OneMain Holdings' Q3 2025: Contradictions Emerge on Credit Underwriting, Originations Growth, Delinquency Trends, and ILC Impact

Date of Call: October 31, 2025

Financials Results

• Revenue: $1.6B, up 9% year-over-year
• EPS: GAAP: $1.67 per diluted share, up 27% YOY; C&I adjusted: $1.90 per diluted share, up 51% YOY

Guidance:

• Full-year 2025 managed receivables growth: 6% to 8% (narrowed to the higher end of prior range)
• Full-year total revenue growth: ~9% (above prior 6%–8% guidance)
• C&I net charge-offs expected: 7.5% to 7.8%
• Operating expense ratio: ~6.6% for the year
• Capital generation expected to significantly exceed 2024

Business Commentary:

• Strong Financial Performance and Capital Generation:
• OneMain Holdings reported capital generation of $272 million for Q3 2025, up 29% year-over-year.

• The growth was driven by increased revenue, disciplined credit management, and strategic investments in product innovation and digital capabilities.

• Revenue and Credit Metrics Improvement:

• Total revenue for Q3 was $1.6 billion, up 9% year-over-year, with managed receivables growing by 6%.

• This was supported by positive credit trends, including a 5.41% 30-plus delinquency rate, down 16 basis points year-over-year.

• Credit Card and Auto Finance Expansion:

• The credit card business ended the quarter with $834 million in receivables, and the auto finance portfolio reached over $2.7 billion.

• The expansion was driven by new data sources and customer experience enhancements, allowing for increased eligible customers without added risk.

• Funding and Balance Sheet Strength:

• OneMain issued unsecured bonds totaling $1.6 billion in Q3, demonstrating strong demand and a 54% secured funding mix.
• The company's balance sheet strength was enhanced by refinancing and reducing funding costs, contributing to its competitive advantage.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly stated strong results: "we're really pleased with our results" and "excellent growth in capital generation." Key metrics cited: capital generation $272M, up 29% YoY; total revenue +9% YoY; C&I adjusted EPS $1.90, +51% YoY. They raised the dividend, authorized a $1B buyback and highlighted improved credit trends and funding execution.

Q&A:

• Question from Terry Ma (Barclays): There's chatter about the health of the nonprime consumer and cracks in auto — what are you seeing recently and how does that tie to your commentary about higher origination growth in Q4?
  Response: Auto and nonprime customers are holding up; auto portfolio performing in line with expectations and underwriting focuses on net disposable income, so management sees opportunity and no current deterioration.

• Question from Terry Ma (Barclays): Net charge-offs and delinquencies improving YOY ex Foursight but delinquency improvement has moderated — any color and direction of travel going forward for delinquencies?
  Response: Direction of travel is positive; delinquencies are in line with expectations and management expects continued YOY improvement in consumer loan net charge-offs toward historical sub-7% levels over time.

• Question from Mark DeVries (Deutsche Bank): Where do you sit on underwriting between tightening and loosening and what's your bias going forward?
  Response: Maintain a conservative underwriting posture with a 30% stress overlay across products; no loosening planned—growth pursued via targeted innovation rather than taking more risk.

• Question from Mark DeVries (Deutsche Bank): Funding costs came in lower than expected — was that term or spreads and how will you use added flexibility?
  Response: Lower funding costs driven by proactive liability management (redeemed 9% 2029 bond using a $750M 6.13% 2030 issue and a $800M 6.5% 2033 issue); flexibility from light near-term maturities and ability to optimize unsecured vs secured funding.

• Question from Mihir Bhatia (BofA): With the upsized buyback, any markers on quarterly sizing or internal payout targets we should model?
  Response: Capital allocation waterfall: lend to return thresholds, invest in the business, maintain dividend, then buybacks/strategic uses; board authorized $1B repurchase through 2028 and buybacks are expected to increase but no quarterly targets provided.

• Question from Mihir Bhatia (BofA): Gain on sale step-up and forward flow/private credit — should we expect more sale gains in '26 and will you expand forward flows/private capital?
  Response: Expanded forward-flow whole loan program with attractive economics (increased monthly commitments); gain on sale contribution modest ($17M this quarter); private credit is an additive, opportunistic funding channel evaluated alongside public markets with focus on total revenue impact.

• Question from Moshe Orenbuch (TD Cowen): Competitive and pricing environment and how would an ILC charter enhance efforts?
  Response: Competitive environment is constructive; pricing has held and >60% of bookings are top two risk grades; an ILC would be accretive—allowing deposit funding, direct card issuance and broader customer reach.

• Question from Donald Fandetti (Wells Fargo): ABS market volatility — how will access hold up and will there be tiering for seasoned issuers like OneMain?
  Response: Management confident in continued ABS access due to a long-established program and strong market reputation; expect ability to access ABS when needed.

• Question from Kyle Joseph (Stephens): Any impacts from the government shutdown on outlook?
  Response: No material impact; government employee exposure is a very small portion of the book and not affecting outlook.

• Question from Kyle Joseph (Stephens): Given auto volatility, are you becoming more aggressive deploying capital into auto or changing strategy?
  Response: Unchanged — auto is a small, growing business being paced conservatively while scaling dealer relationships and maturing models; management sees opportunity but remains disciplined.

• Question from John Pancari (Evercore ISI): What specifically is driving the expected uplift to high single-digit originations in Q4?
  Response: Origination growth driven by product and process innovations (debt consolidation product, streamlined renewals), new data sources and channel expansion rather than loosening underwriting or material price moves.

• Question from John Pancari (Evercore ISI): Any change in M&A appetite given stronger capital generation, especially to grow cards or auto?
  Response: M&A is evaluated selectively for strategic accelerators; management reviews many opportunities but only pursues deals that are strategic, accretive and fit the company's risk/reputation profile.

• Question from Vincent Caintic (BTIG): The unchanged 2025 NCO guide implies wide Q4 range — what creates uncertainty between low and high end of the range?
  Response: Primary uncertainties are roll-to-loss behavior and recoveries; management narrowed guide earlier and will monitor monthly, noting digital servicing and recovery improvements support better outcomes.

• Question from Vincent Caintic (BTIG): Is $12.50 per-share capital generation still the long-term bogey and does it rely on a bank charter?
  Response: $12.50 remains the North Star goal (no specific date); a bank charter would be accretive but is not required to achieve that target.

Contradiction Point 1

Credit Underwriting Stance

It directly impacts the quality of loans and risk management, affecting future financial performance and investor expectations.

With macroeconomic uncertainties and stable consumer demand, is OneMain tightening or loosening its underwriting stance? - Mark DeVries (Deutsche Bank AG)

2025Q3: We have maintained a conservative underwriting stance for years, with a 30% stress overlay on credit boxes. We're seeing stable macroeconomic conditions, and our underwriting process continues to be cautious. - Douglas Shulman(CEO)

What factors are driving success in originations, and how will these trends impact future growth? - Moshe Ari Orenbuch (TD Cowen)

2025Q2: We are very disciplined about the credit boxes we underwrite, and we don't believe that we need to tighten credit quality at this point. - Jeannette E. Osterhout(CFO)

Contradiction Point 2

Originations Growth Expectations

It involves changes in financial forecasts, specifically regarding originations growth expectations, which are critical for revenue projections and company growth.

Why are originations expected to increase, and how will the competitive and pricing environments change? - Moshe Orenbuch (TD Cowen)

2025Q3: We expect to end the year with originations growth in the higher end of our previously guided range of 5% to 8%. - Jenny Osterhout(CFO)

Why has growth in originations moderated in the second half of the year? - Mark DeVries (Deutsche Bank)

2025Q2: We remain comfortable with our full-year managed receivables growth guidance of 5% to 8%. - Jeannette E. Osterhout(CFO)

Contradiction Point 3

Delinquency Trends and Expectations

It involves differing expectations regarding the trends in delinquencies and net charge-offs, which are critical for assessing the financial health of the company and its customer base.

Delinquency improvements are slowing. Can you explain this and discuss the trend of delinquencies? - Terry Ma (Barclays Bank PLC)

2025Q3: The direction of delinquencies is generally positive and in line with expectations. We anticipate continued year-over-year improvement in consumer loan net charge-offs, which are expected to return to historical ranges below 7% over time. - Jenny Osterhout(CFO)

Can you explain the improved late-stage delinquency performance and how it relates to front and back book performance? - Moshe Orenbuch (TD Cowen)

2025Q1: Current trends are reasonably strong in the early to late-stage delinquency trends across our consumer loans excluding Foursight. And the early trends in the newer auto book are showing better performance than those typical seasonal patterns, and the cards are showing improvements, not back to typical levels, but improvements. - Jenny Osterhout(CFO)

Contradiction Point 4

Impact of ILC on Market Expansion

It involves differing statements regarding the potential impact of obtaining an Industrial Loan Corporation (ILC) charter on OneMain's market expansion and customer access.

好的，我现在需要处理用户的请求，用户是一位专业的金融文章作者，需要总结并精简来自美股上市公司财报电话会议的问答环节的问题。用户特别强调要保留原意，使用简洁精准的美式英语，并且只输出简化后的问题，结尾要有问号。首先，我得仔细阅读用户提供的例子：“How would obtaining a ILC charter enhance your growth strategy?”。原问题中的“obtaining a ILC charter”可能是指获得某种许可证或特许经营权，比如工业大麻许可证（Industrial Hemp License）。用户希望简化这个问题，但必须确保不改变原意。接下来，我需要检查是否有冗余的词语。原句中的“How would...enhance”已经比较直接，但“obtaining”可以替换为更简洁的动词，比如“getting”或者“acquiring”。不过“obtaining”在正式场合可能更合适，但用户要求符合美式英语习惯，所以可能需要更口语化一些的表达。另外，要注意是否有必要全大写“ILC charter”？如果是专有名词，可能需要保持大写，但如果是普通名词，可能不需要。这里假设ILC是专有名词，所以保留大写。然后检查是否有更简洁的表达方式，比如“How would obtaining an ILC charter improve your growth strategy?”，但“enhance”和“improve”意思相近，但用户可能希望保持原词。或者是否可以简化为“How does getting an ILC charter boost your growth strategy?”，但这样改变了动词，可能不符合要求。再考虑句子的结构，原句的结构是“How would [动词短语] enhance [名词短语]?”，已经比较简洁，但或许可以进一步缩短，比如“How would an ILC charter enhance your growth strategy?”，但这样去掉了“obtaining”，可能改变了原意。因为原问题问的是“获得”这个过程如何促进增长策略，而如果直接说“an ILC charter”可能不够准确，因为问题的核心在于获得这个动作带来的影响，而不仅仅是拥有它。因此，可能最佳简化是保留“obtaining”，但替换为更简洁的动词，比如“getting”或“acquiring”。但需要确保符合美式英语习惯。例如，“How would acquiring an ILC charter enhance your growth strategy?” 或者 “How would getting an ILC charter enhance your growth strategy?”最终，用户提供的例子中的正确简化可能是“How would obtaining an ILC charter enhance your growth strategy?”，但用户给出的例子已经很简洁，可能不需要进一步修改。但用户给出的示例输出是“How would obtaining an ILC charter enhance your growth strategy?”，而原问题也是如此，所以可能用户希望保持原句，但检查是否有更简化的可能。不过根据用户提供的示例，原问题已经很简洁，所以可能用户希望保持原样，但可能用户提供的例子中“ILC”是否需要加“an”？比如“an ILC charter”是否正确。在英语中，发音以元音开头的单词前面用an，而ILC发音可能以辅音开头，所以应该是“an ILC charter”？需要确认。例如，ILC如果读作“eye-ell-see”，那么第一个音是元音，所以应该用an。所以正确的应该是“How would obtaining an ILC charter enhance your growth strategy?”但原问题中没有an，所以可能用户的问题中没有，但正确语法应该有。不过用户可能希望保持原问题的表述，即使有语法错误，因为是现场提问可能比较随意。所以可能需要保持原样，即“a ILC charter”，但正确的应该是“an ILC charter”。但用户可能希望保留原问题的表述，所以可能不需要修改，即使有语法错误。综上所述，正确的简化问题应该是“How would obtaining an ILC charter enhance your growth strategy?”，但用户提供的例子中是“a ILC charter”，可能用户希望保持原问题的用词，即使有语法错误。因此，最终输出应为用户提供的例子，但可能需要调整冠词。不过用户可能希望保持原问题中的“a ILC charter”，所以可能需要保留，尽管语法上不正确。但根据用户的要求，不改变原意，所以如果原问题中是“a”，则保留。因此，最终简化后的问题应为“How would obtaining a ILC charter enhance your growth strategy?”，但可能用户希望更符合语法，所以可能需要调整为“an ILC charter”。不过用户提供的示例输出是“How would obtaining a ILC charter enhance your growth strategy?”，所以可能用户的问题中确实是“a ILC charter”，所以需要保留。因此，最终输出应保持原问题中的冠词使用，即使语法上可能不正确，因为用户要求不改变原意。因此，正确的简化后的问题就是用户提供的示例，无需修改 - Moshe Orenbuch (TD Cowen)

2025Q3: A potential ILC charter could provide deposit funding, enabling us to access more lower-end prime customers. It could also allow us to book credit cards directly, enhancing our long-term franchise value. - Douglas Shulman(CEO)

What are the benefits of the ILC and its potential impact on market expansion? - Moshe Orenbuch (TD Cowen)

2025Q1: The ILC, if approved, would complement the strategy by providing a unified nationwide rate structure, allowing access to more customers in states with lower risk. This would simplify the operating model and provide access to deposit funding. It would also allow OneMain to use its own bank as the issuing bank for its growing credit card portfolio, without becoming a bank holding company. - Douglas Shulman(CEO)