Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q4 2020 Earnings Presentation
29 slides from Onemain's earnings presentation, Feb 9, 2021
Slide 1: OneMain Financial 4Q20 Earnings Presentation
1 OneMain Financial 4Q20 Earnings Presentation (NYSE: OMF) February 8, 2021
Slide 2: Important Information
2 Important Information This presentation contains summarized information concerning OneMain Holdings, Inc. (the “Company”) and the Company’s business, operations, financial performance and trends. No representation is made that the information in this presentation is complete. For additional financ
Slide 3: Important Information
3 Important Information Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act of 2021; risks associated with our insurance operations, including insurance claims that exceed our expectations or insurance losses that exceed our reserves; our inability to successfu
Slide 4: 2020 Highlights
2020 Highlights • Elevated customer engagement providing individualized support through an evolving and Customer Focused dynamic environment • Broadening our product offering to expand and deepen our customer relationships Cycle Tested Hybrid • Accelerated our omni-channel distribution with 44% of l
Slide 5: 4Q20 and FY20 Financial Highlights
5 4Q20 and FY20 Financial Highlights ($ in millions, except per share statistics or unless noted) Earnings Credit (C&I)* YoY YoY YoY YoY 4Q20 FY20 4Q20 FY20 Chg. Chg. Chg. Chg. Net Income $359 38% $730 (15%) Change in LLR ($59) NM $315 NM C&I Adj. Net Income*1 $373 39% $819 (11%) Net Charge-offs $18
Slide 6: 4Q20 Financial Results
4Q20 Financial Results ($ in millions, except Average Net Receivables in billions, and per share statistics) Earnings Summary C&I Adjusted C&I AdjustedEarnings Summary* Earnings Summary* 4Q20 3Q20 4Q19 4Q20 3Q20 4Q19 Consumer & Insurance* $498 $393 $352 Interest Income $1,093 $1,086 $1,101 Other Net
Slide 7: FY 2020 Financial Results
FY 2020 Financial Results ($ in millions, except Average Net Receivables in billions, and per share statistics) Earnings Summary C&I Adjusted C&I AdjustedEarnings Summary* Earnings Summary* 2020 2019 2020 2019 Consumer & Insurance* $1,092 $1,206 Interest Income $4,353 $4,114 Other Net Revenue 309 43
Slide 8: We continue to deliver strong financial results, even in an uncertain environment
8 We continue to deliver strong financial results, even in an uncertain environment C&I Ending Net Receivables* Capital Generation* ($ in billions) ($ in millions) $18.4 $18.1 $975 $1,056 $16.2 $725 FY18 FY19 FY20 FY18 FY19 FY20 C&I Net Charge-off Ratio* C&I Operating Expense Ratio* 6.5% 8.1% 6.0% 7
Slide 9: Origination trends (C&I)
Origination trends (C&I)* ($ in billions unless noted) Originations Highlights • Loan demand and originations $3.9 $3.7 $3.7 continued modest improvement $3.2 $2.9 leading to ENR growth of $265MM $2.6 $2.6 $2.0 in 4Q20 Tax CARES Season Act • Originations of $3.2 in 4Q20 vs. $3.7 in 4Q19 1Q19 2Q19 3Q
Slide 10: Credit remains resilient (C&I)
Credit remains resilient (C&I)* ($ in millions) 30-89 Days Delinquent Net Charge-offs $455 $411 $413 $413 $366 $296 $348 $284 $282 $313 $290 $256 $261 $227 $232 2.47% 2.15% 2.30% 2.26% 2.28% 1.94% 1.95% 7.11% 6.46% $189 1.63% 6.20% 6.33% 5.71% 5.17% 5.20% 4.18% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q2
Slide 11: 2020 loan loss reserve trends (C&I)
2020 loan loss reserve trends (C&I)* ($ in millions) $2,342 $2,342 $26 ($85) $2,283 $2,202 $1,968 Reserve 10.7% 12.0% 13.2% 13.1% 12.6% (% of ENR) Jan. 1st 1Q20 2Q20 3Q20 Portfolio Other, 4Q20 Growth incl. Macro FY19 NCO 1.9x 2.1x 2.3x 2.3x 2.2x Coverage 4Q20 reserve reduction driven by improving cr
Slide 12: Maintaining operating expense discipline (C&I)
Maintaining operating expense discipline (C&I)* (Operating Expenses $ in millions, ANR $ in billions) Quarterly Operating Expenses FY Operating Expenses $1,500 (3%) $1,400 $1,300 $1,290 $1,250 $1,200 $1,100 $1,000 $900 $800 $327 $330 $700 $319 $600 $297 $302 $500 $400 $300 $200 $100 4Q19 1Q20 2Q20 3
Slide 13: Maintaining our strong balance sheet & robust liquidity
Maintaining our strong balance sheet & robust liquidity ($ in billions unless noted) Key Highlights • Issued $850MM of 10-year bonds at 4.0% coupon • Executed forward flow agreement ($15MM a month for 2 years) at price well above par to further diversify funding and potentially create new customer a
Slide 14: We generate and maintain considerable capital
We generate and maintain considerable capital* ($ in millions) $1,056 $16 ($852) +8.7% +6.5% $329 $19 ($61) $3,587 $3,587 $3,367 $3,300 3Q20 Capital Other Capital 4Q20 4Q19 Capital Other Capital 4Q20 Ending Generation Returns Ending Ending Generation Returns Ending Adjusted Adjusted Adjusted Adjuste
Slide 15: We have a disciplined capital allocation framework
We have a disciplined capital allocation framework 1 Fund portfolio growth with loans that meet our risk / return criteria Originated ~$11B of loans in 2020 through a best in class underwriting decisioning engine ensuring >20% ROTCE at the loan level 2 Invest in our platform and consider inorganic o
Slide 16: Strong capital returns while operating within target leverage range
Strong capital returns while operating within target leverage range Capital Returns1 $3.95 Board will evaluate dividends above the $2.83 quarterly minimum (currently $0.45 per $2.25 $2.33 quarter) every Q1 and Q3 consistent with prior quarters and our capital allocation $0.33 $0.45 strategy $0.25 3Q
Slide 17: Well-positioned and investing for long-term growth
Well-positioned and investing for long-term growth Accelerating Digital New Products Customer Capabilities Credit Card 85% of new applications begin online ✓ Addressable market – ~$430B of near-prime credit card balances, ~5x near-prime personal loan market1 ✓ Synergistic approach – OneMain customer
Slide 18: Appendix
Appendix OneMain Financial.
Slide 19: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Interest Income $1,096 $1,089 $1,077 $1,106 $1,107 $4,368 $4,127 $3,658 Interest Expense (246) (255) (271) (255) (252) (1,027) (970) (875) Provision for Finance Receivable L
Slide 20: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Cash and Cash Equivalents $2,272 $1,944 $2,740 $4,203 $1,227 Investment Securities 1,922 1,882 1,862 1,800 1,884 Net Finance Receivables 18,084 17,817 17,721 18,269 18,389 Unearned Insurance Pr
Slide 21: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Long-Term Debt $17,800 $17,531 $18,010 $20,443 $17,212 Less: Junior Subordinated Debt (172) (172) (172) (172) (172) Adjusted Debt $17,628 $17,359 $17,838 $20,271 $17,040 Less: Available Cash and Cash
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Consumer & Insurance $491 $351 $128 $51 $354 $1,021 $1,168 $787 Other (4) (2) (1) (1) (1) (9) (3) (131) Segment to GAAP Adjustment (11) (8) (9) (7) (9) (35) (67) (32) Income Before Income Taxes - G
Slide 23: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) (unaudited, $ in millions) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Consumer & Insurance $18,091 $17,826 $17,732 $18,283 $18,421 Other 0 0 0 0 0 Segment to GAAP Adjustment (7) (9) (11) (14) (32) Net Finance Receivables - GAAP basis (1) $18,084
Slide 24: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Interest Income $1,093 $1,086 $1,074 $1,101 $1,101 $4,353 $4,114 $3,677 Interest Expense (242) (250) (266) (249) (247) (1,007) (947) (844) Provision for Finance Rec
Slide 25: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, $ in millions, except per share statistics) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Revenue (1) 26.3% 26.4% 25.3% 25.6% 26.6% 25.9% 26.6% 26.2% Net Charge-off (4.2%) (5.2%) (6.3%) (6.5%) (5.7%) (5.5%) (6.0%) (6.5%) Risk Adjusted Margin 22.1
Slide 26: Consumer & Insurance Capital Metrics (Non-GAAP)
Consumer & Insurance Capital Metrics (Non-GAAP) (unaudited, $ in millions) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Provision for Finance Receivable Losses $130 $232 $422 $530 $289 $1,313 $1,105 $1,047 Less: Net Charge-offs (189) (232) (282) (296) (261) (998) (1,028) (998) Change in C&I Allowance for
Slide 27: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Gross Charge-offs $231 $274 $322 $337 $299 $1,163 $1,172 $1,127 Gross Charge-off Ratio 5.12% 6.15% 7.22% 7.36% 6.53% 6.46% 6.86% 7.32% Recoveries $42 $42 $40 $41 $38 $165 $143 $129 Recov
Slide 28: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, $ in millions) 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 FY18 Interest Income $2 $1 $1 $2 $3 $6 $9 $17 Interest Expense (1) (1) (1) (1) (1) (4) (5) (17) Provision for Finance Receivable Losses 0 0 0 0 0 0 0 5 Net Interest Income after Provision for Finance 1 0 0 1 2 2 4 5 Recei
Slide 29: Glossary
Glossary Select Calculations: • Adjusted Capital = Adjusted Tangible Common Equity + Allowance for Finance Receivable Losses (ALLL) + Deferred Tax Asset on Allowance • Adjusted Debt = Long-Term Debt – Junior Subordinated Debt • Adjusted Tangible Common Equity (TCE) = Total Shareholders’ Equity – Goo