OneMain Financial
ABS Investor Presentation
NYSE: OMF | February 2024
Important Information
Cautionary Note Regarding Forward-Looking Statements
This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by or that otherwise include the words "anticipates," "appears," "assumes," "believes," "can," "continues," "could," "estimates," "expects," "forecasts," "foresees," "goals," "intends," "likely," "objective," "plans," "projects," "target," "trend," "remains," and similar expressions or future or conditional verbs such as "could," "may," "might," "should," "will" or "would" are intended to identify forward-looking statements, but these words are not the exclusive means of identifying forward-looking statements.
Forward-looking statements are not statements of historical fact but instead represent only management's current beliefs regarding future events, objectives, goals, projections, strategies, performance, and future plans, and underlying assumptions and other statements related thereto. You should not place undue reliance on these forward-looking statements. By their nature, forward-looking statements are subject to risks, uncertainties, assumptions and other important factors that may cause actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause actual results, performance, or achievements to differ materially from those expressed in or implied by forward-looking statements include, without limitation, the following: adverse changes and volatility in general economic conditions, including the interest rate environment and the financial markets; the sufficiency of our allowance for finance receivable losses; increased levels of unemployment and personal bankruptcies; the current inflationary environment and related trends affecting customers; natural or accidental events such as earthquakes, hurricanes, pandemics, floods or wildfires affecting our customers, collateral, or our facilities; a failure in or breach of our information, operational or security systems or infrastructure or those of third parties, including as a result of cyber-attacks, war or other disruptions; the adequacy of our credit risk scoring models; geopolitical risks, including recent geopolitical actions outside the U.S.; adverse changes in our ability to attract and retain employees or key executives; increased competition or adverse changes in customer responsiveness to our distribution channels or products; changes in federal, state, or local laws, regulations, or regulatory policies and practices or increased regulatory scrutiny of our business or industry; risks associated with our insurance operations; the costs and effects of any actual or alleged violations of any federal, state, or local laws, rules or regulations; the costs and effects of any fines, penalties, judgments, decrees, orders, inquiries, investigations, subpoenas, or enforcement or other proceedings of any governmental or quasi-governmental agency or authority; our substantial indebtedness and our continued ability to access the capital markets and maintain adequate current sources of funds to satisfy our cash flow requirements; our ability to comply with all of our covenants; the effects of any downgrade of our debt ratings by credit rating agencies; and other risks and uncertainties described in the "Risk Factors" and "Management's Discussion and Analysis" sections of the Company's most recent Form 10-K filed with the SEC and in the Company's other filings with the SEC from time to time.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. You should specifically consider the factors identified in this document that could cause actual results to differ before making an investment decision to purchase our securities. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.
Forward looking statements included in this presentation speak only as of the date on which they were made. We undertake no obligation to update or revise any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments or otherwise, except as required by law.
Use of Non-GAAP Financial Measures
We report the operating results of Consumer and Insurance using the Segment Accounting Basis, which (i) reflects our allocation methodologies for interest expense and operating costs, to reflect the manner in which we assess our business results and (ii) excludes the impact of applying purchase accounting (eliminates premiums/discounts on our finance receivables and long-term debt at acquisition, as well as the amortization/accretion in future periods). Consumer and Insurance adjusted pretax income (loss), Consumer and Insurance adjusted net income (loss), and Consumer and Insurance adjusted earnings (loss) per diluted share are key performance measures used to evaluate the performance of our business. Consumer and Insurance adjusted pretax income (loss) represents income (loss) before income taxes on a Segment Accounting Basis and excludes regulatory settlements, net gain or loss resulting from repurchases and repayments of debt, and other items and strategic activities, which include direct costs associated with COVID-19, restructuring charges and the expense associated with cash-settledstock-based awards. We believe these non-GAAP financial measures are useful in assessing the profitability of our segment.
Management also uses pretax capital generation and capital generation, non-GAAP financial measures, as a key performance measure of our segment. Pretax capital generation represents Consumer & Insurance adjusted pretax income, as discussed above, and excludes the change in our Consumer & Insurance allowance for finance receivable losses in the period while still considering the Consumer & Insurance net charge-offs incurred during the period. Capital generation represents the after-tax effect of pretax capital generation.
Management believes that these non-GAAP measures are useful in assessing the capital created in the period impacting the overall capital adequacy of the Company. Management believes that the Company's reserves, combined with its equity, represent the Company's loss absorption capacity.
Management utilizes these non-GAAP measures in evaluating our performance. Additionally, these non-GAAP measures are consistent with the performance goals established in OMH's executive compensation program. These non-GAAP financial measures should be considered supplemental to, but not as a substitute for or superior to, income (loss) before income taxes, net income, or other measures of financial performance prepared in accordance with GAAP.
2
Agenda | 1 | Company Overview | 4 |
2 | Underwriting & Servicing | 18 | |
3 | ABS Overview | 25 | |
4 | OneMain Impact | 41 | |
5 | Data Supplement | 44 | |
3
Company Overview
Key Takeaways
1 | We have unique competitive advantages |
to serve the nonprime consumer, | |
including a 100+ year history, capital, | |
scale and a nationwide branch network | |
2 | Our business is specifically designed to |
provide responsible lending solutions to a | |
large and often underserved market | |
3 | Our nationwide branch network |
enhanced by digital and central | |
capabilities is stable, resilient and cycle- | |
tested, generating significant cash flow | |
4 | We are continuously enhancing our core |
business with technology and analytics | |
capabilities |
5 | Our responsible lending practices, state- |
licensed model and culture of | |
compliance are core to our business | |
model | |
6 | We remain vigilant and proactive in the |
protection of our portfolio | |
7 | We are investing in new auto finance and |
credit card businesses to diversify our | |
revenue streams |
5
Our vision is to be the lender of choice for the nonprime consumer
Meet their needs today
Unsecured loans
Secured loans
Auto finance
Credit cards
OneMain
Customers
Progress to a better future
Financial wellness
Insurance
Bill negotiation
Secured card
6
Our nationwide branch network provides us with unique capabilities
Unique capabilities
Personalized service
Staff performs both originations and collections
Thoughtful customer budgeting and underwriting
Community presence and local knowledge
~1,400branches | 7th | largest branch network |
1 | ||
(including banks) |
90%+ | of prospects live within | 14 yrs avg branch manager tenure | |
2 | |||
branch footprint |
Note: Data as of December 31, 2023. | |
1. When compared to U.S. banks. Source: S&P Capital IQ Pro. | 7 |
2. Footprint defined as within 30 miles of a branch. |
Our nationwide branch network is enhanced by digital and central capabilities
Enhance customer | Branch | |
Drive operating | ||
engagement and | efficiencies | |
satisfaction
Originations
Servicing
Collections
Increase capacity | Enable multiple | |
product delivery | ||
Supported by a strong compliance and control culture
8
We have built a differentiated business model
OneMain
Nonprime focus / proprietary data
Funding breadth and access
Branch + digital + central model
Nationwide distribution
Digital | Branch-based | Regional banks |
lenders | lenders | & credit unions |
Competitive Advantages
~18MM | ~$200B |
Customers | Cumulative |
Served2 | Originations2 |
~90% | $8.4B |
Of New Customer | Unencumbered |
Applications Begin Online | Receivables* |
~50% | $7.7B |
More predictable, lower | Committed Bank |
loss return customers | Capacity |
~50% | $22.2B |
Of Loans Closed | C&I Managed |
Digitally | Receivables* |
Leading to ~20% market share1
We serve hardworking Americans with a financial need
Note: Data as of December 31, 2023, unless otherwise noted. | |
*See 4Q2023 earnings presentation appendix and earnings release for Non-GAAP Financial Measures reconciliations along with defined terms. | 9 |
1. Based on ~$110B of nonprime personal loans outstanding. Nonprime defined as VantageScore between 550 to 700. Source: Experian as of December 31, 2023. |
2. 2006 to December 31, 2023.
Our customers are hardworking Americans
Customer Attributes1
Use of Loan Proceeds2
~631 average FICO
$65k to $70k annual gross income
~10 years in the same residence
~50% in the same job 5+ years
Employed in stable industries
Top 52:
- Healthcare & Social Services
- Manufacturing
- Transportation & Warehousing
- Education
- Accounting, Finance, or Insurance
Other
14%
Family related
10%
11%
Home repair
11%
Auto related
~90%
Customer satisfaction2
Debt consolidation
34%
20%
Unexpected household expenses
Same or next day
Customer receives funds
Note: Use of loan proceeds may not sum due to rounding. | |
1. Source: Internal portfolio data as of December 31, 2023. | 10 |
2. OneMain Financial New Customer Satisfaction Survey, based on 4Q2023 originations. |
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Disclaimer
OneMain Holdings Inc. published this content on 23 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 March 2024 13:32:03 UTC.