What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-07 compared with 2024-02-13 · 214 added, 136 removed, 375 unchanged (48% of the section changed)

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Recent Accounting Pronouncements

We operate in the United States and market our personal loans in 44 states.

We service the loans that we originate and retain on our balance sheet, as well as loans owned by third parties on their behalf in connection with our whole loan sale program and legacy businesses.

In connection with our offerings, our insurance subsidiaries offer our personal loan customers optional credit and non-credit insurance and other optional products.

We also offer two credit cards, BrightWay and BrightWay+, which are designed to reward customers for responsible credit activity, such as consistent on-time payments.

We strive to meet our customers at their preferred channel and to deliver a seamless customer experience through our digital platforms, distribution partnerships, or working with our expert team members at our approximately 1,400 locations.

Our personal loans, credit cards, and other products help customers meet everyday needs and take steps to improve their financial well-being.

We offer consumer loans, which consist of personal loans and auto finance, credit cards, and other products to help customers meet everyday needs and take steps to improve their financial well-being.

We service the loans that we retain on our balance sheet, as well as loans owned by third parties.

Additionally, our insurance subsidiaries offer optional credit and non-credit insurance and other optional products.

We also offer two credit cards, BrightWay and BrightWay+, which are designed to offer a highly digital customer experience while also rewarding customers for responsible credit activity.

Our resources allow us to operate in 47 states and provide a seamless experience through our customers’ preferred channels, including in person, online or over the phone, using our digital platforms, distribution partnerships, or working with our expert team members at more than 1,300 locations.

Our product offerings include:

• Personal Loans — We offer personal loans through our branch network, central operations, auto dealership network, and our website, www.onemainfinancial.com, to customers who need timely access to cash.

• Personal Loans — We offer personal loans through our branch network, central operations, digital affiliates, and our website, www.onemainfinancial.com, to customers who need timely access to cash.

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

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We also service personal loans for our whole loan sale partners.

• Auto Finance — We offer secured auto financing originated at the point of purchase through a growing network of franchise and independent dealerships.

The loans are non-revolving, with a fixed rate, and have fixed terms generally between three and six years.

At December 31, 2024, we had approximately 127 thousand auto finance loans totaling $2.1 billion of net finance receivables, compared to approximately 54 thousand auto finance loans totaling $745 million of net finance receivables at December 31, 2023.

We also service auto finance loans for our whole loan sale partners and loans originated by third parties.

• Credit Cards — BrightWay and BrightWay+ credit cards originate through a third-party bank partner from which we purchase the receivable balances.

The credit cards are offered across our branch network, through direct mail, and through our digital affiliates.

The credit cards are offered across our branch network, as well as through direct mail, our digital affiliates, and our website.

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

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We also offer optional membership plans from an unaffiliated company.

At December 31, 2023, Consumer and Insurance (“C&I”) is our only reportable segment, which includes personal loans, credit cards, and optional products.

At December 31, 2024, Consumer and Insurance (“C&I”) is our only reportable segment, which includes consumer loans, credit cards, and optional products.

At December 31, 2024, we had $24.7 billion of managed receivables due from approximately 3.4 million customer accounts, compared to $22.2 billion of managed receivables due from approximately 3.0 million customer accounts at December 31, 2023.

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Interest Expense

We track the interest expense incurred on our debt, along with amortization or accretion of premiums or discounts, and issuance costs, to monitor the components of our cost of funds.

We expect interest expense to fluctuate based on changes in the secured versus unsecured mix of our debt, time to maturity, interest rates, and utilization of revolving conduit facilities.

We track the interest expense incurred on our debt to monitor the components of our cost of funds.

We expect interest expense to fluctuate based on changes in the secured versus unsecured mix of our debt, time to maturity, interest rates, and utilization of revolving conduit facilities and credit card revolving variable funding note (“VFN”) facilities.

Net Credit Losses

The credit quality of our loans is driven by our underwriting philosophy, which considers the prospective customer’s household budget, his or her willingness and capacity to repay, and the underlying collateral on the loan.

We closely analyze credit performance because the profitability of our loan portfolio is directly connected to net credit losses.

We define net credit losses as gross charge-offs minus recoveries in the portfolio.

Additionally, because delinquencies are an early indicator of future net credit losses, we analyze delinquency trends, adjusting for seasonality, to determine whether our loans are performing in line with our original estimates.

Additionally, because delinquencies are an early indicator of future net credit losses, we analyze delinquency trends and consider seasonality, to determine whether our loans are performing in line with our original estimates.

We also monitor recovery rates because of their contribution to the reduction in the severity of our charge-offs.

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Acquisition of Foursight Capital LLC

On November 21, 2023, we announced that we have entered into a definitive agreement to acquire Foursight Capital LLC (“Foursight”), a wholly owned subsidiary of Jefferies Financial Group, Inc.

for a purchase price of $115 million in cash.

On April 1, 2024, we completed our previously announced acquisition of Foursight Capital LLC (“Foursight”), a wholly owned subsidiary of Jefferies Financial Group, Inc.

Foursight is an automobile finance company that purchases and services automobile retail installment contracts.

Contracts are sourced through an extensive network of auto dealers.

We will acquire Foursight's approximately $900 million auto loan portfolio in the transaction, which is expected to close in the first quarter of 2024, subject to customary closing conditions and applicable regulatory approvals.

We believe Foursight’s seasoned team, scalable technology, tested credit models, franchise dealer network, and loan portfolio will support OneMain’s disciplined expansion into the auto lending business.

See Note 4 of the Notes to the Consolidated Financial Statements included in this report for further information.

Issuances and Redemption of Unsecured Debt

Issuance of 9.00% Senior Notes Due 2029

On June 22, 2023, OMFC issued a total of $500 million aggregate principal amount of 9.00% Senior Notes due 2029.

On November 14, 2023, OMFC issued a total of $400 million aggregate principal amount as an add-on to the 9.00% Senior Notes due 2029.

Issuance of 7.875% Senior Notes Due 2030

On December 13, 2023, OMFC issued a total of $700 million aggregate principal amount of 7.875% Senior Notes due 2030.

Redemption of 6.125% Senior Notes Due 2024

On September 18, 2023, OMFC paid a net aggregate amount of $558 million, inclusive of accrued interest, to complete a partial redemption of its 6.125% Senior Notes due 2024.

On December 14, 2023, OMFC paid a net aggregate amount of $546 million, inclusive of accrued interest, to complete a full redemption.

For information regarding the issuances and redemption of our unsecured debt, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Securitization Transactions Completed - ODART 2023-1, OMFIT 2023-1, and OMFIT 2023-2

For information regarding the issuances of our secured debt, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

On May 22, 2024, OMFC issued a total of $750 million aggregate principal amount of 7.500% Senior Notes due 2031.

On June 10, 2024, OMFC paid a net aggregate amount of $1.0 billion, inclusive of accrued interest and premium, to complete the redemption of its 6.875% Senior Notes due 2025.

On August 19, 2024, OMFC issued a Social Bond offering for a total of $750 million aggregate principal amount of 7.125% Senior Notes due 2031.

On November 4, 2024, OMFC issued a total of $900 million aggregate principal amount of 6.625% Senior Notes due 2029.

Unsecured Corporate Revolver

On September 6, 2024, OMFC amended its unsecured corporate revolver.

At December 31, 2024, the borrowing capacity was $1.1 billion.

For information regarding the issuances and redemption of our unsecured debt and our unsecured corporate revolver, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Securitization Transaction Completed - OMFIT 2024-1

For information regarding the issuances of our secured debt, see “Liquidity and Capital Resources” under Management’s

Discussion and Analysis of Financial Condition and Results of Operations in this report.

Appointments of Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”)

On February 13, 2024, the Company announced the appointments of Micah R.

Conrad as Executive Vice President (“EVP”) and COO and Jeannette E.

Osterhout as EVP and CFO, effective March 31, 2024.

Conrad served as the Company’s EVP and CFO since March 2019 and succeeded Rajive Chadha.

In connection with Mr.

Conrad’s appointment as COO, Ms.

Osterhout assumed the role of CFO.

Osterhout served as the Company’s EVP and Chief Strategy Officer since November 2020.

Appointments of OMFC’s President and CEO and COO

Effective March 31, 2024, OMFC’s Board of Directors appointed Ms.

Osterhout as OMFC’s President and CEO and elected Mr.

Conrad as EVP and COO.

Osterhout succeeded Mr.

Conrad’s former position as President and CEO of OMFC and Mr.

Conrad succeeded Mr.

Chadha as EVP and COO of OMFC.

Resignation of a Member of the OMH Board of Directors

On September 17, 2024, Aneek S.

Mamik resigned from the OMH Board of Directors.

Cash Dividends to OMH’s Common Stockholders

For information regarding the quarterly dividends declared by OMH, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Regulatory Settlements

On May 24, 2023, we entered into a consent order with the NYDFS relating primarily to a past examination of our cybersecurity policies from 2017 to early 2020.

Pursuant to the consent order, we agreed to pay a $4.25 million civil penalty and represent that certain improvements to our cybersecurity controls and procedures had previously been completed.

Additionally, on May 31, 2023, we entered into a consent order with the CFPB to resolve a previously disclosed investigation focused on certain refunding practices for optional insurance and membership plan products that were subsequently canceled by the consumer after purchase.

Pursuant to the consent order, we agreed to issue $10 million in interest refunds to affected customers, pay a $10 million civil penalty and make certain other enhancements to our sales and refunding practices.

In agreeing to these two consent orders, we did not admit to any of the NYDFS’ or the CFPB’s factual findings or legal conclusions.

We are actively monitoring the current macroeconomic environment, including geopolitical actions outside of the U.S., and remain prepared for any developments that may impact our business.

Our financial condition and results of operations could be affected by macroeconomic conditions, including changes in unemployment, inflation, interest rates, and consumer confidence.

We will continue to incorporate updates to our macroeconomic assumptions, as necessary, which could lead to further adjustments in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

We actively monitor the current macroeconomic environment and remain prepared for any developments that may impact our business.

Our financial condition and results of operations could be affected by macroeconomic conditions, including changes in unemployment, inflation, interest rates, consumer confidence, and geopolitical actions outside of the U.S.

We incorporate updates to our macroeconomic assumptions, as necessary, which could lead to adjustments in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

Our experienced management team remains focused on maintaining a strong balance sheet with a long liquidity runway and adequate capital while maintaining a conservative and disciplined underwriting model.

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• striving to be the lender of choice for nonprime consumers and improve their financial well-being;

• continuing to grow our receivables through new products and distribution channels;

• maintaining a rigorous underwriting standard with a goal of enhancing credit performance;

• continuing to expand our product offerings and grow our receivables;

• maintaining a rigorous focus on maximizing returns while minimizing credit risk;

• leveraging our scale and cost discipline across the Company to deliver improved operating leverage;

• maintaining a strong liquidity level with diversified funding sources.

We believe our commitment to closely monitor the macroeconomic environment, retain disciplined underwriting, drive strategic growth initiatives, and maintain a robust balance sheet strengthens our ability to navigate challenges and seize opportunities.

As we pursue our key initiatives, we are confident in our ability to increase shareholder value and remain resilient and adaptable to navigate an ever-evolving economic, social, political, and regulatory landscape.

We believe our commitment to closely monitor the macroeconomic environment, retain disciplined underwriting, drive strategic growth initiatives, and attract and retain top talent strengthens our ability to navigate challenges and seize opportunities.

With a robust balance sheet and a focus on our key initiatives, we are confident in our ability to increase shareholder value and remain resilient and adaptable to navigate an ever-evolving economic, social, political, and regulatory landscape.

Results of Operations

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OMH’S CONSOLIDATED RESULTS

See the table below for OMH's consolidated operating results and selected financial statistics.

The following table below presents OMH’s consolidated operating results and selected financial statistics.

A further discussion of OMH’s operating results for our operating segment is provided under “Segment Results” below.

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Diluted $ 4.24 $ 5.32 $ 7.01

Selected Financial Statistics *

Selected Financial Statistics (a)

Total finance receivables:

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Average net receivables $ 22,395 $ 20,527 $ 19,440

Gross charge-off ratio 8.74 % 7.40 % 5.41 %

Gross charge-off ratio (b)

9.49 % 8.74 % 7.40 %

Recovery ratio (1.38) % (1.26) % (1.29) %

Net charge-off ratio 7.48 % 6.10 % 4.20 %

Net charge-off ratio (b)

8.12 % 7.48 % 6.10 %

(dollars in millions, except per share amounts)

At or for the Years Ended December 31, 2024 2023 2022

Selected Financial Statistics, continued (a)

Personal loans:

Net finance receivables $ 20,833 $ 20,274 $ 19,497

Origination volume $ 12,246 $ 12,296 $ 13,525

Number of accounts 2,375,138 2,361,026 2,305,676

Number of accounts originated 1,171,271 1,224,362 1,342,276

Auto finance:

Net finance receivables $ 2,078 $ 745 $ 382

Origination volume $ 1,075 $ 555 $ 354

Number of accounts 126,518 54,032 28,421

Number of accounts originated 53,222 34,451 23,713

Consumer loans:

Net finance receivables $ 22,911 $ 21,019 $ 19,879

Yield 22.23 % 22.20 % 22.78 %

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Number of accounts originated 1,224,493 1,258,813 1,365,989

Net charge-off ratio 7.42 % 6.09 % 4.20 %

Net charge-off ratio (b)

7.95 % 7.42 % 6.09 %

30-89 Delinquency ratio 3.23 % 3.28 % 3.07 %

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Average daily debt balance $ 20,748 $ 19,047 $ 17,854

* See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

Comparison of Consolidated Results for 2023 and 2022

Interest income increased $129 million or 3% in 2023 when compared to 2022 due to growth in average net receivables, partially offset by lower yield.

Interest expense increased $127 million or 14% in 2023 when compared to 2022 due to a higher average cost of funds and an increase in average debt as we continue to grow the business.

Provision for finance receivable losses increased $319 million or 23% in 2023 when compared to 2022 driven by higher net charge-offs.

Other revenues increased $106 million or 17% in 2023 when compared to 2022 due to an increase in investment revenue due to higher market rates compared to the prior year period and a net loss on the repurchase and repayment of debt in the prior year period.

Other expenses increased $104 million or 6% in 2023 when compared to 2022 due to regulatory settlements in the current period, an increase in general operating expenses and salaries and benefits expense driven by our strategic investments in the business, as well as an increase in insurance policy and benefits claims expense largely driven by favorable claims experience in the prior period not present in the current period.

(a) See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

(b) The calculation for the year ended December 31, 2024 has been adjusted for policy alignment associated with the Foursight Acquisition.

Comparison of Consolidated Results for Twelve Months Ended December 31, 2024 and 2023

Interest income increased $429 million or 9% in 2024 when compared to 2023 due to growth in average net receivables.

Interest expense increased $166 million or 16% in 2024 when compared to 2023 due to an increase in average debt to support our receivables growth and a higher average cost of funds.

Provision for finance receivable losses increased $319 million or 19% in 2024 when compared to 2023 related to growth in our receivables, higher net charge-offs, and the additional build associated with the loans acquired in the Foursight Acquisition.

The increases were partially offset by a lower build in the allowance for finance receivable losses in the current year due to improved credit performance.

Other revenues decreased $40 million or 5% in 2024 when compared to 2023 due to a lower gain on sales of finance receivables, a net loss on the repurchase and repayment of debt in the current period, and a decrease in investment revenue due to lower average corporate cash balances, partially offset by an increase in credit card revenue from growth in receivables and higher servicing revenue associated with our whole loan sale program.

Other expenses increased $77 million or 5% in 2024 when compared to 2023 driven by an increase in general operating expenses due to our strategic investments in the business, including the Foursight Acquisition and growth in our receivables, and restructuring charges in the current period associated with strategic cost-savings initiatives.

The increase was partially offset by regulatory settlements in the prior period.

Income taxes decreased $41 million or 20% in 2024 when compared to 2023 due to lower pretax income.

See Note 13 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information on income taxes.

See Note 14 of the Notes to the Consolidated Financial Statements included in this report for further information on effective tax rates.

Comparison of Consolidated Results for 2023 and 2022

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Management uses C&I adjusted pretax income (loss), a non-GAAP financial measure, as a key performance measure of our segment.

C&I adjusted pretax income (loss) represents income (loss) before income taxes on a Segment Accounting Basis and excludes regulatory settlements, net gain or loss resulting from repurchases and repayments of debt, and other items and strategic activities, which include direct costs associated with COVID-19, restructuring charges, and the expense associated with cash-settled stock-based awards.

C&I adjusted pretax income (loss) represents income (loss) before income taxes on a Segment Accounting Basis and excludes net gain or loss resulting from repurchases and repayments of debt, restructuring charges, acquisition-related transaction and integration expenses, regulatory settlements, and other items and strategic activities.

Management believes C&I adjusted pretax income (loss) is useful in assessing the profitability of our segment.

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$ 707 $ 845 $ 1,169

Regulatory settlements 26 — —

Net loss on repurchases and repayments of debt

Restructuring charges 29 — 7

Acquisition-related transaction and integration expenses 9 — —

Regulatory settlements — 26 —

Adjusted pretax income (non-GAAP)

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See Note 1 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information.

See Note 17 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for a description of our segment, methodologies used to allocate revenues and expenses to our C&I segment, and reconciliations of segment total to consolidated financial statement amounts.

See Note 18 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for a description of our segment and methodologies used to allocate revenues and expenses to our C&I segment and for reconciliations of segment total to consolidated financial statement amounts.

CONSUMER AND INSURANCE

OMH's adjusted pretax income and selected financial statistics for C&I on an adjusted Segment Accounting Basis were as follows:

The following table below presents OMH’s adjusted pretax income and selected financial statistics for C&I on an adjusted Segment Accounting Basis.

(dollars in millions)

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Adjusted pretax income (non-GAAP) $ 782 $ 874 $ 1,206

Selected Financial Statistics *

Selected Financial Statistics (a)

Total finance receivables:

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Average net receivables $ 22,440 $ 20,528 $ 19,442

Gross charge-off ratio 8.74 % 7.40 % 5.42 %

Gross charge-off ratio (b)

9.49 % 8.74 % 7.40 %

Recovery ratio (1.37) % (1.26) % (1.29) %

Net charge-off ratio 7.48 % 6.10 % 4.20 %

Net charge-off ratio (b)

8.11 % 7.48 % 6.10 %

(dollars in millions)

At or for the Years Ended December 31, 2024 2023 2022

Selected Financial Statistics, continued (a)

Personal loans:

Net finance receivables $ 20,833 $ 20,274 $ 19,498

Origination volume $ 12,246 $ 12,296 $ 13,525

Number of accounts 2,375,138 2,361,026 2,305,676

Number of accounts originated 1,171,271 1,224,362 1,342,276

Auto finance:

Net finance receivables $ 2,122 $ 745 $ 382

Origination volume $ 1,075 $ 555 $ 354

Number of accounts 126,518 54,032 28,421

Number of accounts originated 53,222 34,451 23,713

Consumer loans:

Net finance receivables $ 22,955 $ 21,019 $ 19,880

Yield 22.07 % 22.20 % 22.77 %

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Number of accounts originated 1,224,493 1,258,813 1,365,989

Net charge-off ratio 7.42 % 6.09 % 4.20 %

Net charge-off ratio (b)

7.94 % 7.42 % 6.09 %

30-89 Delinquency ratio 3.24 % 3.28 % 3.07 %

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Number of open accounts 782,932 430,784 135,335

* See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

(a) See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

(b) The calculation for the year ended December 31, 2024 has been adjusted for policy alignment associated with the Foursight Acquisition.

Comparison of Adjusted Pretax Income for Twelve Months Ended December 31, 2024 and 2023

Interest income increased $130 million or 3% in 2023 when compared to 2022 due to growth in average net receivables, partially offset by lower yield.

Interest expense increased $129 million or 15% in 2023 when compared to 2022 due to a higher average cost of funds and an increase in average debt as we continue to grow the business.

Provision for finance receivable losses increased $322 million or 23% in 2023 when compared to 2022 driven by higher net charge-offs.

Other revenues increased $83 million or 13% in 2023 when compared to 2022 due to an increase in investment revenue due to higher market rates compared to the prior year period.

Other expenses increased $94 million or 6% in 2023 when compared to 2022 due to an increase in general operating expenses and salaries and benefits expense driven by our strategic investments in the business, as well as an increase in insurance policy benefits and claims expense largely driven by favorable claims experience in the prior period not present in the current period.

Interest income increased $406 million or 9% in 2024 when compared to 2023 due to growth in average net receivables.

Interest expense increased $166 million or 16% in 2024 when compared to 2023 due to an increase in average debt to support our receivables growth and a higher average cost of funds.

Provision for finance receivable losses increased $260 million or 15% in 2024 when compared to 2023 related to growth in our receivables and higher net charge-offs.

The increase was partially offset by a lower build in the allowance for finance receivable losses in the current year due to improved credit performance.

Other revenues remained consistent in 2024 when compared to 2023 as a lower gain on sales of finance receivables and a decrease in investment revenue due to lower average corporate cash balances were offset by an increase in credit card revenue from growth in receivables and higher servicing revenue associated with our whole loan sale program.

Other expenses increased $67 million or 4% in 2024 when compared to 2023 driven by an increase in general operating expenses due to our strategic investments in the business, including the Foursight Acquisition and growth in our receivables.

Comparison of Adjusted Pretax Income for 2023 and 2022

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FINANCE RECEIVABLES

Our net finance receivables, consisting of personal loans and credit cards, were $21.3 billion at December 31, 2023 and $20.0 billion at December 31, 2022.

Our net finance receivables, consisting of consumer loans and credit cards, were $23.6 billion at December 31, 2024 and $21.3 billion at December 31, 2023.

We consider the delinquency status of our finance receivables as our key credit quality indicator.

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We closely track and report the percentage of receivables that are contractually 30-89 days past due as a benchmark of portfolio quality, collections effectiveness, and as a strong indicator of losses in coming quarters.

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

When consumer loans are contractually 60 days past due, we consider these accounts to be at an increased risk for loss and move collection of these accounts to our central collection operations.

Use of our central operations teams for managing late-stage delinquency allows us to apply more advanced collection techniques and tools to drive credit performance and operational efficiencies.

We consider our personal loans to be nonperforming at 90 days contractually past due, at which point we stop accruing finance charges and reverse finance charges previously accrue d .

We consider our consumer loans to be nonperforming at 90 days contractually past due, at which point we stop accruing finance charges and reverse finance charges previously accrue d .

For credit cards, we accrue finance charges and fees until charge-off at 180 days contractually past due, at which point we reverse finance charges and fees previously accrued.

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Consumer and Insurance

(dollars in millions) Personal Loans Credit Cards

(dollars in millions) Consumer Loans

December 31, 2024

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Adjustment Consolidated

Personal Loans Credit Cards

Consumer Loans

Year Ended December 31, 2024

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$ 2,415 $ 65 $ — $ 2,480

Impact of adoption of ASU 2022-02 (a) (20) — 4 (16)

Provision for finance receivable losses

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$ 2,572 $ 138 $ (5) $ 2,705

Net finance receivables

$ 22,955 $ 643 $ (44) $ 23,554

Allowance ratio

11.49 % 19.61 % (b) 11.62 %

11.20 % 21.44 % N/A 11.48 %

Year Ended December 31, 2023

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$ 2,294 $ 21 $ (4) $ 2,311

Impact of adoption of ASU 2022-02 (b)

(20) — 4 (16)

Provision for finance receivable losses

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$ 2,415 $ 65 $ — $ 2,480

Net finance receivables

$ 21,019 $ 330 $ — $ 21,349

Allowance ratio

11.54 % 19.12 % (b) 11.56 %

11.49 % 19.61 % N/A 11.62 %

Year Ended December 31, 2022

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1,376 23 3 1,402

(1,431) (7) — (1,438)

Balance at end of period

$ 2,294 $ 21 $ (4) $ 2,311

Net finance receivables

$ 19,880 $ 107 $ (1) $ 19,986

Allowance ratio

10.93 % 19.91 % (b) 10.90 %

(a) As a result of the adoption of ASU 2022-02, we recorded a one-time adjustment to the allowance for finance receivable losses.

See Notes 3, 4, and 5 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for additional information on the adoption of ASU 2022-02.

(b) Not applicable.

The current delinquency status of our finance receivable portfolio, inclusive of recent borrower performance and loss performance, volume of our modified finance receivable activity, level and recoverability of collateral securing our finance receivable portfolio, and the reasonable and supportable forecast of economic conditions are the primary drivers that can cause fluctuations in our allowance ratio from period to period.

11.54 % 19.12 % N/A 11.56 %

(a) Represents allowance for finance receivable losses recognized on loans acquired in the Foursight Acquisition.

See Note 4 for additional information.

(b) As a result of the adoption of ASU 2022-02, we recorded a one-time adjustment to the allowance for finance receivable losses.

See Notes 3, 4, and 5 of the Notes to the Consolidated Financial Statements in Part II - Item 8 of OMH’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 13, 2024 for additional information on the adoption of ASU 2022-02.

The current delinquency status of our finance receivable portfolio, inclusive of recent borrower performance and loss performance, volume of our modified finance receivable activity, level and recoverability of collateral securing our finance receivable portfolio, portfolio mix, and the reasonable and supportable forecast of economic conditions are the primary drivers that can cause fluctuations in our allowance ratio from period to period.

We monitor the allowance ratio to ensure we have a sufficient level of allowance for finance receivable losses based on the estimated lifetime expected credit losses in our finance receivable portfolio.

The allowance for finance receivable losses as a percentage of net finance receivables increased slightly from the prior year period primarily due to a weaker macroeconomic outlook and portfolio mix.

The allowance for finance receivable losses as a percentage of net finance receivables decreased from the prior year period primarily due to an improvement in credit performance and change in the portfolio mix.

See Note 6 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for more information about the changes in the allowance for finance receivable losses.

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SOURCES AND USES OF FUNDS

We finance the majority of our operating liquidity and capital needs through a combination of cash flows from operations, secured debt, unsecured debt, borrowings from revolving conduit facilities, whole loan sales, and equity.

We may also utilize other sources in the future.

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OMFC’s Issuances, Redemptions, and Repurchases of Unsecured Debt

On June 22, 2023, OMFC issued a total of $500 million aggregate principal amount of 9.00% Senior Notes due 2029 under the Base Indenture, as supplemented by the Fifteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

On November 14, 2023, OMFC issued a total of $400 million aggregate principal amount of 9.00% Senior Notes due 2029 in an add-on to the 9.00% Senior Notes due 2029 under the Base Indenture, as supplemented by the Fifteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

On August 18, 2023, OMFC issued a notice to partially redeem its 6.125% Senior Notes due 2024.

On September 18, 2023, OMFC paid a net aggregate amount of $558 million, inclusive of accrued interest, to complete the partial redemption.

On November 14, 2023, OMFC issued a notice to fully redeem the remaining 6.125% Senior Notes due 2024.

On December 14, 2023, OMFC paid a net aggregate amount of $546 million, inclusive of accrued interest, to complete a full redemption.

On December 13, 2023, OMFC issued a total of $700 million aggregate principal amount of 7.875% Senior Notes due 2030 under the Base Indenture, as supplemented by the Sixteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

On May 22, 2024, OMFC issued a total of $750 million aggregate principal amount of 7.500% Senior Notes due 2031 under the Base Indenture, as supplemented by the Seventeenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

On June 10, 2024, OMFC paid a net aggregate amount of $1.0 billion, inclusive of accrued interest and premium, to complete the redemption of its 6.875% Senior Notes due 2025.

On August 19, 2024, OMFC issued a Social Bond offering for a total of $750 million aggregate principal amount of 7.125% Senior Notes due 2031 under the Base Indenture, as supplemented by the Eighteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

OMFC allocates an amount equivalent to the net proceeds from the offering to finance or refinance, in part or in full, a portfolio of new or existing loans that meet the eligibility criteria of OneMain’s Social Bond Framework.

On November 4, 2024, OMFC issued a total of $900 million aggregate principal amount of 6.625% Senior Notes due 2029 under the Base Indenture, as supplemented by the Nineteenth Supplemental Indenture, pursuant to which OMH provided a guarantee on an unsecured basis.

From time to time we may purchase portions of our unsecured indebtedness through the open market.

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OMFC’s Unsecured Corporate Revolver

At December 31, 2023, the borrowing capacity of our corporate revolver was $1.3 billion, and no amounts were drawn.

Securitizations and Borrowings from Revolving Conduit Facilities

During the year ended December 31, 2023, we completed three personal loan securitizations (ODART 2023-1, OMFIT 2023-1, OMFIT 2023-2, see “Securitized Borrowings” below) and redeemed one personal loan securitization (OMFIT 2020-1).

During the year ended December 31, 2023, we entered into two new revolving conduit facilities.

At December 31, 2024, the borrowing capacity of our corporate revolver was $1.1 billion.

Securitizations, Revolving Conduit Facilities, and Credit Card Revolving VFN Facilities

During the year ended December 31, 2024, we completed one new consumer loan securitization (OMFIT 2024-1, see “Securitized Borrowings” below) and redeemed one consumer loan securitization (FCRT 2021-1, see “Securitized Borrowings” below).

During the year ended December 31, 2024, we entered into three new revolving conduit facilities, terminated one revolving conduit facility, and, pursuant to an amendment, converted one revolving conduit facility to a private secured term funding facility.

At December 31, 2024, the borrowing capacity of our revolving conduit facilities was $6.0 billion.

At December 31, 2023, we had $12.6 billion of gross finance receivables pledged as collateral for our securitizations, conduit facilities, and private secured term funding.

Subsequent to year-end, on January 18, 2024, we entered into two credit card revolving variable funding note (“VFN”) facilities.

The maximum capacity of our credit card revolving VFN facilities was $300 million.

Private Secured Term Funding

At December 31, 2023, an aggregate amount of $350 million was outstanding under the private secured term funding collateralized by our personal loans.

No principal payments are required to be made until after April 25, 2025, followed by a subsequent one-year amortization period at the expiration of which the outstanding principal amount is due and payable.

See Notes 8 and 9 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information on our long-term debt, securitization transactions, private secured term funding, and revolving conduit facilities.

At December 31, 2024, we had $13.5 billion of consumer loan gross finance receivables pledged as collateral for our securitizations, revolving conduit facilities, and private secured term funding facilities.

Subsequent to December 31, 2024, we issued $900 million principal amount of notes backed by secured consumer loans (“ODART 2025-1”).

ODART 2025-1 has a revolving period of five years, during which time no principal payments are required to be made.

During the year ended December 31, 2024, we entered into two credit card revolving VFN facilities.

At December 31, 2024, the borrowing capacity of our credit card revolving VFN facilities was $300 million.

At December 31, 2024, we had $315 million of credit card principal balances held in OneMain Financial Credit Card Trust (“OMFCT”) for our credit card revolving VFN facilities.

Private Secured Term Funding Facilities

At December 31, 2024, the maximum borrowing capacity of $725 million was outstanding under the private secured term funding facilities.

These facilities contain terms during which no principal payments are required, followed by subsequent amortization periods, which upon expiration the outstanding principal is due and payable.

See Notes 9 and 10 of the Notes to the Consolidated Financial Statements included in this report for further information on our long-term debt, securitization transactions, private secured term funding facilities, revolving conduit facilities, and credit card revolving VFN facilities.

Credit Ratings

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Moody’s Ba2 Stable

KBRA BB+ Positive

KBRA BB+ Stable

Currently, no other entity has a corporate debt rating, though they may be rated in the future.

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For additional information regarding the shares repurchased, see Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of Part II in this report.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of Part II included in this report.

Cash Dividend to OMH’s Common Stockholders

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To provide funding for the dividend, OMFC paid dividends of $489 million to OMH during the year ended December 31, 2024.

On February 7, 2024, OMH declared a dividend of $1.00 per share payable on February 23, 2024 to record holders of OMH's common stock as of the close of business on February 20, 2024.

On January 31, 2025, OMH declared a dividend of $1.04 per share payable on February 20, 2025 to record holders of OMH’s common stock as of the close of business on February 12, 2025.

To provide funding for the OMH dividend, the OMFC Board of Directors authorized a dividend in the amount of up to $125 million payable on or after February 18, 2025.

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Whole Loan Sale Transactions

We have whole loan sale flow agreements with third parties, with remaining terms of less than one year, in which we agreed to sell a total of $60 million gross receivables per quarter of newly originated unsecured personal loans along with any associated accrued interest.

During the year ended December 31, 2023, we sold $585 million of gross finance receivables, compared to $720 million during the year ended December 31, 2022.

See Note 4 of the Notes to the Consolidated Financial Statements included in this report for further information on the whole loan sale transactions.

Subsequent to year-end, we entered into a whole loan sale flow agreement with a third party, with a term of less than two years, in which we agreed to sell $600 million of gross receivables of newly originated unsecured personal loans along with any associated accrued interest.

We have whole loan sale flow agreements with third parties, with current terms of less than one year, in which we agreed to sell a remaining total of $900 million gross receivables of newly originated unsecured personal loans along with any associated accrued interest.

During the year ended December 31, 2024, we sold a total of $542 million of gross finance receivables compared to $585 million during the year ended December 31, 2023.

See Note 5 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information on the whole loan sale transactions.

OMH’s Operating Activities

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Net cash provided by operations of $2.5 billion for the year ended December 31, 2023 reflected net income of $641 million, the impact of non-cash items including provision for finance receivable losses of $1.7 billion, and an unfavorable change in working capital of $44 million.

Net cash provided by operations of $2.2 billion for the year ended December 31, 2021 reflected net income of $1.3 billion, the impact of non-cash items, and an unfavorable change in working capital of $48 million.

Net cash provided by operations of $2.4 billion for the year ended December 31, 2022 reflected net income of $872 million, the impact of non-cash items including provision for finance receivable losses of $1.4 billion, and an unfavorable change in working capital of $82 million.

OMH’s Investing Activities

Net cash used for investing activities of $2.9 billion for the year ended December 31, 2023 was due to net principal originations and purchases of finance receivables and purchases of available-for-sale and other securities, partially offset by the proceeds from sales of finance receivables and calls, sales, and maturities of available-for-sale and other securities.

Net cash used for investing activities of $2.1 billion for both the years ended December 31, 2022 and 2021 was primarily due to net principal originations and purchases of finance receivables and purchases of available-for-sale and other securities, partially offset by the

proceeds from sales of finance receivables and calls, sales, and maturities of available-for-sale and other securities.

Net cash used for investing activities of $3.3 billion for the year ended December 31, 2024 was due to net principal originations and purchases of finance receivables, purchases of available-for-sale and other securities, and the Foursight Acquisition, partially offset by the proceeds from sales of finance receivables and calls, sales, and maturities of available-for-sale and other securities.

Net cash used for investing activities of $2.9 billion and $2.1 billion for the years ended December 31, 2023 and 2022, respectively, was due to net principal originations and purchases of finance receivables and purchases of available-for-sale and other securities, partially offset by the proceeds from sales of finance receivables and calls, sales, and maturities of available-for-sale and other securities.

OMH’s Financing Activities

Net cash provided by financing activities of $932 million for the year ended December 31, 2023 was primarily due to the issuance and borrowings of long-term debt, partially offset by repayments and repurchases of long-term debt and cash dividends paid.

Net cash used for financing activities of $326 million and $1.8 billion for the years ended December 31, 2022 and 2021, respectively, were primarily due to repayments and repurchases of long-term debt, cash dividends paid, and the cash paid to repurchase common stock, partially offset by the issuance and borrowings of long-term debt.

Net cash provided by financing activities of $161 million for the year ended December 31, 2024 was due to the issuances and borrowings of long-term debt, partially offset by repayments and repurchases of long-term debt, cash dividends paid, and common stock repurchased.

Net cash provided by financing activities of $932 million for the year ended December 31, 2023 was due to the issuance and borrowings of long-term debt, partially offset by repayments and repurchases of long-term debt and cash dividends paid.

Net cash used for financing activities of $326 million was due to repayments and repurchases of long-term debt, cash dividends paid, and the cash paid to repurchase common stock, partially offset by the issuance and borrowings of long-term debt.

OMH’s Cash and Investments

At December 31, 2023, we had $1.0 billion of cash and cash equivalents, which included $148 million of cash and cash equivalents held at our regulated insurance subsidiaries or for other operating activities that is unavailable for general corporate purposes.

At December 31, 2024, we had $458 million of cash and cash equivalents, which included $123 million of cash and cash equivalents held at our regulated insurance subsidiaries or for other operating activities that is unavailable for general corporate purposes.

At December 31, 2024, we had $1.6 billion of investment securities, which are all held as part of our insurance operations and are unavailable for general corporate purposes.

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These risks include, but are not limited to, the following:

• our inability to grow or maintain our personal loan portfolio with adequate profitability;

• our inability to grow or maintain our consumer loan and credit card portfolios with adequate profitability;

• the effect of federal, state and local laws, regulations, or regulatory policies and practices;

• effects of ratings downgrades on our secured or unsecured debt;

• potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans;

• potential liability relating to real estate and consumer loans which we have sold or may sell in the future, or relating to securitized loans;

• the potential for disruptions in the debt and equity markets.

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• maintaining disciplined underwriting standards and pricing for loans we originate or purchase and managing purchases of finance receivables;

• pursuing additional debt financings (including new secured and unsecured debt issuances, debt refinancing transactions, unsecured corporate revolvers, and revolving conduit facilities), or a combination of the foregoing;

• pursuing additional debt financings (including new secured and unsecured debt issuances, debt refinancing transactions, unsecured corporate revolvers, revolving conduit facilities, and credit card revolving VFN facilities), or a combination of the foregoing;

• purchasing portions of our outstanding indebtedness through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we may determine;

• obtaining new and extending existing secured revolving facilities to provide committed liquidity in case of prolonged market fluctuations.

• obtaining new and extending existing secured revolving facilities and credit card revolving VFN facilities to provide committed liquidity in case of prolonged market fluctuations.

However, it is possible that the actual outcome of one or more of our plans could be materially different than expected or that one or more of our significant judgments or estimates could prove to be materially incorrect.

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

See Note 10 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in this report for further information on these state restrictions and the dividends paid by our insurance subsidiaries from 2021 through 2023.

See Note 11 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in this report for further information on these state restrictions and the dividends paid by our insurance subsidiaries from 2022 to 2024.

OUR DEBT AGREEMENTS

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OMFIT 2023-2 1,400 1,566 1,400 1,566 6.21 % 3 years

OMFIT 2024-1 1,100 1,222 1,100 1,222 5.99 % 7 years

ODART 2019-1 737 750 394 436 3.92 % 5 years

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ODART 2023-1 750 792 750 792 5.63 % 3 years

FCRT 2021-2 (c) 280 281 48 47 2.30 % N/A

FCRT 2022-1 (c) 293 294 72 70 2.99 % N/A

FCRT 2022-2 (c) 215 233 57 75 5.91 % N/A

FCRT 2023-1 (c) 182 199 77 94 5.89 % N/A

FCRT 2023-2 (c) 200 208 111 119 6.48 % N/A

FCRT 2024-1 (c) 210 214 142 148 6.08 % N/A

Total securitizations $ 14,278 $ 15,382 $ 11,703 $ 12,971

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(b) Inclusive of in-process replenishments of collateral for securitized borrowings in a revolving status as of December 31, 2024.

See Note 4 for additional information.

See “Liquidity and Capital Resources - Sources and Uses of Funds - Securitizations, Revolving Conduit Facilities, and Credit Card Revolving VFN Facilities” above for information on the securitization transaction completed subsequent to December 31, 2024.

Revolving Conduit Facilities

In addition to the structured financings, we had access to 16 revolving conduit facilities with a total borrowing capacity of $6.4 billion as of December 31, 2023:

We had access to 17 revolving conduit facilities with a total borrowing capacity of $6.0 billion as of December 31, 2024:

(dollars in millions) Advance Maximum Balance Amount

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OneMain Financial Auto Funding I, LLC 550 —

Seine River Funding, LLC 550 —

Hudson River Funding, LLC 500 —

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OneMain Financial Funding XII, LLC 400 —

Chicago River Funding, LLC 375 —

Mystic River Funding, LLC 350 —

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Lawrence River Funding, LLC 250 —

OneMain Foursight Auto I, LLC 175 —

OneMain Foursight Auto II, LLC 175 —

OneMain Foursight Auto III, LLC 175 —

Total $ 6,000 $ 1

See “Liquidity and Capital Resources - Sources and Uses of Funds - Securitizations and Borrowings from Revolving Conduit Facilities” above for information on the credit card revolving conduit facilities entered into subsequent to December 31, 2023.

Credit Card Revolving VFN Facilities

We also had access to two credit card revolving VFN facilities with a total borrowing capacity of $300 million as of December 31, 2024:

(dollars in millions) Advance Maximum Balance Amount

OneMain Financial Credit Card Trust – Series 2024-VFN1 $ 150 $ —

OneMain Financial Credit Card Trust – Series 2024-VFN2 150 —

Contractual Obligations

At December 31, 2024, our material contractual obligations were as follows:

(dollars in millions) 2024 2025-2026

Securitizations Private Secured Term Funding Revolving

(dollars in millions) 2025 2026-2027 2028-2029 2030+ Securitizations Private Secured Term Funding Facilities

Facilities Total

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Junior subordinated debt — — — 350 — — — 350

Private secured term funding (a) — — — — — 350 — 350

Private secured term funding facilities (a)

— — — — — 725 — 725

Revolving conduit facilities (a) — — — — — — 1 1

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Total $ 591 $ 3,190 $ 4,498 $ 4,468 $ 13,198 $ 850 $ 1 $ 26,796

(a) On-balance sheet securitizations, private secured term funding, and borrowings under revolving conduit facilities are not included in maturities by period due to their variable monthly payments.

(a) Securitizations, private secured term funding facilities, and borrowings under revolving conduit facilities are not included in maturities by period due to their variable monthly payments.

(b) Future interest payments on floating-rate debt are estimated based upon rates in effect at December 31, 2024.

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We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:

ALLOWANCE FOR FINANCE RECEIVABLE LOSSES

ALLOWANCE FOR FINANCE RECEIVABLE LOSSES - CONSUMER LOANS

We estimate the expected credit losses on our finance receivables over their expected lives based on historical experience, current conditions, and reasonable and supportable forecasts of collectability.

No new volume is assumed.

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 charges previously accrued after four contractual payments become past due.

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

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

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

Our estimate of the allowance for finance receivable losses is primarily based on historical loss experience using a cumulative loss model applied to our consumer loan portfolios.

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

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.

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

Other attributes in the model include loan modification status, collateral mix, and recent credit score.

To estimate the gross credit losses, the model utilizes a roll rate matrix to project the first 12 months of losses and historical cohort performance to project the expected losses over the remaining term.

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See Note 3 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for discussion of recently issued accounting pronouncements.

Our personal loan volume and demand is generally lowest during the first part of the year following the holiday season and as a result of tax refunds, and increases through the end of the year.

Delinquencies follow the same trends, being generally lower during the first part of the year and rising throughout the remainder of the year.

Our consumer loan volume and demand are generally lowest during the first quarter of the year following the holiday season and as a result of tax refunds, and then increases through the end of the year.

Delinquencies follow similar trends, being generally lower during the first quarter of the year and rising throughout the remainder of the year.

These seasonal trends contribute to fluctuations in our operating results and cash needs throughout the year.

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 7. Management’s Discussion and Analysis