Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q4 2021 Earnings Presentation
29 slides from Onemain's earnings presentation, Feb 3, 2022
Slide 1: OneMain Financial 4Q21 Earnings Presentation
OneMain Financial 4Q21 Earnings Presentation (NYSE: OMF) February 3, 2022
Slide 2: Important Information
Important Information Cautionary Note Regarding Forward-Looking Statements This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by or that otherwise include the words “anticipates,” “appears,”
Slide 3: 2021 Highlights
2021 Highlights • Our vision is to be the lender of choice for nonprime customers Customer-Focused • Provide a range of responsible lending options to meet customers’ needs today and offer products Vision and services that enable a better financial future • Successful rollout of new Brightway credit
Slide 4: 4Q21 Financial Results
4Q21 Financial Results ($ in millions, except Average Assets and Average Net Receivables in billions, and per share statistics) Earnings Summary C&I* C&IAdjusted Adjusted Earnings Summary Earnings Summary* 4Q21 3Q21 4Q20 4Q21 3Q21 4Q20 Consumer & Insurance* $413 $421 $498 Interest Income $1,119 $1,1
Slide 5: FY 2021 Financial Results
FY 2021 Financial Results ($ in millions, except Average Assets and Average Net Receivables in billions, and per share statistics) Earnings Summary C&I* C&IAdjusted Adjusted Earnings Summary Earnings Summary* 2021 2020 2021 2020 Consumer & Insurance* $1,918 $1,092 Interest Income $4,355 $4,353 Other
Slide 6: Future Vision Deepens & Broadens Customer Relationships
Future Vision Deepens & Broadens Customer Relationships Unsecured Insurance Loans Financial Secured Wellness Progress to a Loans Meet the needs Credit better future of today OneMain Builder/ Products & Services Customers Secured Lending products Card that increase Credit engagement, build Card loyal
Slide 7: Brightway Credit Card Rollout On Track
Brightway Credit Card Rollout On Track Rewarding milestones... …with a great digital experience • 66,000 cards issued in 2021 – in line with target Large Total Addressable Market1 • Branch distribution model proving to be highly valuable to card adoption $427B • Digital engagement is encouraging as
Slide 8: Originations & Receivables (C&I)
Originations & Receivables (C&I)* ($ in billions unless noted) Originations Highlights $13.8 $13.9 • 4Q21 originations up 20% vs 4Q20 and $10.7 4% vs 4Q191 • Strong originations driven by normalized demand as well as product and channel initiatives $3.2 $3.9 $3.8 • Portfolio yield of 23.3% in 4Q21 a
Slide 9: New Products and Channels Support Growth With Attractive Returns (C&I)
New Products and Channels Support Growth With Attractive Returns (C&I)* ($ in millions) +2.6% +0.7% +1.9% $19,629 $19,130 3Q21 Managed Receivables Core Loans New Products 4Q21 Managed Receivables & Channels 1 Illustrative Select New Products and Channels Core Prime Distribution Illustrative Economic
Slide 10: Delinquency & Net Charge-off Trends (C&I)
Delinquency & Net Charge-off Trends (C&I)*1 ($ in millions) 30-89 Days Delinquent 90+ Days Delinquent $455 $467 $450 5.00% $388 $395 $383 $413 $413 $415 $365 $393 $400 $335 $320 $348 $350 $316 4.00% $320 $295 $290 $300 $266 $247 $276 3.00% 2.43% 2.47% $250 2.25% 2.11% 2.16% 1.99% 2.26% 1.95% 2.28% 2
Slide 11: Loan Loss Reserve Trends (C&I)
Loan Loss Reserve Trends (C&I)*1 ($ in millions) $2,342 $2,342 $2,283 $2,202 $2,075 $2,070 $2,102 $2,011 $1,968 CECL Impact 13.2% 13.1% 12.6% $849 12.0% 11.8% 10.7% 11.1% 11.0% 10.9% 4.6% 4Q19 1/1/2020 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Pre-CECL Post-CECL % reflects loan loss reserves as a % of
Slide 12: Operating Expenses (C&I)
Operating Expenses (C&I)*1 ($ in millions) Highlights • FY21 operating expense of $1,341 reflects continued investment and receivables growth • FY21 OpEx ratio remains below 2019 levels, driven by core expense efficiencies • 2020 expenses reflect aggressive cost reductions taken in association with
Slide 13: Investing for Growth While Maintaining Expense Discipline
Investing for Growth While Maintaining Expense Discipline ($ in millions, unless noted) FY19 FY20 FY21 FY22E OpEx Ratio*1 7.5% 6.9% 7.3% < 7.3% 1,400 $1,341 $1,290 1,300 $1,250 +$50 1,200 $165 $257 $185 New Products & 1,100 Channels, Technology, Digital and Data 1,000 Science 900 +3 - 5% Core Expens
Slide 14: Funding, Liquidity & Capital
Funding, Liquidity & Capital ($ in billions unless noted) Highlights • Issued $1B 2-year revolving ABS at 0.98%; redeemed 6.125% $1B unsecured bond due May 2022 • Completed $1B 5-year unsecured corporate revolver to further diversify liquidity • Committed bank capacity of $7B ($6B conduit, $1B revol
Slide 15: Adjusted Capital Roll-Forward
Adjusted Capital* Roll-Forward ($ in millions) 4Q21 FY21 $1,303 ($119) ($1,646) $334 ($52) ($281) $3,587 $3,124 $3,125 $3,125 3Q21 Ending Capital Other Capital 4Q21 Ending 4Q20 Ending Capital Other Capital 4Q21 Ending Adjusted Generation Returns Adjusted Adjusted Generation Returns Adjusted Capital
Slide 16: Capital Allocation Framework
Capital Allocation Framework Strategically positioned to deliver approximately $4B of capital generation over the next three years … to be allocated as follows: 1 Invest in portfolio growth / inorganic growth / maintain net leverage of 4 – 6x • Portfolio generates 6%+ return on receivables and 30%+
Slide 17: 2022 Strategic Priorities (C&I)
2022 Strategic Priorities (C&I)* ($ in millions, except per share statistics) FY19 FY20 FY21 FY22E Managed Receivables Growth 14% (2%) 9% 5 – 10% Net Charge-offs 6.0% 5.5% 4.2% 5.6 - 6.0% OpEx Ratio1 7.5% 6.9% 7.3% <7.3% Capital Generation Return on Receivables 5.7% 5.9% 7.1% ~6% Capital Generation
Slide 18: Total Shareholder Return
Total Shareholder Return 3 Year Total Shareholder Return 215% Secured Loans Credit Builder/ 100% Secured 89% 84% Card Bill Negotiation OneMain Financial S&P 500 S&P 500 Financials Proxy Peer Average 1 OneMain has outperformed the market and peers on total shareholder return 1. Includes: Alliance Dat
Slide 19: Appendix
Appendix OneMain Financial.
Slide 20: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Interest Income $1,121 $1,113 $1,071 $1,060 $1,096 $4,364 $4,368 $4,127 Interest Expense (235) (237) (231) (235) (246) (937) (1,027) (970) Provision for Finance Receivable L
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Cash and Cash Equivalents $541 $821 $1,787 $1,301 $2,272 Investment Securities 1,992 1,963 1,969 1,951 1,922 Net Finance Receivables 19,212 18,843 18,163 17,564 18,084 Unearned Insurance Premiu
Slide 22: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 12/30/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Long-Term Debt 17,750 $17,661 $17,605 $16,789 $17,800 Less: Junior Subordinated Debt (172) (172) (172) (172) (172) Adjusted Debt $17,578 $17,489 $17,433 $16,617 $17,628 Less: Available Cash and Cash
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Consumer & Insurance $359 $388 $474 $567 $491 $1,788 $1,021 $1,168 Other (1) (1) (2) (3) (4) (7) (9) (3) Segment to GAAP Adjustment (3) (11) (9) (18) (11) (40) (35) (67) Income Before Income Taxes
Slide 24: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) (unaudited, $ in millions) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Consumer & Insurance $19,215 $18,847 $18,168 $17,569 $18,091 Segment to GAAP Adjustment (3) (4) (5) (5) (7) Net Finance Receivables - GAAP basis $19,212 $18,843 $18,163 $17,564
Slide 25: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Interest Income $1,119 $1,111 $1,069 $1,057 $1,093 $4,355 $4,353 $4,114 Interest Expense (233) (235) (230) (233) (242) (930) (1,007) (947) Provision for Finance Rec
Slide 26: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, $ in millions, except per share statistics) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Revenue (1) 25.6% 26.1% 26.4% 26.4% 26.3% 26.1% 25.9% 26.6% Net Charge-off (4.2%) (3.5%) (4.4%) (4.7%) (4.2%) (4.2%) (5.5%) (6.0%) Risk Adjusted Margin 21.4
Slide 27: Consumer & Insurance Capital Metrics (Non-GAAP)
Consumer & Insurance Capital Metrics (Non-GAAP) (unaudited, $ in millions) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Provision for Finance Receivable Losses $236 $224 $130 ($3) $130 $587 $1,313 $1,105 Net Charge-offs (204) (165) (194) (205) (189) (768) (998) (1,028) Change in C&I Allowance for Finance
Slide 28: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 FY19 Gross Charge-offs $260 $223 $252 $255 $231 $990 $1,163 $1,172 Gross Charge-off Ratio 5.42% 4.77% 5.70% 5.81% 5.12% 5.42% 6.46% 6.86% Recoveries $56 $58 $58 $50 $42 $222 $165 $143 Recover
Slide 29: Glossary
Glossary Select Calculations: • Adjusted Capital = Adjusted Tangible Common Equity + Allowance for Finance Receivable Losses (ALLL), net of tax • Adjusted Debt = Long-Term Debt – Junior Subordinated Debt • Adjusted Tangible Common Equity (TCE) = Total Shareholders’ Equity – Goodwill – Other Intangib