OMF - Earnings call transcript Q4 2019

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Operator

Welcome to the OneMain Financial Fourth Quarter 2019 Earnings Conference Call and Webcast. Hosting the call today from OneMain is Kathryn Miller, Head of Investor Relations. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode, and the floor will be opened for your questions following the presentation [Operator Instructions]. It is now my pleasure to turn the floor over to Kathryn Miller.

begin. may You

Kathryn Miller

Good Maria. thank for you Thank morning us. joining you, and

important to by XXXX and contain presentation statements can begin Investor measures. me in section of Pages the investor concerning use and directing which be quarter Let The fourth of you X our non-GAAP site. forward-looking the X presentation, the found disclosures Relations of Web

could forward-looking the as statements. of business certain our Our today. actual not statements, reflecting to differ speak Factors statements you these about forth caution that will prospects, materially beliefs and forward-looking from in are performance place contain We and set forward-looking cause these are inherent company’s undue today to financial forward-looking to on discussion current release. future press uncertainties subject earnings risks statements results and reliance management’s and only

listening XXth, replay we herein you this February today, remind If not call. to that this some today, are the you to be remarks made been updated and point of after subsequent may via have as at

call we’ll formal conclusion Doug our and remarks, our President After Q&A a Conrad, remarks and Financial of include this Micah morning Shulman, CEO the our formal from Chief Our session. conduct will Officer.

turn call me let now So over to the Doug.

Doug Shulman

quarter quarter adjusted compared morning, C&I good XXXX. fourth basis point and net the today. a We income almost year X.X%, XXX to of everyone. closed XXXX, and that's Kathryn, achieved receivable being of growth Thanks, for to out note. C&I strong on pleased I'm with improvement fourth the We an you return a on XX% the very

share, XX% or million we $X.XX increase of versus For per C&I adjusted generated year, net $XXX the XXXX. income reflecting diluted full

Day efficiencies results in continue important through these marketing, the opportunities November. rate XXX improved name in experience automation multi-touch and to our attributable the ahead customer We in against are operations, conversion execution Investor improving We to enhanced we basis which our branch initiatives including These underwriting few. expanded central business and enhance against priorities just underway, to outlined XXXX, and about and really feel points. about many progress a in financial delivery, omnichannel good by customer and strong real strategic priorities, our made to our

result, a we or our and achieving lending year-over-year, ending converting net Simply of $X.X by As are criteria. our want XX% attracting, put, billion the anchored receivables adjusted grew to was returns serving and serve. that risk we customers more around

investment our optimize advanced we're model and Across teams. to our is analytics and driving greater across central our productivity credit the marketing in business, to operations strategy, and our branch technology enhance using operations our

XX% As per branch to ending by increased strong. per and receivables up is remained a C&I compared XX%. Credit year, has profitability also performance result, last branch

and year, fourth in gives confidence net quarter was off the and Our with ratio in X.XX% delinquencies for health charge financial full are our our customer. expectations, in us of the which line the X% our

Now however, said I of we to you, what Investor Day. remind want

for strong overall environment. on strong in XX% stressed generate which risk customer to losses. adjusted severely are governance we even ensuring remains achieved profitable a underwriting while on returns, losses, generally We Our into translates we a experience XXXX. are providing and Overall, the returns, results better financial we just risk look underwriting equity company for focused is also return the adjusted that with not in

about adjusted basis our XX As in of mentioned, X.X% year. for XX% improvement which on receivables, growth earnings in the and points I C&I return reached

expect to we to on our As continue considerable and execute to earnings generate we capital. initiatives, continue

part our allocation As Day, recent we of Investor framework. our capital outlined

XXXX, customer analytics, we to return that shareholders. return criteria; our to and and outlined returns know, in capital funded shareholders. to this fund $X.X capital growth risk portfolio to meet loans will third, Applying use talent, technology, to our at framework continue first, We commenced Investor invest capital acquisition invested in second, to; with you And support billion we Day. of receivables as strategic growth. priorities the We business;

share per third annual quarter. regular share our dividend we $X XXXX, in In increase are the $X regular dividend paid and special initiated Today, XX% announcing dividend. we per in we

share reflect In announcing approximately XX dividend the are over continue to will March results in XX% we also current strong we which special in expect over $X.XX our per These price. yield actions is $X.XX generate the on XXXX, XX, our the payable our This result share ending this capital to period confidence month addition, second share, of quarter. out per paid long-run.

are in serve our customers to which and very very we pleased impact said business, our of we managing in company Xst before, drive with the And business to strong. the a our manage shareholder as of long-term the XXXX progress how implementation or I'm January economics fundamental generate. the We're not we value. we are we capital believe great position CECL will made the and well

me let that, the turn to With over call Micah.

Micah Conrad

and good million We income morning, $X.XX fourth diluted or in share. of Doug Thanks net earned per everyone. quarter $XXX the

$XXX the of we earned income. full million net For year,

in tax for release impact was allowances to impacted of against the approximately by by the that tax effective benefits, I'd year-over-year, XXXX, of was million primarily performance. Excluding of including our $XX valuation strong our of XX% XXXX note state increase deferred driven nonrecurring like approximately $XX rate million the taxes. this a C&I Fortress transaction positively

previously Non-C&I income XXXX, effective expect $XX be XX% in was XXXX. net million rate the tax impact included We our tax benefit. to which in mentioned around

net expect be XXXX. $XX impacts and We million income non-C&I between to $XX in million

share an XXXX. $X.XX earned diluted quarter of the $XXX million for fourth C&I our diluted segment share per of XXXX $XXX income adjusted to or in $X.XX compared net per Moving or basis on We fourth quarter on million to the results.

earned million or For $X.XX reflecting the versus full increase net year XXXX. XX% income of diluted XXXX, we of per $XXX share, adjusted

or receivables These year-over-year. $X.X led our from Let's review fourth of $X.X performance. fourth ending quarter billion for billion. the originations net the key drivers billion, C&I $X.X of were quarter XX% to up Originations growth

$X.X same grew by over XX% the portfolio secured or billion period. Our

Interest growth. XX% our was quarter, in up XX which securities fourth losses portfolio. which delinquency. by stage insurance XX.X% quarter, a higher and largely income generally $X.X in last continued versus year, higher year. with $X basis reflecting Yield and strength million had revenue The The points last league origination the income was income to insurance favorable primarily billion, The year's average reflected year's driven mark-to-market than higher our XX% income. reflected $X and was million lower higher fourth other APRs last the Total million last in growth was yield, comparison generally up increase from increase quarter, fourth was investment in in fourth in year-over-year equity receivables quarter. in $XXX investment line receivables on insurance

credit, which well. to on move continues perform to Let's

XX XX Our rate of to last fourth X.XX% essentially was flat delinquency with quarter. year's

last from the off mind Our same points X.XX%, year-over-year future -- down year. improvement XX Keep from do expect from basis not lending. net XX plus charge X.XX, moderating of about portfolio’s was down and ratio we was in in last quarters given magnitude XX rate basis this year, our secured delinquency growth improvements a XX point of

losses. underwrite to emphasize risk returns, Doug optimize We earlier. mentioned to not want I adjusted what

operating charge range. in is term framework, to to offs X% X% long the assuming have relatively Our economic stable a environment,

be Given year. that benign range lower the and to backdrop strong this in expect the of credit part macro environment, we losses

than year's expenses quarter. X% operating were about quarter $XXX Fourth last fourth higher million,

operations. operating For the partially experience the however, This across X% investments investments expenses by discussed year, branches about increase our in efficiencies full offset customer XXXX. acquisition customer particularly were were our versus we up continued technology, in central business, reflected our These and and earlier.

our for was For the the period operating X.X%, down year, XX basis about last expense ratio comparable year. points

of year with average from quarters, balances as increase prior expense in million interest Consistent reflected debt fourth XXX a million support ago. quarter, to was well portfolio as unsecured debt. Lastly, higher greater up a our the growth, the proportion $XXX

discuss our our Before please I that Day, in to within and during XXXX business operate Investor framework on term our sheet, we the recall we move highlighted expect which long beyond. balance to

driven creation, we by continue focused long value highlighted primarily intently are initiatives capital the earlier. enhancing We in will to on which be term

that, With balance to sheet. our let's on move

Our delinquency. seasonally reflecting for $XX reserves sequentially fourth loan about growth quarter higher increased loss and by the million, portfolio

down X.X%, compared Our basis reserve unchanged rate quarter points XX to year-over-year. and third the was

As tangible equities to adoption increase of an the our to which a marked $XXX and Xst in know, led million. reduction CECL, billion about January reserves you of $X.X

a rates the As reserve at increased to our result, total X.X% year XX.X% at start XXXX. end of

XX.X% Over the that economic XXXX, of will under XX.X%, reserve anticipate between and be stable assuming conditions. rate half first CECL our we

aggregate amount from is As have business. equity moves as this the tangible always we combined the same. the capacity one in we viewed an to the absorption reserves simply for capacity change the that accounting with a account other and CECL loss highlighted remaining past,

adjusted our earnings our debt pre of forward, ratio We going adequacy which to our manage view XX capacity and loss a net to Accordingly, capital, adjusted highlighted of is CECL. capital provides we post will metric absorption on of this a Slide consistent believe presentation.

more performance, today. Our coverage after-tax was We ability was can XXXX do as capacity or shareholders. And the our return times December the annual we business cushion to our after-tax our see having balance it earnings well losses. CECL strong shareholders, on being and returned regardless we sheet losses. XXst on our capital January loss impact in can earnings economic sheet as not see billion, CECL or generate and have our significant X on well-capitalized $X.X annual can be or anticipate invest of losses preserving excess absorption balance change on from to accounting while the capital to any to than capacity conditions used be Xst changing as at financial that's our as in of our adequacy loss you still These

As liquidity the you quarter. balance during which enhance conservative both and know, long of runway, a is to sheet we a continue maintain fourth to our priority

the bonds Day, highlighted eights. XX the of of we at three the strength year issued as well confidence five As our This $XXX business program, over during demonstrated and resiliency our unsecured our long-term. in as million issuance funding Investor of we

Net Our available at X.X cash, tangible leverage was times. leverage year our ratio times was end. our X.X ratio of

$X.X longer runway provide of cash as billion quarter liquidity, and capital without of equivalents undrawn conduit as and and to with markets. of $X.X cash well over extended terms assets we business our in Lastly, an at the of access billion to balanced $X.X had billion maturities duration operate This our end. combined uncovered capacity

future. Our business well-positioned uniquely to for be continues the

sheet. well-capitalized We have a conservative balance and

and We and capital investment shareholder that returns of returns. very for utilized long business considerable amount generates be growth, runway our receivables and a have attractive liquidity a can

I'll to Doug. turn the that, With back call over

Doug Shulman

each treating note. customers. our on I'm engage serve who Thanks, progress to very Micah. how a in our as score. a and customers’ of individual, needs understanding the on and attract, loan not company's made We an great strong proud credit closed just person focus year out very We our comes for us we a

and in continue and customer. model return we considerable our benefit on the produced This in business driven that am and to strengthen customer execute how to business used will both business I turn invest on that our focus customer in earnings the business and XXXX. shareholders our Our our plans we our capital our growth. confident as we has to to serve

me let joining that, for And operator us. for the all to turn With call I'll you the thank questions. over of

Operator

floor The now [Operator questions instructions]. you. is open Thank for

line is Fargo. Our Michael of Wells the from of first question coming Kaye

Michael Kaye

little celebration XX% seeing a and bit XX% of demand? that you're you loan of compares saw the QX. terms Maybe can quarter last to quarter in growth what about to in XX% talk year-over-year This origination

Doug Shulman

it’s Michael Doug.

and see quarter lot dodge you'll business demand. a think of the happening. by quarter seasonality isn't best has of necessarily seeing looking We're some I this what's

lot having walking a market on create the into the with through the and good customer the whether loan, they're that said way for with of call before, to is customer a when goal us our then that's that our in we're one good we once a of branch optimize targets we into application associates. attention experience, through our customers’ us qualifies ways. to working loan site our experience our they As all the Web business customers for marketing and make get I sure and with And in process,

So we right now variation we think demand for in much our is customer that. and didn't see strong base

Michael Kaye

or $X.XX second expected assume Second this it's still of year? the though special in Should conservatism year. dividend to will perhaps equal QX dividend initial be we the as in question, in some level later terms the early dividend of the it semiannual

Doug Shulman

and allocation factors capital on As you based that the we capital know, have. earning make all distribution we decisions leverage,

at try So Investor Michael, I that Day a we any too business distributed. dividends. think to to could size the on said, that looking capacity just it's be early And of with speculate you of generate of give sense the special forward capital to the

Michael Kaye

you. Okay, thank

Operator

Hecht Jefferies. comes question line next from Our of of the John

John Hecht

is real bill though, point there's any And I here. question, wondering, I'm patterns the inflammation of But seen of in implementation know a new you on this your been First lending wondering, this or just early have framework changes time? California. in in an I'm in California at demand

Doug Shulman

it’s I John. Yes, think early too

supportive voluntarily penetrated our I of our XX% we California California, and As you course. branches were cap quite opening We all interest the activity know, on in, lot in been we bill. were we have the There’s a did. so of under already rates and California at think operate what plan that's We of states there. in remains

whether say the bill to effect not. has or an that early too it’s think I

John Hecht

to Is X% it, CECL. ALL. think framework or then And guess in a it increase two simple the from as about about I it's impact day

every million incremental the it about and in would Is with a provisioning for net think growth? dollars years rate way growth billion net that to to $XX of prior imply of just that provision. fair So that about compare mind

Micah Conrad

John, in portfolio mind course have and assumes condition. keep is under that about stable you Micah. attributes right it. macro exactly way CECL of That's the to And this think stable that

is for reserving than life a sensitive delinquency less everyone So that step the incurred patterns you’re the CECL the methodology. it will fact how and to general, to just is back going prior from to CECL and be and reserving sensitive to loans. growth on of minute due more originations In be seasonal methodology to remind different

one, portfolio a it, loan is then an on macroeconomic of growing increased portfolio. in the to applying Two, a reserving growth. the the those just a is conditions right the about imparted life X.X using have And So going reserve produce of XX.X and to basis. that against impact larger just CECL attributes of your think way level versus will But on get provisioning model. that ratios third, the the from

John Hecht

overtime, And question, the then improved customer you’ll and an rates. are that any improved drivers Doug, acquisition cost if is referred customer you dynamic? What to final that that conversion way have of

Doug Shulman

business can is of a And to in this of you kind there a drivers. know changes that of the up bottom-line. as lot Look, real add lot impact different numbers small

loan the and understand their as from the customers And they the experience them options? we're phone So always that it’s or think you them technology associates we branch walk actually rate to working does they like given get -- personnel conversion a a their the this if all they the our experience, if have call everything So then to product approved experience, about you attributes, on is for What them phone which to it booking through to like is they when sure quickly not customer come make our a loan. make us? into on funnel? the What treat do they’re experience from are, they the returning from How depending to choices, feel drivers on. that it branch? need a well, Does or phone? of in not? Do call

with can an pieces I experience expect a us a, as excellent And to the price product, a fair so, very and those seeing think what all have all focus we step every to affect have we experience, on getting little you I’ve have rates. see said our different of great can making of granular, way before, improve sure do customer with conversion at

Operator

of Janney. of line Our from the next John question comes Rowan

John Rowan

stable what kind should the we So for is Though, the, Day? guidance state in you be you’ve on gave that obviously call of. gave the don’t whatever off XXXX of it, just or in are that kind you based we recall, assume of I out Investor

Doug Shulman

longer keep term we more that. for We provided at if help we also questions, plan updated, and any operating true XXXX. but be was And But of guardrails certainly, of in that particular those inclusive change. that that that operate with any Kathryn framework you’re the designed at. that can Day was long the Investor of operate term to you period, business to referring to, some that We'll modeling

John Rowan

a here’s I'll it. kind of question, modeling but ask So

year, off state your at your genius. of guidance modeled the year March, the pay don’t see the ago net down the is the end have the rate growth growth stable of usually Looking be always see finance of X% which if going portfolio, seasonal we don't as the to in of portfolio, to excess a we to of XX% well you in off that that with

reserve be the in of down if big in CECL, there's or we to release excess paydown, or have up number? So come in typical bit But a have actually will -- growth group. in we seasonal just earnings XQ continue in that's in could which excess gauge guidance a a going I'm either could a that whether have portfolio XQ, now have we're into is the that number that's of in your, growth we XQ, XQ there do that that in not to that trying if in XQ seasonal bump the or little

Micah Conrad

So in there's there, couple John. I a think questions

statement pointed asked pointed growth. seasonality, the the this not on originations do as growth, business. but of as is in We first you around and only Let Michael a have me take in patterns first our seasonal Doug out. one question, Certainly, also and the out just income

perspective, that tax does challenging, do if people's term. just first be will, behavior borrowing. So IRS a a to the is that From around with tend use that and a of growth has returns to you quarter to quarter lot

origination’s for quarters of a growth. and Of course, stronger second third being quarter couple the

that's term sort that and an for sense by some change seasonal we being historical average, of you will and a of and back receivable said, you overtime on looking at can going that metric is by trends. originations So get quarter that and and our something framework gave that long

piece. one So that's

And that's asked percentage like the CECL. couple going think our to influence of of expectation as we on of the second as part to aggregate was how what out, ratio next over gave receivables you a the in reserve question expect our look prepared quarters. I We remarks, that

estimate you that pretty to experience that came have for gave with probably to XX.X. XX%. now and that close XX.X remember, we the of narrowing so middle We darn gave of at range XX.X% from X. original you you to an in We January model, we As more XX% we're

CECL portfolio, the many mentioned, sensitive course is attributes that we Of to incorporates the a model why bit I across range which ratio. the as originations and gave mix, of

in the on how receivables receivable, the So ending comment whether point at quarter. can't this against period to out question for play you that answer the looking ratio use would release or And is at. the flat whatever would that the the build there's a be first I to necessarily against going you're

John Rowan

a not lot as steady, Well, right? wouldn't the release, charge-offs, below because if hold And figure be release. could to a does with I'm out, out. are too lenders, know It's XQ, down but comes low, a provisions But of play finance that trying just you XQ conceivably in it receivable little you if installment allowance potentially the right? just have would expectations you if a

Micah Conrad

may you the and a play sure. where up right general, it with definitely of about think out, we'd should you're I something thinking percentage follow way, in on as Kathryn like it just your to modeling. receivables it's But think Yes,

Operator

Our comes Sandler. of line next Kevin Barker of from question Piper

Kevin Barker

you growth slightly slowing. that continue guidance into range? your of do year-over-year go part OpEx at here, operating expect fourth the came lower XXXX, momentum to with you the OpEx, maybe plan your X% X% growth in especially quarter When growth Your where rates to expense below

Micah Conrad

Micah. It's Kevin. Thanks

had at I relative came year, we the that think to be signaled around with X% C&I year. the it where to in beginning of OpEx year would for we growth thought respect expectations, full

on year. finishing in customer was we different and to the we quarter very it remarks talked the to XX.XX. be up Day, business. ended over amount but in very, this closely, Of things We're prior significant is the The at from expense further are what at driving heard going per business Again, a efficiencies costs on during XX% with going goes the that about course, as OpEx, is acquisition versus business as X%, which lot influenced into up by up cost his well we managing the five seasonal branch Doug as Investor year-over-year. continue maintain you with in of receivables year discipline

we're core Day, Again, as we're savings those we experience enhancements making our the talked technology, in other to about and being business. at Investor investing our

of and down, the going out originations there the with a little business. depending around the how growth efficiencies on come and when going of our we're on well So driving as quarter, costs again that steady customer to be to it’s in bit and a investing receivables be up growth is rate that, as the not in timing every acquisition play

X% X% the for the the in average investments. and year opportunities So to come relative in out on to see range time we we again be just that where meant going those business efficiencies be and to on driving it’s opportunities a to over specific

Kevin Barker

in that this And you continue of operating to back loan momentum in you see growth that operating in leverage lot XXXX, quarters, place the just that for you what you Do a -- through to have given and you you going analytics and above and especially some continue just seems year of next initiatives your put it in place. like forth? in momentum, the of work frame have then few the so came

Doug Shulman

then number. be what the comes they’re with on a it back manage growth criteria granular think don't to what every say mean, have I our our customers really look, is We and on business We're do with output. here and meet I to try growth. I is we them an once them going conference a will that end repeat growth Yes, and to out basis. breakout But to we risk do a which return call, us at manage want attract think I

this customers or when One do growth we loan running both only that and generally was have better lending loan works the larger secured for said, in of when an customers Micah make amounts. unsecured qualify up we the in this if secured they that's a things we secured as XXs lending to our choice a choice kind the give year And to of rate quarter secured for for of the will moderate. certain We've portfolio to them. what loan, the it's probably, qualify loan, them going been drove low

And we've and so that year. will overall With receivables see a said, we'll growth. got the down that by this definition where slow comes lot underway out of initiatives growth the

Kevin Barker

towards do then expect incremental incremental And more to on that you an shift day impact mix secure the have reserve? CECL

Micah Conrad

Yes, Kevin.

So into is reserve. that that the CECL of the attributes certainly goes one

our lending them three So if rate. secure, direct the reserving at unsecured, look has auto of different each you hard and product, the the main

originations published secure that can in reserve So as XX.X. be, have gave to hence have of what the our is certainly, out, rate. on you portfolio going will seen on rate that the observe we the to rate with is our influence an results, But XX.X with the sort we originations range converging

expect to in receivables be past. catalyst and So the it going large again continued a we -- really has expect been for don't growth forward our secured

Operator

line from KBW. Our the of next Eric question of Hagen comes

Eric Hagen

products, that the Just But hear in forward, you expect going the yields in if to those yield unsecured. secured the that off. how outlook shift? more had receivables might curious in the despite you you strong what taper when any compress been just I'm that loss might concentrated the yield to rates were are of I for portfolio you're earning able lower relative mix percentage earn the your means to that presumably retain

Micah Conrad

and able We've couple portfolio influenced rate. the be going been of yield We've by delinquency to but loans, that in a been APRs of it the of it relatively that's our actively also quarter the originating stable see continue talked in our of seen on markets course, our pricing to testing a indicative is portfolio We've last shift as different we've since but well. we’re about for has XXXX. years. on This been market secured,

also can due, remind I'll we XX So on a but not we past when loan we that income we you have only accrued moment becomes accruing. have reverse that days stop

forward, So to that improvement to year-over-year yields. stable and point be framework stabilizer continues back Again, when expect we’ve we ends kind to XX going put mix with term that contributor what plus secured the of yields see provided, and from certainly forward. we our particularly moderating was out mix in contributor yield that's I’ll which and for the we secured we going a long a stable up what that's expect there being a guardrail

Eric Hagen

tweaks to underwriting one. recently score but a credit. I'm were for score important is addressable methodology could just to the or announced obviously just you there any use those total your you’ve that or the market criteria curious criteria made some changes as those for going being in know general FICO that only how interpreted they and changes just changes result any consumer that forward? impact the how originations, that of I an credit drive to isn't it new demand

Doug Shulman

We or clear. or You our underwriting in know, first, scores advantage either. use be I actually want FICO any scores to don't

prime anticipate which noise my model don't than great, proprietary I else lot affected scores, in that. we is lending anybody model one actually around actually customers. years is around arguably near a lot data proprietary any so aren't by more have our by Fair Isaac. times data, we of which our actually this highlights installment consumers FICO why is credit Consumers, the think advantage of a the of see, just are actually So score impact. -- where services what's

a we and that data highly have underwrite predictive in attributes. and And We new near prime models customers think sources allows that we're continually us to way. tweaking adding to unique

expect followed impact So all our the of business. on article this, any we don't has but

Operator

question JP Our of comes from Rick Morgan. next Shane, line

Rick Shane

you optimize competitive has between origination customer of you little and significant do you terms I'd that? obviously also channel. terms balance a channels, Obviously, branch and network is the difference talk a but there online. What seen like shift of in to do do advantages about in the that? to bit benefits, preference How how

Doug Shulman

loans know, underwrite is talking the the With start Rick, is, And things not vast one, with our and them. setting through majority booked is big what with to ability majority customers of as our you an vast doing pay, what just across I that with we of face-to-face someone the online. their needs, the it’s differentiator. from said income customer, say would are budgeting we a so actually individual

it’s they’re they where saw usually network they online in find mail starts active online. social about the actually through they we're doing OneMain whether come they learn and where an on process, get quite So It piece up application a they affiliate, a search.

We on over and last highlighted they completing cut customer experience of that it time time same better less for amount in it. to the to have to application information our a branch down people our get takes the lot customers, we the months the for considerably six of read

it So experience. drives efficiency both and better customer

that channel after only into their the it’s So branch a come they to loan. comes close

we on just happens And a interactions in actually call the model so process It's generally online ourselves hybrid closing lot and happening why a the happening are phone. that’s branch. where the of our

don't good. we’ll we well, otherwise only that would branch who fraud that credit if is that very Day Investor come lending, that small into underwrite remains working a will way at we lose we want see testing of we competitor online, and online mentioned on book we're a subset them also can customers to a there find we who I in which to do a can

it's on our how their it we using vast, online more because lot about and their world. vast with spend as the to phone said, digital business, in where think and conduct it. more is you important we our customers computer we're are presence, that's So of time a of baffled that a obviously, as mobile start. And majority people But

Rick Shane

So well, really for product using -- price interaction? using and one-on-one and online getting the to actually for channel close have you're consumers them and that discovery branch the into the it you're then

Doug Shulman

Yes, generally.

loan interaction customer customers there's business episodic and come model, call before, do us without we in, the mobile branch do years walk come and neighborhood, a in. today, mobile acquisition, very later Now end back, in a from digital having the neighborhood, they've someone they'll customer you need, robust they a in and a there's can't an have digital. business that three consumer have But who gotten

Operator

comes the Credit of Our Orenbuch Moshe next from Suisse. question of line

Moshe Orenbuch

feel well of from desire little there and put seems demand all my overall together, been on to for you it of also XXXX consumers the of should lend have consumer And consumer comments well. your of does to supply setting from your asked about guess as Maybe kind strong gauging be least that be credit demand most just But and perhaps the your you it's I both like So an in it stronger. at to could answered. talk availability provide just just stories, as as willingness credit, and maybe, that? consumer kind a questions when for ability

Doug Shulman

of our to And talked you at room be overtime, look cards. broad about to Investor their attribute control. try customers consumer give fixed we continue loans they a we good loans get the come Moshe, look unsecured Day to of loans sense very and of like. product you you market chunk Yes, credit bit to personal at And people quite that we at our a would kind a there's a want includes installment overall price as of think about market, down a us and that because of market, credit how that credit the for to under we pay the which has

to So one market. is, in core this we base room grow think customer our there's

both I macro specifics, of but healthy. macro We view overall non the consumer, remains a prime look the us consumer hard the at on of also all think

of surveys last lot the debt-to-income trends, We on both and pay else. years, see us actually data. the unemployment, a do anything branch other ratios our in so as to trends managers though state, been before, seeing operate in have own states are we we've generally I our our while in we hearing, in particular of And growth as of mentioned XX customers, annual macro well a whole of state just they flat. income seen to Over couple attention

us. And backdrop positive feel remains so you know, we for the

going our continually laurels. modify portfolio risk on margins, nationwide meets return around all to it framework never that of stay at rest always managing exposure our of but we and our a this We're hurdles. disciplined do the We credit

try the but driving. to generally do It's to we'll things that's pictures keep and we kind growth we'll that how we look. of manage certainly in customer-by-customer, how So level. return-by-return, we see that's state-by-state, then comes. the output a elements, broad I product-by-product, on and what And depending of each on the those stroke don't have how business see And based like like business, it of granular on very

Moshe Orenbuch

the you talk that targets aspect think and the Could in that I you there's what plans business little your your enough are that kind your XXXX? it’s hasn't And for did funding I you leverage. funding mean, about operating of about talked your attention deal And bit leverage towards? model quarter. you gotten of a an

Micah Conrad

I'll strong. lot is ABS and What in the issuance talked that Both a we We've particularly emphasize market, that develop. balanced seen continue first. our and the great to it. feel at to of unsecured. year. We funding that about in continues length program. a we strength funding markets mix piece are high diversified They've been it strong unsecured of hit a really means We've program about this yield. incredibly of run The

work is put getting lot performance The that. course contributes it it of to a also in and has business of team the to where

But on business. the don't the trading example, yield we program. As very, year an we We with don't as very said, Doug three X.X% five rest XX so our that laurels our either. happy that and around at November in with issued today, funding do is with much

programs we attractive. that see for our our double today the to the space develop are within yield investors are What we and looking looking really prioritizing look yield So markets. high credits continuously

perspective, end continues issue covered unsecured, important to From in. a piece both to Liquidity almost a improve unencumbered of of undrawn sheet we're balance forward Investor has Day. a during with the very of lines after We've billion years that conduit a lot overtime. of the of go of markets which a story programmatic we lot it place billion in health and our funding liquidity couple that and to year. more the receivables remain remixing done the be at in good towards really obviously X.X sheet balance going the a of XX very, got We've

of sort funding of side that's So things. the

leverage, in other over to years. and the We've of rubric at good really, we've the times question strategic de-leveraging come consistent way we under which a would said we we XX are your range, long out operating We to about really couple expect from with it we've been five after period leverage On old acquiring a in a framework before in continue place, laid feel November. times seven last OneMain. leverage shortly operate is to that in the of

Operator

from of Barclays. Mark Our comes next question DeVries

Mark DeVries

down expectations But year-over-year, driving steady up the was while driving state reached Direct kind what's like And what your it that? total auto a of bit Does auto? was mix of direct secured for are hard kind little feel secured there? here you’ve a up.

Doug Shulman

Yes, direct grew actually clear, not it shrinking, auto to is be just XX% year-on-year.

hard simply faster. Our grew secured

is, some less in years need car based choice old which a your so with specific and qualifications XX age to of customers determines lot the their on offers what whether provide loan direct get customers of we to auto. car, needs you their financial bucket your than be so and And of a be

think of So comparison it is view just very it’s was the product of is slower. and viable to it numbers the just direct a little some in its auto my a growing fine growth, other I remains

out gives whether things competitive it's unique advantage. scaled or us and I for need a where think local we branches have management business titling differentiated. with it's we it's quite really the great capabilities in product central states us incredibly, also nationwide, fully And direct the have collateral but you our auto have other servicing for model we and in and operations areas, is it

so And growth rate a product one door, product direct XX% and ebbs in in going the that choice customer remains based good. and comes is, think, over I auto on think the seems be another of to there's flows but great growth who we

Mark DeVries

the to branch. that. was you Is strong it think in lot prepared I down a XX% to C&I hoping your a Or of comments also out also improvement getting I driving And more branch? per year-over-year more in receivables you per of productivity in are little branch? growth each what's alluded on drill

Micah Conrad

I think combination a it's both. of really

strength have in growth our We and profit.

at the our same We branches point also year-over-year. reduced

our experience does cases. drive that hybrid about the but And many these that only initiatives has it's Doug before talked just to using central efficiencies model efficient. and that be and customer we've So to just with also been efficiencies more it our really and better drives respect talking in not about operations

just of two. multiplication those So this function lower really and higher count the branch and a lower of is branches, profit

Operator

next Our Stephens. Vincent line of question the Caintic from of comes

Vincent Caintic

up Just risk-adjusted a discussion about margin. follow on the

like credit with kind So it and there's kind same about of the wondering we're for think there I thought any fourth quarter up a the bracket a just policy had optimizing you improving just goes box rate, opening the and box? credit I a there? or carry credit forward, any think when you recession, by just XXXX. loss X% margins, is if that better really risk-adjusted you. risk-adjusted loss that, of is good I'm loss thinking X% sort margins rate to and of I'm Thank thoughts the otherwise Or than to rate it if getting keeping sort of in if so And

Micah Conrad

XXXX I'll the piece, can. take at piece I'll and Vince take I one time, if So a

fourth So in we're what for and terms Keep like vis-à-vis XXXX in other just of this seasonal. in charge-offs our mind number. that thinking are business just the things delinquency quarter

us, the laid of one long-term. So maximize That better quarter in and optimize charge-offs running Fourth our I that to fourth our pretty the of out. can be quarter our X% tend simply a too. think returns does we quarter to out business. level losses we operating which framework for for We and is would the at X% caution expectation it's taking you risk-adjusted charge-off good just optimal over the

XXXX, of I growth In has been improvement. of loss a driver moderating, mentioned secured that is terms our

growth XXXX. to that X% it's we fact, improvement we've from the In moderating. of have seen as down the Secured rates last probably loss in three is the over go biggest X% driver X.X%, to years loss

So a to catalyst meaningful it's expect do be improvement been for credit it forward don’t not as catalyst we going much a meaningful not for also be but the only expect that growth, we past. in as to

us at metrics look our points. you of of to to the The be XX XX XX XX, charge-offs of expect things X%. said, XXXX these lower flat X% combination in that leads all delinquency plus strategic to that range to down So basis part

Doug Shulman

the distribution, as like we they do want, what about nationwide have different we let with near we keep are returns think really serving and focused profile don't opening something do box. to them the add to would funding just marketing there's division box, very value the advantage accretive What where or customers be always who And we're customers them? where so, do us opening asked business, of in We add, And would customers to unique who would manage we that, work. product current credit me else you credit never our prime to because manage we're And need, competitive can to our customers. a do and able if our so underwriting do to don't on there have be access combination those to looking for that opportunities. to come of with expert

the return franchise. see content you credit future content, we think hurdles, And that customers and our or meet so return the There some loss valuable meet we se the maybe movement enhance hurdles think would there opening is of that would in way by per and would not where that loss product those potential the have our would be would different are box. that about in to and this the that's products modifications

Operator

line Coffey Wedbush. of Henry Our from next question the of comes

Henry Coffey

a I XX% already D.C. has or kind also rather items, that are in even process people Trump cap. would for opportunity like the good very there as Virginia a are the is a own things. Are in John California as equivalent in talking to to big of pointed emphasize we've administration their growth though tell other thinking responsible government job take you is to of a higher responsible them. payday quality doing That's also on isn't up customers lender bill them fix of put what standards opportunity yourself. would something own the you directions? there product? before, cap. that rate also They about completed of these more out, I understand Military for couple And what basically their setting your than some rate convert is to states these enforcing and asked wait are relations call A a CFPB loan

Doug Shulman

to first the look, mean, of Yes, offer vast the time, all, I best highlighted offer. of we that price is already our the majority

loan. And qualify payday loan, OneMain a if take usually so they people OneMain for loan and a

So states. fine with rates, uncapped regulated, not to the moving a know, its usually California. there's activities, have that or rates state to is rates, our not end some but credit we it mirrors and supportive if was there's meet bunch low it's a XX% of some There's as California. one said, in There's running a the were a box we publicly side were payday a like of of Virginia medium state on are cap universe people other, it, state-by-state. that to then bill broad you on lot we're already and have depend because of it high With

to tries right, tries government which to treat that Where a coming sure bank to of out make people that we is of customer culture department roots. story, have active compliance lender be our that a relations an understand has transparent, tries responsible the

the our so we're us. under the driving But And regulatory business we way are and about it feel opportunities good these kind of pretty think right framework. now I current all for

the not. get on we, we'll engaged depending states As dynamics, interested or get

Henry Coffey

down the lot There's what everyone moderate number and thought growth. you has XX%, implications is profitability And you know growth growth, asking your What so profitability for room number, the in terms is of a tweak maybe of the opposite more growth here. of to of shift? much thought about I right more from that higher? Have but the impact view are on XX% the growth? about obviously you been more that So

Doug Shulman

good long We're the serve to I've run. trying through we to company the for trying business. in our and it think who through We're all customers run meet We're different front who front to and end comes an product experience, of that are We our for use in us them, levers let's of the our in cycle. well. the customer sure gone excellent the business and we really run people -- about, make installment of we really we're fair let's We're out market how number. about run criteria, isn't make what I we not it that or I will growth. know loan to an at growth looking think I provide say back the think target And I a and once when it. we're And a be about like at well, price growth and so don't broadly trying mean a the them. sure

Operator

comes Our from next the question line Bologna of of Giuliano BTIG.

Giuliano Bologna

kind Are customer of I or areas mix competition Just a there you're the or of any less looking competition it driving that or guess mix. more equation? really choice seeing competition at the kind more -- any be any business is might Or shift? where of

Doug Shulman

we lending, lot think again secured have pop our creates seen elsewhere. not specifically mean, of -- your lending, if haven't mix in a it we I which around competitive model business real We secured a our out is question advantage

would competition affect of we we So in any that kind do. shift market haven't seen what

Giuliano Bologna

over take the Are December. it’d down given issue notes maturities debt X.XX% really whether don't due balance come to to side near debt any highly now? debt other turning some deal any those kind of notes be really kind can be of of obviously kind there you opportunities costs, billion in to accretive or but then have And that $X to out kind do an have able of term securitization where you of doing the of you taking sheet,

Micah Conrad

on and mind our is that that the Yes, certainly closest near-term something our radar is maturity.

in one, other unsecured We coming have XXXX. another

an XXXX with X.XX% blended $X billion, ABS's debt. it But in is of know staggered are runoff you both, of and terms As that receivables maturities sort in is structures. more maturity as those

you run $X focus to a a to to to issue the billion program. balanced long-term $X We're we going talked fund business. before, and billion funding we As annually

overall to that So we of the about a of those of funding evaluating as timing and doing as think redemption function just maturities, about our strategy. the impact trade-offs so economic we think

our to share on but things certainly It radar. we'll updated conclusive point it's as have at develop. So don't this you anything keep

Giuliano Bologna

of guess terms that ahead But through guys rates 'XX, get 'XX in And obviously, fiscal we’d a I terms bit kind fiscal aware a little in specifically for forward expense of spending? little to this the go any is advance you just operating in of underwriting investment investments are bit be there flowing quarter.

Micah Conrad

nothing the call investment for the OpEx the years would discipline I here, from the efficiencies and that around and adding think would quarter-to-quarter. creating in move every we say managing come will we're we day about the our that. in I our out we mean Yes, investments of out at Again, We next Investor plans specifically. timing few that our laid Day. business

to for continue framework provided a as decreasing expect see So OpEx that growth. we calculated certainly it, annual but growth OpEx our the we've strategic to ratio annual all we've and within receivables

those So things. it's of function two a really

Operator

earnings at XXXX today's And does thank and conference OneMain wonderful day. and a Financial call. you, XXXX time and your conclude year Please fourth gentlemen. fiscal This ladies have lines quarter disconnect this

OneMain (OMF) 11 Feb 202019 Q4 Earnings call transcript