OneMain Holdings, Inc.

Ladies and gentlemen, this is the operator. Your conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Music © transcript Emily Beynon Thank you. Thank you. Thank you. Thank you. Welcome to OneMain Financial Fourth Quarter and Fiscal Year End 2020 Earnings Conference Call and Webcast. Hosting the call today from OneMain is Rohit Dhawan, Interim Head of Investor Relations. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touchstone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We do ask that you limit yourself to one question and one follow-up, and please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Rahit Dhawan. You may begin.

Thank you, Christelle. Good morning, and thank you for joining us. Let me begin by directing you to pages two and three of the fourth quarter 2020 investor presentation, which contain important disclosures concerning forward-looking statements and the use of non-GAAP measures. The presentation can be found in the investor relations section of our website. Our discussion today will contain certain forward-looking statements reflecting management's current beliefs about the company's future financial performance and business prospects, And these forward-looking statements are subject to inherent risks and uncertainties and speak only as of today. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in our earnings press release and include the effects of the COVID-19 pandemic on our business, our customers, and the economy in general. We caution you not to place undue reliance on forward-looking statements If you may be listening to this by replay at some point after today, we remind you that the remarks made herein are as of today, February 9th, and have not been updated subsequent to this call. Our call this morning will include formal remarks from Doug Schulman, our Chairman and Chief Executive Officer, and Micah Conrad, our Chief Financial Officer. After the conclusion of our formal remarks, we will conduct a question and answer session. So now, let me turn the call over to Doug.

Thanks, Rohit, and good morning, everyone. We appreciate all of you joining us today. Let me start by discussing 2020. This past year, more than any other, highlighted the importance of being intensely focused on the wellbeing of our customers. Our team members demonstrated our value by connecting with the vast majority of our customers during the year to check in and make sure They know we want to be there for them to offer assistance when they need it. We also work diligently throughout the year to ensure the safety of our customers and our team members across the country. I am very proud of our team who pulled together in a difficult year to support our customers and each other. 2020 was a year of strong financial performance. as we generated $1.1 billion of capital, $81 million more than 2019, and drove net charge-offs to an all-time low of 5.5%. This significant capital generation allowed us to simultaneously originate attractive loans, reinvest in growth initiatives, and distribute meaningful capital to shareholders. We returned $6.27 per share to our shareholders in 2020, and this capital return is continuing into the first quarter with the declared dividend of $3.95 per share. We've now declared almost $13 in dividends since we started paying a regular dividend in February 2019, two years ago. In 2020, we increased our investments to accelerate key strategic initiatives, drive future growth, and deepen our relationships with our customers. We enhanced our underwriting models with next generation artificial intelligence technology that uses 1400 pieces of data and is constantly improving through machine learning. We continued to invest in our digital capabilities, thereby significantly improving our customer experience. This enabled over 40% of our customers to close their loans digitally in the fourth quarter. Offering a digital option increases our application pull-through rates, and early delinquency metrics on digital loans look as strong as our branch-originated loans. Our unique hybrid capabilities provide customers the flexibility to originate and service their loans however they choose, through our nationwide branch network, our call centers, or our new digital customer experience. We also launch new products, including smaller dollar loans and new optional product offerings, and initiated the build of a credit card business. We're also testing loan pricing for customers with higher credit scores. These expanded products and initiatives allow us to broaden and deepen our customer relationships. Our customers have a strong loyalty and appreciation for OneMain, and they've given us feedback that they'd like to do more with us. Let me spend a minute to provide additional detail on our new credit card business. We'll provide further detail as the year goes on, but I want to take this opportunity to share our thinking and our strategic rationale. We believe credit cards are highly synergistic with our installment loan business, and that OneMain is uniquely positioned to succeed in this market by leveraging our core competencies. First, credit cards represent a large market with $430 billion of near prime balances, five times the size of the installment loan market. Our average customer has about five cards in their wallet. Second, they are highly synergistic. A credit card deepens our relationship with our customers enhancing our existing offerings, and improves our ability to underwrite by incorporating transactional data on everyday spend. In addition, it allows us to bring in new and different customers into the one main ecosystem. Over time, we also anticipate developing new combination products, merging the best feature of cards and loans into one. Our customers have a strong loyalty to one main, and this card will engage our customer base, enhance customer lifetime value, and enable us to bring more customers into the fold. Third, we are developing a differentiated product focused on a unique value proposition to customers, a digitally focused card that rewards consistent payment habits and reinforces credit-building behaviors. Providing responsible credit, which improves our customers' financial well-being, is a foundational principle of OneMain. This card product will be designed with unique features consistent with that objective. We're building a new team focused exclusively on the card product, led by Nick Clemens. a great entrepreneurial executive with deep experience in credit card, risk management, and digital-first businesses. He joined us from LendingTree, which he joined after founding and running Magnify Money, a financial education and comparison website and marketplace that was purchased by LendingTree. Prior to that, he ran the largest consumer business of Barclaycard in the United Kingdom. We expect to be in market in the second half of the year. We're very excited by this opportunity, which we anticipate will be a multi-billion dollar receivable product for OneMain over the coming years. Throughout 2020, we invested $50 million into these various initiatives and our technology to position OneMain for future growth. We plan to invest another $100 million into these initiatives in 2021. We remain committed to investing in our business to develop new capabilities while leveraging our core competencies, customer focus, credit expertise and discipline, distribution, and a bulletproof balance sheet. OneMain is uniquely positioned given these foundational strengths to broaden and deepen our customer relationships in a dynamic and growing market. We look forward to providing more information on these initiatives throughout 2021. I think we all know that the near-term future remains uncertain with COVID impacting every business and every person across the globe. And while we need to continue to navigate these continued uncertain times, we feel very good about the fundamentals of our core business and the strategic pivots we have made to position us to serve our customers and grow our business as we emerge from the pandemic. With that, let me turn it over to Micah to take you through the financial details of the fourth quarter and the full year.