OneMain (OMF) - 2021 Q4 - Annual Report

Employee Engagement and Diversity - As of December 31, 2021, OneMain had over 8,800 employees, emphasizing a commitment to diversity and inclusion with 38% of the Board of Directors being ethnic or racial minorities and 25% women[56][58] - 84% of team members participated in the annual Employee Engagement Survey, indicating a high level of engagement within the organization[59] Corporate Social Responsibility - OneMain entered a $4 million service contract with EVERFI to develop and distribute free digital financial education to 1,500 high schools over four academic years, aiming to enhance financial literacy[64] - In June 2021, OneMain issued its inaugural Social Bond, with at least 75% of the loans funded allocated to women or minority borrowers, reinforcing its commitment to financial inclusion[63] - OneMain's approach to corporate social responsibility includes initiatives for financial literacy, community development, and social justice, reflecting its mission to improve financial well-being[62] Financial Performance - Net income for 2021 was $1,314 million, a significant increase from $730 million in 2020, resulting in a basic earnings per share of $9.90 compared to $5.42 in the previous year[333] - The provision for finance receivable losses decreased from $1,319 million in 2020 to $593 million in 2021, indicating improved credit quality[333] - Total other revenues of $531 million in 2021, slightly up from $526 million in 2020, with insurance revenues contributing $434 million[333] - Comprehensive income for 2021 was $1,281 million, compared to $780 million in 2020, reflecting a strong performance[348] Risks and Challenges - The company faces risks related to economic conditions affecting borrowers' ability to repay loans, particularly among nonprime borrowers who are more vulnerable to adverse conditions[72][73] - The company is exposed to operational risks due to remote work arrangements implemented during the COVID-19 pandemic, which may affect cybersecurity and overall business continuity[77][78] - The competitive landscape in the consumer finance industry poses risks, as competitors may have greater resources and lower costs of funds[104] - Cybersecurity risks, including data breaches and system failures, could disrupt operations and result in significant reputational and financial harm[93] Financial Position and Liquidity - The company emphasizes the importance of generating sufficient cash to service all outstanding debt and maintain liquidity[132] - The company may be required to indemnify or repurchase finance receivables that do not meet certain criteria, which could impact its financial condition and liquidity[91] - The company's ability to fund operational requirements may be adversely affected if it cannot access adequate sources of liquidity[126] Regulatory and Compliance Issues - The company is subject to regulatory scrutiny and potential penalties related to its operations, which could adversely affect its financial condition and results of operations[105] - The CFPB's supervisory authority over the company's real estate servicing activities could lead to increased regulatory compliance costs[115] - The company may face heightened regulatory scrutiny regarding the purchase and sale of finance receivables, especially those in default[121] Asset Management and Valuation - The company faces challenges in accurately valuing financial assets and liabilities due to market disruptions, which could adversely affect its financial condition and results of operations[87] - The company's allowance for finance receivable losses is a critical accounting estimate, requiring significant assumptions about collectability based on historical data and economic trends[85][86] - The company charges off personal loans and credit cards that are beyond seven payments (approximately 180 days) past due, with specific exceptions for bankruptcy cases[373] Shareholder and Stock Information - The company currently has 1,872,540,640 shares of common stock authorized but unissued, which may be issued without stockholder approval, potentially diluting existing stockholders[152] - The company intends to pay a minimum quarterly dividend of $0.95 per share, but future dividends will depend on various financial factors and may not be guaranteed[142] - Cash dividends declared were $9.55 per share in 2021, compared to $5.94 per share in 2020[338] Operational Overview - The company operates approximately 1,400 branch locations across 44 states, supporting its branch business through centralized operations[158] - The company has lease agreements for administrative offices in multiple states, with expiration dates ranging from 2022 to 2028[159] - The company relies on its operating subsidiaries for funds to meet financial obligations, and restrictions on these subsidiaries could impact dividend payments[141]