OneMain Holdings, Inc. Q4 FY2024 earnings call

• In 2024, made progress in personal loan business and new products, with receivables growing 11% to $24.7 billion. - Completed acquisition of Foursight, built out BrightWay credit cards, proactively managed expenses, and refined data science/analytics. - Generated $685 million of capital in 2024 despite peak loan losses early in the year. - Focused on helping customers improve financial well-being, with Trim financial wellness platform saving customers millions and Credit Worthy financial education program reaching over 400,000 students. - Recognized in Newsweek's Excellence Index and Time Magazine America's Best Midsize Companies list. - Fourth quarter capital generation was $183 million, C&I adjusted earnings $1.16 per share, receivables grew 11% year-over-year, and total revenue grew 9%.

Personal Loans: Receivables grew 11% to $24.7 billion in 2024. Fourth quarter originations were $3.5 billion, with organic growth of 11% year-over-year. The APR on consumer loan originations was 27.0% this quarter, up 16 basis points from the third quarter. Consumer loan yield was 22.2% in the fourth quarter, up 14 basis points. Auto Lending: OneMain auto receivables increased $105 million in the quarter to $2.4 billion at year-end, with credit performance in line with expectations and better than comparable industry performance. Credit Cards: Credit card receivables added $93 million during the quarter and ended the year at $643 million, with focus on improving user experience and driving operating efficiencies.

• Expect managed receivables to grow approximately 5% to 8% in 2025. - Anticipate revenue growth in the range of 6% to 8% following receivables growth and modest improvement in consumer loan yield. - Guide full year C&I net charge-offs in the range of 7.5% to 8.0%, with first half 2025 net charge-offs above the range and second half below assuming no change in macroeconomic environment. - Full year OpEx ratio expected to be approximately 6.6%, in line with 2024 and better than 2023.

• Macroeconomic uncertainties that could impact credit performance and originations. - Competitive environment which may affect the ability to drive growth and maintain market share. - Variability in credit metrics due to seasonal patterns and the roll-off of the back book.

Q: Terry Ma of Barclays asked about confidence in sustaining credit trends and the guide for charge-offs.

A: Jenny Osterhout said they're pleased with credit trends improvement, confident in coming down from peak losses, and charge-off guide depends on back book roll-off, delinquency trends, and macroeconomic factors.

Q: Moshe Orenbuch of TD Cowen asked about roll rates and factors driving charge-offs.

A: Jenny Osterhout said roll rates from delinquency to charge-off are performing well, and Doug Shulman added that active credit management and better credit customers contribute to improved trends.

Q: Mark DeVries of Deutsche Bank asked about CECL reserves and card portfolio.

A: Jenny Osterhout explained that CECL reserves are affected by delinquency improvement, macro uncertainty, and card product mix, with reserves expected to gradually come down over time.

Q: John Hecht of Jefferies asked about vintage '24 and tax refund expectations.

A: Jenny Osterhout said recent vintages are performing well, and Doug Shulman noted tax refund impact is early and not wildly different from recent years.

Q: Kyle Joseph of Stephens asked about competitive update and tax refund expectations.

A: Doug Shulman provided a competitive update across product channels and said tax refund impact is early and not significantly different year-over-year.

Q: Michael Kaye of Wells Fargo asked about like-for-like credit performance and debt consolidation.

A: Jenny Osterhout said front book credit performance is consistent across risk grades, and Doug Shulman mentioned they've improved debt consolidation product and see potential demand if market moves in that direction.

Q: Mihir Bhatia of Bank of America asked about forward flows and long-term loss rates.

A: Jenny Osterhout explained forward flows are additive, and Doug Shulman discussed long-term loss rate expectations tied to return on equity and product mix.