NEWS RELEASE
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AMERICAN GENERAL FINANCE
A Subsidiary of American General Corporation
P.O. Box 59, Evansville, Indiana 47701-0059
Contact: Bryan A. Binyon, Treasurer
American General Finance
812/468-5195
AMERICAN GENERAL FINANCE
ANNOUNCES IMPROVED OPERATING RESULTS
HIGHLIGHTS:
Operating earnings up 21%
Charge-off and delinquency rates improve
Operating expenses continue to decline
EVANSVILLE, IN, JULY 30, 1997 - American General Finance
Corporation reports a 21% increase in second quarter
operating earnings to $43 million. The improved quarterly
operating results are attributed to the continued benefits
of action programs aimed at improving credit quality.
Operating earnings exclude the impact of the previously
announced $27 million after-tax loss on the sale of
non-core bank credit card and satellite dish portfolios.
Year-to-date operating earnings increased to $85 million
compared to $65 million for the first half of 1996.
Continued growth in real estate loans, improved credit
quality in non-real estate and retail sales finance
receivables and lower operating expenses were the major
contributors to the improved operating results. At the end
of the quarter, real estate loans were 52% of total
receivables compared to 38% a year earlier. Risk-adjusted
yield increased by 50 basis points over the prior year's
quarter as improvements in charge-offs were only partially
offset by lower yields on the growing, lower risk real
estate portfolio.
The total charge-off rate for the second quarter was 3.70%,
improving from first quarter 1997 charge-off of 3.83% and
full-year 1996's 4.74 % after excluding the charge-offs on
receivables later reclassified as assets held for sale.
Total 60-day+ delinquencies at the end of the second
quarter were 3.74%, improving from 3.77% at the end of the
first quarter and 3.84% at year-end 1996.
Management expects improvements in operating results will
continue reflecting American General Finance's higher
quality receivables mix, stronger branch management
resources, and increased applications of risk management
technology.
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 $8.6 billion and
operates 1,311 offices in 41 states, Puerto Rico, and the
U.S. Virgin Islands. Products and services are provided to
more than two million American families. The company
offers direct consumer and home equity loans, retail sales
financing, and other credit-related products.
Certain information included in this news 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.
American General Finance Corporation
FINANCIAL HIGHLIGHTS:
(Dollars in Millions, Annualized Percentages)
For the Three Months For the Six Months
Ended June 30 Ended June 30
1997 1996 1997 1996
Total Operating
Revenues $376 $430 $757 $865
Interest Expense 110 121 220 245
Operating Expenses 114 126 229 254
Provision for Finance Receivable
Losses 62 100 128 207
Insurance Benefits and
Losses 22 27 46 55
Total Expenses $308 $374 $623 $761
Pretax Operating
Earnings 68 56 134 104
Income Tax
Expense 25 21 49 39
Operating Earnings $43 $35 $85 $65
Loss on Sale of Non-Strategic
Assets (27) - (27) -
Net Realized Investment
Gains(Losses) - (1) - (1)
Net Income $16 $34 $58 $64
Finance Charge
Yield 16.94% 18.12% 17.01% 18.12%
Charge-off Ratio 3.70% 5.38% 3.77% 5.46%
Operating Return
on Assets 1.93% 1.57% 1.86% 1.43%
Operating Return
on Equity 12.94% 10.02% 12.72% 9.17%
6/30/97 6/30/96
Total Assets $8,643 $9,091
Real Estate Loans $3,788 $3,022
Non-Real Estate Loans 2,268 2,466
Retail Sales Contracts 905 1,006
Private Label 266 845
Credit Cards - 519
Total Net Finance
Receivables $7,227 $7,858
Allowance for Finance
Receivable Losses 2Q97 2Q96
Balance at beginning
of period $380 $477
Provision for finance
receivable losses 62 100
Charge-offs, net
of recoveries (66) (105)
Balance at end of period $376 $472
Period-End Allowance Ratio 5.20% 6.01%
60-Day+ Delinquency Ratios 6/30/97 12/31/96 6/30/96
Real Estate Loans 2.43% 2.23% 2.10%
Non-Real Estate Loans 6.32 6.43 6.26
Retail Sales Contracts 2.49 2.90 2.91
Private Label 3.26 3.32 4.85
Credit Cards - - 4.50
Total 3.74% 3.84% 4.01%