BREAD FINANCIAL HOLDINGS, INC.BFH
BREAD FINANCIAL HOLDINGS, INC. Goodwill & Intangibles Disclosure
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
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.
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 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2020 | Feb 26, 2021 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.