OMF - Earnings call transcript Q2 2021

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Operator

Welcome to OneMain Financial Second Quarter 2021 Earnings Conference Call and Webcast. Hosting the call today from OneMain is Peter Poillon, 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 Peter Poillon.

begin. may You

Peter Poillon

Good us. Nicole. and you thank Thank morning, joining for you, everyone,

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

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

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

remarks from conduct a Chief question-and-answer call this morning our formal we will Shulman, After our remarks, will include Officer; the our session. Chairman Officer. Our and and Financial Doug formal Executive Chief Conrad, Micah conclusion of

Now let me turn to the call over Doug.

Doug Shulman

continue some our will strategic Americans. second joining spend improving appreciate financial realize underway but today. of discussing on performance, majority We Thanks, spend good us will call our wellbeing allow initiatives you us of today's quarter everyone. Peter, the also hardworking to that our morning, and to I time mission the time of of We'll covering the

notable million was $XX quarter in saw and Our second up a continues. resilience continued per latter quarter the more capital, of than Capital the the generation for the well we low earnings C&I XX%. generated half as the the of the year, demonstrates our quarter, for loan economic growth remain strong as quarter, we of million share. resolving well positioned and $X.XX as were quarter record growth receivables losses. recovery $XXX adjusted in model originations In strong we the as business performance prior

credit of underwriting actions months robust continues benefit XX the very of remains Our performance the our to at the the over strong start government unprecedented from the credit capabilities. we and pandemic, proactive implemented that tightening support levels past and

our excellent remainder were to the in early we our is and working the our losses our through as for quarter and in the driven this us of confident closely continue committed began, over would said pandemic as performance analytics feel the year-over-year of sequentially. But difficult channels, year. believe to stay pandemic X.X%, highlighting customers to growth initiatives, X% our declined market, also year-over-year. Second time. the by worth Receivables on growth loan Recall this the across near that X% presentation, We X% continued position longer-term new the that as grew product in within managed credit multiple functions help a waned we them initiatives strengthened. prime our XXXX, we which we focused innovation, we and with higher comparison would our continuation receivables including economy company. to loan was performance overall It's the market growth about book to about refer and in the which than installment strong advanced

have and consumer observed government Fed after of demand in multiple jobless economic the is positive. restrictions, now seeing data the to economic year. since a the personal rates a pandemic And We positive shows stimulus trends we start by are now pickup. those to starting were of uncertainty, Unemployment normalize. results from and started business claims many The and Recent see of recession initiatives. quarter driven up are year consumption packages, sharply we

Importantly, originations each future. in quarter activity the the said, has potential of expect a our of but backdrop the including saw levels. record for high variants. improve our products to with we for we closely June the demand of COVID positive associated monitor strong to We products, month With new pre-pandemic customers product with for for recent will economic in company. is conditions, that resulting rebounded also for suite the resurgence economic near The offer current

Let me elaborate a on that. bit

to on taking X at the because we our I'd that of is actions OneMain. discussed vision future it call If presentation, on the are this quarter guiding touch priorities you Slide the we to and like turn last

that promising of more and Our current to prime help to vision on while and also their to near the income be consumers, services providing lender on other, a one hand progress expenses financial mismatch is they have when and needs a customers products choice the meeting future. the between savings

our our strengths leverage will foundational engagement, enhance our and are near products, leader increase But customer We prime to relationships, also to be of we services, continue suite expanding lending. experiences and the installment in our proprietary to dataset. deepen

will to All with us and future. that the provide will want value of make to do it which more in real customers they likely business

credit several market say near our rollout plans digitally to a past to product with offering target to beginning pleased specifically in be initial of consumer. designed extend this that with prime year the few we remain quarters, discussed the I'm on for Over card, later the tests enabled differentiated, the we months. our next the in

include XXXX, line combine to both deliberate provide lending we and credit full more pilot before The hybrid we get in launch scaling a of rollouts, expanding the to for the a product uptake, of rollout. other loan we expectation coming qualified run which the receivables testing, usage credit further will receivables before and and the product latter with scaling test our financial addition multi-billion-dollar solutions part products, to will our be and will card, even the Once will pilot initial anticipate card a over in a be years. through flexibility that credit customers. product also with our As card characteristics

are value excited really that the our to provide customers. product of it will future the set about We and

also quarter. during of closed Trim We the the on acquisition

process wellbeing on now current and forward in Trim as the the are we Americans. the improving our financial mission of We offering customers to integration loan focus of to look multitude continue of to hardworking solutions our

our investments reported not this our significant Finally, doubt making mentioned expanded occurred would continue without new have receivables pricing the and channels, have that on digital our in size the I There is quarter in digital we well product to as earlier, products no channel. impact innovations in new technology, results. growth positive as a and capabilities we're as

to call Micah, enhanced dividend each first briefly the third like with I'd turn announced combined and on enhanced framework deployment. per strength recognizing this I comment with and Consistent quarter, per to regular our to business, capital dividend our quarter our share previously quarter. of of resilience returns and Before considering a quarterly an over per $X.XX $X.XX share, we the of third which dividend of $X.XX share shareholders established

during will second detail XXX,XXX to continue invest on addition, loans the programmatic bought future take our the repurchase call, in million shares framework our Using the and shareholders. to that, share invest for as second us of to return and and customers that we value me meet quarter. financial capital of In $XX our return the our risk in discussed business With as for position we back through guide, commenced to we allocation total a criteria, the let last the program call you to capital provide over the to quarter. turn Micah the

Micah Conrad

year, our Doug, C&I growth confidence pre-pandemic per us $X.XX diluted the earnings both the excluding us C&I loan gives in and or $XXX or per resulting On to the morning, in as consumer or second year-over-year share coverage. the quarter healthy credit $XX impact allowed diluted $XX outlook continued while $X.XX share expense or loan adjusted in in year. of the reduce That the portfolio compares receivables loss million the of in of million interest $XXX share. quarter. economic $X.XX exceed everyone. $XXX improving diluted of of income COVID-related changes share in The Thanks, or great was and We reserve future generation another reserve million second further up adjusted XXXX. our over earned diluted loss million and second We earned million That sequentially. to good returned last in $XXX which quarter quarter, performance net to performance prior demand Capital quarter declined. million to compares or expectations XX% to levels quarter, we had was reserves In second also by per bills. an basis, $X.XX per in impacted

C&I it accelerating and C&I relevant billion, new in hold loan for ago, earlier, were Doug OneMain. and is metric year. sold Managed receivables up this This We first our the a called as managed important from quarter initiatives. balances plus our the quarter a our year sale by that mentioned reflecting the efficiency of demand included encompasses receivables receivables. service rebounding As books, metric been believe loans of earlier the up of growth that of strong and million $XX.X as full on $XXX that and represents loan balance program consumer we've those X% have our this receivables we've began part we materials our ending the from an by and a originated impact

have we management quarter the million the guidance of in for provided prior $XXX peak on taking benefits claims same average and funds the interest Other and the X.X%. second And loan our we average quarter. expense in X.X% million both cost call, prior expense involuntary $X.X compared whole $XX will sold $XX second ending yield quarter, largely by receivables at year are full last charge second claims expense lower sale included sheet $XXX in the to off ending We flat that period billion metrics. and as ongoing revenue revenue to of we year, million during in higher million insurance the Interest program of that reserves, net million and anticipated. experienced of we one receivables quarter was income balance was second continue back as prior important the was since keep loans during net loans unemployment to this have to the comparisons, reduce the down the quarter in that or to was revenue the maturities. significantly X% to on was yield. statement we're receivables, range net Policy the also versus In are started million $XX of sold level other sale the expect XXXX, and Reiterating year the in million Interest the income extending receivables down continue was while expense consistently offset partially XX% up the the moderated prior to trended slightly equivalents elevated first in XXX the that from pandemic. expense been all from benefit the of our $XX manage holder mind year-over-year. current IUI year of loan we as for claims liability Other and million actions $XX is of year. of high of quarter. loss current exclude claims in as year gain the rates, which report levels our as quarter normalized time quarter,

X review XXXX. quarter second $X.X to and billion our quarter, the We trends. receivable XX% originated up Slide originations to second turn from Let's in

comparable government improved Originations this pre-pandemic continued Importantly, to quarter were quarter as of month as stimulus our to programs and the meaningfully XXXX. economic originations impacts improve. of progressed subsided the essentially period the each conditions flat

differences reached throughout fact, nearly measured good In an we're into for of July. originations, The seeing against the while the billion, provide continue respective each X.X comparable the period. June lays actual how of high quarter. business second below the and of bar growth at shows percentage out the bars in XXXX originations percentages XXXX our each adjusted number in days momentum Slide trended the originations XX periods graphs all-time

originations than X% was were further higher June a So and when than for example, dollar May better improved ended May on you basis from for days that can XXXX while adjusting down performance XXXX. levels. actually business then XX% XXXX, see

our the receivables continues, Assuming XX% economic environment grow current in to to expect we X% by XXXX.

December receivables $XXX receivable XX sale include about by will our serviced We expect home for million partners. sold at of but loan OneMain

credit recent to Let's our through Slide and walk now trends. turn XX

we positive adjustments losses made strong Our and credit year to as improving last economic very performance have combined quarters. stimulus had rounds over conditions a effect on be multiple recent government all continues of delinquency the with and

basis net improvement a second seasonally over record the Second last year. in the XX XX improvement were for historic quarter in modest the After charge-offs X.X%, and set of XXX delinquency rose to point basis basis points XX quarter year-over-year against quarter. point a low XX low first second to a an last X.XX% previous up quarter, days quarter

delinquency XX performance we'll to basis strong XX plus confidence strong continue quarter, down a performance last past X.XX% over of record achieved give remainder points XX to the from for levels the quarters the low in quarter, our the charge year-over-year. second delinquency of that Following The hit XX off two net the us year. see

feel about uncertainty level some expect of year full about outlook be in improvement XXXX the While from net now the great X.X%, significant we expectations beginning and there macro our at environment, charge of the we to a year. offs the continues credit for of

loss the on our higher Slide This reserves that billion quarter under are in trends with reduction second brought expected In basis pre-pandemic ratio of and loan quarter, points of still $XX end $X.X first million. Our billion million see XX. XX.X%. reflected than from XX.X%. reduction XX to the economic our the and $X.X the reserves can $XX increase The ratio reserve the reserves and by of second ended our an reduced reserve of million to level associated of under portfolio growth our you a shown we net We with just at improving quarter, our of $XXX XX.X% quarter macro conditions. the performance

which year as and cost of XXXX $XXX took expense comparable higher than the quarter in Turning growth in XX% quarter of year The increase expense year-over-year investment actions continued the receivables. we as operating new to and of the in quarter benefited year Slide over was the reflects in pandemic. quarter initiatives. the operating emergence difficult production growth products expenses The second XX, average against second million, the well comparison X.X% to response from prior

in demand the in discussed our our our this recall of business call, in declined result strong is combined expenses expect the We that XXXX. but to continued range end we on with will operating after X% OpEx the upper loan last X% investment X% growing our in

even and our X.X This comparable billion it's important across I of continue growth reflects the our OpEx drive with XQXX, and in we investment think ratio to of leverage receivables point below business. that since accelerating the efficiency out remains the the actions model XXXX. period operating to in

on the move balance Slide XX. now on Let's sheet to

impressive aligned a residing insecure Bond, the minorities six-year finance affirmed bond Social to of by busy receivables. maintain believe available May, five-year be which by undrawn a to X.XX%. of to the cost a Reserve conduit issued deal or in $XXX million risk June, what billion of will credit least which defined proceeds raising be an counties women. Net liquidity and we of capacity sources at with had S&P Bond and We and in very In $X.X will continue principles. Federal as $XXX billion revolving of with of allocated billion was York was In We $X.X with Bank million credit New billion. we of to of unencumbered loans completed significant $X.X ABS XX% individuals at funding Social $X.X quarter, cash, we funds

we Americans. We emblematic proud this it serve very of are is hardworking as all of how all issuance

quarter in during quarters. loan future this sales million and I loan $XXX we level expect continue we whole of earlier, mentioned to As the of also sale completed

of programs clear believe a we mature a they as hallmark Our stand OneMain, competitive advantage out for funding us. remain

enhanced deliver $X.XX $X.XX to growth quarterly share to attractive our future, regular with continue dividend shareholders. We our paid capital laid months, on per announced includes and and which in $X.XX to addition delivering XXX,XXX in of dividend repurchased August, On to portfolio considerable dividend. returning last we investing our at have framework, XX%. we've shares XX, of a Consistent capital share allocation of business strong be history. framework, Slide this per paid our consistently our yield the stock also per dividend we a share equating share XX in million. out approximately $X.XX total the out per the quarter $XX over In during to Including our we of will a returns, for

remaining our As under of we million had XX, authorization. June $XXX current

framework on our capital execute disciplined leverage ratio. while our allocation maintaining to continue We

move in let's leverage net the for full-year where our some In X.X priorities Slide of financial XXXX. Our strategic lower updated XX, comfortably at end second was closing, strategic we to of end provide quarter times, range. the

We expect net the year. our at to for on average approximately receivables the stable XX% yield remain full

average We expect receivables. between expense our range X.X% of to X.X% and interest net

and our charge net I experience X.X%. XXXX loss has As mentioned earlier, strong year be we in full been offs quite approximately will expect

operating assuming at With to expect XX% grow expenses backdrop, come expect of positive a growth X% X% We we range. back the our this I'll lastly, continued receivables that, to year-over-year to high And end to X% in to year. the turn Doug. economic call our

Doug Shulman

resiliency Micah. stabilizes model through and showing business now of market strength and picks consumer as up. the The our is demand Thanks,

the that providing through continuously they to in-person, enhancements continue phone or we channel to met, this business our service we customers the unprecedented provide whatever digitize in where to and We on the our operational to digital technology made interactions. our will to choose, And pandemic want before pleased outstanding are allowed meet period. that throughout service be customers us they

solutions organization to and bond wellbeing. provide we've Americans I'm strategic I'd and market underserved we are improve to committed Social can ensure strong We earlier. continuing I'm this made help to validated committed financial that customer the as in Micah for discussed over like entire proud to financial our invest to past advancing pay-off. of I have inaugural to pleased that our our continuing customers the efforts. several also our the hardworking by from OneMain’s the was access of innovations initiatives business Bond to we efforts financial to incredibly customers have and and mention needs the our products record supporting strong demand solutions these they are The to executed to meet we their across ensure communities the need. saw continually years

many up that the has reopened in and our take economy us accelerated your in the believe investment parts which into picked Thank and have for and And you the consumer in we're happy to will today. for joining growth to come. we XXXX questions. As demand position of business, we us XXXX years

Operator

Thank Instructions] [Operator you.

with line Our first question from Kaye will Wells come of Michael the Fargo.

Michael Kaye

Hi, Thanks questions. taking for good my morning.

the on wondering the in I your the With impact what's inflation, to view uptick business. was

expense, operating example, how the loan potential impact than a a For we think growth, cost credit consumer debt should perspective? from about

Micah Conrad

Hey, question. Thanks good Micah. good the It's one. for morning, Michael. It's a

with I think in more as we a could cost than positive. be past. Things the think about bit little they've to cost respect originations marginally inflation

other think the is piece on of rising floating. potentially rates. this, X% you, which is big less hit of debt I you our than remind I'll

like position in feel with that. respect we're to good we So pretty a

And contributor. our our been debt. that's recent our issue We really billion long stack of year, from structure. programs great, strength very is our portion to but opportunistically of also a $X been from have We anywhere with not close our in have debt lower the really base $X lot huge of credit debt billion have and a billion We've a a $XX maturity strong which a to think markets. rates a spreads I cost been higher cost replacing the

sort rate our time, So offset increases, but over the strong with to hopefully is there think be ratable continued spreads. it'll we credit of extent

the those think biggest I pieces. two are

Michael Kaye

but Okay. ask How given ticket, it more No, mean, where your Wanted growth? dollars. think helpful to how trial to about $X,XXX Goldilocks this average it's average like too scenario we loan IRS the big isn't about is impacts credit be great. big your tax core should credit? enough a it I

Micah Conrad

is scheme that mean, XX% is also an I of increased that It consumers. depending think of I'm sure don't the of our the think some acceleration from credit for about as, some but age in view affects it I or $X,XXX this $X,XXX monthly or all $X,XXX credit meaningful will it things, maybe right, Michael. to ways, only it's the incremental in of sounds to amount child. business I of that an it's Yes, on filers, and to this the But helpful be enough way. we impact in grand originations has

Michael Kaye

much. Thank you very Okay.

Micah Conrad

Thank you.

Operator

Piper The will of the from with question Sandler. Barker line come Kevin next

Kevin Barker

morning. for my Thanks Good taking questions.

of we tighter into amount have rates the rates XXXX been XXXX, savings has expect you to Given better, underwriting as and tighten the look lower back and start how we the the saw? net just book cash the given underwriting strong there, do should to consumer go just given that with structurally charge-off

Doug Shulman

that lots for mean certainly as with. I Yes. normal we're business Kevin experiencing well are today our below

our quarter to are strong. XX% the have I Average credit stay consumer remain indicator ago. XXX XX% think think a a points the business XX% well them charge-offs up, card XX year second delinquency losses basis good expect We XX but They some low to the I that. is is XXXX, continued this mean, or our Applicants year quarter at income points from – down for the be to below time. in that year early normal level. to about are annual levels. below can down XX debt will basis trends balance revolving coming of XQ about And to a do into from Our look for below you debt XXXX were we about is ago. below be prior sheets forever, don't

credit think sheet, very balance see That influenced rounds forward. by been expect stimulus. consumer of strong strong we government I the has to should going with several certainly So said, credit

XXXX XXXX, trends, over a up in we I saw to going time to as cliff. happen migration think just So do towards versus we expect a is see

Kevin Barker

back early earlier not expiration that's that those as given was releasing or today of of forbearance the it there moratoriums and had the XX consumer that foreclosure programs expiration half And then previously versus lender, company, as last much this was government impact reserves one to XXXX. cited Do about could peers. early they months? had impact And the comments you Great. – credit over half outsize in any impact back from year anticipate year the or the just of and they programs

Doug Shulman

Yes, we and our see remind trends our to our risk and risk base. pay they very underwriting We're into a for don't since as our as this with scoring about big strong we've underwriting. customer even payment both in remain closely you precaution would monitoring been – also July. XQ really a ability forbearance And our XXXX, I in adjusting

So meaning that the loan our as would, for have if treated expense bureau, on a was an consumer’s forbearance would we underwriting. in we

expect And us so to don't we impact materially.

Kevin Barker

you the Thank taking Okay. questions. for

Doug Shulman

you. Thank

Operator

line next with question The will come from of Jefferies. the John Hecht

John Hecht

guys. much questions. taking morning, very my Thanks for Good

Doug Shulman

Good morning.

John Hecht

consumer structural think gaining trends market it's it early of couple a And of I card companies one recovery you I guess are to other seeing finance do you to throttle. as Board, guys rebounded products? share? across stages the demand thoughts because but that or in of Do I'm any terms wondering, reported. you have guys a back have the full tied to mean, just structural? Is relative first why you've demand credit to you're we're is The it the something is product

Doug Shulman

XXXX measure the were and more with look lot our the we things was was XX% Demand originations going trend think June, because had In – it a way we've of about up quarter. flat. an we June, because you we're if measuring actually to June normalized upward a that's pandemic. in there Yes. XXXX on at things Look, through against

product our for started in in our building XXXX June. towards XXXX. XXXX in in demand was the same as and and attribute we growth to that in we a accelerated initiatives was XXXX XXXX the that lot it the and So XXXX of We

of will our options digital pricing to the how fall which of competitive on with then experience the innovations So us less algorithms, pipeline loan we've our branch to lot of routed that off website, Routing about And our models whole important call first customer lot model. size, in, enhanced experience, learning as get innovations we interact either offering. then when machine and continually any there's because come clarity improved changes to or people a and making the through a our be center, applicant using centralized about people channels, we've our small before. to the around which you're operational customer talked calls but propensity give around right

So different X%. than trends. different within near card, a have going while I loans the up our do to product year-over-year market think they're even are installment so is X% balances credit in down But prime, our is

we've And we're been share because picking so market up our focused we do think some really on customer.

John Hecht

Okay. answer. Thank you for the comprehensive

of unsecured the – and Second a long-term, I based decision of a goal is secured spreads? versus question debt? mix dynamic on is just think is a kind of you little bit of liability guess, do management. rates Micah, that there Or what

Micah Conrad

that we've I we had always we've XX-XX. of mean, range to a a be Yes, always bit John, little there. of said, like

the I The tend prepared quarter, as deep. two. cost certainly very remarks, a of markets are costs. They issuance mix that below lower ABS that signals really of just we heard We be that to an nice you attractive want this on funds. think was our did X.X%,

unsecured which runway. liquidity the really We tenor like market, of our ability though and the gives us duration also the manage to longer-term

the to actually in deals just been towards in of running So We've the debt the are as do a secured well. two of category. more as XX% ABS sort we seek amortize XX% our balance. and ways different know, beneficial you

would more down of the the have it. chunky of very $XXX the we unsecured have balance are magic $X to where than and we replace sort and we're the doing have billion naturally them new amortize to issuance, those to like there's to also So two, where in markets. we say But million no with Other issuance bullets. I debt sometimes

move So we where on to quarter that will quarter, from depending around are.

John Hecht

guys. Thanks, Okay.

Micah Conrad

Thank you.

Operator

with come of question will Mark the line from DeVries next Barclays. The

Mark DeVries

Yes, thanks.

what the of far, momentum indication June? growth the on trends anything product the acceleration? a in an whether build Are it July. some is And to you us so gave if of from to out there from of contributing kind on are are You call for initiatives kind loan new you've continuing to perspective seen the

Doug Shulman

July We we forward, kind anticipate June July thought similar least of acceleration strong. through June. Yes. of at but remains strong the don't going the is Look, seeing April beginning to

out strong product. Assuming credit dollar – payments a who there's year. not We could are loans the very that excited, major some offered an has don't call for good we for card It's reopening small going loan, grown, then people meet launch as year I And for not is $X,XXX, variant, going to it's continues be to those People some – did with product. our remainder we smaller after the to larger soon. qualify that. very out think think pilots ago the particular economic Delta $X,XXX have is have to but been a and taken didn't have we're there's people going shock close very rolled a $X,XXX credit we loan, to their growth people that that's a had loan anything loan. the a and out with dollar the product about talked of

product And in think going great a so that's market. be to we the

Our after app. on we current which to bills. the a quarter anticipate first is our Trim integrated We're we onto money for offering And in a save to have way integrating customers fully that. value-added product, really that now customers

next good think a innovations I coming things year. of and of lot the continuation product over the So

Mark DeVries

I every and for Okay, about you investors fixed there's what those pay investors are arbitrage And size look are great. an sale to the program the between the capital loans how then to what quarter? cash clearly income loan markets equity willing in you can think the flows. And for talk paying

So obviously, share look here, repurchases sales factors? and just attractive are thinking those about how weighing but you pretty

Micah Conrad

Yes.

program enhancement programmatic that of about, we it given don't our any terms an whole size at are the as loan loan differently asking funding quarter. In existing the you're sale, obviously relationships. And to in sale programs. look necessarily that markets we These

agreements. flow Our agreements loan two-year sale are

over loans a to is that a two-year liquidity and period So there's buy us. of longer-term a for funding amount commitment obviously certain

other agreements place the price. and same the those counterparty every month agreed buy so the in the at will amount upon on are side And

wouldn't trying selling. quarter in quarter the terms we're I those to from we're change So to levels say of

Mark DeVries

add or of looking want the are to at? be to partners kind Okay. you here Are you level you at

Doug Shulman

I sheet. in I of it think, say vast majority to our Yes. the balance we're and said we've production on we’ll our committed mean, the loan keeping past, again,

open You additional in ABS the loan leave also at with about successful right quarter markets do rates. bond remain at much sale unsecured at We very I'll the agreements it heard And our funding attractive terms. very to our and that. social

Mark DeVries

helpful. that’s you. Okay, Thank

Doug Shulman

you. Thank

Operator

The next Moshe line question will come Credit of Orenbuch from Suisse. with the

Moshe Orenbuch

similar thinking I Mark. guess Hey, And a I great asking about was thanks. question to

amount I generated at you've it, just company. think capital a from look that, operations tremendous of of the when we excess core the

at your question, how “need that that? And generate loan are so, you by know, a and re-ask where perhaps much income relationship expanded for there have looked you could just not guess, paying of but guess as you and maybe isn't the a double-digit more markets about to, – to sales”, necessarily premium be whereby the lower, I fixed think higher if perhaps loans I

Doug Shulman

funding want sheet about if what a within happens the if returns balance are efficient level also very, as think size. they're I loan? again, been we'd source we're our addition we earnings. feel very programs, about loan, does of, those I to what sales, it what on in this certain within with, Moshe us, balance our so there. accretive, like I But an terms funding to happens And existing these already We balance we of – Yeah, certainly certainly we price that and and look is comfortable think our keep new think the in sell sort strategy obviously at the maintain that all like and capital pricing our think we programs for what very that the company of not also sheet of has the loan happens but a

Moshe Orenbuch

it. Got

Okay, That's thank very you. helpful.

opportunities, you rate the take really, of low cost ways did spreads, there funds? to accelerate, any into bond of You that and of obviously a really kind the and in kind about kind it's more into just other of good. little environment talked a funding bit – of and the Are been

Micah Conrad

that's what Well, there's of to coupon higher near maturities able there that debt out are few than we're a future raise in at a the today.

stack, If entire X%. bonds bit little are a is stack on unsecured the and our our just at look yield our on on you coupon over X%, those – under that

markets certainly in and and rolling up there X% some But off today. that's on. in and obviously room got bond can think as bonds X%, at coming issue the new term, so we very that's May, there's Obviously you those dynamic where we've the will coming a about are bonds XX change. above near So

capital – that what added the We come were a bond we last callable last a issued a the bit part to the bond thinking we're the year little and about state callable, challenge markets back So will when over three a that in of bonds. added our programs. there's early of in nice we it's in feature

liability the so know, bond and an this callable ability May, management a you bit that us more And X.XX% to becomes next do little that coupon. And effectively. in it's gives

be So I it about debt we're we think continued the issue what with is, new to in think hope cost that way the strong higher going market. that's will yields replacing

Moshe Orenbuch

much. so Thanks Great.

Micah Conrad

you. Thank

Operator

next with Shane The the line from comes Rick of JPMorgan. question

Rick Shane

levels the Barker XX about is a over I'd Micah, Hey the over much churn. levels. outlook? day still portfolio in my day-one that rate guys, the rate we like points the possibility there that underwriting above year, Should given so has observations. taking next thanks mentioned your reserve for one economic consider nature sort actually year, the goes change been reserve assets, and of the the last in because shift of of the Kevin couple questions. made to below you short-term combine basis the so observation of the the

Micah Conrad

And question thanks. question. it's possible. is, one great I certainly short think mean, the a Rick, about. think your to yes we I answer It's

of of to more too sort it's offer early think much I a concrete view that. on

things reserves, when we terms XX.X%, unemployment the in they of have post the our One with you're still for forecast are rates of of lifetime to CECL. CECL right struck is the forecasting, you'll losses were these right implementation now remember unemployment what incorporate the reserves of that you at the above assumptions

take to prudent reserves. with approach continue We our a

our any look expected in don't performance to and have delinquency some rates, over loss seen our you even things at we've think plus us roll that of and If recoveries. the see I last year would

It's a quarter one to We're don't on things are recoveries is snd the uncertainty at to there's about to million its loan necessarily so. life strong net the we're expect quarterly seeing you payment in future horizon. cautious as But being is going million, the continue a the we the in as in some into aspects that just basis, think $XX reserves the just those go continue down and collections We there's that moving $XX so. the million-ish, we're dynamics really average a but delinquency were of about quarter think spectrum look it our reserves. think of that. lot positive, and and I view on still $XX all a the, If across post-charge-off performance of our of

Rick Shane

Yeah, looking how finance, to of the because it. consideration consumer important you at I recast guys we're more it's positioned in think context to of XX just every reserves portfolio sort months. your months an in are broadly uniquely Got XX

Micah Conrad

of those on is a it especially And timing very business we much a event. under the the why because reason us, also Yeah. reserving, generation focus it's CECL, which for excludes capital

so economic of business focused for actual on try stay we returns the that And the reason. to

Rick Shane

Got it. very guys Great clarification, much. thank you

Micah Conrad

Thanks Rick.

Operator

Lee comes question next Markets. Capital line with The RBC of from Kenneth the

Kenneth Lee

taking Hi, good morning. my for question. Thanks

like either call they there Just market is of improvements or on out any particular the origination versus was, in Thanks. quarter. geographies segments, in terms based others? the saw around One any customer you'd volumes, improvement the to other details

Doug Shulman

We're customers. demand our of our across Yeah. of strong seeing Thanks, geographies across all and all Kenneth.

and So particular and to I'll just I our but we innovations, there's there. channel was we've flat XXXX, seeing come product up things our mean, to fruition enhancements, a were many over really the new no, it demand again, point couple of you credit, know we talking been of channel XXXX lot of do nothing in to that innovations, years, starting XX% out partners, adding operational it's results. last about

Kenneth Lee

the Got it, underwriting very term? changes changes in just follow-up in any the was or I anticipate there you terms helpful. credit over And quarter? if recently And completed may, near box most do of your any one Thanks.

Doug Shulman

box. our expecting at We're looking across refine economic month input, you every at some – looking speaking, we geographic loss. getting stress most always industries. do regions refining more changes always losses credit there's anticipated Broadly based look Yeah, In We're data. have know, longer We no in continue we to model. proprietary industries. and geographies on increased our things still we're and

portfolio. across refined inputs forward. market is but customers more in a was of say – is it now we we our credit a to go year geographies definitely So it, open it's and that's the hone what box that shifting not industries, this very been lot I of is disciplined, underwrite largely our our going stress ROEs lot would underwriting we're XX% than or and gradually being for a assuming, across been There's point continue that to into our but ago, and at but

Kenneth Lee

much. you very Thank helpful. Very Great.

Operator

next The Rowan question of line Janney. of come the will John from

John Rowan

guys. morning Good

Doug Shulman

Hey, John.

John Rowan

a around questions most of timing been answered. change Just possibility quick in the composition my board? of question, of Is have the there any the

Doug Shulman

XXXX governs of appoint certain our their to that share directors consortium large and appoint thresholds agreement, of ownership, ability is the that Look board the publicly agreement decreases. to stockholders' the bought members filed. right in to At

of orderly that happen of than is, expect the an time. That is manner next re-election. the timing, up is directors any over timing later filed again any director contemplates transition resignations agreement which we when no Regarding in publicly to for

appointed I'd make note the the number that, So a important independent sure played we of would company. group directors qualified I in also role success highly to of orderly. think, want changes, an know that you any who

that we So as any and definitely have a that as stability, don't continuity company. got consideration a forward there's around a momentum interruption board, we've in the so

John Rowan

majority the would, make gain the for or they board that there, re-election? members change. there's shareholders come Yeah, certainly when to I that do But any don't rush the up think a

Doug Shulman

three have terms we year a rotating basis. No, on

So it on the board depends member. just all

John Rowan

right, All Okay. thank you.

Operator

the come Kevin with will question final Sandler. Piper line The Barker from of

Kevin Barker

been growth that? digitally-based realize Yeah. much more How XXX driven versus on lending earlier pre-pandemic by bit outlook. I if to closer borrowers I little FICO, some that typically the expand FICO target than or wanted it just FICO. higher XXX towards you follow growth a up to has you of that wouldn't a lending

based us give by an loans. you idea can FICO digitally XXX looks of making that just those so what And like

Micah Conrad

that. on the terms growth, it's of particularly the in business. laid touch majority I'll It’s we've by initiatives in we –the Micah, Kevin, things of Yeah. Doug our things has June in driven been we've think the about our done strategic out, one of talked

One of those is around loan and pricing optimizations.

the it about talked we've in well. pricing So with the past word as strategic

talking I what about. that's you're think

FICO are we're would choice bit the near that in leverage say, to where particularly being we seen focused of affiliate for lender rate I XXX little remain a on an opportunity pricing shopping. to the over prime. to So that XXX more some still, add on customers channels last our We've there's use year arrange

there. that's been And successful where we've so

towards would higher say, but originations I on that near customer. little shift FICO, a we bit in of prime a seeing a focused remain You're the

Kevin Barker

very much. you Thank Okay.

Operator

for does question the Mr. the That Shulman closing today's I would conference. to of session now and like conference answer conclude remarks. turn to over

Doug Shulman

busy Hey, everyone for time I for thank you. to Yeah. just a know it's us. joining want

here. Our team is

day. love you've you follow-up and great has everyone a got hope hear to from If questions,

Operator

disconnect you. and Thank conclude quarter does line This a day. today's at call. XXXX Financial time this second Please conference OneMain your wonderful earnings have

OneMain (OMF) 22 Jul 212021 Q2 Earnings call transcript