OMF - Earnings call transcript Q3 2020

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Operator

Welcome to the OneMain Financial’s Third Quarter 2020 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 open 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 third of you X our non-GAAP forward-looking the X presentation, the found disclosures Relations of website.

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

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

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

the me over Doug. to turn let call So now

Doug Shulman

Thanks, Kathryn, and good morning, everyone.

our and quarter, employees uncertainty. During we safe of to during the that are our the third customers needs period this we ensure continue meet that of

months enabled support times. to innovate and pandemic unprecedented over our historical performance our actions with conservative taken these effectively Our the has our to us the and strong to business underwriting during the operating sheet, combined and evolve led through and serve customers prudent last XX balance strategically we've

our financial XX business. improved net of quarter And and across more basis results year-over-year by than core our reflected strength Both last flat essentially and delinquencies demonstrated with our the points. third year. this charge-offs early remained Our drivers late-stage

we've undertaken of by addition, improved In combination return growth of about the a portfolio supported and the $XX million. to initiatives sequential customer demand our

adjusted year's Our the sequentially last for income quarter, third over and was a improvement quarter. XX% a million increase C&I significant net $XXX

sequentially said customers run generation, capital of in in I've stakeholders. per increase our diluted underscored advanced based our and share. of before, and to credit our of growth uncertainties serve better. reserves. is to quarter. adjusted our reserves advantage our changes We capital C&I downturn analytics for in while year's adjusted continue use income the data Data including loss business and income proprietary continue to quarterly the to This QX, our million, portfolio to our excluding our last net was considerable up loan As XX% our generation of we compared loan in This on loan capital strength were our of stability the net C&I Since reflects third unchanged $XXX to confident business. ability about equivalent X% generation underwriting, loss this foundational across company, value our significant minimum optimize our a all initiatives to and analytics driving XX% with company. for our support our by the dividend also advanced to We to navigate remain $X.XX be

Most industry the thousand learning continues intelligence underwriting. application. more models recently, to refined we as works classification that borrower machine and into a best-in-class each data points additional artificial inputs which the in in underwriting Our incorporate utilize than

precision. geographic also We improved

driven of this nature this to managing recession, lending us surgical uneven approach while continue pandemic prudently allows the risks. to Americans Given hardworking our

in our has portfolio Annual equity that months, income a our XX% XX% adjusting requirements, only requirements. Revolving a reflecting of activity around our income recently industries, business using and continues geographies. the changes XX% early originate have further hurdle. increasing underwriting greater been to the for payment industries factors leisure declined net refined the to to March. loans refined March, quarter, our as levels impact We hospitality. only about from as conservative that debt recession And year higher return and levels verification strong return our loans beginning third health assumptions increased back appropriately which to travel, levels. our such collateral an end By at In XX% have underwritten our the and Since annual that underwriting XXXX-XXXX XX% stress we We certain lending, in underwriting XXXX-XXXX the followed in in from maintain of further and unsecured return almost we've of income about been portfolio trends scenario, disposable recession and adjust income on we the remains customer to to in continue high-risk included forbearance usual Assistance stress Borrower for than cutting returned have lower and risk credit the certain hurdles XXXX standard by months implemented to adding other the of enrollments lenders. implemented third loss across of on and indebtedness out meet style We of that stability. posture base. Cash customer quarter, recent equity strong be levels. underwriting our that the meet shown

and and Given the unemployment trends trends greater industry portfolio into we geography. by visibility, our gained have

only increase seen X% health sectors pre-pandemic September. to X% have X.X% saw some about education unemployment leisure Other XX% about about hospitality to While in increase from pre-pandemic about and from and September. in unemployment like like services industries

monitor Borrower to consumer industry led margins. initial by sentiment, credit adjust into geography, and underwriting well at continue to performance key the closely and trends account including us claims, our also Assistance take insights other These We as trends. as our selectively and

assumptions. the certain recessionary industries Specifically, low-risk reduced assumptions original we loss our below levels XXXX-XXXX peak for to

industries. as XXXX-XXXX scenario. still continue profitable for levels assuming and particular we And revised are said, loss still all high-risk recessionary severe even are be in no our the for XXXX-XXXX regardless, industries, type to assumptions assume low-risk While loans XXXX above underwritten are across as recession. these XXXX industries to That peak a loss we longer levels expectations

Given in monitoring that economic in remains hypervigilant as and continue the emerges. uncertainty our make we'll adjustments to remain we the outlook, data new

focused As our customers I've are discussed before, we well. on intensely serving

analytics Our uncertain we us during continued us ways data innovation enabled XX allowed engage our enhance our them. the to have comprehensive over times. in months has provide customers the last which to and serve these to and support And

have in started and in two-way we capabilities launched our As We digital XXXX, accelerated tools, including chat since with new customers. digital and you XXXX. our co-browsing video, know, investments building early

During $XX significant the digitally, XX loans third over year. prior quarter, invested our over experience. were of enhancing a months, technology about last customer processes the We've million versus and and the XX% closed optimizing increase

reminder, of their online. initiated have borrowers over application XX% prospective As always our a

Now can of borrowers accelerating we into without a are the remotely also branch. portion close who ever coming

that we way is customers evolve change. our philosophy serve to preferences as the we their need Our

digital automated and pay of similar that very verification, credit loans performance with or applications, to over same whether processes, All underwriting our originations closed ability in of go assessment detailed online, regardless and a member, is early and completed to including our best-in-class of OneMain of in-person decisioning. team a discussion centralized they the the through are phone, trending budgeting, person. income data The

their anticipate Our can and potential and address our priorities. made advancements financial prospects data current needs customers innovation us customer circumstances the have and of suit offerings best have enabled The and how efforts that better in understand we better base. on credit the we've and focused our of also segment analytics and to types will

We loan the borrowers and will $X,XXX. average offered traditionally approach. with product has option. been very manner, to These a provide about response products in who unsecured enter were a Last utilizing only small-dollar segments learn we secured loans always customer quarter, a new launched new initial strong. a To-date, or loan prudent another test

more During few have being still excited booking early but customer we able of customers. and last increase example of we've reach three-fold new across the adding innovating more about their this testing is, our to offer to segment. the but rate in support and This more the we're and loans testing, serve some grows, of It's that be prospect future. able credit increase will to the to as and These how we're history customers. one reach likely are products customers seen larger a months we do, in

and are data Our prime in testing FICO XXX for customers analytics also price to driving the our range. XXX

of lower rate a today, in segment. conversion is in meaningfully our than of this those core our serve we customers While number customers range that

the monitored an pandemic, credit since we've of in the start landscape we've segment. this seen As opportunity the competitive

in lean this suggests engage this our lower loss data price capital and the and testing credit, by that are running content the pricing of booking and competitive we time on higher right this tests more strength felt us we with the and our rates. for But to this Given comfort run was clearly offset analysis and test serve customer will initiative. better. to more still more we liquidity have to that than Early be

In new better long-term customer With as over it over value attract, to customer Micah. expand for base, turn we'll doing let well about excited We and that as shareholders. to we're time. serve, products are the testing base retain that, drive core me to our so, our continue

Micah Conrad

for performance originations, great operating Thanks, We and quarters. had Doug, setting quarter expense, up in strong and a continued financial strength credit good morning, everyone. coming the improving us lower with

diluted third basis, quarter billion, We year, $X.XX third XX% an $XXX from per are adjusted share up million of or the third Originations million down but On $X.XX $X.X income XX% in per $XXX sequentially. last we earned diluted in quarter. the for quarter of net or were the C&I share.

with and slightly $XX.X originations can As originations XXXX third were from customer billion, flat of only year's targeted for reflecting were improvement receivables seen roughly up Slide quarter. from down the Ending our September million X, the improvements quarter’s you the secured, production in demand throughout we've year-over-year. quarter net versus initiatives. sequentially and $XX quarter X% in last XX% down see

two continue, the the year $X.X our up prior Interest last reflecting built to X% the late-stage income for was X% billion, prior portfolio to from our primarily liquidity million, was average current in the quarter at expense year. origination XX points Assuming we period. defensive quarter, in increase basis receivables debt higher, below compared position in the we months. expect billion up versus year Yield prior $XX.X over the the balances billion reflecting around higher end trends as third average just reflecting $XXX a the percentage was last six year, Interest year-over-year the $X.X improvement delinquency. year, points

billion of coupon X%. and low a quarter, billion December of the record five-year $X revolving issued $X bonds X.XX% of we During XXXX ABS at retired

in includes from year other claims the lower shorter million expense April's IUI adjusted reserves a quarter, peak. revenue mainly remain we trend duration of $XXX in both million claims the slightly have a This claims to and involuntary result below than moderated anticipated we've $X expected As generally accordingly. driven tracks expense lower prior was quarter insurance quarter. million and actions, products, Total Policyholder reserves third quarter, September our million third elevated, in million have related expense And than This by was revenue, our million to these expectations led insurance. $XX the while decrease IUI claims interest our the XX% which and significantly including $XX quarter claims our down expect claims optional sequentially. with to and originally payments unemployment in for down levels. experienced $XX down year-over-year quarter, benefits bit third third $XX originations. product-related fourth claims

to current expense quarter trends we expect around would trend fourth million. continue, $XX Assuming

in quarter. performance year's essentially X.X% charge-offs were Let's move credit quarter. on the flat third last our Net with to

Our line increased is points sequential XX delinquency quarter. September the points third X.XX%. with from to XX higher in was levels. XX second XX up delinquency down quarter. This XX from increase typically historically was than a moderately we rate the October's but XX year-over-year, to low trending was basis see basis point basis to The second

than payment XX% Borrower above more normal enrolled have XXXX during shown rate, Assistance and average September's quarter quarter. was interest Borrower third customers to who better are have we of the Slide Assistance the X.X% X.X%. As remained levels also than full those Cash enrollments including vintage. year quarter. payments in historical second strong And our principal the performing importantly, XX, on returned in the

remain we unchanged which portfolio, our Given net resulting reserve, strong XXXX. X% and us and billion payment now of the to these full the to the loss be for X.X%, level $X.X was trends year around in down charge-offs our expect from the That loan delinquency for brings in quarter.

Sitting confident adequacy Our our remained and the our stable portfolio today, of are resilience rate here at reserves. of the reserve XX.X%. we in

one strong we rate stimulus in of at develop continue economic expect terms see to downturn typically of portfolio, and from seen of not the We we just markets our and further have than inputs and when and continue today. from different have sources mentioned, payments to delinquency emergence in the of said, in of we portfolio delinquency very That a we both government. recovery economic As an markets, continued in recovery absence use the our in emerged. labor pace pace to number I the federal expect apply including but assumptions reserves, the would a effects slower the performance conservative labor see

last receivables let's the receivables. billion $X.X lower least in period to to Year-to-date cash, full These period we end and on continued XXXX With of the sources maturities below last down year's versus of capacity and undrawn upcoming move to XX% that, year, than XXXX and at of $X.X expense the through operating quarter we XXXX quarter’s operations At of X.X% expense X% capital Third compared sheet. about had markets. without million liquidity same in billion operating on the provide billion track $X.X and come year quarter, cover sufficient available same last X.X% third accessing company unencumbered originations, year. the of was is remain $XXX to balance levels. conduit all our

X.X. Our leverage was ratio third quarter

and between a end the of XXXX range four which our lower to reminder finish as six. X.X X.X, target to towards expect is We of

highlights quarter, four addition coverage reserves through portfolio times have to thus manner, our have billion capital, losses. in Our assets, after-tax in includes in develop the on this achieved the the XXXX far business and the X.X% total equal This was The has to at to to which our equity tangible adjusted strong and adjusted is growth end return highlighted return approximately quarter. our our we we enhance reserves, allowed Slide loss of after-tax $X.X the and we our a we our today, continue us objectives. that generation disciplined these of year maintain XX confidence was in which performance return the of initiatives is invest and our which capital shareholders. Consistent business, reflects the raising our quarterly minimum increase in second dividend quarterly generation last per capital minimum This position considerable to by the capital conservative are capital XX% business. sustainable the to $X.XX the with year to to continued this, in share. supports power our

We will consistent first quarter, the I'll turn over to that, minimum and previous returns continue the third to guidance. evaluate back cadence Doug. call With every above capital and with the

Doug Shulman

OneMain Micah. leave To other Thanks, discussion our to I'd close this. any like with lender. you is consumer today, unlike

manner analytics. balance over in able conservative and This better to through I'll has of result, effective coverage, a growth flexibility customers, to decades Our our We of joining as enables a value and precise me With business powerful business in sheet let And call to manage customers turn questions. data and as capital the serve generation. and well underwrite economic and OneMain to optimize with maintain changing creation portfolio for the and combined proprietary our all for model and fortress conditions. enables thank that for as returns continuity, that, capital business experience shareholders. a and data us us operator our you invest drive been serve

Operator

comes [Operator Instructions] open now floor The first line Kaye is Michael Fargo. question from of the for Our of you. Thank Wells questions.

Michael Kaye

lastly your up to do credit X% you where lagging good that trends I And you rate, color up is the more to to year-over-year appetite look as on minus wanted back coming Hi growth improvement? provide demand origination does the to expect you box open a further could where see it how and see and into September XXXX? customer strongest and run guys, morning. it's you if good match or

Doug Shulman

up What a Doug saw in the we of manage Thanks Hey, it's was Michael. say has environment. suppressed lot there's April increase. Customer and still the nice to continue uncertainty demand very for is in Yes. we since steadily a question. would here. conservatively. I it And picked

I see down it's improving, been Demand is X% and talked think demand. say. the offset some about. but growth able experience still that's customer We've to tough that year-on-year to with I that initiatives

digital Our behind the also to originations, we've our business. continued scenes optimize

customers. We new offers pre-qualified present for have

earlier And I dynamic loans and our tuning. routing been talked innovations have testing We and then, prime. that new we've like products about small-dollar

But we're now. box, for business. credit to conservative the the Regarding tune our is philosophy staying

out is positioned COVID are once for we're we growth a and of us. So behind recession

So pleased for the early to what's offset it's still year still suppressed customers. demand we've they're is creating I and still And value some we're with been going way a driving am what we in say environment. I business would uncertainty the have from too say, I happen think to because customers. the able next little to

Michael Kaye

Okay. That's helpful.

have potential Second maybe and a offense or new company? capabilities the portfolio is any perhaps to of a you a competitor here, lot of for buying is from on distressed capital maybe, clearly some sort acquiring there question liquidity, go opportunities

Doug Shulman

are in looking market Yes, we the opportunistically.

at look would I a nothing imminent. would get tell sense. you most we that make think there's and the What platforms of portfolios I

our good team do products see, As a you and ourselves, in platform got we're can think that. to investing runway we've and our and we very

sure do something. we imminent. accretive, the right for see right nothing we'll so there's if But And opportunity now that's

Michael Kaye

you. Thank Okay.

Operator

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

Kathryn Miller

on Kevin your line is mute.

Doug Shulman

you. hear can't we Kevin,

Kevin Barker

you I'm me? Can hear sorry.

Micah Conrad

Yes.

Doug Shulman

hear can now. I Yes,

Kevin Barker

I’m sorry.

from the last standards follow-up seeing incremental from tightening Sorry questions, Michael's spectrum prime given your it few customers broad a that. seeing some Good months, of the Either or – near in clients? morning. potential are where underwriting on customers it are you is of more or just about demand to you

Doug Shulman

Yes, with in and the business been we've in marketing we, central broad-based. and as market been been and to along. There because the position business far stayed pretty pandemic, on big our credit deemed any as the We've were all our it's hasn't because capital serve standouts throughout the spectrum. our of model, able customers

say, we've months. demand the I'd seen a over last uptick across seven, steady So eight the Board in

Kevin Barker

do to like just Okay. pricing the on up uptick your an And you're you amount near a you decent seems firming well. expect think of environment? just in I seen that given It then you've the power given pricing as do yields you mean, are having still also continue? term Or environment.

Micah Conrad

Yes, It’s morning. Kevin, delinquencies. We our our impact really at year-over-year of good is almost look Micah. yield as yield explained XX the by entirely plus

reverse As we'll when you a loan XX plus incomes. remember reaches

So it's provide when lower going those to to yield. are year-over-year, stability

of pricing, the very seven terms for six, quarters. In very, stable been it's coupon, last and APR at least

Kevin Barker

to stable in And environment view. that Is seems it fairly competitive your the right?

Doug Shulman

Well different a it's question.

Micah Conrad

It you to… do different Doug is a question. want

Doug Shulman

competitors some Yes. out mean, sheets we did. saw I pull had who balance look, than weaker we

coming I experience of work do in. of think being more to serve is a able this some are customers, competitors our our lot think At on some our giving and products, customer new an I digital back of initiatives edge. point us

so up have. at options depending price price on people see on on moves appropriately may the some pick in the margin And We part. that market. depending huge I don't we'll our demand,

Kevin Barker

for my taking thank Yes, questions. you

Micah Conrad

Thanks.

Operator

Our line next from of of comes question Shane JPMorgan. Rick the

Rick Shane

Good question. taking thanks my for morning guys. And

Doug Shulman

Good morning.

Rick Shane

innovation talking going we're think forward, more that you are When in facing going change how that when ways potentially company comments in that And what terms term about you March. we forward, think of context longer innovating think I the were you and profitability? and the your in by the many environment? normal learned to evolving. or what about we return seeing starting evolution tactical going And of a started the you you business Doug, about impacts to company that do are long-term lessons the think in when

Doug Shulman

proven included and we pandemic the and that's strategy a to ago, well. opportunity and include Yes, do our our to to something And it's that distribution be can great set said really channels a a pass a Look, a think expanding which an question. I before that I've gave digital we channel. want year half us customers out

so And loans the forward, I going or of digitally, customers are going the originating phone, in our person. have or think option on

opportunity for customer do just before, us creates that experience, especially that the younger the have for originations, digital not us to think a as in there's might growth door Around all life for things not chat come I ability the – normalize. along cycle. customers it's

You've got a question us. for

got question You've insurance product. about a your

with in got us, it's a setting that a co-browsing with customers, You've or And the the video, tools, to expanding I our around set and really part a going perfecting question or about using of be or on very forward. context up think, our chat, with customers chats, broader whether relationship backbone payment focused we're of that'll products. your collection then model new

small loan does $X,XXX loan, So an dollar loan. a a $X,XXX content door at point just more give brings lower And customers monthly lower it going products didn't product, want development. risk $X,XXX, because smaller give or $X,XXX product, we smaller the them either if look a either value take at unsecured should option It the a a $X,XXX a loan. of to it's that Over to customer loan, That's somewhat many lower payment. or the a lost but what at a it's can loan some be they it's loan graduate the is the at in lifetime because versus then in time are customers you one weren't you larger we those into margin.

business in our I that distribution distribution product. branch this beyond just beyond when just on think time and for So really and has obviously the and difficult our it's original employees, future, the great doubled products for for a we're having in is a future customers, the taking about a our down which prospects country time

of backend have under whenever a and we'll turn, gets this, the economy the the takes on think control virus we a trajectory. better So growth

Rick Shane

terms part like be It terms this of the engagement sounds ways look time, learned a digitally, of is customer that big is of there's a from consultative a it. not just function be helpful. it. in going interacting in lot but And Got in to again, challenging of a lot It's sort origination, actually of it. but to

Doug Shulman

exactly. no, Yes,

I can price customer, on product in value a and them having valuable think great ours how to time to has focus they and sure with it's focused how super giving we to been more met, do our on really really and them and both products OneMain, a of make what to meet we accelerate where we at want opportunity look can this a at We're to customer. add do customer, them they providing customers, focus want, be fair value it's service given us an that.

Rick Shane

thank so this you for morning. questions Hey, much taking my

Doug Shulman

Yes, question. the thanks for

Operator

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

Moshe Orenbuch

And thanks Great, of progression. about to the very kind bit also little a much. Wanted talk quarter. origination excellent

like it in pretty – looks strong some numbers very strong Some September.

you there's actual giving As stimulus think think not, out, months, that out or be build things How and origination if of out, of a and environment those affect could September ability as coming the lot there's competitive without forecast, of level? factors the willingness you over specific do kind emergence but OneMain’s you think to the coming a both the on losses.

Doug Shulman

the as that got it's of are when quickly still when getting if to a that and the vaccine don't I country there's crystal when changes I – total a have factors, changes. And environment to will we across Yes. business and better. kind ball. to I'd is when say and normal, have that have we if macro agile and of things. incrementally factors good and We our question. the that of opposed everyone. We've for mean, we as going make a say an to view a need election and come number, another are kind Look affect There Moshe need returns we stimulus, number stay a nimble business,

stability, but assuming of assumptions much have XXXX box I that So, got a tracking now tightened above are are industries high-risk loss seen where less haven't stress. to you in in in low-risk back now industries. never we we're little industries a XXXX, down, But XXXX, credit our high-risk XXXX, still in where examples and some stress, gave

going bars the we'll be sentiment, looking our I we do macro things. credit We'll it way. claims, the our factors, at looking be assistance, credit we tweak box box to at tweaking the at the we unemployment along of it looking all along as think losses, we're at at we be look be look way, look And by sorts delinquencies, our we state, by we look consumer do industry. at we we'll at

so, of And order the nimble. just to to we're going think, I have day is stay the

Some when to what see and big we'll events, they adjust of happen, we'll means these external consumers. it

keep some our right it's And to all said, that I loans As it's have, consumers going an revolving of of that whether how strong it. debt whether on I'm quite it's income, is confident to the a eye now, whether their they income, much government stimulus. we're just

of you I evolve, conservative and where is see some pull feel guidance, uncertainty more the up. and we we clears but we wish confident I back and could were as what now. our early would give right we I if can But pivot is more things again, to So more say grow quickly bias

Moshe Orenbuch

thanks. Great,

follow-up, both you've you that smaller Just reasons, was are regular a obviously, sort had concerns general, had of of a preference loans shows know And as earnings a confidence from return capital that raising. the regular I a number in congrats The standpoint, on in dividend, of and installment for it for dividends, said to X%, the you investors feels be see as and given, earning you'd XXXX a big I with likely less base that But mean, down level. like money. one receivables special.

XX% your if that replacing share some thought that kind there of to didn't the using sort of to, have company repurchase XXXX. of authorization? grow will, So Is you X% almost in you with

Doug Shulman

quarter, a sticking enhancing dividend We've Every we're that we with first quarter gives look returns. evaluate capital Yes, yield. capital six people third our nice quarter, Moshe We've got to minimum done allocation with a framework. dividend because don't which we're it. buybacks going think other We did that for do we for We the in will we year. we'll a preference quarter discussion reason why now and early that will think halted Board about though, the have and stop. Every some a dividend. see times, have those excess

never, all forward, capital forms our going going of say never So returns bias to we're but dividends. consider is

Moshe Orenbuch

Got it. much. Thanks very

Operator

Next question of RBC Capital. Lee comes from Kenneth

Kenneth Lee

taking for question. thanks my Hi,

macro previous a the level, could Thanks. dividend Just given going gives on Just quarterly minimum At that that versus a brief to mix the on coverage, just whether what dividend you higher the further flesh forward? is comfort factors. just just wondering wondering you follow-up if it any increase out question. other

Micah Conrad

this Thanks that Ken, take for Thank you. Good the Micah. one. question. is I'll hey Yes, morning.

I felt think quarter, our not saw through regular, when scenarios us the that. beyond very pretty really come comfortable factors, down go even increased where we XXXX comfortable would it the many it's macro very, that maintaining And hard, we to simulation. this we process with of stress combination It's to really, in up given the with through say book the testing comes ability for we're respect with we that of too we business, think hard ultimately of book cover generation, XXXX, stressing to hard what that. and really dividend went capital not sort well our capital we minimum in I I there's $X.XX. a the can with our really a stress generation will this but

Kenneth Lee

upon a Got you wondering the trend Thanks. And think you. have, year, I factors at just if abnormal in of for follow-up kind delinquency remarks, have Realize that delinquency the rates expectations this how update pattern. if any one all then seasonal Very may. there's of given could touched the rest on the play. helpful. normal prepared I rates just other And

Micah Conrad

Sure.

we've emerge is I short I over bit a sequential second But quarter, of going we're time of seasonal. curve early to as answer number still the So, are said, seeing times, now. also loss into how our to talk what and think, tell. respect on a question to little to is the about very third I’ll fourth quarter With it's kind think, XXXX, patterns too delinquency,

are But keep quarter and third delinquency in typical lowest those in off quarter ever about coming the increase. a our is the very to which mentioned the year. seen XX delinquency We June, I X.XX% very, history. We in the points were to XX mind, levels. As prepared XX we've up from in remarks XX basis sequential second XX the on was well printed this

that would – I into consideration. that into keep So take always

year. months for at in that the Act our As delinquency. line that heading and kind trend losses quarter with impacts levels quarter post bit support would macro We've things again, what for strong things through the other rates third delinquency quarter expiration environment portfolio, And the see to unemployment below delinquency in our saw next trends wise CARES expect also XXXX and are quarter of roll sets second are little credit some Keep emerged where we've looking of is in minute, towards we just kind of October, normalization the is and unusually and this print a are last generally right. we have on payment of October the And normally mind And backing strong up fourth specifically. and over look first seen performance delinquency in six you up what of going October. September. seen in not enhanced a to and at the

whatever at us to But continue the in early absent persist to higher about conservative might talked levels expect any reserving levels, We've tell at a We future unemployment reserves now. see for and if bit we we're impact a right. with too, our in feel adequately little some XXXX, taken XXXX. approach come too would stimulus. So reserved to

Kenneth Lee

Very I color. appreciate again. Thanks the helpful.

Micah Conrad

Sure.

Operator

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

Vincent Caintic

Good Thanks. morning.

on Just delinquencies was to there's the understand side, I the year-over-year elevated this to as if from questions. opposite wondering there and strong and the due maybe asset side, the other any yield But reserve you interest that going just on been on on And releases and was a But increase going loan quarter up it's well just in follow-ups prior very quarter, still quick some further particularly from result the the that? so initiatives fairly there dollar taking impact this the as market are I'm actually prime? drivers side. any small

Micah Conrad

That's question, good And good morning Sure. a Micah. it’s Vince.

prior on we were quarter this yield. third last quarters to say at around the look XXXX, let's quarter, you four If XX.X% just

So certainly the was supported delinquency by numbers.

yield. of basis that’s trends over XX.X%. remained XX really when it $XX book yield an a mentioned which XX was while increase have move time. side plus move, With the stable points book, that the entirety in our but Kevin respect relatively in takes a quarter-over-quarter and through significant question coupons to our for It's down Our the impact important represented an by the coupons, to factor pretty around origination to certainly I origination asked also billion the

loans the product, would nature because a small wasn't the yields. testing it of the I certainly the prime in impact different of margin, bit – price dollar certainly a APR the has but our different of So an just size little type on say and

Vincent Caintic

very there made Thank can you question were changes maybe you. quarter. assumption us macro helpful. just this reserve quarter, but follow-up a the one, That's or second, as same you. any Thank that Okay. that And you earlier update if from it's if last if

Micah Conrad

you from reserve as the quarter-over-quarter. mean, in flat I confident adequacy, sure. can Yes, remained it see our we're

to We months. also over at inputs assumed loss few are lay sources. economic base but on materially last what what is from say the in a similar which QX markets, talked we number in I we've our assumptions improvements forecast. about of using quarter, our than pace We the slower seen have those labor top would second continued a of

impacts assumed place. currently stimulus not what's We positive have any beyond direct, of in

Vincent Caintic

much. very you Thank Okay.

Micah Conrad

Vince. Thanks,

Operator

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

John Hecht

guys, and congratulations morning a Good good on quarter.

Doug Shulman

Good morning John.

John Hecht

somewhat stress level. stressed asked and don't clearly for are But the environment. of allowance think answered. I reflect been them mean, because guys patterns it's one Mic clearly your a adequately have a your a about then I and of environment delinquency reserved have I lot question just

So And offs looking at two, I'm wondering, is on be be that would allowance some I it you'll one. signals growth you of of for factors, fair to level your near term, where guess to number one. just positioned? think is the what or a the reconsider plus based Is number number minus provisioning questions it is rate charge for to couple you allow this

Micah Conrad

a that a time. we And available just every It's Sure. have at John. quarter we as uncertain evaluate standpoint, And whatever from process good very you know, a question, environment. it's information

base were So well, XXXX the with positive that’s charge we they quarter consistent our or could tailwind the are starting the be continues, could felt seeing the X.X as impact But positive certainly good a that recovery we into forward lead are delinquency trends reserves. reserves, which that with times, stimulus and headwind get roughly a a going off point obviously about what given for reserve a the unemployment against To our increased winter months on coverage, were as could if slower we very, have is a point, flat. more where your any we side, we reserves to very the on saw reserve. in other second

it’s that So the all move at to there, to continue evaluate hard front but on just be basis given in point. future everything we’ll to really out a we’ve uncertainty us specific forward of quarterly

John Hecht

much. very Thanks Great.

Micah Conrad

Thanks, John.

Operator

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

John Rowan

Good morning guys.

Micah Conrad

Good morning.

John Rowan

the not planning are one next taxes unemployment given benefits withholding for that the federal unemployment or question. quick any benefits? states you season asymmetric Just federal of Are from some tax of from year these type

Micah Conrad

this mean, we'll specific at John the to it’s on closer I Nothing question. quarter, a point. a that. we view first good have once get

tend receivables impacts positive behavior. quarter. bit we But do will have more Customers borrowing impact delinquency a that nothing think way. It impact to their see also I an in yet. in the our typically first our on tax a cash do little season having

keep I situation, sure. kind in here. mode think we're of the we'll And for on eye though, quarter-by-quarter a an

John Rowan

Okay, thank you.

Micah Conrad

Thanks, John.

Operator

comes of question America. Hammond the Mark next from of line of Our Bank

Mark Hammond

it’ll as in end the a choose thoughtful and OneMain you're And fours. Hey, and the group reason. said, year, on and so hi, for leverage, leverage you low times a Kathryn, Doug, the Micah as has end six high trended lower,

may So strategy, to end what would range? your that all to event go six of you pursue high the that choice, times, cause leverage the

Doug Shulman

what be range? to increase would Mark is our leverage would to – what the that view question, our our

Mark Hammond

Right, been operating that… in you've

Doug Shulman

that At level?

Mark Hammond

to low that And high? times? of end the and would six could you that? That Or go get would choose to what range up cause why what

Micah Conrad

think target pretty seven. consistent long-term been to think, operate And strategic four We was that we necessarily we've Mark. provided, be at us. pre-CECL six. to I within range we five be to along don't that's for we've the been range we or I Yes, coming that say would seek seek at a

us. a good strong as quarter, value That's of see also the vernacular. capital run and materials. evaluate for every the very four of lot Now, our for to XX under We creation to And create place six, new think business. our leverage that's And a shareholders. Page we returns on I positive a you capital

see from have move and two some of materials us are six specific those the as any and around move specifically. to So will going that deck things move what to back us don't might forth, in you range on quarter-to-quarter. I from our comments

Mark Hammond

it's And just and product. Mic. Did the other on any that small process dollar talk thanks, about particular product, the then follow-up right, products? if All you of underwriting different a than your

Doug Shulman

up it's very at hallmarks – the member to this of originates budgeting I'd conversation we're branch process, through our central their with someone still team And it. member, go of digitally underwriting, testing income, the process same a whether having team member underwriting emphasize ends verification, their and It’s all same income, the disposable point. a it's a much net –

income, a means the with have to underwriting and kind an out data go advantages of at All at which as do looking have of having distribution the is a ability what a make repay. we they more have cash to they disposable net end figure leftover not conversation the a out sure system, income, points, include budget which and big customer, can products the all we that the run just One learn hallmarks across the nationwide, we're we of we whole roll underwriting, got tests, network. we've before our broadly we

Mark Hammond

Perfect, thanks, Doug.

Operator

And thank conference call. XXXX quarter earnings a Financial’s third Please line you disconnect time OneMain this and wonderful your does at have today's day. this conclude

OneMain (OMF) 27 Oct 202020 Q3 Earnings call transcript