OneMain Holdings, Inc.

Welcome to the OneMain Financial First Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today from OneMain is Peter Pouillon, 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 1 on your telephone keypad. 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 Peter Poyan. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us. Let me begin by directing you to page two of the first quarter 2022 investor presentation. which contains 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 via replay at some point after today, we remind you that the remarks made herein are as of today, April 29th, and have not been updated subsequent to this call. Our call this morning will include formal remarks from Doug Shulman, 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, Peter. Good morning, everyone, and thank you for joining us today. This morning, I'd like to take some time to review our strong financial performance for the quarter. Then I'll spend some time updating you on our key strategic initiatives. Before I provide the financial overview, let me say that we continue to view the current economic environment as constructive for our business. The predominance of data suggests that the financial health of our customer base remains quite good, with savings in excess of pre-pandemic levels and debt service levels comfortably below pre-pandemic levels. Importantly, employment remains strong with more job openings than job applicants, especially in the segment of the population that we serve. As you know, the primary factor that impacts our customers' ability to repay their loan is employment status. So we feel that our customer base is positioned quite well. However, given all the uncertainty in the world, including rising interest rates, inflation, and the war in Ukraine, as a management team, we are closely monitoring the economic environment and our customers' financial health, and we'll be ready to pivot quickly if we see any changes that warrant it. I also want to mention our issuance this week of a $600 million social ABS bond. This was the first-ever Social ABS issued by a U.S.-based company, which continues to highlight our position as a leader in this space. The Social ABS underscores our mission to serve hardworking Americans and demonstrates our commitment to providing access to responsible credit for lower- and middle-income consumers With the proceeds of this bond focused on lending in rural communities across the United States. As you know, one main plays an important role in the lives of many customers who often have a hard time gaining access to credit our history and expertise in lending to non prime customers. And our responsible approach to lending is highlighted in this ABS offering focused on lending to rural communities that are often not served by other lenders. Mike is going to speak more about our incredibly strong balance sheet with a long liquidity runway that is a real competitive advantage for us in this economic environment. This bond issuance, again, demonstrates our ability to continue to access markets, even during a volatile time in the bond market. Demand for our loan products remains strong. Originations in the quarter were above seasonal pre-pandemic levels, as healthy demand for our core personal loan products was bolstered by our expanded products and channels, including smaller dollar loans and partnerships at the point of purchase. The strong originations in the quarter led to excellent managed receivables growth of 11% year over year. This is another sign that our customers feel good about their financial prospects. Our experience is that when demand is robust, it means that customers are feeling good about their finances. I'm very pleased with our first quarter performance. We run this business with the goal of maximizing the underlying economics, what we define as capital generation. In the quarter, we generated $280 million of capital. first quarter charge-offs were 5.6%. Our portfolio of loans is performing quite well, comfortably in the range we anticipate to meet our risk-adjusted returns and return on equity hurdles, even as we get further away in time from our own credit tightening actions that we took back in 2020 and the significant pandemic-driven government support programs. The strategic pivots that we have made over the last few years are paying off. We continue to leverage our strong branch network and decades of experience underwriting and serving non-prime customers. But we have added leading digital capabilities with almost half of all lending now occurring outside of the branch. We are also now well on our way to being a multi-product company. most evident by our rollout of the credit card. As I discussed last quarter, the Brightway and Brightway Plus credit cards were successfully launched late last year. As a reminder, we set out to create and distribute a limited number of cards to customers so that we could test and learn around three primary criteria. The first is take-up rates. Does the value proposition resonate? And do customers want the card? Second is utilization. Once they take the card, do they use it? And third is credit performance. Do they pay what they owe on time? We've been very pleased with the key metrics that will drive the ultimate success of the card product, as take-up rates, and utilization rates, along with digital engagement, have all been strong. Importantly, we've been really pleased with the early indicators of card usage levels, as well as where and how the card is being used. We believe the Brightway card is top of wallet for many of our customers. Customers are using the card at gas stations, grocery stores, restaurants, and retailers. fact that these types of transactions are being made on the card are a validation of our strategy of adding a daily transactional product to our larger, more episodic installment lending product, thereby expanding both the total addressable market and the utility of our products for non-prime customers. And while our user experience and engineering team are making weekly improvements. We're pleased with our initial feedback from customers about the digital experience and have seen the Brightway app getting great traffic and reviews. This is important to our longer-term strategy as having digital real estate that customers go to on a regular basis will give us opportunities to deepen our relationships with our customers and offer more products and services in a seamless, low-cost way. Cardholders increased modestly during the quarter to 74,000 from 66,000 at the end of last year, while card receivables doubled to 50 million during this timeframe. This is in line with our expectations as we are using the first half of 2022 to concentrate on improving customer experience and to deeply analyze the performance of the pilot portfolio to validate our risk models. As I've mentioned before, we've run tests to determine the segments that we will lend to and are monitoring across a number of different variables including risk grade, acquisition channel, history with one main, spend patterns, geography, and more. We will continue to closely monitor and evaluate the data to determine the right segments that combined will allow us to meet our return hurdles for each of our two products, Brightway and Brightway Plus. We are encouraged by what we see and remain on target to meaningfully scale the business in select segments in the second half of this year. As a reminder, given our confidence in the value that these differentiated cards bring to customers, we expect our cards portfolio to generate at least 100 to 150 million of capital by 2025. with more growth in the years beyond. We are also making good progress with Trim, our financial wellness fintech platform. It is now available as a set of features to all of our customers. We're really pleased to be able to reward our customers with Trim's unique expense-saving tools like bill negotiation and subscription monitoring and cancellation. And the feedback from customers has been great. Trim is another tool in our toolbox to deepen our engagement with customers while helping them advance to a better financial future. I've also mentioned to you in the past that we continue to innovate in our traditional installment lending product. A great example of this is our smaller dollar loan product that we launched less than two years ago. Smaller dollar loans, as you may recall, are $2,500 loans that we offer to customers that do not quite meet our criteria for a larger loan. With a smaller loan and a smaller monthly payment, the program opens eligibility to a wider group of customers with payments that fit their budgets while developing improved credit habits and discipline. Since its inception in 2020, We've generated about $350 million of originations while adding more than 140,000 new customers. These are customers that we've now brought into our ecosystem to whom we can provide even more value over time. Finally, let me update you on our capital return in the quarter. We've followed the capital allocation priorities that we laid out on our fourth quarter earnings call. Our first and highest priority remains investing in our business that generates 6% return on receivables, translating to very attractive return on adjusted capital in excess of 30%. We will continue to prioritize in balance sheet growth that meets these hurdles. While also continuing to invest in key growth initiatives like digital technology data science and new products and channels, while also managing our leverage within our long standing range of four to six times. excess capital will continue to be returned to shareholders in the form of dividends and share repurchases. During the first quarter, we paid a regular dividend of $0.95 per share and expect to do so over the remaining quarters of 2022. This $3.80 annual regular dividend yields a very healthy return of approximately 8% at the current share price. We are also executing our share repurchase program. which has a $1 billion authorization through 2024. During the quarter, we utilized $110 million of capital to repurchase 2.3 million shares, or nearly 2% of shares outstanding. With that, let me turn the call over to Micah to take you through the financial details of the first quarter.