Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of OMH's financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included in this report. This discussion and analysis contains forward-looking statements that involve risk, uncertainties, and assumptions. See “Forward-Looking Statements” included in this report for more information. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including those discussed in “Risk Factors” included in this report.
An index to our management’s discussion and analysis follows:
Topic Page
Overview
38
Recent Developments and Outlook
40
Results of Operations
42
Segment Results
46
Credit Quality
49
Liquidity and Capital Resources
52
Critical Accounting Policies and Estimates
58
Recent Accounting Pronouncements
59
Seasonality
59
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Overview
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 PRODUCTS
Our product offerings include:
• 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. At December 31, 2024, we had approximately 2.4 million personal loans totaling $20.8 billion of net finance receivables, of which 50% were secured by titled property, compared to approximately 2.4 million personal loans totaling $20.3 billion of net finance receivables, of which 48% were secured by titled property at December 31, 2023. 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, 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. At December 31, 2024, we had approximately 783 thousand open credit card customer accounts, totaling $643 million of net finance receivables, compared to approximately 431 thousand open credit card customer accounts, totaling $330 million of net finance receivables at December 31, 2023.
• Optional Products — We offer our custom ers optional credit insurance products (life, disability, and involuntary unemployment insurance) and optional non-credit insurance products through both our branch network and our central operations. Credit insurance and non-credit insurance products are provided by our affiliated insurance companies. We offer Guaranteed Asset Protection (“GAP”) coverage as a waiver product or insurance. We also offer optional membership plans from an unaffiliated company.
OUR SEGMENT
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.
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 held for sale and reported in Other assets in our consolidated balance sheets. See Note 18 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for more information about our segment.
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HOW WE ASSESS OUR BUSINESS PERFORMANCE
We closely monitor the primary drivers of pretax operating income, which consist of the following:
Interest Income
We track interest income, including certain fees earned on our finance receivables, and continually monitor the components that impact our yield. We include any late charges on loans that we have collected from customer payments in interest income.
Interest Expense
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
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 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.
Operating Expenses
We assess our operational efficiency using various metrics and conduct extensive analysis to determine whether fluctuations in cost and expense levels indicate operational trends that need to be addressed. Our operating expense analysis also includes a review of origination and servicing costs to assist us in managing overall profitability.
Finance Receivables Originations and Purchase Volume
Because volume and portfolio size determine the magnitude of the impact of each of the above factors on our earnings, we also closely monitor originations, purchase volume, and annual percentage rate.
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Recent Developments and Outlook
RECENT DEVELOPMENTS
Acquisition of Foursight Capital LLC
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 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
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. Mr. 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. Ms. 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. Ms. 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.
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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.
OUTLOOK
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. We believe we are well positioned to serve our customers and execute on our strategic priorities, including:
• striving to be the lender of choice for nonprime consumers and improve their financial well-being;
• 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; and
• 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 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.
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Results of Operations
The results of OMFC are consolidated into the results of OMH. Due to the nominal differences between OMFC and OMH, content throughout this section relates only to OMH. See Note 1 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information.
OMH’S CONSOLIDATED RESULTS
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.
(dollars in millions, except per share amounts)
At or for the Years Ended December 31, 2024 2023 2022
Interest income $ 4,993 $ 4,564 $ 4,435
Interest expense 1,185 1,019 892
Provision for finance receivable losses 2,040 1,721 1,402
Net interest income after provision for finance receivable losses
1,768 1,824 2,141
Other revenues 695 735 629
Other expenses 1,796 1,719 1,615
Income before income taxes
667 840 1,155
Income taxes 158 199 283
Net income $ 509 $ 641 $ 872
Share Data:
Earnings per share:
Diluted $ 4.24 $ 5.32 $ 7.01
Selected Financial Statistics (a)
Total finance receivables:
Net finance receivables $ 23,554 $ 21,349 $ 19,986
Average net receivables $ 22,395 $ 20,527 $ 19,440
Gross charge-off ratio (b)
9.49 % 8.74 % 7.40 %
Recovery ratio (1.38) % (1.26) % (1.29) %
Net charge-off ratio (b)
8.12 % 7.48 % 6.10 %
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(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 %
Origination volume $ 13,321 $ 12,851 $ 13,879
Number of accounts 2,501,656 2,415,058 2,334,097
Number of accounts originated 1,224,493 1,258,813 1,365,989
Net charge-off ratio (b)
7.95 % 7.42 % 6.09 %
30-89 Delinquency ratio 3.23 % 3.28 % 3.07 %
Credit cards:
Net finance receivables $ 643 $ 330 $ 107
Purchase volume $ 892 $ 442 $ 172
Number of open accounts 782,932 430,784 135,335
Debt balances:
Long-term debt balance $ 21,438 $ 19,813 $ 18,281
Average daily debt balance $ 20,748 $ 19,047 $ 17,854
(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.
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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 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
For a comparison of OMH's results of operation for the years ended 2023 and 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—OMH’s Consolidated Results” in Part II - Item 7 of OMH’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 13, 2024.
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NON-GAAP FINANCIAL MEASURES
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 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.
Management also uses C&I pretax capital generation, a non-GAAP financial measure, as a key performance measure of our segment. This measure represents C&I adjusted pretax income as discussed above and excludes the change in our C&I allowance for finance receivable losses in the period while still considering the C&I net charge-offs incurred during the period. Management believes that C&I pretax capital generation is useful in assessing the capital created in the period impacting the overall capital adequacy of the Company. Management believes that the Company’s reserves, combined with its equity, represent the Company’s loss absorption capacity.
Management utilizes both C&I adjusted pretax income (loss) and C&I pretax capital generation in evaluating our performance. Additionally, both of these non-GAAP measures are consistent with the performance goals established in OMH’s executive compensation program. C&I adjusted pretax income (loss) and C&I pretax capital generation are non-GAAP financial measures and should be considered supplemental to, but not as a substitute for or superior to, income (loss) before income taxes, net income, or other measures of financial performance prepared in accordance with GAAP.
OMH’s reconciliations of income before income tax expense on a Segment Accounting Basis to C&I adjusted pretax income (non-GAAP) and C&I pretax capital generation (non-GAAP) were as follows:
(dollars in millions)
Years Ended December 31, 2024 2023 2022
Consumer and Insurance
Income before income taxes - Segment Accounting Basis
$ 707 $ 845 $ 1,169
Adjustments:
Net loss on repurchases and repayments of debt
33 — 26
Restructuring charges 29 — 7
Acquisition-related transaction and integration expenses 9 — —
Regulatory settlements — 26 —
Other
4 3 4
Adjusted pretax income (non-GAAP)
782 874 1,206
Provision for finance receivable losses 1,981 1,721 1,399
Net charge-offs (1,849) (1,536) (1,186)
Pretax capital generation (non-GAAP) $ 914 $ 1,059 $ 1,419
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Segment Results
The results of OMFC are consolidated into the results of OMH. Due to the nominal differences between OMFC and OMH, content throughout this section relate only to OMH. See Note 1 of the Notes to the Consolidated Financial Statements in Part II - Item 8 in this report for further information.
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
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)
At or for the Years Ended December 31, 2024 2023 2022
Interest income $ 4,965 $ 4,559 $ 4,429
Interest expense 1,181 1,015 886
Provision for finance receivable losses 1,981 1,721 1,399
Net interest income after provision for finance receivable losses
1,803 1,823 2,144
Other revenues 722 727 644
Other expenses 1,743 1,676 1,582
Adjusted pretax income (non-GAAP) $ 782 $ 874 $ 1,206
Selected Financial Statistics (a)
Total finance receivables:
Net finance receivables $ 23,598 $ 21,349 $ 19,987
Average net receivables $ 22,440 $ 20,528 $ 19,442
Gross charge-off ratio (b)
9.49 % 8.74 % 7.40 %
Recovery ratio (1.37) % (1.26) % (1.29) %
Net charge-off ratio (b)
8.11 % 7.48 % 6.10 %
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(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 %
Origination volume $ 13,321 $ 12,851 $ 13,879
Number of accounts 2,501,656 2,415,058 2,334,097
Number of accounts originated 1,224,493 1,258,813 1,365,989
Net charge-off ratio (b)
7.94 % 7.42 % 6.09 %
30-89 Delinquency ratio 3.24 % 3.28 % 3.07 %
Credit cards:
Net finance receivables $ 643 $ 330 $ 107
Purchase volume $ 892 $ 442 $ 172
Number of open accounts 782,932 430,784 135,335
(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.
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Comparison of Adjusted Pretax Income for Twelve Months Ended December 31, 2024 and 2023
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
For a comparison of OMH's adjusted pretax income for C&I for the years ended 2023 and 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—OMH’s Consolidated Results” in Part II -Item 7 of OMH’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 13, 2024
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Credit Quality
FINANCE RECEIVABLES
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. 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. Our branch and central operation team members work closely with customers as necessary and offer a variety of borrower assistance programs to help support our customers.
DELINQUENCY
We monitor delinquency trends to evaluate the risk of future credit losses and employ advanced analytical tools to manage performance. Team members are actively engaged in collection activities throughout the early stages of delinquency. 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 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 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.
The delinquency information for net finance receivables on a Segment Accounting Basis was as follows:
Consumer and Insurance
(dollars in millions) Consumer Loans
Credit Cards
December 31, 2024
Current
$ 21,633 $ 558
30-89 days past due
743 37
90+ days past due
579 48
Total net finance receivables
$ 22,955 $ 643
Delinquency ratio
30-89 days past due
3.24 % 5.78 %
30+ days past due 5.76 % 13.26 %
90+ days past due 2.52 % 7.47 %
December 31, 2023
Current
$ 19,725 $ 297
30-89 days past due 689 16
90+ days past due
605 17
Total net finance receivables
$ 21,019 $ 330
Delinquency ratio
30-89 days past due
3.28 % 4.93 %
30+ days past due 6.16 % 9.96 %
90+ days past due 2.88 % 5.03 %
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ALLOWANCE FOR FINANCE RECEIVABLE LOSSES
We estimate and record an allowance for finance receivable losses to cover the expected lifetime credit losses on our finance receivables. Our allowance for finance receivable losses may fluctuate based upon changes in portfolio growth, credit quality, and economic conditions.
Our methodology to estimate expected credit losses uses recent macroeconomic forecasts, which include forecasts for unemployment. We leverage projections from various industry leading providers. We also consider inflationary pressures, consumer confidence levels, and interest rate increases that may continue to impact the economic outlook. At December 31, 2024, our economic forecast used a reasonable and supportable period of 12 months. 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 our allowance for finance receivable losses were as follows:
(dollars in millions) Consumer and Insurance Segment to
GAAP
Adjustment Consolidated
Total
Consumer Loans
Credit Cards
Year Ended December 31, 2024
Balance at beginning of period
$ 2,415 $ 65 $ — $ 2,480
Provision for finance receivable losses
1,832 149 59 2,040
Charge-offs
(2,080) (78) 3 (2,155)
Recoveries
307 2 — 309
Other (a)
98 — (67) 31
Balance at end of period
$ 2,572 $ 138 $ (5) $ 2,705
Net finance receivables
$ 22,955 $ 643 $ (44) $ 23,554
Allowance ratio
11.20 % 21.44 % N/A 11.48 %
Year Ended December 31, 2023
Balance at beginning of period
$ 2,294 $ 21 $ (4) $ 2,311
Impact of adoption of ASU 2022-02 (b)
(20) — 4 (16)
Provision for finance receivable losses
1,651 70 — 1,721
Charge-offs
(1,768) (27) — (1,795)
Recoveries
258 1 — 259
Balance at end of period
$ 2,415 $ 65 $ — $ 2,480
Net finance receivables
$ 21,019 $ 330 $ — $ 21,349
Allowance ratio
11.49 % 19.61 % N/A 11.62 %
Year Ended December 31, 2022
Balance at beginning of period
$ 2,097 $ 5 $ (7) $ 2,095
Provision for finance receivable losses
1,376 23 3 1,402
Charge-offs
(1,431) (7) — (1,438)
Recoveries
252 — — 252
Balance at end of period
$ 2,294 $ 21 $ (4) $ 2,311
Net finance receivables
$ 19,880 $ 107 $ (1) $ 19,986
Allowance ratio
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.
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(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 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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Liquidity and Capital Resources
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 and credit card revolving VFN facilities, whole loan sales, and equity. We may also utilize other sources in the future. As a holding company, all of the funds generated from our operations are earned by our operating subsidiaries. Our operating subsidiaries’ primary cash needs relate to funding our lending activities, our debt service obligations, our operating expenses, payment of insurance claims, and supporting strategic initiatives.
We have previously purchased portions of our unsecured indebtedness, and we may elect to purchase additional portions of our unsecured indebtedness or securitized borrowings in the future. Future purchases may be made through the open market, privately negotiated transactions with third parties, or pursuant to one or more tender or exchange offers, all of which are subject to terms, prices, and consideration we may determine at our discretion.
During the year ended December 31, 2024, OMH generated net income of $509 million. OMH’s net cash outflow from operating and investing activities totaled $567 million for the year ended December 31, 2024. At December 31, 2024, our scheduled interest payments for 2025 totaled $591 million and there were no scheduled principal payments for 2025 on our existing unsecured debt. As of December 31, 2024, we had $9.7 billion of unencumbered receivables.
Based on our estimates and considering the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our businesses and repay our obligations as they become due.
OMFC’s Issuances, Redemptions, and Repurchases of Unsecured Debt
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. During the year ended December 31, 2024, we repurchased $589 million of our unsecured notes.
OMFC’s Unsecured Corporate Revolver
At December 31, 2024, the borrowing capacity of our corporate revolver was $1.1 billion.
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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, 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
Our credit ratings impact our ability to access capital markets and our borrowing costs. Rating agencies base their ratings on numerous factors, including liquidity, capital adequacy, asset quality, quality of earnings, and the probability of systemic support. Significant changes in these factors could result in different ratings.
The table below outlines OMFC’s long-term corporate debt ratings and outlook by rating agencies:
As of December 31, 2024
Rating Outlook
S&P BB Stable
Moody’s Ba2 Stable
KBRA BB+ Stable
Currently, no other entity has a corporate debt rating, though they may be rated in the future.
Stock Repurchased
During the year ended December 31, 2024, OMH repurchased 755,274 shares of its common stock through its stock repurchase program for an aggregate total of $35 million, including commissions and fees. As of December 31, 2024, OMH held a total of 16,060,384 shares of treasury stock. To provide funding for the OMH stock repurchases, the OMFC Board of Directors authorized dividend payments in the amount of $65 million.
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 included in this report.
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Cash Dividend to OMH’s Common Stockholders
As of December 31, 2024, the dividend declarations for the current year by the Board were as follows:
Declaration Date Record Date Payment Date Dividend Per Share Amount Paid
(in millions)
February 7, 2024 February 20, 2024 February 23, 2024 $ 1.00 $ 120
April 30, 2024 May 10, 2024 May 17, 2024 1.04 125
July 31, 2024 August 12, 2024 August 16, 2024 1.04 125
October 30, 2024 November 12, 2024 November 18, 2024 1.04 124
Total $ 4.12 $ 494
To provide funding for the dividend, OMFC paid dividends of $489 million to OMH during the year ended December 31, 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.
While OMH intends to pay its minimum quarterly dividend, currently $1.04 per share, for the foreseeable future, all subsequent dividends will be reviewed and declared at the discretion of the Board and will depend on many factors, including our financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends, and other considerations that the Board deems relevant. OMH’s dividend payments may change from time to time, and the Board may choose not to continue to declare dividends in the future. See our “Dividend Policy” in Part II - Item 5 of this report for further information.
Whole Loan Sale Transactions
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.
LIQUIDITY
OMH’s Operating Activities
Net cash provided by operations of $2.7 billion for the year ended December 31, 2024 reflected net income of $509 million, the impact of non-cash items including provision for finance receivable losses of $2.0 billion, and an unfavorable change in working capital of $125 million. 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 $2.4 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 $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.
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OMH’s Financing Activities
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, 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.
Liquidity Risks and Strategies
OMFC’s credit ratings are non-investment grade, which has a significant impact on our cost and access to capital. This, in turn, can negatively affect our ability to manage our liquidity and our ability or cost to refinance our indebtedness.
There are numerous risks to our financial results, liquidity, capital raising, and debt refinancing plans, some of which may not be quantified in our current liquidity forecasts. These risks include, but are not limited to, the following:
• 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 consumer loans which we have sold or may sell in the future, or relating to securitized loans; and
• the potential for disruptions in the debt and equity markets.
The principal factors that could decrease our liquidity are customer delinquencies and defaults, a decline in customer prepayments, rising interest rates, and a prolonged inability to adequately access capital market funding. We intend to support our liquidity position by utilizing some or all of the following strategies:
• 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, 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; and
• 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
Our insurance subsidiaries are subject to state regulations that limit their ability to pay dividends. 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
The debt agreements which OMFC and its subsidiaries are a party to include customary terms and conditions, including covenants and representations and warranties. See Note 9 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in this report for more information on the restrictive covenants under OMFC’s debt agreements, as well as the guarantees of OMFC’s long-term debt.
Securitized Borrowings
We execute private securitizations under Rule 144A of the Securities Act of 1933, as amended. As of December 31, 2024, our structured financings consisted of the following:
(dollars in millions) Issue Amount (a) Initial Collateral Balance Current
Note Amounts
Outstanding (a) Current Collateral Balance
(b) Current
Weighted Average
Interest Rate Original
Revolving
Period
OMFIT 2018-2 $ 368 $ 381 $ 80 $ 108 4.77 % 5 years
OMFIT 2019-2 900 947 900 995 3.30 % 7 years
OMFIT 2019-A 789 892 750 892 3.78 % 7 years
OMFIT 2020-2 1,000 1,053 1,000 1,053 2.03 % 5 years
OMFIT 2021-1 850 904 850 904 2.64 % 5 years
OMFIT 2022-S1 600 652 600 652 4.31 % 3 years
OMFIT 2022-2 1,000 1,099 868 917 5.22 % 2 years
OMFIT 2022-3 979 1,090 796 1,059 6.00 % 2 years
OMFIT 2023-1 825 920 825 920 5.82 % 5 years
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
ODART 2021-1 1,000 1,053 453 465 1.11 % 2 years
ODART 2022-1 600 632 430 437 5.05 % 2 years
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
(a) Issue Amount includes the retained interest amounts as applicable and the Current Note Amounts Outstanding balances reflect pay-downs subsequent to note issuance and exclude retained interest amounts.
(b) Inclusive of in-process replenishments of collateral for securitized borrowings in a revolving status as of December 31, 2024.
(c) On April 1, 2024, we assumed the following securitizations as part of the Foursight Acquisition. 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.
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Revolving Conduit Facilities
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
Drawn
OneMain Financial Funding VII, LLC $ 600 $ —
OneMain Financial Auto Funding I, LLC 550 —
Hudson River Funding, LLC 500 —
OneMain Financial Funding XI, LLC 425 —
OneMain Financial Funding VIII, LLC 400 —
River Thames Funding, LLC 400 —
OneMain Financial Funding X, LLC 400 —
OneMain Financial Funding XII, LLC 400 —
Mystic River Funding, LLC 350 —
Thayer Brook Funding, LLC 350 1
Columbia River Funding, LLC 350 —
Hubbard River Funding, LLC 250 —
New River Funding Trust 250 —
St. 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
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
Drawn
OneMain Financial Credit Card Trust – Series 2024-VFN1 $ 150 $ —
OneMain Financial Credit Card Trust – Series 2024-VFN2 150 —
Total
$ 300 $ —
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Contractual Obligations
At December 31, 2024, our material contractual obligations were as follows:
(dollars in millions) 2025 2026-2027 2028-2029 2030+ Securitizations Private Secured Term Funding Facilities
Revolving
Conduit
Facilities Total
Principal maturities on long-term debt:
Securitization debt (a) $ — $ — $ — $ — $ 11,703 $ — $ — $ 11,703
Medium-term notes — 2,179 3,739 3,042 — — — 8,960
Junior subordinated debt — — — 350 — — — 350
Private secured term funding facilities (a)
— — — — — 725 — 725
Revolving conduit facilities (a) — — — — — — 1 1
Total principal maturities — 2,179 3,739 3,392 11,703 725 1 21,739
Interest payments on debt (b) 591 1,011 759 1,076 1,495 125 — 5,057
Total $ 591 $ 3,190 $ 4,498 $ 4,468 $ 13,198 $ 850 $ 1 $ 26,796
(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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no material off-balance sheet arrangements as defined by SEC rules, and we had no material off-balance sheet exposure to losses associated with unconsolidated VIEs at December 31, 2024 or December 31, 2023.
Critical Accounting Policies and Estimates
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 - 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. 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 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. Our methodology relies on historical loss experience to forecast the corresponding future outcomes. These patterns are then applied to the current portfolio to obtain an estimate of future losses.
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Management exercises its judgment when determining the amount of allowance for finance receivable losses. Our judgment is based on quantitative analyses, qualitative factors, such as recent portfolio, industry, and other economic trends, and experience in the consumer finance industry. We may 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.
Forecasting macroeconomic conditions requires significant judgment and involves estimation uncertainty. We consider key economic factors, most notably unemployment rates, to incorporate into our estimate of the allowance for finance receivable losses. Our macroeconomic forecast considers various scenarios of economic projections from industry leading forecast providers and extends over our reasonable and supportable forecast period, after which we revert to a historical average.
Due to the judgment and uncertainty in estimating the expected credit losses, we may experience 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.
Macroeconomic Sensitivity
To demonstrate the sensitivity of forecasting macroeconomic conditions, we compared the output of our model using a baseline scenario to that of a downside scenario. As of December 31, 2024, the impact of a ten percentage point increase in weighting towards a downside scenario increased the estimate by approximately $28 million.
The macroeconomic scenarios are highly influenced by the timing, severity, and duration of changes in the underlying economic factors. This makes it difficult to estimate how potential changes in economic factors affect the estimated credit losses. Therefore, this hypothetical analysis is not intended to represent our expectation of changes in our estimate of expected credit losses due to a change in the macroeconomic environment, nor does it consider management’s judgment of other quantitative and qualitative information which could increase or decrease the estimate.
Recent Accounting Pronouncements
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.
Seasonality
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.
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