Bread Financial Holdings (BFH) risk factors, FY2025 10-K

Bread Financial Holdings's FY2025 10-K, filed Feb 13, 2026, lists 57 risk factors in 11 groups. Against the prior year's 57: 9 new, 9 dropped, 29 substantially reworded.

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Risk factors listed
5711 groups
New this year
9vs 57 last year
Dropped
9since the prior 10-K
Substantially reworded
29of those kept
Section length
24k wordsItem 1A

What the changes say

  • Bread Financial added new disclosures regarding macroeconomic risks, internal bank mergers, and expanded governance committees.

What changed since the prior 10-K

New

  • NewMacroeconomic, Global, Strategic, Business and Competitive Risks

    Weakness and instability in the macroeconomic environment, as well as global political, public health and social events or conditions, could have a material adverse effect on our business, results of operations and financial condition

    Prolonged economic weakness, inflation, high interest rates, and unemployment could reduce consumer confidence and negatively impact customer payment behavior.

  • NewLegal, Regulatory and Compliance Risks

    prevailing interpretations of federal or state laws and related regulations could also invalidate or call into question the legality of certain of our services and business practices

    Failures to comply with laws and supervisory actions, or differing interpretations of regulations, could result in fines and restrictions.

  • NewLegal, Regulatory and Compliance Risks

    We may not realize the expected benefits of the pending merger of our subsidiary Banks

    The internal merger of subsidiary banks CCB and CB may not achieve expected financial benefits or could divert management attention.

  • NewCybersecurity, Technology and Vendor Risks

    wide-reaching consequences, including the potential to disrupt the overall financial system and other key systems in the global economy

    Failures to invest successfully in advanced digital technology, AI, and risk management systems could harm revenue and profitability.

  • NewRisks Related to the LoyaltyOne Spinoff

    At the enterprise level, we also maintain an Operating Committee (OC), Asset & Liability Management Committee (ALCO) and Capital Management Committee (CMC)

    Management committees such as the OC and ALCO oversee strategic direction, operational performance, liquidity, and market risks.

  • NewRisks Related to the LoyaltyOne Spinoff

    our executive leadership team in its management of our capital, funding and liquidity resources, interest rate sensitivity and our balance sheet more broadly

    The Capital Management Committee assists the board with capital planning, stress testing, and establishing capital targets.

  • NewMarket Risk

    Our principal market risk exposures arise from volatility in interest rates and their impact on economic value, capitalization levels and earnings. To the extent we are unable to effectively match the interest rate sensitivity of our assets and liabilities, our net earnings could be materially adversely affected

    Interest rate volatility and an inability to match asset and liability sensitivity could harm net earnings.

  • NewMarket Risk

    our fixed rate and floating rate assets and liabilities on our Consolidated Balance Sheets, our Net interest income and economic value of equity are expected to increase in higher rate scenarios and decrease in lower rate scenarios

    A hypothetical 100 basis point change in interest rates would have an insignificant impact on annual Net interest income.

  • NewOperational Risk

    Operational risk is inherent in all business activities and can impact us through direct or indirect financial loss, damage to our brand, customer dissatisfaction and legal and regulatory penalties. We have implemented an operational risk framework that is defined in our Operational Risk Management Policy

    Operational and compliance risk frameworks are maintained to protect information systems and prevent regulatory violations.

Dropped

  • DroppedMacroeconomic, Global, Strategic, Business and Competitive Risks

    Weakness and instability in the macroeconomic environment could have a material adverse effect on our business, results of operations and financial condition

  • DroppedMacroeconomic, Global, Strategic, Business and Competitive Risks

    trends. In addition, targeted government efforts to forgive or discharge portions of student loan debt or provide additional relief may further influence these trends

    Macroeconomic conditions and recession risks.

  • DroppedMacroeconomic, Global, Strategic, Business and Competitive Risks

    Similarly, we may evaluate the potential disposition of, or elect to divest, assets or portfolios that no longer complement our long-term strategic objectives, as we did in November 2021, when we completed the spinoff of our LoyaltyOne segment. See also “Risks Related to the LoyaltyOne Spinoff.” below

  • DroppedMacroeconomic, Global, Strategic, Business and Competitive Risks

    integrity and decency. To the extent our leaders behave in a manner that is not consistent with our values, we could experience significant impacts to our brand and reputation, as well as to our corporate culture

    Delinquency rates and student loan debt relief impact.

  • DroppedMacroeconomic, Global, Strategic, Business and Competitive Risks

    We are a holding company and depend on payments from our subsidiaries

  • DroppedLegal, Regulatory and Compliance Risks

    See “Item 1. Business — Supervision and Regulation” for more information about certain laws and regulations to which we are subject and their impacts on us

  • DroppedLegal, Regulatory and Compliance Risks

    For more information on regulatory and legislative activity in this area, see “Privacy, Information Security and Data Protection” above

  • DroppedCybersecurity, Technology and Vendor Risks

    If we are not able to invest successfully in, and compete at the leading edge of, technological developments in our industry, our revenue and profitability could be materially adversely affected

  • DroppedMarket Risk

    Market risk is the risk to current or anticipated earnings, capital or economic value arising from changes in the market

Reworded

  • 80% rewrittenStrategic Risk

    Reputational risk is the risk arising from negative public opinion. This risk may impair competitiveness by affecting the ability to establish new relationships or services, or continue servicing existing relationships

    Model risk was removed as a stand-alone risk pillar and reallocated across the eight other risk pillars.

  • 77% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    We may not be able to retain and/or attract and hire a highly qualified workforce or maintain our corporate culture, and having a large segment of our workforce periodically working from home may exacerbate these risks and cause new risks

    Added specific mention of leadership behaviors not consistent with values impacting brand and reputation.

    Was: We may not be able to retain and/or attract and hire a highly qualified and diverse workforce or maintain our corporate culture, and having a large segment of our workforce working from home may exacerbate these risks and cause new risks

  • 74% rewrittenRisks Related to the LoyaltyOne Spinoff

    Our risk management team, which is led by our CRO and includes compliance, provides oversight of our risk profile and is responsible for maintaining a compliance program that includes compliance risk assessment, policy development, testing and reporting activities

    Clarified CRO collaboration with the first line of defense and updated reporting lines.

  • 72% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    We may not be successful in realizing the benefits associated with our acquisitions, dispositions and strategic investments, and our business and reputation could be materially adversely affected

    Minor phrasing adjustments regarding acquisitions, investments, and growth limitations.

  • 62% rewrittenRisks Related to the LoyaltyOne Spinoff

    We may be adversely affected by LVI’s ongoing bankruptcy proceedings or pending or future litigation or other disputes involving or relating to LVI

    Updated to include specific details regarding the March 10, 2023 LVI Bankruptcy Proceedings and liquidating trust claims.

    Was: The LoyaltyOne spinoff could result in substantial tax liability to us and our stockholders, and more generally, we may be adversely affected by LVI’s ongoing bankruptcy proceedings or pending or future litigation or other disputes involving or relating to LVI

  • 60% rewrittenCybersecurity, Technology and Vendor Risks

    Business interruptions, including loss of data center capacity, interruption due to cyber-attacks, loss of network connectivity or inability to utilize proprietary software of third-party vendors, could affect our ability to timely meet the needs of our partners and customers and harm our business

    Expanded cybersecurity threats to include social engineering, AI technologies used by bad actors, deepfakes, and vulnerabilities in open-source software.

  • 56% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    A significant percentage of our Total net interest and non-interest income, or revenue, is generated through our relationships with a limited number of partners, and a decrease in business from, or the loss of, any of these partners could cause a significant drop in our revenue

    Updated partner concentration figures: the top five programs accounted for 49% of revenue and 44% of loans in 2025.

    Was: relationships with a limited number of partners, and a decrease in business from, or the loss of, any of these partners could cause a significant drop in our revenue

  • 50% rewrittenLegal, Regulatory and Compliance Risks

    Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could cause us material financial loss

    Updated statutory reference from PATRIOT Act to USA PATRIOT Act.

  • 49% rewrittenLegal, Regulatory and Compliance Risks

    Our business is subject to extensive and evolving government regulation and supervision, which could materially adversely affect our results of operations and financial condition

  • 48% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Future sales of our common stock, or the perception that future sales could occur, may adversely affect our common stock price

  • 48% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    The loans we make are unsecured, and we may not be able to ultimately collect from customers that default on their loans

  • 47% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    The market price and trading volume of our common stock may be volatile and our stock price could decline

  • 47% rewrittenStrategic Risk

    Strategic risk is the risk arising from adverse business decisions, poor implementation of business decisions or lack of responsiveness to changes in the industry and operating environment. This risk is a function of an organization’s strategic goals, business strategies, resources and quality of implementation

  • 44% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Reductions in interchange fees, or changes in the laws and regulations governing such fees, could have various adverse impacts on our business and results of operations

  • 41% rewrittenLegal, Regulatory and Compliance Risks

    Litigation and other actions and disputes could subject us to significant fines, penalties, judgments and/or requirements resulting in significantly increased expenses, damage to our reputation and/or a material adverse effect on our business

  • 41% rewrittenCybersecurity, Technology and Vendor Risks

    The development and use of AI present risks and challenges that may adversely impact our business or customers

  • 40% rewrittenRisks Related to the LoyaltyOne Spinoff

    Credit risk is the risk arising from an obligor’s failure to meet the terms of any contract or otherwise perform as agreed. Credit risk is found in all activities in which settlement or repayment depends on counterparty, issuer or borrower performance

  • 37% rewrittenCybersecurity, Technology and Vendor Risks

    We rely on third-party vendors to provide various products and services that are important to our operations, and our business could be adversely impacted if our vendors fail to fulfill their obligations

  • 30% rewrittenLegal, Regulatory and Compliance Risks

    the capital requirements to which it is subject, we may be required to provide them with additional capital, which could also impair our ability to fund dividend payments, any potential share repurchases and our payment obligations, including servicing our indebtedness

    Was: the capital requirements to which it is subject, we may be required to provide them with additional capital, which could also impair our ability to service our indebtedness

  • 30% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Our operations and financial performance could be adversely affected by severe weather and natural disasters, as well as by climate change and ESG-related regulations and actions

  • 28% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Adverse financial market conditions or our inability to effectively manage our funding and liquidity risk could have a material adverse effect on our business, liquidity and ability to meet our debt service requirements and other obligations

  • 28% rewrittenLegal, Regulatory and Compliance Risks

    Our Banks are subject to extensive federal and state regulation that may restrict their ability to make cash available to us and may require us to make capital contributions to them

  • 28% rewrittenRisks Related to the LoyaltyOne Spinoff

    Board and Board Committees

  • 27% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Damage to our reputation could damage our business

  • 25% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Inability to grow or maintain our deposit levels in the future could have a material adverse effect on our liquidity, ability to grow our business and profitability

  • 24% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Any reduction in our credit ratings could increase the cost of our funding from, and restrict our access to, the capital markets and have a material adverse effect on our results of operations and financial condition

  • 23% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Our risk management policies and procedures may not be effective, and the models we rely on may not be accurate or may be misinterpreted

  • 22% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    The amount of our Allowance for credit losses could adversely affect our business and may prove to be insufficient to cover actual losses on our loans

  • 21% rewrittenMacroeconomic, Global, Strategic, Business and Competitive Risks

    Our results are impacted, to a significant extent, by the financial performance of our partners

All 57 risk factors

Headings as the filing states them, in filing order.

Other

  1. 01This risk factor summary is qualified in its entirety by reference to the complete description of our risk factors set forth immediately below

Macroeconomic, Global, Strategic, Business and Competitive Risks

  1. 02Weakness and instability in the macroeconomic environment, as well as global political, public health and social events or conditions, could have a material adverse effect on our business, results of operations and financial conditionNew
  2. 03The loans we make are unsecured, and we may not be able to ultimately collect from customers that default on their loans48% rewritten
  3. 04A significant percentage of our Total net interest and non-interest income, or revenue, is generated through our relationships with a limited number of partners, and a decrease in business from, or the loss of, any of these partners could cause a significant drop in our revenue56% rewritten
  4. 05Our business is heavily concentrated in U.S. consumer credit, and therefore our results are more susceptible to fluctuations in that market than a more diversified company
  5. 06We expect growth to result, in part, from new and acquired credit card and other loan programs whose performance could result in increased portfolio losses and negatively impact our profitability
  6. 07Our risk management policies and procedures may not be effective, and the models we rely on may not be accurate or may be misinterpreted23% rewritten
  7. 08Fraudulent activity associated with our products and services could negatively impact our operating results, brand and reputation and cause the use of our products and services to decrease and our fraud losses to increase
  8. 09The amount of our Allowance for credit losses could adversely affect our business and may prove to be insufficient to cover actual losses on our loans22% rewritten
  9. 10We may not be successful in realizing the benefits associated with our acquisitions, dispositions and strategic investments, and our business and reputation could be materially adversely affected72% rewritten
  10. 11Competition in our industry is intense, and the markets for the services that we offer may contract or fail to expand, each of which could negatively impact our growth and profitability
  11. 12Our results of operations and growth depend on our ability to retain existing partners and attract new partners
  12. 13Our results depend, to a significant extent, on the active and effective promotion and support of our products by our brand partners
  13. 14Our results are impacted, to a significant extent, by the financial performance of our partners21% rewritten
  14. 15We may not be successful in our efforts to promote usage of our DTC credit cards, or to effectively control the costs associated with such promotion, both of which may materially impact our profitability
  15. 16Reductions in interchange fees, or changes in the laws and regulations governing such fees, could have various adverse impacts on our business and results of operations44% rewritten
  16. 17We may not be able to retain and/or attract and hire a highly qualified workforce or maintain our corporate culture, and having a large segment of our workforce periodically working from home may exacerbate these risks and cause new risks77% rewritten
  17. 18Our operations and financial performance could be adversely affected by severe weather and natural disasters, as well as by climate change and ESG-related regulations and actions30% rewritten
  18. 19Damage to our reputation could damage our business27% rewritten
  19. 20Adverse financial market conditions or our inability to effectively manage our funding and liquidity risk could have a material adverse effect on our business, liquidity and ability to meet our debt service requirements and other obligations28% rewritten
  20. 21If we are unable to securitize our credit card loans due to changes in the market or other circumstances or events, we may not be able to fund new credit card loans, which would have a material adverse effect on our operations and profitability
  21. 22The occurrence of events that result in the early amortization of our existing credit card securitization transactions or an inability to delay the accumulation of principal collections for our existing credit card securitization transactions would materially adversely affect our liquidity
  22. 23Lower payment rates on our securitized credit card loans could materially adversely affect our liquidity and financial condition
  23. 24Inability to grow or maintain our deposit levels in the future could have a material adverse effect on our liquidity, ability to grow our business and profitability25% rewritten
  24. 25Our level of indebtedness could materially adversely affect our ability to generate sufficient cash to repay our outstanding debt, and our ability to react to changes in our business and our incurrence of additional indebtedness to fund future needs could exacerbate these risks
  25. 26Restrictions imposed by the indenture governing our senior notes, our credit agreement and our other outstanding or future indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities
  26. 27Any reduction in our credit ratings could increase the cost of our funding from, and restrict our access to, the capital markets and have a material adverse effect on our results of operations and financial condition24% rewritten
  27. 28Changes in market interest rates could negatively affect our profitability
  28. 29Future sales of our common stock, or the perception that future sales could occur, may adversely affect our common stock price48% rewritten
  29. 30The market price and trading volume of our common stock may be volatile and our stock price could decline47% rewritten
  30. 31In preparing our financial statements we make certain assumptions, judgments and estimates that affect amounts reported in our audited Consolidated Financial Statements, which, if not accurate, may significantly impact our financial results

Legal, Regulatory and Compliance Risks

  1. 32Our business is subject to extensive and evolving government regulation and supervision, which could materially adversely affect our results of operations and financial condition49% rewritten
  2. 33prevailing interpretations of federal or state laws and related regulations could also invalidate or call into question the legality of certain of our services and business practicesNew
  3. 34Litigation and other actions and disputes could subject us to significant fines, penalties, judgments and/or requirements resulting in significantly increased expenses, damage to our reputation and/or a material adverse effect on our business41% rewritten
  4. 35Our Banks are subject to extensive federal and state regulation that may restrict their ability to make cash available to us and may require us to make capital contributions to them28% rewritten
  5. 36the capital requirements to which it is subject, we may be required to provide them with additional capital, which could also impair our ability to fund dividend payments, any potential share repurchases and our payment obligations, including servicing our indebtedness30% rewritten
  6. 37We may not realize the expected benefits of the pending merger of our subsidiary BanksNew
  7. 38Increases in FDIC insurance premiums may have a material adverse effect on our results of operations
  8. 39Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could cause us material financial loss50% rewritten
  9. 40We have international operations that subject us to various international risks as well as increased compliance and regulatory risks and costs
  10. 41Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition

Cybersecurity, Technology and Vendor Risks

  1. 42We rely on third-party vendors to provide various products and services that are important to our operations, and our business could be adversely impacted if our vendors fail to fulfill their obligations37% rewritten
  2. 43Business interruptions, including loss of data center capacity, interruption due to cyber-attacks, loss of network connectivity or inability to utilize proprietary software of third-party vendors, could affect our ability to timely meet the needs of our partners and customers and harm our business60% rewritten
  3. 44wide-reaching consequences, including the potential to disrupt the overall financial system and other key systems in the global economyNew
  4. 45The development and use of AI present risks and challenges that may adversely impact our business or customers41% rewritten

Risks Related to the LoyaltyOne Spinoff

  1. 46We may be adversely affected by LVI’s ongoing bankruptcy proceedings or pending or future litigation or other disputes involving or relating to LVI62% rewritten
  2. 47Board and Board Committees28% rewritten
  3. 48Risk Management Roles and Responsibilities
  4. 49Our risk management team, which is led by our CRO and includes compliance, provides oversight of our risk profile and is responsible for maintaining a compliance program that includes compliance risk assessment, policy development, testing and reporting activities74% rewritten
  5. 50At the enterprise level, we also maintain an Operating Committee (OC), Asset & Liability Management Committee (ALCO) and Capital Management Committee (CMC)New
  6. 51our executive leadership team in its management of our capital, funding and liquidity resources, interest rate sensitivity and our balance sheet more broadlyNew
  7. 52Credit risk is the risk arising from an obligor’s failure to meet the terms of any contract or otherwise perform as agreed. Credit risk is found in all activities in which settlement or repayment depends on counterparty, issuer or borrower performance40% rewritten

Market Risk

  1. 53Our principal market risk exposures arise from volatility in interest rates and their impact on economic value, capitalization levels and earnings. To the extent we are unable to effectively match the interest rate sensitivity of our assets and liabilities, our net earnings could be materially adversely affectedNew
  2. 54our fixed rate and floating rate assets and liabilities on our Consolidated Balance Sheets, our Net interest income and economic value of equity are expected to increase in higher rate scenarios and decrease in lower rate scenariosNew

Operational Risk

  1. 55Operational risk is inherent in all business activities and can impact us through direct or indirect financial loss, damage to our brand, customer dissatisfaction and legal and regulatory penalties. We have implemented an operational risk framework that is defined in our Operational Risk Management PolicyNew

Strategic Risk

  1. 56Strategic risk is the risk arising from adverse business decisions, poor implementation of business decisions or lack of responsiveness to changes in the industry and operating environment. This risk is a function of an organization’s strategic goals, business strategies, resources and quality of implementation47% rewritten
  2. 57Reputational risk is the risk arising from negative public opinion. This risk may impair competitiveness by affecting the ability to establish new relationships or services, or continue servicing existing relationships80% rewritten

Other Bread Financial Holdings 10-Ks

  • FY2024 10-K risk factors
    57 risks

    Bread Financial's risks are dominated by unsecured consumer lending default exposure, heavy dependence on large retail partners, and extensive regulatory scrutiny affecting fees and capital.

    Filed Feb 14, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.