate. And then as it relates to CECL, again, I'll say also, that's largely macro-dependent. I mean, right now, we're assuming things remain pretty stable in order for us to do that. We don't need a significantly improving macroeconomic environment to get there. But certainly, if things go sideways the other way, that will put pressure on the pace at which we can improve. And related to CECL, kind of in tandem, the CECL can move down largely in line with credit quality improvements. I've said before, we should find a path to get closer to 10% over time. And as we get closer to that 6% target, you can expect that the CECL rate will get down around that 10% target. Operator: Our next question comes from the line of Terry Ma with Barclays. Terry Ma: Maybe just to start off with credit sales. It did accelerate pretty meaningfully this quarter. Any color on how much of that acceleration was from new partners versus existing partners? And then I think you called out a slowdown in July thus far. Maybe just talk about what verticals you're seeing those slowdowns. Ralph Andretta: Yes, Terry, it's Ralph. How are you? I think the growth was broad, but if I had to isolate it, it was T&E, sporting goods, and from new partners, Raymour & Flanigan, Ethan Allen, Furniture First really drove a lot of that growth. But also Bread Pay had a really good quarter, particularly around a new partner called Vivint. So it was broad, but those were -- that's where the growth came from. Terry Ma: Got it. And then the -- on the deceleration thus far in July, like where are you seeing that? Ralph Andretta: Again, I think it's broad. I think -- quite frankly, I think Perry said it. We still expect spending growth, but it may not be as robust as the second quarter, but we've seen it across the board. Terry Ma: Got it. That's helpful. And then maybe just on the NIM, you guys touched on it a little bit. NIM was pretty strong first half. Your full year guide is for flat to slightly up. Maybe just kind of talk through the moving pieces in the second half. Does that kind of imply lower year-over-year NIM? Perry Beberman: No, not necessarily. I mean it's going to move around seasonally. We've got the third quarter -- the second quarter is obviously down from the first quarter, then it goes back up, and the third quarter comes back down in the fourth quarter. So there's a lot of moving parts in there. And as Ralph just talked about, where the credit sales are coming from, that results in a different product mix also. Different product mix has different yields. A private label has a much higher loan yield than some of the other things like maybe in some Bread Pay or Big Ticket. So you got to look at the total of that. We have pricing actions moving through. You have funding costs doing their thing. So I'd say there's a lot of impacts in there, which is why it's going to have a little more seasonal movement, maybe to a lesser degree than what it was last year. But all the way around, we've got things like better credit that's going to reduce late fees. That also puts pressure on the net interest margin, a little bit of an offset with slightly improving gross losses the rest of the year. That is a little bit of a benefit. There's less reversal of interest and fees. So a lot of moving parts, as we've talked about lots of times, and that's where we try to kind of give the overarching view of this. But when you think about if NIM were to slightly come down, I mean, that would still be an okay thing because that means we're getting better credit performance, too. Operator: Our next question comes from the line of Jeff Adelson with Morgan Stanley. Jeffrey Adelson: Maybe just to follow-up on the long-term targets you put in the slides. It seems clear that you think you have -- you said you have a path to get there now. I guess I was just curious on the ROTCE. You've been in this low 20% range already. You've stepped up pretty meaningfully recently to get there. What are the chances we actually overshoot the mid-20% here in the near term as the credit metrics continue to improve here and you kind of continue to execute? Maybe just help us understand the moving pieces there to getting to the mid-20% and why maybe it couldn't overshoot in the near to medium term? Perry Beberman: Yes. Thanks, Jeff. Look, ROTCE is going to move around a bit, and what I would say is if you strip out the CECL build release, that gives you a good view of the underlying core ROTCE. So when you think about the long term being at mid-20%, excluding mid- to high single-digit loan growth, where you have a -- and you say you already were at the target of a 10% CECL rate, you would expect, again, removing the CECL build that would require a higher than mid-20% core ROTCE. So every year is going to look different depending on the degree to which we're growing in that year, like ending loan growth in a particular year. So in a year where, like right now, to your point, the ROTCE looks pretty good, it better -- it looks ahead of schedule, but we're also not being taxed with, I'll say, a CECL growth tax because we're -- the rate's getting reduced and we're in that low to mid-single digit, I'll call it mid-single-digit end-of-period loan growth. So I think as the end-of-period loan growth accelerates and you are then having provision build, that's going to drag a little bit on that, what you would call an overshoot possibility on ROTCE. Now, the path to getting to the mid-20s%, there's 3 elements, right? There's -- one is continued improvement in credit losses. That's important. Two is us further optimizing our capital stack, and we've made great progress there. So we have a little bit of preferred stock left to go to really get the binding constraint down to that 12% to 13% CET1. And the third piece is continuing to scale and drive operating efficiency. Jeffrey Adelson: Okay. Great. That's clear. And just a follow-up on the noninterest income line and the RSA. I know you already talked about the outperformance of interchange this quarter, and it's always difficult to pin that down. But maybe just what specifically, I guess, why didn't that interchange flow through maybe a higher RSA payment this quarter? Or what specifically led to the RSA maybe staying a little bit more muted than you would have thought this quarter? And I know you talked about the step-up happening next quarter in the RSA, but just maybe help us pin down the noninterest income line as well, broadly. Perry Beberman: Yes. Broadly, the noninterest income line, we had a little bit better benefit in other fees. Merchant discount fees came in stronger as originations came in much higher for the quarter. And then the interchange came through. So then in terms of the RSA, some of that is a little bit of timing. And we expect that the profits -- as the margin continue to improve and the partner payments -- partner programs come on, you're going to see more payments, which is why we try to give a little more detail to the earlier question that you should start to see that RSA as a percent of credit sales, percent of revenue is going to continue to increase a bit over time. Operator: Our next question comes from the line of John Hecht with Jefferies. John Hecht: Maybe just in terms of the increase in the growth guide, I know you've been -- you're kind of running at this pace already, but if you can break it down by new customers and how they contribute to growth versus increasing spend and borrow from the current book? Perry Beberman: Yes. Thanks, John. So I'd say a couple of things. One is the existing partner base is very strong. And we're seeing some improvement on existing partners. So that's important. As we said before, as gross losses improve, that means you don't have as much going out the back door as you're bringing in the front door. So the existing programs that we have stabilized and are showing some nice -- some growth. And as Ralph mentioned, we -- from the new programs that we launched in the back half of last year and continue to ramp up this year, they're contributing to growth. And then Bread Pay was a nice bit of growth that we're experiencing from some of those new partners on the platform on that side. So we expect that to continue to experience good growth, and we'll continue to add more partners later in the year, and we'll talk about that over time. John Hecht: And then I guess a sort of related question is, where are you guys seeing momentum in spend? Is it the more, call it, traditional retail counterparties? Or is it more of the platform kind of programs like the NFL? Or is there a specific product category that you're seeing green shoots and momentum build? Ralph Andretta: We've seen spend really across the board. So particularly on our co-brand products that we have in the marketplace where we have general purpose spend. As I said earlier, T&E has been a really good area for spend growth. We've seen spend in sporting goods. And those new partners, that furniture vertical has really performed very well. But as I said, Bread Pay also has performed very well, particularly around 2 or 3 of the partners, one of them being Vivint. Operator: Our next question comes from the line of Mihir Bhatia with Bank of America. Mihir Bhatia: I wanted to start maybe on expenses. I think if I heard correctly, you said expenses will increase sequentially in both 3Q and 4Q as you invest in growth-related expenses and investments in AI technology capabilities. Can you just help us distinguish a little bit between the variable growth expenses from the discrete and -- versus the discretionary spend? And just with that cadence, should we still expect positive operating leverage for the full year? Or is that a little bit more dependent now on revenue getting closer to the high end of the guide? Perry Beberman: Hi, thanks, Mihir, for the question. Yes, I think as we think about -- as the volumes increase, meaning that you have more accounts, more accounts lead to more customer service calls, more reps, the volumes going through. Again, there's variable costs associated with that on everything from technology costs, card processing costs, that go along with that. And that's just normal. And that's fine. So we also have maintained ever since Ralph took over, our focus on transforming the company, investing in technology, and AI is obviously ramping up. It's not as if we haven't been investing in AI over the past couple of years, but there's an opportunity to lean in more as the agentic opportunities are presenting themselves, as well as tools and things we can use with our associates that make us better. And all that is under the umbrella of operational excellence. So that helps drive efficiencies, that helps self-fund a lot of the investments that we make. And so where we talk about expenses ramping up over the back half of the year, it's not like it's going to be these major step functions, but we're just trying to share that we're committed to positive operating leverage for the year. And that is not, I'd say, at risk at this point, if there was something different, that we would say that. I mean we're very confident in our ability to deliver positive operating leverage because of the start we've got off to this year and what we see for the rest of the year at this point. We'll continue to manage expenses responsibly. Now that doesn't mean that we would forgo making an important investment if it had to be done, but we are able to fund these investments appropriately because of those operational excellence efficiencies that we've been driving that creates tens of millions of dollars for us to reinvest into the company. So for us, with the loan growth, driving revenue, that's a good thing that then allows us to put some of that money back into the company to set us up with our brand partners to deliver capabilities for them, for the customers, to service them in the way they want to be serviced and the features and things. And then also obviously, robust risk management that we have to have in place. Mihir Bhatia: Got it. That's helpful. And maybe just turning to credit for a second. You've talked, I think you laid out the target again for 6% net loss rate. But I think you've also said you don't want to force it there just from overly tightening. Just given the improvement you're seeing in the new vintages you're putting on, you look at delinquency loss trends, just any thoughts on the timing to get to that target? And what do you need to see happening from a macro? Is the current macro good enough? Or do you need to see more improvement there? Perry Beberman: Yes, Mihir, I think -- I'd say this probably some debate if I had our credit strategy team in front of me right now. I think we would say that the current -- if the current macro environment stayed where it is with unemployment below 5%, call it inflation continues to drift back towards 2% over time. Even with the current interest rate environment, it may be this way for a while. I think we've got a path to get towards that 6% over the next couple of years. The pace at which we get there will be dependent on, obviously, the macro environment. It always is. And then the new vintages that we're putting on, to your point, are good quality. We like what we put on. We have a very, very experienced credit team that looks at the customers coming in, understands how to price them appropriately to make sure we get the right returns. And you said it well, we're not forcing our way to 6% by over tightening because we're in the business of enabling sales for our brand partners. I think we've done this really well. We've demonstrated this through this recent -- I call it a cycle, but a period of time. And so that's going to be important for us to keep doing that. But these newer vintages are coming on a little larger, having more impact. Their product mix and risk mix is a little better. So I think we're going to continue to see good improvement, as I mentioned earlier, with the glide path that we're on into '27 and hopefully, in '28, we're able to achieve that target. But again, that will all be dependent on macro. And if macro weakens, that could push the target out a little. It just -- but I wouldn't expect us to get there for a full year next year. Operator: Our next question comes from the line of John Pancari with Evercore. Russ Anderson: This is Russ Anderson on for John Pancari. Just on the buyback cadence and CET1 fell to 12.9% from solid buybacks. Your near-term target is 13% to 14%. I know you mentioned the slowdown into the second half as loan growth accelerates, and then the July repurchases of $25 million. Is that $25 million per month a good way to think about the second half? Or how should we think about that cadence? Perry Beberman: Hi, Russ. Thanks for stepping in for John. We're not going to give specific guidance on a particular month or quarter. There's -- loan growth is going to dictate candidly how much available capital we have. I mean that's going to be our primary driver right now. And if you think about fourth quarter where there's a significant seasonal uplift in loans, that means it requires a decent amount of capital to capitalize those loans as well as you have a CECL build typically in that quarter. That also puts pressure on earnings before tax or net income in that period. So it's usually going to slow down anyways most fourth quarters. And then for us, the pace may also be a little bit dependent, as I said in the prepared remarks, the next tranche of preferred stock issuance that we would want to do if the fourth quarter is opportunistic or not. And if it's not because of, say, market conditions aren't there, it will push itself into the first part of -- first half of next year. So that would be the other component. Remember, we had that availability of slower loan growth in the first quarter and beginning of the year, but it ramps towards the back part and particularly seasonally on an end-of-period loan growth, and that will slow things down. And in the first half, we did have that preferred issuance. So keep that in mind as you're thinking about modeling this. Russ Anderson: Okay. And then if I could jump back to credit. DQs and NCOs came in pretty solid and accelerated year-over-year. I believe you noted that 3Q NCO should be 30 bps better than 2Q. It seems like that means the implied NCO rate for 4Q will reflect a little bit more normalization in that year-over-year improvement to reach kind of the midpoint of your guide. Can you just kind of talk about what you're seeing in the DQ roll rates and the drivers of that in the second half in 4Q? Perry Beberman: Yes. As you look at it, I think you always get this put on the news, there's still a lot of uncertainty out there and variability based on what's happening with fuel prices. So we try to take more of a -- I'll say, a down the middle view of this. We're accounting for a little bit of uncertainty that's out there, right? I mean if fuel prices go back up, consumers are going to have to take some of their available cash to put it towards dealing with things at the fuel pump and maybe pay a little less. So it's something that we're watchful of, and we're still remaining cautious. I mean if fuel prices come back down and snap back down fast, I'd tell you there's -- we have more optimism. But if things continue to worsen a little bit or weaken on that front, it'll put pressure. And that's where you got the range and it's kind of where we are with our current view. Operator: Our last question comes from the line of Dominick Gabriele with Loop Capital. Dominick Gabriele: Obviously, good results. I guess if you -- Ralph, if you look at this medium-term, long-term guidance and you look at how you've kind of transformed this business over the last number of years, I guess, tell us why Bread is not a low double-digit EPS growth engine? Ralph Andretta: A lot of this is macro-dependent. I think we are a low double-digit growth engine. So I'm confident we will be. But listen, it's macro-dependent. We're dependent on the macroeconomic environment, how consumers are feeling. So we are cautiously optimistic as we move forward. Dominick Gabriele: Great. I agree. And so Perry, if you look at the -- you talked about the NIM being flattish to slightly better. You've been growing your cash and investment securities as a percentage of average earning assets over the last number of years. And so I'm just curious how -- if you can talk to us about what your expectations are for that bucket, so I can get a better handle on kind of what really matters, which is the yield on the loans versus the funding costs. Perry Beberman: Yes, that's fair. I'll tell you that the cash that we have on hand will normalize over time. It may have a little more cash at different periods, but we'll make sure that we're not holding more than we need to. But hopefully, we have good loan growth or to put that cash to use to fund those incoming loans. Operator: I'll now pass it back to Ralph Andretta for closing remarks. Ralph Andretta: Thank you very much. As I said, we were very pleased with the quarter, and we want to thank you all for your continued interest in Bread Financial. And everybody, have a terrific day. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect. Before you buy stock in Bread Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bread Financial wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $369,577!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,301,557!* That performance is why people listen. 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Bread Financial (BFH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Financial services company Bread Financial (NYSE:BFH) reported Q2 CY2026 results exceeding the market’s revenue expectations , with sales up 6.9% year on year to $993 million. Its non-GAAP profit of $3.55 per share was 28.3% above analysts’ consensus estimates. Is now the time to buy BFH? Find out in our full research report (it’s free). Revenue: $993 million vs analyst estimates of $959.3 million (6.9% year-on-year growth, 3.5% beat) Adjusted EPS: $3.55 vs analyst estimates of $2.77 (28.3% beat) Operating Margin: 19.8%, up from 18.7% in the same quarter last year Market Capitalization: $4.19 billion Bread Financial delivered a second quarter that met Wall Street’s expectations for both revenue and non-GAAP profit, with management attributing performance to accelerating credit sales and broad-based loan growth. CEO Ralph Andretta noted that key verticals like travel and sporting goods, along with the expansion of co-brand partnerships and new program launches, underpinned the company’s credit sales growth. Management emphasized that the quarter’s results benefitted from disciplined underwriting and operational improvements, reflected in improving credit performance and a lower net loss rate. Looking ahead, Bread Financial’s outlook depends on continued loan growth, stable consumer credit quality, and the successful integration of new partners. Management highlighted investments in technology, digital enhancements, and artificial intelligence as central to driving efficiency and risk management. CFO Perry Beberman cautioned that credit and loan growth will remain sensitive to macroeconomic factors, saying, “the pace at which we get [to a 6% net loss rate] will be dependent on the macro environment.” The company aims to maintain positive operating leverage while investing in growth initiatives. Management credited the quarter’s growth to strong credit sales, broad partner contributions, and a rising share of direct-to-consumer deposits, while discussing the impacts of product mix and partner share arrangements on margins. Co-brand and new partner growth: Existing co-brand partnerships in travel and sporting goods, as well as new launches with furniture retailers and Bread Pay’s Vivint program, drove credit sales gains and expanded the company’s reach. Deposit milestone achieved: Direct-to-consumer deposits grew 16% year-over-year, now making up 50% of the funding mix—a stated goal achieved ahead of schedule, providing a reliable, cost-effective source of funding. Retailer share arrangements (RSAs) impact margins: Management noted that higher credit sales and improved loan yields increased RSA payments to partners, which while positive for growth, also muted some noninterest income gains due to greater profit-sharing obligations. Improved credit performance: The net loss rate and delinquency rate both declined compared to the prior year and prior quarter, reflecting stronger underwriting, higher-quality new accounts, and proactive risk management. Operational efficiency supports investment: Expense growth was kept nearly flat as higher compensation costs were offset by operational excellence initiatives, enabling continued investment in technology and AI without sacrificing operating leverage. Bread Financial’s guidance is shaped by expectations of steady loan growth, further credit improvement, and ongoing investment in technology and partner capabilities. Loan and partner expansion: Management projects low to mid-single-digit loan growth for the year, supported by stable partner relationships, new business launches, and a focus on responsible, profitable lending. The addition of new partners and ongoing ramp-up of recent launches are expected to contribute meaningfully to credit sales and portfolio growth. Credit quality improvements: Continued improvement in net loss and delinquency rates is anticipated, aided by disciplined underwriting and a favorable credit risk mix. Management’s revised net loss rate guidance reflects confidence in the consumer’s financial health, but remains cautious given persistent inflation and potential macroeconomic volatility. Technology and AI investment: Investment in digital platforms and artificial intelligence is expected to drive operational efficiency and enhance risk management. These initiatives will support growth, improve customer experience, and strengthen the company’s competitive position, though management noted that expense growth will be managed to maintain positive operating leverage. In upcoming quarters, the StockStory team will monitor (1) the pace of loan and credit sales growth, particularly as new partner programs mature, (2) trends in credit performance and whether improvements in net loss and delinquency rates persist, and (3) the impact of continued investments in technology and artificial intelligence on both efficiency and customer experience. Shifts in the macroeconomic environment and consumer behavior will also be important factors to watch. Bread Financial currently trades at $101.30, in line with $101.87 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. 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Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Bread Financial Holdings just saw its fair value price target move to $110.00 from $105.75, signaling a refreshed view of where the stock may sit in updated models. This shift comes as analysts factor in upcoming events such as the Q2 2026 earnings call and the planned executive transition that concentrates responsibility for revenue under a new Chief Revenue Officer. Read on to see how these moving pieces fit together and how you can track the evolving analyst narrative around Bread Financial Holdings. Stay updated as the Fair Value for Bread Financial Holdings shifts by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on Bread Financial Holdings. Several firms, including UBS, BTIG, Evercore ISI and BofA, have raised price targets on Bread Financial Holdings into a US$108 to US$132 range. These changes reflect updated models that incorporate recent Q2 results and guidance. TD Cowen, Morgan Stanley and Barclays highlight Q2 performance as better than expected or strong. Their comments point to loan growth, non interest income and expenses as key supports for current earnings guidance. BofA and RBC Capital point to improving credit trends and loan growth as important pillars in their research. BofA cites stronger non interest income, while RBC references management’s confidence following recent card data. Loop Capital’s initiation and BTIG’s longer dated target framework describe Bread Financial as part of a specialty finance group, with analysts updating views around earnings power and potential operating leverage. Despite higher targets, Morgan Stanley, Goldman Sachs, Barclays and TD Cowen maintain more neutral or Hold type stances. Their comments suggest that a large part of recent execution and guidance is already reflected in the current share price. Evercore ISI and BTIG flag that future guidance and the broader interest rate backdrop remain important variables. These factors can limit how far some analysts are willing to move from Equal Weight, Neutral or Sector Perform views. Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there's more to the story. Head to the Simply Wall St Community to discover more perspectives! We've flagged 2 risks for Bread Financial Holdings. See which could impact your investment. Fair Value moved to US$110.00 from US$105.75 in the updated model. Revenue Growth assumption was set at 17.76% compared with 17.12% previously. Net Profit Margin assumption was adjusted to 11.74% from 11.23%. Future P/E assumption was updated to 9.16x from 9.34x. Discount Rate used in the model is now 9.67% compared with 9.61% before. Narratives connect Bread Financial Holdings' business story to analyst forecasts and a fair value framework, updating as new data and research come through. They help you see how product decisions, partnerships and credit trends fit into one coherent outlook. Head over to the Simply Wall St Community and follow the Narrative on Bread Financial Holdings to stay up to date on: How Bread Financial is using technology modernization, digital products and AI driven tools to improve efficiency, credit assessment and customer targeting. The role of co brand and private label partnerships, embedded financing options such as BNPL, and deposit growth in shaping future revenue and funding mix. Key risks around a shift to higher quality customers, competitive pressure on partner economics, tighter credit standards and exposure to consumer and macro conditions. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BFH. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Net Income: $146 million for the second quarter. Tangible Book Value per Common Share: Increased 22% year over year to $63.66. Adjusted PPNR Growth: 11% year over year. Revenue Growth: 7% year over year. Credit Sales Growth: 11% year over year. End of Period Loan Growth: 5% year over year to $18.5 billion. Direct to Consumer Deposits Growth: 16% year over year to $9.4 billion. Diluted EPS: $3.55. Net Interest Margin: 18.5%. Delinquency Rate: 5.25%, down 48 basis points year over year. Net Loss Rate: 6.98%, down 90 basis points year over year. CET1 Ratio: 12.9%. Common Stock Repurchases: 2.8 million shares or $241 million. Total Loss Absorption Capacity: 24.6% of total loans. Warning! GuruFocus has detected 5 Warning Sign with BFH. Is BFH fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Bread Financial Holdings Inc (NYSE:BFH) reported strong financial results for the second quarter, with net income reaching $146 million and a 22% year-over-year increase in tangible book value per common share. The company achieved an 11% year-over-year growth in adjusted pre-provision net revenue (PPNR), supported by a 7% increase in revenue and disciplined expense management. Credit sales grew by 11% year over year, with a 5% increase in end-of-period loans, driven by strong execution across product mix and industry verticals. Direct-to-consumer deposits grew 16% year over year to $9.4 billion, now comprising 50% of the company's funding mix, marking a significant milestone. The company continues to optimize its capital stack, issuing preferred stock and repurchasing 7% of its outstanding common shares, demonstrating disciplined capital allocation. Despite strong results, the company remains cautious due to ongoing macroeconomic uncertainty and persistent inflation, which could impact consumer decision-making. Higher provisions for credit losses and income taxes partially offset the increase in net income, reflecting a reserve release of only $3 million compared to $74 million last year. Non-interest income was lower year over year by 4%, driven by higher retailer share arrangements and lower billed late fees. The company anticipates expenses will increase sequentially in the third and fourth quarters due to growth-related variable expenses and continued investments. The pace of share repurchase activity is expected to slow in the third quarter as loan growth is anticipated to increase, impacting capital allocation flexibility. Q: How do you view the potential for loan growth acceleration in the second half of the year? A: Perry Beberman, CFO, noted that while there was strong loan growth in the second quarter, there is some uncertainty industry-wide. Growth comparisons may slow due to previous product launches in the furniture vertical, but end-of-period loans are expected to be higher, influenced by holiday spending. Q: Can you elaborate on the relationship with retailers and the RSA in a better growth environment? A: Perry Beberman explained that higher credit sales drive more interchange and merchant discount fees, which in turn increase payments to retailers through share agreements. As performance improves, RSA payments are expected to increase, reflecting stronger credit sales and improved loan yields. Q: What is the outlook for credit sales growth and RSA payments? A: Perry Beberman indicated that while credit sales growth has been strong, it may not maintain the same pace due to tougher comparisons. RSA payments are expected to increase over time as a percentage of credit sales, driven by competitive markets and improved profitability. Q: How is credit quality trending, and what is the outlook for the reserve rate? A: Perry Beberman highlighted improvements across the board in credit quality, with new vintages performing well. The reserve rate is expected to move closer to 10% as credit quality improves, aligning with a target net loss rate of 6%. Q: What factors are influencing the net interest margin (NIM) outlook for the second half of the year? A: Perry Beberman mentioned that NIM will experience seasonal fluctuations, influenced by product mix and pricing actions. While better credit reduces late fees, improved gross losses provide some offset. Overall, NIM is expected to remain flat to slightly up compared to 2025. Q: How do you view the potential for exceeding the mid-20s% ROTCE target? A: Perry Beberman stated that while ROTCE may appear ahead of schedule, it is influenced by factors like loan growth and credit loss improvements. The path to mid-20s% ROTCE involves optimizing the capital stack and achieving operating efficiency. Q: What is driving the increase in expenses, and will there be positive operating leverage for the year? A: Perry Beberman explained that expenses are rising due to growth-related variable costs and investments in technology and AI. Despite this, the company remains committed to achieving positive operating leverage for the year. Q: What is the outlook for achieving the 6% net loss rate target, and how does the macro environment impact this? A: Perry Beberman noted that the current macro environment supports a path to the 6% target over the next couple of years. The pace of improvement will depend on macroeconomic conditions and the quality of new vintages. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Bread Financial Holdings (BFH) came out with quarterly earnings of $3.55 per share, beating the Zacks Consensus Estimate of $2.52 per share. This compares to earnings of $3.14 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +40.87%. A quarter ago, it was expected that this manager of loyalty and rewards programs for retailers and others would post earnings of $3 per share when it actually produced earnings of $4.18, delivering a surprise of +39.33%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Bread Financial, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $993 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.21%. This compares to year-ago revenues of $929 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Bread Financial shares have added about 37.6% since the beginning of the year versus the S&P 500's gain of 9.6%. While Bread Financial has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Bread Financial was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.11 on $989.73 million in revenues for the coming quarter and $11.02 on $3.94 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Community Financial System (CBU), is yet to report results for the quarter ended June 2026. The results are expected to be released on July 28. This bank holding company is expected to post quarterly earnings of $1.19 per share in its upcoming report, which represents a year-over-year change of +22.7%. The consensus EPS estimate for the quarter has been revised 1.6% lower over the last 30 days to the current level. Community Financial System's revenues are expected to be $222.08 million, up 11% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report Community Financial System, Inc. (CBU) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research