Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q3 2021 Earnings Presentation
28 slides from Onemain's earnings presentation, Oct 21, 2021
Slide 1: OneMain Financial 3Q21 Earnings Presentation
1 OneMain Financial 3Q21 Earnings Presentation (NYSE: OMF) October 20, 2021
Slide 2: Important Information
2 Important Information Cautionary Note Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “anticipates,” “appears,” “ar
Slide 3: Business Highlights
Business Highlights • Our vision is to be the lender of choice for near-prime customers Customer-Focused Vision • Provide a range of responsible lending options to meet customers’ needs today and offer products and services that enable a better financial future • Managed Receivables* grew $813MM in
Slide 4: 3Q21 Financial Performance Highlights
4 3Q21 Financial Performance Highlights ($ in millions, except per share statistics or unless noted) Earnings Credit (C&I)* YoY YoY 3Q21 3Q20 3Q21 3Q20 Chg. Chg. Net Income $288 $250 15% Change in LLR $59 $0 NM C&I Adj. Net Income*1 $316 $294 7% Net Charge-offs $165 $232 (29%) C&I Change in LLR (net
Slide 5: 3Q21 Financial Results
3Q21 Financial Results ($ 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* 3Q21 2Q21 3Q20 3Q21 2Q21 3Q20 Consumer & Insurance* $421 $477 $393 Interest Income $1,111 $1,0
Slide 6: Future Vision Deepens & Broadens Customer Relationships
Future Vision Deepens & Broadens Customer Relationships Unsecured Insurance Loans Financial Secured Wellness Progress to a Loans Meet the needs Credit better future of today OneMain Builder/ Products & Services Customers Secured that increase Lending products Card Credit engagement, build Card loyal
Slide 7: Strategy Drives Customer Engagement and Growth
Strategy Drives Customer Engagement and Growth ($ in millions) 2020 Future Goal 2025† Expanded product Customers 2.3MM 2x+ set opens avenues to more customers Expanded product Customers with 2 or set broadens more products1 ~20% 50%+ customer relationships Average Length of Diversified offerings Rel
Slide 8: Credit Card Rollout Underway
Credit Card Rollout Underway Rewarding milestones... …with a great digital experience Highlights • Two card offerings, Brightway and Brightway+ designed to reward credit-building behaviors • Cards pilot launched in ~60 branches on the west coast and via direct mail • Early trends are positive, inclu
Slide 9: Originations & Receivables (C&I)
Originations & Receivables (C&I)* ($ in billions unless noted) Originations Highlights $3.8 $3.9 $3.7 $3.2 • Originations grew 34% vs 3Q20 and 6% vs $2.9 3Q19 $2.3 • Strong originations driven by normalized demand as well as product and channel optimization initiatives • Portfolio yield of 23.8%, do
Slide 10: Delinquency & Net Charge-off Trends (C&I)
Delinquency & Net Charge-off Trends (C&I)*1 ($ in millions) 30-89 Days Delinquent Net Charge-offs $455 $411 $413 $413 $415 $296 $282 $261 $348 $232 $320 $227 $290 $276 $205 $194 $189 2.30% 2.47% $165 2.26% 1.95% 2.28% 2.20% 5.17% 5.71% 6.46% 6.33% 1.63% 5.20% 1.57% 1.76% 4.18% 4.67% 4.41% 3.52% 3Q19
Slide 11: Loan Loss Reserve Trends (C&I)
Loan Loss Reserve Trends (C&I)*1 ($ in millions) $2,342 $2,342 $2,283 $2,202 $2,075 $2,070 $2,011 $1,968 CECL Impact 13.2% 13.1% 12.6% 12.0% 11.8% 10.7% 11.1% 11.0% $822 $849 Reserve (% of ENR) 4.6% 4.6% 3Q19 4Q19 1/1/2020 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Pre-CECL Post-CECL Reserves increased $59
Slide 12: Operating Expense Trends (C&I)
Operating Expense Trends (C&I)*1 ($ in millions) Highlights • 3Q21 Opex Ratio2 of 7.2% remains below 2019 level despite continued investment in the business • 2020 expenses reflect aggressive cost reductions taken in association with COVID-19 • Expect full year 2021 operating expense growth at the h
Slide 13: Balance Sheet & Liquidity
Balance Sheet & Liquidity ($ in billions unless noted) Highlights • Moody’s upgraded long-term corporate rating to Ba2 • Issued $600MM unsecured bond due 2028 at 3.88% • Completed $160MM of whole loan sales in 3Q21; new flow at $180MM per quarter • Net Leverage* of 5.4x, reflecting capital returns i
Slide 14: Adjusted Capital Roll-Forward
Adjusted Capital* Roll-Forward ($ in millions) Last Three Months Last Twelve Months $1,298 ($49) ($1,425) $360 ($21) ($700) $3,485 $3,124 $3,300 $3,124 2Q21 Ending Capital Other Capital 3Q21 Ending 3Q20 Ending Capital Other Capital 3Q21 Ending Adjusted Generation Returns Adjusted Adjusted Generation
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 • Originations of $3.9B in 3Q21 through best in class underwriting decisioning engine and >20% ROTCE* at the loan level • 3Q21 originations 6% above 3Q19 levels 2 Invest in our
Slide 16: Consistently Strong Dividend History
Consistently Strong Dividend History Dividends/Share1 $4.20 Board will evaluate dividends above the $3.95 quarterly minimum (currently $0.70 per $2.83 quarter) every Q1 and Q3 consistent with $2.33 prior quarters and our capital allocation $0.70 $0.70 strategy $0.33 $0.45 1Q20 2Q20 3Q20 4Q20 1Q21 2Q
Slide 17: 2021 Strategic Priorities Unchanged
2021 Strategic Priorities Unchanged 20191 2020 2021E C&I* Segment Yield 24.1% 24.2% Stable Metrics Interest Expense 5.5% 5.6% 5.0 – 5.2% Net Charge-offs 6.0% 5.5% ~4.2% Operating Expense Growth 3% (3%) 5 – 7% Managed Receivables Growth 14% (2%) 8 – 10% * See appendix for reconciliations and disclosu
Slide 18: Appendix
Appendix OneMain Financial.
Slide 19: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Interest Income $1,113 $1,071 $1,060 $1,096 $1,089 $4,368 $4,127 Interest Expense (237) (231) (235) (246) (255) (1,027) (970) Provision for Finance Receivable Losses (226) (132)
Slide 20: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Cash and Cash Equivalents $821 $1,787 $1,301 $2,272 $1,944 Investment Securities 1,963 1,969 1,951 1,922 1,882 Net Finance Receivables 18,843 18,163 17,564 18,084 17,817 Unearned Insurance Premi
Slide 21: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Long-Term Debt $17,661 $17,605 $16,789 $17,800 $17,531 Less: Junior Subordinated Debt (172) (172) (172) (172) (172) Adjusted Debt $17,489 $17,433 $16,617 $17,628 $17,359 Less: Available Cash and Cash
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Consumer & Insurance $388 $474 $567 $491 $351 $1,021 $1,168 Other (1) (2) (3) (4) (2) (9) (3) Segment to GAAP Adjustment (11) (9) (18) (11) (8) (35) (67) Income Before Income Taxes - GAAP basis $376 $46
Slide 23: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) (unaudited, $ in millions) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Consumer & Insurance $18,847 $18,168 $17,569 $18,091 $17,826 Segment to GAAP Adjustment (4) (5) (5) (7) (9) Net Finance Receivables - GAAP basis $18,843 $18,163 $17,564 $18,084
Slide 24: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Interest Income $1,111 $1,069 $1,057 $1,093 $1,086 $4,353 $4,114 Interest Expense (235) (230) (233) (242) (250) (1,007) (947) Provision for Finance Receivable Losses (22
Slide 25: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, $ in millions, except per share statistics) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Revenue (1) 26.1% 26.4% 26.4% 26.3% 26.4% 25.9% 26.6% Net Charge-off (3.5%) (4.4%) (4.7%) (4.2%) (5.2%) (5.5%) (6.0%) Risk Adjusted Margin 22.6% 22.0% 21.7% 22.1
Slide 26: Consumer & Insurance Capital Metrics (Non-GAAP)
Consumer & Insurance Capital Metrics (Non-GAAP) (unaudited, $ in millions) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Provision for Finance Receivable Losses $224 $130 ($3) $130 $232 $1,313 $1,105 Net Charge-offs (165) (194) (205) (189) (232) (998) (1,028) Change in C&I Allowance for Finance Receivable 59 (
Slide 27: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 3Q21 2Q21 1Q21 4Q20 3Q20 FY20 FY19 Gross Charge-offs $223 $252 $255 $231 $274 $1,163 $1,172 Gross Charge-off Ratio 4.77% 5.70% 5.81% 5.12% 6.15% 6.46% 6.86% Recoveries $58 $58 $50 $42 $42 $165 $143 Recovery Ratio 1.24% 1.29% 1
Slide 28: 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