OneMain Holdings Inc at Bank of America Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Mihir Bhatia - Bank of America Securities - Analyst : <_ALACRA_META_ABSTRACT>So we've got a lot of companies at this conference. OneMain is a little different than others. So I thought before we get dive in a good place to start would be, one is just give us a lot on a quick overview of what, OneMain does just for people who want to introduce the company, what makes OneMain unique just an overview of the company. Douglas Shulman - OneMain Holdings Inc - Chairman of the Board, President, Chief Executive Officer Yeah, great. You actually did a good job introducing. I'll repeat what you said, which is we're a consumer finance company. We are focused on providing access to credit and lending. Our main product for many years has been personal loans. And that is to an individual, an unsecured loan or a loan secured by in auto. Our unsecured loans on average are $9,000. Our auto loans are about $12,000. And that has been our bread and butter for many years. We also do auto lending through dealers, very similar to a personal loan in that it's a $15,000 car purchase loan, but it's amortizing with a fixed interest rate over time. And then we have a very small credit card portfolio that we've been building carefully and cautiously. Our mission is to be the lender of choice to the non-prime consumer. And we're the largest pure-play public company that has a focus and a specific focus and expertise on non-prime, and I use nonprime very specifically. We're not deep subprime. Our average FICO is about 630. We do a number of prime loans. We do some below that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 4:20PM, OMF.N - OneMain Holdings Inc at Bank of America Financial Services Conference Our average customer has $70,000, $75,000 of income. I think our differentiators is, our history was as a branch-based lender. And so we're in -- we're nationwide. We have 1,300 branches, and we develop a relationship with our customers that allows us to outperform when it comes to credit and losses, delinquencies, and the like. So we're nationwide. We have an omnichannel structure now. We come from branches, but we now have the ability to do business with us digitally, and on the phone and in a branch, which is quite unique for anyone who's not a bank. Just to give you a sense of size, we would be the seventh largest bank in the country by branch count. And so we cover the nation quite well. We also have a fortress balance sheet, and I can talk about it later, but we have long tenured unsecured debt. We have a lot of deep access to the ABS market. We have extra liquidity with untapped bank lines. We keep -- we have a $24 billion balance sheet. We keep $7 billion of bank lines just to tap if we ever need it. And so we've got a real resilient balance sheet. And then the huge differentiator is credit. I mean, just to give you my favorite statistics are our average FICO is 630. For the last eight years, our average losses have been just over 6%, and the volatility of losses measured by standard deviation is 1.2. Prime competitors have average losses of 5%, so just 100 basis points lower, average FICO 100 higher than ours at 730, and a little bit more volatility of loss at 1.4. Our nonprime competitive set, their average is losses twice as high, 12%. FICO actually a little higher at 670 and volatility of losses at 3.4. And it's that community-based deep knowledge lending in our business model that allows those losses to happen.

Question: Mihir Bhatia - Bank of America Securities - Analyst : That's great. Let's begin to the health of the non-prime customer a little bit. A lot of companies at this conference focused on the prime customers. So we've got a lot of the prime customer. But talk to us a little bit about the nonprime customer, consumer, if you will. What is the help right now? Your guidance calls for mid to high single-digit receivable growth. So you must be seeing something that's telling you now is the time to lean back in, grow the receivable book? What are you seeing? What's going on with and on.

Question: Mihir Bhatia - Bank of America Securities - Analyst : You mentioned the 2/3 at the start about 2/3 of customers being in the top two credit grades for the last two years. What do you think 2025 looks like?

Question: Mihir Bhatia - Bank of America Securities - Analyst : Given the tight underwriting posture, should the loss content in these loans be below your typical medium-term guidance, right? I guess the one thing that the question we hear from investors is if the -- if OneMain is tightening so much, they're only doing the top two grades, why is the loss outlook not materially better than its typical medium term, long term. guidance?

Question: Mihir Bhatia - Bank of America Securities - Analyst : Great. I do want to talk the competitive environment. It has been quite favorable over the last couple of years However, we are starting to see particularly the online lenders side to really ramp up originations again. To a certain degree, it's in the prime category and things like that. What are you seeing from a competitive intensity standpoint, are you seeing some more competitive pressures? Or are you still very comfortable with this tight credit box and still delivering the growth?

Question: Mihir Bhatia - Bank of America Securities - Analyst : You mentioned the credit discipline. One example of that, that we saw was on the credit card side, right? When you first launched it in I think it was 2021, you had some goals. You saw the credit environment deteriorate. You were not shy about saying, hey, those goals, we're going to have to pull back from those goals a little bit. You still got growth in that business over the last year or so I guess just talk about the opportunity with the credit card product how early users interacting with it?

Question: Mihir Bhatia - Bank of America Securities - Analyst : You mentioned auto. I do want to hit that before we run out of time. So let's talk about auto a little bit. You've been in that business for a while. But for side for the company for three quarters now. Talk about how that acquisition has paid out in relation to your expectations, any learnings as you've worked through the integration.

Question: Mihir Bhatia - Bank of America Securities - Analyst : I don't want to be called this sort of the time. So why don't I open it up to the audience if anyone has questions because I do have a few more, but. Unidentified Participant Anything in the Trump agenda that excites you or that you're worried about for the company?

Question: Mihir Bhatia - Bank of America Securities - Analyst : Anyone else? So not seeing any. Very quickly, I do want to touch on your less today targets about a little bit more than a year past since you had laid those out. I think one of them was 1215 capital generation over the medium term.

Question: Mihir Bhatia - Bank of America Securities - Analyst : Still go to are you still on track?

Question: Mihir Bhatia - Bank of America Securities - Analyst : Maybe just we'll end with this one. As investors look at OneMain and as you meet with investors, you heard questions they're asking. What do you think is underappreciated? What are people missing? Because if you look at the valuation of OneMain compared to the returns it is lower than what you would expect. You have a company with this return profile. So what are investors missing? What is underappreciated in your view about OneMain?

Question: Mihir Bhatia - Bank of America Securities - Analyst : With that, I think we have time. So again, thank you so much for coming. Really appreciate it. Thank you.