OneMain Holdings, Inc. - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the quarterly period ended March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from to

Commission file number

001-36129 (OneMain Holdings, Inc.)

001-06155 (OneMain Finance Corporation)

ONEMAIN HOLDINGS, INC.

ONEMAIN FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (OneMain Holdings, Inc.)

27-3379612

Indiana (OneMain Finance Corporation)

35-0416090

(State of incorporation)

(I.R.S. Employer Identification No.)

601 N.W. Second Street, Evansville, IN 47708

(Address of principal executive offices) (Zip code)

(812) 424-8031

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

OneMain Holdings, Inc.:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

OMF

New York Stock Exchange

OneMain Finance Corporation: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

OneMain Holdings, Inc. Yes ☑ No ☐

OneMain Finance Corporation Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

OneMain Holdings, Inc. Yes ☑ No ☐

OneMain Finance Corporation Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

OneMain Holdings, Inc.:

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

OneMain Finance Corporation:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

OneMain Holdings, Inc. ☐

OneMain Finance Corporation ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

OneMain Holdings, Inc. Yes ☐ No ☑

OneMain Finance Corporation Yes ☐ No ☑

At April 19, 2021, there were 134,477,096 shares of OneMain Holdings, Inc’s common stock, $0.01 par value, outstanding.

At April 19, 2021, there were 10,160,021 shares of OneMain Finance Corporation’s common stock, $0.50 par value, outstanding.

TABLE OF CONTENTS



GLOSSARY		4

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements of OneMain Holdings, Inc. and Subsidiaries (Unaudited):
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Comprehensive Income (Loss)	8
	Condensed Consolidated Statements of Shareholders’ Equity	9
	Condensed Consolidated Statements of Cash Flows	10
	Financial Statements of OneMain Finance Corporation and Subsidiaries (Unaudited):
	Condensed Consolidated Balance Sheets	11
	Condensed Consolidated Statements of Operations	12
	Condensed Consolidated Statements of Comprehensive Income (Loss)	13
	Condensed Consolidated Statements of Shareholder’s Equity	14
	Condensed Consolidated Statements of Cash Flows	15
	Notes to the Condensed Consolidated Financial Statements	16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54
	Controls and Procedures of OneMain Holdings, Inc.	54
	Controls and Procedures of OneMain Finance Corporation	54

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibit Index	56

SIGNATURES
	OneMain Holdings, Inc. Signature	57
	OneMain Finance Corporation Signature	58

Table of Contents

GLOSSARY

Terms and abbreviations used in this report are defined below.


Term or Abbreviation						Definition


30-89 Delinquency ratio						net finance receivables 30-89 days past due as a percentage of net finance receivables















ABS						asset-backed securities

Adjusted pretax income (loss)						a non-GAAP financial measure used by management as a key performance measure of our segment
AETR						annual effective tax rate
AHL						American Health and Life Insurance Company, an insurance subsidiary of OneMain Financial Holdings, LLC


Annual Report						the Annual Report on Form 10-K of OMH and OMFC for the fiscal year ended December 31, 2020, filed with the SEC on February 9, 2021
AOCI						Accumulated other comprehensive income (loss)
Apollo						Apollo Global Management, LLC and its consolidated subsidiaries
Apollo-Värde Group						an investor group led by funds managed by Apollo and Värde

ARPA						American Rescue Plan Act of 2021 signed into law on March 11, 2021
ASC						Accounting Standards Codification
ASU						Accounting Standards Update
ASU 2016-13						the accounting standard issued by FASB in June of 2016, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments
Average daily debt balance						average of debt for each day in the period
Average net receivables						average of monthly average net finance receivables (net finance receivables at the beginning and end of each month divided by two) in the period

Base Indenture						OMFC Indenture, dated as of December 3, 2014
CAA						Consolidated Appropriations Act of 2021 signed into law on December 27, 2020
CARES Act						Coronavirus Aid, Relief, and Economic Security Act signed into law on March 27, 2020
C&I						Consumer and Insurance
CDO						collateralized debt obligations




CMBS						commercial mortgage-backed securities



COVID-19						the global outbreak of a novel strain of coronavirus






Exchange Act						Securities Exchange Act of 1934, as amended
FASB						Financial Accounting Standards Board


FICO score						a credit score created by Fair Isaac Corporation




GAAP						generally accepted accounting principles in the United States of America
GAP						guaranteed asset protection

Gross charge-off ratio						annualized gross charge-offs as a percentage of average net receivables
Gross finance receivables						the unpaid principal balance of our personal loans. For precompute loans, unpaid principal balance is the gross contractual payments less the unaccreted balance of unearned finance charges

Guaranty Agreements						agreements entered into on December 30, 2013 by OMH whereby it agreed to fully and unconditionally guarantee the payments of principal, premium (if any), and interest on the Other Notes





Junior Subordinated Debenture						$350 million aggregate principal amount of 60-year junior subordinated debt issued by OMFC under an indenture dated January 22, 2007, by and between OMFC and Deutsche Bank Trust Company, as trustee, and guaranteed by OMH









Net charge-off ratio						annualized net charge-offs as a percentage of average net receivables
Net interest income						interest income less interest expense

ODART						OneMain Direct Auto Receivables Trust






OMFC						OneMain Finance Corporation (formerly Springleaf Finance Corporation)

Table of Contents


Term or Abbreviation						Definition

OMFIT						OneMain Financial Issuance Trust
OMH						OneMain Holdings, Inc.

OneMain						OneMain Financial Holdings, LLC, collectively with its subsidiaries

Other securities						primarily consist of equity securities and those securities for which the fair value option was elected. Other securities recognize unrealized gains and losses in investment revenues
Other Notes						collectively, the 8.25% Senior Notes due 2023, on a senior unsecured basis, and the Junior Subordinated Debenture, on a junior subordinated basis, issued by OMFC and guaranteed by OMH


Pretax capital generation						a non-GAAP financial measure used by management as a key performance measure of our segment, defined as adjusted pretax income (loss) excluding the change in allowance for finance receivable losses
Recovery ratio						annualized recoveries on net charge-offs as a percentage of average net receivables


RMBS						residential mortgage-backed securities





SEC						U.S. Securities and Exchange Commission
Securities Act						Securities Act of 1933, as amended
Segment Accounting Basis						a basis used to report the operating results of our C&I segment and our Other components, which reflects our allocation methodologies for certain costs and excludes the impact of applying purchase accounting


SFC						Springleaf Finance Corporation (effective as of July 1, 2020, SFC was renamed to OMFC)



















SpringCastle Portfolio						loans the Company previously owned and now services on behalf of a third party
Springleaf						OMH and its subsidiaries (other than OneMain)



Tax Act						Public Law 115-97 amending the Internal Revenue Code of 1986
TDR finance receivables						troubled debt restructured finance receivables. Debt restructuring in which a concession is granted to the borrower as a result of economic or legal reasons related to the borrower’s financial difficulties


Triton						Triton Insurance Company, an insurance subsidiary of OneMain Financial Holdings, LLC

Unearned finance charges						the amount of interest that is capitalized at time of origination on a precompute loan that will be earned over the remaining contractual life of the loan

Värde						Värde Partners, Inc.
VIEs						variable interest entities

Weighted average interest rate						annualized interest expense as a percentage of average debt
XBRL						eXtensible Business Reporting Language
Yield						annualized finance charges as a percentage of average net receivables

Table of Contents

PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.

ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)



(dollars in millions, except par value amount)	March 31, 2021		December 31, 2020

Assets
Cash and cash equivalents	$	1,301	$	2,272
Investment securities (includes available-for-sale securities with a fair value and an amortized cost basis of $1.9 billion and $1.8 billion in 2021, respectively, and $1.8 billion and $1.7 billion in 2020, respectively)	1,951		1,922
Net finance receivables (includes loans of consolidated VIEs of $8.2 billion in 2021 and $8.8 billion in 2020)	17,564		18,084
Unearned insurance premium and claim reserves	(719)		(771)
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $1.0 billion in 2021 and $1.1 billion in 2020)	(2,062)		(2,269)
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses	14,783		15,044

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents of consolidated VIEs of $553 million in 2021 and $441 million in 2020)	571		451
Goodwill	1,422		1,422
Other intangible assets	296		306

Other assets	961		1,054
Total assets	$	21,285	$	22,471

Liabilities and Shareholders’ Equity
Long-term debt (includes debt of consolidated VIEs of $7.4 billion in 2021 and $7.8 billion in 2020)	$	16,789	$	17,800
Insurance claims and policyholder liabilities	614		621
Deferred and accrued taxes	90		45
Other liabilities (includes other liabilities of consolidated VIEs of $14 million in 2021 and $15 million in 2020)	484		564
Total liabilities	17,977		19,030
Contingencies (Note 12)

Shareholders’ equity:
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized, 134,477,096 and 134,341,724 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1		1
Additional paid-in capital	1,657		1,655
Accumulated other comprehensive income	80		94
Retained earnings	1,570		1,691
Total shareholders’ equity	3,308		3,441
Total liabilities and shareholders’ equity	$	21,285	$	22,471

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)



	Three Months Ended March 31,
(dollars in millions, except per share amounts)	2021		2020




Interest income	$	1,060	$	1,106

Interest expense	235		255

Net interest income	825		851

Provision for finance receivable losses	(2)		531

Net interest income after provision for finance receivable losses	827		320

Other revenues:
Insurance	107		117
Investment	17		9
Net loss on repurchases and repayments of debt	(47)		—

Other	14		15
Total other revenues	91		141

Other expenses:
Salaries and benefits	189		199
Other operating expenses	150		151
Insurance policy benefits and claims	33		68
Total other expenses	372		418

Income before income taxes	546		43

Income taxes	133		11

Net income	$	413	$	32

Share Data:
Weighted average number of shares outstanding:
Basic	134,405,368		135,909,100
Diluted	134,807,165		136,138,677
Earnings per share:
Basic	$	3.07	$	0.24
Diluted	$	3.06	$	0.24

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Net income	$	413	$	32

Other comprehensive loss:
Net change in unrealized losses on non-credit impaired available-for-sale securities	(43)		(55)


Foreign currency translation adjustments	2		(10)
Other	23		—
Income tax effect:
Net change in unrealized losses on non-credit impaired available-for-sale securities	10		13


Foreign currency translation adjustments	—		2
Other	(6)		—





Other comprehensive loss, net of tax	(14)		(50)

Comprehensive income (loss)	$	399	$	(18)

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)


	OneMain Holdings, Inc. Shareholders’ Equity
(dollars in millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Shareholders’ Equity


Balance, January 1, 2021	$	1	$	1,655	$	94	$	1,691	$	3,441
Share-based compensation expense, net of forfeitures	—		7		—		—		7
Withholding tax on share-based compensation	—		(5)		—		—		(5)

Other comprehensive loss	—		—		(14)		—		(14)

Cash dividends (a)	—		—		—		(534)		(534)


Net income	—		—		—		413		413
Balance, March 31, 2021	$	1	$	1,657	$	80	$	1,570	$	3,308


Balance, January 1, 2020 (pre-adoption)	$	1	$	1,689	$	44	$	2,596	$	4,330
Net impact of adoption of ASU 2016-13 (b)	—		—		—		(828)		(828)
Balance, January 1, 2020 (post-adoption)	1		1,689		44		1,768		3,502
Common stock repurchased and retired	—		(45)		—		—		(45)
Share-based compensation expense, net of forfeitures	—		7		—		—		7
Withholding tax on share-based compensation	—		(6)		—		—		(6)
Other comprehensive loss	—		—		(50)		—		(50)
Cash dividends (a)	—		—		—		(388)		(388)
Net income	—		—		—		32		32
Balance, March 31, 2020	$	1	$	1,645	$	(6)	$	1,412	$	3,052

(a) Cash dividends declared were $3.95 per share and $2.83 per share during the three months ended March 31, 2021 and 2020, respectively.

(b) As a result of the adoption of ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, on January 1, 2020, we recorded a one-time cumulative reduction to retained earnings, net of tax. See Note 4 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for additional information on the adoption of ASU 2016-13.

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Cash flows from operating activities
Net income	$	413	$	32
Reconciling adjustments:
Provision for finance receivable losses	(2)		531
Depreciation and amortization	61		64
Deferred income tax charge (benefit)	59		(36)
Net loss on repurchases and repayments of debt	47		—

Share-based compensation expense, net of forfeitures	7		7
Other	(6)		12
Cash flows due to changes in other assets and other liabilities	(23)		(45)
Net cash provided by operating activities	556		565

Cash flows from investing activities
Net principal collections (originations) of finance receivables	217		(188)


Available-for-sale securities purchased	(146)		(132)
Available-for-sale securities called, sold, and matured	91		128
Other securities purchased	(688)		(4)
Other securities called, sold, and matured	681		6
Other, net	43		(6)
Net cash provided by (used for) investing activities	198		(196)

Cash flows from financing activities
Proceeds (expenses) from issuance of long-term debt, net of issuance costs	(1)		3,547
Repayment of long-term debt	(1,065)		(332)
Cash dividends	(534)		(387)
Common stock repurchased and retired	—		(45)
Withholding tax on share-based compensation	(5)		(6)
Net cash provided by (used for) financing activities	(1,605)		2,777



Net change in cash and cash equivalents and restricted cash and restricted cash equivalents	(851)		3,146
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period	2,723		1,632
Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period	$	1,872	$	4,778

Supplemental cash flow information
Cash and cash equivalents	$	1,301	$	4,203
Restricted cash and restricted cash equivalents	571		575
Total cash and cash equivalents and restricted cash and restricted cash equivalents	$	1,872	$	4,778

Restricted cash and restricted cash equivalents primarily represent funds required to be used for future debt payments relating to our securitization transactions.

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)



(dollars in millions, except par value amount)	March 31, 2021		December 31, 2020

Assets
Cash and cash equivalents	$	1,301	$	2,272
Investment securities (includes available-for-sale securities with a fair value and an amortized cost basis of $1.9 billion and $1.8 billion in 2021, respectively, and $1.8 billion and $1.7 billion in 2020, respectively)	1,951		1,922
Net finance receivables (includes loans of consolidated VIEs of $8.2 billion in 2021 and $8.8 billion in 2020)	17,564		18,084
Unearned insurance premium and claim reserves	(719)		(771)
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $1.0 billion in 2021 and $1.1 billion in 2020)	(2,062)		(2,269)
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses	14,783		15,044


Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents of consolidated VIEs of $553 million in 2021 and $441 million in 2020)	571		451
Goodwill	1,422		1,422
Other intangible assets	296		306

Other assets	961		1,054
Total assets	$	21,285	$	22,471

Liabilities and Shareholder's Equity
Long-term debt (includes debt of consolidated VIEs of $7.4 billion in 2021 and $7.8 billion in 2020)	$	16,789	$	17,800
Insurance claims and policyholder liabilities	614		621
Deferred and accrued taxes	92		47
Other liabilities (includes other liabilities of consolidated VIEs of $14 million in 2021 and $15 million in 2020)	484		563
Total liabilities	17,979		19,031
Contingencies (Note 12)

Shareholder's equity:
Common stock, par value $0.50 per share; 25,000,000 shares authorized, 10,160,021 shares issued and outstanding at March 31, 2021 and December 31, 2020	5		5
Additional paid-in capital	1,901		1,899
Accumulated other comprehensive income	80		94
Retained earnings	1,320		1,442
Total shareholder's equity	3,306		3,440
Total liabilities and shareholder's equity	$	21,285	$	22,471

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)



	Three Months Ended March 31,
(dollars in millions)	2021		2020




Interest income	$	1,060	$	1,106

Interest expense	235		255

Net interest income	825		851

Provision for finance receivable losses	(2)		531

Net interest income after provision for finance receivable losses	827		320

Other revenues:
Insurance	107		117
Investment	17		9

Net loss on repurchases and repayments of debt	(47)		—

Other	14		15
Total other revenues	91		141

Other expenses:
Salaries and benefits	189		199
Other operating expenses	150		151
Insurance policy benefits and claims	33		68
Total other expenses	372		418

Income before income taxes	546		43

Income taxes	133		11

Net income	$	413	$	32

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Net income	$	413	$	32

Other comprehensive loss:
Net change in unrealized losses on non-credit impaired available-for-sale securities	(43)		(55)


Foreign currency translation adjustments	2		(10)

Other	23		—
Income tax effect:
Net change in unrealized losses on non-credit impaired available-for-sale securities	10		13


Foreign currency translation adjustments	—		2
Other	(6)		—




Other comprehensive loss, net of tax	(14)		(50)

Comprehensive income (loss)	$	399	$	(18)

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholder's Equity (Unaudited)


	OneMain Finance Corporation Shareholder's Equity
(dollars in millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Shareholder’s Equity


Balance, January 1, 2021	$	5	$	1,899	$	94	$	1,442	$	3,440


Share-based compensation expense, net of forfeitures	—		7		—		—		7
Withholding tax on share-based compensation	—		(5)		—		—		(5)

Other comprehensive loss	—		—		(14)		—		(14)
Cash dividends	—		—		—		(535)		(535)


Net income	—		—		—		413		413
Balance, March 31, 2021	$	5	$	1,901	$	80	$	1,320	$	3,306


Balance, January 1, 2020 (pre-adoption)	$	5	$	1,888	$	44	$	2,388	$	4,325
Net impact of adoption of ASU 2016-13 *	—		—		—		(828)		(828)
Balance, January 1, 2020 (post-adoption)	5		1,888		44		1,560		3,497
Share-based compensation expense, net of forfeitures	—		7		—		—		7
Withholding tax on share-based compensation	—		(6)		—		—		(6)
Other comprehensive loss	—		—		(50)		—		(50)


Cash dividends	—		—		—		(433)		(433)
Net income	—		—		—		32		32
Balance, March 31, 2020	$	5	$	1,889	$	(6)	$	1,159	$	3,047

* As a result of the adoption of ASU 2016-13, on January 1, 2020, we recorded a one-time cumulative reduction to retained earnings, net of tax. See Note 4 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for additional information on the adoption of ASU 2016-13.

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

ONEMAIN FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Cash flows from operating activities
Net income	$	413	$	32
Reconciling adjustments:
Provision for finance receivable losses	(2)		531
Depreciation and amortization	61		64
Deferred income tax charge (benefit)	59		(36)
Net loss on repurchases and repayments of debt	47		—

Share-based compensation expense, net of forfeitures	7		7
Other	(6)		12
Cash flows due to changes in other assets and other liabilities	(23)		(45)
Net cash provided by operating activities	556		565

Cash flows from investing activities
Net principal collections (originations) of finance receivables	217		(188)




Available-for-sale securities purchased	(146)		(132)
Available-for-sale securities called, sold, and matured	91		128
Other securities purchased	(688)		(4)
Other securities called, sold, and matured	681		6
Other, net	43		(6)
Net cash provided by (used for) investing activities	198		(196)

Cash flows from financing activities
Proceeds (expenses) from issuance of long-term debt, net of issuance costs	(1)		3,547
Repayment of long-term debt	(1,065)		(332)






Cash dividends	(534)		(432)

Withholding tax on share-based compensation	(5)		(6)
Net cash provided by (used for) financing activities	(1,605)		2,777





Net change in cash and cash equivalents and restricted cash and restricted cash equivalents	(851)		3,146
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period	2,723		1,632
Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period	$	1,872	$	4,778






Supplemental cash flow information
Cash and cash equivalents	$	1,301	$	4,203
Restricted cash and restricted cash equivalents	571		575
Total cash and cash equivalents and restricted cash and restricted cash equivalents	$	1,872	$	4,778

Restricted cash and restricted cash equivalents primarily represent funds required to be used for future debt payments relating to our securitization transactions.

See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

March 31, 2021


1. Business and Basis of Operations

OneMain Holdings, Inc. (“OMH”), and its wholly-owned direct subsidiary, OneMain Finance Corporation (“OMFC”) (formerly known as Springleaf Finance Corporation (“SFC”)) are financial services holding companies whose subsidiaries engage in the consumer finance and insurance businesses.

Effective July 1, 2020, SFC was renamed to OMFC. The name change did not affect OMFC’s legal entity structure, nor did it have an impact on OMH’s or OMFC’s financial statements. OMFC is used in this report to include references to transactions and arrangements occurring prior to the name change.

The results of OMFC are consolidated into the results of OMH. Due to the nominal differences between OMFC and OMH, content throughout this filing relates to both OMH and OMFC. OMH and OMFC are referred to in this report, collectively with their subsidiaries, whether directly or indirectly owned, as “the Company,” “we,” “us,” or “our.” The information in this Quarterly Report on Form 10-Q is equally applicable to OMH and OMFC, except where otherwise indicated.

At March 31, 2021, the Apollo-Värde Group owned approximately 34.0% of OMH’s common stock.

BASIS OF PRESENTATION

We prepared our condensed consolidated financial statements using generally accepted accounting principles in the United States of America (“GAAP”). These statements are unaudited. The year-end condensed balance sheet data was derived from our audited financial statements but does not include all disclosures required by GAAP. The statements include the accounts of OMH, its subsidiaries (all of which are wholly-owned), and variable interest entities (“VIEs”) in which we hold a controlling financial interest and for which we are considered to be the primary beneficiary as of the financial statement date.

We eliminated all material intercompany accounts and transactions. We made judgments, estimates, and assumptions that affect amounts reported in our condensed consolidated financial statements and disclosures of contingent assets and liabilities. In management’s opinion, the condensed consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of results. Actual results could differ from our estimates. We evaluated the effects of and the need to disclose events that occurred subsequent to the balance sheet date.

The condensed consolidated financial statements in this report should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report. We follow the same significant accounting policies for our interim reporting.

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2. Recent Accounting Pronouncements

ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

Insurance

In August of 2018, the FASB issued ASU 2018-12, Financial Services - Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts, which provides targeted improvements to Topic 944 for the assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited-payment contracts; measurement of market risk benefits; amortization of deferred acquisition costs; and enhanced disclosures. The amendments in this ASU become effective for the Company beginning January 1, 2023, as a result of the FASB issuing a one-year deferral of this ASU for public companies.

We have a cross-functional implementation team and a project plan to ensure we comply with all the amendments in this ASU at the time of adoption. We have selected a vendor for a software solution to meet the new accounting and disclosure requirements of the ASU and continue to make progress in evaluating the potential impact of the adoption of the ASU on our consolidated financial statements.

We do not believe that any other accounting pronouncements issued, but not yet effective, would have a material impact on our consolidated financial statements or disclosures, if adopted.


3. Finance Receivables

Our finance receivables consist of personal loans, which are non-revolving, with a fixed-rate, fixed terms generally between three and six years, and are secured by automobiles, other titled collateral, or are unsecured.

Components of our net finance receivables were as follows:


(dollars in millions)	March 31, 2021		December 31, 2020



Gross finance receivables *	$	17,363	$	17,860
Unearned points and fees	(210)		(225)
Accrued finance charges	268		299
Deferred origination costs	143		150
Total	$	17,564	$	18,084

* Gross finance receivables equal the unpaid principal balance of our personal loans. For precompute loans, unpaid principal balance is the gross contractual payments less the unaccreted balance of unearned finance charges.

CREDIT QUALITY INDICATOR

We consider the delinquency status of our finance receivables as our key credit quality indicator. We monitor the delinquency of our finance receivable portfolio, including the migration between the delinquency buckets and changes in the delinquency trends to manage our exposure to credit risk in the portfolio. When finance receivables are 60 days contractually past due, we consider these accounts to be at an increased risk for loss and we transfer collection of these accounts to our centralized operations.

At 90 days or more contractually past due, we consider our finance receivables to be nonperforming. We stop accruing finance charges and reverse finance charges previously accrued on nonperforming loans. We reversed net accrued finance charges of $20 million and $28 million during the three months ended March 31, 2021 and 2020, respectively. Finance charges recognized from the contractual interest portion of payments received on nonaccrual finance receivables totaled $4 million during the three months ended March 31, 2021 and 2020. All loans in nonaccrual status are considered in our estimate of allowance for finance receivable losses.

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The following tables below are a summary of our finance receivables by the year of origination and number of days delinquent, our key credit quality indicator:


(dollars in millions)	2021		2020		2019		2018		2017		Prior		Total

March 31, 2021
Performing
Current	$	2,193	$	7,488	$	4,860	$	1,703	$	500	$	224	$	16,968
30-59 days past due	1		62		57		22		9		6		157
60-89 days past due	—		47		45		17		6		4		119
Total performing	2,194		7,597		4,962		1,742		515		234		17,244
Nonperforming (Nonaccrual)
90-179 days past due	—		103		131		49		18		10		311
180 days or more past due	—		2		5		1		1		—		9
Total nonperforming	—		105		136		50		19		10		320
Total	$	2,194	$	7,702	$	5,098	$	1,792	$	534	$	244	$	17,564


(dollars in millions)	2020		2019		2018		2017		2016		Prior		Total

December 31, 2020
Performing
Current	$	8,659	$	5,691	$	2,064	$	651	$	184	$	106	$	17,355
30-59 days past due	72		106		44		18		6		5		251
60-89 days past due	44		72		28		11		4		3		162
Total performing	8,775		5,869		2,136		680		194		114		17,768
Nonperforming (Nonaccrual)
90-179 days past due	62		154		59		22		8		5		310
180 days or more past due	1		3		1		1		—		—		6
Total nonperforming	63		157		60		23		8		5		316
Total	$	8,838	$	6,026	$	2,196	$	703	$	202	$	119	$	18,084

TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES

Information regarding TDR finance receivables were as follows:


(dollars in millions)	March 31, 2021		December 31, 2020




TDR gross finance receivables	$	687	$	689
TDR net finance receivables *	690		691
Allowance for TDR finance receivable losses	311		314

* TDR net finance receivables — TDR gross finance receivables net of unearned points and fees, accrued finance charges, and deferred origination costs.

TDR average net finance receivables and finance charges recognized on TDR finance receivables were as follows:


	Three Months Ended March 31,
(dollars in millions)	2021		2020


TDR average net finance receivables	$	691	$	676
TDR finance charges recognized	13		12

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Information regarding the new volume of the TDR finance receivables were as follows:


	Three Months Ended March 31,
(dollars in millions)	2021		2020


Pre-modification TDR net finance receivables	$	116	$	158
Post-modification TDR net finance receivables:
Rate reduction	78		100
Other *	38		58
Total post-modification TDR net finance receivables	$	116	$	158
Number of TDR accounts	14,508		21,818

* “Other” modifications primarily consist of potential principal and interest forgiveness contingent on future payment performance by the borrower under the modified terms.

Finance receivables that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) are reflected in the following table:


	Three Months Ended March 31,
(dollars in millions)	2021		2020





TDR net finance receivables *	$	30	$	31
Number of TDR accounts	4,183		4,552

* Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted.

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4. Allowance for Finance Receivable Losses

We establish an allowance for finance receivable losses through the provision for finance receivable losses. We evaluate our finance receivable portfolio by the level of contractual delinquency in the portfolio, specifically in the late stage delinquency buckets and inclusive of the migration of the loans through the delinquency buckets. We estimate and record an allowance for finance receivable losses to cover the estimated lifetime expected credit losses on our finance receivables. Our allowance for finance receivable losses may fluctuate based upon changes in portfolio growth, credit quality, and economic conditions.

Our current methodology to estimate expected credit losses used the most recent macroeconomic forecasts, which incorporated the projected impacts and expected recovery of the global outbreak of a novel strain of coronavirus (“COVID-19”) on the U.S. economy. Our forecast leveraged economic projections from an industry leading forecast provider. We also incorporated estimated impacts from known government stimulus measures, the involuntary unemployment insurance coverage of our portfolio, and our borrower assistance efforts. At March 31, 2021, our economic forecast used a reasonable and supportable period of 12 months. The decrease in our allowance for finance receivable losses for the three months ended March 31, 2021 was primarily due to the expectation of improved unemployment and anticipated economic recovery from the COVID-19 pandemic. In the near-term, we may experience further changes to the macroeconomic assumptions within our forecast which could lead to further changes in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

Changes in the allowance for finance receivable losses were as follows:


	Three Months Ended March 31,
(dollars in millions)	2021		2020

















Balance at beginning of period	$	2,269	$	829
Impact of adoption of ASU 2016-13 *	—		1,118
Provision for finance receivable losses	(2)		531
Charge-offs	(255)		(337)
Recoveries	50		41
Balance at end of period	$	2,062	$	2,182

* As a result of the adoption of ASU 2016-13, on January 1, 2020, we recorded a one-time adjustment to the allowance for finance receivable losses and a corresponding cumulative reduction to retained earnings, net of tax. See Note 4 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for additional information on the adoption of ASU 2016-13.

The allowance for finance receivable losses and net finance receivables by impairment method were as follows:


(dollars in millions)	March 31, 2021			December 31, 2020

Allowance for finance receivable losses:
Collectively evaluated for impairment	$	1,751		$	1,955

TDR finance receivables	311			314
Total	$	2,062		$	2,269

Finance receivables:
Collectively evaluated for impairment	$	16,874		$	17,393

TDR net finance receivables	690			691
Total	$	17,564		$	18,084

Allowance for finance receivable losses as a percentage of finance receivables	11.74		%	12.55		%

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5. Investment Securities

AVAILABLE-FOR-SALE SECURITIES

Cost/amortized cost, allowance for credit losses, unrealized gains and losses, and fair value of fixed maturity available-for-sale securities by type were as follows:


(dollars in millions)	Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

March 31, 2021*
Fixed maturity available-for-sale securities:
U.S. government and government sponsored entities	$	11	$	—	$	—	$	11
Obligations of states, municipalities, and political subdivisions	85		3		—		88
Commercial paper	49		—		—		49
Non-U.S. government and government sponsored entities	141		6		—		147
Corporate debt	1,175		65		(6)		1,234
Mortgage-backed, asset-backed, and collateralized:
RMBS	191		5		(1)		195
CMBS	54		2		—		56
CDO/ABS	85		2		—		87
Total	$	1,791	$	83	$	(7)	$	1,867

December 31, 2020*
Fixed maturity available-for-sale securities:
U.S. government and government sponsored entities	$	12	$	—	$	—	$	12
Obligations of states, municipalities, and political subdivisions	87		5		—		92
Commercial paper	28		—		—		28
Non-U.S. government and government sponsored entities	137		9		—		146
Corporate debt	1,124		95		(1)		1,218
Mortgage-backed, asset-backed, and collateralized:
RMBS	208		7		—		215
CMBS	55		3		—		58
CDO/ABS	77		2		(1)		78
Total	$	1,728	$	121	$	(2)	$	1,847

* There was no allowance for credit losses related to our investment securities as of March 31, 2021 and December 31, 2020.

Interest receivables reported in “Other assets” totaled $13 million and $12 million as of March 31, 2021 and December 31, 2020, respectively. There were no amounts reversed from investment revenue for available-for-sale securities for the three months ended March 31, 2021 and 2020.

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Fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position without an allowance for credit losses were as follows:


	Less Than 12 Months				12 Months or Longer				Total
(dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

March 31, 2021

Obligations of states, municipalities, and political subdivisions	$	9	$	—	$	—	$	—	$	9	$	—
Commercial paper	18		—		—		—		18		—
Non-U.S. government and government sponsored entities	12		—		1		—		13		—
Corporate debt	174		(5)		22		(1)		196		(6)
Mortgage-backed, asset-backed, and collateralized:
RMBS	38		(1)		—		—		38		(1)
CMBS	3		—		—		—		3		—
CDO/ABS	23		—		6		—		29		—
Total	$	277	$	(6)	$	29	$	(1)	$	306	$	(7)

December 31, 2020

Obligations of states, municipalities, and political subdivisions	$	2	$	—	$	—	$	—	$	2	$	—
Commercial paper	19		—		—		—		19		—
Non-U.S. government and government sponsored entities	1		—		—		—		1		—
Corporate debt	45		(1)		8		—		53		(1)
Mortgage-backed, asset-backed, and collateralized:

CMBS	8		—		—		—		8		—
CDO/ABS	17		(1)		—		—		17		(1)
Total	$	92	$	(2)	$	8	$	—	$	100	$	(2)

On a lot basis, we had 368 and 148 investment securities in an unrealized loss position at March 31, 2021 and December 31, 2020, respectively. We do not consider the unrealized losses to be credit-related, as these unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase. Additionally, at March 31, 2021, there were no credit impairments on investment securities that we intend to sell. We do not have plans to sell any of the remaining investment securities with unrealized losses as of March 31, 2021, and we believe it is more likely than not that we would not be required to sell such investment securities before recovery of their amortized cost.

We continue to monitor unrealized loss positions for potential credit impairments. During the three months ended March 31, 2021 and 2020, there were no material credit impairments related to our investment securities. Therefore, there were no material additions or reductions in the allowance for credit losses (impairments recognized or reversed in earnings) on credit impaired available-for-sale securities for the three months ended March 31, 2021 and 2020.

The proceeds of available-for-sale securities sold or redeemed during the three months ended March 31, 2021 and 2020 totaled $67 million and $58 million, respectively. The net realized gains and losses were immaterial during the three months ended March 31, 2021 and 2020.

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Contractual maturities of fixed-maturity available-for-sale securities at March 31, 2021 were as follows:


(dollars in millions)	Fair Value		Amortized Cost

Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
Due in 1 year or less	$	176	$	175
Due after 1 year through 5 years	592		561
Due after 5 years through 10 years	593		568
Due after 10 years	168		157
Mortgage-backed, asset-backed, and collateralized securities	338		330
Total	$	1,867	$	1,791

Actual maturities may differ from contractual maturities since issuers and borrowers may have the right to call or prepay obligations. We may sell investment securities before maturity for general corporate and working capital purposes and to achieve certain investment strategies.

The fair value of securities on deposit with third parties totaled $581 million and $604 million at March 31, 2021 and December 31, 2020, respectively.

OTHER SECURITIES

The fair value of other securities by type was as follows:


(dollars in millions)	March 31, 2021		December 31, 2020




Fixed maturity other securities:
Bonds



Non-U.S. government and government sponsored entities	$	1	$	1
Corporate debt	13		17
Mortgage-backed, asset-backed, and collateralized bonds	23		17
Total bonds	37		35
Preferred stock *	18		13
Common stock *	29		27

Total	$	84	$	75

* We employ an income equity strategy targeting investments in stocks with strong current dividend yields. Stocks included have a history of stable or increasing dividend payments.

Net unrealized gains on other securities held were immaterial for the three months ended March 31, 2021. Net unrealized losses on other securities held were $13 million for the three months ended March 31, 2020. Net realized gains and losses on other securities sold or redeemed were immaterial for the three months ended March 31, 2021 and 2020.

Other securities primarily consist of equity securities and those securities for which the fair value option was elected. We report net unrealized and realized gains and losses on other securities held, sold, or redeemed in investment revenue.

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6. Long-term Debt

Principal maturities of long-term debt (excluding projected repayments on securitizations by period) by type of debt at March 31, 2021 were as follows:


	Senior Debt
(dollars in millions)	Securitizations		Unsecured Notes (a)		Junior Subordinated Debt (a)			Total

Interest rates (b)	0.91% - 6.94%		4.00% - 8.88%		1.99		%

Remainder of 2021	$	—	$	—	$	—		$	—
2022	—		992		—			992
2023	—		1,175		—			1,175
2024	—		1,300		—			1,300
2025	—		1,835		—			1,835
2026-2067	—		3,999		350			4,349
Securitizations (c)	7,424		—		—			7,424
Total principal maturities	$	7,424	$	9,301	$	350		$	17,075

Total carrying amount	$	7,394	$	9,223	$	172		$	16,789
Debt issuance costs (d)	$	(27)	$	(82)	$	—		$	(109)

(a) Pursuant to the Base Indenture, the Supplemental Indentures, and the Guaranty Agreements, OMH agreed to fully and unconditionally guarantee, on a senior unsecured basis, payments of principal, premium and interest on the Unsecured Notes and Junior Subordinated Debenture. The OMH guarantees of OMFC’s long-term debt are subject to customary release provisions.

(b) The interest rates shown are the range of contractual rates in effect at March 31, 2021.

(c) Securitizations are not included in the above maturities by period due to their variable monthly repayments, which may result in pay-off prior to the stated maturity date. At March 31, 2021, there were no amounts drawn under our revolving conduit facilities. See Note 7 for further information on our long-term debt associated with securitizations and revolving conduit facilities.

(d) Debt issuance costs are reported as a direct deduction from long-term debt, with the exception of debt issuance costs associated with our revolving conduit facilities, which totaled $32 million at March 31, 2021 and are reported in “Other assets.”

Redemption of 7.75% Senior Notes Due 2021

On December 9, 2020, OMFC issued a notice of full redemption of its 7.75% Senior Notes due 2021. On January 8, 2021, OMFC paid a net aggregate amount of $681 million, inclusive of accrued interest and premiums, to complete the redemption. In connection with the redemption, we recognized $47 million of net loss on repurchases and repayments of debt during the three months ended March 31, 2021.

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7. Variable Interest Entities

CONSOLIDATED VIES

We have transferred finance receivables to VIEs for asset-backed financing transactions and include the assets and liabilities in our consolidated financial statements because we are the primary beneficiary of each VIE. We account for these asset-backed debt obligations as secured borrowings.

See Note 3 and Note 10 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for more detail regarding VIEs.

We parenthetically disclose on our consolidated balance sheets the VIE’s assets that can only be used to settle the VIE’s obligations and liabilities if its creditors have no recourse against the primary beneficiary’s general credit. The carrying amounts of consolidated VIE assets and liabilities associated with our securitization trusts and revolving conduit facilities were as follows:


(dollars in millions)	March 31, 2021		December 31, 2020

Assets
Cash and cash equivalents	$	2	$	2
Net finance receivables	8,219		8,772
Allowance for finance receivable losses	955		1,085
Restricted cash and restricted cash equivalents	553		441
Other assets	32		33

Liabilities
Long-term debt	$	7,394	$	7,789
Other liabilities	14		15

Other than the retained subordinate and residual interests in our consolidated VIEs, we are under no further obligation than is otherwise noted herein, either contractually or implicitly, to provide financial support to these entities. Consolidated interest expense related to our VIEs totaled $78 million and $81 million during the three months ended March 31, 2021 and 2020, respectively.

SECURITIZED BORROWINGS

Each of our outstanding securitizations contain a revolving period ranging from two to seven years during which no principal payments are required to be made on the related asset-backed notes. The indentures governing our securitization borrowings contain early amortization events and events of default, that, if triggered, may result in the acceleration of the obligation to pay principal and interest on the related asset-backed notes.

REVOLVING CONDUIT FACILITIES

We had access to 13 revolving conduit facilities with a total maximum borrowing capacity of $7.2 billion as of March 31, 2021. Our conduit facilities contain revolving periods during which time no principal payments are required, but may be made without penalty, followed by a subsequent amortization period. Principal balances of outstanding loans, if any, are due and payable in full over periods ranging up to ten years as of March 31, 2021. Amounts drawn on these facilities are collateralized by our personal loans.

At March 31, 2021, no amounts were drawn under these facilities.

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8. Insurance

Changes in the reserve for unpaid claims and loss adjustment expenses (net of reinsurance recoverables):


	At or for the Three Months Ended March 31,
(dollars in millions)	2021		2020

Balance at beginning of period	$	148	$	117
Less reinsurance recoverables	(3)		(4)

Net balance at beginning of period	145		113

Additions for losses and loss adjustment expenses incurred to:
Current year	57		77
Prior years *	(18)		(9)
Total	39		68
Reductions for losses and loss adjustment expenses paid related to:
Current year	(18)		(17)
Prior years	(47)		(30)
Total	(65)		(47)
Foreign currency translation adjustment	—		(1)
Net balance at end of period	119		133
Plus reinsurance recoverables	3		3

Balance at end of period	$	122	$	136

* Reflects (i) a redundancy in the prior years’ net reserves of $18 million at March 31, 2021, primarily due to favorable development of credit disability and unemployment claims during the period, and (ii) a redundancy in the prior years’ net reserves of $9 million at March 31, 2020, primarily due to a favorable development of credit life, term life, and credit disability claims during the period.


9. Capital Stock and Earnings Per Share (OMH Only)

CAPITAL STOCK

OMH has two classes of authorized capital stock: preferred stock and common stock. OMFC has two classes of authorized capital stock: special stock and common stock. OMH and OMFC may issue preferred stock and special stock, respectively, in one or more series. The OMH Board of Directors and the OMFC Board of Directors determine the dividend, liquidation, redemption, conversion, voting, and other rights prior to issuance.

During the first quarter of 2020, the OMH Board of Directors approved a stock repurchase program, which allows us to repurchase up to $200 million of OMH’s outstanding common stock with no stated expiration. On March 20, 2020, OMH temporarily suspended its stock repurchase program. OMH retains the right to reinstate the stock repurchase program as circumstances change.

Prior to the suspension of the program, OMH repurchased and retired 2,031,698 shares of its common stock with an average price paid per share of $22.30, for an aggregate total of approximately $45 million, including commissions and fees. The aggregate purchase price in excess of the par value of the repurchased OMH common stock is recorded as a reduction to additional paid-in-capital. To provide funding for the OMH stock repurchase and retirement program, the OMFC Board of Directors authorized multiple dividend payments in the aggregate amount of $45 million.

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Changes in OMH shares of common stock issued and outstanding were as follows:


	Three Months Ended March 31,
	2021	2020

Balance at beginning of period	134,341,724	136,101,156
Common shares issued	135,372	240,249
Common shares retired	—	(2,031,698)
Balance at end of period	134,477,096	134,309,707

EARNINGS PER SHARE (OMH ONLY)

The computation of earnings per share was as follows:



	Three Months Ended March 31,
(dollars in millions, except per share data)	2021		2020

Numerator (basic and diluted):
Net income	$	413	$	32
Denominator:
Weighted average number of shares outstanding (basic)	134,405,368		135,909,100
Effect of dilutive securities *	401,797		229,577
Weighted average number of shares outstanding (diluted)	134,807,165		136,138,677
Earnings per share:
Basic	$	3.07	$	0.24
Diluted	$	3.06	$	0.24

* We have excluded weighted-average unvested restricted stock units totaling 133,004 and 214,752 for the three months ended March 31, 2021 and 2020, respectively, from the fully-diluted earnings per share calculations as these shares would be anti-dilutive, which could impact the earnings per share calculation in the future.

Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during each period. Diluted earnings per share is computed based on the weighted-average number of shares outstanding plus the effect of potentially dilutive shares outstanding during the period using the treasury stock method. The potentially dilutive shares represent outstanding unvested restricted stock units.

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10. Accumulated Other Comprehensive Income (Loss)

Changes, net of tax, in accumulated other comprehensive income (loss) were as follows:


(dollars in millions)	Unrealized Gains (Losses) Available-for-Sale Securities (a)		Retirement Plan Liabilities Adjustments		Foreign Currency Translation Adjustments		Other (b)		Total Accumulated Other Comprehensive Income (Loss)

Three Months Ended March 31, 2021
Balance at beginning of period	$	91	$	1	$	2	$	—	$	94
Other comprehensive income (loss) before reclassifications	(33)		—		2		17		(14)


Balance at end of period	$	58	$	1	$	4	$	17	$	80

Three Months Ended March 31, 2020
Balance at beginning of period	$	41	$	3	$	—	$	—	$	44
Other comprehensive loss before reclassifications	(42)		—		(8)		—		(50)

Balance at end of period	$	(1)	$	3	$	(8)	$	—	$	(6)

(a) There were no amounts related to available-for-sale debt securities for which an allowance for credit losses was recorded during the three months ended March 31, 2021 and 2020.

(b) Other primarily includes changes in the fair value of our mark-to-market derivative instruments that have been designated as cash flow hedges.

Reclassification adjustments from accumulated other comprehensive income (loss) to the applicable line item on our condensed consolidated statements of operations were immaterial for the three months ended March 31, 2021 and 2020.

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11. Income Taxes

We had a net deferred tax asset of $349 million and $405 million at March 31, 2021 and December 31, 2020, respectively. The decrease in our net deferred tax asset of $56 million was primarily due to the tax effect of the decrease in the allowance for finance receivable losses and the decrease due to tax amortization of goodwill.

We follow the guidance of ASC 740, Income Taxes, for interim reporting of income taxes under which we calculate an estimated annual effective tax rate (“AETR”) and apply the AETR to our year-to-date income (loss) before income taxes. In addition, we recognize any discrete items as they occur.

The effective tax rate for the three months ended March 31, 2021 was 24.4%, compared to 24.3% for the same period in 2020. The effective tax rate for the three months ended March 31, 2021 and 2020 differed from the federal statutory rate of 21% primarily due to the effect of state income taxes.

We are under examination by various states for the years 2014 to 2018. Management believes it has adequately provided for taxes for such years.

Our gross unrecognized tax benefits, including related interest and penalties, totaled $10 million at March 31, 2021 and December 31, 2020. We accrue interest related to uncertain tax positions in income tax expense. The amount of any change in the balance of uncertain tax liabilities over the next 12 months is not expected to be material to our consolidated financial statements.

During 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and the Consolidated Appropriations Act of 2021 (the “CAA”) were signed into law. During 2021, the American Rescue Plan Act of 2021 (the “ARPA”) was signed into law. Among other things, the provisions of these laws relate to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, and technical corrections to tax depreciation methods for qualified improvement property. We do not anticipate the CARES Act, the CAA, or the ARPA will have a material impact on our consolidated financial statements. We will continue to monitor legislative developments related to the COVID-19 pandemic.


12. Contingencies

LEGAL CONTINGENCIES

In the normal course of business, we have been named, from time to time, as defendants in various legal actions, including arbitrations, class actions, and other litigation arising in connection with our activities. Some of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. While we will continue to evaluate legal actions to determine whether a loss is reasonably possible or probable and is reasonably estimable, there can be no assurance that material losses will not be incurred from pending, threatened or future litigation, investigations, examinations, or other claims.

We contest liability and/or the amount of damages, as appropriate, in each pending matter. Where available information indicates that it is probable that a liability had been incurred at the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many actions, however, it is inherently difficult to determine whether any loss is probable or even reasonably possible, or to estimate the amount of any loss. In addition, even where loss is reasonably possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss.

For certain legal actions, we cannot reasonably estimate such losses, particularly for actions that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the actions in question, before a loss or additional loss or range of loss or range of additional loss can be reasonably estimated for any given action.

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For certain other legal actions, we can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but do not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on our consolidated financial statements as a whole.


13. Segment Information

At March 31, 2021, Consumer and Insurance (“C&I”) is our only reportable segment. The remaining components (which we refer to as “Other”) consist of our liquidating SpringCastle Portfolio servicing activity and our non-originating legacy operations, which primarily include our liquidating real estate loans.

The accounting policies of the C&I segment are the same as those disclosed in Note 3 and Note 18 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report.

The following tables present information about C&I and Other, as well as reconciliations to the consolidated financial statement amounts.


(dollars in millions)	Consumer and Insurance		Other		Segment to GAAP Adjustment		Consolidated Total

At or for the Three Months Ended March 31, 2021
Interest income	$	1,057	$	1	$	2	$	1,060
Interest expense	233		1		1		235
Provision for finance receivable losses	(3)		—		1		(2)
Net interest income after provision for finance receivable losses	827		—		—		827
Other revenues	98		3		(10)		91
Other expenses	358		6		8		372
Income (loss) before income tax expense (benefit)	$	567	$	(3)	$	(18)	$	546

Assets	$	19,194	$	57	$	2,034	$	21,285




At or for the Three Months Ended March 31, 2020
Interest income	$	1,101	$	2	$	3	$	1,106
Interest expense	249		1		5		255
Provision for finance receivable losses	530		—		1		531
Net interest income after provision for finance receivable losses	322		1		(3)		320
Other revenues	136		4		1		141
Other expenses	407		6		5		418
Income (loss) before income tax expense (benefit)	$	51	$	(1)	$	(7)	$	43

Assets	$	22,570	$	72	$	2,051	$	24,693

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14. Fair Value Measurements

The accounting policies of our fair value measurements are the same as those disclosed in Note 3 and Note 19 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report.

The following table presents the carrying amounts and estimated fair values of our financial instruments and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:


	Fair Value Measurements Using						Total Fair Value		Total Carrying Value
(dollars in millions)	Level 1		Level 2		Level 3

March 31, 2021
Assets
Cash and cash equivalents	$	1,298	$	3	$	—	$	1,301	$	1,301
Investment securities	52		1,891		8		1,951		1,951
Net finance receivables, less allowance for finance receivable losses	—		—		18,447		18,447		15,502
Restricted cash and restricted cash equivalents	571		—		—		571		571
Other assets *	—		3		57		60		60

Liabilities
Long-term debt	$	—	$	18,082	$	—	$	18,082	$	16,789

December 31, 2020
Assets
Cash and cash equivalents	$	2,255	$	17	$	—	$	2,272	$	2,272
Investment securities	44		1,870		8		1,922		1,922
Net finance receivables, less allowance for finance receivable losses	—		—		18,629		18,629		15,815
Restricted cash and restricted cash equivalents	451		—		—		451		451
Other assets *	—		2		60		62		62







Liabilities
Long-term debt	$	—	$	19,426	$	—	$	19,426	$	17,800

*Other assets at March 31, 2021 and December 31, 2020 primarily consists of finance receivables held for sale.

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FAIR VALUE MEASUREMENTS — RECURRING BASIS

The following tables present information about our assets measured at fair value on a recurring basis and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:


	Fair Value Measurements Using						Total Carried At Fair Value
(dollars in millions)	Level 1		Level 2		Level 3

March 31, 2021
Assets
Cash equivalents in mutual funds	$	881	$	—	$	—	$	881
Cash equivalents in securities	—		3		—		3
Investment securities:
Available-for-sale securities

U.S. government and government sponsored entities	—		11		—		11
Obligations of states, municipalities, and political subdivisions	—		88		—		88
Commercial paper	—		49		—		49
Non-U.S. government and government sponsored entities	—		147		—		147
Corporate debt	5		1,223		6		1,234
RMBS	—		195		—		195
CMBS	—		56		—		56
CDO/ABS	—		87		—		87




Total available-for-sale securities	5		1,856		6		1,867
Other securities

Bonds:

Non-U.S. government and government sponsored entities	—		1		—		1
Corporate debt	—		12		1		13
RMBS	—		1		—		1

CDO/ABS	—		21		1		22
Total bonds	—		35		2		37
Preferred stock	18		—		—		18
Common stock	29		—		—		29

Total other securities	47		35		2		84
Total investment securities	52		1,891		8		1,951

Restricted cash equivalents in mutual funds	560		—		—		560
Total	$	1,493	$	1,894	$	8	$	3,395

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	Fair Value Measurements Using						Total Carried At Fair Value
(dollars in millions)	Level 1		Level 2		Level 3

December 31, 2020
Assets
Cash equivalents in mutual funds	$	2,018	$	—	$	—	$	2,018
Cash equivalents in securities	—		17		—		17
Investment securities:
Available-for-sale securities

U.S. government and government sponsored entities	—		12		—		12
Obligations of states, municipalities, and political subdivisions	—		92		—		92
Certificates of deposit and commercial paper	—		28		—		28
Non-U.S. government and government sponsored entities	—		146		—		146
Corporate debt	5		1,207		6		1,218
RMBS	—		215		—		215
CMBS	—		58		—		58
CDO/ABS	—		78		—		78




Total available-for-sale securities	5		1,836		6		1,847
Other securities

Bonds:
Non-U.S. government and government sponsored entities	—		1		—		1
Corporate debt	—		16		1		17


CDO/ABS	—		17		—		17
Total bonds	—		34		1		35
Preferred stock	13		—		—		13
Common stock	26		—		1		27

Total other securities	39		34		2		75
Total investment securities	44		1,870		8		1,922
Restricted cash equivalents in mutual funds	441		—		—		441
Total	$	2,503	$	1,887	$	8	$	4,398

Due to the insignificant activity within the Level 3 assets during the three months ended March 31, 2021 and 2020, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.

FAIR VALUE MEASUREMENTS — NON-RECURRING BASIS

We measure the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Net impairment charges recorded on assets measured at fair value on a non-recurring basis were immaterial during the three months ended March 31, 2021 and 2020.

FAIR VALUE MEASUREMENTS — VALUATION METHODOLOGIES AND ASSUMPTIONS

See Note 19 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for information regarding our methods and assumptions used to estimate fair value.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

An index to our management’s discussion and analysis follows:


Topic						Page

Forward-Looking Statements						35
Overview						37
Recent Developments and Outlook						38
Results of Operations						40
Segment Results						43
Credit Quality						45
Liquidity and Capital Resources						49
Off-Balance Sheet Arrangements						53
Critical Accounting Policies and Estimates						53
Recent Accounting Pronouncements						53
Seasonality						53

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Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent only management’s current beliefs regarding future events. By their nature, forward-looking statements are subject to risks, uncertainties, assumptions, and other important factors that may cause actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Statements preceded by, followed by or that otherwise include the words “anticipates,” “appears,” “are likely,” “believes,” “estimates,” “expects,” “foresees,” “intends,” “plans,” “projects,” and similar expressions or future or conditional verbs such as “would,” “should,” “could,” “may,” or “will” are intended to identify forward-looking statements. Important factors that could cause actual results, performance, or achievements to differ materially from those expressed in or implied by forward-looking statements include, without limitation, the following:

•adverse changes in general economic conditions, including the interest rate environment and the financial markets;

•risks associated with the global outbreak of a novel strain of coronavirus (“COVID-19”) or any additional strains of COVID-19 and the mitigation efforts by governments and related effects on us, our customers, and employees;

•our estimates of the allowance for finance receivable losses may not be adequate to absorb actual losses, causing our provision for finance receivable losses to increase, which would adversely affect our results of operations;

•increased levels of unemployment and personal bankruptcies;

•adverse changes in the rate at which we can collect or potentially sell our finance receivables portfolio;

•natural or accidental events such as earthquakes, hurricanes, tornadoes, fires, or floods affecting our customers, collateral, or our branches or other operating facilities;

•war, acts of terrorism, riots, civil disruption, pandemics, disruptions in the operation of our information systems, or other events disrupting business or commerce;

•risks related to the acquisition or sale of assets or businesses or the formation, termination, or operation of joint ventures or other strategic alliances, including increased loan delinquencies or net charge-offs, integration or migration issues, increased costs of servicing, incomplete records, and retention of customers;

•a failure in or breach of our operational or security systems or infrastructure or those of third parties, including as a result of cyber-attacks, or other cyber-related incidents involving the loss, theft or unauthorized disclosure of personally identifiable information (“PII”) of our present or former customers;

•our credit risk scoring models may be inadequate to properly assess the risk of customer unwillingness or lack of capacity to repay;

•adverse changes in our ability to attract and retain employees or key executives to support our businesses;

•increased competition, or changes in customer responsiveness to our distribution channels, an inability to make technological improvements, and the ability of our competitors to offer a more attractive range of personal loan products than we offer;

•changes in federal, state, or local laws, regulations, or regulatory policies and practices that adversely affect our ability to conduct business or the manner in which we currently are permitted to conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the sub-prime lending industry, our use of third-party vendors and real estate loan servicing, or changes in corporate or individual income tax laws or regulations, including effects of the Tax Act, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Consolidated Appropriations Act of 2021 (the “CAA”), and the American Rescue Plan Act of 2021 (the “ARPA”);

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•risks associated with our insurance operations, including insurance claims that exceed our expectations or insurance losses that exceed our reserves;

•our inability to successfully implement our growth strategy for our consumer lending business or successfully acquire portfolios of finance receivables;

•a change in the proportion of secured loans may affect our finance receivables and portfolio yield;

•declines in collateral values or increases in actual or projected delinquencies or net charge-offs;

•potential liability relating to finance receivables which we have sold or securitized or may sell or securitize in the future if it is determined that there was a non-curable breach of a representation or warranty made in connection with such transactions;

•the costs and effects of any actual or alleged violations of any federal, state, or local laws, rules or regulations, including any associated litigation and damage to our reputation;

•the costs and effects of any fines, penalties, judgments, decrees, orders, inquiries, investigations, subpoenas, or enforcement or other proceedings of any governmental or quasi-governmental agency or authority and any associated litigation and damage to our reputation;

•our continued ability to access the capital markets and maintain adequate current sources of funds to satisfy our cash flow requirements;

•our ability to comply with our debt covenants;

•our ability to generate sufficient cash to service all of our indebtedness;

•any material impairment or write-down of the value of our assets;

•the ownership of OMH's common stock continues to be highly concentrated, which may prevent other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest;

•the effects of any downgrade of our debt ratings by credit rating agencies, which could have a negative impact on our cost of and/or access to capital;

•our substantial indebtedness, which could prevent us from meeting our obligations under our debt instruments and limit our ability to react to changes in the economy or our industry or our ability to incur additional borrowings;

•our ability to maintain sufficient capital levels in our regulated and unregulated subsidiaries;

•changes in accounting standards or tax policies and practices and the application of such new standards, policies and practices; and

•management estimates and assumptions, including estimates and assumptions about future events, may prove to be incorrect.

We also direct readers to the other risks and uncertainties discussed in other documents we file with the SEC.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. You should specifically consider the factors identified in this report and in the documents we file with the SEC, including our Annual Report, that could cause actual results to differ before making an investment decision to purchase our securities and should not place undue reliance on any of our forward-looking statements. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

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Overview

We are a leading provider of responsible personal loan products, primarily to non-prime customers. Our network of approximately 1,500 branch offices in 44 states is staffed with expert personnel and is complemented by our centralized operations and our digital platform, which provides current and prospective customers the option of applying for a personal loan via our website, www.omf.com. The information on our website is not incorporated by reference into this report. In connection with our personal loan business, our insurance subsidiaries offer our customers optional credit and non-credit insurance, and other products.

In addition to our loan originations, and insurance and other product sales activities, we service loans owned by us and service loans owned by third parties; pursue strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets; and may establish joint ventures or enter into other strategic alliances.

OUR PRODUCTS

Our product offerings include:

•Personal Loans — We offer personal loans through our branch network, centralized operations, and our website, www.omf.com, to customers who generally need timely access to cash. Our personal loans are non-revolving, with a fixed-rate, fixed terms generally between three and six years, and are secured by automobiles, other titled collateral, or are unsecured. At March 31, 2021, we had approximately 2.23 million personal loans, of which 52% were secured by titled property, totaling $17.6 billion of net finance receivables, compared to approximately 2.30 million personal loans, of which 53% were secured by titled property, totaling $18.1 billion at December 31, 2020.

•Insurance Products — We offer our customers optional credit insurance products (life insurance, disability insurance, and involuntary unemployment insurance) and optional non-credit insurance products through both our branch network and our centralized operations. Credit insurance and non-credit insurance products are provided by our affiliated insurance companies. We offer GAP coverage as a waiver product or insurance. We also offer optional membership plans from an unaffiliated company.

Our non-originating legacy products include:

•Other Receivables — We ceased originating real estate loans in 2012 and we continue to service or sub-service liquidating real estate loans. Effective September 30, 2018, our real estate loans previously classified as other receivables were transferred from held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. Effective March 31, 2020, our real estate loans held for sale are reported in “Other assets” of our consolidated balance sheets.

OUR SEGMENT

At March 31, 2021, C&I is our only reportable segment. The remaining components (which we refer to as “Other”) consist of our liquidating SpringCastle Portfolio servicing activity and our non-originating legacy operations, which primarily include our liquidating real estate loans. See Note 13 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about our segment.

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Recent Developments and Outlook

RECENT DEVELOPMENTS

Management’s Response to the COVID-19 Pandemic

COVID-19 evolved into a global pandemic, resulting in widespread volatility and deterioration in economic conditions across the United States. Governmental authorities continue to take steps to combat the spread of COVID-19, including the distribution of COVID-19 vaccines, which over time are designed to create “herd immunity” and diminish, if not eliminate, the crisis. At this time, the vaccination program has accelerated in many states to allow all adults to receive the vaccines. In the meantime, we have continued to focus on assisting and supporting our customers and employees, while remaining committed to the safety of our employees. We continue to serve our customers by keeping our branch locations open with appropriate protective protocols in place and through our digital closing solutions. This combination has enhanced our operating performance through the pandemic and enabled us to serve and support our customers effectively during these unprecedented times. We believe the actions we have taken and the underlying strength of our balance sheet positions us to take advantage of growth opportunities as the economy continues to recover.

Redemption of 7.75% Senior Notes due 2021

On January 8, 2021, OMFC paid a net aggregate amount of $681 million, inclusive of accrued interest and premiums, to complete the redemption of its 7.75% Senior Notes due 2021. For further information regarding the redemption of our unsecured debt, see Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report.

Cash Dividends to OMH's Common Stockholders

On February 8, 2021, OMH declared a dividend of $3.95 per share payable on February 25, 2021 to record holders of OMH's common stock as of the close of business on February 18, 2021. For information regarding the quarterly dividends declared by OMH, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Apollo-Värde Group Share Sale

On February 11, 2021, we entered into an underwriting agreement with certain entities managed by affiliates of Apollo-Värde Group, in their capacities as selling stockholders (together, the “Selling Stockholders”), and Barclays Capital Inc. and Citigroup Global Markets Inc., as representatives of the several underwriters (the “Underwriters”), for the sale by the Selling Stockholders of up to 9,200,000 shares of the OMH’s common stock, which included an option for the Underwriters to purchase up to 1,200,000 shares of the common stock. The shares sold by the Selling Stockholders were beneficially owned by the Apollo-Värde Group. On February 12, 2021, the Underwriters exercised in full their option to purchase additional shares of common stock, and on February 16, 2021, the offering and sale of 9,200,000 shares by the Selling Stockholders to the Underwriters was completed. We did not receive any proceeds from the sale of the shares by the Selling Stockholders.

Share Repurchase Program

In the second quarter of 2021, the Company announced plans to commence a $150 million share repurchase program. For information regarding the share repurchase program, see “Liquidity and Capital Resources” under Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

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OUTLOOK

While we are actively managing the impacts of the COVID-19 pandemic and are prepared to face any additional challenges that may impact our industry, we expect near-term impacts to continue to affect our originations. The ultimate impact on our financial condition and results of operations depends on the speed of the economic recovery, driven by distribution and effectiveness of the COVID-19 vaccines, government stimulus measures, states reopening, and ultimately unemployment rates. There is also uncertainty regarding the effects of additional strains of COVID-19 and the impact of any related government actions, including the recently enacted American Rescue Plan Act of 2021. To the extent economies are suppressed or slow to recover, we could see lower consumer demand, higher delinquency trends, and related losses. We will continue to incorporate updates, as necessary, to our macroeconomic assumptions which could lead to further adjustments in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

To further expand the ways in which we help our customers improve their financial well-being, on April 26, 2021, we announced that we have entered into an agreement to acquire Trim, a customer-focused financial wellness fintech company. The acquisition of Trim, subject to completion of standard closing conditions, will enhance OneMain’s digital features designed to help its customers progress to a better financial future.

Our experienced management team continues to remain focused on our strategic priorities of maintaining a solid balance sheet, providing a flexible liquidity runway and capital coverage, upholding a conservative and disciplined underwriting model, and building strong relationships with our customers. We are well positioned to continue to support and serve our customers, invest in our business and drive growth while creating value for our stockholders and effectively navigating the evolving economic, social, political, and regulatory environments in which we operate. We further describe our key initiatives and strategies under “Recent Developments and Outlook” of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II - Item 7 included in our Annual Report.

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Results of Operations

The results of OMFC are consolidated into the results of OMH. Due to the nominal differences between OMFC and OMH, content throughout this section relates only to OMH. See Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information.

OMH'S CONSOLIDATED RESULTS

See the table below for OMH's consolidated operating results and selected financial statistics. A further discussion of OMH's operating results for our operating segment is provided under “Segment Results” below.



	At or for the Three Months Ended March 31,
(dollars in millions, except per share amounts)	2021			2020

Interest income	$	1,060		$	1,106
Interest expense	235			255
Provision for finance receivable losses	(2)			531
Net interest income after provision for finance receivable losses	827			320

Other revenues	91			141
Other expenses	372			418
Income before income taxes	546			43
Income taxes	133			11
Net income	$	413		$	32



Share Data:



Earnings per share:

Diluted	$	3.06		$	0.24

Selected Financial Statistics *
Finance receivables held for investment:
Net finance receivables	$	17,564		$	18,269
Number of accounts	2,229,609			2,400,536




Average net receivables	$	17,824		$	18,380
Yield	24.08		%	24.17		%
Gross charge-off ratio	5.81		%	7.35		%
Recovery ratio	(1.14)		%	(0.90)		%
Net charge-off ratio	4.67		%	6.45		%
30-89 Delinquency ratio	1.57		%	2.25		%
Origination volume	$	2,284		$	2,589
Number of accounts originated	225,102			276,773
Debt balances:
Long-term debt balance	$	16,789		$	20,443
Average daily debt balance	17,035			17,675

* See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

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Comparison of Consolidated Results for the Three Months Ended March 31, 2021 and 2020

Interest income decreased $46 million or 4.2% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a decrease in our average net finance receivables.

Interest expense decreased $20 million or 7.8% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a decrease in average debt along with a lower average cost of funds. 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, and our revolving conduit facilities.

Provision for finance receivable losses decreased $533 million for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to the decrease in our charge-offs and the expectation of improved unemployment and anticipated economic recovery from the COVID-19 pandemic as compared to a build in our allowance reserve in the same period in 2020 primarily due to the uncertainty of expected credit losses at the onset of the COVID-19 pandemic.

Other revenues decreased $50 million or 35.5% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a $47 million net loss on the repayment of debt in the current period and a decrease in insurance products sold due to reduced loan origination volume, partially offset by an increase in investment revenue primarily driven by higher mark-to-market net gains on other securities.

Other expenses decreased $46 million or 11.0% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a $35 million decrease in insurance policy and benefits claims expense due to lower than expected involuntary unemployment insurance claims along with a decrease in general operating expenses, reflecting our efforts to manage costs through the pandemic, offset by our strategic investments in the business.

Income taxes totaled $133 million for the three months ended March 31, 2021 compared to $11 million for the three months ended March 31, 2020 due to higher pre-tax income in the first quarter of 2021. For the three months ended March 31, 2021 and 2020, the effective tax rates were 24.4% and 24.3%, respectively. The effective tax rates differed from the federal statutory rate of 21% primarily due to the effect of state income taxes. See Note 11 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information on effective tax rates.

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NON-GAAP FINANCIAL MEASURES

Management uses adjusted pretax income (loss), a non-GAAP financial measure, as a key performance measure of our segment. Adjusted pretax income (loss) represents income (loss) before income taxes on a Segment Accounting Basis and excludes direct costs associated with COVID-19, acquisition-related transaction and integration expenses, net loss resulting from repurchases and repayments of debt, and lower of cost or fair value adjustment on loans held for sale. Management believes adjusted pretax income (loss) is useful in assessing the profitability of our segment.

Management also uses pretax capital generation, a non-GAAP financial measure, as a key performance measure of our segment. This measure represents adjusted pretax income as discussed above and excludes the change in our allowance for finance receivable losses in the period while still considering the net charge-offs incurred during the period. Management believes that pretax capital generation is useful in assessing the capital created in the period impacting the overall capital adequacy of the Company. Management believes that the Company’s reserves, combined with its equity, represent the Company’s loss absorption capacity.

Management utilizes both adjusted pretax net income (loss) and pretax capital generation in evaluating our performance. Additionally, both of these non-GAAP measures are consistent with the performance goals established in OMH’s executive compensation program. Adjusted pretax income (loss) and pretax capital generation are non-GAAP financial measures and should be considered supplemental to, but not as a substitute for or superior to, income (loss) before income taxes, net income, or other measures of financial performance prepared in accordance with GAAP.

OMH's reconciliations of income (loss) before income tax expense (benefit) on a Segment Accounting Basis to adjusted pretax income (loss) (non-GAAP) by segment and Consumer and Insurance pretax capital generation (non-GAAP) were as follows:



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Consumer and Insurance
Income before income taxes - Segment Accounting Basis	$	567	$	51
Adjustments:
Direct costs associated with COVID-19	2		3
Acquisition-related transaction and integration expenses	—		6
Net loss on repurchases and repayments of debt	38		—


Adjusted pretax income (non-GAAP)	$	607	$	60

Provision for finance receivable losses	$	(3)	$	530
Net charge-offs	(205)		(296)
Pretax capital generation (non-GAAP)	$	399	$	294











Other
Loss before income taxes - Segment Accounting Basis	$	(3)	$	(1)
Adjustments:

Lower of cost or fair value adjustment (a)	1		—






Adjusted pretax loss (non-GAAP)	$	(2)	$	(1)

(a) The carrying value of our remaining real estate loans classified in finance receivables held for sale exceeded their fair value, and accordingly, we have marked the loans to fair value and recorded an impairment in other revenue during the three months ended March 31, 2021.

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Segment Results

The results of OMFC are consolidated into the results of OMH. Due to the nominal differences between OMFC and OMH, content throughout this section relate only to OMH. See Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this report for further information.

See Note 13 of the Notes to the Condensed Consolidated Financial Statements included in this report for a description of our segment and methodologies used to allocate revenues and expenses to our C&I segment and Other.

CONSUMER AND INSURANCE

OMH's adjusted pretax income and selected financial statistics for C&I on an adjusted Segment Accounting Basis were as follows:



	At or for the Three Months Ended March 31,
(dollars in millions)	2021			2020

Interest income	$	1,057		$	1,101
Interest expense	233			249
Provision for finance receivable losses	(3)			530
Net interest income after provision for finance receivable losses	827			322
Other revenues	136			136
Other expenses	356			398
Adjusted pretax income (non-GAAP)	$	607		$	60


Selected Financial Statistics *
Finance receivables held for investment:
Net finance receivables	$	17,569		$	18,283
Number of accounts	2,229,609			2,400,536

Average net receivables	$	17,830		$	18,397
Yield	24.04		%	24.07		%
Gross charge-off ratio	5.81		%	7.36		%
Recovery ratio	(1.14)		%	(0.90)		%
Net charge-off ratio	4.67		%	6.46		%
30-89 Delinquency ratio	1.57		%	2.26		%
Origination volume	$	2,284		$	2,589
Number of accounts originated	225,102			276,773

* See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.

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Comparison of Adjusted Pretax Income for the Three Months Ended March 31, 2021 and 2020

Interest income decreased $44 million or 4.0% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a decrease in our average net finance receivables.

Interest expense decreased $16 million or 6.4% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a decrease in average debt along with a lower average cost of funds. 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, and our revolving conduit facilities.

Other revenues for the three months ended March 31, 2021 remained consistent with the same period in 2020 primarily due to a decrease in insurance products sold due to reduced loan origination volume, offset by an increase in investment revenue primarily driven by higher mark-to-market net gains on other securities.

Other expenses decreased $42 million or 10.6% for the three months ended March 31, 2021 when compared to the same period in 2020 primarily due to a $35 million decrease in insurance policy and benefits claims expense due to lower than expected involuntary unemployment insurance claims along with a decrease in general operating expenses, reflecting our efforts to manage costs through the pandemic, offset by our strategic investments in the business.

OTHER

“Other” consists of our liquidating SpringCastle Portfolio servicing activity and our non-originating legacy operations, which primarily include our liquidating real estate loans.

OMH's adjusted pretax loss of the Other components on an adjusted Segment Accounting Basis was as follows:



	Three Months Ended March 31,
(dollars in millions)	2021		2020

Interest income	$	1	$	2
Interest expense	1		1

Net interest income after provision for finance receivable losses	—		1
Other revenues	4		4
Other expenses	6		6
Adjusted pretax loss (non-GAAP)	$	(2)	$	(1)

Net finance receivables of the Other components, reported in “Other assets,” on a Segment Accounting Basis were as follows:



	March 31,
(dollars in millions)	2021		2020






Net finance receivables held for sale:
Other receivables	$	46	$	63

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Credit Quality

FINANCE RECEIVABLES

Our net finance receivables, consisting of personal loans, were $17.6 billion at March 31, 2021 and $18.1 billion at December 31, 2020. Our personal loans are non-revolving, with a fixed-rate, fixed terms generally between three and six years, and are secured by automobiles, other titled collateral, or are unsecured. We consider the delinquency status of our finance receivables as our key credit quality indicator. We monitor the delinquency of our finance receivable portfolio, including the migration between the delinquency buckets and changes in the delinquency trends to manage our exposure to credit risk in the portfolio. Our branch team members work with customers as necessary and offer a variety of borrower assistance programs to help customers continue to make payments.

DELINQUENCY

We monitor delinquency trends to evaluate the risk of future credit losses and employ advanced analytical tools to manage our exposure. Team members are actively engaged in collection activities throughout the early stages of delinquency. We closely track and report the percentage of receivables that are contractually 30-89 days past due as a benchmark of portfolio quality, collections effectiveness, and as a strong indicator of losses in coming quarters.

When finance receivables are contractually 60 days past due, we consider these accounts to be at an increased risk for loss and we transfer collection of these accounts to our centralized operations. Use of our centralized operations teams for managing late stage delinquency allows us to apply more advanced collection technologies and tools, and drives operating efficiencies in servicing. At 90 days contractually past due, we consider our finance receivables to be nonperforming. We stop accruing finance charges and reverse finance charges previously accrued on nonperforming loans.

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The delinquency information for net finance receivables is as follows:


(dollars in millions)	Consumer and Insurance			Segment to GAAP Adjustment		GAAP Basis

March 31, 2021
Current	$	16,973		$	(5)	$	16,968
30-59 days past due	157			—		157
Delinquent (60-89 days past due)	119			—		119
Performing	17,249			(5)		17,244

Nonperforming (90+ days past due)	320			—		320
Total net finance receivables	$	17,569		$	(5)	$	17,564

Delinquency ratio
30-89 days past due	1.57		%	*		1.57		%
30+ days past due	3.39		%	*		3.39		%
60+ days past due	2.50		%	*		2.50		%
90+ days past due	1.82		%	*		1.82		%

December 31, 2020
Current	$	17,362		$	(7)	$	17,355
30-59 days past due	251			—		251
Delinquent (60-89 days past due)	162			—		162
Performing	17,775			(7)		17,768

Nonperforming (90+ days past due)	316			—		316
Total net finance receivables	$	18,091		$	(7)	$	18,084

Delinquency ratio
30-89 days past due	2.28		%	*		2.28		%
30+ days past due	4.03		%	*		4.03		%
60+ days past due	2.64		%	*		2.64		%
90+ days past due	1.75		%	*		1.75		%

* Not applicable

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ALLOWANCE FOR FINANCE RECEIVABLE LOSSES

We estimate and record an allowance for finance receivable losses to cover the estimated lifetime expected credit losses on our finance receivables. Our allowance for finance receivable losses may fluctuate based upon changes in portfolio growth, credit quality, and economic conditions.

Our current methodology to estimate expected credit losses used the most recent macroeconomic forecasts, which incorporated the projected impacts and expected recovery of COVID-19 on the U.S. economy. We also considered known government stimulus measures, the involuntary unemployment insurance coverage of our portfolio, and our borrower assistance efforts. Our forecast leveraged economic projections from an industry leading forecast provider. At March 31, 2021, our economic forecast used a reasonable and supportable period of 12 months. In the near-term, we may experience further changes to the macroeconomic assumptions within our forecast, as well as changes to our loan loss performance outlook, both of which could lead to further changes in our allowance for finance receivable losses, allowance ratio, and provision for finance receivable losses.

Changes in the allowance for finance receivable losses were as follows:


(dollars in millions)	Consumer and Insurance			Segment to GAAP Adjustment		Consolidated Total

Three Months Ended March 31, 2021
Balance at beginning of period	$	2,283		$	(14)	$	2,269
Provision for finance receivable losses	(3)			1		(2)
Charge-offs	(255)			—		(255)
Recoveries	50			—		50
Balance at end of period	$	2,075		$	(13)	$	2,062

Allowance ratio	11.81		%	(b)		11.74		%

Three Months Ended March 31, 2020
Balance at beginning of period	$	849		$	(20)	$	829
Impact of adoption of ASU 2016-13 (a)	1,119			(1)		1,118
Provision for finance receivable losses	530			1		531
Charge-offs	(337)			—		(337)
Recoveries	41			—		41
Balance at end of period	$	2,202		$	(20)	$	2,182

Allowance ratio	12.05		%	(b)		11.95		%

(a) As a result of the adoption of ASU 2016-13, we recorded a one-time adjustment to the allowance for finance receivable losses.

(b) Not applicable.

The current delinquency status of our finance receivable portfolio, inclusive of recent borrower performance, volume of our TDR activity, level and recoverability of collateral securing our finance receivable portfolio, and the reasonable and supportable forecast of economic conditions are the primary drivers that can cause fluctuations in our allowance for finance receivable losses from period to period. We monitor the allowance ratio to ensure we have a sufficient level of allowance for finance receivable losses based on the estimated lifetime expected credit losses in our finance receivable portfolio. The allowance for finance receivable losses as a percentage of net finance receivables decreased from prior period primarily due to the expectation of improved unemployment and anticipated economic recovery from the COVID-19 pandemic as compared to a build in our allowance reserve in the same period in 2020 primarily due to the uncertainty of expected credit losses at the onset of the COVID-19 pandemic. See Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this report for more information about the changes in the allowance for finance receivable losses.

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TDR FINANCE RECEIVABLES

We make modifications to our finance receivables to assist borrowers experiencing financial difficulties. When we modify a loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable.

Information regarding TDR net finance receivables is as follows:


(dollars in millions)	Consumer and Insurance		Segment to GAAP Adjustment		GAAP Basis

March 31, 2021
TDR net finance receivables	$	723	$	(33)	$	690
Allowance for TDR finance receivable losses	327		(16)		311

December 31, 2020
TDR net finance receivables	$	728	$	(37)	$	691
Allowance for TDR finance receivable losses	332		(18)		314

DISTRIBUTION OF FINANCE RECEIVABLES BY FICO SCORE

There are many different categorizations used in the consumer lending industry to describe the creditworthiness of a borrower, including prime, near prime, and sub-prime. While management does not utilize FICO scores to manage credit quality, we have presented the following on how we group FICO scores into said categories for comparability purposes across our industry:

•Prime: FICO score of 660 or higher

•Near prime: FICO score of 620-659

•Sub-prime: FICO score of 619 or below

Our customers’ demographics are, in many respects, near the national median but may vary from national norms in terms of credit and repayment histories. Many of our customers have experienced some level of prior financial difficulty or have limited credit experience and require higher levels of servicing and support from our branch network and central servicing operations.

The following table reflects our personal loans grouped into the categories described above based on borrower FICO credit scores as of the most recently refreshed date or as of the loan origination or purchase date:



(dollars in millions)	March 31, 2021*		December 31, 2020*

FICO scores
660 or higher	$	4,646	$	4,653
620-659	4,742		4,877
619 or below	8,176		8,554
Total	$	17,564	$	18,084

* Due to the impact of COVID-19, FICO scores as of March 31, 2021 and December 31, 2020 may have been impacted due to government stimulus measures, borrower assistance programs, and potentially inconsistent reporting to credit bureaus.

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Liquidity and Capital Resources

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 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 expenditures relating to upgrading and monitoring our technology platform, risk systems, and branch locations.

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, 2021, OMH generated net income of $413 million. OMH’s net cash inflow from operating and investing activities totaled $754 million for the three months ended March 31, 2021. At March 31, 2021, our scheduled principal and interest payments for the remainder of 2021 on our existing debt (excluding securitizations) totaled $393 million. As of March 31, 2021, we had $9.2 billion of unencumbered gross finance receivables.

Based on our estimates and taking into account 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 for at least the next 24 months.

Securitizations and Borrowings from Revolving Conduit Facilities

During the three months ended March 31, 2021, we did not terminate, cancel, or enter into any new securitizations or conduit facilities. At March 31, 2021, we had $8.1 billion of gross finance receivables pledged as collateral for our securitization transactions.

At March 31, 2021, the borrowing capacity of our revolving conduit facilities was $7.2 billion, and no amounts were drawn nor were any personal loans pledged as collateral under these facilities.

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 and revolving conduit facilities.

Cash Dividend to OMH's Common Stockholders

As of March 31, 2021, the dividend declaration for the current year by OMH's board of directors was as follows:


Declaration Date	Record Date	Payment Date	Dividend Per Share			Amount Paid
						(in millions)
February 8, 2021	February 18, 2021	February 25, 2021	$	3.95	*	$	531



Total			$	3.95		$	531

* Includes the minimum quarterly dividend of $0.45 per share as of February 8, 2021.

To provide funding for the dividend, OMFC paid dividends of $531 million to OMH during the three months ended March 31, 2021.

On April 26, 2021, OMH declared a dividend of $0.70 per share payable on May 13, 2021 to record holders of OMH's common stock as of the close of business on May 6, 2021. To provide funding for the OMH dividend, the OMFC Board of Directors authorized a dividend in the amount of up to $95 million payable on or after May 11, 2021.

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While OMH intends to pay its minimum quarterly dividend, currently $0.70 per share, for the foreseeable future, and announced its intention to evaluate dividends above the minimum every first and third quarters, all subsequent dividends will be reviewed and declared at the discretion of the board of directors 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 of directors deems relevant. OMH's dividend payments may change from time to time, and the board of directors 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.

The Company plans to commence a $150 million programmatic share repurchase plan. The timing and amount of any shares repurchased will be determined by the company based on its evaluation of market conditions and other factors and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. The company is not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. The actual timing, number and share price of shares repurchased will depend on a number of factors, including the market price of the company’s stock, general market and economic conditions, and applicable legal requirements. The share repurchase program is expected to be funded by cash on hand and future cash generated from on-going operations.

Whole Loan Sale Transactions

As of March 31, 2021, we have entered into whole loan sale flow agreements with two third-party buyers in which we agreed to sell a combined total of $120 million per quarter of newly originated unsecured personal loans over a two-year commitment period. These unsecured personal loans are sold to unconsolidated VIEs and are derecognized from our balance sheet at the time of sale. We service the personal loans sold and are entitled to a servicing fee and other fees commensurate with the services performed as part of the agreements. The amount sold under the agreements during the three months ended March 31, 2021 was immaterial.

LIQUIDITY

OMH's Operating Activities

Net cash provided by operations of $556 million for the three months ended March 31, 2021 reflected net income of $413 million, the impact of non-cash items, and an unfavorable change in working capital of $23 million. Net cash provided by operations of $565 million for the three months ended March 31, 2020 reflected net income of $32 million, the impact of non-cash items, and an unfavorable change in working capital of $45 million.

OMH's Investing Activities

Net cash provided by investing activities of $198 million for the three months ended March 31, 2021 was primarily due to net principal collections of finance receivables, calls, sales, and maturities of available-for-sale and other securities, partially offset by purchases of available-for-sale and other securities. Net cash used for investing activities of $196 million for the three months ended March 31, 2020 was primarily due to net principal originations of finance receivables and purchases of available-for-sale securities, partially offset by calls, sales, and maturities of available-for-sale securities.

OMH's Financing Activities

Net cash used for financing activities of $1.6 billion for the three months ended March 31, 2021 was primarily due to debt repayments and cash dividends paid. Net cash provided by financing activities of $2.8 billion for the three months ended March 31, 2020 was primarily due to net issuances of long-term debt offset by the cash dividends paid, and the cash paid on the common stock repurchased in the quarter.

OMH's Cash and Investments

At March 31, 2021, we had $1.3 billion of cash and cash equivalents, which included $119 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, 2021, we had $2.0 billion of investment securities, which are all held as part of our insurance operations and are unavailable for general corporate purposes.

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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, 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 any dividends during the three months ended March 31, 2021 and 2020. See Note 11 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 2020.

OUR DEBT AGREEMENTS

The debt agreements to which OMFC and its subsidiaries are a party include customary terms and conditions, including covenants and representations and warranties. See Note 9 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.

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Securitized Borrowings

We execute private securitizations under Rule 144A of the Securities Act of 1933. As of March 31, 2021, our structured financings consisted of the following:


(dollars in millions)	Issue Amount (a)		Initial Collateral Balance		Current Note Amounts Outstanding (a)		Current Collateral Balance (b)		Current Weighted Average Interest Rate		Original Revolving Period

SLFT 2015-B	$	314	$	336	$	132	$	157	4.19	%	5 years
SLFT 2017-A	652		685		346		400		3.23	%	3 years
OMFIT 2015-3	293		329		182		197		4.57	%	5 years
OMFIT 2016-3	350		397		317		414		4.33	%	5 years
OMFIT 2017-1	947		988		264		325		3.33	%	2 years
OMFIT 2018-1	632		650		585		628		3.61	%	3 years
OMFIT 2018-2	368		381		350		400		3.87	%	5 years
OMFIT 2019-1	632		654		554		598		3.82	%	2 years
OMFIT 2019-2	900		947		900		995		3.30	%	7 years
OMFIT 2019-A	789		892		750		892		3.78	%	7 years
OMFIT 2020-1	821		958		821		958		4.12	%	2 years
OMFIT 2020-2	1,000		1,053		1,000		1,053		2.03	%	5 years
ODART 2018-1	947		964		523		558		3.66	%	2 years
ODART 2019-1	737		750		700		750		3.79	%	5 years
Total securitizations	$	9,382	$	9,984	$	7,424	$	8,325

(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, 2021.

Revolving Conduit Facilities

In addition to the structured financings, we have access to 13 revolving conduit facilities with a total borrowing capacity of $7.2 billion as of March 31, 2021:


(dollars in millions)	Advance Maximum Balance		Amount Drawn

Rocky River Funding, LLC	$	400	$	—
OneMain Financial Funding IX, LLC	850		—
Mystic River Funding, LLC	850		—
OneMain Financial Funding VIII, LLC	500		—
Thayer Brook Funding, LLC	500		—
Hubbard River Funding, LLC	250		—
Seine River Funding, LLC	650		—
New River Funding Trust	250		—
Hudson River Funding, LLC	500		—
Columbia River Funding, LLC	500		—
St. Lawrence River Funding, LLC	250		—
OneMain Financial Funding VII, LLC	850		—
OneMain Financial Auto Funding I, LLC	850		—
Total	$	7,200	$	—

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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, 2021 or December 31, 2020.


Critical Accounting Policies and Estimates

We describe our significant accounting policies used in the preparation of our consolidated financial statements in Note 3 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:

•allowance for finance receivable losses; and

•TDR finance receivables.

There have been no material changes to our critical accounting policies or to our methodologies for deriving critical accounting estimates during the three months ended March 31, 2021.


Recent Accounting Pronouncements

See Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this report for discussion of recently issued accounting pronouncements.


Seasonality

Our personal loan volume is generally highest during the second and fourth quarters of the year, primarily due to marketing efforts and seasonality of demand. Demand for our personal loans is usually lower in January and February after the holiday season and as a result of tax refunds. Delinquencies on our personal loans are generally lower in the first and second quarters and tend to rise throughout the remainder of the year. These seasonal trends contribute to fluctuations in our operating results and cash needs throughout the year. Our normal seasonality trends continue to be affected by the COVID-19 pandemic and mitigating efforts from government stimulus measures.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our market risk previously disclosed in Part II - Item 7A included in our Annual Report.

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Item 4. Controls and Procedures.

CONTROLS AND PROCEDURES OF ONEMAIN HOLDINGS, INC.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information OMH is required to disclose in reports that OMH files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2021, OMH carried out an evaluation of the effectiveness of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This evaluation was conducted under the supervision of, and with the participation of OMH’s management, including the Chief Executive Officer and the Chief Financial Officer. Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that OMH's disclosure controls and procedures were effective as of March 31, 2021 to provide the reasonable assurance described above.

Changes in Internal Control over Financial Reporting

There were no changes in OMH's internal control over financial reporting during the first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, OMH's internal control over financial reporting.

CONTROLS AND PROCEDURES OF ONEMAIN FINANCE CORPORATION

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information OMFC is required to disclose in reports that OMFC files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2021, OMFC carried out an evaluation of the effectiveness of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This evaluation was conducted under the supervision of, and with the participation of OMFC’s management, including the Chief Executive Officer and the Chief Financial Officer. Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that OMFC's disclosure controls and procedures were effective as of March 31, 2021 to provide the reasonable assurance described above.

Changes in Internal Control over Financial Reporting

There were no changes in OMFC's internal control over financial reporting during the first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, OMFC's internal control over financial reporting.

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PART II — OTHER INFORMATION


Item 1. Legal Proceedings.

See Note 12 of the Notes to the Condensed Consolidated Financial Statements included in this report.


Item 1A. Risk Factors.

There have been no material changes to our risk factors included in Part I, Item 1A of our Annual Report.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3. Defaults Upon Senior Securities.

None.


Item 4. Mine Safety Disclosures.

None.


Item 5. Other Information.

None.

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Item 6. Exhibit Index.


Exhibit Number						Description





















1.1						Underwriting Agreement, dated February 11, 2021, among OneMain Holdings, Inc., OMH (ML), L.P. and V-OMH (ML) II, L.P., as selling stockholders, and Barclays Capital Inc. and Citigroup Global Markets Inc., as representatives of the several underwriters named therein, incorporated by reference to Exhibit 1.1 to OMH’s Current Report on Form 8-K filed on February 16, 2021.

31.1						Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Executive Officer of OneMain Holdings, Inc.

31.2						Rule 13a-14(a)/15d-14(a) Certifications of the Executive Vice President and Chief Financial Officer of OneMain Holdings, Inc.

31.3						Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Executive Officer of OneMain Finance Corporation

31.4						Rule 13a-14(a)/15d-14(a) Certifications of the Executive Vice President and Chief Financial Officer of OneMain Finance Corporation

32.1						Section 1350 Certifications of OneMain Holdings, Inc.

32.2						Section 1350 Certifications of OneMain Finance Corporation

101						Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Shareholder’s Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File in Inline XBRL format (Included in Exhibit 101).

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OMH Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ONEMAIN HOLDINGS, INC.

(Registrant)

Date:

April 27, 2021

By:

/s/ Micah R. Conrad

Micah R. Conrad

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

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OMFC Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ONEMAIN FINANCE CORPORATION

(Registrant)

Date:

April 27, 2021

By:

/s/ Micah R. Conrad

Micah R. Conrad

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)