OneMain Holdings Inc

SOURCES AND USES OF FUNDS

We finance the majority of our operating liquidity and capital needs through a combination of cash flows from operations, secured debt, unsecured debt, borrowings from revolving conduit facilities and credit card revolving VFN facilities, whole loan sales, and equity. We may also utilize other sources in the future. As a holding company, all of the funds generated from our operations are earned by our operating subsidiaries. Our operating subsidiaries’ primary cash needs relate to funding our lending activities, our debt service obligations, our operating expenses, payment of insurance claims, and supporting strategic initiatives.

We have previously purchased portions of our unsecured indebtedness, and we may elect to purchase additional portions of our unsecured indebtedness or securitized borrowings in the future. Future purchases may be made through the open market, privately negotiated transactions with third parties, or pursuant to one or more tender or exchange offers, all of which are subject to terms, prices, and consideration we may determine at our discretion.

During the three months ended March 31, 2024, OMH generated net income of $155 million. OMH’s net cash inflow from operating and investing activities totaled $325 million for the three months ended March 31, 2024. At March 31, 2024, our scheduled interest payments for 2024 totaled $289 million and there were no scheduled principal payments for 2024 on our existing unsecured debt. As of March 31, 2024, we had $8.3 billion of unencumbered receivables.

Based on our estimates and considering the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our businesses and repay our obligations as they become due.

OMFC’s Repurchases of Unsecured Debt

From time to time we may purchase portions of our unsecured indebtedness through the open market. During the three months ended March 31, 2024, we repurchased $139 million of our unsecured notes.

OMFC’s Unsecured Corporate Revolver

At March 31, 2024, the borrowing capacity of our corporate revolver was $1.3 billion, and no amounts were drawn.

Securitizations and Borrowings from Revolving Conduit Facilities and Credit Card Revolving VFN Facilities

During the three months ended March 31, 2024, we completed no new consumer loan securitizations and redeemed no consumer loan securitizations. During the three months ended March 31, 2024, we entered into no new revolving conduit facilities. At March 31, 2024, the borrowing capacity of our revolving conduit facilities was $6.4 billion. At March 31, 2024, we had $12.4 billion of consumer loan gross finance receivables pledged as collateral for our securitizations, revolving conduit facilities, and private secured term funding.

Subsequent to March 31, 2024, we issued $1.1 billion principal amount of notes backed by personal loans (“OMFIT 2024-1”). OMFIT 2024-1 has a revolving period of seven years, during which time no principal payments are required to be made.

During the three months ended March 31, 2024, we entered into two credit card revolving VFN facilities. At March 31, 2024, the maximum capacity of our credit card revolving VFN facilities was $300 million. At March 31, 2024, we had $117 million of credit card principal balances held in OMFCT for our credit card revolving VFN facilities.

Private Secured Term Funding

At March 31, 2024, an aggregate amount of $350 million was outstanding under the private secured term funding collateralized by our consumer loans. No principal payments are required to be made until after April 25, 2025, followed by a subsequent one-year amortization period at the expiration of which the outstanding principal amount is due and payable.

See Notes 6 and 7 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information on our long-term debt, securitization transactions, private secured term funding, revolving conduit facilities, and credit card revolving VFN facilities.

Credit Ratings

Our credit ratings impact our ability to access capital markets and our borrowing costs. Rating agencies base their ratings on numerous factors, including liquidity, capital adequacy, asset quality, quality of earnings, and the probability of systemic support. Significant changes in these factors could result in different ratings.

The table below outlines OMFC’s long-term corporate debt ratings and outlook by rating agencies:

Currently, no other entity has a corporate debt rating, though they may be rated in the future.

Stock Repurchased

During the three months ended March 31, 2024, OMH repurchased 108,685 shares of its common stock through its stock repurchase program for an aggregate total of $5 million, including commissions and fees. As of March 31, 2024, OMH held a total of 15,475,531 shares of treasury stock. To provide funding for the OMH stock repurchases, the OMFC Board of Directors authorized dividend payments in the amount of $20 million.

For additional information regarding the shares repurchased, see Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Part II included in this report.

Cash Dividend to OMH’s Common Stockholders

As of March 31, 2024, the dividend declarations for the current year by the Board were as follows:

To provide funding for the dividend, OMFC paid dividends of $118 million to OMH during the three months ended March 31, 2024.

On April 30, 2024, OMH declared a dividend of $1.04 per share payable on May 17, 2024 to record holders of OMH’s common stock as of the close of business on May 10, 2024. To provide funding for the OMH dividend, the OMFC Board of Directors authorized a dividend in the amount of up to $125 million payable on or after May 13, 2024.

While OMH intends to pay its minimum quarterly dividend, currently $1.04 per share, for the foreseeable future, all subsequent dividends will be reviewed and declared at the discretion of the Board and will depend on many factors, including our financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends, and other considerations that the Board deems relevant. OMH’s dividend payments may change from time to time, and the Board may choose not to continue to declare dividends in the future. See our “Dividend Policy” in Part II - Item 5 included in our Annual Report for further information.

Whole Loan Sale Transactions

We have whole loan sale flow agreements with third parties, with current terms of less than two years, in which we agreed to sell a remaining total of $630 million gross receivables of newly originated unsecured personal loans along with any associated accrued interest. During the three months ended March 31, 2024, we sold $110 million of gross finance receivables, compared to $180 million during the three months ended March 31, 2023. See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information on the whole loan sale transactions.

LIQUIDITY

OMH’s Operating Activities

Net cash provided by operations of $558 million for the three months ended March 31, 2024 reflected net income of $155 million, the impact of non-cash items including provision for finance receivable losses of $431 million, and an unfavorable change in working capital of $113 million. Net cash provided by operations of $562 million for the three months ended March 31, 2023 reflected net income of $179 million, the impact of non-cash items including provision for finance receivable losses of $385 million, and an unfavorable change in working capital of $66 million.

OMH’s Investing Activities

Net cash used for investing activities of $233 million for the three months ended March 31, 2024 was due to net principal originations and purchases of finance receivables and purchases of available-for-sale and other securities, partially offset by the proceeds from sales of finance receivables and calls, sales, and maturities of available-for-sale and other securities. Net cash used for investing activities of $204 million for the three months ended March 31, 2023 was primarily due to net principal originations and purchases of finance receivables, partially offset by the proceeds from sales of finance receivables.

OMH’s Financing Activities

Net cash used for financing activities of $443 million for the three months ended March 31, 2024 was primarily due to repayments and repurchases of long-term debt and cash dividends paid. Net cash used for financing activities of $242 million for the three months ended March 31, 2023 was primarily due to repayments and repurchases of long-term debt, cash dividends paid, and the cash paid to repurchase common stock, partially offset by the issuance and borrowings of long-term debt.

OMH’s Cash and Investments

At March 31, 2024, we had $831 million of cash and cash equivalents, which included $165 million of cash and cash equivalents held at our regulated insurance subsidiaries or for other operating activities that is unavailable for general corporate purposes.

At March 31, 2024, we had $1.7 billion of investment securities, which are all held as part of our insurance operations and are unavailable for general corporate purposes.

Liquidity Risks and Strategies

OMFC’s credit ratings are non-investment grade, which has a significant impact on our cost and access to capital. This, in turn, can negatively affect our ability to manage our liquidity and our ability or cost to refinance our indebtedness. There are numerous risks to our financial results, liquidity, capital raising, and debt refinancing plans, some of which may not be quantified in our current liquidity forecasts. These risks are further described in our “Liquidity and Capital Resources” of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II - Item 7 included in our Annual Report.

The principal factors that could decrease our liquidity are customer delinquencies and defaults, a decline in customer prepayments, rising interest rates, and a prolonged inability to adequately access capital market funding. We intend to support our liquidity position by utilizing strategies that are further described in our “Liquidity and Capital Resources” of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II - Item 7 included in our Annual Report. However, it is possible that the actual outcome of one or more of our plans could be materially different than expected or that one or more of our significant judgments or estimates could prove to be materially incorrect.

OUR INSURANCE SUBSIDIARIES

Our insurance subsidiaries are subject to state regulations that limit their ability to pay dividends. AHL and Triton did not pay dividends during the three months ended March 31, 2024. AHL paid an ordinary dividend to OneMain Financial Holdings, LLC of $40 million during the three months ended March 31, 2023. Triton did not pay dividends during the three months ended March 31, 2023. See Note 10 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for further information on these state restrictions and the dividends paid by our insurance subsidiaries in 2023.

OUR DEBT AGREEMENTS

The debt agreements which OMFC and its subsidiaries are a party to include customary terms and conditions, including covenants and representations and warranties. See Note 8 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for more information on the restrictive covenants under OMFC’s debt agreements, as well as the guarantees of OMFC’s long-term debt.

Securitized Borrowings

We execute private securitizations under Rule 144A of the Securities Act of 1933, as amended. As of March 31, 2024, our structured financings consisted of the following:

(a) Issue Amount includes the retained interest amounts as applicable and the Current Note Amounts Outstanding balances reflect pay-downs subsequent to note issuance and exclude retained interest amounts.

(b) Inclusive of in-process replenishments of collateral for securitized borrowings in a revolving status as of March 31, 2024.

See “Liquidity and Capital Resources - Sources and Uses of Funds - Securitizations and Borrowings from Revolving Conduit Facilities” above for information on the securitization transaction completed subsequent to March 31, 2024.

Revolving Conduit Facilities

We had access to 16 revolving conduit facilities with a total borrowing capacity of $6.4 billion as of March 31, 2024:

Credit Card Revolving VFN Facilities

We also had access to two credit card revolving VFN facilities with a total borrowing capacity of $300 million as of March 31, 2024:

OFF-BALANCE SHEET ARRANGEMENTS

We have no material off-balance sheet arrangements as defined by SEC rules, and we had no material off-balance sheet exposure to losses associated with unconsolidated VIEs at March 31, 2024 or December 31, 2023.