Philip M. Hanley
Sr. Vice President & Chief Financial Officer
American General Finance, Inc.
812-468-5420
AMERICAN GENERAL FINANCE CORPORATION
ANNOUNCES THIRD QUARTER 1995 RESULTS
EVANSVILLE, IN OCTOBER 24, 1995. American General Finance Corporation reports
net finance receivables increased $109 million in the third quarter to $8.4
billion at September 30, 1995. Internal growth was led by the real estate
portfolio. Net income for the quarter was $56 million compared to $63 million
for the third quarter of 1994. For the first nine months of 1995, net income
was $182 million compared to $173 million for the same period in 1994. The
1995 earnings represent a return on equity of 17.2%.
The primary contributor to the lower earnings was a higher level of provision
for finance receivable losses for the quarter driven by continued increases in
delinquency and net charge offs in the non-real estate portfolios. Offsetting
the higher loss provision were increased yield on finance receivables,
increased insurance earnings and an after tax reduction in state income taxes
of $16 million.
In reaction to the third quarter's higher level of delinquency and charge
offs, management added $49 million to the allowance for finance receivable
losses. This additional reserving increased allowance for finance receivable
losses to 3.62% of receivables and to the high end of the company's historic
1.2 to 1.3 range of allowance to annual charge offs.
In order to mitigate downward pressure on earnings, management has continued
its efforts to improve credit quality. The more significant actions that have
been taken include: raising underwriting standards, slowing all but real
estate growth while stressing collections, and continuing branch training.
Management believes that appropriate corrective actions are essentially in
place, and that the major impact of these programs will be realized during
1996.
American General Finance continues to fine tune the implementation of its
strategy to serve lower-to-middle income consumers through a broad branch
office network. Over the past few years, this strategy has yielded very
positive results as evidenced by higher levels of earnings, return on assets
and return on equity. Management s challenge is to work through the current
level of credit losses and return to the profitability that its strategy can
support.
FINANCIAL HIGHLIGHTS:
(Dollars in Millions, Annualized Percents)
For the Quarter Ended September 30, 1995 1994
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Revenues:
Finance Charges $ 384 $ 276
Insurance $ 55 $ 46
Other $ 30 $ 35
Total Revenues $ 469 $ 357
Net Income $ 56 $ 63
Yield 18.20% 17.59%
Charge-Off Ratio 3.22% 2.25%
For the Nine Months Ended September 30, 1995 1994
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Total Revenues $1,355 $1,006
Net Income $ 182 $ 173
Yield 18.03% 17.37%
Charge-Off Ratio 2.99% 2.10%
Return on Assets 2.59% 2.93%
Return on Equity 17.22% 18.71%
At: 9/30/95 12/31/94
- --- ------- --------
Total Assets $9,618 $8,919
Net Finance Receivables $8,431 $7,907
Delinquency Ratio 3.75% 2.89%
American General Finance Corporation and its subsidiaries are engaged in the
consumer finance and related credit insurance business. The company,
headquartered in Evansville, Indiana, has assets of $9.6 billion and operates
nearly 1,400 offices in 40 states, Puerto Rico, and the U.S. Virgin Islands.
Products and services are provided to more than 3.8 million lower-to-middle
income customers. The company offers consumer and home equity loans; retail
sales financing; credit cards; and credit and non-credit related insurance.