NEWS RELEASE
[LOGO] CONTACT:
American General Finance Bryan A. Binyon, Treasurer
A Subsidiary of American General 812/468-5195
Corporation
P.O. Box 59, Evansville, Indiana 47701
AMERICAN GENERAL FINANCE CORP. REPORTS
1996 RESULTS AND OFFERS PORTFOLIOS FOR SALE
EVANSVILLE, IN, FEBRUARY 4, 1997.--American General Finance
Corporation reports 1996 operating earnings of $140
million compared to $92 million for 1995 which included a
significant increase in allowance for losses. The company
also announces the decision to sell underperforming bank
credit card and satellite dish receivables totaling
approximately $900 million. Net income for the year was
$51 million following an $88 million aftertax charge to
establish a valuation reserve associated with the
portfolios now classified as assets held for sale.
The company reached the decision to segregate and offer to
sell these portfolios in conjunction with rebalancing
credit risk and return of the overall receivable portfolio.
American General Finance's credit quality has been
significantly impacted by the satellite and bank credit
card portfolios during 1996, while delinquencies in the
company's core branch-based lending operations have
remained relatively stable compared to the credit quality
pressures being experienced industry-wide.
During 1996, management's focus on rebalancing the
receivable portfolio credit risk resulted in more than $800
million of real estate receivable growth and lower volumes
in previously fast-growing higher risk receivables. With
the real estate growth and reclassification of credit card
and satellite receivables as assets held for sale, real
estate secured receivables accounted for 49% of the
receivable portfolio, compared to 34% at year-end 1995.
Total portfolio, 60-day+ delinquencies at year-end 1996,
which excludes the reclassified receivables, were 3.84% at
the end of 1996 down from 4.29% at the end of the prior
quarter and 4.15% at year-end 1995. The charge off rate
was 5.51% of receivables for the year compared to 3.77% for
1995. Excluding the reclassified receivables, the 1996
charge off rate would have been 4.74% compared to 3.27% in
1995. The allowance for losses was 5.18% of total
receivables at year-end 1996 compared to 5.88% a year ago.
The allowance decrease reflects the reclassification of the
receivables to assets held for sale and the higher
percentage of lower risk real estate secured receivables.
While delinquencies and charge-offs are expected to remain
above desired levels for the near term, management
continues to implement improvement programs addressing the
credit quality issues that resulted from rapid growth in
1994 and 1995. In addition to the portfolio rebalancing,
the improvement programs include higher underwriting
standards, revised branch incentive compensation, and the
implementation of credit scoring for increased control and
monitoring capabilities.
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 1,350 offices in 39 states, Puerto Rico, and the
U.S. Virgin Islands. Products and services are provided to
2.5 million customer accounts. The company offers direct
consumer and home equity loans, retail sales financing,
and other credit-related products.
Certain information included in this press release is
forward looking and involves risks and uncertainties,
including general economic and competitive conditions that
could significantly impact expected results. Investors are
also directed to other risks and uncertainties discussed in
documents filed by the company with the Securities and
Exchange Commission.
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FINANCIAL HIGHLIGHTS: AGFC
(Dollars in Millions)
For the Year Ended December 31, 1996 1995
Total Revenues $1,709 $1,789
Operating Earnings $140 $92
Net Income $51 $92
Finance Charge Yield 17.84% 18.01%
Net Charge-offs 5.51% 3.77%
Return on Assets 0.55% 0.98%
Return on Equity 3.55% 6.49%
For the Quarter ended December 31, 1996 1995
Total Revenues $423 $451
Net Income ($60) ($90)
Finance Charge Yield 17.32% 17.94%
Net Charge-offs 5.71% 6.04%
At: 12/31/96 12/31/95
Total Assets $9,503 $9,485
Real Estate Loans $3,652 $2,817
Non-Real Estate Loans 2,460 2,694
Retail Sales Contracts 955 1,189
Private Label 376 943
Credit Cards - 558
Total Net Finance Receivables $7,443 $8,201
Assets Held for Sale $669 -
Allowance for Finance Receivable Losses 1996 1995
Balance at beginning of period $482 $226
Provision for finance receivable
losses 410 574
Allowance reclassified to Assets
Held for Sale (70) -
Charge-offs, net of recoveries (437) (311)
Other - (7)
Balance at end of period $385 $482
60-Day+ Delinquency Ratios 12/31/96 12/31/95
Real Estate Loans 2.23% 2.01%
Non-Real Estate Loans 6.43 6.37
Retail Sales Contracts 2.90 3.01
Private Label 3.32 4.77
Credit Cards - 4.85
Total 3.84% 4.15%