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Contact: Bryan A. Binyon, Treasurer
(812) 468-5195
AMERICAN GENERAL FINANCE CORPORATION
REPORTS 18% GROWTH IN EARNINGS
Highlights for the year:
- - Earnings increased 18%
- - Receivables grew 21%
- - Charge-offs improved 102bp
EVANSVILLE, IN, JANUARY 27, 1999 - American General Finance
Corporation's full year 1998 earnings totaled $194 million,
representing an 18% increase over the prior year. Quality
growth, with continued improvement in charge-offs, and controlled
expenses were the drivers of the strong results.
Finance receivables grew 21% during 1998 to end the year at
$9.5 billion. The growth was led by a $1.6 billion increase
in real estate receivables. At December 31, 1998, real estate
receivables represented 60% of the total receivables portfolio,
up from 52% at year end 1997.
Improved charge-offs were a significant contributor to the
earnings increase as net charge-offs for 1998 improved to 2.60%
compared to 3.62% for 1997. The 60-day+ delinquency ratio was
3.78% at December 31, 1998, up 1 basis point from the prior
quarter end. The allowance for losses at December 31, 1998
remained strong at 3.94% of finance receivables.
The company attributes the strong profitability during 1998 to
its focus on quality growth. Management believes that, with
the company's vast branch network, risk management technology,
and financial strength, American General Finance is positioned
for continued profitable growth through existing origination
channels and acquisitions.
______________________________________________________________________________
American General Finance Corporation and its subsidiaries are
engaged in the consumer finance and credit insurance business.
The company, headquartered in Evansville, Indiana, has assets of
$11 billion and operates 1,310 offices in 40 states, Puerto Rico,
and the U.S. Virgin Islands. Products and services are provided
to more than 2 million American families. The company offers
direct consumer and home equity loans, retail sales financing,
and other credit-related products.
All statements, trend analyses, and other information contained
in this report and elsewhere (such as other filings by the company
with the Securities and Exchange Commission, press releases,
presentations by management of the company, or oral statements)
relative to trends in the company's operations or financial
results, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend,"
and other similar expressions, constitute forward-looking statements
under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are made based upon management's current
expectations and beliefs concerning future developments and their
potential effects upon the company. There can be no assurance that
future developments affecting the company will be those anticipated
by management. Actual results may differ materially from those
included in the forward-looking statements.
These forward-looking statements involve risks and uncertainties
including, but not limited to, the following: (1) changes in
general economic conditions, including the performance of financial
markets, interest rates, and the level of personal bankruptcies;
(2) competitive, regulatory, or tax changes that affect the cost of
or demand for the company's products; (3) the company's ability to
achieve Year 2000 readiness for significant systems and operations
on a timely basis; (4) adverse litigation results or resolution of
litigation; and (5) the company's failure to achieve anticipated
levels of expense savings from cost-saving initiatives. Readers
are also directed to other risks and uncertainties discussed in
other documents filed by the company with the Securities and
Exchange Commission. The company undertakes no obligation to
update or revise any forward-looking information, whether as a
result of new information, future developments, or otherwise.
American General Finance Corporation
FINANCIAL HIGHLIGHTS:
(Dollars in Millions, Annualized Percentages) (Unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
1998 1997 1998 1997
_________________ ___________________
Total Revenues $411 $377 $1,594 $1,512
Interest Expense 132 116 501 451
Operating Expenses 120 121 494 467
Provision for Finance
Receivable Losses 59 60 208 242
Loss on Sale of
Non-Strategic Assets 0 0 0 42
Insurance Losses and
Loss Adjustments 20 25 85 94
______ ______ ______ ______
Total Expenses 331 322 1,288 1,296
Income Before Provision
for Income Tax 80 55 306 216
Provision for Income Tax 28 20 112 79
______ ______ _______ ______
Net Income $52 $35 $194 $137
______ ______ ______ ______
Earnings Before Loss on
Sale of Non-Strategic
Assets $52 $35 $194 $164
Finance Charge Yield 15.27% 16.34% 15.87% 16.80%
Charge-off Ratio 2.64% 3.66% 2.60% 3.62%
______ ______ ______ ______
Risk Adjusted Yield 12.63% 12.68% 13.27% 13.18%
Return on Assets 1.97% 1.60% 1.96% 1.51%
Return on Equity 13.49% 10.59% 13.31% 10.16%
AT: 12/31/98 12/31/97
________ ________
Total Assets $11,060 $9,241
Real Estate Loans 5,660 4,068
Non-Real Estate Loans 2,511 2,502
Retail Sales Finance 1,301 1,257
________ ________
Total Net Finance Receivables $9,472 $7,827
Allowance for Finance
Receivable Losses 1998 1997
________ _________
Balance at Beginning of Period $363 $385
Provision for Finance Receivable
Losses 208 242
Allowance Related to Acquired
Receivables 17 0
Charge-offs, Net of Recoveries (215) (264)
_______ ________
Balance at End of Period $373 $363
12/31/98 12/31/97
__________ __________
Allowance as a % of Net
Finance Receivables 3.94% 4.64%
60-Day+ Delinquency Ratios 12/31/98 12/31/97
__________ __________
Real Estate Loans 3.32% 2.59%
Non-Real Estate Loans 5.48% 5.71%
Retail Sales Finance 2.26% 2.45%
__________ __________
Total Net Finance Receivables 3.78% 3.61%