OneMain Holdings' Q3 2025: Contradictions Emerge on Nonprime Consumer Stability, Credit Card Performance, and ILC Strategy

Date of Call: October 31, 2025

Financials Results

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

Guidance:

• Managed receivables growth expected 6%–8% for full year 2025.
• Total revenue growth expected approximately 9% for full year 2025.
• C&I net charge-offs expected between 7.5% and 7.8% for 2025.
• Operating expense ratio expected to be ~6.6% for the year.
• Expect originations growth to increase to high single digits in Q4.
• PB&C expense expected in the low ~$50M range per quarter.
• Capital generation in 2025 expected to significantly exceed 2024.

Business Commentary:

* Capital Generation and Revenue Growth: - OneMain Financial reported capital generation of $272 million for Q3 2025, up 29% year-over-year. - The company's total revenue grew 9%, with receivables increasing by 6% year-over-year. - This growth was driven by expanded use of granular data and analytics in customer underwriting and innovations in product offerings, leading to increased originations.

• Credit Performance and Charge-off Improvements:
• Consumer loan net charge-offs were 6.7%, down 66 basis points year-over-year, while C&I net charge-offs were 7.0%, down 51 basis points.

• The improvement in net charge-offs reflects careful management of the portfolio and strong performance of recent vintages, aligning with a conservative underwriting posture.

• Credit Card and Auto Finance Expansion:

• OneMain ended the quarter with $834 million in credit card receivables, passing 1 million credit card customers for the first time.
• The auto finance business reached over $2.7 billion in receivables, up approximately $100 million from the previous quarter.

• The expansion in these areas is attributed to strategic initiatives and new product offerings that complement the traditional personal loan franchise, enhancing customer relationships.

• Strong Balance Sheet and Funding:

• The company issued $1.6 billion in unsecured bonds, demonstrating access to diversified capital sources and a strong balance sheet.
• Forward flow agreements were expanded, providing further funding and capital options.
• This strength allows OneMain to manage its balance sheet conservatively and takes advantage of attractive market conditions for issuances.

Sentiment Analysis:

Overall Tone: Positive

• "We're really pleased with our results this quarter." Capital generation was $272 million, up 29% year-over-year; "total revenue grew 9%"; management highlighted improving credit trends (30+ delinquency down 16 bps YOY) and tightened guidance upward for revenue—all supporting a positive tone.

Q&A:

• Question from Terry Ma (Barclays Bank PLC): So there's been a lot of chatter about the health of the nonprime consumer. Maybe some cracks showing up in auto, both of which you have exposure to. So maybe just talk about what you guys are seeing more recently. Maybe help us tie that to your commentary about higher origination growth in the fourth quarter.
  Response: Not seeing deterioration: auto performing in line, customers' net disposable income remains strong, and they continue to find origination opportunities without credit stress.

• Question from Terry Ma (Barclays Bank PLC): Great. That's super helpful. Maybe just a follow-up question on credit for Jenny. Like net charge-offs continue to improve year-over-year, delinquencies are also improving year-over-year just ex Foursight. But as I look at the magnitude of delinquency improvement ex Foursight, it's kind of moderated. So maybe like just any color on kind of what's going on there and help us think about maybe just the direction of travel kind of going forward for delinquencies.
  Response: Direction of travel is positive and in line with expectations; expect continued YOY improvement in consumer loan net charge-offs toward historical levels (below ~7%) over time.

• Question from Mark DeVries (Deutsche Bank AG): Doug, given some of your comments about the macro uncertainty and the kind of the stable consumer, where do you think you sit right now in kind of the spectrum of underwriting between tightening and loosening? And given that some of the factors, what's your kind of bias going forward in terms of which direction you'd be moving?
  Response: Maintaining a conservative underwriting posture (30% stress overlay across products); will not loosen unless vintages materially outperform and macro clarity improves.

• Question from Mark DeVries (Deutsche Bank AG): Okay. Makes sense. And just a follow-up for Jenny on funding. I think you mentioned in your prepared comments that funding costs came in lower than you expected for the year. Is this more of a product of term or spreads coming in better than you expected? And you also alluded to enhanced mature -- I mean, the flexibility, right? I think you have very low maturities anytime soon and a lot of liquidity. How are you thinking about taking advantage of that added flexibility in the funding markets?
  Response: Lower funding costs resulted from opportunistic bond issuances and refinancing (replaced 9% 2029 with 6.13% 2030 and issued 6.5% 2033), providing flexibility to opportunistically issue and manage unsecured/secured mix.

• Question from Mihir Bhatia (BofA Securities): Maybe to start just staying on the topic of buybacks or capital, I guess, you obviously upsized the buyback this quarter. Should we be -- any markers you can give us on like what kind of sizing we should be thinking about every quarter? Like what are you trying to solve for? Is there a capital -- like what can we look at? Is it just distributing net income? Is it capital? What payout ratio? What is the target internally that we should be thinking about?
  Response: Capital waterfall: lend to ROE thresholds, invest in business, pay dividend, then buybacks/strategic uses; Board authorized $1B repurchase through 2028—buybacks expected to increase but no set quarterly target.

• Question from Mihir Bhatia (BofA Securities): Fair enough. Maybe switching a little bit just on gain on sale. You've had a nice step-up this year. I think you in your prepared remarks, you talked about further increasing the forward flow. Should we expect another step-up in '26 as that forward flow comes in? And maybe also just take the opportunity to talk about private credit. How does that compare with your traditional channels today? Any desire to expand forward flows further and leverage the demand from private capital? Like give us a peek under the hood in terms of the hold versus distribute equation.
  Response: Forward-flow whole loan sales were increased with attractive economics; private-credit/forward-flow evaluated as additive for funding flexibility; gain on sale was ~$17M this quarter and will modestly help total revenue and servicing fee revenue.

• Question from Moshe Orenbuch (TD Cowen): Great. And it's very encouraging to see the increase in your guidance for originations and loan growth. And can you just talk a little bit about the competitive environment, the pricing environment? And if it's not too much to also say that if -- how would those -- how would your efforts be enhanced if your ILC charter is approved?
  Response: Competitive environment is constructive—originations up 10% YTD while maintaining >60% in top two risk grades; ILC would be accretive by adding deposit funding and direct card-booking but is not required to execute strategy.

• Question from Donald Fandetti (Wells Fargo Securities): Doug, I was curious to get your perspective. I mean there's been a lot of volatility in ABS markets. And I just want to get your thoughts on how you think those markets are going to hold up in terms of access and if you think there'll be tiering for kind of seasoned issuers such as OneMain?
  Response: Confident in ABS access due to a long-standing, disciplined program and strong reputation—expect continued ability to securitize when needed.

• Question from Kyle Joseph (Stephens Inc.): Just wondering if you're seeing any impacts from the government shutdown and if this had any impact on the outlook for this year?
  Response: No material impact or change to outlook; government-worker exposure is a very small portion of the book.

• Question from Kyle Joseph (Stephens Inc.): Got it. And then just one follow-up for me. Yes, given all the volatility in auto, I know you guys highlighted that you're seeing stability in your portfolio. So is that something -- are you seeing kind of a competitive advantage in that? Is that an opportunity? Are you getting more aggressive in terms of deploying capital there? Or is it one of those things where there is a lot of volatility and you're shying away or just kind of unchanged overall?
  Response: Auto approach unchanged: still a small, growing business pursued with disciplined underwriting and measured dealer expansion—scaling carefully.

• Question from John Pancari (Evercore ISI): On the -- back to the origination front on your high single-digit expectation for the fourth quarter, I know you indicated that you're not necessarily unwinding or loosening standards here and your -- it sounds like you're not yet taking a more active pricing posture or anything. So can you maybe give us a little bit more of a detail around what changed here in terms of your expectation for originations to leg up a bit in terms of the pace of growth for the fourth quarter as you look at it?
  Response: Q4 originations bump is from iterative product and channel improvements—targeted pricing/loan-size tweaks, reduced friction (renewals), new data sources, and product innovations like simplified debt consolidation.

• Question from John Pancari (Evercore ISI): Yes. Got it. And then separately, just given the very favorable capital generation that you cited and your expectation for buybacks to leg up a bit, how do you -- any change in how you're looking at M&A opportunities, specifically as you look at still growing the card business? And then on the auto side, is there -- or even outside of that, are there opportunities you see out there that could present from an inorganic point of view?
  Response: Open to selective M&A only if strategically and financially accretive to core franchises (personal loan, card, auto, data/tech); historically very selective and evaluates many opportunities.

• Question from Vincent Caintic (BTIG, LLC): First question, just kind of a follow-up on the 2025 net charge-off guidance. You've had really good credit results this year, both delinquencies and losses. The 2025 guide being unchanged, it kind of does imply a very wide fourth quarter range. So I'm just wondering if you're seeing anything that maybe gives you uncertainty for fourth quarter? And if you could describe that would get you to the low end and the high end of the range?
  Response: NCO guidance tightened to 7.5%–7.8%; management will monitor roll-to-loss metrics monthly—improvement aided by digital outreach and stronger recoveries, but they remain prudent given seasonality and portfolio mix.

• Question from Vincent Caintic (BTIG, LLC): Okay. Great. That makes sense. And then if you could update us on your kind of long-term thoughts on capital generation. It was nice to see the share repurchases, which, to your point, indicates your confidence in OneMain's capital generation. So just wanted to update, is $12.50 a share of capital generation is still a good bogey for 2028? And what are the factors that get you there? And does that $12.50, if that's still the right bogey, does that rely on the bank charter?
  Response: The $12.50 per-share capital generation remains the long-term 'North Star' (no fixed timeline); a bank charter would be accretive but is not required to reach that target.

Contradiction Point 1

Nonprime Consumer Stability and Health

It highlights differing perspectives on the stability and health of the nonprime consumer base, which is crucial for assessing the company's risk profile and growth prospects.

What are your observations on the financial health of nonprime consumers, particularly in the auto sector, and how does this impact your expectations for higher originations in Q4? - Terry Ma (Barclays Bank PLC)

2025Q3: We are not seeing negative trends in our auto credit. Our customers are stable, with strong net disposable income. The nonprime consumer has been stable for 18 months, with unemployment up slightly but still low, wages stable, and savings holding. - Douglas Shulman (CEO)

How is the macroeconomic health of your consumer base? - Richard Barry Shane (JPMorgan Chase & Co)

2025Q2: Our nonprime consumer has been stable, with no deterioration since mid-2023. We manage our credit box to maintain stability. - Douglas Shulman (CEO)

Contradiction Point 2

Credit Card Return on Receivables

It involves differing expectations regarding the performance of the credit card business, which could impact the company's overall revenue and profitability targets.

Can you discuss the competitive landscape and expectations for the ILC charter? - Moshe Orenbuch (TD Cowen)

2025Q3: Our credit card business is growing, and over time, it will likely achieve a similar capital generation return on receivables. - Douglas Shulman (CEO)

What are the competitive dynamics and factors driving growth in originations and your success? - Moshe Ari Orenbuch (TD Cowen)

2025Q2: Our credit card business is growing, and over time, it will likely achieve a similar capital generation return on receivables. - Douglas Shulman (CEO)

Contradiction Point 3

Customer Health and Economic Uncertainty

It involves the company's assessment of the health of its customer base and the impact of macroeconomic uncertainties, which are crucial for understanding its risk management and strategic direction.

How is the nonprime consumer segment performing, particularly in the auto sector, and how does this impact your expectation for higher originations in Q4? - Terry Ma (Barclays Bank PLC)

2025Q3: We are not seeing negative trends in our auto credit. Our customers are stable, with strong net disposable income. The nonprime consumer has been stable for 18 months, with unemployment up slightly but still low, wages stable, and savings holding. - Douglas Shulman (CEO)

With strong credit trends, how will the reserve ratio evolve this year assuming economic uncertainty doesn't lead to a weaker economy? - Mark DeVries (Deutsche Bank AG)

2025Q1: Given the macroeconomic uncertainties, we're adjusting our macro overlay. The reserve ratio may increase due to product mix, but overall, we're waiting to see how the economic situation evolves before making further decisions on reserves. - Jenny Osterhout (CFO)

Contradiction Point 4

Credit Card Performance and Strategy

It involves the company's assessment of its credit card performance and strategic direction, which are critical for understanding its financial outlook and risk management.

Can you discuss the competitive landscape and expectations for the ILC charter? - Moshe Orenbuch (TD Cowen)

2025Q3: The credit card charge-off rate was 19.8%, better than expected. Seasonally, it is higher in the first half, but the book is small and seasoning. We expect losses to stabilize around 15% to 17% long-term, providing good returns. - Jenny Osterhout (CFO)

Would the ILC route all originations through the bank, bypassing state laws, if approved? - Michael Kaye (Wells Fargo)

2025Q1: The credit card net charge-off rate is high. Are you comfortable with the credit performance? - Michael Kaye (Wells Fargo)

Contradiction Point 5

ILC Charter and Strategic Benefits

It involves the company's strategy regarding the ILC charter and its potential benefits, which are crucial for assessing its strategic direction and future growth.

How do you view the competitive landscape and expectations regarding the ILC charter? - Moshe Orenbuch (TD Cowen)

2025Q3: The ILC, if approved, would complement our strategy, driving extra capital generation. It would allow a unified nationwide rate structure, enabling us to reach customers in states where our current rate caps prevent serving high-risk individuals. - Douglas Shulman (CEO)

What are the benefits of the ILC (Industrial Loan Company)? How would it expand market access and simplify operations? - Moshe Orenbuch (TD Cowen)

2025Q1: It would help unify our rate structure, simplify operations, access deposit funding, and serve more customers responsibly. We're not trying to evade usury laws, and our rates won't increase beyond the max rate we already cap at 36%. - Doug Shulman (CEO)