Overview

OneMain Holdings, Inc. (OMH) is a leading consumer finance company that provides personal loans, auto financing, credit cards, and optional insurance products to help customers meet their financial needs. The company operates in 47 states and serves customers through its branch network, digital platforms, and distribution partnerships.

OMH’s primary reportable segment is Consumer and Insurance (C&I), which includes consumer loans, credit cards, and optional insurance products. The company also has a small segment for its liquidating real estate loans and legacy operations.

Financial Performance

In 2024, OMH generated $4.99 billion in interest income, up 9% from 2023, driven by growth in its average net receivables. However, interest expense also increased 16% to $1.18 billion due to higher debt levels and costs to support the receivables growth.

The provision for finance receivable losses, which covers expected credit losses, rose 19% to $2.04 billion in 2024. This was due to the growth in receivables, higher net charge-offs, and additional reserves from the Foursight Capital acquisition. Other revenues decreased 5% to $695 million, mainly from lower gains on loan sales and debt repurchases, partially offset by higher credit card and servicing revenues.

Operating expenses increased 5% to $1.80 billion, driven by higher general costs from strategic investments and the Foursight acquisition, as well as restructuring charges. Income before taxes declined 20% to $667 million, and net income was $509 million, down from $641 million in 2023.

On a segment basis, C&I adjusted pretax income, a non-GAAP metric, was $782 million in 2024, down from $874 million in 2023. This decline was primarily due to the higher provision for losses and operating expenses, partially offset by the growth in interest income.

Strengths and Weaknesses

A key strength of OMH is its diversified product offerings and nationwide footprint, which allow it to serve a broad range of non-prime consumers. The company’s focus on digital capabilities and distribution partnerships also position it well to meet evolving customer preferences.

However, OMH faces risks from macroeconomic conditions, such as changes in unemployment, inflation, and interest rates, which can impact credit performance and funding costs. The company’s non-investment grade credit ratings also limit its access to capital and increase borrowing costs compared to higher-rated peers.

To manage these risks, OMH maintains a conservative and disciplined underwriting approach. The company also aims to maximize returns while minimizing credit risk, leverage its scale and cost discipline, and maintain a strong liquidity position with diversified funding sources.

Outlook

Looking ahead, OMH remains focused on serving non-prime consumers and improving their financial well-being. The company plans to continue expanding its product offerings and growing its receivables, while maintaining a rigorous focus on credit quality and operating efficiency.

OMH’s experienced management team is closely monitoring the macroeconomic environment and prepared to adjust its strategies as needed. The company believes it is well-positioned to navigate challenges and seize opportunities, with a robust balance sheet and a commitment to its key initiatives.

Despite the risks, OMH is confident in its ability to increase shareholder value and remain resilient in the face of an evolving economic, social, political, and regulatory landscape.