Earnings call transcript: OneMain Holdings sees strong Q2 2025 gains, shares rise

OneMain Holdings reported robust financial results for the second quarter of 2025, with significant year-over-year growth in both net income and revenue. The company’s stock price responded positively, rising 6.06% to $53.26 by market close. According to InvestingPro data, the stock has demonstrated strong momentum with a 25.53% return over the past six months. The earnings call highlighted the company’s strategic initiatives and market resilience, contributing to its impressive performance.

Key Takeaways

• OneMain Holdings’ Q2 2025 GAAP net income surged 137% year-over-year to $167 million.
• Adjusted net income per share rose 42% year-over-year, reaching $1.45.
• Total revenue increased 10% year-over-year to $1.5 billion.
• Stock price climbed 6.06% following the earnings announcement.

Company Performance

OneMain Holdings delivered a strong performance in Q2 2025, driven by strategic enhancements and a resilient consumer market. The company’s net income and revenue growth outpaced industry averages, reflecting effective management and successful product innovations. The non-prime consumer market’s stability, alongside a solid labor market, bolstered OneMain’s results.

Financial Highlights

• Revenue: $1.5 billion, up 10% year-over-year
• GAAP net income: $167 million, up 137% year-over-year
• Adjusted net income per share: $1.45, up 42% year-over-year
• Capital generation: $222 million, up 63% year-over-year
• Managed receivables: $25.2 billion, up 7% year-over-year

Market Reaction

Following the earnings release, OneMain Holdings’ stock price increased by 6.06%, closing at $53.26. The stock’s reaction reflects investor confidence in the company’s strong financial performance and strategic initiatives. Despite a slight pre-market dip, the stock rebounded, indicating positive sentiment among investors.

Outlook & Guidance

OneMain Holdings projects full-year revenue growth at the high end of its 6-8% range. The company expects net charge-offs to remain in the lower half of its original guidance, between 7.5% and 7.8%. Managed receivables are anticipated to grow by 5-8%, with significant capital generation expected in 2025.

Executive Commentary

CEO Doug Shulman stated, "We are seeing the results of initiatives and actions we put in motion over the past couple of years," highlighting the company’s strategic focus. CFO Jenny Osterhout added, "We had a really strong quarter with improved credit performance," underscoring the positive financial outcomes.

Risks and Challenges

• Potential macroeconomic shifts could impact consumer spending power.
• Increased competition in the non-prime lending market may pressure margins.
• Regulatory changes could affect lending practices and profitability.

Q&A

During the earnings call, analysts inquired about the maturation strategy for OneMain’s credit card portfolio and the impact of recent tax legislation on customers. Executives addressed these concerns, emphasizing their robust underwriting approach and competitive positioning in the market.

Full transcript - OneMain Holdings Inc (OMF) Q2 2025:

Operator: Welcome to the OneMain Holdings Inc. second quarter 2025 earnings conference call and webcast. Hosting the call today from OneMain Holdings Inc. is Peter Poillon, Head of Investor Relations. Today’s call is being recorded at this time. All participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We do ask that you limit yourself to one question and one follow-up and please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance, please press zero. It is now my pleasure to turn the floor over to Peter Poillon. You may begin.

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Thank you, Operator.

Good morning everyone and thank you for joining us. Let me begin by directing you to page 2 of the second quarter 2025 investor presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP measures. The presentation can be found in the Investor Relations section of the OneMain website. Our discussion today will contain certain forward-looking statements reflecting management’s current beliefs about the company’s future financial performance and business prospects, and these forward-looking statements are subject to inherent risks and uncertainties and speak only as of today. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in our earnings press release. We caution you not to place undue reliance on forward-looking statements.

If you may be listening to this via replay at some point after today, we remind you that the remarks made herein are as of today, July 25th, and have not been updated subsequent to this call. Our call this morning will include formal remarks from Doug Shulman, our Chairman and Chief Executive Officer, and Jenny Osterhout, our Chief Financial Officer. After the conclusion of our formal remarks, we’ll conduct a question and answer session. I’d like to now turn the call over to Doug.

Thanks Pete and good morning everyone. Thank you for joining us today. Let me start by saying we had a very strong second quarter, which demonstrated our expertise in credit management and best-in-class ability to serve the non-prime consumer. We continue to see growth in high-quality loan originations, good pricing, and positive credit trends across the board, all leading to strong growth in capital generation. As you know, we’ve been very disciplined the last three years in managing credit, optimizing pricing, and executing strategic initiatives to drive growth without opening our credit box. All of this sets us up very well for the future. Let me provide a few of the highlights for the quarter. Capital generation was $222 million, up 63% year over year. C&I adjusted earnings were $1.45 per share, up 42%.

Our total revenue grew 10%, and receivables grew 7% year over year, crossing the $25 billion mark for the first time in the company’s history. Originations grew 9%, driven by our expanded use of granular data and analytics as well as product and customer experience innovations to opportunistically drive growth through higher-quality loans. Turning to credit, we continue to see positive trends. Our 30+ day delinquency was 5.07%, which is down 29 basis points year over year as compared to up 27 basis points last year. C&I net charge-offs were 7.6% in the quarter, down 60 basis points from last quarter and down 88 basis points compared to the second quarter of last year. Consumer loan net charge-offs were 7.2%, down 64 basis points from last quarter and down 110 basis points year over year.

Due to the strength of the first two quarters of the year, we have updated our view on 2025 net charge-offs to be at the lower half of the range we provided you at the beginning of the year. Jenny will discuss the specifics in a few minutes, but we are quite pleased with the improvement in credit that we have seen during the first half of 2025. Let me touch on some of the recent initiatives that are helping to drive originations in our core personal loan business. One initiative is loan consolidation. As many Americans have seen growth in credit card debt, we enhanced our debt consolidation offering. This product allows customers to refinance their debt with a OneMain loan with a single predictable payment and faster pay down.

This year we increased awareness of the product and made changes to the customer experience to make it easier to consolidate debt with OneMain. Let me give you a few other examples. We have added new data sources to further automate income verification and collateral details. We also have a new streamlined and faster process to renew a loan for select customers who have demonstrated excellent credit performance. We’re also growing a new loan origination channel as we enable credit card customers to cross buy personal loans through our credit card app. While this is a small test, early results are showing excellent credit performance and low acquisition costs, laying the groundwork to expand this channel in the future. I’ve said before that to run a great business, it is a thousand little things that add up to meaningful value.

Creation initiatives like these are impactful in the aggregate as they expand our reach, improve our offers, and increase application pull through rate. This is a small sample of the many initiatives we are working on every day, enabling us to drive growth and efficiency across our loan business. Let me move on to the progress we are making on our strategic initiatives. Today we provide access to responsible credit to more than 3.5 million customers, up 11% from a year ago. Much of the growth is attributable to the BrightWay credit card and OneMain Auto Finance business as we’re engaging more customers across our expanded multi-product platform. In our credit card business, we ended the quarter with $752 million of receivables, up 61% from a year ago. We now have more than 920,000 credit card customers.

The revenue yield has improved 140 basis points year over year, and portfolio credit performance remains in line with our expectations and will move down over time as the portfolio matures. The credit card portfolio represents only about 3% of our total receivables today as we remain measured in our credit card growth. Our goal is to grow this product conservatively with a focus on building the product for the long term. We are confident that as we scale this business to a mature steady state, its capital generation return on receivables will be similar to our personal loans business, albeit with higher revenue yield that absorbs higher losses. In the meantime, we’re very focused on continuously improving the user experience, growing with our best customers, and reducing marginal costs per account to ensure a profitable business for the long run.

In our auto finance business, we ended the quarter with over $2.6 billion of receivables, up $119 million from the last quarter. It has now been a little over a year since we closed the acquisition of Foursight and we are pleased with the evolution of our auto business since then. In the last year our roster of active dealers grew by 14%, quarterly originations grew by 29%, and we’ve added more than $400 million of receivables. The auto portfolio pricing has moved up nicely and the credit performance remains in line with expectations and better than comparable industry performance. We’ve made excellent strides in carefully growing the auto business within our disciplined credit policies and are very optimistic about our offering through both independent and franchise dealers. We continue to see the auto finance business as a driver of future profitable growth.

Let me touch briefly on the current economic environment this quarter. The macroeconomic environment remained consistent with past quarters, with policy news causing some volatility, but our customer base continuing to manage their household balance sheets well. The nonprime consumer remains resilient, supported by a solid labor market and good wage growth. There are provisions in the recent tax bill that could benefit our customers, including the reduction of taxes on tips and overtime and some of the expanded family tax benefits. I spoke last quarter about the resiliency of our business and our ability to manage profitably through the cycle.

Our confidence is supported by our long history of serving the nonprime consumer, a conservative underwriting approach that for the past three years has incorporated a 30% cushion to ensure that the loans we originate will remain profitable even if the environment experiences stress, and a strong balance sheet with tremendous liquidity. Our second quarter execution offered further evidence of this business model. Our underwriting posture remains very conservative, with more than 60% of our new originations coming from our top two credit tiers. Once again, we demonstrated best-in-class access to capital markets, raising $1.8 billion in the quarter in both the ABS and unsecured markets, which provides us with a lot of flexibility for the coming quarters. Let me close on capital allocation where our priorities remain the same.

We continue to focus on the long-term success of our business, including strategically investing in our expanded product set, data science, digital innovation, as well as profitable growth. Our regular annual dividend of $4.16 per share yields about 7% at today’s share price. This quarter we repurchased 460,000 shares at an average price of just below $46 per share. During the first half of 2025, we’ve repurchased about 780,000 shares for approximately $37 million, already outpacing the 755,000 shares we repurchased in all of 2024. We will continue to pace our repurchases based on a number of factors, including excess capital, available economic conditions, and market dynamics. In summary, it was a great quarter.

We are seeing the results of initiatives and actions we put in motion over the past couple of years, including careful management of our credit box, innovations in our core loan products to drive originations, and new products and channels, all of which resulted in significant capital generation growth year over year. With that, let me turn the call over to Jenny.

Jenny Osterhout, Chief Financial Officer, OneMain Holdings: Thanks Doug and good morning everyone. I’m pleased to start by summarizing another strong quarter marked by double-digit revenue growth, solid receivables growth, and ongoing credit performance improvements. We demonstrated our industry-leading balance sheet management with great market access and funding execution, raising $1.8 billion in both the secured and unsecured markets, providing additional flexibility for future issuances. Second quarter GAAP net income of $167 million, or $1.40 per diluted share, was up 137% from $0.59 per diluted share in the second quarter of 2024. It is worth mentioning that last year’s second quarter GAAP results included purchase accounting adjustments associated with the acquisition of Foursight, which were excluded from our C&I adjusted results. C&I adjusted net income of $1.45 per diluted share was up 42% from $1.02 in the second quarter of 2024.

Capital generation, the metric against which we manage and measure our business, totaled $222 million, up $86 million or 63% from $136 million in the second quarter of 2024, reflecting strong growth in our loan portfolio, improved portfolio yield, and the notable improvement in our credit performance. Given the strong growth in capital generation through the first six months of 2025, we are well positioned to generate significantly more capital this year than we did in either of the past two years. Managed receivables ended the quarter at $25.2 billion, up $1.6 billion or 7% from a year ago. This compares to 6% organic growth last quarter. It has now been a year since our acquisition of Foursight, so all growth discussed this quarter and going forward is organic.

Our growth highlights OneMain’s unique ability to find pockets of growth in higher quality origination segments in our personal loan product while also carefully growing into our newer businesses and responsibly driving improved pricing across the portfolio. It was just three years ago in the second quarter of 2022 that we reached $20 billion in receivables. Since this time we’ve been able to increase our receivables by 25% or $5 billion while maintaining a notably tightened credit box and driving new product growth including $1.3 billion from the acquisition of Foursight. Second quarter originations of $3.9 billion were up 9% year over year despite our continued conservative credit box.

As we look forward to the second half of this year, we expect a more normalized mid single digit year on year growth in originations as we are now more than a year into the successful personal loan growth initiative that we started in June of last year. Importantly, we remain very comfortable with our full year managed receivables growth guidance of 5 to 8%. Second quarter consumer loan yield was 22.6%, up 19 basis points from the first quarter and up 67 basis points year over year. The improvement in yield was driven by the sustained benefit of the pricing actions we’ve taken and the seasonal improvement in 90+ day delinquencies, partially offset by an increasing mix of lower yield, lower loss auto finance receivables.

While we’re pleased with the improvement in yield this year, we expect it to moderate in the second half of the year due to the typical seasonality of 90+ day delinquencies and growth in our auto portfolio. Total revenue this quarter was $1.5 billion, up 10% compared to the second quarter of 2024. Interest income of $1.3 billion grew 10% year over year, driven by receivables growth and the yield improvement I just mentioned. Other revenue of $195 million grew 6% compared to the second quarter of 2024, primarily driven by higher gain on sale associated with our whole loan sale program and higher credit card revenue associated with the growing credit card portfolio. We now expect our 2025 revenue growth to be at the high end of our previously discussed range of 6 to 8%.

Interest expense for the quarter was $317 million, up $22 million compared to the second quarter of 2024, driven by the increase in average debt to support our receivables growth. Interest expense as a percentage of average net receivables in the quarter was 5.4%, consistent with the prior quarter and in line with our expectations for the full year. Second quarter provision expense was $511 million, comprising net charge-offs of $446 million and a $65 million increase to our reserves driven by the increase in receivables during the second quarter. Our loan loss ratio remained flat quarter over quarter at 11.5%. I’ll discuss credit in more detail momentarily. Policyholder benefits and claims expense for the quarter was $54 million, up from $47 million in the second quarter last year. As we have said before, we expect quarterly PB&C expense in the low $50 million range.

Let’s turn to Slide 8 and look at consumer loan delinquency trends. 30+ day delinquency at June 30, excluding Foursight, was 5.07%, down 29 basis points compared to a year ago, benefiting from improvements in both early and late stage delinquencies. As we look ahead, the sustained improvement in delinquency will result in continuing loss benefits into the second half of the year. It is worth noting that we’re seeing positive trends in both early and late stage delinquency performance of our newer products, credit cards and auto finance, in addition to our personal loans product. Across the board we are feeling good about the direction of travel. On slide 9, you see our front book vintages comprised of consumer loans originated after August 2022. Credit tightening now makes up 90% of total receivables.

The performance of the front book remains in line with expectations and is driving most of the delinquency and loss improvements we are seeing. While the back book continues to diminish, now making up only 10% of the total portfolio, it still represents 24% of our 30+ day delinquency. As expected, as the back book continues to run down over the remainder of this year, we anticipate it will contribute less to our delinquency results. Let’s now turn to charge-offs and reserves. As shown on slide 10, C&I net charge-offs, which include credit cards, were 7.6% of average net receivables in the second quarter, down 88 basis points from a year ago. Consumer loan net charge-offs, which exclude credit cards, were 7.2% in the quarter, down 110 basis points year over year. We remain confident in the continued year over year improvement of losses over the remainder of 2025.

As we have discussed before, the difference between C&I net charge-offs and consumer loan net charge-offs comes from our credit card portfolio. Let me spend a moment to update you on the credit trends of this small but growing portfolio. As a point of reference, we rolled out the credit card business in August 2021, yet the portfolio size remains approximately $750 million today. After our initial rollout of a test portfolio, we have been extremely prudent in the ramp of the business given the uncertain environment over that time frame. As we continuously focused on improving the product and user experience, our losses this quarter in our card portfolio improved modestly to the mid-19% range. As we look forward, we expect continued improvement over the remainder of the year, with credit card losses anticipated to decline by around 150 basis points in the second half of the year.

This is primarily driven by the seasoning of the credit card portfolio and improvements across both early and late stage delinquencies. We are pleased with the overall quality of the credit card portfolio and feel confident that we are building an enduring, profitable business for the long term. More broadly, given the trajectory of our early and late stage delinquencies through the first six months of the year across all our products, we are confident that our full year net charge-offs will come in within the lower half of our original guidance range of 7.5% to 8%. Recoveries continue to remain strong, amounting to $87 million in the quarter or 1.5% of receivables as we continue to utilize the various strategies we have available to optimize recoveries. Loan loss reserves ended the quarter at $2.8 billion.

While the credit performance of our portfolio is improving as reflected in our delinquency and charge-off metrics, our 11.5% reserve coverage stayed flat during the quarter as we maintain an appropriately conservative macroeconomic overlay in our reserve. As a reminder, the higher loss higher yield credit card portfolio contributes to the reserve, adding 35 basis points to the overall reserve ratio at June 30. Now let’s turn to Slide 11. Operating expenses were $415 million, up 11% compared to a year ago. Our second quarter 2024 operating expenses were unusually low due to the expense actions we took in the first quarter of last year. Adjusting for those benefits, expense growth was aligned to our receivables growth even as we continue to invest for the future. The 6.7% OpEx ratio this quarter is 9 basis points higher than last quarter and is in line with our expectations.

As we’ve said before, our OpEx ratio can fluctuate from quarter to quarter, but we feel great about the inherent operating leverage of our business. We remain confident in our full year 2025 operating expense ratio guide of approximately 6.0%. Now turning to funding and our balance sheet on Slide 12. During the quarter we continued to optimize our balance sheet. We raised a total of $1.8 billion through two issuances. In May, we issued a seven-year $800 million unsecured bond at 7.125% callable in three years. The bond proceeds were used to partially redeem a significant portion of the 7 1/8% bond that mature in March 2026. As we proactively manage our balance sheet by reducing our nearest maturity, at quarter end, only about $400 million of the original $1.6 billion of March 2026 bonds remain outstanding with no further unsecured maturities until January 2027.

In June, we also issued a three-year revolving $1 billion ABS with a cost of funds under 5%. Both of our issuances during the quarter had strong market demand, including a healthy number of new investors in our name. With $3.3 billion of funding raised through the first half of 2025, we have great flexibility on amount, purpose, and timing of funding over the remainder of the year. Additionally, our bank facilities totaled $7.5 billion at quarter end with unencumbered receivables of $9.7 billion contributing to our best-in-class liquidity profile. Net leverage at the end of the second quarter was 5.5 times, flat to last quarter. Turning to Slide 14, our full year 2025 guidance. Given the strong performance of revenues and net charge-offs in the first half of the year, we are updating our guidance on those metrics.

Total revenue growth is now expected to come in at the high end of the previously provided 6% to 8% range. C&I net charge-offs are expected to come in between 7.5% and 7.8%, narrowing to the lower half of the guidance range we gave you at the beginning of the year. We are maintaining our full year managed receivables growth in the 5% to 8% range and our operating expense ratio guide of approximately 6.6%. With all of these metrics moving in the right direction, capital generation in 2025 will significantly exceed 2024. I will end with how I opened. We had a really strong quarter with improved credit performance, excellent origination, growth in total revenue, and continued balance sheet strength. We have notable momentum as we move into the second half of 2025 and look forward to delivering outstanding shareholder value in the quarters and years ahead.

With that, let me turn the call back over to Doug.

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Thanks, Jenny. As I mentioned at the beginning of the year, as we actively managed the business over the past couple of years, we created very positive trends in credit and originations. These tailwinds that I spoke about then are clearly present now as we are on pace to deliver significant capital generation growth in 2025. We are confident in the strength of our business model and our strategic initiatives, and we have positioned OneMain very well for the long term with intense focus on our core loan business as well as our new products and channels. We are operating from a position of strength with an experienced team, resilient business model, strong and diverse balance sheet, credit expertise, and long experience serving the non-prime consumer. All of which should benefit our company, our customers, and our shareholders both in the near and the long term.

I’ll close by thanking all of the OneMain team members for their continued dedication to helping our customers improve their financial well-being. Their hard work and dedication to our customers is unmatched. With that, let me open it up for questions.

Operator: The floor is now open for questions at this time. If you have a question or comment, please press star 1 on your touchtone phone. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you limit yourself to one question and one follow-up, and please pick up your handset to provide optimal sound quality. Thank you. Our first question is coming from Moshe Orenbuch at TD Cowen. Please go ahead.

Great. Thanks for taking my questions. I guess both Doug and Jenny, you talked a little bit about the growth in originations and the changing rate of growth there. Could you just talk, flesh out a little bit about the underlying competitive dynamic, other factors that are causing this, that are driving behind the success that you’ve had and how you see that going forward.

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Sure, let me just talk. Hi, Moshe, how are you doing? I will talk about the competitive environment for a minute. Then Jenny may want to add. You know, the competitive environment remains quite constructive for us. As you mentioned, we’ve had nice origination growth despite continuing to have very tight credit box. I think you can look at our pricing, so we’re able to take some price, which shows that our offers are quite competitive, and 60% of our originations are in our higher risk grades, which is usually where there’s more competition and we seem to be getting our fair share. I think in general there are a lot of competitors out there, especially for unsecured loans. You know, half our loans are secured with an auto, not very separate from our auto finance business. It’s a competitive market and we have to earn our customers’ trust.

There’s a lot of capital available. At different times in the market, if the capital markets are tight, competitors sometimes can’t get access to capital, can’t get it at a rate they want, so can’t loan. I think there’s abundance of capital, so that’s not a constraint on the competitive environment. We feel quite good about our positioning. We’ve got loyal customers, we have this expanded product set, we’re making the kinds of enhancements I talked about around product and customer experience. The competitive environment remains. There’s a lot of competition out there, but we feel good about our positioning in it.

Jenny Osterhout, Chief Financial Officer, OneMain Holdings: The only piece I’d add there is, and Doug touched on this, but really it’s high quality originations growth, which we like. It starts with credit. Who are you underwriting and our ability to do that while maintaining a pretty tight credit appetite is very good. To be able to do that also while having good pricing, I think is another piece that is very good. The growth is really the outcome of our choices there. I think we’re quite happy with where it stands.

Got it.

As a follow up, and maybe kind of dovetailed with that a little bit, you know, Jenny, you kind of alluded to a couple of times the strong, stronger capital generation. You know, obviously we see that you bought back, you know, some stock even, you know, kind of at the higher, closer to the higher end of your leverage target. Maybe just talk a little bit about how you think about kind of deploying that in the next six to 12 months in terms of having that stronger capital generation and relatively constructive environment from a loan growth perspective.

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Let me take this on our capital generation and our capital allocation policy. You know, we’ve been quite consistent for many years. First, use of capital is building a great business and investing in our products, our people, our digital capabilities, our data science, and putting money, you know, putting our capital into every loan that meets our risk return criteria. Second is our dividend, and we have about a 7% yield now. It’s a strong dividend. It’s part of the value proposition we have to shareholders. After that, we will use our capital in a discretionary manner where we think it has the highest return to shareholders. There’s going to be more excess capital. I think you’ve seen that as capital generation goes up. You’ve seen quarter over quarter, higher share repurchases. You’ve now seen year over year already higher share repurchases.

We could use that for more share repurchases. We could use that for something strategic. That’s kind of how we think about it.

Thanks very much.

Operator: Thank you. Next, we’ll go to Terry Ma with Barclays. Please go ahead.

Hey, thank you. Good morning. Maybe a question for you, Doug. You kind of called out the credit card portfolio should kind of mature and eventually kind of reach the same return or receivables as the personal lending business. I guess, one, any sense on kind of timing of when that happens? Then, as you kind of get to that point, how do you.

Think about sizing that business and kind of growth going forward.

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Yeah, look, we’re not giving any, like, forward guidance on card per se, but let me tell you how I think about it, which is, you know, over time the card yields will remain above 30%. They’re already above 30%.

They.

Will move up and down a little bit, but in general we’re confident they’re going to be above 30%. Losses are kind of in the mid teens. It’s lower actual operating expense because it’s a digital product and without needing the branch infrastructure to do it. If you add all of those things up, you get to a similar capital generation return on receivables. We’re really not chasing growth in card. We’re being quite measured and right now we’re kind of perfecting the product, making sure we feel really good about the cards we put on our book. When you’re in the early stages you have higher unit costs and then over time those unit costs go down. They go down just by the nature of more receivables against a fixed cost base. They also were actively working to drive those down.

Every year they’re going down some and then we will ramp it as appropriate. We’ve actually been quite conservative. I mean we’ve been at this four years and we still have under $1 billion of receivables. During that time we had a non-prime consumer economic cycle and we’re in no rush. We think this is a great product. We now have a bunch of customers. We have almost a million customers. We’re seeing some really nice results from our test of cross-selling from people who have cards to loans. We’re just going to keep the pace as appropriate. At some point we probably will accelerate growth, but we’re not at that point now.

Got it. Super helpful. As a follow up just on the recently passed one big beautiful bill, you kind of also called out reduction of taxes on tips and overtime and also the expanded credits. Any idea how much, what % of the portfolio this would kind of benefit or your borrower base? Thank you.

Yeah, first of all, I want to be really clear. My comments were that some of the provisions could help some of our customers. We are not baking anything in to our internal projections or our guidance or anything around the bill. I want to be really clear about that. Just to dimension it, if you look at a bunch of industry segments, health care, manufacturing, construction, and then you add retail and hospitality, that is around 40 to 50% of our portfolio. Those are likely places that either have overtime or tips. The question is, how much of an impact is it going to be? How much are they going to save and is it really going to affect payment patterns at all? I think it’s TBD and way too early. There are some other provisions like child care benefits, child tax credits that generally could help our customers.

That’s the dimension of it. I mentioned it because it could be a net positive, but it’s not something we baked in.

Got it.

Thank you.

Operator: Our next question comes from Mark Devries with Deutsche Bank. Please go ahead.

Yeah, thanks. With the front book now, you know, 90% of the portfolio and the back book down to 24%, how much longer should we kind of expect this year over year in improvement in credit to persist? In other words, how much longer do we kind of have this tailwind?

Jenny Osterhout, Chief Financial Officer, OneMain Holdings: Thanks, I’ll take that. I think overall in terms it’s hard for me to give you exactly a sense of how long we will continue to see it. I think we really like what we’re seeing and we’re really liking the trends. We’re the 30 to 89 being down 8 basis points compared to last year and that 30+ down 29 basis points compared to last year. I think we really like this direction of travel. The quarter over quarter improvement may vary some, but we’re really liking where we’re going. We’re also seeing better later stage roll rates, which leads to better loss outcomes. I think generally we’re feeling quite good about this. I don’t know that I can give you a specific moment when we’ll get back to a place where year over year we’re not coming down.

Okay, fair enough. I just wanted to clarify my understanding of, I think, Jenny, in your prepared comments calling out kind of a moderation of growth in the back half of the year, at least relative to the first half trend. Is that attributable more to just tougher comps or are you pulling back a little bit on credit?

If I look at our originations growth last quarter, our originations growth was 20%, and if you look at that organically, it was 13%. This quarter we were at a 9% growth in originations. I think what you’re seeing is we’ve been very focused on growth outcomes while maintaining our credit box, and we’ve been doing that for about a year. I do think you’re starting to lap some of those initiatives, and you’ll see that with some of the moderation in the origination growth. We’re very pleased with where we are and sticking to our guidance of that 5 to 8% receivables growth for the year. That should give you a sense of where we’re expecting to land.

Got it. Thank you.

Operator: Our next question comes from John Hecht with Jefferies. Please go ahead.

Thank you very much for taking my questions. Just a couple things, touching on the credit side of the business, it looks like payment rates accelerated a little bit in the quarter. I’m wondering if there’s anything to take away from that, and then tag onto that is any impact from the student loan repayment update in terms of reporting and requirements.

Jenny Osterhout, Chief Financial Officer, OneMain Holdings: Thanks, I’ll take that. I’d say in terms of payments, I don’t think we see anything particularly unusual on payments I’ve mentioned before, but we are seeing good trajectory on delinquency. What you see there is, customers are going delinquent but seem to be able to then make a payment after falling delinquent. That’s a phenomenon we’ve seen for a while. I don’t know that I’d call it a trend yet. That’s just one interesting piece here to move to your question. On student loans, we monitor the whole portfolio very closely and we’ve been highly focused on this since that deferral period ended in October of 2023.

It’s been a while since the Fed collections action started in May, we have not noted any significant difference in the performance of the segment of the portfolio that has a student loan compared to the segment of the portfolio without a student loan. Just one other piece to mention on this is that many of our customers are current on their student loans and many are also still in deferred status. It’s clearly something that we’ll be watching and closely monitor versus our other population.

Okay, Jenny, thank you. Doug, just, you know, maybe your updated thoughts on the branch network versus the online channel. I mean, I know the branch network’s important from a servicing and customer interaction perspective, but where are you now kind of on this journey of becoming more digital? How does that impact your thinking about the branch network?

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Yeah, look, we view that we’re going to be able to serve our customers across multiple channels: in person, on the phone, and online or on a mobile app. We’re always working to optimize exactly which of these channels, it’s a combination, is most value added to our customers and our business model and then where customer preference is. Our real focus with the branch network is our customers really like having personalized service, someone to talk to, someone to help think about managing their debt, getting them into the right size loan, thinking about a loan consolidation and paying off credit cards and getting into a single monthly payment. They also really like if they have a hiccup in their life, you know, one spouse loses a job or they’re between jobs, that they have someone to call and we will work with them.

The value added is the customer interactions that our branch team members have, and our branch managers have average tenure, 10 years, 15 years. They really know their customer base and they know how to work with this customer. What we’re always trying to do is free our branch team members up to do value added work. A lot of what we put into the app is make a payment, change your payment date, forgot my password, check my balance. We continually made that easier and gotten more and more people to use the app for that. We’ve also supplemented our branches with our central call center if there’s overflowing collection or a branch is busy booking loans and they need to have some help.

A lot of what we’re doing is optimizing the work for maximum efficiency for us, maximum efficiency for our customers, and making sure our branches are focused on engaging with customers, which customers really like.

Operator: We’ll take our next question from Rick.

Thank you so much.

We’ll take our next question from Rick Shane with JPMorgan.

Hey, good morning everybody. You’ve done a good job sort of laying out the case on credit, of dilution of the back book, tightening of credit on the front book. The one factor that’s probably a little bit harder for us to understand is what’s really going on from a macro perspective. If you were to look at cohorts on a like-for-like basis on credit category, are you seeing your consumer stable, improving, deteriorating just to give us a sense of where we are in that cycle?

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: Yeah, look, our consumer has been quite stable. I’d say for over a year now. As you know, there was deterioration in 2022 and into 2023. I think like for like, we’re booking better quality credit than we did if you go way back pre-pandemic, and we’re managing the book to be about the same. We’ve got tools in our toolkit that allow us to kind of manage who we put on the book. I do think overall the non-prime consumer has been stable. I don’t think they’ve seen their economic situation get wildly better. It also hasn’t gotten worse. It’s been stable the last 12 to 18 months. I think what you’ve seen us do is carefully manage the business, so our numbers have continued to get better, and we know how to kind of manage within any sort of economic environment to drive positive capital generation. Got it.

If we were to go back to 2022 in the April to August time frame where credit shifted rapidly, that was obviously triggered in part by the rapid spike in gas prices. We estimate that your customer, probably their spending at the pump is high single digits of their spending. What are the inputs that you’re looking at right now to sort of measure the health of your consumer? What are you seeing? Obviously, gas prices have been a nice tailwind. What are the offsetting headwinds in terms of other expenses?

I mean, look, we were interested in macro trends and we’re all over them. We understand whether it’s food or housing or transportation costs, we watch that. The real inputs we look at is each customer that comes in, do they have a job? Don’t they? How much do they make? How much do they spend? What’s their net disposable income, what’s their debt load and can they afford, you know, what can they afford to, take a loan from us and if so, what is the price? The main input is customer by customer. I think in a macro setting, I do think, and to your earlier question, wages in aggregate have, you know, over about a year ago caught up with inflation in aggregate. Our customers now have more net disposable income than they did, you know, before all of this down cycle and even really before pre-pandemic.

We underwrite to net disposable income. I mean we obviously have, you know, we have a thousand factors that go into our models, but it’s relatively straightforward. How much do you make, how much do you spend, how much is left over and can you afford the loan that we’re putting you into?

Look, I appreciate that, the simple description of it. It’s funny, sometimes we lose sight of that and you guys probably don’t appreciate that as outsiders, it’s hard to sort of appreciate that. So thank you very much. Sure.

Operator: Our next question comes from David Scharf with Citizens Capital Markets. Please go ahead.

All right, great. Thanks for taking my question. Squeezing me in here, Doug. I actually wanted to just revisit, I think it was the very first question on just the competitive environment. We’ve been seeing pretty much across the board this reporting season so far, credit related beats, so obviously all lenders and not necessarily direct competitors to OneMain. I mean it’s a variety of asset classes, but credit’s clearly been performing or outperforming for most, and I assume that also is the case for many of your private competitors. Private credit’s been flowing freely, as you noted. Are there any either early signs of more price competition, or I’m wondering if past cycles are indicative of maybe how many quarters it is before you start to see competitors become much more aggressive on pricing?

You mentioned it’s constructive right now, but can you provide a little more color on kind of what you’re seeing on the margin?

Doug Shulman, Chairman and Chief Executive Officer, OneMain Holdings: You know, look, having been through, I mean, in late 2021 and early 2022, as people were feeling more comfortable from the pandemic, competitors flooded into the market. We watched it and we actually watched competitors take a little bit of share at that time. We stuck to our knitting and we have a credit box and we have our product and we have our marketing and we have our customer experience. We work on that every day to make it better and more refined and more specific and more granular, and whatever we can book, we book within those parameters. We actually don’t get too, too fussed about if the numbers go up a little bit and go down a little bit. I’ve talked about it before as growth is an output.

I think some of the places where there’s more price competition, like a Credit Karma or a LendingTree, some of the aggregators, we’re seeing plenty of competition. Some of the competitors that got burned in 2022 trying to manage non prime credit and didn’t have the expertise we had have come back in but haven’t come as far into non prime. There is more competition at the, you know, call it 660 and above FICO than there is 660 and below. We track very carefully with the data we can get our hands on originations, volume, product. As I mentioned before, plenty of competition in the market right now, but we feel good about the fair share we’re getting. As a management team, we always check any impulse to get too fussed any given quarter about if origination growth is exactly someplace.

Instead, we just stick to our discipline, have a great value proposition to our customer, and we’re pretty confident that we do this very well for the non prime consumer.

Got it. No, that’s very helpful. Color and maybe just a quick follow-up on the auto side. I mean it’s been a year since the Foursight acquisition closed. I know you gave some kind of growth metrics around originations and rooftops, but more specifically, can you provide just some of maybe your observations about the franchise business in particular, how you know, just how it’s performed relative to your expectations a year ago either in terms of penetration of franchise rooftops and the traction you’ve gained within F&I managers.

Yeah, look, we actually looked long and hard and debated whether we were going to build it ourselves. We found Foursight, which we think was a best-in-class auto lender. They actually had a very good sales team, they had very good technology, which have converted our whole auto business onto, which includes a portal for the dealers, and we’ve grown that nicely. I mentioned that active dealers are up, and we’ve seen active dealers up. I think Foursight, for a very small auto lender, was very good at competing head to head with the bigger auto lenders inside franchise dealers. Our growth has been in both franchise and independent dealers over time.

I think you probably know in the auto business the dealer wants a good price for their customer, and they want fast execution so they can move cars and free up their showroom and their F&I dealer to move to the next customer. Foursight does a decision in under 15 seconds. For franchise dealers, they’re bigger auto loans, they’re usually higher credit quality customer. We’ve been really pleased with it, and we’re kind of growing it commensurate with the rest of our business. Again, we put the same discipline of a stress, we’re assuming we put a 30% extra stress on our underwriting models so that we’ve maintained a conservative credit posture even in our auto business. Sure. We’re up against the hour. Thank you all very much for joining the call.

If we didn’t get to your question, our IR team is happy to engage, and we look forward to seeing everybody during this quarter and on next quarter’s call. Thank you very much.

Operator: Thank you. This does conclude today’s OneMain Holdings Inc. second quarter 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.

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