OneMain Holdings Inc (OMF) 2016 Q1 法說會逐字稿

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. The 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 on 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 2016 earnings presentation that has 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 may be 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 is 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 who require credit, but finding it 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 US population lives within driving distance of one of our branches.

Our proven business model and strong customer demand have consistently produced terrific growth in receivables, now with $13.2 billion post the sale from 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 model. 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 long-standing 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 assuming we owned 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 acquisition.

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've 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 taken 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 a priority under previous ownership. This growth includes increasing the level of secured originations at OneMain, which supports our objective of driving profitable growth and improving long-term credit performance.

We're 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 steps to strengthen our capital base and simplify our balance sheet. We have reduced leverage and built 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 is already having a meaningfully positive impact on our operating results.

Looking at earnings per share is a very simple measure. In the first quarter of 2014, our core consumer and 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 reflects just 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 $1.50 per share by the third quarter of 2017 and see continued upside from there as we grow receivables 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 6 turns from year-end 2015 through the end of the first quarter, driven by first-quarter earnings and the sale of our SpringCastle investments. Our objective is to reduce leverage to a target of 5 to 7 times debt to adjusted tangible equity and we expect to achieve that goal in the middle of 2018.

We feel very good about where we are today as our earnings power drives us toward 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 upsized by over 2 times from our initial launch. In that transaction, we raised about $400 million of net new cash, while repurchasing $600 million of existing debt that was scheduled to mature in late 2017.

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 from the portfolio. As you know, the portfolio has been in runoff from the time it was purchased in 2013 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 2013 and has proven to be a tremendous asset for us.

Now, let's turn to slide 6. We're 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 US economy and our customers that we factor into our underwriting every day.

Our customer base is very representative of the American population, with some key demographics shown on the left side 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 most 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 low and 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 loans we have booked over time, reflecting the fact that we have maintained our underwriting discipline and not gone deeper to grow.

I'm going to turn the call over to Scott now to review our first-quarter financial performance and take you through 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 the pretax gain of $230 million from the sale of our SpringCastle investment, which closed on March 31.

Our core consumer and 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 receivable. Of course, this is a touch below the 4% return on receivables that Jay just reviewed earlier, but as we have 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 that 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 focused on unsecured lending. Secured loans typically have larger loan amounts and better credit performance, so as one of our first major initiatives, we moved quickly to roll out 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'll 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 sale 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 off 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 and very positive month-by-month trends.

Importantly, secured loan origination 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're already up to [30%] (technical difficulty) 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're really pleased with the responses 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 reflect actions we took immediately upon closing. In addition to setting up secured lending, we moved quickly to implement targeted changes in direct marketing at OneMain and increased the use and effectiveness of email and online lead generation programs, leading to significantly more high-quality applications.

Debt 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 loan is significantly higher and the customer walks away with more cash in hand after paying off other debts. 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 important drivers of customer financial decisions. This demonstrates how secured loans can drive a significant balance -- benefit 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 we capture these cost saves and continue to drive lower OpEx, the scale benefits result in a meaningful improvement in our 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 the 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 accounts 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 the 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 out the actual net charge-off rate for each quarter, beginning from the first quarter of 2015, with an overlay of our 30- 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 the 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're 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 cost, 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 projecting 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 -- Stephanie, happy to turn it back to you for Q&A.

(Operator Instructions). Henry Coffey, Agee CRT.

Good morning, everyone, and thank you for taking my question. A couple of points of clarification, 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 would think about it is as we look at what we have laid out over the pro forma is we have a lot of cost actions that will take place and start benefiting in late 2016 and early 2017, 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 the third quarter we start to get to the run rate over $1.50, which is commensurate with 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 (multiple speakers)

That's set for 2017, Henry, not 2016.

Okay, I'm sorry. All right, so the -- and in terms of charge-off expectation and reserve levels, as charge-offs come down, should we assume that the provision is at or equal to charge-offs or will 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 expect the third quarter a little bit of a reserve build and fourth quarter is reasonably flat.

Great, thank you very much for taking my question.

John Rowan, Janney.

You spent a good bit of time talking about introducing the auto secured product into the OneMain branches, but I wanted to maybe ask the question in a little different manner. 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 have really focused on more of the, as I 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 had historically gone after. So it is probably a few months away.

Okay, and then (multiple speakers). I'm sorry.

On the secured lending, it's a combination of both the auto product, but also the hard secured product, and the really difference is if you remember in the fourth quarter, there was a difference in the loss rates between OneMain hard secured and Springleaf and it was really the amount of collateral that was covering the loan, and so you'll see it's a 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 that 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? Maybe just talk about the demand for 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 retained the two bottom tranches of the securitization. So, as you remember, the first transaction we did was in February was when the markets were pretty challenging on the overall high-yield area, and then, to your point, the second transaction we did in March was a reverse inquiry as we were at the conference in Las Vegas and had some demand from some of our investors, so we did go out and issue. That was very, very successful.

On both deals, though, we did retain the bottom tranches. And we will (multiple speakers) look to sell those as the market -- if we see a good opportunity in the marketplace.

But have the bids improved on those bottom tranches or are we still where we were in February?

No, we are significantly better than we were then.

No, things are better than they were clearly in February, but we look at it the rates on those tranches relative to our cost of capital, and if the rates are above what we see our overall cost of capital, we will retain them. If we see 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, because I think it is a great question, which is I would add what we were most impressed by, especially in 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 the Springleaf and the OneMain program, in 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 as actually an excellent asset class and something they wanted to diversify into.

Thanks, Jay.

Moshe Orenbuch, Credit Suisse.

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

You're talking about on the OneMain side?

On the OneMain side, yes.

We did lay out that we did have 25% year-over-year overall growth in the OneMain portfolio, with an increasing percent of that being on the secured side. So we think we are seeing very good 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, it sounds like it continued into Q2, because the April level was higher than where it was.

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

Look, I want to say, look, I would 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 were even seeing for April at 30% of total production was really not even reflecting the full month of April and still getting educated. I would say it is off to a better start at OneMain than we even achieved at Springleaf.

Now when we have gotten 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're 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 which 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 subprime auto guys, I know it's not exactly the same, did a securitization that was materially tighter than what they had done three months ago, particularly in the -- some of the lower-rated tranches that might have been 25 to 60 basis points tighter. Any kind of feedback you have gotten as to where yours might be if you were to do another securitization? Or when you're going to do that?

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 the marketplace. We do have several other planned ABS transactions throughout the year and hopefully that trend continues from the February/March time frame to when we issue later in the year.

Great. Thanks, Scott.

John Hecht, Jefferies.

I know there was a question about the ALLL before, but just in terms of modeling or thinking about it, are you provisioning for a forward expected charge-off level? And if so, how many quarters does reach out for?

Yes, it is a forward look on that and it is approximately between the portfolios eight months, eight to nine months for the forward look. So that's why in the delinquencies, driving down and the shift of the secured lending, which has lower losses, will benefit that as we go forward.

Okay. And then, I guess a question on new customer aggregation. We haven't talked about iLoan as much on this call. I am wondering if you can give us a commentary on development of that. 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 a very timely question with everything 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 of loans a month, and I wouldn't say it's 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 has 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 has been.

And I think one of the great -- as Moshe referred to earlier, actually one of the great built-in opportunities is there is a huge existing customer base at OneMain, and when you 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 early on at Springleaf when we rolled out the auto lending, so I think there is a lot of focus on that.

Great, thanks very much for the color.

Sanjay Sakhrani, KBW.

This is actually Tai DiMaio in for Sanjay. Just when 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 on a 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 will, again, be second half loaded because it will be post -- a lot of it will be post the version of the branches, so as you get to 2017, you will get some additional benefit. But then, as I mentioned, we are targeting about $200 million of lower costs on a steady state, which would show up in 2018.

So I think it is 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. 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 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 is 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 an optimal level where you think is best for the business?

No, 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 to price it where we are comfortable and it is up to really them. I think we have seen the mix at Springleaf at 50-50; that fits us. I think it depends on what do you want your credit mix to be probably drives that as much as you can't look at it in isolation.

Okay, great. Thank you.

Mark DeVries, Barclays.

You took a number of measures during the quarter that, while dilutive to earnings, I think sensibly helped accelerate the deleveraging of the balance sheet. Could you talk about whether you have any additional plans for asset sales or any other pushing out of maturities that could help accelerate the deleveraging, beyond what you've laid out in slide 5?

I think, as you saw with the last high-yield or unsecured debt that we did, it was a combination of both new money, as well as exchanging -- taking out some of the near-term maturities. So that's always a possibility to do a little bit more of that in the near term on the 2017s and extending our debt maturities beyond the 2021 time frame. So, clearly, there is some things we can do there.

I think we have talked about is we do have some non-core legacy assets that we are continuing to evaluate, opportunities to see is there a more efficient way to house those assets? Is there a way to monetize them is clearly something we are constantly looking at, but that amount, Mark, it's somewhere around [$5] million, $700 million, so it's not a significant amount, but it is clearly something we are focused on.

Okay, got it. And is 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 to continue to repurchase debt here?

Sure. It's available for any purpose.

Yes, so most of that we use for paying down our conduit lines, as you see on the chart that we put out there, as well as for normal operating cash that we need, but if there is opportunity, clearly it could be used for that.

Okay, got it. And sorry if you 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 on -- 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 getting our charge-offs back in line where we were in 2015, and that -- but 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 we -- that that's clearly achievable.

Okay, that's helpful. Thanks.

David Scharf, JMP.

Jay, maybe taking a step back and focusing just at a high level on demand, obviously the rollout of secured in 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 at the legacy Springleaf units looked like during the quarter?

Sure. It was a -- we track it really in a couple of ways. We track applications very closely from every channel, so mail, Internet, walk in, et cetera. We certainly track pullthrough 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.

Closings for new customers were up, as you have seen, significantly at OneMain and modestly at Springleaf, so we continue to see quality customers looking for smart solutions for what is usually a debt consolidation loan to put them in a better place. Part of it is unsecured, part of it is secured, but I don't think we have seen any fall-off in demand and I will leave it at that.

At Springleaf, it was more modest than it has been in the past, but I would say that was largely intentional. First quarter is not -- so I'm looking really over fourth quarter as opposed to last year, first quarter is really never the strongest quarter, but, as 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've continued to feel good about growing the portfolio responsibly.

Got it. Thanks. And maybe I will ask about target levels of secured lending at OneMain a little differently. I know it was asked before and you mentioned obviously so much comes down to consumer choice. But given the impact on the loss rate outlook by rolling out those products and the additional seasoning, 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?

I think the -- remember, it is like the current year, just based on originations. Really, the secured lending leads to the question I think Mark just had around 2017 and what we feel about 2017. Because as you look at the chart, we're talking about really 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 -- first/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 2016, but it is really a 2017 benefit.

Got it. On the allowance rate, you had commented typically you see a release in the first quarter and maybe a less pronounced one in Q2 and then the build again. Can you perhaps give us a little handholding as we model that [ALL] throughout this year, building off the Q1 level, by quarter?

I think there is so many assumptions you have to build in there, I don't know if I can hold your hand, but I would say in regards to -- it is really based on the trends, so at least for the second quarter I would say that using the first quarter as some proxy is probably not a bad place.

In regards to the build in the third quarter, it really is going to be based on there, the portfolio, and the mix that we just talked about, so I think some of the historical -- if we do the continued progress we have on the secured lending, clearly the 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 fairly consistent. It will probably be similar to historical levels for Springleaf.

It is something maybe we -- we will try to help out next quarter, but it is not an easy one to give you a precise framing of that, other than the trends.

Got it. That's helpful. And just one last quick one, you referenced obviously the news flow, some of the dislocations in the marketplace lending arena. Has that actually -- have you been feeling any benefits of that, 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, you have -- on targeting mail, you are a month or six weeks between the time you pull up [yuros], figure out who you're going to target, and you actually see it, but net net we think this is a big positive.

We have touted our model and how we lend and how we underwrite, and dealing with this kind of borrower, we think it is important to do in-person lending, and we have challenged some of the online lenders that think they can go deep or deeper and try and lend to this customer set.

So, it will be interesting to see how it all plays out. There have definitely been a couple people that have said they have been challenged with the credit metrics around going deeper to the model, and we're certainly hoping that as they have come to the conclusions of their experiments that they will find out that it may be appropriate for a super-prime customer, but as you go deeper down, it is a tougher thing to do without the kind of model that we've had with the balance sheet and the other things that we've provided.

Got it. Thanks very much, guys.

Bob Ramsey, FBR.

Maybe along a similar line, I know you described iLoan 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 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 credit than we have certainly targeted at our branches in terms of the upper 600, lower 700 FICOs. Not that we underwrite by FICO, but just to put it in the band. I think we have closed, if I'm 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 do the customer reviews work, how is the whole thing. So I would say that has been the main goal thus far.

I will say we are keeping a close eye on really what is going on in 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 give them those choices over time, especially for customers we know, is something that is important. So I would say there is no immediate plans to ramp it up anything materially in the near future.

Okay. And then, I wanted to shift gears, thinking about the increase in funding costs that you guys have now baked into your 2017 guidance. I am just curious if that is 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 is based on current interest rates or whether there is any assumption around rising rates on a macro level in that as well?

I think you covered a lot of things, so I think given where we have been for the last couple months, I think it is 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 of last year, was up higher levels than what that was. We talked a little bit, I think, then had a comment about 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 is not exact math. We are just trying to give a best estimate.

But I think the other piece is really maintaining 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're going to -- if we think it would be better to issue that earlier than later in 2016 versus waiting until 2017, 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 free up our conduit capacity.

So I think it's a combination of all that you have, but there is not one thing that is leading to that -- leading to our update in guidance.

Okay. All right, thank you.

Michael Tarkan, Compass Point.

Thanks for taking my questions. Most of them have been answered, but just a couple modeling ones left. Just on the credit, specifically on that charge-off rate, I think you mentioned there were some (multiple speakers) 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, that was planned for the first quarter and it did slip into the second quarter, so I think -- I wouldn't say it was significant, but it is probably around 10 basis points.

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

No, it is something we talked about in the fourth quarter as we were giving guidance for the first quarter. It was really when Springleaf centralized some of the back-end collections in mid of 2015, and so we believe that impact was in the first quarter, but that won't continue for the rest of the year. That was just -- that was really more of a late 2014 and early 2015, 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 2016, and we don't expect it to impact the rest of the year.

Can you frame that for us in terms of the size or the magnitude of that?

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

Okay, thanks. And then, did you guys give the number of auto receivables or 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.

Lee Cooperman, Omega Advisors.

I apologize in advance because I missed the first part of the call due to a 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 a $6 run rate in earnings by the third quarter of next year. The stock is down [2]. It trades under 5 times earnings. You are targeting when property leveraged at 25 ROE; a 25 ROE shouldn't sell at under 5 times earnings.

You guys were brilliant in April of last year where you sold stock at $51.51. 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 buy back cheap stock or pay a dividend out of our cash flow to shareholders? What is that, the earliest date that that would be possible?

It is 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-2018, and people have asked, what are you going to 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 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 make sense when you're generating the kind of capital and free cash flow and earnings that we expect to be generating.

So the answer is 2018?

Correct.

Got you. Well, I will be 75, but hopefully I will be around.

I know you will.

Okay, thank you. Keep (multiple speakers) doing a good job. Thank you. Okay, thank you.

Sam McGovern, Credit Suisse.

Thanks for taking my questions. Just going back to the corporate debt, you talked a little bit earlier on -- about plans to address the 2017 maturities. I think when you said that, you mentioned that you were planning to issue somewhere beyond the 2021 maturity. 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 annual debt maturities on the unsecured side in that $1 billion to $1.5 billion. So as you can see, from 2019 through 2021 that was in our targets, so (multiple speakers)

Got you.

So that's why we would look to do debt issuance further out from those maturities.

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

Well, it's a confluence because, as we talked about, the first quarter is -- we don't have a lot of overall asset growth, as Jay mentioned, in regards to some of the tax refunds and paydowns. And clearly, we start ramping up more in the second half on asset growth, so as we go forward the unencumbered assets will be a function of those that we use to continue on our ABS execution, as well as asset growth, and that will box the unencumbered assets we have at any particular time.

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

Mark Hammond, Bank of America.

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

Yes, I think, as we talked about, our strategy would be to keep as much of the conduits available and be able to use for any kind of market disruption or things in regards to execution. So the numbers will move around as we move forward through the strategy in regards to asset growth.

But we're also 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 to 18 months what our overall liquidity needs are and making sure we have enough between those two components to deal with all debt 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 delevering?

Well, I think, clearly, I won't speak for them, but we did have a conversations with all the rating agencies. I think it was a positive step, given the leverage post the transaction and taking a significant reduction in the leverage for the -- as Jay mentioned, the -- 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 their continued execution on the growth of receivables.

But clearly, it was -- I will let you talk to them, but I think it clearly was positively received and so we're continuing to focus on deleveraging the Company.

Thanks, Scott.

Mike Grondahl, Northland Securities.

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 email and online leads. Where are you in that transition at the legacy OneMain?

Sure. On the national referral, it's largely local merchants. It is actually interesting. In the communities we're in, I talk about Zanesville and Peoria and all kinds of places, it is 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 may be -- plumbing or whatever is needed -- auto repairs, (inaudible) funerals, weddings, et cetera. And then that customer will get sent over, I would say.

It was recently rolled out across OneMain. It has been very important across Springleaf for the last few years and drives a significant amount of our new business. It 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 tried to bring in big national big boxes or anything else. We think there are other people that do that well and we will leave that to them.

As it relates to emails and other things, I would say that is something we have just begun across OneMain on the marketing side. We have found it 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 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.

Eric Wasserstrom, Guggenheim.

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 step function for us. I think if you look at -- we put out in the appendix 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 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 2016, as we've said, would be -- will be positive on overall earnings even after those charges, and then in 2017 you start to see the impacts start to dissipate. And then in 2018, 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 deleveraging this year, but the majority of it over the next two, through the accumulation of earnings without the purchase accounting charges?

Correct.

Okay. And (multiple speakers)

Excuse me, 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.

Michael Prober, Clovis.

Thanks for taking my call. So, going back to Lee's question with the valuation of 5 times earnings, I break it down into a Company that -- a finance company that has high leverage and a finance company that has subprime 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 buy back stock in 24 months or so.

But on credit, my question is a little bit different. 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, et cetera. In fact, you were 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 is in subprime 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 performed through not the last recession, but I call it the last great depression of seven, eight years ago, where -- I will speak to both companies -- charge-offs were significantly lower than private 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 have Citi as a parent is totally coincidental to the fact that both these companies, through the branches and through the management teams, are lenders by nature, collectors by nature, and have lent 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're 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 will we lend to a customer that has a stable income, that has a paycheck, and that generally wants to pay their credit? The answer is yes. And I think when you look at the subprime 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, my suggestion is while we wait for the 24 months until you could buy back stock or have dividends is to provide more data to the equity holders in various forms on this because the debtholders understand this. Because there is a disconnect between where the debt is pricing and the equity is pricing, and that would be my feedback. Thanks for my question.

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

[Yahud Salomon], [GSO].

It is [Dick Bluid] stepping in for Yahud. Thanks very much for taking the call. Just a quick question for you on getting back to 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 it at 2X the spread of where you were a year ago and just that -- and you are a 73 LTV borrower versus a 90 LTV borrower by keeping your Cs and Ds.

So, I think it is very positive that you were 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 17 points of LTV that you've retained feels troublesome on a go-forward basis if that is where you had to print.

I know you have tightened since there, but roughly you used to be a blended spread guy of [TRAs] and Bs of 150, call it. Now you are 300 plus. How do you think about that going forward? That the ABS market is going to snap back? You're going to play subs and all those single -- top part of your capital stack is going to come in 150 basis points? I just am stuck there.

I think -- I don't think when you think about funding our overall portfolio, clearly this is not just at OneMain. The overall marketplace and when we did transactions, we are routine issuers, so there is clearly something to your comments in regards to what is going on with spreads.

If you look at the spreads of our paper relative to some of the other consumer lenders out there, I think you're going to see that our spreads are much tighter than theirs, and it goes back to what the previous question was, based on the history and performance of our collateral relative to the performance of some other collateral.

So, I think as we continue to execute and deliver strong 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 more reflective of the uncertainty in more of the high-yield area and those spreads have come down significantly. So as we go forward on issuing, we will be looking to take all that into consideration on the next trade and the future trades in regards to how do we balance not only 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.

Got it.

We are going through cycles, so there is going to be cycles for credit. There is going to be a cycle for funding and we have to balance those, too, but your points are spot on in regards to the technical analysis of where our bonds and where our ABS traded versus last year.

But I think it is also you got to take the market situation and we want to make sure that, again as Jay talked about, we are building a broad-based investor group and that will pay dividends over time as we continue to grow the business, to have those partners with us as we grow the business.

Got it, got it. Thank you very much. One last one. When do you think you'll see another ABS deal backed by Springleaf collateral? We haven't seen one in a while now. Is that just on purpose while you finish the merger or just curious we haven't seen one?

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

And do you publish a forward-looking -- you do your unsecured debt maturity, 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 put into that kind of maturity stack, given (multiple speakers)

Sure, reinvestment period, et cetera.

Yes, you got the reinvestment, the amortization post the revolving period on our ABS securities, so I think it is something we'll 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. So (multiple speakers)

I think that would be great if you could -- . 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're an ABS guy, you get it.

But 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 a guy that does ABS for a living, it becomes very clear what is good and what's bad. So just as an observation, that kind of maturity wall, with even assumptions and little print at the bottom, I think would be very helpful for people to form a view.

Yes, so (multiple speakers)

Thank you very much for answering it.

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 else anyone 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.