Onemain Holdings, Inc. · NYSE:OMF
Onemain — Springleaf Holdings — Debt Investor Presentation (June 2014)
31 slides from Onemain's debt investor presentation, June 2014
Slide 1: Springleaf Funding Trust Personal Loan ABS Investor Presentation
Springleaf Funding Trust Personal Loan ABS Investor Presentation June 2014 CONFIDENTIAL & PROPRIETARY 1
Slide 2: Qualification and Safe Harbor Disclaimer
Qualification and Safe Harbor Disclaimer This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. Important Information The following slides are part of a prese
Slide 3: Springleaf Today
Springleaf Today Business focused exclusively on consumer lending Proven relationship-based lending model with localized Consumer Lending originations, servicing and centralized risk management Consistent underwriting and loan performance Creating new unit focused on direct auto lending Di
Slide 4: Springleaf Overview
Springleaf Overview For over 90 years Springleaf has offered responsible alternatives for borrowers seeking affordable personal loans – Fixed rate and fully amortizing loans with level monthly payments and no balloons or prepayment penalties – Over 830 branches across 26 states; 72% have been open
Slide 5: Large Non-prime Borrower Demand, Limited Lender Supply
Large Non-prime Borrower Demand, Limited Lender Supply Uniquely positioned to capitalize on supply-demand imbalance within the non-prime lending space – Large and Growing Non-Prime Population: 122 million Americans earn less than $72,000(1) – Limited Liquidity: 40% of Americans do not believe they
Slide 6: Few Lending Alternatives in Non-prime / Near-prime Market
Few Lending Alternatives in Non-prime / Near-prime Market Of those institutions still lending today: – Banks mainly lending to prime borrowers – Payday lenders under intense regulatory scrutiny Springleaf offers a responsible alternative for borrowers seeking convenient and affordable personal l
Slide 7: Customer Profile
Customer Profile Borrowers typically have consistent income and solid job history, Borrowers technologically adept (1) but are often credit or liquidity constrained – 93% bank online – Borrowers rely on our loans for: – 81% have smartphones • Loan Consolidations – Increased use of Springleaf • H
Slide 8: Personal Loan Profile
Personal Loan Profile Springleaf makes 3 types of personal loans Customer distribution(1) ̶ Hard Secured: collateralized predominantly by ̶ 59% Present Customers (renewals) automobiles (first lien) ̶ 32% New Customers ̶ Soft Secured: collateralized by untitled consumer ̶ 9% Former Customers asse
Slide 9: Personal Loan Underwriting
Personal Loan Underwriting Capacity Character Collateral Income/ability to repay Willingness to repay Additional loan support Time tested underwriting principles produce consistently strong performance – Enhanced by proprietary data and active user of alternative data (e.g. utility and rent paymen
Slide 10: Consistent Performance Through Multiple Economic Cycles
Consistent Performance Through Multiple Economic Cycles Portfolio Delinquencies Compare Favorably… …And So Do Portfolio Losses 3.66% 5.18% 4.93% 2.98%(1) 3.81% (3) 2.60% (2) (2) Subprime Auto Private Label Card Springleaf charge-off rates have been consistent through multiple economic cycles (4) Ban
Slide 11: Personal Loan Performance
Personal Loan Performance Risk adjusted yield has grown almost 1000 bps over the last 5 years, including an increase of 60 bps q-o-q(1) Enhanced analytics driving real time risk-adjusted pricing Gross Yield Continues to Trend Up (1,2) 30.0% 26.3% 26.9% 25.8% 25.4% 25.0% 24.1% 22.9% 20.0% 15.0% 2
Slide 12: Servicing and Loss Mitigation Tools
Servicing and Loss Mitigation Tools Springleaf responsibly employs several tools to meet customer needs during periods of financial stress (if appropriate) The goal of all programs is to provide solutions to meet a customer’s needs, while not masking any inevitable losses Cure program being te
Slide 13: Delinquency Resolution Outcomes
Delinquency Resolution Outcomes "Renewals" of delinquent accounts are not common practice - 2.3% of 30+ delinquent loans are cured through renewal (average for past 12 months) – Approval criteria: full re-underwriting and evidence that past delinquency was due to a temporary circumstance that will
Slide 14: Centralized Servicing Operations
Centralized Servicing Operations Springleaf has three state-of-the-art London, Kentucky centralized servicing facilities with nearly 500 agents servicing both consumer and mortgage loans Springleaf currently services over $5 billion consumer and mortgage receivables in its Acquired Sept 2013 f
Slide 15: Profitable Core Insurance Operations
Profitable Core Insurance Operations Springleaf’s insurance operations have been consistently profitable – Insurance revenues increased $9.3 million from FY’12 to $137.9 million for FY’13 – Pre-tax income of $45.1 million for FY’13 Springleaf’s insurance subsidiaries have also been a source of l
Slide 16: Regulatory
Regulatory State Regulation − Subject to supervision by state financial regulators and the Indiana Department of Insurance − Over 800 state exams conducted each year − Licensed in all 50 states − Positive exam results with no material findings Federal Regulation − CFPB will be Springleaf’s prima
Slide 17: Liquidity and Funding
Liquidity and Funding Unsecured / Hybrid As of 3/31/14 Strong and stable liquidity position Diversified Funding Consumer – $760 million cash on hand as of 3/31/14 Sources Securitizations(2) – $1bn committed undrawn funding ABS 28% capacity from 3 money-center banks RMBS Unsecured/ 41% TRUPS – $350
Slide 18: 1Q14 Summary Financial Results
1Q14 Summary Financial Results ($ in thousands) 1Q14 4Q13 1Q13 Consumer & Insurance(1) $48,822 $41,015 $40,231 Acquisitions & Servicing(2) 30,658 35,831 0 Pretax Core Earnings(3) $79,480 $76,846 $40,231 Estimated Income Taxes(4) (29,408) (28,433) (14,885) Core Earnings $50,072 $48,413 $25,346 Net In
Slide 19: Overview of Securitization Programs
Overview of Securitization Programs 3 personal loan ABS transactions since 2013 ABS Program ̶ $568 million inaugural securitization February 2013, $370 million transaction June (“SLFT”) 2013, $559 transaction March 2014 ̶ Programmatic issuance planned Springleaf acquired a 47% interest in the $3
Slide 20: ABS Program ("SLFT") Overview
ABS Program (“SLFT”) Overview SLFT 2013-A SLFT 2013-B SLFT 2014-A Class A Notes Class A Notes Class A Notes Revolving Period: 2 years Revolving Period: 3 years Revolving Period: 2 years $500 million $500 million $342.55 million 77.60% Initial Collateral: $662mm 75.50% Initial Collateral: $441mm 77.5
Slide 21: SLFT 2014-A Key Terms
SLFT 2014-A Key Terms Capital Structure Concentration Limits Cumulative Concentration SLFT SLFT SLFT % of Limits 2014-A 2013-B 2013-A Pool Balance Product Type Unsecured 20% 20% 20% Unsecured or Other Secured 60% 60% 60% Class A Risk Level $500,000,000 77.60% E 6% 6% 6% E or D 15% 15% 15% E to (and
Slide 22: Conservative Amortization Profile
Conservative Amortization Profile With non-declining overcollateralization and locked-out subordinate tranches, credit enhancement builds rapidly during the amortization period (1) ̶ The amortization profile and WAL for the notes are similar under a variety of CPR assumptions ̶ Over 55% of the Cla
Slide 23: SLFT Losses Are A Fraction Of Rating Agency Base Case
SLFT Losses Are A Fraction Of Rating Agency Base Case 3 Month Net Annualized WAC and Excess Spread (1) 2014-A S&P Assumption (1) Excess Spread: coupon minus servicing fee rate minus duration weighted coupon Prepays – Including Renewals Prepays – Without Renewals Seasonal Seasonal spike spike 2013-B
Slide 24: Collateral Consistency
Collateral Consistency SLFT 2014-A SLFT 2013-B SLFT 2013-A Current Aggregate Principal $644,330,689 $441,989,251 $662,247,048 Balance Number of Loans 167,615 120,605 190,627 Average Principal Balance $3,844 $3,664 $3,474 Weighted Average Coupon 27.502% 25.475% 25.259% Weighted Average Original Term
Slide 25: SpringCastle ABS Securitization ("SCFT") Overview
SpringCastle ABS Securitization (“SCFT”) Overview In April 2013, Springleaf acquired a 47% interest in a $3.9 billion HSBC consumer portfolio − Collateral consists of both closed end and revolving, mortgage and non-mortgage receivables Credit enhancement for Class A consists of subordinate notes
Slide 26: Back-Up Servicing
Back-Up Servicing Wells Fargo (AA- / Aa3) is a warm back-up servicer for all SLFT and SCFT transactions Wells Fargo has duties / obligations based on a multi-stage plan which is divided into 3 periods: − Pre-Centralization Period (business as usual): • Ensure ongoing system compatibility with Sp
Slide 27: Enhanced Investor Transparency
Enhanced Investor Transparency Springleaf continually seeks to augment its investor reporting website for our ABS investors Recently added collateral pool and performance data http://investor.springleaffinancial.com/ Collateral Pool and Performance Data New Feature 27
Slide 28: Appendix
Appendix Financial
Slide 29: Personal Loan Statistics by Product Types
Personal Loan Statistics by Product Types Hard Secured (45%) Secured by automobiles or other titled assets $ in millions 2008 2009 2010 2011 2012 2013 2014Q1 Origination Volume $1,743 $965 $949 $1,157 $1,140 $1,423 $334 Originated and serviced in the branches Period end UPB $2,048 $1,563 $1,265
Slide 30: Branches Supported by Centralized Functions
Branches Supported by Centralized Functions Key centralized functions provide strong controls − Originations, servicing and collections performed at branch level with close supervision by highly experienced field management − Underwriting & pricing centrally controlled through proprietary credit s
Slide 31: Reconciliation – Push-Down Accounting to Historical / Pretax Core Earnings
Reconciliation – Push-Down Accounting to Historical / Pretax Core Earnings (unaudited, in thousands) 1Q14 4Q13 1Q13 1 1 Push-Down Accounting Pretax Income (Loss) Attributable to Springleaf $82,842 $12,542 ($13,877) 2 Interest Income (36,867) (45,976) (50,180) 3 Interest Expense 28,560 34,898 35,336
Springleaf Holdings — Debt Investor Presentation (June 2014) on 6ix