Spec Fin Weekly

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Spec Fin Weekly

updates on efficiency targets would be helpful in calming market concerns about these topics. There is also some discussion

of Capital One beginning to migrate Discover credit cards to Capital One's backend beginning July 2026, and we look for some

framework on what we should expect from that move.

Wednesday, June 10:SPECIALTY

■ Bread Financial (BFH, Buy, $105 PT): We recently hosted Bread Financial two weeks ago, and we expect Bread's positive tone

to remain unchanged. We'll look for updates on the same topics discussed in our NDR, namely consumer spending and lending,

credit reserve and underwriting posture, and capital levels. The most likely incremental update will be on capital levels, which

includes thinking around additional preferred equity issuance and the potential freeing up of capital from merging Bread's two

banks. We may also get an update on Bread's credit reserve levels since, as we previously discussed, Bread's credit reservesFINANCE assume draconian levels of unemployment.

■ Upstart Holdings (UPST, Buy, $43 PT): Recent datapoints from Upstart have been mixed, with the May UMI pointing to a more

stressed consumer, but the origination volumes pointing to a 5% beat versus consensus expectations (see more discussion

below). Rising rate expectations for both the Fed Funds Rate and medium term benchmarks are also negative for Upstart. All

of this to say that Upstart's fundamentals are somewhat pressured from macro conditions. However, we remain bullish onINDUSTRY UPST shares primarily from the significant, 65% expansion to EBITDA from becoming a bank. We hope Upstart can emphasize

the upside in more detail, plus talk about the timeframe for bank regulatory approval.