OneMain Holdings, Inc. (OMF) Q1 2016 Earnings Report, Transcript and Summary

Welcome to the OneMain Financial First Quarter 2016 Earnings Conference Call and Webcast. Hosting the call today from Springleaf is Craig Streem, Senior Vice President, Investor Relations. Today’s call is being recorded. [Operator Instructions] It is now my pleasure to turn the floor over to Craig Streem. You may begin.

Thank you, Stephanie. Good morning, everybody. Thanks for joining us. Let me begin by directing you to the back of the deck actually, Pages 26 and 27 with our important disclosures. Presentation itself of course can be found in the Investor Relations section of our website and we will of course be referencing that presentation during this morning’s call. Our discussion contains certain forward-looking statements about the company’s future financial performance and business prospects and these are subject to risks and uncertainties and speak only as of today. The factors that could cause actual results to differ materially from these forward-looking statements are set forth within today’s earnings press release, which was furnished to the SEC in an 8-K report and in our annual report on Form 10-K, which was filed with the SEC on February 29 of this year as well as in the first quarter ‘16 earnings presentation that’s been posted on the IR page of our website. We encourage you to refer to these documents for additional information regarding the risks associated with forward-looking statements. In the first quarter 2016 earnings material, we have provided information that compares and reconciles our non-GAAP financial measures with the GAAP financial information. And we also explain why these presentations are useful to management and investors and we would urge you to review that information in conjunction with today’s discussion. And if you maybe listening to the replay down the road at some point after today, we remind you that the remarks made herein are as of today, May 4 and have not been updated subsequent to this call. Our call this morning will include formal remarks from Jay Levine, our President and CEO and Scott Parker, our Chief Financial Officer. And as Stephanie said, after we conclude our formal remarks, we will have plenty of time for Q&A. So now, it’s my pleasure to turn the call over to Jay.

Thanks so much, Craig and thanks for joining us this morning. First, let me begin by saying that we had a great first quarter. And with our acquisition of OneMain now behind us, we are well positioned to generate stable and growing earnings for the foreseeable future. Let’s turn to Slide 2 and get right into the discussion. We are proud to be America’s leading consumer finance company with an unmatched market position serving the borrowing needs of millions of Americans require credit, but finding challenging to obtain from big banks. Our 1,800 plus branches are in local communities in 43 states across the country and almost 90% of the U.S. population lives within driving distance of one of our branches. Our proven business model and strong customer demand have consistently produced terrific growth and receivables now at $13.2 billion post the sales of Lendmark and we are well-positioned to continue to produce sustained profitability and strong returns. Let’s turn to Slide 3. Before Scott and I get into our results for the quarter, I want to anchor the discussion in a quick review of the keys to the business and our financial models. At the simplest level, our business is about providing responsible loans to working Americans who have been increasingly overlooked by the big banks in communities large and small. For over 100 years, we have been serving this segment of the population in a responsible manner with fixed rate, fully amortizing loans with affordable monthly payments intended to fit our customers’ individual budgets. Our community-based branch network gives us terrific insight into local economies and importantly enables us to have longstanding face-to-face relationships with our customers. In addition, we rely on sophisticated underwriting models and extensive credit data derived over the course of many cycles creating the strongest analytical tools for this customer set. Our extensive footprint and scale drives significant operating leverage and returns which leads me to the operating model on the right side of the slide. Our business is straightforward and very compelling. Using full year 2015 numbers and assumingly on OneMain for the full year, we would have generated an after-tax return on receivables of 4.1%, reflecting virtually no revenue or portfolio enhancement or cost savings from the acquisitions. We will discuss our guidance update later in the call, but the financial model you see here positions us quite well to achieve the targets we have outlined. The nature of our model is such that even with modest receivables growth drives greater earnings growth, as Scott will discuss later in the call. As the company and management team, our objective is to deliver long-term shareholder value by generating strong and sustainable returns on capital. We have consistently worked toward that objective and you have seen the results at Springleaf since our IPO almost 3 years ago. We have generated profitable growth in both receivables and more importantly, earnings and taking critical steps to dramatically improve our business and balance sheet. We are in a great business that is virtually impossible to replicate and is capable of generating the kinds of returns we plan to deliver. Having completed the acquisition of OneMain, we have significantly increased the earnings power of our company and accelerated the timetable for us to achieve our targeted return on receivables with an expectation of reaching an ROE north of 25% at our target leverage. Turning to Slide 4, I want to highlight how the acquisition significantly increases our earnings power. As we think about capturing the benefits of the acquisition, our principal focus is on reinvigorating growth at OneMain, something that just wasn’t the priority under previous ownership. This growth includes increasing the level of securitizations at OneMain, which supports our objective of driving profitable growth and improving long-term credit performance. We are off to a great start on these initiatives and Scott will discuss that in greater detail. We also have a great opportunity to generate enhanced positive operating leverage through scale and cost efficiencies as we benefit from higher levels of originations across our largely fixed cost branch network. In addition, we have also made meaningful progress on reducing the absolute level of operating costs as we work on integrating the two companies. Further, we have taken a number of very significant strength – steps to strengthen our capital base and simplify our balance sheet. We have reduced leverage and build capital through a combination of earnings and capital friendly initiatives such as the sale of SpringCastle and we are continuing to look at opportunities to optimize other non-core assets. We are also focused on maintaining access to a variety of funding sources which we will speak to in greater detail later on as well. Now, less than six months after closing and with the early results from a number of the initiatives, we feel even more positive about the acquisition which has already having a meeting fully positive impact on our operating results. Looking at the earnings per share is a very simple measure. In the first quarter of 2014, our Core Consumer Insurance segment at Springleaf earned $0.27 per share, excluding SpringCastle and this grew to $0.35 per share in last year’s first quarter. For the first quarter of this year, the segment earned $0.94 and this reflected the beginning of the synergies we plan to realize. Looking ahead, by capturing the benefits of the acquisition and continuing to execute, we expect to reach a run rate in core earnings exceeding $1.5 per share for the third quarter of ‘17 and see continued upside from there as we grow receivable holds against our largely fixed cost branch network. Let’s turn to Slide 5 and review the progress on reducing leverage and smoothing out our liability structure. First, we have achieved a substantial reduction in leverage of almost six turns from year end ‘15 through the end of the first quarter, driven by first quarter earnings and the sale of our SpringCastle investment. Our objective is to reduce leverage to a target of 5x to 7x debt to adjusted tangible equity and we expect to achieve that goal in the middle of ‘18. We feel very good about where we are today as our earnings power drives us towards that goal. The sale of SpringCastle reduced our on balance sheet debt by about $2 billion while generating almost $300 million of tangible equity, contributing to improvements in both liquidity and leverage. In addition, shortly after the end of the first quarter, we completed a successful unsecured debt issuance of $1 billion, outsized by over 2x from our initial launch. In that transaction, we have raised about $400 million of net new cash while repurchasing $600 million of existing debt that was scheduled to mature in late ‘17. And as we announced earlier this week, we received about $625 million of cash from the branch sale to Lendmark as required by our antitrust settlement with the Department of Justice. Regarding SpringCastle, I also want to note that we are giving up a modest and declining degree of earnings for the portfolio. As you know, the portfolio has been in run-off from the time it was purchased in ‘13 and the earnings contribution has continued to diminish. Importantly, we will continue to service the portfolio at our London, Kentucky servicing center which we acquired with the portfolio in ‘13 and has proven to be a tremendous asset for us. Now, let’s turn to Slide 6 and we are going to cover the specifics of our credit performance and an outlook in a moment. But I want to take a minute to look at some financial characteristics of our customer base, along with some key indicators for the U.S. economy and our customers that we factor into our underwriting everyday. Our customer base is very representative of the American population with some key demographics shown on the left of the slide. Importantly, the Springleaf and OneMain customers have similar profiles, with strong stability in both job tenure and time in residence, which are important indicators of positive credit performance. The macroeconomic environment in general continues to be favorable for our customers and North Americans. While Wall Street may be jittery for a host of reasons, Main Street seems to be just fine. The slow and steady economic expansion continued loan declining levels of initial unemployment claims and positive trends in consumer confidence are all strong economic indicators supporting our positive credit outlook. Specifically related to our loans, we have seen growth in customer income accompanied by stronger debt to income ratios. A number of other lenders have experienced higher delinquencies as they have originated deeper in the consumer credit spectrum over the past few years in an effort we believe to grow rapidly and expand market share. The credit characteristics of the loans we are booking today are very similar to the loans we have booked over time reflecting the fact that we have maintained our underwriting discipline and not going deeper to grow. I am going to turn the call over to Scott now to review our first quarter financial performance and take you to the balance of our remarks.

Thanks, Jay and good morning, everyone. Let’s turn to Slide 7 and review the highlights of our first quarter performance. On a GAAP basis, we earned $1.13 this quarter and $1.05 on a core basis. GAAP basis results included a pre-tax gain of $230 million on the sale of our SpringCastle investment, which closed on March 31. Our Core Consumer insurance segment earned $0.94 per share. On the right side of Slide 7, we are providing a summary P&L analysis for the first quarter, walking down to a 3.7% after-tax return on receivables. Of course, this is a touch below the 4% return on receivables that Jay just reviewed earlier. But as we said, the first quarter of the year is seasonally our highest loss quarter and our outlook is for improvement in quarterly charge-offs similar to past years. I will discuss our credit metrics in greater detail in the call – later in the call. Turning to Slide 8, I want to mention some of the more significant opportunities to leverage the strength of each of the two companies. First, Springleaf had tremendous success in growing its secured portfolio to 55% of receivables while OneMain has historically on unsecured lending. Secured loans typically have larger loan amounts and better credit performance. So, as one of our first major initiatives, we move quickly to rollout our auto-secured lending across OneMain’s 1,100 plus branches. Over time, we expect this effort to result in strong growth and lower credit losses. As you will see in a minute on Slide 9, gross charge-offs in the Springleaf secured portfolio are significantly lower than on the unsecured portion and we expect to see similar performance on the OneMain side. Some of this benefit comes from better recoveries on secured loans, but the loss benefit is most importantly driven by the reduction in the frequency of defaults. We also expect the integration of the two companies to lead to a meaningful improvement in operating expense ratio. As we move towards the levels achieved historically at OneMain and potentially beyond that, the drivers of this improvement will be headquarter cost synergies, the branch sales we announced yesterday and by realizing the continued benefits of scale as we grow receivables against our largely fixed cost branch network. Looking ahead to 2017, the principal areas of cost saves will be our exit of the services provided by Citi under the TSA, some marketing synergies and additional headquarter synergies post system conversions. Turning to Slide 9, the acquisition of OneMain has given us a host of opportunities to create greater shareholder value that would not have been possible without the combination. First and foremost, we are beginning to accelerate growth in the former OneMain branches with total origination volumes up 25% year-over-year, very positive month-by-month trends. Importantly, secured loan originations at the former OneMain were up 75% versus last year’s first quarter as we rolled out the secured installment loan product across the OneMain network. To give you some color on this, in this first quarter – this year’s first quarter, total originations at the OneMain branches have accelerated from $1.1 billion in last year’s first quarter to $1.4 billion this year and secured originations have grown from about $150 million last year to $264 million in this year’s first quarter. And while not on the chart, secured originations at OneMain have grown from 15% of total originations in January to 23% in March and we are already up to 30% in April as we rolled out the programs to all branches. From the time we first announced the acquisition last March, we have talked about the great opportunity we have to ramp up originations at OneMain, including secured lending. We are really pleased with the response to the new offerings from the OneMain branch team members, who appreciate being able to offer customers choices and options that were not previously available. These improvements in origination activity, reflects actions we took immediately upon closing. In addition to setting up secured lending, we move quickly to implement targeted changes in direct marketing at OneMain and increased the use and effectiveness of e-mail and online lead generation programs, leading to significantly more high-quality applications. That consolidation is the principal use of proceeds for our secured loans, so I want to focus for a moment on the very meaningful benefit of secured loans to our customer. The chart on the right side of this slide lays out the average loan amount, cash out to the borrower and monthly payment reduction along with the average coupon for our unsecured and secured loans. First, the average loan amount for the secured loans is significantly higher and the customer walks away with more cash in hand after paying off other debt. The average coupon on our secured loans is about 500 basis points below our unsecured loan. And importantly, the borrower sees an improvement in their available monthly free cash. Given that so much of America lives paycheck to paycheck, free cash and total monthly payments are total monthly drivers of customer financial decisions. This demonstrates how secured loans can drive a significant balance of benefits for our customer while generating lower losses and more profitability for the company. Let’s turn to Slide 10. We also continue to target reductions in our operating expenses as the integration progresses. So far this year, we have completed the realignment of the headquarter functions, generating about $40 million of run rate cost savings and the recently closed branch sale to Lendmark will generate another $50 million in run rate cost savings. We expect to achieve an additional $10 million in saves over the balance of this year bringing us to our original projection of $100 million in annualized cost saves by the end of this year. Overall, we look for a total of $275 million to $300 million in run rate savings based on the standalone pro forma business plans for the two companies, with about two-thirds of that being expense reductions and one-third cost avoidance. As recapture these cost saves and continue to drive lower OpEx, the scale benefits result in a meaningful improvement in operating leverage. Working from a 2015 pro forma operating expense ratio of 10.6%, we are projecting approximately 9% for this year, dropping down to approximately 8% in 2017. Turning to Slide 11, let me begin with a comment about our year-over-year increase in charge-offs, which was about 40 basis points. As I mentioned on our fourth quarter earnings call, we anticipated higher charge-offs in the first quarter due to a change in collection strategy implemented in mid-2015, along with the seasoning of our new customer volume. In addition, first quarter net charge-offs were impacted by the timing of a sale of charged off account that slipped from the first quarter into the second. We are maintaining our outlook for full year charge-offs in the range of 6.8% to 7.3%. This would represent a decline from our first quarter charge-off rate which is to be expected given that first quarter is the highest loss quarter for the year. You can see from this pretty clearly on the chart on the left hand side of the slide, where we show the improvement in charge-offs from the first quarter in 2015 to the full year and again from the first quarter of the current year to our projected range for the full year. As you can see, a seasonal improvement is consistent. Overall, we do not see any deterioration year-over-year in the underlying credit performance. The increase is primarily due to the factors I just described. Supporting our view on charge-off improvement is a very positive trend we are seeing in early stage delinquencies which is demonstrated in the chart on the right hand side of the slide. We have laid the actual net charge-off rate for each quarter beginning from the first quarter of 2015 with an overlay of our 30 day to 89 day delinquency rates on a two quarter lag basis. Each stage – early stage delinquencies are a leading indicator of future charge-offs, so you can see how the sharp decline in early stage delinquencies support our confidence in the outlook for charge-off improvement over the remainder of this year. If the current trends continue, we feel confident in achieving the midpoint of the 6.8% to 7.3% range for net charge-offs this year. In addition to seasonality, the steps we have taken since 2014 to grow our auto-secured receivables at Springleaf and now at OneMain should contribute to better credit performance in our portfolio with the benefits starting to show up in 2017 and beyond. I want to be clear that the performance enhancements that we see from our secured lending are primarily driven by lower frequency of loss and the benefits are not dependent about future path of used cars – used car pricing. Turning to Slide 12, I would like to review our funding and liquidity. Our objective is to maintain a well-balanced funding profile reflecting regular issuance in the term ABS and unsecured debt markets and the maintenance of significant undrawn conduit capacity. We plan to access the ABS market on a routine basis as already demonstrated this year. Despite choppiness in the debt markets, we launched three very successful deals in the ABS and the unsecured markets in just the past few months. The success of our recent unsecured debt issuance allowed us to level off our debt maturities, which is an important accomplishment for us. Our guidance update, which I will address on the next slide reflects assumptions on funding costs that take into consideration today’s market environment versus what we were looking at when we announced the acquisition late last year. Key components of our liquidity strategy include targeting $300 million to $500 million of operating cash, along with maintaining significant undrawn committed conduit capacity, which is currently around $4 billion. Turning to Slide 13, I would like to review our core EPS guidance for 2016 and 2017 and illustrate the positive operating leverage in our model. First, for 2016, we are maintaining our prior guidance but adjusting it by $0.30 to reflect the sale of SpringCastle and the impact on earnings for the last three quarters of the year, which bring us to a range of $4.20 to $4.70 per share. For 2017, we are following the same approach with about half the change in the guidance coming from the SpringCastle impact and half due to the higher expected funding costs as I just explained. This brings us to a range of $5.60 to $6.10 for 2017. To illustrate the tremendous operating leverage in the business, we are protecting about a 10% to 15% growth in receivables from 2016 to 2017 and with the benefits of scale, we expect this to lead to even greater than 30% growth in earnings per share using the midpoint of the guidance ranges. Now, I would like to turn the call back to Jay for his closing comments.

Thanks, Scott. And as we turn to Slide 14, I want to reemphasize how excited we are about the tremendous potential we have in front of us. As we continue to grow our receivables, the operating leverage and cost synergies we expect to achieve will lead to higher returns on receivables and on equity. The strong earnings power of our core business should drive reductions in balance sheet leverage as we move towards realizing our targets in 2018. We feel very good about the fundamentals of our business and our competitive market position and now happy to turn to Stephanie, happy to turn it back to you for Q&A.

[Operator Instructions] Thank you. Our first question is coming from Henry Coffey of Agee CRT.

Good morning, everyone and thank you for taking my questions. A couple of points of clarification that’s the $1.50 run-rate for the third quarter – is that $1.50 guidance core for the quarter or how should we interpret that?

I think Henry, the way I think about it is as we look at what we have laid out over the kind of the pro forma is we have a lot of cost actions that will take place and start benefiting late ‘16 and early ‘17 as well as the actions we are doing on the portfolio around driving more secured lending that I talked about. And as we see those pieces come together, we see kind of the third quarter we start to get to the run-rate over $1.50 which is kind of commensurate with kind of the high-end of the guidance for 2017.

But that means we should be right at or close to $1.50 in the fourth quarter then, is that the way to think about it?

Fourth quarter of – that’s for ‘17, Henry, not ‘15.

Okay, I am sorry. Alright. So, the – in terms of charge-off expectations and reserve levels, as charge-offs come down, should we assume that provision sort of is at or equal to charge-offs or would there be provision build or what is the thought process there?

As you know Henry typically, we have reserve releases in the first and second quarter. And we did in the first quarter – we did have that reserve release. And then, you would kind of expect kind of in the third quarter a little bit of reserve build and fourth quarters is kind of reasonably flat.

Great. Thank you very much for taking questions.

Thanks Henry.

Our next question comes from John Rowan from Janney.

You spent a good bit of time talking about introducing the auto secured product into the OneMain branches, but I want to maybe ask the question a little different manner, are you – have you seen any benefit in introducing or have you introduced any OneMain style lending into the former Springleaf branches?

I would say at this point, we really focused on more of the – as I have said secured lending across the OneMain network as we bring the two together and we really merge the marketing efforts is when I think you will start to see combined marketing that really targets the higher credit customer which is really where OneMain is historically going after, so it’s probably a few months away.

Okay. And then have.

Secured lending is a combination of both the auto product, but also the hard secured product and really the difference is if you remember in the fourth quarter, there was a difference in the loss rates between the OneMain hard secured and Springleaf and it was really the amount of collateral that was covering the loan. And so you will see the combination of both that as we drive the secured lending across the OneMain platform.

Okay. And have you had to change any loan to value rates with any auto secured products just given the declines you have seen in the used car market?

No, we have not changed any of our underwriting criteria across our auto lending.

Okay. And then, just lastly with the ABS deals this quarter obviously, I think was it one or two were reverse inquiry, I mean maybe just talk about the demand for you – your asset backed securities, it seems relatively high given again the reverse inquiry, but also did you sell – did you ever wind up selling the last tranche of one of the deals, I believe there was one deal where you intentionally retained the bottom tranche?

Actually, on both deals, we retain the two bottom tranches of the securitization. So as you remember, the first transaction we did was in February was kind of when the markets were pretty challenging on the overall high yield area. And then your point, the second transaction we did in March was a reverse inquiry as we are kind of at the conference in Las Vegas and kind of had some demand from some of our investors, so we did fill out an issue that was very, very successful. On both deals that we did retained the bottom tranches and we will see – look to sell those at the market, if we see a good opportunity in the marketplace.

Perhaps the bid has improved on those bottom tranches or are we still where we were in February?

No, we are significantly better.

Things are better than they were clearly in February. But we kind of look at it the rates on those tranches relative to our cost of capital and if the rates are above kind of we see our overall cost of capital, we will retain them. If we see kind of the pricing go below that, then we clearly would use that as an opportunity to sell them out.

Okay. Thank you very much.

I would just add one thing, that was a great question which is I would add what we were most impressed by especially the second transaction was the number of new investors that came into the program. While we have always had a large following of major institutional investors that have supported both Springleaf and the OneMain program and the last transaction where we actually upsized and more than doubled the deal, there was a significant number of new major institutional investors who had avoided the entire space and actually saw the program history of it is actually an excellent asset class is something they want to diversify into.

Thanks Jay.

Our next question comes in Moshe Orenbuch of Credit Suisse.

I was intrigued by the comments you made about the penetration of the secured product just over the course of the last kind of three months, is there a way that we could translate that into what that might mean for receivables growth?

You are talking about on the OneMain side?

On the OneMain side, yes.

Yes. Well, Moshe, we did kind of lay out that we did have 25% year-over-year overall growth in the OneMain portfolio with an increasing percent of that being kind of on the secured side. So, we think we are seeing very good kind of penetration and we don’t see the move to more secured as a limitation on our growth on receivables, if that’s the question?

Well, yes, I mean, it sounds like it continued into Q2, because the April level goes higher than were it was?

Yes, that was the split of kind of the increase in regards to the overall kind of penetration on the secured side.

Look I want to say, I’d say we are thrilled with the early rollout. We didn’t even finish launching it in all the branches until late in April. So, the numbers you are seeing for April at 30% of total production was really not even reflecting the full month of April and still getting educated, I’d say it’s off to a better start at OneMain and we even achieved at Springleaf knowing we have got the kinks out, figured out how to explain the benefits to the customer, teach the sales force and I think the goal is I think we feel where we want to be around origination growth for the year and certainly, the goal is we would like to see more of it be secured versus unsecured. So, I think that gives us comfort that we are going to be able to achieve the goals that we want to which is a better mix of secured and unsecured lending across both networks and I should have probably said in my earlier remarks where we are and you haven’t asked, but we continue to be on track towards integration probably about a year from now when the branches will come together and ultimately the lending should look very similar by that time.

Got it. Thanks. And just as a follow-up on the ABS front, I noticed that this week one of the sub-prime auto guys saw exactly the same did a securitization that was materially tighter than what they had kind of done 3 months ago, particularly in some of the lower rated tranches that might have been 25 to 60 basis points tighter. I mean any kind of feedback you have gotten as to where yours might be if you were to do another securitization or when you are going to do that?

Yes. I mean, I think as the previous question was asked I think over the – at least over the last month or so, we have seen tightening in the previous deals that we issued also. And so we are constantly monitoring kind of the marketplace. We do have several other plan kind of ABS transactions throughout the year. And hopefully, that trend continues from the February, March timeframe to when we issue later in the year.

Great. Thanks, Scott.

Our next question is from John Hecht of Jefferies.

Good morning. Thanks very much. Just I know there is a question about the ALLL before, but just in terms of modeling or thinking about it, are you provisioning for kind of a forward expected charge-off level and if so how many quarters does that reach out for?

Yes, it is a forward look on that and it’s approximately between the portfolio 8 to 9 months for the kind of the forward look. So, that’s why in the delinquencies driving down and the shift of the secured lending, which has lowered losses will benefit that as we go forward.

Okay. And then I guess a question on kind of new customer aggregation, we haven’t talked about iLoan as much on this call. I am wondering if you can – you give us a commentary on the development of that and what are the composition of new customers that come into the branch versus those that you identify on the Internet before bringing them to the branch at this point?

Sure. Great question. Certainly, very timely question with everything sort of rocking and rolling a little bit in the Internet lending world. I would say for us, iLoan continues to be a very small, slow experiment in terms of the progress we are making in the tunes of hundreds among the month and I wouldn’t say its much more material than that. As it relates to new customers coming in versus renewals versus former customers, the mix continues to be similar to what it’s been in the past. We continue to be effective targeting using direct mail. We have actually been very cognizant of working with online aggregators and others in terms of quality of loans that we want to originate. And I would say, the mix remains very similar to what it’s been. And I think one of the great – as mostly referred to earlier, actually one of the great built-in opportunities is there is a huge existing customer base at OneMain. And then we see the opportunity to reduce rates, lend more dollars and do it in a better way. There is a lot of natural built-in growth there as we saw earlier on at Springleaf when we rolled out the auto lending. So we have a lot of focus on that.

Great. Thanks very much for the color.

Our next question comes from Sanjay Sakhrani of KBW.

Hi, this is actually Tai DiMaio in for Sanjay. Just one, looking at your operating expense leverage targets, beyond 2016 it seems to be mainly driven from growth on the current platform, are there still areas of efficiency improvement that can occur and also how should we think about your long-term targeted efficiency on the platform, is that kind of on the receivables per branch basis or is it really the OpEx ratio of legacy OneMain?

From the perspective, I think as we laid out, we are targeting a run rate at the end of 2016 of about $100 million cost take out. We laid out that we have additional initiatives for further cost reduction in 2017 that kind of will again be second half loaded, because it will be post – a lot of it will be post the conversion of the branches. So as you kind of get to ‘17, you will get some additional benefit. But then as I mentioned, we are targeting about $200 million of lower cost on a steady state which would kind of show up in 2018. So I think it’s both a combination of absolute dollar reduction as well as the leverage from receivables growth.

Okay. And just are you guys thinking about a long-term targeted efficiency that you think you can run the business at?

I think that’s clearly, there is a nature – you asked the question about how do we measure branches, I mean clearly we do measure how many accounts per employee and loans per employee. There is a level at which with our business model, there is only so much you can kind of push that without having other consequences of that. So we clearly have a range of what we think is reasonable based on our experience. So at least in the branches, that’s going to be representative of how many units that we have. I think from a headquarter point of view, I think clearly as we get off the services being provided from the seller and other things, there probably could be some incremental synergies at the headquarter level versus I think in the branches.

Okay. And then just going back to the secured lending mix, is there kind of an optimal level where you think is best for the business?

Now, look it’s all about customer choice. So we want to make sure customers have choice in terms of what makes the most sense for them. Clearly, we want to figure out – we are willing price it where we are comfortable and it’s up to really them. I think we have seen the mix at Springleaf at 50-50 that fits us. I think it sort of depends on what you want credit mix to be is probably drives that as much as sort of you can’t look at an isolation.

Okay, great. Thank you.

Sure.

Our next question comes from Mark DeVries of Barclays.

Yes. Thanks. You took a number of measures during the quarter that while dilutive to earnings I think kind of sensibly help to accelerate the de-leveraging of the balance sheet, could you talk about whether you have any additional plans for asset sales or any other kind of pushing out maturities that could help accelerate the de-leveraging beyond what you kind of laid out in Slide 5?

Well, I think as you saw with the last kind of high yield or unsecured debt that we did was a combination of both new money as well as exchanging. They are kind of taking out some of the near-term maturities. So that’s always a possibility to kind of do a little bit more of that on – in the near-term on to ‘17 and extending our debt maturities kind of beyond – kind of ‘21 timeframe. So clearly, there are some things we can do there. I think we have talked about is we do have some kind of non-core legacy assets that we are continuing to evaluate. Opportunities to see is the more efficient way to house those assets, is there a way to monetize them, it is clearly something we are constantly looking at. But that amount Mark, is somewhere around $500 million to $700 million. So it’s not a significant amount, it’s clearly something we are focused on.

Okay, got it. And then just the $400 million or so of net cash that you generated from the latest issuance and also the $600 million or so from the branch sales, is that cash available for continued to repurchase that here?

Sure. Available for any purpose.

Yes. So, I mean, most of that we use for paying down our conduit lines as you kind of see on the chart that we put out there as well as for normal kind of operating cash that we need but if there is opportunity, clearly to be used with that.

Okay, got it. And sorry if you have covered this, but have you indicated whether you still expect charge-offs to be down year-over-year in 2017 as you start to benefit from the higher percentage of the secured loans?

Yes, we haven’t gone that far out. We do, based on the trends we are seeing right now, the positive momentum we have on the secured lending on the OneMain, all those point to kind of getting our charge-offs back in line where we were in ‘15. And by going that far out, given the current environment, as long as those trends continue, we will keep updating you on a quarterly basis. That gives us a good view that, that’s clearly achievable.

Okay, that’s helpful. Thanks.

Our next question comes from David Scharf of JMP.

Hi, good morning. Thank you. Jay, maybe taking a step back and focusing at a high level on demand, obviously, the rollout of secured and to specifically direct auto at OneMain is having an intended and large impact on receivable growth. But can you speak more broadly about what the demand looks like post-tax refund season that seasonal pickup how it compares to a year ago as well as what the organic or same-store receivable growth that the legacy Springleaf units look like during the quarter?

Sure. It was – we track it really in a couple of ways. We track applications very closely from every channel of mail, internet, walk-in, etcetera. We certainly track pull-through rates. We track the quality of the applications. I will say application volume across OneMain was up significantly in the first quarter. It was up modestly at Springleaf. So, we continue to see demand. Closing for new customers were up come as you have seen significantly at OneMain and modestly at Springleaf. So, we continue to see quality customers looking for smart solutions for what’s usually a debt consolidation loan to put them in a better place. Part of it is unsecured. Part of it’s secured, but I don’t think we have seen any falloff in demand. And I will leave it at that. At Springleaf, it was more modest than it’s been in the past, but I would say that was largely intentional first quarter is not as I am looking really of our fourth quarter as opposed to last year. First quarter is really never the strongest quarter, because you said because of tax refunds and other good things that tend to happen to people in the first quarter. But across the board, I think we continue to feel good about growing the portfolio responsibly.

Got it. Thanks. And maybe I will ask about sort of target levels of secured lending at OneMain a little differently. I know it was asked before and you mentioned obviously so much comes down at consumer choice. But given the impact on the loss rate outlook by rolling out those products and the additional seasoning, I mean, can you give us a sense perhaps what level of secured lending at OneMain is implied by that 6.8% to 7.3% NCO forecast?

Well, I think that you remember it’s kind of like the current year just based on originations. Really the secured lending leads to the question I think Mark just had around ‘17 and what we feel about ‘17, because as you look at the chart we are talking about really in the first – on the delinquency rates, the trend for the rest of this year is really based on second half of last year and what we do in the first quarter – for second quarter of this year. So, the improvement on the secured lending really will help us as we roll into 2017. We will get a little bit of benefit clearly in late ‘16, but it’s really a ‘17 benefit.

Got it. On the allowance rate, you would come in and typically you see a release in the first quarter and maybe less pronounced one in Q2 and then to build again, can you perhaps give us a little handholding as we model that ALLL throughout this year, building off the Q1 level by quarter?

I think there are so many kind of assumptions you have to build in there. I don’t know if I can kind of hold your hand. But I would say in regards to – it’s really based on the trends. So at least for kind of the second quarter, I mean I would say that using the first quarter some proxies probably not a bad place. In regards to the build in the third quarter, it really is going to be based on the portfolio and kind of the mix that we just talked about. So I think some of historical, if we do the continued progress we have on the secured lending, clearly reserve build on the OneMain will be less because we will have a lower expected loss because of the portfolio shift and probably Springleaf has been kind of fairly consistent and probably be similar historical levels for Springleaf. It’s something maybe we will try to help out kind of in the next quarter. But it’s not an easy one just to kind of give you a precise framing of that other than the trends.

Got it. No, it’s helpful. And just one last quick one, you referenced obviously the news flow, some of the dislocations in the marketplace lending arena, is that actually, been – have you been feeling any benefits of that, sort of pullbacks in volumes by some of the more prominent ones or is it still not meaningful enough to impact your demand?

I think it’s pretty recent. At the end of the day, on targeting mail, you are a month or six weeks between the time you pull up euro figures we are going to target and you actually see it. But net-net we think this is a big positive. We have touted our model on how we lend and how we underwrite and dealing with this kind of borrow we think it’s in person to do – important to do in person lending. And we have sort of challenged some of the online lenders I think they can go deep, go deeper and try and to lend to this customer set. So it would be interesting to see how it all plays out. There are definitely a couple of people that have said they have been challenged with the credit metrics around going deeper to their model. And we are certainly hoping that as they have come to the conclusions of their experiments that they will find out that maybe appropriate for a super prime customer, but as you go deeper down, it’s a tougher thing to do without the kind of model that we have had with the balance sheet and the other things that we provided.

Got it. Thanks very much guys.

Our next question is from Bob Ramsey of FBR.

Hi, good morning guys. Maybe along a similar line, I know you described that loan as sort of a slow experiment, I am just curious how you like what you have seen thus far, I forget if you are three quarters in or exactly when it launched, but sort of what the initial impressions are and what you would be looking for to accelerate and how you are thinking about the timeline?

Sure. As a reminder, the initial plan was to go much higher in credits and we have certainly targeted at our branches in terms of the upper-600, lower-700 FICOs, not that we underwrite FICO. We just put it in the band. I think we have closed if I am not mistaken less than $5 million of loans, so it’s still a very small number as it relates to the total portfolio. And for us, it was really about the customer experience. It was really about learning how the whole process works, how did the customer reviews work, how was the whole thing. So I would say that has been the main goal thus far. I would say we are keeping a close eye on really what’s going on at the online marketplace, before we really make any dramatic decisions of where we want to go but we do think there is quality customers who deserve choices and certainly building the technology to be able to given those choices over time, especially for customers we know is something that’s important. So I would say there are no immediate plans to ramp it up anything materially in the near future.

Okay. And then, I wanted to shift gears sort of thinking about the increase in funding costs that you guys have now baked into your 2017 guidance, I am just curious if that’s based on the current debt structure or whether you have put any sort of thought around when you do eventually roll that 2017 debt into that guidance or if it’s based on current interest rates or whether there is any assumption around rising rates on a macro level in that as well?

Well, I think you covered a lot of things, so I think given kind of where we have been for the last couple of months, I think it’s a little bit of all that. So clearly, we issued some debt recently in the unsecured market and that rate was, if you look back to third quarter, fourth quarter last year was up higher levels and what that was. We talked a little bit I think, then had a comment around the ABS by Moshe. And I think clearly the ABS market was a little bit higher when we issued those versus what we were able to execute in 2015. So, I think that’s part of it. Part of it is taking into consideration, the outlook and where things could go. It’s not exact math. We are just trying to give best estimate, but I think the other piece is really kind of maintaining kind of our overall funding mix in regards to unsecured and secured. So, whether we have to issue the unsecured prior to the maturities in 2017, so you are going to – if we think it would be better to issue that earlier than later in ‘16 versus waiting for ‘17 that also could have a little piece of negative carry there as we have higher cost debt and what we would do is we would kind of free up our conduit capacity. So, I think it’s a combination of all that you have, but there is not one thing that’s kind of leading to that – leading to our updating guidance.

Okay, alright. Thank you.

Our next question is from Michael Tarkan of Compass Point.

Thanks for taking my questions. Most of them have been answered. But just a couple of modeling ones left. Just on the credit specifically on that charge-off rate, I think you mentioned there were some charge-off accounts in the second quarter that was maybe going to come in the first quarter, can you give us the impact of that?

It was something I think – it was we planned for the first quarter and it did slipped into the second quarter. So, I think kind of I wouldn’t say it was significant, but it’s probably around 10 basis points.

Okay, thanks. And then were there any one-time impacts from the move to centralize servicing on to one platform, I think you talked about that you are going to do that this quarter or last?

No, it’s kind of something that kind of we talked about in the fourth quarter as we were kind of giving guidance for the first quarter. It was really when Springleaf kind of centralized some of the back-end collections in mid of 2015. And so we believe that, that impact kind of – it was in the first quarter, but that won’t continue for the rest of the year. That was just really – that was really more of a late ‘14 and early ‘15, so we wouldn’t expect that going forward.

Okay, but did that impact the number in the first quarter, just so I am clear?

Yes, it did impact this first quarter – first quarter of ‘16 and we don’t expect it to impact the rest of the year.

And can you frame that for us in terms of the size and magnitude of that?

I think if you kind of look at kind of the year-over-year increase, I think I gave you one item, I think you can kind of probably get to somewhere that there was a combination of multiple items that I talked about. You can probably back into something that’s reasonable.

Okay, thanks. And then did you guys give the number of auto receivables originations this quarter?

We did at OneMain, we did not at Springleaf, but it was a similar mix to what we have had in the past.

Okay, thank you.

Our next question is from Lee Cooperman of Omega Advisors.

Yes, hi. I apologize in advance, because I missed the first part of the call due to conflict and so you may have addressed this, but you guys have done an excellent job and I look at the slide deck and I see that we are thinking in terms of the $6 run-rate in earnings by the third quarter of next year, stock is down 2, it trades under 5x earnings. You are targeting when property leveraged at 25 ROE, a 25 ROE shouldn’t sell under 5x earnings. You guys were brilliant in April of last year we sold stock at $51.50. The average price objective of the guys that cover you now is $41. When are we going to be in a position to take matters into our own hands and buyback cheap stock or pay a dividend out of our cash flow to shareholders, when is that the earliest date that, that would be possible?

It’s a great question, Lee and thanks for the comment. Look, I would say we have targeted getting leverage to where we think is responsible to manage the company over the long haul, which is mid ‘18. And people have asked what do you do about capital then? I think that’s a great position we would like to be in, because we totally agree with you this company is trading cheaper than I think the earnings capacity of we believe we have and into the future. So, we look forward to being in that position where we can have the kinds of conversations around dividends, buybacks and the things that makes sense when you are generating the kind of capital and free cash flow and earnings that we expect to be generating.

So, the answer is 2018?

Correct.

Got it. I will be 75, but hopefully I will be around.

I am doing well.

Okay, thank you. Keep doing a good job. Thank you. Okay, thank you.

Our next question is from Sam McGovern of Credit Suisse.

Hey, guys. Thanks for taking my questions. Just going back to the corporate debt, you talked a little bit earlier about plan to sort of address the 2017 maturities, I think that when you said that you mentioned that you were planning to issue somewhere beyond the 2021 maturity, was that – was I hearing you right or did I mishear that?

Yes. So if you look at our debt maturity stack that we put out there, we have a blip in regards to no maturities in 2018. But we really would like to keep our kind of annual debt maturities on the unsecured side in that kind of $1 billion and $1.5 billion. So as you can kind of see that from 2019 through kind of 2021, that kind of was in our targets. So that’s why we would kind of look to do debt issuance kind of further out from those maturities.

Okay, great. And then just in terms of unencumbered assets with all the ABS issuance that you are planning to do for the year, should we expect that to decline going forward or remain fairly stable?

It was confluence, because as we talked the first quarter is kind of a – we don’t have a lot of overall asset growth, as Jay mentioned in regards to some of the tax refunds and pay downs and clearly, we start ramping up kind of more in the second half on asset growth. So as we go forward the unencumbered assets will be a function of those that we used to continue on our ABS execution as well as asset growth. And that will kind of box the unencumbered assets we have at any particular time.

Okay, great. Thanks so much. I will pass it on.

Our next question is from Mark Hammond of Bank of America.

Thank you. Following up on the unencumbered loans, I was wondering $3 billion now, at the end of 4Q it was $2 billion, is there a strategy to keep the minimum just for liquidity or will that fluctuate and go below the $2 billion based upon time of year end and openness of the ABS markets?

Yes. I think as we talked about is our strategy would be to keep as much of the conduits kind of available and be able to use for any kind of market kind of disruption or things in regards to kind of execution. So the numbers will move around as we kind of move forward through the strategy in regards to asset growth. But we are also kind of keeping as you see strong operating cash flow that also buffers. So it’s really a combination of operating cash flow and our liquidity and looking out 12 months to 18 months what our overall liquidity needs are and making sure we have enough between those two components to deal with all of that maturities as well as operating expenses for running the business.

Thanks. And then switching to the SpringCastle sale, I was wondering if the rating agencies were supportive or had any concerns over that and whether that reduces the ability to generate earnings and then build retained earnings which would contribute to de-levering?

Well, I think clearly I won’t speak for them, but we did have conversations with all the rating agencies. I think it was a positive step given kind of the leverage post to transaction and taking a significant reduction in the leverage for the – as Jay mentioned kind of it was a declining portfolio of earning assets and the profitability was declining over time. So we think that it was a good transaction to build capital quickly. And from a perspective of lost earnings, we have to make up for that with continued execution on the growth of receivables. Clearly, it was – I will let you talk to them, but I think it clearly was positively received and so we continued to focus on de-leveraging the company.

Thanks Scott.

Our next question comes from Mike Grondahl of Northland Securities.

Yes. Thanks for taking my questions guys. Two quick questions, one could you update us a little bit on your local and national accounts program and the rollout at OneMain. And then secondly, on the direct marketing side at OneMain, you talked a little bit about using more e-mail and online leads, where are you in that transition at the legacy OneMain?

Sure. On the natural referral, it’s largely local merchants, it’s actually interesting in the communities we are in. And I talked about Zanesville and Peoria and all kinds of places, it’s really about the local branch in town on Main Street, First Avenue, wherever they are calling on the other local merchants in town and having them send business to that branch when they find customers that want to take on a service whatever it maybe plumbing or whatever is needed, auto repairs, funerals, weddings, etcetera and then that customer will get sent over. I would say it was recently rolled out across OneMain. It’s been very important across Springleaf for the last few years and drives a significant amount of our new business is actually one of the reasons why we find it so important to be local and have those relationships because you can never go do that on a national basis. We really haven’t gone after and try to bring in big national – big boxes or anything else. We think there is other people that do that well and we will leave that to them. As it relates to e-mails and other things, I’d say there is something we have just begun across OneMain on the marketing side. We have found that highly successful as a means of additional marketing at a very low cost, especially when you have got as many former customers as we do that like to stay in touch and I expect to see more use of that as well as other tools that we have adopted over the last few years across Springleaf on the OneMain marketing side. And then as I said ultimately and we look forward to the day it can happen that there will be one brand and we will continue to get additional efficiencies out of the whole marketing infrastructure.

Thank you.

Our next question is from Eric Wasserstrom of Guggenheim.

Thanks very much. Just getting back to the deleveraging plan, Scott, just so I am clear, how much of that is expected to be the accumulation of retained earnings versus future capital actions in terms of debt retirement or other one-time gain benefits?

Well, I think the SpringCastle was a big kind of step function for us. I think if you look at we put out in the appendix of the supplement that we talked about in regards to the impact of the purchase accounting items and looking at that. So, we are looking for – always looking for additional ways to kind of improve our leverage, but I would say most of it is going to come from the forward earnings net of those purchase accounting items. And so ‘16 as we said would be kind of will be positive on overall earnings even after those charges. And then in ‘17, you start to see the impact start to dissipate. And then in ‘18, we see those dissipating even more. So you start to get the growth in the earnings – core earnings and less of the impact of the accounting, which really drives the equity retained earnings build. So, I would say most of it is going to come from that.

Got it. So, just in terms of the glide path it sounds like some incremental de-leveraging this year, but the majority of it over the next two, three the accumulation of earnings without the purchase accounting charges?

Correct.

Okay. And...

Not without, but with lower levels of the purchase accounting items.

Got it. And the level of anticipated earnings is consistent with the core guidance that you have given out or a different level?

No, that would be the level.

Okay, great. Thanks very much.

Our next question is from Michael Prober of Clovis.

Hi, guys. Thanks for taking my call. So, going back to the lease question, the valuation of 5x earnings, I break it down into a company that the finance company that has high leverage and a finance company that has sub-prime credit. So, on the high leverage, you guys seem to be taking care of it. And in your answer to Lee, you should be in a position to buyback stock in 24 months or so. But on credit, my question is a little bit different. It’s – the company hasn’t been around during the last great recession. It wasn’t public. Okay, but on your website, you say you have been around for 100 years. Through the Great Depression, World War II, inflation, etcetera, in fact you are even owned by AIG and Citi, not the best risk control operators. So, my question is how do you give us as investors comfort that when we do see some type of economic slowdown, you have either the skill sets, the systems, the ability to change the credit box to change pricing, so that we won’t experience a company that’s in sub-prime lending that goes to zero that was almost everyone’s experience last time. We had a slowdown in the economy.

Sure. I would love to take that one. First and foremost I think we provide 20 years of historical data around credit on our asset-backed decks that are all up online. And I would encourage you and everybody else to go look at how we perform through not the last recession, but I would call it the last Great Depression, of 7 years, 8 years ago where I will speak to both companies, charge-offs were significantly lower than prime credit cards. And I can talk about the risk nature of both companies, but the local lending, the local collecting, the know your customer, the have collateral were all things that have for 100 years played into the DNA of each of these two companies. And the fact that one happened to have AIG as a parent and one happened to have Citi as a parent, it’s totally coincidental to the fact that both of these companies, through the branches and through the management teams are lenders by nature, collectors by nature and have lend through cycles and are more than prepared to lend and collect and adjust as the economy changes. So one of the reasons we are excited about our prospects, no matter the economy is the fact that we have done it, we have lived it and our numbers are there to back us up. And if you look at the volatility around our losses, I think they are better than any prime assets you will find and both the local nature as well as the fact that we have gotten collateral next to the loan have all made significant differences. So are we lending to a customer that is not going to get a platinum American Express card, yes. But we will lend to a customer that has a stable income, that has a paycheck and that generally wants to pay their credits, the answer is yes. And I mean I think when you look at the sub-prime mortgage, you are looking at something completely different where people were living off appraisals and inflation and taking money out where there was no basis of income to support the borrowings they were taking. So more than happy to spend time in the office and go through it again, but we have to say we have got a lending history, each company has a lending history of 100 years that we couldn’t be prouder of and know we are going to do well through whatever cycles we hit.

Okay. Well, my suggestion is while we wait for the 24 months so you could buyback stock or have dividends is to provide more data to the equity holders in various forms on this, because the debt holders understand this, because there is a disconnect between where the debt is pricing and the equity is pricing and that would be my feedback. And thanks for taking my question.

No, look, I really appreciate it and we will do what we can to get more information out there. So I sincerely appreciate the comment.

Our next question is from [indiscernible] of GSO.

Hey, it’s Dick Bluid [ph] steeping in for Yahud. Thanks very much for taking the call. Just quick question for you on getting back to kind of debt and your ABS facilities, I took it a little more negative than you guys talked about it on this call in terms of your last print, I do see that you upsized it, but you upsized at a kind of 2x the spread of where you were a year ago, and just and you kind of 73 LTV borrower versus a 90 LTV borrower by keeping your Cs and Ds, so I think it’s very positive that you are able to print that is a sign that people will take your credit on a secured ABS basis in tough times. But from a business model perspective, that cost of capital and that extra kind of 17 points of LTV that you retained feels troublesome on a go forward basis, if that’s where you had at print. Now you have tightened since there, but roughly you used to be a blended spread guy of As and Bs of 150, call it, now you are kind of 300 plus, that looks like how do you think about that going forward that the ABS market is going to snap back, you are going to place subs and all those single top priority – your capital stack is going to come in 150 basis points, just I am stuck there?

I think – I don’t think when you kind of think about finding our overall portfolio clearly, this is not just the OneMain. I mean the overall marketplace and when we did transactions, our routine issue is it’s clearly something to your comments in regards to what’s going on with spreads. If you look at kind of the spreads of our paper relative to some of the other consumer lenders out there, I think you are going to see that our spreads are much tighter than theirs and it goes back to what the question was based on the history and performance of our collateral relative to the performance of some of the collateral. So I think as we continue to execute and deliver kind of strong kind of credit numbers, that will help in regards to execution in the ABS market. And we have been in the market and at certain times, as I mentioned on the Cs and Ds, clearly those tranches were kind of more reflective of kind of the uncertainty in more of the high yield area and those spreads have come down significantly. So as we kind of go forward on issuing, we will be looking to kind of take all that into consideration on the next trade and the future trades in regards to how do we balance not only kind of the market spreads but also our spreads relative to the industry. But clearly, it is an area that we have to make up for the higher cost of funds as part of the business model. So we are going through cycles. There is going to be cycles for credit, they are going to be cycles for funding and we have to balance those two. But your points are spot on in regards to the technical analysis of kind of where our bonds and where our ABS traded versus last year. But I think it’s also you have got to take the market situation and we want to make sure that again, as Jay talked about, we are building a broad-based industrial group and that will play – pay dividends over time as we continue to grow the business to have those partners with us as we grow the business.

Got it. Thank you very much. One last one, when do you think you will see another ABS deal back by Springleaf collateral, we haven’t seen one in a while now, is that on purpose while you kind of finish the merger or just curious we haven’t seen one?

No, I think we are going to issue on it both. I think part of it was the ones on the OneMain were some of the transaction we are hitting their revolving period – ending their revolving period, so we wanted to replace that facility to kind of keep the secured debt at similar levels that we were at. But clearly, we will be entering the market on Springleaf over 2016.

And you published kind of a forward-looking – you do your unsecured debt maturity, kind of maturity wall graphs, do you do that for ABS as well in these decks?

We haven’t done it historically, but it’s something that – there is a lot of assumptions you have to kind of have to put into that maturity stack given...

Sure, reinvestment period, etcetera.

Yes. You have got the reinvestment, the amortization post the kind of the revolving period on our ABS securities. So I think it’s something we will consider and try to make sure that we can provide something that is a reasonable estimate without having a lot of assumptions that could be complicated to decipher.

Yes, I think that would be great. If you could provide something like that, I think to the prior caller’s point, right, if you are an equity guy, this is a little hard to understand. If you are an ABS guy, you kind of get it. But like since you are such a big borrower in the ABS market, as much clarity and if you provide the information, the equity guys who want to dig in can dig in and get comfortable or not. And if you are kind of a guy that does ABS for living, it becomes very clear what’s good and what’s bad. So just as an observation, that kind of maturity wall with even assumptions a little print at the bottom, I think would be very helpful for people to form a view.

Yes. So…

Thank you very much.

Okay.

There are no further questions. I would now like to turn the floor back to Craig Streem for any additional or closing remarks.

Sure. Thanks. Just quickly in closing thanks everybody for hanging with us this morning. It was a long call, lots of questions and we were certainly happy to take them and be as responsive as we possibly can. Anything everyone else needs, you know how to find us. So thanks. Have a good day.

Thank you. This does conclude today’s conference call. Please disconnect your lines at this time and have a wonderful day.