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Item 8. Financial Statements and Supplementary Data

2022-02-11 compared with 2021-02-09 · 315 added, 449 removed, 1563 unchanged (33% of the section changed)

1 unchanged sentence

An index to our financial statements and supplementary data follows:

Report of Independent Registered Public Accounting Firm (OneMain Holdings, Inc.)

Report of Independent Registered Public Accounting Firm (OneMain Finance Corporation )

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) (OneMain Holdings, Inc.)

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) (OneMain Finance Corporation)

Financial Statements of OneMain Holdings, Inc.

13 unchanged sentences

Nature of Operations

Reconciliation of OneMain Finance Corporation Results to OneMain Holdings, Inc.

Summary of Significant Accounting Policies

13 unchanged sentences

Fair Value Measurements

Selected Quarterly Financial Data (Unaudited)

Report of Independent Registered Public Accounting Firm

31 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Finance Receivable Losses for Loans Collectively Evaluated for Impairment – Forecasted Macroeconomic Conditions

As described in Notes 3 and 6 to the consolidated financial statements, the Company’s allowance for finance receivable losses for loans collectively evaluated for impairment was $1,955 million as of December 31, 2020.

Management estimates the allowance for finance receivable losses for loans collectively evaluated for impairment primarily on historical loss experience using a cumulative loss model applied to the Company’s finance receivable portfolios.

Management also considers forecasted macroeconomic conditions within the Company’s reasonable and supportable forecast period, which incorporated the projected impacts of COVID-19 on the U.S.

Management’s forecasted macroeconomic conditions leveraged economic projections that considered estimated impacts from known government stimulus measures, the involuntary unemployment insurance coverage of the Company’s portfolio, and management’s borrower assistance efforts.

The principal considerations for our determination that performing procedures relating to the allowance for finance receivable losses for loans collectively evaluated for impairment – forecasted macroeconomic conditions is a critical audit matter are (i) the significant judgment by management in determining adjustments to the results of the cumulative loss model to reflect forecasted macroeconomic conditions, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s determination of the impact of forecasted macroeconomic conditions, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Allowance for Finance Receivable Losses for Personal Loans Collectively Evaluated for Impairment – Forecasted Macroeconomic Conditions

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s allowance for finance receivable losses for personal loans collectively evaluated for impairment was $1,820 million as of December 31, 2021.

Management estimates the allowance for finance receivable losses for personal loans collectively evaluated for impairment primarily on historical loss experience using a cumulative loss model applied to the Company’s finance receivable portfolios.

Management also considers forecasted macroeconomic conditions within the Company’s reasonable and supportable forecast period, which incorporated the ongoing impacts of COVID-19 on the U.S.

economy and the overall unemployment rate.

The principal considerations for our determination that performing procedures relating to the allowance for finance receivable losses for personal loans collectively evaluated for impairment – forecasted macroeconomic conditions is a critical audit matter are (i) the significant judgment by management in determining adjustments to the results of the cumulative loss model to reflect forecasted macroeconomic conditions, which led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s determination of the impact of forecasted macroeconomic conditions, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

29 unchanged sentences

Allowance for Finance Receivable Losses for Loans Collectively Evaluated for Impairment – Forecasted Macroeconomic Conditions

Management also considers forecasted macroeconomic conditions within the Company’s reasonable and supportable forecast period, which incorporated the projected impacts of COVID-19 on the U.S.

Allowance for Finance Receivable Losses for Personal Loans Collectively Evaluated for Impairment – Forecasted Macroeconomic Conditions

Management also considers forecasted macroeconomic conditions within the Company’s reasonable and supportable forecast period, which incorporated the ongoing impacts of COVID-19 on the U.S.

economy and the overall unemployment rate.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

5 unchanged sentences

We have served as the Company's auditor since 2002.

Financial Statements.

ONEMAIN HOLDINGS, INC.

4 unchanged sentences

Cash and cash equivalents $ 541 $ 2,272

Investment securities (includes available-for-sale securities with a fair value of $ 1.8 billion and

an amortized cost basis of $ 1.7 billion in 2020 and 2019)

Net finance receivables (includes loans of consolidated VIEs of $ 8.8 billion in 2020 and $ 8.4 billion

Investment securities (includes available-for-sale securities with a fair value and an amortized cost basis of $ 1.9 billion and $ 1.8 billion in 2021, respectively, and $ 1.8 billion and $ 1.7 billion in 2020, respectively)

Net finance receivables (includes loans of consolidated VIEs of $ 8.8 billion in 2021 and 2020)

19,212 18,084

Unearned insurance premium and claim reserves ( 761 ) ( 771 )

Allowance for finance receivable losses (includes allowance of consolidated VIEs of $ 1.1 billion in

2020 and $ 340 million in 2019)

Allowance for finance receivable losses (includes allowance of consolidated VIEs of $ 910 million in 2021 and $ 1.1 billion in 2020)

( 2,095 ) ( 2,269 )

Net finance receivables, less unearned insurance premium and claim reserves and allowance for

finance receivable losses 15,044 16,767

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents

of consolidated VIEs of $ 441 million in 2020 and $ 400 million in 2019)

Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses 16,356 15,044

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents of consolidated VIEs of $ 466 million in 2021 and $ 441 million in 2020)

Goodwill 1,437 1,422

7 unchanged sentences

Deferred and accrued taxes 1 45

Other liabilities (includes other liabilities of consolidated VIEs of $ 15 million in 2020 and $ 14 million

Other liabilities (includes other liabilities of consolidated VIEs of $ 13 million in 2021 and $ 15 million in 2020)

Total liabilities 18,986 19,030

6 unchanged sentences

Retained earnings 1,727 1,691

Treasury stock, at cost;

6,712,923 shares at December 31, 2021 and no shares at December 31, 2020, respectively

Total shareholders’ equity 3,093 3,441

15 unchanged sentences

Net loss on repurchases and repayments of debt ( 78 ) ( 39 ) ( 35 )

Net gain on sale of real estate loans — 3 18

Other 110 47 102

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Foreign currency translation adjustments — — ( 2 )

Other ( 3 ) — —

Other comprehensive income (loss), net of tax, before reclassification adjustments ( 32 ) 51 77

15 unchanged sentences

Income (Loss) Retained

Earnings Total Shareholders’ Equity

Balance, January 1, 2020 (pre-adoption) $ 1 $ 1,689 $ 44 $ 2,596 $ 4,330

Net impact of adoption of ASU 2016-13 (see Note 4)

— — — ( 828 ) ( 828 )

Balance, January 1, 2020 (post-adoption) 1 1,689 44 1,768 3,502

Common stock repurchased and retired — ( 45 ) — — ( 45 )

Earnings Treasury Stock Total Shareholders’ Equity

Balance, January 1, 2021 $ 1 $ 1,655 $ 94 $ 1,691 $ — $ 3,441

Common stock repurchased — — — — ( 368 ) ( 368 )

Share-based compensation expense, net of forfeitures

— 23 — — — 23

Withholding tax on share-based compensation

— ( 6 ) — — — ( 6 )

Other comprehensive income — — 50 — 50

Cash dividends *

Other comprehensive loss — — ( 33 ) — — ( 33 )

Cash dividends (a)

— — — ( 1,278 ) — ( 1,278 )

1 unchanged sentence

Balance, December 31, 2021 $ 1 $ 1,672 $ 61 $ 1,727 $ ( 368 ) $ 3,093

Balance, January 1, 2019 $ 1 $ 1,681 $ ( 34 ) $ 2,151 $ 3,799

Balance, January 1, 2020 (pre-adoption) $ 1 $ 1,689 $ 44 $ 2,596 $ — $ 4,330

Net impact of adoption of ASU 2016-13 (b)

— — — ( 828 ) — ( 828 )

Balance, January 1, 2020 (post-adoption) 1 1,689 44 1,768 — 3,502

Common stock repurchased (c)

— ( 45 ) — — — ( 45 )

Share-based compensation expense, net of forfeitures

— 17 — — — 17

Withholding tax on share-based compensation

1 unchanged sentence

Other comprehensive income — — 50 — — 50

Cash dividends * — — — ( 410 ) ( 410 )

Cash dividends (a) — — — ( 807 ) — ( 807 )

Net income — — — 730 — 730

1 unchanged sentence

Balance, January 1, 2019 $ 1 $ 1,681 $ ( 34 ) $ 2,151 $ — $ 3,799

Non-cash incentive compensation from SFH — 110 — — 110

Share-based compensation expense, net of forfeitures

— 13 — — — 13

Withholding tax on share-based compensation

— ( 5 ) — — — ( 5 )

Other comprehensive loss

Other comprehensive income

— — 78 — — 78

Impact of AOCI reclassification due to the Tax Act — — 2 ( 2 ) —

Cash dividends (a) — — — ( 410 ) — ( 410 )

— — — 855 — 855

Balance, December 31, 2019 $ 1 $ 1,689 $ 44 $ 2,596 $ — $ 4,330

* Cash dividends declared were $ 5.94 per share in 2020 and $ 3.00 per share in 2019.

(a) Cash dividends declared were $ 9.55 per share, $ 5.94 per share, and $ 3.00 per share in 2021, 2020, and 2019, respectively.

(b) As a result of the adoption of ASU 2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments , on January 1, 2020, we recorded a one-time cumulative reduction to retained earnings, net of tax.

See Notes to the Consolidated Financial Statements.

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Net loss on repurchases and repayments of debt 78 39 35

Non-cash incentive compensation from SFH — — 110

Share-based compensation expense, net of forfeitures 23 17 13

Gain on sales of finance receivables ( 47 ) — —

Other ( 8 ) 3 ( 9 )

2 unchanged sentences

Cash flows from investing activities

Net principal originations of finance receivables held for investment and held for sale ( 748 ) ( 3,305 ) ( 2,373 )

Proceeds on sale of finance receivables held for sale originated as held for investment — 19 100

Net principal originations and purchases of finance receivables ( 2,514 ) ( 748 ) ( 3,305 )

Proceeds from sales of finance receivables 560 — —

Available-for-sale securities purchased ( 517 ) ( 456 ) ( 718 )

8 unchanged sentences

Cash dividends ( 1,274 ) ( 806 ) ( 408 )

Common stock repurchased and retired ( 45 ) — —

Common stock repurchased ( 368 ) ( 45 ) —

Withholding tax on share-based compensation ( 6 ) ( 6 ) ( 5 )

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Total cash and cash equivalents and restricted cash and restricted cash equivalents $ 1,017 $ 2,723 $ 1,632

Cash paid for amounts included in the measurement of operating lease liabilities $ ( 57 ) $ ( 58 ) $ —

Interest paid $ ( 891 ) $ ( 978 ) $ ( 845 )

Income taxes paid ( 403 ) ( 289 ) ( 261 )

Cash paid for amounts included in the measurement of operating lease liabilities ( 58 ) ( 57 ) ( 58 )

ONEMAIN HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

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Right-of-use assets obtained in exchange for operating lease obligations $ 43 $ 47 $ 233

Transfer of net finance receivables held for investment to finance receivables held for sale

(prior to deducting allowance for finance receivable losses) — — 111

Restricted cash and restricted cash equivalents primarily represent funds required to be used for future debt payments relating to our securitization transactions.

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Cash and cash equivalents $ 510 $ 2,272

Investment securities (includes available-for-sale securities with a fair value of $ 1.8 billion and

an amortized cost basis of $ 1.7 billion in 2020 and 2019)

Net finance receivables (includes loans of consolidated VIEs of $ 8.8 billion in 2020 and $ 8.4 billion

Net finance receivables (includes loans of consolidated VIEs of $ 8.8 billion in 2021 and 2020)

19,212 18,084

Unearned insurance premium and claim reserves ( 761 ) ( 771 )

Allowance for finance receivable losses (includes allowance of consolidated VIEs of $ 1.1 billion in

2020 and $ 340 million in 2019)

Allowance for finance receivable losses (includes allowance of consolidated VIEs of $ 910 million in 2021 and $ 1.1 billion in 2020)

( 2,095 ) ( 2,269 )

Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance

receivable losses 15,044 16,767

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents

of consolidated VIEs of $ 441 million in 2020 and $ 400 million in 2019)

Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses 16,356 15,044

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash

equivalents of consolidated VIEs of $ 466 million in 2021 and $ 441 million in 2020)

Goodwill 1,437 1,422

7 unchanged sentences

Deferred and accrued taxes 1 47

Other liabilities (includes other liabilities of consolidated VIEs of $ 15 million in 2020 and $ 14 million

Other liabilities (includes other liabilities of consolidated VIEs of $ 13 million in 2021 and $ 15 million in 2020)

Total liabilities 18,986 19,031

2 unchanged sentences

Common stock, par value $ 0.50 per share;

25,000,000 shares authorized, 10,160,021 shares issued and

outstanding at December 31, 2020 and December 31, 2019

25,000,000 shares authorized, 10,160,021 shares issued

and outstanding at December 31 , 2021 and December 31, 2020

Additional paid-in capital 1,916 1,899

17 unchanged sentences

Net loss on repurchases and repayments of debt ( 78 ) ( 39 ) ( 35 )

Net gain on sale of real estate loans — 3 18

Other 110 47 109

22 unchanged sentences

Foreign currency translation adjustments — — ( 2 )

Other ( 3 ) — —

Other comprehensive income (loss), net of tax, before reclassification adjustments ( 32 ) 51 77

13 unchanged sentences

Income (Loss) Retained

Earnings Total Shareholder’s Equity

Earnings Total Shareholders’ Equity

Balance, January 1, 2021 $ 5 $ 1,899 $ 94 $ 1,442 $ 3,440

Share-based compensation expense, net of forfeitures — 23 — — 23

Withholding tax on share-based compensation — ( 6 ) — — ( 6 )

Other comprehensive loss — — ( 33 ) — ( 33 )

Cash dividends — — — ( 1,678 ) ( 1,678 )

Net income — — — 1,314 1,314

Balance, December 31, 2021 $ 5 $ 1,916 $ 61 $ 1,078 $ 3,060

Balance, January 1, 2020 (pre-adoption) $ 5 $ 1,888 $ 44 $ 2,388 $ 4,325

Net impact of adoption of ASU 2016-13 (see Note 4)

— — — ( 828 ) ( 828 )

Net impact of adoption of ASU 2016-13 * — — — ( 828 ) ( 828 )

Balance, January 1, 2020 (post-adoption) 5 1,888 44 1,560 3,497

Share-based compensation expense, net of forfeitures — 17 — — 17

Withholding tax on share-based compensation — ( 6 ) — — ( 6 )

Withholding tax on shared-based compensation — ( 6 ) — — ( 6 )

Other comprehensive income — — 50 — 50

12 unchanged sentences

Balance, December 31, 2019 $ 5 $ 1,888 $ 44 $ 2,388 $ 4,325

Balance, January 1, 2018 $ 5 $ 1,909 $ 6 $ 1,482 $ 3,402

Non-cash incentive compensation from SFH — 110 — — 110

Contribution of OGSC to OMFC from SFI — 53 5 — 58

Contribution of SMHC to OMFC from SFI — 30 — — 30

Share-based compensation expense, net of forfeitures — 10 — — 10

Withholding tax on share-based compensation — ( 2 ) — — ( 2 )

Other comprehensive income — — ( 48 ) — ( 48 )

Impact of AOCI reclassification due to the Tax Act — — 3 ( 3 ) —

Net income — — — 461 461

Balance, December 31, 2018 $ 5 $ 2,110 $ ( 34 ) $ 1,940 $ 4,021

* As a result of the adoption of ASU 2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments on January 1, 2020, we recorded a one-time cumulative reduction to retained earnings, net of tax.

See Notes to the Consolidated Financial Statements.

10 unchanged sentences

Net loss on repurchases and repayments of debt 78 39 35

Non-cash incentive compensation from SFH — — 110

Share-based compensation expense, net of forfeitures 23 17 13

Gain on sales of finance receivables ( 47 ) — —

Other ( 8 ) 3 ( 9 )

2 unchanged sentences

Cash flows from investing activities

Net principal originations of finance receivables held for investment and held for sale ( 748 ) ( 3,305 ) ( 2,372 )

Proceeds on sale of finance receivables held for sale originated as held for investment — 19 100

Cash advances on intercompany notes receivables — ( 3 ) ( 34 )

Proceeds from repayments of principal on intercompany note to parent — 3 187

Net principal originations and purchases of finance receivables ( 2,514 ) ( 748 ) ( 3,305 )

Proceeds from sales of finance receivables 560 — —

Available-for-sale securities purchased ( 517 ) ( 456 ) ( 718 )

8 unchanged sentences

Cash contribution of SCLH — — 12

Cash dividends to OMH ( 846 ) ( 408 ) —

Cash contribution from OMH — — 144

Cash contribution of SMHC — — 13

Cash contribution of OGSC — — 11

Cash dividends ( 1,677 ) ( 846 ) ( 408 )

Payments on intercompany notes payable — — ( 170 )

4 unchanged sentences

Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period $ 986 $ 2,723 $ 1,632

ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

5 unchanged sentences

Total cash and cash equivalents and restricted cash and restricted cash equivalents $ 986 $ 2,723 $ 1,632

Cash paid for amounts included in the measurement of operating lease liabilities $ ( 57 ) $ ( 58 ) $ —

Interest paid $ ( 891 ) $ ( 978 ) $ ( 847 )

Income taxes paid ( 403 ) ( 289 ) ( 261 )

Cash paid for amounts included in the measurement of operating lease liabilities ( 58 ) ( 57 ) ( 58 )

Supplemental non-cash activities

2 unchanged sentences

Non-cash contribution of SCLH — — 22

Transfer of net finance receivables held for investment to finance receivables held

for sale (prior to deducting allowance for finance receivable losses) — — 111

Non-cash contribution of OGSC — — 47

Non-cash contribution of SMHC — — 17

Restricted cash and restricted cash equivalents primarily represent funds required to be used for future debt payments relating to our securitization transactions.

6 unchanged sentences

OneMain Holdings, Inc.

(“OMH”), and its wholly-owned direct subsidiary, OneMain Finance Corporation (“OMFC”) (formerly known as Springleaf Finance Corporation (“SFC”)) are financial services holding companies whose subsidiaries engage in the consumer finance and insurance businesses.

Prior to the completion of the merger described below, OMH’s direct subsidiary was Springleaf Finance, Inc.

On September 20, 2019, SFC entered into a merger agreement with SFI, its direct parent at the time, to merge SFI with and into SFC, with SFC as the surviving entity.

The merger was effective in SFC's consolidated financial statements as of July 1, 2019.

As a result of the merger with SFI, SFC became a wholly-owned direct subsidiary of OMH.

Effective July 1, 2020, SFC was renamed to OneMain Finance Corporation (“OMFC”).

The name change did not affect OMFC’s legal entity structure, nor did it have an impact on OMH’s or OMFC’s financial statements.

OMFC is used in this report to include references to transactions and arrangements occurring prior to the name change.

OMH and OMFC are referred to in this report, collectively with their subsidiaries, whether directly or indirectly owned, as “the Company,” “we,” “us,” or “our.” The information in this Annual Report on Form 10-K is equally applicable to OMH and OMFC, except where otherwise indicated.

At December 31, 2020, the Apollo-Värde Group owned approximately 40.9 % of OMH’s common stock.

2018 Share Sale Transactions

Prior to the Fortress Transaction, certain executives of the Company held incentive units that only provided benefits (in the form of distributions) if Springleaf Financial Holdings, LLC ("SFH") made distributions to one or more of its common members that exceeded specified threshold amounts.

In connection with the Fortress Transaction, certain executive officers who were holders of SFH incentive units received a distribution of approximately $ 106 million in the aggregate from SFH.

Although the distribution was not made by the Company or its subsidiaries, in accordance with Accounting Standards Codification ("ASC") 710, Compensation-General , we recorded non-cash incentive compensation expense of approximately $ 106 million, with an equal and offsetting increase to additional paid-in-capital.

The impact to the Company was non-cash, equity neutral, and not tax deductible.

In addition, in connection with the distributions by SFH to AIG resulting from the AIG Share Sale Transaction, these same executive officers holding the incentive units described above, received a distribution of approximately $ 4 million in the aggregate from SFH in respect of their incentive interests in SFH.

Consistent with the Fortress Transaction, we recorded non-cash incentive compensation expense of approximately $ 4 million, with an equal and offsetting increase to additional paid-in-capital.

Again, the impact to the Company was non-cash, equity neutral, and not tax deductible.

Reconciliation of OneMain Finance Corporation Results to OneMain Holdings, Inc.

(“OMH”) and its wholly owned direct subsidiary, OneMain Finance Corporation (“OMFC”), are financial services holding companies whose subsidiaries engage in the consumer finance and insurance businesses.

The results of OMFC are consolidated into the results of OMH.

Due to the nominal differences between OMFC and OMH, content throughout this filing relates to both OMH and OMFC.

OMFC disclosures relate only to itself and not to any other company.

Except where otherwise indicated, and excluding certain insignificant cash and non-cash transactions at the OMH level, these notes relate to the consolidated financial statements for both companies, OMH and OMFC.

In addition to certain intercompany payable and receivable amounts between the entities, the following is a reconciliation of the consolidated balance sheets and results of our consolidated statements of operations of OMFC to OMH:

December 31, 2020 2019

(dollars in millions) OMH OMFC Difference OMH OMFC Difference

Other assets $ 1,054 $ 1,054 $ — $ 769 $ 768 $ 1

Deferred and accrued taxes 45 47 ( 2 ) 34 35 ( 1 )

Other liabilities 564 563 1 592 595 ( 3 )

Total shareholders' equity 3,441 3,440 1 4,330 4,325 5

Years Ended December 31, 2020 2019 2018

(dollars in millions) OMH OMFC Difference OMH OMFC Difference OMH OMFC Difference

Interest income $ 4,368 $ 4,368 $ — $ 4,127 $ 4,127 $ — $ 3,658 $ 3,648 $ 10

Interest expense 1,027 1,027 — 970 972 ( 2 ) 875 876 ( 1 )

Provision for finance receivable losses 1,319 1,319 — 1,129 1,129 — 1,048 1,043 5

Other revenues 47 47 — 99 106 ( 7 ) 70 56 14

Salaries and benefits 756 756 — 808 808 — 917 877 40

Other operating expenses 573 573 — 559 558 1 576 577 ( 1 )

Income before income taxes 977 977 — 1,098 1,104 ( 6 ) 624 643 ( 19 )

Income taxes 247 247 — 243 246 ( 3 ) 177 182 ( 5 )

Net Income 730 730 — 855 858 ( 3 ) 447 461 ( 14 )

The following transactions are related to OMFC and have no impact on OMH's consolidated financial results.

Merger of SFI into OMFC

On September 20, 2019, OMFC entered into a merger agreement with its direct parent SFI, to merge SFI with and into OMFC, with OMFC as the surviving entity.

The merger was effective in OMFC's condensed consolidated financial statements as of July 1, 2019.

In conjunction with the merger, the net deficiency of SFI, after elimination of its investment in OMFC, was absorbed by OMFC resulting in an equity reduction of $ 408 million to OMFC, which included the elimination of the intercompany notes and receivables between OMFC and SFI, as discussed below.

The net deficiency of SFI included an intercompany note payable plus accrued interest of $ 166 million from SFI to OMH, which OMFC assumed through the merger.

On September 23, 2019, OMFC repaid SFI’s note to OMH.

Concurrently, OMH paid $ 22 million in other payables due to OMFC and made an equity contribution of $ 144 million to OMFC.

The transactions noted above resulted in a net $ 264 million reduction to OMFC's equity.

OMFC's Notes Receivable from Parent

As a result of the merger between SFI and OMFC, described in Note 1 and above, a $ 232 million note receivable from SFI to OMFC was dissolved effective July 1, 2019.

Additionally, OMFC assumed a $ 28 million note payable from SFI to SMHC, a wholly-owned subsidiary of OMFC, and OMFC subsequently paid off the note on September 23, 2019.

Interest income on these notes totaled $ 8 million during 2019 and $ 18 million during 2018, which we report in other revenues.

Springleaf Consumer Loan Holding Company (“SCLH”) Contribution

On March 10, 2019, all of the outstanding capital stock of SCLH, a subsidiary of SFI, was contributed to OMFC, and SCLH became a wholly-owned direct subsidiary of OMFC.

The contribution was effective as of January 1, 2019 and increased OMFC’s total shareholder’s equity and total assets by $ 34 million and $ 53 million, respectively.

The contribution is presented prospectively because it is deemed to be a contribution of net assets.

OneMain Consumer Loan, Inc.

(“OCLI”) Loan Referral Fees

Through June 30, 2018, OCLI, a wholly-owned direct subsidiary of SCLH, provided personal loan application and credit underwriting services on behalf of OMFC for personal loan applications that are submitted online.

OMFC was charged a fee of $ 35 for each underwritten approved application processed, as well as any other fees agreed to by the parties.

On July 1, 2018, OMFC terminated its agreement with OCLI to provide these services.

Prior to the termination, during 2018, OMFC recorded $ 29 million of referral fee expense.

Certain costs incurred by OCLI to provide these services were a component of deferred origination costs, which are included in net finance receivables.

OneMain General Services Corporation (“OGSC”) Services Agreement

OGSC provides a variety of services to affiliates under a services agreement, including OMFC.

OGSC was contributed to OMFC by OMH effective July 1, 2018, and all activity between OGSC and OMFC under the agreement is eliminated from OMFC’s results as of July 1, 2018.

Prior to the contribution, during 2018, OMFC recorded $ 265 million of service fee expenses, which are included in operating expenses.

Due to the nominal differences between OMFC and OMH, content throughout this filing relates to both OMH and OMFC, except where otherwise indicated.

OMH and OMFC are referred to in this report, collectively with their subsidiaries, whether directly or indirectly owned, as “the Company,” “OneMain,” “we,” “us,” or “our.”

Summary of Significant Accounting Policies

14 unchanged sentences

Generally, we classify finance receivables as held for investment based on management’s intent at the time of origination.

We determine classification on a loan-by-loan basis.

We determine classification on a receivable-by-receivable basis.

We classify finance receivables as held for investment due to our ability and intent to hold them until their contractual maturities.

We carry finance receivables at amortized cost which includes accrued finance charges, net unamortized deferred origination costs and unamortized points and fees, unamortized net premiums and discounts on purchased finance receivables, and unamortized finance charges on precomputed receivables.

Our finance receivables held for investment consist of our personal loans and credit cards.

We carry finance receivables at amortized cost which includes accrued finance charges, net unamortized deferred origination costs and unamortized fees, unamortized net premiums and discounts on purchased finance receivables, and unamortized finance charges on precomputed receivables.

We include the cash flows from finance receivables held for investment in the consolidated statements of cash flows as investing activities, except for collections of interest, which we include as cash flows from operating activities.

3 unchanged sentences

We recognize finance charges as revenue on the accrual basis using the interest method, which we report in interest income.

We amortize premiums or accrete discounts on finance receivables as an adjustment to finance charge income using the interest method and contractual cash flows.

We defer the costs to originate certain finance receivables and the revenue from nonrefundable points and fees on loans and amortize them as an adjustment to finance charge income using the interest method.

We stop accruing finance charges when four payments (approximately 90 days) become contractually past due for personal loans.

We reverse finance charge amounts previously accrued upon suspension of accrual of finance charges.

We defer and amortize the costs to originate certain finance receivables and the revenue from nonrefundable fees, along with any premiums or discounts, as an adjustment to finance charge income using the interest method.

For credit cards, we amortize certain deferred costs on a straight-line basis over a twelve-month period.

For our personal loans, we stop accruing finance charges when four payments (approximately 90 days) become contractually past due.

We reverse finance charge amounts previously accrue d upon suspension of accrual of finance charges.

For credit cards, we continue to accrue finance charges and fees until charge-off when seven payments (approximately 180 days) become contractually past due and reverse finance charges and fees previously accrued.

For certain finance receivables that had a carrying value that included a purchase premium or discount, we stop accreting the premium or discount at the time we stop accruing finance charges.

We do not reverse accretion of premium or discount that was previously recognized.

We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt.

We resume the accrual of interest on a nonaccrual finance receivable when the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual.

For our personal loans, we recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt.

We resume the accrual of interest on a nonaccrual personal loans when the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual.

At that time, we also resume accretion of any unamortized premium or discount resulting from a previous purchase premium or discount.

Troubled Debt Restructured Finance Receivables

We make modifications to our personal loans to assist borrowers who are experiencing financial difficulty, are in bankruptcy or are participating in a consumer credit counseling arrangement.

When we modify a loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable.

We make modifications to our finance receivables to assist borrowers who are experiencing financial difficulty, are in bankruptcy or are participating in a consumer credit counseling arrangement.

When we modify the contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that receivable as a TDR finance receivable.

We restructure finance receivables only if we believe the customer has the ability to pay under the restructured terms for the foreseeable future.

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Account modifications that are not classified as a TDR finance receivable are measured for impairment in accordance with our policy for allowance for finance receivable losses.

We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt.

TDR finance receivables that are placed on nonaccrual status remain on nonaccrual status until the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual.

Allowance for Finance Receivable Losses

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None of our accounts are large enough to warrant individual evaluation for impairment.

We estimate the allowance for finance receivable losses primarily on historical loss experience using a cumulative loss model applied to our finance receivable portfolios.

We estimate the allowance for finance receivable losses primarily on historical loss experience using a cumulative loss model applied to our personal loan portfolios.

Our gross credit loss expectation is offset by the estimate of future recoveries using historical recovery curves.

Our finance receivables are primarily segmented in the loss model by contractual delinquency status.

Our personal loans are primarily segmented in the loss model by contractual delinquency status.

Other attributes in the model include collateral mix and recent credit score.

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These patterns are then applied to the current portfolio to obtain an estimate of future losses.

We also consider key economic trends including unemployment rates and bankruptcy filings.

We also consider key economic trends including unemployment rates.

Forecasted macroeconomic conditions extend to our reasonable and supportable forecast period and revert to a historical average.

No new volume is assumed.

Renewals are a significant piece of our new volume and are considered a terminal event of the previous loan.

We have elected not to measure an allowance on accrued finance charges as it is our policy to reverse finance charge amounts previously accrued after four contractual payments become past due.

Personal loan renewals are a significant piece of our new volume and are considered a terminal event of the previous loan.

For our personal loans, we have elected not to measure an allowance on accrued finance charges as it is our policy to reverse finance charge amounts previously accrued after four contractual payments become past due.

For credit cards, we measure an allowance on uncollected finance charges, but do not measure an allowance on the unfunded portion of the credit card lines as the accounts are unconditionally cancellable.

Management exercises its judgment when determining the amount of allowance for finance receivable losses.

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We adjust the amounts determined by our model for management’s estimate of the effects of model imprecision which include but are not limited to, any changes to underwriting criteria and portfolio seasoning.

We generally charge off to the allowance for finance receivable losses personal loans that are beyond seven payments (approximately 180 days) past due.

Generally, we start repossession of the titled personal property when the customer becomes two payments (approximately 30 days) past due and may charge-off prior to the account becoming seven payments (approximately 180 days) past due.

Generally, we charge-off loans with bankruptcy filings at the earlier of notice of discharge or when the customer becomes seven payments past due.

We infrequently extend the charge-off period for individual personal loan accounts when, in our opinion, such treatment is warranted and consistent with our credit risk policies.

We generally charge-off to the allowance for finance receivable losses on personal loans and credit cards that are beyond seven payments (approximately 180 days) past due.

Exceptions include accounts in bankruptcy, which are generally charged off at the earlier of notice of discharge or when the customer becomes seven payments past due, and accounts of deceased borrowers, which are generally charged off at the time of notice.

Generally, we start repossession of any titled personal property when the customer becomes two payments (approximately 30 days) past due and may charge-off prior to the account becoming seven payments (approximately 180 days) past due.

We may renew delinquent secured or unsecured personal loan accounts if the customer meets current underwriting criteria and it does not appear that the cause of past delinquency will affect the customer’s ability to repay the renewed loan.

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For our personal loans, we may offer those customers whose accounts are in good standing the opportunity of a deferment, which extends the term of an account.

We may extend this offer to customers when they are experiencing higher than normal personal expenses.

However, we may offer a deferment to a delinquent customer who is experiencing a temporary financial problem.

We also may extend this offer to customers when they are experiencing higher than normal personal expenses or to a delinquent customer who is experiencing a temporary financial problem.

The account must be current after granting the deferment.

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We generally limit a customer to two deferments in a rolling twelve month period unless we determine that an exception is warranted and is consistent with our credit risk policies.

Additionally, for borrowers that do not meet the qualifications of a deferment, we may also offer a cure agreement, settlement or a loan modification.

Additionally, for borrowers that do not meet the qualifications of a deferment, we may also offer a re-age, settlement, or a loan modification.

We also establish reserves for TDR finance receivables, which are included in our allowance for finance receivable losses.

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The primary assumptions to estimate these expected cash flows are prepayment speeds, default rates, and loss severity rates.

Goodwill represents the amount of purchase price over the fair value of net assets we acquired in connection with the OneMain Acquisition.

Goodwill represents the amount of purchase price over the fair value of net assets we acquired in connection with business combinations, primarily related to the OneMain Acquisition.

We test goodwill for potential impairment annually as of October 1 of each year and whenever events occur or circumstances change that would more likely than not reduce the fair value of our reporting unit below its carrying amount.

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Intangible Assets other than Goodwill

At the time we initially recognize intangible assets, a determination is made with regard to each asset as it relates to its useful life.

We have determined that each of our intangible assets has a finite useful life with the exception of the OneMain trade name, insurance licenses, lending licenses and certain domain names, which we have determined to have indefinite lives.

At the time we initially recognize intangible assets, a determination is made with regard to each asset’s useful life.

We have determined that each of our intangible assets have indefinite lives with the exception of value of business acquired (“VOBA”), which has a finite useful life.

We amortize our finite useful life intangible assets in a manner that reflects the pattern of economic benefit used.

For intangible assets with a finite useful life, we review for impairment at least annually and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

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For indefinite-lived intangible assets, we review for impairment at least annually and whenever events occur or circumstances change that would indicate the assets are more likely than not to be impaired.

We first complete an annual qualitative assessment to determine whether it is necessary to perform a quantitative impairment test.

We first complete a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test.

If the qualitative assessment indicates that the assets are more likely than not to have been impaired, we proceed with the fair value calculation of the assets.

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Restricted Cash and Cash Equivalents

We include funds to be used for future debt payments relating to our securitization transactions, insurance regulatory deposits and reinsurance trusts with third parties, in each case , in restricted cash and cash equivalents.

We include funds to be used for future debt payments and collateral relating to our securitization and conduit transactions, insurance regulatory deposits and reinsurance trusts with third parties, in each case , in restricted cash and cash equivalents.

Long-term Debt

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Dilutive potential common shares represent outstanding unvested restricted stock units and awards.

Foreign Currency Translation

Assets and liabilities of foreign operations are translated from their functional currencies into U.S.

dollars for reporting purposes using the period end spot foreign exchange rate.

Revenues and expenses of foreign operations are translated monthly from their respective functional currencies into U.S.

dollars at amounts that approximate weighted average exchange rates.

The effects of those translation adjustments are classified in accumulated other comprehensive income (loss) on the consolidated balance sheets.

Recent Accounting Pronouncements

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

Financial Instruments - Credit Losses

In June of 2016, the FASB issued Accounting Standard Update 2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which significantly changed the way that entities are required to measure credit losses.

The new standard required that the estimated credit loss be based upon an “expected credit loss” approach rather than the “incurred loss” approach previously required.

The new approach required entities to measure all expected credit losses for financial assets over their expected lives based on historical experience, current conditions, and reasonable and supportable forecasts of collectability.

The expected credit loss model required earlier recognition of credit losses than the incurred loss approach.

We expect ongoing changes in the allowance for finance receivable losses will be driven primarily by the growth of our loan portfolio, mix of secured and unsecured loans, credit quality, and the economic environment at that time.

In addition, the Accounting Standard Update (“ASU”) developed a new accounting treatment for purchased financial assets with credit deterioration.

The ASU also modified the other-than-temporary impairment model for available-for-sale debt securities by requiring companies to record an allowance for credit impairment rather than write-downs of such assets.

Management has reviewed this update and other ASUs that were subsequently issued to further clarify the implementation guidance outlined in ASU 2016-13.

We adopted the amendments of these ASUs as of January 1, 2020.

Upon adoption, we recorded an increase to the allowance for finance receivable losses of $ 1.12 billion, an increase to deferred tax assets of $ 0.28 billion, and a corresponding one-time cumulative reduction to retained earnings, net of tax, of $ 0.83 billion in the consolidated balance sheet as of January 1, 2020.

The adoption of this ASU, as it relates to available-for-sale debt securities, did not have a material impact on the consolidated financial statements as of January 1, 2020.

As a result of the adoption of ASU 2016-13, several of our significant accounting policies have changed to reflect the requirements of the new standard.

Refer to Note 3 for the Summary of Significant Accounting Policies.

See Notes 5, 6, and 7 for additional information on the adoption of ASU 2016-13.

ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

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and enhanced disclosures.

The amendments in this ASU become effective for the Company beginning January 1, 2023, as a result of the FASB issuing a one-year deferral of this ASU for public companies.

We have a cross-functional implementation team and a project plan to ensure we comply with all the amendments in this ASU at the time of adoption.

We have selected a vendor for a software solution to meet the new accounting and disclosure requirements of the ASU and continue to make progress in evaluating the potential impact of the adoption of the ASU on our consolidated financial statements.

Upon adoption, our cash flow assumptions used to measure the liability for future policy benefits will be updated at least annually.

The guidance requires the discount rate used to measure the liability to be an upper-medium grade fixed-income instrument yield and updated at each reporting date with changes in the liability due to the discount rate recognized in other comprehensive income.

The amendments in this ASU become effective for the Company beginning January 1, 2023.

The Company’s cross-functional implementation team continues to make progress in line with the established project plan to ensure we comply with all the amendments in this ASU at the time of adoption.

We will utilize an actuarial software solution to meet the new accounting and disclosure requirements, and we continue to refine the development of the actuarial model and assumptions.

After the model has been subject to a parallel testing phase in 2022, the Company will provide further disclosure regarding the estimated impact of the adoption of the ASU on our consolidated financial statements.

We do not believe that any other accounting pronouncements issued, but not yet effective, would have a material impact on our consolidated financial statements or disclosures, if adopted.

Finance Receivables

Our finance receivables consist of personal loans, which are non-revolving, with a fixed-rate, fixed terms generally between three and six years , and are secured by automobiles, other titled collateral, or are unsecured.

Net finance receivables consist of our total portfolio of personal loans.

Components of our personal loans were as follows:

(dollars in millions)

At December 31, 2021, our finance receivables consisted of personal loans and credit cards.

Personal loans are non-revolving, with a fixed rate, fixed terms generally between three and six years , and are secured by automobiles, other titled collateral, or are unsecured.

During the third quarter of 2021, we began offering credit cards.

Credit cards are open-ended, revolving, with a fixed rate, and are unsecured.

Components of our net finance receivables were as follows:

(dollars in millions) Personal Loans Credit Cards Total

December 31, 2021

Gross finance receivables * $ 17,860 $ 18,195

Unearned points and fees

Gross finance receivables (a) $ 18,944 $ 24 $ 18,968

Unearned fees

( 225 ) ( 1 ) ( 226 )

Accrued finance charges 299 289

Accrued finance charges and fees 289 — 289

Deferred origination costs 179 2 181

Total $ 19,187 $ 25 $ 19,212

* Gross finance receivables equal the unpaid principal balance of our personal loans.

December 31, 2020 (b)

Gross finance receivables (a) $ 17,860 $ — $ 17,860

Unearned fees

( 225 ) — ( 225 )

Accrued finance charges and fees 299 — 299

Deferred origination costs 150 — 150

Total $ 18,084 $ — $ 18,084

(a) Gross finance receivables equal the unpaid principal balance of our personal loans and credit cards.

For precompute loans, unpaid principal balance is the gross contractual payments less the unaccreted balance of unearned finance charges.

(b) There were no credit cards at December 31, 2020 as the product offering began in 2021.

GEOGRAPHIC DIVERSIFICATION

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The largest concentrations of net finance receivables were as follows:

December 31, 2020 2019*

December 31, 2021 2020 (a)

(dollars in millions) Amount Percent Amount Percent

Personal Loans:

Texas $ 1,812 9 % $ 1,614 9 %

California 1,289 7 1,196 7

North Carolina 1,130 6 1,217 7

Pennsylvania 1,123 6 1,097 6

Florida 1,255 7 1,060 6

Pennsylvania 1,199 6 1,123 6

North Carolina 1,117 6 1,130 6

Ohio 960 5 922 5

Georgia 770 4 712 4

Illinois 765 4 739 4

Indiana 728 4 728 4

Georgia 712 4 748 4

Virginia 666 4 710 4

New York 681 4 580 3

Virginia 665 3 666 4

Other 7,946 41 7,614 42

Total $ 18,084 100 % $ 18,389 100 %

* December 31, 2019 concentrations of net finance receivables are presented in the order of December 31, 2020 state concentrations.

Total personal loans $ 19,187 100 % $ 18,084 100 %

Credit Cards (b):

California $ 7 28 % $ — — %

Texas 4 14 — —

Florida 2 7 — —

Other 12 51 — —

Total credit cards $ 25 100 % $ — — %

(a) December 31, 2020 concentrations of net finance receivables are presented in the order of December 31, 2021 state concentrations.

(b) There were no credit cards at December 31, 2020 as the product offering began in 2021.

WHOLE LOAN SALE TRANSACTIONS

As of December 31, 2021, we have whole loan sale flow agreements with third parties, with remaining terms ranging between one to two years , in which we agreed to sell a combined total of $ 180 million gross receivables per quarter of newly originated unsecured personal loans along with any associated accrued interest.

These unsecured personal loans are derecognized from our balance sheet at the time of sale.

We service the personal loans sold and are entitled to a servicing fee and other fees commensurate with the services performed as part of the agreements.

The gain on sales and servicing fees are recorded in other revenue.

Our first sale was executed in the first quarter of 2021.

During 2021, we sold $ 505 million of gross finance receivables and the gain on the sales was $ 47 million.

CREDIT QUALITY INDICATOR

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We monitor the delinquency of our finance receivable portfolio, including the migration between the delinquency buckets and changes in the delinquency trends to manage our exposure to credit risk in the portfolio.

When finance receivables are 60 days contractually past due, we consider these accounts to be at an increased risk for loss and we transfer collection of these accounts to our centralized operations.

At 90 days or more contractually past due, we consider our finance receivables to be nonperforming.

We stop accruing finance charges and reverse finance charges previously accrued on nonperforming loans.

We reversed net accrued finance charges of $ 86 million during the year ended December 31, 2020.

Finance charges recognized from the contractual interest portion of payments received on nonaccrual finance receivables totaled $ 14 million during the year ended December 31, 2020.

All loans in nonaccrual status are considered in our estimate of allowance for finance receivable losses.

The following is a summary of our personal loans held for investment by the year of origination and number of days delinquent, our key credit quality indicator, at December 31, 2020:

When personal loans are 60 days contractually past due, we consider these accounts to be at an increased risk for loss and collection of these accounts is handled by our centralized operations.

At 90 days or more contractually past due, we consider our personal loans to be nonperforming and stop accruing finance charges.

We reverse finance charges previously accrued.

For our personal loans, we reversed net accrued finance charges of $ 77 million and $ 86 million during the years ended December 31, 2021 and 2020, respectively.

Finance charges recognized from the contractual interest portion of payments received on nonaccrual personal loans totaled $ 13 million and $ 14 million during the years ended December 31, 2021 and 2020, respectively.

All personal loans in nonaccrual status are considered in our estimate of allowance for finance receivable losses.

We accrue finance charges and fees on credit cards until charge-off at approximately 180 days past due and reverse finance charges and fees previously accrued.

For credit cards, there were no net accrued finance charges and fees reversed for the year ended December 31, 2021.

The following tables below are a summary of our personal loans by the year of origination and number of days delinquent, our key credit quality indicator:

(dollars in millions) 2021 2020 2019 2018 2017 Prior Total

December 31, 2021

Current $ 10,645 $ 3,935 $ 2,641 $ 814 $ 193 $ 109 $ 18,337

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90+ days past due 125 130 85 28 9 6 383

180 days or more past due 1 3 1 1 — — 6

Total nonperforming 63 157 60 23 8 5 316

Total $ 10,976 $ 4,192 $ 2,812 $ 872 $ 212 $ 123 $ 19,187

The following is a summary of our personal loans held for investment by number of days delinquent at December 31, 2019, which is prior to the adoption of ASU 2016-13 on January 1, 2020 and continues to be reported under ASC 310, Receivables :

(dollars in millions)

(dollars in millions) 2020 2019 2018 2017 2016 Prior Total

December 31, 2020

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Total performing 8,775 5,869 2,136 680 194 114 17,768

Nonperforming

Nonperforming (Nonaccrual)

90+ days past due 63 157 60 23 8 5 316

180 days or more past due 9

Total nonperforming 386

Total $ 8,838 $ 6,026 $ 2,196 $ 703 $ 202 $ 119 $ 18,084

PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES

ASU 2016-13 superseded the accounting for purchased credit impaired finance receivables with purchase credit deteriorated finance receivables.

As a result, we converted all purchased credit impaired finance receivables to purchased credit deteriorated finance receivables in accordance with ASC Topic 326, which resulted in the gross-up of net finance receivables and allowance for finance receivable losses of $ 15 million on January 1, 2020.

Due to the adoption of ASU 2016-13, the disclosures related to purchase credit impaired finance receivables are no longer applicable for reporting periods beginning in 2020.

TDR FINANCE RECEIVABLES

The following is a summary of credit cards by number of days delinquent, our key credit quality indicator:

(dollars in millions)

30-59 days past due

60-89 days past due

90+ days past due

There were no credit cards converted to term loans for the year ended December 31, 2021.

TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES

Information regarding TDR finance receivables were as follows:

(dollars in millions)

Personal Loans

TDR gross finance receivables $ 646 $ 689

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Allowance for TDR finance receivable losses 270 314

* TDR net finance receivables — TDR gross finance receivables net of unearned points and fees, accrued finance charges, and deferred origination costs.

TDR average net finance receivables and finance charges recognized on TDR finance receivables for our personal loans that are held for investment and our real estate loans that are held for sale were as follows:

(dollars in millions) Personal

Loans Real Estate Loans Total

Year Ended December 31, 2020

TDR average net finance receivables $ 693 $ 50 $ 743

TDR finance charges recognized 50 3 53

Year Ended December 31, 2019

TDR average net finance receivables $ 550 $ 58 $ 608

TDR finance charges recognized 45 3 48

Year Ended December 31, 2018

TDR average net finance receivables $ 383 $ 130 $ 513

TDR finance charges recognized 45 7 52

Information regarding the new volume of the TDR finance receivables held for investment were as follows:

* TDR net finance receivables are TDR gross finance receivables net of unearned fees, accrued finance charges, and deferred origination costs.

There were no credit cards classified as TDR finance receivables for the year ended December 31, 2021.

Information regarding the new volume of the TDR finance receivables were as follows:

(dollars in millions)

Personal Loans

Years Ended December 31, 2021 2020 2019

Pre-modification TDR net finance receivables $ 453 $ 499 $ 536

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* “Other” modifications primarily consist of potential principal and interest forgiveness contingent on future payment performance by the borrower under the modified terms.

New volume of TDR finance receivables held for sale are not included in the table above as they were immaterial for the years ended December 31, 2020, 2019, and 2018.

Personal loans held for investment that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) are reflected in the following table.

Finance receivables that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) are reflected in the following table:

(dollars in millions)

Years Ended December 31, 2021 2020 2019

Personal Loans

TDR net finance receivables * $ 117 $ 105 $ 96

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* Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted.

Real estate loans held for sale that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) were immaterial for the years ended December 31, 2020, 2019, and 2018.

UNFUNDED LENDING COMMITMENTS

Our unfunded lending commitments consist of the unused credit card lines, which are unconditionally cancellable.

We do not anticipate that all of our customers will access their entire available line at any given point in time.

The unused credit card lines totaled $ 54 million at December 31, 2021.

Allowance for Finance Receivable Losses

We establish an allowance for finance receivable losses through the provision for finance receivable losses.

We evaluate our finance receivable portfolio by the level of contractual delinquency in the portfolio, specifically in the late stage delinquency buckets and inclusive of the migration of the loans through the delinquency buckets.

We estimate and record an allowance for finance receivable losses to cover the estimated lifetime expected credit losses on our finance receivables, pursuant to the adoption of ASU 2016-13 on January 1, 2020.

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See Note 2 for additional information regarding our policy for allowance for finance receivable losses.

Our current methodology to estimate expected credit losses used the most recent macroeconomic forecasts, which incorporated the projected impacts of the global outbreak of a novel strain of coronavirus (“COVID-19”) on the U.S.

We also considered known government stimulus measures, the involuntary unemployment insurance coverage of our portfolio, and our borrower assistance efforts.

Our forecast leveraged economic projections from an industry leading forecast provider.

Our current methodology to estimate expected credit losses used the most recent macroeconomic forecasts, which incorporated the ongoing impacts of the global outbreak of a novel strain of coronavirus (“COVID-19”) on the U.S.

economy and the overall unemployment rate.

We also considered inflationary pressures, supply chain concerns, and businesses’ ability to remain open.

Our forecast leveraged economic projections from industry leading forecast providers.

At December 31, 2021, our economic forecast used a reasonable and supportable period of 12 months.

The increase in our allowance for finance receivable losses for the year ended December 31, 2020 was largely due to the adoption of ASU 2016-13 along with the economic considerations relating to COVID-19.

In the near-term, we may experience further changes to the macroeconomic assumptions within our forecast, as well as changes to our loan loss performance outlook, both of which could lead to further changes in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

The decrease in our allowance for finance receivable losses for the year ended December 31, 2021 was largely due an improved outlook for unemployment and macroeconomic conditions, partially offset by growth in our loan portfolio.

We may experience further changes to the macroeconomic assumptions within our forecast, as well as changes to our loan loss performance outlook, both of which could lead to further changes in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

Changes in the allowance for finance receivable losses were as follows:

(dollars in millions) Personal

Receivables Total

(dollars in millions) Personal Loans Credit Cards Total

Year Ended December 31, 2021

Balance at beginning of period $ 2,269 $ — $ 2,269

Impact of adoption of ASU 2016-13 (a) 1,118 — 1,118

Provision for finance receivable losses 588 5 593

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Balance at end of period $ 2,090 $ 5 $ 2,095

Year Ended December 31, 2019

Year Ended December 31, 2020 (a)

Balance at beginning of period $ 829 $ — $ 829

Impact of adoption of ASU 2016-13 (b) 1,118 — 1,118

Provision for finance receivable losses 1,319 — 1,319

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Balance at end of period $ 2,269 $ — $ 2,269

Year Ended December 31, 2018

Year Ended December 31, 2019 (a)

Balance at beginning of period $ 731 $ — $ 731

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Recoveries 126 — 126

Other (b) — ( 23 ) ( 23 )

Balance at end of period $ 829 $ — $ 829

(a) As a result of the adoption of ASU 2016-13 on January 1, 2020, we recorded a one-time adjustment to the allowance for finance receivable losses.

See Notes 4 and 5 for additional information on the adoption of ASU 2016-13.

(b) Other consists primarily of the reclassification of allowance for finance receivable losses due to the transfer of the real estate loans in other receivables from held for investment to finance receivables held for sale on September 30, 2018.

(a) There were no credit cards for the years ended December 31, 2020 and 2019 as the product offering began in 2021.

(b) As a result of the adoption of ASU 2016-13 on January 1, 2020, we recorded a one-time adjustment to the allowance for finance receivable losses.

The allowance for finance receivable losses and net finance receivables by impairment method were as follows:

(dollars in millions)

(dollars in millions) Personal Loans Credit Cards Total

December 31, 2021

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$ 1,820 $ 5 $ 1,825

Purchased credit impaired finance receivables * — —

TDR finance receivables 270 — 270

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$ 18,537 $ 25 $ 18,562

Purchased credit impaired finance receivables *

TDR finance receivables 650 — 650

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10.89 % 19.91 % 10.90 %

* As a result of the adoption of ASU 2016-13 on January 1, 2020, the accounting for purchased credit impaired finance receivables was superseded with purchase credit deteriorated finance receivables which are collectively evaluated for impairment.

See Notes 4 and 5 for additional information on the adoption of ASU 2016-13.

December 31, 2020 (a)

Allowance for finance receivable losses:

Collectively evaluated for impairment $ 1,955 $ — $ 1,955

TDR finance receivables

Total $ 2,269 $ — $ 2,269

Finance receivables:

Collectively evaluated for impairment

$ 17,393 $ — $ 17,393

TDR finance receivables 691 — 691

Total $ 18,084 $ — $ 18,084

Allowance for finance receivable losses as a percentage of finance receivables

12.55 % — % 12.55 %

(a) There were no credit cards for the year ended December 31, 2020 as the product offering began in 2021.

Investment Securities

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169 3 ( 2 ) 170

90 1 ( 1 ) 90

Total $ 1,842 $ 73 $ ( 8 ) $ 1,907

* There was no allowance for credit losses related to our investment securities as of December 31, 2020.

(dollars in millions) Cost/

Cost Unrealized

Gains Unrealized

December 31, 2020*

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Obligations of states, municipalities, and political subdivisions

91 2 ( 1 ) 92

Commercial paper 28 — — 28

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Total $ 1,728 $ 121 $ ( 2 ) $ 1,847

* The balances reported as of December 31, 2019 are not subject to ASU 2016-13 which was adopted on January 1, 2020 and continue to be reported under ASC 320, Investments – Debt and Equity Securities .

As of December 31, 2020, interest receivables reported in “Other assets” totaled $ 12 million.

Amounts reversed from investment revenue for available-for-sale securities were immaterial.

* There was no material allowance for credit losses related to our investment securities as of December 31, 2021 and there was no allowance for credit losses as of December 31, 2020.

Interest receivables reported in “Other assets” totaled $ 13 million and $ 12 million as of December 31, 2021 and 2020, respectively.

There were no material amounts reversed from investment revenue for available-for-sale securities for the year ended December 31, 2021 and no amounts reversed from investment revenue for available-for-sale securities for the year ended December 31, 2020.

Fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position without an allowance for credit losses were as follows:

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December 31, 2021

government and government sponsored entities

$ 6 $ — $ — $ — $ 6 $ —

Obligations of states, municipalities, and political subdivisions

3 unchanged sentences

government and government sponsored entities

19 — 5 — 24 —

Corporate debt 208 ( 3 ) 38 ( 2 ) 246 ( 5 )

Mortgage-backed, asset-backed, and collateralized:

RMBS 81 ( 1 ) 15 ( 1 ) 96 ( 2 )

CMBS 7 — — — 7 —

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December 31, 2020

government and government sponsored entities

$ — $ — $ 3 $ — $ 3 $ —

Obligations of states, municipalities, and political subdivisions

3 unchanged sentences

government and government sponsored entities

19 — 14 — 33 —

Corporate debt 45 ( 1 ) 8 — 53 ( 1 )

Mortgage-backed, asset-backed, and collateralized:

RMBS 45 — — — 45 —

CMBS 8 — — — 8 —

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Total $ 92 $ ( 2 ) $ 8 $ — $ 100 $ ( 2 )

On a lot basis, we had 570 and 148 investment securities in an unrealized loss position at December 31, 2021 and 2020, respectively.

We do not consider the unrealized losses to be credit-related, as these unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase.

Additionally, at December 31, 2020, there were no credit impairments on investment securities that we intend to sell.

Additionally, as of December 31, 2021, there were no credit impairments on investment securities that we intend to sell.

We do not have plans to sell any of the remaining investment securities with unrealized losses as of December 31, 2021, and we believe it is more likely than not that we would not be required to sell such investment securities before recovery of their amortized cost.

We continue to monitor unrealized loss positions for potential credit impairments.

During 2020, there were no material credit impairments related to our investment securities.

Therefore, there were no material additions or reductions in the allowance for credit losses (impairments recognized or reversed in earnings) on credit impaired available-for-sale securities during 2020.

Prior to the adoption of ASU 2016-13, other-than-temporary impairment losses, primarily on corporate debt, in investment revenues were immaterial during 2019 and 2018.

There were no material additions or reductions in the cumulative amount of credit losses (recognized in earnings) on other-than-temporarily impaired available-for-sale securities during 2019 and 2018.

During the years ended December 31, 2021 and 2020, there were no material credit impairments related to our investment securities.

Prior to the adoption of ASU 2016-13, other-than-temporary impairment losses, primarily on corporate debt, in investment revenues were immaterial during 2019.

There were no material additions or reductions in the cumulative amount of credit losses (recognized in earnings) on other-than-temporarily impaired available-for-sale securities during 2019.

The proceeds of available-for-sale securities sold or redeemed totaled $ 250 million, $ 259 million and $ 284 million during 2021, 2020, and 2019, respectively.

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Fixed maturity other securities:

government and government sponsored entities 1 1

Corporate debt 17 24

Mortgage-backed, asset-backed, and collateralized bonds 17 15

Total bonds 35 40

Bonds $ 30 $ 35

Preferred stock * 22 13

Common stock * 33 27

Other long-term investments — 1

Total $ 85 $ 75

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Stocks included have a history of stable or increasing dividend payments.

Net unrealized losses on other securities held were immaterial at December 31, 2020.

Net unrealized gains were $ 6 million and net unrealized losses were $ 7 million on other securities held at December 31, 2019 and 2018, respectively.

Net unrealized gains and losses on other securities held were immaterial at December 31, 2021, 2020, and 2019.

Net realized gains and losses on other securities sold or redeemed were immaterial during 2021, 2020, and 2019.

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December 31, 2021

Customer relationships $ 223 $ ( 194 ) $ 29

Trade names $ 220 $ — $ 220

Value of business acquired (“VOBA”)

105 ( 77 ) 28

Licenses 25 — 25

Customer relationships 223 ( 223 ) —

Other 13 ( 12 ) 1

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December 31, 2020

Customer relationships $ 223 $ ( 160 ) $ 63

Trade names $ 220 $ — $ 220

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Licenses 25 — 25

Customer relationships 223 ( 194 ) 29

Other 13 ( 12 ) 1

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Amortization expense totaled $ 32 million in 2021, $ 37 million in 2020, and $ 39 million in 2019.

The estimated aggregate amortization of other intangible assets for each of the next five years is reflected in the table below.

(dollars in millions) Estimated Aggregate Amortization Expense

The estimated aggregate amortization of other intangible assets for each of the next five years is immaterial.

Long-term Debt

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Total 5.37 5.68 5.93 5.03 5.68

Principal maturities of long-term debt (excluding projected repayments on securitizations by period) by type of debt at December 31, 2020 were as follows:

(dollars in millions) Securitizations Unsecured

Principal maturities of long-term debt (excluding projected repayments on securitizations and revolving conduit facilities by period) by type of debt at December 31, 2021 were as follows:

(dollars in millions) Securitizations Revolving

Facilities Unsecured

Notes (a) Junior

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2026 — — 1,600 — 1,600

2027-2067 — — 3,750 350 4,100

Securitizations (c) 7,432 — — — 7,432

Revolving conduit facilities (c) — 600 — — 600

Total principal maturities $ 7,432 $ 600 $ 9,660 $ 350 $ 18,042

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(b) The interest rates shown are the range of contractual rates in effect at December 31, 2021.

(c) Securitizations are not included in the above maturities by period due to their variable monthly repayments, which may result in pay-off prior to the stated maturity date.

At December 31, 2020, there were no amounts drawn under our revolving conduit facilities.

(c) Securitizations and borrowings under the revolving conduit facilities are not included in the above maturities by period due to their variable monthly repayments, which may result in pay-off prior to the stated maturity date.

See Note 9 for further information on our long-term debt associated with securitizations and revolving conduit facilities.

(d) Debt issuance costs are reported as a direct deduction from long-term debt, with the exception of debt issuance costs associated with our revolving conduit facilities, which totaled $ 33 million at December 31, 2020 and are reported in “Other assets.”

(d) Debt issuance costs are reported as a direct deduction from long-term debt, with the exception of debt issuance costs associated with our revolving conduit facilities and unsecured corporate revolver, which totaled $ 29 million at December 31, 2021 and are reported in “Other assets.”

2021 DEBT ISSUANCES AND REDEMPTIONS

8.875 % Senior Notes Due 2025 Offering

On May 14, 2020, OMFC issued a total of $ 600 million aggregate principal amount of 8.875 % Senior Notes due 2025 under the Base Indenture, as supplemented by the Tenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

Redemption of 7.75 % Senior Notes Due 2021

On June 29, 2020, OMFC issued a notice of full redemption of its 8.25 % Senior Notes due 2020.

On July 29, 2020, OMFC paid an aggregate amount of $ 1.0 billion, inclusive of accrued interest and premiums, to complete the redemption.

In connection with the redemption, we recognized a $ 35 million net loss on repurchases and repayments of debt for the year ended December 31, 2020.

4.00 % Senior Notes Due 2030 Offering

On December 17, 2020, OMFC issued a total of $ 850 million aggregate principal amount of 4.00 % Senior Notes due 2030 under the Base Indenture, as supplemented by the Eleventh Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

Redemption of 7.75 % Senior Notes Due 2021

On December 9, 2020, OMFC issued a notice of full redemption of its 7.75 % Senior Notes due 2021.

On January 8, 2021, OMFC paid a net aggregate amount of $ 681 million, inclusive of accrued interest and premiums, to complete the redemption.

In connection with the redemption, we will recognize $ 47 million of net loss on repurchases and repayments of debt in the first quarter of 2021.

In connection with the redemption, we recognized $ 47 million of net loss on repurchases and repayments of debt during the year ended December 31, 2021.

Social Bond Offering - Issuance of 3.50 % Senior Notes Due 2027

OMFC issued its inaugural social bond offering on June 22, 2021 for a total of $ 750 million aggregate principal amount of 3.50 % Senior Notes due 2027 (the “Social Bond”) under the Base Indenture, as supplemented by the Twelfth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

Issuance of 3.875 % Senior Notes Due 2028

On August 11, 2021, OMFC issued a total of $ 600 million aggregate principal amount of 3.875 % Senior Notes due 2028 (the “ 3.875 % Senior Notes due 2028”) under the Base Indenture, as supplemented by the Thirteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

Redemption of 6.125 % Senior Notes Due 2022

On November 10, 2021, OMFC issued a notice of full redemption of its 6.125 % Senior Notes due 2022.

On December 10, 2021, OMFC paid a net aggregate amount of $ 1.0 billion, inclusive of accrued interest and premiums, to complete the redemption.

In connection with the redemption, we recognized $ 23 million of net loss on repurchases and repayments of debt during the year ended December 31, 2021.

UNSECURED CORPORATE REVOLVER

On October 25, 2021, OMFC entered into an unsecured corporate revolver with a total maximum borrowing capacity of $ 1.0 billion.

The corporate revolver has a five-year term during which draws and repayments may occur.

Any outstanding principal balance is due and payable on October 25, 2026.

At December 31, 2021, no amounts were drawn under this facility.

DEBT COVENANTS

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In addition, the OMH guarantees of OMFC’s long-term debt discussed above are subject to customary release provisions.

With the exception of OMFC’s junior subordinated debenture, none of our debt agreements requires OMFC or any of its subsidiaries to meet or maintain any specific financial targets or ratios.

With the exception of OMFC’s junior subordinated debenture and unsecured corporate revolver, none of our debt agreements requires OMFC or any of its subsidiaries to meet or maintain any specific financial targets or ratios.

However, certain events, including non-payment of principal or interest, bankruptcy or insolvency, or a breach of a covenant or a representation or warranty, may constitute an event of default and trigger an acceleration of payments.

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As part of our overall funding strategy and as part of our efforts to support our liquidity from sources other than our traditional capital market sources, we have transferred certain finance receivables to VIEs for asset-backed financing transactions, including securitization and revolving conduit transactions.

We have determined that OMFC or OMFH is the primary beneficiary of these VIEs and, as a result, we include each VIE’s assets, including any finance receivables securing the VIE’s debt obligations, and related liabilities in our consolidated financial statements and each VIE’s asset-backed debt obligations are accounted for as secured borrowings.

We have determined that OMFC or OneMain Financial Holdings, LLC (“OMFH”) is the primary beneficiary of these VIEs and, as a result, we include each VIE’s assets, including any finance receivables securing the VIE’s debt obligations, and related liabilities in our consolidated financial statements and each VIE’s asset-backed debt obligations are accounted for as secured borrowings.

OMFC or OMFH is deemed to be the primary beneficiary of each VIE because OMFC or OMFH, as applicable, has the ability to direct the activities of the VIE that most significantly impact its economic performance, including the losses it absorbs and its right to receive economic benefits that are potentially significant.

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To the extent we retain any debt obligation or residual interest in an asset-backed financing facility, we are exposed to potentially significant losses and potentially significant returns.

The asset-backed debt obligations issued by the VIEs are supported by the expected cash flows from the underlying finance receivables securing such debt obligations.

The asset-backed debt obligations and conduits issued by the VIEs are supported by the expected cash flows from the underlying finance receivables securing such debt obligations.

Cash inflows from these finance receivables are distributed to repay the debt obligations and related service providers in accordance with each transaction’s contractual priority of payments, referred to as the “waterfall.” The holders of the asset-backed debt obligations have no recourse to the Company if the cash flows from the underlying finance receivables securing such debt obligations are not sufficient to pay all principal and interest on the asset-backed debt obligations.

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Our conduit facilities contain revolving periods during which time no principal payments are required, but may be made without penalty, followed by a subsequent amortization period.

Principal balances of outstanding loans, if any, are due and payable in full over periods ranging up to ten years as of December 31, 2020.

Principal balances of outstanding loans, if any, are due and payable in full over periods ranging up to nine years as of December 31, 2021.

Amounts drawn on these facilities are collateralized by our personal loans.

At December 31, 2020, no amounts were drawn under these facilities.

At December 31, 2021, an aggregate amount of $ 600 million was drawn under these facilities and the remaining borrowing capacity was $ 5.4 billion.

Our insurance business is conducted through our wholly owned insurance subsidiaries, American Health and Life Insurance Company (“AHL”) and Triton Insurance Company (“Triton”).

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Triton is a property and casualty insurance company licensed in 50 states, the District of Columbia, and Canada to write credit involuntary unemployment, credit disability, and collateral protection insurance.

As part of our continuing integration efforts in connection with the OneMain Acquisition, we sold all of the issued and outstanding shares of our former insurance subsidiaries, Merit Life Insurance Co.

(“Merit”) and Yosemite Insurance Company (“Yosemite”) during the 2019 and 2018 periods, respectively.

As part of our continuing integration efforts in connection with the OneMain Acquisition, we sold all of the issued and outstanding shares of our former insurance subsidiary, Merit Life Insurance Co.

(“Merit”) during the 2019 period.

INSURANCE RESERVES

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Total $ 1,382 $ 1,392

* The 2019 presentation has been conformed to the 2020 presentation.

(a) Reported as a contra-asset to net finance receivables.

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Plus reinsurance recoverables 3 3 4

Less transfer of reserves — — ( 19 )

Balance at end of period $ 118 $ 148 $ 117

* Reflects a redundancy in the prior years’ net reserves of $ 11 million, $ 15 million, and $ 10 million at December 31, 2020, 2019, and 2018, respectively, primarily due to net favorable developments of term life, credit life, and credit disability during 2020, and favorable developments of credit life, disability, and unemployment claims during 2019 and 2018.

* At December 31, 2021, $ 18 million reflected a redundancy in the prior years’ net reserves, primarily due to net favorable developments of credit disability and unemployment claims.

At December 31, 2020, $ 11 million reflected a redundancy in the prior years’ net reserves, primarily due to net favorable developments of term life, credit life, and credit disability.

At December 31, 2019, $ 15 million reflected a redundancy in the prior years’ net reserves, primarily due to favorable developments of credit life, disability, and unemployment claims.

Incurred claims and allocated claim adjustment expenses, net of reinsurance, as of December 31, 2021, were as follows:

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Life and health:

Merit $ — $ — $ 53

AHL $ 79 $ 114 $ 56

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Life and health:

AHL $ 292 $ 261

Our insurance companies are also subject to risk-based capital requirements adopted by the Texas DOI.

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Our insurance subsidiaries are subject to domiciliary state regulations that limit their ability to pay dividends.

Our previously owned insurance subsidiaries, Merit and Yosemite, were domiciled in Indiana, with Merit redomesticating to Texas on January 28, 2019.

Our previously owned life insurance subsidiary, Merit, was domiciled in Indiana and redomesticated to Texas on January 28, 2019.

AHL and Triton are domiciled in Texas.

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Any amount greater must be approved by the state of domicile DOI.

The maximum ordinary dividends for an Indiana or Texas domiciled property and casualty insurance company that can be paid without prior approval in a 12 month period (measured retrospectively from the date of payment) is the greater of:

The maximum ordinary dividends for a Texas domiciled property and casualty insurance company that can be paid without prior approval in a 12 month period (measured retrospectively from the date of payment) is the greater of:

(i) 10 % of policyholders’ surplus as of the prior year-end or (ii) the statutory net income.

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Years Ended December 31, 2021 2020 2019

Triton $ — $ — $ 70

Merit $ — $ — $ 140

Yosemite — — 42

Capital Stock and Earnings Per Share (OMH Only)

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The OMH Board of Directors and the OMFC Board of Directors determine the dividend, liquidation, redemption, conversion, voting, and other rights prior to issuance.

During the first quarter of 2020, the OMH Board of Directors approved a stock repurchase program, which allows us to repurchase up to $ 200 million of OMH’s outstanding common stock with no stated expiration.

On March 20, 2020, OMH temporarily suspended its stock repurchase program.

OMH retains the right to reinstate the stock repurchase program as circumstances change.

Prior to the suspension of the program, OMH repurchased and retired 2,031,698 shares of its common stock with an average price paid per share of $ 22.30 , for an aggregate total of approximately $ 45 million, including commissions and fees.

The aggregate purchase price in excess of the par value of the repurchased OMH common stock is recorded as a reduction to additional paid-in-capital.

To provide funding for the OMH stock repurchase and retirement program, the OMFC Board of Directors authorized multiple dividend payments in the aggregate amount of $ 45 million.

Par value and shares authorized at December 31, 2021 were as follows:

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Common shares issued 180,839 272,266 268,878

Common shares retired ( 2,031,698 ) — —

Common shares repurchased * ( 6,712,923 ) ( 2,031,698 ) —

Balance at end of period 127,809,640 134,341,724 136,101,156

* During the year ended December 31, 2021, the common stock repurchased was held in treasury.

During the year ended December 31, 2020, the common stock repurchased was retired.

OMFC shares issued and outstanding were as follows:

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Gains (Losses)

Available-for-Sale Securities * Retirement

Available-for-Sale Securities (a) Retirement

Plan Liabilities

Adjustments Foreign

Adjustments Total

Adjustments Other (b) Total

Comprehensive

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( 41 ) — 1 8 ( 32 )

Reclassification adjustments from accumulated other

comprehensive income ( 1 ) — — ( 1 )

Reclassification adjustments from accumulated other comprehensive income ( 1 ) — — — ( 1 )

Balance at end of period $ 49 $ 1 $ 3 $ 8 $ 61

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Balance at beginning of period $ 41 $ 3 $ — $ — $ 44

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

51 ( 2 ) 2 — 51

Reclassification adjustments from accumulated other comprehensive income

( 1 ) — — ( 1 )

Balance at end of period $ 91 $ 1 $ 2 $ — $ 94

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Balance at beginning of period $ ( 28 ) $ ( 3 ) $ ( 3 ) $ — $ ( 34 )

Other comprehensive loss before reclassifications ( 35 ) ( 4 ) ( 9 ) ( 48 )

Other comprehensive income before reclassifications 68 6 3 — 77

Reclassification adjustments from accumulated other comprehensive income

Impact of AOCI reclassification due to the Tax Act

Balance at end of period $ 41 $ 3 $ — $ — $ 44

* There were no amounts related to available-for-sale debt securities for which an allowance for credit losses was recorded during the year ended December 31, 2020.

(a) There were no material amounts related to available-for-sale debt securities for which an allowance for credit losses was recorded during the year ended December 31, 2021.

There were no amounts related to available-for-sale debt securities for which an allowance for credit losses was recorded during the years ended December 31, 2020 and 2019.

(b) Other primarily includes changes in the fair value of our mark-to-market derivative instruments that have been designated as cash flow hedges.

Reclassification adjustments from accumulated other comprehensive income (loss) to the applicable line item on our consolidated statements of operations were immaterial for the years ended December 31, 2021, 2020, and 2019.

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subsidiaries file a consolidated life/non-life federal tax return with the IRS.

AHL, an insurance subsidiary of OneMain, is not an eligible company under Internal Revenue Code Section 1504 and therefore, files separate federal life insurance tax returns.

Income taxes from the consolidated federal and state tax returns are allocated to our eligible subsidiaries under a tax sharing agreement with OMH.

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Effective income tax rate 24.56 % 25.33 % 22.27 %

The lower effective income tax rate in 2021 as compared to 2020 is primarily due to recording the benefit of tax credits and lower state tax expense.

The higher effective income tax rate in 2020 as compared to 2019 is primarily due to the release of the valuation allowance against certain state deferred taxes in 2019.

The lower effective income tax rate in 2019 as compared to 2018 is primarily due to the release of the valuation allowance against certain state deferred taxes in 2019 and the effect of discrete tax expense for non-deductible compensation in 2018.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits (all of which would affect the effective income tax rate if recognized) is as follows:

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Pension/employee benefits 22 15

Mark-to-market — 10

Tax interest adjustment 2 7

Acquisition costs 5 6

Total $ 643 $ 665

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Deferred loan fees 33 21

Mark-to-market 2 —

Fair value of equity and securities investments 17 27

Fixed assets 13 15

Discount - debt exchange 2 5

Total $ 276 $ 238

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The gross deferred tax liabilities are expected to reverse in time, and projected taxable income is expected to be sufficient to create positive taxable income, which will allow for the realization of all of our gross federal deferred tax assets and a portion of the state deferred tax assets.

The increase in net deferred tax asset of $ 301 million was primarily due to the tax effect of the increase in the allowance for finance receivable losses from both the adoption of ASU 2016-13 on January 1, 2020 and the current period activity.

See Note 6 for further information on the increase in allowance.

The increase was partly offset by tax amortization of goodwill.

The decrease in net deferred tax assets of $ 66 million was primarily due to the tax effect of the decrease in the allowance for finance receivable losses and the tax amortization of goodwill.

At December 31, 2021, we had state net operating loss carryforwards of $ 375 million compared to $ 451 million at December 31, 2020.

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During 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and the Consolidated Appropriations Act of 2021 (the “CAA”) were signed into law.

During 2021, the American Rescue Plan Act of 2021 (the “ARPA”) was signed into law.

Among other things, the provisions of these laws relate to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, and technical corrections to tax depreciation methods for qualified improvement property.

We do not anticipate the CARES Act or the CAA will have a material impact on our consolidated financial statements.

We will continue to monitor legislative developments related to the COVID-19 pandemic.

Based on our review, we have determined the CARES Act, the CAA, and the ARPA will not have a material impact on our consolidated financial statements.

We will continue to monitor legislative developments related to the COVID-19 pandemic, along with other tax legislative and regulatory developments.

Leases and Contingencies

Our operating leases primarily consist of leased office space, automobiles, and information technology equipment and have remaining lease terms of one year to ten years .

Our operating leases primarily consist of leased office space, automobiles, and information technology equipment and have remaining lease terms of one to ten years .

Our operating right-of-use asset and liability balances were $ 140 million and $ 151 million, respectively, at December 31, 2021 and $ 153 million and $ 165 million, respectively, at December 31, 2020.

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Weighted Average Discount Rate 3.34 %

Operating lease cost and variable lease cost, which are recorded in other operating expenses, for the years ended December 31, 2020 and 2019, were as follows:

Operating lease cost and variable lease cost, which are recorded in other operating expenses, were as follows:

(dollars in millions)

December 31, 2020 2019

Years Ended December 31, 2021 2020 2019

Operating lease cost $ 60 $ 63 $ 61

Variable lease cost 15 15 16

Our sublease income was immaterial for 2020 and 2019.

Total $ 75 $ 78 $ 77

Our sublease income was immaterial for the years ended December 31, 2021, 2020, and 2019.

LEGAL CONTINGENCIES

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OneMain 401(k) Plan

The OneMain 401(k) Plan (the “401(k) Plan”), previously known as the Springleaf Financial Services 401(k) Plan, provided for a 100 % Company matching on the first 4 % of the salary reduction contributions of the employees for 2020, 2019, and 2018.

The salaries and benefits expense associated with this plan was $ 18 million in 2020 and $ 17 million in 2019 and 2018.

The OneMain 401(k) Plan (the “401(k) Plan”) provided for a 100 % Company matching on the first 4 % of the salary reduction contributions of the employees for 2021, 2020, and 2019.

The salaries and benefits expense associated with this plan was $ 17 million in 2021, $ 18 million in 2020, and $ 17 million in 2019.

In addition, the Company may make a discretionary profit sharing contribution to the 401(k) Plan.

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$ 9 $ 4 $ ( 1 )

Pretax net gain (loss) recognized in accumulated other comprehensive income (loss)

$ 3 $ 4 $ ( 3 )

Pretax net gain recognized in accumulated other comprehensive income (loss)

(a) For the years ended December 31, 2021, 2020, and 2019, the actuarial gains or losses were primarily due to year-over-year fluctuations in discount rates used to calculate the present value of benefit obligations for the defined benefit plans.

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Amended 2013 Omnibus Incentive Plan (the “Omnibus Plan”).

As of December 31, 2020, 13,139,204 shares of common stock were reserved for issuance under the Omnibus Plan, including 714,193 shares subject to outstanding equity awards.

As of December 31, 2021, 12,339,199 shares of common stock were reserved for issuance under the Omnibus Plan.

The amount of shares reserved is adjusted annually at the beginning of the year by a number of shares equal to the excess of 10 % of the number of outstanding shares on the last day of the previous fiscal year over the number of shares reserved and available for issuance as of the last day of the previous fiscal year.

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The total income tax benefit recognized for stock-based compensation was $ 6 million, $ 4 million, and $ 3 million in 2021, 2020, and 2019, respectively.

As of December 31, 2020, there was total unrecognized compensation expense of $ 15 million related to unvested stock-based awards that are expected to be recognized over a weighted average period of less than two years .

As of December 31, 2021, there was total unrecognized compensation expense of $ 53 million related to unvested stock-based awards that are expected to be recognized over a weighted average period of approximately two years .

Service-based Awards

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Performance-based Awards

During 2020, 2019 and 2018, OMH awarded certain executives performance-based awards that may be earned based on the financial performance of OMH.

These awards are subject to the achievement of performance goals during a one-year period or a cumulative three-year period.

The awards are considered earned after the attainment of the performance goal, which occurs after the performance period when results have been evaluated and approved by the committee of the OMH Board of Directors, which oversees OMH's compensation programs (the "Compensation Committee"), and vest according to their certain terms and conditions.

The fair value for all performance-based awards is based on the closing market price of OMH's stock on the date of the award.

Expense for performance-based awards is recognized over the requisite service period when it is probable that the performance goals will be achieved and is based on the total number of units expected to vest.

During 2021, 2020 and 2019, OMH awarded certain executives performance-based awards that may be earned based on the financial performance of OMH or the market performance of OMH’s common stock.

These awards are subject to the achievement of performance goals during either a cumulative three-year period or up to a seven-year period.

The awards are considered earned after the attainment of the performance goal, which can occur during or after the performance period when results have been evaluated and approved by the committee of the OMH Board of Directors, which oversees OMH's compensation programs (the "Compensation Committee"), and vest according to their certain terms and conditions.

The fair value for performance-based awards is typically based on the closing market price of OMH's stock on the date of the award.

For performance-based awards with market conditions, the fair value is measured on the grant date using an option-pricing model.

Expense for performance-based awards is typically recognized over the requisite service period when it is probable that the performance goals will be achieved and is based on the total number of units expected to vest.

Expense for awards with graded vesting is recognized under the accelerated method, whereby each vesting is treated as a separate award with expense for each vesting recognized ratably over the requisite service period.

If minimum targets are not achieved by the end of the respective performance periods, all unvested shares related to those targets will be forfeited and canceled, and all expense recognized to that date is reversed.

Expense for performance-based awards with market conditions is recognized over the requisite service period, which represents the period over which the market condition is expected to be satisfied.

The weighted average grant date fair value of performance-based awards issued in 2021, 2020, and 2019 was $ 40.62 , $ 42.86 , and $ 31.86 , respectively.

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Granted 724,031 40.62

Vested ( 3,250 ) 30.00

Forfeited ( 40,065 ) 45.31

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The awards provide for the right to accrue cash dividend equivalents.

Upon achievement, these awards would be settled in cash.

The grant date fair value of the cash-settled stock-based awards was zero because the satisfaction of the required event-based performance conditions were not considered probable as of the grant dates.

Vesting of the cash-settled stock-based awards was not considered probable as of December 31, 2020.

INCENTIVE UNITS

SFH Incentive Units

In connection with the sale of OMH's common stock by SFH in 2018, as described in Note 1 of the Notes to the Consolidated Financial Statements, certain specified thresholds were satisfied.

In accordance with ASC 710, Compensation-General , we recorded non-cash incentive compensation expense of $ 106 million related to the Apollo-Värde Transaction and $ 4 million related to the AIG Share Sale Transaction with a capital contribution offset.

Under both of these transactions, the impacts to the Company were non-cash, equity neutral, and not tax deductible.

No expense was recognized for these awards during 2020 or 2019.

The grant date fair value of the cash-settled stock-based awards was zero because the satisfaction of the required event-based performance conditions was not considered probable as of the grant dates.

During 2021, the vesting conditions related to a portion of the cash-settled stock-based awards were satisfied and we recognized $ 54 million in salaries and benefits expense.

For the remaining unvested awards, the fair value was estimated using an option-pricing model on the date the required event-based performance condition was satisfied.

The unvested cash-settled stock-based awards are liability-classified and expense is recognized over the requisite service period, which is the period of time the remaining vesting conditions are expected to be satisfied.

As a result, we recognized additional salaries and benefits expense during 2021, which was immaterial.

Segment Information

At December 31, 2020, Consumer and Insurance (“C&I”) is our only reportable segment.

At December 31, 2021, 2020, and 2019, Consumer and Insurance (“C&I”) was our only reportable segment.

The remaining components (which we refer to as “Other”) consist of our liquidating SpringCastle Portfolio servicing activity and our non-originating legacy operations, which primarily include our liquidating real estate loans.

The accounting policies of the C&I segment are the same as those disclosed in Note 2, except as described below.

Due to the nature of the OneMain Acquisition and the Fortress Acquisition, we applied purchase accounting.

However, we report the operating results of C&I and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for interest expense and operating costs, and (ii) excludes the impact of applying purchase accounting.

We report the operating results of C&I and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for interest expense and operating costs, and (ii) excludes the impact of applying purchase accounting.

We allocate revenues and expenses on a Segment Accounting Basis to the C&I segment and Other using the following methodologies:

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Provision for finance receivable losses

Directly correlated to the C&I segment and Other.

Directly correlated to the C&I segment.

Other revenues Directly correlated to the C&I segment and Other.

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The "Segment to GAAP Adjustment” column in the following tables primarily consists of:

• Interest income - reverses the impact of premiums/discounts on purchased finance receivables and the interest income recognition under guidance in ASC 310-20, Nonrefundable Fees and Other Costs , and ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , prior to the adoption of ASU 2016-13 on January 1, 2020, and reestablishes interest income recognition on a historical cost basis;

• Interest income - reverses the impact of premiums/discounts on certain purchased finance receivables and the interest income recognition under guidance in ASC 310-20, Nonrefundable Fees and Other Costs , and ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , prior to the adoption of ASU 2016-13 on January 1, 2020, and reestablishes interest income recognition on a historical cost basis;

• Interest expense - reverses the impact of premiums/discounts on acquired long-term debt and reestablishes interest expense recognition on a historical cost basis;

2 unchanged sentences

• Other expenses - reestablishes expenses on a historical cost basis by reversing the impact of amortization from acquired intangible assets, including amortization of other historical deferred costs and the amortization of purchased software assets on a historical cost basis;

• Assets - revalues assets based on their fair values at the effective date of the OneMain Acquisition and the Fortress Acquisition.

• Assets - revalues assets based on their fair values at the effective date of the acquisition.

The following tables present information about C&I and Other, as well as reconciliations to the consolidated financial statement amounts.

6 unchanged sentences

Provision for finance receivable losses

1,313 — 6 1,319

Net interest income after provision for finance receivable losses

26 unchanged sentences

Assets $ 20,705 $ 77 $ 2,035 $ 22,817

* Other revenues in Other include the gains on the February 2019 Real Estate Loan Sale and the December 2018 Real Estate Loan Sale, as well as the impairment adjustments on the remaining loans in held for sale in 2019 and 2018, respectively.

* Other revenues in Other include the gain on the February 2019 Real Estate Loan Sale, as well as the impairment adjustments on the remaining loans in held for sale in 2019.

Fair Value Measurements

The fair value of a financial instrument is the amount that would be expected to be received if an asset were to be sold or the amount that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of a financial instrument is the expected amount that would be received if an asset were to be sold or the expected amount that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The degree of judgment used in measuring the fair value of financial instruments generally correlates with the level of pricing observability.

43 unchanged sentences

Other securities

government and government sponsored entities — 1 — 1

Corporate debt — 9 — 9

30 unchanged sentences

Common stock 26 — 1 27

Other long-term investments — — 1 1

Total other securities 39 34 2 75

2 unchanged sentences

Total $ 2,503 $ 1,887 $ 8 $ 4,398

Due to the insignificant activity within the Level 3 assets during 2020 and 2019, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.

Due to the insignificant activity within the Level 3 assets during the years ended December 31, 2021 and 2020, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.

FAIR VALUE MEASUREMENTS — NON-RECURRING BASIS

We measure the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Net impairment charges recorded on assets measured at fair value on a non-recurring basis were immaterial during 2020 and 2019.

Net impairment charges recorded on assets measured at fair value on a non-recurring basis were immaterial during the years ended December 31, 2021 and 2020.

FAIR VALUE MEASUREMENTS — VALUATION METHODOLOGIES AND ASSUMPTIONS

20 unchanged sentences

Finance Receivables

The fair value of net finance receivables, less allowance for finance receivable losses, is determined using discounted cash flow methodologies.

The fair value of net finance receivables, less allowance for finance receivable losses, is primarily determined using discounted cash flow methodologies.

The application of these methodologies requires us to make certain judgments and estimates based on our perception of market participant views related to the economic and competitive environment, the characteristics of our finance receivables, and other similar factors.

The most significant judgments and estimates made relate to prepayment speeds, default rates, loss severity, and discount rates.

The most significant judgments and estimates relate to prepayment speeds, default rates, loss severity, and discount rates.

The degree of judgment and estimation applied is significant in light of the current capital markets and, more broadly, economic environments.

6 unchanged sentences

We estimate the fair values associated with variable rate revolving lines of credit to be equal to par.

Selected Quarterly Financial Data (Unaudited)

OMH's selected quarterly financial data for 2020 was as follows:

(dollars in millions, except per share amounts) Fourth

Quarter Third

Quarter Second

Quarter First

Interest income $ 1,096 $ 1,089 $ 1,077 $ 1,106

Interest expense 246 255 271 255

Provision for finance receivable losses 134 231 423 531

Net interest income after provision 716 603 383 320

Other revenues 137 101 148 141

Other expenses 377 363 413 418

Income before income taxes 476 341 118 43

Income taxes 117 91 29 11

Net income $ 359 $ 250 $ 89 $ 32

Earnings per share:

Basic $ 2.67 $ 1.86 $ 0.66 $ 0.24

Diluted 2.67 1.86 0.66 0.24

Year-to-Date may not sum due to rounding

OMH's selected quarterly financial data for 2019 was as follows:

(dollars in millions, except per share amounts) Fourth

Quarter Third

Quarter Second

Quarter First

Interest income $ 1,107 $ 1,065 $ 1,000 $ 956

Interest expense 252 244 238 236

Provision for finance receivable losses 293 282 268 286

Net interest income after provision 562 539 494 434

Other revenues 162 156 156 148

Other expenses 380 398 394 380

Income before income taxes 344 297 256 202

Income taxes 83 49 62 50

Net income $ 261 $ 248 $ 194 $ 152

Earnings per share:

Basic $ 1.92 $ 1.82 $ 1.43 $ 1.12

Diluted 1.91 1.82 1.42 1.11

Year-to-Date may not sum due to rounding.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data