What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-02-13 compared with 2025-02-14 · 623 added, 627 removed, 1439 unchanged (46% of the section changed)

3 unchanged sentences

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Tabl e of Contents

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

10 unchanged sentences

Based on those criteria and management’s assessment, with the participation of our Chief Executive Officer and Chief Financial Officer, we conclude that, as of December 31, 2025, our internal control over financial reporting was effective.

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The effectiveness of our internal control over financial reporting as of December 31, 2025, has been audited by Deloitte & Touche LLP, our independent registered public accounting firm who also audited our Consolidated Financial Statements;

28 unchanged sentences

8-K 3.1 3/24/22

3.3 (a) Certificate of Designations of Series A Preferred Non-Voting Convertible Preferred Stock of the Registrant

3.3 (a) Certificate of Designations of 8.625% Non-Cumulative Perpetual Preferred Stock, Series A of the Registrant

8-K 3.1 11/25/25

3 unchanged sentences

10-Q 4.0 8/8/03

(a) Description of Registrant’s Common Stock

(a) Description of Registrant’s C apital Stock

+10.1 (a) Bread Financial Holdings, Inc.

21 unchanged sentences

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(a) Form of Performance-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc.

37 unchanged sentences

8-K 4.6 8/31/01

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(d) Second Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of May 19, 2004, among World Financial Network National Bank, WFN Credit Company, LLC and BNY Midwest Trust Company.

8-K 4.1 8/4/04

Tabl e of Contents

(d) Third Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of March 30, 2005, among World Financial Network National Bank, WFN Credit Company, LLC and BNY Midwest Trust Company.

18 unchanged sentences

8-K 4.2 6/16/20

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(c) Twelfth Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of October 27, 2020, among WFN Credit Company, LLC, as transferor, Comenity Bank, as servicer, and MUFG Union Bank, N.A., as trustee.

8-K 4.1 10/30/20

Thirteenth Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of April 26, 2024, among WFN Credit Company, LLC, as transferor, Comenity Bank, as servicer, and U.S.

Bank National Association, as trustee.

Bank National Association .

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Collateral Series Supplement to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 21, 2001, among WFN Credit Company, LLC, World Financial Network National Bank and BNY Midwest Trust Company.

4 unchanged sentences

8-K 4.1 7/8/16

(d) Collateral Certificate No.

4 dated June 18, 2021, among WFN Credit Company, LLC, World Financial Network Credit Card Master Note Trust, and World Financial Network Credit Card Master Trust .

(c) Transfer and Servicing Agreement, dated as of August 1, 2001, between WFN Credit Company, LLC, World Financial Network National Bank, and World Financial Network Credit Card Master Note Trust.

10 unchanged sentences

8-K 4.2 10/31/07

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(d) S eventh Amendment to Transfer and Servicing Agreement, dated as of June 28, 2010, among World Financial Network National Bank, WFN Credit Company, LLC, and World Financial Network Credit Card Master Note Trust.

8-K 4.4 6/30/10

Tabl e of Contents

(d) Supplemental Agreement to Transfer and Servicing Agreement, dated as of August 9, 2010, among World Financial Network National Bank, WFN Credit Company, LLC, and World Financial Network Credit Card Master Note Trust.

19 unchanged sentences

8-K 4.3 6/16/20

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(d) Fifth Amendment to Receivables Purchase Agreement, dated as of April 26, 2024, between Comenity Bank and WFN Credit Company, LLC.

1 unchanged sentence

8-K 4.1 8/31/01

Tabl e of Contents

(c) Omnibus Amendment, dated as of March 31, 2003, among WFN Credit Company, LLC, World Financial Network Credit Card Master Trust, World Financial Network National Bank and BNY Midwest Trust Company.

6 unchanged sentences

8-K 4.3 6/15/07

(d) Supplemental Indenture No.

Supplemental Indenture No.

3, dated as of May 27, 2008, between World Financial Network Credit Card Master Note Trust and The Bank of New York Trust Company, N.A.

8-K 4.2 5/29/08

(d) Supplemental Indenture No.

Supplemental Indenture No.

4, dated as of June 28, 2010, between World Financial Network Credit Card Master Note Trust and The Bank of New York Mellon Trust Company, N.A.

15 unchanged sentences

8-K 4.1 5/28/21

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(d) Succession Agreement, dated as of June 18, 2021, by and among Comenity Bank, World Financial Network Credit Card Master Note Trust, MUFG Union Bank, N.A.

6 unchanged sentences

Bank National Association.

Tabl e of Contents

First Amendment to Series 2023-A Indenture Supplement, dated as of December 22, 2023, between World Financial Network Credit Card Master Note Trust and U.S.

6 unchanged sentences

Bank National Association.

(d) Amended and Restated Trust Agreement, dated as of August 1, 2001, between WFN Credit Company, LLC and Chase Manhattan Bank USA, National Association.

Amended and Restated Trust Agreement, dated as of August 1, 2001, between WFN Credit Company, LLC and Chase Manhattan Bank USA, National Association.

8-K 4.4 8/31/01

1 unchanged sentence

8-K 4.2 5/28/21

(d) Administration Agreement, dated as of August 1, 2001, between World Financial Network Credit Card Master Note Trust and World Financial Network National Bank.

Administration Agreement, dated as of August 1, 2001, between World Financial Network Credit Card Master Note Trust and World Financial Network National Bank.

8-K 4.5 8/31/01

(d) First Amendment to Administration Agreement, dated as of July 31, 2009, between World Financial Network Credit Card Master Note Trust and World Financial Network National Bank.

First Amendment to Administration Agreement, dated as of July 31, 2009, between World Financial Network Credit Card Master Note Trust and World Financial Network National Bank.

8-K 4.1 7/31/09

(d) Sixth Amended and Restated Service Agreement, dated as of January 1, 2025, by and between Comenity Bank and Comenity Servicing LLC.

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(d) Asset Representations Review Agreement, dated as of July 6, 2016, among Comenity Bank, WFN Credit Company, LLC, World Financial Network Credit Card Master Note Trust and FTI Consulting, Inc.

8-K 10.1 7/8/16

(a) Receivables Purchase Agreement, dated as of September 28, 2001, between World Financial Network National Bank and WFN Credit Company, LLC.

10-Q 10.5 11/7/08

(a) First Amendment to Receivables Purchase Agreement, dated as of June 24, 2008, between World Financial Network National Bank and WFN Credit Company, LLC.

10-K 10.94 3/2/09

(a) Second Amendment to Receivables Purchase Agreement, dated as of March 30, 2010, between World Financial Network National Bank and WFN Credit Company, LLC.

10-K 10.127 2/28/11

(a) Supplemental Agreement to Receivables Purchase Agreement, dated as of August 9, 2010, between World Financial Network National Bank and WFN Credit Company, LLC.

10-K 10.128 2/28/11

(a) Third Amendment to Receivables Purchase Agreement, dated as of September 30, 2011, between World Financial Network Bank and WFN Credit Company, LLC.

10-Q 10.4 11/7/11

(a) World Financial Network Credit Card Master Trust III Amended and Restated Pooling and Servicing Agreement, dated as of September 28, 2001, among WFN Credit Company, LLC, World Financial Network National Bank, and The Chase Manhattan Bank, USA, National Association.

10-Q 10.6 11/7/08

(a) First Amendment to the Amended and Restated Pooling and Servicing Agreement, dated as of April 7, 2004, among WFN Credit Company, LLC, World Financial Network National Bank, and The Chase Manhattan Bank, USA, National Association.

10-Q 10.7 11/7/08

(a) Second Amendment to the Amended and Restated Pooling and Servicing Agreement, dated as of March 23, 2005, among WFN Credit Company, LLC, World Financial Network National Bank, and The Chase Manhattan Bank, USA, National Association.

10-Q 10.8 11/7/08

(a) Third Amendment to the Amended and Restated Pooling and Servicing Agreement, dated as of October 26, 2007, among WFN Credit Company, LLC, World Financial Network National Bank, and Union Bank of California, N.A.

(successor to JPMorgan Chase Bank, N.A.).

10-Q 10.9 11/7/08

(a) Fourth Amendment to Amended and Restated Pooling and Servicing Agreement, dated as of March 30, 2010, among WFN Credit Company, LLC, World Financial Network National Bank, and Union Bank, N.A.

10-Q 10.9 5/7/10

First Addendum to Sixth Amended and Restated Service Agreement, dated as of April 1 , 2025 , by and between Comenity Bank and Comenity Servicing LLC.

Second Addendum to Sixth Amended and Restated Service Agreement, dated as of April 1, 2025, by and between Comenity Bank and Comenity Servicing LLC.

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(a) Fifth Amendment to Amended and Restated Pooling and Servicing Agreement, dated as of September 30, 2011, among WFN Credit Company, LLC, World Financial Network Bank, and Union Bank, N.A.

10-Q 10.3 11/7/11

(a) Sixth Amendment to Amended and Restated Pooling and Servicing Agreement, dated as of December 1, 2016, among WFN Credit Company, LLC, Comenity Bank, and Deutsche Bank Trust Company Americas.

10-K 10.94 2/27/17

(a) Seventh Amendment to Amended and Restated Pooling and Servicing Agreement, dated as of September 1, 2017, among WFN Credit Company, LLC, Comenity Bank, and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-K 10.96 2/27/18

(a) Eighth Amendment to Amended and Restated Pooling and Servicing Agreement, dated as of November 16, 2020, among WFN Credit Company, LLC, Comenity Bank, and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-K 10.105 2/26/21

(a) Supplemental Agreement to Amended and Restated Pooling and Servicing Agreement, dated as of August 9, 2010, among WFN Credit Company, LLC, World Financial Network National Bank, and Union Bank, N.A.

10-K 10.134 2/28/11

Service Agreement, dated as of April 1, 2025, by and between Comenity Bank and Comenity Servicing LLC.

Third Addendum to Sixth Amended and Restated Service Agreement, dated as of June 1, 2025, by and between Comenity Bank and Comenity Servicing LLC.

Fourth Addendum to Sixth Amended and Restated Service Agreement, dated as of October 1, 2025, by and between Comenity Bank and Comenity Servicing LLC.

(a) Receivables Purchase Agreement, dated as of September 29, 2008, between World Financial Capital Bank and World Financial Capital Credit Company, LLC.

10-Q 10.3 11/7/08

(a) Amendment No.

Amendment No.

1 to Receivables Purchase Agreement, dated as of June 4, 2010, between World Financial Capital Bank and World Financial Capital Credit Company, LLC.

1 unchanged sentence

Amendment No.

2 to Receivables Purchase Agreement, dated as of December 12, 2024, between World Financial Capital Bank and World Financial Capital Credit Company, LLC.

2 to Receivables Purchase Agreement, dated as of December 12, 2024, between Comenity Capital Bank and World Financial Capital Credit Company, LLC.

10.100 2/14/25

(a) Transfer and Servicing Agreement, dated as of September 29, 2008, among World Financial Capital Credit Company, LLC, World Financial Capital Bank and World Financial Capital Master Note Trust.

4 unchanged sentences

Amendment No.

2 to Transfer and Servicing Agreement, dated as of December 12, 2024, among World Financial Capital Credit Company, LLC, World Financial Capital Bank and World Financial Capital Master Note Trust.

2 to Transfer and Servicing Agreement, dated as of December 12, 2024, among World Financial Capital Credit Company, LLC, Comenity Cap ital Bank and World Financial Capital Master Note Trust.

10.103 2/14/25

(a) Master Indenture, dated as of September 29, 2008, between World Financial Capital Master Note Trust and U.S.

1 unchanged sentence

10-K 10.104 2/27/18

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

Supplemental Indenture No.

1 unchanged sentence

Bank National Association.

10.105 2/14/25

(a) Receivables Purchase Agreement, dated as of June 17, 2022, between Comenity Capital Bank and Comenity Capital Credit Company, LLC.

2 unchanged sentences

1 to Receivables Purchase Agreement, dated as of December 20, 2024, between Comenity Capital Bank and Comenity Capital Credit Company, LLC.

10.107 2/14/25

(a) Transfer Agreement, dated as of June 17, 2022, between Comenity Capital Credit Company, LLC and Comenity Capital Asset Securitization Trust.

10.99 2/28/23

Tabl e of Contents

Amendment No.

1 to Transfer Agreement, dated as of December 20, 2024, between Comenity Capital Credit Company, LLC and Comenity Capital Asset Securitization Trust.

10.109 2/14/25

(a) Servicing Agreement, dated as of June 17, 2022, between Comenity Capital Credit Company, LLC, Comenity Capital Bank and Comenity Capital Asset Securitization Trust.

10.100 2/28/23

(a) Master Indenture, dated as of June 17, 2022, between Comenity Capital Asset Securitization Trust and U.S.

4 unchanged sentences

Bank Trust Company, National Association.

10.112 2/14/25

(a) Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of February 28, 2014, between World Financial Network Credit Card Master Note Trust and Union Bank, N.A.

2 unchanged sentences

10-Q 10.8 8/7/17

(a) Second Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of December 1, 2017, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.109 2/27/18

(a) Third Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of May 3, 2018, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.110 2/26/19

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(a) Fourth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of August 31, 2018, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.111 2/26/19

(a) Fifth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of February 1, 2019, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.112 2/26/19

(a) Sixth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of June 11, 2020, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.118 2/26/21

(a) Seventh Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of September 10, 2020, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A.

10-K 10.119 2/26/21

Tabl e of Contents

(a) Eighth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of August 1, 2022, between World Financial Network Credit Card Master Note Trust and U.S.

2 unchanged sentences

Ninth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of February 1, 2023, between World Financial Network Credit Card Master Note Trust and U.S.

Bank National Association, as successor to MUFG Union Bank, N.A.

Bank National Association .

10.127 2/20/24

Tenth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of December 22, 2023, between World Financial Network Credit Card Master Note Trust and U.S.

Bank National Association, as successor to MUFG Union Bank, N.A.

Bank National Association .

10.128 2/20/24

Eleventh Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of April 26, 2024, between World Financial Network Credit Card Master Note Trust and U.S.

Bank National Association, as successor to MUFG Union Bank, N.A.

(a) Third Amended and Restated Series 2009-VFC1 Supplement, dated as of April 28, 2017, among WFN Credit Company, LLC, Comenity Bank and Deutsche Bank Trust Company Americas.

10-Q 10.7 8/7/17

(a) First Amendment to Third Amended and Restated Series 2009-VFC1 Supplement, dated as of October 19, 2017, among WFN Credit Company, LLC, Comenity Bank and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-Q 10.4 11/8/17

(a) Second Amendment to Third Amended and Restated Series 2009-VFC1 Supplement, dated as of August 31, 2018, among WFN Credit Company, LLC, Comenity Bank and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-K 10.115 2/26/19

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

(a) Third Amendment to Third Amended and Restated Series 2009-VFC1 Supplement, dated as of June 28, 2019, among WFN Credit Company, LLC, Comenity Bank and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-K 10.123 2/26/21

(a) Fourth Amendment to Third Amended and Restated Series 2009-VFC1 Supplement, dated as of April 17, 2020, among WFN Credit Company, LLC, Comenity Bank and U.S.

Bank National Association (successor to Deutsche Bank Trust Company Americas).

10-K 10.124 2/26/21

(a) Sixth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of December 12, 2024, between World Financial Capital Master Note Trust and Deutsche Bank Trust Company Americas.

(a) Series 2023-VFN1 Indenture Supplement, dated as of September 29, 2023, between Comenity Capital Asset Securitization Trust and U.S.

Bank Trust Company, National Association.

Bank National Association .

10.124 2/14/25

First Amendment and Consent to Series 2023-VFN1 Indenture Supplement, dated as of February 21, 2024, between Comenity Capital Asset Securitization Trust and U.S.

Bank Trust Company, National Association.

Second Amendment to Series 2023-VFN1 Indenture Supplement, dated as of December 20, 2024, between Comenity Capital Asset Securitization Trust and U.S.

Bank Trust Company, National Association.

Series 2024-VFN1 Indenture Supplement, dated as of February 21, 2024, between Comenity Capital Asset Securitization Trust and U.S.

Bank Trust Company, National Association.

First Amendment to Series 2024-VFN1 Indenture Supplement, dated as of December 20, 2024, between Comenity Capital Asset Securitization Trust and U.S.

Bank Trust Company, National Association.

Twelfth Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of September 19, 2025, between World Financial Network Credit Card Master Note Trust and U.S.

Bank National Association.

(a) Credit Agreement, dated as of June 7, 2023, by and among Bread Financial Holdings, Inc., the subsidiary guarantors parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and other financial institutions as lenders.

3 unchanged sentences

10.1 10/21/24

Indenture, dated as of June 13, 2023, among Bread Financial Holdings, Inc., certain of its subsidiaries as guarantors and U.S.

Bank Trust Company, National Association, as trustee (including the form of the Company’s 4.25% Convertible Senior Note due June 15, 2028).

Indenture, dated as of December 22, 2023, among Bread Financial Holdings, Inc., certain of its subsidiaries as guarantors and U.S.

Bank Trust Company, National Association, as trustee (including the form of the Company’s 9.750% Convertible Senior Note due March 15, 2029).

Tabl e of Contents

Incorporated by Reference

Filer Description Form Exhibit Filing Date

Indenture, dated as of March 10, 2025, among Bread Financial Holdings, Inc.

Bank Trust Company, National Association, (including the form of the Company’s 8.375% Fixed-Rate Reset Subordinated Notes due June 15, 2035).

Indenture, dated as of November 6, 2025, among Bread Financial Holdings, Inc., the subsidiary guarantors party thereto and U.S.

Bank Trust Company, National Association (including the form of the Company’s 6.750 % Fixed-Rate Reset Subordinated Notes due May 15, 2031) .

B read Financial Holdings, Inc.

4 unchanged sentences

pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

Tabl e of Contents

*31.2 (a) Certification of Chief Financial Officer of Bread Financial Holdings, Inc.

17 unchanged sentences

Securities and Exchange Commission.

# This exhibit has been re-filed with the Securities and Exchange Commission to correct an inadvertent error on the cover page of Exhibit 4.1, filed with the Company’s Current Report on Form 8-K (File 001-15749) on November 6, 2025, and hereby supersedes and replaces such Exhibit 4.1 in its entirety.

(a) Bread Financial Holdings, Inc.

127 unchanged sentences

( 3 ) ( 2 ) ( 19 )

Net income $ 277 $ 718 $ 223

Net income available to common stockholders $ 518 $ 277 $ 718

Basic income per share (Note 18)

18 unchanged sentences

Net income $ 518 $ 277 $ 718

Other comprehensive (loss) income

Unrealized (loss) gain on available-for-sale debt securities ( 4 ) 2 ( 25 )

Tax benefit 1 — 6

Unrealized (loss) gain on available-for-sale debt securities, net of tax ( 3 ) 2 ( 19 )

Other comprehensive (loss) income, net of tax ( 3 ) 2 ( 19 )

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale debt securities 7 ( 4 ) 2

Tax (expense) benefit ( 2 ) 1 —

Unrealized gain (loss) on available-for-sale debt securities, net of tax 5 ( 3 ) 2

Unrealized gain on cash flow hedges 1 — —

Tax expense — — —

Unrealized gain on cash flow hedges, net of tax 1 — —

Other comprehensive income (loss), net of tax 6 ( 3 ) 2

Total comprehensive income, net of tax $ 524 $ 274 $ 720

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Millions, except per share amounts)

(Millions, except preferred shares and percentages)

Cash and cash equivalents $ 3,604 $ 3,679

6 unchanged sentences

Credit card and other loans, net 16,699 16,655

Investments (Fair value:

2024 and 2023, $ 217 )

Investments (includes investment securities carried at fair value:

2025, $ 221 ;

2024, $ 217 )

Property and equipment, net 117 142

10 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.01 par value;

authorized, 75.0 thousand shares;

issued and outstanding:

2025, 75.0 thousand shares;

2024, no shares

Common stock, $ 0.01 par value;

authorized, 200.0 million shares;

issued and outstanding:

2025, 44.1 million shares;

8 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Preferred Stock Common Stock Additional

Capital Retained Earnings Accumulated Other Comprehensive Loss Total

Stockholders’

Shares Amount

Balance as of December 31, 2021 49.8 $ 1 $ 2,174 $ ( 87 ) $ ( 2 ) $ 2,086

Net income — — — 223 — 223

Other comprehensive loss — — — — ( 19 ) ( 19 )

Stock-based compensation — — 33 — — 33

Repurchase of common stock ( 0.2 ) — ( 12 ) — — ( 12 )

Dividends and dividend equivalent rights declared ($ 0.84 per common share)

— — — ( 43 ) — ( 43 )

Issuance of shares to employees, net of shares withheld for employee taxes 0.3 — ( 3 ) — — ( 3 )

Shares Amount Shares Amount

(Millions, except preferred shares in thousands and per shares amounts)

Balance as of December 31, 2022 — $ — 49.9 $ 1 $ 2,192 $ 93 $ ( 21 ) $ 2,265

3 unchanged sentences

Capped call transactions for convertible senior notes due 2028, net of tax — — — — ( 30 ) — — ( 30 )

Repurchase of common stock ( 0.9 ) — ( 35 ) — — ( 35 )

Repurchases of common stock — — ( 0.9 ) — ( 35 ) — — ( 35 )

Dividends and dividend equivalent rights declared ($ 0.84 per common share)

— — — — — ( 44 ) — ( 44 )

Issuance of shares to employees, net of shares withheld for employee taxes 0.3 — ( 2 ) — — ( 2 )

Issuances of shares to employees, net of shares withheld for employee taxes — — 0.3 — ( 2 ) — — ( 2 )

Balance as of December 31, 2023 — $ — 49.3 $ 1 $ 2,169 $ 767 $ ( 19 ) $ 2,918

8 unchanged sentences

— — — — — ( 44 ) — ( 44 )

Issuance of shares to employees, net of shares withheld for employee taxes 0.8 — ( 7 ) — — ( 7 )

Issuances of shares to employees, net of shares withheld for employee taxes — — 0.8 — ( 7 ) — — ( 7 )

Balance as of December 31, 2024 — $ — 49.1 $ 1 $ 2,073 $ 999 $ ( 22 ) $ 3,051

Net income — — — — — 518 — 518

Other comprehensive income — — — — — — 6 6

Stock-based compensation — — — — 56 — — 56

Issuance of preferred stock 75.0 — — — 71 — — 71

Repurchases of common stock — — ( 5.7 ) ( 1 ) ( 312 ) — — ( 313 )

Repurchases of Convertible Notes — — — — ( 4 ) — — ( 4 )

Dividends and dividend equivalent rights declared ($ 0.86 per common share)

— — — — — ( 42 ) — ( 42 )

Issuances of shares to employees, net of shares withheld for employee taxes — — 0.7 — ( 16 ) — — ( 16 )

Balance as of December 31, 2025 75.0 $ — 44.1 $ — $ 1,868 $ 1,475 $ ( 16 ) $ 3,327

__________________________________

(1) Represents the cumulative effect, net of tax, of adopting the proportional amortization method of accounting for our tax credit investment.

11 unchanged sentences

Deferred income taxes 90 ( 85 ) ( 68 )

Non-cash stock compensation 54 44 33

Non-cash stock-based compensation 56 54 44

Amortization of deferred financing costs 16 21 26

1 unchanged sentence

Gain on portfolio sale ( 3 ) ( 11 ) ( 230 )

Loss on debt extinguishment and repurchased Convertible Notes 117 7 —

Loss on debt extinguishment 74 117 7

Change in other operating assets and liabilities

16 unchanged sentences

Repayments/maturities of debt issued by consolidated variable interest entities ( 2,063 ) ( 1,727 ) ( 4,807 )

Net (decrease) increase in deposits ( 541 ) ( 209 ) 2,778

Net increase (decrease) in deposits 835 ( 541 ) ( 209 )

Payment of deferred financing costs ( 24 ) ( 15 ) ( 63 )

Net proceeds from the issuance of preferred stock 71 — —

Repurchases of common stock ( 313 ) ( 55 ) ( 35 )

Dividends and dividend equivalent rights paid ( 42 ) ( 43 ) ( 42 )

Payment of Capped Call transactions — — ( 39 )

Dividends paid ( 43 ) ( 42 ) ( 43 )

Repurchase of common stock ( 55 ) ( 35 ) ( 12 )

Other ( 17 ) ( 7 ) ( 2 )

Net cash (used in) provided by financing activities ( 592 ) ( 3,086 ) 3,267

Net cash used in financing activities ( 807 ) ( 592 ) ( 3,086 )

Change in cash, cash equivalents and restricted cash ( 86 ) 98 ( 311 )

13 unchanged sentences

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

DESCRIPTION OF BUSINESS

We are a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions to millions of U.S.

Our payment solutions, including Bread Financial general purpose credit cards and savings products, empower our customers and their passions for a better life.

Additionally, we deliver growth for some of the most recognized brands in travel & entertainment, health & beauty, jewelry and specialty apparel through our private label and co-brand credit cards and pay-over-time products providing choice and value to our shared customers.

Our partner base consists of large consumer-based businesses, including well-known brands such as (alphabetically) AAA, Academy Sports + Outdoors, Caesars, Dell Technologies, Hard Rock International, the NFL, Saks Fifth Avenue, Signet, Ulta and Victoria’s Secret, as well as small- and medium-sized businesses (SMBs).

Our partner base is well diversified across a broad range of industries and retail verticals, including travel and entertainment, health and beauty, jewelry, sporting goods, home goods, technology and electronics and the industry in which we first began, specialty apparel.

Additionally, we deliver growth for some of the most recognized brands in travel and entertainment, health and beauty, jewelry and specialty apparel through our private label and co-brand credit cards and pay-over-time products providing choice and value to our shared customers.

We have continued to diversify our product mix with our brand partners through growth of our co-brand credit card programs, which, relative to our private label credit card programs, have higher credit sales per account and an improved credit risk mix that generally results in higher transactor balances, lower delinquencies and late fees, as well as lower losses.

We also offer our proprietary credit cards along with the expansion of our Bread Pay products, which are our installment loans and “split-pay” offerings.

Our partner base consists of large consumer-based businesses, including well-known brands such as (alphabetically) AAA, Academy Sports + Outdoors, Caesars, Dell Technologies, Hard Rock International, the NFL, Raymour & Flanigan, Saks Fifth Avenue, Signet, Ulta and Victoria’s Secret, as well as small- and medium-sized businesses (SMBs).

Our partner base is well diversified across a broad range of industries and retail verticals, including travel and entertainment, specialty apparel, health and beauty, jewelry, sporting goods, technology and electronics, as well as home and furniture.

We believe our comprehensive suite of payment, lending and saving solutions, along with our related marketing and data and analytics, allows us to offer products relevant across all customer segments (Gen Z, Millennial, Gen X and Baby Boomers).

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Intangible Assets, Net Note 6 Goodwill and Intangible Assets, Net

Leases Note 8 Leases

Derivatives Note 12 Derivatives and Hedging Activities

Stock Compensation Expense Note 19 Stockholders' Equity

Stock-Based Compensation Expense Note 14 Stock-Based Compensation

Income Taxes Note 17 Income Taxes

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For variable interest entities (VIEs), which are themselves determined based on the amount and characteristics of the equity in the entity, we have a controlling financial interest when we are determined to be the primary beneficiary.

The primary beneficiary is the party having both the power to exercise control over the activities that most significantly impact the VIE’s financial performance, as well as the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE.

The primary beneficiary is the party having both (i) the power to exercise control over the activities that most significantly impact the VIE’s financial performance, as well as (ii) the obligation to absorb the losses of, or the right to receive the benefits from, the VIE that could potentially be significant to that VIE.

We are the primary beneficiary of our master securitization trusts and therefore consolidate these securitization trusts within our audited Consolidated Financial Statements.

In cases where we do not have a controlling financial interest, but we are able to exert significant influence over the operating and financial decisions of the entity, we account for such investments under the equity method.

In cases where we do not have a controlling financial interest, but we are able to exert significant influence over the operating and financial decisions of the investee, we account for such investments under the equity method.

All intercompany transactions have been eliminated.

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Our primary expense is Provision for credit losses driven by Net principal losses from our various credit card and other loan products.

Our key metrics include the growth in and yield on our credit card and other loan portfolios, Net interest margin, operating leverage and Efficiency ratio, our various capital ratios, and credit-related ratios such as our Delinquency rate, Net principal loss rate and Reserve rate.

Our Chief Operating Decision Maker (CODM) regularly receives and reviews consolidated operating results and uses our key metrics to evaluate the performance of the Company, focusing primarily on Income from continuing operations before income taxes from the Consolidated Statements of Income, to make decisions regarding the allocation of resources and assessment of performance.

Our key financial metrics include the growth in and yield on our Credit card and other loans, Net interest margin, operating leverage and Efficiency ratio, our various capital ratios, Return on average tangible common equity, and credit-related ratios such as our Delinquency rate, Net principal loss rate and Reserve rate.

Our Chief Operating Decision Maker (CODM) regularly receives and reviews consolidated operating results and uses our key financial metrics to evaluate the performance of the Company, focusing primarily on Income from continuing operations before income taxes from the Consolidated Statements of Income, to make decisions regarding the allocation of resources and assessment of performance.

The function of CODM is performed by our President and Chief Executive Officer.

Amounts Based on Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments about future events that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the audited Consolidated Financial Statements, as well as the reported amounts of income and

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Amounts Based on Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments about future events that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the audited Consolidated Financial Statements, as well as the reported amounts of income and expenses during the reporting periods.

The most significant of those estimates and judgments relate to our Allowance for credit losses, Provision for income taxes and Goodwill;

expenses during the reporting periods.

The most significant of those estimates and judgments relate to our Allowance for credit losses and Goodwill;

actual results could differ.

Consolidated Statements of Income

We recognize revenue when obligations under the terms of a contract with a customer are satisfied.

Payments made pursuant to contractual arrangements with our brand partners or other customers are classified as contra-revenue, except where we receive goods, services or other benefits for which the fair value is determinable and measurable, in which case they are recorded as expense.

Our primary source of revenue is from Interest and fees on loans from our various credit card and other loan products, and to a lesser extent from contractual relationships with our brand partners.

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Interest and fees continue to accrue on all accounts, except in limited circumstances, until the account balance and all related interest and fees are paid or charged-off, which happens in the month during which an account becomes 180 days past due for credit card loans or 120 days past due for other loans, which consist primarily of our pay-over-time products, which include installment loans and “split-pay” offerings.

Charge-offs for unpaid interest and fees, as well as any adjustments to the Allowance for credit losses associated with unpaid interest and fees, are recorded as a reduction of Interest and fees on loans.

Direct loan origination costs on Credit card and other loans are deferred and amortized on a straight-line basis over a one-year period for credit card loans, or for other loans, over the life of the loan;

and are recorded as a reduction of Interest and fees on loans.

Charge-offs of unpaid interest and fees are recorded as a reduction of Interest and fees on loans.

As of December 31, 2025 and 2024, the remaining unamortized deferred direct loan origination costs were $ 42 million and $ 45 million, respectively, and included in Total credit card and other loans.

Interest on cash and investment securities:

Represents revenue earned on cash and cash equivalents as well as investments

in debt securities, and is recognized in the period earned.

Represents revenue earned on cash and cash equivalents as well as investments in debt securities, and is recognized in the period earned.

Interchange revenue, net of retailer share arrangements:

Represents revenue earned from merchants, including our brand partners, and cardholders from processing and servicing accounts, and is recognized as such services are performed.

Revenue earned from merchants, including our brand partners, primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions and are recognized at the time the cardholder transaction occurs.

Costs of cardholder reward arrangements are recognized when the rewards are earned by the cardholders and are generally classified as a reduction of revenue with the related liability included in Other liabilities on the Consolidated Balance Sheets.

Such revenue primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions and are recognized at the time the cardholder transaction occurs.

Our credit card program agreements may also provide for royalty payments, or retailer share arrangements, to our brand partners based on purchase volume or if certain contractual incentives are met (such as if the economic performance of the program exceeds a contractually defined threshold), or for new accounts acquired.

These amounts are recorded as a reduction of revenue in the period incurred.

These amounts are recorded as contra-revenue, i.e., as a reduction of revenue, in the period incurred.

Also recorded as a contra-revenue, costs of cardholder reward arrangements are recognized when the rewards are earned by the cardholders and are generally classified as a reduction of revenue.

Where we are responsible for reward redemption under the cardholder reward arrangements, we maintain a liability included in Other liabilities on the Consolidated Balance Sheets.

Our liability is impacted by the terms and conditions of the specific reward arrangements, the costs of fulfillment, and anticipated redemption rates.

Where our brand partners are responsible for reward redemption under the cardholder reward arrangements, our obligation to cover certain costs of rewards earned by the cardholders is satisfied as we make payments to the brand partners and, typically, no liability is recognized.

Other non-interest income:

Represents ancillary revenues earned from cardholders, consisting primarily of monthly fees from the purchase of certain payment protection products, which are recognized based on the average cardholder account balance over time and can be cancelled at any point by the cardholder, as well as gains or losses on the sales of loan portfolios, and losses from our equity method investment in Loyalty Ventures Inc.

Represents ancillary revenues earned from cardholders, consisting primarily of monthly fees from the purchase of certain payment protection products, which are recognized based on the average cardholder account balance over time and can be cancelled at any point by the cardholder, as well as paper statement fees and losses from our equity method investment in Loyalty Ventures Inc.

Contract costs:

We recognize as an asset contract costs, such as up-front payments made pursuant to contractual agreements with brand partners.

We recognize contract costs, such as up-front payments made pursuant to contractual agreements with brand partners, as assets.

Such costs are deferred and recognized on a straight-line basis over the term of the related agreement.

Depending on the nature of the contract costs, the amortization is recorded as a reduction to Non-interest income, or as a charge to Non-interest expenses, in the Consolidated Statements of Income.

Depending on the nature of the contract costs, the amortization is recorded as either a contra-revenue through a reduction to Non-interest income, or as a charge to Non-interest expenses, in the Consolidated Statements of Income.

Amortization of contract costs recorded as a reduction of Interchange revenue, net of retailer share arrangements, was $ 42 million, $ 51 million and $ 59 million for the years ended December 31, 2025, 2024 and 2023, respectively;

amortization of contract costs recorded across various Non-interest expense categories totaled $ 12 million in each of those same years.

amortization of contract costs recorded across various Non-interest expense categories totaled $ 10 million for the year ended December 31, 2025 and $ 12 million in both 2024 and 2023.

As of December 31, 2025 and 2024, the remaining unamortized contract costs were $ 205 million and $ 228 million, respectively, and are included in Other assets on the Consolidated Balance Sheets.

We perform an impairment assessment when events or changes in circumstances indicate that the carrying amount of our contract costs may not be recoverable.

No impairment charges were recognized during either of the years ended

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

December 31, 2024 or 2022.

We perform an impairment assessment when events or changes in circumstances indicate that the carrying amount of our contract costs may not be recoverable.

No impairment charges were recognized during either of the years ended December 31, 2025 or 2024.

However, for the year ended December 31, 2023 we recognized a $ 7 million impairment charge in Other non-interest expenses in our Consolidated Statements of Income for certain of our deferred contract costs.

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Cash and cash equivalents:

Includes cash and due from banks, interest-bearing cash balances such as those invested in money market funds, as well as other highly liquid short-term investments with an original maturity of three months or less, along with restricted cash.

As of December 31, 2025 and 2024, respectively, cash and due from banks was $ 386 million and $ 330 million, interest-bearing cash balances were $ 3.2 billion and $ 3.1 billion, and short-term investments were $ 26 million and $ 272 million.

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Property and equipment :

Furniture, equipment, buildings and leasehold improvements are carried at cost less accumulated depreciation, and depreciation is recognized on a straight-line basis.

Furniture, equipment and leasehold improvements are carried at cost less accumulated depreciation, and depreciation is recognized on a straight-line basis.

Costs incurred during construction are capitalized;

depreciation begins once the asset is placed in service and is also recognized on a straight-line basis.

Our furniture and equipment is depreciated over the estimated useful lives of the assets , which range from less than one year to 10 years, while leasehold improvements are depreciated over the lesser of the remaining terms of the respective leases, or the useful lives of the improvements, and range from less than one year to 20 years.

Depreciation expense, including purchased software, totaled $ 20 million, $ 20 million and $ 19 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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An impairment is recognized if the carrying amount is not recoverable and exceeds the asset or asset group’s fair value.

No impairment was recognized during the years ended December 31, 2024, 2023 and 2022.

No impairment of a long-lived asset or asset group was recognized during the years ended December 31, 2025, 2024 and 2023.

We have various operating leases for facilities and equipment which are recorded as lease-related assets (i.e., right-of-use assets) and liabilities for those leases with terms greater than 12 months.

We do not have any finance leases.

We determine if an arrangement is a lease or contains a lease at inception, and we do not separate lease and non-lease components.

Right-of-use assets are recognized as of the lease commencement date at amounts equal to the respective lease liabilities, adjusted for any prepaid lease payments, initial direct costs and lease incentives, and are recorded in Other assets on the Consolidated Balance Sheets.

Our lease liabilities are recognized as of the lease commencement date, or upon

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

modification of the lease, at the present value of the contractual fixed lease payments, discounted using our incremental borrowing rate (as the rate implicit in the lease is typically not readily determinable) and are recorded within Other liabilities on the Consolidated Balance Sheets.

Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets;

lease expense for these leases is recognized on a straight-line basis over the lease terms.

Total lease expense for the years ended December 31, 2025, 2024 and 2023 was $ 15 million, $ 14 million, and $ 25 million, respectively, including variable lease costs and sublease income, which were insignificant.

As with other long-lived assets, right-of-use assets are reviewed for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable.

No impairment of a right-of-use asset was recognized during the years ended December 31, 2025, 2024 and 2023.

Derivatives :

From time to time we may enter into derivative transactions to support our overall risk management activities.

Our primary financial risks stem from the impact on our earnings and economic value of equity due to changes in interest rates, and to a lesser extent, changes in foreign exchange rates, and therefore we may use derivative financial instruments to manage our exposure to these financial risks.

We do not trade or speculate in derivatives.

Subject to the criteria set forth in GAAP, we will either designate our derivatives in qualifying hedging relationships, or as economic hedges should the criteria in GAAP not be met.

All derivatives that we enter into are recognized at fair value in our Consolidated Balance Sheets, where our derivative receivables are included in Other assets and our derivative payables are included in Other liabilities.

As permitted by GAAP, when a legally enforceable master netting agreement exists between us and the derivative counterparty, we present derivative receivables and derivative payables with the same counterparty on a net basis in the Consolidated Balance Sheets, including any related cash collateral receivables and payables.

We have managed our interest rate sensitivity in part by changing the duration and re-pricing characteristics of a portion of our variable rate credit card loan portfolio by using interest rate swaps.

We also use foreign currency forwards to limit our earnings and capital exposures to foreign exchange risk by hedging our limited exposures denominated in foreign currencies, in particular, Canadian dollars.

We have entered into receive-fixed, pay-floating interest rate swaps to modify the interest rate characteristics of designated credit card loans from a floating rate to a fixed rate in order to reduce the impact of changes in forecasted future cash flows due to fluctuations in market interest rates.

We designate our interest rate swaps as qualifying accounting cash flow hedges.

As of December 31, 2025 and 2024, we had outstanding interest rate swaps with a total notional amount of $ 500 million and $ 1.5 billion.

The impacts of our cash flow hedges were insignificant to the Consolidated Financial Statements for the periods presented on both a gross basis and, where applicable, a net basis.

We have also entered into foreign currency forwards to limit our Canadian dollar exposure, which we account for as economic hedges (as the criteria under GAAP for designation have not been met).

As of December 31, 2025 and 2024, we had outstanding foreign currency forwards with a total notional amount of $ 45 million and $ 73 million, respectively.

The impacts of our economic hedges were insignificant to the Consolidated Financial Statements for the periods presented.

The notional amounts disclosed above are not exchanged on our derivatives.

While these notional amounts provide an indication of the volume of our derivative activity, they significantly exceed, in our view, the possible losses that could arise from the associated transactions.

CONCENTRATIONS

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In particular, our programs with (alphabetically) Signet Jewelers, Ulta Beauty and Victoria’s Secret & Co.

and its retail affiliates, each accounted for 10% or more of our Total net interest and

and its retail affiliates, each accounted for 10% or more of our Total net interest and non-interest income for the year ended December 31, 2025.

A decrease in business from, or the loss of, any of our significant partners for any reason, could have a material adverse effect on our business.

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

non-interest income for the year ended December 31, 2024.

A decrease in business from, or the loss of, any of our significant partners for any reason, could have a material adverse effect on our business.

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting Standards Recently Adopted

Standard Guidance Timing and Financial Statement Impact

Investments – Equity Method and Joint Ventures:

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Issued March 2023

Expands the election to apply the proportional amortization method of accounting to tax credit investments beyond low-income-housing tax credit investments, when certain conditions are met.

Adopted under the modified retrospective method on January 1, 2024, which resulted in an insignificant decrease to retained earnings.

Adoption did not have a significant impact on our results of operations, financial position, regulatory risk-based capital, or on our operational processes, controls and governance in support of the new guidance.

Segment Reporting:

Improvements to Reportable Segment Disclosures

Issued November 2023

Requires interim and annual disclosure of significant segment expense categories and amounts that are regularly provided to the CODM, as well as disclosure of the aggregate amount and description of other segment items beyond significant segment expenses.

Adopted effective with this report.

Adoption did not significantly impact our disclosures for our single reportable segment, our financial reporting, or our operational processes, controls, and governance in support of the new guidance.

Accounting Standards Recently Issued but Not Yet Adopted

Accounting Standards Recently Adopted during 2025

Standard Guidance Timing and Financial Statement Impact

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Requires greater disaggregation of rate reconciliation and income taxes paid information, as well as other changes intended to enhance the transparency and decision-usefulness of income tax disclosures.

Effective beginning with our Annual Report on Form 10-K for the year ending December 31, 2025.

Early adoption is permitted, although we did not early adopt.

Adoption will require enhancements to our income tax disclosures but is not expected to have a significant impact on our financial reporting, or on our operational processes, controls and governance in support of the new guidance.

Adopted effective with this report on a prospective basis.

Adoption required enhancements to our income tax disclosures but did not have a significant impact on our financial reporting, or on our operational processes, controls and governance in support of the new guidance.

Accounting Standards Recently Issued but Not Yet Adopted as of December 31, 2025

Standard Guidance Timing and Financial Statement Impact

Debt – Debt with Conversion and Other Options:

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Improves the relevance and consistency in application of the induced conversion guidance for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible.

Effective January 1, 2026.

Early adoption is permitted, although we do not plan to early adopt.

Adoption is not expected to have a significant impact on our financial reporting as the new guidance aligns with our recent accounting for the repurchases of certain of our Convertible Senior Notes due 2028.

Additionally, adoption is not expected to have a significant impact on our operational processes, controls and governance in support of the new guidance.

Adopted January 1, 2026.

Adoption had no impact on our financial reporting and will not have any impact in the near term as all of our Convertible Notes had been extinguished and no Convertible Notes remained outstanding as of December 31, 2025.

Additionally, adoption did not have a significant impact on our operational processes, controls and governance in support of the new guidance.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures:

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Adoption is not expected to have a significant impact on our financial reporting, or on our operational processes, controls and governance in support of the new guidance.

Intangibles – Goodwill and Other – Internal-Use Software:

Targeted Improvements to the Accounting for Internal-Use Software

Issued September, 2025

Amends certain aspects of the accounting for and disclosure of internal-use software costs, including removing all references to prescriptive and sequential software development stages to align better with current software development methods, e.g., agile.

Effective January 1, 2028.

Early adoption is permitted, although we do not plan to early adopt.

Adoption is not expected to have a significant impact on our financial reporting, or on our operational processes, controls and governance in support of the new guidance.

Financial Instruments – Credit Losses:

Purchased Loans

Issued November, 2025

Amends the accounting for acquired loans (excluding credit cards) that meet certain criteria at acquisition (referred to as purchased seasoned loans) by recognizing them at their purchase price plus an allowance for expected credit losses (i.e., the gross-up approach).

Effective January 1, 2027.

Early adoption is permitted, although we do not plan to early adopt.

Adoption is not expected to have a significant impact on our financial reporting, or on our operational processes, controls and governance in support of the new guidance.

CREDIT CARD AND OTHER LOANS

Our payment and lending solutions result in the origination of Credit card and other loans, which are recorded at the time a borrower enters into a point-of-sale transaction with a merchant.

Credit card loans represent revolving lines of credit and

Credit card loans represent revolving lines of credit and have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new information about the cardholder, in accordance with applicable regulations and the governing terms and conditions.

information about the cardholder, in accordance with applicable regulations and the governing terms and conditions.

Cardholders choosing to make a payment of less than the full balance due, instead of paying in full, are subject to finance charges and are required to make monthly payments based on pre-established amounts.

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(1) Includes $ 10.7 billion and $ 12.4 billion of Credit card and other loans available to settle obligations of consolidated VIEs as of December 31, 2025 and 2024, respectively.

(2) Includes $ 378 million and $ 371 million of accrued interest and fees that have not yet been billed to cardholders as of December 31, 2024 and 2023, respectively.

(2) Includes $ 378 million of accrued interest and fees that have not yet been billed to cardholders as of both December 31, 2025 and 2024.

BREAD FINANCIAL HOLDINGS, INC.

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As permitted by GAAP, the primary difference between the amortized cost basis included in the table above and the carrying value of our Credit card and other loans relates to the exclusion of unbilled finance charges and fees from the amortized cost basis.

As of December 31, 2024 and 2023, accrued interest and fees that have not yet been billed to cardholders were $ 378 million and $ 371 million, respectively, included in Credit card and other loans on the Consolidated Balance Sheets.

From time to time we may re-age cardholders’ accounts, with the intent of assisting delinquent cardholders who have experienced financial difficulties but who demonstrate both an ability and willingness to repay the amounts due, this practice affects credit card loan delinquencies and principal losses.

For both December 31, 2025 and 2024, accrued interest and fees that have not yet been billed to cardholders were $ 378 million, and included in Credit card and other loans on the Consolidated Balance Sheets.

This practice affects credit card loan delinquencies and principal losses.

Accounts meeting specific defined criteria are re-aged when the cardholder makes one or more consecutive payments aggregating to a certain pre-defined amount of their account balance.

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After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent;

based upon the level of risk indicated, a collection strategy is deployed.

based upon the level of risk indicated, a collection strategy is deployed, which may include tech-enabled, targeted collections strategies to engage with cardholders in the most efficient communication channel.

If after exhausting all in-house collection efforts we are unable to collect on the account, we may engage collection agencies or outside attorneys to continue those efforts, or sell the charged-off balances.

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Net Principal Losses:

Our net principal losses include the principal amount of losses that are deemed uncollectible, less recoveries, and exclude charged-off interest, fees and third-party fraud losses (including synthetic fraud).

Charged-off interest and fees reduce Interest and fees on loans, while third-party fraud losses are recorded in Card and processing

Our net principal losses include the principal amount of Credit card and other loans that are deemed uncollectible, less recoveries, and exclude charged-off interest, fees and third-party fraud losses (including synthetic fraud).

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Charged-off interest and fees reduce Interest and fees on loans, while third-party fraud losses are recorded in Card and processing expenses.

Our credit card loans, including unpaid interest and fees, are generally charged-off in the month during which an account becomes 180 days past due.

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As of December 31, 2025, approximately 88 % of these loans were originated with customers with scores of 661 or above, and correspondingly approximately 12 % of these loans were originated with customers with scores below 661.

Similarly, as of December 31, 2023, approximately 82 % and 18 % of these loans were originated with customers with FICO scores of 661 or above, and below 661, respectively.

Similarly, as of December 31, 2024, approximately 84 % and 16 % of these loans were originated with customers with Vantage scores of 661 or above, and below 661, respectively.

Modified Credit Card Loans

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As part of our collections strategy, we may offer temporary and short term programs in order to improve the likelihood of collections and meet the needs of our customers.

For example, as a result of hurricanes Helene and Milton in 2024 we froze delinquency progression for cardholders in Federal Emergency Management Agency identified impact zones for one billing cycle.

For example, as a result of hurricanes Helene and Milton in September and October of 2024, respectively, we froze delinquency progression for cardholders in Federal Emergency Management Agency identified impact zones for one billing cycle.

Our modifications, for customers who have requested assistance and meet certain qualifying requirements, come in the form of reduced payment requirements, interest rate reductions and late fee waivers.

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These temporary loan modifications may assist in cases where we believe the customer will recover from the short-term hardship and resume scheduled payments.

Under these consumer relief programs, those accounts receiving relief may not advance to the next delinquency cycle, including charge-off, in the same time frame that would have occurred had the relief not been granted.

We evaluate our consumer relief programs to

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

determine if they represent a more than insignificant delay in payment granted to borrowers experiencing financial difficulty, in which case they would then be considered a Loan Modification.

We evaluate our consumer relief programs to determine if they represent a more than insignificant delay in payment granted to borrowers experiencing financial difficulty, in which case they would then be considered a Loan Modification.

Loans in these short term programs that are determined to be Loan Modifications, will be included as such in the disclosure below.

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The following table provides information relating to credit card loans to borrowers experiencing financial difficulty that were granted a concession under a Loan Modification program during the years ended December 31:

Account Balances (1)

% of Total Credit Card Loans

Weighted Average Interest Rate Reduction (% points) Account Balances (1)

2025 2024 2023

(Millions, except percentages)

Account balance (1)

$ 325 $ 303 $ 269

% of Total credit card loans

1.8 % 1.7 % 1.4 %

Weighted average interest rate reduction (% points)

(Millions, except percentages)

Credit card loans $ 303 1.7 % 22.0 % $ 269 1.4 % 19.2 %

23.5 % 22.0 % 19.2 %

(1) Represents the outstanding balances as of December 31, 2024 and 2023, respectively, of all Loan Modifications undertaken in the past twelve months, for credit card loans that remain in modification programs on December 31, 2024 and 2023, respectively.

__________________________________

(1) Represents the outstanding balances as of December 31, 2025, 2024 and 2023 of all Loan Modifications undertaken in the past twelve months, for credit card loans that remain in modification programs on December 31, 2025, 2024 and 2023 , respectively.

The outstanding balances include principal, accrued interest and fees.

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the probability of default is factored into the Allowance for credit losses:

Modifications Outstanding

Balance Number of

Modifications Outstanding

2025 2024 2023

(Millions, except for Number of modifications)

Loan Modifications that subsequently defaulted 15,663 $ 29 14,196 $ 23

Number of modifications

14,196 15,663 14,196

Outstanding balance

$ 29 $ 29 $ 23

Unfunded Lending Commitments

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As of December 31, 2025 and 2024, there were no credit card loans held for sale.

During the year ended December 31, 2025, we did not sell any credit card loan portfolios.

In late April 2024 we sold a credit card loan portfolio for cash consideration of $ 102 million.

We recognized a gain on sale in April 2024 that was subsequently adjusted during the second half of 2024 to recognize an incremental amount due to us under the purchase and sale agreement.

We recognized a gain on sale in April 2024 that was subsequently adjusted during the second half of 2024, and again one final time during the first half of 2025, to recognize an incremental amount due under the purchase and sale agreement.

We previously announced the non-renewal of our contract with BJ’s Wholesale Club (BJ’s) and the sale of the BJ’s portfolio, which closed in late February 2023, for a total purchase price of $ 2.5 billion on a loan portfolio of $ 2.3 billion, resulting in a $ 230 million Gain on portfolio sale.

Portfolio Acquisitions

In August 2024, we acquired a credit card loan portfolio for cash consideration of $ 378 million.

In October 2023, we acquired a credit card loan portfolio for cash consideration of $ 388 million.

During the year ended December 31, 2025, we did not acquire any credit card loan portfolios.

In August 2024, we acquired a credit card loan portfolio for cash consideration of approximately $ 378 million.

ALLOWANCE FOR CREDIT LOSSES

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Our estimate under the Current Expected Credit Loss (CECL) approach is significantly influenced by the composition, characteristics and quality of our portfolio of Credit card and other loans, as well as the prevailing economic conditions and forecasts utilized.

The Allowance for credit losses includes an estimate for uncollectible principal as well as unpaid interest and fees.

The Allowance for credit losses includes an estimate for uncollectible principal as well as billed, unpaid interest and fees.

Principal losses, net of recoveries are deducted from the Allowance for credit losses.

Losses of unpaid interest and fees as well as any adjustments to the Allowance for credit losses associated with unpaid interest and fees are recorded as a reduction to Interest and fees on loans.

Losses of unpaid interest and fees are recorded as a reduction to Interest and fees on loans upon charge-off.

The Allowance for credit losses is maintained through an adjustment to the Provision for credit losses and is evaluated for appropriateness on a quarterly basis.

In estimating our Allowance for credit losses, for each identified segment of loans sharing similar risk characteristics, management uses modeling and estimation techniques based on historical loss experience, current conditions, reasonable

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and supportable forecasts and other relevant factors.

This modeling uses historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships, to determine expected credit performance.

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The following table provides our Allowance for credit losses for our Credit card and other loans.

The amount of the related Allowance for credit losses on Other loans is insignificant and therefore has been included in the table below for the periods presented:

The amount of the related Allowance for credit losses on other loans is insignificant and therefore has been included in the table below as of December 31:

2025 2024 2023

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(2) Net principal losses are presented net of recoveries of $ 347 million, $ 367 million and $ 332 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Net principal losses for the years ended December 31, 2023 and 2022 include an adjustment of $ 10 million and $ 5 million, respectively, related to the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency;

no such adjustment was made in the current period.

For the year ended December 31, 2024, the factors that influenced the decrease in the Allowance for credit losses are lower Credit card and other loans, as well as a modest decrease in the reserve rate over the period.

Overall, our reserve rate is nominally lower, 11.9 % as of December 31, 2024 compared with 12.0 % as of December 31, 2023, reflecting conservative weightings on the economic scenarios in our credit reserve modeling given the wide range of potential 2025

Net principal losses for the year ended December 31, 2023 include an adjustment of $ 10 million related to the effects of the purchase of previously written-off accounts that were sold to a third-party debt collection agency;

no such adjustment was made for the years ended December 31, 2025 and 2024.

For the year ended December 31, 2025, the factors that influenced the decrease in the Allowance for credit losses are lower Credit card and other loans, as well as a decrease in the reserve rate over the period.

Our reserve rate was 11.2 % as of

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

macroeconomic outcomes, which we intend to maintain until we see sustained improvement in delinquencies and an improved macroeconomic outlook.

December 31, 2025, reflecting our improving credit metrics and higher-quality new account acquisitions.

We continue to maintain appropriately prudent weightings on the economic scenarios in our credit reserve modeling to ensure the adequacy of our Allowance for credit losses given the wide range of potential macroeconomic outcomes, including ongoing uncertainty around inflation and unemployment.

SECURITIZATIONS

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Other investments also include an insignificant tax credit investment where we elected to apply the proportional amortization method of accounting, for which the impacts of both the amortization of the investment and income tax benefits are fully recognized in the Provision for income taxes.

Refer to Note 12, “Fair Values of Financial Instruments” for a description of our methodology for determining the fair values of our investment securities.

The following table provides a summary of our Investments as of December 31:

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Any unrealized gains, or any portion of an AFS debt security’s non-credit-related unrealized losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax.

Realized gains and losses are recorded in Other non-interest expenses in the Consolidated Statements of Income upon disposition of the AFS debt security, using the specific identification method.

The gross unrealized losses on our AFS debt securities are primarily attributable to an increase in the current benchmark interest rate.

Any realized gains and losses are recorded in Other non-interest expenses in the Consolidated Statements of Income upon disposition of the AFS debt security, using the specific identification method.

Gains and losses on investments in equity securities and CRA-related equity method investments are recorded in Other non-interest expenses in the Consolidated Statements of Income.

8 unchanged sentences

Total $ 189 $ — $ ( 18 ) $ 171 $ 195 $ — $ ( 25 ) $ 170

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The following tables provide information about AFS debt securities in a gross unrealized loss position and the length of time that individual securities have been in a continuous unrealized loss position, as of December 31:

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Total $ — $ — $ 135 $ ( 18 ) $ 135 $ ( 18 )

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Less than 12 months 12 Months or Greater Total

4 unchanged sentences

Total $ 27 $ — $ 140 $ ( 25 ) $ 167 $ ( 25 )

As of December 31, 2024, our AFS debt securities included mortgage-backed securities, which do not have a single maturity date, with an amortized cost and estimated fair value of $ 167 million and $ 145 million, respectively, and municipal bonds, all of which have a maturity date greater than ten years, with an amortized cost and estimated fair value of $ 28 million and $ 25 million, respectively.

As of December 31, 2025, our AFS debt securities included mortgage-backed securities and municipal bonds.

The mortgage-backed securities, which do not have a single maturity date, have an amortized cost and estimated fair value of $ 158 million and $ 143 million, respectively, with a weighted average yield of 3.21 %.

The municipal bonds which all have a maturity date greater than ten years, have an amortized cost and estimated fair value of $ 31 million and $ 28 million, respectively, with a weighted average yield of 3.86 %.

Weighted average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security.

The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts.

Accrued interest on our AFS debt securities is included in Other assets on the Consolidated Balance Sheets and was insignificant as of both December 31, 2025 and 2024.

There were no realized gains or losses from the sale of any investment securities for the years ended December 31, 2025, 2024 and 2023.

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When measuring the fair value we use widely accepted valuation techniques, leveraging a combination of the income approach based on discounted cash flows and the market approach based on valuation multiples.

The key assumptions used to determine the fair value are primarily unobservable inputs (i.e., Level 3 inputs as defined under GAAP) including internally developed forecasts to estimate future cash flows, growth rates and discount rates, as well as market valuation multiples (for the market approach).

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multiples (for the market approach).

Estimated cash flows are based on internal forecasts grounded in historical performance and future expectations.

2 unchanged sentences

When using valuation multiples under the market approach, we apply comparable publicly traded companies’ multiples (e.g., price to tangible book value or return on tangible equity) to our reporting unit’s operating results.

For the years ended December 31, 2024 and 2023, we performed a quantitative assessment in connection with our annual goodwill impairment evaluation and concluded that the fair value of our reporting unit was in excess of its carrying value.

For the year ended December 31, 2022, we performed a qualitative assessment and determined that it was more likely than not that the fair value of our reporting unit exceeded its carrying value.

In connection with our annual goodwill impairment evaluations, for the year ended December 31, 2025, we performed a qualitative assessment and determined that it was not more likely than not that the fair value of our reporting unit was less than its carrying amount.

For the years ended December 31, 2024 and 2023, we elected to perform quantitative impairment assessments and concluded that the fair value of our reporting unit was in excess of its carrying amount.

Goodwill was $ 634 million as of December 31, 2025, 2024 and 2023.

No goodwill impairment was recognized during any of those years, and there were no accumulated goodwill impairment losses as of December 31, 2025.

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Intangible Assets, net

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Amortization expense related to intangible assets was approximately $ 30 million, $ 35 million and $ 37 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows for the years ending December 31:

Thereafter 11

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows for the years ending December 31:

The following provides a summary of Other assets as of December 31:

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______________________________

(1) See Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” for discussion of impairment of certain deferred contract costs.

(1) See Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” for a discussion of impairment of certain deferred contract costs.

(2) Primarily related to federal, state and foreign income tax receivables (including a tax-related receivable in the amount of approximately $ 50 million, net, which we are entitled to receive through LVI), and amounts receivable from various brand partners.

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(4) Primarily comprised of prepaid expenses and non-income-based tax receivables.

We do not have any finance leases.

We determine if an arrangement is a lease or contains a lease at inception, and we do not separate lease and non-lease components.

Our lease liabilities are recognized as of the lease commencement date, or upon modification of the lease, at the present value of the contractual fixed lease payments, discounted using our incremental borrowing rate (as the rate implicit in the lease is typically not readily determinable).

Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

As of December 31, 2024 and 2023, the weighted average discount rate applied was 7.0 % and 6.9 %, respectively.

As of December 31, 2024, our leases have remaining lease terms ranging from one year , to up to 14 years, some of which may include renewal options;

the weighted average remaining lease term was 7.5 years and 8.4 years as of December 31, 2024 and 2023, respectively.

Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets;

lease expense for these leases is recognized on a straight-line basis over the lease terms.

As with other long-lived assets, right-of-use assets are reviewed for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable.

Total lease expense for the years ended December 31, 2024, 2023 and 2022 was $ 14 million, $ 25 million, and $ 13 million, respectively, including variable lease costs and sublease income, which were insignificant.

Supplemental lease-related cash flow information was as follows for the years ended December 31:

2024 2023 2022

Cash paid for amounts included in the measurement of lease liabilities – operating cash flows $ 29 $ 27 $ 23

Right-of-use assets obtained in exchange for operating leases – non-cash $ 9 $ 37 $ —

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Future maturities of our operating lease liabilities, by year, were as follows as of December 31, 2024:

Thereafter 61

Total undiscounted lease liabilities 170

Amount representing interest ( 42 )

Total present value of minimum lease payments $ 128

Deposits were categorized as interest-bearing or non-interest-bearing as follows, as of December 31:

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(1) The 2026 balance includes $ 4 million in unamortized debt issuance costs, which are associated with the entire portfolio of certificates of deposit.

As of December 31, 2025 and 2024, retail deposits that exceeded applicable Federal Deposit Insurance Corporation (FDIC) insurance limits, which are generally $250,000 per depositor, per insured bank, per ownership category, were estimated to be $ 638 million ( 5 % of Total deposits) and $ 531 million ( 4 % of Total deposits), respectively.

The measurement of estimated uninsured deposits aligns with regulatory guidelines.

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

As of December 31, 2024 and 2023, deposits that exceeded applicable Federal Deposit Insurance Corporation (FDIC) insurance limits, which are generally $250,000 per depositor, per insured bank, per ownership category, were estimated to be $ 574 million ( 4 % of Total deposits) and $ 509 million ( 4 % of Total deposits), respectively.

The measurement of estimated uninsured deposits aligns with regulatory guidelines.

BORROWINGS OF LONG-TERM AND OTHER DEBT

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Senior notes due 2029 — 900 March 2029 9.75 %

Senior notes due 2031 500 — May 2031 6.75 %

Subordinated notes due 2035 400 — June 2035 8.38 %

Subtotal 900 1,010

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2027 4.62 % to 5.47 %

Conduit asset-backed securities 3,213 3,550 Various – Feb.

Conduit asset-backed securities 2,075 3,213 Various – Oct.

Subtotal 3,425 4,563

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Long-term and Other Debt

Throughout 2024, we engaged in a number of financing-related transactions, including offering additional 9.750% Senior Notes due 2029, reducing our Parent Company debt, amending our Revolving Credit Facility to extend the maturity date, entering into separate privately negotiated repurchase agreements with a limited number of holders of our 4.25% Convertible Senior Notes Due 2028, and offering asset-backed term notes through one of our securitization trusts.

Throughout 2025 we engaged in a number of financing-related transactions, including the issuances of senior and subordinated notes, the completion of tender offers to repurchase certain outstanding senior and subordinated notes, the redemption of certain senior notes and the completion of the repurchases of 100% of our outstanding convertible senior notes.

Each of these transactions, as well as other matters relating to our liquidity and capital resources during the year, are described in more detail below.

Credit Agreement

In June 2023, we entered into our credit agreement with Parent Company, as borrower, certain of our domestic subsidiaries, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent and lender, and various other financial institutions, as lenders, which provides for a $ 700 million senior unsecured revolving credit facility (the Revolving Credit Facility).

In October 2024, we amended our Revolving Credit Facility to extend the maturity date to October 2028, as well as to delete the provisions relating to our prior term loan facility (which was repaid in full and terminated in December

In October 2024, we entered into our amended credit agreement with the Parent Company, as borrower, certain of our domestic subsidiaries, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent and lender, and various other financial institutions, as lenders, which provides for a $ 700 million senior unsecured revolving credit facility (the Revolving Credit Facility), which matures in October 2028.

As of December 31, 2025, our Revolving Credit Facility was undrawn and all $ 700 million remained available for future borrowings.

Senior Notes Due 2026, 2028, 2029 and 2031

The Senior Notes set forth below are each governed by their respective indenture that includes usual and customary negative covenants and events of default.

These Senior Notes are unsecured and are guaranteed on a senior unsecured basis

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

2023) and make certain other amendments.

As of December 31, 2024, our Revolving Credit Facility was undrawn and all $ 700 million remained available for future borrowings under the Revolving Credit Facility.

Senior Notes Due 2026, 2028 and 2029

The Senior Notes set forth below are each governed by their respective indenture that include usual and customary negative covenants and events of default.

These Senior Notes are unsecured and are guaranteed on a senior unsecured basis by certain of our existing and future domestic restricted subsidiaries that incur or in any other manner become liable for any debt under our domestic credit facilities, including the Revolving Credit Facility.

by certain of our existing and future domestic restricted subsidiaries that incur or in any other manner become liable for any debt under our domestic credit facilities, including the Revolving Credit Facility.

7.000 % Senior Notes Due 2026

In September 2020, we issued and sold $ 500 million aggregate principal amount of 7.000 % Senior Notes due January 15, 2026 (the Senior Notes due 2026).

The Senior Notes due 2026 accrue interest on the outstanding principal amount at the rate of 7.000 % per annum from September 22, 2020, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2021.

The Senior Notes due 2026 will mature on January 15, 2026, subject to earlier repurchase or redemption.

In January 2024, we redeemed $ 400 million in aggregate principal amount of the Senior Notes due 2026 with the net proceeds from the January 2024 offering of Senior Notes due 2029, together with $ 100 million of cash on hand.

See “— 9.750 % Senior Notes due 2029” below.

Further, in January 2025, with cash on hand we redeemed the remaining $ 100 million in aggregate principal amount of our Senior Notes due 2026.

In September 2020, we issued and sold $ 500 million aggregate principal amount of 7.000 % Senior Notes due January 15, 2026 (Senior Notes due 2026).

In January 2024, we redeemed $ 400 million in aggregate principal amount of the Senior Notes due 2026, and in January 2025, with cash on hand, we redeemed the remaining $ 100 million in aggregate principal amount of our Senior Notes due 2026.

4.25 % Convertible Senior Notes Due 2028

In June 2023, we issued and sold $ 316 million aggregate principal amount of 4.25 % Convertible Senior Notes due 2028 (the Convertible Notes).

The Convertible Notes bear interest at an annual rate of 4.25 %, payable semi-annually in arrears on June 15 and December 15 of each year.

The Convertible Notes mature on June 15, 2028, unless earlier repurchased, redeemed or converted.

The Convertible Notes are convertible, under certain conditions, until March 15, 2028, and on or after such date without condition, at an initial conversion rate of 26.0247 shares of our common stock per $1,000 principal amount of Convertible Notes, subject to adjustment, which represents a 25 % conversion premium based on the last reported sale price of our common stock of $ 30.74 on June 8, 2023 prior to issuing the Convertible Notes.

Upon any such conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock (at our election), in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

At our option, we may redeem for cash, all or a portion of the Convertible Notes on or after June 21, 2026, and before the 51 st scheduled trading day before the maturity date, but only if the closing price of our common stock reaches specified targets as defined in the indenture governing the Convertible Notes.

The redemption price will equal 100 % of the principal amount of the redeemed Convertible Notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the Convertible Notes, the note holders may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100 % of the principal amount of the Convertible Notes plus any accrued and unpaid interest.

Before we repurchased 100 % of our outstanding Convertible Notes, the Convertible Notes bore interest at an annual rate of 4.25 %, payable semi-annually in arrears on June 15 and December 15 of each year.

The Convertible Notes were scheduled to mature on June 15, 2028, unless earlier repurchased, redeemed or converted.

During 2025, through discrete, privately-negotiated repurchase transactions, we repurchased the remaining $ 10 million in aggregate principal amount of outstanding Convertible Notes.

The aggregate purchase price, or settlement value, for the repurchases during 2025 was $ 16 million, which was funded with cash on hand.

In connection with the repurchases, we recognized a $ 3 million inducement expense in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the total conversion value (calculated in accordance with the indenture governing the Convertible Notes), as well as a $ 4 million reduction in Additional paid-in capital (APIC) related to the total conversion value paid in excess of the carrying value of the Convertible Notes repurchased and a deferred tax impact.

As of December 31, 2025, all of the Convertible Notes had been extinguished and no Convertible Notes remained outstanding.

Prior to the repurchases of the Convertible Notes, the embedded conversion feature within the Convertible Notes was both considered indexed to the Company’s own equity and met the equity classification conditions;

therefore, it did not require derivative accounting.

Upon entering into the repurchase agreements that themselves required cash settlement of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes, the embedded conversion feature no longer met the equity classification conditions;

therefore, requiring bifurcation and derivative accounting.

In connection with the issuance of the Convertible Notes, we entered into privately negotiated capped call (Capped Call) transactions with certain financial institution counterparties.

These transactions are expected generally to reduce potential dilution to our common stock upon any conversion of Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Convertible Notes, with such reduction and/or offset subject to a cap, based on the cap price.

The base price of the Capped Call transactions is $ 38.43 , representing a premium of 25 % over the last reported sale price of our common stock of $ 30.74 on June 8, 2023, while the cap price is initially $ 61.48 , which represents a premium of 100 % over that same sale price on June 8, 2023.

Within the share price range of $ 38.43 to $ 61.48 the Capped Call transactions provide economic value to us from the counterparties, upon maturity or earlier conversion.

The Capped Call transactions met the conditions under the related accounting guidance for equity classification and are not measured at fair value on a recurring basis;

the price paid of $ 39 million was recorded in Additional paid-in capital, net of tax, in the Consolidated Balance Sheet.

At that time, these transactions were expected generally to reduce potential dilution to our common stock upon any conversion of Convertible Notes and/or offset any cash payments we were required to make in excess of the principal amount of the Convertible Notes, with such reduction and/or offset subject to a cap, based on the cap price.

All of the Capped Call transactions continue to remain outstanding, notwithstanding that no Convertible Notes remain outstanding.

Although we do not trade or speculate in derivatives, we may seek to opportunistically terminate the Capped Call transactions (in full or in part from time to time) or leave the Capped Call transactions outstanding, possibly until maturity, in any such case with the objective of optimizing the stockholder value we receive under these transactions.

The value that we ultimately realize from the Capped Call transactions (either in the form of cash or shares of our common stock, at our election) is subject to a number of variables, most significantly our stock price at the time the Capped Call transactions are terminated, and is subject to other potential adjustments based on the amount of our quarterly dividend, the volume of our share repurchases and other factors.

For additional information on the June 2023 issuance of our Convertible Notes and the subsequent repurchases in 2024, as well as information on our Capped Call transactions, refer to Note 10, “Borrowings of Long-Term and Other Debt” to the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

In August 2024 we entered into separate, privately-negotiated repurchase agreements with a limited number of Convertible Note holders to repurchase $ 238 million aggregate principal amount of outstanding Convertible Notes (the August Repurchases).

Subsequently, in September and November of 2024, certain holders of Convertible Notes separately approached us to repurchase Convertible Notes, and we entered into additional separate, privately-negotiated repurchase agreements with such holders of Convertible Notes, repurchasing $ 68 million aggregate principal amount of outstanding Convertible Notes (the Subsequent Repurchases and, together with the August Repurchases, the Repurchases).

The final aggregate purchase price, or settlement value, for the Repurchases was $ 486 million, which was funded with cash on hand.

In connection with the Repurchases, we recognized a $ 107 million inducement expense in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the total conversion value (calculated in accordance with the indenture governing the Convertible Notes), as well as an $ 88 million reduction in Additional paid-in capital (APIC) related to the total conversion value paid in excess of the carrying value of the Convertible Notes repurchased and a deferred tax impact.

Prior to the repurchases of Convertible Notes described above, the embedded conversion feature within the Convertible Notes was both, considered indexed to the Company’s own equity, and met the equity classification conditions;

therefore it did not require accounting as a derivative under GAAP.

Upon entering into the repurchase agreements that themselves required cash settlement of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes, the embedded conversion feature for those particular Convertible Notes no longer met the equity classification conditions;

therefore requiring bifurcation and derivative accounting.

Of the total $ 107 million recognized in Other non-interest expenses, $ 53 million represented the mark-to-market on the embedded conversion features over the measurement period from the date the repurchase agreements were executed until settlement thereof.

These fair value adjustments were determined using the daily volume-weighted average price per share of Parent Company’s common stock over the measurement period.

As all of the repurchases were negotiated and settled during the second half of 2024, there were no embedded conversion features requiring bifurcation and derivative accounting as of December 31, 2024.

Following the settlement of these repurchases, $ 10 million of Convertible Notes remained outstanding as of December 31, 2024.

For these Convertible Notes, the embedded conversion feature is both, considered indexed to the Company’s own equity, and meets the equity classification conditions;

therefore not requiring derivative accounting.

We may, from time to time, seek to retire or repurchase our remaining outstanding Convertible Notes through cash purchases or exchanges for other securities, in open market purchases, tender offers, privately negotiated transactions or otherwise.

During the fourth quarter of 2024, the Convertible Notes became convertible at the option of the holders (and the Convertible Notes have remained convertible during the first quarter of 2025) due to the last reported sales price per share of Parent Company’s common stock having exceeded 130 % of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding quarter (i.e., the quarters ended September 30, 2024 and December 31, 2024) (the Common Stock Sale Price Condition).

The Common Stock Sale Price Condition is remeasured each quarter, so the Convertible Notes may continue or cease to be convertible in future quarters depending on the performance of our stock price.

As of the date of this report, we have not received any conversion requests.

All of the Capped Call transactions continue to remain outstanding, notwithstanding the repurchases noted above.

Although we do not trade or speculate in derivatives, we may seek to opportunistically terminate the Capped Call transactions (in full or in part from time to time) or leave the Capped Call transactions outstanding, possibly until maturity, in any such case with the objective of optimizing the shareholder value we receive under these transactions.

9.750 % Senior Notes Due 2029

In January 2024, we issued and sold an additional $ 300 million aggregate principal amount of 9.750 % Senior Notes due 2029 (Senior Notes due 2029) at an issue price of 101.00 % of principal plus accrued interest from December 22, 2023.

The Senior Notes due 2029 issued in January 2024 were issued as additional notes under the same indenture pursuant to which the initial $ 600 million of Senior Notes due 2029 were issued in December 2023.

The Senior Notes due 2029 that were issued in both December 2023 and January 2024 constitute a single series of notes and have the same terms, other than the issue date and issue price.

The Senior Notes due 2029 accrue interest on the outstanding principal amount at the rate of

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

9.750 % per annum from December 22, 2023, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2024.

The Senior Notes due 2029 will mature on March 15, 2029, unless subject to earlier repurchase or redemption.

We used the proceeds of the January 2024 offering of Senior Notes due 2029, together with $ 100 million of cash on hand, to fund the redemption of $ 400 million in aggregate principal amount of our outstanding 7.000 % Senior Notes due 2026.

In June 2025 , we completed a cash tender offer (the Tender Offer) pursuant to which we repurchased $ 150 million aggregate principal amount of our 9.750 % Senior Notes due 2029 (Senior Notes due 2029).

The consideration paid in the Tender Offer for each $ 1,000 principal amount of the Senior Notes due 2029 was $ 1,071 , plus accrued and unpaid interest.

In connection with the repurchase, we recognized a $ 13 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029.

In August 2025, we completed another cash tender offer (the Third Quarter Tender Offer) pursuant to which we repurchased $ 31 million in aggregate principal amount of our Senior Notes due 2029, as well as $ 0.1 million aggregate principal amount of 8.375 % Subordinated Notes due 2035.

The consideration paid in the Third Quarter Tender Offer for each $ 1,000 principal amount of the Senior Notes due 2029 was $ 1,070 , plus accrued and unpaid interest.

In connection with the repurchase, we recognized a $ 3 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029.

See further discussion of our 8.375 % Subordinated Notes due 2035, below.

In November 2025, we redeemed the remaining $ 719 million in aggregate principal amount of our Senior Notes due 2029 with the net proceeds from the issuance of the 6.750 % Senior Notes due 2031 (as discussed below), together with cash on hand.

The consideration paid in the redemption for each $ 1,000 principal amount of the Senior Notes due 2029 was $ 1,068 , plus accrued and unpaid interest.

In connection with the redemption, we recognized a $ 55 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029.

There were no Senior Notes due 2029 outstanding as of December 31, 2025.

For additional information on the issuance of our Senior Notes due 2029, refer to Note 10, “Borrowings of Long-Term and Other Debt” to the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

6.750 % Senior Notes Due 2031

In November 2025, we issued $ 500 million aggregate principal amount of 6.750 % Senior Notes due 2031 (Senior Notes due 2031).

The Senior Notes due 2031 accrue interest on the outstanding principal amount at a rate of 6.750 % per annum from November 6, 2025, payable semi-annually in arrears, on May 15 and November 15 of each year, beginning on May 15, 2026.

The Senior Notes due 2031 will mature on May 15, 2031, unless subject to earlier repurchase or redemption.

We used the net proceeds from the offering of the Senior Notes due 2031, together with cash on hand, to fund the redemption in full of our outstanding Senior Notes due 2029.

8.375 % Subordinated Notes Due 2035

In March 2025, we issued and sold $ 400 million in aggregate principal amount of 8.375 % Fixed-Rate Reset Subordinated Notes due 2035 (the Subordinated Notes).

The Subordinated Notes accrue interest on the outstanding principal amount (i) at a rate per annum equal to 8.375 % from, and including, March 10, 2025, to, but excluding, June 15, 2030 (the Reset Date), and (ii) from, and including, the Reset Date to, but excluding, the maturity date at a rate per annum equal to the Five-Year U.S.

Treasury Rate as of the date that is two business days prior to the Reset Date, plus 430 basis points.

Interest on the Subordinated Notes is payable semiannually in arrears on June 15 and December 15 of each year.

The Subordinated Notes will mature on June 15, 2035, unless subject to earlier repurchase or redemption.

As noted above, as part of the Third Quarter Tender Offer, we repurchased $ 0.1 million aggregate principal amount of Subordinated Notes.

We used $ 250 million of the net proceeds from the Subordinated Notes offering to enter into a subordinated promissory note between Parent Company, as lender, and CCB, as borrower, on terms substantially the same as those of the Subordinated Notes.

The subordinated promissory note is eliminated in consolidation.

Debt Issued by Consolidated VIEs

An asset-backed security is a security whose value and income payments are derived from and collateralized by a specified pool of underlying assets – in our case, our credit card loans.

The sale of the pool of underlying assets to general investors is accomplished through a securitization process.

We regularly sell our credit card loans to our Trusts, which are consolidated.

The sale of the pool of underlying assets to investors is accomplished through a securitization process.

We regularly sell our credit card loans to our Trusts, which are

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

consolidated.

The liabilities of these consolidated VIEs include asset-backed securities for which creditors, or beneficial interest holders, do not have recourse to our general credit.

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Conduit Facilities Capacity Drawn (6)

Change Capacity Drawn (6)

Maturity Date (7)

Change Capacity Drawn Maturity Date (7)

Comenity Bank

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CCAST 2023-VFN1 (4)

250 250 — 250 250 September 2025

250 250 ( 250 ) — — —

CCAST 2024-VFN1 (5)

— — 200 200 — February 2025

200 — ( 200 ) — — —

Total $ 5,350 $ 3,213 $ ( 1,600 ) $ 3,750 $ 2,075

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(1) 2009-VFN Conduit issued under World Financial Network Credit Card Master Note Trust (WFNMNT).

(2) 2009-VFC1 Conduit issued under World Financial Network Credit Card Master Trust III (WFNMT).

In October 2024, the revolving period of the 2009-VFC1 Conduit expired and the Conduit Facility entered controlled amortization, meaning the period in which principal collections are accumulated to pay down the outstanding principal amount of the notes issued under the Conduit Facility.

In October 2025, the 2009-VFN Conduit commitment was reduced by $ 900 million to $ 1.75 billion, and the Maturity Date was extended to October 2026.

(2) 2009-VFC1 Conduit issued under World Financial Network Credit Card Master Trust III (WFNMT) was retired following controlled amortization, meaning the period in which principal collections are accumulated to pay down the outstanding principal amount of the notes issued under the Conduit Facility, in June 2025 pursuant to the termination, consent and waiver agreement.

(3) 2009-VFN Conduit issued under World Financial Capital Master Note Trust (WFCMNT).

In February 2025, the 2009-VFN Conduit commitment will be reduced by $ 250 million to $ 2 billion, and the Maturity Date will be extended to February 2026.

In February 2025, the 2009-VFN Conduit commitment was reduced by $ 250 million to $ 2 billion, and the Maturity Date was extended to February 2026.

Then in December 2025, the Maturity Date of the 2009-VFN Conduit was further extended to February 2027.

(4) 2023-VFN1 Conduit issued under Comenity Capital Asset Securitization Trust (CCAST).

(5) 2024-VFN1 Conduit issued under CCAST.

In February 2025, the 2024-VFN1 Conduit will be retired pursuant to the terms of a termination, consent and waiver agreement.

(6) Amounts drawn do not include $ 1.1 billion and $ 1.2 billion of debt issued by the Trusts as of December 31, 2024 and 2023, respectively, which were not sold, but were retained by us as a credit enhancement and therefore have been eliminated from the Total.

The purchase commitment expired on September 29, 2025 and the 2023-VFN1 Conduit was retired on October 1, 2025 pursuant to the termination, consent and waiver agreement.

(5) 2024-VFN1 Conduit issued under CCAST was retired in February 2025 pursuant to the termination, consent and waiver agreement.

(6) Amounts drawn do not include $ 1.1 billion of debt in the form of subordinated notes issued by WFNMNT and WFCMNT as of December 31, 2024, which were not sold, but were retained by us as credit enhancements and therefore have been eliminated from the Total.

The credit enhancements represented by subordinated notes issued by WFCMNT and WFNMNT were replaced with excess collateral amounts in February 2025 and October 2025, respectively, as defined in the relevant indenture supplements.

(7) Maturity Date with respect to conduit borrowings means the date on which the revolving period for the applicable Conduit Facility expires.

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The offering consisted of $ 500 million of Class A notes with a fixed interest rate of 5.47 % per year, $ 44 million of zero coupon Class M notes, and $ 26 million of zero coupon Class B notes.

The Class M and B notes were retained by us

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

and eliminated from the Consolidated Balance Sheet.

The Class M and B notes were retained by us and are eliminated in consolidation.

In addition, in August 2024 WFNMNT issued $ 500 million of Series 2024-B public term asset-backed notes, which mature in July 2027.

The offering consisted of $ 500 million of Class A notes with a fixed interest rate of 4.62 % per year.

There were no asset-backed notes issued in 2025.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The future principal payments for our Long-term and other debt are as follows, as of December 31, 2025:

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2027 — 1,712 1,712

2027 — 1,000 1,000

2029 900 — 900

Thereafter 900 — 900

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______________________________

(1) Primarily related to accrued payroll and benefits, marketing, taxes and professional services expenses.

(1) Primarily related to accrued payroll and benefits, professional services and regulatory fees, marketing and various other operating activities.

(2) Primarily comprised of cardholder rewards liabilities and long-term unearned revenue .

DERIVATIVES AND HEDGING ACTIVITIES

From time to time, we use derivative financial instruments to manage our exposure to various financial risks;

we do not trade or speculate in derivatives.

Subject to the criteria set forth in GAAP, we will either designate our derivatives in qualifying hedging relationships, or as economic hedges should the criteria in GAAP not be met.

Risk Management Objectives of Using Derivatives

We enter into derivative transactions to support our overall risk management activities.

Our primary risks stem from the impact on our earnings and economic value of equity due to changes in interest rates, and to a lesser extent, changes in foreign exchange rates.

Beginning in October 2024, we manage our interest rate sensitivity in part by changing the duration

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

and re-pricing characteristics of a portion of our variable rate credit card loan portfolio by using interest rate swaps.

We designate our interest rate swaps as qualifying accounting cash flow hedges, and account for our foreign currency forwards as economic hedges (as the criteria under GAAP for designation have not been met).

See below for additional information on our use of derivatives and how we account for them:

• Cash flow hedges:

We designate derivatives as cash flow hedges when they are used to manage our exposure to variability in cash flows attributable to changes in contractually specified interest rates on our variable-rate credit card loans.

Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss.

Those amounts are reclassified into our Consolidated Statements of Income in the same period during which the hedged forecasted interest accruals impact earnings, and are presented in the same line item as the earnings effect of the hedged items (i.e., Interest and fees on loans).

Specifically, we entered into receive-fixed, pay-floating interest rate swaps to modify the interest rate characteristics of designated credit card loans from a floating rate to a fixed rate in order to reduce the impact of changes in forecasted future cash flows due to fluctuations in market interest rates.

As of December 31, 2024, we had outstanding interest rate swaps with a total notional amount of $ 1.5 billion and the maximum period over which forecasted interest accruals were hedged with these interest rate swaps was approximately 1.8 years.

The impacts of our cash flow hedges were insignificant to the Consolidated Financial Statements for the periods presented on both a gross basis and, where applicable, a net basis.

Additionally, within the next 12 months, we expect to reclassify an insignificant loss recognized in Accumulated other comprehensive loss as of December 31, 2024 into our Consolidated Statements of Income.

The actual amount reclassified into earnings may vary due to market conditions and adjustments made as part of our ongoing risk management strategy.

• Economic hedges:

Our economic hedges use derivatives to hedge the risk of changes in foreign currency exchange rates.

Changes in the fair value of derivatives used in economic hedges are recognized in Other non-interest expense in our Consolidated Statements of Income.

As of December 31, 2024 and 2023, we had outstanding foreign currency forwards with a total notional amount of $ 73 million and $ 79 million, respectively.

The impacts of our economic hedges were insignificant to the Consolidated Financial Statements for the periods presented.

The notional amounts disclosed above are not exchanged on our derivatives.

OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES

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Payment protection products $ 116 $ 120 $ 132

Paper statement fees 82 22 —

Loss from equity method investment — — ( 6 )

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Professional services and regulatory fees $ 112 $ 112 $ 128

Repurchased Convertible Notes 107 — —

Debt repurchases 74 117 1

Occupancy expense 23 22 22

Total other non-interest expense $ 300 $ 219 $ 227

Total other non-interest expenses $ 248 $ 300 $ 219

______________________________

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In estimating the fair values, we use a discounted cash flow model (i.e., Level 3 inputs), primarily because a comparable whole loan sales market for similar loans does not exist, and therefore there is a lack of observable pricing inputs.

We use various internally derived inputs, including projected income, discount rates and forecasted write-offs.

We use various internally derived inputs, including projected income, discount rates and forecasted charge-offs.

Economic value attributable to future loans generated by the cardholder accounts is not included in the fair values.

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These inputs can vary depending on the type of derivatives and nature of the underlying rate, price or index upon which the value of the derivative is based.

We typically classify derivatives as Level 2 as significant inputs can be observed in a liquid market and the model itself does not require significant judgment.

We typically classify derivatives as Level 2 as significant inputs can be observed in a liquid market and the underlying model itself does not require significant judgment.

At least annually, we reaffirm our understanding of the valuation techniques applied in our vendor-based models and validate the valuation output on a quarterly basis.

Our derivatives are included in Other assets or Other liabilities on the Consolidated Balance Sheets.

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We record Long-term and other debt at amortized cost (including unamortized fees, issuance costs, premiums and discounts, where applicable) on the Consolidated Balance Sheets.

The fair value is estimated based on the currently observable market rates available to us for similar debt instruments with similar remaining maturities, or quoted market prices for the same transaction (i.e., Level 2 inputs).

Fair value is estimated based on the currently observable market rates available to us for similar debt instruments with similar remaining maturities, or quoted market prices for the same transaction (i.e., Level 2 inputs).

Interest payable is included within Other liabilities on the Consolidated Balance Sheets.

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These assets are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances, such as upon impairment.

We did not have any impairments for the year ended December 31, 2024.

For the year ended December 31, 2022, we wrote off $ 44 million of our equity method investment in LVI, with the remaining $ 6 million of our investment written off during the year ended December 31, 2023.

We did not have any impairments for the years ended December 31, 2025 and 2024.

For the year ended December 31, 2023, we wrote off the remaining $ 6 million of our equity method investment in LVI.

Financial Instruments Disclosed but Not Carried at Fair Value

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NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

REGULATORY MATTERS AND CAPITAL ADEQUACY

Regulatory Matters

Our business is subject to extensive federal and state laws and regulations, as well as related regulation and supervision, including by the FDIC, CFPB and other federal and state authorities.

Pending and future laws and regulations (federal and state) may adversely impact our business.

Without limiting the foregoing, CB is subject to various regulatory capital requirements administered by the State of Delaware and the FDIC.

CCB is also subject to various regulatory capital requirements administered by the State of Utah and the FDIC.

Failure to meet minimum capital requirements can trigger certain mandatory and possibly additional discretionary actions by our regulators.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, both Banks must meet specific capital guidelines that involve quantitative measures of their assets and liabilities as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by these regulators about components, risk weightings and other factors.

In addition, both Banks are limited in the amounts they can pay as dividends to the Parent Company.

Quantitative measures, established by regulations to ensure capital adequacy, require the Banks to maintain minimum amounts and ratios of Tier 1 capital to average assets, and Common equity tier 1, Tier 1 capital and Total capital, all to risk weighted assets.

Failure to meet these minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions by the Banks’ regulators that if undertaken, could have a direct material effect on CB’s and/or CCB’s operating activities, as well as our operating activities.

Based on these regulations, as of December 31, 2024 and 2023, each Bank met all capital requirements to which it was subject, and maintained capital ratios in excess of the minimums required to qualify as well capitalized.

The Banks seek to maintain capital levels and ratios in excess of the minimum regulatory requirements inclusive of the 2.5% Capital Conservation Buffer.

Although Bread Financial is not a bank holding company as defined under the Bank Holding Company Act, we seek to maintain capital levels and ratios in excess of the minimums required for bank holding companies.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

As of December 31, 2024 the actual capital ratios and minimum ratios for each Bank, as well as Bread Financial, are as follows:

Actual Ratio Minimum Ratio for

Capital Adequacy

Purposes Minimum Ratio to be

Well Capitalized under

Prompt Corrective

Action Provisions

Total Company

Common equity tier 1 capital ratio (1)

12.4 % 4.5 % 6.5 %

Tier 1 capital ratio (2)

Total risk-based capital ratio (3)

13.8 8.0 10.0

Tier 1 leverage capital ratio (4)

Total risk-weighted assets (5)

Comenity Bank

Common equity tier 1 capital ratio (1)

16.5 % 4.5 % 6.5 %

Tier 1 capital ratio (2)

Total risk-based capital ratio (3)

17.9 8.0 10.0

Tier 1 leverage capital ratio (4)

Comenity Capital Bank

Common equity tier 1 capital ratio (1)

15.4 % 4.5 % 6.5 %

Tier 1 capital ratio (2)

Total risk-based capital ratio (3)

16.7 8.0 10.0

Tier 1 leverage capital ratio (4)

__________________________________

(1) Common equity tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets.

In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders' equity has been reduced, primarily by Goodwill and intangible assets, net.

(2) Tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets.

In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders' equity has been reduced, primarily by Goodwill and intangible assets, net.

(3) Total risk-based capital ratio represents total capital divided by total risk-weighted assets.

In the calculation of total capital, we follow the Basel III Standardized Approach and therefore tier 1 capital has been increased by tier 2 capital, which for us is the allowable portion of the Allowance for credit losses.

(4) Tier 1 leverage capital ratio represents tier 1 capital divided by total average assets, after certain adjustments.

(5) Total risk-weighted assets are generally measured by allocating assets, and specified off-balance sheet exposures, to various risk categories as defined by the Basel III Standardized Approach.

We are also involved, from time to time, in reviews, investigations, subpoenas, supervisory actions and other proceedings (both formal and informal) by governmental agencies regarding our business, which could subject us to significant fines, penalties, obligations to change our business practices, significant restrictions on our existing business or ability to develop new business, cease-and-desist orders, safety-and-soundness directives or other requirements resulting in increased expenses, diminished income and damage to our reputation.

On November 20, 2023, following the consent of the Board of Managers of Comenity Servicing LLC (the Servicer), the FDIC issued a consent order to the Servicer.

The Servicer is not one of our Bank subsidiaries, but is our wholly-owned subsidiary that services substantially all of our loans.

The consent order arose out of the June 2022 transition of our credit card processing services to strategic outsourcing partners and addresses certain shortcomings in the Servicer’s information technology (IT) systems development, project management, business continuity management, cloud operations, and third-party oversight.

The Servicer entered into the consent order for the purpose of resolving these matters without admitting or denying any violations of law or regulation set forth in the order.

The consent order does not contain any monetary penalties or fines.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The Servicer continues to take significant steps to strengthen the organization’s IT governance and address the other issues identified in the consent order, working diligently to ensure that all requirements of the consent order are satisfied.

Without limiting the generality of the foregoing, the Servicer has taken steps to address each provision within the consent order and continues to comply with each ongoing requirement.

The Servicer is committed to complying with the longer-term requirements of the consent order, including the enhancement of its compliance management processes and related corporate governance, compliance with the applicable system conversion requirements, and enhanced risk management and reporting.

The Servicer has submitted nearly all of the required deliverables under the consent order to the FDIC for its review and consideration.

The Board of Directors of each of the Banks continue to oversee the Servicer’s compliance with the requirements of the consent order and provide effective challenge to the Servicer’s management toward that end.

On August 22, 2024, each Bank entered into an agreement with the FDIC to pay civil money penalties (CMPs) of $ 1 million per Bank.

The CMPs, which have been paid in full, arose out of the June 2022 transition of our credit card processing services to strategic outsourcing partners and were related to disruptions to the Banks’ customer reward programs and automatic payments following the transition.

These issues were self-identified and remediated timely, and the Banks provided full cooperation with the regulators throughout their examination.

The Banks’ agreements to pay the CMPs did not require admission of wrongdoing, and there are no operational limitations on the Banks or our business associated with the CMPs.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time we are subject to various lawsuits, claims, disputes, or potential claims or disputes, and other proceedings, arising in the ordinary course of business that we believe, based on our current knowledge, will not have a material adverse effect on our business, consolidated financial condition or liquidity, including claims and lawsuits alleging breaches of our contractual obligations, arbitrations, class actions and other litigation, arising in connection with our business activities.

However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, penalties or fines, it is possible that the outcome of legal proceedings could have a material impact on our results of operations.

Certain legal proceedings involving us or our subsidiaries are described further below.

On February 20, 2024, we and our general counsel were named as defendants in an adversary proceeding filed by the liquidating trustee in LVI’s Chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas, captioned Pirinate Consulting Group, LLC v.

Bread Financial Holdings, Inc.

24-03027 (Bankr.

Tex.), alleging actual and constructive fraudulent transfers, among other claims, in connection with our spinoff of LVI.

Also on February 20, 2024, the liquidating trustee filed an action in the United States District Court for the District of Delaware against us, each of the members of our Board of Directors at the time of the spinoff, and certain members of our management team, captioned Pirinate Consulting Group, LLC v.

Bread Financial Holdings, Inc.

24-cv-00226-RGA (D.

Del.), alleging certain breaches of fiduciary duties (and aiding and abetting breaches of fiduciary duties) in connection with the spinoff.

Subsequently, the liquidating trustee voluntarily dismissed without prejudice the complaint in the District of Delaware and commenced on March 20, 2024 a substantially similar action in Delaware Chancery Court, captioned Pirinate Consulting Group, LLC v.

Bread Financial Holdings, Inc.

2024-0277-MTZ (Del.

Ch.), against the same parties and asserting the same claims.

Among other things, in each of the Texas and Delaware actions, the liquidating trustee seeks damages in the amount of approximately $ 750 million plus interest, fees and expenses.

We and certain current and former members of our management team have also been named as defendants in other litigation matters relating to the LVI spinoff.

LoyaltyOne, Co.

(the LVI subsidiary that operated its Canadian AIR MILES business) filed suit against us and our general counsel in the Ontario Superior Court of Justice in Canada on October 18, 2023, in an action captioned LoyaltyOne, Co.

Bread Financial Holdings, Inc.

The lawsuit asserts that our general counsel, in his capacity as a pre-spinoff director of LoyaltyOne, Co., breached various fiduciary duties owed to LoyaltyOne, Co.

in connection with the LVI spinoff and certain other transactions, and that Bread Financial assisted in and benefited from those breaches.

The lawsuit seeks damages in the amount of $ 775 million.

LoyaltyOne, Co.

is also contesting our entitlement to certain potential tax refunds under the tax matters agreement, in proceedings pursuant to the Canadian Companies’ Creditors Arrangement Act in the Commercial List of the Ontario Superior Court of Justice, captioned In re Matter of a Plan of Compromise or Arrangement of LoyaltyOne, Co., Case No.

CV-23-00696017-00CL (the Tax Matters Dispute).

In July 2024, the judge presiding over the Tax Matters Dispute issued an order in our favor, and

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

LoyaltyOne, Co.

has filed a motion for leave to appeal that order, which is pending with Court of Appeal for Ontario as of the date of this report.

Finally, on April 27, 2023, we and certain current and former members of our management team were named as defendants in a putative federal securities class action filed in the United States District Court for the Southern District of Ohio, captioned Newtyn Partners, LP v.

Alliance Data Systems n/k/a Bread Financial Holdings, Inc.

23-cv-1451-EAS (S.D.

Ohio), concerning disclosures made about LVI’s business prior to the spinoff.

The lead plaintiff in this matter filed an amended complaint on March 21, 2024 and is seeking, among other things, a class action designation and an award of damages in an amount to be proven at trial, plus fees and expenses.

In all these actions related to the spinoff, we believe the allegations contained in the complaints are without merit and intend to defend the cases.

We cannot predict at this point the length of time that these actions will be ongoing or the liability, if any, which may arise therefrom.

Some matters pending against us specify the damages sought, others seek an unspecified amount of damages or are at very early stages of the legal process.

In matters where the amount of damages claimed against us are stated, the claimed amount may be exaggerated and/or unsupported.

While some matters have not yet progressed sufficiently through discovery or have had development of important factual information and legal issues to enable us to estimate an amount of loss or a range of possible loss, other matters may have progressed sufficiently to enable an estimate of an amount of loss, or a range of possible loss.

We accrue for a loss contingency when it is both probable that a loss has occurred, and the amount of loss can be reasonably estimated;

however, there may be instances in which an exposure to a loss contingency exceeds our accrual.

On a quarterly basis we evaluate developments in the legal proceedings against us that could cause an increase or decrease in the amount of the accrual that has been previously recorded.

EMPLOYEE BENEFIT PLANS

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Regular, or Non-Roth elective deferrals made by employees, together with our contributions to the Plan, and income earned on these contributions, are not taxable until withdrawn from the Plan.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

In 2023, we expanded our contributions to the Plan with an automatic annual deposit for eligible employees.

1 unchanged sentence

In addition, we match an employee’s contribution fifty cents-per-dollar, up to six percent of the employee’s eligible annual compensation.

For the years ended December 31, 2024, 2023 and 2022, our matching contributions were $ 29 million, $ 30 million and $ 17 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, our employer contributions were $ 30 million, $ 29 million and $ 30 million, respectively.

Participants in the Plan can direct their contributions and our matching contribution to numerous investment options, including our common stock.

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As of December 31, 2025 and 2024, our outstanding liability related to the EDCP, which was included in Other liabilities on the Consolidated Balance Sheets, was $ 29 million and $ 25 million, respectively.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of Accumulated other comprehensive loss, net of tax effects, are as follows for the periods presented:

Net Unrealized Gains (Losses) on AFS Securities Foreign Currency Translation Losses Accumulated other comprehensive loss

Balance as of December 31, 2021 $ 1 $ ( 3 ) $ ( 2 )

Changes in other comprehensive loss ( 19 ) — ( 19 )

Balance as of December 31, 2022 $ ( 18 ) $ ( 3 ) $ ( 21 )

Changes in other comprehensive income 2 — 2

Balance as of December 31, 2023 $ ( 16 ) $ ( 3 ) $ ( 19 )

Changes in other comprehensive loss ( 3 ) — ( 3 )

Balance as of December 31, 2024 $ ( 19 ) $ ( 3 ) $ ( 22 )

STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

On February 21, 2024, our Board of Directors approved a stock repurchase program to acquire up to $ 30 million in shares of our outstanding common stock in the open market during the period ended December 31, 2024.

On December 2, 2024, our Board of Directors approved a $ 25 million increase to this stock repurchase program, increasing the total authorized amount of shares to be repurchased from $ 30 million to $ 55 million during the period ended December 31, 2024.

The rationale for this repurchase program, and the amount thereof, was to offset a portion of the impact of dilution associated with issuances of employee restricted stock units.

During the year ended December 31, 2024, under the authorized stock repurchase program, we acquired a total of 1.0 million shares of our common stock for $ 55 million.

Following their repurchase, these 1.0 million shares ceased to be outstanding shares of common stock and are now treated as authorized but unissued shares of common stock.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Stock Compensation Plans

STOCK-BASED COMPENSATION

We have adopted equity compensation plans to advance the interests of BFH by rewarding certain employees for their contributions to the financial success of BFH and thereby motivating them to continue to make such contributions in the future.

The 2020 Omnibus Incentive Plan (the 2020 Plan) became effective July 1, 2020 and reserved 2,400,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock unit awards (RSUs), performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for us or our affiliates, with only employees being eligible to receive incentive stock options.

Under the Omnibus Incentive Plans described further below, certain shares of common stock are reserved for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock unit awards (RSUs), performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for us or our affiliates, with only employees being eligible to receive incentive stock options.

As well, the maximum amount that may be awarded under any of our equity compensation plans to any independent member of our Board of Directors in any one calendar year may not exceed $ 1 million.

2020 Omnibus Incentive Plan

The 2020 Omnibus Incentive Plan (the 2020 Plan) became effective July 1, 2020 and reserved 2,400,000 shares of common stock for future grants.

The 2020 Plan expires on June 30, 2030;

provided that, pursuant to the terms of the 2022 Omnibus Incentive Plan (as defined below), no new grants are permitted to be made under the 2020 Plan.

The 2022 Omnibus Incentive Plan (the 2022 Plan) became effective July 1, 2022 and reserved 3,075,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for us or our affiliates, with only employees being eligible to receive incentive stock options.

The 2022 Plan expires on June 30, 2032;

provided that, pursuant to the terms of the 2024 Omnibus Incentive Plan (as defined below), no new grants are permitted to be made under the 2022 Plan, and all of the shares that remained available for grant under the 2022 Plan ( 203,687 shares) were rolled over into the 2024 Plan under the terms thereof, together with any shares that may be forfeited under the outstanding

equity awards under the 2022 Plan, as discussed in more detail below.

In April 2024, our Board of Directors adopted the 2024 Omnibus Incentive Plan (the 2024 Plan), which was subsequently approved by our stockholders on May 14, 2024.

2022 Omnibus Incentive Plan

The 2022 Omnibus Incentive Plan (the 2022 Plan) became effective July 1, 2022 and reserved 3,075,000 shares of common stock for future grants.

The 2022 Plan expires on June 30, 2032, provided that pursuant to the terms of the 2024 Omnibus Incentive Plan (the 2024 Plan), no new grants are permitted to be made under the 2022 Plan, and all of the shares that remained available for grant under the 2022 Plan ( 203,687 shares) were rolled over into the 2024 Plan under the terms thereof, together with any shares that may be forfeited under the outstanding equity awards under the 2022 Plan, as discussed in more detail below.

2024 Omnibus Incentive Plan

In April 2024, our Board of Directors adopted the 2024 Plan, which was subsequently approved by our stockholders on May 14, 2024.

The 2024 Plan became effective May 14, 2024 and expires on May 13, 2034.

The 2024 Plan reserves 5,000,000 new shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for us or our affiliates, with only employees being eligible to receive incentive stock options.

In addition, the 2024 Plan (i) permitted us to roll over the shares that remained available for grant under the 2022 Plan at the time the 2024 Plan was approved ( 203,687 shares as of May 14, 2024) and (ii) permits us to roll over and re-issue shares that are forfeited under outstanding equity awards under the 2022 Plan (a total of 2,463,907 shares were subject to outstanding equity awards as of May 14, 2024).

The maximum amount that may be awarded to any independent member of our Board of Directors in any one calendar year may not exceed $ 1 million.

The 2024 Plan reserves 5,000,000 new shares of common stock for future grants.

As of December 31, 2025 61,300 shares had been forfeited and rolled over from the 2022 Plan to the 2024 Plan, and 1,574,387 shares remained subject to outstanding equity awards under the 2022 Plan.

On May 14, 2024 we registered up to an aggregate of 7,667,594 shares of our common stock authorized for issuance in accordance with the 2024 Plan pursuant to a Registration Statement on Form S-8, File No.

Terms of all awards under the 2024 Plan are determined by the Board of Directors or the Compensation & Human Capital Committee of the Board of Directors or its designee at the time of award.

Stock Compensation Expense

Stock-based Compensation Expense

Stock-based compensation expense is measured at the grant date of the award, based on the fair value of the award, and is recognized ratably over the requisite service period.

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We estimate forfeitures at each grant date based on historical experience, with forfeiture estimates to be revised, if necessary, in subsequent periods should actual forfeitures differ from those estimates.

forfeitures were estimated at 5 % for each of the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2024, there was approximately $ 56 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, stock-based equity awards granted to employees, which is expected to be recognized over a weighted average remaining period of approximatel y 1.9 years.

Forfeitures were estimated at 4 % for the year ended December 31, 2025, and were estimated at 5 % for the years ended December 31, 2024 and 2023.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

As of December 31, 2025, there was approximately $ 63 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, stock-based equity awards granted to employees, which is expected to be recognized over a weighted average remaining period of approximatel y 1.6 years.

Restricted Stock Unit Awards

The following table summarizes RSUs activity for our equity compensation plans:

The following table summarizes RSUs activity for our stock-based compensation plans:

Based Total Weighted

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(1) Shares granted reflect a 100 % target attainment of the respective market-based or performance-based metric.

Shares forfeited include those RSUs forfeited as a result of BFH not meeting the respective market-based or performance-based metric conditions.

(1) Shares granted reflect a 100 % target attainment of the respective performance-based metric.

Shares forfeited include those RSUs forfeited as a result of BFH not meeting the respective performance-based metric conditions.

For Service-based and Performance-based awards, the fair value of the RSUs was estimated using our closing share price on the date of grant.

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Performance-based RSUs typically cliff vest at the end of three years , if specified performance measures tied to our financial performance are met, which are measured annually over the three-year period.

The predefined vesting criteria typically permit a range from 0 % to 150 % to be earned.

Performance-based RSUs granted in 2025 include a market-based relative total stockholder return modifier which is measured over the three-year vesting period.

For Performance-based awards granted in 2023 and 2024, the predefined vesting criteria permit a range from 0 % to 150 % to be earned.

For Performance-based awards granted in 2025, the predefined vesting criteria permit a range from 0 % to 160 % to be earned, including the +/- 10% relative total stockholder return modifier, which is measured against a defined peer group.

Accruals of compensation cost for an award with a performance condition are based on the probable outcome of that performance condition.

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As of December 31, 2025, the aggregate intrinsic value of RSUs outstanding and expected to vest was $ 194 million.

For the years ended December 31, 2024, 2023 and 2022, we paid $ 43 million, $ 42 million and $ 43 million, respectively, in dividends to holders of our common stock.

On January 30, 2025, our Board of Directors declared a quarterly cash dividend of $ 0.21 per share on our common stock, payable on March 21, 2025, to stockholders of record at the close of business on February 14, 2025.

We file income tax returns in federal, state, local and foreign jurisdictions, as applicable.

PREFERRED STOCK AND COMMON STOCK

Preferred Stock

In November 2025, we authorized and issued 75,000 shares of preferred stock as depositary shares (the Depositary Shares) for gross proceeds of $ 75 million, with each Depositary Share representing a 1/40th interest in our Series A 8.625 % Non-Cumulative Perpetual Preferred Stock, par value $ 0.01 per share (the Series A Preferred Stock).

The Series A Preferred Stock has a liquidation preference of $ 25 per Depositary Share (equivalent to $ 1,000 per share of Series A Preferred Stock) and as of December 31, 2025, the aggregate liquidation value was $ 75 million.

We used the net proceeds of the offering to enter into a preferred stock transaction with one of our subsidiary banks, CCB, pursuant to which CCB issued preferred

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

stock to Parent Company on terms substantially the same as those of the Series A Preferred Stock.

The CCB preferred stock is eliminated in consolidation.

We will pay dividends on the Series A Preferred Stock quarterly in arrears, when, as, and if declared by our Board of Directors, and to the extent that we have lawfully available funds to pay such dividends, on March 15, June 15, September 15, and December 15 of each year.

We expect to pay dividends on our Series A Preferred Stock beginning on March 15, 2026, subject to the above referenced conditions.

We may redeem the Series A Preferred Stock at our option, subject to any regulatory approval requirements as are in effect at such time, (i) in whole or in part, on any dividend payment date on or after December 15, 2030 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in either case at a redemption price equal to $ 1,000 per share (equivalent to $ 25 per Depositary Share), plus any declared and unpaid dividends.

In the event we liquidate, dissolve or wind-up our business and affairs, either voluntarily or involuntarily, as noted above holders of the Series A Preferred Stock are entitled to a liquidation preference of $ 25 per Depositary Share, plus any declared and unpaid dividends, before we make any distribution of assets to the holders of our common stock.

Holders of the Depositary Shares are entitled to all proportional rights and preferences of the Series A Preferred Stock (including dividend, voting, redemption and liquidation rights).

Stock Repurchase Programs

Periodically, we enter into stock repurchase programs, as approved by our Board of Directors.

The rationale for our repurchase programs, and the amounts thereof, is to execute against our previously disclosed capital priorities to grow responsibly, maintain balance sheet strength, and return value to stockholders.

The following table provides information about our common stock repurchases under our various Board of Directors approved share repurchase authorizations, for the periods presented:

(Millions) Amount Authorized for Repurchase Number of Shares Repurchased (1)

Approximate Dollar Value of Shares Repurchased (2)

Amount Remaining for Future Repurchases

For the three months ended:

March 31, 2025

$ 150 2.1 $ 102 $ 48

June 30, 2025

September 30, 2025

200 0.6 40 160

December 31, 2025

200 1.9 120 $ 240

Total $ 550 5.7 $ 310

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(1) Following their repurchase, these shares ceased to be outstanding shares of common stock and are now treated as authorized but unissued shares of common stock.

(2) Excludes excise taxes on stock repurchases.

The table below summarizes the cash dividend activity we had on our common stock for the dates presented:

(Millions, except per share amounts)

Dividend Declaration Date Dividend Payment Date Amount Per Common Share Amount (1)

January 30, 2025 March 21, 2025 $ 0.21 $ 10

April 24, 2025 June 13, 2025 $ 0.21 10

July 24, 2025 September 12, 2025 $ 0.21 10

October 23, 2025 December 12, 2025 $ 0.23 10

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(1) Excludes dividend equivalent rights paid during the period.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

No cash dividends were declared or paid on our preferred stock during 2025.

On January 29, 2026, our Board of Directors declared a quarterly cash dividend of $ 26.35 per share on our preferred stock and $ 0.23 per share on our common stock, payable on March 16, 2026, to stockholders of record at the close of business on February 27, 2026.

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of Accumulated other comprehensive loss, net of tax effects, are as follows for the periods presented:

Net Unrealized Losses on AFS Securities Net Unrealized Gains on Cash Flow Hedges Foreign Currency Translation Losses Accumulated Other Comprehensive Loss

Balance as of December 31, 2022 $ ( 18 ) $ — $ ( 3 ) $ ( 21 )

Changes in other comprehensive income 2 — — 2

Balance as of December 31, 2023 $ ( 16 ) $ — $ ( 3 ) $ ( 19 )

Changes in other comprehensive loss ( 3 ) — — ( 3 )

Balance as of December 31, 2024 $ ( 19 ) $ — $ ( 3 ) $ ( 22 )

Changes in other comprehensive income 5 1 — 6

Balance as of December 31, 2025 $ ( 14 ) $ 1 $ ( 3 ) $ ( 16 )

We file income tax returns in U.S.

federal, state, local and foreign jurisdictions, as applicable.

Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year.

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Changes in deferred income tax assets and liabilities associated with components of Stockholders’ equity are charged or credited directly to Stockholders’ equity.

Otherwise, changes in deferred income tax assets and

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

liabilities are included as a component of Provision for income taxes.

Otherwise, changes in deferred income tax assets and liabilities are included as a component of Provision for income taxes.

The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates is charged or credited to Provision for income taxes in the period of enactment.

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Uncertainties can mean the tax benefits ultimately realized differ from amounts previously recognized, with any differences recorded in Provision for income taxes, along with amounts for estimated interest and penalties.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The components of our Income from continuing operations before income taxes and Provision for income taxes included in the Consolidated Statements of Income were as follows for the years ended December 31:

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Federal $ 36 $ 156 $ 261

State 29 37 41

State and local ( 34 ) 29 37

Foreign 2 2 1

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Federal 98 ( 73 ) ( 65 )

State ( 10 ) ( 2 ) ( 44 )

State and local ( 7 ) ( 10 ) ( 2 )

Foreign ( 1 ) ( 2 ) ( 1 )

Total deferred income tax benefit ( 85 ) ( 68 ) ( 245 )

Total deferred income tax expense (benefit) 90 ( 85 ) ( 68 )

Total Provision for income taxes $ 94 $ 102 $ 231

The following table presents Income taxes paid, net of refunds for the year ended December 31:

State and local 18

Total income taxes paid during the year, net of refunds (1)

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(1) During the year ended December 31, 2025 Income taxes paid, net of refunds, for the State of California were $ 4 million, which exceeded 5% of our Total income taxes paid, net of refunds.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

A reconciliation of our expected income tax expense computed by applying the federal statutory rate to Income from continuing operations before income taxes, to the recorded Provision for income taxes, is as follows for the years ended December 31:

In accordance with the applicable accounting guidance in effect for the year ended December 31, 2025, the following table reconciles the U.S.

Federal statutory tax amount and rate to our actual effective income tax amount and rate for the year ended December 31:

Amount Percent

Income from continuing operations, before income taxes $ 615

Federal statutory tax 129 21.0 %

State and local income taxes, net of federal income tax effect (1)

Tax credits ( 3 ) ( 0.5 ) %

Non-deductible expenses 5 0.9 %

Changes in unrecognized tax benefits ( 39 ) ( 6.5 ) %

Other adjustments ( 3 ) ( 0.5 ) %

Effective income tax $ 94 15.2 %

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(1) In 2025, state taxes in New York and Utah made up the majority (greater than 50 percent) of the tax effect in this category.

In accordance with the applicable accounting guidance in effect for the years ended December 31, 2024 and 2023, the following table reconciles the U.S.

Federal statutory tax amount to our recorded Provision for income taxes for the years ended December 31:

Expected expense at statutory rate $ 80 $ 203

Increase (decrease) in income taxes resulting from:

State and local income taxes, net of federal benefit 15 27 ( 2 )

State and local income taxes, net of federal income tax effect 15 27

Non-deductible expenses 29 8

IRC Section 199, net of tax reserves — — 4

Basis difference in unconsolidated subsidiaries — — ( 8 )

Valuation allowance ( 1 ) ( 5 )

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Total $ 102 $ 231

For the tax year ended December 31, 2025, the decrease in the State and local income taxes, net of federal income tax effect is primarily related to a tax law change in the State of California.

For the year ended December 31, 2024, the increase in the non-deductible expenses from prior periods is primarily related to the non-deductible portion of our repurchased Convertible Notes transactions.

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For the year ended December 31, 2023, we utilized a portion of our capital loss, and therefore released the associated portion of the valuation allowance against it.

For the year ended December 31, 2022, we increased our reserve for Internal Revenue Code (IRC) Section 199 deductions by approximately $ 4 million as a result of an unfavorable court ruling.

In addition, we recorded an income tax benefit (deferred tax asset) of approximately $ 8 million related to the initial recognition of the basis difference in an unconsolidated subsidiary, against which we recorded a $ 16 million valuation allowance as of December 31, 2022.

BREAD FINANCIAL HOLDINGS, INC.

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With the exception of NOLs generated after December 31, 2017, these attributes expire at various times through the year 2034.

As of December 31, 2024, we have state NOLs of approximately $ 233 million and state credits of approximately $ 1 million, both available to offset future state taxable income, as well as state capital losses of approximately $ 15 million to offset capital gains.

With the exception of some state NOLs generated after December 31, 2017, these NOLs, credits and capital losses will expire at various times through the year 2042.

As of December 31, 2025, we have state NOLs of approximately $ 237 million available to offset future state taxable income, as well as state capital losses of approximately $ 15 million to offset capital gains.

With the exception of some state NOLs generated after December 31, 2017, these NOLs and capital losses will expire at various times through the year 2043.

As of December 31, 2025, we have tax credits in foreign jurisdictions of approximately $ 4 million available to offset future tax liabilities.

These credits expire at various times through the year 2041.

As well, in 2024 we recorded a tax expense of approximately $ 7 million in Additional paid-in capital related to the tax impact of the repurchased Convertible Notes, specifically, the write-off of the associated deferred tax asset.

In addition, in 2023 we recorded a tax benefit of approximately $ 9 million in Additional paid-in capital to establish the deferred tax asset associated with the Capped Call transactions, which continue to remain outstanding.

In 2024 we recorded a tax expense of approximately $ 7 million in Additional paid-in capital related to the tax impact of the repurchased Convertible Notes, specifically, the write-off of the associated deferred tax asset.

We use the portfolio approach relating to the release of stranded tax effects recorded in Accumulated other comprehensive loss.

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Settlements during the period ( 10 )

Lapses of applicable statutes of limitations ( 20 )

Balance as of December 31, 2023 $ 215

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Increases related to current year tax positions 4

Settlements during the period ( 21 )

Lapses of applicable statutes of limitations ( 10 )

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We have potential cumulative interest and penalties with respect to unrecognized tax benefits of approximately $ 62 million, $ 86 million and $ 84 million as of December 31, 2025, 2024 and 2023, respectively.

For those same years we recorded approximately a $ 2 million expense, $ 9 million expense and $ 1 million benefit, respectively, in Provision for income taxes for potential interest and penalties for unrecognized tax benefits.

For those same years we recorded a benefit of approximately $ 19 million and expenses of $ 2 million and $ 9 million, respectively, in Provision for income taxes for potential interest and penalties for unrecognized tax benefits.

As of December 31, 2025, 2024 and 2023, we had unrecognized tax benefits of approximately $ 155 million, $ 200 million and $ 226 million, respectively, that, if recognized, would impact the effective tax rate.

We do not anticipate a significant change to the total amount of unrecognized tax benefits over the next twelve months.

We file income tax returns in U.S.

federal, state and foreign jurisdictions, as applicable.

federal income tax returns are no longer subject to examination for years before 2015, and with a few exceptions, state and local income tax returns are no longer subject to examination for years before 2015.

Foreign income tax returns are no longer subject to examination for years before 2018.

With few exceptions, U.S.

federal income tax returns are no longer subject to examination for years before 2022, and state and local income tax and foreign income tax returns are no longer subject to examination for years before 2021.

EARNINGS PER SHARE

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( 3 ) ( 2 ) ( 19 )

Net income $ 277 $ 718 $ 223

Net income available to common stockholders $ 518 $ 277 $ 718

Weighted average common stock outstanding – basic 46.8 49.6 49.8

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(2) As the effect would have been anti-dilutive, for the years ended December 31, 2025, 2024 and 2023, approximately 0.4 million, 0.6 million, and 1.2 million, respectively, restricted stock awards were excluded from each calculation of weighted average dilutive common shares.

(3) Holders of the Convertible Notes may convert their notes under certain conditions until March 15, 2028, and on or after such date without condition.

Upon any such conversion, we will repay the aggregate principal amount of the Convertible Notes in cash, and pay or deliver, as the case may be, cash, shares of our common stock or a combination of both (at our election), in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes.

We may also, from time to time, retire or purchase all or a portion of the outstanding Convertible Notes through cash purchases or exchanges for other securities, in open market purchases, tender offers, privately negotiated transactions or otherwise.

The conversion feature of the Convertible Notes has a dilutive impact on EPS when the average market price of our common stock for the period exceeds the conversion price of $ 38.43 per share.

With the three months ended June 30, 2024 being the first period in which the average market price of our common stock exceeded the conversion price, a weighted average of the quarterly results from the Dilutive effect of Convertible Notes is computed, and has been reflected in the table above for the year ended December 31, 2024.

(3) The conversion feature of the Convertible Notes had a dilutive impact on EPS when the average market price of our common stock for the period exceeded the conversion price of $ 38.43 per share, and has been reflected in the table above.

As of December 31, 2025, all of the Convertible Notes have been extinguished and no Convertible Notes remain outstanding.

(4) In connection with the issuance of the Convertible Notes, we entered into privately negotiated Capped Calls with certain financial institution counterparties.

These transactions are expected generally to reduce potential dilution to our common stock upon any conversion of Convertible Notes and/or offset certain cash payments we may be required to make in excess of the principal amount of the Convertible Notes upon conversion, redemption or repurchase thereof, with such reduction and/or offset subject to a cap of $ 61.48 per share.

Diluted weighted average common stock does not include the impact of the Capped Calls we entered into

Diluted weighted average common stock does not include the impact of the Capped Calls we entered into concurrently with the issuance of the Convertible Notes, as the effect would have been anti-dilutive.

REGULATORY MATTERS AND CAPITAL ADEQUACY

Regulatory Matters

Our business is subject to extensive federal and state laws and regulations, as well as related regulation and supervision, including by the FDIC, CFPB and other federal and state authorities.

Pending and future laws and regulations (federal and state) may adversely impact our business.

Without limiting the foregoing, CB is subject to various regulatory capital requirements administered by the Delaware Office of the State Bank Commissioner and the FDIC.

CCB is also subject to various regulatory capital requirements administered by the Utah Department of Financial Institutions and the FDIC.

Failure to meet minimum capital requirements can trigger certain mandatory and possibly additional discretionary actions by our regulators.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

concurrently with the issuance of the Convertible Notes, as the effect would have been anti-dilutive.

If shares were delivered to us under the Capped Calls, those shares would offset, up to the cap, the dilutive effect of the shares that we would issue upon conversion of the Convertible Notes.

under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by these regulators about components, risk weightings and other factors.

In addition, both Banks are limited in the amounts they can pay as dividends to the Parent Company.

Based on these regulations, as of December 31, 2025 and 2024, each Bank met all capital requirements to which it was subject, and maintained capital ratios in excess of the minimums required to qualify as well capitalized.

The Banks seek to maintain capital levels and ratios in excess of the minimum regulatory requirements inclusive of the 2.5% Capital Conservation Buffer.

The following table provides the actual capital ratios and minimum ratios for the Company, as well as each Bank, as of December 31:

Ratio/Dollar Value Minimum Ratio for

Capital Adequacy

Purposes * Minimum Ratio to be

Well Capitalized under

Prompt Corrective

Action Provisions

(Millions, except percentages) 2025 2024

Total Company

Common equity tier 1 capital ratio (1)

13.0 % 12.4 % 4.5 % N/A

Tier 1 capital ratio (2)

13.4 12.4 6.0 N/A

Total risk-based capital ratio (3)

16.8 13.8 8.0 N/A

Tier 1 leverage capital ratio (4)

12.4 11.5 4.0 N/A

Total risk-weighted assets (5)

$ 19,755 $ 19,928

Comenity Bank

Common equity tier 1 capital ratio (1)

15.1 % 16.5 % 4.5 % 6.5 %

Tier 1 capital ratio (2)

15.1 16.5 6.0 8.0

Total risk-based capital ratio (3)

16.5 17.9 8.0 10.0

Tier 1 leverage capital ratio (4)

14.1 15.3 4.0 5.0

Comenity Capital Bank

Common equity tier 1 capital ratio (1)

13.5 % 15.4 % 4.5 % 6.5 %

Tier 1 capital ratio (2)

14.1 15.4 6.0 8.0

Total risk-based capital ratio (3)

17.5 16.7 8.0 10.0

Tier 1 leverage capital ratio (4)

13.2 14.3 4.0 5.0

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* The listed capital adequacy ratios exclude the Capital Conservation Buffer.

(1) Common equity tier 1 capital ratio represents tier 1 capital reduced by Preferred stock divided by total risk-weighted assets.

In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders ’ equity has been reduced by Goodwill and intangible assets, net.

(2) Tier 1 capital ratio represents tier 1 capital divided by total risk-weighted assets.

In the calculation of tier 1 capital, we follow the Basel III Standardized Approach and therefore Total stockholders ’ equity has been reduced, primarily by Goodwill and intangible assets, net.

For us, tier 1 capital is primarily comprised of CET1 capital and Preferred stock.

(3) Total risk-based capital ratio represents total capital divided by total risk-weighted assets.

In the calculation of total capital, we follow the Basel III Standardized Approach and therefore tier 1 capital has been increased by tier 2 capital, which for us is

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

comprised of subordinated notes, as well as the allowable portion of the Allowance for credit losses.

(4) Tier 1 leverage capital ratio represents tier 1 capital divided by total average assets, after certain adjustments.

(5) Total risk-weighted assets are generally measured by allocating assets, and specified off-balance sheet exposures, to various risk categories as defined by the Basel III Standardized Approach.

In November 2023 following the consent of the Board of Managers of Comenity Servicing LLC (the Servicer), the FDIC issued a consent order to the Servicer.

The Servicer is not one of our Bank subsidiaries, but is our wholly-owned subsidiary that services substantially all of our loans.

The Servicer entered into the consent order for the purpose of resolving these matters without admitting or denying any violations of law or regulation set forth in the order.

The consent order does not contain any monetary penalties or fines.

Without limiting the generality of the foregoing, the Servicer has taken steps to address each provision within the consent order and continues to comply with each ongoing requirement.

The Servicer has submitted all required deliverables under the consent order to the FDIC for its review and consideration.

The Board of Managers of the Servicer continues to oversee its compliance with the requirements of the consent order and provide effective challenge to the Servicer’s management toward that end.

The Board of Directors of each of the Banks also receives reporting about the Servicer and monitors the Servicer’s compliance with the provisions of the consent order.

On December 17, 2025, we filed applications with the federal and respective state banking regulators for permission to merge CB with and into CCB, with CCB being the surviving entity.

Pending regulatory approval and the expiration of any applicable waiting periods, the merger of CB and CCB is expected to occur in the second half of 2026.

The merger is not expected to have a significant impact on our consolidated financial position, results of operations, or liquidity.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Certain legal proceedings involving us or our subsidiaries are described further below.

Bread Financial Holdings, Inc.

24-03027 (Bankr.

Tex.), alleging actual and constructive fraudulent transfers, among other claims, in connection with our spinoff of LVI.

Bread Financial Holdings, Inc.

24-cv-00226-RGA (D.

Del.), alleging certain breaches of fiduciary duties (and aiding and abetting breaches of fiduciary duties) in

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

connection with the spinoff.

Bread Financial Holdings, Inc.

2024-0277-MTZ (Del.

Ch.), against the same parties and asserting the same claims.

Among other things, in each of the Texas and Delaware actions, the liquidating trustee seeks damages in the amount of approximately $ 750 million plus interest, fees and expenses.

In the Texas action, the United States Bankruptcy Court permitted certain of the claims to move past a motion to dismiss, and on January 22, 2026, the Court denied our motion for partial summary judgment on other claims;

on February 5, 2026, we filed a motion for leave to appeal that decision to the United States District Court.

We and certain current and former members of our management team have also been named as defendants in other litigation matters relating to the LVI spinoff.

LoyaltyOne, Co.

Bread Financial Holdings, Inc.

The lawsuit asserts that our general counsel, in his capacity as a pre-spinoff director of LoyaltyOne, Co., breached various fiduciary duties owed to LoyaltyOne, Co.

in connection with the LVI spinoff and certain other transactions, and that Bread Financial assisted in and benefited from those breaches.

The lawsuit seeks damages in the amount of $ 775 million.

LoyaltyOne, Co.

CV-23-00696017-00CL (the Tax Matters Dispute).

In July 2024, the judge presiding over the Tax Matters Dispute issued an order in our favor, and LoyaltyOne, Co.

filed a motion for leave to appeal that order, which motion was dismissed by the Court of Appeal for Ontario in March 2025.

LoyaltyOne, Co.

has indicated that it will continue to seek to contest our entitlement to these potential tax refunds.

A hearing is scheduled before the Ontario Superior Court of Justice in March 2026 at which LoyaltyOne, Co.

and certain creditors of LVI are seeking a temporary stay of these Canadian proceedings pending final resolution of the U.S.

litigation filed by the liquidating trustee or, alternatively, an order that LoyaltyOne, Co.

is entitled to breach the tax matters agreement and retain the tax refunds at issue.

Alliance Data Systems n/k/a Bread Financial Holdings, Inc.

23-cv-1451-EAS (S.D.

Ohio), concerning disclosures made about LVI’s business prior to the spinoff.

The lead plaintiff in this matter filed an amended complaint on March 21, 2024.

In March 2025, the United States District Court for the Southern District of Ohio granted our and the other defendants’ motions to dismiss in full and with prejudice;

the court entered judgment in favor of all defendants and terminated the case.

The plaintiffs appealed the District Court’s ruling in the Newtyn Partner s matter, and the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of the suit in January 2026.

In all these actions related to the spinoff, we believe the allegations contained in the complaints are without merit and intend to defend the cases.

We cannot predict at this point the length of time that these actions will be ongoing or the liability, if any, which may arise therefrom.

Some matters pending against us specify the damages sought, others seek an unspecified amount of damages or are at very early stages of the legal process.

In matters where the amount of damages claimed against us are stated, the claimed amount may be exaggerated and/or unsupported.

We accrue for a loss contingency when it is both probable that a loss has occurred, and the amount of loss can be reasonably estimated;

however, there may be instances in which an exposure to a loss contingency exceeds our accrual.

On a quarterly basis we evaluate developments in the legal proceedings against us that could cause an increase or decrease in the amount of the accrual that has been previously recorded.

PARENT COMPANY FINANCIAL STATEMENTS

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The stand-alone parent-only financial statements are presented below.

Parent Company – Condensed Balance Sheets

Cash and cash equivalents $ 21 $ 2

Investment in subsidiaries 3,195 3,615

Intercompany receivables, net 773 612

Other assets 123 147

Total assets $ 4,112 $ 4,376

Long-term and other debt $ 999 $ 1,394

Other liabilities 62 64

Total liabilities 1,061 1,458

Stockholders’ equity 3,051 2,918

Total liabilities and stockholders’ equity $ 4,112 $ 4,376

Parent Company – Condensed Statements of Income

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Parent Company – Condensed Statements of Income and Comprehensive Income

Years Ended December 31,

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Net income $ 518 $ 277 $ 718

Total comprehensive income, net of tax $ 518 $ 277 $ 718

Parent Company – Condensed Balance Sheets

Cash and cash equivalents (1)

Investment in subsidiaries 3,080 3,195

Intercompany receivables, net 733 773

Other assets 93 123

Total assets $ 4,218 $ 4,112

Long-term and other debt $ 886 $ 999

Other liabilities 5 62

Total liabilities 891 1,061

Stockholders’ equity 3,327 3,051

Total liabilities and stockholders’ equity $ 4,218 $ 4,112

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(1) Includes $ 210 million in deposits with CCB as of December 31, 2025.

There were no deposits with either of our Banks as of December 31, 2024.

BREAD FINANCIAL HOLDINGS, INC.

NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Parent Company – Condensed Statements of Comprehensive Income

Years Ended December 31,

2024 2023 2022

Net income $ 277 $ 718 $ 223

Other comprehensive loss, net of tax — — ( 3 )

Total comprehensive income, net of tax $ 277 $ 718 $ 220

Parent Company – Condensed Statements of Cash Flows

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2025 2024 2023

Net cash used in operating activities $ ( 182 ) $ ( 422 ) $ ( 219 )

Net cash provided by (used in) operating activities $ 482 $ ( 182 ) $ ( 422 )

Cash flows from investing activities:

Investment in subsidiaries ( 75 ) — —

Net increase in amounts due from subsidiaries ( 450 ) — —

Dividends received 834 910 1,063

6 unchanged sentences

Dividends paid ( 42 ) ( 43 ) ( 42 )

Repurchase of common stock ( 55 ) ( 35 ) ( 12 )

Repurchases of common stock ( 313 ) ( 55 ) ( 35 )

Net proceeds from the issuance of preferred stock 71 — —

Other ( 17 ) ( 7 ) ( 2 )

3 unchanged sentences

Cash, cash equivalents and restricted cash at end of year $ 312 $ 21 $ 2

Non-cash financing activities related to the Parent Company – Condensed Statements of Cash Flows for the year ended December 31, 2024 include the impact to Additional paid-in capital related to the debt issuance costs from the repurchased Convertible Notes.

Non-cash financing activities related to the Parent Company – Condensed Statements of Cash Flows for the years ended December 31, 2025 and 2024 include the impact to Additional paid-in capital related to the debt issuance costs from the repurchased Convertible Notes.

Non-cash investing activities related to the Parent Company – Condensed Statements of Cash Flows for the year ended December 31, 2023 include a $ 318 million non-cash dividend in the form of an intercompany return of capital from Bread Financial Payments, Inc.

to the Parent Company.

Non-cash investing and financing activities related to the Parent Company – Condensed Statements of Cash Flows for the year ended December 31, 2022 included the dissolution of a subsidiary, ADS Foreign Holdings, Inc.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Bread Financial Holdings, Inc.

has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Bread Financial Holdings, Inc.

1 unchanged sentence

February 13, 2026

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Bread Financial Holdings, Inc.

and in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Name Title Date

President, Chief Executive Officer and Director February 14, 2025

ANDRETTA President, Chief Executive Officer and Director February 13, 2026

BEBERMAN Executive Vice President and Chief Financial Officer February 13, 2026

BRYAN CAMPBELL

Senior Vice President and Chief Accounting Officer February 14, 2025

BRYAN CAMPBELL Senior Vice President and Chief Accounting Officer February 13, 2026

Bryan Campbell

Chairman of the Board, Director February 14, 2025

Director February 14, 2025

BALLOU Chairman of the Board, Director February 13, 2026

FAWCETT Director February 13, 2026

GERSPACH, JR.

1 unchanged sentence

Gerspach, Jr.

/S/ PRANITI LAKHWARA

Director February 14, 2025

/S/ PRANITI LAKHWARA Director February 13, 2026

Praniti Lakhwara

/S/ RAJESH NATARAJAN

Director February 14, 2025

/S/ RAJESH NATARAJAN Director February 13, 2026

Rajesh Natarajan

/S/ JOYCE ST.

Director February 14, 2025

CLAIR Director February 13, 2026

/S/ TIMOTHY J.

Director February 14, 2025

THERIAULT Director February 13, 2026

/S/ LAURIE A.

Director February 14, 2025

TUCKER Director February 13, 2026

/S/ SHAREN J.

Director February 14, 2025

TURNEY Director February 13, 2026

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures