EXHIBIT 99
Philip M. Hanley
Sr. Vice President & Chief Financial Officer
American General Finance, Inc.
812-468-5420
AMERICAN GENERAL FINANCE CORPORATION
ANNOUNCES 1995 RESULTS
EVANSVILLE, IN, JANUARY 29, 1996.--American General Finance Corporation
reports net finance receivables increased $294 million during 1995 to $8.2
billion at December 31, 1995. The receivables growth resulted primarily from
internal growth including a $119 million increase in the real estate
portfolio. Net income for the year was $92 million compared to $243 million
in 1994. Fourth quarter net loss was $90 million compared to net income of
$71 million during the final quarter of 1994.
The primary contributor to the lower 1995 earnings was a $574 million loss
provision for the year which included a $216 million increase in the allowance
for losses on finance receivables during the fourth quarter. The allowance
increase was determined by extensive internal analysis with the assistance of
nationally recognized consultants and the company's independent auditors.
Included in the fourth quarter allowance increase was $30 million for bankrupt
accounts that were charged-off due to a tightening of the charge-off policy
for certain bankruptcies. The higher loss provision more than offset the
increased finance receivables revenue and increased insurance earnings.
At year-end 1995, the allowance for finance receivable losses was $482
million, or 5.9% of receivables, compared to $226 million, or 2.9% of
receivables at year-end 1994. The increased allowance represents the
company s best estimate of the net credit losses on outstanding finance
receivables. The comprehensive analysis of the finance receivables portfolio
and the corresponding increase in the allowance during the fourth quarter were
in response to the unexpected rise in delinquencies beginning in the third
quarter of 1995. At year-end 1995, 60 day+ delinquencies were 4.15% compared
to 2.89% at the end of 1994.
To reflect its commitment to American General Finance as one of its core
businesses, American General Corporation contributed $80 million of internally
generated capital to American General Finance in December 1995. This
contribution enabled American General Finance Corporation to maintain leverage
below its target level of 6.5 to 1 debt to tangible net worth.
While non-branch initiatives such as private label and branch credit cards
generated high receivables growth over the last few years, this growth was
followed by an unacceptable rise in delinquencies and charge-offs. Rapid
growth in branch operations during the past two years also contributed to
credit quality deterioration. Consequently, as a result of an in-depth
operations review, improvement programs have been implemented to address both
the branch and non-branch credit quality issues. Underperforming non-branch
initiatives have been discontinued or restructured. Lower growth targets and
other improvement programs have also been instituted in the branches to return
credit quality to an acceptable level.
Management believes the increase in the allowance and other actions taken
address the overall credit quality issue and position the company to return to
the levels of earnings achieved over the past few years.
FINANCIAL HIGHLIGHTS:
(Dollars in Millions)
For the Year Ended December 31, 1995 1994
- -------------------------------- ------ ------
Total Revenues $1,789 $1,388
Net Income $ 92.3 $243.3
Finance Charge Yield 18.01% 17.42%
Return on Assets 0.98% 2.99%
Return on Equity 6.49% 19.51%
For the Quarter Ended December 31, 1995 1994
- ----------------------------------- ------ ------
Total Revenues $451 $382
Net Charge-Offs $127.0 $39.4
Net Income ($89.7) $70.7
At: 12/31/95 12/31/94
- ---- -------- --------
Total Assets $9,485 $8,919
Real Estate Loans $2,817 $2,698
Non-Real Estate Loans 2,694 2,656
Retail Sales Finance 2,132 2,073
Credit Cards 558 480
------ ------
Total Net Finance Receivables $8,201 $7,907
Allowance for Finance Receivable Losses 1995 1994
- --------------------------------------- ------ ------
Balance at beginning of year $226 $153
Provision for finance receivable losses 574 155
Allowance related to net (sold) acquired
receivables and other (7) 52
Charge-offs, net of recoveries (311) (134)
------ ------
Balance at end of year $482 $226
Delinquency Ratios Y.E. 1995 Y.E. 1994
- ------------------- --------- ---------
Real Estate Loans 2.01% 1.65%
Non-Real Estate Loans 6.37 4.54
Retail Sales Finance 3.76 2.13
Credit Cards 4.85 3.25
------ ------
Total 4.15% 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 $9.5 billion and operates
over 1,370 offices in 39 states, Puerto Rico, and the U.S. Virgin Islands.
Products and services are provided to over 3 million low-to-middle income
American families. The company offers direct consumer and home equity loans;
indirect retail sales financing, credit cards; and credit and non-credit
insurance.