Auto Credit Express Blog
September 17, 2008
AmeriCredit Reports Fourth Quarter and Fiscal Year 2008 Operating Results
Highlights of the latest report from AmeriCredit include a 4th quarter net loss of $150 million and quarterly pre-tax income of $13 million, excluding goodwill impairment and restructuring charges.
Loan originations drop as charge-offs decline
AmeriCredit’s latest report to stockholders reflects, as far as we can tell here at Auto Credit Express, the industry trend towards raising lending requirements while reducing loan originations. AmeriCredit reduced their loan originations for the fourth quarter from $2.51 billion in 2007 to $780 million in 2008. This compares to Capital One, which reduced originations from $3.0 billion to $1.5 billion and Citigroup, which reduced originations from $2.8 billion to $800 million. In addition, HSBC and Triad Financial exited the auto finance sector, reducing the competition for better subprime customers.
This means that even as the economy has deteriorated, the outlook for subprime lenders such as AmeriCredit has remained fairly stable, as evidenced by AmeriCredit’s quarterly charge-offs declining to 5.9%.
Here is the press release from AmeriCredit:
FORT WORTH, Texas, – AMERICREDIT CORP. (NYSE: ACF) today announced a net loss of $150 million, or $1.30 per share, for its fiscal fourth quarter ended June 30, 2008. AmeriCredit reported net income of $87 million, or $0.66 per share, for the same period a year earlier. For the fiscal year ended June 30, 2008, AmeriCredit reported a net loss of $69 million, or $0.60 per share, compared to net income of $360 million, or $2.73 per share, for the fiscal year ended June 30, 2007.
Net loss for the quarter ended June 30, 2008, included a $135 million after-tax impairment charge ($213 million pre-tax), or $1.17 per share, related to the write-off of goodwill recorded in connection with the acquisitions of Long Beach Acceptance Corp. and Bay View Acceptance Corporation, and a $7 million after-tax restructuring charge ($11 million pre-tax), or $0.06 per share, related to changes in our lending programs and organizational structure.
“Excluding the goodwill impairment and restructuring charge, we earned $13 million pre-tax for the quarter even after significantly increasing loan loss provisions to build our allowance for loan losses,” said AmeriCredit Chief Financial Officer Chris Choate.
The allowance for loan losses as a percentage of receivables increased to 6.3% at June 30, 2008, from 5.7% at March 31, 2008.
Originations were $780 million for the quarter ended June 30, 2008, compared to $2.51 billion for the same quarter last year. Originations for the fiscal year ended June 30, 2008, were $6.29 billion, compared to $8.45 billion for the prior fiscal year. Managed receivables totaled $14.98 billion at June 30, 2008, compared to $15.95 billion at June 30, 2007.
Annualized net charge-offs totaled 5.9% of average managed receivables for the quarter ended June 30, 2008, compared to 3.3% for the quarter ended June 30, 2007. For the fiscal year ended June 30, 2008, net charge-offs were 6.2%, compared to 4.7% last year.
Managed auto receivables 31-to-60 days delinquent were 6.0% of the portfolio at June 30, 2008, compared to 4.7% at June 30, 2007. Accounts more than 60 days delinquent were 2.9% of the portfolio at June 30, 2008, compared to 2.1% a year ago.
“We have taken proactive steps to conserve liquidity and position the business to withstand the weak macroeconomic environment and the dislocation in the capital markets,” said AmeriCredit President and Chief Executive Officer Dan Berce. “Our goal as we manage through this challenging environment is to protect the value of our platform and position the franchise to provide shareholder value well into the future.”
