• Capital Generation: $685 million for the full year 2024; $183 million in Q4 2024.
• Receivables Growth: 11% year-over-year, reaching $24.7 billion.
• Total Revenue Growth: 9% year-over-year in Q4 2024.
• Net Income: GAAP net income of $126 million in Q4 2024; $1.05 per diluted share.
• C&I Adjusted Earnings: $1.16 per diluted share in Q4 2024.
• Originations: $3.5 billion in Q4 2024, with 11% organic growth year-over-year.
• Net Charge-Offs: 7.9% in Q4 2024, up 36 basis points from the previous quarter.
• Delinquency Rate: 30 to 89-day delinquency at 3.06%, down 22 basis points year-over-year.
• Interest Income: $1.3 billion in Q4 2024, up 11% year-over-year.
• Interest Expense: $310 million in Q4 2024, up $39 million from the prior year.
• Operating Expenses: $422 million in Q4 2024, up 10% year-over-year.
• Auto Receivables: Increased by $105 million in Q4 2024, totaling $2.4 billion.
• Credit Card Receivables: Added $93 million in Q4 2024, totaling $643 million.
• Dividend: $4.16 per share annually, yielding about 7%.
• Share Repurchases: Approximately 755,000 shares repurchased for $35 million in 2024.

• Warning! GuruFocus has detected 7 Warning Sign with OMF.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OneMain Holdings Inc (NYSE:OMF) achieved significant growth in its customer base, increasing by 15% to 3.4 million customers.
• The company generated $685 million of capital in 2024, despite peak loan losses at the beginning of the year.
• Receivables grew by 11% to $24.7 billion, driven by growth in the auto business and BrightWay credit cards.
• OneMain Holdings Inc (NYSE:OMF) successfully integrated its acquisition of Foursight, enhancing its auto lending capabilities.
• The company maintained a strong balance sheet and funding program, raising $3.9 billion in funding, including high-yield bond issuances and secure funding.

Negative Points

• Fourth quarter GAAP net income decreased to $126 million or $1.05 per diluted share, down from $1.38 per diluted share in the fourth quarter of 2023.
• Interest expense for the quarter increased by $39 million year-over-year, driven by an increase in average debt and higher cost of funds.
• Net charge-offs were 7.9% in the quarter, up 36 basis points from the previous quarter.
• The company faces continued uncertainty around inflation and unemployment, impacting its reserve calculations.
• Operating expenses increased by 10% compared to the previous year, driven by the Foursight acquisition and business investments.

Q & A Highlights

Q: Can you speak to your confidence in sustaining the improved delinquency trends and explain the factors that could lead to the high or low end of your charge-off guidance for the year? A: Jenny Osterhout, Executive Vice President, Chief Financial Officer, explained that they are pleased with the improvement in delinquency trends and expect lower losses to drive improved earnings. The guidance range depends on the pace of the back book rolling off, delinquency trends, roll rates to loss, growth in originations, and macroeconomic conditions.

Q: Could you provide more color on the expected modest improvement in portfolio yield for 2025? A: Jenny Osterhout noted that they expect modest improvement from the fourth quarter run rate of 22.2% on consumer loan yield. Improvements are due to pricing actions in personal and auto loans, but are partially offset by credit and growth in lower yield auto business. The rate of improvement will depend on product mix.

Q: How are roll rates from delinquency to charge-off performing, given the inflationary environment? A: Jenny Osterhout stated that roll rates are performing well, with trends in line or slightly better than typical expectations. Douglas Shulman added that improvements are due to active management and better credit customers, despite cumulative inflation remaining high.

Q: Can you discuss the impact of product mix on CECL reserves and where you expect reserve levels to go? A: Jenny Osterhout explained that as credit metrics improve, consumer loan reserves should gradually decrease. The macroeconomic environment and product mix, including the growing card portfolio, will influence reserve levels. They expect reserves to potentially decrease by about 50 basis points over time.

Q: What is OneMain's view on originating loans for private capital versus its balance sheet? A: Jenny Osterhout stated that they view forward flow arrangements as additive rather than necessary, given their strong access to public markets. They selectively expanded their whole loan sale program to $900 million annually, seeing it as an opportunity to diversify funding sources while maintaining discipline in pricing and economic trade-offs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.