News Release
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AMERICAN GENERAL FINANCE
a Subsidiary of American General Corporation
P.O. Box 59 - Evansville, IN 47701
CONTACT:
Bryan A. Binyon
Treasurer
812/468-5195
AMERICAN GENERAL FINANCE CORPORATION REPORTS INCREASED
EARNINGS FOR 1997
Highlights for the year:
Earnings increase 17%
Real estate receivables grow 11%
Credit quality improves
EVANSVILLE, IN, JANUARY 27, 1998-American General Finance
Corporation reports 1997 operating earnings of $164
million, a 17% increase over 1996 operating earnings of
$140 million. The improved results reflect the company's
focus on quality growth, improved portfolio credit quality
and expense control.
During 1997, the company grew real estate secured loans by
11% to represent 52% of the year-end total receivable
portfolio, up from 49% a year ago. The total portfolio
grew $384 million during 1997.
This higher level of growth in real estate secured loans
and strengthened underwriting systems had significant
positive impacts on the credit quality of the receivable
portfolio. The charge-off ratio improved by 110 basis
points to 3.62% in 1997 from 4.72% for 1996 (excluding
assets held for sale). Additionally, 1997 ended with
60-day+ delinquencies at 3.61%, down from the 3.84% at
year-end 1996, while the allowance for losses was strong at
4.64%.
Operating expenses were successfully lowered by $30 million
during the year. These improvements were attributable to a
workforce reduction of 800 positions during 1997 from the
closing of less productive branch offices and the sale of
under performing private label and credit card receivables.
Assuming favorable performance of the economy and stable
credit quality of the U.S. consumer, management expects
1998 to produce growth in all receivable product types and
a continuation of the company's improved operating results.
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 $9.2 billion and
operates 1,322 offices in 40 states, Puerto Rico and the
U.S. Virgin Islands. Products and services are provided to
2.4 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 risk 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 Year
Ended December 31, Ended December 31,
1997 1996 1997 1996
_______________________________________
Total Operating $376 $423 $1,510 $1,710
Revenues
Interest Expenses 116 121 451 482
Operating Expenses 121 123 467 497
Provision for Finance
Receivable Losses 60 115 242 410
Insurance Benefits
and Losses 24 22 93 103
Total Expenses $321 $381 $1,253 $1,492
Pretax Operating
Earnings 55 42 257 218
Income Tax Expense 19 14 93 78
Operating Earnings $36 $28 $164 $140
Loss on Non-Strategic
Assets - (88) (27) (88)
Net Realized Investment
Gains(Losses) - - - (1)
Net Income $36 $(60) $137 $51
Finance Charge
Yield 16.34% 17.32% 16.80% 17.84%
Charge-off Ratio 3.66% 5.71% 3.62% 5.51%
Operating Return
on Assets 1.56% 1.18% 1.80% 1.05%
Operating Return
on Equity 10.39% 8.06% 12.19% 9.90%
AT: 12/31/97 12/31/96
Total Assets $ 9,241 $ 9,503
Real Estate Loans 4,067 3,652
Non-Real Estate Loans 2,502 2,460
Retail Sales Finance 1,258 1,331
Total Net Finance
Receivables $ 7,827 $ 7,443
Allowance for Finance Receivables Losses 1997 1996
Balance at Beginning of Period $385 $482
Provision for Finance Receivable Losses 242 410
Allowance Reclassified to Assets
Held for Sale - (70)
Charge-offs, net of recoveries (264) (437)
Balance at End of Period $ 363 $385
12/31/97 12/31/96
Allowance as a % of Finance
Receivables 4.64% 5.18%
12/31/97 9/30/97 12/31/96
60-Day+ Delinquency Ratios 3.61% 3.85% 3.84%