OMF - Earnings call transcript Q4 2021

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Operator

Welcome to OneMain Financial Fourth 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. [Operator Instructions] It is now my pleasure to turn the floor over to Peter Poillon, you may begin.

Peter Poillon

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

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

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

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

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

the to Doug. over turn call let me So now

Doug Shulman

and then an minutes time beyond. a our past for the and returns provide you morning, look spend I'll good several take review will like few strategic at our to I in key updating performance strong framework then Peter, our Thanks, morning, some for and initiatives on This over years. finally, everyone. back quarter. capital updated to XXXX financial progress the I'd

often and As we liquidity, years have couple excess environment. I I've the and to serving been the outstanding Year, with New sheet point. with to of last company, strength conservative that want I that drive any together proven history the non-prime start uniquely with said our our business business. on our of positions resiliency results have Since balance with expertise reflect the customer, economic believe through us the I

had XXXX, were course of depth demand government dislocation lend During XXXX, returned. even customers the we in and out and many markets market, the we and originations competitors markets due capital issued to we're step to debt continue In serve when dislocated capital to headwinds had stayed and of when our the well XXXX. the when our we the stimulus, positioned during

and XXXX We analytics also future. which as new capabilities us new digital well as well throughout the position product built extremely and for XXXX,

In XXXX this XXXX, is that In of back for on at where our resulting loan did originations out business which we to XX%. agree us and on Day. you the the are Most were and not right we X% we government to anomalous years any Investor people So last XXXX XXXX, now? are of the and the expect exogenous would course stimulus, depressed year at does losses. laid we major like XXXX $X and back XXXX, events have our way the right lead pandemic trillion track both after growth look that

the year return be strength XXXX X%, between X%, and of X% mid-teens. on be our even X%. will the to to profitability regard of single above the receivables to XXXX, almost of favorable their remind who operating hit people our let is losses jobs. expect pre-pandemic in whether to products of and a invest whether me our simple people and will framework is projector In is We around we truth. long-term channels. the levels. unemployment have jobs lend while We keep of customers, levels you spring we money back repaid end X.X% to to and With or largest Today, new which income, it And

and While good feel the this environment varies are about today. that business some by we underwriting sector, business, for a very it we is constructive our

combined before, on strength economics and of our track This years, run previously annual generating pandemic business our capital at Despite in the unforeseen turmoil, exceeding of any XXXX, the on and least $X As anticipate of we of I've resulting between generate billion approximately capital based driven we generation are over or way said to business, billion products generation capital macro cumulatively our we billion the are $X.X $X.X new billion with of our the goal X well stated the $X.XX our on barring by and core we year, and to the initiatives. market of business. next events. capital,

to me strong a Let shift for some OneMain. It highlights. was XXXX very year

we full grew capital. $X.X year, receivables and our the For billion billion of generated by $X.X over

capital continue significant return our invest future our to to strong and Our us performance in financial to shareholders. allowed also

we XXXX. normal took Brightway+. fourth on the quarter, this pleased maintaining generated focus Fourth in and successfully performance Trim, forward to an quarter the to contributions stimulus. our for customers levels our of integrated non-prime wellness million look of the strategic choice the capital. returning customers, get making financial impact and better overview that will results, our XXXX mission orderly In we And provide to $XXX distribution and credit and we we of It XXXX. we some FinTech. an steps We to While reflecting year, channels, we and path be new early charge-offs from as our beyond. will and growth. to is acquired away were milestones Micah see performance which eventful support a X.X%, credit and in millions our maintaining from tightening quarter of government actions launched momentum important developed programs differentiated financial lender very of the We further government financial success our our our the I'm take you in importantly, achieved and are in response cards, significant with helped an to towards performance. credit service financial also customers. our advancing XXXX sharp customer partner We've Brightway future, already credit through most pandemic focused, on further and was

As we I've said X% before, enough this is low customers. in healthy If not and losses expected. stayed mean credit serving it the would our range, are

million from by new of originations our of our as growth products recent loan receivables demand the core generate to healthy resulting in for origination in nearly our by increase continued introduced the loan a fourth strong in part $XXX quarter. We personal products level The in driven strong is growth strategic and bolstered quarter, initiatives.

from can portion a these As Slide see the on initiatives. sizable in our growth you quarter X, came of

profitable examples of superior advantage operating are and couple new growth. in Over The million channels. our credit distribution past just balance growth products the rate of leverage, leveraging of approximately from taking our our and data incremental healthy About our year, came model core quarter These representing to the growth offerings was cards our million and sheet been product $XXX knowledge deep of scale, a drive growth and incremental loans from $XXX and strength customers. on higher channels, products, customer analytics of diversify its distribution we've quality to own. of the and operating our to including annual a

team, future a and it also to XXXX, help XX,XXX dollars When business uses customers chance Americans. improving of loyalty Trim's bill results OneMain's both quarter, we well-being or product their customer subscriptions acquire of reduce and Key account of increases engagement cancel with a tools credit In recently our Brightway Take-up and were mobile saving expectations. line customer, to customers' them the unneeded cards tangible were we year-end. negotiation, lower deepens rates made and with When diversification the our spend launched with to strategy notable by cancellation, with able aggregation subscription and of During our go Trim. in pockets. slate us. price the to build and expense and credit X the integration Brightway+. separate track hard-working a them auto and commitment launched supports in cost that financial it monthly our progress Trim, insurance monitoring like is app tracking that bills, we cards, back book cards our comparison in into spending, builds their help doing to

it We aspect very pleased the are of in on-time is very our very process. market. in still customers, result payments earthly is target reciprocity that the for where improved Recognizing, well with consistent card the resonating terms

in measured cards including made pleased digital by the and We're are app customers in key customers rollout, models importance the app. of deliberate and projections, We are of dining groceries, recognizing payments metrics, spend that Over metrics scaling. and a risk line already cards are are with nearly and XX% and of engagement. using several purchases, Activation before especially being we're installed downloaded credit to the approved our encouraged very approach the the everyday and out have the to our our see validating XX% gas. for taking

year, tempering we'll half in year, to the begin scaling first of the During and second this closely. meaningfully we half continue of performance monitor and are credit to this volume, expect we

see the results our As provide to on that by the encouraged X, Slide cards credit you we and value are early customers.

Xx the for market the size the $XXX As loan non-prime a of is total installment addressable market. reminder, cards billion, credit

a be source of for us. to this growth anticipate we So

We beyond. generate million XXXX, $XXX in expect more our the portfolio by with growth to $XXX years capital of cards to million

me capital framework. let Finally, return and our allocation shift to

execution several strategy, investors. over policy off business has and past the Our paid capital for allocation years

years our for XXX X return the has for and shareholder compared total Our the for XX% been as XXX% past S&P XXX% peers. with

which program our a return limited in by towards historically capital XX% shareholder, driven the existence has Our dividends, of liquidity biased stock. been

Over we of we sold million more shares evolving volume predictable been the XXX,XXX In about regular a shares. beginning as its X.X million to to about Liquidity that has today. the has shareholder cadence have back X.X stock capital year, in increased the quarter, the And shares including stake. average doubled the year returns, fourth share repurchases. at bought and from of past daily

And trading last believe for at months. are extremely few attractive. Our prioritizing such, as we've are the buybacks levels shares been we

We few are incredibly model next years. over confident strategic business and our the positioning our in

discuss So forward. our path let me

priority and in highest the first Our investing business. remains

capital generates of return a XX%. adjusted a which over business greater Our into receivables, on X% on return translates than

will We sheet investment prioritize returns. balance in growth meets these that to continue attractive

continue invest investments also products. $X that approximately we will for science next and years. in cumulative X generation capital fuel of are the billion the to essential data digital, new These over technology, We anticipate

to value. We acquisitions consider to strategy drive also our continue and will shareholder

synergies the including several at our credit couple looked our year. made card base the over platform. our card, have We but taking advantage acquisition own in of of to of years, past space FinTech platforms small with build We the Trim last chose customer operating and investments

well at shareholders and over to allocation don't value. range that At current increasing and our our we We capital translates robust regular our or opportunities is this This into continue time, open enhance maximizes opportunistically predictable. dividend and at and we consistent growth $X.XX initiatives shifting within price. scenarios. regular yield downturn to to the manner more planning This drive given capital return will in our be in our will business share out. other to comfort and X% to regular dividend dividend one to deploy Any We've in look that that our or returned decided a dividend, we deploying our on we that shareholder are to strategically business announced in acquisitions we'll confidence step-up can XX%. year have count regular value. to we our shareholders capital to balance we the large said year sheet be capital Yesterday, and we past $X our are believe that policy a as in transition by remain

to the annually. plan dividend increase also regular We

plan, a to $X repurchase and X/X we XXXX. expect Our Board utilize approximately in also authorized of has share that billion

of to priorities. call let We to expect and strategic you the organic over details through that, fourth growth share already per me our financial take growth. meaningful repurchases a XXXX our to the strong Micah provide be business the share With to quarter turn for lever prospects

Micah Conrad

to morning, and great receivables a continues good initiatives We everyone. healthy Doug, execution for drive our our loans, Thanks, combined quarter as strong had growth. with demand against growth

whereas C&I or loss generation $X.XX loss loan $XX quarter strong, As or net $XXX We charge-offs benefited quarter solid $XX reserves fourth year. basis, Doug share diluted in full driven a was growth the X.X% on $XXX per from $XXX prior the quarter. million in a in year. increased our of basis fourth that On the in mentioned, GAAP earned in earned loan X% million, basis XXXX. diluted nearly both adjusted from the for prior were at the receivables. share down per million and $X.XX compared we on current XX% up of share, Capital an the per reserve year by we've coming million by Recall quarter, to reductions results quarter, million

well year, over XX% X% growth full quarter reflecting grew $XXX year capital the prior generation normal compared or yield new demand from as XX.X% For our increases higher $X.X year. including growth up to driven in a channels. the the positive quarter, to $XX.X primarily compared X% income up from the third Fourth and yield $X.X billion initiatives, was XX-plus billion quarter quarter. in ago, receivables reflects to in as from impact up XX.X% receivables. Portfolio million by up Managed as delinquency and from the third distribution new fourth the continued prior was billion, $X.X the strong pricing consumer in impact billion, prime Interest year, seasonal was our initiatives. in and quarter

these shift anticipate of some full you very to similar the As year compared metrics see attractive 'XX. X, our XQ originations on loans. can to driving but XXXX core returns X%, at yield are to We levels of be do when Slide

However, normal trends. delinquency reflect we and XX-plus to quarter expect seasonal the first

the moved average from metrics versus $XXX levels. continued a year our quarter, prior down improvement expect to year-over-year see around and was While million expense increase profitability basis points we yield XXXX despite improved percentage an has expense basis debt. XX our points expect quarter historical interest in improved sequentially. overall X.X% for improvement expense bit, to year of compared Interest to and as in average a a receivables the XX when Interest in and X% X.X% ago other this

and quarters next costs expect of sheet our several the the balance years, improvement interest yet the of projections debt rates. next fixed books aware our remain an at acutely as see already liability out to our very we maturing cost And as the of funds as are interest in in X%. at rising we continued X confident We from for we over of of We strategy expense years of funding nearly XXXX average on interest benefit have look billion our potential management. over few last debt is the about XX% $X.X rates,

issued XXXX. $X.X at As in cost a X.X% an comparison point, average we billion of

to created a our in have the flexibility profile our of of over great results. is financial result deliberate of in mix larger unsecured. development deal to strategy sheet paying our off shift funding has and We a a now liquidity of maturities duration debt the our as strategy years This of and supported a and our years balance extend very

of this loan gain million revenue, The of XX% our which million during Let to sold economics in me sale continue quarter. other level to quarter, move was up future year the anticipate of loans on fourth and from approximately quarter. including primarily prior whole million in $XXX on the by gains driven to sale increase $XXX the We the $XX was quarters. program, sales revenue from compared

Finally, policyholder claims quarter, the million $XX from benefits was in million $XX up prior expense and year. the in

'XX. turn from quarter, billion to now our trends. fourth Originations up XX% originations and the XQ X review $X.X Let's in to were receivables Slide

receivables X% year-over-year growth managed to and led originations sequentially. Our of X%

quarter to in expectations include portfolio by sale to million levels. our performance As $XXX and of a credit The our sold continues loan managed but trending reminder, receivables line normal this for whole OneMain with serviced partners. be back receivables of our

seasonally points positively up XX-plus Recoveries of X.XX% in from from net million up fourth XXXX. the quarter in Recoveries average and the XX quarter the X.X%. in of came X.XX%, in X.XX% quarter to came at of historical 'XX. at quarter third XX early-stage quarter up and X.XX% and fourth in from at above basis of XX charge-offs third from or in $XX up contributed levels strong in quarter our X.XX% also fourth receivables. remain to remained the Our delinquency X.XX%, delinquency seasonally X.XX%

had were also net the X.X% as charge-offs For year, we projected.

the As X.X% look to of XXXX, full we forward expect X.X%. we year range in to be charge-offs to

ended quarter strong loan a on of quarter below our modestly reserves We receivables in Slide by of Our CECL above the XX. ratio are slightly with loss shown reserve the and billion X increased the levels of million XX.X%, to reserve and quarter. trends We due $X.X growth fourth last reserves in $XX day XX.X%. quarter

XX. expense operating Slide quarter million. to was Turning $XXX Fourth

Our full levels, in and in higher within generated have X% investment receivables. we growth as our year just our the XXXX our year guidance $X.X expense significant accelerated for than and operating even was business billion,

turn over few the deeper a dive to last little years. Slide Let's into XX for our expenses

see level. blue bar the dark slide a You on graph, this our have maintained C&I expense, portions core of we at the that balanced very

fact, despite XXXX in operating receivables and reflects over inherent investment efforts disciplined and in to the that management, flat This our accelerated In efficiency operating our core C&I expense expense growth nearly average period. is X% business. leverage

For XXXX, our within operating framework of we expenses X%. to growth in X% modest and our expect core long-term

in incremental business. and for we underwriting. operating to in to efficiencies OpEx XXXX continue our these expect and levels improve our We in products. About we credit technology remainder, growth our expect digital, these science investment additional million to to our also tech, new as enhance investments the XXXX, science future, distribution our $XX in to card. we ratio channels, against customer have areas. and plan our invest data XX%, to digital been to new accelerating invest data and drive capabilities, future to experience capabilities direct we plan products we new The continue an customer In in growth-related drive across and experience, investment with including Even

capital funding, and Slide discuss Let's XX. liquidity on move to now on our

on weighted As issued we our we that last we in discussed redeemed $X a billion a were May Later X.XX%. the in of deal average at year. [X.XXX%] coupon our October, this quarter, $X call, notes unsecured just of due ABS in billion

issuance deal XXXX, maturity now March of unsecured good as discussed next of flexibility is I us Our earlier. bit a XXXX, giving a in

much quarter, conduit enhance corporate $X which a continued corporate the our liquidity are enabled reduce new billion by we to has X-year billion. Unsecured position our During revolvers to unsecured $X to capacity closing track balance us revolver, we our and in rarely our a available very business. of and of to non-investment-grade is sheet partners' success our performance strong believe confidence bank reflection and companies, our our business record

Our total committed of level $X a in stands targeted now liquidity runway capacity of XX which under our at billion, numerous economic excess supports months scenarios.

the robust. on see of ended slide remain that million $XXX receivables billion available with we liquidity our unencumbered $XX.X cash resources and of the year so You

sheet. we forward, Going conduit QX efficiencies of funding our best-in-class in our At relatively secured December use X.Xx, We repurchase our balance facilities strong $XX flexible driving through the to to XX. a plan regular issuance, of as year-end, even had quarter source as $XXX of capital OneMain our $XXX capital was million more us another between million allowed our generation to markets drawn return and conduit stock million leverage flat through in shareholders of as to dividend.

to run of long-standing to within expect continue leverage business we forward, X Going our our to Xx. range

of guidance. Let our me recapping end by XXXX some

managed expect XX%, long-term grow with receivables X% operating in framework. We line to to our

of expect to in X.X% net the range charge-offs X.X%. We

This of generation billion run that, to XXXX. return XXXX on generate capital business were be optimize favorably approximately you very healthy compares a in expect course, And billion receivables to to years by as target expect the we $X.XX we to unaffected pandemic. know, very and $X.X and XXXX generation our X%. capital We to

$X.XX. to Doug. generation between incorporate per that, to buyback we and announced to the program, we the I'd share With like capital turn back $X.XX As be call share expect

Doug Shulman

consumers. Thanks, non-prime Micah. and a lending in place important OneMain the occupies unique market for

At us ourselves for excellent customers As and access are down with fair the XXXX. credit We I dedication many the of means for consumer. OneMain non-prime customers the on access can sight is and customers accomplishments to call, hard-working mentioned ensuring members lose space, significant joining some service. Thank the more the in start pay This pride shareholders. team particularly success to for make our our fact XXXX. mission I to a the who investments come this your results customers Americans We've I banks for to providing and the vacated for we foundational work our X,XXX our effort, our strong they and as our on remain all have throughout on work credit never take vision well-being in our us our and them financial of for every that focus and the to of questions. us of the and doubled of afford to dedication strength success to lender difference it at result than price of being responsible a to a the of place happy innovation day our a that in improving of of our financial you with back. achieved thank today, we're hard choice difficult a a propelling get the business. and environment business of milestones and for

Operator

will we Michael take Wells And with Fargo. Instructions] first question Kaye our from [Operator

Michael Kaye

any the you just what large normalization not a talk that of or in and trends a broad confidence, gives for example, most your ramp-up expectations? Like little You're you in Can delinquencies underlying this overperforming the consumer of charge-offs ahead there are of portfolio is credit? part industry. you more gives in point confidence a advantage more any and that's finance deterioration credit about credit your underperforming from seeing net bit

Micah Conrad

is this Micah. Michael,

industry. As you underwrite state. underwrite know, we by We by

base. customer of We with in have a long profile performance history credit this

guidance that which we We're for We balance both. profitability business, performance good evaluating view in overall credit And XXXX. feel to on to embedded good see as of portfolio. adjusting X.X% strong. but we're long-term the about is performance, remain We focused I of think in the sheets the really underwrite the is we loss the our remain X.X% also feel constantly industry. Overall, about consumer and income, We unique results.

Michael Kaye

framework. I those net X% heard to a why X% say, just was And doesn't a surprised become a I wondering X% X% some originations, now, operating the mention really I lower to little of prime thought X.X%? little bit Doug that was higher the loss I X% to given partnerships, not whole something that let's loan new products distribution sales. to lower, it's

Doug Shulman

Yes. some Michael, look, I basis, ranges. to really give loss think don't return we'll it and you annual the on sense losses. to manage on receivables of an We manage We business capital generation.

And just so be this a risk-adjusted within framework that And returns. different well the line everyone looking what at about it we're have different of we're I profiles business. going long-term customers. we're that's that and the of And to is to think year. actually the think we remind is under bottom managed I I to we wanted way to think And

how that's about it. we think So

Operator

We will Caintic take our next question with from Vincent Stephens.

Vincent Caintic

Okay.

illustrative XXXX, you of talk launched. First, initial you if could what to card. about million that about pathway see $XXX $XXX credit economics and on there that's you're initial on to by so the path? million card, thoughts learnings the any for that the that Maybe give excited can to thinking And

Doug Shulman

I positive. days, we've everything but Yes. seen it's early still Look, is Vincent, think

of things to our in the far installed products customers. XX% We've both the the approve the app to The card that of for Brightway issuing do have accounts going XX,XXX take I mentioned, to was to way X to a take-up app. Brightway+, a is reach were the been We're the and allows which test this think it, XX% we're and the acquisition I next, as a number. have better through we've of cells so our cooling about interaction and higher a to line issue the take-up of of opened current One both and line, more lower little We've is excellent I'd which people rates app talked off we feeder business encouraging year, good. goal card is And built and of being card. payments credit months projections. That around kind Our many engagement rest just got call are enough credit rates our we end We'll customers, by other us all right deeper excellent cost have X I not going digital-first a always be our happen. new where about few. than is I've talked period. our looking for. and coming of a and cards. seen always have card, our and the engage our cards be we're say, for pilot

do is results Second, then credit And line usage. line, X use months. season need good and we've seen really the people we third credit another That, the and our models.

the because the where have we different different channels I results different you'll are see the don't, assuming see that in we can in, you the year, at the profiles. coming think areas expect ramp we If we up ramp of customer results want. we end some I cards, think still see

as receivables X%. this far the matures state and are into As on be the think steady as return we we economics, to get going

current So they'll be very favorable product. to our

schedule roll about we milestones, out kind as the things out, a information and time. sense of it give we the you and know we we think a we'll XXXX of way. the profitability we We looks confident profitability little what balances the and work kind could rollout you give to wanted of in along see very need feel I more like, can you more

want we're going what I this into make great way, we we with but as looking and be we've think pleased looking sure careful we're the the out very We're going measured is results emphasize at to we credit. seen, and also roll is I now. so the deliberate to very very to thing -- have everything we a get want in

Vincent Caintic

And next then Great. question.

should for, low end for does influence ranges you how be about return, the maybe originations you've you . And XXXX? high Just and expecting charge-off guidance. we also to that of the talked the the say, get Maybe could the ranges range then to -- about in yield the the the risk-adjusted by charge-offs? talk if that XXXX and do the does

Micah Conrad

Thanks, Vincent.

range part remind our I and second reasonable Let on may our think from -- me we we me. X% growth just XX% play. framework, question. does based of receivables the in managed the on to average ask ranges, of the your to and over the to X% come time. grab XX% if market which then overall But it's one, guidance the operating And the And expect first terms is

of that We feel year start about good sort we So the there. range.

about will X.X% portfolio. and credit, things unemployment, X.X% our well-diversified That I'll are own I In well that we bit certainly influence range, With both talk as factors little inflation include then of X to a have of said, macro immediately. a and these like lot credit, growth, that factors state. a to of the by think terms wage there's of the portfolio relative

the just look level really about at our rates, due before, plus is economics but lower overall book, than And not quarter delinquency obviously, continued very historical to which are both to level a at we've the And which performance key. but That's velocity are back-end a losses So talked and is later XXXX, between running recoveries XX the if state national delinquency also delinquency important, also big levels, you stats. factor, moves within loss that remain roll strong. still ratio also norms. of

the growth, to which the so course, also and of to lesser then over things, influence a going those degree, on charge-offs a both And is normalize that receivables denominator. range they are how of year next

when just about demand sensitive where the up on our of think things, operating started general, receivables I the feel for a to little following I future. factors. credit less framework In bit credit have they good consumers the macro and on side

Competition factor as important. there. healthy aren't any is well, economic but seeing a really impediments a growth to backdrop plays we So

question, second your margin was as around to relates interest net think yield. which I it

As is year to expect losses NIM, bit trends level. do we we We will be mentioned, credit to we 'XX But XQ full aside for which than yield XQ think second. normal from around seasonal be 'XX a just XQ the anticipate levels. a lower put

expense, on have which expense, at we guide on strong tailwinds you interest the with against which believe our And we year-over-year year. the expect compares pre-pandemic be interest then offset of performance impact expect very If very, will obviously, a that net that capital interest We periods. look strong on return do incorporates next our significant we to our margin, well in decline receivables, generation, yield.

Operator

next Kevin Sandler. our Barker from take Piper will We with question

Kevin Barker

you income Could I term clarify it's any for portfolio. releases generation to you here? to Could build the for loan the capital net assume reserve listeners the just clarify relative that? just adjustments plus reserve

Micah Conrad

that's right. Yes, Kevin. Sure, exactly

adjusted measure, as our is the capital. So defined materials. for plus I loss to We back is appendix we absorption our equity combination adjusted tax. metric capital capital look use quite in and it earnings our the clearly which We to a our tangible come generation of leverage of our which view way capital, reserves at relates after

capital the our to we that billion, capital. at at roughly we for business billion the as relates capital that look look levels. becomes here, billion $X neighbourhood. basis forms capital in So that our adjusted When we to capital of our it beginning is $X.X existing put generation formation, and formation capital $X.XX the When that out

we capital at the directly within portfolio excludes, the articulated we well, So all way base. manage changes is those in What our reserve that we our is way way the excludes that, generation and run and due business. it to view it capital it loan capital you loss the to the and tied look

Kevin Barker

is us remind million you you share put could number out, $XXX I per correct? was And that to $XXX believe, the million,

Micah Conrad

million million, $XXX $XXX correct. to

Kevin Barker

today, your XX.X% anything level, shifts it the that on lower the there on at relative could newer in to targeted either would and then seems charge-offs for you've portfolio shifts like levels. products lower portfolio? in the portfolio. pre-pandemic impact And the guiding the you had your And what within in the that reserve year bring whether this the Okay. Is charge-offs levels, duration you're given you're to net just of the net reserve it's portfolio or

Micah Conrad

first will. Yes. X the impact I sort XXXX, we ago, when the mean We quarter all was years could if reserve almost ago. it several which were is of you we at CECL those XX.X% where rate, certainly up installed end resting and of years on

will years different So it X portfolio say I ago. than is today was the

these XX.X% of We sit And today products about receivables. at coming have we in. some new of

performance trends day to $XX quarters The than So higher continue and levels. the million those see towards macroeconomic that CECL call that strong portfolio. could reserve we be pre-COVID coming levels. if can in I roughly move certainly see and certainly strong, back expect X

be I managing lot in still business and to think and a there's to as conservative in our very our our said, determined. We be tend performance. balance we've aggressive sheet,

confident of feel we here at. can be until with really with level degree a feel sustained our take conservatism we that the we we reserving So

Operator

Moshe our take from Credit Suisse. will We next Orenbuch question with

Moshe Orenbuch

your the Micah, 'XX. in back fact and consistent XXXX referred think, guidance has and was to look kind been that and of pretty went the I much same to it had you growth

high of I the end think bit little ’XX came at above. a and in you kind XXXX,

As that think the kind of of benefit idea talk how how XX% Like, your the enter selling of loans? about now those kind new elements, products you you X% in of guidance. can should look with other we of context out into these about to the

Micah Conrad

The thanks, reflective is can new expected Yes. some balances the end also To our to year. all X% products I Moshe. of XX% the have. by card include we mean, definitely credit our that extent, the on of

again. in guidance, the credit, of looks on in all our guidance felt in cetera. full look that we for channels, such, We'll, be the we breaking seen But et It with overall our looking as That receivables, course, there, distribution included the picture and for the about And to credit in that receivables of when context the basis. you new pricing, consistent of like managed we're So card going future. X% past. receivables. the at for we a cards is good feel credit prime of credit. is out And consumer loan pretty be our we've at to environment putting what out XX% what good the

million think end receivables of partners. that balance that managed are on we -- you our about had loan whole receivables serviced at sold number over receivables, the been about of as sheet just ending had in $XXX and by million sale $XXX So the that year

about selling million We per are quarter. $XXX

as year. Use assumption with year that sales million our ending add managed take for the then the of sheet And an sold for end assume asset in. for the and of and you something runoff and that think some at balances will so balance up book, on then of growth, to that and $XXX I get it factor receivables end the the you incorporate receivables. to you're I some the for loans would credit receivables to would come card, that we've estimate can trying the about

Moshe Orenbuch

January kind your maybe question, Got this it. prior of question, about have follow-up And a in you on but now mentioned is, of that tacked Is unsecured over side of idea funding increase on paying off. of of portion and secured there lot really this the said I kind with just should sorry say anything that. And -- a done course XXXX? the an opportunity as trends having you the to then the can funding it's to

Micah Conrad

Yes. Look, and a thanks great question, asking. for that's

sheet, little me We've debt ourselves to on last I feel good our position a still strength healthy I'd for can feel X.X% just unsecured really we It's of our are actually meant at August and have asset-backed and of to receivables a want have we lower-cost -- a precise. issued a the that mean, to about to we've ABS. strong, a now be meant to X%, Those that. our unsecured very issued We And also think sheet. balance XXXX. to we We in probably But in be to of taken liquidity. that our done long-term the our unsecured nature move of but opportunistic to that been see little more obviously, an our think number bit side. presented us efficiency and using few X.XXX% puts balance extend there little opportunistic. XX-XX the as mix. And That's to I debt bit.We've as ABS issue very over benefit have about portion heard directional. the say rates market and we've mix we And have you little not utilizing in cost a said I unsecured issuance. a the a think opportunities we've I think balance range. the been markets never We our on can been there's of always we the a X.X% as bit We good. maybe higher of floating very, secured I our rate. within with put you X.X% from on opportunity up definitely my obviously lot more up closer while a now, And be the liquidity, comments, But lower in do years. we duration position there has context. on for bit is rates we us that. X% in X% thought backed times, roughly X% heard

we have a issuance rising rates our within agenda. of lot opportunity lot of and a feel flexibility we and against insulation So like

Doug Shulman

Doug. is this And Moshe,

into going the our to our core grow We've We've see balance added is understand new done hopping incredibly we it, well we're people make think of positioned, lot way product, That's Just we distribution. your to innovation. added kind to just branches, of a us sheet. we first question, our which sure I allow want products. digital

number. return. a have As we've growth we and you, customers manage balance certain told a it manage position serve really it good We the don't the to to sheet to well

share balance return, back we So you our have our into to a and growing allow which grow bottom allow capital and we grow buybacks, growing grow us shareholders gen cap to with to more. means as and capital our that return put line will can a capital. sheet X% per dividend our also can we sheet even That us balance means generate do more

disciplined sheet going to be growing key we returns. grow on we're balance going it to this we're to the is cycle, and obviously, risk-adjusted but see So it, based

Operator

question our Jefferies. John And next with take will Hecht we from

John Hecht

driving impetus mentioned And of board, to you first what's I think the year. kind I sure or the there? product I make just is card want of the across just tapering it's the this that in across half if the board? understood. Doug, credit Is that in

Doug Shulman

Yes.

and me third months we X see could I good referring was accounts the to and to was got XXXX, in to be on, XX plan, of there. history XX,XXX you the of happen it's a And of estimate I'm so -- on payments, a any only or delinquencies good what's get X fourth clear, you've sorry, put book so and across quarter was our card. always and we Let book once board. not future, credit needed this then test delinquencies, or going months on of read very days which

sure put have is we're the look quality credit that's at So been to ramp was It credit credit of it's on, a after ramp make our models and validated. that cards that not saying steady XX,XXX-plus card. all

John Hecht

kind been lot XXX% Great. I appreciate or that of, survey the is out on sense Doug, color, officer little installment bit that ability the impacts has business? that just And the underwriting channel model and logical your wonder comment officer that of there's there emerging loan the on it kind of makes bank of flex you for the participants, pursue it, to showed a can question I call a particularly there's to overall -- a way. environment now. loan in survey and Fed how underwriting impacts your pivot digital Follow-up competitive in any that right loans.

Doug Shulman

up and lot a a quarter can Yes. Look, the XXXX, there credit through data, from I competition. was their of lot of we of think see in opened what people second box

sheet As X%. in our we XXXX, balance you saw grew by

a And so we positioned. think time. we We've this are well for doing very long been

based we any customer installment close So and We've lender. open got don't proprietary just macro more environments. data on than

things in to doing stay that we customer with and scores seen lot are making sure an NPS competitive. loan can of a we high us so environment, you've pay And back And very people market the who loyalty. evolving us

customers. increase So originated also are digitally customers now. half with our just loans allows and under to help ways in engagement us of other Trim

lending The than and a with rather customer. people a buy $XXX to vice loan opportunity that or we're the transactions larger in them allows have And So card card product daily us for to stickier will for a customers transaction. it's again, bringing versa. a do $X,XXX to episodic cross

And channels. so Micah had talked a little new about bit

We've Anytime we position. is definitely open years, market. it many things about up feel some. really this dislocation, a and competitive competitive there's done So good our usually for market

Operator

question take we Meng Deutsche with will our Jiao And from next Bank.

Meng Jiao

for I future appetite on of wanted your a acquisitions. strategic sort ask to question

in sense your get as of color whether the how Just portfolio months? there you then couple acquisition in of well. past to bolt-on of a might wanted helpful. consider FinTech would similar be that, Trim to have be trended related sort on And terms valuations acquisitions of FinTech they Any what space to of sort but or separately, over sort the

Doug Shulman

Yes. Look, active, but disciplined. our very stayed we've corporate development team has been very

acquisitions credit we build a wanted potential our portfolios we a Like scale to very said, the we will especially is our advantage market synergistic our highly teams still customer the has consider -- some distribution there on we're especially that and if down were certainly I public take were private position card but high that of of We've see you the just we There tech I lot that them, some, multiples our think card, also acquisitions. are have decided gone and quite got example. credit ROI We frothy, tech took and invested strategically and bought. and base. for and out and card platforms markets underwriting So and that fluctuated know, to right companies, disciplined. for us, as pricing the pretty mean, we but going be a lot.

And we it would it make that more decided from sense scratch. build so to

because We've stay very a shareholders' what always do tell to our me only I'd we a and partner looked at to we build And you, we're X We've deploying exactly for small, say bolt-ons as pretty that things. look things. capital. Hard years, except are last lot seriously we've be, would the will they analysis by at of so we disciplined going been disciplined. for done very take

Meng Jiao

there to card the first the your decision of in sort see that that Got sort on just portfolio half is seasoned taper how in anything it. that sort year? the this else of to credit the just mainly is on first or this half year, Great. of based your the leads secondly, of And on then taper that to decision of

Doug Shulman

be We to the we out really ago, and put started want repeatedly this exact we of I second year XXXX, how and the Yes, they then accounts and validate publicly, season clear. plan see make is of a we the on, a pilot laid was and card I've half models. sure about talking which credit bunch

plan So and to. it's no change. is we're the This there's sticking been the plan, absolutely

Operator

take will our next question John from And Rowan with we Janney.

John Rowan

bit and look your a use to we at through of assumptions going dividends, that kind just you a going paying your you're and if the of per balance you're capital of actually the address to quarter, it $X.XX implies of sheet special X/X given kind up dividend a of quite I wind wanted repurchase if that lack that comment? generation, program delevering you're can

Micah Conrad

cost to not about share as which Yes, also million of sure equation growth. numbers, well. need we part but If leverage for X/X to around somewhat John, if I'm called But also it XX% the then at you're used aside the a to based our of you capital, the really on the be that's range, on our but that $XXX instance, that gives $X.X shares deleveraging, the expected billion I capital repurchase back. that because year around could existing factoring -- roughly at look $XXX range, million, gen. during depends have $XXX in look sheet use we of how growth many if a the for buy The number, million. it maintain mean the of for million of I cap the of put total is if we $X round within high you $XXX use balance you will rest rough capital $XXX at just end that end billion, million, annual and dividend the

John Rowan

picked sheet correct? loan in Well, balance growth portfolio sheet assumption your in growth, the -- the up has balance for

Micah Conrad

That's correct.

John Rowan

should -- but provision be you're expense Okay. when period is more I And -- your income in be guidance your mean, should capital then your capital for gave greater a of providing charge-offs, where growth to net share, your than per generation just you share, generation be clear, south correct? per you

Micah Conrad

Right.

Operator

We'll take final our question…

Doug Shulman

one have more. think I time we Operator, for

Operator

Perfect.

We final Rick question with from will JPMorgan. our take Shane

Rick Shane

$XX look run the then a I look repurchase, X% want follow generation sort low-end capital John's million, high lease about to the growth and X.X excess to million is million capital the I scenarios capital to X, growth But low dividend that I generation, scenarios of X.X, the if of When and in distributions XX% excess again, million. see end generation, capital high have formation. we about up $XXX at question. center $XXX $XXX and loan about the factor end most scenarios of end, around the the and I on of and at and you related most

the needs, idea be delever John's the situation on increase million a to another special extent business, Following or would to up question, that at you, year you're point, of cap where the would would $XXX do $XXX consider million, the up at end gen it wind in to you supplemental the of the Or dividend? ahead buyback? be

Doug Shulman

given we more programmatic fair Look, for in the amount regular, our of plans the a amount to of use a the we've embedding this -- year. distribution a by buyback basis, capital and fair spoken into Yes.

the afterwards. our certainly you think Board -- ran I number have of left at over some the decide on or point. I we end the buybacks things math that's what into that open like listed you either we at depending any we options The we'll But won't your point, are have think to remain through of look would do. that validate delevering money options. to I the And at end and consider And think I to some, scenarios, things. what we'll won't, special the putting year more a if at

could in, guidance have for with now, conversation capital, there's and bake with So majority it. about to happening we'll excess to it. of I what's give we serious flexible, be what think the to try a do If people going so we're

Rick Shane

that over -- appropriate think would I deficiency, what with be a to we and if a Look, Yes. were in there's conservatism, is mean, things go I the what million are It's that. a returns? is the look, just helpful, of I if very there sort here. the at scenario maintain ROE it. all question for of of think we $XX where amount was an solutions well, looking and cushion guidance Got

Doug Shulman

of expect the is look, lightly lot way We mean, at out certainly to I And years. that very is of think generate will we we deploy over we at well. incredibly open. in doing if judicious next X all We we excess generate have how it. look be we put $X capital it Yes. the billion end, And a capital. the capital options don't business the I remain

Rick Shane

And but growth sort of objectives? realize loans at an ask repayment obviously, loan degree Got of a reason that about loan, drives that, to off behavior? when issues we What I'm anyway, seeing the you of terms the ask are it. to optionality, sales if rates kind the And one the hey, not is this I of I'm how probably realize your in that? question we're which is growth, of flexibility already, expectation one I think your degree have card in people a since -- of space most in of And bonus point dropped is repayment loan you come will just time think portfolio I going about we're the rates same but that, down. wondering card using manage here, last the double

Micah Conrad

of future with funding originations heard that potentially one of our different loan about on sale flexibility whole be buyers. to whole sale not would us and sale diversification we're balance suited that access And point those to program I talked as the But the that give loan might better strategic With our program, we yet. to also at sheet for before channels think. I pockets our of not funding that does whole the we've X a Well, there, respect put questions in some want -- our loan for being capital.

pandemic on using We plenty are in I put about of opportunity, to our to absolutely got it to basically in month in normal spoke during loan high around markets back not sale today stimulus. But a into the a the that. of X% program funding versus factored to customer on billion as mix when continue dynamics governor the receivables accelerate that growth. receivables a go whole We've With our the before, opportunity strong. relatively is quite about is after rates respect new think We guidance portfolio. about we levels million as respect and We've at payment But our rates, bit $XXX of shortly all sheet. that renewals talked very, all just of we've to to our seen as to growth capital. receivables taken balance absolutely saw payment $X payments. about remain an our that, pockets We've diversify into that is the very with it

Peter Poillon

it. Yes, Look, we us appreciate thanks, everyone, for joining today.

here. Our team is

with have speaking forward any soon. to out, please feel you questions, everyone look we So and to free reach if

Operator

line Call. disconnect a Conference Fourth your wonderful OneMain and does today's at Quarter Financial This have XXXX conclude Earnings time, Please this day.

OneMain (OMF) 3 Feb 222021 Q4 Earnings call transcript