Business Overview and History

OneMain Holdings Inc (OMF) is a leading consumer finance company dedicated to providing nonprime consumers in the United States with responsible access to credit. With a history spanning over a century, the company has established itself as a trusted provider of personal loans, auto financing, and credit card products, catering to the financial needs of hardworking Americans.

OneMain's origins can be traced back to 1912 when it was founded as Springleaf Finance Corporation, a regional finance company in Indiana. Over the decades, the company has evolved and expanded its operations, navigating industry changes and economic cycles to become the prominent player it is today. In 2013, the company underwent a significant transformation by acquiring the consumer finance business of CitiFinancial, which substantially expanded its scale and reach. In 2014, Springleaf Holdings, Inc. went public on the New York Stock Exchange, raising capital to support its growth strategy. The following year, in 2015, the company rebranded as OneMain Holdings, Inc. to better reflect its national presence and diverse product offerings.

OneMain's core product offerings include personal loans, auto financing, and credit cards. The company's personal loan portfolio, which accounts for the majority of its receivables, offers fixed-rate, fixed-term loans secured by automobiles, other titled collateral, or provided on an unsecured basis. The auto financing business, which the company expanded through the strategic acquisition of Foursight Capital in 2024, provides point-of-sale lending through a growing network of franchise and independent dealerships. Additionally, OneMain's credit card business, centered around the BrightWay and BrightWay products, provides customers with a differentiated digital experience and rewarding credit solutions.

Throughout its history, OneMain has successfully navigated numerous challenges, including the global financial crisis of 2008-2009 and the economic disruption caused by the COVID-19 pandemic. The company's experienced management team, disciplined underwriting, and diversified business model have enabled it to weather these storms and emerge as an even stronger competitor. Today, OneMain operates a nationwide network of over 1,300 branches and serves approximately 3.4 million customers, solidifying its position as a leading player in the nonprime consumer finance market.

Financial Performance and Ratios

In the fiscal year 2024, OneMain reported total revenue of $4.99 billion, a 7.6% increase compared to the previous year. Net income for the year stood at $509 million, with diluted earnings per share (EPS) of $4.24. The company's most recent quarter (Q4 2024) saw revenue of $1.32 billion, up 9% year-over-year, while net income for the quarter was $126 million, down from $165 million in Q4 2023.

OneMain's financial ratios demonstrate its strong liquidity and solvency position. As of December 31, 2024, the company's debt-to-equity ratio stood at 6.72, suggesting a moderately leveraged capital structure. The return on equity (ROE) was 15.95%, reflecting the company's efficiency in utilizing its shareholders' capital. Cash and cash equivalents totaled $458 million at the end of 2024.

Competitive Landscape and Growth Strategies

OneMain operates in the highly competitive consumer finance industry, serving nonprime consumers alongside banks, credit unions, fintech platforms, and other specialty lenders. The company's key competitive strengths include its extensive branch network, advanced digital capabilities, robust data analytics, and diversified funding sources, which enable it to offer responsible and flexible credit solutions to its customers.

To drive growth, OneMain has implemented several strategic initiatives. The company continues to invest in data science, underwriting capabilities, and technological advancements to enhance its credit risk management and customer experience. The acquisition of Foursight Capital has expanded OneMain's auto lending business, leveraging the acquired company's relationships with independent dealers and scalable platform. Additionally, the company's focus on diversifying its product offerings, including the development of its credit card business, has helped it broaden its addressable market and tap into new revenue streams.

Risks and Challenges

As a consumer finance company, OneMain faces various risks, including macroeconomic conditions, changes in consumer behavior, regulatory scrutiny, and cybersecurity threats. The company's exposure to the nonprime consumer segment makes it vulnerable to economic downturns, which can impact its loan performance and credit quality. Regulatory changes, such as those introduced by the Consumer Financial Protection Bureau (CFPB), can also affect the company's operations and compliance requirements.

OneMain's reliance on technology and digital platforms also exposes it to cybersecurity risks, which could disrupt its operations, lead to data breaches, and damage its reputation. The company mitigates these risks through robust risk management frameworks, data security measures, and ongoing investment in its technological infrastructure.

Guidance and Outlook

For the fiscal year 2025, OneMain has provided the following guidance:

• Managed receivables growth of 5% to 8%
• Revenue growth in the range of 6% to 8%
• C&I net charge-offs between 7.5% and 8.0%
• Operating expense ratio of approximately 6.6%

The company expects to see typical seasonal patterns in quarterly losses, with first half 2025 net charge-offs above the full year range and second half below. No changes are assumed in the macroeconomic environment, including inflation.

This outlook reflects OneMain's continued focus on responsible growth, disciplined credit risk management, and operational efficiency. Despite the challenging macroeconomic environment, OneMain's diversified product offerings, strong liquidity position, and experienced management team position it well to navigate the industry's complexities and capitalize on emerging opportunities.

Financials

OneMain's financial performance demonstrates its ability to generate consistent revenue and profitability. The company's total revenue of $4.99 billion in fiscal year 2024 represents a solid 7.6% increase from the previous year, indicating steady growth in its core business segments. The net income of $509 million and diluted EPS of $4.24 reflect the company's ability to translate revenue growth into bottom-line results.

In the most recent quarter (Q4 2024), OneMain reported revenue of $1.32 billion, up 9% year-over-year, while net income for the quarter was $126 million, down from $165 million in Q4 2023. Notably, loan origination volume grew 16% year-over-year, including 11% organic growth and 5% from the Foursight acquisition.

Liquidity

OneMain maintains a robust liquidity position, which is crucial for a consumer finance company. The debt-to-equity ratio of 6.72 as of December 31, 2024, indicates a moderately leveraged capital structure. The company's cash and cash equivalents stood at $458 million at the end of 2024, providing a solid foundation for operational needs and potential investment opportunities.

OneMain's liquidity is further supported by its diverse funding sources, including:

• An unsecured corporate revolver with $1.1 billion capacity
• 17 revolving conduit facilities with $6.0 billion total capacity
• 2 credit card revolving VFN facilities with $300 million total capacity

This diversified funding structure provides OneMain with financial flexibility and the ability to navigate potential economic uncertainties.

Consumer and Insurance Segment

The Consumer and Insurance (CI) segment is OneMain's sole reportable segment as of December 31, 2024. This segment encompasses the company's core business activities, including the origination and servicing of consumer loan and credit card products, as well as the offering of optional credit and non-credit insurance products.

Personal Loans: As of December 31, 2024, OneMain had approximately 2.4 million personal loans totaling $20.83 billion in net finance receivables, with 50% secured by titled property. These loans are non-revolving, have fixed rates, and generally have terms between three to six years.

Auto Finance: At the end of 2024, the company had around 127,000 auto finance loans totaling $2.08 billion in net finance receivables. These loans are secured, non-revolving, and typically have terms between three to six years.

Credit Cards: As of December 31, 2024, OneMain had approximately 783,000 open credit card customer accounts, totaling $643 million in net finance receivables. The company offers two credit card products, BrightWay and BrightWay, which are open-ended, revolving, fixed-rate, and unsecured.

Optional Products: OneMain also offers optional credit insurance products and other non-credit insurance products through its affiliated insurance subsidiaries.

Key financial metrics for the CI segment in 2024 include:

• Total net finance receivables of $23.60 billion, up from $21.35 billion at the end of 2023
• Net charge-off ratio of 8.11%, compared to 7.48% in 2023
• Allowance for finance receivable losses of $2.57 billion, resulting in an allowance ratio of 11.20%
• Adjusted pretax income of $782 million, down from $874 million in 2023
• Pretax capital generation of $914 million, compared to $1.06 billion in 2023

Industry Trends and Market Position

OneMain operates primarily in the United States, serving customers across 47 states through its branch network and digital platforms. The U.S. consumer lending industry has seen moderate growth, with a compound annual growth rate (CAGR) of approximately 5-7% over the past three years. OneMain's focus on the nonprime consumer segment, combined with its diversified product offerings and robust distribution channels, positions the company well to capitalize on this growth trend.

Conclusion

OneMain Holdings Inc (OMF) has established itself as a leading provider of responsible credit solutions for nonprime consumers in the United States. With a rich history, innovative product offerings, and a commitment to financial inclusion, the company has demonstrated its resilience and adaptability in the face of industry challenges. As it continues to execute on its strategic initiatives, OneMain is well-positioned to drive growth, enhance its competitive position, and deliver long-term value for its shareholders. The company's strong performance against its 2024 guidance and positive outlook for 2025 further underscore its potential for continued success in the dynamic consumer finance landscape.