Direct auto loans made up 20% of the company’s net receivables at the end of the period up from 15% during the same period the year prior. While exact auto outstanding numbers were not given, the company grew total net receivables to $14.8 billion, which includes personal loans and unsecured auto loans. The Evansville-Ind. based lender grew total originations by 34% to $3.1 billion.
“We would expect the auto originations to continue to increase,” Jay Levine, president and chief executive, said on an earnings call last week. “It just won’t increase at the same rate that it has over the last year or so. We do expect the percentage of direct auto to continue to increase.”
That push for direct auto loans has brought down profitability from the loans it is securing. Yields were down to 23.8% in the fourth quarter compared with 24.3% during the prior year period.
“[Direct lending] generates the most attractive risk-adjusted returns in our portfolio,” Chief Financial Officer Scott Parker said on the call. “We will continue to prioritize disciplined receivables in 2018 reflecting our focus on credit quality, secured lending, and pricing.”
Across the company’s portfolio, net losses and long-term delinquencies were down, but shorter 30-to-89-day delinquencies were up 19%. Net charge-offs made up 6.4% of the portfolio down from 7.5% the year prior.
Springleaf Holdings Inc. acquired OneMain Financial from Citigroup in 2015 and rebranded its businesses under the OneMain name. The company is publically traded with a market cap of $4.5 billion
Additionally, the company issued its first securitization backed by direct auto loans for $600 million during the quarter. It was OneMain’s first auto ABS rated in the AAA tranche and Kroll Bond Ratings Agency reported an expected loss rate of 4.05%, according to the presale report.
“We plan to build on this momentum in 2018 and increase our mix of unsecured debt,” Parker said on the call. “Doing so will enhance our strong liquidity profile even further by freeing up assets and extending the duration of our maturities.”
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