BREAD FINANCIAL HOLDINGS, INC. 10-K

Item 9A. Controls and Procedures. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Report. 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. 81 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. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP), and includes those policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) . 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. 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; their attestation report on the effectiveness of our internal control over financial reporting appears on page F-4. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 82 Tabl e of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Incorporated by reference to the Proxy Statement for the 2026 Annual Meeting of our stockholders, which will be filed with the SEC not later than 120 days after December 31, 2025. Item 11. Executive Compensation. Incorporated by reference to the Proxy Statement for the 2026 Annual Meeting of our stockholders, which will be filed with the SEC not later than 120 days after December 31, 2025. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Incorporated by reference to the Proxy Statement for the 2026 Annual Meeting of our stockholders, which will be filed with the SEC not later than 120 days after December 31, 2025. Item 13. Certain Relationships and Related Transactions, and Director Independence. Incorporated by reference to the Proxy Statement for the 2026 Annual Meeting of our stockholders, which will be filed with the SEC not later than 120 days after December 31, 2025. Item 14. Principal Accounting Fees and Services. Incorporated by reference to the Proxy Statement for the 2026 Annual Meeting of our stockholders, which will be filed with the SEC not later than 120 days after December 31, 2025. 83 Tabl e of Contents PART IV Item 15. Exhibits and Financial Statement Schedules. a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (2) Financial Statement Schedules. Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the audited Consolidated Financial Statements. (3) Exhibits. The following exhibits are filed as part of this Annual Report on Form 10-K or, where indicated, were previously filed and are hereby incorporated by reference. Incorporated by Reference Exhibit No. Filer Description Form Exhibit Filing Date 3.1 (a) Third Amended and Restated Certificate of Incorporation of the Registrant. 8-K 3.2 6/10/16 3.2 (a) Certificate of Amendment to Third Amended and Restated Certificate of Incorporation of the Registrant. 8-K 3.1 3/24/22 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 3.4 (a) Sixth Amended and Restated Bylaws of the Registrant. 8-K 3.2 3/24/22 4.1 (a) Specimen Certificate for shares of Common Stock of the Registrant. 10-Q 4.0 8/8/03 *4.2 (a) Description of Registrant’s C apital Stock +10.1 (a) Bread Financial Holdings, Inc. Executive Deferred Compensation Plan, amended and restated effective January 1, 2018. 8-K 10.1 11/24/17 +10.2 (a) Amendment effective January 1, 2024 to the Bread Financial Holdings, Inc. Executive Deferred Compensation Plan. 10-K 10.2 2/20/24 +10.3 (a) Bread Financial Holdings, Inc. 2010 Omnibus Incentive Plan. DEF 14A A 4/20/10 +10.4 (a) Bread Financial Holdings, Inc. 2015 Omnibus Incentive Plan. DEF 14A B 4/20/15 +10.5 (a) Bread Financial Holdings, Inc. 2020 Omnibus Incentive Plan. DEF 14A A 4/23/20 +10.6 (a) Bread Financial Holdings, Inc. 2022 Omnibus Incentive Plan. DEF 14A A 4/13/22 +10.7 (a) B read Financial Holdings, Inc. 2024 Omnibus Incentive Plan. DEF 14A B 4/3/24 +10.8 (a) Form of Time-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2020 Omnibus Incentive Plan. 8-K 10.1 2/18/21 84 Tabl e of Contents ^+10.9 (a) Form of Performance-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2020 Omnibus Incentive Plan. 8-K 10.2 2/18/21 +10.10 (a) Form of Time-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2022 Omnibus Incentive Plan. 10-K 10.9 2/20/24 ^+10.11 (a) Form of Performance-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2022 Omnibus Incentive Plan. 10-K 10.10 2/20/24 +10.12 (a) Form of Time-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2024 Omnibus Incentive Plan . 10-Q 10.11 8/1/24 +10.13 (a) Form of Performance-Based Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2024 Omnibus Incentive Plan . 10-Q 10.12 8/1/24 +10.14 (a) Form of Non-employee Director Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2010 Omnibus Incentive Plan. 10-K 10.52 2/28/13 +10.15 (a) Form of Non-employee Director Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2015 Omnibus Incentive Plan. 10-Q 10.6 8/7/17 +10.16 (a) Form of Non-employee Director Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2020 Omnibus Incentive Plan. 8-K 10.1 6/15/21 +10.17 (a) Form of Non-employee Director Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2022 Omnibus Incentive Plan. 10-K 10.14 2/20/24 +10.18 (a) Form of Non-employee Director Restricted Stock Unit Award Agreement under the Bread Financial Holdings, Inc. 2024 Omnibus Incentive Plan. 10-Q 10.13 8/1/24 +10.19 (a) Bread Financial Holdings, Inc. Non-Employee Director Deferred Compensation Plan. 8-K 10.1 6/9/06 +10.20 (a) Form of Bread Financial Associate Confidentiality Agreement. 10-K 10.18 2/27/17 +10.21 (a) Form of Bread Financial Holdings, Inc. Indemnification Agreement for Officers and Directors. 8-K 10.1 6/5/15 +10.22 (a) Bread Financial Holdings, Inc. Amended and Restated 2015 Employee Stock Purchase Plan, effective March 23, 2022. DEF 14A C 4/20/15 10.23 (b) (c) Second Amended and Restated Pooling and Servicing Agreement, dated as of January 17, 1996 as amended and restated as of September 17, 1999 and August 1, 2001, by and among WFN Credit Company, LLC, World Financial Network National Bank, and BNY Midwest Trust Company. 8-K 4.6 8/31/01 10.24 (b) (c) (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 85 Tabl e of Contents 10.25 (b) (c) (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. 8-K 4.1 4/5/05 10.26 (b) (d) Fourth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of June 13, 2007, among World Financial Network National Bank, WFN Credit Company, LLC and BNY Midwest Trust Company. 8-K 4.1 6/15/07 10.27 (b) (c) (d) Fifth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of October 26, 2007, among World Financial Network National Bank, WFN Credit Company, LLC and BNY Midwest Trust Company. 8-K 4.1 10/31/07 10.28 (b) (d) Sixth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of May 27, 2008, among World Financial Network National Bank, WFN Credit Company, LLC, and The Bank of New York Trust Company, N.A. 8-K 4.1 5/29/08 10.29 (b) (d) Seventh Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of June 28, 2010, among World Financial Network National Bank, WFN Credit Company, LLC, and The Bank of New York Mellon Trust Company, N.A. 8-K 4.2 6/30/10 10.30 (b) (d) Supplemental Agreement to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 9, 2010, among World Financial Network National Bank, WFN Credit Company, LLC, and The Bank of New York Mellon Trust Company, N.A. 8-K 4.1 8/12/10 10.31 (b) (c) (d) Eighth Amendment to the Second Amended and Restated Pooling and Servicing Agreement, dated as of November 9, 2011, among World Financial Network Bank, WFN Credit Company, LLC, and The Bank of New York Mellon Trust Company, N.A. 8-K 4.1 11/14/11 10.32 (b) (c) (d) Ninth Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of December 1, 2016, among Comenity Bank, WFN Credit Company, LLC, and MUFG Union Bank, N.A. 8-K 4.1 12/2/16 10.33 (b) (c) (d) Tenth Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of August 16, 2018, among Comenity Bank, WFN Credit Company, LLC, and MUFG Union Bank, N.A. 8-K 4.1 8/20/18 10.34 (b) (c) (d) Eleventh Amendment to Second Amended and Restated Pooling and Servicing Agreement, dated as of June 11, 2020, among Comenity Bank, WFN Credit Company, LLC, and MUFG Union Bank, N.A. 8-K 4.2 6/16/20 10.35 (b) (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 . 8-K 4.1 10/30/20 10.36 (b) (c) (d) 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 . 8-K 4.3 4/30/24 86 Tabl e of Contents 10.37 (b) (c) 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. 8-K 4.7 8/31/01 10.38 (b) (c) First Amendment to Collateral Series Supplement, dated as of November 7, 2002, among WFN Credit Company, LLC, World Financial Network National Bank and BNY Midwest Trust Company. 8-K 4.3 11/20/02 10.39 (b) (c) (d) Second Amendment to Collateral Series Supplement, dated as of July 6, 2016, among WFN Credit Company, LLC, Comenity Bank and MUFG Union Bank, N.A. 8-K 4.1 7/8/16 10.40 (b) (c) (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 . 8-K 4.3 6/24/21 10.41 (b) (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. 8-K 4.3 8/31/01 10.42 (b) (c) First Amendment to the Transfer and Servicing Agreement, dated as of November 7, 2002, among WFN Credit Company, LLC, World Financial Network National Bank and World Financial Network Credit Card Master Note Trust. 8-K 4.2 11/20/02 10.43 (b) (c) (d) Third Amendment to the Transfer and Servicing Agreement, dated as of May 19, 2004, among WFN Credit Company, LLC, World Financial Network National Bank and World Financial Network Credit Card Master Note Trust. 8-K 4.2 8/4/04 10.44 (b) (c) (d) Fourth Amendment to the Transfer and Servicing Agreement, dated as of March 30, 2005, among WFN Credit Company, LLC, World Financial Network National Bank and World Financial Network Credit Card Master Note Trust. 8-K 4.2 4/5/05 10.45 (b) (d) Fifth Amendment to the Transfer and Servicing Agreement, dated as of June 13, 2007, among WFN Credit Company, LLC, World Financial Network National Bank and World Financial Network Credit Card Master Note Trust. 8-K 4.2 6/15/07 10.46 (b) (c) (d) Sixth Amendment to the Transfer and Servicing Agreement, dated as of October 26, 2007, among WFN Credit Company, LLC, World Financial Network National Bank and World Financial Network Credit Card Master Note Trust. 8-K 4.2 10/31/07 10.47 (b) (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 87 Tabl e of Contents 10.48 (b) (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. 8-K 4.3 8/12/10 10.49 (b) (c) (d) Eighth Amendment to Transfer and Servicing Agreement, dated as of June 15, 2011, among World Financial Network National Bank, WFN Credit Company, LLC, and World Financial Network Credit Card Master Note Trust. 8-K 4.1 6/15/11 10.50 (b) (c) (d) Ninth Amendment to Transfer and Servicing Agreement, dated as of November 9, 2011, among World Financial Network Bank, WFN Credit Company, LLC, and World Financial Network Credit Card Master Note Trust. 8-K 4.3 11/14/11 10.51 (b) (c) (d) Tenth Amendment to the Transfer and Servicing Agreement, dated as of July 6, 2016, among Comenity Bank, WFN Credit Company, LLC and World Financial Network Credit Card Master Note Trust. 8-K 4.4 7/8/16 10.52 (b) (c) (d) Eleventh Amendment to the Transfer and Servicing Agreement, dated as of April 26, 2024, among Comenity Bank, WFN Credit Company, LLC and World Financial Network Credit Card Master Note Trust. 8-K 4.5 4/30/24 10.53 (b) (d) Receivables Purchase Agreement, dated as of August 1, 2001, between World Financial Network National Bank and WFN Credit Company, LLC. 8-K 4.8 8/31/01 10.54 (b) (d) First Amendment to Receivables Purchase Agreement, dated as of June 28, 2010, between World Financial Network National Bank and WFN Credit Company, LLC. 8-K 4.3 6/30/10 10.55 (b) (d) Supplemental Agreement to Receivables Purchase Agreement, dated as of August 9, 2010, between World Financial Network National Bank and WFN Credit Company, LLC. 8-K 4.2 8/12/10 10.56 (b) (c) (d) Second Amendment to Receivables Purchase Agreement, dated as of November 9, 2011, between World Financial Network Bank and WFN Credit Company, LLC. 8-K 4.2 11/14/11 10.57 (b) (c) (d) Third Amendment to Receivables Purchase Agreement, dated as of July 6, 2016, between Comenity Bank and WFN Credit Company, LLC. 8-K 4.2 7/8/16 10.58 (b) (c) (d) Fourth Amendment to Receivables Purchase Agreement, dated as of June 11, 2020, between Comenity Bank and WFN Credit Company, LLC. 8-K 4.3 6/16/20 10.59 (b) (c) (d) Fifth Amendment to Receivables Purchase Agreement, dated as of April 26, 2024, between Comenity Bank and WFN Credit Company, LLC. 8-K 4.4 4/30/24 10.60 (b) (c) Master Indenture, dated as of August 1, 2001, between World Financial Network Credit Card Master Note Trust and BNY Midwest Trust Company. 8-K 4.1 8/31/01 88 Tabl e of Contents 10.61 (b) (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. 8-K 4 4/22/03 10.62 (b) (d) Supplemental Indenture No. 1, dated as of August 13, 2003, between World Financial Network Credit Card Master Note Trust and BNY Midwest Trust Company. 8-K 4.2 8/28/03 10.63 (b) (d) Supplemental Indenture No. 2, dated as of June 13, 2007, between World Financial Network Credit Card Master Note Trust and BNY Midwest Trust Company. 8-K 4.3 6/15/07 10.64 (b) (d) 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 10.65 (b) (d) 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. 8-K 4.1 6/30/10 10.66 (b) (c) (d) Supplemental Indenture No. 5, dated as of February 20, 2013, between World Financial Network Credit Card Master Note Trust and Union Bank, N.A. 8-K 4.2 2/22/13 10.67 (b) (c) (d) Supplemental Indenture No. 6 to Master Indenture, dated as of July 6, 2016, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A. 8-K 4.3 7/8/16 10.68 (b) (c) (d) Supplemental Indenture No. 7 to Master Indenture, dated as of June 11, 2020, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A. 8-K 4.1 6/16/20 10.69 (b) (c) (d) Supplemental Indenture No. 8 to Master Indenture, dated as of April 26, 2024, between World Financial Network Credit Card Master Note Trust and U.S. Bank National Association. 8-K 4.1 4/30/24 10.70 (b) (c) (d) Agreement of Resignation, Appointment and Acceptance, dated as of May 25, 2021, by and among WFN Credit Company, LLC, U.S. Bank Trust National Association and Citicorp Trust Delaware, National Association. 8-K 4.1 5/28/21 10.71 (b) (c) (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. and U.S. Bank National Association. 8-K 4.1 6/24/21 10.72 (b) (c) (d) Succession Agreement, dated as of June 18, 2021, among WFN Credit Company, LLC, MUFG Union Bank, N.A. and U.S. Bank National Association. 8-K 4.2 6/24/21 10.73 (b) (c) (d) Series 2023-A Indenture Supplement, dated as of May 16, 2023, between World Financial Network Credit Card Master Note Trust and U.S. Bank National Association. 8-K 4.1 5/19/23 89 Tabl e of Contents 10.74 (b) (c) (d) 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. Bank National Association. 8-K 4.1 12/26/23 10.75 (b) (c) (d) Second Amendment to Series 2023-A Indenture Supplement, dated as of April 26, 2024, between World Financial Network Credit Card Master Note Trust and U.S. Bank National Association. 8-K 4.2 4/30/24 10.76 (b) (c) (d) Series 2024-A Indenture Supplement, dated as of May 15, 2024, between World Financial Network Credit Card Master Note Trust and U.S. Bank National Association. 8-K 4.1 5/21/24 10.77 (b) (c) (d) Series 2024-B Indenture Supplement, dated as of August 13, 2024, between World Financial Network Credit Card Master Note Trust and U.S. Bank National Association. 8-K 4.1 8/14/24 10.78 (b) (d) 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 10.79 (b) (c) (d) First Amendment to Amended and Restated Trust Agreement, dated as of May 25, 2021, between WFN Credit Company, LLC and Citicorp Trust Delaware, National Association. 8-K 4.2 5/28/21 10.80 (b) (d) 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 10.81 (b) (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. 8-K 4.1 7/31/09 10.82 (b) (c) (d) Sixth Amended and Restated Service Agreement, dated as of January 1, 2025, by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.1 1/2/25 10.83 (b) (c) (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 10.84 (b) (c) (d) First Addendum to Sixth Amended and Restated Service Agreement, dated as of April 1 , 2025 , by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.1 4/3/25 10.85 (b) (c) (d) Second Addendum to Sixth Amended and Restated Service Agreement, dated as of April 1, 2025, by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.2 4/3/25 90 Tabl e of Contents 10.86 (b) (c) (d) Service Agreement, dated as of April 1, 2025, by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.3 4/3/25 10.87 (b) (c) (d) Third Addendum to Sixth Amended and Restated Service Agreement, dated as of June 1, 2025, by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.1 8/1/25 10.88 (b) (c) (d) Fourth Addendum to Sixth Amended and Restated Service Agreement, dated as of October 1, 2025, by and between Comenity Bank and Comenity Servicing LLC. 8-K 99.1 10/1/25 10.89 (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 10.90 (a) 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. 10-Q 10.11 8/9/10 10.91 (a) Amendment No. 2 to Receivables Purchase Agreement, dated as of December 12, 2024, between Comenity Capital Bank and World Financial Capital Credit Company, LLC. 10-K 10.100 2/14/25 10.92 (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. 10-Q 10.4 11/7/08 10.93 (a) Amendment No. 1 to Transfer and Servicing Agreement, dated as of June 4, 2010, among World Financial Capital Credit Company, LLC, World Financial Capital Bank and World Financial Capital Master Note Trust. 10-Q 10.12 8/9/10 10.94 (a) Amendment No. 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-K 10.103 2/14/25 10.95 (a) Master Indenture, dated as of September 29, 2008, between World Financial Capital Master Note Trust and U.S. Bank National Association, together with Supplemental Indenture Nos. 1 - 3. 10-K 10.104 2/27/18 10.96 (a) Supplemental Indenture No. 4 to Master Indenture, dated as of December 12, 2024, between World Financial Capital Master Note Trust and U.S. Bank National Association. 10-K 10.105 2/14/25 10.97 (a) Receivables Purchase Agreement, dated as of June 17, 2022, between Comenity Capital Bank and Comenity Capital Credit Company, LLC. 10-K 10.98 2/28/23 10.98 (a) Amendment No. 1 to Receivables Purchase Agreement, dated as of December 20, 2024, between Comenity Capital Bank and Comenity Capital Credit Company, LLC. 10-K 10.107 2/14/25 10.99 (a) Transfer Agreement, dated as of June 17, 2022, between Comenity Capital Credit Company, LLC and Comenity Capital Asset Securitization Trust. 10-K 10.99 2/28/23 91 Tabl e of Contents 10.100 (a) Amendment No. 1 to Transfer Agreement, dated as of December 20, 2024, between Comenity Capital Credit Company, LLC and Comenity Capital Asset Securitization Trust. 8-K 10.109 2/14/25 10.101 (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-K 10.100 2/28/23 10.102 (a) Master Indenture, dated as of June 17, 2022, between Comenity Capital Asset Securitization Trust and U.S. Bank Trust Company, National Association. 10-K 10.101 2/28/23 10.103 (a) Supplemental Indenture No. 1 to Master Indenture, dated as of December 20, 2024, between Comenity Capital Asset Securitization Trust and U.S. Bank Trust Company, National Association. 10-K 10.112 2/14/25 10.104 (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. 10-K 10.129 2/27/15 10.105 (a) First Amendment to Fourth Amended and Restated Series 2009-VFN Indenture Supplement, dated as of July 10, 2017, between World Financial Network Credit Card Master Note Trust and MUFG Union Bank, N.A., formerly known as Union Bank, N.A. 10-Q 10.8 8/7/17 10.106 (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. 10-K 10.109 2/27/18 10.107 (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. 10-K 10.110 2/26/19 10.108 (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. 10-K 10.111 2/26/19 10.109 (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. 10-K 10.112 2/26/19 10.110 (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. 10-K 10.118 2/26/21 10.111 (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. 10-K 10.119 2/26/21 92 Tabl e of Contents 10.112 (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. Bank National Association, as successor to MUFG Union Bank, N.A. 10-K 10.110 2/28/23 10.113 (a) 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 . 10-K 10.127 2/20/24 10.114 (a) 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 . 10-K 10.128 2/20/24 10.115 (a) 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 . 10-K 10.124 2/14/25 *10.116 (a) 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. 10.117 (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. 8-K 10.2 6/13/23 ^10.118 (a) Amendment No. 1 to Credit Agreement, dated as of October 18, 2024, by and among Bread Financial Holdings, Inc., as borrower, and certain of its subsidiaries as guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent and various other lenders. 8-K 10.1 10/21/24 10.119 (a) Indenture, dated as of March 10, 2025, among Bread Financial Holdings, Inc. and U.S. Bank Trust Company, National Association, (including the form of the Company’s 8.375% Fixed-Rate Reset Subordinated Notes due June 15, 2035). 8-K 4.1 3/10/25 *10.120 (a) 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) . # *19 (a) B read Financial Holdings, Inc. Insider Trading Policy . *21 (a) Subsidiaries of the Registrant *23.1 (a) Consent of Deloitte & Touche LLP *31.1 (a) Certification of Chief Executive Officer of Bread Financial Holdings, Inc. pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 93 Tabl e of Contents *31.2 (a) Certification of Chief Financial Officer of Bread Financial Holdings, Inc. pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. **32.1 (a) Certification of Chief Executive Officer of Bread Financial Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. **32.2 (a) Certification of Chief Financial Officer of Bread Financial Holdings, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. *97 (a) Bread Financial Holdings, Inc. Compensation Recoupment Policy . *101 (a) The following financial information from Bread Financial Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, formatted in Inline XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Audited Consolidated Financial Statements. *104 (a) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ______________________________ * Filed herewith ** Furnished herewith + Management contract, compensatory plan or arrangement ∧ Certain exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Bread Financial Holdings, Inc. hereby undertakes to furnish supplementally copies of any of the omitted exhibits upon request by the U.S. 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. (b) WFN Credit Company, LLC (c) World Financial Network Credit Card Master Trust (d) World Financial Network Credit Card Master Note Trust Item 16. Form 10-K Summary. None. 94 Tabl e of Contents INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS BREAD FINANCIAL HOLDINGS, INC. Page Bread Financial Holdings, Inc. and Subsidiaries Reports of Independent Registered Public Accounting Firm (PCAOB ID: 34 ) F- 2 Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 F- 5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 F- 6 Consolidated Balance Sheets as of December 31, 2025 and 2024 F- 7 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024 and 2023 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 F- 9 Notes to the audited Consolidated Financial Statements F- 10 F-1 Tabl e of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Bread Financial Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying Consolidated Balance Sheets of Bread Financial Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related Consolidated Statements of Income, Comprehensive Income, Stockholders’ Equity, and Cash Flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses for credit card loans — Refer to Notes 1 and 3 to the financial statements Critical Audit Matter Description The Allowance for credit losses is an estimate of expected credit losses, measured over the estimated life of its credit card loans, that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the credit reserving methodology referred to as the Current Expected Credit Loss (CECL) model is significantly influenced by the composition, characteristics and quality of the Company’s credit card portfolio, as well as the prevailing economic conditions and forecasts utilized. The estimate of the Allowance for credit losses for credit card loans includes an estimate for uncollectible principal as well as unpaid interest and fees. Principal losses, net of recoveries are deducted from the Allowance for credit losses. Losses 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 to F-2 Tabl e of Contents Interest and fees on loans. The Allowance for credit losses is maintained through an adjustment to the Provision for credit losses and is evaluated for appropriateness. In estimating its Allowance for credit losses for credit card loans, management uses modeling and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships, to determine expected credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card loans, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the Allowance for credit losses reflects the Company’s best estimate of current expected credit losses within the credit card loans balance. Given the significant judgments made by management in estimating its Allowance for credit losses related to credit card loans, performing audit procedures to evaluate the reasonableness of the estimated Allowance for credit losses, including procedures to evaluate the qualitative adjustments, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our credit modeling specialists. How the Critical Audit Matter Was Addressed in the Audit • We tested the design and operating effectiveness of management’s controls over the determination and review of model methodology, significant assumptions and qualitative adjustments. • We evaluated whether the method (including the model), data, and significant assumptions are appropriate in the context of the applicable financial reporting framework. • We tested the completeness and accuracy of the historical data used in management’s models. • With assistance from credit modeling specialists, we evaluated whether the model is suitable for determining the estimate, which included understanding the model methodology and logic, whether the selected method for estimating credit losses is appropriate and whether the significant assumptions were reasonable. • We evaluated the reasonableness of the selection of forecasted macroeconomic variables, considered alternative forecasted scenarios and evaluated any contradictory evidence. • We evaluated whether judgments have been applied consistently to the model and that any qualitative adjustments to the output of the model are consistent with the measurement objective of the applicable financial reporting framework and are appropriate in the circumstances. • We considered any contradictory evidence that arose while performing our procedures, and whether or not this evidence was indicative of management bias. /s/ Deloitte & Touche LLP Columbus, Ohio February 13, 2026 We have served as the Company’s auditor since 1998. F-3 Tabl e of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Bread Financial Holdings, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Bread Financial Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Financial Statements as of and for the year ended December 31, 2025, of the Company and our report dated February 13, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Columbus, Ohio February 13, 2026 F-4 Table of Contents BREAD FINANCIAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 2025 2024 2023 (Millions, except per share amounts) Interest income Interest and fees on loans $ 4,739 $ 4,820 $ 4,961 Interest on cash and investment securities 173 204 184 Total interest income 4,912 5,024 5,145 Interest expense Interest on deposits 554 608 541 Interest on borrowings 300 352 338 Total interest expense 854 960 879 Net interest income 4,058 4,064 4,266 Non-interest income Interchange revenue, net of retailer share arrangements ( 416 ) ( 381 ) ( 335 ) Gain on portfolio sale 3 11 230 Other 200 144 128 Total non-interest income ( 213 ) ( 226 ) 23 Total net interest and non-interest income 3,845 3,838 4,289 Provision for credit losses 1,242 1,397 1,229 Total net interest and non-interest income, after provision for credit losses 2,603 2,441 3,060 Non-interest expenses Employee compensation and benefits 880 897 867 Card and processing expenses 322 326 428 Information processing and communication 308 300 301 Marketing expenses 150 147 161 Depreciation and amortization 80 90 116 Other 248 300 219 Total non-interest expenses 1,988 2,060 2,092 Income from continuing operations before income taxes 615 381 968 Provision for income taxes 94 102 231 Income from continuing operations 521 279 737 Loss from discontinued operations, net of income taxes (1) ( 3 ) ( 2 ) ( 19 ) Net income available to common stockholders $ 518 $ 277 $ 718 Basic income per share (Note 18) Income from continuing operations $ 11.15 $ 5.63 $ 14.79 Loss from discontinued operations $ ( 0.08 ) $ ( 0.05 ) $ ( 0.40 ) Net income per share $ 11.07 $ 5.58 $ 14.39 Diluted income per share (Note 18) Income from continuing operations $ 10.96 $ 5.54 $ 14.74 Loss from discontinued operations $ ( 0.07 ) $ ( 0.05 ) $ ( 0.40 ) Net income per share $ 10.89 $ 5.49 $ 14.34 Weighted average common shares outstanding (Note 18) Basic 46.8 49.6 49.8 Diluted 47.6 50.4 50.0 ___________________________________________________________ (1) Includes amounts that related to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. For additional information refer to Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” to the audited Consolidated Financial Statements. See Notes to the audited Consolidated Financial Statements. F-5 Table of Contents BREAD FINANCIAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, 2025 2024 2023 (Millions) Net income $ 518 $ 277 $ 718 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 See Notes to the audited Consolidated Financial Statements. F-6 Table of Contents BREAD FINANCIAL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 (Millions, except preferred shares and percentages) ASSETS Cash and cash equivalents $ 3,604 $ 3,679 Credit card and other loans Total credit card and other loans (includes loans available to settle obligations of consolidated variable interest entities: 2025, $ 10,708 ; 2024, $ 12,408 ) 18,805 18,896 Allowance for credit losses ( 2,106 ) ( 2,241 ) Credit card and other loans, net 16,699 16,655 Investments (includes investment securities carried at fair value: 2025, $ 221 ; 2024, $ 217 ) 284 266 Property and equipment, net 117 142 Goodwill and intangible assets, net 716 746 Other assets 1,243 1,403 Total assets $ 22,663 $ 22,891 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits $ 13,916 $ 13,082 Debt issued by consolidated variable interest entities 3,422 4,558 Long-term and other debt 886 999 Other liabilities 1,112 1,201 Total liabilities 19,336 19,840 Commitments and contingencies (Note 20) 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; 2024, 49.1 million shares — 1 Additional paid-in capital 1,868 2,073 Retained earnings 1,475 999 Accumulated other comprehensive loss ( 16 ) ( 22 ) Total stockholders’ equity 3,327 3,051 Total liabilities and stockholders’ equity $ 22,663 $ 22,891 See Notes to the audited Consolidated Financial Statements. F-7 Table of Contents BREAD FINANCIAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred Stock Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity 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 Net income — — — — — 718 — 718 Other comprehensive income — — — — — — 2 2 Stock-based compensation — — — — 44 — — 44 Capped call transactions for convertible senior notes due 2028, net of tax — — — — ( 30 ) — — ( 30 ) Repurchases of common stock — — ( 0.9 ) — ( 35 ) — — ( 35 ) Dividends and dividend equivalent rights declared ($ 0.84 per common share) — — — — — ( 44 ) — ( 44 ) 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 Cumulative effect of change in accounting principle (1) — — — — — ( 1 ) — ( 1 ) Net income — — — — — 277 — 277 Other comprehensive loss — — — — — — ( 3 ) ( 3 ) Stock-based compensation — — — — 54 — — 54 Repurchases of common stock — — ( 1.0 ) — ( 55 ) — — ( 55 ) Repurchases of Convertible Notes — — — — ( 88 ) — — ( 88 ) Dividends and dividend equivalent rights declared ($ 0.84 per common share) — — — — — ( 44 ) — ( 44 ) 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. For additional information refer to Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” to the audited Consolidated Financial Statements. See Notes to the audited Consolidated Financial Statements F-8 Table of Contents BREAD FINANCIAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2025 2024 2023 (Millions) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 518 $ 277 $ 718 Adjustments to reconcile net income to net cash provided by operating activities Provision for credit losses 1,242 1,397 1,229 Depreciation and amortization 80 90 116 Deferred income taxes 90 ( 85 ) ( 68 ) Non-cash stock-based compensation 56 54 44 Amortization of deferred financing costs 16 21 26 Amortization of deferred origination costs 75 92 92 Gain on portfolio sale ( 3 ) ( 11 ) ( 230 ) Loss on debt extinguishment 74 117 7 Change in other operating assets and liabilities Change in other assets 57 42 28 Change in other liabilities ( 96 ) ( 109 ) — Other ( 17 ) ( 26 ) 25 Net cash provided by operating activities 2,092 1,859 1,987 CASH FLOWS FROM INVESTING ACTIVITIES Change in credit card and other loans ( 1,345 ) ( 840 ) ( 1,154 ) Proceeds from sale of credit card loan portfolios — 101 2,499 Purchases of credit card loan portfolios — ( 377 ) ( 473 ) Purchases of investments ( 22 ) ( 31 ) ( 50 ) Maturities of investments 20 14 14 Other, including capital expenditures ( 24 ) ( 36 ) ( 48 ) Net cash (used in) provided by investing activities ( 1,371 ) ( 1,169 ) 788 CASH FLOWS FROM FINANCING ACTIVITIES Unsecured borrowings under debt agreements 900 300 1,401 Repayments/maturities of unsecured borrowings under debt agreements ( 1,079 ) ( 894 ) ( 1,882 ) Debt issued by consolidated variable interest entities 925 2,390 2,592 Repayments/maturities of debt issued by consolidated variable interest entities ( 2,063 ) ( 1,727 ) ( 4,807 ) 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 ) Other ( 17 ) ( 7 ) ( 2 ) Net cash used in financing activities ( 807 ) ( 592 ) ( 3,086 ) Change in cash, cash equivalents and restricted cash ( 86 ) 98 ( 311 ) Cash, cash equivalents and restricted cash at beginning of period 3,714 3,616 3,927 Cash, cash equivalents and restricted cash at end of period $ 3,628 $ 3,714 $ 3,616 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for interest $ 868 $ 922 $ 861 Cash paid during the year for income taxes, net $ 53 $ 227 $ 292 Cash and cash equivalents reconciliation Cash and cash equivalents $ 3,604 $ 3,679 $ 3,590 Restricted cash included within Other Assets 24 35 26 Total cash, cash equivalents and restricted cash $ 3,628 $ 3,714 $ 3,616 The Consolidated Statements of Cash Flows are presented with the combined cash flows from continuing and discontinued operations. See Notes to the audited Consolidated Financial Statements. F-9 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 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. consumers. 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 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). The breadth and quality of our product and service offerings, coupled with our customer-centric approach, have enabled us to establish and maintain long-standing partner relationships. We operate our business through a single reportable segment, with our primary source of revenue being 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. Throughout this report, unless stated or the context implies otherwise, the terms “Bread Financial”, “BFH”, the “Company”, “we”, “our” or “us” refer to Bread Financial Holdings, Inc. and its subsidiaries on a consolidated basis. References to “Parent Company” refer to Bread Financial Holdings, Inc. on a parent-only standalone basis. In addition, in this report we may refer to the retailers and other companies with whom we do business as our “partners”, “brand partners”, or “clients”, provided that the use of the term “partner”, “partnering” or any similar term does not mean or imply a formal legal partnership, and is not meant in any way to alter the terms of Bread Financial’s relationship with any third parties. We offer our credit products through our insured depository institution subsidiaries, Comenity Bank and Comenity Capital Bank, which together are referred to herein as the “Banks.” BASIS OF PRESENTATION These audited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The audited Consolidated Financial Statements also include amounts that relate to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. Such amounts have been classified within Discontinued operations and primarily relate to the after-tax impact of contractual indemnification and tax-related matters. For additional information about our previously disclosed discontinued operations please refer to Note 22, “Discontinued Operations and Bank Holding Company Financial Presentation” to the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. F-10 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) SIGNIFICANT ACCOUNTING POLICIES We present our accounting policies within the Notes to the audited Consolidated Financial Statements to which they relate; the table below lists such accounting policies and the related Notes. The remaining significant accounting policies applied are included following the table. Significant Accounting Policy Note Number Note Title Credit Card and Other Loans Note 2 Credit Card and Other Loans Allowance for Credit Losses Note 3 Allowance for Credit Losses Transfers of Financial Assets Note 4 Securitizations Investments Note 5 Investments Goodwill Note 6 Goodwill and Intangible Assets, Net Intangible Assets, Net Note 6 Goodwill and Intangible Assets, Net Stock-Based Compensation Expense Note 14 Stock-Based Compensation Income Taxes Note 17 Income Taxes Earnings Per Share Note 18 Earnings Per Share Principles of Consolidation The accompanying audited Consolidated Financial Statements include the accounts of BFH and all subsidiaries in which we have a controlling financial interest. For voting interest entities, a controlling financial interest is determined when we are able to exercise control over the operating and financial decisions of the investee. 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 (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 investee, we account for such investments under the equity method. All intercompany transactions have been eliminated. Segment Reporting We operate as a single reportable segment, where we manage our business and assess financial performance on a consolidated basis. Our single reportable segment’s 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. Our primary expense is Provision for credit losses driven by Net principal losses from our various credit card and other loan products. 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 F-11 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. The following describes our recognition policies across the various sources of revenue we earn. Interest and fees on loans : Represents revenue earned on customer accounts owned by us, and is recognized in the period earned in accordance with the contractual provisions of the credit agreements. 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 of 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. 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. 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. 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 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 paper statement fees and losses from our equity method investment in Loyalty Ventures Inc. (LVI). Contract costs: 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 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 $ 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. F-12 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. Interest expense: Represents interest incurred primarily to fund Credit card and other loans, general corporate purposes and liquidity needs, and is recognized as incurred. Interest expense is divided between Interest on deposits, which relates to interest expense on Deposits taken from customers, and Interest on borrowings, which relates to interest expense on our Long-term and other debt. Card and processing expenses: Primarily represents costs incurred in relation to customer service activities, including embossing, and postage and mailing, as well as fraud and credit bureau inquiries. These costs are expensed as incurred. Information processing and communication expenses: Represents costs incurred in relation to data processing, and software license and maintenance charges. These costs are expensed as incurred. Marketing expenses: Represents costs incurred in campaign development and initial placement of advertising, which are expensed in the period in which the advertising first takes place. Other marketing expenses are expensed as incurred. Consolidated Balance Sheets 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. 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. Restricted cash primarily includes cash restricted for principal and interest repayments of debt issued by our consolidated VIEs, as well as other restricted amounts including cash pledged to collateralize our derivative contracts. Restricted cash is recorded in Other assets on the Consolidated Balance Sheets and totaled $ 24 million and $ 35 million as of December 31, 2025 and 2024, respectively. Property and equipment : 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 one year to 16 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. Costs associated with the acquisition or development of internal-use software are also capitalized and recorded in Property and equipment. Once the internal-use software is ready for its intended use, the cost is amortized on a straight-line basis over the software’s estimated useful life. As of December 31, 2025, our internal-use software has estimated useful lives ranging from one year to 10 years. As of December 31, 2025 and 2024, the net amount of unamortized capitalized internal-use software costs included in Property and equipment on the Consolidated Balance Sheets was $ 54 million and $ 71 million, respectively. Amortization expense on capitalized internal-use software costs totaled $ 30 million, $ 35 million and $ 60 million for the years ended December 31, 2025, 2024 and 2023, respectively. We review long-lived assets and asset groups for impairment whenever events or circumstances indicate their carrying amounts may not be recoverable. An impairment is recognized if the carrying amount is not recoverable and exceeds the asset or asset group’s fair value. No impairment of a long-lived asset or asset group was recognized during the years ended December 31, 2025, 2024 and 2023. Leases : 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 F-13 Table of Contents BREAD FINANCIAL HOLDINGS, INC. 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 We depend on a limited number of large partner relationships for a significant portion of our revenue. As of and for the year ended December 31, 2025, our five largest credit card programs (based on Total net interest and non-interest income) accounted for approximately 49 % of our Total net interest and non-interest income excluding the gain on sale and 44 % of our End-of-period credit card and other loans. 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 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. F-14 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING STANDARDS Accounting Standards Recently Adopted during 2025 Standard Guidance Timing and Financial Statement Impact Income Taxes: Improvements to Income Tax Disclosures Issued December, 2023 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. 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: Induced Conversions of Convertible Debt Instruments Issued November, 2024 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. 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: Disaggregation of Income Statement Expenses Issued November, 2024 Requires disaggregated disclosure of certain income statement expenses on the face of the Consolidated Statements of Income, and further disaggregation of certain expense captions into specified categories in disclosures within the notes to the Consolidated Financial Statements. Effective beginning with our Annual Report on Form 10-K for the year ending December 31, 2027, and effective for interim reporting periods beginning in 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. 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. 2. 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 have a range of terms that include credit limits, interest rates and fees, which can be revised over time based on new F-15 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. Other loans, which consist primarily of our pay-over-time products, which include installment loans and “split-pay” offerings, have a range of fixed terms such as interest rates, fees and repayment periods, and borrowers are required to make pre-established monthly payments over the term of the loan in accordance with the applicable terms and conditions. Credit card and other loans include principal and any related accrued interest and fees and are presented on the Consolidated Balance Sheets net of the Allowance for credit losses. We continue to accrue interest and fee income on all accounts, except in limited circumstances, until the related balance and all related interest and fees are paid or charged-off. We generally classify our Credit card and other loans as held for investment. We sell a majority of our credit card loans originated by Comenity Bank (CB) and by Comenity Capital Bank (CCB), to certain of our master securitization trusts (the Trusts), which are consolidated VIEs, and therefore these loans are restricted for securitization investors. All new originations of Credit card and other loans are determined to be held for investment at origination because we have the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, we consider the average life and homogenous nature of our Credit card and other loans. In assessing whether our Credit card and other loans continue to be held for investment, we also consider capital levels and scheduled maturities of funding instruments used. The assertion regarding the intent and ability to hold Credit card and other loans for the foreseeable future can be made with a high degree of certainty given the maturity distribution of our direct-to-consumer (DTC or retail) deposits and other funding instruments; the demonstrated ability to replace maturing time-based deposits and other borrowings with new deposits or borrowings; and historic payment activity on Credit card and other loans. Due to the homogenous nature of our credit card loans, amounts are classified as held for investment on a brand partner portfolio basis. From time to time certain credit card loans are classified as held for sale, as determined on a brand partner portfolio basis. We carry held for sale loans at the lower of aggregate cost or fair value and continue to recognize finance charges on an accrual basis. Cash flows associated with Credit card and other loans originated or purchased for investment are classified as Cash flows from investing activities, regardless of any subsequent change in intent and ability. The following table provides Credit card and other loans, as of December 31: 2025 2024 (Millions) Credit card loans $ 18,417 $ 18,586 Other loans 388 310 Total credit card and other loans (1)(2) 18,805 18,896 Less: Allowance for credit losses ( 2,106 ) ( 2,241 ) Credit card and other loans, net $ 16,699 $ 16,655 __________________________________ (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 of accrued interest and fees that have not yet been billed to cardholders as of both December 31, 2025 and 2024. F-16 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Credit Card and Other Loans Aging The following table provides the delinquency trends of our Credit card and other loans portfolio, based on the amortized cost, as of the dates presented: Aging Analysis of Delinquent Amortized Cost Credit Card and Other Loans (1) 31 to 60 Days Past Due 61 to 90 Days Past Due 91 or more Days Past Due Total Total Current Total (Millions) December 31, 2025 $ 359 $ 282 $ 676 $ 1,317 $ 17,076 $ 18,393 December 31, 2024 $ 369 $ 288 $ 730 $ 1,387 $ 17,105 $ 18,492 ______________________________ (1) Other loans delinquencies have been included with credit card loan delinquencies in the table above, as amounts were insignificant as of each period presented. 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. 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. 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. 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. Upon re-aging, the outstanding balance of a delinquent account is returned to current status. Our re-aged accounts as a percentage of Total credit card and other loans represented 3.0 %, 4.1 % and 2.6 %, for the years ended December 31, 2025, 2024, and 2023 respectively. Our re-aging practices comply with regulatory guidelines. Credit Quality Indicators for Our Credit Card and Other Loans Given the nature of our business, the credit quality of our assets, in particular our Credit card and other loans, is a key determinant underlying our ongoing financial performance and overall financial condition. When it comes to our Credit card and other loans portfolio, we closely monitor Delinquency rates and Net principal loss rates, which reflect, among other factors, our underwriting, the inherent credit risk in our portfolio and the success of our collection and recovery efforts. These rates also reflect, more broadly, the general macroeconomic conditions, including the compounding effect of persistent inflation relative to wage growth, and higher interest rates. Our Delinquency and Net principal loss rates are also impacted by the size of our Credit card and other loans portfolio, which serves as the denominator in the calculation of these rates. Accordingly, changes in the size of our portfolio (whether due to credit tightening, acquisitions or dispositions of portfolios, or otherwise) may cause movements in our Delinquency and Net principal loss rates that are not necessarily indicative of the underlying credit quality of the overall portfolio. Delinquencies: An account is contractually delinquent if we do not receive the minimum payment due by the specified due date. Our policy is to continue to accrue interest and fee income on all accounts, except in limited circumstances, until the balance and all related interest and fees are paid or charged-off. 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, 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. The Delinquency rate is calculated by dividing outstanding principal balances that are contractually delinquent (i.e., principal balances greater than 30 days past due) as of the end of the period, by the outstanding principal amount of Credit card and other loans as of the same period-end. As of December 31, 2025 and 2024, our Delinquency rates were 5.8 % and 5.9 %, respectively. Net Principal Losses: 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). F-17 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. Our pay-over-time products, which include installment loans and “split-pay” offerings, including unpaid interest, are generally charged-off when a loan becomes 120 days past due. However, in the case of a customer bankruptcy or death, Credit card and other loans, including unpaid interest and fees, as applicable, are charged-off 60 days after receipt of the notification of the bankruptcy or death, but in any case no later than 180 days past due for credit card loans and 120 days past due for installment loans and “split-pay” offerings. We record the actual losses for unpaid interest and fees as a reduction to Interest and fees on loans, which were $ 924 million, $ 1,027 million and $ 954 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Net principal loss rate is calculated by dividing net principal losses for the period by the Average credit card and other loans for the same period. Beginning in January 2024, we revised the calculation of Average credit card and other loans to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, Average credit card and other loans represent the average balance of the loans at the beginning and end of each month, averaged over the periods indicated. For the years ended December 31, 2025, 2024 and 2023, our Net principal loss rates were 7.7 %, 8.2 %, and 7.5 %, respectively. Overall Credit Quality: As part of our credit risk management activities for our credit card loans portfolio, we assess overall credit quality by reviewing information from credit bureaus and other sources relating to our cardholders’ broader credit performance. We utilize VantageScore (Vantage) credit scores to assist in our assessment of credit quality. Vantage credit scores are obtained at origination of the account and are refreshed monthly thereafter to assist in predicting customer behavior. We categorize these Vantage credit scores into the following three credit score categories: (i) 661 or higher, which are considered the strongest credits and therefore have the lowest credit risk; (ii) 601 to 660, considered to have moderate credit risk; and (iii) 600 or less, which are considered weaker credits and therefore have the highest credit risk. In certain limited circumstances there are customer accounts for which a Vantage score is not available and we use alternative sources to assess credit risk and predict behavior. The table below excludes less than 0.1 % of the total credit card loans balance as of both December 31, 2025 and 2024, representing those customer accounts for which a Vantage credit score is not available. The following table reflects the distribution of credit card loans by Vantage score as of December 31: Vantage 2025 2024 661 or Higher 601 to 660 600 or Less 661 or Higher 601 to 660 600 or Less Credit card loans 59 % 27 % 14 % 58 % 27 % 15 % As part of our credit risk management activities for our Other loans portfolio, we also assess overall credit quality by reviewing information from credit bureaus. We have historically utilized Fair Isaac Corporation (FICO) credit scores to assist in our assessment of the credit quality for our Other loans portfolio, but in early 2024 we completed a transition to Vantage scoring. The scoring scale produced by both FICO and Vantage is similar in that scores of 600 or less are considered weaker scores and as per our categorization method would have the highest credit risk. The amortized cost basis of Other loans totaled $ 365 million and $ 298 million as of December 31, 2025 and 2024, respectively. 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, 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 Consumer Relief Programs 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 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. We do not offer programs involving the forgiveness of principal. These temporary loan modifications may assist in cases where we believe the customer will recover from the short-term hardship and resume scheduled payments. F-18 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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 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. Credit Card Loans – Modifications for Borrowers Experiencing Financial Difficulty (Loan Modifications) In instances where cardholders are experiencing financial difficulty, we may modify our credit card loans with the intention of minimizing losses and improving collectability, while providing cardholders with financial relief; such credit card loans are classified as Loan Modifications, exclusive of the temporary, short-term consumer relief programs described above. Loan Modifications include concessions consisting primarily of a reduced minimum payment, late fee waiver, and/or an interest rate reduction. The majority of concessions remain in place for a period no longer than 12 months; however, for certain modifications the concessions remain in place through the payoff of the credit card loans if the cardholder complies with the terms of the program. Loan Modification concessions do not include the forgiveness of unpaid principal, but may involve the reversal of certain unpaid interest or fee assessments, and the cardholder’s ability to make future purchases is either limited, or suspended until the cardholder successfully exits from the modification program. In accordance with the terms of our workout programs, the credit agreement reverts back to its original contractual terms (including the contractual interest rate) when the customer exits the program, which is either when all payments have been made in accordance with the program, or when the customer defaults out of the program. Loan Modifications are collectively evaluated for impairment on a pooled basis in measuring the appropriate Allowance for credit losses. 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: 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) 23.5 % 22.0 % 19.2 % __________________________________ (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. Interest income on these impaired credit card loans is accounted for in the same manner as non-impaired credit card loans, and cash collections are allocated according to the same payment hierarchy methodology applied for credit card loans not in Loan Modification programs. The following table provides the performance of our credit card loans that were modified within the 12 months prior to the dates presented and remain in a Loan Modification program as of the dates presented: Aging Analysis of Delinquent Amortized Cost Loan Modifications – Credit Card Loans 31 to 60 Days Past Due 61 to 90 Days Past Due 91 or more Days Past Due Total Total Current Total (Millions) December 31, 2025 $ 24 $ 22 $ 26 $ 72 $ 253 $ 325 December 31, 2024 $ 21 $ 18 $ 22 $ 61 $ 242 $ 303 F-19 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) The following table provides additional information regarding credit card Loan Modifications that have subsequently defaulted within 12 months of their modification dates for the years ended December 31; the probability of default is factored into the Allowance for credit losses: 2025 2024 2023 (Millions, except for Number of modifications) Number of modifications 14,196 15,663 14,196 Outstanding balance $ 29 $ 29 $ 23 Unfunded Lending Commitments We manage potential credit risk in unfunded lending commitments by reviewing each potential customer’s credit application and evaluating the applicant’s financial history and ability and perceived willingness to repay. Credit card loans are made primarily on an unsecured basis, and our Cardholders reside throughout the U.S. and are not significantly concentrated in any one geographic area. We manage our potential risk in credit commitments by limiting the total amount of credit, both by individual customer and across our credit card loan portfolio, by monitoring the size and maturity of our loan portfolio and applying consistent risk-based underwriting standards reflective of current and anticipated macroeconomic conditions. We have the unilateral ability to cancel or reduce unused credit card lines at any time. Unused credit card lines available to cardholders totaled approximately $ 98 billion and $ 103 billion as of December 31, 2025 and 2024, respectively. While this amount represented the total available unused credit card lines, we have not experienced and do not anticipate that all cardholders will access their entire available line at any given point in time. Portfolio Sales 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, 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 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. 3. ALLOWANCE FOR CREDIT LOSSES The Allowance for credit losses represents our estimate of expected credit losses over the estimated life of our Credit card and other loans, incorporating future macroeconomic forecasts in addition to information about past events and current conditions. 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 billed, unpaid interest and fees. Principal losses, net of recoveries are deducted from the Allowance for credit losses. 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. F-20 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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 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. Our quantitative estimate of expected credit losses under CECL is impacted by certain forecasted macroeconomic variables. We consider the macroeconomic forecast used to be reasonable and supportable over the estimated life of the Credit card and other loans portfolio, with no reversion period. In addition to the quantitative estimate of expected credit losses, we also incorporate qualitative adjustments for certain factors such as Company-specific risks, changes in current macroeconomic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the Allowance for credit losses reflects our best estimate of current expected credit losses. Credit Card Loans We use a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. We have evaluated multiple risk characteristics across our credit card loans portfolio, and determined delinquency status and overall credit quality to be the most significant characteristics for estimating expected credit losses. To estimate our Allowance for credit losses, we segment our credit card loans on the basis of delinquency status, credit quality risk score and product. These risk characteristics are evaluated on at least an annual basis, or more frequently as facts and circumstances warrant. In determining the estimated life of our credit card loans, payments were applied to the measurement date balance with no payments allocated to future purchase activity. We use a combination of First In First Out and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) methodologies to model balance paydown. Other Loans We measure our Allowance for credit losses on Other loans, consisting primarily of our installment loans and “split-pay” offerings, using a statistical model to estimate projected losses over the remaining terms of the loans, inclusive of an assumption for prepayments. The model is based on the historical statistical relationship between loan loss performance and certain macroeconomic data pooled based on credit quality risk score, term of the underlying loans, vintage and geographic location. As of December 31, 2025 and 2024, the Allowance for credit losses on Other loans was $ 26 million and $ 30 million, respectively. Allowance for Credit Losses Rollforward 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 as of December 31: 2025 2024 2023 (Millions) Beginning balance $ 2,241 $ 2,328 $ 2,464 Provision for credit losses (1) 1,242 1,397 1,229 Change in the estimate for uncollectible unpaid interest and fees — 5 10 Net principal losses (2) ( 1,377 ) ( 1,489 ) ( 1,375 ) Ending balance $ 2,106 $ 2,241 $ 2,328 ______________________________ (1) Provision for credit losses includes a build/release for the Allowance for credit losses, as well as replenishment of Net principal losses. (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 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 F-21 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. 4. SECURITIZATIONS We account for transfers of financial assets as either sales or financings. Transfers of financial assets that are accounted for as a sale are removed from the Consolidated Balance Sheets with any realized gain or loss reflected in the Consolidated Statements of Income during the period in which the sale occurs. Transfers of financial assets that are not accounted for as a sale are treated as a financing. We regularly securitize the majority of our credit card loans through the transfer of those loans to one of our Trusts. We perform the decision making for the Trusts, as well as servicing the cardholder accounts that generate the credit card loans held by the Trusts. In our capacity as a servicer, we administer the loans, collect payments and charge-off uncollectible balances. Servicing fees are earned by a subsidiary, which are eliminated in consolidation. The Trusts are consolidated VIEs because they have insufficient equity at risk to finance their activities – the issuance of debt securities and notes, collateralized by the underlying credit card loans. Because we perform the decision making and servicing for the Trusts, we have the power to direct the activities that most significantly impact the Trusts’ economic performance (the collection of the underlying credit card loans). In addition, we hold all of the variable interests in the Trusts, with the exception of the liabilities held by third-parties. These variable interests provide us with the right to receive benefits and the obligation to absorb losses, which could be significant to the Trusts. As a result of these considerations, we are deemed to be the primary beneficiary of the Trusts and therefore consolidate the Trusts. The Trusts issue debt securities and notes, which are non-recourse to us. The collections on the securitized credit card loans held by the Trusts are available only for payment of those debt securities and notes, or other obligations arising in the securitization transactions. For our securitized credit card loans, during the initial phase of a securitization reinvestment period, we generally retain principal collections in exchange for the transfer of additional credit card loans into the securitized pool of assets. During the amortization or accumulation period of a securitization, the investors’ share of principal collections (in certain cases, up to a maximum specified amount each month) is either distributed to the investors or held in an account until it accumulates to the total amount due, at which time it is paid to the investors in a lump sum. Under the Indentures of each Trust and their Indenture Supplements, we are required to maintain minimum interests in our Trusts ranging from 4 % to 10 % of the securitized credit card loans. This requirement is met through a transferor’s interest and is supplemented through excess funding deposits which represent cash amounts deposited with the trustee of the securitizations. Cash collateral, restricted deposits are generally released proportionately as investors are repaid. Under the terms of the Trusts, the occurrence of certain triggering events associated with the performance of the securitized credit card loans in each Trust could result in certain required actions, including payment of Trust expenses, the establishment of reserve funds, or early amortization of the debt securities and/or notes, in a worst-case scenario. During the years ended December 31, 2025, 2024 and 2023, no such triggering events occurred. The following tables provide the total securitized credit card loans, and related delinquencies, and net principal losses of securitized credit card loans for the periods presented: December 31, 2025 December 31, 2024 (Millions) Total credit card loans – available to settle obligations of consolidated VIEs $ 10,708 $ 12,408 Of which: principal amount of credit card loans 91 days or more past due $ 257 $ 305 Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 (Millions) Net principal losses of securitized credit card loans $ 786 $ 852 $ 801 F-22 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 5. INVESTMENTS Investments include investment securities and various other investments primarily held by the Banks for Community Reinvestment Act (CRA) purposes. Investment securities consist of available-for-sale (AFS) debt securities, which are mortgage-backed securities and municipal bonds, and equity securities, which are mutual funds. Investment securities are carried at fair value on the Consolidated Balance Sheets. We also have other investments, which primarily include a portfolio of investments in certain limited partnerships and limited liability companies accounted for under the equity method, and therefore are recorded at cost and adjusted each period for our share of the investee’s earnings or losses, less any impairment. 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: 2025 2024 (Millions) Investment securities Available-for-sale debt securities $ 171 $ 170 Equity securities 50 47 Total investment securities 221 217 Equity method and other investments 63 49 Total Investments $ 284 $ 266 For AFS debt securities in an unrealized loss position, any estimated credit losses are recognized in the Consolidated Statements of Income by establishing or adjusting an existing Allowance for credit losses for such losses. We typically invest in highly-rated securities with low probabilities of default; therefore, we did not have an Allowance for credit losses as of either December 31, 2025 or 2024, and did not recognize any credit losses for the periods presented. 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. 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. The table below provides unrealized gains and losses on AFS debt securities as of December 31: 2025 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value (Millions) Available-for-sale securities $ 189 $ — $ ( 18 ) $ 171 $ 195 $ — $ ( 25 ) $ 170 Total $ 189 $ — $ ( 18 ) $ 171 $ 195 $ — $ ( 25 ) $ 170 F-23 Table of Contents BREAD FINANCIAL HOLDINGS, INC. 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: 2025 Less than 12 months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (Millions) Available-for-sale securities $ — $ — $ 135 $ ( 18 ) $ 135 $ ( 18 ) Total $ — $ — $ 135 $ ( 18 ) $ 135 $ ( 18 ) 2024 Less than 12 months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (Millions) Available-for-sale securities $ 27 $ — $ 140 $ ( 25 ) $ 167 $ ( 25 ) Total $ 27 $ — $ 140 $ ( 25 ) $ 167 $ ( 25 ) 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. 6. GOODWILL AND INTANGIBLE ASSETS, NET Goodwill Goodwill is recognized for business acquisitions when the purchase price is higher than the fair value of acquired net assets. Goodwill is not amortized but is tested for impairment at least annually. We evaluate goodwill for impairment annually as of July 1, or more frequently if events or circumstances arise that would more likely than not reduce the fair value of our single reporting unit below its carrying value. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. Alternatively, we can perform a more detailed quantitative assessment of goodwill impairment. Qualitative factors considered in evaluating goodwill impairment include macroeconomic conditions, industry and market considerations, our overall financial performance and other relevant entity-specific factors, and/or a sustained decrease in our share price. If, after assessing these qualitative factors we conclude that it is not more likely than not that the fair value of our reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is not necessary. However, if the qualitative factors indicate it is more likely than not that the fair value of our reporting unit is less than its carrying amount, or we elect to skip the qualitative assessment, we would perform a quantitative impairment test. The quantitative test compares the fair value of our reporting unit with its current carrying amount, including goodwill. 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 F-24 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) multiples (for the market approach). Estimated cash flows are based on internal forecasts grounded in historical performance and future expectations. To discount the estimated cash flows, we use the expected cost of equity taking into account a combination of industry and Company-specific factors we believe a third-party market participant would incorporate. We believe the discount rate applied appropriately reflects the risks and uncertainties in the financial markets generally and specifically in our internally developed forecasts. 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. 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. Intangible Assets, net Our identifiable intangible assets consist of both amortizable and non-amortizable intangible assets. Definite-lived intangible assets are subject to amortization and are amortized on a straight-line basis over their estimated useful lives; indefinite-lived intangible assets are not amortized. We review long-lived assets and asset groups, including intangible assets, for impairment whenever events and circumstances indicate their carrying amounts may not be recoverable; recognizing an impairment if the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. Intangible assets consisted of the following as of December 31: 2025 Gross Assets Accumulated Amortization Net Useful Life (Millions) Definite-Lived Assets Premium on purchased credit card loan portfolios $ 172 $ ( 94 ) $ 78 3 - 13 years Non-compete agreements 2 ( 2 ) — 5 years 174 ( 96 ) 78 Indefinite-Lived Assets Tradename 4 — 4 Indefinite life Total intangible assets $ 178 $ ( 96 ) $ 82 2024 Gross Assets Accumulated Amortization Net Useful Life (Millions) Definite-Lived Assets Premium on purchased credit card loan portfolios $ 221 $ ( 113 ) $ 108 3 - 13 years Non-compete agreements 2 ( 2 ) — 5 years $ 223 $ ( 115 ) $ 108 Indefinite-Lived Assets Tradename 4 — 4 Indefinite life Total intangible assets $ 227 $ ( 115 ) $ 112 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. F-25 Table of Contents BREAD FINANCIAL HOLDINGS, INC. 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: (Millions) 2026 $ 29 2027 24 2028 7 2029 7 2030 6 Thereafter 5 $ 78 7. OTHER ASSETS The following provides a summary of Other assets as of December 31: 2025 2024 (Millions) Deferred tax asset, net $ 616 $ 708 Deferred contract costs (1) 205 228 Accounts receivable, net (2) 148 145 Right-of-use assets – operating leases 63 87 Restricted cash (3) 24 35 Other (4) 187 200 Total other assets $ 1,243 $ 1,403 ______________________________ (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. (3) Restricted cash primarily includes cash restricted for principal and interest repayments of debt issued by our consolidated VIEs, as well as other restricted amounts including cash pledged to collateralize our derivative contracts. (4) Primarily comprised of prepaid expenses and non-income-based tax receivables. F-26 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 8 . DEPOSITS Deposits were categorized as interest-bearing or non-interest-bearing as follows, as of December 31: 2025 2024 (Millions) Interest-bearing $ 13,891 $ 13,055 Non-interest-bearing (including cardholder credit balances) 25 27 Total deposits $ 13,916 $ 13,082 Deposits by deposit type were as follows as of December 31: 2025 2024 (Millions) Savings accounts Direct-to-consumer (retail) $ 4,329 $ 3,226 Wholesale 3,371 3,601 Certificates of deposit Direct-to-consumer (retail) 4,193 4,461 Wholesale 1,998 1,767 Cardholder credit balances 25 27 Total deposits $ 13,916 $ 13,082 The scheduled maturities of certificates of deposit were as follows as of December 31, 2025: (Millions) 2026 (1) $ 4,420 2027 1,295 2028 366 2029 59 2030 51 Thereafter — Total certificates of deposit $ 6,191 ______________________________ (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. F-27 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 9. BORROWINGS OF LONG-TERM AND OTHER DEBT Long-term and other debt consisted of the following as of December 31: Description 2025 2024 Contractual Maturities Interest Rates (Millions, except percentages) Long-term and other debt: Revolving line of credit $ — $ — October 2028 (1) Senior notes due 2026 — 100 January 2026 7.00 % Convertible senior notes due 2028 — 10 June 2028 4.25 % 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 Less: Unamortized debt issuance costs 14 11 Total long-term and other debt $ 886 $ 999 Debt issued by consolidated VIEs: Fixed rate asset-backed term note securities $ 1,350 $ 1,350 Various – May 2026 to Jul. 2027 4.62 % to 5.47 % Conduit asset-backed securities 2,075 3,213 Various – Oct. 2026 to Feb. 2027 (2) Subtotal 3,425 4,563 Less: Unamortized debt issuance costs 3 5 Total debt issued by consolidated VIEs $ 3,422 $ 4,558 Total borrowings of long-term and other debt $ 4,308 $ 5,557 ______________________________ (1) The interest rate is based upon the Secured Overnight Financing Rate (SOFR) plus an applicable margin. (2) The interest rate is based upon SOFR, or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. As of December 31, 2025, the interest rates ranged from 4.77 % to 4.81 % with a weighted average rate of 4.78 %. As of December 31, 2024, the interest rates ranged from 5.48 % to 5.60 % with a weighted average rate of 5.54 %. Certain of our long-term debt agreements include various restrictive financial and non-financial covenants. If we do not comply with certain of these covenants and an event of default occurs and remains uncured, the maturity of amounts outstanding may be accelerated and become payable, and, with respect to our credit agreement, the associated commitments may be terminated. As of December 31, 2025, we were in compliance with all such covenants. Long-term and Other Debt 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 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 F-28 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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 (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). 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. 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. F-29 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 9.750 % Senior Notes Due 2029 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 investors is accomplished through a securitization process. We regularly sell our credit card loans to our Trusts, which are F-30 Table of Contents 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. Conduit Facilities We maintained committed syndicated bank Conduit Facilities to support the funding of our credit card loans for our Trusts. Borrowings outstanding under each private Conduit Facility bear interest at a margin above SOFR, or the asset-backed commercial paper costs of each individual conduit provider. The table below summarizes our conduit capacities, borrowings and maturities for the periods presented: (Millions) December 31, 2024 Commitment December 31, 2025 Conduit Facilities Capacity Drawn (6) Change Capacity Drawn Maturity Date (7) Comenity Bank WFNMNT 2009-VFN (1) $ 2,650 $ 1,955 $ ( 900 ) $ 1,750 $ 1,363 October 2026 WFNMT 2009-VFC1 (2) — 141 — — — — Comenity Capital Bank WFCMNT 2009-VFN (3) 2,250 867 ( 250 ) 2,000 712 February 2027 CCAST 2023-VFN1 (4) 250 250 ( 250 ) — — — CCAST 2024-VFN1 (5) 200 — ( 200 ) — — — Total $ 5,350 $ 3,213 $ ( 1,600 ) $ 3,750 $ 2,075 ______________________________ (1) 2009-VFN Conduit issued under World Financial Network Credit Card Master Note Trust (WFNMNT). 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 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). 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. The revolving period may be extended or renewed (unless an early amortization event occurs prior to the Maturity Date). Absent the extension or renewal of the revolving period, the Conduit Facility shall enter controlled amortization on the Maturity Date and may no longer be drawn upon. Fixed Rate Asset-Backed Term Notes In May 2024, WFNMNT issued $ 570 million of Series 2024-A public term asset-backed notes, which mature in April 2027. 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 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. F-31 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Maturities The future principal payments for our Long-term and other debt are as follows, as of December 31, 2025: Year Long-Term and Other Debt Debt Issued by Consolidated VIEs Total (Millions) 2026 $ — $ 1,713 $ 1,713 2027 — 1,712 1,712 2028 — — — 2029 — — — 2030 — — — Thereafter 900 — 900 Total maturities 900 3,425 4,325 Unamortized debt issuance costs ( 14 ) ( 3 ) ( 17 ) $ 886 $ 3,422 $ 4,308 10. OTHER LIABILITIES The following provides a summary of Other liabilities as of December 31: 2025 2024 (Millions) Accounts payable and other brand partner liabilities $ 289 $ 326 Accrued liabilities (1) 290 295 Long-term tax reserves 189 250 Operating lease liabilities 85 128 Other (2) 259 202 Total other liabilities $ 1,112 $ 1,201 ______________________________ (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 . 11. OTHER NON-INTEREST INCOME AND OTHER NON-INTEREST EXPENSES The following table provides the components of Other non-interest income for the years ended December 31: 2025 2024 2023 (Millions) Payment protection products $ 116 $ 120 $ 132 Paper statement fees 82 22 — Loss from equity method investment — — ( 6 ) Other 2 2 2 Total other non-interest income $ 200 $ 144 $ 128 F-32 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) The following table provides the components of Other non-interest expenses for the years ended December 31: 2025 2024 2023 (Millions) Professional services and regulatory fees $ 112 $ 112 $ 128 Debt repurchases 74 117 1 Occupancy expense 23 22 22 Other (1) 39 49 68 Total other non-interest expenses $ 248 $ 300 $ 219 ______________________________ (1) Primarily related to costs associated with various other individually insignificant operating activities . 12. FAIR VALUES OF FINANCIAL INSTRUMENTS Fair value is defined under GAAP as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; with such a transaction based on the principal market, or in the absence of a principal market the most advantageous market for the specific instrument. GAAP provides for a three-level fair value hierarchy that classifies the inputs to valuation techniques used to measure fair value, defined as follows: Level 1: Inputs that are unadjusted quoted prices for identical assets or liabilities in active markets that the entity can access. Level 2: Inputs, other than those included within Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, or inputs other than quoted prices that are observable for the asset or liability. Level 3: Inputs that are unobservable (e.g., internally derived assumptions) and reflect an entity’s assumptions about estimates market participants would use in pricing the asset or liability based on the best information available under the circumstances. In particular, Level 3 inputs and valuation techniques involve judgment and as a result are not necessarily indicative of amounts we would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts. We monitor the market conditions and evaluate the fair value hierarchy levels at least quarterly. For the years ended December 31, 2025 and 2024, there were no transfers into or out of Level 3, and no transfers between Levels 1 and 2. The following table summarizes the carrying values and fair values of our financial assets and financial liabilities as of December 31: 2025 2024 Carrying Amount Fair Value Carrying Amount Fair Value (Millions) Financial assets Credit card and other loans, net $ 16,699 $ 18,747 $ 16,655 $ 19,011 Investment securities 221 221 217 217 Financial liabilities Deposits 13,916 13,928 13,082 13,087 Debt issued by consolidated VIEs 3,422 3,442 4,558 4,572 Long-term and other debt 886 931 999 1,085 F-33 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Valuation Techniques Used in the Fair Value Measurement of Financial Assets and Financial Liabilities Credit card and other loans, net: Our Credit card and other loans are recorded at amortized cost, less the Allowance for credit losses, on the Consolidated Balance Sheets. 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 charge-offs. Economic value attributable to future loans generated by the cardholder accounts is not included in the fair values. Investment securities: Investment securities consist of AFS debt securities, including both mortgage-backed securities and municipal bonds, as well as equity securities, which are mutual funds, and are recorded at fair value on the Consolidated Balance Sheets. Quoted prices of identical or similar investment securities in active markets are used to estimate the fair values (i.e., Level 1 or Level 2 inputs). Derivative assets and liabilities : We use derivatives to manage our interest rate and foreign currency risk exposures. When quoted market prices are available and used to value our derivatives, we classify them as Level 1. However, the majority of our derivatives do not have readily available quoted market prices. Therefore, we value most of our derivatives using vendor-based models. We primarily rely on market observable inputs for these models, including, for example, interest rate yield curves and currency rates. 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 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. The fair value impacts of our derivative assets and liabilities were insignificant to the Consolidated Financial Statements for the periods presented on both a gross basis and, where applicable, a net basis. Deposits: Money market and other non-maturity deposits carrying values approximate their fair values because they are short-term in duration and have no defined maturity. GAAP requires that the fair values of deposit liabilities with no stated maturities equal their carrying values and does not permit recognition of the inherent funding value of the instruments. Certificates of deposit are recorded at their historical issuance cost on the Consolidated Balance Sheets, adjusted for unamortized fees, with the fair value being estimated based on the currently observable market rates available to us for similar deposits with similar remaining maturities (i.e., Level 2 inputs). Interest payable is included within Other liabilities on the Consolidated Balance Sheets. Debt issued by consolidated VIEs: We record Debt issued by our consolidated VIEs at amortized cost (including unamortized fees, issuance costs, premiums and discounts, where applicable) on the Consolidated Balance Sheets. 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. Long-term and other debt: 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. 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. Financial Instruments Measured at Fair Value on a Recurring Basis The following tables summarize our financial instruments measured at fair value on a recurring basis, categorized by the fair value hierarchy described in the preceding paragraphs, as of December 31: 2025 Total Level 1 Level 2 Level 3 (Millions) Investment securities $ 221 $ 50 $ 171 $ — Total assets measured at fair value $ 221 $ 50 $ 171 $ — F-34 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 2024 Total Level 1 Level 2 Level 3 (Millions) Investment securities $ 217 $ 47 $ 170 $ — Total assets measured at fair value $ 217 $ 47 $ 170 $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including equity method investments, property and equipment, right-of-use assets, deferred contract costs, goodwill and intangible assets. 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 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 The fair values of financial instruments that are measured at amortized cost are estimates, and require management’s judgment; therefore, these fair value estimates may not be indicative of future fair values, nor can our fair value be estimated by aggregating all of the amounts presented. The following tables summarize our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of December 31: 2025 Fair Value Level 1 Level 2 Level 3 (Millions) Financial assets Credit card and other loans, net $ 18,747 $ — $ — $ 18,747 Total $ 18,747 $ — $ — $ 18,747 Financial liabilities Deposits $ 13,928 $ — $ 13,928 $ — Debt issued by consolidated VIEs 3,442 — 3,442 — Long-term and other debt 931 — 931 — Total $ 18,301 $ — $ 18,301 $ — 2024 Fair Value Level 1 Level 2 Level 3 (Millions) Financial assets Credit card and other loans, net $ 19,011 $ — $ — $ 19,011 Total $ 19,011 $ — $ — $ 19,011 Financial liabilities Deposits $ 13,087 $ — $ 13,087 $ — Debt issued by consolidated VIEs 4,572 — 4,572 — Long-term and other debt 1,085 — 1,085 — Total $ 18,744 $ — $ 18,744 $ — F-35 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 13. EMPLOYEE BENEFIT PLANS Employee Stock Purchase Plan In March 2015, our Board of Directors adopted the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which was subsequently approved by our stockholders on June 3, 2015. The 2015 ESPP became effective July 1, 2015 with no definitive expiration date; however, our Board of Directors may at any time and for any reason terminate or amend the 2015 ESPP. No employee may purchase more than $ 25,000 worth of stock under the 2015 ESPP in any calendar year, and no employee may purchase stock under the 2015 ESPP if such purchase would cause the employee to own more than 5 % of the voting rights or value of our common stock. The 2015 ESPP provides for six-month offering periods, commencing on the first trading day of the first and third calendar quarter of each year and ending on the last trading day of each subsequent calendar quarter. The purchase price of the common stock upon exercise is 85 % of the fair market value of shares on the applicable purchase date as determined by averaging the high and low trading prices of the last trading day of each six-month period as defined above. An employee elects to participate and have contributions deducted through payroll deductions. The 2015 ESPP also provides for the issuance of any remaining shares available for issuance under our 2005 Employee Stock Purchase Plan, which were 441,327 shares as of June 30, 2015. The 2015 ESPP reserved an additional 1,000,000 shares of our common stock for issuance under the 2015 Plan, bringing the maximum number of shares reserved for issuance under the 2015 ESPP to 1,441,327 shares, subject to adjustment as provided in the 2015 ESPP. During the year ended December 31, 2025, we issued 94,497 shares of common stock under the 2015 ESPP at a weighted-average issue price of $ 54.69 . Since the 2015 ESPP became effective on July 1, 2015, 1,015,496 shares of common stock have been issued, with 425,831 shares therefore available for issuance. 401(k) Retirement Savings Plan The Bread Financial 401(k) Plan (the Plan), as amended, is a defined contribution plan that is qualified under Section 401(k) of the Internal Revenue Code of 1986. The Plan is an IRS-approved safe harbor plan design that eliminates the need for most discrimination testing. Eligible employees can participate in the Plan immediately upon joining BFH and begin receiving Company matching contributions and safe-harbor non-elective contributions. The Plan covers U.S. employees of BFH who are at least 18 years old, employees of one of our wholly-owned subsidiaries and any other subsidiary or affiliated organization that adopts the Plan; employees of BFH and all of its U.S. subsidiaries are currently covered. The Plan permits eligible employees to make Roth elective deferrals, which are included in the employee’s taxable income at the time of contribution, but not when distributed. 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. In 2023, we expanded our contributions to the Plan with an automatic annual deposit for eligible employees. We now automatically deposit three percent of an employee’s eligible annual pay in their 401(k) account on an annual basis, regardless of their contributions. 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, 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. On July 20, 2001, we registered 1,500,000 shares of our common stock for issuance in accordance with the Plan pursuant to a Registration Statement on Form S-8, File No. 333-65556. As of December 31, 2025, 107,291 of such shares remain available for issuance. Executive Deferred Compensation Plan We also maintain an Executive Deferred Compensation Plan (EDCP). The EDCP permits a defined group of management and highly compensated employees to defer, on a pre-tax basis, a portion of their base salary and incentive compensation (as defined in the EDCP) payable for services rendered. Deferrals under the EDCP are unfunded and subject to the claims of our creditors. Each participant in the EDCP is 100 % vested in their account, and account balances accrue interest at a rate established and adjusted periodically by the Compensation & Human Capital committee of our Board of Directors. 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. F-36 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 14. 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. 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. 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 future grants. 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. 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. 333-279495. 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-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. Stock-based compensation expense recognized in Employee compensation and benefits expense in the Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 was $ 56 million , $ 54 million and $ 44 million, respectively, with corresponding income tax benefits of $ 10 million , $ 9 million and $ 8 million, respectively. As the amount of stock-based compensation expense recognized is based on awards ultimately expected to vest, the amount recognized in the Consolidated Statements of Income has been reduced for estimated forfeitures. 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 4 % for the year ended December 31, 2025, and were estimated at 5 % for the years ended December 31, 2024 and 2023. F-37 Table of Contents 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 stock-based compensation plans: Performance- Based (1) Service- Based Total Weighted Average Fair Value Balance as of December 31, 2022 164,946 1,107,663 1,272,609 $ 68.86 Shares granted 175,587 1,172,465 1,348,052 38.02 Shares vested ( 9,254 ) ( 434,049 ) ( 443,303 ) 67.49 Shares forfeited — ( 87,527 ) ( 87,527 ) 53.82 Balance as of December 31, 2023 331,279 1,758,552 2,089,831 $ 49.89 Shares granted 243,312 1,307,833 1,551,145 37.78 Shares vested ( 95,133 ) ( 730,635 ) ( 825,768 ) 56.58 Shares forfeited — ( 68,012 ) ( 68,012 ) 43.39 Balance as of December 31, 2024 479,458 2,267,738 2,747,196 $ 41.54 Shares granted 157,788 867,302 1,025,090 61.93 Shares vested ( 99,184 ) ( 962,815 ) ( 1,061,999 ) 47.05 Shares forfeited — ( 59,233 ) ( 59,233 ) 45.17 Balance as of December 31, 2025 538,062 2,112,992 2,651,054 $ 47.20 Outstanding and Expected to Vest 2,621,537 $ 46.85 ______________________________ (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. Service-based RSUs typically vest ratably over a three-year period. 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. 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. For RSUs vested during the years ended December 31, 2025, 2024 and 2023, the total fair value, based upon our stock price at the date the RSUs vested, was $ 50 million , $ 47 million and $ 30 million, respectively. As of December 31, 2025, the aggregate intrinsic value of RSUs outstanding and expected to vest was $ 194 million. 15. 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 F-38 Table of Contents 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 — 1.1 48 — September 30, 2025 200 0.6 40 160 December 31, 2025 200 1.9 120 $ 240 Total $ 550 5.7 $ 310 ______________________________ (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. Dividends 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 $ 40 ______________________________ (1) Excludes dividend equivalent rights paid during the period. F-39 Table of Contents 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. 16. 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 (Millions) 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 ) 17. INCOME TAXES 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. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions. Differences between the audited Consolidated Financial Statements and tax bases of assets and liabilities give rise to deferred tax assets and liabilities, which measure the future tax effects of items recognized in the audited Consolidated Financial Statements. 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 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. Deferred tax assets require certain estimates and judgments in order to determine whether it is more likely than not that all or a portion of the benefit of a deferred tax asset will not be realized. In evaluating our deferred tax assets on a quarterly basis as new facts and circumstances emerge, we analyze and estimate the impact of future taxable income, reversing temporary differences and available tax planning strategies. Uncertainties can lead to changes in the ultimate realization of deferred tax assets. A liability for unrecognized tax benefits, representing the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized in the audited Consolidated Financial Statements, inherently requires estimates and judgments. A tax position is recognized only when it is more likely than not to be sustained, based purely on its technical merits after examination by the relevant taxing authority, and the amount recognized is the benefit we believe is more likely than not to be realized upon ultimate settlement. We evaluate our tax positions as new facts and circumstances become available, making adjustments to unrecognized tax benefits as appropriate. 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. F-40 Table of Contents 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: 2025 2024 2023 (Millions) Components of Income from continuing operations before income taxes Domestic $ 608 $ 375 $ 964 Foreign 7 6 4 Total Income from continuing operations before income taxes $ 615 $ 381 $ 968 Components of Provision for income taxes Current Federal $ 36 $ 156 $ 261 State and local ( 34 ) 29 37 Foreign 2 2 1 Total current income tax expense 4 187 299 Deferred Federal 98 ( 73 ) ( 65 ) State and local ( 7 ) ( 10 ) ( 2 ) Foreign ( 1 ) ( 2 ) ( 1 ) 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: 2025 (Millions) Federal $ 33 State and local 18 Foreign 2 Total income taxes paid during the year, net of refunds (1) $ 53 ______________________________ (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. F-41 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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: 2025 Amount Percent (Millions) Income from continuing operations, before income taxes $ 615 U.S. Federal statutory tax 129 21.0 % State and local income taxes, net of federal income tax effect (1) 5 0.8 % 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 % ______________________________ (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: 2024 2023 (Millions) Expected expense at statutory rate $ 80 $ 203 Increase (decrease) in income taxes resulting from: State and local income taxes, net of federal income tax effect 15 27 Non-deductible expenses 29 8 Valuation allowance ( 1 ) ( 5 ) Audit resolutions ( 20 ) — Other ( 1 ) ( 2 ) 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. We also utilized a portion of our capital loss, and therefore released the associated portion of valuation allowance against it. In addition, our tax expense decreased by approximately $ 20 million as a result of favorable audit resolutions. 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. F-42 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) The following table provides the significant components of Deferred tax assets and liabilities as of December 31: 2025 2024 (Millions) Deferred tax assets Deferred revenue $ 14 $ 12 Allowance for credit losses 513 534 Net operating loss carryforwards and other carryforwards 47 48 Operating lease liabilities 19 29 Research & development expenses 23 53 Accrued expenses and other 80 87 Total deferred tax assets 696 763 Valuation allowance ( 20 ) ( 19 ) Deferred tax assets, net of valuation allowance 676 744 Deferred tax liabilities Deferred income $ 2 $ 2 Depreciation 30 — Right of use assets 13 19 Intangible assets 15 15 Total deferred tax liabilities 60 36 Net deferred tax assets $ 616 $ 708 Amounts recognized on the Consolidated Balance Sheets: Other assets $ 616 $ 708 As of December 31, 2025, included in our U.S. tax returns are approximately $ 107 million of U.S. federal net operating loss carryovers (NOLs) and federal capital losses of approximately $ 48 million to offset capital gains. With the exception of NOLs generated after December 31, 2017, these attributes expire at various times through the year 2034. 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. 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. F-43 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) The following table presents changes in unrecognized tax benefits: (Millions) Balance as of December 31, 2022 $ 242 Increases related to prior years’ tax positions 1 Decreases related to prior years’ tax positions ( 11 ) Increases related to current year tax positions 13 Settlements during the period ( 10 ) Lapses of applicable statutes of limitations ( 20 ) Balance as of December 31, 2023 $ 215 Increases related to prior years’ tax positions 1 Decreases related to prior years’ tax positions ( 40 ) Increases related to current year tax positions 9 Settlements during the period ( 21 ) Lapses of applicable statutes of limitations ( 10 ) Balance as of December 31, 2024 $ 154 Increases related to prior years’ tax positions 1 Decreases related to prior years’ tax positions ( 27 ) Increases related to current year tax positions 4 Lapses of applicable statutes of limitations ( 10 ) Balance as of December 31, 2025 $ 122 We recognize potential accrued interest and penalties related to unrecognized tax benefits in Provision for income taxes. 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 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. 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. 18. EARNINGS PER SHARE Basic earnings (losses) per share (EPS) is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of unvested restricted stock awards or other dilutive securities. Diluted EPS is based on (i) the weighted average number of common and potentially dilutive common shares (unvested restricted stock awards outstanding during the year), pursuant to the Treasury Stock method, and (ii) the potential conversion of the Convertible Notes, pursuant to the If-converted method. F-44 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the years ended December 31: 2025 2024 2023 (Millions, except per share amounts) Numerator Income from continuing operations $ 521 $ 279 $ 737 Loss from discontinued operations, net of income taxes (1) ( 3 ) ( 2 ) ( 19 ) Net income available to common stockholders $ 518 $ 277 $ 718 Denominator Weighted average common stock outstanding – basic 46.8 49.6 49.8 Weighted average effect of dilutive securities Add: net effect of dilutive unvested restricted stock awards (2) 0.8 0.7 0.2 Add: dilutive effect of Convertible Notes (3)(4) — 0.1 — Weighted average common stock outstanding – diluted 47.6 50.4 50.0 Basic EPS Income from continuing operations $ 11.15 $ 5.63 $ 14.79 Loss from discontinued operations $ ( 0.08 ) $ ( 0.05 ) $ ( 0.40 ) Net income per share $ 11.07 $ 5.58 $ 14.39 Diluted EPS Income from continuing operations $ 10.96 $ 5.54 $ 14.74 Loss from discontinued operations $ ( 0.07 ) $ ( 0.05 ) $ ( 0.40 ) Net income per share $ 10.89 $ 5.49 $ 14.34 ______________________________ (1) Includes amounts that related to the previously disclosed discontinued operations associated with the spinoff of our former LoyaltyOne segment in 2021 and the sale of our former Epsilon segment in 2019. For additional information refer to Note 1, “Description of Business, Basis of Presentation and Significant Accounting Policies” to the audited Consolidated Financial Statements. (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) 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. 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. 19. 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. 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 F-45 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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, each 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, 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. 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. 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 __________________________________ * 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 F-46 Table of Contents 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. 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. 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 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. 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 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. 20. 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. , Case No. 24-03027 (Bankr. S.D. 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. , Case No. 24-cv-00226-RGA (D. Del.), alleging certain breaches of fiduciary duties (and aiding and abetting breaches of fiduciary duties) in F-47 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) 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. , Case No. 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. (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. v. Bread Financial Holdings, Inc. et al . 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 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. 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. , Case No. 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. 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. 21. PARENT COMPANY FINANCIAL STATEMENTS The following Parent Company financial statements are provided in accordance with the rules of the SEC, which require such disclosure when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets. Certain of our subsidiaries may be restricted in distributing cash or other assets to the Parent Company, which could be utilized to service our indebtedness. The stand-alone parent-only financial statements are presented below. F-48 Table of Contents 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, 2025 2024 2023 (Millions) Total interest income $ 62 $ 11 $ 12 Total interest expense 108 116 111 Net interest expense ( 46 ) ( 105 ) ( 99 ) Dividends from subsidiaries 834 910 1,063 Loss from equity method investment — — ( 6 ) Total net interest and non-interest income 788 805 958 Total non-interest expenses 76 121 12 Income before income taxes and equity in undistributed net income of subsidiaries 712 684 946 Benefit for income taxes 31 38 31 Income before equity in undistributed net income of subsidiaries 743 722 977 Equity in undistributed net loss of subsidiaries ( 225 ) ( 445 ) ( 259 ) Net income $ 518 $ 277 $ 718 Total comprehensive income, net of tax $ 518 $ 277 $ 718 Parent Company – Condensed Balance Sheets December 31, 2025 2024 (Millions) Assets Cash and cash equivalents (1) $ 312 $ 21 Investment in subsidiaries 3,080 3,195 Intercompany receivables, net 733 773 Other assets 93 123 Total assets $ 4,218 $ 4,112 Liabilities 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 ______________________________ (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. F-49 Table of Contents BREAD FINANCIAL HOLDINGS, INC. NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) Parent Company – Condensed Statements of Cash Flows Years Ended December 31, 2025 2024 2023 (Millions) 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 Net cash provided by investing activities 309 910 1,063 Cash flows from financing activities: Borrowings under debt agreements 900 300 1,401 Repayments of borrowings under debt agreements ( 1,079 ) ( 894 ) ( 1,882 ) Payment of deferred financing costs ( 20 ) ( 10 ) ( 45 ) Payment of capped call transactions — — ( 39 ) Dividends paid ( 42 ) ( 43 ) ( 42 ) Repurchases of common stock ( 313 ) ( 55 ) ( 35 ) Net proceeds from the issuance of preferred stock 71 — — Other ( 17 ) ( 7 ) ( 2 ) Net cash used in financing activities ( 500 ) ( 709 ) ( 644 ) Change in cash, cash equivalents and restricted cash 291 19 ( 3 ) Cash, cash equivalents and restricted cash at beginning of year 21 2 5 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 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. F-50 Table of Contents SIGNATURES 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. By: /S/ RALPH J. ANDRETTA Ralph J. Andretta President and Chief Executive Officer Table of Contents DATE: 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 the Company and in the capacities and on the dates indicated. Name Title Date /S/ RALPH J. ANDRETTA President, Chief Executive Officer and Director February 13, 2026 Ralph J. Andretta /S/ PERRY S. BEBERMAN Executive Vice President and Chief Financial Officer February 13, 2026 Perry S. Beberman /S/ J. BRYAN CAMPBELL Senior Vice President and Chief Accounting Officer February 13, 2026 J. Bryan Campbell /S/ ROGER H. BALLOU Chairman of the Board, Director February 13, 2026 Roger H. Ballou /S/ JOHN J. FAWCETT Director February 13, 2026 John J. Fawcett /S/ JOHN C. GERSPACH, JR. Director February 13, 2026 John C. Gerspach, Jr. /S/ PRANITI LAKHWARA Director February 13, 2026 Praniti Lakhwara /S/ RAJESH NATARAJAN Director February 13, 2026 Rajesh Natarajan /S/ JOYCE ST. CLAIR Director February 13, 2026 Joyce St. Clair /S/ TIMOTHY J. THERIAULT Director February 13, 2026 Timothy J. Theriault /S/ LAURIE A. TUCKER Director February 13, 2026 Laurie A. Tucker /S/ SHAREN J. TURNEY Director February 13, 2026 Sharen J. Turney