OneMain Holdings, Inc. (OMF) Earnings Call Transcript & Summary

We'll get started. Good afternoon, everyone. Thank you for joining us this afternoon. I'm -- those who I haven't met, I'm Mihir Bhatia. I cover consumer finance and specialty payments companies here at Bank of America. We welcome you to our conference, and we recognize this is keeping you from the drinks reception. So we'll try to keep it fast, but still cover all the key topics. I'm glad to have OneMain on stage with me here today. Doug is the CEO of OneMain. For those who don't know, I imagine most people do. But in case you don't, OneMain is a leading consumer finance company that provides personal loans, auto loans, and it recently expanded into credit cards. The company focuses primarily on nonprime customers. So Doug, thank you for doing this event, and welcome to the conference. We'll talk -- we'll get into some detail over the next 0.5 hour, 40 minutes on various aspects of the business. But I thought a good place to start would be for you to just provide a little bit of an overview of OneMain. Really, what makes it unique or different compared to a lot of the other companies at this conference?

Yes. No, it's great to be here. Thanks for having us and having me up here at the panel. And thanks, everyone, for showing up at 4:40 on a sunny afternoon in Miami Beach. We appreciate the focus and time. Look, OneMain, as Mihir said, is a consumer finance company. We are focused on the nonprime consumer. I think we're the biggest pure-play public company lender on the nonprime segment. We -- our goal and our mission is to be the lender of choice to the nonprime consumer. And so to give people access to credit with credit products, but also to help them move to a better financial future with things like financial wellness, insurance products that give them peace of mind if something happens in their life. We basically have 3 products. We have a personal loan, and it comes in 2 flavors, an unsecured loan. The average size is about $8,000 or $9,000, and then we have a loan secured by an auto, but someone comes to us because they want access to some money. And those auto loans usually, $12,000, $13,000 is the average price. Then we have an auto finance business, which is purchase money auto. We'll talk a little bit more about that later, where someone goes to an auto dealer and they get a loan to buy a car. And then a couple of years ago, we launched a credit card business. So we run the gamut, and we'll talk about some of those new products because we're quite excited about those. I think our -- what differentiates us is a few things. One is we are nationwide. There's a bunch of nonprime consumer lenders who are geographically centered. But we have nationwide distribution. We operate in our installment loan are traditional, we're state-based and so we operate in 44 states. Auto lending and credit cards, we can do nationwide. We also have a unique branch network combined with digital capabilities combined with central call centers. And so we actually can service the customer in person on the phone or digitally. We think we underwrite better than anybody else in this business. We've got 100 years of history. We've got proprietary models. We've got proprietary data, and we'll get into some of the underwriting. But if you match FICO to FICO, product to product, our credit results are both better on an absolute sense, and the volatility of credit losses traditionally has been a lot lower than competition. And then finally, we've got very deep access to funding and diversified funding. And so we issue a lot of long-term unsecured debt in the bond markets. We have an active ABS program. We have 15 diversified banks where we have over $7 billion of credit lines that we don't even tap that we just have as insurance in case something ever happens to the funding market. And so we've got a very strong diversified balance sheet. The stat I'd take you to is, we have 24 months of liquidity at any time, which means if the capital markets froze and we didn't get a dime of funding, we can run our business, pay our people, make loans and be in the market. And just to give you a data point, in '08-'09, the capital markets were closed for like 3 months. And so we take liquidity very seriously.

That's a very comprehensive overview. But I wanted to go back to the branch network. It remains a question we consistently get from investors, why do they need so many branches? Could they be more efficient? So spend a couple of minutes just talking about why the hybrid model is right for OneMain, what does it mean? I think we've talked before, it helps on the credit side. But just talk about the branch network and why it's the right thing to have.

So we have about 1,400 branches. In 2017, we had 2,000. So we're always paring back, consolidating, doing things with branches. In the nonprime world, being community-based is really important. And so the way our branches work is there are usually 3 to 7 people. There's a branch manager, and our branch managers have an average tenure of 15 years with the company. They are player coaches, so they actually do a lot of the work themselves. They're not just a manager. And in each of our branches, they do both underwriting and collections and servicing. And they get paid based on loan volume, which is sales, but also on delinquency and credit results. So you can think of our branches as little, small businesses that have the right balance of incentives to manage the customer. From a credit result, we hear all the time from our customers, why do I pay you back? It's because I got a loan from Bob in the branch. When I got behind, I called Bob and they either helped me defer a payment and get through it. Or when I was behind, I didn't get called from an 800 number, I got called from my local area code and it was Bob and said, hey, we just did a budget, we thought you could afford it, what happened? how do we make adjustments, et cetera. And so I mean, I'll just give you some credit results. This was in our Investor Day, which we had in December. Since 2016, our average losses were 6%, and our average FICO was around 635. And our volatility of losses measured by standard deviation was 1.2. Our competitors, their average losses with the same bands of FICO were 11% and their volatility was 3.4. Interestingly, Prime, their average losses were 5% compared to our 6%, even though their FICO was about 100 points better than ours, and their volatility was slightly higher than ours. And so we actually think the branches, you walk in, you note -- you meet somebody. We can do a budget with you. We can also put you in the right product and offer you insurance if we think it makes sense for you. You drive by that branch on a regular basis. So there's some psychic benefit. Branches helped drive those credit results. But they're also great for distribution. And what we've done over the last 5 years is we've built up our central operations. So now we can do a lot of collections in central. We can do overload when branches have too many applications. Central can close alone, and then it will get signed back to the branch. And more and more, we've been building out a digital presence where a customer can do a lot there. The last thing I'd say about branches is people often ask them because they have a bank hat on. Bank branches are in the -- the corner of the most expensive real estate in town. These branches are in suburbs, in strip malls, in Class B office buildings. And so they're actually not that expensive to run. And so you can think about it as a distributed call center as much as kind of what people think about with the branch.

Changing gears a little bit. Last week, you announced some management changes. Talk about that a little bit. Not to put Jenny on the spot a little bit. But like you went with an internal candidate. Was that relatively straightforward? Did you think about do we need to look at some external candidates? Just talk about what that process was like, why is now the right time to make this transition? What's happening there?

Yes. So 2 people in the front row, Micah Conrad, who's our current CFO, is going to become COO. Jenny Osterhout, who was never supposed to be on the panel, this was Bank of America's little snafu, with the green scarf, is becoming the CFO. This was part of long-term planning that we've been doing, and we do talent development across the business. Two world-class executives. When we recruited Jenny to come and be Chief Strategy Officer, and she's been running strategy, corporate development, all our new products, tech and digital and then working closely with Micah and me on all the planning and financials. We actually recruited Jenny out of being a CFO for Bank of New York's $1.2 trillion asset management division. So she's got CFO background and was at McKinsey before that. And so the plan always was that we'd find places for world-class executives, people would swap roles, it deepens our bench. And so this is really part of long-term planning. Similar with Micah. Micah has been in this job 5 years. Five years before that, he was in finance, and he was CFO of OneMain when it was Citi. He knows his business probably better than anybody else at the company. He's going to bring an incredible amount of analytical and financial rigor to the operations. In addition to that, he's just a great people leader. So the timing was all about long-term planning. The timing actually is pretty good because we just laid out our 3- to 5-year plan at Investor Day. And so we wanted to make sure we had the right team in the right spot for those 3 to 5 years.

Talking about the 3- to 5-year target of achieving, I think it's $30 billion in receivables from $22 billion today and generating $12.50 billion in -- per share in capital generation.

Yes.

Talk about the path to get you there. Do you have the right products in place already? Do you need to add more products, you need to do anything particularly different? And if you can also just focus on some of the critical waypoints that you are most focused on or that investors can look at in the near term to make sure you're on the path to achieving these targets.

Look, first of all, they are very doable -- it's -- those are very doable targets with our current product set. Put it in perspective, we're going to close Foursight, which is just under $1 billion of receivables. So that gets us from $22 billion to $23 billion of receivables. From there, 3 years is about a 10% CAGR and 5 years is about a 5% CAGR of growth. Either of those is very doable and achievable. I will note, we don't have growth targets in any given year. Our view is anyone can grow as much as they want. We could lend all the money we wanted. The key is to lend money that gets paid back. And so what we do is we're very conservative and we run a credit box. And we'll only -- things that meet our 20% return on equity hurdle, well, those are the only loans we'll book, whether it's card, auto or personal loans. And then we run a great customer experience. So the path to get there, I would think about modest growth. We're already the biggest player in installment lending, so probably 3% to 5% growth in installment lending. And then you'll have some natural growth because it's starting from a small base in card and auto. I think there's a variety of levers we could get to go there. I mean, we could grow a little faster than auto, a little slower in card. We could grow a little faster in card, a little slower in auto. We could grow slower in both and more in installment loans. A couple of milestones. We set out a $2 billion card portfolio, which will generate over $100 million in capital. I think that's a few years away once we open up our credit box more. Right now, we're running a very tight credit box across the spectrum. I think with auto, we've had nice steady growth with a tight box. Foursight, when we add that, there'll be some growth along the way. So I would think about the $2 billion mark for both of those being important milestones for those products to be more substantial. And then I think our lending portfolio, we'll just keep doing what we're doing, which is great customer experience, innovate around price and size, make sure it's meeting our return hurdles. And so I think there's a number of ways to get there. The key is great product for our customers, really good customer experience, focus on our team members who serve our customers. And it is -- we haven't put out any numbers since I've been here that we haven't hit. And so I think we wouldn't have put those out if we didn't think it was imminently achievable.

Got it. So let's jump to 2024 and the current environment a little bit. You serve a more nonprime customer base than probably the typical company at this conference. So I was just wondering, what are you seeing in terms of consumer health currently? Talk about demand payment trends, demand trends you're seeing from this nonprime customer base?

Yes. Look, demand -- I would separate the nonprime consumer, the whole industry and us. And so there's -- we see 3 different things. At the industry, the peak of demand and the peak of supply was the first half of 2022. Second quarter of 2022, there was 1.5x the original origination volume as there was in 2019. Last quarter, fourth quarter of '24 in the nonprime segment of installment loans, there was just about on top of where it was in 2019. So like things really ramped up, and then they went back. I think payment trends, kind of a similar story. 2020 to 2022, consumers had a lot of extra stimulus cash in their pockets. And so there was a lot of -- there was higher payment, especially early payments than had been there traditionally. That's normalized back to kind of what we saw for the 10 years before that. And so I think both of those trends are going down. For us, we have access to funding. We have a really good brand that people know. We've been in the market the whole time because we didn't run out of funding when the capital markets got tight in 2022 and early 2023. So we're still seeing really healthy demand, and we still are able to kind of pick our customers. And so we're able to like underwrite customers that we really like that meet our return profile. I see -- we look at the competitors and we can see their volume in the market and their marketing. A lot -- some of the competitors that had a lot of trouble that saw delinquencies and losses really spike are still not fully back in the market.

Got it. So you're still continuing to benefit from some of the competitive pullback you've talked about previously?

Yes.

Okay. Maybe like -- let's turn to credit guidance, the '24 guidance of around 8% net charge-offs. Little bit about the long term, 6% to 7%. Talk about the path to get back to that 6% to 7%. What does that look like? Does that just happen like as you exit the year and the front book becomes a bigger part of the portfolio, it takes a little bit longer?

Yes. I mean, unless something unexpected happens with the economy, so if the economy stays relatively stable, our front book, which are the loans we booked starting in September of 2022 and all of 2023, that's performing within the 6% to 7% long-term guidance that we've given. Just some data points, but we need to see the front book become the majority of the loss content to get there. At the end of last year, so December 31, the back book, which has elevated losses in receivables that really was hit in 2022 because of inflation spiking so people had less money to pay back loans. It was only 45% of our $22 billion portfolio, but it accounted for 57% of our delinquencies. And the reason for that is, the first 6 months after you book a loan, there's very few delinquencies whether it's performing well or not because we just underwrote you and we paid you. And there's no losses because it takes -- you have to be 6 months into delinquency to roll through to loss. By the second quarter, the front book is going to account for the majority of our delinquencies. So from there, there should be a downward path to where we're headed. The other thing I think investors should get their mind around is, over the long run, we basically run a diversified -- we run a -- we're risk managers, and we run a nationwide portfolio of risk. In the past, it was based on our losses and our pricing in 44 states, and we'd adjust that so that we could hit that number, 6% to 7%. As we add credit card, credit card, you can -- you basically will be higher priced with higher losses. Auto is actually lower priced with lower losses. So we think that blended rate is going to be 6% to 7%. But we really -- we don't underwrite to losses. We underwrite to return. So if we can price for higher losses, we'll be okay with that. But we do construct -- I think the important thing about that loss guidance is for our debt investors and our funding program, people like to see it within a certain band. And so that's why we have that guidance. But I think the path to is, it's pretty straightforward. I mean, as the front book takes over the back book with delinquencies and losses, it will naturally be driving down our loss rate.

Got it. In terms of that back book loss performance, is that really just an inflation story? Or is there something else going on there? I just want to understand, right, we haven't seen a big increase in unemployment. So traditionally, that's what investors looked at was like, well, people have jobs, they'll pay their bills, they don't -- that can be. So is it all just about inflation? Or did something else also happen there?

I think it's the -- I think the majority -- first of all, it's very hard to say. I mean, we've -- the whole industry has seen this phenomenon. One, I mean, with employment, the 1 thing I would say is in 2020 and '21, or especially once kind of it became clear that there was a spike in unemployment, but it came right down. And as the government flooded the markets with $6 trillion, it was very hard to hire workers. So not only were people employed, they could get 2 jobs if they wanted. They could get a lot of overtime. Two spouses could get 2 jobs with overtime. And so even though the overall unemployment numbers have -- are really low now, I think the ability to earn as much money is -- did come down in 2022. And at the same time, we had double-digit inflation. And so if you look at 1 of our customers or a typical nonprime customer, they make $60,000, $70,000, $80,000 a year. The price of food has gone up. The price of gas has gone up. The price of school supplies for their kids have gone up, the price of clothing has gone up. And so even though inflation is moderating, it's still -- a lot of those prices are 20% higher than they were 3 years ago. So I think that's part of the story. On the positive side, I've seen some statistics recently that for the lowest 2 deciles of income, sometime around the middle of this year, wages should finally catch up with inflation. So like wage growth has remained like 3% to 5% during all that time. Inflation spiked. Now it's a little bit below that. And so I think you should see things normalized.

Maybe let's switch to some -- a bit about the strategic initiatives. So let's start with credit card. You've been pretty deliberate in your growth there, which I think investors generally like, they're seeing the discipline there, in growing. But give us the long-term vision there. Is it cross sell? Does it help my customers build credit? Is this an opportunity to sell them some -- if they can't qualify a personal loan, maybe they can get a lower balance credit card loan? Like what's the long-term vision? How does it really fit with your customer base?

Yes. I mean, look, the long-term vision, first is about complementary products, where alone, you get $10,000, you paid off over 2, 3, 4 years and you say goodbye to OneMain until you need $10,000 again. A credit card, you get a $1,000 or $2,000 line, you're with us while you have your loan, you say goodbye and you still have your credit card and we still have a relationship with you. And they're used for different things. The personal loan is usually a big episodic payment or an expense that you're looking for, a credit card is a daily transactional product. So we think it -- for customer stickiness and to diversify our product base for the same customer, that's the fundamental vision. As far as cross-sell, all of our products -- I'm a believer that if you're going to spend shareholders' money on something, whether you give someone a credit card or launch a new product, that the unit economics should make sense in and of themselves. And so the product will be profitable in and of itself. You have to go through a J curve because you spend the money to get a customer. They get a credit card, it takes them 10 months to build up a balance and then you start -- and so it's more expensive upfront. So you need to get some critical mass for the overall portfolio to be profitable, and we think that should -- we ramped it down. We thought it would be sometime in the beginning of this year, probably be about a year from now before like the overall portfolio is now on that trajectory and we have that scale. But we do think the card is a really great product for -- I'd like to call it cross-buy, not cross-sell. It's how it was brought up, that it should be attractive for a customer to want, not us pushing it at a customer. But the way we look at it is a lot of our cards now are $750 lines with an annual fee. And so it can be a higher-risk customer because you can have higher losses, the annual fee pays for a bunch of the losses, and you're not putting that much capital at risk when you do it. And so we can bring people into the franchise. Our card value proposition, which is unique in the industry, is payments equal progress. So if you have 6 on-time payments, you can either lower your rate or increase your line. If you have 24 of those, so 4x6 on-time payments, you can move from a fee card to a no-fee card. And the credit behavior will be great when we do that. So we actually think you pay to get -- it's a lower cost of acquisition to get someone into a card. We get proprietary data on them. And then we're going to have a whole bunch of customers that when they want to get a loan, we'll be able to offer them that loan. They'll know us, they trust us. It's the brand. It will be simple to get on the app. We'll have the data already. We'll have the credit pools already and go from there. And so we think it's a great product. Our vision is it becomes for the foreseeable future, personal loans are still going to be the biggest part of our portfolio, but I could easily see card in a few years being a $2 billion portfolio, a few more years being a $5 billion portfolio, kicking off quite a bit of profit for the company.

Great. Given that you do serve a little bit more of a subprime population, I understand it's small right now, but I was curious about your thoughts around the late fee rule. We're hearing it could come as soon as this week. Now we've heard that before. We are hearing it could come this week, Thursday. But just your thoughts around the late fee rule, will you need to change your product for that? Will you need to change underwriting to account for that? How it -- any thoughts?

Yes. Look we're watching it like everybody else. I personally like -- I think late fees like charging people who cost you more money and aren't meeting their contracts is better than charging everyone. We've got a lot of optionality around the pricing of our products, so the APRs and also the annual fees that we charge. And so we -- it's not changing our underwriting because we think we can get the economics a variety of ways. And frankly, we're not super worried about it because we don't have a big back book that depends on it. It's a lot easier for us to say, your interest rate is, when you get the card, 32%, versus it would have been 29% 6 months ago before this happened than it is for someone who's got several million card hurdles already and send out a notice that we're raising your interest rate. And so because we're a challenger in this market and because we're building a book, I think it affects us less. And when it comes, who knows.

Let's switch gears to auto. Now you've done auto lending or some form of auto lending for some time. But you recently acquired Foursight. Maybe talk a little bit about what Foursight adds to the auto business?

Yes. Just for folks out there who are having a track, in 2015, we created this product called a direct auto product. So somebody wanted to borrow $10,000. We saw that they had an auto loan. We said we can offer you $15,000. We'll pay off your $4,000 auto loan, you'll get $11,000 and you'll get a lower interest rate because we'll take your auto as collateral. To do that, we actually build up -- we have an auto underwriting department. We have a collateral management department who can work with repo vendors, sell cars at auctions. We know how to perfect the lien in 44 states, which isn't a small task, like you have to build up -- so we actually have a big auto infrastructure. And then about 2.5 years ago, some team members who were there and some of the leadership came and said, hey, we think we could start booking some loans through independent dealers through Dealertrack network. Should we give it a try? And we said, sure, we'll give you a little bit of capital. Give it a try and let's see what the performance is. It was really good. And so we have really low loss rates. We're booking good loans. We got some good relations with about 1,000 dealers nationwide, and we built up a portfolio of $750 million. And so we like the business because it's -- we know how to do it, it can leverage our infrastructure and it's lower loss business, which dampens the volatility of losses. So we think it's a nice part of our portfolio of risk. But the vast majority of auto lending happens with franchise dealers, so not with the independent dealers that we're doing business with. So we went out and said, if we wanted to get in the franchise dealer network, we could either build it ourselves, we can buy something small, or we could buy something big. And we looked at -- and we ran a process around all of these. And Jenny, who runs strategy and corporate development, kind of ran that strategy for us with Micah and I. We ended up with Foursight because it's a really well-run company. It's a tuck-in acquisition, so it doesn't bet the farm. They've got a really good management team. So that team will likely be the team that runs our auto business, both the 1 we have, Foursight and the expansion. So we bought a management team. They have really good tech. Like our tech team has diligenced about 100 companies that we've looked at buying. And they always come back and they say, oh, the technology sucks. It's not scalable, it's not component size. This one, they actually came back and said, oh, it's architected really well, it can scale, et cetera. So we like the technology. We get credit models, so we get 12 years of auto credit models. And we get a small base of franchise dealers. So what it does is the auto market we're playing in now, the independent dealer market for nonprime 550 to 700 FICO is about $100 billion to $150 billion market. This will add about $450 billion more of addressable market. And so it just gives it -- it rounds out. So we'll be able to work with franchise dealers as well as independent dealers, and it gets us a nice little platform for growth. What I would say is we're super conservative on credit right now. Our posture is we're going to play a very conservative game in first quarter 2024. And until that changes, it's not like it's going to close and we're going to accelerate growth. I mean, I view this as a platform that gives us optionality for growth when we want to grow.

Okay. There's about 7 minutes left. So let me just open it up in case anyone asks questions, or I can ask a few more. If anyone has any, feel free.

Thanks for all the comments. Maybe you can just share the current state of the credit box? I know you tightened a year or so ago, and now the status for '24, are you going into it with still a pretty high bar in terms of the credit box? Or how should we think about it?

Yes. So 1 really important thing is -- we call it the credit box, and we got to talk about the general posture. The reality is it's like 1,000 little boxes. So we have 10 risk tiers. And within each risk tier, we run it by decile. Then we have different credit performance depending on the channel, where a loan comes in from -- so if someone walks into a branch, it's -- we see different credit performance, that if we send someone a direct mail and they call us, then if they come in via Credit Karma, then if they come in via we sent them an e-mail. And so we have -- we have different by channel. Different products and different loan sizes have different -- so secured, unsecured, smaller dollar loans, et cetera. And then by state, we have different credit performance and we have different pricing. Right now, we have a very -- though if you go overall, we have a very tight posture. And the way we underwrite is we have a minimum threshold at the margin of 20% return on equity. So every loan we make, about 15% of that loan is our -- we put equity into that loan. And then the rest, the 85% is debt. And so we need to make a 20% return on the equity. And the way we calculate that is we -- the variables are we have a price that we can charge. We have expected losses. We have our operating expense, our marginal expense of making that loan, and then we've got our cost of debt. So what we're paying for our debt at any given time. The biggest variable that we're managing to when we talk about a tight credit box is really the credit performance. And back in August 2022, we actually put a 30% stress assumption on our decision engine. So what that means is, we already had elevated losses and delinquencies that we had seen in the first half of 2022. And so that was accounted for in our credit box. But then we said, even if losses increase 30% from an already elevated level, would we still make our 20% return on equity threshold? And we'll only book loans that will still make it. An easy way to think about it, that's unemployment in the 5% to 6% range as opposed to in the 3 percentage range, where it's been hovering. So you could actually go into a mild recession, not have a soft landing. And those loans, we would originate. We're keeping that posture for now. So we have a very tight box. About half though of the tightening that we did in 2023 was increased pricing. Micah has talked about it a bunch on our conference calls that -- we took about 120 basis points across our personal loan portfolio of increased pricing. Some of the channels where we originate, there's not a lot of -- you can increase pricing, and people still book. But in places like Credit Karma or LendingTree where people do price shopping, some folks will drop off, but we like the trade because it's more profitable. So that's another way to tighten the credit box as you just give yourself more margin with more price. But it's a long answer to -- we still have a very conservative posture on our credit box. We'd rather leave a little money on the table and be careful with shareholders' capital than open up too soon.

I guess just to kind of dig into there, Doug, I guess you kind of mentioned tightening the credit box back in August of '22. It sounds like you tightened incrementally during 2023 through some pricing actions. I'm curious what you're seeing there that's kind of causing you to pull back on originations in this environment, given kind of -- I guess the overall theme, it seemed like credit was getting better through the year. You expect the consumer to be in a good spot. So I was just curious, what you're seeing there to keep the box really tight?

Yes. I mean, again, look, the way we run the business is very conservative balance sheet. We're never going to run out of money. And very conservative on credit. And then very aggressive, innovative and creative when it comes to product, customer experience, making sure we have the best team members, being a company that people want to work for. And so that's our mindset. During 2023, the biggest credit tightening, biggest category was just price increases. And so we could take price. It's less volume, but it actually is as much to the bottom line. So it's actually a very good trade. The others were just some judgmental tightening. So if you think about those 1,000 different small credit boxes, some, we didn't like the performance. We tightened a little. But sometimes, it was things -- I'll give you an example. We capped loan size for renewals for some of our existing customers. That if they were in a certain credit band, all our models would show if we gave them a $12,000 loan, they paid down to $6,000, that we could top off their loan at a $10,000 if they came to us for money. And the models would show it would happen, but it would increase -- their payment now might be $300 and it would take it to $350. And we just said, in this environment, we don't want to overstretch current customers. And so we put some caps on it. And so the net effect has been a continued tight credit box. And again, look, I always say your credit box is always wrong. It's either too tight or too loose. And you're just trying to toggle and get the right -- get it right at any given time. And I think right now, we'd rather err on the side of too tight until a bunch of these cross currents clear up. Inflation, while the annual increase is down, it's -- prices are still up quite a bit for our consumer. Wages haven't quite caught up. We still have high interest rates. Hopefully, they come down. Unemployment seems stable for now, but we want to just have some wiggle room if it does tick up.

So I think that brings us to time. I'm going to ask 1 last question. Is there something -- you do a lot of these meetings, you meet with investors. You've been at OneMain for 5 years now, I think. During this time, you probably learned a lot about the company. Something maybe surprised you when you came into the company. But is there something that you wish analysts, investors understood better about the company, appreciated more that you feel is maybe a little underappreciated about OneMain's business or -- yes.

Yes. No, it's a good question. We -- look, I think there's a couple of things. One is, people think about the nonprime consumer as some struggling, poor person who's always going to default on their credit. Ours is -- 93 or 94 out of 100 people pay their bills and pay our credit every year. That's the 6% to 7% loss rate. And we've been doing this for a long time. And so I think a lot of people think about like a company like ours as like a financial algorithm figuring out the right losses, when the reality is, the customers pay our bill. . Our customers are working Americans. Our employees are the ones who treat our customers well and service our customers every day. So as long as we're an ethical company that works with our customers, we get a lot of customer loyalty. And a lot of like hard working middle-class people will come back to us time and again. And that's the key to our franchise. Of course, we got to be really good with the numbers, and we got to be really good risk managers, and we got to tap the capital markets. And those are a bunch of variables. But the reality is we have this incredible franchise, and we built it so that there's, in my mind, very low risk of the existential threats. Low loss volatility, almost no risk of there being a liquidity issue because we spend a lot of extra money on our balance sheet. And at the same time, we have 5% on average return on receivables, which is better than anybody else in the industry. So I think investors understand it. I think probably don't understand how much we've dampened the risk because people still think of if you're doing nonprime lending, it's super risky. If you do it right, it's not that risky and you build great customer loyalty. You have a really good product for your customers and you can actually run a company that's profitable through the cycle.

Great. We probably should leave it there. Thank you so much for coming. Thanks, everyone.

Thanks for having me.