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Indiana
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35-0416090
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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601 N.W. Second Street, Evansville, IN
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47708
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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Term or Abbreviation
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Definition
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2013 Omnibus Incentive Plan
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incentive plan under which equity-based awards are granted to selected management employees, non-employee directors, independent contractors, and consultants
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2017 Annual Report on Form
10-K
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Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on February 21, 2018
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30-89 Delinquency ratio
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net finance receivables 30-89 days past due as a percentage of net finance receivables
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401(k) Plan
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Springleaf Financial Services 401(k) Plan
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5.25% SFC Notes
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$700 million of 5.25% Senior Notes due 2019 issued by SFC on December 3, 2014 and guaranteed by OMH
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5.625% SFC Notes
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$875 million of 5.625% Senior Notes due 2023 issued by SFC on December 8, 2017 and guaranteed by OMH
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6.125% SFC Notes
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$500 million of 6.125% Senior Notes due 2022 issued by SFC on May 15, 2017 and $500 million of 6.125% Senior Notes due 2022 issued by SFC on May 30, 2017 and, in each case, guaranteed by OMH
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6.875% SFC Notes
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$1.25 billion aggregate principal amount of 6.875% Senior Notes due 2025 issued by SFC on March 12, 2018 and guaranteed by OMH
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7.125% SFC Notes
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$900 million of 7.125% Senior Notes due 2026 issued by SFC on May 11, 2018 and $700 million of 7.125% Senior Notes due 2026 issued by SFC on August 10, 2018 and, in each case, guaranteed by OMH
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8.25% SFC Notes
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$1.0 billion of 8.25% Senior Notes due 2020 issued by SFC on April 11, 2016 and guaranteed by OMH
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ABO
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accumulated benefit obligation
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ABS
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asset-backed securities
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Accretable yield
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the excess of the cash flows expected to be collected on the purchased credit impaired finance receivables over the discounted cash flows
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Adjusted pretax income (loss)
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a non-GAAP financial measure used by management as a key performance measure of our segments
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AHL
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American Health and Life Insurance Company, an insurance subsidiary of OMFH
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AIG
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AIG Capital Corporation, a subsidiary of American International Group, Inc.
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AIG Share Sale Transaction
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sale by SFH of 4,179,678 shares of OMH common stock pursuant to an Underwriting Agreement entered into February 21, 2018 among OMH, SFH and Morgan Stanley & Co. LLC
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AOCI
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Accumulated other comprehensive income (loss)
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Apollo
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Apollo Global Management, LLC and its consolidated subsidiaries
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Apollo-Värde Group
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an investor group led by funds managed by Apollo and Värde
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Apollo-Värde Transaction
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the purchase by the Apollo-Värde Group of 54,937,500 shares of OMH common stock from SFH pursuant to the Share Purchase Agreement for an aggregate purchase price of approximately $1.4 billion in cash on June 25, 2018
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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August 2016 Real Estate Loan Sale
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SFC and certain of its subsidiaries sold a portfolio of second lien real estate loans for aggregate cash proceeds of $246 million on August 3, 2016
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Average daily debt balance
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average of debt for each day in the period
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Average net receivables
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average of monthly average net finance receivables (net finance receivables at the beginning and end of each month divided by two) in the period
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Blackstone
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collectively, BTO Willow Holdings II, L.P. and Blackstone Family Tactical Opportunities Investment Partnership—NQ—ESC L.P.
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BPS
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basis points
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CDO
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collateralized debt obligations
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CFPB
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Consumer Financial Protection Bureau
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Citigroup
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CitiFinancial Credit Company
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CMBS
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commercial mortgage-backed securities
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Contribution
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On June 22, 2018, SFC entered into a Contribution Agreement with SFI, a wholly-owned subsidiary of OMH. Pursuant to the Contribution Agreement, Independence was contributed by SFI to SFC.
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Current Report on Form 8-K/A Exhibit 99.1
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revised financial statement schedules included in SFC’s Current Report on Form 8-K/A Exhibit 99.1, filed with the SEC on August 3, 2018
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Term or Abbreviation
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Definition
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December 2016 Real Estate Loan Sale
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SFC and certain of its subsidiaries sold a portfolio of first and second lien real estate loans for aggregate cash proceeds of $58 million on December 19, 2016
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December 2018 Real Estate Loan Sale
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SFC and certain of its subsidiaries sold a portfolio of real estate, classified in finance receivables held for sale, for aggregate cash proceeds of $100 million on December 21, 2018.
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Dodd-Frank Act
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the Dodd-Frank Wall Street Reform and Consumer Protection Act
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DOJ
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U.S. Department of Justice
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ERISA
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Employee Retirement Income Security Act of 1974
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Exchange Act
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Securities Exchange Act of 1934, as amended
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Excess Retirement Income Plan
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Springleaf Financial Services Excess Retirement Income Plan
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FA Loans
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purchased credit impaired finance receivables related to the Fortress Acquisition
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FASB
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Financial Accounting Standards Board
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FHLB
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Federal Home Loan Bank
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FICO score
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a credit score created by Fair Isaac Corporation
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Fixed charge ratio
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earnings less income taxes, interest expense, extraordinary items, goodwill impairment, and any amounts related to discontinued operations, divided by the sum of interest expense and any preferred dividends
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Fortress
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Fortress Investment Group LLC
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Fortress Acquisition
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transaction by which FCFI Acquisition LLC, an affiliate of Fortress, acquired an 80% economic interest of the sole stockholder of SFC for a cash purchase price of $119 million, effective November 30, 2010
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GAAP
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generally accepted accounting principles in the United States of America
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GAP
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guaranteed asset protection
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Gross charge-off ratio
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annualized gross charge-offs as a percentage of average net receivables
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HAMP
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Home Affordable Modification Program
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Indenture
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the SFC Base Indenture, together with all subsequent Supplemental Indentures
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Independence
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Independence Holdings, LLC
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Indiana DOI
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Indiana Department of Insurance
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Investment Company Act
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Investment Company Act of 1940
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IRS
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Internal Revenue Service
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Junior Subordinated Debenture
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$350 million aggregate principal amount of 60-year junior subordinated debt issued by SFC under an indenture dated January 22, 2007, by and between SFC and Deutsche Bank Trust Company, as trustee, and guaranteed by OMH
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KBRA
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Kroll Bond Rating Agency, Inc.
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Lendmark Sale
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the sale of 127 Springleaf branches to Lendmark Financial Service, LLC, effective April 30, 2016
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LIBOR
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London Interbank Offered Rate
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Loss ratio
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annualized net charge-offs, net writedowns on real estate owned, net gain (loss) on sales or real estate owned, and operating expenses related to real estate owned as a percentage of average real estate loans
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Merit
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Merit Life Insurance Co., an insurance subsidiary of SFC
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Military Lending Act
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governs certain consumer lending to active-duty service members and covered dependents and limits, among other things, the interest rate that may be charged
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Moody’s
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Moody’s Investors Service, Inc.
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Nationstar
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Nationstar Mortgage LLC, dba “Mr. Cooper”
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Net charge-off ratio
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annualized net charge-offs as a percentage of average net receivables
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Net interest income
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interest income less interest expense
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NRZ
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New Residential Investment Corp.
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OCLI
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OneMain Consumer Loan, Inc
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ODART
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OneMain Direct Auto Receivables Trust
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OGSC
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OneMain General Services Corporation, successor to Springleaf General Services Corporation and SFMC
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OM Loans
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purchased credit impaired personal loans acquired in the OneMain Acquisition
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OMFG
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OneMain Financial Group, LLC
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Term or Abbreviation
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Definition
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OMFH
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OneMain Financial Holdings, LLC
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OMFH Indenture
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Indenture entered into on December 11, 2014, as amended or supplemented from time to time, by OMFH and certain of its subsidiaries in connection with the issuance of the OMFH Notes
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OMFH Notes
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collectively, $700 million aggregate principal amount of 6.75% Senior Notes due 2019 and $800 million in aggregate principal amount of 7.25% Senior Notes due 2021
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OMFH Supplemental Indenture
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Second Supplemental Indenture dated as of November 8, 2016, to the OMFH Indenture
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OMFIT
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OneMain Financial Issuance Trust
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OMH
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OneMain Holdings, Inc.
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OneMain
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OMFH, collectively with its subsidiaries
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OneMain Acquisition
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Acquisition of OneMain from CitiFinancial Credit Company, effective November 1, 2015
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Other securities
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securities for which the fair value option was elected and equity securities. Other Securities recognize unrealized gains and losses in investment revenues
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Other SFC Notes
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collectively, SFC’s 8.25% Senior Notes due 2023, 7.75% Senior Notes due 2021, and 6.00% Senior Notes due 2020, on a senior unsecured basis, and the Junior Subordinated Debenture, on a junior subordinated basis, issued by SFC and guaranteed by OMH
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PBO
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projected benefit obligation
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PRSUs
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performance-based RSUs
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PVFP
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present value of future profits
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Recovery ratio
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annualized recoveries on net charge-offs as a percentage of average net receivables
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Retail sales finance portfolio
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collectively, retail sales finance contracts and revolving retail accounts
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Retirement Plan
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Springleaf Financial Services Retirement Plan
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RMBS
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residential mortgage-backed securities
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RSAs
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restricted stock awards
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RSUs
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restricted stock units
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SCP Loans
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purchased credit impaired loans acquired through the SpringCastle Joint Venture
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SEC
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U.S. Securities and Exchange Commission
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Securities Act
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Securities Act of 1933, as amended
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Segment Accounting Basis
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a basis used to report the operating results of our segments, which reflects our allocation methodologies for certain costs and excludes the impact of applying purchase accounting
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SERP
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Supplemental Executive Retirement Plan
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Settlement Agreement
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a Settlement Agreement with the U.S. Department of Justice entered into by OMH and certain of its subsidiaries on November 13, 2015, in connection with the OneMain Acquisition
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SFC
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Springleaf Finance Corporation
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SFC Base Indenture
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Indenture dated as of December 3, 2014
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SFC First Supplemental Indenture
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First Supplemental Indenture dated as of December 3, 2014, to the SFC Base Indenture
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SFC Fifth Supplemental Indenture
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Fifth Supplemental Indenture dated as of March 12, 2018, to the SFC Base Indenture
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SFC Fourth Supplemental Indenture
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Fourth Supplemental Indenture dated as of December 8, 2017, to the SFC Base Indenture
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SFC Guaranty Agreements
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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 SFC Notes
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SFC Second Supplemental Indenture
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Second Supplemental Indenture dated as of April 11, 2016, to the SFC Base Indenture
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SFC Senior Notes Indentures
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the SFC Base Indenture as supplemented by the SFC First Supplemental Indenture, the SFC Second Supplemental Indenture, the SFC Third Supplemental Indenture, the SFC Fourth Supplemental Indenture, the SFC Fifth Supplemental Indenture and the SFC Sixth Supplemental Indenture
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SFC Sixth Supplemental Indenture
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Sixth Supplemental Indenture dated as of May 11, 2018, to the SFC Base Indenture
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SFC Third Supplemental Indenture
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Third Supplemental Indenture dated as of May 15, 2017, to the SFC Base Indenture
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SFC Trust Guaranty Agreement
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agreement entered into on December 30, 2013 by OMH whereby it agreed to fully and unconditionally guarantee the related payment obligations under the trust preferred securities in connection with the Junior Subordinated Debenture
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Term or Abbreviation
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Definition
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SFH
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Springleaf Financial Holdings, LLC, an entity owned primarily by a private equity fund managed by an affiliate of Fortress that sold 54,937,500 shares of OMH’s common stock to the Apollo-Värde Group in the Apollo-Värde Transaction
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SFI
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Springleaf Finance, Inc.
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SFMC
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Springleaf Finance Management Corporation
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Share Purchase Agreement
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a share purchase agreement entered into on January 3, 2018, among the Apollo-Värde Group, SFH and OMH to acquire from SFH 54,937,500 shares of OMH’s common stock that was issued and outstanding as of such date, representing the entire holdings of OMH’s stock beneficially owned by Fortress
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SLFT
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Springleaf Funding Trust
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SMHC
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Springleaf Mortgage Holding Company
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SpringCastle Interests Sale
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the March 31, 2016 sale by SpringCastle Holdings, LLC and Springleaf Acquisition Corporation of the equity interest in the SpringCastle Joint Venture
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SpringCastle Joint Venture
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joint venture among SpringCastle America, LLC, SpringCastle Credit, LLC, SpringCastle Finance, LLC, and SpringCastle Acquisition LLC in which SpringCastle Holdings, LLC previously owned a 47% equity interest in each of SpringCastle America, LLC, SpringCastle Credit, LLC and SpringCastle Finance, LLC and Springleaf Acquisition Corporation previously owned a 47% equity interest in SpringCastle Acquisition LLC
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SpringCastle Portfolio
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loans acquired through the SpringCastle Joint Venture
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S&P
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Standard & Poor’s Rating Services
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Tangible equity
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total equity less accumulated other comprehensive income or loss
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Tangible managed assets
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total assets less goodwill and other intangible assets
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Tax Act
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Public Law 115-97 amending the Internal Revenue Code of 1986
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TDR finance receivables
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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.
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Texas DOI
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Texas Department of Insurance
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TILA
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Truth In Lending Act
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Triton
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Triton Insurance Company, an insurance subsidiary of OMFH
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Trust preferred securities
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capital securities classified as debt for accounting purposes but due to their terms are afforded, at least in part, equity capital treatment in the calculation of effective leverage by rating agencies
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Unearned finance charges
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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
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UPB
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unpaid principal balance for interest bearing accounts and the gross remaining contractual payments less the unaccreted balance of unearned finance charges for precompute accounts
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Värde
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Värde Partners, Inc.
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VOBA
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value of business acquired
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VIEs
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variable interest entities
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Weighted average interest rate
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annualized interest expense as a percentage of average debt
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Yield
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annualized finance charges as a percentage of average net receivables
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Yosemite
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Yosemite Insurance Company, a former insurance subsidiary of SFC. In the third quarter of 2018, the Company sold all of the issued and outstanding shares in Yosemite to a third party.
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Forward-Looking Statements
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adverse changes in general economic conditions, including the interest rate environment and the financial markets;
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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;
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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;
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increased levels of unemployment and personal bankruptcies;
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our strategy of increasing the proportion of secured loans may lead to declines in or slower growth in our personal loan receivables and portfolio yield;
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adverse changes in the rate at which we can collect or potentially sell our finance receivables portfolio;
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our decentralized branch loan approval process could expose us to greater than historical delinquencies and charge-offs;
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natural or accidental events such as earthquakes, hurricanes, tornadoes, fires, or floods affecting our customers, collateral, or branches or other operating facilities;
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war, acts of terrorism, riots, civil disruption, pandemics, disruptions in the operation of our information systems, or other events disrupting business or commerce;
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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, or “PII,” of our present or former customers;
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our credit risk scoring models may be inadequate to properly assess the risk of customer unwillingness or lack of capacity to repay;
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adverse changes in our ability to attract and retain employees or key executives to support our businesses;
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increased competition, lack of 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;
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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 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
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risks associated with our insurance operations, including insurance claims that exceed our expectations or insurance losses that exceed our reserves;
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we may be unable to successfully implement our growth strategy for our consumer lending business or successfully acquire portfolios of personal loans;
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declines in collateral values or increases in actual or projected delinquencies or net charge-offs;
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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;
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the costs and effects of any actual or alleged violations of any federal, state or local laws, rules or regulations, including any litigation associated therewith;
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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 litigation associated therewith;
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our continued ability to access the capital markets or the sufficiency of our current sources of funds to satisfy our cash flow requirements;
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our ability to comply with our debt covenants;
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our ability to generate sufficient cash to service all of our indebtedness;
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any material impairment or write-down of the value of our assets;
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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;
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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;
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our ability to maintain sufficient capital levels in our regulated and unregulated subsidiaries;
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changes in accounting standards or tax policies and practices and the application of such new standards, policies and practices;
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management estimates and assumptions, including estimates and assumptions about future events, may prove to be incorrect;
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any failure to achieve the SpringCastle Portfolio performance requirements, which could, among other things, cause us to lose our loan servicing rights over the SpringCastle Portfolio; and
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various risks relating to continued compliance with the Settlement Agreement with the U.S. Department of Justice.
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Item 1. Business.
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provide responsible personal loan products;
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offer optional credit and non-credit insurance products;
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service loans owned by us and service loans owned by third-parties;
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pursue strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets; and
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may establish joint ventures or enter into other strategic alliances.
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Consumer and Insurance; and
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Acquisitions and Servicing.
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Credit life insurance
— Insures the life of the borrower in an amount typically equal to the unpaid balance of the finance receivable and provides for payment to the lender of the finance receivable in the event of the borrower’s death.
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Credit disability insurance
— Provides scheduled monthly loan payments to the lender during borrower’s disability due to illness or injury.
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Credit involuntary unemployment insurance
— Provides scheduled monthly loan payments to the lender during borrower’s involuntary unemployment.
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mail and telephone solicitations;
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payment processing;
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originating “out of network” loans;
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servicing of delinquent real estate loans and certain personal loans;
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bankruptcy process for loans in Chapter 7, 11, 12 and 13 proceedings;
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litigation requests for wage garnishments and other actions against borrowers;
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collateral protection insurance tracking;
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repossessing and re-marketing of titled collateral;
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sales and retention of customers; and
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charge-off recovery operations.
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Our operational policies and procedures standardize various aspects of lending and collections.
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Our branch finance receivable systems control amounts, rates, terms, and fees of our customers’ accounts; create loan documents specific to the state in which the branch office operates or to the customer’s location if the loan is made electronically through our centralized operations; and control cash receipts and disbursements.
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Our accounting personnel reconcile bank accounts, investigate discrepancies, and resolve differences.
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Our credit risk management system reports allow us to track individual branch office performance and to monitor lending and collection activities.
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Our privacy and information security incident response plan establishes a privacy and information security response team that responds to information security incidents by identifying, evaluating, responding to, investigating, and resolving information security incidents impacting our information systems.
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Our executive information system is available to headquarters and field operations management to review the status of activity through the close of business of the prior day.
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Our branch operations management structure, Regional Quality Coordinators and Compliance Field Examination team are designed to control a large, decentralized organization with succeeding levels of supervision staffed with more experienced personnel.
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Our branch operations compensation plan aligns with corporate strategies and is based on profitability, credit quality, and compliance.
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Our compliance department assesses our compliance with federal and state laws and regulations, as well as our compliance with our internal policies and procedures; oversees training to ensure team members have a sufficient level of understanding of the laws and regulations that impact their job responsibilities; and manages our regulatory examination process.
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•
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Our Executive Office of Customer Care maintains our consumer complaint resolution and reporting process.
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Our internal audit department audits our business for adherence to operational policy and procedure and compliance with federal and state laws and regulations.
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•
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the Dodd-Frank Act (which, among other things, created the CFPB);
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•
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the Equal Credit Opportunity Act (which, among other things, prohibits discrimination against creditworthy applicants) and the CFPB’s Regulation B, which implements this statute;
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the Fair Credit Reporting Act (which, among other things, governs the use of credit bureau reports and reporting information to credit bureaus);
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the Truth in Lending Act (which, among other things, governs disclosure of applicable charges and other terms of consumer credit) and the CFPB’s Regulation Z, which implements this statute;
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the Fair Debt Collection Practices Act (which, among other things, governs practices in collecting certain debts);
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•
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the Gramm-Leach-Bliley Act (which, among other things, governs the handling of personal financial information) and the CFPB’s Regulation P, which implements this statute;
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•
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the Military Lending Act (which, among other things, governs certain consumer lending to active-duty military servicemembers and their spouses and covered dependents and limits, the interest rate and certain fees, charges and premium they may be charged on certain loans);
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the Servicemembers Civil Relief Act, which, among other things, can impose limitations on the interest rate and the servicer’s ability to collect on a loan originated with an obligor who is on active duty status and up to nine months thereafter;
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the Real Estate Settlement Procedures Act and the CFPB’s Regulation X (both of which regulate the making and servicing of closed end residential mortgage loans);
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•
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the Federal Trade Commission’s Consumer Claims and Defenses Rule, also known as the “Holder in Due Course” Rule (which, among other things, allows a consumer to assert, against the assignees of certain credit contracts, certain claims that the consumer may have against the originator of the credit contracts); and
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•
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the Federal Trade Commission Act (which, among other things, prohibits unfair and deceptive acts and practices).
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•
|
provide for state licensing and periodic examination of lenders and loan originators, including state laws adopted or amended to comply with licensing requirements of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (which, in some states, requires licensing of individuals who perform real estate loan modifications);
|
•
|
require the filing of reports with regulators and compliance with state regulatory capital requirements;
|
•
|
impose maximum term, amount, interest rate, and limit other charges;
|
•
|
impose consumer privacy rights and other obligations that may require us to notify customers, employees, state attorneys general, regulators and others in the event of a security breach;
|
•
|
regulate whether and under what circumstances we may offer insurance and other ancillary products in connection with a lending transaction; and
|
•
|
provide for additional consumer protections.
|
•
|
licensing;
|
•
|
conduct of business, including marketing and sales practices;
|
•
|
periodic financial and market conduct examination of the affairs of insurers;
|
•
|
form and content of required financial reports;
|
•
|
standards of solvency;
|
•
|
limitations on the payment of dividends and other affiliate transactions;
|
•
|
types of products offered;
|
•
|
approval of policy forms and premium rates;
|
•
|
formulas used to calculate any unearned premium refund due to an insured customer;
|
•
|
permissible investments;
|
•
|
deposits of securities for the benefit of policyholders;
|
•
|
reserve requirements for unearned premiums, losses, and other purposes; and
|
•
|
claims processing.
|
•
|
licensing;
|
•
|
conduct of business, including marketing and sales practices;
|
•
|
periodic financial and market conduct examination of the affairs of insurers;
|
•
|
form and content of required financial reports;
|
•
|
standards of solvency;
|
•
|
limitations on the payment of dividends and other affiliate transactions;
|
•
|
types of products offered; and
|
•
|
reserve requirements for unearned premiums, losses, and other purposes.
|
Item 1A. Risk Factors.
|
•
|
the integration of the assets or business into our information technology platforms and servicing systems;
|
•
|
the quality of servicing during any interim servicing period after we purchase a portfolio but before we assume servicing obligations from the seller or its agents;
|
•
|
the disruption to our ongoing businesses and distraction of our management teams from ongoing business concerns;
|
•
|
incomplete or inaccurate files and records;
|
•
|
the retention of existing customers;
|
•
|
the creation of uniform standards, controls, procedures, policies and information systems;
|
•
|
the occurrence of unanticipated expenses; and
|
•
|
potential unknown liabilities associated with the transactions, including legal liability related to origination and servicing prior to the acquisition.
|
•
|
our representations and warranties concerning the quality and characteristics of the finance receivable are inaccurate;
|
•
|
there is borrower fraud; or
|
•
|
we fail to comply, at the individual finance receivable level or otherwise, with regulatory requirements in connection with the origination and servicing of the finance receivables.
|
•
|
address the risks associated with our focus on personal loans (including direct auto loans), including, but not limited to consumer demand and changes in economic conditions and interest rates;
|
•
|
address the risks associated with the new centralized method of originating and servicing our internet loans through our centralized operations, which represents a departure from our traditional high-touch branch-based servicing function and includes the potential for higher default and delinquency rates;
|
•
|
integrate, and develop the expertise required to capitalize on, our centralized operations;
|
•
|
obtain regulatory approval in connection with the acquisition of loan portfolios and/or companies in the business of selling loans or related products;
|
•
|
comply with regulations in connection with doing business and offering loan products over the Internet, including various state and federal e-signature rules mandating that certain disclosures be made, and certain steps be followed in order to obtain and authenticate e-signatures, with which we have limited experience;
|
•
|
finance future growth; and
|
•
|
successfully source, underwrite and integrate new acquisitions of loan portfolios and other businesses.
|
•
|
it may require us to dedicate a significant portion of our cash flows from operations to the payment of the principal of, and interest on, our indebtedness, which reduces the funds available for other purposes, including finance receivable originations;
|
•
|
it could limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing regulatory, business and economic conditions;
|
•
|
it may limit our ability to incur additional borrowings or securitizations for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes, or to refinance our indebtedness;
|
•
|
it may require us to seek to change the maturity, interest rate and other terms of our existing debt;
|
•
|
it may place us at a competitive disadvantage to competitors that are not as highly leveraged;
|
•
|
it may cause a downgrade of our debt and long-term corporate ratings; and
|
•
|
it may cause us to be more vulnerable to periods of negative or slow growth in the general economy or in our business.
|
•
|
our ability to generate sufficient cash to service all of our outstanding debt;
|
•
|
our continued ability to access debt and securitization markets and other sources of funding on favorable terms;
|
•
|
our ability to complete on favorable terms, as needed, additional borrowings, securitizations, finance receivable portfolio sales, or other transactions to support liquidity, and the costs associated with these funding sources, including sales at less than carrying value and limits on the types of assets that can be securitized or sold, which would affect profitability;
|
•
|
the potential for downgrade of our debt by rating agencies, which would have a negative impact on our cost of, and access to, capital;
|
•
|
our ability to comply with our debt covenants;
|
•
|
the amount of cash expected to be received from our finance receivable portfolio through collections (including prepayments) and receipt of finance charges, which could be materially different than our estimates;
|
•
|
the potential for declining financial flexibility and reduced income should we use more of our assets for securitizations and finance receivable portfolio sales; and
|
•
|
the potential for reduced income due to the possible deterioration of the credit quality of our finance receivable portfolios.
|
•
|
our inability to grow our personal loan portfolio with adequate profitability to fund operations, loan losses, and other expenses;
|
•
|
our inability to monetize assets including, but not limited to, our access to debt and securitization markets;
|
•
|
our inability to obtain the additional necessary funding to finance our operations;
|
•
|
the effect of federal, state and local laws, regulations, or regulatory policies and practices, including the Dodd-Frank Act (which, among other things, established the CFPB with broad authority to regulate and examine financial institutions), on our ability to conduct business or the manner in which we 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;
|
•
|
potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans, if it is determined that there was a non-curable breach of a warranty made in connection with the transaction;
|
•
|
the potential for increasing costs and difficulty in servicing our loan portfolio as a result of heightened nationwide regulatory scrutiny of loan servicing and foreclosure practices in the industry generally, and related costs that could be passed on to us in connection with the subservicing of our real estate loans that were originated or acquired centrally;
|
•
|
reduced cash flows as a result of the liquidation of our real estate loan portfolio;
|
•
|
the potential for additional unforeseen cash demands or acceleration of obligations;
|
•
|
reduced income due to loan modifications where the borrower’s interest rate is reduced, principal payments are deferred, or other concessions are made;
|
•
|
the potential for declines or volatility in bond and equity markets; and
|
•
|
the potential effect on us if the capital levels of our regulated and unregulated subsidiaries prove inadequate to support our current business plans.
|
As of December 31, 2018
|
|
Rating
|
|
Outlook
|
|
|
|
|
|
S&P
|
|
B+
|
|
Positive
|
Moody’s
|
|
B1
|
|
Positive
|
KBRA
|
|
BB+
|
|
Stable
|
Item 1B. Unresolved Staff Comments.
|
Item 2. Properties.
|
Item 3. Legal Proceedings.
|
Item 4. Mine Safety Disclosures.
|
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Item 6. Selected Financial Data.
|
(dollars in millions)
|
|
At or for the Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015 *
|
|
2014
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
3,648
|
|
|
$
|
3,187
|
|
|
$
|
3,096
|
|
|
$
|
1,910
|
|
|
$
|
1,625
|
|
Interest expense
|
|
876
|
|
|
816
|
|
|
856
|
|
|
715
|
|
|
683
|
|
|||||
Provision for finance receivable losses
|
|
1,043
|
|
|
947
|
|
|
929
|
|
|
711
|
|
|
352
|
|
|||||
Other revenues
|
|
560
|
|
|
540
|
|
|
754
|
|
|
275
|
|
|
745
|
|
|||||
Other expenses
|
|
1,646
|
|
|
1,569
|
|
|
1,668
|
|
|
955
|
|
|
657
|
|
|||||
Income (loss) before income tax expense (benefit)
|
|
643
|
|
|
395
|
|
|
397
|
|
|
(196
|
)
|
|
678
|
|
|||||
Net income (loss)
|
|
461
|
|
|
152
|
|
|
270
|
|
|
(74
|
)
|
|
445
|
|
|||||
Net income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
28
|
|
|
127
|
|
|
48
|
|
|||||
Net income (loss) attributable to Springleaf Finance Corporation
|
|
461
|
|
|
152
|
|
|
242
|
|
|
(201
|
)
|
|
397
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
|
|
$
|
14,734
|
|
|
$
|
13,627
|
|
|
$
|
12,414
|
|
|
$
|
14,217
|
|
|
$
|
6,181
|
|
Total assets
|
|
20,309
|
|
|
19,645
|
|
|
18,340
|
|
|
21,396
|
|
|
10,998
|
|
|||||
Long-term debt
|
|
15,178
|
|
|
15,050
|
|
|
13,959
|
|
|
17,300
|
|
|
8,356
|
|
|||||
Total liabilities
|
|
16,288
|
|
|
16,243
|
|
|
15,067
|
|
|
18,488
|
|
|
9,021
|
|
|||||
Springleaf Finance Corporation shareholder’s equity
|
|
4,021
|
|
|
3,402
|
|
|
3,273
|
|
|
2,987
|
|
|
2,106
|
|
|||||
Non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
(129
|
)
|
|||||
Total shareholders’ equity
|
|
4,021
|
|
|
3,402
|
|
|
3,273
|
|
|
2,908
|
|
|
1,977
|
|
*
|
On November 15, 2015, as part of our acquisition strategy, we completed the OneMain Acquisition. The selected financial data for 2015 includes OneMain’s results effective from November 1, 2015, pursuant to our contractual agreements with Citigroup.
|
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
Overview
|
•
|
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, a fixed term of
three
to
six years
, and are secured by automobiles, other titled collateral or are unsecured. At
December 31, 2018
, we had approximately
2.4 million
personal loans, representing
$16.1 billion
of net finance receivables, compared to approximately
2.3 million
personal loans totaling
$14.8 billion
at
December 31, 2017
.
|
•
|
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 also offer optional home and auto membership plans of an unaffiliated company.
|
•
|
Other Receivables —
We ceased originating real estate loans in 2012 and purchasing retail sales finance contracts and revolving retail accounts in 2013. We continue to service or sub-service liquidating real estate loans and retail sales finance contracts. 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. See Notes
5
,
6
and
7
of the Notes to the Consolidated Financial Statements included in this report for more information about Other Receivables.
|
•
|
Consumer and Insurance; and
|
•
|
Acquisitions and Servicing.
|
Recent Developments and Outlook
|
•
|
On March 12, 2018, SFC issued
$1.25 billion
aggregate principal amount of
6.875%
Senior Notes due 2025 (the “
6.875%
SFC Notes”).
|
•
|
On May 11, 2018 and August 10, 2018, SFC issued
$900 million
and
$700 million
, respectively, aggregate principal amount of
7.125%
Senior Notes due 2026 (the “
7.125%
SFC Notes”). SFC used a portion of the net proceeds to redeem the remaining
$400 million
in aggregate principal amount of the OMFH
7.25%
Senior Notes due 2021.
|
•
|
Continuing growth in receivables through enhanced marketing strategies and customer product options;
|
•
|
Growing secured lending originations with a goal of enhancing credit performance;
|
•
|
Leveraging our scale and cost discipline across the Company to deliver improved operating leverage;
|
•
|
Increasing tangible equity and reducing leverage; and
|
•
|
Maintaining a strong liquidity level with diversified funding sources.
|
Results of Operations
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
3,648
|
|
|
$
|
3,187
|
|
|
$
|
3,096
|
|
Interest expense
|
|
876
|
|
|
816
|
|
|
856
|
|
|||
Provision for finance receivable losses
|
|
1,043
|
|
|
947
|
|
|
929
|
|
|||
Net interest income after provision for finance receivable losses
|
|
1,729
|
|
|
1,424
|
|
|
1,311
|
|
|||
Net gain on sale of SpringCastle interests
|
|
—
|
|
|
—
|
|
|
167
|
|
|||
Other revenues
|
|
560
|
|
|
540
|
|
|
587
|
|
|||
Acquisition-related transaction and integration expenses
|
|
54
|
|
|
69
|
|
|
108
|
|
|||
Other expenses
|
|
1,592
|
|
|
1,500
|
|
|
1,560
|
|
|||
Income before income taxes
|
|
643
|
|
|
395
|
|
|
397
|
|
|||
Income taxes
|
|
182
|
|
|
243
|
|
|
127
|
|
|||
Net income
|
|
461
|
|
|
152
|
|
|
270
|
|
|||
Net income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
28
|
|
|||
Net income attributable to SFC
|
|
$
|
461
|
|
|
$
|
152
|
|
|
$
|
242
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics (a)
|
|
|
|
|
|
|
|
|
||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
16,122
|
|
|
$
|
14,909
|
|
|
$
|
13,686
|
|
Number of accounts
|
|
2,365,113
|
|
|
2,351,211
|
|
|
2,202,166
|
|
|||
Finance receivables held for sale:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
103
|
|
|
$
|
132
|
|
|
$
|
153
|
|
Number of accounts
|
|
2,827
|
|
|
2,460
|
|
|
2,800
|
|
|||
Finance receivables held for investment and held for sale: (b)
|
|
|
|
|
|
|
||||||
Average net receivables
|
|
$
|
15,428
|
|
|
$
|
14,009
|
|
|
$
|
14,412
|
|
Average daily debt balance
|
|
$
|
15,444
|
|
|
$
|
14,224
|
|
|
$
|
15,138
|
|
Yield
|
|
23.56
|
%
|
|
22.66
|
%
|
|
21.35
|
%
|
|||
Gross charge-off ratio
|
|
7.11
|
%
|
|
7.47
|
%
|
|
6.04
|
%
|
|||
Recovery ratio
|
|
(0.73
|
)%
|
|
(0.76
|
)%
|
|
(0.50
|
)%
|
|||
Net charge-off ratio
|
|
6.38
|
%
|
|
6.71
|
%
|
|
5.54
|
%
|
|||
30-89 Delinquency ratio
|
|
2.41
|
%
|
|
2.48
|
%
|
|
2.30
|
%
|
|||
Origination volume
|
|
$
|
11,899
|
|
|
$
|
10,502
|
|
|
$
|
9,408
|
|
Number of accounts originated
|
|
1,432,395
|
|
|
1,436,871
|
|
|
1,313,388
|
|
(a)
|
See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.
|
(b)
|
Includes personal loans held for sale, but excludes real estate loans held for sale in order to be comparable with our segment statistics disclosed in “Segment Results.”
|
•
|
Finance charges
increased $152 million primarily due to the net of the following:
|
•
|
Yield on finance receivables held for investment
increased primarily due to lower amortization of purchase premium on non-credit impaired finance receivables. This increase was partially offset by the continued shift of the portfolio towards secured personal loans and direct auto customers who tend to have loans with lower yields and lower charge-offs relative to our unsecured personal loans.
|
•
|
Average net receivables held for investment
decreased primarily due to (i) the SpringCastle Interests Sale and (ii) our liquidating real estate loan portfolio, including transfers of $307 million of real estate loans to finance receivables held for sale during 2016. This decrease was partially offset by the continued growth in our personal loan portfolio.
|
•
|
Interest income on finance receivables held for sale
decreased $61 million primarily due to (i) personal loans sold in the Lendmark Sale in May 2016, and (ii) the real estate loans in finance receivables held for sale during 2016, which were sold in the fourth quarter of 2016.
|
•
|
Average debt
decreased primarily due to debt elimination associated with the SpringCastle Interests Sale and net debt issuance and repayment activity in 2017. This decrease was partially offset by net debt issuances during the past 12 months relating to SFC’s offerings of the 6.125% SFC Notes in May of 2017 and our securitization transactions. See Notes
13
and
14
of the Notes to the Consolidated Financial Statements included in this report for further information on our long-term debt, securitization transactions and our conduit facilities.
|
•
|
Weighted average interest rate on our debt
increased primarily due to (i) SFC’s offering of the 8.25% SFC Notes in April of 2016, (ii) the debt elimination associated with the SpringCastle Interests Sale, and (iii) the pay down of securitizations, which had a lower interest rate relative to our other indebtedness. This increase was partially offset by the repurchase of $600 million of unsecured notes, which had a higher interest rate relative to our other indebtedness.
|
•
|
Other operating expenses
decreased $83 million primarily due to (i) a decrease in Citigroup transition expenses of $55 million, (ii) lower professional and audit expenses of $33 million during 2017, (iii) an increase in the deferral of origination costs of $22 million due to the increase in the number of loans originated in 2017 compared to prior year, and (iv) a decrease in amortization of other intangible assets of $18 million during 2017. This decrease was partially offset by an increase in OCLI loan referral fees of $39 million due to increased levels of loan volume through online sources. See Note
12
of the Notes to the Consolidated Financial Statements included in this report for further information on loan referral fees.
|
•
|
Insurance policy benefits and claims
increased $17 million primarily due to the prior year favorable variances of $12 million in credit claim and benefit reserves and a $5 million increase in reserve for non-credit insurance products due to higher growth in sales.
|
•
|
Salaries and benefits
increased by $6 million.
|
*
|
In 2018, the resulting impairment on finance receivables held for sale remaining after the December 2018 Real Estate Loan Sale has been combined with the gain on the sale. See Notes
2
and
7
of the Notes to the Consolidated Financial Statements included in this report for more information regarding the real estate loan sales.
|
Segment Results
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
3,667
|
|
|
$
|
3,296
|
|
|
$
|
3,314
|
|
Interest expense
|
|
845
|
|
|
765
|
|
|
738
|
|
|||
Provision for finance receivable losses
|
|
1,042
|
|
|
955
|
|
|
908
|
|
|||
Net interest income after provision for finance receivable losses
|
|
1,780
|
|
|
1,576
|
|
|
1,668
|
|
|||
Other revenues
|
|
558
|
|
|
567
|
|
|
601
|
|
|||
Other expenses
|
|
1,433
|
|
|
1,458
|
|
|
1,457
|
|
|||
Adjusted pretax income (non-GAAP)
|
|
$
|
905
|
|
|
$
|
685
|
|
|
$
|
812
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics (a)
|
|
|
|
|
|
|
|
|
|
|||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
16,153
|
|
|
$
|
14,772
|
|
|
$
|
13,409
|
|
Number of accounts
|
|
2,365,113
|
|
|
2,346,289
|
|
|
2,191,348
|
|
|||
Finance receivables held for investment and held for sale: (b)
|
|
|
|
|
|
|
||||||
Average net receivables
|
|
$
|
15,357
|
|
|
$
|
13,811
|
|
|
$
|
13,393
|
|
Yield
|
|
23.88
|
%
|
|
23.86
|
%
|
|
24.75
|
%
|
|||
Gross charge-off ratio
|
|
7.30
|
%
|
|
7.92
|
%
|
|
7.82
|
%
|
|||
Recovery ratio
|
|
(0.84
|
)%
|
|
(0.93
|
)%
|
|
(0.76
|
)%
|
|||
Net charge-off ratio
|
|
6.46
|
%
|
|
6.99
|
%
|
|
7.06
|
%
|
|||
30-89 Delinquency ratio
|
|
2.42
|
%
|
|
2.43
|
%
|
|
2.25
|
%
|
|||
Origination volume
|
|
$
|
11,899
|
|
|
$
|
10,502
|
|
|
$
|
9,388
|
|
Number of accounts originated
|
|
1,432,395
|
|
|
1,436,871
|
|
|
1,313,388
|
|
(a)
|
See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.
|
(b)
|
Includes personal loans held for sale in 2016 in connection with the Lendmark Sale.
|
•
|
Interest income on finance receivables held for sale
decreased $56 million in 2017 due to the transfer of our personal loans to finance receivables held for sale in 2015 that were sold in the Lendmark Sale in May of 2016.
|
•
|
Finance charges
increased $38 million primarily due to the net of the following:
|
•
|
Average net receivables held for investment
increased primarily due to the continued growth in our personal loan portfolio.
|
•
|
Yield on finance receivables held for investment
decreased primarily due to the continued shift of the portfolio towards secured personal loans and direct auto customers who tend to have loans with lower yields and lower charge offs relative to our unsecured personal loans.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
20
|
|
|||
Provision for finance receivable losses
|
|
—
|
|
|
—
|
|
|
14
|
|
|||
Net interest income after provision for finance receivable losses
|
|
—
|
|
|
—
|
|
|
68
|
|
|||
Other revenues
|
|
3
|
|
|
—
|
|
|
—
|
|
|||
Other expenses
|
|
8
|
|
|
2
|
|
|
15
|
|
|||
Adjusted pretax income (loss) (non-GAAP)
|
|
(5
|
)
|
|
(2
|
)
|
|
53
|
|
|||
Pretax earnings attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
28
|
|
|||
Adjusted pretax income (loss) attributable to SFC (non-GAAP)
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
25
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics *
|
|
|
|
|
|
|
||||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Average net receivables
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
414
|
|
Yield
|
|
—
|
%
|
|
—
|
%
|
|
24.19
|
%
|
|||
Net charge-off ratio
|
|
—
|
%
|
|
—
|
%
|
|
3.48
|
%
|
*
|
See “Glossary” at the beginning of this report for formulas and definitions of our key performance ratios.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
17
|
|
|
$
|
23
|
|
|
$
|
51
|
|
Interest expense
|
|
17
|
|
|
21
|
|
|
43
|
|
|||
Provision for finance receivable losses (a)
|
|
(5
|
)
|
|
7
|
|
|
6
|
|
|||
Net interest income (loss) after provision for finance receivable losses
|
|
5
|
|
|
(5
|
)
|
|
2
|
|
|||
Other revenues (b)
|
|
16
|
|
|
23
|
|
|
3
|
|
|||
Other expenses
|
|
16
|
|
|
11
|
|
|
28
|
|
|||
Adjusted pretax income (loss) (non-GAAP)
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
(23
|
)
|
(a)
|
Provision for finance receivable losses
for
2017
includes a $5 million increase due to estimated net charge-offs attributable to the impact of hurricanes Harvey and Maria.
|
*
|
On September 30, 2018, we transferred our real estate loans previously classified as Other Receivables from held for investment to held for sale. See Notes
5
and
7
of the Notes to the Consolidated Financial Statements included in this report for further information.
|
Credit Quality
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Personal loans
|
|
$
|
16,153
|
|
|
$
|
—
|
|
|
$
|
(31
|
)
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Personal loans
|
|
$
|
14,772
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
14,775
|
|
Other receivables
|
|
—
|
|
|
142
|
|
|
(8
|
)
|
|
134
|
|
||||
Total
|
|
$
|
14,772
|
|
|
$
|
142
|
|
|
$
|
(5
|
)
|
|
$
|
14,909
|
|
•
|
Prime: FICO score of 660 or higher
|
•
|
Near prime: FICO score of 620-659
|
•
|
Sub-prime: FICO score of 619 or below
|
(dollars in millions)
|
|
Personal
Loans |
|
Other Receivables
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
||||||
FICO scores
|
|
|
|
|
|
|
||||||
660 or higher
|
|
$
|
3,896
|
|
|
$
|
—
|
|
|
$
|
3,896
|
|
620-659
|
|
4,239
|
|
|
—
|
|
|
4,239
|
|
|||
619 or below
|
|
7,987
|
|
|
—
|
|
|
7,987
|
|
|||
Total
|
|
$
|
16,122
|
|
|
$
|
—
|
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
||||||
FICO scores
|
|
|
|
|
|
|
||||||
660 or higher
|
|
$
|
3,937
|
|
|
$
|
45
|
|
|
$
|
3,982
|
|
620-659
|
|
3,903
|
|
|
22
|
|
|
3,925
|
|
|||
619 or below
|
|
6,935
|
|
|
67
|
|
|
7,002
|
|
|||
Total
|
|
$
|
14,775
|
|
|
$
|
134
|
|
|
$
|
14,909
|
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
$
|
15,399
|
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
15,373
|
|
30-59 days past due
|
|
230
|
|
|
—
|
|
|
(2
|
)
|
|
228
|
|
||||
Delinquent (60-89 days past due)
|
|
161
|
|
|
—
|
|
|
(1
|
)
|
|
160
|
|
||||
Performing
|
|
15,790
|
|
|
—
|
|
|
(29
|
)
|
|
15,761
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming (90+ days past due)
|
|
363
|
|
|
—
|
|
|
(2
|
)
|
|
361
|
|
||||
Total net finance receivables
|
|
$
|
16,153
|
|
|
$
|
—
|
|
|
$
|
(31
|
)
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
|
|
||||||||
Delinquency ratio
|
|
|
|
|
|
|
|
|
||||||||
30-89 days past due
|
|
2.42
|
%
|
|
*
|
|
|
*
|
|
|
2.41
|
%
|
||||
30+ days past due
|
|
4.67
|
%
|
|
*
|
|
|
*
|
|
|
4.65
|
%
|
||||
60+ days past due
|
|
3.25
|
%
|
|
*
|
|
|
*
|
|
|
3.24
|
%
|
||||
90+ days past due
|
|
2.25
|
%
|
|
*
|
|
|
*
|
|
|
2.24
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
$
|
14,076
|
|
|
$
|
109
|
|
|
$
|
—
|
|
|
$
|
14,185
|
|
30-59 days past due
|
|
203
|
|
|
9
|
|
|
(2
|
)
|
|
210
|
|
||||
Delinquent (60-89 days past due)
|
|
156
|
|
|
4
|
|
|
(1
|
)
|
|
159
|
|
||||
Performing
|
|
14,435
|
|
|
122
|
|
|
(3
|
)
|
|
14,554
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming (90+ days past due)
|
|
337
|
|
|
20
|
|
|
(2
|
)
|
|
355
|
|
||||
Total net finance receivables
|
|
$
|
14,772
|
|
|
$
|
142
|
|
|
$
|
(5
|
)
|
|
$
|
14,909
|
|
|
|
|
|
|
|
|
|
|
||||||||
Delinquency ratio
|
|
|
|
|
|
|
|
|
||||||||
30-89 days past due
|
|
2.43
|
%
|
|
8.60
|
%
|
|
*
|
|
|
2.48
|
%
|
||||
30+ days past due
|
|
4.71
|
%
|
|
22.75
|
%
|
|
*
|
|
|
4.86
|
%
|
||||
60+ days past due
|
|
3.34
|
%
|
|
16.66
|
%
|
|
*
|
|
|
3.45
|
%
|
||||
90+ days past due
|
|
2.28
|
%
|
|
14.15
|
%
|
|
*
|
|
|
2.38
|
%
|
*
|
Not applicable.
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions and Servicing
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at beginning of period
|
|
$
|
719
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
(62
|
)
|
|
$
|
692
|
|
Provision for finance receivable losses
|
|
1,042
|
|
|
—
|
|
|
(5
|
)
|
|
6
|
|
|
1,043
|
|
|||||
Charge-offs
|
|
(1,120
|
)
|
|
—
|
|
|
(3
|
)
|
|
26
|
|
|
(1,097
|
)
|
|||||
Recoveries
|
|
127
|
|
|
—
|
|
|
3
|
|
|
(19
|
)
|
|
111
|
|
|||||
Other (a)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
7
|
|
|
(23
|
)
|
|||||
Balance at end of period
|
|
$
|
768
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(42
|
)
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance ratio
|
|
4.76
|
%
|
|
(b)
|
|
|
(b)
|
|
|
(b)
|
|
|
4.50
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at beginning of period
|
|
$
|
729
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
(74
|
)
|
|
$
|
686
|
|
Provision for finance receivable losses
|
|
955
|
|
|
—
|
|
|
7
|
|
|
(15
|
)
|
|
947
|
|
|||||
Charge-offs
|
|
(1,093
|
)
|
|
—
|
|
|
(7
|
)
|
|
53
|
|
|
(1,047
|
)
|
|||||
Recoveries
|
|
128
|
|
|
—
|
|
|
4
|
|
|
(26
|
)
|
|
106
|
|
|||||
Balance at end of period
|
|
$
|
719
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
(62
|
)
|
|
$
|
692
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance ratio
|
|
4.86
|
%
|
|
(b)
|
|
|
24.28
|
%
|
|
(b)
|
|
|
4.64
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at beginning of period
|
|
$
|
766
|
|
|
$
|
4
|
|
|
$
|
70
|
|
|
$
|
(251
|
)
|
|
$
|
589
|
|
Provision for finance receivable losses
|
|
908
|
|
|
14
|
|
|
6
|
|
|
1
|
|
|
929
|
|
|||||
Charge-offs
|
|
(1,047
|
)
|
|
(17
|
)
|
|
(18
|
)
|
|
210
|
|
|
(872
|
)
|
|||||
Recoveries
|
|
102
|
|
|
3
|
|
|
8
|
|
|
(39
|
)
|
|
74
|
|
|||||
Other (c)
|
|
—
|
|
|
(4
|
)
|
|
(35
|
)
|
|
5
|
|
|
(34
|
)
|
|||||
Balance at end of period
|
|
$
|
729
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
(74
|
)
|
|
$
|
686
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance ratio
|
|
5.44
|
%
|
|
(b)
|
|
|
17.51
|
%
|
|
(b)
|
|
|
5.01
|
%
|
(a)
|
Other consists primarily of the reclassification of allowance for finance receivable losses due to the transfer of the real estate loans in Other Receivables from held for investment to finance receivables held for sale. See Note
5
of the Notes to the Consolidated Financial Statements included in this report for further information.
|
(b)
|
Not applicable.
|
(c)
|
Other consists of:
|
•
|
the elimination of allowance for finance receivable losses due to the transfers of real estate loans held for investment to finance receivables held for sale during 2016.
|
(dollars in millions)
|
|
Consumer
and Insurance |
|
Other
|
|
Segment to
GAAP Adjustment |
|
Consolidated
Total |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
TDR net finance receivables
|
|
$
|
554
|
|
|
$
|
—
|
|
|
$
|
(102
|
)
|
|
$
|
452
|
|
Allowance for TDR finance receivable losses
|
|
209
|
|
|
—
|
|
|
(40
|
)
|
|
169
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
TDR net finance receivables
|
|
$
|
480
|
|
|
$
|
74
|
|
|
$
|
(188
|
)
|
|
$
|
366
|
|
Allowance for TDR finance receivable losses
|
|
190
|
|
|
26
|
|
|
(70
|
)
|
|
146
|
|
•
|
On January 23, 2019, we issued $632 million in notes backed by personal loans (“OMFIT 2019-1”), maturing in February 2031. We initially retained $32 million of the asset-backed notes, representing at least 5% of the initial note balance, distributed among each class of notes.
|
•
|
our inability to grow or maintain our personal loan portfolio with adequate profitability;
|
•
|
any inability to repay or default in the repayment of intercompany indebtedness owed to us by our affiliates or owed by us to our affiliates;
|
•
|
the effect of federal, state and local laws, regulations, or regulatory policies and practices;
|
•
|
potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans; and
|
•
|
the potential for disruptions in the debt and equity markets.
|
•
|
maintaining disciplined underwriting standards and pricing for loans we originate or purchase and managing purchases of finance receivables;
|
•
|
pursuing additional debt financings (including new securitizations and new unsecured debt issuances, debt refinancing transactions and revolving conduit facilities), or a combination of the foregoing;
|
•
|
purchasing portions of our outstanding indebtedness through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we may determine; and
|
•
|
obtaining new and extending existing secured revolving facilities to provide committed liquidity in case of prolonged market fluctuations.
|
(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-A
|
|
$
|
1,163
|
|
|
$
|
1,250
|
|
|
$
|
465
|
|
|
$
|
509
|
|
|
3.93
|
%
|
|
3 years
|
SLFT 2015-B
|
|
314
|
|
|
336
|
|
|
314
|
|
|
336
|
|
|
3.78
|
%
|
|
5 years
|
||||
SLFT 2016-A
|
|
532
|
|
|
559
|
|
|
490
|
|
|
515
|
|
|
3.10
|
%
|
|
2 years
|
||||
SLFT 2017-A
|
|
652
|
|
|
685
|
|
|
619
|
|
|
685
|
|
|
2.98
|
%
|
|
3 years
|
||||
OMFIT 2015-1
|
|
1,229
|
|
|
1,397
|
|
|
505
|
|
|
621
|
|
|
4.53
|
%
|
|
3 years
|
||||
OMFIT 2015-2
|
|
1,250
|
|
|
1,346
|
|
|
275
|
|
|
344
|
|
|
4.68
|
%
|
|
2 years
|
||||
OMFIT 2015-3
|
|
293
|
|
|
329
|
|
|
293
|
|
|
325
|
|
|
4.21
|
%
|
|
5 years
|
||||
OMFIT 2016-1
|
|
500
|
|
|
570
|
|
|
459
|
|
|
543
|
|
|
4.01
|
%
|
|
3 years
|
||||
OMFIT 2016-2
|
|
890
|
|
|
1,007
|
|
|
352
|
|
|
500
|
|
|
5.04
|
%
|
|
2 years
|
||||
OMFIT 2016-3
|
|
350
|
|
|
397
|
|
|
317
|
|
|
391
|
|
|
4.33
|
%
|
|
5 years
|
||||
OMFIT 2017-1
|
|
947
|
|
|
988
|
|
|
900
|
|
|
988
|
|
|
2.79
|
%
|
|
2 years
|
||||
OMFIT 2018-1
|
|
632
|
|
|
650
|
|
|
600
|
|
|
651
|
|
|
3.60
|
%
|
|
3 years
|
||||
OMFIT 2018-2
|
|
368
|
|
|
381
|
|
|
350
|
|
|
381
|
|
|
3.87
|
%
|
|
5 years
|
||||
ODART 2017-1
|
|
300
|
|
|
300
|
|
|
119
|
|
|
146
|
|
|
3.17
|
%
|
|
1 year
|
||||
ODART 2017-2
|
|
605
|
|
|
624
|
|
|
575
|
|
|
604
|
|
|
2.63
|
%
|
|
1 year
|
||||
ODART 2018-1
|
|
947
|
|
|
964
|
|
|
900
|
|
|
964
|
|
|
3.56
|
%
|
|
2 years
|
||||
Total securitizations
|
|
$
|
10,972
|
|
|
$
|
11,783
|
|
|
$
|
7,533
|
|
|
$
|
8,503
|
|
|
|
|
|
(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.
|
(dollar in millions)
|
|
Note Maximum
Balance |
|
Amount
Drawn |
|
Revolving
Period End |
|
Due and Payable
|
||||
|
|
|
|
|
|
|
|
|
||||
Rocky River Funding, LLC
|
|
$
|
400
|
|
|
$
|
—
|
|
|
June 2020
|
|
July 2021
|
Thur River Funding, LLC
|
|
350
|
|
|
—
|
|
|
June 2020
|
|
February 2027
|
||
OneMain Financial Funding IX, LLC
|
|
600
|
|
|
—
|
|
|
June 2020
|
|
July 2021
|
||
Mystic River Funding, LLC
|
|
850
|
|
|
—
|
|
|
September 2020
|
|
October 2023
|
||
Fourth Avenue Auto Funding, LLC
|
|
250
|
|
|
—
|
|
|
September 2020
|
|
October 2021
|
||
OneMain Financial Funding VIII, LLC
|
|
650
|
|
|
—
|
|
|
August 2021
|
|
September 2023
|
||
OneMain Financial Auto Funding I, LLC
|
|
850
|
|
|
—
|
|
|
June 2021
|
|
July 2028
|
||
OneMain Financial Funding VII, LLC
|
|
850
|
|
|
—
|
|
|
June 2021
|
|
July 2023
|
||
Thayer Brook Funding, LLC
|
|
250
|
|
|
—
|
|
|
July 2021
|
|
August 2022
|
||
Hubbard River Funding, LLC
|
|
250
|
|
|
—
|
|
|
September 2021
|
|
October 2023
|
||
Seine River Funding, LLC
|
|
650
|
|
|
—
|
|
|
October 2021
|
|
November 2024
|
||
Total
|
|
$
|
5,950
|
|
|
$
|
—
|
|
|
|
|
|
(dollars in millions)
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
2024+
|
|
Securitizations
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal maturities on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securitization debt (a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,533
|
|
|
$
|
7,533
|
|
Medium-term notes
|
|
686
|
|
|
1,945
|
|
|
2,175
|
|
|
2,849
|
|
|
—
|
|
|
7,655
|
|
||||||
Junior subordinated debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350
|
|
|
—
|
|
|
350
|
|
||||||
Total principal maturities
|
|
686
|
|
|
1,945
|
|
|
2,175
|
|
|
3,199
|
|
|
7,533
|
|
|
15,538
|
|
||||||
Interest payments on debt (b)
|
|
538
|
|
|
894
|
|
|
586
|
|
|
1,100
|
|
|
508
|
|
|
3,626
|
|
||||||
Operating leases (c)
|
|
60
|
|
|
87
|
|
|
38
|
|
|
12
|
|
|
—
|
|
|
197
|
|
||||||
Total
|
|
$
|
1,284
|
|
|
$
|
2,926
|
|
|
$
|
2,799
|
|
|
$
|
4,311
|
|
|
$
|
8,041
|
|
|
$
|
19,361
|
|
(a)
|
On-balance sheet securitizations and borrowings under revolving conduit facilities are not included in maturities by period due to their variable monthly payments. At
December 31, 2018
, there were no amounts drawn under our revolving conduit facilities.
|
(b)
|
Future interest payments on floating-rate debt are estimated based upon floating rates in effect at
December 31, 2018
.
|
(c)
|
Operating leases include annual rental commitments for leased office space, automobiles, and information technology and related equipment.
|
December 31,
|
|
2018
|
|
2017
|
||||||||||||
(dollars in millions)
|
|
+100 bps
|
|
-100 bps
|
|
+100 bps
|
|
-100 bps
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Net finance receivables, less allowance for finance receivable losses
|
|
$
|
(182
|
)
|
|
$
|
187
|
|
|
$
|
(216
|
)
|
|
$
|
222
|
|
Finance receivables held for sale
|
|
(8
|
)
|
|
10
|
|
|
(10
|
)
|
|
12
|
|
||||
Fixed-maturity investment securities
|
|
(66
|
)
|
|
71
|
|
|
(62
|
)
|
|
68
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
(391
|
)
|
|
$
|
361
|
|
|
$
|
(375
|
)
|
|
$
|
236
|
|
Topic
|
|
Page
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
||
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
(dollars in millions, except par value amount)
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
663
|
|
|
$
|
958
|
|
Investment securities
|
|
1,694
|
|
|
1,697
|
|
||
Net finance receivables:
|
|
|
|
|
|
|
||
Personal loans (includes loans of consolidated VIEs of $8.5 billion in 2018 and $9.8 billion in 2017)
|
|
16,122
|
|
|
14,775
|
|
||
Other receivables
|
|
—
|
|
|
134
|
|
||
Net finance receivables
|
|
16,122
|
|
|
14,909
|
|
||
Unearned insurance premium and claim reserves
|
|
(662
|
)
|
|
(590
|
)
|
||
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $444 million in 2018 and $465 million in 2017)
|
|
(726
|
)
|
|
(692
|
)
|
||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
|
|
14,734
|
|
|
13,627
|
|
||
Finance receivables held for sale
|
|
103
|
|
|
132
|
|
||
Notes receivables from parent
|
|
260
|
|
|
391
|
|
||
Restricted cash and restricted cash equivalents (include restricted cash and restricted cash equivalents of consolidated VIEs of $479 million in 2018 and $482 million in 2017)
|
|
499
|
|
|
498
|
|
||
Goodwill
|
|
1,422
|
|
|
1,422
|
|
||
Other intangible assets
|
|
387
|
|
|
439
|
|
||
Other assets
|
|
547
|
|
|
481
|
|
||
|
|
|
|
|
||||
Total assets
|
|
$
|
20,309
|
|
|
$
|
19,645
|
|
|
|
|
|
|
||||
Liabilities and Shareholder's Equity
|
|
|
|
|
|
|
||
Long-term debt (includes debt of consolidated VIEs of $7.5 billion in 2018 and $8.7 billion in 2017)
|
|
$
|
15,178
|
|
|
$
|
15,050
|
|
Insurance claims and policyholder liabilities
|
|
685
|
|
|
737
|
|
||
Deferred and accrued taxes
|
|
42
|
|
|
46
|
|
||
Other liabilities (includes other liabilities of consolidated VIEs of $14 million in 2018 and in 2017)
|
|
383
|
|
|
410
|
|
||
Total liabilities
|
|
16,288
|
|
|
16,243
|
|
||
Commitments and contingent liabilities (Note 20)
|
|
|
|
|
|
|||
|
|
|
|
|
||||
Shareholder's equity:
|
|
|
|
|
|
|
||
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,021 shares issued and outstanding at December 31, 2018 and 2017
|
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
|
2,110
|
|
|
1,909
|
|
||
Accumulated other comprehensive income (loss)
|
|
(34
|
)
|
|
6
|
|
||
Retained earnings
|
|
1,940
|
|
|
1,482
|
|
||
Total shareholder's equity
|
|
4,021
|
|
|
3,402
|
|
||
|
|
|
|
|
||||
Total liabilities and shareholder's equity
|
|
$
|
20,309
|
|
|
$
|
19,645
|
|
(dollars in millions)
|
|
|
||||||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Interest income:
|
|
|
|
|
|
|
||||||
Finance charges
|
|
$
|
3,635
|
|
|
$
|
3,174
|
|
|
$
|
3,022
|
|
Finance receivables held for sale originated as held for investment
|
|
13
|
|
|
13
|
|
|
74
|
|
|||
Total interest income
|
|
3,648
|
|
|
3,187
|
|
|
3,096
|
|
|||
|
|
|
|
|
|
|
||||||
Interest expense
|
|
876
|
|
|
816
|
|
|
856
|
|
|||
|
|
|
|
|
|
|
||||||
Net interest income
|
|
2,772
|
|
|
2,371
|
|
|
2,240
|
|
|||
|
|
|
|
|
|
|
||||||
Provision for finance receivable losses
|
|
1,043
|
|
|
947
|
|
|
929
|
|
|||
|
|
|
|
|
|
|
||||||
Net interest income after provision for finance receivable losses
|
|
1,729
|
|
|
1,424
|
|
|
1,311
|
|
|||
|
|
|
|
|
|
|
||||||
Other revenues:
|
|
|
|
|
|
|
|
|
|
|||
Insurance
|
|
429
|
|
|
420
|
|
|
449
|
|
|||
Investment
|
|
66
|
|
|
73
|
|
|
86
|
|
|||
Interest income on notes receivable from parent
|
|
18
|
|
|
23
|
|
|
19
|
|
|||
Net loss on repurchases and repayments of debt
|
|
(9
|
)
|
|
(29
|
)
|
|
(17
|
)
|
|||
Net gain on sale of SpringCastle interests
|
|
—
|
|
|
—
|
|
|
167
|
|
|||
Net gain on sales of personal and real estate loans
|
|
18
|
|
|
—
|
|
|
18
|
|
|||
Other
|
|
38
|
|
|
53
|
|
|
32
|
|
|||
Total other revenues
|
|
560
|
|
|
540
|
|
|
754
|
|
|||
|
|
|
|
|
|
|
||||||
Other expenses:
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Salaries and benefits
|
|
862
|
|
|
729
|
|
|
723
|
|
|||
Acquisition-related transaction and integration expenses
|
|
54
|
|
|
69
|
|
|
108
|
|
|||
Other operating expenses
|
|
538
|
|
|
587
|
|
|
670
|
|
|||
Insurance policy benefits and claims
|
|
192
|
|
|
184
|
|
|
167
|
|
|||
Total other expenses
|
|
1,646
|
|
|
1,569
|
|
|
1,668
|
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
643
|
|
|
395
|
|
|
397
|
|
|||
|
|
|
|
|
|
|
||||||
Income taxes
|
|
182
|
|
|
243
|
|
|
127
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
461
|
|
|
$
|
152
|
|
|
$
|
270
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
28
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributable to Springleaf Finance Corporation
|
|
$
|
461
|
|
|
$
|
152
|
|
|
$
|
242
|
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
461
|
|
|
$
|
152
|
|
|
$
|
270
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||
Net change in unrealized gains (losses) on non-credit impaired available-for-sale securities
|
|
(44
|
)
|
|
21
|
|
|
36
|
|
|||
Retirement plan liability adjustments
|
|
(8
|
)
|
|
4
|
|
|
22
|
|
|||
Foreign currency translation adjustments
|
|
(9
|
)
|
|
6
|
|
|
4
|
|
|||
Income tax effect:
|
|
|
|
|
|
|
|
|
||||
Net unrealized gains (losses) on non-credit impaired available-for-sale securities
|
|
9
|
|
|
(7
|
)
|
|
(13
|
)
|
|||
Retirement plan liability adjustments
|
|
3
|
|
|
(1
|
)
|
|
(7
|
)
|
|||
Foreign currency translation adjustments
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Other comprehensive income (loss), net of tax, before reclassification adjustments
|
|
(49
|
)
|
|
21
|
|
|
41
|
|
|||
Reclassification adjustments included in net income:
|
|
|
|
|
|
|
|
|
||||
Net realized losses (gains) on available-for-sale securities
|
|
2
|
|
|
(14
|
)
|
|
(15
|
)
|
|||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Income tax effect:
|
|
|
|
|
|
|
|
|
||||
Net realized gains (loss) on available-for-sale securities
|
|
(1
|
)
|
|
5
|
|
|
5
|
|
|||
Reclassification adjustments included in net income, net of tax
|
|
1
|
|
|
(9
|
)
|
|
(14
|
)
|
|||
Other comprehensive income (loss), net of tax
|
|
(48
|
)
|
|
12
|
|
|
27
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
413
|
|
|
164
|
|
|
297
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
28
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income attributable to Springleaf Finance Corporation
|
|
$
|
413
|
|
|
$
|
164
|
|
|
$
|
269
|
|
|
|
Springleaf Finance Corporation Shareholder's Equity
|
|
|
|
|
||||||||||||||||||||||
(dollars in millions)
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Springleaf Finance Corporation Shareholder’s
Equity
|
|
Non-controlling Interests
|
|
Total Shareholder's Equity
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2018
|
|
$
|
5
|
|
|
$
|
1,909
|
|
|
$
|
6
|
|
|
$
|
1,482
|
|
|
$
|
3,402
|
|
|
$
|
—
|
|
|
$
|
3,402
|
|
Non-cash incentive compensation from SFH
|
|
—
|
|
|
110
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|
—
|
|
|
$
|
110
|
|
||||||
Contribution of OGSC to SFC from SFI
|
|
—
|
|
|
53
|
|
|
5
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
$
|
58
|
|
||||||
Contribution of SMHC to SFC from SFI
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
$
|
30
|
|
||||||
Share-based compensation expense, net of forfeitures
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
$
|
10
|
|
||||||
Withholding tax on share-based compensation
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
$
|
(2
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
$
|
(48
|
)
|
||||||
Impact of AOCI reclassification due to the Tax Act
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461
|
|
|
461
|
|
|
—
|
|
|
$
|
461
|
|
||||||
Balance, December 31, 2018
|
|
$
|
5
|
|
|
$
|
2,110
|
|
|
$
|
(34
|
)
|
|
$
|
1,940
|
|
|
$
|
4,021
|
|
|
$
|
—
|
|
|
$
|
4,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2017
|
|
$
|
5
|
|
|
$
|
1,906
|
|
|
$
|
(6
|
)
|
|
$
|
1,368
|
|
|
$
|
3,273
|
|
|
$
|
—
|
|
|
$
|
3,273
|
|
Share-based compensation expense, net of forfeitures
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
$
|
5
|
|
||||||
Withholding tax on RSUs converted
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
$
|
(2
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
$
|
12
|
|
||||||
Dividend of SFMC to SFI
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
|
—
|
|
|
$
|
(38
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
152
|
|
|
152
|
|
|
—
|
|
|
$
|
152
|
|
||||||
Balance, December 31, 2017
|
|
$
|
5
|
|
|
$
|
1,909
|
|
|
$
|
6
|
|
|
$
|
1,482
|
|
|
$
|
3,402
|
|
|
$
|
—
|
|
|
$
|
3,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2016
|
|
$
|
5
|
|
|
$
|
1,889
|
|
|
$
|
(33
|
)
|
|
$
|
1,126
|
|
|
$
|
2,987
|
|
|
$
|
(79
|
)
|
|
$
|
2,908
|
|
Capital contribution from parent
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||||
Share-based compensation expense, net of forfeitures
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||||
Withholding tax on share-based compensation
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Change in non-controlling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions declared to joint venture partners
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|||||||
Sale of equity interests in SpringCastle joint venture
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242
|
|
|
242
|
|
|
28
|
|
|
270
|
|
|||||||
Balance, December 31, 2016
|
|
$
|
5
|
|
|
$
|
1,906
|
|
|
$
|
(6
|
)
|
|
$
|
1,368
|
|
|
$
|
3,273
|
|
|
$
|
—
|
|
|
$
|
3,273
|
|
(dollars in millions)
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
461
|
|
|
$
|
152
|
|
|
$
|
270
|
|
Reconciling adjustments:
|
|
|
|
|
|
|
|
|
||||
Provision for finance receivable losses
|
|
1,043
|
|
|
947
|
|
|
929
|
|
|||
Depreciation and amortization
|
|
279
|
|
|
317
|
|
|
510
|
|
|||
Deferred income tax charge (benefit)
|
|
21
|
|
|
43
|
|
|
(105
|
)
|
|||
Net gain on liquidation of United Kingdom Subsidiary
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Net gain on sales of personal and real estate loans (a)
|
|
(2
|
)
|
|
—
|
|
|
(18
|
)
|
|||
Net loss on repurchases and repayments of debt
|
|
9
|
|
|
29
|
|
|
17
|
|
|||
Non-cash incentive compensation from SFH
|
|
110
|
|
|
—
|
|
|
—
|
|
|||
Share-based compensation expense, net of forfeitures
|
|
10
|
|
|
5
|
|
|
8
|
|
|||
Net gain on sale of SpringCastle interests
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
|||
Other
|
|
15
|
|
|
(5
|
)
|
|
(9
|
)
|
|||
Cash flows due to changes in other assets and other liabilities
|
|
21
|
|
|
159
|
|
|
(273
|
)
|
|||
Net cash provided by operating activities
|
|
1,967
|
|
|
1,647
|
|
|
1,158
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
||||
Net principal originations of finance receivables held for investment and held for sale
|
|
(2,372
|
)
|
|
(2,267
|
)
|
|
(1,155
|
)
|
|||
Proceeds on sales of finance receivables held for sale originated as held for investment
|
|
100
|
|
|
—
|
|
|
930
|
|
|||
Proceeds from sale of SpringCastle interests, net of restricted cash released
|
|
—
|
|
|
—
|
|
|
26
|
|
|||
Cash advances on intercompany notes receivables
|
|
(34
|
)
|
|
(355
|
)
|
|
(297
|
)
|
|||
Proceeds from repayments of principal on intercompany note to parent
|
|
187
|
|
|
249
|
|
|
401
|
|
|||
Cash received from CitiFinancial Credit Company
|
|
—
|
|
|
—
|
|
|
23
|
|
|||
Available-for-sale securities purchased
|
|
(680
|
)
|
|
(671
|
)
|
|
(746
|
)
|
|||
Available-for-sale securities called, sold, and matured
|
|
563
|
|
|
739
|
|
|
837
|
|
|||
Other securities purchased
|
|
(11
|
)
|
|
—
|
|
|
(17
|
)
|
|||
Trading and other securities called, sold, and matured
|
|
36
|
|
|
18
|
|
|
63
|
|
|||
Other, net
|
|
(27
|
)
|
|
7
|
|
|
(2
|
)
|
|||
Net cash provided by (used for) investing activities
|
|
(2,238
|
)
|
|
(2,280
|
)
|
|
63
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
||||
Proceeds from issuance of long-term debt, net of commissions
|
|
5,525
|
|
|
5,427
|
|
|
6,660
|
|
|||
Repayment of long-term debt
|
|
(5,471
|
)
|
|
(4,447
|
)
|
|
(8,320
|
)
|
|||
Distributions to joint venture partners
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||
Cash contribution of SMHC
|
|
13
|
|
|
—
|
|
|
—
|
|
|||
Cash contribution of OGSC
|
|
11
|
|
|
—
|
|
|
—
|
|
|||
Cash dividend of SFMC
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|||
Payments on intercompany note payable
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|||
Withholding tax on share-based compensation
|
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Capital contributions from parent
|
|
—
|
|
|
—
|
|
|
10
|
|
|||
Net cash provided by (used for) financing activities
|
|
(23
|
)
|
|
968
|
|
|
(1,669
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
(294
|
)
|
|
335
|
|
|
(448
|
)
|
|||
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period
|
|
1,456
|
|
|
1,121
|
|
|
1,569
|
|
|||
Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period
|
|
$
|
1,162
|
|
|
$
|
1,456
|
|
|
$
|
1,121
|
|
(a)
|
In 2018, the gain on sale of real estate loans has been combined with the resulting impairment on finance receivables held for sale remaining after the December 2018 Real Estate Loan Sale. See Note 2 of the Notes to the Consolidated Financial Statements included in this report for more information regarding the sale.
|
(dollars in millions)
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Supplemental cash flow information
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
663
|
|
|
$
|
958
|
|
|
$
|
553
|
|
Restricted cash and restricted cash equivalents
|
|
499
|
|
|
498
|
|
|
568
|
|
|||
Total cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
$
|
1,162
|
|
|
$
|
1,456
|
|
|
$
|
1,121
|
|
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
(753
|
)
|
|
$
|
(746
|
)
|
|
$
|
(765
|
)
|
Income taxes paid
|
|
(150
|
)
|
|
(154
|
)
|
|
(269
|
)
|
|||
|
|
|
|
|
|
|
||||||
Supplemental non-cash activities
|
|
|
|
|
|
|
||||||
Transfer of net finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
1,945
|
|
Non-cash contribution of SMHC
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
Non-cash contribution of OGSC
|
|
47
|
|
|
—
|
|
|
—
|
|
|||
Increase in finance receivables held for investment financed with intercompany payable
|
|
—
|
|
|
—
|
|
|
89
|
|
|||
Transfer of finance receivables to real estate owned
|
|
7
|
|
|
9
|
|
|
8
|
|
|||
Non-cash dividend of SFMC
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
(dollars in millions, except par value amount)
|
2017
|
|||||||||||||||
|
As Reported SFC
|
|
Independence
|
|
Adjustments
|
|
Consolidated SFC
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
244
|
|
|
$
|
714
|
|
|
$
|
—
|
|
|
$
|
958
|
|
Investment securities
|
|
536
|
|
|
1,172
|
|
|
(11
|
)
|
|
1,697
|
|
||||
Net finance receivables:
|
|
|
|
|
|
|
|
|
||||||||
Personal loans
|
|
5,308
|
|
|
9,467
|
|
|
—
|
|
|
14,775
|
|
||||
Real estate loans
|
|
128
|
|
|
—
|
|
|
—
|
|
|
128
|
|
||||
Retail sales finance
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Net finance receivables
|
|
5,442
|
|
|
9,467
|
|
|
—
|
|
|
14,909
|
|
||||
Unearned insurance premium and claim reserves
|
|
(108
|
)
|
|
(482
|
)
|
|
—
|
|
|
(590
|
)
|
||||
Allowance for finance receivable losses
|
|
(240
|
)
|
|
(452
|
)
|
|
—
|
|
|
(692
|
)
|
||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
|
|
5,094
|
|
|
8,533
|
|
|
—
|
|
|
13,627
|
|
||||
Finance receivables held for sale
|
|
132
|
|
|
—
|
|
|
—
|
|
|
132
|
|
||||
Notes receivable from parent and affiliates
|
|
4,488
|
|
|
—
|
|
|
(4,097
|
)
|
|
391
|
|
||||
Restricted cash and restricted cash equivalents
|
|
169
|
|
|
329
|
|
|
—
|
|
|
498
|
|
||||
Goodwill
|
|
—
|
|
|
1,422
|
|
|
—
|
|
|
1,422
|
|
||||
Other intangible assets
|
|
15
|
|
|
424
|
|
|
—
|
|
|
439
|
|
||||
Other assets
|
|
146
|
|
|
402
|
|
|
(67
|
)
|
|
481
|
|
||||
Total assets
|
|
$
|
10,824
|
|
|
$
|
12,996
|
|
|
$
|
(4,175
|
)
|
|
$
|
19,645
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities and Shareholder’s Equity
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
7,865
|
|
|
$
|
7,195
|
|
|
$
|
(10
|
)
|
|
15,050
|
|
|
Note payable to parent and affiliates
|
|
—
|
|
|
4,097
|
|
|
(4,097
|
)
|
|
—
|
|
||||
Insurance claims and policyholder liabilities
|
|
261
|
|
|
476
|
|
|
—
|
|
|
737
|
|
||||
Deferred and accrued taxes
|
|
78
|
|
|
3
|
|
|
(35
|
)
|
|
46
|
|
||||
Other liabilities
|
|
214
|
|
|
229
|
|
|
(33
|
)
|
|
410
|
|
||||
Total liabilities
|
|
8,418
|
|
|
12,000
|
|
|
(4,175
|
)
|
|
16,243
|
|
||||
Commitments and contingent liabilities (Note 20)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Shareholder’s equity:
|
|
|
|
|
|
|
|
|
||||||||
Common stock
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Additional paid-in capital
|
|
799
|
|
|
1,110
|
|
|
—
|
|
|
1,909
|
|
||||
Accumulated other comprehensive income (loss)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Retained earnings
|
|
1,602
|
|
|
(120
|
)
|
|
—
|
|
|
1,482
|
|
||||
Total shareholder’s equity
|
|
2,406
|
|
|
996
|
|
|
—
|
|
|
3,402
|
|
||||
Total liabilities and shareholder’s equity
|
|
$
|
10,824
|
|
|
$
|
12,996
|
|
|
$
|
(4,175
|
)
|
|
$
|
19,645
|
|
(dollars in millions)
|
2017
|
|||||||||||||||
|
As Reported
|
|
|
|
|
|
Consolidated
|
|||||||||
Year to Date
|
|
SFC
|
|
Independence
|
|
Adjustments
|
|
SFC
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest income:
|
|
|
|
|
|
|
|
|
||||||||
Finance charges
|
|
$
|
1,228
|
|
|
$
|
1,946
|
|
|
$
|
—
|
|
|
$
|
3,174
|
|
Finance receivables held for sale originated as held for investment
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Total interest income
|
|
1,241
|
|
|
1,946
|
|
|
—
|
|
|
3,187
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
517
|
|
|
531
|
|
|
(232
|
)
|
|
816
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net interest income
|
|
724
|
|
|
1,415
|
|
|
232
|
|
|
2,371
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Provision for finance receivable losses
|
|
324
|
|
|
623
|
|
|
—
|
|
|
947
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net interest income after provision for finance receivable losses
|
|
400
|
|
|
792
|
|
|
232
|
|
|
1,424
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other revenues:
|
|
|
|
|
|
|
|
|
||||||||
Insurance
|
|
140
|
|
|
280
|
|
|
—
|
|
|
420
|
|
||||
Investment
|
|
28
|
|
|
45
|
|
|
—
|
|
|
73
|
|
||||
Interest income on notes receivable from parent and affiliates
|
|
255
|
|
|
—
|
|
|
(232
|
)
|
|
23
|
|
||||
Net loss on repurchases and repayments of debt
|
|
(28
|
)
|
|
(1
|
)
|
|
—
|
|
|
(29
|
)
|
||||
Other
|
|
12
|
|
|
69
|
|
|
(28
|
)
|
|
53
|
|
||||
Total other revenues
|
|
407
|
|
|
393
|
|
|
(260
|
)
|
|
540
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other expenses:
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Salaries and benefits
|
|
307
|
|
|
442
|
|
|
(20
|
)
|
|
729
|
|
||||
Acquisition-related transaction and integration expenses
|
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
||||
Other operating expenses
|
|
251
|
|
|
413
|
|
|
(77
|
)
|
|
587
|
|
||||
Insurance policy benefits and claims
|
|
56
|
|
|
128
|
|
|
—
|
|
|
184
|
|
||||
Total other expenses
|
|
614
|
|
|
983
|
|
|
(28
|
)
|
|
1,569
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income tax expense
|
|
193
|
|
|
202
|
|
|
—
|
|
|
395
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
|
99
|
|
|
144
|
|
|
—
|
|
|
243
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
94
|
|
|
58
|
|
|
—
|
|
|
152
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Springleaf Finance Corporation
|
|
$
|
94
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
152
|
|
(dollars in millions)
|
2016
|
|||||||||||||||
|
As Reported
|
|
|
|
|
|
Consolidated
|
|||||||||
Year to Date
|
|
SFC
|
|
Independence
|
|
Adjustments
|
|
SFC
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest income:
|
|
|
|
|
|
|
|
|
||||||||
Finance charges
|
|
$
|
1,276
|
|
|
$
|
1,746
|
|
|
$
|
—
|
|
|
$
|
3,022
|
|
Finance receivables held for sale originated as held for investment
|
|
74
|
|
|
—
|
|
|
—
|
|
|
74
|
|
||||
Total interest income
|
|
1,350
|
|
|
1,746
|
|
|
—
|
|
|
3,096
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
556
|
|
|
502
|
|
|
(202
|
)
|
|
856
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net interest income
|
|
794
|
|
|
1,244
|
|
|
202
|
|
|
2,240
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Provision for finance receivable losses
|
|
329
|
|
|
600
|
|
|
—
|
|
|
929
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net interest income after provision for finance receivable losses
|
|
465
|
|
|
644
|
|
|
202
|
|
|
1,311
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other revenues:
|
|
|
|
|
|
|
|
|
||||||||
Insurance
|
|
160
|
|
|
289
|
|
|
—
|
|
|
449
|
|
||||
Investment
|
|
31
|
|
|
55
|
|
|
—
|
|
|
86
|
|
||||
Interest income on notes receivable from parent and affiliates
|
|
214
|
|
|
7
|
|
|
(202
|
)
|
|
19
|
|
||||
Net loss on repurchases and repayments of debt
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
||||
Net gain on sale of SpringCastle interests
|
|
167
|
|
|
—
|
|
|
—
|
|
|
167
|
|
||||
Net gain on sales of personal and real estate loans and related trust assets
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||
Other
|
|
1
|
|
|
31
|
|
|
—
|
|
|
32
|
|
||||
Total other revenues
|
|
574
|
|
|
382
|
|
|
(202
|
)
|
|
754
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other expenses:
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Salaries and benefits
|
|
347
|
|
|
427
|
|
|
(51
|
)
|
|
723
|
|
||||
Acquisition-related transaction and integration expenses
|
|
—
|
|
|
—
|
|
|
108
|
|
|
108
|
|
||||
Other operating expenses
|
|
291
|
|
|
436
|
|
|
(57
|
)
|
|
670
|
|
||||
Insurance policy benefits and claims
|
|
55
|
|
|
112
|
|
|
—
|
|
|
167
|
|
||||
Total other expenses
|
|
693
|
|
|
975
|
|
|
—
|
|
|
1,668
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income tax expense
|
|
346
|
|
|
51
|
|
|
—
|
|
|
397
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
|
113
|
|
|
14
|
|
|
—
|
|
|
127
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
233
|
|
|
37
|
|
|
—
|
|
|
270
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to non-controlling interests
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Springleaf Finance Corporation
|
|
$
|
205
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
242
|
|
|
2017
|
|||||||||||||||
(dollars in millions)
|
|
As Reported
SFC |
|
Independence
|
|
Adjustments
|
|
Consolidated
SFC |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
94
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
152
|
|
Reconciling adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Provision for finance receivable losses
|
|
324
|
|
|
623
|
|
|
—
|
|
|
947
|
|
||||
Depreciation and amortization
|
|
143
|
|
|
174
|
|
|
—
|
|
|
317
|
|
||||
Deferred income tax benefit
|
|
(82
|
)
|
|
125
|
|
|
—
|
|
|
43
|
|
||||
Net loss on repurchases and repayments of debt
|
|
28
|
|
|
1
|
|
|
—
|
|
|
29
|
|
||||
Share-based compensation expense, net of forfeitures
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Other
|
|
1
|
|
|
(6
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Cash flows due to changes in:
|
|
|
|
|
|
|
|
|
||||||||
Other assets and other liabilities
|
|
107
|
|
|
68
|
|
|
—
|
|
|
175
|
|
||||
Insurance claims and policyholder liabilities
|
|
(92
|
)
|
|
70
|
|
|
—
|
|
|
(22
|
)
|
||||
Taxes receivable and payable
|
|
13
|
|
|
30
|
|
|
—
|
|
|
43
|
|
||||
Accrued interest and finance charges
|
|
(95
|
)
|
|
54
|
|
|
4
|
|
|
(37
|
)
|
||||
Other, net
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Net cash provided by operating activities
|
|
438
|
|
|
1,205
|
|
|
4
|
|
|
1,647
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
||||||||
Net principal originations of finance receivables held for investment and held for sale
|
|
(783
|
)
|
|
(1,484
|
)
|
|
—
|
|
|
(2,267
|
)
|
||||
Cash advances on intercompany notes receivable
|
|
(1,837
|
)
|
|
—
|
|
|
1,482
|
|
|
(355
|
)
|
||||
Proceeds from repayments of principal and assignment of intercompany notes receivable
|
|
1,154
|
|
|
—
|
|
|
(905
|
)
|
|
249
|
|
||||
Available-for-sale securities purchased
|
|
(245
|
)
|
|
(431
|
)
|
|
5
|
|
|
(671
|
)
|
||||
Available-for-sale securities called, sold, and matured
|
|
301
|
|
|
438
|
|
|
—
|
|
|
739
|
|
||||
Trading and other securities called, sold, and matured
|
|
1
|
|
|
17
|
|
|
—
|
|
|
18
|
|
||||
Proceeds from sale of real estate owned
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Other, net
|
|
12
|
|
|
(9
|
)
|
|
—
|
|
|
3
|
|
||||
Net cash provided by (used for) financing activities
|
|
(1,393
|
)
|
|
(1,469
|
)
|
|
582
|
|
|
(2,280
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuance of long-term debt, net of commissions
|
|
3,456
|
|
|
1,971
|
|
|
—
|
|
|
5,427
|
|
||||
Repayments of long-term debt
|
|
(2,544
|
)
|
|
(1,898
|
)
|
|
(5
|
)
|
|
(4,447
|
)
|
||||
Proceeds from intercompany note payable
|
|
—
|
|
|
1,486
|
|
|
(1,486
|
)
|
|
—
|
|
||||
Payments on intercompany note payable
|
|
—
|
|
|
(905
|
)
|
|
905
|
|
|
—
|
|
||||
Withholding tax on vested RSUs and PRSUs
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Cash dividend of SFMC
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||
Net cash provided by (used for) financing activities
|
|
901
|
|
|
653
|
|
|
(586
|
)
|
|
968
|
|
||||
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (Continued)
|
2017
|
|||||||||||||||
(dollars in millions)
|
|
As Reported
SFC
|
|
Independence
|
|
Adjustments
|
|
Consolidated
SFC
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net change in cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
(54
|
)
|
|
389
|
|
|
—
|
|
|
335
|
|
||||
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period
|
|
467
|
|
|
654
|
|
|
—
|
|
|
$
|
1,121
|
|
|||
Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period
|
|
$
|
413
|
|
|
$
|
1,043
|
|
|
$
|
—
|
|
|
$
|
1,456
|
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
244
|
|
|
$
|
714
|
|
|
$
|
—
|
|
|
$
|
958
|
|
Restricted cash and restricted cash equivalents
|
|
169
|
|
|
329
|
|
|
—
|
|
|
498
|
|
||||
Total cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
$
|
413
|
|
|
$
|
1,043
|
|
|
$
|
—
|
|
|
$
|
1,456
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest paid
|
|
$
|
(436
|
)
|
|
$
|
(310
|
)
|
|
$
|
—
|
|
|
$
|
(746
|
)
|
Income taxes received (paid)
|
|
(71
|
)
|
|
(83
|
)
|
|
—
|
|
|
(154
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Supplemental non-cash activities
|
|
|
|
|
|
|
|
|
||||||||
Transfer of finance receivables to real estate owned
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Net unsettled investment security purchases
|
|
—
|
|
|
1
|
|
|
—
|
|
|
$
|
1
|
|
|||
Non-cash dividend of SFMC
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
2016
|
|||||||||||||||
(dollars in millions)
|
|
As Reported
SFC
|
|
Independence
|
|
Adjustments
|
|
Consolidated
SFC
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
233
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
270
|
|
Reconciling adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Provision for finance receivable losses
|
|
329
|
|
|
600
|
|
|
—
|
|
|
929
|
|
||||
Depreciation and amortization
|
|
144
|
|
|
366
|
|
|
—
|
|
|
510
|
|
||||
Deferred income tax benefit
|
|
(83
|
)
|
|
(22
|
)
|
|
—
|
|
|
(105
|
)
|
||||
Net gain on liquidation of United Kingdom subsidiary
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Net gain on sales of personal and real estate loans and related trust assets
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
||||
Net loss on repurchases and repayments of debt
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Share-based compensation expense, net of forfeitures
|
|
1
|
|
|
7
|
|
|
—
|
|
|
8
|
|
||||
Net gain on sale of SpringCastle interests
|
|
(167
|
)
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
||||
Other
|
|
6
|
|
|
(15
|
)
|
|
—
|
|
|
(9
|
)
|
||||
Cash flows due to changes in:
|
|
|
|
|
|
|
|
|
||||||||
Other assets and other liabilities
|
|
(37
|
)
|
|
(152
|
)
|
|
—
|
|
|
(189
|
)
|
||||
Insurance claims and policyholder liabilities
|
|
(19
|
)
|
|
(45
|
)
|
|
—
|
|
|
(64
|
)
|
||||
Taxes receivable and payable
|
|
56
|
|
|
(94
|
)
|
|
—
|
|
|
(38
|
)
|
||||
Accrued interest and finance charges
|
|
14
|
|
|
1
|
|
|
—
|
|
|
15
|
|
||||
Other, net
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Net cash provided by operating activities
|
|
475
|
|
|
683
|
|
|
—
|
|
|
1,158
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
||||||||
Net principal originations of finance receivables held for investment and held for sale
|
|
(557
|
)
|
|
(598
|
)
|
|
—
|
|
|
(1,155
|
)
|
||||
Proceeds on sales of finance receivables held for sale originated as held for investment
|
|
930
|
|
|
—
|
|
|
—
|
|
|
930
|
|
||||
Proceeds from sale of SpringCastle interests, net of restricted cash released
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||
Cash advances on intercompany notes receivable
|
|
(1,042
|
)
|
|
(670
|
)
|
|
1,415
|
|
|
(297
|
)
|
||||
Proceeds from repayments of principal and assignment of intercompany notes receivable
|
|
1,023
|
|
|
670
|
|
|
(1,292
|
)
|
|
401
|
|
||||
Cash received from CitiFinancial Credit Company
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||
Available-for-sale securities purchased
|
|
(353
|
)
|
|
(399
|
)
|
|
6
|
|
|
(746
|
)
|
||||
Trading and other securities purchased
|
|
(10
|
)
|
|
(7
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Available-for-sale securities called, sold, and matured
|
|
380
|
|
|
457
|
|
|
—
|
|
|
837
|
|
||||
Trading and other securities called, sold, and matured
|
|
20
|
|
|
43
|
|
|
—
|
|
|
63
|
|
||||
Proceeds from sale of real estate owned
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Other, net
|
|
26
|
|
|
(36
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Net cash provided by (used for) investing activities
|
|
451
|
|
|
(517
|
)
|
|
129
|
|
|
63
|
|
||||
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (Continued)
|
2016
|
|||||||||||||||
(dollars in millions)
|
|
As Reported
SFC
|
|
Independence
|
|
Adjustments
|
|
Consolidated
SFC
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuance of long-term debt, net of commissions
|
|
3,854
|
|
|
2,806
|
|
|
—
|
|
|
6,660
|
|
||||
Proceeds from intercompany note payable
|
|
670
|
|
|
1,415
|
|
|
(2,085
|
)
|
|
—
|
|
||||
Repayments of long-term debt
|
|
(4,920
|
)
|
|
(3,394
|
)
|
|
(6
|
)
|
|
(8,320
|
)
|
||||
Distributions to joint venture partners
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
||||
Payments on note payable to affiliate
|
|
(670
|
)
|
|
(1,292
|
)
|
|
1,962
|
|
|
—
|
|
||||
Withholding tax on vested RSUs and PRSUs
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Capital contributions from parent
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Net cash provided by (used for) financing activities
|
|
(1,075
|
)
|
|
(465
|
)
|
|
(129
|
)
|
|
(1,669
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net change in cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
(149
|
)
|
|
(299
|
)
|
|
—
|
|
|
(448
|
)
|
||||
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period
|
|
616
|
|
|
953
|
|
|
—
|
|
|
1,569
|
|
||||
Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period
|
|
$
|
467
|
|
|
$
|
654
|
|
|
$
|
—
|
|
|
$
|
1,121
|
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
240
|
|
|
$
|
313
|
|
|
$
|
—
|
|
|
$
|
553
|
|
Restricted cash and restricted cash equivalents
|
|
227
|
|
|
341
|
|
|
—
|
|
|
568
|
|
||||
Total cash and cash equivalents and restricted cash and restricted cash equivalents
|
|
$
|
467
|
|
|
$
|
654
|
|
|
$
|
—
|
|
|
$
|
1,121
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest paid
|
|
$
|
(451
|
)
|
|
$
|
(314
|
)
|
|
$
|
—
|
|
|
$
|
(765
|
)
|
Income taxes received (paid)
|
|
(140
|
)
|
|
(129
|
)
|
|
—
|
|
|
(269
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Supplemental non-cash activities
|
|
|
|
|
|
|
|
|
||||||||
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)
|
|
$
|
1,945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,945
|
|
Increase in finance receivables held for investment financed with intercompany payable
|
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
||||
Transfer of finance receivables to real estate owned
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Net unsettled investment security purchases
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
•
|
Consumer and Insurance; and
|
•
|
Acquisitions and Servicing.
|
•
|
prior finance receivable loss and delinquency experience;
|
•
|
underlying collateral
|
•
|
the composition of our finance receivable portfolio; and
|
•
|
current economic conditions, including the levels of unemployment and personal bankruptcies.
|
•
|
we intend to sell the security;
|
•
|
it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; or
|
•
|
we do not expect to recover the security’s entire amortized cost basis (even if we do not intend to sell the security).
|
•
|
Personal loans —
are non-revolving, with a fixed-rate, a fixed term of
three
to
six years
, and are secured by automobiles, other titled collateral or are unsecured.
|
•
|
Other receivables —
consist of our loan portfolios in a liquidating status. We ceased originating real estate loans in 2012 and purchasing retail sales finance contracts and revolving retail accounts (“retail sales finance portfolio”) in 2013. We continue to service or sub-service the liquidating real estate loans and retail sales finance contracts. Beginning in 2018, we combined real estate loans and retail sales finance portfolio into “Other Receivables.” Previously, we presented real estate loans and retail sales finance portfolio as distinct receivable types. In order to conform to this new alignment, we have revised our prior period finance receivable disclosures.
|
(dollars in millions)
|
|
Personal
Loans |
|
Other Receivables
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||
Gross receivables (a)(b)
|
|
$
|
15,936
|
|
|
$
|
—
|
|
|
$
|
15,936
|
|
Unearned points and fees
|
|
(200
|
)
|
|
—
|
|
|
(200
|
)
|
|||
Accrued finance charges
|
|
253
|
|
|
—
|
|
|
253
|
|
|||
Deferred origination costs
|
|
133
|
|
|
—
|
|
|
133
|
|
|||
Total
|
|
$
|
16,122
|
|
|
$
|
—
|
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||
Gross receivables (a)(b)
|
|
$
|
14,617
|
|
|
$
|
133
|
|
|
$
|
14,750
|
|
Unearned points and fees
|
|
(168
|
)
|
|
—
|
|
|
(168
|
)
|
|||
Accrued finance charges
|
|
210
|
|
|
1
|
|
|
211
|
|
|||
Deferred origination costs
|
|
116
|
|
|
—
|
|
|
116
|
|
|||
Total
|
|
$
|
14,775
|
|
|
$
|
134
|
|
|
$
|
14,909
|
|
(a)
|
Gross receivables are defined as follows:
|
•
|
Finance receivables purchased as a performing receivable
— gross finance receivables equal the UPB and the remaining unearned discount, net of premium established at the time of purchase to reflect the finance receivable balance at its initial fair value;
|
•
|
Finance receivables originated subsequent to the OneMain Acquisition and the Fortress Acquisition
— gross finance receivables equal the UPB;
|
•
|
Purchased credit impaired finance receivables
— gross finance receivables equal the remaining estimated cash flows less the current balance of accretable yield on the purchased credit impaired accounts; and
|
•
|
TDR finance receivables
— gross finance receivables equal the UPB and, if applicable, the remaining unearned premium, net of discount established at the time of purchase if previously purchased as a performing receivable.
|
(b)
|
As of January 1, 2018, we have reclassified unearned finance charges to gross receivables. To conform to this presentation, we have reclassified the prior period.
|
December 31,
|
|
2018
|
|
2017 *
|
||||||||||
(dollars in millions)
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Texas
|
|
$
|
1,444
|
|
|
9
|
%
|
|
$
|
1,300
|
|
|
9
|
%
|
North Carolina
|
|
1,177
|
|
|
7
|
|
|
1,155
|
|
|
8
|
|
||
California
|
|
989
|
|
|
6
|
|
|
876
|
|
|
6
|
|
||
Pennsylvania
|
|
945
|
|
|
6
|
|
|
882
|
|
|
6
|
|
||
Florida
|
|
830
|
|
|
5
|
|
|
674
|
|
|
5
|
|
||
Ohio
|
|
791
|
|
|
5
|
|
|
726
|
|
|
5
|
|
||
Illinois
|
|
700
|
|
|
4
|
|
|
667
|
|
|
4
|
|
||
Indiana
|
|
653
|
|
|
4
|
|
|
608
|
|
|
4
|
|
||
Virginia
|
|
651
|
|
|
4
|
|
|
641
|
|
|
4
|
|
||
Georgia
|
|
650
|
|
|
4
|
|
|
618
|
|
|
4
|
|
||
Tennessee
|
|
547
|
|
|
3
|
|
|
520
|
|
|
3
|
|
||
Other
|
|
6,745
|
|
|
43
|
|
|
6,242
|
|
|
42
|
|
||
Total
|
|
$
|
16,122
|
|
|
100
|
%
|
|
$
|
14,909
|
|
|
100
|
%
|
*
|
December 31, 2017
concentrations of net finance receivables are presented in the order of
December 31, 2018
state concentrations.
|
(dollars in millions)
|
|
Personal
Loans |
|
Other Receivables
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||
Performing
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
15,373
|
|
|
$
|
—
|
|
|
$
|
15,373
|
|
30-59 days past due
|
|
228
|
|
|
—
|
|
|
228
|
|
|||
60-89 days past due
|
|
160
|
|
|
—
|
|
|
160
|
|
|||
Total performing
|
|
15,761
|
|
|
—
|
|
|
15,761
|
|
|||
Nonperforming
|
|
|
|
|
|
|
||||||
90-179 days past due
|
|
353
|
|
|
—
|
|
|
353
|
|
|||
180 days or more past due
|
|
8
|
|
|
—
|
|
|
8
|
|
|||
Total nonperforming
|
|
361
|
|
|
—
|
|
|
361
|
|
|||
Total
|
|
$
|
16,122
|
|
|
$
|
—
|
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||
Performing
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
14,081
|
|
|
$
|
104
|
|
|
$
|
14,185
|
|
30-59 days past due
|
|
202
|
|
|
8
|
|
|
210
|
|
|||
60-89 days past due
|
|
156
|
|
|
3
|
|
|
159
|
|
|||
Total performing
|
|
14,439
|
|
|
115
|
|
|
14,554
|
|
|||
Nonperforming
|
|
|
|
|
|
|
||||||
90-179 days past due
|
|
330
|
|
|
4
|
|
|
334
|
|
|||
180 days or more past due
|
|
6
|
|
|
15
|
|
|
21
|
|
|||
Total nonperforming
|
|
336
|
|
|
19
|
|
|
355
|
|
|||
Total
|
|
$
|
14,775
|
|
|
$
|
134
|
|
|
$
|
14,909
|
|
(a)
|
Outstanding balance is defined as UPB of the loans with a net carrying amount.
|
(b)
|
Purchased credit impaired FA Loans held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Carrying amount
|
|
$
|
28
|
|
|
$
|
44
|
|
Outstanding balance
|
|
48
|
|
|
72
|
|
(a)
|
Accretion on our purchased credit impaired FA Loans held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Accretion
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
5
|
|
(b)
|
Other reflects a measurement period adjustment in the first quarter of 2016 based on a change in the expected cash flows in the purchase credit impaired portfolio related to the OneMain Acquisition. The measurement period adjustment created a decrease of $
23
million to the beginning balance of the OM Loans accretable yield.
|
(c)
|
Reclassifications from (to) nonaccretable difference represents the increases (decreases) in accretable yield resulting from higher (lower)
|
(dollars in millions)
|
|
Personal
Loans
|
|
Other Receivables (a)
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|||||
December 31, 2018
|
|
|
|
|
|
|
|
|||||
TDR gross finance receivables (b)
|
|
$
|
449
|
|
|
$
|
89
|
|
|
$
|
538
|
|
TDR net finance receivables
|
|
452
|
|
|
75
|
|
|
527
|
|
|||
Allowance for TDR finance receivable losses
|
|
169
|
|
|
—
|
|
|
169
|
|
|||
|
|
|
|
|
|
|
|
|||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||
TDR gross finance receivables (b)
|
|
$
|
318
|
|
|
$
|
139
|
|
|
$
|
457
|
|
TDR net finance receivables
|
|
317
|
|
|
140
|
|
|
457
|
|
|||
Allowance for TDR finance receivable losses
|
|
134
|
|
|
12
|
|
|
146
|
|
(a)
|
Other Receivables held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
|
|||
TDR gross finance receivables
|
|
$
|
89
|
|
|
$
|
90
|
|
TDR net finance receivables
|
|
75
|
|
|
91
|
|
(b)
|
As defined earlier in this Note.
|
(dollars in millions)
|
|
Personal
Loans (a)
|
|
Other Receivables (b)
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
||||||
TDR average net receivables
|
|
$
|
382
|
|
|
$
|
130
|
|
|
$
|
512
|
|
TDR finance charges recognized
|
|
45
|
|
|
7
|
|
|
52
|
|
|||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
||||||
TDR average net receivables
|
|
$
|
230
|
|
|
$
|
140
|
|
|
$
|
370
|
|
TDR finance charges recognized
|
|
33
|
|
|
9
|
|
|
42
|
|
|||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
||||||
TDR average net receivables
|
|
$
|
95
|
|
|
$
|
175
|
|
|
$
|
270
|
|
TDR finance charges recognized
|
|
12
|
|
|
11
|
|
|
23
|
|
(dollars in millions)
|
|
Personal
Loans (a)
|
|
SpringCastle Portfolio
|
|
Other Receivables (b)
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Pre-modification TDR net finance receivables
|
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
378
|
|
Post-modification TDR net finance receivables:
|
|
|
|
|
|
|
|
|
||||||||
Rate reduction
|
|
$
|
288
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
291
|
|
Other (c)
|
|
87
|
|
|
—
|
|
|
—
|
|
|
87
|
|
||||
Total post-modification TDR net finance receivables
|
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
378
|
|
Number of TDR accounts
|
|
56,938
|
|
|
—
|
|
|
70
|
|
|
57,008
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Pre-modification TDR net finance receivables
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
342
|
|
Post-modification TDR net finance receivables:
|
|
|
|
|
|
|
|
|
||||||||
Rate reduction
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
266
|
|
Other (c)
|
|
74
|
|
|
—
|
|
|
—
|
|
|
74
|
|
||||
Total post-modification TDR net finance receivables
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
340
|
|
Number of TDR accounts
|
|
45,300
|
|
|
—
|
|
|
510
|
|
|
45,810
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Pre-modification TDR net finance receivables
|
|
$
|
211
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
228
|
|
Post-modification TDR net finance receivables:
|
|
|
|
|
|
|
|
|
||||||||
Rate reduction
|
|
$
|
194
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
211
|
|
Other (c)
|
|
12
|
|
|
—
|
|
|
1
|
|
|
13
|
|
||||
Total post-modification TDR net finance receivables
|
|
$
|
206
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
224
|
|
Number of TDR accounts
|
|
29,395
|
|
|
157
|
|
|
364
|
|
|
29,916
|
|
(a)
|
TDR personal loans held for sale included in the table above were immaterial.
|
(b)
|
“Other” loans held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
||||||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Pre-modification TDR net finance receivables
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
5
|
|
Post-modification TDR net finance receivables
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
5
|
|
Number of TDR accounts
|
|
44
|
|
|
232
|
|
|
122
|
|
(c)
|
“Other” modifications primarily include forgiveness of principal or interest.
|
(a)
|
Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted.
|
(b)
|
TDR SpringCastle Portfolio loans for the year ended December 31, 2016 that defaulted during the previous 12-month period were less than $
1
million and, therefore, are not quantified in the combined table above.
|
(c)
|
TDR finance receivables held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Other Receivables
|
|
|
|
|
|
|
||||||
TDR net finance receivables
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Number of TDR accounts
|
|
30
|
|
|
53
|
|
|
30
|
|
(dollars in millions)
|
|
Personal
Loans |
|
SpringCastle
Portfolio |
|
Other
Receivables
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at beginning of period
|
|
$
|
668
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
692
|
|
Provision for finance receivable losses
|
|
1,045
|
|
|
—
|
|
|
(2
|
)
|
|
1,043
|
|
||||
Charge-offs
|
|
(1,095
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1,097
|
)
|
||||
Recoveries
|
|
108
|
|
|
—
|
|
|
3
|
|
|
111
|
|
||||
Other (a)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
(23
|
)
|
||||
Balance at end of period
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at beginning of period
|
|
$
|
666
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
686
|
|
Provision for finance receivable losses
|
|
941
|
|
|
—
|
|
|
6
|
|
|
947
|
|
||||
Charge-offs
|
|
(1,041
|
)
|
|
—
|
|
|
(6
|
)
|
|
(1,047
|
)
|
||||
Recoveries
|
|
102
|
|
|
—
|
|
|
4
|
|
|
106
|
|
||||
Balance at end of period
|
|
$
|
668
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
692
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at beginning of period
|
|
$
|
538
|
|
|
$
|
4
|
|
|
$
|
47
|
|
|
$
|
589
|
|
Provision for finance receivable losses
|
|
906
|
|
|
14
|
|
|
9
|
|
|
929
|
|
||||
Charge-offs
|
|
(843
|
)
|
|
(17
|
)
|
|
(12
|
)
|
|
(872
|
)
|
||||
Recoveries
|
|
65
|
|
|
3
|
|
|
6
|
|
|
74
|
|
||||
Other (b)
|
|
—
|
|
|
(4
|
)
|
|
(30
|
)
|
|
(34
|
)
|
||||
Balance at end of period
|
|
$
|
666
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
686
|
|
(a)
|
Other consists primarily of the reclassification of allowance for finance receivable losses due to the transfer of the real estate loans in Other Receivables from held for investment to finance receivables held for sale. See Note
5
included in this report for further information.
|
(b)
|
Other consists of:
|
•
|
the elimination of allowance for finance receivable losses due to the sale of the SpringCastle Portfolio on March 31, 2016, in connection with the sale of our equity interest in the SpringCastle Joint Venture; and
|
•
|
the elimination of allowance for finance receivable losses due to the transfers of real estate loans held for investment to finance receivables held for sale during 2016.
|
(dollars in millions)
|
|
Personal
Loans |
|
Other
Receivables
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||
Allowance for finance receivable losses:
|
|
|
|
|
|
|
|
|
|
|||
Collectively evaluated for impairment
|
|
$
|
557
|
|
|
$
|
—
|
|
|
$
|
557
|
|
Purchased credit impaired finance receivables
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
TDR finance receivables
|
|
169
|
|
|
—
|
|
|
169
|
|
|||
Total
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
||||||
Finance receivables:
|
|
|
|
|
|
|
|
|
|
|||
Collectively evaluated for impairment
|
|
$
|
15,581
|
|
|
$
|
—
|
|
|
$
|
15,581
|
|
Purchased credit impaired finance receivables
|
|
89
|
|
|
—
|
|
|
89
|
|
|||
TDR finance receivables
|
|
452
|
|
|
—
|
|
|
452
|
|
|||
Total
|
|
$
|
16,122
|
|
|
$
|
—
|
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
||||||
Allowance for finance receivable losses as a percentage of finance receivables
|
|
4.50
|
%
|
|
—
|
%
|
|
4.50
|
%
|
|||
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||
Allowance for finance receivable losses:
|
|
|
|
|
|
|
|
|
|
|||
Collectively evaluated for impairment
|
|
$
|
528
|
|
|
$
|
3
|
|
|
$
|
531
|
|
Purchased credit impaired finance receivables
|
|
6
|
|
|
9
|
|
|
15
|
|
|||
TDR finance receivables
|
|
134
|
|
|
12
|
|
|
146
|
|
|||
Total
|
|
$
|
668
|
|
|
$
|
24
|
|
|
$
|
692
|
|
|
|
|
|
|
|
|
||||||
Finance receivables:
|
|
|
|
|
|
|
|
|
|
|||
Collectively evaluated for impairment
|
|
$
|
14,276
|
|
|
$
|
63
|
|
|
$
|
14,339
|
|
Purchased credit impaired finance receivables
|
|
182
|
|
|
22
|
|
|
204
|
|
|||
TDR finance receivables
|
|
317
|
|
|
49
|
|
|
366
|
|
|||
Total
|
|
$
|
14,775
|
|
|
$
|
134
|
|
|
$
|
14,909
|
|
|
|
|
|
|
|
|
||||||
Allowance for finance receivable losses as a percentage of finance receivables
|
|
4.52
|
%
|
|
18.27
|
%
|
|
4.64
|
%
|
(dollars in millions)
|
|
Cost/
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturity available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and government sponsored entities
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Obligations of states, municipalities, and political subdivisions
|
|
91
|
|
|
—
|
|
|
(1
|
)
|
|
90
|
|
||||
Certificates of deposit and commercial paper
|
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||
Non-U.S. government and government sponsored entities
|
|
145
|
|
|
—
|
|
|
(2
|
)
|
|
143
|
|
||||
Corporate debt
|
|
1,027
|
|
|
2
|
|
|
(32
|
)
|
|
997
|
|
||||
Mortgage-backed, asset-backed, and collateralized:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
RMBS
|
|
130
|
|
|
—
|
|
|
(2
|
)
|
|
128
|
|
||||
CMBS
|
|
72
|
|
|
—
|
|
|
(1
|
)
|
|
71
|
|
||||
CDO/ABS
|
|
94
|
|
|
1
|
|
|
(1
|
)
|
|
94
|
|
||||
Total
|
|
$
|
1,643
|
|
|
$
|
3
|
|
|
$
|
(39
|
)
|
|
$
|
1,607
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed maturity available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and government sponsored entities
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28
|
|
Obligations of states, municipalities, and political subdivisions
|
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
||||
Certificates of deposit and commercial paper
|
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
||||
Non-U.S. government and government sponsored entities
|
|
126
|
|
|
—
|
|
|
(1
|
)
|
|
125
|
|
||||
Corporate debt
|
|
941
|
|
|
12
|
|
|
(5
|
)
|
|
948
|
|
||||
Mortgage-backed, asset-backed, and collateralized:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
RMBS
|
|
100
|
|
|
—
|
|
|
(1
|
)
|
|
99
|
|
||||
CMBS
|
|
88
|
|
|
—
|
|
|
(1
|
)
|
|
87
|
|
||||
CDO/ABS
|
|
96
|
|
|
—
|
|
|
—
|
|
|
96
|
|
||||
Total
|
|
$
|
1,574
|
|
|
$
|
12
|
|
|
$
|
(8
|
)
|
|
$
|
1,578
|
|
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
(dollars in millions)
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. government and government sponsored entities
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
Obligations of states, municipalities, and political subdivisions
|
|
10
|
|
|
—
|
|
|
57
|
|
|
(1
|
)
|
|
67
|
|
|
(1
|
)
|
||||||
Non-U.S. government and government sponsored entities
|
|
19
|
|
|
(1
|
)
|
|
97
|
|
|
(1
|
)
|
|
116
|
|
|
(2
|
)
|
||||||
Corporate debt
|
|
377
|
|
|
(14
|
)
|
|
448
|
|
|
(18
|
)
|
|
825
|
|
|
(32
|
)
|
||||||
RMBS
|
|
23
|
|
|
—
|
|
|
78
|
|
|
(2
|
)
|
|
101
|
|
|
(2
|
)
|
||||||
CMBS
|
|
10
|
|
|
—
|
|
|
54
|
|
|
(1
|
)
|
|
64
|
|
|
(1
|
)
|
||||||
CDO/ABS
|
|
18
|
|
|
—
|
|
|
33
|
|
|
(1
|
)
|
|
51
|
|
|
(1
|
)
|
||||||
Total
|
|
$
|
460
|
|
|
$
|
(15
|
)
|
|
$
|
783
|
|
|
$
|
(24
|
)
|
|
$
|
1,243
|
|
|
$
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. government and government sponsored entities
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
Obligations of states, municipalities, and political subdivisions
|
|
65
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
85
|
|
|
—
|
|
||||||
Non-U.S. government and government sponsored entities
|
|
89
|
|
|
(1
|
)
|
|
13
|
|
|
—
|
|
|
102
|
|
|
(1
|
)
|
||||||
Corporate debt
|
|
387
|
|
|
(3
|
)
|
|
93
|
|
|
(2
|
)
|
|
480
|
|
|
(5
|
)
|
||||||
RMBS
|
|
40
|
|
|
—
|
|
|
25
|
|
|
(1
|
)
|
|
65
|
|
|
(1
|
)
|
||||||
CMBS
|
|
40
|
|
|
—
|
|
|
38
|
|
|
(1
|
)
|
|
78
|
|
|
(1
|
)
|
||||||
CDO/ABS
|
|
48
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
74
|
|
|
—
|
|
||||||
Total
|
|
$
|
690
|
|
|
$
|
(4
|
)
|
|
$
|
218
|
|
|
$
|
(4
|
)
|
|
$
|
908
|
|
|
$
|
(8
|
)
|
(dollars in millions)
|
|
Fair
Value
|
|
Amortized
Cost
|
||||
|
|
|
|
|
||||
Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
|
|
|
|
|
|
|
||
Due in 1 year or less
|
|
$
|
184
|
|
|
$
|
184
|
|
Due after 1 year through 5 years
|
|
526
|
|
|
534
|
|
||
Due after 5 years through 10 years
|
|
410
|
|
|
421
|
|
||
Due after 10 years
|
|
194
|
|
|
208
|
|
||
Mortgage-backed, asset-backed, and collateralized securities
|
|
293
|
|
|
296
|
|
||
Total
|
|
$
|
1,607
|
|
|
$
|
1,643
|
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Fixed maturity other securities:
|
|
|
|
|
|
|
||
Bonds
|
|
|
|
|
|
|
||
Non-U.S. government and government sponsored entities
|
|
$
|
1
|
|
|
$
|
1
|
|
Corporate debt
|
|
43
|
|
|
68
|
|
||
Mortgage-backed, asset-backed, and collateralized bonds
|
|
2
|
|
|
5
|
|
||
Total bonds
|
|
46
|
|
|
74
|
|
||
Preferred stock (a)
|
|
19
|
|
|
20
|
|
||
Common stock (a)
|
|
21
|
|
|
23
|
|
||
Other long-term investments
|
|
1
|
|
|
1
|
|
||
Total (b)
|
|
$
|
87
|
|
|
$
|
118
|
|
(a)
|
The Company employs an income equity strategy targeting investments in stocks with strong current dividend yields. Stocks included have a history of stable or increasing dividend payments.
|
(dollars in millions)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Other Intangible Assets
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
||||||
Customer relationships
|
|
$
|
223
|
|
|
$
|
(126
|
)
|
|
$
|
97
|
|
Trade names
|
|
220
|
|
|
—
|
|
|
220
|
|
|||
VOBA
|
|
141
|
|
|
(99
|
)
|
|
42
|
|
|||
Licenses
|
|
28
|
|
|
—
|
|
|
28
|
|
|||
Other
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|||
Total
|
|
$
|
624
|
|
|
$
|
(237
|
)
|
|
$
|
387
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
||||||
Customer relationships
|
|
$
|
223
|
|
|
$
|
(92
|
)
|
|
$
|
131
|
|
Trade names
|
|
220
|
|
|
—
|
|
|
220
|
|
|||
VOBA
|
|
141
|
|
|
(90
|
)
|
|
51
|
|
|||
Licenses
|
|
37
|
|
|
—
|
|
|
37
|
|
|||
Other
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|||
Total
|
|
$
|
633
|
|
|
$
|
(194
|
)
|
|
$
|
439
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
(dollars in millions)
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Senior debt
|
|
$
|
15,006
|
|
|
$
|
14,868
|
|
|
$
|
14,878
|
|
|
$
|
15,436
|
|
Junior subordinated debt
|
|
172
|
|
|
173
|
|
|
172
|
|
|
189
|
|
||||
Total
|
|
$
|
15,178
|
|
|
$
|
15,041
|
|
|
$
|
15,050
|
|
|
$
|
15,625
|
|
|
|
Years Ended December 31,
|
|
At December 31,
|
|||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Senior debt
|
|
5.64
|
%
|
|
5.73
|
%
|
|
5.60
|
%
|
|
5.89
|
%
|
|
5.56
|
%
|
Junior subordinated debt
|
|
8.13
|
|
|
6.41
|
|
|
12.26
|
|
|
8.56
|
|
|
6.37
|
|
Total
|
|
5.66
|
|
|
5.74
|
|
|
5.67
|
|
|
5.92
|
|
|
5.57
|
|
|
|
Senior Debt
|
|
|
|
|
||||||||||
(dollars in millions)
|
|
Securitizations
|
|
Medium
Term Notes |
|
Junior
Subordinated Debt |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest rates (a)
|
|
2.16% - 6.94%
|
|
|
5.25% - 8.25%
|
|
|
4.19
|
%
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
—
|
|
|
686
|
|
|
—
|
|
|
686
|
|
||||
2020
|
|
—
|
|
|
1,299
|
|
|
—
|
|
|
1,299
|
|
||||
2021
|
|
—
|
|
|
646
|
|
|
—
|
|
|
646
|
|
||||
2022
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
1,000
|
|
||||
2023
|
|
—
|
|
|
1,175
|
|
|
—
|
|
|
1,175
|
|
||||
2024-2067
|
|
—
|
|
|
2,849
|
|
|
350
|
|
|
3,199
|
|
||||
Securitizations (b)
|
|
7,533
|
|
|
—
|
|
|
—
|
|
|
7,533
|
|
||||
Total principal maturities
|
|
$
|
7,533
|
|
|
$
|
7,655
|
|
|
$
|
350
|
|
|
$
|
15,538
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total carrying amount
|
|
$
|
7,510
|
|
|
$
|
7,496
|
|
|
$
|
172
|
|
|
$
|
15,178
|
|
Debt issuance costs (c)
|
|
$
|
(23
|
)
|
|
$
|
(59
|
)
|
|
$
|
—
|
|
|
$
|
(82
|
)
|
(a)
|
The interest rates shown are the range of contractual rates in effect at
December 31, 2018
. The interest rate on the remaining principal balance of the Junior Subordinated Debenture consists of a variable floating rate (determined quarterly) equal to 3-month LIBOR plus
1.75%
, or
4.19%
as of
December 31, 2018
.
|
(b)
|
Securitizations have a stated maturity date but 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
December 31, 2018
, there were
no
amounts drawn under our revolving conduit facilities. See Note
14
for further information on our long-term debt associated with securitizations and revolving conduit facilities.
|
(c)
|
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
$25 million
at
December 31, 2018
and are reported in other assets.
|
Guarantee Agreement
|
|
Date Entered
|
|
SFC Supplemental Indentures
|
|
Interest rate
|
|
December 31, 2018 Outstanding Balance
(dollars in millions)
|
||
|
|
|
|
|
|
|
|
|
||
7.125% SFC Notes
|
|
5/11/2018
|
|
SFC Sixth Supplemental Indenture
|
|
7.125%
|
|
$
|
1,600
|
|
6.875% SFC Notes
|
|
3/12/2018
|
|
SFC Fifth Supplemental Indenture
|
|
6.875%
|
|
1,250
|
|
|
5.625% SFC Notes
|
|
12/8/2017
|
|
SFC Fourth Supplemental Indenture
|
|
5.625%
|
|
875
|
|
|
6.125% SFC Notes
|
|
5/15/2017
|
|
SFC Third Supplemental Indenture
|
|
6.125%
|
|
1,000
|
|
|
8.25% SFC Notes
|
|
4/11/2016
|
|
SFC Second Supplemental Indenture
|
|
8.25%
|
|
1,000
|
|
|
5.25% SFC Notes
|
|
12/3/2014
|
|
SFC First Supplemental Indenture
|
|
5.25%
|
|
690
|
|
•
|
8.25%
Senior Notes due 2023;
|
•
|
7.75%
Senior Notes due 2021;
|
•
|
6.00%
Senior Notes due 2020; and
|
•
|
the Junior Subordinated Debenture.
|
*
|
At December 31, 2018,
no
amounts were drawn under our revolving conduit facilities.
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Finance receivable related:
|
|
|
|
|
||||
Payable to OMH:
|
|
|
|
|
||||
Unearned premium reserves
|
|
$
|
583
|
|
|
$
|
515
|
|
Claim reserves
|
|
79
|
|
|
75
|
|
||
Subtotal (a)
|
|
662
|
|
|
590
|
|
||
|
|
|
|
|
||||
Payable to third party beneficiaries:
|
|
|
|
|
||||
Unearned premium reserves
|
|
100
|
|
|
99
|
|
||
Benefit reserves
|
|
106
|
|
|
103
|
|
||
Claim reserves
|
|
17
|
|
|
18
|
|
||
Subtotal (b)
|
|
223
|
|
|
220
|
|
||
|
|
|
|
|
||||
Non-finance receivable related:
|
|
|
|
|
||||
Unearned premium reserves
|
|
77
|
|
|
81
|
|
||
Benefit reserves
|
|
364
|
|
|
375
|
|
||
Claim reserves
|
|
21
|
|
|
61
|
|
||
Subtotal (b)
|
|
462
|
|
|
517
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
1,347
|
|
|
$
|
1,327
|
|
(a)
|
Reported as a contra-asset to net finance receivables.
|
(b)
|
Reported in insurance claims and policyholder liabilities.
|
*
|
Reflects (i) a redundancy in the prior years’ net reserves of
$10 million
at
December 31, 2018
, primarily due to a favorable development of credit disability and unemployment claims during the year, (ii) a shortfall in the prior years’ net reserves of
$5 million
at
December 31, 2017
, primarily due to an unfavorable development on previously disclosed property and casualty policies and an unfavorable development on certain assumed credit disability policies, and (iii) a redundancy in the prior years’ net reserves of
$20 million
at
December 31, 2016
, primarily due to credit disability and credit involuntary unemployment claims developing more favorably than anticipated.
|
|
|
Years Ended December 31,
|
|
At December 31, 2018
|
||||||||||||||||||||||||||
(dollars in millions)
|
|
2014 (a)
|
|
2015 (a)
|
|
2016 (a)
|
|
2017 (a)
|
|
2018
|
|
Incurred-but-
not-reported Liabilities (b)
|
|
Cumulative Number of Reported Claims
|
|
Cumulative
Frequency (c)
|
||||||||||||||
Credit Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accident Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2014
|
|
$
|
145
|
|
|
$
|
132
|
|
|
$
|
130
|
|
|
$
|
131
|
|
|
$
|
122
|
|
|
$
|
1
|
|
|
51,257
|
|
|
2.7
|
%
|
2015
|
|
—
|
|
|
138
|
|
|
129
|
|
|
129
|
|
|
126
|
|
|
2
|
|
|
52,545
|
|
|
2.8
|
%
|
||||||
2016
|
|
—
|
|
|
—
|
|
|
138
|
|
|
135
|
|
|
133
|
|
|
8
|
|
|
51,611
|
|
|
2.8
|
%
|
||||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|
129
|
|
|
19
|
|
|
44,161
|
|
|
2.4
|
%
|
||||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|
64
|
|
|
34,882
|
|
|
1.8
|
%
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
655
|
|
|
|
|
|
|
|
(a)
|
Unaudited.
|
(b)
|
Includes expected development on reported claims.
|
(c)
|
Frequency for each accident year is calculated as the ratio of all reported claims incurred to the total exposures in force.
|
|
Years Ended December 31,
|
|||||||||||||||||||
(dollars in millions)
|
|
2014 *
|
|
2015 *
|
|
2016 *
|
|
2017*
|
|
2018
|
||||||||||
Credit Insurance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accident Year
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014
|
|
$
|
65
|
|
|
$
|
102
|
|
|
$
|
113
|
|
|
$
|
119
|
|
|
$
|
121
|
|
2015
|
|
—
|
|
|
68
|
|
|
107
|
|
|
118
|
|
|
123
|
|
|||||
2016
|
|
—
|
|
|
—
|
|
|
75
|
|
|
114
|
|
|
125
|
|
|||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
110
|
|
|||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
561
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
All outstanding liabilities before 2014, net of reinsurance
|
|
—
|
|
|||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
94
|
|
*
|
Unaudited.
|
*
|
Unaudited.
|
Years
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|||||
Credit insurance
|
|
56.1
|
%
|
|
28.9
|
%
|
|
8.7
|
%
|
|
4.6
|
%
|
|
1.8
|
%
|
*
|
Due to the contribution of OGSC, we did not have payables to parent and affiliates at December 31, 2018. Payables to parent and affiliates at December 31, 2017 primarily consisted of payables to OGSC for services provided to SFC under its intercompany service agreements. See Note
12
for further information regarding SFC’s intercompany agreements and the contribution of OGSC.
|
|
|
Special Stock
|
|
Common Stock
|
||||
|
|
|
|
|
||||
Par value
|
|
$
|
—
|
|
|
$
|
0.50
|
|
Shares authorized
|
|
25,000,000
|
|
|
25,000,000
|
|
|
|
Special Stock
|
|
Common Stock
|
||||||||
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
|
|
|
|
||||
Shares issued and outstanding
|
|
—
|
|
|
—
|
|
|
10,160,021
|
|
|
10,160,021
|
|
(dollars in millions)
|
|
Unrealized
Gains (Losses)
Available-for-Sale Securities
|
|
Retirement
Plan Liabilities
Adjustments
|
|
Foreign
Currency
Translation
Adjustments
|
|
Total
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
$
|
6
|
|
Other comprehensive income (loss) before reclassifications
|
|
(35
|
)
|
|
(5
|
)
|
|
(9
|
)
|
|
(49
|
)
|
||||
Reclassification adjustments from accumulated other comprehensive income (loss)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Impact of AOCI reclassification due to the Tax Act
|
|
2
|
|
|
(1
|
)
|
|
2
|
|
|
3
|
|
||||
Contribution of OGSC to SFC from SFI
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Balance at end of period
|
|
$
|
(28
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
$
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of period
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(6
|
)
|
Other comprehensive income before reclassifications
|
|
14
|
|
|
3
|
|
|
4
|
|
|
21
|
|
||||
Reclassification adjustments from accumulated other comprehensive loss
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
||||
Balance at end of period
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
|
$
|
(14
|
)
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(33
|
)
|
Other comprehensive income before reclassifications
|
|
23
|
|
|
15
|
|
|
3
|
|
|
41
|
|
||||
Reclassification adjustments from accumulated other comprehensive loss
|
|
(10
|
)
|
|
—
|
|
|
(4
|
)
|
|
(14
|
)
|
||||
Balance at end of period
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(6
|
)
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Year Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Unrealized gains (losses) on available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes
|
|
$
|
(2
|
)
|
|
$
|
14
|
|
|
$
|
15
|
|
Income tax effect
|
|
1
|
|
|
(5
|
)
|
|
(5
|
)
|
|||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, net of taxes
|
|
(1
|
)
|
|
$
|
9
|
|
|
10
|
|
||
Unrealized gains on foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
|||
Reclassification from accumulated other comprehensive income (loss) to other revenues
|
|
—
|
|
|
—
|
|
|
4
|
|
|||
Total
|
|
$
|
(1
|
)
|
|
$
|
9
|
|
|
$
|
14
|
|
*
|
There were
no
deferred foreign income taxes during 2018 and were immaterial during
2017
and, therefore, are not quantified in the table above.
|
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
|||
|
|
|
|
|
|
|
|||
Statutory federal income tax rate
|
|
21.00
|
%
|
|
35.00
|
%
|
|
35.00
|
%
|
|
|
|
|
|
|
|
|||
Nondeductible compensation
|
|
3.73
|
|
|
—
|
|
|
—
|
|
State income taxes, net of federal
|
|
3.68
|
|
|
2.63
|
|
|
0.48
|
|
Excess tax expense (benefit) on share-based compensation
|
|
0.02
|
|
|
0.33
|
|
|
(0.18
|
)
|
Return to provision adjustment
|
|
—
|
|
|
0.81
|
|
|
0.26
|
|
Impact of Tax Act
|
|
—
|
|
|
21.69
|
|
|
—
|
|
Tax impact of United Kingdom subsidiary liquidation
|
|
—
|
|
|
—
|
|
|
(0.54
|
)
|
Non-controlling interests
|
|
—
|
|
|
—
|
|
|
(2.49
|
)
|
Other, net
|
|
(0.08
|
)
|
|
1.09
|
|
|
(0.66
|
)
|
Effective income tax rate
|
|
28.35
|
%
|
|
61.55
|
%
|
|
31.87
|
%
|
(dollars in millions)
|
|
Lease Commitments
|
||
|
|
|
||
2019
|
|
$
|
60
|
|
2020
|
|
50
|
|
|
2021
|
|
37
|
|
|
2022
|
|
26
|
|
|
2023
|
|
12
|
|
|
2024+
|
|
12
|
|
|
Total
|
|
$
|
197
|
|
*
|
Reflects the elimination of the reserve associated with other prior sales of finance receivables.
|
(dollars in millions)
|
|
Pension *
|
||||||||||
At or for the Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Projected benefit obligation, beginning of period
|
|
$
|
354
|
|
|
$
|
385
|
|
|
$
|
388
|
|
Interest cost
|
|
11
|
|
|
13
|
|
|
16
|
|
|||
Actuarial loss (gain)
|
|
(30
|
)
|
|
17
|
|
|
(6
|
)
|
|||
Benefits paid:
|
|
|
|
|
|
|
||||||
Plan assets
|
|
(15
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|||
Settlement
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|||
Projected benefit obligation, end of period
|
|
320
|
|
|
354
|
|
|
385
|
|
|||
|
|
|
|
|
|
|
||||||
Fair value of plan assets, beginning of period
|
|
341
|
|
|
354
|
|
|
333
|
|
|||
Actual return on plan assets, net of expenses
|
|
(19
|
)
|
|
47
|
|
|
33
|
|
|||
Company contributions
|
|
1
|
|
|
1
|
|
|
1
|
|
|||
Benefits paid:
|
|
|
|
|
|
|
||||||
Plan assets
|
|
(15
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|||
Settlement
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|||
Fair value of plan assets, end of period
|
|
308
|
|
|
341
|
|
|
354
|
|
|||
Funded status, end of period
|
|
$
|
(12
|
)
|
|
$
|
(13
|
)
|
|
$
|
(31
|
)
|
|
|
|
|
|
|
|
||||||
Other liabilities recognized in the consolidated balance sheet
|
|
$
|
(12
|
)
|
|
$
|
(13
|
)
|
|
$
|
(31
|
)
|
|
|
|
|
|
|
|
||||||
Pretax net gain (loss) recognized in accumulated other comprehensive income or loss
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
(7
|
)
|
*
|
Includes non-qualified unfunded plans, for which the aggregate projected benefit obligation was
$9 million
at
December 31, 2018
and
$10 million
at
December 31, 2017
and
2016
.
|
(dollars in millions)
|
|
PBO and ABO Exceeds
Fair Value of Plan Assets |
||||||
December 31,
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Projected benefit obligation
|
|
$
|
320
|
|
|
$
|
354
|
|
Accumulated benefit obligation
|
|
320
|
|
|
354
|
|
||
Fair value of plan assets
|
|
308
|
|
|
341
|
|
(dollars in millions)
|
|
Pension
|
||||||||||
Years Ended December 31,
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Interest cost
|
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
16
|
|
Expected return on assets
|
|
(18
|
)
|
|
(18
|
)
|
|
(17
|
)
|
|||
Settlement gain
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||
Net periodic benefit cost
|
|
(7
|
)
|
|
(7
|
)
|
|
(1
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other changes in plan assets and projected benefit obligation recognized in other comprehensive income or loss:
|
|
|
|
|
|
|
||||||
Net actuarial loss (gain)
|
|
7
|
|
|
(12
|
)
|
|
(22
|
)
|
|||
Amortization of net actuarial gain (loss)
|
|
—
|
|
|
2
|
|
|
—
|
|
|||
Total recognized in other comprehensive income or loss
|
|
7
|
|
|
(10
|
)
|
|
(22
|
)
|
|||
|
|
|
|
|
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive income or loss
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
(23
|
)
|
•
|
the estimated net loss that will be amortized from accumulated other comprehensive income or loss into net periodic benefit cost over the next fiscal year will be less than $
1 million
for our combined defined benefit pension plans; and
|
•
|
the estimated prior service credit that will be amortized from accumulated other comprehensive income or loss into net periodic benefit cost over the next fiscal year will be
zero
for our combined defined benefit pension plans.
|
|
|
Pension
|
||||
December 31,
|
|
2018
|
|
2017
|
||
|
|
|
|
|
||
Projected benefit obligation:
|
|
|
|
|
||
Discount rate
|
|
4.12
|
%
|
|
3.49
|
%
|
|
|
|
|
|
||
Net periodic benefit costs:
|
|
|
|
|
||
Discount rate
|
|
3.49
|
%
|
|
4.04
|
%
|
Expected long-term rate of return on plan assets
|
|
5.27
|
%
|
|
5.28
|
%
|
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. (a)
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
International (b)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. investment grade (c)
|
|
—
|
|
|
287
|
|
|
—
|
|
|
287
|
|
||||
U.S. high yield (d)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Total
|
|
$
|
4
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
308
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. (a)
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||
International (b)
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. investment grade (c)
|
|
—
|
|
|
281
|
|
|
—
|
|
|
281
|
|
||||
U.S. high yield (d)
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Total
|
|
$
|
2
|
|
|
$
|
339
|
|
|
$
|
—
|
|
|
$
|
341
|
|
(a)
|
Includes index mutual funds that primarily track several indices including S&P 500 and S&P 600 in addition to other actively managed accounts, comprised of investments in small cap and large cap companies.
|
(b)
|
Includes investment mutual funds in companies in emerging and developed markets.
|
(c)
|
Includes investment mutual funds in U.S. and non-U.S. government issued bonds, U.S. government agency or sponsored agency bonds, and investment grade corporate bonds.
|
(d)
|
Includes investment mutual funds in securities or debt obligations that have a rating below investment grade.
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Weighted
Average
Remaining
Term (in Years)
|
|||
|
|
|
|
|
|
|
|||
Unvested as of January 1, 2018
|
|
1,141,610
|
|
|
$
|
34.87
|
|
|
|
Granted
|
|
489,601
|
|
|
31.55
|
|
|
|
|
Vested
|
|
(765,659
|
)
|
|
30.56
|
|
|
|
|
Forfeited
|
|
(170,960
|
)
|
|
33.14
|
|
|
|
|
Unvested at December 31, 2018
|
|
694,592
|
|
|
37.70
|
|
|
1.58
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Weighted
Average
Remaining
Term (in Years)
|
|||
|
|
|
|
|
|
|
|||
Unvested as of January 1, 2018
|
|
269,626
|
|
|
$
|
26.14
|
|
|
|
Granted
|
|
13,420
|
|
|
24.98
|
|
|
|
|
Vested
|
|
(126,497
|
)
|
|
24.83
|
|
|
|
|
Forfeited
|
|
(12,815
|
)
|
|
34.84
|
|
|
|
|
Unvested at December 31, 2018
|
|
143,734
|
|
|
26.40
|
|
|
0.61
|
•
|
Consumer and Insurance
— We originate and service personal loans and offer credit insurance products (life insurance, disability insurance, involuntary unemployment insurance, and collateral protection insurance) and non-credit insurance products through our branch network and our centralized operations. We also offer auto membership plans of an unaffiliated company. Our branch network conducts business in
44
states. Our centralized operations underwrite and process certain loan applications that we receive from our branch network or through an internet portal. If the applicant is located near an existing branch, our centralized operations make the credit decision regarding the application and then request, but do not require, the customer to visit a nearby branch for closing, funding and servicing. If the applicant is not located near a branch, our centralized operations originate the loan.
|
•
|
Acquisitions and Servicing
— SFI services the SpringCastle Portfolio. These loans consist of unsecured loans and loans secured by subordinate residential real estate mortgages and include both closed-end accounts and open-end lines of credit. Unless SFI is terminated, SFI will continue to provide the servicing for these loans pursuant to a servicing agreement, which SFI services as unsecured loans because the liens are subordinated to superior ranking security interests. See Note
2
for information regarding the SpringCastle Interests Sale and the acquisition and disposition of the SpringCastle Portfolio. SMHC which sub-services the subordinate residential real estate mortgages a portion of the SpringCastle Portfolio through a wholly owned subsidiary, was contributed to SFC and SMHC became a wholly owned direct subsidiary of SFC. See Note
12
for further information about the contribution.
|
Interest income
|
Directly correlated with a specific segment.
|
Interest expense
|
Acquisitions and Servicing
- This segment includes interest expense specifically identified to the SpringCastle Portfolio.
|
Consumer and Insurance and Other
- The Company has securitization debt and unsecured debt. The Company first allocates interest expense to its segments based on actual expense for securitizations and secured term debt and using a weighted average for unsecured debt allocated to the segments. Interest expense for unsecured debt is recorded to each of the segments using a weighted average interest rate applied to allocated average unsecured debt.
|
|
Total average unsecured debt is allocated as follows:
|
|
l
Other
- at 100% of asset base. (Asset base represents the average net finance receivables including finance receivables held for sale); and
|
|
l
Consumer and Insurance
- receives remainder of unallocated average debt.
|
|
Provision for finance receivable losses
|
Directly correlated with specific segment.
|
Other revenues
|
Directly correlated with a specific segment, except for:
|
l
Net gain (loss) on repurchases and repayments of debt -
Allocated to each of the segments based on the interest expense allocation of debt.
|
|
l
Gains and losses on foreign currency exchange -
Allocated to each of the segments based on the interest expense allocation of debt.
|
|
Acquisition-related transaction and integration expenses
|
Consists of: (i) acquisition-related transaction and integration costs related to the OneMain Acquisition and the Lendmark Sale, including legal and other professional fees, which we primarily report in Other, as these are costs related to acquiring the business as opposed to operating the business; (ii) software termination costs, which are allocated to Consumer and Insurance; and (iii) incentive compensation incurred above and beyond expected cost from acquiring and retaining talent in relation to the OneMain Acquisition, which are allocated to each of the segments based on services provided.
|
Other expenses
|
Salaries and benefits -
Directly correlated with a specific segment. Other salaries and benefits not directly correlated with a specific segment are allocated to each of the segments based on services provided.
|
Other operating expenses
- Directly correlated with a specific segment. Other operating expenses not directly correlated with a specific segment are allocated to each of the segments based on services provided.
|
|
Insurance policy benefits and claims
- Directly correlated with a specific segment.
|
•
|
Interest income
- reverses the impact of premiums/discounts on purchased finance receivables and the interest income recognition under guidance in ASC 310-20,
Nonrefundable Fees and Other Costs
, and ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
, and reestablishes interest income recognition on a historical cost basis;
|
•
|
Interest expense
- reverses the impact of premiums/discounts on acquired long-term debt and reestablishes interest expense recognition on a historical cost basis;
|
•
|
Provision for finance receivable losses
- reverses the impact of providing an allowance for finance receivable losses upon acquisition and reestablishes the allowance on a historical cost basis and reverses the impact of recognition of net charge-offs on purchased credit impaired finance receivables and reestablishes the net charge-offs on a historical cost basis;
|
•
|
Other revenues
- reestablishes the historical cost basis of mark-to-market adjustments on finance receivables held for sale and on realized gains/losses associated with our investment portfolio;
|
•
|
Acquisition-related transaction and integration expenses
- reestablishes the amortization of purchased software assets on a historical cost basis;
|
•
|
Other expenses
- reestablishes expenses on a historical cost basis by reversing the impact of amortization from acquired intangible assets and including amortization of other historical deferred costs; and
|
•
|
Assets
- revalues assets based on their fair values at the effective date of the OneMain Acquisition and the Fortress Acquisition.
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions
and
Servicing
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At or for the Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
3,667
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
(36
|
)
|
|
$
|
3,648
|
|
Interest expense
|
|
845
|
|
|
—
|
|
|
17
|
|
|
14
|
|
|
876
|
|
|||||
Provision for finance receivable losses
|
|
1,042
|
|
|
—
|
|
|
(5
|
)
|
|
6
|
|
|
1,043
|
|
|||||
Net interest income after provision for finance receivable losses
|
|
1,780
|
|
|
—
|
|
|
5
|
|
|
(56
|
)
|
|
1,729
|
|
|||||
Other revenues (a)
|
|
495
|
|
|
3
|
|
|
10
|
|
|
52
|
|
|
560
|
|
|||||
Acquisition-related transaction and integration expenses
|
|
47
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
54
|
|
|||||
Other expenses
|
|
1,441
|
|
|
8
|
|
|
122
|
|
|
21
|
|
|
1,592
|
|
|||||
Income (loss) before income tax expense (benefit)
|
|
$
|
787
|
|
|
$
|
(5
|
)
|
|
$
|
(107
|
)
|
|
$
|
(32
|
)
|
|
$
|
643
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets (b)
|
|
$
|
17,885
|
|
|
$
|
—
|
|
|
$
|
357
|
|
|
$
|
2,067
|
|
|
$
|
20,309
|
|
At or for the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
3,296
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
(132
|
)
|
|
$
|
3,187
|
|
Interest expense
|
|
765
|
|
|
—
|
|
|
21
|
|
|
30
|
|
|
816
|
|
|||||
Provision for finance receivable losses
|
|
955
|
|
|
—
|
|
|
7
|
|
|
(15
|
)
|
|
947
|
|
|||||
Net interest income (loss) after provision for finance receivable losses
|
|
1,576
|
|
|
—
|
|
|
(5
|
)
|
|
(147
|
)
|
|
1,424
|
|
|||||
Other revenues (a)
|
|
549
|
|
|
—
|
|
|
23
|
|
|
(32
|
)
|
|
540
|
|
|||||
Acquisition-related transaction and integration expenses
|
|
66
|
|
|
—
|
|
|
6
|
|
|
(3
|
)
|
|
69
|
|
|||||
Other expenses
|
|
1,458
|
|
|
2
|
|
|
11
|
|
|
29
|
|
|
1,500
|
|
|||||
Income (loss) before income tax expense (benefit)
|
|
$
|
601
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
(205
|
)
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets (b)
|
|
$
|
16,793
|
|
|
$
|
—
|
|
|
$
|
680
|
|
|
$
|
2,172
|
|
|
$
|
19,645
|
|
At or for the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
3,314
|
|
|
$
|
102
|
|
|
$
|
51
|
|
|
$
|
(371
|
)
|
|
$
|
3,096
|
|
Interest expense
|
|
738
|
|
|
20
|
|
|
43
|
|
|
55
|
|
|
856
|
|
|||||
Provision for finance receivables losses
|
|
908
|
|
|
14
|
|
|
6
|
|
|
1
|
|
|
929
|
|
|||||
Net interest income (loss) after provision for finance receivable losses
|
|
1,668
|
|
|
68
|
|
|
2
|
|
|
(427
|
)
|
|
1,311
|
|
|||||
Net gain on sale of SpringCastle interests
|
|
—
|
|
|
167
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|||||
Other revenues (a)
|
|
609
|
|
|
—
|
|
|
(16
|
)
|
|
(6
|
)
|
|
587
|
|
|||||
Acquisition related transaction and integration expenses
|
|
100
|
|
|
1
|
|
|
27
|
|
|
(20
|
)
|
|
108
|
|
|||||
Other expenses
|
|
1,461
|
|
|
16
|
|
|
29
|
|
|
54
|
|
|
1,560
|
|
|||||
Income before income taxes
|
|
716
|
|
|
218
|
|
|
(70
|
)
|
|
(467
|
)
|
|
397
|
|
|||||
Income before income taxes attributable to non-controlling interests
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||
Income (loss) before income tax expense (benefit) attributable to Springleaf Finance Corporation
|
|
$
|
716
|
|
|
$
|
190
|
|
|
$
|
(70
|
)
|
|
$
|
(467
|
)
|
|
$
|
369
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets (b)
|
|
$
|
15,783
|
|
|
$
|
—
|
|
|
$
|
590
|
|
|
$
|
1,967
|
|
|
$
|
18,340
|
|
(a)
|
Other revenues reported in “Other” primarily includes interest income on the SFC’s note receivable from SFI. See Note
12
for further information on the notes receivable from parent.
|
(b)
|
Assets reported in “Other” primarily includes notes receivable from parent discussed above. See Note
12
for further information on the note receivable from parent.
|
|
|
Fair Value Measurements Using
|
|
Total
Fair Value |
|
Total
Carrying Value |
||||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
602
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
663
|
|
|
$
|
663
|
|
Investment securities
|
|
34
|
|
|
1,655
|
|
|
5
|
|
|
1,694
|
|
|
1,694
|
|
|||||
Net finance receivables, less allowance for finance receivable losses
|
|
—
|
|
|
—
|
|
|
16,692
|
|
|
16,692
|
|
|
15,396
|
|
|||||
Finance receivables held for sale
|
|
—
|
|
|
—
|
|
|
103
|
|
|
103
|
|
|
103
|
|
|||||
Notes receivable from parent
|
|
—
|
|
|
260
|
|
|
—
|
|
|
260
|
|
|
260
|
|
|||||
Restricted cash and restricted cash equivalents
|
|
499
|
|
|
—
|
|
|
—
|
|
|
499
|
|
|
499
|
|
|||||
Other assets (a)
|
|
—
|
|
|
19
|
|
|
15
|
|
|
34
|
|
|
34
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
$
|
—
|
|
|
$
|
15,041
|
|
|
$
|
—
|
|
|
$
|
15,041
|
|
|
$
|
15,178
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
904
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
958
|
|
|
$
|
958
|
|
Investment securities
|
|
36
|
|
|
1,654
|
|
|
7
|
|
|
1,697
|
|
|
1,697
|
|
|||||
Net finance receivables, less allowance for finance receivable losses
|
|
—
|
|
|
—
|
|
|
15,607
|
|
|
15,607
|
|
|
14,217
|
|
|||||
Finance receivables held for sale
|
|
—
|
|
|
—
|
|
|
139
|
|
|
139
|
|
|
132
|
|
|||||
Notes receivable from parent
|
|
—
|
|
|
391
|
|
|
—
|
|
|
391
|
|
|
391
|
|
|||||
Restricted cash and restricted cash equivalents
|
|
498
|
|
|
—
|
|
|
—
|
|
|
498
|
|
|
498
|
|
|||||
Other assets (a)
|
|
—
|
|
|
4
|
|
|
12
|
|
|
16
|
|
|
16
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Long-term debt
|
|
$
|
—
|
|
|
$
|
15,625
|
|
|
$
|
—
|
|
|
$
|
15,625
|
|
|
$
|
15,050
|
|
Other liabilities (b)
|
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
|
189
|
|
(a)
|
Other assets at
December 31, 2018
and
December 31, 2017
include receivables from parent and affiliates and miscellaneous receivables related to our liquidating loan portfolios. Total carrying value of receivables from parent and affiliates totaled
$18 million
at
December 31, 2018
and
$4 million
at
December 31, 2017
.
|
(b)
|
Consists of payables to parent and affiliates. See Note
12
for further information on our related party transactions.
|
|
|
Fair Value Measurements Using
|
|
Total Carried At Fair Value
|
||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3 *
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents in mutual funds
|
|
$
|
415
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
415
|
|
Cash equivalents in securities
|
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and government sponsored entities
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||
Obligations of states, municipalities, and political subdivisions
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
||||
Certificates of deposit and commercial paper
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
||||
Non-U.S. government and government sponsored entities
|
|
—
|
|
|
143
|
|
|
—
|
|
|
143
|
|
||||
Corporate debt
|
|
—
|
|
|
995
|
|
|
2
|
|
|
997
|
|
||||
RMBS
|
|
—
|
|
|
128
|
|
|
—
|
|
|
128
|
|
||||
CMBS
|
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
||||
CDO/ABS
|
|
—
|
|
|
93
|
|
|
1
|
|
|
94
|
|
||||
Total available-for-sale securities
|
|
—
|
|
|
1,604
|
|
|
3
|
|
|
1,607
|
|
||||
Other securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. government and government sponsored entities
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Corporate debt
|
|
—
|
|
|
42
|
|
|
1
|
|
|
43
|
|
||||
RMBS
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
CDO/ABS
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total bonds
|
|
—
|
|
|
45
|
|
|
1
|
|
|
46
|
|
||||
Preferred stock
|
|
13
|
|
|
6
|
|
|
—
|
|
|
19
|
|
||||
Common stock
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Other long-term investments
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total other securities
|
|
34
|
|
|
51
|
|
|
2
|
|
|
87
|
|
||||
Total investment securities
|
|
34
|
|
|
1,655
|
|
|
5
|
|
|
1,694
|
|
||||
Restricted cash in mutual funds
|
|
482
|
|
|
—
|
|
|
—
|
|
|
482
|
|
||||
Total
|
|
$
|
931
|
|
|
$
|
1,716
|
|
|
$
|
5
|
|
|
$
|
2,652
|
|
*
|
Due to the insignificant activity within the Level 3 assets during
2018
, 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 Using
|
|
Total Carried At Fair Value
|
||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3 (a)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents in mutual funds
|
|
$
|
688
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
688
|
|
Cash equivalents in securities
|
|
—
|
|
|
54
|
|
|
—
|
|
|
54
|
|
||||
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and government sponsored entities
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
||||
Obligations of states, municipalities, and political subdivisions
|
|
—
|
|
|
135
|
|
|
—
|
|
|
135
|
|
||||
Certificates of deposit and commercial paper
|
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
||||
Non-U.S. government and government sponsored entities
|
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
||||
Corporate debt
|
|
—
|
|
|
946
|
|
|
2
|
|
|
948
|
|
||||
RMBS
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
||||
CMBS
|
|
—
|
|
|
87
|
|
|
—
|
|
|
87
|
|
||||
CDO/ABS
|
|
—
|
|
|
95
|
|
|
1
|
|
|
96
|
|
||||
Total available-for-sale securities (b)
|
|
—
|
|
|
1,575
|
|
|
3
|
|
|
1,578
|
|
||||
Other securities
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. government and government sponsored entities
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Corporate debt
|
|
—
|
|
|
66
|
|
|
2
|
|
|
68
|
|
||||
RMBS
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
CDO/ABS
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Total bonds
|
|
—
|
|
|
72
|
|
|
2
|
|
|
74
|
|
||||
Preferred stock
|
|
13
|
|
|
7
|
|
|
—
|
|
|
20
|
|
||||
Common stock
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Other long-term investments
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total other securities
|
|
36
|
|
|
79
|
|
|
3
|
|
|
118
|
|
||||
Total investment securities
|
|
36
|
|
|
1,654
|
|
|
6
|
|
|
1,696
|
|
||||
Restricted cash in mutual funds
|
|
484
|
|
|
—
|
|
|
—
|
|
|
484
|
|
||||
Total
|
|
$
|
1,208
|
|
|
$
|
1,708
|
|
|
$
|
6
|
|
|
$
|
2,922
|
|
(a)
|
Due to the insignificant activity within the Level 3 assets during
2017
, 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.
|
(b)
|
Excludes an immaterial interest in a limited partnership that we account for using the equity method and FHLB common stock of
$1 million
at
December 31, 2017
, which is carried at cost.
|
|
|
Fair Value Measurements Using *
|
|
|
|
Impairment Charges
|
||||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At or for the Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Finance receivables held for sale
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
103
|
|
|
$
|
16
|
|
Real estate owned
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At or for the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate owned
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
3
|
|
*
|
The fair value information presented in the table is as of the date the fair value adjustment was recorded.
|
|
|
|
Range (Weighted Average)
|
|
|
Valuation Technique(s)
|
Unobservable Input
|
December 31, 2018
|
December 31, 2017
|
Finance receivables held for sale
|
Income approach
|
Market value for similar type loan transactions to obtain a price point
|
*
|
*
|
Real estate owned
|
Market approach
|
third party valuation
|
*
|
*
|
*
|
We applied the third party exception which allows us to omit certain quantitative disclosures about unobservable inputs for the assets measured at fair value on a non-recurring basis included in the table above. As a result, the weighted average ranges of the inputs for these assets are not applicable.
|
(dollars in millions)
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
$
|
956
|
|
|
$
|
930
|
|
|
$
|
902
|
|
|
$
|
860
|
|
Interest expense
|
|
228
|
|
|
228
|
|
|
220
|
|
|
200
|
|
||||
Provision for finance receivable losses
|
|
277
|
|
|
254
|
|
|
259
|
|
|
253
|
|
||||
Other revenues
|
|
151
|
|
|
140
|
|
|
138
|
|
|
131
|
|
||||
Other expenses
|
|
384
|
|
|
389
|
|
|
506
|
|
|
367
|
|
||||
Income before income taxes
|
|
218
|
|
|
199
|
|
|
55
|
|
|
171
|
|
||||
Income taxes
|
|
51
|
|
|
47
|
|
|
43
|
|
|
41
|
|
||||
Net income
|
|
$
|
167
|
|
|
$
|
152
|
|
|
$
|
12
|
|
|
$
|
130
|
|
(dollars in millions)
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
$
|
853
|
|
|
$
|
806
|
|
|
$
|
772
|
|
|
$
|
756
|
|
Interest expense
|
|
204
|
|
|
207
|
|
|
203
|
|
|
202
|
|
||||
Provision for finance receivable losses
|
|
229
|
|
|
242
|
|
|
233
|
|
|
243
|
|
||||
Other revenues
|
|
139
|
|
|
149
|
|
|
117
|
|
|
135
|
|
||||
Other expenses
|
|
382
|
|
|
401
|
|
|
386
|
|
|
400
|
|
||||
Income before income taxes
|
|
177
|
|
|
105
|
|
|
67
|
|
|
46
|
|
||||
Income taxes
|
|
161
|
|
|
44
|
|
|
20
|
|
|
18
|
|
||||
Net income
|
|
16
|
|
|
61
|
|
|
47
|
|
|
28
|
|
(a)
|
(1) The following consolidated financial statements of Springleaf Finance Corporation and its subsidiaries are included in Part II - Item 8:
|
(b)
|
Exhibits
|
Exhibit
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Shareholder’s Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
|
*
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.
|
|
|
|
SPRINGLEAF FINANCE CORPORATION
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Micah R. Conrad
|
|
|
|
|
Micah R. Conrad
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
/s/
|
Scott T. Parker
|
|
|
Scott T. Parker
|
|
(President, Chief Executive Officer, and Director —
Principal Executive Officer)
|
|
|
|
|
|
/s/
|
Micah R. Conrad
|
|
|
Micah R. Conrad
|
|
(Executive Vice President and Chief Financial Officer, and
Director — Principal Financial Officer)
|
|
|
|
|
|
/s/
|
John C. Anderson
|
|
|
John C. Anderson
|
|
(Executive Vice President and Director)
|
|
|
|
|
|
/s/
|
Michael A. Hedlund
|
|
|
Michael A. Hedlund
|
|
(Senior Vice President and Group Controller
— Principal Accounting Officer)
|
|
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Springleaf Finance Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 15, 2019
|
|
|
|
|
|
|
|
|
|
/s/ Scott T. Parker
|
|
|
|
Scott T. Parker
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Springleaf Finance Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 15, 2019
|
|
|
|
|
|
|
|
|
|
/s/ Micah R. Conrad
|
|
|
|
Micah R. Conrad
|
|
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Scott T. Parker
|
|
|
|
Scott T. Parker
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
/s/ Micah R. Conrad
|
|
|
|
Micah R. Conrad
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Date:
|
February 15, 2019
|
|
|