Bread Financial Holdings, Inc.

Good morning and welcome to the Bread Financial fourth quarter 2025 earnings conference call. My name is Kevin and I'll be coordinating your call today. At this time, all parties have been placed on listen-only mode. Following today's presentation, the floor will be open for your questions. To register a question, please press star 1-1. It is now my pleasure to introduce Mr. Brian Verab, head of investor relations at Bread Financial. The floor is yours.

Thank you. Copies of the slides we will be reviewing and the earnings release can be found on the investor relations section of our website at brettfinancial.com. On the call today, we have Ralph Vendretta, President and Chief Executive Officer, and Perry Bieberman, 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.

Thank you, Brian, and good morning to everyone joining the call. Today, Bread Financial reported strong fourth quarter and full year 2025 results in line with our expectations. Starting with our 2025 financial achievements on slide two, we are proud of the progress we have made executing on our focus areas during the year. Leveraging our experienced team of associates and full product suite we delivered against our responsible growth objective with seven major new brand signings in 2025 and renewing multiple existing partners in a number of verticals. Our home vertical expanded significantly in 2025 with the signings of Bed Bath & Beyond, an e-commerce retailer with ownership interest in various retail brands. Furniture First, a national cooperative, buying group that serves hundreds of independent home furnishings and bedding retailers across the U.S., and Raymoor & Flanagan, the largest furniture and mattress retailer in the Northeast and seventh largest nationwide. Additionally, we signed and launched Crypto.com, as well as BreadPay installment lending relationship with Cricut Wireless and Vivid, reflecting our flexible payment options and seamless integrations and solutions. These relationships demonstrate how our product solutions span all generational segments and are supported by our digital-first approach, creating value for our brand partners through increased sales, revenue, and lifetime customer value. Shifting to our renewals, we renewed multiple brand partners this year, including a multi-year extension with our long-term partner, Caesars Entertainment. All of our top 10 programs are now renewed, until at least 2028. Additionally, in June, we launched a new enhanced fee-based Caesars Rewards credit card that gives members more ways to earn accelerated rewards and enjoy unique experiences. This is a clear example of how we continue to innovate and evolve our product set to fit our brand partner and customer needs and enhance value propositions to drive sales and loyalty. Our vertical and product expansion efforts continue to have a positive impact on both risk management and income diversification across our portfolio, with co-brand comprising 52% of our credit sales in the fourth quarter, up from 48% in the fourth quarter of 2024. Red Financial continues to leverage our partner-first culture and the experienced program management team to deliver full capabilities to brand partners and their customers. This includes providing a full suite of flexible payment options to unlock incremental sales and build loyalty through omni-channel delivery, seamless integrations, and exceptional customer experience. We are routinely chosen by industry-leading brands across a wide array of industry verticals to take their credit and loyalty programs to new heights. We continue to see success in our direct-to-consumer deposit program as it remains an important source of stable and lower-cost funding for the company. Our direct-to-consumer deposit balances increased 11% year-over-year and have grown 20 consecutive quarters, now representing 48% of our fourth-quarter average total funding, up from 43% a year ago. Regarding capital allocation in 2025, we returned $350 million in capital to shareholders. This includes $310 million in common share repurchases, resulting in the repurchase of 12% of our year-end 2024 outstanding shares. We also increased our quarterly common stock dividend by 10% during the fourth quarter of 2025. At the same time, we meaningfully strengthened and optimized our balance sheet by reducing and refinancing our senior debt, and issuing subordinated debt and preferred equity. Lastly, we received a credit rating upgrade from Moody's and Fitch and positive outlooks from Moody's and S&P during the fourth quarter, acknowledging the actions we have taken to strengthen and improve our financial resilience and enhance our enterprise risk management. Our focus on operational excellence and technology advancements was evident this year as we achieved our goal of delivering positive operating leverage with over year-over-year adjusted expenses, while continuing to invest in our business. During the year, we progressed our multi-year technology transformation, which included delivering new customer capabilities, continued cloud migration, and increased automation, including accelerating AI adoption. From a credit management perspective, we underwrite for profitability and returns, creating value for our partners, and providing purchasing power for consumers. The effective execution of the disciplined credit strategies and continued product diversification, coupled with a resilient consumer, led to improving credit metrics throughout 2025. Our full-year net loss rate of 7.7% was better than our outlook and meaningfully better than our initial expectations for 2025. We anticipate that a gradual improvement in our credit metrics will continue in 2026. Overall, we are pleased with our 2025 financial and operational results and remain confident in our ability to generate returns. Moving to the fourth quarter, key highlights on slide three. During the quarter, we generated net income available to common stockholders of $53 million, excluding the $42 million post-tax impact from expenses related to debt repurchases in the quarter, adjusted net income and earnings per diluted share were $95 million and $2.07 respectively. Our tangible book value per common share grew 23% year over year to $57.57, and our return on average tangible common equity was 8% for the quarter and 20% for the full year. In the quarter, we repurchased $120 million or 1.9 million common shares with $240 million remaining on our current share repurchase authorization. We also issued $75 million in preferred shares. consumer finance health remained resilient during the quarter, driving a 2% year-over-year increase in credit sales as a result of higher transaction sizes and increased transaction frequency. We are seeing consumers continue to allocate a larger portion of their budget towards non-discretionary spend. Within discretionary spend, we saw an increase in travel and entertainment spending compared to the fourth quarter of 2024. Additionally, Our credit performance trends continue to improve. The fourth quarter net loss rate was 7.4%. The positive trajectory of our credit sales and credit metrics, along with our new business additions and stable partner base, give us confidence that we are nearing an inflection point for loan growth as we enter 2026. Our solid, sustainable results underscore our disciplined approach to growing responsibly, building financial resilience, and advancing operational excellence. Supported by strong capital levels and cash flow generation, we entered 2026 with strong momentum, which positions us well to execute on our capital and growth priorities while delivering sustainable long-term value for our shareholders. Now I will pass it over to Perry to review the financials in more detail.