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Good morning, everyone. Welcome to today's OneMain Holdings, Inc. Fourth Quarter 2025 Earnings Conference Call and Web Hosting. 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. The floor will be open for your questions following the presentation. Press star one on your telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. We do ask that you please limit yourself to one question and one follow-up. Please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance, please press star 0 at any time. It is now my pleasure to turn the meeting over to Mr. Peter Poillon. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us. Let me begin by directing you to Page two of the fourth 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 Holdings, Inc. 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, February 5, and have not been updated subsequent to this call. Our call this morning will include formal remarks from Douglas Shulman, our Chairman and Chief Executive Officer, and Jenny Osterhout, our Chief Financial Officer. After the conclusion of our formal remarks, we will conduct a question and answer section. I'd like to now turn the call over to Doug.

Thanks, Pete. Good morning, everyone. Thank you for joining us today. Let me start with a brief overview of the company's 2025 performance. It was an excellent year with very strong earnings growth and meaningful progress on our strategic initiatives. All of the momentum we have built over the past few years came through in our 2025 results. Full year C&I earnings per share were $6.66, an increase of 36% year over year. Capital generation was $913 million, an increase of 33%. This outstanding earnings growth was driven by significant revenue growth, accelerated loss improvement, and continued focus on efficiency. And once again, we exhibited our balance sheet strength, raising $5.9 billion in 2025. Our receivables grew 6% to over $26 billion despite maintaining a tight credit posture throughout the year. Receivables growth was supported by focused initiatives to drive more high-quality personal loan originations as well as important contributions from our auto finance and credit card businesses. Revenue grew 9%, supported by higher yields in a constructive competitive environment. C&I net charge-offs were 7.7%, down 46 basis points from 2024. And consumer loan net charge-offs came down 63 basis points from last year, benefiting from the proactive credit actions we've been taking the last several years. In 2025, we continued to make significant progress across all three of our businesses, positioning the company for continued earnings growth in 2026 and beyond. Growth in our personal loans was driven by a series of targeted initiatives. Our debt consolidation product continues to grow. This valuable product, which allows customers to consolidate debt into a single predictable amortizing loan, typically reduces the customer's payment by about 25% on the debt they consolidate. We've also used data to reduce friction and serve more customers, including automated income verification and prepopulated auto collateral before…

Thanks, Doug, and good morning, everyone. I share Doug's enthusiasm about the strong financial results achieved in 2025, as well as the notable progress made toward our long-term strategic priorities. I'll begin today by focusing on the quarter and then I'll get into expectations for 2026. Our fourth quarter results demonstrated continued improvement across our key financial metrics, highlighted by strong revenue growth, steady credit performance, and capital generation that grew 23% year over year. We continued our active management of the balance sheet this quarter, raising $1 billion in the unsecured market, bringing our total funds raised in 2025 to $5.9 billion. We also accelerated our pace of share repurchase volume in the fourth quarter. Combined with our dividend, total capital returned to shareholders increased to $639 million in 2025, up 20% from 2024. Fourth quarter GAAP net income of $204 million or $1.72 per diluted share was up 64% from $1.05 per diluted share in 2024. C&I adjusted net income of $1.59 per diluted share was up 37% from $1.16 per diluted share in 2024. Capital generation, the metric we use to manage and measure our business, totaled $225 million, up $42 million from $183 million in 2024, reflecting strong receivables growth across our products, higher portfolio yields, and good credit performance. Managed receivables finished the year at $20.3 billion, up $1.6 billion or 6% from a year ago. Fourth quarter originations were $3.6 billion, up 3% year over year, in line with recent seasonal trends. Consumer loan originations for the full year were up 8%. We are pleased with our growth trajectory. As we have laid out before, our underwriting approach remains conservative, designed to generate a minimum 20% return on tangible equity even with a stress overlay on losses. So while we continue to actively manage…

Thanks, Jenny. Let me end by saying we continue to feel great about the key drivers of our business. We're serving more customers through continued product innovation and the ongoing scaling of our auto finance and credit card businesses, positioning OneMain Holdings, Inc. as the lender of choice for hardworking Americans. We continue to manage credit carefully through an evolving macroeconomic environment, driving market-leading risk-adjusted returns. We are investing to support growth and core capabilities across products while maintaining tight expense discipline. And our industry-leading balance sheet that is highly diversified with a long liquidity runway continues to be a key competitive differentiator. I've spoken before about the enduring franchise value we have created at OneMain Holdings, Inc. We built a lot of momentum over the last several years and are excited about continuing to drive capital generation growth and build shareholder value in 2026 and beyond. I'll close by offering my thanks to all of the OneMain Holdings, Inc. team members for their great work that made 2025 such a success and for their ongoing commitment to our customers. With that, let me open it up for questions.

Thank you, Mr. Shulman. Ladies and gentlemen, the floor is now open for your questions. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we do ask that you pose your question that you pick up your handset to provide optimal sound quality. We'll go first this morning to Moshe Orenbuch of TD Cowen. Moshe, please go ahead.

Great. Thanks. I know that both you, Doug, and Jenny have talked a little bit about your outlook for credit. Doug, you had said kind of at a high level that, you know, credit continues to improve. Jenny, you had sort of said it will be a little worse than seasonal patterns in the first half of the year, a little better in the second half. I guess, is there a way to kind of tie this all together? I mean, you know, is it really just that 17% of delinquencies moving through or are there other things going on, you know, kind of as you think about your guide for, you know, for the full year losses kind of showing stability as opposed to improvement for 2026?

Thanks, Moshe. Let me chime in here. So I think part of this is 2025 was really a remarkable year. I mean, you can see that we really saw major loss benefit. We talked about this, but the C&I net charge-offs coming down 46 basis points and consumer loan losses coming down 63 basis points. They're really coming off of the 2024 higher losses. And so that's allowed us to generate a lot of capital and increase our cap gen by 33%. So we're coming down from there. And we really like what we're underwriting. So if I then take that to looking forward, we see the vintages in the front book performing in line with our expectations. I talked a little bit about some of that pressure that we see from the back book. That's the pre-August 2022 back book and how that's still outsized in terms of its contribution to delinquency and losses. And then the other piece to keep in mind for C&I is there's some impact on losses from card. In 2026, it's adding about 10 basis points more than it did in 2025, which was about 35 basis points. So we are seeing some positive trajectory there. And then I just remind you that our loans target at 20% return on equity threshold. So we do see very good profitability when we look at the risk-adjusted returns. So that guide that we gave you gives you a range. It also assumes that soft unemployment and persistent inflation we spoke about earlier. And so to the extent the macro improves, we could see some benefit there. I also want to go back to I think we see it higher in the first half and lower in the second half. I wouldn't expect for it to see worse than sequential. Just to go back to the beginning of your question.

Okay. Alright. Thanks. On a separate topic, I think it was almost a year ago that you put in the application for the ILC. Assuming that is approved, can you talk a little bit about what you're gonna be doing, what are the first steps, and what that's gonna mean for pricing and loan growth?

Yeah. You know, we applied for an ILC license. You've seen a couple have been granted this year. People who actually, you know, auto companies who had been there quite a bit before us. And as I've said before, we think we have a very strong application. We think we're qualified to be a bank. And we're progressing through the application process. You know, I think what you know, the timeline, a, I won't predict any timeline whether we'll get it or not. And you know, if we get it, when it would happen. So, the timeline would be it would take about a year to set it up. And so you know, any positive effects are probably a 2027 event, assuming you know, something happened this year. I do think it'd be accretive to the strategy. I do think we would be able to serve more customers. I think we'd have a more standardized rate, structure, operational structure nationwide. We'd have our own bank for our card business. And we'd have access to deposits, which would even further diversify our really strong balance sheet. And so you know, we have a really strong business plan that we feel great about without an ILC. This would be additive and accretive to it, and we're, you know, very positive and hopeful it'll come to pass.

Thanks very much.

Thank you. We go next now to John Hecht of Jefferies. John, please go ahead.

Good morning, and thanks for taking my questions.

Good morning, John.

Thanks very much. You talked about rolling out the new like, co-merchandise backed products. The Ally program, are those programs in, you know, on products, are there pilot periods of those or because they're different, you know, relative to, say, like, the credit card that you're gonna roll them out pretty quickly? How do we think about that?

Yeah. Look. All of our, two different things. The homeownership product is in our personal loan. Every time we roll something whether it's expanded debt consolidation, even prepopulating VINs in auto for our customers or our streamline renewals or our link to paycheck, we always pilot them and are looking to see, you know, we have certain models that say, what will it do to customer pull-through rate? How will the credit perform? How's the pricing in relationship to the credit? Because as you know, we just met we manage the risk-adjusted returns. And so for the homeowner product, we have launched we'll launch it as a pilot like we do for everything else, make sure it's performing well. And if it is performing well, we'll do a full rollout. I think the Ally partnership is just getting started. You know, that's a partnership where you know, an auto dealer sends an app you know, an auto dealer gets to choose where it sends applications. It sends one to Ally, and we're now in the pass-through, which is basically a turndown program. Ally doesn't take but we're now one of their partners in the pass-through. We started with dealers that we already had relationships with. So we already had a contract so we could book loans with. And then we're gonna be rolling it out further. So that's probably you know, I think of that as it's not a pilot, but it's at the very beginning of a partnership. And any partnership you know, you wanna roll out in a pace and responsible fashion.

Okay. And then you we all know that a debt consolidation is one of the primary, I guess, use cases of the product. I'm wondering what are other main use, I guess, drivers of demand and what do those tell you about call it, the state of your borrower?

Yeah. I mean, look. The demand's been pretty similar. About a third is usually debt consolidation where people are taking a whole bunch of other credit they have consolidating it onto a single amortizing loan, getting control of their finances, and getting, you know, as we told you, usually, you know, our average customer has about 25% decrease in their monthly payment when they do debt consolidation with us. There's always a chunk of customers and it hasn't changed a lot, who for emergency needs, you know, whether it's hot water heater breaks, or they got car repairs, or something else like that. And then there's a whole set of customers who are using it for discretionary. You know? We have customers who know, wanna pay for their granddaughter's horseback riding, or they wanna take a vacation, or they're rolling over a loan from somewhere else. And so I don't think there's any great you know, there hasn't been a lot of changes, John. And so I don't think it's stating anything new about you know, I don't think the use of funds is stating anything new about our customer right now.

Okay. Thanks for the color. Appreciate it.

Thank you. We'll go next now to Aaron Cyganovich of Truist Securities. Aaron, please go ahead.

Thank you. In terms of loan growth, the originations for the quarter year over year were 3% and total loan growth 6%, but the guide for 26% is 6% to 9%. What's some of the optimism that you're laying in there while you're still layering, you know, that 30% kind of credit overlay?

Thanks for the question. So you're right. In terms of the quarter, we saw 3%. Really, if you look at the whole year, we had 8% origination growth in 2025. All of that eight percent also had pretty tight underwriting standards. So as we look to next year, we did assume that same macro environment, and we assumed we kept those underwriting standards. It's really some of the efforts that Doug just talked about in terms of the innovation on the personal loan product. But I'd also say it's team member effectiveness. So as we look at ways to improve the productivity of our team members and help them to find things faster and be able to help customers make sure they get the right offer, look at the right offer, and how we can digitize some of that. And then there's also the efforts we've been working on in terms of our new product and their share of the book. If we look at 2025, the new products contributed about 42% of our growth. So we're expecting continued growth in the new products as well as for next year. So when you pull that all together, it's driving our expectations of that guide of six to 9% for 2026. And I just say, you know, growth is an outcome for us. We are always looking to meet those return hurdles that I mentioned before, so above the 20 return on tangible equity. And we really see opportunities next year. We work on those. We always have I like to think of it almost like R&D going. And I think really what you're seeing is the output of all those behind-the-scenes efforts that we've had going in the background this year.

Got it. Thanks. And then in terms of capital return, share repurchases were nicely higher in the quarter, and you have the larger program that you've authorized recently. Can you talk a little bit about share repurchase pace? Is that going to be up notably in 2026?

Yeah. Look, we, as I mentioned before, we're very committed to our healthy dividend. But we think, you know, unless we see another use of capital, the incremental capital generation and the excess capital are biased is towards share repurchase. You know, we never predict exactly what it'll be. You know, as we mentioned, you know, fourth quarter was double what all of 2024 was. I think you know, you can do the math on how much capital we're generating, which is a lot more than the last couple of years. In 2025, we did. And, you know, we said we think we're gonna generate more this year. Take out the dividend, the amount of capital we need for growth, for expense and in investing in the business. And so you know, our bias will make decisions, you know, on an ongoing basis. Is to put the majority of the rest of that into share repurchases.

Thank you.

Thank you. We'll go next now to Mihir Bhatia of Bank of America. Mihir, please go ahead.

Good morning. Thank you for taking my question. First question I wanted to ask. Could you start Mike, I just wanted to ask about tax refunds. You know, a lot of people are obviously calling for higher tax refunds this year. How are you thinking about tax refunds? Is that in your guide? And if I can just ask on that topic, can you just talk about the implications if you get higher refunds, if we do see higher tax refunds on your customer base, would that be, like, both on the credit and on the loan demand side if there is any, typically? Thank you.

Yep. So tax season is obviously a huge focus area for us. I mean, it's a driver of our credit performance. And drives that normal seasonality that you see where refunds typically improve delinquencies in the first quarter and drive losses down into their seasonal low in the third quarter. We don't have an expectation yet for what's going to come this tax return season. It just began. And really for us, to the extent we see those returns come in better than expected, that would bring you into the low range. So that should give you some sense sort of of where it would take us.

And then just on the loan demand, is there any loan demand side impact of

Yes. That's fair. So we do typically see in the first quarter, and some of that is driven by tax returns. I think, again, we talked about our the growth that we're expecting, and a lot of that growth being driven by new either new product innovation on the personal loan side or in our newer products in auto and credit cards, advancements that we're making there. So I'm not expecting if you saw an increase in tax return season, I'm not sure that I would expect for it to really mute growth too much.

Got it. And then if I can ask on name of really interest yield because you talked about interest expense already, Jenny. But just given the card product, some of the newer products that are coming on, anything you can give us on just how we should expect interest yields to trend this year.

So consumer loan yield today is at 22.5%. That's up about 26 basis points from last year in the fourth quarter. So, you know, and if I look at for the year for 2025 as a whole, we were up 43 basis points. So you're gonna get some benefit from those yields going up. Dependent on product mix, it's going to determine what our yields will be going forward. Auto comes with lower yields, but obviously comes also with that better credit performance. Credit. We've seen most of the gain that we've had from that increased pricing that I mentioned earlier since mid-2023. And we really like where our yields are. So I think and the risk-adjusted returns that we're generating. So I really think that the yields for the go forward, I'd expect something similar to what we have today.

Got it. Thank you for taking my questions.

Thank you. We go next now to Mark DeVries with Deutsche Bank. Mark, please go ahead.

Yes, thanks. I have a related follow-up to the last question. If you can just talk about the decision to kind of drop the revenue growth guide from your full-year guidance. It sounds like from a yield perspective, and an interest expense perspective, you expect that to be flat, so spread's kind of unchanged. Should we generally expect revenue growth to kind of track your managed receivable growth guidance? Or is there something about kind of the ramping up of the pass-through that could create a little bit more lumpiness in revenues relative to just kind of the receivables growth?

So you're right. I think we gave you all the pieces, but we didn't sort of cook it for you. So we had really strong revenue growth in this year. So that 9.3% revenue growth. And that was driven by both the portfolio growth and those improving yields I just talked about. So then if I just talk about the pieces that we've given you, and I'll take through them, but it's very similar to what you mentioned. So it's that flat yield year on year. You're basically going to see revenues rise with the asset growth. So with the 6% to 9% managed receivables. One thing to consider is we also have that whole loan sale program that I mentioned, which gives a little bit of benefit to revenues, but it's also growing to about half of the $2.4 billion in 2026. So you need to think about that and think about the on-balance sheet growth in terms of the revenue growth, and that should give you a pretty good sense of where it's going.

Okay. Got it. And then I had a separate question about the whole loan sales and how you think about that longer term. I understand that it's a nice funding diversification strategy, but to your credit, you guys have built very strong liquidity, a lot of funding flexibility. How do you think about just kind of giving up some of those returns versus just keeping them and having confidence in your ability to fund just through the unsecured markets longer term?

We think a lot about it. You're right. I mean, we see we have great access to in the public markets, I think you can really see that. Year. I mean, it was a pretty remarkable year with that $5.9 billion that we were able to raise. But we always look at opportunities. We think of the whole loan sale program as a way to provide funding flexibility. And so really, when we look at it, we're looking at the economics and the terms to make sure it makes sense for us. So I, you know, that $2.4 billion program that we have, you know, we think it has attractive pricing, and we like that diversification that it gives us for our balance sheet. And really, it's about those considerations and how it helps us meet our strategic goals and thinking about those economic trade-offs. Obviously, it gives you a little bit of higher gain on sale, and then you get the servicing income. So there's, you know, a nice diversification in having different revenue streams. But that gives you sort of some of the components for how we think about it.

The only thing I would add also is it gives us a lot of strategic optionality. We have way more demand. A lot more people would love to buy our loans. We're pretty careful about it. And as you know, Jenny mentioned, it's diversification. You know, five years or so ago, we got the pipes working, so the whole thing worked. Allows us to think about it's not what we do now, which is are there things that are unique platform can do, which is, you know, generate now a whole range of different lending products, underwrite them, you know, attract customers, and service them. Are there things we don't want on our balance sheet in the future that others might want on their balance sheet? And so in addition to being a nice, valuable, accretive piece of our current balance sheet, it also is great for strategic optionality for the franchise.

Got it. Thank you.

Thank you. We'll go next now to Rick Shane with JPMorgan. Rick, please go ahead.

Hey, thanks so much for taking my questions this morning. When we look at the charge-off rate on the credit card book, it has improved, and you guys have talked about that. And I think there really are probably three reasons why. One is fundamental improvement. The second is seasonality. And the third is denominator effect from the growth. When we think about the card book long term, what is your target loss rate? Because at the moment, yes, the actual reported net charge-off rate has come down, but the lag loss rates flatten me out a little bit. I'm curious where you think this is gonna go.

Happy to talk about that. You're right. We saw those net charge-offs improve by about 22 basis points from last year to 17.1% in the fourth quarter. We expect for those to continue to improve based on what we've seen in card delinquency performance, which I mentioned is down 83 basis points. So it gives you a little bit of a go-forward guide. And it's a step towards bringing our book into that expected long-term range, which I would say is in the 15% to 17% range. We've really been able to drive those. You mentioned some of it. But through some of that typical portfolio seasoning, but also a lot of actions that taken to improve our servicing and recovery capabilities. You know, this we ran this new product almost like a startup. So don't focus on some of those later pieces right at the very beginning. So we did find, you know, still there were areas that we could improve. And I'd just say and remember that our revenue yields on cards allows us room to be able to do that and cushions those higher losses. So overall, credit card portfolio, we think, remains quite strong. And we think we see that as a way to support our continued capital generation in the years ahead.

Got it. That's very helpful. And to follow-up on that a little bit, and capital generation is exactly what I wanted to talk about. You guys have laid out sort of the plan, and clearly, you are forming more capital than you can redeploy into the business, and you were returning it to shareholders in a very deliberate way. I am curious when you think about capital, held against your traditional consumer loans versus your growing credit card portfolio.

Levels are higher. So, our card reserve levels are around 22%. But if I look overall at our book and how we think about growing the card, I mean, we really manage capital across the business, and we're focused on being able to manage to these rich this 20% return on tangible equity hurdle. And we apply we've been talking about how we also apply additional stress, and we do that across all our products as well. So that's sort of how I would think about it. And I think we feel I mean, especially on cards, we feel like it's gonna be a great source of profitability for the future.

Got it. Okay. Thank you very much.

Folks, we are up against the hour. Let me just end by saying, you know, in 2024, we told our investor base that we'd position our business for significant earnings growth going forward. This played out in 2025, and we're now generating very healthy earnings and capital generation. Our ability to drive losses down by over the last three years, carefully managing the book and finding great customers, has been a major part of it. Despite the fact that there is persistent inflation and there was a slight uptick in unemployment, the customers on our book are performing really well. And we don't anticipate that changing this year. So we feel really good for 2026 and beyond, but especially 2026 to be another year of strong earnings and capital generation. We thank everybody for spending time with us on the call, and as always, our team's available for follow-up. So thanks, everyone, and have a great day.

Thank you, Mr. Shulman, and thank you, Ms. Osterhout. Again, ladies and gentlemen, this will conclude today's OneMain Holdings, Inc. Fourth Quarter 2025 Earnings Conference Call and Webcast. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.