OneMain (OMF) Q1 2026 Earnings Call Transcript

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DATE

Friday, May 1, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Douglas H. Shulman
• Chief Financial Officer — Jeannette E. Osterhout
• Head of Investor Relations — Peter R. Poillon

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TAKEAWAYS

• Revenue -- $1.6 billion, up 6% year over year, with interest income up 6% to $1.4 billion and other revenue up 4% to $198 million.
• Managed Receivables -- $26.1 billion, up $1.5 billion or 6% year over year, reflecting growth across the personal loan, auto, and credit card portfolios.
• Originations -- $3.1 billion, an increase of 3% compared to the prior-year period, with personalized growth strategies maintained in each business line.
• Consumer Loan Yield -- 22.5%, up 13 basis points year over year; yields increased over 60 basis points since second quarter 2024 due to proactive pricing efforts.
• Credit Card Receivables -- Nearly $1 billion, up 45% year over year, with customer accounts up 40% to almost 1.2 million and revenue yield up 300 basis points to 33.9%.
• Auto Finance Receivables -- $2.8 billion, up 14% year over year, supported by network expansion and partnerships such as Ally.
• Credit Performance -- 30–89 day delinquency improved by 1 basis point year over year to 2.62%; sequential improvement outperformed both prior-year and pre-pandemic benchmarks by 48 basis points.
• Net Charge-Offs (C&I) -- 8.4%, up 24 basis points year over year and aligned with seasonal expectations; net charge-off guidance for the full year remains 7.4%-7.9%.
• Consumer Loan Net Charge-Offs -- 8% of average net receivables, up 19 basis points year over year; strong recoveries, up 18% to $104 million, contributed to maintaining net charge-off rates.
• Provision Expense -- $465 million, consisting of $512 million in net charge-offs offset by a $47 million reserve decrease due to seasonal receivables decline.
• Loan Loss Reserve Ratio -- Flat year over year and sequentially at 11.5%, with $2.8 billion in reserves; the credit card portfolio contributed 40 basis points to the total reserve rate.
• Operating Expenses -- $437 million, up 9% year over year, driven by investments in new products, data, and technology; operating expense ratio was 6.8% for the quarter with full-year target at approximately 6.6%.
• Capital Generation -- $194 million, comparable to the prior year, with excess capital returned through a $105 million share repurchase of 1.9 million shares in the quarter.
• Net Leverage -- 5.4x, consistent with the company’s target range of 4x-6x and flat versus the prior quarter.
• Dividend and Repurchases -- Annualized dividend remains at $4.20 per share (7% yield at current price); company expects incremental capital returns to shift more toward repurchases going forward.
• ABS Issuance -- Closed $850 million in three-year revolving asset-backed securities at 4.63% yield, evidencing strong market access despite broader volatility.
• AI and Technology Initiatives -- Deployed agentic AI to recover insurance proceeds on damaged autos and broadened use of AI for product development, branch productivity, and customer service enhancement.
• Personal Loan Product Innovation -- Enhanced debt consolidation and HomeFix secured loan offerings are attracting higher-quality customers and supporting loan portfolio growth and mix improvements.
• Guidance Reaffirmed -- Company reiterated guidance for full-year managed receivables growth of 6%-9%, 7.4%-7.9% C&I net charge-offs, and a 6.6% operating expense ratio.

SUMMARY

Management confirmed deliberate capital allocation favoring disciplined receivables growth and active share repurchases as excess capital allows. Strategic initiatives in auto and credit card businesses are scaling, demonstrated by multi-year high growth in receivables and customer counts in these segments. Product mix is shifting toward higher-yielding, lower-loss accounts, enabled by data-driven improvements in underwriting and customer engagement. Management is leveraging technology—specifically AI—to accelerate operational efficiency and support differentiated customer experiences. Refinancing activity has reduced secured funding mix and extended maturities, offering balance sheet flexibility in volatile conditions.

• Jeannette E. Osterhout stated, "We saw good performance in our personal loan business, coupled with growth in auto and outsized improvement across key financial metrics in the credit card business."
• Credit card net charge-offs declined 176 basis points year over year to 18% in the quarter, with 30-plus delinquency down 105 basis points.
• Policyholder benefits and claims expense increased to $52 million from $49 million in the prior-year quarter; second-quarter and subsequent quarterly expectations are in the mid- to high-$50 million range.
• The back book represents 5% of the portfolio but accounts for 14% of 30-plus delinquencies, leading management to monitor this vintage's impact on credit quality as it seasons and runs off.
• Douglas H. Shulman said, "we apply a 30% peak loss overlay—and even with that overlay, loans must meet our 20% marginal return on tangible equity."
• No material change was observed in customer payment patterns or unemployment-related claims due to macro risks such as rising oil prices or geopolitical tension during the quarter.
• The company’s bank lines remained stable at $7.5 billion, supporting liquidity and funding flexibility.

INDUSTRY GLOSSARY

• Agentic AI: Artificial intelligence tools configured to autonomously complete tasks—such as negotiating insurance recoveries—by interacting with external parties or systems, improving operational throughput.
• Back Book: Portfolio segment consisting of older, seasoned loans that typically exhibit distinct credit performance trends compared to new originations.
• C&I: For OneMain Holdings, Inc., references to "C&I" denote combined consumer installment and credit card businesses as reported for credit metrics.
• 30–89 Day Delinquency: Percentage of loan portfolio with payments overdue by 30 to 89 days, a leading measure for early-stage credit stress.
• ABS: Asset-backed securities; financial instruments collateralized by pools of loans or receivables, enabling funding diversification for nonbank lenders.

Full Conference Call Transcript

Operator: Good morning, everyone. Welcome to the OneMain Holdings, Inc. First Quarter 2026 Earnings Conference Call and Webcast. Hosting the call today from OneMain Holdings, Inc. is Peter R. Poillon, Head of Investor Relations. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode. The floor will be opened for your questions following the presentation. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We do ask that you please limit yourself to one question and one follow-up. Also, please pick up your handset to allow for optimal sound quality.

Lastly, if you require operator assistance today, please press star 0 at any time. It is now my pleasure to turn the floor over to Mr. Peter R. Poillon. Please go ahead, sir.

Peter R. Poillon: Good morning, everyone, and thank you for joining us. Let me begin by directing you to Page 2 of the first quarter 2026 investor presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP measures. The presentation can be found in the Investor Relations section of the OneMain Holdings, Inc. website. Our discussion today will contain certain forward-looking statements reflecting management's current beliefs about the company's future, financial performance, and business prospects. These forward-looking statements are subject to inherent risks and uncertainties and speak only as of today. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in our earnings press release.

We caution you not to place undue reliance on forward-looking statements. If you are listening via replay at some point after today, we remind you that the remarks made herein are as of today, May 1, and have not been updated subsequent to this call. Our call this morning will include formal remarks from Douglas H. Shulman, our Chairman and Chief Executive Officer, and Jeannette E. Osterhout, our Chief Financial Officer. After the conclusion of our formal remarks, we will conduct a question-and-answer session. I would now like to turn the call over to Douglas H. Shulman.

Douglas H. Shulman: Thanks, Pete, and good morning, everyone. Thank you for joining us today. Let me begin by saying we are quite pleased with the financial results of the quarter, which continue the momentum we built over the last couple of years. Our customers remain resilient, and we are confident in our ability to execute our 2026 financial plan as we operate from a position of strength. Let me briefly walk you through a few of the highlights for the quarter and then I will discuss progress on some of our important strategic initiatives. Capital generation was $194 million in the quarter. C&I adjusted earnings were $1.95 per share, up 13% year over year.

Total revenue and receivables each grew 6% year over year. We achieved this growth while still maintaining a conservative underwriting posture. Receivables growth was supported by focused initiatives to drive high-quality personal loan originations and important contributions from our newer businesses, auto finance and credit card. Credit performance was very good and continues to track well against our expectations both for delinquencies and losses. Our 30–89 delinquency declined year over year, improving on last quarter's slight increase. Quarter-over-quarter improvement in 30–89 delinquency was better than last year and better than the pre-pandemic average.

C&I net charge-offs were 8.4%, in line with expectations as first-quarter losses are seasonally the highest of the year, and we feel good about our full-year credit outlook. Consumer loan net charge-offs were 8%, also in line with expectations, and we continue to see strong recoveries across the business. During the quarter, we continued to make progress on key strategic initiatives positioning the company well for continued earnings growth in 2026 and beyond. In our personal loans business, we are always enhancing our product offerings to better serve customers and drive profitable growth while maintaining our disciplined underwriting practices. We continue to refine how we deliver debt consolidation loans, making the experience more seamless.

This product provides real value to our customers, as they consolidate other debt onto a loan with a single monthly payment that amortizes down over time. In a majority of the cases, our customers' credit scores improved, and OneMain Holdings, Inc. also benefits from better credit performance. We have also seen an uptick in the number of customers who choose to share bank data with us. By accessing this more granular data, we can offer better loan terms, improve credit outcomes, and continue to enhance our credit models over time. We are also encouraged by the early performance of our new HomeFix secured loan product, which provides OneMain Holdings, Inc. homeowners with a differentiated way to access credit.

We continue to pilot this offering, and it is performing very well, attracting high-quality customers and delivering strong results. These types of innovations are positioning our personal loan business for continued growth. As always, we move quickly but with discipline, testing rigorously, scaling what works, and building a pipeline of initiatives that we expect to drive value over time. Turning to auto finance, receivables grew 14% year over year to $2.8 billion. Credit performance was in line with expectations and continues to outperform the broader industry. During the quarter, we continued to grow our dealer network across the country, including through our partnership with Ally. We are also innovating across our auto finance business.

Earlier this year, we began piloting an agentic AI tool that improves insurance recovery outcomes on damaged customer vehicles by automating negotiations with insurers. Initial results have exceeded expectations with improved outcomes for us and our customers. We have also deployed AI more broadly across the company where we see clear near-term benefits. This includes using AI across the product development life cycle, leading to faster deployment of technology at a potentially lower cost. We have also developed an AI tool which gives our team members easy access to a broad array of internal information, increasing their effectiveness, saving them time, and speeding up customer service.

And we are launching pilots in key customer service areas where the risk is low and the learning potential is high. We are taking a focused, strategic approach to AI by implementing where we have high conviction and piloting in other areas to build capability and scale over time. Turning to our credit card business, we delivered strong results for the quarter, with receivables increasing 45% year over year to just under $1 billion, and customer accounts up 40% year over year to nearly 1.2 million. All of the key metrics in the credit card business were very strong, as we saw increased yields, improvement in loss trends, and decreased unit costs.

We are driving profitable growth in the card business by combining product innovation with deeper customer engagement. As the business has matured, we have enhanced line management processes for our best customers. We are developing differentiated offerings across rewards and pricing to increase our share of wallet with lower-risk customers. And our data science team has refined marketing and credit models to make better offers to customers more likely to use the card, thereby creating more value for the customer and for OneMain Holdings, Inc. All of this shifts our portfolio mix to our best customers and supports profitable long-term growth. We are also implementing initiatives to improve delinquency and collections performance while driving cost efficiencies as we scale.

Taken together, we expect these efforts to position the business for profitable growth this year and beyond. We have also seen a steady rise in customer adoption of our financial wellness offering, which has recently been enhanced and rebranded OneMain MyMoney. Our customers use OneMain MyMoney to monitor credit scores, manage budgets, track expenses, and negotiate bills to save money. It is another way we build deep, long-lasting relationships with our customers and help them make progress toward a better financial future. These are just a few examples of strategic business initiatives across our company that are driving both short- and long-term value. Let me briefly touch on the consumer.

While the current economic environment continues to have some uncertainty, our customers remain resilient. A year ago, tariffs were top of mind. Today, geopolitical tensions and their impact on energy prices are the broader risk. However, unemployment remains low, providing ongoing support for credit performance. As always, we are closely monitoring trends across the consumer and our portfolio, and we are maintaining our cautious underwriting posture. But credit is performing well, as the actions we have taken over the past several years put us in a strong position.

Turning to capital allocation, our first priority for capital remains extending credit that meets our risk-adjusted returns while also investing in the business to meet customer needs, drive efficiency, and build an enduring franchise. Our regular dividend, which is currently $4.20 per share on an annual basis, represents a 7% yield at today's share price. As I discussed last quarter, all else equal, we expect incremental capital returns to be weighted more toward share repurchases going forward. In the first quarter, we repurchased 1.9 million shares for $105 million. Over the last two quarters, we have repurchased 3.1 million shares for $176 million.

As we look ahead, we will continue to pace share repurchases based on several factors, including the capital needs of our business, market dynamics, and economic conditions. I am feeling very good about our business, as we are operating from a position of strength with disciplined underwriting, a proven team that is experienced in serving the nonprime consumer, and a resilient, diversified balance sheet. We remain confident in our competitive positioning and like the trajectory of our credit performance, and we anticipate continued capital generation growth this year and beyond as we execute on our strategic priorities. With that, let me turn the call over to Jeannette.

Jeannette E. Osterhout: Thanks, Doug, and good morning, everyone. Let me begin by summarizing our solid first-quarter performance, which supports our continued confidence in the trajectory of the business. We delivered revenue growth, credit performance, and capital generation in the quarter that was right in line with our expectations. We saw good performance in our personal loan business, coupled with growth in auto and outsized improvement across key financial metrics in the credit card business. Additionally, we executed across all our businesses on several strategic initiatives that we expect to deliver significant value in the quarters ahead.

Funding was, once again, a highlight as we further strengthened our balance sheet and accessed markets favorably even in a challenging environment, demonstrating the strength of our programs and our access to capital. We increased our share repurchases in the first quarter to $105 million. While we remain committed to our dividend as the primary means to return capital to our shareholders, we continue to expect to use share repurchases as a means to bolster capital returns in the future. In the first quarter, we generated higher excess capital due to our seasonally lower growth needs and returned that excess capital through our share repurchase program.

Looking ahead for the year, we expect to continue generating excess capital, though at more moderate levels, as we deploy additional capital to support higher seasonal growth in the business. As a result, we expect share repurchase activity to adjust accordingly. First-quarter GAAP net income per diluted share of $1.93 was up 8% from $1.78 in 2025. C&I adjusted net income per diluted share of $1.95 was up 13% from $1.72 in 2025. Capital generation totaled $194 million, comparable to 2025. Managed receivables ended the quarter at $26.1 billion, up $1.5 billion, or 6%, from a year ago.

First-quarter originations of $3.1 billion increased 3% compared to the first quarter of last year, and we see opportunities to continue our growth across our products. In our personal loan business, we saw good performance as the initiatives we have discussed continued to gain traction. Moving to our newer businesses, auto originations this quarter benefited from the expansion of our dealer network and new partnership activity, which has helped support scale and momentum across our auto business. We like the pace and performance of our auto business and expect it to continue to grow and contribute to our future capital generation.

In our card business, we saw growth in both account openings and receivables, as our increased customer engagement continues to support the enhanced value proposition of the BrightWay card product. Notably, in April, we crossed $1 billion in card receivables, marking another important milestone in scaling the card business. As we look forward, we expect both of our newer products and personal loan innovation initiatives to help drive receivables growth throughout the year. Turning to yield, our first-quarter consumer loan yield was 22.5%, up 13 basis points year over year. Consumer loan yields are up over 60 basis points since second quarter 2024, resulting from the proactive steps we took to optimize pricing in certain customer segments since 2023.

Despite the mix-shift headwinds from the growth of our lower-loss, lower-yielding auto business, we expect consumer loan yield to remain around current levels throughout the rest of the year, assuming a steady product mix and competitive environment. While the credit card portfolio remains a relatively small portion of our overall portfolio, we continue to see strong yield momentum with total revenue yield of 33.9%, increasing roughly 300 basis points since last year, supporting our overall revenue growth as the card portfolio scales. Total revenue was $1.6 billion, up 6% compared to 2025. Interest income of $1.4 billion grew 6% from the first quarter of last year, driven by receivables growth and yield improvements.

Other revenue of $198 million was up 4% from last year, primarily due to higher servicing fees on our growing portfolio of loans serviced for third parties and higher credit card revenue as we grow the card business. Interest expense for the quarter was $322 million, up 4% compared to 2025, driven by an increase in average debt to support our receivables growth. Our interest expense as a percentage of average net receivables was 5.3% this quarter, down from 5.4% in 2025, helping our profitability as we grow the book. Going forward, we expect our funding costs to remain at approximately this level throughout 2026.

First-quarter provision expense was $465 million, comprising net charge-offs of $512 million and a $47 million decrease in our reserves driven by the seasonal sequential decline in receivables during the first quarter. Our loan loss reserve ratio of 11.5% remained flat to prior year and last quarter. Policyholder benefits and claims expense for the quarter was $52 million, up from $49 million in the first quarter last year. Looking forward, we expect quarterly claims expense in the mid- to high-$50 million range over the remainder of the year. Turning to credit, 30–89 day delinquency on March 31, excluding Foresight, was 2.62%, down 1 basis point compared to a year ago.

This year-over-year performance is in line with our expectations and modestly better than the performance we saw a quarter ago. The 48 basis point sequential improvement was better than the 43 basis point sequential improvement both last year and in the pre-pandemic benchmark period. Our front book continues to perform in line with expectations, while our back book, which represents only 5% of the portfolio, still accounts for 14% of 30-plus delinquencies. This is more than double the impact we would typically expect from vintages on the book this long, so the back book continues to present a headwind for total portfolio credit metrics.

Moving to net charge-offs for the quarter, first-quarter C&I net charge-offs, which include the results from our small but growing credit card portfolio, were 8.4%, up 24 basis points year over year and in line with expectations. Consumer loan net charge-offs, which exclude credit cards, were 8% of average net receivables in the first quarter, up 19 basis points from a year ago and in line with our expectations. Strong recoveries continued to support our results, increasing 18% year over year to $104 million in the first quarter.

Recoveries as a percentage of receivables increased to 1.7% from 1.5% in 2025, largely due to continued enhancements to our internal recovery strategies, and it is worth noting that bulk sales of charged-off loans, which is one of the strategic tools in our overall recovery strategy, were slightly less than prior year. As net charge-offs are seasonally highest in the first half of the year, we expect losses in the second half of the year to significantly decline following the improvement in early delinquencies we have seen. This normal seasonal improvement is reflected in our full-year C&I net charge-off guidance range provided on our last earnings call, which remains 7.4% to 7.9%.

As a reminder, C&I net charge-offs include losses in our credit card portfolio, which has higher yields and higher loss content and will continue to pressure overall losses as the portfolio grows. With that in mind, we are seeing improvement in our credit card net charge-offs, which declined 176 basis points year over year to 18% in the quarter. We also continued to see strong performance in card delinquency, as 30-plus delinquency fell 105 basis points year over year in the first quarter, a notable improvement from the 83 basis point decline we saw in the fourth quarter. While we like the sustained improvements we are seeing, we remain committed to measured growth and disciplined underwriting.

Loan loss reserves ended the quarter at $2.8 billion. Our loan loss reserve ratio remained flat both sequentially and year over year at 11.5%. The continuation of the steady improvement in our card portfolio I just spoke about was also reflected in our reserves this quarter, as the reserve rate on the credit card portfolio dropped 80 basis points from last quarter. However, given it is a higher-yield, higher-loss business, the card portfolio maintains a higher reserve rate than the consumer loan book and will continue to pressure the overall reserve rate of the company.

This quarter, the credit card portfolio continued to add approximately 40 basis points to the overall reserve rate, and we expect that to increase slightly over the remainder of the year, consistent with the growth of the portfolio. Looking forward, in addition to the shifting product mix of the overall portfolio, we will continue to be prepared to adjust reserves if and when the macroeconomic environment changes. Operating expenses were $437 million, up 9% compared to a year ago, driven by thoughtful investment in growth initiatives in our newer products and solutions, as well as data and technology capabilities to better serve our customers, accelerate product innovation, and drive operating efficiency in the future.

Our OpEx ratio this quarter was 6.8%. As the year progresses, we have a clear line of sight to lower quarterly expense growth, which combined with expected receivables growth will drive the OpEx ratio lower, and we remain confident in the full-year OpEx ratio guide of approximately 6.6%. Now turning to funding and our balance sheet, during March, even with escalating geopolitical tensions and market uncertainty, we were able to issue an $850 million three-year revolving ABS. The offering saw very strong demand and was executed at attractive pricing of 4.63%, once again demonstrating our excellent access to markets and strong ability to execute even in difficult market conditions.

The proactive measures we took last year to reduce our secured funding mix, redeem and repurchase near-term maturities, and refinance the 9% 2029 bonds reduced our interest expense and gave us significant flexibility on both the mix and timing of issuance in 2026, an important advantage, especially given the increased volatility in markets so far this year. At the end of the first quarter, our bank lines totaled $7.5 billion, unchanged from last quarter. These bank lines add significant liquidity and funding flexibility to our program. Our balance sheet is a core strength, highlighted by staggered long-term maturities, strong market access and experienced execution, a balanced funding mix, and significant liquidity.

We view this as a durable competitive advantage that supports our business through economic cycles. Our net leverage at the end of the first quarter was 5.4x, in line with last quarter and within our targeted range of 4x to 6x. We are reiterating our 2026 guidance that we provided last quarter. We had a good first quarter that was in line with our expectations, and we are pleased with our performance. For full-year 2026, we expect to grow managed receivables in the range of 6% to 9% while maintaining our current conservative underwriting posture. We expect C&I net charge-offs in the range of 7.4% to 7.9%, and we expect our full-year operating expense ratio to be approximately 6.6%.

All of this supports the strong capital generation of the company for 2026 and beyond. In closing, we are encouraged by our first-quarter performance and start to the year. Our credit metrics are in line with expectations, supporting good momentum over the remainder of the year. We see opportunities to grow through innovation and product expansion while improving efficiency, which we expect will deliver outstanding shareholder value in the quarters and years ahead. With that, let me turn the call back over to Doug.

Douglas H. Shulman: Thanks, Jenny. In closing, we remain very confident in the strength and trajectory of our business. We are serving more customers with products that meet their diverse needs and strengthen OneMain Holdings, Inc.'s position as the lender of choice for hardworking Americans. We remain focused on profitably scaling our auto finance and credit card businesses to provide value in both the short and long term. Credit is performing well and in line with our expectations, and our industry-leading balance sheet remains a key competitive advantage, supported by a diversified funding model, consistent market access, and a strong liquidity position. All of this points to our expectations of driving increased capital generation this year and beyond.

Let me conclude by thanking our team members for their outstanding execution, as well as their commitment to our customers and to each other. We will now open the call for questions.

Operator: Thank you, Mr. Shulman. Ladies and gentlemen, the floor is now open for questions. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Again, we do ask that you please limit yourself to one question and one follow-up. We will go first this morning to John Douglas Hecht with Jefferies.

John Douglas Hecht: Hey, guys. Thanks very much for taking my questions. First, any update on the bank application, any sense of timing and so forth there?

Douglas H. Shulman: No updates this quarter. The process continues to move forward. Timing is uncertain, but we remain optimistic because we continue to believe we have a very strong case for approval. We are having dialogues with the FDIC and the Utah Department of Financial Institutions, so we are optimistic, and we will keep folks posted as things evolve.

John Douglas Hecht: Thanks. And then you talked about a lot of focus on technology and using AI for productivity. Any update on the branch versus digital activities and how they integrate together, and thoughts on the trajectory of the branch system over time?

Douglas H. Shulman: We have, over the last seven to eight years, really focused on being a multiproduct omnichannel lender. We have added card and auto, which are not dependent on the branch, but our core personal loan business has a model where you can do business with us in person, on the phone, or digitally. We do think our branches are a competitive differentiator and one of the secret sauces of how we serve the nonprime customer very well. They can walk into a branch, work out issues with us, gain confidence, and we can advise them on getting into a loan they can afford and the right type of loan.

Over the years, our branch footprint shrank from about 2,000 to about 1,400 and has remained somewhat steady. It has gone down about 100 over the last couple of years. We have focused on making sure our branch team members spend time working with customers, either in lending or in servicing, and moving lower-value work to technology, self-service, or our call centers. We have made a lot of progress automating information branches used to need to get, adding outbound calling to complete applications, and bringing in DMV data so branches do not have to look up VINs. We continue to invest in technology to make our branch team members more productive and free them up to work with customers.

On AI, we see opportunities to automate tasks and provide chatbots to get information for the branch. A great example is that all of our internal information—previously on our intranet or in different applications—is now fed into an AI program where someone can just ask, “What is the policy for loan size in Tennessee?” or “What is the policy about health insurance for my child?” They can just have a chat and get information at their fingertips, freeing up branch team members.

John Douglas Hecht: Great. Thanks very much.

Operator: We will go next now to Moshe Ari Orenbuch with TD Cowen.

Moshe Ari Orenbuch: Great. Thanks. I was hoping to talk a little bit about credit quality. You called out that you expect credit to improve more than seasonal patterns by the second half, and you have a lower level of the back book, yet it has been a little bit stubborn. Can you expand on what is going on with those loans and customers, and what gives you confidence you will get to that back-half level?

Jeannette E. Osterhout: Hi, Moshe. This quarter we saw that back book represent about 5% of the portfolio, and it contributed 14% to the 30-plus delinquency. Those loans are continuing to go delinquent at about two times the rate we would have expected. What gives us confidence is that our loans typically are about five years, and as those loans season and burn off, we should get closer to our historical range, with growth also playing a role in the mix.

Moshe Ari Orenbuch: Thanks. I was also intrigued to hear you talk about the credit card business turning to profitability. Can you talk about the level of investment to date and how you think about the ultimate profitability compared to your core installment product and what that might mean for overall earnings for OneMain Holdings, Inc.?

Jeannette E. Osterhout: Card businesses are challenging to set up and take time. What has been remarkable is that we were able to start this card business coming out of COVID and leverage the company’s scale, breadth, and knowledge—corporate functions, funding program, and more. We did mention we are now at scale and turning to profitability. From here, it is about scaling in a way we like. In terms of returns, personal loans have a very good return profile. Credit cards are one of the few businesses serving the nonprime consumer where you can have a similar or slightly higher return profile.

You can see revenue yields in the low 30s, support over time for credit coming in closer to the mid-teens percent range, and we are very focused on operating and unit operating expenses. As we scale, unit costs come down. We are pleased with where we are and where we are going.

Operator: Thank you. We will go next now to Aaron Cyganovich with Truist.

Aaron Cyganovich: Good morning. In terms of personal loans, they are up on balance sheet around 2%. I know you are selling a portion as well. Can you talk about the balance of pushing personal loans versus demand relative to card and auto that you are increasing? Is there any push and pull in how you focus on originations? And can you touch on the health of the consumer given rising oil prices and how that might impact your customers?

Douglas H. Shulman: There are two questions there. We run the three businesses independently. We are not trying to balance how much personal loans versus card versus auto. Each loan—card, auto, or personal—needs to meet our 20% ROE threshold based on credit box, cost of funds, OpEx, and losses over time. They will move at different paces. We have a very big market share in personal loans, so we are growing from a large base and do not expect as much percentage growth, although it remains the biggest part of our annual originations.

Auto and credit card are huge markets—about a $500 billion card market where we have $1 billion of receivables, and a $600 billion auto market where we have just under $3 billion of receivables—so we would expect those to grow relatively faster. Each business has a dedicated team given different characteristics and competitive environments. On the consumer, our customers remain resilient. Our credit is performing where we expected. External data shows employment remains low—ticked up a little in the second half of 2025 but has been stable recently. Wages and savings have been stable. Sentiment has gone down a lot in the last six months, but we are not seeing that in our numbers.

We are paying attention to geopolitical tension and oil costs, but we have not seen that creep into our book at this time. Our unemployment insurance data shows no uptick, and our branch survey of managers has been stable over the last couple of quarters.

Aaron Cyganovich: Thanks. A follow-up on personal loans. Is there a higher competitive environment today from fintech lenders? Or are credit overlays keeping growth from being faster than expected?

Douglas H. Shulman: We have a very conservative credit box, and we have had it for a few years because macro uncertainty has not fully cleared. There is no material change in the competitive environment. The last 18 months have been quite competitive with plenty of funding available for competitors. Different competitors have different return profiles and premiums on growth. We do not chase growth; we focus on profitability. We are still booking 60% of originations in our best, lowest-risk customers with very attractive pricing, which indicates our competitive position remains strong. We have a pipeline of product innovation. It will fluctuate quarter to quarter. We focus on a great product, targeted marketing, and booking loans that meet risk-adjusted returns.

We are fine with 6% year-over-year receivable growth.

Operator: We will go next now to Mihir Bhatia with Bank of America.

Mihir Bhatia: Hey. Good morning, and thank you for taking my question. I wanted to turn to credit for a minute. There are a few moving pieces this quarter. Gross charge-offs and recoveries both stepped up materially year over year. What is driving that? And early-stage DQs, the 30–89 bucket, are basically flat while the 90-plus bucket increased. Is something going on in roll rates where folks are finding it difficult to cure once delinquent? Can you help frame what is going on with credit?

Jeannette E. Osterhout: We focus on net charge-offs, and we ended net charge-offs in line with expectations. You are right there were puts and takes. We have seen historically low roll rates from delinquency to loss since the pandemic, and this quarter we saw some normalization in those roll rates. We are not expecting that normalization to continue through the rest of the year, and roll rates remain better than pre-pandemic. Second, recoveries efforts paid off. We saw very strong recoveries that helped offset gross charge-offs, largely from improvements to internal capabilities. Bulk sales of charged-off loans were slightly less year over year. In general, we feel good about where credit is and where it is going.

The movement you see in 90-plus reflects some of those roll dynamics, but we are not expecting that to persist.

Operator: Thank you. We will go next now to John Pancari with Evercore ISI.

John Pancari: Morning. Just to go back to the credit point regarding the back book—you indicated the loans are going delinquent two times faster than expected, but you are still confident in the charge-off expectation given the burn-off. Is that view predicated on that two-times faster DQ formation slowing, or on it remaining stable? What is your assumption around that DQ formation when it comes to your charge-off outlook?

Jeannette E. Osterhout: The back book’s contribution to delinquency has shrunk slightly over time, and it will not be perfectly linear with run-off. On a typical personal loan curve, as loans get older, you see some plateauing. For the second half, we look at the composition of vintages. We expect the back book contribution to come down slightly—approximately two times, maybe slightly more than two times, what we would have expected pre-pandemic—but we will also have newer, good-performing vintages coming on book, which improves the mix.

John Pancari: Thanks. Separately, can you give us an update on the status of the State AG lawsuit filed back in March—any developments, progression in the courts, thoughts on exposure, fines, remediation, settlements? I know you indicated this issue had been addressed by the CFPB in a previous action.

Douglas H. Shulman: First, please see our public statement on our website. The bottom line is the claims made by the states are untrue and have no merit. They are attempting to relitigate issues already reviewed by the CFPB and resolved. We are happy to go to court and are confident we can win. Regarding sizing, these are matters fully resolved with the CFPB, and it is only a fraction of states involved. We do not view this as a material matter or one that will have any material impact on our business.

Operator: We will go next now to Richard Barry Shane with JPMorgan.

Richard Barry Shane: Hey, guys. Thanks for taking my questions this morning. There is an interesting dynamic: you have had a tight credit box and have consistently tightened since August 2022, driven by sensitivity of lower-quality borrowers to inflation—housing and gas were standouts. We are now two months into substantially higher gas prices. How do you think about the credit box now? Had you anticipated loosening and you will maintain status quo, or do you tighten from here?

Douglas H. Shulman: We think we have a good, conservative credit box, and we have kept it conservative for exactly the kinds of uncertainties we have seen recently. We have a 30% stress overlay in our credit box—on top of model predictions, we apply a 30% peak loss overlay—and even with that overlay, loans must meet our 20% marginal return on tangible equity. I would not say things are worse than in 2022. We are more than three years into a period of persistent uncertainty, but performance has been pretty good despite that. We have not declared the coast is clear, and we have constructed a book with better-quality customers, driving losses down and profitability up.

We do not react to oil price moves in isolation. We look at on-us credit, external factors, early defaults, and we run weathervane tests—booking a de minimis amount under our 20% threshold to see if they pop above over time. Nothing indicates we should add more overlay now, but we are not taking the overlay off. We are always making tweaks—by geography, product type, and customer characteristics—but the overall overlay remains constant, and we will change it when warranted.

Richard Barry Shane: Understood. As a follow-up, incumbent in your guidance is a significant improvement in credit in the second half. Do recent changes—like higher gas prices—reduce your confidence in achieving that?

Douglas H. Shulman: No. What we have seen so far does not change anything. If the economy were to materially weaken, our outlook would change, but we are assuming a relatively steady environment and remain confident in our guidance.

Douglas H. Shulman: Thank you, everyone, for joining us. As always, our team is available for follow-up. Have a great day.

Operator: Thank you, Mr. Shulman. Thank you, Ms. Osterhout. Again, ladies and gentlemen, this concludes today’s OneMain Holdings, Inc. first quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.

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