April Credit Trends Mixed, but Loan Growth Better

Research evidence excerpt

April Credit Trends Mixed, but Loan Growth Better

Flash Note Financials | Specialty Finance

May 15, 2026

Bread Financial Holdings John Pancari Girard Sweeney 212 497 0861 646 551 8503

BFH | $86.83 john.pancari@evercoreisi.com girard.sweeney@evercoreisi.com

Outperform | Target Price/Base Case: $99.00 Russ Anderson

Commentary 212-497-0887

Russ.Anderson@evercoreisi.com

April NCOs below EVR & Street, while DQs above, while pace of improvement also mixed; loan growth solid. BFH's NCO

rate decreased 71 bps YoY in April vs 82 bps in March, with the pace of YoY improvement moderating. However, monthly NCOs

are still tracking ~45 bps below our 2Q26 estimate. 30+ day DQs improved 36 bps YoY in April vs 30 bps in March, an acceleration

in pace of improvement, though the implied 2Q26 DQ rate is above EVR/Street. Loan balances came in well ahead of our

expectations, a modest positive against the backdrop of broader normalization in card credit trends.

Implied 2Q26 DQs screen above EVR & Street. BFH's 30+ day DQs for April totaled $1.0B or 5.3%, -36 bps YoY and -26 bps

MoM. Assuming historical seasonal trends, this implies 30+ day DQs of 5.71% in 2Q26, which screens above EVR and consensus

(+21 bps/+14 bps). Positively, the pace of YoY improvement has accelerated since March (-36 bps vs -30 bps).

Implied 2Q26 NCOs screen below EVR & Street. BFH's total loan NCOs for April totaled $108M or 7.09%, decreasing 71 bps

YoY and -19 bps MoM. Assuming historical seasonal trends, this implies NCOs of 6.87%, which screen below EVR/Street (-45

bps/-39 bps). The pace of YoY improvement continues to moderate (-71 bps vs -82 bps).

Loan balances screen higher vs EVR expectations. Per 8-K data, April's EOP credit card loans increased 227 bps YoY and

decreased 7 bps MoM.