As filed with the Securities and Exchange Commission on December 30, 2014

Registration No. 333-199206

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ONEMAIN FINANCIAL HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

6141

27-4393679

(State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

300 Saint Paul Place

Baltimore, MD 21202

(410) 332-3000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

April O. Park

General Counsel

OneMain Financial Holdings, Inc.

300 Saint Paul Place

Baltimore, MD 21202

(410) 332-3000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Richard D. Truesdell, Jr.

Sophia Hudson

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

Jeffrey D. Karpf

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York 10006

(212) 225-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer ¨
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 30, 2014

PRELIMINARY PROSPECTUS

LOGO

Shares Common Stock $ per share

This is the initial public offering of shares of our common stock. We currently expect the initial public offering price to be between $ and $ per share of common stock. See “Use of Proceeds.”

Immediately following the completion of this offering, Citigroup Inc. will beneficially own between approximately % and % of our shares of common stock, depending on whether and the extent to which the underwriters exercise their over-allotment option.

We intend to apply to have our common stock listed on the New York Stock Exchange under the trading symbol “ .”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 16.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Share	Total
Public Offering Price	$	$
Underwriting Discounts and Commissions(1)	$	$
Proceeds to OneMain (before expenses)	$	$

(1)

See “Underwriting” for additional compensation to be paid to the underwriters.

Citigroup Inc., or the selling stockholder, has granted the underwriters an option for a period of 30 days to purchase up to additional shares of common stock to cover over-allotments. Any proceeds resulting from the sale of shares by the selling stockholder, after deducting underwriting discounts, will be paid to the selling stockholder, and we will receive no proceeds from the exercise of the over-allotment option.

The underwriters expect to deliver the shares to purchasers on or about , 2014 through the book-entry facilities of The Depository Trust Company.

Sole Book-Running Manager

Citigroup

, 2014

TABLE OF CONTENTS


	Page
Non-GAAP Financial Measures and Other Information		ii
Summary		1
The Offering		10
Summary Consolidated and Combined Financial and Other Data		11
Risk Factors		16
Special Note Regarding Forward-Looking Statements		48
Use of Proceeds		50
Dividend Policy		50
Capitalization		51
Dilution		52
Selected Consolidated and Combined Historical Financial Data		54
Unaudited Pro Forma Consolidated and Combined Financial Information		58
Management’s Discussion and Analysis of Financial Condition and Results of Operations		63
Business		90
Management		104
Compensation Discussion and Analysis		108
Certain Relationships and Related Party Transactions		121
Principal and Selling Stockholders		127
Description of Certain Indebtedness		128
Description of Capital Stock		130
Material U.S. Federal Tax Considerations for Non-U.S. Holders of Our Common Stock		138
Shares Eligible for Future Sale		140
Underwriting		142
Conflicts of Interest		144
Legal Matters		148
Experts		148
Market and Industry Data and Forecasts		148
Where You Can Find More Information		148
Index to Consolidated and Combined Financial Statements		F-1

We, the selling stockholder and the underwriters have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus or in any free writing prospectus prepared by or on behalf of us. We, the selling stockholder and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholder are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus or any free writing prospectus is accurate as of any date other than the date of the relevant document. Our business, financial condition, results of operation or future growth prospectus may have changed since those dates.

NON-GAAP FINANCIAL MEASURES AND OTHER INFORMATION

In this prospectus, we have included financial measures that are compiled in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, as well as certain non-GAAP financial measures. These non-GAAP financial measures include:

•

Adjusted pro forma net income from continuing operations is the pro forma net income from continuing operations giving effect to the Transactions (as defined in “Unaudited Pro Forma Consolidated and Combined Financial Information”) further adjusted for (i) the transfer of our real estate portfolio to an affiliate effective January 1, 2014 and (ii) the transfer of our servicing portfolio to an affiliate that occurred on January 6, 2014, in each case net of tax, as if each of the Transactions and the further adjustments had occurred on January 1, 2013.

We refer to the (i) transfer of our real estate portfolio to an affiliate effective January 1, 2014 and (ii) transfer of our servicing portfolio to an affiliate on January 6, 2014 collectively as our 2014 exit from the real estate business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Overview.”

•

Adjusted pro forma return on assets is the ratio of Adjusted pro forma net income from continuing operations to Adjusted average pro forma total assets.

•

Adjusted average pro forma total assets is the average pro forma total assets, giving effect to the Transactions and adjusted for our 2014 exit from the real estate business, as if each of the Transactions and the further adjustments had occurred on January 1, 2013.

•

Adjusted pro forma return on equity is the ratio of Adjusted pro forma net income from continuing operations to pro forma equity.

These non-GAAP financial measures are supplemental measures of our performance and are not required by, or presented in accordance with, GAAP. We use the non-GAAP measures to provide us and other interested third parties a basis to better understand our ongoing operating results on a consistent basis. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

The non-GAAP financial measures used in this prospectus have limitations as analytical tools, and you should not consider them in isolation or as a substitute for the analysis of our results as reported under GAAP. You should be aware that in the future we may incur expenses that are the same as, or similar to, the adjustments used in this prospectus. Our presentation of adjusted pro forma net income from continuing operations should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Throughout this prospectus we also refer to the term “FICO score,” which means a credit score developed by Fair Isaac Corporation. A FICO score is widely used as a means of evaluating the likelihood that credit users will pay their obligations. The range of FICO scores is 300-850, with a higher FICO score generally indicating a greater likelihood of repayment.

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our Consolidated and Combined Financial Statements, the notes to those statements and both our selected historical and pro forma consolidated and combined financial data before making a decision to purchase our common stock. Some information in this prospectus contains forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”

As used in this prospectus, all references in this prospectus to “OneMain,” the “Company,” “we,” “us,” “our,” “ours” or similar terms refer to OneMain Financial Holdings, Inc., a Delaware corporation, together with its consolidated subsidiaries. References to “Citi” refer to Citigroup Inc. and its subsidiaries other than OneMain.

OneMain Financial Overview

We are a leading consumer finance company in the United States, providing responsible solutions to credit-worthy individuals through our nationwide branch network and online channels. Our 100-plus year history and culture embodies our dedication to high-quality origination, underwriting and servicing of traditional, easily understood and transparent personal loans to primarily middle-income households. Our personal loans are fixed-rate, fixed-term and fixed-payment, which are attractive to our customers. We also offer optional products that protect customers in the event of unforeseen circumstances. We have been a stable and positive community presence using our industry-leading technology platform, proprietary underwriting process and data analytics to originate, price, manage, and monitor risk effectively through changing economic conditions. We have built a culture of compliance to anticipate, understand and embrace a changing regulatory environment. Our experienced management team, strong financial position, and adherence to our core values of customer advocacy, ethical leadership, ownership attitude, continuous improvement and personal development, position us well for future success and growth.

At the core of our business is a national, community-based network of 1,140 branches as of September 30, 2014, serving 1.3 million customer accounts across 43 states. This network is supported by our state-of-the-art technology platform that allows us to efficiently process applications and provide convenient self-service features for our customers. As of September 30, 2014, the network consists of a local, well-trained, front-end workforce of approximately 4,100 employees and is supported centrally by approximately 1,150 employees with additional functional support provided by Citi. Our captive insurance business, Citi Assurance Services, or CAS, is staffed by an additional workforce of approximately 215 employees. Our branch employees typically live in the communities they serve, and we believe our customers value the face-to-face interaction and the long-term relationships they build with our branch employees. This face-to-face interaction significantly enhances the value we provide to customers as we work together to assess their household budgets and ability to repay their loans. The knowledge gained and relationships built during the face-to-face interactions allow us to quickly service customers, while also improving our loan performance. Branches not only originate but also service loans through early-stage delinquency, which we view as a key aspect of our relationship-driven model. This relationship-driven model is further strengthened by our extensive and complementary centralized operations that deliver cost efficiencies and risk and compliance controls. Our experience suggests that combined, our branches and centralized operations are the most effective means for both serving our target customers and driving low default and delinquency rates in our loan portfolio.

Our customers are creditworthy and represent a unique segment of the middle-income market that is underserved by traditional banking institutions and can particularly benefit from our reationship-driven approach.

Our customers typically come to us with a specific borrowing need. We believe our customers prefer and benefit from the face-to-face discussion of their household budgets and cash flow needs with our branch employees. Our customers value speed, convenience, service and funds availability as high priorities. Our customers have an average FICO score of 629 and an average income of $45,000.

During 2013, we advanced new funds totaling $3.2 billion, and at September 30, 2014, we had $8.3 billion of loans outstanding and 1.3 million customer accounts. For the year ended December 31, 2013, we had net income of $536 million, representing a return on assets of 5.4% and return on equity of 19.9%. For the nine months ended September 30, 2014, we had net income of $415 million, representing a return on assets of 5.7% and a return on equity of 17.9%.

Our Strengths

Largest Consumer Finance Branch Network in the United States with Complementary Centralized Support Operations

Our business is large and well established with 1,140 branches as of September 30, 2014, serving 1.3 million customer accounts across 43 states. Our national, community-based branch network is the foundation of our relationship-driven business model and is the product of thoughtful market identifications and profitability analysis. Our centralized operations provide customer services, transaction processing and late-stage collection efforts, driving operating efficiencies and risk and compliance control. We believe the scale of our business, resulting operating efficiencies, proprietary industry knowledge and investment in regulatory compliance contribute significantly to our success and profitability.

Industry-Leading Technology Strategy and Platform

We believe that our technology platform is a strategic asset, and we maintain a well-defined technology strategy and investment plan to protect our competitive edge. Technology investments improve our speed of service and ability to respond to customer needs and help drive our efficiency, scale and stable operations. We use a centrally-run technology platform with proprietary applications for originations, servicing and collections to provide a seamless, real-time link between our branches and our centralized operations. The cornerstone of this platform is our internally developed, front-office processing platform that integrates our key business functions into a single, web-based solution. Additionally, our expanding digital capabilities are helping us service and grow our customer base.

Centralized Risk Analytics Supported by Our Proprietary, National Database

Our longevity and stability result from our focus on providing straightforward, traditional loan products and our conservative approach to originating loans. While our branches originate and service loans, our pricing, loan underwriting and approval decisions are made centrally through our risk management system. Our disciplined risk management model and advanced analytics effectively complement localized branch operations to drive low default and delinquency rates. We use a rigorous underwriting process that leverages industry and proprietary credit tools built using customer performance data from our national lending database. Our long-tenured and experienced branch staff complements our data-driven process.

Extensive Experience with Complex Regulatory Oversight and Strong Compliance Culture

We have extensive experience operating in a complex and highly regulated environment. We have built a robust compliance culture in the last decade and established processes and controls to monitor our legal and regulatory adherence. Our primary regulators are state regulators from whom we have state level licenses, the

Board of Governors of the Federal Reserve System, or the Federal Reserve Board, and the Consumer Financial Protection Bureau, or the CFPB. In 2013, state regulators conducted exams of over 600 of our branches and centralized sites. In addition, as a subsidiary of a bank holding company, we have been closely examined a number of times by the Federal Reserve Board and continue to have regular interactions with them. We also have been examined several times by the CFPB, and we believe our business is well suited to address their requirements.

Robust Financial Performance

We increased our profitability in 2012 and 2013 with net income of $407 million and $536 million, a return on assets of 4.0% and 5.4% and an operating efficiency ratio of 34.8% and 32.5% in each of the two years, respectively. We believe our profitability can be attributed to our rigorous underwriting process, strong pricing and expense discipline, operational expertise and loyal customer base.

Seasoned Management with Extensive Industry Experience

We have highly experienced employees throughout all levels of our organization. Mary McDowell, our Chief Executive Officer and President, is an accomplished financial services executive with more than 30 years of experience in consumer finance and was the 2010-2011 Chair of the American Financial Services Association, the consumer credit industry’s trade organization. Our senior leadership has an average of 24 years of experience in consumer finance and an average tenure of 19 years at OneMain and/or Citi. Our branch network employees and managers hold an average tenure of 11 and 14 years, respectively, and our district managers and area directors average 19 and 25 years of experience, respectively, when looking at their combined years of service at OneMain and Citi.

Our Business and Growth Strategy

We are a leading branch-based consumer finance business in the United States, and our strategy is to enhance stockholder value by (1) maintaining our attractive profitability profile and (2) growing our business through new origination channels, capabilities and products, as follows:

Maintain Our Attractive Profitability by Focusing on Fundamental Aspects of Our Business

•

Customer-Centric Strategy: Our customer-centric strategy is to continue to deliver responsible solutions consistent with fair lending principles to our customers to grow our market and gain market share. Improving the customer experience is the primary motivation for our investments in digital, product and service innovations.

•

Data-Driven, Analytical Approach to Profit Optimization: Data analysis is the core of our business engine, and the multi-decade history of consumer behavior that forms the backbone of our analytics gives us a strong competitive advantage. Our ability to link marketing activity, branch incentives, financial return and risk analytics to drive profitability forms the foundation of our strategy. We continuously improve our data collection, management and analytical capabilities to further expand growth possibilities and focus on the most profitable opportunities.

•

Highly Efficient and Scalable Operations: We believe that we are an industry leader in operating efficiency, and we remain diligent by continuously leveraging digital advancements and other opportunities to optimize our expense base. We test new branch models, layouts, locations and centralized support and distribution options on a regular basis to optimize employee focus on customers while maintaining efficiency. We design technology platforms for our centralized operations and branches that are scalable so that we may grow efficiently.

•

Diverse Funding Sources: The consumer finance business requires constant access to liquidity, and we have the proven ability to finance our business from a variety of funding sources, including cash flows from operations and the capital markets in the form of two personal loan securitizations and an unsecured debt offering. We also plan to further diversify our funding sources by entering into warehouse lines and offering additional unsecured debt. Our continued access to financing on favorable terms is important to our business and failure to access such financing on favorable terms could adversely affect our financial condition and results of operations.

Grow Our Business Through New Origination Channels, Capabilities and Products

•

Increase Personal Loan Volume through New Channels: We are growing volume by expanding outreach to new customers through physical and digital channels. On the physical front, we are focusing on customer referrals and partnerships with retailers and other institutions that cater to our core customer base. We are also growing leads through digital channels by extending our network of over 40 online partners (for example, our relationship with Lending Club, a leading “peer-to-peer” online lending platform), increasing volume through our dedicated online portal and leveraging channels such as social media.

•

Digital Sales and Service Enablement: We are developing new capabilities as part of our digital strategy to increase loan applications through all channels. We have been testing centralized capabilities to onboard new borrowers that complement our local presence and increase the volume of loans we make. These capabilities allow us to provide rapid response times to customers from both physical and digital channels, for inquiries and pre-closing services. We have launched 20 fully operating “Discovery Branches” to test new technologies, operating models and processes that increase our productivity, improve the customer experience, accelerate learning and speed deployment across the network. Discovery Branch learnings, along with our investments in new account and data management systems and enhanced web capabilities, are helping us create the flexibility to originate, fund and service loans online.

•

Broaden Our Product Offering: We believe that we can successfully offer additional complementary financial products to our customers. In the nine months ended September 30, 2014, approximately 65% of our customer base purchased optional products in addition to receiving a personal loan. We may either develop additional complementary financial products ourselves or distribute them on behalf of partners. We have achieved success with these strategies in the past. Leveraging our risk expertise and extensive branch network with expanded solutions has the potential to both increase the products available to existing customers and attract new customers.

Industry and Market Overview

The U.S. consumer finance industry has approximately $3.2 trillion of outstanding borrowings and includes vehicle loans and leases, credit cards, student loans and personal loans. Our 1.3 million customer accounts represent a very small fraction of the approximately 115 million consumers that generally align with our customer base (FICO scores between 550 and 749). A portion of these consumers have non-prime credit scores, meaning that loans to them generally have lower collection rates and are generally subject to higher loss rates than loans to prime borrowers. We believe that most of this population is underserved and provides an attractive market opportunity for our business.


$3.2 Trillion Consumer Finance Industry		U.S. FICO Score Distribution



Sources: Federal Reserve Bank of New York; Federal Student Aid/U.S. Department of Education. As of September 30, 2014.		Source: FICO^TM Banking Analytics Blog. ^© Fair Isaac Corporation. As of April 2014.

As a leading player in the highly-fragmented, non-prime consumer finance industry, we believe we are uniquely positioned to take advantage of our market opportunity. Many existing consumer lenders operate at a regional level and typically have fewer than 200 branches and less than $2 billion in loans outstanding. With 1,140 branches and $8.3 billion loans outstanding as of September 30, 2014, our strategy is to maintain and expand our market share with our robust physical and online presence.

Our History and Development

We have been operating since the founding of our predecessor, Commercial Credit Company, in 1912. Since our founding, we have grown both organically as well as through various acquisitions. Commercial Credit Company acquired Primerica in 1988, forming the Primerica Corporation, which acquired the Travelers Corporation in 1993. Following the merger of Travelers Group with Citicorp to form Citigroup Inc. in 1998, Commercial Credit Company was rebranded as CitiFinancial in 1999.

Prior to 2011, we were part of a larger business within Citi known as CitiFinancial North America, or CFNA, the U.S. business of which contained approximately $10 billion of personal loans and $15 billion of mortgage and real estate loans. In the middle of 2010, CFNA’s management decided to split the U.S. business of

CFNA into two distinct business lines. OneMain, the go-forward business, retained the majority of CFNA’s U.S. personal loans and a portion of its U.S. real estate loans but only until January 2014. CitiFinancial Servicing was formed with the remaining portion that did not strategically align with OneMain’s go-forward origination and risk strategy. CitiFinancial Servicing was designed to support certain customers and loans that would benefit from expanded support, including loan modifications or restructurings, rather than originate loans. In effect, CitiFinancial Servicing became a liquidating business. For a discussion of the separation and how it and subsequent transactions are presented in our Consolidated and Combined Financial Statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Overview.”

The chart below summarizes the ownership structure that we anticipate at the time of this offering.

LOGO

The Transactions and Our Separation from Citi

Citi currently indirectly owns 100% of our common stock. After the completion of this offering, Citi will beneficially own % of our outstanding common stock (or % if the underwriters exercise their over-allotment option in full). Prior to this offering, we expect to declare a dividend of a $ million note, which we refer to as the Dividend Note, and issue the Dividend Note to Citi. We intend to repay the Dividend Note in full (plus any accrued and unpaid interest thereon) with the proceeds of this offering.

Upon the consummation of this offering, we will enter into a number of agreements with Citi that will govern our relationship with Citi. We refer to this offering, our establishment of a fully independent capital structure and the various other transactions relating to our separation from Citi as the “Transactions.” For more information relating to the Transactions, see “Unaudited Pro Forma Consolidated and Combined Financial Information.” For a discussion of certain risks associated with our separation from Citi, see “Risk Factors—Risks Relating to Our Organization and Structure.”

Citi has informed us that, after this offering, it may complete its exit from our business in one or more of several ways. Citi may exit our business by selling or otherwise distributing or disposing of all or a portion of its shares of our common stock, including through a tax-free distribution of all of its remaining shares of our common stock to its stockholders, which we refer to as the “Distribution.” For more information, see “Risk Factors—Risks Relating to Our Organization and Structure.”

Debt Financings

Historically, we have funded our operations through cash from our operations and funding provided by Citi. The weighted average interest rate on our historical debt was 3.99% per annum for the nine months ended September 30, 2014 and 3.7% per annum for the year ended December 31, 2013. We have started to establish a fully independent capital structure and to finance our liquidity needs from a variety of third-party debt sources. In April 2014 and July 2014, we raised capital through two securitizations of our loan portfolio and in December 2014, we completed an issuance of $1.5 billion of unsecured debt. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Description of Certain Indebtedness.” As we establish a fully independent capital structure, existing debt in some cases may be replaced by higher-cost funding provided by third-party sources. Pro forma for the Transactions at September 30, 2014, our debt outstanding would have by approximately $ billion, and for the year ended December 31, 2013 and the nine months ended September 30, 2014, our interest expense would have by $ million and $ million, respectively, and our cost of funds would have from % to % per annum, respectively. See “Unaudited Pro Forma Consolidated and Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Trends and Conditions—Changing funding mix and increased funding costs” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Separation from Citi.”

Dividend Recapitalization

On November 18, 2014, we paid a $1.5 billion dividend, or the Dividend Recapitalization, to Citi, which was funded by $1.5 billion of related-party debt from Citi. This dividend was intended to align our equity capital with what we believe is a level needed to support an independent capital structure as we transition away from related-party debt from Citi.

Corporate Information

Our executive offices are located at 300 St. Paul Place, Baltimore, Maryland 21202, and our telephone number is (410) 332-3000. Our website address is onemainfinancial.com. The information on our website is not a part of this prospectus.

Risks Affecting Us

As part of your evaluation of our company, you should consider the risks associated with our business, regulation of our business, our indebtedness, our organization and structure and this offering. These risks include:

•

Risks relating to our business, including: (i) our ability to access adequate sources of liquidity to fund operational requirements and satisfy financial obligations; (ii) the impact of macroeconomic conditions; (iii) insufficient allowance for loan losses; (iv) our ability to successfully manage our credit risk; (v) the identification of material weaknesses and significant deficiencies in our internal control over financial reporting; (vi) historical charge-off rates that may not be predictive of future charge-off rates; (vii) the effectiveness of our risk management processes and procedures, and the accuracy of the assumptions or estimates used in our models and in preparing our financial statements; (viii) the competition in the consumer finance industry; (ix) risks and uncertainties associated with our insurance operations; (x) failures or security breaches in our or third parties’ information systems or Internet platform or disruptions in the operations of our computer systems and data centers; (xi) our transition to, and quality of, new technology platforms; (xii) our ability to protect our intellectual property; (xiii) litigation and regulatory actions; (xiv) damage to our reputation; (xv) our ability to attract, retain and motivate key officers and employees; (xvi) misconduct by our employees or third parties that we employ; (xvii) potential future geographic concentrations of our loan portfolio; (xviii) requirements to repurchase loans from purchasers of loans that we sell or securitize; (xix) our ability to implement our growth strategy and realize the value of strategic investments; (xx) our ability to successfully develop new or enhanced products; and (xxi) natural disasters, acts of war or terrorism or other external events.

•

Risks relating to regulation, including: (i) significant and extensive regulation, supervision and examination of, and enforcement relating to, our business by governmental authorities; (ii) impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and the impact of the CFPB’s regulation of our business; (iii) regulations and supervision by the Federal Reserve Board for as long as we are controlled by Citi for bank regulatory purposes; (iv) regulatory scrutiny resulting from selling loans, including charged-off loans and loans where the borrower is in default; (v) the impact of state regulations in the states in which we conduct our business; (vi) regulations relating to privacy, information security and data protection; (vii) use of third-party vendors and ongoing third-party business relationships; and (viii) banking regulations that limit our business activities.

•

Risks relating to our indebtedness, including: (i) the size of our indebtedness, which could affect our ability to meet our obligations under our debt instruments and could impact our business; (ii) the impact of covenants in our debt instruments that may restrict our operations; (iii) our obligations under the indenture governing our unsecured debt restrict our current operations and may restrict our future operations; (iv) the accuracy of the judgments and estimates used in assessing our liquidity; (v) the potential impact to our funding and business resulting from a change in our credit ratings; (vi) the impact of our securitizations and ability to access the securitizations market in the future; and (vii) repayment of the Dividend Note and compliance with its covenants.

•

Risks relating to our organization and structure, including: (i) the interests of Citi conflicting with our interests and with those of our public stockholders, including you; (ii) the sufficiency of assets and resources that we acquire from Citi in our separation from Citi and the difficulties in separating our assets and resources from Citi in our separation from Citi; (iii) loss of some of our arrangements with Citi that existed before this offering; (iv) the impact on our business resulting from competition with Citi after this offering; (v) loss of association with Citi’s strong brand and reputation; (vi) certain of our directors experiencing conflicts of interest because of their positions with Citi; (vii) the limited liability of Citi and its directors and officers for breach of fiduciary duty to us or to you; (viii) our consolidated and combined historical financial data and pro forma consolidated and combined financial data do not necessarily reflect future results; (ix) charges in connection with this offering and incremental costs of operating as a stand-alone public company; (x) the allocation of liabilities between us and Citi; (xi) our exemption from certain corporate governance requirements due to our status as a “controlled company” within the meaning of the New York Stock Exchange rules; (xii) Citi potentially selling a controlling interest in our company to a third party in a private transaction; (xiii) failure of the Distribution to qualify for tax-free treatment, which, if caused by us, may result in significant tax liabilities to Citi for which we may be required to indemnify Citi; (xiv) our reliance on our operating subsidiaries to provide us with the funds that are necessary to meet our financial obligations; (xv) our intention to not pay dividends on our common stock in the foreseeable future; (xvi) the insurance laws and regulations that may delay or impede purchases of our common stock; and (xvii) immediate dilution as a result of this offering.

•

Risks relating to this offering, including: (i) future sales of a substantial number of shares of our common stock; (ii) the development of an active trading market for our common stock; (iii) volatility of the price and trading volume of our common stock; (iv) resources and management attention required to meet the obligations associated with being a public company; and (v) our common stock is and will be subordinate to all of our existing and future indebtedness.

For a discussion of these and other risks, see “Risk Factors.”

Conflicts of Interest

Prior to this offering, all of our outstanding common stock is indirectly owned by Citi. Citi will continue to own a majority of our outstanding common stock immediately following completion of this offering and we expect will receive $ million in connection with our repayment of the full amount due to Citi under the

Dividend Note using the proceeds of this offering. If the underwriters exercise the over-allotment option, Citi will also receive all of the net proceeds from such exercise. In addition, prior to this offering we have had, and after this offering we will continue to have, numerous commercial and contractual arrangements with affiliates of Citi.

Citigroup Global Markets Inc., the sole book-running manager of this offering, is a wholly owned subsidiary of Citigroup Inc. Because Citigroup Global Markets Inc. is under common control with us and the selling stockholder, and because the selling stockholder, an affiliate of Citigroup Global Markets Inc., will receive at least 5% of the proceeds of this offering, a conflict of interest under Financial Industry Regulatory Authority, Inc., or FINRA, Rule 5121 is deemed to exist. This offering will be conducted in accordance with that rule. As required by FINRA Rule 5121, has agreed to act as the “qualified independent underwriter” for this offering and has participated in the preparation of, and has exercised the usual standards of “due diligence” in respect of, this prospectus.

See “Risk Factors—Risks Relating to Our Organization and Structure,” “Use of Proceeds” and “Underwriting—Conflicts of Interest.”

THE OFFERING

Common stock offered by us

Over-allotment option offered by Citigroup Inc.

Common stock to be outstanding after this offering

shares ( shares if the underwriters exercise their over-allotment option in full)

Voting rights

One vote per share

Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately $ million, based on an assumed public offering price of $ per share (the midpoint of the price range on the front cover of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to repay the Dividend Note in full (plus any accrued and unpaid interest thereon). Any proceeds resulting from the exercise of the over-allotment option will be paid to Citigroup Inc., and we will receive no proceeds from the exercise of the over-allotment option. See “Use of Proceeds.”

Dividend policy

We do not intend to pay dividends on our common stock.

New York Stock Exchange (“NYSE”) symbol

We intend to apply to have our shares of common stock listed on the NYSE under the trading symbol “ .”

Risk factors

See “Risk Factors” beginning on page 16 of this prospectus and the other information included in this prospectus for a discussion of the factors you should consider carefully before deciding to invest in shares of our common stock.

Controlling stockholder

Citigroup Inc.

Unless we specifically state otherwise, all information in this prospectus, including information regarding the number of shares of our common stock outstanding:

•

gives effect to our Amended and Restated Certificate of Incorporation that we intend to file prior to the consummation of this offering;

•

assumes an initial public offering price of $ per share (the midpoint of the price range set forth on the front cover of this prospectus); and

•

assumes the underwriters’ option to purchase additional shares of common stock from Citi has not been exercised.

SUMMARY CONSOLIDATED AND COMBINED FINANCIAL AND OTHER DATA

The following table sets forth summary consolidated and combined historical financial data as of and for the nine months ended September 30, 2014 and 2013, and as of and for the years ended December 31, 2013 and 2012. The summary consolidated and combined historical statement of income data for the nine months ended September 30, 2014 and 2013, and the summary consolidated historical statement of financial position data as of September 30, 2014 presented below has been derived from our unaudited Condensed Consolidated and Combined Financial Statements included elsewhere in this prospectus. The summary combined historical statement of income data for the years ended December 31, 2013 and 2012 and the summary combined historical statement of financial position data as of December 31, 2013 and 2012 presented below have been derived from our audited Combined Financial Statements included elsewhere in this prospectus.

We prepared our unaudited interim financial statements on the same basis as our audited financial statements and have included all adjustments, consisting of normal and recurring adjustments that we consider necessary to present fairly our financial position and results of operations for the unaudited periods, except that our financial statements for periods subsequent to July 1, 2014 are prepared on a “consolidated” basis rather than a “combined” basis. On July 1, 2014, CitiFinancial Credit Company contributed all of the capital of OneMain Financial, Inc., American Health and Life Insurance Company and Triton Insurance Company to us, resulting in our becoming the legal parent of the contributed entities. The consequence of this contribution is that our financial statements for periods subsequent to July 1, 2014 are “consolidated” rather than “combined.” Operating results for the nine-month periods are not necessarily indicative of results for a full financial year or any other periods.

The following table sets forth the unaudited summary pro forma consolidated and combined statement of income data for the nine months ended September 30, 2014 that is derived from our unaudited Condensed Consolidated and Combined Financial Statements included elsewhere in this prospectus and gives effect to the Transactions (as defined in “Unaudited Pro Forma Consolidated and Combined Financial Information”) as if each had occurred on January 1, 2013. The unaudited summary pro forma consolidated statement of financial position data as of September 30, 2014 is derived from our unaudited Condensed Consolidated and Combined Financial Statements included in this prospectus and gives effect to the Transactions as if each had occurred on September 30, 2014. The following table also sets forth unaudited summary pro forma combined statement of income data for the year ended December 31, 2013 that is derived from our audited Combined Financial Statements included elsewhere in this prospectus and gives effect to the Transactions as if each had occurred on January 1, 2013.

The unaudited summary pro forma consolidated and combined financial data below is based upon available information and assumptions that we believe are reasonable. The unaudited summary pro forma consolidated and combined financial data is for illustrative and informational purposes only and is not intended to represent the actual results that would have been achieved had the Transactions each occurred on the dates indicated. The unaudited summary pro forma consolidated and combined financial data should not be considered representative of our future financial condition or results of operations.

Our separation from Citi and the establishment of a fully independent capital structure will result in financial results that are materially different from those reflected in the consolidated and combined historical financial data that appears in this prospectus. For an understanding of how these changes will affect our results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Separation from Citi” and “Unaudited Pro Forma Consolidated and Combined Financial Information.”

You should read the following summary information in conjunction with the information under “Selected Consolidated and Combined Historical Financial Data,” “Unaudited Pro Forma Consolidated and Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated and Combined Financial Statements and the related notes included elsewhere in this prospectus.

Consolidated and Combined Statements of Income Information


	Pro Forma	Historical				Pro Forma	Historical
	Nine Months Ended September 30,	Nine Months Ended September 30,				Year Ended December 31,	Year Ended December 31,
	2014	2014		2013		2013	2013		2012
	(in millions of dollars, except share data)
	(unaudited)	(unaudited)				(unaudited)
Interest revenue	$	$	1,542	$	1,501	$	$	2,019	$	1,982
Interest expense			162		174			228		264

Net interest revenue			1,380		1,327			1,791		1,718
Non-interest revenue			289		378			498		553

Total revenue, net of interest expense			1,669		1,705			2,289		2,271
Provision for credit losses and for benefits and claims			488		535			701		850
Operating expenses			532		559			743		790

Income from continuing operations before income taxes			649		611			845		631
Provision for income taxes			234		224			309		224
Net income from continuing operations			415		387			536		407

Loss from discontinued operations, net of taxes			—		—			—		—

Net income	$	$	415	$	387	$	$	536	$	407

Adjusted pro forma net income from continuing operations(1)			N/A		N/A			N/A		N/A
Weighted average shares outstanding(2)			1,000		1,000			N/A		N/A
Earnings per share basic and diluted(2)		$	414,638	$	387,063			N/A		N/A

Consolidated and Combined Statements of Financial Position Information


	Pro Forma	Historical
	As of September 30,	As of September 30,			As of December 31,
	2014	2014			2013			2012
	(unaudited)	(unaudited)
	(in millions of dollars)
*Assets*
Cash and cash equivalents	$	$	307		$	319		$	369
Investments (at fair value)			1,502			1,431			1,507
Loan receivables, net of unearned revenue and deferred cost			8,278			8,575			8,447
Unearned premium and claims reserves			(415	)		(416	)		(394	)
Accrued interest receivable			87			92			114
Allowance for loan losses			(643	)		(676	)		(686	)

Net consumer finance receivables			7,307			7,575			7,481
Deferred tax assets, net			274			256			221
Premises and equipment, net			98			21			28
Other assets			233			234			257

Total assets	$	$	9,721		$	9,836		$	9,863

*Liabilities and Equity/Parent Equity*
Related-party debt	$	$	3,447		$	5,894		$	6,037
Long-term debt			1,944			—			—
Insurance policy and claim reserves			465			483			505
Accounts payable, accrued expenses and other liabilities			528			612			795

Total liabilities			6,384			6,989			7,337
Total equity/Parent equity			3,337			2,847			2,526

Total liabilities and equity/Parent equity	$	$	9,721		$	9,836		$	9,863

Other Financial and Statistical Data


	Pro Forma	Historical						Pro Forma	Historical
	At and for the Nine Months Ended September 30,	At and for the Nine Months Ended September 30,						At and for the Year Ended December 31,	At and for the Years Ended December 31,
	2014	2014			2013			2013	2013			2012
	(in millions of dollars, except ratio, share and other data)
	(unaudited)	(unaudited)						(unaudited)
*Financial Position Data*
Personal loan receivables	$	$	8,278		$	7,993		$	$	8,112		$	7,890
Average personal loan receivables			8,079			7,771				7,837			7,836
Total assets			9,721			9,757				9,836			9,863
Average assets(3)			9,779			9,810				9,850			10,231
Total equity/Parent equity			3,337			2,697				2,847			2,526
Average equity(3)			3,092			2,612				2,687			2,512
Equity to assets(4)			34.33	%		27.64	%			28.94	%		25.61	%
Debt to equity(5)			1.62x			2.06x				2.07x			2.39x

*Selected Performance Data*
Net income			415			387				536			407
Net interest margin			1,380			1,327				1,791			1,718
Efficiency ratio(6)			31.88	%		32.79	%			32.46	%		34.79	%
Personal loan performance
Loan yield(7)			24.76	%		24.13	%			24.13	%		23.38	%
Risk-adjusted yield(8)			18.57	%		17.70	%			17.83	%		17.14	%
Net charge offs			6.19	%		6.43	%			6.30	%		6.24	%
30+ days past due as a % of personal loan receivables, end of period			4.39	%		3.80	%			4.10	%		4.05	%
90+ days past due as a % of personal loan receivables, end of period			2.46	%		2.16	%			2.42	%		2.42	%
Return on assets(9)			5.67	%		5.27	%			5.44	%		3.98	%
Return on equity(10)			17.94	%		19.81	%			19.95	%		16.20	%
Adjusted pro forma net income from continuing operations(1)(11)			N/A			N/A				N/A			N/A
Adjusted pro forma return on assets(1)(11)(12)			N/A			N/A				N/A			N/A
Adjusted pro forma return on equity(1)(11)(13)			N/A			N/A				N/A			N/A

*Other Data*
Active personal loan customer accounts			1,329,649			1,338,489				1,343,538			1,365,986
Number of branches			1,140			1,158				1,155			1,222

(1)

We present Adjusted pro forma net income from continuing operations as a supplemental measure of our performance. This measure provides us and other interested third parties a basis to better understand our ongoing operating results on a consistent basis. We define Adjusted pro forma net income from continuing operations as pro forma net income from continuing operations giving effect to the Transactions (as defined in “Unaudited Pro Forma Consolidated and Combined Financial Information”) adjusted for our 2014 exit from the real estate business, as if each of the Transactions and our 2014 exit from the real estate business had occurred on January 1, 2013. We refer to (i) the transfer of our real estate portfolio to an affiliate effective January 1, 2014 and (ii) the transfer of our servicing portfolio to an affiliate on January 6, 2014 collectively as our 2014 exit from the real estate business. Adjusted pro forma net income from continuing operations should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP. Our presentation of Adjusted pro forma net income from continuing operations below should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. The following table provides the reconciliation of our Pro forma net income from continuing operations under “Unaudited Pro Forma Consolidated and Combined Financial Information” to Adjusted pro forma net income from continuing operations for the periods presented:


	Pro Forma
	Nine Months Ended September 30, 2014	Year Ended December 31, 2013
	(unaudited)
	(in millions of dollars)
Pro forma net income from continuing operations	$	$
Adjustments:
Transfer of real estate portfolio
Transfer of real estate servicing portfolio

Adjusted pro forma net income from continuing operations	$	$

(2)

Weighted average shares outstanding gives effect to our Amended and Restated Certificate of Incorporation that we intend to file prior to the consummation of this offering.

(3)

Average pro forma financial data gives effect to the Transactions as if they had occurred on January 1, 2013.

(4)

Equity to assets is the Total equity/Parent equity divided by Total assets.

(5)

Debt to equity is the sum of Related-party debt, Short-term borrowings and Long-term debt divided by Total equity/Parent equity.

(6)

Efficiency ratio is Operating expenses divided by Total revenue, net of interest expense.

(7)

Loan yield is personal loan finance charges divided by Average personal loan receivables. For nine-month amounts, personal loan finance charges for the nine months ended September 30, 2014 and 2013, respectively, are annualized by dividing the personal loan finance charges for such periods by the number of days elapsed in the year, and then multiplying by the number of days in the year.

(8)

Risk-adjusted yield is the Loan yield less Net charge offs.

(9)

Return on assets is Net income divided by Average total assets. For nine-month amounts, Net income for the nine months ended September 30, 2014 and 2013, respectively, is annualized by dividing Net income for such periods by the number of days elapsed in the year, and then multiplying by the number of days in the year.

(10)

Return on equity is Net income divided by Average equity. For nine-month amounts, Net income for the nine months ended September 30, 2014 and 2013, respectively, is annualized by dividing Net income for such periods by the number of days elapsed in the year, and then multiplying by the number of days in the year.

(11)

Adjusted pro forma consolidated and combined financial data give effect to the Transactions and our 2014 exit from the real estate business as if each of the Transactions and the further adjustments had occurred on January 1, 2013 for amounts calculated using average financial position data.

(12)

Adjusted pro forma return on assets is defined as the ratio of Adjusted pro forma net income from continuing operations to Adjusted average pro forma total assets. We define Adjusted average pro forma total assets as the average pro forma total assets, adjusted for our 2014 exit from the real estate business as if each of the Transactions and the further adjustments had occurred on January 1, 2013. The following table provides the reconciliation of Average pro forma total assets to Adjusted average pro forma total assets for the periods presented. See also “Unaudited Pro Forma Consolidated and Combined Financial Information” for the pro forma consolidated and combined statements of financial position information.


	Pro Forma
	Nine Months Ended September 30, 2014	Year Ended December 31, 2013
	(in millions of dollars)
	(unaudited)
Average pro forma total assets	$	$
Adjustment:
Transfer of real estate portfolio

Adjusted average pro forma total assets	$	$

(13)

Adjusted pro forma return on equity is defined as the ratio of Adjusted pro forma net income from continuing operations to pro forma equity.

RISK FACTORS

Investing in our common stock involves substantial risks. You should carefully consider the following risk factors that may affect our business, future operating results and financial condition, as well as the other information set forth in this prospectus before making a decision to invest in our common stock. If any of the following risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment.

Risks Relating to Our Business

An inability to access adequate sources of liquidity, or to do so on favorable terms, may adversely affect our capital structure and our ability to fund operational requirements and satisfy financial obligations.

We have historically funded our operations through cash from our operations and funding provided by Citi. We intend to establish a fully independent capital structure and finance our liquidity needs through various sources of third-party debt. In April 2014 and July 2014 we successfully executed two securitization transactions and in December 2014, we completed an issuance of $1.5 billion of unsecured debt. As we establish an independent capital structure, existing funding from Citi in some cases may be replaced by higher-cost funding provided by third-party sources.

While financial market conditions have stabilized and, in many cases, improved since the financial crisis that began in 2008, there can be no assurance that significant disruptions, uncertainties and volatility will not occur in the future. If we do not have sufficient liquidity because we are unable to obtain access to credit or complete additional securitizations on favorable terms and in a timely manner, we may not be able to meet our obligations. If we maintain or are required to maintain too much liquidity, our business, results of operations and financial condition could be adversely affected.

The availability of financing will depend on a variety of factors such as financial market conditions generally, including the availability of credit to the financial services industry, our performance and credit ratings and the performance of our securitized portfolios. Disruptions, uncertainty or volatility in the capital or credit markets may limit our ability to obtain additional financing or refinance maturing liabilities on desired terms in a timely manner or at all. It may also be more difficult or costly for us to obtain funds when we are no longer a wholly owned subsidiary of Citi. As a result, we may be forced to delay obtaining funding or be forced to issue or raise funding on undesirable terms, which could significantly reduce our financial flexibility and cause us to contract or restrict our business growth, all of which could have a material adverse effect on our results of operations and financial conditions.

There can be no assurances that we will be able to complete additional securitizations. The extent to which we will securitize our loans in the future will depend in part upon the conditions in the securities markets in general and the consumer loan asset-backed securities market in particular, the overall credit quality of our loans, the conformity of the loans and our securitization program to rating agency requirements, the costs of securitizing our loans and the legal, regulatory, accounting and tax requirements governing securitization transactions. In the event we are unable to refinance existing asset-backed securities with new securities or there are structural and regulatory constraints on our ability to refinance these asset-backed securities with other funding, we would be required to rely on different sources for funding. A prolonged inability to securitize our loans or to refinance our asset-backed securities would have a material adverse effect on our business, liquidity, cost of funds and financial condition. In addition, following completion of this offering, it may be more difficult for us to securitize our loans if investors view us as a weaker sponsor once we are no longer wholly owned by Citi. To compensate, our future issuances of asset-backed securities may need to provide for a higher interest rate or provide additional credit enhancements. These factors may increase the costs of securitizing our loans relative to our historical costs.

For more information on the risks relating to our unsecured debt, please see “Risk Factors Relating to Our Indebtedness—Our obligations under the indenture governing our unsecured debt restrict our current operations and may restrict our future operations.”

Macroeconomic conditions could have a material adverse effect on our business, our customers, results of operations, financial condition and stock price.

Key macroeconomic conditions historically have affected our business, our results of operations and financial condition and our customers and are likely to affect them in the future. While certain economic conditions in the United States have shown signs of improvement, economic growth has been slow and uneven as consumers continue to be affected by high unemployment rates, slowly recovering housing values and continuing concerns about the level of U.S. government debt and fiscal actions that may be taken to address this. A prolonged period of slow economic growth, significant deterioration in economic conditions or elevated unemployment levels would likely affect the ability of customers to pay amounts owed to us, and could have a material adverse effect on our business, results of operations and financial condition.

As of September 30, 2014, 70% of our customers have a FICO score below 660, which is consistent with our customer make up over the past two years. Subprime or non-prime borrowers generally have lower collection rates and are generally subject to higher loss rates than prime borrowers. Subprime and non-prime borrowers have historically been, and may in the future become, more likely to be affected, or more severely affected, by adverse macroeconomic conditions, particularly unemployment. If our borrowers default under an unsecured loan, we will bear a risk of loss of principal and if under a secured loan, we will bear this risk to the extent of any deficiency between the value of the collateral and the outstanding principal and accrued but unpaid interest of the loan, which could adversely affect our cash flow from operations. Additionally, under certain circumstances, we may be required to repurchase those loans we have securitized. See “—If our loans fail to meet certain criteria or characteristics or under other circumstances, we may be required to repurchase the loans that we sell or securitize, which could adversely affect our results of operations, financial condition and liquidity” below. The cost to service our loans may also increase without a corresponding increase in our interest income.

Macroeconomic conditions may also cause net income to fluctuate and diverge from expectations of securities analysts and investors, who may have differing assumptions regarding the impact of these conditions on our business, and this may adversely impact the trading price of our common stock.

If aspects of our business, including the quality of our borrowers, are significantly affected by economic changes or any other conditions in the future, we cannot be certain that our policies and procedures for underwriting, processing and servicing loans will adequately adapt to such changes. If we fail to adapt to changing economic conditions or other factors, or if such changes affect our borrowers’ capacity to repay their loans, our results of operations, financial condition and liquidity would be materially adversely affected.

Our risk management processes and procedures may not be effective in mitigating our risks.

We have established processes and procedures intended to identify, measure, monitor and control the types of risk to which we are subject, including credit risk, market risk, liquidity risk, strategic risk and operational risk. Credit risk is the risk of loss that arises when a borrower fails to meet the terms of a loan. Market risk is the risk of loss due to changes in external market factors such as interest rates and prepayment rates. Liquidity risk is the risk that a company’s financial condition or overall safety and soundness are adversely affected by an inability, or perceived inability, to meet funding obligations and support business growth. Strategic risk is the risk from changes in the business environment, improper implementation of decisions or inadequate responsiveness to changes in the business environment. Operational risk is the risk of loss arising from inadequate or failed processes, people or systems, external events (for example, natural disasters) or compliance, reputational or legal matters and includes those risks as they relate directly to our company as well as to third parties with whom we contract or otherwise do business. See “Management’s Discussion and Analysis of

Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure about Market Risk,” “Business—Credit Risk” and “Business—Business Operations—Operational Controls” for additional information on the types of risks that affect our business.

We seek to monitor and control our risk exposure through a framework that includes our risk appetite, enterprise risk assessment process, risk policies, procedures and controls, reporting requirements, credit risk culture and governance structure. Management of our risks in some cases depends upon the use of analytical and/or forecasting models, including the proprietary scoring we use to supplement FICO scores when evaluating potential borrowers. If the models that we use to manage risk are ineffective at predicting future losses or are otherwise inadequate, we may incur unexpected losses or otherwise be adversely affected. In addition, the information we use in managing our credit and other risk may be inaccurate or incomplete as a result of error or fraud, both of which may be difficult to detect and avoid. There may also be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated including when processes are changed or new products and services are introduced. If our risk management framework does not effectively identify and control our risks, we could suffer unexpected losses or be adversely affected, and that could have a material adverse effect on our business, results of operations and financial condition.

We rely extensively on models to manage many aspects of our business, and if they are not accurate or are misinterpreted, it could have a material adverse effect on our business, results of operations and financial condition.

We rely extensively on models to manage many aspects of our business, including liquidity and capital planning, customer selection, credit and other risk management, pricing, reserving and collections management. Our models, including the proprietary scoring we use to supplement FICO scores when evaluating potential borrowers, may prove in practice to be less predictive than we expect for a variety of reasons, including as a result of errors in constructing, interpreting or using the models or the use of inaccurate assumptions (including failures to update assumptions appropriately or in a timely manner). Our assumptions may be inaccurate for many reasons including that they often involve matters that are inherently difficult to predict and beyond our control (for example, macroeconomic conditions and their impact on customer behavior) and they often involve complex interactions between a number of dependent and independent variables, factors and other assumptions. The errors or inaccuracies in our models may be material and could lead us to make incorrect or sub-optimal decisions in managing our business, and this could have a material adverse effect on our business, results of operations and financial condition.

Our business depends on our ability to successfully manage our credit risk, and failing to do so may result in higher charge-off rates.

Our success depends on our ability to manage our credit risk. The models and approaches we use to manage our credit risk may not accurately predict future charge offs for various reasons discussed in the preceding risk factor.

We remain subject to conditions in the consumer finance environment, and our ability to manage credit risk and avoid higher charge-off rates also may be adversely affected by economic conditions that may be difficult to predict, such as the recent financial crisis. Although delinquencies and charge offs remained stable in 2012 and 2013, they both may increase in the future and are likely to increase materially if economic conditions deteriorate. There can be no assurance that our credit underwriting and risk management strategies will enable us to avoid higher charge-off rates, or that our allowance for loan losses will be sufficient to cover actual losses.

A customer’s ability to repay us can be negatively impacted by increases in their payment obligations to other lenders under mortgage, credit card and other loans. In addition, a customer’s ability to repay us can be negatively impacted by a restricted availability of credit to consumers generally, including reduced and closed lines of credit. Customers with insufficient cash flow to fund daily living expenses and lack of access to other

sources of credit may be more likely to default on their payment obligations to us, resulting in higher losses in our portfolio. Our collection operations may not compete effectively to secure more of customers’ diminished cash flow than other competing creditors.

Our ability to manage credit risk also may be adversely affected by legal or regulatory changes (such as bankruptcy laws and collection regulations), competitors’ actions and consumer behavior, as well as inadequate collection operations staffing, techniques, models and performance of vendors such as collection agencies.

Our allowance for loan losses may prove to be insufficient to cover losses on our loans.

We maintain an allowance for loan losses (a reserve established through a provision for losses charged to expense) that we believe is adequate to cover losses inherent in our existing portfolio. The process for establishing an allowance for loan losses is critical to our results of operations and financial condition and requires complex models and judgments, including forecasts of economic conditions. Changes in economic conditions affecting borrowers, new information regarding our loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. We may underestimate or miscalculate our incurred losses and fail to maintain an allowance for loan losses sufficient to account for these losses. In cases where we modify a loan, if the modified loans do not perform as anticipated, we may be required to establish additional allowances on these loans.

Moreover, our regulators and independent auditors, as part of their supervisory or review and independent audit functions, periodically review our methodology, models and the underlying assumptions, estimates and assessments we use for calculating, and the adequacy of, our allowance for loan losses. For more information relating to the findings of our independent auditors, see “—If we are unable to achieve and maintain effective internal control over financial reporting, this could have a material adverse effect on our business” below. Our regulators and independent auditors, based on their judgment, may conclude that we should modify our methodology or models, increase our allowance for loan losses and/or recognize further losses.

We periodically review and update our methodology, models and the underlying assumptions, estimates and assessments we use to establish our allowance for loan losses to reflect our view of current conditions. We cannot assure you that our loan loss reserves will be sufficient to cover actual losses. Future increases in the allowance for loan losses or recognized losses (as a result of any internal review or update, regulatory guidance or otherwise) will result in a decrease in net income and capital and could have a material adverse effect on our business, results of operations and financial condition.

If we are unable to achieve and maintain effective internal control over financial reporting, this could have a material adverse effect on our business.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud or material error. Any failure to implement current internal controls or required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

In each of our 2011 and 2012 audits, our independent auditors identified a material weakness in the internal controls related to the methodology, accounting and management of loan loss reserves. The 2011 audit cited

miscalculations in the discounted cash flow models that management controls did not identify. The 2012 audit cited exclusion of foreclosure and partial charge-off balances in certain months, formula errors in models related to real estate loans and miscalculations used in the discounted cash flow curves.

In our 2013 audit, our independent auditors determined that progress had been made to enhance our controls and as a result, the material weakness relating to the loan loss reserves from the 2012 audit was reduced to a significant deficiency due to the implementation of a new internal control that independently recalculates allowance for loan losses each quarter and reconciles to the amounts derived by the existing financial models and to the general ledger. This significant deficiency in 2013 resulted from management not having sufficient documentation to demonstrate the level of detail and precision in its review of the internal controls used to calculate the allowance for loan losses. We are taking action to remediate these issues and improve our loan loss methodologies and procedures, but we cannot assure you that our management of our loan loss reserves will continue to improve.

The discovery of a material weakness and the disclosure of that fact, even if quickly remedied, could reduce the market value of shares of our common stock. Additionally, the existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiency and management may not be able to remediate any such material weaknesses or significant deficiency in a timely manner. Undetected material weaknesses in our internal controls could lead to financial statement restatements, which could have a material adverse effect on our business, financial condition and results of operation.

Our historical charge-off rates may not be predictive of our future charge-off rates.

Our historical net charge-off and delinquency rates may not be predictive of our future net charge-off and delinquency rates. Prior to 2011, we were part of a larger business within Citi known as CFNA. CitiFinancial Servicing, a business designed to support certain customers and loans that would benefit from expanded support, including loan modifications or restructurings rather than originate loans, was split from us and is reflected in discontinued operations in our Combined Financial Statements for the year ended December 31, 2011. Therefore, our financial results do not reflect the CitiFinancial Servicing charge-off rates.

In addition, approximately 87%, or $7.2 billion, of our loans as of September 30, 2014, were originated since the start of 2012. In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time, a process we refer to as “seasoning.” As a result, a portfolio of older loans will usually behave more predictably than a portfolio of newer loans. Furthermore, we have experienced extremely favorable credit conditions over the past three years.

As we seek to originate personal loans that maximize profitability in each state in which we operate, from time to time we will adjust our risk and loss tolerance to achieve our profitability goals. We believe that our net charge-off rates and 30+ day delinquency rates may increase in the near to mid-term as we increase our risk and loss tolerance in geographies where we have had additional pricing opportunities. If we have been or are unable to appropriately price risk or adjust for the factors described above or other factors that could affect the performance of our loan portfolio, our net charge-off and delinquency rates may increase at a rate that is not offset by higher finance charges and interest, in which case our results of operation and financial condition may be adversely affected.

If assumptions or estimates we use in preparing our financial statements are incorrect or are required to change, our reported results of operations and financial condition may be adversely affected.

We are required to use certain assumptions and estimates in preparing our financial statements under U.S. Generally Accepted Accounting Principles, or GAAP, including in determining allowances for loan losses, fair value of financial instruments, asset impairment, reserves related to litigation and other legal matters, valuation

of income and other taxes and regulatory exposures. In addition, significant assumptions and estimates are involved in determining certain disclosures required under GAAP, including those involving the fair value of our financial instruments. If the assumptions or estimates underlying our financial statements are incorrect, the actual amounts realized on transactions and balances subject to those estimates will be different, and this could have a material adverse effect on our results of operations and financial condition.

In addition, the Financial Accounting Standards Board, or FASB, is currently reviewing or proposing changes to several financial accounting and reporting standards that govern key aspects of our financial statements, including areas where assumptions or estimates are required. As a result of changes to financial accounting or reporting standards, whether promulgated or required by the FASB or other regulators, we could be required to change certain of the assumptions or estimates we previously used in preparing our financial statements, which could negatively impact how we record and report our results of operations and financial condition generally. For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and Note 2 (Summary of Significant Accounting Policies) of our audited Combined Financial Statements.

Competition in the consumer finance industry may adversely affect our ability to originate new loans.

The consumer finance industry is fragmented but also highly competitive. We compete with other consumer finance companies as well as other types of financial institutions such as national, regional and community banks, credit unions and online lending platforms that offer products similar to those that we offer. Some of these competitors may have considerably greater financial, technical and marketing resources than we do. Some competitors may also have a lower cost of funds, greater access to funding sources or other competitive advantages relative to us. These competitive pressures may adversely affect our ability to originate new loans and that could have a material adverse effect on our business, results of operations and financial condition.

Our decentralized branch system, and in particular our need to staff each of our branches with qualified personnel, may pose risks to our underwriting, servicing and collections processes.

We conduct significant operations through our branch offices, including key parts of the underwriting process. In processing a customer’s request for a loan, we rely on certain inputs and verifications in the underwriting process to be performed by individual personnel at the branch level. There can be no assurance that we will be able to attract and retain qualified personnel to perform these tasks. Limited staffing, and the resulting need to validate data elements remotely, may result in scenarios where fraud is not as readily detected, and also may result in heightened exposure to the possibility of employee misconduct. All approved loan applications require an in-person meeting at one of our branch offices to close on a loan. Our typical branch model averages 3.5 employees per branch, however in certain regions and under certain circumstances, there may be fewer employees present in the branch office. As a result of these staffing limitations, it may not always be possible for two of our employees to be present at the closing of a loan. If only a single employee is present at any such closing, this could result in heightened vulnerability to fraud risk.

In addition, our branches serve as an important component of our ongoing servicing and collections processes. Primary responsibility for servicing and collections processes resides with local branches until a loan is 60 days delinquent. Loan servicing is performed at the branch level and therefore requires a certain minimal level of staffing and accurate data inputs, such as ensuring accurate payment application, recognizing and recording customers’ requests for no further contact, keeping records of collection activities and, to the extent applicable, maintaining servicing-related documents (for example, deferments, adjustments of terms and customer correspondence). Consequently, the decentralized servicing model is vulnerable to errors that could affect any or all of the tasks required to service a loan. Furthermore, we seek to contact customers with delinquent loan balances soon after the loan becomes delinquent because historically, when collection efforts begin at an earlier stage of delinquency, there is a greater likelihood that the applicable loan will not be charged

off (though there is no assurance that such historical trend will continue). Consequently, during periods of increased delinquencies, it becomes extremely important that our branches are properly staffed and that the staff at our branches are properly trained to take appropriate action in an effort to bring the delinquent balance current and ultimately avoid the loan becoming charged off. If we are unable to attract and retain qualified credit and collection personnel, and maintain workloads for our collections personnel at a manageable level, it could result in increased delinquencies and charge offs on our loans.

Our insurance operations are subject to a number of risks and uncertainties, including claims, underwriting risks and dependence on a primary distribution channel.

Insurance claims and policyholder liabilities are difficult to predict and may exceed the related reserves set aside for claims (losses) and associated expenses for claims adjudication (loss adjustment expenses). Additionally, events such as pandemic disease and prolonged economic downturns could adversely affect our financial condition or results of operations. Other risks relating to our insurance operations include changes to laws and regulations applicable to us, as well as changes to the regulatory environment. Examples include changes to laws or regulations affecting capital and reserve requirements; frequency and type of regulatory monitoring and reporting; consumer privacy, use of customer data and data security; benefits or loss ratio requirements; insurance producer licensing or appointment requirements; and required disclosures to consumers. Moreover, our insurance companies are highly dependent on our lending operations for their source of business and product distribution. If our lending operations discontinue offering insurance products, including as a result of regulatory requirements, our insurance operations would have significantly reduced distribution opportunity for their products.

Failures or security breaches in our information systems or Internet platform, in the information systems of third parties or in our branches or destruction of physical records could adversely affect our reputation and could subject us to significant costs and regulatory penalties.

Our operations rely heavily on the secure processing, storage and transmission of confidential customer and other information in our computer systems and networks. Each branch office and our Internet application portal is part of an electronic information network that is designed to permit us to originate, service and trace collections and perform other tasks that are part of our everyday operations. Our computer systems, software and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses or other malicious code that could result in disruption to our business or the loss or theft of confidential information, including customer information. Any failure, interruption or breach in our cyber security, including any failure of our back-up systems or failure to maintain adequate security surrounding customer information, could result in reputational harm, disruption in the management of our customer relationships or the inability to originate, process and service our loans. Further, any of these cyber security and operational risks could result in a loss of customer business, subject us to additional regulatory scrutiny or expose us to lawsuits by customers for identity theft or other damages resulting from the misuse of their personal information and possible financial liability, any of which could have a material adverse effect on our results of operations, financial condition and liquidity. Regulators may also impose penalties or require remedial action if they identify weaknesses in our security systems, and we may be required to incur significant costs to increase our cyber security to address any vulnerabilities that may be discovered or to remediate the harm caused by any security breaches.

As part of our business, and pursuant to applicable law, we may share confidential customer information and proprietary information with customers, vendors, service providers and business partners. The information systems of these third parties may be vulnerable to security breaches and we may not be able to ensure that these third parties have appropriate security controls in place to protect the information we share with them. If our proprietary or confidential customer information is intercepted, stolen, misused or mishandled while in possession of a third party, it could result in reputational harm to us, loss of customer business and additional regulatory scrutiny, and it could expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our results of operations, financial condition and liquidity. Although we have insurance that is intended to cover certain losses from such events, there can be no assurance that such insurance will be adequate or available.

Our branch offices have physical customer records necessary for day-to-day operations that contain extensive confidential information about our customers, including financial and personally identifiable information. We also retain physical and electronic records in various storage locations outside of our branch offices. The loss or theft of customer information and data from our branch offices or other storage locations could subject us to additional regulatory scrutiny and penalties, and could expose us to civil litigation and possible financial liability, which could have a material adverse effect on our results of operations, financial condition and liquidity. In addition, if we cannot locate original documents (or copies, in some cases), we may not be able to collect on the loans for which we do not have documents.

Our credit insurance operations share the same security and privacy concerns as our lending operations. In addition, our insurance operations are subject to compliance with state insurance privacy regulations and federal law in the form of the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Among other things, HIPAA establishes strict privacy standards for the use and disclosure of individuals’ health information. One of the goals of HIPAA is to assure individuals’ health information is properly protected. The insurance operation has implemented the necessary systemic controls, policies and procedures to ensure compliance with HIPAA, and does not share any individual’s health information collected during the claims process. The Office for Civil Rights within the Health and Human Services Department is responsible for implementing and enforcing the HIPAA privacy rules and should violations be found, we may be subject to civil monetary penalties and may have to incur remediation costs.

Disruptions in the operation of our computer systems and data centers could have a material adverse effect on our business.

Our technology systems are a critical component of our business. Our ability to deliver products and services to our customers and operate our business in compliance with applicable laws depends on the efficient and uninterrupted operation of our computer systems and data centers, as well as those of our third-party service network providers. These computer systems and data centers may encounter service interruptions at any time due to system, network or software failure, operator negligence or improper operation by employees, physical or electronic loss of data or security breaches, computer viruses, natural disasters or other reasons. In particular, given that we currently maintain records of loans by hard copy only, our employees may inadvertently lose records that could ultimately result in the potential breach of our customers private information. In addition, the implementation of technology changes and upgrades to maintain current and integrate new systems may also cause service interruptions, transaction processing errors and system conversion delays and may cause our failure to comply with applicable laws. Any failure of our systems due to any of these causes, if not supported by our disaster recovery plan, could cause an interruption in operations and could have a material adverse effect on our business.

Following this offering, we will migrate, and in some cases, establish with third parties, key parts of our technology infrastructure. These infrastructure changes may cause disruptions, systems interruptions, transaction processing errors and system conversion delays. For the duration of the transition services agreement with Citi or until we complete our transition to our own system, whichever is earlier, Citi will provide certain services to us relating to technology and business processes. The complexities of these arrangements, the services provided and the transition to independent operations could result in unanticipated expenses, disruptions to our operations and other adverse consequences, all of which could have a material adverse effect on our business.

Our transition to, and quality of, new technology platforms may not meet expectations and may hinder us from making technological improvements as quickly as some of our competitors, which could harm our ability to compete with our competitors and adversely affect our results of operations, financial condition and liquidity.

The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial and lending institutions to better serve customers and reduce costs.

We intend to consolidate customer data from our current origination system and account management platform into a hosted third-party consolidated repository to be used by our finance, marketing and risk management reporting teams. Given the complexity and significance of this proposed transition, including the large volume of customer data within our systems that will need to be accessed, consolidated and migrated, our customer relationships, reputation and overall business could be severely damaged if the consolidation and migration is poorly executed. Furthermore, we will partner with third parties to coordinate the consolidation and migration of the customer data and to manage our new technology platform going forward, therefore exposing us to a risk that such third parties do not successfully perform the tasks necessary for a successful consolidation and migration of customer data and management of the platform thereafter. In addition, we expect to incur additional expenses as a result of our near-term plans to run dual technology platforms as we implement our new technology platform while maintaining our existing technology platform, and if we experience any delay or technical problems as a result of moving, we may incur greater expenses than anticipated.

Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. We expect that new technologies and business processes applicable to the consumer finance industry will continue to emerge, and these new technologies and business processes may be better than those we currently use. We cannot assure you that we will be able to sustain our investment in new technology, and we may not be able to effectively implement new technology-driven products and services as quickly as some of our competitors or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could cause disruptions in our operations, harm our ability to compete with our competitors and adversely affect our results of operations, financial condition and liquidity.

If we are alleged to have infringed upon the intellectual property rights owned by others or are not able to manage and protect our intellectual property, our business and results of operations could be adversely affected.

Competitors or other third parties may allege that we, or consultants or other third parties retained or indemnified by us, infringe on their intellectual property rights. We also may face allegations that our employees have misappropriated intellectual property of their former employers or other third parties. Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, an assertion of an infringement claim against us may cause us to spend significant amounts to defend the claim (even if we ultimately prevail), pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property, cease offering certain products or services, or incur significant license, royalty or technology development expenses. Moreover, it has become common in recent years for individuals and groups to purchase intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies like ours. Even in instances where we believe that claims and allegations of intellectual property infringement against us are without merit, defending against such claims is time consuming and expensive and could result in the diversion of time and attention of our management and employees. In addition, although in some cases a third party may have agreed to indemnify us for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. In addition to infringement claims, we may also become involved in disputes with others regarding the ownership of intellectual property rights. For example, to the extent that we jointly own intellectual property with other parties, disagreements may arise as to the ownership or use of the intellectual property governed by such relationships. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.

Moreover, we rely on a variety of measures to protect our intellectual property and proprietary information, including copyrights, trademarks, trade secrets and controls on access and distribution. These measures may not prevent misappropriation or infringement of our intellectual property or proprietary information and a resulting loss of competitive advantage, and in any event, we may be required to litigate to protect our intellectual property and proprietary information from misappropriation or infringement by others, which is expensive, could cause a diversion of resources and may not be successful. Third parties may challenge, invalidate or circumvent our

intellectual property, or our intellectual property may not be sufficient to provide us with competitive advantages. For example, words and devices contained in our trademarks and trade names (including the phrase “One Main”) are also found in the trade names and trademarks of a significant number of third parties. This has resulted in, and may in the future result in, challenges to our ability to use our trademarks and trade names in particular geographical areas or lines of business. Such challenges could impede our future expansion into new geographic areas or lines of business and could limit our ability to realize the full value of our trademarks and trade names. We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, which is expensive, could cause a diversion of resources and may not prove successful. Existing use by others of trademarks and trade names that are similar to ours could limit our ability to challenge third parties when their use of such marks or names may cause consumer confusion, negatively affect consumers’ perception of our brand and products or dilute our brand identity.

Our competitors or other third parties may also independently design or develop similar technology, or otherwise duplicate our services or products such that we could not assert our intellectual property rights against them. In addition, our contractual arrangements may not effectively prevent disclosure of our intellectual property or confidential and proprietary information or provide an adequate remedy in the event of an unauthorized disclosure. The loss or diminution of our intellectual property protection or the inability to obtain third-party intellectual property could harm our business and ability to compete.

Litigation and regulatory actions could subject us to significant fines, penalties, judgments and requirements resulting in increased expenses.

In the normal course of business, from time to time, we have been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with our business activities. Certain of the legal actions include claims for substantial compensatory and/or punitive damages, or claims for indeterminate amounts of damages. In addition, while the arbitration provision in our customer agreements historically has limited our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing our arbitration clause in the future. There may also be legislative, administrative or regulatory efforts to directly or indirectly prohibit the use of pre-dispute arbitration clauses, including by the Consumer Financial Protection Bureau, or the CFPB, or we may be compelled as a result of competitive pressure or reputational concerns to voluntarily eliminate pre-dispute arbitration clauses. Recently, the Department of Justice has brought actions against financial institutions under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or FIRREA. Under FIRREA, the Department of Justice may obtain civil penalties for fraudulent conduct.

We are also involved, from time to time, in reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our business, or collectively, regulatory matters, which could subject us to significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. The current environment of additional regulation, increased regulatory compliance efforts and enhanced regulatory enforcement has resulted in significant operational and compliance costs and may prevent or make it less attractive for us to continue providing certain products and services. There is no assurance that these governmental actions will not, in the future, affect how we conduct our business and in turn have a material adverse effect on our business, results of operations and financial condition.

We contest liability and/or the amount of damages as appropriate in each pending matter. The outcome of pending and future matters could be material to our results of operations, financial condition and cash flows depending on, among other factors, the level of our earnings for that period, and could adversely affect our business and reputation. For a discussion of certain legal proceedings, see Note 16 (Contingencies) to our audited Combined Financial Statements.

Damage to our reputation could negatively impact our business.

Recently, financial services companies have been experiencing increased reputational risk as consumers take issue with certain of their practices or judgments. Maintaining a positive reputation is critical to our

attracting and retaining customers, investors and employees. Harm to our reputation can arise from many sources, including employee misconduct, misconduct by outsourced service providers or other counterparties, litigation or regulatory actions, failure by us to meet minimum standards of service and quality, inadequate protection of customer information, and compliance failures. Negative publicity regarding us (or others engaged in a similar business or activities) or Citi, whether or not accurate, may damage our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

Our business could be adversely affected if we are unable to attract, retain and motivate key officers and employees.

Our success depends, in large part, on our ability to retain, recruit and motivate key officers and employees. Our senior management team has significant industry experience and would be difficult to replace. We may not be able to attract and retain qualified personnel to replace or succeed members of our senior management team or other key personnel following the completion of this offering or at any other time; however, we do not anticipate any significant changes to our senior management team, following the completion of this offering. Rules implementing the executive compensation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, may limit the type and structure of compensation arrangements that we may enter into with our most senior executives. These restrictions could negatively impact our ability to compete with other companies in recruiting, retaining and motivating key personnel. Failure to retain talented senior leadership could have a material adverse effect on our business, results of operations and financial condition.

Employee misconduct or misconduct by third parties we employ could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny and reputational harm.

Our reputation is critical to maintaining and developing relationships with our existing and potential customers and third parties with whom we do business. There is a risk that our employees or third parties that we employ could engage in misconduct that adversely affects our business. For example, if an employee or a third party that we employ were to engage in, or be accused of engaging in, illegal or suspicious activities including fraud or theft, we could suffer direct losses from the activity, and in addition we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial condition, customer relationships, and ability to attract future customers. Employee or third-party misconduct could prompt regulators to allege or to determine based upon such misconduct that we have not established adequate supervisory systems and procedures to inform employees of applicable rules or to detect and deter violations of such rules. Our branches have experienced employee fraud from time to time, and it is not always possible to deter employee or third-party misconduct. The precautions we take to detect and prevent misconduct may not be effective in all cases. Misconduct by our employees or by third parties that we employ, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business.

The geographic distribution of our loan portfolio may increase the risk of delinquencies and charge-offs on our loans.

Certain geographic concentrations of our loan portfolio may increase as we adjust our risk and loss tolerance and strategy to achieve our profitability goals. We have the greatest concentration of personal loans outstanding in Texas, North Carolina, Pennsylvania, California and Ohio, but no state accounts for more than 10% of our personal loans outstanding. Any geographic concentration may expose us to an increased risk of loss if that geographic region experiences low employment rates, natural disasters or weak economic conditions. Certain regions of the United States from time to time will experience weaker economic conditions and higher unemployment and, consequently, loans originated in such regions will experience higher rates of delinquency and loss than on similar loans nationally. In addition, natural disasters in specific geographic regions may result in higher rates of delinquency and loss in those areas. In the event that a significant portion of our loans are originated in states where weak economic conditions, low employment rates or natural disasters affect such states in particular, it could adversely impact the delinquency and default rates of our loan pool.

We are more susceptible to fluctuations and risks particular to U.S. consumer credit than a more diversified company. For example, our business is particularly sensitive to macroeconomic conditions that affect the U.S. economy, consumer spending and consumer credit, as well as risks associated with increased regulations and legal and other regulatory actions targeted at consumer credit or the specific products that we offer.

If our loans fail to meet certain criteria or characteristics or under other circumstances, we may be required to repurchase the loans that we sell or securitize, which could adversely affect our results of operations, financial condition and liquidity.

To date, we have completed two securitizations of our personal loan portfolio. The documents governing our securitizations contain provisions that require us to repurchase loans under certain circumstances. While our securitization documents vary, they contain customary provisions that require us to repurchase loans if our representations and warranties concerning loan quality, originations, underwriting and servicing techniques and circumstances are inaccurate or not complied with. We believe that many holders of our loans are particularly aware of the conditions under which originators must repurchase loans and would likely enforce any repurchase remedies that they may have.

We face significant risks in implementing our growth strategy, some of which are outside our control.

We intend to grow our business through new origination channels, capabilities and products. Our ability to execute this growth strategy is subject to significant risks, some of which are beyond our control, including:

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the inherent uncertainty regarding general economic conditions;

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our ability to generate returns on our investments in our business;

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the prevailing laws and regulatory environment of each state in which we operate or seek to operate, and, to the extent applicable, federal laws and regulations, which are subject to change at any time;

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the degree of competition in new markets and its effect on our ability to attract new customers;

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our ability to recruit qualified personnel, in particular in areas where we face a great deal of competition; and

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our ability to obtain and maintain approvals from Citi under the stockholder’s agreement that we will enter into with Citi prior to this offering, or the Stockholder’s Agreement, or any regulatory approvals, government permits, or licenses that may be required on a timely basis.

As part of our strategy to grow our business, we may also execute strategic acquisitions or partnerships or make other strategic investments in businesses, products, technologies or platforms to enhance or grow our business. These strategic investments may also present integration, technical, legal, regulatory or other challenges that we may not be able to manage effectively. The planning and integration of an acquisition, partnership or investment may divert employee time and other resources which could impair our ability to focus on our business.

We may not be able to execute our growth strategy due to lack of acceptance by partners, customers or employees, higher than forecasted costs, lengthy transition periods, synergies or savings not being realized and a variety of other factors. This may result in a delay or unrealized benefit, or in some cases, increased costs or other unforeseen risks to our business.

We may be unable to successfully develop and commercialize new or enhanced products.

A key part of our strategy is to broaden our product offerings, but realizing benefits from this strategy is uncertain. We may not be permitted to broaden our product offerings due to regulatory or other constraints. We may not assign the appropriate level of resources, priority or expertise to the development and commercialization

of new products. Our success will be dependent on factors such as partner and customer acceptance, adoption and usage, competition, the effectiveness of marketing programs, the availability of appropriate technologies and business processes and regulatory approvals. Success of a new product, service or enhancement also may depend upon our ability to deliver it on a large scale, which may require a significant investment. In any event, we may not realize the benefit of new products for many years or competitors may introduce more compelling products, services or enhancements. Our failure to successfully develop and commercialize new or enhanced products could have a material adverse effect on our business, results of operations and financial condition.

Natural disasters, acts of war or terrorism or other external events could significantly impact our business.

A significant natural disaster, such as an earthquake, fire, power outage, flood or other catastrophic event, widespread disease or pandemics, acts of war or terrorism or other adverse external events could have a significant impact on our ability to conduct business. In addition, such events could impair the ability of borrowers to repay outstanding loans, cause significant property damage, result in loss of revenue, impair our portfolio performance and ability to service and collect receivables, or cause us to incur additional expenses. The occurrence of such events in the United States and the political and/or military response to any such events may have an adverse effect on general economic conditions, consumer and business confidence and general market liquidity. The occurrence of any of these events in the future could have a material adverse effect on our business, financial condition or results of operations.

Risks Relating to Regulation

Our business is subject to extensive government regulation, supervision, examination and enforcement, which could adversely affect our business, results of operations and financial condition.

Our business, including our relationships with our customers and certain third-party vendors, is subject to extensive regulation, supervision and examination under U.S. federal and state laws and regulations. These laws and regulations cover all aspects of our business, including lending practices, treatment of our customers, customer privacy and information security, transactions with affiliates and conduct and qualifications of personnel. As a subsidiary of a bank holding company, we are subject to extensive regulation, supervision and examination by the Board of Governors of the Federal Reserve System, or the Federal Reserve Board. We are also currently and in the future may be regulated by the CFPB.

New laws or regulations or policy changes in enforcement practices of existing laws or regulations applicable to our businesses may be imposed, which could adversely impact our profitability, limit our ability to continue existing or pursue new business activities, require us to change certain of our business practices or alter our relationships with customers, affect retention of our key personnel, or expose us to additional costs (including increased compliance costs). These changes may also require us to invest significant management attention and resources to make any necessary changes and could adversely affect our business, results of operations and financial condition. For example, the CFPB has broad authority over the businesses in which we engage, including authority over the actions taken by third parties that we hire. In the past, when third parties that we have contracted with did not adequately perform their contractual obligations for us, we experienced administrative difficulty, negative press and increased scrutiny from the CFPB. See “—The CFPB is a relatively new agency, and there continues to be uncertainty as to how the agency’s actions will impact our business” below.

Loans must comply with applicable federal and state consumer protection laws. If any of our loans do not comply with such laws, those loans may be invalid or unenforceable. Therefore, any violation of such laws or any allegations of such a violation with respect to a loan could result in our modifying our methods of doing business which would impair our ability to make loans and could adversely affect our business, results of operations and financial condition.

We are also subject to potential enforcement, supervisions and other actions that may be brought by state attorneys general or other state enforcement authorities and other governmental agencies. Any such actions could subject us to civil money penalties, customer remediation and increased compliance costs, as well as damage our

reputation and brand and could limit or prohibit our ability to offer certain products and services or engage in certain business practices. For a discussion of risks related to actions or proceedings brought by regulatory agencies, see “Risks Relating to Our Business—Litigation and regulatory actions could subject us to significant fines, penalties, judgments and requirements resulting in increased expenses.”

The CFPB is a relatively new agency, and there continues to be uncertainty as to how the agency’s actions will impact our business.

The CFPB, which commenced operations in July 2011, has broad authority over the businesses in which we engage to prevent “unfair, deceptive or abusive acts or practices” through its regulatory, supervisory and enforcement authority. This includes authority to write regulations under federal consumer financial protection laws, to examine certain financial institutions, including us, for compliance with such laws and to enforce those laws. The CFPB is authorized to remediate violations of consumer protection laws in a number of ways, including collecting civil money penalties and fines and providing for customer restitution.

There continues to be uncertainty as to how the CFPB’s strategies and priorities, including in both its examination and enforcement processes, will impact our businesses and our results of operations going forward. Actions by the CFPB could result in requirements to alter or cease offering affected products and services, making them less accessible to our customers and restricting our ability to offer them.

If the CFPB changes regulations that were adopted in the past by other regulators and then transferred to the CFPB by the Dodd-Frank Act, modifies through supervision or enforcement past related regulatory guidance or interprets existing regulations in a different or stricter manner than they have been interpreted in the past by us, the industry or other regulators, our compliance costs, risk of additional enforcement actions, fines, penalties and litigation exposure could increase. If future regulatory or legislative restrictions or prohibitions are imposed that affect our ability to offer certain of our products or require us to make significant changes to our business practices, and we are unable to develop compliant alternatives with acceptable returns, these restrictions could have a material adverse impact on our financial condition and results of operations.

The Dodd-Frank Act authorizes state officials to enforce regulations issued by the CFPB and to enforce the Dodd-Frank Act’s general prohibition against unfair, deceptive or abusive practices. This could make it more difficult than in the past for federal financial regulators to declare state laws that differ from federal standards to be preempted. To the extent that states enact requirements that differ from federal standards or state officials and courts adopt interpretations of federal consumer laws that differ from those adopted by the CFPB, we may be required to alter or cease offering products or services in some jurisdictions, which would increase compliance costs, we may be subject to a higher risk of state enforcement actions.

To date, the CFPB has indicated a strong interest in debt collection practices, sales of ancillary products, servicing transfers and customer complaints, which may impact our ability to originate and collect on loans. The CFPB and other regulators recently have brought enforcement actions against lenders for the sale of certain ancillary products, such as debt protection products that cancel or suspend a borrower’s monthly payment or total indebtedness if certain life events occur. Regulators have questioned such products’ value and the tactics used by the lender to sell these bundled products. The optional credit insurance products that we offer have some similar benefits as debt protection products and are largely subject to state regulation such as state mandated loss ratios, premium rates, sales disclosures and free look periods. Although we have established sales practices that typically go beyond current state law requirements, the CFPB or other regulators may challenge our sales practices in regard to optional credit insurance or some other ancillary products.

As a result of the creation of the CFPB, and other changes occurring in the regulatory environment, the amount of fees and interest we collect, the number of optional products we sell and the number of new loans we originate could decrease, which could have a material adverse effect on our results of operations and financial condition.

The Dodd-Frank Act has had, and may continue to have, a significant impact on our business, financial condition and results of operations.

The Dodd-Frank Act, which, among other provisions, established the CFPB, was enacted on July 21, 2010. While certain provisions in the Dodd-Frank Act were effective immediately, many of the provisions require implementing regulations to be effective. The Dodd-Frank Act and regulations promulgated thereunder have had, and may continue to have, a significant adverse impact on our business, results of operations and financial condition. For example, the Dodd-Frank Act and related regulations restrict certain business practices, impose additional costs on us (including increased compliance costs and increased costs of funding raised through the issuance of asset-backed securities), limit the fees we can charge for services and affect the value of our assets. The Dodd-Frank Act also may adversely affect the securitization market because it requires, among other things, that a securitizer generally retain not less than 5% of the credit risk for certain types of securitized assets that are transferred, sold, or conveyed through issuance of asset-backed securities. These changes could result in additional costs or limit our ability to securitize loans. For a description of certain other provisions of the Dodd-Frank Act and other legislative and regulatory developments see “Business—Regulation.” Federal agencies continue to promulgate regulations to implement the Dodd-Frank Act, and these regulations may continue to have a significant adverse impact on our business, financial condition and results of operations.

Many provisions of the Dodd-Frank Act require the adoption of additional rules to implement. In addition, the Dodd-Frank Act mandated multiple studies, many of which resulted in additional legislative or regulatory action, and the CFPB has also been mandated to execute further studies. For example, in December 2013 the CFPB published preliminary research on the use of pre-dispute arbitration clauses and it is in the process of preparing a statutorily mandated report to be delivered to Congress. As a result, the ultimate impact of the Dodd-Frank Act and its implementing regulations remains unclear and could have a material adverse effect on our business, results of operations and financial condition.

Because we are controlled by Citi we are subject to banking regulations and additional regulatory scrutiny.

Citi’s relationship and good standing with its regulators are important to the conduct of our business. Citi is a bank holding company and a “financial holding company” regulated by the Federal Reserve Board under the Bank Holding Company Act of 1956, or the BHC Act. The BHC Act imposes regulations and requirements on Citi and on any company that the Federal Reserve Board deems to be controlled by Citi. Because we are controlled by Citi, we are currently subject to regulation, supervision, examination and potential enforcement action by the Federal Reserve Board. Following this offering, we will continue to be controlled by Citi for bank regulatory purposes and, therefore, we will continue to be subject to regulation by the Federal Reserve Board and to most banking laws, regulations and orders that apply to Citi. The regulation of Citi and its controlled companies under applicable banking laws is intended primarily for the protection of Citi’s banking subsidiaries, their depositors, the deposit insurance fund of the Federal Deposit Insurance Corporation, or the FDIC, and the banking system as a whole, rather than for the protection of stockholders or creditors of Citi or us. For example, for as long as we are controlled by Citi, regulations will limit the ability of bank subsidiaries of Citi to extend credit to, or conduct other transactions with, us.

We will remain subject to this regulatory regime until Citi is no longer deemed to control us for bank regulatory purposes, which may not occur until Citi has significantly reduced its ownership interest in us. The ownership level at which the Federal Reserve Board would consider us no longer controlled by Citi will depend on the circumstances at that time (such as the extent of our relationships with Citi) and could be less than 5%.

Citi and its subsidiaries are also subject to examination by various banking regulators, which results in examination reports and ratings that may adversely impact the conduct and growth of our businesses. In the United States, Citi is regulated by the Federal Reserve Board, the Office of the Comptroller of the Currency and the FDIC, and we are regulated by the Federal Reserve Board. The Federal Reserve Board has broad enforcement authority over us, including the power to prohibit us from conducting any activity that, in the Federal Reserve Board’s opinion, is unauthorized or constitutes an unsafe or unsound practice in conducting our business. The

Federal Reserve Board may also impose substantial fines and other penalties for violations of applicable banking laws, regulations and orders. The failure of Citi to maintain its status as a financial holding company could result in substantial limitations on certain of our activities and our growth. In addition, pursuant to the Stockholder’s Agreement, we will agree not to take any action or fail to take any action that would result in Citi being in non-compliance with the BHC Act or any other applicable bank regulatory law, rule, regulation, guidance, order or directive.

As a controlled subsidiary of Citi, we are subject to the Dodd-Frank Act’s “Volcker Rule” prohibitions on investing in or sponsoring “covered funds,” which means that by July 21, 2015 our securitizations of loans will need to be structured to qualify for an exclusion from the definition of an investment company under the Investment Company Act of 1940, or the Investment Company Act, such as the Investment Company Act Rule 3a-7 exclusion for certain issuers of asset-backed securities or, if we intend to depend upon another exclusion, will need to comply with the provisions of the Volcker Rule regulations. Even after we are no longer a controlled subsidiary of Citi, we expect that we will still want to structure our loan securitizations so as to not be covered funds under the Volcker Rule in order for us to sell interests to banking entities. Currently, neither of our securitizations would be considered a covered fund.

We sell loans, including charged off loans and loans where the borrower is in default. This practice could subject us to heightened regulatory scrutiny, which may expose us to legal action, cause us to incur losses and/or limit or impede our collection activity.

As part of our business model, we sell loans, including those that may have been charged off as uncollectible. The CFPB and other regulators recently have significantly increased their scrutiny of debt sales, especially delinquent and charged-off debt. The CFPB has criticized sellers of debt for insufficient documentation to support and verify the validity or amount of the debt. It has also criticized debt collectors for, among other things, collection tactics, attempting to collect debts that are no longer valid, misrepresenting the amount of the debt and not having sufficient documentation to verify the validity or amount of the debt. Our loan sales could expose us to lawsuits or fines by regulators if we do not have sufficient documentation to support and verify the validity and amount of the loans underlying these transactions, or if we or purchasers of our loans use collection methods that are viewed as unfair or abusive. In addition, our collections could suffer and we may incur additional expenses if we are required to change collection practices or stop collecting on certain debts as a result of a lawsuit or action on the part of regulators. For more information with respect to the regulatory framework affecting our businesses, see “Business—Regulation.”

Our businesses are subject to extensive regulation in each of the states in which we conduct our business.

Our businesses are subject to numerous state and local laws and regulations. The extent of state regulation of our lending business varies by jurisdiction but relates primarily to the following: limits on the term of a loan, amounts, interest rates and charges on the loan; whether and under what circumstances insurance and other ancillary products may be offered to consumers in connection with a lending transaction; the manner in which we use personal data; collections efforts; and other consumer protections. The extent of state regulation of our insurance business varies by product and by jurisdiction, but relates primarily to the following: licensing; conduct of business; periodic examination of the affairs of insurers; form and content of required financial reports; standards of solvency; limitations on dividend payments and other related party transactions; types of products offered; approval of policy forms and premium rates; permissible investments; deposits of securities for the benefit of policyholders; reserve requirements for unearned premiums, losses and other purposes; and claims processing.

All of our operations are subject to regular examination by state regulators, and as a whole, our entities are subject to several hundred regulatory examinations in a given year. These examinations may result in requirements to change our policies or practices, and in some cases, we are required to pay monetary fines or make reimbursements to customers. Many state regulators and some federal regulators have indicated an

intention to pool their resources in order to conduct examinations of licensed entities, including us, at the same time (referred to as a “multi-state” examination). This could result in more in-depth examinations, which could be more costly and lead to more significant enforcement actions.

States also have various loan servicing or debt collection licensing and regulatory requirements. To the extent that they exist, we must comply with state licensing and various operational compliance requirements in all of the states in which we offer our services. These requirements include, among others, the form and content of contracts and other documentation, controls and limitations on marketing and solicitation practices, collection practices, disclosures and record keeping. We are sensitive to regulatory changes that may increase our costs through stricter licensing laws, disclosure laws or increased fees. The failure to satisfy these regulatory requirements could have a material adverse effect on our operations. In addition, changes in laws or regulations applicable to us could subject us to additional licensing, registration and other regulatory requirements in the future or could adversely affect our ability to operate or the manner in which we conduct business.

A material failure to comply with applicable laws and regulations could result in regulatory actions, lawsuits and damage to our reputation, which could have a material adverse effect on our results of operations, financial condition and liquidity. For more information with respect to the regulatory framework affecting our businesses, see “Business—Regulation.”

Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.

We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by them. For example, for so long as we are an affiliate of Citi, we are subject to the Gramm-Leach-Bliley Act, or the GLBA, and implementing regulations and guidance. Among other things, the GLBA: (i) imposes certain limitations on the ability of financial institutions to share consumers’ nonpublic personal information with nonaffiliated third parties, (ii) requires that financial institutions provide certain disclosures to consumers about their information collection, sharing and security practices and affords customers the right to “opt out” of the institution’s disclosure of their personal financial information to nonaffiliated third parties (with certain exceptions) and (iii) requires financial institutions to develop, implement and maintain a written comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of the financial institution’s activities, and the sensitivity of customer information processed by the financial institution as well as plans for responding to data security breaches.

Moreover, various federal banking regulatory agencies and states have enacted data security breach notification requirements with varying levels of individual, consumer, regulatory and/or law enforcement notification in certain circumstances in the event of a security breach.

Furthermore, legislators and/or regulators are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer and/or employee information, and some of our current or planned business activities. This includes increased privacy-related enforcement activity at the federal level, by the Federal Trade Commission, as well as at the state level, such as with regard to mobile applications. This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.

Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting customer and/or employee data to which we are subject could result in higher compliance and technology costs. Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions and damage to our reputation and our brand.

Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.

We regularly use third-party vendors and subcontractors as part of our business. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by our federal regulators (the Federal Reserve Board and the CFPB). Regulation requires us to enhance our due diligence, ongoing monitoring and control over our third-party vendors and subcontractors and other ongoing third-party business relationships. In certain cases we may be required to renegotiate our agreements with these vendors and/or their subcontractors to meet these enhanced requirements, which could increase our costs. We expect that our regulators will hold us responsible for deficiencies in our oversight and control of our third-party relationships and for the performance of the parties with which we have these relationships. As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third-party vendors and subcontractors or other ongoing third-party business relationships, or that such third parties have not performed appropriately, we could be subject to enforcement actions.

We are subject to certain banking regulations that limit our business activities, including our ability to pay dividends and enter into certain business transactions without the approval of the Federal Reserve Board.

Because our controlling stockholder, Citi, is a bank holding company, we are subject to certain banking regulations, including oversight by the Federal Reserve Board and the CFPB. Such banking regulations could limit the activities and the types of businesses that we may conduct. The Federal Reserve Board has broad enforcement authority over bank holding companies and their subsidiaries. The Federal Reserve Board could exercise its power to restrict Citi from having a non-bank subsidiary that is engaged in any activity that, in the Federal Reserve Board’s opinion, is unauthorized or constitutes an unsafe or unsound business practice, and could exercise its power to restrict us from engaging in any such activity. This power includes the authority to prohibit or limit the payment of dividends if, in the Federal Reserve Board’s opinion, such payment would constitute an unsafe or unsound practice. Moreover, certain banks and bank holding companies, including Citi, are required to perform a stress test and submit a capital plan to the Federal Reserve Board on an annual basis, and to receive a notice of non-objection to the plan from the Federal Reserve Board before taking capital actions, such as paying dividends, implementing common equity repurchase programs or redeeming or repurchasing capital instruments. In March 2014, the Federal Reserve Board rejected Citi’s capital plan, and for as long as we are controlled by Citi for bank regulatory purposes, approval of the Federal Reserve Board may be required before we may pay a dividend. There can be no assurance whether the Federal Reserve Board will accept Citi’s next capital plan, and even if it does, there can be no assurance that the Federal Reserve Board will not impose restrictions on our ability to pay dividends. The Federal Reserve Board may also impose substantial fines and other penalties for violations that we may commit, and has the authority to approve or disallow acquisitions or other activities we may contemplate, which may limit our future growth plans. To the extent that we are subject to banking regulation, we could be at a competitive disadvantage because some of our competitors are not subject to these limitations.

Risks Relating to Our Indebtedness

Our indebtedness is significant, which could affect our ability to meet our obligations under our debt instruments and could materially and adversely affect our business and ability to react to changes in the economy or our industry.

We currently have a significant amount of indebtedness. As of September 30, 2014, we had $5.4 billion of indebtedness outstanding (including securitizations and unsecured borrowings from Citi). Interest expense on our indebtedness was $228 million in 2013. There can be no assurance that we will be able to repay or refinance our debt in the future.

The amount of indebtedness could have important consequences, including the following:

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it may require us to dedicate a significant portion of our cash flow from operations to the payment of the principal of, and interest on, our indebtedness, which reduces the funds available for other purposes, including loan originations;

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it could limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing regulatory, business and economic conditions;

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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;

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it may require us to seek to change the maturity, interest rate and other terms of our existing debt;

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it may place us at a competitive disadvantage compared to other, less leveraged competitors;

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it may cause a downgrade of our debt and long-term corporate ratings if and after those ratings are obtained;

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it may cause us to be more vulnerable to periods of negative or slow growth in the general economy or in our business; and

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it may increase our cost of borrowing.

In addition, meeting our anticipated liquidity requirements is contingent upon our continued compliance with our existing debt agreements. An event of default or declaration of acceleration under one of our existing debt agreements could also result in an event of default and declaration of acceleration under certain of our other existing debt agreements. Such an acceleration of our debt would have a material adverse effect on our liquidity and our ability to continue as a going concern. Furthermore, our existing debt agreements do not restrict us from incurring significant additional indebtedness. If our debt obligations increase, whether due to the increased cost of existing indebtedness or the incurrence of additional indebtedness, the consequences described above could be magnified.

Our obligations under the indenture governing our unsecured debt restrict our current operations and may restrict our future operations.

The indenture governing our unsecured debt contains, and future debt agreements may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including, but not limited to, restrictions on our ability to:

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incur or guarantee additional indebtedness or issue certain preferred stock;

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make dividend payments or distributions on or purchases of our equity interests;

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make other restricted payments or investments;

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create certain liens;

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make certain dispositions of assets;

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engage in certain transactions with affiliates;

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sell securities of our subsidiaries;

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create restrictions on our restricted subsidiaries’ ability to pay dividends or make other payments; and

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merge, consolidate or sell all or substantially all of our properties and assets.

For further information, see “Description of Certain Indebtedness—6.75% Notes and 7.25% Notes.”

Our ability to comply with these and other provisions of the indenture governing our unsecured debt may be affected by changes in our business condition or results of operations, adverse regulatory developments or other events beyond our control, including changes in general economic and business conditions. In particular, if our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. However, we may be unable to implement alternative financing plans, if necessary, on commercially reasonable terms or at all, and any such alternative financing plans might be insufficient to allow us to meet our debt service obligations and other liquidity needs. In addition, our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous borrowing covenants, which could further restrict our business operations. The terms of our debt instruments may restrict us from adopting some of these alternatives. Moreover, any failure to make payments of principal and interest on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Any of the foregoing consequences could materially and adversely affect our business, financial condition, results of operations and prospects.

A breach of the covenants or restrictions under the indenture governing our unsecured debt or our other debt instruments into which we may enter in the future could result in an event of default under the applicable indebtedness. A default may allow the creditors or holders of our unsecured debt to accelerate the related debt and may result in the acceleration of other debt. In the event lenders, including holders of our unsecured debt, accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:

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limited in how we conduct our business;

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unable to raise additional debt or equity financing to operate during general economic or business downturns; or

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unable to compete effectively or to take advantage of new business opportunities.

In addition, our future debt may include restrictive covenants, including the maintenance of specified financial ratios, and, subject to certain exceptions, may prohibit us from prepaying our other indebtedness, including our unsecured debt.

To establish a fully independent capital structure, we expect to enter into other transactions prior to, and after, this offering that could further exacerbate the risks to our financial condition described above.

In order to establish a fully independent capital structure and finance our liquidity needs after this offering, we plan to incur third-party indebtedness such as securitizations, warehouse lines and additional unsecured debt prior to, and after, this offering. For example, in December 2014, we completed an issuance of $1.5 billion of unsecured debt, as described in “Description of Certain Indebtedness—6.75% Notes and 7.25% Notes. Although the agreements governing such indebtedness may contain restrictions on the incurrence of additional indebtedness, such restrictions may be subject to a number of qualifications and exceptions that would allow us to incur substantial additional indebtedness while remaining in compliance with the restrictions. Future restrictions on indebtedness also would not prevent us from incurring additional obligations, such as trade payables, that may not constitute indebtedness as defined under the applicable agreements.

The agreements that will govern our future indebtedness may contain covenants customary for such financings, such as limiting our ability to sell or dispose of assets, incur additional indebtedness or liens, make certain restricted payments, make certain investments, consummate mergers, consolidations or other business combinations or engage in other lines of business. These restrictions may interfere with our ability to engage in other necessary or desirable business activities, which could materially affect our business, financial condition or results of operations.

The assessment of our liquidity is based upon significant judgments or estimates that could prove to be materially incorrect.

In assessing our current financial position and developing operating plans for the future, management has made significant judgments and estimates with respect to our liquidity, including but not limited to:

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our ability to generate sufficient cash to service all of our outstanding debt;

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our ability to complete, as needed, additional borrowings, securitizations, loan 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;

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if and after a corporate debt rating is obtained, the potential for downgrade of our debt by rating agencies, which would have a negative impact on our cost of, and access to, capital;

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our ability to comply with our debt covenants;

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the amount of cash expected to be received from our loan portfolio through collections (including prepayments) and receipt of fees we collect, which could be materially different than our estimates;

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the amortization rate of our securitization facilities, which could be materially different than our estimates and result in an early amortization event, which could have a materially adverse effect on our liquidity and cost of funds;

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the potential for declining financial flexibility and reduced income should we use more of our assets for securitizations and loan portfolio sales; and

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the potential for reduced income due to the possible deterioration of the credit quality of our loan portfolios.

Additionally, there are numerous risks to our financial results, liquidity, capital raising and debt refinancing plans that are not quantified in our current liquidity forecasts. These risks include, but are not limited, to the following:

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our inability to grow or maintain our consumer finance portfolio with adequate profitability to fund operations, loan losses and other expenses;

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our inability to monetize assets including, but not limited to, our access to debt and securitization markets;

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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), on our ability to conduct business or the manner in which we conduct business, or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the non-prime lending industry;

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the potential for increasing costs and difficulty in servicing our loan portfolio as a result of heightened nationwide regulatory scrutiny of loan servicing in the industry generally;

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potential liability relating to consumer financial products 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;

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the potential for additional unforeseen cash demands or accelerations of obligations;

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reduced income due to loan modifications where the borrower’s interest rate is reduced, principal payments are deferred, or other concessions are made;

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the potential for declines in bond and equity markets; and

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the potential effect on us if the capital levels of our regulated and unregulated subsidiaries prove inadequate to support current business plans.

We intend to support our liquidity position by managing originations and maintaining disciplined underwriting standards. We intend to support operations and repay indebtedness with one or more of the following activities, among others: loan collections, cash on hand, additional debt financings (particularly new securitizations and possible new issuances and/or debt refinancing transactions), loan portfolio sales, or a combination of the foregoing. There can be no assurance that we will be successful in undertaking any of these activities to support our operations and repay our obligations.

However, the actual outcome of one or more of our plans could be materially different than expected or one or more of our significant judgments or estimates about the potential effects of these risks and uncertainties could prove to be materially incorrect. In the event of such an occurrence, if third-party financing is not available, our liquidity could be substantially and materially affected, and as a result, substantial doubt could exist about our ability to continue as a going concern.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs, which could negatively affect our results of operations, financial condition and liquidity.

Our debt currently has a non-investment grade rating and any rating assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our debt. Credit ratings are not recommendations to purchase, hold or sell any security, and may be revised or withdrawn at any time by the issuing organization. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure or marketing of our securities and may not reflect all risks associated with an investment in our securities. Any future lowering of our ratings likely would make it more difficult and more expensive for us to obtain additional debt financing and will adversely impact the then-current market price of our securities. As a result, our future ratings could negatively impact our results of operations, financial condition and liquidity.

Our securitizations may expose us to financing and other risks, and there can be no assurance that we will be able to access the securitization market in the future, which may require us to seek more costly financing.

In 2014, we completed two securitizations of, and may in the future securitize, our loans to generate cash to originate new loans or pay our outstanding indebtedness. In each such transaction, we convey a pool of loans to a special purpose entity, which, in turn, conveys the loans to a trust (the issuing entity). Concurrently, the trust issues non-recourse notes or certificates pursuant to the terms of an indenture or pooling and servicing agreement, respectively, which then are transferred to the special purpose entity in exchange for the loans. The securities issued by the trust are secured by the pool of loans. In exchange for the transfer of loans to the issuing entity, we receive the cash proceeds from the sale of the trust securities, all residual interests, if any, in the cash flows from the loans after payment of the trust securities, and a 100% beneficial interest in the issuing entity. During periods of challenging credit and liquidity conditions, the value of the residual interests we may retain in our securitizations could be reduced or, in some cases, eliminated.

We currently act as servicer with respect to our securitization trusts and their related series of asset-backed securities. If we default in our servicing obligations, an early amortization event could occur with respect to the relevant asset-backed securities and we could be replaced as servicer. Servicer defaults include, for example, the failure of the servicer to make any payment, transfer or deposit in accordance with the securitization documents, a breach of representations, warranties or agreements made by the servicer under the securitization documents, the delegation of the servicer’s duties contrary to the securitization documents and the occurrence of certain insolvency events with respect to the servicer. Such an early amortization event could have materially adverse consequences on our liquidity and cost of funds. Although we were able to complete two securitizations in 2014, the securitization market remains constrained, and we can give no assurances that we will be able to complete additional securitizations.

Rating agencies may also affect our ability to execute a securitization transaction, or increase the costs we expect to incur from executing securitization transactions, not only by deciding not to issue ratings for our securitization transactions, but also by altering the criteria and process they follow in issuing ratings. Rating agencies could alter their ratings processes or criteria after we have accumulated loans for securitization in a manner that effectively reduces the value of those loans by increasing our financing costs or otherwise requiring that we incur additional costs to comply with those processes and criteria. We have no ability to control or predict what actions the rating agencies may take.

Further, other matters, such as (i) accounting standards applicable to securitization transactions and (ii) capital and leverage requirements applicable to banks and other regulated financial institutions holding asset-backed securities, could result in decreased investor demand for securities issued through our securitization transactions, or increased competition from other institutions that undertake securitization transactions. In addition, compliance with certain regulatory requirements, including the Dodd-Frank Act and the Investment Company Act, may affect the type of securitizations that we are able to complete and the cost of securitization transactions.

If it is not possible or economical for us to securitize our loans in the future, we would need to seek alternative financing to support our operations and to meet our existing debt obligations, which may be less efficient and more expensive than raising capital via securitizations and may have a material adverse effect on our results of operations, financial condition and liquidity.

Our non-compliance with the covenants of the Dividend Note could result in a reduction in our liquidity.

Prior to this offering, we expect to declare a dividend of a $ million note, which we refer to as the Dividend Note, and issue the Dividend Note to Citi. We will be obligated to comply with customary covenants contained in the Dividend Note. Although we expect to repay the full amount of the Dividend Note with the proceeds of this offering, our failure to pay the amount due under the Dividend Note or comply with its covenants would restrict our liquidity and, consequently, could have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to Our Organization and Structure

Citi owns a controlling interest in our company, and the interests of Citi may conflict with our interests and with those of our public stockholders, including you.

After this offering, Citi will own approximately % of the outstanding shares of our common stock ( % if the underwriters exercise their over-allotment option in full).

For so long as Citi owns shares of our common stock representing more than 50% of the voting power of our outstanding voting securities, Citi will generally be able to determine the outcome of all corporate actions requiring stockholder approval, including the election of all of the members of our Board of Directors who will determine our strategic plans, approve major financing decisions and appoint top management. In addition, as a holder of a majority of our common stock, Citi may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to the non-Citi holders of our common stock or adversely affect us or our public investors, including you. See “Description of Capital Stock.” Because Citi’s interests as our controlling stockholder may differ from your interests, actions taken by Citi with respect to us may not be favorable to you.

Prior to the completion of this offering, we also will enter into the Stockholder’s Agreement and a number of other agreements with Citi setting forth various matters governing our relationship with Citi while it remains a significant stockholder. In addition, our Amended and Restated Certificate of Incorporation will provide Citi with certain rights. For a description of these agreements and our Amended and Restated Certificate of Incorporation, see “Certain Relationships and Related Party Transactions—Relationship with Citi” and “Description of Capital

Stock.” These agreements will govern our relationship with Citi after this offering and the provision of various services to us and certain provisions of these agreements are likely to affect our ability to make certain acquisitions or to merge or consolidate or to sell all or substantially all our assets without Citi’s consent.

Citi’s rights under these agreements may allow Citi to delay or prevent an acquisition of us or prevent a redemption or repurchase of our common stock that our public stockholders, including you, may consider favorable. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and Board of Directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. We will not be able to terminate these agreements with Citi or amend them in a manner we deem more favorable, except in accordance with their terms. In addition, a supermajority stockholder vote is required to amend Citi’s rights as set forth in our Amended and Restated Certificate of Incorporation. See “Description of Capital Stock.”

The assets and resources that we acquire in our separation from Citi may not be sufficient for us to operate as a stand-alone company, and we may experience difficulty in separating our assets and resources from Citi.

Because we have not operated as a stand-alone company in the recent past, we may have difficulty doing so after this offering. We may need to acquire assets and resources in addition to those provided to us by and in connection with our separation from Citi and may also face difficulty in separating our assets from Citi’s assets and integrating newly acquired assets into our business. Our business, financial condition and results of operations could be harmed if we have difficulty operating as a stand-alone company, fail to acquire assets that prove to be important to our operations or incur unexpected costs in separating our assets from Citi’s assets or integrating newly acquired assets.

Some of our arrangements with Citi may not be sustained at the same levels as when we were wholly owned by Citi.

We have, and after this offering will continue to have, contractual arrangements which require Citi and its affiliates to provide certain services to us. Following this offering, many of these services will be governed by a transition services agreement between Citi and us. There is no assurance that upon termination or expiration of the transition services agreement, these services will be sustained at the same levels as they were when we received such services from Citi or that we will obtain the same benefits. We may not be able to replace services and arrangements in a timely manner or on terms and conditions, including cost, as favorable as those we have previously received from Citi. In addition, we anticipate that we will be obligated to provide certain services to Citi under the Transition Services Agreement, and performing such services may distract our management and employees from conducting our business. The agreements with Citi and its affiliates were entered into in the context of a parent/wholly owned subsidiary relationship, and we may have to pay higher prices for similar services from Citi or unaffiliated third parties in the future. See “Certain Relationships and Related Party Transactions—Relationship with Citi—Transition Services Agreement.”

If Citi engages in the same type of business we conduct, our ability to successfully operate and expand our business may be impaired.

Because Citi may engage in the same activities in which we engage (subject to the terms of the Stockholder’s Agreement), there is a risk that we may be in direct competition with Citi with respect to lending or insurance. Due to Citi’s significant resources, including financial resources and name recognition, Citi could have a significant competitive advantage over us should it decide to engage in the type of business we conduct, which may cause our business to be materially adversely affected.

This offering and future sales of our common stock by Citi could adversely affect our business and profitability due to our loss of Citi’s strong brand, reputation and capital base.

We believe the association with Citi has provided us with preferred status among our customers, vendors and other persons due to Citi’s globally recognized brand, perceived high-quality products and services, and

strong capital base and financial strength. This offering and future sales of our common stock by Citi could adversely affect our ability to attract and retain customers, which could result in reduced volumes of loans. The loss of the Citi brand may also prompt some third parties to reprice, modify or terminate their relationships with us. We cannot predict with certainty the effect that this offering will have on our business, our customers, vendors or other persons.

Certain of our directors may have actual or potential conflicts of interest because of their positions with Citi.

Following this offering, will serve on our Board of Directors and retain their positions with Citi. In addition, such directors may own Citi common stock, options to purchase Citi common stock or other Citi equity awards. These individuals’ holdings of Citi common stock, options to purchase common stock of Citi or other equity awards may be significant for some of these persons compared to these persons’ total assets. Their positions at Citi and the ownership of any Citi equity or equity awards create, or may create the appearance of, conflicts of interest when these directors are faced with decisions that could have different implications for Citi than the decisions have for us or our public stockholders, including you.

Citi and its directors and officers will have limited liability to us or you for breach of fiduciary duty.

Our Amended and Restated Certificate of Incorporation will provide that, subject to any contractual provision to the contrary (including the Stockholder’s Agreement), Citi will have no obligation to refrain from:

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engaging in the same or similar business activities or lines of business as we do;

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doing business with any of our customers; or

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employing or otherwise engaging any of our officers or employees.

Under our Amended and Restated Certificate of Incorporation, neither Citi nor any officer or director of Citi, except as provided in our Amended and Restated Certificate of Incorporation, will be liable to us or to our stockholders for breach of any fiduciary duty by reason of any of these activities. See “Description of Capital Stock—General—Amended and Restated Certificate of Incorporation Provision Relating to Corporate Opportunities and Interested Directors.”

Our consolidated and combined historical and pro forma financial data are not necessarily representative of the results we would have achieved as a stand-alone company and may not be a reliable indicator of our future results.

Our consolidated and combined historical financial data included in this prospectus do not reflect the financial condition, results of operations or cash flows we would have achieved as a stand-alone company during the periods presented or those we will achieve in the future. This is primarily the result of the following factors:

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our consolidated and combined historical financial data reflect allocations of corporate expenses from Citi associated with information technology, human resources, corporate governance, regulatory, capital planning, treasury, accounting, compliance, internal audit and other control operations and infrastructure costs that may be lower than the comparable expenses we would have actually incurred as a stand-alone company;

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our cost of debt and our capitalization will be different from that reflected in our Consolidated and Combined Financial Statements;

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significant increases may occur in our cost structure as a result of this offering, including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act; and

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this offering may have a material effect on our customers and other business relationships, including supplier relationships, and may result in the loss of preferred pricing available by virtue of our relationship with Citi.

Our financial condition and future results of operations, after giving effect to our separation from Citi and the Transactions, will be materially different from amounts reflected in our Consolidated and Combined Financial Statements that appear elsewhere in this prospectus. As a result of the Transactions, it may be difficult for investors to compare our future results to historical results or to evaluate our relative performance or trends in our business.

We expect to incur charges in connection with this offering and incremental costs as a stand-alone public company.

We will need to replicate or replace certain functions, systems and infrastructure to which we will no longer have the same access after this offering. For instance, we currently use certain Citi systems and infrastructure that we will need to replace prior to the expiration or termination of the transition services agreement, including its investment management, legal, compliance, regulatory reporting, risk management, taxation, accounting, marketing, strategy, management and human resources functions. We will also need to make investments to operate without the same access to Citi’s existing operational and administrative infrastructure. These initiatives may be costly to implement. In addition, pursuant to the transition services agreement, we will agree to indemnify Citi for certain past, present and future liabilities related to our business. We also expect to incur significant non-cash compensation charges associated with the grant of equity awards to our employees. Due to the scope and complexity of the underlying projects relative to these efforts, the amount of total costs could be materially higher than our estimate, and the timing of the incurrence of these costs is subject to change.

Following this offering, many of these services will be governed by a transition services agreement with Citi. There is no assurance that upon termination or expiration of the transition services agreement, the services that Citi currently performs for us will be sustained at the same levels as when we were receiving such services from Citi or that we will obtain the same benefits. When we begin to operate these functions independently, if we do not have our own adequate systems and business functions in place, or are unable to obtain them from other providers, we may not be able to operate our business effectively or at comparable costs, and our profitability may decline. In addition, our business has benefited from Citi’s purchasing power when procuring goods and services, including office supplies and equipment, employee benefit platforms, travel services and computer software licenses. As a stand-alone company, we may be unable to obtain such goods and services at comparable prices or on terms as favorable as those obtained prior to this offering, which could decrease our overall profitability.

For more information regarding transition services, see “Certain Relationships and Related Party Transactions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Separation from Citi.”

We will owe obligations, including indemnification obligations, to Citi under the Stockholder’s Agreement that will be executed as part of our separation from Citi. These obligations could be materially disruptive to our business or subject us to substantial liabilities, including contingent liabilities and liabilities that are presently unknown or are difficult to quantify.

Prior to the completion of this offering, we will enter into the Stockholder’s Agreement with Citi that sets forth our relationship with Citi and its affiliates after this offering. The Stockholder’s Agreement will provide for, among other things, indemnification obligations designed to make us financially responsible for the debts, obligations and liabilities of any kind relating to or arising from the business, assets, contracts, properties, activities or practices now, hereafter or previously conducted, owned, entered into or operated by us or our legacy entities or businesses, including legacy entities, businesses or assets retained by Citi in CFNA (or retained elsewhere in Citi), or previously divested by us or Citi. As part of the foregoing indemnity, we will indemnify Citi for all liabilities arising from activities, practices (including origination and servicing), transactions and claims relating to or arising from our current or legacy businesses, branches, portfolios and assets, whether now part of our business or part of CFNA, CitiFinancial Servicing or Citi Holdings, including any liabilities relating

to or arising from any of our business practices that are continued by Citi or from any sale by Citi or us of any such assets. We will not indemnify Citi for liabilities arising out of servicing or other activities by Citi after January 1, 2014 with respect to the CFNA mortgage portfolio that do not constitute a continuation of our business practices, any financial loss in the value of any assets held by Citi due to the performance of such assets or market conditions, or liabilities related to or arising from the Canada and Puerto Rico businesses within CFNA.

If we are required to indemnify Citi under the circumstances set forth in the Stockholder’s Agreement, we may be subject to substantial liabilities including liabilities that are accrued, contingent or otherwise and regardless of whether the liabilities are known or unknown at the time of our separation from Citi. Specifically, originations and servicing of various loans or insurance products are, or could become, subject to various claims, litigation or legal, regulatory or other proceedings resulting from business activities relating to current or legacy businesses or operations, even though they are no longer considered a part of our present-day business, and may result in liability due to future or changed laws, rules, interpretations or court decisions which purport to have retroactive effect. Such liabilities could be significant.

It is inherently difficult, and in some cases impossible, to estimate the probable losses associated with contingent and unknown liabilities of this nature, but future losses may be substantial and will be borne by us in accordance with the terms of the Stockholder’s Agreement.

We will be a “controlled company” within the meaning of the New York Stock Exchange rules and, as a result, are exempt from certain corporate governance requirements.

Upon completion of this offering, Citi will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a company of which more than 50% of the voting power is held by another company is a “controlled company” and need not comply with certain requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that the nominating/corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors nor will our Nominating and Corporate Governance and Compensation Committees consist entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

If Citi sells a controlling interest in our company to a third party in a private transaction, you may not realize any change-of-control premium on shares of our common stock and we may become subject to the control of a presently unknown third party.

Following the completion of this offering, Citi will own a % equity interest in our company. Citi will have the ability, should it choose to do so, to sell some or all of its shares of our common stock in a privately negotiated transaction, which, if sufficient in size, could result in a change of control of our company. The ability of Citi to privately sell its shares of our common stock, with no requirement for a concurrent offer to be made to acquire all of the shares of our common stock that will be publicly traded hereafter, could prevent you from realizing any change-of-control premium on your shares of our common stock that may otherwise accrue to Citi upon its private sale of our common stock. Additionally, if Citi privately sells its significant equity interest in our company, we may become subject to the control of a presently unknown third party. Such third party may have conflicts of interest with those of public stockholders, including you. However, Citi has agreed, subject to certain exceptions, not to dispose of or hedge any shares of our common stock for a period of 180 days from the date of this prospectus.

If Citi distributes the remaining shares of our stock to its stockholders in a transaction that is intended to be tax-free to Citi, we could have a material indemnification obligation under the Tax Matters Agreement we will enter into with Citi if we cause the distribution or certain related preliminary internal transactions to fail to qualify for tax-free treatment.

Citi has informed us that, after this offering, it may complete its exit from its investment in us by making a distribution of all of its remaining shares of our stock to its stockholders in a transaction that would be designed to qualify for tax-free treatment to Citi and its stockholders under Section 355 of the Internal Revenue Code, or the Code. Completion by Citi of the Distribution is conditioned on, among other things, an opinion from tax counsel confirming the tax-free treatment under Section 355 of the Code of the Distribution and the tax-free treatment of a series of preliminary transactions that would be required prior to implementing the Distribution. The opinion of tax counsel will rely on certain facts, assumptions, representations and undertakings from Citi and us regarding the past and future conduct of Citi’s and our businesses and other matters. If any of these facts, assumptions, representations or undertakings is incorrect or not otherwise satisfied, Citi may not be able to rely on the opinion of tax counsel. Notwithstanding the opinion of tax counsel, the IRS could determine that the Distribution (or any of the preliminary transactions) is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion, or for other reasons, including as a result of certain significant changes in the stock ownership of Citi or us after the Distribution. If the Distribution (or any of the preliminary transactions) is determined to be taxable, Citi could incur significant tax liabilities, and under the Tax Matters Agreement we will enter into with Citi prior to the completion of this offering, we may be required to indemnify Citi for any such liabilities.

In order to preserve the tax-free status of the Distribution and the preliminary transactions to Citi, the Tax Matters Agreement will generally prohibit us from taking action after the Distribution that would cause the Distribution (or the preliminary transactions) to become taxable. As a result, and given that we may be required to indemnify Citi under the Tax Matters Agreement for tax liabilities incurred by Citi as a result of our taking such action, we may be required to forgo certain significant transactions that would otherwise have been advantageous to us for a period of time following the Distribution, such as certain dispositions of our assets or issuances of our stock. See “Certain Relationships and Related Party Transactions—Tax Matters Agreement.”

We are a holding company with no operations and will rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations and to pay dividends.

We are a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries, which own our operating assets. As a result, we will be dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations on our common stock. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. For example, our insurance subsidiaries are subject to regulations that limit their ability to pay dividends or make loans or advances to us, principally to protect policyholders. See “Description of Certain Indebtedness.” If the cash we receive from our subsidiaries pursuant to dividend payments is insufficient for us to fund our obligations, or if a subsidiary is unable to pay dividends to us, we may be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise cash by these means.

If the ability of any of our subsidiaries to pay dividends or make other distributions or payments to us is materially restricted by regulatory requirements, bankruptcy or insolvency, or our need to maintain our financial strength ratings, or is limited due to operating results or other factors, it could materially adversely affect our ability to pay our operating costs and other corporate expenses.

We do not anticipate paying any dividends on our common stock in the foreseeable future.

We have no plans to pay regular dividends on our common stock, and we anticipate that a significant amount of any free cash flow generated from our operations will be utilized to redeem or prepay outstanding

indebtedness and accordingly would not be available for dividends. Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our Board of Directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our Board of Directors deems relevant. Until such time that we pay a dividend, our investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Insurance laws and regulations may delay or impede purchases of our common stock.

The insurance laws and regulations of the jurisdiction in which our insurance subsidiaries are domiciled generally provide that no person may acquire control, directly or indirectly, of a domiciled insurer, unless the person has provided required information to, and the acquisition is approved or not disapproved by, the applicable Department of Insurance. Generally, any person acquiring beneficial ownership of 10% or more of our voting securities would be presumed to have acquired indirect control of our insurance subsidiaries unless the applicable Department of Insurance, upon application, determines otherwise. Certain purchasers of our common stock could be subject to similar approvals which could significantly delay or otherwise impede their ability to complete such purchase.

Risks Relating to this Offering

Future sales of a substantial number of shares of common stock may adversely affect the market price of our shares.

If Citi sells or otherwise disposes of a large number of shares of our common stock, or if we issue a large number of shares of our common stock in connection with future acquisitions, financings or other circumstances, the market price of shares of our common stock could decline significantly. Moreover, Citi’s intention to divest of its remaining shares of our common stock or the perception in the public market that other stockholders might sell shares of our common stock could depress the market price of our common stock. However, Citi has agreed, subject to certain exceptions, not to dispose of or hedge any shares of our common stock for a period of 180 days from the date of this prospectus.

All the shares of our common stock sold in this offering will be freely tradable without restriction, except for shares of our common stock owned by any of our affiliates, including Citi. Immediately after this offering, the public market for our common stock will include only the million shares of our common stock that are being sold in this offering, or million shares of our common stock if the underwriters exercise the over-allotment option in full. After this offering, we intend to register million shares of our common stock, which are reserved for issuance under our employee benefit plans. Once we register these shares, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates. In addition, we have granted Citi demand and “piggyback” registration rights with respect to the shares of our common stock it will continue to hold upon the completion of this offering. Citi may exercise its demand and piggyback registration rights, and any shares of our common stock so registered will be freely tradable in the public market, except for shares acquired by any of our affiliates. See “Certain Relationships and Related Party Transactions—Relationship with Citi—Registration Rights Agreement” and “Shares Eligible for Future Sale.”

In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. In particular, we intend to continue to seek opportunities to acquire consumer finance portfolios and/or businesses that engage in consumer finance loan servicing and/or consumer finance loan originations. Future acquisitions could require substantial additional capital in excess of cash from operations. We would expect to finance the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness, asset-backed acquisition financing and/or cash from operations.

Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our stockholders at the time of such issuance or reduce the market price of our common stock or both. Upon liquidation, holders of debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us. See “Description of Capital Stock.”

An active trading market for our common stock may never develop or be sustained.

Before this offering, there has been no established public market for our common stock. An active, liquid trading market for our common stock may not develop or be sustained following this offering. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an attractive price, or at all. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability to acquire other companies, products or technologies by using our common stock as consideration. In addition, the liquidity of any market that may develop or the price that our stockholders may obtain for their shares of common stock cannot be predicted. The initial public offering price for our common stock will be determined by negotiations between us, the selling stockholders, and the representative of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. See “Underwriting.” Consequently, you may not be able to sell your common stock at or above the initial public offering price or at any other price or at the time that you would like to sell.

The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

Even if an active trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. The initial public offering price of our common stock will be determined by negotiation between us, the representatives of the underwriters and the selling stockholder based on a number of factors and may not be indicative of prices that will prevail in the open market following completion of this offering. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:

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variations in our quarterly or annual operating results;

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changes in our earnings estimates (if provided) or differences between our actual financial and operating results and those expected by investors and analysts;

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the contents of published research reports about us or our industry or the failure of securities analysts to cover our common stock after this offering;

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additions to, or departures of, key management personnel;

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any increased indebtedness we may incur in the future;

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announcements by us or others and developments affecting us;

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actions by institutional stockholders;

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litigation and governmental investigations;

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changes in market valuations of similar companies;

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speculation or reports by the press or investment community with respect to us or our industry in general;

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increases in market interest rates that may lead purchasers of our shares to demand a higher yield;

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announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic relationships, joint ventures or capital commitments; and

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general market, political and economic conditions, including any such conditions and local conditions in the markets in which our borrowers are located.

These broad market and industry factors may decrease the market price of our common stock, regardless of our actual operating performance. The stock market has generally, from time to time, experienced extreme price and volume fluctuations, including in recent months. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

The obligations associated with being a public company will require significant resources and management attention.

As a result of this offering, we will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. All of the procedures and practices required as a majority-owned subsidiary of Citi were previously established, but we will have additional procedures and practices to establish as a stand-alone public company. As a result, we will incur significant legal, accounting and other expenses that we did not previously incur. Once established, these controls may not achieve their intended objectives. Control processes that involve human diligence and compliance, such as our disclosure controls and procedures and internal control over financial reporting, are subject to lapses in judgment and breakdowns resulting from human failures. Controls can also be circumvented by collusion or improper management override. Because of such limitations, there are risks that material misstatements due to error or fraud may not be prevented or detected and that information may not be reported on a timely basis. If our controls are not effective, it could have a material adverse effect on our financial condition, results of operations, and market for our common stock, and could subject us to regulatory scrutiny.

Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements.

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we file with the SEC, and will likely require in the same report, a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. We will be unable to issue securities in the public

markets through the use of a shelf registration statement if we are not in compliance with Section 404. In addition, failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price.

Our common stock is and will be subordinate to all of our existing and future indebtedness and any preferred stock, and effectively subordinated to all indebtedness and preferred equity claims against our subsidiaries.

Shares of our common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities. Additionally, holders of our common stock may become subject to the prior dividend and liquidation rights of holders of any classes or series of preferred stock that our Board of Directors may designate and issue without any action on the part of the holders of our common stock. Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors and preferred stockholders.

You will incur immediate dilution as a result of this offering.

If you purchase common stock in this offering, you will pay more for your shares than the pro forma net tangible book value of your shares. As a result, you will incur immediate dilution of $ per share, assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the front cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses, and based on our net tangible book value per share as of September 30, 2014 of $ , representing the difference between such assumed offering price and our net tangible book value per share. Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment. See “Dilution.”

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements in the sections “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and in other sections of this prospectus that are forward-looking statements. You can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “intends,” “targets” or “continue,” the negative of these terms and other comparable words. These forward-looking statements are subject to risks, uncertainties and assumptions and may include projections of our future financial performance, anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events and are subject to risks, uncertainties and assumptions. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, those factors discussed under “Risk Factors” and factors relating to:

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changes in general economic conditions, including unemployment, the interest rate environment in which we conduct business and the financial markets through which we can access capital;

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the effectiveness of our risk management processes and procedures in mitigating our risks;

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the effectiveness of the models we use to manage our business, including liquidity and capital planning, customer selection, risk management, pricing, reserving and collections management;

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the sufficiency of our allowance for loan losses to cover losses on our loans;

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the identification of material weaknesses or significant deficiencies in our internal control over financial reporting;

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the possibility that our historical charge-off rates may not be predictive of our future charge-off rates;

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the impact on our reported results of operations and financial condition if assumptions or estimates we use in preparing our financial statements are incorrect or are required to change;

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the ability to originate new loans due to competition in the consumer finance industry;

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the effectiveness of our lending and insurance operations;

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our use of technology in conducting our business, including disruptions in our computer systems and data centers and our transition to, and quality of, new technology platforms;

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the impact on our business and results of operations if we are alleged to have infringed upon the intellectual property rights owned by others or are not able to protect our intellectual property;

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the costs and effects of any litigation or regulatory actions involving us;

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our ability to maintain a positive reputation;

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changes in our ability to attract, retain and motivate employees or key executives, as well as the costs and effects of employee misconduct or misconduct by third parties we employ;

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our ability to realize the value of strategic investments that we pursue and the potential for such investments to divert resources or introduce unforeseen risks to our business;

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the potential concentration of the geographic distribution of our loan portfolio;

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the costs and effects of repurchasing the loans that we sell or securitize if our loans fail to meet certain criteria or characteristics or under other circumstances;

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our ability to effectively implement our growth strategy;

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the costs and effects of the extensive federal and state government regulation, supervision, examination and enforcement to which our business is subject;

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our substantial indebtedness, which could prevent us from meeting our obligations under our debt instruments or restrict our ability to incur additional borrowings;

•

the accuracy of our judgments and estimates we use to assess our liquidity;

•

the costs and effects relating to our securitizations, including exposure to financing and other risks, as well as the potential inability to access the securitization market in the future;

•

the possibility that Citi, as a controlling stockholder, and certain of our directors, as employees of Citi, may have interests that conflict with ours and those of our other stockholders;

•

the possibility that the assets and resources that we acquire upon our separation from Citi may not be sufficient to sustain our business or adequately separated from Citi;

•

the fact that our consolidated and combined historical and pro forma financial data are not necessarily representative of the results we would have achieved as a stand-alone company and may not be a reliable indicator of our future results;

•

the costs we expect to incur in connection with this offering and incremental costs as a stand-alone public company;

•

the impact on you of our utilization of “controlled company” status within the meaning of the New York Stock Exchange rules;

•

the costs to you if Citi sells a controlling interest in our company to a third party in a private transaction;

•

our reliance on our operating subsidiaries to provide us with funds; and

•

the impact of insurance laws and regulations on purchases and sales of a substantial number of shares of our common stock.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus, including in the section “Risk Factors.” Moreover, neither we, Citi, the underwriters, nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to conform our prior statements to actual results or revised expectations, except as required by law.

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately $ million, based on an assumed public offering price of $ per share (the midpoint of the price range on the front cover of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use all of the net proceeds of this offering to repay $ (the full amount) due under the Dividend Note, which matures on and bears interest at .

If the underwriters exercise their over-allotment option in whole or in part, Citi will receive all of the net proceeds from the sale of those shares.

DIVIDEND POLICY

We do not currently anticipate paying any dividends on the shares of our common stock in the foreseeable future and anticipate that we will retain all available funds for use in the operation and expansion of our business.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2014:

•

on a consolidated historical basis;

•

on a pro forma basis to give effect to the Pre-IPO Transactions, as described in more detail in “Unaudited Pro Forma Consolidated and Combined Financial Information;” and

•

on a pro forma as adjusted basis to give effect to the Transactions, including the issuance and sale of shares of common stock in this offering and the repayment in full of the Dividend Note with the net proceeds of this offering.

This table should be read in conjunction with “Selected Consolidated and Combined Historical Financial Data,” “Unaudited Pro Forma Consolidated and Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Condensed Consolidated and Combined Financial Statements and notes thereto included elsewhere in this prospectus.


	As of September 30, 2014
	(in millions of dollars)
	(unaudited)
	Actual		Pro Forma	Pro Forma as Adjusted
Cash and cash equivalents (including restricted cash of $123)	$	307	$	$

*Debt:*
Long-term debt		1,944
Related-party debt		3,447

Total debt		5,391


*Equity:*
Common stock(1)		—
Additional paid-in capital(1)		3,159
Retained earnings		128
Accumulated other comprehensive income		50

Total stockholder’s equity		3,337

*Total capitalization*	$	8,728	$	$

(1)

Pro forma and pro forma as adjusted information reflects the reclassification of Citi’s net investment in us, which is recorded in Parent’s net investment, into Common stock and Additional paid-in capital.

DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted.

Dilution per share represents the difference between the price per share to be paid by new investors for the shares of common stock sold in this offering and the net tangible book value per share after this offering. The price per share to the public of the shares of common stock in this offering substantially exceeds the net tangible book value per share prior to the offering. Our net tangible book value at September 30, 2014 would have been approximately $ , or $ per share of our common stock based on shares of our common stock issued and outstanding after giving effect to the Transactions, including the sale of shares of our common stock by us at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the front cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses. Therefore, purchasers of shares of common stock in this offering will realize immediate and substantial dilution in the net tangible book value of $ per share. Net tangible book value per share represents total tangible assets, less total liabilities, divided by the number of shares of common stock outstanding.

The following table illustrates this per share dilution after giving pro forma effect to the Transactions:


Assumed initial public offering price (the midpoint of the price range on the front cover of this prospectus)		$
Net tangible book value per share as of September 30, 2014	$
Increase in net tangible book value per share attributable to the Transactions (excluding this offering and the repayment in full of the Dividend Note)	$

Increase in net tangible book value per share attributable to this offering and the repayment in full of the Dividend Note	$

Net tangible book value per share of common stock after this offering		$
Dilution per share to new investors		$

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the net tangible book value at September 30, 2014 by approximately $ , or approximately $ per share and the dilution per share to new investors by $ , in each case assuming the number of shares offered, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We may also increase or decrease the number of shares we are offering. An increase of one million shares in the number of shares offered by us would result in net tangible book value at September 30, 2014 of approximately $ , or $ per share, and the dilution per share to investors in this offering would be $ per share, assuming the public offering price per share remains the same. Similarly, a decrease of one million shares in the number of shares of common stock offered by us would result in net tangible book value at September 30, 2014 of approximately $ , or $ per share, and the dilution per share to investors in this offering would be $ per share. The information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of this offering determined at pricing.

The following table sets forth the difference between the existing stockholder and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us, or to be paid for these shares, and the average price per share paid, or to be paid, by the existing stockholder and by the new investors, at an assumed initial public offering price of $ per share before deducting estimated underwriting discounts and commissions and offering expenses payable by us, as of September 30, 2014:


	Shares Purchased				Total Consideration				Average Price Per Share
	Number	Percent			Amount	Percent			Average Price Per Share
Existing stockholders				%	$			%	$
New investors

Total			100	%	$		100	%	$

Each $1.00 increase (decrease) in the assumed initial offering price of $ per share of common stock would increase (decrease) the total consideration paid by new investors by approximately $ , or the percent of total consideration paid by new investors by approximately %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of shares in the number of shares offered by us increase (decrease) the total consideration paid by new investors by approximately $ , or the percent of total consideration paid by new investors by approximately %, assuming the public offering price per share remains the same. The information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of this offering determined at pricing.

Sales in this offering will reduce the number of shares held by the existing stockholder to or approximately % of the total shares of common stock outstanding after the offering if the over-allotment option is exercised in full, and will increase the number of shares to be purchased by new investors to or approximately % of the total shares of common stock outstanding after the offering if the over-allotment option is exercised in full.

SELECTED CONSOLIDATED AND COMBINED HISTORICAL FINANCIAL DATA

The following tables set forth our selected consolidated and combined historical financial data. You should read the following summary information in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited Consolidated and Combined Financial Statements and the related notes included elsewhere in this prospectus.

The selected consolidated and combined historical statement of income data for the nine months ended September 30, 2014 and 2013, and the selected consolidated historical statement of financial position data as of September 30, 2014 are derived from the unaudited Condensed Consolidated and Combined Financial Statements included elsewhere in this prospectus and should be read in conjunction with those unaudited Condensed Consolidated and Combined Financial Statements and notes thereto. The selected combined historical statement of income data for the years ended December 31, 2013, 2012 and 2011, and the selected combined historical statement of financial position data as of December 31, 2013 and 2012 are derived from the historical Combined Financial Statements, which have been audited by KPMG LLP and are included elsewhere in this prospectus and should be read in conjunction with those Combined Financial Statements and notes thereto. The selected combined historical statement of financial position data as of December 31, 2011 are derived from historical unaudited Combined Financial Statements not included in this prospectus. The selected combined historical statement of income data for the years ended December 31, 2010 and 2009 and the combined statement of financial position data as of December 31, 2010 and 2009 are unaudited and have been derived from the historical audited financial information of the U.S. business of CFNA prior to the split of OneMain and CitiFinancial Servicing not included in this prospectus and as such are not directly comparable to the subsequent years.

We prepared our unaudited interim financial statements on the same basis as our audited financial statements and have included all adjustments, consisting of normal and recurring adjustments, that we consider necessary to present fairly our financial position and results of operations for the unaudited periods, except that our financial statements for periods subsequent to July 1, 2014 are prepared on a “consolidated” basis rather than a “combined” basis. On July 1, 2014, CitiFinancial Credit Company contributed all of the capital of OneMain Financial, Inc., American Health and Life Insurance Company and Triton Insurance Company to us, resulting in our becoming the legal parent of the contributed entities. The consequence of this contribution is that our financial statements for periods subsequent to July 1, 2014 are “consolidated” rather than “combined.” Operating results for the nine-month periods are not necessarily indicative of results for a full financial year or any other periods.

Our separation from Citi and the establishment of a capital structure fully independent from Citi will result in financial results that are materially different from those reflected in the consolidated and combined historical financial data that appears in this prospectus. For an understanding of how these changes will affect our results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Separation from Citi” and “Unaudited Pro Forma Consolidated and Combined Financial Information.”

Consolidated and Combined Statements of Income


	Nine Months Ended September 30,				Year Ended December 31,
	2014		2013		2013		2012		2011			2010			2009
	(in millions of dollars)
	(unaudited)											(unaudited)			(unaudited)
Interest revenue	$	1,542	$	1,501	$	2,019	$	1,982	$	2,339		$	3,716		$	4,366
Interest expense		162		174		228		264		676			1,707			1,947

Net interest revenue		1,380		1,327		1,791		1,718		1,663			2,009			2,419
Non-interest revenue		289		378		498		553		500			485			481

Total revenue, net of interest expense		1,669		1,705		2,289		2,271		2,163			2,494			2,900
Provision for credit losses and for benefits and claims		488		535		701		850		665			2,014			3,069
Operating expenses(1)		532		559		743		790		806			3,647			1,123

Income from continuing operations before income taxes		649		611		845		631		692			(3,167	)		(1,292	)
Provision for income taxes		234		224		309		224		234			(1,126	)		(453	)
Net income from continuing operations		415		387		536		407		458			(2,041	)		(839	)

Loss from discontinued operations, net of taxes		—		—		—		—		(140	)		—			—

Net income	$	415	$	387	$	536	$	407	$	318		$	(2,041	)	$	(839	)

Consolidated and Combined Statements of Financial Position


	As of September 30,			As of December 31,
	2014			2013			2012			2011			2010			2009
	(in millions of dollars)
	(unaudited)									(unaudited)			(unaudited)			(unaudited)
*Assets*
Cash and cash equivalents	$	307		$	319		$	369		$	449		$	150		$	141
Investments (at fair value)		1,502			1,431			1,507			1,759			1,571			1,838
Loans receivables net of unearned revenue and deferred costs		8,278			8,575			8,447			8,757			25,725			29,123
Unearned premium and claims reserves		(415	)		(416	)		(394	)		(380	)		(427	)		(496	)
Accrued interest receivable		87			92			114			116			563			517
Allowance for loan losses		(643	)		(676	)		(686	)		(545	)		(2,652	)		(2,708	)

Net consumer finance receivables		7,307			7,575			7,481			7,948			23,209			26,436
Deferred tax assets, net		274			256			221			132			1,639			801
Premises and equipment, net		98			21			28			15			183			195
Other assets		233			234			257			296			277			2,690

Total assets	$	9,721		$	9,836		$	9,863		$	10,599		$	27,029		$	32,101

*Liabilities and Equity/Parent Equity*
Related-party debt		3,447			5,894			6,037			3,638			20,469			28,220
Short-term borrowings		—			—			—			750			750			—
Long-term debt		1,944			—			—			2,500			2,500			—
Insurance policy and claim reserves		465			483			505			532			222			68
Accounts payable, accrued expenses and other liabilities		528			612			795			681			398			404

Total liabilities		6,384			6,989			7,337			8,101			24,339			28,692
Total equity/Parent equity		3,337			2,847			2,526			2,498			2,690			3,409

Total liabilities and equity/Parent equity	$	9,721		$	9,836		$	9,863		$	10,599		$	27,029		$	32,101

Other Financial and Statistical Data


	At and for the Nine Months Ended September 30,						At and for the Years Ended December 31,
	2014			2013			2013			2012
	(in millions of dollars, except ratio, share and other data)
	(unaudited)
*Financial Position Data*
Personal loan receivables	$	8,278		$	7,993		$	8,112		$	7,890
Average personal loan receivables		8,079			7,771			7,837			7,836
Total assets		9,721			9,757			9,836			9,863
Average assets		9,779			9,810			9,850			10,231
Total equity/Parent equity		3,337			2,697			2,847			2,526
Average equity		3,092			2,612			2,687			2,512
Equity to assets(2)		34.33	%		27.64	%		28.94	%		25.61	%
Debt to equity(3)		1.62x			2.06x			2.07x			2.39x

*Selected Performance Data*
Net income		415			387			536			407
Net interest margin		1,380			1,327			1,791			1,718
Efficiency ratio(4)		31.88	%		32.79	%		32.46	%		34.79	%
Personal loan performance
Loan yield(5)		24.76	%		24.13	%		24.13	%		23.38	%
Risk-adjusted yield(6)		18.57	%		17.70	%		17.83	%		17.14	%
Net charge offs		6.19	%		6.43	%		6.30	%		6.24	%
30+ days past due as a % of personal loan receivables, end of period		4.39	%		3.80	%		4.10	%		4.05	%
90+ days past due as a % of personal loan receivables, end of period		2.46	%		2.16	%		2.42	%		2.42	%
Return on assets(7)		5.67	%		5.27	%		5.44	%		3.98	%
Return on equity(8)		17.94	%		19.81	%		19.95	%		16.20	%

*Other Data*
Active personal loan customer accounts		1,329,649			1,338,489			1,343,538			1,365,986
Number of branches		1,140			1,158			1,155			1,222

(1)

The U.S. business of CFNA recorded a goodwill impairment charge of $2.4 billion in 2010.

(2)

Equity to assets is the Total equity/Parent equity divided by Total assets.

(3)

Debt to equity is the sum of Related-party debt, Short-term borrowings and Long-term debt divided by Total equity/Parent equity.

(4)

Efficiency ratio is Operating expenses divided by Total revenue, net of interest expense.

(5)

Loan yield is the annualized personal loan finance charges divided by Average personal loan receivables. For nine-month amounts, personal loan finance charges for the nine months ended September 30, 2014 and 2013, respectively, are annualized by dividing the personal loan finance charges for such periods by the number of days elapsed in the year, and then multiplying by the number of days in the year.

(6)

Risk-adjusted yield is the Loan yield less Net charge offs.

(7)

Return on assets is the Net income divided by Average assets.

(8)

Return on equity is the Net income divided by Average equity.

UNAUDITED PRO FORMA CONSOLIDATED AND COMBINED FINANCIAL INFORMATION

The following unaudited pro forma consolidated combined financial statements are intended to provide you with information as to how the transactions described in this section might affect our Consolidated and Combined Financial Statements. The unaudited pro forma consolidated and combined financial statements do not necessarily reflect what our actual financial position or results of operations will be if the transactions described in this section occur as of the dates indicated, nor should they be taken as necessarily indicative of our future financial position or results of operations.

Prior to, and concurrent with, the completion of this offering, we expect the following transactions to have occurred and refer to these transactions collectively as the “Transactions.” The unaudited pro forma information in this section gives effect to the Transactions as if each had occurred at January 1, 2013 in the case of statements of income information, and at September 30, 2014 in the case of statement of financial position information. For purposes of presentation in this section, we separate the Transactions into “Pre-IPO Transactions” and “IPO Transactions” as follows:

Pre-IPO Transactions

•

completion of a 144A/Reg S securitization in April 2014 for $760 million (for unaudited pro forma Consolidated and Combined statement of income only);

•

completion of a 144A/Reg S securitization in July 2014 for $1,184 million (for unaudited pro forma Consolidated and Combined statement of income only);

•

payment of a $1.5 billion dividend to Citi in November 2014, which we refer to as the Dividend Recapitalization;

•

completion of a $1.5 billion issuance of unsecured debt in December 2014 to third-party lenders and related expenses; and

•

anticipated issuance of a $ million dividend to Citi in the form of a note, which we refer to as the Dividend Note.

IPO Transactions

•

issuance of million shares of our common stock at an estimated offering price of $ per share (the midpoint of the price range set forth on the front cover of this prospectus), after giving effect to our Amended and Restated Certificate of Incorporation that we intend to file prior to the consummation of this offering; and

•

anticipated repayment of the Dividend Note in full using the proceeds of this offering.

The unaudited historical pro forma consolidated and combined statement of income data for the nine months ended September 30, 2014 is derived from our unaudited Condensed Consolidated and Combined Financial Statements included elsewhere in this prospectus and gives effect to the Transactions as if each had occurred on January 1, 2013. Our unaudited historical pro forma combined statement of income data for the year ended December 31, 2013 is derived from our audited Combined Financial Statements included elsewhere in this prospectus and gives effect to the Transactions as if each had occurred on January 1, 2013. The unaudited historical pro forma consolidated statement of financial position data as of September 30, 2014 is derived from our unaudited Condensed Consolidated and Combined Financial Statements included elsewhere in this prospectus and gives effect to the Transactions as if each had occurred on September 30, 2014 (other than our 144A/Reg S securitization in April 2014, which occurred prior to September 30, 2014).

The unaudited pro forma information below is based upon available information and assumptions that we believe are reasonable, that reflect the expected impact of events that are directly attributable to the Transactions, that are factually supportable and that are expected to have a continuing impact on us.

You should read the following unaudited pro forma consolidated and combined financial statements in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Selected Consolidated and Combined Historical Financial Data” and our Consolidated and Combined Financial Statements and related notes thereto included elsewhere in this prospectus.

Unaudited Pro Forma Condensed Consolidated and Combined Statements of Income Information


	Nine Months Ended September 30, 2014
	Historical		Adjustments for the Pre-IPO Transactions	As Adjusted before this Offering	Adjustments for this Offering and the Use of Proceeds	Pro Forma
	(dollars in millions, except share data)
	(unaudited)
Interest revenue	$	1,542	$	$	$	$
Interest expense(a)		162

Net interest revenue		1,380
Non-interest revenue		289

Total revenue, net of interest expense		1,669
Provision for credit losses and for benefits and claims		488
Operating expenses		532

Income from continuing operations		649
Provision for income taxes(d)		234

Net income	$	415	$	$	$	$

Weighted average shares outstanding		1,000
Earnings per share basic and diluted(e)	$	414,638


	Year Ended December 31, 2013
	Historical		Adjustments for the Pre-IPO Transactions	As Adjusted before this Offering	Adjustments for this Offering and the Use of Proceeds	Pro Forma
	(dollars in millions, except share data)
	(audited)		(unaudited)
Interest revenue	$	2,019	$	$	$	$
Interest expense(a)		228

Net interest revenue		1,791
Non-interest revenue		498

Total revenue, net of interest expense		2,289
Provision for credit losses and for benefits and claims		701
Operating expenses		743

Income from continuing operations		845
Provision for income taxes(d)		309

Net income	$	536	$	$	$	$

Weighted average shares outstanding		1,000
Earnings per share basic and diluted(e)	$	387,063

Unaudited Pro Forma Condensed Consolidated and Combined Statements of Financial Position Information


	As of September 30, 2014
	Historical			Adjustments for the Pre-IPO Transactions	As Adjusted before this Offering	Adjustments for this Offering and the Use of Proceeds	Pro Forma
	(dollars in millions)
	(unaudited)
*Assets*
Cash and cash equivalents	$	307		$	$	$	$
Investments (at fair value)		1,502
Loans receivables net of unearned revenue and deferred costs		8,278
Unearned premium and claims reserves		(415	)
Accrued interest receivable		87
Allowance for loan losses		(643	)
Net consumer finance receivables		7,307
Deferred tax assets, net		274
Intangible assets		—
Premises and equipment, net		98
Other assets(a)		233

Total assets	$	9,721		$	$	$	$

*Liabilities and Equity/Parent Equity*
Related-party debt(c)		3,447
Short-term borrowings		—
Long-term debt(a)		1,944
Insurance policy and claim reserves		465
Accounts payable, accrued expenses and other liabilities		528

Total liabilities		6,384

Common stock, par value(c)
Additional paid-in capital(c)
Accumulated other comprehensive income
Parent equity(b)(c)
Total equity		3,337

Total liabilities and equity/Parent equity	$	9,721		$	$	$	$

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

(a)

Reflects an adjustment to record $ billion of borrowings in connection with our Pre-IPO Transactions described above. The additional borrowing commitments and related interest expense at an estimated weighted average interest rate of % per annum, reflect the following:

completion of a 144A/Reg S securitization in April 2014 for $760 million;

completion of a 144A/Reg S securitization in July 2014 for $1,184 million;

payment of a $1.5 billion special cash dividend to Citi on November 18, 2014, funded by an increase in related-party debt, which we refer to as the “Dividend Recapitalization”; and

the issuance of $1.5 billion of unsecured debt to third-party lenders in December 2014.

The unaudited pro forma consolidated and combined financial information also includes an adjustment to record $ million of deferred financing costs related to the borrowings described above. The proceeds of the new borrowings were used to repay related-party debt.

An increase (decrease) in the weighted average interest rate of 0.125% per annum would increase (decrease) pro forma interest expense related to our borrowings described above by $ million for the nine months ended September 30, 2014 and $ million for the year ended December 31, 2013.

(b)

Reflects the Dividend Recapitalization.

(c)

Reflects that we declared and paid to Citi a dividend of a $ million note on , 2014, which we refer to as the Dividend Note. We intend to repay the Dividend Note in full (plus any accrued and unpaid interest thereon) with the proceeds of this offering. Also reflects the conversion of our Parent’s net investment in us from “Parent equity” to “Common stock” and “Additional paid-in capital” as a result of this offering and the sale of shares of common stock in this offering based on an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the front cover of this prospectus), less assumed underwriting discounts and commissions and estimated offering expenses.

The following adjustments are reflected in our pro forma results to reflect the impact of the Transactions on “Parent equity,” “Common stock,” “Additional paid-in capital” and “Accumulated other comprehensive income.” See “Use of Proceeds.”


	As of September 30, 2014
	Issuance of Dividend Note	Proceeds from This Offering / Use of Proceeds	Conversion of Parent Equity to Additional Paid-in Capital	Adjustments for This Offering / Use of Proceeds
	(unaudited)
Dividend Note
Parent equity
Common stock
Additional paid-in capital
Accumulated other comprehensive income

(d)

Reflects an adjustment to record the tax impact of pro forma earnings adjustments at an estimated statutory tax rate of 36%. We expect our tax rate in future years, however, to vary from this percentage.

(e)

Pro forma basic earnings (loss) per common share is computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Pro forma diluted earnings per common share is computed by dividing earnings (loss) available to common stockholders by the sum of weighted average common shares outstanding plus dilutive common shares for the period. Pro forma basic and diluted common shares also include the number of shares issued in this offering.

The following table sets forth the computation of pro forma basic and diluted net income (loss) per share (in millions, except share amounts):


	Nine Months Ended September 30, 2014	Year Ended December 31, 2013
	(unaudited)
Basic and diluted pro forma net loss per common share
Numerator:
Net income	$	$
Denominator:
Weighted average common shares outstanding
Add:
Shares from this offering, the proceeds of which will be used for the repayment of the Dividend Note
Pro forma weighted average common shares outstanding—basic
Add:
Dilutive effect of stock options
Pro forma weighted average common shares outstanding—diluted
Pro forma net earnings per share—basic
Pro forma net earnings per share—diluted

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated and Combined Financial Statements and related notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Actual results may differ materially from those contained in any forward-looking statements. These forward-looking statements involve numerous risks and uncertainties, including those discussed below and elsewhere in this prospectus including the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” All references in this discussion to “OneMain,” the “Company,” “we,” “us,” “our,” “ours” or similar terms refer to OneMain Financial Holdings, Inc., a Delaware corporation, together with its consolidated subsidiaries. References to “Citi” refer to Citigroup Inc. and its subsidiaries other than OneMain.

Overview

We are a leading consumer finance company in the United States, providing responsible solutions to credit-worthy individuals through our nationwide branch network and online channels. Our 100 plus year history and culture embodies our dedication to high-quality origination, underwriting and servicing of traditional, easily understood and transparent personal loans to primarily middle-income households. Our personal loans are fixed-rate, fixed-term and fixed-payment, which are attractive to our customers. We also offer optional products that protect customers in the event of unforeseen circumstances. At September 30, 2014, we had $8.3 billion of loans outstanding and 1.3 million customer accounts. Our customer base is geographically diverse and has an average FICO score of 629. For the year ended December 31, 2013, we had net income of $536 million representing a return on assets of 5.4% and a return on equity of 19.9%, and for the nine months ended September 30, 2014, we had net income of $415 million representing a return on assets of 5.7% and a return on equity of 17.9%.

The core of our business is a national, community-based network of 1,140 branches, serving 1.3 million customer accounts across 43 states as of September 30, 2014, supported by our online platform that allows us to efficiently process applications and provide convenient self-service features for our customers. As of September 30, 2014, the network consists of a local, well-trained, front-end workforce of approximately 4,100 employees and is supported centrally by approximately 1,150 employees with additional functional support provided by Citi. Our captive insurance business, Citi Assurance Services, or CAS, is staffed by an additional workforce of approximately 215 employees.

Segment Overview

Our business consists of two reportable segments: Lending and Insurance.

Lending Segment. We originate and service both unsecured personal loans and personal loans secured in part or in whole by a customer’s automobile through a national, community-based network of branches. We have consistently maintained a conservative approach to lending and only offer loans to customers that meet a minimum documented ability to pay, ensuring that individuals receive a responsible and appropriate product for their household budget. Our customer sourcing strategy is built on efficiently acquiring new customers while also retaining and growing relationships with profitable existing customers. The primary source for acquiring new customers is through targeted direct mail offers. Online application sourcing is increasingly providing another source for acquiring new customers, with Internet searches, partnerships, affiliates and our branded website accounting for 50% of all new borrower applications for the nine months ended September 30, 2014, up from 34% in 2011. Regardless of the channel from which personal loan originations are sourced, all of our loans require a face-to-face meeting with the customer and in-person closing at a branch.

We have executed a number of restructuring activities since 2011 that are reflected in “—Results of Operations—December 31, 2013, 2012 and 2011” below. Prior to 2011, we were part of a larger business within Citi known as CitiFinancial North America, or CFNA, which contained approximately $10 billion of personal

loans and $15 billion of mortgage and real estate loans in the United States. In the middle of 2010, management decided to split the U.S. business of CFNA into two distinct business lines. OneMain, the go-forward business, retained the majority of U.S. personal loans and a portion of U.S. real estate loans but only until January 2014. CitiFinancial Servicing was formed with the remaining portion that did not strategically align with OneMain’s go-forward origination and risk strategy. CitiFinancial Servicing was designed to support certain customers and loans that would benefit from expanded support, including loan modifications or restructurings, rather than originate loans. In effect, CitiFinancial Servicing became a liquidating business. CitiFinancial Servicing is reflected in discontinued operations in our Combined Financial Statements for the year ended December 31, 2011 as a distribution to our parent company CitiFinancial Credit Company, or CCC, in our combined statement of income for the year ended December 31, 2011.

On July 1, 2011, we also began to service certain real estate loans for CitiFinancial Servicing for which we received a servicing fee. This real estate servicing arrangement ceased as of January 6, 2014, and we no longer receive a servicing fee from CitiFinancial Servicing. On January 1, 2014, we also transferred all real estate loans that we owned to CitiFinancial Servicing. Therefore, all of the originations and servicings that are currently in our Lending Segment are related to personal loans only. As a result of these restructuring activities since 2011, the Combined Financial Statements as of and for the year ended December 31, 2011 are not comparable to subsequent years.

Insurance Segment. We write, reinsure and administer various optional products for our customers and Citi affiliates, including credit life, disability, involuntary unemployment and collateral protection insurance. These products are distributed in the branches through a robust and highly-structured sales process to ensure that customers understand the benefits, costs and optional nature of the products. Credit insurance products are underwritten and administered by American Health and Life Insurance Company and Triton Insurance Company, members of a group of insurance entities within CAS. In the nine months ended September 30, 2014, approximately 65% of our personal loan customers purchased at least one optional product from CAS. Our Insurance Segment also provides fee-based services to Citi affiliates, including the administration of debt protection products. Debt protection products are non-insurance products offered as an extension of a lending agreement. We expect to continue to provide these fee-based services to Citi after the separation.

Our results of operations for the Insurance Segment also includes “closed blocks” of insurance business that are not actively marketed or sold to new customers. The two primary insurance products within these “closed blocks” of business are accidental death and term life insurance. The accidental death insurance and a portion of the term life insurance were acquired from a third party, while a majority of the term life insurance was acquired from an affiliate prior to 2011. Additionally, a block of credit insurance written on real estate loans is in runoff. As these are closed blocks of business, the year-over-year earned premium for these products will decline. The earned premium associated with the accidental death and term life insurance acquired from a third party has declined from $88 million in 2011, to $80 million in 2012 and to $73 million in 2013. The earned premium associated with the term life insurance acquired from an affiliate has declined from $47 million in 2011, to $40 million in 2012 and to $32 million in 2013. The earned premium associated with the credit insurance has declined from $30 million in 2011, to $26 million in 2012 and to $22 million in 2013. As of December 31, 2013, these three closed blocks comprised roughly 94% of the yearly earned premium for all closed blocks of business.

See Note 4 (Business Segments) to our audited Combined Financial Statements for certain additional information regarding our operating segments.

Business Trends and Conditions

We believe our business and results of operations will be affected in the future by various trends and conditions, including the following:

•

Growth in loan portfolio and interest income. We believe that continuing improvement in the U.S. economy and employment rates will contribute to an increase in consumer spending. In addition, we expect the volume of personal loans to continue to increase as consumers increase spending levels. We anticipate that these trends, combined with our marketing efforts and online and branch-based engagement

strategies, will contribute to growth in our loan portfolio. In the near-to-medium term, we expect our total interest revenue to continue to grow, driven by the expected growth of our loan portfolio. We do not currently anticipate any significant changes to personal loan pricing in the near term and therefore expect that yields generated from interest and fees on interest-earning assets will remain relatively stable.

•

Changing funding mix and increased funding costs. Our primary funding sources have historically included cash from operations and funding provided by Citi. In April 2014 and July 2014, we successfully executed two securitization transactions and in December 2014, we completed an issuance of $1.5 billion of unsecured debt, demonstrating our ability to attract independent capital markets funding. Both of these securitizations were structured with a twenty-four month revolving period and are redeemable two years after closing. We expect to continue securitizing loans to achieve cost-effective funding. We also expect to enter into various third-party debt agreements to achieve a debt capital structure that is fully independent of Citi. We expect the following factors to affect our funding costs:

•

the changing mix in our funding costs, as existing debt, in some cases, may be replaced by higher-cost funding provided by third-party sources; and

•

a rising interest rate environment.

As a result of these factors, we expect our aggregate funding costs to increase following this offering. For the year ended December 31, 2013, if we had in place for the entire year the funding sources that we expect to have upon the closing of this offering, our interest expense would have increased by $ million, and our cost of funds would have increased from % to % per annum. See “Unaudited Pro Forma Consolidated and Combined Financial Information.”

•

Elimination of real estate lending and servicing. On June 1, 2012, we ceased originating real estate loans but continued to service our existing portfolio and a larger portfolio of real estate loans owned by CCC. Real estate loans are comprised of residential first mortgages and home equity loans. In January 2014, we transferred our remaining real estate portfolio to an affiliate and also stopped servicing our affiliate’s real estate loan portfolio. The transfer of our real estate loan portfolio in 2014 did not materially change our expense profile because the resources previously dedicated to servicing the real estate loan portfolio were redeployed to originate and service personal loans. The following table sets forth the revenue, credit costs and income before provision for income taxes from our owned and serviced real estate loan portfolios for the years ended December 31, 2013, 2012 and 2011.


	Year Ended December 31,
	2013			2012			2011
	(in millions of dollars)
Real Estate Portfolio Revenue
Interest revenue	$	62		$	75		$	435
Interest expense		(14	)		(19	)		(241	)

Net interest revenue		48			56			194
Non-interest revenue		101			127			71

Total real estate revenue, net of interest expense		149			183			265
Net credit losses		40			43			70
Credit reserve build (release)		(15	)		15			57

Provisions for credit losses		25			58			127

Income before provision for income taxes	$	124		$	125		$	138

•

Stable asset quality. Our personal loan credit performance remained stable through 2013, with a net charge-off rate of 6.30% for the year ended December 31, 2013 and 30+ day delinquency rate of 4.10% for the year ended December 31, 2013, compared to a net charge-off rate of 6.24% for the year ended December 31, 2012 and 30+ day delinquency rate of 4.05% for the year ended December 31, 2012. We continue to strive to originate personal loans that maximize profitability in each state in which we operate

and from time to time will adjust our risk and loss tolerance to achieve our profitability goals. We believe that our net charge-off rates and 30+ day delinquency rates may increase in the near-to-mid term reflecting our risk and loss tolerance in geographies where we have had pricing opportunities. We expect that additional finance charges and interest will offset any resulting increases in our provision for loan losses.

•

Entrance into related-party revenue agreements. As part of our separation from Citi, we will enter into agreements to extend the duration of several strategic commercial relationships with certain Citi affiliates. We expect these relationships to continue to provide important revenue sources that leverage our existing infrastructure and expense base. First, we will enter into two long-term agreements with both of Citi’s credit cards businesses, or Citi Cards, to continue to provide administration services for Citi’s debt protection product portfolios. Our Citi Assurance Services operations team will service this product from Fort Worth, Texas. We expect that this servicing agreement will generate non-lending fee-based revenues of approximately $ million per year. Separately, we will also enter into an agreement with Citi’s branded cards business to underwrite and administer selected insurance benefits provided complimentary with the credit card. We expect to generate approximately $ million in premium and other fee income annually. Lastly, we will enter into a long-term insurance distribution agreement with CitiFinancial Canada whereby we will continue to be the sole underwriter for all the credit insurance products sold by CitiFinancial Canada to its customers. We will pay CitiFinancial Canada a customary distribution fee and a participation in the underwriting profits on all new policies written after separation. We expect to generate revenues of approximately $ million per year from this arrangement with CitiFinancial Canada.

•

Investments in technology. In 2012, we completed the roll-out of Symphony, our proprietary underwriting, originating, servicing and payment processing platform, to all of our branches. In 2014, we started a project to migrate our current account management system to a third-party provider, a project that is expected to create additional operational and product flexibility, a stronger technology model and improved operational efficiency. Additionally, we are expecting to migrate data from the origination system, account management system and third-party partners into a consolidated repository where we can leverage the information for business, finance, marketing and risk management reporting and analysis. While we expect this account management system migration to add incremental expense in the short term, we expect a long-term benefit of cost savings from our current level of expense.

Description of Key Statement of Income Line Items

Below is a summary of the key line items included in our Consolidated and Combined Statements of Income.

Interest Revenue. Interest revenue consists of finance interest and other charges and investment revenue. Finance interest and other charges are comprised of interest earned on our loans, amortization of loan origination fees and certain direct origination costs. Investment revenue consists of interest income from our investment portfolio in the insurance segment.

We analyze finance interest and other charges as a function of two principal components: average net receivables and yield-on-average net receivables. The key drivers of average net receivables include loan volumes, payment rates, early pay-off rates and charge offs. Loan volumes are influenced by a number of factors including macroeconomic conditions and customer demand. Payment rates and early pay-off rates reflect the extent to which customers maintain a balance. Charge offs on loans occur when principal is deemed uncollectible. The key drivers of yield-on-average net receivables include pricing, changes to our mix of loans (for example, differing rate structures by state), credit and delinquency performance, frequency of late fees and accrual status of our loans.

Investment revenue strategy includes analyzing and matching of assets and liabilities to determine strategic asset allocations intended to optimize investment revenue and adequately provide for the anticipated cash flow requirements, while remaining within the strict constraints of our investment guidelines. In 2013, the average duration of our investment portfolio was four years, as compared to a three-year average duration of liabilities.

Interest Expense. Interest expense is incurred on our interest-bearing liabilities, which consist of funding from Citi and debt of our consolidated securitization entities. Key drivers of interest expense include the amounts outstanding of our borrowings and other funding sources, the interest rate environment and its effect on interest rates paid on our funding sources and the changing mix of our funding from Citi, securitizations and other third-party funding.

Net Interest Revenue. Net interest revenue represents the difference between interest revenue and interest expense. We expect net interest revenue, as a percentage of interest-earning assets, to be influenced by changes in the interest rate environment, changes in our mix of products, credit performance of our loans and changes in the amount and composition of our interest-bearing liabilities. We track the spread between the interest revenue earned on our assets and the interest expense incurred on our debt and continually monitor the components of our yield and our cost of funds.

Insurance Premiums. Insurance premiums consists of earned premiums in our insurance segment for insurance coverage sold by our branches and other affiliates, as well as several closed blocks of business acquired through reinsurance transactions. The premium for an insurance policy sold to our lending segment customers is included in the principal amount of a customer’s personal loan, which is repaid by the customer over the term of the loan and earned over the same period.

Other Revenue. Other revenue consists of servicing fees, debt protection administration fees, commissions and other fees. Servicing fees were earned historically for servicing CCC’s real estate loan portfolio for loans that were less than 90+ days past due. As of January 6, 2014, we transferred the responsibility for servicing this real estate loan portfolio to an affiliate, and therefore we have not earned any meaningful servicing fee revenue since January 6, 2014. Debt protection fees consist of administration fees earned from CAS’ role as a vendor for Citi Cards. Additionally, fee income and investment gains/losses on our investment portfolio are also earned in our insurance segment. Lastly, we also earn commissions and a variety of ancillary fees in our Lending Segment.

Operating Expenses. Operating expenses consist of Compensation and benefits, Advertising and marketing and Other operating expenses. Compensation and benefits expense primarily consists of employee salaries, incentive compensation and benefit costs. Advertising and marketing expense includes spending that directly drives our loan volume and spending on sponsorships and branding initiatives. Other operating expenses primarily consist of premises costs, technology and communications expense and other general and administrative expense. As discussed below under “—Our Separation from Citi,” Citi provides us with certain services that are indirectly allocated to us as corporate overhead unless the costs associated with such services are directly charged and included in the appropriate cost categories (for example, employee benefits costs charged to us and included in Compensation and benefits expense).

We assess our operational efficiency using various metrics and conduct extensive operating expense analysis to determine whether fluctuations in cost and expense levels indicate trends that need to be addressed. Our operating expense analysis also includes a review of origination and servicing costs to assist us in assessing profitability by portfolio and by branch.

Provision for Credit Losses. Provision for credit losses is the expense related to our net credit losses (gross charge-offs less recoveries) and maintenance of the allowance for loan losses. The allowance for loan losses is maintained at a level to absorb the estimated probable losses of the loan portfolio, including expected future losses on troubled debt restructurings, or TDR loans, at each period-end date. We continuously review and evaluate our loan loss reserve methodology and models and implement further enhancements or changes to them, as needed.

Each of our loans is assessed using our proprietary, risk-based underwriting models that take into account an applicant’s credit profile, as well as their ability to repay the proposed loan. Because the profitability of our loan portfolio is directly affected by net credit losses, we closely analyze credit performance on an ongoing basis. We also monitor recovery rates because of their impact on the charge offs. Additionally, because delinquencies are an early indicator of future credit losses, we analyze delinquency trends, adjusting for seasonality, to determine whether or not our loans are performing in line with our expectations. For more information, see “—Credit Quality” below.

Policyholder Benefits and Claims. Policyholder benefits and claims is the expense related to claims payments to our insurance policyholders, plus changes to the claims reserves at each period-end date.

Provision for Income Taxes. We are included in the consolidated U.S. federal and state income tax returns of Citi, where applicable, but also file certain separate state and foreign income tax returns. The tax provision and current and deferred tax balances have been presented on a separate company basis as if we were a separate filer. The effects of tax adjustments and settlements from taxing authorities are presented in our Consolidated and Combined Financial Statements in the period to which they relate as if we were a separate filer. Our current tax obligations are settled with CCC on an estimated basis and adjusted in later periods as appropriate and reflected in our Consolidated and Combined Financial Statements in the periods in which those settlements occur. We recognize the current and deferred tax consequences of all transactions that have been recognized in the Consolidated and Combined Financial Statements using the provisions of the enacted tax laws. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws and rates that will be in effect when the differences are expected to reverse. We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. See Note 11 (Income Taxes) to our audited Combined Financial Statements for additional detail.

Results of Operations


	Nine Months Ended September 30,				Year Ended December 31,
	2014		2013		2013		2012		2011
	(in millions of dollars)
	(unaudited)
Interest revenue
Finance interest and other charges	$	1,496	$	1,451	$	1,953	$	1,907	$	2,251
Investment revenue		46		50		66		75		88

Interest revenue total		1,542		1,501		2,019		1,982		2,339
Interest expense		162		174		228		264		676

Net interest revenue		1,380		1,327		1,791		1,718		1,663

Other non-interest revenue
Insurance premiums		255		265		353		379		400
Other revenue		34		113		145		174		100

Non-interest revenue total		289		378		498		553		500

Total revenue, net of interest expense		1,669		1,705		2,289		2,271		2,163

Provision for losses
Net credit losses		374		405		534		532		574
Credit reserve build (release)		12		15		16		151		(102	)

Total provision for credit losses		386		420		550		683		472
Policyholder benefits and claims		102		115		151		167		193

Provision for credit losses, benefits and claims		488		535		701		850		665

Operating expenses
Compensation and benefits		216		220		294		264		342
Advertising and marketing		55		46		66		67		83
Other operating expenses		261		293		383		459		381

Total operating expenses		532		559		743		790		806

Income for continuing operations before provision for income taxes		649		611		845		631		692
Provision for income taxes		234		224		309		224		234

Net income from continuing operations		415		387		536		407		458

Discontinued operations
Loss from discontinued operations		—		—		—		—		(230	)
Benefit for income taxes		—		—		—		—		90

Loss from discontinued operations		—		—		—		—		(140	)

Net income	$	415	$	387	$	536	$	407	$	318

Results of Operations—Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

Interest Revenue. Total interest revenue increased by $41 million as of the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013, which was primarily due to increases in our personal loan volumes and yields. That growth was partially offset by the transfer of our real estate portfolio to an affiliate on January 1, 2014. The following table sets forth changes in our Lending Segment finance charges.


	Nine Months Ended September 30,
	2014		2013
	(in millions of dollars)
Lending Segment
Personal loan finance charges	$	1,496	$	1,402
Real estate finance charges		—		49

Total Lending Segment interest revenue		1,496		1,451


Insurance Segment
Investment revenue		46		50

Total interest revenue	$	1,542	$	1,501

The following table sets forth the changes in our finance charges due to yield and volume for the nine months ended September 30, 2014 when compared to the same period in 2013.


	Nine Months Ended September 30,
	2014 v. 2013
	(in millions of dollars)
Changes in Finance Charges, Lending Segment
Increase in personal loan finance charges due to yield	$	37
Increase in personal loan finance charges due to volume		57
Decrease in real estate finance charges		(49	)

Total	$	45

For the Lending Segment for the nine months ended September 30, 2014, finance interest and other charges increased by $45 million when compared to the nine months ended September 30, 2013. This was due primarily to an increase of $94 million in our personal loan finance charges, which was partially offset by a $49 million decrease in real estate finance charges due to the transfer of our real estate loan portfolio to an affiliate in January 2014. Our continued focus on originating loans with higher profitability, as well as the impact of pricing increases in several states, positively impacted our personal loan yields, which increased from 24.13% in the nine months ended September 30, 2013 to 24.76% in the same period in 2014. Personal loan average net receivables increased by $308 million in the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013 due primarily to our branches being able to solely focus on personal loans following the transfer of our real estate portfolio and servicing in January 2014.

For the Insurance Segment for the nine months ended September 30, 2014, investment revenue decreased by $4 million for the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013 primarily due to a reduction in the insurance investment portfolio as a result of ordinary dividends paid to CCC in 2013.

Interest Expense. For the nine months ended September 30, 2014, interest expense decreased by $12 million when compared to the nine months ended September 30, 2013 due to an overall decrease in average total debt of $483 million, which was partially offset by an increase in the weighted average interest rate of

0.05%. The weighted average rate of interest paid on our outstanding debt was 3.80% and 3.75% for the nine months ended September 30, 2014 and 2013, respectively. Our average related-party debt (which we characterize as short-term debt) decreased by $1.3 billion for the nine months ended September 30, 2014, but was partially offset by an increase in average long-term (third-party) debt of $856 million from our April 2014 and July 2014 securitizations of personal loans. We had no long-term debt outstanding as of September 30, 2013.

Non-Interest Revenue. Non-interest revenue decreased by $89 million in the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013. The following table summarizes non-interest revenue, by segment, for the nine months ended September 30, 2014 and 2013.


	Nine Months Ended September 30,
	2014			2013
	(in millions of dollars)
Lending Segment
Lending revenue	$	55		$	131

Insurance Segment
Insurance premiums		255			265
Other insurance revenue		10			12

Total		265			277
Inter-segment elimination(1)		(31	)		(30	)

Total non-interest revenue	$	289		$	378

(1)

Represents payments made by the Insurance Segment to the Lending Segment for selling insurance products through the Lending Segment branch network.

For the Lending Segment, non-interest revenue decreased by $76 million in the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to the cessation of servicing our affiliate’s portfolio of real estate loans in January 2014.

For the Insurance Segment, Insurance premiums decreased by $10 million in the nine months ended September 30, 2014 when compared to the same period in 2013. This decrease was driven primarily by the run-off of the closed blocks of insurance business. Premiums earned related to our personal loans in the nine months ended September 30, 2014 and 2013 were $123 million and $120 million, respectively. Premiums related to the closed blocks of insurance business for the same periods were $94 million and $103 million, respectively. Other non-interest revenue decreased by $2 million in the nine months ended September 30, 2014 when compared to the same period in 2013, primarily due to higher capital gains on the insurance investment portfolio in the nine months ended September 30, 2013.

Operating Expenses. Operating expenses decreased by $27 million in the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013. The following table summarizes the components of operating expenses, by segment, for the nine months ended September 30, 2014 and 2013.


	Nine Months Ended September 30,
	2014			2013
	(in millions of dollars)
Lending Segment
Compensation and benefits	$	200		$	204
Advertising and marketing		55			46
Other operating expenses		219			248

Total Lending Segment operating expenses		474			498

Insurance Segment
Compensation and benefits		16			16
Advertising and marketing		—			—
Other operating expenses		73			75

Total Insurance Segment operating expenses		89			91

Inter-segment elimination(1)		(31	)		(30	)

Total operating expenses	$	532		$	559

(1)

Represents payments made by the Insurance Segment to the Lending Segment for selling insurance products through the Lending Segment branch network.

For the Lending Segment, Compensation and benefit expenses decreased by $4 million in the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to a reduction in the Citi benefits rates and a reduction in headcount. We reimburse Citi for benefits provided to our employees under various Citi employment benefit plans. These costs are charged to us based on our employees’ eligible wages and actual third-party costs incurred by Citi. The third-party costs are impacted by claim rates, return on assets and other factors. We expect Citi will generally continue to provide these benefits to our employees at our expense, as referenced under the contemplated Employee Matters Agreement and Transition Services Agreement, for as long as Citi owns a significant amount of our common stock, or until such time as separate benefit plans are established. Advertising and marketing expenses increased by $9 million in the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to planned spending increases in our direct mail and Internet channels to support our loan growth objectives. Other operating expenses decreased by $29 million in the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to a reduction in indirectly allocated costs from Citi.

For the Insurance Segment, Compensation and benefit expenses in the nine months ended September 30, 2014 were flat when compared to the same period in 2013. Advertising and marketing expenses were essentially zero. Other operating expenses decreased by $2 million in the nine months ended September 30, 2014 when compared to the same period in 2013 due to lower expenses related to the run-off of the closed blocks of insurance business.

Provision for Credit Losses. Net credit losses decreased by $31 million in the nine months ended September 30, 2014 when compared to the same period in 2013 due primarily to the transfer of our real estate loan portfolio to an affiliate in January 2014.

Policyholder Benefits and Claims. Policyholder benefits and claims in the nine months ended September 30, 2014 and 2013 decreased by $13 million when compared to the same period in 2013, primarily due to the run-off of closed blocks of insurance business and a reduction in disability claims. The policyholder benefits and claims related to the closed blocks of insurance business in the nine months ended September 30, 2014 and 2013 were $46 million and $54 million, respectively.

Provision for Income Taxes. Our effective tax rate was 36.1% and 36.7% for the nine months ended September 30, 2014 and 2013, respectively. The effective tax rate differs from the U.S. federal statutory tax rate of 35% due to state and local income taxes and the business and geographic mix of earnings.

Net Income from Continuing Operations. Net income from continuing operations of $415 million increased by $28 million in the nine months ended September 30, 2014 when compared to the same period in 2013. The increase in net income was driven primarily by a decrease in our Provision for credit losses, benefits and claims, which was $47 million lower in the nine months ended September 30, 2014 when compared to the same period in 2013. We also had a decrease of $27 million in Operating expenses in the nine months ended September 30, 2014 when compared to the same period in 2013 that contributed to the increase in Net income. These were partially offset by a $36 million decrease in Revenue related to the transfer of our real estate portfolio and an increase of $10 million in our Provision for income taxes for the same period.

Results of Operations—Years Ended December 31, 2013, 2012 and 2011

As discussed above in “—Segment Overview,” the results of operations for the Lending Segment in 2011 are not directly comparable to those in 2012 and 2013 due to a number of restructuring activities.

Interest Revenue. Total interest revenue increased by $37 million in 2013 when compared to 2012, which was primarily due to increases in our personal loan yields. Total interest revenue decreased by $357 million in 2012 when compared to 2011, which was primarily due to our split from CitiFinancial Servicing in 2011.


	Year Ended December 31,
	2013		2012		2011
	(in millions of dollars)
Lending Segment
Personal loan finance charges	$	1,891	$	1,832	$	1,816
Real estate finance charges		62		75		435

Total Lending Segment interest revenue		1,953		1,907		2,251


Insurance Segment
Investment revenue		66		75		88

Total interest revenue	$	2,019	$	1,982	$	2,339

The following table sets forth the changes in our finance charges due to yield and volume in the years ended December 31, 2013, 2012 and 2011.


	Year Ended December 31,
	2013 v. 2012			2012 v. 2011
	(in millions of dollars)
Changes in Finance Charges
Increase in personal loan finance charges due to yield	$	59		$	44
Decrease in personal loan finance charges due to volume		—			(28	)
Decrease in real estate finance charges		(13	)		(360	)

Total	$	46		$	(344	)

For the Lending Segment in 2013, finance interest and other charges increased by $46 million when compared to 2012. This was primarily due to our focus on originating loans with higher profitability and pricing increases in several states, which increased our personal loan yield from 23.38% in 2012 to 24.13% in 2013. Personal loan average net receivables remained relatively flat in 2013 when compared to 2012 at $7.8 billion. The reduction in real estate finance charges was driven by the continued liquidation of our run-off real estate loan

portfolio in 2013. Excluding a decrease of $360 million in real estate finance charges that was driven by the split of OneMain and CitiFinancial Servicing in 2011 and continued liquidation of the real estate portfolio, finance charges were up $16 million in 2012 as compared to 2011 as a $28 million decrease from lower volumes was offset by an increase of personal loan yield from 22.82% in 2011 to 23.38% in 2012.

For the Insurance Segment in 2013, investment revenue decreased by $9 million when compared to 2012 and by $13 million in 2012 when compared to 2011, primarily due to a reduction in the insurance investment portfolio as a result of dividends of excess capital paid to CCC each year.

Interest Expense. For 2013, interest expense decreased by $36 million when compared to 2012 due to a decrease in average debt of $779 million and a decrease in the weighted average interest rate of 0.10%. Average debt decreased in 2013 when compared to 2012 primarily because we reduced our borrowings through cash payments of $725 million in December 2012 and $2.1 billion during 2013.

For 2012, interest expense decreased by $412 million when compared to 2011 due to a decrease in average debt of $8.35 billion and a decrease in the weighted average interest rate of 0.63%. Average debt decreased in 2012 when compared to 2011 due to the repayment of a large amount of related-party debt relating to our split from CitiFinancial Servicing in 2011. The weighted average rate of interest paid for the years ended December 31, 2013, 2012 and 2011 was 3.69%, 3.79% and 4.42%, respectively.

Non-Interest Revenue. Non-interest revenue decreased by $55 million in 2013 when compared to 2012 and increased by $53 million in 2012 when compared to 2011. The following table summarizes non-interest revenue, by segment, for the years ended December 31, 2013, 2012 and 2011.


	Year Ended December 31,
	2013			2012			2011
	(in millions of dollars)
Lending Segment
Lending revenue	$	170		$	186		$	103

Insurance Segment
Insurance premiums		353			379			400
Other insurance revenue		15			28			18

Total		368			407			418
Inter-segment elimination(1)		(40	)		(40	)		(21	)

Total non-interest revenue	$	498		$	553		$	500

(1)

Represents payments made by the Insurance Segment to the Lending Segment for selling insurance products through the Lending Segment branch network.

For the Lending Segment in 2013, non-interest revenue decreased by $16 million when compared to 2012, primarily due to a decrease in the revenue received from servicing our affiliate’s liquidating real estate loan portfolio. Non-interest revenue increased by $83 million in 2012 when compared to 2011, largely due to our split from CitiFinancial Servicing in 2011, after which we continued to service the real estate loan portfolio, therefore increasing our servicing fee revenue in 2012 relative to 2011.

For the Insurance Segment in 2013, Insurance premiums decreased by $26 million when compared to 2012. This decrease was driven primarily by the run-off of the closed blocks of insurance business. Insurance premiums decreased $21 million when comparing 2012 to 2011, also driven by the run-off of the closed blocks of business. Premiums earned related to our personal loans in 2013, 2012 and 2011 were $161 million, $162 million and $163 million, respectively. Premiums related to the closed blocks of insurance business in 2013, 2012 and 2011 were $137 million, $158 million and $179 million, respectively. Other insurance revenue

decreased by $13 million in 2013 when compared to 2012, primarily due to lower capital gains on our investment portfolio. Other insurance revenue increased by $10 million in 2012 when compared to 2011, primarily due to higher capital gains on the insurance investment portfolio in 2012.

Operating Expenses. Operating expenses decreased by $47 million and $16 million in 2013 and 2012, respectively, when compared to the prior year. The following table summarizes the components of Operating expenses, by segment, for the years ended December 31, 2013, 2012 and 2011.


	Year Ended December 31,
	2013			2012			2011
	(in millions of dollars)
Lending Segment
Compensation and benefits	$	273		$	242		$	319
Advertising and marketing		66			66			81
Other operating expenses		324			395			303

Total Lending Segment operating expenses		663			703			703

Insurance Segment
Compensation and benefits		21			22			23
Advertising and marketing		—			1			2
Other operating expenses		99			104			99

Total Insurance Segment operating expenses		120			127			124
Inter-segment elimination(1)		(40	)		(40	)		(21	)

Total operating expenses	$	743		$	790		$	806

(1)

Represents payments made by the Insurance Segment to the Lending Segment for selling insurance products through the Lending Segment branch network.

For the Lending Segment in 2013, Compensation and benefits increased by $31 million when compared to 2012, primarily due to a shift of expenses from Other operating expenses in 2012 to Compensation and benefits. This shift of expenses was due to an affiliate’s transfer of certain employees to us in 2013; prior to this transfer, the expense for these employees had been allocated to us and reported in Other operating expenses. Advertising and marketing remained stable in 2013 when compared to 2012. Other operating expenses decreased by $71 million in 2013 when compared to 2012 due to the transfer of employees explained above and a decrease in indirectly allocated costs from Citi.

For the Lending Segment in 2012, Compensation and benefit expenses decreased by $77 million when compared to 2011 primarily due to a shift of expenses from Compensation and benefits to Other operating expenses due to our transferring of certain employees to an affiliate; prior to this transfer, the expense for these employees had been directly incurred by us and reported in Compensation and benefits. Advertising and marketing expenses decreased by $15 million in 2012 when compared to 2011 primarily due to the increased advertising expenditures to support our rebranding efforts during 2011. Other operating expenses increased by $92 million in 2012 when compared to 2011 due primarily to the above-referenced transfer of employees and an increase in our technology expense of $19 million.

For the Insurance Segment, Compensation and benefits decreased by $1 million and $1 million in 2013 and 2012, respectively, primarily due to reductions in headcount. Other operating expenses decreased by $5 million in 2013 when compared to 2012, primarily due to lower expenses related to the closed blocks of insurance business. In 2012, other operating expenses increased by $5 million when compared to 2011, primarily due to an increase in the payment made by the Insurance Segment to the Lending Segment for selling insurance products through the Lending Segment branch network, partially offset by a reduction in the expense related to the closed blocks of insurance business.

Provision for Credit Losses. While net credit losses in 2013 increased by $2 million when compared to 2012, our credit reserve build/(release) decreased by $135 million primarily due to the absence of a credit reserve build for TDR loans. While net credit losses in 2012 decreased by $42 million when compared to 2011, our credit reserve build/(release) increased by $253 million primarily due to a credit reserve build for TDR loans related to a revised outlook on the future performance of our TDR loans after a release in 2011 that was driven by improving performance of the portfolio and several macroeconomic factors.

Policyholder Benefits and Claims. Policyholder benefits and claims decreased by $16 million when comparing 2013 to 2012 and by $26 million when comparing 2012 to 2011, primarily due to the run-off of closed blocks of insurance business and improved loss performance. The policyholder benefits and claims related to the closed blocks of insurance business in 2013, 2012 and 2011 were $73 million, $80 million and $93 million, respectively.

Provision for Income Taxes. Our effective tax rate was 36.6%, 35.5% and 33.8% for the years ended December 31, 2013, 2012 and 2011, respectively. In 2013, 2012 and 2011, the effective tax rate differs from the U.S. federal statutory tax rate of 35% due to state and local income taxes and the business and geographic mix of earnings.

Net Income from Continuing Operations. Net income from continuing operations of $536 million increased by $129 million in 2013 when compared to 2012. The increase in net income from continuing operations was driven primarily by a decrease in our Provision for credit losses and Policyholder benefits and claims, which was $149 million lower in 2013 than in 2012. We also had a decrease of $47 million in Operating expenses and an increase of $18 million in revenue in 2013 when compared to 2012 that were offset by an increase of $85 million in our Provision for income taxes.

Net income from continuing operations of $407 million decreased by $51 million in 2012 when compared to 2011. The decrease in net income from continuing operations was driven primarily by an increase in our Provision for credit losses and Policyholder benefits and claims, which was $185 million higher in 2012 than in 2011. We also had an increase in revenue of $108 million and a decrease in Operating expenses of $16 million in 2012 when compared to 2011 that were offset by a decrease of $10 million in our Provision for income taxes.

Credit Quality

Loan Portfolio. Our largest category of assets and primary source of revenue is our loan portfolio. The following table sets forth the composition of our loan portfolio by product type, as of the dates indicated.


	At or for the Nine Months Ended September 30,										At or for the Year Ended December 31,
	2014					2013					2013					2012
	$		%			$		%			$		%			$		%
	(in millions of dollars)
End of Period Loan Receivables
Personal loans	$	8,278		100	%	$	7,993		94	%	$	8,112		95	%	$	7,890		93	%
Real estate loans		—		—			486		6	%		463		5	%		557		7	%

Total end of period loan receivables	$	8,278		100	%	$	8,479		100	%	$	8,575		100	%	$	8,447		100	%

Average Loan Receivables
Personal loans	$	8,079		100	%	$	7,771		94	%	$	7,837		94	%	$	7,836		93	%
Real estate loans		—		—			522		6	%		510		6	%		600		7	%

Total average loan receivables	$	8,079		100	%	$	8,293		100	%	$	8,347		100	%	$	8,436		100	%

Our personal loan portfolio had the following geographic concentration as of September 30, 2014 and December 31, 2013. The table below shows our five largest states, none of which are more than 10% of our total personal loan portfolio.


	As of September 30, 2014					As of December 31, 2013
	Personal Loans Outstanding		% of Total Personal Loans Outstanding			Personal Loans Outstanding		% of Total Personal Loans Outstanding
	(in millions of dollars)
State
Texas	$	804		9.7	%	$	788		9.7	%
North Carolina		722		8.7	%		686		8.5	%
Pennsylvania		548		6.6	%		531		6.5	%
California		472		5.7	%		464		5.7	%
Ohio		400		4.8	%		391		4.8	%

Delinquency. We consider the delinquency status of our personal loan portfolio as a key credit quality indicator and we monitor delinquency trends to assist in managing our exposure to credit risk. Interest income accrual ceases for personal loans when payments are 90 days contractually past due. Contractual delinquency status is determined by the number of payments that have elapsed since the paid-to-date of a loan, which is the date after which an account is deemed past due. When payments are applied to an account, the number of months the paid-to-date is advanced is determined by taking the number of all scheduled payments that have become due, and comparing it to the number of all payments satisfied after the payments have been applied, rounded to the nearest whole number. As long as the total number of rounded payments made is greater than or equal to the total number of payments due as of the then-current paid-to-date, the paid-to-date will advance. The following is a summary of net personal loans by the number of days delinquent as of the dates indicated:


	As of September 30,					As of December 31,
	2014					2013					2012
	$		%			$		%			$		%
	(in millions of dollars)
Personal loan receivables:
Current	$	7,915		95.61	%	$	7,780		95.90	%	$	7,570		95.95	%
30-89 days past due		159		1.93	%		136		1.68	%		129		1.63	%
90+ days past due		204		2.46	%		196		2.42	%		191		2.42	%

Total personal loan receivables		8,278		100.00	%		8,112		100.00	%		7,890		100.00	%

Total real estate loan receivables		—					463					557

Total end of period loan receivables	$	8,278				$	8,575				$	8,447

Credit Losses. Net credit losses consist of the unpaid principal balance of loans, net of the related deferred fees and costs that we determine are uncollectible, net of recovered amounts. Net credit losses are recorded as a reduction to the allowance for loan losses and subsequent recoveries of previously charged off amounts are credited to the allowance for loan losses.

Personal loans net credit losses totaled $374 million for both the nine months ended September 30, 2014 and 2013, as increased recoveries during 2014 offset the increase in gross credit losses driven by growth in the portfolio.

Personal loans net credit losses totaled $494 million, $489 million and $504 million for the years ended December 31, 2013, 2012 and 2011, respectively. The increase of $5 million from 2012 to 2013 was primarily attributable to the slight growth of the portfolio. The decrease of $15 million from 2011 to 2012 was primarily due to tightening credit during the recession.


	Nine Months Ended September 30,						Year Ended December 31,
	2014			2013			2013			2012			2011
	(in millions of dollars)
Personal loan:
Gross credit losses	$	417		$	404		$	535		$	517		$	526
Credit recoveries		43			30			41			28			22

Personal loan net credit losses		374			374			494			489			504

Real estate net credit losses		—			31			40			43			70

Total net credit losses	$	374		$	405		$	534		$	532		$	574

Personal loan credit losses as % of average personal loan receivables		6.19	%		6.43	%		6.30	%		6.24	%		6.33	%

Allowance for Loan Losses. The allowance for loan losses is established by direct charges to income in amounts sufficient to maintain the allowance at a level management determines to be adequate to cover probable losses inherent in our existing portfolio. The allowance may fluctuate based upon continual review of the loan portfolio and changes in economic conditions.

The allowance for personal loan losses totaled $643 million at September 30, 2014 compared with $631 million at December 31, 2013. The increase of $12 million was primarily attributable to the growth of our portfolio and seasonality of our delinquency.

The allowance for personal loan losses totaled $631 million at December 31, 2013 compared with $623 million at December 31, 2012. The increase of $8 million was primarily attributable to portfolio growth during 2013.


	At September 30,						At December 31,
	2014						2013						2012
	$			%			$			%			$			%
	(in millions of dollars)
Allowance for loan losses, ending balance
Personal loans	$	643			100	%	$	631			93	%	$	623			91	%
Real estate loans		—			—			45			7	%		63			9	%

Total allowance for loan losses, ending balance	$	643			100	%	$	676			100	%	$	686			100	%

Personal loan allowance as % of end of period personal loan receivables		7.77	%					7.78	%					7.90	%
Personal loan allowance, months of concurrent coverage		15.5						15.3						15.3

The following table summarizes the change in the allowance for loan losses on consumer finance receivables:


	Nine Months Ended September 30,						Year Ended December 31,
	2014			2013			2013			2012			2011
	(in millions of dollars)
Balance, January 1	$	676		$	686		$	686		$	545		$	2,652
Provision for credit losses		386			420			550			683			472
Amounts charged off		(417	)		(436	)		(577	)		(561	)		(599	)
Recovery of amounts previously charged off		43			31			43			29			25
Distribution to parent		(45	)		(2	)		—			—			(278	)
Changes due to discontinued operations		—			—			—			—			(1,727	)
Other(1)		—			—			(26	)		(10	)		—

Balance, end of period(2)	$	643		$	699		$	676		$	686		$	545

Total loans(3)	$	8,278		$	8,479		$	8,575		$	8,447		$	8,757
Ratio of allowance for loan losses to consumer finance receivables		7.77	%		8.24	%		7.88	%		8.12	%		6.22	%

(1)

Related to a non-provision transfer of reserves associated with loan sale transactions.

(2)

Beginning in October 2013, TDRs that have subsequently renewed into a new loan at current market terms, and for which the borrower is no longer experiencing financial difficulty, are no longer considered an impaired loan or a TDR at time of renewal. Management determined that it is impracticable to determine the effect of applying this change retrospectively to impaired loans and the related allowance for loan losses presented prior to October 2013.

(3)

Excludes unearned premium and claim reserves and accrued interest receivable.

Troubled Debt Restructuring (TDR) Loans. When we determine that a customer no longer has the ability to satisfy the original payment obligations on their loan and would have the ability and willingness to satisfy modified payment obligations, we can grant them a concession through a temporary or permanent modification of loan terms. These concessions can include a reduced interest rate, deferred loan principal, contingent principal forgiveness and/or an extension of the loan amortization schedule. Permanent modification programs are primarily used in cases such as bankruptcy, as well as in permanent hardship situations where a customer suffers from the death of a spouse or permanent disability. Temporary modification programs are primarily used for temporary hardship situations such as unemployment for a five-to-eleven month period, and revert back to the original loan terms at the expiration of the temporary modification. Prior to granting a modification program to a customer, full income and employment verification is required, and this verification process is substantially similar to the process for a newly underwritten loan. Loans whose terms have been modified as described above are reported as TDR loans. The following table is a summary of the recorded investment of TDR loans for the dates indicated:


	At September 30,					At December 31,
	2014					2013						2012
	Personal Loans			Real Estate Loans		Personal Loans			Real Estate Loans			Personal Loans			Real Estate Loans
	(in millions of dollars)
Total TDR loan principal(1) (2)	$	496		$	—	$	476		$	63		$	488		$	64
Net origination costs & fees		—			—		—			—			—			—

Outstanding recorded investment		496			—		476			63			488			64
Allowance for TDR loan losses		(206	)		—		(212	)		(23	)		(213	)		(28	)

Outstanding recorded investment, net of allowance	$	290		$	—	$	264		$	40		$	275		$	36

(1)

Total TDR loan principal represents contractual principal amounts due from borrowers net of principal charged off.

(2)

The amount of loans reclassified to performing loans by period is as follows: $12 million in 2012, $64 million in 2013 and $60 million as of September 30, 2014.

Our Separation from Citi

Citi and its subsidiaries have historically provided us with centralized support related to employee benefits, technology, operations and other shared services. Prior to the completion of this offering, we will enter into an employee matters agreement with Citi, or the Employee Matters Agreement, and a transition services agreement with Citi, or the Transition Services Agreement, that will govern the provision of, and costs associated with, such services to us after this offering. As a result of our separation from Citi and transition to a stand-alone public company, we expect to incur some short-term expenses and modest increased costs of approximately $ million to $ million per year to build our capabilities as a public company and replace services previously provided by Citi.

Citi has also historically provided funding to us. In conjunction with this offering, we intend to establish an independent capital structure. To this end, we have completed two separate securitizations of our loan portfolios in 2014, and we also expect to incur $ billion of third-party debt prior to the completion of this offering.

The historical costs related to these services and the interest related to the funding provided by Citi include directly charged costs associated with services provided directly to us, indirectly allocated costs related to general corporate services and interest expense, as described below.


	Nine Months Ended September 30,				Year Ended December 31,
	2014		2013		2013		2012
	(in millions of dollars)
Directly charged costs(1)	$	157	$	167	$	224	$	254
Indirectly allocated costs(2)		33		58		76		101
Interest expense(3)		145		174		228		173

Total expenses for services and funding provided by Citi	$	335	$	399	$	528	$	528

(1)

Included in the Compensation and benefits, Advertising and marketing and Other operating expenses line items in our Consolidated and Combined Statements of Income.

(2)

Included in the Other operating expenses line item in our Consolidated and Combined Statements of Income.

(3)

Included in the Interest expense line item in our Consolidated and Combined Statements of Income.

After the completion of this offering, indirectly allocated costs will become directly charged costs and will be charged to us under the Employee Matters Agreement and Transition Services Agreement in accordance with the terms of those agreements. Other than services provided under the Employee Matters Agreement (as described below), we expect that the majority of the services currently provided by Citi will be replaced within twelve to twenty-four months of this offering.

Directly Charged Costs. Certain functions and services, such as employee benefits, technology, office space and operations and shared services, are centralized at Citi. In addition, Citi enters into certain third-party contracts for goods and services from which we benefit, such as software licenses or desktop operating systems. Citi charges us for these goods and services using methodologies based on our actual use (for example, the number of software licenses that we use). For these services from Citi, we incurred costs of $157 million and $167 million for the nine months ended September 30, 2014 and 2013, respectively, and $224 million and $254 million for the years ended December 31, 2013 and 2012, respectively. Below is a description of the services resulting in the most significant direct costs.

•

Employee benefits. We reimburse Citi for payroll taxes and benefits provided to our employees under various Citi employee benefit plans, including Citi’s retirement plans and active health and life insurance plans. These costs are charged to us based on our employees’ wages. For these plans, we incurred costs of $55 million and $59 million for the nine months ended September 30, 2014 and 2013, respectively, and

$80 million and $70 million for the years ended December 31, 2013 and 2012, respectively. Under the contemplated Employee Matters Agreement, we expect that Citi will generally continue to provide these benefits to our employees at our expense for as long as Citi owns a significant amount of our outstanding common stock. See “Certain Relationships and Related Party Transactions—Relationship with Citi—Employee Matters Agreement.”

OneMain Financial Holdings, Inc. S-1/A