Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q4 2016 Earnings Presentation
33 slides from Onemain's earnings presentation, Feb 13, 2017
Slide 1: 4Q 2016 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 4Q 2016 Earnings Presentation February 13, 2017
Slide 2: Important Information
Important Information This document 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 document is complete. For additional financial, stati
Slide 3: Important Information: Use of Non-GAAP Financial Measures
Important Information Use of Non-GAAP Financial Measures We report the operating results of our Consumer and Insurance segment, Acquisitions and Servicing segment, Real Estate segment, and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, pr
Slide 4: 4Q16 Executive Summary
4Q16 Executive Summary Net income of $27MM, diluted EPS of $0.20 Financial Consumer and Insurance (“C&I”) adjusted net income* of $108MM Performance Consumer and Insurance (“C&I”) adjusted diluted EPS* of $0.80 C&I net charge-off (“NCO”) ratio* of 7.5%, up seasonally from 6.2% in 3Q16 Credit
Slide 5: Our Business Model
Our Business Model Our business model consistently generates 10% unlevered returns Our Business Model Balanced receivables growth Scale drives operating leverage Disciplined underwriting Target 20%+ return on equity and modest tangible leverage (5 – 7x) (2) Consistent Unlevered Returns (1) O
Slide 6: Disciplined Underwriting
Disciplined Underwriting Our underwriting has been tested through multiple credit cycles We assess each borrower’s income and only lend against a portion of income after expenses Decades of credit data spanning multiple economic cycles provides a proprietary edge Local community presence augme
Slide 7: Integration Update
Integration Update The integration of OneMain is now complete Objectives Preliminary Results Complete systems conversion with January conversion Wave 1 of ~500 minimal disruption branches completed Lessons learned from October Maintain stable credit performance pilot incorporated during conv
Slide 8: Disciplined Underwriting
Disciplined Underwriting 2017 C&I net charge-off (“NCO”) ratio expected to be in the low 7’s C&I 30-89 Delinquency* and Net Charge-Off Ratios* 30-89 delinquency is an early indicator of net credit losses two quarters later C&I NCO Springleaf 30-89 Delinquency 9.0% C&I estimated NCO 3.5% Former OneMa
Slide 9: Receivables Growth
Receivables Growth Continued growth at former Springleaf Integration activities have delayed growth at former OneMain (2) Former OneMain Secured C&I Pre-Acquisition Profile (1) C&I Avg. Net Receivables * ($B) Originations % Springleaf OneMain Year over year growth $13.4 $13.5 $12.8 38% Receivables $
Slide 10: 4Q16 Financial Performance
4Q16 Financial Performance ($ in millions, except per share statistics) Delivering strong unlevered returns of 10%+ Earnings Summary C&I Return on Receivables* (1) 4Q16 3Q16 4Q15 4Q16 3Q16 4Q15 Consumer & Insurance * $175 $196 $143 Revenue 27.6% 28.1% 28.1% Acquisitions & Servicing * 2 2 28 Charge-O
Slide 11: Full Year 2016 Financial Performance
Full Year 2016 Financial Performance ($ in millions, except per share statistics) Delivering strong unlevered returns of 10%+ Earnings Summary C&I Return on Receivables* (1) 2016 2015 2016 2015 Consumer & Insurance* $784 $361 Revenue 28.0% 28.5% Acquisitions & Servicing * 32 128 Charge-Offs (7.1%) (
Slide 12: Scale Drives Operating Leverage
Scale Drives Operating Leverage ($ in millions) C&I Operating Expense (“OpEx”) ratio* down 120bps from 4Q15 (3) Pre-Acquisition Profile (1) C&I Operating Expense Achieved $100MM+ run-rate cost savings in 2016 $360 $349 ~13% OpEx Ratio* ~9% $333 $330 $325 2017 Cost Actions Achieve $200MM run-rate c
Slide 13: Funding & Liquidity
Funding & Liquidity Strong liquidity profile with balanced unsecured debt maturities Diverse Funding Sources (1) Funding & Liquidity Progress $14.3B of debt, down $0.1B from 9/30/16 12+ months of forward liquidity(1) • Unsecured debt of $6.1B (42%) • $4.8B of undrawn conduits, no 2017 maturities
Slide 14: Capital Structure
Capital Structure Tangible leverage* and tangible equity continue to improve Tangible Leverage* on track Estimated Tangible Equity* Improvement 18.5x (2) 3Q16 4Q16 2017E 10.7x C&I Adjusted Net Income* $122 $108 $525 10.4x ~9.0x Other (3) ($97) ($81) ($225) ~7.0x Net Income $25 $27 $300 Adjusted Tang
Slide 15: Our Business Model
Our Business Model Our business model consistently generates 10% unlevered returns C&I Adjusted Diluted EPS* Our Business Model $3.75 - $4.00 $3.60 Balanced receivables growth Disciplined underwriting $1.77 Scale drives operating leverage $1.28 Target 20%+ return on equity and modest tangibl
Slide 16: Appendix
% OneMain. Lending Made Personal Appendix 16
Slide 17: Disciplined Underwriting - Springleaf
Disciplined Underwriting - Springleaf Secured lending continues to improve credit performance Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 days past due at 6 months on book Secured charge-offs more than 50% lower than unsecured 53% 57% 3.0% 3.2% 46% 2.7% 2014 2015
Slide 18: Disciplined Underwriting – Former OneMain
Disciplined Underwriting – Former OneMain Secured lending strategies expected to drive 2018 loss improvements Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 daysBypast Origination due at 6Vintage months on book 24% as of 4Q16 1H16 vintage partially impacted by integ
Slide 19: Acquisition Related Accounting Impacts
Acquisition Related Accounting Impacts Includes the impact of non-cash acquisition accounting, acquisition and integration related costs, and other operations 2016 2016 Actual Estimate (1) SpringLeaf Debt Discount Accretion ($83) ($100) OMFH LLR Provision Catch-up (135) (125) OMFH Receivable Premium
Slide 20: Consolidated Income Statement (GAAP)
Consolidated Income Statement (GAAP) (unaudited, in millions, except per share statistics) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Finance Charges $765 $763 $723 $785 $643 $3,036 $1,870 Finance Receivables Held for Sale Originated as Held for Investment 3 7 18 46 47 74 60 Total Interest Income 768 770 74
Slide 21: Consolidated Balance Sheet (GAAP)
Consolidated Balance Sheet (GAAP) Prior to 310-30 Policy Change (unaudited, in millions) 12/31/16 9/30/16 6/30/16 3/31/16 12/31/15 12/31/15 Cash and Cash Equivalents $579 $658 $742 $716 $939 $939 Investment Securities 1,764 1,788 1,744 1,872 1,867 1,867 Net Finance Receivables: Personal Loans & Reta
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Pretax Income (Loss) Attributable to OMH - GAAP basis $29 $33 $42 $224 ($331) $328 ($353) GAAP to Segment Accounting Basis Adjustments: Interest Income 61 68 106 136 100 371 91 Interest Expense 8 15 14 18
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Pretax Income (Loss) - Segment Accounting Basis $136 $179 $206 $167 $127 $688 $345 Net Loss on Repurchases and Repayments of Debt 1 0 5 8 0 14 0 Net Gain on Sale of Personal Loans 0 0 (22) 0 0 (22) 0 Acqu
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 12/31/16 9/30/16 6/30/16 3/31/16 12/31/15 Consumer & Insurance $13,455 $13,485 $13,304 $12,984 $12,954 Acquisition & Servicing 0 0 0 0 1,703 Real Estate 153 210 219 542 565 Other 23 27 30 35 41 Segment to GAAP Adjustment 101 148 204 275 29
Slide 25: Consumer and Insurance Segment (Non-GAAP)
Consumer and Insurance Segment (Non-GAAP) (unaudited, in millions, except per share statistics) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Finance Charges $821 $827 $817 $807 $621 $3,272 $1,439 Finance Receivables Held for Sale Originated as Held for Investment 0 0 14 42 43 56 43 Total Interest Income 821 8
Slide 26: Reconciliation of Consumer & Insurance Segment Pro Forma
Reconciliation of Consumer & Insurance Segment Pro Forma (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Pretax Income (Loss) Attributable to OMH $29 $33 $42 $224 ($331) $328 ($353) Acquisition & Servicing (2) (2) (2) (26) (28) (32) (128) Real Estate / Other 7 8 15 13 39 43 236 Net Loss
Slide 27: Consumer & Insurance Segment Pro Forma (Non-GAAP)
Consumer & Insurance Segment Pro Forma (Non-GAAP) (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Finance Charges $821 $827 $817 $807 $799 $3,272 $3,159 Finance Receivables Held for Sale Originated as Held for Investment 0 0 14 42 43 56 43 Total Interest Income 821 827 831 849 842 3,328
Slide 28: Consumer & Insurance Segment Pro Forma Metrics (Non-GAAP)
Consumer & Insurance Segment Pro Forma Metrics (Non-GAAP) (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Revenue (1) 27.6% 28.1% 28.2% 28.3% 28.1% 28.0% 28.5% Net Charge-Offs (2) (7.5%) (6.2%) (7.0%) (7.5%) (6.5%) (7.1%) (6.5%) Risk Adjusted Margin 20.1% 21.9% 21.2% 20.8% 21.6% 20.9% 22
Slide 29: Reconciliation of C&I Unlevered Returns
Reconciliation of C&I Unlevered Returns (unaudited, in millions) 2011 2012 2013 2014 2015 2016 Revenue (1) $2,784 $2,867 $3,061 $3,385 $3,613 $3,770 Net Charge-Offs (2) (598) (571) (591) (677) (819) (948) Risk Adjusted Margin 2,186 2,296 2,470 2,708 2,794 2,822 Operating Expense (1,234) (1,169) (1,1
Slide 30: Acquisitions and Servicing Segment (Non-GAAP)
Acquisitions and Servicing Segment (Non-GAAP) (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Interest Income $0 $0 $0 $102 $108 $102 $463 Interest Expense 0 0 0 (20) (20) (20) (87) Provision for Finance Receivable Losses 0 0 0 (14) (15) (14) (68) Net Interest Income after Provision 0 0
Slide 31: Real Estate Segment (Non-GAAP)
Real Estate Segment (Non-GAAP) (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Finance Charges $4 $3 $12 $12 $12 $31 $55 Finance Receivables Held for Sale Originated as Held for Investment 3 7 3 3 4 16 13 Total Interest Income 7 10 15 15 16 47 68 Interest Expense (8) (8) (14) (13) (35) (
Slide 32: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, in millions) 4Q16 3Q16 2Q16 1Q16 4Q15 FY16 FY15 Interest Income $1 $1 $1 $1 $2 $4 $8 Interest Expense 2 (1) (1) 0 (8) 0 (56) Provision for Finance Receivable Losses 0 0 0 0 0 0 (1) Net Interest Income (Loss) after Provision 3 0 0 1 (6) 4 (49) Other (3) 0 0 0 0 (3) 0 Tota
Slide 33: Reconciliation of Balance Sheet Metrics
Reconciliation of Balance Sheet Metrics Prior to 310-30 Policy Change (unaudited, in millions) 12/31/16 9/30/16 6/30/16 3/31/16 12/31/15 12/31/15 Total Assets $18,123 $18,353 $18,544 $19,134 $21,190 $21,056 Less: Goodwill (1,422) (1,422) (1,422) (1,422) (1,440) (1,440) Less: Other Intangible Assets