11/30/2022 0 Comments Avi joiner 2.03 full![]() ![]() ![]() While the increase in loan loss provision may represent a major red flag to investors, the company is simply preparing itself in the event things would turn bad. These monies are not “sunk” but set aside in the event their loan portfolio experiences increasing defaults. The bottom line in 2022 was most impacted by its increasing provision for loan losses. On a profit and loss basis, OneMain is experiencing higher net interest income compared to the same period a year ago, due to its ability to control interest expenses. Source: SEC 10-Q, Period Ending June 30, 2022 A further examination of the company financials will determine if this is sufficient. It’s also important to note that the company holds more than $2 billion in loan loss reserves against nearly $20 billion in loans. The company’s balance sheet is relatively uneventful as OneMain still holds slightly more than $3 billion in shareholder equity and similar leverage compared to the end of 2021. OneMain’s financial performance indicates that management is taking prudent steps to protect the company from rising interest rates. Management can change the dividend at any time. ![]() Bonds are senior to common shares in that management cannot opt to not pay interest on debt or full principal at maturity without a bankruptcy. While value and income investors may be attracted to OneMain shares due to their recent decline combined with their now 12% dividend yield, investors may find high income and decent value through an investment in OneMain’s bonds.įor example, OneMain’s March 2026 maturing debt, which pays a 7.125% semi-annual coupon, is priced at under 92 cents on the dollar, yielding just under 10 percent to maturity. Over the last 52 weeks, the shares are down 45%. ![]() The recent surge in interest rates has sent shares of personal loans lender OneMain Holdings ( NYSE: OMF) plunging. ![]()
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